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VI. Article IV back to top
A. Text of Article IV
Article IV: Increasing Participation of Developing Countries
1. The
increasing participation of developing
country Members in world trade shall be facilitated through negotiated
specific commitments, by different Members pursuant to Parts III and
IV
of this Agreement, relating to:
(a) the strengthening of their domestic services
capacity and its efficiency and competitiveness, inter alia
through access to technology on a commercial basis;
(b) the improvement of their access to
distribution channels and information networks; and
(c) the liberalization of market access in sectors
and modes of supply of export interest to them.
2. Developed country Members, and to the extent
possible other Members, shall establish contact points within two years
from the date of entry into force of the WTO Agreement to facilitate the
access of developing country Members’ service suppliers to
information, related to their respective markets, concerning:
(a) commercial and technical aspects of the supply
of services;
(b) registration, recognition and obtaining of
professional qualifications; and
(c) the availability of services technology.
3. Special priority shall be given to the
least-developed country Members in the implementation of paragraphs 1
and 2. Particular account shall be taken of the serious difficulty of
the least-developed countries in accepting negotiated specific
commitments in view of their special economic situation and their
development, trade and financial needs.
B. Interpretation and Application of Article IV
1. General
38. With respect to
application of Article IV to electronic commerce, see the Progress
Report adopted by the Council for Trade in Services in the context of
the Work Programme on Electronic Commerce on 19 July 1999.(46)
2. Article IV:3
(a) Contact points
(i) General
39. With respect to the
contact points provided for in paragraph 2, see the “Decision on the
Notification of the Establishment of Enquiry and Contact Points”
referenced in paragraph 37 above.
(ii) Accountancy services
40. With respect to contact
points in accountancy services, see the Disciplines on Domestic
Regulation in the Accountancy Sector, adopted by the Council for Trade
in Services on 14 December 1998.(47)
VII. Article V
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A. Text of Article V
Article V: Economic Integration
1. This Agreement shall not prevent any of its
Members from being a party to or entering into an agreement liberalizing
trade in services between or among the parties to such an agreement,
provided that such an agreement:
(a) has substantial sectoral
coverage,(1) and
(footnote
original) 1 This condition is understood in terms of number
of sectors, volume of trade affected and modes of supply. In order to
meet this condition, agreements should not provide for the a priori
exclusion of any mode of supply.
(b) provides for the absence or elimination of
substantially all discrimination, in the sense of Article
XVII, between
or among the parties, in the sectors covered under subparagraph
(a),
through:
(i) elimination of existing discriminatory
measures, and/or
(ii) prohibition of new or more discriminatory
measures,
either at the entry into force of that
agreement or on the basis of a reasonable time-frame, except for
measures permitted under Articles XI, XII,
XIV and XIV bis.
2. In evaluating whether the conditions under
paragraph 1(b) are met, consideration may be given to the relationship
of the agreement to a wider process of economic integration or trade
liberalization among the countries concerned.
3. (a)
Where developing countries are parties
to an agreement of the type referred to in paragraph
1, flexibility
shall be provided for regarding the conditions set out in paragraph
1,
particularly with reference to subparagraph (b) thereof, in accordance
with the level of development of the countries concerned, both overall
and in individual sectors and subsectors.
(b)
Notwithstanding paragraph 6, in the case
of an agreement of the type referred to in paragraph 1 involving only
developing countries, more favourable treatment may be granted to
juridical persons owned or controlled by natural persons of the parties
to such an agreement.
4. Any agreement referred to in
paragraph 1
shall be designed to facilitate trade between the parties to the
agreement and shall not in respect of any Member outside the agreement
raise the overall level of barriers to trade in services within the
respective sectors or subsectors compared to the level applicable prior
to such an agreement.
5. If, in the conclusion, enlargement or any
significant modification of any agreement under paragraph
1, a Member
intends to withdraw or modify a specific commitment inconsistently with
the terms and conditions set out in its Schedule, it shall provide at
least 90 days advance notice of such modification or withdrawal and the
procedure set forth in paragraphs 2,
3 and 4 of Article XXI shall apply.
6. A service supplier of any other Member that
is a juridical person constituted under the laws of a party to an
agreement referred to in paragraph 1 shall be entitled to treatment
granted under such agreement, provided that it engages in substantive
business operations in the territory of the parties to such agreement.
