WT/REG279/2  
17 September 2015  
(15-4784)  Page: 1/6  
Committee on Regional Trade Agreements  Original: English/Spanish  
 
  FRAMEWORK AGREEMENT ON COMPREHENSIVE ECONOMIC CO-OPERATION BETWEEN 
THE ASSOCIATION OF SOUTHEAST ASIAN NATIONS (ASEAN) AND CHINA 
(SERVICES) 
QUESTIONS AND REPLIES 
The following communication, dated 16 Septembe r 2015, is being circulated at the request 
of the delegations of ASEAN (Brunei Darussalam, Cambodia, Indonesia, Lao People's Democratic 
Republic, Malaysia, Myanmar, Philippines, Sing apore, Thailand, and Viet Nam) and China. 
 
_______________ 
 
 
This document reproduces the questions a ddressed to the Parties and the responses 
submitted. 
 
Questions from the delegation of Australia1 
 
General questions: 
 1.1.  In what areas/sectors is the China-AS EAN Agreement more or less liberalizing than 
the ASEAN Framework Agreement on Services? 
Each ASEAN Member State committed a different level of commitments based on their level 
of economic development and readiness under the ASEAN-China Agreement. Commitments also 
vary in terms of subsectors involved. In general, the AFAS contains more commitments than the 
China-ASEAN Agreement. 
 
1.2.  Are there particular issues within th e China-ASEAN Agreement that were not able 
to be negotiated and are expected to be upgraded? (Note China and ASEAN have 
announced end-2015 for an "upgrade" of this agreement). 
 China and ASEAN agreed to negotiate the third package of specific commitments on trade in 
services in the China ASEAN agreement on upgrad ing negotiations, aiming to achieve a balanced 
outcome and higher degree of liberalization.  
 
 We are unable to comment further as negotiations on the upgrade are ongoing.  1.3.  How do you track utilization of the Agreement and do you have any early 
observations on its overall effectivene ss in increasing trade and investment. 
We track the utilization of the FTA through the monitoring of trade data. Parties have seen 
an increase in trade and investment since the coming into force of the FTA. For example, 
Malaysia's trade export to China has been growing especially in sectors relating to business 
services. In addition, Singapore has seen an in crease in trade of construction services and 
Thailand has observed growth in tourism figures. 
 
                                               
1 Questions were submitted to the Parties on 3 September 2015 (three weeks before the meeting). WT/REG279/2 
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  Regarding specific sections of the WTO's Factual Presentation: 
 1.4.  Paragraph 3.9 – Can the Parties explain their rational e for excluding MFN from the 
Agreement, given its role in promoting on going liberalization between the Parties? 
 This reflects the outcome of negotiations between China and ASEAN. 
 1.5.  Paragraph 3.13 – To what extent do the Parties commitments under the Agreement 
represent new MA liberalization and to what ex tent did it lock in existing levels of 
market openness? 
 The Parties agreed to enter into negotiations to progressively liberalize trade in services with 
substantial sectoral coverage. 
 
1.6.  Paragraph 3.4.1.2 – Can China identify the extent to which ASEAN service suppliers 
have taken up opportunities under the Agreem ent? e.g. in building cleaning services, 
printing of packaging materials or repair services for motor vehicles? 
 Unfortunately we do not yet have the statistics. 
 
1.7.  Paragraph 3.37 – Have Indonesia's commitments on lab testing for isotope 
analysis, geological and geophysical servic es for seismic data acquisition and coal 
liquefaction and gasification led to increa sed foreign investment in these sectors? 
 We have yet to possess the statistical data. 
 
1.8.  Paragraph 3.95 – To what extent did the newer ASEAN Member States give 
consideration to liberalization in the tr ansport, distribution and logistics and 
communication sectors as a way to improv e distribution channels and information 
networks? 
Response from the delegation of Cambodia 
 
 Cambodia is an LDC has opened a high level of commitments in transport, distribution, logistics and communication sectors and sub sectors. Cambodia's commitments under ACFTIS maintains the same as GATS Commitments. 
 
