WTO ANALYTICAL INDEX: AGREEMENT ON GOVERNMENT PROCUREMENT

General Agreement on Trade in Services

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I. Preamble  

A. Text of the Preamble

   Members,

 

   Recognizing the growing importance of trade in services for the growth and development of the world economy;

 

   Wishing to establish a multilateral framework of principles and rules for trade in services with a view to the expansion of such trade under conditions of transparency and progressive liberalization and as a means of promoting the economic growth of all trading partners and the development of developing countries;

 

   Desiring the early achievement of progressively higher levels of liberalization of trade in services through successive rounds of multilateral negotiations aimed at promoting the interests of all participants on a mutually advantageous basis and at securing an overall balance of rights and obligations, while giving due respect to national policy objectives;

 

   Recognizing the right of Members to regulate, and to introduce new regulations, on the supply of services within their territories in order to meet national policy objectives and, given asymmetries existing with respect to the degree of development of services regulations in different countries, the particular need of developing countries to exercise this right;

 

   Desiring to facilitate the increasing participation of developing countries in trade in services and the expansion of their service exports including, inter alia, through the strengthening of their domestic services capacity and its efficiency and competitiveness;

 

   Taking particular account of the serious difficulty of the least-developed countries in view of their special economic situation and their development, trade and financial needs;

 

   Hereby agree as follows:

 
B. Interpretation and Application of the Preamble

1. “transparency”

1.   In US — Gambling, the Panel found that the scope of the United States’ commitment in its GATS Schedule on “Other recreational services, except sporting” extends to gambling and betting services. The Panel considered that its conclusion was consistent with the object and purpose of “transparency”:

“The object and purpose of the GATS lends support to the conclusion that the ordinary meaning of the terms used in the US Schedule, when read in their context, is that the United States has undertaken specific commitments on gambling and betting services in sub-sector 10.D of its Schedule. Our conclusion derives from the need to provide clarity and precision in respect of the US entry under sub-sector 10.D (Other recreational services, except sporting) and the fact that, unless otherwise indicated in the schedule, Members were assumed to have relied on W/120 and the corresponding CPC references.

 

The need for clarity and precision in Members’ schedules referred to in the 1993 Scheduling Guidelines is consistent with the preamble to the GATS which stipulates, inter alia, that, in establishing the GATS, Members sought the expansion of trade in services “under conditions of transparency”. This requirement of transparency is undoubtedly an object and purpose of the GATS — and the WTO in general — and applies equally to GATS schedules of specific commitments. Indeed, schedules of specific commitments determine, inter alia, the scope of market access and national treatment obligations that Members undertake under the GATS. It is, therefore, important that schedules be readily understandable by all other WTO Members, as well as by services suppliers and consumers.

 

The Appellate Body found that “the security and predictability of ‘the reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade’ is an object and purpose of the WTO Agreement, generally, as well as of GATT 1994.”(1) This confirms the importance of the security and predictability of Members’ specific commitments, which is equally an object and purpose of the GATS.”(2)

2.   The Appellate Body in US — Gambling approved the Panel’s finding of a need for precision and clarity in scheduling in the following terms:

“The Panel referred to the requirement of “transparency” found in the preamble to the GATS, as supporting the need for precision and clarity in scheduling, and underlining the importance of having Schedules that are “readily understandable by all other WTO Members, as well as by services suppliers and consumers”.(3) The Panel also referred to the Appellate Body Report in EC — Computer Equipment as follows:

 

The Appellate Body found that “the security and predictability of ‘the reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade’ is an object and purpose of the WTO Agreement, generally, as well as of GATT 1994.” This confirms the importance of the security and predictability of Members’ specific commitments, which is equally an object and purpose of the GATS. (original footnote omitted)

 

We agree with the Panel’s characterization of these objectives, along with its suggestion that they reinforce the importance of Members’ making clear commitments.”(4)

2. “progressive liberalization”

3.   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 considered that its interpretation was consistent with the object and purpose of the GATS:

“We now verify whether our interpretation of China’s commitment on “Sound recording distribution services” is consistent with the object and purpose of the GATS. We note that the Preamble of the GATS indicates that the Agreement is aimed, inter alia, at establishing “a multilateral framework of principles and rules for trade in services with a view to the expansion of such trade under conditions of transparency and progressive liberalization”. In light of this general object and purpose, the Preamble also provides that commitments negotiated under the Agreement should aim at “securing an overall balance of rights and obligations” between the Members. We find that our interpretation of China’s commitment on “Sound recording distribution services” is consistent with this object and purpose.”(5)

4.   In China — Publications and Audiovisual Products, China argued on appeal that the Panel’s interpretation of “Sound recording distribution services” is inconsistent with the object and purpose of the GATS and, in particular, with the principle of “progressive liberalization”. More specifically, China argued that the Panel interpreted the entry “Sound recording distribution services” according to the contemporary meaning of the words it contains, but that the principle of “progressive liberalization” does not allow for the expansion of the scope of the commitments of a WTO Member by interpreting the terms used in the Schedule based on the meaning of those terms at the time of interpretation. The Appellate Body saw no error in the Panel’s consideration of the object and purpose of the GATS in general, and considered that the principle of “progressive liberalization” does not lend support to an interpretation that would constrain the scope and coverage of specific commitments that have already been undertaken by Members and by which they are bound:

“We observe that the GATS preamble lists various objectives, including the “establish[ment] of a multilateral framework of principles and rules for trade in services with a view to the expansion of such trade under conditions of transparency and progressive liberalization”, and the “early achievement of progressively higher levels of liberalization of trade in services through successive rounds of multilateral negotiations”. The Panel found that its interpretation of “Sound recording distribution services” is consistent with the objectives listed in the GATS preamble.

 

We do not disagree with the Panel that nothing in the GATS preamble appears to contradict an interpretation of “Sound recording distribution services” as extending to electronic distribution of sound recordings. At the same time, we observe that none of the objectives listed in the GATS preamble provides specific guidance as to the correct interpretation to be given to China’s GATS Schedule entry “Sound recording distribution services”.

