WORLD TRADE  
ORGANIZATION  TN/S/W/29 
16 February 2005 
 (05-0651) 
Council for Trade in Services  
Special Session  Original:  English 
 
  
COMMUNICATION FROM AUSTRALIA, CHILE, THE EUROPEAN COMMUNITIES, 
NEW ZEALAND, NORWAY AND SWITZERLAND 
 
Trade in Services to the Aviation Industry:
 
A case for commitments under the GATS  
 
Questions and answers that may help 
 
 
 The following communication, dated 15 Februa ry 2005 from the delegations of Australia, 
Chile, the European Communities, New Zealand, Norway and Switzerland is being circulated to the Members of the Council for Trade in Services.  
_______________ 
  
What does this statement mean? 
1. The co-sponsors of this paper are amongst tho se who consider that it is possible to take 
meaningful commitments for ground handling services.  As important commerci al services in their 
own right, ground handling should be covered by specific commitments. 
2. Claims that the GATS excludes all services that support air transport (that can be supplied on 
a commercial, competitive basis) are mistaken.  For example, do you need traffic rights for a cleaning 
company to clean a plane? Or for a caterer to pr ovide on-board food? Clearly not.  These services can 
be provided without any direct relation to traffic rights.  Today, numerous air catering or cleaning 
companies provide their services within increasingl y competitive markets.  In these respects, air 
catering, cleaning services and a range of other ground handling services are not special cases.  Trade 
of these services is a reality today, in practice taking place independently of air traffic rights.  Hence, it is possible to take meaningful commitments on ground handling, since these commitments would apply to measures that affect services not directly related to the exercise of traffic rights.  We note that 
the Annex on Air Transport Services applies to measures  affecting trade in air transport services, 
rather than to any sector s or subsectors as such.  
3. Air Services Agreements (ASAs) deal with more th an just the exchange of air traffic rights.  
What measures are directly linked to air traffic ri ghts is not a question of what measures can be 
affected by an ASA.  For example, mediation clauses may be part of an ASA.  From this, of course, it 
does not follow that measures affecting mediation are di rectly related to the exercise of traffic rights.  
For another example, ASAs can include references to  surface transport.  Therefore, the fact that 
measures affecting ground handling, for example, are included in some ASAs (usually from the 
perspective of an airline and not a ground handler) does not by itself mean that ground handling as such is excluded from GATS coverage. TN/S/W/29 
Page 2  
 
 Why are “measures affecting” air “traffic rights” specifically excluded from GATS? 
 
4. Since World War II, the international civil aviation industry developed subject to the 
“bilateral system”.  This allows nations to ma nage their own aviation environment by permitting 
access to other countries’ air carriers through bila teral negotiation.  This is achieved through the 
negotiation of complex treaties called Air Services Agreements that, among other things, include the 
reciprocal exchange of air traffic rights. 
5. When negotiations on the GATS itself were taking place, arguments over whether the 
bilateral system should be subject to multilateral trade disciplines threatened to derail the whole 
GATS process.  The exclusion of measures affecti ng traffic rights and measures affecting services 
directly related to the exercise of traffic rights was agreed to allow negotiations on trade in all services 
to continue. 
6. The exclusion of measures affecting air traffic rights and services directly related to the 
exercise of traffic rights actually makes it easier to take commitments on ground handling, since this exclusion guarantees that such commitmen ts relate only to measures that do not affect traffic rights.  
In this sense, the Annex on Air Transport Servi ces carves out what would otherwise be a possible 
reason for not taking commitments in ground handling.  In short, thanks to the Annex, commitments 
on ground handling pose no challenge to any air traffic rights. 
What has changed in recent times? 
 
7. In the sixty years since the bilateral system was established, aviation has become a major 
service industry.  As the recent mandated review  required by the GATS Annex on Air Transport 
Services showed, a whole sector has developed that provides a range of aviation-related services that 
were formerly supplied only by airlines.  For example, ground handling services are still undertaken 
by many airlines, but specialist companies operati ng worldwide now also provide them.  Those who 
wish to provide these services cannot be fully assured of  doing so on a fair and equitable basis in the 
continued absence of  GATS commitments. 
8. The world market for aviation ground handling is estimated to be of the order of $27 billion 
annually.  Airlines and airports are estimated to control 75 per cent of the market, but increasingly these are disposing of ground handling, as it does not represent core business.  Accordingly, 
commitments on ground handling are increasingly commercially meaningful. 
When are services not “directly related  to the exercise of traffic rights”? 
 9. Services such as: 
• Catering services; 
• Baggage handling services; 
• Check-in and counter services; 
• Cleaning services; 
• Ramp handling; 
• Warehousing services; 
• Fuel services 
 can be provided by specialist service providers without the exercise of traffic rights.  Sometimes 
called “soft rights”, these are examples of ground services that support the airline industry (see 
S/C/W/163/Add.1 for possible corresponding CPC classifications).   TN/S/W/29 
 Page 3 
 
 
 10. The other rights – those related to access to a nother country’s aviation market, or “traffic 
rights” that are sometimes called “hard rights” – are measures which are excluded, and can not be covered by commitments without a separate decisi on under a Review of the Annex on Air Transport 
Services.  
What is this paper  proposing? 
 11. This paper proposes that Members: 
• make commitments in all three areas specifically referred to in the Annex, if they have 
not also done so, 
• make commitments on ground-handling ser vices during the current round, and   
• give further consideration to the character isation of other aviation-related services as 
related to the exercise of either “hard” or “soft” rights prior to the next round of 
negotiations. 
 
