WORLD TRADE  
ORGANIZATION  WT/COMTD/60 
31 January 2007 
 
 (07-0432) 
Committee on Trade and Development Original:   Spanish 
  
 
COMMUNICATION FROM BRAZIL ON BEHALF OF THE MERCOSUR 
 
Protocol of Montevideo on Tr ade in Services in the MERCOSUR
 
  
 The following communication, dated 19 Janua ry 2007, from the delegation of Brazil on 
behalf of the MERCOSUR member countries is being circulated for information.  It concerns the 
"Protocol of Montevideo on Tr ade in Services in the MERCOSUR"
1. 
  
_______________ 
 
 
Protocol of Montevideo on Trade in Services in the MERCOSUR 
 
 
 In its capacity of Pro Tempore  Chairman of MERCOSUR, the Brazilian Government, on 
behalf of the MERCOSUR Member Countries (Argen tina, Brazil, Paraguay and Uruguay), conveys to 
the WTO Secretariat for the attention of all WTO Members that on 7 December 2005 the Protocol of Montevideo on Trade in Services in the MERCOSUR ente red into force.  The duration of the Protocol 
is indefinite. 
 The Protocol of Montevideo on Trade in Services in the MERCOSUR, signed on 
15 December 1997, aims at implementing the provision contained in the Treaty of Asunción
2 
concerning the free movement of goods, services and f actors of production between the States Parties.  
The Protocol establishes the completion of the liberalization programme of trade in services within ten years from the date of its entry into force. 
 The following text reproduces the Protocol of  Montevideo and its Annexes.  The Initial 
Schedules of Specific Commitments of the member c ountries, which also integrate the Protocol, may 
be found at htttp://www.mercosur.int/msweb/p rincipal/contenido.asp (Decision CMC 09/98). 
 
                                                     
 
1 Notified to the Council for Trade in Services as document S/C/N/388. 
2 Notification distributed as document L/7370. WT/COMTD/60 
Page 2  
 
  PROTOCOL OF MONTEVIDEO ON 
TRADE IN SERVICES IN THE MERCOSUR 
 
PREAMBLE  
  
 The Argentine Republic, the Federative Republic of Brazil, the Republic of Paraguay and the 
Eastern Republic of Uruguay, States Parties of the Southern Common Market (MERCOSUR);   
Reaffirming  
that, pursuant to the Treaty of Asunción, the Comm on Market implies, among other commitments, the 
free movement of services within the expanded market;   
Recognizing   
the importance of liberalizing trade in services for the development of the economies of the 
MERCOSUR States Parties, for expanding the customs union and for the gradual creation of the 
Common Market;   
Bearing in mind   
the need to ensure that the less developed c ountries and regions within the MERCOSUR increasingly 
participate in the services market and to promote tr ade in services on the basis of reciprocal rights and 
obligations;  
 
Desiring  
to establish in a common instrument the rules and principles governing trade in services among 
MERCOSUR States Parties so as to expand trade under conditions of transparency, balance and 
progressive liberalization;  
 
Taking into account   
the General Agreement on Trade in Services (GATS)  of the World Trade Organization (WTO), in 
particular Article V thereof, as well as the commi tments undertaken by the States Parties under the 
GATS; 
 
Hereby agree the following:   
PART I 
 
Purpose and Scope of Application 
Article I 
Purpose
 
The purpose of this Protocol is to promot e free trade in services within the MERCOSUR.  WT/COMTD/60 
 Page 3 
 
 
  Article II 
Scope of application  
1. This Protocol shall apply to measures adopted by  the States Parties affecting trade in services 
in the MERCOSUR, including those relating to the following: 
(i) The supply of a service; 
(ii) the purchase, payment or use of a service; 
(iii) access to services which the States Parti es prescribe shall be offered to the 
public in general and use thereof for the purpose of supplying a service; 
(iv) the presence of persons from a State Party in the territory of another State 
Party in order to supply a service, including commercial presence. 
2. For the purpose of this Protocol, trade in services means the supply of a service:  
(a) From the territory of one State Party to the territory of any other State Party;  
(b) within the territory of a State Party to a service consumer in any other State Party;  
(c) by a service supplier of a State Party thr ough commercial presence in the territory of 
any other State Party;  
(d) by a service supplier of a State Party through the presence of natural persons of a 
State Party in the territory of any other State Party. 
3. For the purpose of this Protocol: 
(a) "Measures adopted by the States Partie s" mean the measures taken by:  
(i) Central, state, provincial, departmental, municipal or local governments and 
authorities:  and  
(ii) non-governmental bodies in the exercise of the powers delegated by the 
governments or authorities referred to in subparagraph (i) above.  
In fulfilling its obligations and commitments under this Protocol, each State Party shall take the 
necessary measures as may be available to it to en sure their observance by state, provincial, 
departmental, municipal or local governments and authorities and non-governmental bodies within its 
territory;  
(b) "services" include any service in any sector, except services supplied in the exercise 
of governmental authority;  
(c) "service supplied in the exercise of govern mental authority" means any service which 
is supplied neither on a commercial basis nor in competition with one or more service 
suppliers. WT/COMTD/60 
Page 4  
 
