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Section 2.4.6 Resolving a Relative URI says: "The URILiteral is subjected to whitespace normalization as defined for the xs:anyURI type in [XML Schema 1.0] or [XML Schema 1.1]: this means that leading and trailing whitespace is removed, and any other sequence of whitespace characters is replaced by a single space (#x20) character. Whitespace normalization is done after the expansion of character references, so writing a newline (for example) as 
 does not prevent its being normalized to a space character." This paragraph has nothing to do with resolving relative URIs. It is better placed in 2.4.5 URI Literals. The paragraph following this begins with "The URILiteral is not automatically subjected to percent-encoding or decoding as defined in [RFC3986]." I believe that this sentence should be moved as well.
I agree. So moved.