RESTRICTED  WORLD TRADE  
ORGANIZATION  S/WPGR/M/45 
18 December 2003 
 (03-6654) 
Working Party on GATS Rules  
   
REPORT OF THE MEETING OF 2 DECEMBER 2003 
 
Note by the Secretariat
1 
  1. The Working Party on GATS Rules opened its forty-fifth meeting under the chairmanship of 
Mr. Santiago Urbina, from Nicaragua.  The agenda for the meeting was contained in WTO/AIR/2221.  
It included the following items:  Annual Report of the Working Party on GATS Rules to the Council 
for Trade in Services, emergency safeguard measures , government procurement, subsidies, date of the 
next meeting, and other business.  To assist dele gations in the preparation of the meeting, the 
Chairperson had prepared an annotated agenda contained in JOB(03)/215.   
2. The representative of Brazil
 enquired about the status of the study on subsidies being 
undertaken by UNCTAD and wondered whether the Chai rperson could address this topic under "other 
business".  The Chairperson  said he would comment on this issue under the agenda item pertaining to 
negotiations on subsidies.  There was no request to  add any items under Other Business.  The agenda 
for the meeting was adopted .   
I. ANNUAL REPORT OF THE WORKING PARTY ON GATS RULES TO THE 
COUNCIL FOR TRADE IN SERVICES (2003) 
3. The Chairperson  explained that the Working Party need ed to adopt its Annual Report to the 
Council for Trade in Services.  He recalled that, in view of the Cancun Ministerial Meeting, the Working Party on GATS Rules had adopted, in Ju ly 2003, an update to its 2002 Annual Report, 
contained in document S/WPGR/12, which covere d the meetings of the Working Party up to 
May 2003.  Short and factual, the draft Annual Report  that Members needed to adopt at this meeting 
covered meetings held in July and October, and w as contained in document S/WPGR/W/45.  It had to 
be read in conjunction with the July update.  The Working Party was invited to adopt this report and transmit it to the Council for Trade in Services.   
4. A number of delegations proposed drafting changes to the draft report.  The following 
delegations participated in the ensuing discussion:   Switzerland, Philippines, United States, Brazil, 
European Communities, India, Mexico, Canada, and China.  Following a number of revisions, 
Members adopted
 the Annual Report, which was circulated as document S/WPGR/13.   
II. NEGOTIATIONS ON EMERGENCY SAFEGUARD MEASURES (ARTICLE X) 
5. The Chairperson  recalled that at the last meeting th e delegation of Switzerland had presented 
a non-paper that examined an hypothetical scenar io and analysed the possibilities available to a 
Member in the absence of an ESM.  Also, the dele gation of Thailand, speaking for a number of other 
delegations, had provided answers to questions previously asked regarding how a particular ESM 
model might apply to a hypothetical situation.  He invited delegations to pursue their discussion on 
that basis, given that many could only express prelim inary comments at the last meeting.  In light of 
                                                      
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO.  S/WPGR/M/45 
Page 2  
 
some of the issues mentioned by delegations at the l ast meeting, he suggested that questions that could 
be addressed related, for example, to the following:  in responding to a given situation, what was the 
role and relevance of domestic re gulation and of other measures permitted by GATS, and what was 
the importance of the type of commitment inscribed in the schedule?  What would be the form and 
effect of the emergency safeguard measure used to r eact to the situation describ ed in the hypothetical 
example?  What would be the role and releva nce of an emergency safeguard mechanism in 
encouraging more commitments or more liberal commitments?  Delegations might also wish to 
consider whether other ESM models or approaches, or  other hypothetical situations, might help bring 
forward relevant considerations.  While it was hi s desire to pursue the discussion in light of the 
substantive contributions made at the last meeting,  the Chairperson undersco red that the deadline for 
these negotiations was fast approaching.  Docume nt S/L/102, adopted by the Council for Trade in 
Services on 15 March 2002, extended the deadline to 15 March 2004.  He indicated that he would 
subsequently take the floor in order to invite view s from delegations as to how best to proceed up to 
mid-March, given that the Working Party currently had only one other formal meeting planned before 
the expiration of the deadline, tentatively scheduled  at present for the first week of February.    
6. The representative of Brazil
 thought that, in addition to the questions formulated by the 
Chairperson, another relevant item to guide discussi ons related to how a collective mechanism such as 
an ESM would stimulate Members to get rid of, and stop resorting to, certain entries in schedules that could have an effect equivalent to that of an ESM.  The representative of the United States
 considered 
that the annotated agenda contained the Chairpers on's suggestions to help guide discussions, but was 
not something that Members needed to agree to.   
7. The representative of the Philippines , speaking also for the delegations of Brunei Darussalam, 
Indonesia, Malaysia and Thailand, wished to offer some observations on the non-paper from the 
delegation of Switzerland.  While measures such as zo ning or shopping-hour regulations might help to 
alleviate, to a certain extent, injury suffered by  domestic industry, he did not think these were 
sufficient to address fully the problem sought to be rectified through an emergency safeguard 
measure.  Domestic regulations did not really reduc e the inflow of foreign service suppliers, in this 
case foreign retailers, which might benefit from su ch advantages as access to greater resources, 
economies of scale, or integrated network of affiliates.  What was really required was a measure to allow domestic service suppliers to have time to adju st.  Regarding zoning regulations, he considered, 
as mentioned by the representative of Korea at the l ast meeting, that such measures might be related 
to economic needs tests found in schedules.  He al so wondered whether zoning  regulations would not 
simply result in displacing the injury from one area to another.   
8. The representative of Brazil
 stated that his delegation was not campaigning for or against an 
ESM.  Rather, his delegation wanted to analyse th e tools available within GATS so as to make the 
whole architecture of the Agreement more transparen t and predictable.  He saw the question of ESM 
in that light.  With respect to the non-paper from Sw itzerland, he agreed that the GATS was a flexible 
agreement but noted that Members nevertheless need ed to be very cautious before undertaking a 
commitment.  Being cautious did not preclude th e occurrence of unforeseen events, however, which 
was why the Agreement's flexibility was not sufficient.  Emergency safeguard measures thus had a role to play.  He thought that an ESM would be pr eferable to the scheduling of economic needs tests 
(ENTs).  Many, if not most, of the numerous EN Ts listed in schedules had no clear criteria and 
produced an effect equivalent to that of a safeguard.  He thought it was preferable to discuss the issue 
multilaterally so as to design a mechanism that could be  supervised collectively, rather than to have 
individual Members craft and list their own ESM in their schedules.  Regarding domestic regulations, 
he did not think that it was advi sable to use domestic regulations as a way to overcome  an unforeseen 
problem arising from commitments undertaken.  He also wondered whether Switzerland could further 
explain the relevance of the non-discriminatory pr ogramme for the training of workers, which was 
suggested in the non-paper.  Finally, he e xpressed doubts about two other alternative avenues  S/WPGR/M/45 
 Page 3 
 
