RESTRICTED  
WORLD TRADE  WT/REG3/M/4  
 3 June 1997  
ORGANIZATION  
 (97-2329)  
 
Committee on Regional Trade Agreements  
Tenth Session  
 
 
 
 EXAMINATION OF THE ENLARGEMENT OF THE EUROPEAN COMMUNITIES:  
 ACCESSION OF AUSTRIA, FINLAND AND SWEDEN  
 
 Note on the Meeting of 28 April 1997  
 
 Chairman:  H.E. Mr. John Weekes (Canada)  
 
 
1. The agenda contained in WT O/AIR/574 was adopted.  
 
2. The Committee on Regional Trade Agreements continued the examination of the Treaty of 
Accession of Austria, Finland and Sweden to the European Communities (EC Enlargement) under agenda 
item B.I of its Tenth Session.  The meeting covered the following topics:  
 
A. General Re marks  
B. Services Aspects of EC Enlargement  
- Specific Commitments  
- MFN Exemptions  
- Other Questions  
C. Goods Aspects of EC Enlargement  
 
3. The Chairman  recalled that summary records of previous Committee meetings devoted to the 
examination of EC Enlargement were contained in documents WT/REG3/M/1, WT/REG3/M/2 and 
WT/REG3/M/3.  Document WT/REG3/2/Add.1, which contained questions and replies relating to th e 
services aspects of the Agreement, had been distributed recently and would serve as a basis for discussion 
of the services aspects of the EC Enlargement.  
 
A. General Remarks  
 
4. The representative of Japan  welcomed the recent docu mentation and information that had been 
made available, but emphasized the importance of this being done in a timely manner.  Regarding the 
certification of commitments, his delegation considered that final certifications should be made in the 
Council for Trade in Services but that the commitments could be examined in this Committee.  In addition, 
his delegation considered that not only the Enlargement of the EC but also the EC itself should be examined 
in the future, and in that context it invited the EC d elegation to provide information on services using the 
Standard Format.  
 
 WT/REG3/M/4  
Page 2 
 
 B. Services Aspects of EC Enlargement  
 
5. The representative of the European Communities  said the Committee would have to come to an 
assessment as to whether the overall level of liberalization, or the overall level of barriers to trade in services, 
had been changed, compared to the level of liberalization that had been offered by the EC -12 and the three 
acceding countries, individually.  It was important that the Committee view the examination of the 
EC Enlargement from the perspective of GATS Article  V:4, and that it assess whether the EC had 
decreased the level of liberalization, overall.  Her delegation had provided as promptly as possible replies 
to questio ns submitted in writing, and the examination process was more or less on schedule.  Questions 
of a very general or vague nature did not receive elaborate answers, but specific questions were addressed.  
In the general part of the answers, the responses aim ed to indicate what the EC had done with its level of 
liberalization, as a result of the Enlargement.  In this regard, it should be noted that, because of the way in 
which the EC's internal market, or single market, functioned, the Enlargement from 12 to 1 5 members had 
to be seen as an increase from 12 to 15 markets where a service supplier of a third party could now establish, 
and from there on, freely circulate or re -establish in another member of the EC.  That, in itself, was a 
substantial improvement of  the level of liberalization.  It was even more so because the three acceding 
countries, Sweden, Finland and Austria, were very dynamic markets in services.  Many services suppliers 
from third parties were established there.  From that market, they could t hen freely circulate or re -establish, 
enjoying EC conditions.  Often this took place in important sectors, such as financial services, in which they 
could have the benefits of the single license for banking or the single license for insurance companies.  T he 
shear fact of expanding or enlarging entailed greater potential for services suppliers, not only in terms of 
access to the EC, which already had a very high level of liberalization individually and overall, but also in 
terms of EC treatment which the co mpany would benefit from once established.  
 
