RESTRICTED
WORLD TRADE WT/COMTD/1
2May 1995
ORGANIZATION(95-1108)
Original: Spanish Committee onTrade andDevelopment
SOUTHERN COMMON MARKET (MERCOSUR) AGREEMENT
Thefollowingcommunication,dated5April1995,hasbeenreceivedfromthePermanentMission
ofParaguay.
_______________
Initscapacity ofPro-Tempore Chairman ofMERCOSUR, theParaguayan Government, on
behalf oftheMERCOSUR Member Countries (Argentina, Brazil, Paraguay andUruguay), andasa
follow-up tothecommunication dated 21December 1994 (document L/7615), requests thattheupdated
textofthereplies tothequestionnaire onMERCOSUR becirculated asanofficial document ofthe
Working Party onMERCOSUR established bytheCommittee onTrade andDevelopment.
Thedocument includes, atAnnex I,theCommon External Tariff, theSchedules ofExceptions
andtheTimetable forConvergence ontheCommon External Tariff.1These texts areforguidance
onlyandarestillprovisional, since technical corrections arebeing made totheCommon External Tariff
andtheMembers ofMERCOSUR have until 30April 1995 tocomplete theSchedules ofExceptions
(Resolution 47/94 oftheCommon Market Group). Thefinal texts oftheCommon External Tariff
andSchedules ofExceptions willbecirculated assoon asthey have been approved bythecompetent
MERCOSUR authority.
1InteresteddelegationsmaycollectcopiesofthedocumentationinvolvedfromOfficeNo.3006.TheCommo n
External Tariff andTables referred toasAnnex Iareavailable ondiskettes.WT/COMTD/1
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UPDATING OFTHE REPLIES TOTHE QUESTIONS SUBMITTED TOTHE
WORKING PARTY ONTHE SOUTHERN COMMON MARKET
(MERCOSUR) AGREEMENT2
1. ELIMINATION OFDUTIES, CHARGES AND OTHER RESTRICTIONS APPLIED
INTHE STATES PARTIES 'RECIPROCAL TRADE (ARTICLE 1,PARAGRAPH 2,
ARTICLE 5(A) AND ANNEX I)
1.1 Weunderstand that theelimination ofduties, charges andother restrictions applied in
theStates Parties 'reciprocal trade isproceeding asscheduled inAnnex Ionthetrade liberalization
programme oftheMERCOSUR Agreement. Wewould likeParties toconfirm whether there
isanyplan tochange theschedule and, ifany, wewould liketoknow about theproposed change.
With respect tomost oftheir reciprocal trade theStates Parties toMERCOSUR have metthe
schedule laiddown inthetrade liberalization programme. Except foralimited number ofheadings
oftheHarmonized System subject totheprocedure foradaptation tothetrade liberalization programme
within amaximum period offour years forArgentina andBrazil andfiveyears forParaguay and
Uruguay, therestofintra-regional trade hasbeen duty-free since 1January 1995.
1.2 Have thedecisions ontariff reductions andtheelimination ofnon-tariff restrictions as
described inAnnex Ibeen accomplished asplanned? What kind ofstructural changes areenvisaged
foreach country inconnection with these eliminations?
Theplanned tariff reductions setoutinthetrade liberalization programme inAnnex Itothe
Treaty have been progressively implemented inaccordance with theestablished timetable, with effect
every sixmonths on1January and1Julyofeach year, with theresult thatformost reciprocal trade
tariff barriers were totally eliminated on31December 1994.
With regard tonon-tariff barriers orrestrictions (Article 10ofAnnex I),twocriteria have
been taken intoaccount forthepurpose ofeliminating theeffects ofsuch measures ontrade: onthe
onehand, elimination oftherestrictions mentioned bytheStates Parties intheComplementary Notes
toLAIA Economic Complementarity Agreement No.18which implements theTreaty ofAsuncíon
(November 1991) within theframework oftheLatin American Integration Association; andonthe
other hand, harmonization ofthose measures which cannot beeliminated, asinthecase oftechnical
standards, animal andplant health provisions, etc.
Thestructuralmodificationsresultingfromimplementationoftheprogrammeofgradualreduction
ofcustoms tariffs among thefourStates Parties toMERCOSUR were taken intoaccount intheTreaty
ofAsuncíon, which provides forthepossibility ofusing asafeguard clause during thetransition period
which ended on31December 1994. This clause could beused inrespect ofaspecific product once
only with effect foroneyear, which could beextended byafurther year.
Theprocedure laiddown inAnnex IVtotheTreaty ofAsuncíon forapplying safeguard clauses
follows theguidelines laiddown inArticle XIXoftheGeneral Agreement onTariffs andTrade, adapting
them totheinstitutional functioning ofMERCOSUR andtheneed toprotect thesituation ofcertain
sectors ofdomestic industry insome oftheStates Parties toMERCOSUR.
2Theprevious version of"Questions andReplies" wasdistributed asdocument L/7540 tothecontracting
parties ofGATT 1947.WT/COMTD/1
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Thesafeguard clause provides thatincases ofemergency thecountry concerned may adopt
measures tolimit imports from oneormore oftheStates Parties provided thatitimmediately notifies
andconsults theexecutive body ofMERCOSUR, theCommon Market Group.
TheState Party concerned must inform theCommon Market Group ofincreases inimports
ofcertain products andthedamage orthreat ofdamage which itconsiders such anincrease might cause
fordomestic production ordirectly competitive products. TheCommon Market Group hastotake
adecision within aperiod notexceeding 20days from thestartofconsultations among theStates Parties
involved, after theState which considers thatithassuffered prejudice haspresented itscase.
Annex IVstates thatinnoevent may thequantitative restrictions decided upon belessthan
theaverage volume imported inthepreceding three calendar years.
Alimited number ofproducts considered sensitive byStates Parties, including those which
were thesubject ofaction under thesafeguard clause during thetransition period, have been included
intheprocedure foradaptation totheliberalization programme starting from 1January 1995. This
calls foralinear tariff reduction inseveral annual tranches, four forArgentina andBrazil andfive
forParaguay andUruguay.
Their inclusion intheadaptation process isintended topromote thecontinuity ofstructural
adjustment andhelp place thesectors involved inacompetitive position within theregion bytheend
oftheperiod inquestion.
Withregardtostructuraladjustment,itisalsoworthmentioningthenegotiationsbeingconducted
bytheStates Parties with aview toharmonizing public policy invarious areas andestablishing atrade
regime thatwillensure faircompetition.
1.3 Article 5oftheAgreement specifies themain economic andtrade policy instruments to
beused inestablishing MERCOSUR. Inrelation tothetrade liberalization programme, could
theparties please advise:
(a) Whether there have been exceptions totheautomatic andlinear tariff cuts being
implemented according tothetimetable inAnnex ItotheAgreement?;
(b) What stage theremoval ofnon-tariff barriers isat?and
(c) Whether theannual 20percentreduction intheexemptions listfortariff reductions
assubmitted byeach Party isoccurring attherate specified intheAgreement?
Inconnection with thetrade liberalization programme mentioned inArticle 5ofthe
Treaty ofAsuncíon andinAnnex I,thefollowing should benoted:
a. InDecisions Nos. 5/94 and23/94, theCouncil oftheCommon Market decided to
establish theFinal MERCOSUR Adaptation Regime applicable tointra-MERCOSUR
trade, extending over aperiod offour years inthecase ofArgentina andBrazil and
fiveyears inthecase ofUruguay andParaguay, with atimetable foralinear and
automatic tariff reduction tozero percentbased onthenational tariff levels inforce
on5August 1994, lessaninitial preference percentage fortheStates Parties. This
regime applies toalimited listofproducts bycountry, based onaneligibility criterion
established forthose products which were included intheSchedules ofExceptions in
Economic Complementarity Agreement No.18ortowhich safeguard clauses have
been applied, asprovided forinAnnex IIIoftheTreaty ofAsuncíon.WT/COMTD/1
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b. TheMERCOSUR countries have made adistinction between non-tariff restrictions
which willhave tobeeliminated andmeasures ofanon-tariff nature which willbe
subjected toaharmonization process. Thelatter mainly comprise measures relating
toplant andanimal health, technical standards, environmental protection, andsafety.
