RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/M/68
28 November 2003
(03-6329 )
Council for Trade in Services
REPORT OF THE MEETING HELD ON 2, 9 AND 24 OCTOBER 2003
Note by the Secretariat1
1. The Council for Trade in Services held a meeting on 2, 9 and 24 October 2003 Chairmaned
by Ambassador Ousmane Camara (Senegal).  The report of the previous meeting held on 3 and 7 July
is contained in document S/C/M/67.  The agenda for this meeting is contained in documentWTO/AIR/2176.
2. The Chairman informed the Council that he intended to make a statement of a procedural
nature regarding the transitional review under Section 18 of the Protocol of Accession of the People's
Republic of China.
3. The representative of Japan, referring to the transitional review mechanism, recalled that his
delegation had circulated papers to the Members of the Committee on Trade in Financial Services and
to the Council for Trade in Services on the review.  He sought to confirm that the papers circulated
would be discussed at the December meetings.
4. The Chairman suggested that the agenda be adopted as circulated with the addition to Other
Business to which he had referred.
5. It was so agreed.
A. NOTIFICATION TO THE COUNCIL PURSUANT TO GATS ARTICLE XXVIII:(K)(II):2
6. The Chairman drew the Council's attention to a notification from the Republic of Armenia
pursuant to Article XXVIII:(k):(ii):2 of the GATS contained in document S/C/N/232.  He recalled that
the notification concerned the granting of substantia lly the same treatment to permanent residents as
was granted to nationals in respect of measures affecting trade in services.  He proposed that the
Council take note of the notification.
7. The Council so took note.
B. IMPLEMENTATION OF ARTICLE VII OF GATS
8. The Chairman recalled that the Council had held a preliminary discussion on this item at its
last meeting based on an informal note from the delegation of India contained in document
JOB(03)/120.  Some twenty delegations had made statements at that time and, given the level ofinterest, the Council had agreed to revert to this item.  He also recalled a request from the delegation
of the United States that a communication circulated to the Working Party on Domestic Regulation,
                                                     
1 This document has been prepared under the Secretariat's own responsibility and without prejudice to
the positions of Members and to their rights and obligations under the WTO.S/C/M/68
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contained in document S/WPDR/W/23, be made available to delegations for discussion in the
Council.  He stated that the this document had accordingly been included in the package of documents
prepared for the meeting.
9. The representative of India recalled that at the last meeting India's informal note had
generated a fairly substantive discussion, although he recognised that most of the reactions had been
preliminary.  He sought to clarify and add a few points to the intervention he had made on that
occasion.  He said that delegated authority was the case in India and he confirmed that for a large
number of professional services, such as legal, accountancy, architectural, medical and dental, the
respective professional associations were charged with various tasks by virtue of delegated authority.
He recalled that some Members had indicated that they would revert to the issue of delegated
authority and that in order to move the discussi on forward it had been suggested that Members could
consider the extent to which the issue of delegated authority arose in the notifications.  Referring toparagraph 9 of India's communication, he recalled the suggestion that Members examine the extent to
which the content of notifications could be improved in the interest of transparency and other
obligations required of Members.  He suggested that this was another area in which Members could
move forward and begin to think about possible im provements while perhaps keeping to the side the
issue of delegated authority.
10. The Chairman presumed that the Members wished to reflect further on this issue and
proposed that the Council take note of the statements made and revert to this issue at the next meeting.
11. It was so agreed.
C. REVIEW OF AIR TRANSPORT UNDER THE ANNEX ON AIR TRANSPORT
12. The Chairman recalled that at the Council meeting held on 14 May 2003 he had made a brief
remark on this issue under Other Business.  He further recalled that he had informed Members of his
intention to conduct consultations on this issue in light of developments subsequent to the
International Civil Aviation Organization's Worldwide Air Transport Conference held in March 2003.
An abridged report of the Conference had been circulated to Members of the Council in June 2003
and was contained in document JOB(03)/117.  The Chairman recalled that, according to the Rules ofProcedure, Observers to the Council were normally accorded the floor at the end of a discussion on an
item.  In this particular case, he felt that it might be useful if the Council accorded the floor to the
representative of ICAO prior to a general discussion in order that she report on the Worldwide Air
Transport Conference prior to the general discussion.
13. The representative of ICAO sought to inform the Council about the outcome of the fifth
Worldwide Air Transport Conference of the International Civil Aviation Organization.  She recalled
that the Conference had convened in Montreal from 24 to 28 March 2003.  Some 800 participantsfrom 145 States and 26 observer organizations had attended the event despite the disturbing
circumstances prevailing at the time.  The excellent attendance was indicative of the widespread
interest of participants in looking at the Conference's theme, "challenges and opportunities of
liberalization", and ways of advancing the agenda of liberalization.  She expressed ICAO's
appreciation to the WTO for its interest in ICAO's work in air transport regulation and in particularliberalization, and also for its active participation during the Conference.  She stated that Dr. Kotaite,
the President of the ICAO Council, had commented at the end of the Conference that "this was a truly
remarkable Conference".  The Conference had been a remarkable success because States had shown
an acceptance of the need to take a global approach to the important issues under discussion and to
reach consensus on the more difficult and contentious issues linked to liberalization.  The Conferencehad also given a strong role to ICAO to continue to advise, facilitate and promote generally the
liberalization process.  The Conference reiterated the position that liberalization should proceed atS/C/M/68
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each State's own pace, in accordance with globally endorsed principles and practices, and for the
benefit of the travelling public and the air transport industry.
14. The representative of ICAO recalled that the essence of the results of the Conference could be
found in document JOB(03)/117, which had been distributed to Members of the Council in June 2003,
and contained the "Consolidated Conclusions, Model Clauses, Recommendations and Declarationapproved by the Conference".  The Conference outcome consisted of the Declaration of Global
Principles for the Liberalization of International Air Transport, two recommendations, conclusions
and models for use in air services agreements.  The Conference Declaration, adopted by acclamation,
specified the individual and collective roles and responsibilities of States in working towards the goal
of giving international air transport as much economic freedom as possible.  This process should seek
to preserve the needs of the travelling public and the industry, while respecting the specific
characteristics of air transport, its impact on the environment, social and labour standards, and aboveall safety and security.  She noted that the two recommendations and the conclusions on key
liberalization issues had been agreed by consensus.   The Conference also adopted seven model
clauses for optional use by States in their air services agreements, and reached 67 conclusions
covering all aspects of the agenda items.  Some of the principal issues covered by the conclusions of
the Conference, in addition to a more liberalized fo rmula for the designation of air carriers, included:
the liberalization of international air cargo on an accelerated basis; formulae for aircraft leasing,
safeguards against anti-competitive practices and ensuring the effective and sustained participation of
developing countries; a mediation mechanism to settle a full range of disputes that might arise from a
liberalized environment and a model clause for States to use in order to promote and enhance
transparency by improving the registration of their air services agreements with ICAO.  States werealso urged to give consideration to become parties to the International Air Services Transit Agreement
(IASTA) if they were not yet parties to the Agreement.  She also said that there had been widespread
support for two ICAO Template Air Services Agreements developed by ICAO and designed for the
optional use of States in a bilateral and regional or plurilateral situations.  These templates were
comprehensive framework air services agreements which included provisions on traditional,transitional and most liberal approaches, and included optional wording to the various elements in an
air services agreement.  The Templates could prove useful tools for States in the liberalization process
and their use, she noted, should enhance harmonization of the regulation of international air transport.
15. Turning to the first of the two recommendations adopted by the Conference, the representative of
ICAO stated that it dealt with the crucial issue of air carrier ownership and control, which was at the
forefront of the debate at the Conference.  The Conference had approved "principal place of business
and effective regulatory control" as an alternative criteria to the traditional but restrictive "substantial
ownership and effective control" when designating carriers pursuant to an exchange of market access.
Furthermore, in order to advance the agenda of " how to" liberalize, the Conference advised States to
take positive approaches, which could be done through a unilateral or group declaration, the
acceptance of designated foreign carriers that might not meet the traditional national ownership and
control criteria or the criteria of principal place of business and effective regulatory control.  TheConference advocated flexibility in the acceptance of designation, so long as adequate oversight of
safety and security for the designated air carrier was undertaken in accordance with standards
established by ICAO.  She observed that the potential existed for States to significantly liberalize by
agreeing on and accepting through positive action different formulae with different partners.
Moreover, a liberalized designation criteria would have implications for market access liberalization.In its second Recommendation, the Conference endorsed ICAO's continued leadership role in
facilitating and coordinating the process of liberalization of international air transport and
recommended that ICAO focus its future work on facilitating, promoting and assisting States to
harness the broader benefits of liberalization.  In this connection, the Conference concluded that
ICAO should cooperate with all organizations having an interest or involvement in global regulatory
matters to ensure that ICAO's mandate and role, as well as the broader interests of the aviation
community were taken into account by such bodies. The second Recommendation specificallyS/C/M/68
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addressed the relation between ICAO and the WTO and drew attention to  ICAO's long-standing
policy on trade in services in the context of air transport regulation and, particularly, the linkage and
interrelationship between safety, security and economic regulation.
