RESTRICTED  WORLD TRADE  
ORGANIZATION  S/C/M/76 
4 February 2005 
 (05-0469) 
Council for Trade in Services   
  
 
REPORT OF THE MEETING HELD ON 30 NOVEMBER 2004 
 
Note by the Secretariat
1 
  
1. The Council for Trade in Services held a meeting dedicated to the Review of Article II 
Exemptions (MFN) on 30 November 2004.  The m eeting was chaired by Ambassador Peter Brño 
(Slovak Republic).  The agenda for this m eeting was contained in document WTO/AIR/2451. 
2. The Chairman
 suggested that the agenda be adopted as circulated.  
3. The Council so agreed . 
4. The Chairman  recalled that this was the second review  of MFN exemptions, mandated by the 
Annex on Article II (MFN) Exemptions.  More speci fically, paragraph 4 of the Annex called upon the 
Council to examine whether the conditions which creat ed the need for the exemptions still prevailed 
and to determine the date of any further review.  The background documents for this Review were 
circulated to Members in advance of this meeting.  These documents included two updated compilations, contained in documents JOB(04)/114 (MFN exemptions by sector) and JOB(04)/115 & 
Corr.1 (MFN exemptions by Member), and statisti cal information on the number of MFN exemptions, 
contained in document JOB(04)/132. 
5. The Chairman
 recalled that it was agreed at the C ouncil's meeting held on 23 September 2004 
that the second review of MFN exemptions woul d be conducted on a sector-by-sector basis through a 
question-and-answer process, following the previous practice.  Therefore, this session addressed MFN 
exemptions listed for all sectors, business services,  communication services, construction and related 
engineering services, and distribution services. 
6. Members wishing to raise questions were require d to submit their questions in writing well in 
advance of the meeting.  The responding Members we re free to answer questions either in writing or 
orally at the meeting.  For the purpose of this Re view, a number of delegations submitted questions in 
writing in advance of the meeting.  These questions were circulated to the Members of the Council in 
six communications.  The joint communication from Chile, China, Hong Kong, China, Japan, Korea, 
Mexico and Chinese Taipei, contained in documen t JOB(04)/131, was circulated at the Council's 
meeting in September 2004.  Five communications , contained in documents S/C/W/246, S/C/W/247, 
S/C/W/248, S/C/W/250, and S/C/W/251, respectively from Japan, Hong Kong, China, Korea, Chinese Taipei and Mexico, were circulated in November 2004. 
7. In order to have an orderly and efficient discussion, the Chairman
 suggested that the Council 
take each sector in turn and open the floor for delegations which had recei ved questions in that 
particular sector to respond.  He noted that it w as desirable for responding Members to structure their 
interventions as much as possible on the basis of th e questions addressed to them.  Discussions would 
be conducted in formal mode with the possibility of tu rning to informal mode if Members so desired.  
                                                      
