WORLD TRADE  
ORGANIZATION  WT/REG184/4 
4 June 2007 
 (07-2291) 
Committee on Regional Trade Agreements  
  
 
 
 
FACTUAL PRESENTATION 
 
Free Trade Agreement between the 
United States and Australia   
(Services) 
 
Report by the Secretariat 
 
 
 
 
This report, prepared for the considerati on of the Free Trade Agreement between the 
Government of the United States and the G overnment of Australia has been drawn up 
by the WTO Secretariat on its own responsib ility.  The report was requested by the 
Parties and prepared in consultation with them in accordance wi th the Guidelines on 
Procedures to Improve and Facilitate the Examination Process (document WT/REG/W/15/Add.1). 
 
Any technical questions arising from this report may be addressed to Mrs. Catherine Hennis-Pierre (tel:  022/739 5640).  WT/REG184/4 
 Page iii 
 
 
  TABLE OF CONTENTS 
 
Page 
 
I. TRADE ENVIRONMENT 1  
II. TREATY CHARACTERISTIC ELEMENTS (SERVICES) 6  
A. B ACKGROUND INFORMATION  6 
B. S COPE AND DEFINITIONS  6 
C. P ROVISIONS ON TRADE IN SERVICES AND INVESTMENT  8 
1. Market access 8 
2. Most favoured nation principle, National treatment, standard of 
treatment 9 
3. Local presence or performance requirements 9 4. Recognition 10 
5. Domestic Regulation 10 
6. Non-conforming Measures 11 7. Denial of benefits 11 
III. LIBERALIZATION COMMITMENTS IN SELECTED SERVICES SECTORS 11  
A. P
ROFESSIONAL SERVICES  12 
B. C OMMUNICATIONS  12 
1. Telecommunications services 12 
2. Audiovisual services 13 3. Express delivery services 14 
C. F
INANCIAL SERVICES  14 
D. T RANSPORT SERVICES  16 
1. Maritime transport services 16 
2. Air and space tr ansport services 16 
3. Land transport services 17 
4. Auxiliary transport services 17 
IV. OTHER REGULATORY PROVISIONS CONCERNING SERVICES 17  
A. P ROCUREMENT RELA TED PROVISIONS  17 
B. I NTELLECTUAL PROPERTY RIGHTS (IPR S) 19 
C. E NVIRONMENT  20 
D. L ABOUR  20 
E. E LECTRONIC COMMERCE  20 
F. D ISPUTE SETTLEMENT PROVISIONS  20 
 
     WT/REG184/4 
   Page 1  
 
  I. TRADE ENVIRONMENT  
1. The economic ties between Australia  and the United States are based, inter alia , on a common 
language and culture and shared le gal traditions.  Both countries ha ve similar levels of per capita 
income
1, and similar economic structures, with a st rong reliance on services, and on mining.  The 
two countries have longstanding trading relations:  the United States is Australia's third largest 
merchandise trading partner (imports  plus exports), and its largest pa rtner in terms of foreign direct 
investment. 
2. Australia's GDP was US$700 billion in 2005, while that of the United States reached 
US$12,455 billion.2 With total merchandise exports of US $106 billion and imports of US$125 billion, 
Australia ranked in 2005 as the 27th top exporter and the 21st top importer; with merchandise exports 
of US$904 billion and imports of US$1,732 billion, the United States ranked as the 2nd top exporter 
and the 1st top importer in that year.  The two economies are thus of considerably different size, and 
therefore the U.S. market is proportionately more im portant to Australia than the Australian market is 
to the United States. 
3. In 2005, the United States ranked second worldw ide in terms of both world imports and 
exports of commercial services. Its commercia l services exports amounted to US$354 billion, 
representing 15 per cent of world imports, while im ports amounted to US$281 billion and represented 
12 per cent of world imports.  Services exports re present 28 per cent of total exports and services 
imports 14 per cent of total imports.  In 2005 Austra lia ranked 12th in terms of both world imports 
and exports of commercial services. Australia's commercial services imports amounted to US$30.5 billion, representing 1.3 per cent of world imports, while exports amounted to 
US$31.1 billion and represented 1.29 per cent of worl d exports.  Services exports represent 20.73 per 
cent of total exports and services impor ts 18.74 per cent of total imports.
3 
4. The services sector dominates Australia's economy, accounting for nearly two thirds of GDP 
and roughly three quarters of employment in 2005.4  The Australian Bureau of Statistics reports that 
Australian exports of services have grown from A$33.5 billion in 2000 to A$39.8 billion in 2005  
(Table I.1), an average annual growth of 3.5 per cen t.  When expressed in per capita US dollar terms, 
these exports have advanced very sizeably, from US $ 1,090 per capita in 19 99-00 to US$ 1,460 in 
2005.  Services are also an important part of tota l value added in the United States, accounting for 
69 per cent of GDP and 71 per cent of employment respectively.  Total U.S. exports of services 
expanded by close to 5 per cent annually between  2000 and 2005 to reach US$360 billion that year 
(Table I.2), or over US$1,200 per capita, up from US$1,005 in 2000. 
Table I.1 
Australian trade in commercial services wi th the United States, by sector, 2000-2005 
(A$ million) 
 2000 2001 2002 2003 2004 2005 
Exports:            
Transport 814 785 754 747 615 771 
Travel 1,499 1,477 1,604 1,426 1,406 1,337 
Other commercial services, of which: 3,629 2,647 2,677 2,800 2,584 2,720 
Communication 299 163 184 224 80 95 
Construction np - - 3 np - 
Table I.1 (Cont'd)  
                                                      
