03-21364. Request for Public Comment on the Market Access Implications for U.S. Trade in Services of the Accession to the European Union of Austria, Finland and Sweden

AGENCY:

Office of the United States Trade Representative.

ACTION:

Request for comment.

SUMMARY:

The Trade Policy Staff Committee gives notice that the Office of the United States Trade Representative (USTR) requests written submissions from the public concerning the market access implications for U.S. trade in services of the 1995 enlargement of the European Union to include Austria, Finland and Sweden. On July 10, 2003, the European Communities and its Member States (collectively, the EC) transmitted a “Notification Pursuant to Article V:5 of the GATS—Accession of Austria, Finland and Sweden to the European Communities” (S/C/N/231), notifying the WTO Council for Trade in Services of their intention to modify or withdraw Specific Commitments. It stated that previous GATS schedules of specific commitments and lists of MFN exemptions will be replaced by new commitments as from April 30, 2004. The existing schedules and lists are accessible through the WTO's Services Database Web site, http://tsdb.wto.org/​wto/​WTOHomepublic.htm. From that site, click on “Pre-defined Reports” and then “All Sectors in Each Country.”

On August 6, 2003, the United States indicated its claim of interest in the modification or withdrawal of specific commitments and requested negotiations with the EC pursuant to GATS Article XXI with a view to reaching an agreement on any necessary compensatory adjustment. The United States also requested that the EC clarify the legal and procedural basis for any modifications in the GATS Article II MFN exemptions of the EC or its Member States that may be included in the EC's consolidated list of GATS Article II MFN exemptions, reflecting changes in the EC's WTO obligations resulting from the 1995 enlargement. USTR and other agencies are currently engaged in an assessment of the potential impact on U.S. services trade of the 1995 enlargement of the EC and in particular of what compensation the EC may owe to the United States under WTO rules; comments from the public in response to this notice will be incorporated into that assessment.

DATE:

Submissions must be received on or before noon, 30 days after publication.

ADDRESSES:

Submissions by Electronic Mail: [e-mail]. Submissions by facsimile: Gloria Blue, Executive Secretary, Trade Policy Staff Committee (TPSC), Office of the USTR, at [phone].

FOR FURTHER INFORMATION CONTACT:

For procedural questions concerning public comments, contact Gloria Blue, Executive Secretary, TPSC, Office of the USTR, 1724 F Street, NW., Washington, DC 20508, telephone [phone]. Substantive questions concerning this review should be addressed to Mark Mowrey, Deputy Assistant U.S. Trade Representative for Europe and the Mediterranean, telephone [phone].

SUPPLEMENTARY INFORMATION:

1. Background Information

A. The 1995 Enlargement

On January 1, 1995, the EC grew from 12 to 15 Member States, with the accession to the Union of Austria, Finland and Sweden effective that date. With respect to WTO rules related to trade in goods, the United States entered into compensation negotiations with the EC under General Agreement on Tariffs and Trade (GATT) Articles XXIV and XXVIII. Those negotiations took place in 1994 and 1995, yielding a bilateral agreement on compensation which entered into force on July 22, 1996 (effective from December 30, 1995).

Despite repeated requests from the United States and other WTO members, the EC failed in the period subsequent to the 1995 enlargement to notify WTO Members of its proposed modification or withdrawal of commitments as the result of this enlargement as required under GATS Articles V:5 and XXI. However, on July 10, 2003 the EC provided its proposed consolidated GATS schedule for the EC 15 and formally notified its intent to modify or withdraw commitments as a result of its enlargement. Pursuant to GATS Article XXI, the EC is required to enter into negotiations with any WTO Members who believe they may be affected by the proposed modification or withdrawal of specific commitments with a view to reaching agreement on any necessary compensatory. On August 6, 2003 the United States notified the EC that it did desire such negotiations.

B. The EC Notification of 2003

On July 10, 2003, the EC transmitted a communication to the WTO Secretariat presenting its consolidated schedule for the EC 15 of specific commitments under the GATS, and its consolidated list for the EC 15 of GATS Article II MFN exemptions.

(1) Specific Commitments

The EC's Communication stated that pursuant to Article V:5 of the GATS and in accordance with the terms of GATS Article XXI:1(b), the EC was notifying the WTO's Council for Trade in Services of its intention to modify or withdraw a number of specific GATS commitments. The EC presented a summary list of these modified commitments, which is paraphrased below:

a. Horizontal Commitments

• Market access entry: the EC limitation with respect to public utilities services being subject to public monopolies or to the granting of exclusive rights to private operators is extended to Austria, Finland and Sweden.
• National treatment limitations on subsidies—mode 3: the limitations on subsidies on mode 3 inscribed in the EC's schedule now apply also to Austria, Finland and Sweden.

b. Sectoral commitments

• Rental/Leasing services without operators—relating to aircraft: the EC's limitations under mode 2 and mode 3 are extended to Austria.
• Services incidental to manufacturing: the commitment included in the schedule of Austria is withdrawn.
• Education services—limitation to “only privately funded services”: the EC's limitation is now extended also to Austria.

c. Space Transport

• The commitment included in the schedule of Austria is withdrawn.

