Agreement Establishing the World Trade Organization
(Continued)
Annex 1B: General Agreement on Trade in Services
Article X: Emergency Safeguard Measures
1. There shall be multilateral negotiations on the question of
emergency safeguard measures based on the principle of non-discrimination.
The results of such negotiations shall enter into effect on a
date not later than three years from the date of entry into force
of the WTO Agreement.
2. In the period before the entry into effect of the results of
the negotiations referred to in paragraph 1, any Member may, notwithstanding
the provisions of paragraph 1 of Article XXI, notify the Council
on Trade in Services of its intention to modify or withdraw a
specific commitment after a period of one year from the date on
which the commitment enters into force; provided that the Member
shows cause to the Council that the modification or withdrawal
cannot await the lapse of the three-year period provided for in
paragraph 1 of Article XXI.
3. The provisions of paragraph 2 shall cease to apply three years
after the date of entry into force of the WTO Agreement.
Article XI: Payments and Transfers
1. Except under the circumstances envisaged in Article XII, a
Member shall not apply restrictions on international transfers
and payments for current transactions relating to its specific
commitments.
2. Nothing in this Agreement shall affect the rights and obligations
of the members of the International Monetary Fund under the Articles
of Agreement of the Fund, including the use of exchange actions
which are in conformity with the Articles of Agreement, provided
that a Member shall not impose restrictions on any capital transactions
inconsistently with its specific commitments regarding such transactions,
except under Article XII or at the request of the Fund.
Article XII: Restrictions to Safeguard the Balance of
Payments
1. In the event of serious balance-of-payments and external financial
difficulties or threat thereof, a Member may adopt or maintain
restrictions on trade in services on which it has undertaken specific
commitments, including on payments or transfers for transactions
related to such commitments. It is recognized that particular
pressures on the balance of payments of a Member in the process
of economic development or economic transition may necessitate
the use of restrictions to ensure, inter alia, the maintenance
of a level of financial reserves adequate for the implementation
of its programme of economic development or economic transition.
2. The restrictions referred to in paragraph 1:
(a) shall not discriminate among Members;
(b) shall be consistent with the Articles of Agreement of the
International Monetary Fund;
(c) shall avoid unnecessary damage to the commercial, economic
and financial interests of any other Member;
(d) shall not exceed those necessary to deal with the circumstances
described in paragraph 1;
(e) shall be temporary and be phased out progressively as the
situation specified in paragraph 1 improves.
3. In determining the incidence of such restrictions, Members
may give priority to the supply of services which are more essential
to their economic or development programmes. However, such restrictions
shall not be adopted or maintained for the purpose of protecting
a particular service sector.
4. Any restrictions adopted or maintained under paragraph 1, or
any changes therein, shall be promptly notified to the General
Council.
5. (a) Members applying the provisions of this Article shall consult
promptly with the Committee on Balance-of-Payments Restrictions
on restrictions adopted under this Article.
(b) The Ministerial Conference shall establish procedures 4 for
periodic consultations with the objective of enabling such recommendations
to be made to the Member concerned as it may deem appropriate.
(c) Such consultations shall assess the balance-of-payment situation
of the Member concerned and the restrictions adopted or maintained
under this Article, taking into account, inter alia, such
factors as:
(i) the nature and extent of the balance-of-payments and the
external financial difficulties;
(ii) the external economic and trading environment of the consulting
Member;
(iii) alternative corrective measures which may be available.
(d) The consultations shall address the compliance of any restrictions
with paragraph 2, in particular the progressive phaseout of restrictions
in accordance with paragraph 2(e).
(e) In such consultations, all findings of statistical and other
facts presented by the International Monetary Fund relating to
foreign exchange, monetary reserves and balance of payments, shall
be accepted and conclusions shall be based on the assessment by
the Fund of the balance-of-payments and the external financial
situation of the consulting Member.
