DECREE NO. 6,480, OF June 11, 2008.

Promulga the Montevideo Protocol on Trade in Services of MERCOSUR, completed in Montevideo, on December 15 of 1997, accompanied by its four Setorial Attachments, adopted by Decision 9/98 of the Common Market Council, on July 23, 1998, and the?List of Initial Specific Appointments? of Brazil, approved by the Decision No 9/98 of the Common Market Council, on July 23, 1998.

THE PRESIDENT OF THE REPUBLIC, in the use of the assignment that gives it the art. 84, inciso IV, of the Constitution, and

Considering that the National Congress has approved, by means of the Legislative Decree no 335 of July 24, 2003, the Montevideo Protocol on Trade in Services of MERCOSUR concluded in Montevideo on December 15, 1997, accompanied by its four Setorial Attachments, adopted by Decision 9/98 of the Council Common Market, on July 23, 1998;

Whereas the National Congress approved, by means of the Legislative Decree no 926, of September 15, 2005, the text of?List of Initial Specific Appointments? of Brazil, approved by the Decision No 9/98 of the Common Market Council, on July 23, 1998;

DECRETA:

Art. 1st The Protocol of Montevideo on the Trade in Services of MERCOSUR, concluded in Montevideo on December 15, 1997, accompanied by its four Setorial Attachments, adopted by Decision 9/98 of the Common Market Council, on July 23, 1998, and the?List of Initial Specific Appointments? of Brazil, approved by the Decision No 9/98 of the Common Market Council, on July 23, 1998, appended by copy to the present Decree, shall be executed and complied with as entirely as in them.

Art. 2nd They are subject to National Congress approval any acts that may result in revision of the referred Protocol or which carries charges or commitments engraved to the national heritage, pursuant to art. 49, inciso I, of the Constitution.

Art. 3rd This Decree shall come into force on the date of its publication.

Brasilia, June 11- 2008; 187º of Independence and 120º of the Republic.

LUIZ INACIO LULA DA SILVA

Celso Luiz Nunes Amorim

This text does not replace the one published in the DOU of 6/12/2008

MONTEVIDEO PROTOCOL ON THE TRADE

OF MERCOSUR SERVICES

PREÂMBCHAPTER

A Argentine Republic, the Federative Republic of Brazil, the Republic of Paraguay and the Eastern Republic of Uruguay, States Parties to the Common Market of South-MERCOSUR;

Restating that in accordance with the Treaty of Assumption the Common Market implies, among other commitments, the free movement of services in the enlarged market;

Recognizing the importance of liberalization of trade in services for the development of the economies of the States Parties to MERCOSUR, to the deepening of the Customs Union and the progressive conformation of the Common Market;

Considering the need for the less developed countries and regions of MERCOSUR to have a growing share in the service market and to promote the trade of services on the basis of reciprocity of rights and obligations;

Wishing consecration in a common instrument the standards and principles for trade in services between the States Parties to MERCOSUR, with views to the expansion of trade in conditions of transparency, balance and progressive liberalization;

Having regard to the General Agreement on Trade in Services (AGCS) of the World Trade Organization (WTO), in particular its Article V, and the commitments made by States Parties to the AGCS;

Wake up the next:

PART I

OBJECT AND SCOPE OF APPLICATION

Article I

Objective

1.The present Protocol aims to promote the free trade of services in MERCOSUR.

Article II

Scope of application

1. This Protocol applies to the measures adopted by States Parties that affect trade in services in MERCOSUR, included as relating to:

i) provision of a service;

ii) purchase, payment, or use of a service;

iii) access and use, on the occasion of the provision of a service, of services that the State Party requires to be offered to the general public;

iv) presence, inclusive of the commercial presence, of persons from a State Party in the territory of another State Party to the provision of a service.

2.For the purposes of this Protocol, trade in services is defined as the provision of a service:

a) of the territory of a State Party to the territory of any other State Party;

b) in the territory of a State Party to a consumer of services of any other State Party;

c) by a service provider of a State Party upon commercial presence in the territory of any other State Part;

d) by a service provider of a State Party upon presence of persons physical of a State Party in the territory of any other State Party.

3. For the purposes of this Protocol:

a) shall tender for? measures adopted by the States Parts? the measures adopted by:

i. governments and central, state, provincial, departmental, municipal, or local authorities;

ii. nongovernmental institutions in the exercise of powers to them delegated by the governments or authorities mentioned in? i?.

