RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG143/M/1
WT/REG144/M/1WT/REG145/M/1
WT/REG146/M/1
17 June 2003
(03-3226)
Committee on Regional Trade Agreements
Thirty-Fourth Session
EXAMINATION OF THE
EUROPEAN COMMUNITIES – LATVIA EUROPE AGREEMENT, SERVICES;
EUROPEAN COMMUNITIES – ESTONIA EUROPE AGREEMENT, SERVICES;
EUROPEAN COMMUNITIES – LITHUANIA EUROPE AGREEMENT, SERVICES;
EUROPEAN COMMUNITIES – SLOVENIA EUROPE AGREEMENT, SERVICES
Note on the Meeting of 4 April 2003
Chairman: Mr. B. A.  Weston  (Trinidad and Tobago)
1. The meeting was convened in document WTO/AIR/2056/REV.1
2. Under Agenda Items C.XX-XXIII of its Thirty-Fourth Session, the Comm ittee on Regional
Trade Agreements (hereinafter CRTA or the Committe e) took up the first round of examination of the
European Communities (EC)-Latvia Europe Agreement, Services; EC-Estonia Europe Agreement,
Services; EC-Lithuania Europe Agreement, Services; EC-Slovenia Europe Agreement, Services.  Thefollowing topics were discussed:
A. G
ENERAL REMARKS
B. S ECTION I - B ACKGROUND INFORMATION ON THE AGREEMENTS
C. S ECTION II - P ROVISIONS AFFECTING TRADE IN SERVICES
D. S ECTION III - G ENERAL PROVISIONS OF THE AGREEMENTS
A. G ENERAL REMARKS
3. The Chairman noted that this was the first round of examination of the EC-Latvia Europe
Agreement, Services;  EC-Estonia Europe Agreem ent, Services;  EC-Lithuania Europe Agreement,
Services; and EC-Slovenia Europe Agreement, Services.  The EC-Latvia Europe Agreement had been
signed on 12 June 1995 and had entered into force on 1 February 1999.  The Agreement had been
notified to the WTO on 11 February 2002 as document S/C/N/187, with the text of the Agreementappearing in document WT/REG143/1 and the St andard Format in S/C/N/187.  The EC-Estonia
Europe Agreement had been signed on 12 June 1995 and had entered into force on 1 February 1998.
The Agreement had been notified to the WTO on 11 February 2002 as document S/C/N/188, with the
text of the Agreement appearing in document WT/R EG144/1 and the Standard Format in S/C/N/188.
The EC-Lithuania Europe Agreement had been signed on 12 June 1995 and had entered into force on1 February 1998.  The Agreement had been notified to the WTO on 11 February 2002 as document
S/C/N/189, with the text of the Agreement appearing in document WT/REG145/1 and the Standard
Format in S/C/N/189.  The EC-Slovenia Europe Agreement had been signed on 10 June 1996 and had
entered into force on 1 February 1999.  The Agreement had been notified to the WTO on 11 February
2002 as document S/C/N/190, with the text of the Agreement appearing in document WT/REG146/1and the Standard Format in S/C/N/190.  He added that the decision to refer these Agreements for
examination to the CRTA had been taken on 5 June 2002 by the Council for Trade in Services, as
contained in document S/C/M/60.  He proposed to consider the four Agreements together with theWT/REG143/M/1, WT/REG144/M/1,
WT/REG145/M/1, WT/REG146/M/1
Page 2
understanding that this would have no effect on the examination per se,  as each Agreement would be
judged on its own merit and would have its own report with its own conclusions.  He proposed to
organize the examination by first asking the Parties and other Members to give any general comments
and then turn to the specifics of the Agreements using the Standard Formats to guide the debate.  In
order to better organize the discussion, he request ed delegations to indicate whether their comments
related to all Agreements, or, if that was not the case, to indicate the relevant Agreement.
4. The representative of the European Communities speaking on behalf of all the Parties
explained that the Europe Agreements between the EC and their Member States and Latvia, Estonia,
Lithuania and Slovenia were wide-ranging economic integration agreements that established an
Association between the Parties.  The stated aims of the Agreements were both political and
economic, and included the development of close political relations and the expansion of tradebetween the Parties.  The Agreements were designed as a stepping-stone to membership of the
European Union (EU), and provided a framework for the necessary integration.  Latvia, Estonia,
Lithuania and Slovenia had each applied to join the EU.  The Europe Agreements provided a
framework for the necessary preparations for member ship, including the removal of tariff barriers, the
harmonization of legislation and liberalization in the field of services.  Membership of the  EUimplied full participation in the European Single Market.  The Agreements were based upon clear
undertakings on liberalization of trade and economic cooperation.  In turn, those undertakings were
reinforced by political dialogue between the Parties at all levels, including ministerial and
parliamentary dialogue.