6. If a Member which is not a member of the International Monetary
Fund wishes to apply the provisions of this Article, the Ministerial
Conference shall establish a review procedure and any other procedures
necessary.
Article XIII: Government Procurement
1. Articles II, XVI and XVII shall not apply to laws, regulations
or requirements governing the procurement by governmental agencies
of services purchased for governmental purposes and not with a
view to commercial resale or with a view to use in the supply
of services for commercial sale.
2. There shall be multilateral negotiations on government procurement
in services under this Agreement within two years from the date
of entry into force of the WTO Agreement.
Article XIV: General Exceptions
Subject to the requirement that such measures are not applied
in a manner which would constitute a means of arbitrary or unjustifiable
discrimination between countries where like conditions prevail,
or a disguised restriction on trade in services, nothing in this
Agreement shall be construed to prevent the adoption or enforcement
by any Member of measures:
(a) necessary to protect public morals or to maintain public
order; 5
(b) necessary to protect human, animal or plant life or health;
(c) necessary to secure compliance with laws or regulations which
are not inconsistent with the provisions of this Agreement including
those relating to:
(i) the prevention of deceptive and fraudulent practices or
to deal with the effects of a default on services contracts;
(ii) the protection of the privacy of individuals in relation
to the processing and dissemination of personal data and the protection
of confidentiality of individual records and accounts;
(iii) safety;
(d) inconsistent with Article XVII, provided that the difference
in treatment is aimed at ensuring the equitable or effective 6
(i) apply to non-resident service suppliers in recognition of
the fact that the tax obligation of non-residents is determined
with respect to taxable items sourced or located in the Member's
territory; or
(ii) apply to non-residents in order to ensure the imposition
or collection of taxes in the Member's territory; or
(iii) apply to non-residents or residents in order to prevent
the avoidance or evasion of taxes, including compliance measures;
or
(iv) apply to consumers of services supplied in or from the territory
of another Member in order to ensure the imposition or collection
of taxes on such consumers derived from sources in the Member's
territory; or
(v) distinguish service suppliers subject to tax on worldwide
taxable items from other service suppliers, in recognition of
the difference in the nature of the tax base between them; or
(vi) determine, allocate or apportion income, profit, gain, loss,
deduction or credit of resident persons or branches, or between
related persons or branches of the same person, in order to safeguard
the Member's tax base.
Tax terms or concepts in paragraph (d) of Article XIV and in
this footnote are determined according to tax definitions and
concepts, or equivalent or similar definitions
and concepts, under the domestic law of the Member taking the
measure.
imposition or collection of direct taxes in respect of services
or service suppliers of other Members;
(e) inconsistent with Article II, provided that the difference
in treatment is the result of an agreement on the avoidance of
double taxation or provisions on the avoidance of double taxation
in any other international agreement or arrangement by which the
Member is bound.
Article XIV bis: Security Exceptions
1. Nothing in this Agreement shall be construed:
(a) to require any Member to furnish any information, the disclosure
of which it considers contrary to its essential security interests;
or
(b) to prevent any Member from taking any action which it considers
necessary for the protection of its essential security interests:
(i) relating to the supply of services as carried out directly
or indirectly for the purpose of provisioning a military establishment;
(ii) relating to fissionable and fusionable materials or the
materials from which they are derived;
(iii) taken in time of war or other emergency in international
relations; or
(c) to prevent any Member from taking any action in pursuance
of its obligations under the United Nations Charter for the maintenance
of international peace and security.
2. The Council for Trade in Services shall be informed to the
fullest extent possible of measures taken under paragraphs 1(b)
and (c) and of their termination.
Article XV: Subsidies
1. Members recognize that, in certain circumstances, subsidies
may have distortive effects on trade in services. Members shall
enter into negotiations with a view to developing the necessary
multilateral disciplines to avoid such trade-distortive effects. 7
The negotiations shall also address the appropriateness of
countervailing procedures. Such negotiations shall recognize the
role of subsidies in relation to the development programmes of
developing countries and take into account the needs of Members,
particularly developing country Members, for flexibility in this
area. For the purpose of such negotiations, Members shall exchange
information concerning all subsidies related to trade in services
that they provide to their domestic service suppliers.
