RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/136
5 May 2000
(00-1848)
Council for Trade in Services Original:  English
COMMUNICATION FROM JAPAN
State of Play of MFN Exemptions
Compiled from Background Notes by the Secretariat for the
Information Exchange Programme
(Japan's Initiative)
The attached paper has been received from the delegation of Japan with the request that it be
circulated to Members of the Council for Trade in Services.
_______________
This paper has been produced for the sole purp ose of compiling information to be shared by
Member countries at the MFN Review Meetings. The content has been extracted, without
modification, from papers prepared by the Secretariat for the Information Exchange Program, and,therefore, does not reflect the position on MFN exemptions of any Members, not even Japan.S/C/W/136
Page 2
CONTENTS
(in the order of W/120)
Page
I. PRESENCE OF NATURAL PERSONS  S/C/W/75  3
II. LEGAL SERVICES S/C/W/43  9
III. ACCOUNTANCY SERVICES S/C/W/73  9
IV. ARCHITECTURAL AND ENGINEERING SERVICES S/C/W/44  9
V. COMPUTER AND RELATED SERVICES S/C/W/45 10
VI. POSTAL AND COURIER SERVICES S/C/W/39 10
VII. AUDIOVISUAL SERVICES S/C/W/40 11
VIII.  CONSTRUCTION AND RELATED ENGINEERING S/C/W/38 11
SERVICES
IX. DISTRIBUTION SERVICES S/C/W/37 12
X. EDUCATION SERVICES S/C/W/49 12
XI. FINANCIAL SERVICES S/C/W/72 13
XII. HEALTH AND SOCIAL SERVICES S/C/W/50 14
XIII.  TOURISM SERVICES S/C/W/51 16
XIV. MARITIME TRANSPORT SERVICES S/C/W/62 16
XV. AIR TRANSPORT SERVICES S/C/W/59 20
XVI. LAND TRANSPORT SERVICES PART II - S/C/W/61 32
RAIL TRANSPORT SERVICES
XVII.  LAND TRANSPORT SERVICES PART I - S/C/W/60 32
GENERALITIES AND ROAD TRANSPORTS/C/W/136
Page 3
I. PRESENCE OF NATURAL PERSONS (S/C/W/75)
45. With regard to the access criteria and conditions used in individual schedules, the following
observations may be made:
f) There is a variety of additional cases where Members found it appropriate to include
limitations, although relevant GATS rules do not seem to require scheduling under
Articles XVI or XVII.  Thus, in twenty cases, discriminatory tax measures have beenincluded;
1  in three cases, foreign exchange restrictions have been listed;2  and several
Members have scheduled limitations benefiting foreigners who are related to
nationals or have resided in the country for a minimum number of years.3
5.2 MFN Exemptions
46. It is difficult to provide a reasonably comprehensive overview of the MFN exemptions
affecting movements of natural persons.  This is ma inly for two reasons.  First, MFN exemptions are
not generally expressed in modal terms.  Many of them, not least in the area of professional services,
may affect both movements of natural persons and commercial presence (investment).  Second, a
variety of exemptions relate to regional agreements – notwithstanding the provisions of Article V
and Vbis of the GATS – which are described in such general terms, sometimes merely by name, that
is next to impossible to infer their coverage.  Despite such uncertainties, however, the Secretariat hasidentified 38 MFN exemptions clearly dealing with such movements;  their content is summarized in
Table 13 (Annex) .
47. Of these exemptions, 32 are of a preferential nature.  In the remaining cases, the treatment
covered is purely reciprocal or, in two cases, it is at the same time preferential and reciprocal.
Preferences granted are not frequently mirrored by similar exemptions on the part of beneficiarycountries.  Among other factors, this could reflect asymmetrical treatment under relevant agreements
or failure by a government to seek an exemption in time.  (In turn, such failure could also result in
asymmetries should the government, in view of the legal situation, have decided to extend the benefits
erga omnes .)  Due to imprecise drafting, however, such possibilities cannot be further explored.
Moreover, while 11 exemptions are clearly related to bilateral agreements and seven to unilateralmeasures, 12 provide no clarification of  the legal basis of the measure – unilateral application;
bilateral, regional or plurilateral agreement.  Other exemptions provide cover for various
combinations of unilateral measures and bilateral, regional and plurilateral agreements.
                                                     
1 A footnote to Article XIV would seem to provide a carve out for direct taxation of non-residents
under certain conditions.
2 Paragraph 9 of document MTN.GNS/W/164/Add.1 states that "exchanges control restrictions are
subject to the general disciplines of Articles XI and XII of the GATS.  Foreign exchange control restrictionwhich fall under Article XII are exceptions from the obligations and commitments of the GATS and therefore
should not be scheduled."
3Such measures seem to raise problems under Article II and may need to be covered by an MFN
exemption .  Only one Member has acted correspondingly.S/C/W/136
Page 4
48. Most of the exemptions are of unspecified sect oral coverage.  Only three exemptions apply to
clearly designated sectors - interpretation, distribution and maritime transport - and one exemption to
sectors covered by a bilateral treaty (Annex Table 13.B).  In another case, the Member involved has
indicated the sectors "principally concerned" (hotel, catering, construction).  The scope of two other
exemptions is confined to unskilled or semi-skilled labour, and a further exemption covers only
seasonal workers.  Finally, three exemptions apply to what seem to be peripheral aspects from theperspective of Mode 4 trade, namely the amount of consulate duties collected (one case) and a social
security agreement.S/C/W/136
Page 5TABLE 13
Overview of MFN exemptions affecting movements of natural persons
A. EXEMPTIONS WITH COMPREHENSIVE SECTORAL COVERAGE
WTO MEMBERS BENEFICIARIES TREATMENT COVERED DURATIONOTHER
REMARKS
1. Austria Switzerland Waiving of visa requirement and other measures Indefinite
2. Brunei Traditional sources Preferences for entry and stay Indefinite with
periodic national
review
3. Cyprus EU Member States Permission for limited numbers of EU nationals to be employed or to exercise
professions in specific occupations in accordance with criteria to be established
unilaterally or in future agreements with EUUntil the time of
full EU
membership
4. Portugal Angola, Brazil, Cape Verde,
Guinea Bissau,
Mozambique, Sao Tome and
PrincipeWaiving of the nationality requirement for the exercise of certain  activities and
professionsIndefinite
5. France Francophone African
countries, Algeria,
Switzerland and RomaniaFacilitation of access procedures for the exerci se of certain services activities 10 years
6. United 
KingdomMembers of the British
CommonwealthWaiving of the requirement of a work permit for citizens having a grandparent
born in the UKIndefinite
7. EC and/or 
Member StatesSwitzerland Measures with the objective of providing for the movement of all categories of
natural persons supplying servicesIndefinite Reference to a
progressiveprocess
8. EC and certain 
Member StatesSan Marino, Monaco,
Andorra, Vatican State cityRight of establishment for natural (and legal) persons, waiving the requirement of
work permitsIndefinite
9. EC Member 
StatesStates in Central, Eastern
and South-Eastern Europe
including Russia, Ukraine,Belarus and Georgia, and inthe Mediterranean basinGuarantee of work permits in limited number for temporary contract work Indefinite or, for
certain countries,
until an economicintegrationagreement is
concluded or
completedAll sectors
(principally
construction, hoteland catering).Reference to a
broader initiative
10. Italy States in Central Eastern and
South Eastern Europe and in
the Mediterranean BasinGuarantee of work permits for seasonal workers IndefiniteS/C/W/136
Page 6
WTO MEMBERS BENEFICIARIES TREATMENT COVERED DURATIONOTHER
REMARKS
11. Egypt Greece, Iraq, Jordan, Libya,
Qatar, Sudan, United ArabEmirates, Yemen andpossibly other countriesFull national treatment As long as the
agreementsremain in force
12. Indonesia Malaysia, Singapore, Brunei
Darussalam, Papua NewGuinea, AustraliaMeasures concerning movement of personnel (semi–skilled workers).  Limited
access to low level occupationsIndefinite
13. Jamaica Caricom Members:  Antigua
and Barbuda, Barbados,Belize, Dominica, Grenada,
Guyana, Montserrat, St Kitts
and Nevis, St Lucia, StVincent and the Grenadines,Trinidad and TobagoWaiving of work permits Indefinite