  PART II 
 
Obligations and General Rules 
 
Article III 
Most-favoured-nation treatment
 
1. With respect to the measures covered by th is Protocol, each State Party shall accord 
immediately and unconditionally to services and service suppliers of any other State Party treatment no less favourable than that it accords to like services and service suppliers of any other State Party or 
third countries.  
2. The provisions of this Protocol shall not be so construed as to prevent any State Party from 
conferring or according advantages to neighbouring count ries, whether or not States Parties, in order 
to facilitate exchanges limited to contiguous frontier zones of services that are both locally produced 
and consumed.  
Article IV 
Market access
 
1. With respect to market access through the modes of supply identified in Article II, each State 
Party shall accord to services and service suppliers  of the other States Parties treatment no less 
favourable than that provided for in their Schedules  of Specific Commitments.   The States Parties 
undertake to allow the cross-border movement of cap ital which forms an essential part of a market 
access commitment contained in their Schedules of Sp ecific Commitments in respect of cross-border 
trade, as well as of capital transfers to their terr itory in the case of market access commitments made 
in respect of commercial presence.  
2. The States Parties may neither maintain nor adopt measures regarding the following, whether 
on the basis of a regional subdivision or on the basis of their entire territory:  
(a) The number of service suppliers, whether in the form of numerical quotas, 
monopolies exclusive service suppliers or the requirements of an economic needs 
test;  
(b) the total value of services transactions or as sets in the form of numerical quotas or the 
requirements of an economic needs test;  
(c) the total number of service operations or the total quantity of service output, 
expressed in terms of designated numerica l units, in the form of quotas or the 
requirements of an economic needs test, excep t measures that limit inputs to be used 
for the supply of services;  
(d) the total number of natural persons that may be employed in a particular service 
sector or that a service supplier may employ and who are necessary for, and directly related to, the supply of a specific service, in the form of numerical quotas or the 
requirements of an economic needs test;  
(e) the specific type of legal person or joint venture through which a service supplier may 
supply a service;  and   WT/COMTD/60 
 Page 5 
 
 
  (f) the participation of foreign capital in term s of maximum percentage limit on foreign 
shareholding or the total value of individual or aggregate foreign investment.  
Article V 
National treatment  
1. Each State Party shall accord to services and service suppliers of any other State Party, in 
respect of all measures affecting the supply of services, treatment no less favourable than that it 
accords to its own like services and service suppliers.  
2. Specific commitments undertaken pursuant to th is Article do not oblige States Parties to 
compensate for intrinsic competitive disadvantages r esulting from the foreign nature of the relevant 
services or service suppliers.  
3. A State Party may meet the requirements of paragraph 1 by according to services and service 
suppliers of other States Parties either formally iden tical treatment or formally different treatment to 
that it accords to its own like services and service suppliers.  
4. Formally identical or formally different treatment  shall be considered to be less favourable if 
it modifies the conditions of competition in favour of services or service suppliers of the State Party 
compared to like services or service suppliers of any other State Party.  
Article VI 
Additional commitments  
 States Parties may negotiate commitments with respect to measures affecting trade in services 
not subject to scheduling under Articles IV and V,  including those regarding qualifications, standards 
or licensing matters.  Such commitments shall be inscribed in a State Party's Schedule of Specific 
Commitments.  
Article VII 
Schedules of Specific Commitments  
1. Each State Party shall set out in a Schedule of  Specific Commitments the sectors, subsectors 
and activities with respect to which it undertakes commitments and, for each corresponding mode of 
supply, shall indicate the terms, limitations and co nditions on market access and national treatment.  
Each State Party may also specify additional commitments pursuant to Article VI.  Where 
appropriate, each State Party shall specify the time -frame for implementation of such commitments as 
well as the date on which they enter into force.  
2. Articles IV and V shall not apply to the following:  
(a) The sectors, subsectors, activities or measures that are not set out in the Schedule of 
Specific Commitments;  
(b) the measures set out in their Schedules of Specific Commitments that are inconsistent 
with Article IV or Article V. WT/COMTD/60 
Page 6  
 
