WORLD TRADE  
ORGANIZATION  WT/REG238/1 
9 May 2008 
 (08-2195) 
Committee on Regional Trade Agreements  
  
 
    
 
FACTUAL PRESENTATION 
 
Protocol of Montevideo on Trade in Services 
in the MERCOSUR 
 
Report by the Secretariat 
 
 
 
 
This report, prepared for the consideration of the Protocol on Montevideo on Trade in Services in the MERCOSUR has been drawn up by the WTO Secretariat 
on its own responsibility and in full consulta tion with the Parties.  The report has 
been drawn up in accordance with the ru les and procedures contained in the 
Decision for a Transparency Mechan ism for Regional Trade Agreements 
(WT/L/671).  
 
Any technical questions arising from this report may be 
addressed to Mrs. Maria Pillinini (tel: +41 22 739 5244) and Mr. Martin Roy 
(tel.: +41 22 739 6105).  WT/REG238/1 
 Page iii 
 
 
  TABLE OF CONTENTS 
 
 Page 
 
I. TRADE ENVIRONMENT 1  
II. CHARACTERISTIC ELEMENTS OF THE PROTOCOL 13  
A. B ACKGROUND INFORMATION  13 
B. S COPE AND DEFINITIONS  15 
C. D ENIAL OF BENEFITS  15 
D. G ENERAL PROVISIONS ON TRADE IN SERVICES  16 
1. Market access and na tional treatment 16  
2. MFN 17  
3. Movement of natural persons 17  
E. L IBERALIZATION COMMITMENTS  18 
1. Argentina 18  
(a) Horizontal commitments 18 
(b) Sector-specific commitments 18 
2. Brazil 19  
(a) Horizontal commitments 19 
(b) Sector-specific commitments 20 
3. Paraguay 22  
(a) Horizontal commitments 22 
(b) Sector-specific commitments 22 
4. Uruguay 23  
(a) Horizontal commitments 23 
(b) Sector-specific commitments 23 
F. R EGULATORY PROVISIONS  24 
1. Domestic regulation 24  
2. Recognition 24  
3. Subsidies 25  
4. Safeguards 25  
5. Other 25  
(a) Government procurement 25 
(b) Competition policy 26 
(c) Intellectual property rights 27 
G. S ECTOR -SPECIFIC PROVISIONS  27 
1. Financial Services 27  
2. Transport Services 28  
(a) Land and water transport services 28 
(b) Air transport services 28 
H. G ENERAL PROVISIONS  29 
1. Transparency 29  
2. Payments and capital movements 29  
3. Exceptions 29  
4. Accession 29  
5. Institutional Framework 30  
6. Dispute Settlement 31  
7. Relationship with agreements concluded by the Parties 34  
ANNEX I 36 
ANNEX II 38 
  WT/REG238/1 
 Page 1 
 
 
  PROTOCOL OF MONTEVIDEO ON TRAD E IN SERVICES IN THE MERCOSUR 
 
Factual Presentation by the Secretariat  
 
 I. TRADE ENVIRONMENT
1 
1. In 2006, MERCOSUR as a whole ranked 15th in world exports of commercial services 
(excluding intra-EU (25) trade) and 11th as regards imports.2  During the period 2001-2006, Argentina 
and Brazil have remained net importers of servi ces and Uruguay has been a net exporter;  as for 
Paraguay, trade figures that take into account "royalti es" place it as a net services exporter, but if these 
are disregarded, then Paraguay would qualify as a net services importer. 
2. In 2006, Argentina's exports of services reached US$7.2 billion and imports were 
US$8.1 billion, ranking it in the 48th and 50th position s in world exports and imports of services.  The 
evolution of Argentina's trade in services for th e period 2001-06, reported in Chart I.1, shows a 
significant drop in 2002 – by 25% for exports and 41% for imports compared to 2001.  Since the 
economic crisis in 2002, trade has increased consis tently and by 2006 exports had increased by 66% 
as compared to the 2001 level, while imports had re ached the 2001 level.  No figures have been made 
available regarding the trade vis-à-vis the other MERCOSUR Parties.   
 
012345678910
2001 2002 2003 2004 2005 2006US$billionChart I.1
Argentina, trade in services to world, 2001-06
Source: Ministry of Economy, Argentina.Total imports Total exports
Note:         Data on trade with MERCOSUR Parties were not provided by the Argentinian authorities.
 
 
 
                                                      
1 Aggregate figures in this section are from the WTO publications "International Trade Statistics 2007" 
and "Trade Profiles 2007".  These figures may therefore not match data provided by national authorities 
(reflected in particular in the Charts), in pa rticular due to the definition of "services". 
2 For trade in goods under the same basis, MERCOSUR ranks 13th both in exports and imports. WT/REG238/1 
Page 2  
 
  3. Argentina's services imports from the world increased by 33% between 2003 and 2005.  
Chart I.7, which reports average imports for 2003-05 by sectors, shows that two services sectors, namely travel and transportation, accounted for 63.4% of total imports, with business services and 
royalties accounting for an additional 11.8% and 7.8% of imports, respectively, with all others sectors 
and sub-sectors being below 5%.  The increase in im ports took place in all sectors and sub-sectors, 
with the exception of personal travel and cons truction;  transportation services were a major 
contributor to the increase in imports – almost doubling from 2003 to 2005 – while the largest increase was in maritime transport.   
4. Argentina's services exports to the world re gistered an increase of 41% between 2003 and 
2005.  Average exports for 2003-05 by sector in Char t I.7, indicate that the three main sectors were 
travel, transportation and business services, which t ogether represented 86.5% of total exports;  all 
other sectors or sub-sectors accounted for less than 5%  of exports.  Exports have increased in all 
sectors and/or sub-sectors with the exception of bus iness travel;  increases in real terms have been 
particularly important in travel, business and transportation services. 
5. Brazil is by far the largest MERCOSUR trader in services;  in 2006, imports and exports of 
services reached, respectively, US$26.9 and US$17 .9 billion, placing Brazil respectively in 27
th and 
32nd place in world trade.  For  2007, world imports of services am ounted to US$37.2 and exports to 
the world reached US$23.9 billion.  Char t I.2 shows that since 2002, trade vis-à-vis  the world and 
MERCOSUR increased constantly, with the excepti on of a decrease in exports towards MERCOSUR 
Parties in 2006 as compared to 2005.3  However, the ratio of Brazilian trade with MERCOSUR 
vis-à-vis  the world has decreased during that same period, and by 2006 it was at the level of 2.5% of 
imports and 1.1% for exports.  By 2007, world im ports and exports had increased by more than 250% 
compared to 2002 levels, illustrating the dynamism of the services sector in Brazil. 
 
                                                      
3 Statistics for trade in travel and transportation services by country are not available;  therefore, and 
throughout this section, Brazilian imports from and expo rts to MERCOSUR Parties do not include figures for 
these two sectors.  This is of particular importance given that they account for a significant percentage of 
Brazilian trade in services (around 40% in 2003-05).  WT/REG238/1 
 Page 3 
 
 
  0510152025303540
0.000.250.500.751.001.251.50US$billionChart I.2
Brazil, trade in services to world and MERCOSUR Parties*, 2001-07
  Source: Central Bank of Brazil.  
  * Trade with MERCOSUR excludes data on travel and transportation, for which a breakdown by country is not available.Imports from Mercosur
Exports to Mercosur Total exportsTotal imports Left hand scale: Right hand scale:US$billion
2001 2002 2003 2004 2005 2006 2007
 
 
6. As reflected in Chart I.7, Brazilian imports of business services and transportation accounted 
on average for 52.3% of 2003-05 imports, with travel  being the third largest importer (the relevant 
percentages are 29.5%, 22.7% and 17.3%, respectiv ely).  The major sub-sectors in business services 
were rental and leasing (more than half of the sector, 52.1%) and professional services (36.1%).  All sectors registered an increase in imports during th is period, with the exception of communication 
services which dropped by 69.2% between 2003 and 2005.   On the other extreme of the spectrum, 
imports of construction services have increased by a factor of six during the same period although in 
absolute terms they remained negligible. 
7. Chart I.7 shows that three sectors – business, tr avel and transportation – accounted for 83.9% 
of Brazilian exports to the world on average for the period 2003-05.  Balance-of-payments figures 
show that for the business sector, more than half of the exports were from architectural, engineering and other technical services, and installation, maintenance and rental of offices (representing 
respectively 54.8% and 36.3% of the total exports  of business services).  With the exception of 
communications and audiovisual services, exports by all other sectors and sub-sectors increased 
during this period;  in particular, revenues from professional services in 2006 were 26 times higher 
than in 2001, reaching 7.4% of total exports in 2006.  
8. The comparison of Brazil's trade in services by sector of activity vis-à-vis  MERCOSUR – 
reported in Charts I.3 and I.4 – and the world is difficult because a breakdown by country is not 
available for travel and transportation – sectors of  major importance in Brazilian trade.  Brazilian 
imports from MERCOSUR of business services were mainly focused on professional and distribution 
services (the former reaching three-quarters of the total), with rental and leasing services occupying 
the third position.  Royalties and licences constitu ted the second sector of importance as regards 
imports;  these were followed by computer and informatics and communication services, all of which have consistently reported an upward trend during the period anal ysed.  The profile of Brazilian WT/REG238/1 
Page 4  
 
  exports towards MERCOSUR  Parties is similar to that toward s the world, with business services 
largely concentrated in technical and professiona l services (between 80%-90% of business services 
exports in 2001-06).  During 2001-06, exports of co mputer and informatics services were subject to 
important fluctuations.  
0100200300400500600700800Million US$
2001 2002 2003 2004 2005 2006Chart I.3 
Brazil, imports from MERCOSUR Parties by sector of activity, 2001-06
Computer and informatics Communications Construction
Business services Royalties and licences Insurance
Other financ ial services Government services Personal, cultural and recreational services
Note:       Excluding data on travel and transportation, for which a breakdown by country is not available.
Source:  Brazilian Authorities.  
050100150200250Million US$
2001 2002 2003 2004 2005 2006Chart I.4 
Brazil, exports towards MERCOSUR Partie s by sector of activity, 2001-2006
Computer and informatics Communications Construction
Business services Royalties and licences Insurance
Other financial services Government services Personal, cultural and recreational services
Note:      Excluding data on travel and transportation, for which a breakdown by country is not available.
Source:  Brazilian Authorities.
 
9. Paraguay is the smallest of the MERCOSUR tr aders in services;  in 2006, imports from and 
exports to the world reached respectively US$ 406 and US$716 million, making Paraguay the world's  
143rd importer and 113th exporter of services.  During 2001-06, as shown in Chart I.5, exports of 
services to the world increased consistently growin g by 45.3% by 2006 compared to 2001 levels;   WT/REG238/1 
 Page 5 
 
 
  imports in 2006 were 8.8% above the 2001 level.  No figures have been made available regarding 
trade vis-à-vis  other MERCOSUR Parties.   
01002003004005006007008009001,000
2001 2002 2003 2004 2005 2006US$millionChart I.5
Paraguay, trade in services to world, 2001-06
Source: Departament of Informatics, Paraguay.Total imports Total exportsLeft hand scale:
Note:         Data on trade with MERCOSUR Parties were not provided by the Paraguayan au thorities.
 
 
 10. Chart I.7 shows that, of all of the MERCOSUR Parties, imports were least diversified in 
Paraguay, with two sectors – transportation and travel – accounting for around three-quarters of 
services imports in 2003-05.  Insurance accounted for an additional 13.1% of imports;  all the other 
sectors had a small participation in total trade.  It is worth noting the relatively small share of business 
services (4.1%) compared to that in other MERCOSUR Parties. 
11. Royalties and licences were by far the largest services sectors as regards exports, accounting 
for 33.2% of exports on average during 2003-05;  this can be explained by the very high revenue 
collected thorough the exploitation of electricity in the Itaipú and Yacyretá hydroelectric power 
stations.  Business services accounted for an add itional 30.6% of exports while transportation and 
travel accounted for 13.6% and 11% respectively.   
12. Uruguay's imports and exports of services in 2006 reached respectively US$885 and 
US$1,258 million, making it respectively the world's 116
th and 96th trader.  Chart I.6 shows a constant 
increase in trade in the period 2002-2007;  exports a nd imports have increased at similar rates in all 
years except in 2004, when exports registered a very  high increase.  In 2006, trade growth has slowed 
down but in 2007 both exports and im ports have increased by around 27% as compared to the 2006 
levels.  No figures have been made available regarding trade vis-à-vis  other MERCOSUR Parties. 
 
