RESTRICTED  WORLD TRADE  
ORGANIZATION  S/C/M/102 
21 February 2011 
 (11-0864) 
Council for Trade in Services   
  
 
REPORT OF THE MEETING HELD ON 17 NOVEMBER 2010 
 
Note by the Secretariat
1 
  
1. The Council for Trade in Services held a meeting dedicated to the Review of Article II 
Exemptions (MFN) on 17 November 2010.  The mee ting was chaired by Ambassador Elin Johansen 
(Norway).  The agenda for this meeting was contained in document WTO/AIR/
3658 . 
2. The Chairperson  suggested that the agenda be adopted as circulated.  
3. The Council so agreed . 
4. The Chairperson  recalled that this was the third review of MFN exemptions mandated by the 
Annex on Article II (MFN) Exemptions.  More speci fically, paragraph 4 of the Annex called upon the 
Council to examine whether the conditions which creat ed the need for the exemptions still prevailed 
and to determine the date of any further review.  The Secretariat had circulated three background 
documents in advance of the meeting:  two updated compilations, one organised by sector 
(JOB/SERV/29), and one organised by Member (JOB/SERV/30), and a doc ument providing updated 
statistical information on the number of MFN exem ptions listed (JOB/SERV/31).  These documents 
were introduced by the Secretariat.  
5. The Chairperson  recalled that it was agreed at the Council's meeting held on 30 June 2010, 
that the third review of MFN exemptions would be conducted in dedicated meetings, on a sector-by-
sector basis through a question-and-answer process, following previous practice.  It had also been 
decided that the first dedicated meeting woul d address MFN exemptions listed for the following 
sectors:  all sectors, business services, communica tion services, construction and related engineering 
services, and distribution services.  For the purpose of the review, a number of delegations had submitted questions in writing in advance of the meeting.  These questions were circulated to 
Members, as follows:  a communication from Ch ina (S/C/W/321);  a communication from Hong 
Kong China and Japan (S/C/W/322);  a communicati on from Chile (S/C/W/323 and Corr.1);  and a 
communication from Korea (S/C/W/325 and Corr.1).  
6. In order to have an orderly and efficient discussion, the Chairperson
 suggested that the 
Council take each sector in turn and open the floor  for delegations which had received questions in 
that particular sector to respond.  She noted that it was desirable for responding Members to structure 
their interventions as much as possible on the basis of  the questions addressed to them.  Discussions 
would be conducted in formal mode with the possibi lity of turning to informal mode if Members so 
desired.  Before opening the discussions on the exem ptions for "All Sectors", the Chairperson invited 
delegations to comment on issues of a general nature. 
                                                      
 1  This document has been prepared  under the Secretariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO. S/C/M/102 
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A. I
SSUES OF A GENERAL NATURE  
7. The representative of Hong Kong China  thanked the Secretariat for compiling the relevant 
information in preparation for the third review.  He welcomed the opportunity to review existing 
MFN exemptions but was at the same time disappoi nted that it was still necessary to do so, fifteen 
years after many of these exemptions were scheduled .  The MFN principle was the cornerstone of the 
multilateral trading system.  Thus, while under Ar ticle II:2 of GATS, a Member may maintain a 
measure which is inconsistent with its MFN obligati on, such exemptions were  exceptions to the rule 
and were not intended to be maintain ed for an indefinite period.  He  recalled that paragraph 4 of the 
Annex on Article II Exemptions required the Co uncil to examine whether the conditions which 
created the need for the exemption still prevailed.  In  order to have a meaningful examination of  such 
conditions, Members had the right to ask for all re levant information, including, for example, the 
scope, the administration and use of MFN exemptions scheduled. 
8. He further noted that the first sentence of para graph 6 of the Annex on Article II Exemptions 
stated that "in principle, such exemptions should not exceed a period of 10 years".  However, nearly 
all MFN exemptions had been scheduled for an indefi nite period of time.  This placed some doubt on 
whether Members saw MFN treatment to be the rule, or  as the exception.  His delegation believed that 
the language in paragraph 6 had set a ten year limit  for MFN exemptions.  As this was already the 
third review, he stressed the importance for all Me mbers to participate constructively, in order to 
make it a substantive and meaningful exercise.  To facilitate the review, Hong Kong China together 
with Japan had in the communication contained in document S/C/W/322, set out a number of general 
questions to all Members maintaining MFN exempt ions.  These included: whether exemptions had 
been used;  whether they were still justified;  wh ether steps had been taken to consider eliminating 
them;  and whether such exemptions would be c onsistent with other ground principles of the WTO 
architecture.  He encouraged Members to make use of these questions for reflection and critical 
assessment, and hoped to hear responses. 
9. Whilst the review would not pass judgement on whether MFN exemptions would still be 
needed, his delegation hoped that Members would make use of the exercise to take concrete steps to 
consider whether exemptions could be eliminated.  He recalled that in the negotiations a collective 
request had been submitted requesting Members to el iminate their exemptions as part of the Doha 
outcomes.  So far, the response to  that collective request from Member s had been very disappointing.  
Whilst the review exercise was being conduc ted on a separate track from the Doha Round 
negotiations, it could be a positive contribution.  He noted that no written replies had, so far, been 
received from Members.  Thus, he expected that most Members would be responding to the questions 
orally.  Following the practice of the second revi ew conducted in 2004 and 20 05, he requested that 
Members be provided with the opportunity to revert to any outstanding points at the next dedicated session.  He looked forward to construc tive engagement by all Members. 
10. The representative of Japan
 stressed that MFN was one of the most important principles of the 
GATS and that MFN exemptions must be exceptiona l and transitional.  As the review had been 
mandated by the GATS itself, his delegation saw its purpose as one of maintaining the proper 
functioning of the GATS by ensuring the transpar ency and soundness of measures taken.  He noted 
that Japan had jointly submitted a set of written que stions together with Hong Kong China and looked 
forward to examining whether the conditions which had created the need for the exemptions still 
prevailed.  He hoped that through the review, Members' understanding of the subject would be 
deepened and that common understanding could be reached on those measures for which MFN 
exemptions would be needed.  He  also underscored the need for substantive and meaningful outcomes 
from the review, including the effort to reduce th e number of exemptions through negotiations.  
11. The representative of Korea  expressed support for the statement made by Hong Kong China 
and thanked the Secretariat for updating the compila tions of MFN exemption lists.  He noted that 
these documents represented useful background material  for the Review.  He stressed that while MFN  S/C/M/102 
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was one of the fundamental principles of the GATS,  at the same time, the agreement also provided 
Members with some temporary flexibility in the application of this fundamental principle under certain conditions.  In principle, such exemptions  should not exceed 10 years and should be kept to a 
minimum.  He expressed confidence that the re view process would contribute to the eventual 
elimination, if not reduction, of the existing MF N exemption measures by clarifying and identifying 
various problematic aspects.  His delegation hoped to  see constructive engagement by all Members.  
