Article X Payments and Transfers 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. The provisions of paragraph 2 shall cease to apply three years after the date of entry into force 3. of the WTO Agreement. Page 293 Article X V 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. 7A future work programme shall determine how, and in what time-frame, negotiations on such multilateral disciplines will be conducted. Page 297 PART III SPECIFIC COMMITMENTS Article X VI 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) (b) (c) (d) (e) (f) 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; limitations on the total value of service transactions or assets in the form of numerical quotas or the requirement of an economic needs test; 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 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; measures which restrict or require specific types of legal entity or joint venture through which a service supplier may supply a service; and 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. 8If 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. 9Subparagraph 2(c) does not cover measures of a Member which limit inputs for the supply of services. Page 298 Article X VII 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 X VIII 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 X X 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) (b) (c) (d) (e) terms, limitations and conditions on market access; conditions and qualifications on national treatment; undertakings relating to additional commitments; where appropriate the time-frame for implementation of such commitments; and 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. Schedules of specific commitments shall be annexed to this Agreement and shall form an integral 3. part thereof. Article X XI Modification of Schedules (a) A Member (referred to in this Article as the "modifying Member") may modify or 1. 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. (a) At the request of any Member the benefits of which under this Agreement may be affected 2. (referred to in this Article as an "affected Member") by a proposed modification or withdrawal notified under subparagraph 1(b), the modifying Member shall enter into negotiations with a view to reaching agreement on any necessary compensatory adjustment. In such negotiations and agreement, the Members Page 300 concerned shall endeavour to maintain a general level of mutually advantageous commitments not less favourable to trade than that provided for in Schedules of specific commitments prior to such negotiations. (b) Compensatory adjustments shall be made on a most-favoured-nation basis. (a) If agreement is not reached between the modifying Member and any affected Member 3. 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. (a) 4. compensatory adjustments in conformity with the findings of the arbitration. The modifying Member may not modify or withdraw its commitment until it has made (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. PART V INSTITUTIONAL PROVISIONS Article X XII Consultation 1. Each Member shall accord sympathetic consideration to, and shall afford adequate opportunity for, consultation regarding such representations as may be made by any other Member with respect to any matter affecting the operation of this Agreement. The Dispute Settlement Understanding (DSU) shall apply to such consultations. 2. The Council for Trade in Services or the Dispute Settlement Body (DSB) may, at the request of a Member, consult with any Member or Members in respect of any matter for which it has not been possible to find a satisfactory solution through consultation under paragraph 1. 3. A Member may not invoke Article XVII, either under this Article or Article XXIII, with respect to a measure of another Member that falls within the scope of an international agreement between them relating to the avoidance of double taxation. In case of disagreement between Members as to whether a measure falls within the scope of such an agreement between them, it shall be open to either Member to bring this matter before the Council for Trade in Services.11 The Council shall refer the matter to arbitration. The decision of the arbitrator shall be final and binding on the Members. 11With respect to agreements on the avoidance of double taxation which exist on the date of entry into force of the WTO Agreement, such a matter may be brought before the Council for Trade in Services only with the consent of both parties to such an agreement. Page 301 Article X XIII Dispute Settlement and Enforcement If any Member should consider that any other Member fails to carry out its obligations or specific 1. commitments under this Agreement, it may with a view to reaching a mutually satisfactory resolution of the matter have recourse to the DSU. 2. If the DSB considers that the circumstances are serious enough to justify such action, it may authorize a Member or Members to suspend the application to any other Member or Members of obligations and specific commitments in accordance with Article 22 of the DSU. 3. If any Member considers that any benefit it could reasonably have expected to accrue to it under a specific commitment of another Member under Part III of this Agreement is being nullified or impaired as a result of the application