 WT/REG238/1 
Page 6  
 
  Chart I.6 
Uruguay, trade in services to world, 2001-07
-2004006008001,0001,2001,4001,6001,8002,000US$ million
Total imports Total exports2001 2002 2003 2004 2005 2006 2007
Note :        Data on trade with MERCOSUR Parties were not provided by the Uruguayan authorities.
Source:      Central Bank of Uruguay. 
 
 13. Chart I.7 illustrates that on th e basis of the average for 2003-05, around two-thirds of 
Uruguay's imports were in travel and transportation services, with business services being the third 
most important sector.  Compared to 2001 levels , imports of business services have shown the 
greatest increase (an increase of 240% between 200 1 and 2005);  other sectors where 2005 imports 
have bypassed the 2001 levels were transportati on, computer and information, and government 
services.  
  WT/REG238/1 
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  Chart I.7
MERCOSUR Parties, trade in services wi th the world by sector of activity, 
annual average 2003-05
Argentina's imports from the world A rgentina's export to the world
Source:  BOP statistics from national authorities.
Note:     Equivalent data for intra-MERCOSUR trade has not been provided by the Parties, with the exception of Brazil;  these 
are reflected in Charts I.3 and I.4.Per cent
Total:  US$6.7 billion Total:  US$5.3 billion
Total:  US$19 billion Total: US$13 billion
Total:  US$328.1 million Total:  US$589.9 millionParaguay's imports from the worldParaguay's exports to the worldBrazil's imports from the world Brazil's exports to the worldRoyalties 7.8
Business 11.8Other  2.4Personal 2.5
Communication 3.6
Trans portation 23.7Government 3.7Travel
44.2Financial 2.1 Other 3.8
Insurance 2.8
Travel 
39.7Computer 2.3
Total:  US$787.3 million Total:  US$1.1 billionUruguay's imports from the world Uruguay's exports to the worldTrans portation 21.5Business 20.8Computer 3.8Communication 3.3
Business 29.5
Transportation 22.7Travel 
17.3Government 7.2Computer 7.1Royalties 6.2Financial 3.5Insurance 3.4Other  3.1
Business 40.5
Travel 24.5Trans portation 19Governnment 7.7Financial 3.3Communication 2.4 Other  2.6
Transportation 53.2
Travel 
20.6Insurance 13.1Government 6.0Business 4.1 Other  3.0
Royalties 33.2
Business 30.6Transportation 13.6Travel 11.0Goverrnment 5.1Insurance 2.8Communication 2.4Other  1.3
Trans portation 44.1
Travel 
26.2Business 15.6Government 4.7Insurance 3.0Communication 2.4Other  3.9
Travel 
43.6
Trans portation 32.8Business 8.2Financial 5.4Computer 4.8Goverrnment 2.4 Other  2.8
 
 WT/REG238/1 
Page 8  
 
  14. Chart I.7 indicates that on the basis of th e average for 2003-05, Uruguay's two major 
exporting sectors were travel and transportation ser vices, with the latter taking the lead.  Business 
services came third and financial services,  excluding insurance, followed suit.
4  The most dynamic 
export sectors from 2001 to 2005 were computer and related services as well as business services, with exports in 2005 around five times those in 20 01;  together, they represented 13.2% of total 
exports in 2005.  On the other side of the sp ectrum, communication, personal and cultural services 
and insurance services saw a si gnificant loss in exports revenues in 2005 as compared to 2001. 
Chart I.7 indicates that on the basis of the average for 2003-05, Uruguay's two major exporting sectors were travel and transportation services, with the la tter taking the lead.  Computer and informatics or 
information came third and financial servi ces, excluding insurance, followed suit.  
15. As reflected in Chart I.8, the stock of foreign direct investment (FDI) in Argentina dropped by 
almost half between 2001 and 2002.  While FDI has increased consistently since then, by 2004 none 
of the sectors had achieved the FDI levels prev ailing in 2001.  Petroleum and manufacturing have 
suffered less from this disinvestment;  in servi ces, transport and communications were the only 
sectors where the fall had not reached 50%.   
0102030405060708090
2001 2002 2003 2004Chart I.8 
Argentina, Stock of FDI by economic activity, 2001-04
Manufacturing industry
Source:  DNCI - INDECTransport and communicationsUS$billion
Mining Commerce OtherPetroleumElectricity, gas and water Banks
 Note:       Provisional data for 2004.
 
 
  
                                                     
 
4 While aggregate numbers for the business sector as  a whole placed it as the third major export sector, 
if sectors are taken at a more disaggregate level computer and information would become the third major sector 
of exports for Uruguay.   WT/REG238/1 
 Page 9 
 
 
  16. Chart I.9 shows that FDI in Brazil has ma inly been directed towards services and 
manufacturing, with FDI in agriculture and mi ning being comparatively of minor importance.5  I n  
services, the stock of FDI was highest in transport and communications.  FDI stock increased by 147.1% between 1995 and 2000, and by 2007 it had tripled as compared to 2000.  Inward flows of FDI from 2001 to 2007 reached US$150.4, with manuf acturing, and transport and communications 
being the major recipients of FDI during that period.  Chart I.10 shows that FDI by MERCOSUR 
countries in Brazil represented around 3% of the st ock in 2000 and 1.65% of total FDI inward flows 
to Brazil.  Participation of MERCOSUR FDI inward flows has fluctuated between 0.8% and 1.8% of 
world FDI flows during 2001-07;  Uruguay and Argentina respectively accounted for around two-
thirds and one-third of this investment, while Paragua y has had negligible levels of FDI in Brazil.   
050100150200250
1995 2000 2001 2002 2003 2004 2005 2006US$ billion
Petroleum Mining Other agriculture Manufacturing
Electricity, gas, water Commerce Transport and communications Financial 
Other services All sectorsChart I.9
Brazil, FDI by economic activity, 1995-2006 and 2001-07
Stock
0510152025303540US$ billionInward flows
2001 2002 2003 2004 2005 2006 2007
Note:     Data on "stock" only includes equity capitals;  it does not include intercompany loans and real state acquisitions.  
              Data on "inward flows" include inflows of investment, and convertion of loans and financing of direct investment.
Source:  Brazilian Central Bank. 
 
   
                                                     
 
5 The Census of Foreign Capitals in Brazil considers, in measuring FDI position, only equity capital 
(excluding intercompany loans and real estate acquisitions);  figures reflected in this document are therefore 
based on that definition. WT/REG238/1 
Page 10  
 
  0.000.250.500.751.001.251.501.752.002.252.502.753.00
1995 2000050100150200250300350400
2001 2002 2003 2004 2005 2006 2007Chart I.10
Brazil, FDI from MERCOSUR countries, 1995-2000 and 2001-07
StockInward flows
Argentina
Source: Brazilian Central Bank.Paraguay UruguayUS$billion US$million
 
 
 
17. Chart I.11 shows that FDI stock in Paraguay decreased significantly in 2002;  from 2003 
onwards, it has increased and by 2006 it had more than doubled as compared to 2003 levels.  FDI 
from MERCOSUR countries during the period under review represented around 20% of Paraguay's  
total FDI;  in 2006 this ratio  had reached its highest level of 23%, with FDI by MERCOSUR 
amounting to US$360.1 million.  Data for FDI by activity, available only for the period 2004-06, 
indicate that services were the most attractive sect or, and one where flows and stock consistently 
increased during 2004-06;  during that same period, negative inflows of FDI were registered for the 
other two sectors of economic activity. 
  WT/REG238/1 
 Page 11 
 
 
  00.20.40.60.811.21.41.61.8
2001 2002 2003 2004 2005 2006US$ billion
Agriculture and mining Manufacturing Services All sectors-40-20020406080100120140160Chart I.11 
Paraguay, FDI by sector of activity, 2001-06
StockFlows
US$million
  Note:      Provisional data for 2004.
  Source:  Central Bank of Paraguay.200420052006
 
 
18. Uruguay's stock of FDI, as reflected in Chart I. 12, has consistently increased;  in 2006, stocks 
represented three times those in 2002.6  The increase was particularly marked in 2006 compared to 
2005 – 47.3%;  however, the absence of data on FDI by activity or by origin does not permit a more 
in-depth analysis of the increase.   As indicated in Chart I.13, for the period 2001-2005, around one 
fifth of FDI flows into Uruguay originated from other MERCOSUR countries, in particular Argentina;  the ratio of FDI flows from MERCOSUR vis-à-vis  the rest of the world has decreased in 
2002-2003 but has followed an upward trend in 2004-20 05.  As regards flows of FDI by sector of 
activity, agriculture and hotels and restaurant ha ve been the major recipients of FDI during 
2001-2005.  While only one sector – namely elect ricity, gas and water – has registered a 
disinvestment – though minimum (-0.4%) – duri ng that period, few other sectors, including 
agriculture, have registered negative flows  in one of the years under consideration. 
 
                                                     
 
6 As of 2003, FDI figures also include investment in land. WT/REG238/1 
Page 12  
 
  Chart I.12 
Uruguay, FDI Stock and flows from the world, 2001-06
0.00.51.01.52.02.53.03.54.04.5
2001 2002 2003 2004 2005 2006Thousand US$
Stock FlowsNote: From 2003 ownwards, includes investment in land.
Source:  Central Bank of Uruguay.
 
 
-1000100200300400500600700800
2001 2002 2003 2004 2005Flows by origin
Argentina Brasil Paraguay Rest of the worldChart I.13
Uruguay, FDI flows by country of origin and by economic activity, 2001-2005
Flows by sector of activity
-1000100200300400500600700800900
2001 2002200320042005Thousand 
US$
Agriculture Manufacturing
Electricity, gas, water Construction
Commerce Hotels and restaurants 
Transport and communications Financial 
Business services Other 
 
 
 
   WT/REG238/1 
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  II. CHARACTERISTIC ELEMENTS OF THE PROTOCOL 
A. BACKGROUND INFORMATION  
19. The Protocol of Montevideo on Trade in Services in the MERCOSUR – the Southern 
Common Market comprising Argentina, Brazil, Para guay and Uruguay (hereinafter "the Protocol") 
was signed by the Parties on 15 December 1997;  its Annexes and the Parties' initial lists of specific 
commitments were adopted on 23 June 1998.7  The Protocol along with initial lists entered into force 
on 7 December 2005, following ratification by three of the Parties, namely Argentina, Brazil and 
Uruguay.8   
20. The Protocol is one of the legal instruments concluded under the auspices of the Treaty of 
Asunción which established MERCOSUR.  The Asunción Treaty, in force since November 1991, 
aims at creating a common market with free movement of goods, services, and persons;  its first step, 
the implementation of a customs union, has been in  place since 1 January 1995.  The goods aspects of 
the Treaty of Asunción, notified in March 1992 to the GATT 1947 under the Enabling Clause, was examined in the WTO Committee on Re gional Trade Agreements (CRTA).
9  The Protocol on the 
accession of Venezuela to the Treaty of Asunción w as signed in July 2006;  as of end-March 2008, 
ratification procedures had not been completed and accession was therefore not in force.10  
21. Pursuant to GATS Article V:7, the Protocol of Montevideo on Trade in Services in the 
MERCOSUR was notified to the Council for Trade in Services (CTS) on 5 December 2006 (S/C/N/388, and Corr.1 in the English version) as li beralizing trade in services within the meaning of 
GATS Article V.
11  For information purposes, the text of the Protocol was submitted to the Committee 
on Trade and Development (WT/COMTD/60).  At th e meeting held on 1 March 2007, the CTS took 
note of the notification and referred the Protocol to the CRTA (S/C/M/86). 
22. The Protocol is of indefinite duration and aims  at applying the relevant services provisions of 
the Treaty of Asunción in light of the Treaty's objective of creating a common market with free movement of goods, services, and persons.  It est ablishes a programme for the liberalization of 
intra-trade in services within an overall implementati on period of ten years from the date of entry into 
force, i.e. by December 2015.  The Parties have agreed (Article XXVI) that the Protocol may be 
revised taking into account trends and regulation of trade in services in MERCOSUR, as well as 
progress achieved in relation to trade in services, in pa rticular in the WTO.  Particular reference is 
made to possible amendments to Part IV on institutional provisions.  
                                                     