Response from the delegation of the Lao People's Democratic Republic  
 
 No response provided.  
 Response from the delegation of Myanmar 
  No response provided.  Response from the delegation of Viet Nam 
  Viet Nam has made relatively liberalized commitments in the transport, distribution, logistics and communication sectors. 
 
Questions from the delegation of Canada 
 
Provisions on Trade in Services 
Scope and definitions. Paragraph 3.5 
 
1.9.  The Factual Presentation remarks that newer ASEAN member states, notably 
Cambodia, Lao PDR, Myanmar and Viet Nam, "enjoy special and differential treatment 
under the Agreement", citing Article 17(b) of the Agreement which grants these states flexibility to liberalize "fewer sectors and tr ansactions with the view to progressively 
extending market access based on their respective development situations." WT/REG279/2 
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   In light of the time that has elapsed si nce the Agreement came into force in 2007, 
can the Committee on Regional Trade Agreements comment on what progress has been made in strengthening the "domestic services  capacity" of Cambodia, Lao PDR, Myanmar 
and Viet Nam? More specifically, what step s have been taken to ensure that market 
access commitments are "in line with a Part y's development situation," particularly 
given the absence of MFN obligations in the Agreement? Further, have there been any lessons learned from the adoption of this  asymmetrical approach to scheduling 
commitments? 
Commitments Cambodia, Lao PDR, Myanmar and Viet Nam have offered to China are based 
on and within the WTO commitments which are relatively liberalized.  
Commercial presence. Paragraph 3.10 
 
1.10.  The Factual Presentation remarks th at "no specific provision on commercial 
presence, per se , is stated under the Agreement". 
 Given the importance of liberalization of  requirements pertaining to commercial 
presence, particular for mode 1, can th e Committee on Regional Trade Agreements 
comment on the rationale for omitting oblig ations pertaining to commercial presence? 
ACTIS follows the GATS structure. 
 
Liberalization commitments. Paragraph 3.13 
 1.11.  The Factual Presentation remarks that "the Parties shall endeavour to achieve … commitments … that go beyond their GATS  commitments" citing Article 21.1 in the 
Agreement. The Factual Presentation further remarks, in various sections throughout 
the report, that Parties only schedu le commitments that are GATS plus. 
Again in light of the time that has elap sed since the Agreement came into force 
in 2007, can the Committee on Regional Trade Agreements comment on the extent to 
which commitments specified in each Party's schedule reflect the current state of each 
Party's evolving domestic regime? 
 The commitments specified in each Party's schedule reflect the outcome of ASEAN-China 
FTA negotiations. In 2012, parties negotiated the second package and the outcomes were based 
on the balance of benefits including areas that reflected our current regime (e.g. telecommunication, construction services etc.). 
 
Questions from the delegation of the European Union 
 
China 
Horizontal commitments 
 
Reference is made to paragraph 3.15 of the Factual presentation and to China's 
horizontal commitments.  
 1.12.  What is the precise content of the new horizontal national treatment limitation 
"on all subsidies to domestic services su ppliers in any new sectors and subsectors 
scheduled after China's accession to the WTO"?  
1.13.  Does this, a contrario , mean that for all sectors that  were liberalized when China 
joined the WTO, there is an obligation not to  discriminate with regards to subsidies, 
including with regards to access to subsidies?   
Since the negotiation on the discipline of subsidies is still ongoing, Members have not 
decided what is a subsidy and how to discipline it. To this end, we think it is premature to identify 
detailed policy arrangements under the GATS framework which may fall into the scope of 
"subsidies" in question.  WT/REG279/2 
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  Sector-specific provisions 
Reference is made to paragraph 3.96 statin g that the GATS Annexes on Air Transport 
Services, Financial Services, and Telecommuni cations shall, mutatis mutandis, apply to 
the Agreement (Article 28.1). 
 