In the fulfillment of its obligations and commitments under this Protocol, each State Party shall take the necessary measures that are within its reach to ensure its observance by governments and state, provincial, departmental, municipal, or local authorities and by existing non-government institutions in their territory;

b) the term? services? includes any service in any sector, except the services provided in the exercise of governmental authority;

c) a? service provided in the exercise of governmental authority? means any service that is not provided under commercial conditions, nor in competition with one or several service providers.

PART II

OBLIGATIONS And GENERAL DISCIPLINES

Article III

Treatment of the most favored nation

1. With respect to the measures understood by this Protocol, each State Party shall immediately and unconditionally hear from the services and service providers of any other State Party a treatment not less favourable than the one that award to similar services and similar service providers from any other State Party or third parties.

2. The provisions of this Protocol shall not be interpreted in such a way as to prevent a State Party from hearing or granting advantages to bordering countries, whether or not States Parties, with a view to facilitating limited exchanges to the border areas contiguous, of services that are produced and consumed locally.

Article IV

Access to markets

1. With respect to access to markets through the modes of provision identified in Article II, each State Party will hear from the services and service providers of the remaining States Parties a treatment no less favourable than that provided for compliance with the specified in your List of specific appointments. The States Parties undertake to allow the cross-border movement of capital that constitutes an essential part of a commitment to access markets contained in its list of specific commitments with respect to cross-border trade, as well as capital transfers to its territory when it comes to commitments to access markets assumed with respect to the commercial presence.

2. The States Parties shall not be able to maintain or adopt, whether in the framework of a regional subdivision or the totality of its territory, measures with respect to:

a) to the number of service providers, whether in the form of numerical contingents, monopolies or exclusive providers of services or upon demand of proof of economic needs;

b) to the total value of the assets or services transactions in the form of numerical contingents or upon the requirement of proof of economic needs;

c) to the total number of service operations or to the total amount of the production of services, expressed in designated numerical units, in the form of contingents or upon the requirement of proof of economic needs, excluded the measures that limit the inputs for the provision of services;

d) to the total number of physical persons that may be employed in a particular sector of services or that a service provider may employ and are necessary for the provision of a specific service and are directly related to the same, in the form of contingents numerics or by requiring proof of economic needs;

and) to types specific legal person or joint company by means of which a service provider can provide a service; and

f) to the share of foreign capital expressed as a maximum percentage limit to holding of shares by foreigners or as a total value of foreign investments individual or aggregated.

Article V

National Treatment

1. Each State Party shall listen to the services and service providers of any other State Party, with respect to all measures affecting the provision of services, a treatment no less favourable than the one who bestows on their own similar services or similar service providers.

2. The specific commitments made by virtue of this Article do not oblique States Parties to compensate for intrinsic competitive disadvantages that result from the foreign character of the relevant services or service providers.

3. Every State Party shall be able to comply with paragraph I by hedging to the services and service providers of the other States Parties a formally identical or formally different treatment to which it bestows to its own similar services and similar providers of services.

4. It shall be considered that a formally identical or formally different treatment is less favourable if it modifies the conditions of competition in favour of the services or service providers of the State Party in comparison with similar services or the providers of similar services of another State Party.

Article VI

Additional appointments

The States Parties will be able to negotiate compromises regarding measures that affect trade in services, but which do not are subject to consignment on lists, by virtue of Articles IV and V, including those who refer to qualification titles, standards or issues relating to the licences. These appointments will be consigned to the list of specific commitments of each State Party.

Article VII

List of Specific Appointments

1. Each State Party shall specify in a list of specific commitments the sectors, sub-sectors and activities with respect to which it will undertake commitments and, for each corresponding mode of delivery, shall indicate the terms, limitations and conditions in respect of of access to markets and national treatment. Each State Party may also specify additional commitments to comply with Article VI. When it is pertinent, each State Party shall specify deadlines for implementation of commitments as well as the date of entry into force of these commitments.

2. Articles IV and V will not apply:

a) to the sectors, subsectors, activities, or measures that are not specified in the List of specific commitments;

b) to the measures specified in your List of specific commitments that are incompatible with Article IV or with Article V.

3. Measures that are incompatible at the same time with Article IV and with Article V should be listed in the Article IV column. In this case, the inscription will be considered as a condition or constraint also to Article V.

4. The Lists of specific commitments shall be annexed to this Protocol and shall be an integral part of it.

Article VIII

Transparency

1. Each State Party shall promptly publish, prior to the date of its entry into force, save situations of force majeany, all relevant measures of general application which refer to this Protocol or affect its operation. Outrossim, each State Party shall publish international agreements that subscribe to any country and refer to, or affect, the trade in services.

