WORLD TRADE
ORGANIZATIONS/CSS/W/134
15 March 2002
(02-1367)
Council for Trade in Services
Special SessionOriginal:  English
COMMUNICATION FROM HONG KONG, CHINA
Autonomous Liberalisation
The attached communication has been received from the delegation of Hong Kong, China
with the request that it be circulated to Members of the Council for Trade in Services.
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1. Article XIX of the GATS stipulates that Memb ers should “establish modalities for treatment
of liberalisation undertaken autonomously by Members since previous negotiations”.  This Council
has been discussing this subject for some time.  H ong Kong, China (HKC) wishes to contribute to the
on-going discussion by building on our earlier informal paper Job No.7580 dated 27 November 2000,and putting forward some ideas on possible elements for criteria and modalities on the granting of
credits for autonomous liberalisation.  This paper is without prejudice to HKC’s position on the issue.
I. GENERAL CONSIDERATIONS
2. HKC suggested in Job No.7580 that the actual text of Article XIX provided mixed signals on
the meaning of such concepts as “undertaken autonomously”, “previous negotiations”, “modalities”
and “treatment”.  But we believe there are so me good reasons which support the development of
different treatment for autonomous liberalization measures.  These include the notion that voluntaryconcession deserves special recognition as such; the need to protect the negotiating position for those
Members who have undertaken autonomous liberalisation; and the desirability of giving other
Members the incentive to undertake autonomous liberalisation as well.  In the ensuing discussion on
possible elements of the criteria and modalities, we will bear in mind the need for any suggested
criteria and modalities to reflect these considerations.
3. HKC believes that the criteria and modalities for the treatment of autonomous liberalisation
are to be established for the purpose of negotiations of specific commitments under Article XIX.  In
accordance with the Negotiating Guidelines, “account shall be taken and credit shall be given in the
negotiations of specific commitments to autonomous liberalisation measures, based on multilateral
agreed criteria”.  Thus any criteria and modalities developed should also recognise the need for themto complement the modalities for the negotiation of specific commitments as a whole.
II. MODALITIES AND CRITERIA: GENERAL PRINCIPLES
4. Given that the starting point of the negotiations of specific commitments is the existing
schedules, we consider that all measures that would bring the liberalisation in relevant sector over and
above the bound level of commitments of the liberalising Member should potentially be of value inthe negotiations.  And, in this context, the value of a certain liberalisation measure will be dependent
upon the actual and/or potential level of trade that would be allowed to take place with theS/CSS/W/134
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introduction of such measures, as well as the legal certainty of that measure.  The latter would be
greatly enhanced with a readiness to bind it as specific commitments as part of the result of the
current round of negotiations.  The value of “de facto measures”, i.e. measures which are
implemented in practice but not bound as specific commitments would be difficult to evaluate in the
negotiating context.  As suggested in our earlier statement in this Council, both the measures for
which credit would be granted and the credit so granted should in our view be bound, so as to provide
predictability, legal certainty, and fairness.  If there should be no bound commitments for measures
for which credit was requested, and granted, then the question would arise as to whether the credit
should also be subject to withdrawal at later stage, especially if the measures in question were to be
adjusted or invoked subsequently.  Such a scenario would of course render any previous effort in
determining the value of the measures and the corresponding appropriate credit futile.
5. Another principle that we would like to pu t forward is that the value of an autonomous
liberalisation measure should be judged both in terms of the actual and/or potential commercial value
of the measure to the liberalising Member’s trading partners, as well as its role in facilitating the
economic development of the liberalising Member itself.  For instance, a liberalisation measure
undertaken in the telecommunications or other infrastructural sector of an individual Member may be
of relatively little interest to its trading partners in general, but it could be of significant value to theeconomic development of the Member itself.  In line with our general objective of promoting
progressive trade liberalisation, account should be taken of this factor when determining the value of
the measure.
6. Indeed, given that a fair amount of autonomous liberalisation measures might have been in
force for sometime, they could be fairly well known to the liberalising Members’ trading partners, andmay be accorded relatively low negotiating priorities in requests.  These measures might not therefore
be “requested” in the request and offer negotiations, or might even become the de facto starting point
for negotiations in practice.  Multilaterally agreed modalities and criteria should come in handy to
deal with these situations.
