Bilateralism in services trade: Is there fire behind the (Bit-)smoke?

Journal of International Economic Law

Volumn 11, Issue 2, 2008, Pages 365-409

  Adlung, Rudolf ^a   Molinuevo, Martín ^b  

^a WTO Secretariat   (Switzerland)

^b UNIVERSITY OF BERN   (Switzerland)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 44949104013     PISSN: 13693034     EISSN: 14643758     Source Type: Journal    
DOI: 10.1093/jiel/jgn013     Document Type: Article

References (143)

1. The relevant provisions are Article XXIV of the General Agreement on Tariffs and Trade (GATT), the Enabling Clause, and Article V of the General Agreement on Trade in Services (GATS). Interestingly, bilateral agreements account for over 80% of all preferential agreements notified and in force. See Roberto V. Fiorentino/Luis Verdeja/Christelle Toqueboeuf, The Changing Landscape of Regional Trade Agreements: 2006 Update (WTO Discussion Paper No. 12, Geneva: World Trade Organization, 2007) 3-8;
2. and Martin Roy/Juan Marchetti/Hoe Lim, "Services Liberalization in the New Generation of Preferential Trade Agreements (PTAs): How Much Further than the GATS?', 6 World Trade Review 2 (2007), at 157.
3. For example, Pomfret notes that a simple count of the RTAs notified to the WTO does not take into account the unequal significance of the individual agreements, disregards the impact of the transformation processes in Eastern Europe and subsequent WTO accessions, and fails to acknowledge the limited potential for trade diversion given generally liberal access conditions on a multilateral basis. See Richard Pomfret, 'Is Regionalism an Increasing Feature of the World Economy?', 30 The World Economy 6 (2007), at 929.
4. In view of such qualifying factors, Abbott takes the view that the most troubling aspect 'is the exercise of virtually unconstrained political and economic power by the United States and the EU to seek concessions from developing (and developed) countries'. See Frederick M. Abbott, 'A New Dominant Trade Species Emerges: Is Bilateralism a Threat?', 10 JIEL 3 (2007), at 583,
5. and, in a similar vein, Richard E. Baldwin, 'Multilateralising Regionalism: Spaghetti Bowls as Building Blocs on the Path of Global Free Trade', 29 The World Economy 11 (2006), at 1511,
6. and Patrick Messerlin, 'Three Variations on "the Future of the WTO'", 8 JIEL 2 (2005), at 304.
7. The scope of services trade under the GATS and, thus, of WTO Members' trade obligations under the Agreement is defined to include cross-border imports (cross-border trade: mode 1), the consumption of services in another Member's territory (consumption abroad: mode 2) as well as the services-related activities of foreign established suppliers (commercial presence: mode3) and foreign natural persons (presence of natural persons: mode4) in a Member's territory. See Rudolf Adlung et al., 'The GATS: Key Features and Sectors', in Bernhard Hoekman/Aaditya Mattoo/Philip English (eds), Development, Trade, and the WTO (Washington D.C.: The World Bank, 2002) 259-79.
8. Mode 3 alone is estimated to account for 50% of all services transactions falling under the Agreement, followed by mode 1 (35%), mode 2 (10-15%) and mode 4 (1-2%).
9. See WTO, International Trade Statistics 2005 (Geneva: World Trade Organization, 2005) 8.
10. The relatively few WTO Members that are covered by MFN exemptions are listed in section III.A.3 and Table A1.
11. Cases in point are the Singapore-Jordan BIT of 2004, signed together with a PTA between both parties, and a BIT between Korea and Iceland, Liechtenstein and Switzerland of 2005, signed in conjunction with the Korea-EFTA PTA.
12. For the sake of simplicity, the term 'treaties' is used synonymously with bilateral investment treaties.
13. The Doha Ministerial Declaration (WT/MIN(01)/DEC/1, adopted 20 November 2001, at 4f) explicitly foresaw that the negotiations should take account, as appropriate, of existing bilateral and regional arrangements on investment. General Council Decision, WT/L/579, adopted 2 August 2004, at 3.