 
7 Decisions of the Council of the Common Market No 13/97 and 9/98, respectively. 
8 Ratified by Argentina on 17 July 2002 (Protocol and list of specific commi tments), by Brazil on 
8 November 2005; and by Uruguay on 20 December 20 04 (Protocol and list of specific commitments).  
Ratification by Paraguay is still pending.   
9 GATT document L/6985, 5 March 1992 and WTO document WT/COMTD/5/Rev.1, 25 October 
1995.  The CRTA has concluded the examination on 3 April 2006;  relevant documentation can be found in the 
WT/COMTD/1/- series. 
10 In accordance with Article XXIX of the Montevideo Protocol, such accession also applies to the 
services Protocol – i.e. once the accessi on is in force, Venezuela will be a Party to the Montevideo Protocol.  
11 An early announcement of the notification was made by the Parties at the CTS meeting held on 
30 November 2006 (S/C/N/85). WT/REG238/1 
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  Box II.1  
Outline of the Protocol of Montevideo on Trade in Services in the MERCOSUR 
Preamble 
Part I - Purpose and Scope of Application 
 Article I Purpose 
 Article II Scope of application 
Part II - Obligations and General Rules 
 Article III Most-favoured-nation treatment 
 Article IV Market access 
 Article V National treatment 
 Article VI Additional commitments  Article VII Schedules of Specific Commitments 
 Article VIII Transparency 
 Article IX Disclosure of confidential information  Article X Domestic regulation 
 Article XI Recognition 
 Article XII Competition  Article XIII General exceptions 
 Article XIV Security exceptions 
 Article XV Government procurement  Article XVI Subsidies 
 Article XVII Denial of benefits 
 Article XVIII Definitions 
Part III - Liberalization Programme 
 Article XIX Negotiation of specific commitments 
 Article XX Modification or suspension of commitments 
Part IV - Institutional Provisions 
 Article XXI Common Market Council 
 Article XXII Common Market Group 
 Article XXIII MERCO SUR Trade Commission 
 Article XXIV Settlement of disputes 
Part V - Final Provisions 
 Article XXV Annexes 
 Article XXVI Review  Article XXVII Term 
 Article XXVIII Notifications 
 Article XXIX Accessi on or denunciation 
 Article XXX Denomination 
Appendix I: Sectoral Annexes 
 Annex on Movement of Natural Persons Supplying Services 
 Annex on Financial Services 
 Annex on Land and Water Transport 
 Annex on Air Transport Services 
Appendix II: Schedules of Specific Commitments   
 Schedule of Argentina 
 Schedule of Brazil  Schedule of Paraguay 
 Schedule of Uruguay  
23. Since the Protocol in December 1997, six rounds of negotiations on specific commitments 
have been conducted, the last concluded in July 2006.  The Schedules of Specific Commitments have 
to be incorporated into national legislation (Article XXVII:3);12  their entry into force is subject to the 
same rule as that of the Protocol itself – that is th ey enter into force 30 days after the deposit of the 
third instrument of ratification.  A seventh rou nd of negotiations has been launched in June 2007 
                                                      
12 Article XXVII:3 states that "The Schedules of Sp ecific Commitments shall be  incorporated into the 
national legal system in accordance with the procedures laid down in each State Party."  WT/REG238/1 
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  (GCM Res. 16/07) on the basis of parameters and guidelines agreed by the Parties in November 2007 
(see also paragraph 31 below).13  
24. As of end-March 2008, the Schedules of Specific Commitments in force for Argentina, Brazil 
and Uruguay are the initial Schedules;  therefore, this document is based on the trade in services 
regime created by the Montevideo Protocol and it s original Schedules.  Table AI.1 in the Annex 
summarizes the status of ratification of the Schedules by individual MERCOSUR Parties.  In the 
absence of ratification by Paraguay, its schedule is  not in force;  trade in services between other 
MERCOSUR Parties and Paraguay is therefore carri ed out in accordance with the WTO's General 
Agreement on Trade in Services. 
B. SCOPE AND DEFINITIONS  
25. The Protocol applies to measures adopted by the Parties affecting trade in services, which is 
defined, as in GATS, through four modes of s upply (see Article II on scope).  The measures 
concerned are those taken at all le vels of government and authorities – i.e. central, state, provincial, 
departmental, municipal or local – and non-govern mental bodies, in exercising powers delegated by 
any such governments or authorities;  Parties are to take the necessary measures to ensure that the 
Protocol's provisions are observed by all of these entities.  The following are not covered by the 
Protocol: 
• "services supplied in the exercise of a governmental authority", as defined in 
Article II:3(c);  a different definition appli es for financial services and is contained in 
paragraph 1(b)-(d) of the A nnex on financial services; 
• measures affecting natural persons seeking access to a Party's employment market or 
regarding citizenship, residence or employme nt on a regular basis (paragraph 2 of the 
Annex on movement of na tural persons);  and 
• on a temporary basis, bilateral agreements on land and water transport services in force 
by, or signed prior to, 7 December 2005 - i.e. the date of entry into force of the Protocol  (paragraphs 3 and 5 of the Annex to the Mont evideo Protocol on land and water transport 
services;  see paragraphs 91-92 below). 
• Also excluded are commercial air traffic right s for routes established under the terms of  
bilateral air services agreements signed between the States Parties;  cabotage traffic remain excluded (paragraphs 2 and 3 of the Annex to the Montevideo Protocol on air 
transport services;  see paragraph 93 below). 
26. The promotion and protection of investments is covered by the Protocol of Colonia signed in 
1994 but not yet in force.
14  
27. Article XVIII contains the definitions applying to the Protocol. 
C. DENIAL OF BENEFITS  
28. Article XVII of the Protocol deals with the denial  of benefits;  it provides that benefits may be 
denied by a Party to a service supplier in another Pa rty upon demonstration that the service is supplied 
                                                      
13 CMC/DEC. No 24/07, CMC/DEC. No 30/06, GMC/RES. No 16/07.  The deadline of December 2007 
for setting parameters and guidelines for the seventh round has not been met. 
14 None of the MERCOSUR countries has ratified this Protocol. WT/REG238/1 
Page 16  
 
  by a person from a country that is not a MERCOSUR Party.
15  Denial of benefits is subject to 
previous notification and the holding of consultations.  It can be noted  that to be considered as a 
supplier from another State Party, a legal person must , among other things, have its head office within 
MERCOSUR (Article XXVIII(k)).  
D. GENERAL PROVISIONS ON TRADE IN SERVICES  
29. The Protocol's architecture is similar to that  of the GATS's "positive list" approach;  thus, 
while some Articles apply only to those sectors where commitments have been undertaken in the 
Schedule (e.g. market access and national treatment), others – in particular MFN treatment – apply to 
all trade in services. 
30. Article VI provides that Parties are free to ne gotiate commitments that would normally not be 
subject to scheduling under Articles IV (market access) and V (national treatment) such as on 
qualifications, standards, licensing;  in such cases,  these commitments shall also be inscribed in the 
Party's Schedule of Specific Commitments.  
31. The modalities, criteria and instruments for the negotiation of specific commitments on the 
first phase of MERCOSUR's liberalization, initially agreed in December 1998 and complemented in 
June 2000,16 binds the status quo  as a general principle;  modalities and criteria for starting 
dismantling protection are still to be defined.  
1. Market access and national treatment  
32. Article VII provides that each Party set out in  a schedule the sectors in which it undertakes 
commitments for each corresponding mode of supply, indicating the terms, limitations and conditions 
of market access and national treatment.   
33. As determined by its Schedule of Specific Commitments, pursuant to Article IV 
(Market access) of the Protocol, neither Party ma y maintain or adopt the following six types of 
measures, whether for a regional subdivision or the entire territory: the number of service suppliers;  
the total value of services transactions or assets;  the total number of service operations or the total 
quantity of service output, except measures that limit inputs to be used for the supply of services;  the 
total number of natural persons that may be employed  in a particular service sector or that a service 
supplier may employ and which are necessary for, a nd directly related to, the supply of a specific 
service;  the specific type of legal person or jo int venture through which a service supplier may supply 
a service;  and the participation of foreign capital in  terms of maximum percentage limits on foreign 
shareholdings or the value of individual or aggreg ate foreign investment.  Pursuant to Article VII 
(Schedules of Specific Commitments), all MERCOSU R Parties have listed in their schedule the 
sectors and sub-sectors where they undertook market access – as well as national treatment – 
commitments, along with the non conforming measures th at they are allowed to use;  details on these 
are provided in section E of this document. 
34. In addition, a decision adopted in December 2001 provides that if a Party had not regulated a 
service sector or sub-sector, it must not apply restrictive measures to service providers from other 
MERCOSUR countries in cases where the other th ree members had inscribed "none" in their 
schedules for that sector or sub-sector (CCM Dec. 11/01).   This aims at insuring that, in any future 
scheduling, a Party will not restrict market access nor national treatment whenever the other Parties 
had already fully committed the relevant sector/mode of supply. 
                                                      
15 In order to benefit from the agr eement, a service provider has to co mply with the definition of "legal 
person of another State Party", as stated in Article XV III(k);  in doing that, account is taken of each Party's 
legislation and any relevant conditions inscribed in the Schedule. 
16 GCM RES. No 73/98 and No 36/00, respectively.  WT/REG238/1 
 Page 17 
 
 
  35. National treatment is dealt with in Article V, which specifies that each State Party shall 
accord to services and service suppliers of any other State Party treatment no less favourable that that 
it grants to its own services and service suppliers.  Like for the market access obligation, each State 
Party sets out in its Schedule the sectors and modes to which this obligation will apply, along with 
relevant limitations.  Article V indicates that nationa l treatment – either through formally identical or 
formally different treatment between national and fo reign services and /or suppliers – exists when the 
treatment granted does not modify the conditions of competition in favour of national services or  suppliers of like services.  It also specifies that  nothing obliges the Parties to compensate for intrinsic 
competitive disadvantages resulting from the foreign nature of the relevant services or service 
suppliers. 
2. MFN 
36. Article III contains the MFN clause of the Protocol;  it mirrors the relevant provision in the 
GATS, but does not provide the possibility for MFN ex emptions.  Thus, with respect to all measures 
covered by the Protocol and irrespective of whethe r or not the Parties have undertaken commitments 
in sectors, sub-sectors, activities or measures the tr eatment granted by a Party to any other Party or 
third country is to be extended immediately an d unconditionally to services and services suppliers of 
any other Party.  Article III:2 embodies an MFN derogation for the granting of advantages to neighbouring countries in order to facilitate exchang es limited to contiguous frontier zones of services 
that are both locally produced and consumed.  While  no general derogation is provided for in relation 
to concessions granted to third parties in the cont ext of preferential agreements covering trade in 
services, the sectoral annexes provide that the MFN clause does not apply vis-à-vis  bilateral air, land 
and water transport agreements;  these annexes ar e however to be revised by December 2008.   
3. Movement of natural persons 
37. Like in the GATS, the Protocol's Annex on th e movement of natural persons applies to 
measures affecting natural persons who are service supp liers of a Party, and natural persons of a Party 
employed by a service supplier of a Party.  Among other things;  it:  
(a) excludes measures regarding natural persons seeking access to employment in a 
Party, citizenship, residence or employment on a permanent basis, from coverage the Protocol.  In that respect, some instruments have been negotiated by the Parties (see paragraph 38(a)-38(b) below); 
(b) clarifies that Parties are free to apply measures to regulate the entry of natural persons 
into, or their temporary stay in, its territory, provided they are not applied in such a 
manner as to nullify or impair the benefits of a specific commitment;  and 
(c) unlike in the GATS, states that the labou r-related laws of the place in which the 
service contract is carried out shall appl y, to regulate labour-related situations 
affecting natural persons c overed by the Agreement. 
38. A number of instruments, the majority of which not ratified and in force by end-March 2008, 
have also been negotiated by the Parties, with  relevance for the movement of natural persons: 
(a) "Agreement on the Internal Immigrati on Normalization of MERCOSUR Citizens" 
(CCM Dec. 28/02, adopted in December 2002), which allows the nationals of any 
Party to carry out immigration formalitie s in the country where they are living;
17  
                                                      
17 In parallel, a similar agreement has been signed between the MERCOSUR Parties, Bolivia and Chile. WT/REG238/1 
Page 18  
 
