WORLD TRADE
ORGANIZATIONS/C/17/Rev.1
8 July 2003
(03-3704)
Council for Trade in Services
UPDATE TO THE ANNUAL REPORT OF 2002 OF THE
COUNCIL FOR TRADE IN SERVICES TO THE GENERAL COUNCIL (2003)
Revision
1. Since its last annual report to the General Council, dated 9 December 2002, the Council for
Trade in Services has held three formal meetings on 6 December 2002, 28 February 2003 and 14 May
2003.  Reports of the meetings are contained in documents S/C/M/64, S/C/M/65, and S/C/M/66.  Thereports of the meetings should be read in conjunction with this report.  During this period, the Council
addressed the following matters:
I. PROPOSALS FOR A TECHNICAL REVIEW OF GATS PROVISIONS  –
ARTICLE XX:2
2. Substantive discussions on Proposals for a Technical Review – Article XX:2 began in
June 2002, after the Council had agreed to consider  three subjects for a possible technical review of
the GATS, beginning with consideration of proposals relating to Article XX:2.  In addition to earlier
Secretariat notes contained in JOB(01)/17, JOB(02)/ 89 and JOB(02)/153, the Council held substantive
discussions in the reporting period based on subm issions from Brazil (JOB(02)/215), Hong Kong,
China (JOB(03)/34) and Switzerland (JOB(03)/85).
3. The submissions and detailed discussions have permitted the Council to more clearly identify
the types of scenarios contained in Schedules from which legal ambiguities could arise.  In this
regard, Members have explored how Article XX:2 would be applicable to these scenarios.  As well,
questions have been raised as to the impact that various possible decisions by the Council would have
on existing and future specific commitments.
II. RE-OPENING OF THE FIFTH PROTOCOL FOR ACCEPTANCE
4. At its meeting held on 14 May 2003, following separate requests from Dominican Republic
and Uruguay the Council decided to re-open the Fifth Protocol relating to Financial Services for
acceptance by these two Members.  The two Decisions taken in this regard are contained in
documents S/L/111 and S/L/112.
III. NOTIFICATIONS MADE TO THE COUNCIL PURSUANT TO GATS
ARTICLES III:3 AND V:7
5. At the three formal meetings held during the reporting period, the Council took note of the
following notifications made pursuant to Articl e III:3 of the GATS concerning modifications to
services regulations in sectors where specific commitments have been undertaken:
Albania (S/C/N/194-200)
Japan (S/C/N/201-205)People's Republic of China (S/C/N/208-225)
Poland (S/C/N/227)
Kyrgyz Republic  (S/C/N/228)
Chinese Taipei (S/C/N/230)S/C/17/Rev.1
Page 2
6. At the two formal meetings held on 6 December 2002 and 28 February 2003, the Council took
note of the following notifications made pursuant to Article V:7 of the GATS concerning economic
integration agreements:
Japan and Singapore (S/C/N/206)
EFTA (S/C/N/207)EFTA and Singapore (S/C/N/226)
CARICOM (S/C/N/229).
7. The Council referred these four economic integration agreements to the Committee on
Regional Trade Agreements.
IV. WORK OF THE SUBSIDIARY BODIES
8. The activities of the subsidiary bodies are reflected in their respective reports, which are
annexed to this report as follows:
Annex I Report of the Committee on Specific Commitments
Annex II Report of the Committee on Trade in Financial Services
Annex III Report of the Working Party on Domestic Regulation
Annex IV Report of the Working Party on GATS Rules
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ANNEX I
Committee on Specific Commitments
S/CSC/8
3 July 2003
UPDATE TO THE ANNUAL REPORT OF 2002 OF THE COMMITTEE ON SPECIFIC
COMMITMENTS TO THE COUNCIL FOR TRADE IN SERVICES (2003)
1. Since its last annual report1 to the Council for Trade in Services, the Committee on Specific
Commitments held three formal meetings.  Minutes of these meetings are contained in WTO
documents S/CSC/M/26-28.2  The Committee in this period addressed three items: classification
issues; matters relating to the scheduling of commitments; and state of play and possible future work.At the meeting of 27 February 2003, the Chairperson made a statement on procedures for the
submission and circulation of initial offers.
