The texts reproduced here do not have the legal standing of the original documents which are entrusted and kept at the WTO Secretariat in Geneva.

XIX. Article XV

A. Text of Article XV

Article XV: 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.

(footnote original) 7 A future work programme shall determine how, and in what time-frame, negotiations on such multilateral disciplines will be conducted.

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.



B. Interpretation and Application of Article XV

1. General

94. The Panel in US  Large Civil Aircraft (2nd Complaint) referred to Articles XIII:2 and XV of the GATS in the context of interpreting the definition of a subsidy found in Article 1 of the SCM Agreement. The Panel concluded that transactions properly characterized as purchases of services are excluded from the scope of Article 1 of the SCM Agreement, which expressly refers to purchases of goods but omits any reference to purchases of services. In the course of its analysis, the Panel observed that [w]hile the SCM Agreement was being negotiated, parallel negotiations on trade in services were also taking place. Article XIII:2 and XV of the GATS reflect the fact that the negotiators of the GATS were unable to reach agreement on disciplines regarding governmental purchases of services, or on disciplines governing the provision of subsidies to service suppliers.(145) The Panel concluded that when the omission of purchases of services from the text of Article 1 of the SCM Agreement is read against this historical background, it offers further confirmation that the drafters of that provision could not have removed the express reference to purchases of services from Article 1 of the SCM Agreement on the understanding that the reference was superfluous.(146)

2. Working Party on GATS Rules

95. Negotiations on subsidies have been carried out in the Working Party on GATS Rules, established on 30 March 1995 by the Council for Trade in Services.(147)

Part III: Specific Commitments

XX. Article XVI

A. Text of Article XVI

Article XVI: 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)

(footnote original) 8 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(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.

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) 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;

(b) limitations on the total value of service transactions or assets in the form of numerical quotas or the requirement of an economic needs test;

(c) 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)

(footnote original) 9 Subparagraph 2(c) does not cover measures of a Member which limit inputs for the supply of services.

(d) 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;

(e) measures which restrict or require specific types of legal entity or joint venture through which a service supplier may supply a service; and

(f) limitations on the participation of foreign capital in terms of maximum percentage limit on foreign share-holding or the total value of individual or aggregate foreign investment.



B. Interpretation and Application of Article XVI

1. General

(a) Electronic commerce

96. With respect to application of Article XVI to electronic commerce, see the Progress Report adopted by the Council for Trade in Services in the context of the Work Programme on Electronic Commerce on 19 July 1999.(148)

2. Article XVI:1

97. The Panel in US  Gambling found that paragraph 1 of Article XVI did not contain restrictions on market access beyond those listed in paragraph 2 of Article XVI:

The ordinary meaning of the words, the context of Article XVI, as well as the object and purpose of the GATS confirm that the restrictions on market access that are covered by Article XVI are only those listed in paragraph 2 of this Article.(149)

98. The Appellate Body in US  Gambling, noting that Antigua had only made a conditional appeal regarding this issue, left the issue of the relationship between the first and second paragraphs of Article XVI to another day.(150)

99. In ChinaPublications and Audiovisual Products, the Panel stated that:

Paragraph 1 of Article XVI sets out the general principle that a Member must accord to services and service suppliers of other Members treatment no less favourable than that specified under the terms, limitations and conditions contained in its schedule. Paragraph 2 is more specific. It defines, in six sub-paragraphs, the measures that a Member, having inscribed a specific sectoral commitment, must not adopt or maintain unless otherwise specified in its Schedule. The six types of measures form a closed or exhaustive list, as indicated by the wording of the chapeau to paragraph 2 (the measures are defined as). Under Article XVI, a Member undertakes a minimum standard of treatment, and is thus free to maintain a market access regime less restrictive than set out in its schedule, as confirmed in paragraph 1 which refers to a standard of no less favourable treatment.(151)

3. Article XVI:2

(a) Restrictions on part of a sector

100. The Panel in US  Gambling stated, in a finding which was not appealed,(152) that if a full market access commitment is given in a particular sector or sub-sector, that commitment applies to the whole of that sector, including all of its sub-sectors:

In our view, if a Member makes a market access commitment in a sector or sub-sector, that commitment covers all services that fall within the scope of that sector or sub-sector. A Member does not fulfil its GATS obligations if it allows market access for only some of the services covered by a committed sector or sub-sector while prohibiting all others. If a Member wishes to restrict market access with respect to certain services falling within the scope of a sector or sub-sector, it should set out the restrictions or limitations on access in the appropriate place in the Members schedule. Indeed, a specific commitment in a given sector or sub-sector is a guarantee that the whole of that sector, i.e. all services included in that sector or sub-sector are covered by the commitment. Any other interpretation would make market access commitments under the GATS largely meaningless.(153)

(b) Restrictions on part of a mode of supply

101. The Panel in US  Gambling stated, in a finding that was not appealed,(154) that if a full market access commitment is given for the supply of a service through mode 1, that commitment applies to any mode of delivery included in mode 1:

The Panel concludes that mode 1 under the GATS encompasses all possible means of supplying services from the territory of one WTO Member into the territory of another WTO Member. Therefore, a market access commitment for mode 1 implies the right for other Members suppliers to supply a service through all means of delivery, whether by mail, telephone, Internet etc., unless otherwise specified in a Members Schedule. We note that this is in line with the principle of technological neutrality, which seems to be largely shared among WTO Members.(155)

(c) Restrictions directed at consumers

102. The Panel in US  Gambling, found that certain laws making it a criminal offence for a person to engage in gambling were directed at consumers, not suppliers, of the service and therefore that these measures were not inconsistent with Article XVI:2(a) and (c).(156) On appeal, the Appellate Body found that, because the claimant had failed to make a prima facie case of violation with respect to these laws, the Panel was not entitled to make findings on them, and therefore that there was no need, in resolving the appeal, to consider the merits of the Panels findings.(157)

(d) Temporal qualifications

103. The Panel in Mexico  Telecoms, in examining a market access commitment made subject to a permit which would not be granted until the corresponding regulations are issued, found:

The wording of the limitation, that permits for the establishment of a commercial agency [will not be issued] until the corresponding regulations are issued, does not specify that a numerical quota was to be imposed on the issuance of permits. Rather, the sentence seems to introduce a temporal qualification as to when establishment will be permitted  namely, after the issuance of the regulations.

The six categories of measures in Article XVI:2 refer to the types of market access limitations that can be imposed on the supply of a service. However, none of the six categories relate to temporal limitations  such as dates for entry into force or for the implementation of commitments. This suggests that temporal limitations cannot constitute limitations on market access under Article XVI:2 of the GATS.(158)

104. The Panel in Mexico  Telecoms said further that the temporal qualifications in Mexicos scheduled commitments did not meet the requirements under Article XX:1(d) and (e), because a time frame was not specified.(159) In this regard, see Section XXIV.B.3 below.

(e) Routing requirements in telecommunications

105. The Panel in Mexico  Telecoms, observing that Mexicos GATS Schedule required that international telecommunications traffic must be routed through the facilities of a Mexican concessionaire, found that this refers not to a requirement simply to use the equipment or physical assets of a Mexican concessionaire, but to supply the service on a facilities-basis, and not through capacity leased to the cross-border supplier.(160) With respect to the cross border supply of telecommunications services:

This element of the routing restriction means, therefore, that supply of the service by means of one of the categories (over leased capacity) within Mexico is prohibited, and is subject to a zero quota in the sense of Article XVI:2(a), (b) and (c). We note that, while this limitation prohibits services that originate on a facilities basis from being terminated over leased circuits, it does not prevent these services from being supplied when they fall within the facilities-based category with respect to termination.(161)

106. Likewise, with respect to non-facilities based services supplied cross border, the Panel in Mexico  Telecoms found that the routing requirement prohibits the cross-border supply upon termination within Mexico by means of the very leased capacity which defines this type of service. The Panel therefore found:

While this element of the routing restriction does not expressly prohibit cross-border supply over leased capacity on the originating segment, it means that supply over leased capacity on the terminating segment is prohibited. Therefore, this element of the routing restriction prohibits end-to-end International Simple Resale (ISR), and effectively eliminates the possibility of any cross-border supply of services over leased capacity. In this sense, with respect to cross border services supplied by commercial agencies, the routing restriction falls within the scope of Article XVI:2(a), (b) and (c).(162)

4. Article XVI:2 (Introductory Heading or chapeau)

107. The Appellate Body in US  Gambling, observed that the phrase where market access commitments are made, did not imply that a zero quota or a prohibition was outside the scope of the quantitative measures described in sub-paragraph (a).(163) See also paragraph 113 below.

