RESTRICTED
WORLD TRADE TCA/M/1
5January 1996
ORGANIZATION(96-0027)
Committee onTrade inCivil Aircraft
MINUTES OFTHE MEETING OFTHE COMMITTEE
HELD ON17NOVEMBER 1995
Chairman: Mr.M.Abdel-Fattah (Egypt)
Page
A. Adoption ofAgenda 1
B. Status ofthe1979 Agreement onTrade inCivil Aircraft under theWTO and 1
proposed technical revisions totheAgreement
C. Report (1995) totheCONTRACTING PARTIES totheGATT 1947 andto 5
theWTO General Council
A. Adoption ofAgenda
1. The Chairman noted that theagenda forthepresent meeting was contained in
WTO/AIR/205/Rev.1. Hewelcomed Macau, which hadaccepted theAgreement on14July1995,
asaSignatory totheAgreement onTrade inCivil Aircraft.
B. Status ofthe1979Agreement onTrade inCivilAircraft under theWTO andproposed technical
revisions totheAgreement
2. TheChairman recalled thattheproposed technical changes tothe1979 Agreement onTrade
inCivil Aircraft (hereafter the"Aircraft Agreement") werecontained inAIR/W/98 which hadbeen
circulated on26October 1994. Hethensummarized hisunderstanding ofthestatus oftheAgreement
under theWTO asfollows. Ithadnotbeenpossible toconclude thenegotiations onanewAgreement
onTrade inCivilAircraft intimefortheconclusion oftheUruguay Round in1993. Additional attempts
in1994hadbeenequally unsuccessful. Finally, ithadnotbeenpossible toadopt aproposal tointroduce
technical changes intotheexisting texttomake itformally fitwithin theWTO framework. Inhisview,
theresulting situation wasveryworrying.
3. Herecalled thattheAircraft Agreement wasoneofthePlurilateral Trade Agreements contained
inAnnex 4totheMarrakesh Agreement Establishing theWorld Trade Organization (hereafter the
"WTO Agreement"). Inapplication ofArticle II,paragraph 3,oftheWTO Agreement, itwaspart
ofthatAgreement. However, among theelements which hadtobetaken intoaccount indetermining
theactual status oftheAircraft Agreement, therewerethreemainfactors which created ahighdegree
oflegal uncertainty andwhich ledtoasituation where theAircraft Agreement waspractically not
operational. Thefirstrelated tothedateofadoption andentry intoforce oftheAircraft Agreement
compared withthedateofadoption andentry intoforce oftheother WTO agreements. Thisfactor
hadanimpact, interalia,ontheapplicability ofcertain substantive provisions oftheAircraft Agreement.
Thesecond factor wastheabsence ofadecision ontheapplication oftheWTO Understanding onRulesTCA/M/1
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andprocedures Governing theSettlement ofDisputes (hereafter the"DSU") totheAircraft Agreement.
ThelastfactorrelatedtothedifferentinstitutionalprovisionsexistingintheAircraftAgreementcompared
withthose oftheWTO.
4. Regarding thefirstfactor, astheAircraft Agreement hadentered intoforce in1980 andhad
beenlastamended in1986, anyoftheagreements annexed totheWTO Agreement werelaterintime
compared withtheAircraft Agreement. Asnoprovision intheAircraft Agreement orintheWTO
agreements expressly addressed theissueofapplicability ofpriororsubsequent agreements, onecould
onlyrelyonprinciples andcustomary rulesofinternational lawregarding theapplication ofsuccessive
treaties relating tothesame subject-matter, inparticular those reflected inArticle 30oftheVienna
Convention of1969ontheLawofTreaties. Inapplication oftheprinciples andcustomary rulesrecalled
intherelevant provisions ofthatArticle, whenever aprovision ofthe1979 Agreement onTrade in
Civil Aircraft wasnotcompatible withaprovision ofoneoftheagreements annexed totheWTO
Agreement relating tothesamesubject-matter, theprovision oftheAgreement onTrade inCivilAircraft
could notbeapplied. Inhisview, theobligation torelyonresiduary principles orrulesofinternational
lawraised ahighdegree oflegaluncertainty. Forexample, themeaning of,e.g.,"successive treaties",
"same subject-matter" or"compatible" inaparticular casecould besubject todiscussion. Such a
situation wasincontradiction withthespirit oftheWTO Agreement toimprove legal certainty in
international tradeandwasparticularly worrying inlightofthefactthattherewasnoeffective dispute
settlement available under theAircraft Agreement asitstood.