14. Liechtenstein Switzerland Mutual granting of temporary stay and permanent residency Indefinite
15. Liechtenstein EC and EFTA countries Preferential treatment of  persons from traditional recruiting areas with regard to
permits for entry, stay and work (applies to persons other than the essential
persons appearing in the schedule of commitments).Indefinite
16. Liechtenstein All countries Reciprocity concerning the "right of presence of natural persons" Indefinite
17. Malaysia All countries Differential treatment for measures affecting the movement of semi-skilled and
unskilled workers on a regional, religious and cultural basisIndefinite
18. Malta European Union Countries Preferential treatment in the gran ting of licences and permits to provide services Indefinite Ref erence to the
integrationprocess into theEU
19. New Zealand Kiribati Most favourable entry conditions possible for up to 20 nationals each year Indefinite
20. New Zealand Tuvalu Most favourable entry conditions possible for up to 80 nationals each year Indefinite
21. Panama Guatemala, El Salvador,
Nicaragua, Costa Rica, andHondurasPreferential treatment for suppliers of services of different kinds Indefinite
22. Panama United States Preferential treatment for suppliers of services under the Panama Canal Treaties Indefinite
23. Peru All countries Waiving the limitations of:  three years as maximum duration, 20% of the total
number of employees and 30% of the payrollIndefinite
24. Philippines "All countries" /countries
with whom a treaty on entryrights for traders and
investors has been
concludedWaiving labour market test and simplifying entry procedures Expiry or
termination dateof the bilateral
treatiesS/C/W/136
Page 7WTO MEMBERS BENEFICIARIES TREATMENT COVERED DURATIONOTHER
REMARKS
25. Sierra Leone Mano River Union and
ECOWAS countriesFull national treatment As long as
agreementsremain in force orare extended
26. Singapore "Traditional sources" Measures  regarding unskilled, semi-skilled, and skilled persons except specialists
and professionals. (Purpose:  prevent overpopulation and maintain social order)Indefinite
(periodic nationalreview)
27. Solomon 
IslandsMembers of the Melanesian
Spearhead Group: Vanuatu,Papua New GuineaWaivers for measures affecting the entry and temporary stay of natural persons Indefinite Reference to an
ongoing process
28. Sweden Switzerland Measures with the objective of providing for the movement of all categories of
natural persons supplying servicesIndefinite Reference to a
progressiveprocess
29. Switzerland Liechtenstein See 14. Indefinite
30. Switzerland EC and EFTA countries See 15. Indefinite
31. Tunisia "All countries" (probably
with whom Tunisia has orwill have agreements)Bilateral social security agreements: ex tension of social security and health
benefits to citizens of other countriesNot specified
32. Turkey Libya Restrictions on the transfer of premiums for long-term insurance schemes and on
employment of foreign-workers by foreign companies is waived (not appliedde facto).Indefinite
33. Turkey All countries Consulate duties:  if the amount of the consulate duties collected from Turkish
nationals by any country is higher than the amount written in the tariff list, theconsulate duties collected from the nationals of that country will be increased
reciprocally.Indefinite
34. USA All countries with whom the
United States has a
friendship, commerce and
navigation treaty, a bilateralinvestment treaty; or certaincountries described inSection 204 of the
Immigration Act of 1990Movement of persons for trade and investment:  issuance of "treaty trader or treaty
investor non immigrant visas" to nationals of the countries concerned engaged in
substantial trade in services or in developing an investment.IndefiniteS/C/W/136
Page 8
B.  SECTOR-SPECIFIC EXEMPTIONS
WTO MEMBERSECTOR
CONCERNEDBENEFICIARIES TREATMENT COVERED DURATION
1. New Zealand Interpretation
servicesJapan and other
countries with whom
such arrangements maybe desirableMost favourable entries conditions if employment for up to two years as
interpreters in tourism related industries.Indefinite
2. Switzerland Distribution services EFTA members Granting of work permits without certain limitations to employees of
companies (commerce in goods) from EFTA countriesIndefinite
3. Thailand Services mentioned
in the US –Thailand
Treaty of Amity and
Economic RelationsUSA National treatment to U.S. citizens to provide the services mentioned in the
Treaty10 years
4. USA Maritime transport Countries that prohibit
longshore work by crew
members aboard U.S.vesselsRestrictions on performance of longshore work when making U.S. port calls
by crews of foreign vessels owned or flagged in countries that similarly
restrict U.S. crews on U.S. flag vessels.IndefiniteS/C/W/136
Page 9
II. LEGAL SERVICES (S/C/W/43)
56. Professional associations are also involved in the bilateral negotiation of market access for
foreign lawyers4 and mutual recognition agreements on matters such as qualification requirements,
licensing requirements and ethical standards.  Bilateral agreements exist between the American Bar
Association (ABA) and the Law Society of England and Wales.  It is evident that any such agreement
will have to comply with the MFN obligation of Article II and with the provisions of Article VII onmutual recognition.
G. Specific commitments and MFN exemption lists
58. Four Members have MFN exemptions in legal services5, while four other Members have
exemptions in professional services.6  Three of the legal services sect or specific exemptions cover all
measures pertaining to the provision of legal services and apply to all countries on the basis of
reciprocity.  The fourth exemption extends full national treatment for mode three and four only tocompanies and citizens of countries with which preferential arrangements exist.  All the professional
services exemptions maintain reciprocity as a condition for authorizations to exercise professional
activities, including legal services.
59. It appears that in some countries which have undertaken specific commitments the actual
legal services regime is more liberal than the regime bound in the schedules and that some countrieswho have not scheduled specific commitments a nd have listed MFN exemptions maintain rather
liberal legal services regimes.
7
III. ACCOUNTANCY SERVICES (S/C/W/73)
43. Seven WTO Members have taken MFN exemptions which directly specify either accountancy
services or professional services in general.8  These MFN exemptions all involve reciprocity
provisions for the exercise of professional activities.  Additionally, a number of Members have taken
general MFN exemptions which may have an effect on the accountancy sector, most notably
preferential access measures for natural persons.
IV. ARCHITECTURAL AND ENGINEERING SERVICES (S/C/W/44)
34. There are only a few MFN exemptions specific to the architectural and engineering sectors, or
those which apply to professional services including those sectors, but a number of Members apply
reciprocity in allowing foreign professionals to perform those services in their countries.9
                                                     
4 It has been reported that the Law Society of England and Wales has been negotiating with the relevant
bar councils in India to discuss the creation of a forei gn lawyer regime for the country, ideally mirroring the
rights that Indian advocates enjoy in the United Kingdom.
5 Brunei Darussalam, Bulgaria, Dominican Republic and Singapore.
6 Costa Rica, Honduras, Panama, Turkey.
7 US International Trade Commission, “General Agreement on Trade in Services: examination of the
schedules of commitments submitted by Asia/Pacific trading partners,” Investigation no. 332-374, Washington
DC, August 1997.
8 The countries are Costa Rica, Dominican Republic, Honduras, Panama, Thailand, Turkey and
Venezuela.
9Some countries apply preferential treatment to nationals  or firms of other countries with historical links.S/C/W/136
Page 10
V. COMPUTER AND RELATED SERVICES (S/C/W/45)
36. No WTO Members have listed MFN exemptions specific to computer and related services.
However, given the importance of commercial presence and movement of natural persons, some of
the horizontal MFN exemptions listed relating to  these modes of supply would have an impact.
