The single euro payments area (SEPA) and its compatibility with the GATS disciplines on financial services

Journal of World Trade

Volumn 42, Issue 3, 2008, Pages 509-533

  Vranes, Erich ^a  

^a VIENNA UNIVERSITY OF ECONOMICS AND BUSINESS   (Austria)

Author keywords

[No Author keywords available]

Indexed keywords

CAPITAL MARKET; EUROPEAN UNION; FINANCIAL SERVICES; GATT; GENERAL AGREEMENT ON TRADE IN SERVICES; WORLD TRADE ORGANIZATION;

EURASIA; EUROPE;

EID: 47249164305     PISSN: 10116702     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (177)

1. Cf EC Commission, Proposal for a directive of the European Parliament and of the Council on payment services in the internal market, COM(2005) 603 final.
2. Cf, in particular, S.J. Key, "Financial Services", in P.F.J. Macrory, A.E. Appleton and M.G. Plummer (eds), The World Trade Organization: Legal, Econornic and Political Analysis (New York: Springer, 2005), p. 954;
3. J. Kokott, Liberalisierung der Finanzdienstleistungen im Rahmen der WTO, 46 Recht der Internationalen Wirtschaft, (2000), 401;
4. E.H. Leroux, Trade in Financial Services under the World Trade Organization, 36 Journal of World Trade (2002), 413.
5. On the Economic and Monetary Union. Cf, e.g., J.A. Usher, The Law of Money and Financial Services in the EC (2nd edn, Oxford: Oxford University Press, 2000);
6. on the legal regime tying together EU Member States having adopted the Euro and those which have not yet introduced it, cf E. Wanes, The "internal" external relations of EMU, On the legal framework of the relations of In and Out states, Special Issue: The EU as an International Actor, 6 Columbia Journal of European Law 3 (2000), 261-282.
7. On this and the following, cf ECB, The Single Euro Payments Area (2006), 7ff;
8. ECB, Towards a Single Euro Payments Area (2006);
9. European Payments Council, EPC Roadmap 2004-2010, available at: ;
10. European Payments Council, Making SEPA a Reality (version 1.3, 9 January 2007, regularly updated), available at: ;
11. European Payments Council, SEPA Credit Transfer Scheme Rulebook, Version 2.2 of 13 December 2006;
12. European Payments Council, SEPA Direct Debit Scheme Rulebook, Version 2.0 of 8 March 2006;
13. European Payments Council, SEPA Cards Framework, Version 2.0 of 8 March 2006;
14. European Payments Council, Framework for the Evolution of the Clearing and Settlement of Payments in SEPA, Version 1.0 of 8 March 2006.
15. Cf. Article 5.1 of the Credit Transfer Rulebook.
16. Article 5.1 of the Direct Debit Rulebook; on the supplementing legal fi-amework, in particular the EC Payment Services Directive, cf in the following.
17. Cf ECB (2006), 14.
18. Cf EC Commission, Consultative Paper on SEPA Incentives, 13 February 2006.
19. Cf EPC, Making SEPA a Reality, Version 1.3 (2007), 4.
20. Cf. EC Commission, Consultative Paper on SEPA Incentives, 13 February 2006, 8.
21. Cf ECB (2006), 8.
22. A credit transfer is defined by the ECB in the SEPA context as "a payment initiated by the payer. In the case of a credit transfer, a payment instruction is sent to the payer's bank (the sender's bank), which moves the funds to the payee's bank (the receiver's bank), possibly via several intermediaries"; cf ECB, Euro (2006), 20.
23. A direct debit is defined by the ECB in the SEPA context as "a transfer initiated by the payee (the receiver) via the payee's bank after agreement between the payee and payer (the sender). Direct debits are often used for recurring payments (such as utility bills) with a pre-authorized agreement being put in place with the payer. Direct debits are also used for one-off payments where the payer authorizes an individual payment"; cf ECB (2006), 21.
24. European Payments Council, SEPA Cards Framework, Version 2.0 of 8 March 2006.
25. European Payments Council, Framework for the Evolution of the Clearing and Settlement of Payments in SEPA, Version 1.0 of 8 March 2006; clearing is defined as "the process of transmitting, reconciling, and confirming payments of different types and the establishment of a final position for settlement either on an individual transaction basis or on a periodic basis for aggregated or netted positions"; settlement is defined as "an act that discharges the obligations created through the clearing process with respect to liabilities between participating Scheme Participants";
