RESTRICTED
WORLD TRADE WT/REG3/2/Add.3
7July1997
ORGANIZATION(97-2824)
Original: English Committee onRegional Trade Agreements
Twelfth Session
ENLARGEMENT OFTHE EUROPEAN COMMUNITIES
ACCESSION OFAUSTRIA, FINLAND AND SWEDEN
Questions andReplies
Addendum
Thisdocument contains answers tothequestions received withrespect totheEC'sconsolidated
listofMFN exemptions.
Theanswers follow theorder oftheconsolidated MFN list(seeWTO document JobNo.510),
replying tothequestions relating toAustria, Finland andSweden respectively foreachMFN exemption.
_______________
1. Thedraft schedule submitted bytheECeliminates existing commitments ofAustria,
Finland, orSweden inanumber ofsectors, including legal services, dataprocessing,
aircraft rental services, space transport, andphotography. Forallsectors andsub-sectors
soaffected, please explain whether andhowthese changes meetthestandard ofArticle V:4,
which states thataneconomic integration agreement “shallnotinrespect ofanyMember
outside theagreement raise theoverall level ofbarriers totrade inservices within the
respective sectors orsub-sectors compared tothelevel applicable prior tosuch an
agreement. ”
[Answer tobesubmitted.]
2. Based oninformation submitted bytheEC,weunderstand thattheECintends toapply
ninenewMFN exemptions toAustria, ninenewMFN exemptions toFinland, andeight
newMFN exemptions toSweden. Please explain howapplication ofthese newMFN
exemptions areconsistent withtheEC’sWTO obligations. Werequest theEC’sviews
inparticular onwhether these proposed newpreferences areconsistent withthestandard
inArticle V:4,noted above.
(a) Audiovisual Services -Distribution ofaudiovisual works: Redressive duties which
maybeimposed inorder torespond tounfair pricing practices, bycertain third
countries distributors ofaudiovisual works.
Thefactthatmeasures covered bythisexemption might alsobeapplied inthecaseofAustria,
Finland andSweden isaresult oftheeconomic integration process withtookplacebetween theEuropean
Community of12Member States and3WTO Members. Itisthesame MFN exemption ascontained
intheEC(12) listbutitisnowpossibly applicable byalarger geographic area. That, asaresult ofWT/REG3/2/Add.3
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anEconomic Integration, thegeographic scope ofameasure maychange isnotcontested. What the
Parties tosuchAgreement havetoensure, isthattheydonotraisebarriers vis-à-vis WTO Members
notparty tosuchEconomic Integration Agreement.
Itshould benoted herethatredressive duties, theobject oftheMFN exemption, arenotbarriers
assuch. Rather, thisMFN exemption isaformofacommercial policy defence measure. Accordingly,
itisstillthesamemeasure aswasthecasepriortotheenlargement, butpossibly applicable byabigger
geographic area.Itisaccepted thatexisting trade defence measures areextended totheparties joining
anEconomic Integration Agreement, aslongasbarriers arenotraised.
Inaddition, itshould benoted, thatthemeasures forwhich anexemption hasbeentaken, could
onlybeapplied following ameasure taken byathirdcountry.
(b) Audiovisual Services: Measures taken toprevent, correct orcounterbalance
adverse, unfair orunreasonable conditions oractions affecting ECaudiovisual
services, products orservice providers, inresponse tocorresponding orcomparable
actions taken byother Members.
Thesame reasoning applies asfortheabove MFN-exemption. Itconcerns thesame andone
single measure: notatrade barrier butaform ofcommercial policy defence instrument which may
bebrought intoeffect upon action ofathirdcountry only. There istherefore noraising ofbarriers
involved. Again, nomeasures covered bythisexemption areinforce.
(c) Audiovisual Services -Production anddistribution ofcinematographic works and
televisionprogrammes:Measuresbasedupongovernment-to-governmentframework
agreements, andplurilateral agreements, onco-production ofaudiovisual works,
whichconferNationalTreatmenttoaudiovisualworkscoveredbytheseagreements,
inparticular inrelation todistribution andaccess tofunding.