 
mentioned by Switzerland, i.e., Article XXI pr ocedures and seeking a waiver.  Specifically, he 
wondered why it would not be feasib le to withdraw a commitment temporarily if it was possible to do 
so permanently under Article XXI.   
9. The representative of Hong Kong, China  thought that discussing examples was useful since it 
helped to focus on the concrete issues that delegati ons had to face in the consideration of an ESM.   
Regarding the non-paper presented by Switzerland,  he agreed that the GATS provided great 
flexibility, and noted that it was essential to ha ve the proper regulatory framework in place when 
undertaking liberalisation so as to cater for the structural adjustment that might occur as a 
consequence.  He had reservations about the suggest ion that economic needs tests could be a solution.  
It was not apparent that ENTs were intended to a ddress situations similar to those for which an ESM 
might be needed.  Economic needs tests were su pposed to be based on clear, objective and pre-
established criteria.  Their application should thus be predictable.  An ESM would be intended, in 
contrast, to address unforeseen or emergency circumst ances.  An ENT could thus not be used to 
address the latter set of circumstances.  He indi cated that, had he to choose between ENTs and 
multilateral rules to address unforeseen and emerge ncy circumstances, the initial preference of his 
delegation would be the latter.  Re garding economic needs tests that lacked clear criteria, he thought 
this was a problem in itself.  Regarding the role a nd relevance of domestic regulation in responding to 
a given situation, he thought that the GATS, by permitting non-discriminatory domestic regulations, 
provided ample flexibility to governments in dealing w ith any situation that might arise, even when 
full commitments were undertaken.  He was not cer tain, however, whether some of the situations 
suggested in the Swiss paper could really be consid ered as measures that would be consistent with a 
full commitment.  With respect to the suggestion to  have different shopping hours for small retailers 
and large retailers, he wondered, in the event all the large retailers were foreign and all the small 
retailers were domestic, and if the intent of differe ntial treatment related to national origin, whether 
the possibility of a de facto  national treatment violation would arise.  Determination of what 
regulations would be consistent with commitments could only be done on a case-by-case basis.   
10. Turning back to the Shangri La example pr eviously presented, the representative of Hong 
Kong, China had some questions for the group of de legations that had indicated that such example 
could justify the use of emergency safeguard meas ures.  He asked what were the emergency and 
unforeseen circumstances that required the use of emergency safeguard measures and whether such 
circumstances arose from liberalization undertak en or commitments made?  Was that only a 
transitional problem?  Were the circumstances mentioned in the example different from structural 
adjustment, which was presumably unavoidable a nd should have been foreseen when undertaking 
reforms and liberalization?  What kind of m easures would have been undertaken to address the 
situation in the example of Shangri La and why were  such measures not listed in the schedule?  How 
did the situation in that example differ from a scenario where withdrawal of commitments was 
intended?   
11. The representative of China  wished to comment on the non-paper presented by Switzerland.  
Referring to the perceived flexibility at the time of making commitments, he said that China's commitments had not been made according to the le vel of development of Chinese services industry, 
or to regulatory capacity, because of the nature of accession negotiations.  Moreover, China had not 
been allowed to inscribe an ENT in its schedule.  China had made commitments, including phase-in 
commitments, in sectors where it had little experience.  He indicated that it was hard, at the time a 
commitment was made, to predict the results of libera lisation.  As a result, ESM was an issue that was 
seriously considered by China during the current services negotiations.  His delegation thought that a 
safeguard mechanism would be helpful for further liberalization in the new round of negotiations and 
that the absence of such a mechanism might l ead the domestic industry to consider further 
commitments to be neither feasible nor desirable.  Liberalization might then take place according to 
one's own development level and regulatory capacity.   S/WPGR/M/45 
Page 4  
 
12. The representative of th e European Communities
 considered that the Shangri La example was 
special in that it related to the issue of large reta ilers versus small retailer s, rather than domestic 
suppliers versus foreign suppliers.  It might be that large retailers originated in other countries, but 
that was not always the case.  Increasingly, supermarkets from developing countries were expanding within their own country, as well as abroad.  Distin ctions between large and small retailers could not 
simply be equated to issues relating to foreign versus domestic suppliers , which was probably why 
Switzerland had mentioned the role of domestic regu lation. She asked whether the delegation of the 
Philippines could explain how time would permit small retailers to adjust to competition from large 
retailers, which might be forei gn or domestic.  She did not see how the protection of domestic 
industry for a period of time would allow small reta ilers to adjust to competition from large retailers 
and felt that such an issue would be more appropria tely dealt with through domestic regulation than 
by keeping foreign suppliers out of the market.   
13. The representative of Indonesia
 agreed with Switzerland that the GATS was flexible and that 
Members had policy options to react when facing a situation such as that of Shangri La.  Members could, for instance, liberalize autonomously at th e national level only and decide at a later stage 
whether to make commitments under GATS.  Th e issue at stake, though, was whether GATS 
provisions as they now stood adequately addressed the situation where a Member, after having undertaken market access commitmen ts, suffered serious injury because of a radical increase in 
imports of services.  He  said that the existing pr ovisions of the GATS were not designed to protect 
the domestic industry in such a situation, as a Member currently could not respond swiftly to deal with it.  Emergency situations could only be addressed through tem porary measures taken in a timely 
manner.  Temporary suspension might be appropriate in certain cases in order to address injury.  
Regarding domestic regulations, he considered th at these might only serve as a partial solution and 
could not be used to address the underlying problems.   
14. The representative of Switzerland
 indicated that the non-paper by his delegation examined a 
range of possibilities available to a government in a gi ven situation, but recalled that it did not express 
a preference for any of the particular measures mentioned.  Regarding the comments made by the 
delegation of the Philippines, he said that his de legation had never argued th at one given measure, 
such as zoning plans, would be sufficient to address  fully the problem at hand.  He thought there was 
a large array of measures that could be taken and that, in such a context, an ESM did not provide 
added value.  The non-paper showed that the GATS w as flexible and that a variety of avenues could 
be used on a case-by-case basis.  He considered that  even an ESM would not be sufficient to address 
fully the situation at hand in the Shangri La exampl e, because structural problems could not be solved 
by an emergency safeguard measure.  With regard to  a point previously raised about the link between 
zoning plans and specific commitments, he considered  that zoning plans, because they were not listed 
as a market access limitation in Article XVI, were deemed prima facie  to be a domestic regulation.  
Zoning plans had to be used sensibly and not as a disguised trade barrier.  In reaction to the 
intervention made by the representative of China, he  recognized that there was a difference in levels 
of commitments between original and more recent Memb ers.  In any event, he was not aware of cases 
where an ESM was the only possible means of resolv ing a given problem and felt viable alternatives 
existed for all Members, notwithstanding th e time at which they joined the WTO.   
15. Regarding a point raised by the representativ e of Hong Kong, China, the representative of 
Switzerland indicated that the problem at hand was st ructural and related to the relationship between 
small retailers and large retailers, as noted by th e representative of the EC.  Domestic regulations 
sought to address this structural issue, but not to k eep foreign suppliers out of the market for a certain 
period of time.  Restrictions on foreign suppliers  through an ESM would not help to solve this 
problem.  Concerning the points raised with regard to  economic needs tests, he said that his delegation 
was of the view that ENTs should be removed wh enever possible.  When they needed to be 
scheduled, ENTs had to be based on objective, transp arent and predictable criteria.  He disagreed with  S/WPGR/M/45 
 Page 5 
 
