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XIX. Article XV back to top
A. Text of Article XV
Article XV: Subsidies
1. Members recognize that, in certain circumstances, subsidies may
have distortive effects on trade in services. Members shall enter into
negotiations with a view to developing the necessary multilateral
disciplines to avoid such trade-distortive effects.(7) The
negotiations shall also address the appropriateness of countervailing
procedures. Such negotiations shall recognize the role of subsidies in
relation to the development programmes of developing countries and take
into account the needs of Members, particularly developing country
Members, for flexibility in this area. For the purpose of such
negotiations, Members shall exchange information concerning all
subsidies related to trade in services that they provide to their
domestic service suppliers.
(footnote original) 7 A future work programme shall
determine how, and in what time-frame, negotiations on such multilateral
disciplines will be conducted.
2. Any Member which considers that it is adversely affected by a
subsidy of another Member may request consultations with that Member on
such matters. Such requests shall be accorded sympathetic consideration.
B. Interpretation and Application of Article XV
1. General
94. The Panel in US — Large Civil Aircraft
(2nd Complaint)
referred to Articles XIII:2 and
XV of the GATS in the context of
interpreting the definition of a subsidy found in Article 1 of the SCM
Agreement. The Panel concluded that transactions properly characterized
as purchases of services are excluded from the scope of Article 1 of the
SCM Agreement, which expressly refers to purchases of goods but omits
any reference to purchases of services. In the course of its analysis,
the Panel observed that “[w]hile the SCM Agreement was being
negotiated, parallel negotiations on trade in services were also taking
place. Article XIII:2 and XV of the GATS reflect the fact that the
negotiators of the GATS were unable to reach agreement on disciplines
regarding governmental purchases of services, or on disciplines
governing the provision of subsidies to service suppliers.”(145)
The Panel concluded that when the omission of “purchases” of “services”
from the text of Article 1 of the SCM Agreement is read against this
historical background, it offers further confirmation that the drafters
of that provision could not have removed the express reference to “purchases”
of “services” from Article 1 of the SCM Agreement on the
understanding that the reference was superfluous.(146)
2. Working Party on GATS Rules
95. Negotiations on subsidies have been carried out in the Working
Party on GATS Rules, established on 30 March 1995 by the Council for
Trade in Services.(147)
Part III: Specific Commitments
XX. Article XVI back to top
A. Text of Article XVI
Article XVI: Market Access
1. With respect to market access through the modes of supply
identified in Article I, each Member shall accord services and service
suppliers of any other Member treatment no less favourable than that
provided for under the terms, limitations and conditions agreed and
specified in its Schedule.(8)
(footnote original) 8 If a Member undertakes a
market-access commitment in relation to the supply of a service through
the mode of supply referred to in subparagraph 2(a) of Article I and if
the cross-border movement of capital is an essential part of the service
itself, that Member is thereby committed to allow such movement of
capital. If a Member undertakes a market-access commitment in relation
to the supply of a service through the mode of supply referred to in
subparagraph 2(c) of Article I, it is thereby committed to allow related
transfers of capital into its territory.
2. In sectors where market-access commitments are undertaken, the
measures which a Member shall not maintain or adopt either on the basis
of a regional subdivision or on the basis of its entire territory,
unless otherwise specified in its Schedule, are defined as:
(a) limitations on the number of service suppliers whether in the
form of numerical quotas, monopolies, exclusive service suppliers or the
requirements of an economic needs test;
(b) limitations on the total value of service transactions or assets
in the form of numerical quotas or the requirement of an economic needs
test;
(c) limitations on the total number of service operations or on the
total quantity of service output expressed in terms of designated
numerical units in the form of quotas or the requirement of an economic
needs test;(9)
(footnote original) 9 Subparagraph 2(c) does not cover
measures of a Member which limit inputs for the supply of services.
(d) limitations on the total number of natural persons that may be
employed in a particular service sector or that a service supplier may
employ and who are necessary for, and directly related to, the supply of
a specific service in the form of numerical quotas or the requirement of
an economic needs test;
(e) measures which restrict or require specific types of legal entity
or joint venture through which a service supplier may supply a service;
and
(f) limitations on the participation of foreign capital in terms of
maximum percentage limit on foreign share-holding or the total value of
individual or aggregate foreign investment.
B. Interpretation and Application of Article XVI
1. General
(a) Electronic commerce
96. With respect to application of
Article XVI to electronic
commerce, see the Progress Report adopted by the Council for Trade in
Services in the context of the Work Programme on Electronic Commerce on
19 July 1999.(148)
2. Article XVI:1
97. The Panel in US — Gambling found that
paragraph 1 of
Article XVI did not contain restrictions on market access beyond those
listed in paragraph 2 of Article XVI:
“The ordinary meaning of the words, the context of
Article XVI, as
well as the object and purpose of the GATS confirm that the restrictions
on market access that are covered by Article XVI are only those listed
in paragraph 2 of this Article.“(149)
98. The Appellate Body in US — Gambling, noting that Antigua
had only made a conditional appeal regarding this issue, left the issue
of the relationship between the first and
second paragraphs of Article
XVI “to another day.”(150)
99. In China–Publications and Audiovisual Products, the
Panel stated that:
“Paragraph 1 of Article XVI sets out the general principle that a
Member must accord to services and service suppliers of other Members
treatment no less favourable than that specified under the “terms,
limitations and conditions” contained in its schedule. Paragraph 2 is
more specific. It defines, in six sub-paragraphs, the measures that a
Member, having inscribed a specific sectoral commitment, must not adopt
or maintain “unless otherwise specified in its Schedule”. The six
types of measures form a closed or exhaustive list, as indicated by the
wording of the chapeau to paragraph 2 (“the measures … are defined
as”). Under Article XVI, a Member undertakes a minimum standard of
treatment, and is thus free to maintain a market access regime less
restrictive than set out in its schedule, as confirmed in paragraph 1
which refers to a standard of “no less favourable” treatment.”(151)
3. Article XVI:2
(a) Restrictions on part of a sector
100. The Panel in US — Gambling stated, in a finding which
was not appealed,(152) that if a full market access commitment is
given in a particular sector or sub-sector, that commitment applies to
the whole of that sector, including all of its sub-sectors:
“In our view, if a Member makes a market access commitment in a
sector or sub-sector, that commitment covers all services that fall
within the scope of that sector or sub-sector. A Member does not fulfil
its GATS obligations if it allows market access for only some of the
services covered by a committed sector or sub-sector while prohibiting
all others. If a Member wishes to restrict market access with respect to
certain services falling within the scope of a sector or sub-sector, it
should set out the restrictions or limitations on access in the
appropriate place in the Member’s schedule. Indeed, a specific
commitment in a given sector or sub-sector is a guarantee that the whole
of that sector, i.e. all services included in that sector or
sub-sector are covered by the commitment. Any other interpretation would
make market access commitments under the GATS largely meaningless.”(153)
(b) Restrictions on part of a mode of supply
101. The Panel in US — Gambling stated, in a finding that
was not appealed,(154) that if a full market access commitment is
given for the supply of a service through mode 1, that commitment
applies to any mode of delivery included in mode 1:
“The Panel concludes that mode 1 under the GATS encompasses all
possible means of supplying services from the territory of one WTO
Member into the territory of another WTO Member. Therefore, a market
access commitment for mode 1 implies the right for other Members’
suppliers to supply a service through all means of delivery, whether by
mail, telephone, Internet etc., unless otherwise specified in a Member’s
Schedule. We note that this is in line with the principle of “technological
neutrality”, which seems to be largely shared among WTO Members.”(155)
(c) Restrictions directed at consumers
102. The Panel in US — Gambling, found that certain laws
making it a criminal offence for a person to engage in gambling were
directed at consumers, not suppliers, of the service and therefore that
these measures were not inconsistent with Article XVI:2(a) and
(c).(156)
On appeal, the Appellate Body found that, because the claimant had
failed to make a prima facie case of violation with respect to
these laws, the Panel was not entitled to make findings on them, and
therefore that there was no need, in resolving the appeal, to consider
the merits of the Panel’s findings.(157)
(d) Temporal qualifications
103. The Panel in Mexico — Telecoms, in examining a market
access commitment made subject to a permit which would not be granted
“until the corresponding regulations are issued”, found:
“The wording of the limitation, that ‘permits for the
establishment of a commercial agency [will not be issued] until the
corresponding regulations are issued’, does not specify that a
numerical quota was to be imposed on the issuance of permits.
Rather, the sentence seems to introduce a temporal qualification
as to when establishment will be permitted — namely, after the
issuance of the regulations.
The six categories of measures in Article XVI:2 refer to the types of
market access limitations that can be imposed on the supply of a
service. However, none of the six categories relate to temporal
limitations — such as dates for entry into force or for the
implementation of commitments. This suggests that temporal limitations
cannot constitute limitations on market access under Article XVI:2 of
the GATS.”(158)
104. The Panel in Mexico — Telecoms said further that the
temporal qualifications in Mexico’s scheduled commitments did not meet
the requirements under Article XX:1(d) and (e), because a time frame was
not specified.(159) In this regard, see
Section XXIV.B.3 below.
(e) “Routing requirements” in telecommunications
105. The Panel in Mexico — Telecoms, observing that Mexico’s
GATS Schedule required that international telecommunications traffic “must
be routed through the facilities” of a Mexican concessionaire, found
that this “refers not to a requirement simply to use the equipment or
physical assets of a Mexican concessionaire, but to supply the service
on a facilities-basis, and not through capacity leased to the
cross-border supplier.”(160) With respect to the cross border
supply of telecommunications services:
“This element of the routing restriction means, therefore, that
supply of the service by means of one of the categories (over leased
capacity) within Mexico is prohibited, and is subject to a zero quota in
the sense of Article XVI:2(a), (b) and
(c). We note that, while this
limitation prohibits services that originate on a facilities basis from
being terminated over leased circuits, it does not prevent these
services from being supplied when they fall within the facilities-based
category with respect to termination.”(161)
106. Likewise, with respect to non-facilities based services supplied
cross border, the Panel in Mexico — Telecoms found that the
routing requirement “prohibits the cross-border supply upon
termination within Mexico by means of the very “leased capacity”
which defines this type of service. The Panel therefore found:
“While this element of the routing restriction does not expressly
prohibit cross-border supply over leased capacity on the originating
segment, it means that supply over leased capacity on the terminating
segment is prohibited. Therefore, this element of the routing
restriction prohibits end-to-end International Simple Resale (ISR), and
effectively eliminates the possibility of any cross-border supply of
services over leased capacity. In this sense, with respect to cross
border services supplied by commercial agencies, the routing restriction
falls within the scope of Article XVI:2(a), (b) and
(c).”(162)
4. Article XVI:2 (Introductory Heading or “chapeau”)
107. The Appellate Body in US — Gambling, observed that the
phrase “where market access commitments are made”, did not imply
that a zero quota or a prohibition was outside the scope of the
quantitative measures described in sub-paragraph
(a).(163) See
also paragraph 113 below.
5. Article XVI:2(a) (limitations on the Number of Suppliers)
108. The Appellate Body in US — Gambling observed that the
use of the words “number” of suppliers and “numerical” quotas in
this provision suggests a focus on “quantitative limitations”.(164)
109. Since the dictionary meaning of the word “form” was broad,
the Appellate Body in US — Gambling reasoned that the meaning
of the phrase “in the form of” had to be deduced by reading it
together with the four types of limitation which it described.(165)
The phrase “in the form of ”, read together with the words “numerical
quota”, suggested that Article XVI:2(a) could encompass a zero quota:
“The fact that the word “numerical” encompasses things which
“have the characteristics of a number” suggests that limitations “in
the form of a numerical quota” would encompass limitations which, even
if not in themselves a number, have the characteristics of a number.
Because zero is quantitative in nature, it can, in our view, be
deemed to have the “characteristics of” a number — that is, to be
“numerical”.”(166)
110. The phase “in the form of ”, read together with the terms
“monopolies” and “exclusive service suppliers”, and bearing in
mind the GATS definitions of these terms, suggested that Article
XVI:2(a) could include limitations that are “in effect” monopolies
or exclusive service suppliers:
“These two definitions suggest that the reference, in
Article XVI:2(a), to limitations on the number of service suppliers “in the
form of monopolies and exclusive service suppliers” should be read to
include limitations that are in form or in effect, monopolies or
exclusive service suppliers.”(167)
111. The phrase “in the form of ”, read together with the phrase
“the requirements of an economic needs test” did not suggest clearly
that such a test needed to take any particular form:
“We further observe that it is not clear that “limitations on the
number of service suppliers … in the form of … the requirements of
an economic needs test” must take a particular “form.”(168)
Thus, this fourth type of limitation, too, suggests that the words “in
the form of” must not be interpreted as prescribing a rigid mechanical
formula.”(169)
112. The Appellate Body in US — Gambling, in concluding that
the words “in the form of” must not be interpreted as “prescribing
a rigid mechanical formula”, cautioned:
“This is not to say they should not be “ignored or replaced by
the words “that have the effect of”. Yet, at the same time, they
cannot be read in isolation.”(170)
113. Interpreted in this way, the Appellate Body in US
— Gambling found that “it is clear that the thrust of sub-paragraph
(a) [of Article XVI:2] is not on the form of limitations, but on their numerical,
or quantitative, nature.”(171)
114. The Appellate Body in US — Gambling examined the
context provided by the phrase “where market access commitments are
made”, contained in the chapeau to Article
XVI:2. It concluded that
this phrase did not imply that a zero quota or a prohibition was outside
the scope of the quantitative measures described in subparagraph
(a),
referring to an analogous provision in the GATT 1994, Article
II:1(b).(172)
The Appellate Body quoted approvingly the Panel’s conclusion on this
issue:
“The fact that the terminology [of Article
XVI:2(a)] embraces
lesser limitations, in the form of quotas greater than zero, cannot
warrant the conclusion that it does not embrace a greater limitation
amounting to zero. Paragraph (a) does not foresee a “zero quota”
because paragraph (a) was not drafted to cover situations where a Member
wants to maintain full limitations. If a Member wants to maintain a full
prohibition, it is assumed that such a Member would not have scheduled
such a sector or subsector and, therefore, would not need to schedule
any limitation or measures pursuant to Article
XVI:2.”(173)
115. The Appellate Body in US — Gambling, finding that “certain
ambiguities” remained in the interpretation of Article
XVI:2(a),
referred to the 1993 Scheduling Guidelines as relevant preparatory work,
concluding that a measure equivalent to a zero quota is within the scope
of sub-paragraph (a):
“[T]hose Guidelines set out an example of the type of limitation
that falls within the scope of sub-paragraph (a) of Article
XVI:2, that
is, of the type of measures that will be inconsistent with Article XVI
if a relevant commitment has been made and unless the Member in question
has listed it as a condition or limitation in its Schedule. That example
is: “nationality requirements for suppliers of services (equivalent to
zero quota)”.(174) This example confirms the view that measures
equivalent to a zero quota fall within the scope of Article
XVI:2(a).”
116. The Appellate Body in US — Gambling was thus able to
conclude that “limitations amounting to a zero quota are quantitative
limitations and fall within the scope of Article XVI:2(a)”(175).
Since the Panel’s findings on limitations affecting part of a sector,
or part of a mode of supply, were not appealed, the Appellate Body was
able to quote and uphold the Panel’s combined finding that:
“[a prohibition on one, several or all means of delivery
cross-border] is a “limitation on the number of service suppliers in
the form of numerical quotas” within the meaning of Article XVI:2(a)
because it totally prevents the use by service suppliers of one, several
or all means of delivery that are included in mode 1.”(176)
117. The Panel in Mexico — Telecoms, observing that Mexico’s
GATS Schedule required that international telecommunications traffic “must
be routed through the facilities” of a Mexican concessionaire, found
that this “refers not to a requirement simply to use the equipment or
physical assets of a Mexican concessionaire, but to supply the service
on a facilities-basis, and not through capacity leased to the
cross-border supplier.”(177) With respect to the cross border
supply of telecommunications services:
“This element of the routing restriction means, therefore, that
supply of the service by means of one of the categories (over leased
capacity) within Mexico is prohibited, and is subject to a zero quota in
the sense of Article XVI:2(a), (b) and
(c). We note that, while this
limitation prohibits services that originate on a facilities basis from
being terminated over leased circuits, it does not prevent these
services from being supplied when they fall within the facilities-based
category with respect to termination.”(178)
118. Likewise, with respect to non-facilities based services supplied
cross border, the Panel in Mexico — Telecoms found that the
routing requirement “prohibits the cross-border supply upon
termination within Mexico by means of the very “leased capacity”
which defines this type of service.” The Panel therefore found:
“While this element of the routing restriction does not expressly
prohibit cross-border supply over leased capacity on the originating
segment, it means that supply over leased capacity on the terminating
segment is prohibited. Therefore, this element of the routing
restriction prohibits end-to-end International Simple Resale (ISR), and
effectively eliminates the possibility of any cross-border supply of
services over leased capacity. In this sense, with respect to cross
border services supplied by commercial agencies, the routing restriction
falls within the scope of Article XVI:2(a),
(b) and (c).”(179)
6. Article XVI:2(b)
119. The Panel in Mexico — Telecoms examined Mexico’s GATS
Schedule which required that international telecommunications traffic
“must be routed through the facilities” of a Mexican concessionaire.
See discussion in paragraphs 116–117
above.
7. Article XVI:2(c)
120. The Appellate Body in US — Gambling, noting that the
construction of Article XVI:2(c) was “grammatically ambiguous”(180),
focused instead on the language of the provision, finding that it did
not necessarily exclude a measure equivalent to a zero quota:
“In our view, by combining, in sub-paragraph
(c), the elements of
the first clause of Article XVI:2(c) and the elements in the second part
of the provision, the parties to the negotiations sought to ensure that
their provision covered certain types of limitations, but did not feel
the need to clearly demarcate the scope of each such element. On the
contrary, there is scope for overlap between such elements: between
limitations on the number of service operations and limitations on the
quantity of service output, for example, or between limitations in the
form of quotas and limitations in the form of an economic needs test.
That sub-paragraph (c) applies in respect of all four modes of supply
under the GATS also suggests the limitations covered thereunder cannot
take a single form, nor be constrained in a formulaic manner.
Nonetheless, all types of limitations in sub-paragraph (c) are
quantitative in nature, and all restrict market access. For these
reasons, we are of the view that, even if sub-paragraph (c) is read as
referring to only two types of limitations, as contended by the United
States, it does not follow that sub-paragraph (c) would not catch a
measure equivalent to a zero quota.”(181)
121. In order to resolve any ambiguity that
Article XVI:2(c) covers
measures equivalent to a zero quota, the Appellate Body in US — Gambling resorted to supplementary sources. It noted references,
made in 1991 in the group negotiating the GATS, to the “quantitative”
nature of measures covered by Article XVI. It also noted a relevant
example in the 1993 Scheduling Guidelines of a type of measure covered
by Article XVI:2(c): “[r]estrictions on broadcasting time available
for foreign films”, a measure that does not mention numbers or units.(182)
If this were not the case, the Appellate Body stated, Article XVI:2(c)
“could not cover, for example, a limitation expressed as a percentage
or described using words such as “a majority”.”(183)
122. The Appellate Body in US — Gambling was thus able to
conclude that “limitations amounting to a zero quota are quantitative
limitations and fall within the scope of Article XVI:2(a)”.(184)
Since the Panel’s findings on limitations affecting part of a sector,
or part of a mode of supply, were not appealed, the Appellate Body was
able to quote and uphold the Panel’s combined finding that a measure
prohibiting the supply of certain services where specific commitments
have been undertaken is a limitation within the meaning of Article
XVI:2(c) “because it totally prevents the services operations and/or
service output through one or more or all means of delivery that are
included in mode 1. In other words, such a ban results in a “zero
quota” on one or more or all means of delivery include in mode 1.”(185)
123. The Appellate Body in US — Gambling declined to go
beyond a ruling on the measure at issue, and stated that “[i]t is
neither necessary nor appropriate for us to draw, in the abstract, the
line between quantitative and qualitative measures, and we do not do so
here.”(186)
124. The Panel in Mexico — Telecoms examined Mexico’s GATS
Schedule which required that international telecommunications traffic
“must be routed through the facilities” of a Mexican concessionaire.
See discussion in paragraphs 116–117
above.
XXI. Article XVII back to top
A. Text of Article XVII
Article XVII: National Treatment
1. In the sectors inscribed in its Schedule, and subject to any
conditions and qualifications set out therein, each Member shall accord
to services and service suppliers of any other Member, in respect of all
measures affecting the supply of services, treatment no less favourable
than that it accords to its own like services and service suppliers.(10)
(footnote original) 10 Specific commitments assumed
under this Article shall not be construed to require any Member to
compensate for any inherent competitive disadvantages which result from
the foreign character of the relevant services or service suppliers.
2. A Member may meet the requirement of
paragraph 1 by according to
services and service suppliers of any other Member, either formally
identical treatment or formally different treatment to that it accords
to its own like services and service suppliers.
3. Formally identical or formally different treatment shall be
considered to be less favourable if it modifies the conditions of
competition in favour of services or service suppliers of the Member
compared to like services or service suppliers of any other Member.