2. Any Member which considers that it is adversely affected by
a subsidy of another Member may request consultations with that
Member on such matters. Such requests shall be accorded sympathetic
consideration.
PART III: SPECIFIC COMMITMENTS
Article XVI: Market Access
1. With respect to market access through the modes of supply identified
in Article I, each Member shall accord services and service suppliers
of any other Member treatment no less favourable than that provided
for under the terms, limitations and conditions agreed and specified
in its Schedule. 8
2. In sectors where market-access commitments are undertaken,
the measures which a Member shall not maintain or adopt either
on the basis of a regional subdivision or on the basis of its
entire territory, unless otherwise specified in its Schedule,
are defined as:
(a) limitations on the number of service suppliers whether in
the form of numerical quotas, monopolies, exclusive service suppliers
or the requirements of an economic needs test;
(b) limitations on the total value of service transactions or
assets in the form of numerical quotas or the requirement of an
economic needs test;
(c) limitations on the total number of service operations or
on the total quantity of service output expressed in terms of
designated numerical units in the form of quotas or the requirement
of an economic needs test; 9
(d) limitations on the total number of natural persons that may
be employed in a particular service sector or that a service supplier
may employ and who are necessary for, and directly related to,
the supply of a specific service in the form of numerical quotas
or the requirement of an economic needs test;
(e) measures which restrict or require specific types of legal
entity or joint venture through which a service supplier may supply
a service; and
(f) limitations on the participation of foreign capital in terms
of maximum percentage limit on foreign shareholding or the total
value of individual or aggregate foreign investment.
Article XVII: National Treatment
1. In the sectors inscribed in its Schedule, and subject to any
conditions and qualifications set out therein, each Member shall
accord to services and service suppliers of any other Member,
in respect of all measures affecting the supply of services, treatment
no less favourable than that it accords to its own like services
and service suppliers. 10
2. A Member may meet the requirement of paragraph 1 by according
to services and service suppliers of any other Member, either
formally identical treatment or formally different treatment to
that it accords to its own like services and service suppliers.
3. Formally identical or formally different treatment shall be
considered to be less favourable if it modifies the conditions
of competition in favour of services or service suppliers of the
Member compared to like services or service suppliers of any other
Member.
Article XVIII: Additional Commitments
Members may negotiate commitments with respect to measures affecting
trade in services not subject to scheduling under Articles XVI
or XVII, including those regarding qualifications, standards or
licensing matters. Such commitments shall be inscribed in a Member's
Schedule.
PART IV: PROGRESSIVE LIBERALIZATION
Article XIX: Negotiation of Specific Commitments
1. In pursuance of the objectives of this Agreement, Members shall
enter into successive rounds of negotiations, beginning not later
than five years from the date of entry into force of the WTO Agreement
and periodically thereafter, with a view to achieving a progressively
higher level of liberalization. Such negotiations shall be directed
to the reduction or elimination of the adverse effects on trade
in services of measures as a means of providing effective market
access. This process shall take place with a view to promoting
the interests of all participants on a mutually advantageous basis
and to securing an overall balance of rights and obligations.
2. The process of liberalization shall take place with due respect
for national policy objectives and the level of development of
individual Members, both overall and in individual sectors. There
shall be appropriate flexibility for individual developing country
Members for opening fewer sectors, liberalizing fewer types of
transactions, progressively extending market access in line with
their development situation and, when making access to their markets
available to foreign service suppliers, attaching to such access
conditions aimed at achieving the objectives referred to in Article
IV.