 
the idea that an ESM would make commitments more liberal.  Rather, it would diminish and compromise the value of commitments negotiated du ring the Uruguay Round.  Finally, recalling that 
the purpose of an ESM allegedly was to address emergency and unforeseeable effects caused by commitments, he wondered whether these could o ccur when commitments had been in effect for 
many years.  For example, he did not see why, when Members had commitments in place for some 
10 years or so, an ESM should continue to  apply to all Members and all sectors.   
16. The representative of Philippines
, speaking also on behalf of Brunei Darussalam, Indonesia, 
Malaysia and Thailand, agreed, like Switzerland a nd others, that the GATS was flexible, but noted 
that because of other factors a Member might, notwith standing that flexibility, be constrained at the 
time of taking commitments.  Concerning the point ma de by Switzerland that an ESM was not needed 
because a government could use a variety of measur es even when commitments  had been made, he 
said that he saw domestic regulations as something that  should not be used to discriminate against 
foreign suppliers.  Domestic regulations, as understood under the GATS, should not serve as a 
disguised market access barrier.  He considered th at this discussion highlighted that an ESM was 
necessary, desirable and feasible, and wondered why a case could be made for an ESM in the goods 
sector, but not in services.  Regarding the point by the representative of the EC that the use of an 
emergency safeguard measure in the case at hand w ould not help to solve a structural problem, he 
thought one could not imply that all problems were structural and that they could never be overcome 
after a given period of time.  In any event, an emergency safeguard measure could only be employed for a limited period.  The group of delegations he was speaking for had mentioned a time limit of 
three years for developing countries, perhaps with th e possibility of extension.  There was no intention 
to suggest that modification of commitments be permanent.  A key difference between the model 
proposed by ASEAN in 2000 and a modification of co mmitments was that, in the former, the offering 
of compensation was not required for the first th ree years.  With resp ect to comments by the 
delegation of Switzerland that the situation justifyi ng the emergency safeguard measure needed to be 
"unforeseeable", he felt that this issue only arose b ecause of the decision of the Appellate Body in US 
– Lamb, where unforeseen circumstances were treated as an additional element that an investigative 
authority needed to take into consideration.  He was not certain, however, th at the Appellate Body had 
precisely used the words "unforeseeable circumstan ces".  He considered that the unforeseen or 
emergency circumstances in the Shangri La exam ple requiring a safeguard measure related to the 
sudden increase in supplies by foreign service supp liers, which was not foreseen at the time the 
commitment was made.  He indicated that he would like to revert to some of the questions asked by 
Hong Kong, China, at a later time.  Finally, the interv entions under this agenda item showed that there 
was interest in fleshing out and clarifying various qu estions.  This pointed to the need to make further 
efforts to meet the 15 March deadline or, otherwi se, to have an appropriate alternative.   
17. While she did not necessarily agree with all the options mentioned in the non-paper by 
Switzerland, the representative of the United States
 thought it raised important questions about the 
relevance of the hypothetical example presented.   The ensuing discussion still had not solved the 
questions of desirability and feasibility.  No thr eshold on the question of an ESM had been reached.  
Looking more carefully at the paper on the modal app lication of an ESM previously circulated by the 
European Communities might have helped to focus discussions, which had often tended to be circular 
in nature.  Reacting to a response provided by Thai land at the last meeting, she considered that the 
type of emergency at issue was still not apparent.  She also sought additional clarification of Brazil's 
position, including with regard to the role of ENTs and Article XXI.  Her delegation did not see that a 
case had been made for an ESM under modes 1, 2 or 3.  Since the structure of the GATS was different 
from that of agreements on goods, the Agreement on Safeguards could not simply be used as a model 
for services, given the basic differences between the sets of relevant disciplines.  She feared that the 
discussion was moving away from the key i ssues that needed to be addressed.   S/WPGR/M/45 
Page 6  
 