2. When it is not possible to publish the information referred to in the preceding paragraph, the same will be available to the public in another way.

3. Each State Party shall promptly, and at a minimum, once a year, to the MERCOSUR Trade Commission, the establishment of new laws, regulations or administrative guidelines or the introduction of modifications to the existing ones that it considers that significantly affect the trade in services.

4. Each State Party shall promptly respond to all requests for specific information that shall form the remaining States Parties concerning any of its general application measures or international agreements referred to in paragraph 1. Outrossim, each State Party shall provide specific information to States Parties that request it, through the established service or services, in accordance with paragraph 4 of Article III of the AGCS, on all such matters or on those that are subject to notification under paragraph 3.

5. Each State Party shall be able to notify the Trade Commission of MERCOSUR any measure adopted by another State Party which, in its judgment, affects the functioning of this Protocol.

Article IX

Dissemination of confidential information

No provision of this Protocol shall impose on the State Party any obligation to provide confidential information the disclosure of which may constitute an impediment to the compliance with laws or otherwise be contrary to the public interest, or may lest the legitimate business interests of public or private companies.

Article X

National regulation

1. Each State Party shall ensure that all measures of general application affecting the trade in services are administered in a reasonable, objective and impartial manner.

2. Each State Party shall maintain or establish courts or judicial, arbitral or administrative procedures that permit, at the request of an affected service provider, the ready review of administrative decisions affecting the trade in services and, when it is justified, the application of appropriate solutions. When such procedures are not independent of the organ in charge of the administrative decision that it is addressed, the State Party shall ensure so that an objective and impartial review is indeed allowed.

The provisions of that item will not be interpreted in the sense of imposing on any State Part the obligation of to establish such courts or procedures when this is incompatible with their constitutional structure or the nature of their legal system.

3. When you require licence, registration, certificate or other type of authorization for the provision of a service, the competent authorities of the State Party to deal with, within a prudential time, from the submission of a petition:

i) When the petition is complete, they will deliberate on the same by informing the person concerned; or

ii) When the petition is not complete, they will inform the person concerned without unnecessary delay about the state of the petition, as well as about additional information that is required in accordance with the law of the State Party.

4. With the aim of ensuring that the measures relating to technical standards, requirements and procedures regarding fitness securities and the requirements on licences do not constitute unnecessary obstacles to trade in services, the States Parties will ensure that these requirements and procedures, among other things:

i) are based on objective and transparent criteria, such as the competence and the ability to render the service;

ii) are no more onerous than necessary to ensure the quality of the service; and

iii) in the case of procedures in respect of licences, do not constitute in themselves a restriction on the provision of the service.

5. Each State Party shall be able to establish the appropriate procedures to verify the competence of professionals in the other States Parties.

Article XI

Acknowledgment

1. Where a State Party shall recognize, in a unilateral manner or through an agreement, the education, experience, licences, enrolment or certificates obtained in the territory of another State Party or of any country that does not integrate MERCOSUR:

(a) nothing of the provisions of this Protocol shall be interpreted to require such a State Part that acknowledges the education, experience, licences, enrolment or certificates obtained in the territory of another State Party; and

b) the State Party shall grant to any other State Party appropriate opportunity for (i) to demonstrate that education, experience, licences, enrolment and certificates obtained in their territory should also be recognized; or, (ii) that may conclude an agreement or equivalent effect convenium.

2. Each State Party undertakes to alight the competent entities in their respective territories, among others, to those of a governmental nature, as well as professional associations and colleges, in cooperation with competent entities of the other States Parties, to develop mutually acceptable standards and criteria for the exercise of the relevant activities and professions in the sphere of services, through the outoring of licences, enrolment and certificates to service providers and to propose recommendations to the Common Market Group on mutual recognition.

3. The standards and criteria referred to in paragraph 2 could be developed, among others, on the basis of the following elements: education, examinations, experience, conduct and ethics, professional development and renewal of certification, scope of action, local knowledge, consumer protection and requirements of nationality, residence or domicile.

4. Once the recommendation referred to in paragraph 2 is received, the Joint Market Group will examine it within a reasonable period of time to determine its consistency with this Protocol. Basing on this examination, each State Party undertakes to instruct its respective competent authorities, when so necessary, the implementation of the decided by the competent instances of MERCOSUR, within a period mutually agreed.

