WORLD TRADE
ORGANIZATIONWT/REG139/1
17 October 2002
(02-5643)
Committee on Regional Trade Agreements Original:  English
EUROPE AGREEMENT BETWEEN THE
EUROPEAN COMMUNITIES AND THE CZECH REPUBLIC, SERVICES
Notification Pursuant to Article V:7(a) of the General Agreement on Trade in Services
Pursuant to Article V paragraph 7(a) of the GATS, the European Communities and their
Member States, on the one part, and the Czech Republic, on the other part, hereby notify the
"economic integration agreement" as instituted by the Europe Agreement concluded between
themselves.  This notification follows the formal notification already submitted and is made in
accordance with the "standard format for information on economic integration agreements onservices” as taken note of by the Committee on Regional Trade Agreements at its meeting on
2 May 1997.
To facilitate the examination by the Members, th e relevant provisions on trade in services in
this agreement have been identified in the notification.  The full text of the Europe Agreement wherethese provisions can be found, in their original version, is available at the WTO Secretariat.
1  T h e
Europe Agreement is published in the Official Journal of the European Communities (L 360 of
31 December 1994, p. 1) and in the Collection of the Law 7/1995 of the Czech Republic (Official
Journal of the Czech Republic).
I. BACKGROUND INFORMATION ON THE AGREEMENT
1. Membership and dates of signature, ratification and entry into force
The Europe Agreement is a wide-ranging economic integration agreement that establishes an
association between the European Communities and their Member States, acting within the
framework of the European Union, of the one part and the Czech Republic, of the other part. The
agreement was signed on 4 October 1993. It entered into force on 1 February 1995 after theratification process had been concluded by contracting parties in accordance with their own
procedures. The Agreement replaced the first Europe agreement establishing an association between
the European Communities (and their Member States) and the then Czech and Slovak Federal
Republic, which was signed in December 1991.
2. Type of agreement
The Europe Agreement is the basic legal instrument of the relationship between the EU and
the Czech Republic. It establishes gradually a free trade area between the EU and the Czech Republic,
provides for a political dialogue, legal approximation and various other areas of cooperation.  No new
                                                     
1 The text of the Agreement has been circulated as WT/REG18/6.  The text of the Agreement together
with its Annexes and Protocols is also available on the Europa website:http://europa.eu.int/smartapi/cgi/sga_doc?smartap i!celexapi!prod!CELEXnumdoc&lg=EN&numdoc=21994A12
31(34)&model=guichettWT/REG139/1
Page 2
customs duties or quantitative restrictions can be introduced in trade between the European Union and
the Czech Republic from the date of entry into force of the Europe Agreement. The Europe
Agreement provides for progressive alignment with  Community rules as well as a number of specific
provisions in such areas as capital movement, rules of competition, intellectual and industrial property
rights and public procurement. The Europe Agreement constitutes a key element of the EU’s pre-accession strategy which aims at preparing the Czech Republic for EU membership.
3. Scope
As regards the services sectors, the Europe Agreement covers in principle all services sectors
and all modes of delivery (see II.1(b) below).
4. Economic and Trade Data
See available data from Eurostat.
II. PROVISIONS AFFECTING TRADE IN SERVICES
1. (a) Provisions in the Europe Agreement which are relevant to the scope of the
GATS:
− Article 1 - Objective;
− Title II - "General principles":  Articles 6 and 7;
− Title IV - Chapter 1:  "Movement of workers";  Chapter 2 "Establishment";
Chapter 3 "Supply of services between the Community and the Czech Republic" and
Chapter 4 "General provisions";
− Title V - Chapter 1:  "Current payments and movement of capital";  Chapter 2
"Competition and other economic provisions" and Chapter 3 "Approximation of
laws";
− Title VI - "Economic cooperation", in particular Articles 74 on Investment promotion
and protection; Article 79 on energy; Article 81 on environment; Article 82 on
Transport; Article 83 on Telecommunication; Article 84 on Banking, insurance, other
financial services and audit cooperation; Article 89 on Tourism and Article 90 on
Small and medium-sized Enterprises;
− Title IX - "Institutional, general and final provisions".
(b) These provisions of the Europe Agreement constitute an agreement liberalising trade
in services between the European Communities and their Member States, on the one
part, and the Czech Republic, on the other part, in the sense of Article V, paragraph 1,
given that:
− it provides for universal sectoral coverage of all service activities, subject to a
gradual coverage of some services' activities (see Article 45 para 1, 5 and 6)and the temporary exemption under Article 52 (i.e. establishment in air
transport services, inland-waterways transport services and maritime
cabotage transport services.)WT/REG139/1
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− it provides for the liberalisation of trade through all modes of supply:  "cross
border" trade, "consumption abroad", "commercial presence" (with orwithout movement of natural persons) as well as "presence of natural
persons" (see in particular Articles 38, 42, 43, 45, 53, 56 and 59);
− it provides for the absence or elimination of substantially all discrimination
through elimination of existing discriminatory measures and prohibition of
new or more discriminatory measures (see in particular Articles 38, 45, 47,
53 and 56);
− the time-table for the progressive elimination of existing discriminatory
measures is reasonable:  a transition period of a maximum of 10 years (see
Articles 7 and 45);
− the degree of liberalisation of trade in services between the Community and
its Member States, on the one part, and the Czech Republic, on the other part,
goes beyond the requirements and disciplines of the GATS in many respects.