 1  This document has been prepared  under the Secretariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO. S/C/M/76 
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Before opening the discussions on the exemptions for "All Sectors", the Chairman invited delegations 
to comment on issues of a general nature. 
A. ISSUES
 OF A GENERAL  NATURE 
8. The representative of Hong Kong, China  thanked the Secretariat for the updated compilations  
and for the document on statistical information whic h had revealed the structure and extent of the 
MFN exemptions and helped delegations to formul ate specific questions.  He also thanked those 
delegations which had put forward qu estions to help all Members to proceed with this Review and  
those which said they would provide answers.  He stressed that it was his delegation's belief that the 
MFN principle was a corner-stone of the multilateral trading system and that any departure from this 
principle had to be taken seriously.  MFN exemp tions constituted a significant derogation from the 
MFN principle because they allowed for the maintena nce of bilateral, reciprocal or preferential 
systems with respect to specific sectors or me asures even though WTO Members had agreed to a 
multilateral framework concerning trade in services in the form of the GATS. 
9. He recalled the legal basis on which Members were acting in the Review.  Article II, 
paragraph 1 stated the MFN obligation under the GATS.   Paragraph 2 of the same Article allowed a 
Member to maintain a measure inconsistent with paragraph 1 provided that such a measure was listed 
in and met the conditions of the Annex on Article II Exemptions.  Paragraph 1 of the Annex specified 
the conditions under which a Member, at the entry into force of the GATS,  was exempted from his 
MFN obligations.  Paragraphs 3 and 4 of the Anne x provided for the review of all MFN exemptions 
by the Council for Trade in Services.  Specifically, the Council had to review all exemptions granted for a period of more than 5 years and examine whet her the conditions that created the need for the 
exemption still prevailed.  The Council also had the dut y to determine the date of any further review.  
Paragraph 6 of the Annex also stated that "in prin ciple such exemptions should not exceed a period of 
10 years" and many of the exemptions under examination in this Review were nearing the end of the 10 year period.  He expressed the belief that this  Review was being conducted at a very opportune 
time to examine whether the conditions which created  the need for the exemptions still prevailed. 
10. He stressed that a meaningful review, for the purpose of examining whether the conditions 
which created the need for the MFN exemptions still prevailed, would call for substantive answers to 
questions posed by Members in the Review.  Such questions would need to address meaningfully the 
following aspects.  First, the cond itions that created the need for the exemptions  in the first place.  
Hong Kong, China would be looking fo r clarifications of the conditions and for what exactly were the 
MFN exemptions being used.  Second, whether th e conditions had continued to exist since their 
inception and whether they were still in existence today.  They looked forward to receiving answers 
on whether the exemptions had been used for actual me asures that were in place.  Third, whether the 
conditions still prevailed.  They expected answer s from Members as to whet her any steps had been 
undertaken leading to the elimination of the conditio ns that created the need  for the MFN exemptions 
in the first place.  Finally, in connection with the provisions of paragraph 6 of the Annex, whether the 
exemptions expired on reaching 10 years or whether they had already expired. 
11. He noted that all these questions focused speci fically on the conditions for the exemptions 
and believed that they were relevant to the manda ted review by the Council, which had to focus on 
what those exemptions were, why they existed and whether the conditions still prevailed.  He recalled 
that his delegation had formulated general questi ons together with several other delegations in 
document JOB(04)/131 as well as more specific questions in document S/C/W/247.  He looked 
forward to constructive engagement by all Member s and for the Council to draw positive conclusions 
from the Review with respect to the conditions fo r the MFN exemptions.  He emphasised that given 
the provisions in paragraph 6 of the Annex, exem ptions should not exceed a period of 10 years and 
that a conscientious review and positive conclu sions would be appropriate at this juncture. 
12. The representative of China
 stated that since the MFN pr inciple was one of the most  S/C/M/76 
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significant pillars of the GATS and the MFN exempti ons deviated from this principle, his delegation 
fully believed that MFN exemptions should be kept to a minimum in order to maintain and strengthen 
the application of the GATS MFN principle.  Therefore, his delegation expected all Members to engage substantially and ser iously in this Review. 
13. The representative of Korea
 thanked Hong Kong, China for the very detailed legal 
explanation and the Secretariat for updating the comp ilations of the MFN exemption lists as well as 
compiling the statistical information, which summari sed the present situation with regard to the MFN 
exemptions.  He noted that these documents represen ted useful background material for the Review.  
He stressed that while MFN was one  of the fundamental principles of the GATS, at the same time, the 
GATS also provided Members with some temporary fl exibility in the application of this fundamental 
principle under certain conditions.  In principle, su ch exemptions should not exceed 10 years and were 
subject to review, as stipulated in the Annex on th e MFN exemptions.  He reiterated Korea's position 
with regard to MFN exemptions which should be kept to a minimum in order to maintain and 
strengthen the application of the GATS MFN princi ple.  He expressed confidence that the review 
session would contribute to the eventual elimination,  if not reduction, of the existing MFN exemption 
measures by clarifying and identifying various problematic aspects of the exemptions. 
14. He recalled that several Members, including Korea, submitted a paper, S/C/W/173 dated 6 
October 2000, regarding matters arising from the MF N review.  That paper identified 14 points for 
further discussion.  Since the last review and the su bmission of that paper, the Korean delegation had 
paid attention to those points and conducted caref ul examinations.  Among those points, the Korean 
delegation attached great importance to certain cat egories of measures, namely "MFN exemptions 
which purport to grant less favourable treatment and specificities of listed measures".  According to 
one study there were as many as 110 potential MFN measures among more than 400 such measures 
which might not be in conformity with several ar ticles of the GATS, particularly Annex II of the 
GATS and the MFN Guidelines.  Some of those measur es might give rise to less favourable treatment 
than specific commitments inscribed in national sch edules, while some measures were too broad in 
nature.  The situation was not much different fo r new WTO Members that had acceded since the 2000 
review process. 
15. The Review should determine "whether conditions  which create a need for exemptions still 
prevail";  however, without knowing what had been  requested to be exempted and what had been 
committed, especially in the same sub-sector, the review of the conditions might prove meaningless 
let alone fruitless.  This was the background of the questions put by Korea to other Members for this 
Review.  Korea sought clarification on the conditions on the basis of which the exemptions were 
sought when specific commitments were made in the same sub-sector.  They did not believe their 
questions were exhaustive of all the issues, as there might have been other e qually or more important 
points on MFN exemption measures.  Korea reserved its right to raise other questions and points 
during the discussions if necessary.  Finally, Kor ea encouraged other Members to provide further 
information and clarification on MFN exemption m easures so that all Members could deepen their 
understanding of MFN measures in relation to specifi c commitments and the review process could be 
a constructive one. 
16. The representative of Japan  expressed support for the comments made by Hong Kong, China.  
He stated that this Review was important especi ally regarding the issue of the duration of the 
measures exempted.  According to the Annex on Artic le II Exemption, paragraph 6, "in principle such 
exemptions should not exceed a period of 10 years".  He  noted that this was a very important part of 
the package at the time of the Uruguay Round an d, therefore, it was important to review those 
exemptions that should terminate at the end of the 10 year period.  He argued that the focus of the 
Review should be on this exemption period: when the duration of the exemptions was specifically 
indicated in the exemption list, e.g., 5 or 10 years, in his delegation's view, legally speaking and 
according to paragraph 5 of the Annex, those me asures should be terminated.  In the questions 
submitted, Japan focused on the MFN exemptions a nd their relationship with  regional and bilateral S/C/M/76 
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Economic Integration Agreements (E IAs), which should be covered by Article V of the GATS.  If the 
measure was covered by the EIA, and was consistent with Article V, it would not need to be indicated 
in the MFN list.  Japan also raised questions on those cases in which the measure was not specific 
enough, asking Members to specify it, and on tho se cases in which a specific duration was mentioned 
in the list, asking Members what they were willi ng to do with respect to the measure after the 
termination of that period.  He expressed hope that  the Review be held in a very constructive manner 
and to receive a good response from those Member s to which his delegation asked questions. 
17. The representative of Chinese Taipei
 expressed support for the comments made by the 
speakers who preceded her and in particular for t hose comments made by Hong Kong, China.  She 
stated that her delegation wanted to know what was the legal background of  Article II, paragraph 6 
which stated: "in principle such exemptions should not exceed a period of 10 years" and she said her 
delegation would seek clarifications on the conditi ons that created the need for MFN exemption 
measures, whether they still prevailed and whethe r the exemptions would be eliminated.  The 
questions were not addressed to all Members nor di d they cover all sectors and sub-sectors; at this 
stage Chinese Taipei  had only addressed questions to its majo r trading partners, focusing exclusively 
on audiovisual services and maritime transport services. 
18. The representative of the European Communities  said that his delegation would answer 
questions asked on the list of the exemptions of th e "EC 12", which entered into force in 1995 and on 
the 13 lists of exemptions of the 13 Europ ean countries which had acceded to the European 
Communities between 1995 and 2004 and which were Members at the time  of the Review.  He also 
welcomed the formal opening of this second revi ew of MFN Exemptions and the opportunity it 
provided to answer relevant questions raised by so me WTO Members.  He recalled that the scope and 
objective of this Review was clearly delineated in  paragraph 4 of the Annex on Article II: examine 
whether the conditions which justified the MFN exem ptions were still in place and determine the date 
of the next review.  In this spirit the European  Communities would answer the questions posed.  He 
underlined that questions outside of the scope of  this Review, including those in relation to 
paragraph 6 of the Annex, should not be addressed in the Review.  As exemptions were also the 
object of negotiations (in the present and future negotiating rounds) the European Communities were 
ready to answer any additional questions in the c ontext of these negotiations.  Moreover, paragraph 6 
of the Annex clearly stated that "in principle such  exemptions should not exceed a period of 10 years".  
According to the European Comm unities there was no systematic obligation in this paragraph to 
eliminate by a definite date exemptions to Article  II.  The possible elimination of some exemptions 
should, in accordance with paragraph 6 of this Annex,  be the subject of negotiations in the context of 
the present and future rounds. 
19. The representative of Mexico  agreed with those who preceded him in taking the floor, and 
particularly with the delegations of Hong Kong, Ch ina, Korea and Japan.  He noted that in this 
Review Members were acting under a fully establis hed mandate which should be a guideline in the 
discussions taking place in these dedicated sessions.  Furthermore, he noted that Members were 
approaching a critical date, 1 January 2005, that mark ed the passing of ten years since the date of 
entry into force of the GATS.  He argued that fo r this reason the exemptions of those countries which 
did not have a specific date or deadline would have to come to an end.  He emphasised that in the 
Review a full justification was required for the me asures which were covered by the exemptions.  The 
questions posed by his delegation in general terms a nd in more specific terms for some countries were 
concerned with these elements.  He pointed out that the written questions submitted were not 
exhaustive, as they had selected the most relevant  ones, and reserved their right to supplement these 
questions during the debates.  He recalled that Mexi co had issued a paper on the issue of duration of 
MFN exemptions that was distributed to Member s in 2001 (S/C/W/196, of 20 September 2001) and 
whose recirculation they had requested at the prev ious meeting of the Council for Trade in Services. 
20. The representative of Switzerland  recalled that for generations  MFN had been, and still was, 
the cornerstone of international trade relations.  He expressed hope for a very useful discussion on the  S/C/M/76 
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conditions that give rise to Members' need for MFN exemptions and added that his delegation was 
definitely willing to have an open discussion on this  issue.  The Review was mandated and could be 
useful to all delegations as negotia tors.  He thanked all those who ha d submitted relevant, interesting  
questions on MFN exemptions and noted that Switzerland had received a number of stimulating 
questions.  Outside the specific mandate of the Re view, he added that it would have been a positive 
sign of progress in the current round of negotiations if, at the end of the day, the overall number of 
MFN exemptions were to be reduced.  The on-goi ng parallel negotiations presented an opportunity 
and Switzerland was willing to look carefully at the conditions giving rise to the need of the 
exemptions. 
21. The representative of Hong Kong, China  pointed out that in this dedicated session Members 
were not trying to interpret what would be the m eaning of the Annex on Article II exemptions nor the 
meaning of any specific MFN exemption.  In his delegation's view Members were not negotiating any 
of the MFN exemptions in this session and it was clear that Members were undertaking the Review according to the mandate of the Annex.  He expressed sympathy for the comments made by 
delegations and agreed that the ongoing negotiations represented an opportunity for the elimination of 
the MFN exemptions in so far as they represen ted a derogation from the corner stone of the 
multilateral trading system.  He emphasised that the two exercises were entirely separate and that in 
this context Hong Kong, China intended to focus on the Review.  However, on the point of the duration, Paragraph 6 of the Annex specified that  in principle MFN exemptions should not exceed a 
period of 10 years and, therefore, that was part of  the conditions under which a Member may maintain 
MFN exemptions.  He stressed that his delegati on believed that a review and a positive conclusion 
would be necessary to maintain any MFN exemption,  especially if the MFN exemption were to be 
maintained beyond the period of 10 years, as mentione d by Mexico.  Substantive justifications would 
have to be put forward for the maintenance of a ny MFN exemption, if it were to be maintained 
beyond 10 years. 
22. The representative of the United States
 welcomed the opportunity to answer the questions 
posed by other delegations to the United States on MFN exemptions.  Her delegation believed that the 
proper scope and purpose of the Review according to the Annex on Article II Exemptions was to 
examine whether the conditions which created the need for the exemptions still prevailed and the 
setting of a date for subsequent review by the Council.  Beyond that, the United States did not think that a number of questions raised were within the scope of this Review.  The United States was 
concerned that a number of Members had taken a diff erent and broader view of what was properly the 
subject of discussions in the Review and it did not believe that Members could assess the 
effectiveness of existing MFN exemptions, i.e., the degree to which the exemptions actually had been 
employed.  The United States also did not believe that Members could assess the economic rationale of existing MFN exemptions nor that Members should provide explanations for the conditions 
creating the need for the exemptions. 
23. The United States believed that Members s hould provide a description of the conditions 
creating the need for an exemption, but not engage  in a discussion over the necessity or continuing 
necessity of MFN exemptions.  On a broader note, the United States did not think that the GATS and 
its market access and national treatment disciplines should be placed above all other international 
relationships.  They believed that in a number of significant instances MFN exemptions served to 
maintain coherence between the world of the GA TS and the much wider world of economic and non-
economic relationships.  They agreed that the MF N principle was one of the cornerstones of the 
GATS but believed that it was equally important to  recognise the role of other international 
relationships. 
24. The representative of the United States added that, considering that paragraph 6 states that 
"MFN exemptions shall be subject to negotiations in  subsequent trade liberalizing rounds", the United 
States associated themselves with a number of comments that were made by other delegations which 
thought that some questions went beyond the prop er scope of this Review  and should be properly S/C/M/76 
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addressed within the context of the current round of negotiations.  On this point the United States 
reserved its rights to do that with respect to other Me mbers' MFN exemptions.  Finally, with regard to 
comments that were made on the duration of MFN exemptions, as a legal matter the United States 
believed that it was clear from the language of paragr aph 6 that the use of the term "in principle" 
made it obvious that the notion that such exemption should not exceed a period of 10 years was not a 
mandatory requirement but rather a guideline.  With in that context the United States did not believe 
that paragraph 6 provided the founda tion, as had been suggested by some Members, for this Review 
to look at justifications for further continuation of  measures beyond the 10 year period.  They believed 
that this was further clarified by the following sente nce in paragraph 6 "that in any event they shall be 
subject to negotiation in subsequent trade liberaliz ing rounds".  Concluding, they did not believe it 
was within the scope of this Review to look at th e question of the duration of MFN exemptions nor to 
suggest that there was a mandatory limit of 10 years. 
25. The representative of Norway
 found the Review to be a necessary and useful exercise and 
echoed other delegations in stating that the MFN principle remained  the core principle of international 
trade and that exemptions should be very carefully ex amined and justified.  He stated that they had 
not yet completed their internal review but were primarily working on the questions set out in the 
document tabled on 22 September 2004 by Chile, Ch ina, Hong Kong, China, Japan, Korea, Mexico 
and Chinese Taipei.  He said that they expected to retain their exemptions as long as the international 
agreements forming the basis for the exemptions re mained in force and went beyond his delegation's 
specific commitments in the GATS.  He expressed hope that a number of MFN exemptions would be 
lifted after this exercise. 
26. The representative of Iceland  stated that in some instances, in order to be able to realize some 
goals and priorities, Members had introduced an ex emption to the MFN pillar.  She expressed support 
for and commitment to the MFN review exercise and informed Members that her authorities were currently undertaking the MFN exemption review in  Reykjavik with a view to considering whether 
there was still a need to maintain their existing six MFN exemptions or whether Iceland was in a 
position to eliminate some of them.  She stressed th at her delegation could not  make any promises, but 
in the interest of transparency wanted to inform  other delegations of Iceland's commitment to this 
educative exercise: Iceland was working on the Review, although this work had not yet been 
completed. 
27. The representative of Korea
 stated that his delegation disagreed with the view expressed by 
some other Members that no explanation was requi red for exemptions during this Review on two 
main grounds.  First, they had mentioned previously that they were asking information for 
clarification, as Members would not be able to unde rstand the conditions that created the need for the 
exemptions unless they knew exactly what had b een committed, provided that the exemption and 
commitments had been undertaken in the same sub-sector.  Second, the review process was not a 
panel nor a court procedure where strict rules a pplied.  Members were simply asking for further 
information to clarify and better understand the situ ation or conditions of the measures inconsistent 
with MFN.  Concerning the duration of the measur es, he recalled that according to the Annex, the 
MFN inconsistent measures could be maintained in principle for 10 years.  If one looked at all MFN 
exemption measures, the quasi-totality of the meas ures were not for 10 years but for an indefinite 
period of time, casting doubts on wh ich was the principle and which the exception.  He stressed that 
the question of the duration of the exemp tions should be considered carefully. 
28. The representative of Japan  stated that his delegation's view would be different, in terms of 
scope, from that expressed by some delegations whic h had argued for a restrictive scope of this 
Review.  The Review mandated the Council for Trad e in Services to examine whether the conditions 
which created the need for the exemptions still prev ailed.  Therefore, the membership of the Council 
had the right to know all relevant info rmation to be able to make this examination.  He said that in his 
delegation's view, all the questions th at had been raised so far were re levant for this process.  The first 
sentence of paragraph 6 ("in principle such exemp tions should not exceed a period of 10 years") was  S/C/M/76 
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itself a result of negotiations during the Uruguay Round, and although the specific elimination of 
exemptions was subject to more negotiations, he stressed  that this principle was an integral part of the 
Uruguay Round package. 
29. Delegations asked the Secretariat to shed some light on the negotiating background and 
history of paragraph 6 of the Annex.  The Secretariat  stated that the text of paragraph 6 was quite 
clear in terms of the non-legally binding nature of  the 10 years.  Paragraph 6 contained exhortatory 
language, as it was called in legal jargon, which does not mandate a specific timeframe but expresses 
a certain spirit of the provision.  Therefore, th e enforceability of that ti meframe had also been 
understood to be a matter of peer pressure rather th an a legally binding obligation.  The non-legally 
binding nature of the timeframe had emerged very clearly during the last phase of the Uruguay Round 
in the listing of MFN exemptions, particularly tho se referred to by Korea which were open-ended in 
nature.  The representative of the Secretariat unders cored that he had expressed only the Secretariat's 
point of view and that he was not trying to inte rpret the agreement, which remained a prerogative of 
Members. 
30. The representative of Hong Kong, China  responded to the comments made by delegations and 
to the statement by the Secretariat.  He stated th at his delegation disagreed with the interpretation by 
some delegations, such as the United States, of the scope of the Review and of the 10 year timeframe of MFN exemptions.  He underlined that, as the Secretariat had noted at the end of its intervention, its comments were made on a purely consultative basis a nd did not represent an interpretation on the part 
of the Secretariat nor of any Member.  He made the point that in the view of his delegation, reference 
should be made to some jurisprudence for the in terpretation of paragraph 6 of the Annex and in 
particular certain panel reports ( e.g., Shrimp/Turtle case) which might shed some light on how 
Members could effectively interpret the treaty provisi on in paragraph 6 of the Annex so as to give it 
effective meaning, rather than to reduce it to a meaningless provision. 
B. ALL
 SECTORS 
31. The Chairman  invited Members which had received ques tions on exemptions filed for "All 
Sectors" to respond, pointing out that there were 82 measures inconsistent with MFN which had been 
listed under this category. 
32. The representative of China  said that, due to the late arrival of the questions from their 
capital, they had not been able to circulate their qu estions before the session.  At this juncture they 
wanted to pose two questions of a horizontal nature  to the United States.  The first was concerned 
with the movement of natural persons:  they want ed to know which were those countries described in 
Section 204 of the Immigration Act of 1990 to which the MFN exemption regarding government 
issuance of non-immigration visas applied.  The second concerned the United States MFN exemption covering taxation measures:  the listed condition that created the need for the exemption was to force 
trade-efficient international taxation policies.  Fo r clarification purposes they asked the United States 
to explain the meaning of trade-efficient international taxation policies. 
33. The United States
 expressed appreciation for the questi ons and undertook to provide answers 
at a later stage, once they had had the time to consider the questions. 
34. The representative of Peru  stated that the questions they had received from delegations made 
specific reference to Peru's horizontal exempti ons on the movement of natural persons providing 
services.  He noted that under the exemption, nationa ls of a country with which Peru had a reciprocal 
labour agreement; nationals of a country with wh ich Peru had an agreement on dual nationality; or 
foreign personnel recruited under bilateral or multilateral agreements concluded by the Government 
of Peru, were not subject to the limitati ons on recruitment of foreign workers ( i.e., maximum period 
of stay of three years and ceiling of 20% of the total number of employees or 30% of the total payroll).  The measure covered by the exemption app lied to all Members, had an indefinite duration, S/C/M/76 
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and the conditions which gave rise to this exemp tion, namely reciprocity, dual-nationality and the 
promotion of investment cooperation, were listed in Peru's list of MFN exemptions,. 
35. He reiterated that the exemption applied to mode four in all sectors and was based on the 
principles of reciprocity and dual-nationality.  He no ted that in this manner they were ensuring that 
countries which benefited from Peru's  more favourable treatment also provided the same treatment in 
their markets to Peruvians.  This constituted one  of the basic elements of the bilateral labour 
agreements into which Peru had entered.  Peru be lieved that this was a valid element, which was 
included in their global efforts on progressive liber alization.  Peru felt that the applicability of 
Article V bis of the GATS was limited and that this Artic le only referred to agreements providing for 
full integration of labour markets.  Regarding dua l-nationality, Peru took this exemption having in 
mind individuals with dual nationality, both foreig n and Peruvian, although in the case of Peruvians 
nationals, Peru possibly did not need the exemption,  as the limitations in their schedule did not apply 
to them.  Peru nevertheless took this exemption to be  sure to provide legal c overage for the measures 
under the GATS. 
36. In reference to the specific question of whethe r Peru was going to terminate this exemption 
over the 10 year period, Peru, as it had been stated by the Secretariat, did not consider that they were 
legally obliged to unilaterally terminate the exempt ion after 10 years.  However, as the question of 
termination had been put to th em by one delegation, they were willing to examine with other 
delegations the future of this exemption at a suita ble time and based on the applicable provisions of 
paragraph 6 of the Article II Anne x.  They would do that under the Re view and towards the end of the 
negotiations when they would consider how to deal  with the issue of MFN treatment.  Peru also 
stressed that it had to be taken into account th at the GATS provided for MFN exemptions and that 
such exemptions could last beyond the 10 year peri od, considering that paragraph 6 of the Annex 
started with the words "in principle". 
37. The representative of Japan
 intervened to clarify that most of their questions were of a general 
nature except a number of questions related to speci fic sectors, such as transport.  He read out the 
numbers of the questions that were not relevant to  the discussion under "All Sectors":  4, 9, 10, 11, 12, 
13, 14, 21, 28, 34, 40, 41, 44 and 46.  He stated that all other questions were relevant under this 
agenda item. 
38. The representative of Honduras  said that they had received questions from Hong Kong, 
China, Japan and Mexico.  They thanked these delega tions for the questions and informed them they 
had sent the questions to capital and were still waiti ng for the responses, which they hoped to be able 
to share with Members at the next meeting. 
39. The representative of Costa Rica  recalled that Costa Rica maintained one exemption to MFN 
treatment which was applied horizontally with regard  to bilateral investment agreements.  They had 
received questions from Japan, Mexico and Hong K ong, China and had prepared some responses.  
First, he noted that Costa Rica maintained this  type of exemption because they felt that it was 
necessary for their development.  It was justified as a part of their legal framework and under the 
Annex on MFN exemptions.  He noted that while th e duration of the measures inscribed in the list 
was indefinite they hoped that through negotiatio ns, which were underway, they would be able to 
better define for how long these exemptions would appl y.  On the other hand he stated that at that 
particular point in time, his delegation was not in  the position to indicate for how long this exemption 
would last. 
40. He recalled that they had received questions fro m Mexico and Japan which made reference to 
the provisions of the General Treaty of Central Amer ican Economic Integration.  He noted that Costa 
Rica had not referred to the General Treaty of Ce ntral American Economic Integration in its MFN 
exemption list, although many of the measures whic h Costa Rica had listed provided for preferential 
treatment for Central American countries.  This more favourable  treatment, however, was not the  S/C/M/76 
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result of a regional agreement but rather of nationa l legislation and that was why they felt Article V 
did not provide coverage. 
41. Regarding a question from Mexico on mode four  and the scope of Cost Rica's horizontal 
exemption, he replied that Costa Rica did not have any exemption which applied specifically to mode four: its only horizontal exemption concerned bilateral investment treaties.  Hong Kong, China
 