- Specific Commitments  
 
6. Turning to country -specific questions, the representative of the European Communities  said the 
responses were grouped according to each schedule of commitments.  One question concerned the fact 
that the EC had deleted data processing from Austria's Schedule of Commitments.  Since providing the 
written reply, she had learned that this was not the exact service activity that the EC had deleted; rather, it 
was mobile  and satellite services, which was, for the EC, a basic telecommunications activity.  If her 
delegation had maintained that commitment, it would have made Austria the only country within the EC to 
have a commitment on what the EC classified as basic teleco mmunications.  The EC had deleted it because 
it would possibly have to be included at the conclusion of the negotiations on basic telecommunications.  
At the time, the aim was that the level of liberalization of the 15 Member States be coherent.  The EC 
subsequently had re -introduced that commitment in the commitments on basic telecommunications.  This 
was an example to demonstrate how the EC's internal market worked.  Although the commitment made 
by Austria had not been very substantial, Austria had commit ted not to have restrictions on consumption 
abroad; that would have meant that, if the EC made such a commitment for one Member State, given the 
way in which the internal market worked, all other Member  States would have had to abide by it.  The EC 
was not  in a position to maintain that commitment, at that time, in the absence of others having made 
commitments on basic telecommunications.  With the deal on basic telecommunications, the EC had re -
introduced it for all the 15 Member States.  It was a re -shifting of the commitment, but the commitment 
had not been taken away at all.  
 
7. The representative of the European Communities  then said she had a reverse example, namely the 
commitment that Austria had made on space transportation.  Again, this had been a commitment that 
Austria had made, and Austria was the only Member State that had made that commitment.  It was a 
commitment w hich had said that there were no limitations to the consumption abroad of space 
transportation.  The Committee could assess whether that represented an economic interest for anybody 
within the Austrian market.  Her delegation was by no means saying that it  was not a commitment; but 
because of the way in which the market functioned internally, there could be a disturbing effect if one 
member of the 15 made a commitment which did not reflect EC policy.  Overall, it had seemed best to           WT/REG3/M/4  
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 take that commitment away .  Her delegation admitted that this could arguably be considered as 
deliberalization.  If any third party considered itself affected, its concerns would be given attention.  
 
8. The representative of the European Communities  then no ted that her delegation had received 
questions on why Austria had taken away a commercial presence requirement under a number of services 
sectors from the commitments under Mode 4.  The EC had taken that away for scheduling purposes and 
coherence.  It was basically not necessary to say that a service could be supplied through movement of 
persons and at the same time to require commercial presence, since movement of persons was linked to 
commercial presence, and the conditions were already stated in the hori zontal section.  For the sake of 
coherence and to avoid different ways of scheduling which could lead to a conflicting interpretation between 
Austria and the 14 other Member States, the EC had taken that reference away.  That did not seem to affect 
the sub stance of the level of liberalization.  Austria did not have a condition in its Schedule saying that 
rented aircraft must meet certain nationality conditions; that was a condition resulting from EC legislation 
which the other Member States had had.  For so me reason, Austria had viewed this mainly as a licensing 
condition and had not written this in its Schedule, but the market access condition for the rental of aircraft 
had not been restricted and third countries could still come in and establish such a com pany and fulfil the 
conditions.  Austria's following the coherence of the  14 other Member States did not in any way affect the 
specific commitments made or the level of liberalization offered before and afterwards.  
 
9. The represent ative of the United States  said her delegation was trying very carefully to analyze how 
the changes in the commitments affected commercial interests.  In the introductory remarks, the EC 
delegate had noted that responses had been provided only to questions  that were very specific; it would be 
interesting to know what kind of questions had been received that had not been answered.  Perhaps, as had 
been done in previous examinations, the questions could be circulated to all Members, so that everyone 
could hav e an idea of what was being asked.  
 
10. The representative of Japan  said that, as the EC delegation had asserted, the dynamic liberalization 
in Europe had potential to improve the global market.  Regarding Austria's regulations on sp ace 
transportation, the reply to the question stated that the commitments by Austria on space transportation had 
been deleted because of a lack of equivalent concessions in that sector by other WTO Members.  This 
explanation did not seem appropriate, given  the legal nature of the commitment.  Also, concerning 
commitments made by Austria on the rental of aircraft (question 9), Mode 3 had been changed.  The 
answer indicated that the aircraft must be owned either by natural persons meeting specific nationality  criteria 
or by juridical persons meeting specific criteria on ownership of capital and control, including the nationality 
of directors; those statements seemed to contradict each other, since the previous Schedule of Austria had 
not put any Mode 3 restric tion on the rental of aircraft, including no restrictions on foreign capital.  His 
delegation was of the view that there needed to be some compensatory adjustment, according to Article  V:5 
and Article XXI of the GATS.  
 