16. The representative of ICAO said that ICAO's re lations with the WTO were governed, in part, by
an Assembly Resolution, the text of which had been made previously available to the Members of theCouncil for Trade in Services.  While the working relationship between ICAO and the WTO had been
constructive and mutually beneficial, the question of giving greater clarity to it and to each
Organisation's respective responsibilities had also arisen at the Conference.  It was a matter addressed
by the Council for Trade in Services in 2001 that remained unresolved.  The Secretary General of
ICAO had referred to the matter in a recent letter informing the Director General of the WTO
concerning the outcome of the Conference.  ICAO stood ready to explore the question further within
the scope of both Organisations' respective mandates and processes.  Finally, she said that since thefourth Air Transport Conference in 1994, ICAO had put the liberalization of international air transport
onto the global aviation agenda.  With ICAO's gu idance, the mushrooming of liberalization at the
bilateral and regional levels had occurred.  ICAO was therefore confident that the fifth Air Transport
Conference would produce a similar impact for air transport regulation and the liberalization of this
sector.  ICAO was committed to working closely with all organizations involved in the liberalizationof the air transport sector in order to ensure that civil aviation continued to evolve in an economical,
orderly and safe manner.  In light of the Conference outcome and the impetus it would give to further
liberalization, ICAO was looking forward to continued and constructive cooperation with the WTO
and to further strengthen this working relationship in a way that was suitable to both Organisations.
17. The Chairman thanked the representative of ICAO for her complete and edifying report.
18. The representative of Cuba said that generally her delegation shared completely the
conclusions adopted at the ICAO Conference.  She considered that the bilateral regime based on the
Chicago Accord was flexible and allowed every Member to liberalise in accordance with its needs and
in the appropriate conditions.  She considered th at the implementation of the MFN principle of the
GATS remained a complex problem and was difficult to implement.  She felt that no consensus hademerged with respect to the broadening of the Annex.  She said that therefore the evolution of the
industry and the process of liberalization of the sector should continue to be led by ICAO.
19. The representative of Australia thanked the representative of ICAO for her presentation and
said that since the mandated review of the Annex on Air Transport Services had began in 2000,
Members had been examining developments in the air transport sector.  He said that for his
delegation, the discussions had concluded that the current state of economic regulation of aviation had
been the product of immense change over the period of the review.  He felt that there was a generalview that this change had not ended and that the final shape of a new system for regulating aviation
which would best suit the interests of all WTO Members was far from certain.  It was clear from the
discussion that had been held that the aviation industry was linked to the wealth of WTO Members
through the opportunities it opened for trade and tourism.  His delegation sought to ensure that
Members did not lock away any option that might be in the interest of Members for managing thechange that had been identified in the review.  He said that in establishing the WTO, Members were
agreed to preserve the basic principles and further the objectives underlining the multilateral trading
system.  In committing to the text of the GATS, Members had indicated the wish to establish a
multilateral framework of principles and rules for trade in services with a view to the extension of
such trade under conditions of transparency a nd progressive liberalization.  He noted the ICAO
Conference conclusion said that in pursuing liberalization States should use multilateral avenues as
appropriate.  He drew attention to a joint communication from New Zealand and Australia that had
been recently circulated to Members in JOB(03)/ 193.  It outlined their joint position on the closure of
the review of the Annex of Air Transport Services and the timing of the next review.  In the paper,
these two delegations recognised that the extensiv ely surveyed developments in the air transportS/C/M/68
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sector had provided valuable insights into its operation.  However, they also acknowledged that no
consensus had been reached on whether to amend the Annex to account for developments in the air
transport sector identified during the course of the review or on the extent to which the air transport
sector was covered by the GATS.  He agreed with some others that it might be best to proceed by
concluding the current review, allowing Members to  reflect on the relationship between air transport
services and the GATS, and returning reinvigorated to consider these issues in the next mandated
review.  He said that the question which then arose was the timing of the next review.  Given the
importance of air transport in facilitating international trade and the rapidly changing environment in
which the sector operated, he proposed that in agreeing to close the current review the Council
commit itself to a commencement date for the next re view.  In fact, he saw agreement on a date for
commencement that was consistent with the Annex manda te to be integral to closure.  He recalled that
the Annex mandated that the "Council for Trade in Services shall review periodically, and at least
every five years, developments in the air transport sector and the operation of the Annex with a view
to considering the possible further application of  the GATS to the sector".  He said that his
delegation's interpretation of the understanding of Members in accepting the Annex on Air Transport
Services was that the use of the words "at least every five years" implied that the Council should
prepare for the commencement at five-year interval s, noting the commencement of the current review
in 2000.  However, he was aware that others had different interpretations of these words and that they
would prefer commencement at a later date.  Out of respect for their views and to help facilitate a
consensus, he said that his delegation was building some flexibility into its approach.  He recognised
that there was a good deal of preparatory work necessary before the next review could effectively be
deemed to commence, namely, that there wa s a lag period between announcement and actual
commencement.  This covered the period necessary for preparatory meetings, preparation time for the
Secretariat, etc.  Bearing this in mind, New Zealand and Australia were prepared to see the effective
commencement of the next review take place in early-mid 2006.  He said that he would not be happy
to let these matters be absent from consideration and the GATS for any longer than this time, and he
hoped that Members would be able to join the consensus that the co-sponsors were proposing.
20. The representative of Cuba said that she did not think that it was relevant to conclude this
review; nonetheless, she said that her delegation could be in agreement with the dates that had been
proposed by the delegation of Australia.
21. The Chairman pointed out that the agenda had proposed a sub-division of the discussion on
this item.  Given that the previous interventions suggested they could be related, he invited
delegations wishing to speak on any of the sub-items to take the floor.  The representatives of Japan,
the United States, Chile , Norway , Canada , the European Communities , the Dominican Republic ,
Brazil, Mexico , Korea , India , and Indonesia  thanked the representative of ICAO for her presentation
as well as Australia and New Zealand for their proposal.
22. The representative of Japan, referring to the informal note from Australia and New Zealand,
said that Japan was of the view that the current review had revealed a divergence of opinion among
Members and had lost its momentum.  Despite an extensive exchange of views and valuablecontributions, he felt that the repetition of past ar guments would be unproductive.  In principle, Japan
was of the view that the next mandated review should commence five years after the termination of
the current review session.  However, Japan was wi lling to show flexibility in order to promote a
consensus based on the conclusion outlined in the informal note, namely, that Japan could go along to
its paragraph 11 and begin the effective commencement in early to mid 2006.  While Japan differed inits opinion with respect to the observations outlined in parts of the note, it was nonetheless willing to
show flexibility in terms of the paper's conclusion.
23. The representative of New Zealand, thanking the representative of ICAO for her presentation
and the written communication found in JOB(03)/117, st ated that the significance of the transport
sector to the growth of the global economy c ould not be underestimated and had been well-S/C/M/68
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documented.  For New Zealand,  an island nation of the South Pacific geographically distant from its
main trading partners, air transport services were of vital importance to its economy.  She observed
that the air transport sector remained an anom aly under GATS as it was the only sector subject to
specific exclusions.  She recalled that the Annex on Air Transport Services mandated that the
"Council for Trade in Services shall review periodic ally, and at least every five years, developments
in the air transport sector and the operation of the Annex".  She said that agreement on the Annex had
been necessary for the conclusion of the Uruguay Round and had been drafted for this purpose.  She
said that a reasonable interpretation of the intent of the drafters was that progressive expansion of the
coverage of the sector would be expected.  The mandated review of the Annex had begun in 2000 and
had been underway for three years.  She said that her delegation's views on next steps were set out in
document under discussion.  She said that the review had extensively surveyed developments in the
air transport sector and had provided valuable insights into the operation of the sector.  She expressedappreciation for the work of the Secretariat in producing the relevant studies.  She said that at the
ICAO Conference held in March had failed to reach a consensus on the role of the GATS in air
transportation.  New Zealand was disappointed that the review had not fully addressed this complex
issue and had not reached firm conclusions.  She said that being able to participate in and benefit from
efficient air services was vital to New Zealand's success as a trading nation and that it had devotedconsiderable resources to participate in the review.  She recalled that New Zealand's submission,
contained in document S/C/W/185 had sought inter alia  to address the parallels between the GATS
and air services agreements.  However, it had become clear that not all Members wished to extend the
possibilities for more comprehensive coverage of air transport services by the GATS at the present
juncture.  She said that there could be a number of reasons for this.  It could not be denied that theairline industry had been battered by a series of crises in the preceding two years.  She said that some
Members would have liked to have seen the outcome of ICAO's Worldwide Conference prior to
moving forward to remove restrictions imposed by air transport service arrangements.  However, New
Zealand contended that incorporating trade in air transport services under the GATS would further the
objectives underlying the multilateral trading system that the WTO had established to support.  Theexclusions in the Annex on Air Transport Services did not prohibit the trade of air transport auxiliary
services, and she said the reciprocity-based system  and MFN system could co-exist comfortably with
regard to these services.  At least two matters had become clear during the course of the review:  there
was no consensus among Members of the Council to amend the Annex to account for developments
in the air transport sector identified in the course of the review, and there was no consensus among
Members of the Council regarding the extent to which the Annex excluded the air transport sector
from coverage by the GATS.  It did not appear that consensus on either of these points could bereached in the course of the present review.  Give n that the Annex was binding on the Members of the
Council, that there was no clear default situation for interpreting the Annex, and that the likelihood for
consensus arising from the mandated review on either  the interpretation of the existing Annex or an
amendment to it was remote, she felt that it was ti me to proceed to the conclusion of the current
review, provided that a consensus could be reached on the timing of the commencement of the nextmandated review.   Her delegation expected that the next mandated review would commence in 2005;
however, she said that the Secretariat would need to undertake extensive preparatory research work.