5. The Common Market Group will periodically examine and, at a minimum once every three years, the implementation of this Article.

Article XII

Defense of the competition

With respect to the acts practiced in the provision of services by providers of public or private law services or other entities that are aimed at producing or producing effects on competition within the framework of MERCOSUR and affecting trade in services between States Parties, the provisions will be applied of the Competition Defence Protocol of MERCOSUR.

Article XIII

General Exceptions

Under reserve that the measures that are related to follow are not applied in such a way as to constitute an arbitrary or unjustifiable means of discrimination when they prevail among the countries similar conditions, or a covert restriction on trade in services, no provision of this Protocol shall be interpreted to prevent a State Party from adopting or applying measures:

a) necessary to protect morale or maintain public order, and may only invoke the exception of public order when to set an imminent and sufficiently serious threat to one of the fundamental interests of society;

b) necessary to protect the life and health of people and animals or to preserve the vegetables;

c) necessary to blend the observance of laws and regulations that are not inconsistent with the provisions of the this Protocol, including those relating to:

i) the prevention of practices that induce the fraudulent errors and practices, or the means of dealing with the effects of the disservice of service contracts;

ii) the protection of the privacy of individuals with respect to the treatment and dissemination of personal data and the protection of the confidential character of the records and accounts individual;

iii) the security;

d) incompatible with Article V, as it is expressed in this Protocol, whenever the difference in treatment is aimed at ensuring taxation or the equestic and effective collection of direct taxes concerning the services or service providers of the remaining States Parties, understanding the measures adopted by a State Party by virtue of its tax regime, in accordance with the stipulation in the Article XIV letter d) of the AGCS;

and) incompatible with Article III, as is expressed in this Protocol, where the difference in treatment results from an agreement designed to avoid double taxation or provisions designed to avoid double taxation contained in any other agreement or international convenium that is binding to the State Party that applies the measure.

Article XIV

Exceptions relative to security

1. No provision of this Protocol shall be construed in the sense of:

a) to impose on a State Part an obligation to provide information the disclosure of which this considers to be contrary to the essential interests of its security; or

b) prevent a State Party from adopting measures that this esteem required for the protection of the essential interests of its security:

i) concerning the provision of services targeted directly or indirectly to ensure the supply of the forces armed;

ii) relating to the fissionable or fusionable subjects or those that serve to its manufacture;

iii) applied in times of war or in the event of serious international tension; or

c) preventing a State Party from adopting measures in the performance of the obligations by it taken over by virtue of the United Nations Charter for the maintenance of international peace and security.

2. The Trade Commission of MERCOSUR will be informed of the measures adopted by virtue of the letters b) and c) of paragraph 1, as well as of its deletion.

Article XV

Public contracting

1.Articles III, IV and V shall not be applicable to laws, regulations or prescriptions governing the contracting by government bodies of services for official purposes and not for commercial resale or their use of services for sale commercial.

2.Sem injury to the set out in paragraph 1 and, recognizing that such laws, regulations or prescriptions may have distorting effects on trade in services, States Parties agree that common disciplines that on government procurement in general will be established in MERCOSUR.

Article XVI

Grants

1. The States Parties recognize that under certain circumstances, subsidies may have made distortion in the trade in services. The States Parties agree that they will be established in MERCOSUR.

2.Será of application mechanism provided for in paragraph 2 of the Article XV of the GATS.

Article XVII

Denegation of Benefits

A State Party will be able to denigrate the benefits derived from this Protocol to a service provider from another state Part, subject to the notification and holding of consultations, when that State Party demonstrates that the service is being provided by a person from a country that is not State Party of MERCOSUR.

Article XVIII

Definitions

1. For the purposes of this Protocol:

a)? measure? means any measure adopted by a State Party, whether in the form of law, regulation, rule, procedure, decision or administrative disposition, or in any other form;

b)? provision of a service? includes the production, distribution, marketing, sale and delivery of a service;

c) ? commercial presence?, means every kind of commercial or professional establishment, through, among other means, the constitution, acquisition or maintenance of a legal person, as well as of branches and offices of located representation in the territory of a State Party with the end of providing a service.

d)? sector? of a service means:

i) with reference to a specific commitment, one or several subsectors of that service, or the totality of them, as specified in the List of specific commitments of a State Party;

ii) in other cases, the totality of this service sector, included all sub-sectors.

