Provisions on Trade in Services in Trade and Integration Agreements
 in the Western Hemisphere

Summary

1. The Compendium of Provisions on Trade in Services in the Trade and Integration Arrangements of the Western Hemisphere contains information on provisions relating to services in nine trade and integration arrangements in the Western Hemisphere in Part I, information on service sectors which form separate chapters of these agreements and arrangements in Part III, and information on the provisions relating to services contained in five bilateral free trade agreements and four Economic Complementation Agreements in Part II. All of the 34 participants in the Free Trade Area of the Americas (FTAA) process, except for Haiti, are covered by one or more of the arrangements examined.

2. The Compendium was originally published in May 1997, following approval for its dissemination by the FTAA Working Group on Services. It was made available at the official FTAA web site: http://www.ftaa-alca.org. The current version has been updated to include those trade and integration agreements that have been signed since mid-1997, and is based on information available through April 1999.

3. The nine trade and integration arrangements examined in Part I are:

• The North American Free Trade Agreement (NAFTA), between the United States, Canada, and Mexico;
• The Treaty on Free Trade between Colombia, Venezuela and Mexico (GROUP OF 3);
• The General Treaty on Central American Economic Integration (CACM) between Costa Rica, Guatemala, El Salvador, Honduras and Nicaragua;
• The Caribbean Community and Common Market (CARICOM), involving fourteen Caribbean countries: Antigua, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, Montserrat, St. Kitts-Nevis, St. Lucia, St. Vincent, Suriname and Trinidad and Tobago;
• The Andean Sub-regional Integration Agreement (ANDEAN COMMUNITY), between Bolivia, Colombia, Ecuador, Peru and Venezuela;
• The Southern Cone Common Market (MERCOSUR) Agreement, between Argentina, Brazil, Paraguay and Uruguay;
• Agreement on Economic Cooperation between MERCOSUR and Chile;
• Agreement on Economic Cooperation between MERCOSUR and Bolivia;
• Treaty on Free Trade between Central America (CACM) and the Dominican Republic

4. Of these trade and integration arrangements, four have the stated objective of becoming a customs union, namely: CACM; CARICOM; ANDEAN COMMUNITY; and MERCOSUR. The remaining arrangements have the stated objective of being free trade areas. However, certain of the free trade area agreements contain substantial additional elements of integration, including provisions on the liberalization of trade in services and disciplines and obligations with respect to trade in services.

5. In Part I, the multilateral rules and provisions on trade in services set out in the WTO General Agreement on Trade in Services (GATS) are used as a reference for reviewing the provisions on trade in services in the nine trade and integration arrangements listed above. They also serve as reference for the examination of nine bilateral agreements in Part II.

6. The nine bilateral agreements examined in Part II are:

Chile and Mexico;	Chile and Canada;
Chile and Bolivia;	Mexico and Bolivia;
Chile and Venezuela;	Mexico and Costa Rica;
Chile and Colombia;	Mexico and Nicaragua
Chile and Ecuador;

7. In Part III, the provisions on specific service sectors as set out in the separate chapters of the various trade and integration arrangements are examined. The service sectors included in one or more of these chapters contain the following: movement of natural persons; financial services; telecommunications; air and maritime transport; and professional services.

With respect to provisions on services, the trade and integration arrangements contain the following:

8. Several of the trade and integration arrangements in the Western Hemisphere now contain extensive commitments and provisions for the liberalization of services as well as disciplines for trade in services. This includes NAFTA, the GROUP OF 3 Agreement, the Protocol on Services of MERCOSUR, the Decision on Services of the Andean Community, and the Agreement between Central America and the Dominican Republic. This is also the case for several of the bilateral free trade agreements, including those between Mexico/Bolivia, Mexico/Costa Rica, Mexico/Nicaragua, Chile/Mexico, and Canada/Chile.

9. The other trade and integration arrangements contain no provisions specific to services or to the liberalization of trade in services, although definitions on services are set out in the annex to the CARICOM. The Chile/MERCOSUR and Bolivia/MERCOSUR agreements include a short chapter on services, with a few provisions.

10. The Coverage of service sectors is comprehensive in all of the agreements concluded in the Western Hemisphere containing substantive provisions on trade in services, with very few specified exceptions. The latter are generally confined to air transport services (routing), and services carried out in the exercise of government functions on a non-competitive basis.

11. National Treatment is provided for foreign service providers by all of the trade and integration agreements concluded in the Western Hemisphere containing substantive provisions on trade in services. The CACM provides for national treatment in the case of construction enterprises.

