RESTRICTED
WORLD TRADE S/WPGR/M/11
30June1997
ORGANIZATION(97-2795)
Working Party onGATS Rules
REPORT OFTHE MEETING OF22MAY 1997
Note bytheSecretariat
1. Theeleventh meeting oftheWorking Party onGATS Rules waschaired byMs.JillCourtney
ofAustralia. Theagenda consisted offiveitems: negotiations onsafeguards under Article Xofthe
GATS; negotiations onsubsidies under Article XVoftheGATS; negotiations ongovernment
procurement under Article XIIIoftheGATS; dateofthenextmeeting oftheWorking Party; andother
business.
Negotiations onSafeguards under Article XofGATS
2. TheChairperson indicated thatsince theprevious meeting, several delegations hadprovided
useful responses tothewritten questions relating toanemergency safeguard mechanism inGATS,
circulated asdocument (S/WPGR/W/15). Inaddition toThailand, whose response hadcome inbefore
theprevious meeting andhadbeencirculated asS/WPGR/W/15/Add.1, theWorking Party hadreceived
responsesfromIndia(Add.2),Poland(Add.3),EuropeanCommunitiesandtheirMemberStates(Add.4),
Egypt (Add.5), andMexico (Add.6). Asubmission onthesubject hadalsobeenreceived fromHong
Kong (S/WPGR/W/18).
3. Introducing itsresponse tothequestionnaire, thedelegation ofEgypt stated thattheresponses
should beseenaspreliminary. Shesaidthatapositive viewshould betaken ofanemergency safeguard
mechanism (ESM) since itwould serve toencourage Members tomake substantive liberalization
commitments.MembersshouldnotruleoutthepossibilityofanESMintheGATSwithwiderobjectives
thanthose foreseen inArticle XIXofGATT. Furthermore, Articles XII,XIV, andXXIoftheGATS
were designed toaddress situations verydifferent from those inwhich recourse would besought to
anESM under Article X.Astowhether adistinction should bemade between establishment rights
perseandpost-establishment operations inrelation topossible safeguard measures under modes 3and
4,thedelegation didnotseethatanypurpose would beserved bydis-establishment, withdrawal of
licenses ofoperating service suppliers ordigressing fromaMember 'sprevious commitments. Asto
thedefinition of"domestic industry", atthisstagethisdelegation wasoftheviewthatsuchadefinition
shouldencompassestablishedsuppliersofforeignorigin,includinganyjointventures,aswellasnational
suppliers.
4. Therepresentative ofHong Kong saidthatthepurpose oftheirsubmission wastohelpadvance
thediscussion onanESM inafocused manner. Thepaper suggested anapproach under which the
Working Party could conduct abalanced examination ofasetofkeyissues inorder toassess whether
having anESM would beappropriate. These issues related to:dealing withthefourmodes ofsupply
inconsideringhowtoestablishanESM;thedifficultyindemonstratingseriousinjuryandinestablishing
causality; distinguishing between domestic service suppliers andnational service suppliers.
5. Therepresentative ofMexico indicated thatinpreparing answers tothequestionnaire, theaim
hadbeentocontribute totheanalysis ofthepossibility ofhaving anESM intheservices sector;S/WPGR/M/11
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therefore theinformation contained inthatdocument should notbeinterpreted asMexico 'sposition
onthesubject. Sheobserved thatinservices, thedifferent forms ofaccess tothemarket werebased
onlawsandregulations foreachspecific sector; itwould, therefore, beimportant todetermine whether
itwasappropriate tomodify these lawsandregulations when introducing safeguards inemergency
situations. ShefeltthattheWorking Party should work onadefinition of"injury", andaddress the
difficulties presented bythelackofstatistics inservices.
6. Inintroducing itssubmission, therepresentative ofIndia saidthatasafeguard measure should
address anunforeseen situation andfocus onspecific commitments intheschedule oftheMember
invoking thesafeguard mechanism. Themeasure should apply onanMFN basis, foralimited period
oftime, andsubject toother conditions tobedrawn upinthecourse ofthediscussion.