14. As remarked by Peterson, this is not without irony: 'While proposed agreements such as the OECD Multilateral Agreement on Investment (MAI) were subjected to rigorous public scrutiny, many hundreds of bilateral agreements have entered into force without public notice or scrutiny. [. . .] For those who take the extreme view that investor protection is an illegitimate international goal, the sober reality is that there have been rather more "losses" than "victories" of late, as bilateral treaties have proliferated with surprisingly little public notice.' Luke Eric Peterson, The Global Governance of Foreign Direct Investment: Madly Off in All Directions (Dialogue on Globalization: Occasional Paper No. 19, Geneva: Friedrich-Ebert-Stiftung, 2005) 25.
15. To a certain degree, the 'trade and . . .' concerns surrounding the WTO have found a counterpart in 'investment and . . .' discussions relating to BITs. See Anne van Aaken, Fragmentation in International Law: The Case of International Investment Protection (University of St Gallen Law School, Law and Economics Research Paper Series, Working Paper No. 2008-1, 2008).
16. UNCTAD, Bilateral Investment Treaties 1995-2006: Trends in Investment Rulemaking (New York and Geneva: United Nations, 2007) 1.
17. Such flows are estimated to have risen from US$4 billion in 1985 to US$61 billion in 2004.
18. UNCTAD, World Investment Report 2006 (New York and Geneva: United Nations, 2007) xxiv.
19. UNCTAD, Developments in International Investment Agreements in 2005, IIA Monitor No. 2 (New York and Geneva: United Nations, 2006) 5;
20. and UNCTAD, above n 9, at 1.
21. UNCTAD, Recent Developments in International Investment Agreements, IIA Monitor No. 2 (New York and Geneva: United Nations, 2005) at 9;
22. and Annex Table A3. Some of the co-signatories, such as the three Baltic States and several Central European countries, have meanwhile joined the European Union.
23. See, for example, Pierre Sauvé, 'Qs and As on Trade, Investment and the WTO', 31 Journal of World Trade 8 (1997) 35-79, at 63-5.
24. Mode 4 may also prove relevant since a number of BITs provide for the facilitation of entry and stay of certain personnel necessary for the establishment and operation of the investment. See, for instance, Argentina-Australia BIT of 1999, Article 6.1, and Japan-Korea BIT of 2002, Article 8.1.
25. Some treaties even commit the signatories to extending such benefits to family members of the persons concerned (e.g. China-Jordan BIT of 2005, Article 2.3).
26. For more details concerning scope and coverage of the Agreement see Rudolf Adlung, 'Services Negotiations in the Doha Round: Lost in Flexibility?', 9 JIEL 3 (2006), at 865-93.
27. UNCTAD, above n 10, at 266.
28. UNCTAD, above n 9, at xiii.
29. It could be argued that 'investment liberalization treaties' do not in fact have a substantial liberalizing effect, since the opening up to foreign investment is most frequently the result of a unilateral change in domestic economic policies, while the treaties only provide guarantees that those changes will not be reversed. Even from this perspective, however, there is a substantial difference from 'investment protection treaties', which do not entail an obligation to admit foreign investors and investments on a national treatment basis.
30. No sector reservations were found among a sample of 32 treaties concluded by Germany, 18 treaties concluded by China and 24 treaties concluded by the United Kingdom. In a review of 41 BITs signed by Switzerland, the only relevant reservation concerned entertainment services and was contained in a treaty with Mexico. The samples consisted of all publicly available treaties concluded after January 1995.
31. There are, however, strong variations within these groups as well. See Adlung, above n 14, at 873.
32. The exclusion of telecom and financial services, in which the United States undertook significant GATS commitments under mode 3, appears due mainly to the fact that most of its BITs were signed prior to the conclusion of the extended Uruguay Round negotiations in these sectors, in February and December 1997, respectively (The term 'sector exclusions' refers not only to sectors fully exempt from BIT coverage, but also to sectors that have been made subject to national treatment limitations).