Thenon-tariff restrictions inquestion have already been eliminated within theMERCOSUR
context (orareinprocess ofbeing eliminated where such elimination requires parliamentary approval).
The process ofharmonization ofmeasures ofanon-tariff nature isinvarious stages of
implementation,dependingonthemeasuresconcerned,andisbeingmonitoredbytheTradeCommission.
Annex IIreproduces theResolution oftheCommon Market Group establishing theregulatory
framework fortheelimination ofnon-tariff restrictions andharmonization ofmeasures ofanon-tariff
nature (Resolution 123/94)3which liststhenon-tariff restrictions already eliminated orinprocess of
elimination.
c. Theannual 20percentreduction initems included intheSchedules ofExceptions to
tariff reduction hasinfactbeen made precisely on31December ineach ofthelast
three years, except asregards thefinal group ofproducts consisting ofallthose eligible
forinclusion intheAdaptation Regime.
1.4 Has thetariff reduction timetable inAnnex I,Article 3,been respected sofarbyallthe
States Parties toMERCOSUR?
Thetariff reduction timetable hasbeen respected byalltheStates Parties toMERCOSUR.
Seethereply toQuestion 1.3.
1.5 On31December1994,willallcustomsdutiesbetweenMERCOSURcountriesbeeliminated
forallreciprocal trade?
Seethereply toquestion 1.3.
1.6 Has thetimetable forthereduction ofSchedules ofExceptions described inAnnex I,
Articles 6and7,been respected sofarbyallStates Parties toMERCOSUR?
Thetimetable forthereduction ofSchedules ofExceptions described inArticles 6and7of
AnnexItotheTreatyofAsuncíonhasbeenrespectedbyallStatesPartiestoMERC OSURandcompleted
according toplan.
1.7 Article 10ofAnnex Iprovides thatallnon-tariff restrictions shall beeliminated from the
Common Market Area asof31December 1994. Isthere anagreed plan andschedule forthe
abolition ofsuch non-tariff restrictions? Ifso,could asummary beprovided?
Seethereplies toquestions 1.2and1.3(b).
1.8 Could theStates Parties toMERCOSUR indicate what arethemeasures taken inthe
situations envisaged inArticle 50ofthe1980 Treaty ofMontevideo? (Annex I,Article 2(b)).
3Annex IIisavailable forconsultation inoffice No.3006.WT/COMTD/1
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Themeasures inforce ineach country adopted inaccordance with Article 50ofthe1980 Treaty
ofMontevideo, andinaccordance with Articles XXandXXI oftheGeneral Agreement, have sofar
been maintained. Forfurther clarification, Article 50oftheTreaty ofMontevideo reads asfollows:
"No provision under thepresent Treaty shall beinterpreted asprecluding theadoption and
observance ofmeasures regarding:
(a) Protection ofpublic morality;
(b) Implementation ofsecurity laws andregulations;
(c) Regulation ofimports andexports ofarms, munitions, andother warmaterials and,
under exceptional circumstances, allother military equipments;
(d) Protection ofhuman, animal andplant lifeandhealth;
(e) Imports andexports ofgold andsilver inbullion form;
(f) Protection ofnational treasures ofartistic, historical orarchaeological value; and
(g) Exportation, useandconsumption ofnuclear materials, radioactive products orany
other material used forthedevelopment andexploitation ofnuclear energy."
1.9 Does Argentina currently apply astatistical taxonimports? Ifsowhat isthelevel of
thetax?
Initsnational listattheWTO Argentina hasbound atariff of35percentandastatistical tax
of3percent.
1.10 Will trade between theparties beexempt from anyfeesconnected with importation and
exportation which arecovered byArticle VIII oftheGATT? Ifso,how willthecostburden be
assessed forthird country trading partners?
Theduties covered byArticle VIIIoftheGeneral Agreement arefixed asawhole inaccordance
with theprovisions ofthatArticle andtheobligations assumed bytheStates Parties toMERCOSUR
intheUruguay Round.
2. THE COORDINATION OF MACROECONOMIC POLICIES (ARTICLE 1,
PARAGRAPH 2,AND ARTICLE 5(B))
2.1 Have theparties come toanyagreement oncoordination ofmacroeconomic andsectoral
policies asdecided intheTreaty?
Thecoordination ofmacroeconomic polices within MERCOSUR isseen asaprocess tobe
completed gradually andnotasanobjective tobereached byaparticular date. Until now, theprocess
hasnottaken theform ofspecific agreements, although frequent contacts atdifferent levels among
theeconomic authorities oftheStates Parties have allowed theinitial outline ofmacroeconomic
coordination tobedefined. Theunderlying idea istogive priority incoordination efforts tothose
macroeconomic policy mechanisms most directly related totrade.
Thecoordination ofsectoral policies hasalsobeen thesubject ofintensive efforts atthetechnical
level andcovers several areas: industry, agriculture, energy, transport andlabour. Theresults of
these activities arebeing incorporated inDecisions orResolutions adopted bythehigh-level bodiesWT/COMTD/1
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ofMERCOSUR, leading togreater harmonization ofdomestic sectoral policies aspartofthemomentum
oftheintegration process.
Theweekly meetings oftheCouncil oftheCommon Market andthemeetings oftheMinisters
oftheEconomy andCentral Bank Governors ofthefourStates Parties toMERCOSUR constitute the
institutional framework within which information concerning thesituation with regard tothe
macroeconomic policies ofeach oftheStates Parties isexchanged andanalysed.
2.2 What istheprogress inrelation tothecoordination andharmonization ofmacroeconomic
policies being implemented? Can MERCOSUR members provide abrief outline ofeconomic
integration achievements todate, together with anoutline ofwhat plans have been made forfurther
progress? Can atimetable forfuture integration plans beprovided?
One objective oftheeconomic policy oftheMERCOSUR countries istomaintain thekey
macroeconomic balances -fiscal, monetary andexchange-rate. These notonly form thebasis ofthe
reforms implemented byeachcountry independently butarealsoperceived assignificant fortheregional
integration process.
InJune 1992, theCouncil oftheCommon Market established thetimetable ofmeasures for
thecoordination ofmacroeconomic, sectoral andinstitutional policies. Theimproved coordination
andharmonization ofmacroeconomic policies isreflected intheprogress made, which enabled the
transitional phase ofMERCOSUR tobebrought toasatisfactory conclusion on31December 1994
asplanned (Article 3oftheTreaty ofAsunción) andtheMERCOSUR Customs Union tobeestablished,
asenvisaged intheTreaty.
Atthelastmeeting oftheCouncil oftheCommon Market andtheCommon Market Group,
held atOuro Preto, Brazil, on16and17December 1994, theStates Parties toMERCOSUR adopted
aseries ofdecisions andresolutions which brought theMERCOSUR customs union intooperation
onthebasis oftheCommon External Tariff (CET), introduced on1January 1995, andthecommon
trade policy measures necessary foritsimplementation. Thelatter include acommon system ofrules
oforigin, regulations concerning unfair practices directed against third countries (inprocess ofbeing
updated onthebasis oftheresults oftheUruguay Round), acommon MERCOSUR regime forfree
zones, export processing zones andspecial customs areas, aMERCOSUR customs code andaseries
ofoperational customs regulations which have been harmonized andapplied jointly bytheStates Parties.
With regard totaxation, comparative studies ofthesystems operated bytheStates Parties have
been made with aview todetermining anydifferences andthus identifying theareas inwhich
convergence willhave tobepursued. Inconnection with thecoordination ofmacroeconomic policies,
studies have been made toidentify thekeymacroeconomic indicators forevaluating theperformance
oftheeconomies oftheStates Parties.
Thefollowing listoftheprincipal decisions concerning theharmonization oftrade andsectoral
policies adopted atthemeeting inOuro Preto gives some idea oftheprogress made todate inthis
field (thecorresponding texts arereproduced inAnnex III):
(a) Decision No. 12/94. Adoption oftheprinciples ofconsolidated global banking
supervision.