 1UNDP (2006), The 2006 Human Development Report . Viewed at: http://www.h dr.undp.org/hdr2006/.  
Australia's income was US$30,331 in purchasing power terms in 2004, compared to US$39,676 in the 
United States;  life expectancy in the U. S., at 77.5 years, was estimated to be  lower than the 80.5 years estimated 
for Australia, and its school enrolment ratio is also lower.  
2 WTO Statistics Database, Trade Profiles. 
 3 WTO Statistics Database, Trade Profiles. 
 4 WTO (2007), Trade Policy Review – Australia, Geneva. WT/REG184/4 
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   2000 2001 2002 2003 2004 2005 
Insurance 317 285 284 286 290 293 
Financial services 257 268 276 280 281 281 
Computer services 355 289 294 341 369 388 
Royalties and licence fees 373 318 281 295 263 248 
Other business and professional services 1,215 1,210 1,222 1,249 1,203 1,301 
Personal cultural and recreational services  np 115 135 125 np 114 
Total exports to the United States 5,942 4,909 5,035 4,973 4,605 4,828 
Total exports to the World 33,462 34,190 35,228 35,583 37,798 39,781 
Imports       
Transport -1,247 -1,095 -684 -674 -608 -585 
Travel -1,948 -1,527 -1,472 -1,473 -1,833 -2,038 
Other commercial services, of which:       
Communication -423 -267 -282 -247 -121 -109 
Construction - - - - - - 
Insurance -315 -295 -297 -299 -302 -306 
Financial services -189 -191 -189 -178 -173 -170 
Computer services -389 -338 -447 -436 -388 -362 
Royalties and licence fees -1,073 -1,010 -1,160 -1,256 -1,338 -1,501 
Other business and professional services -735 -1048 -1066 -1102 -949 -950 
Personal cultural and recreational services -477 -456 -562 -513 -579 -520 
Total imports from the United States -6,796 -6,226 -6,159 -6,179 -6,291 -6,540 
Total imports from the World -32,014 -32,906 -33,107 -32,869 -37,211 -39,176 
Memorandum:  Period average exchange rate 0,6289 0,5379 0,5239 0,5848 0,7137 0,7529 
np Not provided. 
Source:  Australian Bureau of Statistics, available at the following Internet  site:  http://www.abs.gov.au.  
5. In 2001, Australian exports of services to th e United States recorded a substantial drop 
(Table I.1) and have stagnated since then, contras ting with the strong overall growth of 5 per cent per 
annum in Australian exports of services to the world, shown in table I.1.  As a result, the share of the 
U.S. market in total Australian services exports  has shrunk from 15.7 per cent to 12.6 per cent. 
Imports of services from the United States showed a si milar drop, but have recovered:  they accounted 
for 17.2 per cent of total Australia n imports of services in 2005.    
6. Also after a substantial drop in 2001, U.S. exports of services to Australia have grown by 
6 per cent annually over 2000-05, faster than export growth recorded vis-à-vis  Asia in general, but 
slower than U.S. exports of services to the fast growing markets of China (+12 per cent) and India (+15 per cent).  At US$7.4 billion in 2005 (Table I.2) , they account for a small share (2.1 per cent) of 
total U.S. exports of services.  Services exports to Au stralia consist mainly of travel receipts, royalties 
and licence fees.  U.S. imports of services from Aust ralia have expanded at a similar pace, to reach 
US$4.6 billion.  
Table I.2  
U.S. trade in commercial services with Australia, by sector, 2000-05 
(US$ million) 
 2000 2001 2002 2003 2004 2005 
E x p o r t s :        
Transport 812 652 653 633 829 928 
Travel, of which: 1,856 1,382 1,473 1,502 2,074 2,244 
     - Education-related expenditure  59 62 67 70 69 71 
Other commercial services, of which: 2,160 2,141 2,315 2,934 2,892 3,055 
      - Telecommunications 205 172 139 103 80 114 
      - Computer services 125 97 120 260 302 236 
      - Construction 28 15 9 7 1 11 
      - Insurance 82 53 66 181 213 200 
      - Financial services 290 296 363 457 539 734 
      - Royalties and license fees 747 696 829 960 1058 1181 
       - Other busin., profess. , tech. services 438 457 409 456 397 478 
Total exports to Australia 5,573 4,870 5,269 6,027 6,852 7,409 
Total exports to the World 284,028 272,814 279,561 289,102 320,000 360,489 
Table I.2 (Cont'd)  WT/REG184/4 
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   2000 2001 2002 2003 2004 2005 
I m p o r t s :        
Transport -867 -983 -833 -833 -995 -1210 
Travel, of which: -1473 -1549 -997 -1037 -1128 -1188 
        - Education-rela ted expenditure  82 103 121 211 208 221 
Other commercial services, of which: -1058 -1046 -1101 -1227 -1609 -2037 
      - Telecommunications 163 69 49 57 46 63 
      - Computer services 7 9 2 3 9 17 
      - Construction 7 1 1 0 1 2 
      - Insurance 16 9 8 14 42 26 
      - Financial services 60 103 95 70 100 121 
      - Royalties and license  fees -96 -86 -125 -110 -148 -224 
      - Other busin., profess. , tech. services 74 88 77 21 16 10 
Total imports from Australia -3,493 -3,665 -3,059 -3,210 -3,881 -4,660 
Total imports from world 207,392 204,074 209,048 221,849 257,235 280,563 
M e m o r a n d u m :        
Balance on services   2,322 1,267 2,243 2,859 2,880 3,007 
n.a. Not applicable. 
Source:  U.S. Bureau of Economic Analysis, Survey of Current Bu siness, various issues, availa ble at the following internet 
 address:  http://www.bea.gov. WT/REG184/4 
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  050100150200250300
2001 2002 2003 2004 2005
Total foreign investment Foreign direct investment0100200300400
2001 2002 2003 2004 2005AUS$ billion
Source: Australian Bureau of Statistics.Australian stock of foreign investment in the United States, 2001-05
AUS$ billionChart I.1
Stock of US foreign investment in Australia, 2001-05
 
 
  WT/REG184/4 
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  7. The two countries are also well integrated in terms of foreign investment:  The Australian 
Bureau of Statistics reports that U.S. investors acco unt for 27 per cent of the total foreign investment 
stock in Australia.  The  stock of U.S. investment  was estimated at A$326 billion for 2005 (Chart I.1), 
representing an average annual growth rate of 7.3 per cent since 2001.5  However, only a small share 
of this investment - A$69 billion in 2005 - is fo reign direct investment (FDI), although the United 
States is the top source of FDI in Australia.  The reliance on the U.S. market is even stronger for 
Australian investment abroad (AIA):  43 per cen t of the total stock in 2005 (A$ 291 billion) was 
invested in the United States, whic h is the top destination for AIA.  Australian investment in the 
United States has expanded at a pace of 5.3 pe r cent over 2001-05.  Also, FDI accounts for a higher 
share - 38 per cent - in total Australian investment in the United States than in U.S. investment in 
Australia. 
8. In 2000, Australia accounted for 2.7 per cent of  the U.S. direct investment position abroad 
(DIA), a share that had risen to US$ 113.4 billion or 5.5 per cent of the total DIA in 2005 following 
acquisitions, notably in the beverages and media sector s.  Most investment appears to be in non-bank 
holding companies.  Australian FDI in the Unite d States stood at US$44 billion in 2005, a share of 
2.7 per cent of the total, up from 1.7 per cent in 2000 (Table I.3).   
Table I.3  
U.S. direct investment position in Au stralia and Australian forei gn direct position in the United States, 2000-05  
(US$ million) 
 2000 2001 2002 2003 2004 2005 
All industries        
    - U.S. direct investment in Australia 35,364 34,041 34,409 48,447 .. 113,385 
    -  Australian Foreign direct investment 20,701 23,488 23,136 37,059 40,884 44,061 
       
Mining        
    - U.S. direct investment in Australia 8,286 9,208 7,897 5,286 4,635 5,059 
    -  Australian Foreign direct investment 65 .. .. .. .. .. 
       
Manufacturing        
    - U.S. direct investment in Australia 7,795 6,761 8,334 11,160 12,466 13,174 
    -  Australian Foreign direct investment 5,371 4,883 2,666 3,644 4,317 4,986 
       
Wholesale trade        
    - U.S. direct investment in Australia 2,480 2,470 2,794 2,499 2,588 2,532 
    -  Australian Foreign direct  investment 79 104 1,209 1,387 1,692 1,722 
       
D e p o s i t o r y        
    - U.S. direct investment in Australia 1,523 1,529 1,690 2,597 2,893 2,804 
    -  Australian Foreign direct investment .. .. .. .. .. .. 
       
Other finance       
    - U.S. direct investment in Australia 7,743 7,752 3,592 4,524 5,249 6,455 
    -  Australian Foreign direct investment 1,904 .. 1,540 1,623 1,918 2,447 
       
Non bank holding companies       
    - U.S. direct investment in Australia .. .. .. 12,190 .. 77,339 
    -  Australian Foreign direct investment .. .. .. .. .. .. 
.. Not available.   
Source:  U.S. Bureau of Economic Analysis, Su rvey of Current Business, various issu es, available at:  http://www.bea.gov. 
 