e)? service of another State Party? means a service provided:

i) either from or within the territory of that other State Part;

ii) in the case of provision of a service by commercial presence or by presence of physical persons, by a service provider of that other State Party;

f) ? service provider? means every person who pays a service. When the service is not provided by a legal person directly, but rather through other forms of commercial presence, for example a branch office or office of representation, we will hear from the service provider nevertheless (that is, to the legal person), through that presence, the treatment bestowing on the service providers by virtue of the Protocol. Such processing shall be bestoed to the presence by means of which the service is provided, without it being necessary to hear it to any other part of the provider located outside the territory in which the service is provided;

g)? consumer of services? means every person who receives or uses a service;

h)? person? means a physical person or a legal person;

i)? physical person of another state Part? means a physical person residing in the territory of that other State Party or of any other State Party and who, in accordance with the legislation of that other State Party, shall be a national of that other State Party or has the right of residence permanent in that other State Party;

j)? legal person? means every legal entity duly constituted or organised in accordance with the legislation applicable to it, whether or not it is for profit, whether public, private or mixed and is organized under any socieage-related or association;

k)? legal person of another State Party? means a legal person who is constituted or arranged in accordance with the legislation of that other State Party, which has in it its registered office and develops or programe to develop substantive commercial operations in the territory of that State Party or from any other State Party.

PART III

LIBERALISATION PROGRAM

Article XIX

Negotiation of Specific Commitments

1. In fulfilment of the objectives of this Protocol, the States Parties shall maintain successive rounds of negotiations with a view to complete within a maximum of ten years, counted from the date of entry into force of this Protocol, the Programme of Liberalization of trade in services of MERCOSUR. The rounds of negotiations will take place annually and will have as their main objective the progressive incorporation of sectors, sub-sectors, activities and modes of service provision to the Liberalization Program of this Protocol, as well as the reduction or elimination of the unfavorable effects of measures on trade in services, as a means of ensuring effective access to markets. This process will be for the purpose of promoting the interests of all participants, on the basis of mutual advantage, and achieving a global balance of rights and obligations.

2. The process of progressive liberalization will be routed in each round through negotiations geared toward increasing the level of specific commitments made by the States Parties to their Lists of specific commitments.

3. In the development of the Liberalization Program will admit to differences in the level of commitments made attending to the specificities of the distinct sectors and respecting the objectives noted in the following paragraph.

4. The liberalization process will respect the right of each State Party to regulate and introduce new regulations within its territories to achieve the national policy objectives regarding the service sector. Such regulations will be able to regulate, among others, national treatment and access to markets, every time they do not negate or harm the emerging obligations of this Protocol and the specific commitments.

Article XX

Modified or Withdrawal of Appointments

1. Each State Party may, during the implementation of the Liberalization Program referred to in Part III of this Protocol, modify or withdraw specific commitments included in its List of Specific Commitments.

This modification or withdrawal can only be applied from the date on which it is established and respecting the principle of non-retroactivity to preserve the acquired rights.

2. Each State Party shall use the present regime only in exceptional cases and provided that, when it does so, notify the Common Market Group and expose in the face of the same facts, the reasons and the justifications for such a modification or withdrawal of commitments. In such cases, the State Party concerned shall request consultations with the Common Market Group or the States Parties that consider themselves affected, to achieve a consensus on the specific measure to be applied and the term of their duration.

PART IV

INSTITUTIONAL ARRANGEMENTS

Article XXI

Council of the Common Market

The Common Market Council will approve the results of the negotiations in matter of specific commitments, as well as any modification and / or withdrawal from them.

Article XXII

Group Common Market

1. The negotiation on services in MERCOSUR is the competence of the Common Market Group. With respect to this Protocol, the Common Market Group shall have the following functions:

a) to convene and supervise the negotiations provided for in Article XIX of this Protocol. To these effects, the Joint Market Group shall establish the scope, criteria and instruments for the conclusion of the negotiations on specific commitments;

b) receive the notifications and the results of the queries regarding the modification and / or withdrawal of specific commitments under Article XX;

c) give fulfillment to the ordered functions in Article XI;

d) periodically evaluate the evolution of trade in services in MERCOSUR; and

e) perform the remaining tasks commissioned by the Common Market Council in respect of trade in services.

2. To the effects of the functions provided above, the Market Group Common will constitute an ancillary organ and regulate its composition and operating modalities.

