Services are not defined in the WTO’s General Agreement on Trade in Services, nor by the CEFTA 2006. Article 56 of the Treaty on the Functioning of the EU (TFEU) defines “services” as activities provided in exchange for payment. Unlike goods, services are intangible and can be delivered physically or electronically. 

The CEFTA 2006 defines the notion of trade in services “in accordance with Article I and, if appropriate, Article XXVIII of the General Agreement on Trade in Services”, which describes the notion of trade in services as:

“the supply of a service:

(a) from the territory of one Member into the territory of any other Member;

(b) in the territory of one Member to the service consumer of any other Member;

(c) by a service supplier of one Member, through commercial presence in the territory of any other Member;

(d) by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member”.

Services can be traded through four primary modes of supply:

  • Mode 1: Cross-border supply: Services delivered from one Party to another, such as telecommunications or financial services;
  • Mode 2: Consumption abroad: Consumers traveling to another Party to receive a service, like tourism or education;
  • Mode 3: Commercial presence: A company from one Party establishing a physical presence in another Party to provide services, such as a bank or insurance company;
  • Mode 4: Presence of natural persons: Individuals from one Party providing services in another, such as consultants or engineers.

The General Agreement on Trade in Services (GATS) is a multilateral agreement within the World Trade Organization (WTO) framework that establishes rules for trade in services. Its primary objectives are:

  • To liberalise trade in services sectors, such as telecommunications, financial services, and tourism; and
  • To create a predictable international system of rules for trade in services.

The GATS sets out key principles like the most-favoured-nation (MFN) treatment and the national treatment (NT), aimed at ensuring that foreign service providers are not discriminated on the basis of the origin of the supplier or the service and are treated no less favourably than domestic ones in WTO Members.

  • Most-favoured-nation (MFN) treatment requires that WTO Members treat services and service suppliers of any other WTO Member no less favourably than those of any other WTO Member. This aims at preventing discriminatory treatment between different WTO Members; and
  • National treatment (NT) requires that each WTO Member treats services and service suppliers of other WTO Members no less favourably than its own domestic services and service suppliers. This means that foreign service providers shall not be subject to more burdensome regulations or restrictions than domestic ones. 

Other commitments under the GATS include transparency obligations, requiring the publication of relevant laws and regulations, as well as means to facilitate the recognition of professional qualifications among WTO Members.

A great number of services are covered under the GATS, although some exceptions exist. The full list of those sectors and sub-sectors covered by the GATS is provided here, as prepared by the WTO Secretariat to inform on the implementation of the GATS by establishing a clear classification of existing services sectors.

Trade agreements typically employ either positive or negative lists to outline the scope of commitments for liberalising trade in services. This is done by inscribing their commitments and the exceptions to them in the respective Schedules of Commitments.

Positive lists

  • Explicitly listing the sectors and subsectors open to foreign competition; and
  • Specifying any limitations or conditions attached to these commitments.

Negative Lists

  • Listing only the sectors or subsectors excluded from liberalisation; and
  • All other sectors are considered open to foreign competition, subject to general rules and regulations.

Trade agreements often include “standstill” and “ratchet” clauses. A standstill clause compels the parties to the agreement to keep the market as open in the future as it was at the time when the trade agreement was concluded, while a ratchet clause prohibits parties to unilaterally revert back trade-opening measures. Despite these commitments, parties can typically still implement non-discriminatory regulations to protect public interests, such as consumer safety, environmental standards, and public health.

Section A of Chapter VI of the CEFTA 2006 ‘Services’ outlines a framework for liberalising trade in services among CEFTA Parties.

Under Article 27 of the CEFTA 2006, the CEFTA Parties committed to “gradually develop and broaden their co-operation with the aim of achieving a progressive liberalisation and mutual opening of their services markets, in the context of European integration, taking into account the relevant provisions of the GATS and commitments entered into under GATS by Parties being WTO members”.

While the CEFTA 2006 does not mandate specific liberalisation measures, it encourages CEFTA Parties to work towards a progressive liberalisation of trade in services, taking into account their individual commitments under the GATS.

The CEFTA 2006 also recognises the importance of electronic commerce and promotes cooperation in addressing the regulatory challenges associated with it (Article 28 of the CEFTA 2006). The CEFTA Joint Committee is given a crucial role in reviewing progress and initiating negotiations for deeper liberalisation if appropriate (Article 29 of the CEFTA 2006).