12. The representative of China
 expressed support for the statement made by Hong Kong China 
and thanked the Secretariat for the useful b ackground documents.  The MFN principle was the 
cornerstone of the multilateral trading system, and an y deviation from this principle should be treated 
with utmost seriousness as it weaken ed the basis for fair trade among WTO Members.  He noted that 
the MFN review mechanism had played an important  role in the past years and some progress had 
been made.  Under the mechanism, Members had cl arified in a substantive and meaningful manner 
why exemptions had been needed .  The mechanism had enhanced transparency and understanding of 
the purpose of the review.  Furthermore, it was en couraging that some Members had indicated their 
willingness to remove their MFN exemptions in th e ongoing negotiations.  Although an integral part 
of the GATS framework, it was his delegation's view that all MFN exemptions shall be one-off, of 
limited duration and subject to frequent review, and sh all not be used as disguised trade restrictions.  
Any new exemptions shall be dealt with through an  application for a waiver and should not exceed a 
period of 10 years.  Substantive and meaningful review must be regularly carried out to examine whether the conditions which created the need for the exemptions still pr evailed.  He noted that China 
had circulated its questions in advance of the me eting and looked forward to  constructive engagement 
by other Members. 
13. The representative of Chinese Taipei
 emphasised that MFN treatment was one of the most 
important disciplines under the multilateral trading sy stem.  Any deviation from MFN represented an 
exception to the rule and not a comm on practice.  He recalled that as stated in the Annex on Article II 
Exemptions the purpose of the review was to examine whether the need for exemptions still prevailed.  
On this occasion, his delegation had not submitted any particular questions to Members but this did 
not mean that it attached less importance to the th ird review.  He referred to the communication from 
Chinese Taipei, Hong Kong China, Japan, Korea and Mexico, as contained in S/C/W/322, in which 
four general questions had been submitted to Me mbers which had MFN exemptions.  Answers to 
those questions would help improve understanding as to whether the conditions for listed exemptions 
still prevailed.  He recalled that Members are to  be guided by the objectives under Annex C of the 
Hong Kong Ministerial Declaration which included th e removal and/or substantial reduction of MFN 
exemptions, as well as the clarification of remain ing exemptions.  He looked forward to having 
fruitful discussions under the review and expect ed meaningful results from the negotiations.  
14. The representative of Switzerland  thanked the Secretariat for the useful background 
documents.  He expressed the support of his dele gation for the comments made by Hong Kong China 
which fully reflected the position of Switzerland.  He referred to two points mentioned by previous 
speakers.  Firstly, an important purpose of the revi ew was to better clarify the reasons for scheduling 
and maintaining an MFN exemption.  As had be en highlighted by the delegation of Hong Kong 
China, it was important to establish the legal basis for exemptions, be it internal legislation or a 
bilateral or multilateral treaty.  If there was no lega l basis for the listed exemption, then it cannot be 
applied.  Such a case could give cause for dispute action.  In earlier reviews, Switzerland had already 
raised this question but either no response was receive d or replies were insufficient.  The situation was 
no better in the context of bilate ral consultations.  Secondly,  as had been mentioned by other 
delegations, the Annex on Article II Exemptions had envisaged a temporary duration for exemptions.  
Even though the provision uses the term "should", th e intent was clear and exemptions scheduled, no 
matter how they might be worded, must comply with  the requirement of the Annex on duration.  The 
Secretariat compilation as contained in documen t JOB/SERV/29 showed that exemptions had not 
been reduced in any way as compared to earlier compilations.  It also demonstrated the limited success of the review process, which was clearly to reduce or to eliminate all exemptions.  He noted S/C/M/102 
Page 4  
 
that his delegation would like to come back to this point, in particular with re ference to paragraph four 
of the Annex, at the end of the review.  
15. The representative of Pakistan
 associated his delegation with statements by previous speakers, 
particularly the comments made by Hong Kong Ch ina, which had reiterated the fact that MFN 
exemptions were a temporary and not a permanent feature of the GATS system.  
16. The representative of Mexico  noted that her delegation supported the joint communication 
from Hong Kong China and Japan (S/C/W/322).  She hoped that Members would be able to answer 
the general questions that had been posed so  as to make the review process effective.  
B. ALL SECTORS  
17. The Chairperson  reassured the delegation of Hong Kong China that there would be an 
opportunity to revert to any outstanding issue at the next dedicated session.  She then invited  
Members which had received questions on exemptions filed for "All Sectors" to respond, pointing out 
that a large number of MFN-inconsistent m easures had been listed under that category.  
18. The representative of Hong Kong China  highlighted that together with the delegation of Japan 
it had submitted questions on horizon tal exemptions to five different Members.  These questions 
followed-up on those asked at previous reviews.  Fi rstly, he asked the delegation of Canada why an 
MFN exemption had been listed for a measure that w as outside the scope of the GATS.  He noted that 
the Canadian delegation had responde d in previous reviews, but his delegation would nevertheless be 
interested to know if there had been any new thi nking on this matter.  Secondly, clarification was 
requested from the EU as to why it was necessary to keep MFN exemptions for countries that had 
already acceded to the EU.  Thirdly, with resp ect to the US, it would like to know why it was 
necessary to list an exemption for less favourable  treatment of Members with discriminatory 
measures, rather than seek recourse from the disput e settlement system.  Finally, his delegation would 
like to know from Malaysia and Thailand whether the MFN exemptions listed continued to exist.  He 
believed that the responses to these questions w ould help assess whether the conditions for the 
exemptions still prevail. 
19. The representative of China  noted that with respect to the category "all sectors", it had 
submitted five questions to the EU, and one to Th ailand and the US respectively.  These questions 
were contained in the document S/C/W/321 and mainly  focused on exemptions relating to measures 
regulating the movement of natural persons.  He high lighted in particular pa ragraphs 2, 6 and 8 of 
their communication.  A review of these questi ons would help delegati ons better understand the 
regulatory situation with respect to these exemptio ns and whether the conditions still prevailed, 15 
years after they were listed. 
20. The representative of Canada  responded to the questions that had been posed to her 
delegation.  With respect to the general question on its horizontal investor-state arbitration, she noted 
that Canada had taken this exemption because of the right to investor-state arbitration in its foreign 
investment promotion and protection agreements (FIP As).  By virtue of Article V of the GATS, the 
MFN clause cannot be invoked with regard to more favourable rights granted to Canada's partners 
pursuant to a free trade agreement.  However, it would be unlikely that measures adopted under a 
bilateral investment treaty would satisfy the conditi ons of Article V.  Canada, therefore, took this 
exemption on an indeterminate basis with no commitment for a phase-out and would apply it to 
sectors and all countries for the promotion of foreign investment.  These bilateral investment treaties remain in effect.  Since 2004 to 2005, Canada h as concluded six more such agreements bringing the 
total number to 23.  New bilateral investment tr eaties with an investor-state dispute settlement 
provision had been negotiated and brought into force.   Canada expected to continue including these 
provisions in future agreements.  For this reason, Canada could not say that the conditions creating the 
need for this MFN exemption had changed nor did it foresee any future changes.  It would continue to  S/C/M/102 
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maintain the exemption to ensure there would not be  an obligation to extend investor-state rights to 
other WTO Members.  