New Zealand was therefore prepared to accept that an effective commencement date for the next
mandated review and the first meetings would not o ccur until 2006.  She welcomed in this regard the
interventions and flexibility demonstrated by Cuba and Japan.  She said that her delegation wouldcontinue to address aviation issues in the market access request-offer process in the Doha Round.
New Zealand had made a solid offer on auxiliary services and had encouraged others to do likewise.
She was confident that the current GATS provisions on air services provided sufficient scope for
Members to increase the number and quality of commitments for air transport services.
24. The representative of Chile regretted that the ICAO presentation had not made more reference
to additional complementary work that the WT O and ICAO could carry out.  Her delegation was of
the view that there was scope for such complementary work and that the process of liberalization
could be strengthened in both fora.  With respect to the review of the Annex on Air Transport, ChileS/C/M/68
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believed that the examination had been useful and was grateful for the very complete documents
prepared by the Secretariat.   Chile further believed, like Australia and New Zealand, that the time had
probably come to suspend the process with the co mmitment to commence the next review, preferably
in 2005.  However, in a spirit of flexibility she could entertain 2006.  She wished to state clearly that
when the process was reinitiated, it would be important that all the work completed to date be takeninto account to help move further work, as well as other areas such as the negotiations, forward.  She
said that the interim period between reviews migh t allow for the process to be taken up in a more
constructive fashion.
25. The representative of Norway joined others who had underlined the importance of the air
transport sector in world trade and economic development.  He recalled the Annex mandated that the
"Council for Trade in Services shall review periodic ally, and at least every 5 years, developments in
the sector".  He shared the view of Australia and New Zealand that a reasonable interpretation of theunderstanding of Members in accepting the Annex on Air Transport Services was that the use of "at
least every five years" implied that Members should prepare for commencements at five-year
intervals, noting the commencement of the present review in 2000, which would mean that the next
review would be initiated in 2005.  He appreciated that Japan and Cuba, despite somewhat divergent
views, could agree to the proposition from Australia and New Zealand, namely, that the next reviewcould begin in 2006.  He hoped that consensus could be reached on this issue.
26. The representative of Canada expressed support for the comments made by Cuba.  He stated
that Canada had a different opinion on some of the points raised in the document from Australia and
New Zealand.  He agreed that no consensus had been achieved in the present review on Air Transport
Services.  As there was no consensus to modify the Annex, Canada expressed its view that only threesub-sectors were covered and were listed in paragra ph 3 of the Annex.  On the issue of the end of the
review of the Annex, he agreed with Japan that the next review should commence five years after the
end of the present review, namely, that a conclusion in 2003 would see the next review commence in
2008.  Recalling Canada's position, he felt that, given the absence of consensus, it would not be
productive to commence the next review at an early da te.  He said that the absence of consensus was
also noted in the ICAO paper reporting the conclusions of the Worldwide Conference held in March.
Canada was willing to show flexibility and could agree with the position expressed in paragraph 11 of
the note from Australia and New Zealand, namely, an effective commencement in preferably mid-
2006.  He echoed statements by Chile that the work conducted for the current review be taken into
account for the next review in order avoid repetition.  Canada's view was that the next review should
relate to developments that will have taken place after the conclusion of the present review.
27. The representative of the United States said that it was clear that since the Air Transport
Conference of 1994 there had been remarkable progress in air transport liberalization.  The United
States believed that the progress achieved was evidence that the current system had been very
effective in increasing overall liberalization.  Her delegation continued to recognise the leadership
role that ICAO played in air transport liberalization and safety and security oversight.  The United
States shared the position expressed earlier by Japan concerning closure of the review and thequestion of the commencement of the next review.  Specifically, the United States believed that the
next review should commence five years after the conclusion of the present review.  She also shared
the position expressed by Canada.  In light of the goodwill expressed by the delegations of Australia
and New Zealand to indicate an area of possible compromise, her delegation could consider the
solution indicated in paragraph 11 of their submission.  In this regard, she valued a mid-termcommencement in mid-2006.  The United States considered that, during the course of the present
review, the Secretariat had surveyed developments in the aviation sector and the operation of the
Annex in a comprehensive and thorough manner.  The United States believed that the review had
confirmed that the liberalization of air transport services continued to be effectively promoted through
reciprocity-based arrangements such as bilateral or multilateral open skies agreements and that thiswould be the case for the foreseeable future.  The United States continued to believe that the AnnexS/C/M/68
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on Air Transport Services prohibited GATS commitments in air transport auxiliary services other than
those listed in the Annex, namely, computer reserv ation services, selling and marketing, and aircraft
repair and maintenance.  She said that during the Uruguay Round negotiations on the Annex, some
Members sought language in the Annex that would allow Members to schedule commitments in air
transport services beyond the three to which she had just referred.  However, these proposals wereultimately excluded from the text of the Annex.  She indicated that her delegation was willing to work
with the Chairman and those delegations that had expressed views about the closure of the review.
28. The representative of the European Communities, without wishing to go into substance at the
regular session of the Council, welcomed the ICAO presentation and the joint submission, and agreed
with Australia and New Zealand that the review had not fully addressed all the issues nor come to
conclusions.  Her delegation's preference was to continue with the review in order to address these
issues.  However, given the amount of flexibility that was being demonstrated, she said that, in linewith paragraphs 8 and 9 of the informal note under discussion, her delegation could eventually agree
to conclude the review and to commence the ne xt review at some point in 2005, which would
effectively be five years after the first session of the present review.
29. The representative of the Dominican Republic stated that the documents prepared by ICAO
and the Secretariat had been a proper preparation for a fresh review, particularly in view of the fact
that the current review had not come to any conclusions.  Regarding the importance of air transport
for trade and as far as liberalization policies were concerned, she said it was an important sector of the
national economy.  She agreed with the proposal that a fresh review could commence in 2006.
30. The representative of Switzerland stated that his delegation believed that the mandated review
that had been underway for three years had provided  valuable insights into the operation of the air
transport sector.  Like others, he agreed that a wide gap separated the views of Members, as far as the
amendment of the Annex was concerned or the extent to which the Annex excluded air transport from
coverage by GATS.  As Switzerland believed that consensus was not in sight and that it was unlikely
that it could be reached in the present review, he thought that the Council should conclude the review
earlier than later.  He emphasised that, although there was no agreement on the exact coverage of theAnnex on Air Transport Services, many Members had been discussing various sectors of air transport
in bilateral fora.  Switzerland was one of the Members which believed that the Annex of Air
Transport Services did not prohibit a discussion on trade in air transport auxiliary services.  The so-
called double track approach, in his view, was possible and posed no problem since common ground
erga omnes  did not prevent complementary bilateral agr eements.  With respect to the commencement
of the next review, he associated his delegation with the proposal tabled by Australia and New
Zealand and appreciated their flexibility which allowed others to move towards consensus.Switzerland believed that the date proposed by Australia and New Zealand was adequate and could
associate itself with paragraph 11 of the proposal.
31. The representative of Brazil took note of the emerging consensus based on the proposal from
Australia and New Zealand and thanked those Members that had indicated flexibility.  He said that he
had been in contact with the proponents of the paper and acknowledged the transparent nature of theirprocedure.  Although the question, to his knowledge, regarding the commencement date of the next
review had not been answered, he was aware of the proposal under discussion and had communicated
it to capital.  He regretted that for this reason he was not in a position to join the emerging consensus
on a date to commence the next review.  He suggest ed that the Council reconvene in the coming days
in order to revert to this issue.  This would afford him an opportunity to apprise capital of the
discussions.  He indicated that he  would prefer to avoid a decision ad referendum .
32. The Chairman asked if Brazil might be able to elaborate on his delegation's position on this
issue.  The representative of Brazil responded that he had informed the department of civil aviation
that this point was to be discussed at the present meeting.  Since Brazil believed that theS/C/M/68
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commencement date for the next review should be  in 2008, it was of the view that a 2005 start-date
would be too short and its preference remained 2008.  He said that he had inquired as to whether there
was any flexibility in this position and his authorit ies had informed him that they would advise.  He
reiterated that in the absence of instructions he re gretted that he could not join the emerging consensus
as he did not know if his capital would be amenable to a start-date in early or late 2006 or 2007.
33. The representative of Mexico regretted that, like Brazil, he was not in a position to go along
with the emerging consensus, as he needed to confirm his instructions from capital.  He requested
additional time to do so.
34. The representative of New Zealand expressed her confidence that the delegates of Brazil and
Mexico would faithfully inform their respective capitals about the discussion and agreed with the
procedural suggestion that the Council reconvene on this point.
35. The representative of Korea, referring to the commencement of the next review, indicated that
his delegation could also be flexible.  On the fundamental issue of whether to change the current air
transport Annex to a multilateral system, he felt that delegations would require more time to discuss
this issue.