I. CLASSIFICATION ISSUES
2. During the reporting period, the Committee discussed new communications concerning
classification on Computer and related Services, and (S/CSC/W/37 – Separate Customs Territory ofTaiwan, Penghu, Kinmen and Matsu) and Legal Services (S/CSC/W/39 – European Communities).
At the meeting of 5 December 2002, the Secretariat was requested to revise the compendium of
classification proposals to take account of new proposals, add footnote references to helpful
documents, and rectify any omissions.  The revised compendium was issued on 24 February as
JOB(02)/143/Rev.1.
II. MATTERS RELATING TO THE SCHEDULING OF COMMITMENTS
3. At the meeting of 5 December 2002, the Chairperson reported on the Scheduling Workshop,
held in November 2002, which had been conducted by the Secretariat upon a request by Members,
and in which some one-hundred capital based, as well as eighty Geneva-based services officials had
participated.
4. At the meetings of 5 December 2002 and 27 February 2003, the Committee continued its
discussion of approaches to the scheduling of additional commitments under Article XVIII of theGATS.
5. At the meeting of 27 February 2003, a representative of the Secretariat reported that, upon
request by Members, the Trade in Services Division had prepared 67 draft consolidated schedules and
had converted another 62 schedules into Word format.  Three Members had carried out the
consolidation of their schedules themselves.  The draft consolidated and converted schedules had beencirculated in a one-off document series as S/DCS/W documents.  He recalled the agreement of
                                                     
1 S/CSC/7, 6 December 2002.
2 Meetings of 5 December 2002 (S/CSC/M26); 27 February 2003 (S/CSC/M/27), and 12 May 2003
(S/CSC/M/28).S/C/17/Rev.1
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Members that these draft schedules were not legal documents and were intended to serve as templates
to facilitate the presentation of initial offers in the negotiations.3
III. PROCEDURES FOR THE SUBMISSION AND CIRCULATION OF INITIAL
OFFERS – STATEMENT BY THE CHAIRPERSON
6. At the meeting of 27 February 2003, the Chairperson made a statement recalling certain
points from earlier discussions regarding the technical side of the submission and circulation of initial
offers.  The Chairman's statement was circulated in JOB(03)/38.
IV. STATE OF PLAY AND POSSIBLE FUTURE WORK
7. At the meeting of 12 May 2003, Members had a first exchange of views on possible topics
for, and the organization of future work.  The discussion was facilitated by an informal note from the
incoming and outgoing Chairpersons, contained in JOB(03)/74.
_______________
                                                     
3 For further explanation, see Note by the Secretar iat - Circulation of Draft Consolidated Schedules,
S/CSC/W/38, 23 January 2003S/C/17/Rev.1
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ANNEX II
Committee on Trade in Financial Services
S/FIN/9
3 July 2003
UPDATE TO THE ANNUAL REPORT OF 2002 OF THE COMMITTEE ON TRADE IN
FINANCIAL SERVICES TO THE COUNCIL FOR TRADE IN SERVICES (2003)
1. Since its last annual report to the Council for Trade in Services, the Committee on Trade in
Financial Services has held three formal meetings, on 2 December 2002, 26 February 2003, and 16
May 2003. Reports of those meetings are contained in  documents S/FIN/M/38 to 40.  In this period,
the Committee addressed the following matters: the acceptance of the Fifth Protocol to the GeneralAgreement on Trade in Services; technical issues; rece nt developments in financial services trade; and
a presentation by the World Bank.
I. ACCEPTANCE OF THE FIFTH PROTOCOL TO THE GATS
2. In the period under consideration, Dominican Republic, Poland and Uruguay informed the
Committee that they had concluded their domestic procedures and would be in a position to accept theFifth Protocol, once the appropriate decision to reopen the protocol had been taken by the Council for
Trade in Services. Three other Members have not yet accepted the Protocol: Brazil, Jamaica, and
Philippines.