21. Specifically on the question raised by Hong Kong China, she noted that Canada did believe 
that some aspects of bilateral investment agreem ents were covered by commercial presence, mode 3 
of the GATS.  In this respect, Canada's bilateral investment agreement simply reflected the status quo 
of its GATS commitments and obligations.  The only substantial difference being that investors and 
their investments have an additional right to arbitr ation under the investor-state provisions of those 
agreements.  This was the reason wh y Canada had taken an MFN exempti on, but it did not feel that an 
exemption would be necessary for other aspects of  its bilateral investment agreements.    
22. The representative of the European Union  welcomed the formal start of the third review of the 
MFN exemptions pursuant to the GATS Annex.  The pur pose of this review was very clearly stated in 
the Annex on Article II exemptions, namely that it w as to examine whether the conditions that created 
the need for the exemptions still prevailed.  Th erefore, the EU would respond to the questions 
received with that purpose in mind.  Other questions that were of a more general character including 
questions that fell within the scope of paragraph 6 of the Annex, should be discussed in the context of 
the Doha negotiations.  With respect to exemptions applying to all sectors, the EU had received joint 
questions from China,  Hong Kong China,  and Japan, and a separate question from Chile.  She noted that she would group her responses to these questions. 
23. The first question concerned exemptions by Austria and the EU as a whole.  The 
representative of the EU noted that they both addr essed bilateral agreements that the EU or its 
Members had signed with Switzerland.  Both the Austrian and the EU exemption, were based on 
longstanding relations  with Switzerland and also based on the possible progressive integration of 
Switzerland into the EU.  According to those agre ements Swiss citizens enjoy a special right and 
certain privileges with respect to visas, commerc ial presence and access to employment.  There was 
also a more recent agreement concluded between th e EU and Switzerland which entered into force in 
2002, which also provided for the cross-border supply of  services.  Therefore, the EU considered that 
all the conditions behind these exemptions still prevaile d and needed to be maintained.  She noted that 
there was also a specific question on whether there was a distinction between measures which targeted 
immigration and those which targeted the tem porary movement of natural persons as service 
suppliers.  The agreement made no clear distinction but the main focus of the exemption itself was on 
the supply of services, and immigration matters were in any case, outside the scope of the GATS.  She 
gave the following example:  Swiss citizens may exercise any activity as employed or self-employed 
persons under the same conditions applicable to Au strian citizens after five years of permanent 
residence in Austria.  Therefore, due to the ve ry close co-operation between Switzerland and the EU, 
this exception was considered to be necessary.   
24. The second question from China and Chile concer ned an exemption with respect to the 
facilitation of access procedures in France for the exercise of certain service activities and professions 
by natural and legal persons of certain third coun tries.  France had specified that nationals of a 
number of non-European countries notably from French speaking African countries and Algeria may benefit from more favourable measures regardi ng access to certain professions.  Those exemptions 
resulted from the fact that France had concluded w ith those countries bilateral agreements regarding 
residence and stay, which covered the exercise of  commercial agricultural or craftsmen activities, 
whether salaried or non salaried, as well as exceptiona l access to liberal professions.  Those bilateral 
agreements were the result of long standing relatio ns between France and those countries.  Since the 
beginning of the 1990s, France had begun the renegotiation of circulation and establishment 
agreements that it had concluded with most of  the African countries previously under French 
sovereignty.  Therefore, the conditions requiring the maintenance of this exemption still prevailed.   S/C/M/102 
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25. The third question concerned measures based upon bilateral agreements between Italy and 
third countries guaranteeing work permits for seasona l workers.  That MFN exemption again reflected 
historical and geographical links between Italy and the designated countries.  Italy had concluded such 
agreements because they were with neighbouri ng countries from which constant flows of workers 
traditionally arrived.  It had been judged necessary to  prevent disorderly immigration, foster economic 
relations with those countries and labour shortages during seasonal peaks.  These agreements, such as 
with Egypt and Albania, were in force and it w ould be necessary to maintain the exemption.   
26. The fourth question concerned the exem ption listed on page 76 of the document 
JOB/SERV/30.  This exemption covered all sectors, pr incipally construction, hotel and catering.  This 
exemption was based on the historical relations be tween the European and Mediterranean countries 
with the EU, particularly countries which had also signed association agreements.  They all form part 
of the immediate periphery of the EU.  Association agreements were crucial elements of the EU foreign policy.  She noted that with regard to the services dimension of those agreements, the MFN 
exemption was an essential part of the EU offer,  and since it covered not only countries which had 
joined the EU, the exemption had to be maintained for other countries and the agreements in force.  
27. The fifth question, raised by Chile, concerned the exemption by Portugal.  She noted that 
there was, however, no need for the EU to pr ovide information on the activities and professions 
covered by the measure.  The important element of the exemption was not the link to the identity of the activities, but the identity of the nationals covered.  In the case of the latter, they were all nationals 
from Portuguese-speaking countries.  The exemption was based on historical links between Portugal and designated countries and served to reinforce co -operation between countries who have Portuguese 
as their official language.  It took into account strong cultural and political links and had to be 
maintained for these reasons.   
28. The sixth question, also from Chile, concerned an  exemption listed by the EU with regard to 
existing or future agreements w ith certain countries and principalities.  These principalities are San 
Marino, Monaco, Andorra and the Vatican city state.   The rationale of this MFN exemption was the 
particular historical situation of these principalities.   They are landlocked and highly integrated with 
the EU, and enjoy a special relationship with certain  member states for obvious political and historical 
reasons.  The exemption was indefinite in duratio n and the EU did not see any change in the near 
future.  The circumstances that created the need for the exempti on still prevailed, and it would be 
necessary to maintain it.   
29. The seventh question, from Hong Kong China and Japan, concerned measures taken to 
promote Nordic cooperation.  The reasons which justified the exemption still prevailed.  This 
exemption was necessary in order fo r Nordic countries that are EU me mbers to be able to guarantee 
financial support and assistance relating to projects fo r Nordic co-operation and identity.  Nordic co-
operation covered very broad pol itical, educational and legal areas.  The measures would not 
discriminate service providers from other WTO countries but would help promote and develop 
historically strong social and economic ties between Nordic countries. 