ThisMFNexemptionistakenformeasuresbasedupongovernmenttogovernmentorplurilateral
agreements between aMember State andthecountries mentioned incolumn three (country towhich
themeasure applies).
InthecaseofAustria, anMFN exemption forsuchanagreement hadbeentaken (seepage2
ofdoc.GATS/EL/7 of15/4/1994) inrespect of"thecountries which areMembers oftheCouncil of
Europe, andsignatories oftheConvention oftheCouncil ofEurope andforallcountries withwhom
acultural cooperation maybedesirable".
Although notdrafted inthesame way,thecountries intended byAustria docorrespond tothe
countries which were already listed inthelistofEC(12). Accordingly, thesubstance ofbothMFN
exemptions isthesamei.e.foragreements withwhom cultural cooperation exists ormaybedesirable.
There istherefore nochange intheAustrian MFN exemption.
Itiscorrect tostatethatFinland andSweden hadnottaken anMFN exemption forsuch
measures. Itshould benoted, however, thatatthetimetheEC(12) tooktheMFN exemption, notall
Member States weredirectly concerned bythatMFN exemption butthishadnotbeenspecified. Indeed,
notallMember States havesuchgovernment togovernment agreements withall,orinsome cases,
withanyofthecountries listed inthethirdcolumn. Inlinewiththispractice, ithasnotbeenconsidered
necessaryneitherappropriatetoidentifytheaccedingMemberStatesindividuallyinthisMFNexemption.
(d) Road Transport -passenger andfreight: Provisions inexisting orfuture agreements
oninternational road haulage (including combined transport -road/rail) andWT/REG3/2/Add.3
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passenger transport, concluded between theECortheirMember States andthird
countries, which:
- reserve orlimittheprovision ofatransport service between thecontracting
parties oracross theterritory ofthecontracting parties tovehicles
registered ineachcontracting party;
- provide fortaxexemption forsuchvehicles.
InitsMFN list,Austria hadtaken anMFN exemption forpreferential treatment onroad
transport, passenger andfreight. (See1stMFN exemption ofAustria listinDoc. GATS/EL/7 of
15/4/1994.)ThewordingisdifferentintheconsolidateddocumentbutthecontentoftheMFNexemption
isexactly thesame: access onareciprocity basistoundertake transport byroad(goods andpassengers).
Accordingly, there isnosubstantive change resulting from theenlargement process.
(e) InternalWaterwaysTransport:Measuresbaseduponexistingorfutureagreements
onaccess toinland waterways (including agreements following the
Rhine-Main-Danube link), which reserve traffic rights foroperators based inthe
countries concerned andmeeting nationality criteria regarding ownership.
AsfarasAustriaisconcerned,asimilarMFNexemptionwastaken:seesecondMFNexemption
inAustria 'slistindocument GATS/EL/7 of15/4/1994). Accordingly, thesituation remains unchanged
compared toprior totheenlargement. AsfarasFinland andSweden areconcerned, thesituation is
alsounchanged.
First, withrespect totheMFN exemption forexisting agreements, thisrelates toaseries of
existing bilateral agreements between Member States andthirdcountries. Forgeographic reasons, it
isobvious thatnotallMember States aredirectly involved. Asalready explained above, atthetime
ofhaving taken theMFN exemption for12Member States, theMember States directly concerned have
notbeenlisted individually. Inlinewiththispractice, ithasnotbeenconsidered appropriate neither
necessary toidentify theacceding Member States individually inthisMFN exemption.
With respect totheMFN exemption forfuture agreements, theEuropean Communities and
theirMember States might needtoconclude agreements foraccess towaterways. ThisiswhyanMFN
exemption wastaken bytheEC(12). Theregime negotiated forthe12Member States will,asaresult
ofenlargement, apply automatically bythislarger geographic area.Itisstillthesamemeasure, however.
