CONFIDENTIAL DAFFElMAl(97) 1/REV2

IX. RESERVATIONS

LODGING OF COUNTRY SPECIFIC RESE VA TIONS⁽¹⁾

A.⁽²⁾ Article X (National Treatment), Y (Most Favoured Nation Treatment), [Article Z. ..., and

Article ...], do not apply to:

(a) any existing non-conforming measure that is maintained by a Contracting Party as set

out in its Schedule to Annex A of the Agreement;

(b) the continuation or prompt renewal of any non-conforming measure referred to in

subparagraph (a); or

(c) an amendment to any non-conforming measure referred to in subparagraph (a) to the

extent that the amendment does not decrease the conformity of the measure, as it

existed immediately before the amendment, with Articles X (National Treatment),

Article Y (Most Favoured Nation), [Article Z. ..., and Article ...].

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CONFIDENTIAL DAFFEIMAI(97) 1/REV2

[B.⁽³⁾ Articles X, Y. [Z, .., and Article ...] do not apply to any measure that Contracting Party [adopts]

or [maintains] with respect to sectors, subsectors or activities, as set out in Annex ... of the Agreement.]

it

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1. The European Commission proposed an alternative approach to the drafting of this article as follows:

(1)Subject to the provisions of this Article a Contracting Party may not make country-specific reservations or exceptions to the present Agreement

(2)Any non-conforming measure existing at the time of signature has to be listed in the Schedule to Annex A of this Agreement in order to allow the application of paragraph 3. Measures adopted at a later stage and non-conforming measure with regard to Article ..... are excluded form listing.

(3)The provisions of this Agreement do not prevent a Contracting Party from applying

a)any existing non-conforming measure that is maintained by a Contracting Party as set out in its Schedule to Annex A of the Agreement

b)the continuation or prompt renewal of any non-conforming measure referred to in subparagraph (a); or

c)an amendment to any non-conforming measure referred to in subparagraph (a) to the extent that the amendment does not decrease the conformity of the measure, as it existed immediately beforme the amendment, with the provision of this Agreement.

Any act adopted by a Contracting Party in accordance with the provisions of letters b) and c) shall be promptly notified to the Parties Group to be effective."

2. It was agreed that part A of the draft article was needed as the core provision to "grandfather" existing non- conforming measures and prevent the introduction of more restricitive measures ("standstill").

3. Different views were expressed with respect to part B of the draft article which would allow new non- conforming measures to be introduced after the Agreement comes into force. One view was that such a provision might undermine the MAI disciplines to which it applied. The opposite view was the part B would make it easier to preserve high standards in the disciplines of the agreement by allowing flexibility to countries in lodging their resevations.