7. (a)
Members which are parties to any
agreement referred to in paragraph 1 shall promptly notify any such
agreement and any enlargement or any significant modification of that
agreement to the Council for Trade in Services. They shall also make
available to the Council such relevant information as may be requested
by it. The Council may establish a working party to examine such an
agreement or enlargement or modification of that agreement and to report
to the Council on its consistency with this Article.
(b)
Members which are parties to any agreement
referred to in paragraph 1 which is implemented on the basis of a
time-frame shall report periodically to the Council for Trade in
Services on its implementation. The Council may establish a working
party to examine such reports if it deems such a working party
necessary.
(c)
Based on the reports of the working
parties referred to in subparagraphs (a) and (b), the Council may make
recommendations to the parties as it deems appropriate.
8. A Member which is a party to any agreement
referred to in paragraph 1 may not seek compensation for trade benefits
that may accrue to any other Member from such agreement.
B. Interpretation and Application of Article V
1. Article V:1
41. The Panel on Canada
— Autos, in a
finding subsequently not addressed by the Appellate Body, considered
that, with respect to an import duty exemption available to only a
limited number of firms, Canada could not claim an exemption from its
MFN obligation under Article II by invoking
Article V:1. The Panel noted
that the Canadian measures at issue did not grant more favourable
treatment to all services and service suppliers of members of NAFTA:
“Even assuming that the [Canadian measures
at issue] could be brought within the scope of the services
liberalization provisions of NAFTA, we note that the import duty
exemption under the [measures at issue] is accorded to a small number of
manufacturers/wholesalers of the United States to the exclusion of all
other manufacturers/wholesalers of the United States and of Mexico. The
[measures at issue], therefore, provide more favourable treatment to
only some and not all services and service suppliers of Members of NAFTA,
while, according to Article V:1(b), an economic integration agreement
has to provide for ‘the absence or elimination of substantially all
discrimination, in the sense of Article
XVII’, in order to be eligible
for the exemption from Article II of the
GATS.
Although the requirement of Article
V:1(b) is
to provide non-discrimination in the sense of Article XVII (National
Treatment), we consider that once it is fulfilled it would also ensure
non-discrimination between all service suppliers of other parties to the
economic integration agreement. It is our view that the object and
purpose of this provision is to eliminate all discrimination among
services and service suppliers of parties to an economic integration
agreement, including discrimination between suppliers of other parties
to an economic integration agreement. In other words, it would be
inconsistent with this provision if a party to an economic integration
agreement were to extend more favourable treatment to service suppliers
of one party than that which it extended to service suppliers of another
party to that agreement.
Moreover, it is worth recalling that Article V
provides legal coverage for measures taken pursuant to economic
integration agreements, which would otherwise be inconsistent with the
MFN obligation in Article II. Paragraph 1 of Article V refers to ‘an
agreement liberalizing trade in services’. Such economic integration
agreements typically aim at achieving higher levels of liberalization
between or among their parties than that achieved among WTO Members.
Article V:1 further prescribes a certain minimum level of liberalization
which such agreements must attain in order to qualify for the exemption
from the general MFN obligation of Article
II. In this respect, the
purpose of Article V is to allow for ambitious liberalization to take
place at a regional level, while at the same time guarding against
undermining the MFN obligation by engaging in minor preferential
arrangements. However, in our view, it is not within the object and
purpose of Article V to provide legal coverage for the extension of more
favourable treatment only to a few service suppliers of parties to an
economic integration agreement on a selective basis, even in situations
where the maintenance of such measures may explicitly be provided for in
the agreement itself.”(48)
2. Article V:7
(a) Format for notifications
42. With respect to the format for
notifications under paragraph 7, see the Guidelines for Notifications
under the General Agreement on Trade in Services. (49)
(b) Reporting on the operation of regional
trade agreements
43. On 20 February 1998, the Committee on RTAs
made recommendations to the Council for Trade in Services with respect
to the reporting on the operation of regional trade agreements to the
Committee. (50) On 23
and 24 November 1998, the Council for Trade in
Services took note of the recommended procedures, as general guidelines
with respect to reports/information on regional trade agreements
submitted to it.(51)
(c) Examination of specific agreements
(i) General
44. With respect to the procedures for the
examination of specific agreements, see Section V.B.7(iv) of the Chapter
on the WTO Agreement.