9. According to a study of Australian outward fore ign affiliates' trade, the United States hosted 
25 per cent of all foreign affiliates of Au stralian resident enterprises in 2002-03.6  These 1,006 foreign 
                                                      
 5Australian Bureau of Statistics online information. Viewed at:  
http://www.abs.gov.au/ausstats/abs@.nsf /web+pages/statistic s?opendocument. 
 6Australian Bureau of Statistics (2004), 2002-03 Australian Outward Foreign Affiliates Trade , 
Publication 5495.0.  Viewed a t: http://www.ausstats.abs.gov.au. WT/REG184/4 
Page 6  
 
  affiliates in the United States employed close to 50,0 00 staff, with A$3.4 billion in wages.  Sales and 
purchases of services were valued, respectively, at A$26 billion and A$17 billion.    The magnitude of 
these statistics suggests that services trade betw een the two countries takes place more through 
commercial presence than through cross-borde r trade and/or movement of persons. 
10. According to the U.S. Bureau of Economic Analysis, sales of services in Australia by 
majority-owned foreign affiliates (MOFAs) of U. S. companies have grown from US$15.3 billion in 
2000 to 18.4 billion in 2004, an average annual incr ease of 4.7 per cent that did not differ much from 
the overall growth (worldwide) of foreign sales by U.S. affiliates.
7  In contrast, sales in the United 
States of majority-owned U.S. affiliates of Aust ralian companies increased from US$9.2 billion to 
US$12.0 billion.  This corresponded to a brisk expans ion of close to 7  per cent per annum, as U.S. 
sales of Australian affiliates have expanded at nearly  three times the pace of growth of  total U.S. 
sales of foreign affiliates.   
11. About 130,000 Australian business visitors, speci ality occupation workers or intra-company 
transferees entered the United States in 2004.  In Aust ralia, the number of U.S. short-term visitors was 
447,000 in 2005.   
II. TREATY CHARACTERISTIC ELEMENTS (SERVICES) 
A. BACKGROUND INFORMATION  
12. The Free Trade Agreement between the United States and Australia (hereafter "the 
Agreement") was signed by the Governments of the Un ited States and of Australia (the Parties) on 18 
May 2004;  it entered into force on 1 January 200 5.  The Parties notified the goods and services 
aspects of the Agreement to the WTO on 22 Decem ber 2004.  The services aspects were notified 
under GATS Article V:7(a) as an agreement liberalizing trade in services.8  The Agreement is 
composed of 22 Chapters and related annexes. A number of side letters are also an integral part of the 
Agreement (Table II.1).  The commitments undertaken  in the area of trade in services have applied 
fully since the entry into force of the Agreement.    
B. SCOPE AND DEFINITIONS  
13. Trade in services liberalization is mainly govern ed by the Chapter on Cross Border Trade in 
Services (Chapter 10), which is generally defined to include GATS modes of supply 1, 2, and 4.  
Measures falling under mode 3 under the GATS are c overed by Chapter 11 on Investment, and by the 
Chapters on Financial Services and telecommunicati ons (Table II.1);  however, disciplines contained 
in the Investment Chapter apply not only to direct i nvestment but also to other assets such as portfolio 
investment.   Liberalization of trade in goods is  principally contained in Chapters 2-7, and in 
Chapters 15-17;  it is the subject of a Factua l Presentations on Goods by the WTO Secretariat.9  The 
Agreement also contains provisions relating to  labour and environmental policy, government 
procurement, intellectual propert y rights, and dispute settlement provisions (see below).   
                                                      
 7 U.S. Bureau of Economic Analysis, Survey of current Business (2006), U.S. International Services, 
Cross-Border Trade in 2005 and Sales through Affiliates in 2004 , October. Viewed at: 
http://www.bea.gov/scb/pdf/2006/10October/1006_intlserv.pdf. 
 8 WTO document S/C/N/310. The Council for Tr ade in Services referred the Agreement 
for examination in the CRTA on 9 February 2005 (S/C/M /77).  The text of the Agreement was circulated to 
the Members as document WT/REG184 /1, and is also available, together with its Annexes, on 
the Parties' official Websites (URL addresses: http:// www.dfat.gov.au/trade/negotiations/us_fta/final-text and 
http://www.ustr.gov/Trade_Agreements /Bilateral/Australia_FTA/Final_Tex t/Section_Index.html. The Parties 
also notified the Agreement under GATT Article XXIV:7( a), and the Understanding on the Interpretation of 
GATT Article XXIV as an agreement forming a free trad e area (WT/REG184/N/1).  Th e factual presentation for 
the goods part of the Agreement is also ava ilable (WT/REG184/3). 
 9 WTO document WT/REG184/3.  WT/REG184/4 
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  14. The Agreement liberalizes trade between "pers ons" of the United States and Australia.  These 
persons are defined as either a national or an enterp rise of a Party.  In turn, the Agreement defines a 
national of a Party as a natural person that is either  an Australian citizen, a United States citizen, or a 
permanent resident of either country.10  An "enterprise of a Party means an enterprise constituted or 
organized under a Party’s law, or a branch located in the territory of a Party and carrying out business 
activities there".  An "investor of a Party means a Part y, or a national or an enterprise of a Party, that 
seeks to make, is making, or has made an investment in the territory of the other Party".  Territory is 
defined, generally, as the territory of the Commonw ealth of Australia, the customs territory of the 
United States, their territorial seas, and thei r exclusive economic and foreign trade zones.11 
15. As described above, the Agreement defines a "n ational" as either a citizen or a permanent 
resident.  Accordingly, under the terms of the Agreement, United States and Australian permanent 
residents enjoy the benefits of the Agreement as well as their citizens.  Under the GATS,  Members 
must accord the same benefits to permanent reside nts of another Member as are accorded to that other 
Member’s citizens provided, among other things, that a notification to this effect has been submitted 
by such other Member at the time of acceptance or accession to the WTO Agreement.12  Whereas 
Australia has made such a notification to the WTO,13 no such notification exists for the United States.   
Table II.1 
Chapters, annexes and side letters of the Agreement 
Chapters and annexes 
Chapter 1  Establishment of a Free Trade Area and Definitions 
Annex 1-A  Certain Definitions  
Chapter 2  National Treatment and Market access for Goods 
Annex 2-A  Application of Chapter II 
Section A-Measures Of The United States 
Section B – Measures Of Australia 
Annex 2-B  Tariff Elimination  
Annex 2-C    Pharmaceuticals  
Side letters (Ch2) PBS , Blood Plasma , Waiver of Customs Duties , Di stinctive Products , Temporary Entry Without Bond  
Chapter 3 Agriculture 
Annex 3-A     Agricultural Safeguard Measures  
Side letters (Ch3) BSE 
Chapter 4  Textiles and Apparel 
Annex 4-A  Textile or apparel specific rules of origin  for chapters 42, 50 through 63, 70, and 94  
Chapter 5 Rules of Origin 
Annex 5-A  Product-Specific Rules of Origin  
Chapter 6 Customs Administration 
Chapter 7  Sanitary and Phytosanitary Measures 
Annex 7-A  Standing technical working group on animal and plant health measures  
Chapter 8 Technical Barriers to Trade 
Annex 8-A  Chapter coordinator  
Chapter 9 Safeguards  
Side letters (Ch9) Safeguards 
Chapter 10 Cross-Border Trade in Services 
Annex 10-A  Professional Services  
Side letters (Ch10) Clarification on National Treatment, Education: States, Educational Criteria, Immigration, Express Delivery, 
Gambling  
Chapter 11 Investment 
Annex 11-A  Customary international law  
Annex 11-B   Expropriation  
Side letters (Ch11) FIRB, FIRB Review  
Table II.1 (Cont'd)  
                                                      