36. The representative of India, expressing his delegation's appreciation for flexibility that had
been demonstrated, stated that, like Brazil and Mexico, he could not proceed in the absence of input
from capital.  He tended to agree with the suggestion that the Council reconvene on this point shortly.
37. The representative of the United States, echoing the comments by New Zealand, said that she
could agree to give some Members a little more time to consider this item before returning to it in
order to reach closure on the emerging consensus around the proposal from Australia and New
Zealand.  She acknowledged the latters' attempt to reach out to those delegations with concerns aboutstarting prior to 2008 by suggesting that the review  commence in 2006 as reflected in paragraph 11.
She thought the procedural suggestion was a good one  and would give some delegations the time they
needed to respond to the effort of goodwill on the part of New Zealand and Australia.
38. The representative of Indonesia, echoing the comments by Brazil, India and Mexico, said that
he had not had an opportunity to consult with capital, and reserved his position and the right to revert
to this issue.  He said that his delegation required some time to reflect on the proposal and he
requested that he participate in any informal consultations that the Chairmanman might organise.
39. The representative of Australia, thanking those delegations that had spoken and demonstrated
flexibility and good will, regretted that a consensus could not be reached immediately, but was
sympathetic with the concerns that had been ex pressed and could go along with the procedural
suggestion that had been made.
40. The representative of Cuba recalled that she had clear instructions from capital which stated
that Members should continue to examine their policies in the air transport sector and in principle, her
delegation urged Members to continue the review and submit new proposals.  She felt that the
suggestion by Brazil was helpful and she indicated that  she would report to capital the content of the
discussion without prejudice to whether a consensus could be reached.
41. Seeking a few points of clarification, the representative of Brazil thanked New Zealand and
Australia for their understanding.  He asked the Secretariat whether a conclusion would require a
formal decision or agreement on the proposal.  What would be the formal outcome of the exercise?
Secondly, referring to paragraph 10 of the proposal, he asked what was intended by the proponents in
drawing a distinction between an announcement and co mmencement of a review, as well as what the
nature of the preparatory period referred to.  He asked whether his authorities might be required, forS/C/M/68
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instance, to attend any meetings in Geneva prior to the commencement date.  Finally, he asked for
clarification as to what was meant by "early-mid 2006".
42.  The representative of Australia, responding to the questions posed by Brazil, said that his
delegation had envisaged that the review would commence in 2005, but that the first meeting of
Members would not take place until 2006.  He said that early to mid 2006 simply referred to the firsthalf of 2006.  He understood that when the review  would commence, there would be a need for the
Secretariat to undertake work and plan the process, which was what he saw as occupying the time
between the official start-date and the effective commencement.
43. Referring to the question regarding the form of agreement that would be reached, a
representative of the Secretariat said that an agreement on the conclusion of the review and a start-
date for the next review could be stated by the Chairman and reflected ad verbatim  in the minutes of
the Council.  He said that such situations did no t necessarily require a formal decision of the Council
issued as a separate document.
44. The Chairman proposed that the Council leave this item open and that the Council reconvene
in the next week in order to conti nue discussion on this important issue.
45. It was so agreed.
46. Reconvening the meeting, the Chairman recalled  that earlier the Council had agreed to keep
item C of the agenda open in order for a number of Members to consult with capital on the question of
the conclusion of the present review and the date of the next one.
47. The representative of India stated that his delegation could go along with the consensus on the
issue as it had been outlined earlier.
48. The representative of Brazil stated that his delegation could go along with the commencement
of a new review in mid-2006, in so far as there was a clear statement that the new review would start
in 2006, as had been his understanding of the emerging consensus.
49. The representative of Mexico stated that he had consulted capital and that his delegation was
ready to join the consensus.  At the same time it was his delegation's understanding that the new
review should not commence any earlier than 2006.
50. The representative of Indonesia indicated that his delegation could join the consensus that the
next review would not open earlier than 2006.
51. The representative of Cuba, recalling her comments in earlier meeting, said that she had not
received further instructions and was not in a position to join the consensus.
52. The representative of Barbados indicated that her delegation could join the consensus to end
the present review and commence a new review in 2006.
53. The Chairman stated that it appeared to him from the interventions which had been made that
the Council was moving towards consensus and that real flexibility had been demonstrated.  In light
of the comment made by Cuba, he wondered whether the Council might be able to take a decision ad
referendum  in order to allow the delegation of Cuba time to respond within one or two weeks.
54. The representative of Cuba indicated that her delegation would be in a position to provide a
definitive answer with in one or two weeks.S/C/M/68
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55. Based on the discussions that had taken place, the Chairman wondered if the Council would
wish for him to propose that the Council decide to conclude the first review conducted under
paragraph 5 of the Annex on Air Transport Services and that the formal commencement of the next
review begin in mid-2006.
56. The representative of the European Communities, referring to the emerging consensus that the
Chairman had alluded to, recalled that her delegation had a preference to keep the review open, but
could have gone along with a consensus, as suggest ed in the Australian and New Zealand proposal, to
open the next review 2005.  She believed that this date represented five years from the start of the
existing review.  However, she said that her delegation could not agree to a formal start in mid-2006.
For systemic reasons her delegation believed that this period should not be modified, irrespective of
whether this period were counted from the beginning or the end.  She appreciated the flexibility
shown by those delegations who felt that the end of the five year period would be marked in 2008 bycoming forward to mid-2006 since the reference in th e Annex stated "at least every five years".  She
regretted that she could not go along with this date, and looked forward to the Council setting a new
date for a dedicated session to continue the review, si nce she felt that issues remained to be examined,
including some raised in recent discussions with some partners which she thought might be of interest
to Members.
57. The representative of Brazil thanked the European Communities for its clarification.  He
inquired as to whether the European Communities would be willing to revert to this issue at the next
meeting.  He said that perhaps his delegation could even accept the European Communities or
Australian approach, but was not in a position to do so at the present juncture.  He thought that the
Council could revert to the issue of closing the curr ent review and discussing the start-date of the next
review before moving on to discuss the continuation of the current review.
58. The representative of the European Communities reiterated her appreciation for the flexibility
demonstrated by Brazil.  She indicated that, from her perspective, were the review to be concluded in
the near future, her delegation would want the next review to start in 2005.  She indicated that her
delegation could be flexible as to when in 2005 it might start; however the question of having areference to even the first three months of 2006 touched upon a systemic issue.  She said that her
delegation was open to reverting to this issue at the next meeting to see if Members could reach a
consensus.  She reiterated that her delegation's position was determined not by the question of a few
months, but rather by the systemic issue at play.
59. The representative of the United States, seeking a clarification regarding the Australian-New
Zealand proposal, recalled that earlier in the meeting Members had made reference to paragraph 11 of
the proposal.  She further recalled that earlier in th e meeting in responding to point of information, the
delegation of Australia had also made reference to paragraph 10 of its proposal.  She said that her
delegation could not support entering into any dedicated session.  She thought it might be better to see
how Members might reflect the proposals by Australia and New Zealand in paragraphs 10 and 11
with a view to helping the European Communities w ith its systemic issues.  She recalled that her
delegation parted with the European Communities on its position on the interpretation of the Annex
concerning the review.  She had understood that Australia and New Zealand had submitted their
proposal in such a way as to bridge the gap be tween views on the interpretation of when the next
review should commence.  In that light and wi thout prejudicing any Member's view on when the
review should commence as seen from a systemic point of view, she hoped that Members could
maintain the spirit in which the compromise had been made, which, she reiterated, would also notprejudge their view.  She noted that her delegation also had a systemic concern on this issue since
different WTO documents reviews were not interpreted the same way.
60. The representative of Switzerland thanked the European Communities for its clarification and
Brazil for its further flexibility.  Noting that Switzerland had a political system based on pragmatism,S/C/M/68
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he thought another compromise proposal might be possible.  He wondered, in this regard, if Members
could agree to formally start the next review at the last regular meeting of the Council of 2005 at
which time the Council would take the formal decision to commence the review, and the Council
would come back to the issue subs tantively in the first half of 2006.  He thought that this solution
might help take into account the systemic concerns that had been expressed.  He believed thatMembers had made progress and wondered if a solution along the lines he had outlined might help in
taking the final steps towards consensus.
61. The representative of Mexico also thanked the European Communities for its clarification.
He felt that the comments made by the United States were relevant and he would go along with this
approach.  He also thought that the suggestion by  Switzerland might also might prove useful.  From
his point of view there was a consensus to conclude the review, which he thought might be formalised
as the present meeting while reverting to the question of when to open the next review.  He suggestedthat the Council move forward along these lines.
62. The representative of Australia expressed thanks for the clarifications made by the European
Communities, the flexibility shown, and for the various suggestions put forward.  He confirmed that
the proposal sought an effective start of the substance of the review in early to mid 2006.  He recalled
that paragraph 10 of the paper developed the idea that there existed a time lag or period of preparationbetween the formal start of the review and the time when meetings and negotiating sessions would be
conducted.  Therefore the proposal mentioned by Switzerland could hold some prospect for achieving
consensus and was entirely consistent with the proposal.  He recalled that his delegation, in examining
this question, had started with a position similar to that of the European Communities and also had a
preference for the next review to begin in 2005.  However, in discussion with other partners, it hadbecome clear to his delegation that an effective start of negotiations in 2005 could not meet with
consensus, but might be attainable with an effective start date in 2006.  It was in a spirit of
compromise and flexibility that New Zealand and Australia had put forth their position.  However, he
noted that his delegation's position on conclusion was contingent on agreeing on an acceptable date
for commencing the next review.  He said that it would not be acceptable to his delegation to close thecurrent review before deciding on the date of the commencement of the next review.  In the case of
such a scenario, his delegation would prefer to keep the current review open.
