RESTRICTED  
  
S/C/ W/370  
 
6 January 2017  
(17-0081) Page: 1/5 
Council for Trade in Services  Original: English  
 
COMMUNICATION FROM H ONG KONG, CHINA  
REVIEW O F ARTICLE II (MFN) EXEMPTIONS  
Questions from Hong Kong, China  
The following communication, dated 29 December  2016, from the delegation of Hong Kong, China 
is being circulated to the Members of the Council for Tra de in Services.  
 
 
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Recalling t he MFN principle is the cornerstone of the WTO system , any MFN exemptions under 
Article II: 2 of the GATS, as the name implies, must be the exceptions, and such exemptions 
should not be maintained  for an indef inite period.  
 
In light of that, t he Annex on Article II Exemptions of the GATS mandates the Council for Trade in 
Services to review all exemptions granted for a period of more than five years and the review 
shall, among others, examine whether the conditi ons which created the need for such exemptions 
still prevail.  
 
For the purpose of the review of the MFN exemptions by the Council for Trade in Services  in 
accordance with the Annex on Article II Exemptions of the GATS , we would request the Members 
concerne d to provide answers to the  following questions in respect of their MFN exemptions.  
 
1  GENERAL QUESTIONS  
1.1.  For each of the MFN exemptions listed in the Secretariat ’s sectoral compilation 
(JOB/SERV/29 /Rev.1 ), we would appreciate  if all Members maintaining any M FN exemptions  would 
respond to the following general questions by the delegation of Hong Kong, China : 
Q1 Please indicate whether the exemption has been used for any actual measure since the 
previous review in 20 10/11, and if so provide information on the u se. 
 
Q2  The intended duration for the following MFN exemptions has already expired or should  have 
expired.  Please advise if there is any plan to remove them from the MFN exemption list.  If not, 
please explain why these exemptions have to be maintained.  
 
Member  MFN Exemption  
(page number in JOB/SERV/29 /Rev.1 ) 
Cyprus  All sectors  (page 6) 
Thailand  Treaty of Amity and Economic Relations (page 34)  
Malaysia  Advertising services (page 51)  
Bangladesh  Telecommunication services – international services (page  
53, two entries)  
European Union  Financial services (page 113)  
Mauritius  Financial services (page 115)  
Cameroon  Maritime transport: coastal shipping (cabotage) trade  (page 
132) S/C/W /370 
 
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  Member  MFN Exemption  
(page number in JOB/SERV/29 /Rev.1 ) 
Congo  Maritime transport: coastal shipping (cabotage) trade  (page 
135) 
Côte d'Ivoire  Maritime transport: coastal shipping (cabotage) trade  (page 
137) 
Gabon  Maritime transport: coastal shipping (cabotage) trade (page 
138) 
Mali Maritime transport: coastal shipping (cabotage) trade (page 
140) 
Niger  Maritime transport: coastal sh ipping (cabotage) trade (page 
142) 
Senegal  Maritime transport: coastal shipping (cabotage) trade (page 
145) 
Thailand  International maritime transport of cargoes (page 149, three 
entries)  
Viet Nam  Maritime transport (page 154)  
Ukraine  Internal waterways  transport - passenger  and freight 
transportation (page 158)  
Moldova, Republic of  Selling and marketing of air transport services (page 163)  
 
Q3  The following exemptions appear not MFN inconsistent, e.g. covered by GATS Article V 
exception, covered by g eneral exceptions in GATS, outside the scope of GATS, etc.  Please explain 
the rationale for maintaining such an exemption.  
 
Member  MFN Exemption  
(page number in 
JOB/SERV/29 /Rev.1 ) Questions  
El Salvador  All sectors (page 9)  Is the concern already covered  by  
GATS Article V exception?  
European Union  All sectors, 1st and 3rd entries 
(page  11) Work permit requirement alone 
should not constitute an MFN 
breach if it is simply an 
immigration measure.  Is there 
any other reason for the 
exemptio n? 
Guatemala  All sectors (page 13) and all sectors, 
entries No. 4 and No. 5 (page 14)  Is the concern already covered by 
GATS Article V ex ception?  
Honduras  All sectors (page 15)  Is the concern already covered by 
GATS Article V ex ception?  
Jamaica  All sectors (page 16)  Work permit requirement alone 
should not constitute an MFN 
breach if it is simply an 
immigration measure.  Is there 
any other reason for the 
exemption?  
Liechtenstein  All sectors (page 19)  Granting permit of temporary stay 
and permanent residency alone 
should  not constitute an MFN 
breach if it is simply an 
immigration measure.   Is there 
any other reason for the 
exemption?  
Switzerland  All sectors (page 31)  Granting permit of temporary stay 
and permanent residency alone 
should not constitute an MFN 
breach if i t is simply an 
immigration measure.  Is there 
any other reason for the 
exemption?  
Georgia  Fishing related services (page 51)  Why fish catch is considered as 
services?   S/C/W /370 
 
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  Member  MFN Exemption  
(page number in 
JOB/SERV/29 /Rev.1 ) Questions  
Indonesia  Construction services (government 
funded projects) (page 106)  Does the meas ure fall under 
government procurement?  
Cyprus  Human health services (page 125)  Is the concern already covered by 
general exceptions ? 
Canada  Air Transport - aircraft repair and 
maintenance services provided by 
service suppliers located outside of 
Canada ( page 160)  Is the concern already covered by 
GATS general exceptions?  
 
