RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG139/M/1
WT/REG2/M/3WT/REG1/M/3
14 January 2003
(03-0181)
Committee on Regional Trade Agreements
  Thirty-Third Session
EXAMINATION OF THE
EUROPEAN COMMUNITIES – CZECH REPUBLIC EUROPE AGREEMENT, SERVICES;
EUROPEAN COMMUNITIES  – ROMANIA EUROPE AGREEMENT, SERVICES;
EUROPEAN COMMUNITIES  – BULGARIA EUROPE AGREEMENT, SERVICES
Note on the Meeting of 12 November 2002
Chairperson: Mr. B. G.  Chidyausiku  (Zimbabwe)
1. The meeting was convened in document WTO/AIR/1955.
2. Under Agenda Items B.II-IV. of its Thirty-Third Session, the Committee on Regional Trade
Agreements (hereinafter CRTA or the Committee) took up the first round of examination of the
European Communities (EC)-Czech Republic Europe Agreement, Services; EC-Romania Europe
Agreement, Services; EC-Bulgaria Europe Agr eement, Services.  The following topics were
discussed:
A. G ENERAL REMARKS
B. S ECTION I - B ACKGROUND INFORMATION ON THE AGREEMENT
C.S ECTION II - TRADE PROVISIONS
D.S ECTION III - G ENERAL PROVISIONS OF THE AGREEMENT
A. G ENERAL REMARKS
3. The Chairman said that the EC-Czech Republic Europe Agreement had been signed on 4
October 1993 and had entered into force on 1 February 1995.  The Agreement had been notified to the
WTO on 9 October 1996, as document S/C/N/26, with the text of the Agreement appearing in
document WT/REG18/6, and the Standard Format  in WT/REG139/1.  The EC-Romania Europe
Agreement had been signed on 1 February 1993 and had entered into force on 1 February 1995.   The
Agreement had been notified to the WTO on 9 October 1996, as document S/C/N/27, with the text of
the Agreement appearing in document WT/REG2/5 and the Standard Format in WT/REG2/6.  The EC-
Bulgaria Europe Agreement had been signed on 8 March 1993 and had entered into force on 1
February 1995.   The Agreement had been notified to the WTO on 25 April 1997 as document
S/C/N/55, with the text of the Agreement appear ing in document WT/REG1/6 and the Standard Format
in WT/REG1/7.  He added that the decision to refer these Agreements for examination to the CRTA had
been taken on 23 March 2001 by the Council for Trade in Services, as contai ned in document S/C/M/52.
He proposed to consider the three Agreements together with the understanding that this would have
no effect on the examination per se as each Agreement would be judged on its own merit and would
have its own report with its own conclusions.  He proposed to organize the examination by first asking
the Parties and other Members to give any general comments and then turn to the specifics of the
Agreements using the Standard Formats to guide the debate.  In order to better organize the discussion,he requested delegations to indicate whether their co mments related to all Agreements, or, if that was
not the case, to indicate the relevant Agreement.WT/REG139/M/1
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4. The representative of the European Communities dr ew the Committee's attention to the fact that
due to an electronic glitch the second paragraph of  the Introduction of the Standard Format, document
WT/REG1/7, omitted a reference to the State Gazette of Bulgaria and that Section IV omitted tomention that the text of the Agreement was equally  available from Bulgaria.  She explained that the
written version submitted to the Secretariat was co rrect, but the electronic version contained this
oversight.  She would provide details to the Secretar iat so that an amendment could be made.  On behalf
of the EC, the Czech Republic, Romania and Bulgaria she explained that the Europe Agreements
between the EC and the Czech Republic, Romania, and Bulgaria were wide-ranging economic
integration agreements that established an associati on between the relevant Parties.  The stated aims of
the Agreements were both political and economic and included the development of close political
relations and the expansion of trade between the Parties.  The Agreements were designed as a stepping
stone to membership in the EU and provided a framework for the necessary integration.  The Czech
Republic, Romania and Bulgaria had each applied to join the European Union and the Europe
Agreements provided a framework for the necessary preparations for membership including the removal
of tariff barriers, the harmonization of legislation and liberalization in the field of services.  Membership
of the European Union implied full participation in  the European Single Market.  The Agreements were
based upon clear undertakings on liberalization of trade and economic cooperation.  In turn, these
undertakings were reinforced by political dialogue be tween the Parties at all levels, including ministerial
and parliamentary dialogue.  The Europe Agreements were preferen tial Agreements structured around a
ten-year transitional period.  By the end of the ten-year period a free-trade area for goods, together witha liberalized regime for the establishment of comp anies and nationals between the Parties, would be
established.