  3. Measures inconsistent with both Article IV and Article V shall be inscribed in the column 
relating to Article IV.  In this case, the inscrip tion will be considered to provide a condition or 
restriction also affecting Article V.  
4. The Schedules of Specific Commitments shall be a nnexed to this Protocol and shall form an 
integral part thereof.  
Article VIII 
Transparency
 
1. Each State Party shall publish promptly prior to their entry into force, except in situations of 
force majeure, all relevant measures of general application which pertain to or affect the operation of 
this Protocol.  Likewise, each State Party shall pu blish any international ag reements signed with any 
country pertaining to or affecting trade in services.  
2. Where publication as referred to in the preceding paragraph is not practicable, such 
information shall be made otherwise publicly available.  
3. Each State Party shall promptly and at least annually inform the MERCOSUR Trade 
Commission of the adoption of any new, or an y changes to existing, laws, regulations or 
administrative guidelines which it considers si gnificantly affect trade in services.  
4. Each State Party shall respond promptly to all requests by any other State Party for specific 
information on any of its measures of general app lication or international agreements within the 
meaning of paragraph 1.  Likewise, each State Pa rty shall provide specific information to States 
Parties, upon request, through the established service or  services, in accordance with Article III.4 of 
the GATS, on all such matters as well as those subject to the notification requirement in paragraph 3.  
5. Any State Party may notify to the MERCOSUR Trade Commission any measure taken by 
another State Party, which it considers affects the operation of this Protocol.  
Article IX 
Disclosure of confidential information  
 Nothing in this Protocol shall require any Stat e Party to provide confidential information, the 
disclosure of which would impede law enforcement, or  otherwise be contrary to the public interest, or 
which would prejudice the legitimate commercial interest s of particular enterprises, public or private.  
 
Article X 
Domestic regulation  
1. Each State Party shall ensure that all measur es of general application affecting trade in 
services are administered in a reasonable, objective and impartial manner.  
2. Each State Party shall maintain or institute judicial, arbitral or administrative tribunals or 
procedures which provide, at the request of an aff ected service supplier, for the prompt review of, and 
where justified, appropriate remedies for, administ rative decisions affecting trade in services.  Where 
such procedures are not independent of the agen cy entrusted with the administrative decision 
concerned, the State Party shall ensure that th e procedures in fact provide for an objective and 
impartial review.   WT/COMTD/60 
 Page 7 
 
 
  The provisions of this paragraph shall not be cons trued to require a State Party to institute such 
tribunals or procedures where this would be inconsis tent with its constitutional structure or the nature 
of its legal system.  
3. Where a licence, registration, certification or an y other type of authorization is required in 
order to supply a service, the competent authoritie s of the State Party concerned shall within a 
reasonable period of time following the submission of the application:  
(i) Take a decision and inform the interested party, if the application is 
complete;  or  
(ii) if the application is not complete, info rm the interested party without undue 
delay of the status of the application and of any additional information that is 
required in accordance with the State Party's legislation.  
4. With a view to ensuring that measures relating to technical standards, qualification 
requirements and procedures and licensing require ments do not constitute unnecessary barriers to 
trade in services, the States Parties shall ensu re that such requirements and procedures are, inter alia :  
(i) Based on objective and transparent criteria, such as competence and the 
ability to supply the service;  
(ii) not more burdensome than necessary to ensu re the quality of the service;  and  
(iii) in the case of licensing procedures, not in themselves a restriction on the 
supply of the service.  
5. Each State Party may provide for adequate  procedures to verify the competence of 
professionals of any other State Party.  
Article XI 
Recognition  
1. Where a State Party, either unilaterally or under an agreement, recognizes the education, 
experience, licences, registration or certifications obtai ned in the territory of another State Party or in 
any country that is not a Member of MERCOSUR: 
(a) Nothing in this Protocol shall be construed to require that State Party to recognize the 
education, experience, licences, registration or certifications obtained in the territory of another State Party;  and  
(b) the State Party shall afford any other State Party adequate opportunity:  
(i) To demonstrate that the education, experience, licences, registration or 
certifications obtained in its territory should be recognized;  or  
(ii) to conclude an agreement or arrange ment having equivalent effect.  
2. Each State Party undertakes to encourage the co mpetent authorities in its respective territory, 
inter alia, governmental authorities, as well as professiona l associations and societies, in cooperation 
with the competent authorities of other States Partie s, to develop mutually acceptable standards and 
criteria for the practice of relevant services trades  and professions, by granting licences, registration WT/COMTD/60 
Page 8  
 
  and certifications to service suppliers and to ma ke recommendations on mutual recognition to the 
Common Market Group.  
3. The standards and criteria referred to  in paragraph 2 may be developed, inter alia,  on the 
basis of the following elements:  education, examinations, experience, conduct and ethics, 
professional development and renewed certification, scope of action, local knowledge, protection of 
consumers, and nationality, reside nce or domicile requirements.  
4. After receiving the recommendation referred to in paragraph 2, the Common Market Group 
shall consider it within a reasonable period of time in order to determine its  consistency with this 
Protocol.  On the basis of this consideration, each State Party undertakes to instruct its respective 
competent authorities, where necessary, to implem ent the provisions agreed by the MERCOSUR's 
competent bodies within a mutu ally agreed time frame.  
5. The Common Market Group shall examine the implementation of this Article periodically 
and at least once every three years.  
Article XII 
Competition
 