(b) Decision No.15/94. Agreement onmultimodal transport inMERCOSUR.
(c) Decision No.16/94. Implementing regulations concerning thecustoms clearance of
goods.WT/COMTD/1
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(d) Decision No.17/94. Implementing regulations concerning thecustoms valuation of
goods.
(e) Decision No.19/94. Regime forthesugar sector.
(f) Decision No.22/94. Adoption oftheMERCOSUR Common Nomenclature (MCN)
andtheCommon External Tariff (CET).
(g) Decision No.23/94. Rules ofOrigin.
(h) Decision No.24/94. Final adaptation regime ofthecustoms union.
(i) Decision No.25/94. Adoption oftheMERCOSUR customs code.
(j) Decision No.29/94. Regime fortheautomotive sector.
Foritspart, atitsXVIth meeting on14and15December 1994, theCommon Market Group
adopted aseries ofresolutions, most ofwhich related totheharmonization andapproval oftechnical
standards fortheautomotive, food andpharmaceutical industries, including public health matters.
Thenext steps intheMERCOSUR integration process willinvolve improving theoperation
ofthecustoms union both with respect totheconsideration andadoption oftrade policy instruments
andinrelation tosuch aspects asoperational harmonization, technical standards, taxation andpublic
sector policies.
2.3 Could differences inmacroeconomic policies leadtodelays intheliberalization programme
ortheintroduction ofacustoms union?
Anydifferences inthemacroeconomic policies oftheStates Parties toMERCOSUR have not
ledtodelays inthetrade liberalization programme orintheimplementation ofthecustoms union.
The trade liberalization programme assuch was finally completed bythefour States Parties on
31December 1994.
3. THEESTABLISHMENTOFACOMMONEXTER NALTARIFFANDTHEADOPTION
OFACOMMON TRADE POLICY INRELATION TOTHIRD STATES ORGROUPS
OFSTATES (ARTICLE 1,PARAGRAPH 2AND ARTICLE 5(C)
3.1 Could theparties advise oftheprogress thathasbeen made onthetariff levels tobeapplied
under thecommon external tariff (CET) inaccordance with Article 5?What isthelikelihood
thattheCET willbeinplace asscheduled attheendofthetransition period inDecember 1994?
Inaccordance with thedecisions adopted bytheStates Parties toMERCOSUR (Buenos Aires,
August 1994, andOuro Preto, December 1994), theCommon External Tariff (CET) andthe
MERCOSUR Common Nomenclature (MCN) entered intoforce on1January 1995, when each of
theStates Parties approved thenational decrees andregulations necessary toputtheOuro Preto
agreements intopractice.
3.2 Paragraph 2ofArticle 1andArticle 5(c)relate totheestablishment ofacommon external
tariff. Wewould liketoknow indetail thecoverage ofitems, theitems excluded, theschedule
forestablishing acommon external tariff, thecommon external tariff rateofeach item, andfinally,
thecomparison oftheoverall level oftariff rates between thecommon external tariff rates and
each State Party 'sapplied tariff rates (onthebasis ofthetrade-weighted average ortheapplied
rates).WT/COMTD/1
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TheCET tariff levels extend from zeropercentto20percentinsteps oftwopercentage points.
Argentina, Brazil andUruguay may identify upto300national exceptions totheCET andParaguay
upto399national exceptions, with amaximum initial tariff level of35percent, toconverge linearly
andautomatically ontheCET within amaximum ofsixyears (by1January 2001). Ascending
exceptions, i.e.converging ontheCET from alower national tariff level, arealsopossible.
Inaddition tothese general exceptions totheCET, thefour States Parties have decided that
exceptions totheagreed CET intheareas ofcapital goods, telecommunications andinformation
technology, calculated independently oftheother type ofexceptions, may bemaintained.
Inthecase ofcapital goods, theCET isfixed at14percent, andArgentina andBrazil may
converge linearly andautomatically onthatlevel by1January 2001, while Uruguay andParaguay
may converge onitlinearly andautomatically by1January 2006.
Asregards information technology andtelecommunications equipment, theCET isfixed at
16percent, andthefour States Parties may converge onthatlevel linearly andautomatically by
1January 2006.
Theavailable information concerning thetariff headings covered bytheCET, thelevels agreed
ineach case andtheheadings which aretobeprovisionally excluded issetoutinAnnex I.4
3.3 How farhaswork progressed onacommon external tariff andonacoordinated foreign
trade policy towards third countries? Dothere exist anyfurther agreements onthese issues?
Seethereplies toquestions 2.2and3.2.
Theadoption ofacommon trade policy isaninseparable complement totheimplementation
oftheCET. Inthisrespect, MERCOSUR hasalready defined themain instruments ofsuch acommon
trade policy. Moreover, MERCOSUR assuch isintheprocess ofre-negotiating theEconomic
Complementarity Agreements which each oftheStates Parties hassigned with theother LAIA member
countries.
3.4 The States Parties tothe"Southern Common Market" have setthemselves thegoal of
establishing acommon external tariff andadopting acommon trade policy inrelation tothird
States orgroups ofStates. However, document L/7370/Add.1 gives noinformation about this
common external tariff noraschedule forestablishing it.Inthiscase:
- Will theSouthern Common Market beacustoms union orafree-trade agreement
between theStates concerned?
- Inthefirstcasecould theStates Parties toMERCOSUR provide information about
theestablishment ofacommon external tariff (level ofcustoms duties, programmed
forestablishing thetariff, etc.) andtheadoption ofacommon trade policy?
TheSouthern Common Market, MERCOSUR, hasbeen acustoms union since 1January 1995,
bysovereign decision ofitsfourStates Parties embodied inthedecisions adopted atOuro Preto, Brazil,
inDecember 1994.
4Annex Iisavailable ondiskettes inoffice No.3006.WT/COMTD/1
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TheStates Parties toMERCOSUR have reached technical andpolitical agreements onthe
structure andshape ofthecommon external tariff, allcompleted inaccordance with thetimetable set
outintheTreaty ofAsuncíon andthetimetable ofmeasures adopted atLasLeñas inJune 1992.
Asalready noted inthereply toquestion 3.2,theavailable information concerning thetariff
headings covered bytheCET, thelevels agreed ineach case andtheheadings which aretobe
provisionally excluded issetoutinAnnex I.5
3.5 Recent reporting hassuggested thattheMERCOSUR countries arehaving some trouble
agreeing acommon external tariff. Iscustoms union (asopposed toafree-trade area) arealistic
prospect?
Seethereply toquestion 3.4.
3.6 How isitenvisaged that theCET beimplemented? Although thisdoes notseem tobe
covered inanydetail (Article 5(c) only), ourunderstanding isthat theintention istoapply a
maximum external tariff of20percent, with 11applicable tariff points between zero and
20percent. Presumably theMERCOSUR countries willseek toharmonize onthelowest existing
tariff oftheMERCOSUR Members with theminimum ofrounding upandwillbealert tothe
dangers ofanti-competitive trade diversion iftheexternal tariff isconcentrated atthehigh end
ofthezero-20 percent range?
Seethereply toquestion 3.2.
Thecommon external tariff meets theobjective ofopening uptheeconomies ofMERCOSUR.
Itisaweighted average whose level willbelower than thetariffs applied bytheStates Parties prior
tosignature oftheTreaty ofAsuncíon.
Thestructure oftheCET isbased ontheprinciple ofreserving thelower levels ofprotection
forrawmaterials andproducts with relatively little processing, theintermediate tariff levels for
semi-manufactures andgoods used asinputs forother production chains, andthehigher levels of
protection forconsumer goods.
3.7 Ithasbeen reported that oneoftheParties wishes topursue acommon tariff incertain
sectors which may result inanincrease intheaverage incidence oftariffs onthird parties. Would
theParties provide anundertaking thatimplementation oftheCET willnotadversely affect the
trade ofthird parties byensuring that theCET isestablished according totheprovisions of
Article XXIV:5(a)?