5. Article XVI:2(a) (limitations on the Number of Suppliers)

108. The Appellate Body in US  Gambling observed that the use of the words number of suppliers and numerical quotas in this provision suggests a focus on quantitative limitations.(164)

109. Since the dictionary meaning of the word form was broad, the Appellate Body in US  Gambling reasoned that the meaning of the phrase in the form of had to be deduced by reading it together with the four types of limitation which it described.(165) The phrase in the form of , read together with the words numerical quota, suggested that Article XVI:2(a) could encompass a zero quota:

The fact that the word numerical encompasses things which have the characteristics of a number suggests that limitations in the form of a numerical quota would encompass limitations which, even if not in themselves a number, have the characteristics of a number. Because zero is quantitative in nature, it can, in our view, be deemed to have the characteristics of a number  that is, to be numerical.(166)

110. The phase in the form of , read together with the terms monopolies and exclusive service suppliers, and bearing in mind the GATS definitions of these terms, suggested that Article XVI:2(a) could include limitations that are in effect monopolies or exclusive service suppliers:

These two definitions suggest that the reference, in Article XVI:2(a), to limitations on the number of service suppliers in the form of monopolies and exclusive service suppliers should be read to include limitations that are in form or in effect, monopolies or exclusive service suppliers.(167)

111. The phrase in the form of , read together with the phrase the requirements of an economic needs test did not suggest clearly that such a test needed to take any particular form:

We further observe that it is not clear that limitations on the number of service suppliers in the form of the requirements of an economic needs test must take a particular form.(168) Thus, this fourth type of limitation, too, suggests that the words in the form of must not be interpreted as prescribing a rigid mechanical formula.(169)

112. The Appellate Body in US  Gambling, in concluding that the words in the form of must not be interpreted as prescribing a rigid mechanical formula, cautioned:

This is not to say they should not be ignored or replaced by the words that have the effect of. Yet, at the same time, they cannot be read in isolation.(170)

113. Interpreted in this way, the Appellate Body in US  Gambling found that it is clear that the thrust of sub-paragraph (a) [of Article XVI:2] is not on the form of limitations, but on their numerical, or quantitative, nature.(171)

114. The Appellate Body in US  Gambling examined the context provided by the phrase where market access commitments are made, contained in the chapeau to Article XVI:2. It concluded that this phrase did not imply that a zero quota or a prohibition was outside the scope of the quantitative measures described in subparagraph (a), referring to an analogous provision in the GATT 1994, Article II:1(b).(172) The Appellate Body quoted approvingly the Panels conclusion on this issue:

The fact that the terminology [of Article XVI:2(a)] embraces lesser limitations, in the form of quotas greater than zero, cannot warrant the conclusion that it does not embrace a greater limitation amounting to zero. Paragraph (a) does not foresee a zero quota because paragraph (a) was not drafted to cover situations where a Member wants to maintain full limitations. If a Member wants to maintain a full prohibition, it is assumed that such a Member would not have scheduled such a sector or subsector and, therefore, would not need to schedule any limitation or measures pursuant to Article XVI:2.(173)

115. The Appellate Body in US  Gambling, finding that certain ambiguities remained in the interpretation of Article XVI:2(a), referred to the 1993 Scheduling Guidelines as relevant preparatory work, concluding that a measure equivalent to a zero quota is within the scope of sub-paragraph (a):

[T]hose Guidelines set out an example of the type of limitation that falls within the scope of sub-paragraph (a) of Article XVI:2, that is, of the type of measures that will be inconsistent with Article XVI if a relevant commitment has been made and unless the Member in question has listed it as a condition or limitation in its Schedule. That example is: nationality requirements for suppliers of services (equivalent to zero quota).(174) This example confirms the view that measures equivalent to a zero quota fall within the scope of Article XVI:2(a).

116. The Appellate Body in US  Gambling was thus able to conclude that limitations amounting to a zero quota are quantitative limitations and fall within the scope of Article XVI:2(a)(175). Since the Panels findings on limitations affecting part of a sector, or part of a mode of supply, were not appealed, the Appellate Body was able to quote and uphold the Panels combined finding that:

[a prohibition on one, several or all means of delivery cross-border] is a limitation on the number of service suppliers in the form of numerical quotas within the meaning of Article XVI:2(a) because it totally prevents the use by service suppliers of one, several or all means of delivery that are included in mode 1.(176)

117. The Panel in Mexico  Telecoms, observing that Mexicos GATS Schedule required that international telecommunications traffic must be routed through the facilities of a Mexican concessionaire, found that this refers not to a requirement simply to use the equipment or physical assets of a Mexican concessionaire, but to supply the service on a facilities-basis, and not through capacity leased to the cross-border supplier.(177) With respect to the cross border supply of telecommunications services:

This element of the routing restriction means, therefore, that supply of the service by means of one of the categories (over leased capacity) within Mexico is prohibited, and is subject to a zero quota in the sense of Article XVI:2(a), (b) and (c). We note that, while this limitation prohibits services that originate on a facilities basis from being terminated over leased circuits, it does not prevent these services from being supplied when they fall within the facilities-based category with respect to termination.(178)

118. Likewise, with respect to non-facilities based services supplied cross border, the Panel in Mexico  Telecoms found that the routing requirement prohibits the cross-border supply upon termination within Mexico by means of the very leased capacity which defines this type of service. The Panel therefore found:

While this element of the routing restriction does not expressly prohibit cross-border supply over leased capacity on the originating segment, it means that supply over leased capacity on the terminating segment is prohibited. Therefore, this element of the routing restriction prohibits end-to-end International Simple Resale (ISR), and effectively eliminates the possibility of any cross-border supply of services over leased capacity. In this sense, with respect to cross border services supplied by commercial agencies, the routing restriction falls within the scope of Article XVI:2(a), (b) and (c).(179)

6. Article XVI:2(b)

119. The Panel in Mexico  Telecoms examined Mexicos GATS Schedule which required that international telecommunications traffic must be routed through the facilities of a Mexican concessionaire. See discussion in paragraphs 116117 above.

7. Article XVI:2(c)

120. The Appellate Body in US  Gambling, noting that the construction of Article XVI:2(c) was grammatically ambiguous(180), focused instead on the language of the provision, finding that it did not necessarily exclude a measure equivalent to a zero quota:

In our view, by combining, in sub-paragraph (c), the elements of the first clause of Article XVI:2(c) and the elements in the second part of the provision, the parties to the negotiations sought to ensure that their provision covered certain types of limitations, but did not feel the need to clearly demarcate the scope of each such element. On the contrary, there is scope for overlap between such elements: between limitations on the number of service operations and limitations on the quantity of service output, for example, or between limitations in the form of quotas and limitations in the form of an economic needs test. That sub-paragraph (c) applies in respect of all four modes of supply under the GATS also suggests the limitations covered thereunder cannot take a single form, nor be constrained in a formulaic manner. Nonetheless, all types of limitations in sub-paragraph (c) are quantitative in nature, and all restrict market access. For these reasons, we are of the view that, even if sub-paragraph (c) is read as referring to only two types of limitations, as contended by the United States, it does not follow that sub-paragraph (c) would not catch a measure equivalent to a zero quota.(181)

121. In order to resolve any ambiguity that Article XVI:2(c) covers measures equivalent to a zero quota, the Appellate Body in US  Gambling resorted to supplementary sources. It noted references, made in 1991 in the group negotiating the GATS, to the quantitative nature of measures covered by Article XVI. It also noted a relevant example in the 1993 Scheduling Guidelines of a type of measure covered by Article XVI:2(c): [r]estrictions on broadcasting time available for foreign films, a measure that does not mention numbers or units.(182) If this were not the case, the Appellate Body stated, Article XVI:2(c) could not cover, for example, a limitation expressed as a percentage or described using words such as a majority.(183)

122. The Appellate Body in US  Gambling was thus able to conclude that limitations amounting to a zero quota are quantitative limitations and fall within the scope of Article XVI:2(a).(184) Since the Panels findings on limitations affecting part of a sector, or part of a mode of supply, were not appealed, the Appellate Body was able to quote and uphold the Panels combined finding that a measure prohibiting the supply of certain services where specific commitments have been undertaken is a limitation within the meaning of Article XVI:2(c) because it totally prevents the services operations and/or service output through one or more or all means of delivery that are included in mode 1. In other words, such a ban results in a zero quota on one or more or all means of delivery include in mode 1.(185)

123. The Appellate Body in US  Gambling declined to go beyond a ruling on the measure at issue, and stated that [i]t is neither necessary nor appropriate for us to draw, in the abstract, the line between quantitative and qualitative measures, and we do not do so here.(186)

124. The Panel in Mexico  Telecoms examined Mexicos GATS Schedule which required that international telecommunications traffic must be routed through the facilities of a Mexican concessionaire. See discussion in paragraphs 116117 above.