26. cf European Payments Council, Framework for the Evolution of the Clearing and Settlement of Payments in SEPA, Version 1.0 of 8 March 2006, Article 2.
27. Credit Transfer Rulebook, Article 3.5.
28. Cf Credit Transfer Rulebook, Article 0.5.6, Article 1.4 and Article 5.2; Direct Debit Rulebook, Article 3.3.
29. Credit Transfer Rulebook, Article 1.8.
30. Cf Direct Debit Rulebook, Articles 2.7 and 5.3.
31. Cards Framework, Version 2.0 (8 March 2006), para. 1.1.
32. Cf ECB (2006), 22.
33. Cf. Cards Framework, Version 2.0 (8 March 2006), para. 1.3.1.
34. Framework for Infrastructure, Article 0.5.3.
35. Cf. Framework for Clearing and Settlement, para. 1.1.
36. Cf. e.g., Credit Transfer Rulebook, Article 0.5.2.
37. Cf. e.g., EC Commission, Consultative Paper on SEPA Incentives, 13 February 2006, 8 passim.
38. Cf. also EC document IP/07/550 of 24 April 2007.
39. Proposal for a Directive on Payment Services in the Internal Market, COM(2005)603 final of 1 December 2005.
40. EC document IP/07/550 of 24 April 2007.
41. Cf. the PSD proposal, COM(2005)603 final, Articles 24 ff, and 41 ff, respectively.
42. Cf. Directive 2000/12/EC of the European Parliament and of the Council of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions, OJ L 126, 26.5.2000, 1.
43. Cf. Directive 2000/46/EC of the European Parliament and of the Council of 18 September 2000 on the taking up, pursuit of and prudential supervision of the business of electronic money institutions, OJ L 275, 27.10.2000, 39.
44. Cf. Article 2(3) second indent of Directive 2000/12/EC.
45. Cf. COM(2005)603 final, 7.
46. Cf. Article 5 of the PSD proposal, COM(2005)603 final.
47. Cf. Article 6(3) of the PSD proposal, COM(2005)603 final.
48. Cf Article 10(1) of the PSD proposal, COM(2005)603 final.
49. That is, € 5 million on average over a month and € 5 million at any given point in time according to Article 21 of the Commission's PSD proposal. These limits have been lowered to € 5 million in any calendar month or € 300,000 on any day.
50. Article 21 of the PSD proposal, COM(2005)603 final.
51. Cf e.g., Credit Transfer Rulebook, Chapter 4, p. 24;
52. see also the SEPA, Cards Framework, Preamble, para. 1. 1;
53. see also EC Commission, Consultative Paper on SEPA Incentives, 13 February 2006, passim.
54. The overview in this and the following section draws on the author's post-doctoral thesis, Trade and the Environment. Fundamental Issues in International and WTO Law, submitted at the Vienna University of Economics and Business Administration, October 2006, pp. 434-437 and 560-561.
55. GATS Article II.
56. Article 6 of the GATS Annex on Article II Exemptions.
57. Cf. M. Krajewski, National Regulation and Trade Liberalization in Services (The Hague: Kluwer Law International, 2003), p. 120.
58. Article III;
59. but see Article III bis on the exception of confidential information.
60. Article V.
61. Article VI.
62. Article VII.
63. Article VIII.
64. Article IX.
65. Article X.
66. Article XI.
67. Article XII.
68. Article XIII.
69. Articles XIV and XIV bis respectively.
70. Article XVIII.
71. Articles XIX-XXI of Part IV (Progressive Liberalization) of the GATS.
72. Articles XXII-XXVI of Part V (Institutional Provisions) of the GATS.
73. Article XXVIII of Part VI (Final Provisions) of the GATS.
74. Article XXIX of Part VI ("Final Provisions") of the GATS.
75. Cf. also W. Weiss and Chr. Herrmann, Welthandelsrecht (Munich: C.H. Beck, 2003), para. 836.
76. On this cf also Pitschas, "Allgemeines Übereinkommen über den Handel mit Dienstleistungen (GATS)", in H.-J. Priess and G.M. Berrisch (eds), WTO-Handbuch (Munich: C.H. Beck, 2003), p. 495 ff., paras 9 ff;
77. G.M. Berrisch, "Das Allgemeine Zoll- und Handelsabkommen", in H.-J. Priess and G.M. Berrisch (eds), WTO-Handbuch (Munich: C.H. Beck, 2003), p. 71, paras 6 ff, 27 ff, 89 ff et passim;
78. J. Pauwelyn, Conflict of Norms in Public International Law. How WTO Law Relates to other Rules of International Law (Cambridge: Cambridge University Press, 2003), pp. 399 ff;
79. Kraiewski, as note 44 above, pp. 62-73.
80. "... from the territory of one Member into the territory of any other Member" (Article 1:2(a)).
81. "... in the territory of one Member to the service consumer of any other Member" (Article 1:2(b)).
