Proposal for a COUNCIL DECISION concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the results of the WTO negotiations on financial services and on movement of natural persons
Date: 1996-04-11
Institutions: European Commission
Subjects: World Trade Organisation, banking, free movement of persons, provision of services

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Brussels,  11.04.1996 
COM(96)154  final 

96/0105 (CNS) 

Proposal  tor  a 

COUNCIL  DECISION 

concerning 
the conclusion on behalf of the European Community, 
as regards matters within its competence, 
of the results of the WTO negotiations 
on financial  services and on movement of natural persons 

(presented  by  the  Commission) 

Explanatory  Mei  o  andum 

By  its decision  of  22  December  19941,  the  Council  of  the  European  Union  approved  the 
linal  Act  embodying  the  results  of  the  Uruguay  Round  of  multilateral  trade  negotiations 
concluded  at  the  end  of  December  1993.  It  thereby  approved  the  Marrakesh  Agreement 
estabUshing  the  World  Trade  Organization  and  its  related  agreements,  among  which  the 
General  Agreement  on  Trade  in  Services,  as  well  as  the  Ministerial  Declarations  and 
Decisions  and  the  Understanding  on  Commitments  in  Financial  Services  featured  in  the 
linal  Act. 

The  Ministerial  Decision  on  Financial  Services  stated  that  at  the  conclusion  of  a  period 
ending no later than  six  months  after  the date of entry  into  force  of the  WTO  Agreement, 
which  took  place  on  1 January  1995, WTO  Members  were  free  to  improve,  modify  or 
withdraw  all or  part  of  their  commitments  in the financial services  sector  without  offering 
compensation.  By  the  same  deadline  of  30  June  1995,  WTO  members  were  to  finalize 
their position relating to MFN  exemptions in this sector. 

The  Ministerial  Decision  on  Negotiations  on  Movement  of  Natural  Persons  stated  that 
negotiations  on  further  liberalisation  of  movement  of  natural  persons  for  the  purpose  of 
supplying  services  continued  with  a  view  to  allowing  the  achievement  a  higher  level  of 
commitments  by  participants  These  negotiations  were  to  be  finalised  no  later  than  six 
months after  the date of entry  into force  of the WTO  Agreement. 

On  29 June, at  the end  of the  negotiating  process, while major  WTO  Members,  including 
the  European  Community  and  its  Member  States,  had  submitted  revised  schedules  of 
commitments on  financial  services to become unconditional  MFN-based  commitments,  the 
United  States  unexpectedly  decided  to withdraw  most  of its offer  on  financial  services  by 
taking a blanket  MFN  exemption.  In these circumstances,  it was  proposed  to  prolong  the 
negotiations  for  one  month  to  allow  countries,  including  the  United  States,  to  confirm 
whether or not they were wishing to maintain their best  offers. 

In parallel, the negotiations  on movement  of persons were prolonged  for  one  month. 

The  Second  Protocol  and  related  Decisions  on  financial  services  as  well  as  the  Third 
Protocol  and related  Decision  on movement  of natural  persons were adopted  by the  WTO 
Services Council  of 21 July  1995 

The Council  in  its conclusions  of  26 July  1995 authorised  the Commission  to  confirm,  on 
behalf  of  the  European  Community  and  its  Member  States,  the  offer  submitted  to  the 
WTO  on  financial  services  on  21  July  1995  and  the  negotiated  improvements  to  their 
existing commitments  on movement  of natural  persons. 