63. The representative of Japan whole-heartedly supported the statements by the delegations of
the United States and Switzerland and thanked the delegation of Australia for its clarification.  From a
systemic point of view he felt that the suggestion by these delegations was entirely consistent with the
current Annex on Air Transport Services.  He felt that the formal commencement could take place at
the last regular meeting of the Council and a first effective meeting in mid 2006.  Given the flexibilityof Members and their proximity to consensus, his delegation was of the view that the presentation of
past positions would be unproductive.  He said that it was best for a fresh start to take place in the
light of new developments in the future.
64. The representative of Canada recognised the flexibility that had been shown by Members.  On
the basis of the statements made, he felt that consensus could be reached.  He appreciated the position
of the United States and stated that Canada had no interest in a dedicated session devoted to the
review of air transport services.  However, he could agree with the positions expressed by Japan and
Switzerland to the effect that there was a compromise that could be reached on the basis of a formal
review beginning at the end of 2005 with an effective start-date in 2006.
65. The representative of Chile sought to join the consensus that was gaining momentum, namely
that the Council decide in 2005 that the next review  would effectively start in 2006.  He indicated that
his delegation would not be prepared to decide to close the current review without first deciding upon
the start-date of the next review.  He said that his delegation's support for the Australian and NewS/C/M/68
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Zealand proposal had been made on the basis that th e date of the next review would be fixed.  He
thanked delegations who had demonstrated flexibility.
66. The representative of New Zealand was encouraged by the momentum that appeared to be
building on the helpful interventions by Switzerland, Japan, Canada and Chile.  She hoped that a
consensus could be arrived at around a formal launch at the end of 2005 with an expectation that thefirst meeting to address substance would occur in 2006.
67. The representative of Turkey stated that his delegation could demonstrate flexibility and that
its position was close to that expressed by Australia among others.  He could agree to the closure of
the current review once a commencement date for the ne xt review had been established, otherwise, his
preference was to keep the current review open.  He expressed support for the proposal by
Switzerland to decide to open the review in 2005 and begin substantive work in 2006.
68. The representative of Indonesia affirmed that his delegation had shown flexibility on the
proposal and he noted that the instructions he had received from capital responded to paragraph 10
and 11 of the proposal by New Zealand and Australia.  With respect to the view expressed by the
delegation of European Communities, he said that he did not have specific guidance from his capital.
He preferred therefore to go along with the view expressed by Australia when explaining the rationale
behind paragraph 11, namely, that the formal commencement would being by mid-2006.  He said thathis delegation would have no difficulties envisaging some preparatory work prior to this, as proposed
by Japan and Switzerland.
69. The representative of Brazil noted that he had very clear instructions to agree on a formal
commencement of the new review in mid-2006, which was the proposal his delegation could go along
with.  If consensus could not be reached on this proposal, he said that he would have to return tocapital to outline the various proposals made, including from Switzerland and the European
Communities.  He reiterated that he was only in  a position to accept formal commencement in mid-
2006.  He said that he could not go along with ad referendum  decision.  His understanding was that
previously in the meeting Members were asked to go along with a consensus on a proposal that had
subsequently changed somewhat.  As a result, he said he would need to report these changes to capitalto see if they were acceptable.
70. The Chairman felt that delegations had exerted a real effort to arrive at a consensus and those
Members that had intervened had demonstrated great flexibility.  He sought to put forth a proposal for
reflection, in light of the fact that it appeared that a decision could not be made immediately.  He
suggested that Members could reflect on it between th e present and the next meeting, in order to allow
delegations to seek instructions from capital.  The Chairman proposed the that "The Council decides
to conclude the first review mandated under paragr aph 5 of the Annex on Air Transport Services and
decides that the formal commencement of the seco nd review shall take place at the last regular
meeting of the Council for Trade in Services of 2005".  In response to a request for clarification by the
representative of Brazil the Chairman  stated that the text he had just read was for Members' reflection
and consultation between the present and the following meeting.
71. The representative of the European Communitie s suggested that it might be helpful for the
Secretariat to have the text translated and circulated informally.
72. The representative of Switzerland thanked Chairman for his proposal and like others thought
that the Council was close to an agreement.  He understood that some Members needed to obtain
formal instructions; however, he suggested that this  item could be left open again in order to allow
time for consultation before returning to it in the ne xt week.  He felt this might be helpful since the
spirit of his earlier suggestion was not far removed from the proposal contained in the Australian andS/C/M/68
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New Zealand paper and it seemed that all that was required was a little more time for delegations to
seek instructions.
73. The representative of Indonesia recalled his delegation's flexibility, and said that, like for
Brazil, the instructions he had responded to the proposal put forth by Australia and New Zealand in
paragraph 11 of their paper.  His delegation was prepared to see a formal commencement of the nextreview in early to mid 2006.  He said that an earlier date for commencement would require him to
consult with capital and might pose a problem.
74. The representative of Mexico said that his situation was similar to that of Brazil and
Indonesia.  As he had understood the Swiss proposal, the Council at its last regular session of 2005
would debate the formal commencement of the review at the beginning of 2006.  He hoped that
wording along these lines could be found, and reit erated that this would mean that the formal
commencement would be at the beginning of 2006.
75. The representative of the United States, referring to the statements by delegations that they
had been caught by surprise that the consensu s emerging around the Australia-New Zealand proposal
concerning early to mid 2006 had been modified, said that if one looked at the proposal contained in
paragraphs 10 and 11 it might be that the Chairman's proposal would encompass a compromise.  This
said, she thought that the expression "effective commencement" used in paragraph 11 and thetimeframe that had emerged in the meeting that could maintain the momentum might prove useful
when delegations consulted their capitals.  Like Mexico, if a way could be found to reflect these
concerns in the language, it could be that this term might be useful.  She said that the portions of the
Australia-New Zealand proposal that her delegation had found some comfort in were in paragraph 10
and paragraph 11 with respect to the first sentence.
76. The Chairman noted that a proposal had been made that this item be kept open and that the
Council meet again to discuss it in advance of th e next formal meeting.  He suggested that he
reconvene the present meeting on 24 October.
77. The delegations of Australia, Indonesia  and Canada  expressed their support for this proposal.
78. In response to a question from Indonesia, the Chairman clarified that he was suggesting that
that Council leave this item open and that the Co uncil resume the meeting on October 24 in order to
discuss the proposal he had read earlier which would be translated and circulated informally.  As there
were no further immediate requests for the floor, the Chairman suggested that the Council leave this
item open and that he recess the meeting.
79. It was so agreed.
80. Reconvening the meeting on 24 October 2003, the Chairman recalled that the Council had
agreed to keep item C, "Review of Air Transport under the Annex on Air Transport", open when it
had last convened.  He further recalled that before he had recessed the meeting, he had proposed a text
for consideration.  He said that, in the interim and at the request of some Members, he had held
consultations on this text and had had transmitted to Members a revised proposal that read, "The
Council decides to conclude the first review mandated under paragraph 5 of the Annex on Air
Transport Services.  While noting that the Annex requires that a review be conducted at least everyfive years, the Council decides that the formal co mmencement of the second review shall take place at
the last regular meeting of the Council for Trade in Services of 2005".  In his opinion, this formulation
took into account the different points of views and concerns expressed by delegations over the course
of the present meeting and in consultations.  Turning to Members, he asked if there were any
delegations that were not in a position to join the emerging consensus around this formulation.S/C/M/68
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81. The representative of Cuba, referring to the original Chairman text, said that she had been
able to convince capital that, regardless of her delegation's interpretation of paragraph 5 of the Annex,
her delegation could be flexible regarding Australia's and New Zealand's proposal, namely, that an
effective commencement would occur in mid-2006.  She had understood that this had been the basis
for consensus earlier in the meeting.  She said that her delegation had followed the development ofvarious drafts, including the first text by the Chairman which made reference only to 2005 and which
had avoided any reference to the actual text of paragraph 5 of the Annex and simply said that the
Council would agree to close the review and begin th e next one at a given date.  She said that there
was another proposal from another delegation that would have been acceptable to her delegation, and
she said that based on instructions received, her delegation could be flexible on the basis of Australia's
proposal.  However, the most recent text posed some difficulty as it did not make a simple reference
to close the review and a start-date in December 2005, but rather was worded in such a way thatinterpreted the Annex.  She had discussed with Hispanic colleagues the English and Spanish versions,
and it did not appear that her concern arose from translation but rather that the text itself prejudged an
interpretation of paragraph 5 on which, in her view, there was no consensus.  She reiterated that her
delegation could be flexible with regard to the star t-date of the next review, but Cuba did not want to
commit to a final interpretation of paragraph 5 of the Annex.
