RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG138/M/1
4 December 2002
(02-6680)
Committee on Regional Trade Agreements Original:  English
  Thirty-Third Session
EXAMINATION OF THE EUROPEAN ECONOMIC AREA, SERVICES
Note on the Meeting of 12 November 2002
Chairperson: Mr . B. G. Chidyausiku  (Zimbabwe)
1. The meeting was convened in document WTO/AIR/1955.
2. Under Agenda Item B.V. of its Thirty-Third Session, the Committee on Regional Trade
Agreements (hereinafter CRTA or the Committee) took up the first round of examination of the
European Economic Area (EEA), Services.  The following topics were discussed:
A. G ENERAL REMARKS
B. S ECTION I - B ACKGROUND INFORMATION ON THE AGREEMENT
C. S ECTION II - TRADE PROVISIONS
A. G ENERAL REMARKS
3. The Chairman said that this was the first round of examination of the services aspects of the
European Economic Area.  The Agreement had been signed on 2 May 1992 and had entered into
force on 1 January 1994.  It had been notified to the WTO on 10 October 1996, as document
S/C/N/28, with the text of the Agreement appear ing in document WT/REG138/1.  Before giving the
floor to the Parties for their general statements, he recalled that the decision to refer this Agreement
for examination to the CRTA had been taken on 23 March 2001 by the Council for Trade in Services,
as contained in document S/C/M/52.  He proposed to organize the examination by asking first the
Parties and then other Members to give any general comments and would then turn to the specifics of
the Agreement using the Standard Format, do cument WT/REG138/2, to guide the debate.
4. The representative of the European Communities (EC) said that the European Economic Area
was an economic integration agreement coveri ng trade in services between the European
Communities and their member states and the Kingdom of Norway, the Republic of Iceland and the
Principality of Liechtenstein.  In addition to trade in services, the Agreement incorporated a free-tradearea covering trade in goods based on existing agreements between the Parties. It also created an
integrated and homogenous economic area based on the four freedoms, i.e. the free movement of
goods, services, labour and capital, as well as a common competition and state aid regime, regulatory
harmonization and close cooperation in other relevant  areas.  He explained that the EEA was based on
European Single Market principles and terminology which at times made it difficult to make directcomparisons with the terminology of the GATS, notably the four modes of supply.  Coverage of
services was, nonetheless, comprehensive.  None of the modes of supply in services was excluded
from the Agreement.  Indeed the comprehensive provisions covering all aspects of economic relations
meant that all modes were fully covered. Sectoral coverage was universal as all services activities
were covered subject only to the exceptions foreseen in Articles 32 and 33 which paralleled theexceptions provided for under relevant provisions of the GATS.  In the view of the Parties, the EEA
satisfied the other relevant tests of GATS Article V in that it provided for the absence or eliminationWT/REG138/M/1
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of existing discriminatory measures and contained prohibitions on new or more discriminatory
measures.  It did not raise the overall level of barriers to trade in services in respect of any WTO
Member, not party to the Agreement, nor did it discriminate against any services suppliers of other
Members, established in one of the Parties, as long as they had a registered office, central
administration, or principal place of business there.  Accordingly, the "no  denial of benefits"provision of GATS V:6 was satisfied.  She hoped that this introduction gave Members a good idea of
the content of the Agreement and she expressed her delegation's willingness to answer any questions
posed by Members.
5. The representative of the Norway, speaking on behalf of Norway, Liechtenstein and Iceland,
said that the EC played a very dominant role as a trading partner for the EEA states, also parties to the
European Free Trade Association (EFTA). The EEA provided for a broad process of economic
integration between the EC and its member states and the EFTA EEA states, not only in services but
in economic relations in general.  In fact, the goods part of the Agreement would be considered under
Item C of the Committee's Agenda (Reporting on the Operation of Agreements).  The EEA was a
dynamic Agreement in the sense that it provided for progressive alignment with EC rules on a wide
range of trade-related areas.  A particularity of the Agreement was the two pillars system: independent
EFTA institutions were entrusted with the monitoring of the implementation of EEA-relevant ECacquis  in the EFTA EEA states.  It was no secret that the development of the EC's membership was
more of a success story than EFTA's and this affected the size of the two pillars in the Agreement.
But still the structure of the Agreement functioned very well, and the EFTA EEA Parties appreciated
the good cooperation they had with the EC.  The EFTA EEA Parties had learned many lessons from
their experience in the EEA that were of great re levance and value for their work in the WTO, in
particular in services.  The EFTA EEA states were of the opinion that the EEA Agreement might be
considered as a model in terms of meeting the requirements of the GATS.
