WORLD TRADE  
ORGANIZATION  WT/REG238/2 
19 August 2008 
 (08-3867) 
Committee on Regional Trade Agreements Original:   English/ 
 Spanish 
 
 
 
PROTOCOL OF MONTEVIDEO ON TRADE IN SERVICES 
IN THE MERCOSUR 
 
Questions and Replies  
 
  The following communication, dated 7 July 2008,  is being circulated at the request of the 
delegations of Argentina, Brazil, Paraguay, and Uruguay.  
 This document reproduces the questions addressed to the Parties and the responses submitted. 
 
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Questions from the delegation of the European Communities
 
 
1. Could the Parties, describe the reasons fo r this Agreement having entered into force 
eight years after its signature? 
 As established in Article XXVII, the Protocol w ould enter into force 30 days after the date of 
deposit of the third instrument of ratification, wh ich was the Brazilian one.  For each Party to ratify 
the Protocol, it was necessary to obtain parliamentary approval.  This is a time-consuming process, 
especially because it involves more than one Parliament.  
2. Could Paraguay explain why it has not ratified this Protocol yet and when it plans to do 
so? 
 The ratification of the Protocol depends on its approval by the Congress, which is still 
examining it.  The new legislative period has begun last 1
st July. 
 
3. Paragraph 20 of the Factual Presentation notes that "The Protocol on the accession of 
Venezuela to the Treaty of Asuncion was signed in July 2006;  as of end-March 2008, ratification procedures had not been complete d and accession was therefore not in force".  
Footnote 10 notes that once the accession is in force, Venezuela will be a Party to the 
Montevideo's Protocol. 
 Could the Parties elaborate on the accession process of Venezuela and, in particular, as 
regards Venezuela's accession to this Protocol?  Have negotiations on Venezuela's Schedules of 
Specific Commitments been initiated? 
 The accession of Venezuela requires the ratification of the Protocol on the accession by all 
MERCOSUR Member Countries and Venezuela.  Brazil and Paraguay have not ratified it yet, as their 
respective Parliaments are still examini ng it.  In the case of Brazil, the i ssue is at an advanced stage.  WT/REG238/2 
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  When the process is concluded, Venezuela will be a Pa rty to the Montevideo Protocol, in light of its 
Article XXIX.   As regards negotiations on Venezuela's Sche dules of Specific Commitments, these will await 
the conclusion of the accession process. 
 
4. Paragraph 22 of the Factual presentation indicates that the Protocol establishes a 
gradual liberalization programme within ten years fr om its entry into force.  The Protocol may 
be revised taking into account trends and reg ulation of trade in services in MERCOSUR and 
progress made regarding trade in services at the WT O.  Since the signature of the Protocol in 
1997, six rounds of negotiations on specifics  commitments have been concluded.  A 
seventh round has been launched in June 2007.  According to the Factual Presentation, the 
Schedules of Specific Commitments in force for Ar gentina, Brazil and Uruguay are the initial 
Schedules as agreed in 1997. 
 (a) What are the elements each Party considers improving during the current round 
of negotiations? 
 
 The seventh round – based, like the previous on es, on the request-offer procedure, is still 
under way.  It is therefore difficult to anticipate its possible results.  
 (b) Could each Party indicate whether it aims to improve its level of commitments of 
the original schedules? 
 
 The level of commitments of the original sch edules have been considerably improved for all 
Parties throughout the six rounds of negotiations that we re concluded.  In light of Article XIX of the 
Montevideo Protocol, the Parties intend to continue  such process until the liberalization programme is 
completed. 
 
 (c) Could the Parties elaborate on the procedures to modify and withdraw 
commitments under the Protocol?  Do th ese procedures include compensation to 
other Parties, and if so, what sort of compensation? 
 
 (d) Could the Parties explain whether the modifications and suspensions of 
commitments could be undertaken on a permanent basis?  If so, could the 
Parties assess their effect on the liberalization goals of the Protocol? 
 
