WORLD TRADE  
ORGANIZATION  WT/REG2/7 
10 February 2004 
 
 (04-0517) 
Committee on Regional Trade Agreements Original:   English 
  
 EUROPE AGREEMENT BETWEEN THE  
EUROPEAN COMMUNITIES AND ROMANIA, SERVICES 
 
Questions and Replies
 
 
 The following communication, dated 30 January 2 004, is being circulated at the request of the 
Delegation of the European Commission and of the Permanent Mission of Romania. 
  This document reproduces the questions addressed  to the Parties and the responses submitted. 
The questions and replies set out below are or ganized in accordance with document WT/REG2/6. 
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I. BACKGROUND INFORMATION ON THE AGREEMENT 
1. Membership and dates of signatu re, ratification and entry into force 
 
1. We understand that both agreements have come  into effect in February 1995, while 
Article 7 of the Agreement provides for the transitional period of a maximum duration of 10 
years 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, whic h is expected to take place in 
2007 for Romania. Within this framework, Romania 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 inform ation 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 Romania respectivel y would fall under the provisions of the EEA 
Agreement. As a proportion of the EU’s total fo reign cross-border trade in services (export+import), 
trade in services with Romania represents 0.3 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. WT/REG2/7 
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  (a) Please identify all secto rs covered by the agreement. 
  (b) Please identify all sectors excluded from the agreement and explain why they 
have been excluded. 
 
 (c) Please explain why the parties consid er 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. 
 
• With regard to the establishment of EU companies in Romania: organisation of 
gambling, betting, lotteries and other simila r activities; legal services, excluding legal 
advisory services; purchase, ownership, sale of land and forestry; purchase, ownership, sale of residence buildings not re lated to foreign investments in Romania; 
cultural and historic monuments and buildings. 
 
• With regard to the establishment of Romani an companies in the EU Member States: 
legal acts relating to real-estate property in frontier regions in accordance with 
legislation in force in certain Member States of the Community. 
 
 The establishment of EU companies in Romania in the sector of financial services is 
liberalised by the end of the transitional period.   No sector is excluded from the chapter on the liberalisation of the supply of services.  (c)  It is considered that the Agreement res ponds to this requirement, given that it has an 
extremely comprehensive number of sectors covered,  with only a real exclusion (transport services) 
only regarding right of establishment, it affects almo st 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, ca n the parties identify the date on which each 
will become effective, and explain whet her this time-frame is reasonable? 
 Article 38 covers establishes the absence of di scrimination for workers of the Contracting 
Parties who are legally employed in the territory of  the other 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 Pa rty. 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, whic h is to be realised progressively during the 
transitional period. 
 
5. Please identify all provisions in the agreement  that allow for discrimination, in the sense 
of Article XVII, between or among the parties, in  each of the sectors identified 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?  WT/REG2/7 
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  As it is specified in the reply to question 3, tran sport is the only substantial exclusion, and that 
only from one single aspect of the agreement (establish ment only). It is therefore difficult to estimate 
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 or 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, a nd 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 ensure 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 parti es to the agreement publish such laws? 
 
 The approximation of law will be applicable, w ithout discrimination, within the territory of 
the EU and Romania. The publication will be done in accordance with the pr ocedures 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 continuous link with the economy of one of the 
Member States or Romania ...”? 
 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 "lette r 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 langua ge "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 ex pressly 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 parti es define Romanian or Community “control” 
of a company? 
 The interpretation of the provisions of the EC  Treaty and of the Europe Agreements are the 
competence of the European Court of Justice and of the dispute settlement procedures of the Europe Agreements respectively. In this respect, there h as 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 of WT/REG2/7 
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 July 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 Me mber States and/or nationals of Member States 
have, either individually or acting together with other Member States or nationals of Member States, 
the ultimate decision-making po wer in the management”. 
 10. Please explain the requirements by which a serv ice 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 suppl ier 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 gran ted under the agreement on the basis of       
Article 49.  
3. Standards/Recognition 
 
11. How will the parties ensure that mutual rec ognition 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 agreements between the Contracting Parties.   III. GENERAL PROVISIONS OF THE AGREEMENT 
1. Exceptions and reservations 
 
12. Article 54(2) of the Europe Agreement stat es 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 occasionally , 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 Ar ticle 54(2) as more or less inclusive than 
the GATS’ exclusion of services provide d 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 Artic le 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 wher e the European Court of Justice has adopted 
jurisprudence on the basis of Article 45. In these cases, the Court of Justice has taken a restrictive 
interpretation 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 55 
must be restricted to activities which in themselve s are directly and specifically connected with the  WT/REG2/7 
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 exercise of official authority  and accordingly, concluded that th e profession of lawyer (‘avocat’) in 
Belgium does not fall under the scope of Article 55.   The Court ruled, however, that the following activities are not covered by Article 55
: 
 
- private security undertakings and private security staff in Spain (Judgement 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 a nd demand in employment relationship in 
Italy (Judgement of the Court (Sixth Chamber) of 11 December 1997, Job Centre 
coop. arl. , Case C-55/96, European Court Reports 1997, page I-7119); 
 - the concession for the computerisation system  for the Italian lottery (Judgement of the 
Court of 26 April 1994., Commission of the European Communities v Italian 
Republic , Case C-272/91, European Court Reports 1994, page I-1409); 
 - the activities of approved commissioners with insurance undertakings and private 
provident associations in Belgium (Judgeme nt 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 I-4047);  
 
- the provision of business executives by pers onnel consultants in Germany (Judgement 
of the Court (Sixth Chamber) of 23 April 1991, Klaus Höfner and Fritz Elser v 
Macrotron GmbH , Case C-41/90, European Cour t Reports 1991 page I-1979); 
 
- the activities of traffic accident experts in Greece (Judgement of the Court of 10 
December 1991, Commission of the European Communities v Hellenic Republic , 
Case C-306/89, European Court Reports 1991, page I-5863);  
 - the activities concerning the design, progr amming and operation of data-processing 
systems for the public authorities in Italy (Judgement of the Court of 5 December 
1989, Commission of the European Communities v Italian Republic , Case C-3/88, 
European Court Reports 1989, page 4035);  
 - the setting up of private schools in Greece (Judgement 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 Jus tice has adopted a restrictive interpretation of 
this exception. Any activity must be evaluated on a ca se 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 simila r concepts, even if it does appears 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 in tended to be applied restrictively. 
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