RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/152
21 June 2000
(00-2508)
Council for Trade in Services Original:  English
COMMUNICATION FROM AUSTRALIA
Review of Article II Exemptions
Questionnaire on the List of MFN Exemptions
(from Financial Services to Transport 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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Australia supports the objectives for the revi ew 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;  and
(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 leasttrade-restrictive available.
I. GENERAL QUESTIONS
We note the general questions raised by Hong Kong, China, in relation to all MFN
exemptions, and wish to propose two additional questions:
1. A number of  Members have created an exemption for "All countries", or similar, on the basis
of reciprocity.  In the interests of transparency, we ask Members to list the countries with which they
have reciprocal agreements, and the basic terms of the agreements.  Examples  include:
− Austria (p 75),  Bulgaria (p 143), Colo mbia (p 78), Cuba (p 100), EC (p 93),
Honduras (p 133), Mauritius (p 83), Pakistan (p 83), Peru (pp 84, 135),
Philippines (p 85), Slovak Republic (p 87), Swaziland (p 138), Thailand (p 139),
Turkey (p 127), USA (p 142).
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 listingS/C/W/152
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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:
− Brunei, Singapore (pp 76, 86), ASEAN – financial
− Cote d'Ivoire, Senegal (pp 79, 85), WAEMU – financial
− Honduras, Nicaragua (pp 81, 83) – financial
− South Africa, Swaziland (p 88), Common Monetary Area Agreement – financial
− USA (pp 90, 91) – financial
− Mexico (p 92) – tourism
− Venezuela (p 113), Andean Group - maritime freight transport
− Bolivia, Colombia and Peru (pp 129, 130, 135), Andean Group - land transport
− Costa Rica, (p 130), Treaty of Central American Integration - land transport
− Egypt (p 131) - Arab League - road transport
II. FINANCIAL SERVICES
3. USA (p 90 - first row)  has an exemption relating to insurance measures according
differential treatment.  How is this assessed and implemented?  To which countries does it apply?
III. HEALTH-RELATED AND SOCIAL SERVICES
4. Cyprus (p 92):  Why has Cyprus taken out this exemption on human health services, rather
than those Members which grant preferential treatment to Cypriot citizens?
IV. TRANSPORT SERVICES
A. MARITIME TRANSPORT SERVICES
As specified in paragraph 4 of the Decision on Maritime Transport Services of 3 July 1996
(S/L/24), Article II of the GATS and the Anne x on Article II Exemptions are suspended for
international shipping, auxiliary services, and access to and use of port facilities until the conclusion
of the next round of services negotiations. Paragraph 4 does not apply, however,  to the MFN
exemptions of Members who maintained specific co mmitments in maritime transport. Thus, as noted
in paragraph 39 of S/C/W/62, of the 26 Members with MFN exemption lists in maritime transport
services, only 14 have exemptions actually in force.
We note that a large proportion of both active and suspended exemptions are phrased in a
very broad and generic way and cover an undefined range of existing and future measures. Moreover,
the vast majority of exemptions do not specify the intended duration and are described as
"indeterminate", "indefinite" or "unlimited".   Australia questions whether such broad generic
exemptions, particularly those covering future measures, are in accordance with schedulingS/C/W/152
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guidelines. We also encourage Members to specify the intend duration of exemptions in line with the
guidelines set down in the Annex on Article II Exemptions.
A large proportion of MFN exemptions  in this sector reflect the suspended status of maritime
transport services negotiations. Other exemptions re late to maritime-specific issues such as the UN
Convention on a Code of Conduct on Liner Conferences, and cabotage. We expect these issues to be
resolved when negotiations resume, and have not addressed them here.
5. New Zealand (p 104):  Please explain the policy rationale for this measure - why can only
Members from the listed countries satisfy "requisite qualifications"?
6. Thailand (p 108):  Please supply more detail on the exemption, specifically  to which
countries the measure applies and why the duration is indefinite. Please confirm that, as detailed inThailand's 1999 APEC IAP, that Thailand intends to lift this exemption between 2001-2005.
7. Turkey (p 112):  Please explain how the specified tax exemptions "lower costs and create
favourable conditions for the provision of services" in the sector.
B. I
NTERNAL WATERWAYS
8. Bulgaria, Czech Republic, EC, Romania, Slovak Republic, Switzerland (pp 114-116):
The exemption lists in this sector seem be designed to reflect the relationship between the EU and
adjacent countries.  In the interests of transparency, could the EC and other Members with exemption
lists in this sector please update the relevant details, specifically the countries to which the exemptions
apply, and whether they could be covered by Article V?
C. AIR TRANSPORT
As observed in S/C/W/59, MFN exemptions in this  sector are designed to ensure reciprocity.
We acknowledge that these exemptions reflect long-established bilateral practice, but we draw
Members' attention to the principle that such exem ptions should not exceed a period of 10 years.  We
encourage Members to consider the utility of their MFN exemptions during forthcoming sessions of
the Air Transport review.
D. RAIL TRANSPORT
9. Bulgaria, the Czech Republic and the Slovak Republic  (pp 126-127)  have identical
exemptions which cover current and future agreements regulating traffic rights and operating
conditions. With which countries are these agreements  are in operation and could they be covered by
Article V?
10. Turkey (p 127): Please provide more detail on the measures covered by the exemptions, in
particular what steps currently excluded parties woul d need to take in order to benefit from them. We
would also be interested to learn why MFN treatment in this case is undesirable.
E. ROAD TRANSPORT
11. Austria (pp 128-9) : Could Austria please advise which of these exemptions are still current,
after EU accession?
12. South Africa (p 138):  Why is reservation of cabotage to South African registered vehicles
and operators covered under MFN exemptions, rather than under sector-specific commitments?S/C/W/152
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13. Thailand (p 139): Please confirm whether, as detailed in Thailand's 1999 APEC IAP, that
this exemption will be removed before 2005.
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