33. See Rudolf Adlung, 'The Contribution of Services Liberalization to Poverty Reduction: What Role for the GATS?', 8 Journal of World Investment & Trade 4 (2007) 549-71, at 564-6.
34. The precise sector-coverage of these treaties is subject to an element of uncertainty, however, since it is difficult in many cases to associate broad references to particular services (banking, telephone and telegraph services, etc.) with the sub-sectors contained in the Classification List for GATS commitments. In cases of doubt, sectors were not counted as being covered by a BIT. Also, Table 1 does not reflect any policy-related reservations that may have been inscribed in BITs; for example, the United States has consistently excluded government subsidies or grants from its national treatment obligations.
35. In March 2008, Rwanda was the next LDC to sign an investment treaty with the United States.
36. See Adlung, above n 21, at 565.
37. Appellate Body Report, European Communities - Regime for the Importation, Sale and Distribution of Bananas (EC - Bananas III), WT/DS27/AB/R, adopted 25 September 1997, para 220,
38. and Panel Report, EC - Bananas III (Ecuador), para 7.285.
39. Article XIII:1 of the GATS exempts government purchases of services from the application of Article II (MFN), Article XVI (market access) and Article XVII (national treatment). While Article XIII:2 provides for negotiations, very little has been achieved in more than ten years.
40. UNCTAD, above n 9, at 80-99, provides a detailed overview of exception clauses in recent BITs.
41. While recent BITs concluded by Japan apply in principle to subsidies and grants, Japan has inscribed a national treatment reservation for such measures (see, for instance, the treaty with Vietnam, Article 2 and Annex I).
42. Indeed, both the United States and Canada have inscribed horizontal limitations with regard to subsidies and grants under mode 3 in their GATS schedules. These limitations, however, do not go as far as the relevant carve-outs in their BITs. Canada's national treatment limitation is confined to subsidies related to research and development, while the United States' schedule only excludes from national treatment certain insurance and loan guarantees granted by the Federal Overseas Private Investment Corporation (OPIC).
43. UNCTAD, above n 9, at 90.
44. Concerning sector reservations, see above n 18. The exclusion of certain types of measures may also affect the sector scope of a treaty. For example, some BITs concluded by France exempt from coverage measures that are destined to preserve or promote cultural and linguistic diversity.
45. For an overview of key BIT provisions in the light of development objectives see J. Anthony VanDuzer/Penelope Simons/Graham Mayeda, 'Modeling International Investment Agreements for Economic Development', in Veniana Qalo (ed.), Bilateralism and Development: Emerging Trade Patterns (London: Cameron May, 2008).
46. GATS Articles II:1 and I:1.
47. See also section III.A subsequently.
48. US-Uruguay BIT, Article 4.
49. See, for instance, Belgium/Luxemburg-Kuwait BIT, Article 4.1.
50. Bosnia/Herzegovina-United Kingdom BIT, Article 3.3.
51. For example, Costa Rica-Spain BIT, Article IV:1.
52. The countries involved are Albania, Bolivia, Azerbaijan, Bahrain, Bangladesh, Cameroon, Croatia, Democratic Republic of Congo, Egypt, Georgia, Mongolia, Morocco, Mozambique, Nicaragua, Senegal and Turkey.
53. Examples include the treaties of Denmark with Indonesia; Italy with India; Japan with Vietnam and Korea; Jordan with Syria; Korea with Cambodia, Hong Kong/China, India, Laos, and Tajikistan; and some older treaties signed by Turkey.
54. Further countries have on occasions extended admission and establishment rights to foreign investors in their treaties, especially on an MFN, rather than national treatment, basis. However, this has not been a consistent practice. See, for instance, China-Turkey BIT of 1990 and China-Korea BIT of 1992.
55. See, for instance, Canada's BITs with Barbados of 1997 and Armenia of 1999.
56. See Appellate Body Report, United States - Measures Affecting the Cross-Border Supply of Gambling and Betting Services (US - Gambling), WT/DS284/AB/R, adopted 20 April 2005, paras 214-38.