XXI. Article XVII

A. Text of Article XVII

Article XVII: 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)

(footnote original) 10 Specific commitments assumed under this Article shall not be construed to require any Member to compensate for any inherent competitive disadvantages which result from the foreign character of the relevant services or service suppliers.

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.



B. Interpretation and Application of Article XVII

1. General

(a) Elements of a claim under Article XVII

125. In ChinaPublications and Audiovisual Products, the Panel provided an overview of the elements of a claim under Article XVII:

The wording of Article XVII indicates that we need to determine: whether the services at issue, i.e. the wholesale services supplied through commercial presence, are inscribed in Chinas Schedule; the extent of Chinas national treatment commitments, including any conditions or qualifications, with respect to these services entered in its Schedule; whether the measures at issue affect the supply of these services; and whether these measures accord less favourable treatment to service suppliers of other Members, in comparison with like domestic suppliers.(187)

(b) Electronic commerce

126. With respect to application of Article XVII to electronic commerce, see the Progress Report adopted by the Council for Trade in Services in the context of the Work Programme on Electronic Commerce on 19 July 1999.(188)

2. subject to any conditions and qualifications set out therein

127. In ChinaPublications and Audiovisual Products, the Panel stated:

As noted above, a Member may limit the extent to which it grants market access or national treatment for the services listed in its Schedule, by inscribing the conditions and qualifications (which we refer to more simply as limitations) mentioned in Article XVII either under limitations on market access or under limitations on national treatment. A Members obligations on market access and/or national treatment are determined with reference to any such limitations inscribed in its schedule. Therefore, to determine the extent of Chinas national treatment commitments with respect to the services at issue, we need to examine Chinas Schedule to see whether, with respect to supply through commercial presence, there are any limitations inscribed (a) beside Wholesale Trade Services, in the national treatment column or (b) in the national treatment column of the horizontal section of Chinas Schedule, as those limitations inscribed in the horizontal section apply to all the sectors in the Schedule unless otherwise specified.(189)

3. like services and service suppliers

128. The Panel in EC  Bananas III, in a finding not reviewed by the Appellate Body, addressed the issue of likeness under Article XVII:

[T]he nature and the characteristics of wholesale transactions as such, as well as of each of the different subordinated services mentioned in the headnote to section 6 of the CPC, are like when supplied in connection with wholesale services, irrespective of whether these services are supplied with respect to bananas of EC and traditional ACP origin, on the one hand, or with respect to bananas of third-country or non-traditional ACP origin, on the other. Indeed, it seems that each of the different service activities taken individually is virtually the same and can only be distinguished by referring to the origin of the bananas in respect of which the service activity is being performed. Similarly, in our view, to the extent that entities provide these like services, they are like service suppliers.(190)

129. In ChinaPublications and Audiovisual Products, the Panel concluded that when origin is the only factor on which a measure basis a difference in treatment between domestic service suppliers and foreign suppliers, the like service suppliers requirement is met, provided there will, or can, be domestic and foreign suppliers that under the measure are the same in all material respects except for origin:

When origin is the only factor on which a measure bases a difference of treatment between domestic service suppliers and foreign suppliers, the like service suppliers requirement is met, provided there will, or can, be domestic and foreign suppliers that under the measure are the same in all material respects except for origin. We note that similar conclusions have been reached by previous panels.(191) We observe that in cases where a difference of treatment is not exclusively linked to the origin of service suppliers, but to other factors, a more detailed analysis would probably be required to determine whether service suppliers on either side of the dividing line are, or are not, like.

Therefore, to the extent that, under the measure at issue, a difference of treatment between foreign-invested enterprises that would, if not prohibited, engage in the wholesale of imported reading materials and wholly Chinese-owned enterprises that are permitted to supply this service is based exclusively on the origin of service suppliers, the like service suppliers requirement in Article XVII is met, as long as there will, or can, be domestic and foreign suppliers that under the measure are the same in all material respects except for origin. In our view, there is no doubt that under the measure at issue, there will, or can, be foreign-invested enterprises prohibited from engaging in the wholesale of imported reading materials that are the same in all material respects as wholly Chinese-owned enterprises permitted to supply this service, except for their origin. We also note that the parties do not dispute the likeness of the service suppliers under the measures at issue. We thus consider that, for the measure at issue, the like service suppliers requirement in Article XVII is met.(192)

4. treatment no less favourable

130. As regards the no less favourable treatment element of Article XVII, the Panel in China  Publications and Audiovisual Products stated that:

We must now examine whether the formal prohibition on the supply of certain services by a foreign service supplier that a like domestic supplier may undertake, constitutes no less favourable treatment in terms of Article XVII.

This treatment is to be assessed in terms of the conditions of competition between like services and services suppliers, as specified in Article XVII:3 of the GATS:

Formally identical or formally different treatment shall be considered to be less favourable if it modified 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.

In our view, a measure that prohibits foreign service suppliers from supplying a range of services that may, subject to satisfying certain conditions, be supplied by the like domestic supplier cannot constitute treatment no less favourable, since it deprives the foreign service supplier of any opportunity to compete with like domestic suppliers. In terms of paragraph 3 of Article XVII, such treatment modifies conditions of competition in the most radical way, by eliminating all competition by the foreign service supplier with respect to the service at issue.(193)

131. The Panel in China  Publications and Audiovisual Products also discussed the burden of proof on the issue of less favourable treatment, drawing upon jurisprudence developed under the GATT 1994:

We recall the requirement under Article XVII that a Member accord no less favourable treatment to foreign services or service suppliers than it does to like domestic ones. Under paragraph 2 of Article XVII, the treatment need not be identical. Formally different treatment may be accorded to foreign services or service suppliers, as long as that treatment does not modify conditions of competition in favour of like domestic services or service suppliers. Therefore, Chinas formally different treatment of foreign-invested wholesalers with respect to operating term does not necessarily indicate an inconsistency with Article XVII. It is for the United States, as the complaining party, to demonstrate that the formal difference in treatment by China has modified the conditions of competition in favour of wholly Chinese-owned wholesalers.

The demonstration of less favourable treatment of foreign services or service suppliers under Article XVII must proceed through careful analysis of the measure and the market. In examining the national treatment obligation applying to trade in goods, the Appellate Body in US  FSC (Article 21.5  EC) stated:

The examination of whether a measure involves less favourable treatment of imported products within the meaning of Article III:4 of the GATT 1994 must be grounded in close scrutiny of the fundamental thrust and effect of the measure itself.(194) This examination cannot be rest on simple assertion, but must be founded on a careful analysis of the contested measure and of its implications in the marketplace. At the same time, however, the examination need not be based on the actual effects of the contested measure in the marketplace.(195)(196)

We consider that this statement by the Appellate Body is relevant also to an analysis under Article XVII of the GATS, since an examination of less favourable treatment involves, in goods as well as services cases, an analysis of the effects of a measure on conditions of competition.(197)

5. aims-and-effects test

132. In EC  Bananas III, the Appellate Body rejected the alleged relevance of the so-called aims-and-effects test in the context of Article XVII:

We see no specific authority either in Article II or in Article XVII of the GATS for the proposition that the aims and effects of a measure are in any way relevant in determining whether that measure is inconsistent with those provisions. In the GATT context, the aims and effects theory had its origins in the principle of Article III:1 that internal taxes or charges or other regulations should not be applied to imported or domestic products so as to afford protection to domestic production. There is no comparable provision in the GATS. Furthermore, in our Report in Japan  Alcoholic Beverages the Appellate Body rejected the aims and effects theory with respect to Article III:2 of the GATT 1994. The European Communities cites an unadopted panel report dealing with Article III of the GATT 1947, United States  Taxes on Automobiles as authority for its proposition, despite our recent ruling.(198)

6. Footnote 10

133. In Canada  Autos, one of the measures at issue was the so-called Canada Value Added (CVA) requirement, according to which a tax duty exemption was granted, inter alia, only if the amount of Canadian value added in a manufacturers local production of motor vehicles exceeded a certain level. One component of this CVA requirement was maintenance and repair work executed in Canada on buildings, machinery and equipment used for production purposes. Canada argued that there can be no discrimination against these services supplied through modes 1 and 2, as cross-border supply and consumption abroad of these services are not technically feasible. Further, Canada pointed out that the competitive disadvantage in the foreign provision of many services listed by the complainants as being affected by the CVA requirements is inherent in the foreign character of these services and, as stated in footnote 10 to Article XVII, should not be regarded as a national treatment restriction.(199) The Panel, in a finding not reviewed by the Appellate Body, disagreed with Canada:

We consider that, although the supply of some repair and maintenance services on machinery and equipment through modes 1 and 2 might not be technically feasible, as they require the physical presence of the supplier, all other services listed by the complainants as being affected by the CVA requirements, including some consulting and advisory services relating to repair and maintenance of machinery, can be supplied through modes 1 and 2. We further consider that treatment less favourable granted to services supplied outside Canada cannot be justified on the basis of inherent disadvantages due to their foreign character. Footnote 10 to Article XVII only exempts Members from having to compensate for disadvantages due to foreign character in the application of the national treatment provision; it does not provide cover for actions which might modify the conditions of competition against services and service suppliers which are already disadvantaged due to their foreign character.