11. The repres entative of Switzerland  said he wished to react to the comment by the EC representative 
concerning the trade effects of specific commitments and exemptions.  He noted that his delegation did 
agree with the reply given to question 2, concerning exemptions t hat applied to the three new members.  In 
fact, the only new exemption applied to Austria for road -land transport, and it would provisionally last only 
another year.  He indicated that Switzerland would withdraw its general reservation to GATS Article  V 
concerning the issue raised under question  2.  At the same time, the replies provided by the EC seemed 
to require further clarification or in -depth consideration.  Either the EC could hold bilateral consultations, 
or his delegation would submit further quest ions in writing so as to obtain clarifications.  Regarding question 
6, space transport, what he had said earlier on the scope of GATS Article V:4 was relevant in this respect.  
He also endorsed the comments made by the delegate of Japan.  
 
12. The representative of Canada  said that the questions and replies document went beyond the general 
assertion made at previous meetings that the Enlargement did not result in any change in the level of 
commitments.  In fact, the information now bef ore the Committee did suggest a series of changes, though 
some were more minor than others.  He concurred with comments made by the two previous speakers, in WT/REG3/M/4  
Page 4 
 
 that the answers relating to space transport and aircraft services would need to be elaborated.  F or instance, 
in the last sentence of question 9, it was asserted that there were no changes in the degree of access, but only 
an additional requirement to comply with certain rules of origin; it seemed this was a well -known element 
by which additional rest rictions could be introduced, in the context of a customs union or any preferential 
arrangement.  So, some clarification of that statement would be welcome.  Some general comments from 
the EC as to what its intention was with respect to GATS Article  XXI wo uld also be appreciated, because 
it seemed clear from the document that changes had been made to the Schedule and that therefore there 
would need to be further consultations, in respect of the modification of that Schedule, pursuant to Article 
XXI.  
 
13. The representative of the European Communities  reiterated that the examination should centre on 
the Article V:4 question of whether EC Enlargement had raised the overall level of barriers.  With the 
accessions, changes had been made fo r reasons of coherence or scheduling for the internal market.  
Presumably there would be net deliberalization with respect to Austria, due to the space transportation 
regulations noted.  For aircraft rental, the conditions of access for a company that want ed to establish in 
Sweden or in one of the other Member States were the same as those for Austria.  Her delegation would 
provide clarification as to whether that requirement was an Article VI condition or a market access condition.  
The examination might s how a need for Article XXI "Modification of Schedules" compensation, as 
Members might be affected by the deletion of the commitment regarding consumption abroad of space 
transportation from Austria's Schedule.  
 
14. With reference to specific commitments of Finland, the representative of the European 
Communities  referred to a written question posed by the Japanese delegation concerning a long list of 
changes in scheduling, which the EC was said to have made with regard to Mode 4; she s aid she was unable 
to find any such changes in the Schedule and suggested that there might have been confusion due to 
abbreviations or translating.  She then turned to question 11, regarding legal services, and explained that 
the change in scheduling had b een made for corrective purposes because a condition that had been classified 
in terms of Mode 1 was better classified in terms of Mode 3.  The written response had tried to clarify that, 
in order to supply services in Finland on a cross -border basis, ther e were no limitations except for the 
condition of Bar membership, which required Finnish citizenship and residency in Finland.  That 
condition, in itself, was contradictory, given the definition of cross -border supply under the GATS, since it 
meant there w as no movement of persons.  For example, a lawyer in the United States could not physically 
have residency in Finland, and therefore the condition had been incorrectly scheduled.  Regarding security 
services, Finland had made a very limited commitment, wit h respect to only one part of Central Product 
Classification (CPC).  With respect to exhibition management services, that commitment was fully retained 
but had been scheduled under another classification number, found on page 53 of the EC -15 Schedule.  
 