45. At its meeting on 29-30 March 2004, the
Committee on RTAs agreed on a way forward regarding services agreements
transmitted to it for examination: their factual examination would start
once specific commitments had been agreed upon.(52)
(ii) European Union
46. With respect to the enlargement of the
European Union as a result of the accession of Austria, Finland and
Sweden on 1 January 1995,(53) the Council for Trade in Services agreed
that two issues, namely the Treaty of Accession of Austria, Finland and
Sweden to the European Union and the Treaties establishing the European
Union should be discussed separately. With respect to the first issue,
the Council for Trade in Services on 30 March 1995 agreed to establish
the Working Party on the Enlargement of the European Union.(54) With
respect to the second issue, the Council for Trade in Services, at its
meeting of 23 September 1996, decided to refer the Treaties establishing
the European Union to the Committee on RTAs for examination pursuant to
paragraph 7 of Article V of the GATS.(55)
(iii) Other agreements
47. Between 1 January 1995 and 31 December
2004, a total of 36 economic integration agreements had been notified to
the Council for Trade in Services. The Council has adopted terms of
reference for examination of all these agreements, to be carried out by
the Committee on RTAs pursuant to paragraph 7(a) of Article V of the
GATS. By 31 December 2004, 26 agreements were at various stages of
examination in the Committee on RTAs; two agreements were yet to be
considered by the Council for Trade in Services (see lists included in
annex I below); and eight agreements had been terminated as a
consequence of the enlargement of the European Union to include 10 new
member States on 1 May 2004 (see Chapter on the GATT 1994, Article
XXIX,
and annex ii below):
C. Annex I
1. List of RTAs notified under Article V of
the GATS for which factual examination has been completed
2. List of RTAs notified under Article V of
the GATS under factual examination
3. List of RTAs notified under Article V of
the GATS for which factual examination has not yet commenced
4. List of RTAs notified under Article V of
the GATS which have not yet been considered by the Council for Trade in
Services
|
Agreement |
Date |
Document series |
|
Free Trade Agreement between the United
States and Australia |
23-Dec-04 |
WT/REG184
S/C/N/310 |
|
Free Trade Agreement between the EFTA
States and Chile |
10-Dec-04 |
WT/REG179
S/C/N/309 |
D. Annex II
1. RTAs notified under Article V of the GATS
which have been terminated following the enlargement of the European
Union on 1 May 2004
VIII. Article V bis
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A. Text of Article V bis
Article V bis: Labour Markets Integration Agreements
This Agreement shall not prevent any of its
Members from being a party to an agreement establishing full
integration(2) of the labour markets between or among the parties to such
an agreement, provided that such an agreement:
(footnote original) 2 Typically, such
integration provides citizens of the parties concerned with a right of
free entry to the employment markets of the parties and includes
measures concerning conditions of pay, other conditions of employment
and social benefits.
(a) exempts citizens of parties to the
agreement from requirements concerning residency and work permits;
(b) is notified to the Council for Trade in
Services.
B. Interpretation and Application of Article V
bis
1. Article V bis:(b)
(a) Format for notifications
48. With respect to the format for
notifications under subparagraph (b), see the Guidelines for
Notifications under the General Agreement on Trade in Services.(56)
IX. Article VI
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A. Text of Article VI
Article VI: Domestic Regulation
1. In sectors where specific commitments are
undertaken, each Member shall ensure that all measures of general
application affecting trade in services are administered in a
reasonable, objective and impartial manner.
2. (a)
Each Member shall maintain or institute
as soon as practicable judicial, arbitral or administrative tribunals or
procedures which provide, at the request of an affected service
supplier, for the prompt review of, and where justified, appropriate
remedies for, administrative decisions affecting trade in services.
Where such procedures are not independent of the agency entrusted with
the administrative decision concerned, the Member shall ensure that the
procedures in fact provide for an objective and impartial review.
(b)
The provisions of subparagraph (a) shall
not be construed to require a Member to institute such tribunals or
procedures where this would be inconsistent with its constitutional
structure or the nature of its legal system.
3. Where authorization is required for the
supply of a service on which a specific commitment has been made, the
competent authorities of a Member shall, within a reasonable period of
time after the submission of an application considered complete under
domestic laws and regulations, inform the applicant of the decision
concerning the application. At the request of the applicant, the
competent authorities of the Member shall provide, without undue delay,
information concerning the status of the application.
4. With a view to ensuring that measures
relating to qualification requirements and procedures, technical
standards and licensing requirements do not constitute unnecessary
barriers to trade in services, the Council for Trade in Services shall,
through appropriate bodies it may establish, develop any necessary
disciplines. Such disciplines shall aim to ensure that such requirements
are, inter alia:
(a) based on objective and transparent
criteria, such as competence and the ability to supply the service;
(b) not more burdensome than necessary to
ensure the quality of the service;
(c) in the case of licensing procedures, not
in themselves a restriction on the supply of the service.
