WORLD TRADE
ORGANIZATIONWT/REG1/8
28 October 2003
(03-5721)
Committee on Regional Trade Agreements Original:  English
EUROPE AGREEMENT BETWEEN
THE EUROPEAN COMMUNITIES AND BULGARIA, SERVICES
Questions and Replies
This document reproduces the questions addressed to the Parties and the responses submitted.
The questions and replies set out below are organized in accordance with document WT/REG1/7.
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I. BACKGROUND INFORMATION ON THE AGREEMENT
2. Type of Agreement
1. We understand that the Agreement has come into effect in February 1995, while
Article 7 of the Agreement provides for the transitional period of a maximum duration of 10years divided into two successive stages. As the first half period has already expired, we would
like to learn of the liberalization that has already taken place, as well as the liberalization that is
expected to take place in the future.
The process of liberalisation as foreseen by the Europe Agreement is taking place in parallel
with the negotiations for the member ship to the European Union, which is expected to take place in
2007 for Bulgaria. Within this framework, Bulgaria is gradually putting in conformity its legislative
framework with that of the European Union.
4. Economic and Trade Data
2. Can the parties please provide available information on the volume of trade affected by
the Agreement? The data provided free-of-charge on  the Eurostat Internet site is insufficient to
answer this question.
The statistics provided by Eurostat are the only data available at present. Almost all trade in
services between the EU and Bulg aria would fall under the provisions of the EEA Agreement. As a
proportion of the EU's total foreign cross-border trade in services (export + import), trade in services
with Bulgaria represents 0.2 per cent.
II. PROVISIONS AFFECTING TRADE IN SERVICES
1. Provisions in the Europe Agreement whic h are relevant to the scope of the GATS
3. We have been unable to access the annexes to the Europe Agreement from the Internet
sites identified in your submissions.
(a) Please identify all sectors covered by the Agreement.WT/REG1/8
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(b) Please identify all sectors excluded from the Agreement and explain why they
have been excluded.
(c) Please explain why the parties consider the Agreement has substantial sectoral
coverage.
(a) (b) The Agreement covers all sectors, with the exception of the following sectors:
− Air transport services, inland-waterways transport services and maritime cabotage
transport services.
− Only with regard to the establishment of EU companies in Bulgaria: acquisition of
land, owning real property in certain geographic regions.
− Only with regard to the establishment of Bulgarian companies in EU Member States:
legal acts relating to real-estate property in frontier regions in accordance withlegislation in force in certain Member States of the Community.
The establishment of EU companies in Bulgaria is liberalised by the end of the transitional
period in the following areas: financial services; acquisition of participation which ensures a majority
in adopting decisions or blocks the adoption of decisions in companies engaged in the activities of
manufacturing or trading with weapons, munitions or  military equipment, prospecting, development
or extraction of natural resources from the territorial sea, continental shelf or the exclusive economic
zone; representation at court and legal services not including legal advice in business related matters;
arrangement of gambling games, lotteries.
No sector is excluded from the chapter on the liberalisation of the supply of services.
(c) It is considered that the Agreement responds to this requirement, given that it has an
extremely comprehensive number of sectors covered, with only a real exclusion (transport services)
regarding right of establishment, it affects almost all trade in services between the Parties, and it
covers all modes of supply.
4. Please identify all provisions in the Agreement that provide for the absence or
elimination of discrimination, in the sense of Article XVII, between or among the Parties, in
each of the sectors identified in response to Question 3. If any of these provisions are not
effective upon entry into force of the Agreement, can the parties identify the date on which each
will become effective, and explain whether this time-frame is reasonable?
Article 38 establishes the absence of discrimination for workers of the Contracting Parties
who are legally employed in the territory of the othe r Contracting Party.  Article 45 covers the right of
establishment.  Article 53 covers the key personnel of companies of the Contracting Parties which are
established in the other Contracting Party.  Article 56 covers the supply of services by companies or
nationals of the Contracting Parties who are established in a Party other than that of the person for
whom the services are intended, which is to be realised progressively during the transitional period.
