. /.RESTRICTEDWORLD TRADE
ORGANIZATIONS/WPGR/W/41
3 March 2003
(03-1234)
Working Party on GATS Rules Original:  English
COMMUNICATION FROM THE EUROPEAN COMMUNITIES
AND THEIR MEMBER STATES
Scope for Emergency Safeguard Measures (ESM) in the GATS
The following communication is circulated at the request of the European Communities and
their Member States, to Members of the Working Party on GATS Rules.
_______________
This submission is made in accordance with point 3, (a) and (b), of the work program on ESM
adopted by the WPGR on 22 July 2002.  It summarises the views of the European Communities on
this issue.
I. ARTICLE X OF GATS EXPRESSLY REFERS TO EMERGENCY  SAFEGUARD
MEASURES
1. A safeguard measure that is in conformity with the wording and spirit of Article X of GATS
needs to be based on a situation of emergency, which is characterised by its extraordinary nature and
intended to deal with unforeseen developments. Such characteristics are not met by the mere increase
in trade and competition that is inherent in any liberalisation commitment.
2. The mandate set out in Article X of GATS was not intended to allow Members to introduce
new general exceptions into the GATS, to carry out structural adjustments or to protect infant
industries. The GATS already has provisions dealing with general exceptions, which are set out in
articles XIV and XIV bis of GATS. As regards structural problems, which by their very nature are not
extraordinary, and in particular the protection of infant industries, the bottom-up architecture of theGATS affords Members enough flex ibility to fully take them into account when undertaking
commitments. Also the Agreement provides for a pro cedure to deal with situations whereby Members
decide to modify or withdraw in whole or in  part their commitments (Article XXI of GATS).
3. Furthermore, situations of emergency related to capital movements that can seriously
compromise the balance of payments or the monetary policy of Members are already contemplated bythe GATS. The Agreement provides in its Article XII a remedy for serious balance-of-payments and
external financial difficulties or threat thereof. As regards capital movements causing serious
difficulties for monetary policy, no specific remedy is needed since, by application of the annex on
financial services, the GATS does not cover the activities conducted by a central bank or monetary
authority or any other public entity in pursuit of monetary or exchange rate policies.S/WPGR/W/41
Page 2
4. It is therefore not surprising that no concrete example of emergency situation has yet been
provided by the experience gathered in the application of GATS1 or identified on a hypothetical basis
by the different written contributions submitted to the WPGR2.
II. ARTICLE X CLEARLY STIPULATES THAT NEGOTIATIONS WILL ADDRESS
THE QUESTION  OF ESM
5. At the time of concluding the GATS negotiations, notwithstanding the existence of a
precedent in the goods area, ESM in services could not be agreed since the question of their feasibility
and desirability was not solved. This explains the language used by Article X3.
6. The contributions submitted to the WPGR, which, in the absence of concrete examples of
emergency situations, are based on abstract considerations, show that this question remains still
unresolved. Most of them, whether they directly refer to feasibility and desirability or are made
without prejudice to that question, have identified a num ber of issues that show the difficulties for the
application of ESM in the GATS (legal certaint y of commitments, modal application, protection of
acquired rights, applicability of the principle of non-discrimination,…).
7. From a modal application perspective, the goods model is not appropriate for services, since
trade in goods is equivalent only to cross-border supply of services (mode 1). A very extensive
interpretation of the analogy argument might lead to cover trade in services in modes 2 and 4, but inno case the establishment under mode 3. In all circumstances, the application of ESM to any of the
four modes of supply as well as the inter-modal relations raise important concerns already identified
by the European Communities
4 and which so far have not been fully addressed by the WPGR.
III. A POSITIVE CONCLUSION ON THE QUESTION OF ESM PRESUPPOSES
THEREFORE
(a) The identification, in case they exist, of concrete examples of emergency situations in
the services area that are not already addressed by GATS provisions, and
(b) The demonstration that an ESM would be feasible and desirable to deal with the
identified situations (i.e. that the difficulties and concerns that have been raised in
respect of ESM can be overcome in practice).
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1 The second paragraph of Article X has never been enacted.
2 Listed in JOB(02)/200.
3 S/WPGR/W/1.
4 S/WPGR/W/38.