B. Interpretation and Application of Article XVII
1. General
(a) Elements of a claim under Article XVII
125. In China–Publications and Audiovisual Products, the
Panel provided an overview of the elements of a claim under Article
XVII:
“The wording of Article XVII indicates that we need to determine:
whether the services at issue, i.e. the wholesale services supplied
through commercial presence, are inscribed in China’s Schedule; the
extent of China’s national treatment commitments, including any
conditions or qualifications, with respect to these services entered in
its Schedule; whether the measures at issue affect the supply of these
services; and whether these measures accord less favourable treatment to
service suppliers of other Members, in comparison with like domestic
suppliers.”(187)
(b) Electronic commerce
126. With respect to application of
Article XVII to electronic
commerce, see the Progress Report adopted by the Council for Trade in
Services in the context of the Work Programme on Electronic Commerce on
19 July 1999.(188)
2. “subject to any conditions and qualifications set out therein”
127. In China–Publications and Audiovisual Products, the
Panel stated:
“As noted above, a Member may limit the extent to which it grants
market access or national treatment for the services listed in its
Schedule, by inscribing the “conditions and qualifications” (which
we refer to more simply as “limitations”) mentioned in Article XVII
either under “limitations on market access” or under “limitations
on national treatment”. A Member’s obligations on market access
and/or national treatment are determined with reference to any such
limitations inscribed in its schedule. Therefore, to determine the
extent of China’s national treatment commitments with respect to the
services at issue, we need to examine China’s Schedule to see whether,
with respect to supply through commercial presence, there are any
limitations inscribed (a) beside “Wholesale Trade Services”, in the
national treatment column or (b) in the national treatment column of the
horizontal section of China’s Schedule, as those limitations inscribed
in the horizontal section apply to all the sectors in the
Schedule unless otherwise specified.”(189)
3. “like services and service suppliers”
128. The Panel in EC — Bananas III, in a finding not
reviewed by the Appellate Body, addressed the issue of likeness under
Article XVII:
“[T]he nature and the characteristics of wholesale transactions as
such, as well as of each of the different subordinated services
mentioned in the headnote to section 6 of the CPC, are ‘like’ when
supplied in connection with wholesale services, irrespective of whether
these services are supplied with respect to bananas of EC and
traditional ACP origin, on the one hand, or with respect to bananas of
third-country or non-traditional ACP origin, on the other. Indeed, it
seems that each of the different service activities taken individually
is virtually the same and can only be distinguished by referring to the
origin of the bananas in respect of which the service activity is being
performed. Similarly, in our view, to the extent that entities provide
these like services, they are like service suppliers.”(190)
129. In China–Publications and Audiovisual Products, the
Panel concluded that when origin is the only factor on which a measure
basis a difference in treatment between domestic service suppliers and
foreign suppliers, the “like service suppliers” requirement is met,
provided there will, or can, be domestic and foreign suppliers that
under the measure are the same in all material respects except for
origin:
“When origin is the only factor on which a measure bases a
difference of treatment between domestic service suppliers and foreign
suppliers, the “like service suppliers” requirement is met, provided
there will, or can, be domestic and foreign suppliers that under the
measure are the same in all material respects except for origin. We note
that similar conclusions have been reached by previous panels.(191)
We observe that in cases where a difference of treatment is not
exclusively linked to the origin of service suppliers, but to other
factors, a more detailed analysis would probably be required to
determine whether service suppliers on either side of the dividing line
are, or are not, “like”.
Therefore, to the extent that, under the measure at issue, a
difference of treatment between foreign-invested enterprises that would,
if not prohibited, engage in the wholesale of imported reading materials
and wholly Chinese-owned enterprises that are permitted to supply this
service is based exclusively on the origin of service suppliers, the “like”
service suppliers requirement in Article XVII is met, as long as there
will, or can, be domestic and foreign suppliers that under the measure
are the same in all material respects except for origin. In our view,
there is no doubt that under the measure at issue, there will, or can,
be foreign-invested enterprises prohibited from engaging in the
wholesale of imported reading materials that are the same in all
material respects as wholly Chinese-owned enterprises permitted to
supply this service, except for their origin. We also note that the
parties do not dispute the likeness of the service suppliers under the
measures at issue. We thus consider that, for the measure at issue, the
“like” service suppliers requirement in Article XVII is met.”(192)
4. “treatment no less favourable”
130. As regards the “no less favourable” treatment element of
Article XVII, the Panel in China — Publications and Audiovisual
Products stated that:
“We must now examine whether the formal prohibition on the supply
of certain services by a foreign service supplier that a like domestic
supplier may undertake, constitutes “no less favourable” treatment
in terms of Article XVII.
This treatment is to be assessed in terms of the “conditions of
competition” between like services and services suppliers, as
specified in Article XVII:3 of the GATS:
“Formally identical or formally different treatment shall be
considered to be less favourable if it modified the conditions of
competition in favour of services or service suppliers of the Member
compared to like services or service suppliers of any other Member.”
In our view, a measure that prohibits foreign service suppliers from
supplying a range of services that may, subject to satisfying certain
conditions, be supplied by the like domestic supplier cannot constitute
treatment “no less favourable”, since it deprives the foreign
service supplier of any opportunity to compete with like domestic
suppliers. In terms of paragraph 3 of Article XVII, such treatment
modifies conditions of competition in the most radical way, by
eliminating all competition by the foreign service supplier with respect
to the service at issue.”(193)
131. The Panel in China — Publications and Audiovisual Products
also discussed the burden of proof on the issue of “less favourable”
treatment, drawing upon jurisprudence developed under the GATT 1994:
“We recall the requirement under Article XVII that a Member accord
“no less favourable treatment” to foreign services or service
suppliers than it does to like domestic ones. Under paragraph 2 of
Article XVII, the treatment need not be identical. Formally different
treatment may be accorded to foreign services or service suppliers, as
long as that treatment does not modify conditions of competition in
favour of like domestic services or service suppliers. Therefore, China’s
formally different treatment of foreign-invested wholesalers with
respect to operating term does not necessarily indicate an inconsistency
with Article XVII. It is for the United States, as the complaining
party, to demonstrate that the formal difference in treatment by China
has modified the conditions of competition in favour of wholly
Chinese-owned wholesalers.
The demonstration of “less favourable treatment” of foreign
services or service suppliers under Article XVII must proceed through
careful analysis of the measure and the market. In examining the
national treatment obligation applying to trade in goods, the Appellate
Body in US — FSC (Article 21.5 — EC) stated:
“The examination of whether a measure involves ‘less favourable
treatment’ of imported products within the meaning of Article III:4 of
the GATT 1994 must be grounded in close scrutiny of the ‘fundamental
thrust and effect of the measure itself’.(194) This examination
cannot be rest on simple assertion, but must be founded on a careful
analysis of the contested measure and of its implications in the
marketplace. At the same time, however, the examination need not be
based on the actual effects of the contested measure in the marketplace.”(195)’(196)
We consider that this statement by the Appellate Body is relevant
also to an analysis under Article XVII of the GATS, since an examination
of “less favourable treatment” involves, in goods as well as
services cases, an analysis of the effects of a measure on conditions of
competition.”(197)
5. “aims-and-effects” test
132. In EC — Bananas III, the Appellate Body rejected the
alleged relevance of the so-called “aims-and-effects” test in the
context of Article XVII:
“We see no specific authority either in Article II or in
Article
XVII of the GATS for the proposition that the ‘aims and effects’ of
a measure are in any way relevant in determining whether that measure is
inconsistent with those provisions. In the GATT context, the ‘aims and
effects’ theory had its origins in the principle of Article III:1 that
internal taxes or charges or other regulations ‘should not be applied
to imported or domestic products so as to afford protection to domestic
production’. There is no comparable provision in the GATS.
Furthermore, in our Report in Japan — Alcoholic Beverages the
Appellate Body rejected the ‘aims and effects’ theory with respect
to Article III:2 of the GATT
1994. The European Communities cites an
unadopted panel report dealing with Article III of the GATT
1947, United
States — Taxes on Automobiles as authority for its proposition,
despite our recent ruling.”(198)
6. Footnote 10
133. In Canada — Autos, one of the measures at issue was the
so-called Canada Value Added (CVA) requirement, according to which a tax
duty exemption was granted, inter alia, only if the amount of
Canadian value added in a manufacturer’s local production of motor
vehicles exceeded a certain level. One component of this CVA requirement
was “maintenance and repair work executed in Canada on buildings,
machinery and equipment used for production purposes”. Canada argued
that there can be no discrimination against these services supplied
through modes 1 and 2, as cross-border supply and consumption abroad of
these services are not technically feasible. Further, Canada pointed out
that “the competitive disadvantage in the foreign provision of many
services listed by the complainants as being affected by the CVA
requirements is inherent in the foreign character of these services and,
as stated in footnote 10 to Article XVII, should not be regarded as a
national treatment restriction.”(199) The Panel, in a finding
not reviewed by the Appellate Body, disagreed with Canada:
“We consider that, although the supply of some repair and
maintenance services on machinery and equipment through modes 1 and 2
might not be technically feasible, as they require the physical presence
of the supplier, all other services listed by the complainants as being
affected by the CVA requirements, including some consulting and advisory
services relating to repair and maintenance of machinery, can be
supplied through modes 1 and 2. We further consider that treatment less
favourable granted to services supplied outside Canada cannot be
justified on the basis of inherent disadvantages due to their foreign
character. Footnote 10 to Article XVII only exempts Members from having
to compensate for disadvantages due to foreign character in the
application of the national treatment provision; it does not provide
cover for actions which might modify the conditions of competition
against services and service suppliers which are already disadvantaged
due to their foreign character.
We therefore find that lack of technical feasibility only excludes
the supply of some repair and maintenance services on machinery and
equipment through modes 1 and 2 from Canada’s national treatment
obligation. We also find that any eventual inherent disadvantages due to
the foreign character of services supplied through modes 1 and 2 do not
exempt Canada from its national treatment obligation with respect to the
CVA requirements.”(200)
XXII. Article XVIII back to top
A. Text of Article XVIII
Article XVIII: Additional Commitments
Members may negotiate commitments with respect to measures affecting
trade in services not subject to scheduling under Articles XVI or
XVII,
including those regarding qualifications, standards or licensing
matters. Such commitments shall be inscribed in a Member’s Schedule.
B. Interpretation and Application of Article XVIII
1. “Reference Paper” on Basic Telecommunications
(a) General
134. Special GATS negotiations in basic telecommunications, in which
Members made commitments in market access and national treatment, were
concluded in 1997. Many Members also took additional commitments under
Article XVIII, by drawing upon the provisions of a negotiated “Reference
Paper” containing pro-competitive regulatory principles applicable to
the telecommunications sector. In the negotiations, Members could elect
to insert any or all of the provisions of the model Reference Paper in
their schedules, and could also insert modified versions of these
provisions. The Reference Paper provisions contained in the schedules of
individual Members may therefore differ from the model provisions below.
(b) Text of model Reference Paper
“Reference Paper
Scope
The following are definitions and principles on the regulatory
framework for the basic telecommunications services.
Definitions
Users mean service consumers and service suppliers.
Essential facilities mean facilities of a public
telecommunications transport network or service that:
(a) are exclusively or predominantly provided by a single or limited
number of suppliers; and
(b) cannot feasibly be economically or technically substituted in
order to provide a service.
A major supplier is a supplier which has the ability to
materially affect the terms of participation (having regard to price and
supply) in the relevant market for basic telecommunications services as
a result of:
(a) control over essential facilities; or
(b) use of its position in the market.
1. Competitive Safeguards
1.1 Prevention of anti-competitive practices in telecommunications
Appropriate measures shall be maintained for the purpose of
preventing suppliers who, alone or together, are a major supplier from
engaging in or continuing anti-competitive practices.
1.2 Safeguards
The anti-competitive practices referred to above shall include in
particular:
(a) engaging in anti-competitive cross-subsidization;
(b) using information obtained from competitors with anti-competitive
results; and
(c) not making available to other services suppliers on a timely
basis technical information about essential facilities and commercially
relevant information which are necessary for them to provide services.
2. Interconnection
2.1 This section applies to linking with suppliers providing public
telecommunications transport networks or services in order to allow the
users of one supplier to communicate with users of another supplier and
to access services provided by another supplier, where specific
commitments are undertaken.
2.2 Interconnection to be ensured
Interconnection with a major supplier will be ensured at any
technically feasible point in the network. Such interconnection is
provided.
(a) under non-discriminatory terms, conditions (including technical
standards and specifications) and rates and of a quality no less
favourable
than that provided for its own like services or for like services of
non-affiliated service suppliers or for its subsidiaries or other
affiliates;
(b) in a timely fashion, on terms, conditions (including technical
standards and specifications) and cost-oriented rates that are
transparent, reasonable, having regard to economic feasibility, and
sufficiently unbundled so that the supplier need not pay for network
components or facilities that it does not require for the service to be
provided; and
(c) upon request, at points in addition to the network termination
points offered to the majority of users, subject to charges that reflect
the cost of construction of necessary additional facilities.
2.3 Public availability of the procedures for interconnection
negotiations
The procedures applicable for interconnection to a major supplier
will be made publicly available.
2.4 Transparency of interconnection arrangements
It is ensured that a major supplier will make publicly available
either its interconnection agreements or a reference interconnection
offer.
2.5 Interconnection: dispute settlement
A service supplier requesting interconnection with a major supplier
will have recourse, either:
(a) at any time; or
(b) after a reasonable period of time which has been made publicly
known
to an independent domestic body, which may be a regulatory body as
referred to in paragraph 5 below, to resolve disputes regarding
appropriate terms, conditions and rates for interconnection within a
reasonable period of time, to the extent that these have not been
established previously.
3. Universal service
Any Member has the right to define the kind of universal service
obligation it wishes to maintain. Such obligations will not be regarded
as anti-competitive per se, provided they are administered in a
transparent, nondiscriminatory and competitively neutral manner and are
not more burdensome than necessary for the kind of universal service
defined by the Member.
4. Public availability of licensing criteria
Where a licence is required, the following will be made publicly
available:
(a) all the licensing criteria and the period of time normally
required to reach a decision concerning an application for a licence;
and
(b) the terms and conditions of individual
licences.
The reasons for the denial of a licence will be made known to the
applicant upon request.
5. Independent regulators
The regulatory body is separate from, and not accountable to, any
supplier of basic telecommunications services. The decisions of and the
procedures used by regulators shall be impartial with respect to all
market participants.
6. Allocation and use of scarce resources
Any procedures for the allocation and use of scarce resources,
including frequencies, numbers and rights of way, will be carried out in
an objective, timely, transparent and non-discriminatory manner. The
current state of allocated frequency bands will be made publicly
available, but detailed identification of frequencies allocated for
specific government uses is not required.
(c) Section 1.1 — Anti-competitive Practices
(i) Concept of “anti-dumping practices”
135. In examining the meaning of “anti-competitive practices”,
the Panel in Mexico — Telecoms stated that, on its own, the
term is “broad in scope, suggesting actions that lessen rivalry or
competition in the market.”(201) Referring to the three
examples ((a)-(c)) of such practices set out in Section 1.2 of the model
Reference Paper, the Panel stated:
“All three examples show that ‘anti-competitive practices’ may
also include action by a major supplier without collusion or
agreement with other suppliers. Cross-subsidization, misuse of
competitor information, and withholding of relevant technical and
commercial information are all practices which a major supplier can, and
might normally, undertake on its own.”(202)
136. The Panel in Mexico — Telecoms also supported its
reasoning in paragraph 135 above by considering the concept of “major
supplier”:
“The use of the term ‘major supplier’ in Section 1, examined in
the light of the definition of this term, suggests that the focus of ‘anti-competitive
practices’ is on a supplier’s ‘ability to materially affect the
terms of participation (having regard to price and supply)’ — in
other words, on monopolization or the abuse of a dominant position in
ways that affect prices or supply. The definition of a major supplier in
terms of suppliers ‘alone or together’ and the requirement in
Section 1.1 of ‘preventing suppliers from engaging in or continuing
anti-competitive practices’ also suggests that horizontal
coordination of suppliers may be relevant. This is supported by the
requirement in Section 1.1 of ‘preventing suppliers from engaging in
or continuing anti-competitive practices’.”(203)
137. The Panel in Mexico — Telecoms was thus able to find
that the term “anti-competitive practices” in Section 1 of Mexico’s
Reference Paper “includes practices in addition to those listed in
Section 1.2, in particular horizontal practices related to price-fixing
and market-sharing agreements.”(204)
(ii) Practices required under a Member’s law
138. In determining whether or not the actions by the major supplier
of telecommunications services in Mexico constituted “anti-competitive
practices” because it was required under national law to act in this
way, the Panel in Mexico — Telecoms found that Section 1.2
contains an explicit example of an anti-competitive practice,
cross-subsidization, which has typically been a government requirement.
The Panel stated:
“Cross-subsidization was and is a common practice in monopoly
regimes, whereby the monopoly operator is required by a government to
cross subsidize, either explicitly or in effect, usually through
government determination or approval of rates or rate structures. Once
monopoly rights are terminated in particular services sectors, however,
such cross-subsidization assumes an anti-competitive character. This
provision, therefore, provides an example of a practice, sanctioned by
measures of a government, that a WTO Member should no longer allow an
operator to ‘continue’. Accordingly, to fulfil its commitments with
respect to ‘competitive safeguards’ in Section 1 of the Reference
Paper, a Member would be obliged to revise or terminate the measures
leading to the cross-subsidization. This example clearly suggests that
not all acts required by a Member’s law are excluded from the scope of
anti-competitive practices.”(205)
139. The Panel in Mexico — Telecoms pointed out further that
obligations in the Reference Paper could and did refer to practices that
were not dependent on their consistency with a Member’s national law.
The Panel stated:
“Section 2.1 illustrates that Members did not hesitate to undertake
obligations, with respect to a major supplier, that defined an objective
outcome — ‘cost-oriented’ interconnection. There is no reason to
suppose, and no language to suggest, that the desired outcome in Section
1 — preventing major suppliers from engaging in anti-competitive
practices — should depend entirely on whether a Member’s own laws
made such practices legal.”(206)
140. The Panel in Mexico — Telecoms observed further that,
although legal doctrines applicable under national law might protect a
firm in compliance with a specific legislative requirement from the
application of national competition law, these doctrines did not provide
cover from international obligations. The Panel stated that:
“[P]ursuant to doctrines applicable under the competition laws of
some Members, a firm complying with a specific legislative requirement
of such a Member (e.g. a trade law authorizing private market-sharing
agreements) may be immunized from being found in violation of the
general domestic competition law. The reason for these doctrines is
that, in most jurisdictions, domestic legislatures have the legislative
power to limit the scope of competition legislation. International
commitments made under the GATS ‘for the purpose of preventing
suppliers … from engaging in or continuing anti-competitive practices’(207)
are, however, designed to limit the regulatory powers of WTO Members.
Reference Paper commitments undertaken by a Member are international
obligations owed to all other Members of the WTO in all areas of the
relevant GATS commitments. In accordance with the principle established
in Article 27 of the Vienna Convention,(208) a requirement
imposed by a Member under its internal law on a major supplier cannot
unilaterally erode its international commitments made in its schedule to
other WTO Members to prevent major suppliers from ‘continuing
anti-competitive practices’.(209) The pro-competitive
obligations in Section 1 of the Reference Paper do not reserve any such
unilateral right of WTO Members to maintain anti-competitive measures.”(210)
141. The Panel in Mexico — Telecoms emphasized, however,
that particular measures addressed in the case were exceptional, and
that the autonomy of Members under Section 1 was not unduly
circumscribed:
“Although we find that measures required by a Member under its
internal laws may fall within the scope of Section 1, the measures
addressed in the case before us are exceptional, and require a major
supplier to engage in acts which are tantamount to anti-competitive
practices which are condemned in domestic competition laws of most WTO
Members, and under instruments of international organizations to which
both parties are members. Section 1 is a voluntary, additional
commitment to maintain certain ‘appropriate’ measures, which
reserves a degree of flexibility for Members in accepting and
implementing such an additional commitment.”(211)
(iii) Types of measures constituting “anti-competitive practices”
Setting of uniform price by the major supplier
142. The Panel in Mexico — Telecoms, in examining the
specific practices of the major supplier, stated that:
“the removal of price competition by the Mexican authorities,
combined with the setting of the uniform price by the major supplier,
has effects tantamount to those of a price-fixing cartel. We have
previously found that horizontal practices such as price-fixing among
competitors are ‘anti-competitive practices’ under Section 1 of
Mexico’s Reference Paper.”(212)
Proportionate return system
143. The Panel in Mexico — Telecoms, in further examining
the specific practices of the major supplier, found that “the
allocation of market share between Mexican suppliers imposed by the
Mexican authorities, combined with the authorization of Mexican
operators to negotiate financial compensation between them instead of
physically transferring surplus traffic, has effects tantamount to those
of a market sharing arrangement between suppliers.”
(iv) Maintaining “appropriate measures”
144. The Panel in Mexico — Telecoms described the meaning of
“appropriate measures” in the following terms:
“We recognize that measures that are ‘appropriate’ in the sense
of Section 1 of Mexico’s Reference Paper would not need to forestall
in every case the occurrence of anti-competitive practices of major
suppliers. However, at a minimum, if a measure legally requires
certain behaviour, then it cannot logically be ‘appropriate’ in preventing
that same behaviour.”
