WORLD TRADE  
ORGANIZATION  WT/REG265/3 
28 October 2009 
 (09-5373) 
Committee on Regional Trade Agreements Original:   English 
  
 
CLOSER ECONOMIC PARTNERSHIP AGREEMENT BETWEEN  
PAKISTAN AND MALAYSIA (SERVICES) 
 
Questions and Replies
 
 
 
 The following communication, dated 6 October 2009, is being circulated at the request of the delegations of Pakistan and Malaysia.   This document reproduces the follow-up
 questions addressed to the Parties following the 
54th Session of the CRTA and the responses submitted. 
 
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Questions from the Delegation of the United States
 
 
Liberalization Commitments  
 
1. Malaysia’s Annex 7 list of non-conforming measures includes a reservation (No. 15) 
against Articles 89 and 90 of the Agreement for me asures relating to “any sector that has not 
been established in Malaysia at the time of entry into force” of the Agreement. 
(a) Could Malaysia please clarify how “has not been established” and “sector” 
would be defined for the purposes of this reservation? 
Reservation 15 of Annex 7  
 
 This reservat ion is taken against NT  and MFN  for any sector that has not been established  at 
the time of entry into force  of the Agreement .  It is to provide  reiterating policy space  for sectors that 
have not been established at the time of entry into force of the Agreement.  
  The term ‘has not been established
’ refers to those sectors  that are new to Malaysia .   
 
 ‘Sectors ’ here can be either an activity or an industry . 
 
(i) What factors would be considered in a determination of whether or not a 
sector has been “established”? 
 The factors that would be considered in a de termination of whether or not a sector has been 
“established” include whether there are any substa ntial or significant economic activities in that 
sector, and whether that sector is being regulated. 
 
(ii) How broadly would “sector” be defined for the purposes of this 
reservation? WT/REG265/3 
Page 2  
 
   Malaysia usually follows internationally accep ted practices in defining economic sectors, 
such as the provisional Central Product Classificati on (CPC) and Internationa l Standard Industrial 
Classification (ISIC) for all economic activities.  
2. Malaysia’s Annex 7 list of non-conforming measures also includes a reservation (No. 16) 
against Arts. 89, 90, and 92 of the Agreement for me asures that are otherwi se consistent with its 
obligations under Chapter 8, as well as for “any me asure relating to any services sector that has 
not been established in Malaysia at the ti me of entry into force” of the Agreement. 
(a) What is the need for the two separate reservations in this non-conforming 
measure entry?  The first reservation already limits Malaysia’s commitments 
with respect to investments in services sect ors to only those expressly listed in its 
Annex 5 schedule.  Could Malaysia please explain why the second reservation is necessary? 
Reservation 16 Annex 7 
 
 
 The two separate reservations were made to pr ovide clarity that Malaysia’s reservation is 
intended to cover “existing services sectors” as well as “services sectors that has not been established 
in Malaysia”. 
 
(b) Could Malaysia please clarify how “has  not been established” and “services 
sector” would be defined for the purposes of this reservation? 
 The term ‘has not been established ’ refers to those services that are currently new to 
Malaysia .  ‘Sectors ’ here refers to either an activity or an industry . 
 
(i) What factors would be considered in a determination of whether or not a 
sector has been “established”? 
 The factors that would be considered in the de termination of whether or not a sector has been 
“established” include whether there are any substa ntial or significant economic activities in that 
sector, and whether that sector is being regulated.  
(ii) How broadly would “sector” be defined for the purposes of this 
reservation? 
 Malaysia usually follows internationally accep ted practices in defining economic sectors, 
such as the provisional Central Product Classificati on (CPC) and Internationa l Standard Industrial 
Classification (ISIC) of all economic activities.  
Denial of Benefits
 
 
3. Paragraph 57 of the Factual Presentation no tes that, under Art. 101 of the Agreement, a 
Party may deny the benefits of Chapter 9 to an investor of the other Party, if that investor is an enterprise owned or controlled by persons of a non-Party, and irrespective of whether or not 
that enterprise has substantial business activi ties in the territory of the other Party. 
 How does this provision of the Agreement reconcile with Parties’ obligations under 
Art. V(6) of the GATS? 
 
 The relevant provision for denial of benefit w ith respect to all modes of trade in services is 
provided for in Article 84, Chapter 8 (Services) wh ich is consistent with Art V (6) of GATS.   WT/REG265/3 
 Page 3 
 
 
   Therefore, in the event of any inconsistenc y between Chapter 8 and Chapter 9, Article 87.4 
provides that:  
(a) with respect to matters covered by Articl es 89, 90 and 92, Chapter 8 shall prevail to 
the extent of inconsistency, and 
(b) with respect to all other matters, Chapter 9 sha ll prevail to the extent of inconsistency.  
 As it is, there is no overlap in the scope and coverage of the services and investment chapters.  
 
Regulatory Provisions
 
 
4. Paragraph 92 of the Factual Presentation no tes that Annex 6 of the Agreement sets out 
Parties’ objectives with respect to fulfilling the obligation in Art. 77 to facilitate the development 
of mutual recognition agreements (MRAs).  Anne x 6 calls on Parties to, among other things, 
(1) endeavour to take relevant steps to ensu re development of accreditation and recognition 
arrangements; (2) develop procedures for fost ering the development and implementation of 
MRAs; (3) identify services sectors for negotiation s on MRAs; and (4) facilitate negotiations and 
implementation of MRAs. 
 Could the Parties please provide an update as to the progress of discussions and work 
undertaken pursuant to Annex 6?  
 To date, there has been no formal exchange of views on the work to be undertaken pursuant 
to Annex 6.  
 
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