 
2  SPECIFIC QUESTIONS ON HORIZONTAL EXEMPTIONS  
2.1.  Hong Kong, China would like to request the Members concerned respond to the following 
specific questions  (see JOB/SERV/29 /Rev.1 for the rele vant page number reference ): 
Q4 Brunei Darussalam (page 3 , 1st entry ), Malaysia (page 22) :  Foreign  equity cap, which  
is usually applied on a non -discriminatory basis, is one of the very common trade barriers.  In this 
regard, we would like to know the rea son for applying discriminatory treatment.  Please illustrate, 
with examples of existing measures, how those discriminatory measures could achieve the policy 
goal of match ing specific development requirements with the abilities and facilities provided by 
foreign enterprises and their home countries  and maximis ing economic benefits of foreign 
participation in your economy .  In particular, w e note that in the last review Malaysia stated that it 
had not taken any discriminatory measures against any Member unde r this exemption.  On this 
basis, we would like to know whether this exemption is necessary and if Malaysia would consider 
removing this exemption.  
 
3  SPECIFIC QUESTIONS ON SECTOR AL EXEMPTIONS  
3.1.   Furthermore, we would appreciate the Members concerned  could re spond to the following 
specific questions  (see JOB/SERV/29 /Rev.1 for the relevant page number reference ): 
Business Services  
Q5 Costa Rica  (page 45):  How this reciprocal arrangement  could ensure the minimum 
standards of quality for professional services?  Did Costa Rica conduct any review on the 
effectiveness of this reciprocal arrangement?  
 
Q6 New Zealand  (page 51):  Other than Japan, which countries are currently covered under 
such arrangement?  What conditions will New Zealand take into account when givi ng more 
favourable entry to nationals of any countries?  
 
Telecommunication Services  
Q7 Argentina (page 53):  Having regard to the development of the telecommunications 
market in the past decade, please advise whether the condition for this exemption (i.e. 
development of domestic satellite systems) is still valid.  If so, did Argentina conduct any review 
on the effectiveness of the reciprocity arrangement in the development of domestic  satellite 
systems?  Are there any other factors that would be more effect ive in promoting the development 
of domestic  satellite systems?  
 
Q8 Colombia (page 54):  In the past twenty years, progressive liberalisation has taken place 
in the telecommunications sector all over the world.  Such liberalisation has delivered tremendous  
benefits to businesses and consumers.  In this regard, did Colombia conduct any review to 
evaluate whether such preferential treatment limited to Andean Group countries was beneficial  to 
Colombia ’s economy?  Would Colombia consider extending the treatment  to all WTO Members?  
 S/C/W /370 
 
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  Financial  Services  
Q9 Austria (page 108) : Please provide a list of countries to which this exemption is applied.  
Is this list subject to periodic review?  If so, what kind of assessment has been taken to determine 
the countries on th e list are not offering competitive opportunities and effective market access to 
Austrian service suppliers?  
 
Q10 Hungary (page 113) : Please provide a list of countries that are currently not eligible  for or 
denied MFN treatment as a result of the measure under this exemption.  What kind of assessment 
has been taken to determine which countries are not offering equal market access possibilities to 
Hungarian service providers?  
 
Q11 Israel (page 114) : Please provide a list of countries that are currently not eligible  for or 
denied MFN treatment as a result of the measure under this exemption.  What kind of assessment 
has been taken to determine which countries are not offering equal market access possibilities to 
Israeli banks?  
 
Q12 Peru (page 117) : Please ela borate, with existing measure and example, the meaning of 
national or public interest covered by this exemption.  
 
Q13 Philippines (page 117, all the three entries) : Please provide a list of countries that are 
currently not eligible  for or denied MFN treat ment as a result of the measures under the three 
exemptions.  Regarding the condition for the creation of the exemptions, does “full market access 
and national treatment ” refer to other Members ’ GATS commitments or their de facto regimes?  
 
Q14 Slovak Repub lic (page 120) : Please provide a list of countries that are currently not 
eligible  for or denied MFN treatment as a result of the measures under this exemption.  What kind 
of assessment has been taken to determine which countries are not offering equal mar ket access 
possibilities to Slovak service providers?  
 
Maritime Transport Services  
Q15 Brazil (page 131): Please provide an update on the list of countries that Brazil  has cargo 
sharing agreements with.   
 
Q16 Bulgaria (page 131): What kind of preferentia l treatment is awarded to countries which 
are parties to the UN Convention on a Code of Conduct on Liner Conference?  Is such preferential 
treatment stipulated  in the Convention, or in the laws of Bulgaria?  Regarding the cargo sharing 
agreements, could Bu lgaria provide an update on the list of countries that it has cargo sharing 
agreements with?   
 
Q17 India (page 140, 2nd entry): We note that in its revised conditional offer India has 
offered to terminate this MFN exemption  and India has indicated in the last review that the 
removal of this exemption was subject to the result of the DDA negotiations .  Does India still 
maintain any cargo reservation with any country under this exemption?  
 
Q18 Philippines (page 143, 2nd entry): Please provide information on the existing bilateral 
agreements covered by this exemption, the countries to which  these bilateral agreements appl y, 
and the expiry date of each of these agreements.  Please also elaborate on the meaning of "limited 
access " in the second column.  
 
Q19 Singapore (page 147): It is noted that Singapore will periodically review this exemption in 
the light of international developments.  Would Singapore please provide information about the 
latest review , including the timing of the review, the criteria used,  and the results?   We would also 
like to know if there are other bilateral shipping agreements signed since the last review.  Please 
provide details if there is any.  
 
Q20 Thailand (page 148) : In the last review, Thailand indicated that the measure relating to  
VAT collection on the selling and marketing of maritime transport services had been modified and 
it was no longer inconsistent with the MFN obligation in GATS.  In this regard, we would like to 
know if Thailand has any plan to remove this exemption.  
 S/C/W /370 
 
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  Road  Transport Services  
Q21 US (page 196): Do the conditions  for the need of this exemption  still valid?  If so, please 
illustrate the rationale behind.    
 
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