 The answer given to question 17 from the delegation of the United States apply to questions 
4(c) and 4(d) above in most aspects.  Concerning compensation, the Protocol does not contain any 
clear indication on the issue.  It is possible t hough to imagine that it could be raised during the 
consultation process.  
5. In light of the level of the commitments which are included in the current schedules 
attached to the Montevideo Protocol, how do the Parties consider the Protocol's compatibility 
with Article V(1) of the GATS? 
 The Parties consider that the Montevideo Protoc ol is completely compatible with Article V of 
the GATS, especially in light of the flexibilit y accorded to developing countries established in 
paragraph 3.  In this respect, it is important to b ear in mind that the commitment to liberalizing trade 
in services in MERCOSUR is to be achieved gradually, but in a fixed period of time.  Also 
paragraph 2 has to be taken into account as MERCOSUR constitutes a wider process of economic 
integration.   WT/REG238/2 
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   Moreover, the Montevideo Protocol satisfies the requirement of substantial sectoral coverage 
foreseen in paragraph 1, as it comprises all sector s and the four modes of supply established by the 
GATS, without any a priori  exclusion.  The fixed period for the completion of the liberalization 
programme being of ten years, the results of th e successive rounds of negotiation are automatically 
incorporated into the general process, respecting the principle of gradualism. 
 
 Finally, the most favoured nation principle is  unrestricted among the Parties, ruling out the 
possibility of establishing any exceptions to it.  
6. Do the Parties consider these commitments  substantially exceed their current 
commitments under the GATS? 
 The commitments in force under the Montevideo Protocol were made in 1998 and they 
already exceeded commitments under GATS.  Those commitments were improved even before the 
entry into force of Protocol, through six rounds of negotiations, the last one having been concluded in 
2006 and being currently examined by the Parliaments of each Party. 
 
7. How do the Parties envisage the formation of a common market based on the current 
liberalization commitments? 
 The formation of the common market, established in the Treaty of Asunción, is not based on 
the current commitments under the Montevideo Pr otocol.  The Initial Schedules of Commitments 
were just a first step, as the Parties have held successive rounds of negotiation in order to achieve 
further liberalization in their trade in services, in  light of Article XIX of the Protocol, and will 
continue to do so in order, as mentioned a bove, to complete the liberalization programme. 
  Furthermore, the liberalization of trade in ser vices has been dealt with by other agreements, 
referred to in paragraph 38 of the Factual Presenta tion, related either to the movement of natural 
persons or the commercial presence.  Those are inte nded to create a more favourable environment to 
the liberalization of trade in services, contribut ing to the formation of the common market. 
 
8. Paragraph 58 of the Factual Presentation summarizes Brazil's commitments with 
respect to the insurance sector.  In particular, it is stated that "[f]or work accident insurance, 
and reinsurance and retrocession, no market a ccess liberalization is provided for initially;  
however, Brazil has agreed to undertake liberaliza tion commitments within two years from the 
adoption by the Congress of legislation regulat ing their presence".  The EC understands that 
the relevant legislation has been adopted by the Congress. 
 When does Brazil expect the implementi ng legislation to enter into force? 
  A new regulation concerning reinsurance and retrocession has been in force since 
January 2007 through the enactment of Complement ary Law No. 126 and allows foreign participation 
in that market under certain conditions.  As rega rds work accident insurance, it is still a State 
monopoly and there are no prospects, in the immedi ate future, for introducing new regulation in this 
sector.  9. Table II.3 in page 34-35 identifies a number of PTAs concluded by both MERCOSUR as 
a group and its individual parties. 
 Could the Parties explain why most PTAs h ave not been notified to WTO?  Please 
explain for each PTA in particular. 
 WT/REG238/2 
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   The Parties take note of EU interest in this issue, but understand that the current exercise is 
limited to aspects regarding the Protocol  of Montevideo on Trade in Services. 
 