 10 See Annex 1-A. 
11 See Annex 1-A of the Agreement for full definitions. 
 12 See GATS Article XXVIII(k)(ii)2. 
 13 WTO document S/C/N/3, 15 February 1995.  WT/REG184/4 
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  Chapters and annexes 
Chapter 12 Telecommunications 
Side letters (Ch12) Telstra, Telecom Consultations  
Chapter 13 Financial Services 
Annex 13-A  Cross-Border Trade 
United States 
Australia  
Annex 13-B  Specific Commitments  
Annex 13-C  Authorities responsible for financial services  
Side letters (Ch13) FSSA, Recognition, Securities , Insurance, Guarantees  
Chapter 14 Competition-Related Matters 
Chapter 15 Government Procurement 
Annex 15A  Section 1:  Central Government Entities 
  Section 2:  Regional Government Entities 
 Section 3:  Government enterprises 
 Section 4:  Goods 
 Section 5:  Services 
 Section 6:  Construction services 
 Section 7:  General Notes 
 Section 8:  Threshold Adjustment Formula  
Side letters (Ch15) Government procurement 
Chapter 16 Electronic Commerce 
Chapter 17 Intellectual Property Rights 
Side letters (Ch17) ISP Liability , Application of IPR , IPR and National Treatment  
Chapter 18 Labour 
Chapter 19 Environment 
Chapter 20 Transparency 
Chapter 21 Institutional Arrangements and Dispute Settlement 
Annex 21A Inflation adjustment fo rmula for monetary assessments  
Chapter 22 General Provisions And Exceptions 
Annex I   
Annex II   
Annex III   
Chapter 23 Final Provisions 
Source:  USAFTA. 
C. PROVISIONS ON TRADE IN SERVICES AND INVESTMENT  
1. Market access 
16. Article 10.4 on market access precludes,  either on the basis of a regional subdivision or on 
the basis of its entire territory, measures that "( a) impose limitations on: (i) the number of service 
suppliers, whether in the form of numerical quot as, monopolies, exclusive service suppliers, or the 
requirement of an economic needs test; (ii) the total value of service transactions or assets in the form 
of numerical quotas or the requirement of an econom ic needs test; (iii) the total number of service 
operations or the total quantity of services output e xpressed in terms of designated numerical units in 
the form of quotas or the requirement of an econom ic needs test; or  the total number of natural 
persons that may be employed in a particular servi ce sector or that a service supplier may employ and 
who are necessary for, and directly related to, the s upply of a specific service in the form of numerical 
quotas or the requirement of an economic needs test; or  (b) restrict or require specific types of legal 
entity or joint venture through which a service supplier may supply a service".  Article 10.4 does not mention limitations on the participation of foreign capital in the services sector that are contained in 
GATS Article XVI; however, such limitations are prohibited by Article 11.3 of the Investment 
Chapter.  WT/REG184/4 
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  17. Chapter 11 – Investment – applies to measures ad opted or maintained by a Party relating to 
investors of the other Party; and to their investme nts in its territory ("covered investments").   
Although no market access provisions are specified in  Chapter 11, Article 10.1 stipulates that market 
access, domestic regulation, and transparency provis ions specified for cross- border trade in services 
shall also apply to measures by a Party affecting the supply of a service in its territory by a covered 
investment.  Article 11.7 of the Agreement c ontains provisions regarding expropriation and 
compensation, whilst transfers are the subject of Article 11.8.  Specific market access provisions for 
financial institutions are stipulated in Chapter 13 (see below).   
2. Most favoured nation principle, Nation al treatment, standard of treatment 
18. Under Article 10.2 on the principle of national treatment, each Party shall accord to service 
suppliers of the other Party treatment no less favourab le than that it accords, in like circumstances, to 
its own service suppliers. Article 10.3 on the Most  favoured Nation (MFN) principle requires that 
each Party accord to service suppliers of the othe r Party treatment no less favourable than that it 
accords, in like circumstances, to service suppliers of a non-Party.    
19. Chapter 11 requires each Party to affo rd Most-favoured nation (MFN) treatment 
(Article 11.4) national treatment (A rticle 11.3) and minimum standard of treatment (Article 11.5) to 
investors of the other Party and their investments,  with respect to the establishment, acquisition, 
expansion, management, conduct, operation, and sale or other di sposition of investments in its 
territory.  Chapter 11 provisions on national and MFN treatment do not apply to subsidies.  
3. Local presence or performance requirements 
20. The Investment Chapter's provisions relating to environmental standards (Article 11.1) and to 
performance requirements (Article 11.9) apply to all investments irrespective of the origin of 
investors.  Article 11.9 prohibits performance require ments. Accordingly, the Parties undertake not to 
impose any of the following requirements or conditions:  
(a) export a given level or per centage of goods or services; 
(b) achieve a given level or percentage of domestic content;  purchase, use, or accord a 
preference to locally-produced goods or to pur chase goods from persons in their territory; 
(c) relate the volume or value of  imports to that of exports or  to amounts of foreign exchange 
inflows associated with such investment; 
(d) restrict sales of goods or services in their territory that such investment produces or supplies 
by relating such sales in any way to the volume or value of exports or foreign exchange earnings; 
(e) transfer a particular technology, a producti on process, or other propr ietary knowledge to a 
person in their territory; or 
(f) supply exclusively from the territory of the Pa rty the goods that such investment produces or 
the services that such investment supplies to a specific regional market or to the world. 
21. However, the Parties exclude from certain of  these disciplines on investment qualification 
requirements for goods or services related to their e xport promotion and foreign aid programmes;  and 
to their government procurement (Article 11.9).  They reserve the right to condition the granting of 
advantages on compliance with requirements to locat e production, supply a service, train or employ 
workers, construct or expand particular facilities, or carry out research and development, in their 
territory.  Also, they reserve the right to adop t or maintain measures, including environmental WT/REG184/4 
Page 10  
 
  measures, that are necessary to secure compliance with  laws not inconsistent with the Agreement, or 
necessary to protect human, animal, or plant life or health, or to necessary assure the conservation of 
exhaustible natural resources, provided that such  measures are not applied in an arbitrary or 
unjustifiable manner, or constitute a disguised restri ction on investment or international trade.  
 
22. Article 11.10. contains a general prohibition on restrictions concerning the nationality of 
senior managers.  However, a Party may require that a majority or less of the board of directors be of 
a particular nationality or have residency in the te rritory of the Party, provided that the requirement 
does not materially impair the ability of the investor to exercise control over its investment.   
4. Recognition 
23. Chapter 10 contains further provisions on r ecognition of standards or criteria for the 
authorization, licensing, or certification of ser vices suppliers (Article 10.9), in line with 
GATS Article VII.  Such recognition, which may be  achieved through harmonization or otherwise, 
may be based on an agreement or arrangement  with the other Party or may be accorded 
autonomously.  Article 10.9 states that where a Pa rty recognizes, autonomously or by agreement or 
arrangement, the education or experience obtained,  requirements met, or licenses or certifications 
granted in the territory of a non-Party, that Party is  not as a result required to accord such recognition 
to the education or experience obtained, requirement s met, or licenses or certifications granted in the 
territory of the other Party.  A Party that is a party to an agreement or arrangement on mutual 
recognition, whether existing or future, shall afford adequate opportunity for the other Party, if the 
other Party is interested, to negotiate accession to such  an agreement or arrangement or to negotiate a 
comparable one with it.  Where a Party accords recognition autonomously, it shall afford adequate 
opportunity for the other Party to demonstrate that education, experience, licenses, or certifications 
obtained or requirements met in that other Party’s territory should be recognized.  A Party shall not 
accord recognition in a manner which would constitut e a means of discrimination between countries 
in the application of its standards or criteria for th e authorization, licensing, or certification of services 
suppliers, or a disguised restriction on trade in services.   
5. Domestic Regulation  
24. Chapter 10 (Cross-border Trade in Services) contains some provisions on domestic 
regulation, transparency and mutual recognition.  The provisions on domestic regulation (10.7) and 
transparency (10.8) are also made applicable to  the Chapter on Investment (11) by Article 10.1. 
25. Article 10.7.1 contains rules governing the treat ment of applications for authorization, 
which mirror the corresponding GATS provisions (Article  VI:3).  Moreover, Article 10.7.2 contains a 
best endeavours clause (" ... shall endeavour to en sure, as appropriate for individual sectors, ... ") in 
order to avoid that measures relating to qua lification requirements and procedures, licensing 
requirements, and technical standards, constitute unn ecessary barriers to trade.  The relevant criteria 
for such measures are the same as those stipulated  in the negotiating mandate under Article VI:4 of 
the GATS (transparency and objectiv ity, not unnecessarily burdensome,  etc.) which, in turn, are 
implemented on a provisional basis, in the form of a qualified standstill, under GATS Article VI:5.  
Referring to the negotiations at multilateral level, Ar ticle 10.7.3. foresees possible amendments to the 
Agreement (" ... as appropriate, after consultations between the parties ... ") to implement the results 
under GATS Article VI:4 as well.  Also, the Parties are committed to coordinating on such 
negotiations, as appropriate.   
26. Article 10.8 specifies rules on transparency that go beyond the requirements of Article III of 
the GATS, by requiring the parties to establish mechanisms to respond to enquiries from any 
interested persons regarding regula tions relating to Chapter 10 and by requiring parties to address in 
writing comments received on their draft regulations.   WT/REG184/4 
 Page 11 
 
