SSRN Id4141380

See discussions, stats, and author profiles for this publication at: https://www.researchgate.
net/publication/363008468
Market Access under the GATS – A Legal Commentary on Article XVI GATS
Article in SSRN Electronic Journal · January 2022

DOI: 10.2139/ssrn.4141380
CITATIONS READS
3 19
3 authors, including:
Panos Delimatsis
Tilburg University
139 PUBLICATIONS 668 CITATIONS
SEE PROFILE
All content following this page was uploaded by Panos Delimatsis on 05 June 2023.
The user has requested enhancement of the downloaded file.

TILEC
TILEC Discussion Paper

DP 2022-011
Market Access under the GATS – A Legal
Commentary on Article XVI GATS
By
Lillyana Daza Jaller, Panos Delimatsis and Martín
Molinuevo
June 03, 2022
ISSN 1572-4042
ISSN 2213-9419 https://ssrn.com/abstract=4141380
Electronic copy available at: https://ssrn.com/abstract=4141380

Market Access under the GATS – A Legal
Commentary on Article XVI GATS
LILLYANA DAZA JALLER, PANOS DELIMATSIS AND MARTÍN

MOLINUEVO ∗
ABSTRACT
Market access is the most important liberalizing principle in the
General Agreement on Trade in Services (GATS). It entails a
general prohibition of quantitative restrictions, which however is
conditional on commitments undertaken by Members in their
respective Schedules of Commitments. Case-law over the years,
notably the US – Gambling case, has shed light on various
aspects of this provision relating to its substantive scope and
limits. This paper critically reviews the various legal terms
included in the provision and their interpretation by various WTO
Panels as well as the Appellate Body. It also reveals the logic of
the provision and, based on this analysis, offers insights as to the
proper meaning of those aspects of the principle of market access
which have not been subject to a dispute as of yet, including its
relationship with other GATS provisions.
Keywords: market access; General Agreement to Trade in

Services (GATS); quantitative restrictions; non-discrimination;
scheduling approach; limitations
JEL codes: F02, F13, F15, F21, K20, K33, P45
∗
World Bank; Tilburg University; and World Bank, respectively.

A. GENERAL
The GATS aims to establish a legally binding set of commitments
to enhancing predictability and transparency under the tenet of
progressive liberalization.1 The main tools of liberalization of
the GATS, that is, Art. XVI on market access and Art. XVII on
national treatment, are to be found in Part III of the Agreement,
entitled “Specific Commitments”. The raison d’être of Part III of
the GATS was to capture a wide range of trade barriers to trade
in services and establish a mechanism for scheduling specific
commitments on them.2 Part III of the GATS does so by setting
disciplines aimed to limit the use of certain quantitative
restrictions to the provision of services (Art. XVI) and the
adoption or maintenance of discriminatory measures against
foreign service suppliers (Arts XVI and XVII). Additionally, Part
III allows Members to undertake commitments regarding other
types of restrictions that escape the scope of Arts XVI and XVII
- so called, Additional Commitments (Art. XVIII).
The market access obligation, like the national treatment
obligation, does not apply unconditionally. Rather, it applies only
to services sectors that are inscribed in the Members’ Schedules
of specific commitments and subject to the terms, limitations and
conditions set out therein.3 Furthermore, unlike national
treatment, “market access” is not a general concept under the
GATS. The measures covered by Art. XVI are a well-defined set
of quantitative restrictions as listed in Art. XVI:2 (a-f) that may
hamper the ability to perform or expand business in the market
1
See Rec. 2 GATS Preamble. The Panel in US—Gambling noted that
“[p]rogressive liberalization entails including more sectors in
Members’ schedules and reduction or elimination of limitations, terms,
conditions and qualifications on market access and national treatment
through successive rounds of negotiations”, see Panel Report, US—
Gambling, WT/DS285/R, para. 6.313; see also Delimatsis, Article XIX
GATS, paras 1, 5-7.
2
Committee on Specific Commitments, Additional Commitments
Under Article XVIII of the GATS, Note by the Secretariat,
S/CSC/W/34, 16 July 2002, para. 3.
3
In what follows, we use the term “limitations” as encompassing these
three types of measures. This is also in accordance with the list of
measures/limitations laid down in Art. XVI: 2 (a – f).

of a given WTO Member.4
As to the listing of commitments, the GATS adopts a so-called
“hybrid approach”, which combines elements of both positive
and negative listing.5 In Art. XVI, the market access obligation
is negatively defined in that it prohibits several types of
restrictions that hinder the supply of services in a given market.
At the same time, ensuring effective market openness to
international trade in services is arguably the overarching
objective of the GATS. All GATS substantive obligations aim to
achieve meaningful access to domestic services markets.
Granting national or MFN treatment and abiding by the GATS
transparency-related and other obligations should ultimately lead
to improved conditions of entry into and operation within the
Members’ markets.
The extent of liberalization is reflected in the number of services
sectors that are included in each Schedule in conjunction with the
restrictions listed therein. The content of the Schedules also
determines the scope of the market access and national treatment
obligations for each Member. As a result, the scope of these two
obligations varies from Member to Member, depending on each
Member’s schedule and the commitments undertaken therein.6
This is the fundamental application in the GATS of the
overarching objective of progressive liberalization when it comes
to trade in services, as each Member may liberalize services trade
on varying levels and at different speeds.
Whereas both Arts XI GATT and XVI GATS deal with trade
restrictions of quantitative nature, they could hardly be
considered analogous. Art. XI GATT is more comprehensive, as
it contains a per se prohibition regarding the use of quotas or
“other measures” resulting in a restriction or prohibition on the
importation or exportation of any product.7 Art. XVI, instead,
4
See below, paras 14-15 and Section II.
5
Daza Jaller & Molinuevo, Article XX GATS, paras 13, 23-33; see also
Delimatsis, JWT 40 (2006), 1059, 1062; Fink & Molinuevo, 12-13.
6
Delimatsis, JWT 40 (2006), 1059, 1062.
7
Panel Report, India—Autos, WT/DS146/R, WT/DS175/R, paras
7.246-7.249.

can be regarded as a requirement to schedule market access
limitations. In this respect, the spirit of Art. XVI arguably is
closer to Art. II GATT on schedules of tariff concessions. At the
same time, Art. XVI covers both discriminatory and origin-
neutral quantitative limitations and, in this sense, has a broader
scope than Art. XI GATT. For similar measures regulating trade
in goods, the GATT provides that Art. III GATT should
preferably be applicable, by virtue of the Ad Note to Art. III
GATT.8
The GATS negotiating history reveals that Members construed
market access under GATS as extending beyond any notion of
access for foreign service suppliers (tariff bindings in GATT) to
encompass all policies, mostly of a quantitative nature, that
restrict market access; and this even in a non-discriminatory
manner.9 Having said this, Art. XVI:2 (e) is not a quantitative
restriction, as it refers to the form of legal entity, whereas Art.
XVI:2 (f) relates to foreign equity participation and, thus, is a
discriminatory quantitative limitation. The measures that require
the creation of a joint venture are also discriminatory, as this type
of establishment typically involves cooperation between a
domestic and a foreign company.
The introduction of a market access obligation predominantly
dealing with quantitative restrictions in the GATS was deemed
necessary because, contrary to those to trade in goods, barriers to
trade in services typically display quota characteristics.10 Tariff
barriers to trade in services are rare due to the services’ intangible
nature. As services escape any physical control at borders,
8
Mavroidis, Commentary, 46.
9
See, inter alia, Group of Negotiations on Services, Uruguay Round,
Note on the Meeting of 27 May to 6 June 1991, MTN.GNS/42, 24 June
1991, 1-3; Group of Negotiations on Services, Uruguay Round, Note
on the Meeting of 24-28 June 1991, MTN.GNS/43, 15 July 1991, paras
34-36; Group of Negotiations on Services, Uruguay Round, Note on
the Meeting of 10-25 July 1991, MTN.GNS/44, 28 August 1991, para.
45; also Group of Negotiations on Services, Uruguay Round,
Scheduling of Initial Commitments in Trade in Services, Explanatory
Note, MTN.GNS/W/164, 3 September 1993, para. 4. For a different
view, see Mavroidis, WTR 6 (2007), 1, 9.
10
See Francois & Wooton, Eur. J. Pol. Econ. 17 (2001), 389, 395.

governments extensively use quantitative restrictions or, more
generally, non-tariff barriers to regulate their domestic markets.
B. GRANTING MARKET ACCESS AS PROVIDED FOR IN A

MEMBER’S SCHEDULE (ART. XVI:1)
Art. XVI:1 entails a general prohibition on according less
favourable treatment to foreign services and service suppliers
than that provided for in a Member’s Schedule. That prohibition
extends to the treatment afforded to services suppliers of any
Member, in a non- discriminatory manner.11 While the level of
market access cannot be lower than that inscribed in the
Schedule, Members remain free unilaterally to adopt measures
that entail a higher degree of liberalization.12 In this sense,
specific commitments resemble tariff bindings under the GATT,
which do not necessarily reflect the rates actually applied. The
latter can be more liberal (lower) that the tariffs bound at the
multilateral level. Thus, despite being commonly expressed in
terms of maximum quantitative restrictions, WTO Members’
entries in their Schedules should be considered minimum market
access guarantees for foreign services suppliers on which each
WTO Member may unilaterally expand.13 Such guarantees,
therefore, do not reveal the actual levels of protection, thereby
reducing the significance of the Schedules.
In US—Gambling, the Appellate Body expressed the view that
Art. XVI:1 points to the link that exists between Members’
market access obligation in committed sectors, on the one hand,
and the “terms, limitations and conditions” inscribed in their
respective Schedules, on the other.14 In other words, the market
access obligation is subordinated to, and qualified by, the
relevant “terms, limitations and conditions” inscribed in
11
In the view of the US—Gambling Panel, Art. XVI:1 contains a specific
expression of the MFN principle of Art. II, see Panel Report, US—
Gambling, WT/DS285/R, paras 6.263-6.265.
12
Ibid., paras 6.263-6.264.
13
Mattoo, JWT 31 (1997) 1, 107, 110.
14 See Appellate Body Report, US—Gambling, WT/DS285/AB/R, para.
214.