18. The representative of Brazil
 was not convinced that the hypothetical situation could be 
characterized as a structural issue, i.e., small vers us large retailers.  If the problem was caused by 
domestic suppliers, it could be solved through dom estic procedures.  If it was caused by foreign 
suppliers, actions of governments in addressing the situation could be  inconsistent with commitments, 
which was why different remedies we re needed for such situations.  Regarding the question put by the 
delegation of the United States, he said that questi ons such as that of feasibility had not prevented 
negotiators from designing Article XXI.   
19. The representative of Canada  recalled the question he had asked at the last meeting, which 
related to the prospect of a pre-established forei gn firm undertaking further domestic expansion after 
the application of a safeguard measure.  The representative of Chinese Taipei  indicated that she had 
reservations regarding some of the views expressed regarding the relation between zoning regulations 
and the obligations of market access and national tr eatment.  Foreign suppliers should not receive less 
favourable treatment than that granted to domestic suppliers, unless it was inscribed in schedules.  She 
shared the view expressed by the delegation of the Philippines that domestic regulations were not 
sufficient to address the ESM problem.   
20. In response, the representative of the Philippines , speaking also for the delegations of Brunei 
Darussalam, Indonesia, Malaysia and Thailand, said that the concept of domestic industry, as ASEAN 
had proposed to define it, would be used for initia tion of investigation and da ta collection.  Whether 
foreign suppliers established in Sh angri La would be subject to th e application of an emergency 
safeguard mechanism depended to a large extent on the degree of acquired rights that would be 
granted to such suppliers, as agreed by Members.  Whether a foreign supplier would be allowed to 
undertake further domestic expansion also depended to a large extent on the degree of acquired rights 
agreed upon.   
21. The Chairperson  thanked delegations for their interventi ons.  He called attention to his initial 
intervention under this agenda item.  In light of  the deadline of 15 March 2004 for the negotiations on 
the question of emergency safeguard measures, he asked delegations for their views and suggestions 
regarding how best to proceed in the coming months , in light of the mandate  of obtaining results by 
mid-March.   
22. The representative of the Philippines , also speaking for the delegations of Brunei Darussalam, 
Indonesia, Malaysia and Thailand, reiterated the commi tment to conclude negotiations by the deadline 
of 15 March 2004.  He asked, to that end, that  the Chairperson preside over dedicated informal 
sessions of the Working Party before the next cluste r of meetings in February.  The representative of 
China  supported this suggestion.  The representative of the United States  indicated she could not 
support that suggestion, as she did not consider  that such sessions would change the position of 
Members on the question of an ESM.  No specific dat es needed to be fixed for consultations by the 
Chairperson.  Should the dates of the next cluster of meetings be available, it would be possible to 
work backward and suggest when he might wa nt to have consultations.  The Chairperson  noted that 
the Working Party needed, pursuant to Article X, to obtain a result and that he remained at the 
disposal of delegations in order to facilita te that process.  The representative of Brazil  stressed the 
interest of his delegation in taki ng part in any consultations.   
III. NEGOTIATIONS ON GOVERNMENT PROCUREMENT (ARTICLE XIII) 
23. The Chairperson  recalled that at the last meeting the delegation of the European Communities 
had formally explained its proposal for a framework of rules in the area of government procurement 
in the GATS, contained in document S/WPGR/W/42.  Various delegations ha d made observations and 
asked questions relating, for example, to the role a nd relevance of procedural rules, the relevance for 
each mode of supply, and the possible use of c oncrete examples to facilitate discussions on the  S/WPGR/M/45 
 Page 7 
 
 
applicability of the proposed framework.  A number of delegations also had reserved the right to 
comment at a later point.  In addition, the delegation of Singapore recently submitted a 
communication, circulated as JOB(03)/216.   
24. In introducing this communication, the representative of Singapore  noted that the mandate for 
negotiations on procurement in the GATS was a comp lex issue because of the potential overlap with 
the Government Procurement Agreement (GPA) and the negotiations on transparency in government 
procurement. Moreover, wide differences exis ted amongst delega tions with regard to the 
interpretation of the mandate contained in Article XIII.  The proposal by the European Communities 
served as a useful basis to undertake domestic cons ultations.  He considered that the proposal 
provided flexible modalities to make commitments in government procurement in services.  Given 
that consultations were still ongoi ng domestically, he was not in a position to express definitive views.  
Nevertheless, these consultations had so far permitt ed to identify a number of issues and questions 
arising from the proposal by the EC, and he hoped these could facilitate discussions in the Working 
Party.  He then proceeded to the issues listed in the communication from his delegation.  Point 
(a) referred to the differences of views regardi ng the interpretation of the mandate contained in 
Article XIII and asked whether the negotiating history could shed some light on the issue, as hinted in 
paragraph 15 of the latest communication from th e EC (S/WPGR/W/42).  Point (b) referred to the 
applicability of provisions other than national treatment, market access and MFN to government 
procurement in services.  Point (c) addressed the potential overlap between the GPA and the 
modalities proposed in S/WPGR/W/42, while point (d ) referred to the MFN exemption proposed in 
paragraphs 13 and 14 of the communication from the EC.  He sought further clarification from the EC 
on these issues.   
25. Point (e) asked how the proposed MFN exemption for government procurement in the GATS 
should apply, if at all, to the specific non-application or reciprocity conditions contained in GPA Annexes.  Point (f) referred to the relationshi p between GPA Article III:3 and the modalities in 
S/WPGR/W/42.  He wondered whether the intent of the EC was to include the qualification in 
paragraph 11 of its proposal into the eventual out come of negotiations under Article XIII of GATS so 
as to avoid any ambiguity.  Recognizing the need to avoid duplication between the work of the WPGR and that of the WGTGP, point (g) asked whether the WPGR should start looking at other 
sources for discussing procedural rules or rather wait further for developments in the WGTGP.  Point 
(h) asked, as Japan did at the last meeting, how the proposed modalities might be operationalized 
under the various modes of supply.  He considered that examples might help to clarify the issue.  
Point (i) asked whether some of the disciplines on government procurement contained in section B:2 
of the Understanding on Commitments in Financial Services could be used for other services sectors, 
and, if so, how it would interact with the proposed  modalities in S/WPGR/W/42.  Point (j) asked to 
what extent Article XX of the GPA, which referred to domestic review procedures, would apply in the 
context of possible GATS disciplines on government proc urement.  He noted that Article VI:2 already 
contained some provisions on domestic review proce dures.  Finally, point (k) called attention to the 
fact that Articles V and XVI of the GPA, among others, contained provisions relating to developing countries and special and differential treatment.  He thought these provisions might serve as a useful reference for negotiations pursuant to GATS Article XIII.   
26. The representative of the European Communities
 intended to answer key questions raised at 
the October meeting of the Working Party and to re act, on a preliminary basis, to some of the points 
in the communication by Singapore.  Regardi ng the relationship between the GATS annex on 
government procurement, proposed by his delegati on, and the Government Procurement Agreement 
(GPA), he indicated that a provision of the prop osed annex could ensure that GPA commitments not 
be extended to all Members on an MFN basis.  Th is would not take the form of a typical MFN 
exemption, but rather that of a specific article of  the annex that would cover not only Members of the 
GPA and their current commitments, but also futu re GPA Members and future commitments.  In S/WPGR/M/45 
Page 8  
 