5. Please identify all provisions in the Agreemen t that allow for discrimination, in the sense
of Article XVII, between or among the Parties, in  each of the sectors id entified in response to
Question 3, and provide an estimate of the volume  of trade affected. What plans do the Parties
have to eliminate this discrimination?
As it is specified in the reply to question 3, transport is the only substantial exclusion, and that
only from one single aspect of the agreement (establishment only). It is therefore difficult to estimateWT/REG1/8
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the volume of trade covered except to say that almost all trade in services would fall under the
provisions of the Agreement.
6. Please identify all sectors o subsectors with in which the Agreement, in respect of any
Member outside the Agreement, raises the level of barriers to trade in services compared to the
level applicable prior to such an Agreement, and explain how the overall level of barriers within
the respective sectors or subsectors has not been raised.
The Agreement does not raise the level of barriers to trade in services neither on an overall
level nor at sectoral level, but, on the opposite, has increased the possibilities for third countries to
provide services to the Contracting Parties.
7. Article 70 states that the approximation of laws will be extended to, inter alia , banking
law, company accounts and standards, financia l services, technical rules and standards, and
transport.
(a) How will the parties to the Agreement ensu re that such approximation does not
result in de facto restrictions on services provided by third-party suppliers?
(b) Will third-party suppliers be given an opportunity to provide services affected
by such laws?
(c) In what manner will the Parties to the Agreement publish such laws?
The approximation of law will be applicable, without discrimination, within the territory of
the EU and Bulgaria. The publication will be done in accordance with the procedures existing in each
Contracting Party.
2. Rules of origin
8. With regard to Article 49 of the Agreement, what criteria are used to determine whether
a firm's operation possesses "…a real and conti nuous link with the economy of one of the
Member States or Bulgaria…"?
The requirement for "a real and continuous link" is designed solely to prevent the abuse of the
Agreements through the creation of a so-called "letter-box" operation in one of the parties in order to
circumvent controls imposed by the other on access by foreign nationals and companies to its market.
The phrase "a real and continuous link" is the equivalent of the language "substantive business
operations" in GATS Article V.6. Under the EC definition of this phrase, initially used in the "General
Programme" of 15 January 1962, it is expressly excluded that a real and continuous link should
depend on the nationality of the partners, of the members of the management or supervisory bodies, or
of the persons holding the capital.
9. With regard to Article 55, how do the parties define Bulgarian of Community "control"
of a company?
The interpretation of the provisions of the EC Treaty and of the Europe Agreement are the
competence of the European Court of Justice and of the dispute settlement procedures of the Europe
Agreement respectively. In this respect, there ha s been a number of instances where the European
Court of Justice has adopted jurisprudence on the basis of Community law, where a similar concept
exists. In particular, this notion has been addressed by the European Court of Justice in its decision ofJuly 1995 in the case of Swissair/Sabena (OJ No L 239, 7.10.1995, p.19), where it stated that "the
effective control requirement is complied with if Member States and/or nationals of Member StatesWT/REG1/8
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have, either individually or acting together with ot her Member States or nationals of Member States,
the ultimate decision-making power in the management."
10. Please explain the requirements by which a service supplier of another Member that is a
juridical person constituted under the laws of a pa rty to the Agreement is entitled to treatment
granted under the Agreement, if that service supplier engages in substantive business
operations in the territory of the parties to the Agreement.
The juridical person of another Member that is a juridical person constituted under the laws of
a party to the Agreement is entitled to treatment granted under the Agreement on the basis of
Article 49.
3. Standards / Recognition
11. How will the parties ensure that mutual recognition agreements will not result in de
facto restrictions on professionals from other countries?
The situation with regard to the treatment accorded to other WTO Members will not change
as a result of mutual recognition agr eements between the Contracting Parties.
