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WTO ANALYTICAL INDEX: GENERAL AGREEMENT ON TRADE IN SERVICES General Agreement on Trade in Services |
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> Preamble
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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.
1. Working Party on GATS Rules 59. 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.(94)
Part III: Specific Commitments
XX. Article XVI back to top 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.
60. 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.(95) 2. Relationship with Article VI:4 61. With respect to the relationship between Article VI:4 and XVI, see paragraph 45 above.
XXI. Article XVII back to top 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.
62. 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.(96) 2. Likeness of Services and Service Suppliers 63. The Panel on 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."(97) 64. 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."(98) 65. 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."(99) 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."(100) 5. Relationship with Article VI:4 66. With respect to the relationship between Article VI:4 and XVII, see paragraph 45 above.
XXII. Article XVIII back to top 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.
No jurisprudence or decision of a competent WTO body.
Part IV: Progressive Liberalization
XXIII. Article XIX back to top 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.
67. 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,(101) 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.(102) 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.(103) 68. 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.(104) 69. 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.(105) 70. 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,(106) which were subsequently reaffirmed by Ministers meeting in Doha on 9-14 November 2001.(107) (b) Assessment of trade in services 71. 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.(108) 3. Negotiations in Specific Services Sectors (a) Movement of natural persons 72. At its meeting of 21 July 1995,(109) the Council for Trade in Services decided to adopt the Third Protocol to the General Agreement on Trade in Services,(110) which had been proposed by the Negotiating Group on Movement of Natural Persons. 73. 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.(111) 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(112) and the Second Decision on Financial Services,(113) both of which had been proposed by the Committee on Trade in Financial Services.(114) 74. 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.(115) 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(116), 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.(117) 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. Since September 1999 until 31 December 2002, six WTO Members have accepted.(118) (c) Maritime transport services 75. 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 GATS, and to conclude them no later than at the end of this first round of progressive liberalization.(119) The Group was to resume "with the commencement of comprehensive negotiations on Services".(120) A Special Session of the Council for Trade in Services formally launched the new negotiations on services on 25 February 2000.(121) 76. 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,(122) both of which had been proposed by the Negotiating Group on Basic Telecommunications. 77. With respect to the establishment of the Working Party on Professional Services, and its successor, the Working Party on Domestic Regulation, see paragraphs 89-91 below. (i) Disciplines on domestic regulation 78. With respect to disciplines on domestic regulation, see paragraph 44 above.
XXIV. Article XX back to top 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.
(a) Committee on Specific Commitments 79. With regard to the establishment and terms of reference of the Committee on Specific Commitments under the GATS, see paragraph 94 below. (b) Guidelines for Scheduling of Specific Commitments 80. At its meeting of 23 March 2001, the Council for Trade in Services adopted the Guidelines for the Scheduling of Specific Commitments.(123)
XXV. Article XXI back to top 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.
81. With respect to the format for notifications under paragraph 1(b), see the Guidelines for Notifications under the General Agreement on Trade in Services.(124) (a) Procedures for the rectification or modification of schedules 82. 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.(125) The Procedures are to be used whenever a Member intends to modify or withdraw a scheduled commitment. 83. 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.(126) 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 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.
No jurisprudence or decision of a competent WTO body.
XXVII. Article XXIII back to top 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.(127), (128).
(a) Relationship with Article 3.8 of the DSU 84. 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."(129) 85. The following table lists the disputes in which panel and/or Appellate Body reports have been adopted where the provisions of GATS were invoked:
3. Decision on Certain Dispute Settlement Procedures for the General Agreement on Trade in Services 86. 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(130), which called for the establishment of a roster of panellists.(131) The text of the decision is as follows: "Decision on Certain Dispute Settlement Procedures for the General Agreement on Trade in Services
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." 87. 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.(132)
XXVIII. Article XXIV back to top 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.
(a) Establishment of subsidiary bodies (i) Committee on Trade in Financial Services 88. 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,(133) thereby establishing the Committee on Trade in Financial Services. 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."(134) (ii) Working Party on Professional Services and Working Party on Domestic Regulation 89. 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.(135) With respect to disciplines on domestic regulation and mutual recognition guidelines, see paragraphs 44 and 48 above. 90. The Working Party reported to the Council for Trade in Services on an annual basis.(136) 91. 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.(137) For this purpose, at the same meeting, the Council for Trade in Services adopted a decision establishing the Working Party on Domestic Regulation (WPDR).(138) 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.(139) 92. The WPDR reports to the Council for Trade in Services on an annual basis. (iii) Working Party on GATS Rules 93. 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).(140) (iv) Committee on Specific Commitments 94. On 4 October 1995, the Council for Trade in Services established the Committee on Specific Commitments.(141) 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.(142) (v) Negotiating Groups on Natural Persons, Maritime Transport Services and Basic Telecommunications 95. 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 96. On 4 October 1995, the Council for Trade in Services adopted(143) the Rules of Procedure of the General Council, along with appropriate modifications.(144) See also the Chapter on WTO Agreement, paragraph 153. 97. 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(145) 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.(146) 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.(147) 98. 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.(148)
99. With respect to institutional arrangements for the GATS, Ministers at the 1994 Marrakesh Ministerial conference adopted the following Decision:(149) "Decision on Institutional Arrangements for the General Agreement on Trade in Services
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 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.
No jurisprudence or decision of a competent WTO body.
XXX. Article XXVI back to top 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.
1. Agreement between the International Telecommunication Union and the World Trade Organization 100. On 26 May 2000, the Council for Trade in Services adopted the Cooperation Agreement between the International Telecommunication Union and the World Trade Organization.(150) 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.(151) 101. With respect to the relationship of the WTO to other international organizations in general, see the Chapter on the WTO Agreement, paragraphs 246-247.
Part V : Final Provisions
XXXI. Article XXVII back to top 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.
No jurisprudence or decision of a competent WTO body.
XXXII. Article XXVIII back to top 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.
102. 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.(152)
XXXIII. Article XXIX back to top Article XXIX: Annexes The Annexes to this Agreement are an integral part of this Agreement.
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.]"
103. 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.(153) 104. The Council conducted a review of MFN exemptions at meetings held on 29 May 2000, 5 July 2000 and 5 October 2000.(154) The Council decided that a further review of MFN exemptions should take place no later than June 2004.(155) 105. 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 General Agreement on Trade in Services.(156) 4. Terminations, reductions and rectifications of MFN exemptions 106. 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.(157)
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."
1. Measures Relating to the Entry and Stay of Natural Persons 107. At its meeting of 1 March 1995, the Council for Trade in Services adopted a conclusion of the Sub-Committee on Services concerning measures relating to the entry and stay of natural persons.(158) The Sub-Committee had dealt with the question on what basis a distinction between "temporary" and "permanent" residency and employment should be made. The Sub-Committee, 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.(159)
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 non-scheduled, 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.
108. 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.(160)
XXXVII. Annex on Financial Services back to top 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.
No jurisprudence or decision of a competent WTO body.
XXXVIII. Second Annex on Financial Services back to top 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.
No jurisprudence or decision of a competent WTO body.
XXXIX. Annex on Negotiations on Maritime Transport Services back to top 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.
No jurisprudence or decision of a competent WTO body.
XL. Annex on Telecommunications back to top 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.
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