7. InPoland 'sviewthere wasaneedtodevelop anESM under GATS. Thismechanism should
beintended todealwithathreat toadomestic industry arising fromincreased imports. Itwould support
liberalization ofservices tradeandhelpachieve higher levelofcommitments. Theeconomic objective
ofasafeguard action should betoprotect domestic production consisting ofnational service suppliers.
Thedistinctionbetweenforeignandnationalservicesuppliersshouldbebasedonthedefinitionscontained
inArticle XXVIII ofGATS. Healsosaidthatthedistinction between establishment rights perseand
post-establishment operations should berelevant inrelation topossible safeguard measures under modes
3and4.AMember could usethemechanism onlyinrespect tonewentrants. Safeguard actions should
beapplied inprinciple onanon-discriminatory basis except forthecases provided forinArticle V
ofGATS. Thecriteria intheexisting Safeguards Agreement defining critical circumstances, duration,
andprocedure ofapplication could inprinciple beadapted totheservices context.
8. Therepresentative oftheEuropean Communities andtheirMember States indicated thatin
theirviewthequestions ofdesirability andfeasibility ofaESMunder GATS werestillunclear. Further
discussion should beconducted onthequestion ofdesirability, focusing onwhether asafeguard
mechanism could indeed serve asadevice forprogressive liberalization. Astothefeasibility question,
shefeltthattheWorking Party needed topursue further discussions onthedisciplines thatwould be
attached toapossible safeguard clause. Invoking suchaclause would onlybejustified when aMember
faced unforseen circumstances inanareawhere thatMember hadmade specific commitments. Bearing
inmindthatMembers alsohadobligations under theGATS withrespect toservices areaswhere specific
commitments hadnotbeentaken, itwasnecessary toexamine whether theinvocation ofasafeguard
would belimited tospecific commitments. Inlightofthefactthatthere wasnotadefinition oraclear
understanding ofwhatwasmeant by"unforeseen circumstances", itwould beuseful todetermine to
whatextent Members wanted topursue thatnotion andwhether theywanted toachieve acertain degree
ofcommon understanding onit.Since shewassceptical about theneedforasafeguard clause because
itcould beusedasaninstrument toclosethemarket rather thantoopenit,itwould beuseful toidentify
whatMembers could conceive as"unforeseen circumstances". Shestressed theimportance ofdefining
"injury" and,inthisrespect, thenotion of"industry". These questions should beaddressed taking
intoaccount thedifferent modes ofsupply, especially mode 3.Sheshared theview thatforthese
distinctions theWorking Party should takeintoaccount thedefinitions contained inGATS. Astothe
issueofhowtomeasure imports and,inthisrespect, thedifficulties presented bythelackofstatistics,
sheconsidered thatthese arguments could notbedecisive against thefeasibility ofasafeguard clause
sincestatistics wererequired forotherpurposes within thecontext ofGATS. Lackofdata,nevertheless,
raisedquestionsabouttheavailabilityofstatisticsandwhethertheinformationprovidedbythosestatistics
wassufficient forthedetermination ofinjury. Shesuggested thattheWorking Party pursue further
discussion onthenotions of"increased imports" and"causal link".
9. Therepresentative oftheUnited States observed thatasaworking proposition thenotion of
"injury"wasbasedonveryspecificcriteriathatreliedonsophisticateddata,withinthecontextofexisting
GATT Agreements. Thiswasbecause countries conceived injury indifferent ways which made itS/WPGR/M/11
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necessary todevelop specific disciplines foritsdetermination. Hesaidthatintheabsence ofdatain
theservices area,itwould bepreferable tousetheterm"adverse effects" instead of"injury" because
Members could notexpect, notwithstanding anyeffort undertaken toimprove statistics, tohavethe
kindofdatainservices thatwould enable thenotion ofinjury tobeusedinapredictable andtransparent
manner. Heraised thequestion ofwhether theSafeguard mechanism under GATS should beageneric
oneapplied toanysector asitwasunder Article XIXofGATT 1994, orwhether itshould bedesigned
onthebasisofscheduled commitments thatwould include safeguard-type provisions toaddress specific
circumstances. Heexpressed reservations about thepossibility ofjustifying safeguards onthebasis
ofunanticipated circumstances. Inservices, Members didnotbindonlyatariff, butasetofregulations
thathadanobjective. Members should, therefore, beabletoinscribe asafeguard intheirschedule
toaddress situations inwhich theymight takeatemporary measure.