Article XXIII

Trade Commission of MERCOSUR

1. Without prejudice to the functions referred to in the preceding Articles, the application of this Protocol shall be in charge of the MERCOSUR Trade Commission, which shall have the following functions:

a) receive information that, in accordance with Article VIII of this Protocol, is notified to it by the States parties;

b) receive information from the States Parties with respect to the exceptions provided for in the Article XIV;

c) receive information from States Parties with respect to actions that may be set up in abuses of a dominant position or practices that distort competition and give knowledge to national bodies of enforcement of the Competition Defence Protocol;

d) give treatment the consultations and complaints submitted by the States Parties with respect to application, interpretation or the failure to comply with this Protocol and to the commitments they undertake in the Lists of specific commitments, applying the prevailing mechanisms and procedures in MERCOSUR; and

e) perform the remaining tasks that are commissioned by the Common Market Group, in matters of services.

Article XXIV

Solution of controversies

The controversies that may arise between the States Parties in relation to the application, interpretation or non-fulfilment of the commitments set out in this Protocol, shall be resolved in accordance with the procedures and solution mechanisms prevailing in MERCOSUR.

PART V

FINAL PROVISIONS

Article XXV

Attachments

The Attachments of the present Protocol form an integral part of it.

Article XXVI

Revision

1. For the purpose of achieving the objective and end of this Protocol, this may be revised, considering the evolution and regulation of trade in services in MERCOSUR, as well as the lograined advancements in services in the World Organization of the Trade and other specialized forums.

2. In particular, on the basis of the evolution of the operation of the institutional provisions of this Protocol and the institutional structure of MERCOSUR, Part IV could be modified with views to its improvement.

Article XXVII

Vigence

1. The present Protocol, an integral part of the Treaty of Asuncion, shall have indefinite duration and shall enter into force thirty days after the date of the deposit of the third instrument of ratification.

2. The present Protocol and its instruments of ratification shall be deposited before the Government of the Republic of Paraguay, and which shall send certified copy of the present

Protocol to the Governments of the remaining States Parties.

3. The Lists of specific commitments will incorporate national legal ordinances of compliance with the procedures laid down in each State Party.

Article XXVIII

Notifications

The Government of the Republic of Paraguay shall notify the governments of the other States Parties on the date of the deposit of the instruments of ratification and the entry into force of this Protocol.

Article XXIX

Accession or denunciation

In respect of accession or denunciation, they shall govern as a whole, for the present Protocol, the standards set forth by the Treaty of Asuncion. Accession or denunciation to the Treaty of Asuncion or to the present Protocol, shall mean, ipso jure, the accession or denunciation to this Protocol and to the Treaty of Asuncion.

Article XXX

Denomination

The present Protocol shall be named Protocol of Montevideo on the Trade in Services of the Common Market of the South.

Made in the city of Montevideo, Eastern Republic of Uruguay, at the fifteen days of the month of December of the year one thousand nine hundred and ninety-seven, in an original in the Spanish languages and portuguese, being both texts being equally authentic.

The present version in Portuguese was made in Buenos Aires, Argentine Republic, at the twenty-three days of the month of July one thousand nine hundred and ninety eight.

By the Government of the Argentine Republic GUIDO DI TELLA Minister of Foreign Affairs, Foreign Trade and Culto	By the Government of the Federative Republic of Brazil LUIZ FELIPE LAMPREIA Minister of Foreign Affairs
By the Government of the Republic of Paraguay RUBEN MELGAREJO Minister of Foreign Affairs	By the Government of the Eastern Republic of Uruguay DIDIER OPERTTI Minister of Foreign Affairs.

MERCOSUR ul/cmc/dec No 9/98

PROTOCOL OF MONTEVIDEO S0BRE THE TRADE OF SERVICES OF MERCOSUR-ANNEXES WITH SPECIFIC SECTORAL PROVISIONS AND LISTS OF INITIAL SPECIFIC COMMITMENTS

HAVING IN VISTA: The Treaty of Asuncion, the Black Gold Protocol, the Decision No 13/97 of the Common Market Council and Resolutions No. 67/97 and 32/98 of the Common Market Group.

CONSIDERING:

That Dec. CMC 13/97 provides that the Annexes to the Montevideo Protocol with specific sectoral arrangements are approved by the Common Market Council.

That Dec. CMC 13/97 and the Protocol it Montevideo provides for the approval by the Council of the Initial Specific Commitments of States Parties.

THE COUNCIL OF THE COMMON MARKET DECIDES:

Art. 1. Approve the following Annexes to the Montevideo Protocol on Trade in Services of MERCOSUR, which establish specific sectoral provisions:

-Movement of Physical Persons Makers of Services

Financial Services

- Land and Aquatic Transport Services

- Air Transport Services

Art. 2. Approve the Lists of Initial Specific Commitments of the States Parties.