II. TECHNICAL ISSUES
3. Discussions during the period under consideration focussed on an issue raised by Brazil,
namely the relationship between specific commitments on financial services and capital movements.
At the request of the Committee, and in order to enhance the background information on this issue,
the International Monetary Fund presented an annotated list of relevant Fund documents, that was
circulated under the title "Financial Sector Stability, Reform Sequencing and Capital Flows"
(Job(03)/52). The communication by the Fund was discussed at the meetings on 26 February and 16
May 2003.
III. RECENT DEVELOPMENTS IN FINANCIAL SERVICES TRADE
4. During the period under consideration, discussions focussed on two communications on e-
finance submitted by Hong Kong, China and Switzerland (S/FIN/W/25, Add.1 and W/26,
respectively). Additionally, capital-based experts from Peru and Turkey made presentations about
latest developments concerning those countries' regulatory regimes for financial services.
IV. PRESENTATION BY THE WORLD BANK
5. Following a decision taken by the Committee in October 2002, World Bank representatives
made a presentation on 26 February 2003 of its 11
th policy report entitled "Finance for Growth: Policy
Choices in a Volatile World".
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ANNEX III
Working Party on Domestic Regulation
S/WPDR/5
3 July 2003
UPDATE TO THE ANNUAL REPORT OF 2002 OF THE WORKING PARTY ON
DOMESTIC REGULATION TO THE COUNCIL FOR TRADE IN SERVICES (2003)
1. Since the 2002 annual report to the Council for Trade in Services, the Working Party on
Domestic Regulation (WPDR) held three formal meetings and two informal meetings. Minutes of the
formal meetings are found in WTO documents S/WPDR/M/19 to M/21.  The next formal meeting is
scheduled for 1 July 2003.  Both formal and informal papers have been submitted to the Working
Party.  The formal papers were submitted by China; the Separate Customs Territory of Taiwan,Penghu, Kinmen and Matsu; Canada; and the United States.
4  Informal papers were submitted by the
Chairperson,5 Members6 and the Secretariat.7
2. At the formal meeting on 15 May, Members approved the appointment of
Mr. Johannes Bernabe of the Philippines as the new WPDR Chairperson, replacing the previous
Chairperson, Mr. Sergio Santos of Brazil.
I. DEVELOPMENT OF REGULATORY DISCIPLINES UNDER GATS ARTICLE VI:4
3. With respect to the development of any necessary disciplines on domestic regulation,
discussions of the Working Party in the first half of 2003 continued to focus on the regulatory barriers
and issues that service suppliers actually faced.  This involved further engaging in a review of the
measures contained in the informal Secretariat paper Examples of Measures to be Addressed by
Disciplines under GATS Article VI:4  (latest version is JOB(02)/20/Rev.5, dated 29 April 2003).  No
conclusions have yet been reached on any of the issues raised.
4.  At the formal WPDR meetings on 24 February and 15 May 2003, as well as at the informal
meetings held on 28 January 2003 and 13 June 2003, Members discussed the informal Secretariat
paper, Proposed Workshop on Domestic Regulation , the latest version of which is JOB(02)/35/Rev.1,
dated 7 May 2003.
5. In March 2003, Japan submitted an informal paper, Draft Annex on Domestic Regulation ,
which was circulated as JOB/(03)/45, dated 3 March 2003.8  Members welcomed Japan’s
contribution, and made extensive preliminary comments on the draft annex at the 24 February and 15
May 2003 formal meetings.
                                                     
4 S/WPDR/W/20, dated 2  December 2003;  S/WPDR/W/21, date d 24 January 2003;  S/WPDR/W/22,
dated 10 February 2003;  and S/WPDR/W/23, dated 10 March 2003, respectively.
5 JOB/(02)/206, dated 3 December 2002.
6 JOB/(02)/203, dated 3 December 2002 (Communicatio n from China);  JOB/(03)/113, dated 11 June
2003 (Communication from Singapore).