 
  27. Chapter 10 also contains sector-specific di sciplines on domestic regulation for professional 
services, addressing the development of mutua lly acceptable standards for the licensing and 
certification of professional service suppliers, and en couraging the development of procedures for the 
temporary licensing of such suppliers.  Chapters 12,  13, and 16 also provide some sector-specific 
disciplines on domestic regulation for telecommunications services, financial services and electronic commerce (see below).
 
6. Non-conforming Measures 
28. Under the Agreement, reservations and non-conforming measures with respect to 
cross-border trade in services (Article 10.6) and inv estment (Article 11.13) can only be specified with 
respect to the obligations of MFN treatment, nati onal treatment, market access, and local presence; 
plus, in the case of investment, measures regarding performance requirements or senior management and boards of directors.  Non-conforming measure s are set out in Annexes I and II.  Autonomous 
liberalizations to all non-conforming measures appe aring in Annex I are bound in the Agreement. 
29. In particular, under its Annex II, the United Stat es has reserved the right to adopt or maintain 
any measure affecting cross-border trade that is  not inconsistent with its obligations under 
Article XVI of the GATS.
 14 Australia has reserved the right to adopt or maintain any measure with 
respect to the supply of a service by a U.S. suppl ier, through presence of natural persons of the 
United States in its territory, that is not inconsis tent with its obligations under Article XVI of the 
GATS.15   
30. In addition, both Parties have made genera l reservations for any existing non-conforming 
measures at state or regional level.16   These non-conforming measures are not explicitly listed, but 
they are bound and cannot be made worse unless othe rwise provided for in the Agreement.  These 
reservations apply to both cross-border trade and investment.    
7. Denial of benefits 
31. Under Article 10.11 and Article 11.12, a Party may deny the benefits of the relevant chapter 
to a service supplier or investor in the other Party if that person is an enterprise owned or controlled 
by persons of a third party and the denying Party (i ) does not maintain diplomatic relations with the 
third party or (ii) adopts or maintains measures w ith respect to the third party or the enterprise 
controlled by the third party that prohibit transac tions with it or that would be violated or 
circumvented if the benefits of that chapter were accorded to it.  In addition, the benefits of both 
Chapters may be denied by a Party to a service supplier or investor (of any of the two parties) if this 
supplier or investor is owned or controlled by non-parties or the denying Party and if it has no 
substantive business operations in th e territory of the other Party.  
III. LIBERALIZATION COMMITMENTS IN SELECTED SERVICES SECTORS 
32. The Agreement follows a "negative list" appro ach:  therefore, all sectors or sub-sectors are 
assumed to be opened to competition from nationals of the other Party, both in terms of market access 
and national treatment, unless otherwise specified in Annexes I and II which contain a list of 
non-conforming measures or other reservations (see a bove).  The sectors described below are subject 
to specific provisions, defined either in sector-relate d chapters, or in terms of measures specified in 
the Agreement's annexes. 
                                                      
 14 Annex II-United States-8. 
 15 Annex II-Australia-2. 
 16 Annex I-US-12, Annex I-Australia-2.  WT/REG184/4 
Page 12  
 
  A. P
ROFESSIONAL SERVICES  
33. Professional services are defined in Chapter 10 (Article 10.14) as "services, the supply of 
which requires specialized post-secondary education or equivalent training or experience, and for 
which the right to practice is granted or restri cted by a Party, but does not include services by 
trades-persons or vessel and aircraft crew Members".  This sector covers medical and dental services, 
veterinary services, and services by midwives, nurses, physiotherapists and paramedical personnel, 
which are not part of the U.S. GATS commitments bu t have, as a result of the Agreement, hence been 
opened to Australian suppliers.  It also covers legal services concerni ng the application of domestic law, 
landscape architectural services, and medical services, which are currently excluded from Australia's GATS commitments, but have hence be en opened to U.S. suppliers. 
34. Specific non-conforming measures in Annexes I and II, however, largely mirror existing 
limitations under the Parties' WTO commitments.   As noted above, the United States reserves the 
right to adopt or maintain any measure not inconsis tent with its obligations under Article XVI of the 
GATS,
17 which effectively binds the United States at the level of relevant WTO Modes 1,2 and 4 
commitments.  Australia reserves this right only  with regard to presence of natural persons and 
regional level measures.18 
35. In addition, both Parties reserve generally for any existing non-conforming measures at state 
or regional level 19; as numerous professional services are regulated on a state or regional level in the 
Parties' territories, the reservations in Annexes I an d II thus effectively bind the Parties at the level of 
their GATS commitments until such time as either Party autonomously liberalizes any such measure.     
36. Annex 10-A on Professional Services sets up a tw o-track mechanism for the development of 
mutually acceptable standards and criteria for licensing and certifications of professional services 
suppliers.  On one level, the Parties shall encourag e the relevant bodies in their respective territories 
to develop standards on education, examinati ons, experience, conduct and ethics, professional 
development and re-certification, scope of practice,  local knowledge, and consumer protection and to 
provide recommendations on mutual recognition to the Joint Committee established under Chapter 21 
(see below).  Based on the Joint Committee's review , each Party shall further encourage its respective 
competent authorities to implement the recommenda tions within a mutually agreed timeframe.  
Further, where the Parties agree,  each shall encourage its relevant bodies to develop procedures for 
temporary licensing of professional service suppliers of the other Party. 
37. In addition, Annex 10-A provides for the establishment of a Working Group on Professional 
Services, which comprises representatives of the tw o Parties.  The Working Group shall consider:  
(i) procedures fostering the development of mutual  recognition arrangements between their relevant 
bodies;  (ii) the feasibility of developing model procedures for licensing and certification of professional service suppliers, and (iii) other issues of  mutual interest.  The Working Group reports to 
the Joint Committee on its progress, and is tasked  to develop recommendations for initiatives to 
promote mutual recognition within two years.   
B. C
OMMUNICATIONS  
1. Telecommunications services 
38. Specific liberalization commitments relating to telecommunications services are contained in 
Chapter 12 on telecommunications, which expands th e commitments made by the Parties under the 
WTO Reference Paper on regulatory issues.  Govern ment procurement of te lecommunication services 
                                                      
