RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/103
22 March 1999
(99-1126)
Council for Trade in Services Original:  English
COMMUNICATION FROM SWITZERLAND
Preparing for the GATS 2000 negotiations
The following communication has been received from the delegation of Switzerland with the
request that it be circulated to the Members of the Council for Trade in Services.
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This paper constitutes a contribution of Switzerland to the work to be undertaken by the
Council for trade in services in fulfilling its mandate under GATS Article XIX in perspective of the
year 2000 negotiations on services. It is without prejudice to the position of Switzerland in the process
underway in the General Council in special sessi on following the ministerial decision of May 1998.
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PREPARING FOR THE GA TS 2000 NEGOTIATIONS
Article XIX of the GATS prescribes that "Members shall enter into successive rounds of
negotiations, beginning not later than five years after the entry into force of the WTO Agreement...".At the Ministerial Conference held 1996 in Singapore, Ministers endorsed a recommendation:
- calling upon the Council for Trade in Services to develop an information exchange program
(IEP) with the aim of facilitating the access of all Members, in particular developing country
Members, to information regarding laws, regulations, administrative guidelines and policies
affecting trade in services; as well as;
- calling upon the Council to begin the consideration of guidelines and procedures for
negotiations mandated under Article XIX at an appropriate time;
with a view to facilitating the coming GATS 2000 negotiations.
An extensive and fruitful information exchange has taken place during the last months in the
framework of the Council for Trade in Services, on the basis of a series of background notes prepared
by the Secretariat as well as of a number of contributions by Members. This information exchange
proved to be highly informative and helpful in preparing for the GATS 2000 negotiations. The IEP
does also provide an excellent basis for the work to be undertaken under the mandate of GATSArticle XIX:3, i.e. to develop negotiating guidelines and procedures.
Switzerland believes that time has now come to meet the second part of the mandate to the
GATS Council, i.e. to establish negotiating guidelines and procedures.
Negotiating guidelines and procedures
GATS Article. XIX prescribes with respect to negotiating guidelines that "for the purpose of
establishing such guidelines, the Council for Trade in  Services shall carry out an assessment of trade
in services in overall terms and on a sectoral basis with reference to the objectives of this Agreement,
including those set out in paragraph 1 of Article IV". Switzerland believes that, with the completion ofthe IEP, the GATS Council has conducted much of the work conducive to a proper assessment of
trade in services in the meaning of GATS Article XIX. Furthermore, with the Secretariat's note that
has been prepared following the decision of the Council on 15 December 1998 (S/C/W/94) and the
coming discussion of this note within the CTS, we feel that most of what Members are able to
undertake in terms of assessing trade in services will have been done.
The next step following the mandate to the CTS under GATS Article XIX is to establish
negotiating guidelines and procedures. There is no formal precedent to the work that the CTS is about
to undertake following this mandate. Neither does a definition of the term "negotiating guidelines and
procedures" exist. Switzerland believes however that  the CTS should avoid any abstract debate about
the actual meaning of these terms. On the contra ry, the CTS should, following the mandate arising
from GATS Article XIX, concentrate its efforts on the preparation of the GATS 2000 negotiations as
concretely as possible.
It can be drawn from previous negotiations that a negotiating program typically includes the
identification and determination of:  (a) issues/topic s for the negotiation;  (b) the objectives of the
negotiation;  (c) a method or principles for the negotiation;  (d) an approximate time-frame;  (e) and
practical arrangements regarding the organisation of work. It is not clear as from today to which
extent the CTS will be able to address these five topics within the time available. Switzerland believesS/C/W/103
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however that the CTS should start by concentrating it s efforts on the first item, i.e. the identification
of the negotiating issues, because the determination of the negotiating issues is necessary to take up
anyone of the other elements. This paper therefore focuses on the identification of the negotiating
issues/topics.
Issues/topics for negotiation
A number of the issues that are identified belo w are not new. Some of them have already been
decided as issues to be tackled in the framework of the year 2000 negotiations; some are being
discussed already today as a result of corresponding mandates arising from the GATS Agreement.
Other are being suggested as "new" issues, i.e. issues that we believe should be taken up in theframework of the coming negotiation, but that are not yet the object of a corresponding decision. They
are presented here in a structured manner in order to bring the process of preparing the GATS 2000
negotiation further.