We therefore find that lack of technical feasibility only excludes the supply of some repair and maintenance services on machinery and equipment through modes 1 and 2 from Canadas national treatment obligation. We also find that any eventual inherent disadvantages due to the foreign character of services supplied through modes 1 and 2 do not exempt Canada from its national treatment obligation with respect to the CVA requirements.(200)

XXII. Article XVIII

A. Text of Article XVIII

Article XVIII: 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.



B. Interpretation and Application of Article XVIII

1. Reference Paper on Basic Telecommunications

(a) General

134. Special GATS negotiations in basic telecommunications, in which Members made commitments in market access and national treatment, were concluded in 1997. Many Members also took additional commitments under Article XVIII, by drawing upon the provisions of a negotiated Reference Paper containing pro-competitive regulatory principles applicable to the telecommunications sector. In the negotiations, Members could elect to insert any or all of the provisions of the model Reference Paper in their schedules, and could also insert modified versions of these provisions. The Reference Paper provisions contained in the schedules of individual Members may therefore differ from the model provisions below.

(b) Text of model Reference Paper

Reference Paper

Scope

The following are definitions and principles on the regulatory framework for the basic telecommunications services.

Definitions

Users mean service consumers and service suppliers.

Essential facilities mean facilities of a public telecommunications transport network or service that:

(a) are exclusively or predominantly provided by a single or limited number of suppliers; and

(b) cannot feasibly be economically or technically substituted in order to provide a service.

A major supplier is a supplier which has the ability to materially affect the terms of participation (having regard to price and supply) in the relevant market for basic telecommunications services as a result of:

(a) control over essential facilities; or

(b) use of its position in the market.

1. Competitive Safeguards

1.1 Prevention of anti-competitive practices in telecommunications

Appropriate measures shall be maintained for the purpose of preventing suppliers who, alone or together, are a major supplier from engaging in or continuing anti-competitive practices.

1.2 Safeguards

The anti-competitive practices referred to above shall include in particular:

(a) engaging in anti-competitive cross-subsidization;

(b) using information obtained from competitors with anti-competitive results; and

(c) not making available to other services suppliers on a timely basis technical information about essential facilities and commercially relevant information which are necessary for them to provide services.

2. Interconnection

2.1 This section applies to linking with suppliers providing public telecommunications transport networks or services in order to allow the users of one supplier to communicate with users of another supplier and to access services provided by another supplier, where specific commitments are undertaken.

2.2 Interconnection to be ensured

Interconnection with a major supplier will be ensured at any technically feasible point in the network. Such interconnection is provided.

(a) under non-discriminatory terms, conditions (including technical standards and specifications) and rates and of a quality no less favourable than that provided for its own like services or for like services of non-affiliated service suppliers or for its subsidiaries or other affiliates;

(b) in a timely fashion, on terms, conditions (including technical standards and specifications) and cost-oriented rates that are transparent, reasonable, having regard to economic feasibility, and sufficiently unbundled so that the supplier need not pay for network components or facilities that it does not require for the service to be provided; and

(c) upon request, at points in addition to the network termination points offered to the majority of users, subject to charges that reflect the cost of construction of necessary additional facilities.

2.3 Public availability of the procedures for interconnection negotiations

The procedures applicable for interconnection to a major supplier will be made publicly available.

2.4 Transparency of interconnection arrangements

It is ensured that a major supplier will make publicly available either its interconnection agreements or a reference interconnection offer.

2.5 Interconnection: dispute settlement

A service supplier requesting interconnection with a major supplier will have recourse, either:

(a) at any time; or

(b) after a reasonable period of time which has been made publicly known

to an independent domestic body, which may be a regulatory body as referred to in paragraph 5 below, to resolve disputes regarding appropriate terms, conditions and rates for interconnection within a reasonable period of time, to the extent that these have not been established previously.

3. Universal service

Any Member has the right to define the kind of universal service obligation it wishes to maintain. Such obligations will not be regarded as anti-competitive per se, provided they are administered in a transparent, nondiscriminatory and competitively neutral manner and are not more burdensome than necessary for the kind of universal service defined by the Member.

4. Public availability of licensing criteria

Where a licence is required, the following will be made publicly available:

(a) all the licensing criteria and the period of time normally required to reach a decision concerning an application for a licence; and

(b) the terms and conditions of individual licences.

The reasons for the denial of a licence will be made known to the applicant upon request.

5. Independent regulators

The regulatory body is separate from, and not accountable to, any supplier of basic telecommunications services. The decisions of and the procedures used by regulators shall be impartial with respect to all market participants.

6. Allocation and use of scarce resources

Any procedures for the allocation and use of scarce resources, including frequencies, numbers and rights of way, will be carried out in an objective, timely, transparent and non-discriminatory manner. The current state of allocated frequency bands will be made publicly available, but detailed identification of frequencies allocated for specific government uses is not required.

(c) Section 1.1  Anti-competitive Practices

(i) Concept of anti-dumping practices

135. In examining the meaning of anti-competitive practices, the Panel in Mexico  Telecoms stated that, on its own, the term is broad in scope, suggesting actions that lessen rivalry or competition in the market.(201) Referring to the three examples ((a)-(c)) of such practices set out in Section 1.2 of the model Reference Paper, the Panel stated:

All three examples show that anti-competitive practices may also include action by a major supplier without collusion or agreement with other suppliers. Cross-subsidization, misuse of competitor information, and withholding of relevant technical and commercial information are all practices which a major supplier can, and might normally, undertake on its own.(202)

136. The Panel in Mexico  Telecoms also supported its reasoning in paragraph 135 above by considering the concept of major supplier:

The use of the term major supplier in Section 1, examined in the light of the definition of this term, suggests that the focus of anti-competitive practices is on a suppliers ability to materially affect the terms of participation (having regard to price and supply)  in other words, on monopolization or the abuse of a dominant position in ways that affect prices or supply. The definition of a major supplier in terms of suppliers alone or together and the requirement in Section 1.1 of preventing suppliers from engaging in or continuing anti-competitive practices also suggests that horizontal coordination of suppliers may be relevant. This is supported by the requirement in Section 1.1 of preventing suppliers from engaging in or continuing anti-competitive practices.(203)

137. The Panel in Mexico  Telecoms was thus able to find that the term anti-competitive practices in Section 1 of Mexicos Reference Paper includes practices in addition to those listed in Section 1.2, in particular horizontal practices related to price-fixing and market-sharing agreements.(204)

(ii) Practices required under a Members law

138. In determining whether or not the actions by the major supplier of telecommunications services in Mexico constituted anti-competitive practices because it was required under national law to act in this way, the Panel in Mexico  Telecoms found that Section 1.2 contains an explicit example of an anti-competitive practice, cross-subsidization, which has typically been a government requirement. The Panel stated:

Cross-subsidization was and is a common practice in monopoly regimes, whereby the monopoly operator is required by a government to cross subsidize, either explicitly or in effect, usually through government determination or approval of rates or rate structures. Once monopoly rights are terminated in particular services sectors, however, such cross-subsidization assumes an anti-competitive character. This provision, therefore, provides an example of a practice, sanctioned by measures of a government, that a WTO Member should no longer allow an operator to continue. Accordingly, to fulfil its commitments with respect to competitive safeguards in Section 1 of the Reference Paper, a Member would be obliged to revise or terminate the measures leading to the cross-subsidization. This example clearly suggests that not all acts required by a Members law are excluded from the scope of anti-competitive practices.(205)

139. The Panel in Mexico  Telecoms pointed out further that obligations in the Reference Paper could and did refer to practices that were not dependent on their consistency with a Members national law. The Panel stated:

Section 2.1 illustrates that Members did not hesitate to undertake obligations, with respect to a major supplier, that defined an objective outcome  cost-oriented interconnection. There is no reason to suppose, and no language to suggest, that the desired outcome in Section 1  preventing major suppliers from engaging in anti-competitive practices  should depend entirely on whether a Members own laws made such practices legal.(206)

140. The Panel in Mexico  Telecoms observed further that, although legal doctrines applicable under national law might protect a firm in compliance with a specific legislative requirement from the application of national competition law, these doctrines did not provide cover from international obligations. The Panel stated that:

[P]ursuant to doctrines applicable under the competition laws of some Members, a firm complying with a specific legislative requirement of such a Member (e.g. a trade law authorizing private market-sharing agreements) may be immunized from being found in violation of the general domestic competition law. The reason for these doctrines is that, in most jurisdictions, domestic legislatures have the legislative power to limit the scope of competition legislation. International commitments made under the GATS for the purpose of preventing suppliers from engaging in or continuing anti-competitive practices(207) are, however, designed to limit the regulatory powers of WTO Members. Reference Paper commitments undertaken by a Member are international obligations owed to all other Members of the WTO in all areas of the relevant GATS commitments. In accordance with the principle established in Article 27 of the Vienna Convention,(208) a requirement imposed by a Member under its internal law on a major supplier cannot unilaterally erode its international commitments made in its schedule to other WTO Members to prevent major suppliers from continuing anti-competitive practices.(209) The pro-competitive obligations in Section 1 of the Reference Paper do not reserve any such unilateral right of WTO Members to maintain anti-competitive measures.(210)

141. The Panel in Mexico  Telecoms emphasized, however, that particular measures addressed in the case were exceptional, and that the autonomy of Members under Section 1 was not unduly circumscribed:

Although we find that measures required by a Member under its internal laws may fall within the scope of Section 1, the measures addressed in the case before us are exceptional, and require a major supplier to engage in acts which are tantamount to anti-competitive practices which are condemned in domestic competition laws of most WTO Members, and under instruments of international organizations to which both parties are members. Section 1 is a voluntary, additional commitment to maintain certain appropriate measures, which reserves a degree of flexibility for Members in accepting and implementing such an additional commitment.(211)

(iii) Types of measures constituting anti-competitive practices

Setting of uniform price by the major supplier

142. The Panel in Mexico  Telecoms, in examining the specific practices of the major supplier, stated that:

the removal of price competition by the Mexican authorities, combined with the setting of the uniform price by the major supplier, has effects tantamount to those of a price-fixing cartel. We have previously found that horizontal practices such as price-fixing among competitors are anti-competitive practices under Section 1 of Mexicos Reference Paper.(212)

Proportionate return system

143. The Panel in Mexico  Telecoms, in further examining the specific practices of the major supplier, found that the allocation of market share between Mexican suppliers imposed by the Mexican authorities, combined with the authorization of Mexican operators to negotiate financial compensation between them instead of physically transferring surplus traffic, has effects tantamount to those of a market sharing arrangement between suppliers.

(iv) Maintaining appropriate measures

144. The Panel in Mexico  Telecoms described the meaning of appropriate measures in the following terms:

We recognize that measures that are appropriate in the sense of Section 1 of Mexicos Reference Paper would not need to forestall in every case the occurrence of anti-competitive practices of major suppliers. However, at a minimum, if a measure legally requires certain behaviour, then it cannot logically be appropriate in preventing that same behaviour.

(d) Section 2.1  Interconnection

(i) on the basis of the specific commitments undertaken

145. The Panel in Mexico  Telcoms, in examining whether certain commitments triggered the interconnection obligation, found that:

The wording of Section 2 of the Reference Paper as a whole suggests that the purpose of the interconnection obligation is to enable suppliers supplying a basic telecommunications service committed by a Member in its schedule not to be restricted by unduly onerous interconnection terms, conditions and rates imposed by a major supplier. It would not appear to be the purpose of Section 2 to provide the benefits of the interconnection to a supplier in any telecommunications subsector or mode of supply, simply because other subsectors and modes of supply have been committed. It would seem reasonable to conclude, therefore, that the right to interconnect accorded by Section 2.2 should apply where, with respect to a particular subsector and mode of supply, a Members market access and national treatment commitments specifically accords the right to supply that service.(213)

(ii) Applicability to cross-border supply

146. The Panel in Mexico  Telecoms found that there was no language in Section 2 to suggest that interconnection obligations did not apply to the cross-border supply of international telecommunications services. The Panel noted that in Section 2 there is:

[N]o reference to the entity that is entitled to be linked to the public telecommunications transport networks or services; no language thus exists that would circumscribe the scope, geographic or otherwise, of the basic telecommunications suppliers to be linked. This provision therefore could not be read to exclude suppliers outside of Mexico from linking to public telecommunications transport networks and services in Mexico.(214)

147. The Panel in Mexico  Telecoms supported the above observation by noting that from legislative, commercial, contractual or technical points of view, there was no fundamental difference between national and international interconnection:

In sum the ordinary meaning, in the heading of Section 2 of Mexicos Reference Paper, of the term interconnection  that it does not distinguish between domestic and international interconnection, including through accounting rate regimes  is confirmed by an examination of any special meaning that the term interconnection may have in telecommunications legislation, or by taking into account potential commercial, contractual or technical differences inherent in international interconnection. We find that any special meaning of the term interconnection in Section 2 of Mexicos Reference Paper does not justify a restricted interpretation of interconnection, or of the term linking, which would exclude international interconnection, including accounting rate regimes, from the scope of Section 2 of the Reference Paper.(215)

148. Further, the Panel in Mexico  Telecoms considered that the object and purpose of the GATS supported the inclusion of international interconnection within the disciplines of the Reference Paper:

Trade in services is defined in Article I:2 to include the cross-border supply of a service from the territory of one Member into the territory of any other Member. This mode of supply, together with supply through commercial presence, is particularly significant for trade in international telecommunications services. There is no reason to suppose that provisions that ensure interconnection on reasonable terms and conditions for telecommunications services supplied through the commercial presence should not benefit the cross-border supply of the same service, in the absence of clear and specific language to that effect.(216)

149. The Panel in Mexico  Telecoms found also that the existence of an explicitly non-binding understanding on accounting rates contained in the Report of the negotiating group report did not support the notion that international interconnection was excluded from the scope of the interconnection obligations in the Reference Paper. The Panel stated:

In sum, the Understanding seeks to exempt a very limited category of measures, temporarily, and on a non-binding basis, from the scope of WTO dispute settlement. Simply because Members wished to shield a certain type of cross-border interconnection from dispute settlement, because of possible MFN inconsistencies (with respect to differential rates), it does not follow that they wished to shield all forms of cross-border interconnection from dispute settlement. The clear intention to do so is not expressed in the Understanding. This suggests that the content and purpose of the Understanding is of limited assistance in interpreting the scope of application of the term interconnection in Section 2.1 of Mexicos Reference Paper.(217)

(iii) major supplier

150. In examining whether Telmex was a major supplier, the Panel in Mexico  Telecoms analysed first whether there was a relevant market:

The fact that arrangements for interconnection and termination may take the form of joint service agreements, and may not be price-oriented, does not change the fact that the market exists. Nor is it pertinent to the determination of the relevant market, as Mexico suggests, that most WTO Members have not undertaken market access commitments specifically in termination services; facilities for the termination and interconnection are essential to the supply of the services at issue in this case.

Is this market for termination the relevant market? For the purposes of this case, we accept the evidence put forward by the United States, and uncontested by Mexico, that the notion of demand substitution  simply put, whether a consumer would consider two products as substitutable  is central to the process of market definition as it is used by competition authorities. Applying that principle, we find no evidence that a domestic telecommunications service is substitutable for an international one, and that an outgoing call is considered substitutable for an incoming one. One is not a practical alternative to the other. Even if the price difference between domestic and international interconnection would change, such a price change would not make these different services substitutable in the eyes of a consumer. We accept, therefore, that the relevant market for telecommunications services for the services at issue  voice, switched data and fax  is the termination of these services in Mexico.(218)

(iv) the ability to materially affect the terms of participation (having regard to price and supply)

151. In examining further whether Telmex could affect the market to the extent required to be a major supplier, the Panel in Mexico  Telecoms found:

[S]ince Telmex is legally required to negotiate settlement rates for the entire market for termination of the services at issue from the United States, we find that it has patently met the definitional requirement in Mexicos Reference Paper that it have the ability to materially affect the terms of participation, particularly having regard to price.(219)

(v) control over essential facilities or use of its position in the market

152. The Panel in Mexico  Telecoms found that [t]he ability to impose uniform settlement rates on its competitors is the use by Telmex of its special position in the market, which is granted to it under the ILD Rules.(220)

(e) Section 2.2(b)  Interconnection rates

(i) cost oriented

153. In examining the ordinary meaning of the term cost-oriented, the Panel in Mexico  Telecoms stated:

Rates that are cost-oriented thus suggest rates that are brought into a defined relation to known costs or cost principles. Rates that are cost-oriented would not need to equate exactly to cost, but should be founded on cost. The degree of flexibility inherent in the term cost-oriented suggests, moreover, that more than one costing methodology could be used to calculate cost-oriented rates.(221)

