Report of the NAFTA Working Group on Investment and Services

PART A: Work Accomplished in Past Year

Members of the Working Group conducted extensive consultations throughout 1995 and into 1996 to complete the notification of Annex I reservations concerning existing non-conforming measures of their subnational units, in accordance with NAFTA Articles 1108(2) and 1206(2). This work culminated in a Ministerial exchange of letters and attachments that constituted an agreement of the Free Trade Commission on March 31, 1996. This agreement extended for an indefinite period the reservation of all existing measures of states and provinces on investment and non-financial services that do not conform to NAFTA. "Existing measures" are defined as those in effect on January 1, 1994. The NAFTA originally "grandfathered" all existing non-conforming measures for a two-year period, ending January 1, 1996. That deadline was extended to March 31, 1996 by an exchange of letters by trade ministers. Furthermore, for transparency, the NAFTA Parties submitted lists of existing non-conforming measures maintained at the subnational level. The Free Trade Commission also agreed to the following interpretation:


The listing of a measure in Annex I is without prejudice to a future claim that Annex II may apply to the measure or some application of the measure.

With respect to professional services, trilateral discussions have continued throughout the past year to implement the work programs of Annex 1210.5 regarding the development of recommendations for the temporary licensing of engineers and common procedures for the authorization of foreign legal consultancy services (FLCs).

In June 1995, representatives of the engineering profession from the three countries signed an agreement on mutual recognition (MRA) of qualifications of licensed engineers. Efforts are currently under way in each of the three countries to ratify the trilateral agreement. The representative bodies of the engineering profession have forwarded the agreement to their respective governments. Mexican and Canadian engineering representative bodies have requested that the NAFTA Commission encourage their competent authorities to implement the agreement. As of January 1, 1997, eleven of twelve Canadian provincial and territorial engineering associations had signed letters of intent to implement the MRA.

In regard to the work program for FLCs, representatives from the legal profession of the NAFTA Parties have developed a draft recommendation. The Parties will review this recommendation in accordance with NAFTA Annex 1210.5, Section B. As well, several other professional groups (e.g., architects, nurses, and accountants) have initiated trilateral discussions with a view to developing joint recommendations on mutual recognition.

PART B: Work in Progress

The Working Group was unable to meet formally in 1996, but officials of the three Parties maintained on-going contact with respect to developments and implementation issues pertaining to the NAFTA services and investment provisions. The Working Group is planning to meet in the spring of 1997, in Ottawa.

The following work will be on the agenda:

  • discussion of possible interpretations of certain provisions of Chapters 11 and 12;
  • review of the Annex II social services reservations;
  • brief reports on phase-out of measures notified in Annex I;
  • status report and next steps concerning the completion of the Chapter 11 roster of arbitrators;
  • brief discussion of possible trilateral coordination of GATS notifications;
  • discussion and follow up concerning NAFTA Article 1207 on quantitative restrictions;
  • developing procedures for notifications pursuant to Article 1209(a); and
  • status report on professional services.

PART C: Future Work Plan

Following the Ottawa 1997 meeting, the Working Group plans to focus on inter alia:

  • compliance re Articles 1210(3)&(4) (Professional Services);
  • compliance with the liberalization commitments under
  1. Article 1208 (Non-discriminatory Measures),
  2. Annex VI (Miscellaneous Commitments), and
  3. Annex III (Mexican privatization in the energy sector);

Article 1209(b) procedures for consultations on further liberalization and the further phase-out of measures notified in Annex I, including subnational measures.

March 18, 1997


Source: International Trade Canada

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