57. Article XVI:2(a)-(c) of the GATS captures quantitative restrictions limiting, respectively, the number of suppliers, value of transactions or assets, and number of operations or quantity of output. This includes restrictions that are imposed by means of an economic needs test. Pursuant to Article XX:2, Members are held to inscribe any such measures, should these be inconsistent with Article XVII (national treatment) as well, under Article XVI only.
58. The latter observations also apply to investment protection treaties.
59. As far as services under the GATS are concerned, pursuant to the MFN requirement in Article II (section III.A subsequently), the carve-out would apply only to measures taken prior to the date of entry into force of the first BIT concluded by Canada that contains such provisions. Moreover, commitments scheduled under the GATS would need to be respected in any event.
60. See Martin Molinuevo, Recent Developments in International Investment Agreements. Where does China stand?, Paper prepared for the World Bank East Asia and Pacific Region Poverty Reduction and Economic Management Unit, 2007, mimeo, at 29.
61. S.D. Myers v Canada, First Partial Award, 13 November 2000, para 252.
62. Austria-Jordan BIT, Article 3.3.
63. See also Rudolf Adlung/Martin Roy, 'Turning Hills into Mountains? Current Commitments under the General Agreement on Trade in Services and Prospects for Change', 39 Journal of World Trade 6 (2005) 1161-94, at 1181.
64. Rudolf Adlung, 'Negotiations on Safeguards and Subsidies in Services: A Never-Ending Story?', 10 JIEL 2 (2007), 235-65, at 247.
65. Ibid, at 251-3.
66. The share would be slightly higher if those Members were added whose BITs are covered by MFN exemptions under the GATS. The governments concerned might still be able to invoke a future safeguard mechanism under the GATS, without infringing on their international obligations, should the 'injury' have been caused by investments from non-BIT partners. However, this possibility is subject to various uncertainties. These are related, for example, to the extent to which the negotiating mandate under Article X of the GATS, requiring that relevant measures be based on the 'principle of non-discrimination', would actually be filled with legal content. Also, since the main source countries of FDI are likely to be covered by the BITs concerned, this scenario may not prove highly economically relevant.
67. On the concept of 'likeness' in the GATS, see Mireille Cossy, Determining 'Likeness' under the GATS: Squaring the Circle? (WTO Working Paper, ERSD-2006-08, Geneva: WTO, 2006).
68. See, for instance, Iceland-Chile BIT (2003), Article IV.
69. UNCTAD, National Treatment, UNCTAD Series on International Investment Policies for Development (New York and Geneva: United Nations, 1999), at 34.
70. See ibid, at 28-33, for a review of the different standards of comparison found in BITs.
71. For an analysis of jurisprudence on the concept of 'likeness' in the context of merchandise trade and foreign investment, respectively, see Nicholas DiMascio/Joost Pauwelyn, 'Non-Discrimination in Trade and Investment Treaties: Worlds Apart or Two Sides of the Same Coin?', American Journal of International Law 102 (2008, forthcoming) 1-42.
72. See S.D. Myers v Canada, First Partial Award, 13 November 2000, para 252.
73. Implicitly, this was also the approach followed in Pope & Talbot Inc. v Canada, Award on the Merits 10 April 2001, paras 73-104,
74. and Methanex v United States, Final Award, 3 August 2005, Part IV - Chapter B, paras 11-17.
75. Occidental Exploration and Production Company v Ecuador, LCIA Case No. UN3467, Final Award, 1 July 2004, paras 168, 173 and 176-8.
76. On the scope of the fair and equitable treatment obligations and a review of relevant jurisprudence, see, inter alia, UNCTAD, Fair and Equitable Treatment, UNCTAD Series on International Investment Policies for Development (New York and Geneva: United Nations, 1999);
77. OECD, Fair and Equitable Treatment Standard in International Investment Law (Working Papers on International Investment, Number 2004/3, Paris: OECD, 2004);
78. and Thomas Westcott, 'Recent Practice on Fair and Equitable Treatment', 8 Journal of World Investment & Trade 3 (2007), at 409-29. BITs promoted by the United States specify that, while no treatment is required in addition to or beyond what is required by the international minimum standard, the concept of fair and equitable treatment includes 'the obligation not to deny justice in criminal, civil, or administrative adjudicatory proceedings in accordance with the principle of due process'.