5. Regarding thesecond main factor, herecalled thatAppendix 1totheDSU provided thatthe
applicability oftheDSU tothePlurilateral Trade Agreements inAnnex 4totheWTO Agreement
(including theAircraft Agreement) would besubject totheadoption ofadecision bytheparties to
eachagreement, setting outtheterms fortheapplication oftheDSU totheindividual agreement,
including anyspecial oradditional rulesorprocedures. Thismatter hadbeendiscussed in1994 and
adraftdecision hadbeensuggested. However, asthediscussion ontechnical changes hadbecome
deadlocked, thisspecific issue hadnotbeendiscussed anyfurther. Asaresult, thesituation wasthat
theDSU could notapply todisputes initiated under theAircraft Agreement. Onewasleftwiththe
provisions oftheAircraft Agreement, together withtheprovisions ofGATT 1947 andthose ofthe
1979Understanding Regarding Notification, Consultation, Dispute Settlement andSurveillance (BISD
26S/210). Thisimplied that,atbest, Signatories would have torelyonthepre-Uruguay Round
instruments, which were lessefficient thantheDSU. Aworst casescenario would involve the
termination ofGATT 1947 andthetermination ofthe1979 Understanding Regarding Notification,
Consultation, Dispute Settlement andSurveillance, either through aformal decision ofthecountries
parties tothatUnderstanding, orasaresult oftheapplication ofprinciples orcustomary rules of
international lawapplicable totermination oftreaties, asembodied inparticular inArticle 59ofthe
Vienna Convention. Insuchasituation, dispute settlement under theAircraft Agreement would be
reduced tototalinefficiency, should theparties toadispute notagree onhowtohandle thedispute.
6. Hesaidthataconsequence ofthiswasthattheAircraft Agreement could not,inpractice, be
enforced against anyofitsSignatories. Suchasituation implied thatanydiscipline under theAircraft
Agreement which wasnotalsocovered byanother WTO agreement wasdefactonotapplicable. This
wasthecase, forexample, fortheprovisions ofArticle 4oftheAircraft Agreement regarding
government-directed procurement, mandatory sub-contracts andinducements. Thisclearly added to
theexisting legaluncertainty already stemming fromtheabsence ofclarity ontheapplicability ofcertain
provisions oftheAircraft Agreement inrelation totheother WTO agreements.
7. Hefurther saidthattheAircraft Agreement stillcontained institutional provisions which were
atoddswiththestructure established under theaegis oftheWTO. While itcould beargued thatthe
WTO institutional framework should apply totheAircraft Agreement evenintheabsence offormal
amendment ofthelatter, either onthebasis ofinterpretation ofprovisions oftheWTO AgreementTCA/M/1
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(inparticular Articles II.3andIV.8 thereof), oronthebasis ofprinciples orcustomary rules of
international law,suchanoption, byitsverynature, implied additional legaluncertainty.
8. Inconcluding, herecalled that,while some oftheproblems resulting from theabsence ofa
formal adaptation oftheAircraft Agreement totheWTO framework could be,toacertain extent,
addressed through theapplication, e.g.,ofprinciples andcustomary rules ofinternational law,the
degree oflegaluncertainty which would nevertheless result from thecurrent situation clearly could
notbetolerated inthecontext oftheWTO, which wasinteraliaintended torationalise thefunctioning
oftheagreements compared withtheTokyo Round situation. Hethenasked delegations fortheir
thoughts onhowtobreak thedeadlock.
9. Therepresentative ofCanada thanked theChairman forhaving recalled theneedforimproved
legalcertainty,whichhadbeentheconcernofdelegationswhentheyhaddiscussedtechnicalamendments
totheAircraft Agreement in1994. Oneyearlater, theproblem wasonlymore evident. Heunderlined
theimportance thatCanada attached toasolution tothisissue. Ayearago,Canada hadbeenready
toaccept thetextscontained indocument AIR/98, which itconsidered tobeabalanced proposal. His
delegation hoped agreement onatextcould bereached atthepresent meeting.
10. Therepresentative oftheEuropean Communities recalled thatithadbeenpreviously agreed
thattheexercise ofamending theAircraft Agreement would beapurely technical one. Noattempt
should bemade toalterthesubstance oftheAircraft Agreement. There hadalsobeenanagreement
adreferendum onadecision oftheSignatories tobeadopted inconnection withtheProtocol. All
Signatories hadsupported thisdecision, butoneSignatory hadsubsequently changed itsposition. In
hisview, auseful starting point foradiscussion onhowtoproceed further would betohavean
explanation fromthatSignatory astowhy, afterreflection, itcould notaccept thepreviously agreed
compromise.