 

The principle of progressive liberalization is reflected in the structure of the GATS, which contemplates that WTO Members undertake specific commitments through successive rounds of multilateral negotiations with a view to liberalizing their services markets incrementally, rather than immediately and completely at the time of the acceptance of the GATS. The scheduling of specific commitments by service sectors and modes of supply represents another manifestation of progressive liberalization. In making specific commitments, Members are not required to liberalize fully the chosen sector, but may limit the coverage to particular subsectors and modes of supply and maintain limitations, conditions, or qualifications on market access and national treatment, provided that they are inscribed in their Schedules. We do not consider, however, that the principle of progressive liberalization lends support to an interpretation that would constrain the scope and coverage of specific commitments that have already been undertaken by Members and by which they are bound.”(6)

5.   In addition, the Appellate Body stated that it was not persuaded that the meanings of the terms “sound recording” and “distribution” had changed between the time of China’s accession to the WTO (2001) and the time of the Panel’s interpretation (2009). Moreover, the Appellate Body considered that the terms of a GATS schedule should be interpreted in accordance with concept of evolutionary interpretation:

“More generally, we consider that the terms used in China’s GATS Schedule (“sound recording” and “distribution”) are sufficiently generic that what they apply to may change over time. In this respect, we note that GATS Schedules, like the GATS itself and all WTO agreements, constitute multilateral treaties with continuing obligations that WTO Members entered into for an indefinite period of time, regardless of whether they were original Members or acceded after 1995.(7)

 

We further note that interpreting the terms of GATS specific commitments based on the notion that the ordinary meaning to be attributed to those terms can only be the meaning that they had at the time the Schedule was concluded would mean that very similar or identically worded commitments could be given different meanings, content, and coverage depending on the date of their adoption or the date of a Member’s accession to the treaty. Such interpretation would undermine the predictability, security, and clarity of GATS specific commitments, which are undertaken through successive rounds of negotiations(8), and which must be interpreted in accordance with customary rules of interpretation of public international law.”(9)

 

Part I: Scope and Definition

 

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II. Article I  

A. Text of Article I

Article I: Scope and Definition

1.   This Agreement applies to measures by Members affecting trade in services.

 

2.   For the purposes of this Agreement, trade in services is defined as the supply of a service:

 

(a)   from the territory of one Member into the territory of any other Member;

 

(b)   in the territory of one Member to the service consumer of any other Member;

 

(c)   by a service supplier of one Member, through commercial presence in the territory of any other Member;

 

(d)   by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member.

 

3.   For the purposes of this Agreement:

 

(a)   “measures by Members” means measures taken by:

 

(i)   central, regional or local governments and authorities; and

 

(ii)   non-governmental bodies in the exercise of powers delegated by central, regional or local governments or authorities;

 

In fulfilling its obligations and commitments under the Agreement, each Member shall take such reasonable measures as may be available to it to ensure their observance by regional and local governments and authorities and non-governmental bodies within its territory;

 

(b)   “services” includes any service in any sector except services supplied in the exercise of governmental authority;

 

(c)   “a service supplied in the exercise of governmental authority” means any service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers.

 
B. Interpretation and Application of Article I

1. Scope of GATS

(a) Measures relating to judicial and administrative assistance

6.   With respect to measures relating to judicial and administrative assistance in the context of Article II of the GATS, as referenced in paragraph 30 below, at its meeting of 1 March 1995, the Council for Trade in Services agreed to adopt the conclusion of the Sub-Committee on Services concerning measures relating to judicial and administrative assistance.(10) The adopted conclusion, inter alia, states that none of the provisions of the GATS would apply to such measures.(11)

(b) Measures relating to the entry and stay of natural persons

7.   With respect to the basis for drawing the distinction between “temporary” and “permanent” residency in the context of the GATS, see paragraph 234 below.

(c) Electronic commerce

8.   At its meeting of 25 September 1998, the General Council adopted the Work Programme on Electronic Commerce, which mandated the Council for Trade in Services to examine and report on the treatment of electronic commerce in the GATS legal framework.(12)

2. Article I:1

(a) “measures affecting trade in services”

9.   The Panel in EC — Bananas III defined the scope of application of the GATS in the following terms:

“[N]o measures are excluded a priori from the scope of the GATS as defined by its provisions. The scope of the GATS encompasses any measure of a Member to the extent it affects the supply of a service regardless of whether such measure directly governs the supply of a service or whether it regulates other matters but nevertheless affects trade in services.”(13)

10.   Based on its interpretation of the scope of the GATS set out above, the Panel in EC — Bananas III concluded that there was “no legal basis for an a priori exclusion of measures within the EC banana import licensing regime from the scope of the GATS”.(14) The Appellate Body upheld this finding and held that no provision of the Agreement “suggest[s] a limited scope of application for the GATS”:

“In addressing this issue, we note that Article I:1 of the GATS provides that ‘[t]his Agreement applies to measures by Members affecting trade in services’. In our view, the use of the term ‘affecting’ reflects the intent of the drafters to give a broad reach to the GATS. The ordinary meaning of the word ‘affecting’ implies a measure that has ‘an effect on’, which indicates a broad scope of application. This interpretation is further reinforced by the conclusions of previous panels that the term ‘affecting’ in the context of Article III of the GATT is wider in scope than such terms as ‘regulating’ or ‘governing’. … We also note that Article I:3(b) of the GATS provides that ‘ ’services’ includes any service in any sector except services supplied in the exercise of governmental authority’ (emphasis added), and that Article XXVIII(b) of the GATS provides that the ‘ ’supply of a service’ includes the production, distribution, marketing, sale and delivery of a service’. There is nothing at all in these provisions to suggest a limited scope of application for the GATS. … For these reasons, we uphold the Panel’s finding that there is no legal basis for an a priori exclusion of measures within the EC banana import licensing regime from the scope of the GATS.”(15)

11.   The Appellate Body in Canada — Autos stated that whether a measure is “affecting” trade in services must be assessed before any further consistency of this measure with other GATS provision is considered:

“[T]he fundamental structure and logic of Article I:1, in relation to the rest of the GATS, require that determination of whether a measure is, in fact, covered by the GATS must be made before the consistency of that measure with any substantive obligation of the GATS can be assessed.