To achieve full national treatment, additional disciplines and means of
liberalisation are foreseen such as:  mutual recognition of qualifications;
approximation of laws;  behaviour of monopolies and exclusive service
providers;  restrictive business practices and payments, transfers and freemovement of capital.
(c) Consideration should also be given, pursuant to Article V paragraph 2 of GATS, to
the relationship of this agreement to the wider process of economic integration
between the European Communities and their Member States, on the one part, and theCzech Republic, on the other part, provided for under the Europe Agreement.
Economic integration is not only taking place in the field of services, but also in
respect of trade in goods and in  economic relations in general.  In addition, this
Agreement will help the Czech Republic to achieve its objective to become a Member
of the European Union .
(d) The European Communities and their Member States, on the one part, and the Czech
Republic, on the other part, have negotiated their Schedule of Specific Commitments
and list of MFN exemptions during the Uruguay Round. The entry into force of the
Europe Agreement did not imply any modification or amendment in these lists. TheEurope Agreement aims at facilitating trade between the Parties. No provisions of the
Europe Agreement aim at raising the level of restrictions of trade in services in
respect of any other WTO Member.
2. Rules of origin
A “Community company” or a “Czech Republic company” respectively shall mean a
company set up in accordance with the laws of a Member State or of the Czech Republic respectively
and having its registered office or central administration or principal place of business in the territory
of the Community or the Czech Republic respectively. However, should the company, set up in
accordance with the laws of a Member State or the Czech Republic respectively, have only its
registered office in the territory of the Community or the Czech Republic respectively, the company
shall be considered a Community or a Czech Republic company respectively if its operations possessa real and continuous link with the economy of one of the Member States or the Czech Republic
respectively (Art. 49).WT/REG139/1
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3. Standards/Recognition
The Europe Agreement foresees measures necessary for mutual recognition of qualifications
(Art. 47) and to achieve the Czech Republic’s full conformity with Community technical regulations
and European standardisation and conformity assessment procedures (Art. 75).
4. Safeguards
The Europe Agreement has provisions for balance-of-payments difficulties in the Community
or in the Czech Republic (Art. 65) and for limited derogations for the Czech Republic from the
provisions on establishment in special cases including: Czech Republic industries undergoing
restructuring, facing serious difficulties or elimination/drastic reduction of the total market share, or
for newly emerging industries in the Czech Republic (Art. 51).
5. Subsidies and state-aid
Article 64 contains a number of provisions as regards subsidies and state aids. It contains
inter alia  a general prohibition of any public aid which distorts or threatens to distort competition by
favouring certain undertakings or certain products. Any practices contrary to this rule shall be
assessed on the basis of criteria arising from the application of the rules of Article 87 (ex-Article 92)of the Treaty establishing the European Community. This period was extended by further period of
five years with the effect as of 1 January 1997. In addition, special implementing rules on state aids
have been developed to implement the above mentioned provisions. Each party shall ensure
transparency in the area of public aid.
6. Government procurement
Article 68 contains provisions on non-disc rimination as regards public procurement.
III. GENERAL PROVISIONS OF THE AGREEMENT
1. Exceptions and reservations
Exceptions are provided for under articles 54 (public policy, security and health) and 114
(security).
2. Accession
The Europe Agreement does not contain any provisions allowing other countries to accede to
the Agreement. However, with necessary modifi cations, the agreement shall apply to any new
Member State of the European Communities.
3. Dispute settlement procedures
Each of the two parties may refer to the Association Council any dispute relating to the
application or interpretation of this Agreement. The Association Council may settle the dispute bymeans of a decision, which will be binding for each party (Article 107).
4. Relations with other trade agreements
Article 28 states that the Europe Agreement shall not preclude the maintenance or
establishment of customs unions, free trade areas or arrangements for frontier trade except in so far asWT/REG139/1
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they alter the trade arrangements provided for in the Agreement. Consultations shall take place within
the Association Council concerning agreements establishing such customs unions or free trade areas
and, where requested, on other major related issues.
5. Institutional framework
The Europe Agreement provides for a cycle of annual meetings of the Association Council
(ministerial level) and the Association Committee (high level officials) as well as frequent multi-
disciplinary sub-committee meetings (technical level). These institutions of the Europe Agreement
have assumed an enlarged role in the pre-accession proc ess, in particular in regard to monitoring the
progress made by the Czech Republic in the adoption and implementation of the acquis
communautaire . Exchanges between the European and the Czech Republic Parliaments are taking
place within an association Parliamentary Committee which meets 1-2 times a year.
IV. OTHER
The full text of the agreement is available from:
- the WTO Secretariat;
- the European Commission;
- the Czech Republic.
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