11. Therepresentative oftheUnited States welcomed Macau asanewsignatory totheAgreement.
Ontheissue ofrectification oftheAircraft Agreement, hesaidthattheUnited States hadexplained
itsposition attheprevious meeting oftheCommittee andthatalternative language hadbeen
communicated totheCommittee (circulated asAIR/83). TheUnited States agreed withthestatements
made bytheChairman andtheECthatoneofthepremises fortherectification wasthatithadtobe
atechnical exercise. There hadbeencertain complications from thebeginning, onebeing thatthe
Aircraft Agreement hadnotbeenrectified bythetimetheWTO Agreement wassigned inMarrakesh
orbythetimeitentered intoforce. Theprocess hadbeenheldupbyoneother Signatory untillate
in1994. Thiswould make anyrectified Aircraft Agreement alater-in-time agreement. Heagreed with
theChairman thatparticipants hadtoproceed withtherectification exercise assoon aspossible.
However, while itwasimportant toremedy thepotential legalproblems, henoted thattherehadbeen
noformal dispute inthehistory oftheAircraft Agreement. Asaresult, there wasnourgent need
foramore efficient dispute settlement mechanism.
12. HesaidthatintheUSview, theobject ofthetechnical exercise wastotrackasclosely aspossible
thelanguage oftheAircraft Agreement, asamended bythe1986 Protocol. TheAircraft Agreement
wasnotsilent astotherelationship toother agreements. InArticle 6.1,itmade clearthatthe1979
Agreement onInterpretation andApplication ofArticles VI,XVIandXXIII oftheGeneral Agreement
onTariffs andTrade applied tocivilaircraft and,inArticle 8.8,itmade clear thatwhere adispute
wascovered byanother multilateral agreement, thedispute would takeplace under thatagreement
unless theparties tothedispute agreed tomove ittotheAircraft Agreement. IntheUSview, changing
thatrelationship, particularly withrespect totheWTO Agreement onSubsidies andCountervailing
Measures, wasmore thanatechnical change. TheUSproposal, firstintheformofatextual change
inArticle 6oftheAgreement andlaterinthedecision accompanying thedraftprotocol, wasdesigned
torestore thesituation thatexisted prior totheentry intoforce oftheWTO Agreement. IntheUSTCA/M/1
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view, there wasnospecific conflict between theAircraft Agreement andtheWTO Agreement on
Subsidies andCountervailing Measures.
13. Therepresentative oftheEuropean Communities saidthatoneofthepurposes oftheUruguay
Round wastoclear upsome oftheproblems thathadarisen inearlier years because ofthewaythe
GATT haddeveloped, interaliathepossibility forforum shopping. Allthishadbeenrevised inthe
context oftheWTO. Hecould notseeanyreasons forputting theclock backandallowing fora
resumption offorum shopping, which hadbeen, interalia,oneofthereasons forthemodifications
introducedbytheWTOdisputesettlementmechanism.TheonlyobjectiveoftheEuropeanCommunities,
apartfromthenecessary technical amendments, wastoensure thatallrelevant WTO agreements were
applied totheaircraft sector astheyhadbeendrafted, including theAircraft Agreement asamended
throughtheprotocols,andtheWTOAgreementonSubsidiesandCountervailingMeasuresinitsentirety.
14. Therepresentative oftheUnited States saidthatthedrafters oftheAircraft Agreement had
beenverycareful inspelling outtherelationship between theAircraft Agreement andother agreements.
The1979 textwasnotsilent onthatpoint. TheUnited States didnotwant asituation inwhich
ambiguities intheAircraft Agreement could beusedtointerpret ordiminish obligations under theWTO
Agreement onSubsidies andCountervailing Measures. IntheUSview, special treatment hadalready
beengiventoaircraftintheWTOAgreementonSubsidiesandCountervailingMeasures,andSignatories
totheAircraft Agreement werealsoMembers oftheWTO Agreement onSubsidies andCountervailing
Measures. Theextent towhich aircraft hadtobetreated differently wasspecified inthree footnotes
totheWTO Agreement onSubsidies andCountervailing Measures. Thedisciplines inthose agreements
wereclear,andtheUnitedStatesdidnotwanttointroduceanythingdifferentthatwouldcreateconfusion.