15. The representative of the European Communities  said that one of the questions with respect to 
Sweden's specific commitments had concerned the way in which the EC had scheduled its commitments 
on financial services, in Mode 4.  Swede n had followed the Understanding on Financial Services.  The 
other 14 Member States had done it in the horizontal section, and Sweden was willing to follow that same 
level of commitment.  The language "unbound, except as indicated in the horizontal section " was related to 
these scheduling mechanics.  A comparison of the level of commitments that followed from the horizontal 
section with those from the Understanding on Financial Services revealed that, in fact, there were now better 
commitments on movement o f persons from Sweden.  There had also been a suggestion that the EC had 
changed entertainment services in Mode 4, but there did not actually appear to be such a change.  Regarding 
photographic services, under Mode 1 Sweden had no limitations.  The EC -12, as well as Finland and 
Austria, had also specified with respect to Mode  1 that the only activity of photographic services that could 
actually be done on a cross -border basis was aerial photography.  Sweden had followed that logic of 
scheduling, given, agai n, the limited definition of cross -border services.  The EC delegation would argue 
that it was not a substantial limitation to say that there would be fewer cross -border photographic services 
from outside Sweden coming into Sweden, as the only relevant act ivity that was feasible on a cross -border 
basis was aerial photography, which was fully maintained.  It was merely an alignment according to the logic 
used in the scheduling by the  14 other Member States.            WT/REG3/M/4  
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16. The representative of Japan  requested clarification as to the reply to question 15, which seemed to 
conflict with the Consolidated Schedule with respect to the financial services sector (page 69, paragraph  4), 
which said:  "except for Sweden, in which case  commitments are made according to the Understanding".  
 
17. The representative of the European Communities  said that the Japanese delegate was correct in his 
assertion; the problem was that her delegation had not deleted that referen ce yet.  Commitments according 
to the horizontal section applied now to all 15 Member States;  those for Sweden were no longer according 
to the Understanding.  The headnote would be corrected in due course.  
 
- MFN Exemptions  
 
18. The representative of the European Communities  referred to a question submitted with respect to 
an MFN exemption that the EC -12 had taken for direct non -life insurance.  This concerned an agreement 
the EC -12 had had with Switzerland involving recognition o f each other's prudential measures and a single 
license.  Because of the way in which the internal market worked, Swiss companies established in one of 
the three acceding countries would also benefit from that bilateral agreement, with Switzerland granting  that 
same treatment to the three acceding countries.  Her delegation did not view this as a new MFN exemption.  
The exemption had applied to the EC -12, and, as a result of the way in which the internal market worked, 
was now applicable to the 15 markets.  The conditions of access needed to be understood because the 
MFN exemption taken with Switzerland was not a market access condition, in the sense of Article XVI.  
Therefore, for example, a Japanese company or a Canadian one could still establish a direct non-life 
insurance company in Finland, Austria or Sweden, with the same access conditions as before - this was not 
at all changing their access conditions.  What was different was the treatment that Switzerland gave to these 
three members and vice versa.  Thus, even if the EC extended the MFN exemption to the three Member 
States vis-à-vis Switzerland, the level of liberalization was not at all modified for third countries' services 
suppliers.  To the contrary, it seemed that because of GATS Article V:6, the se companies would also 
benefit from EC treatment once they were in a country of the economic integration agreement, with all the 
regulations that went with it.  So, it was not a new MFN exemption, but rather only the extension of an 
MFN exemption from EC -12 to EC -15.  The commitments on market access conditions for third countries 
had not changed at all in terms of establishment of direct non -life insurance companies.  
 
19. The representative of the United States  said there had been d iscussion about the specific 
commitments, in terms of whether the level of liberalization had changed and in terms of the procedural 
mechanisms for modifying the schedules (which in some ways was very similar to what was done on the 
goods side when tariff bindings were modified).  But MFN exemptions were another matter altogether.  
Using GATS terms, the EC delegation referred to liberalization overall, and also within a sector.  In the 
process of joining the EC, the three new Member States had each taken a number of new MFN exemptions.  
While the comments on the insurance sector were appreciated, it was difficult to view the change as not 
being a new exemption but rather just an extension, when the exemption had not been taken by those three 
Member States in  the Uruguay Round.  By her delegation's count, it appeared that Austria had taken 10 
new MFN exemptions, Finland 9, and Sweden 8.  That did not appear to be liberalizing.  Her delegation 
was also particularly interested in which mechanisms the EC intended  to use to modify the list to incorporate 
those new MFN exemptions, in view of the fact that they were not negotiable in the same way that specific 
commitments were.  She indicated that her delegation had a list of new MFN exemptions which could be 
discuss ed elsewhere.  
 