  (b) "Agreement on Residence Status for Nati onals of the MERCOSUR State parties" 
(CCM Dec. 28/02, adopted in December 2002), providing the terms and requirements 
for MERCOSUR nationals to obtain legal residence in one of the Parties;   
(c) the creation of a "MERCOSUR visa" for higher level professionals - i.e. managers 
and executive directors, administrators, di rectors, delegated-managers or legal 
representatives, scientists, researcher, professors, artists, sportsmen, journalists, 
highly qualified or specialized - to be granted for two years with the possibility of one extension (CCM Dec. 16/03, adopted in December 2003);   
(d) the establishment of a "Mechanism for Temporary Professional Practice" 
(CCM Dec. 25/03, adopted in December 2003);  and 
(e) "Agreement for the Facilitation of Business Activities" (CCM Dec. 32/04, adopted in 
December 2004), in force for Argentina, Brazil and Uruguay since 27 November 2007.  
E. L
IBERALIZATION COMMITMENTS  
1. Argentina 
39. Argentina's list of initial commitments under MERCOSUR's Protocol include specific 
commitments in seven of the 11 sector groups found in the Services Sectoral Classification List 
(SSCL).18  It covers about 40% of all services sub-sectors in the List.  Argentina's commitments tend 
to replicate, with few exceptions, its existing commitments under the GATS. 
(a) Horizontal commitments 
40. Argentina's horizontal commitments in MERCO SUR are the same as under the GATS;  they 
include both market access and na tional treatment limitations – e.g. Argentina's horizontal mode 4 
commitments under MERCOSUR are limited to sen ior personnel, namely managers, executives and 
specialists.  Mode 4 bindings at the level of sect or-specific commitments always refer to horizontal 
commitments.   
(b) Sector-specific commitments 
41. Argentina's schedule under the Protocol of Montevideo includes full commitments under 
modes 1 to 3 in such sectors as computer and related services, courier services, wholesale and retail distribution, franchising, tourism and travel rela ted services, and in all construction services except 
general construction work for civil engineering.   
42. Like in the GATS, Argentina's MERCOSUR commitments cover essentially all basic and 
value-added telecommunications ser vices, with few limitations.
19  Commitments under modes 1 and 3 
for voice telephony, international data, facsimile  and telex services, and leased circuit services 
provide for full commitments as of 8 November 2000.  For mobile services, the schedule provides for 
the maintenance of a duopoly in tele phony and allows authorities to li mit the number of suppliers of 
personal communication services per operating area on the basis of perceived needs.  Other 
telecommunication services – except telegraph services for which there are no commitments – provide 
for full commitments in modes 1 to 3.   
                                                      
18 Document MTN.GNS/W/120. 
19 Argentina has subscribed to the "Reference Paper" on regulatory obligations for basic 
telecommunications, developed in the Post-Uruguay Round negotiations on basic telecoms.  WT/REG238/1 
 Page 19 
 
 
  43. Argentina's initial commitments on financial ser vices under the Montevideo Protocol also 
mirror those it contracted in the extended GATS negotia tions in this area.  In insurance, commitments 
under mode 3 provide that authorization for th e establishment of new entities is suspended.  
Commitments on life and non-life insurance are unbound for modes 1 and 2, while full commitments 
are undertaken for maritime and air transport in surance services, as well as for reinsurance and 
retrocession.  There are no specific commitments on insurance intermediation and services auxiliary 
to insurance.   
44. Argentina has undertaken commitments in all sub-sectors encompassing banking and other 
financial services, each with full commitments in m odes 2 and 3.  Mode 1 is  left unbound, except for 
"advisory and other auxiliary financial services" and "provision and transfer of financial information 
and financial data processing services", where no limitations are maintained.20   
45. Commitments on professional services, similar to  those under GATS, are undertaken on legal 
services;  accounting, auditing and bookkeeping servi ces;  architectural services;  and engineering 
services.  Full commitments in modes 1 to 3 are undertaken in these sub-sectors;  however, the schedule specifies that for all professional services sectors listed (for modes 1, 3 and 4), "(p)ersons 
seeking to provide professional services must obtain recognition of their professional degree, enrol in 
the relevant college and establish legal domicile in Argentina" and notes that the legal domicile 
condition does not mean that residency is require d.  Unlike in its GATS schedule, Argentina's 
MERCOSUR commitments also comprise psychology services (full commitments under mode 3), as well as integrated engineering services and urban planning and landscape architectural services (although modes 1 and 2 are unbound and mode 3 is unbound for market access). 
46. Argentina's MERCOSUR schedule of commitm ents does not include sectors such as 
education, environmental, health, audiovisual, or transport services.
21 
2. Brazil 
47. Brazil's list of initial commitments unde r MERCOSUR's Protocol include specific 
commitments in seven of the 11 sector groups fou nd in the SSCL and covers almost 30% of all 
services sub-sectors in the List.   
(a) Horizontal commitments 
48. Brazil's horizontal commitments in the MERCOSUR Pr otocol, which relate to modes 3 and 4,   
are almost identical to those under the GATS.  The differences are as follows:  
(a) any existing proportionality (i.e. ratio of Brazilian employees vis-à-vis  total 
employees) is waived for natural persons from MERCOSUR working as specialized 
technicians, provided the requirements of the "necessity test" administered by the 
Ministry of Labour are fulfilled;  how ever, a proportional of 2 Brazilians to 
3 employees still applies as related to juri dical persons engaged in communications, 
land transportation, commercial stores and o ffices, insurance, advertising, hotels and 
restaurants.  While that same requirement is included in Brazil's GATS schedule, the 
Montevideo schedule introduces an additiona l commitment by Brazil, in the context 
of reforms on labour legislation, to atte mpt to reduce the required proportionality 
                                                      
20 For banking and other financial services, financial operations by the Government and State-owned 
enterprises are excluded from the conditions specified in the schedule; they may carry out operations through 
their own designated entities. 
21 Regarding transport services, it is  noted, however, that commitments included in the initial list result 
from the application of bilateral and multilateral ag reements pursuant to the Protocol's Annexes on Air 
Transport Services and Land and Water Transport Services. WT/REG238/1 
Page 20  
 
  vis-à-vis  natural persons from a MERCOSUR party on the basis of a necessity test 
and also to work with other MERCOSU R parties to try to increase flexibility vis-à-vis  
other limitations on the movement  of natural persons;  and 
(b) Market access and national tr eatment limitations in the ar ea of subsidies, unbound  
under the GATS, do not appear in the Montevideo schedule;  thus, the relevant 
disciplines are those of the Protocol.  
49. At the sector-specific level, commitments under mode 4 generally include a cross-reference to 
horizontal commitments. 
(b) Sector-specific commitments 
50. Brazil's Schedule under the Protocol includes va rious sub-sectors not listed under the GATS, 
including a significant number of professional services such as: 
(a) engineering design services n.e.c, and other engineering services provided during the 
construction and installa tion phase;  limitations vis-à-vis  other engineering services 
listed under the GATS also apply to these services; 
(b) pharmacy, psychology, library and computer  and related services (CPCs 841, 842, 
843, 844 e 849) are bound with no limitations on modes 1-3; 
(c) R&D in the natural sciences (chemistry, biol ogy and interdisciplinary) is unbound for 
modes 1-2, bound with no limitations on mode 3;  and 
(d) technical testing and analysis services, and related scientific a nd technical consulting 
services are unbound for modes 1-2;  for mode  3, foreign providers are required to 
from a specified legal entity jointly with  Brazilian companies with the latter having 
leadership. 
51. In communications, courier services are covered to  a larger extent as compared to the GATS 
– i.e. they cover more multi-modal services. 
52. As regards telecommunications, the MERCOSUR schedule is identical to the commitments 
that Brazil had negotiated during the post-Uruguay Round negotiations on basic telecommunications .  
However, unlike the MERCOSUR commitment s, the commitments emerging from these 
WTO negotiations never came into force.  Brazil therefore has no commitments on 
telecommunications under the GATS;  however, the Br azilian service offer made in the context of the 
Doha round of negotiations does in clude telecommunication commitments.   
53. Brazil has a number of limitations applying to all its telecommunication services 
commitments.  For example, licenses for services s upplied in Brazil are only granted to juridical 
persons that have their head office and manageme nt located in Brazil, and EMBRATEL has exclusive 
rights to link with Intelsat and Inmarsat.   
54. Regarding basic telecommunication services, Br azil has commitments for public domestic 
and international services on a facilities basis only (exc luding private leased circuits).  Under mode 1, 
international traffic has to be routed through a gateway in Brazil.  Mode 3 is unbound, but it is 
specified that Brazil will undertake commitments one  year after the enactment of the then draft 
General Telecommunications Law.  Brazil also has commitments on domestic and international 
services for closed user groups, on a facilities basis.  These provide for no limitations under modes 2 and 3;  for cross-border trade, the commitment speci fies that network facilities in Brazil have to be 
provided by a duly licensed supplier.  WT/REG238/1 
 Page 21 
 
 
  55. Brazil undertook full commitments under modes 1 to 3 for all value-added services.  Under 
"other services", Brazil made commitments in facilities-based mobile, and paging services and 
satellite telecommunications transport services.  National treatment for all of these is bound without 
limitations;  for market access, mode 1 is unbound for mobile and paging services, and bound with 
limitations for satellite services.  Mode 3 is fu lly liberalized for paging services and bound with 
limitations for the other sub-sectors, including pr ovision through a duopoly in the mobile segment. 
56. Brazil has, in many instances, undertaken add itional commitments, in particular for further 
bindings within one year from the adoption by th e Congress of a new "General Telecommunications 
Law".22  
57. A similar situation is seen for financial services, where the MERCOSUR Schedules mainly 
mirror significantly the GATS supplementary schedule resulting from the negotiations on financial 
services, and which never came into force.   
58. In the area of insurance, few sub-sectors are added to those under the GATS, namely 
insurance for work accidents and for vessels (body, mach inery and civil liability),23 as well as 
reinsurance and retrocession.  Other differences with  the GATS relate to:  market access for transport 
insurance – where no limitations on foreign participation apply;24  national treatment which is bound 
with limitations under mode 1 for transport and vessels insurance (unbound under the GATS);25 and 
allowing for the commercial presence of juridical  persons incorporated under Brazilian law in 
auxiliary services/agencies and brokers (under the GATS mode 3 only allows for commercial 
presence for natural persons).  For work accident insurance, and reinsurance and retrocession, no 
market access liberalization is provided for initially;26  however, Brazil has agreed to undertake 
liberalization commitments within two years fro m the adoption by the Congress of legislation 
regulating their presence.  
59. For banking services provided by financial institutions, some sub-sectors are added compared 
to the GATS – i.e. acceptance of funds for housing fi nance (the GATS reference was to "financing of 
commercial transactions"), money brokerage (in GA TS brokerage of foreign exchange only), and 
settlement and clearing services for securities and de rivatives;  less-restrictive limitations apply on 
market access (the number of branches) and national treatment (use of automatic teller machines, minimum paid-in capital and net worth requirements, and expansion of operations);  Brazil has also 
undertaken additional commitments regarding credit cards and factoring so that national treatment 
will be provided to commercial presence if these serv ices are defined as "financial services" in future 
legislation adopted by the Congress.  Further,  the MERCOSUR Schedule also includes various 
banking services provided by non-financial instituti ons, whereas under the GATS none of these were 
covered;  these are scheduled with modes 1 a nd 2 unbound and mode 3 without limitations, provided 
that (i) juridical persons are incorporated under Brazilian law, (ii) only ju ridical persons provide 
clearing services for, and public offerings of secu rities and derivatives, and (iii) settlement and 
clearing services be provided by a corporation ("sociedade anônima").   
                                                     
 
22 At the time of the scheduling of MERCOSUR’s initial commitments, Brazil was in the process of 
reforming the telecommunications sector, through the termination of the sector’s state monopoly and its privatization;  this situation explains the reasons fo r the scheduling of additional commitments.  The Brazilian 
offer for the first round of negotiations in the context of the Montevideo Protocol consolidated the changes made 
to the sector’s domestic regulations. 
23 Insurance on vessels may be authorized for vessels registered in the Brazilian Special Registry, 
depending on the internal supply conditions. 
24 In the GATS, foreign participation in a company is  limited to 50% of its capital and 1/3 of its voting 
stock.  
25 This binding does not apply to contracts on and any liability arising from imported goods as regards 
transport insurance, while for vessel it requires that  it is registered in the Brazilian Special Registry. 
26 Only the already existing provider is authorized, namely the National Institute of Social Security for 
work accident insurance and the Br azil's Institute of Reinsurance fo r reinsurance and retrocession. WT/REG238/1 
Page 22  
 