(d) Section 2.1 — Interconnection
(i) “on the basis of the specific commitments undertaken”
145. The Panel in Mexico — Telcoms, in examining whether
certain commitments triggered the interconnection obligation, found
that:
“The wording of Section 2 of the Reference Paper as a whole
suggests that the purpose of the interconnection obligation is to enable
suppliers supplying a basic telecommunications service committed by a
Member in its schedule not to be restricted by unduly onerous
interconnection terms, conditions and rates imposed by a major supplier.
It would not appear to be the purpose of Section 2 to provide the
benefits of the interconnection to a supplier in any telecommunications
subsector or mode of supply, simply because other subsectors and modes
of supply have been committed. It would seem reasonable to conclude,
therefore, that the right to interconnect accorded by Section 2.2 should
apply where, with respect to a particular subsector and mode of
supply, a Member’s market access and national treatment
commitments specifically accords the right to supply that service.”(213)
(ii) Applicability to cross-border supply
146. The Panel in Mexico — Telecoms found that there was no
language in Section 2 to suggest that interconnection obligations did
not apply to the cross-border supply of international telecommunications
services. The Panel noted that in Section 2 there is:
“[N]o reference to the entity that is entitled to be linked to the
public telecommunications transport networks or services; no language
thus exists that would circumscribe the scope, geographic or otherwise,
of the basic telecommunications suppliers to be linked. This provision
therefore could not be read to exclude suppliers outside of Mexico from
“linking” to public telecommunications transport networks and
services in Mexico.”(214)
147. The Panel in Mexico — Telecoms supported the above
observation by noting that from legislative, commercial, contractual or
technical points of view, there was no fundamental difference between
national and international interconnection:
“In sum the ordinary meaning, in the heading of Section 2 of Mexico’s
Reference Paper, of the term ‘interconnection’ — that it does not
distinguish between domestic and international interconnection,
including through accounting rate regimes — is confirmed by an
examination of any ‘special meaning’ that the term ‘interconnection’
may have in telecommunications legislation, or by taking into account
potential commercial, contractual or technical differences inherent in
international interconnection. We find that any ‘special meaning’ of
the term ‘interconnection’ in Section 2 of Mexico’s Reference
Paper does not justify a restricted interpretation of interconnection,
or of the term “linking”, which would exclude international
interconnection, including accounting rate regimes, from the scope of
Section 2 of the Reference Paper.”(215)
148. Further, the Panel in Mexico — Telecoms considered that
the object and purpose of the GATS supported the inclusion of
international interconnection within the disciplines of the Reference
Paper:
“Trade in services is defined in Article I:2 to include the
cross-border supply of a service ‘from the territory of one Member
into the territory of any other Member’. This mode of supply, together
with supply through commercial presence, is particularly significant for
trade in international telecommunications services. There is no reason
to suppose that provisions that ensure interconnection on reasonable
terms and conditions for telecommunications services supplied through
the commercial presence should not benefit the cross-border supply of
the same service, in the absence of clear and specific language to that
effect.”(216)
149. The Panel in Mexico — Telecoms found also that the
existence of an explicitly non-binding understanding on accounting rates
contained in the Report of the negotiating group report did not support
the notion that international interconnection was excluded from the
scope of the interconnection obligations in the Reference Paper. The
Panel stated:
“In sum, the Understanding seeks to exempt a very limited category
of measures, temporarily, and on a non-binding basis, from the scope of
WTO dispute settlement. Simply because Members wished to shield a certain
type of cross-border interconnection from dispute settlement,
because of possible MFN inconsistencies (with respect to
differential rates), it does not follow that they wished to shield all
forms of cross-border interconnection from dispute settlement. The clear
intention to do so is not expressed in the Understanding. This suggests
that the content and purpose of the Understanding is of limited
assistance in interpreting the scope of application of the term “interconnection”
in Section 2.1 of Mexico’s Reference Paper.”(217)
(iii) “major supplier”
150. In examining whether Telmex was a “major supplier”, the
Panel in Mexico — Telecoms analysed first whether there was a
“relevant market”:
“The fact that arrangements for interconnection and termination may
take the form of ‘joint service’ agreements, and may not be
price-oriented, does not change the fact that the market exists. Nor is
it pertinent to the determination of the ‘relevant market’, as
Mexico suggests, that most WTO Members have not undertaken market access
commitments specifically in ‘termination services’; facilities for
the termination and interconnection are essential to the supply
of the services at issue in this case.
Is this market for termination the ‘relevant’ market? For the
purposes of this case, we accept the evidence put forward by the United
States, and uncontested by Mexico, that the notion of demand
substitution — simply put, whether a consumer would consider two
products as ‘substitutable’ — is central to the process of market
definition as it is used by competition authorities. Applying that
principle, we find no evidence that a domestic telecommunications
service is substitutable for an international one, and that an outgoing
call is considered substitutable for an incoming one. One is not a
practical alternative to the other. Even if the price difference between
domestic and international interconnection would change, such a price
change would not make these different services substitutable in the eyes
of a consumer. We accept, therefore, that the ‘relevant market for
telecommunications services’ for the services at issue — voice,
switched data and fax — is the termination of these services in
Mexico.”(218)
(iv) “the ability to materially affect the terms of participation
(having regard to price and supply)”
151. In examining further whether Telmex could affect the market to
the extent required to be a major supplier, the Panel in Mexico — Telecoms found:
“[S]ince Telmex is legally required to negotiate settlement
rates for the entire market for termination of the services at issue
from the United States, we find that it has patently met the
definitional requirement in Mexico’s Reference Paper that it have ‘the
ability to materially affect the terms of participation’, particularly
‘having regard to price’.”(219)
(v) “control over essential facilities” or “use of its position
in the market”
152. The Panel in Mexico — Telecoms found that “[t]he
ability to impose uniform settlement rates on its competitors is the “use”
by Telmex of its special “position in the market”, which is granted
to it under the ILD Rules.”(220)
(e) Section 2.2(b) — Interconnection rates
(i) “cost oriented”
153. In examining the ordinary meaning of the term “cost-oriented”,
the Panel in Mexico — Telecoms stated:
“Rates that are ‘cost-oriented’ thus suggest rates that are brought
into a defined relation to known costs or cost principles. Rates
that are ‘cost-oriented’ would not need to equate exactly to cost,
but should be founded on cost. The degree of flexibility inherent in the
term “cost-oriented” suggests, moreover, that more than one costing
methodology could be used to calculate ‘cost-oriented’ rates.”(221)
154. The Panel in Mexico — Telecoms found that the ordinary
meaning of the phrase “cost oriented” was confirmed by its special
meaning in the telecommunications sector, in particular as expressed in
a key ITU recommendation. The Panel stated:
“In sum, Recommendation D.140 requires in its present form that the
cost elements and the cost model both be clearly related
to the cost of delivering the service. This special meaning of ‘cost-orientated’,
in the context of the ITU, is thus consistent with the ordinary meaning
of the term as it appears in Section 2.2(b) of Mexico’s Reference
Paper. As both parties to this dispute as well as most WTO Members are
also members of the ITU, the special definition adds precision to the
ordinary meaning by classifying allowable cost elements, and
establishing the causality between the cost elements and the services
provided. While leaving a margin of discretion to national authorities
to choose the precise cost method by which to arrive at ‘cost-oriented’
rates, the ITU recommendations indicate that the term ‘cost-oriented
rates’ can be understood as rates related to the cost incurred in
providing the service.”(222)
155. The Panel in Mexico — Telecoms further noted that the
ITU stated in a report that “incremental cost methodologies are
becoming the de facto standard for interconnection pricing around the
world”.(223) The Panel explained:
“These methods focus on the additional future fixed and variable
costs that are attributable to the service. Setting rates in line with
long run incremental costs reflects the view that the regulator should
require prices from dominant or major suppliers that most closely
imitate a fully competitive market, where prices are driven down towards
marginal or incremental costs.(224) The increasing use of
incremental cost methodologies indicates the special meaning that the
term “cost-oriented” is acquiring among WTO Members.”(225)
(ii) “reasonable”
156. In examining the further requirement that cost-oriented rates be
“reasonable”, the Panel in Mexico — Telecoms found that this term
suggested something “judged to be appropriate or suitable to the
circumstances or purpose.”(226) The Panel explained that
this meant that interconnection rates should:
“[R]eflect the overall objectives of the provision that the rates
represent the costs incurred in providing the service. The word ‘reasonable’
thus emphasizes that the application of the cost model chosen by the
Member reflects the costs incurred for the interconnection service.
Flexibility and balance are also part of the notion of ‘reasonable’.”(227)”(228)
(iii) “having regard to economic feasibility”
157. The Panel in Mexico — Telecoms found that the phrase
“having regard to economic feasibility”, which qualifies “cost-oriented
rates”:
“[S]erves merely to underline that the major supplier is entitled
to rates that allow it to undertake interconnection on an “economic”
basis, that is, to make a reasonable rate of return.”(229)
(iv) Evaluating whether rates are “costs oriented”
158. In evaluating whether in fact the rates were “cost-oriented,”
the Panel in Mexico — Telecoms found:
“We think it is justified to presume that the aggregate price
charged by Telmex for the use of network components, when used for
purely domestic traffic, is an indication of the cost-oriented rate, in
the sense of Section 2.2(b) of Mexico’s Reference Paper, for the use
of these same network components in terminating an international call.”(230)
159. Applying this methodology (the difference between the aggregate
price charged for the use of network components when used for purely
domestic traffic, and the price charged for the use of these same
network components in terminating an international call), the Panel in Mexico
— Telecoms found:
“The evidence reveals that the blended average difference in costs
is in the order of 77%. Mindful of the fact that the cost-ceiling
figures used are conservative (since they are based in part on retail
rates for private lines, and Telmex’s interconnection rates to cities
without competition in call origination), we find that a difference of
over 75% above Telmex’s demonstrated cost-ceiling is unlikely to be
within the scope of regulatory flexibility allowed by the notion of ‘cost-oriented’
rates, in the sense of Section 2.2(b) of Mexico’s Reference Paper.”(231)
160. In examining other methodologies for determining whether
interconnection rates were “cost-oriented”, the Panel in Mexico
— Telecoms was not convinced that a comparison of international
grey-market rates was “fully warranted”. It reasoned that “such
capacity may be priced at short-term incremental cost (well below
long-term incremental cost as required under Mexican law for calculating
interconnection charges) and may also result in lower service
reliability and quality”, even though any “substantial difference in
costs” could go some way to support findings under other
methodologies.(232) On the other hand, the Panel found that
benchmarking which involved a “comparison of the market for wholesale
transportation and termination of international calls” in different
countries was a “valid method” for examining whether interconnection
rates were cost-oriented.(233)
Part IV: Progressive Liberalization
XXIII. Article XIX back to top
A. Text of Article XIX
Article XIX: Negotiations on Specific Commitments
1. In pursuance of the objectives of this Agreement, Members shall
enter into successive rounds of negotiations, beginning not later than
five years from the date of entry into force of the WTO Agreement and
periodically thereafter, with a view to achieving a progressively higher
level of liberalization. Such negotiations shall be directed to the
reduction or elimination of the adverse effects on trade in services of
measures as a means of providing effective market access. This process
shall take place with a view to promoting the interests of all
participants on a mutually advantageous basis and to securing an overall
balance of rights and obligations.
2. The process of liberalization shall take place with due respect
for national policy objectives and the level of development of
individual Members, both overall and in individual sectors. There shall
be appropriate flexibility for individual developing country Members for
opening fewer sectors, liberalizing fewer types of transactions,
progressively extending market access in line with their development
situation and, when making access to their markets available to foreign
service suppliers, attaching to such access conditions aimed at
achieving the objectives referred to in Article
IV.
3. For each round, negotiating guidelines and procedures shall be
established. For the purposes of establishing such guidelines, the
Council for Trade in Services shall carry out an assessment of trade in
services in overall terms and on a sectoral basis with reference to the
objectives of this Agreement, including those set out in paragraph 1 of
Article IV. Negotiating guidelines shall establish modalities for the
treatment of liberalization undertaken autonomously by Members since
previous negotiations, as well as for the special treatment for
least-developed country Members under the provisions of paragraph 3 of
Article IV.
4. The process of progressive liberalization shall be advanced in
each such round through bilateral, plurilateral or multilateral
negotiations directed towards increasing the general level of specific
commitments undertaken by Members under this Agreement.
B. Interpretation and Application of Article XIX
1. Article XIX:1
(a) Information exchange
161. On 9–13 December 1996 in Singapore, the Ministerial Conference
endorsed the recommendation that the Council for Trade in Services would
develop an information exchange programme,(234) as part of the
requisite work to facilitate the negotiations of progressive
liberalization of trade in services as mandated by Paragraph 1 of
Article XIX.(235) On 11 May 1998, the Council on Trade in
Services agreed, on an ad referendum basis, on certain aspects
concerning the structure and content of the exchange of information
exercise.(236)
(b) GATS 2000 negotiations
162. At its meeting on 7–8 February 2000, the General Council took
note of a statement by the Chairman recalling that the mandated
negotiations had begun on 1 January 2000. The Council agreed that the
negotiations be conducted in Special Sessions of the Council for Trade
in Services.(237)
(c) Doha Development Agenda
163. On 9–14 November 2001 in Doha, Ministers took note that work
had already been undertaken in the negotiations, initiated in January
2000. They agreed that the conduct, conclusion and entry into force of
the services negotiations would be treated as one part of the single
undertaking.(238)
2. Article XIX:3
(a) GATS 2000 negotiations
164. At its meeting on 28 March 2001, the Council for Trade in
Services adopted the Guidelines and Procedures for the Negotiations on
Trade in Services,(239) which were subsequently reaffirmed by
Ministers meeting in Doha on 9–14 November 2001.(240)
(b) Assessment of trade in services
165. At its meeting on 25 February 2000, the Council decided that the
assessment of trade in services be moved to the agenda of the Special
Session. It was agreed that the assessment should be regarded as an
on-going process rather than a one-off exercise.(241)
3. Negotiations in specific services sectors
(a) Movement of natural persons
166. At its meeting of 21 July
1995,(242) the Council for
Trade in Services decided to adopt the Third Protocol to the General
Agreement on Trade in Services,(243) which had been proposed by
the Negotiating Group on Movement of Natural Persons.
(b) Financial services
167. At its meeting of 21 July 1995, the Committee on Trade in
Financial Services decided to adopt the Second Protocol to the General
Agreement on Trade in Services.(244) Following the adoption of
the Second Protocol, at its meeting of 21 July 1995, the Council for
Trade in Services, so as to address the situation where the Second
Protocol would not enter into force, adopted the Decision on Commitments
in Financial Services(245) and the Second Decision on Financial
Services,(246) both of which had been proposed by the Committee
on Trade in Financial Services.(247)
168. On 12 and 14 November 1997, the Committee on Trade in Financial
Services approved the final results of the negotiations on financial
services, and adopted the Fifth Protocol to the General Agreement on
Trade in Services.(248) Following the adoption of the Fifth
Protocol, the Council for Trade in Services, at its meeting of 12
December 1997, so as to address the situation where the Fifth Protocol
would not enter into force, adopted the Decision of December 1997 on
Commitments in Financial Services,(249) which had been proposed
by the Committee on Trade in Financial Services. The Fifth Protocol
entered into force on 1 March 1999 and remained open for acceptance by
the Members concerned until 15 June 1999.(250) However, some of
those Members failed to accept the Protocol by that date. In order to
allow for the acceptance of the Protocol after the expiry of the
deadline, the Council for Trade in Services has periodically opened the
Fifth Protocol for acceptance upon request by a Member.(251)
(c) Maritime transport services
169. At its meeting of 28 June 1996, the Council for Trade in
Services adopted a Decision to suspend the negotiations on maritime
transport services and to resume them with the commencement of
comprehensive negotiations on services, in accordance with Article XIX
of the GATS, and to conclude them no later than at the end of this first
round of progressive liberalization.(252) The Group was to resume
“with the commencement of comprehensive negotiations on Services”.(253)
A Special Session of the Council for Trade in Services formally launched
the new negotiations on services on 25 February 2000.(254)
(d) Basic telecommunications
170. On 30 April 1996, the Council for Trade in Services decided to
adopt the Decision on Commitments in Basic Telecommunications and the
Fourth Protocol to the General Agreement on Trade in Services,(255)
both of which had been proposed by the Negotiating Group on Basic
Telecommunications.
(e) Professional services
171. With respect to the establishment of the Working Party on
Professional Services, and its successor, the Working Party on Domestic
Regulation, see paragraphs 208–210
below.
(i) Disciplines on domestic regulation
172. With respect to disciplines on domestic regulation, see
paragraph 60 above.
XXIV. Article XX back to top
A. Text of Article XX
Article XX: Schedule of Specific Commitments
1. Each Member shall set out in a schedule the specific commitments
it undertakes under Part III of this Agreement. With respect to sectors
where such commitments are undertaken, each Schedule shall specify:
(a) terms, limitations and conditions on market access;
(b) conditions and qualifications on national treatment;
(c) undertakings relating to additional commitments;
(d) where appropriate the time-frame for implementation of such
commitments; and
(e) the date of entry into force of such commitments.
2. Measures inconsistent with both
Articles XVI and XVII shall be
inscribed in the column relating to Article XVI. In this case the
inscription will be considered to provide a condition or qualification
to Article XVII as well.
3. Schedules of specific commitments shall be annexed to this
Agreement and shall form an integral part thereof.
B. Interpretation and Application of Article XX
1. General
(a) Committee on Specific Commitments
173. With regard to the establishment and terms of reference of the
Committee on Specific Commitments under the GATS, see paragraph 215
below.
174. At the Committee meeting of 10 April
2006,(256) the
Chairman reported that during informal discussions, Members’ attention
had been drawn to an error in the French version of the Services
Sectoral Classification List where parts of the headings of the
sub-sectors corresponding to CPC 9401 and CPC 9403 had been inverted.
The correct correspondence was set out in the report of the meeting, as
well as in a corrigendum to the French version of the Guidelines for the
Scheduling of Commitments under the General Agreement on Trade in
Services (GATS). (257)
175. At the meeting of 5 October
2006,(258) delegations
arrived at a common understanding to the effect that dredging services,
which are not explicitly mentioned in the CPC, are covered by CPC 5133
— “Construction work for civil engineering for waterways, harbours,
dams, and other water works.”
176. This information is also contained
in the Annual Report of the Committee on Specific Commitments to the
Council for Trade in Services 2006, S/CSC/12, 21 November 2006.
2. Interpretation of schedules
(a) General
177. The Appellate Body in US — Gambling observed that the
interpretative approach for a GATS Schedule is very similar to that used
for a tariff schedule under GATT 1994, relying on Articles 31 and 32 of
the Vienna Convention:
“In the context of the GATS, Article XX:3 explicitly provides that
Members’ Schedules are an “integral part” of that agreement. Here,
too, the task of identifying the meaning of a concession in a GATS
Schedule, like the task of interpreting any other treaty text, involves
identifying the common intention of Members. Like the Panel — and,
indeed, both the participants — we consider that the meaning of the
United States’ GATS Schedule must be determined according to the rules
codified in Article 31 and, to the extent appropriate, Article 32 of the
Vienna Convention.(259)
178. The Panel and the Appellate Body in US
— Gambling considered
the need for precision and clarity in scheduling. See above, paragraphs
1–2.