had posed a question on bilateral investment treati es asking for an updated list of those countries with 
which Costa Rica maintained a bilateral investment ag reement.  He replied that Costa Rica had signed 
18 bilateral investment agreements of which 12 were in force to date.  The agreements in force had 
been concluded with Argentina, Canada, Chile, Ch inese Taipei, Czech Republic, Germany, Korea, the 
Netherlands, Paraguay, Spain, Switzerland, Venezuel a.  Other agreements which had not yet entered 
into force had been concluded with France, Belg ium and Luxembourg, Bolivia, Ecuador, Finland and 
Great Britain.  Of those agreements, four were going through the approval process in their legislature.  
Finally he stated that the conditions which creat ed the need for this exemption still prevailed. 
42. The representative of El Salvador  stated that her delegation had taken note of all the questions 
which had been put to them within the framework of the second revision of MFN Exemptions.  They 
had transmitted those questions to capital and were  hoping to receive the response as soon as possible. 
43. The representative of Australia  wished to respond to questions on sector-specific matters.  
She noted that Australia had two MFN exemptions bo th of which were in the audiovisual sector.  In 
response to the questions that had been put to them  she advised that to date the conditions which had 
created the need for those two exemptions still pr evailed and they continued to be given a high 
priority in support of maintaining Australia's cultural policies and objectives. 
44. The representative of Guatemala  explained that the reasons for having registered these 
exemptions were part of their domestic and regiona l policies which were still being developed.  The 
position of Guatemala with regard to MFN treatment  was very closely related to the negotiations 
underway.  Regarding mode four, although their legi slation was being amended to provide for more 
opening, clearly they were under no obligation to consolidate this in their schedule.  He stressed that 
they remained open to any questions Members wanted  to put to them and that they would provide 
responses in due course. 
45. The representative of Switzerland  recalled that on their MFN ex emptions applicable to all 
sectors they had received questions from Mexico and Japan.  He noted that the conditions creating the 
need for the two exemptions on mode four were different: one condition was the special relationship 
among EFTA countries.  The exemption was require d for an EFTA convention of 1972 that covered 
trade in goods and contained also facilitation prov isions for mode 4.  Subsequently, Switzerland 
signed a new EFTA convention which covered free movement of persons  and that was notified to the 
Committee on Regional Trade Agreements (CRTA) under Article V of the GATS.  The CRTA had 
concluded its examination of th is EFTA Convention a few weeks ea rlier.  He announced that 
Switzerland was considering deleting the corresponding parts of the mode 4 exemptions from in its 
next revised offer.  He pointed out that alt hough this was beyond the mandate of the Review his 
delegation thought it would have been useful to provide  this information in the context of the Review. 
46. He recalled that a number of measures covered by one of their horizontal mode four 
exemptions related to relationships with the Eur opean Communities, which were part of a dynamic 
framework agreement where conditions and work pe rmits for service providers gradually were being 
reduced.  To date, however, a number of requirements applicable to natural persons of the European 
Communities were still in place, so that they did no t think that, at least for the time being, legally 
speaking the agreement with the European Communities would be covered by Article V( bis).  For this 
reason they believed that the conditions that creat ed the need for that exemption still prevailed. 
47. One of the two mode four exemptions referred to areas of traditional recruitment.  This S/C/M/76 
Page 10  
 
element had been deleted from their list of exem ptions attached to their initial offer in the 
negotiations.  The exemption was based on autonom ous agreements that were no longer in place.  
This element in the exemption had been deleted in th e Swiss offer, considering that the conditions that 
had created the need for the exemption were no longer in place.  He noted that although he had tried to answer the questions in full, the GATS covered only the temporary entry of service providers and 
did not cover the access to the labour market as such.  Therefore, although some of their exemptions 
were part of a broader contractual framework c overing both service providers and labour markets he 
had answered the questions only with  reference to the GATS framework. 
48. The representative of New Zealand
 said that they had received a number of questions from 
other delegations, but they were not in a position to provide responses at this meeting.  He said that 
they were considering the questions and that they would respond in due course. 
49. The representative of Croatia  reiterated his delegation's commitment and support to the 
process and stated that they were ready to participate actively in this exercise.  He noted that they had 
received questions from Hong Kong, China on their MFN exemption concerning the purchase of real 
estate in Croatia.  Croatia filed this exemption si nce they had established that it was impossible for 
Croatian citizens and companies to acquire real es tate in many countries throughout the world.  
Therefore, they had decided to offer the possibility of  buying real estate in Croatia only to the citizens 
of other countries on a reciprocal basis.  He pointed out that this MFN exemption did not apply to the companies established and incorporated in Croatia as legal persons.  All requests from foreign citizens 
wanting to buy real estate in Croatia were subject  to a verification process with the Ministry of 
Foreign Affairs in Croatia.  In this procedure, the Mi nister of  Foreign Affairs granted the right to buy 
real estate property in Croatia to citizens whose c ountries of origin granted the same right to Croatian 
citizens and companies.  Unfortunately, a numbe r of countries restricted Croatian citizens and 
companies from purchasing real estate in their territo ries.  Therefore, since the conditions that created 
the need for this exemption still pr evailed, he argued that his delegation saw no reason to eliminate 
the exemption now.  Moreover, they believed that  this exemption was aimed at creating equal 
treatment rather than a discriminatory one. 
50. The representative of Thailand
 said that Thailand maintained one MFN exemption applicable 
to all sectors concerning the 1966 Treaty of Amity and Economic Relations between Thailand and the 
United States.  As a general matter he assured a ll Members that Thailand was fully aware of and 
remained committed to its WTO obligations.  With respect to this MFN exemption, Thailand wished 
to reassure Members that any cause of action it took  under the exemption would be in good faith and 
wholly consistent with their obligations under inte rnational law.  Concerning the actual use of the 
Treaty of Amity and Economic Relations, he in formed Members that between 700 and 800 US 
nationals and companies had bene fited from the national treatment provisions during the years 1972-
1999, and from 1999 to date (under a new law)  around 300 US nationals and companies had 
benefited. 
51. Regarding the questions of whether the conditio ns which created the need for the Treaty of 
Amity and Economic Relations still prevailed, Thailand answered in  the affirmative and confirmed 
that that the reasons for this Treaty were still valid  and that the special ties between Thailand and the 
United States persisted.  He nevert heless stressed that all steps were  being taken in consultation with 
the United States in order to ensure that Thaila nd fully conformed with its WTO obligations.  
Thailand remained committed to trade liberalization as reflected by its active participation in the 
WTO negotiation process.  They welcomed any furt her questions and expressed the hope that the 
Review would once again be conducted in an atmo sphere of mutual understanding and cooperation. 
52. The representative of Bolivia  thanked Japan for the question raised about Road Transport 
services in document S/C/W/246.  The questions had b een transmitted to the authorities in capital and 
they were expecting replies as soon as possible.  S/C/M/76 
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53. The representative of the Former  Yugoslav Republic of Macedonia  thanked delegations for 
the questions posed and informed that authorities in capital were in the process of answering the 
questions. 
54. The representative of th e European Communities  noted that a number of questions had been 
addressed to them on exemptions concerning moveme nt of natural persons.  First he took up the 
exemption concerning measures based on bilateral agreements with Switzerland and measures based 
on bilateral agreements with Sa n Marino, Monaco, Andorra and the Vatican City.  This MFN 
exemption was based on the long-standing historical and political links with these countries which were landlocked by the European Communities a nd economically highly integrated within the 
European Communities.  The agreements and arrang ements were in force and enabled citizens of 
these countries to enjoy certain privileges with r espect to visas, commercial presence and access to 
employment.  Second he took up the exemption co ncerning measures based on bilateral agreements 
with European and Mediterranean countries whic h guaranteed work permits for the purpose of 
temporary work on the basis of contracts between an employer of the country concerned and the company in the Member Sate concerned.  These c ountries all formed part of the immediate periphery 
of the European Union and the bilateral agreemen ts measures covered by the MFN exemption were a 
central part of the European Communities' polic y towards these countries.  He added that the 
conditions which created the need for the ex emptions mentioned a bove still prevailed. 
55. He recalled that the European Communities also had an exemption awarding a waiver for 
nationality requirements for the exercise in Portuga l of certain activities and professions by natural 
persons supplying services from mainly Portuguese sp eaking countries.  This measure was justified 
by historical links between Portugal and designate d countries of Portuguese official language.  These 
links were reflected in cooperation and other agreements between Portugal and the designated 
countries which might grant to citizens of these countries rights that were not otherwise awarded to others.  This MFN exemption took into account existing as well as future measures.  These agreements aimed at reinforcing cooperati on among countries whose official language was 
Portuguese  The exemption also took into account cu ltural and political links.  He added, therefore, 
that the conditions which created the need for this exemption still prevailed. 
56. He noted that similarly, for citizens of Comm onwealth Countries with grandparents born in 
the United Kingdom, the United Kingdom waived the requirement for a work permit in all services 
sectors.  These rules were formulated in 1972 in recognition of the United Kingdom's connection with 
the Commonwealth.  He pointed out that althoug h this relationship had evolved over the past 
20 years, the citizens of Commonwealth countries ad mitted under this category still retained the right 
to take up employment in the United Kingdom without the need to obtain an work permit, hence the need for a continuing MFN exemption.  Similar bila teral agreements linked France with some French 
speaking countries and provided preferential access to the labour market in France.  Some of these 
agreements were being reviewed.  He further noted that Estonia had an MFN exemption providing for 
preferential treatment in the granting of entry an d work permits in Estonia to natural persons 
providing services of countries w ith which Estonia had concl uded reciprocity agreements. 
57. He said that on all the mode four exemptions  referred to above, a number of WTO Members 
had asked whether the measures and agreements concerned would not be covered by Article V bis of 
the GATS on labour markets integration agreements.  On this point, he argued that it was not certain 
that all the bilateral agreements and measures c overed by these MFN exemptions would comply with 
the stringent conditions of Article V bis. 
58. He then referred to the questions they had received on the exemption of Poland concerning 
the concept of commercial presence contained in  Commerce and Navigation Treaties; Business and 
Economic Relation Treaties; and Pr omotion and Protection of Forei gn Investment Agreements that 
went beyond the limitations and commitments embodied in the schedule of specific commitments of 
the European Communities.  He noted that af ter the accession of Poland to the European S/C/M/76 
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Communities a number of these agreements were under review.  However, for the time being the 
conditions which justified the need fo r such an exemption still prevailed. 
59. The European Communities also received questions regarding the exemption covering the 
authorisation for purchase of real estate in Italy by foreign natural and juridical persons on the basis of 
reciprocity.  Its representative explained that the reci procity test allowed foreign citizens in Italy to 
exercise the right to purchase real es tate on the same terms granted to Italian citizens in the country of 
origin of the foreign citizens.  A list of countries and relative reciprocity status was available on the 
website of the Italian Ministry of Foreign Affairs.  Such reciprocity test was not based on the formal 
verification of the existing bilateral agreements between Italy and other countries on this matter but 
required an evaluation of actual cond itions.  He concluded that the c onditions which justified the need 
for such an exemption still prevailed. 
60. The representative of Chinese Taipei
 recalled that one question had been addressed to her 
delegation by Hong Kong, China on their MFN exemp tion regarding the lease and purchase of land.  
She explained why the conditions which created the n eed for the exemption still prevailed.  Although 
they understood that an open market policy of land would be more likely to attract increased foreign 
investment, at that time they still welcomed such an investment subject to reciprocity.   
61. She argued that considering the high population de nsity that characterized the territory of her 
country, their land policy was a fundamental national policy objective.  Therefore, as far as this exemption was concerned they wanted to make refe rence to the first paragr aph of the Preamble of 
GATS that recognised the right of the Members to regulate, as well as to the third paragraph of the 
Preamble which balanced the goal of "progressively  higher levels of liberalization of trade in 
services" with the reference to "due respect to na tional policy objectives".  They believed that their 
land policy was a national policy objective fully ju stifiable under the GATS and that therefore the 
conditions which created the need fo r this exemption still prevailed. 
62. The representative of Turkey
 recalled that Turkey maintained four general exemptions to the 
MFN principle that applied to all sectors.  Rega rding the general questions posed by Hong Kong, 
China (1 to 4 in document S/C/W/247) she informed participants that in their initial offer they had 
offered to delete at the end of the ongoing nego tiations four sector-specific exemptions, two on 
telecommunications, one on postal and one on financial services.  The remaining 11 exemptions, 
including those applicable to all sectors, were s till in force and Turkey did not foresee any specific 
dates to terminate them. 
63. She noted that the general exemptions listed in  Turkey's list had resulted from agreements to 
which Turkey was a party or from Turkey's related le gislation in force.  The conditions that formed 
the basis for these exemptions still prevailed.  Th e exemptions that resulted from agreements could 
not be repealed unilaterally.  On the other side , amendments and modifications to the domestic 
legislation in force would be reflected in the MFN exemption list of Turkey.  Concerning the other set 
of questions that were put to Turkey regarding th e two exemptions on consulate duties and real-estate 
acquisition, she noted that theses exemptions were based on legislation in force and both exemptions 
contained reciprocity conditions.  However, by listing these exemptions Turkey did not intend to 
create obstacles to services trade or to create an environment which contradicted the rules of the 
multilateral trading system.  Rather, they supported services trade liberalization by encouraging also 
other countries to take measures which would facilitate  this process.  She re marked that Turkey did 
not have any market access and national treatment  commitments related to these exemptions.  
Regarding the specific question put to Turkey con cerning long-term insurance premiums, she stated 
that the agreement which aimed at guaranteeing the social security of Turkey's citizens working in 
Libya was still in force and was being implemented. 
64. The representative of Jordan  pointed out that Jordan had MFN exemptions in different sectors 
and believed these exemptions were in line with th eir commitments in the WTO.  Many questions had  S/C/M/76 
 Page 13 
 