Members’ Schedules.15 The use of the phrase “terms, limitations
and conditions” aims to make it clear that Members wished to
establish a broad market access obligation, so that Members feel
compelled to schedule any type of measures that may fall within
the categories listed in Art. XVI:2.16 In other words, Members’
Schedules specify the trade-restrictive measures that Members
wish to maintain with regard to the market access obligation. The
terms “agreed and specified” featured in Art. XVI:1 allude to the
fact that, while Schedules reflect the commitments made by one
Member, the Schedules represent a common agreement among
the entire WTO membership.17
Following the Appellate Body guidance in US—Gambling
regarding the appropriate standard of review,18 in China—
Publications and Audiovisual Products, the Panel clarified that
the analysis requires first defining the services at issue and then
determining whether they fall within the scope of market access
commitments undertaken in the country’s Schedule. If so, the
Panel must then examine the “terms, limitations and conditions”
specified in the schedule with respect to those commitments.19
Members may not adopt or maintain measures that provide
service suppliers with less favourable treatment than that
specified in the market access column of each Member’s
Schedule. Hence, when it comes to the appropriate standard of
15
Compare Appellate Body Report, Canada—Dairy, WT/DS103/AB/R,
WT/DS113/AB/R, para. 134 (referring to Art. II:1 (b) GATT 1994).
16
In US—Gambling, the Panel noted that the words “terms” and
“conditions”, which are also used in Art. XX:1, relate to the “measures”
to which Art. XVI:2 (e) and the chapeau of Art. XVI:2 refer, see Panel
Report, US—Gambling, WT/DS285/R, para. 6.294; it can be argued,
however, that there is no textual or contextual element that may lead to
this interpretation. Art. XX:1 simply replicates the wording of Art.
XVI:1 which also refers to “terms, limitations and conditions”; on this
issue, see also Daza Jaller & Molinuevo, Article XX GATS, para. 11.
17
See Appellate Body Report, EC—Computer Equipment,
WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R, para. 109.
18
See Appellate Body Report, US—Gambling, WT/DS285/AB/R, para.
143.
19
Panel Report, China—Publications and Audiovisual Products,
WT/DS363/R, paras 7.1316 and 7.1354.

review, a Panel’s task is to juxtapose this minimum treatment set
out in the specific market access commitments in each Member’s
Schedule with the actual treatment that a Member offers when
market access is sought to determine whether the “no less
favourable” treatment standard of Art. XVI:1 was violated.20
Art. XVI:1 refers to market access that is sought through the four
modes of supply as set out in Art. I:2, that is, cross-border supply;
consumption abroad; commercial presence; and presence of
natural persons.21 These four modes correspond to the scope of
the GATS.22 In this sense, Members are required to undertake
specific commitments under the market access and national
treatment columns of their Schedules by reference to a services
sector or subsector and a mode of supply.23
Finally, footnote 8 to Art. XVI:1 aims to protect the movements
of capital resulting from the supply of services in a cross-border
manner (mode 1) or through commercial presence (mode 3),
provided that a Member made a commitment on market access
with respect to these two modes of supply.24 In the first case, a
Member is obligated to allow the ensuing capital movement if the
latter forms an essential part of the service supplied cross-border.
Any capital movement in the absence of which the service cannot
be supplied, such as, for instance, the ability to make outward
transfers of funds to benefit from commitments with regard to the
cross-border supply of deposit services, should be considered
“essential”. The drafting of footnote 8, sentence 1 confirms that
the capital movements covered are only those inherently linked
with the service itself and do not extend to other types of related
transfers, such as payments. The term “cross-border movement
of capital” should be regarded as covering both inward and
outward movements of capital. However, the obligation to allow
movement of capital pertaining to commercial presence suggests
20
See Panel Report, US—Gambling, WT/DS285/R, para. 6.263.
21
See Collins, Article I GATS, paras 37 et seq.
22
See Council for Trade in Services, Trade in Services, Guidelines for
the Scheduling of Specific Commitments Under the GATS, Adopted
on 23 March 2001, S/L/92, 28 March 2001, para. 26.
23
Daza Jaller & Molinuevo, Article XX GATS, paras 19-20.
24
See Siegel, AJIL 96 (2002), 561, 598.

that Members are required to allow transfers into their territory.
A plain reading of footnote 8, sentence 2 (“[...] allow related
transfers of capital into its territory”)25 suggests that repatriation
of capital does not come within the purview of footnote 8. In any
event, the obligation enshrined in footnote 8 to Art. XVI:1 is to
be read in conjunction with Art. XI and the relevant reference to
the Members’ rights and obligations under the IMF agreement.26
Through the insertion of this interpretative note, and the
disciplines of Art. XI, Members wished to make explicit their
willingness to allow transfer of funds that can be indispensable
for the supply of services by means of modes 1 and 3.
Conversely, movements of capital associated with the supply of
a service by means of mode 2 or 4 are not covered by footnote 8,
thus allowing Members to maintain limitations on fund transfers
with regard to these modes of supply.27 In practice, international
transfers will not be large in the latter two modes of supply.
Rather, transfers of funds will be more significant when they
relate to modes 1 and 3. In any event, a Member is allowed to
inscribe in its Schedule a restriction regarding the related capital
movement for services in committed sectors, as long as such
restrictions do not flout the disciplines of Art. XI.
C. OUTLAWING RECOURSE TO SIX TYPES OF LIMITATIONS

(ART. XVI:2)
Art. XVI:2 consists of a list of six different types of limitations
on market access. These restrictions may limit: (a) the number of
service suppliers; (b) the total value of services transactions or
assets; (c) the total number of service operations or the total
quantity of service output; (d) the total number of natural persons
who may be employed in a certain service sector; (e) the forms
of legal entity or joint venture through which a service can be
supplied; and/or (f) the participation of foreign capital. Except for
25
Emphasis added.
26
Lang, Article XI GATS, para. 12.
27
Lang, Article XI GATS, para. 36.

(e), the limitations set out in this paragraph are quantitative in
nature and provide for maximum limitations. Non-quantitative
measures (except for those covered under Art. XVI:2 (e) and
measures that set minimum requirements, rather than maximum
limitations, fall outside the scope of Art. XVI. This latter is also
corroborated by the use of the term “total” in Art. XVI:2 (b, c, d,
and f) or the use of the term “maximum” under Art. XVI:2 (f).28
These limitations exhaust the types of market access restrictions
prohibited by Art. XVI:1 and cannot be maintained or adopted
unless a Member inscribes them in its Schedule under the market
access column.29 Regardless of whether or not they are
discriminatory, all market access limitations are to be inscribed
in the market access column pursuant to the scheduling
convention of Art. XX:2. In Mexico—Telecoms, the Panel dealt
with a limitation in which Mexico was introducing a qualification
as to when commercial presence would be allowed. The Panel
implicitly confirmed the exhaustive nature of the list of Art.
XVI:2 by ruling that temporal limitations, such as dates for entry
into force or for the implementation of commitments, do not
constitute market access limitations within the meaning of Art.
XVI:2.30
I. The Chapeau of Art. XVI:2

The chapeau of Art. XVI:2 clarifies that the per se prohibition of
market access limitations does not apply across the board, but
only to scheduled sectors. Thus, the chapeau, like Art. XVI:1,
28
On the other hand, the absence of the term “total” in Art. XVI:2 (a)
should not be taken to mean that this provision does not cover
maximum limitations. The Scheduling Guidelines lead to the same
conclusion. See Council for Trade in Services, Trade in Services,
Guidelines for the Scheduling of Specific Commitments Under the
GATS, Adopted on 23 March 2001, S/L/92, 28 March 2001, para. 11.
29
Group of Negotiations on Services, Uruguay Round, Scheduling of
Initial Commitments in Trade in Services, Explanatory Note,
MTN.GNS/W/164, 3 September 1993, para. 4; Panel Report, US—
Gambling, WT/DS285/R, para. 6.298.
30
Panel Report, Mexico—Telecoms, WT/DS204/R, paras 7.357-7.358,
7.361-7.362.

points to the conditional nature of the market access obligation.
This provision prohibits the maintenance or adoption of certain
measures. Under Art. XXVIII (a), the term “measure” is defined
in an all-encompassing manner to cover any measure by a
Member, regardless of the legal form that it may take. It can be,
inter alia, a law, regulation, rule, procedure, decision,
administrative action, but also provisions relative to professional
qualifications or licensing adopted by professional bodies with
delegated power or, more generally, actions by non-
governmental actors that are attributable to a Member’s
government.31 To the extent that any of these measures falls
under one of the limitations itemized by Art. XVI:2 and applies
to a committed sector, they need to be scheduled. The text of the
chapeau of Art. XVI:2 confirms that the list of prohibited
measures is exhaustive and not merely indicative by stating that
“the measures which a Member shall not maintain or adopt [...]
are defined as” the measures described by (a-f).32
Ratione temporis, Art. XVI applies not only to measures that
were adopted after the entry into force of the GATS but also to
pre-existing measures that are maintained after the entry into
force of the agreement.
Finally, the per se prohibition covers measures that may be
adopted or maintained at all levels of government. This reference
in the chapeau to the coverage of Art. XVI seems superfluous,
since Art. I:3 (a) already makes it clear that the GATS covers
measures taken at lower levels of government. A Member,
however, has the right to specify otherwise in its Schedule, and
thus limit the territorial applicability of Art. XVI. For instance, a
Member could commit itself to granting market access to foreign
telecommunication service suppliers only in underserved regions
of its territory to promote the development of the infrastructures
of these regions, or certain sub-federal governments may limit
the number of banks established in their region. In any case, the
provision aims to ensure that a measure may be subject to Art.
31
Delimatsis, Trade in Services, 22.
32
WT/DS363/R, para. 7.1353.
10

XVI obligations also in cases where it is applicable or enforced
in only a part of that Member’s territory.33
II. The Six Limitations Identified in Art. XVI:2

1. The Substantive Scope of Art. XVI:2
The main text of Art. XVI:2 defines the types of limitations and
measures that must be eliminated, unless otherwise specified in a
given Member’s Schedule. Art. XVI:2 informs Members of the
manner in which they should inscribe such limitations in their
Schedules.34 For instance, under Art. XVI:2 (a), a Member can
limit the total number of service suppliers through the use of
numerical quotas, monopolies, exclusive service suppliers, or the
requirement of an economic needs test.35
More generally, the restrictions of Art. XVI:2 (a-d) relate to
numbers or, else, are quantitative limitations. Other than being
expressed numerically, these limitations can also be articulated
through the criteria identified in Art. XVI:2 (a-d);36 that is, a
Member can use numerical quotas, monopolies, exclusive service
suppliers, or economic needs tests to limit market access.37
However, as the Appellate Body confirmed in US—Gambling,
the thrust of Art. XVI:2 (a) (and, by implication, of Art. XVI:2
(b-d) is not about the form of limitations “but on their numerical,
or quantitative nature”.38 Put differently, it is not the form of the
measure that will determine the applicability of any of the Art.
XVI:2 subparagraphs, but rather its quantitative nature,
33
Panel Report, China—Electronic Payment Services, WT/DS413/R,
para. 7.611.
34
Panel Report, US—Gambling, WT/DS285/R, para. 6.293.
35
See Appellate Body Report, US—Gambling, WT/DS285/AB/R, paras
231-232.
36
Council for Trade in Services, Trade in Services, Guidelines for the
Scheduling of Specific Commitments Under the GATS, Adopted on 23
March 2001, S/L/92, 28 March 2001, para. 8; also compare Appellate
Body Report, US—Gambling, WT/DS285/AB/R, para. 225.
37
See below, para. 51.
38
232 (emphasis added); as to Art. XVI:2 (c), the Appellate Body reached
a similar conclusion, ibid., para. 247.
11

irrespective of whether this nature is expressed in numerical
terms or otherwise.39
In addition, while Art. XVI:2 describes the limitations that are
prohibited unless otherwise specified in a Member’s Schedule, it
does not contain any indication regarding the means that should
be used to supply a service. The US—Gambling ruling confirmed
that, when a Member undertakes a full market access
commitment for a given service under one mode of supply, it
cannot maintain or adopt measures that prohibit the use of one,
several, or all means of supply of that service in that mode unless
it explicitly states so in its Schedule .40 This interpretation is also
in accordance with the concept of technical neutrality that is one
of the inherent characteristics of GATS.41 By the same token, a
Member that inscribes a market access commitment in a sector
or subsector commits itself with respect to all services included
in that sector or subsector.42
As noted earlier, the list of the six types of limitations is
exhaustive.43 In Argentina—Financial Services, the Panel
recalled that this list establishes “clearly, exactly and precisely”
the types of limitation on market access that are prohibited and
thus cannot be maintained or adopted in the inscribed sectors
unless mentioned in a WTO Member’s Schedule. The rationale
behind this obligation relates to the objective of transparency for
those Members that undertake commitments but also all the other
Members, thereby allowing for the clear and exact identification
of the scope of such limitations - and, a fortiori, the scope of the
inscribed specific commitment.44
39
Delimatsis, JWT 40 (2006), 1059, 1068.
40
41
See Wunsch-Vincent, WTR 5 (2006), 319, 332.
42
43
See above, para. 15; ibid., para. 6.298; see also Group of Negotiations
on Services, Uruguay Round, Scheduling of Initial Commitments in
Trade in Services, Explanatory Note, MTN.GNS/W/164, 3 September
1993, para. 4.
44
Panel Report, Argentina—Financial Services, WT/DS453/R, para.
7.418; see also Panel Report, EU—Energy Package, WT/DS476/R,
para. 7.648.
12