179. In China–Publications and Audiovisual Products, the
Panel summarized the guidance provided by the Appellate Body (elaborated
in detail below) on the various instruments that have potential value in
the interpretation of GATS schedules:
“Apart from the WTO Agreement and its constituent parts, various
instruments have been recognized in previous dispute settlement cases as
having potential value in assisting the interpretation of GATS
schedules. These instruments include the 1991 United Nations Provisional
Central Product Classification (hereafter “CPC”) and the GATT
Secretariat document “Services Sectoral Classification List” (MTN.GNS/W/120,
hereafter “W/120”), both of which deal with the classification of
services. The Appellate Body has identified document W/120 and the 1993
Guidelines for the Scheduling of Specific Commitments under the GATS
(hereafter the “1993 Scheduling Guidelines”), which are not binding
on WTO Members, as supplementary means of interpretation within the
meaning of Article 32 of the Vienna Convention.“(260),(261)
(b) 1993 Scheduling Guidelines(262)
180. The Appellate Body in US — Gambling found that the 1993
Scheduling Guidelines were a “supplementary means of interpretation,
including the preparatory work of the treaty and the circumstances of
its conclusion”, in terms of Article 32 of the Vienna Convention.(263)
The Appellate Body noted, nonetheless, the importance of the Guidelines
(and document W/120) which were:
“[P]repared and circulated at the request of parties to the Uruguay
Round negotiations for the express purpose of assisting those parties in
the preparation of their offers. These documents undoubtedly served,
too, to assist parties in reviewing and evaluating the offers made by
others. They provided a common language and structure which, although
not obligatory, was widely used and relied upon.”(264)
181. The Appellate Body in US — Gambling therefore set aside
the Panel’s finding that the 1993 Guidelines are “context” under
Article 31(2) of the Vienna Convention. Explaining its disagreement with
the Panel’s justification that these documents “were agreed upon by
Members with a view to using such documents, not only in the negotiation
of their specific commitments, but as interpretative tools in the
interpretation and application of Members’ scheduled commitments”,(265)
the Appellate Body stated:
“In our opinion, the Panel’s description of how these documents
were created and used may suggest that the parties agreed to use such
documents in the negotiations of their specific commitments. The Panel
cited no evidence, however, directly supporting its further conclusion,
in the quotation above, that the agreement of the parties encompassed an
agreement to use the documents “as interpretative tools in the
interpretation and application of Members’ scheduled commitments.”(266)
182. The Appellate Body in US — Gambling stated that the
1993 Scheduling Guidelines also do not constitute “subsequent practice”
under Article 31(3)(b) of the Vienna Convention:
“Although they may be relevant in identifying the United States’
practice, they do not establish a common, consistent, discernible
pattern of acts or pronouncements by Members as a whole. Nor do they
demonstrate a common understanding among Members that specific
commitments are to be interpreted by reference to (…) the 1993
Scheduling Guidelines.”(267)
(c) 2001 Scheduling Guidelines(268)
183. The Appellate Body in US — Gambling stated that the
1993 Scheduling Guidelines do not constitute “subsequent practice”
under Article 31(3)(b) of the Vienna Convention, with respect to
pre-existing commitments:
“Although the 2001 Guidelines were explicitly adopted by the
Council for Trade in Services, this was in the context of the
negotiation of future commitments and in order to assist in the
preparation of offers and requests in respect of such commitments. As
such, they do not constitute evidence of Members’ understanding
regarding the interpretation of existing commitments.”(269)
184. The Appellate Body in US — Gambling stated that the
Guidelines for the Scheduling of Specific Commitments do constitute “supplemental
means of interpretation” of GATS, in accordance with Article 32 of the
Vienna Convention.(270) The Appellate Body found that the Panel
had erred in characterising the Guidelines as “context” under
Article 31 of the Vienna Convention.(271)
(d) Document W/120(272)
185. The Appellate Body in US — Gambling found that document
W/120 was a “supplementary means of interpretation, including the
preparatory work of the treaty and the circumstances of its conclusion”,
in terms of Article 32 of the Vienna Convention.(273) The
Appellate Body noted, nonetheless, the importance W/120 (and the 1993
Scheduling Guidelines) which were:
“[P]repared and circulated at the request of parties to the Uruguay
Round negotiations for the express purpose of assisting those parties in
the preparation of their offers. These documents undoubtedly served,
too, to assist parties in reviewing and evaluating the offers made by
others. They provided a common language and structure which, although
not obligatory, was widely used and relied upon.”(274)
186. The Appellate Body in US — Gambling therefore set aside
the Panel’s finding that document W/120 (and the 1993 Scheduling
Guidelines) are “context” under Article 31(2) of the Vienna
Convention. Explaining its disagreement with the Panel’s justification
that the documents “were agreed upon by Members with a view to using
such documents, not only in the negotiation of their specific
commitments, but as interpretative tools in the interpretation
and application of Members’ scheduled commitments”,(275) the
Appellate Body stated:
“In our opinion, the Panel’s description of how these documents
were created and used may suggest that the parties agreed to use such
documents in the negotiations of their specific commitments. The Panel
cited no evidence, however, directly supporting its further conclusion,
in the quotation above, that the agreement of the parties encompassed an
agreement to use the documents “as interpretative tools in the
interpretation and application of Members’ scheduled commitments.”(276)
187. The Appellate Body in US — Gambling noted a direct
reference to W/120 in the DSU, providing direct support for the
relevance of W/120 in identifying services sectors in GATS Schedules:
“Article 22.(f) of the DSU provides that, for purposes of
suspending concessions, “‘sector’ means …. (ii) with respect to
services, a principal sector as identified in the current ‘Services
Sectoral Classification List’ which identifies such sectors”. A
footnote adds that “[t]he list in document MTN.GNS/W/120
identifies
eleven sectors.” This reference confirms the relevance of W/120 to the
task of identifying service sectors in GATS Schedules, but does not
appear to assist in the task of ascertaining within which subsector of a
Member’s Schedule a specific service falls.”(277)
(e) UN Provisional Central Product Classification (“CPC”)(278)
188. The Appellate Body in US — Gambling clarified the
relationship between the different levels of disaggregation within the
CPC:
“As the CPC is a decimal system, a reference to an aggregate
category must be understood as a reference to all of the constituent
parts of that category. Put differently, a reference to a three-digit
CPC Group should, in the absence of any indication to the contrary, be
understood as a reference to all the four-digit Classes and five-digit
Sub-classes that make up the group; and a reference to a four-digit
Class should be understood as a reference to all of the five-digit
Sub-classes that make up that Class.”(279)
(f) Other Members’ Schedules
189. The Appellate Body in US — Gambling stated that other
Members’ Schedules could be relevant context for the interpretation of
a particular Schedule:
“Both participants, as well as the Panel, accepted that other
Members’ Schedules constitute relevant context for the interpretation
of subsector 10.D of the United States’ Schedule. As the Panel pointed
out, this is the logical consequence of Article XX:3 of the
GATS, which
provides that Members’ Schedules are “an integral part” of the
GATS. We agree. At the same time, as the Panel rightly acknowledged, use
of other Members’ Schedules as context must be tempered by the
recognition that “[e]ach Schedule has its own intrinsic logic, which
is different from the US Schedule.”“(280)
(g) Document published by a government agency
190. The Appellate Body in US — Gambling observed that,
given the findings it had already made in the case, it did not need to
determine whether the Panel erred in using a document of the USITC to
confirm its interpretation of the US Schedule.(281) The Panel had
found that the USITC document, which related the service sectors in the
US Schedule to corresponding CPC classifications, had “probative value
as to how the US government views the structure and the scope of the US
Schedule, and, hence, its GATS obligations”.(282)
3. Article XX:1
191. The Appellate Body in US — Gambling deduced that the
structure of the GATS led to two consequences for the scheduling of a
specific commitment covering a particular service:
“First, because the GATS covers all services except those supplied
in the exercise of governmental authority, it follows that a Member may
schedule a specific commitment in respect of any service. Secondly,
because a Member’s obligations regarding a particular service depend
on the specific commitments that it has made with respect to the sector
or subsector within which that service falls, a specific service cannot
fall within two different sectors or subsectors. In other words, the
sectors and subsectors in a Member’s Schedule must be mutually
exclusive.”(283)
4. Article XX:1(d)
192. The Panel in Mexico — Telecoms, in examining a market
access commitment made subject to a permit that would not be granted “until
the corresponding regulations are issued”, explained the role and
application of paragraph (d):
“We therefore consider that subparagraph (d) of Article XX:1
requires the specification of a time-frame for implementation should a
Member wish to implement a commitment after its entry into force. Where
a Member does not specify a time-frame, implementation must be deemed to
be concurrent with the entry into force of the commitment.”(284)
193. Referring to the circumstances of the case, the Panel in Mexico
— Telecoms then pointed out that:
“[E]ven if Mexico had needed time to complete the issuance of the
regulations beyond the time of entry into force of its commitment on 5
February 1998, Mexico should, at the very minimum, have initiated that
process leading to the issuance of the regulations. There is no
evidence, however, that Mexico has taken any steps to comply with
its commitment.”(285)
194. With respect to the length of time in which implementation by
Mexico could reasonably have been concluded, the Panel in Mexico — Telecoms stated:
“We do not consider it necessary to rule on the length of a time
period within which the implementation of Mexico’s commitment might
reasonably have been concluded, as more than five years have passed
since the entry into force of Mexico’s commitment, and Mexico still
has indicated no date by which it intends to issue the relevant
regulations and permits.”(286)
195. The Panel in Mexico — Telecoms found that Mexico’s
refusal to authorize the supply of services by commercial agencies was
inconsistent with the market access commitment inscribed in its
schedule.
5. Article XX:2
196. The Panel in China — Publications and Audiovisual Products
explained that:
“This schedule structure gives each WTO Member
flexibility in
defining the precise scope of its commitments. Having chosen on which
service sectors it wishes to commit, a Member may specify the exact
extent to which these commitments are to apply by indicating full market
access and national treatment, or partial or no commitment with respect
to the four modes of supply. As stated, this case involves only the
supply of distribution services through “commercial presence”, also
known as “mode 3”. In the case of making partial commitment, a
Member may inscribe limitations in one of the two columns: either under
“limitations on market access” or under “limitations on national
treatment”. If a limitation affects both market access and
national treatment then, by a convention set out in Article XX:2 of the
GATS (avoiding the need to repeat an inscription), it is to be inscribed
only in the market access column.”(287)
6. Article XX:3
197. The Panel in US — Gambling stated that all Members’
Schedules annexed to the GATS, according to Article
XX:3, are an
integral part of the Agreement.(288)
198. The Appellate Body in US — Gambling found that, as in
the context of the GATT 1994, the interpretation of schedules of
specific commitments under the GATS must be based on the customary rules
of interpretation, codified in Articles 31 and 32 of the Vienna
Convention.
“In the context of the GATT 1994, the Appellate Body has observed
that, although each Member’s Schedule represents the tariff
commitments that bind one Member, Schedules also represent a common
agreement among all Members.(289) Accordingly, the task of
ascertaining the meaning of a concession in a Schedule, like the task of
interpreting any other treaty text, involves identifying the common
intention of Members, and is to be achieved by following the
customary rules of interpretation of public international law, codified
in Articles 31 and 32 of the Vienna Convention.(290)
In the context of the GATS, Article XX:3 explicitly provides that
Members’ Schedules are an “integral part” of that agreement. Here,
too, the task of identifying the meaning of a concession in a GATS
Schedule, like the task of interpreting any other treaty text, involves
identifying the common intention of Members. Like the Panel(291)
— and, indeed, both the participants(292) — we consider that
the meaning of the United States’ GATS Schedule must be determined
according to the rules codified in Article 31 and, to the extent
appropriate, Article 32 of the Vienna Convention.”
199. The Panel in China — Publications and Audiovisual Products,
referring to Article XX:3 and prior Appellate Body pronouncements,
stated that “[w]e recognize that GATS schedules are an integral part
of the GATS,(293) and are thus legally part of the WTO Agreement.
Consistent with Article 3.2 of the DSU, we interpret commitments in
schedules according to the “customary rules of interpretation of
public international law” which include Articles 31 and 32 of the
Vienna Convention.”(294)
XXV. Article XXI back to top
A. Text of Article XXI
Article XXI: Modification of Schedules
1. (a)
A Member (referred to in this Article as the “modifying
Member”) may modify or withdraw any commitment in its Schedule, at any
time after three years have elapsed from the date on which that
commitment entered into force, in accordance with the provisions of this
Article.
(b)
A modifying Member shall notify its intent to modify or withdraw
a commitment pursuant to this Article to the Council for Trade in
Services no later than three months before the intended date of
implementation of the modification or withdrawal.
2. (a)
At the request of any Member the benefits of which under this
Agreement may be affected (referred to in this Article as an “affected
Member”) by a proposed modification or withdrawal notified under
subparagraph 1 (b), the modifying Member shall enter into negotiations
with a view to reaching agreement on any necessary compensatory
adjustment. In such negotiations and agreement, the Members concerned
shall endeavour to maintain a general level of mutually advantageous
commitments not less favourable to trade than that provided for in
Schedules of specific commitments prior to such negotiations.
(b)
Compensatory adjustments shall be made on a
most-favoured-nation
basis.
3. (a)
If agreement is not reached between the modifying Member and
any affected Member before the end of the period provided for
negotiations, such affected Member may refer the matter to arbitration.
Any affected Member that wishes to enforce a right that it may have to
compensation must participate in the arbitration.
(b)
If no affected Member has requested arbitration, the modifying
Member shall be free to implement the proposed modification or
withdrawal.
4. (a)
The modifying Member may not modify or withdraw its commitment
until it has made compensatory adjustments in conformity with the
findings of the arbitration.
(b)
If the modifying Member implements its proposed modification or
withdrawal and does not comply with the findings of the arbitration, any
affected Member that participated in the arbitration may modify or
withdraw substantially equivalent benefits in conformity with those
findings. Notwithstanding Article II, such a modification or withdrawal
may be implemented solely with respect to the modifying Member.
5. The Council for Trade in Services shall establish procedures for
rectification or modification of Schedules. Any Member which has
modified or withdrawn scheduled commitments under this Article shall
modify its Schedule according to such procedures.
B. Interpretation and Application of Article XXI
1. Article XXI:1(b)
(a) Format for notifications
200. With respect to the format for notifications under
paragraph 1(b), see the Guidelines for Notifications under the General Agreement
on Trade in Services.(295)
2. Article XXI:5
(a) Procedures for the rectification or modification of schedules
201. Since the conclusion of the Uruguay Round, an ad hoc
certification procedure had been applied for the purpose of introducing
changes or adding new commitments to Members’ Schedules, pending the
adoption of a formal set of procedures under Article XXI (Modification
of Schedules). On 20 July 1999, the Council for Trade in Services
adopted the Procedures for the Implementation of Article XXI upon the
recommendation of the Committee on Specific Commitments.(296) The
Procedures are to be used whenever a Member intends to modify or
withdraw a scheduled commitment.
202. On 14 April 2000, upon a recommendation of the Committee on
Specific Commitments, the Council for Trade in Services adopted the
Procedures for the Certification of Rectifications or Improvements to
Schedules of Specific Commitments.(297) These Procedures are to
be used whenever a Member intends to undertake new commitments, improve
existing ones, or introduce rectifications or changes of a purely
technical nature that do not alter the scope on the substance of the
existing commitments.
Part V: Institutional Arrangements
XXVI. Article XXII back to top
A. Text of Article XXII
Article XXII: Consultation
1. Each Member shall accord sympathetic consideration to, and shall
afford adequate opportunity for, consultation regarding such
representations as may be made by any other Member with respect to any
matter affecting the operation of this Agreement. The Dispute Settlement
Understanding (DSU) shall apply to such consultations.
2. The Council for Trade in Services or the Dispute Settlement Body (DSB)
may, at the request of a Member, consult with any Member or Members in
respect of any matter for which it has not been possible to find a
satisfactory solution through consultation under paragraph
1.
3. A Member may not invoke
Article XVII, either under this Article or
Article XXIII, with respect to a measure of another Member that falls
within the scope of an international agreement between them relating to
the avoidance of double taxation. In case of disagreement between
Members as to whether a measure falls within the scope of such an
agreement between them, it shall be open to either Member to bring this
matter before the Council for Trade in Services.(11) The Council
shall refer the matter to arbitration. The decision of the arbitrator
shall be final and binding on the Members.
(footnote original) 11 With respect to agreements on
the avoidance of double taxation which exist on the date of entry into
force of the WTO Agreement, such a matter may be brought before the
Council for Trade in Services only with the consent of both parties to
such an agreement.
B. Interpretation and Application of Article XXII
No jurisprudence or decision of a competent WTO body.
XXVII. Article XXIII back to top
A. Text of Article XXIII
Article XXIII: Dispute Settlement and Enforcement
1. If any Member should consider that any other Member fails to carry
out its obligations or specific commitments under this Agreement, it may
with a view to reaching a mutually satisfactory resolution of the matter
have recourse to the DSU.
2. If the DSB considers that the circumstances are serious enough to
justify such action, it may authorize a Member or Members to suspend the
application to any other Member or Members of obligations and specific
commitments in accordance with Article 22 of the DSU.
3. If any Member considers that any benefit it could reasonably have
expected to accrue to it under a specific commitment of another Member
under Part III of this Agreement is being nullified or impaired as a
result of the application of any measure which does not conflict with
the provisions of this Agreement, it may have recourse to the DSU. If
the measure is determined by the DSB to have nullified or impaired such
a benefit, the Member affected shall be entitled to a mutually
satisfactory adjustment on the basis of paragraph 2 of Article XXI,
which may include the modification or withdrawal of the measure. In the
event an agreement cannot be reached between the Members concerned,
Article 22 of the DSU shall apply.(298),(299).
B. Interpretation and Application of Article XXIII
1. Article XXIII:1
(a) Relationship with Article 3.8 of the DSU
203. In EC — Bananas III, the Appellate Body considered that
the Panel had erred in extending the scope of the presumption of
nullification or impairment in Article 3.8 of the DSU to violation
claims made under the GATS:
“We observe, first of all, that the European Communities attempts
to rebut the presumption of nullification or impairment with respect to
the Panel’s findings of violations of the GATT 1994 on the basis that
the United States has never exported a single banana to the European
Community, and therefore, could not possibly suffer any trade damage.
The attempted rebuttal by the European Communities applies only to one
complainant, the United States, and to only one agreement, the GATT
1994. In our view, the Panel erred in extending the scope of the
presumption in Article 3.8 of the DSU to claims made under the GATS as
well as to claims made by the Complaining Parties other than the United
States.”(300)
204. The Panel in Mexico — Telecoms understood these
statements by the Appellate Body to mean that the GATS does not require
that, in the case of a violation complaint (Article XXIII:1 of the
GATS), “nullification or impairment” of treaty benefits has to be
claimed by the complaining WTO Member and examined by a Panel:
“ Unlike some other covered agreements (e.g. GATT Article XXIII:1
in connection with Article 3.8 of the DSU), the GATS does not require
that, in the case of a violation complaint (GATS Article
XXIII:1), ‘nullification
or impairment’ of treaty benefits has to be claimed by the complaining
WTO Member and examined by a Panel. Whereas Article XXIII:1 of the GATT
specifically conditions access to WTO dispute settlement procedures on
an allegation that a ‘benefit’ or the ‘attainment of an objective’
under that agreement are being ‘nullified or impaired’, the
corresponding provision in the GATS (Article
XXIII:1) permits access to
dispute settlement procedures if a Member “fails to carry out its
obligations or specific commitments” under the GATS. In this respect,
we note that the Appellate Body in EC — Bananas III stated that
the panel in that case “erred in extending the scope of the
presumption in Article 3.8 of the DSU to claims made under the GATS”.(301)
Having found that Mexico has violated certain provisions of the GATS, we
are therefore bound by Article 19 of the DSU to proceed directly to the
recommendation set out in that provision.”(302)
2. Articles of the GATS invoked in panel and Appellate Body
proceedings
205. For a table of disputes under the GATS, see the table of “Articles
of the Covered Agreements Invoked in Panel and Appellate Body
Proceedings” in the Chapter on the DSU.
3. Decision on Certain Dispute Settlement Procedures for the General
Agreement on Trade in Services
206. On 1 March 1995, pursuant to the Ministers’ Decision on
Certain Dispute Settlement Procedures for the General Agreement on Trade
in Services, the Council for Trade in Services adopted the Decision on
Certain Dispute Settlement Procedures for the General Agreement on Trade
in Services,(303) which called for the establishment of a roster
of panellists.(304) The text of the decision is as follows:
“Decision on Certain Dispute Settlement Procedures for the General
Agreement on Trade in Services
Ministers,
Decide to recommend that the Council for Trade in Services at its
first meeting adopt the decision set out below.
The Council for Trade in Services,
Taking into account the specific nature of the obligations and
specific commitments of the Agreement, and of trade in services, with
respect to dispute settlement under Articles XXII and
XXIII,
Decides as follows:
1. A roster of panellists shall be established to assist in the
selection of panellists.
2. To this end, Members may suggest names of individuals possessing
the qualifications referred to in Paragraph 3 for inclusion on the
roster, and shall provide a curriculum vitae of their qualifications
including, if applicable, indication of sector-specific expertise.
3. Panels shall be composed of well-qualified governmental and/or
non-governmental individuals who have experience in issues related to
the General Agreement on Trade in Services and/or trade in services,
including associated regulatory matters. Panellists shall serve in their
individual capacities and not as representatives of any government or
organisation.
4. Panels for disputes regarding sectoral matters shall have the
necessary expertise relevant to the specific services sectors which the
dispute concerns.
5. The Secretariat shall maintain the roster and shall develop
procedures for its administration in consultation with the Chairman of
the Council.”
207. On 4 October 1995, the Council for Trade in Services decided
that, given the comprehensive nature of the indicative list established
by the DSB pursuant to Article 8(4) of the DSU, there was no need for
the Council to establish a separate roster of serving panellists.(305)
XXVIII. Article XXIV back to top
A. Text of Article XXIV
Article XXIV: Council for Trade in Services
1. The Council for Trade in Services shall carry out such functions
as may be assigned to it to facilitate the operation of this Agreement
and further its objectives. The Council may establish such subsidiary
bodies as it considers appropriate for the effective discharge of its
functions.
2. The Council and, unless the Council decides otherwise, its
subsidiary bodies shall be open to participation by representatives of
all Members.