Art. 3. The Annexes to the Protocol of Montevideo mentioned in the art. 1 are listed as Appendix 1 and are part of this Decision.

The Lists of Initial Specific Commitments of the States Parties mentioned in the art. 2 are listed as Appendix II and are part of this Decision.

Art. 4. As of the date of the adoption of this Decision, the internal procedures necessary for legislative approval and ratification of the Montevideo Protocol on Trade in MERCOSUR Services shall be initiated in the States Parties.

XIV CMC-Buenos Aires, 23 /VII/98.

ANNEX ABOUT THE MOVEMENT OF PERSONS FÍSlCAS

SERVICES MAKERS

1. This Annex applies to measures that affect physical persons who are the service providers of a State Party, and to physical persons of a State Party who are employed by a service provider of a State Party, with respect to the provision of a service.

2. The Protocol shall not apply to measures that affect physical persons seeking access to the labour market of a State Party or to the measures in respect of citizenship, residence or employment with permanent character.

3. In accordance with Parts II and III of the Protocol, States Parties will be able to negotiate specific commitments applicable to the movement of all categories of physical persons providing services under the Protocol. It will allow physical persons covered by a specific commitment to provide the service of which it treats in accordance with the terms of that commitment.

4. The Protocol will not prevent a State Party from applying measures to regulate the entry or temporary stay of physical persons on its territory, including the necessary measures to protect the integrity of its borders and ensure the movement orb of physical persons through the same, whenever such measures do not apply in a manner to annul or reduce the resulting advantages for a State Part of the terms of a specific commitment.

5. To regulate a certain situation of labor indole that affects physical persons who are the service providers of a State Party or physical persons of a State Party who are employed by a service provider of a State Party, the right of the place of execution of the service contract shall be applicable.

ANNEX ON SERVICES FINANCIAL

1. Scope or Scope of Application

a) The present Annex applies to all measures of a State Party that affects the provision of financial services. References in this Attachment to the provision of a financial service means the provision of a financial service under the definition set out in paragraph 2 of Article II of the Protocol.

b) For the purpose of paragraph 3 (b) of Article II of the Protocol, it shall be understood to ? services provided in the exercise of the government authorities of the States Parties? the following activities:

i) the activities carried out by a central bank or a monetary authority or by any other public entity of the States Parties in the application of monetary or exchange rate policies;

ii) the activities that form part of a legal system of social insurance or public retirement plans;

iii) other activities carried out by a public entity on account of or with warranty of States Parties or with use of financial resources of the latter.

c) For the purposes of paragraph 3 (b) of Article II of the Protocol, if a State Party authorize its financial service providers to develop any of the activities mentioned in the incisos ii) and (iii) of this paragraph in competition with a public entity or with a financial service provider, the term? services? will understand these activities.

d) The definition of paragraph 3 (c) of Article II of the Protocol shall not apply to the services covered by this Annex.

2. Transparency and Disclosure of Confidential Information

For the purpose of VlIl and IX articles of the Protocol and for greater clarity, it is understood that no provision of the Protocol shall be construed to oblige a State Party to reveal information relating to business and accounting of private customers nor any information confidential or from private domain in power of public entities.

3. Prudential Measures

a) No provision of this Protocol shall be construed as a impediment so that States Parties may adopt or maintain reasonable measures for prudential reasons, for:

i) protect investors, depositors, financial market participants, policyholders, or persons with whom a financial service provider has contracted a fiduciary obligation,

ii) to ensure the solvency and liquidity of the financial system.

When those measures are not in compliance with the provisions of the Protocol, no should be used to evade the commitments and obligations contracted by States Parties under the framework of the Protocol.

b) When applying its own measures relating to financial services, a State Party may recognize the prudential measures of another State Party. Such recognition could be:

i) unilaterally outwar,

ii) can be effected by harmonization or otherwise,

iii) or could be based on an agreement or convenium with the State Party in question

c) The State Party that callers to another State Party Part recognition of prudential measures in accordance with point (s) b) will grant appropriate opportunities to the remaining States Parties so that they can demonstrate the existence of equivalence in regulations, supervision and enforcement of so-called regulations, and if it is the case, in the procedures for the exchange of information between the parties.

d) When a State Party outorates to another State Party recognition of the measures prudential as per (b) iii and the conditions stipulated in (c) exist, this shall grant appropriate opportunities to the remaining States Parties concerned to negotiate their adherence to such agreements or arrangements, or to negotiate with it other similar agreements or congeniums.

e) Agreements or arrangements based on the principle of recognition will be informed promptly and, at least annually, to the Common Market Group and the MERCOSUR Trade Commission to comply with the provisions of the Protocol (Art. VlIl and Art. XXll).