7 JOB(02)/3/Rev.3, 2.12.02;  JOB/(02)/204, 2.12.03; JOB(02)/20/Rev.3, 3.12.02;  JOB/(03)/28,
13.02.03;  JOB/(02)/30/Rev.4, 19.02.03;  JOB/( 03)/35, 21.02.03;  JOB/(02)/204/Rev.1, 21.02.03;
JOB(02)/20/Rev.4, 21.02.03;  JOB(03)/45, 3.03.03;  JO B(02)/20/Rev.5, 29.04.03;  JOB(02)/3/Rev.5, 29.04.03;
JOB/(03)/45/Rev.1, 2.05.03;  JOB(03)/35/Rev.1, 7.05.03.
8 The latest version is JOB/(03)/45/Rev.1, dated 2 May 2003.S/C/17/Rev.1
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6. At the formal meeting on 24 February, 2003, the OECD gave a brief presentation, on an
informal basis, regarding their recent paper on MRAs.9
II. DEVELOPMENT OF DISCIPLINES FOR PROFESSIONAL SERVICES
7. Regarding the development of disciplines for professional services, the Working Party
continued to hold discussions on the informal Secretariat paper Synthesis of Results to Date of the
Domestic Consultations in Professional Services , the latest version of which was circulated as
(JOB(02)/204, dated 21 February 2003).
8. At the formal meetings on 24 February and 15 May 2003, the Secretariat updated Members
on the results to date of the consultations with international professional services organizations,
concerning the potential suitability of the Disciplines on Domestic Regulation in the Accountancy
Sector  (S/L/64, dated 17 December 1998) for other professions.
_______________
                                                     
9 The OECD paper was circulated as an informal paper, JOB/(03)/28, dated 13 February, 2003.S/C/17/Rev.1
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ANNEX IV
Working Party on GATS Rules
S/WPGR/12
3 July 2003
UPDATE TO THE ANNUAL REPORT OF 2002 OF THE WORKING PARTY
ON GATS RULES TO THE COUNCIL FOR TRADE IN SERVICES (2003)
1. Since its last annual report10, the Working Party on GATS Rules held 3 formal meetings.11  In
each meeting, the Working Party considered the th ree negotiating mandates it is entrusted with:
emergency safeguard measures (Article X);  government procurement (Article XIII);  and subsidies
(Article XV).  It also held various informal meetings on the three items.
I. NEGOTIATIONS ON EMERGENCY SAFEGUARD MEASURES UNDER GATS
ARTICLE X
2. Members continued their examination of various  themes as they had emerged from previous
meetings and submissions.  Issues under examination included desirability and feasibility of an
emergency safeguard mechanism (ESM), the interpretation of the GATS Article X mandate, modal
application, examples presented by Members of safeguard-type provisions contained in economicintegration agreements, in Members' schedules and in WTO instruments, as well as S&D.  There were
diverging views as to whether some of the examples constituted safeguard-type provisions.  Members
also discussed possible common elements of various types of ESM, based on the Synopsis
12 and on
the Overview of the Synopsis,13 and process-related issues such as transparency, notification,
consultation, surveillance provisions and expedited dispute settlement proceedings.
3. Many delegations called for the Working Party to discuss actual or hypothetical situations
where a safeguard action might be needed, and which form action could take, as an important aspect
for further progress in the negotiations.  One example was presented at the February meeting by
Thailand, on behalf of the ASEAN Members.  The Working Party is still examining whether this
example can be considered as a possible situation justifying an ESM.  Other delegations suggested
that discussion of existing safeguard-type prov isions applying to services should continue.
4. As requested by Members the Secretariat prepared three background documents: (i) a
Compilation of References Made by Delegations to Safeguard-Type Provisions14;  (ii) a note on Core
Elements Contained in Members' Proposals – Overview of the Synopsis15;  and (ii) a note on
Safeguard-Type Provisions in Economic Integration Agreements16.