82. "... by a service supplier of one Member, through commercial presence in the territory of any other Member" (Article 1:2(c)). Commercial presence is further defined in Article XXVIII(d) as meaning "any type of business or professional establishment, including through: (i) the constitution, acquisition or maintenance of a juridical person, or (ii) the creation or maintenance of a branch or a representative office, within the territory of a Member for the purpose of supplying a service."
83. "... by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member" (Article 1:2(d)).
84. Article XXVIII(a).
85. Cf. also W. Zdouc, "WTO Dispute Settlement Practice Relating to the General Agreement on Trade in Services", in F. Ortino and E-U. Petersmann, The WTO Dispute Settlement System 1995-2003 (The Hague: Kluwer Law International, 2004), pp. 381, 387.
86. Article 13(a).
87. Cf. TBT Agreement Articles 3, 4, 7 and 8.
88. Article 1:3(a).
89. "Services supplied in the exercise of govermental authority" (Article 1:3(b)) are further defined to mean any service which is supplied neither on a commercial basis nor in competition with one or more service suppliers" (Article 1:3(c)). For an interpretation of these criteria cf. Krajewski, as note 44 above, 69 ff.
90. Cf. also the Panel Report, European Communities - Regime for the Importation, Sale and Distribution of Bananas, Complaint by Ecuador, WT/DS27/R/ECU, adopted 25 September 1997 (EC - Bananas III), para. 7.288.
91. Article XXVIII(c) merely contains an illustrative list, according to which "'measures by Members affecting trade in services' include measures in respect of: (i)the purchase, payment or use of a service; (ii) the access to and use of, in connection with the supply of a service, services which are required by those Members to be offered to the public generally; (iii) the presence, including commercial presence, of persons of a Member for the supply ofa service in the territory of another Member."
92. Cf. Panel Report, EC - Bananas III, para. 7.281, referring to the Note by the Secretariat, Definitions in the Draft General Agreement on Trade in Services, GATT Doc. MTN.GNS/W/139, p. 4, para. xii;
93. this jurisprudence has started with the 1958 GATT Panel Report, Italian Discrimination Against Imported Agricultural Machinery, L/ 833, adopted 23 October 1958, BISD 7S/60, para. 12, and was confirmed in standing GATT/WTO jurisprudence.
94. Cf. also the Appellate Body Report, Canada - Certain Measures Affecting the Automotive Industry, WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000, paras 151 ff, which emphasized that the logic of Article 1:1 and the rest of the GATS require that the scope of application must be assessed first under Article 1:1, before the issue of a violation of the GATS can be dealt with under its individual provisions.
95. Cf. panel peport, United States - Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/R, adopted 20 April 2005, paras 6.96 and 6.135-6.137.
96. Cf. e.g., S.J. Key, "Financial Services", in P.F.J. Macrory, A.E. Appleton and M.G. Plummer (eds), The World Trade Organization: Legal, Economic and Political Analysis (New York: Springer, 2005), p. 954;
97. J. Kokott, Liberalisierung der Finanzdienstleistungen im Rahmen der WTO, 46 Recht der Internationalen Wirtschaft (2000), 401;
98. E.H. Leroux, Trade in Financial Services under the World Trade Organization, 36 Journal of World Trade (2002), 413.
99. WTO, Fifth Protocol to the General Agreement on Trade in Services, WTO Doc S/L/45, 3 December 1997.
100. These results are often referred to as a WTO "Agreement" on financial services, which however is misnomer, given that a separate multilateral agreement on financial services does not exist, as is rightly pointed out by, e.g., Key, as note 78 above, p. 957.
101. Cf. WTO, Fifth Protocol to the General Agreement on Trade in Services, WTO Doc S/L/45, 3 December 1997, para 1.
102. Cf para. (ii) of the headnote of the Understanding, pursuant to which the Understanding "does not prejudice the right of any Member to schedule its specific commitments in accordance with the approach under Part III of the [GATS]"; cf also the final sentence of the headnote, according to which a Member's specific commitments are 'subject to condititions and qualifications' specified in its schedule;
103. cf also Key, as note 78 above, p. 957.
104. Cf European Communities and their Member States, Schedule of Specific Commitments, Supplement 4, Revision, WTO Doc GATS/SC/31/Suppl.4/Rev.1, 18 November 1999.
105. According to Article XI, Members are not to apply restrictions on international transfers and payments for current transactions relating to their specific commitments.