12. It is not the intention of the co-sponsors of this paper that the exchange of GATS 
commitments on ground handling would apply to measu res affecting traffic rights of the designated 
airlines of Members, or for that matter, other measures affecting services related to traffic rights of the aviation industry. 
How many Members actively support this vi ew that commitments on ground handling are 
meaningful?  
13. The European Communities, New Zealand, Switzerland and Australia already have made 
offers including “soft rights”.  There are other Members that agree in principle with this view but have 
not yet made formal offers in this area. 
So why should providers of these services be diff erent to service providers in other industries? 
 
14. This is exactly what the argument is about – there is no reason.  Suppliers who provide 
services to airlines should have the same advantages as do other service providers, including providers 
of similar support services to other modes of transport.  It is contrary to the principles of broad and 
meaningful trade liberalisation that services in the av iation industry should be treated differently to 
services in any other industry. 
Why should Members do something about it now? 
 
15. The aviation sector is of great and growing im portance to economies worldwide.  Efficiency 
through improvements in competition in services su ch as ground handling will enable the aviation 
industry to better meet the needs of users, as well as being valuable during a difficult time for the global airline industry.  Further, any improvement for the global airline industry particularly supports 
tourism, amongst other services. 
Is this a back door method for getting measures  on Air Transport Services related to traffic 
rights included in the GATS? 
 16. Commitments on ground hand ling or other “soft rights” services will not prejudice the 
positions Members may wish to take in relation to traffic rights at the next Review of the Annex on 
Air Transport.  Over the last 60 years the bilate ral system has become the means by which countries 
regulate access to their air transport markets.  Th e sponsors of this paper believe that trading in 
ground handling and other “soft right services” is not always directly related to measures affecting the TN/S/W/29 
Page 4  
 
 exercise of traffic rights.  We are presenting this  informal Questions and Answer Paper to assist 
Members in considering their views during the current round.  
  TN/S/W/29
 Page 5Modes of Supply     (1) Cross-Border     (2) Consumption Abroad     (3) Commercial Presence    (4) Presence of Natural Persons 
Sector or sub-sector 
 Limitations on Market Access Limitations on National Treatment Additional Commitments 
AUSTRALIA 
11. TRANSPORT SERVICES  
C. Air Transport Services     
 
Ground handling services: - Airport operation services (7461 - 
excludes cargo handling 
- Cargo handling (74110 and 74190 
air transport sector only) 
- Other supporting services for air 
transport (7469 – excludes airport 
and terminal firefighting services) 
  
1) Unbound
* 
2) None 
3) None 
4) Unbound except as indicated in  
the horizontal section.  
1) Unbound* 2) None 
3) None 
4) Unbound except as indicated in 
the horizontal section.  
EUROPEAN COMMUNITIES 
11. TRANSPORT SERVICES  
C. Air Transport Services  
               Groundhandling 1)  Unbound 
2)  None 
3)  None, except that categories of 
activities depend of size of airport, 
the number of providers in each 
airport can be limited due to available-space constraints and to 
not less than two suppliers for 
other reasons, and non-discriminatory pre-approval 
procedures may apply 
4)  ICT and BV: Unbound except as 
indicated in the horizontal section 
 1)  Unbound 
2)  None  
3)  None, except that categories of 
activities depend of size of airport, 
the number of providers in each 
airport can be limited due to available-space constraints and to 
not less than two suppliers for 
other reasons, and non-discriminatory pre-approval 
procedures may apply  
4)  ICT and BV Unbound except as 
indicated in the horizontal section  
      CSS:  Unbound     CSS:  Unbound 
  
 
 
