RESTRICTED  
  
S/C/W/451  
 
17 July 2023 
(23-4853) Page: 1/8 
Council for Trade in Services  Original: English  
 
  
COMMUNICATION FROM THE EUROPEAN UNION  
REVIEW OF ARTICLE II (MFN) EXEMPTIONS  
Written answers by the European Union to the questions from Hong Kong, China;  
Japan; the Republic of Korea and Switzerland (S/C/W/431 ) 
The following communication from the delegation of the Euro pean Union , dated 10 July 2023, is 
being circulated to the Members of the Council for Trade in Services.  
 
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1  QUESTION FROM THE REPUBLIC OF KOREA (QUESTION 4, S/C/W/431 ) 
Regarding the MFN exemption measure, "Permission for limited numbers of nationals of the 
European Union (EU) Member States to be employed or to exercise professions in specific 
occupations in Cyprus in accordance with criteria to be established unilaterally by Cyprus or in future 
agreements between Cyprus and the EU Member States", please confirm if the exemption measure 
pertains to measures affecting natural persons seeking access to the em ployment market, which are 
carved out by paragraph 2 of Annex on Movement of Natural Persons Supplying Services under the 
Agreement.  
 
Answer from the European Union:  
The exemption was conditioned to Cyprus accession to the European Union and Cyprus is now 
member of the European Union.  
 
2  QUESTION FROM THE REPUBLIC OF KOREA (QUESTION 5, S/C/W/431 ) 
Regarding the MFN exemption measure, "The nationals of countries other than Estonia are given 
preferential treatment when granting permits for entry, stay, and work in Estonia to natural persons 
providing services (other than essential persons as defined in I Horizontal com mitments in the 
Schedule of Specific Commitments of Estonia on trade in services) on the basis of reciprocity 
established by agreements between Estonia and these countries.", please confirm if the exemption 
measure pertains to measures affecting natural pe rsons seeking access to the employment market, 
which are carved out by paragraph 2 of Annex on Movement of Natural Persons Supplying Services 
under the Agreement.  
 
Answer from the European Union:  
The measures underlying the exemption cover both situations relevant to the supply of services 
under mode 4 and situations relating to access to the employment market in the EU.  
 
3  QUESTION FROM THE REPUBLIC OF KOREA (QUESTION 6, S/C/W/431 ) 
Regarding the MFN exemption measure, "For citizens of Commonwealth countries with a grandparent 
born in the UK, the UK waives the requirement for a work permit in all services sectors.", please  
confirm if the exemption measure pertains to measures affecting natural persons seeking access to  S/C/W/451  
 
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  the employment market, which are carved out by paragraph 2 of Annex on Movement of Natural 
Persons Supplying Services under the Agreement.  
 
Answer from the E uropean Union:  
Please refer to the reply provided by the United Kingdom to questions 33 and 34.  
 
4  QUESTION FROM THE REPUBLIC OF KOREA (QUESTION 7, S/C/W/ 431) 
Regarding the MFN exemption measures, "Measures based on existing or future bilateral agreements 
between the European Communities and San Marino, Monaco, Andor ra, Vatican City State and the 
countries and principalit ies concerned, providing for: b) waiving the requirement of work permits for 
natural persons supplying services", please confirm if the exemption measures pertain to measures 
affecting natural persons seeking access to the employment market, which are carv ed out by 
paragraph 2 of Annex on Movement of Natural Persons Supplying Services under the Agreement.  
 
Answer from the European Union:  
The measures underlying the exemption cover both situations relevant to the supply of services 
under mode 4 and situation s relating to access to the employment market in the EU.  
 
5  QUESTION FROM THE REPUBLIC OF KOREA (QUESTION 8, S/C/W/431 ) 
Regarding the MFN exemption measures, "Measures based upon bilateral agreements between Italy 
and third countries guaranteeing work permits for seasonal workers", please confirm if the 
exemption measures pertain to measures affecting natural persons seeki ng access to the 
employment market, which are carved out by paragraph 2 of Annex on Movement of Natural Persons 
Supplying Services under the Agreement.  
 
Answer from the European Union:  
The measures underlying the exemption cover both situations relevant t o the supply of services 
under mode 4 and situations relating to access to the employment market in the EU.  
 