5. (a)
In sectors in which a Member has
undertaken specific commitments, pending the entry into force of
disciplines developed in these sectors pursuant to paragraph
4, the
Member shall not apply licensing and qualification requirements and
technical standards that nullify or impair such specific commitments in
a manner which:
(i) does not comply with the criteria outlined
in subparagraphs 4(a), (b) or
(c); and
(ii) could not reasonably have been expected
of that Member at the time the specific commitments in those sectors
were made.
(b)
In determining whether a Member is in
conformity with the obligation under paragraph
5(a), account shall be
taken of international standards of relevant international
organizations(3) applied by that Member.
(footnote original) 3 The term “relevant
international organizations” refers to international bodies whose
membership is open to the relevant bodies of at least all Members of the
WTO.
6. In sectors where specific commitments
regarding professional services are undertaken, each Member shall
provide for adequate procedures to verify the competence of
professionals of any other Member.
B. Interpretation and Application of Article VI
1. General
(a) Electronic commerce
49. With respect to application of
Article VI
to electronic commerce, see the Progress Report adopted by the Council
for Trade in Services in the context of the Work Programme on Electronic
Commerce on 19 July 1999.(57)
2. Article V:4
(a) Professional services/domestic regulation
50. With respect to the Working Party on
Professional Services and its successor, the Working Party on Domestic
Regulation, see paragraphs 132-134
below.
(b) Disciplines in accountancy services
51. On 14 December 1998, with a view to
ensuring that domestic regulations affecting trade in accountancy
services met the requirements of Article VI:4, the Council for Trade in
Services adopted the Disciplines on Domestic Regulation in the
Accountancy Sector,(58) which had been recommended by the Working Party on
Professional Services. These Disciplines contain, inter alia, the
following provision under the heading “General Provisions”:
“Members shall ensure that measures not
subject to scheduling under Articles XVI or
XVII of the GATS, relating
to licensing requirements and procedures, technical standards and
qualification requirements and procedures, are not prepared, adopted or
applied with a view to or with the effect of creating unnecessary
barriers to trade in accountancy services. For this purpose, Members
shall ensure that such measures are not more trade-restrictive than
necessary to fulfil a legitimate objective. Legitimate objectives are,
inter alia, the protection of consumers (which includes all users of
accounting services and the public generally), the quality of the
service, professional competence, and the integrity of the profession.”(59)
(c) Relationship with Articles XVI and XVII
52. On 10 December 1998, the Working Party on
Professional Services submitted a report to the Council for Trade in
Services on the development of Disciplines on Domestic Regulation in the
Accountancy Sector, including the informal note by the Chairman entitled
“Discussion of Matters Relating to Articles XVI and
XVII of the GATS
in Connection with the Disciplines on Domestic Regulation in the
Accountancy Sector”.(60)
X. Article VII
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A. Text of Article VII
Article VII: Recognition
1. For the purposes of the fulfilment, in
whole or in part, of its standards or criteria for the authorization,
licensing or certification of services suppliers, and subject to the
requirements of paragraph 3, a Member may recognize the education or
experience obtained, requirements met, or licences or certifications
granted in a particular country. Such recognition, which may be achieved
through harmonization or otherwise, may be based upon an agreement or
arrangement with the country concerned or may be accorded autonomously.
2. A Member that is a party to an agreement or
arrangement of the type referred to in paragraph
1, whether existing or
future, shall afford adequate opportunity for other interested Members
to negotiate their accession to such an agreement or arrangement or to
negotiate comparable ones with it. Where a Member accords recognition
autonomously, it shall afford adequate opportunity for any other Member
to demonstrate that education, experience, licences, or certifications
obtained or requirements met in that other Member’s territory should
be recognized.
3. A Member shall not accord recognition in a
manner which would constitute a means of discrimination between
countries in the application of its standards or criteria for the
authorization, licensing or certification of services suppliers, or a
disguised restriction on trade in services.
