RESTRICTED  
  
S/C/W/432  
 
26 May 2023 
(23-3593) Page: 1/2 
Council for Trade in Services   Original: English  
 
COMMUN ICATION FROM THE SEYCHELLES  
REVIEW OF ARTICLE II (MFN) EXEMPTIONS  
Written answers by the Seychelles to the questions from Hong Kong, China (S/C/W/ 431) 
The following communication  dated 24 May 2023, from the delegation of the Seychelles is being 
circulated to the Members of the Council for Trade in Services.  
 
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1  QUESTION FROM HONG KONG CHINA ON SEYCHELLES ' MFN EXEMPTION FOR ALL 
SECTORS ' COMMERCIAL PRESENCE  
1.1  The exemption appears to be covered by GATS exceptions and not MFN inconsistent. 
Would Seychelles consider removing this exemption? If not, please explain the rationale 
for maintaining such exemption.  
The exemption put in by Seychelles allows there to be measures that extends prefere ntial treatment 
for commercial presence in accordance with bilateral investment treaties that ha ve been or will be 
signed with Seychelles. The condition of the exemption is to foster investment in Seychelles.  
 
MFN Exemption in comparison to Article XIV (General exceptions)  
 
Article XIV, the General exceptions of GATS, allows Member s to adopt and enforce GATS -inconsistent 
measures for numerous reasons, subject to the requirement that the measures are not applied  in a 
manner which would constitute a means of arbitrary or unjustifiable discrimination between 
countries where like condition s prevail, or disguised restriction s in services . Nothing in this 
agreement shall be construed to prevent adoption or enforcement  by any Member of measures:  
 
a. necessary for protecting public morals or maintaining public order  
b. necessary for protecting human, animal or plant life or health  
c. necessary for securing compliance with regulations which are not inconsistent with GATS 
provision s  
d. can be inconsistent with Article XVII National treatment provided that these measures are 
aimed at the equitable or effective imposition or collection of direct taxes  
e. can be inconsistent with Article II Most Favoured Nation provided that the difference  in 
treatment is the result of an agreement on the avoidance of double taxation or the provisions 
on the avoidance of double taxation in any other international agreement or arrangement 
by which the Member is bound.  
 
Therefore, we are of view that Article  XIV (e) can be invoked to justify measures that are exclusively 
in conflict with the MFN treatment obligation if they are the result of an international tax agreement. 
The MFN exemption put in place by Seychelles is to foster investments. Hence, it is our  
understanding that the provisions stipulated by Seychelles are indeed MFN inconsistent and not 
covered by the GATS general exceptions.  
 S/C/W/432  
 
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  1.2  Why is the exemption  needed despite the exception provided by Article V of GATS?  
MFN Exemption in comparison to Articl e V (Economic Integration) of GATS  
 
The legal justification for a WTO Member to diverge from its MFN commitment and become a party 
to a services trade preferential agreement is provided for in Article V of the GATS, which deals with 
economic integration.  
 
The Article allows WTO Members to enter into such an agreement to further liberalize services trade 
on a bilateral or plurilateral basis, as long as the agreement has substantial sectoral coverage and 
eliminates substantially all discrimination between par ticipants in accordance with GATS Article XVII 
on national treatment.  
 
However, the Article permits any WTO Member to enter into an agreement to further liberalise trade 
on the condition that the agreement  
1. Has substantial sectoral coverage (in terms of vol ume of trade , number of sectors and 
modes; the liberalisation should cover a broad range of services activities; Article V:1)  
2. No a priori  exclusion of modes etc. (does not exclude any  of the  four modes of supply 
for the sectors covered)  
3. Absence or eliminat ion of substantially all discrimination in the sense of Article XVII, 
National treatment (elimination of existing, prohibition of new or more restrictive 
discriminatory measures)  
4. Should facilitate trade among parties and not raise overall barriers vis -à-vis other 
Members (Article V:4)  
5. If GATS specific commitments are affected, renegotiation according to Article XXI is 
required (Article V:5)  
 
In view of the above, MFN exemptions are not required if all the conditions of Article V set out above 
are met. If the conditions are not met, the MFN exemptions are essential.  
 
Seychelles ' Position  
Considering the above therefore, Seychelles wishes to maintain the exemption. We are of the view 
that MFN exemptions are needed in the case that bilateral , regional or othe r agreement s that 
Seychelles signs extend preferences that do not satisfy the criteria of GATS Article V; e.g. , not having 
substantial sectoral coverage .  
 
 
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