 The provisions of the MERCOSUR Protocol on Co mpetition shall apply to acts carried out by 
service suppliers under public or private law or by other entities when providing services when the purpose is to affect competition or which affect  competition within the MERCOSUR and trade in 
services among the States Parties.  
Article XIII 
General exceptions
 
 Subject to the requirement that such measures are not applied in a manner which would 
constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions 
prevail or a disguised restriction on trade in servi ces, nothing in this Protocol  shall be construed to 
prevent the adoption or enforcement by any State Party of measures:  
(a) Necessary to protect morals or to mainta in public order, the public order exception 
may be invoked only where an imminent and sufficiently serious threat is posed to one of the fundamental interests of society;  
(b) necessary to protect human, animal or plant life or health;  
(c) necessary to secure compliance with laws a nd regulations which are not inconsistent 
with the provisions of this Protocol, including those relating to:  
(i) The prevention of deceptive and fraudulen t practices or to deal with the 
effects of a default on services contracts;  
(ii) the protection of the privacy of indivi duals in relation to the processing and 
dissemination of personal data and th e protection of confidentiality of 
individual records and accounts;  
(iii) safety;   WT/COMTD/60 
 Page 9 
 
 
  (d) inconsistent with Article V, as set out in th is Protocol, provided that the difference in 
treatment is aimed at ensuring the equitabl e or effective imposition or collection of 
direct taxes in respect of services or service suppliers of other States Parties, including measures adopted by a State Party under its taxation system, as provided in Article XIV(d) of the GATS; 
(e) inconsistent with Article III, as set out in this Protocol, provided that the difference in 
treatment is the result of an agreemen t on the avoidance of double taxation or 
provisions on the avoidance of double taxa tion in any other international agreement 
or arrangement by which the State Party applying the measure is bound.  
Article XIV 
Security exceptions
 
1. Nothing in this Protocol shall be construed:  
(a) To require any State Party to furnish any information, the disclosure of which it 
considers contrary to its essential security interests;  or  
(b) to prevent any  State Party from taking any action which it considers necessary for the 
protection of its essential security interests: 
(i) Relating to the supply of services as carried out directly or indirectly for the 
purpose of the provision of a military establishment;  
(ii) relating to fissionable or fusionable ma terials or the materials from which 
they are derived;  
(iii) taken in time of war or in other emerge ncy in international relations;  or  
(c) to prevent any State Party from taking an y action in pursuance of its obligations 
under the United Nations Charter for the ma intenance of international peace and 
security.  
2. The MERCOSUR Trade Commi ssion shall be informed of measures taken under 
subparagraphs 1(b) and 1(c) and of their termination.  
Article XV 
Government procurement  
1. Articles III, IV and V, shall not apply to the laws, regulations or re quirements governing the 
procurement by governmental agencies of services purchased for governmental purposes and not with 
a view to commercial resale or with a view to use in the supply of services for commercial sale.  
2. Without prejudice to the provisions of para graph 1 and recognizing that such laws, 
regulations or requirements may ha ve distorting effects on trade in services, the States Parties hereby 
agree that the common disciplines on government proc urement in general to be determined by the 
MERCOSUR shall apply.  WT/COMTD/60 
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  Article XVI 
Subsidies
 
1. The States Parties recognize that, in certain circumstances, subsidies may have distorting 
effects on trade in services.  The States Parties hereby agree that the common disciplines on subsidies in general to be determined by the MERCOSUR shall apply.  
2. The mechanism provided in paragraph 2 of Article XV of the GATS shall apply.  
Article XVII 
Denial of benefits
 