106. On this cf. section III.A. above.
107. Cf. Articles 2 and 3 of the Annex on Financial Services.
108. Article I(1) of the GATS; on this cf section III.A. above.
109. Article 1(a) of the Annex on Financial Services.
110. Cf. Article 5(b) of Annex on Financial Services: "... but the term 'financial service supplier' does not include a public entity".
111. Cf. Article 5(b)(viii), (xv) and (xvi) of the Annex on Financial Services.
112. Cf. Article 3(b) of the Annex on Financial Services.
113. Cf. the preambular paragraph of the Understanding.
114. Cf. Article A of the Understanding.
115. Cf. Article B.1 of the Understanding.
116. Article B.2 of the Understanding.
117. Article B.3(c) of the Understanding.
118. Article B.4 of the Understanding.
119. Article B.5-6 of the Understanding.
120. Article B.7 of the Understanding; pursuant to Article D.3, "new financial service" in this context means services "of a financial nature, including services related to existing and new products or the manner in which a product is delivered, that is not supplied by any financial service supplier in the territory of a particular Member but which is supplied in the territory of another Member".
121. Article B.8 of the Understanding.
122. Article B.9 of the Understanding.
123. Article B.10-11 of the Understanding.
124. Article C.1-2 of the Understanding.
125. Cf. European Communities and their Member States, Schedule of Specific Commitments, Supplement 4, Revision, WTO Doc GATS/SC/31/ Suppl.4/Rev.1, 18 November 1999.
126. Cf. ibid. para. 2.
127. Cf. GATS Article I(2)(a) and (b).
128. Cf. section III.D. above.
129. Cf. section III.D. above.
130. Cf. as note 104 above, para 4.
131. Cf. ibid., para 5.
132. Limitations to commitments serve to enable Members to maintain measures described in their schedules and thereby to take them out from the ambit of relevant service disciplines (cf. the 1993 Scheduling Guidelines, GATT DOC MTN.GNS/W/164 of 3 September 1993, para. 25, which state with respect to limitations to conunitments: "... the Member must describe... the measures maintained which are inconsistent with Articles XVI or XVII. The entry should describe each measure concisely, indicating the elements which make it inconsistent with Articles XVI or XVII").
133. There are only scattered examples of payment-specific limitations. Thus, Finland has scheduled the limitation that payments from governmental entities shall be transmitted through the Finnish Postal Giro System; cf. European Communities and their Member States, Schedule of Specific Commitments, Supplement 4. Revision, WTO Doc GATS/SC/31/ Suppl.4/Rev.1, 18 November 1999, p. 13.
134. The case concerned Articles III:4 and XI of the GATT, cf. the GATT Panel Report, Canada - Administration of the Foreign Investment Act, L/ 5504, BISD 30S/140, adopted on 7 February 1984 (Canada-FIRA), paras 2.1 ff and 5.1 ff.
135. Cf. e.g., R. Alexy, A Theory of Constitutional Rights (Oxford: Oxford University Press, 2002), p. 128 ff.
136. Article 5 of the ILC Draft Articles.
137. Article 8 of the ILC Draft Articles.
138. ICJ, Case Concerning Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America), 27 June 1986, General List No. 70, para. 115.
139. Cf. ICTY, Prosecutor v Tadic, judgment of 15 July 1999, Case No. IT-94-1-A, paras 103 ff;
140. cf. also Stein and von Buttlar, Völkerrecht (11th edn, Köln: Heymann, 2005), p. 438.
141. ILC, Commentaries to the draft articles on Responsibility of States for internationally wrongful acts adopted by the International Law Commission at its 53rd session (2001) extract from the Report of the International Law Commission on the work of its Fifty-third session, Official Records of the General Assembly, Fifty-sixth session, Supplement No. 10 (A/56/10), Commentary on Article 8, available at: .
142. Panel Report, Canada - FIRA, para. 5.4.
143. Cf. the GATT 1947 Panel Report, Japan - Restrictions on Imports of Certain Agricultural Products (L/6253), para. 5.4.1.4.
144. Panel Report, Japan - Trade in Semi-Conductors, BISD 35S/116, adopted on 4 May 1988, paras 106 ff.
145. Panel Report, Japan - Semi-Conductors, para. 117.
146. Panel Report, EEC - Dessert Apples, para. 12.8.