6  QUESTION FROM THE REPUBLIC OF KOREA (QUESTION 9, S/C/W/431 ) 
Regarding the MFN exemption measures, "Measures based upon bilateral agreements between 
Community Member States and European and Mediterranean countries guaranteeing work permits, 
for the purposes of temporary contract work, on the basis of contracts between an employer of the 
third country concerned and a company in the Member State concerned, and whi ch permit limited 
numbers of workers from the countries concerned to be employed in certain service sectors;  the 
numbers are subject to variation according to criteria established in the agreement.", please confirm 
if the exemption measures pertain to meas ures affecting natural persons seeking access to the 
employment market in the forms of employment contracts, which are carved out by paragraph 2 of 
Annex on Movement of Natural Persons Supplying Services under the Agreement, not in the forms 
of services su pplying contracts.  
 
Answer from the European Union:  
The measures underlying the exemption cover both situations relevant to the supply of services 
under mode 4 and situations relating to access to the employment market in the EU.  
 
7  QUESTION FROM HONG KONG, CHINA (QUESTION 10, S/C/W/431 ) 
This exemption was removed in the revised offer for the Doha round negotiation.  In this regard, 
please advise whether the conditions which created the need for the exemption still prevail. For 
Sweden, the exemption appears to be stemmed from bilateral investment treaty which should 
already be covered by GATS Article V exception. Please exp lain the need for maintaining this 
exemption.  
 S/C/W/451  
 
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  Answer from the European Union:  
The conditions which created the need for the exemption still prevail. The main reason for the 
exemption is related to funding. For information, the Nordic Investment Bank is a mandate driven 
international financial institution. All of its financing is provided with a view to promoting that 
mandate both within its member countries and outside. As an international financial institution, the 
decision whether to grant finance or not  is in the discretion of its governing bodies and for this 
reason the exemptions have been obtained and maintained.  
 
8  QUESTION FROM HONG KONG, CHINA (QUESTION 29, S/C/W/431 ) 
This exemption was removed in the revised offer for the Doha round negotiation.  In this regard, 
please advise whether the conditions which created the need for the exemption still prevail.  For 
Sweden , the exemption appears to be stemmed from bilateral investment treaty which should 
already be covered by GATS Article V exception.  Please explain the need for maintaining this 
exemption.  
 
Answer from the European Union:  
The conditions which created the need for this exemption continue to prevail. Amongst other, these 
agreements include provisions on maritime transport introducing non -discriminatory treatment for 
international maritime transport services.  
 
9  QUESTION FROM THE REPUBLIC OF KOREA (QUESTION 50,  S/C/W/431 ) 
Regarding the reciprocity -based MFN exemption measure under publishing, "Foreign participation in 
compani es in Italy exceeding 49% of the capital and voting rights, subject to a condition of 
reciprocity.", we wonder whether this exemption is based on any international agreements.  
 
Answer from the European Union:  
The exemption is not directly based on any int ernational agreement. However, the EU cultural policy 
builds on the commitments and principles set out in the 2005 UNESCO Convention on the Protection 
and Promotion of the Diversity of Cultural Expressions. This exemption is also based on Italian 
domestic legislation (Law 416/1981, Article 1 and subsequent amendments).  
 
10  QUESTION FROM THE REPUBLIC OF KOREA (QUESTION 62, S/C/W/431 ) 
Regarding the MFN exemption measure, "Preferential treatment of audiovisual works meeting 
European origin criteria regarding screen time access", we wonder whether this exemption is based 
on any international agreements.  
 
Answer from the European Union:  
The exemption is not directly based on any international agreement. However, the EU cultural policy 
builds on the commitments and principles set out in the 2005 UNESCO Convention on the Protection 
and Promotion of the Diversity of Cultural Expressions.  
 
11  QUESTION FROM HONG KONG, CHINA (QUESTION 63, S/C/W/431 ) 
We note that the two exemptions mentioned apply  to "Parties to the Council of Europe Convention 
on Transfrontier Television or other European countries with whom an agreement may be concluded" 
and "European countries" respectively.  Please explain whether the conditions which created the need 
for such e xemptions still prevail after Croatia has become EU member state since 2013.  Please 
provide a list of countries who are not EU member states and to which these exemptions apply.  
 
Answer from the European Union:  
The conditions which created the need for suc h exemptions still prevail after Croatia has become an 
EU Member State, in line with corresponding exemptions applying to the rest of the EU.  
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  12  QUESTION FROM JAPAN (QUESTION 64, S/C/W/431 ) 
Please explain which countries are included in "European countries".  
 
Answer from the European Union:  
For the purpose of EU law, the definition of "European works" refers to the parties  to the European 
Convention on Transfrontier Television of the Council of Europe (Directive 2010/13/EU, Article 1, 
paragraph (n)(ii)).  
 