82. The representative of Canada sought to recall his delegation's view that the text was
acceptable, although he understood the concerned expressed by the representative of Cuba.  He hoped
that Cuba would be able to convince her experts in capital that the text did represent a balance of
views in order to allow Members to move forwar d and reach a consensus on the revised Chairman's
text.
83. The representative of Cuba thanked the representative of Canada for his suggestion and said
that she would need to be convinced herself, befo re reporting to capital, that there was a consensus
among Members regarding the periodicity of the review.  One example would be that the current
review had started in 2000 and explained why some Members felt that the next review should begin in
2005.  However, she noted that she was not aware of any background regarding this particularinterpretation and she sought to know if there were any such precedent.  Only on the basis of such a
precedent and a consensus among Members did she feel that she might be able to convince her
capital.
84. The Chairman suggested that, given the concerns raised by the representative of Cuba, the
Council might be in a position to make a decision ad referendum .
85. The representative of Cuba stated that she did not see opposition to the consensus, but felt that
the Council should further discuss paragraph 5 of the Annex, although this was not her desire.  While
she could accept a decision that would close the review and state the start-date for the next one, she
had concerns regarding prejudging the interpretation of paragraph 5.  In this context, her delegation
could not accept a procedure that would prejudge that her delegation would accept the decision under
discussion.  She was not aware of any understanding arrived at by Members regarding paragraph 5.
She said that if such an understanding had been reached, she would like to learn its contents so thatshe could report to her capital with this informati on.  However, in the absence of such information,
she could not agree to the procedural suggestion made by the Chairman.
86. The representative of Canada said by way of in formation that there were differing views as to
when the next review should begin.  It was his view that the revised text by the Chairman did not
prejudge an interpretation of paragraph 5.  He hoped that this might provide comfort to the delegationof Cuba.
87. The representative of the European Communities expressed support for the comments by
Canada and said that her delegation was aware that there were different interpretations of the AnnexS/C/M/68
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by different Members.  She felt that the text could be a good basis for consensus since it did not
prejudge any interpretation.  Indeed, were it seen as prejudging an interpretation of paragraph 5, this
would be of concern to her delegation.  She hoped that her comment would be helpful to Cuba.
88. The representative of Australia supported the two previous interventions.  He believed that
the revised text and the terms "at least every five years" gave Members sufficient flexibility in the
interpretation of the meaning.  He said that much work had been undertaken in order to find a
consensus, thought that it was a good text, and encouraged Cuba to adopt it.
89. The representative of Switzerland supported the comments of the three previous delegations
and believed that the Chairman's text took into account the various opinions and points of view raised.
He felt that the text represented a delicate balance and did not prejudge the interpretation of paragraph
5 of the Annex.  He hoped that others who still had difficulties in supporting the text could agree to an
ad referendum  procedure, given how close the Council was to consensus.
90. The representative of the United States sought to say a few words about her delegation's
understanding of the text.  Her delegation's position concerning the interpretation of paragraph 5 of
the Annex on Air Transport Services was not the same of the European Communities and some other
delegations.  However, she recognised that Australia and New Zealand had tried to move forward and
seek agreement on when the Council could commen ce the next review without prejudging the
different interpretations that had been advanced by various delegations.  It was her delegation's
position that the interpretation of paragraph 5 of the Annex was not that subsequent reviews should
start five years from a given review's commencement, but rather from its ending.  Thus, in her view,
the next review would start in 2008.  Her delegation was willing to agree to an earlier start-date, but
not so early so as to frustrate concerns related to the time and efforts devoted to a review.  She thoughtthat Australia's and New Zealand's proposal to have effective commencement in early-mid 2006 with
a formal commencement in 2005 was a useful proposal, particularly because it covered the European
Communities systemic impression as to when the formal commencement should take place.  She said
that the original proposal from the Chairman had reflected only one side of the issue and she thought
that by circulating another text both sides could be addressed, namely, formal commencement late in2005 to accommodate the concerns of some delegations with effective commencement in mid-2006.
She thought that this formulation honoured the language in the New Zealand-Australia proposal.  She
recognised that the Chairman's proposal would have captured the same goal.  However, in terms of
the appearance of the text, she felt that the other element of the Australia-New Zealand proposal,
which referred to 2006, should be reflected.  She said that further consultations had been held in
which the language contained in the draft had been proposed.  With reference to the second sentence
of the text, she noted that the word "while" had been added at the suggestion of another delegation inorder to address her delegation's concerns about the interpretation of the Annex and the linkage of the
interpretation of the Annex to when the Council wo uld commence the next review.  She felt that the
insertion of the word "while" would imply that there was no clear decision that the commencement of
subsequent reviews should be every five years as counted from the beginning or the end of the first
review.  She thought that in this way it would not prejudge one interpretation over another and de-linked the interpretation of paragraph 5 from the decision as to when commence the next review, as
contained in the last line of the Chairman's text.  She said that the text had been sent to capital and
sufficiently covered her delegation's concerns.  This had alleviated the need to add a reference to 2006
since her delegation had understood that the Council would formally commence the second review at
the last regular meeting of the Council for Trade in Services in 2005, which would mean that anywork Members agreed to commission would take some time to prepare and would bring Members to
mid 2006.  This would be similar to the proposal put forth by Australia and New Zealand in their
compromise.  Once the commissioned work would have been completed in about mid 2006, this work
would need to be taken to capital for study in or der to prepare reactions for the review.  She thought
that the language provided cover in terms of not prejudging the interpretation of paragraph 5 of theAnnex, while at the same time seeing further work addressed in 2006.S/C/M/68
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91. The representative of Japan said that the statement of the representative of the United States
exactly reflected the position of his delegation.  Japan fully believed that the revised text from the
Chairman perfectly captured the flexibility that had been demonstrated and was a good avenue to
consensus.
92. The representative of New Zealand said that her delegation's position was that the text
reflected a wide range of views about the interpretation of paragraph 5 of the Annex on Air Transport
Services, which had been reinforced by the interventions made.  She expressed her gratitude to the
Chairman for his efforts in achieving a delicately balanced text and hoped that Cuba would be able to
show flexibility and consider joining a consensus on this issue.
93. The representative of Indonesia said that his delegation could be flexible noting the rationale
of the interpretation of the last sentence as explained by the representative of the United States.
Noting that his example was hypothetical, he inquired as to when a subsequent review would be heldif Members were to agree without an agreement on substance to close the review in June 2005.  His
understanding was that a conclusion of the review in 2003 would mean that the next review would
commence in end 2007 or early 2008, although his delegation had shown its flexibility.  It was in this
light that he interpreted paragraph 5 of the Annex and the last sentence of the Chairman's text.  He
could go along with the last sentence of the text on the same understanding outlined by the UnitedStates and Japan.
94. The representative of Brazil congratulated the Chairman on his efforts to find appropriate
language around which consensus could be found to close the present review.  As his delegation had
noted on previous occasions and according to its understanding of the mandate contained in paragraph
5 of the Annex on Air Transport Services, his delegation's preference was for the next review tocommence at a date later than the one contained in the Chairman's proposal, namely 2008.
Nevertheless, his delegation could go along with the Chairman's suggestion.  However, he sought to
make it clear that, as far as his delegation was concerned, this should not be taken as a precedent for
future reviews.  He flagged that his delegation's flexibility on the date of the second review should not
be misunderstood:  it was a procedural decision and did not prejudge Brazil's position on thesubstantive position on the outcome of any review on air transport in the GATS, and in particular on
the scope of the Agreement and the operation of the Annex.
95. The representative of Argentina had understood that the Council was being asked to decide
when the next review would take place.  In this rega rd, he felt that the original text from the Chairman
had been sufficient and that the revised text had added wording to the effect that a decision would be
taken that might have systemic consequences for some Members.  He said that the earlier text made
reference simply to a date and that now the Counci l would also need to decide on an interpretation of
paragraph 5 of the Annex.  He believed that a possible solution would be to revert to the original
version of the Chairman's text or to add a sentence at the end of the revised text to the effect that the
decision would not prejudge Members' interpretati on as to when the next review should commence.
96. The representative of the United States sought to record that her delegation shared the views
expressed by Brazil in full.  She said that her delegation would have no difficulty in adding the
sentence suggested by Argentina.  She felt it was important to have the substance of the matter
preserved and felt that the phrase "while noting" supported the clarification that had been made.
97. The representative of Japan associated his delegation with the intervention by Brazil.
98. The representative of Cuba said that she had taken from the interventions made that the
additional sentence would clarify that there was only one way to interpret the Annex.  For her
delegation it was clear from the Spanish version that the Council would be acting as a consequence of
the contents of the Annex.  She said that Spanish speaking colleagues would recognise that a phraseS/C/M/68
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which followed the conjunction "in view of" would be understood to reinforce through action what
was stated in the Annex, and that this was a problem for her delegation.  She said that she would have
to seek guidance from capital and requested that all the interventions made at the meeting be included
in the record of the formal meeting.  This would help give her capital the certainty that the exact
interpretation of this text would be that one did not prejudge on any future decision concerningreviews.
99. The representative of the United States expressed concern over the interpretation of the word
"while" at the beginning of the second sentence of the Chairman's revised text and sought clarification
as to the meaning of the terms used in the French and Spanish texts.  Were the Spanish text to carry
the meaning that had been outlined, this would be a problem for her delegation.