 

Article II:1 of the GATS states expressly that it applies only to “any measure covered by this Agreement”. This explicit reference to the scope of the GATS confirms that the measure at issue must be found to be a measure “affecting trade in services” within the meaning of Article I:1, and thus covered by the GATS, before any further examination of consistency with Article II can logically be made. We find, therefore, that the Panel should have inquired, as a threshold question, into whether the measure is within the scope of the GATS by examining whether the import duty exemption is a measure “affecting trade in services” within the meaning of Article I. In failing to do so, the Panel erred in its interpretative approach.

[W]e believe that at least two key legal issues must be examined to determine whether a measure is one “affecting trade in services”: first, whether there is “trade in services” in the sense of Article I:2; and, second, whether the measure in issue “affects” such trade in services within the meaning of Article I:1.”(16)

12.   Rejecting the notion that a panel could directly determine whether a measure was “affecting” trade in services under Article I:1 simply by examining whether the measure violated Article II or Article XVII of GATS, the Appellate Body in Canada — Autos stated that a panel needed instead to examine the effect of the measure on the relevant services as services, or upon the service suppliers in their capacity as service suppliers. It criticized the Panel’s approach in the following terms:

“[T]he Panel … never examined whether or how the import duty exemption affects wholesale trade service suppliers in their capacity as service suppliers. Rather, the Panel simply stated:

 

‘Like the measures at issue in the EC — Bananas III case, the import duty exemption granted only to manufacturer beneficiaries bears upon conditions of competition in the supply of distribution services, regardless of whether it directly governs or indirectly affects the supply of such services. (emphasis added)’

 

We do not consider this statement of the Panel to be a sufficient basis for a legal finding that the import duty exemption ‘affects’ wholesale trade services of motor vehicles as services, or wholesale trade service suppliers in their capacity as service suppliers. The Panel failed to analyze the evidence on the record relating to the provision of wholesale trade services of motor vehicles in the Canadian market. It also failed to articulate what it understood Article I:1 to require by the use of the term ‘affecting’. Having interpreted Article I:1, the Panel should then have examined all the relevant facts, including who supplies wholesale trade services of motor vehicles through commercial presence in Canada, and how such services are supplied. It is not enough to make assumptions. Finally, the Panel should have applied its interpretation of ‘affecting trade in services’ to the facts it should have found.

 

The European Communities and Japan may well be correct in their assertions that the availability of the import duty exemption to certain manufacturer beneficiaries of the United States established in Canada, and the corresponding unavailability of this exemption to manufacturer beneficiaries of Europe and of Japan established in Canada, has an effect on the operations in Canada of wholesale trade service suppliers of motor vehicles and, therefore, ‘affects’ those wholesale trade service suppliers in their capacity as service suppliers. However, the Panel did not examine this issue. The Panel merely asserted its conclusion, without explaining how or why it came to its conclusion. This is not good enough.”(17)

13.   In China — Publications and Audiovisual Products, the Panel found that various measures at issue were measures “affecting” the supply of services. The Panel noted that it was not in dispute that the measures at issue “regulate or govern” certain matters, and stated that “[s]ince the term “affecting” is wider in scope than “regulating” or “governing”, we therefore consider that these measures are “affecting” the supply of [services]”.(18)

3. Article I:2(a)

(a) Means of delivery covered

14.   The Panel in US — Gambling stated that supply of a service through mode 1 includes all means of delivery:

“To sum up, we conclude that mode 1 includes all means of delivery. We are of the view that when a Member inscribes the word “None” in the market access column of its schedule for mode 1, it commits itself not to maintain measures which prohibit the use of one, several or all means of delivery under mode 1 in a committed sector or sub-sector. This is especially so in sectors and sub-sectors where cross-border supply is effected essentially if not exclusively through the Internet.”(19)

“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.”(20)

15.   In China — Publications and Audiovisual Products, the Panel considered that the principle of “technological neutrality” “might have come into play” had it found that there was doubt about whether it also covered the distribution of content on non-physical media, but that this was not the case in that dispute:

“In light of our interpretation of China’s commitment, we now examine the US argument on “technological neutrality”. This principle, according to the United States, establishes that any differences between the supply of the sound recording distribution services on physical, as compared to non-physical, media are merely “technological”, and thus should not, unless specified in China’s Schedule, serve to narrow the scope of China’s commitment. The United States derives this principle from a statement in a Progress Report on a “Work Programme on Electronic Commerce”, dated 19 July 1999, prepared by the Council for Trade in Services for the General Council.(21) The statement says:

 

“It was also the general view that the GATS is technologically neutral in the sense that it does not contain any provisions that distinguish between the different technological means through which a service may be supplied.”(22)

 

We note that this statement has been referred to by the panel in US — Gambling. That panel, in examining the range of possible means of delivery included in a full market access commitment on cross-border supply, concluded that such a commitment includes “all means of delivery, whether by mail, telephone, Internet etc., unless otherwise specified in a Member’s Schedule.”(23) The panel in that case added that this was “in line” with the principle of technological neutrality that “seems to be largely shared among WTO Members” as evidenced by the statement in the Progress Report.(24)

 

We note, however, that in interpreting China’s commitment on “sound recording distribution services”, we have no need to invoke a principle of technological neutrality. We have already found that the core meaning of China’s commitment on these services includes the distribution of audio content on non-physical media. The principle of technological neutrality might have come into play had we found that China’s commitment covered distribution on physical media and that there was doubt about whether it also covered the distribution of content on non-physical media. But this was not the case here.”(25)

(b) Relevance of where the supplier operates, or is present

16.   The Panel in Mexico — Telecoms found that “the services at issue, in which United States suppliers link their networks at the border with those of Mexican suppliers for termination within Mexico, without United States’ suppliers operating, or being present in some way, in Mexico, are services which are supplied cross-border within the meaning of Article I:2(a) of the GATS.”(26) In examining Article I:2(a), the Panel found that this provision does not require that the service supplier must itself operate, or be present, in the territory into which the service is supplied:

Subparagraph (a) describes what is referred to as ‘cross-border’, or ‘mode 1’, supply of trade in services. The ordinary meaning of the words of this provision indicate that the service is supplied from the territory of one Member into the territory of another Member. Subparagraph (a) is silent as regards the supplier of the service. The words of this provision do not address the service supplier or specify where the service supplier must operate, or be present in some way, much less imply any degree of presence of the supplier in the territory into which the service is supplied.

