./.RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG39/M/3
21 July 1998
(98-2881)
Committee on Regional Trade Agreements
Eighteenth Session
EXAMINATION OF THE TREATIES ESTABLISHING
THE EUROPEAN UNION, SERVICES
Note on the Meeting of 10 July 1998
Chairman:  Mr. Claude Bouah-Kamon (Côte d'Ivoire)
1. The Committee on Regional Trade Agreements took up the examination of the Treaties
Establishing the European Union, Services under Agenda Item D.VI of its Eighteenth Session, as
found in Airgram WTO/AIR/871.  The examination was conducted on the basis of the Standard
Format for Information on Economic Integration Agreements on Services submitted by the Parties
(WT/REG39/1) and accordingly followed its la yout.  The following topics were discussed:
A. General Remarks
B. Provisions Affecting Trade in Services
- Safeguards
- Subsidies and state-aid
A. General Remarks
2. The Chairman stated that the first meeting devoted to the examination of the services aspects
of the Treaties Establishing the European Union had taken place in November 1997 and that the
examination was pursued at the Committee's last Session, despite the late distribution of the standard
format.  In May, it had been agreed that written questions that Members wished to pose were to be
sent to the Secretariat as soon as possible so that replies from the Parties could be made available well
before that day's meeting.  Unfortunately, replies to questions posed at the end of May were only
recently distributed in document WT/REG39/2.  Furthermore, replies to some other questions
received at a later date could not be included in that document.  The representative of the European
Communities (EC) had informed him that she would nevertheless respond in a preliminary manner to
those questions at that day's meeting and that more detailed written replies would be submitted soon.
Despite this situation, he hoped that, with the collaboration of Members, the Committee would make
progress in the examination of the Treaties.
B. Provisions Affecting Trade in Services
3. Despite the fact that answers were received only the day before and his comments could only
be preliminary, the representative of Japan said that the reply concerning safeguards seemed to be
abstract, and he requested that illustration be provided on which international obligations would be
invoked regarding the protection of foreign companie s located in the EC.  Responding to that, the
representative of the European Communities said that the international obligations with respect to
commercial presence stemmed from the m.f.n. obligations under the General Agreement on Trade inServices (GATS).
4. The representative of Egypt said that he also had a concern with safeguards.  He requested
that the Committee informed officially the Working Party on GATS Rules about the text of theWT/REG39/M/3
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paragraph on safeguards as he thought that it would help ongoing negotiations on that issue.  The
representative of the European Communities said that, in the answers to the question on safeguards,
the EC had provided many details, including details on possible national legislation that could formthe basis for safeguards legislation.  However, the Working Party on GATS Rules could also use the
explanation provided in the Standard Format.  The representative of Egypt affirmed that he would
prefer that the information be transmitted by the Secretary of the CRTA to the Secretary of the
Working Party on GATS Rules.
5. The representative of Japan said that the answer provided to the question regarding subsidies
addressed two categories of permitted subsidies and state-aid, i.e. those of a social character and those
related to damage caused by natural disasters.  He added that his delegation had also requested
clarification on other categories of aid, i.e. aid to promote the execution of an important project of
common European interest and aid to facilitate the development of certain economic activities or ofcertain economic areas.  He thought that those might distort competition or the free flow of services
from foreign countries or foreign services suppliers, and he requested that those points be further
clarified.  The representative of the European Communities said that clarification on those other types
of subsidies was difficult, precisely because they might or might not be compatible with theprovisions of the Treaties, and the EC might not even qualify them as such.  For example, one couldnot say from the outset whether a subsidy relating to an important project was compatible or not; the
required notification had to be examined to see whether those subsidies could affect the free supply of
services within the EC.  Thus, unless a specific project were dealt with, it would be hard to assess
whether a subsidy would be compatible.  The comp atibility was always examined with a view to
secure the freedom to supply the service among the Member States.  Replying to the representative ofJapan, who asked whether provisions concerning those types of subsidies had ever been invoked, the
representative of the European Communities said that no examples existed on the invocation of
Article 115 with respect to safeguards but that, with respect to subsidies, examination was done on an
ad hoc  basis.  The EC's disciplines on subsidies were structured in such a manner that some subsidies
were compatible from the outset (those dealing with natural disasters and individual consumers),while others fell in a category where they might or not be compatible.  The latter were not by
definition compatible.  Like Japan, the EC also was of the view that, for those subsidies, there was a
presumption that they could affect the Treaties.  Hence, the need for an examination.  In such an
examination of a Member State's notification of its intention to apply subsidies in that category, the
EC would seek to assess whether those subsidies would or could distort trade in light of their
compatibility with the EC's freedoms.  If the examination identified that they could affect trade,
changes would be suggested to prevent those subsid ies from distorting trade flows of other Member
States.  The EC's disciplines were very similar those contained in the WTO Agreement on Subsidies
and Countervailing Measures, distinguishing between actionable and non-actionable subsidies, with
the difference that the EC's system for the former category avoided counter-measures by examining
beforehand the possible trade effects and proposing changes.
6. Noting that the discussion had been fruitful, the Chairman concluded the debate for that
Session.  In light of the fact that some questions were not yet fully responded to and that the EC had
indicated that it would reply in writing to the questions which had not been included in document
WT/REG39/2, he said that a further brief mee ting would be held in September in the hope of
wrapping up the examination of the Treaties, thus allowing the Secretariat to start drafting the report
of the examination.
7. The Committee took note of the comments made.
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