of any measure which does not conflict with the provisions of this Agreement, it may have recourse to the DSU. If the measure is determined by the DSB to have nullified or impaired such a benefit, the Member affected shall be entitled to a mutually satisfactory adjustment on the basis of paragraph 2 of Article XXI, which may include the modification or withdrawal of the measure. In the event an agreement cannot be reached between the Members concerned, Article 22 of the DSU shall apply. Article X XIV Council for Trade in Services 1. The Council for Trade in Services shall carry out such functions as may be assigned to it to facilitate the operation of this Agreement and further its objectives. The Council may establish such subsidiary bodies as it considers appropriate for the effective discharge of its functions. The Council and, unless the Council decides otherwise, its subsidiary bodies shall be open to 2. participation by representatives of all Members. 3. The Chairman of the Council shall be elected by the Members. Article X X V Technical Cooperation Service suppliers of Members which are in need of such assistance shall have access to the 1. services of contact points referred to in paragraph 2 of Article IV. Technical assistance to developing countries shall be provided at the multilateral level by the 2. Secretariat and shall be decided upon by the Council for Trade in Services. Article X X VI Relationship with Other International Organizations The General Council shall make appropriate arrangements for consultation and cooperation with the United Nations and its specialized agencies as well as with other intergovernmental organizations concerned with services. Page 302 PART VI FINAL PROVISIONS Article X X VII Denial of Benefits A Member may deny the benefits of this Agreement: (a) (b) to the supply of a service, if it establishes that the service is supplied from or in the territory of a non-Member or of a Member to which the denying Member does not apply the WTO Agreement; in the case of the supply of a maritime transport service, if it establishes that the service is supplied: (i) (ii) by a vessel registered under the laws of a non-Member or of a Member to which the denying Member does not apply the WTO Agreement, and by a person which operates and/or uses the vessel in whole or in part but which is of a non-Member or of a Member to which the denying Member does not apply the WTO Agreement; (c) to a service supplier that is a juridical person, if it establishes that it is not a service supplier of another Member, or that it is a service supplier of a Member to which the denying Member does not apply the WTO Agreement. Article X X VIII Definitions For the purpose of this Agreement: (a) (b) "measure" means any measure by a Member, whether in the form of a law, regulation, rule, procedure, decision, administrative action, or any other form; "supply of a service" includes the production, distribution, marketing, sale and delivery of a service; (c) "measures by Members affecting trade in services" include measures in respect of (i) (ii) (iii) the purchase, payment or use of a service; the access to and use of, in connection with the supply of a service, services which are required by those Members to be offered to the public generally; the presence, including commercial presence, of persons of a Member for the supply of a service in the territory of another Member; (d) "commercial presence" means any type of business or professional establishment, including through Page 303 (i) (ii) the constitution, acquisition or maintenance of a juridical person, or the creation or maintenance of a branch or a representative office, within the territory of a Member for the purpose of supplying a service; (e) "sector" of a service means, (i) with reference to a specific commitment, one or more, or all, subsectors of that service, as specified in a Member's Schedule, (ii) otherwise, the whole of that service sector, including all of its subsectors; (f) "service of another Member" means a service which is supplied, (g) (h) (i) (j) (k) (i) (ii) from or in the territory of that other Member, or in the case of maritime transport, by a vessel registered under the laws of that other Member, or by a person of that other Member which supplies the service through the operation of a vessel and/or its use in whole or in part; or in the case of the supply of a service through commercial presence or through the presence of natural persons, by a service supplier of that other Member; "service supplier" means any person that supplies a service;12 "monopoly supplier of a service" means any person, public or private, which in the relevant market of the territory of a Member is authorized or established formally or in effect by that Member as the sole supplier of that service; "service consumer" means any person that receives or uses a service; "person" means either a natural person or a juridical person; "natural person of another Member" means a natural person who resides in the territory of that other Member or any other Member, and who under the law of that other Member: (i) (ii) is a national of that other Member; or has the right of permanent residence in that other Member, in the case of a Member which: 1. 