4. Each Member shall:
(a) within 12 months from the date on which
the WTO Agreement takes effect for it, inform the Council for Trade in
Services of its existing recognition measures and state whether such
measures are based on agreements or arrangements of the type referred to
in paragraph 1;
(b) promptly inform the Council for Trade in
Services as far in advance as possible of the opening of negotiations on
an agreement or arrangement of the type referred to in paragraph 1 in
order to provide adequate opportunity to any other Member to indicate
their interest in participating in the negotiations before they enter a
substantive phase;
(c) promptly inform the Council for Trade in
Services when it adopts new recognition measures or significantly
modifies existing ones and state whether the measures are based on an
agreement or arrangement of the type referred to in paragraph
1.
5. Wherever appropriate, recognition should be
based on multilaterally agreed criteria. In appropriate cases, Members
shall work in cooperation with relevant intergovernmental and
non-governmental organizations towards the establishment and adoption of
common international standards and criteria for recognition and common
international standards for the practice of relevant services trades and
professions.(61)
B. Interpretation and Application of Article VII
1. General
53. With respect to application of
Article VII
to electronic commerce, see the Progress Report adopted by the Council
for Trade in Services in the context of the Work Programme on Electronic
Commerce on 19 July 1999.(62)
2. Article VII:4
(a) Format for notifications
54. With respect to the format for
notifications under paragraph 4, see the Guidelines for Notifications
under the General Agreement on Trade in Services. (63)
3. Article VII:5
(a) Guidelines for Mutual Recognition
Agreements or Arrangements in the Accountancy Sector
55. On 29 May 1997, the Council for Trade in
Services approved the voluntary Guidelines for Mutual Recognition
Agreements or Arrangements in the Accountancy Sector.(64)
XI. Article VIII
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A. Text of Article VIII
Article VIII: Monopolies and Exclusive Services Suppliers
1. Each Member shall ensure that any monopoly
supplier of a service in its territory does not, in the supply of the
monopoly service in the relevant market, act in a manner inconsistent
with that Member’s obligations under Article II and specific
commitments.
2. Where a Member’s monopoly supplier
competes, either directly or through an affiliated company, in the
supply of a service outside the scope of its monopoly rights and which
is subject to that Member’s specific commitments, the Member shall
ensure that such a supplier does not abuse its monopoly position to act
in its territory in a manner inconsistent with such commitments.
3. The Council for Trade in Services may, at
the request of a Member which has a reason to believe that a monopoly
supplier of a service of any other Member is acting in a manner
inconsistent with paragraph 1 or 2, request the Member establishing,
maintaining or authorizing such supplier to provide specific information
concerning the relevant operations.
4. If, after the date of entry into force of
the WTO Agreement, a Member grants monopoly rights regarding the supply
of a service covered by its specific commitments, that Member shall
notify the Council for Trade in Services no later than three months
before the intended implementation of the grant of monopoly rights and
the provisions of paragraphs 2,
3 and 4 of Article XXI shall apply.
5. The provisions of this Article shall also
apply to cases of exclusive service suppliers, where a Member, formally
or in effect, (a) authorizes or establishes a small number of service
suppliers and (b) substantially prevents competition among those
suppliers in its territory.(65)
B. Interpretation and Application of Article VIII
1. General
(a) Electronic commerce
56. With respect to application of
Article
VIII to electronic commerce, see the Progress Report adopted by the
Council for Trade in Services in the context of the Work Programme on
Electronic Commerce on 19 July 1999.(66)
2. Article VIII:4
(a) Format for notifications
57. With respect to the format for
notifications under paragraph 4, see the Guidelines for Notifications
under the General Agreement on Trade in Services. (67)
XII. Article IX
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A. Text of Article IX
Article IX: Business Practices
1. Members recognize that certain business
practices of service suppliers, other than those falling under Article
VIII, may restrain competition and thereby restrict-trade in services.
2. Each Member shall, at the request of any
other Member, enter into consultations with a view to eliminating
practices referred to in paragraph 1. The Member addressed shall accord
full and sympathetic consideration to such a request and shall cooperate
through the supply of publicly available non-confidential information of
relevance to the matter in question. The Member addressed shall also
provide other information available to the requesting Member, subject to
its domestic law and to the conclusion of a satisfactory agreement
concerning the safeguarding of its confidentiality by the requesting
Member.
B. Interpretation and Application of Article IX
1. General
(a) Electronic commerce
58. With respect to application of
Article IX
to electronic commerce, see the Progress Report adopted by the Council
for Trade in Services in the context of the Work Programme on Electronic
Commerce on 19 July 1999.(68)
XIII. Article X
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A. Text of Article X
Article X: Emergency Safeguard Measures
1. There shall be multilateral negotiations on
the question of emergency safeguard measures based on the principle of
non-discrimination. The results of such negotiations shall enter into
effect on a date not later than three years from the date of entry into
force of the WTO Agreement.