100. The Chairman said that there appeared to be no concerns with the English version and he saw
no concern with the French version.  He felt that Members were extremely close to a consensus and
that the opportunity present should not be permitted to evaporate.  He suggested that all the made
statements be included in the record of the meeting and that the suggestion by Argentina to add a
sentence be taken into account.  He proposed to amend his revised text by adding after the second
sentence, "This shall not prejudge Members' interpretation of paragraph 5 of the Annex".
101.  The representative of Cuba sought to confirm that the sentence read would be added to the
current text and that the statements made would be reflected in the minutes.
102. The Chairman confirmed that he had proposed that the sentence he had just read be added to
the text after the second sentence.  He also confirmed that all the statements that had been made
would be reflected on the record.
103. The representative of the United States could support the addition proposed by the Chairman
on the condition that the interpretation in Spanish and French of the word "while" was as she
understood it to be in English.  It was not sufficient for her delegation to say that a decision would not
prejudge Members' interpretation.  She felt that the amendment proposed lent added support to her
view.  She said that time had been spent on the text to ensure that the language did justice to her
delegation's understanding that a decision did not prejudge her delegation's understanding.  Shesought clarification in this regard.
104. The representative of Switzerland indicated that his delegation could accept the proposed
addition by the Chairman.  He felt that it would give added support to the interpretation Members
might have.
105. The representative of Australia said that his delegation could support the Chairman's proposed
addition.  He also sought to note that the closure of the review until its formal re-opening in 2005 was
without prejudice to the right of Members to seek specific commitments from Members underArticles XVI and XVII of the GATS in relation to services not directly related to traffic rights such as
ground-handling services.  These commitments w ould be pursued in the context of services
negotiations mandated under Article XIX of the GATS and re-affirmed by the Doha Declaration.
106. The representative of the European Communitie s, referring to the revised Chairman's note,
said that it appeared that it was easier to arrive at a text than an agreement as how to interpret it.  She
said that she could agree to the additional sentence as proposed by the Chairman to the effect that the
decision would not prejudge Members' interpretation of paragraph 5 of the Annex.  This seemed to
have already been the case, since the phrase which stipulated that a review of the Annex was to take
place at least every five years in the Chairman's text took up the phrase from the Annex but did not
interpret it and comforted each Member in its interpretation of the beginning and periodicity of thereview.  It seemed that it was only on the basis of the Chairman's text that there could be movementS/C/M/68
Page 19
forward.  She also noted that her delegation's acceptance of the text and its interpretation of it was not
subject to the interpretation of another Member.
107. The representative of Indonesia stated that his delegation could accept the proposed added
sentence to the text.
108. The representative of the United States recalled that her delegation had earlier supported the
statement by Brazil because it had included the concept of not prejudging the views of Members in
terms of procedure as well as their views on the scope of the Annex.  She thought that the earlier
intervention by the representative of Australia went further in indicating that the matter before the
Council would be without prejudice to a Member's "right" to seek commitments in a manner which
her delegation felt was outside the scope of the review of the Annex and prejudged the outcome of the
review.  This was the case because certain Members had advanced in the course of the review that
perhaps the plain letter of the Annex should be adjusted.  She said that it was not her delegation's viewthat other delegations could not express themselves as they wished, but her delegation could not agree
to the procedural proposal on the basis that there was an existing right which was beyond the scope
she read in the plain language of the Annex on Air Transport Services.  She reiterated that her
delegation could not accept the proposal on the basis of the statement by Australia.
109. The representative of New Zealand supported the Chairman's proposal to add the sentence he
had suggested to the text.  She noted that her delegation supported the statement made by Australia
that a conclusion of the review did not impact on the ability of Members to continue their discussions
bilaterally about the exchange of air transport services not related to traffic rights.
110. The representative of Japan expressed his support for the proposed addition.  Referring to the
statement by the Australian delegation, he said that his delegation was of the view that the GATS
applied only to the three services explicitly stipulated in the Annex on Air Transport Services, which
meant that ground-handling services was not covered under the GATS.  He expressed a serious
concern that the statement by Australia could prejudge the outcome of the review and in this sense
Japan could not agree with that statement.
111. The representative of Canada encouraged Members to bear in mind that the item under
discussion had been kept open in order for Members to try to come to a decision about whether to
conclude the first review and when to commence the next one.  He felt that Members had shown
flexibility with respect to an issue on which they  held very differing views regarding when the next
review should take place.  He supported the addition of an additional sentence to the Chairman's
revised text.  He hoped that this addition would allow Cuba to accept the revised text immediately or
on an ad referendum  basis.
112. The Chairman felt compelled to remind the Council that the point under discussion pertained
to a very clearly defined matter, namely the conclusion of the present review and the date of the next
review.  He said that the purpose was not to discuss the scope of services covered under the GATS.
He was not of the opinion that it was necessary for Members to make statements beyond the matter at
hand.  He reiterated that the discussion pertained to the conclusion of the current review and the
timing of the next one.
113. The representative of Cuba felt that the suggestion by Argentina was very pertinent and
recognised that the Spanish version was not clear.   She requested that the Spanish text be revised so
that it was an exact reflection of the English text.  Her delegation could accept this paragraph if the
Spanish version were correctly reflected, the Argentine proposal added and the statements made
reflected on the record.S/C/M/68
Page 20
114. A representative of the Secretariat, referring to the question of Spanish translation, said that
he would check with the translation experts in the Secretariat to ensure that the Spanish text had been
faithfully rendered.  He said any views the representa tive of Cuba might have in this regard would be
welcome.  The representative of Cuba acknowledged this statement.
115. Given the statements that had been made, the Ch airman thought that it would be appropriate
for the Council to move to a decision and take note of the statements made, including the one that he
had made regarding the scope of the item under discussion.  He proposed that:
"the Council decides to conclude the first re view mandated under paragraph 5 of the Annex
on Air Transport Services.  While noting that the Annex requires that a review be conducted
at least every five years, the Council decides that the formal commencement of the second
review shall take place at the last regular meeting of the Council for Trade in Services of
2005.  This shall not prejudge Members' interpretation of paragraph 5 of the Annex."
116. It was so decided.
117. The Chairman proposed that the Council take note of the statements made.
118. It was so agreed.
D. NOTIFICATION TO THE COUNCIL PURSUANT TO ARTICLE V:5 OF THE GATS
119. The Chairman drew the Council's attention to a notification by the European Communities
pursuant to Article V:5 of the GATS regarding the accession of Austria, Sweden and Finland to the
European Communities and Its Member States and contained in document S/C/N/231 and as corrected
in document S/C/N/231/Corr.1.  He further drew the Council's attention to a related informal
communication contained in document JOB(03)/149 dated 11 July 2003.  He said that documentS/C/N/231, as corrected in S/C/N/231/Corr.1, notified the Council of the European Communities'
intention, in accordance with the terms of Article XXI of the GATS, to modify or withdraw the
specific commitments set out in the list attach ed to its communication.  The procedure for the
implementation of Article XXI of the GATS were contained in document S/L/80.  He recalled that
these procedures required, inter alia , that the item appear on the agenda of the present meeting and
that any Member which considered that its interests might be affected by the proposed modification or
withdrawal communicate its claim of interest in writing to the modifying Member and at the same
time to all other Members through the Secretariat.  He said that these claims of interest had been
circulated as documents S/L/ 131 to S/L/147 and S/L/135/Corr.1.
120. The representative of the European Communities stated that this item was on the agenda in
part because her delegation had requested it and in accordance with the procedures for the
modification of schedules.   She recalled that at last meeting her delegation had agreed to a re-circulation of the notification and a re-starting of the process.  She said that this involved putting the
item on the agenda of the present meeting as well as new notifications from Members who might have
considered themselves affected.  By way of an update, she said that her delegation had received letters
from 16 trading partners and had arranged bilateral meetings with most of those concerned in the
following days and would endeavour to arrange meeting dates with the others.
121. The representative of Japan thanked the delegation of the European Communities for the
arrangement of bilateral consultations and said that his delegation had notified a claim of interest on
the matter under discussion.  He recalled that at the last regular meeting, the delegate of the European
Communities had explained, regarding MFN exemptions, that the communication did not indicate that
this delegation was launching any specific procedur e regarding MFN and it was premature to discuss
the issue.  The delegate of the European Communities had further explained that his delegation wasS/C/M/68
Page 21
launching the appropriate procedures as far as specific commitments were concerned.  In terms of the
enlargement of the European Communities' MFN Exemption List, the representative of Japan sought
clarification that the procedure regarding the MFN lists had not commenced, as well as when and how
the European Communities foresaw commencing this procedure.