VI. POSTAL AND COURIER SERVICES (S/C/W/39)
Relation to other services/sectors.  Postal and courier services are dependent on physical means of
delivery, particularly air and road transport services. Road transport may be a significant means of
delivery of parcels and other items within geographic regions or contiguous countries, and air
transport is the predominant means of delivery among distant locations. However, air and road
transport services are identified as sectors in their own right in the Services Sectoral Classification
List.  Moreover, that list includes freight transportation among the subsectors of these and most other
transport subsectors. While the CPC explicitly excludes transport of mail by air from its definition ofcourier services, first, it nowhere defines the scope of  "mail" and, second, it does not make clear
whether the exclusion applies only to "mail" services based exclusively on air transport or to any air
transport component of any courier service suppliers' operations. Notably, the UNCPC makes no
similar exclusion for transport of mail by road mean s, even though such an item also appears in the
CPC under road transport services. These definiti onal ambiguities can result in overlap between
coverage of commitments in the different sectors or , at least, point to an important relation between
the commitments. Clarity regarding such  issues ma y be particularly important for highly integrated
courier services suppliers, such as those operating their own fleet of trucks and/or airplanes. Some
Members have dealt with the ambiguities by entering text in their schedules explaining the scope of
the courier service commitment with respect to means of transport. Nevertheless, given the waycourier services suppliers operate, it is likely that the exclusion of most air transport services by the
GATS Annex on Air Transport and MFN exemptions taken for measures relating to road transport
have an impact on courier services commitments undertaken.
As noted earlier, since the courier services often encompass some  components of other service
industries such as air and road transport, commitments undertaken on courier services may be affectedby market access limitations in these other relevant service sectors and by various regulatory
requirements relating to the means of transportation they may use.  One example may be air transport
regulations prohibiting express mail service suppliers to self-handle their own aircraft or rules
requiring trans-shipments on an arriving aircraft to be formally imported and re-exported. Other
practices can include surcharges on aircraft services or unclear methods of computing airport userfees.  Some countries regulations limit the ability of foreign courier service suppliers to obtain the
variety of licenses they may need (e.g. trucking , customs, postal, freight forwarding, brokerage,
warehouse) to efficiently provide their services. Some such licenses may be restricted to nationals or
extended only to monopoly concessions.
In addition, regulatory requirements relating to personnel, vehicle fleets, facilities, and
communications can be relevant.  Such measures that are horizontal in nature can include limitations
on foreign investment, acquisition of land, access to domestic credit, and the entry and temporary stayof natural persons supplying services to that country.  In this vein, MFN exemptions on horizontal
measures can be as important a consideration as limitations listed in horizontal sections of schedules.
Such measures may include those related to movement of natural persons  (e.g. preferential work
permit arrangements, or labour market tests).S/C/W/136
Page 11
VII. AUDIOVISUAL SERVICES (S/C/W/40)
V. Negotiations on Audiovisual Services and Existing Commitments under the GATS
24. These social and economic concerns, and the pressures for change exerted by new
technology, underlay the discussion of audiovisual services in the Uruguay Round, in which there was
a heavy focus on the cultural specificity of the film and television industries, in particular.  There was
no specific recognitions of these concerns in the text of the Agreement, but at the end of the Roundonly 13 countries made commitments in this sector. A substantially larger number took MFN
exemptions.  As a result of accessions, the number of Members making commitments has since risen
to 19.
25. The majority of the 19 Members who have made commitments to date in audiovisual services
(Table 9), have followed the sectoral classification in W/120, with some modifications or exceptions.
In some cases, however, national definitions have been used.
10  In one case, CPC 7524 has been
included under commitments on audiovisual services, but defined as "Radio and television cableservices".  For the numerous MFN exemptions taken in the audiovisual services sector, national
definitions have primarily been used.
31. A large number of MFN exemptions have been taken in regard to audiovisual services.
Counting the European Community as a single entity, a total of 33 MFN exemptions
11 specifically
mentioning the audiovisual sector are in place, wi th an additional eight MFN exemptions applying to
all services sectors, potentially including audiovisual.  The exemptions most commonly cover co-
production arrangements for film and television productions, typically granting national treatment
status in respect to eligibility for financial assistance, tax benefits and simplified entry procedures for
natural persons.
32. Agreements mentioned in the MFN exemptions include those for the promotion of European,
Latin American and Arab audiovisual works.  Preferential treatment in regard to screen-time access is
also given in many cases.  The most wide-ranging MFN exemptions are those of the European
Community and Venezuela.  Some MFN exemptions also provide for potential retaliatory measures
against unilateral measures imposed by trading partners.
VIII.  CONSTRUCTION AND RELATED ENGINEERING SERVICES (S/C/W/38)
20. Subsidies and tax incentives are provided in many countries to promote construction work or
to encourage growth of the construction sector.  If they are granted only to local suppliers, they may
be inconsistent with a Member's national treatment obligations.  There can also be preferences
provided to local contractors in bidding, or requirements to transfer technology.  Restrictions on theownership of land by foreigners are normally applied to all sectors, but may have a strong effect on
the construction industry, since property developers will not be able to own apartments and houses
                                                     
10This number includes one case where commitments were made under 2. C. (Telecommunications
services), but the sub-categories concerned (CPC 75241 and 75242) are classified as Audiovisual services underW/120 and the Provisional CPC.
11The 33 exemptions covering audiovisual services are by:  Australia, Austria, Bolivia, Brazil, Brunei
Darussalam, Bulgaria, Canada, Chile, Columbia, Cuba, Cyprus, Czech Republic, Ecuador, Egypt, European
Community, Finland, Hungary, Iceland, India, Israel, Liechtenstein, New Zealand, Norway, Panama, Poland,
Singapore, Slovak Republic, Slovenia, Sweden, Switzerla nd, Tunisia, United States and Venezuela.  The eight
general MFN exemptions potentially impacting audiovisual services are by:  El Salvador, Malaysia, Peru,Philippines, Sierra Leone, Thailand, Turkey and the United Arab Emirates.S/C/W/136
Page 12
under construction until completion.12  When preferential treatment is provided to suppliers of certain
countries in the bidding process, for example, an MFN exemption is required.  MFN exemptions
concerning the movement of personnel, research and development subsidies, and foreign investment
listed for all sectors would also affect this sector significantly.
27. There are very few MFN exemptions specific to the construction sector, but some Members
provide preferential treatment to suppliers from neighbouring countries, such as preferential short-listing in international competitive bidding.
IX. DISTRIBUTION SERVICES (S/C/W/37)
MFN Exemptions
58. Only two Members (Liechtenstein and Switzerland) have listed MFN exemptions which
apply specifically to distribution services.  Both reserve the right to grant work permits to employees
of locally established enterprises, engaged in commerce in goods, of member countries of theConvention establishing the European Free Trade A ssociation (EFTA).  The intended duration of the
exemptions is indefinite and the exemptions have been justified as "flanking measures" to the
provision on free trade in goods under the EFTA Agreement.  It is possible that other, more general
MFN exemptions also have an impact on trade in distribution services.
Possible questions:- What are the reasons for the frequent exclusion of certain product categories from the
scope of Members' commitments?
- How far have the commitments of Members captured the liberalization of trade in
distribution services?
- How far do the commitments reflect the restrictions still in place?
X. EDUCATION SERVICES (S/C/W/49)
MFN Exemptions
46. MFN exemptions have been taken by 15 of the 30 Members with commitments on education
services.
13  None of these Members have listed exemptions specific to education.  Most of the existing
MFN exemptions are designed to provide cover for preferential treatment on the basis of bilateral
agreements; three Members have included reservations allowing for reciprocity.14  The preferential
treatment relates mostly to movement of natural persons supplying services, promotion and protection
of investment, and right of establishment of juridical persons.
Issues for Discussion:
- How far do current commitments reflect actual access conditions?
                                                     
12 See, for example, WTO, Trade Policy Review of Switzerland, 1996.
13Austria, Costa Rica, EU, Jamaica, Liechtenstein, New Zealand, Norway, Panama, Poland,
Sierra Leone, Switzerland, Thailand, Trinidad and Tobago, Turkey, USA.
