WORLD TRADE  
ORGANIZATION  WT/REG39/3 
6 June 2006 
 
 (06-2682) 
Committee on Regional Trade Agreements Original:   English 
  
 
ESTABLISHMENT OF THE EUROPEAN UNION, SERVICES  
 
Questions and Replies
 
 
 
 The following communication, dated 1 June 2006, is being circulated at the request of the 
Delegation of the European Communities.   This document reproduces the questions addressed  to the Parties and the responses submitted. 
The questions and replies set out below are or ganized in accordance with document WT/REG39/1. 
 
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I. BACKGROUND INFORMATION ON THE AGREEMENT 
2. General Description of the Structure of the Agreement 
 
1. Please discuss how shared competency be tween the European Commission and the 
Member States on trade in services (particularl y with respect to commercial presence) affects 
the rules and regulations governing trade in servi ces both for trade within the Internal Market 
and with respect to third parties operating with in the Internal Market. In answering the above, 
please also identify who has comp etence in each service sector. 
 This question concerns only the internal dist ribution of competencies between the EC and its 
Members states and is no subject to CRTA review. 
 
3. Plan and schedule 
 
2. In WT/REG39/1, the European Communities and their Member states cite various 
documents that discuss the trade in services regim e for the EC (12). In order to allow for a 
thorough review of the information provided in WT/REG39/1, the US requests that the EC and 
Member States make available to all WTO members the various documents cited (such as EC Official Journal 402 of 1/15/82 , the 1985 White Paper on services, etc) as well as the relevant 
provisions of the treaties governing trade in services - since the provisions governing EC(12) are not found in one collective volume and/or agreemen t, as has been the case with every other 
agreement evaluated to date. 
 All those documents are available with WT O Secretariat and/or are accessible in the 
following website : http://europa.eu.int
 . 
 
3. Please identify all sectors that are excluded from Internal Market coverage in which 
Member States retain sole authority to regulate. Why have these sectors been excluded? WT/REG39/3 
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   Only non-economic activities are excluded from Internal Market coverage. The ECT being an 
economic integration agreement , there is no reas on to cover non-economic activities in the Treaty 
(see in particular Articles 45 and 55 ECT).  
4. Economic and Trade Data 
 
4. Please provide available information on the volume of trade affected by EC(12) . 
 Since the EC has now 25 members, please refer to document WT/REG39/2, page 4 for figures 
concerning EC12 prior to the enlargement to EC-15.  
 All trade among the 12 Member States is affected by EC(12). 
II. PROVISIONS AFFECTING TRADE IN SERVICES 
1. Sectors or sub-sectors and modes of delivery   
 
5. Article 60 (now Article 50) of the « ECT » defi nes Services as activities of an industrial 
and commercial character, activities of craftsme n and of the professionals AND the freedom to 
provide services in the filed of transports. Plea se discuss why transport services were separated 
out and what differences in treatment apply? Plea se also identify what separate « Title in the 
Treaty » mentioned in WT/REG39/1 covers transpor t services? What is the definition of service 
supplier and juridical person under this separate “t itle in the Treaty » for transport services? 
 Transport is covered by a separate Chapter in the EC Treaty (see Title V, Articles 70 to 80). 
The reason for a separate chapter are post war circumstances : strategic importance of transport  and 
traditionally governed by different rules than ge neral investment regime. The Common Transport 
policy is included, however, among the activities in  which the Community must engage, according to 
Article 3.1(f) of the EC Treaty, in establishing a common market and progressively approximate the 
economic policies of the Member States. In other wo rds, although transport is covered in a separate 
chapter, the rules of non-discrimination and national treatment apply with respect to the provision of 
transport services and establishment (irrespective of th e mode of transport). Besides a wide range of 
regulatory initiatives taken at community level, laws  and regulations are enforced by the European 
Court so as to ensure non-discriminatory applica tion. By now, the basic framework of the single 
transport market is in place. 
2. Elimination of Discriminatory Measures 
 
6. WT/REG39/1 indicates that Member States m ay apply national measures that directly 
or indirectly hinder or make less attractive the exercise of fundamental freedoms for provisions of services guaranteed by the EC Treaty. Please de fine what are considered to be «fundamental 
freedoms». Please provide case examples and di scuss the criteria established for determining 
whether each of the four conditions cited in  WT/REG39/1 are met for when Member States may 
apply measures that hinder the exercise of such fundamental freedoms. Provide an estimate of 
the volume of trade affected to date by such national measures. What plans do the parties have to eliminate these measures? 
 The so-called fundamental freedoms are free m ovement of goods, of persons, of services and 
of capital, as enshrined in the EEC Treaty.  
 