A State Party may deny the benefits of this Protocol to a service supplier in another State 
Party, subject to notification and the holding of cons ultations, if the said State Party demonstrates that 
the service is being supplied by a person from a country that is not a MERCOSUR State Party. 
Article XVIII 
Definitions  
For the purpose of this Protocol:  (a) "Measure" means any measure by a State Pa rty, whether in the form of a law, 
regulation, rule, procedure, decision, administrative action, or any other form;  
(b) "supply of a service" includes the production, distribution, marketing, sale and 
delivery of a service;  
(c) "commercial presence" means any type of  business or professional establishment, 
including through the constitution, acquisiti on or maintenance of a legal person, as 
well as of branches or representative offices within the territory of a State Party for 
the purpose of supplying a service;  
(d) "sector" of a service means:  
(i) With reference to a specific commitment, one or more, or all, subsectors of 
that service, as specified in the Schedul e of Specific Commitments of a State 
Party;  
(ii) otherwise, the whole of that service sector, including all of its subsectors;  
(e) "service of another State Party" means a service which is supplied:  
(i) From or in the territory of another State Party;  
(ii) in the case of the supply of a service through commercial presence or through 
the presence of natural persons, by a service supplier of that other State Party;  
(f) "service supplier" means any person that supp lies a service.  Where the service is not 
supplied directly by a legal person but through other forms of commercial presence 
such as a branch or a representative office, the service supplier (i.e., the legal person)  WT/COMTD/60 
 Page 11 
 
 
  shall, nonetheless, through such presence, be accorded the treatment provided for 
service suppliers under the Protocol.  Such  treatment shall be extended to the 
presence through which the service is supplied and need not be ex tended to any other 
parts of the supplier located outside the territory where the service is supplied;  
(g) "service consumer" means any person that receives or uses a service;  
(h) "person" means either a natural or a legal person;  
(i) "natural person of another State Party" means a natural person who resides in the 
territory of that other State Party or any other State Party and who, under the law of that other State Party, is a national of that other State Party or has the right of permanent residence in that other State Party;  
(j) "legal person" means any legal entity duly constituted and organized under applicable 
law, whether for profit or otherwise, and whether government-owned, privately-
owned or jointly-owned and organized in the form of any type of company or 
association;  
(k) "legal person of another State Party" m eans a legal person constituted or otherwise 
organized under the law of that other State Party and which has its head office and is 
engaged in or plans to engage in substan tive business operations in the territory of 
that State Party or any other State Party. 
 
 
PART III 
 
Liberalization Programme 
 
Article XIX 
Negotiation of specific commitments
 
1. In pursuance of the objectives of this Protocol , the States Parties shall hold successive rounds 
of negotiations for the purpose of completing the Liberalization Programme for MERCOSUR trade in 
services within a maximum period of ten years as of the entry into force of this Protocol.  The negotiating rounds shall be held annually and their main objective shall be the gradual incorporation 
of sectors, subsectors, activities and modes of supply  of services into the Protocol's Liberalization 
Programme, as well as the reduction or elimination of the adverse effects on trade in services of 
measures as a means of providing effective market a ccess.  This process shall take place with a view 
to promoting the interests of all participants on a mutually advantageous basis and to securing an 
overall balance of rights and obligations.  
2. In each round, the process of gradual liberali zation shall be directed through negotiations 
aimed at raising the level of specific commitments undertaken by the States Parties in their Schedules 
of Specific Commitments.  
3. In implementing the Liberalization Programme, differences in the level of commitments 
undertaken shall be allowed bearing in mind the sp ecific features of the various sectors and observing 
the objectives set out in the following paragraph. WT/COMTD/60 
Page 12  
 
  4. The liberalization process shall respect the right of each State Party to implement regulations 
and to introduce new regulations within their territo ries in order to achieve their national policy goals 
relating to the service sector.  Such regulations may cover, inter alia, national treatment and market 
access, provided that they do not nullify or impair obligations arising out of  this Protocol or the 
specific commitments.  
Article XX 
Modification or suspension of commitments
 
1. Throughout the implementation of the Liberalizati on Programme referred to in Part III of this 
Protocol, each State Party may modify or suspend specific commitments contained in its Schedule of Specific Commitments.  
Such modification or suspension shall apply only as of the date on which it is determined and shall 
observe the principle of non-retroactivity in order to preserve the rights acquired. 
2. Each State Party shall only resort to this regi me in exceptional cases, provided that when it 
does so it notifies the Common Market Group and explains to it the facts, reasons and justification for such modification or suspension of commitments.  In  such cases, the State Party concerned shall hold 
consultations with the State Party or States Parties that consider themselves affected thereby in order 
to reach a mutual understanding on the specific meas ure to be applied and the period during which it 
will remain in effect.    
PART IV 
 