14 EU, Liechtenstein, Turkey.S/C/W/136
Page 13
- How far do they reflect restrictions that scholars and students may consider as particularly
onerous?  What is the relative importance of domestic regulation falling under Article VI?
- Article XVII of the GATSs relates to all measures that modify the "conditions of competition"
to the detriment of foreign suppliers of like services.  what is the status of mesures
conditioning a) financial support to students, and b) recognition of diplomas/certificates onthe nationality of the education service supplier?
XI. FINANCIAL SERVICES (S/C/W/72)
37. Non-prudential regulatory measures such as lending requirements to certain sectors or
geographical regions, restrictions on interest rates or fees and commissions, and requirements to
provide certain services may also exist.  Services related to the issuance of public debt are often
subject to special rules and standards.  Some of those measures may be subject to scheduling under
the GATS as limitations on market access, or as limitations on national treatment, particularly whenthey are applied in a discriminatory manner.  They  may also necessitate MFN exemptions, if applied
in a discriminatory manner between trading partners.
45. Concerning national treatment, special authorization requirements for foreign institutions,
limitations on the ownership of land, and nationality and residency requirements for members of the
board are very common.  Taxes and subsidies also cause national treatment concerns.  Taxation isoften a determining factor in the decision of the location of financial transactions and can
substantially alter the conditions of competition between financial service suppliers.
15  Subsidies are
also not uncommon, but they may take the form of preferential loans from the central bank or
governmental entities, which may be difficult to identify.  Governmental assistance to the banking
sector provided in the context of a financial crisis may have national treatment implications, but couldconstitute prudential measures if the objective is to protect depositors or to restore the stability of the
financial system.
16  National treatment and MFN are important issues in government procurement of
financial services, especially when it relates to issuance of public debt.
61. Sectoral MFN exemptions in financial services have been taken by 39 Members.17  Although
broad MFN exemptions based on reciprocity (or similar requirements) were largely eliminated as a
result of the most recent negotiations, they remain in the MFN exemption lists of 13 Members.18  In
relation to the question of grandfathering existing foreign ownership in local financial institutions, the
United States took an MFN exemption in insurance, applicable in a circumstance of forced divestiture
of U.S. ownership in insurance service providers operating in WTO Member countries.
                                                     
15 The Committee on Fiscal Affairs of the OECD has been discussing issues related to the taxation of
new financial instruments and the taxation of global trading of financial instruments.  Seehttp://www.oecd.org/daf/fa.
16 S/WPGR/W/25 of 26 January 1998 reports that, acco rding to WTO Trade Policy Reviews, at least
ten Members have assisted their offshore banking sectors or rescued ailing domestic banks in recent years.
17 Including Côte d'Ivoire which does not yet have commitments in financial services, but has entered
an MFN Exemption List on 12 December 1997 (S/L/48).
18 Brunei Darussalam, Colombia, Honduras, Hungary, Indonesia, Israel, Mauritius, Peru, Philippines,
Turkey, United Arab Emirates and Venezuela.  As a result of the most recent negotiations, Mauritius has limited
the scope of its MFN exemption based on reciprocity to services not listed in its Schedule of Specific
Commitments.  Hungary has limited the applicability of its exemption by removing a discretionary licensingrequirement.  The Philippines has reduced the scope of its exemption in commercial banking by excluding theexpansion of existing operations from the scope, leaving only the establishment of new commercial presence.Venezuela has reduced the scope of its exemption by removing capital market services from the coverage.S/C/W/136
Page 14
XII. HEALTH AND SOCIAL SERVICES (S/C/W/50)
40. In addition, there may be various types of direct private/public-sector cooperation, for
example with private companies operating public health facilities.  Under so-called
Build-Operate-Transfer (BOT) arrangements, governments may invite private investors to build
hospitals through offering them certain exclusivity rights on a temporary basis.  The legal status of
such arrangements under the GATS may vary, depending on the rights and obligations conferred inindividual cases.  BOT arrangements, for example, may be viewed as some form of government-
regulated commercial activity or as government procurement of the services involved.  In the former
case, for example, the authorities would be required to extend MFN treatment under Article II and –
in scheduled sectors – to ensure that the relevant access criteria are "objective and transparent"
(Article VI:4).
19  In the latter case, Article XIII of the GATS would provide legal cover against
infringements of MFN, Market Access and National Treatment obligations.
MFN Exemptions
63. Among the MFN exemptions listed by WTO members in the context of the Uruguay Round
or recent accessions, eight cases relate to professional services in general – thus extending to the four
categories covered by this Note – or to individual health and social services.  The exemptions havebeen listed by Bulgaria, Costa Rica, Cyprus, Do minican Republic, Honduras; Panama, Turkey and
Venezuela.  In a clear majority of cases, the intended purpose is to provide legal cover for some type
of reciprocity requirement governing market access for professionals (Table 5).  In one case (Cyprus),
it is not possible to identify the precise nature of the MFN problem expected to be covered.  In
another case (Bulgaria), the description of the measure seems to indicate that consumers rather thansuppliers of health and medical services are subject to an element of discrimination.
                                                     
19Other relevant provisions may include Article VIII:2 of the GATS which obliges Members to ensure
that monopoly positions are not abused in areas outside the scope of the monopoly;  the supplier concerned must
be prevented from acting in a manner inconsistent with the Member's specific commitments.  (BOT
arrangements may be considered to confer temporary monopoly rights, at least on a regional basis, on individualsuppliers.)S/C/W/136
Page 15 Country and sector Measure Countries covered
BULGARIA
Medical and dental servicesBenefits under public medical insurance, subsidization and
compensation schemes covering me dical and dental services are
extended to foreigners staying in Bulgaria on the basis of reciprocity.Current and future signatories to bilateral agreements
COSTA RICA
Professional servicesForeign professionals may become members of professional colleges
only if a reciprocal agreement with the home country exists and/or incertain cases if Costa Ricans may exercise the profession in similarcircumstances in the country concerned.All countries
CYPRUS
Human health services and social
securityHuman health services:
Measures governing the provision to Cypriots of medical treatment not
otherwise available in Cyprus.
Public social security:
Measures covered by bilateral agreements on social security.All countries with whom medical co-operation might be
desirable (agreements currently exist with medical centres
in Greece, United Kingdom and Israel).
Austria, Canada (Quebec) and any country with whom an
agreement may be concluded in future.
DOMINICAN REPUBLICDental, physiotherapy, medical,
paramedical and nursing servicesDentists, physiotherapists, doctors, paramedical personnel and nurses
may exercise their profession only on the basis of reciprocity.All countries
HONDURAS
Professional servicesAuthorization to exercise a profession is granted on the basis of
reciprocity.All countries
PANAMA
Professional servicesAuthorization to exercise a profession is granted on the basis of
reciprocity.All countries
TURKEY
Professional servicesPossibility of prohibiting the supply of services in Turkey if the
supplier's home country maintains legal and administrative conditionsadversely affecting Turkish citizens who supply similar services.All countries
VENEZUELA
Professional servicesLaws governing the supply of professional services by foreigners
(including physicians and veterinary surgeons) may specify as acondition that Venezuelans must receive the same treatment in theapplicant's home country.All countries
Source: WTO Secretariat based on documents GATS/EL/122, 22, 25, 28, 38, 124, 88 and 92.S/C/W/136
Page 16
XIII.  TOURISM SERVICES (S/C/W/51)
37. An MFN exemption affecting Tourism has been taken by Mexico in regard to tax deductions
for individuals attending business conventions.  Under the Aviation category in the Transport sector,
Members have taken a significant number (16) of MFN exemptions for CRS;  exemptions are also in
place for a number of other aviation-related measures.  In addition, a substantial number of Membershave taken general MFN exemptions which may have an effect on the Tourism sector, most notably
preferential access measures for natural persons.