13  QUESTION FROM THE REPUBLIC OF KOREA (QUESTION 65, S/C/W/431 ) 
Regarding the MFN exemption measure under distribution of audiovisual works, "Redressive duties 
which may be imposed in order to respond to unfair pricing practices, by certain third countries 
distributors audiovisual works.", please elaborate on or specify 'unfair pricing practices'.  
 
Answer from the European Union:  
There is no established definition in EU case law for the purpose of this exemption.  
 
14  QUESTION FROM THE RE PUBLIC OF KOREA (QUESTION 66, S/C/W/431 ) 
Regarding the MFN exemption measures, "Measures taken to prevent, correct o r counterbalance 
adverse, unfair or unreasonable conditions or actions affecting EC audiovisual services, products or 
service providers, in response to corresponding or comparable actions taken by other Members.", 
please elaborate on or specify 'adverse, u nfair or unreasonable conditions or actions'.  
 
Answer from the European Union:  
There is no established definition in EU case law for the purpose of this exemption.  
 
15  QUESTION FROM JAPAN (QUESTION 67, S/C/W/431 ) 
Please explain which countries are included in "European countries".  
Answer from the European Union:  
For th e purpose of EU law, the definition of "European works" refers to the parties to the European 
Convention on Transfrontier Television of the Council of Europe (Directive 2010/13/EU, Article 1, 
paragraph (n)(ii)).  
 
16  QUESTION FROM THE REPUBLIC OF KOREA (QUESTI ON 68, S/C/W/431 ) 
Regarding the reciprocity -based MFN exemption measure under television and radio broadcasting 
services, "Foreign participation in companies in Italy exceeding 49% of the capital and voting rights, 
subject to a condition of reciprocity.", we wonder if this exemption is based on any international 
agreements.  
 
Answer from the European Union:  
The exemption is not directly based on any international agreement. However, the EU cultural policy 
builds on the commitments and principles set out in the 2005 UNESCO Convention on the Protection 
and Promotion of the Diversity of Cultural Expressions.  
 
17  QUESTION FROM TH E REPUBLIC OF KOREA (QUESTION 70, S/C/W/431 ) 
Regarding the MFN exemption measure under motion picture and video tape production and 
distribution services, "Preferential treatment of audiovisual works, including preferential access to 
funding ", we wonder whether this exemption is based on any internat ional agreements.  
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  Answer from the European Union:  
The exemption is not directly based on any international agreement. However, the EU cultural policy 
builds on the commitments and principles set out in the 2005 UNESCO Convention on the Protection 
and Prom otion of the Diversity of Cultural Expressions.  
 
18  QUESTION FROM THE REPUBLIC OF KOREA (QUESTION 71, S/C/W/431 ) 
Regardi ng the MFN exemption measure, "Preferential treatment of audiovisual works meeting 
European origin criteria regarding screen -time access.", we wonder whether this exemption is based 
on any international agreements.  
 
Answer from the European Union:  
The exem ption is not directly based on any international agreement. However, the EU cultural policy 
builds on the commitments and principles set out in the 2005 UNESCO Convention on the Protection 
and Promotion of the Diversity of Cultural Expressions.  
 
19  QUESTION F ROM SWITZERLAND (QUESTION 82, S/C/W/431 ) 
We note the growth and development of the Austrian financial services secto r since the inscription 
of the MFN reservation in 1994. Could you indicate whether an economic needs test is still applied 
and if so, whether it is applied on a discriminatory basis (reciprocity) as outlined in the exemption?  
 
Answer from the European Union:  
The exemption was taken because it was not possible to conclude the financial services negotiations 
in 1993. The original aim was to ensure competitive opportunities for Austrian financial services 
providers equivalent to those offered to f oreign suppliers by Austrian law (reciprocity). In the 
meantime, and after the conclusion of the post Uruguay Round negotiations on financial services in 
1997 respectively, the entry into force of the Fifth Protocol to the GATS in 1999 the exemption has 
ceased to have any practical relevance.  
 
20  QUESTION FROM HONG KONG, CHINA (QUESTION 83, S/C/W/431 ) 
As the list of countr ies to which the measure applies is subject to further consideration, would Austria 
or the European Union provide an updated list?  As regards the column on "the conditions creating 
the need for the exemption", it is stated that countries not indicated in t he above list are presumed 
not to offer competitive opportunities and effective market access to Austrian service suppliers, are 
there any objective criteria to determine the above list?  
 
Answer from the European Union:  
The exemption was taken because it w as not possible to conclude the financial services negotiations 
in 1993. The original aim was to ensure competitive opportunities for Austrian financial services 
providers equivalent to those offered to foreign suppliers by Austrian law (reciprocity). In t he 
meantime, and after the conclusion of the post Uruguay Round negotiations on financial services in 
1997 respectively, the entry into force of the Fifth Protocol to the GATS in 1999 the exemption has 
ceased to have any practical relevance.  
 