3. The Chairman of the Council shall be elected by the Members.
B. Interpretation and Application of Article XXIV
1. Article XXIV.1
(a) Establishment of subsidiary bodies
(i) Committee on Trade in Financial Services
208. On 1 March 1995, pursuant to the Ministers’ Decisions in
Marrakesh, the Council for Trade in Services adopted the Decision on
Institutional Arrangements for the General Agreement on Trade in
Services,(306) thereby establishing the Committee on Trade in
Financial Services.(307) Its responsibilities are listed in
paragraph 2 of the Decision and comprise, inter alia, the duty:
(a) to keep under continuous review and surveillance the application
of the Agreement with respect to the sector concerned;
(b) to formulate proposals or recommendations for consideration by
the Council in connection with any matter relating to trade in the
sector concerned;
(c) if there is an annex pertaining to the sector, to consider
proposals for amendment of that sectoral annex, and to make appropriate
recommendations to the Council;
(d) to provide a forum for technical discussions, to conduct studies
on measures of Members and to conduct examinations of any other
technical matters affecting trade in services in the sector concerned;
(e) to provide technical assistance to developing country Members and
developing countries negotiating accession to the Agreement Establishing
the World Trade Organization in respect of the application of
obligations or other matters affecting trade in services in the sector
concerned; and
(f) to cooperate with any other subsidiary bodies established under
the General Agreement on Trade in Services or any international
organizations active in any sector concerned.(308)
(ii) Working Party on Professional Services and Working Party on
Domestic Regulation
209. On 1 March 1995, pursuant to
paragraph 2 of the Decision on
Professional Services, the Council for Trade in Services established a
Working Party on Professional Services.(309) With respect to
disciplines on domestic regulation and mutual recognition guidelines,
see paragraph 60 above.
210. The Working Party reported to the Council for Trade in Services
on an annual basis.(310)
211. On 26 April 1999, the Council for Trade in Services discussed
the issue of how to manage the two overlapping mandates under Article
VI:4 which called upon the Council to develop disciplines on domestic
regulation in all services sectors, and the Decision on Professional
Services which called upon the Working Party on Professional Services (WPPS)
to fulfill the same task for professional services.(311) For this
purpose, at the same meeting, the Council for Trade in Services adopted
a decision establishing the Working Party on Domestic Regulation (WPDR).(312)
The WPDR would replace the WPPS and would be responsible for carrying
out all the work foreseen under Article
VI:4. It would give priority to
the development of horizontal disciplines applicable to all services
sectors, while retaining the possibility of developing further
disciplines applicable to specific sectors or groups of sectors,
including the development of general disciplines for professional
services.(313)
212. In 2005, the WTO Hong Kong Ministerial Declaration instructed
negotiators to develop disciplines on domestic regulations and to adopt
text for adoption before the end of the Round. Annex C of the
Ministerial Declaration provides that:
“5. Members shall develop disciplines on domestic regulation
pursuant to the mandate under Article VI:4 of the GATS before the end of
the current round of negotiations. We call upon Members to develop text
for adoption. In so doing, Members shall consider proposals and the
illustrative list of possible elements for Article VI:4 disciplines(2).
Footnote 2 As attached to the Report of the Chairman of
the Working Party on Domestic Regulation to the Special Session of the
Council for Trade in Services on 15 November 2005, contained in document
JOB(05)/280.”
213. The WPDR reports to the Council for Trade in Services on an
annual basis.(314)
(iii) Working Party on GATS Rules
214. At its meeting of 30 March 1995, the Council for Trade in
Services established a Working Party on GATS Rules to carry out the
negotiating mandates contained in the GATS on “Emergency Safeguard
Measures” (Article X), “Government Procurement”
(Article XIII) and
“Subsidies” (Article XV).(315)
(iv) Committee on Specific Commitments
215. On 4 October 1995, the Council for Trade in Services established
the Committee on Specific Commitments.(316) At its meeting on 22
November 1995, the Council for Trade in Services adopted the Decision on
the Terms of Reference for the Committee on Specific Commitments.(317)
(v) Negotiating Groups on Natural Persons, Maritime Transport
Services and Basic Telecommunications
216. The Negotiating Group on Natural Persons, the Negotiating Group
on Maritime Transport Services and the Negotiating Group on Basic
Telecommunications were established by Ministerial Decisions at
Marrakesh.
2. Rules of procedure of the Council for Trade in Services
(a) Rules of procedure
217. On 4 October 1995, the Council for Trade in Services
adopted(318)
the Rules of Procedure of the General Council, along with appropriate
modifications.(319) See also the Chapter on the WTO Agreement,
Section V.B.5(b).
(b) Observer status
218. At is meeting of 1 March 1995, the Council for Trade in Services
took note of the decision by the General Council of 31 January 1995(320)
in which it granted observer status to a number of governments and
separate territories and also covered observership to the subsidiary
bodies to the General Council, including the Council for Trade in
Services.(321) The Council for Trade in Services also took note
of the decision of the General Council which agreed on an ad hoc
arrangement whereby the IMF, the World Bank, the UN and UNCTAD were
invited to participate as observers in the first meetings of the General
Council and its subsidiary Councils.(322)
219. At its meeting on 14 April 2000, the Council for Trade in
Services agreed to grant the World Health Organization and the World
Tourism Organization observer status on an ad hoc basis.(323)
At its meeting on 11 April 2006, the Council for Trade in Services,
following previous practice, decided to grant ad hoc observer
status to the Universal Postal Union [s/c/26].
C. Decision on Institutional Arrangements for the General Agreement
on Trade in Services
220. With respect to institutional arrangements for the GATS,
Ministers at the 1994 Marrakesh Ministerial conference adopted the
following Decision:
“Decision on Institutional Arrangements for the General Agreement
on Trade in Services
Ministers,
Decide to recommend that the Council for Trade in Services at its
first meeting adopt the decision on subsidiary bodies set out below.
The Council for Trade in Services,
Acting pursuant to Article XXIV with a view to facilitating the
operation and furthering the objectives of the General Agreement on
Trade in Services,
Decides as follows:
1. Any subsidiary bodies that the Council may establish shall report
to the Council annually or more often as necessary. Each such body shall
establish its own rules of procedure, and may set up its own subsidiary
bodies as appropriate.
2. Any sectoral committee shall carry out responsibilities as
assigned to it by the Council, and shall afford Members the opportunity
to consult on any matters relating to trade in services in the sector
concerned and the operation of the sectoral annex to which it may
pertain. Such responsibilities shall include:
(a) to keep under continuous review and
surveillance the application
of the Agreement with respect to the sector concerned;
(b) to formulate proposals or recommendations for consideration by
the Council in connection with any matter relating to trade in the
sector concerned;
(c) if there is an annex pertaining to the sector, to consider
proposals for amendment of that sectoral annex, and to make appropriate
recommendations to the Council;
(d) to provide a forum for technical discussions, to conduct studies
on measures of Members and to conduct examinations of any other
technical matters affecting trade in services in the sector concerned;
(e) to provide technical assistance to developing country Members and
developing countries negotiating accession to the Agreement Establishing
the World Trade Organization in respect of the application of
obligations or other matters affecting trade in services in the sector
concerned; and
(f) to cooperate with any other subsidiary bodies established under
the General Agreement on Trade in Services or any international
organizations active in any sector concerned.”
XXIX. Article XXV back to top
A. Text of Article XXV
Article XXV: Technical Cooperation
1. Service suppliers of Members which are in need of such assistance
shall have access to the services of contact points referred to in
paragraph 2 of Article IV.
2. Technical assistance to developing countries shall be provided at
the multilateral level by the Secretariat and shall be decided upon by
the Council for Trade in Services.
B. Interpretation and Application of Article XXV
No jurisprudence or decision of a competent WTO body.
XXX. Article XXVI back to top
A. Text of Article XXVI
Article XXVI: Relationship with Other International Organizations
The General Council shall make appropriate arrangements for
consultation and cooperation with the United Nations and its specialized
agencies as well as with other intergovernmental organizations concerned
with services.
B. Interpretation and Application of Article XXVI
1. Agreement between the International Telecommunication Union and
the World Trade Organization
221. On 26 May 2000, the Council for Trade in Services adopted the
Cooperation Agreement between the International Telecommunication Union
and the World Trade Organization.(324) At its meeting on 10
October 2000, the General Council approved the Agreement between the ITU
and WTO contained in document S/C/11 and consequently authorized the WTO
Director-General to sign this Agreement.(325)
222. With respect to the relationship of the WTO with other
international organizations in general, see Article V of the Chapter on
the WTO Agreement.
Part VI: Final Provisions
XXXI. Article XXVII back to top
A. Text of Article XXVII
Article XXVII: Denial of Benefits
A Member may deny the benefits of this Agreement:
(a) to the supply of a service, if it establishes that the service is
supplied from or in the territory of a non-Member or of a Member to
which the denying Member does not apply the WTO Agreement;
(b) in the case of the supply of a maritime transport service, if it
establishes that the service is supplied:
(i) by a vessel registered under the laws of a non-Member or of a
Member to which the denying Member does not apply the WTO Agreement, and
(ii) by a person which operates and/or uses the vessel in whole or in
part but which is of a non-Member or of a Member to which the denying
Member does not apply the WTO Agreement;
(c) to a service supplier that is a juridical person, if it
establishes that it is not a service supplier of another Member, or that
it is a service supplier of a Member to which the denying Member does
not apply the WTO Agreement.
B. Interpretation and Application of Article XXVII
No jurisprudence or decision of a competent WTO body.
XXXII. Article XXVIII back to top
A. Text of Article XXVIII
Article XXVIII: Definitions
For the purpose of this Agreement:
(a) “measure” means any measure by a Member, whether in the form
of a law, regulation, rule, procedure, decision, administrative action,
or any other form;
(b) “supply of a service” includes the production, distribution,
marketing, sale and delivery of a service;
(c) “measures by Members affecting trade in services” include
measures in respect of:
(i) the purchase, payment or use of a service;
(ii) the access to and use of, in connection with the supply of a
service, services which are required by those Members to be offered to
the public generally;
(iii) the presence, including commercial presence, of persons of a
Member for the supply of a service in the territory of another Member;
(d) “commercial presence” means any type of business or
professional establishment, including through
(i) the constitution, acquisition or maintenance of a juridical
person, or
(ii) the creation or maintenance of a branch or a representative
office, within the territory of a Member for the purpose of supplying a
service;
(e) “sector” of a service means,
(i) with reference to a specific commitment, one or more, or all,
subsectors of that service, as specified in a Member’s Schedule,
(ii) otherwise, the whole of that service sector, including all of its
subsectors;
(f)
“service of another Member” means a service which is
supplied,
(i) from or in the territory of that other Member, or in the case of
maritime transport, by a vessel registered under the laws of that other
Member, or by a person of that other Member which supplies the service
through the operation of a vessel and/or its use in whole or in part; or
(ii) in the case of the supply of a service through commercial
presence or through the presence of natural persons, by a service
supplier of that other Member;
(g) “service supplier” means any person that supplies a service;(12)
(footnote original) 12 Where the service is not
supplied directly by a juridical person but through other forms of
commercial presence such as a branch or a representative office, the
service supplier (i.e. the juridical person) shall, nonetheless, through
such presence be accorded the treatment provided for service suppliers
under the Agreement. Such treatment shall be extended to the presence
through which the service is supplied and need not be extended to any
other parts of the supplier located outside the territory where the
service is supplied.
(h) “monopoly supplier of a service” means any person, public or
private, which in the relevant market of the territory of a Member is
authorized or established formally or in effect by that Member as the
sole supplier of that service;
(i) “service consumer” means any person that receives or uses a
service;
(j) “person” means either a natural person or a juridical person;
(k) “natural person of another Member” means a natural person who
resides in the territory of that other Member or any other Member, and
who under the law of that other Member:
(i) is a national of that other Member; or
(ii) has the right of permanent residence in that other Member, in
the case of a Member which:
1. does not have nationals; or
2. accords substantially the same treatment to its permanent
residents as it does to its nationals in respect of measures affecting
trade in services, as notified in its acceptance of or accession to the
WTO Agreement, provided that no Member is obligated to accord to such
permanent residents treatment more favourable than would be accorded by
that other Member to such permanent residents. Such notification shall
include the assurance to assume, with respect to those permanent
residents, in accordance with its laws and regulations, the same
responsibilities that other Member bears with respect to its nationals;
(l) “juridical person” means any legal entity duly constituted or
otherwise organized under applicable law, whether for profit or
otherwise, and whether privately-owned or governmentally-owned,
including any corporation, trust, partnership, joint venture, sole
proprietorship or association;
(m) “juridical person of another Member” means a juridical person
which is either:
(i) constituted or otherwise organized under the law of that other
Member, and is engaged in substantive business operations in the
territory of that Member or any other Member; or
(ii) in the case of the supply of a service through commercial
presence, owned or controlled by:
1. natural persons of that Member; or
2. juridical persons of that other Member identified under
subparagraph (i);
(n) a juridical person is:
(i) “owned” by persons of a Member if more than 50 per cent of
the equity interest in it is beneficially owned by persons of that
Member;
(ii) “controlled” by persons of a Member if such persons have the
power to name a majority of its directors or otherwise to legally direct
its actions;
(iii) “affiliated” with another person when it controls, or is
controlled by, that other person; or when it and the other person are
both controlled by the same person;
(o) “direct taxes” comprise all taxes on total income, on total
capital or on elements of income or of capital, including taxes on gains
from the alienation of property, taxes on estates, inheritances and
gifts, and taxes on the total amounts of wages or salaries paid by
enterprises, as well as taxes on capital appreciation.
B. Interpretation and Application of Article XXVIII
1. Article XXVIII(a) (“measure”)
223. The Appellate Body in US — Gambling, rejecting Antigua’s
claim that a “total prohibition” resulting from various US federal
and state laws was in itself a measure, stated that:
“We are therefore of the view that the DSU and the GATS focus on
“measures” as the subject of challenge in WTO dispute settlement. To
the extent that a Member’s complaint centres on the effects of an
action taken by another Member, that complaint must nevertheless be
brought as a challenge to the measure that is the source of the alleged
effects.(326)
2. Article XXVIII(b) (“supply of a service”)
225. In China — Publications and Audiovisual Products, the
Panel found that the scope of China’s commitment in its GATS Schedule
on “Sound recording distribution services” extends to sound
recordings distributed in non-physical form, through technologies such
as the Internet. The Panel found support for its interpretation in the
definition of “supply of a service” in Article XXVIII(b):
“The Panel recalls that a Member’s Schedule, according to
Article XX:2, is an integral part of the GATS, and the provisions of the GATS
thus apply to the inscriptions in China’s Schedule. In examining the
definitions in Article XXVIII(b) of the GATS, we note that “the supply
of a service” is defined as including the “production, distribution,
marketing, sale and delivery of a service” (emphasis added). This
definition makes clear that the activity of “distribution” is
included within the notion of the supply of a service. Since a “service”
is intangible and not itself a good (although the supply of a service
may well involve goods), this definition suggests that the supply of a
service listed in a Member’s Schedule, unless otherwise specified, can
cover the distribution of nonphysical products, such as sound recordings
delivered over the Internet. In our view, therefore Article XXVIII:(b)
of the GATS is further support for the view that the supply of “sound
recording distribution services” that China has committed to in its
Schedule applies, unless otherwise specified in its Schedule, to the
distribution of the intangible content of sound recordings, and is not
limited, as China argues, to the distribution of sound recordings as
physical products.”(327)
226.
The Appellate Body agreed with the Panel’s analysis, and
stated that:
“The definition of “supply of a service” in Article XXVIII(b)
of the GATS would not in itself exclude the possibility of drafting a
Schedule entry in a way that covers only the distribution of physical
goods. However, the interpretative question in this dispute is whether
China’s entry has been formulated in such a way. It is clear that the
term “distribution” as used in Article XXVIII(b) of the GATS refers
to the distribution of something intangible — services. We agree with
the Panel that this is relevant context in interpreting the meaning of
the term “distribution” in China’s entry “Sound recording
distribution services” in its GATS Schedule, and that Article XXVIII(b)
of the GATS lends support to an interpretation of the term “distribution”
in the relevant entry in China’s Schedule as covering the distribution
of both tangible and intangible products.”(328)
3. Article XXVIII(d) (“commercial presence”)
227. The Panel in China — Publications and Audiovisual Products
referred to the definition of “commercial presence” in Article
XXVIII(d) in the context of interpreting and applying Article XVII:
“Article XXVIII (d) of the GATS defines “commercial presence”
as “any type of business or professional establishment, including
through: (i) the constitution, acquisition or maintenance of a
juridical person, or (ii) the creation or maintenance of a branch or a
representative office, within the territory of a Member for the purpose
of supplying a service.” (emphasis added) Therefore for the purpose of
Article XVII, and depending on the measures at issue, the term “service
suppliers of another Member” supplying a service through commercial
presence includes entities that have established a commercial presence
in the host Member and/or entities that seek to establish in the host
Member.”(329)
4. Article XXVIII(e) (“sector”)
228. The Panel in US — Gambling stated that:
“In our view, if a Member makes a market access commitment in a
sector or sub-sector, that commitment covers all services that fall
within the scope of that sector or sub-sector. A Member does not fulfil
its GATS obligations if it allows market access for only some of the
services covered by a committed sector or sub-sector while prohibiting
all others. If a Member wishes to restrict market access with respect to
certain services falling within the scope of a sector or sub-sector, it
should set out the restrictions or limitations on access in the
appropriate place in the Member’s schedule. Indeed, a specific
commitment in a given sector or sub-sector is a guarantee that the whole
of that sector, i.e. all services included in that sector or
sub-sector are covered by the commitment. Any other interpretation would
make market access commitments under the GATS largely meaningless.”(330)
229. Along the same lines, the Panel in China
— Publications and
Audiovisual Products stated that:
“A description of a service sector in a GATS schedule does not need
to enumerate every activity that is included within the scope of that
service, and is not meant to do so. Article XXVIII(e) of the GATS
defines “sector” generally as “the whole of that service sector,
including all of its subsectors”. A service sector or subsector in a
GATS schedule thus includes not only every service activity specifically
named within it, but also any service activity that falls within the
scope of the definition of that sector or subsector referred to in the
schedule.”(331)
5. Article XXVIII(k)(ii)2 (“natural person of another Member”)
230. On 1 March 1995, the Council for Trade in Services took note of
four communications to the effect that the concerned Members accord
substantially the same treatment to their permanent residents as they
accord to their nationals with respect to measures affecting trade in
services and that they assume, with respect to those permanent
residents, the same responsibilities that other members bear with
respect to their nationals.(332) At its meeting of 2, 9 and 24
October 2003 the Council took note of a similar notification.(333)
XXXIII. Article XXIX back to top
A. Text of Article XXIX
Article XXIX: Annexes
The Annexes to this Agreement are an integral part of this Agreement.
B. Interpretation and Application of Article XXIX
No jurisprudence or decision of a competent WTO body.
XXXIV. Annex on Article II Exemptions
back to top
A. Text of the Annex on Article II Exemptions
Annex on Article II Exemptions: Scope
1. This Annex specifies the conditions under which a Member, at the
entry into force of this Agreement, is exempted from its obligations
under paragraph 1 of Article II.
2. Any new exemptions applied for after the date of entry into force
of the WTO Agreement shall be dealt with under paragraph 3 of Article IX
of that Agreement.
Review
3. The Council for Trade in Services shall review all exemptions
granted for a period of more than 5 years. The first such review shall
take place no more than 5 years after the entry into force of the WTO
Agreement.
4. The Council for Trade in Services in a review shall:
(a) examine whether the conditions which created the need for the
exemption still prevail; and
(b) determine the date of any further review.
Termination
5. The exemption of a Member from its obligations under
paragraph 1
of Article II of the Agreement with respect to a particular measure
terminates on the date provided for in the exemption.
6. In principle, such exemptions should not exceed a period of 10
years. In any event, they shall be subject to negotiation in subsequent
trade liberalizing rounds.
7. A Member shall notify the Council for Trade in Services at the
termination of the exemption period that the inconsistent measure has
been brought into conformity with paragraph 1 of Article II of the
Agreement.
List of Article II
Exemptions
[The agreed list of exemptions under
paragraph 2 of Article II is
omitted.]”
B. Interpretation and Application of the Annex on Article II
Exemptions
1. Paragraph 3
231. At the meeting of the Council for Trade in Services of 18
October 1999, it was agreed that the first review of Article II (MFN)
Exemptions had begun.(334)
2. Paragraph 4
232. The Council conducted a review of MFN exemptions at meetings
held on 29 May 2000, 5 July 2000 and 5 October 2000.(335) The
Council decided that a further review of MFN exemptions should take
place no later than June 2004.(336)
233. At its dedicated meetings held on 30 November 2004 and 23
February 2005, the Council undertook the second review of MFN
exemptions. At its regular meeting on 24 June 2005, the Council
addressed outstanding questions on MFN exemptions and concluded the
second review by deciding that the next review should begin in 2010 and
no later than June 2010.(337)
234. The third review of MFN exemption formally began at the meeting
of the Council held on 30 June 2010. At its dedicated meetings held on
17 November 2010 and 9 March 2011, the Council undertook the substantive
part of the review. At its regular meeting on 2 May 2011, the Council
addressed outstanding questions on MFN exemptions and concluded the
third review by deciding to hold its next review no later than 2016.(338)
3. Paragraph 7
235. With respect to the format for notifications required under
paragraph 7 of the Annex on Article II Exemptions, see the Guidelines
for Notifications under the GATS.(339)
4. Terminations, reductions and rectifications of MFN exemptions
236. At its meeting of 5 June 2002, the Council for Trade in Services
adopted Procedures for the Certification of Terminations, Reductions and
Rectifications of Article II (MFN) Exemptions.(340)
XXXV. Annex on Movement of Natural Persons Supplying Services Under
the Agreement back to top
A. Text of the Annex on Movement of Natural Persons Supplying
Services Under the Agreement
Annex on Movement of Natural Persons Supplying Services under the
Agreement
1. This Annex applies to measures affecting natural persons who are
service suppliers of a Member, and natural persons of a Member who are
employed by a service supplier of a Member, in respect of the supply of
a service.