As the Preamble to the GATS states, the GATS aims at achieving progressively higher levels
of liberalisation of trade in services through successive rounds of multilateral negotiations aimed at
promoting the interests of all participants on a mutually advantageous basis. From the discussion
conducted so far principally in the framework of the IEP, a number of different topics for negotiations
emerge that are conducive to a higher level of liberalisation of trade in services. These topics can be
divided into three broad categories:  (i) the level of market access and national treatmentcommitments;  (ii) domestic regulation and GATS Article VI related issues;  (iii) functioning of the
GATS.
(i) Specific commitments and MFN exemptions
Negotiations on specific commitments conducted during the Uruguay Round and within the
built-in agenda have produced a heterogeneous overall picture in a cross-sectoral as well as in a cross-
country perspective. Not least the IEP has shown the existence of fairly broad differences regarding
actual and prospective market access opportunities among sectors and/or countries. Obviously, the
notion of progressive liberalisation within the GATS  aims primarily at improving the overall level of
specific commitments. Therefore, negotiation of sp ecific commitments should be a the heart of the
GATS 2000 negotiating program.
Switzerland believes that the negotiations of specific commitments should be a priori
extended to all sectors. The mandate for the nego tiations provided by Article XIX of the GATS is
formulated in general terms and does therefore not exclude any sector from the scope of the
negotiations. Furthermore, a comprehensive approach offers prospects of trade-offs and facilitates
thereby negotiations which are conducive to substantial gains for all Members, including developingcountry Members.
Yet, it is foreseeable that some degree of prioritisation will emerge from the negotiation of
specific commitments. For instance, additional liberalisation steps in sectors with limited
commitments (e.g. air transport, environment services, distribution services, energy services) willbring most substantial effects, hence addressing those sectors will probably emerge as a priority.
Maritime transport will merit special attention, give n the present status of this sector in the GATS.
Furthermore, a particular attention should be give n to sectors where regulatory changes, modification
of business structures and/or technological progress have occurred since the last negotiations (for
instance air transport or audiovisual services) which facilitate liberalisation at the multilateral level.
The negotiation of liberalisation commitments across all sectors would profit from some
streamlining efforts in the form of commonly agreed methods, be it on a sectoral or cross-sectoralS/C/W/103
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basis, or on a modal or cross-modal basis. Furthermore, while keeping in mind the principle of
progressive liberalisation, a more homogenous level of commitments would make the GATS more
readily understandable and help reinforcing its role as a legal benchmark for operators. Therefore,
Switzerland believes that the development of liberalisation formulas could help bringing the
negotiating process further. A debate about such approaches could concentrate on some of thefollowing elements:
- establishing standardised lists of services products for a given sub-sector to be
included in Members' commitments;
- establishment of standardised minimum liberalisation commitments on a sub-sectoral
or on a modal basis (including the movement of natural persons);
- exclusion of certain types of restrictions across the board;Finally, the GATS Annex on Article II exemptions prescribes that the CTS shall review all
MFN exemptions no more than 5 years after the en try into force of the WTO Agreement i.e December
31, 1999. It is therefore to be expected that MFN-exemptions will be taken up in the framework of  or
at least in parallel to the coming negotiations.
(ii) Domestic Regulation (Art. VI GATS)
Switzerland believes that issues pertaining to domestic regulations will become an
increasingly important aspect of liberalisation of trade in services if effective market access is to be
secured. Experience clearly shows that measures pertaining to the definition and implementation of
licensing and qualifications requirements and procedures as well as of technical standards [i.e.
measures that are not subject to scheduling under GATS Article XVI (market access) and XVII(national treatment)] can seriously affect the effective conditions of access for foreign services or
foreign services suppliers. With a growing level of market access and national treatment
commitments, the relevance of GATS Article VI measures for effective market access will inevitably
become greater.
Article VI:1 GATS requires Members to "ensure that all measures of general application
affecting trade in services are administered in a reasonable, objective and impartial manner" in sectorswhere they have undertaken specific commitments. Article VI:4 GATS mandates the Council for
Trade in Services, through appropriate bodies it may establish, to develop any necessary disciplines to
ensure that measures relating to qualification requirements and procedures, technical standards and
licensing requirements do not constitute unnecessary barriers to trade in services.  A useful work has
been undertaken so far under this mandate by the WPPS.  We believe that, building on these efforts,Members should develop further disciplines pertaining to GATS Article VI as a matter of priority for
the GATS 2000 negotiations
1.