The Panel in Argentina—Financial Services agreed with
previous panels, noting that
even if it were conceivable that there might be some
other element distinct from the four identified in
subparagraphs (a) to (d), whose market access could
hypothetically be limited quantitatively, such an
element would not form part of the limitations
regulated by Article XVI:2 because it was not
identified by the drafters.45
The Panel further noted that the application of Art. XVI:2 to
quantitative measures not expressly covered by Art. XVI:2 (a-d)
would go beyond the scope of the Members’ market access
obligations under the GATS.
Viewed from this angle, a Member that does not maintain or
adopt in a services sector and mode of supply any of the six
categories of measures identified in Art. XVI (i.e. it inscribed
“None” in its Schedule) grants full market access in this sector
and mode of supply.46 However, it is questionable whether a
Member that provides “full market access” in the terms of Art.
XVI is obliged to open its market fully to foreign services
providers.47 In this sense, under the GATS, “market access” is a
legally defined concept that encompasses a limited set of
situations, described in Art. XVI, and is not to be equated with
common terms (such as entry, admission, establishment, etc.)
that imply the general ability to perform business activities in a
given market. Textual and contextual elements lead to the
conclusion that no obligation to provide for full market openness
exists. First, according to footnote 8 to Art. XVI, restrictions on
movements of capital with respect to modes 2 and 4 escape Art.
45
7.419.
46
MTN.GNS/W/164, 3 September 1993, para. 4; Council for Trade in
Services, Trade in Services, Guidelines for the Scheduling of Specific
Commitments Under the GATS, Adopted on 23 March 2001, S/L/92,
28 March 2001, para. 8.
47
Delimatsis, JWT 40 (2006), 1059, 1064-1065.
13

XVI. Secondly, and crucially, Art. XVIII also confirms that there
may be restrictions on the supply of services that are not subject
to scheduling under Arts XVI or XVII.48 Such an interpretation
would also appear to give full effect to the principle of
progressive liberalization and Members’ right to regulate.49
A handful of cases have addressed this matter. The US—
Gambling confirmed that a Member cannot maintain any of the
measures listed under Art. XVI:2 if it has made a full market
access commitment.50 Similarly, the Panel in Argentina—
Financial Services stated that where a Member inscribes the
word "None" in the "Limitations on market access" column, it
undertakes a “full specific commitment” with regard to that
service, which means that the Member “has undertaken not to
maintain any of the six measures included in any of the
subparagraphs of Article XVI:2”. 51 By the same token, in EU—
Energy Package, the Panel noted that although the GATS does
not define the word “None”, the presence of this word in the
market access column indicates a commitment not to maintain
any of the measures under Art. XVI:2.52 In that sense, the Panel
in China—Electronic Payments Services concluded that
“[u]nlike Article XVII […] the scope of the market access
obligation does not extend generally to ‘all measures affecting
the supply of services’. Instead, it applies to six carefully defined
categories of measures of a mainly quantitative nature”.53 These
interpretations confirm that a “full market access commitment”
does not automatically imply total market openness but only the
inconsistency with the GATS of the measures listed in Art.
XVI:2.
Finally, the potential delineation among the six subparagraphs
48
49
Ibid., paras 6.313-6.317.
50
See Panel Report, US—Gambling, WT/DS285/R, para. 6.318, and
Appellate Body Report, US—Gambling, WT/DS285/AB/R para. 215.
51
7.454.
52
Panel Report, EU—Energy Package, WT/DS476/R, para. 7.348.
53
para. 7.652.
14

was discussed more recently in Argentina—Financial Services.
In a clear obiter dictum, the Panel noted that, in interpreting each
of the subparagraphs of Art. XVI:2, a Panel should be mindful of
the possibility to deprive one subparagraph of its effectiveness
(or “effet utile”) by unduly broadening the scope of another
subparagraph. In the Panel’s view, such a maximalist approach
would lead to the absurd result of all limitations being regarded
as having the effect of indirectly limiting the number of suppliers,
thereby expanding the scope of Art. XVI:2 (a).54
2. Origin-Neutral Quantitative Restrictions Art. XVI:2 (a-d)
a) Limitations on the Number of Service Suppliers Art. XVI:2

(a)
The standard of review under Art. XVI:2 (a) requires two
elements to be assessed: first, whether the contested measure
limits the number of service suppliers and, second, whether this
measure takes one of the forms described under (a).55
“Service supplier” within the meaning of the GATS is defined
broadly to cover any person that supplies a service.56 In turn, this
person may be either a natural or a juridical person.57 A natural
person would typically reside in the territory of any WTO
Member (including the Member imposing the market access
limitation) and would either be a national of another WTO
Member or have the right of permanent residence in that
Member.58 A juridical person, on the other hand, is also defined
in a broad manner to encompass any legal entity duly constituted
or otherwise organized under applicable law, including any
54
7.420.
55
This second element is dealt with under paras 50 et seq.
56
Art. XXVIII (g); see also Panel Report, US—Gambling, WT/DS285/R,
para. 6.321.
57
Art. XXVIII (j).
58
See Art. XXVIII (k). This provision refers only to natural persons of
another Member. This definition will be used here so as also to include
natural persons of the Member imposing the market access limitations,
since Art. XVI covers both discriminatory and non-discriminatory
measures.
15

corporation, trust, partnership, joint venture, sole proprietorship,
or association.59 An interpretative note to Art. XXVIII (g) makes
it clear that, even in cases where the service is provided through
forms of commercial presence other than those described under
Art. XXVIII (l), such as a representative office or a branch, these
entities, and, a fortiori, the juridical person that established them,
should be treated as service suppliers under the GATS within the
territory where the service is supplied through the commercial
presence.60 In Argentina—Financial Services, the Panel drew a
distinction between measures that regulate services suppliers as
such and those that apply to operations which foreign service
suppliers may conduct with domestic companies.61 Based on
that distinction, it found that a measure that regulates the
conditions for certain types of insurance operations is not a
limitation on the number of service suppliers within the meaning
of Art. XVI:2 (a).
In US—Gambling, the WTO judiciary dealt with the question of
whether a complete ban (or a total prohibition) on the cross-
border supply of a service (in casu, gambling and betting
services) in respect of which a full market access commitment
was made should be regarded as a market access limitation falling
within Art. XVI:2 (a and c); and this even if this ban is not
explicitly expressed in numerical terms. The Panel implicitly
found, and the Appellate Body explicitly stated, that it is the
numerical or quantitative nature of a measure that the WTO
judiciary will focus on in order to classify this measure under Art.
XVI:2 (a).62 Consequently, both adjudicating bodies found that
a measure that totally prohibits the supply of certain services
effectively limits to zero the number of service suppliers. In the
view of the WTO judiciary, such a prohibition results in a “zero
59
Art. XXVIII:l; also Art. XXVIII (m and n).
60
Footnote 12 to Art. XXVIII (g).
61
7.428.
62
Panel Report, US—Gambling, WT/DS285/R, para. 6.330-6.332;
Appellate Body Report, US—Gambling, WT/DS285/AB/R, para. 232.
As noted earlier above, para. 21, this applies to all four quantitative
limitations under Art. XVI:2.
16

quota” and hence constitutes a market access limitation that takes
the form of a numerical quota, as zero is quantitative in nature
and, thus, numerical.63 A narrower interpretation, like the one
suggested by the United States, gave more relevance to the
wording “in the form of” found in Art. XVI:2 (a-d)” and
advocated that only measures formally expressed in numerical
terms would be covered by the prohibition on quotas.64 In the
Panel’s view, this interpretation would lead to absurd results.65
To reach this conclusion, both the Panel and the Appellate Body
turned to the 1993 Scheduling Guidelines to confirm the view
that a measure amounting to a zero quota falls within Art. XVI:2
(a).66 In particular, the Panel drew on the example provided by
the 1993 Scheduling Guidelines - “nationality requirements for
suppliers of services (equivalent to zero quota)”67 - to conclude
that “a measure that is not expressed in the form of a numerical
quota or economic needs test may still fall within the scope of
Article XVI:2(a)”.68
63
Appellate Body Report, US—Gambling, WT/DS285/AB/R, para. 227;
see also Panel Report, Mexico—Telecoms, WT/DS204/R, para. 7.85.
While it cannot be contested that a prohibition leads, by definition, to
a limitation of the number of service suppliers equal to zero – a quantity
–, one could challenge the view that a prohibition can ipso facto be
assumed to constitute a measure of a “quantitative nature”. The
rationale behind a non-discriminatory ban on a given business
operation would commonly be found in certain qualitative elements of
that activity that, in the view of the regulator, make it undesirable in
that market, in any quantity whatsoever. In plain terms, the question
“how much of X is desirable” assumes that X is not inherently
undesirable and aims at finding its right amount; the question “whether
X is desirable” would entail instead an examination of its qualitative
characteristics.
64
65
Panel Report, US—Gambling, WT/DS285/R, para. 6.332; the
Appellate Body backed this finding, see Appellate Body Report, US—
Gambling, WT/DS285/AB/R, para. 250.
66
Panel Report, US—Gambling, WT/DS285/R, para. 6.332; Appellate
Body Report, US—Gambling, WT/DS285/AB/R, para. 237.
67
MTN.GNS/W/164, 3 September 1993, para. 6 (a).
68
Panel Report, US—Gambling, WT/DS285/R, para. 6.332 (emphasis
17

This controversial question has been addressed by a few
subsequent cases, which one could interpret as an attempt to
narrow down the interpretation of Art. XVI:2 (a) offered in US—
Gambling. Following the guidance by the Appellate Body in
US—Gambling, the Panel in China—Electronic Payment
Services focused its analysis on whether the measures at issue
constituted a limitation that is “numerical or quantitative in
nature” and therefore “limit[ed] the supply of a service as a quota
would do”; in so doing, the Panel proceeded to examine whether
the measures at issue “limit to one, or a small number” the service
suppliers.69 While the matter before the Panel in China—
Electronic Payment Services concerned the existence of a
monopoly, rather than a complete ban, the Panel’s attention on
whether the measure limited to “one, or a small number” the
service suppliers could be taken to suggest that a “complete ban”
would be beyond the scope of the provision.
This reading would also be in line with the Panel’s suggestions
that the measure should be quantitative in nature and limit the
number of services suppliers “as a quota would do”, as quotas
tend to feature positive values. At the same time, one should also
note that in this case, the Panel was reviewing the existence of a
quantitative limitation in the form of monopolies or exclusive
service suppliers, whereas in US—Gambling at stake was the
existence of a limitation in the form of numerical quotas. Thus,
in the former case, the quest for the existence of a limitation that
benefits one or a small number of suppliers appears to be
justified.
added). It bears noting that the Appellate Body had earlier reversed the
Panel’s finding that these Guidelines constitute context pursuant to Art.
31 VCLT and, instead, found that the Scheduling Guidelines should be
regarded as supplementary means of interpretation within the meaning
of Art. 32 VCLT. Nevertheless, the Appellate Body relied on the
Scheduling Guidelines, just as the Panel did, to validate the
interpretation that it advanced under Art. XVI. On the interpretative
value of the scheduling guidelines, see Ortino, JIEL 9 (2006), 117-148;
see also Mavroidis, WTR 6 (2007), 1, 7.
69
paras 7.592-7.593 (emphasis added); similarly, Panel Report, EU—
Energy Package, WT/DS476/R, para. 7.598-7.600.
18