1 JO n°336 of 23rd December  1994. p. 1. 

The Council  also authorized  the Commission  on the same date to  approve  the Decision  of 
the Committee on Trade in Financial  Services adopting the Second  Protocol  to the  GATS, 
the  Decision  of  the  Council  for  Trade  in  Services  on  Financial  Services,  the  Second 
Decision  of  the  Council  for  Trade  in  Services  on  Financial  Services  and  the  Decision  of 
the Council  for  Trade  in Services on movement  of natural  persons 

On  28  July  1995, the  following  WTO  Members  confirmed  that  they  would  maintain  their 
best  offers  on  new  commitments:  besides  the  European  Community  and  its  Member 
States,  these  countries  are  Australia,  Brazil,  Canada,  Chile,  the  Czech  Republic,  the 
Dominican  Republic,  Egypt,  Hong  Kong,  Hungary,  India,  Indonesia,  Japan,  Korea, 
Kuwait,  Malaysia,  Mexico,  Morocco,  Norway,  Pakistan,  Philippines,  Poland,  Singapore, 
the  Slovak  Republic,  South  Africa,  Switzerland,  Thailand,  Turkey,  Venezuela  These 
countries  will be  signatories  to  the  Second  Protocol  to the GATS,  the  legal  instrument  to 
which  they  will  attach  their  new  schedules  and  MFN  exemption  lists  The  US  did  not 
level  of 
change  the  position  stated  on  30  June  1995  and  thus  applies  a  reduced 
commitments  and  a  broad  MFN  exemption.  Other  WTO  member  countries,  such  as 
Argentina  and  New Zealand, will continue to apply their April  1994 schedules. 

On  28  July  1995, the  following  WTO  Members  confirmed  submission  of  their  improved 
commitments  on  movement  of  natural  persons:  Australia,  Canada, 
the  European 
Community and its Member  States, India, Norway and  Switzerland 

Negotiations were therefore  concluded  on 28 July  1995. 

The  individual  schedules  of  commitments  to  be  annexed  respectively  to  the  Second  and 
Third  Protocol  to  the  General  Agreement  on  Trade  in  Services  were  technically  verified 
and approved  by the WTO  Council for  Trade in Services in Geneva on 4 October  1995. 

Both  Protocols  are  open  for  acceptance,  by  signature  or  otherwise,  by  Members 
concerned  until 30th June  1996. 

Negotiations  were  conducted  in  the  light  of  the  guidelines  adopted  by  the  Council  of  6 
March  1995, as interpreted  by the Council on  17 July 1995. 

The overall  level  of  commitments  both  on  market  access  and  national  treatment  reached 
upon  adoption  by  WTO  of the  interim  agreement  on  28  July  1995  is  globally  better  than 
that  obtained  at  the  end  of December  1993. It  allows EU  financial  services  and  insurance 
industries  to  benefit  from  greater  legal  certainty  and  predictability  than  previously 
available, and constitutes  a basis on which to build further  market-opening  measures  in the 
future. 

An  important  objective  of  the  Community  and  its  Member  States  was  to  achieve  the 
multilateralisation  of  Japan/US  measures  on  insurance  and  financial  services  so  that  the 
dispute  settlement  procedures  could  be  invoked  if  EU  financial  services  providers  were 
discriminated  against,  compared  with  US  suppliers.  In  response,  Japan  confirmed  in  an 
open  letter  to  the  Director  General  of the  WTO  that  all the  benefits  of  the  Measures  on 
insurance  and  financial  services  are  multilaterally  applied  on  an  MFN  basis  consistently 
with WTO rules. 

The  contribution  of  the  European  Community  and  its  Member  States  to  a  satisfactory 
conclusion  of  the  negotiations  on  the  movement  of  persons  supplying  services  was  also 
important.  It  shows  that  the  interests  of  all  Members  of the  WTO  are  taken  into  account 
by the EU. Moreover,  the outcome  of these negotiations constitutes  a more balanced  level 
of commitments in that  area. 

The Commission therefore  recommends that the Council of the European  Union  adopt  the 
attached  decision  concerning  the  conclusion  of  the  results  of  the  extended  WTO 
negotiations on financial services and on movement  of natural persons. 