5. The representative of the European Communities continued, saying that the supply of services
between the Parties had been progressively liberalized  and the entire process of economic liberalization
had been reinforced by provisions for economic cooperation on all major areas of mutual interest.  Shedrew attention to the fact that the Agreements we re based on European Single Market principles and
terminology which made it difficult to make dir ect comparisons with the terminology of the GATS,
notably the four modes of supply, but coverage of se rvices was, nonetheless, comprehensive.  While the
terms for modes of supply for services were not used in the same way as in the GATS, none of them had
been excluded from the Agreements.  Indeed the comprehensive provisions covering all aspects of
economic relations meant that the modes were fully covered.  In terms of timing, the Agreements had
been designed with a phased and gradual approach ov er the ten-year transitional period.  Liberalization
was largely asymmetric, given the size and strength of the EC Single Market and the need for the Czech
Republic, Romania and Bulgaria to adapt as they opened and developed their services markets.  The
three countries had been given a certain amount of time beyond that granted to the EC before
introducing national treatment in the areas of estab lishment and operation.  It must be stressed, however,
that all Parties should have reached the same position in terms of the treatment granted to the services
suppliers of the other Party by the end of the transitional period.  For the liberalization of the supply of
services between the Parties the process was based on a mutual commitment to take the necessary steps
to liberalize trade.  In terms of sectoral cove rage, the Agreements were based on the negative list
principle.  All services sectors were covered unle ss specifically listed or excluded from the provisions.
Where sectors were subject to phasing-in, the A ssociation Council established under each Agreement
had a responsibility to consider whether the process could be accelerated.  Where sectors were excluded,
the Association Council was under an obligation to c onsider whether there were means to bring them
into the scope of the Agreement.  Transport was a su bject of special coverage in the Agreements as it
was excluded from the general provisions for the liber alization of trade in services, but the aim was to
create new additional agreements for air and inland tran sport.  In the field of maritime transport, the
principle of non-discriminatory access to the market was affirmed.  Outside the transport area the
Agreements had a small number of excluded areas all of which remained subject to review and
suggestion by the Association Council for means of including them.  There were no provisions whichWT/REG139/M/1
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affected the treatment of services and service provid ers from third countries and no modifications to the
Schedules of Specific Commitments had been propos ed as the Agreements predated the GATS.  No
provisions in the Agreements raised the level of re strictions in trade in services for any other WTO
Member.  In conclusion, she said that she hoped her introduction had given a good idea of the content of
the Agreements.  The EC and its partners would wo rk to provide the CRTA with additional information
including the provision of trade data where possible.   In the meantime, the Parties would be happy to
receive any questions based on the information supplied to the WTO.
B. SECTION I – BACKGROUND INFORMATION ON THE AGREEMENT
6. The representative of Australia said that the Services Agreements between the EC and the
Czech Republic, Romania and Bulgaria appeared to contain substantive commitments with regard to
only three of the four modes of supply described in GATS Article I.  Specifically on cross-border
supply, Mode 1, the only commitment appeared to be to liberalize progressively with no specific
timeframe  given for this process.  Bearing in mind the requirement under GATS Article V that
services agreements not exclude any mode of supply, she enquired as to the timeframe for the
progressive liberalization of Mode 1.  As regards commercial presence, Mode 3 of the GATS, thecommitments appeared to be comprehensive.  That  said, she wondered if the services specifically
excluded from the Agreement with Romania in Annexes XVI and XVII and with Bulgaria in Annexes
XVa and XVd were available on the internet.
7. The representative of Japan said that his question related to the Czech Republic’s accession to
the EU in 2004.  His delegation had noticed that some of the Czech Republic's commitments in
services were higher than that of the EC at the moment.  Once the Czech Republic became a member
of the EU, he understood that the Schedule of Commitments in services for the Czech Republic would
be incorporated into the EC's Schedule of Commitm ents and he wondered how these differing levels
of commitments would be reconciled.  For example, in accounting services, the Czech Republic's
commitments were higher than those of the EC: wo uld this level of commitment be retained at the
same level after the Czech Republic became a member of the EU?  He admitted that he had not
studied the Schedules in great detail, but wondered if the same applied to Romania and Bulgaria.
8. The representative of Chile said that while th e Agreement appeared to be quite ambitious in
terms of Mode 3, commercial presence, she wondered if there were other chapters on investment or
other aspects of investment.
9. The representative of the European Communities said she would provide more information on
Mode 1 and investment, particularly with regard to what had happened in the interim with the
Agreements.  She reiterated her delegation's position that all four modes of supply were covered by
the Agreements.  In response to the question by the representative of Japan, she said that it exceeded
the Committee's mandate to look at an integration agreement which had not yet been notified to the
Committee.  She also noted that current negotiations were taking place under the GATS with the aim
of progressively higher levels of liberalization so the position regarding the EC and its three partnersin the Europe Agreements would need to be looked at in terms of the prevailing situation when these
Agreements were examined by the CRTA.
