RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG50/2/Add.3
WT/REG51/2/Add.3WT/REG52/2/Add.3
19 May 1999
(99-2018)
Committee on Regional Trade Agreements Original:  English
THE EUROPEAN COMMUNITES-HUNGARY EUROPE AGREEMENT,
SERVICES; THE EUROPEAN COMMUNITIES-POLAND
EUROPE AGREEMENT, SERVICES;  AND THE
EUROPEAN COMMUNITIES-SLOVAK REPUBLIC
EUROPE AGREEMENT, SERVICES
Joint Communication from the Parties
Addendum
This document reproduces additional questions addressed to the Parties and the joint
responses provided by them.
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1. Which sectors will still not be covered at the end of the transition  period? In
particular, what will be the status at the end of the transition period in the areas offinancial services, basic telecommunications and legal services? Are utilities excludedfrom the coverage of the Europe Agreem ents with Hungary, Poland and the Slovak
Republic?
In order to give a clear and synthetic view, the status of all sectors at the end of the transition
period are presented by mode of supply for Hungary, the Slovak Republic and Poland in the Annex to
this communication.
The services listed above will be covered by the Europe Agreements with Poland and the
Slovak Republic for all modes of supply. This will also be the case for Hungary with only one
exception for legal services in respect of establishm ent. The latter will be excluded at the end of the
transition period with the exception of business consultancy including relevant legal aspects which
will be included.
The utilities are not excluded as such from the scope of the Europe Agreements with
Hungary, Poland and the Slovak Republic. The pace of  liberalisation will naturally vary both between
utilities and across countries. It should be noted that there is already a significant and increasing
foreign presence in these services sectors in the form of direct investment.
2. What steps have the Association Councils taken for further liberalisation of the
excluded sectors, or of the sectors with a 10 years transitions period, since the entry into force ofthe Agreements? Are there any ongoing and advan ced discussions about the liberalisation of
any of those sectors?WT/REG50/2/Add.3
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The answer should deal specifically with basic telecommunications, financial services,
contractual services, foreign legal services and transport including maritime cabotage.
Initiatives have already been undertaken and negotiations have taken place between the parties
with a view to including certain transport services  (inland waterways, road transport notably), for
faster liberalisation of financial services, movement of natural persons, and basic telecommunications
or to conclude separate agreements (air transport).
3. What is the relationship between “in the exercise of government authority” (GATS
Article 1.3(b)) and the operation of entities wh ich would be covered by EC Treaty Article 55.
Article 55 of the EC treaty (Article 45 of the consolidated Amsterdam Treaty) stipulates that
“the provisions of this Chapter [on right of establishment] shall not apply, so far as any given Member
State is concerned, to activities which in that State are connected, even occasionally, with the exercise
of official authority.”
The Europe Agreements with Hungary, Poland and the Slovak Republic contain a similar
provision: “the liberalisation does not extend to activities which in the territory of each party are
connected, even occasionally, with the exercise of of ficial authority” (Article 53.2 for Hungary and
Poland, 54.2 for the Slovak Republic).
These provisions are similar with those of Ar ticle 1.3.(b) of GATS which excludes from its
scope services “supplied in the exercise of governmental authority.”
The interpretation of the provisions of the EC Treaty and of the Europe Agreements are the
competence of the European Court of Justice and of the dispute settlement procedures of the EuropeAgreements respectively (see Article 107 of the Agreement with Hungary and the Slovak Republic
and Article 105 of the Agreement with Poland). In this respect, there has been a number of instances
where the European Court of Justice has adopted jurisprudence on the basis of Article 55. In these
cases, the Court of Justice has taken a restrictive interpretation of the scope of Article 55.
More specifically, the Court of Justice ruled on 21 June 1974 in Case 2/74 Reyners v Belgium
(European Court Reports, 1974, p. 631, paragraph 45) that the derogation provided for in Article 55
must be restricted to activities which in themselves are directly and specifically connected with the
exercise of official authority and accordingly, concluded that the profession of lawyer (‘avocat’) in
Belgium does not fall under the scope of Article 55.