Council Decision 

of... 

concerning the conclusion on behalf of the European Community, as regards 
matters within its competence, of the results of the WTO negotiations on financial 
services and on movement of natural persons 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Articles  54,  57,  63,  66,  73C  (2),  100,  100A  and  113,  in  conjunction  with  the  second 
sentence of Article 228 (2) and the first sub-paragraph of Article 228 (3) thereof, 

Having regard to the proposal from the Commission, 

Having regard to the opinion of the Economic and Social Committee, 

Having regard to the opinion of the European Parliament, 

Whereas  the  Marrakesh  Agreement  establishing  the  World  Trade  Organisation  and  its 
related  agreements  as  well  as  the  Ministerial  Decisions  and  Declarations  and  the 
Understanding  on  Commitments  in  Financial  Services  were  approved  by  a  Council 
decision of 22 December  19940); 

Whereas the overall commitments on financial  services negotiated  by the Commission, on 
behalf of the European  Community  and  its Member  States, constitutes a satisfactory  and 
balanced outcome for the interim period concerned; 

Whereas  some  commitments  were  negotiated  by  the  Commission  on  behalf  of  the 
European  Community  and  its  Member  States  on  movement  of  natural  persons  for  the 
purpose of supplying services; 

Whereas on 26 July  1995 the Council  authorized  the Commission  to  agree, on  behalf of 
the European  Community  and  its Member  States, to  the Decision  of the  Committee  on 
Trade  in Financial  Services  adopting  the  Second  Protocol  to the  General  Agreement  on 
Trade in Services, the Decision of the Council  for  Trade in Services on Commitments on 
Financial  Services  and  the  Second  Decision  of  the  Council  for  Trade  in  Services  on 
Financial  services  as  well  as  the  Decision  of  the  Council  for  Trade  in  Services  on 
movement of natural persons commitments ; 

1 JO n°336 23 December  1994. p. 1 

Whereas the competence of the Community to conclude international agreements does not 
derive only from explicit conferral  by the Treaty but may also derive from  other provisions 
of  the  Treaty  and  from  acts  adopted  pursuant  to  those  provisions  by  Community 
institutions; 

Whereas where Community  rules have been  adopted  in order to  achieve the aims of the 
Treaty, Member States may not, outside the framework of the common institutions, enter 
into commitments liable to affect  those rules or alter their scope; 

Whereas  some  commitments  on  financial  services  fall  within  the  competence  of  the 
Community under Article 113 of the Treaty; whereas, furthermore,  other commitments on 
financial  services  as  well  as  the  commitments  on  movement  of  natural  persons  affect 
Community rules adopted on the basis of Articles 54, 57, 63, 66,  100 and  100A, and may 
therefore only be entered into by the Community alone; 

Whereas,  the  use  of  Article  73C  (2)  of  the  Treaty  as  a  legal  basis  for  this  Decision  is 
required since the results of the WTO negotiations on financial services and on movement 
of natural persons impose certain  obligations on the Community  regarding the movement 
of  capital  and  payments  between  the  Community  and  third  countries  Members  of  the 
WTO, 

Whereas, by its nature, the Agreement establishing the World Trade Organisation and the 
Protocols to  the General  Agreement  on  Trade  in  Services,  are not  susceptible  to  being 
directly invoked in Community or Member States courts, 

HAS DECIDED AS FOLLOWS: 

Article 1 

The Second Protocol to the General  Agreement  on Trade in Services concerning 
1. 
financial  services is hereby approved on behalf of the European Community with regard to 
that portion of it which falls within the competence of the European Community: 

The text of the Second Protocol as well as the following decisions are attached  to 

2. 
this Decision : 

-  the  Decision  of  the  Committee  on  Trade  in  Financial  Services  adopting  the  Second 

Protocol to the General Agreement on Trade in Services, 

-  the  Decision  of  the  Council  for  Trade  in  Services  on  Commitments  on  Financial 

Services, 

- the Second  Decision of the Council for Trade in Services on financial  services 

3. 
The  President  of  the  Council  is  hereby  authorized  to  designate  the  person 
empowered  to sign the Second  Protocol  to the General  Agreement  on Trade in  Services 
in order  to  bind  the  European  Community  with  regard  to  that  portion  of  the  Protocol 
falling within its competence. 