5. On 14 March 2003, the former Chairperson of the Working Party, Mr. Thomas Chan,
circulated under his responsibility a Report on Negotiations on Emergency Safeguard Measures17, as
                                                     
10 S/WPGR/8, 5 December 2002.
11 Meetings of 3 December 2002, 25 February 2003 and 13-14 May 2003..
12 JOB(01)/122 + Add.1.
13 JOB(02)/200 and --/Rev.1.
14 JOB(03)/20.
15 JOB(02)/200 and --/Rev.1.
16 S/WPGR/W/4/Add.1.
17 S/WPGR/9.S/C/17/Rev.1
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mandated in the work programme on ESM adopted on 22 July 2002.18  Delegations had a first
exchange of views on this Report during an informal meeting held on 20 April.  At the formal meeting
of 13-14 May, the Working Party gave further consideration to the Report.  Comments made by
delegations are recorded in the minutes of this meeting.19  At the same meeting, the European
Communities introduced a written contribution on  Scope for Emergency Safeguard Measures (ESM)
in the GATS.20  A number of delegations welcomed this contribution.  Other delegations expressed
different views.
II. NEGOTIATIONS ON GOVERNMENT PROCUREMENT UNDER GATS
ARTICLE XIII
6. Discussions continued on the Communication from the European Communities and their
Member States on government procurement of services.21  In May, the European Communities
introduced a new contribution proposing a legal fram ework for government procurement in services.22
At the same time, several delegations maintained  the view that Article XIII excluded from the
negotiations the obligations of most-favoured-nation treatment, market access and national treatment,
whilst others underlined that the mandate of Article XIII:2 included no such limitation.
7. Members noted the possibility of duplicatio n between the WPGR and the Working Group on
Transparency in Government Procurement (WGTGP).  The WPGR should be aware of the relevantissues raised in the WGTGP.
8. At its meeting on 13-14 May 2003, the Working Party requested the Secretariat to prepare a
note providing an Overview of Government Procurement-Related Provisions in Economic Integration
Agreements .  The note was issued on 24 June 2003.
23
9. On 30 June 2003, Mr. Santiago Urbina, Chairperson of the Working Party, submitted a note
under his responsibility to report on the progress of work, as mandated in the work programme on
government procurement adopted on 22 July 2002.24
III. NEGOTIATIONS ON SUBSIDIES UNDER GATS ARTICLE XV
10. The delegation of Poland circulated an informal contribution containing thoughts on the
definition of subsidies in services.25  Two main issues emerged from the discussion: (i) the scope of a
generic definition of subsidies in the services context, including the relevance of the definition
contained in the SCM Agreement; and (ii) the meaning of the concept of trade-distortive or
"actionable" subsidies.  Several delegations recalled the mandate in GATS Article XV to exchange
information concerning all subsidies related to trad e in services that they provide to their domestic
service suppliers.  The need for more information on services subsidies from Members as well as
other sources such as other intergovernmental organizations was also stressed by several delegations.
11. On 17 March 2003, the Chairperson circulated a revised Checklist on Subsidies ,26 as had been
agreed at the February meeting.27  This new revision, prepared again under the responsibility of the
                                                     
18 S/WPGR/7.
19 S/WPGR/M/42.
20 S/WPGR/W/41.
21 S/WPGR/W/39.
22 S/WPGR/W/42.
23 S/WPGR/W/44.
24 S/WPGR/11.
25 JOB(02)207.
26 JOB(03)/57.
27 The first version of the Checklist had been circulated as Job No. 4519, 17 July 2000.S/C/17/Rev.1
Page 10
Chairperson, includes two changes.  First, the question of categorization of subsidies has been
explicitly spelled out under the first point, i.e. definition of a subsidy in trade in services.  Second, a
new issue has been added, relating to concepts relevant to what should be regarded as trade-distortive
subsidies.  The Checklist  is without prejudice to the position of any Member.
12. On 30 June 2003, Mr. Santiago Urbina, Chairperson of the Working Party, submitted a note
under his responsibility to report on the progress of work, as mandated in the work programme on
subsidies adopted on 22 July 2002.28
__________
                                                     
28 S/WPGR/10.