4. Commitment to Harmonization

The States Parties undertake to continue moving forward in the harmonization process, as per the approved tariffs and to be approved by the Common Market Group, in the prudential regulations, in the consolidated supervisory regimes and in the exchange of information in financial services.

5. Definicons

For the purposes of this Annex:

a) By financial service understands all the service of financial character offered by a service provider financial from a State Party. Financial services comprise all insurance and insurance-related services and all banking services and other financial services.

Notwithstanding, the States Parties undertake to harmonize the definitions of the activities of the various financial services, and as the basis of paragraph 5 of the Annex on Financial Services of the General Agreement on Trade in Services (GATS) of the World Trade Organization (WTO).

b) A financial service provider means any physical or legal person of a State Party that pay or wish to provide a financial service, but does the expression? provider of financial services? does not include a public entity.

c) By? public entity? whether it is understood:

i) a government, a central bank or a monetary authority of a State Party, or an entity owned or controlled by a State Party, which is principally engaged in performing governmental functions or carrying out activities for governmental purposes, excluding entities devoted primarily to the provision of financial services under commercial conditions; or

ii) a private entity that performs the functions normally performed by a central bank or a monetary authority, while exerting these functions.

ANNEX ABOUT TRANSPORT SERVICES

TERRESTRIAL AND BY WATER

1. This Annex applies to measures that affect the trade in land transport services (road and rail) and water.

2. The application of this Protocol shall not initially affect the rights and obligations arising from the application of the multilateral agreements signed between the States Parties to MERCOSUR prior to the entry into force of this Protocol, to the extent that such agreements aimed at harmonizing and controlling the conditions of competition between transport companies, observing as a basic priority the intra-MERCOSUR liberalisation of the sector.

3. The provisions of this Protocol shall not temporarily apply to each of the bilateral agreements on transport in force or signed prior to the entry into force of this Protocol.

4. Each of the bilateral and multilateral agreements mentioned in paragraphs 2 and 3 will maintain their duration and will be complemented by the corresponding emerging specific commitments of the Liberalization Program.

5. The Common Market Group during the third year after the entry into force of this Protocol and once a year since then, will examine and consider the breakthroughs to be achieved as a result of the compatibilization of the previously mentioned instruments with the objectives and principles of this Protocol.

ANNEX ON AIR TRANSPORT SERVICES

1. This Annex applies to measures that affect the trade in air transport services, whether regular or non-regular.

Similarly, and of application to ancillary services to air transport, understanding of such those included in the General Agreement on Trade in Services (A.G.C.S.) and those that timely may result from the revisions of this Attachment.

2 A The application of this Protocol shall not affect the rights and obligations arising from the implementation of bilateral, plurilateral or multilateral agreements firmed up by the States Parties of MERCOSUR, beholstered at the time of entry into force of the Montevideo Protocol.

3. The Protocol shall not be applicable to measures affecting the rights relating to the commercial aerocommercial traffic established for routes agreed upon pursuant to the Agreements on bilateral Air Services signed between the States Parties, and the exclusion of the traffic in cabotage.

4. With respect to regular and exploratory sub-regional air services on routes other than the regional routes effectively operated under the bilateral Air Services Agreements signed by the States Parties, the provisions shall apply of the Agreement on Sub-Regional Air Services firmed in Fortaleza, Brazil, on December 17, 1996 and complements the lists of emerging commitments of the Liberalization Program.

5. The procedures and mechanisms of solution of prevailing controversies in MERCOSUR may be invoked when no other specific solution mechanism is contemplated between the States Parties involved.

6. The Common Market Group, within the first three years of the entry into force of this Protocol, shall revise this Annex on the basis of the proposals effecting the technical experts in air transport representatives of the four States Parties, with the goal to decide on the modifications that are made necessary, including the aspects concerning the scope of application, in line with the principles and objectives of this Protocol.

7. Should a Multilateral Convention include in its provisions the treatment of air transport, the Aeronautical Authorities of the States Parties shall conduct consultations with the aim of determining the degree to which this Protocol may be affected by the provisions of the Convention and decide on the modifications to be made necessary in this Annex.