Article 2 

The  Third  Protocol  to  the  General  Agreement  on  Trade  in  Services  concerning 
1. 
movement  of natural  persons  is hereby  approved  on  behalf of the European  Community 
with  regard  to  that  portion  of  it  which  falls  within  the  competence  of  the  European 
Community: 

The text of the Third Protocol  as well as the Decision of the Council for  Trade in 

2. 
Services on movement of natural persons commitments are attached to this Decision. 

3. 
The  President  of  the  Council  is  hereby  authorized  to  designate  the  person 
empowered to sign the Third Protocol to the General Agreement  on Trade in Services in 
order to bind the European Community with regard  to that portion  of the Protocol  falling 
within its competence. 

Done at Brussels,... 

For the Council 
The President 

WORLD  TRADE 

ORGANIZATION 

Trade  in  Services 

S/L/U 
24  July  1995 

(95-2166) 

THIRD  PROTOCOL  TO  THE 
GENERAL  AGREEMENT  ON  TRADE  IN  SERVICES 

Members  of  the World Trade Organization  whose Schedules of Specific  Commitments  to the 
General  Agreement  on  Trade  in Services  relating to movement  of natural  persons  are annexed  to  this 
Protocol, 

Having  carried  out  negotiations under the  terms  of  the  Ministerial  Decision  on  Negotiations 

on  Movement  of  Natural  Persons  adopted  at  Marrakesh  on  15  April  1994, 

Having  regard  to  the  results  of  such  negotiations. 

Having  regard  to  the  Decision  on  the Movement  of  Natural  Persons  adopted  by  the  Council 

for  Trade  in  Services  on  30  June  1995, 

Agree  as  follows: 

1. 
The commitments on Movement of Natural Persons annexed to this Protocol relating to a Member 
shall,  upon the entry  into  force  of  this  Protocol  for that Member,  replace  or supplement  the  relevant 
entries  on  movement  of  natural  persons  in the  Schedule  of  Specific  Commitments  of  that  Member. 

This  Protocol  shall  be open  for  acceptance, by  signature or otherwise, by  Members  concerned 

2. 
until  30th  June  1996. 

3. 
This  Protocol  shall  enter  into force  on the 30th  day after  1st January  1996  for  those  Members 
which  have  accepted  it  by  that  date,  and  for  those  accepting  it after  that date,  which  date  shall  not  be 
beyond  30th  June  1996.  it shall  enter  into force  on the  30th day  following  the date  of each  acceptance. 
If  a  Member  whose  schedule  is  annexed  to  this  Protocol  does  not  accept  it  by  that  date,  the  matter 
shall  be  referred  to  the  Council  for  Trade  in  Services  for  consideration  and  appropriate  action. 

This  Protocol  shall  be deposited  with  the Director-General  of the World  Trade  Organization. 
4. 
The  Director-General  shall  promptly  furnish  to  each  Member  a  certified  copy  of  this  Protocol  and 
notifications  of  acceptances  thereof  pursuant  to  paragraph  3. 

This Protocol  shall be registered  in accordance with the provisions of Article  102 of the  Charter 

5. 
of  the  United  Nations. 

Done  at  Geneva  this  -  day  of  [month]  one  thousand  nine hundred  and  ninety-five,  in  a  single 
copy  in English,  Trench  and  Spanish  languages, each text being authentic, except  as otherwise  provided 
for  in  respect  of  the  Schedules  annexed  hereto. 

% 

W O R LD  TRADE 

ORGANIZATION 

Trade  in  Services 

S/UIO 
24 July  1995 

(95-2164) 

DECISION  ON  MOVEMENT  OF NATURAL  PERSONS  COMMITMENTS 

Adopted  by  the Council  for  Trade  in Services on 21 July  1995 

The Council for  Trade in Services, 

Having regard to the results of the negotiations conducted under the terms of the  Decision on 

Movement  of  Natural  Persons  adopted  at Marrakesh  on  15th April  1994, 

Having regard  to the  Decision on the Movement  of  Natural  Persons  adopted  by the  Council 

for  Trade  in Services  on  30 June  1995, 

Decides as  follows: 

1. 