 
been posed to Jordan by Japan, Hong Kong, China, Korea and Mexico.  He thanked these delegations 
and stated that all questions had been transmitted to capital and would receive careful consideration. 
65. The representative of Venezuela  said that they had received questions regarding exemptions 
in professional services, petroleum-related service s and audiovisual services from Hong Kong, China 
and Japan.  He mentioned that in the case of Ve nezuela major changes to  the constitution in 1998 
resulted in a series of changes to the legislation in  2000: about 50 laws were amended resulting in the 
need to assess the impact of such  changes on Venezuela's international agreements.  For this reason, 
Venezuela wanted to wait for the results of this assessment before providing a definitive response to 
some of the questions posed on its exemptions. 
66. Regarding the exemption on professional services, he  affirmed that the conditions which gave 
rise to that exemption continued to prevail at the time of the Review.  The old constitution, the new 
1998 constitution as well as the labour legislation of  1995 contained provisions which justified the 
exemption on professional services.  As far as the audiovisual services and petroleum-related services exemptions were concerned they were still waiting for responses from capital. 
67. The representative of Chile
 referred specifically to a question posed by Hong Kong, China, 
related to bilateral investment agreements.  He poi nted out that these bilateral investment agreements 
contained clauses on the duration and, based on durati on, the agreements could be divided into two 
groups: one group lasting 10 years, becoming indefinite once the 10 year term was over; the other group lasting 15 years, becoming indefinite once the 15 year term was over.  Regarding the request to update the list of these agreements, he informed partic ipants that there were at the time 56 agreements 
of which 34 still were in force.  He undertook to pr ovide a detailed list of countries with which Chile 
had agreements and details on the duration of each agreement.  Finally, as to Chile's policy on 
bilateral investment agreements he pointed out that at the time of the Review Chile was not 
negotiating any bilateral investment agreements  of the type covered by the exemption. 
68. The representative of Egypt
 noted that they had received questions from Hong Kong, China 
and Mexico.  At that time they were not in a pos ition to provide answers but  informed participants 
that the questions had been tran smitted to capital and that they were waiting for the replies  They 
hoped to be able to provide responses at the next meeting. 
69. The representative of Indonesia  noted that they had received a number of questions from 
Japan, Hong Kong, China and Mexico.  They were in  the process of studying the questions received 
and would respond in due course. 
70. The representative of the United States  noted that they had received a number of questions of 
a general, rather than sector-specific, nature fro m Hong Kong, China.  Regarding the movement of 
natural persons they had been aske d a question related to longshore work  by crews of foreign vessels.  
She said that this MFN exemption would not terminate after a period of 10 years and they were not able to determine at that time when it would term inate.  The exemption had been used since its 
introduction: the immigration and nationality act allowed the performance of this kind of activity by 
alien crewmen aboard vessels fla gged in owners countries where such activities were permitted by 
crews aboard US ships while prohibited the perform ance of this kind of activity by alien crewmen 
aboard vessels flagged in owners' countries where su ch activities were prohibited for crews aboard US 
ships. 
71. The law was in effect at the time of the Review  and she was aware of no plans to modify it.  
She further noted that to date no action had been  undertaken or contemplated to eliminate the 
conditions which created the need for this exemption and that the elimination of this exemption would 
contravene current US law. 
72. She then addressed the questions  posed on the MFN exemption for the movement of natural S/C/M/76 
Page 14  
 
persons relating to bilateral investment treaties.   She said that this MFN exemption would not 
terminate after a period of 10 years and they were not able to determine at that time when it would terminate.  The measures covered by the exempti on allowed for the temporary entry, under "treaty 
traders" and "treaty investors" non-immigrant visas, only of nationals of countries which had concluded a treaty of Friendship, Commerce and Navigation Treaty or an equivalent bilateral 
agreement according to the Department of State, w ith the United States.  She noted that the exemption 
had been used since its introduction.  The law was in  effect at that time and she was unaware of any 
plans by their Congress to change it.  Moreover, the bilateral treaties related to the exemption for this 
temporary admission category remained in effect.  No action had been taken, or contemplated, to 
eliminate the conditions which created  the need for this exemption. 
73. The United States had also received questi ons from Hong Kong, China regarding the 
reciprocity elements in its exemptions relating to longshore work by crews of foreign vessels.  She 
noted that Section 258 of the US Immigration a nd Nationality Act determined that alien crewmen 
were prohibited from performing longshore work in the United States subject to certain exceptions.  
One of these exceptions was the reciprocity pr ovision that allowed performance of activities 
consisting of longshore work by alien crew aboard  vessels flagged in owners' countries where such 
activities were permitted by the crews aboard Unite d States ships.  The United States Secretary of 
State was directed to compile and maintain a list of countries that prohibited longshore work activities 
by law, regulation or practice.  This list was co mpiled and maintained annually by the Secretary of 
State, and the Attorney General used the list to de termine whether to permit an  alien crew member to 
perform longshore work activities in the United States or  in its coastal waters in accordance with the 
conditions set forth in the Act.  Crews of ships eith er registered or owned by nationals of the countries 
on the list could not perform the longshore activities listed for that country. 
74. The State Department based its list on repor ts from United States diplomatic posts and 
submissions from interested parties in response to a notice and comment process.  Based on this 
information, the State Department had amended th e 2003 list, and effective 14 January 2005 the list 
included 24 countries not previously listed:  Alba nia, Antigua & Barbuda, Brunei, Chile, the Cook 
Islands, Grenada, Kazakhstan, Latvia, Lebanon, Macau (China), Namibia, Tuvalu, United Arab 
Emirates and Vietnam.  Two countries, Estonia and Micronesia, were dropped from the list because 
the most recent information indicated that they did not restrict longshore activities by crew members 
of United States vessels. 
75. With respect to Q9 by Hong Kong, China ( see S/W/247), she noted that the exemption was 
not directly related to their market access horizontal  commitments on mode four.  With respect to Q7 
by Hong Kong, China, she noted that the Immigr ation and Nationality Act granted access to treaty 
traders and/or treaty investors who were nationals of one of the countries that had concluded one of 
the international treaties referred to in the exem ption with the United States.  Regarding Q34 from 
Hong Kong, China, she said that the United St ates had roughly 120 Friendship, Commerce and 
Navigation Treaties (FCNs) and Bilateral Investment Tr eaties (BITs) in existence at that time and that 
they had a list of those agreements which they would have been happy to provide to Hong Kong, 
China.  She added that under the current United St ates Immigration Laws the temporary admission of 
persons holding treaty trade and treat y investor status could not be accorded on a multilateral basis. 
76. On the issues of reciprocity she stated that they had also received a number of questions 
regarding United States taxation laws.  Answering Q7 by Hong Kong, China, she said that the 
exemption relating to United States taxation policy was included in their internal revenue code.  
Answering Q8 by Hong Kong, China, she stated that  the principle of reciprocal tax exemption of 
transportation income was incorporated in the US Internal Revenue Code of 1921 and had been an 
essential aspect of international taxation principl es since the development of their modern tax 
agreements. 
77.
 The reason why income from the operation of ship s or aircraft in international traffic was  S/C/M/76 
 Page 15 
 