30. The representative of the United States
 responded to questions posed by Hong Kong China, 
Japan and China.  He noted that as some of those questions were of a very general nature, he would 
first provide a general overview before turning to  the specific questions posed.  In general, the 
exemptions maintained by the US were the result of policies designed to promote liberal market 
access, and fell into two broad categories:  reciprocit y provisions found in federal or state laws;  and 
reciprocal treatment resulting from international agre ements on trade and investment or taxation.  The 
goal of these exemptions was to encourage tradin g partners to provide a corresponding level of 
openness.  He noted that at present, there was a ra ther wide disparity in level of openness among 
Members, and as a result, the conditions creating th e need for these exemptions still prevailed.    S/C/M/102 
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31. Regarding the questions from  Hong Kong China and Japan, on the US internal revenue code, 
he noted that the US had never actually implemente d any measure in accordance with this authority.  
As a result it had not made determinations, for exampl e, with respect to the President's authority or on 
whether dispute settlement would be pursued th rough the WTO or other channels.  Thus, no 
determination had been taken that would allow for a solid policy course in that event.  Regarding 
China's question, he noted that the relevant visas fell under the E-one treaty trader and E-two treaty 
investor programmes.  These were designed to facilitate trade by providing a mechanism whereby 
nationals of countries with which the US had agreem ents would be able to come to the country, in 
order to direct and develop, their firm's substa ntial trade or investment in US businesses.  Non-
immigrant visas were for international travellers , citizens of other countries, coming to the US 
temporarily.  The visa would allow an individual to travel to a US port of entry and request 
permission from the Department of Homeland Secur ity, Customs and Border Protection to enter the 
US.  This type of non-immigrant visa related to the principle purpose of travel.   
32. For non-immigrants seeking to work temporarily in the US, the prospective employer must 
generally file a non-immigrant petition on behalf of th e visa applicant.  An overview of the types of 
non-immigrant visas and visas available under immigra tion law could be found on the internet at 
travel.state.gov.  For an immigrant visa, in genera l, the foreign citizen must be sponsored by a US 
citizen, relative, a US lawful permanent resident or  a prospective employer, and be the beneficiary of 
an approved petition.  An affida vit of support form is required for most family-based and some 
employment-based immigrants to show that there woul d be adequate means of financial support in the 
US.  He believed that these were the specific ques tions received by the US, a nd he would be happy to 
provide further details, if required.   
33. The representative of Malaysia  thanked Hong Kong China and Japan for their questions.  On 
the horizontal exemptions, Malaysia maintained the exemption as part of its national policy objectives 
towards progressive liberalization and the developmen t of domestic service suppliers.  The conditions 
for which these exemptions were ta ken still prevailed.  Despite the exemptions, it was noted that 
Malaysia's equity restrictions on investment app lied to all countries.  Ma laysia had not  taken any 
discriminatory measures against any Member, in its unilateral liberalization, in any sector.  The exemption was not intended to hinder foreign service suppliers from establishing presence or providing services in Malaysia.  She reassured Members that the exemption would not be implemented on a discriminatory basis.  All liberalization measures taken by Malaysia had been accorded on an MFN basis, apart from those taken in bilateral and regional trading agreements.  These 
measures were in any event covered by Article V of  the GATS.  She noted that her delegation would 
be happy to take up any follow-up questions that Ho ng Kong China or Japan might have bilaterally  
34. The representative of Thailand
 thanked delegates for the questions raised on the exemptions 
pertaining to the Treaty of Amity and Economic Re lations between Thailand and the US, which was 
signed in 1966.  He highlighted that the pro cess of negotiations had been prolonged by political 
changes and the global financial crisis.  In particul ar the political changes in Thailand in 2006 led to 
the establishment of a new constitution in 2007.  The new constitution enforced lengthy internal 
procedures for parliamentary approval to commence ne gotiations on internationa l agreements that had 
significant impact on the Thai economy and society.   Significant international negotiations, including 
renewed negotiations, were subject to the procedur es required by the constitution.  These procedures 
include amongst others impact assessment studies  as well as parliamentary reviews.  All these 
processes took time.  In spite of the political situ ation, Thailand had continued to pursue progressive 
liberalization of services trade based on differe nt levels of development and readiness.  
35. The representative of Canada  responded to a number of non-horizontal MFN questions that 
had been posed.  These related to sectoral indefin ite exemptions.  She underscored that the GATS was 
a relatively new agreement, and the exemptions in questions related to agre ements taken before GATS 
commitments came into place.  The first related to the seasonal agricultural worker programme in 
Canada.  She noted that this was a very specific programme, which dated back to the 1960s and 70s, S/C/M/102 
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and the exemption applied to the  Caribbean c ountries of Anguilla, Antigua and Barbuda, Barbados, 
Dominica, Grenada, Jamaica, Montserrat, St Kitts and Nevis, St Lucia, St Vincent, Trinidad and 
Tobago.  The duration of the exemption was inde terminate.  The number of workers coming under 
this programme had constantly increased and the terms of the reference of the memorandum of understanding governing this process had remained intact.  
36.  The conditions which created the need for this exemption still prevailed.  The hiring for these 
workers was primarily by the Canadian agricultu ral industry.  The memo randum of unde rstanding had 
been signed for an indeterminate duration, prior to taking on GATS commitments.  Under the immigration and refugee protection regulations, Human Resources and Skills Development Canada 
had the obligation to assess the potential impact that  the entry of foreign workers would have on the 
Canadian labour market.  This assessment include d an evaluation of the availability of domestic 
labour to fill the jobs offered by Canadian empl oyers.  In the Canadian agricultural industry, 
employers continue to be faced with on-going shortages of domestic agricultural workers and the 
government did not expect this situation to change.   
37. Concerning the accelerated process for labour certification, it was noted that the request for 
labour market opinion from agricultural employer s, particularly seasonal ones, was given high 
priority.  It was understood that the sector had climate based and  seasonal needs, as a result, the 
processing of these applications was generally more  time sensitive.  Labour market opinion request 
from employers and work permit request from work ers were informally processed quickly by the 
Human Resources and Skills Development Canada a nd by the Citizenship and Immigration Canada. 
However, no formal accelerated process for these applications w as in place.  The memorandum of 
understandings  were still in force a nd their duration indeterminate.   
38. Another exemption mentioned related to audiovis ual services, a sector for which Canada had  
co-production agreements.  This ex emption continued to be used.  From 2005 until 2009, Canada had 
348 projects co-produced with foreign partners generating production activities in the figure of 
Canadian $2.3 billion.  Treaty co-production of films or television produc tion would take place 
pursuant to international treaties signed by stat e governments allowing Canada and foreign producers 
to pool their creative technical and financial r esources, and access domestic benefits in each 
respective country.  Such benefits included fundi ng programmes, fiscal incentives and cinema and 
television screens in signatory countries.  She noted that Canada had exercised its right to list MFN 
exemptions to ensure that its GATS commitments  would not adversely affect the co-production 
agreements.  In addition to responding to industry interests, these agreements promoted the diversity 
of cultural expression, enhanced diplomatic re lations and strengthened both signatory countries 
domestic audiovisual industries.  