TheMERCOSUR Common External Tariff hasbeen fixed entirely inconformity with the
provisions ofArticle XXIV, paragraph 5,oftheGeneral Agreement. Asmentioned inthereply to
theprevious question, therated average does notexceed thatapplied individually byMember States
prior tosignature oftheTreaty ofAsunción. Itmaybeconcluded thattheentry intoforce oftheCET
willnotadversely affect trade with third countries but,onthecontrary, willpromote thegrowth of
such trade.
5SeeFootnote 4.WT/COMTD/1
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3.8 Will there beanyexceptions totheCET? Ifyes,would alistbeprovided indicating the
duty thatwould becharged byeach Party? What time-table willbeemployed inintegrating any
exceptions into theCET?
Seethereply toquestion 3.2.
Itmay beadded thatthefour States Parties have defined fewer exceptions totheCET than
the300or399authorized ineach particular case. Under Resolution CMG No.47/94, theStates Parties
toMERCOSUR have until 30April 1995 tocomplete their national schedules ofexceptions tothe
CET.
Theexceptions totheCET andthetimetables forconvergence communicated byeach country
aregiven inAnnex I.6
Induecourse, through itsPro-Tempore Chairman, MERCOSUR willinform theWTO 's
Committee onTrade andDevelopment ofthefinal contents ofthenational schedules ofexceptions
totheCET.
3.9 Ifthere areexceptions, willtheCET cover substantially allthetrade between theParties?
Theexceptions totheCET arerestricted toasmall number oftariff headings oftheMCN,
andtheCETwhichhasbeenputintoeffectcovers100percentofthetariffheadingsoftheMERC OSUR
Common Nomenclature.
3.10 Exactly which aretheproducts forwhich notimetable hasbeen established fortheadoption
ofcommon external customs tariffs? (Provide more detail ondata processing, telecommunications
andothers).
Every product hasafixed CET.
Thetariff headings included intheschedule ofexceptions, with convergence ontheCET, have
been defined byeach oftheStates Parties.
Argentina: 231headings (84upwards and147downwards).
Brazil: 175headings (123 upwards and52downwards).
Paraguay: 214headings (allupwards).
Uruguay: 212headings (206 upwards and6downwards).
Thefour States Parties reserve theright tospeed upirreversibly theprocess ofconvergence
ontheCET. Inwhich case they may communicate their intentions totheother Parties onthefirst
dayofthemonths ofJanuary, May andSeptember ineach year.
Theproducts included intheadaptation regime arealsoexceptions tothecommon external
tariff (distinct from the300or399general exceptions totheCET).
With regard totelecommunications andother sectors, seethereply toquestion 3.2.
3.11 Inthetrade liberalization programme outlined inAnnex I,there isreference toadifferent
time-frame forproducts inschedules ofexceptions. What arethese products? Arethese exceptions
6SeeFootnote 4.WT/COMTD/1
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partofthereason thatacommon tariff across theboard cannot beimplemented by1January 1995.
Weunderstand that anagreement on85percent oftheproducts tobeincluded inacommon
tariff from thisdate should beready byJune 1994, while adeadline oftheyear 2006 hasbeen
setfortherest.
This question confuses theschedules ofexceptions tothetrade liberalization programme in
Annex ItotheTreaty ofAsunción with theexceptions totheCET.
Theagreement ontheCET covers 100percent ofthetariff headings oftheMCN, leaving
nocommon external tariff level tobedefined bytheStates Parties.
3.12 When willtheCET beavailable forexamination bythecontracting parties?
TheMERCOSUR Common External Tariff isnowinfulleffect, sothatmembers oftheWTO
may examine itwhenever they wish. TheCET, theexceptions totheCET andthetariff headings
included intheAdaptation Regime arereproduced atAnnex I.7.7
3.13 According toArticle XXIV:5(c) oftheGATT, any interim agreement leading tothe
formation ofacustoms union shall include aplan andschedule fortheformation ofsuch acustoms
union within areasonable length oftime. Theschedules mentioned in3.2and3.3above should
beincluded intheMERCOSUR Agreement since weunderstand thatthisAgreement isacustoms
union,inaccordancewithArticleXIV:8(a)(ii)andwithparagraph2ofArticle1oftheMERCOSUR
Agreement. However, thesaidAgreement hasonly provided theschedule foreliminating duties,
charges andother restrictions applied intheStates Parties 'reciprocal trade, andsetnoschedule
fortheintroduction ofacommon external tariff andacommon trade policy. Wewould liketo
have more information about the consistency ofthe MERCOSUR Agreement with
GATT Article XXIV:5(c).
Seethereplies toquestions 3.12 and11.
RegardingtheconsistencyoftheMERC OSURAgreementwithArticleXXIV:5(c)oftheGeneral
Agreement,itshouldbenotedthatMERC OSURisnotaninterimagreementbutaTreatywithobligations
andprogrammes which theStates Parties areimplementing.
3.14 Can Parties confirm that therequirements ofArticle XXIV:6 oftheGeneral Agreement
willbemet?
AsstatedintheCouncilandtheCommitteeonTradeandDevelopment,theStatesPartiesconfirm
thatthey will respect allobligations under theGeneral Agreement, naturally including those of
Article XXIV:6.
3.15 Could theParties totheAgreement explain themanner inwhich they intend todetermine
principal supplier rights under Article XXVIII oftheGATT?
Depending onimplementation ofthecustoms union, theStates Parties willdetermine principal
supplier rights when itbecomes necessary tore-negotiate theconcessions under Article XXVIII of
theGeneral Agreement.
7SeeFootnote 4.WT/COMTD/1
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3.16 InOctober 1991, Argentina raised itsgeneral tariff onalumina from zero to5percent.
Have tariffs onother items been increased byArgentina oranyother Party totheAgreement
and, ifso,dotheParties consider that such increases conform with therequirements of
Article XXIV:5(a) oftheGeneral Agreement?
Argentina hasmade minor modifications toimport duties inrecent years, infullconformity
with itsobligations under theGeneral Agreement, including paragraph 5(a)ofArticle XXIV.
3.17 IntheMERCOSUR Agreement there isnospecific confirmation that acommon trade
policy shall beadopted. Isacommon trade policy stillplanned tobeintroduced? Ifthat isthe
case, what istheschedule fortheintroduction ofacommon trade policy andwhat isthedetail
ofthiscommon trade policy?
Theadoption ofanexternal trade policy isprovided forinArticle 1oftheTreaty ofAsuncíon.
Thecommon trade policy isaseries ofmeasures andregulations, some ofwhich have already
been adopted andareinoperation. Others, which mainly relate totheupdating oftheregulations on
third-country unfair trading practices andthesafeguard regulations toconform with theFinal Actof
theUruguay Round, arestillpending (seethereply toquestions 2.2and14).
4. RULES OFORIGIN (ANNEX II,ARTICLE 3)
4.1 Rules oforigin areincluded intheInternational Convention ontheSimplification and
Harmonization ofCustoms Procedures aswell asintheFinal ActoftheUruguay Round. To
what extent didthese rules serve asguidance when thepresent General Rules forClassification
ofOrigin were established andarethere anydivergences?
Thedefinition ofalltrade policy instruments inMERCOSUR, including rules oforigin, is
based ontherelevant provisions ofGATT andtheWorld Customs Organization.
Itshould alsobepointed outthattherules currently ineffect inMERCOSUR were formulated
intheTreaty ofAsuncíon onthebasis ofthose applicable intheLatin American Integration Association
(LAIA).
TheMERCOSUR Rules ofOrigin arethesubject ofDecisions 6/94 and23/94 which are
reproduced inAnnex III.8
4.2 What treatment willbegiven togoods manufactured orprocessed inthefree zones and
what percentage ofvalue added willgive them MERCOSUR origin?
Goods from freezones areconsidered extra-zonal andaretherefore subject tothetariff treatment
applicable tosuch goods.