 
generally taxed only in the resident's country was that international shipping and airlines companies 
served many countries so that it would have been very  difficult to subject them to the tax systems of 
all the countries they served.  Double taxation c ould easily arise due to differences in expense 
allocation under different national rules.  In a ddition, enforcement of a tax on international 
transportation income from other countries than th at of residency of the transport company had 
proved extremely difficult as well as a restriction on the flow of goods.  Regarding Q9 by Hong Kong, 
China, as far as this United States tax provision was c oncerned, she stated that they regarded such a 
question as not relevant to the MFN review. 
78. They had also received some questions on the exemption allowing for reciprocal treatment in 
the deduction of advertising expenses by foreign broa dcasters.  This exemption was included in the 
Internal Revenue Code and was designed to enc ourage the allowance of advertising expenses 
internationally, and to promote a free and ope n multilateral trading system by discouraging 
discriminatory taxation of advertising expenses.  With respect to Q9 by Hong Kong, China, they believed this was not relevant to the MFN review. 
79. A number of other questions on their horizontal exemptions primarily related to United States 
taxation policy and law.  Q35 by Hong Kong, China,  asked to provide an up-to-date list of countries 
considered contiguous to the United States and whose residents were ac corded more favourable 
treatment under the United States  Internal Revenue Code.  She answered that only Canada and 
Mexico were considered to be c ontiguous to the United States and thus entitled to more favourable 
treatment under the United States Internal Revenue Code.  The exemption applied to all countries 
because the measures in question applied to all coun tries that met the requirements of the measure. 
80. With respect to Q36 by Hong Kong, China, the answer was that the exemption covered 
Section 883 of the United States Internal Revenue  Code which could be but was not necessarily 
implemented by Executive Agreement.  This exempt ion was separate from the exemption provided by 
tax treaties because the United States requirements for entering into a tax treaty had resulted in a 
relatively limited number of such treaties. 
81. With respect to Q37, they had been asked to  indicate what taxation measures related to the 
provision of less favourable taxation for citizens, co rporations or products of a foreign country.  The 
answer was that the relevant measures were Secti ons 891 and 896 of the US Internal Revenue Code.  
The relevant measures did not provi de any more explicit definition of the terms "discriminatory", 
"extra-territorial taxes", "more burdensome taxa tion" or "other discriminatory conduct".  No 
regulations had been issued and the provisions had never been invoked.  They had also been asked 
how deterring discriminatory practices related to the fo stering of efficient international tax policies.  
She argued that the differential treatment could foster inefficiencies and that deterring such 
differential treatment was expected to reduce di scrimination and ineffici encies.  The relevant 
measures could deter discriminatory tax practices by  providing that another country's discriminatory 
tax practices against certain United States nationals or corporations would result in adjustments to the 
United States tax rate applicable to some of that  country's nationals', residents' or corporations' 
income. 
82. With respect to Q38 in which they had been ask ed to identify which elements of United States 
tax policy were inconsistent with Article II of th e GATS, they believed that each of the elements 
identified in their MFN exemption identified the pot ential basis for differential treatment which could 
give rise to a departure from MFN treatment.  Regarding Q39 on United States taxation measures, 
they believed that this question was not relevant to the MFN review. 
83. The representative of Malaysia  stated that the conditions  which made it necessary for 
Malaysia to maintain its MFN exemptions still pr evailed and that the exemptions would not be 
terminated, also taking into account developm ental aspects and national policy objectives.  The 
policies behind the exemptions were at the heart of Malaysia's economy and political stability and in S/C/M/76 
Page 16  
 
line with its development goals.  Malaysia's nati onal policies provided for the striking of an ideal 
balance between the goals of economic growth and equity.  This ensured a balance among the major 
sectors of the economy so as to optimise growth, reduce the social economic inequalities and provide 
for an equitable sharing of the economic growth among all citizens. 
84. She stated that Malaysia would be pleased to  follow up with the questions posed by Hong 
Kong, China in bilateral meetings.  As to the qu estions posed by Japan and Mexico the relevant 
measure had been taken in light of domestic policy considerations and was still in place.  There was 
an obvious need to regulate the flow of foreign wo rkers both for economic and social objectives.  The 
basis of their preferential treatment was geographical  proximity and priority accorded by Malaysia to 
its regional neighbours, the maintenance of social  economic policy objectives and ensuring orderly 
flows in the interests of security.  Malaysia had tr aditionally sought its supply of labour from its close 
regional neighbours.  Policy c onsiderations obviously went be yond the mere controlling of the 
number of workers and such policies were being regu larly reviewed to suit the needs of their national 
interest. 
85. The representative of the Philippines
 stated that the questions received pertained to a national 
law which granted special visa categories to trad ers and investors of countries with which the 
Philippines had concluded treaties on entry rights for tr aders and investors.  In the previous review the 
Philippines had referred to treaties with 3 countries:  Japan (the Treaty of Amity, Commerce and Navigation);  the United States (Agreement relating to Entry of Nationals for Purposes of Trade, 
Investment and Related Activities);  and Germany (Treaty concerning Promotion and Protection of 
Investments, Trade Agreement between the Republic  of the Philippines and Federal Republic of 
Germany, and the Protocol of the Negotiations between the Government of the Republic of the 
Philippines and the Government of th e Federal Republic of Germany). 
86. The relevant provisions of the treaties concer ning special entry rights essentially stipulated 
that the persons entitled to entry into the country under the conditions of the treaty on entry rights for 
traders and investors could be admitted as non-immigrants.  They were given treaty-trader visas for 
the sole purpose of carrying on substantial trade be tween the Philippines and the state of which they 
were nationals.  The visa could also be for the pur pose of developing and directing the operations of 
an enterprise in which they were investing or had invested a large amount of capital.  Regarding the 
questions raised on the possible termination of the exemption at the end of the 10 year period, his delegation was not in a position to indicate at that meeting whether it would expire or terminate at the 
end of the 10 year period as provided in the Annex.   With regard to the question of whether the 
conditions which created the need for the exemption still prevailed he noted that the conditions which 
gave rights to this extension resulted from both economic and non-eco nomic considerations, 
particularly in relation to amity and historic speci al ties with the relevant countries as well as other 
special consideration and his delegation was not aware that, at that point, these conditions had 
substantially changed so as to warrant a withdraw al of the exemption.  Obviously, they were 
continuing to review the situation with regard to  the MFN exemption and were committed to ensure 
that the Philippines fully abid ed by its WTO commitments. 
87. With respect to the question from Mexico on wh ether they had considered the possibility of 
changing the condition of reciprocity in their ag reement with the United States for some other 
convention which granted similar guarantees for moveme nt of national persons he said that they were 
not aware that this had been under consideration.  He  stressed that their comments were preliminary in 
nature and that if delegations were  interested in getting further details or clarification they we were 
prepared to provide such clarifications at an appropriate time.  On the debate on the scope and 
interpretation of the Annex on Artic le II Exemptions, he said that hi s delegation looked forward to the 
opportunity to offer insights on this ques tion at an appropriate occasion and forum. 
88. The representative of Singapore
 recalled that there were three exemptions in their horizontal 
section.  The first one related to  natural persons, the second to i nvestment guarantee agreements and  S/C/M/76 
 Page 17 
 
 
the third to the commonwealth tax credit.  In all these exemptions they had had stated that Singapore 
would periodically review its exemptions in the light of domestic and nati onal policy considerations 
as well as international developments in the case of certain exemptions.  He welcomed questions and 
assured all Members that they were taking this Revi ew seriously and had been conducting an internal 
review periodically.  With respect to the three hor izontal exemptions, following the latest internal 
review he informed the Council that the conditions th at created the need for the exemptions remained 
valid.  Therefore, the exemptions would not be term inated at that juncture.  They had provided some 
detailed information on the exemptions at the last  MFN review that took place in 2000.  He then 
brought some elements to Members' attention to de monstrate why the conditions that created the need 
for exemptions still prevailed. 
89. The first exemption related to natural persons.  Singapore maintained preferences for workers 
from traditional sources of supply.  This measure  had been taken in light of domestic policy 
considerations, in particular land constraints.  Si ngapore granted preference to workers from countries 
that had a similar social and cultural ethos, count ries that they regarded as traditional sources of 
supply.  Therefore, he announced that Singapore woul d continue to retain this exemption.  His second 
comment related to the exemption on investment guarantee agreements.  He first noted that this 
exemption was still in force. While the intended du ration of this exemption was indefinite, Singapore 
would continue to review this in light of developments.  The c onditions which created the need for the 
exemption still prevailed.  Investment guarantee agr eements had been and cont inued to be useful to 
Singapore's investment promotion and protection effort s.  The bilateral agreements that Singapore has 
entered into with other countries had added to a mo re secure and certain investment environment for 
investors.  In turn, that had contributed to an in crease in investment commitments into Singapore.  
The Commonwealth tax-credit scheme exemption was also still in force.  He said that Singapore 
would periodically review this exemption as part of  the review process of its tax laws.  As the tax-
credit scheme was part of Singapore's efforts within  the Commonwealth, the conditions that created 
the need for this exemption still prevailed. 
90. The representative of  the Dominican Republic  requested that a correction be made to the 
MFN compilation in the part concerning the Dominican  Republic.  They had made the same request at 
the last review: under the sector "Legal Services" re ference was made to "Architects and Engineers", 
while it should read "Lawyers".  Regarding the ques tions received, most of them were on Business 
Services in addition to the genera l questions from Hong Kong, China. 
91. On the mode four exemption for medical services she stated that the exemption was needed to 
obtain access for their professionals to other countries on the basis of reciprocity.  The condition 
which had given rise to the exemption was the need to continue to use reciprocity, considering the 
difficulties professionals from developing countries, such as the Dominican Republic, faced in obtaining access to foreign markets.  Regarding the question of whether as a result of the exemptions 
they were granting less favourable treatment than  in their schedule of specific commitments, she 
assured Members that this was not the case. 
92. With regard to the question put by Hong Kong,  China on "the requirement to have something 
from the executive powers" in addition to reciproc ity, she referred back to the answer they had 
provided in the context of the 2000 Review, that is to  say that this was (together with reciprocity) a 
very general measure in the Dominican Republic as we ll as in other Latin American countries.  It was 
similar to obtaining a licence in order to exercise a profession but without having to pass an exam. 
93. The questions from Korea to the Dominican Re public referred to the relationship between 
their MFN exemptions and their commitments in the schedule.  She said that they did not think that 
their exemptions  resulted in any less favourable tr eatment for some Members than that provided for 
in the schedule of specific commitments.  Regard ing the question of whether there had been any 
limitations on access or on the provision of these se rvices in the Dominican Republic she answered 
that no restrictions on the provision of these servi ces would take place provided no restrictions were S/C/M/76 
Page 18  
 
implemented on citizens and juridical persons of the Dominican Republic in the other countries. 
94. With regard to the question from Mexico as to  how they ensured reciprocity she confirmed 
that they ensured reciprocity by entering into agre ements with other countri es' governments, including 
agreements on the recognition of degrees and di plomas and agreements which enabled foreign 
professionals to practice in the Dominican Republic and citizens of the of the Dominican Republic to 
practice in other countries. 
95. The representative of Mexico
 stressed the point that they ex pected countries to be as precise 
as possible in their responses to the questions Mexico ha d put to them.  He felt that some of the replies 
received thus far were very general, while it woul d have been desirable to make reference to the 
extent possible to all laws and regula tions which were behind each exemption. 
96. The representative of Hong Kong, China  thanked those delegati ons which had provided 
answers to questions his delegation had raised.  He  suggested that delegations could provide their 
replies in advance of the next dedicated session so  that the discussion would be more efficient and 
fruitful.  He also suggested that those colleagues who did not have time to prepare answers to the 
questions they had raised undertoo k to provide those answers at the next session of this Review, or 
before, if possible.  He noted that many delegati ons had provided detailed a nd useful answers to the 
questions raised and reserved the opportunity to reve rt to some of the answers he had heard today, 
especially from those delegations which had undertaken  to provide further information bilaterally or 
in another context.  His delegation would have li ked to have had the opportunity to reflect on the 
information provided and to revert to some of th e answers in response to questions raised under the 
individual sectors at the appropriate juncture.  He took the opportunity to respond on a number of 
points.  He noted that a number of answers touche d upon various international agreements and stated 
that in respect of international agreements there we re two points which were worth noting.  First, from 
the responses they had received at that meeting thus  far, it seemed that there were MFN exemptions 
that provided coverage for non-MFN treatment re sulting from pre-existing agreements.  Second, 
reference was also made to international agreemen ts which come into force after the listing of MFN 
exemptions.  In distinguishing between pre-exis ting and new agreements his delegation was not 
entirely sure what would have b een the basis for the conditions which created the need for the 
exemption and whether those conditions would also be applicable to those agreements which come 
after the MFN exemptions themselves were listed. 
97. As many replies had indicated, many MFN ex emptions actually referred to international 
agreements and to those provisions of the internati onal agreements which had created the need for the 
MFN exemptions in the first place.  On the other ha nd, regarding those provisi ons or agreements that 
came into existence after the inception of the MFN exemptions, his delegation was not entirely sure  
about the legal basis for the coverage under MFN ex emptions.  However, putting the question of legal 
coverage aside, he raised a policy question and ma de the point that if there were already other 
provisions in the GATS that provided coverage for su ch kinds of international agreements, especially 
in the case of economic integration agreements  and labour integratio n agreements,  it was 
questionable that there still would be a basis for maintaining those MFN exemptions.  This problem 
was compounded by the fact that those Members wh ich did not take MFN exemptions to provide 
coverage for these types of agreements would be requi red to comply with all those relevant provisions 
under the GATS, while those Members which did take ex emptions would be able to enter into an FTA 
without having to comply with the provisions of Ar ticle V of the GATS.  He stated that in his 
delegation's view this would not be an equitable nor an appropriate result within the originally 
envisaged framework of the GATS. 
98. Another point concerning agreements cited in the MFN exemptions would be the question of 
the specificity of the actual measures which were not  consistent with the MFN obligation.  He noted 
that they had heard a number of references to in ternational agreements a nd to domestic legislative 
provisions but pointed out that one of the aims of this Review was to have greater specificity as to  S/C/M/76 
 Page 19 
 