2. In the period before the entry into effect
of the results of the negotiations referred to in paragraph
1, any
Member may, notwithstanding the provisions of paragraph 1 of Article
XXI,
notify the Council on Trade in Services of its intention to modify or
withdraw a specific commitment after a period of one year from the date
on which the commitment enters into force; provided that the Member
shows cause to the Council that the modification or withdrawal cannot
await the lapse of the three-year period provided for in paragraph 1 of
Article XXI.
3. The provisions of
paragraph 2 shall cease
to apply three years after the date of entry into force of the WTO
Agreement.
B. Interpretation and Application of Article X
1. Working Party on GATS Rules
(a) Article X:1: first sentence
59. Negotiations on the question of emergency
safeguard measures have been carried out in the Working Party on GATS
Rules, established on 30 March 1995 by the Council for Trade in
Services.(69) Members have postponed five times the deadline referred to
in Article X:1. On 15 March 2004 in relation to the Fifth Decision on
Negotiations on Emergency Safeguard Measures, Members decided the
following: (70)
“1. The first sentence of
paragraph 1 of
Article X shall continue to apply.
2. Subject to the outcome of the mandate in
paragraph 1, the results of such negotiations shall enter into effect on
a date not later than the date of entry into force of the results of the
current round of services negotiations.
3. Notwithstanding paragraph 3 of Article
X,
until the entry into effect of the results of the negotiations mandated
under paragraph 1 of Article X, the provisions of
paragraph 2 of that
Article shall continue to apply.”
(b) Identification, elaboration and
consolidation of common elements for an emergency safeguard measure
60. On 14 March 2003, the Report by the
Chairperson of the Working Party on GATS Rules(71) summarized the results
of negotiations, noting that there had been some progress in the
identification of issues relevant to the consideration and formulation
of an emergency safeguard measure.
XIV. Article XI
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A. Text of Article XI
Article XI: Payments and Transfers
1. Except under the circumstances envisaged in
Article XII, a Member shall not apply restrictions on international
transfers and payments for current transactions relating to its specific
commitments.
2. Nothing in this Agreement shall affect the
rights and obligations of the members of the International Monetary Fund
under the Articles of Agreement of the Fund, including the use of
exchange actions which are in conformity with the Articles of Agreement,
provided that a Member shall not impose restrictions on any capital
transactions inconsistently with its specific commitments regarding such
transactions, except under Article XII or at the request of the Fund.
B. Interpretation and Application of Article XI
No jurisprudence or decision of a competent
WTO body.
XV. Article XII
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A. Text of Article XII
Article XII: Restrictions to Safeguard the Balance-of-Payment
1. In the event of serious balance-of-payments
and external financial difficulties or threat thereof, a Member may
adopt or maintain restrictions on trade in services on which it has
undertaken specific commitments, including on payments or transfers for
transactions related to such commitments. It is recognized that
particular pressures on the balance of payments of a Member in the
process of economic development or economic transition may necessitate
the use of restrictions to ensure, inter alia, the maintenance of a
level of financial reserves adequate for the implementation of its
programme of economic development or economic transition.
2. The restrictions referred to in
paragraph 1:
(a) shall not discriminate among Members;
(b) shall be consistent with the Articles of
Agreement of the International Monetary Fund;
(c) shall avoid unnecessary damage to the
commercial, economic and financial interests of any other Member;
(d) shall not exceed those necessary to deal
with the circumstances described in paragraph 1;
(e) shall be temporary and be phased out
progressively as the situation specified in paragraph 1 improves.
3. In determining the incidence of such
restrictions, Members may give priority to the supply of services which
are more essential to their economic or development programmes. However,
such restrictions shall not be adopted or maintained for the purpose of
protecting a particular service sector.
4. Any restrictions adopted or maintained
under paragraph 1, or any changes therein, shall be promptly notified to
the General Council.
5. (a)
Members applying the provisions of this
Article shall consult promptly with the Committee on Balance-of-Payments Restrictions on restrictions adopted under this Article.
(b) The Ministerial Conference shall establish
procedures(4) for periodic consultations with the objective of enabling
such recommendations to be made to the Member concerned as it may deem
appropriate.
(footnote original) 4 It is understood that
the procedures under paragraph 5 shall be the same as the GATT 1994
procedures.