20. The representative of Japan  said his delegation supported the comments made by the United  States 
representative.  Regarding the MFN exemptions on non -life insurance with respect to Switzerland, the 
explanation by t he EC delegation seemed to indicate that this MFN exemption was added; but according to 
the commitment by Sweden, the supply of direct insurance was allowed under certain conditions.  Adding 
MFN exemptions for this sector could mean the withdrawal of the c ommitment by Sweden.  Could the EC 
delegation clarify or confirm this point?  
 WT/REG3/M/4  
Page 6 
 
 21. The representative of the European Communities  said she could only respond to the comment by 
the Japanese delegate regarding direct non -life insurance,  on which Sweden had made a commitment.  All 
of the EC Member States had made a commitment on that activity.  Again, there was a distinction between 
the commitments that had been made and fully maintained and the MFN exemption that had been taken 
for the r ecognition of the prudential regulations.  That one was a very specific MFN exemption, which had 
been taken for a border -line case of prudential regulations and which possibly fell under GATS Article VII.  
That needed to be considered on its own merits, in  addition to the general argument that this was an 
extension of an existing MFN exemption as opposed to a new MFN exemption.  Her delegation would 
likely maintain this logic for the other MFN exemptions that the United States delegation had reportedly 
identified with respect to the new members.  Since the United States representative offered to share that 
information in more detail, her delegation would look at exactly what was at stake.  Regarding what the 
representative of the United States had said with respect to MFN exemptions not being negotiable in the 
same way commitments were, she would contend that MFN exemptions were the other side of 
commitments.  A Member took commitments to a certain level, and then it took MFN exemptions where 
it had not taken  commitments.  There was no explicit provision preventing Members from taking into 
account these problems in an enlargement process.  The only criterion to look at was the EC's overall level 
of liberalization, which would have to be measured.  Exemptions f rom MFN were on the other side of 
liberalization.  So, the Committee should look at the overall level of liberalization that resulted from the 
EC's commitments, which would be the plus and the minus, within that exercise.  Part of this would be to 
look at the plus or the minus resulting from MFN exemptions.  While the United States delegation had 
mentioned a number of changes in MFN exemptions from Austria, Finland and Sweden, the EC had also 
deleted one MFN exemption; so, there again, there was an exercise  of plus and minus.  After this exercise 
examining the overall level of liberalization, measured, on the one hand, in terms of net commitments and, 
on the other, in terms of net MFN exemptions, there needed to be an assessment of who had been affected.  
That assessment could be done on a bilateral basis, if delegations preferred.  
 
- Other Questions  
 
22. The representative of India  said he had a procedural question regarding what had been noted with 
respect to the specific commitments of Austria on aircraft.  It seemed there had been a statement that the 
question of the modification of schedules would be addressed only if a Member was affected.  Had the EC 
or Austria provided a 90 -day advance notice of the decision to modify this Schedu le, as required under 
GATS Article  V:5? 
 
23. The representative of Japan  said his delegation supported the point mentioned by the representative 
of India.  Regarding question 7, the EC delegation had said the deletion of the space tr ansport sector was a 
minor matter.  Although the deletion was justified, his delegation was raising as a matter of principle the fact 
that if a Member committed itself under GATS, there was a legal obligation.  Regarding question 9, 
concerning the rental o f aircraft in the Austrian Schedule, the EC delegation had said there had been no 
change but had also stated that there had been additional rules of origin requirements; it was difficult to 
agree with that explanation.  Also, while the EC delegation said t he Committee should judge whether overall 
there had been a raising of barriers, according to GATS Article V:4, the Committee should look at effects 
"within the respective sectors or sub -sectors", not overall effects.  The question was whether parties raise d 
barriers in a given sector or not.  
 
24. The representative of Korea  recalled the Chairman's clarification in the previous session regarding 
the verification of the Consolidated EC -15 Schedule.  It was up to the Committee on Specifi c 
Commitments to do that, and the CRTA was responsible for reviewing the Consolidated Schedule in light 
of GATS Article  V.  He wished to reserve his delegation's right to come back to the specific commitments 
when it came to the verification of these speci fic points.  With respect to the current status of the Schedule, 
he asked if the EC -12 commitments plus the individual three commitments were currently valid, or whether 
the Consolidated Schedule of the EC -15 was valid.  If the EC -12 plus the individual th ree countries' 
Schedules were not valid, when would the Consolidated Schedule enter into force?  In this regard, he asked 
whether the EC had gone through the procedure provided in GATS Article V:5, concerning modification           WT/REG3/M/4  
            Page 7 
 
 or withdrawal procedures.  He took  note of the statement in the answer to question  1, which stated that 
the mere accession or Enlargement itself would improve the overall level of liberalization with respect to 
other countries.  His delegation wished to deliberate further on this statement  because it did not always 
seem to be the case, due to the unique nature of the services commitments in the WTO system;  perhaps 
that statement was only valid because of the conditions which prevailed in the case of the EC Enlargement.  
His delegation supp orted the interventions by the representatives of India and Japan, regarding space 
transport; although Korea as a nation did not have much interest in that specific sector, his delegation did 
not find the EC explanation to be convincing.  
 