 
what exactly were the measures that were covered by the MFN exemptions.  He stressed that it was 
important to define the scope of MFN exemptions as narrowly as possible, as any of the measures covered would constitute a deviation from the MFN prin ciple.  Unfortunately, the actual entries in the 
lists of MFN exemptions did not reveal sufficient sp ecificity as to the elements of inconsistency with 
MFN.  They appreciated the answers, which had been provided at that meeting and which provided 
some clarifications as to what exactly were the me asures that were intended to be covered by those 
exemptions.  However, he expressed the hope that Members would provide further information with a 
greater level of specificity with respect to bot h the description of the measures indicating their 
inconsistency with Article II and those countries to which the measures applied. 
99. He invited Members to clarify these issues and make consequential changes to their lists of 
MFN exemptions, where applicable.  He remarked that one of the positive things that distinguished 
this Review from the last one was that Members now had available procedures for the termination and 
reduction of MFN exemptions.  Such procedures w ould provide the legal basis for Members that 
wanted to reduce or clarify their MFN exemptions. 
100. Concluding, he touched upon another issue concer ning reciprocity which had been raised in 
some of the answers.  In the first review and in  the questions put forward for this Review, Hong 
Kong, China had raised the point that there was no question that any MFN exemption would allow a 
Member to be able to grant treatment that woul d be less favourable than what had been committed 
under its schedule of specific commitments.  He em phasised that his delegation was pleased to hear 
that some Members  had confirmed that it was not the case that they intended to grant less favourable 
treatment than what had inscribed in the schedule. 
101. In some of the MFN exemptions, that did not clearly appear to be the case, and while they 
were looking forward to a greater degree of clarity, he argued that if it was the intention of some MFN 
exemptions to grant less favourable treatment, as that was not envisaged under the current GATS 
framework, it would have been appropriate fo r those MFN exemptions to be removed. 
102. On reciprocity he touched upon the broader ques tion of how did the condition of reciprocity 
itself sit with the principle of MFN treatment.  He noted that some Members had inscribed MFN 
exemptions based on reciprocity because they were being subject to less than reciprocal treatment 
from other countries.  Some Members also had made the point that in certain cases they did not intend 
to invoke those MFN exemptions.  He argued that if  that was the case, the questions should have been 
raised as to what extent this type of MFN exem ption based on reciprocity inhibited Members to 
engage and participate in multila teral opening.  He wondered wh ether there was any scope for 
Members to eliminate reciprocity exemptions, especi ally if Members did not envisage the need to 
invoke the conditions of reciprocity against each othe r and those reciprocity exemptions were mainly 
inscribed for defensive purposes. 
C. BUSINESS
 SERVICES 
103. The Chairman  introduced the next sector, business services,  noting that the exemptions in this 
sector were grouped under two sub-sectors: professional services and other business services. He then 
opened the floor for delegations whic h had received questions to respond. 
104. The representative of Thailand  responded to questions from Hong Kong, China, Korea and 
Mexico on its exemptions on auditing services and pub lishing newspapers.  They had indicated at the 
previous review in 2000 that the law governing auditing services, at that time called the Thai Auditing 
Act 1962, was being amended.  She informed the Council that the amendment of the Thai Auditing 
Act had been completed and that Parliamentary a pproval had been received on 12 October 2004.  
Subsequently, the Act had been published in the Royal Gazette on 22 October 2004.  In the present 
law, the Accounting Profession Act of 2004, the provi sion  concerning the nationality of Thai auditors 
remained intact, i.e., only Thai nationals and citizens of a c ountry with which Tha iland had a bilateral S/C/M/76 
Page 20  
 
agreement could be auditors in Thailand.  She not ed that this provision remained unchanged in the 
most recent Act and therefore the conditions that creat ed the need for this exemption still prevailed.  
Regarding the question by Hong Kong, China on th e relationship between exemptions and specific 
commitments, she pointed out that Thailand had always supported clarity and consistency in the 
scheduling of specific commitments.  With respect  to this specific exemption, which concerned 
mainly mode four, she brought to the attention of the Council that their commitments on auditing 
services were unbound both on market access and national treatment, so that in their view their MFN exemption could not be seen as undermining their specific commitments on auditing services. 
105. On the exemption regarding newspaper publishi ng, she noted that this service was governed 
by two laws, of which one was the Foreign Busin ess Act of 1999.  This Act provided the general 
framework for the establishment of foreign business ope rations in Thailand and limited foreign equity 
investment in publishing newspaper services to 49%.  The second law that was relevant to publishing 
newspapers was the Thai Publishing Act of 1941,  which specified qualification requirements for 
publishers.  It specified that natural persons i nvolved in the publishing of newspapers, including 
publishers, advertisers, editors and ow ners of a newspaper had to be of  Thai nationality.  This act was 
still in force at that time and there was no plan to re peal or amend it in any way.  She added that his 
delegation had received confirmation from the national enforcing agency , the Royal Thai Police, that 
they needed to maintain these exem ptions in the interest of national security.  The conditions that 
created the need for these exemptions still preva iled and since Thailand had not taken any specific 
commitments in newspaper publishing they did not see any inconsistency between the exemption and 
their specific commitments. 
106. The representative of Costa Rica
 recalled that Costa Rica maintained an exemption regarding 
recognition agreements for professionals.  He stated that the exemption was based on national legislation applicable in this sector and did not necessarily correspond to the application of 
agreements covered by Article VII.   He added that the government encouraged relevant agencies to 
conclude recognition agreements w ith their counterparts from other countries.  He noted that Mexico 
had asked which sectors provided minimum quality re quirements for services in Costa Rica.  He 
answered that those were all sectors which require d affiliation to a professional body or the issuance 
of a licence. 
107. Regarding whether this exemption would affect  the specific commitments of Costa Rica in 
this area, he informed the Council that they ha d not bound professional services in their schedule of 
specific commitments and therefore they considered that this limit ation did not affect Costa Rica’s 
specific commitments.  He also pointed out that Jap an had asked about the relationship between this 
exemption and the General Treaty on Central Economic Integration.  He recalled the answer he had 
provided on this point in the discussions on All Sect ors exemptions earlier in the meeting, that the 
General Treaty of Central Economic Integration did not include provisions on services.  He said that 
although the preferential treatment that Costa Rica granted to the other countries in the region under 
the exemption was part of the regional integr ation process, it was not a result of the regional 
agreement and therefore in their view was not s ubject to provisions of Article V of the GATS. 
108. The representative of Canada
 noted that Canada had received two questions relating to its 
exemption on services incidental to Agriculture, i.e., on the temporary entry of agricultural workers 
into Canada.  Hong Kong, China had asked them about the selection criteria for countries to whom 
they gave more favourable treatment under this exemption and why the treatment could not be 
extended to other WTO Members, if the service w as demand driven.  She replied that the foreign 
workers receiving preferential treatment were nationals of the countries covered by Canada's previous bilateral agreements.  She said, however, that Ca nada no longer concluded ne w bilateral agreements 
on seasonal agricultural workers.  If there was a demand in Canada for foreign workers from any 
country foreign workers might apply as tempor ary foreign workers under Canada's general 
immigration law and regulations.  S/C/M/76 
 Page 21 
 
 
109. More specifically on Canada's foreign workers pr ogramme, she pointed out that it was used to 
assist workers and organizations in sending countri es to search for job opportunities in Canada or 
develop relationships with prospec tive Canadian employers.  The formal process to obtain temporary 
worker status, i.e., by obtaining the corresponding work permit, started with an application from a 
prospective Canadian employer seeking to hire a foreign workers on a temporary basis to the 
Department of Human Resources and Skills Developmen t.  She said that his delegation would have 
been happy to provide interested Members with mo re information on their temporary foreign worker 
programme. 
110. With respect to Japan's question to specify the reasons for the n eed for such an indeterminate 
exemption and to explain the rela tionship with Article V of the GATS, she replied that the seasonal 
agricultural workers programme started in 1966, and that the Department of Human Resources and 
Skills Development worked with the relevant Mi nistries in the countries with which Canada had 
agreements.  She pointed out that there was no quota on the number of employees that entered the country.  The numbers were based on the needs of the Canadian agricultural sector.  The programme 
was designed to provide for the organized movement  of foreign agricultural workers to Canada to 
meet the seasonal needs of agricultural employers fo r specific periods, primarily during the harvesting 
and planting of fruit and vegetable crops when an insufficient supply of Canadian workers was most 
likely to occur.  The programme was intended to im prove Canada's prosperity by ensuring that the 
crops were harvested in a timely manner thus ma intaining job opportunities for Canadian workers 
whose livelihood depended on the timely harvesting of such crops.  The conditions that created the 
need for such an exemption continued to prevail. 
111. With respect to Article V she argued that there was no relationship between Canada's seasonal 
agricultural workers programme and Article V of the GATS.  Article V of the GATS preserved the 
rights of Members to enter into regional agreemen ts which providing for preferential liberalization, 
provided that such agreements had substantial sect oral coverage, including through the modes of 
supply.  She stated that her delegations did not th erefore consider that Ca nada’s bilateral seasonal 
workers agreements were covered by Article  V. 
112. The representative of Singapore
 replied to questions received on their MFN exemptions 
relating to legal services.  He informed the Council th at this exemption was still in force and that the 
conditions which had created the need for these exemp tions still prevailed.  He responded to questions 
by pointing out that the MFN exemption covered a ll measures pertaining to the provision of legal 
services in Singapore.  Since the coming into for ce of the legal profession and judicial services rules 
in May 2000, all foreign law firms and lawyers pr actising foreign law in Si ngapore were required to 
apply for certificate registration with the Attorney General.  These certificates were issued almost 
automatically.  Among other conditions that created the need for exemption was the requirement that 
foreign law firms wishing to enter into joint ventur es or formal law alliances with Singapore law firms 
had to apply to the Attorney General for approval. 
113. He emphasised that consideri ng its small domestic legal mark et, Singapore was not able to 
grant MFN-based recognition to law degrees from all WTO Members for admission to the Singapore Bar.  Nevertheless, Singapore had taken steps in achieving progressive liberalization since 5 May 
2000, when the legal services international rules under  part 9(a) of the Legal Profession Act had come 
into force.  With these rules, the government had implemented the recommendation of the Legal 
Services Review Committee to allow foreign lawyer s working in joint ventures between Singapore 
and foreign law firms to practice Singapore law, ex cept representation before judicial, arbitral and 
regulatory bodies.  Foreign lawyers in formal la w alliances with Singapore law firms would also be 
allowed to draft legal documents regulated by Singa pore law.  On 14 September 2004, in the context 
of the further opening up of the legal services market to foreign lawyers, the Singapore Parliament amended Section 35 of the Legal Profession Act.  With this amendment all foreign lawyers were 
allowed to appear in internationa l arbitrations held in Singapore. S/C/M/76 
Page 22  
 
114. The representative of Turkey
 replied to questions posed by Hong Kong, China and Korea on 
their two exemptions on professional services and on accounting, auditing and bookkeeping services.  
She remarked that the two exemptions reflected th e principle of reciprocity which existed in their 
legislation. 
115. She stressed that with the exemptions they we re not trying to avoid the applicability of their 
specific commitments.  Besides, she noted that in  their specific commitments on accounting, auditing 
and bookkeeping services it was pointed out that fo reign financial advisors were subject to 
authorization.  Finally, regarding the specific question no. 51 by Hong Kong, China, she replied that both exemptions aimed at providing favourable conditi ons for Turkish citizens in other countries.  If 
foreign service suppliers had been allowed to supply financial advi sory services in Turkey without 
reciprocity conditions, it would have been possibl e that their countries would not allow Turkish 
financial advisors to do the same in their territo ries, thus distorting competition against Turkish 
financial advisors in the interna tional environment.  The exemption, therefore, aimed at creating a 
non-discriminatory competition environment for bot h Turkish foreign and financial advisors. 
116. The representative of the European Communities
 replied to questions relating to Lithuania’s 
MFN exemption in legal services, covering agreements enabling attorneys from foreign countries to 
participate in Lithuania as advocates in court.  The legal basis for this exemption was the law on 
Advocacy No. 8811 which was adopted in 1998 and amended in 2004.  It provided that advocates 
from foreign countries were allowed to practice in Lithuania in accordance with bilateral agreements 
on mutual legal assistance. Such agreements on mutu al legal assistance had been signed by Lithuania 
and had entered into force with th e following countries:  Azerbaijan,  Belarus, Estonia, Kazakhstan, 
China, Latvia, Poland, Moldova, the Russ ian Federation, Ukraine and Uzbekistan. 
117. He recalled that the European Communities had also received questions regarding Poland’s 
MFN exemption on fishing-related services covering bilateral agreements signed by Poland, including 
agreements currently in force with Norway, Swed en, Russia, Canada, Mauritania and North Korea.  
Finally he referred to an exem ption on publishing services regard ing reciprocity conditions and 
participation in the capital of publishing companies in Italy.  The reciprocity test allowed foreign 
citizens in Italy to acquire participation in p ublishing companies exceeding 49% of the capital and 
voting rights on the same terms that were extended to Italian citizens in the foreign citizens' countries 
of origin. 
118. The representative of Hong Kong, China  thanked those delegati ons which had provided 
responses to their questions on professional and othe r business services.  He took the opportunity to 
return to the issue of reciprocity, based on the explanations given by de legations of their MFN 
exemptions in professional and other business services.  Costa Rica, Thailand and possibly other delegations had touched upon the issue of reciproc ity and the relationship with specific commitments. 
119. In this respect he wondered to what extent the condition of reciprocity was something which 
was compatible with the GATS framework, even when  listed as an MFN exemption.  This reflection 
was prompted by the question of how did reciprocity  conditions sit with, or relate to, the specific 
commitments that Members had undertaken.  He had a lluded in earlier statements to the situation in 
which a Member would grant less favourable treatment by way of an MFN exemption than what it had committed in its schedule.  The responses received raised further issues.  He wondered in the case 
of Members which had not at that time undertaken specific commitments in the particular sector to 
which the MFN exemption applied, to what extent  the maintenance of an MFN exemption on the 
basis of reciprocity, would preclude the negotiation of  specific commitments in that particular sector.  
Some delegations mentioned that their MFN exem ptions constituted no problem as they had not 
undertaken any specific commitments in  the services in the sectors involved.  However, if that was the 
case, he wondered whether, in view of the exis ting MFN exemptions, there was any scope for the 
Member concerned to be able to engage in ne gotiations for specific commitments in the sectors 
involved.  S/C/M/76 
 Page 23 
 