 

If we look at the wording of the other modes of supply, we note that the silence in subparagraph (a) as regards the presence of the supplier of the service is in marked contrast to the modes of supply described in subparagraphs (c) (‘commercial presence’) and (d) (‘presence of natural persons’). In both cases, the presence of the service supplier within the territory where the service is supplied is specifically mentioned. The context provided by subparagraphs (c) and (d) therefore suggests that, where the presence of the service supplier was required to define a particular mode of supply, the drafters of the GATS expressed this clearly.”(27)

(c) Relevance of ownership and control of the infrastructure used to supply the service

17.   The Panel in Mexico — Telecoms, in examining the definition of basic telecommunications services contained in the GATS, found that the definition does not imply that the supplier of such services must itself own or control the entire network infrastructure over which the cross-border service is supplied:

“According to the definition, basic telecommunications services are services supplied ‘between two or more points’. The definition nowhere indicates that a single supplier must undertake the transmission between the ‘points’. The words ‘between two or more points’ suggest, in fact, the contrary. Transmission to the various ‘points’ requested by a customer requires ownership of or access to an expansive transmission infrastructure. It would be unreasonable to assume that the definition of telecommunications services applies only where a telecommunications supplier itself owns or controls a complete global infrastructure allowing it to reach every potential ‘point’ requested by its customers. Had WTO Members intended this to be the case, they surely would have made it explicit in the definition.”(28)

18.   The Panel in Mexico — Telecoms found further support for this view by examining the meaning of “public long-distance voice telephone services”, contained in the UN 1991 Provisional Central Product Classification, and referenced in the GATS Sectoral List (W/120) used by Mexico and many other Members in scheduling their telecommunications commitments:

“This definition makes clear that the service of long-distance telephony consists of giving a customer access to both ‘the supplier’s and connecting operator’s entire telephone network’ (emphasis added). The definition of voice telephony services thus anticipates interworking of both operating networks in order for the service to be performed. No element of the definition implies or requires ‘end-to-end’ service by one and the same operator. Moreover, when more than one operator is involved, the service supplied to customers includes access to the ‘entire networks’ of both operators. The service supplied is not therefore the simple transmission of a voice message ‘up to’ a connecting operator’s network; rather, the service is defined as spanning both operators’ networks. It therefore follows that supply of the service involves call completion spanning both operators’ networks.”(29)

19.   The Panel in Mexico — Telecoms specified that the cross-border supply of telecommunications services could take place even if elements of the service were subcontracted or carried out with assets owned by another firm:

“More generally, a supplier of services under the GATS is no less a supplier solely because elements of the service are subcontracted to another firm, or are carried out with assets owned by another firm. What counts is the service that the supplier offers and has agreed to supply to a customer. In the case of a basic telecommunications service, whether domestic or international, or supplied cross-border or through commercial presence, the supplier offers its customer the service of completing the customer’s communications. Having done so, the supplier is responsible for making any necessary subsidiary arrangements to ensure that the communications are in fact completed. The customer typically pays its supplier the price of the end-to-end service, regardless of whether the supplier contracts with, or uses the assets of, another firm to supply the service.”(30)

(d) Relevance of degree of interaction between different operators

20.   Referring again to the definition of “public long-distance voice telephone services” in the UN 1991 Provision Central Product Classification, the Panel in Mexico — Telecoms stated that the reference in this definition to services “necessary to establish and maintain communications” suggested a high degree of interaction between operators in the cross-border supply of a telecommunications service:

“We observe that basic telecommunications services supplied between Members do require, during the delivery of the service, a high degree of interaction between each other’s networks, since the service typically involves a continuous, rapid and often two-way flow of intangible customer and operator data. The interaction results in a seamless service between the originating and terminating segments, which suggests that the service be considered as a single, cross-border service.”(31)

(e) Relevance of supply by means of “linking” to another operator

21.   In arriving at the conclusion discussed in paragraph 16 above, the Panel in Mexico — Telecoms considered that Mexico’s claim that he supplier itself must transmit the customer data from one Member to another Member:

“If linking with another operator implied that the originating operator were no longer ‘supplying’ the service, an absurd consequence would result. Not only would telecommunications services delivered in this manner not be ‘supplied’ cross-border in the sense of Article I:2(a), they would also not be ‘supplied’ under any of the other modes of supply under the GATS. Nearly all telecommunications services currently supplied across borders would then fall outside the scope of the GATS. Present and future liberalization of this form of international telecommunications trade would not be possible within the WTO, without a new or amended treaty. Such an interpretation would be inconsistent with the fact that the GATS ‘applies to … trade in services’ (Article I:1), and that ‘trade in services’ is defined comprehensively as the supply of services through four modes of supply. The GATS creates a wide-ranging agreement covering all services and modes of supply, in order to allow progressive liberalization of trade in services between Members. This suggests that the supply of basic telecommunications services — the ‘transmission of customer supplied information’ — must include supply by means which involve or require linking to another operator to complete the service.”(32)

4. Article I:2(c)

(a) Supply by a firm commercially present in one Member into the territory of another Member

22.   The Panel in Mexico — Telecoms examined whether international services supplied by a firm in Mexico fell within the definition of services supplied through commercial presence. It found that there was no territorial requirement contained in paragraph 2(c) other than a commercial presence in the territory of any other Member:

“The definition of services supplied through a commercial presence makes explicit the location of the service supplier. It provides that a service supplier has a commercial presence — any type of business or professional establishment — in the territory of any other Member. The definition is silent with respect to any other territorial requirement (as in cross-border supply under mode 1) or nationality of the service consumer (as in consumption abroad under mode 2). Supply of a service through commercial presence would therefore not exclude a service that originates in the territory in which a commercial presence is established (such as Mexico), but is delivered into the territory of any other Member (such as the United States).(33)

5. Article I:3(b)

23.   The Appellate Body in US-Gambling examined the context provided by the structure of GATS in interpreting the specific commitments made by the US in its GATS Schedule. The Appellate Body stated that from the definition of ‘services’ and ‘sector’(34) found in GATS, it follows that, firstly, a Member may schedule commitments in respect of any service and secondly, that a particular service cannot fall within two different sectors or sub sectors of a Member’s Schedule:

“To us, the structure of GATS necessarily implies two things. 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 the 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.“(35)

6. Relationship with the GATT 1994

24.   The Panel in Canada — Periodicals, in a finding subsequently not addressed by the Appellate Body, rejected the argument by Canada that Article III of the GATT 1994 does not apply to a measure which is within the purview of the GATS:

“Canada’s argument is essentially that since Canada has made no specific commitments for advertising services under GATS, the United States should not be allowed to ‘obtain benefits under a covered agreement that have been expressly precluded under another covered agreement’. … Put another way, Canada seems to argue that if a Member has not undertaken market-access commitments in a specific service sector, that non-commitment should preclude all the obligations or commitments undertaken in the goods sector to the extent that there is an overlap between the non-commitment in services and the obligations or commitments in the goods sector. Canada claims that because of the existence of the two instruments — GATT 1994 and GATS — both of which may apply to a given measure, ‘it is necessary to interpret the scope of application of each such as to avoid any overlap’.