122. The representative of Hong Kong, China thanked the delegation of the European
Communities for the clarifications it had offered at the previous meeting as well as the flexibility it
had shown on the matter.  He indicated that his delegation had submitted a claim of interest and had
arranged a meeting on this issue in accordance with the procedures for the modification and
withdrawal of commitments  (Article XXI) contained in document in S/L/80.  In this regard, he said
that he looked forward to this discussion while taking note of the practical concern that subsequent
bilateral meetings might not be possible prior to the cluster of meetings in December.  He was not
sure if he could arrange such a meeting in either party's capital or in Geneva.  He sought to flag twoissues:  when the negotiating period ended and whether, as was his understanding, the procedures
provided for an extension.  He said that, in the light  of the forthcoming bilateral meetings, the need for
an extension might be considered.  With regard to the questions put forth by the delegation of Japan,
he noted that his delegation shared these concerns, and in his view, the notifications which had been
circulated concerned the procedures for the withdrawal or modification of specific commitments anddid not concern the consolidation of the MFN exemption lists.  As far as he had understood from the
statement by the representative of the European Communities at the previous meeting, the relevant
procedures in this regard had not commenced.  Reca lling his own statement on that occasion, he said
that he would like to be enlightened as to the relevant procedures the European Communities
envisaged in due course.
123. The representative of Mexico expressed his concern with regard to the procedure underway.
He understood that this was the first time that the procedure was being exercised, and all were
analysing its details.  He thanked the European Communities for the openness and diligence that they
had shown and he hoped they would continue to show.
124. The representative of Korea, noting that his delegation was an interested party, welcomed the
new notification from the European Communities and looked forward to constructive negotiations
which were to begin in the coming days.  Like Japan and Hong Kong, China, he requested that the
European Communities circulate the notification of the enlargement of the MFN exemption list.
125. The representative of New Zealand welcomed the European Communities' statement and
looked forward to bilateral consultations.  She saw that meeting as a first step and an opportunity to
seek clarifications and ask questions.  She did not see the 90 day period as an end-point for the
discussion, although she expected the bilateral consultations to be productive.  She thought that itmight be necessary to have supplementary bilateral meetings, and the December cluster of meetings
appeared to be the most practical point to meet , even though this would been beyond the 90 day
period.  Like others, she also sought further discussion on the question of MFN exemptions.
126. The representative of the European Communities on the question of MFN exemptions stated
that the issue had been dealt with at previous meetings at which her delegation made it clear that it
had launched an Article XXI procedure with respect of specific commitments only.  With regards to
the question of being able or not being able to  complete work during the forthcoming bilateral
meetings, she said that it would be difficult to predict their outcome; however, she took note that the
procedures did provide for the possibility of extending the negotiating process.
127. The representative of the United States requested a clarification as to the run date of the 90
day period.S/C/M/68
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128. The representative of the Secretariat stated that the notification from European Communities
had been circulated on 10 July.  Paragraph 3 of the procedures contained in S/L/80 stated that
Members then had 45 days to notify a claim of interest, which, in the present case, had been Sunday,
24 August.  Paragraph 4 stated that the negotiating period ran for a period of 3 months starting on the
date of the deadline for claims of interest.  He pointed out that paragraph 4 also foresaw that, were theconcerned Members to extend this period, this would need to be notified to the Members of the
Council.
129. The representatives of Brazil and Mexico
 pointed out that three months referred to implied
that the period of negotiations would run three months after the start-date and on the same day.  The
representative of Mexico said that from his view point this was on 24 November.
130. The representative of Argentina sought some orientation from the Chairman and other
Members with regard to the European Communities' MFN exemption lists since questions remained
as to the legal basis to introduce amendments to MFN exemptions.  As this process was subject to
negotiation, he said that Argentina sought to avoid misunderstandings at the end of the process.
Therefore, he thought that clarifying the legal basis of the relevant procedure would be helpful.  It was
his delegation's understanding that there was no consensus on the interpretation of Article V of the
GATS, for example, within the Committee on Regional Trade Agreements.
131. The representative of Ecuador said that in terms of the deadline for the first three months of
the negotiations, her interpretation was that this deadline fell on 24 November.  With respect to the
question of whether to take up the MFN discussion in a bilateral context, she said that for her country,
it was important that the procedure be transparent as it was the first time that it was being applied,
meaning it would set a precedent.  She did not feel that the procedure involved bilateral clarification,but rather would have a bearing on how the procedure would be implemented and what its results
would be, particularly in the knowledge that th e application of the procedure would create a
precedent.
132. The representative of Argentina wished to echo comments from Ecuador and the European
Communities that the notification pertained only to the amendment of schedules of specific
commitments in accordance with Article XXI.  Modifications to the lists of MFN exemptions, as
interpreted according to the European Communities, would be under its own prerogative and a special
interpretation of Article V.  These modifications could not be the object of consultations or bilateral
negotiations because this was not the procedure applicable at the present juncture.  Argentina
considered that this issue needed to be clarified at the multilateral level.
133. The representative of the European Communities,  referring to the intervention by Argentina,
said that since her delegation had not launched any procedure and it was premature to discuss them.
Referring to the intervention by Ecuador, she said that her delegation approached the discussion in a
spirit of transparency.  She felt that the procedures for Article XXI were clear and that  her delegation
was following them.  She recalled that these procedures gave Members the possibility to review them
at a later stage if they so felt the need.  Finally, she sought to clarify that the 10 July date for
document S/C/N/231 was not the date on which the notification was launched, but rather it was thedate that the document had been circulated by the Secretariat and was the date in the procedures from
which other dates began to run.
134. The representative of Chile stated that, although Chile had not notified itself as an affected
Member, his delegation had an interest in the systemic implications of the problem being analysed.
He echoed the question from the delegation of Argentina regarding the procedures concerning the listsof MFN exemptions.  He said that Chile did not agree with any suggestion that this process was
bilateral, and felt that the procedures to be launched should be made clear.S/C/M/68
Page 23
135. The representative of the United States shared the views of delegations concerning MFN
exemptions.  She said that this procedure did not involve the request-offer approach that Members had
consented to in the context of the single undertaking of the Doha Development Round.  She recalled
that her delegation too had expressed an interest in the procedures that the European Communities
would use for MFN exemptions and she looked forward to hearing the views of the European
Communities once they had come to that determination.  She did not feel that the current forum or
discussion was the appropriate process;  the United States' view was that the process was outlined in
the Annex on Article II Exemptions.  She had taken note at the last meeting that the European
Communities would come back to this process.  She reiterated that the applicable process already
existed and that it would not be affected by any bilateral discussions.
136. The Chairman enquired as to whether the Council would wish to revert to this item at its next
meeting.
137. The representative of the European Communitie s noted that the procedures did provide for
having the Article XXI process on the agenda for the current meeting; however they did not foresee
that this point would be a standing item.
138. The representative of the United States reca lled that the European Communities in their
opening comments under this agenda item had stated that they had requested that this item be
included on the agenda for this meeting.  This would imply that it was up to the European
Communities to decide whether to revert to this item or not.
139. The representative of the European Communities clarified that her delegation had asked for
this item to appear on the agenda because this was foreseen in the procedures and because her
delegation had sought to avoid further confusion and problems of procedure.  Therefore, this issuewas on the agenda for the current meeting as required;  however the procedure did not foresee this
item as a standing item.  She believed that questions raised in relation to Article XXI procedure had
been answered, and thus there was no necessity to revert to this item.  She reiterated that the MFN
exemptions had not been notified to the Council for Trade in Services or any other body, and thus, she
did not see the utility of a discussion at a future meeting on this point.
140. The representative of Hong Kong, China observ ed that from his point of view the present
agenda item pertaining to a notification pursuant to Article V:5 had appeared in order to fulfil the
procedural requirement contained in document S/L/80.   In so far as the delegate from the European
Communities had clarified that the notification concerned the modification and withdrawal of specific
commitments in accordance with Article XXI, he said that the agenda item did not pertain to the MFN
exemption item per se .  His delegation had taken note of the questions raised relating to MFN
exemptions by a number of delegations as a matter of systemic interest and arising from thediscussion at the previous meeting.  He thought that one way to proceed would be for the notification
item to expire, since it had served its purpose.  If there were further questions of a systemic nature
relating to the modification of MFN exemptions, this could be taken up under a separate agenda item
at the next meeting.  In this regard, his delegation had taken note that the European Communities had
not started the notification procedures for the modification of MFN exemptions.  He felt that thiswould not preclude Members from discussing the issue or the appropriate legal basis or procedures for
the modification of MFN exemptions as a systemic issue if the so wished.
141. The Chairman suggested that the Council take note of the statements made.
142. It was so agreed.S/C/M/68
Page 24
E. OTHER BUSINESS
143. Recalling that he had indicated at the beginning of the meeting that he wished to make a
statement pertaining to the transitional review unde r Section 18 of the Protocol of Accession of the
People's Republic of China, the Chairman said that Section 18 of the protocol provided for an annual
review of the implementation by China of the WTO Agreement and of the related provisions of
China's Accession Protocol.  As indicated in Section 18, he said that the Committee on Trade in
Financial Services was one of the bodies in which this review would be conducted.  The CTFS would
report to the Council for Trade in Services whic h would conduct its own review and report to the
General Council.  The General Council would also conduct its own review.  In that connection, he
announced that the next transitional review of Ch ina's specific commitments would be conducted by
the Council for Trade in Services at its next meet ing in December.  In terms of how to conduct the
review, he suggested that the Counc il follow the same procedure as the one that had been used the
previous year.  As no delegation sought the floor on this item, the Chairman suggested that before he
adjourn the meeting, Members take note of the statements made.
144. It was so agreed.
__________