In December 2019, the CEFTA Joint Committee adopted the CEFTA Additional Protocol No.6 on Trade in Services (AP6), which entered into force on 11 January 2021. It extends the scope of CEFTA’s trade liberalisation to trade in services.

The AP6 contains commitments in a number of key areas, such as:

  • Market Access (Article 4);
  • Movement of Natural Persons (Article 8 and Annex I on “Temporary Entry and Stay of Natural Persons for Business Purposes”);
  • Transparency (Article 9);
  • Recognition of Professional Qualifications within CEFTA (Article 11);
  • Monopolies and Exclusive Service Suppliers (Article 12);
  • Business Practices (Article 13);
  • Payments and Transfers; (Article 14);
  • Telecommunications (Annex II on “Regulatory Principles Regarding Telecommunications); and
  • Cooperation on Electronic Commerce (Article 18).

Substantively, the main contributions of the AP6 consist in the establishment of an obligation for the CEFTA Parties to remove existing restrictions on trade in services and to guarantee that they are not introduced again (Article 4 of the AP6). This refers to restrictions affecting market access, which can take the form of, inter alia, maximum or minimum thresholds, quotas or economic tests (for instance, by limiting the number of service suppliers or the capital participation in domestic companies of foreign actors) or those that discriminate based on the local or non-local character of a company (for example, by requiring different fees and charges or establishing criteria of local residence). Related obligations are listed in Annex 3 to the AP6 providing the “Consolidated Schedule of Specific Commitments on Trade in Services of CEFTA Parties”, which also lists all relevant exemptions.

Under the AP6, CEFTA Parties committed to allow companies from CEFTA Parties to send workers to other markets for limited periods of time (for instance, trainees for a maximum period of one year, as per Annex I). Nevertheless, the AP6 recognises CEFTA Parties’ right to impose conditions on service providers from other CEFTA Parties, such as licensing, specific qualifications, or adherence to standards. However, these conditions must be based on “objective and transparent criteria” and must not be “more burdensome than necessary”. 

Based on the AP6, CEFTA Parties have taken concrete steps to facilitate trade in services, notably through the adoption of several recent decisions.

In 2020, CEFTA initiated intra-regional regulatory cooperation in the tourism sector. To deepen market integration, CEFTA Parties focused on addressing key obstacles, such as licensing requirements for tourism agencies and tour operators. In view of relevant EU regulations and practices, CEFTA adopted Decision No. 6/2024 on Facilitating Trade in Services Supplied by Travel Agencies and Tour Operators.

Decision No. 6/2024 on liberalising trade for travel agencies and tour operators introduces several key measures:

  • Mutual recognition of licenses: Eliminates the need for agencies to reapply for permits in each CEFTA Party, reducing administrative burdens;
  • Standardised documentation: Mandates the acceptance of equivalent documents from other CEFTA Parties, streamlining approval processes;
  • Simplified temporary service provision: Removes restrictive conditions on short-term operations in other CEFTA markets, requiring only a prior declaration; and
  • Alignment with EU Regulatory Standards: Creates a more integrated and competitive environment, facilitating cross-border operations.

These measures address critical regulatory barriers, such as duplicative licensing requirements and inconsistent documentation standards, enabling agencies to expand and operate seamlessly across CEFTA Parties.

On 9 October 2024, as part of a strategic effort to improve intra-CEFTA parcel delivery services and align its regulation with the EU acquis and best practices, as set out in the Common Regional Action Plan 2021-2024, the CEFTA Joint Committee adopted Decision No. 3/2024 on Inter-Party Parcel Delivery Services.

The CEFTA Decision on Inter-Party Parcel Delivery Services introduces several key measures to streamline and facilitate cross-border parcel delivery within the region:

  • Disclosure of pricing information: Enhances transparency and promotes competition among public postal service operators;
  • Framework for cooperation and standardization: Fosters a more efficient and interconnected market by establishing a common platform for collaboration; and
  • Future collaboration: Lays the groundwork for future cooperation in areas such as service quality standards and environmental sustainability, contributing to the overall improvement of parcel delivery services.