Inaddition, itshould benoted thatthisMFN exemption hadbeentaken mainly foragreements
withcountries withwhom theEChasconcluded anAssociation Agreement. These agreements have
since theentry intoforce oftheGATS beennotified totheCouncil onTrade inServices andwillbe
subject toexamination under Article VoftheGATS. Thisiscertainly thecaseforthecountries with
whom theECintends tonegotiate, inthefirstplace, suchagreements i.e.withPoland, Czech and
Slovak Republics. Accordingly, thepreferential access which willresult from these agreements will
andcanbejustified onthebasis ofArticle V.YettheECisoftheview that,asaresult ofits
enlargement, itwould beentitled tohaveitscommunity measures applied byalarger geographical
area. Since thisisnotrelevant atthisstage itistobeexpected thatthissituation willnotcreate any
controversy.WT/REG3/2/Add.3
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(f) Internal Waterways Transport: Regulations implementing theMannheim
Convention onRhine Shipping.
Thisisanother MFN exemption which isrelevant forsome Member States onlyi.e.those who
areaParty totheMannheim Convention onRhine shipping. However, byvirtue ofaProtocol tothe
Convention, vessels ofallMember States benefit fromtheprovisions oftheConvention. Thisiswhy
ithasbeenleftopenfortheother Member States, including nowtheacceding countries. NoMember
Stateother thantheoriginal contracting parties havesigned uptotheProtocol. Therefore, nochanges
haveoccurred compared tothesituation prior toenlargement.
(g) Direct Non-Life Insurance: Measures based onabilateral agreement between the
European Communities andSwitzerland ondirect insurance other than life
insurance. This agreement provides onareciprocal basis forfreedom of
establishment andtheright totakeuporpursue non-life insurance business for
agencies andbranches ofundertakings whose headoffice issituated intheterritory
oftheother contracting party.
Thefactthatthese measures apply nowalsointhecaseofmarket access between Switzerland
andAustria, Finland andSweden respectively, isamere result oftheeconomic integration process
asitstems from anagreement between theEuropean Community andSwitzerland. Itisthesame
measure/MFN exemption butnowapplicable byalarger geographic area.
ThisMFNexemptionisaboutmutualrecognitionoffinancialstandardsandprudentialmeasures,
which leadtoarightofestablishment andtaking-up non-life insurance business. Themarket access
limitations andnational treatment forthirdcountries suppliers areinthecaseofEC(12) andAustria,
Finland andSweden respectively "none" andthisremains unchanged afterenlargement. Accordingly,
notrade barrier hasbeenraised.
(h) AllSectors: Measures based onexisting orfuture bilateral agreements between
theEuropean Communities andcertain Member States andthecountries and
principalities concerned, providing for:
(i) theright ofestablishment forjuridical andnatural persons and;
(ii) waiving therequirements ofwork permits fornatural persons supplying
services.
(Question forAustria, Finland andSweden)
(i) AllSectors: Measures based onbilateral agreements between theEuropean
Communities and/or their Member States andSwitzerland withtheobjective of
providing forthemovement ofallcategories ofnatural persons supplying services.
(Question forFinland)
Itiscorrect tostatethatAustria, Finland andSweden didnothaveanMFN exemption for
suchmeasures intheirindividual MFN lists.
Itshould benoted thatatthetimetheMFN exemption wastaken bytheEC(12), notallMember
States weredirectly concerned. Inlinewiththispractice, ithasnotbeenconsidered necessary toidentify
theacceding Member States individually inthisMFN exemption. Intheabsence ofsuchagreements,
theMFN exemption could notbeinvoked bythenon-concerned Member State.WT/REG3/2/Add.3
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(j) AllSectors -principally construction andhotel andcatering: Measures based upon
bilateral agreements between Community Member States andEuropean and
Mediterraneancountriesguaranteeingworkpermits,forthepurposesoftemporary
contract work, onthebasis ofcontracts between anemployer ofthethird country
concernedandacompanyintheMemberStateconcerned,andwhichpermitlimited
numbers ofworkers from thecountries concerned tobeemployed incertain service
sectors; thenumbers aresubject tovariation according tocriteria established in
theagreement.
Thesame reasoning applies asforsome oftheabove MFN exemptions: notallMember States
were directly concerned butthishadnotbeenspecified. Accordingly, there isnoreason toidentify
theacceding Member States only.