79. Christoph Schreuer, 'Fair and Equitable Treatment in Arbitral Practice', 6 Journal of World Investment & Trade 3 (2005) 357-86, at 373-4;
80. and Barnali Choudhury, 'Evolution or Devolution? Defining Fair and Equitable Treatment in International Investment Law', 6 Journal of World Investment & Trade 2 (2005) 297-320, at 305-15.
81. Waste Management, Inc. v United Mexican States (Number 2), ICSID Case No. ARB(AF)/00/3, Award, 30 April 2004, para 99.
82. This overview cannot aspire to be complete. Other provisions that might need to be added include Article VI:3 (information requirement vis-à-vis suppliers/investors that have applied for a license) or Article VIII (disciplines on the business conduct of monopolies and exclusive service suppliers).
83. See Técnicas Medioambientales Tecmed S.A. v Mexico, ICSIS Case No. ART(AF)/00/2, para 154,
84. Metalclad Corporation v Mexico, ICSID Case No. ARB(AF)/97/1, Award, 30 August 2000, para 76.
85. The association of transparency requirements with the notion of fair and equitable treatment was forthrightly rejected by the British Columbia Supreme Court on judicial review. The Court noted that 'the [arbitral] Tribunal did not simply interpret the wording of [NAFTA] Article 1105. Rather, it misstated the applicable law to include transparency obligations and it then made its decision on the basis of the concept of transparency', which is not included in NAFTA's investment chapter.
86. See United Mexican States v Metalclad Corporation, 2 May 2001, BCSC 664, paras 59-72.
87. The Panel on Argentina - Hides and Leather (para 11.76) highlighted that 'the focus [of the transparency obligation] is on the treatment accorded by government authorities to the traders in question' so as to allow private parties to become acquainted with the relevant regulation that concerns their activity. In contrast, Article III of the GATS lacks a specific reference to business operators ('traders') as featured in GATT X:1, and refers only to transparency obligations vis-à-vis other WTO Members.
88. GATT Article X:3 (conceptually analogous to GATS Article VI:1) has been considered to apply in situations pertaining to lack of procedural fairness, due process, disclosure of confidential information and non-compliance with a Member's regulatory regime for no apparent reason. It could be argued that the fair and equitable treatment principle covers similar situations.
89. See, inter alia, Appellate Body Report, United States - Import Prohibition of Certain Shrimp and Shrimp Products (US - Shrimps), WT/DS58/AB/R, adopted 21 November 2001, paras 182-3;
90. Panel Report, Argentina - Measures Affecting the Export of Bovine Hides and the Import of Finished Leather (Argentina - Hides and Leather), WT/DS155/R, adopted 16 February 2001, para 11.94;
91. and Panel Report, Dominican Republic - Measures Affecting the Importation and Internal Sale of Cigarettes (Dominican Republic - Import and Sale of Cigarettes), WT/DS302/R, adopted 19 May 2005, paras 7.384-88.
92. See UNCTAD, Transfer of Funds, UNCTAD Series on International Investment Policies for Development (New York and Geneva: United Nations, 2000) at 30-2.
93. Footnote 8 to GATS Article XVI:1 further provides that inward transfers of capital related to commercial presence are to be allowed where commitments on market access have been undertaken. However, unlike the majority of BITs, the provision says nothing about possible restrictions on outward transfers.
94. UNCTAD, Key Terms and Concepts in IIAs: A Glossary, UNCTAD Series on International Investment Policies for Development (New York and Geneva: United Nations, 2004) 64-70.
95. UNCTAD, Investor-State Disputes Arising from Investment Treaties: A Review, UNCTAD Series on International Investment Policies for Development (New York and Geneva: United Nations, 2005) 41-2.