B. SECTION I – BACKGROUND INFORMATION ON THE AGREEMENT
6. The representative of Australia said that this Agreement appeared comprehensive, addressing
all sectors and all four modes of supply.  She expressed interest in examining Annexes IX to XI which
contained specific provisions on the freedom to provide services and she wondered if they were
available on the internet.
7. Referring to footnote 4 of document WT/REG 138/1 which referred to the fact that the
reference to the Swiss Confederation had been deleted by the Adjusting Protocol, the representative of
Japan asked whether the treatment accorded to Switzerland by the EEA was the same as that accorded
to all other Members of the WTO, given that Switzerland was a third party to the EEA.  Secondly, in
view of the special relationship that existed between Switzerland and Liechtenstein, he asked if there
were any provisions that the EEA had accord ed to Liechtenstein but not to Switzerland.
8. In response to the question raised by the representative of Japan concerning the deletion of the
Swiss Confederation in footnote 4 of the EEA Agreement, the representative of the European
Communities said that it had been the intention of the Swiss Confederation to be party to the EEA, but
following internal procedures within Switzerland this had not been taken up and the Agreement hadsubsequently been adjusted.  As regards the other questions, she agreed to provide answers in writing.
The representative of Liechtenstein explained that Liechtenstein had a customs union agreement with
Switzerland which covered trade in goods.  There had been only very minor agreements in theservices sector so far, some of which had been cancelled in the last year, and which covered, forexample, postal services or telecommunications serv ices.  When Liechtenstein entered the EEA it had
had to liberalize its postal and telecommunications services and the treaty with Switzerland had been
cancelled.  There was a small treaty with regard to the movement of persons.  She added that the
updated EFTA Convention, which had entered into force on 1 June 2002, now covered more aspects
of trade in services between Liechtenstein and Switzerland.WT/REG138/M/1
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C. SECTION II – TRADE PROVISIONS
9. The representative of the United States wondered if Article 32 of the EEA, which stated that
provisions on the right of establishment should not apply "to activities which in that contracting party
were connected, even occasionally, with the exercise of official authority", was considered more or
less inclusive than the GATS provision on the exclusion of services provided in the exercise ofgovernmental authority and if the Parties could provide examples of such activities.  Her second
question concerned Article 34 which stated that "companies or firms formed in accordance with the
law of an EC member state or an EFTA state and having their  registered office, central administration
or principal place of business within the territory of the Contracting Parties, should for purposes of
that Chapter be treated in the same way as natural persons who were nationals of EC member states or
EFTA states".  She wondered if this provision applied to companies or firms which had been formed
in accordance with the law of an EC member state or an EFTA state and that engaged in substantivebusiness in that state and what rights companies or firms that were covered by Article 34 had under
the EEA provisions which did not fall under Part III, Chapter 2.
10. The representative of Korea asked for an explanation of the EEA's safeguard mechanism as
outlined in the Standard Format, WT/REG138/2, th e last sentence of which explained that "such
provisions had only been applied with regard to goods and movements of persons".  Given thatArticles 112 and 114 of the EEA legal text did not contain such limitations or restrictions, he
wondered if the explanation in the Standard Format reflected actual practice or if it explained the legal
text.  As safeguards were currently being discussed under GATS rules, it would be useful for
Members to review the text and experience of EEA members in applying safeguard mechanisms in
the services area.  He asked if the EEA members had applied the safeguard mechanism and if so, whattype of measure had been applied, and in what area.
11. In response to the question on emergency safeguard measures, the representative of the
European Communities replied that she had referred in her presentation to actual practice and
experience to date.  In a document submitted to the working party on GATS rules, the EC had notedthe difficulties of applying emergency safeguard measures to various modes of supply, and had indeedcommented that Mode 4 was perhaps the easiest mode in which to apply the mechanism.  The
experience thus far had demonstrated that there had been a need only to apply safeguard measures to
Mode 4 on the services side and her delegation did not expect this to change in the foreseeable future.
She would try to provide additional information on this point.
12. The Chairman said that the first round of the EEA Services Agreement had allowed the
Committee to clarify a number of points, but a number of questions remained pending.  He invited
delegations to submit questions to the Secretariat by 22 November 2002 and the Parties to provideresponses by 10 January 2003.
13. The Committee took note of the comments made.
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