addition, his delegation had raised in its communication the possibility of listing MFN exemptions.  These would not serve to clarify the relationship between the GPA and the GATS, since this would be done through the inclusion of a specific article to th at effect within the text of the Agreement, but 
rather to address the fact that Article II of the GATS did not apply to government procurement and that, consequently, in 1994 Members had not listed MFN exemptions pertaining to government 
procurement.  His delegation thus thought it might be  appropriate that, only at the time of entry into 
force of a GATS Agreement on Government Procurem ent, Members could have the possibility to list 
MFN exemptions relating to procurement.  The form at of such exemptions could be discussed, but he 
did not see a priori  why the current format would not be applicable.  Concrete examples might be 
helpful in determining whether some adjustments might be necessary.   
27. With respect to questions raised regarding proce dural rules, he recalled that his delegation did 
not intend to duplicate discussions taking place in th e WGTGP and that procedural rules developed by 
that Working Group could be imported into the GATS.   In waiting for an ag reement on transparency 
in government procurement to be developed, the WPGR could, as suggested by various delegations, 
discuss procedural rules on the basis of those containe d in either the GPA or in bilateral or regional 
agreements.  In that regard, the work done by the Secretariat, in S/WPGR/W/44, highlighted that a 
significant number of regional agreements contained such procedural rules.  He wondered whether the 
Secretariat could draw up a list of provisions relating to procedures and transparency in the agreements mentioned in its previous Note.  Turnin g to the question raised by Singapore on Article III 
of the GPA, he noted that national treatment in the GPA applied only to procurement laws, 
regulations, procedures and practices, and not to trade in services.  That meant that, when actually 
providing the service, the foreign supplier, once selected for the procurement contract, had to conform 
to the rules and limitations of the GATS.  The same  principle was being followed in his delegation's 
proposal for an annex on government procurement w ithin GATS.  Article XVI and XVII would apply 
once the contract had been awarded.  For exampl e, should a foreign service supplier of construction 
services win a procurement contract in the market of  a Member that had a commitment in government 
procurement for that sector, that supplier would s till need to respect the conditions and limitations 
listed by the Member under Article XVI or Article XVII for that sector, for each relevant mode.   
28. Concerning questions raised on the modal a pplicability of the commitments on government 
procurement, particularly those regarding modes 2 and 4, the representative of the European 
Communities said that, since the commitments on govern ment procurement would relate to invitations 
to tender and awarding of contracts, distincti ons between modes were not essential.  One could 
imagine a single commitment for all four modes of supply in the government procurement column of 
the schedule, with the supply of the service then being governed by commitments in columns relating 
to Articles XVI and XVII.  A full commitment for all modes of supply in the government 
procurement column for, say, computer services, would amount to non-discriminatory access to invitations to tender in that sector, as well as non-di scriminatory treatment in the procedures relating 
to the awarding of the contract.  Once the contract  had been awarded, typical limitations inscribed in 
the market access or national treatment columns, for any given mode, would apply to the supply of the 
service.  That being said, some WTO Members might prefer to undertake separate government 
procurement commitments for each mode of supply.  For example, access to government procurement might be limited to firms established in th e territory, as was done in the Understanding on 
Commitment in Financial Services.  He considered that commitments on procurement for modes 2 
and 4 could be relevant.  Natural pe rsons often needed to enter the mark et in order to submit a tender.  
There were some cases where governmental entities c onsumed services abroad for the organisation of 
an event in another country.  He noted that ma ny delegations had called for the use of concrete 
scheduling examples and thought it might indeed be useful to proceed accordingly.   
29. Regarding invitations to tende r covering various sectors, he thought this question was not 
relevant only for government procurement since ma ny services resulted from the combination of  S/WPGR/M/45 
 Page 9 
 
 
various other services.  In such cases, commitment s in the relevant sectors were needed so that the 
supply of the service was entirely covered.  It mi ght be examined whether some relevant clusters 
existed in the field of government procurement, as there might be more generally in the provision of 
services under the GATS.  On the issue of domestic revi ew procedures, he noted that Article VI:2 of 
the GATS already touched upon this issue and that Members might want to consider whether that 
Article was sufficient or whether more precise provi sions would be needed as part of a GATS annex 
on government procurement.  With respect to reciprocity conditions in the GPA, he noted that the GATS functioned differently, as each Member's commi tments were extended to all other Members 
and could not contain reciprocity provisions.  Concer ning provisions relating to developing countries, 
including special and differential treatment, he r ecalled the views of his delegation on the benefits 
accruing to Members, including developing economies, as a result of a framework of rules on 
government procurement.  The GATS' flexibility o ffered the possibility for each Member to take 
various levels of commitments, in sectors of choice, with thresholds, exclusions, price preferences, or 
other limitations and conditions.  This would permit each Member, principally developing Members, 
to adapt their commitments to their developmental needs and the particular situation in each services 
sector.  He felt that a discussion on general principl es for the treatment of developing countries could 
be useful.   
30. The representative of Canada
 asked some questions to the delegation of the EC in relation to 
paragraphs 6 and 8 of S/WPGR/W/ 42.  Paragraph 6 mentioned proc urement involving both services 
and goods.  He indicated that, previously, the GAT T Code on Government Pr ocurement only applied 
to goods and that past experience might help to deal with services procurement that included some 
goods.  He asked whether the EC thought it would be necessary to develop and agree on rules that 
would somehow distinguish between, on the one  hand, services procurement which included 
incidental goods, for example a maintenance procurem ent that might include spare parts, and, on the 
other hand, goods contracts.  Would it be useful to have a general statement of scope that would focus 
on services with incidental goods and that woul d let the methodology to be determined by 
implementing governments?  He understood that this  was the approach follo wed in the GATT Code 
on Government Procurement.  Rega rding paragraph 8, he thought the proposal by the EC implied that 
thresholds might differ between services sectors.  He wondered whether this was indeed what the 
European Communities had in mind.  If so, how w ould a Member assess the benefits of these varying 
thresholds and how would such multiple thres holds guarantee the efficiency of government 
operations?  Finally, since procur ement often involved a variety of services that could be brought 
together in a given tender, did the EC envisage developing rules to determine in which of these 
services sectors it might fall into?   
31. The representative of Chinese Taipei  made preliminary observations on the communication 
from Singapore.  She welcomed the idea of looking  into the GATS negotiating history to see whether 
some light could be shed on the interpretation of  Article XIII.  She noted that her delegation's 
understanding of the mandate contained in that Ar ticle was the same as that suggested by the 
European Communities in paragraph 15 of S/WPGR/W/ 42, i.e., that the obligations of market access, 
national treatment and most-favoured-nation shoul d not apply to government procurement until 
appropriate procedural rules were developed.  She al so agreed with Singapore that it was important to 
have a clear understanding of the relationship between the GPA, the WGTGP and the GATS.  
Notwithstanding negotiations under Artic le XIII, she thought that the special rules of the GPA would 
continue to apply between GPA Members.  Finally , coming back to some of the questions she had 
directed at the EC during the last meeting, she noted that procurement in services was often characterized by clusters.  For example, a tende r for mass transit systems might involve various 
services sectors, such as legal, accounting, engineeri ng, architecture, transport, construction and other 
related services.  Some of these sectors might be su bject to commitments and others not.  She thus 
sought the views of the European Communities on how  their proposed framework would address such 
situations and thought that concrete and specifi c examples should be used in future discussions. S/WPGR/M/45 
Page 10  
 