5. MEASURES AFFECTING IMPORTS FROM THIRD COUNTRIES (ARTICLE 4)
5.1 According toArticle 4oftheMERCOSUR Agreement, theStates Parties shall apply the
domestic legislation torestrict imports whose prices areinfluenced bysubsidies, dumping orany
other unfair practice. Inthisrespect, what kind ofmeasures areintended tobetaken assuch
import restrictions?
8Annex IIIisavailable forconsultation inoffice No.3006.WT/COMTD/1
Page 13
TheStates Parties toMERCOSUR have incorporated theUruguay Round Agreements intheir
domestic legislation. Accordingly, they will apply themeasures provided forintheagreements
concerning unfair practices (subsidies andcountervailing measures andanti-dumping) adopted inthe
Uruguay Round.
Measures toprevent unfair practices will beinconformity with theprovisions ofthe
WTO agreements.
5.2 How dotheStates Parties toMERCOSUR intend torestrict imports whose prices are
influenced bysubsidies, dumping oranyother unfair practice? How istheterm "unfair practice"
tobedefined?
TheStates Parties toMERCOSUR willonly apply domestic legislation torestrict imports
resulting from unfair practices within theframework oftheprovisions oftheWTO.
Unfair practices willbedefined asthose identified assuch inthose provisions.
Itshould benoted thattheStates Parties toMERCOSUR areworking onacommon setof
rules governing unfair practices consistent with theprovisions oftheWTO.
5.3 Could theParties advise whether there hasbeen anyprogress inthedrafting ofthecommon
rules oftrade competition referred toinArticle 4oftheAgreement?
Inthisconnection, MERCOSUR hasapproved three documents:
(a) Regulations onpreventing imports which arethesubject ofdumping orsubsidies by
countries notmembers ofMERCOSUR;
(b) Procedure forcomplaints andconsultation onunfair trade practices;
(c) Procedurefortheexchangeofinformationinconnectionwithinvestigationsondumping
caused byimports from oneoftheStates Parties toMERCOSUR.
Theproceduresmentionedinsubparagraphs(b)and(c)wereappliedduringthetransitionperiod,
while theregulations mentioned insubparagraph (a)arebeing revised toadapt them toWTO rules.
Theprocedure forprotection against third-country unfair trading practices andthecommon
safeguards policy (Resolution 108/94) laydown, asgeneral guidelines, thattheStates Parties shall
apply their domestic legislation until thecommon regulations areadopted, keeping theMercosur Trade
Commission (MTC) informed (seethereply toquestion 14). TheTrade Commission willsubmit to
theCommon Market Group thecommon regulations onunfair practices, adapted totheGATT, together
with thesafeguards procedure, onthebasis ofthepreliminary work done bySub-Group 1.
6. NATIONAL TREATMENT (ARTICLE 7)
6.1 According toArticle 7oftheMERCOSUR Agreement, inthearea oftaxes, charges and
other internal duties, products originating intheterritory ofoneState Party shall enjoy, inthe
other States Parties, thesame treatment asdomestically produced products. What istheexact
definition ofthesaid taxes, charges andother internal duties? Wewould also liketoconfirm
whether imported products from anon-State Party aregiven thesame treatment asproducts
originating intheterritory ofanyState Party.WT/COMTD/1
Page 14
Thedistinction between taxes andcharges ismade because oneofthem concerns imposition
ofanexclusively fiscal nature (taxes), while charges represent reimbursement oftheapproximate cost
ofaservice effectively rendered. Duties include customs duties andother similar costs whether they
befiscal, monetary orexchange costs orcosts ofanyother type which affect foreign trade.
Guidelines andcriteria concerning taxation principles arebeing developed with theaimof
facilitating harmonization inthisarea within MERCOSUR.
Thebasis oftaxation policy istoensure thatthere isnodiscriminatory treatment against imports,
whether from States Parties orthird countries, inaccordance with Article IIIofGATT.
7. COMMITMENTS UNDER LAIA (ARTICLE 8)
7.1 Could thelinkages between MERCOSUR andLAIA beexplained?
MERCOSUR isasubregional integration agreement established bytheTreaty ofAsuncíon.
This Treaty wasincorporated intheLatin American Integration Association asaresult ofthesigning
oftheEconomic Complementarity Partial Scope Agreement No.18(ECA 18),within theframework
oftheThird Section ofChapter II-Partial Scope Agreements, Articles 7to14ofthe1980 Treaty
ofMontevideo (establishing LAIA) andResolution 2oftheLAIA Council ofMinisters.
TheStates Parties toMERCOSUR aremember countries ofLAIA. TheTreaty ofMontevideo
which created theassociation allows theconclusion ofagreements between twoormore countries so
astoaccelerate theregional integration process without providing thatthepreferences granted areto
beextended totheremaining members which arenotparties tosuch agreements. Article 7provides
that"rights andobligations tobeestablished inpartial scope agreements shall exclusively bind the
signatory member countries orthose adhered thereto".
Within this legal framework, theStates Parties toMERCOSUR concluded Economic
Complementarity Agreement No.18within theframework ofLAIA under theterms agreed inAnnex I
totheTreaty ofAsuncíon.
Economic Complementarity Agreement No.18meets therequirements oftheThird Section
oftheTreaty ofMontevideo andResolution 2oftheCouncil ofMinisters, assetoutinitspreamble.
These encompass thefollowing:
- Theprinciples ofArticle 3oftheTreaty ofMontevideo;
- theobjective oftheTreaty, inaccordance with Article 8;
- thegeneral provisions ofArticle 9,incorporated inArticle 14ofEconomic
Complementarity Agreement No.18onconvergence andinArticle 15which laysdown
theterms forratifying "adhesion".
MERCOSUR therefore complies strictly with theterms ofagreements provided forinthe
1980 Treaty ofMontevideo forcountries members ofLAIA andisfully consistent with itsprinciples,
objectives andinstruments.
7.2 What arethedifferences from thestandpoint oftrade arrangements between theLatin
American Integration Association (LAIA) andtheTreaty ofAsuncíon?WT/COMTD/1
Page 15
Inthisconnection, thefollowing aspects should betaken intoaccount, bearing inmind that
theobjective ofboth treaties istoestablish acommon market:
(1) LAIA (the1980 Treaty ofMontevideo) isasystem forregional integration composed
of11Latin American countries. TheTreaty ofAsuncíon iscovered byitsarticles
andiscomposed offour LAIA Member Countries.
(2) The Treaty ofMontevideo establishes themechanisms forconvergence among
subregional agreements. TheTreaty ofAsuncíon constitutes oneofthese subregional
agreements andiswithin theframework ofLAIA soastomove towards convergence.
(3) LAIA gives itsmembers thepossibility ofconcluding different types ofinstruments:
partial scope agreements, whether bilateral ormultilateral, and regional scope
agreements. These maytaketheform oftrade agreements, economic complementarity
agreements, trade promotion agreements andother forms which themember countries
wish toadopt. Theinstrument concluded bytheStates Parties toMERCOSUR isan
economic complementarity agreement ofpartial scope andismultilateral because it
involves four countries.
(4) The common market envisaged intheLAIA does nothave anytime-limit forits
establishment, unlike MERCOSUR, which became acustoms union on1January 1995
andwhich isadhering todefinite timetables. Inthisconnection, MERCOSUR
constitutes anintegration agreement aimed atrevitalizing anddeveloping thesystem
ofpreferences among States Parties inaccordance with theprovisions andmechanisms
provided intheTreaty ofMontevideo.
7.3 Reference ismade tothe1980 Treaty ofMontevideo andpartial scope agreements and
economic complementarity agreements under itsauspices. Could youplease explain thelegal
implications oftheTreaty ofMontevideo ontheMERCOSUR Agreement? More specifically we
would appreciate aclarification onAnnex I,Articles 2(b) and12,andAnnex II,Articles 1(b)
and1(c), aswell asArticle 19(identical toArticle 12,Annex I)oftheTreaty ofAsuncíon.
TheTreaty ofMontevideo laysdown theoverall legal framework andthegeneral guidelines
towhich MERCOSUR conforms.