21  QUESTION FROM  THE REPUBLIC OF KOREA (QUESTION 84, S/C/W/431 ) 
Regarding the reciprocity -based MFN exemption measure under licensing  of branches or subsidiaries 
of foreign financial service suppliers, "The requirement of an economic interest test bound in the 
Austrian Schedules is waived for countries indicated in column 3)", we wonder whether this 
exemption is based on any internation al agreements.  
 
Answer from the European Union:  
The exemption was taken because it was not possible to conclude the financial services negotiations 
in 1993. The original aim was to ensure competitive opportunities for Austrian financial services S/C/W/451  
 
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  providers equivalent to those offered to foreign suppliers by Austrian law (reciprocity). In the 
meantime, and after the conclusion of the post Uruguay Round negotiations on financial services in 
1997 respectively, the entry into force of the Fifth Protocol to the G ATS in 1999 the exemption has 
ceased to have any practical relevance.  
 
22  QUESTION FROM HONG KONG, CHINA (QUESTION 94, S/C/W/431 ) 
This exemption was removed in the revised offer for the Doha round negotiation.  In this regard, 
please advise whether the conditions which created the need for the exemption still prevail.  It is 
noted that the exemption applies to Switzerland based on a bilateral agreement but Switzerland has 
not scheduled the same exemption, please advise whether it is still necessary to maintain this 
exemption.  
 
Answer from the European Union:  
The agreement between the EU and Switzerland on non -life insurance is in force. The conditions 
which created the need for this exemption continue to prevail.  
 
23  QUESTION FROM THE REPUBLIC OF KOREA (QUESTION 96, S/C/W/431 ) 
Regarding the reciprocity -based MFN exemption measure, "The opening of branches or agencies of 
foreign banks may be subject to reciprocity.", we wonder whether this exemption is based on any 
international ag reements.  
 
Answer from the European Union:  
Hungarian legislation includes the conditions on establishment of branches as well as commercial 
representations of foreign -based enterprises in Hungary (Act CXXXII of 1997 on Branches and Act 
CCXXXVII of 2013 on Credit Institutions and Financial Enterprises). We note that in the GATS, the 
OECD agreement, and in the European Agreement promulgated by Act I of 1994, we undertook 
obligations to provide national treatment for enterprises with headquarters in other Stat es Parties 
to these agreements, creating non -discriminatory rules in Hungary to enable establishment for 
economic purposes, i.e., the establishment and operation of subsidiaries, branches, commercial 
representatives.  
 
24  QUESTION FROM SWITZERLAND (QUESTION 97, S/C/W/431 ) 
A reciprocity requirement is reserved for all financial services provided under mode 3.  We note that, 
in practice, Hungary generally has open regulation for financial service suppliers. In the period since 
the last review, has Hungary applied a reciprocity requirement? Document GATS/EC/157 dated 
7 May 2019 notes on page 118 that "Legislation per mitting market access of branches is currently 
being prepared". What is the legal reference for this new legislation and does it foresee a reciprocity 
requirement for branches?  
 
Answer from the European Union:  
Hungarian legislation includes the conditions on establishment of branches as well as commercial 
representations of foreign -based enterprises in Hungary (Act CXXXII of 1997 on Branches and Act 
CCXXXVII of 2013 on Credit Institutions and Financial Enterprises). We note that in the GATS, the 
OECD agreem ent, and in the European Agreement promulgated by Act I of 1994, we undertook 
obligations to provide national treatment for enterprises with headquarters in other States Parties 
to these agreements, creating non -discriminatory rules in Hungary to enable es tablishment for 
economic purposes, i.e., the establishment and operation of subsidiaries, branches, commercial 
representatives.  
 
25  QUESTION FROM JAPAN (QUESTION 118, S/C/W/431 ) 
Please explain what kind of assessment has been taken to determine which countries are not offering 
equal market access possibilities to Slovak service providers and when will the new Act on Banks be 
adopted?  
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  Answer from the European Union:  
This measure is no longer in force. The new Act on Banks has been in force since 1 January 2002.  
 
26  QUESTION FROM THE REPUBLIC OF KOREA (QUESTION 126, S/C/W/431 ) 
Regarding the reciprocity -based MFN exemption measure under news agency services, "Foreign 
participation in companies in France publishing publications in the French l anguage exceeding 20% 
of the capital or of voting rights in the company, subject to a condition of reciprocity.", we wonder 
whether this exemption is based on any international agreements.  
 