1.14.  Could the parties clarify whether any ASEAN countries have agreed to adopt the 
Telecom Reference Paper as part of its co mmitments under the Services FTA (either 
directly or via the update via the Second Protocol)? 
Parties are given a choice whether to adopt the Telecommunications Reference Paper. Those 
who have done so include Cambodia, China and Viet Nam. 
Questions from the delegation of Mexico 
 
Trade and environment. Paragraph 1.5 
1.15.  Which sectors and subsectors of ASEAN, in particular those in Singapore, Thailand 
and Malaysia, have increased their exports to  China? Please elaborate on the specific 
reasons for such increases. 
Response from Malaysia 
 
Malaysia's trade export to China has been growing robustly especially in sectors relating to 
financial services and business services.  
Response from Singapore 
 
One of the sectors that experienced an increase of exports to China is Construction services. 
In 2012 when the second package entered into force, Singapore exported S$60.5 million in 
construction services to China. This figure increased by about 21% to S$73.5 million in 2013.  
Response from Thailand 
 
In 2013, Thailand's tourism services ex ports to China amounted to US$6.076 billion 
representing an increase of 72% compared to US$3.533 billion in 2012. 
 
Market access. Paragraph 3.7 
1.16.  Could the representatives of ASEAN pl ease explain in greater detail the six types 
of limitations that cannot be adopted by any ASEAN party, specifically in terms of the 
relevant economic packages estab lished in the agreed schedules? 
As indicated in GATS Article XVI and ACTIS Article 18.  
Horizontal commitments. Paragraph 3.15 
1.17.  Would the representatives of the Chinese Government please specify which 
subsidies would not be granted to enterpri ses supplying services ? Which institutions 
provide them? What are their main characteri stics? What is the definition of local 
services supplier? 
 Since the negotiation on the discipline of subsidies is still ongoing, Members have not 
decided what is a subsidy and how to discipline it. To this end, we think it is premature to identify 
detailed policy arrangements under the GATS framework which may fall into the scope of 
"subsidies" in question.  WT/REG279/2 
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  Sector-specific commitments. Paragraph 3.16 
1.18.  Could the representatives of the Chin ese Government please explain the purpose 
of the economic needs tests? In what year we re they introduced? What do they involve? 
Do they apply to both Chinese domestic se rvice suppliers and foreign investors? Are 
non-member countries of the Agreement also subject to these tests? 
Like other Members, China made ENT (economic needs tests) reservations in some sectors 
as well, when it acceded to the WTO. At the moment, China does not have a detailed definition of 
ENT in its regulatory practices. Generally, based on  the real needs of regulation, China adopts test 
methods consistent with what other WTO Members us e. This is in accordance with both China's 
commitments and the WTO rules.  
Sector-specific commitments. Paragraph 3.18 
1.19.  Could the representatives of the Chin ese Government please explain the purpose 
of the economic needs tests? In what year we re they introduced? What do they involve? 
Do they apply to both Chinese domestic se rvice suppliers and foreign investors? Are 
non-member countries of the Agreement also subject to these tests? 
Regarding ENT, please note that China made high level commitments in this regard; there 
are only two ENT reservations in China's GATS commitments, namely medical and dental services 
(CPC 9312)  and aircraft repair and maintenance (CPC 8868) . 
 At the moment, China does not have a detailed definition of ENT in its regulatory practices. 
Generally, based on the real needs of regulation, China adopts test methods consistent with what 
other WTO Members use. This is in accordance with both China's commitments and the WTO rules.  
Sector specific commitments. Paragraph 3.19 
1.20.  Could the representatives of the Chin ese Government please explain the purpose 
of the economic needs tests? What do they  involve? Do they apply to both Chinese 
domestic service suppliers and foreign inve stors? Are non-member countries of the 
Agreement also subject to these tests? Are there minimum amounts of equity? Are there 
any geographical limitations on foreign di rect investors from ASEAN member states 
establishing themselves and/ or providing their services? 
Like other Members, China made ENT (economic needs tests) reservations in some sectors 
as well, when it acceded to the WTO. At the moment, China does not have a detailed definition of ENT in its regulatory practices. Generally, based on  the real needs of regulation, China adopts test 
methods consistent with what other WTO Members us e. This is in accordance with both China's 
commitments and the WTO rules.  
Sector specific commitments. Paragraph 3.20 
 