  60. Commitments in tourism and travel related servi ces, which cover hotels and restaurants, are 
the same as under the GATS;  that is also th e case for pipeline transport services and services 
auxiliary to all modes of transport.  There are no commitments for maritime, internal waterways and 
air transport services under the GATS or MERCOSUR;  however, MERCOSUR's schedule refers to the agreements under the Protocol's sectoral anne xes on land and water trans port, and air transport 
services.  Additional commitments have  also been undertaken by Brazil vis-à-vis  its MERCOSUR 
partners for the simplification and compatibility of its  rules and regulations to facilite of international 
air transportation (as regards immigration, customs and sanitary and phytosanitary surveillance);  the 
compatibility of its rules and procedures on air tran sport in accordance with the International Civil 
Aviation Organization's recommendations;  and the pe riodic exchange of statistical information. 
61. A final difference between the MERCOSUR and GATS schedules relates to construction and 
related engineering services;  while mode 3 will be liberalized within 2 years from the entry into force 
of the Protocol and the initial lists, the GATS schedule foresees a 5 year timeframe for such 
liberalization.  In practice, however, that distin ction is now irrelevant since full commitments under 
GATS are in effect since 1 January 2000.   
3. Paraguay 
62. Paraguay's initial schedule of specific commitm ents under MERCOSUR's Protocol features 
commitments in financial services, tourism and tele communications;  while the first two sectors are 
also included in the GATS schedules, that is not the case for the latter. 
(a) Horizontal commitments 
63. Paraguay's schedule under the Protocol of M ontevideo contains horizontal commitments 
under mode 4 for managers, executives, and specia lists.  Sector-specific commitments on the 
movement of natural persons generally refer to the horizontal section, although with some variations;  
for example, tourism commitments under mode 4 are limited to senior manageri al personnel with staff 
training programmes.  In respect of mode 3, the horizontal section also specifies that measures in 
relation to border zones are unbound.  Paragua y has no horizontal commitment under the GATS. 
(b) Sector-specific commitments 
64. The telecommunications commitments cover mobile telephony and value-added telecom 
services such as electronic mail, voice mail, on-line information retrieval, electronic data interchange (EDI), enhanced/value-added facsimile services, an d paging.  Levels of commitments bound for these 
sectors vary, although an entry covering the whole sector specifies inter alia  that licenses will only be 
granted to juridical persons established in Para guay with a minimum of 50% domestic equity 
participation. 
65. Commitments on financial services are undertaken in both insurance (life, accident, health 
and non-life insurance, plus reinsurance and re trocession) and banking services (acceptance of 
deposits, lending, and other services auxiliary to fi nancial intermediation).  Modes 1 and 2 remain 
unbound, except for reinsurance and retrocession, and other services auxiliary to financial 
intermediation, where no restrictions are maintain ed.  Mode 3 commitments are unrestricted, except 
that an authorization from the Central Bank is re quired and that the commercial presence should take 
the form of a limited liability corpora tion ("sociedad anónima") or branch. 
66. Paraguay's commitments on tourism services replicate GATS entries.  Hotel and restaurant 
services, as well as tourist guide services are free fr om restrictions under modes 1 to 3.  For travel 
agencies and tour operators services, the schedul e limits, under market access, commercial presence 
to those companies focusing on tourist activities for foreign travellers in Paraguay, and is unbound 
under national treatment.  WT/REG238/1 
 Page 23 
 
 
  4. Uruguay 
67. Uruguay's initial schedule under the Protocol in cludes specific commitments in 8 of the 
11 sector groups of the SSCL, which cover more th an a third of all the services sub-sectors identified 
therein.  Sectors committed to at least in part, include computer, courier, financial, tourism, and 
recreational services – which feature in Urugua y's GATS schedule of commitments – but also 
telecommunications, construction, professional and distribution services – which are not featured 
therein.   
(a) Horizontal commitments 
68. Horizontal commitments under mode 4, lik e under GATS, cover managers, executives and 
specialists.  These commitments apply to all sectors included in the schedule.   
(b) Sector-specific commitments 
69. Within "business services", the initial schedule contains commitments in regard to certain 
professional services (accounting, auditing and bookkeep ing, architecture, and engineering services), 
for which mode 1 is unbound and mode 3 is bound for national treatment but not  for market access.  
As for Argentina, for these sectors, it is specified that (i) "(p)ersons seeking to provide professional 
services must obtain recognition of their professiona l degree, enrol in the relevant college and 
establish legal domicile in Uruguay", and (ii) th e legal domicile condition does not mean that 
residency is required.  Other sub-sectors committe d under 'business services' show a higher level of 
openness (full commitments in modes 1 to 3), including for computer services, real estate, rental and 
leasing, and other business services.   
70. Uruguay's commitments on to telecom servi ces include voice mail, mobile telephony, 
electronic mail, online database access, paging and internet access.  These commitments are often 
unbound under modes 1 and 2 and/or require that the service be provided only through the network of, 
or a contractual arrangement with, the monopoly supplie r;  the latter restriction also applies to the 
services provided through commercial presence.  Fo r mobile telephony, the commitment limits the 
number of suppliers depending on zones of the country.   
71. Commitments on construction services (general construction work for civil engineering) and 
distribution services (wholesale, retail and franchising  services) are also undertaken.  No limitations 
are scheduled in regard to commercial presence in any of these services, and modes 1 and 2 are unbound only in construction services. 
72. Uruguay's has undertaken numerous commitments in the financial services sector – both for  
insurance and banking services – sometimes be yond existing GATS commitments.  The initial 
schedule includes commitments in regard to lif e insurance and a number of non-life insurance 
services, such as transport insurance,  insurance against fire or other damage to property, general civil 
responsibility insurance, as well as re-insurance a nd retrocession, insurance intermediation, and 
auxiliary services.  A number of these sectors re main unbound, at least for market access, under 
modes 1 and 2, except for reinsurance and retroces sion, auxiliary services, and transport insurance, 
which are unrestricted for such modes of supply.  Co mmercial presence is require d to take the form of 
a public limited company, except for reinsurance and retrocession, which is  unbound under this mode, 
and for transport insurance, intermediation, a nd auxiliary services, which are unrestricted.   
73. With respect to banking services, Uruguay h as undertaken commitments in almost all 
sub-sectors identified in the SSCL.  Commitments under modes 1 and 2 are unbound except for the 
following services, which are unrestricted: acceptance of deposits;  some lendi ng and financial leasing 
services;  payment and money transmission services;  and, guarantees and commitments.  Mode 3, 
especially for banks, is subject to certain lim itations, including a restriction on the form of WT/REG238/1 
Page 24  
 
  establishment (organization as an Uruguayan public  limited company with registered shares or as a 
branch of foreign banks), and a quantitative rest riction on the number of new banks authorized 
annually. 
74. Bindings on tourism services (hotels and restaurants, travel agencies and tourist guides), 
entertainment services, and auxiliary transport services (storage and warehousing) feature no 
restrictions under modes 1 to 3, replicating the GATS schedule. 
F. R
EGULATORY PROVISIONS  
1. Domestic regulation 
75. Article X of the Protocol deals with domestic  regulation;  its requirements apply to all 
measures of general application affecting trade in services, irrespective of whether or not the Parties 
have undertaken commitments in secto rs, sub-sectors, activities or measures.27  The provisions 
require:  a reasonable, objective and impartial admi nistration of all measures of general application 
(para. 1);  the existence of an appeals procedur e providing for prompt review of administrative 
decisions affecting trade in services (para. 2);  an  adequate system for the exchange of information 
with the applicant in cases where an authorization is required for supplying a service (para. 3);  and 
clarify that the Parties may verify the competen ce of professionals from other Parties thorough 
adequate procedures (para. 5). 
76. Article X:4 provides for a binding commitment by the Parties to ensure that measures relating 
to technical standards, and qualification and licen sing requirements and procedures, do not constitute 
unnecessary barriers to trade in services, by requiring inter alia  that they are based on objective and 
transparent criteria;  not more burdensome than ne cessary to ensure the quality  of the services;  and 
that the licensing procedures are not  in themselves a restriction on th e supply of the service.  This 
paragraph goes beyond the GATS (Article VI: 4), which essentially commits WTO Members to negotiate such type of disciplines having the "aim to ensure" that the aforementioned principles are 
respected. 
2. Recognition 
77. Article XI of the Protocol deals with recognition;  it states that:  
(a) in cases where a Party recognizes the educati on, experience, licences, registration or 
certification obtained in another country, it is not obliged to automatically extend such recognition to other MERCOSUR Parties;  however, adequate opportunity shall be provided for the other Party to demonstr ate that these should be recognized or to 
conclude a recognition agreement; 
(b) Parties are encouraged to develop mutually acceptable standards and criteria for  
relevant services trade and professions , to be implemented through mutual 
recognition agreements;
28  recommendations on these questi ons are to be submitted to 
the GCM.  The GCM shall consider the consistency of these recommendations with 
the Protocol;  it shall also provide Parti es with implementation indications, including 
a time frame;  and 
(c) the GCM is to conduct a review of the im plementation of this Article at least on a 
triennial basis. 
                                                      
27 That is a major distinction vis-à-vis  the GATS, in which the equivalent provision applies only in 
certain instances to sectors where specifi c commitments have not been undertaken. 
28 On the basis of elements also provided in that Article.    WT/REG238/1 
 Page 25 
 
 
  78. A number of recognition-type of instruments, in particular as they relate to education, have 
been negotiated among MERCOSUR parties and are cu rrently in force;  they include protocols 
regarding recognition of education at primary and middle levels;  r ecognition of university degrees for 
pursuing post-grade studies in a MERCOSUR country;  agreement on the acceptance of diplomas for exercising academic activities in a MERCOSUR Party (in force for Argentina and Brazil as of 
20 June 2004);  and an agreemen t on the acceptance of diplomas for teaching Spanish and Portuguese 
as a foreign language in a MERCOSUR Party (not yet in force).  Outside the education area, the Parties have also worked significantly toward s harmonization and recognition transport services 
(e.g. coordination of road transportation, mi nimum requirements for operators of multimodal 
transportation and for accreditation for internationa l road transportation);  and agreed on minimal 
conditions for labour inspection, standards for labour inspectors, and quality standards for postal 
services. 
3. Subsidies 
79. Article XVI of the Protocol, which deals with subsidies, provides: 
(a) that the MERCOSUR common disciplines on subs idies in general, to be determined 
by MERCOSUR, shall apply (as of end-March 2008, no such disciplines have been 
adopted);  and 
(b) that, in line with GATS Article XV:2, consu ltations may be requested in cases where 
a Party considers that is adversely affected by a subsidy of another Party;  as of end- 
March 2008, no such consultations have taken place. 
4. Safeguards 
80. The Protocol does not contain disciplines on emergency safeguard measures. 
5. Other  
(a) Government procurement  
81. Article XV of the Protocol - like in the GATS - provides that the obligations of national 
treatment and MFN do not apply to government pr ocurement of services.  None of the MERCOSUR 
countries are Parties to the WTO's Agreement on Go vernment Procurement;  Argentina is, however, 
an observer to the Agreement.  
82. In July 2006, the CCM adopted the Protocol on Government Procurement in MERCOSUR 
(Dec 23/06), while the decision on its regulation was adopted in December 2004.
29  As of end-March 
2008, none of the Parties had ratified the Prot ocol, which will only enter into force following 
ratification by at least two of the MERCOSUR countr ies, and which will only apply with respect to 
such Parties.  The Protocol, which aims at providing suppliers and providers of a Party 
non-discriminatory treatment for government procuremen t by public entities, includes basic principles 
such as MFN, national treatment and transparency.   
83. The Protocol provides for the opening between Pa rties  of the procurement of goods, services 
and public works by public entities of federal and sub-fe deral levels of govern ment;  this general 
objective is supplemented by a number of conditions/criteria: 
                                                      
29 This Protocol, which supersedes the 2004 Protocol, is in substance identical to the earlier Protocol 
but includes additional text providing the signatories, the venue and date of its signature.  On its turn, the 2004  
Protocol supersedes the 2003 Protocol on Government Procurement. WT/REG238/1 
Page 26  
 