Articles 2(b) and12ofAnnex ItotheTreaty ofAsuncíon refer toregulations (exceptions)
specific totheTreaty ofMontevideo orresulting from commitments undertaken within itsframework.
Articles 1(b), 1(c)and19ofAnnex IItotheTreaty ofAsuncíon adopt thesame criterion for
rules oforigin, i.e., linkage oftheTreaty with theTreaty ofMontevideo.
7.4 InCOM.TD/W/497 (pp. 1-2)itisstated thatadditional protocols anddecisions approved
under MERCOSUR arealsoregistered inLAIA, taking direct legal effect inconstituent countries.
How dothedecisions taken inMERCOSUR affect LAIA member countries which arenotparties
inMERCOSUR? Which agreement setstheoverall framework/guidelines?
Some ofthedecisions adopted within theframework ofMERCOSUR have been formalized
inLAIA inthelegal form ofAdditional Protocols toEconomic Complementarity Agreement No.18.
These concern theintegration process andaresubstantive rather than ofform. However, decisions
concerning thenegotiating process assuch, forexample, theholding ofspecial meetings, changes to
thetimetables ofthetechnical sub-groups, etc., have notbeen formalized.WT/COMTD/1
Page 16
Decisions intheform ofAdditional Protocols toEconomic Complementarity Agreement No.18
form partoftheAgreement. They only have effect incountries which areparties totheAgreement.
Examples aretheSystem ofSanctions forFalsification ofCertificates ofOrigin andtheSystem for
theSettlement ofDisputes related totheapplication, interpretation ornon-fulfilment oftheAgreement.
Ifacountry which isnotamember ofMERCOSUR wishes toaccede toanAdditional Protocol,
itmust dosobyacceding toEconomic Complementarity Agreement No.18,following theprocedure
forallAdditional Protocols topartial scope agreements inLAIA.
Decisions canalso beformalized intheform ofpartial scope agreements. These would
automatically beopen toaccession bytheother LAIA countries.
Assoon asdecisions areincorporated inLAIA, they become subject toitsrules.
8. ACCESSION (ARTICLE 20)
8.1 Bolivia isanobserver inMERCOSUR. What aretheperspectives foraBolivian accession
totheAgreement? Doyouforesee anextension ofthisTreaty toadditional new members?
TheStatesPartiestoMERC OSURarerenegotiatingtheiragreementswithotherLAIAcountries
under thevarious forms ofintegration provided forintheTreaty ofMontevideo anditisexpected
thatthisprocess willbeconcluded inthecourse ofthisyear.
Asregards Bolivia, itshould bepointed outthatthatcountry isnotanobserver inMERCOSUR,
atleast according tothemeaning given toobserver inGATT, because there isnoprovision forobserver
status intheTreaty ofAsunción.
Itshould beemphasized that Bolivia hasreceived invitations toparticipate insome of
MERCOSUR 'stechnical meetings.
Finally,itshouldbepointedoutthatArticle20oftheTreatyofAsunciónallowsfortheaccession
ofother LAIA member countries following negotiations. This possibility issubject totime limitations
(five years after theentry intoforce oftheTreaty ofAsunción). Therequirements fortheaccession
ofother LAIA countries comply with theprovisions ofthe1980 Treaty ofMontevideo.
8.2 Will third countries other than those belonging totheLatin American Integration
Association (LAIA) beable tobecome parties totheTreaty ofAsunción?
TheTreaty ofAsunción does notprovide foraccession bycountries which donotbelong to
LAIA.
9. DISPUTE SETTLEMENT
9.1 How willthedisputes settlement provisions (Annex III)oftheAgreement operate? Will
these beGATT-consistent?
The dispute settlement procedure adopted within theframework ofMERCOSUR isfully
compatible withtherules oftheWTO anditspurpose istoresolve disputes among States Parties relating
totheTreaty ofAsunción.
Byincorporatingdirectnegotiationsandareconciliationroleforthefourcountriesactingjointly,
thegeneral principles prevailing intheWTO inthisarea arerespected.WT/COMTD/1
Page 17
Likewise, thepossibility ofrecourse toarbitration forquestions related totheapplication,
interpretation ornon-fulfilment oftheAgreement iscustomary practice attheinternational level and
isconsistent with therelevant WTO provisions.
9.2 Wehave understood that there exists a"Brasilia Protocol" ondispute settlement. Does
thisdiffer from Annex III?
TheBrasilia Protocol fortheSettlement ofDisputes wasapproved bytheStates Parties on
17December 1991 inaccordance with paragraph 2ofAnnex IIItotheTreaty ofAsunción inwhich
theStates Parties undertook toadopt asystem forthesettlement ofdisputes during thetransition period.
TheStates Parties decided tomaintain thisProtocol inforce from 1January 1995, inaccordance
with Article 43oftheProtocol ofOuro Preto.
Strictly speaking, Annex IIItotheTreaty ofAsunción establishes thegeneral principles and
timetable fortheelaboration ofasystem forthesettlement ofdisputes, both forthetransition period
andonapermanent basis, whereas the"Brasilia Protocol" laysdown thevarious stages andprocedures
forthesettlement ofdisputes inMERCOSUR.
10. TRADE DATA
10.1 Could theParties provide anupdate toAppendices IandIItodocument L/7044, which
show each Party 'stotal exports andimports bydestination?
These figures have been updated inAnnex IVtothisdocument.
10.2 Could some information beprovided concerning MERCOSUR trade?
Forthelastthree years:
- total trade between MERCOSUR countries andtherestoftheworld;
- trade with LAIA countries;
- trade among MERCOSUR countries.
Seethereply toquestion 10.1.
10.3 How much preferential trade isthere between theMERCOSUR countries andtheLAIA
countries?
Seethereply toquestion 10.1.
11. TRADE CREATION/TRADE DIVERSION
11.1 Have theParties totheAgreement undertaken anystudies onthetrade creating andtrade
diverting effects oftheAgreement? Towhat extent dotheparties expect trade diversion tooccur?
Sofar,noprojections have been made concerning thetrade-creating ordiverting effects of
theMERCOSUR customs union inoperation since 1January 1995.
Theresults ofstudies ofthetrade-creating anddiverting effects produced byMERCOSUR
since itwasestablished in1991 arepresented inAnnex V.
These studies arebased onaggregate trade data. MERCOSUR willhave tocarry outstudies
onadesegregated basis, which will make possible amore thorough assessment oftheWT/COMTD/1
Page 18
trade-creating/diverting effects, using datafortheperiods both before andafter theestablishment of
acustoms union on1January 1995.
Considering theobjective ofmaintaining open economies andthefactthatthecommon tariff
levels asawhole donotexceed those actually applied bytheStates Parties prior tosigning theTreaty
ofAsunción, itisobvious thatMERCOSUR fulfils thegeneral conditions laiddown inGATT 94for
customs unions.
12. MERCOSUR AND INTEGRATION EFFORTS INTHE WESTERN HEMISPHERE
12.1 What istheview oftheStates Parties toMERCOSUR ofthisAgreement inrelation to
otherregionalintegrationefforts?TheTreatyformspartofthegeographicallymorecomprehensive
LAIA. MERCOSUR alsohasanagreement with theUnited States concerning aCouncil onTrade
andInvestment under theauspices ofPresident Bush 's"Enterprise fortheAmericas Initiative".
What istheattitude towards NAFTA? Should MERCOSUR beunderstood asamove towards
even wider Latin American integration?
From theoutset, theprimary objective oftheStates Parties totheTreaty ofAsunción hasbeen
toincorporate MERCOSUR inglobal trade patterns. MERCOSUR isaflexible andopen process,
theopposite oftheideaofa"fortress" reformulating, atquadripartite level, oldisolationist concepts.
Inthisconnection, inthepreamble totheTreaty ofAsunción, thefour States Parties declare
thattheyare"aware thatthisTreaty must beviewed asafurther stepinefforts gradually tobring about
Latin American integration, inkeeping with theobjectives oftheMontevideo Treaty in1980"
(seealsothereply toquestion 12.3).