39. Since 1963, Canada had concluded 49 co-pr oduction agreements including treaties and 
memorandum of understandings with 53 foreign partners and it had recently announced that it would 
seek new and modernised co-production agreements w ith key players.  Some examples of countries 
included Algeria, Argentina, Australia, Austria, Be lgium, Brazil, Bulgaria, Chile, China, Colombia, 
Croatia, Cuba, Czech Republic, Denmark, Estonia,  Finland, France, Germany, Greece, Hong Kong 
China, Hungary, Iceland, Ireland, Israel, Italy, Japan , South Korea, etc.  All the information could be 
found on a website.  The list was long and covere d many WTO Members including those that had 
asked questions about MFN exemptions.  Conditions  which gave rise to the MFN exemptions still 
existed.  One of the objectives of official co-pr oduction was to enable producers in Canada and their 
foreign counterparts to pool creative, artistic, tec hnical and financial resources to co-produce films. 
Increasing production budgets make it difficult to  find audiovisual support exclusively from a 
domestic capital base.  Further information can found at www.telefilm.gc.ca.   
40.
 The representative of Hong Kong China  thanked delegations for th eir responses and raised a 
number of follow-up queries.  Firstly, with respect to the investor-state dispute system referred to by 
Canada, he noted that his delega tion had different views regarding the coverage of the GATS and its  S/C/M/102 
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relationship with investment agreements.  It had, ne vertheless, been very useful to hear Canada's line 
of thinking and rationale.  Secondly, with respect to  the EU's responses, he noted that together with 
Japan, his delegation had posed a systemic question on how the EU would consolidate and update its list of MFN exemptions when expanding its member ship.  He would appreciate further comments on 
that aspect.  Thirdly, on the US internal revenue c ode, since the measure had never been used it was in 
the view of his delegation doubtful as to whether it was beneficial to maintain such an exemption.  
From a systemic point of view, Hong Kong China di d not think that it would be beneficial to the 
multilateral trading system if Members resorted  to providing less favourable treatment for 
discriminatory measures in such an ad hoc manner.  It  would be preferable if Members resorted to the 
WTO mechanism.  He noted that this feature wa s not exclusive to the MFN exemptions by the US, 
and could be found in many of the exemptions taken by other Members.  Fourthly, Thailand's 
response provided an useful update.  Fifthly, Mala ysia's response had furt hered their understanding on 
the rationale behind the exemption.  It was comfor ting to hear that Malaysia would not take any 
discriminatory measures against any WTO Members but, nevertheless, Hong Kong China continued to have concerns over the exemption and was plea sed to note the willingness of Malaysia to follow-up 
through bilateral contacts.  
41. The representative of Switzerland
 thanked all the delegations who had prepared substantial 
responses to the questions submitted.  He raised a num ber of follow-up points.  Firstly, in its response,  
Canada had given examples of countries with wh ich it had co-production agreements.  Korea was 
amongst the countries mentioned.  He asked whethe r the agreement with Canada was a self standing 
one, or part of a more wide ranging agreement, and if it was subject to Article II of the GATS. 
42.  Secondly, on the reasons that might justify an MFN exemption, he noted that many of the 
responses had given logical reasons justifying an exemption, and had explained why it had been 
necessary to discriminate against a third country.  However, some responses did not seem to fully 
explain the justification for discrimination, or, perh aps, he had not fully understood the justification 
given.  For example, in the justification pr ovided by Canada on seasonal workers, while he 
appreciated that there could be seasonal labour s hortages, this did not in itself justify the 
discrimination.  There was no particular need to  discriminate in the event of a shortage.  In 
comparison, the response given by the EU with resp ect to exemptions relating to measures by France, 
Portugal and Italy, gave justifications for discriminat ion.  For instance, linguistic justifications, such 
as links between Portuguese or French speaking countri es.  These were links that did not exist with 
other countries, or in the case of Italy, there was a geographical consideration in terms of its treatment 
of neighbouring countries.  He encouraged other Members to deepen their responses.  He also 
supported Hong Kong China, on its comment with resp ect to reciprocity meas ures.  These had been 
presented as liberalization measures but they were nevertheless discriminatory and by definition ran 
counter to liberalization. 
43. The Chairperson  proposed taking the four sectors on the agenda together.  The exemptions 
under business services are grouped into the sub-sectors: professional services and other business 
services.  The exemptions listed in the communication services sector are grouped under three sub-sectors:  postal services, telecommunication services and audiovisual services.  There were also exemptions under construction and related engineering services, and distribution services. 
C. B
USINESS SERVICES , COMMUNICATION SERVICES , CONSTRUCTION AND RELATED 
ENGINEERING SERVICES , AND DISTRIBUTION SERVICES  
44. The representative of Hong Kong China  raised questions with respect to communication 
services, namely telecommunications and audiovisual services.  On telecommunication services, four 
questions had been submitted on the sectoral exempti ons, held by Brazil, India, Turkey and the US.  
The same questions had been asked of Brazil and the US in the last review in 2004.  At that occasion, 
no replies were received.  He hoped this time round it would be possible to better understand the 
rationales of these two Members for maintaining the irrespective exemptions.  On the question put to S/C/M/102 
Page 10  
 
India, the exemption was discussed in the year  2000 during the first MFN review.  India had 
explained at the time that the major reason that  it had listed the exemption was because of the 
uncertainty in the international negotiation on acco unting rates for telecommunication services.  He 
noted that his delegation would like to know whethe r after ten years India saw any changes in the 
conditions and circumstances that had justified the ex emption.  A question had been posed to Turkey 
because the  scope of exemption was unclear.  
45. On audiovisual services, a total number of nine questions had been posed to Australia, Brazil, 
Canada, the EU, India, Singapore and Vietnam.  Th e questions to Australia and Singapore followed- 
up on those raised in the second review in 2004.   He hoped to hear how the two members had 
reviewed their respective MFN exemptions and whet her they saw any continual need for maintaining 
them.  The same question had been put to Brazil, Canada and India, as they respectively maintained 
MFN exemptions in audiovisual services on the gr ound of co-production agreements to promote 
cultural exchange.  Hong Kong China was doubtful wh ether co-production agreements were the only 
effective way to pursue cultural policy objectives.  He noted that Canada had already provided replies 
to this question when discussing horizontal MF N exemptions.  Hong Kong China did have co-
production agreements, as had been highlighted by  Canada, but it did not believe that an MFN 
exemption would be the effective way to promote cultural diversity.  He hoped to hear from these 
Members on why they saw MFN exemptions to be effective in the light of their co-production 
argument.   
46. He noted that Hong Kong China had three questi ons for the EU, these were questions 18, 19 
and 20 as contained in the document S/C/W/322.  These had been raised at the last two MFN reviews.  