154. The Panel in Mexico  Telecoms found that the ordinary meaning of the phrase cost oriented was confirmed by its special meaning in the telecommunications sector, in particular as expressed in a key ITU recommendation. The Panel stated:

In sum, Recommendation D.140 requires in its present form that the cost elements and the cost model both be clearly related to the cost of delivering the service. This special meaning of cost-orientated, in the context of the ITU, is thus consistent with the ordinary meaning of the term as it appears in Section 2.2(b) of Mexicos Reference Paper. As both parties to this dispute as well as most WTO Members are also members of the ITU, the special definition adds precision to the ordinary meaning by classifying allowable cost elements, and establishing the causality between the cost elements and the services provided. While leaving a margin of discretion to national authorities to choose the precise cost method by which to arrive at cost-oriented rates, the ITU recommendations indicate that the term cost-oriented rates can be understood as rates related to the cost incurred in providing the service.(222)

155. The Panel in Mexico  Telecoms further noted that the ITU stated in a report that incremental cost methodologies are becoming the de facto standard for interconnection pricing around the world.(223) The Panel explained:

These methods focus on the additional future fixed and variable costs that are attributable to the service. Setting rates in line with long run incremental costs reflects the view that the regulator should require prices from dominant or major suppliers that most closely imitate a fully competitive market, where prices are driven down towards marginal or incremental costs.(224) The increasing use of incremental cost methodologies indicates the special meaning that the term cost-oriented is acquiring among WTO Members.(225)

(ii) reasonable

156. In examining the further requirement that cost-oriented rates be reasonable, the Panel in Mexico  Telecoms found that this term suggested something judged to be appropriate or suitable to the circumstances or purpose.(226) The Panel explained that this meant that interconnection rates should:

[R]eflect the overall objectives of the provision that the rates represent the costs incurred in providing the service. The word reasonable thus emphasizes that the application of the cost model chosen by the Member reflects the costs incurred for the interconnection service. Flexibility and balance are also part of the notion of reasonable.(227)(228)

(iii) having regard to economic feasibility

157. The Panel in Mexico  Telecoms found that the phrase having regard to economic feasibility, which qualifies cost-oriented rates:

[S]erves merely to underline that the major supplier is entitled to rates that allow it to undertake interconnection on an economic basis, that is, to make a reasonable rate of return.(229)

(iv) Evaluating whether rates are costs oriented

158. In evaluating whether in fact the rates were cost-oriented, the Panel in Mexico  Telecoms found:

We think it is justified to presume that the aggregate price charged by Telmex for the use of network components, when used for purely domestic traffic, is an indication of the cost-oriented rate, in the sense of Section 2.2(b) of Mexicos Reference Paper, for the use of these same network components in terminating an international call.(230)

159. Applying this methodology (the difference between the aggregate price charged for the use of network components when used for purely domestic traffic, and the price charged for the use of these same network components in terminating an international call), the Panel in Mexico  Telecoms found:

The evidence reveals that the blended average difference in costs is in the order of 77%. Mindful of the fact that the cost-ceiling figures used are conservative (since they are based in part on retail rates for private lines, and Telmexs interconnection rates to cities without competition in call origination), we find that a difference of over 75% above Telmexs demonstrated cost-ceiling is unlikely to be within the scope of regulatory flexibility allowed by the notion of cost-oriented rates, in the sense of Section 2.2(b) of Mexicos Reference Paper.(231)

160. In examining other methodologies for determining whether interconnection rates were cost-oriented, the Panel in Mexico  Telecoms was not convinced that a comparison of international grey-market rates was fully warranted. It reasoned that such capacity may be priced at short-term incremental cost (well below long-term incremental cost as required under Mexican law for calculating interconnection charges) and may also result in lower service reliability and quality, even though any substantial difference in costs could go some way to support findings under other methodologies.(232) On the other hand, the Panel found that benchmarking which involved a comparison of the market for wholesale transportation and termination of international calls in different countries was a valid method for examining whether interconnection rates were cost-oriented.(233)

Part IV: Progressive Liberalization

XXIII. Article XIX

A. Text of Article XIX

Article XIX: Negotiations on Specific Commitments

1. In pursuance of the objectives of this Agreement, Members shall enter into successive rounds of negotiations, beginning not later than five years from the date of entry into force of the WTO Agreement and periodically thereafter, with a view to achieving a progressively higher level of liberalization. Such negotiations shall be directed to the reduction or elimination of the adverse effects on trade in services of measures as a means of providing effective market access. This process shall take place with a view to promoting the interests of all participants on a mutually advantageous basis and to securing an overall balance of rights and obligations.

2. The process of liberalization shall take place with due respect for national policy objectives and the level of development of individual Members, both overall and in individual sectors. There shall be appropriate flexibility for individual developing country Members for opening fewer sectors, liberalizing fewer types of transactions, progressively extending market access in line with their development situation and, when making access to their markets available to foreign service suppliers, attaching to such access conditions aimed at achieving the objectives referred to in Article IV.

3. For each round, negotiating guidelines and procedures shall be established. For the purposes of establishing such guidelines, the Council for Trade in Services shall carry out an assessment of trade in services in overall terms and on a sectoral basis with reference to the objectives of this Agreement, including those set out in paragraph 1 of Article IV. Negotiating guidelines shall establish modalities for the treatment of liberalization undertaken autonomously by Members since previous negotiations, as well as for the special treatment for least-developed country Members under the provisions of paragraph 3 of Article IV.

4. The process of progressive liberalization shall be advanced in each such round through bilateral, plurilateral or multilateral negotiations directed towards increasing the general level of specific commitments undertaken by Members under this Agreement.



B. Interpretation and Application of Article XIX

1. Article XIX:1

(a) Information exchange

161. On 913 December 1996 in Singapore, the Ministerial Conference endorsed the recommendation that the Council for Trade in Services would develop an information exchange programme,(234) as part of the requisite work to facilitate the negotiations of progressive liberalization of trade in services as mandated by Paragraph 1 of Article XIX.(235) On 11 May 1998, the Council on Trade in Services agreed, on an ad referendum basis, on certain aspects concerning the structure and content of the exchange of information exercise.(236)

(b) GATS 2000 negotiations

162. At its meeting on 78 February 2000, the General Council took note of a statement by the Chairman recalling that the mandated negotiations had begun on 1 January 2000. The Council agreed that the negotiations be conducted in Special Sessions of the Council for Trade in Services.(237)

(c) Doha Development Agenda

163. On 914 November 2001 in Doha, Ministers took note that work had already been undertaken in the negotiations, initiated in January 2000. They agreed that the conduct, conclusion and entry into force of the services negotiations would be treated as one part of the single undertaking.(238)

2. Article XIX:3

(a) GATS 2000 negotiations

164. At its meeting on 28 March 2001, the Council for Trade in Services adopted the Guidelines and Procedures for the Negotiations on Trade in Services,(239) which were subsequently reaffirmed by Ministers meeting in Doha on 914 November 2001.(240)

(b) Assessment of trade in services

165. At its meeting on 25 February 2000, the Council decided that the assessment of trade in services be moved to the agenda of the Special Session. It was agreed that the assessment should be regarded as an on-going process rather than a one-off exercise.(241)

3. Negotiations in specific services sectors

(a) Movement of natural persons

166. At its meeting of 21 July 1995,(242) the Council for Trade in Services decided to adopt the Third Protocol to the General Agreement on Trade in Services,(243) which had been proposed by the Negotiating Group on Movement of Natural Persons.

(b) Financial services

167. At its meeting of 21 July 1995, the Committee on Trade in Financial Services decided to adopt the Second Protocol to the General Agreement on Trade in Services.(244) Following the adoption of the Second Protocol, at its meeting of 21 July 1995, the Council for Trade in Services, so as to address the situation where the Second Protocol would not enter into force, adopted the Decision on Commitments in Financial Services(245) and the Second Decision on Financial Services,(246) both of which had been proposed by the Committee on Trade in Financial Services.(247)

168. On 12 and 14 November 1997, the Committee on Trade in Financial Services approved the final results of the negotiations on financial services, and adopted the Fifth Protocol to the General Agreement on Trade in Services.(248) Following the adoption of the Fifth Protocol, the Council for Trade in Services, at its meeting of 12 December 1997, so as to address the situation where the Fifth Protocol would not enter into force, adopted the Decision of December 1997 on Commitments in Financial Services,(249) which had been proposed by the Committee on Trade in Financial Services. The Fifth Protocol entered into force on 1 March 1999 and remained open for acceptance by the Members concerned until 15 June 1999.(250) However, some of those Members failed to accept the Protocol by that date. In order to allow for the acceptance of the Protocol after the expiry of the deadline, the Council for Trade in Services has periodically opened the Fifth Protocol for acceptance upon request by a Member.(251)

(c) Maritime transport services

169. At its meeting of 28 June 1996, the Council for Trade in Services adopted a Decision to suspend the negotiations on maritime transport services and to resume them with the commencement of comprehensive negotiations on services, in accordance with Article XIX of the GATS, and to conclude them no later than at the end of this first round of progressive liberalization.(252) The Group was to resume with the commencement of comprehensive negotiations on Services.(253) A Special Session of the Council for Trade in Services formally launched the new negotiations on services on 25 February 2000.(254)

(d) Basic telecommunications

170. On 30 April 1996, the Council for Trade in Services decided to adopt the Decision on Commitments in Basic Telecommunications and the Fourth Protocol to the General Agreement on Trade in Services,(255) both of which had been proposed by the Negotiating Group on Basic Telecommunications.

