RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG3/2/Add.4
29 April 1998
(98-1720)
Committee on Regional Trade Agreements Original:  English
ENLARGEMENT OF THE EUROPEAN COMMUNITIES
ACCESSION OF AUSTRIA, FINLAND AND SWEDEN
Questions and Replies
Addendum
This document reproduces the replies provided by the European Communities and their
Member States on EC(15)/Services to additional questions posed by Members.
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Outstanding Answers to Other Questions from WT/REG3/2
106. Do EU directives that impose a reciprocit y test on investment apply in the three new
Member States?  In particular, do the Banking Directive, Hydrocarbon Directive, the
Satellite Directive, and the Ground-Handling Directive apply in Austria, Finland andSweden?  If so, what will be the effect on trade and investment flows caused by these
directives?
There is no reciprocity clause in the satellite directive.
The reciprocity clause in the Ground-handling directive is part of the legislation of the three
new Member States (in fact this directive dates from 15 October 1996).  However, this directiverelates to services activities not covered by the GATS since carved-out from the GATS’ scope by the
Annex on Air Transport.
The reciprocity clause (or so-called third country market access clause) in the Banking
directive applies also in the case of the three ne w Member States However, as in the case of the
EC(12), the three new Member States have waived the right to invoke this third country market access
clause for banking vis-à-vis  WTO Members since the EC and their Member States have undertaken
specific commitments in financial services and not listed an MFN exemption.  The absence of anMFN exemption for the reciprocity clause in the banking directive was confirmed at the conclusion of
the Financial services negotiations in December 1997.
107. Aside from the directives referenced above, does accession to the European
Communities result in discrimination against foreign-owned investments in Austria,
Finland and Sweden?
There is no legislation in place in the three new Member States which would entitle the three
new Members to discriminate against foreign investment. Following the enlargement, Austria,
Finland and Sweden have fully maintained all their MFN based commitments on Mode 3/commercial
presence. In addition, as a result of the enlargemen t all companies established in one Member State,
be it original 12 Member States or the three new Member States, will benefit from CommunityWT/REG3/2/Add.4
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treatment and thus access for third country suppliers seeking to establish/invest from one of the three
new Member States to the EC(12) and vice-versa, has substantially been improved since the
enlargement.
108. How will the European Union’s MFN exemptions  in the services area apply to the three
new Member States?  In particular, will all of the MFN exemptions in the audiovisual
sector apply to Austria, Finland and Sweden?
Document WT/REG23/2/Add.3, explains in detail  how the EC MFN exemptions apply to the
three new Member States.  No different treatment or approach has been applied for the audiovisual
sector.  All measures now applicable to the three new Member States are measures well known to the
WTO Members and negotiated by the EC(12).  As a result of the EC enlargement, no new measures
have been introduced or altered.  These same measures apply now to a larger geographic area.
110. Article 108 - Will a new VAT apply in the Aland Islands?
The same VAT laws (and rates) are being applied in the Aland Islands as in mainland
Finland.
Further Explanations on Questions on Consolidated Schedule (See WT/REG3/M/4)
- Rental/Leasing services without operators relating to Aircraft
For this service activity the EC (12) and respectively Finland and Sweden took a reservation
for Mode 2 which specifies that air carriers can rent/hire only aircrafts which are registered in the
European Community.  For short term leasing, waivers can be granted.  Austria did not take such
reservation but as a result of the enlargement, has to apply the same conditions as the 14 other
Member States.  In other words, service suppliers established in Austria can now only use aircraft
registered in the Community and in exceptional circumstances, this condition can be waived. In factthis condition amounts to a limitation on the input that air carriers can have.  The EC would be
interested to learn in which way this condition affects service suppliers from other WTO Members.
The EC(12), Finland and Sweden took under Mode 3 the same reservation as under Mode 2 to
ensure that operating licenses to air carriers established in one of the Member States, will be granted
only for aircrafts owned by Community natural persons or meeting specific nationality conditions oraircrafts owned by juridical persons meeting specif ic criteria regarding ownership of capital and
control. In other words, the service suppliers established in one of the Member States to supply rental
or leasing of aircrafts, can supply this service only with aircrafts registered in the aircraft register of
the Member States.  Given that this condition is pa rt of Community legislation, the same measure has
to apply for service suppliers established in Au stria.  It should be noted that following the
enlargement, the establishment conditions themselv es for service suppliers providing rental/leasing
services without operators relating to aircraft remain unchanged in Austria.  As in the case of Mode 2,this condition amounts in fact to a limitation on the input but not on the possibility to establish. As a
result of the enlargement, the service suppliers in Austria need now to observe the condition that the
rental of aircrafts has to comply with a number of rules of origin.  The EC would be interested to learn
in which way this condition affects service suppliers from other WTO Members.
- Deletion of commitment in Space transport in Austria
Members asked for further explanations.  There is no other explanation than the need to
withdraw this commitment from the EC(15) schedule so as to ensure a coherent application of the
EC’s internal market rules.  The commitment made by Austria allowed for service suppliers
established in Austria, to consume space launching services outside Austria and to establish as a spaceWT/REG3/2/Add.4
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launching service supplier.  As of today, no space launching service suppliers are launching from
Austria or are as a matter of fact established in Austria.  In addition, the WTO countries in which
space launching could be consumed, are very limited.  Therefore the EC sees no likelihood that this
can affect the rights of the WTO Members.  The EC reiterates its willingness to consider such
possible allegations.
Questions on EC Consolidated Co mmitments (see WT/REG3/2/Add.3)
With reference to document WT/REG3/2/Add 3, see EC replies in
document WT/REG3/2/Add.1.
As to the more general question on how the EC positions itself in light of Article V para. 4,
the EC reiterates its willingness to consider affected rights of third parties if those establish that
barriers have been raised as a result of enlargem ent.  In assessing whether the barriers have been
raised, WTO Members should also duly take into account the improved market access opportunitiesoffered in the new Member States individually and in the entire European Community, as a result of
the enlarged single market.  The EC is ready to provide further information on the latter.
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