 
120. He recalled that negotiations were taking place in the context of Article XIX of the GATS 
which envisaged progressive liberalization based on  negotiating guidelines that provided that there 
should have been no a priori  exclusion of any sectors or modes of supply.  He expressed concern on 
this issue and hoped to be enlightened by delegations on how the MFN exemptions based on 
reciprocity affected negotiations.  He added that  considering that reciprocity conditions were 
fundamentally incompatible with the multilateral negotiation of commitments , reciprocity-based MFN 
exemptions could become an impediment to th e negotiation of the specific commitments.  He 
concluded by saying that his delegation would welcom e the opportunity to come back to this question 
at a later date with those Members which could not respond at that juncture. 
121. Before the end of the discussion on Business Services, the Secretariat  intervened to clarify a 
point raised by the delegation of the Dominican Republic concerning the request for a correction to 
the two compilations of MFN exemptions (by countr y and by sector) circulated to Members by the 
Secretariat for the purposes of this Review.  The re presentative of the Secretariat noted that the point 
raised related to the inconsistency between the entr y in the sector column of the list of the Dominican 
Republic, legal services, and the following column (description of the measure) where reference was 
made to architects and engineers.  He said that th e entry appeared in the sa me way in the treaty copy 
of the list of MFN exemptions of the Dominican Repub lic and that, therefore, it had to be transcribed 
in identical form in the compilations.  He recalle d that in June 2002 the Services Council had adopted 
a set of procedures for the certification of rectifica tions or other changes to MFN exemption lists.  In 
order to make a correction, those procedures needed to be invoked as a rectification in the treaty copy 
of the MFN Exemption List would be necessary.  The Secretariat was aware of the inconsistency but 
was not in a position to do the correction in the absence of the proper procedure. 
D. COMMUNICATION  SERVICES 
122. The Chairman  turned to the exemptions listed in the sector of communication services, which 
were grouped under three sub-sectors: postal ser vices, telecommunication services and audiovisual 
services.  He noted that this was a large group of  MFN exemptions with 120 measures inconsistent 
with MFN listed. 
123. The representative of Pakistan  recalled that they had received questions from Japan, Hong 
Kong, China and Korea on their MFN exemptions on telecommunication services.  Japan had asked 
them to specify the measures concerning telecommunica tion services that were subject to exemption.  
He replied that Pakistan had signed bilatera l agreements with ECO (Economic Cooperation 
Organization) Member countries (Afghanistan, Az erbaijan, Iran, Kazakhstan, Kyrgyz Republic, 
Tajikistan, Turkey, Turkmenistan and Uzbekistan ) and with Bangladesh.  The measures for which 
exemption was required included application of diff erent accounting rates for different operators in 
countries covered by the agreement. 
124. Hong Kong, China, had also asked to confirm whether the exemption had expired or would 
terminate on reaching a duration of 10 years.  On this point the representative of Pakistan answered 
that the exemptions were for an indefinite peri od and would not expire at the end of the 10 years 
period.  Another question specifically asked if the exemption had been used for any actual measures.  
The answer was yes, the exemptions had been used  for actual measures.  A third question asked to 
explain whether conditions which created the need fo r the exemptions still prevailed.  Also in this 
case the answer was yes, the conditions still preva iled since the process of deregulation in their 
telecommunication sector had not yet been completed.  On the last question, asking whether any 
action had been taken or contemplated to elimin ate the conditions that cr eated the need for the 
exemption, he replied that Pakistan’s process of de regulation was being undertaken in various steps: 
the deregulation of Pakistan's Telecommunicati on Company Limited was necessary in order to 
eliminate the conditions that creat ed the need for the exemptions. 
125. Korea asked Pakistan what justif ication there was to continue with the exemptions in light of S/C/M/76 
Page 24  
 
the recent Mexico-United States telecommunications case that had been decided by a Panel earlier in the year.  The representative of Pakistan replied th at the case had been forwar ded to the Ministry for 
Information Technology and Telecommunications whic h was still studying it.  However, their initial 
response was that after studying the panel decision and considering its possi ble implications, it was 
evident that accounting rates were covered by GATS.  Therefore, it was imperative that they retained 
their MFN exemptions in this sector, as this was re quired for the transition period from a regulated to 
a deregulated telecommunications market. 
126. The representative of Israel
 recalled that they had received questions from a group of seven 
Members contained in document JOB(04)/131 rega rding Israel's MFN exemption for audiovisual 
services .  On the question of duration, he replie d that the exemption would not terminate after a 
period of 10 years and that at that time there was no intention of terminating the exemption.  On the 
actual use of the exemption, she said that the exempt ion had been used for the co-production of works 
under co-production agreements to which Israel was a party.  Israel had signed eight co-production 
agreements, notably with Australia, Belgium, Cana da, France, Germany, Italy, Poland and Sweden. 
127. She pointed out that the conditions which cr eated the need for the MFN exemption still 
prevailed.  The MFN exemption was aimed at prom oting Israeli works as well as greater diversity 
among foreign audiovisual work in the Israeli market.  The Israeli government placed great 
importance on cultural policy matters as a means of  strengthening and promo ting national and cultural 
identity and this remained a key policy objective.  On  the relationship with specific commitments, she 
stressed that the exemption was not intended to c over measures that granted less-favourable treatment 
than that accorded under the respective market a ccess and national treatment commitments.  She 
added that some other aspects of the questions that  had been put to them by Hong Kong, China were 
still being examined in capital and the answ ers would be provided at a later stage. 
128. Regarding a question by Chinese Taipei on the de termination of the national origin of the 
works, she replied that the measu res were applied based on the national origin of audiovisual work, 
which was determined based on the origin of the funding party, the production crew and the place of 
production. 
129. The representative of Turkey  thanked Hong Kong, China, Korea and Japan for their questions 
on postal and telecommunication services.  As she had indicated previously, they had deleted two MFN exemptions on telecommunications services  and one on postal services in their initial 
conditional offer, submitted on 3 September 2003.  She remarked that this deletion would take effect 
depending on the results of the Doha Round of negotiations. 
130. The representative of Argentina
 replied to the questions received on their exemption in this 
sector noting that this was without prejudice to the scope of this MFN review process.  He recalled 
that Argentina had an exemption listed under tel ecommunication services for the provision of satellite 
facilities of geostationary satellites operating fixed sat ellite services to be authorised under conditions 
of reciprocity.  He pointed out that the objective of this exemption was the development of domestic 
satellite systems. 
131. He then addressed a series of questions that had been put to them by Hong Kong China.  On 
the question of duration and possible forthcoming te rmination of the exemption, he replied that 
Argentina would maintain the exemption for an indefi nite period because the same factors that created 
the need for the exemption did not permit its termina tion.  He stressed that they had a policy in the 
communication sector aimed at favouring investment, research and development in satellites.  On the 
question concerning the actual use of the exemption si nce its introduction and information, he replied 
that the exemption allowed a foreign satellite provider to provide satellite facilities in Argentina, if the 
country of origin of that provider granted recipro cal treatment to Argentinean providers.  Argentina 
had agreements of this type with the United St ates, the Netherlands, Canada, Spain, Brazil and 
Mexico.  These agreements permitted the gradual open ing of the Argentinean market.  He added that  S/C/M/76 
 Page 25 
 
 
Argentina had taken concrete acti on for the development of Argentinean satellites which included not 
only the occupation of orbital positions, notified by Argentina to the International Telecommunication 
Union (ITU), but also the local manufacturing of sat ellite systems.  For these reasons the conditions 
that had created the need for the exemption still prevailed. 
132. On the question of reciprocity he replied that the exemption was not based on a domestic 
framework, but covered the bilateral agreements he  had mentioned earlier.  He stressed that these 
measures were consistent with the GATS multilateral trading framewo rk, based on the provisions of 
the Annex on Article II Exemptions, which was an inte gral part of the GATS.  He also noted that the 
measures were fully consistent with Article XIX: 2 of the GATS, which referred to due respect for 
national policy objectives and the level of developmen t of individual Members.  He indicated that 
Argentina had not undertaken any commitments on th e provision of satellite facilities of geostationary 
satellites operating fixed satellite services.  Regard ing a question from Korea referring to the exact 
classification of the provision of satellite facilities of geostationary satellites operating fixed satellite 
services, he pointed out that his delegation did not believe that such a question was relevant to the 
review process underway, but was available if necessar y to clarify the issue of classification in the 
Committee on Specific Commitments. 
133. The representative of Canada  answered two questions from Chinese Taipei  on their MFN 
exemptions for co-production arrangements in the audiovisual sector.  The first question asked whether the measures under the exemption were app lied by national origin of the audiovisual works 
and, if so, how was the national origin applied.  She replied that a co-production work which was 
done under an official co-production agreement betw een Canada and another country and certified as 
such by the competent authority of both countries, was granted the status of national production in 
both countries and therefore entitled to the benef its incurred by this status.  The co-production 
agreements enabled Canadian producers and their fore ign counterparts to pool their creative, artistic, 
technical and financial resources to co-produce f ilms and television programmes that enjoyed the 
status of national production in each of the countries  concerned.  Information on how to obtain this 
status was available at the following website:  www.telefilm.gc.ca. 
134. The second question asked whether the conditi ons which created the need for the MFN 
exemption still prevailed and specifically whether any measures not based on discrimination among countries had been contemplated for pursuing the same policy objectives.  She replied that the 
conditions that gave rise to the MFN exemptions still prevailed.  The declining licence fees paid by 
broadcasters and an increasing production budget con tinued to make it difficult to fund audiovisual 
productions domestically as well as for Canada's co-production partners to  raise their financial 
participation within their domestic market.  In Fren ch language television, wh ich was more limited in 
size, producers relied more on co-productions in orde r to develop and market productions in French.  
Co-productions were a key component of Canadian film and television produc tion.  They were the 
favoured method of penetrating new markets and facilitating product financing.  The independent 
audiovisual sector in Canada used co-productio n as a tool to finance high quality products for 
distribution in the global market place.  In add ition to responding to industry interests the signing of 
these agreements supported the development of ex panding cultural relations between Canada and 
other signatories and strengthened signatory countries' domestic audiovisual industries.  At that time 
Canadian producers could co-produce works with count erparts in 53 countries.  During the last five 
years 587 projects had been co-produced between Ca nada and foreign partne rs, generating production 
activity worth some 4.4 billion dollars. 
135. Canada had exercised its right to file an MF N exemption to ensure that GATS obligations 
would not adversely affect co-production agreem ents.  Regarding the Quebec – Motion Picture 
Association of America (MPAA) film distribution agreement, the conditions that gave rise to this MFN exemption still existed as developing a strong film distribution industry was a vital component 
of the Quebec cinema industry.   The Quebec – MPAA agreemen t ensured that Quebec film 
distributors had the best access to films from around the world. S/C/M/76 
Page 26  
 
