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US And EU Reach Agreement On Services

by Glen Shapiro,, New York

26 September 2006

US Trade Representative Susan C. Schwab on Monday announced that the United States and the European Union have reached an agreement on compensation for modifications to the EU’s World Trade Organisation services commitments.

According to the USTR, the agreement announced yesterday represents the "successful conclusion" of compensation negotiations with the European Union for modifications to their commitments, due to EU enlargement, under the General Agreement on Trade in Services (GATS).

The EU requested modifications to its commitments under the GATS resulting from the accession of the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Austria, Poland, Slovenia, the Slovak Republic, Finland, and Sweden to the European Communities.

Each of these countries had previously undertaken commitments individually under the GATS. In harmonizing their individual commitments with those of the EU as a whole, they had to modify their laws and regulations in a way inconsistent with prior commitments.

The United States worked closely with Brazil, Hong Kong, Japan, Canada and 12 other WTO Members to negotiate this compensation package with the EU, which provides new benefits to suppliers of services in the $8.6 trillion European services market.

"This agreement demonstrates the value of the multilateral process and how the U.S. and other WTO Members continue to work constructively together in that forum," observed Ambassador Schwab, continuing:

"This is the first time that any WTO Member has used the procedures for modifying GATS commitments. Over the last three years we have worked cooperatively with Canada, Hong Kong, Brazil, Japan, and the other 16 affected Members to make these untested, complex procedures work. We are pleased that this cooperative effort has produced a meaningful compensation package whereby the EU and its member states will offer new opportunities in financial services, engineering, computer services, advertising, and other service sectors."

The agreed compensation package contains new commitments on telecommunications that provide important clarity concerning the coverage of all basic and value-added telecommunication services. In addition, the compensation package provides new or enhanced commitments in several other sectors, including public utilities, engineering, computer, advertising, and financial services.

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