(e) Professional services

171. With respect to the establishment of the Working Party on Professional Services, and its successor, the Working Party on Domestic Regulation, see paragraphs 208210 below.

(i) Disciplines on domestic regulation

172. With respect to disciplines on domestic regulation, see paragraph 60 above.

XXIV. Article XX

A. Text of Article XX

Article XX: Schedule 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) terms, limitations and conditions on market access;

(b) conditions and qualifications on national treatment;

(c) undertakings relating to additional commitments;

(d) where appropriate the time-frame for implementation of such commitments; and

(e) 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.

3. Schedules of specific commitments shall be annexed to this Agreement and shall form an integral part thereof.



B. Interpretation and Application of Article XX

1. General

(a) Committee on Specific Commitments

173. With regard to the establishment and terms of reference of the Committee on Specific Commitments under the GATS, see paragraph 215 below.

174. At the Committee meeting of 10 April 2006,(256) the Chairman reported that during informal discussions, Members attention had been drawn to an error in the French version of the Services Sectoral Classification List where parts of the headings of the sub-sectors corresponding to CPC 9401 and CPC 9403 had been inverted. The correct correspondence was set out in the report of the meeting, as well as in a corrigendum to the French version of the Guidelines for the Scheduling of Commitments under the General Agreement on Trade in Services (GATS). (257)

175. At the meeting of 5 October 2006,(258) delegations arrived at a common understanding to the effect that dredging services, which are not explicitly mentioned in the CPC, are covered by CPC 5133  Construction work for civil engineering for waterways, harbours, dams, and other water works.

176. This information is also contained in the Annual Report of the Committee on Specific Commitments to the Council for Trade in Services 2006, S/CSC/12, 21 November 2006.

2. Interpretation of schedules

(a) General

177. The Appellate Body in US  Gambling observed that the interpretative approach for a GATS Schedule is very similar to that used for a tariff schedule under GATT 1994, relying on Articles 31 and 32 of the Vienna Convention:

In the context of the GATS, Article XX:3 explicitly provides that Members Schedules are an integral part of that agreement. Here, too, the task of identifying the meaning of a concession in a GATS Schedule, like the task of interpreting any other treaty text, involves identifying the common intention of Members. Like the Panel  and, indeed, both the participants  we consider that the meaning of the United States GATS Schedule must be determined according to the rules codified in Article 31 and, to the extent appropriate, Article 32 of the Vienna Convention.(259)

178. The Panel and the Appellate Body in US  Gambling considered the need for precision and clarity in scheduling. See above, paragraphs 12.

179. In ChinaPublications and Audiovisual Products, the Panel summarized the guidance provided by the Appellate Body (elaborated in detail below) on the various instruments that have potential value in the interpretation of GATS schedules:

Apart from the WTO Agreement and its constituent parts, various instruments have been recognized in previous dispute settlement cases as having potential value in assisting the interpretation of GATS schedules. These instruments include the 1991 United Nations Provisional Central Product Classification (hereafter CPC) and the GATT Secretariat document Services Sectoral Classification List (MTN.GNS/W/120, hereafter W/120), both of which deal with the classification of services. The Appellate Body has identified document W/120 and the 1993 Guidelines for the Scheduling of Specific Commitments under the GATS (hereafter the 1993 Scheduling Guidelines), which are not binding on WTO Members, as supplementary means of interpretation within the meaning of Article 32 of the Vienna Convention.(260),(261)

(b) 1993 Scheduling Guidelines(262)

180. The Appellate Body in US  Gambling found that the 1993 Scheduling Guidelines were a supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in terms of Article 32 of the Vienna Convention.(263) The Appellate Body noted, nonetheless, the importance of the Guidelines (and document W/120) which were:

[P]repared and circulated at the request of parties to the Uruguay Round negotiations for the express purpose of assisting those parties in the preparation of their offers. These documents undoubtedly served, too, to assist parties in reviewing and evaluating the offers made by others. They provided a common language and structure which, although not obligatory, was widely used and relied upon.(264)

181. The Appellate Body in US  Gambling therefore set aside the Panels finding that the 1993 Guidelines are context under Article 31(2) of the Vienna Convention. Explaining its disagreement with the Panels justification that these documents were agreed upon by Members with a view to using such documents, not only in the negotiation of their specific commitments, but as interpretative tools in the interpretation and application of Members scheduled commitments,(265) the Appellate Body stated:

In our opinion, the Panels description of how these documents were created and used may suggest that the parties agreed to use such documents in the negotiations of their specific commitments. The Panel cited no evidence, however, directly supporting its further conclusion, in the quotation above, that the agreement of the parties encompassed an agreement to use the documents as interpretative tools in the interpretation and application of Members scheduled commitments.(266)

182. The Appellate Body in US  Gambling stated that the 1993 Scheduling Guidelines also do not constitute subsequent practice under Article 31(3)(b) of the Vienna Convention:

Although they may be relevant in identifying the United States practice, they do not establish a common, consistent, discernible pattern of acts or pronouncements by Members as a whole. Nor do they demonstrate a common understanding among Members that specific commitments are to be interpreted by reference to ( ) the 1993 Scheduling Guidelines.(267)

(c) 2001 Scheduling Guidelines(268)

183. The Appellate Body in US  Gambling stated that the 1993 Scheduling Guidelines do not constitute subsequent practice under Article 31(3)(b) of the Vienna Convention, with respect to pre-existing commitments:

Although the 2001 Guidelines were explicitly adopted by the Council for Trade in Services, this was in the context of the negotiation of future commitments and in order to assist in the preparation of offers and requests in respect of such commitments. As such, they do not constitute evidence of Members understanding regarding the interpretation of existing commitments.(269)

184. The Appellate Body in US  Gambling stated that the Guidelines for the Scheduling of Specific Commitments do constitute supplemental means of interpretation of GATS, in accordance with Article 32 of the Vienna Convention.(270) The Appellate Body found that the Panel had erred in characterising the Guidelines as context under Article 31 of the Vienna Convention.(271)

(d) Document W/120(272)

185. The Appellate Body in US  Gambling found that document W/120 was a supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in terms of Article 32 of the Vienna Convention.(273) The Appellate Body noted, nonetheless, the importance W/120 (and the 1993 Scheduling Guidelines) which were:

[P]repared and circulated at the request of parties to the Uruguay Round negotiations for the express purpose of assisting those parties in the preparation of their offers. These documents undoubtedly served, too, to assist parties in reviewing and evaluating the offers made by others. They provided a common language and structure which, although not obligatory, was widely used and relied upon.(274)

186. The Appellate Body in US  Gambling therefore set aside the Panels finding that document W/120 (and the 1993 Scheduling Guidelines) are context under Article 31(2) of the Vienna Convention. Explaining its disagreement with the Panels justification that the documents were agreed upon by Members with a view to using such documents, not only in the negotiation of their specific commitments, but as interpretative tools in the interpretation and application of Members scheduled commitments,(275) the Appellate Body stated:

In our opinion, the Panels description of how these documents were created and used may suggest that the parties agreed to use such documents in the negotiations of their specific commitments. The Panel cited no evidence, however, directly supporting its further conclusion, in the quotation above, that the agreement of the parties encompassed an agreement to use the documents as interpretative tools in the interpretation and application of Members scheduled commitments.(276)

187. The Appellate Body in US  Gambling noted a direct reference to W/120 in the DSU, providing direct support for the relevance of W/120 in identifying services sectors in GATS Schedules:

Article 22.(f) of the DSU provides that, for purposes of suspending concessions, sector means . (ii) with respect to services, a principal sector as identified in the current Services Sectoral Classification List which identifies such sectors. A footnote adds that [t]he list in document MTN.GNS/W/120 identifies eleven sectors. This reference confirms the relevance of W/120 to the task of identifying service sectors in GATS Schedules, but does not appear to assist in the task of ascertaining within which subsector of a Members Schedule a specific service falls.(277)