3. For each round, negotiating guidelines and procedures shall
be established. For the purposes of establishing such guidelines,
the Council for Trade in Services shall carry out an assessment
of trade in services in overall terms and on a sectoral basis
with reference to the objectives of this Agreement, including
those set out in paragraph 1 of Article IV. Negotiating guidelines
shall establish modalities for the treatment of liberalization
undertaken autonomously by Members since previous negotiations,
as well as for the special treatment for least-developed country
Members under the provisions of paragraph 3 of Article IV.
4. The process of progressive liberalization shall be advanced
in each such round through bilateral, plurilateral or multilateral
negotiations directed towards increasing the general level of
specific commitments undertaken by Members under this Agreement.
Article XX: Schedules of Specific Commitments
1. Each Member shall set out in a schedule the specific commitments
it undertakes under Part III of this Agreement. With respect to
sectors where such commitments are undertaken, each Schedule shall
specify:
(a) terms, limitations and conditions on market access;
(b) conditions and qualifications on national treatment;
(c) undertakings relating to additional commitments;
(d) where appropriate the time-frame for implementation of such
commitments; and
(e) the date of entry into force of such commitments.
2. Measures inconsistent with both Articles XVI and XVII shall
be inscribed in the column relating to Article XVI. In this case
the inscription will be considered to provide a condition or qualification
to Article XVII as well.
3. Schedules of specific commitments shall be annexed to this
Agreement and shall form an integral part thereof.
Article XXI: Modification of Schedules
1. (a) A Member (referred to in this Article as the "modifying
Member") may modify or withdraw any commitment in its Schedule,
at any time after three years have elapsed from the date on which
that commitment entered into force, in accordance with the provisions
of this Article.
(b) A modifying Member shall notify its intent to modify or withdraw
a commitment pursuant to this Article to the Council for Trade
in Services no later than three months before the intended date
of implementation of the modification or withdrawal.
2.
3. (a) If agreement is not reached between the modifying Member
and any affected Member before the end of the period provided
for negotiations, such affected Member may refer the matter to
arbitration. Any affected Member that wishes to enforce a right
that it may have to compensation must participate in the arbitration.
(b) If no affected Member has requested arbitration, the modifying
Member shall be free to implement the proposed modification or
withdrawal.
4. (a) The modifying Member may not modify or withdraw its commitment
until it has made compensatory adjustments in conformity with
the findings of the arbitration.
(b) If the modifying Member implements its proposed modification
or withdrawal and does not comply with the findings of the arbitration,
any affected Member that participated in the arbitration may modify
or withdraw substantially equivalent benefits in conformity with
those findings. Notwithstanding Article II, such a modification
or withdrawal may be implemented solely with respect to the modifying
Member.
5. The Council for Trade in Services shall establish procedures
for rectification or modification of Schedules. Any Member which
has modified or withdrawn scheduled commitments under this Article
shall modify its Schedule according to such procedures.
Continue with the Annex 1B
4 It is understood that the procedures under paragraph
5 shall be the same as the GATT 1994 procedures.
5 The public order exception may be invoked only where
a genuine and sufficiently serious threat is posed to one of the
fundamental interests of society.
6 Measures that are aimed at ensuring the equitable or
effective imposition or collection of direct taxes include measures
taken by a Member under its taxation system which:
7 A future work programme shall determine how, and in
what time-frame, negotiations on such multilateral disciplines
will be conducted.
8 If a Member undertakes a market-access commitment in
relation to the supply of a service through the mode of supply
referred to in subparagraph 2(a) of Article I and if the cross-border
movement of capital is an essential part of the service itself,
that Member is thereby committed to allow such movement of capital.
If a Member undertakes a market-access commitment in relation
to the supply of a service through the mode of supply referred
to in subparagraph 2(c) of Article I, it is thereby committed
to allow related transfers of capital into its territory.
9 Subparagraph 2(c) does not cover measures of a Member
which limit inputs for the supply of services.
10 Specific commitments assumed under this Article shall
not be construed to require any Member to compensate for any inherent
competitive disadvantages which result from the foreign character
of the relevant services or service suppliers.
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