25. The representative of the United States  said with respect to the MFN exemptions that the numbers 
she had provided were newly calculated, and her delegation had accounted for the changes in the country 
coverage (i.e. particular exemptions simply a pplied a little differently to certain countries).  The Committee 
was mixing two distinct processes.  One process was the role of the Committee in examining whether the 
Enlargement was liberalizing overall and on a sectoral basis.  Another process was that  of looking to see 
that the GATS was followed with respect to the modification of schedules and the compensation of injured 
parties; in this regard, she trusted that the EC would take the necessary steps in the near future.  
 
26. The representative of Australia  said he understood the EC delegation to have said that at least part 
of the reason for the MFN exemption in direct non -life insurance was for prudential reasons.  That would 
seem to mean that countries were allowed to take measu res for prudential reasons.  He queried:  why 
change the original commitment if there was no need to?  Regarding the point made about the reply to 
question  9, he said his delegation, too, would be interested to see precisely what the rules of origin were.  
The reply must have been carefully drafted, as it focused on whether there was any extra barrier to the 
conditions of establishment of a third country; however, it was also possible that these rules of origin, which 
concerned the aircraft rather than the supplier, could conceivably have an effect on the overall level of 
liberalization involved.  
 
27. The representative of Japan  supported what the Australian delegate had just said.  Also, with 
respect to the previous comment concerning direct non -life insurance and the MFN exemptions, he said he 
was not persuaded by the EC explanation, at least regarding the EC -Switzerland Agreem ent.  Under Mode 
1, the EC had scheduled this direct insurance sector and had also listed its MFN exemptions.  He was of 
the view that this could not be allowed.  If the EC listed MFN exemptions in its Schedule in that Mode, this 
should be written as "unbo und".  There had been guidelines for GATS scheduling (document 
MTN/GNS/W/164).  He hoped the Committee would continue to discuss this specific issue.  
 WT/REG3/M/4  
Page 8 
 
 28. The representative of the European Communities  said she agreed with points made by the 
Australian representative.  First, with respect to the condition in Austria's Schedule for the supply of rented 
aircraft, the fact that the aircraft itself had to comply with certain rules of origin had not affected  
establishment; however, as the representative of Australia had rightly suggested, conceivably this could have 
an effect on supply.  Her delegation would take a closer look to determine how the condition might affect 
the ability of a services supplier to s upply aircraft rentals.  It was not the condition on the establishment 
condition itself that had been changed.  Her delegation would look over the legislation and see how, in 
practice, this requirement could possibly affect the supply of this service.  She  requested the opportunity to 
return to the explanation from the perspective that the Australian delegate had presented.  The same 
applied to the issue of direct non -life insurance.  She had said "prudential" because at the time that her 
delegation had tak en the MFN exemption for the bilateral agreement it had with Switzerland, it had 
questioned whether doing so was necessary.  It was a border -line case between prudential measures or 
recognition of each other's standards, which were not purely prudential in  the narrow interpretation of 
prudential regulations.  The area of prudential regulations covered many areas but was not a blank cheque; 
her delegation thought the case went beyond prudential regulations and was a recognition of each other's 
standards.  Ar guably, it was at that time already an Article  VII issue, as well.  Her delegation would look 
at it carefully, but she now wished to indicate, in response to the comment by the Japanese representative, 
that the conditions of establishment for direct non -life insurance had not been changed.  The level of 
commitment that the EC -12 had made was a commitment on establishment for that activity, despite the EC's 
MFN exemption.  The agreement with Switzerland facilitated the access of direct non -life insurance 
services, because the parties had a mechanism to recognize each other's standards.  That made access 
easier, but not the conditions of establishment.  Her delegation would look at that agreement to see exactly 
where the MFN exemption was needed for the 12; th e same rationale would then apply for the three 
acceding countries.  
 