 For the purpose of those freedoms, discriminat ory measures are prohibited unless justified by 
any of the exceptions exhaustively listed in the ECT (similar to those of Article XIV of the GATS).  WT/REG39/3 
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   Those provisions may also prohibit the application of non-discriminatory regulatory measures 
that may hinder the freedoms unless these measures are necessary and proportionate to achieve legitimate objectives of public policy.  
7. What is the definition of commercial presen ce of juridical person for purposes of Article 
58 (now Article 48) comparison under the ne wly-passed European Company Law? How will 
this new law affect treatment of trade in services within the Internal Market and with respect to 
third parties providing services within EC (12) – now EC (15) ? 
 The Regulation on the Statute for a Europ ean Company Statute (ECS) was adopted on 8 
October 2001 (Regulation (EC) 200/2157 of 8.10.2003  in Official Journal L 294 , 10.11.2001 p.1–21). 
The regulation is a key element in the realisati on of the Single Market creating a completely new 
vehicle to business allowing any company with a Europ ean dimension to register in any Member State 
as a SE. An SE will be considered as a juridical person in the sense of Article 48 just as any other juridical person (subsidiary, limited liability company et c). It affects trade in services in the sense that 
it offers additional opportunities to our services pr oviders to establish and be nefit from the European 
single market. Indeed, the mere fact  of being registered in one Me mber States is recognised in all 
other Member States as an SE. In the Regulation setting the statutory conditions to establish under such commercial form, no distinction is made between establishment by a Community services 
supplier or one of third country origin.   
8. Under the Hydrocarbons Directive and Satellit e Directive which cover trade in services 
issues, there has been some question as to whet her third parties have the rights provided for 
under Article 58 (now Article 48). Please discuss what the extent of Article 58’s (now Article 48) application to third parties is, especially in lig ht of the directives noted above. Also please 
address the reason for the apparent difference in definition of juridical person or « company » 
under Article 58 (now Article 48) and the above Directive and the potential differences in 
treatment afforded services supplie rs because of this difference. 
 Please specify the question with exact referenc es. From the outset it can be stated, however, 
that in none of the directives cited, reference is made to Article 48 of the ECT and there is no reason 
to interpret that the general rules on the right of establishment do not apply.  
9. What restrictions remain on cross-border trad e within Europe? WT/REG39/1 indicates 
that the Single Market programme liberalises cr oss-border trade in « traditional services» -
listed as financial services, AV, and transport. What about all other services sectors covered by 
the GATS for which cross-border services commitments have been made ? 
 The general community rules and principles apply to all services sectors in all modes of 
supply including on cross-border trade or what is qualif ied in the EC treaty as supply of services. It is 
not because no specific implementation legislation exists, that the freedom to supply services on a 
cross-border basis within the Europ ean Community from the territory of one Member State to another, 
is not possible or guaranteed. In the standard format  with answers, reference has been made to the so-
called traditional services, by way of example. Specific legislation exist on many more services activities. Where no specific legislation exists, the right to supply services on a cross-border exists 
without discrimination. 
4. Treatment of Services and Serv ice Providers from Third Countries 
 
10. Please discuss what de jure  and de facto  differences in treatment arise from Member 
States having competence for the establishment and treatment of third country branches. In 
which sectors has there been harmonisation; in which sectors has there been no harmonisation? WT/REG39/3 
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   Please refer to point 4 of WT/REG39/1. 
 
11. WT/REG39/1 states that «No provisions in the Agreement raise the levels of restrictions 
on trade in services for any other WTO member». Please discuss how the requirement that future members harmonise their cur rent and future laws to that of the Community will affect 
each countries. GATS commitments and, there fore, the treatment of services and service 
providers from Third countries in each market. More specifically, in sectors where each country 
may be more liberal than the current EU reg ime, how will the likelihood of future more 
restrictive third country treatment in each market be addressed since it would appear that this 
harmonisation requirement could arise barriers to tread in services as Europe expands ? 
 This question is irrelevant in the context of the review of the EC and twelve Member States 
and is being reviewed, to the extent relevant, unde r the examination of the EC and 15 Member States. 
As to future accession negotiations, th is will be addressed when relevant. 
5. Rules of Origin for Community Companies 
 
12. Please discuss what criteria have been used to determine whether a firm has an « 
effective and continuous link » with the economy of a Member State for purposes of 
establishment rights. Please discuss the grounds pe rmitted under Court of Justice case law that 
have allowed limitations on secondary establis hment or provision of cross-border trade in 
services. 
 The requirement for « a real and continuous link » is designed solely to prevent the abuse of 
the European Economic Community through the crea tion of a so-called «letter-box» operation in one 
of the Member States of the EC, in order to circumvent controls imposed by the other on access by foreign nationals and companies to its market.   The phrase «a real and continuous link» is the equivalent of the language « substantive 
business operations» in GATS Article V, para 6. Under the EC definition of this phrase, initially used 
in the «General Programme» of 15 January 1962, it is expressly excluded that a real and continuous 
link should depend on the nationality of the part ners, of the members of the management of 
supervisory bodies, or of the persons holding the capital.  
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