In Argentina—Financial Services, the Panel, as noted earlier,70
opted for a narrow reading of all subparagraphs of Art. XVI:2
that would clarify the limits between the various subparagraphs.
Importantly, for our purposes, the Panel had to review whether
Argentina introduced an economic test that limited the total
number of reinsurance service suppliers in violation of Art.
XVI:2 (a). Argentina’s laws appeared to allow the conclusion of
reinsurance contracts with foreign entities only if they exceeded
$50 million, and only for the excess amount in contravention of
Argentina’s inscribed commitment granting full market access
for the cross-border supply of reinsurance and retrocession
services (Mode 1). In reviewing the measure, the Panel noted that
the measure does not specifically refer to the suppliers as such
but rather to reinsurance operations that reinsurers established in
other countries may undertake with Argentine insurance
companies. For that reason, the Panel dismissed Panama’s claim
that the measure at issue violate Art. XVI:2 (a).
To reach this conclusion, the Panel followed its previous finding
that for a measure to fall under subparagraph (a), it must
specifically regulate any natural or legal person supplying
services as such. However, the Panel did not exclude a violation
of subparagraph (c), which in any case Panama did not bring
forward. In adopting this narrow interpretation, the Panel
emphasized that it took issue with the alleged finding by the
Panel in US—Gambling that a measure which referred expressly
to service suppliers also regulated service operations because it
effectively prohibited the supply of betting or wagering
services.71 However, the Argentina—Financial Services Panel
appears to miss the point here. A careful reading of the Panel
report in US—Gambling reveals that the Panel did not suggest
that the same measure can on its face fall under one of the
subparagraphs and also violate in effect another subparagraph.
Rather, what the Panel clearly found was that a measure can
simultaneously violate more than one paragraphs of Art. XVI:2.
This is a logical finding that does not unduly trespass the
70
See above, paras 26 et seq.
71
Panel Report, Argentina—Financial Services, WT/DS453/R, fn. 584.
19

boundaries between the different types of measures covered by
Art. XVI:2. On the contrary, it ensures that such boundaries are
adhered to by suggesting that a measure can be sufficiently
complex to constitute a limitation on the number of suppliers and
also a limitation on the number of operations.72
Based on the previous analysis, it becomes clear that various
interpretive questions remain open with regard to the delineation
among the various limitations identified in Art. XVI:2 but also
with regard to the constituent elements of each one of those
limitations set out in the six subparagraphs of Art. XVI:2. The
fact that the appellate review often does not scrutinize all Panel
findings prolongs this interpretive ambiguity. For instance, non-
contextual analysis of the case-law in the aftermath of the US—
Gambling Appellate Body report could lead to a conclusion that
total prohibitions may no longer be covered by Art. XVI:2 (a).
The Panel in EU—Energy Package, relying on previous
Appellate Body and panel reports, placed the burden of proof on
the Complainant to prove that a measure limits the number of
service suppliers to one or a small number.73 The Panel set a
high standard of proof in this regard, focusing on the quantitative
nature of the restriction. Following the Panel’s reasoning, it is
unlikely that a complainant will be able to establish that a
measure that does not impose a de jure limitation in the form of
a monopoly or exclusive service supplier has a restrictive effect
in practice.74 At the same time, a cursory look at the China—
Electronic Payment Services Panel report discussing the “Hong
Kong and Macao requirements” (that is, that Chinese Union Pay
could only handle the processing of transactions in Hong Kong
and Macao) would suggest that, whereas heightened, the burden
of proof is not impossible to meet; rather, a complainant would
need to prove the restrictive effect of a specific legislative
instrument on the service supply of other (foreign) service
suppliers wishing to offer the service at issue in a committed
72
Panel Report, US—Gambling, WT/DS285/R, paras 6.360-6.365.
73
Panel Report, EU—Energy Package, WT/DS476/R, para 7.600.
74
Hoekman & Meagher, WTR 13 (2) 436.
20

sector.75
b) Limitations on the Total Value of Service Transactions or

Assets Art. XVI:2 (b)
Art. XVI:2 (b) prohibits the setting of ceilings to the total value
of service transactions or assets. As for the other quantitative
measures listed in Art. XVI:2 (a, c, and d), these restrictions
cannot be established in the form of numerical quotas or as the
requirement of an economic needs test.
Prohibiting restrictions on the value of services transactions,
albeit a rather infrequent measure, may be particularly relevant
in some specific service sectors, such as financial services. In this
context, measures that, for instance, limit the total value of
lending operations that foreign banks may grant expressed in a
monetary figure would be in violation of Art. XVI:2 (b), unless
otherwise scheduled and provided that they cannot be justified as
prudential measures.
Art. XVI:2 (b) also bans restrictions on the total value of assets
of services suppliers. The Scheduling Guidelines provide as an
example a measure that would limit foreign bank subsidiaries to
X percent of total domestic assets of all banks.76
The prohibition of (b) on restrictions to the value of services
transactions and assets, together with (c) on the number of
services operations and service output, ensures that service
suppliers are not restricted in their ability to conduct business
operations in sectors where commitments have been undertaken.
c) Limitations on the Total Number of Service Operations or

on the Total Quantity of Service Output Art. XVI:2 (c)
Art. XVI:2 (c) prohibits the adoption or maintenance of measures
that limit the total number of service operations or the total
75
See Panel Report, China—Electronic Payment Services,
WT/DS413/R, paras 7.620-7.624.
76
March 2001, S/L/92, 28 March 2001, para. 12.
21

quantity of service output, expressed in terms of designated
numerical units in the form of quotas or the requirement of an
economic needs test. The term “total” hints that this subparagraph
covers maximum limitations imposed on services operations
and/or service output.77 These limitations are quantitative.78
Service operations or service output are not defined in the GATS.
The US—Gambling Panel, however, offered an interpretation of
these two concepts.79 As to service operations, the Panel
contended that they mean activities comprised in the production
of a given service. Service output, on the other hand, was defined
as describing the result of the production of the service. The Panel
based this conclusion on the example that the 1993 Scheduling
Guidelines contain regarding Art. XVI:2 (c), that is, “restrictions
on broadcasting time available for foreign films”.80
As the definitions of the two concepts also imply, there is scope
for overlap between limitations on the total number of service
operations and limitations on the total quantity of service output.
The overall structure of this subparagraph also suggests that the
delineation between the elements used is not an easy task. In fact,
such delineation is not necessary, since all these elements
demonstrate Members’ willingness to ensure that certain types of
quantitative market access limitations would be caught by the
purview of this provision.81 The Panel’s analysis under this
subparagraph also hints at this. Indeed, when the Panel attempted
to categorize the federal and state laws at issue, it did not feel
compelled to decide whether the measures at hand limit the
number of service operations or the quantity of service output.82
Thus, the Panel’s finding that domestic laws that prohibit the
cross-border supply of a committed services sector or subsector
77
78
79
80
MTN.GNS/W/164, 3 September 1993, para. 6 (c.)
81
82
Panel Report, US—Gambling, WT/DS285/R, paras 6.355, 6.361, 6.369
and 6.376.
22

limit to zero the total number of service operations and/or the
total quantity of service output (zero quota) was upheld by the
Appellate Body. Consequently, both adjudicating bodies rejected
the respondent’s view that only limitations that contain express
reference to numbered units are subject to Art. XVI:2. The
Appellate Body held that: “[...] a prohibition on the supply of
services in respect of which a full market access obligation has
been undertaken is a quantitative limitation on the supply of such
services”.83 Thus, the Appellate Body explicitly condemned as
incompatible with Art. XVI the maintenance or adoption of
domestic measures establishing prohibitions in services sectors
where full market access commitments were made.
This finding can have far-reaching implications, as it does not
seem to be limited to prohibitions amounting to zero quotas.
Arguably, the underlying rationale of this interpretation is that a
Member should not be allowed to circumvent its market access
commitment by prohibiting the entry into its market either overall
(e.g. blanket ban) or with respect to specific means of supply (e.g.
ban on service supply through electronic means only).84
While any limitation on the number of service operations or on
the quantity of service output is prohibited, Members are free to
maintain or adopt measures that limit inputs for the supply of a
service. This is made clear in footnote 9 to Art. XVI:2 (c). The
concept of an “input for the supply of services” hints at a
segmented contribution to the production of the service that,
added to other elements/inputs, ultimately leads to the supply of
services.85
Historically, footnote 9 was conceived to allow Members to
regulate zoning and floor space.86 Additionally, it seems that
Members also wanted to make a clear separation between the
83
84
See Delimatsis, JWT 40 (2006), 1059, 1067.
85
In the view of some commentators, footnote 9 to Article XVI:2 (c)
allows Members to prevent the outsourcing of services, except where
outsourcing itself (through mode 1) has been expressly committed; see
on this, Mattoo & Wunsch, 14.
86
Ibid.
23

main service and services that are inputs to it,87 e.g. accounting
services as opposed to financial services, so that a Member that
made a liberalizing commitment under financial services would
not be obliged to extend this commitment to its accountancy
sector unless it had explicitly said so in its Schedule. On this
score, the 1993 and 2001 Scheduling Guidelines make it clear
that the existence of a market access and national treatment
commitment does not imply that the supplier of a committed
service is allowed to supply uncommitted services which are
inputs to the committed service.88 Thus, footnote 9 aims to
protect against unwanted liberalization.89 Even so, the
distinction between a service and the inputs of its supply may be
very difficult in practice.
d) Limitations on the Total Number of Natural Persons Art.

XVI:2 (d)
Art. XVI:2 (d) prohibits restrictions on the total number of
natural persons. While in principle the provision applies to all
modes of supply, it is addressed in particular to services provided
by means of modes 3 and 4. The provision applies to
discriminatory and non-discriminatory measures and, like the
other subparagraphs of Art. XVI:2, applies only to maximum
limitations. In this sense, a measure that requires that a
commercial presence employs at least a certain number of
nationals would arguably not infringe the disciplines of Art.
XVI:2 (d) and would not need to be scheduled under Art. XVI
since it would not limit the total number of natural persons.90
87
Ibid., 15.
88
MTN.GNS/W/164, 3 September 1993, para. 17; Council for Trade in
Services, Trade in Services, Guidelines for the Scheduling of Specific
Commitments Under the GATS, Adopted on 23 March 2001, S/L/92,
28 March 2001, para. 25.
89
Lapid, JWT 40 (2006), 341, 355.
90
However, measures requiring the employment of nationals, or
limitations on the employment of foreigners could eventually be
challenged as a national treatment violation.
24