AsfarastheAmerican hemisphere isconcerned, attherecent Hemisphere Summit meeting
itwasdecided tomake animmediate start onnegotiations aimed atestablishing a"Free-Trade Area
oftheAmericas" inwhich barriers totrade andinvestment willbegradually eliminated. Itisanticipated
thatthese negotiations willbecompleted bytheyear 2005 atthelatest.
Inthiscontext, anImmediate Action Planfortheachievement oftheabove-mentioned objective,
with specific terms ofreference forthearea'sMinisters ofTrade, hasbeen adopted. Itisplanned
toarrange meetings between regional groupings, thevarious trade andinvestment councils being the
appropriate framework foridentifying areas andestablishing lines ofaction.
Accordingly,althoughtherulesandcriteriawhichwillallowMERC OSURtobecomeinterrelated
with themarkets ofNorth America arestillintheprocess ofbeing defined, theobjective ofsetting
upafree-trade area within theabove-mentioned time-limits hasalready been established.
12.2 Can other customs unions orfree-trade areas grant reciprocal preferential treatment?
(NAFTA, which wasrecently setup,hasoffered membership toArgentina, which isamember
ofMERCOSUR).
There arenolegal obstacles preventing MERCOSUR from negotiating reciprocal preferential
treaties with other countries, integration areas orcustoms unions.
12.3 How does MERCOSUR fitintothewider Latin American regional integration process -
towhat extent isthisastepping stone towards aLatin American/Caribbean free-trade area or
anAmericas free-trade area?
Through theformalization ofEconomic Complementarity Agreement No.18within LAIA,
MERCOSUR fulfils theprinciples andobjectives ofthe1980 Treaty ofMontevideo, inparticular,WT/COMTD/1
Page 19
Article 1which states that"the long-term objective ofthe[integration] process shall bethegradual
andprogressiveestablishmentofaLatinAmericancommonmarket".ThesettingupoftheMERC OSUR
customs union willpromote andimprove preferences among itsmember countries within theprovisions
andmechanisms envisaged intheTreaty ofMontevideo.
13. SERVICES
13.1 Although theWorking Party 'sterms ofreference areonly related totheGATT, and
especially Article XXIV and theEnabling Clause, itisdifficult nottogointo other areas as
MERCOSUR isstyled tobecome anagreement oneconomic integration, alsocovering services.
During thelastmonths oftheUruguay Round negotiations, aprovision inArticle VoftheGATS
wasadded, directly connected with theefforts ofestablishing theMERCOSUR, namely paragraph
3(b) which allows for"more favourable treatment tojuridical persons owned orcontrolled by
natural persons oftheparties tosuch anagreement". Itwould beinteresting tohear theviews
ofthecountries concerned astowhat kind ofmore favourable treatment they have been thinking
of,andwhat economic reasoning liesbehind thewish todiscriminate third-country-controlled
companies that engage insubstantive business operations intheMERCOSUR area. Can such
discrimination bebeneficial toacountry 'seconomy, andcanitnotbecome adisincentive for
profitable investments?
MERCOSUR countries willstrictly observe theprovisions oftheGeneral Agreement onTrade
inServices (GATS).
Regional initiatives aimed atliberalizing trade inservices areconsistent with Article 5ofthe
aforementioned agreement. TheStates Parties toMERCOSUR, inaccordance with their domestic
policy criteria, arenotconsidering theadoption ofanymeasure thatwould discourage investment from
third countries. Onthecontrary, theaimoftheir investment policies istopromote thefullparticipation
ofthird countries intheir domestic manufacturing andservice activities.
14. OTHER AREAS
14.1 What time horizon isthere fortheother areas oftheAgreement? Could theWorking
Party begiven anexposè oftheissues the11working groups areworking on? Wewould, for
example, want tobeassured thattheSub-Group onMaritime Transport isnotplanning toimpose
new restrictions, e.g.new cargo preference schemes between the"States Parties".
Since 1January 1995 MERCOSUR hashadanew institutional structure adopted under the
Protocol ofOuro Preto, which issubject toratification bytheparliaments oftheStates Parties. See
Annex VI.9
TheCounciloftheCommonMarketestablishedtheMERC OSURTradeCommissiontosupervise
theapplication oftheCET andthecommon trade policy instruments. Initsturn, thisCommission
setupvarious technical committees responsible forcarrying forward thevarious tasks assigned by
theCouncil oftheCommon Market andtheCommon Market Group.
Asregards theoperation ofthepresent working groups listed below, theCommon Market
Group willdecide their future activities:
9Annex VIisdistributed asanAddendum tothisdocument: WT/COMTD/L/1/Add.1.WT/COMTD/1
Page 20
Subgroup 1: Trade Issues
Subgroup 2: Customs Issues
Subgroup 3: Technical Standards
Subgroup 4: Fiscal andMonetary Policies Relating toTrade
Subgroup 5: Inland Transport
Subgroup 6: Maritime Transport
Subgroup 7: Industrial andTechnological Policy
Subgroup 8: Agricultural Policy
Subgroup 9: Energy
Subgroup 10: Co-ordination ofMacroeconomic Policies
Subgroup 11: Labour Policy
MERC OSURisnotplanningtoimposenewrestrictionsonmaritimecargoesbytheStatesParties.
15. TRANSPARENCY INIMPLEMENTING THE AGREEMENT
15.1 DotheStates Parties toMERCOSUR undertake tonotify theGATT ofanychanges in
theTreaty ofAsuncíon?
Any amendment totheTreaty ofAsuncíon willbenotified totheWTO bytheStates Parties
toMERCOSUR.
15.2 Dothey undertake regularly tosubmit reports thatwillenable theimpact andfunctioning
oftheTreaty ofAsuncíon tobeexamined?
TheTreaty ofAsuncíon wasamended bytheProtocol ofOuro Preto which isintheprocess
ofbeing ratified bytheStates Parties.WT/COMTD/1
Page 21
ANNEXES
ANNEX I10COMMON EXTERNAL TARIFF, TRANSITIONAL EXCEPTIONS AND
TIMETABLE FOR CONVERGENCE ONTHE CET:
- COMMON EXTERNAL TARIFF
- BASIC CONVERGENCE SCHEDULES FOR THE CAPITAL GOODS SECTOR:
- ARGENTINA;
- BRAZIL;
- PARAGUAY;
- URUGUAY.
- CONVERGENC ESCHEDULES FORTHE INFORMA TIONTECHNO LOGYAND
TELECOMMUNICATIONS SECTOR:
- ARGENTINA;
- BRAZIL;
- PARAGUAY;
- URUGUAY.
- BASIC NATIONAL SCHEDULES OFEXCEPTIONS TOTHE CET:
- ARGENTINA;
- BRAZIL;
- PARAGUAY;
- URUGUAY.
- ADAPTATION REGIME:
- ARGENTINA;
- BRAZIL;
- PARAGUAY;
- URUGUAY.
ANNEX II11NON-TARIFF RESTRICTIONS (RESOLUTION 123/94)
- IMPORT RESTRICTIONS
- EXPORT RESTRICTIONS
ANNEX III12PRINCIPAL DECISIONS ADOPTED ATTHE SEVENTH MEETING OFTHE
COUNCIL OFTHE COMMON MARKET (OURO PRETO, DECEMBER 1994):
- DECISION 06/94
- DECISION 12/94
10SeeFootnote 1.
11SeeFootnote 3.