2. does not have nationals; or accords substantially the same treatment to its permanent residents as it does to its nationals in respect of measures affecting trade in services, as notified in its acceptance of or accession to the WTO Agreement, provided that no Member is obligated to accord to such permanent residents treatment more favourable than would be 12Where the service is not supplied directly by a juridical person but through other forms of commercial presence such as a branch or a representative office, the service supplier (i.e. the juridical person) shall, nonetheless, through such presence be accorded the treatment provided for service suppliers under the Agreement. Such treatment shall be extended to the presence through which the service is supplied and need not be extended to any other parts of the supplier located outside the territory where the service is supplied. Page 304 accorded by that other Member to such permanent residents. Such notification shall include the assurance to assume, with respect to those permanent residents, in accordance with its laws and regulations, the same responsibilities that other Member bears with respect to its nationals; (l) "juridical person" means any legal entity duly constituted or otherwise organized under applicable law, whether for profit or otherwise, and whether privately-owned or governmentally-owned, including any corporation, trust, partnership, joint venture, sole proprietorship or association; (m) "juridical person of another Member" means a juridical person which is either: (i) (ii) constituted or otherwise organized under the law of that other Member, and is engaged in substantive business operations in the territory of that Member or any other Member; or in the case of the supply of a service through commercial presence, owned or controlled by: 1. 2. natural persons of that Member; or juridical persons of subparagraph (i); that other Member identified under (n) a juridical person is: (i) (ii) (iii) "owned" by persons of a Member if more than 50 per cent of the equity interest in it is beneficially owned by persons of that Member; "controlled" by persons of a Member if such persons have the power to name a majority of its directors or otherwise to legally direct its actions; "affiliated" with another person when it controls, or is controlled by, that other person; or when it and the other person are both controlled by the same person; (o) "direct taxes" comprise all taxes on total income, on total capital or on elements of income or of capital, including taxes on gains from the alienation of property, taxes on estates, inheritances and gifts, and taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation. Article X XIX Annexes The Annexes to this Agreement are an integral part of this Agreement. ANNEX ON ARTICLE II EXEMPTIONS Page 305 Scope This Annex specifies the conditions under which a Member, at the entry into force of this 1. Agreement, is exempted from its obligations under paragraph 1 of Article II. Any new exemptions applied for after the date of entry into force of the WTO Agreement shall 2. be dealt with under paragraph 3 of Article IX of that Agreement. Review 3. The Council for Trade in Services shall review all exemptions granted for a period of more than 5 years. The first such review shall take place no more than 5 years after the entry into force of the WTO Agreement. 4. The Council for Trade in Services in a review shall: (a) examine whether the conditions which created the need for the exemption still prevail; and (b) determine the date of any further review. Termination The exemption of a Member from its obligations under paragraph 1 of Article II of the Agreement 5. with respect to a particular measure terminates on the date provided for in the exemption. In principle, such exemptions should not exceed a period of 10 years. In any event, they shall 6. be subject to negotiation in subsequent trade liberalizing rounds. 7. A Member shall notify the Council for Trade in Services at the termination of the exemption period that the inconsistent measure has been brought into conformity with paragraph 1 of Article II of the Agreement. Lists of Article II Exemptions [The agreed lists of exemptions under paragraph 2 of Article II will be annexed here in the treaty copy of the WTO Agreement.] Page 306 ANNEX ON MOVEMENT OF NATURAL PERSONS SUPPLYING SERVICES UNDER THE AGREEMENT 1. This Annex applies to measures affecting natural persons who are service suppliers of a Member, and natural persons of a Member who are employed by a service supplier of a Member, in respect of the supply of a service. The Agreement shall not apply to measures affecting natural persons seeking access to the 2. employment market of a Member, nor shall it apply to measures regarding citizenship, residence or employment on a permanent basis. In accordance with Parts III and IV of the Agreement, Members may negotiate specific 3. commitments applying to the movement of all categories of natural persons supplying services under the Agreement. Natural persons covered by a specific commitment shall be allowed to supply the service in accordance with the terms of that commitment. 