2. The Agreement shall not apply to measures affecting natural
persons seeking access to the employment market of a Member, nor shall
it apply to measures regarding citizenship, residence or employment on a
permanent basis.
3. In accordance with
Parts III and IV of the
Agreement, Members may
negotiate specific commitments applying to the movement of all
categories of natural persons supplying services under the Agreement.
Natural persons covered by a specific commitment shall be allowed to
supply the service in accordance with the terms of that commitment.
4. The Agreement shall not prevent a Member from applying measures to
regulate the entry of natural persons into, or their temporary stay in,
its territory, including those measures necessary to protect the
integrity of, and to ensure the orderly movement of natural persons
across, its borders, provided that such measures are not applied in such
a manner as to nullify or impair the benefits accruing to any Member
under the terms of a specific commitment.(13)
(footnote original) 13 The sole fact of requiring a
visa for natural persons of certain Members and not for those of others
shall not be regarded as nullifying or impairing benefits under a
specific commitment.
B. Interpretation and Application of the Annex on Movement of Natural
Persons Supplying Services Under the Agreement
1. Measures relating to the entry and stay of natural persons
237. At its meeting of 1 March 1995, the Council for Trade in
Services adopted a conclusion of the SubCommittee on Services concerning
measures relating to the entry and stay of natural persons.(341)
The SubCommittee had dealt with the question on what basis a distinction
between “temporary” and “permanent” residency and employment
should be made. The SubCommittee, however, ultimately decided that the
commitments set out in the individual countries’ schedules were
sufficiently clear, so that there was no need for further multilateral
work on this issue.(342)
XXXVI. Annex on Air Transport Services
back to top
A. Text of the Annex
on Air Transport Services
Annex on Air Transport Services
1. This Annex applies to measures affecting trade in air transport
services, whether scheduled or nonscheduled, and ancillary services. It
is confirmed that any specific commitment or obligation assumed under
this Agreement shall not reduce or affect a Member’s obligations under
bilateral or multilateral agreements that are in effect on the date of
entry into force of the WTO Agreement.
2. The Agreement, including its dispute settlement procedures, shall
not apply to measures affecting:
(a) traffic rights, however granted; or
(b) services directly related to the exercise of traffic rights,
except as provided in paragraph 3 of this Annex.
3. The Agreement shall apply to measures affecting:
(a) aircraft repair and maintenance services;
(b) the selling and marketing of air transport services;
(c) computer reservation system (CRS) services.
4. The dispute settlement procedures of the Agreement may be invoked
only where obligations or specific commitments have been assumed by the
concerned Members and where dispute settlement procedures in bilateral
and other multilateral agreements or arrangements have been exhausted.
5. The Council for Trade in Services shall review periodically, and
at least every five years, developments in the air transport sector and
the operation of this Annex with a view to considering the possible
further application of the Agreement in this sector.
6. Definitions:
(a) ‘Aircraft repair and maintenance services’ mean such
activities when undertaken on an aircraft or a part thereof while it is
withdrawn from service and do not include so-called line maintenance.
(b) ‘Selling and marketing of air transport services’ mean
opportunities for the air carrier concerned to sell and market freely
its air transport services including all aspects of marketing such as
market research, advertising and distribution. These activities do not
include the pricing of air transport services nor the applicable
conditions.
(c) ‘Computer reservation system (CRS) services’ mean services
provided by computerised systems that contain information about air
carriers’ schedules, availability, fares and fare rules, through which
reservations can be made or tickets may be issued.
(d) ‘Traffic rights’ mean the right for scheduled and
non-scheduled services to operate and/or to carry passengers, cargo and
mail for remuneration or hire from, to, within, or over the territory of
a Member, including points to be served, routes to be operated, types of
traffic to be carried, capacity to be provided, tariffs to be charged
and their conditions, and criteria for designation of airlines,
including such criteria as number, ownership, and control.
B. Interpretation and Application of the Annex on Air Transport
Services
1. Paragraph 5
238. The Council conducted the review mandated under
paragraph 5 of
the Air Transport Annex at meetings held on 28–29 September 2000, 4
December 2000, 9 October 2001 and 18 March 2002.(343) The Council
decided at its meeting of 2, 9 and 24 October 2003 on the conclusion of
the review and the start-date for the next one:
“The Council decides to conclude the first review mandated under
paragraph 5 of the Annex on Air Transport Services. While noting that
the Annex requires that a review be conducted at least every five years,
the Council decides that the formal commencement of the second review
shall take place at the last regular meeting of the Council for Trade in
Services of 2005. This shall not prejudge Members’ interpretation of
paragraph 5 of the Annex.”(344)
239. In accordance with the decision taken at the conclusion of the
first Review, the Council formally commenced the second Review at its
last 2005 meeting, i.e. on 23 September 2005.(345) Three
dedicated meetings have taken place in the context of the Second Review
(12 September 2006, 1 March and 2 October 2007).
XXXVII. Annex on Financial Services
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A. Text of the Annex
on Financial Services
Annex on Financial Services
1. Scope and Definition
(a) This Annex applies to measures affecting the supply of financial
services. Reference to the supply of a financial service in this Annex
shall mean the supply of a service as defined in paragraph 2 of Article
I of the Agreement.
(b) For the purposes of
subparagraph 3(b) of Article I of the
Agreement, ‘services supplied in the exercise of governmental
authority’ means the following:
(i) activities conducted by a central bank or monetary authority or
by any other public entity in pursuit of monetary or exchange rate
policies;
(ii) activities forming part of a statutory system of social security
or public retirement plans; and
(iii) other activities conducted by a public entity for the account
or with the guarantee or using the financial resources of the
Government.
(c) For the purposes of
subparagraph 3(b) of Article I of the
Agreement, if a Member allows any of the activities referred to in
subparagraphs (b) (ii) or (b) (iii) of this paragraph to be conducted by
its financial service suppliers in competition with a public entity or a
financial service supplier, ‘services’ shall include such
activities.
(d) Subparagraph 3(c) of Article I of the Agreement shall not apply
to services covered by this Annex.
2. Domestic Regulation
(a) Notwithstanding any other provisions of the Agreement, a Member
shall not be prevented from taking measures for prudential reasons,
including for the protection of investors, depositors, policy holders or
persons to whom a fiduciary duty is owed by a financial service
supplier, or to ensure the integrity and stability of the financial
system. Where such measures do not conform with the provisions of the
Agreement, they shall not be used as a means of avoiding the Member’s
commitments or obligations under the Agreement.
(b) Nothing in the Agreement shall be construed to require a Member
to disclose information relating to the affairs and accounts of
individual customers or any confidential or proprietary information in
the possession of public entities.
3. Recognition
(a) A Member may recognize prudential measures of any other country
in determining how the Member’s measures relating to financial
services shall be applied. Such recognition, which may be achieved
through harmonization or otherwise, may be based upon an agreement or
arrangement with the country concerned or may be accorded autonomously.
(b) A Member that is a party to such an agreement or arrangement
referred to in subparagraph (a), whether future or existing, shall
afford adequate opportunity for other interested Members to negotiate
their accession to such agreements or arrangements, or to negotiate
comparable ones with it, under circumstances in which there would be
equivalent regulation, oversight, implementation of such regulation,
and, if appropriate, procedures concerning the sharing of information
between the parties to the agreement or arrangement. Where a Member
accords recognition autonomously, it shall afford adequate opportunity
for any other Member to demonstrate that such circumstances exist.
(c) Where a Member is contemplating according recognition to
prudential measures of any other country, paragraph 4(b) of Article VII
shall not apply.
4. Dispute Settlement
Panels for disputes on prudential issues and other financial matters
shall have the necessary expertise relevant to the specific financial
service under dispute.
5. Definitions
For the purposes of this Annex:
(a) A financial service is any service of a financial nature offered
by a financial service supplier of a Member. Financial services include
all insurance and insurance-related services, and all banking and other
financial services (excluding insurance). Financial services include the
following activities:
Insurance and insurance-related services
(i) Direct insurance (including co-insurance):
(A) life
(B) non-life
(ii) Reinsurance and retrocession;
(iii) Insurance intermediation, such as brokerage and agency;
(iv) Services auxiliary to insurance, such as consultancy, actuarial,
risk assessment and claim settlement services.
Banking and other financial services (excluding insurance)
(v) Acceptance of deposits and other repayable funds from the public;
(vi) Lending of all types, including consumer credit, mortgage
credit, factoring and financing of commercial transaction;
(vii) Financial leasing;
(viii) All payment and money transmission services, including credit,
charge and debit cards, travellers cheques and bankers drafts;
(ix) Guarantees and commitments;
(x) Trading for own account or for account of customers, whether on
an exchange, in an over-the-counter market or otherwise, the following:
(A) money market instruments (including cheques, bills, certificates
of deposits);
(B) foreign exchange;
(C) derivative products including, but not limited to, futures and
options;
(D) exchange rate and interest rate instruments, including products
such as swaps, forward rate agreements;
(E) transferable securities;
(F) other negotiable instruments and financial assets, including
bullion.
(xi) Participation in issues of all kinds of securities, including
underwriting and placement as agent (whether publicly or privately) and
provision of services related to such issues;
(xii) Money broking;
(xiii) Asset management, such as cash or portfolio management, all
forms of collective investment management, pension fund management,
custodial, depository and trust services;
(xiv) Settlement and clearing services for financial assets,
including securities, derivative products, and other negotiable
instruments;
(xv) Provision and transfer of financial information, and financial
data processing and related software by suppliers of other financial
services;
(xvi) Advisory, intermediation and other auxiliary financial services
on all the activities listed in subparagraphs (v) through
(xv),
including credit reference and analysis, investment and portfolio
research and advice, advice on acquisitions and on corporate
restructuring and strategy.
(b) A financial service supplier means any natural or juridical
person of a Member wishing to supply or supplying financial services but
the term ‘financial service supplier’ does not include a public
entity.
(c) ‘Public entity’ means:
(i) a government, a central bank
or a monetary authority, of a Member, or an entity owned or controlled
by a Member, that is principally engaged in carrying out governmental
functions or activities for governmental purposes, not including an
entity principally engaged in supplying financial services on commercial
terms; or
(ii) a private entity, performing functions normally performed by a
central bank or monetary authority, when exercising those functions.
B. Interpretation and Application of the Annex on Financial Services
240. The Panel in Mexico — Telecoms was reluctant to place
too much weight on the wording of the Annex on Financial Services in
order to interpret the scope of another Annex to the GATS which “differs
significantly in structure and objective”:
“Mexico contrasts the scope provision of the Annex with the
provisions on “Scope and Definition” contained in Section 1 of the
Annex on Financial Services, and argues that the former only applies to
access to and use of public telecommunications transport networks and
services, whereas the latter applies to “supply”. Mexico is of the
view that, where the negotiators of the GATS intended that an Annex was
to apply to the “supply” of a service, they stated this explicitly.
According to Mexico, the Annex distinguishes between access to and
use of public telecommunications transport networks and services,
which is relevant to telecommunications services as an underlying
transport means for other economic activities, and the supply of
such services, which is relevant to trade in telecommunications services
as a distinct sector of economic activity.
We agree that the Annex addresses measures affecting “access to and
use of” public telecommunications transport networks and services, and
not the supply of services. However, “access to and use of” public
telecommunications transport networks and services are to be granted in
order to enable the supply of services. Section 5 explicitly seeks to
ensure that access to and use of public telecommunications transport
networks and services is granted “for the supply of a service
included in [a Member’s] Schedule”. While the Annex is neutral as to
the services that can be supplied through access to and use of public
telecommunications transport networks and services, the Annex on
Financial Services only “applies to measures affecting the supply of
financial services”. The fact that Members devoted an annex to
measures affecting the supply of services in one specific services
sector — financial services — does not provide a basis for
interpreting the scope of another annex — on telecommunications
networks and services — which differs significantly in structure and
objective.”(346)
241. Along the same lines, the Panel in Korea
— Commercial
Vessels questioned the relevance of the wording of the GATS Annex on
Financial Services to the interpretation of a provision of the SCM
Agreement.(347)
XXXVIII. Second Annex on Financial Services
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A. Text of the Second Annex on Financial Services
Second Annex on Financial Services
1. Notwithstanding
Article II of the Agreement and paragraphs 1 and
2
of the Annex on Article II Exemptions, a Member may, during a period of
60 days beginning four months after the date of entry into force of the
WTO Agreement, list in that Annex measures relating to financial
services which are inconsistent with paragraph 1 of Article II of the
Agreement.
2. Notwithstanding
Article XXI of the Agreement, a Member may, during
a period of 60 days beginning four months after the date of entry into
force of the WTO Agreement, improve, modify or withdraw all or part of
the specific commitments on financial services inscribed in its
Schedule.
3. The Council for Trade in Services shall establish any procedures
necessary for the application of paragraphs 1 and
2.
B. Interpretation and Application of the Second Annex on Financial
Services
No jurisprudence or decision of a competent WTO body.
XXXIX. Annex on Negotiations on Maritime Transport Services
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A. Text of the Annex on Negotiations on Maritime Transport Services
Annex on Negotiations on Maritime Transport Services
1. Article II and the
Annex on Article II Exemptions, including the
requirement to list in the Annex any measure inconsistent with most-favoured-nation
treatment that a Member will maintain, shall enter into force for
international shipping, auxiliary services and access to and use of port
facilities only on:
(a) the implementation date to be determined under paragraph 4 of the
Ministerial Decision on Negotiations on Maritime Transport Services; or,
(b) should the negotiations not succeed, the date of the final report
of the Negotiating Group on Maritime Transport Services provided for in
that Decision.
2. Paragraph 1 shall not apply to any specific commitment on maritime
transport services which is inscribed in a Member’s Schedule.
3. From the conclusion of the negotiations referred to in
paragraph 1, and before the implementation date, a Member may improve, modify or
withdraw all or part of its specific commitments in this sector without
offering compensation, notwithstanding the provisions of Article XXI.
B. Interpretation and Application of the Annex on Negotiations on
Maritime Transport Services
No jurisprudence or decision of a competent WTO body.
XL. Annex on Telecommunications
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A. Text on the Annex on Telecommunications
Annex on Telecommunications
1. Objectives
Recognizing the specificities of the telecommunications services
sector and, in particular, its dual role as a distinct sector of
economic activity and as the underlying transport means for other
economic activities, the Members have agreed to the following Annex with
the objective of elaborating upon the provisions of the Agreement with
respect to measures affecting access to and use of public
telecommunications transport networks and services. Accordingly, this
Annex provides notes and supplementary provisions to the Agreement.
2. Scope
(a)
This Annex shall apply to all measures of a Member that affect
access to and use of public telecommunications transport networks and
services.(14)
(footnote original) 14 This paragraph is understood to
mean that each Member shall ensure that the obligations of this Annex
are applied with respect to suppliers of public telecommunications
transport networks and services by whatever measures are necessary.
(b)
This Annex shall not apply to measures affecting the cable or
broadcast distribution of radio or television programming.
(c)
Nothing in this Annex shall be construed:
(i) to require a Member to authorize a service supplier of any other
Member to establish, construct, acquire, lease, operate, or supply
telecommunications transport networks or services, other than as
provided for in its Schedule; or
(ii) to require a Member (or to require a Member to oblige service
suppliers under its jurisdiction) to establish, construct, acquire,
lease, operate or supply telecommunications transport networks or
services not offered to the public generally.
3. Definitions
For the purposes of this Annex:
(a) ‘Telecommunications’ means the transmission and reception of
signals by any electromagnetic means.
(b) ‘Public telecommunications transport service’ means any
telecommunications transport service required, explicitly or in effect,
by a Member to be offered to the public generally. Such services may
include, inter alia, telegraph, telephone, telex, and data
transmission typically involving the real-time transmission of
customer-supplied information between two or more points without any
end-to-end change in the form or content of the customer’s
information.
(c) ‘Public telecommunications transport network’ means the
public telecommunications infrastructure which permits
telecommunications between and among defined network termination points.
(d) ‘Intra-corporate communications’ means telecommunications
through which a company communicates within the company or with or among
its subsidiaries, branches and, subject to a Member’s domestic laws
and regulations, affiliates. For these purposes, ‘subsidiaries’, ‘branches’
and, where applicable, ‘affiliates’ shall be as defined by each
Member. ‘Intra-corporate communications’ in this Annex excludes
commercial or non-commercial services that are supplied to companies
that are not related subsidiaries, branches or affiliates, or that are
offered to customers or potential customers.
(e) Any reference to a paragraph or subparagraph of this Annex
includes all subdivisions thereof.
4. Transparency
In the application of Article III of the
Agreement, each Member shall
ensure that relevant information on conditions affecting access to and
use of public telecommunications transport networks and services is
publicly available, including: tariffs and other terms and conditions of
service; specifications of technical interfaces with such networks and
services; information on bodies responsible for the preparation and
adoption of standards affecting such access and use; conditions applying
to attachment of terminal or other equipment; and notifications,
registration or licensing requirements, if any.
5. Access to and use of Public Telecommunications Transport
Networks and Services
(a)
Each Member shall ensure that any service supplier of any other
Member is accorded access to and use of public telecommunications
transport networks and services on reasonable and non-discriminatory
terms and conditions, for the supply of a service included in its
Schedule. This obligation shall be applied, inter alia, through
paragraphs (b) through (f).(15)
(footnote original) 15 The term ‘non-discriminatory’
is understood to refer to most-favoured-nation and national treatment as
defined in the Agreement, as well as to reflect sector-specific usage of
the term to mean ‘terms and conditions no less favourable than those
accorded to any other user of like public telecommunications transport
networks or services under like circumstances’
(b)
Each Member shall ensure that service suppliers of any other
Member have access to and use of any public telecommunications transport
network or service offered within or across the border of that Member,
including private leased circuits, and to this end shall ensure, subject
to paragraphs (e) and (f), that such suppliers are permitted:
(i) to purchase or lease and attach terminal or other equipment which
interfaces with the network and which is necessary to supply a supplier’s
services;
(ii) to interconnect private leased or owned circuits with
public telecommunications transport networks and services or with
circuits leased or owned by another service supplier; and
(iii) to use operating protocols of the service supplier’s choice
in the supply of any service, other than as necessary to ensure the
availability of telecommunications transport networks and services to
the public generally.
(c)
Each Member shall ensure that service suppliers of any other
Member may use public telecommunications transport networks and services
for the movement of information within and across borders, including for
intra-corporate communications of such service suppliers, and for access
to information contained in data bases or otherwise stored in
machine-readable form in the territory of any Member. Any new or amended
measures of a Member significantly affecting such use shall be notified
and shall be subject to consultation, in accordance with relevant
provisions of the Agreement.
(d)
Notwithstanding the preceding paragraph, a Member may take such
measures as are necessary to ensure the security and confidentiality of
messages, subject to the requirement that such measures are not applied
in a manner which would constitute a means of arbitrary or unjustifiable
discrimination or a disguised restriction on trade in services.
(e)
Each Member shall ensure that no condition is imposed on access
to and use of public telecommunications transport networks and services
other than as necessary:
(i) to safeguard the public service responsibilities of suppliers of
public telecommunications transport networks and services, in particular
their ability to make their networks or services available to the public
generally;
(ii) to protect the technical integrity of public telecommunications
transport networks or services; or
(iii) to ensure that service suppliers of any other Member do not
supply services unless permitted pursuant to commitments in the Member’s
Schedule.
(f)
Provided that they satisfy the criteria set out in paragraph
(e),
conditions for access to and use of public telecommunications transport
networks and services may include:
(i) restrictions on resale or shared use of such services;
(ii) a requirement to use specified technical interfaces, including
interface protocols, for inter-connection with such networks and
services;
(iii) requirements, where necessary, for the inter-operability of
such services and to encourage the achievement of the goals set out in
paragraph 7(a);
(iv) type approval of terminal or other equipment which interfaces
with the network and technical requirements relating to the attachment
of such equipment to such networks;
(v) restrictions on inter-connection of private leased or owned
circuits with such networks or services or with circuits leased or owned
by another service supplier; or
(vi) notification, registration and licensing.
(g)
Notwithstanding the preceding paragraphs of this section, a
developing country Member may, consistent with its level of development,
place reasonable conditions on access to and use of public
telecommunications transport networks and services necessary to
strengthen its domestic telecommunications infrastructure and service
capacity and to increase its participation in international trade in
telecommunications services. Such conditions shall be specified in the
Member’s Schedule.