CEFTA is taking steps to address potential barriers posed by requirements for professional qualifications. Building on a pilot project to establish a general system of mutual recognition of professional qualifications mandated by the CEFTA Joint Committee in 2020 to the Subcommittee on Trade in Services, experts from the CEFTA Parties have agreed on the text of a Decision on Establishing a General System of Recognition of Professional Qualifications. The Decision still needs to be adopted by the CEFTA Joint Committee.  

CEFTA also maintains a Joint Working Group on Mutual Recognition of Professional Qualifications between CEFTA, the Education Reform Initiative of South Eastern Europe (ERISEE), and the Regional Cooperation Council (RCC) Social Agenda Working Group (SAWG). The Joint Working Group was established by Decision No. 2/2015 on the Amendment to Decision No 5/2014 of CEFTA Joint Committee and operates under the auspices of the RCC and the CEFTA Subcommittee on Trade in Services. The purpose of the Joint Working Group is to:

  • To facilitate negotiations for mutual recognition agreements of professional qualifications, which are of mutual interest to the CEFTA Parties; 
  • To work towards enhancing transparency of arrangements on recognition of professional qualifications; 
  • To enhance regional data exchange on the mobility of professionals; and
  • To encourage overall intra-regional labour mobility.

Electronic commerce is a vital sector of CEFTA, as recognised by Article 28 of the CEFTA 2006, which calls for closer cooperation in this field among CEFTA Parties, stating that “The Parties, recognizing that the use of electronic means increases trade opportunities in many sectors, agree to promote the development of electronic commerce between them, in particular by cooperating on the  market access and regulatory issues raised by electronic commerce”.

Article 18 of the AP6 regulates Parties’ Cooperation on Electronic Commerce, notably by:

  • Establishing a common framework of high standards of data protection (Article 18.2); 
  • Ensuring the non-application of Customs duties on digital services (Article 18.3); and  
  • Prescribing regulatory dialogue on key issues like electronic signatures, consumer protection, and platform liability (Article 18.4).

The E-commerce Roadmap, endorsed by the CEFTA Joint Committee in 2020, outlines priorities such as the harmonisation of core rules, introducing a common market principle, simplifying Customs procedures for parcels, and removing unjustified geo-blocking. This commitment to e-commerce was later ratified by the adoption of the Common Regional Action Plan 2021-2024 and, most notably, the Joint Committee Decision No. 2/2024 on Facilitation of Electronic Commerce.

Decision No. 2/2024 makes key contributions to facilitating electronic commerce through the following elements:

  • Prohibition of prior authorisation: Ensures that information society service providers can operate without unnecessary regulatory barriers, promoting easier market entry;
  • Consumer protection standards: Harmonises consumer protection measures, ensuring a high level of trust and safety for consumers engaging in electronic commerce;
  • Administrative cooperation: Encourages collaboration among CEFTA Parties to share information and best practices, enhancing regulatory efficiency and responsiveness;
  • Transparency and fairness: Promotes fairness and transparency for business users of online intermediation services, fostering a competitive and equitable market environment; and
  • Alignment with EU standards: Aims to align CEFTA regulations with advanced EU standards, facilitating smoother trade relations and integration with larger markets.

 

Geo-blocking refers to the practice of restricting access to online content or services based on a user’s location. This can involve blocking access to websites, displaying different content, or offering different prices to users from specific regions. In 2024, the CEFTA Joint Committee adopted Decision No.4/2024 on the Prevention of Unjustified Geo-blocking, which aims at combating unjustified geo-blocking within CEFTA, ensuring that consumers can access goods and services online without discrimination based on their location. This Decision pursues this objective by means of the following obligations:

  • Prohibition of geo-blocking: Traders are prohibited from blocking or limiting access to their online interfaces based on the customer’s provenance or residence, ensuring equal access to services across CEFTA Parties;
  • Non-discriminatory access conditions: The Decision mandates that general conditions of access to goods and services must not contain discriminatory provisions related to the customer’s provenance or residence, promoting fair competition;
  • Transparency requirements: Traders must provide clear explanations to customers regarding any necessary blocking or redirection of access, enhancing transparency and consumer trust; and
  • Consumer assistance mechanisms: Each CEFTA Party is required to designate bodies responsible for assisting consumers in disputes, ensuring that consumer rights are upheld and fostering a more secure trading environment.

CEFTA Parties shall provide Party-specific information related to services.