Answer from the European Union:  
The exemption is not directly base d on any international agreement. However, the EU cultural policy 
builds on the commitments and principles set out in the 2005 UNESCO Convention on the Protection 
and Promotion of the Diversity of Cultural Expressions.  
 
27  QUESTION FROM THE REPUBLIC OF KOREA (QUESTION 127, S/C/W/431 ) 
Regarding the reciprocity -based MFN exemption measure u nder press agency services, "Market 
access in France.  Subject to a condition of reciprocity.", we wonder whether this exemption is based 
on any international agreements.  
 
Answer from the European Union:  
The exemption is not directly based on any internatio nal agreement. However, the EU cultural policy 
builds on the commitments and principles set out in the 2005 UNESCO Convention on the Protection 
and Promotion of the Diversity of Cultural Expressions.  
 
28  QUESTION FROM HONG KONG, CHINA (QUESTION 131, S/C/W/431 ) 
In response to the question on the preferential treatment and the list of countries that Bulgaria has 
cargo sharing  agreements with, the European Union in the last review replied that the termination 
of the exemptions in question should be evaluated during the market access negotiations. Would 
Bulgaria or the European Union elaborate more on the details of the preferen tial treatment and the 
list of countries to which these exemptions apply?  Do the conditions creating the need for the 
exemption still prevail?  
 
Answer from the European Union:  
The position on this matter remains unchanged. As set out in Bulgaria 's list of Art. II exemptions, 
Bulgaria scheduled an MFN exemption to guarantee "equality in freight liftings originating in the 
ports of partners to the agreement and equality in freight earnings ". The MFN exemption was listed 
to apply to "India and other countries with which bilateral cargo sharing agreements are or will be 
concluded ". Any re -evaluation regarding the termination of this and other exemptions should take 
place in the context of market access negotiations.  
 
29  QUESTION FROM SWITZERLAND (QUESTION  132, S/C/W/431 ) 
According to the United Nations Treaty Collection website (UNTC) it would appear that Bulgaria 
denounced UN Convention on a Code of Conduct on Liner Conference in 2008 with effect on 
22 December 2009. Could you provide an update on the status of Bulgaria's relation to this treaty 
and the consequence, if any, for this MFN exemption?  
 
Answer from the Eur opean Union:  
Bulgaria 's relation to this treaty has not changed since 2009. The conditions which created the need 
for this exemption still prevail.  
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  30  QUESTION FROM THE REPUBLIC OF KOREA (QUESTION 136, S/C/W/431 ) 
Regarding the reciprocity -based MFN exemption measures under rental/leasing services without 
operators, relating to ships and rental of vessels with crew, "Chart ering in of foreign ships by 
consumers resident in Germany may be subject to condition of reciprocity.", we wonder whether 
this exemption is based on any international agreements.  
 
Answer from the European Union:  
This exemption is based on German domestic legislation (§ 2 Verordnung über die Küstenschifffahrt 
vom 05.07.2002).  
 
31  QUESTION FROM THE REPUBLIC OF KOREA (QUESTION 150, S/C/W/431 ) 
Regarding the reciprocity -based MFN exemption measure, "Exemption from vehicles tax under 
certain conditions on the grounds of de facto reciprocity limited to vehicles registered in the countries 
indicated in column 3).", we wond er whether this exemption is based on any international 
agreements and also whether the conditions which created the need for this exemption still prevail 
and if so, please specify them.  
 
Answer from the European Union:  
The Austrian motor vehicle tax law s tates "Exempt are … motor vehicles belonging to persons who 
are granted tax exemption on the basis of international treaties, declarations of reciprocity or 
otherwise in accordance with the principles of intergovernmental tax law or who are granted tax 
exemption on the basis of reciprocity actually granted. " There are treaties (e.g.  Convention on the 
Taxation of Road Vehicles for Private Use in International Traffic, Convention on the Taxation of Road 
Vehicles Engaged in International Goods Transport) and a lso European Union law, from which 
specific exemptions arise. These legal instruments are still in place.  
 
32  QUESTION FROM THE REPUBLIC OF KOREA (QUESTION 152, S/C/W/431 ) 
Regarding the MFN exemption measure under road transport services - freight, "Authorization for 
the establishment of a commercial presence in Spain may be refused to service suppliers, whose 
country of o rigin does not accord effective market access to Spanish service suppliers.", we wonder 
whether the conditions which created the need for this exemption still prevail and if so, please specify 
them.  
 
Answer from the European Union:  
The conditions for this exemption still prevail as it is based on Spanish domestic legislation ( Ley 
16/1987, de 30 de julio, de Ordenación de los Transportes Terrestres ). 
 
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