S/C/N/798  
18 March 2015  
(15-1559) Page: 1/2  
Council for Trade in Services  Original: English  
 
  NOTIFICATION PURSUANT TO ARTICLE III:3 OF THE 
WTO AGREEMENT ON TRADE IN SERVICES 
The following notification from the delegation of  the European Union, dated 16 March 2015, is 
being circulated to the Members of the Council for Trade in Services. 
 
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The following notification is made pursuant to GATS Article III:3 and relates to measures adopted 
by the European Union in 2014. Given that th ere is no common understanding among WTO 
Members on when a measure "significantly affects trade in services" within the meaning of GATS 
Article III:3 and that the European Union cannot make a positive determination on this issue, it is 
therefore notifying measures that may be relevant  to trade in services without prejudice to the 
interpretation of the phrase "significantly affect trade in services" in Article III:3. 
1  MEMBER NOTIFYING 
The European Union 2  NOTIFICATION UNDER ARTICLE(S) 
Article III, paragraph 3, of the General Agreement on Trade in Services 
3  DATE OF ENTRY INTO FORCE 
2 July 2014 4  AGENCY RESPONSIBLE FOR IMPLEMENTATION AND ENFORCEMENT OF THE MEASURE 
Member States of the European Union 
 5  DESCRIPTION OF THE MEASURE
* 
a) Full title of the EU act: 
 Directive  2014/59/EU of the European Parliament  and of the Council of 15 May 2014 establishing 
a framework for the recovery and resolution of credit institutions and investment firms and 
amending Council Directive 82/891/EEC, an d Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 
2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU an d 2013/36/EU, and Regulations (EU) 
No 1093/2010 and (EU) No 648/2012, of the European Parliament and of the Council. 
 
b) Brief summary of the content with a focu s on potential effect on services trade: 
 
Member States are to set up resolution authorities and equip them with the powers to deal with 
banks and large investment firms encountering varying degrees of financial stress, including their possible failure. Banks are required to prepare recovery plans to overcome financial distress; 
resolution authorities are required to prepare resolution plans for how banks would be restructured 
and their critical functions kept alive in the even t of their failure. Home and host authorities of 
cross-border groups would cooperate on ensuring coherent plans across groups, in a way which 
                                               
* Including international agreements, recognition measures or other types. S/C/N/798 
 
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  takes account of the interests and financial situation of jurisdictions. Authorities are also granted a 
range of powers to intervene in the operations of banks before they reach the point of failure. If a 
bank is failing or likely to fail, and no private sector alternative can avert failure, and when its failure would jeopardise the public interest, resolution would be triggered. The key objectives of 
resolution are to safeguard financial stability and ensure the continuity of banks’ critical functions, 
and to protect taxpayers and depositors. The owne rs and creditors of banks would bear losses in 
line with the hierarchy of claims in insolv ency. Depositors up to EUR 100 000 would remain 
unaffected. Resolution can be undertaken by way of several tools which can be used in 
conjunction: (i) sale of a bank’s entire or critical functions to a viable competitor; (ii) creation of a publicly controlled bridge bank; (iii) transfer  of bank assets and liabilities into an asset 
management vehicle; and (iv) bail-in of creditors to absorb losses and recapitalise the bank (write-
down of liabilities and their possible conversion to  equity). Banks are also to contribute to newly 
set up resolution funds based on their risk and f unding profile, to support the costs of resolution 
and provide short-term funding support.  
 
Regarding non-EEA countries, Member States may conclude international agreements regarding the recovery and resolution of individual institutions with relevant authorities, which may be 
complemented by framework agreements negotiat ed by the Commission and prepared by the 
European Banking Authority. Even without th ese agreements, Member States shall when 
necessary cooperate with third country authorities to recognise and give effect to resolution proceedings in relation to banks from these countri es with operations in their territory. They can 
refuse such recognition if for instance resolution proceedings in the non-EEA country do not 
provide for equal treatment of local creditors.  
The framework in its entirety is consistent with the international standards of the Financial 
Stability Board.  
6  MEMBERS SPECIFICALLY AFFECTED 
None 7  TEXTS AVAILABLE FROM 
 Other sources (address, fax and telephone of other body) 
 
EU Official Journal, available on line at:  
http://eur-lex.europa.eu/legal-content/EN/TX T/?uri=uriserv:OJ.L_ .2014.173.01.0190.01.ENG  
 
 
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