There are no examples in the European Court of Justice jurisprudence where the Court found
that an activity would fall under the scope of Arti cle 55.  The Court ruled, however, that the following
activities are not covered by Article 55:
− private security undertakings and private security staff in Spain (Judgment of the Court (Fifth
Chamber) of 29 October 1998. Commission of the European Communities v Kingdom of
Spain , Case C-114/97, European Court Reports 1998);
− activity as an intermediary between supply and demand in employment relationship in Italy
(Judgment of the Court (Sixth Chamber) of 11 December 1997, Job Centre coop. arl ., Case
C-55/96, European Court Reports 1997, page I-7119);WT/REG50/2/Add.3
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− the concession for the computerisation system for the Italian lottery (Judgment of the Court of
26 April 1994., Commission of the European Communities v Italian Republic, Case C-272/91,
European Court Reports 1994, page I-1409);
− the activities of approved commissioners with insurance undertakings and private provident
associations in Belgium (Judgment of the Court (Fifth Chamber) of 13 July 1993, Adrianus
Thijssen v Controledienst voor de verzekeringen , Case C-42/92, European Court
Reports 1993, page I-4047);
− the provision of business executives by personnel consultants in Germany (Judgment of the
Court (Sixth Chamber) of 23 April 1991, Klaus Höfner and Fritz Elser v Macrotron GmbH,
Case C-41/90, European Court Reports 1991 page I-1979);
− the activities of traffic accident experts in Greece (Judgment of the Court of 10 December
1991, Commission of the European Communities v Hellenic Republic, Case C-306/89,
European Court Reports 1991, page I-5863);
− the activities concerning the design, programming and operation of data-processing systems
for the public authorities in Italy (Judgment of the Court of 5 December 1989, Commission of
the European Communities v Italian Republic , Case C-3/88, European Court Reports 1989,
page 4035);
− the setting up of private schools in Greece (Judgment of the Court of 15 March 1988,
Commission of the European Communities v Hellenic Republic , Case 147/86, European Court
Reports 1988, page 1637).
In any case, it is the Community’s reading of GATS that the application of Article 55 could
not be used to deny GATS rights of third countries.WT/REG50/2/Add.3
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Liberalisation of services sectors between Hungary, Poland and the Slovak Republic
and the European Communities at the end of the transition period of the Europe Agreements
Sector (1)Modes 1 and 2
Cross border trade and
consumption abroadMode 3
Establishment (2)Mode 4
Movement of natural
persons (3)
Business services Covered Covered except in
Hungary for legal services
(except for business
consultancy involving
relevant legal aspects
which will be covered)Covered
Communication services Covered Covered Covered
Construction services Covered Covered Covered
Distribution services Covered Covered Covered
Educational services Covered Covered Covered
Environmental services Covered Covered Covered
Financial services Covered Covered Covered
Health services Covered Covered Covered
Tourism services Covered Covered Covered
Cultural services Covered Covered Covered
Transport services (3)International maritime
transport is covered.
The liberalisation of air
transport and inland
transport shall be dealt
with by separate
agreements.Covered except maritime
cabotage services and
inland waterway transport.Excluded
Other services Covered Covered except in
Hungary for services
connected with
agriculture, forestry,
fishing and their products
and organisation of
gambling, betting, lotteries
and other similar activities
which will be excluded.Covered
Note 1: The liberalisation does not extend to ac tivities which in the territory of each party are c onnected, even
occasionally, with the exercise of official authority. This is valid of all modes of supply and all services sectors.
The liberalisation for all modes of supply is applied s ubject to limitations justified on the grounds of public
policy, public security or public health
Note 2: The right to acquire, use, rent and sell real property, and as regards natural resources, agricultural land and
forestry, the right to lease, are fully liberalised provided they are directly necessary for the conduct of the
economic activities for which a Community company is established. The same rights should be granted to
Community nationals established as self employed persons at the latest by the end of the transitional period Thisright does not include establishment for the purpose of dealing and agency in the area of real estate and naturalpersons.
Note 3: See relevant Articles of the Europe Agreements for an exact description of the liberalisation for mode 4.
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