To adopt  the text  of the  "Third  Protocol  to the General  Agreement  on  Trade  in Services". 

2. 

Commencing immediately and continuing until the date of entry into force of the Third Protocol 

to the General Agreement on Trade in Services, Members concerned shall, to the fullest extent consistent 

with their existing legislation,  not take measures  which would be incoasistent  with their  undertakings 

resulting  from  these  negotiations. 

3. 

The Council  for Trade  in Services shall monitor  the acceptance of the Protocol  by  Members 

concerned and shall, at the request of a Member/examine any concerns raised regarding the application 

of  paragraph  2 above. 

3 

WORLD  TRADE 

ORGANIZATION 

Trade  in  Services 

S,L/H 
24 July  1995 

(95-2165) 

SECOND  PROTOCOL  TO THE 
GENERAL  AGREEMENT  ON TRADE  IN SERVICES 

Members  of  the  World  Trade  Organization  (hereinafter  referred  to  as  the  "WTO")  whose 
Schedules of Specific Commitments  and Lists of Exemptions from Article  II of the General Agreement 
on Trade  in Services concerning  financial  services are annexed to this Protocol  (hereinafter  referred 
to  as  " Members  concerned"), 

Having carried out negotiations under the terms of the Ministerial Decision on Financial Services 

adopted  at  Marrakesh  on  15 April  1994, 

Having regard to the Second Annex on Financial Services, and to the Decision on the application 

of  that  Annex  adopted  by  the  Council  for  Trade  in Services on 30 June  1995, 

Agree as  follows: 

A Schedule  of  Specific  Commitments  and  a List of  Exemptions  from  Article II  concerning 
1. 
financial  services  annexed  to this  Protocol  relating to a Member  shall, upon  the entry  into  force  of 
this  Protocol  for  that  Member,  replace  the financial  services  sections  of  the  Schedule  of  Specific 
Commitments  and  the  List  of  Article II Exemptions  of that Member. 

This Protocol shall be open for acceptance, by signature or otherwise, by the Members concerned 

2. 
until  30 June  1996. 

This  Protocol  shall  enter  into  force  on the  30th day  following  the date  of  its  acceptance  by 
3. 
all  Members  concerned.  If by  1  July  1996 it has not been accepted by all Members concerned,  those 
Members  which  have  accepted  it before  that date may,  within a period of  30 days thereafter,  decide 
on  its entry  into  force. 

4 
This Protocol shall be deposited with the Director-General of the WTO.  The Director-General 
ol  the WTO shall  promptly  furnish  to each Member  of the WTO a certified  copy of this  Protocol  and 
notifications  of  acceptances  thereof  pursuant  to paragraph  3. 

This Protocol shall be registered in accordance with the provisions of Article 102 of the Charter 

5. 
of  the  United  Nations. 

Done at Geneva this — day of [month] one thousand nine hundred and ninety-five,  in a single 
copy in English, French and Spanish languages, each text being authentic, except as otherwise provided 
for  in respect  of  the  Schedules  annexed  hereto. 

yk> 

W O R LD  TRADE 

ORGANIZATION 

Trade  in Services 

MVU 
24 July  1995 

(95-2167) 

DECISION  ADOPTING  THE SECOND  PROTOCOL  TO  THE 
GENERAL  AGREEMENT  ON TRADE  IN SERVICES 

Adopted  bv the Committee  on Trade  in Financial  Services on 21 July  1995 

The Committee on Trade in Financial Services, 

Having regard to the results of the negotiations conducted under the terms of the Decision on 

Financial  Services  adopted  at  Marrakesh  on  15 April  1994, 

Having regard to the Second Annex on Financial Services, and to the Decision on the application 

of  that  Annex  adopted  by  the Council  for Trade  in Services on 30 June  1995, 

Decides as  follows: 

1. 

To adopt the text of  the  "Second  Protocol to the General  Agreement  on Trade  in Services". 