6. Technical Cooperation
(a)
Members recognize that an efficient, advanced telecommunications
infrastructure in countries, particularly developing countries, is
essential to the expansion of their trade in services. To this end,
Members endorse and encourage the participation, to the fullest extent
practicable, of developed and developing countries and their suppliers
of public telecommunications transport networks and services and other
entities in the development programmes of international and regional
organizations, including the International Telecommunication Union, the
United Nations Development Programme, and the International Bank for
Reconstruction and Development.
(b)
Members shall encourage and support telecommunications
cooperation among developing countries at the international, regional
and sub-regional levels.
(c)
In cooperation with relevant international organizations, Members
shall make available, where practicable, to developing countries
information with respect to telecommunications services and developments
in telecommunications and information technology to assist in
strengthening their domestic telecommunications services sector.
(d)
Members shall give special consideration to opportunities for the
least-developed countries to encourage foreign suppliers of
telecommunications services to assist in the transfer of technology,
training and other activities that support the development of their
telecommunications infrastructure and expansion of their
telecommunications services trade.
7. Relation to International Organizations and Agreements
(a)
Members recognize the importance of international standards for
global compatibility and inter-operability of telecommunication networks
and services and undertake to promote such standards through the work of
relevant international bodies, including the International
Telecommunication Union and the International Organization for
Standardization.
(b)
Members recognize the role played by intergovernmental and
non-governmental organizations and agreements in ensuring the efficient
operation of domestic and global telecommunications services, in
particular the International Telecommunication Union. Members shall make
appropriate arrangements, where relevant, for consultation with such
organizations on matters arising from the implementation of this Annex.
B. Interpretation and Application of the Annex on Telecommunications
1. Application to access and use by scheduled suppliers of basic
telecommunications services
242. In examining which suppliers and services are entitled to access
and use public telecommunications transport networks and services, the
Panel in Mexico — Telecoms observed that:
“[T]he wording of Section 2(a) does not specify that the provision
is limited to measures affecting access to and use of public
telecommunications transport networks and services by only certain
services or service sectors. The ordinary meaning of the words in
Section 2(a) suggests therefore that the scope of the Annex includes all
measures that affect access to or use of public telecommunications
transport networks and services with regard to all services,
including basic telecommunications services.”(348)
243. Likewise, referring to
Section 5(a) of the Annex, the Panel in Mexico
— Telecoms stated that:
“Section 5 (a) of the Annex states that the obligation to ensure
access to and use of public telecommunications transport networks and
services shall apply for the benefit of “any service supplier of any
other Member” for the supply of “a service included in its schedule”.
This language does not explicitly exclude suppliers of basic
telecommunications services. On the contrary, Section 5(a) speaks of “any”
service supplier. It also speaks of a “service included” in a Member’s
schedule which, in the case of any Member, can, and for many Members
does, include basic telecommunications services. We consider this to be
a further indication that the Annex is not limited in its application to
exclude measures ensuring the access to and use of public
telecommunications transport networks and services for the supply of any
service, including basic telecommunications services.”(349)
244. The Panel in Mexico — Telecoms observed further that it
would be “unreasonable to suppose that the access and use of public
telecommunications transport networks and services that is essential to
the international supply of basic telecommunications services was not
intended to be covered by the Annex.” The Panel noted:
“If the Annex did not apply to measures affecting access to and use
of public telecommunications transport networks and services for basic
telecommunications services, Members could effectively prohibit any
supply other than that which originated and terminated within the same
suppliers’ network, even where commitments were undertaken, thereby
rendering most basic telecommunications commitments without economic
value.”(350)
2. Section 5(a)
(a) Relationship of paragraph (a) to the other parts of Section 5
245. The Panel in Mexico — Telecoms, in assessing the
relationship between paragraph (a) and the other paragraphs of Section
5, stated:
“We note that the obligation in paragraph (a) ‘shall be applied, inter
alia, through paragraphs (b) through (f)’. … An obligation
cannot be applied “through” another provision if that obligation is
read in isolation from that provision. For an obligation in one
provision to be applied “through” another provision, it is evident
that the two provisions must be interrelated and must inform each other.
We read paragraph (a), in other words, as containing an obligation that informs
paragraphs (b) through (f), and must be read taking into account
paragraphs (b) through (f).”(351)
246. In examining further the relationship between
paragraph (a) and
the other paragraphs of Section 5, the Panel in Mexico — Telecoms
determined that the “reasonable and non-discriminatory” standard in
paragraph (a) applies only to measures that are permissible under
paragraph (e):
“We determined earlier that paragraph (a) should be read together
with the other paragraphs of Section 5. We note that paragraph (a)
addresses “terms and conditions” for access to public
telecommunications transport networks and services, which must be “reasonable
and nondiscriminatory”. Paragraph (e) requires that no condition other
than as necessary to achieve any of three policy objectives contained in
subparagraphs (e)(i) to (iii) shall be imposed by a Member. We infer
that whenever a condition is “necessary” under paragraph
(e), it
must, in addition, be “reasonable and non-discriminatory” under
paragraph (a). Conversely, if a condition is not “necessary” to
fulfil at least one of the three policy objectives set out under
subparagraphs (i) to (iii), paragraph (e)
prohibits the imposition of
such a condition, which suggests that there may be no need to analyse in
that case whether that condition would otherwise be “reasonable and
nondiscriminatory.
…
We conclude that the obligation contained in Section 5(a) informs the
other paragraphs of Section 5, and is likewise informed by elements of
these paragraphs. We cannot therefore examine what constitutes “reasonable
terms and conditions” for access to and use of public
telecommunications transport networks and services in isolation from the
question of whether or not a particular condition may be imposed, an
issue that is addressed in paragraph (e).”(352)
(b) Access and use “on reasonable … terms and conditions”
(i) Whether rates for access and use constitute “terms”
247. The Panel in Mexico — Telecoms stated that “the
ordinary meaning of the word “terms” suggests that it would include
pricing elements, including rates charged for access to and use of
public telecommunications transport networks and services.”(353)
(ii) Whether rates for access and use are subject to examination as
“reasonable” terms
248. The Panel in Mexico — Telecoms found that rates for
access and use can be examined under Section 5 to establish whether or
not they constitute “reasonable” terms. The Panel also found that
“access to and use of public telecommunications transport networks and
services on “reasonable” terms includes questions of pricing of that
access and use”.(354)
(iii) Rates for access and use that are “reasonable”
249. The Panel in Mexico — Telecoms, in examining when rates
for access and use are “reasonable”, and applying the criterion to
the facts of the case, stated:
“We have previously noted that Mexico’s Reference Paper contains
obligations additional to those in the Annex. We consider therefore that
rates charged for access to and use of public telecommunications
transport networks and services may still be ‘reasonable’, even if
generally higher than rates for interconnection that are cost-oriented
in terms of Section 2.2(b) of Mexico’s Reference Paper. …
We have already determined in part B of these findings that the rates
charged to interconnect United States suppliers of the services at issue
to public telecommunications transport networks and services in Mexico
exceed cost-oriented rates by a substantial margin.(355) We find
that rates which exceed cost-based rates to this extent, and whose
uniform nature excludes price competition in the relevant market of the
telecommunications services bound under Mexico’s Schedule, do not
provide access to and use of public telecommunications transport
networks and services in Mexico ‘on reasonable … terms’.”(356)
3. Section 5(b)
(a) Relationship of paragraph (b) to the other parts of Section 5
250. Recognizing that the relationship of
paragraph (b) with the
other parts of Section 5 was more “straightforward” than that of
paragraph (a)(357), the Panel in
Mexico — Telecoms stated:
“The obligations in paragraph (b) apply “subject to
paragraphs
(e) and (f)”. We understand this to mean that the obligations in
paragraph (b) are subordinated to, and are, therefore, qualified
by, paragraphs (e) and (f). The obligations in
paragraph (b) are
therefore subject to any condition that a Member may impose that
is necessary to achieve one of the policy objectives set out in
paragraph (e)(i) to (iii).(358) We recall that
paragraph (b) is
informed also by paragraph (a), and that the obligation in the latter
provision to ensure reasonable and nondiscriminatory access also applies
to paragraph (b).
(…)
We conclude that an obligation arises for a Member under
paragraph
5(b) subject to any term or condition that a Member may impose in a
manner consistent with the provisions of paragraphs (a) and
(e).”(359)
(b) Obligation to provide access to and use of private leased
circuits
251. The Panel in Mexico — Telecoms stated that it:
“[C]onsiders Mexico to have undertaken commitments on the supply of
the services at issue by commercial agencies through commercial
presence, for which access to and use of private leased circuits is not
only relevant but, by Mexico’s own definition in its schedule, is
essential. Therefore, we find that Mexico has failed to ensure access to
and use of private leased circuits for the supply of the committed
services in a manner consistent with the Section 5(b) of the Annex on
Telecommunications.”(360)
4. Sections 5(e) and (f)
(a) Whether rates for access and use constitute “conditions”
252. The Panel in Mexico — Telecoms noted
Section 5(f),
which lists examples of “conditions,” does not refer to specific
pricing measures.(361) It concluded that, since “whether or not
to charge, or the existence of a price, does not appear to fit within
the meaning of the language of 5(f) and its subparagraphs,” pricing
measures such as rates are not “conditions” within the meaning of
Section 5(e).”(362)
(b) Meaning of “necessary” in paragraph (e)
253. The Panel in Mexico — Telecoms, in considering the
alternative case that rates for access and use were “conditions“ as
well as “terms”, examined the meaning of the term “necessary”.
It noted that the meaning of “necessary” could range from “indispensable”
to achieving a policy goal, to merely “making a contribution” to
that policy goal.(363) The Panel found:
“The interpretation of the word ‘necessary’ in
Section 5(e) as
meaning ‘indispensable’ would however leave no room for an analysis
of whether terms were ‘reasonable’. If cost-based rates were ‘indispensable’
to reach the policy objective, then these rates surely could not also be
unreasonable. Such an interpretation would empty the ‘reasonable’
standard in Section 5(a) of much of its meaning.”(364)
254. The Panel therefore concluded that, the meaning of “necessary”
in paragraph (e) was closer to “making a contribution” to a policy
goal, since then “an examination under paragraph (a) of whether that
rate was also “reasonable” would still have meaning.”(365)
(c) Measures to prevent supply of an unscheduled service in paragraph
(e)
255. The Panel in Mexico — Telecoms found that
paragraph (e)(iii),
permitting conditions to be imposed “to ensure that service suppliers
of any other Member do not supply services unless permitted pursuant to
commitments in the Members’ Schedule”, does not apply to a measure
that simply prevents the supply of a service on which a scheduled
commitment has been made.(366)
5. Section 5(g)
256. In response to the argument that
Section 5(g) allowed Mexico as
a developing country to place reasonable conditions on access and use,
the Panel in
Mexico — Telecoms observed:
“Section 5(g) recognizes the right of developing countries
to inscribe limitations in their schedules for the objectives
recognized in Section 5(g). The Panel notes that Mexico’s Schedule of
Specific Commitments does not include any limitations referring to
Section 5(g) or to the development objectives mentioned therein. Without
such limitations in Mexico’s Schedule, Section 5(g) does not permit a
departure from specific commitments which Mexico has voluntarily and
explicitly scheduled.”(367)
6. Relationship between Annex obligations and Reference Paper
commitments
257. The Panel in Mexico — Telecoms compared Annex
obligations and Reference paper commitments in the following terms:
“The Panel noted that, although the obligations in the Annex and
the Reference Paper may overlap in certain respects, there are clear
differences between the two instruments. First, the Annex sets out
general obligations for access to and use of public telecommunications
transport networks and services, applicable to all Members and all
sectors in which specific commitments have been undertaken. Reference
Paper obligations, as additional commitments, are applicable only by
Members that have included them in their schedules, and they apply only
to basic telecommunications. Second, while the Annex applies to all
operators of public telecommunications transport networks and services
within a Member, regardless of their competitive situation, the
Reference Paper obligations on interconnection apply only with respect
to ‘major suppliers’. Third, the Annex broadly deals with ‘access
to and use of’ public telecommunications transport networks and
services, while the Reference Paper focuses on specific ‘competitive
safeguards’ and on ‘interconnection’.(368)
In spite of these differences, the Annex recognizes that its
provisions relate to and build upon the obligations and disciplines
contained in the Articles of the GATS — the Annex states expressly
that it ‘provides notes and supplementary provisions to the Agreement’.(369)
Similarly, many of the provisions of the Reference Paper also draw from
and add to existing obligations of the GATS, such as Articles
III, VI,
VIII and IX and the Annex on
Telecommunications. Accordingly, there is a
degree of overlap between the obligations of the Annex and the Reference
Paper, despite their differences in scope, level of obligations, and
specific detail provided. To the extent that the Reference Paper
requires cost-oriented interconnection on reasonable terms and
conditions, it supplements Annex Section 5, requiring additional
obligations as regards ‘major suppliers’. The Reference Paper
commitments do not in this sense subtract from the Annex or render it
redundant.”(370)
XLI. Annex on Negotiations on Basic Telecommunications
back to top
A. Text of the Annex on Negotiations on
Basic Telecommunications
Annex on Negotiations on Basis Telecommunications
1. Article II and the
Annex on Article II Exemptions, including the
requirement to list in the Annex any measure inconsistent with most-favoured-nation
treatment that a Member will maintain, shall enter into force for basic
telecommunications only on:
(a) the implementation date to be determined under paragraph 5 of the
Ministerial Decision on Negotiations on Basic Telecommunications; or,
(b) should the negotiations not succeed, the date of the final report
of te Negotiating Group on Basic Telecommunications provided for in that
Decision.
2. Paragraph 1 shall not apply to any specific commitment on basic
telecommunications which is inscribed in a Member’s Schedule.
B. Interpretation and Application of the Annex on Negotiations on
Basic Telecommunications
No jurisprudence or decision of a competent WTO body.
XLII. Understanding on Commitments in Financial Services
back to top
A. Text of the Understanding on Commitments in Financial Services
Understanding on Commitments in Financial Services
Participants in the Uruguay Round have been enabled to take on
specific commitments with respect to financial services under the
General Agreement on Trade in Services (hereinafter referred to as the
‘Agreement’) on the basis of an alternative approach to that covered
by the provisions of Part III of the Agreement. It was agreed that this
approach could be applied subject to the following understanding:
(i) it does not conflict with the provisions of the Agreement;
(ii) it does not prejudice the right of any Member to schedule its
specific commitments in accordance with the approach under Part III of
the Agreement;
(iii) resulting specific commitments shall apply on a most-favoured-nation
basis;
(iv) no presumption has been created as to the degree of
liberalization to which a Member is committing itself under the
Agreement.
Interested Members, on the basis of negotiations, and subject to
conditions and qualifications where specified, have inscribed in their
schedule specific commitments conforming to the approach set out below.
A. Standstill
Any conditions, limitations and qualifications to the commitments
noted below shall be limited to existing non-conforming measures.
B. Market Access
Monopoly Rights
1. In addition to
Article VIII of the Agreement, the following shall
apply:
Each Member shall list in its schedule pertaining to financial
services existing monopoly rights and shall endeavour to eliminate them
or reduce their scope. Notwithstanding subparagraph 1(b) of the Annex on
Financial Services, this paragraph applies to the activities referred to
in subparagraph 1(b)(iii) of the Annex.
Financial Services purchased by Public Entities
2. Notwithstanding
Article XIII of the Agreement, each Member shall
ensure that financial service suppliers of any other Member established
in its territory are accorded most-favoured-nation treatment and
national treatment as regards the purchase or acquisition of financial
services by public entities of the Member in its territory.
Cross-border Trade
3. Each Member shall permit non-resident suppliers of financial
services to supply, as a principal, through an intermediary or as an
intermediary, and under terms and conditions that accord national
treatment, the following services:
(a) insurance of risks relating to:
(i) maritime shipping and commercial aviation and space launching and
freight (including satellites), with such insurance to cover any or all
of the following: the goods being transported, the vehicle transporting
the goods and any liability arising therefrom; and
(ii) goods in international transit;
(b) reinsurance and retrocession and the services auxiliary to
insurance as referred to in subparagraph 5(a)(iv) of the
Annex;
(c) provision and transfer of financial information and financial
data processing as referred to in subparagraph 5(a)(xv) of the Annex and
advisory and other auxiliary services, excluding intermediation,
relating to banking and other financial services as referred to in
subparagraph 5(a)(xvi) of the Annex.
4. Each Member shall permit its residents to purchase in the
territory of any other Member the financial services indicated in:
(a) subparagraph
3(a);
(b) subparagraph
3(b); and
(c) subparagraphs 5(a)(v) to
(xvi) of the Annex.
Commercial Presence
5. Each Member shall grant financial service suppliers of any other
Member the right to establish or expand within its territory, including
through the acquisition of existing enterprises, a commercial presence.
6. A Member may impose terms, conditions and procedures for
authorization of the establishment and expansion of a commercial
presence in so far as they do not circumvent the Member’s obligation
under paragraph 5 and they are consistent with the other obligations of
the Agreement.
New Financial Services
7. A Member shall permit financial service suppliers of any other
Member established in its territory to offer in its territory any new
financial service.
Transfers of Information and Processing of Information
8. No Member shall take measures that prevent transfers of
information or the processing of financial information, including
transfers of data by electronic means, or that, subject to importation
rules consistent with international agreements, prevent transfers of
equipment, where such transfers of information, processing of financial
information or transfers of equipment are necessary for the conduct of
the ordinary business of a financial service supplier. Nothing in this
paragraph restricts the right of a Member to protect personal data,
personal privacy and the confidentiality of individual records and
accounts so long as such right is not used to circumvent the provisions
of the Agreement.
Temporary Entry of Personnel
9. (a)
Each Member shall permit temporary entry into its territory of
the following personnel of a financial service supplier of any other
Member that is establishing or has established a commercial presence in
the territory of the Member:
(i) senior managerial personnel possessing proprietary information
essential to the establishment, control and operation of the services of
the financial service supplier; and
(ii) specialists in the operation of the financial service supplier.
(b) Each Member shall permit, subject to the availability of
qualified personnel in its territory, temporary entry into its territory
of the following personnel associated with a commercial presence of a
financial service supplier of any other Member:
(i) specialists in computer services, telecommunication services and
accounts of the financial service supplier; and
(ii) actuarial and legal specialists.
Non-discriminatory Measures
10. Each Member shall endeavour to remove or to limit any significant
adverse effects on financial service suppliers of any other Member of:
(a) non-discriminatory measures that prevent financial service
suppliers from offering in the Member’s territory, in the form
determined by the Member, all the financial services permitted by the
Member;
(b) non-discriminatory measures that limit the expansion of the
activities of financial service suppliers into the entire territory of
the Member;
(c) measures of a Member, when such a Member applies the same
measures to the supply of both banking and securities services, and a
financial service supplier of any other Member concentrates its
activities in the provision of securities services; and
(d) other measures that, although respecting the provisions of the
Agreement, affect adversely the ability of financial service suppliers
of any other Member to operate, compete or enter the Member’s market;
provided that any action taken under this paragraph would not
unfairly discriminate against financial service suppliers of the Member
taking such action.
11. With respect to the non-discriminatory measures referred to in
subparagraphs 10(a) and (b), a Member shall endeavour not to limit or
restrict the present degree of market opportunities nor the benefits
already enjoyed by financial service suppliers of all other Members as a
class in the territory of the Member, provided that this commitment does
not result in unfair discrimination against financial service suppliers
of the Member applying such measures.
C. National Treatment
1. Under terms and conditions that accord national treatment, each
Member shall grant to financial service suppliers of any other Member
established in its territory access to payment and clearing systems
operated by public entities, and to official funding and refinancing
facilities available in the normal course of ordinary business. This
paragraph is not intended to confer access to the Member’s lender of
last resort facilities.
2. When membership or participation in, or access to, any
self-regulatory body, securities or futures exchange or market, clearing
agency, or any other organization or association, is required by a
Member in order for financial service suppliers of any other Member to
supply financial services on an equal basis with financial service
suppliers of the Member, or when the Member provides directly or
indirectly such entities, privileges or advantages in supplying
financial services, the Member shall ensure that such entities accord
national treatment to financial service suppliers of any other Member
resident in the territory of the Member.
D. Definitions
For the purposes of this approach:
1. A non-resident supplier of financial services is a
financial
service supplier of a Member which supplies a financial service into the
territory of another Member from an establishment located in the
territory of another Member, regardless of whether such a financial
service supplier has or has not a commercial presence in the territory
of the Member in which the financial service is supplied.
2. ‘Commercial presence’ means an enterprise within a Member’s
territory for the supply of financial services and includes wholly- or
partly-owned subsidiaries, joint ventures, partnerships, sole
proprietorships, franchising operations, branches, agencies,
representative offices or other organizations.
3. A new financial service is a service of a financial nature,
including services related to existing and new products or the manner in
which a product is delivered, that is not supplied by any financial
service supplier in the territory of a particular Member but which is
supplied in the territory of another Member.
B. Interpretation and Application of the Understanding on Commitments
in Financial Services
No jurisprudence or decision of a competent WTO body.
Footnotes:
145. Panel Report, US — Large Civil Aircraft
(2nd Complaint), para. 7.968. back to text
146. Panel Report, US — Large Civil Aircraft
(2nd Complaint),
para. 7.969. back to text
147. S/C/M/2, paras. 23–25. See also the Reports of the Working
Party on GATS Rules to the Council for Trade in Services, S/WPGR/1–21.