(c)
Such consultations shall assess the
balance-of-payment situation of the Member concerned and the
restrictions adopted or maintained under this Article, taking into
account, inter alia, such factors as:
(i) the nature and extent of the
balance-of-payments and the external financial difficulties;
(ii) the external economic and trading
environment of the consulting Member;
(iii) alternative corrective measures which
may be available.
(d)
The consultations shall address the
compliance of any restrictions with paragraph 2, in particular the
progressive phase-out of restrictions in accordance with paragraph
2(e).
(e)
In such consultations, all findings of
statistical and other facts presented by the International Monetary Fund
relating to foreign exchange, monetary reserves and balance of payments,
shall be accepted and conclusions shall be based on the assessment by
the Fund of the balance-of-payments and the external financial
situation of the consulting Member.
6. If a Member which is not a member of the
International Monetary Fund wishes to apply the provisions of this
Article, the Ministerial Conference shall establish a review procedure
and any other procedures necessary.
B. Interpretation and Application of Article XII
1. Article XII:4
(a) Format for notifications
61. With respect to the format for
notifications under paragraph 4, see the Guidelines for Notifications
under the General Agreement on Trade in Services. (72)
XVI. Article XIII
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A. Text of Article XIII
Article XIII: Government Procurement
1. Articles
II, XVI and XVII shall not apply
to laws, regulations or requirements governing the procurement by
governmental agencies of services purchased for governmental purposes
and not with a view to commercial resale or with a view to use in the
supply of services for commercial sale.
2. There shall be multilateral negotiations on
government procurement in services under this Agreement within two years
from the date of entry into force of the WTO Agreement.
B. Interpretation and Application of Article XIII
1. Working Party on GATS Rules
62. Negotiations on government procurement in
services have been carried out in the Working Party on GATS Rules,
established on 30 March 1995 by the Council for Trade in Services.(73) A
Report by the Chairperson was circulated on 30 June 2003(74) taking
account of the progress made in the negotiations.
XVII. Article XIV
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A. Text of Article XIV
Article XIV: General Exceptions
Subject to the requirement that such measures
are not applied in a manner which would constitute a means of arbitrary
or unjustifiable discrimination between countries where like conditions
prevail, or a disguised restriction on trade in services, nothing in
this Agreement shall be construed to prevent the adoption or enforcement
by any Member of measures:
(a) necessary to protect public morals or to
maintain public order;(5)
(footnote original)
5 The public order
exception may be invoked only where a genuine and sufficiently serious
threat is posed to one of the fundamental interests of society.
(b) necessary to protect human, animal or
plant life or health;
(c) necessary to secure compliance with laws
or regulations which are not inconsistent with the provisions of this
Agreement including those relating to:
(i) the prevention of deceptive and fraudulent
practices or to deal with the effects of a default on services
contracts;
(ii) the protection of the privacy of
individuals in relation to the processing and dissemination of personal
data and the protection of confidentiality of individual records and
accounts;
(iii) safety;
(d) inconsistent with
Article XVII, provided
that the difference in treatment is aimed at ensuring the equitable or
effective(6) imposition or collection of direct taxes in respect of
services or service suppliers of other Members;
(footnote original)
6 Measures that are aimed
at ensuring the equitable or effective imposition or collection of
direct taxes include measures taken by a Member under its taxation
system which:
(i) apply to non-resident service suppliers in
recognition of the fact that the tax obligation of non-residents is
determined with respect to taxable items sourced or located in the
Member’s territory; or
(ii) apply to non-residents in order to ensure
the imposition or collection of taxes in the Member’s territory; or
(iii) apply to non-residents or residents in
order to prevent the avoidance or evasion of taxes, including compliance
measures; or
(iv) apply to consumers of services supplied
in or from the territory of another Member in order to ensure the
imposition or collection of taxes on such consumers derived from sources
in the Member’s territory; or
(v) distinguish service suppliers subject to
tax on worldwide taxable items from other service suppliers, in
recognition of the difference in the nature of the tax base between
them; or
(vi) determine, allocate or apportion income,
profit, gain, loss, deduction or credit of resident persons or branches,
or between related persons or branches of the same person, in order to
safeguard the Member’s tax base.
Tax terms or concepts in paragraph (d) of
Article XIV and in this footnote are determined according to tax
definitions and concepts, or equivalent or similar definitions and
concepts, under the domestic law of the Member taking the measure.