5. The representative of the European Comm unities indicated that the Agreements were
preferential agreements structured around a ten-year transitional period.  By the end of that period, a
free-trade area for goods together with a liberalized  regime for the establishment of companies and
nationals between the Parties would be established.  She added that the supply of services between the
Parties would be progressively liberalized and that the entire process was reinforced by provisions for
economic cooperation on all major issues of mutual interest.  She remarked that the Agreements werebased on European Single Market principles and terminology, which could make it difficult to make
direct comparison with the terminology of the GATS,  notably the four modes of supply, but coverage
of services was, nonetheless, comprehensive.  While the terms for the modes of supply for services
were not used in the same way as in the GATS, none of them had been excluded from the
Agreements.  Indeed, the comprehensive provisions covering all aspects of economic relations meant
that the modes were fully covered.  In terms of timing, the Agreements were designed with a phased
and gradual approach over the ten-year transitional period.  Liberalization was largely asymmetricgiven the size and strength of the European Single Market and the need for Latvia, Estonia, Lithuania
and Slovenia to adapt as they opened and developed their services markets.  The four countries had
been given a certain amount of time beyond that given to the EC, before introducing national
treatment in the areas of establishment and operations.  She stressed, however, that all Parties should
have reached the same position in terms of the treatment granted to the service suppliers of the otherparty by the end of the transitional period.  For the lib eralization of the supply of services between the
Parties, the process was based on a mutual commitment to take the necessary steps to liberalize trade.
In terms of sectoral coverage, the Agreements were based on the negative list principle.  All services
sectors were covered unless they were specifically listed or excluded from the provisions.  Where
sectors were subject to phasing-in, the Association Council established under each Agreement had aresponsibility to consider whether the process could be accelerated.  Where sectors were excluded, the
Association Council was under an obligation to consid er whether there were means to bring them into
the scope of the Agreement.  Transport was the subj ect of special coverage in the Agreements as it
was excluded from the general provisions for the liberalization of trade in services, but the aim was to
create new additional agreements for air and inland tr ansport.  In the field of maritime transport, the
principle of non-discriminatory access to the market was affirmed.  Outside the transport area, the
Agreements had a small number of excluded areas, all of which remained subject to review andWT/REG143/M/1, WT/REG144/M/1,
WT/REG145/M/1, WT/REG146/M/1
Page 3
suggestion by the corresponding Association Council for means of including them.  There were no
provisions which affected the treatment of services and service providers from third countries and no
modifications to the schedules of specific commitments had been made.  No provision in the
Agreements raised the level of restrictions on trade in services for any other WTO Member.  In
conclusion, she said that she hoped her introduction had given a good idea of the content of the
Agreements.  The EC and its partners would be work ing to supply the CRTA with further information,
including trade data where possible.  In the meantime, the Parties would be happy to receive any
questions on the basis of the original notifications supplied to the WTO.
6. The representative of Japan noting that the Agreements under consideration were all with
countries candidate to become members of the EU, wondered whether upon accession of those
countries to the EU the Agreements would expire.  The representative of the European Communities
confirmed that the effect of acceding to the Co mmunity meant that the Agreements would no longer
apply.  On that point, the representative of the United States asked whether the effect of those
countries joining the EC would mean that all remaining discrimination in the services area would haveto be eliminated before the end of the phase-out pe riod since they would be subject to EC law.  The
representative of the European Communities said that the Accession Treaties contained a provision
which allowed for the full integration of acceding countries into the Community market in some cases
with transitional periods.  She added, however, that  they would be in the position to examine that
issue when notifying the EC enlargement as it occurred.
7. The representative of the United States expressed disappointment to the timing of the review
of the Agreements.  She remarked that the Agreements had been notified to the WTO with a delay of
three, four years, and just before the renegotiation of their schedules under Article V of the GATS.  In
light of that she questioned the usefulness of review ing agreements that were about to be superseded.