  (a) only those entities listed in the Annexes to the Protocol are required to abide by its 
disciplines;   
(b) for those entities, only procurement above a specified threshold
30 is subject to the 
Protocol's disciplines;  and 
(c) the Parties' obligations are subject to the specific reservations they have undertaken. 
84. A summary of the entities covered and reservations undertaken is provided in Annex II;  as of 
end-March 2008, only Brazil provided market ac cess for public work tenders/projects under the 
Protocol.  The Protocol does not cover concessi ons and contracts financed by international 
organizations, unless specifically provided for in the respective contract. 
(b) Competition policy 
85. Article II states that the MERCOSUR Protocol  on Competition applies in relation to acts 
carried out by services suppliers or providers (under pub lic or private law) when they affect (or have 
the purpose of affecting) competition and trade in services within MERCOSUR. 
86. The MERCOSUR Competition Protocol was adopted by CCM's Decisions 18/96 (the 
Protocol and 02/97 (the annex fixing the amount of  the fines);  an agreement on its regulation was 
adopted by the Parties in December 2002.  The Protocol entered into force on 8 September 2000 for 
Brazil and Paraguay;  as of end-March 2008,  ratification was still pending for Argentina31 and 
Uruguay.  The Protocol provides a general defini tion of acts that infringe its provisions, and an 
illustrative list of (17) behaviors that constitute "restrictive business practices" (Articles 4 and 6, 
respectively).32  It establishes a detailed mechanism for dea ling with infringements of its disciplines 
through investigations, determin ation of sanctions and enforcement;  it also provides for the 
possibility of preventiv e measures and cessation. 
87. While the Protocol does not provide for a s upranational institution to enforce competition 
policy, it establishes a sharing of responsibilities among the three institutions involved;  their main responsibilities are summarized below. 
(a) The national authorities
 are responsible for initiating the proceedings, either 
ex officio or on the basis of a request from an interested party, and to transfer the 
case, together with a preliminary tec hnical appraisal, to the Committee on the 
Defense of Competition (CDC).  Upon instru ctions from the CDC, they shall conduct 
the full investigation and submit findings  to the CDC.  Enforcement is the 
responsibility of the national authorities of the infringing Party.  
(b) The CDC  carries out a preliminary analysis of a case and then decides to either open 
a full investigation or, upon agreement of the Trade Commission (TC), terminate it.  
Upon receipt of the findings from the national authorities, the CDC shall establish the sanctions or other measures;  in cases of urgency, it shall also – and upon agreement 
of the TC – define preventive measures.   
                                                     
 
30 The thresholds for procurement of goods and services are of US$150,000 for Argentina, US$75,000 
for Brazil, US$200,000 for Paraguay and Uruguay, and US$ 3,000,000 for the procurement of public works by 
Brazil. 
31 The Protocol has been approved by the Argentinean Senate and by end-March 2008 it was under 
consideration by the Congress. 
32 Article 1 of the Protocol specifies that public enterprises exercising state monopolies are also subject 
to its disciplines.  WT/REG238/1 
 Page 27 
 
 
  (c) The Trade Commission  (TC) is the CDC’s superior body.  The sanctions or other 
measures defined by the CDC are to be confirmed by the TC through a Directive.  
 As of end-March 2008, these procedures had not been used. 
 (c) Intellectual property rights 
88. The CCM has adopted two protocols on the harmonization of intellectual property norms in 
MERCOSUR with respect to (i) trademarks and indications and denomina tions of origin, and 
(ii) industrial designs (Decisions N
o 8/95 and 16/98 of August 1995 and December 1998, 
respectively).  The former includes national treatme nt, definition of trademar ks and duration for the 
protection  (initially of 10 years subject to extens ion), signs considered, as trademarks, non-registrable 
trademarks, reciprocal protection of indications and denominations of origin, and a prohibition on 
registering them as trademarks;  it entered into force on 6 August 2000 for Paraguay and Uruguay but as of end-March 2008, ratification was still pending for Argentina and Brazil.  The Protocol on 
industrial design provides for national treatment, a de tailed definition of industrial design that may be 
protected and of those excluded from protection, an initial minimal duration of 10 years for the 
protection of industrial designs, and a best endeavour cl ause for one extension of at least five years;  
by end-March 2008, it was not in force and none of the Parties had ratified it. 
G. S
ECTOR -SPECIFIC PROVISIONS  
1. Financial Services  
89. The Annex on financial services applies to all measures by a Party affecting the supply of 
financial services except "services supplied in the ex ercise of a governmental authority", defined in 
paragraph 1 of the Annex as covering activities conducted  by a public entity in pursuit of monetary or 
exchange rate policies and, provided that is not done  in competition with another public entity or with 
a financial service supplier, activities forming part of  a statutory system of social security or public 
retirement plans and other activities conducted by a public entity involving the Party's financial 
resources. 
90. The Annex contains provisions on transparency and disclosure of confidential information; 
prudential measures;  harmonization;  and sector-sp ecific definitions.  Prudential measures that are 
inconsistent with the Protocol ar e permitted provided they are not used to circumvent its obligations.  
Recognition of other Parties' prudential measures may be granted unilaterally, through harmonization 
or on the basis of an agreement between the Par ties;  in the latter case, the Common Market Group 
and the MERCOSUR Trade Commission shall be info rmed of such instrument. As of end-March 
2008, no such instrument had been signed.   Parties are to pursue the harmonization process;  on that 
aspect, a number of harmonized regulations have been agreed upon33 or are under discussion.34 
                                                      
33 Harmonization work has been completed on minimum requirements for the capital markets 
(CCM Dec 8/93 and 13/94);  adjusting financial markets to the prudential regulations of the Basel Committee on 
Banking Supervision (CCM Dec 10/93);  a framework agreement on access conditions for insurance companies 
emphasizing the idiary's access (CCM Dec 9/99);  a glos sary of basic terminology  on insurance (GCM RES 
No. 83/99);  Central Bank cooperation on preventing and suppressing maneuvers of assets legitimization that 
come from illicit activities (CCM Dec 40/00);  minimum requirements for preventing and suppressing money 
laundering in MERCOSUR (CCM Dec 40/00).  With the exception of Dec 40/00 and RES No. 53/00 which, by 
end-March 2008 had not been incorporated by Urugua y, these instruments are in force for all Parties.  
34 Harmonization work is being carried out on in formation systems needed  for implementing the 
recommendations of the Basel II;  basic rules for the classifications of debitors, minimum supply and criteria for 
dividing credit risk;  a framework for investment funds;   and a framwork agreement on conditions of exercise.  WT/REG238/1 
Page 28  
 
  2. Transport Services 
(a) Land and water transport services 
91. The Annex on land (rail and road) and water trans port services, consisting of five paragraphs, 
exempts temporarily any relevant mu ltilateral and bilateral agreements that predated the Protocol of 
Montevideo from its disciplines.
35  More specifically, it provides that the Protocol does not 
temporarily affect the rights and obligations of the following agreements signed prior to its entry into 
force: 
(i) multilateral agreements among MERCOS UR Parties aiming at harmonizing and 
monitoring competition among transport enterprises, provided they respect the priority of intra-trade liberalization;  and 
 (ii) bilateral transport agreements. 
 92. The temporary element provides that be tween December 2007 and 2008, and annually 
thereafter, the Group of the Common Market (GCM) will examine and consider the progress made in bringing these agreements into conformity with the Protocol.  
(b) Air transport services 
93. The Annex on air transport services exempt s the following from the disciplines of the 
Montevideo Protocol: 
(i) bilateral, plurilateral or multilateral ag reements among MERCOSUR Parties in force 
at the time of entry into force of the Protocol;
36 
(ii)  measures affecting commercial traffic ri ghts agreed upon in bilateral air services 
agreements (but not including cabotage traffic); 
(iii) subregional scheduled and explorat ory air services on routes other than those 
operated in accordance with (ii) above.  For such services, disciplines are those of the 
Subregional Air Services Agreement (the “Fortaleza Agreement”) of 17 December 
199637, and any additional specific commitments included in the Parties' Schedules to 
the Montevideo Protocol.38 
94. The Annex provides that the general dispute settlement mechanism of MERCOSUR may be 
invoked in disputes relating to air transport servi ces if the Parties have not agreed on another 
mechanism.  It also stipulates th at the GCM will review this An nex by December 2008 in order to 
decide on any necessary amendments, including with resp ect to scope.  Finally, it provides for Parties' 
aviation authorities to consult on any possible neces sary amendments to the Annex to reflect measures 
on air transport services agreed upon in the context of a multilateral convention.  
                                                      
35 Table AI.2 in Annex I lists those agreements.  
36 Table AI.3 in Annex I lists those agreements concluded by Uruguay. 
37 This Agreement, in force since 9 April 1999, applie s to Argentina, Bolivia, Brazil, Chile, Paraguay,  
Uruguay and Peru. 
38 Agreement signed by MERCOSUR countries, Bolivia and Chile.  WT/REG238/1 
 Page 29 
 
 
  H. GENERAL PROVISIONS  
1. Transparency 
95. Transparency is regulated by Article VIII and IX  of the Protocol;  the disciplines are similar 
to those of the GATS, as follows: 
(a) measures of general application pertaining to , or affecting the Protocol's operation are 
to be published promptly and prior to their entry into force, except in cases of force 
majeure ; 
(b) international agreements that the Parties ha ve signed which pertain to, or affect trade 
in services are also to be published; 
(c) when (a) or (b) are not practicable, info rmation shall be made otherwise publicly 
available; 
(d) Parties are to inform promptly, and at least annually, MERCOSUR's TC of the 
adoption of new, or changes to existing, la ws, regulations or administrative guidelines 
significantly affecting trade in services; 
(e) upon request, and through the contact poi nts established in accordance with GATS 
Article III:4, Parties are to provide add itional information on measures of general 
application, international agreements a nd measures referred to under (d) above;  
(f) a Party is free to cross-notify MERCOSUR's TC of measures taken by another Party 
which it considers affect the operation of the Protocol;  and 
(g) Article IX clarifies that the Protocol does not require Parties to disclose confidential 
information.   
2. Payments and capital movements 
96. Article II.1(ii) provides that the Protocol appli es to measures adopted by the Parties affecting 
trade in services in the MERCOSUR, including those related to "the purchase, payment or use of a 
service".  Movement of capital is referred to in  Article IV:1, which provides for the absence of 
restrictions on the payment of a service, and for free movement of capital in respect of cross-border 
trade and commercial presence related to specifi c commitments undertaken by a Party.    
3. Exceptions 
97. General exceptions and exceptions related to national security are contained in Article XIII 
and XIV;  they are similar to those of the GATS. 
4. Accession 
98. Article XXIX states that the Protocol is an  integral part of the Treaty of Asunción – 
i.e. accession to, or withdrawal from, the Treaty of Asunción or the Protocol means ipso jure  
accession/withdrawal to both instruments – and that accession or denunciation rules are those of the latter Treaty.  The Asunción Treaty provides that acce ssion (Article 20) is possible by other member 
countries of the LAIA, subject to negotiation.  As  for withdrawal (Articles 21 and 22), once it has 
been formalized, those rights and obligations of  the denouncing State deriving from its status as a 
State Party shall cease, while those relating to th e liberalization programme under the Treaty and any WT/REG238/1 
Page 30  
 
  other aspect agreed to by the Parties and the deno uncing State shall remain in force for a period of 
two years from the date of the above-mentioned formalization. 
5. Institutional Framework 
99. The institutional framework under which the Protoc ol operates is basically that provided for 
in the Protocol of Ouro Preto, signed by MERCOSUR countries on 17 December 1994 and in force 
since 15 December 1995;  and some institutional nove lties agreed upon since then.  In particular, 
these include the establishment – respectively in February 2007 and December 2003 – of the 
MERCOSUR Parliament
39 and the Commission of Permanent Representatives, comprised of four 
members (the Permanent Representative in Montevideo ) and a President nominated for two years, the 
transformation of the MERCOSUR's Administrative Secretariat into a Technical Secretariat in 
July 02,40 and the creation in July 1998 of the Group on Services as a subsidiary body of the Group of 
the Common Market, in accordance with  Article XXII:2 of the Protocol. 
100. The highest decision-making body of the MERCOSUR is the Council for the Common 
Market (CCM), followed by the Group of the Common Market  – MERCOSUR's executive body – and the Trade Commission;  their role in services is defined in Articles XXI-XXIII of the Protocol.  
The general characteristics of these bodi es are summarized in table II.1 below.   
Table II.1 
MERCOSUR Institutional Framework 
Functions Composition Subordinate Bodies 
Council of the Common Market (CCM)  
•Consolidation of the integration process 
• Fulfillment of the Treaty of Asunción's goals • Issues Decisions 
 