 17 Annex II-United States-8. 
 18 Annex II-Australia-2. 
 19 Annex I-United States-12, Annex I-Australia-2.   WT/REG184/4 
 Page 13 
 
 
  is addressed in Chapter 15.  In general, the Agre ement largely mirrors the extensive commitments on 
telecommunications that both the United States and Australia have scheduled under the GATS, 
reflecting the openness of both markets to competition, including from foreign suppliers.  
39. On regulatory matters, Chapter 12 reitera tes the provisions of the GATS Annex on 
Telecommunications and of the WTO Reference Paper on regulatory principles, that both the 
United States and Australia have included in thei r GATS schedules as additional commitments.  In 
addition, Chapter 12 provides greater specificity to , or broadens the applicability of a number of 
GATS obligations and commitments.  For example, Chapter 12 imposes an obligation to interconnect 
on all suppliers of public telecommunications (rather  than only on major suppliers).  In addition, 
major suppliers are not to discriminate against other suppliers.  A provision on leased circuits 
provided by major suppliers to other public tel ecommunications suppliers requires the regulators to 
have the authority to require "cost-oriented" rates,  rather than only "reasonable" rates as required by 
the Telecom Annex.  Also, each Party must ensure that major suppliers must provide access to those 
poles, ducts, conduits and rights of way under their control on terms and conditions that are not only 
reasonable and non-discriminatory, but also cost-ori ented. The agreement permits parties to decide 
which structures are required for the purposes of this provision, based on a finding that such structures 
cannot feasibly be economically substituted by a s upplier seeking to provide a competing service.  
Flexibility in suppliers' choice of technology is ma de explicit in the Agreem ent:  it requires that 
spectrum management be objective, timely, transp arent and non-discriminatory, and includes a public 
comment process and market-based approaches fo r allocation of spectrum for non-government 
services. 
40. Chapter 12 also contains provisions on number  portability and dialling parity for fixed 
telephone services, landing rights for submarine cabl es, unbundling of network elements (i.e. local-
loop unbundling), co-location obligations, and pr ecludes suppliers from imposing restrictions on 
resale.  Other novel provisions relate to conditions for the facilitated supply of value-added services, 
ensuring the enforcement powers of regulators, and regulatory forbearance as a recognized and 
effective means of implementing regulatory requirement s.  In addition, transparency and due process 
provisions specific to the telecommunications sect or (e.g., notice and comment, right to appeal, 
publication of tariffs and inte rconnection agreements) significantly exceed WTO obligations. 
41. In the Agreement (as under the GATS), Australia  takes reservations with respect to both 
foreign shareholding in Telstra and in Telstra's board composition.  With respect to government 
procurement, Australia excludes purchases of two telecommunication services, plasma fractionation 
services and government advertising (Box II.1).   
42. With respect to government procurement, th e United States liberalizes access to value-added 
telecommunications in favour of Australian suppliers, but excludes a number of services including basic telecommunication services (Box II.1).   
43. Chapter 12 does not apply to measures that a Pa rty adopts or maintains relating to broadcast 
or cable distribution of radio or television programming, except to ensure that enterprises providing 
these services have  continued access to and use of public telecommunications services. 
2. Audiovisual services 
44. Australia, which has no GATS commitments on audiovisual services, undertook significant  
commitments in this sector in the Agreement.  Australia maintains no market access or national 
treatment limitations under modes 1 and 3 regard ing such services as movie theatres/projection, 
movie production or movie distri bution, with the three following reservations: (1) cross-cutting 
limitations such as the Australia’s foreign invest ment policy (consisting of the Foreign Acquisitions 
and Takeovers Act 1975 (FATA), the Foreign Ac quisitions and Takeovers  Regulations 1989 and 
relevant Ministerial statements), which applies to foreign investments above certain thresholds (with WT/REG184/4 
Page 14  
 
  preferential thresholds for U.S. investors), includi ng in, the media sector; (2) the maintenance of 
existing non-conforming measures at the regional gove rnment level; and (3) the exclusion of subsidies 
from the scope of the Chapter on cross-border trade in services, and from the provisions on national treatment, most-favoured-nation treatment and senior management and boards of directors that are 
contained in the investment chapters. Australia al so maintains an MFN reservation in Annex II, which 
allows it to give preferential treatment to othe r countries pursuant to co-production agreements for 
films and television productions.  
45. With respect to television broadcasting services,  Australia has retained a number of existing 
restrictions, including a local-content quota on commercial free-to-air television (for both 
programming and advertising) and limits on foreign ownership and c ontrol of commercial television 
broadcasting licenses.  It also reserved the right, among other things, to adopt or maintain expenditure 
requirements for Australian production on subscrip tion TV broadcasting services, and local content 
quotas for free-to-air radio broadcasting services.   While it imposes no content quotas on interactive 
audio or video services, Australia reserved the right to take measures to ensure that local programming is not "unreasonably denied" to Aust ralian consumers.  This right, however, is 
conditional upon a finding by the Aust ralian government that local content is not readily available to 
Australian consumers.  Any such measures adopted pur suant to this right are also subject to certain 
conditions intended to minimise disruption to trade,  such as being implemented through a transparent 
and open process, being based on objective criteria, being no more trade restrictive than necessary, and not being unreasona bly burdensome.   
46. The United States reserved the right (in annex I
20) to restrict ownership of radio licenses and 
took a reservation under annex II21 (MFN and national treatment)  to  adopt or maintain any measure 
according equivalent treatment to persons of any c ountry that limits ownership by persons of the 
United States in an enterprise engaged in the operati on of a cable television system in that country.  
Also in its Annex II, the United States has an MF N reservation to allow for reciprocity measures or 
other preferential treatment with respect to the one-way satellite transmission of direct-to-home 
(DTH) and direct broadcasting satellite (DBS) television services and digital  audio services.22    
3. Express delivery services 
47. Express delivery services constitute the subject of  additional provisions  under Article 10.12, 
as well as of a side letter by the Parties.  These se rvices are defined as the collection, transport and 
delivery of documents, printed matter, parcels, or  other items on an expedited basis, while tracking 
and maintaining control of these items throughout the supply of the service.  The Parties confirm their 
desire to maintain at least the level of mark et openness for express delivery services that is in 
existence on the date the Agreement is signed.  In  addition, each Party confirms its intention to 
prevent revenues derived from monopoly postal servi ces from conferring an advantage on its own or 
any other competitive supplier’s express delivery servi ces in a manner inconsistent with that Party’s 
laws and practices applicable to the monopoly supply of postal services.   
48. In Australia, while there are no specific foreign investment limitations on express delivery 
services, this sector is subject to the cross-cutting FATA thresholds.   
C. FINANCIAL SERVICES  
49. Chapter 13 on financial services governs all aspects of  trade in financial services. It applies to 
(a) financial institutions of the other party; (b) inv estors of the other Party, and investments of such 
investors, in financial institutions in the Party’ s territory; and (c) cross-border trade in financial 
                                                      