32. The representative of Mexico
 recalled the view of his delegation regarding the interpretation 
of the negotiating mandate containe d in Article XIII.  In that regard, he understood that the 
negotiations aimed at determining how obligations  other than those of Articles II, XVI and XVII 
applied to government procurement.  He wondere d what was the basis for the EC's view on the 
negotiating mandate, as found in paragra ph 19 of the communication.    
33. The representative of th e European Communities  intended to answer immediately some of the 
questions raised.  Concerning procurement covering both goods and services, he indicated that for a 
large number of Members the rules governing procur ement were the same for goods and services.  For 
these Members, establishing a distinction between th e two types of procurement was not essential and 
applying GATS rules on procurement would not pose difficulties.  Other Members, including the EC, 
drew a distinction in their domestic legislation between procurement of goo ds and procurement of 
services.  A borderline had to, and could, be draw n between the two types of procurement so as to 
clarify which legislation had to be complied with.  In GATS, it would be useful to also draw such a 
borderline.  This would have to be discussed between  Members.  It might be decided that procurement 
which covered principally the provision of servi ces would fall under the GATS, as opposed to 
procurement covering principally the provision of goods .  The content of such a clause would have to 
be determined.  With respect to the question by the delegation of Canada on thresholds, he said his 
delegation hoped to develop an agreement providing for maximum flexibility; each Member should 
be free to specify a threshold for each of its commitments.  Thresholds could vary from sector to sector, as was already the case in the GPA, and from Member to Member, depending on the size of the economy or the level of development.  With regard to procurement contracts covering multiple 
services, he indicated that this was an issue inhere nt to GATS itself, and was not solely arising with 
respect to procurement.  The provision of a serv ice that included other services classified elsewhere 
required commitments in all relevant sectors.  The sam e would be true for government procurement.   
IV. NEGOTIATIONS ON SUBSIDIES (ARTICLE XV) 
34. The Chairperson
 indicated that, as requested by the Working Party, the Secretariat had  
prepared two Notes.  He also recalled that at the la st meeting, in an effort to help discussions, the 
delegation of Chile, with support from a number of ot her delegations, had suggested that delegations 
provide concrete examples of subsidies that might  distort trade in services.  Some delegations had 
indicated that the compilation of such a list of examples would eventually need to be discussed 
further.  However, Members were free to come  forward with their own examples and to seek the 
views of Members in that regard.  This seemed to be  a logical step which could help to focus attention 
on possible subsidy-related problems and issues.  In that respect, a communication from Chile, 
contained in JOB(03)/218, had recently been circ ulated.  The Chairperson also recalled that 
delegations had had a substantive discussion on the definition of subsidy at the last meeting.  
Members might want to pursue that discussion by trying to assess where areas of commonality existed 
and what were some of the remaining key issues to be addressed.  Moreover, as indicated at the last 
meeting, he had wanted to hear more from delega tions regarding the proposal that the Secretariat 
prepare a Note on notifications covering services th at were made to the Committee on Subsidies and 
Countervailing Duties.  Some Members had expressed  support for this proposal, while others had 
expressed concerns.  Discussions he had had since then  did not lead him to believe that these concerns 
had receded.  He thus thought it might be more useful if each Member wishing to do so used this available information as a possible source of in spiration for providing anonymous examples of 
subsidies that might distort trade in services.  He also reminded delegations that it had been agreed at 
the last meeting that the Secretariat, subsequently to the two Notes for today's meeting, would prepare 
an update to the Note on services subsidies in Trade Policy Reports.  This could be done for the next 
meeting of the Working Party, depending on overall workload.  Finally, regarding the question raised 
at the outset of this meeting about UNCTAD's work on subsidies, he said that such work had not yet  S/WPGR/M/45 
 Page 11 
 
 
been completed yet.  UNCTAD might possibly be able  to inform delegations at the next meeting of 
the Working Party.   
35. A representative of the Secretariat  said that the two Notes prepared at the request of Members 
were short and factual.  The first was an overv iew of subsidy disciplines in economic integration 
agreements notified under Article V of the GATS, circulated as S/WPGR/W/46.  The Secretariat 
already had done a similar Note, dated 20 May 1996 , which had been circulated as S/WPGR/W/12.  
The current Note thus only looked at the 24 agreemen ts notified after that date.  Thirteen of these 
agreements contained some disciplines on subsidy practices, 11 of which were agreements between 
the EC and other European countries.  The second No te prepared by the Secretariat was a list of 
publications from other international organizations relating to subsidies in services, circulated as 
S/WPGR/W/47.  While the list was not necessarily exhaustive, the Secretariat preferred it to be as 
comprehensive as possible.  As a result, however, Me mbers should not consider all studies listed to be 
of direct relevance for the mandate of the Working Party.  He invited Members to contact the Secretariat, should they want to provide additi onal information or obtain further details.     
36. The representative of Chile
 regretted that the communication from his delegation could only 
be circulated very recently.  The communication was intended to further the negotiating mandate in 
Article XV.  Since little information had been exch anged pursuant to paragr aph 2 of Article XV, it 
was essential, in order to develop disciplines pursu ant to paragraph 1 of Article XV, to know the 
subsidy programmes that Members currently had in force, so as to identify types of programmes and 
their sectoral focus, and to distinguish those that di d distort trade in services from those that did not.  
The communication from his delegation intended to focus the discussion on real examples of 
subsidies that Members were applying.  Although the identity of the Member providing the subsidy 
was not specified, the communication contained real  examples found on the internet.  The issue of 
subsidies could not be separated from market access issues.  One needed to know, when undertaking a 
commitment, whether foreign service suppliers were benefiting from subsidies, as this could generate 
distortions.  He considered that the discussion of examples needed to complement both the exchange 
of information and the work on the development of disciplines.  The communication from his 
delegation divided examples of subsidy progra mmes in two groups.  The first group listed two 
programmes which contained elements that he t hought had been prohibited in the area of goods, 
because the subsidy was contingent on either expor ts or domestic content.   The programmes 
contained in the second group did not appear to en tail subsidies prohibited under the disciplines on 
goods.  He noted that his delegation had encountered  various subsidies relating to air transport and 
maritime transport services, but preferred not to focus discussion on such issues on this occasion, 
although it seemed important to discuss them in th e future.  Finally, the communication concluded 
with three questions, which he hoped woul d foster discussions between Members.   
37. The representative of Hong Kong, China  said he looked forward to an eventual circulation 
and presentation of the study being undertaken by UNCTAD, as had been done in other subsidiary 
bodies.  With regard to the Note by the Secretariat on studies relating to services subsidies done by 
other international organizations, he indicated th at his authorities were assessing whether useful 
information or lessons could be extracted from these studies.  Concerning the Note by the Secretariat 
on subsidy disciplines in economic integration agreem ents, he observed that a significant number of 
economic integration agreements ha d been notified since the previous  Secretariat Note on the subject, 
over half of which contained disciplines on subsidi es in services sectors.  He thought it would be 
useful if those Members that were parties to the agreements containing such disciplines could 
contribute to the discussions of the Working Party by expanding upon a few specific issues.  The first 
issue related to what was the motivation or in tention for including subsidy disciplines in the 
agreements.  Second, Members might want to ela borate on the coverage of these disciplines, as many 
seemed to apply to both services a nd goods.  Another aspect was whether the disciplines also covered 
subsidies for exports of services to other markets.  He thought that one of the agreements mentioned S/WPGR/M/45 
Page 12  
 