96. See, for instance, Finland-Algeria BIT of 2005, Article 4.
97. The arbitral decision on Siemens v Argentina (ICSID Case No. ARB/02/8, para 273) questioned the link between the particular decree leading to the expropriation, suggesting that the expropriatory measures had been taken on political grounds, rather than for alleviation of the ongoing financial crisis, as alleged. However, noting that the composition requirement had not been met, the arbitral decision refrained from exploring further the purpose of the measure.
98. See Carsten Fink/Martin Molinuevo, East Asian Free Trade Agreements in Services: Roaring Tigers or Timid Pandas? (Washington D.C.: World Bank Policy Research Paper, 2007) 50-4.
99. UNCTAD points to over 250 known arbitration cases by the end of 2006.
100. See UNCTAD, Latest Developments in Investor-State Dispute Settlement, IIA Monitor No. 4 (New York and Geneva: United Nations, 2006). Of the WTO disputes, only two dealt exclusively with alleged infringements of GATS commitments (Mexico - Telecoms and US - Gambling).
101. Adlung and Roy, above n 49, at 166-7, find a relationship of over two limitations per each market access commitment undertaken on mode 3 (horizontal and sector-specific limitations combined). Most entries relate to foreign capital participation and restrictions on the type of legal entity.
102. UNCTAD, Preserving Flexibility in IIAs: The Use of Reservations, UNCTAD Series on International Investment Policies for Development (New York and Geneva: United Nations, 2006) 56-8.
103. However, recent investment treaties promoted by the United States and Canada expressly allow the parties to adopt or maintain nationality requirements for boards of directors, subject to certain qualifications. The limitations scheduled by both countries under the GATS are more narrowly defined. The US has inscribed nationality requirements for certain financial services only, while a cross-sectoral ('horizontal') entry in Canada's schedule refers solely to privatized and 'federally incorporated' companies.
104. Pursuant to paras 3 and 4 of the Annex on Article II Exemptions, the Council for Trade in Services is tasked to review all exemptions granted for a period of more than five years. These reviews are destined to examine whether the conditions which created the need for the exemption still prevail.
105. At a meeting of the Preparatory Committee for the World Trade Organization, in December 1994, the Chairman of the Sub-Committee on Services noted, inter alia, that it had not been possible for delegations to agree on whether the GATS applies to investor-State dispute settlement mechanisms in investment treaties. The continuation of relevant MFN exemptions, which refer specifically to dispute settlement under BITs (Annex Table A1), even after two MFN reviews, in 2000 and 2005, suggests that at least three Members- Canada, Chile and Poland-do not preclude this possibility (section III.A.3).
106. See Uruguay Round - Group of Negotiations on Services - Issues Relating to the Scope of the GATS - Note by the Secretariat, MTN.GNS/W/177/Rev.1, 4 November 1993, and the minutes of the Preparatory Committee for the World Trade Organization, PC/M/11 of 16 January 1995.
107. Appellate Body Report, EC - Bananas III, above n 25, para 220.
108. Panel Report, EC - Bananas III (Ecuador), above n 25, para 7.282.
109. UNCTAD, Scope and Definition, UNCTAD Series on Issues in International Investment Agreements (New York and Geneva: United Nations, 1999) 38.
110. GATS Article XIII:2 provides for negotiations on government procurement in services, but these have made little progress, if any, in over ten years. However, some 30 Members have adopted an optional 'Understanding on Commitments in Financial Services' under which they are committed, inter alia, to extending MFN and national treatment to the procurement by their public entities of financial services under mode 3 (para 2).
111. In turn, as noted in above n 3, mode 3 alone represents some 50% of services trade falling under the GATS.
112. See Federico Ortino/Audley Sheppard, 'International Agreements Covering Foreign Investment in Services: Patterns and Linkages', in Lorant Bartels/Federico Ortino (eds), Regional Trade Agreements and the WTO Legal System (Oxford: Oxford University Press, 2006) 213.