Thiswasatechnical exercise, andanyMember wishing tomodify theWTO Agreement onSubsidies
andCountervailing Measures should gototheCommittee established under thatAgreement andpropose
anamendment. There werenoreasons tochange theWTO Agreement onSubsidies andCountervailing
Measures through changes intheAircraft Agreement. HesaidthatSignatories already hadtodeal
withatemporal change because ofdelays intherectification process, forwhich hisdelegation was
notresponsible.
15. Inresponse totheChairman 'squestion, hesuggested that,sincethereseemed tobeadifference
ofviews, thereshould becontinued bilateral consultations withsuggestions andcoordination fromthe
Chairman andtheSecretariat, sothatSignatories could bring thisexercise toaconclusion asquickly
aspossible, hopefully before theendof1995. TheUnited States would work constructively tothis
endbutcould notgiveupitssubstantive rights.
16. TherepresentativeoftheEuropeanCommunitiessaidthattherewasnotonlyabasiccontradiction
between thepositions oftwoSignatories, butalsoaninternal contradiction intheposition ofoneof
them. Thecurrent exercise waspurely technical andnoSignatory should engage inanattempt to
introduce substantive modifications totheAircraft Agreement. TheUnited States 'alternative proposal
tothedraftdecisionagreedadreferendumin1994includedsubstantivemodificationstothe1979Aircraft
Agreement. ThiswaswhytheECcould notaccept it.
17. TheChairman expressed disappointment andfrustration overthelackofsuccess inmoving
positions onthisissuecloser. Heasked alldelegations toreflect oninitiatives tounblock thisexercise.
Herecalled thatthedrafttextofaprotocol wascontained inAnnex ItoAIR/W/98. Hisunderstanding
from pastdiscussions wasthatthere wasnoobjection toitscontent assuch, butthatitsacceptance
bycertain delegations wasconditional upon theconcurrent adoption ofadecision addressing certain
concerns ofthesedelegations. Itwastherefore inrelation tothisdraftdecision thathethought hecould
provideanintellectualcontributiontothedebate,whichheurgeddelegationstoconsiderinaconstructive
spirit. Inhisview, hisapproach would notmake thelegal situation ofanySignatory worse thanit
wasunder theAircraft Agreement asitstood, inthecontext hehaddescribed. Hesuggested thatattemptsTCA/M/1
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could bemade toamend thecurrent second sentence ofthesecond paragraph ofthedraftdecision
contained inAnnex IIofAIR/W/98 inorder tosimplify it,bymerely referring tothefactthatthe
Aircraft Agreement didnottakeprecedence overtheAgreement onSubsidies andCountervailing
Measures.
18. Heurged thedelegations concerned toconsider carefully thisapproach ortocome upwith
other, realistic andcompromise-oriented proposals, which could bridge thegapbetween theircurrent
positions. Hesaidthatitseemed fromthediscussion thatdelegations wereinagreement thatthepresent
situationshouldnotcontinueandthatasatisfactorysolutionshouldbefound.Hewouldconductinformal
consultations withallinterested delegations onhowtoresolve thepresent deadlock andmake theAircraft
Agreement operational. Headded thathemight callanother meeting oftheCommittee atanappropriate
timetoconsider theresults ofthese consultations.
19. TheCommittee tooknoteofthestatements.
C. Report (1995) totheCONTRACTING PARTIES totheGATT 1947andtotheWTO General
Council
20. TheChairman recalled that,pursuant toArticle 8.2oftheAgreement onTrade inCivilAircraft,
theCommittee wastoreport totheCONTRACTING PARTIES. However, inapplication ofArticle
IV.8oftheWTO Agreement, thebodies provided forunder thePlurilateral Trade Agreements were
tokeeptheWTO General Council informed oftheiractivities onaregular basis. Given thatboththe
WTO andtheGATT 1947 were concurrently inforce, andgiven thattheprovisions ofArticle 8.2
oftheAgreement onTrade inCivil Aircraft andthose ofArticle IV.8oftheWTO Agreement were
notincompatible, hesuggested thatthe1995 report oftheCommittee besubmitted bothtothe
CONTRACTING PARTIES totheGATT 1947 andtotheWTO General Council.
21. TheCommittee adopted itsReport (1995) totheCONTRACTING PARTIES totheGATT
1947 andtotheWTO General Council, contained inWT/L/107-L/7655.