 

We are not fully convinced by Canada’s characterization of the Excise Tax as a measure intended to regulate trade in advertising services, in view of the fact that there is no comparable regulation on advertisements through other media and the fact that the tax is imposed on a ‘per issue’ basis. However, assuming that Canada intended to carve out Part V.1 of the Excise Tax Act from the coverage of its GATS commitments by not inscribing advertising services in its Schedule…, does that exonerate Canada from the Panel’s scrutiny regarding the alleged violation of its obligations and commitments under GATT 1994?

 

In order to answer this question, we need to examine the structure of the WTO Agreement including its annexes. Article II:2 of the WTO Agreement is the relevant provision, which reads as follows:

 

‘The agreements and associated legal instruments included in Annexes 1, 2 and 3 … are integral parts of this Agreement, binding on all Members’ ….”(36)

25.   Recalling the principle of effective treaty interpretation, the Panel then found that “obligations under GATT 1994 and GATS can co-exist and that one does not override the other”:

“According to Article 31(1) of the 1969 Vienna Convention on the Law of Treaties (‘Vienna Convention’), a treaty must be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose. Furthermore, as the Appellate Body has repeatedly pointed out, ‘one of the corollaries of the ‘general rule of interpretation’ in the Vienna Convention is that interpretation must give meaning and effect to all the terms of the treaty. An interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility.’…(37) The ordinary meaning of the texts of GATT 1994 and GATS as well as Article II:2 of the WTO Agreement, taken together, indicates that obligations under GATT 1994 and GATS can co-exist and that one does not override the other. If the consequences suggested by Canada were intended, there would have been provisions similar to Article XVI:3 of the WTO Agreement or the General Interpretative Note to Annex 1A in order to establish hierarchical order between GATT 1994 and GATS. The absence of such provisions between the two instruments implies that GATT 1994 and GATS are standing on the same plain in the WTO Agreement, without any hierarchical order between the two.”(38)

26.   The Panel in Canada — Periodicals finally rejected the notion that overlaps between the subject-matter of the GATT 1994 and GATS should be avoided. Rather, it noted that certain types of services have long been associated with GATT disciplines, as evidenced, inter alia, by certain GATT Panel Reports:

“In this connection, Canada also argues that overlaps between GATT 1994 and GATS should be avoided. … We disagree. Overlaps between the subject matter of disciplines in GATT 1994 and in GATS are inevitable, and will further increase with the progress of technology and the globalization of economic activities. We do not consider that such overlaps will undermine the coherence of the WTO system. In fact, certain types of services such as transportation and distribution are recognized as a subject-matter of disciplines under Article III:4 of GATT 1994. It is also noteworthy in this respect that advertising services have long been associated with the disciplines under GATT Article III. As early as 1970, the Working Party on Border Tax Adjustment made the following observation:

 

‘The Working Party noted that there was a divergence of views with regard to the eligibility for adjustment of certain categories of tax and that these could be subdivided into

 

(a)   ‘Taxes occultes’ which the OECD defined as consumption taxes on capital equipment, auxiliary materials and services used in the transportation and production of other taxable goods. Taxes on advertising, energy, machinery and transport were among the more important taxes which might be involved. …;

 

(b)   Certain other taxes, …’…(39)

 

We also note that there are several adopted panel reports that examined the issue of services in the context of GATT Article III. For instance, the panel on Canada — Import, Distribution and Sale of Certain Alcoholic Drinks by Provincial Marketing Agencies addressed the issues of access to points of sale and restrictions on private delivery of beer. … The panel on United States — Measures Affecting Alcoholic and Malt Beverages also dealt with the issues of distribution of wine and beer. … More to the point, the panel on Thailand — Restrictions on Importation of and Internal Taxes on Cigarettes specifically addressed the question of advertising …

 

In any event, since Canada admits that in the present case there is no conflict between its obligations under GATS and under GATT 1994 … there is no reason why both GATT and GATS obligations should not apply to the Excise Tax Act. Thus, we conclude that Article III of GATT 1994 is applicable to Part V.1 of the Excise Tax Act.”(40)

27.   On appeal, the Appellate Body in Canada — Periodicals did not find it necessary “to pronounce on the issue of whether there can be potential overlaps between the GATT 1994 and the GATS, as both participants agreed that it is not relevant in this appeal.” The Appellate Body then held that the Canadian measure at issue, as an excise tax on certain periodicals, clearly applied to goods. The Appellate Body subsequently examined the measure under Article III:2 of the GATT 1994. (41)

28.   While in Canada — Periodicals the Appellate Body did not find it necessary to pronounce on the question whether there could be overlaps between the scope of application of the GATT 1994 and GATS, in EC — Bananas III the Appellate Body confirmed the approach of the Panel in Canada — Periodicals. The Appellate Body rejected the notion that the GATT 1994 and GATS are “mutually exclusive agreements” and held that there was a “category of measures that could be found to fall within the scope of both the GATT 1994 and the GATS”:

“The second issue is whether the GATS and the GATT 1994 are mutually exclusive agreements. The GATS was not intended to deal with the same subject matter as the GATT 1994. The GATS was intended to deal with a subject matter not covered by the GATT 1994, that is, with trade in services. Thus, the GATS applies to the supply of services. It provides, inter alia, for both MFN treatment and national treatment for services and service suppliers. Given the respective scope of application of the two agreements, they may or may not overlap, depending on the nature of the measures at issue. Certain measures could be found to fall exclusively within the scope of the GATT 1994, when they affect trade in goods as goods. Certain measures could be found to fall exclusively within the scope of the GATS, when they affect the supply of services as services. There is yet a third category of measures that could be found to fall within the scope of both the GATT 1994 and the GATS. These are measures that involve a service relating to a particular good or a service supplied in conjunction with a particular good. In all such cases in this third category, the measure in question could be scrutinized under both the GATT 1994 and the GATS. However, while the same measure could be scrutinized under both agreements, the specific aspects of that measure examined under each agreement could be different. Under the GATT 1994, the focus is on how the measure affects the goods involved. Under the GATS, the focus is on how the measure affects the supply of the service or the service suppliers involved. Whether a certain measure affecting the supply of a service related to a particular good is scrutinized under the GATT 1994 or the GATS, or both, is a matter that can only be determined on a case by case basis. This was also our conclusion in the Appellate Body Report in Canada — Periodicals.”(42)

29.   In China — Publications and Audiovisual Products, the Panel and the Appellate Body found that China had acted inconsistently with the “trading rights commitments” found in China’s Protocol of Accession and China’s Accession Working Party Report. China argued, inter alia, that because one of the measures at issue regulated trade in services, it should be excluded from scrutiny under China’s “trading rights commitments”, which are applicable only to trade in goods. The Appellate Body saw no error in the Panel’s finding that the measure was subject to China’s trading rights commitments, in that it necessarily affects who may engage in importing of hard-copy cinematographic films and, therefore, goods. While the argument raised by China did not concern the relationship between the GATS and the GATT 1994, in the course of its analysis, the Appellate Body found guidance in its prior pronouncements regarding the relationship between the GATS and the GATT 1994:

“We understand China to argue that, because the Film Regulation regulates trade in services, it should be excluded from scrutiny under China’s trading rights commitments, which are applicable only to trade in goods. We note, in this regard, that the Appellate Body has found that a measure could be simultaneously subject to obligations relating to trade in goods under the GATT 1994 and to obligations relating to trade in services under the GATS. As the Appellate Body noted in Canada — Periodicals, “[t]he entry into force of the GATS, as Annex 1B of the WTO Agreement, does not diminish the scope of application of the GATT 1994.”(43) In EC — Bananas III, the Appellate Body observed that, although the subject matter of the GATT 1994 and that of the GATS are different, particular measures “could be found to fall within the scope of both the GATT 1994 and the GATS”, and that such measures include those “that involve a service relating to a particular good or a service supplied in conjunction with a particular good.”(44) These findings specifically concern the relationship between the GATS and the GATT 1994, and thus do not directly address the relationship between China’s trading rights commitments and its commitments on trade in services. Yet, these findings provide assistance in analyzing the issue of whether a measure can be simultaneously subject to obligations relating to trade in goods and those relating to trade in services. Given that China’s trading rights commitments apply to trade in goods, the Appellate Body findings in these earlier disputes are also relevant to resolving the issue of whether measures regulating services may be subject to China’s trading rights commitments.

 

The Appellate Body’s approach in the above two disputes implies that a measure can regulate both goods and services and that, as a result, the same measure can be subject to obligations affecting trade in goods and obligations affecting trade in services. …

We do not see the clear distinction drawn by China between “content” and “goods”. Neither do we consider that content and goods, and the regulation thereof, are mutually exclusive. Content can be embodied in a physical carrier, and the content and carrier together can form a good. For example, in Canada — Periodicals, the Appellate Body found that “a periodical is a good comprised of two components: editorial content and advertising content. Both components can be viewed as having services attributes, but they combine to form a physical product — the periodical itself.”(45) Moreover, the United States points out that China’s Schedule of Concessions on goods, which contains the Harmonized System heading 3706, defines as a good “cinematographic film, exposed and developed, whether or not incorporating sound track or consisting only of sound track”. This confirms that a physical film reel containing content is treated as a good under China’s own tariff regime. We therefore share the view that China’s arguments “are premised on an artificial dichotomy between film as mere content (which China contends is not a good) and the physical carrier on which content may be embedded (which China views as a good)”.”(46)

 

Part II: General Obligations and Disciplines

 

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III. Article II  

A. Text of Article II

Article II: Most Favoured-Nation Treatment

1.   With respect to any measure covered by this Agreement, each Member shall accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favourable than that it accords to like services and service suppliers of any other country.

 

2.   A Member may maintain a measure inconsistent with paragraph 1 provided that such a measure is listed in, and meets the conditions of, the Annex on Article II Exemptions.

 

3.   The provisions of this Agreement shall not be so construed as to prevent any Member from conferring or according advantages to adjacent countries in order to facilitate exchanges limited to contiguous frontier zones of services that are both locally produced and consumed.

 
B. Interpretation and Application of Article II

1. Scope

(a) Measures relating to judicial and administrative assistance

30.   At its meeting of 1 March 1995, the Council for Trade in Services agreed to adopt the following conclusion of the Sub-Committee on Services concerning measures relating to judicial and administrative assistance:(47)

“At the end of the Uruguay Round it had been agreed by participants that Article II of the GATS (MFN) would not apply to measures relating to judicial and administrative assistance. This agreement was reflected in document MTN.GNS/W/177/Rev.1/Add.1 which states:

 

‘It is agreed by participants that the provisions of Article II (Most-Favoured National Treatment) do not apply to measures relating to judicial and administrative assistance. In the light of this agreement, the former footnote to Article II has been deleted.’

 

The agreement was based on the view that discrimination between service suppliers of different Members arising from judicial and administrative assistance measures, apart from what is already stipulated by the provisions of the GATS, would not have any significant effect on conditions of competition between service suppliers. In the subsequent consultations it was agreed that the same logic could be applied to the whole of the GATS and that therefore none of the provisions of the GATS would apply to such measures.”(48)

(b) Electronic commerce

31.   With respect to the application of Article II 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.(49)

2. Application

32.   In Canada — Autos, the Appellate Body explained how a Panel should proceed when examining the consistency of a measure with Article II:1 of the GATS: after determining whether the measure under examination affects trade in services, the examiner should make “factual findings as to treatment of wholesale trade services and service suppliers of motor vehicles of different Members commercially present” and, as the last step, apply Article II:1 to these facts:

“The wording of this provision suggests that analysis of the consistency of a measure with Article II:1 should proceed in several steps. First, as we have seen, a threshold determination must be made under Article I:1 that the measure is covered by the GATS. This determination requires that there be ‘trade in services’ in one of the four modes of supply, and that there be also a measure which “affects” this trade in services. We have already held that the Panel failed to undertake this analysis.

