Agreement on Trade in Services and Investments

On December 9, 2010, the Republic of Belarus, the Republic of Kazakhstan and the Russian Federation entered into Agreement on Trade in Services and Investments Within the States-Members of Common Economic Space (Moscow, December 9, 2010)

Russian Federation ratified the Agreement on July 11, 2011. The Agreement entered into force on January 1, 2012. The Agreement could be described as a sort of equivalent of GATS (mini-GATS) between Belarus, Kazakhstan and Russia.

Pursuant to Article 7(1) the Agreement applies to all measures effecting trade in services relating to purchase of services, payment for services and use of services, access to services and etc. The main aim of the Agreement is to build up a system of unified rules on trade in services between its members and to create mutually beneficial investment environment in them.

From the technical point of view the Agreement is quite complicated. Below is a very brief outline of this Agreement.

Transparency

One of the major WTO principles, namely the principle of “transparency” (openness), was also perceived by the Agreement (Article 13). All legislation which affects or could affect trade in services and investments would be published on the official resource of a member-state, if possible on a specially designated for this purpose web-site.

Limitations and treatment of foreign persons from the member-states

According to the Agreement investors and foreign persons from the member-state are provided with the national regime (Article 3(1)).

The Agreement also establishes the most-favored nation regime meaning that investors and foreign persons from the member-states are provided not less favorable conditions in comparison with conditions granted for third countries (non member-states) in relation to establishment and operating of activity (Article 3(2)).

Under the Agreement each member-state should abolish current restrictive measures and would not introduce such new measures connected with transfers and payments subsequent to establishment and activity (Article 21(1)).

However in order to protect national trade in services the member-states introduced certain restrictions (Annex 2, Annex 3, Annex 4). Annex 2 to the Agreement details exclusions from the member-state obligations to provide most-favored nation treatment to the residents from the other member-state. Annex 3 is devoted to trans-border trade and specifies the list of sectors where national treatment is provided and describes exclusions from the obligations to provide national treatment to the residents from the member-state. Annex 3 also spells the description of services in relation to which the member-states took obligations.

Annex 4 covers those limitations that continue to exist in relation to the establishment. Annex 1 covers particular issues of activity in the sphere of telecommunication; while Annex 5 affects trade in financial services.

The following sectors of services are excluded from trans-boundary trade in services in the member-states, namely:

  • sphere of air transport services and services directly relating to the air transport services (Article 7(2));
  • government procurement of services for the governmental purposes (Article 7(2));
  • services rendered in the course of execution of governmental powers (Article 7(2));
  • provision of subsidies (Article 7(2)).

Several limitations are similar for all member-states. For instance, the member-state foreigners are prohibited to acquire an ownership rights over agricultural land in the member-state (only land lease by the member-state foreigners is allowed) (Annex 3).

However the member-states agreed to abolish limitations step-by-step on the basis of reciprocal consultations and negotiations (Article 11).

The member-states obligations in the sector of legal services

The Agreement (like GATS) covers such sector of services as provision of legal services. The legal services are referred to directly several times in the Annexes to the Agreement. Each member-state undertook certain obligations to allow foreign persons from another member-state to supply legal services in different modes.
However each member-state specified certain limitations for supplying legal services by foreigners from another member-state.

Limitations on legal services in Annex 3(trans-border trade)

In relation to national treatment of non-residents in the sector of legal services Belarus established that the member-state foreigners could provide legal assistance within Belarus only on private international law, international public law and the law of the country in which jurisdiction the personnel of the services supplier is qualified. Belarus did not take any obligation in relation to notary and patent attorneys’ services directly excluding these legal professions from the list.

Kazakhstan specified that legal services include advising and participation in arbitration proceedings and conciliation procedures. Foreign person from the member-state could supply legal services only on the law of the country in which jurisdiction the supplier of the services is qualified and on international public law. Kazakhstan did not also take any obligations regarding Notary services and services connected with criminal law.

Russia undertook obligations in relation to legal services in the same scope as Belarus, excluding notary and patent attorneys’ services from the obligations, too. Belarus, Russia and Kazakhstan did not establish any limitations in relation to national treatment to the residents from the member-state supplying legal services.

However Russia and Belarus allowed foreign persons from the member-state to advice on private international law which is the part of the domestic law. This provision seems to be an omission due to approach to private international law as similar in nature with public international law.

Limitations on legal services in Annex 4 (the establishment)

Belarus specified that only citizens of the Republic of Belarus could receive a status of advocate (attorney-at-law), private notary and patent attorney. Kazakhstan also introduced the citizenship limitation. Pursuant to that limitation only citizens of the Republic of Kazakhstan could obtain a status of:

  • advocate and trainee of advocate;
  • notary and assistant notary;
  • patent attorney.

Moreover only citizens of the Republic of Kazakhstan could perform administration of insolvent debtors’ estate and affairs in the course of insolvency proceedings and be employed as forensic experts in forensic judicial expert body.

Russian Federation specified limitations in the same manner as the other member-states. Therefore only citizens of the Russian Federation could obtain the status of:

  • notary, candidate notary and assistant notary. Notary chamber and notary office could be established only by the natural or juridical person of the Russian Federation;
  • patent attorney.

It is worth noting that Russian Federation made the reservation that the foreign citizens can obtain the advocate status in case they are not advocates of the other states (it is very strange reservation). Russia also specified that advocates could supply legal services only through legal forms which are identical to those used by the Russian advocates.

Besides, the advocates of foreign states cannot provide legal assistance within the territory of the Russian Federation on issues connected with the state secrets of the Russian Federation. Therefore in comparison with Belarus and Kazakhstan Russia introduced more detailed list of limitations. However, only Russia allowed foreign persons to become advocates under Russian law (with the strange reservation mentioned above).

The Agreement is important in light of Russia’s and Kazakhstan’s accession to the WTO.

Muranov, Chernyakov & Partners

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