See also S/WPGR/M/71. back to text
148. S/L/74, paras. 15–16. back to text
149.Panel Report, US — Gambling, para. 6.318. See also
paras. 6.298–6.299. back to text
150. Appellate Body Report, US — Gambling,
para. 256.
back to text
151. Panel Report, China — Publications and Audiovisual
Products, para. 7.1353. back to text
152. Appellate Body Report, US — Gambling,
para. 6.219–220.
back to text
153. Panel Report, US — Gambling, para. 6.290.
back to text
154. Appellate Body Report, US — Gambling,
para. 6.219–6.220.
back to text
155. Panel Report, US — Gambling, para. 6.285.
back to text
156. Panel Report, US — Gambling, paras. 6.381–6.383,
6.396–6.398, 6.399–6.402, 6.403–6.406. back to text
157. Appellate Body Report, US — Gambling,
para. 6.254.
back to text
158. Panel Report, Mexico — Telecoms, paras. 7.357–7.358.
back to text
159. Panel Report, Mexico — Telecoms, para. 7.361.
back to text
160. Panel Report, Mexico — Telecoms, para. 7.85.
back to text
161. Panel Report, Mexico — Telecoms, para. 7.85.
back to text
162. Panel Report, Mexico — Telecoms, para. 7.86.
back to text
163. Appellate Body Report, US — Gambling,
para. 233.
back to text
164. Appellate Body Report, US — Gambling,
para. 225.
back to text
165. Appellate Body Report, US — Gambling,
para. 226.
back to text
166. Appellate Body Report, US — Gambling,
para. 227.
back to text
167. Appellate Body Report, US — Gambling,
para. 230.
The definition of “monopoly supplier of a service” is found in GATS
Article XXVIII(h); the definition of “exclusive service suppliers”
is found in GATS Article VIII:5. back to text
168. (footnote original) See the WTO Secretariat Note on
“Economic Needs Tests”, S/CSS/W/118, 30 November 2001, para. 4. back to text
169. Appellate Body Report, US — Gambling, para. 231.
back to text
170. Appellate Body Report, US — Gambling, para. 232.
back to text
171. Appellate Body Report, US — Gambling, para. 232.
back to text
172. Appellate Body Report, US — Gambling, para. 233.
back to text
173. Panel Report, US — Gambling, para. 6.331; quoted in
Appellate Body Report, para. 233. back to text
174. (footnote original) 1993 Scheduling Guidelines, para.
6. (Scheduling of Initial Commitments in Trade in Services: Explanatory
Note, MTN.GNS/W/64, 3 September 1993). back to text
175. Appellate Body Report, US — Gambling, para. 238.
back to text
176. Panel Report, US — Gambling, para. 6.335.
back to text
177. Panel Report, Mexico — Telecoms, para. 7.85.
back to text
178. Panel Report, Mexico — Telecoms, para. 7.85.
back to text
179. Panel Report, Mexico — Telecoms, para. 7.86.
back to text
180. Appellate Body Report, US — Gambling, para. 245.
back to text
181. Appellate Body Report, US — Gambling, para. 247.
back to text
182. Appellate Body Report, US — Gambling, para. 249.
back to text
183. Appellate
Body Report, US — Gambling, para. 250.
back to text
184. Appellate
Body Report, US — Gambling, para. 238.
back to text
185. Panel Report, US — Gambling, para. 6.355, cited by
the Appellate Body at para. 252. back to text
186. Appellate
Body Report, US — Gambling, para. 250.
back to text
187. Panel Report, China — Publications and Audiovisual
Products, para. 7.944. back to text
188. S/L/74, paras. 17–18. back to text
189. Panel Report, China — Publications and Audiovisual
Products, para. 7.950. back to text
190. Panel Report, EC — Bananas III, para. 7.322.
back to text
191. (footnote original) E.g, Panel Report on Canada — Wheat Exports and Grain Imports, paras 6.164–6.167, and
Panel
Report on Argentina — Hides and Leather, paras. 11.168–11.169.
Although these cases concern trade in goods, we consider that the same
reasoning applies here. back to text
192. Panel Report, China — Publications and Audiovisual
Products, paras. 7.975–7.976. back to text
193. Panel Report, China — Publications and Audiovisual
Products, paras. 7.978–7.979. back to text
194. (footnote original) Appellate Body Report on Korea
— Various Measures on Beef, supra, footnote 44, para. 142. back to text
195. (footnote original) Appellate Body Report on Japan
— Alcoholic Beverages II, supra, footnote 116, at 110. back to text
196. (footnote original) Appellate Body Report on US — FSC (Article 21.5
— EC), paras. 215 and 221. back to text
197. Panel Report, China — Publications and Audiovisual
Products, paras. 7.1130–7.1131. back to text
198. Appellate Body Report, EC — Bananas III, para. 241.
back to text
199. Panel Report, Canada — Autos, para. 10.298.
back to text
200. Panel Report, Canada — Autos, paras. 10.300–10.301.
back to text
201. Panel Report, Mexico — Telecoms, para. 7.230.
back to text
202. Panel Report, Mexico — Telecoms, para. 7.232.
back to text
203. Panel Report, Mexico — Telecoms, para. 7.234.
back to text
204. Panel Report, Mexico — Telecoms, para. 7.238.
back to text
205. Panel Report, Mexico — Telecoms, para. 7.242.
back to text
206. Panel Report, Mexico — Telecoms, para. 7.243.
back to text
207. (footnote original) Section 1.1 of the Reference
Paper. back to text
208. (footnote original) See the Vienna Convention on the
Law of Treaties, 1969, Art. 27. See also Ian Brownlie, Principles
of Public International Law (Clarendon Press, 1998, 5th ed.), page 34. back to text
209. (footnote original) Section 1.1 of the Reference
Paper. back to text
210. Panel Report, Mexico — Telecoms, para. 7.244.
back to text
211. Panel Report, Mexico — Telecoms, para. 7.267.
back to text
212. Panel Report, Mexico — Telecoms, para. 7.262.
back to text
213. Panel Report, Mexico — Telecoms, para. 7.94.
back to text
214. Panel Report, Mexico — Telecoms, para. 7.105.
back to text
215. Panel Report, Mexico — Telecoms, para. 7.117.
back to text
216. Panel Report, Mexico — Telecoms, para. 7.121.
back to text
217. Panel Report, Mexico — Telecoms, para. 7.138.
back to text
218. Panel Report, Mexico — Telecoms, para. 7.151.
back to text
219. Panel Report, Mexico — Telecoms, para. 7.155.
back to text
220. Panel Report, Mexico — Telecoms, para. 7.159.
back to text
221. Panel Report, Mexico — Telecoms, para. 7.168.
back to text
222. Panel Report, Mexico — Telecoms, para. 7.174.
back to text
223. (footnote original) ITU, Trends in
Telecommunications Reform: Interconnection Regulation, 3rd edition,
sec. 4.2.1.2, p. 40. This paragraph also states that countries that
apply long run incremental cost methodologies include United States,
Australia, EC, Colombia, and South Africa, and that “numerous
developing countries have adopted or proposed” some form of this
model. back to text
224. (footnote original) ITU, Trends in
Telecommunications Reform: Interconnection Regulation, 3rd edition,
sec. 4.2.1.2, p. 40. back to text
225. Panel Report, Mexico — Telecoms, para. 7.175.
back to text
226. Panel Report, Mexico — Telecoms, para. 7.182.
back to text
227. (footnote original) The Appellate Body in US — Hot-Rolled Steel stated: “…The word ‘reasonable’ implies a
degree of flexibility that involves consideration of all of the
circumstances of a particular case. What is ‘reasonable’ in one set
of circumstances may prove to be less than ‘reasonable’ in different
circumstances. This suggests that what constitutes a reasonable period
or a reasonable time, under Article 6.8 and
Annex II of the Anti-Dumping
Agreement, should be defined on a case-by-case basis, in the light of
the specific circumstances of each investigation. In sum, a “reasonable
period” must be interpreted consistently with the notions of
flexibility and balance that are inherent in the concept of “reasonableness”,
and in a manner that allows for account to be taken of the particular
circumstances of each case. This was in the context of the Anti-Dumping
Agreement, but we believe it is equally pertinent in the context of
GATS.” See Appellate Body
Report, US — Hot-Rolled Steel, paragraphs
84–85. back to text
228. Panel Report, Mexico — Telecoms, para. 7.182.
back to text
229. Panel Report, Mexico — Telecoms, para. 7.184.
back to text
230. Panel Report, Mexico — Telecoms, para. 7.191.
back to text
231. Panel Report, Mexico — Telecoms, para. 7.203.
back to text
232. Panel Report, Mexico — Telecoms, para. 7.207.
back to text
233. Panel Report, Mexico — Telecoms, para. 7.208.
back to text
234. S/C/3, para. 47. back to text
235. WT/MIN(96)/DEC, para. 19. See also
S/C/M/17, para. 14.
back to text
236. S/C/M/27, para. 3. back to text
237. WT/GC/M/53, paras. 13 and 39. See also
S/CSS/M/1, Section A.
For the reports by the Chairman of the Special Session to the TNC, see
the document series TN/S/-. back to text
238. WT/MIN(01)/DEC/1, paras. 15 and 47. See also
TN/C/M/1.
back to text
239. S/L/93. back to text
240. WT/MIN(01)/DEC/1, para. 15. back to text
241. S/CSS/3, Section II. back to text
242. S/C/M/5, para. 4. back to text
243. S/C/M/5, paras. 4–5. The Decision can be found in
S/L/10,
and the text of the adopted Third Protocol can be found in S/L/12. back to text
244. S/FIN/M/8, para. 4. The text of the Second Protocol can be
found in S/L/11. Also, the text of the decision to adopt the Second
Protocol can be found in S/L/13. back to text
245. The text of the adopted Decision can be found in
S/L/8.
back to text
246. The text of the adopted Second Decision can be found in
S/L/9. back to text
247. S/C/M/5, paras. 2–3. back to text
248. S/FIN/M/18, para. 25. The text of the Fifth Protocol can be
found in S/L/45. Also, the text of the decision to adopt the Fifth
Protocol can be found in S/L/44. back to text
249. S/C/M/22, para. 2. The text of the decision can be found in
S/L/50. back to text
250. S/L/68. back to text
251. See e.g. Costa Rica and Nigeria
(S/L/76); Ghana (S/L/87);
Kenya and Nigeria (S/L/89); Bolivia
(S/L/108); Dominican Republic (S/L/111); Uruguay (S/L/112); Poland (S/L/130); and Philippines (S/L/382).
back to text
252. S/C/M/11, paras. 12–13. The text of the Decision can be
found in S/L/24. The Council for Trade in Services noted in its report
to the General Council, (S/C/3) paras. 32–33, dated 6 November 1996:
“After the suspension of the negotiations, two Members, Iceland and
Norway, consolidated their best offers, i.e. transformed their offers
into specific commitments to be inscribed in their schedules. Two
Members, Austria (in the context of its accession to the European Union)
and the Dominican Republic, withdrew their commitments, while two
Members, Canada and Malaysia, modified their commitments slightly.
Currently, 35 Members have commitments on maritime transport services.
This includes: 29 Members who made commitments in the Uruguay Round, 4
Members (Papua New Guinea, Saint Christopher and Nevis, Sierra Leone and
Slovenia) who acceded subsequently, and 2 Members (Iceland and Norway)
who made commitments after the extended negotiations.
At the time of suspension of the negotiations, 56 governments
(including the European Communities and their Member States) had elected
to participate fully in the negotiations. Another 16 governments were
participating in the process as observers. By that time 24 conditional
offers had been submitted.” back to text
253. S/L/24. back to text
254.
S/CSS/M/1, paras. 4–35. The decision to hold the
negotiations in Special Sessions of the Council for Trade in Services
was tabled by the General Council on 7 February 2000. The text of the
decision can be found in WT/GC/M/53. back to text
255. S/C/M/9, paras. 2–3. The text of the adopted Fourth
Protocol can be found in S/L/19. Also, the text of the adopted Fourth
Protocol can be found in S/L/20. Appellate Body Report in US — Gambling, para. 194. back to text
256. Report of the Meeting held on 10 April 2006,
S/CSC/M/40, 10
May 2006. back to text
257. Document S/L/92/Corr.1, 12 June 2006, French version only.
back to text
258. Report of the Meeting held on 5 October 2006,
S/CSC/M/42, 19
October 2006. back to text
259. Appellate
Body Report, US — Gambling, para. 159.
back to text
260. (footnote original) Appellate
Body Report on US — Gambling,
para. 196. back to text
261. Panel Report, China — Publications and Audiovisual
Products, para. 7.923. back to text
262. Scheduling of Initial Commitments in Trade in Services:
Explanatory Note (MTN.GNS/W/64, 3 September 1993). back to text
263. Appellate
Body Report, US — Gambling, paras. 188–189.
back to text
264. Appellate
Body Report, US — Gambling, para. 204.
back to text
265. Panel Report, US — Gambling, para. 6.82.
back to text
266. Appellate
Body Report, US — Gambling, para. 177.
back to text
267. Appellate
Body Report, US — Gambling, para. 194.
back to text
268. Guidelines for the Scheduling of Specific Commitments under
the General Agreement on Trade in Services (S/L/92, 28 March 2001),
adopted by the Council for Trade in Services 23 March 2001 (S/C/M/52,
para. 11). back to text
269. Appellate
Body Report, US — Gambling, para.
back to text
270. Appellate
Body Report, US — Gambling, para. 197.
back to text
271. Appellate
Body Report, US — Gambling, para. 197.
back to text
272. Services Sectoral Classification List,
MTN.GNS/W/120, 10
July 1991. back to text
273. Appellate
Body Report, US — Gambling, paras. 188–189.
back to text
274. Appellate
Body Report, US — Gambling, para. 204.
back to text
275. Panel Report, US — Gambling, para. 6.82.
back to text
276. Appellate
Body Report, US — Gambling, para. 177.
back to text
277. Appellate
Body Report, US — Gambling, para. 181.
back to text
278. United Nations, Statistical Papers, Series M, No. 77, 1991.
back to text
279. Appellate
Body Report, US — Gambling, para. 200.
back to text
280. Appellate
Body Report, US — Gambling, para. 182.
back to text
281. Appellate
Body Report, US — Gambling, para. 212.
back to text
282. Panel Report, US — Gambling, para. 6.133.
back to text
283. Appellate
Body Report, US — Gambling, para. 180.
back to text
284. Panel Report, Mexico — Telecoms, para. 7.371.
back to text
285. Panel Report, Mexico — Telecoms, para. 7.371.
back to text
286. Panel Report, Mexico — Telecoms, para. 7.371.
back to text
287. Panel Report, China — Publications and Audiovisual
Products, para. 7.921. back to text
288. Panel Report, US — Gambling, para. 6.97
back to text
289. (footnote original) Appellate Body Report, EC — Computer Equipment,
para. 109. back to text
290. (footnote original) Ibid., para. 84.
back to text
291. (footnote original) Panel Report, para. 6.45.
back to text
292. (footnote original) Antigua’s and the United States’
responses to questioning at the oral hearing. back to text
293. (footnote original) Article XX:3 of the GATS
provides: “Schedules of specific commitments shall be annexed to this
Agreement and shall form an integral part thereof.” back to text
294. Panel Report, China — Publications and Audiovisual
Products, para. 7.922. back to text
295. S/L/5. back to text
296. S/C/M/38, section D. The text of the adopted procedure can
be found in S/L/80. The text of the decision to adopt Procedures can be
found in S/L/79. back to text
297. S/C/M/42, para. 38–41. The text of the adopted Procedures
can be found in S/L/84. The text of the decision to adopt the Procedures
can be found in S/L/83. back to text
298. Paragraph 4 of Annex on Air Transport Services relates to
the dispute settlement in air transport services. back to text
299. Paragraph 4 of Annex on Financial Services relates to the
dispute settlement in financial services. back to text
300. Appellate Body Report, EC — Bananas III, para. 250.
back to text
301. (footnote original) See Appellate Body Report,
European Communities — Regime for the Importation, Sale and
Distribution of Bananas (“EC — Bananas III”), WT/DS27/AB/R, adopted 25 September 1997, DSR 1997:II, 591, at paragraph
250. back to text
302. Panel Report, Mexico — Telecoms, para. 8.4.
back to text
303. S/C/M/1. The text of the adopted Decision can be found in
S/L/2. back to text
304. S/L/2, para. 1. back to text
305. S/C/M/6, paras. 41–42. back to text
306. S/C/M/1, paras. 6–7. The text of the adopted Decision can
be found in S/L/1. back to text
307. See Annual Reports S/FIN
1–6, 8–10,
14.
back to text
308. S/L/1, para.
1. back to text
309. S/L/3. back to text
310. The reports are numbered S/WPPS/1–4. back to text
311. S/C/M/35, paras.
18–22. back to text
312. S/L/70. back to text
313. S/C/10, para. 25. Report (1999) of the Council for Trade in
Services to the General Council. back to text
314. S/WPDR 1–7. back to text
315. S/C/M/2,
paras. 22–25. back to text
316. S/C/M/6, paras. 22–25. back to text
317. S/L/16. back to text
318. S/L/15. back to text
319. S/C/M/6. back to text
320. WT/GC/M/1. back to text
321. S/C/M/1. back to text
322. S/C/M/1. back to text
323. S/C/M/42, paras. 68–69. back to text
324. The text is contained in document S/C/9/Rev.1.
back to text
325. WT/GC/M/58, pp. 14–15. back to text
326. Appellate
Body Report, US — Gambling, paragraph
123. back to text
327. Panel Report, China — Publications and Audiovisual
Products, para. 7.1209. back to text
328. Appellate Body Report, China — Publications and
Audiovisual Products, para. 379. back to text
329. Panel Report, China — Publications and Audiovisual
Products, para. 7.974. back to text
330. Panel Report, US — Gambling, paragraph 6.289.
back to text
331. Panel Report, China — Publications and Audiovisual
Products, para. 7.1014. back to text
332. S/C/N/1, S/C/N/2, S/C/N/3 and S/C/N/5. back to text
333. S/C/N/232. back to text
334. S/C/M/40, para. 53. back to text
335. See S/C/M/44, S/C/M/45 and S/C/M/47. back to text
336. S/C/M/53, Section A. back to text
337. S/C/24. back to text
338. S/C/M/105, para. 35. back to text
339. S/C/M/1, paras. 10–11. The approved Guidelines can be
found in S/L/5. back to text
340. S/L/106. back to text
341. S/C/M/1, para. 14. back to text
342. G/C/1, para. 6. back to text
343. S/C/M/49, S/C/M/50, S/C/M/57 and S/C/M/62. back to text
344. S/C/M/68, paras. 115–116. back to text
345. S/C/26. back to text
346. Panel Report, Mexico — Telecoms, paras. 7.282–7.283.
back to text
347. Panel Report, Korea — Commercial Vessels, para.
7.47. back to text
348. Panel Report, Mexico — Telecoms, para. 7.278.
back to text
349. Panel Report, Mexico — Telecoms, para. 7.281.
back to text
350. Panel Report, Mexico — Telecoms, para. 7.286.
back to text
351. Panel Report, Mexico — Telecoms, para. 7.302.
back to text
352. Panel Report, Mexico — Telecoms, paras. 7.306 and
7.309. back to text
353. Panel Report, Mexico — Telecoms, para. 7.325.
back to text
354. Panel Report, Mexico — Telecoms, para. 7.333, see
also paras. 7.331–7.332, and para. 229 of this Chapter. back to text
355. (footnote original) see para. 7.216.
back to text
356. Panel Report, Mexico — Telecoms, paras. 7.334–7.335.
back to text
357. Panel Report, Mexico — Telecoms, para. 7.307.
back to text
358. (footnote original) For an interpretation of the
words subject to, see also: Appellate Body Report, Canada — Dairy,
para. 134. back to text
359. Panel Report, Mexico — Telecoms, paras. 7.308–7.309.
back to text
360. Panel Report, Mexico — Telecoms, para. 7.381.
back to text
361. Panel Report, Mexico — Telecoms, para. 7.326.
back to text
362. Panel Report, Mexico — Telecoms, para. 7.327.
back to text
363. Panel Report, Mexico — Telecoms, para. 7.338.
back to text
364. Panel Report, Mexico — Telecoms, para. 7.341.
back to text
365. Panel Report, Mexico — Telecoms, para. 7.342.
back to text
366. Panel Report, Mexico — Telecoms, para. 7.385.
back to text
367. Panel Report, Mexico — Telecoms, para. 7.388.
back to text
368.
Panel Report, Mexico — Telecoms, para. 7.331. back to text
369. (footnote original) For example, footnote 2 of the
Annex expressly refers to most favoured nation treatment (Article
II)
and national treatment (Article XVII). Section 4 (Transparency) builds
upon Article III (Transparency). The Annex further elaborates on
concepts contained in Articles VI (Domestic Regulation),
VIII
(Monopolies and exclusive service suppliers), and IX (Business
Practices). back to text
370. Panel Report, Mexico — Telecoms, paras. 7.331–7.332.
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