 20 Annex I-United States-10. 
 21 Annex II-United States-2. 
 22 Annex II-United States-1.  WT/REG184/4 
 Page 15 
 
 
  services. Apart from the traditional disciplines on MF N, market access, and national treatment, the 
agreement contains obligations with regard to ne w financial services; treatment of certain financial 
information; nationality of senior management and members of boards of directors; access to self-regulatory organizations and payments and clea ring systems; and the expedited availability of 
insurance services. in addition, the obliga tions on regulatory transparency include inter alia  the 
obligation for each party to publish draft regulations of  general application in advance, and to provide 
interested persons and the other party a reas onable opportunity to comment on such proposed 
regulations. 
50. Similar to the GATS, the Parties have exclude d from the disciplines of the Agreement those 
activities or services forming part of a public retirement plan or statutory system of social security; or 
activities or services conducted for the account or with  the guarantee or using the financial resources 
of the Party, including its public entities; as well as non-discriminatory measures of general 
application taken by any public entity in pursuit of  monetary and related credit policies or exchange 
rate policies. Additionally, the Agreement contai ns an exception for measures taken for prudential 
reasons, which has also been modelled on the same provision contained in the GATS Annex on 
Financial Services.  
51. Non-conforming measures at the central or re gional level of government are set out in 
Annex III. Local level measures are bound at existin g levels of access through a text provision.  The 
chapter also provides that, where a Party liberali zes an existing non-conforming measure (listed in 
Section A of Annex III), that degree of liberali zation becomes automatically bound for the purposes 
of the FTA (except for cross-border trade).  
52. Chapter 13 on financial services contains a provision on market access for financial services 
modelled on GATS Article XVI.  However, it only app lies to investors in financial institutions and 
hence to the supply of financial services thr ough commercial presence (mode 3 in the GATS). The 
liberalization of investment in the financial servi ces sector is subject to the traditional negative list 
approach.  Reservations can be entered with regard to the obligations of MFN, market access, national 
treatment, and senior management and boards of directors. 
53. Cross-border supply of financial services, instead, is  subject to a different approach insofar as 
the services sectors subject to liberalization are "pos itively" listed in Annex 13-A to the Agreement.  
Cross-border consumption applies on a negative list b asis.  This approach has been modelled on the 
Understanding on Commitments in  Financial Services.  Thus, except for a few improvements, 
commitments by both Australia and the United States in the case of cross-border supply and 
consumption abroad of financial services, are very similar to those undertaken by both parties in the 
GATS.  The main improvement concerns the oblig ation for the United States to allow the cross-
border supply of intermediation services  (brokerage and agency) for all lines of insurance. In addition, 
both Australia and the United States take on new commi tments to allow financial institutions (other 
than trust companies), organized in the other Pa rty’s territory to provide investment advice and 
portfolio management services, to collective inv estment schemes located in its own territory.  
54. Regarding the supply of banking, insurance, a nd other financial serv ices through commercial 
presence, commitments undertaken by Australia and the United States in the Agreement generally 
mirror the commitments included in their GATS sch edules. In addition, under the Agreement, 
Australia has also undertaken in the Agreem ent some commitments that go beyond its GATS 
commitments Regarding the supply of financial servi ces through commercial pre sence.  In particular, 
Australia (a) exempted all new investments in financial services from screening under the FATA;  
nevertheless, acquisitions for ba nking and insurance may be reviewed on a case-by-case basis, and an 
acquisition may be refused or subject to certain cond itions if it leads to a large-scale transfer of WT/REG184/4 
Page 16  
 
  Australian ownership of the financial system to fore ign hands; and (b) as regards insurance, Australia 
provided new rights to U.S. suppliers to supply lif e insurance services in Australia through branches.
23    
D. TRANSPORT SERVICES  
1. Maritime transport services 
55. Maritime transport services are largely excluded from U.S. commitments both under the 
Agreement and under the GATS.24  However, cross-border trade and investment are liberalized under 
the Agreement for a number of sub-sectors, includi ng vessel construction and repair and, subject to 
reciprocity:  landside aspects of port activities, including operation and ma intenance of docks;  
loading and unloading of vessels directly to or from land; marine cargo handling;  operation and 
maintenance of piers;  ship and boat cleaning;  st evedoring;  transfer of cargo between vessels and 
trucks, trains, pipelines, and wharves;  waterfront terminal operations; canal operation;  operation of 
marine railways for dry-docking;  marine surveyor s, except cargo;  dismantling or wrecking of vessels 
for scrap;  and ship classification societies.  The U.S. reservations regarding shipping services apply 
to investment in inland waterways by Australian investors.   
56. Australia has made extensive new commitments in  maritime transport services.  All relevant 
sectors are covered by the Agreement, including aux iliary services, but are subject to the following 
reservations: (1) investments by foreigners in th e transport sector, including shipping services that 
exceed a certain threshold, are subject to the FATA  screening process; (2) residency requirements in 
relation to international liner cargo shipping services;  (3) the right to adopt or maintain measures 
regarding the registration of vessels; and (4) the right  to adopt or maintain measures with respect to 
maritime cabotage services and offshore transport services (as defined in the reservation).25   
2. Air and space transport services 
57. Chapter 10 on cross-border trade specifically excludes air transport services and related 
services in support of air services, with the exception of aircraft repair and maintenance services, and 
specialty air services (Article 10.1).  In contrast, air transport and related services in support of air services are not specifically excluded from Chap ter 11 on investment.  For example, computer 
reservation systems and direct selling and marketing of air transport services by the airline have not 
been specifically excluded from investment through  reservations, and their implicit inclusion thus 
constitutes an additional commitment towards Au stralian suppliers as compared to the GATS.  
Specialty air services have been bound by both Parties for both cross-border trade and investment under the Agreement.  Specifically Cross-border trade in  specialty air services in the United States is 
subject to authorization from the U.S. Department of Transportation, which Australian citizens will be 
able to obtain.
26 
58.   In addition, U.S. commitments allow Australia n persons to acquire up to 25 per cent of the 
voting interest in U.S. airlines, provided that two thirds of the board and other managing directors are 
U.S. citizens; and that the airline remain s under the actual control of U.S. citizens. 27 the same 
requirements apply to investments in specialty air se rvices..  In addition, both parties have reserved 
measures taken under international air transport agreements.   
                                                      
23Branching is not allowed under Australia's GAT S commitments, whereas no reservation has been 
taken by Australia under the Agreement.    
 24 Annex II-United States-5. 
 25 Annex I-Australia-3. 
 26 Annex I-United States-7. 
27 Annex I-United States -6  WT/REG184/4 
 Page 17 
 
 
  59. As noted, Australia has bound specialty air services, for both cross-border trade and 
investment, under the Agreement.  Selling and marketing services are bound with respect to investment, as are all other investments in air tran sport services, including investment in airlines and 
in airports.  The following reservations apply:  FA TA provisions on investment screening;  maximum 
foreign ownership of 49 per cent in airlines, and other nationality and residence restrictions 
(e.g. location of head office, operational base)
28;  a reservation against the MFN treatment obligation 
for treatment accorded under international air transport agreements29;  and a reservation of any 
measure with respect to investment in federal leased airports. 30 
60. Neither Australia or the United States have made any reservation nor sectoral exclusion 
regarding space transport services.  The Parties noted  however that there are a number of cross-cutting 
reservations that could affect space transport, such as reservations with respect to GATS Article XVI 
market access limitations (Australia Annex II-2  and US Annex II-8) and Australia's Annex I-3 
reservation. 
3. Land transport services 
61. The two Parties have taken no reservations regard ing rail transport services.  Australia's full 
commitments in this area are nevertheless subject  to the general FATA screening provisions for 
transport.   
62. Full commitments regarding cross border trade an d investment in road transport have been 
made by the United States under the Agreement, in cluding for national cargo traffic and national and 
international passenger traffic, rental of comme rcial vehicles and supporting services for road 
transport.  Australia has also abstained from any reservation in this area, with the exception of the 
FATA screening.  Australian commitments under th e Agreement thus liberalize freight and passenger 
transport for U.S. suppliers, as well as rental of co mmercial vehicles, maintenance and repair services, 
and supporting services for road transport services. 
63. Pipeline transport services has not been subject ed by the United States to any sectoral 
restriction or reservation under the Agreement, t hus resulting in full market opening commitment.  
Australia also makes full commitments in  this area, subject to the FATA.   
4. Auxiliary transport services 
64. The parties have both liberalized auxiliary transport services, including cargo handling 
services for all modes of transport, storage a nd warehousing services, and freight transportation 
agencies. However, as noted above these services ar e excluded from cross border commitments in the 
air sector; and U.S. commitments in auxiliary maritime services listed in the relevant annex31 are 
subject to comparable market access from Australia.   In Australia, foreign investments, including in 
these sectors, are subject to the FATA provisions.   
IV. OTHER REGULATORY PROVISIONS CONCERNING SERVICES 
A. PROCUREMENT RELATED PROVISIONS  
65. Chapter 15 of the Agreement on Government Proc urement consists of 15 articles, one annex 
and two side letters (Table II.1).  The Chapte r's core principles are national treatment, non-
discrimination and transparency in the conduct of go vernment procurement.  Other general principles 
                                                      