 

If the threshold determination is that the measure is covered by the GATS, appraisal of the consistency of the measure with the requirements of Article II:1 is the next step. The text of Article II:1 requires, in essence, that treatment by one Member of ‘services and services suppliers’ of any other Member be compared with treatment of ‘like’ services and service suppliers of ‘any other country’. Based on these core legal elements, the Panel should first have rendered its interpretation of Article II:1. It should then have made factual findings as to treatment of wholesale trade services and service suppliers of motor vehicles of different Members commercially present in Canada. Finally, the Panel should have applied its interpretation of Article II:1 to the facts as it found them.”(50)

33.   The Appellate Body in Canada — Autos subsequently disapproved of the Panel’s application of Article II of the GATS to the facts in the case before it. Specifically, the Appellate Body objected to what it considered to be the Panel’s assumption that the application of an import duty exemption to manufacturers automatically affected “competition among wholesalers in their capacity as service suppliers”:

“Clearly, here the Panel is confusing the application of the import duty exemption to manufacturers with its possible effect on wholesalers. In our view, the Panel has conducted a ‘goods’ analysis of this measure, and has simply extrapolated its analysis of how the import duty exemption affects manufacturers to wholesale trade service suppliers of motor vehicles. The Panel surmised, without analyzing the effect of the measure on wholesalers as service suppliers, that the import duty exemption, granted to a limited number of manufacturers, ipso facto affects conditions of competition among wholesalers in their capacity as service suppliers. As we stated earlier in respect of whether the measure at issue ‘affects trade in services’, the Panel failed to demonstrate how the import duty exemption granted to certain manufacturers, but not to other manufacturers, affects the supply of wholesale trade services and the suppliers of wholesale trade services of motor vehicles. In reaching its conclusions under Article II:1 of the GATS, the Panel has neither assessed the relevant facts — we see no analysis of any evidence relating to the supply of wholesale trade services of motor vehicles — nor has it interpreted Article II of the GATS and applied that interpretation to the facts it found.”(51)

3. Article II:1

(a) “no less favourable treatment”

34.   In EC — Bananas III, the European Communities argued that Article II of the GATS did not cover de facto discrimination; the European Communities claimed that if the drafters of the GATS had wished to make the “modification of competitive conditions” requirement an integral part of the “no less favourable treatment” test under the most-favoured-nation clause, they would have done so explicitly. The Panel rejected this argument, noting that Article XVII “is meant to provide for no less favourable conditions of competition regardless of whether that is achieved through the application of formally identical or formally different measures … The absence of similar language in Article II is not, in our view, a justification for giving a different ordinary meaning in terms of Article 31(1) of the Vienna Convention to the words ‘treatment no less favourable’, which are identical in both Articles II:1 and XVII:1.”(52) The Panel also opined that “if the standard of ‘no less favourable treatment’ in Article II were to be interpreted narrowly to require only formally identical treatment, that could lead in many situations to the frustration of the objective behind Article II which is to prohibit discrimination between like services and service suppliers of other Members”.(53) The Appellate Body did not agree with this reasoning of the Panel, but reached the same conclusion as regards the applicability of Article II of GATS to de facto discrimination:

“We find the Panel’s reasoning on this issue to be less than fully satisfactory. The Panel interpreted Article II of the GATS in the light of panel reports interpreting the national treatment obligation of Article III of the GATT. The Panel also referred to Article XVII of the GATS, which is also a national treatment obligation. But Article II of the GATS relates to MFN treatment, not to national treatment. Therefore, provisions elsewhere in the GATS relating to national treatment obligations, and previous GATT practice relating to the interpretation of the national treatment obligation of Article III of the GATT 1994 are not necessarily relevant to the interpretation of Article II of the GATS. The Panel would have been on safer ground had it compared the MFN obligation in Article II of the GATS with the MFN and MFN-type obligations in the GATT 1994.

 

Articles I and II of the GATT 1994 have been applied, in past practice, to measures involving de facto discrimination. …

 

The GATS negotiators chose to use different language in Article II and Article XVII of the GATS in expressing the obligation to provide ‘treatment no less favourable’. The question naturally arises: if the GATS negotiators intended that ‘treatment no less favourable’ should have exactly the same meaning in Articles II and XVII of the GATS, why did they not repeat paragraphs 2 and 3 of Article XVII in Article II? But that is not the question here. The question here is the meaning of ‘treatment no less favourable’ with respect to the MFN obligation in Article II of the GATS. There is more than one way of writing a de facto nondiscrimination provision. Article XVII of the GATS is merely one of many provisions in the WTO Agreement that require the obligation of providing ‘treatment no less favourable’. The possibility that the two Articles may not have exactly the same meaning does not imply that the intention of the drafters of the GATS was that a de jure, or formal, standard should apply in Article II of the GATS. If that were the intention, why does Article II not say as much? The obligation imposed by Article II is unqualified. The ordinary meaning of this provision does not exclude de facto discrimination. Moreover, if Article II was not applicable to de facto discrimination, it would not be difficult — and, indeed, it would be a good deal easier in the case of trade in services, than in the case of trade in goods — to devise discriminatory measures aimed at circumventing the basic purpose of that Article.