 Services-specific functions 
•  Endorsement of specific commitments 
resulting form it, as well as any modification 
and/or suspension thereof • Minister of Foreign 
Affairs • Minister of Finance • Commission of Permanent Representatives of 
MERCOSUR (four members and a President)
a 
• Others ( e.g. Forum of Political Consultation and 
Coordination, Consultative Forum of Municipalities and 
Provinces, Meeting of Ministers, Meeting of High Authorities on Human Rights, and some high level groups 
and working groups) 
Group of the Common Market (GCM)  
• Supervision of the application of the Treaty of Asunción and legal instruments signed within its 
framework • Negotiations with third countries and 
international organizations (through a precise 
mandate from the CCM) • Issues mandatory Resolutions 
 
 Services-specific functions 
• Competence for services negotiations;  function 
carried out by the Group on Services Representatives of: 
• Ministry of Foreign 
Affairs • Ministry of Finance 
• Central Bank  • Working groups (industry, agriculture, energy, mining, 
services, communications, institutional affairs, technical 
regulations and conformity a ssessment, financial affairs, 
transport, environment, labour issues, investment, 
economic affairs, health, e-commerce) 
• Committees (automotive industry, technical co-operation)  
• Groups (services, government procurement) 
• Ad-hoc groups (sugar industry, external relations, etc.) • Specialized meetings (family agriculture, cinema and 
audiovisual authorities, drugs , science and technology, 
social communication, cooper atives, public defenders, 
youth, women, public ministries, trade promotion, 
tourism, residents abroad 
• Socio-Labour Commission • Technical Meeting on the Incorporation of the 
MERCOSUR Norms  
Table II.1 (Cont'd)  
                                                      
39 The inaugural session of the Parliament was held in December 2006 in Brasilia, and its installation 
took place on 7 May 2007 in Montevideo.  
40 The Decisions on the "Protocol Constitutive of the MERCOSUR Parliament" and on the 
establishment of the Commission and of the Secretariat were adopted respectively in December 2005, 
October 2003 and July 2002.  WT/REG238/1 
 Page 31 
 
 
  Functions Composition Subordinate Bodies 
Trade Commission (TC)  
• Application of common trade policy 
instruments, their follow-up and revision 
• Deal with intra-MERCOSUR trade 
• Issues  Directives 
 
 Services-specific functions 
• Implementation of the Protocol, with the 
exception of services negotiations  • Technical committees (tariffs, customs issues, trade 
rules, public policy that distorts competitivity, defense of 
competitiveness, trade statistics, consumer protection, and 
trade defense and safeguards). 
a The Commission assists the pro-tempore Presidency of MERCOSU R;  presents initiatives to the Council regarding MERCOSUR 
integration, external negotiations  and the formation of the common market;  and ai ms at strengthening economic, social, and par liamentary 
relations in MERCOSUR. 
 
101. An Ad Hoc  High Level Group for the Institutional Refo rm of MERCOSUR was established in  
December 2005;  following various adjournments, its proposals for an overall reform to 
MERCOSUR's institutional framework are expected to  be presented to the CCM by June 2009.   
6. Dispute Settlement 
102. Article XXIV provides that any dispute between Parties on matters dealt with by the Protocol 
is to be resolved in accordance with the pr ocedures and mechanisms in force in MERCOSUR 
regarding the settlement of disputes;  two such procedur es exist in parallel.  The first, and older, is the 
mechanism foreseen in the Protocol of Ouro Preto, wh ich entrusts in particular the TC to deal with 
complaints.  The second procedure is that establish ed by the Protocol of Olivos, in force since 
1 January 2004.41  Its main features include consultations ("direct negotiations");  choice of forum for 
the settlement of a dispute (MERCOSUR or WTO);42  intervention by the GCM upon agreement by 
the Parties, arbitration within an Ad Hoc  Arbitral Court (AC) composed of three members;43  and a 
review mechanism through the establishment of a Permanent Review Court (PRC) of five members.44  
Time frames are associated with every stage of the procedure.45  The Protocol also includes a 
mechanism for dealing with private complaints, from either natural or juridical persons within the 
GCM.   
103. From the entry into force of the Protocol of Montevideo and up to end-March 2008, no 
dispute has been initiated regarding trade in services.  
104. The Protocol of Olivos states that in cases of to tal or partial failure of  consultations, a party 
may decide to go into arbitration and/or to refer the matter to the GCM (Art. 6-8);46  alternatively, the 
parties may, by mutual agreement, access the P RC upon completion of cons ultations without going 
                                                      
41 The Protocol of Olivos was signed in Februa ry 2002 and regulated in December 2003.  On 
19 January 2007, the Parties signed a “Protocol Modifying the Protocol of Olivos”, which by end-March 2008 
had not yet entered into force.  The changes aim at adapting the Protocol of Olivos to an enlarged MERCOSUR and to transfer tasks under the responsibility of the ME RCOUR Administrative Secretariat to the Secretariat to 
the Permanent Review Court, established in 2005 by a GCM Resolution. 
42 Upon agreement of the respondent  party.  Once a dispute settlement procedure has begun, the parties 
may not request the use of the mechan isms established in the other fora. 
43 The Members are chosen from a roster of arbitrators.  Each MERCOSUR party nominates 
12 arbitrators and four "third arb itrators";  the latter chair the AC. 
44 Rules relating to the composition, functioning and rules of procedure of the PRC are contained in 
Articles 18-22 of the Protocol of Olivos.  In cases where the dispute involves only 2 State Parties, the PRC will be composed of 3 members only, otherwise it will be composed of five members.  Nevertheless, the State 
Parties may decide by mutual agreement other criteria for the functioning of the Tribunal. 
45 Timeframes refer to calendar days and are of a pe remptory  nature.  Parties to the dispute may 
however by mutual agreement ag ree on different timeframes. 
46 A third-party to the dispute may also refer the matter to the GCM;  in that case, the arbitral 
proceedings are not suspended unless agreed otherwise. WT/REG238/1 
Page 32  
 
  through the arbitration process
47 – which constitutes a major distinction vis-à-vis  the WTO dispute 
settlement mechanism.  The GCM is to be kept  informed of progress in and results of the 
consultations;  its intervention and recommendation sha ll not last more than 30 days from the date of 
the meeting where the dispute was first considered (Article 8).   
105. The detailed arbitration procedures, that are similar to those of the WTO are presented in 
Table II.2.  The Administrative Secretariat of MERCOSUR, and, when relevant, the later created 
Secretariat to the PRC, are responsible for the  ad ministrative proceedings in the arbitration and for 
informing the GCM of the main steps of the arbitration.   
106. The scope of the subject in arbitration is defi ned by the texts presented, and replies provided, 
to the AC and cannot be widened at a later stage (Art. 14).  Provisional measures may be authorized 
by the AC upon request but may be cancelled at any time (Art. 15).  Recourse to the review procedure 
filed following the AC award may be contested by th e other party (Art. 21).  Awards by the AC are to 
be issued within 60 days, with a possible extension of 30 days;  these timeframes are reduced to 30 and 15 days respectively in cases of awards by the PRC.  Awards by the AC and the PRC are adopted by majority and are binding.  The bindi ng nature of complying with an AC award is 
suspended if a motion for review is filed;  awards by the PRC are not subject to appeal.  Articles 31 
and 32 of the Protocol contain de tailed provisions relating to retalia tion, including the possibility for 
the party affected to request the AC or PRC, as th e case may be, to consider and issue a determination 
on implementation and retaliation, a nd their proportionality.  The Protocol also states that the CCM 
may establish special procedures to deal with excepti onal urgent situations that may cause injury to 
parties that would be difficult to remediate (Article 24);  these were agreed in July 2004 (CCM Dec 
23/04) and, as of end-March 2008, were not yet in  force since ratificati on from Brazil was still 
pending.   These procedures state the conditions under whic h a Party may have urgent recourse to the 
PRC;  set tight deadlines for presentation of the de fense arguments (three working days), the PRC's 
decision on the merits of the request (six calenda r days) and on the urgent  measure allowed (six 
calendar days);  regulates the application of retalia tory measures and parties’ requests to the PRC to 
reconsider its decision. 
107. The MERCOSUR's dispute settlement mechanisms are of a temporary nature;  Article 53 of 
the Protocol of Olivos provides for a review of the existing mechanism prior to the harmonization of 
the Common External Tariff, with a view to a dopting a permanent mechanism for the settlement of 
disputes.  Proposals for adjustments to the existi ng dispute settlement mechanism and the relevant 
Protocol of Olivos are expected by June 2008. 
                                                     
 
47 In cases of direct recourse to the PRC, the relevant provisions of Articles 9 and 12-16 of the Protocol 
of Olivos apply.  WT/REG238/1 
 Page 33 
 
 
   
(Art. 1802)  
-
- 4) Consultations  ("direct negotiations", Art. 4-5) 
Referral to Arbitral Court (Art. 6.1 & 9 )
AC award  (Art. 16 ) 
PRC award (Art. 21.2 )AC Composition (Art. 10, max. 20 days) 
Parties' representatives (Art.12-13) 
Recourse to PRC  (Art. 17) 
Examination (Art. 21.2 & 22) 60 da ys (30 da ys extension possible ) 
Notification of  measures adopted for  
complying with award (Art. 29.3)  Referral to GCM (Art. 6.2-6.3) 
Recommendations and/or comments  (Art. 7 )
AC examination  (Art. 14 & 16 ) 
Final im plementation  (Art. 29.2 ) 
Notice of retaliation (if non-
compliance)  (Art. 31) 
Retaliation  (Art. 31 ) Recourse to AC or PCR by 
other party (Art. 32.1) 
AC or PCR determination (Art. 32.2) 
Confirmation or modification of compensatory 
measures imposed (Art. 32.3) Provisional measures  (Art. 15 ) 
Contest by other 
parties  (Art. 21.1) 
Decision by AC or PRC  
(Art. 30.2) 30 da ys
Divergence on 
implementation  (Art. 30.1) Max. 35 days
15 da ys 15 days 15 da ys 
Direct recourse to PRC (Art. 23 )
30 days (15 days extension 
ibl )
Request for clarification on award 
and reply (30 days) (Art. 28) 
Timeframe as in award; otherwise, 30 days ** 
*  Timeframes refer to calendar days and are of a peremptory na ture.  Parties to the dispute ma y however by mutual agreement 
agree on different timeframes. 
** Timeframe suspended if recourse to PRC is made. 15 days 
30 da ys 1 year 
15 da ys  15 da ys
30 days from constitution of AC or PCR 
10 days or more if agreed30 da ys from meetin g Table II.2 - S ynopsis of MERCOSUR's dis pute settlement*WT/REG238/1 
Page 34  
 
  7. Relationship with agreements concluded by the Parties 
108. MERCOSUR, either collectively or individually,  has concluded a number of preferential trade 
agreements, either leading to the formation of free- trade areas or simply providing for the exchange of 
preferences.  In particular, numerous of such agre ements have been concluded in the context of the 
LAIA.  Free-trade and preferential trade agreemen ts concluded by both MERCOSUR as a group and 
its individual parties are presented in Table II.3 below.   
109. WTO Members were informed of the conclusion of some of these agreements in biennial 
reports presented by the LAIA Secretariat to the Committee on Trade and Development;  formal 
notifications to the WTO have not been made.
48   
110. In addition, MERCOSUR has concluded framework  agreements with Egypt (July 2004), the 
Gulf Cooperation Council (May 2005), Mexico (J uly 2002), Morocco (November 2004) and Pakistan 
(July 2006);  framework agreements concluded w ith India, Israel and South Africa have been 
superseded by the agreements listed below. 
Table II.3 
MERCOSUR: Participation in other RTAs (not ified and non-notified  in force), January 2008 
GATT/WTO Notification 
Partner/Agreement Date of 
signature  Date of 
entry  
into force Type of 
agreement Year WTO Provision 
ARGENTINA  
GSTP 13.04.88 19.04.89 Goods 1989 Enabling Clause 
LAIAa 12.08.80 18.03.81 Goods 1982 Enabling Clause 
BRAZIL  
GSTP 13.04.88 19.04.89 Goods 1989 Enabling Clause 
LAIAa 12.08.80 18.03.81 Goods 1982 Enabling Clause 
PTN 08.12.71 11.02.73 Goods 1971 Enabling Clause 
PARAGUAY  
LAIAa 12.08.80 18.03.81 Goods 1982 Enabling Clause 
PTN 08.12.71 11.02.73 Goods 1971 Enabling Clause 
URUGUAY  
Méxicob 15.11.03 15.07.04 Goods Not notified 
LAIAa 12.08.80 18.03.81 Goods 1982 Enabling Clause 
PTN 08.12.71 11.02.73 Goods 1971 Enabling Clause 
MERCOSUR 
    Israelc 18.12.07 Not in force Goods Not notified 
GSTP  03.10.06 02.11.06 G oods Accession to GSTP not notified. 
Cubad 21.07.06 02.07.07 Goods Not notified 
  Table II.3 (Cont'd)  
                                                      