4. The Agreement shall not prevent a Member from applying measures to regulate the entry of natural persons into, or their temporary stay in, its territory, including those measures necessary to protect the integrity of, and to ensure the orderly movement of natural persons across, its borders, provided that such measures are not applied in such a manner as to nullify or impair the benefits accruing to any Member under the terms of a specific commitment.1 1The sole fact of requiring a visa for natural persons of certain Members and not for those of others shall not be regarded as nullifying or impairing benefits under a specific commitment. ANNEX ON AIR TRANSPORT SERVICES Page 307 1. This Annex applies to measures affecting trade in air transport services, whether scheduled or non-scheduled, and ancillary services. It is confirmed that any specific commitment or obligation assumed under this Agreement shall not reduce or affect a Member's obligations under bilateral or multilateral agreements that are in effect on the date of entry into force of the WTO Agreement. 2. The Agreement, including its dispute settlement procedures, shall not apply to measures affecting: (a) (b) traffic rights, however granted; or services directly related to the exercise of traffic rights, except as provided in paragraph 3 of this Annex. 3. The Agreement shall apply to measures affecting: (a) (b) (c) aircraft repair and maintenance services; the selling and marketing of air transport services; computer reservation system (CRS) services. The dispute settlement procedures of the Agreement may be invoked only where obligations 4. or specific commitments have been assumed by the concerned Members and where dispute settlement procedures in bilateral and other multilateral agreements or arrangements have been exhausted. The Council for Trade in Services shall review periodically, and at least every five years, 5. developments in the air transport sector and the operation of this Annex with a view to considering the possible further application of the Agreement in this sector. 6. Definitions: (a) "Aircraft repair and maintenance services" mean such activities when undertaken on an aircraft or a part thereof while it is withdrawn from service and do not include so-called line maintenance. (b) "Selling and marketing of air transport services" mean opportunities for the air carrier concerned to sell and market freely its air transport services including all aspects of marketing such as market research, advertising and distribution. These activities do not include the pricing of air transport services nor the applicable conditions. (c) "Computer reservation system (CRS) services" mean services provided by computerised systems that contain information about air carriers' schedules, availability, fares and fare rules, through which reservations can be made or tickets may be issued. (d) "Traffic rights" mean the right for scheduled and non-scheduled services to operate and/or to carry passengers, cargo and mail for remuneration or hire from, to, within, or over the territory of a Member, including points to be served, routes to be operated, types of traffic to be carried, capacity to be provided, tariffs to be charged and their conditions, and criteria for designation of airlines, including such criteria as number, ownership, and control. Page 308 1. Scope and Definition ANNEX ON FINANCIAL SERVICES (a) This Annex applies to measures affecting the supply of financial services. Reference to the supply of a financial service in this Annex shall mean the supply of a service as defined in paragraph 2 of Article I of the Agreement. (b) For the purposes of subparagraph 3(b) of Article I of the Agreement, "services supplied in the exercise of governmental authority" means the following: (i) (ii) (iii) activities conducted by a central bank or monetary authority or by any other public entity in pursuit of monetary or exchange rate policies; activities forming part of a statutory system of social security or public retirement plans; and other activities conducted by a public entity for the account or with the guarantee or using the financial resources of the Government. (c) For the purposes of subparagraph 3(b) of Article I of the Agreement, if a Member allows any of the activities referred to in subparagraphs (b)(ii) or (b)(iii) of this paragraph to be conducted by its financial service suppliers in competition with a public entity or a financial service supplier, "services" shall include such activities. (d) Subparagraph 3(c) of Article I of the Agreement shall not apply to services covered by this Annex. 2. Domestic Regulation (a) Notwithstanding any other provisions of the Agreement, a Member shall not be prevented from taking measures for prudential reasons, including for the protection of investors, depositors, policy holders or persons to whom a fiduciary duty is owed by a financial service supplier, or to ensure the integrity and stability of the financial system. Where such measures do not conform with the provisions of the Agreement, they shall not be used as a means of avoiding the Member's commitments or obligations under the Agreement. (b) Nothing in the Agreement shall be construed to require a Member to disclose information relating to the affairs and accounts of individual customers or any confidential or proprietary information in the possession of public entities. 