147. Panel Report, EEC - Regulation on Imports of Parts and Components, L/6657-BISD 37S/132, adopted on 16 May 1990 (EEC - Parts and Components), para. 5.21; confirmed by Panel Report, European Communities - Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/R, adopted on 25 September 1997 (EC - Bananas III), paras 7.179-7.180.
148. See also Panel Report, Japan - Measures Affecting Consumer Photographic Film and Paper, WT/DS44/R, adopted 22 April 1998, para. 10.49; for an analysis of this case and preceding GATT jurisprudence, cf. also S.M. Villalpando, Attribution of Conduct to the State. How the Rules of State Responsibility may be Applied within the WTO Dispute Settlement System, Journal of International Economic Law (2002), 393-420.
149. Article XXVIII(a).
150. Cf. also Zdouc, as note 68 above, 387.
151. Cf. section II above.
152. Cf. preceding section.
153. Cf. ibid.
154. Cf. Article 1:1 and Article I:3(a) of the GATS.
155. Cf. e.g., Alexy, as note 114 above, p. 149 ff. with further references.
156. Article I:3(a); on this cf section III.A. above.
157. On the concept of non-violation complaints, cf., e.g., M. Matsushita, T.J. Schoenbaum and P.C. Mavroidis, The Word Trade Organization (2nd edn, Oxford: Oxford University Press, 2006), p. 144 ff.
158. Cf. section III.A. above.
159. For example, in that it incurs competitive benefits for such domestic payment institutions vis à vis other foreign payment providers.
160. In this regard, it has to be recalled that the PSD merely governs payment services within the EC. This distinguishes the PSD from other SEPA instruments, which include also Iceland, Liechtenstein, Norway and Switzerland. If such a provision were to be extended to countries outside the EC (e.g., to the European Economic Area or to Switzerland, which is merely associated to the EC by means of a set of bilateral agreements), the inquiry under Article V of the GATS would be more complex.
161. Cf. WTO Appellate Body Report, Turkey - Restrictions on Imports of Textile and Clothing Products, WT/DS34/AB/R, 22 October 1999, paras 43 ff.
162. A concern in point in the present context could, e.g., stem from the fact that payment institutions, as defined in the PSD, are also entitled to provide ancillary services such as ensuring the execution of payment transactions, foreign exchange services, safekeeping activities, and storage and processing of data. In addition, they are permitted to access and operate payment systems (cf. Article 10(1) of the PSD proposal). Theoretically, and to illustrate the possible incidence of the GATS on domestic regulation, it could be questioned whether such "ancillary advantages" - if they are not extended to service suppliers of foreign origin - are "necessary" in the sense of this jurisprudence. For an analysis of such and similar issues. Cf. also L. Bartels, The Legality of the EC's Mutual Recognition Clause under WTO Law, 8 Journal of International Economic Law (2005), 691-720.
163. Cf. Article 5.4 Credit Transfer Rulebook and Article 5.4 Direct Debit Rulebook.
164. Cf. Article C. 1 of the Understanding on Commitments in Financial Services.
165. Cf. Article 2 of the GATS Annex on Financial Services.
166. Cf. Article B. 10(d) of the GATS Annex on Financial Services.
167. Cf. Article 5.4 Credit Transfer Rulebook and Article 5.4 Direct Debit Rulebook; similarly, Article 3.2.2(a) of the SEPA Cards Framework provides for the recognition of banking supervision in other SEPA countries.
168. Cf. the introductory paragraphs of the Understanding on Conunitments in Financial Services.
169. See section III.D. above.
170. Cf. Article 5.4 Credit Transfer Rulebook and Article 5.4 Direct Debit Rulebook.
171. GATS Article XIV(c).
172. Cf. Article 5.4 Credit Transfer Rulebook and Article 5.4 Direct Debit Rulebook.
173. Cf. Article 5.3 Credit Transfer Rulebook and Article 5.3 Direct Debit Rulebook.
174. Cf. e.g., Article 2.3 of the SEPA Framework for clearing and settlement mechanisms.
175. As explained above, this would not per se provide a shield against challenges under the GATS, given that there are obvious implicit linkages also between the Frameworks and Rulebooks on the one side and the EC Payment Services Directive on the other side. Since the latter clearly constitutes a "state measure" in the sense of the GATS, the Frameworks and Rulebooks may, indirectly, have to be attributed to the EC and its Member States as well.
176. Cf. section IV.A. above.
177. Cf. GATS Article IX, which merely gives affected WTO Members the right to request consultations.