1 THE GENERAL AGREEMENT ON TRADE IN SERVICES (GATS) And The Russian Federation WTO Secretariat

Content of Presentation 1.Basic elements of GATS 2.Market access for services and the Russian Federation 3.Notification obligation 2

3 Article I - Scope and Definition oALL MEASURES AFFECTING TRADE IN SERVICES (At all government levels, including non-governmental bodies exercising delegated authority) oDEFINITION OF TRADE IN SERVICES o(1) Cross border supply o(2) Consumption abroad o(3) Commercial presence o(4) Presence of natural persons oUNIVERSAL COVERAGE OF GATS (All services, except those provided in the exercise of governmental authority and air transport )

4 GENERAL AGREEMENT ON TRADE IN SERVICES: SCHEDULING OF COMMITMENTS

5 Back to Basics Three possible Scenarios: I. Sector is not covered by GATS II. All other services: certain horizontal (“unconditional”) disciplines III. Sector is subject to Specific Commitments: MA and NT obligations and additional disciplines

6 Scenario III: Sector is subject to Specific Commitments The GATS requires each Member to submit a Schedule of Specific Commitments that lists the sectors in which it grants Market Access and National Treatment. General obligations (“conditional” and “unconditional”) apply in addition.

7 Specific commitments (Part III) Article XVI:1 (Market Access) “… each Member shall accord services and service suppliers of any other Member treatment no less favourable than that.. Specified in its Schedule”

8 Six Types of Market Access Limitations (Article XVI:2) (a) Number of service suppliers* (e.g. new entries subject to economic needs) (b) Value of transactions or assets* (e.g. assets of foreign banks limited to x percent of total bank assets) (c) Total number of operations or quantity of output* (e.g. restrictions on broadcasting time for foreign films)

9 Six Types of Market Access Limitations (bis) (d) Total number of natural persons* (e.g. no more than x foreigners per outlet) (e) Type of legal entity or joint venture (e.g. foreign presence only via subsidiaries) (f) Foreign capital participation (e.g. foreign equity limited to 49 percent) _______________________________________ *Or requirement of economic needs test. See also S/L/92, para. 12

10 “Open definition” of National Treatment (Article XVII) (1) Treatment shall be “no less favourable than accorded to own like services and services suppliers”. (2) … “either formally identical or formally different treatment” … (3) relevant benchmark: no modification of “the conditions of competition” in favour of own like services or service suppliers.

11 Overlap between Market Access and National Treatment Article XX:2: Relevant measures (e.g. joint venture requirements, discriminatory quotas) shall be inscribed in the column relating to Article XVI (MA). This provides a condition and qualification to Article XVII (NT) as well. See also S/L/92, para. 18

12 Role of Additional Commitments (Article XVIII) Scheduling of measures not falling under Articles XVI or XVII. Such measures may relate to qualifications, standards, licenses,competition disciplines, etc. See also S/CSC/W/34

13 How Schedules of Commitments are structured

14 Progressive Liberalization (Part IV) Article XIX (Negotiation of Specific Commitments) “…Members shall enter into successive Rounds of negotiation…with a view to achieving a progressively higher level of liberalization…” Due respect for national policy objectives and the level of development Flexibility for individual developing country Members (to open fewer sectors, liberalize fewer types of transactions) Negotiating guidelines and procedures based on an assessment of trade in services

Market Access for Services: Russian Federation - 1 RF made specific commitments on 11 services sectors and on 116 sub- sectors Some of the notable commitments in service sectors include: –Telecommunication: foreign equity limitation (49)% would be eliminated four years from accessions. 15

Market Access for Services: Russian Federation - 2 Foreign insurance companies will be allowed to establish branches nine years from the date of accession Foreign banks would be allowed to establish subsidiaries. No cap on individual banks but an overall cap of 50% foreign capital participation in RF banking system Transportation services: Commitments in maritime and road transport services Distribution services: 100% foreign-owned companies to engage in wholesale, retail, and franchise 16

17 NOTIF: Services (1) Basic document: S/L/5 Changes in regulations affecting trade in scheduled sectors (art. III.3) Ad-hoc, at least annually when conditions met Enquiry point (art. III.4) All Members Contact point (art. IV.2) Developed WTO Members

18 NOTIF: Services (2) Existing recognition measures (art. VII.4) All Members Treatment of permanent residents (art. XXVIII:(k):(ii):2) All Members (one-off) MFN exemption termination (Annex on Article II exemption para. 7) Members with such exemption