(e) UN Provisional Central Product Classification (CPC)(278)

188. The Appellate Body in US  Gambling clarified the relationship between the different levels of disaggregation within the CPC:

As the CPC is a decimal system, a reference to an aggregate category must be understood as a reference to all of the constituent parts of that category. Put differently, a reference to a three-digit CPC Group should, in the absence of any indication to the contrary, be understood as a reference to all the four-digit Classes and five-digit Sub-classes that make up the group; and a reference to a four-digit Class should be understood as a reference to all of the five-digit Sub-classes that make up that Class.(279)

(f) Other Members Schedules

189. The Appellate Body in US  Gambling stated that other Members Schedules could be relevant context for the interpretation of a particular Schedule:

Both participants, as well as the Panel, accepted that other Members Schedules constitute relevant context for the interpretation of subsector 10.D of the United States Schedule. As the Panel pointed out, this is the logical consequence of Article XX:3 of the GATS, which provides that Members Schedules are an integral part of the GATS. We agree. At the same time, as the Panel rightly acknowledged, use of other Members Schedules as context must be tempered by the recognition that [e]ach Schedule has its own intrinsic logic, which is different from the US Schedule.(280)

(g) Document published by a government agency

190. The Appellate Body in US  Gambling observed that, given the findings it had already made in the case, it did not need to determine whether the Panel erred in using a document of the USITC to confirm its interpretation of the US Schedule.(281) The Panel had found that the USITC document, which related the service sectors in the US Schedule to corresponding CPC classifications, had probative value as to how the US government views the structure and the scope of the US Schedule, and, hence, its GATS obligations.(282)

3. Article XX:1

191. The Appellate Body in US  Gambling deduced that the structure of the GATS led to two consequences for the scheduling of a specific commitment covering a particular service:

First, because the GATS covers all services except those supplied in the exercise of governmental authority, it follows that a Member may schedule a specific commitment in respect of any service. Secondly, because a Members obligations regarding a particular service depend on the specific commitments that it has made with respect to the sector or subsector within which that service falls, a specific service cannot fall within two different sectors or subsectors. In other words, the sectors and subsectors in a Members Schedule must be mutually exclusive.(283)

4. Article XX:1(d)

192. The Panel in Mexico  Telecoms, in examining a market access commitment made subject to a permit that would not be granted until the corresponding regulations are issued, explained the role and application of paragraph (d):

We therefore consider that subparagraph (d) of Article XX:1 requires the specification of a time-frame for implementation should a Member wish to implement a commitment after its entry into force. Where a Member does not specify a time-frame, implementation must be deemed to be concurrent with the entry into force of the commitment.(284)

193. Referring to the circumstances of the case, the Panel in Mexico  Telecoms then pointed out that:

[E]ven if Mexico had needed time to complete the issuance of the regulations beyond the time of entry into force of its commitment on 5 February 1998, Mexico should, at the very minimum, have initiated that process leading to the issuance of the regulations. There is no evidence, however, that Mexico has taken any steps to comply with its commitment.(285)

194. With respect to the length of time in which implementation by Mexico could reasonably have been concluded, the Panel in Mexico  Telecoms stated:

We do not consider it necessary to rule on the length of a time period within which the implementation of Mexicos commitment might reasonably have been concluded, as more than five years have passed since the entry into force of Mexicos commitment, and Mexico still has indicated no date by which it intends to issue the relevant regulations and permits.(286)

195. The Panel in Mexico  Telecoms found that Mexicos refusal to authorize the supply of services by commercial agencies was inconsistent with the market access commitment inscribed in its schedule.

5. Article XX:2

196. The Panel in China  Publications and Audiovisual Products explained that:

This schedule structure gives each WTO Member flexibility in defining the precise scope of its commitments. Having chosen on which service sectors it wishes to commit, a Member may specify the exact extent to which these commitments are to apply by indicating full market access and national treatment, or partial or no commitment with respect to the four modes of supply. As stated, this case involves only the supply of distribution services through commercial presence, also known as mode 3. In the case of making partial commitment, a Member may inscribe limitations in one of the two columns: either under limitations on market access or under limitations on national treatment. If a limitation affects both market access and national treatment then, by a convention set out in Article XX:2 of the GATS (avoiding the need to repeat an inscription), it is to be inscribed only in the market access column.(287)

6. Article XX:3

197. The Panel in US  Gambling stated that all Members Schedules annexed to the GATS, according to Article XX:3, are an integral part of the Agreement.(288)

198. The Appellate Body in US  Gambling found that, as in the context of the GATT 1994, the interpretation of schedules of specific commitments under the GATS must be based on the customary rules of interpretation, codified in Articles 31 and 32 of the Vienna Convention.

In the context of the GATT 1994, the Appellate Body has observed that, although each Members Schedule represents the tariff commitments that bind one Member, Schedules also represent a common agreement among all Members.(289) Accordingly, the task of ascertaining the meaning of a concession in a Schedule, like the task of interpreting any other treaty text, involves identifying the common intention of Members, and is to be achieved by following the customary rules of interpretation of public international law, codified in Articles 31 and 32 of the Vienna Convention.(290)

In the context of the GATS, Article XX:3 explicitly provides that Members Schedules are an integral part of that agreement. Here, too, the task of identifying the meaning of a concession in a GATS Schedule, like the task of interpreting any other treaty text, involves identifying the common intention of Members. Like the Panel(291)  and, indeed, both the participants(292)  we consider that the meaning of the United States GATS Schedule must be determined according to the rules codified in Article 31 and, to the extent appropriate, Article 32 of the Vienna Convention.

199. The Panel in China  Publications and Audiovisual Products, referring to Article XX:3 and prior Appellate Body pronouncements, stated that [w]e recognize that GATS schedules are an integral part of the GATS,(293) and are thus legally part of the WTO Agreement. Consistent with Article 3.2 of the DSU, we interpret commitments in schedules according to the customary rules of interpretation of public international law which include Articles 31 and 32 of the Vienna Convention.(294)

XXV. Article XXI

A. Text of Article XXI

Article XXI: Modification of Schedules

1. (a) A Member (referred to in this Article as the modifying Member) may modify or 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.

2. (a) At the request of any Member the benefits of which under this Agreement may be affected (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 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.

3. (a) If agreement is not reached between the modifying Member and any affected Member 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.

4. (a) The modifying Member may not modify or withdraw its commitment until it has made compensatory adjustments in conformity with the findings of the arbitration.

(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.



B. Interpretation and Application of Article XXI

1. Article XXI:1(b)

(a) Format for notifications

200. With respect to the format for notifications under paragraph 1(b), see the Guidelines for Notifications under the General Agreement on Trade in Services.(295)

2. Article XXI:5

(a) Procedures for the rectification or modification of schedules

201. Since the conclusion of the Uruguay Round, an ad hoc certification procedure had been applied for the purpose of introducing changes or adding new commitments to Members Schedules, pending the adoption of a formal set of procedures under Article XXI (Modification of Schedules). On 20 July 1999, the Council for Trade in Services adopted the Procedures for the Implementation of Article XXI upon the recommendation of the Committee on Specific Commitments.(296) The Procedures are to be used whenever a Member intends to modify or withdraw a scheduled commitment.

202. On 14 April 2000, upon a recommendation of the Committee on Specific Commitments, the Council for Trade in Services adopted the Procedures for the Certification of Rectifications or Improvements to Schedules of Specific Commitments.(297) These Procedures are to be used whenever a Member intends to undertake new commitments, improve existing ones, or introduce rectifications or changes of a purely technical nature that do not alter the scope on the substance of the existing commitments.

Part V: Institutional Arrangements

XXVI. Article XXII

A. Text of Article XXII

Article XXII: 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.

(footnote original) 11 With 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.



B. Interpretation and Application of Article XXII

No jurisprudence or decision of a competent WTO body.

XXVII. Article XXIII

A. Text of Article XXIII

Article XXIII: Dispute Settlement and Enforcement

1. If any Member should consider that any other Member fails to carry out its obligations or specific 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.(298),(299).



B. Interpretation and Application of Article XXIII

1. Article XXIII:1

(a) Relationship with Article 3.8 of the DSU

203. In EC  Bananas III, the Appellate Body considered that the Panel had erred in extending the scope of the presumption of nullification or impairment in Article 3.8 of the DSU to violation claims made under the GATS:

We observe, first of all, that the European Communities attempts to rebut the presumption of nullification or impairment with respect to the Panels findings of violations of the GATT 1994 on the basis that the United States ha