XIV. MARITIME TRANSPORT SERVICES (S/C/W/62)
3. The results of the Uruguay Round, while incorpor ating in the services schedules the maritime
transport commitments made, also contain an annex to the GATS on negotiations in maritime
transport services and a ministerial decision on maritime transport services whose effect was to
prolong maritime transport negotiations until 30 June 1996 and create to that effect a NegotiatingGroup on Maritime Transport Services (NGMTS).  This group held 17 meetings between May 1994
and June 1996.  As a result of its work, the Council for Trade in Services adopted on 28 June 1996 a
Decision on Maritime Transport Services (S/L/24 dated 3 July), which again incorporates the
maritime commitments and the MFN exemptions re lated to those commitments in the schedules,
suspends the negotiations until the commencement of the next comprehensive negotiations onservices, and suspends the MFN obligation until the end of the negotiations.  The text of this decision
is in Annex 1.S/C/W/136
Page 17
ANNEX 1
DECISION ON MARITIME TRANSPORT SERVICES
Adopted by the Council for Trade in Services on 28 June 1996
The Council for Trade in Services,
Having  regard to the Annex on negotiations on Maritime Transport Services,
Having  regard to the Decision on Negotiations on Maritime Transport Services, adopted at Marrakesh on
15 April 1994,
Noting  the Report of the Negotiating Group on Maritime Transport Services and the commitments
scheduled by Members in this sector,
Desiring  to further the liberalization of international trade in maritime transport services within the
framework of the General Agreement on Trade in Services (GATS),
Decides  as follows:
1. To suspend the negotiations on Maritime Transport Services and to resume them with the commencement
of comprehensive negotiations on Services, in accordance with Article XIX of the GATS, and to conclude them nolater than at the end of this first round of progressive liberalization.  At an appropriate time decisions pursuant to
paragraph 3 of Article XIX of the GATS will be taken on procedures for the conduct of such negotiations.  It is
agreed that negotiations will be resumed on the basis of existing or improved offers.
2. Members wishing to exercise their rights under paragraph 3 of the Annex on Negotiations on Maritime
Transport Services may do so during a period of 30 days from the date of this Decision.
3. Any commitments resulting from these negotiations will be inscribed in Schedules of Specific
Commitments annexed to the GATS.
4. Article II of the GATS and the Annex on Article II Exemptions, including the requirement to list in the
Annex any measures inconsistent with most-favoured-nation treatment that a Member will maintain, shall enter
into force for international shipping, auxiliary services and access to and use of port facilities at the same time as
the conclusion of the negotiations referred to in paragraph 1.  During the course of negotiations the effects of thecontinued suspension of Article II will be kept under review by the Council for Trade in Services.
5. Paragraph 4 of this Decision shall not apply to any specific commitment on maritime transport services
which is inscribed in a Member's Schedule.
6. Notwithstanding Article XXI, a Member may improve, modify or withdraw all or part of its specific
commitments in this sector, during a period of sixty days the end of which shall coincide with the conclusion of thenegotiations referred to in paragraph 1.  During the same period, Members shall finalize their positions relating toMFN Exemptions in this sector.
7. Commencing immediately and continuing until the conclusion of the negotiations referred to in
paragraph 1, it is understood that Members shall not apply any measures affecting trade in maritime transportservices except in response to measures applied by other countries and with a view to maintaining or improving thefreedom of provision of maritime transport services, nor in such a manner as would improve their negotiatingposition and leverage.S/C/W/136
Page 18
39. As far as MFN exemptions are concerned, 26 Members have MFN exemption lists in
maritime transport services.  However, according to paragraph 4 of the Decision on Maritime
Transport Services of 3 July 1996 (S/L/24), Article II of the GATS and the Annex on Article II
Exemptions are suspended for international shipping, auxiliary services and access to and use of port
facilities until the conclusion of the next round of services negotiati ons.  Paragraph 4 of the Decision,
however, does not apply to any specific commitment on maritime transport services which is inscribed
in a Member’s schedule.  The only MFN exemption lists which are not suspended are those taken by
Members who have maintained specific commitments in the sector.  There are therefore only
14 Members who have MFN exemption lists actually in force.
40. Four MFN exemptions among those whose effects are not suspended cover measures taken by
Members under the UN Convention on a Code of Conduct on Liner Conferences.  These exemptions
are of a preferential nature in so far as they favour countries who are signatories to the Code.However, treatment under the Code is partially
20 based on reciprocity and has a partial exclusionary
effect on third parties (which are limited to 20 per cent of the cargoes carried by the conference). Four
other exemptions are specific to cabotage, three to  tax treatment and four are of a broad and generic
nature covering a bundle of existing and future measures in the maritime sector.  The vast majority of
exemptions (15) do not specify the intended duratio n and have entries such as “indefinite, unlimited
or indeterminate”; three exemptions link the duration of the exemptions to the expiry date or
termination of existing bilateral agreements.  Fina lly six exemptions are both of a preferential and
reciprocal nature, nine are only reciprocal and four are only preferential.
41. This table only lists the MFN exemptions of those Members who have commitments in
maritime transport services as, according to paragraph 5 of the Decision on Maritime Transport
Services of 3 July 1996 (S/L/24), the continued suspension of Article II and of the Annex on Article II
exemptions does not apply to Members’ specific commitments on maritime transport inscribed in the
schedules and to the relevant MFN exemptions.
42. This table does not take account of MFN exemptions applicable to all sectors, it only lists
MFN exemptions specific to the maritime sector.
                                                     
20 For instance EC regulation 954//79 known as the "Brussels package" disapplies between EC shipping
companies the strict bilateral cargo sharing (40-40) foreseen by the code.S/C/W/136
Page 19
MFN EXEMPTIONS IN MARITIME TRANSPORT SERVICES
Member Sector affected Countries to which the
measure appliesIntended duration Nature of exemption
Benin Coastal shipping
(cabotage) and liner tradeNot specified 10 years renewable Preferential/reciprocal
Maritime transport: UN
Convention on a Code ofConduct on LinerConferencesNot specified Unlimited Preferential/reciprocal
Canada Maritime transport: tax
exemptionAll Indeterminate Reciprocal
Cuba Freight transportation All countries with which
bilateral agreements have
been concludedUntil end of notice of
termination by one of the
partiesPreferential
European
CommunityRental/leasing services
without operators, relating
to ships; rental of vesselswith crew(Chartering of foreign
ships to consumers
resident in Germany)All Indefinite Reciprocal
Finland Cabotage All Indefinite Reciprocal
Jamaica Cargo reservations under
the UN Code of Conducton Liner ConferencesSignatories to the UN
Convention on a Code ofConduct on Liner
ConferencesIndefinite Preferential/reciprocal
New Zealand Maritime (passenger and
freight): supply of servicesby officers on New
Zealand ships –
qualification requirementsEire, Hong Kong, United
Kingdom, India, Malaysia,Singapore, Pakistan, South
AfricaIndefinite Preferential
Peru Transport: land and sea Andean Group countries Indefinite Preferential
Philippines Cabotage All Expiry date or
termination of bilateralagreements on Amity,
Commerce and
NavigationReciprocal
Senegal Coastal shipping
(cabotage) trade25 countries Near future, while the
objective pursued takes
rootReciprocal
Maritime transport: UN
Convention on a Code of
Conduct on LinerConferencesNot specified Unlimited Preferential/reciprocal
Maritime transport Not specified Unlimited Preferential/reciprocal
Thailand Selling and marketing of
maritime transportservices: value added taxcollectionAll Indefinite Reciprocal
Trinidad and
TobagoCargo reservations under
the UN Code of Conducton Liner ConferencesSignatories to the Code Unlimited Preferential/reciprocal
Turkey Transportation services:
income and corporate taxrates. Value added tax
exemption.All Indefinite Reciprocal
Treatment of
transportation vehiclesAll Indefinite Reciprocal
Venezuela Maritime freight transport
servicesNot specified Indefinite Reciprocal
Maritime freight transport
services: cargo sharingUnited States Indefinite PreferentialS/C/W/136
Page 20
XV. AIR TRANSPORT SERVICES (S/C/W/59)
16. In the same way Mode 3 conditions the establishment of foreign maintenance facilities in
third markets.  Table 1 in the Annex compares the number of WTO Members having MFN
obligations on air maintenance (all save one) the size of their commercial fleet in 1995 and 1998 and
the number of maintenance and repair facilities on their territory in those same years.  Countries withmarket access and/or national treatment commitments on maintenance services are highlighted.  The
table reveals a general increase in the number of new facilities established.  This is more likely to
result from market growth than from the effects of the GATS, but it may be noted that six of the
13 cases of newly created facilities have been in countries with GATS commitments in this sector.