III. GENERAL PROVISIONS OF THE AGREEMENT
1. Exceptions and reservations12. Article 54(2) of the Europe Agreement states that provisions on establishment (found in
Title IV, Chapter II of the agreement), "… shall no t apply to activities which in the territory of
each party are connected, even occasionall y, with the exercise of official authority."
(a) Could the parties provide examples of activities that are covered by Article
54(2)?
(b) Do the parties to the agreement view Article 54(2) as more or less inclusive that
the GATS' exclusion of services provided in the exercise of governmental
authority?
(a) The exception provided for by Article 32 of the EEA Agreement is similar to that included in
Article 45 of the EC Treaty, which stipulates that "the provisions of this Chapter (on right of
establishment) shall not apply, so far as any given Member State is concerned, to activities which in
that State are connected, even occasionally, with the exercise of official authority".
This provision is similar with that of Article 1.3.(b) of GATS which excludes from its scope
services "supplied in the exercise of governmental authority".
There have been a number of instances where the European Court of Justice has adopted
jurisprudence on the basis of Article 45. In these cases, the Court of Justice has taken a restrictiveinterpretation of the scope of Article 45.
More specifically, the Court of Justice ruled on 21 June 1974 in Case 2/74 Reyners v Belgium
(European Court Reports, 1974, p.631, paragraph 45) that the derogation provided for in Article 45
(ex 55) must be restricted to activities which in themselves are directly and specifically connected
with the exercise of official authority and accordingly, concluded that the profession of lawyer
("avocat") in Belgium does not fall under the scope of Article 45.
The Court ruled, however, that the followin g activities are not covered by Article 45:WT/REG1/8
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− private security undertakings and private security staff in Spain (Judgment of the Court (Fifth
Chamber) of 29 October 1998. Commission of the European Communities v Kingdom of
Spain , Case C-114/97, European Court Reports 1998);
− activity as an intermediary between supply and demand in employment relationship in Italy
(Judgment of the Court (Sixth Chamber) of 11 December 1997, Job Centre coop. arl ., Case
C-55/96, European Court Reports 1997, page l-7119);
− the concession for the computerisation system for the Italian lottery (Judgment of the Court of
26 April 1994, Commission of the European Communities v Italian Republic , Case C-272/91,
European Court Reports 1994, page l-1409);
− the activities of approved commissioners with insurance undertakings and private provident
associations in Belgium (Judgment of the Court (Fifth Chamber) of 13 July 1993, Adrianus
Thijssen v Controledienst voor de verzekeringen , Case C-42/92, European Court Reports
1993, page l-4047);
− the provision of business executives by personnel consultants in Germany (Judgment of the
Court (Sixth Chamber) of 23 April 1991, Klaus Höfner and Fritz Elser v Macroton GmbH ,
Case C-41/90, European court Reports 1991 page l-1979);
− the activities of traffic accident experts in Greece (Judgment of the Court of 10 December
1991, Commission of the European Communities v Hellenic Republic , Case C-306/89,
European Court Reports 1991 page l-5863);
− the activities concerning the design, programming and operation of data-processing systems
for the public authorities in Italy (Judgment of the Court of 5 December 1989, Commission ofthe European Communities v Italian Republic , Case C-3/88, European Court Reports 1989,
page 4035);
− the setting up of private schools in Greece (Judgment of the Court of 15 March 1988,
Commission of the European Communities v Hellenic Republic , Case 147/86, European
Court Reports 1988, page 1637).
In all these rulings the European Court of Justice had adopted a restrictive interpretation of
this exception. Any activity must be evaluated on a case by case, as it is with regard to Article 1.3
GATS, with regard to the specific situation existing in the country.
(b) These provisions seem to be referring to similar concepts, even if it does appear possible to
evaluate their exact interrelation, given the absence of specific GATS jurisprudence.
IV. OTHER
13. In general terms, how do the Parties define the term "…a limited period of time", as
used in Article 45(6) and Article 51 of the Agreement?
As it constitutes an exception, it is intended to be applied restrictively.
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