29. The representative of the European Communities  continued, saying she did not agree with the 
representative of Japan that the EC had changed the conditions of ma rket access in the Schedule.  The 
commitments made by Austria, Finland and Sweden were fully preserved and incorporated into the 
Schedule.  But again, those were two issues that should be examined more closely.  The representative of 
Korea had raised two q uestions, which were questions of process.  One of them related to the role of this 
Committee, as it contended there were issues that fell under the competence of the Committee on Specific 
Commitments.  As she had said during the last meeting, her delegati on viewed the role of the Committee 
on Specific Commitments as being to provide technical verification of a schedule.  Her delegation did not 
yet have a final schedule.  That related to another question which the Korean delegation, and indirectly, the 
Indian delegation, had posed.  Her delegation had a proposed Consolidated Schedule.  As long as that 
one was not definite, it was the Schedules of the 12 and the individual acceding countries that remained the 
valid, legally binding commitments.  The EC had pr oposed its Consolidated Schedule because the 
delegation realized that there was an assessment to be made with respect to the level of liberalization overall 
and within the different sectors.  After that assessment, her delegation would submit a final sched ule and 
list of MFN exemptions to the Council on Trade in Services, indicating how this exercise was carried out 
and whether in the Enlargement process the EC had fully complied with its rights and obligations.  This 
would then be examined by the Committee  on Specific Commitments to determine its technical accuracy.  
Today, the Japanese representative had highlighted an example of this process, noting that the EC had 
changed the commitments by Sweden.  Because of this, the language currently in the general headnote 
would be altered in the final product.  Then that would be verified for its technical scheduling accuracy.  
But for the evaluation in terms of GATS Article  V:5, it was true that, with new territory, there were many 
fundamental questions that neede d to be considered.  The Committee would have more economic 
integration agreements to examine, and it was setting a number of important precedents regarding legal 
interpretations.  This related to the question from the representative of India as to why the  EC had not 
notified and given 90 days' notice.  The evaluation of the modification should be made before the 90 -day 
process began to run.  Once there was an assessment, then the time constraints of the 90 -day notice would 
start and the EC delegation would  have to decide whether to resort to Article  XXI.  That was when a 
conclusion would need to be made on whether the overall level of liberalization had been modified as a 
result of the Enlargement.            WT/REG3/M/4  
            Page 9 
 
  
30. The Chairman  said that the Comm ittee needed to bear in mind the process for carrying out its 
mandate from the Council on Trade in Services to examine the consistency of the Treaty of Accession with 
GATS Article  V.  When the Committee finished its examination, it would send a report back  to the 
Council.  Before then, it appeared that at least one delegation (i.e. the United States) intended to submit 
further written questions.  It would also be interesting for the Committee to have a specific listing of the 
additional MFN exemptions ident ified by the United States.  
 
31. The representative of the European Communities  said her delegation would supply more 
information on the specific commitments envisioned and on the individual MFN exemptions, plus answers 
to additional  questions raised during the course of the day's examination.  
 
32. The Chairman  said the Committee had not yet completed the question -and-answer process.  
There had been some interesting and important issues raised during the discuss ion, which reflected the fact 
that this was the first time there had been a WTO examination of a customs union that included services 
aspects.  There had been some interesting questions about the relationship between GATS Article  V and 
Article XXI which wa rranted reflection.  The discussion had been useful in setting out some of the issues 
to be considered.  It seemed another session was needed for treating the services aspects of the Agreement.  
 
33. The representative of Australia  said that the proposals for the amalgamated Schedules were clearly 
proposals which would not replace the respective Schedules and Lists until after the completion of the 
examination process.  If the previous Schedules were still in force, it would seem that the measures 
described in those Schedules also were still in force and that, conversely, any changes to measures that might 
result in changes to the Schedules had not occurred.  
 
34. The representative of the European Communities  confirmed the Australian representative's 
assertion.  
 
C. Goods Aspects of EC Enlargement  
 
35. The Chairman  turned the Committee's attention to the goods side of its work, noting that 
consultations had been held on the matter of general i ncidence calculations.  Without necessarily having 
substantive problems with the methodology used in calculating the general incidence, some delegations had 
asked for more time to reflect on the issue.  
 