Table 1:  WTO Members  - with MFN obligat ions for Repair and Maintenance Services
(Bold areas are symbolising countries with commitments)
1995 1998
Number of
aircraftNumber of
repair andmaintenancefacilitiesNumber of
aircraftNumber of
repair andmaintenancefacilitiesNew facilities
established
Member
Angola 24 25
Antigua & Barbuda 12 9
Argentina 71 80 1 +1
Australia 207 2 231 2
Austria 68 1 74 1
Bahrain 1 2
Bangladesh 7 8
Barbados 1 0
Belgium 111 1 132 2 +1
Belize 0 0
Benin 0 0
Bolivia 21 18
Botswana 1 1
Brazil 194 3 219 4 +1
Brunei Darassalam 14 20
Bulgaria 88 47
Burkina Faso 2 2
Burundi 0 0
Cameroon 6 6
Central African Rep. 0 0
Chad 1 1
Chile 42 53
Colombia 94 92 1 +1S/C/W/136
Page 21
1995 1998
Number of
aircraftNumber of
repair andmaintenancefacilitiesNumber of
aircraftNumber of
repair andmaintenancefacilitiesNew facilities
established
Congo 5 5
Congo, Dem. Rep. 32 30
Costa Rica 12 1 11 1
Cote d'Ivoire 17 1 18 1
Cuba 94 42
Cyprus 19 19
Czech Republic 35 1 43 1
Denmark 66 1 67 1
Djibouti 4 2
Dominica 0 0
Dominican Rep. 4 0
Ecuador 24 24
Egypt 58 64
El Salvador 15 20
Fiji 5 7
Finland 45 51
France 483 7 443 11 +4
Gabon 4 8
Gambia 1 11
Germany 474 5 575 9 +4
Ghana 12 14
Greece 53 1 42 1
Grenada 0 0
Guatemala 8 8
Guinea Bissau 1 0
Guinea, Rep. 2 1
Guyana 1 1
Haiti 1 0
Honduras 5 1
Hong Kong 100 1 0 2 +1
Hungary 35 1 31 1
Iceland 18 1 22 1
India 128 134
Indonesia 223 196
Ireland 52 6 74 6
Israel 36 2 40 2
Italy 245 2 202 2S/C/W/136
Page 22
1995 1998
Number of
aircraftNumber of
repair andmaintenancefacilitiesNumber of
aircraftNumber of
repair andmaintenancefacilitiesNew facilities
established
Jamaica 10 14
Japan 485 476
Kenya 14 10
Korea 190 226
Lesotho 1
Liechtenstein 0 132
Luxembourg 16 1 17 1
Macau 0 74
Madagascar 8 6
Malawi 2 3
Malaysia 124 1 131 1
Maldives 1 1
Mali 0 1
Malta 16 13
Mauritania 2 1
Mauritius 10 8
Mexico 217 2 203 2
Morocco 42 1 34 1
Mongolia 20 3
Mozambique 7 5
Myanmar 8 5
Namibia 2 2
Netherlands 154 5 145 5
New Zealand 60 1 55 2 +1
Nicaragua 1 1
Niger 1 1
Nigeria 103 100
Norway 40 40
Pakistan 51 49
Panama 10 15
Papua New Guinea 10 10
Paraguay 6 6
Peru 49 46
Philippines 60 104
Poland 56 41
Portugal 46 1 75 1S/C/W/136
Page 23
1995 1998
Number of
aircraftNumber of
repair andmaintenancefacilitiesNumber of
aircraftNumber of
repair andmaintenancefacilitiesNew facilities
established
Qatar 4 11
Romania 48 45 1 +1
Rwanda 1 0
St Kitts & Nevis 0 0
Saint Lucia 0 0
St.Vincent & Grn. 0 0
Senegal 2 1
Sierra Leone 1 1
Singapore 101 5 149 7 +2
Slovak Republic 4 15
Slovenia 11 7
Solomon Islands 1 2
South Africa 59 1 135 2 +1
Spain 249 1 269 1
Sri Lanka 16 9
Suriname 0 1
Swaziland 5 5
Sweden 230 2 207 2
Switzerland 124 3 96 3
Tanzania 10 4
Togo 2 5
Trinidad & Tobago 13 13
Tunisia 25 28
Turkey 107 138
Uganda 6 9
United Arab Emirates 33 1 45 1
United Kingdom 610 11 758 14 +3
United States 5576 66 6090 75 +8
Uruguay 77 4
Venezuela 75 75
Zambia 8 5
Zimbabwe 12 8S/C/W/136
Page 24
26. The development of the regulatory regime has been determined to a large extent by the
property rights of the airline companies.  The CRS companies were founded by airline companies
which, though they  were obliged to include the flights of competitors in their databases in order to
offer the complete range of flights available, quite logically used their subsidiaries to promote in the
first instance their own flights.  To do this the "screens" showing flights between two given cities(City Pairs) were set up so that the flights of th e parent company showed up first, before those of
competitors.  As public authorities became aware of this problem and began to take measures to
suppress it, other more subtle programmes were designed.  This explains the appearance in the early
1980s of "Codes of Good Conduct" under which a CRS supplier was authorized to operate only if it
undertook an obligation to give non-discriminatory treatment to all airlines such as EU regulation
n° 2299/89
21 and n° 3089/9322 or the corresponding US legislation.23  These regulations, which imply
reciprocity-based treatment, have been the subject of MFN exemptions. Nonetheless, as appears fromthe following table compiled by ICAO, this reciprocity regime has not prevented the establishment of
the major suppliers, which tends to confirm the ge neral view in the economic literature and in the
profession to the effect that these problems of "collusion" have largely evaporated for the "classical"
CRS suppliers.  They recur however on the websites operated by the airline companies.
                                                     