Like other restrictions covered by Art. XVI (d) applies to
restrictions that take the form of numerical quotas or establish an
economic needs test. These types of restrictions are frequently
used with regard to the employment of foreigners. The 2001
Scheduling Guidelines list a limitation that reads “foreign labour
should not exceed x percent and/or wages xy percent of total” as
an example of a prohibited restriction on the total number of
natural persons.
Art. XVI:2 (d) clarifies that the prohibition affects restrictions on
the number of natural persons employed in a given service sector
or by a service supplier. Measures covered by this provision may
read: a) “full-time teachers employed by private education
institutions may be limited” or b) “beyond x employees,
employment in gambling casinos is subject to an economic needs
test”.
The scope of the prohibition is, however, restricted to those
measures that limit the number of natural persons necessary for,
or directly related to, the supply of a service. The text of the
provision suggests that a restriction on the number of natural
persons that does not directly relate to the provision of the service
would not be covered by (d). This relationship, however, could
be assessed only on a case-by-case basis.
3. Forms of Origin-Neutral Quantitative Restrictions
Art. XVI:2 (a-d) prohibits quantitative limitations, be they origin-
neutral or not. These limitations may take several forms. Quotas
and economic needs tests are common forms that the limitations
set out in Art. XVI: (a-d) may take. In addition, under Art. XVI:2
(a), limitations may take the form of monopolies or exclusive
service suppliers. The Appellate Body stated that these
limitations impart meaning to the phrase “in the form of” that
appears in (a-d), and not the other way around.91
Two elements bear mention: first, a plain reading of Art. XVI:2
(a-d) shows that the forms of limitations identified therein
comprise an exhaustive list. The Panel in US—Gambling
91
25

dismissed Antigua’s argument that the measures listed under Art.
XVI:2 (a), i.e. numerical quotas, monopolies, exclusive service
suppliers, or requirements of an economic needs test, are part of
an indicative list of measures that can limit the number of service
suppliers because of the use of the word “whether”. The Panel
suggested that this word alone cannot be construed as
automatically suggesting an illustrative list of the forms that
quantitative restrictions under (a) can take.92 Instead, the Panel
found that Art. XVI:2 (a) embodies an exhaustive list of forms of
such restrictions. Other forms of quantitative restrictions not
expressly listed under Art. XVI:2 (a-d) fall outside the scope of
the provision and need not to be scheduled. Second, in the view
of the WTO adjudicating bodies, the word “form” appears to
have a broad meaning.93
The Appellate Body considered that the phrase “in the form of”
should not be construed as prescribing a “rigid mechanical
formula”, nor could it be read to imply a single form or be
constrained in a “formulaic manner”.94 Notably, this latter
element seems to have been the yardstick that led the Appellate
Body to its conclusions with regard to Art. XVI:2 (a) and c.95 In
this respect, however, the Appellate Body cautioned that “this is
not to say that the words ‘in the form of’ should be ignored or
replaced by the words ‘that have the effect of’”.96 Still, the
Appellate Body left the door wide open for some flexibility when
interpreting the type of measures that the provision identifies,
notably when it found that the thrust of the subparagraphs is not
in the form of limitations but on their numerical or quantitative
nature.
Art. XVI:2 (a, b, and d) indicate that limitations may take the
form of numerical quotas. It is only under Art. XVI:2 (c) that the
adjective “numerical” is not used with respect to quotas, but,
92
Panel Report, US—Gambling, WT/DS285/R, paras 6.322-6.325 and
6.341.
93
94
Ibid., paras 231 and 247; see also above, para. 49.
95
Delimatsis, JWT 40 (2006), 1059, 1066.
96
232.
26

again, a quota will typically be numerical. In the latter case, it
may be argued that the phrase “in the form of quotas” should be
read together with the phrase that precedes it, namely “limitations
[...] expressed in terms of designated numerical units” to clarify
the scope of a limitation on the quantity of service output.
In US—Gambling, the Appellate Body, when interpreting Art.
XVI:2 (a), submitted that a numerical quota equates to a
quantitative limit that is explicitly framed in quantitative or
numerical terms or, alternatively, has the characteristics of a
number even if numbers are not explicitly used.97 Therefore, in
the Appellate Body’s view, a limitation that would limit the
number of potential service suppliers to zero does take “the form
of” a numerical quota.98 As Art. XVI covers both discriminatory
and origin-neutral measures, since it is not addressed just to
“foreign” service suppliers, the fact that the imposed zero quota
does not discriminate between domestic and foreign service
suppliers becomes irrelevant. This interpretation of quotas would
also apply mutatis mutandis for Art. XVI:2 (b, c, and d).
Limitations under Art. XVI:2 (a) may also take the form of
monopolies. A monopoly supplier under GATS is broadly
defined to include “any person, public or private, which in the
relevant market of the territory of a Member is authorized or
established formally or in effect by that Member as the sole
supplier of that service”.99 A person, in turn, can be either
natural or juridical.100 A third type of limitation under (a) can
take the form of exclusive service suppliers. Art. VIII:5, entitled
“Monopolies and Exclusive Service Suppliers”,101 suggests that
such suppliers exist when a Member “formally or in effect, (a)
authorizes or establishes a small number of service suppliers and
(b) substantially prevents competition among those suppliers in
97
Ibid., para. 227.
98
Ibid.; see also Panel Report, US—Gambling, WT/DS285/R, para.
6.338.
99
Art. XXVIII (h) (emphasis added); Appellate Body Report, US—
Gambling, WT/DS285/AB/R, para. 228.
100
Art. XXVIII (j-n).
101
Natens, Article VIII GATS, paras 51-56.
27

its territory”.102 The Appellate Body concluded from these two
definitions that, as regards limitations on the number of service
suppliers in the form of monopolies or exclusive service
suppliers, they encompass limitations that are in form or in effect
monopolies or exclusive service suppliers.103
The potential overlap between the concepts of “monopoly
supplier of a service” and “exclusive service suppliers” came up
again in China—Electronic Payment Services. In that case, the
United States argued that the two concepts overlap in that a
monopoly supplier has an exclusive right to operate in a given
market. Nevertheless, and in line with the US—Gambling
Appellate Body report, the Panel made clear that the distinction
present in Art. XVI:2 (a), as corroborated by Art. XXVIII (h) and
VIII:5, should not be disregarded.104
An economic needs test105 refers to a mechanism controlled by
a Member or an entity with delegated power (e.g. a professional
association) that allows them to decide whether the entry into the
market of new (domestic or foreign) service suppliers is required
on economic grounds.106 Hence, economic needs tests typically
have the effect of restricting market access, based on an
assessment of the “needs” of the domestic market.107 While
such mechanisms may be established due to legitimate policy
considerations, such as prudential policies, they have often been
102
(emphasis added).
103
104
para. 7.587.
105
Economic needs tests should not be confounded with necessity tests
like the one set up in Art. VI:4 GATS. Measures in the form of ENTs
are quantitative and thus are based on criteria the fulfilment of which
is beyond the control of the service supplier affected. See Council for
Trade in Services, Special Session, Economic Needs Tests, Note by the
Secretariat, S/CSS/W/118, 30 November 2001, para. 6.
106
Goode, 123.
107
OECD, Working Party of the Trade Committee, Assessing Barriers to
Trade in Services, The Scheduling of Economic Needs Tests in the
GATS – An Overview, TD/TC/WP(2000)11/FINAL, 20 September
2000.
28

criticized because of their opaque and discretionary nature.108
Economic needs tests do not have a standard format, but their
common denominator is that the needs of the domestic economy
or the relevant service industry will be taken into account before
granting market access to a new supplier. In US—Gambling, this
was a further element in the Appellate Body’s attempt to
substantiate its argument that the scope of Art. XVI is fairly broad
regarding the form that limitations should have to fall within the
ambit of this provision.109 Arguably, a broad interpretation of
this type would render futile a determination as to whether the
list of the forms that Art. XVI:2 measures can take (that is,
quotas, monopolies or exclusive service suppliers, or economic
needs tests).
In US—Gambling, both the Panel and the Appellate Body dealt
with the question whether Art. XVI:2 (c) covers two or three
forms of limitations. For the respondent, the United States, this
provision included two limitations, and, therefore, quotas were to
be expressed only in terms of designated numerical units. The
Panel ultimately found that this provision suggests three
limitations, namely limitations in the form of: (1) designated
numerical units, (2) quotas; and (3) the requirement of an
economic needs test.110 On the basis of this conclusion, the
Panel found that a zero quota was a limitation “in the form of
quotas” falling within Art. XVI:2 (c).111 On appeal, the
Appellate Body implicitly dismissed this interpretation. Indeed,
as noted earlier,112 a textual and contextual interpretation can
only lead to the conclusion that (c) identifies two types of
limitations. Even under this interpretation, however, the thrust is
not on the form of the limitations but on the fact that they limit
quantitatively the service operations or the quantity of service
output. An interpretation that would not be constrained in a
108
See Low & Mattoo, in: Sauvé & Stern (eds), 449, 456; see also
S/CSS/W/118, paras 11, 12, 14, 17.
109
Appellate Body Report, US—Gambling, WT/DS285/AB/R, paras 231-
232.
110
111
Ibid., para. 6.355.
112
See above, para. 40.
29

“formulaic manner” would include a measure that results in a
zero quota.
To sum up, it is the quantitative nature of a measure that leads to
its characterization as a market access limitation within the
meaning of Art. XVI. In this respect, it is worth noting that the
Appellate Body did not feel compelled to decide whether a
complete prohibition on the cross-border supply of gambling and
betting services is a numerical quota, a monopoly, etc. under Art.
XVI:2 (a), or a designated numerical unit in the form of a quota
or the requirement of an economic needs test under Art. XVI:2
(c). On the contrary, the Appellate Body appeared to terminate
its legal analysis when finding that the measures at issue were
measures of a quantitative nature limiting to zero the number of
service suppliers that could deliver their gambling and betting
services across borders or the service operations and the output
relating to such services. Indeed, it is surprising that the Appellate
Body did not classify the measures at issue as numerical quotas
under (a) in an explicit manner but instead excluded the adoption
of any rigid mechanical formulas. This was made clearer notably
in the Art. XVI:2 (c) analysis, where the form of the limitations
remained unclear.113
4. Limitations on the Forms of Establishment Art. XVI:2 (e)
Art. XVI:2 (e) prohibits measures that limit the forms of
establishment of the service supplier by outlawing measures that
restrict the type of legal entity through which a service supplier
may supply a service, or measures that require the establishment
of a joint venture. Art. XVI:2 (e) significantly differs from the
rest of the measures covered by Art. XVI:2 as it does not concern
measures of a quantitative nature. Restrictions on the type of
legal entity are qualitative requirements imposed on the service
supplier. In the absence of (e), these restrictions would have been
covered either by Art. XVII if they were discriminatory or by Art.
VI if they were non-discriminatory.
The provision contains two distinct - albeit related - prohibitions
that apply to different situations. On the one hand, the ban on
113
See Delimatsis, JWT 40 (2006), 1059, 1068.
30

measures that limit certain types of legal entity applies equally to
modes 1, 2, and 3 and covers both discriminatory and non-
discriminatory measures. On the other hand, the ban on the
requirement of establishing joint ventures as a means to provide
services applies exclusively to discriminatory measures affecting
commercial presence.114
a) Limitations on the Types of Legal Entity

