WORLD TRADE  
ORGANIZATION  WT/REG265/M/1 
29 September 2009 
 (09-4541) 
Committee on Regional Trade Agreements 
Fifty-fourth Session  
 
 
 
CONSIDERATION OF THE CLOSER ECONOMIC PARTNERSHIP AGREEMENT 
BETWEEN PAKISTAN AND MALAYSIA, SERVICES 
 
Note on the Meeting of 15 September 2009  
 
Chairman:  Mr D. Brauns (Germany) 
  
1. The meeting was convened in document  WTO/AIR/3410, dated 7 August 2009. 
2. Under Agenda Item B.II of its 54th Session,  the Committee on Regional Trade Agreements 
(hereinafter CRTA or the Committee) took up cons ideration of the Closer Economic Partnership 
Agreement between Pakistan and Malaysia (h ereinafter 'the Agreement'), services.  
3. The Chairman
 noted that the Agreement had entere d into force on 1 January 2008 and had 
been notified by the Parties to the WTO on 19 February 2008 under GATS Article V:7(a) as an Agreement providing for the liberalization of trade in services within the meaning of GATS Article V 
(document S/C/N/440).  The goods part of this Ag reement had been considered in the Committee on 
Trade and Development's Dedicated Session, held on 14 September 2009.  The text of the Agreement 
was available, together with its Annexes, on the Pa rties' official websites.  The Factual Presentation 
on the services aspects (document WT/REG265/1, da ted 30 June 2009) had been prepared by the 
Secretariat on its own responsibility in full consultation with the Par ties, in accordance with paragraph 
7(b) of the Transparency Mechanism for Regiona l Trade Agreements (document WT/L/671).  In 
addition, written questions and replies on the servi ces aspects of the Agreement had been recently 
distributed in document WT/REG265/2, dated 3 Se ptember 2009.  He proposed to organize the 
consideration of the Agreement by asking first the Pa rties and then other Members to give any general 
comments.  The Committee would then turn to  the specifics of the Agreement using the 
Factual Presentation to guide the debate.  He proposed to go through the Factual Presentation by 
section, and then through the questions and replies document.  
4. The representative of Pakistan
 expressed thanks for the opportunity to present the services 
part of the Agreement and to the WTO Secretariat for the Factual Presentation.  Pakistan strongly believed in the rules based multilateral system and be lieved transparency and predictability to be the 
main pillars of the system.  Pakistan also s upported the Transparency Mechanism.  The Parties 
enjoyed exemplary fraternal and bilateral relati ons not only between their governments but also 
between their peoples.  Pakistan had been one of the first countries to recognize and establish 
diplomatic relations with Malays ia in 1957.  The Agreement cove red trade in goods and services, 
investment and economic cooperation.  With regard  to trade in services, the Parties had provided 
WTO plus market accesses to each other, positiv ely impacting investment and trade in goods.  A 
mutual recognition agreement was also an integral  part, providing a framework for accreditation in 
many areas, such as educational institutions and academic programmes and facilitating the effective 
and efficient delivery of services.  In particular, Pakistan had committed to GATS plus liberalization 
for Malaysia in many sectors and sub-sectors includi ng distribution, educa tional, environmental, 
recreational, cultural and transport services, wh ich went beyond Pakistan’s current multilateral WT/REG265/M/1 
Page 2  
 