in S/WPGR/W/46 had disciplines explicitly covering export subsidies, and hoped that the relevant 
Members could elaborate as to why such scope w as selected.  Third, he wondered whether those 
delegations that had disciplines in economic in tegration agreements could explain how they 
operationalized them, including how they addressed th e issue of definition of subsidy and how they 
determined the appropriate criteria for invoking su ch disciplines.  In that regard, it would be 
interesting to understand what deve lopments in the market could trigger the disciplines.  He also 
asked whether these subsidy disciplin es had been invoked and, if so, under what circumstances.  In 
addition, he thought that some of the disciplines mentioned in the Secretariat Note seemed to imply 
recognition that subsidies could affect conditions of competition and that, more particularly, export 
subsidies could have a direct distorting effect on tr ade in services.  He hoped to hear more in that 
regard from Members participating in such agreements.   
38. With respect to the communication from Chile, he  noted that the two first examples referred 
to situations where the subsidy was related to th e export of services.  The observations just made on 
the basis of the Secretariat Note on subsidy disciplines in economic integration agreements would also be relevant.  He looked forward to views of  other Members and wondered how the first two 
programmes mentioned in the communication fro m Chile would be treated under the subsidy 
disciplines of economic integration agreements previous ly referred to.  It was useful to also consider 
the examples in light of these disciplines and to  see how Members that were parties to such 
agreements saw such situations.  The examples lis ted in part III of the communication from Chile 
showed that it might be important to discuss other t ypes of subsidies that were, by their nature, less 
trade distortive and could, because they related to public policy objectives, be regarded as tolerable or 
non-actionable.  Discussions on both types of subsidies could take place in parallel.   
39. Programmes similar to the general infrastruct ure programme mentioned in the communication 
from Chile were being run by many governments.  This raised the question whether certain areas or 
forms of government support should be considered as non-actionable under any disciplines to be developed.  He believed similar c onsiderations would apply to the example listed by Chile pertaining 
to scientific research and technology transfers.  While some Members had scheduled limitations to 
national treatment for such subsidies, it was obvious  that many governments provided very significant 
funding for technology and human resources developm ent so as to enhance the competitiveness of 
their economy.  He thought it was important to di scuss whether such programm es, in whatever form, 
should be accommodated in the disciplines to be develope d.  With respect to the definition of subsidy, 
he considered that recent discussions on the issue had highlighted important areas of commonality, 
but he hoped to hear more from the delegations that had not intervened on this particular point.  He 
asked whether the Chairperson, in  order to assist discussions on definition, as well as on the points 
raised by the delegation of Chile, would consider further updating the Chair's Checklist of Issues, so 
as to cover points raised in recent meetings.  The two key starting points for listing relevant issues were, first, the definition of subsidy and, second,  the examination of subsidies that might have 
distortive effects on trade in services.  Finally, he  invited other de legations to come forward with 
additional anonymous examples so as to highlight th e types of subsidy programmes in existence and 
the types of problems they might cause.  This would provide the basis for further discussions of the type of disciplines that might be needed.   
40. The representative of India
 made some observations on the examples put forward in Chile's 
communication.  He thought a distinction was made  in the first example between specific firms and 
the generic industry and wondered whether a similar distinction was made in the goods context and 
what would be the implications in services.  He also wondered about cases where a subsidy targeted a 
service embodied in a physical good, and whether this  would be considered as a subsidy relating to a 
good or a service, especially in light of the examples given for tourism.  It could also be useful to 
assess how some of the examples might relate to national treatment commitments.    S/WPGR/M/45 
 Page 13 
 
 
41. In relation to the first question posed in Chile's  communication, pertaining to the elements of 
subsidies in each programme, the Chairperson  said that the first example might include direct 
transfers of funds, tax breaks, loans, and provision of export development assistance.  With regard to 
the second question, regarding the beneficiaries, he considered that the modal application needed to 
be assessed further.   
42. The representative of the United States  expressed concerns with regard to the source of the 
examples being provided by the dele gation of Chile, given these were real-world situations.  With that 
in mind, she had difficulty with the implicit as sumption that Members had agreed to analyse the 
particular examples on the basis of the questions s uggested by Chile.  On a preliminary basis, she 
thought the questions were probabl y relevant and interesting, but it might have been easier if 
Members had put forward their own subsidy progra mmes as examples.  Another avenue to consider 
was Article XV:2, which provided that any Member that considered itself adversely affected by a 
subsidy of another Member might request consulta tions with that Member, and that such requests 
shall be accorded sympathetic consideration.  W ith regard to suggestions about pursuing various 
issues in tandem, she thought that, while the abse nce of a definition of subsidy did not necessarily 
mean other elements of Article XV needed to be sidestepped, a piecemeal approach might be more 
appropriate.    
43. The Chairperson , taking note of the reservations, remarked that the discussion was analytical 
in nature and did not aim at determining whet her given programmes were legal or illegal.   
44. The representative of Brazil  considered that the communication from Chile represented a 
useful way to focus discussions.  While he thought some of the examples listed bore similarities to 
programmes provided in his country, his delegation was not taking a restrictive approach to the 
discussion but hoped to pursue the discussion further at the next meeting.   
45. The representative of Canada  noted that the range of exampl es provided by the delegation of 
Chile, in addition to the complexities related to the four modes of supply, underlined the difficulties in 
defining what was a subsidy in services trade.  Tryi ng, subsequently, to deci de which subsidies were 
distorting and to discipline them would be a signifi cant challenge, especially given the different aims 
and objectives of the various programmes.  He thought  that in considering whether certain subsidy 
programmes had distortive effects, it was important to determine the extent to which existing GATS 
obligations, especially national treatment, could help in addressing potential effects of subsidies.  For 
example, with regard to the example of the infrast ructure programme listed in the communication, any 
company supplying the service through mode 3 would, in the event of a full national treatment 
commitment, have access to the subsid y.  He hoped to provide further co mments at the next meeting.   
46. The representative of Japan  believed that the contribution by Chile was a positive step 
forward, as it permitted to better grasp the issues at  hand and to avoid the chicken-and-egg situation 
previously experienced.   He encouraged other dele gations to come forward with additional real, but 
anonymous, examples.  The issue was complex and he wondered what was the element pertaining to 
services trade in the examples on tourism and on scientific research and technology transfer, in 
particular.  Further analysis of the examples would thus be useful.  With respect to the Secretariat Note on subsidy disciplines found in economic integr ation agreements, he expressed interest, as the 
delegation of Hong Kong, China, in hearing more fr om those Members that ap plied such disciplines.  
He noted, however, that the circumstances under whic h such disciplines were used might be different 
in the context of regional trade agreements than in GATS, since the levels of integration envisaged 
were quite different.  Under GATS, how could Me mbers address issues arising from subsidies to a 
specific service sector when the levels of comm itments for such a sector varied across the 
membership?  This issue needed to  be addressed in the future.   S/WPGR/M/45 
Page 14  
 