When a Member undertakes commitments with regard to Art.
XVI:2 (e), it may not require that the service be supplied by only
certain types of legal entities. All forms of legal establishment
are to be allowed to supply services, independently of their
incorporated or non-incorporated nature; whether or not of
limited liability; or privately- or governmentally-owned.115 This
provision, when read in conjunction with Art. XXVIII (l),
appears to hint at a broad interpretation of what form a legal
entity can take based on the various applicable domestic
corporate laws of the WTO Members.
Unlike for measures requiring the establishment of joint ventures,
this requirement concerns also services provided through cross-
border supply, consumption abroad, or the establishment of a
commercial presence. As it concerns services supplied by a legal
entity, however, (e) does not have any bearing on services
supplied by means of mode 4.
EU—Energy Package was the first WTO dispute featuring a
claim under Art. XVI:2 (e). The Panel started its analysis
acknowledging that, although the GATS did not define the term
“legal entity”, based on the ordinary meaning of the relevant
terms, Art. XVI:2 (e) covers measures which “restrict or require
the legal form of a legal entity through which a service supplier
114
See also Panel Report, China—Electronic Payment Services,
WT/DS413/R, para. 7.653.
115
As the Panel noted in EU—Energy Package, “the mere fact that an
entity may (or may not) own or control another entity is not sufficient
to make the former entity (or the latter) a ‘specific type of legal entity’
within the meaning of Article XVI:2(e) because ownership or control
per se does not speak to the legal form of either entity.”, Panel Report,
EU—Energy Package, WT/DS476/R, para. 7.668.
31

may supply a service”. The Panel also clarified that the burden of
proof rests with the complainant in that case.116 The Panel
further noted that measures falling within the purview of Art.
XVI:2 (e) do not generally restrict a legal entity from doing
something, nor do they require a legal entity to do something.117
Restrictions on the type of legal entity abound, for instance, with
regard to professional services, which under some WTO
Members’ internal legislation can only be provided by natural
persons or organizations through non-limited liability structures.
On the other hand, some banking and financial services can only
be provided by limited liability corporations. Where a Member
wishes to maintain these types of restrictions in scheduled
sectors, it should inscribe them in all the relevant modes,
particularly modes 1 and 3.
The ban on legal entity requirements affects foreign and domestic
service suppliers alike in a non-discriminatory fashion. For this
reason, the failure of a Member to inscribe measures requiring
only certain types of legal entities - such as those described above
- would lead to an obligation on that Member to modify its
regulatory framework in order to allow any type of legal
establishment to provide services.118
In addition to the non-discriminatory measures outlined above,
the prohibition on limitations on the type of legal entity also
prohibits measures that limit the means of establishment of
foreign services providers when they wish to provide services
through commercial presence. The Scheduling Guidelines
provide three examples of measures prohibited by Art. XVI:2 (e)
that relate exclusively to foreign services, namely: a) commercial
presence excludes representative offices; b) foreign companies
116
Ibid., para 7.642.
117
Ibid., para 7.632.
118
While this reading stems from the text of the provision and is confirmed
by the entries in the Schedules, it may not necessarily be the
understanding of all WTO Members. More generally, it would appear
that for some WTO Members such a restraint on regulatory autonomy
is no longer welcome. For instance, in various FTAs that draw
inspiration from Article XVI:2 (e) no longer is included in the text of
the agreement.
32

required to establish subsidiaries; and c) in sector x, commercial
presence must take the form of a partnership.119 This obligation,
complemented by the prohibition on requiring the establishment
of joint ventures, ensures that foreign services suppliers are not
restricted in their choice of the form of establishment.
b) Prohibition on Requiring Joint Ventures

Art. XVI:2 (e) also outlaws measures that require the formation
of joint ventures in order to provide services. Since joint venture
requirements are a limitation in the form of establishment of
foreign companies,120 this provision applies only to measures of
a discriminatory nature. In addition, by definition, this provision
only affects measures with regard to services supplied through
commercial presence.
While joint ventures do not necessarily entail one specific legal
form, this form of establishment involves an agreement between
two or more enterprises engaged in one defined project that the
group intends to carry out, which will be conducted jointly and
for which the partners will share profits and losses. Establishment
through joint ventures may be a valuable option for foreign
investors in services since it allows them to benefit from the
domestic partner’s experience in the local market. On the other
hand, joint ventures may also be preferred by governmental
authorities to foster the transfer of technology and know-how
119
120
It would theoretically be possible to envisage a measure of this nature
that applies equally to both domestic and foreign service suppliers.
However, such a scenario would rarely be found in reality, since there
would arguably be no raison d'être for such a requirement for local
service suppliers. At the same, one cannot neglect that the provision
does not refer to only foreign joint ventures. In this respect, the EU—
Energy Package Panel found that the ordinary meaning of joint
ventures tends to be origin-neutral and thus could also cover an
association between two domestic firms. Even if such situation is less
frequent or uncommon, the fact remains that the provision is drafted in
an origin-neutral manner. See Panel Report, EU—Energy Package,
WT/DS476/R, para. 7.715.
33

from international enterprises to domestic companies. For this
reason, a great number of joint ventures requirements can be
found in the Schedules of several WTO Members, such as China.
However, joint venture requirements can also be used to coerce
foreign service suppliers into alliances with inefficient rent-
seeking domestic companies.
With the prohibition on joint venture requirements, plus the
prohibition on WTO Members to limit service suppliers in their
ability to establish themselves through any type of legal entity
(representative offices, subsidiaries, or branches), Art. XVI
ensures that foreign investors in services are not restricted in their
choice of the entry mode in order to supply services through
commercial presence, provided that commitments have been
undertaken in that regard.
5. Limitations on Foreign Equity Participation Art. XVI:2 (f)
a) General remarks
Absent any limitations to the contrary, Art. XVI:2 (f) prohibits
measures that limit foreign equity participation. Like the
restriction of joint venture requirements, this provision applies by
definition only to discriminatory measures with regard to
services supplied through commercial presence. Indeed, joint
venture requirements are commonly accompanied by foreign
equity limitations restricting foreign participation to less than 50
percent.
Relying on the report of the Panel in China—Publications and
Audiovisual Products, the Panel in EU—Energy Package
established the criteria to determine whether a measure
constitutes a violation of Art. XVI:2 (f). The Panel must examine
whether the measure at issue limits the participation of foreign
capital. If so, it must evaluate whether it takes one of the forms
provided by XVI:2 (f) (1) a cap on the percentage of foreign
shareholding or (2) a limit on the aggregate foreign
investment.121
121
Panel Report, EU—Energy Package, WT/DS476/R, paras 7.707 and
34

According to the principle of effective treaty interpretation, the
Panel in EU—Energy Package provided the ordinary meaning of
“foreign” as: “[b]elonging to, coming from, or characteristic of,
another country or nation”.122 Based on this definition, the Panel
held that Art. XVI:2 (f) applied to limitations on equity
participation “belonging to” or “coming from” another country
or nation. The same definition applies to limits on share-holding
percentage levels and individual or aggregate investment. The
fact that (f) is the only Art. XVI:2 subparagraph that includes the
word “foreign” led the Panel to believe that the drafters intended
this provision to cover measures that restrict foreign participation
specifically, excluding non-discriminatory limitations from its
scope.123 The Panel emphasized, however, that the measure
must not explicitly refer to foreign capital participation to be
covered by this provision:
[f]or example, a measure articulating a condition in
relation to domestic capital participation may be
encompassed within the scope Article XVI:2(f) if such
measure targets foreign capital participation due to the
foreign origin of the capital (e.g. domestic capital
participation shall be no less than X per cent).124
The measures covered by Art. XVI:2 (f) are those that impose
maximum percentage limits on foreign participation. The 2001
Scheduling Guidelines provide as an example an entry that reads:
“foreign equity ceiling of x percent for a particular form of
commercial presence”.125 Measures that instead require that
foreign investors acquire a certain minimum amount of equity to
participate in the company are not covered by Art. XVI:2 (f) and
do not need to be scheduled in the market access column.126
7.708; also Panel Report, China—Publications and Audiovisual

Products, WT/DS363/R, para. 7.1360.
122
Panel Report, EU—Energy Package, WT/DS476/R, para 7.712.
123
Ibid., paras 7.713 and 7.716.
124
Ibid., para. 7.718.
125
126
China, for instance, requires foreign investors to acquire a minimum of
35

The prohibition equally concerns measures that limit individual
or aggregate foreign investment. In that sense, Art. XVI:2 (f)
outlaws a) measures that set a limit of X percent equity
participation on each individual foreign shareholder - albeit that
a fully foreign-owned company would be allowed if ownership
were distributed in different foreign investors - and b) measures
that set a maximum ceiling on foreign participation, for instance,
the maximum amount of money that can be invested by law,
regardless of how that participation is distributed among
foreigners.
b) Restrictions Below 50 Percent of Foreign Equity

Participation
Art. XVI:1 stipulates that the measures covered by Art. XVI:2
are those with regard to the treatment of “service supplier of any
other Member”.127 In the case of a service provided through
mode 3, this entails, by means of the definitions set out in Art.
XXVIII, that a commercial presence is to be “owned or
controlled” by persons of another WTO Member.128 In the terms
of Art. XXVIII (n), a juridical person is “owned” by persons of a
Member if more than 50 percent of the equity interest is owned
by persons of that Member, and is “controlled” by persons of a
Member if such persons have the power to name a majority of its
directors or otherwise legally direct its actions. In other words, a
services company is a “service supplier of any other Member”
only when it is owned or controlled by foreigners; where foreign
participation does not reach that threshold, the company is
considered a domestic service supplier, falling outside the scope
of Art. XVI. From this perspective, limitations that fall below the
threshold sufficient to acquire ownership or control are not
covered by Art. XVI:2 (f) and hence need not be scheduled, since
they do not affect “service suppliers of any other Member” as
required by Art. XVI:1. This means that measures that restrict
foreign participation to less than 50 percent and/or do not allow
25% of the company’s equity share. If applied only to foreign investors

that requirement would be covered by the national treatment obligation.
127
Emphasis added.
128
See Art. XXVIII (d and m).
36

for foreign control are not affected by the prohibition on
imposing foreign equity restrictions set out in Art. XVI:2 (f) and
may be introduced or maintained by Members regardless of their
Art. XVI commitments.129
On the other hand, however, it is notable that Art. XVI:2 (f) is the
only GATS provision that refers to “foreign investment” rather
than “commercial presence” or, more broadly, “service supplier”.
The concept of “foreign investment” is defined or otherwise
utilized nowhere else in the GATS, which may arguably expand
the scope of this provision in a unique manner. Indeed, a
reference to “commercial presence” or “service supplier of
another Member” would have made it clear that Art. XVI:2 (f) is
limited to service suppliers that are owned or controlled by
foreigners, as explained above. Instead, the broad reference to
“foreign investment” may suggest that Art. XVI:2 (f) is not
limited to “commercial presence” in the terms of Art. XXVIII but
is intended to cover all measures that limit the individual or total
value of “foreign investment”, including those cases where the
foreign participation does not suffice to establish a “commercial
presence” - that is, it is insufficient for the acquisition of
ownership or control over the company. In other words, under
this broad reading of the term “foreign investment” in Art. XVI:2
(f), all foreign equity limitations would be covered by Art. XVI
and need to be scheduled.130
129
However, a foreign investor may acquire “control”, i.e. the power to
name a majority of its directors or otherwise legally direct its actions,
over the commercial presence by holding less than 50% of its equity
shares, if the remaining shares are widely spread in a number of
shareholders, or the shareholder own multiple voting shares. In this
case, a measure that limits foreign equity to, for instance, 40% may still
fall within Art. XVI:2 (f) if the foreign investor is still able legally to
direct the actions of the company.
130
In this scenario the question remains, however, how a violation of a
partial commitment to allow 50%- or less of foreign equity would be
considered in WTO dispute settlement procedures, particularly with
regard to retaliatory measures; see on this, Molinuevo, 27.
37

