. /.WORLD TRADE
ORGANIZATIONS/C/W/206
18 March 2002
(02-1408)
Council for Trade in Services Original:  English
COMMUNICATION FROM AUSTRALIA, CHILE AND NEW ZEALAND
Review of the GATS Annex on Air Transport Services
The following communication has been received from the delegations of Australia, Chile and
New Zealand with the request that it be circulated to the Members of the Council for Trade in
Services.
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1. The co-sponsors of this paper regard the GATS as one of a number of promising avenues for
reform in the air services sector that deserve to be properly and thoroughly explored.  It is important
that, in any time of change, Members do not shut off options for managing that change, particularly
when they can be considered without commitment.
2. Paragraph 5 of the Air Transport Annex to the GATS instructs the Council on Trade in
Services to review periodically, and at least every five years, developments in the air transport sector
and the operation of the Annex with a view to considering the possible further application of the
Agreement in the sector.
3. Discussions in sessions of the mandated review on the past five years of developments in the
air transport sector lend weight to the conclusion that there is increasing dissatisfaction worldwide
with traditional structures for exchanging air transp ort economic rights. This is particularly the case
on a range of matters not directly related to the exercise of traffic rights where States are increasingly
willing to relinquish bilateral control for the general controls of non sector-specific law.
4. An increasing number of States are opting for alte rnatives to the traditional structures and are
pursuing both regional and multilateral options as shown by the formation of a number of regional
groupings such as CARICOM, the Fortaleza Agr eement and the European Common Aviation Area;
and the development of the 'Multilateral Agreement on the Liberalisation of International Air
Transportation' signed by the governments of Br unei, Chile, New Zealand, Peru, Singapore and the
US. New and innovative options for further liberalisation are also being discussed in such fora as
ICAO and the OECD.
5. The review has shown that the issue is no longer whether the reciprocity-based system is in
need of reform but how this reform process might best be approached.  States have indicated by their
actions that the system is already moving from the traditional bilateralism to more sophisticated
structures.S/C/W/206
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6. As we start to consider substantively  the next stage of the review - possible further application
of the GATS to the air transport services  sector we should examine a number of questions, including:
(i) How should GATS members' general commitment to preserve the basic principles
and advance the objectives underlying the multilateral trading system that the WTO
was established to support, be applied in considering the further application of thisagreement?
(ii) Can the reciprocity-based system and the most favoured nation system co-exist for
the different elements of the aviation sector?
(iii) Can the reciprocity-based system and the most favoured nation-based system co-exist
for relationships between different groups of states for the same elements of theaviation sector?
(iv) Which of the classifications listed in the Annex to S/C/W/200 are already covered by
the GATS?
7. Answers to these questions will form the contex t for any consideration of the possible further
application of the Agreement to this sector.
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