The EU had responded that the conditions still preva iled but did not provide an y further substance on 
why this was the case.  Question number 20 was of a factual nature, as his delegation was not sure of 
the scope of the exemption.  The question to Viet nam was on the applicability of the exemption listed 
under audiovisual services, as it appeared to be unclear.  He looked forward to hearing from the 
various Members.  
47. The representative of Costa Rica
 thanked the Secretariat for the documents prepared for the 
MFN review as well as the questions received.  W ith regard to the first question from Hong Kong 
China and Japan, she noted that the exemptions lis ted are maintained in the Costa Rican legislation 
and had been applied in a continuous fashion wi th its trading partners.  Concerning the second 
question, the conditions which had created the need  for the exemptions still prevailed.  Moreover, 
given the process of economic integra tion in Central America, they would remain indefinitely.  On the 
third question, she indicated that no actions had been  taken to eliminate the conditions that had given 
rise to these exemptions.  She noted that some of  them were necessary so as to achieve a minimum 
level of quality in professional services and, as had been mentioned earlier, was part of the economic 
integration process in Central America.  With regard  to the fourth question, she reiterated that these 
exemptions related to autonomous preferences exte nded to Central American countries as part and 
parcel of the economic integration process in the region.  
48. Concerning the specific questions submitted by Chile, she first clarified that the MFN 
exemption permitted a foreign professional to become a member of a professional association, if there 
was an agreement with the country of origin, or if Costa Rican professionals could provide services 
under similar conditions in the country of origin of  that foreign professional.  Concerning the first 
question from Chile, she explained that the pre-requis ites for registration in a professional association, 
varied from one profession to another.  Generally  speaking, there was a question of nationality, 
residence, examinations, accreditation, experience an d compliance with social service and evaluation.  
Furthermore, foreign professional service providers must demonstrate that their country of origin allowed Costa Rican professionals to engage in  the same activities in similar circumstances.  S/C/M/102 
 Page 11 
 
 
49. On the second question, she clarified that it was necessary for foreign professionals from 
Central American countries to become members of a professional association, in compliance with the 
requirements of the specific sector.  All types of professions had the obligation to register.  She noted that the specific obligations depended on what was se t forth in the given sector.  At the moment such 
pre-requisites covered a broad spectrum of professi ons, including engineers, geologists, dentists, 
architects, public accountants, veterinary doctors, nurses, attorneys at law, chemical engineers, 
physicians, surgeons and so on.  She could ma ke the list available, should any delegation be 
interested.  
50. Concerning the final question on the situa tion of professionals who provide temporary 
service, they would have to comply with immigrati on pre-requisites and the various terms set forth in 
the legislation.  Some professional associations coul d provide licenses of limited timeframe to work in 
Costa Rica.  The professions covered: biologists, ec onomists, social scientists, specialists in political 
sciences and international relations, dental surg eons, pharmacists, agro-engineers and architects, 
physicians, surgeons, veterinary doc tors, journalists, physiologists, chemists, chemical engineers and 
chiropractors. 
51. The representative of Japan
 highlighted that it had a question on advertising services in 
Malaysia.  He noted that his de legation understood that the actual  limitation on foreign content in 
advertising services was thirty percent.  He would like to know the latest situation.  
52. The representative of India  noted that exemptions were maintained by India in shipping, 
telecommunications, audiovisual and recreational servi ces.  In response to the general questions posed 
in the document S/C/W/322, he noted that these ex emptions had been used for actual measures.  
Audiovisual exemptions had been used for the ne gotiations of co-production agreements.  The MFN 
exemptions under shipping and recreational service s had been used on a continuous basis as these 
related to the operative issues in the sector.  There was in general a need for continued existence of 
these exemptions.  At this point, it would not be  possible to indicate how far these would last.  
However, he informed Members that India was in  the process of reviewing whether any of the 
exemptions taken could be eliminat ed or relaxed.  In India's revised offer, two MFN exemptions 
under the shipping sector pertaining to cargo reservati on had already been offered for elimination.  
Regarding the question on exemptions pertaining to any international agreemen ts or arrangements, the 
only relevant exemption in the case of India was in regard to recreational services, namely the 
exemption on the prohibition of the sale of lottery ticke ts in India.  This was part of a comprehensive 
bilateral agreement between India and Bhutan.  He noted that Bhutan was not a Member of WTO, and 
that India and Bhutan had a special relationship whic h dated back to 1949.  The sale of lottery tickets 
by Bhutan in India had been provided in this treaty, as well as in the protocol of the 1995 Agreement on Trade and Commerce between India and Bhutan.  Gi ven the special relationship, and the fact that 
Bhutan was a small and landlocked economy, sale of  lottery tickets by Bhutan was allowed and 
covered by the MFN exemption.  
53. On audiovisual services, it was noted that India had signed audiovisual co-production 
agreements with Brazil, Germany, United Kingdom, It aly and Korea.  It also had a protocol with 
France.  These Agreements would generally be in force for an unlimited period of time unless 
specifically terminated by any party.  He fu rther noted that these audiovisual co-production 
agreements had been signed with the objective of c ontributing to the development of the film industry 
and to an intensification of the cultural and economic exchange between the parties.  These 
agreements stimulate cultural and economic co-ope ration between the parties by promoting the co-
production of audiovisual content. On the question about India's exemption in the telecommunication 
services, he noted that policy reforms in the te lecom sector was an ongoing process.  India was 
examining the possibility of relaxing the exemption in this sector, and was willing to consider with 
others the future of this exemption at an appropria te time, as per the provisions  of paragraph 6 of the 
Annex on Article II exemptions.  S/C/M/102 
Page 12  
 
54. The representative of Brazil
 stressed that his delegation attached importance to the MFN 
principle, not only in the area of trade in services, but  in international trade as a whole.  However, it 
was also important to recall that MFN exemptions  constituted one of the elements that made the 
GATS possible.  Brazil recognised that this did not mean that such exemptions should last forever, 
and for its part, had been undertaking all possible e fforts to remove its own exceptions, in light, of the 
conditions that had created their need.  He noted  that Brazil had received questions from Hong Kong 
China, Japan and Korea on exemptions in telecomm unication services and audiovisual services.  With 
regard to telecommunication services, the rationale for the exemption related to technical and regulatory aspects, which from the perspective of Brazilian authorities required a breach of the MFN 
principle. The competent governmental bodies in Br azil had been studying these issues carefully in 
order to find a higher level of harmonization be tween the Brazilian and international regulatory 
frameworks. However, this process was still ongoing and, in the meantime, the conditions which had 
created the need for the exemption still prevailed.  
55. He further noted that the exemption had not b een used for actual measures or international 
agreements, except in the framework of regiona l trade agreements, such as the Mercosur and 
Mercosur-Chile agreements.  The latter agreem ent was signed on July 2008.  His delegation 
recognized that, as pointed out by Korea, the exempti on did not appear in its revised offer of 2005.  In 
this connection, it was important to bear in mind that the offer was conditional on the overall results 
of the Round and on the results of the services negotiations, in particular.  Brazil had proposed 
removing the exemption notwithstanding the fact that the conditions that had created it still prevailed.  