1.21.  In the context of trade in services , what approach has been adopted regarding 
environmental services? 
 For environment services (excluding environmental quality monitoring and pollution source 
inspection), CPC 9401-9406 and 9409, China's commitments permit wholly foreign-owned enterprises. 
 
Viet Nam, Subsidies. Paragraph 3.90 
 
1.22.  Are fisheries subsidies included in this paragraph? 
The elements of the subsidies included in ACTI S Article 14 were built upon GATS Article XV. 
Since the negotiation on the discipline of subsidies is still ongoing, it is premature to identify detailed policy arrangements under the GATS framework, which may fall into the scope of the 
"subsidies" in question. 
 WT/REG279/2 
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  Questions from the delegation of the Separate Customs Territory of Taiwan, Penghu, 
Kinmen, and Matsu 
 
Trade Environment 
 1.23.  Paragraph 1.4, Chart 1.1 shows the br eakdown of commercial services trade for 
China in 2000-2008. During this period, China has run a constant trade deficit in these 
services. The top three categories for both exports and imports were: transportation and 
travel services, and other business services . In its commercial services trade with 
ASEAN as well, China recorded a constant deficit during the period 2007-2009 (Chart 1.2). 
 We would like to ask whether there have been any significant changes in the 
structure of services trade for exports an d imports between ASEAN and China since the 
FTA entered into force. 
 
There is no significant change in the struct ure of services trade for exports and imports 
between ASEAN and China.  
 
Provisions on Trade in Services 
Malaysia 
 
1.24.  According to paragraph 3.45, of the WTO Secretariat's Factual Presentation about 
commitment in education, a sector in which Malaysia has not made commitments under the GATS, a commitment is taken for higher educ ation. The sector is limited to services 
provided by "privately-funded higher educat ion" (i.e., commitments only for privately 
funded higher education).  
 We would like to ask about the change in Education Services under the 
ASEAN-China FTA. What has resulted from Malaysia's commitment to open up higher 
education, such as the number of service pr oviders and the amount of funding? How can 
non-ASEAN-China countries (e.g. the UK ) access the higher education market? 
 
Foreign companies are allowed to apply, establish and operate private higher education 
institutes (PHEI) in Malaysia. The Ministry of Education provides extensive guides and references available for foreign PHEI to offer higher education services. Currently, Xiamen University from 
China is in the process of establishing its first branch campus in Malaysia which is scheduled to be 
fully operational by December 2015.  
Myanmar 
Sector-specific commitments 
 
1.25.  According to paragraph 3.51. of the WTO Secretariat's Factual Presentation, for 
audiovisual services of Myanmar, motion pict ure and video tape production services are 
subject to joint venture and minimum foreign equity of 35% under mode 3.  
 We would like to confirm whether the limit ation of foreign equity is a minimum or 
maximum of 35%. 
 
With regard to Myanmar's schedule of commitments for Motion Picture and Video Tape 
Production Services, we would like to confirm that the limitation of foreign equity is a minimum 
of 35% according to the Union of Myanmar Foreign Investment Law 1988 as indicated in the Horizontal Commitments. The Protocol to Implem ent the 2nd Package of Specific Commitments 
under ASEAN-China Trade in Services Agreement was signed in 2011. At that time, the existing 
law for foreign direct investment in Myanmar was the Union of Myanmar Foreign Investment 
Law 1988. So, we referred to that law in our commitments.  
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