10. TheChairperson summarized theinformal discussion conducted onthe20May1997. She
observed thattheWorking Party wasmaking progress onthisissue interms oftherange ofviews
andideas thathadbeenexpressed. Shesaidthatbased ontheprevious informal consultations and
theformal discussion nowbeing conducted, Members might wishtofocus onfourquestions: (a)On
whose behalf would emergency safeguard action betaken? (b)Inwhatcircumstances would emergency
safeguard action betaken andwhat would bethepurpose ofsuchaction? (c)How would injury be
determined andhowwould acausal linkbeestablished withincreased imports?, and(d)What measures
would betaken under theemergency safeguard mechanism? Aresome measures deemed more suitable
thanothers?
11. Therepresentative ofMorocco indicated thathewould liketoinclude inthediscussion whether
anemergency safeguard measure would befeasible insituations where alicense wasrequired inagiven
sector, andalsotowhatextent asafeguard action could beapplicable toaspecific sector, forinstance
telecommunications. Therepresentative ofHong Kong suggested thatforthetimebeing issues of
procedure could besetaside andthediscussion should focus onhowtheprinciples tobeattached to
apossible ESM would work inpractice. TheChairperson proposed circulating anon-paper containing
thelistofthequestions referred topreviously, asabasistostructure theinformal consultations. The
Working Party accepted thisproposal.
Negotiations onsubsidies under Article XVoftheGATS
12. TheChairperson recalled thattheWorking Party hadestablished 15May1997asthedeadline
forsubmissions ofresponses tothesubsidy questionnaire (S/WPGR/W/16). Shenoted thatnoresponses
hadbeenreceived yet.Sheurged delegations tomake theirbesteffort toprovide responses assoon
aspossible because thatinformation would helpinthesubstantive discussion. Shestressed thatthe
Working Party should notletanysubstantive discussion ofthesubject depend entirely ontheinformation
gathering exercise.
Negotiations onGovernment Procurement under Article XIIIofGATS.
13. TheChairperson indicated thatsince theprevious meeting, responses totheprocurement
questionnaire had been received from Mexico (S/WPGR/W/11/Add.18) and Argentina
(S/WPGR/W/11/Add.19). Thisbrought thetotalnumber ofresponses received to19,including the
onesthathadbeenreceived previously fromNorway, Switzerland, Brazil, NewZealand, Japan, United
States, Canada, Colombia, Hong Kong, European Communities, Australia, Poland, Korea, India, Chile,
SingaporeandHungary.SherecalledthatatthepreviousmeetingMembershadrequestedtheSecretariat
toobtain information ongovernment procurement regimes gathered byAPEC andFTAA. Sheindicated
thatthisinformation hadalready beenrequested butitwould probably takesome timebefore itcouldS/WPGR/M/11
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beprovided. Shesuggested thatmeanwhile those Members oftheWorking Party whowere also
Members ofAPEC and/or FTAA maychoose tomake available totheWorking Party theirsubmissions
made inthose groups. Sherecalled thatattheprevious meeting, NewZealand hadshared withMembers
thepreliminary results oftheiranalysis oftheresponses tothequestionnaire, andsomeotherdelegations
hadplanned toundertake theirownanalysis.
14. Therepresentative ofCanada stated thattheGovernment Procurement Expert Group, within
thecontext ofAPEC, haddecided toprovide aninput intothework oftheWorking Group on
TransparencyinGovernmentProcurement.Thatcontribution,whichwouldbeintheformofthesurveys
andtheChairperson 'ssummary ofsurvey conclusions, would beforthcoming overthesummer period.
Hesaidthathisdelegation waswilling tosubmit individually itssurveys prepared fortheAPEC and
FTAA processes.