(2) MFN Exemptions

In its communication of July 10, 2003 the EC also proposed a consolidated list of GATS Article II MFN exemptions for the EC 15 that in essence would extend the coverage of the EC's existing MFN exemptions to Austria, Sweden and Finland. According to the EC's notification, the only modifications or withdrawals of specific commitments are those listed in the Annex attached to the notification, which does not refer to the EC's MFN exemptions. The United States therefore believes that the EC's MFN exemptions are not within the scope of its GATS Article V notification and has requested that the EC provide clarification of the procedural and legal basis for any changes in its MFN exemption list.

(3) Applicable GATS Requirements

Article V of the GATS provides that the GATS does not prevent a WTO Member from being a party to an economic integration agreement liberalizing trade in services provided that, inter alia, the agreement has substantial sectoral coverage and provides for the absence or elimination of substantially all discrimination between the parties in the sectors covered by such an agreement. Paragraph 5 of Article V provides that if such an agreement is later enlarged or significantly modified, and a WTO Member intends to modify or withdraw a specific GATS commitment as a result, it must provide 90 days advance notice of such modification and follow the applicable procedures set out in GATS Article XXI. Paragraph 2 of Article XXI provides that WTO Members who believe they may be affected by the proposed modification of commitments can request negotiations with the modifying Member with the purpose of reaching an agreement on compensation for the proposed modification.

While Article XXI covers modification and withdrawal of specific GATS commitments, it does not address modifications to a WTO Member's MFN exemptions pursuant to GATS Article II. The GATS Annex on MFN exemptions provides that any modifications to a WTO Member's MFN exemptions, after entry into force of the Agreement Establishing the WTO (“WTO Agreement”), require a Member to seek a waiver pursuant to Article IX of the WTO Agreement. The EC's communication of July 10, 2003 did not address the issue of whether it intends to seek a waiver for its proposed consolidated list of MFN exemptions.

(4) Accessing the Schedules of Specific Commitments and Lists of MFN Exemptions

The EC's proposed consolidated schedule of specific commitments and consolidated list of MFN exemptions for the EC 15 are restricted WTO documents. The public therefore is advised to examine the existing GATS schedules of specific commitments and lists of MFN exemptions of the EC, Austria, Finland and Sweden to determine whether changes implied through consolidation of the schedules and lists would impact U.S. commercial interests. The existing schedules and lists are accessible through the WTO's Services Database Web site, http://tsdb.wto.org/​wto/​WTOHomepublic.htm. From that site, click on “Pre-defined Reports” and then “All Sectors in Each Country.”

2. Requirements for Submissions

To ensure prompt and full consideration of responses, USTR strongly recommends that interested persons submit comments by electronic mail to the following e-mail address: [e-mail]. Persons making submissions by e-mail should use the following subject line: “Services Accession Austria, Finland and Sweden.” Documents should be submitted in WordPerfect, MSWord, or text (.TXT) files. Supporting documentation submitted as spreadsheets is acceptable in Quattro Pro or Excel format. For any document containing business confidential information submitted electronically, the file name of the business confidential version should begin with the characters “BC-”, and the file name of the public version should begin with the character “P-”. The “P-” or “BC-” should be followed by the name of the submitted information. Persons who make submissions by e-mail should not provide separate cover letters; information that might appear in a cover letter should be included in the submission itself. To the extent possible, any attachments to the submission should be included in the same file as the submission itself, and not as separate files.

Written submissions will be placed in a file open to public inspection pursuant to 15 CFR 2003.5, except confidential business information exempt from public inspection in accordance with 15 CFR 2003.6 must be clearly marked “Business Confidential” at the top of each page, including any cover letter or cover page, and must be accompanied by a non-confidential summary of the confidential information. All public documents and non-confidential summaries will be available for public inspection in the USTR Reading Room in Room 3 of the Annex of the Office of the USTR, 1724 F Street, NW., Washington, DC 20508. An appointment to review the file may be made by calling [phone]. The USTR Reading Room is generally open to the public from 10 a.m.-12 noon and 1-4 p.m., Monday through Friday. Appointments must be scheduled at least 48 hours in advance.

Carmen Suro-Bredie,

Chairperson, Trade Policy Staff Committee.