                                                      
* Unbound due to lack of technical feasibility   
 TN/S/W/29 
Page 6 Modes of Supply     (1) Cross-Border     (2) Consumption Abroad     (3) Commercial Presence    (4) Presence of Natural Persons 
Sector or sub-sector 
 Limitations on Market Access Limitations on National Treatment Additional Commitments 
NEW ZEALAND 
11.    TRANSPORT SERVICES  
C.    Air Transport Services     
 Airport Operation  
 Services   (CPC74610**, excl  
 Navigation aids) 1) None 
2) None 3) None 
4) Unbound except as indicated in 
the horizontal section 1) None 
2) None 3) None 
4) Unbound except as indicated in 
the horizontal section  
 Other supporting services  
 for air transport 
 (CPC 74690** excl fire  
 fighting and fire- 
 prevention services) 1) Unbound* 
2) None 
3) None 
4) Unbound except as indicated in  
the horizontal section 1) Unbound* 
2) None 
3) None 
4) Unbound except as indicated in 
the horizontal section  
 Cargo and baggage  
 handling services 
 (CPC 741**)  1) Unbound* 
2) None 
3) None 4) Unbound except as indicated in 
the horizontal section 1) Unbound* 
2) None 
3) None 4) Unbound except as indicated in 
the horizontal section  
 Ramp handling services  
 (CPC 741**) 
 1) Unbound* 
2) None 
3) None 
4) Unbound except as indicated in 
the horizontal section 1) Unbound* 
2) None 
3) None 
4) Unbound except as indicated in 
the horizontal section  
 Airfreight Storage and  
 warehousing services        (CPC 742**) 1) Unbound* 
2) None 3) None 
4) Unbound except as indicated in 
the horizontal section 
 1) Unbound* 
2) None 3) None 
4) Unbound except as indicated in 
the horizontal section  
                                                      
 * Unbound due to lack of te chnical feasibility. 
** In the context of CPC listings in the sc hedule, the use of ** against individual CP C listings indicates that the service spe cified constitutes only part of the total range of activities 
covered by the CPC concordance   
  TN/S/W/29
 Page 7Modes of Supply     (1) Cross-Border     (2) Consumption Abroad     (3) Commercial Presence    (4) Presence of Natural Persons 
Sector or sub-sector 
 Limitations on Market Access Limitations on National Treatment Additional Commitments 
SWITZERLAND 
11. TRANSPORT SERVICES    
 
C. Air Transport Services  
- Ground-handling services 
(ground administration, passenger handling, baggage 
handling, freight and mail 
handling, ramp handling, aircraft services, fuel an d oil handling, 
flight operations and crew 
administration, surface transport) 
  
1) Unbound due to lack of  
technical feasibility 
2) None 3) None 
4) Unbound except as indicated in 
Part I  
1) Unbound due to lack of 
technical feasibility 
2) None 3) None 
4) Unbound except as indicated in 
Part I  
H. Services Auxiliary to All Modes of 
Transport  
 
(a) Cargo-handling services  (CPC 741) 
 1) Unbound due to lack of technical 
feasibility 
2) None 
3) None 4) Unbound except as indicated in 
Part I 
 1) Unbound due to lack of technical 
feasibility 
2) None 
3) None 4) Unbound except as indicated in 
Part I  
 
(b) Storage and warehouse services 
(CPC 742) 
 1) Unbound due to lack of technical 
feasibility 
2) None 3) None 
4) Unbound except as indicated in 
Part I 
 1) Unbound due to lack of technical 
feasibility 
2) None 3) None 
4) Unbound except as indicated in 
Part I 
  
  
 TN/S/W/29 
Page 8 UN PROVISIONAL CENTRAL PRODUCT CLASSIFICATION † 
 
SECTION:  7 TRANSPORT, STORAGE AND COMMUNICATIONS SERVICES 
Division: 74 Supporting and auxiliary transport services 
Group: 741 Cargo handling services 
 Group: 742 Storage and warehousing services Group: 746 Supporting services for air transport 
Class: 7411 Container handling services 7421 Storage 
services of frozen or refrigerated 
goods 7422 Bulk 
storage services of liquids or 
gases 7429 Other 
storage or warehousing 
services Class: 7461Airport 
operation services (excl. cargo handling) Class: 7469 Other supporting 
services for air transport 
Sub Class 74110 - Container handling 
services  Cargo 
handling services provided for freight in 
special containers. 
Included are services of freight terminal 
facilities, on a fee or 
contract basis, for all modes of transport, 
including stevedoring 
services (i.e. the loading, unloading and 
discharging of vessels' 
containerized freight, at ports). Subclass: 74190 - Other cargo 
handling services  Cargo 
handling services provided for 
non-containerized freight or for passenger baggage. Included are 
services of freight terminal 
facilities, on a fee or contract basis, for all modes of transport, 
including stevedoring services 
(i.e. the loading, unloading and discharging of vessels' non-
containerized frei ght, at ports), 
and cargo handling services incidental to freight transport, not 
elsewhere classified. Also 
included are baggage handling services at airports, and at bus, 
rail or highway vehicle terminals. 
 Exclusions: Other supporting and 
auxiliary transport services linked 
to a specific mode of transport are 
classified in subclass 74300 for 
railway transport, subclass 74490 for road transport, subclass 74590 
for water transport and subclass 
74690 for air transport.  Subclass: 74690 - Other supporting services for air 
transport  Aircraft cleaning and disinfecting services, 
firefighting and fire-prevention services, and hangar 
services, on a fee or contra ct basis. Aircraft towing 
services are also included. 
 
Exclusion: Air-sea rescue services are classified in subclass 91290 (Other public order and safety affairs 
related services). 
__________ 
                                                      
†  Statistical Papers Series M No. 77, Provisional Central Produc t Classification, Department of International Economic and Soci al Affairs, Statistical Office of the 
United Nations, New York, 1991.