Institutional Provisions 
 
Article XXI 
Common Market Council
 
The Common Market Council shall endorse the conclusions of the negotiations on specific 
commitments as well as any modification and/or suspension thereof.  
Article XXII 
Common Market Group  
1. In the MERCOSUR, the Common Market Group has competence for negotiations on 
services.  The Common Market Group shall have th e following responsibilities in relation to this 
Protocol:  
(a) To convene and supervise the negotiations pr ovided in Article XIX of this Protocol.  
For this purpose, the Common Market Group shall determine the scope, criteria and 
instruments for the holding of negotiations on specific commitments;  
(b) to receive notifications and the conclusions  of consultations on modification and/or 
suspension of specific commitments in accordance with Article XX;  
(c) to carry out the functions set out in Article XI;   WT/COMTD/60 
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  (d) periodically to evaluate trends in trad e in services within the MERCOSUR;  and  
(e) to perform other tasks related to trade in services entrusted to it by the Common 
Market Council.  
2. For the purpose of the functions provided above, the Common Market Group shall set up a 
subsidiary body and shall decide upon its composition and operating methods.  
Article XXIII 
MERCOSUR Trade Commission  
Without prejudice to the functions referred to in the preceding Articles, implementation of 
this Protocol shall be the responsibility of the MERCOSUR Trade Commission,  which shall have the 
following functions:  
(a) To receive information which, pursuant to Ar ticle VIII of this Prot ocol, is notified to 
it by the States Parties;  
(b) to receive information from States Parti es regarding the exceptions provided in 
Article XIV; 
(c) to receive information from the States Parties on action that might constitute abuse of 
a dominant position, or a practice distorting competition, and to bring it to the 
attention of the national bodies respons ible for implementing the Competition 
Protocol;  
(d) to hear questions and claims transmitted by States Parties relating to the 
implementation or interpretation of, or non- compliance with, this Protocol or the 
commitments undertaken in the Schedules of Specific Commitments, applying the 
mechanisms and procedures in for ce within the MERCOSUR;  and  
(e) to perform other services-related tasks entrusted to it by the Common Market Group.  
Article XXIV 
Settlement of disputes  
Disputes that may arise between States Parties relating to the implementation or interpretation 
of, or non-compliance with, the commitments determ ined in this Protocol shall be resolved in 
accordance with the settlement procedures and m echanisms in force within the MERCOSUR. 
  
PART V 
 
Final Provisions 
 
Article XXV 
Annexes
 
 The Annexes to this Protocol are an integral part thereof.  
 WT/COMTD/60 
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  Article XXVI 
Review
 
1. In order to achieve the objective and purpose of this Protocol, it may be revised, taking into 
account trends, and regulation of trade, in services  in the MERCOSUR, as we ll as the progress made 
in relation to services in the World Trade Or ganization and other specialized forums.  
2. In particular, based on developments in the f unctioning of the institutional provisions of this 
Protocol and the institutional structure of MERCOSU R, Part IV may be amended with a view to its 
improvement.  
Article XXVII 
Term  
1. This Protocol, an integral part of the Treaty of Asunción, shall remain in force indefinitely 
and shall take effect thirty days after the date of  deposit of the third instrument of ratification.  
2. This Protocol and its instrument s of ratification shall be deposite d with the Government of the 
Republic of Paraguay, which shall transmit an authenti cated copy of this Protocol to the Governments 
of the other States Parties.  
3. The Schedules of Specific Commitments shall be incorporated into the national legal system 
in accordance with the procedures laid down in each State Party.  
Article XXVIII 
Notifications  
 The Government of the Republic  of Paraguay shall notify the Governments of the other States 
Parties of the date of deposit of instruments of ratifi cation and of the entry into force of this Protocol.  
Article XXIX 
Accession or denunciation  
 For the purpose of this Protocol, the rules laid down in the Treaty of Asunción as a whole 
shall apply to accession or denunciation.  Accession to, or withdrawal from, the Treaty of Asunción or 
this Protocol signify, ipso jure,  accession to, or denunciation of, this Protocol and the Treaty of 
Asunción. 
Article XXX 
Denomination  
 This Protocol shall be called the Protocol of Montevideo on Trade in Services of the Southern 
Common Market.   WT/COMTD/60 
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 Done at the city of Montevideo, Eastern Republic of Uruguay, on the fifteenth day of 
December in the year one thousand nine hundred and ni nety seven, in an original copy in the Spanish 
and Portuguese languages, both texts being equally authentic.  
 