                                                     
1 See also Document S/C/W/66: Work programme on Article VI:4, Communication by New
ZealandDocument S/C/W/96, Article VI:4 of the GATS: Disciplines on domestic regulation applicable to all services, Note by the SecretariatDocument S/C/W/97, International regulatory initiatives in services, Background
Note by the SecretariatS/C/W/103
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In our view there are two lines for improvement of the domestic regulation issue:
- The present phraseology of GATS Article VI itself is too loose and fairly unbalanced
in comparison with Article XVI GATS (market access) and Article XVII (national
treatment). As outlined above, further liberalisation under GATS Article XVI andXVII will even increase this unbalance. In other words, the less restrictions exist in
market access and national treatment, the more important ruling about domestic
regulation will become. Article VI itself should therefore be reassessed and further
elaborated towards more clarity and a more straightforward normative content.
- In addition to the general principles that Article VI is meant to provide, it seems, not
least from discussions during the IEP, that specific disciplines in individual sectorswill be needed, especially in sectors where particular regulatory constraints do exist
and substantially affect the condition of business. The services industry is known as
being highly regulated, so that effective access to foreign markets by services
suppliers may, at least in some sub-sectors, require some degree of specification of
the general principles contained in GATS Article VI. Existing examples are thereference paper for the telecommunication services, as well as the Article VI
disciplines on accountancy services. We believe that further disciplines of this kind
should be envisaged in other sectors.
(iii) Functioning of the GATS
Experiences from more than four years of implementation of the GATS indicate that the
General agreement and its Annexes and Protocols function fairly well. At the same time, the first
years of implementation have let a number issues of various importance and relevance appear that
would need to be addressed.
- The first obvious loophole inherited from the Uruguay Round are the GATS rules: The built-
in agenda provides for negotiations on three unresolved issues from the Uruguay Round:
emergency safeguards (Article X GATS), government procurement (Article XIII GATS) and
subsidies (Article XV GATS). Given the conceptual difficulties in some of the issues and
current pace of discussions in the WPGR, it is likely that these negotiations are to continue
into the next round. To the extent that the discussion on the GATS rules will not have beencompleted by the end of 1999, these issues will therefore need to be taken up and brought to a
conclusion within the coming GATS 2000 talks.
- Switzerland believes that, while there should be no re-negotiation of the General Agreement
as such, some review work should be undertaken to ensure consistency of all parts of theAgreement as well as to allow for some adjustment of individual provisions, where such
adjustments are technically necessary, where obvious mistakes exist or where the text does
not reflect Members' obvious common intention. Some provisions have indeed proven to be
difficult to interpret or to implement. Some examples of such issues are:
 
 - the definitions of a (financial) services supplier in Article XXVIII and in the Annex
on financial services are different;
 
 - the relationship between Article II exemptions and specific commitments have given
rise to different interpretations during the telecommunication and financial servicestalks, but also during accession negotiations;
 S/C/W/103
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- Article XX:2 GATS prescribes that "Measures inconsistent with both Articles XVI
and XVII shall be inscribed in the column relating to Article XVI. In this case the
inscription will be considered to provide a condition or qualification to Article XVII
as well." That prescription has proven to be quite cumbersome, to the extent that it
prevents a country from submitting a restriction under GATS Article XVI to anational treatment obligation, even if it would want to do so;
- the distinction between mode 1 and mode 2 provided by GATS Article I has proven
to be difficult to implement in the practice, at least in some sectors
.
- Finally several technical shortcomings of the GATS system have emerged in the course of
implementation of the obligation as well as during accession negotiations. Some of them have
been discussed within the CSC, some have been highlighted within the IEP. Among others,
they are:
- classification of services, in particular new services;
- scheduling issues.Switzerland believes that the GATS 2000 negotiations should be the occasion to take up these
technical issues and to make the necessary adjustments.
Conclusion
The present contribution aims at presenting in a structured manner the items that, according to
our view, should be at the agenda of the GATS 2000 negotiations. We suggest that the CTS should
first concentrate its work on identifying the issu es that Members will be negotiating during the GATS
2000 talks. This is without prejudice to other aspects of a negotiating programme as outlined above
such as the objectives or the organisation of the negotiation.
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