21 OJ n° L/220, 29 July 1989, page 1.
22 OJ n° L/278, 11 November 1993, page 1 (under revision).
23 57 FR 43834, 22 September 1992.S/C/W/136
Page 25
Table 2: WTO Members with MFN exemptions on CRS services
(Members with commitments are shown in bold type)
1995 1998
MembersNumber of Vendors Number of Vendors Evolution
State
Austria 4 4
Belgium 5 4 -1
Bulgaria 3 1
Denmark 4 4
Finland 4 4
France 5 4 -1
Korea 2 4 +2
Kuwait 0 2 +2
Germany 5 4 -1
Greece 4 4
Iceland 2 2
Ireland 3 4 +1
Italy 5 4 -1
Liechtenstein 0 0
Luxembourg 5 4 -1
Netherlands 4 4
Norway 4 4
Poland 5 3 -2
Portugal 4 4
Romania 1 3 +2
Singapore 5 4 -1
Slovenia 1 1
Spain 4 4
Sweden 4 4
Switzerland 4 4
Thailand 2 4 +2
United Kingdom 6 4 -2
United States 5 4 -1
30. Annex Table 2, compiled by ICAO, illustrates the presence of major CRS suppliers in the
territory of WTO Members which have MFN obligations on these services.  (For the situation ofMembers which have taken MFN exemptions on CRS services see Table 2 above).  There seems to be
no correlation between the development of the number of suppliers and the existence of
commitments:  of the Members which have MFN obligations 30 (seven having commitments) show a
fall in the number of suppliers, 27 (four with commitments) show an increase and 45 (six with
commitments) show no change.  There also appears to be no correlation for those Members who haveMFN exemptions on CRS services:  nine Members (six with commitments) show a fall, five (three
with commitments) show an increase and 13 (eleven with commitments) show no change.  This does
not imply that commitments make no difference:  other factors help to explain both reductions in the
number of suppliers (concentration among operators) and their increase (growth in the market).  It
will be necessary to await completion of the concentration process before the long-term effects ofcommitments on the investment strategies of CRS suppliers can be assessed.S/C/W/136
Page 26
Table 2:  CRS Vendors in WTO Members with MF N obligations for Computer Reservations Systems
(Bold areas are symbolising countries with commitments)
Members1995
Number of Vendors1998
Number of Vendors Evolution
Angola 2 1 -1
Antigua & Barbuda 1 2 +1
Argentina 4 3 -1
Australia 5 5
Bahrain 2 2
Bangladesh 1 2 +1
Barbados 1 2 +1
Belize 2 2
Benin 1 1
Bolivia 2 1
Botswana 1 1
Brazil 4 3 -1
Brunei Darassalam 1 2 +1
Burkina Faso 1 1
Burundi 0 0
Cameroon 1 1
Canada 6 4 -2
Central African Rep. 0 1 +1
Chad 0 1 +1
Chile 5 3 -2
Colombia 3 2 -1
Congo 1 2 +1
Congo, Dem. Rep. 3 0 -3
Costa Rica 4 2 -2
Côte d'Ivoire 1 1
Cuba 1 0 -1
Cyprus 2 4 +2
Czech Republic 3 4 +1
Djibouti 0 0
Dominica 0 1 +1
Dominican Rep. 2 2
Ecuador 4 2 -2
Egypt 4 4S/C/W/136
Page 27
Members1995
Number of Vendors1998
Number of Vendors Evolution
El Salvador 3 2 -1
Fiji 1 1
Gabon 1 1
Gambia 0 0
Ghana 1 0 -1
Grenada 1 2 +1
Guatemala 4 3 -1
Guinea Bissau 0 1 +1
Guinea, Rep. 1 1
Guyana 2 2
Haiti 2 2
Honduras 2 2
Hong Kong 4 3 -1
Hungary 4 4
India 5 4 -1
Indonesia 2 3 +1
Israel 4 3 -1
Jamaica 2 2
Japan 3 3
Kenya 1 1
Lesotho 1 1
Macau 0 0
Madagascar 0 1 +1
Malawi 1 1
Malaysia 5 3 -2
Maldives 0 0
Mali 1 1
Malta 1 2 +1
Mauritania 0 1 +1
Mauritius 1 1
Mexico 5 4 -1
Morocco 2 2
Mongolia 0 0
Mozambique 1 0 -1
Myanmar 0 0
Namibia 0 1 +1
New Zealand 3 4 +1
Nicaragua 3 2 -1
Niger 0 1 +1S/C/W/136
Page 28
Members1995
Number of Vendors1998
Number of Vendors Evolution
Nigeria 3 1 -2
Pakistan 1 4 +3
Panama 4 2 -2
Papua New Guinea 1 1
Paraguay 2 2
Peru 3 2 -1
Philippines 3 4 +1
Qatar 3 2 -1
Rwanda 0 0
St Kitts & Nevis 0 1 +1
Saint Lucia 1 1
St.Vincent & Grn. 1 2 +1
Senegal 1 1
Sierra Leone 0 0
Slovak Republic 2 3 +1
Solomon Islands 0 0
South Africa 4 4
Sri Lanka 1 2 +1
Suriname 2 0 -2
Swaziland 1 1
Tanzania 1 1
Togo 1 1
Trinidad & Tobago 1 2 +1
Tunisia 0 1 +1
Turkey 4 3 -1
Uganda 1 0 -1
United Arab Emirates 2 2
Uruguay 4 2 -2
Venezuela 4 3 -1
Zambia 1 0 -1
Zimbabwe 0 0
2. Aircraft repair and maintenance
43. Commitments under Mode 2 (consumption abroad) appear very liberal, since 42 Members
have offered it with no limitations and only three have made no commitment for this mode.  (One ofS/C/W/136
Page 29
these three Members also maintains an MFN ex emption under which preferential treatment is
accorded to certain suppliers of maintenance services outside its territory.) Under Mode 3,
34 Members have offered the sector without limitations and eight have done so with limitations (on
investment screening, obligation to establish a registered office, licencing or authorization
requirements, residence requirements and foreign equity limitations).  In Mode 4, 43 of the 44schedules follow the classic formula – no commitment except as indicated in the horizontal section.
The remaining Member has made no commitment, horizontal or otherwise, under this mode.
44. National treatment limitations either reflect those in the market access column or are more
liberal, but for two exceptions (one reference to the horizontal section under Mode 3 and one case
where there is no national treatment commitment although a commitment is made in market access).
45. Apart from the case mentioned above, only two Members have taken MFN exemptions:  these
Members also have no commitments for this sector.  One of these exemptions is formulated in verygeneral terms, referring to all of the services co vered by the Annex and to all regulatory regimes,
whether bilateral, multilateral, unilateral, de jure  or de facto .  The other exemption covers a typical
reciprocity regime.
3. Selling and marketing of air transport services
47. Two Members have defined this activity in a sui generis  manner and one, which has not made
commitments, has used a sui generis  definition for its MFN exemption.  These definitions appear in
the footnotes to Tables 4 and 7 in the Annex.  Three Members have referred to the CPC – either to
CPC 7469 (other services related to air transport) or to CPC 74710-74720 (travel agency and tourist
organization services/tourist guide services).  Three Members have included in the definition the
selling and marketing of computer reservation systems.  Six have made an explicit reference to thedefinition in the Annex.  Finally, two Members have limited the scope of their commitments, one by
excluding the selling and marketing of air transport services for a series of raw and processed
agricultural products, the other by limiting its commitments to advertising and the creation of regional
offices.
49. As regards national treatment, the commitments either match in essence the entries in the
national treatment column or are more liberal.  In 18 cases (counting EU Member States individually),
limitations relate to use of computer reservation systems and to MFN exemptions intended to cover
reciprocity requirements in that matter.  These limitations concern Modes 1 and 3 and are all drafted
in the same terms:  "for distribution through CRS of air transport services provided by CRS parent
carrier:  unbound".   In three cases, national treatment limitations differ from those in the market
access column (one reference to the horizontal section, one case in which national treatment is
unbound and one providing for exemption from VAT on a reciprocal basis).
50. MFN exemptions for this activity are of two kinds.  The most common (24 cases counting EU
Member States individually) covers both selling and marketing and CRS services:  these are designed
to obtain equivalent treatment on the basis of reciprocity.  They cover all countries where there is a
CRS supplier or an aviation company using CRS, are of indefinite duration and are justified by
reference to the inadequacy of multilaterally agreed rules for CRS services.  Twelve cases concernEuropean  Members and in these reference is sometimes made to Community regulation. Their
transatlantic counterpart is largely similar but defines selling and marketing more broadly, and
establishes a link with the Chicago Convention an d with bilateral agreements.  The other kind of
exemption (three cases) covers selling and marketing only.  One is formulated in very general terms,
while the others relate to provisions under bilateral agreements which may involve reciprocalrestrictions, or preferential treatment, for selling and marketing activities.S/C/W/136
Page 30
4. Computer Reservation Systems Services
54. National treatment commitments essentially reflect those under market access, though some
are more liberal.  In seven cases, limitations relate to the use of CRS and to the MFN exemptions
covering reciprocity legislation in this connection.  In one other case, reference is made to thehorizontal section;  this does not appear in the market access column.
