Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Canadian Businesses Who Trade Services with the EU May Have A Right To Compensatory Relief

PLEASE READ CAREFULLY AS THERE MAY BE AN OPPORTUNITY TO RECEIVE COMPENSATORY RELIEF (THIS DOES NOT MEAN A PAYMENT OF MONEY)

The deadline for submitting views is January 4, 2008.

In the December 8, 2007 issue of the Canada Gazette Part I, the Department of Foreign Affairs and International Trade issued an invitation to submit views of the market access implications for Canadian trade in services with the EU. 

The problem/opportunity relates to the recent accession of Bulgaria and Romania to the EU.  The European Union notified the WTO with its intention to withdraw or modify some of the obligations in its schedules to the General Agreement on Trade in Services (GATS).  Specifically, the EU is seeking to withdraw or modify the pre-EU-accession commitments made by Bulgaria and Romania to WTO Members.  Some of the areas which are being modified include new limitations related to public utilities, subsidiaries, branches, agencies, representative offices and subsidies.

The GATS and WTO Agreements do not allow a WTO Member to withdraw or modify their existing commitments in a way that would have a negative effect on other WTO Members or suppliers from other WTO Members.  However, when a WTO Member withdraws or modifies its commitments, other WTO Members may seek compensatory trade concessions if they are adversely affected by such a modification or withdrawal. 

An example of a compensatory trade concession would be that if a WTO Member withdraws trade concessions for trade in tourism services, Canada would make a similar withdrawal.  The relief would be that competitors are removed from the Canadian marketplace creating an opportunity for Canadian tourism businesses to fill the void.  Compensatory relief is not always so easy because trade flows are not always equal.  As a result, the Canadian industry that suffers as the result of the withdrawal of market access may not directly benefit from Canada's retaliatory action.  Sometimes, Canada may withdraw a different category of services in its GATS commitments (only in respect of trade with the offending WTO Member and not all WTO Members) to the benefit of a totally different service industry.  However, since the party withdrawing the GATS trade concession is the EU and the EU is comprised of many countries, there is a potential for reciprocal trade flows and retaliation in connection with the service industry at issue.

The Government of Canada needs to know who will be negatively affected by the EU request to withdraw or modify GATS trade concessions.  In order to determine the magnitude of the negative effect of the changes, the Department of Foreign Affairs and International Trade is seeking input from Canadian companies who are actively exporting to, or who have investments in Bulgaria and Romania.

We would also recommend that companies that could benefit from retaliatory measures by the Government of Canada against the EU (not only Bulgaria and Romania) also contact the Government of Canada and to provide detailed submissions on the potential benefits.  If you do not ask, you cannot expect the Government of Canada to know about your relevant interests.

If you require assistance in presenting your views to the Government of Canada, please contact a Canadian trade lawyer or a government relations specialist.  What and how you communicate is important.

If you would like to read the Canada Gazette Notice, please click on Invitation to Submit Views.

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