ABSTRACT
GATT Article XXIV(8)(a)(i) is seen as establishing a standard for the internal trade between constituent members to fulfil the requirements of a Custom Union. And the constituent members of a Custom Union are required to apply a common external trade regime relating to both duties and other regulation of commerce. So far, the ruling of the AB in the Turkey-Textiles case clarifies Article XXIV(8)(a)(i) dealing with Custom Unions and not Article XXIV(8)(b) on FTAs. But, since the phrase ‘substantially all trade’ has a similar function in both sub-paragraphs and the relevant difference between Custom Unions and free trade areas in this connection is only on the origin of covered goods, it may be assumed that the AB interpretation could be applicable mutatis mutandis to Article XXIV(8)(a) and Article XXIV(8)(b). Regarding the views of members, in the examination of the Treaty of Rome, the six member states opined that the test for ‘substantially all trade’ would be satisfied if 80 per cent of the volume of trade between the parties were liberalised. But in the EU-South Africa Trade and Development Cooperation Agreement (TDCA), the threshold seems to be slightly different. The EU gives 95 per cent of South African exports improved access to its markets, while South Africa does so for 86 per cent of EU exports. For its part, the United States argued in the Line Pipe case that since NAFTA covered 97 per cent of the trade between the parties, it was in conformity with the provisions of Article XXIV(8).13