This reflected Brazil's constructive engagement in th e services negotiations.  However, as for the time 
being there was no clarity about the possible results of  the Round,  Brazil would not be in a position to 
confirm that the exemption would be removed.  Concerning the exemption in audiovisual services, he noted that his delegation, as had been expressed by others, was of the opinion that co-production 
agreements had greatly contributed to cultural exch ange.  It had also fac ilitated Brazilian productions 
in the international audiovisual services market, a sector in which it was not particularly strong.  
These conditions justified the need for the exempti on.  He noted that Brazil had signed co-production 
agreements with 12 countries, namely Argentina, Canada, Chile, Colombia, France, Germany, India, 
Israel, Italy, Portugal, Spain, France, Italy and Ve nezuela.  These agreements were not time limited 
and the conditions still prevailed.  
56. The representative of the United States
 responded to questions raised by Hong Kong China 
and Japan on communication services.  The questions had referred to the initial offer by the US to 
terminate an MFN exemption relating to direct home and television services.  However, that offer was 
conditional upon other Members taking commitments fo r these services or removing existing barriers.  
If Members do not offer to take commitments in these sectors, then the US would feel that the need 
for this would still prevail.  He emphasised that  with respect to Hong Kong China's comment on 
systemic integrity, the US was sympathetic to th e view that maintenance of MFN exemptions might 
raise such concerns.  However, the other side of sy stemic integrity was the existence of commitments.  
The dispute settlement system of the WTO could only be invoked if a commitment had been undertaken.  The very wide disparity in the leve ls of commitments taken by Members called into 
question the systemic integrity of whether the dis pute settlement process can be effectively utilized to 
address the kinds of discriminatory measures which concern the US. 
57. The representative of Turkey
 noted that it had received a question from Korea regarding an 
exemption on professional services.  This MFN exemption reflected some limitations that exist in the 
Turkish legislation.  According to Article 11 of th e law on work permits for foreigners, reciprocity is 
one of the principles that might restrict work perm issions.  On the other hand, according to Article 30 
of the law on attorneys, foreign legal partnershi ps do not have to become a member of the bar 
association to practice.  However, the implementa tion of this principle would be dependent on 
reciprocity.  On questions received from Korea and Hong Kong China on telecommunication services, 
she confirmed that Turkey had offered to delete  two MFN exemptions on telecommunication services  S/C/M/102 
 Page 13 
 
 
and one on postal services in its conditional offer submitted in 2003.  However, this offer would 
depend on the results of the D oha round of negotiations.   
58. The representative of Australia  thanked the delegations of Hong Kong China, China and 
Japan for their questions regarding Australia’s MFN exemptions in relation to audiovisual services.  
The exemption on 'unreasonable action' was not inte nded to prevent trade in audiovisual services and 
was not trade restrictive.  Australia's audiovisual sector was critical to the achievement of key social 
and cultural objectives.  The exemption reflected the great importance which it placed on sustaining 
Australian creative resources and ensuring that Aust ralians have access, via audiovisual means, to 
their own images and stories.  Although it had ne ver been used, the exemption gave additional 
assurance to Australia's national policy in this im portant sector.  She noted that the Australian 
government remained committed to preserving the ri ght to regulate audiovisual media to achieve 
social and cultural objectives, and to maintain th e broad matrix of support measures to underpin 
cultural policy.  Since these conditions still prevailed,  there was no plan, at this time, to remove the 
exemption. 
59. The MFN exemption on co-production allowed Australia to enter into preferential 
arrangements with participants in  its co-production program.  Under the program, Australia currently  
had specific bilateral treaties with Canada, China, Germany, Ireland, Israel, Italy, Singapore and the 
United Kingdom, as well as memorandum of understa ndings with France and New Zealand.  The 
governments of Australia and South Africa had also signed a co-production treaty on 18 June 2010, 
which would enter into force shortly.  She informed  Members that Australia was currently negotiating 
co-production treaties with India, Denmark, Malaysia and Republic of Korea, and was renegotiating 
its treaty with the United Kingdom.  As with its ‘unreasonable action’ exemption, Australia 
maintained the exemption on co-production because of the high value which it placed on achieving 
social and cultural policy objectives in this key sector.  Australia’s support framework for the 
audiovisual sector focused on areas of greatest need, including film and television content where activity would not otherwise occur or would fall to levels low enough to threaten the sustainability of 
the industry.  She reiterated that the mix of s ubsidy, regulation and tax concessions which supported 
Australia’s audiovisual sector was not designed to present  barriers to market access.  It provided necessary financial support to sustain Australian cr eative resources and ensure Australians had access 
to their own images and stories.  Film co-producti on helped Australia meet this policy objective and 
encouraged cultural exchange. 
60. The representative of Malaysia
 responded to the question under business services, in 
particular with respect to advertising, as contai ned in document S/C/W/322.  The intent of this 
exemption was to promote intra- ASEAN tourism amongst the five c ountries in the context of the 
regional preferential arrangement.  There was no intention to expand the measure to other ASEAN members for this sub-sector.  Laws and regulati ons on advertising cut across many ministries and 
domestic consultations are be ing undertaken with various relevant st akeholders to consider removal of 
this particular exemption.  She noted that Mala ysia was favourably looking at this and would be 
prepared to remove this exemption subject to th e context of the overall negotiations under the Doha 
Development Agenda.  
61. The representative of Colombia
 thanked the Secretariat for the background information.  He 
underscored that Colombia saw the principle of MFN treatment as one of the cornerstones of the 
system.  He noted that that there were many exem ptions that had been listed by Members, which  
applied across the board or that are applied in a very broad way.  He also noted that Chile had 
submitted a question on one of the very few exempti ons listed by Colombia.   He thought that the 
question would help illustrate why some situations require the maintenance of exemptions that are 
related to  regional integration plans or agreemen ts, which do not have to be notified under Article V 
of the GATS.  S/C/M/102 
Page 14  
 
62. Regarding the first question, which concerned the telecommunications sector, he noted that 
the Treaty of the Andean Community, the Cartagena Agreement, made it possible to eliminate tariff 
barriers and non tariff barriers for the import of go ods and services. It was agreed in the Andean 
Common Market that this constituted one of the f undamental elements for regional integration. He 
noted that the general framework of principles a nd standards were contained in Decisions 439, 510 
and also 659.  In compliance with that general ag reement and framework, every member will provide 
the services and service providers of other countries free access to their country through any of the methods of provision of services in the decision.   Every country can provide immediately and 
unconditionally services under treatment that is no less favourable, for the provision of similar services from another country, whether or not they  are members of the Andean community.  Every 
member country will provide to the services and service providers of the other member country 
treatment which is no less favourable than that pr ovided to its own services or own service provider in 
the similar sector.  In the area of telecommunica tion, there was also Decision 462.  Trade in 
telecommunication services in the Andean Commun ity which was developed under a regiment of 
liberalization and integration, provided for the elim ination of restrictive measures that ran counter to 
the principles of market access and national treatment. 