10. The representative of United States expressed the opinion that, in general, more information
on services should be provided to the Committee.  She was interested in additional information on all
modes of supply which the EC representative had agreed to provide.  She asked for identification ofall specific sectors excluded from the Agreements and the reasons why they had been excluded.  She
wondered if the Parties had any information on the volume of trade affected by the Agreements and
requested confirmation that no mode of supply had been a priori excluded from the Agreements.  SheWT/REG139/M/1
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asked for a more detailed explanation of how the EC terminology translated into the GATS
terminology and for a more specific explanation of why the Agreements had substantial sectoral
coverage, as maintained by the EC and the Parties.   In addition, she requested information on all the
provisions of the Agreements which provided for the absence or elimination of discrimination in the
sense of Article XVII between or among the Parties in each of the sectors covered: if any of these
provisions had not been effective upon the date of entry into force of the Agreement she asked the
Parties to provide the date on which each became or would become effective on a sectoral basis and
whether this timeframe was reasonable.  She asked if any provisions in the Agreements allowed for
discrimination in the sense of Article XVII, if there was discrimination between or among the Parties
in any of the sectors identified, and for the volume of trade which was affected by the provisions thatallowed for discrimination.  She understood that discussions took place among the Parties to eliminate
discrimination and she wondered if anything specific  had happened in the last five years since the
Agreements had come into effect and if ther e were any future plans for the elimination of
discrimination.  She also had a question on persons covered.  Her delegation required an explicit
explanation of coverage as it was difficult to determine this by thumbing through the Schedules.
C. SECTION II – TRADE PROVISIONS
11. Referring to Articles 45.5 and 49 of the Agreement with the Czech Republic, but noting that
the same provisions applied in the other two Agreements, the representative of the United States
wondered how the Parties defined the term “limited period of time” and what criteria were used todetermine whether a company's operation possessed what was called “a real and continuous link withthe economy of one of the member states or the Czech Republic”.  She wondered if the mutual
recognition agreements contemplated (and it was unclear if any had already been undertaken) would
result in de facto restrictions on professionals from other countries.  She asked if the Parties could
provide details of the activities covered by Article 54.2 of the Agreement which stated that the
provisions on establishment should "not apply to activities which in the territory of each Party areconnected, even occasionally, with the exercise of official authority”.  She wondered if the Parties
viewed Article 54.2 as more or less inclusive than the GATS exclusion of services "supplied in the
exercise of governmental authority" and whether it was intended to be "on all fours" with the
definition or if it represented less or more in terms of coverage.  She also wondered whether there
were any specific concepts or definitions that the Parties had discussed or which applied in Article 55
(mislabelled in the EC-Czech Republic Agreement)  to determine how the Parties defined control of a
company.  Finally, she referred to Article 70 of the EC-Czech Republic Agreement and similarprovisions contained in the other Agreements, which stated that the approximation of laws would be
extended to banking law, company accounts and standards, financial services, technical rules and
standards, and transport, and wondered how the Parties ensured that this type of approximation did
not result in de facto restrictions on services provided by third-party suppliers; in what manner would
the Parties to the Agreements publish such laws; and if third-party suppliers would be given anopportunity to provide services affected by the approximation of such laws.
12. The representative of the European Communities asked for the questions to be submitted in
writing.  In relation to the last question raised by the US representative regarding whether the
approximation of laws was de-liberalizing in some way, she replied that no restrictions were made on
suppliers of services from other WTO Members in addition to what had already existed at the time ofthe GATS coming into force.  In the case of establishment, other WTO Members were generally
considered to be suppliers of the country in which they were established and would normally receive
national treatment.  In the case of third-country branches, there had tended to be ways for individual
Members to deal with this within the legislation, in accordance with the various commitments which
the various Parties had taken under the GATS.WT/REG139/M/1
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D. SECTION III – GENERAL PROVISIONS OF THE AGREEMENT
13. As regards the institutional framework, the representative of the United States asked for
details of any further liberalization that  had taken place in the last five years since the Agreements'
entry into force, if any progress had been made on the acquis , if there were any reports of these
meetings, and of the extent to which liberalization in services on a bilateral basis between the Parties
had been affected.  Finally, she enquired whether the Protocols and Schedules were available on the
internet.  The representative of the European Communities replied that she would have to check on
the details.  She added that the text of the Agreements were contained in the documentation whichMembers had received for the day's meeting and she had further information which could be provided
concerning various elements.
14. The Chairman said that this first round of the services aspects of the Agreements between the
European Communities and the Czech Republic, Romania and Bulgaria, respectively had allowed the
Committee to clarify a number of points, but some remained pending.  He asked delegations to submit
questions to the Secretariat by 22 November 2002 and for the Parties to submit replies at the latest by
10 January 2003.
15. The Committee took note of the comments made.
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