D. THE RELATIONSHIP BETWEEN ART. XVI:1 AND ART.
XVI:2
The US—Gambling Panel suggested that Art. XVI:2
complements Art. XVI:1 in that it exhausts the types of market
access restrictions that Art. XVI:1 outlaws.131 The relationship,
however, between Art. XVI:1 and Art. XVI:2 is not so
straightforward. The complexity stems from the textual
differences between Art. XVI:1 and Art. XVI:2. On the one hand,
Art. XVI:1 refers to the treatment that one Member grants to
“services suppliers of any other Member”.132 A textual reading
of Art. XVI:1 suggests that the scope of Art. XVI deals
exclusively with measures of a discriminatory nature. The
treatment must be “no less favourable” than that specified under
its Schedule.133 While it is clear that there are a number of
measures that belong exclusively to the ambit of either Art. XVI
or XVII, Art. XX:2 partially supports the interpretation explained
above insofar as it recognizes the existence of measures that can
be simultaneously inconsistent with both the market access and
national treatment obligations.
On the other hand, Art. XVI:2 prohibits a series of quantitative
limitations that affect nationals and foreigners alike. In this sense,
a reading exclusively based on Art. XVI:2 would suggest that the
scope of Art. XVI comprises only non-discriminatory
quantitative restrictions (with the exception of the situations
covered by Art. XVI:2 (f) and, arguably, the reference to joint
ventures in Art. XVI:2 (e).
However, Panels have not yet directly addressed the relationship
between these two paragraphs. Following the approach taken by
the Panels in US—Gambling and China—Publications and
Audiovisual Products, the Panel in China—Electronic Payment
Services found it unnecessary to analyze the measure at issue
131
Panel Report, US—Gambling, WT/DS285/R, para. 6.298; see also
WT/DS363/R, para. 7.1353.
132
Emphasis added.
133
WT/DS363/R, para. 7.1353.
38

under Art. XVI:1 once it had reached findings under one of the
subparagraphs of Art. XVI:2.134 Panels and the Appellate Body
have consistently stated that, in order to establish a prima facie
violation under Art. XVI, a complaining party must establish that
the responding party undertook relevant market access
commitments in its Schedule and that the measures at issue are
inconsistent with one of the provisions under Art. XVI:2.135
Finally, the principle of effectiveness (effet utile) requires the
WTO judiciary to “give meaning and effect to all the terms of the
treaty”.136 The ostensibly conflicting meanings of Arts XVI:1
and XVI:2 must be overcome by finding a harmonious
interpretation that gives meaning and effect to all the terms of
Art. XVI without reducing whole clauses or paragraphs of a
WTO agreement to redundancy or inutility.
Art. XVI:1 entails a general obligation to provide to foreign
service suppliers the treatment specified in the Schedules. Thus,
Art. XVI:1 does not enshrine a self-standing obligation but
constitutes an introduction to the limitations described in Art.
XVI:2. Art. XVI:1 influences Art. XVI:2 by noting that the listed
measures have to relate to a service supplier of another Member
in order to be covered by the GATS. This is also confirmed by
the reference to the Schedules and the modes of supply.
The language of Art. XVI:1, however, does not specifically
require a comparison between foreign and domestic service
suppliers of the type found in the national treatment obligation.
Rather, the reference to foreigners is made so as to delimit the
scope of Art. XVI. That is, Art. XVI:1 does not necessarily
require discriminatory treatment towards foreigners; it simply
requires that the measure at issue concern the treatment of foreign
134
paras 7.628-7.631.
135
Appellate Body Report, US—Gambling, WT/DS285/AB/R, para. 143;
para. 7.512; Panel Report, China—Publications and Audiovisual
Products, WT/DS363/R, para. 7.1354; Panel Report, EU—Energy
Package, WT/DS476/R, para. 7.233; and Panel Report, Argentina—
Financial Services, WT/DS453/R, paras 7.391-7.392.
136
Appellate Body Report, US—Gasoline, WT/DS2/AB/R, 23.
39

suppliers. Whether it negatively affects foreigners more than, or
the same as, nationals, is not relevant under these terms; the key
element is that foreign service suppliers are reached by the
measures at issue. Discriminatory measures will naturally fall
into this category. But non-discriminatory measures that affect
the treatment of foreign service suppliers should also comply
with this requirement set out in Art. XVI:1.
Art. XVI:2 itemizes the measures prohibited under Art. XVI and
broadly covers quantitative measures, without any specific
reference to foreigners or nationals. However, when these
quantitative measures are read under the lens of Art. XVI:1, the
result is that quantitative restrictions are outlawed insofar as
foreign service suppliers are concerned. Therefore, quantitative
discriminatory measures - that affect exclusively foreign service
suppliers - fall within the scope of the provision. Furthermore,
non-discriminatory measures that affect domestic and foreign
service suppliers equally are also covered to the extent that they
affect foreign service suppliers.
A reading of the broad terms of Art. XVI:2 in isolation would
suggest that quantitative measures are reached by the scope of the
prohibition, regardless of their impact - or lack thereof - on
foreigners. Nonetheless, when Art. XVI:2 is read under the optic
of Art. XVI:1, which requires that the measures concern foreign
service suppliers, the result is that measures that apply
exclusively to nationals are out of the reach of Art. XVI.
In practice, however, the scope of Art. XVI remains significantly
broad. Indeed, where a Member undertook a full commitment
under market access, it is compelled to eliminate all Art. XVI
restrictions at least with regard to foreign service suppliers. Any
restriction, be it applicable exclusively to foreigners or to both
foreigners and nationals, would be inconsistent with the full
commitment. On the other hand, maintaining discriminatory
measures that set restrictions exclusively on nationals would be
allowed under GATS. In effect, a Member would retain the
ability to apply any of the measures of Art. XVI:2 only when it
had inscribed “unbound” or an entry equal to “only domestic
service suppliers may supply services”. This latter entry, which
40

at first glance would suggest that the country has undertaken a
partial commitment, is equal in effect to “unbound” since the
Member at hand does not undertake any commitments with
respect to foreigners.137 Under this constellation, measures that
concern only domestic service suppliers, as explained above, can
be applied at any time.138
In sum, the relationship between Arts XVI:1 and XVI:2 clarifies
that the seemingly broad scope of Art. XVI:2, when read together
with Art. XVI:1, is narrowed in such a manner that quantitative
restrictions that do not affect foreign service suppliers fall outside
the scope of the market access obligation.
E. THE RELATIONSHIP OF ART. XVI WITH OTHER GATS

PROVISIONS
To the extent that the measures covered by Art. XVI can be of
both a non-discriminatory and a discriminatory nature,139 the
137
On the other hand, it could be argued that where a Member
autonomously admits a certain number of foreign suppliers to provide
services in its market, that Member may not maintain any Art. XVI
limitations with regard to them.
138
On the relationship between Art. XVI:1 and Art. XVI:2, Mavroidis has
advanced a slightly different interpretation from the one suggested in
this study; see Mavroidis, WTR 6 (2007), 1, 9. While it is agreed that
the reference to “service suppliers of any other Member” in Art. XVI:1
sets a limit to the scope of Art. XVI:2, the conclusion is not drawn here
– as Mavroidis does – that Art. XVI:2 exclusively deals with
discriminatory measures. Mavroidis’ interpretation restricts the scope
of Art. XVI to measures listed in our category a), since he inaccurately
equates measures that apply to foreigners with measures of a
discriminatory nature, failing to note that non-discriminatory measures
– category b) – can, also, affect foreigners in a manner inconsistent
with paragraph 1. As explained above, the reading favoured here allows
one to conclude that non- discriminatory quantitative measures –
category b) – are also covered by the GATS market access obligation.
We agree with Mavroidis, however, that measures that exclusively
affect domestic service suppliers –category c) – fall outside the scope
of Art. XVI.
139
See also Panel Report, China—Electronic Payment Services,
WT/DS413/R, para. 7.654.
41

most obvious interplay of two GATS provisions is between Arts
XVI and XVII. More specifically, any measures of the types
mentioned in Art. XVI:2 (a-f) in their discriminatory form fall
within the scope of both Arts XVI and XVII. Art. XX:2 provides
that all quantitative limitations that come within the purview of
Art. XVI:2 should be scheduled under the market access column,
even where they constitute an Art. XVII limitation as well.140
Consequently, according to this provision, a Member should
inscribe in the national treatment column discriminatory
measures that do not fall within Art. XVI:2 (a-f). This scheduling
convention provided for in Art. XX:2, however, offers only
limited clarification of situations where a Member undertakes
commitments under one of the columns but not the other. The
issue is quite complex and has been discussed in the current
negotiations but also in academic literature.141
The matter was discussed in China—Electronic Payment
Services. At issue was the scope of a market access entry by
China under mode 1 (“Unbound”) and the effect to this entry of
an entry promising full liberalization under mode 1 of the
national treatment column (“None”). This is an issue of systemic
importance as it potentially raises the issue of hierarchy between
the principles of market access and national treatment. The
complainant, the US, argued that Art. XVI:2 does not cover
discriminatory quantitative measures; those are covered by Art.
XVII. Therefore, according to the US, an “Unbound” inscription
for market access, combined with a “None” for national
treatment, carves out only overall quantitative limitations and not
limitations that discriminate against foreign suppliers.
On the other hand, China contended that an “Unbound” entry
under the market access column can only be regarded as a
shorthand device for inscribing all measures, present or future,
that are inconsistent with Art. XVI:2. The Panel in essence agreed
140
See also Daza Jaller & Molinuevo, Article XX GATS, paras 40-41.
141
Daza Jaller & Molinuevo, Article XX GATS, paras 38-45; Hoffmann,
Article XVII GATS, paras 71 et seq; see also Delimatsis, JWT 40
(2006), 1059, 1072; Mattoo, JWT 31 (1997) 1, 107, 113; Pauwelyn,
WTR 4 (2005), 131, 148.
42

with China, following the scheduling rule of Art. XX:2, as noted
earlier. In the Panel’s view, by inscribing “Unbound” on the
market access column, China acted as if it had inscribed all
possible measures falling under Art. XVI:2. However, due to the
“None” inscription for national treatment, China was still obliged
to grant national treatment with respect to any measure that is not
inconsistent with Art. XVI:2.142 In finding so, the Panel noted
that its task was only to interpret through scheduling rules the
inscription made by China, without any intention to suggest that
either of Arts XVI or XVII is substantively subordinate to the
other .143
The Panel’s decision was not appealed, seemingly recognizing
this as an acceptable solution.144 Although it provides some
clarity on the interpretation of certain inconsistent measures and
incites Members to revise their schedules, this approach does not
apply in all cases where the overlap arises.145 Additionally, it is
still not clear whether Art. XVII applies to pre-entry and/or post-
entry measures. The Panel in Argentina—Financial Services
seemed to take the view that it only covers pre-establishment
discrimination, but the Appellate Body did not address this
issue.146
The relationship between Arts XVI and VI is not defined in the
142
See Panel Report, China—Electronic Payment Services,
WT/DS413/R, paras 7.645-7.663.
143
Ibid., para. 7.664; see also Muller, WTR 16 (2017), 449, 455. Recently
the Court of Justice of the European Union also had to interpret the
meaning of an entry in the EU’s Schedule of commitments on
education services provided by private higher education institutions in
Hungary. Hungary conditioned commercial presence on the existence
of an authorization by the authorities but inscribed “None” under the
national treatment column; the Court followed the same approach as
the Panel in Panel Report, China—Electronic Payment Services,
WT/DS413/R, see ECJ, Judgment of the Court (Grand Chamber) of 6
October 2020, European Commission v. Hungary, C-66/18,
ECLI:EU:C:2020:792, paras 108-114.
144
Ibid.; see also Block, Chi. J. Int’l L. (2014) 652, 652; but see Wang,
Int’l Law. (2012) 1045, 1064, Zang, Manch. J. Int. Econ. Law 12.
145
Block, Chi. J. Int’l L. 652, 693.
146
Ibid., 456.
43