63. Concerning the second question on the pre-requisites to establish commercial presence for  
service providers in telecommunications, these include d the following: the legal person had to be 
constituted in compliance with Colombian legisla tion for the purpose of supplying telecommunication 
services;  the paid equity capital should be no less than 100 minimum monthly legal salaries in force.  Regarding the third question, the exemption still ha d to be maintained given the framework of the 
integration provision of the Andean system and the common Andean service market.   
64. The representative of Pakistan
 noted that it had received one question from Korea on the 
MFN exemption maintained on different accountin g rates under telecommunication services.  The 
exemption was needed due to Pakistan's special b ilateral agreements with neighbouring countries.  
This exemption would not act as a market entry barr ier because it was very limited in application and 
scope.  It was also not a pre-requisite for entry but  related to different accounting rates when services 
were actually supplied.  The conditions  still prevailed.  He noted that Pakistan was participating in the 
friends of MFN plurilateral request and under the Doha round negotiations his delegation would be 
looking at the possibility of removing this and other exemptions.  
65. The representative of European Union  noted that it had received three questions on 
audiovisual services from Hong Kong China and Japan  jointly.  The first two questions would be 
addressed together as they both related to defens ive MFN exemptions in the area of audiovisual 
services.  In this respect, the EU supported the arguments by Australia, which concerned a similar 
exemption of their own.  Additionally, these exemp tions were aimed at discouraging adverse, unfair  
or unreasonable conditions or actions affecting audi ovisual services.  The first exemption provided for 
the possibility to adopt duties countering unfair prici ng practices in audiovisual services trade.  She 
believed that acting against unfair practices was a very  legitimate aim for an MFN exemption to serve.  
The EU needed to maintain this  exemption because contrary to the GATT, the GATS did not contain 
any provision on anti-dumping, the discipline that would normally be used to counter unfair pricing in international trade.  Until now no measure had been applied on the basis of those exemptions.  This 
might be a sign that the MFN exemption had served as a deterrent to unfair pricing practises and had 
to be maintained.  Moreover, since the EU did not have any commitments in the audiovisual sector, it 
could still apply countermeasures.  The fact that this exemption had not been used should reassure 
trading partners that it would not be used inappropriately.  
66. The third question concerned audiovisual production and distribution of television 
programmes and cinematographic works.  The objectiv e of this exemption was to enable the EU to 
fund and support production and distribution of audi ovisual works of non-EU countries, and by this 
means to feed international cooperation and exchang es, and to contribute to the cultural diversity in 
Europe and worldwide. The exemption was needed in  order to preserve and promote cultural identity   S/C/M/102 
 Page 15 
 
 
through financial support mechanisms and projects.   This was a very specific exemption and the 
purpose provided enough clarity on the scope of application of the exemption.  She saw no purpose of providing a list of countries.  
67. The representative of Singapore
 responded to specific question from Hong Kong China on 
audiovisual services.  She noted, more generally, th at Singapore was reviewing the need to maintain 
or reduce the scope of its MFN exemptions.  Singapo re had offered to remove one exemption in its 
revised offer and was continuing to review the n ecessity of the other exemptions.  On the question 
regarding broadcasting services, this MFN exempti on had been taken due to Singapore's social and 
cultural policy objectives, including the promotion of social stability and cultural relations.  There had 
been no decision to remove the exemption since th e conditions which created the need for it still 
prevailed.  
68. The representative of Chile  thanked the Secretariat for the documents that had been prepared 
for the meeting.  As had already been menti oned by other delegations , Chile attached great 
importance to the MFN review procedure.  The re view was necessary from a transparency point of 
view but also from the point of view of moving towards the lowest number of possible exemptions.  
This subject, as other delegations had already menti oned, was part of the Doha round negotiations. He 
noted that several delegations had mentioned th e possibility of eliminating a certain number of 
exemptions.  He thanked he dele gations of the European Union, Costa Rica and Colombia for their 
very comprehensive responses to the questions that had been raised by Chile.  He believe that the 
exchange of questions and answers could help clar ify various aspects related to exemptions.  In the 
case of the exemptions listed by Chile, he high lighted that they were based on international 
agreements that were still in force.  They were c onstantly being reviewed to establish the relevance of 
the conditions that had made them necessary.  Curre ntly the conditions were still in place, but as had 
been  mentioned in the last review, each and everyo ne of them are constantly being reviewed by the 
Chilean  authorities to see whether one or several of them could be removed.  
69. The representative of China  thanked the delegations which had responded to its questions.  
The information provided was pertin ent and helpful to understand the cu rrent situation with respect to 
those MFN exemptions and the positions of Members.  China was of the view that MFN exemptions  
should be temporary and should not exceed a period of  10 years.  Further liberalization of mode 4 
would promote services trade in mode 4 and benef it more developing countries.  He encouraged  
Members to consider removing MFN exemptions in  this round of negotiations under the mandate of 
paragraph 6 of the Annex on Article II Exemptions. 
70. The representative of Hong Kong China  noted that it had received more substantive replies to 
the questions posed than in the past.  He was appreci ative of the constructive approach taken.  He was 
pleased to hear that Members were in the pro cess of reviewing the need for some of the MFN 
exemptions, with a view to possibly eliminating th em.  He noted that many Members had indicated 
that  such willingness to eliminate was conditional on the Doha round ne gotiations.  On this point, he 
stressed that while the negotiations was one aspect  to consider, there was a regular function to 
scrutinise and review the continual need of MFN exemptions.  Even if the Doha round were to 
conclude, it would still be the task of this bod y to scrutinise MFN exemptions.  Therefore the 
negotiations and review exercise we re on two parallel tracks.  Should conditions for MFN exemptions 
no longer be valid, Hong Kong China would expect sp eedy action to eliminate them.  He also noted 
that replies were still outstanding on certain questi ons and that his delega tion would be following-up 
on these at the next session.  
71. The Chairman  suggested that the Council take note of the statements made by delegations at 
this meeting. She noted that there had been a subs tantive and well prepared discussion, in which many 
Members had explained and underlined their conc erns and positions.  She proposed that the next 
session  of the third Review of Article II (MFN) Ex emptions take place during the next cluster of 
services meetings, and that the exemptions liste d in the following sectors would be reviewed:  S/C/M/102 
Page 16  
 
educational services, financial services, health rela ted and social services, tourism and travel related 
services, recreational, cultural and sporting services and transport services.  Delegations would also 
have the opportunity to revert to the MFN exempti ons pertaining to the sectors discussed today.  At 
the next session, the Council would also have to determine the date for any future review.   
72. The Council took note
. 
__________