Questions from the delegation of Japan
 
 
10. With regard to Paragraph 24 and Annex I Table AI.1 of the Factual Presentation 
(WT/REG238/1), could each Party inform us about the expected timing for the ratification of 
each round of Schedules of Specific Commitments, including Paraguay's ratification from the 
initial list? 
 The Parties held indeed six rounds of negotiation under the Protocol of Montevideo.  The 
sixth round, however, incorporates the results of all previous ones.  For this reason, only the 
sixth round is being examined by the Parliaments of  each Party.  In this respect, it is difficult to 
anticipate the timing for the ratification of this last round, as it depends, in the first place, on 
parliamentary approval, and Parliaments are autonomous from the Executive Branch in all 
MERCOSUR Member Countries.   As regards Paraguay, the ratification of the Protocol depends on its approval by the Congress, 
which is still examining it.  The new legislative period has begun last 1
st July. 
 
11. With regard to Section II.F.5.(a) and A nnex II (Government Procurement) of the 
Factual Presentation, we noted that the scope of  the commitment made by each Party is quite 
uneven.  Are there any plans for expanding the scope of the Government Procurement in order 
to make the commitment more equal among the Parties? 
 The Parties take note of Japan's interest in this  issue, but understand that the current exercise 
is limited to aspects regarding the Protocol of M ontevideo on Trade in Services, which, by the way, 
excludes government procurement from its scope. 
Questions from the delegation of Mexico  
 
General comment from MERCOSUR to the questions from Mexico  
  Services liberalization in MERCOSUR has a di mension that goes beyond the negotiation of 
schedules of specific regional commitments.  In th is connection, a number of decisions have been 
adopted (Decisions CMC/28/02, 16/03,  25/03 and 32/04), with a view to facilitating the movement of 
natural persons.  In addition, initiatives are under way to harmonize regulations regarding company 
registration, for example.  Argentina
 
 
12. Argentina's MERCOSUR schedule of commitments does not include sectors such as 
education, environmental, health, audiovisual, or transport services. 
 Are we to understand that the ten-year liberalization programme will, by the end of that 
period, include the educational, environmental, health, audiovisual and transport services 
sectors?  
 Pursuant to Article XIX of the Montevideo Protocol, the States parties will hold successive 
rounds of negotiation with a view to completi ng the MERCOSUR programme of liberalization of 
trade in services within ten years from th e entry into force of the Protocol. 
  WT/REG238/2 
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   However, each sector has its own specific features.  The transport sector, for example, is 
governed by an Agreement on International Land Tran sport, which pre-dates the Protocol and covers 
countries that are not parties to MERCOSUR.   In the successive rounds of negotiation, cons ideration will be given to ways of scheduling 
commitments to ensure that all sectors are covered. 
 
Brazil
 
 
13. Brazil's list of initial commitments under MERCOSUR's Protocol include specific 
commitments in seven of the 11 sector groups found in the SSCL and covers almost 30% of all 
services sub-sectors in the List. 
 Will Brazil include the four remaining sector s across all four modes of supply by the 
time the liberalization programme is completed? 
 
 Pursuant to Article 19 of the Montevideo Protocol, the States Parties will hold successive 
rounds of negotiation with a view to completi ng the MERCOSUR programme of liberalization of 
trade in services within ten years from entry into fo rce of the Protocol.  The Protocol entered into 
force on 7 December 2005, together with th e schedules of initial specific commitments. 
  In the case of Brazil, the initial schedule in  fact includes commitments in seven of the 
11 sectors classified in the SSCL (W/120).  However, even before the entry into force of the Protocol, 
the States Parties had already conducted seven r ounds of negotiation to deepen the liberalization 
process.  In this connection, in the sixth round, c oncluded in July 2006, Brazil had already undertaken 
commitments in all sectors of the SSCL and will con tinue to expand its commitments, in the spirit of 
thoroughgoing integration which characterizes MERCOSUR.   It is also important to point out that, alt hough Brazil has commitments in all sectors covered 
in the sixth round, the commitments in force ar e those set forth in its initial schedule.  The 
sixth round, which consolidates the results of all th e previous rounds, is s till under consideration in 
the Brazilian Congress.  
Paraguay
 
 
14. Paraguay's initial schedule of specific commitments under MERCOSUR's Protocol 
features commitments in financial servi ces, tourism and telecommunications. 
 Will Paraguay include the remaining sectors by the time the liberalization programme is 
completed?  
 Paraguay plans to include all sectors by the time the liberalization programme is completed. 
 