 28 Annex I-Australia-20. 
29 Annex II-Australia-14 
 30 Annex II-Australia-14. 
31 Annex II-United States-6. WT/REG184/4 
Page 18  
 
  include the prohibition of ofsets and non-disclosure of information.  Parties undertake to treat 
suppliers, goods and services of the other Party in  the same way as their own domestic suppliers, 
goods and services.  Annex 15-A sets out the government  entities that are covered by the Chapter, the 
threesholds that are applied, and the specific ty pes of procurements and procurement arrangements 
that each Party has exempted from th e application of the Chapter.  
66. Government procurement of services is carved out from core GATS provisions:  specifically, 
GATS Article XIII.1 provides that MFN, market access and national treatment obligations do not apply to measures "governing the procurement by governmental agencies of services purchased for 
governmental purpose".
32  
67. The United States is one of the 40 Members (as of April 2007) of the WTO Agreement on 
Government Procurement (GPA), but not Australia.33  Australia therefore has no commitments under 
the GPA.   
68. By virtue of the non-discrimination provisions in Article 15.2 of the Agreement, Australia 
became a designated country under the U.S. Trade Agre ements Act.  This allows Australian suppliers 
to bid for contracts tendered by U.S. Federal G overnment entities, without having first to establish 
operations in the United States, or in a designated country, or establish partnering arrangements with 
U.S. companies.  
69. In return, Australia has agreed to tender pr ocedures and transparency arrangements that 
required changes to its procurement rules, including  the adoption of regulations to ensure compliance 
by procuring entities.    
70. The Chapter applies only to procurements by en tities listed in the annexes with a value equal 
to or above certain thresholds. A nnex 15-A lists 78 U.S. Federal Depa rtments.  With a few exceptions, 
Australia's list in Annex 15-A includes all Federa l Departments and all other agencies covered by its 
Financial Management and Accountability Act 1997.  In addition, both Australia and the United 
States have submitted a number of regional government entities to the disciplines of Chapter 15. 
71. Thresholds vary for different groups of entities and according to the nature of purchases 
(goods, services, or construction services); they are ad justable for inflation, and for changes in the 
U.S. dollar / Special Drawing Right (SDR) exchange rate.34  The thresholds for procurement of 
construction services are:  A$9,396,000 or US$6,725, 000. They compare with a U.S. threshold of 
SDR 5 million for central government entities unde r the GPA, corresponding to a threshold of 
US$ 7,407,000 for 2006-07.35  The general thresholds for both goods and (other) services are laid 
down in Table III below.   
 
    
 
                                                     
 
 32 Article XIII:2 provides for negotiations, however. 
33 See http://www.wto.org/english/tr atop_e/gproc_e/gp_gpa_e.htm. 
 34Annexes 15-A, 15-B and 15-C. 
 35 WTO document GPA/W/295/Add.2, 14 December 2005.    WT/REG184/4 
 Page 19 
 
 
  Table III.1 
United States - Australia thres hold Values for government procurement of goods and services (except co nstruction services) 
United States 
Classification Threshold Value 
GPA  Threshold Value 
(US$) – USAFTA 
Section 1 – Central Government Entities  SDR 130,000 (US$ 193,000 for 2006-07) 58,550 
Section 2 – Regional Government Entities  SDR 355,000 (US$ 526,000 for 2006-07) 477,000 
Section 3 – Government Enterprise s  SDR 400,000 (US$593,000 for 2006-07)36 292,75137 
Australia 
Classification Threshold Value 
GPA Threshold Value 
(A$) – USAFTA 
Section 1 – Central Government Entities 81,800 
Section 2 – Regional Government Entities 666,000 
Section 3 – Government Enterprises Not Applicable38 
409,000 
 
72. As can be seen from Table III, the Agreemen t thresholds for procurement of services, 
particularly those for procurement by central gove rnment entities and by government enterprises, are 
lower than U.S. thresholds under the GPA.  A ll types of services are covered unless specifically 
excluded (Box II.1).  
Box II.1: Services procured by Government procu rement entities that are excluded from liberalization 
under the Agreement   
Schedule of Australia  
• Plasma fractionation services. 
• Government advertising services. 
Schedule of the United States  
• Basic telecommunications network and services, su ch as public voice and data services.   
• Maintenance, Repair, Modification, Rebuilding and Installation of Equipment Related to Ships;  
Non-nuclear Ship Repair. 
• Operation of the following government-owned facilities: all government-owned facilities operated by 
the Department of Defence, Department of Energy, and the National Aeronautics and Space 
Administration;  and all Research and development facilities (entities in Sections 1-3, Annex 15A).  
• All classes of utilities.  
• All transportation, travel and relocation Services except Travel Agent Services. 
• The procurement of any service in su pport of military forces overseas. 
• The procurement of dredging services 
Source: USAFTA. 
 
B. INTELLECTUAL PROPERTY RIGHTS (IPR S) 
73. Intellectual property rights issues are the subject of Chapter 17 of the Agreement.  They are 
also referenced in Annex 2-C on pharmaceuticals and in the Chapter on investment, including in 
Article 11.7 (compulsory licensing) and Article 11. 9 (patents and proprietary information).  The 
Agreement seeks to enhance the protection of intell ectual property and the enforcement of intellectual 
property rights.  General provisions of the Chapte r (Article 17.1) include national treatment and 
transparency obligations as well as an indication of th e Parties' intentions or actions with regards to 
other international agreements on intellectual propert y.  The Chapter consists of 29 Articles and three 
exchange letters covering tradem arks and geographical indicator s (Article 17.2); domain names 
(Article 17.3);  copyright and related rights (Artic les 17.4, 17.5 and 17.6);  protection of encrypted 
                                                      
 36 Exceptions to the general threshold are the Te nnessee Valley Authority, the five Power Marketing 
Administrations of the Department of Energy, and the  St. Lawrence Seaway Development Corporation for 
which the threshold is specified in dollar terms at US$ 250,000.  
37 Exceptions include the power generating projects financed by the U.S. Rural Utilities Services, for 
which the threshold is US$538,000. 
 38 Australia is not a Member (a s of March 2007) of the GPA. WT/REG184/4 
Page 20  
 
  programme-carrying satellite signals (Article 17.7);  designs (Article  17.8);  patents (Article 17.9), 
and certain regulated products (Article 17.10).  Article 17.11 deals with the enforcement of 
intellectual property rights. See Section II.C.5.e in document WT/REG184/3 for more information. 
C. E
NVIRONMENT  
74. The provisions on environment contained in Chap ter 19 relate to both goods and services.  In 
addition, Article 11.11 stipulates that none of the pr ovisions regarding investment can prevent a Party 
from adopting, maintaining, or enforcing any measur e that it considers appropriate to ensure that 
investment activity in its territory is undertaken in  a manner sensitive to environmental concerns.  See 
Section II.C.5.e in document WT/REG184/3 for more information. 
D. LABOUR  
75. See Section II.C.5.f in document WT/REG184/3. 
E. ELECTRONIC COMMERCE  
76. See Section II.C.5.g in document WT/REG184/3. 
F. DISPUTE SETTLEMENT PROVISIONS  
77. See Section II.E.4 in document WT/REG184/3.  
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