RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG50/2/Add.1
WT/REG51/2/Add.1
WT/REG52/2/Add.1
23 June 1998
(98-2519)
Committee on Regional Trade Agreements
THE EUROPEAN COMMUNITIES-HUNGARY EUROPE AGREEMENT, SERVICES
THE EUROPEAN COMMUNITIES-POLAND EUROPE AGREEMENT, SERVICES;
AND THE EUROPEAN COMMUNITIES-SLOVAK REPUBLIC
EUROPE AGREEMENT, SERVICES
Joint Communication from the Parties
Addendum
This document reproduces questions addressed to the Parties and the joint responses provided
by them.  The questions and replies set out below are organized in accordance with documents
WT/REG50/1-2 (EC-Hungary);  WT/REG51/1- 2 (EC-Poland);  and WT/REG52/1-2 (EC-
Slovak Republic).
I. BACKGROUND INFORMATION ON THE AGREEMENT
2. General Description of the Structure of the Agreement
1. The EC refers to the “Understanding on the Interpretation of Article XXIV of the
GATT 1994”.  However, as indicated by a few Members during the last examination meeting,
there is no established interpretation of a “rea sonable time-frame” in the GATS.  Interpretation
should be made in light of the spirit of the “p rogressive liberalisation” considering that the next
round of negotiations will take place in less than two years.  Our Delegation would register thatJapan’s understanding of a “reasonable time frame” for GATS Article V.1(b) is five years.
The EC and its partners note that Japan feels that five years should be considered reasonable.
They would urge Japan, however, to take into account the enormity of the task facing the EC and its
partners as they put into action a wide-ranging process of co-ordination, approximation andharmonisation.  The scope of the Europe Agreements is very broad, going well beyond the field of
goods and services, and the logistics of putting in place the necessary legislation mean that a short
deadline would not be realistic.  In addition, consideration must be given to economic and political
factors.  Even with the rapid growth seen in the economies of the partner countries, the disparities
between the Member States of the EC and the Europe Agreement partners meant that some scope wasrequired for tailoring the rate of progress to the conditions in the partner countries. The ten year time
frame will permit this.
In the view of the EC and its partners, ten years is a reasonable period given the task in hand -
it is better for an agreement to be realistic in its ambitions and time scale than to set a short deadlinethat cannot be met.  The structure of the Agreements themselves, it should be noted, is in any case
based on the principle of a maximum transitional period.  For many aspects of the provisions on
establishment and operation, the deadline is shorter than ten years, while the overall timetable of the
Agreement consists of the ten year maximum transitional period.WT/REG50/2/Add.1
WT/REG51/2/Add.1
WT/REG52/2/Add.1
Page 2
II. PROVISIONS AFFECTING TRADE IN SERVICES
3. Restrictions Remaining in Force
2. It is indicated that “the Association Council has the option of making recommendations
for the improvement of establishment and operation in these sectors”
(i) Do the Agreements include any particular provisions which authorise the
Association Council to do so?
(ii) How is the Association Council formed and organised?(iii) Are the recommendations legally binding?
(iv) If so, shouldn’t they become integral parts of the Agreements?
(i) Article 45.5 in the EC/Slovak Republic Agreement, Article 44.6 of the EC/Hungary
Agreement and Article 44.5 of the EC/Poland Agreement require the Association Council to examineregularly the possibility of accelerating the provisions on establishment and the inclusion of any
excluded areas.
Article 52.2 of the EC/Slovak Agreement, Ar ticle 51.2 of the EC/Hungary Agreement and
Article 51.2 of the EC/Poland Agreement give the Association Council the ability to recommend waysof improving establishment and operations in air transport, inland-waterways transport and maritime
cabotage transport.
Article 57. 6 of the EC/Slovak Agreement, Article 56.6 of the EC/Hungary Agreement and
Article 56.6 of the EC/Poland Agreement require the Association Council to examine ways ofcreating the conditions necessary for improving freedom to provide air and inland transport services.
(ii) The Association Council consists of members of the Council of the European Communities
(government ministers from the 15 EU Member St ates), members o f the European Commission and
Members appointed by the governments of Hungary, Poland and the Slovak Republic respectively.  It
is presided in turn by a representative of the Council of the EC and by a member of the Government
of the partner country.
(iii) Where the Association Council is empowered to take decisions by the Agreement, the
decisions are binding on the Parties which shall take the measures necessary to implement the
decisions taken.  Recommendations by the Associati on Council also require implementation by other
bodies, but are not directly binding since the implementing measures are likely to need further
discussion and legislation.
(iv) The Europe Agreements set out frameworks for the development of relations in a wide range
of areas.  Where implementing action is taken pursuant to the Agreements, it can be said to have its
roots in the Agreements.WT/REG50/2/Add.1
WT/REG51/2/Add.1
WT/REG52/2/Add.1
Page 3
3. On a more concrete point concerning the Agreement between the EC and Hungary, it is
described that “the Association Council is charged with a regular examination of whether these
services [legal services, organisation of gambling, betting, lotteries, etc.] can be brought into thescope of the Agreement.”
(i) Is there any provision authorising the Council to do so?
(ii) Will the result of the examination be legally binding?
(i) Please see the answer above – Articl e 45.5 in the EC/Slovak Republic Agreement,
Article 44.6 of the EC/Hungary Agreement and Arti cle 44.5 of the EC/Poland Agreement require the
Association Council to regularly examine whether excluded sectors can be brought into the scope of
the relevant provisions of the Agreement.  The Council is authorised to amend the agreement.
(ii) Under the above-mentioned articles, amendments to the annexes which set out the sectoral
coverage and exclusions may be made by decisi on of the Association Council and thus are legally
binding.
7. Safeguards
4. In the second sentence of question 12 of documents WT/REG50/2, WT/REG51/2 and
WT/REG52/2 it is stated that the safeguard me asures “could take the form of temporary
limitations on the establishment of foreign co mpanies and nationals”.  Can we understand that
the measure is only applied in mode 3 of any sector?
Yes - this safeguard provision amounts to permitting the partner countries to introduce
measures which derogate from the provisions on establishment.  The measures permitted amount to
the possibility of a limited delay in implementation of the establishment provisions.
5. It would be appreciated if the EC can give further clarification on the condition for the
application of the measure, for example, the criteria for applying the safeguard measure and the
form of the measure.
The basic criteria are set out in the three agreements.  The three partner countries may
introduce measures which derogate from the provisions on establishment if certain industries:
- are undergoing restructuring;  or
- are facing serious difficulties, particularly where these entail serious social problems;
or
- face the elimination or a drastic reduction of the total market share held by domestic
companies or nationals in a given sector;  or
- are newly emerging industries in the country concerned.
These criteria are designed to reflect the considerable structural and economic changes
underway in the three partner countries and to ensu re that the implementation of the agreement does
not give rise to social problems, untoward hardship or long-term damage to the partner economies
caused by too rapid progress.  The interpretation of the criteria would be, in the final analysis, a
political question decided on the basis of the circumstances in the particular sector of the economyconcerned at the time the problem arose.
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