  
For the Government of the 
Argentine Republic 
 
GUIDO DI TELLA  
Minister of Foreign Affairs and Worship 
 For the Government of the Federative 
Republic of Brazil 
 
LUIZ FELIPE LAMPREIA  
Minister of Foreign Affairs 
For the Government of the 
Republic of Paraguay  
 
RUBEN MELGAREJO  
Minister of Foreign Affairs For the Government of the Eastern 
Republic of Uruguay  
 
CARLOS PEREZ DEL CASTILLO  
Acting Minister for Foreign Affairs 
 WT/COMTD/60 
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  SECTORAL ANNEXES 
 
 
ANNEX ON MOVEMENT OF NATURAL PERSONS SUPPLYING SERVICES 
  
1. This Annex applies to measures affecting natura l persons who are service suppliers of a State 
Party, and natural persons of a State Party who are employed by a service supplier of a State Party, in respect of the supply of a service. 
2. The Protocol shall not  apply to measures affecting na tural persons seeking access to the 
employment market of a State Party, nor shall it a pply to measures regarding citizenship, residence or 
employment on a permanent basis. 
3. In accordance with Parts II and III of the Prot ocol, States Parties may negotiate specific 
commitments applying to the movement of all categories of natural persons supplying services under the Protocol.  Natural persons covered by a speci fic commitment shall be allowed to supply the 
service in accordance with the terms of that commitment. 
4. The Protocol shall not prevent a State Party fro m applying measures to regulate the entry of 
natural persons into, or their temporary stay in, its territory, including those measures necessary to 
protect the integrity of, and to ensure the orderl y movement of natural persons across, its borders, 
provided that such measures are not applied in such  a manner as to nullify or impair the benefits 
accruing to a State Party under the terms of a specific commitment. 
5. In order to regulate a particular labour-related situation affecting natural persons that are 
service suppliers of a State Party or natural persons of a State Party employed by  a service supplier of a State Party, the law of the place in which th e service contract is carried out shall apply. 
  WT/COMTD/60 
 Page 17 
 
 
  ANNEX ON FINANCIAL SERVICES 
 
 
1. Coverage or scope of application 
 
(a) This Annex applies to all measures by a St ate Party affecting the supply of financial 
services.  Reference to the supply of a financ ial service in this Annex shall mean the 
supply of a financial service as defined in paragraph 2 of Article II of the Protocol. 
(b) For the purpose of subparagraph 3(b) of Ar ticle II of the Protocol, "services supplied 
in the exercise of governmental authority" of the States Parties mean the following: 
(i) Activities conducted by a central bank or a monetary authority or by any 
other public entity in the States Parties in pursuit of monetary or exchange 
rate policies; 
(ii) activities forming part of a statutory system of social security or public 
retirement plans;  and 
(iii) other activities conducted by a public en tity for the account of or with the 
guarantee or using the financial resources of the States Parties. 
(c) For the purpose of subparagraph 3(b) of Artic le II of the Protocol, if a State Party 
allows any of the activities referred to in subparagraphs (b)(ii) or (b)(iii) to be 
conducted by its financial servi ce suppliers in competition with a public entity or with 
a financial service supplier, "servi ces" shall include such activities. 
(d) The definition given in subpara graph 3(c) of Article II of the Protocol shall not apply 
in the case of this Annex. 
2. Transparency and disclosure of confidential information 
 
 For the purpose of Articles VIII and IX of the Pr otocol and for greater clarity, it is understood 
that nothing in the Protocol shall be construed to require a State Party to disclose information relating 
to the affairs and accounts of individual customers or any confidential information or proprietary 
information in the possession of public entities.  
3. Prudential measures 
 
(a) Nothing in this Protocol shall be constr ued to prevent States Parties from taking or 
maintaining reasonable measures for prudential reasons, in order: 
(i) To protect investors, depositors, partic ipants in the financial market, policy 
holders or persons to whom a fiduciary  duty is owed by a financial service 
supplier. 
(ii) To ensure the solvency and liqui dity of the financial system. 
Where such measures do not conform with the prov isions of the Protocol, they shall not be 
used as a means of avoiding the commitments or obligations unde rtaken by the States Parties 
under the Protocol. WT/COMTD/60 
Page 18  
 
  (b) In applying its own measures on financial services, a State Party may recognize the 
prudential measures of another State Party.  Such recognition may be: 
(i) Given unilaterally; 
(ii) through harmonization or otherwise; 
(iii) based upon an agreement or arrangement with the State Party concerned. 
(c) A State Party granting recognition of prude ntial measures to another State Party 
pursuant to subparagraph (b) shall afford ad equate opportunity for other States Parties 
to demonstrate that the regulation, oversi ght and implementation of such regulation 
and, if appropriate, procedures concerni ng the sharing of information among the 
Parties, are equivalent.  
(d) Where a State Party recognizes the prudential measures pursuant to 
subparagraph (b)(iii) and the conditions speci fied in subparagraph (c) exist, it shall 
afford other interested States Parties adequa te opportunity to negotiate their accession 
to such agreements or arrangements or to negotiate comparable ones with it. 
(e) The agreements or arrangements based on the principle of recognition shall be 
communicated promptly, and at least annually, to the Common Market Group and the 
MERCOSUR Trade Commission in order to comply with the provisions of the Protocol (Articles VIII and XXII). 
4. Harmonization commitment 
 