3. Recognition (a) A Member may recognize prudential measures of any other country in determining how the Member's measures relating to financial services shall be applied. Such recognition, which may be achieved through harmonization or otherwise, may be based upon an agreement or arrangement with the country concerned or may be accorded autonomously. (b) A Member that is a party to such an agreement or arrangement referred to in subparagraph (a), whether future or existing, shall afford adequate opportunity for other interested Members to negotiate their accession to such agreements or arrangements, or to negotiate comparable ones with it, under circumstances in which there would be equivalent regulation, oversight, implementation of such regulation, and, if appropriate, procedures concerning the sharing of information between the Page 309 parties to the agreement or arrangement. Where a Member accords recognition autonomously, it shall afford adequate opportunity for any other Member to demonstrate that such circumstances exist. (c) Where a Member is contemplating according recognition to prudential measures of any other country, paragraph 4(b) of Article VII shall not apply. 4. Dispute Settlement Panels for disputes on prudential issues and other financial matters shall have the necessary expertise relevant to the specific financial service under dispute. 5. Definitions For the purposes of this Annex: (a) A financial service is any service of a financial nature offered by a financial service supplier of a Member. Financial services include all insurance and insurance-related services, and all banking and other financial services (excluding insurance). Financial services include the following activities: Insurance and insurance-related services (i) Direct insurance (including co-insurance): (A) (B) life non-life Reinsurance and retrocession; Insurance intermediation, such as brokerage and agency; Services auxiliary to insurance, such as consultancy, actuarial, risk assessment and claim settlement services. (ii) (iii) (iv) Banking and other financial services (excluding insurance) (v) (vi) Acceptance of deposits and other repayable funds from the public; Lending of all types, including consumer credit, mortgage credit, factoring and financing of commercial transaction; (vii) Financial leasing; (viii) All payment and money transmission services, including credit, charge and debit cards, travellers cheques and bankers drafts; (ix) (x) Guarantees and commitments; Trading for own account or for account of customers, whether on an exchange, in an over-the-counter market or otherwise, the following: (A) (B) (C) money market instruments (including cheques, bills, certificates of deposits); foreign exchange; derivative products including, but not limited to, futures and options; Page 310 (D) (E) (F) exchange rate and interest rate instruments, including products such as swaps, forward rate agreements; transferable securities; other negotiable instruments and financial assets, including bullion. (xi) Participation in issues of all kinds of securities, including underwriting and placement as agent (whether publicly or privately) and provision of services related to such issues; (xii) Money broking; (xiii) (xiv) (xv) (xvi) Asset management, such as cash or portfolio management, all forms of collective investment management, pension fund management, custodial, depository and trust services; Settlement and clearing services for financial assets, including securities, derivative products, and other negotiable instruments; Provision and transfer of financial information, and financial data processing and related software by suppliers of other financial services; Advisory, intermediation and other auxiliary financial services on all the activities listed in subparagraphs (v) through (xv), including credit reference and analysis, investment and portfolio research and advice, advice on acquisitions and on corporate restructuring and strategy. (b) A financial service supplier means any natural or juridical person of a Member wishing to supply or supplying financial services but the term "financial service supplier" does not include a public entity. (c) "Public entity" means: (i) a government, a central bank or a monetary authority, of a Member, or an entity owned or controlled by a Member, that is principally engaged in carrying out governmental functions or activities for governmental purposes, not including an entity principally engaged in supplying financial services on commercial terms; or (ii) a private entity, performing functions normally performed by a central bank or monetary authority, when exercising those functions. SECOND ANNEX ON FINANCIAL SERVICES Page 311 1. Notwithstanding Article II of the Agreement and paragraphs 1 and 2 of the Annex on Article II Exemptions, a Member may, during a period of 60 days beginning four months after the date of entry into force of the WTO Agreement, list in that Annex measures relating to financial services which are inconsistent with paragraph 1 of Article II of the Agreement. Notwithstanding Article XXI of the Agreement, a Member may, during a period of 60 days 2. beginning four months after the date of entry into force of the WTO Agreement, improve, modify or withdraw all or part of the specific commitments on financial services inscribed in its Schedule. The Council for Trade in Services shall establish any procedures necessary for the application 3. of paragraphs 1 and 2. Page 312 ANNEX ON NEGOTIATIONS ON MARITIME TRANSPORT SERVICES 1.