55. MFN exemptions on CRS services are of three kinds.  One of these covers all sectors
including CRS and all types of air transport regimes.  The second consists of exemptions covering
both CRS and selling and marketing, (in one case CRS alone) and is intended to secure reciprocal
treatment (see paragraph 26 above).  Thirdly there are two exemptions designed to accord preferential
treatment to a particular CRS system or to air carriers using it.  One of these permits only companies
in partnership with a major CRS supplier to establish their own system.  The other permits access tonational tourist agencies via the dedicated SITA network only to CRS providers designated by the
carriers of the country benefitting from the exemption.  The texts of these exemptions can be found in
the footnotes, Table 7 in the Annex.
Other MFN exemptions
59. Seven exemptions taken by five Members fall into two categories – fiscal exemptions and
exemptions related to transport activities.  Four Members have between them taken five exemptions
providing for reciprocal exemption from various ta xes, relating to all countries and of indefinite
duration.  Two Members have taken reciprocity-based exemptions covering the treatment given
specifically to suppliers of air transport services.  The texts of these exemptions can be found in the
footnote to Table 7 in the Annex.S/C/W/136
Page 31
Table 7:  MFN Exemptions in Air Transport Services
Members MaintenanceSelling/
MarketingCRS Others
Austria X x
Bulgaria X x
Canada x X x
European
Community24Xx
Finland X x
Iceland X x
Korea x25
Kuwait x X x
Liechtenstein X x
Norway X x
Poland Xx x x26
Romania X
Singapore x
Slovenia X x
Sweden X x
Switzerland X x
Thailand X x27x
Turkey xxx28
USA x29xx
TOTAL 2 17 16 7
                                                     
24 Counting EC as one.
25 "Access to foreign CRS through the SITA network is allowed only for domestic travel agencies
which want to access CRS designated by carriers of the country indicated in the nextcolumn/USA/indefinite/access to foreig n CRS through the SITA network could be limited or otherwise affected
by negotiations on granting and receiving traffic rights".
26 "All passenger and freight transport services ex cluding maritime transport/reciprocity requirement
concerning supply of transport services by suppliers of countries concerned – in,. into and across the territory of
such countries/all countries/indefinite/system of recipr ocal agreements – existing and future – on transport
cooperation (or of similar character) and promotion and protection of foreign investments, implementing, amongothers – transportation quotas resulting from bilaterally agreed system of permits".
27 "Only airlines/CRS partners which are in Amadeus system can bring in and install their own systems
in Thailand/countries whose CRS operators are in Amadeus system and intend to bring in and install the systems
to any travel agencies in Thailand/i ndefinite/to ensure that local operators  are able to make complete access to
the Amadeus system within a certain period of time".
28 "To apply, on the basis of reciprocity, restrictions, prohibitions, different treatment and different
tariffs to the goods and transportation vehicles of the countries which apply restrictions, prohibitions anddifferent treatment to the Turkish road air and maritime transportation vehicles/all countries/indefinite/desire tosecure the smooth functioning of mutual transportation services".
29 Sui generis definition of selling and marketing:  "including sales, other than by airlines, of passenger
charters and forwarding of air freight other than by airlines".S/C/W/136
Page 32
XVI. LAND TRANSPORT SERVICES PART II – RAIL TRANSPORT SERVICES 
(S/C/W/61)
48. As far as MFN exemptions are concerned and setting aside the "all sectors derogations" it
appears that two types of exemption affect the supp ly of rail transport services:   those concerning
land transport in general and those concerning rail transport in particular.  In seven cases out of ten,the general land transportation exemptions concern regional agreements in South and Central
America.  The three other cases concern reciprocity requirements, among which one case of tax
reciprocity (VAT).  There are five proper rail transportation exemptions:  three of them have been
made in identical terms by Central European countries to cover existing or future agreements
regulating traffic rights and operating conditions, one concerns preferential treatment for leasing
charges for railway wagons for specified neighbouring countries, and one a reciprocal deduction of
tax on earnings from the use of rolling stock.  These MFN exemptions have a noticeable effect on thecommitments as seven Members out of the 15 that have made exemptions have made commitments
(two out of the ten have made general land transportation exemptions, all of the five have made
proper rail transport exemptions).
XVII.  LAND TRANSPORT SERVICES PART I – GENERALITIES AND ROAD
TRANSPORT (S/C/W/60)
50. As regards cross-border supply, mode 1, the international regulations have also begun to be
liberalized mainly, in view of the "intra-continental" nature of this mode of transport, through regional
agreements.  Thus, outside the single road transport market of the European Community, the
European Conference of Transport Ministers (ECTM) , an organization linked to the OECD but which
has for many years included the countries of Central and Eastern Europe, administers a multilaterallicence quota
30, which even includes "green" and "greener and safe" categories, and as a first step
towards complete multilateralization has undertaken to standardize the bilateral agreements on a
recommended model.31 Moreover, road transport is included in NAFTA where it is the subject only of
limited reservations concerning mainly cabotage traffic.  Finally, several regional agreements in
Central America and South America concern road transport and have been the subject of MFNexemptions.
73. Overall, the level of commitments for passenger transportation seems low:  between 12.8 and
18.9 per cent of Members depending on the subsector. However, it is even lower when the impact of
MFN exemptions is taken into account. Leaving as ide the "all sectors" exemptions and the general
"land transport" exemptions, 34 exemptions out of 37 include passenger transportation.  Out of the
25 Members undertaking passenger transportation commitments, 12 have taken MFN exemptions
granting various partners preferential treatment on  rights concerning passengers/cargoes to, from,
across and into their territory and on operating conditions, either on the basis of bilateral agreements,
existing or future, or on the basis of reciprocity.  As in maritime transport, the cargo-sharing nature of
this preferential treatment implies an exclusionary element for third parties.  This factor must be taken
into account when assessing the extent of commitments in this sector.
77. As in passenger transport, the MFN exemptions have an important bearing on the extent of
the commitments undertaken.  Out of the 25 countries having given commitments on freight
transportation, ten also have one or more MFN exemptions regarding cargoes.
78. As, in the vast majority of cases the MFN ex emptions regarding road transport cover both
freight and passengers, it is possible to try to draw  a general typology of these MFN exemptions.  In a
significant number of cases (five counting the E.U. as one) Members have felt it necessary to lodge
                                                     
30 See document CEMT/CM(98)7/final.
31 See documents CEMT/CM(97)21 and CM(97)21/Add.1.S/C/W/136
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separate exemptions for preferential fiscal treatment on VAT, vehicle tax and income tax. Some of
these derogations are subject to reciprocity, others are granted only to specifically designated
Members, and all are indefinite in duration.  In other instances this preferential tax treatment has been
combined with cargo-sharing provisions in a single derogation, either by mentioning the preferential
tax treatment specifically or by referring more generally to the operating conditions.
79. As far as the cargo–sharing provisions of the MFN derogations are concerned, a relatively
clear pattern seems to emerge. They are mainly bilateral (19 cases), although there are cases where
they are regional (five cases including the "all land transport" derogations) or both bilateral and
regional (four cases).  In six cases (including the "all land transport" derogations) they are unilateral
and in five of those cases based on reciprocity.  In nearly all cases they cover all countries and
existing and future agreements, although sometimes accompanied by a detailed list of beneficiaries.
They are also nearly all indefinite or non-specific as far as their duration is concerned.Geographically speaking, they can be found in developed as well as in developing countries and in
Europe, America and Africa.  As far as Asia is  concerned, only one Member has taken such an
exemption.  This pattern shows clearly that there is an unaddressed problem as far the liberalization of
road transport is concerned.  These derogations seem to have been meant by their drafters to last
forever and will fall foul of the limitation to ten years, in principle on the MFN exemptions.  Theyalso remove a significant proportion of the traffic from the application of MFN and more generally
from liberalization.  Certain regional attempts have been made to liberalize the road transport sector,
such as the single European transport market, the NAFTA provisions or the multilateral quota
administered under the aegis of the ECMT, but no targeted thinking seems to have been devoted as
yet to the multilateral liberalization of the sector. It should be kept in mind, however, that these MFNderogations only cover modes 1 and 2, while mode 3, which is essential, remains unaffected.
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