 

For these reasons, we conclude that ‘treatment no less favourable’ in Article II:1 of the GATS should be interpreted to include de facto, as well as de jure, discrimination. We should make it clear that we do not limit our conclusion to this case. We have some difficulty in understanding why the Panel stated that its interpretation of Article II of the GATS applied ‘in casu’.”(54)

35.   In Canada — Autos, Canada argued that it was not possible to establish whether treatment no less favourable had been granted or not, due to vertical integration and exclusive distribution arrangements existing in the motor vehicle industry between manufacturers and wholesale trade service suppliers; Canada argued that these circumstances excluded any actual or potential competition at the wholesale trade level. The Panel found that these factual elements did not rule out the possibility of less favourable treatment:

“We therefore find that vertical integration and exclusive distribution arrangements between manufacturers and wholesalers in the motor vehicle industry do not rule out the possibility that treatment less favourable may be granted to suppliers of wholesale trade services for motor vehicles. We also find that vertical integration and exclusive distribution arrangements do not preclude potential competition among wholesalers for the procurement of vehicles from manufacturers and actual inter-brand competition for sales to retailers.”(55)

(b) “like services and service suppliers”

36.   The Panel in EC — Bananas III, in a finding subsequently not reviewed by the Appellate Body, addressed the issue of likeness under Article II:

“[I]n our view, the nature and the characteristics of wholesale transactions as such, as well as of each of the different subordinated services mentioned in the head-note 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.”(56)

37.   The Panel in Canada — Autos reiterated this approach, stating that “[w]e agree that to the extent that the service suppliers concerned supply the same services, they should be considered ‘like’ for the purpose of this case.”(57)

(c) “aims-and-effects” test

38.   In EC — Bananas III, the Appellate Body rejected the application of the so-called “aims-and-effects” test which had been previously adopted by several GATT panels in interpreting GATT Article III, to the national treatment requirement contained in Article II or Article VII of the GATS. See paragraph 131 below.

39.   With respect to the “aims-and-effects” test under GATT Article III, see Article III of the Chapter on the GATT 1994.

4. Exemptions from Article II

(a) Annex on Article II Exemptions

40.   See Section XXXIV.B.

(b) Exemptions in financial services

41.   With respect to exemptions from Article II of the GATS concerning financial services, see the Fifth Protocol to the GATS,(58) adopted by the Committee on Trade in Financial Services on 14 November 1997.(59)

(c) Exemptions in maritime transport services

42.   With respect to this issue, see the Decision on Maritime Transport Services adopted by the Council for Trade in Services at its meeting of 28 June 1996, which suspends negotiations on maritime transport services; the Decision further states that such negotiations will resume with “the commencement of comprehensive negotiations on Services” and that Article II of the GATS will enter into force with respect to “international shipping, auxiliary services and access to and use of port facilities” when these negotiations have been concluded.(60)

(d) Exemptions in basic telecommunications

43.   With respect to this issue, see the Fourth Protocol to the GATS, adopted by the Council for Trade in Services at its meeting of 30 April 1996.(61)

 

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IV. Article III  

A. Text of Article III

Article III: Transparency

1.   Each Member shall publish promptly and, except in emergency situations, at the latest by the time of their entry into force, all relevant measures of general application which pertain to or affect the operation of this Agreement. International agreements pertaining to or affecting trade in services to which a Member is a signatory shall also be published.

 

2.   Where publication as referred to in paragraph 1 is not practicable, such information shall be made otherwise publicly available.

 

3.   Each Member shall promptly and at least annually inform the Council for Trade in Services of the introduction of any new, or any changes to existing, laws, regulations or administrative guidelines which significantly affect trade in services covered by its specific commitments under this Agreement.

 

4.   Each Member shall respond promptly to all requests by any other Member for specific information on any of its measures of general application or international agreements within the meaning of paragraph 1. Each Member shall also establish one or more enquiry points to provide specific information to other Members, upon request, on all such matters as well as those subject to the notification requirement in paragraph 3. Such enquiry points shall be established within two years from the date of entry into force of the Agreement Establishing the WTO (referred to in this Agreement as the “WTO Agreement”). Appropriate flexibility with respect to the time-limit within which such enquiry points are to be established may be agreed upon for individual developing country Members. Enquiry points need not be depositories of laws and regulations.

 

5.   Any Member may notify to the Council for Trade in Services any measure, taken by any other Member, which it considers affects the operation of this Agreement.(62)

 
B. Interpretation and Application of Article III

1. General

(a) Electronic commerce

44.   With respect to the applicability of Article III 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.(63)

(b) Accountancy services

45.   With respect to transparency in domestic regulations in the field of accountancy services, see the Disciplines on Domestic Regulation in the Accountancy Sector, adopted by the Council for Trade in Services at its meeting of 14 December 1998.(64)

2. Article III:3

(a) Format for notifications

46.   On 1 March 1995, the Council for Trade in Service approved the “Guidelines for Notifications under the General Agreement on Trade in Services”.(65)

3. Article III:4

(a) Enquiry points

47.   On 28 May 1996, the Council for Trade in Services adopted the “Decision on the Notification of the Establishment of Enquiry and Contact Points”, which calls upon Members to notify the establishment of enquiry points pursuant to Paragraph 4 of Article III.(66)

 

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V. Article III bis  

A. Text of Article III bis

Article III bis: Disclosure of Confidential Information

   Nothing in this Agreement shall require any Member to provide confidential information, the disclosure of which would impede law enforcement, or otherwise be contrary to the public interest, or which would prejudice legitimate commercial interests of particular enterprises, public or private.

 
B. Interpretation and Application of Article III bis

48.   In EC — Bananas III, the Panel referred to Article III bis in the context of concluding that information provided by the complainants sufficiently established that entities of Complainants’ origin control subsidiaries established in the European Communities that provide wholesale trade services in bananas in and to the European Communities:

“As to the second point, i.e., whether these non-EC companies control subsidiaries that supply wholesale trade services in bananas and are commercially present in the EC, the Complainants submitted a list entitled “Principal banana wholesaling companies established in the EC that were owned or controlled by the Complainants’ services suppliers, 1992”. The EC notes that no formal records of shareholders and company registrations were submitted by the Complainants. However, we recall that, according to Article III Bis of GATS, “nothing in GATS requires any Member to provide confidential information, the disclosure of which … would prejudice legitimate commercial interests of particular enterprises”. According to the Complainants, their information was limited in part based on confidentiality concerns. Nonetheless, we believe that the Complainants’ evidence is sufficient to establish that there are non-EC companies that control subsidiaries that supply wholesale trade services in bananas and that are commercially present in the EC. In this regard, we note that while the EC argued that more evidence should have been submitted by the Complainants, it did not present information that would cast doubt on the evidence presented by the Complainants. As a consequence, we must assess whether that evidence is sufficiently credible to be accepted by us. In making our objective assessment (Article 11 of the DSU), we are persuaded that the Complainants have sufficiently established that entities of Complainants’ origin control subsidiaries established in the EC that provide wholesale trade services in bananas in and to the EC.”(67)

 

 

 

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