  commitments.  In almost all cases, the equity par ticipation had been raised to 60% from Pakistan’s 
existing GATS commitments.  In addition, modes 1 and 2 had been fully liberalized in most cases. 
The movement of natural persons had been dealt with comprehensively and the professional and intra-
corporate transferees had been granted mutual access in a GATS plus manner.  The Parties had also agreed to start consultations within  three years for further liberalizati on of bilateral trade in services.  
He thanked Members for their questions to which Pakistan had replied, and would be happy to 
respond to any follow up questions Members wished to raise.  
5. The representative of Malaysia
 thanked Members for the interest shown in the Agreement and 
the questions submitted, and the Secretariat for having prepared the Factual Presentation.  The 
Agreement involved two developing countries and enco mpassed liberalization in trade in goods and 
services, investment, as well as bilateral technical cooperation and capacity building in areas such as 
sanitary and phyto-sanitary measures, intellectual pr operty protection, construction, tourism, health 
care and telecommunications.  Since the Agreement' s entry into force in 2008, the Parties had 
smoothly implemented their bilateral commitments and obligations.  In services, Malaysia's offer to 
Pakistan included more favourable commitments than those made under the GATS, such as in 
engineering, tourism, construction, telecommuni cations, health services, architectural services, 
accountancy and professional and business services.  Mala ysia had benefited from Pakistan's offer of 
maximum foreign equity participation of 60% in  all sectors with no limitations on the number of 
Malaysians employed per organization.  Malaysia's  sectors of interest included professional services, 
construction and related engineering services, e ducation services, telecommunication services and 
Islamic banking.  On investment, the Agreement pr ovided a framework which enhanced predictability 
and transparency for facilitating cross-border inv estment between the Parties through commitments on 
national and most favoured nation tr eatment and enhanced protection for investors and investment.  
The negotiations had taken into account  the different levels of devel opment of the two countries.  The 
Parties had agreed to focus on products of interest  where the gains from liberalization were expected 
to be substantial.  She believed th at the benefits were not only short-term but also long-term, such as 
in economic and technical cooperation.  She also noted  that the Agreement provided for the Parties to 
review their concessions with the purpos e of  broadening  future coverage.  
6. The representative of the European Communities (EC)  thanked the Parties for their 
presentations and for their written answers.  The EC believed that the Agreement fell short of 
substantial commitments in trade in services,  since it had barely improved the commitments 
scheduled by the Parties under the GATS.  In additi on, the answers provided by the Parties did not 
explain why they considered that the Agreemen t had substantially improved their existing GATS 
commitments.  She asked the Parties to elabor ate on their understanding of how the Agreement 
conformed to Article V of the GATS.  The representative of Pakistan , noting that the question had 
already been submitted in writing and included in the Questions and Replies document, said that 
Pakistan's GATS commitments, which dated back to  the Uruguay Round, were limited to six services 
sectors and to a small number of subsectors, whereas it had made commitments in 11 services sectors 
and in a larger number of sub-sectors under the Agreem ent.  He also pointed out that under mode 3, 
Pakistan limited foreign equity levels to ar ound 50% in its GATS commitments, whereas under the 
Agreement it had increased the limit to 60%.  He t hus believed that Pakistan's commitments had 
improved as compared to its multilateral commitments, and the Agreement conformed to Article V of the GATS.  
7. The representative of the United States
 had questions on liberalization commitments, denial 
of benefits and regulatory provisions that would also  be submitted to the WTO Secretariat in writing. 
With respect to liberalization comm itments in the Agreement, she ha d questions on Malaysia's list of 
non-conforming measures in Annex 7, in particular , reservation 15 against Articles 89 and 90 of the 
Agreement and reservation 16 against Articles 89, 90 and 92 of the Agreement, that had already been 
submitted to the Secretariat in writing.  With respec t to the denial of benefits, paragraph 57 of the 
Factual Presentation noted that under Article 101 of the Agreement a Party may deny the benefits of  WT/REG265/M/1 
 Page 3 
 
 
  Chapter 9 to an investor of the other Party if that  investor was an enterprise owned or controlled by 
persons of a non-Party and irrespective of whethe r or not the enterprise had substantial business 
activities in the territory of the other Party.  She ask ed how this provision coul d be reconciled with the 
Parties' obligations under Article V.6 of the GATS which provided that a services supplier of another 
Member would be entitled to benefits under the Ag reement provided that it engaged in substantive 
business operations in the territory of the Partie s to the Agreement.  On regulatory provisions, 
specifically paragraph 92 of the Factual Presentation, she asked the Parties to provide an update on 
discussions related to the development of the mutu al recognition agreement.  The representative of 
Malaysia  said Malaysia would respond in writing.  
8. The Chairman  noted that the consideration of the services aspects of the Closer Economic 
Partnership Agreement between Pakistan and Ma laysia had allowed the Committee to clarify a 
number of questions and oral discussion of the Ag reement could be concluded in accordance with 
paragraph 11 of the Transparency Mechanism.  If any delegations wished to ask follow-up questions 
they were invited to forward submissions in writi ng to the Secretariat by 22 September 2009 and the 
Parties were asked to submit replies in writing by no later than 6 October 2009.  In accordance with 
paragraph 13 of the Transparency Mechanism all written submissions, as well as minutes of this 
meeting would be circulated promptly, in all WTO official languages, and would be made available 
on the WTO website. 
9. The Committee took note of the comments made. 
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