RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG3/M/8
21 July 1998
(98-2888)
Committee on Regional Trade Agreements
Eighteenth Session
EXAMINATION OF THE ENLARGEMENT OF THE EUROPEAN COMMUNITIES:
ACCESSION OF AUSTRIA, FINLAND AND SWEDEN, SERVICES
Note on the Meeting of 10 July 1998
Chairman:  Mr. Claude Bouah-Kamon (Côte d'Ivoire)
1. The Committee on Regional Trade Agreements took up the examination of the Enlargement
of the European Communities (Accession of Austria, Finland and Sweden), Services, under Agenda
Item D.VII of its Eighteenth Sess ion, as found in Airgram WTO/AIR/871.
2. The Chairman said that the last examination of the services aspects of the Enlargement of the
European Communities (EC) had taken place at the Committee's last Session in May.  Today's
discussion would be based mainly on the questions and replies contained in document
WT/REG3/2/Add.4, which had pr eviously been considered only in a preliminary manner.
3. The representative of the European Communities sa id that at the last meeting she had invited
Members to pose any additional questions.  No question of a factual nature had been made with
respect to the Enlargement or to the List of MFN Exemptions;  factual questions relating to  changes
in the consolidated Schedule had been received and answered.  What remained to be decided was how
to proceed.  The consolidated Schedule of Commitments and the consolidated List of MFN
Exemptions had been submitted to the Committee on a provisional basis.  Legally, the Schedules of
the EC(12) and of the three acceding countries remain ed therefore in force.  It seemed appropriate to
change that situation, since it was in the interest of all in the WTO to have a clear and predictablelegal framework.  A final consolidated Schedule of Commitments and a final List of MFN
Exemptions needed now to be agreed.  At the last meeting, the representative of Japan had said that if
the changes identified in the Schedule were to be formalized, an Article XXI procedure had to be
launched.  That was an undeniable observation.  In order to come to a formal consolidated Schedule
of Commitments for the EC(15), an Article XXI pr ocedure would be initiated by the EC and the
relevant notification would identify those changes which resulted from the factual examination in the
Committee.  That was because Members had indicated in the Committee that they were satisfied with
the explanations given by the EC with respect to modifications made in the Schedules of Finland and
Sweden.  Pending questions, which had been identi fied and would therefore require the launching of
an Article XXI procedure, referred to changes in Austria's Schedule.  The EC would demonstrate, onthe basis of Article XXI, that the Enlargement from 12 to 15 had resulted in a territorial community
which had became larger and in which third countries' access had improved.  The EC was also faced
with the question of changes to be introduced in the List of MFN Exemptions.  The EC had reflected
on how to deal with the matter, but no clear answ er had yet emerged.  During the examination, she
had repeatedly asked EC trading partners to indicate whether they had been affected by thosemodifications, but there had been no response from Members, with the exception of the delegation of
Korea, which had mentioned the need to look at whether third countries had been affected by the
changes.  GATS Article V:4 stated that, in integrat ing or enlarging, Members could not raise barriers-
although, of course, it was not clear whether barriers could not be raised overall or on a sector-by-
sector basis.  In the absence of any answer from Members on whether they had been affected by theWT/REG3/M/8
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provisional List of MFN Exemptions, she would formally reiterate her request to Members to indicate
how they were affected.
4. The representative of the European Communities continued by saying that one option was
that, in launching an Article XXI procedure for th e modification of the Schedule, the EC would have
to assimilate to that process the changes in th e List of MFN Exceptions, then formally inviting
Members to identify where they had been affected.  The procedure for the modification of the
Schedule would be dealt with in the Council for Trade in Services (CTS).  She did not know in which
WTO body the request for modification of the Li st of MFN Exceptions (which the EC would
assimilate to the request for the modification of the Schedule) would be discussed, and it seemed that
further reflection was needed.  She requested the Committee to provide some guidance on whether the
Committee could further discuss the matter in the context of the preparation of the report of the
examination, or whether the matter should also be examined in the CTS.  Noting that all the factsrelating to the Enlargement had been clarified to the maximum extent possible, she wondered when
the Committee would ask the Secretariat to start drafting the report, in which the EC's offer to give
compensation for modifications introduced in the List of MFN Exemptions might be recorded.
Summarizing the matter of changes in the List of MFN Exemptions, she said that one option would be
to assimilate the changes to the GATS Article  XXI procedure, to be discussed in the CTS.
Alternatively, that matter could be dealt with in the Committee on the basis of the discussions
concerning the report of the examination, which should also be launched.  During those discussions,
the Committee could see whether Members were in a position to identify where their trade interests
had been affected.
5. The representative of Japan welcomed the fact that the EC delegation would launch a formal
Article XXI procedure.  Concerning the introduction of a new item on the EC's List of MFN
Exemptions, she said that, following the GATS Annex on Article II Exemptions and Article IX:3(b)
of the Marrakesh Agreement Establishing the World Trade Organization, her delegation was of the
view that the EC should submit th e request for introducing m.f.n. exemptions to the CTS and follow a
certain procedure.  The representative of Australia sa id that he agreed with the statement made by the
representative of Japan.
6. The representative of Hong Kong, China than ked the EC delegation for its confirmation that
an Article XXI procedure would be engaged and said that he agreed with the statement made by the
representative of Japan.  He said that he had understood the representative of the EC as having said
that the specific matters to be introduced under Article XXI procedures would be based on the factual
examination that had taken place;  he requested that this be clarified.  For him, that meant that the
EC delegation would only introduce those modifications that Members had identified during thefactual examinations, which might mean that Members had missed some.  Responding to that point,
the representative of the European Communities said that before giving a formal reply she would have
to revert to the different factual examinations the EC had had on the changes in the Schedule from
EC(12) and the three acceding countries to the EC(15) Schedule.  The Article XXI procedure referred
to requesting approval only of modifications in commitments, and that was what the EC would do.
More specifically, the EC had received questions on commitments that had appeared to Members as
having been modified, but following the EC explanat ions that these were simply placed or described
elsewhere, Members seemed to have agreed that the change in placement did not constitute
modifications.  Saying that those were the types of changes that would not be the object of a
consultation, she noted that they applied to a very limited number of changes.  The representative ofHong Kong, China said that he would reflect further on that, as he was not sure that he would view
the examination held in the Committee concerning modifications of Schedules as being the same asthe process called for in GATS Article XXI.  The representative of the United States associated
himself with that last comment made by the repr esentative of Hong Kong, China and said that the
question had to be looked at in the CTS.WT/REG3/M/8
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7. The representative of Japan registered her delegation's understanding of the interpretation of
Article XXI:2, which was that the Article provided that any Member which might be affected could
request negotiations, and that there was not even a need for analyzing the actual effect on the Member
at that stage of entering into negotiation.  Her delegation would like that point to be included in the
report of the examination.
8. The Chairman said that the factual part of the examination of Enlargement of the EC, services
had been completed at today's meeting.  He requested the Committee to agree that he ask the
Secretariat to start drafting the report of the examination, which could be considered in the autumn.
The Committee so agreed.
9. The Committee took note of the comments made.
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