(e) inconsistent with Article
II, provided
that the difference in treatment is the result of an agreement on the
avoidance of double taxation or provisions on the avoidance of double
taxation in any other international agreement or arrangement by which
the Member is bound.
B. Interpretation and Application of Article XIV
1. General
(a) Electronic commerce
63. With respect to application of
Article XIV
to electronic commerce, see the Progress Report adopted by the Council
for Trade in Services in the context of the Work Programme on Electronic
Commerce on 19 July 1999.(75)
(b) Trade in services and the environment
64. On 1 March 1995, the Council for Trade in
Services, pursuant to the Ministerial Decision on Trade in Services and
the Environment, adopted the Decision on Trade in Services and the
Environment.(76) The Decision stipulates,
inter alia:
“In order to determine whether any
modification of Article XIV of the Agreement is required to take account
of such measures, [Ministers] request the Committee on Trade and
Environment to examine and report, with recommendations if any, on the
relationship between services trade and the environment including the
issue of sustainable development. The Committee shall also examine the
relevance of inter-governmental agreements on the environment and their
relationship to the Agreement.”(77)
XVIII. Article XIV bis
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A. Text of Article XIV bis
Article XIV bis: Security Exceptions
1. Nothing in this Agreement shall be
construed:
(a) to require any Member to furnish any
information, the disclosure of which it considers contrary to its
essential security interests; or
(b) to prevent any Member from taking any action
which it considers necessary for the protection of its essential
security interests:
(i) relating to the supply of services as
carried out directly or indirectly for the purpose of provisioning a
military establishment;
(ii) relating to fissionable and fusionable
materials or the materials from which they are derived;
(iii) taken in time of war or other emergency
in international relations; or
(c) to prevent any Member from taking any
action in pursuance of its obligations under the United Nations Charter
for the maintenance of international peace and security.
2. The Council for Trade in Services shall be
informed to the fullest extent possible of measures taken under
paragraphs 1(b) and (c) and of their termination.
B. Interpretation and Application of Article XIV
bis
1. Article XIV bis:2
(a) Format for notifications
65. With respect to the format for
notifications under paragraph 2, see the Guidelines for Notifications
under the General Agreement on Trade in Services. (78)
Footnotes:
46.
S/L/74, para. 10. back to text
47. S/L/64, paras. 3-4. back to text
48. Panel Report on Canada — Autos, paras.
10.269-10.272. back to text
49. S/L/5. back to text
50. WT/REG/M/16, section B, in particular,
paras. 4-39. The adopted recommendations can be found in WT/REG/5. back to text
51. S/C/M/31, section E. The procedures can
be found in S/C/W/92. back to text
52. WT/REG/M/36, para.10. See the Committee’s
annual report (2004) for a list of such agreements: WT/REG/14 and
WT/REG/14/Corr.1/Rev.1. back to text
53. Notified in WT/L/7. back to text
54. S/C/M/2, paras. 9-10. back to text
55. S/C/M/13, paras. 29-30. back to text
56. S/L/5. back to text
57. S/L/74, para. 11. back to text
58. S/C/M/32, section A. The adopted
Disciplines can be found in S/L/64. back to text
59. S/WPPS/W/21, para. 2. back to text
60. S/WPPS/4. back to text
61. Paragraph 3 of the Annex on Financial
Services relates to recognition in financial services. back to text
62. S/L/74, para. 11. back to text
63. S/L/5. back to text
64. S/C/M/19, paras. 4-7. The text of the
approved Guidelines can be found in S/L/38. back to text
65. Paragraph 5 of the Annex on
Telecommunications relates to the access to and use of public
telecommunications transport networks and services. back to text
66. S/L/74, paras. 12-13. back to text
67. S/L/5. back to text
68. S/L/74, para. 12-13. back to text
69. S/C/M/2, paras. 23-25. See also the
Reports of the Working Party on GATS Rules to the Council for Trade in
Services: S/WPGR/1-6, S/WPGR/8, S/WPGR/12-13. back to text
70. S/L/159. back to text
71. S/WPGR/9. back to text
72. S/L/5. back to text
73. S/C/M/2, paras. 23-25. See also the
Reports of the Working Party on GATS Rules to the Council for Trade in
Services, S/WPGR/1-13. back to text
74. S/WPGR/11. back to text
75. S/L/74,
para. 14. back to text
76. S/C/M/1. The adopted Decision can be
found in S/L/4. back to text
77. S/L/4,
para. 1. back to text
78. S/L/5.
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