GATS.147 The US—Gambling Panel, in a clear obiter dictum,
examined this relationship and found that “Arts VI:4 and VI:5 on
the one hand and XVI on the other hand are mutually
exclusive”.148 However, it is unclear whether this is a correct
interpretation. Indeed, the claim for mutual exclusivity does not
seem to have any foundation in the negotiating history as
revealed in the minutes of the meetings of the Working Party on
Domestic Regulation. The Appellate Body avoided commenting
on the issue. Academic discussions have identified the
advantages and disadvantages of both approaches.149
F. OUTLOOK
The relationship between Arts XVI and XVII has been identified
as an issue needing clarification since the enactment of the
GATS. Possible solutions have been proposed, but Members
have been reluctant to advance any of them. Nevertheless,
Members would be well advised to reach an agreement regarding
the interplay of these two provisions, for instance through the
adoption of a Decision by the CSC, sooner rather than later.
Otherwise, it is possible that, as a result of a dispute, the WTO
adjudicating bodies will comment on the issue in a way that
several Members would not necessarily agree to. The
implications of such a decision would be even more significant if
it led one to construe a given Schedule as implying a higher level
of liberalization than the scheduling Member had actually
intended. That was eventually not the case in China—Electronic
Payment Services, but nothing precludes that the Appellate Body
takes a different approach to the issue. Thus, legislative action
appears to be preferable.
Another important issue under Art. XVI is whether prohibitions
on consumers should be covered by this provision.150 In
147
Hoffmann, Article VI GATS, paras 75 et seq.
148
Panel Report, US—Gambling, WT/DS285/R, para. 6.305 (emphasis
added).
149
See Pauwelyn, WTR 4 (2005), 131, 152; Delimatsis, JWT 40 (2006),
1059, 1069; Hoffmann, Article VI GATS, paras 76 et seq.
150
See Krajewski, LIEI 32 (2005), 417, 436.
44

accordance with Art. XXVIII (i), any person that receives or uses
a service is considered to be a service consumer. In the US—
Gambling dispute, the Panel, when interpreting Art. XVI:2 (a),
submitted that Art. XVI only addresses limitations to suppliers,
that is, any person that supplies a service. In contrast, limitations
to consumers fall outside the scope of this provision. Therefore,
the Panel, after an examination of the scope of four of the United
States’ state laws at issue, rejected Antigua’s view that
prohibitions on consumption are covered by Art. XVI:2 (a)
and/or (c).151
However, a similar interpretation is not so straightforward when
it comes to Art. XVI:2 (b and c).152 In both cases, arguably,
limitations on consumers could also fall within the latter
provisions. The GATS covers measures affecting trade in
services. By the same token, Art. XXVIII (c) defines such
measures very broadly to encompass any measures in respect of
“the purchase, payment or use of a service”.153 The main
argument justifying an interpretation covering prohibitions on
consumption is that a Member that undertook a full commitment
would easily evade its commitments by imposing a prohibition
on consumers rather than on suppliers.
From another perspective, however, prohibitions on consumption
would entail a questionable interpretative expansion of the terms
of Art. XVI, which, as noted by the Appellate Body, does not
cover all measures that have the effect of limiting the number of
service suppliers or the total number of service operations, but
only those that are quantitative in nature.154 The main travaux
préparatoires of the GATS, that is, the Scheduling Guidelines,
bear on the issue. Para. 19 (b) of the Scheduling of Initial
151
Panel Report, US—Gambling, WT/DS285/R, paras 6.382-6.383
(Colorado), 6.397-6.398 (Minnesota), 6.401-6.402 (New Jersey) and
6.405-6.406 (New York).
152
See the EC arguments in Appellate Body Report, US—Gambling,
WT/DS285/AB/R, para. 101.
153
Emphasis added.
154
Ibid., paras 225, 232; Group of Negotiations on Services, Uruguay
Round, Scheduling of Initial Commitments in Trade in Services,
Explanatory Note, MTN.GNS/W/164, 3 September 1993, 9.
45

Commitments in Trade in Services155 provides that the GATS
obligations relate to the treatment of services and service
suppliers. The only case in which they also concern consumers is
when services or service suppliers of other Members are also
affected.156 Nevertheless, this statement can be construed as
supporting both approaches described above, since, in the case of
a total prohibition on consumers, suppliers of other Members
will, more often than not, be affected as well. In US—Gambling,
the Appellate Body did not tackle the issue since it had previously
found that Antigua had not established a prima facie case with
regard to the United States’ state laws.
BIBLIOGRAPHY
A. Mattoo, National Treatment in the GATS, Corner-Stone or
Pandora’s Box?, JWT 31 (1997), 107-135;
P. Low & A. Mattoo, Is There a Better Way? Alternative
Approaches to Liberalization Under GATS, in: P. Sauvé & R. M.
Stern (eds), GATS 2000, New Directions in Services Trade
Liberalization, 2000, 449-472;
J. Francois & I. Wooton, Market structure, trade liberalization
and the GATS, EJPE 17 (2001), 389-402;
D. E. Siegel, Legal Aspects of the IMF/WTO Relationship: The
Fund’s Articles of Agreement and the WTO Agreements, AJIL
96 (2002), 561-599;
155
MTN.GNS/W/164, 3 September 1993, 9.
156
See also Council for Trade in Services, Trade in Services, Guidelines
for the Scheduling of Specific Commitments Under the GATS,
Adopted on 23 March 2001, S/L/92, 28 March 2001, para. 30.
46

W. Goode, Dictionary of Trade Policy Terms, 4th ed., 2003;
A. Mattoo & S. Wunsch, Pre-Empting Protectionism in Services:
The WTO and Outsourcing, World Bank Policy Research
Working Paper No. 3237, 2004;
M. Krajewski, Playing by the Rules of the Game? Specific
Commitments After US – Gambling and Betting and the Current
GATS Negotiations, LIEI 32 (2005), 417-447;
P. C. Mavroidis, The General Agreement on Tariffs and Trade:
A Commentary, 2005;
J. Pauwelyn, Rien Ne Va Plus? Distinguishing Domestic
Regulation from Market Access in GATT and GATS, WTR 4
(2005), 131-170;
P. Delimatsis, Don’t Gamble with GATS – The Interaction
Between Articles VI, XVI, XVII and XVIII GATS in the Light
of the US – Gambling Case, JWT 40 (2006), 1059-1080;
K. Lapid, Outsourcing and Offshoring Under the General
Agreement on Trade in Services, JWT 40 (2006), 341-364;
F. Ortino, Treaty Interpretation and the WTO Appellate Body
Report in US – Gambling: A Critique, JIEL 9 (2006), 117-148;
S. Wunsch-Vincent, The Internet, Cross-Border Trade in
Services, and the GATS: Lessons from US – Gambling, WTR 5
(2006), 319-355;
P. Delimatsis, International Trade in Services and Domestic
Regulations – Necessity, Transparency, and Regulatory
Diversity, 2007;
C. Fink & M. Molinuevo, East Asian Free Trade Agreements in
Services: Roaring Tigers or Timid Pandas?, East Asia and Pacific
Region Report No. 40175, 2007;
P. C. Mavroidis, Highway XVI Re-Visited: The Road from Non-
Discrimination to Market Access in GATS, WTR 6 (2007), 1-23;
M. Molinuevo, Can Foreign Investors in Services Benefit from
WTO Dispute Settlement? Legal Standing and Remedies in
WTO and International Arbitration, NCCR Trade Regulation
Working Paper No. 2006/17, 2007;
W. Wang, On the Relationship Between Market Access and
47

National Treatment Under the GATS, Int’l Law. (2012), 1045-
1065;
R. Block, Market Access and National Treatment in China –
Electronic Payment Services: An Illustration of the Structural
and Interpretive Problems in GATS, Chi. J. Int’l L. (2014), 652-
701;
B. Hoekman & N. Meagher, China—Electronic Payment
Services: discrimination, economic development and the GATS,
WTR 13 (2014), 409-442;
M. Zang, The Uncompleted Mission of China—Electronic
Payment Services: Policy Equilibrium between Market Access
and National Treatment under the GATS, PluriCourts Research
Paper No. 15-01, 2015;
G. Muller, Troubled Relationships under the GATS: Tensions
between Market Access (Article XVI), National Treatment
(Article XVII), and Domestic Regulation (Article VI), WTR 16
(2017), 449-474.
CASE LAW
Appellate Body Report, US—Gasoline, WT/DS2/AB/R;
Appellate Body Report, EC—Computer Equipment,
WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R;
Appellate Body Report, Canada—Dairy, WT/DS103/AB/R,
WT/DS113/AB/R;
Panel Report, India—Autos, WT/DS146/R, WT/DS175/R;
Panel Report, Mexico—Telecoms, WT/DS204/R;
Panel Report, US—Gambling, WT/DS285/R;
Appellate Body Report, US—Gambling, WT/DS285/AB/R;
WT/DS363/R;
Panel Report, China—Electronic Payment Services,
WT/DS413/R;
Panel Report, Argentina—Financial Services, WT/DS453/R;
Panel Report, EU—Energy Package, WT/DS476/R.
48

DOCUMENTS
Group of Negotiations on Services, Uruguay Round, Note on the
Meeting of 27 May to 6 June 1991, MTN.GNS/42, 24 June 1991;
Group of Negotiations on Services, Uruguay Round, Services
Sectoral Classification List, Note by the Secretariat,
MTN.GNS/W/120, 10 July 1991;
Meeting of 24–28 June 1991, MTN.GNS/43, 15 July 1991;
Meeting of 10–25 July 1991, MTN.GNS/44, 28 August 1991;
Group of Negotiations on Services, Uruguay Round, Scheduling
of Initial Commitments in Trade in Services, Explanatory Note,
MTN.GNS/W/164, 3 September 1993;
Council for Trade in Services, Trade in Services, Guidelines for
the Scheduling of Specific Commitments Under the GATS,
Adopted on 23 March 2001, S/L/92, 28 March 2001;
Council for Trade in Services, Special Session, Economic Needs
Tests, Note by the Secretariat, S/CSS/W/118, 30 November
2001;
Committee on Specific Commitments, Additional Commitments
Under Article XVIII of the GATS, Note by the Secretariat,
S/CSC/W/34, 16 July 2002.
49

View publication stats

SSRN Id4141380

Uploaded by

Copyright:

Available Formats

SSRN Id4141380

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

SSRN Id4141380

Uploaded by

Copyright:

Available Formats

See discussions, stats, and author profiles for this publication at: https://www.researchgate.

Article in SSRN Electronic Journal · January 2022

The user has requested enhancement of the downloaded file.

TILEC Discussion Paper

Market Access under the GATS – A Legal

Commentary on Article XVI GATS

Lillyana Daza Jaller, Panos Delimatsis and Martín

June 03, 2022

ISSN 2213-9419 https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

LILLYANA DAZA JALLER, PANOS DELIMATSIS AND MARTÍN

Keywords: market access; General Agreement to Trade in

JEL codes: F02, F13, F15, F21, K20, K33, P45

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

B. GRANTING MARKET ACCESS AS PROVIDED FOR IN A

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

C. OUTLAWING RECOURSE TO SIX TYPES OF LIMITATIONS

Electronic copy available at: https://ssrn.com/abstract=4141380

I. The Chapeau of Art. XVI:2

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

II. The Six Limitations Identified in Art. XVI:2

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

a) Limitations on the Number of Service Suppliers Art. XVI:2

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

b) Limitations on the Total Value of Service Transactions or

c) Limitations on the Total Number of Service Operations or

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

d) Limitations on the Total Number of Natural Persons Art.

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

a) Limitations on the Types of Legal Entity

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

b) Prohibition on Requiring Joint Ventures

Electronic copy available at: https://ssrn.com/abstract=4141380

Electronic copy available at: https://ssrn.com/abstract=4141380

7.708; also Panel Report, China—Publications and Audiovisual

Electronic copy available at: https://ssrn.com/abstract=4141380