113. The relevant provisions read: 'Where developing countries are parties to an agreement . .., flexibility shall be provided for regarding the conditions set out in paragraph 1 [i.e., (a) substantial sector coverage and (b) elimination of existing discriminatory measures and/or prohibition of new or more discriminatory measures], particularly with reference to sub-paragraph (b) thereof, in accordance with the levels of development of the countries concerned, both overall and individual sectors and subsectors.'
114. Some of these treaties are quite dated. In the case of Germany and Bangladesh, they were signed in 1964 and 1989, respectively.
115. Lists of MFN exemptions are set up in standard format, consisting of five columns: Sector or sub-sector; description of measure indicating its inconsistency with Article II; countries to which the measure applies; intended duration and conditions creating the need for the exemption.
116. Moreover, given the heading of the relevant column-'Intended duration'-it might be argued that even if a date had been specified, its expiry would not automatically invalidate the exemption concerned as long as the termination of the measure has not been notified. Paragraph 7 of the Annex on Article II Exemptions requires Members 'to notify the Council for Trade in Services at the termination of the exemption that the inconsistent measure has been brought into conformity . . .'.
117. The United States' exemption refers to the issuance of special visas to nationals of treaty partners engaged in carrying out 'substantial trade' or developing and directing the operations of enterprises set up under BITs [Trade in Services - United States of America - Final List of Article II (MFN) Exemptions, GATS/EL/90, 15 April 1994].
118. The services offer submitted by the European Communities under the Doha Development Agenda foresees the elimination of Sweden's MFN exemption (Council for Trade in Services - Special Session - Communication from the European Communities and its Member States - Conditional Revised Offer, TN/S/O/EEC/Rev.1, 29 June 2005).
119. See, for example, the overview provided in Sauvé, above n 13, at 74-7.
120. During the 2005 review of MFN exemptions, the United States gave the view that MFN exemptions could also apply to future measures, which fell within the scope of what had been listed. Consequently, exemptions could cover the negotiation of future agreements, provided their type was clearly described. See Council for Trade in Services, Note by the Secretariat, S/C/M/78, 17 May 2005, para 82.
121. A recommendation adopted by the Committee on Technical Barriers to Trade reads as follows: 'When assessing the significance of the effect on trade of technical regulations [for the purposes of Articles 2.9 and 5.6], the Member concerned should take into consideration such elements as the value or other importance of imports in respect of the importing and/or exporting Members concerned, whether from other Members individually or collectively, the potential growth of such imports, and difficulties for producers in other Members to comply with the proposed technical regulations. The concept of a significant effect on trade of other Members should include both import-enhancing and import-reducing effects on the trade of other Members, as long as such effects are significant.' See Committee on Technical Barriers to Trade - Decisions and Recommendations Adopted by the Committee since 1 January 1995 - Note by the Secretariat, G/TBT/1/Rev.8, 23 May 2002.
122. Four Members - United States, European Communities, Japan and China - are due to be reviewed every two years, another 16 Members every four years, and the remaining Members every six years. In addition, China's Protocol of Accession (23 November 2001) provides for a Transitional Review Mechanism, during the first eight years of WTO membership, to monitor implementation on an annual basis.
123. Decision of the General Council, WT/L/671, adopted 18 December 2006.
124. The Preamble to the relevant Decision by the General Council refers to the fact that 'trade agreements of a mutually preferential nature . . . have greatly increased in number and have become an important element in Members' trade policies and developmental strategies' and expresses the conviction 'that enhancing transparency in, and understanding of, PTAs and their effects is of systemic interest and will be of benefit to all Members'.
125. Mode 4 (presence of natural persons) is estimated to represent no more than 1 or 2% of total services trade under the GATS;
126. see above n 3.
127. While the Agreement establishes no firm timeframe for the conduct of these reviews, apart from the first review, which was to be held within five years from the date of entry into force of the WTO, Members agreed at the end of the second review in 2005 that the following one would start no later than June 2010.