48 WT/COMTD/11, 8 October 1997 and WT/COMTD/59, 25 January 2007.  The MERCOSUR Parties 
indicated that the LAIA reports, ma de under paragraph 4(a) on the Enab ling Clause, was elaborated by the 
LAIA Secretariat and presented by the 12 LAIA's member countries for the consideration of other 
WTO Members;  Parties also underlined that this was how LAIA provided information on its developments and 
progress in the context of the Enabling Clause.    WT/REG238/1 
 Page 35 
 
 
  GATT/WTO Notification 
Partner/Agreement Date of 
signature  Date of 
entry  
into force Type of 
agreement Year WTO Provision 
Perue 30.11.05 01.01.06 Goods Not notified 
SACUf 16.12.04 Not in force Goods Not notified 
Andean Communit y
(Colombia, Ecuado r
Venezuela)g 18.10.04 Jan-Apr-05 Goods Not notified 
Indiah 25.01.04 Not in force Goods Not notified 
Boliviai 17.12.96 28.02.97 Goods Not notified 
Chilej 25.06.96 01.10.96 Goods Not notified 
a Framework agreement that allows for the conclusion of bilate ral or plurilateral preferential trade arrangements among Latin Ame rican 
countries. 
b Concluded in the framework of the MERCOSUR-Me xico Framework Agreement signed in July 2002. 
c Gradual establishment of a free-trade area within a transition period of 10 years;  rounds of negotiations currently taking pl ace. 
d Multilateralization of previous bila teral preferential agreements.  Not in force for Paraguay and Uruguay. 
e Establishment of a free-trade area within a maximum transition period of 15 years. 
f Coverage of around 950 tariff lines for each part y, margins of preferen ce of 10, 25, 50 e 100%. 
g Gradual establishment of a free-trade area within a transition period of 10 years. 
h Coverage of around 450 tariff lines for each party, margins of preference of 10,  20, and few of 100%. 
i Establishment of a free-trade area by 1 January 2006. 
j Duty elimination for at least three quarters of tari ff lines by January 2004 and for all tariff lines by 2014. 
GSTP: GENERAL SYSTEM OF TRADE PREFERENCES AMONG DEVELOPING COUNTRIES. 
LAIA: LATIN AMERICAN INTEGRATION ASSOCIATION. PTN: PROTOCOL RELATING TO TRADE NEGOTIATIONS AMONG DEVELOPING COUNTRIES. 
 
Source: WTO Secretariat. 
 
111. As associated members of MERCOSUR, Boliv ia, Chile, Colombia, Ecuador and Peru 
participate at MERCOSUR summits.   
112. MERCOSUR and the European Union are negotia ting an interregional association agreement 
for the establishment of a comprehensive political and economic partnership between the two regions 
on the basis of the EU-MERCOSUR Interregional Framework Co-operation Agreement, signed in 
December 1995.  The negotiations were formally  launched in June 1999 and tariff and services 
negotiations started on July 2001;  the target date of October 2004 for the conclusions of the 
negotiations was however not met.  Both parti es have underlined the relationship between their 
negotiations and progress in the Doha round;  from that date and up to early 2008, discussions at the 
technical level have been held.  In a Ministerial Meeting held in December  2007, the parties signed a 
declaration regarding an indicative co-operation programme for 2007-2013 and reaffirmed their will 
to re-launch the negotiations with a view to concluding an Association Agreement. WT/REG238/1 
Page 36  
 
  ANNEX I 
 
 
Table AI.1 
Status of Ratification of Schedules of Specific Commitments by MERCOSUR Parties  
 Argentina Brazil Paraguay Uruguay 
Initial list CMC Decision No 9/98 of July 1998 
    Ratification 17.7.02 8.11.05 No 8.12.04 
    In force Yes Yes No Yes 
First round CMC Decision No 01/00 of July 2000 
    Ratification No 8.11.05 No No 
    In force No No No No 
Second round CMC Decision No 56/00 of December 2000 
    Ratification  11.11.05 No No 
    In force No No No No 
Third round CMC Decision No 10/01   
    Ratification No No No No 
    In force No No No No 
Fourth round CMC Decision No 22/03 of December 2003 
    Ratification No No No No 
    In force No No No No 
Fifth round CMC Decision No 29/04 of December 2004 
    Ratification No No No No 
    In force No No No No 
Sixth round CMC Decision No 01/06 of July 2006 
    Ratification No No No No 
    In force No No No No 
 
Table AI.2 
Transport Agreements signed by MERCOSUR Parties prior to the entry into force of the Montevideo Protocol  
Country Agreements 
Argentina Agreement on Maritime  Transport Argentina-Brazil 
 Agreement on River Transport thr ough the Paraguay-Paraná Waterway 
 Agreement on International Land Transport – ATIT 
 Agreement on Maritime Transport  Argentina-Cuba 
 Agreement on Transversal Transboudary River Transport Argentina-Brazil 
 Agreement on Transversal Transboudary River Transport Argentina-Paraguay 
 Agreement on Transversal Transboudary River Trans port of Passengers and Vehicles Argentina-Uruguay 
Brazil Agreement on Maritime Transport Brazil-Argentina 
 Agreement on River Transport thr ough the Paraguay-Paraná Waterway 
 Agreement on International Land Transport –ATIT 
 Agreement on Contract for International Transport and Ci vil Responsibility of Transporte rs in International Road 
Transportation of Goods  
 Agreement on Transboudary River Transport Argentina-Brazil 
 Convention on Maritime Transport Brazil-Uruguay 
Paraguay Agreement on International Land Transport –ATIT 
Uruguay Agreement on Maritime and River Transport  Uruguay-Brazil 
 Agreement on Transversal Transboudary River Trans port of Passengers and Vehicles Uruguay-Argentina 
 Agreement on River Transport thr ough the Paraguay-Paraná Waterway 
 Agreement on Maritime and Fluvi al Transport Uruguay- Paraguay 
 Agreement on International Land Transport –ATIT 
 
  WT/REG238/1 
 Page 37 
 
 
  Table AI.3 
Air Transport Agreements signed by Uruguay prior to  the entry into force of the Montevideo Protocol  
Country Date Liberty 
Subregional Fortaleza Convention of 17.12.96.  Deals with 3rd and 4th Liberties.    
Argentina  22.12.68, 7.11.97 (i nitialled), last consultation 
meeting held on 23-24.2.05. Deals with 3rd, 4th and 5th Liberties.    
Austria 28.2.96. Deals with 3rd, 4th and 5th Liberties.  
Bolivia 26.7.75, last consulta tion meeting held La Paz in 
July 1998. Deals with 3rd, 4th and 5th Liberties.    
Brazil 28.12.56, last consultation meeting held in 
Montevideo on 4.12.03. Deals with 3rd, 4th and 5th Liberties.    
Chile 5.1.77, last consultation meeting held in Montevideo 
on 13.2.03. An Open Skies convention has been initialled but 
entry into force is pending changes into Uruguay 
legislation. 
Colombia 28.7.79, last consultation meeting held in 
Montevideo on 2-3.7.01. Deals with 3rd and 4th Liberties.    
Cuba 5.7.97.  Deals with 3rd and 4th Liberties.    
Dubai  Memorandum of Understa nding of 3.10.06. Deals with 1st, 2nd, 3rd, 4th and 5th Liberties.    
Ecuador Agreement under negotia tion, last consultation in 
December 2001.  
European Communities 14.11.05.  
France Agreement of 1979, last consultation meeting held 
on 15.9.94. Deals with 3rd, 4th and 5th Liberties. 
Germany 31.8.57, last consultation m eeting held in 1987. Deals with 3rd, 4th and 5th Liberties.    
Israel 7.5.96, last consultation meeting held in Tel-Aviv 
on 6-7.5.96  Deals with 3rd and 4th Liberties.    
Italy  No bilateral convention, last consultation on 
29-30.5.81.  
Jordan Agreement initialled  on 10.3.77. Deals with 3rd and 4th Liberties.    
Morocco 31.5.79.  Deals with 3rd and 4th Liberties.    
Netherlands 30.1.79.   Deals with 3rd, 4th and 5th Liberties.    
Netherlands Antilles Act of Unders tanding of 1.1.81.  Deals with 3rd, 4th and 5th Liberties.    
Panama 16.1.98.  Open Sky Treaty. 
Paraguay 19.3.57, last consultation meeting held in 
Montevideo on 28.7.03. Deals with 3rd, 4th and 5th Liberties.    
Peru Agreement initialled on 26-27.11.99. Deals with 3rd and 4th Liberties.    
Poland Agreement initialled.   
Portugal Memorandum of Understandi ng of 9.9.98.  Deals with 3rd and 4th Liberties.    
Romania 17.4.96. Deals with 3rd and 4th Liberties.    
Russian Federation Bilateral agreem ent of 23.7.79, last consultation 
meeting held in Moscow on 19.6.96. Deals with 3rd, 4th and 5th Liberties. 
Spain  24.11.77, last consultation meeting held in Madrid 
on 5-6.3.96. New draft of 21.10.05. Deals with 3
rd, 4th, 5th and 6th Liberties.  
Sweden, Denmark and 
Norway 21.9.79.  Deals with 3rd and 4th Liberties.    
Switzerland 16.9.60, last consultation meeting held in 
Montevideo on 2.5.95. Deals with 3rd, 4th and 5th Liberties.    
United Kingdom 6.2.98.  Deals with 3rd, 4th and 5th Liberties.    
United States 14.7.46, last consultation meeting held in 
Montevideo on 20.10.04. Open Skies Convention signed on  20.10.04. Deals with 3
rd, 4th and 5th Liberties. 
Venezuela 9.12.05. Deals with 1stand  2nd Liberties.    
 
 
 
  WT/REG238/1 
Page 38  
 
  ANNEX II 
 
 
Table AII.1 
MERCOSUR Government Procurement Prot ocol – Summary of Positive Lists 
Country and Positive Lists of Entities Argentina Brazil Paraguay Uruguay 
Goods  
Entities of the Central administration  21    
Entities of the Executive power   23 9 70 
Entities of the Judicial power  9 4 4 
Decentralized Agencies  35  30 3 
Institutes of Social Security  3    
Public enterprises, companies of mixed economy and 
regulatory and executive Gov. agencies   1   
Other non-financial entities of the national public service  38    
Other entities  1  3 
     
Services  
Business services  
  Professional services X X   
  Computer and related services X X X X 
  Research and development services X X   
  Real state services  X X  X 
  Rental/leasing services without operators X X  X 
  Other business services X X X X 
Communication services  
  Courier services X  X  
  Telecommunication services X  X  
  Audiovisual services  X   
Distribution services  
  Wholesale trade services X X X  
  Retailing services X X X  
  Franchising X  X  
Educational services   
  Other education services   X   
Financial services  
  All insurance and insurance-related services X  X  
Tourism and travel related services  
  Hotel and restaurants X X X  
  Travel agencies and tour operators services X X X X 
  Tourist guides services X  X X 
  Other  X  X  
Recreational, cultural and sporting services   
  Entertainment services   X   
  Libraries, archives, museums and other cultural   services   X   
Transport services  
  Road transport services   X   
  Services auxiliary to al l modes of transport    X 
Other services n.i.e.  
  Cleaning of textiles and leather services  X   
     
Public works  
Construction and related engineering services   
  General construction work for buildings  X   
  general construction work for civil engineering  X   
  Installation and assembly work  X   
  Building completion and finishing work  X   
  Other  X   
To be determined at a later stage X  X X 
  WT/REG238/1 
 Page 39 
 
 
  Table AII.2 
MERCOSUR Government Procurement Protocol – Summary of Negative Lists and Reservations  
Country  Reservations and Negative Lists  
Argentina No entities at sub-federal level 
Negative list of goods Reservations with regards to national treatment 
Brazil No entities at sub-federal level 
No negative list of goods 
Paraguay No market access to Argentina and Brazil until such time these countries open 
the procurement of regional and local  governments on the Paraguayan border 
Negative list of goods to be determined 
Reservations with regards to national treatment 
Uruguay None 
Negative list of goods vis-à-vis  Argentina and Brazil;  Paraguay to be determined 
Reservations with regards to national treatment 
 
__________