 The States Parties undertake to continue m oving ahead with the harmonization process, in 
conformity with the guidelines approved or to  be approved by the Common Market Group, the 
prudential regulations and the consolidated oversi ght regimes, as well as with the exchange of 
information on financial services.  
5. Definitions 
  For the purposes of this Annex: 
 
(a) A financial service is any service of a financ ial nature offered by a financial service 
supplier of a State Party.  Financial ser vices include all insurance and insurance-
related services, as well as banking and other financial services. 
The States Parties nevertheless undertake to harmonize the definitions of activities in 
various financial services sectors, taking as a basis paragraph 5 of the Annex on 
Financial Services to the General Agreement on Trade in Services (GATS) of the World Trade Organization (WTO). 
(b) "Financial service supplier" means any na tural or legal person of a State Party 
wishing to supply or supplying financial ser vices, but the term "financial service 
supplier" does not include a public entity.  WT/COMTD/60 
 Page 19 
 
 
  (c) "Public entity" means: 
(i) A government, a central bank or a monetary authority of a State Party or an 
entity owned or controlled by a State Party, that is principally engaged in carrying out governmental functions or activities for governmental purposes, not including entities principally engage d in supplying financial services on 
commercial terms;  or 
(ii) a private entity performing functions normally performed by a central bank or 
monetary authority when exercising those functions. WT/COMTD/60 
Page 20  
 
  ANNEX ON LAND AND WATER TRANSPORT 
 
 1. This Annex applies to measures affecting trad e in land (rail and road) or water transport 
services. 
2. Implementation of this Protocol shall not init ially affect the rights and obligations arising 
from the implementation of multilateral agreemen ts signed among MERCOSUR States Parties prior 
to the entry into force of this Protocol to the ex tent that the purpose of such agreements is to 
harmonize and monitor the terms of competition am ong transport enterprises, respecting as a basic 
priority intra-MERCOSUR liberalization of the sector. 
3. The provisions of this Protocol shall not apply temporarily to each of the bilateral transport 
agreements in force or signed prior to the entry into force of this Protocol. 
4. Each of the multilateral or bilateral agreements re ferred to in paragraphs 2 and 3 shall remain 
in force and shall be supplemented by the corr esponding specific commitments arising out of the 
Liberalization Programme. 
5. During the third year after entry into force of this Protocol, and annually thereafter, the 
Common Market Group shall examine and consider the progress made in bringing the aforementioned 
instruments into conformity with the objectives and principles of this Protocol. 
  WT/COMTD/60 
 Page 21 
 
 
  ANNEX ON AIR TRANSPORT SERVICES 
 
 1. This Annex applies to measures affecting trade in scheduled or non-scheduled air transport 
services.  It applies likewise to ancillary air tran sport services, meaning those covered by the General 
Agreement on Trade in Services (GATS) and those which may result from revisions of this Annex. 
2. Implementation of this Protocol shall not aff ect the rights and obligations arising from the 
implementation of bilateral, plurilateral or multila teral agreements signed by the MERCOSUR States 
Parties and in effect at the time the Protocol of Montevideo entered into force. 
3. This Protocol shall not apply to measures aff ecting commercial air traffic rights determined 
for routes agreed according to the terms of bilate ral air services agreements signed between States 
Parties, not including cabotage traffic. 
4. With regard to subregional scheduled and e xploratory air services on routes other than the 
regional routes actually operated in accordance with  the terms of bilateral air services agreements 
signed between States Parties, the provisions of th e Subregional Air Services Agreement, signed at 
Fortaleza, Brazil, on 17 December 1996, shall apply and, additionally, the Schedules of Commitments 
arising out of the Liberalization Programme. 
5. The procedures and mechanisms for the settle ment of disputes in effect within the 
MERCOSUR may be invoked where no other specifi c settlement mechanism has been decided upon 
by the States Parties concerned. 
6. Within the first three years of the entry into force of this Protocol, the Common Market Group 
shall review this Annex on the basis of the pro posals made by technical air transport experts 
representing the four States Parties in order to  decide on any necessary amendments,, including 
aspects relating to the scope of application, in acco rdance with the principles and objectives of this 
Protocol. 
7. Where a multilateral convention includes measure s on air transport among its provisions, the 
aviation authorities of the States Parties shall hold c onsultations in order to determine the extent to 
which this Protocol may be affected by the provi sions of the said Convention and to decide on any 
amendments to this Annex that may be necessary.  
__________