128. See Council for Trade in Services, Note by the Secretariat, S/C/M/80, 17 October 2005.
129. A similar proposal has been made with regard to PTAs, see Roy, Marchetti and Lim, above n 1, at 188.
130. It might be argued that transparency procedures for investment treaties already exist in other fora, keeping in mind in particular UNCTAD's extensive activities in this area. A mere duplication under the WTO would certainly prove redundant. However, UNCTAD's investment treaty database, which essentially depends on voluntary contributions from the governments concerned, features the text of some 1800 BITs out of more than 2500 currently recorded treaties (http://www.unctadxi.org/templates/Page_1006.aspx). ICSID compiles a list of concluded BITs, which is also limited in coverage; the texts are not publicly available. (http://icsid.worldbank.org/ICSID/FrontServlet?requestType= ICSIDPublicationsRH&actionVa1=ViewBilateral&reqFrom=Main).
131. For example, India has repeatedly raised doubts about Members' compliance with the notification requirement under Article VII, concerning the recognition of foreign licences, standards, etc., and perceived information gaps in the notifications actually made. See Council for Trade in Services, Note by the Secretariat, S/C/M/67, 17 September 2003, S/C/M/68, 28 November 2003, and S/C/M/69, 15December 2003.
132. This apparent imbalance in obligations might have been intended to avoid an imbalance in treatment. While the carve-out for Canada has reduced the BIT's coverage, in terms of the three GATS Articles, by one-third, from some 160 to 105 sectors, a similar provision for Peru would have produced a reduction of more than two-thirds, down to less than 50 sectors.
133. Canada is a special case insofar as it had listed an MFN Exemption for the dispute settlement provisions of its investment treaties.
134. See UNCTAD, above n 11, at 2,
135. and UNCTAD, Developments in international investment agreements in 2006, IIA Monitor No. 3 (New York and Geneva: United Nations, 2007) 3.
136. A number of BITs signed by EC Member States, including Bulgaria, Poland and Romania, have been or are currently being re-negotiated in light of possible inconsistencies with EC law, especially in relation to transfer of funds. Also, the European Commission has reportedly filed a complaint with the European Court of Justice against Austria, Finland and Sweden for failing to adjust their investment treaties accordingly [Investment Treaty News, 30 June 2007, published by the International Institute for Sustainable Development; available under http://www.investmenttreatynews.com (visited February 2008)].
137. Trade in Services - Poland - Final List of Article II (MFN) Exemptions, GATS/EL/71, 15 April 1994.
138. Unlike the European Communities and its Members States, the United Sates and Canada are not Members, but only observers of the Energy Charter Conference. Similarly, the United States-Australia Free Trade Agreement does not provide for an investor-State dispute settlement mechanism. Divergences over scope and content of such a mechanism also played an important role in the eventual failure of the MAI, in addition to other factors, such as provisions on investment liberalization, which are absent from treaties signed by European countries [see UNCTAD, Lessons from the MAI, UNCTAD Series on Issues in International Investment Agreements (New York and Geneva: United Nations, 1999) 19;
139. and UNCTAD, Dispute Settlement: Investor - State, UNCTAD Series on Issues in International Investment Agreements (New York and Geneva: United Nations, 2003) at 8].
140. See above n 74.
141. The negotiating group concerned agreed that the use of differential accounting rates for the termination of international traffic, although potentially inconsistent with MFN treatment, 'would not give rise to action [. . .] under dispute settlement under the WTO'. The understanding was made subject to review prior to 1January 2000. See Report of the Group on Basic Telecommunications, S/GBT/4, 15 February 1997.
142. Based on a detailed review of the panoply of investment incentives operated by very many countries, Subrahmanyam points to 'intense incentive competition' between governments and sees the need, in particular from the perspective of developing countries, to introduce effective disciplines. See B.V.R. Subrahmanyam, 'Investment Incentives and Multilateral Disciplines', in Simon J. Evenett/Bernard M. Hoekman (eds), Economic Development & Multilateral Trade Cooperation (Washington and New York: World Bank and Palgrave Macmillan, 2005) 301-48, at 345.
143. See also Abbott in above n 2.