Nonetheless, she indicated that her delegation might have some questions of a general nature, and in
that case, these would be submitted in writing.  At the present stage, however, she wondered whether
the EC could provide for all the Agreements a listing of all attached documentation such as Annexesand Protocols since the internet references provided no longer applied.  She also referred to the
Negotiating Group on Rules and indicated that it would be helpful if future submission of agreements
would list the documentation not being provided to the WTO since that could affect the level of
liberalization and Members' views of the agreements.  The representative of the European
Communities considered the latter to be a systemic issue; however, with respect to the Europe
Agreements under consideration she said that the required information would be provided.
B. SECTION I – BACKGROUND INFORMATION ON THE AGREEMENT8. The representative of Japan said that his delegation had some questions with regards to scope.
However, due to their complexity they would be submitted in writing.
C. SECTION II – PROVISIONS AFFECTING TRADE IN SERVICES
9. The representative of Japan, referring to Article 46 of document WT/REG143/1 and to GATS
Article V.6, wanted to know whether a Japanese company which had established a subsidiary in
Latvia in accordance with Latvian law and that engaged in substantive business operations in the
sense of GATS Article V.6 would be granted the sa me treatment accorded to Latvian companies.  He
clarified that although the example referred to the EC-Latvia Agreement, it concerned all four
Agreements.  He added that he would submit the question in writing should that be necessary.  The
representative of the European Communities asked for the question to be submitted in writing.
10. Turning to Safeguards, the representative of Uruguay said that his delegation had some
comments on this issue and indicated that these applied to all four Agreements.  Referring to SectionWT/REG143/M/1, WT/REG144/M/1,
WT/REG145/M/1, WT/REG146/M/1
Page 4
II.4 of the Standard Formats dealing with Safeguar ds he expressed doubts as to whether the special
cases granting limited derogations to Latvia, Estonia, Lithuania and Slovenia respectively from the
provisions on establishment were related to the issue of balance-of-payments or if they did not go
beyond that scope.  He indicated that his delegation was interested in receiving more information ateither that meeting or a future one on two points.  The first one concerned the operation of the
provisions on safeguards in the services area as contained in the Agreements.  Bearing in mind the
main elements that constitute a safeguard, he asked what would be, for example, a situation that
would justify an emergency action.  Would that be the case of infant industries?  How would the
question of modes of supply be handled?  And what would be the concept of like-services?  What
would be the definition of a domestic service?  How would the issue of acquired rights be dealt with?
What would be the indicators and criteria?  What measures would be applied?  Would there becompensation?  And would there be notification, c onsultations, any mechanism of transparency and
control?  In short, he asked for as much information as possible which would help his delegation to
understand better the question of safeguards in the field of services.  The second point, was whether
the inclusion of a provision on safeguards in the Agreements meant that the Parties to the Agreements
had solved the issue of feasibility and desirability w ith respect to safeguards in the field of services.
He indicated that that issue had been discussed for around eight years in the Working Party on GATS
Rules without any conclusion having been reached to that day.
11. The representative of the European Commun ities recalled that the GATS contained a
provision related to safeguards for balance-of-payments difficulties.  She also pointed out that in the
notification of the Agreements it had been indicated that no safeguards had ever been applied toaddress either balance-of-payments difficulties nor those special cases referred to in Section II:4 of
the Standard Formats.  She added that the transition al periods within which the four partners would be
able to apply the safeguard provisions had elapsed.  Should the need for a safeguard be considered in
the future it would, therefore, require the authorization of the responsible Association Council which
would have to look at the issues concerned and would indeed be dealing with the issues of feasibilityand desirability referred to by the representative of Uruguay.  However, she was of the opinion that it
was unlikely that a safeguard would ever be applied in spite of the existence of such provision in the
Europe Agreements.  As such, she was unable to provide any answers that could help the issues under
discussion in the Working Party on GATS Rules.  The representative of Uruguay acknowledged the
fact that no safeguards had ever been applied with respect to the Agreements.  He restated, however,that since the Europe Agreements contained such legal provision, he was hopeful that the
representative of the European Communities could provided information that could assist the workbeing carried out on that issue within the WTO.
12. The Chairman said that the first round of exam ination of the services aspects of the Europe
Agreements between the European Communities and Latvia, Estonia, Lithuania and Slovenia,
respectively, had allowed the Committee to clarify a number of issues, but some remained pending.
He asked delegations to submit questions to the Secretariat by the end of July 2003 and for the Partiesto submit replies no later than the end of October 2003.
13. The Committee took note of the comments made.
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