15. Therepresentative ofNewZealand stated thatherdelegation hadcontinued withtheanalysis
oftheresponses examining thethirdareaidentified intheChairman 'snoteof21February 1997, namely
questions 5,7and8relating todisciplines onprocurement procedures. Shenoted thatresponses
suggested thatgovernment procurement inservices islargely decentralised, andthatprocedures followed
indifferent Members regarding publication, tender processing andpost-award information, werequite
similar. Shesaidthatthese common threads could provide auseful basis forfurther analysis and
discussion intheWorking Party. Aformal submission oftheresults wasstillbeing considered by
herauthorities.
16. Therepresentative ofArgentina indicated thattheyhadalsoinitiated ananalysis, sofarcovering
parts1and2,relating toScope andCoverage andBasic Disciplines, i.e.national treatment andMFN
treatment. Inhisview, itwould beimportant toconsider whether itwould bedesirable tohavea
definition ofgovernment procurement when drawing upfuture disciplines orwhether itwassufficient
tohaveadefinition liketheoneinparagraph 1ofArticle IIIofGATS. Astocoverage, hesaidthat
mostreplies refertoservices ingeneral, without clarifying theexistence ofpossible exceptions relating
todifferent sectors, which inhisviewdidnotnecessarily mean thatallservices sectors werecovered
bytherelevant legislation. Generally countries applied thesame norms togovernment procurement
ofgoods andservices, while some didhavedistinctions. Inhisview, incaseswhere different modalities
wereused, theWorking Party should analyze howtodetermine theapplication ofthestandards inmixed
contracting, which included goods andservices. Another issuetobereflected uponwould bethedegree
ofcentralization anddecentralization ofbothstandards andoperational aspects. Other aspects that
deserved attention were MFN treatment, which didnotseem tocharacterise therelations between
Members inthisarea,andthegranting ofpreferences tonational suppliers ofservices, which seemed
tobeacommon practice.
17. Noting thatthedelegation ofNewZealand wasconsidering thecirculation toMembers ofthe
results ofitsexamination oftheresponses tothequestionnaire, theChairperson encouraged Argentina
toconsider doing thesame. Sheinvited delegations tocomment ontheprocedural aspects ofthework
inthisarea.
18. Therepresentative ofNorway stressed thatherdelegation would liketoseetheWorking Party
advancing itsdiscussion inthisarea. Tothiseffect shesuggested thattheSecretariat prepare apaper
analysing theresponses tothequestionnaire thattheWorking Party hadreceived sofar.Based on
suchapaper, theWorking Party could examine thesimilarities anddifferences ofthevarious regimes
moredeeply. Subsequently, Members should startworkonthebasisoftheChairperson 'snoteoutlining
themainelementstobeincludeinanagreement.Severaldelegationsexpressedsupportforthisproposal.
Australia indicated thatperhaps theSecretariat should starttheanalysis ofparts1and2,namely Scope
andCoverageandBasicDisciplines,i.e.nationaltreatmentandMFNtreatment.Argentina,insupporting
Australia 'sproposal, saidthatbearing inmind thefactthatthethird itemofthenoterelated toS/WPGR/M/11
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transparency andtoavoid duplication ofwork, itwould perhaps beuseful toinitiate theanalysis with
parts 1and2only. Several delegations supported thisproposal butemphasized theimportance of
transparency inthisareaandstressed theneedtoavoid setting anyexplicit orimplicit priorities.
19. Insummarizing thediscussion, theChairperson saidthatthere wasageneral consensus that
theSecretariat should beasked toprepare ananalysis oftheresponses tothequestionnaire. Sheindicated
thatinsuggesting thattheanalysis begin withparts1and2oftheChair'snote, therewasnointention
ofsetting priorities among thepossible elements ofmultilateral disciplines buttofollow asequence
inthelightofwhatcould beachieved before thefollowing meeting.
Dateofthenextmeeting oftheWorking Party.
20. TheChairperson saidthatatentative dateforthefollowing meeting would be23July1997.
Thisdatewould beconfirmed afterconsulting withtheotherbodies related togovernment procurement.
Other Business.
21. There wasnoitemunder Other Business.