12SeeFootnote 8.WT/COMTD/1
Page 22
- DECISION 15/94
- DECISION 16/94
- DECISION 17/94
- DECISION 19/94
- DECISION 22/94
- DECISION 23/94
- DECISION 24/94
- DECISION 25/94
- DECISION 29/94
ANNEX IV TRADE DATA
ANNEX V TRADE CREATION/DIVERSION
ANNEX VI PROTOCOL OFOURO PRETO13
13SeeFootnote 9.WT/COMTD/1
Page 23
TRADE DATA
Appendix I:Reply toQuestion 10.1
Global exports ofmember countries according todestination, 1990-1993
(f.o.b. value, inmillions ofdollars)
Exporting country
andyearMERCOSUR Other LAIA LAIA Rest oftheworld TOTAL
Argentina
1990
1991
1992
19931,833
1,978
2,327
3,6621,295
1,391
1,591
1,6003,128
3,369
3,918
5,2629,225
8,609
8,317
7,82812,353
11,978
12,235
13,090
Brazil
1990
1991
1992
19931,320
2,308
4,098
5,3951,874
2,630
3,495
3,7503,194
4,938
7,593
9,14528,219
26,684
28,383
29,55631,413
31,622
35,976
38,701
Paraguay
1990
1991
1992
1993380
259
246
28746
68
66
56426
327
312
343533
410
345
382959
737
657
725
Uruguay
1990
1991
1992
1993594
558
544
69876
76
128
152670
634
672
8501,038
940
948
7951,708
1,574
1,620
1,645
MERCOSUR
1990
1991
1992
19934,127
5,103
7,215
10,0423,291
4,165
5,280
5,5587,418
9,268
12,495
15,60039,015
36,643
37,993
38,56146,433
45,911
50,488
54,161WT/COMTD/1
Page 24
Appendix I:Reply toQuestion 10.1
Global imports ofmember countries according toorigin, 1990-1993
(c.i.f. value, inmillions ofdollars)
Importing country
andyearMERCOSUR Rest ofLAIA LAIA Rest oftheworld TOTAL
Argentina
1990
1991
1992
1993833
1,804
3,755
4,214513
944
1,226
1,2201,346
2,748
4,981
5,4342,731
5,527
9,890
11,3524,077
8,275
14,871
16,786
Brazil
1990
1991
1992
19932,444
2,417
2,374
3,4771,342
1,530
1,496
1,4253,786
3,947
3,870
4,90218,674
19,030
18,476
22,55322,460
22,977
22,346
27,455
Paraguay
1990
1991
1992
1993404
437
526
63240
58
72
74444
495
598
706906
965
824
9831,350
1,460
1,422
1,689
Uruguay
1990
1991
1992
1993560
655
832
1,126129
96
101
99689
751
933
1,225726
801
1,077
1,0991,415
1,552
2,010
2,324
MERCOSUR
1990
1991
1992
19934,241
5,313
7,487
9,4492,024
2,628
2,895
2,8186,265
7,941
10,382
12,26723,037
26,323
30,267
35,98729,302
34,264
40,649
48,254Appendix II:Reply toQuestion 10.2
MERCOSUR Trade
(f.o.b. value ofexports, inmillions ofdollars)WT/COMTD/1
Page 251991
of toArgentina Brazil Paraguay Uruguay MERCOSUR Rest ofLAIA LAIA Rest ofthe
worldTOTAL
Argentina
Brazil
Paraguay
Uruguay
MERCOSUR1,475
45
163
1,6831,489
203
384
2,076178
496
11
685311
337
11
6591,978
2,308
259
558
5,1031,391
2,630
68
76
4,1653,369
4,938
327
634
9,2688,609
26,684
410
940
36,64311,978
31,622
737
1,574
45,911
1992
of toArgentina Brazil Paraguay Uruguay MERCOSUR Rest ofLAIA LAIA Rest ofthe
worldTOTAL
Argentina
Brazil
Paraguay
Uruguay
MERCOSUR3,041
64
250
3,3551,671
171
284
2,126272
543
10
825384
514
11
9092,327
4,098
246
544
7,2151,591
3,495
66
128
5,2803,918
7,593
312
672
12,4958,317
28,383
345
948
37,99312,235
35,976
657
1,620
50,488
1993
of toArgentina Brazil Paraguay Uruguay MERCOSUR Rest ofLAIA LAIA Rest ofthe
worldTOTAL
Argentina
Brazil
Paraguay
Uruguay
MERCOSUR3,659
65
316
4,0402,791
215
366
3,372358
961
16
1,335513
775
7
1,2953,662
5,395
287
698
10,0421,600
3,750
52
152
5,5545,262
9,145
339
850
15,5967,828
29,556
386
795
38,56513,090
38,701
725
1,645
54,161Appendix II:Reply toQuestion 10.2
MERCOSUR Trade
(c.i.f. value ofimports, inmillions ofdollars)WT/COMTD/1
Page 26
1991
of toArgentina Brazil Paraguay Uruguay MERCOSUR Rest ofLAIA LAIA Rest ofthe
worldTOTAL
Argentina
Brazil
Paraguay
Uruguay
MERCOSUR1,747
175
271
2,1931,526
251
373
2,15043
224
11
278235
446
11
6921,804
2,417
437
655
5,313944
1,530
58
96
2,6282,748
3,947
495
751
7,9415,527
19,030
965
801
26,3238,275
22,977
1,460
1,552
34,264
1992
of toArgentina Brazil Paraguay Uruguay MERCOSUR Rest ofLAIA LAIA Rest ofthe
worldTOTAL
Argentina
Brazil
Paraguay
Uruguay
MERCOSUR1,833
231
346
2,4103,339
283
475
4,09765
191
11
267351
350
12
7133,755
2,374
526
832
7,4871,226
1,496
72
101
2,8954,981
3,870
598
933
10,3829,890
18,476
824
1,077
30,26714,871
22,346
1,422
2,010
40,649
1993
of toArgentina Brazil Paraguay Uruguay MERCOSUR Rest ofLAIA LAIA Rest ofthe
worldTOTAL
Argentina
Brazil
Paraguay
Uruguay
MERCOSUR2,765
242
483
3,4903,570
369
636
4,57573
275
7
355571
437
21
1,0294,214
3,477
632
1,126
9,4491,220
1,425
74
99
2,8185,434
4,902
706
1,225
12,26711,353
22,553
983
1,099
35,98716,786
27,455
1,689
2,324
48,254Appendix III:Reply toQuestion 10.3
MERCOSUR -Rest ofLAIA: Total trade andnegotiated trade
(c.i.f. value, inmillions ofdollars)WT/COMTD/1
Page 27Importing country and year Total Negotiated Share ofnegotiated trade intotal
Argentina
1991
1992
1993944
1,226
1,220306
559
71232.4
45.6
58.4
Brazil
1991
1992
19931,530
1,496
1,425560
565
n.a.36.6
37.8
n.a.
Paraguay
1991
1992
199358
72
74n.a.
n.a.
n.a.n.a.
n.a.
n.a.
Uruguay
1991
1992
199396
101
9931
35
2832.3
34.7
28.3
MERCOSUR
1991
1992
19932,628
2,895
2,818897
1,159
74034.1
40.0
26.3WT/COMTD/1
Page 28
ANNEX V
Trade Creation/Diversion
MERCOSUR
Share ofandEffects onWorld Trade 1990-93
(inbillions ofUSdollars andpercent)
Year Imports
WorldImports
MERCOSURMERCOSUR as%
oftotal
1990 3,549 27.3 0.8
1993 3,690 41.0 1.1
1. Increase inorpositive effect ondemand asaresult oftheincrease inMERCOSUR 'sshare
ofworld trade.
0.3percentage points between 1990 and1993, equivalent toanadditional 11.1 billion dollars
ofannual imports based onthetotal value ofimports for1993.
2. Decrease inimports from third countries asaresult oftheincreased coverage ofregional trade
intotal MERCOSUR imports.
(a) World trade without theincrease duetothegrowth inMERCOSUR 'sshare ofworld trade:
3690 -11.1 =3678.9 billion dollars.
(b) Imports from third countries ifMERCOSUR 's1990 coverage andshare hadbeen maintained:
3678.9 x0.8(1-0.15) =29.4 -4.4=25.0 billion dollars.
(c) Actual imports from third countries in1993:
32.3 billion dollars.
(d) Effect onworld demand calculated bycomparing situation (c)with situation (b).
32.3 -25=7.3billion dollars ofannual trade creation.
Between 1990 and1993 trade creation wasparalleled byastrong expansion inintra-regional
trade which more than doubled, increasing by111.6 percent, with theresult thatthecoverage with
respect tototal trade rose from 15to21.2 percent.