2. 
Commencing immediately and continuing until the date of entry into force of the Second Protocol 
to the General Agreement on Trade in Services, Members concerned shall, to the fullest extent consistent 
with their existing legislation,  not take measures which would be inconsistent  with their  undertakings 
resulting  from  these  negotiations. 

3. 
The Committee  on Trade  in Financial  Services shall monitor  the acceptance  of  the  Protocol 
by Members concerned  and shall, at the request of a Member, examine any concerns raised  regarding 
the application of paragraph  2 above. 

S 

W O R LD  TRADE 

ORGANIZATION 

Trade  in Services 

S/L/S 
24 July  1995 

(95-2162) 

DECISION  ON  COMMITMENTS  IN FINANCIAL  SERVICES 

Adopted  by  the Council  for  Trade  in Services on 21 July  1995 

The Council for  Trade in Services, 

Having regard to the Second Annex on Financial Services, and the Second Protocol to the General 

Agreement  on Trade  in Services, 

Having regard to the Decision on the Application of the Second Annex on Financial  Services 

adopted  by the Council  for  Trade  in Services on 30 June  1995, 

Noting the results of the negotiations carried out under the terms of the Decision on Financial 

Services adopted  at Marrakesh  on  15 April  1994, 

Decides as  follows: 

If the Second Protocol to the General Agreement on Trade in Services (GATS) does not enter 

1. 
into  force  in accordance  with paragraph  3 therein: 

(a) 

(b) 

Notwithstanding  Article  XXI of the GATS, a Member  may  during  a period  of sixty 
days  beginning  on  1 August  1996,  modify  or  withdraw  all  or  part  of  the  Specific 
Commitments  on  Financial  services  inscribed  in its Schedule. 

Notwithstanding  Article  II of  the  GATS  and  paragraphs  1 and  2  of  the  Annex  on 
Article  II  Exemptions,  a  Member  may,  during  the  same  period  referred  to  in 
paragraph  1,  list  in  that  Annex  measures  relating  to  financial  services  which  are 
inconsistent  with  paragraph  1 of  Article II of the GATS. 

The  Committee  on Trade  in Financial  Services shall establish  any procedures  necessary  for 

2. 
the  implementation  of paragraph  1. 

^ 2-

WORLD  TRADE 

ORGANIZATION 

Trade  in Services 

»L» 
24 July  1995 

(95-2163) 

SECOND  DECISION  ON  FINANCIAL  SERVICES 

Adopted  by the Council  for  Trade  in Services on 21 July  1995 

The Council for  Trade in Services, 

Having regard  to the  Second  Annex on  Financial  Services, 

Noting the results of the negotiations carried out under the terms of the Decision on  Financial 

Services  adopted  at Marrakesh  on  15 April  1994, 

Having  regard to the  Decision on the Application of the Second  Annex on  Financial  Services 

adopted  by the Council  for  Trade  in Services  on  30 June  1995, 

Decides as  follows: 

1. 
Notwithstanding Article XXI of the General Agreement on Trade in Services (GATS), a Member 
may  during  a period  of  sixty  days beginning on  1 November  1997, modify  or  withdraw  all  or  part 
of  the Specific  Commitments  on  Financial  Services  inscribed  in its Schedule. 

2. 
Notwithstanding  Article  II of the GATS  and  paragraphs  1 and  2 of  the  Annex  on  Article  II 
Exemptions,  a Member  may,  during  the same  period  referred  to in paragraph  1,  list  in that  Annex 
measures relating to financial services which are inconsistent with paragraph  1 of Article II of the GATS. 

3. 
The Committee  on Trade  in Financial  Services  shall oversee  any negotiations  that  may  lake 
place prior to the date specified  in paragraph  1.  It shall  also establish  any procedures  necessary  for 
the  application  of paragraphs  I  and 2. 

The application  of  this  Decision  shall  be  contingent  upon  the entry  into force  of  the  Second 

4. 
Protocol  to the General  Agreement  on Trade  in Services. 

1} 

ISSN  0254-1475 

COM(96)  154 final 

DOCUMENTS 

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11  02  09 

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