. /.RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/LTU/24
14 May 1998
(98-1930)
Working Party on the
Accession of LithuaniaOriginal:  English
ACCESSION OF LITHUANIA
Communication from Lithuania
The Permanent Mission of the Republic of Lith uania has submitted the following information
on MFN problemacity related to the commitments for commercial presence, with the request that it be
circulated to Working Party members.
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Lithuanian offer for insurance services sector
Explanatory note
The delegation of Lithuania hereby wishes to draw the attention of members of the Working
Party to problems arising concerning the inclusion of the insurance sector into its GATS Schedule ofSpecific Commitments.
Lithuania’s Law on Insurance of 10 July 1996 (Article 27, paragraph 2) provides that a
foreign insurance company applying for registration (i.e., applying for an establishment licence) in
Lithuania shall present a reference proving that insurance companies from Lithuania have the right to
engage in insurance activities in the country wher e the head-office of the foreign insurance company
is situated (reciprocity principle).  In the absence of such proof the licence must be refused.
Therefore Lithuania has left “unbound” its commercial presence mode of supply for sector 7
“Financial Services A. Insurance and insurance-related services” in its draft Schedule on Specific
Commitments on GATS and it has included insurance services into the List of Exemptions to
Article II with the explanation that this proves to be necessary under the above Law in order to
maintain the reciprocity condition which supports equal access possibilities for Lithuanian insurance
companies to foreign insurance markets.
There were several cases in which Lithuanian insurance companies were not granted
permission for establishment in non-WTO countries while in several of them insurance companies
were showing a keen interest to establish in Lithuania.  Because of these denials Lithuanian legislators
found it reasonable to introduce a reciprocity clause into the insurance legislation.
Several members of the Working Party confirmed that a reciprocity condition could not be
inserted in the Schedule and argued that MFN treatment had to be provided and, in the case of
non-WTO countries, could argue that countries which denied access to Lithuanian companies would
not benefit from MFN treatment, because they are not Members of the WTO.  However, their possible
future WTO Membership would require elimination of limitation for establishment.WT/ACC/LTU/24
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Lithuania, however, faces a double problem under its present Law:
- it cannot grant a right for establishment in insurance to WTO Members who have not
themselves accepted the same commitment in GATS;
- Lithuania has concluded bilateral agreements providing for MFN treatment in the services
sector so it cannot give all WTO Members unconditional free establishment in insurancewithout extending it to its non-WTO bilateral partners who have a right to MFN treatment.  If
it gives up the reciprocity condition it looses the leverage to obtain for its insurance
companies the right of access to these non-WTO countries.
Lithuania finds that the reciprocity principle is the only solution at the moment and that is
why it has not taken a commitment on establishment for insurance and has invoked an exemption
under Article II of the GATS.  It is ready to discuss other solutions such as for example a purely
bilateral confirmation to interest ed GATS partners who have undertaken commitments in this sector
that it guarantee freedom of establishment for their insurance companies.
The particular case of Lithuania’s insurance sector can serve as an example for the broader
view of the problem arising from compatibility of MFN granted within GATS and MFN granted to
non-WTO Members according to the bilateral investment protection or other treaties.
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