RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/146
17 May 2000
(00-2019)
Council for Trade in Services Original:  English
COMMUNICATION FROM AUSTRALIA
Review of Article II Exemptions
Questions on the List of MFN Exemp tions (up to Distribution Services)
The attached paper has been received from the delegation of Australia with the request that it
be circulated to Members of the Council for Trade in Services.
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We support the objectives for the review of MFN exemptions, proposed by Hong Kong,
China, in its paper of 8 May:
a. to improve the clarity of existing exemptions;
b. to enhance their transparency;
c. to consider their necessity;d. to review their consistency with the WTO/GATS obligations.
We consider that a review structured along these lines would give Members an opportunity to
assess options, and to reconsider whether the measures concerned are the most effective and least
trade-restrictive available.
GENERAL QUESTIONS
We note the general questions raised by Hong Kong, China, both in relation to all MFN
exemptions (1-2) and to the horizontal section (3-5 ).  We wish to propose two additional questions,
and to seek further clarification under one of Hong Kong, China's questions.
1. There are a number of  Members which have created an exemption for "All countries" on the
basis of reciprocity.  In the interests of transparency, we ask Members to list the countries with whichthey have reciprocal agreements, and the basic terms of the agreements.  Examples include:
- Austria (p 75), Canada (p77), Costa Rica (pp 3, 35),
Dominican Republic (pp 35-36), Honduras (p 36), EC (pp 8, 39),
Pakistan (pp 42, 83), Panama (p 36), Peru (pp 18, 84), Philippines (p 18),
Turkey (p 40), Thailand (pp 36, 40), US (pp 27, 33) Venezuela (p 37).S/C/W/146
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2. We would like clarification of the instances in which only some Members of a specific
regional agreement have listed an exemption for that agreement.  (a) What are their reasons for listing
it, when other Members of the same agreement have not found it necessary to do so?  (b) Could these
exemptions be covered by GATS Article V?  Examples include:
- Cyprus (p 4), Customs Union with  the EU - horizontal section;
- El Salvador, Guatemala, Honduras, Panama (pp 7, 11,  13, 17, 41), Treaty of Central
American Integration - horizontal section;
- Jamaica (p 14), CARICOM - horizontal section;
- Bulgaria (p 34) – legal;
- Costa Rica (p 39) – advertising;
- Pakistan (p 42) – telecommunications;- Antigua & Barbuda (p 49) CARICOM – telecommunications;
- Honduras (p 41) – telecommunications;
- Colombia (p 41), Andean Group – telecommunications;
- Venezuela (p 44), OAS – telecommunications;
- Indonesia (p 74), ASEAN - construction and engineering;
- Liechtenstein and Switzerland (pp 74-75), EFTA - distribution.3. We support Hong Kong, China's question no 3 about MFN exemptions which are listed
because of the need to implement the provisions under certain agreements on the promotion and
protection of foreign investments.  We would li ke the following Members also to clarify such
exemptions:
- Cyprus (p 5), Guatemala (p 12), US (p 27).
HORIZONTAL SECTION
4. Brunei Darussalam (p 2) and Malaysia (p 16) :  For transparency purposes, please clarify
the process by which relevant authorities use their discretion to carry out future liberalisation ofmeasures affecting limitations on foreign equity or interest in companies.
5. Egypt (p 6):   Please clarify "the major trading partners do not accord the Egyptian nationals
satisfactory opportunities" and to which other countries the exemption applies.
6. Indonesia (p 13) : Please clarify "low level occupations"?
7. Malaysia (p 15):  What is the process for determining whether measures contribute to "social
stability and industrial harmony in Malaysia" ?
8. Singapore (p 20):  Which countries are classified as "traditional sources"?S/C/W/146
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9. USA (p 30):   How are "discriminatory or extraterritorial taxes, more burdensome taxation, or
other discriminatory conduct" assessed?  How is this process implemented?
BUSINESS SERVICES
Legal Services
10. Brunei (p 34) :  Could you advise of any steps you are taking to review the MFN exemption
pertaining to the provision of legal services in Brunei?  Please clarify the current conditions creating
the need for this exemption.
11. Singapore (p 36) :  Could you advise of any steps you are taking to review the MFN
exemption pertaining to the provision of legal services in Singapore?
COMMUNICATIONS
Postal Services
12. Turkey (p 40) :  Turkey is the only WTO member with an MFN exemption on postal services.
The reason for the exemption is given as reciprocal bilateral agreements with Iraq, Greece, Iran, andPakistan.  Is it still necessary for Turkey to retain this exemption, given that other WTO Members in
the reciprocal agreements have not taken out exemptions?
Telecommunications
13. Bangladesh, India, Pakistan, Sri Lanka, and Turkey  have taken Article II exemptions in
respect of the application of accounting rates.  In order to avoid the submission of "further" such
exemptions, the Report of the Group on Basic Telecommunications (S/GBT/4 of February 1997)
noted that:
- the application of such accounting rates would not give rise to action by Members under dispute
settlement; and that
- this understanding would be reviewed during the next round of services negotiations.
If this understanding is sufficient for all other WTO Members, could those countries with MFN
exemptions on accounting rates please justify why additional arrangements are necessary in their
particular cases?
14. Bangladesh, India, Pakistan and Sri Lanka  have scheduled for accounting rates twice -
once for international, and once for regional agreements.  What is the basis for having both regional
and international exemptions (given regional arra ngements would be covered the exemptions for
international arrangements)?
15. India, Pakistan, Sri Lanka, and Turkey have taken out the exemption "indefinitely", while
Bangladesh took out the MFN exemption for 10 year s.  Could those four Members please clarify why
they need an indefinite exemption?
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