Uruguay
 
 
15. Uruguay's initial schedule under the Protocol includes specific commitments in 8 of the 
11 sector groups of the SSCL, which cover more than a third of all the services sub-sectors identified therein. 
 Will Uruguay include the remaining sectors by the end the liberalization period? 
 
 The answer to Mexico's question is yes.  As provided in Article XIX of the Protocol, 
liberalization will be carried out through successive rounds of negotiations, with a view to completing 
the liberalization programme within a maximum of te n years from the entry info force of the Protocol, 
i.e. by 2015.  By the time that deadline is reached, coverage should be complete. WT/REG238/2 
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  Questions from the delegation of the United States
 
 
16. Can Brazil please provide the website where its annex of services commitments under 
the Protocol can be found? 
 The specific commitments undertaken by all MERCOSUR Parties can be found on the 
MERCOSUR web site (www.mercosur.int).  For ease of  reference, Decision 9/98, which approves the 
lists of initial commitments can be  found under the icon "decisiones" , with the indication of 1998 as 
the search year.  
17. Page 30, Table II.1 of the Secretariat's factual presentation notes that among the 
functions of the Council of the Common Market (CCM) is "endorsement" of modification or 
suspension of Parties' specific commitments.  Article XX of the Montevideo Protocol provides 
that, when modifying or suspending a specific co mmitment contained in its services schedule, a 
Party must hold consultations with other intere sted Parties, in order to "reach a mutual 
understanding on the specific measure to be app lied and the period during which it will remain 
in effect." 
 Can the Parties please clarify whether either CCM endorsement or the requirement to 
obtain "mutual understanding" from interested Parties serves as requirement that all 
interested MERCOSUR Parties must consent to any modification or suspension of a Party's specific commitments? 
  Article XX of the Montevideo Protocol is in tended to provide a degree of flexibility in the 
programme of liberalization of trade in services during the ten-year progr amme of liberalization 
foreseen in Article XIX:1.  It is important to stress that such flexibility is available only during this 
ten-year period.  
 As can be derived from Article XX:1, the only limitations to a recourse to its provisions is 
that any modification or suspension shall only be applicable as from the date of establishment and 
shall not have retroactive effect.  Article XX:2 oblig es for consultations with affected Parties, but does 
not condition the application of the modification or suspension to the results of such consultations. 
  Article XXII:1(b) clearly indicates that the CMG shall receive the notifications and results of 
such consultations, but is not involved substantivel y in the content of measures.  Article XXI provides 
for a role for the CCM in that any modification or  suspension affects concessions approved at that 
level.  
18. Article XX also provides that modification or suspension of specific commitments must 
be done in the course of "implementation of the Liberalization Programme referred to in 
Part III," i.e., in the course of successive rounds of negotiation to provide more effective market 
access. 
 Can the Parties please confirm whether the resu lts of any modification or suspension of 
commitments would be subject to the same pr ocess of ratification as that for revised 
services schedules resulting from subse quent negotiating rounds?  Would any 
modification or suspension therefore require ra tification in order to enter into force? 
 
 As mentioned above, the provisions of Artic le XX to the effect that modification or 
suspension of specific commitments must be done in the course of "implementation of the Liberalization Programme referred to in Part III," refe r to the fact that any modification or suspension 
can only be undertaken during this ten-year implem entation period, rather than signifying that it is 
undertaken within the process of the successive rounds of negotiation.  WT/REG238/2 
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   From this point of view, any modification – as a permanent alteration in a Member's list of 
concessions – would have to be incorporated into  that list and would therefore require the usual 
ratification procedure during the round under negotiation.  A suspen sion, however, would constitute a 
temporary deviation from the commitments of the list and would therefore not require internal ratification.  In both hypotheses, th e only requirement for entry into force is that the measure shall 
only be applicable as from the date of establis hment and shall not have retroactive effect. 
 
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