136. The representative of Singapore
 answered questions pertaining to their MFN exemption on 
broadcasting services that were posed by Hong Kong, China and Chinese Taipei.  He stated that the 
MFN exemption on broadcasting services had not ye t expired, although Singapore would keep under 
review the possibility of removing this exemp tions.  Singapore had taken an MFN exemption on 
broadcasting services because of the importance it placed on promoting social stability and cultural 
relations.  These conditions continued to be valid at the time of the Review.  Singapore accorded 
preferential broadcasting and transmission rights to  selected countries with which they had signed 
bilateral agreements.  Such bila teral agreements depended on the needs of the nations concerned.  
Currently, Brunei Darussalam and Indonesia had signe d memoranda of understa nding with Singapore. 
137. The representative of the European Communities  replied first to the questions received on the 
exemptions covering programmes in Nordic Countries .  He noted that these exemptions pertained to 
cooperation arrangements between Nordic countries.  The aim was to provide coverage for the criteria 
used for granting benefits from the Nordic film a nd TV funds for the production and distribution of 
audiovisual work produced in the Nordic countri es.  The parties to the agreement establishing the 
Nordic film and TV funds were the Nordic C ouncil of Ministers, the Pin Foundation and Film 
Institutes of the Nordic countries and the public servi ces broadcasters of Nordic Countries.  The main 
reason behind these exemptions was the need to maintain and develop cultural cooperation between 
Nordic countries.  There was a continued need fo r such cooperation in the audiovisual sector to 
preserve and promote the regional identity and th e cultural diversity of these countries.  The 
conditions which created the need fo r these exemptions still prevailed. 
138. Questions were also addressed to the Eu ropean Communities on two defensive MFN 
exemptions in the field of audiovisual services.  The first one provided for the facility to adopt 
redressive duties countering unfair pricing practic es in audiovisual services trade.  The second 
exemption allowed discriminatory actions by the Eu ropean Communities in the audiovisual sector to 
counter possible unilateral actions from other WTO Members, i.e., to counteract by adopting 
measures to prevent, correct or counter-balance adve rse and unreasonable actions by other Members.  
These exemptions aimed to discourage unfair or unreasonable practices and act ions.  The conditions 
which created the need for these exemptions still pr evailed.  Finally, questions were asked on their 
MFN exemptions on co-production agreements.  He st ressed that these agreements were a major tool 
to foster the development of local audiovisual productions and to promote cultural diversity by favouring exchanges and cooperation between cultures.  The conditions  which created the need for 
these exemptions, namely the desire to promote cu ltural links between the countries concerned, still 
prevailed.  In reply to a specific question on the app lication of origin criteria, he made reference to 
Article 6 of EC Directive 89/552/EEC. 
139. The representative of Antigua and Barbuda
 answered questions on its MFN exemption on  
mobile telecommunication services.  He noted that Antigua and Barbuda was part of the thirteen 
Member integration process in the Caribbean Co mmunity (CARICOM).  This regional agreement 
continued to be important for their development as they established closer ties through the Caribbean 
Single Market and Economy.  He said that Antigua  and Barbuda maintained this MFN exemption for 
the purpose of facilitating the development of the sect or at the regional level and to promote regional 
integration and solidarity.  He pointed out that hi s delegation considered the possibility of having such 
an exemption to be a useful tool for their developmen t.  He added that they expected to review their 
MFN exemption in the context of the request and of fer process in the negotiations.  He concluded by 
saying that the questions posed by Japan would f acilitate their review process and help them to 
determine the extent to which thy might want to maintain the MFN exemption. 
140. The representative of Australia  replied to the questions received on their two MFN 
exemptions in the audiovisual sector.  She advised th at the conditions which created the need for both 
exemptions still prevailed and they continued to  be given a high priority in the preservation 
Australia's cultural policy objectives.  On the co-p roduction MFN exemption, she said that this was 
used for preferential treatment under bilateral fi lm and television co-production arrangements which  S/C/M/76 
 Page 27 
 
 
Australia had with Canada, France, Germany, Irela nd, Israel, Italy, New Zealand and the United 
Kingdom.  On the question of reciprocity, she noted  that under these co-production arrangements, co-
production status conferred national treatment for works covered by these arrangements, including, 
for instance with respect to access to finance and tax concessions and simplified requirements for the 
temporary entry of skilled personnel into Aust ralia for the purpose of the co-production. 
141. The representative of Switzerland  replied to a question by Hong Kong, China on their 
audiovisual MFN exemptions, stating that the reasons  for such exemptions were still valid and lay in 
the promotion of cultural objectives as well as in  the limited size of the various markets for 
audiovisual services in Switzerland.  He remarked that in Switzerland there was not just one market 
but, due to variety of languages, there were sever al markets and therefore it was necessary to provide 
some protection to cultural diversity.  He affirm ed that the duration of the MFN exemptions was 
indefinite and they were not aware of any reasons or developments which could justify the removal of 
such MFN exemptions.  Nonetheless, as in the case of other MFN exemptions he said that they 
continue to keep the exemptions in this field under review. 
142. The representative of the United States  asked a few questions orally to the European 
Communities on their MFN exemptions in the audi ovisual sector.  First, regarding the MFN 
exemption allowing for the imposition of redressive duties to respond to unfair pricing practices of 
third countries, she wondered how would this provis ion be implemented, specifically how would they 
make a determination of unfair pricing practice of a motion picture or television programme and how 
would they take into account the pricing di fferences between the first-run and second-run 
programming.  She noted that this MFN exemption appeared to suggest that countries needed MFN 
exemptions to act against dumping or other types of anti-competitive predatory pricing in the 
audiovisual sector.  In her delegation's view, on the other hand, no GATS ru le prohibited competition 
authorities from intervening in cases of unfair pricing practices in the audiovisual sector or in any 
other sector.  Therefore, she wondered why had an  MFN exemption been filed for the audiovisual 
sector and what criteria the relevant national au thorities would apply in predatory pricing cases. 
143. Second she referred to the MFN exemption for m easures to prevent, correct or counterbalance 
adverse, unfair or unreasonable conditions or ac tions taken by other Members that affect EC 
audiovisual services products or service providers.  She wondered whether this exemption – and also 
the previous on unfair pricing practices – was in tended to be trade-expa nding or rather trade-
restrictive.  She also wondered whether either  of these two MFN exemptions had ever been 
implemented or ever been considered for implemen tation.  She further noted that in the European 
Union enlargement process the European Communiti es had attempted to extend these exemptions to 
the new Member States. 
144. The representative of the European Communities  replied that he thought  he had replied earlier 
in the affirmative to the question concerning wh ether the conditions for these exemptions still 
prevailed.  He then quoted from his notes the in troductory statement made by the delegation of the 
United States that "Members are not to provide explanations or to assess the necessity of MFN 
exemptions in the framework of this MFN review".  He said that the United States had stated that they 
regarded the GATS as an important element of ec onomic and trade policy but had expressed concerns 
as to Members having posed questions that had imp licitly or explicitly asserted that MFN exemptions 
must disappear and that all international exch anges must be conducted on the basis of GATS 
disciplines.  He also stated that the United States had quoted paragraph 6 of the Annex on MFN 
exemptions which provided that MFN exemptions sh all be subject to negotiations in future trade 
liberalizing rounds.  Concluding, he agreed on thos e introductory remarks by the United States and 
thought that the questions that had been addressed  to them by the United States would have been 
better addressed in the framework of the DDA negotia tions and their bilateral meetings in this 
context. S/C/M/76 
Page 28  
 
145. The representative of the United States
 stood by her introductory statements although she 
reserved her rights as to the correctness of the quotat ions made by the representative of the European 
Communities.  She said she was surprised that th e European Communities would consider that the 
questions they had asked were outside the scope of  the Review.  She emphasised that her delegation 
disagreed with the position assumed by the European  Communities that that every single question 
they had asked was outside the scope of this Review. 
146. The representative of Hong Kong, China  stated that his delegation did not agree with the 
United States on the scope of the Review.  He pointed  out that the questions that had been asked by 
the delegation of the United States to the Europ ean Communities were exactly the same that Hong 
Kong, China had posed in Q71 of their submission.  He believed that those questions fell clearly 
within the scope of this Review and looked forwar d to substantive answers from the delegation of the 
European Communities. 
147. Regarding the earlier reply of the European Communities on the conditions that created the 
need for two of their MFN exemptions (on dist ribution of audiovisual works and on measures to 
prevent, correct or counterbalance adverse, unfai r or unreasonable conditions) he recalled that the 
European Communities had mentioned that the conditi ons still prevailed but noted that his delegation 
would be interested in more specific details on the ex act nature of the conditions that created the need 
for the exemptions, why they still prevailed and if  any action had been taken to eliminate those 
conditions.  He explained that the reasons for th eir question was that the wording in these MFN 
exemptions clearly indicated a defensive purpose.  His delegation wanted to know if measures had 
been taken under these MFN exemptions.  He further noted that going through the list of all Members' 
MFN exemptions, he had not been able to iden tify any similar MFN exemption, except one by 
another Member which also had inscribed sim ilar MFN exemptions for the purpose of taking 
retaliatory or defensive measures in this sector.  His delegation wondered, ther efore, to what extent 
the conditions of international trade in this partic ular sector still warranted the maintenance of these 
exemptions, or in which WTO Members did th e European Communities consider that those 
conditions would exist.  If the answer was that there was a minimal risk that such practices or 
conditions would be created, as there was no corres ponding MFN exemptions by the trading partners, 
his delegation would question the need for maintaining those MFN exemptions. 
148. Regarding the co-production agreements MFN exemptions, he noted that his delegation 
appreciated the value of such co-production ag reements in facilitating cultural exchange and 
cooperation.  He also noted that Hong Kong, Chin a had co-production agreements with other WTO 
Members.  He questioned, however, to what extent  co-production agreements  were an essential and 
effective measure in pursuit of cultural policy objectiv es and cultural diversity.  He stressed that what 
was really needed was a substantive discussi on among Members about what exactly were the 
measures Member governments wanted to undertake in pursuit of the cultural policy objectives and 
whether and how such measures could be accommoda ted under the existing WTO – in particular, the 
GATS - framework. 
149. Regarding the telecommunications sector, he touched upon two r esponses received by 
delegations.  On the issue of accounting rates, he noted that this concerned every Member as they 
were all subject to accounting rates arrangements.  In the view of his delegation, accounting rates did 
not need to be inscribed in the list of MFN exem ptions and, following the responses of Pakistan and 
Turkey, he wanted to know from these Members to what extent measures under the respective 
accounting rates arrangements would not be covere d by the Understanding on Accounting Rates and 
needed an exemption.  He appreciated the res ponse by Argentina on the MFN exemptions regarding 
geostationary satellites, but welcomed further inform ation as to what exactly were the measures that 
were covered by this MFN exemption.  He took not e that the MFN exemption did refer to conditions 
of reciprocity and noted that there were geogra phical constraints on the facilities that individual 
economies and governments could make availabl e for geostationary satellites providers.  He 
wondered how the conditions of reciprocity of the MFN exemption would apply in this case,  S/C/M/76 
 Page 29 
 
 
especially for those economies which had geographi cal constraints in providing conditions of 
reciprocity. 
150. The Chairman  asked if any delegations had any comments to make on the MFN exemptions 
in the construction and related engineering servi ces and in the distribution services sectors.  No 
delegation intervened under these items.  He remarked that the Council had had substantive 
discussions and that the first session of the Review ha d been completed relatively well.  He noted that 
while a majority of countries had prepared answers to the questions received, some others had not.  
He emphasised that in order to have an effectiv e review, questions and answers should be prepared 
adequately for the second meeting.  He also stated th at delegations had the possibility to come back at 
the next session with some follow-up questions on the sectors discussed in this first session.  
151. He informed participants that  the second session of the review of MFN exemption would take 
place during the next cluster of services meetings scheduled between 7 and 25 February 2005.  The 
exact date of the MFN review session would be co mmunicated to delegations in due course.  He 
recalled that the next session would be devoted to th e sectors which had not yet been reviewed, that is 
to say: financial services;  health related and soci al services;  tourism and travel related services;  
recreational services and transport services.  In add ition, in accordance with paragraph 4(b) of the 
Annex on Article II Exemptions, the Council would need  to determine the date of any future review. 
152. The representative of Japan  thanked delegations that prepared answers to their questions and 
asked the Secretariat to prepare the report of this meeting in advance of the next meeting, so as to 
facilitate delegations' work on the questions and answers exercise. 
153. The representative of Korea  thanked delegations for their res ponses and said that they would 
wait for the next meeting to receive the answers to their outstanding questions. 
154. The representative of Hong Kong, China  also thanked delegations for their responses to their 
questions and stated that at the next session they would have liked to receive answers from those Members that had not provided them yet.  He sai d that his delegation also would appreciate if 
delegations could make their answers available in adva nce of the next meeting.  Finally, he suggested 
that at the beginning of the next session some time be made available to address the outstanding 
questions and answers arising from this first session. 
155. The Chairman
 suggested that the Council take note of the statements made by delegations at 
this meeting and revert to the Review of Article II Exemptions at a next meeting. 
156. The Council took note . 
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