47. The representative of New Zealand
 considered the communication from Chile to be a useful 
contribution to the discussion which was being studied  more fully by her authorities.  Regarding a 
point raised by the delegation of Hong Kong, China,  she believed it was very important to consider 
the underlying policy objectives in analyzing the ex amples put forward.  A question to that effect 
could be added to the list included in Chile's communication. Particularly, what was the prime 
objective of the measure and were any benefits to services industries incidental or explicit?  In 
considering these issues, she believed that limited in ferences could be drawn from the treatment of 
subsidies in the goods context.  Finding an appropr iate manner to treat public service subsidies would 
be key to advancing the Working Party's discussions  in this area.  She also supported Hong Kong, 
China's call for participation of a greater number  of delegations, including in the information 
exchange and the discussion of the examples put forw ard by Chile.  With respect to the Secretariat 
Note on subsidy disciplines found in economic integr ation agreements, she noted that the entry into 
force, in 1988, of the Protocol on Trade in Servic es of the Australia-New Zealand Closer Economic 
Relations Trade Agreement created substantially free trade and investment conditions in services 
between the two countries on a negative list basis with  very few exceptions.  She did not recall that 
trade distortive subsidies had been identified in the field of services.  She intended to revert to the 
questions raised by some delegations at the next meeting of the Working Party, after having had the 
opportunity to consult with her authorities. 
48. The representative of Switzerland  believed that the communication by Chile constituted a 
very good contribution to the work of the Working Pa rty.  On a preliminary basis, he thought that the 
paper confirmed that there was an issue to be a ddressed and that the member ship needed to devote 
greater energy and resources.  It also highlighted that it was sensible to discuss the issue of definition 
in parallel with the examination of substantive issues such as suggested in the communication from 
Chile.  He recalled the importance of the obligation of information exchange and stressed that, while 
not a substitute for such an exercise, the discussion of  examples was consistent with that objective.  
Like Japan, he hoped that this discussion would he lp to solve the chicken-and-egg dilemma, which 
had prevented progress in the past.   
49. The representative of Australia  stated that the Secretariat Note on subsidy disciplines in 
economic integration agreements conf irmed the view that it was possible to consider subsidy rules for 
services in a manner which, if not identical, might pa rallel and be based on rules already applying to 
subsidies in goods.  He would inform his authorities of questions raised regarding the Australia-New 
Zealand Closer Economic Relations Trade Agreemen t.  Chile's communication was an effective way 
to assist the discussions of difficult conceptual issu es such as definition.  He would revert to the 
contribution by Chile at the next meeting.   
50. The representative of Chinese Taipei  considered that the paper from Chile was helpful in 
facilitating the discussions of the Working Party.  On  a preliminary basis, she observed that subsidies 
granted to service providers were sometimes associated  with goods and could thus be governed by the 
Agreement on Subsidies and Countervailing Measures.   Also, it was important to consider what 
modes of supply might be affected by subsidies.  As mentioned by Canada , all established suppliers 
could benefit from the subsidy in the example of th e infrastructure programme.  It might therefore be 
difficult to identify trade distortive effects.  She hoped to comment further at the next meeting.   
51. The representative of Chile  thanked delegations for their comments on the communication.  
She underscored that her delegation did not want to li mit the list of examples to those that were most 
clearly distortive, such as export subsidies.  It was also important, in the context of services, to discuss 
examples that related to public services or social pol icy objectives.  Even if such subsidies might not 
be disciplined, they could not be ignored in the Working Party's discussion.  The questions raised by 
India were interesting, and her delegation had some doubts regarding the issue of services embodied 
in goods as well as the application of the obligation of national treatment.  Such issues needed to be  S/WPGR/M/45 
 Page 15 
 
 
further discussed.  Concerning the point raised by some delegations about subsidies available to 
foreign suppliers having establishe d a commercial presence in the territory, pursuant to mode 3, she 
thought this also needed to be carefully consider ed.  Such subsidies might have a trade distortive 
effect when the recipients supplied services outside th e territory of the Member granting the subsidy.  
She looked forward to pursuing this discussion at the next meeting.   
52. The Chairperson  thanked delegations for their particip ation, and the Working Party took note 
of statements made.  In reviewing the discussions on all agenda items, he welcomed the adoption of 
the Annual Report, although he ha d hoped delegations could avoid drafting details.  On emergency 
safeguard measures, delegations had focused on i ssues arising from the non-paper by Switzerland and 
the proposed hypothetical application of an em ergency safeguard mechanism to the Shangri La 
example.  With respect to the upcoming deadlin e for the negotiations, he  had gotten endorsement 
from all Members to conduct consultations before th e next meeting of the Working Party in order to 
address issues relating to that deadline.  With resp ect to negotiations on gove rnment procurement, the 
contribution from Singapore had helped stimulate the discussion, including with regard to the 
proposal from the European Communities for a framewo rk of rules in this area.  Concerning the 
negotiations on subsidies, the contribution from Chile, with examples of subsidy programmes and 
related issues, had helped to enrich the discussi on.  Various delegations had made preliminary 
comments and raised questions in light of this  communication and the Notes prepared by the 
Secretariat for this meeting.  Some reservations had been raised pertaining to the use of concrete 
examples.   
V. DATE OF THE NEXT MEETING 
53. The Chairperson noted that the dates of the next cluster of services meetings would be 
confirmed later in the light of further consultation.   
 
____________