36. The representative of the United States  suggested having a Chairman's note to set out the 
Committee's understanding of the correct way to calculate the general incidence, according to the 
Understanding on the Interpretation of Article XXIV of GATT 1994.  The note could specify the kind of 
information that the Secretariat required from countries to calculate general incidence, so as to provide an 
agreed -upon approach for generically calculating the general incidence, and it could indicate any special 
exceptions for EC Enlargement.  
 
37. The representative of Japan  said his delegation had questions regarding the automatic extension of 
anti-dumping measures.  Having read the summary records in document WT/REG/3/M/1, he wondered 
whether the anti -dumping measures whi ch had been extended to the three new countries were still in force.  
The EC had said the extension of measures could be justified on both legal and practical grounds.  Maybe 
the Parties were saying that, in order to achieve substantially the same duties a nd to avoid circumvention, 
the measures were justified legally on practical grounds.  His delegation could not agree on that point.  
 
38. The representative of the European Communities  said the suggestion by the United  States 
delegati on for deciding the general incidence methodology seemed a sensible way forward.  A note from 
the Chairman could promote an understanding of the overall approach, as well as of the particular 
circumstances of the latest EC Enlargement, in terms of the timi ng and coincidence with the conclusion of WT/REG3/M/4  
Page 10 
 
 the Uruguay Round, etc.  It seemed that the question now before the Committee was how quickly it could 
proceed with the work.  
 
39. The Chairman  said that the Secretariat could help with the Chairman's note which would set out 
the information required to make the general incidence determination and which would spell out the special 
circumstances of EC Enlargement.  There was still the question of whether the Committee wanted to have 
a discussion on that note before the Secretariat would prepare the general incidence calculations.  The 
Committee could have informal consultations to see whether delegations were sufficiently comfortable with 
that note  to proceed with the general incidence calculations, so that they would be ready for the June 
meeting.  
 
40. The representative of the United States  suggested that the Chairman's note make use of an informal 
note drafted by the Secret ariat last autumn as a basis for the general scheme, and then elaborate on how the 
Committee might deal with the EC Enlargement case.  
 
41. The representative of the European Communities  said this was a sensible way forward, as there was 
no point in re -inventing material which already existed and which seemed suitable.  
 
42. The representative of Switzerland  said that, concerning the goods aspects of Enlargement, his 
delegation had written to the EC a letter dated  1 September  1996, which had been accompanied by some 
tables with precise and complete figures.  To date, the Swiss delegation had received no reaction to this 
communication.  His Government had not completed negotiations with the EC in the area of goods, under 
Article XXIV:6.  In view of the fact that no mutually satisfactory solution had been reached, Switzerland 
would urge the EC to respond to the invitation to propose compensation at a level corresponding to the 
losses incurred as a result of the EC Enl argement, regarding which Switzerland had provided complete and 
detailed figures.  Since the process provided for in Article XXIV:6 had not yet been completed, Switzerland 
was not at this stage in a position to reach a conclusion as to the EC Enlargement's  full compatibility with all 
the relevant provisions of Article XXIV.  
 
43. The representative of Australia  said that for some time his delegation had been discussing with the 
EC delegation the question of how to reflect the distincti on between multilateral commitments on domestic 
support and export subsidies, under Part IV of the Schedule, and concessions under Part  I of the EC's 
Schedule.  Australian concerns were well known to the EC, and it seemed an acceptable solution would be 
reached regarding the issue.  It was in that context that he wished to hear from the EC delegation responses 
to two questions on the finalization of the Schedule.  First, how would the EC propose to reflect changes to 
its Schedule, as a result of Article XXI V:6 negotiations, which had not been completed at the time the EC 
had tabled its revised EC -15 Schedule in March 1996.  Would this be done through a rectification of its 
Schedule?  Second, his delegation would appreciate any information from the EC on when  all of the Article 
XXIV:6 negotiations would be finalized, and on when the Committee could expect to see a final EC -15 
Schedule.  
 
44. The representative of the European Communities  said the day's questions were ones that the EC 
delegation would try to answer in a straightforward way in a single written form.  
 
45. The Chairman  said the Committee had arrived at a point in the examination where it was close to 
finishing with respect to the goods aspects, and where  it had a little more to do with respect to the services 
aspects.  If delegations would submit any further questions by 9 May, and answers then supplied by 30 May, 
the Secretariat would be able to distribute the document by 6 June.  In this way, the Commit tee might aim 
to finish the formal examination of EC Enlargement at its next Session.  
 
46. The Committee took note  of the comments made.