12. Most-Favoured-Nation Treatment is provided by all of the trade and integration agreements concluded in the Western Hemisphere containing substantive provisions on trade in services

13. The possibility of Non-Conforming Measures in the area of services is found in NAFTA, the GROUP OF 3, the agreements signed by Mexico with Bolivia, Chile, Costa Rica and Nicaragua, as well as in the Canada/Chile and Central American/Dominican Republic free trade agreements. The list of reservations (non-conforming measures) is attached in annexes to the NAFTA and the Canada/Chile agreement. For the others, a list of reservations has yet to be made publicly available. The Decision of the Andean Community contains a standstill provision, whereby Members commit themselves not to increase the degree of non-conformity of measures affecting trade in services following its entry into force.

14. General obligations to ensure Transparency, and to foster Recognition of the equivalency of the qualifications of service providers, and provisions for General Exceptions are included in all of the agreements concluded in the Western Hemisphere containing substantive provisions on trade in services. Domestic Regulation is discussed as well in all of the agreements.

15. Provisions with respect to Technical Cooperation, appear in a few of the agreements on services, specifically in the agreement signed by the GROUP OF 3, and in those signed by MERCOSUR with Chile and Bolivia where technical cooperation is mentioned with respect to general scientific and technological cooperation. This provision is also contained in the bilateral agreements signed by Mexico with Bolivia, Costa Rica, and Nicaragua.

16. The possibility for general Safeguard action with respect to services is not contained in the trade and integration agreements of the Western Hemisphere, though it is found in the GATS. Safeguard action in the case of balance-of-payments difficulties is foreseen however in most agreements including NAFTA, the GROUP OF 3, the ANDEAN COMMUNITY and Central America with the Dominican Republic. The bilateral treaties signed by Mexico with Bolivia, Costa Rica, and Nicaragua specify that procedures for the establishment of disciplines relating to safeguards will be developed.

17. General provisions on Dispute Settlement for services are contained in all of the agreements. NAFTA and the GROUP OF 3 have additional dispute settlement provisions for financial services, and the Canada/Chile treaty contains provisions on dispute settlement in the chapter on Temporary Entry of Business Persons. The MERCOSUR Protocol on Services refers disputes on services to the general Dispute Settlement Regime.

18. In addition to the provisions of the GATS, an article on Local Presence or the prohibition of any Party to a given agreement to require a foreign service provider to establish locally in order to supply a traded service, is contained in NAFTA, the GROUP OF 3, the bilateral agreements signed by Mexico with Bolivia, Chile, Costa Rica, and Nicaragua, as well as in the Canada/Chile and the Central America/Dominican Republic agreements.

19. A commitment to Future Liberalization of trade in services is contained in several agreements. A commitment to the liberalization or removal of quantitative restrictions carried out through means of negotiations held no less frequently than every two years is contained in NAFTA. In the GROUP OF 3 treaty and the free trade agreements signed by Mexico with Bolivia, Chile, Costa Rica, and Nicaragua, future liberalization is foreseen through future negotiations aiming to eliminate the restrictions represented by non-conforming measures. The commitment to fully liberalize all restrictions on trade in services within a ten-year period after its entry into force is contained in the Protocol on Services of MERCOSUR, and a similar commitment is contained in Decision 439 of the Andean Community, under which trade in services are to be fully liberalized within a five-year period, beginning in the year 2000.

20. In terms of Specific Sectors, a separate chapter on financial services is found in NAFTA, the GROUP OF 3, and in the agreements signed by Mexico with Bolivia and Nicaragua. The Protocol on Services of MERCOSUR includes an annex on financial services. A separate chapter on telecommunications is found in NAFTA, the GROUP OF 3, the Andean Community and in the agreements signed by Chile with Canada and Mexico, as well as in the agreements signed by Mexico with Bolivia and Nicaragua. Separate chapters on transport are contained in several agreements - NAFTA, GROUP OF 3, CACM, the Andean Community, Chile/MERCOSUR, and the treaty between Central America and the Dominican Republic B either with respect to maritime or land transport (also air transport for the Andean Community). The Protocol on Services of MERCOSUR includes an annex on transport (maritime and land). Professional services are the object of an annex in many of the agreements, including NAFTA, the GROUP OF 3, the agreements signed by Chile with Canada and Mexico, the agreements signed by Mexico with Bolivia, Costa Rica, and Nicaragua, and the treaty between Central America and the Dominican Republic. For the Andean Community, professional services are to be the object of a future agreement. With respect to the temporary entry of business persons, this is covered in a separate chapter in NAFTA, the GROUP OF 3, and in the bilateral agreements signed by Chile with Canada and Mexico, and by Mexico with Bolivia, Costa Rica, and Nicaragua. The Protocol on Services of MERCOSUR includes an annex on the temporary entry of natural persons. The decision 463 of the Andean Community on Tourism is included at the end of the Compendium.