III. POSSIBLE ELEMENTS FOR CRITERIA
7. We have put forward in paragraph 11(d) of Job No. 7580 a list of possible factors, which may
be agreed multilaterally, to be taken into account during bilateral negotiations where autonomous
liberalisation is raised.  Building on that list, a possible set of elements for criteria could be as follows:
(a) All liberalisation measures that were undertaken outside the context of all WTO
negotiations leading to the current schedules of commitments should potentially be
recognised as autonomously taken by Members since previous negotiations (in the
present context this should mean the Uruguay Round and the extended negotiations).
(b) Liberalisation taken over and above the existing schedules of commitments
(i.e. potential AL measures which are recognizable for granting credit) could include
(i) de facto  measures over and above the existing binding; (ii) measures undertaken
unilaterally by a Member as a result of domestic policy change; and (iii) measures
undertaken by a Member as a result of FTAs and to be extended to all Members on anMFN basis in accordance with sub-paragraph (d).
(c) For a measure to be recognised for credit, it must be susceptible of being scheduled or
committed under GATS, i.e. those schedulable under Art. XVI, XVII and XV III, or
those leading to the elimination of MFN exemptions.
(d) In line with the principle of MFN and non-discrimination, which is a fundamental
tenet of the multilateral trading system, only AL measures which are applied on anS/CSS/W/134
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MFN basis should be recognised for credit under the criteria and modalities for
treatment of AL measures.  This should include extending measures which are
currently applied on a non-MFN basis (in sectors where MFN exemptions have been
undertaken) to all Members on an MFN basis.
(e) AL measures which a Member is willing to bind at the end of negotiations should be
recognised as eligible for credit.
(f) The trading value of the AL measure to the trading partner concerned, having regard
to actual and/or potential commercial interests.  This may be considered in the light
of, for example, the weighting of the sector or mode in which autonomous
liberalisation is taken, to the GDPs of the relevant trading partners, subject to
availability of credible statistics.
(g) The significance of the AL measure in promoting the economic development of the
liberalizing Member, having regard to its level of development.
(h) The gap between the AL measure and the de facto level, if the AL measure for which
credit is claimed is not the de factor measure.
IV. POSSIBLE ELEMENTS FOR MODALITIES
8. As regards possible elements for modalities, we consider that an AL measure may be used to
claim credit either:  (i) in making requests in respect of specific trading partners for liberalisation in
general or in specific sectors; or (ii) in making offers either in response to requests in the same or a
related sector.  Here, the requesting Member should be responsible for providing information
regarding the AL measure for which credit is sought, describing its significance to the Member’s
economic development, indicating a willingness to bind the measure by the end of the negotiations ifcredit is granted, and explaining its relevance to the requests being made (if applicable).
9. The trading partner(s) should evaluate the trading value of the AL measure put forward to it
by the liberalising Member, having regard to its actual or potential commercial interests.  Where it is
considered that an AL measure is of little or no trading value, the trading partner(s) should provide
information on the evaluation as early as possible to allow time for the liberalising Member to requestconsultation.
10. Where the liberalising Member, after consultation with the trading partner concerned, failed
to gain credit for its AL measure requested for either in requests or offers, the Member may notify the
Council for Trade in Services, Special Session and re quests for a peer review of the AL measure and
the credit sought.  In other words, an oversight role is envisaged for the Council for Trade in Services,
Special Session in order to ensure that the multilaterally agreed criteria are applied in an appropriate
manner, in line with the understanding of the membership.  We believe this is consistent with thefunction of the Council for Trade in Services, Special Session as the forum overseeing the conduct of
services negotiations at Council and subsidiary level.
11. For the modalities of treatment for AL measures to be operational, notification and
transparency of AL measures, for which recognition is sought and credit is granted in the negotiation
process, would be necessary.  Such notification and transparency should meet the same level ofrequirements as under Art. III.  In particular, the notification should describe the measure and its
significance to the Member’s economic development, and indicate a readiness to bind the measure by
the end of the negotiations, if credit is granted.  Phased-in notification and transparency should be
allowed to tie in with the negotiations process.  A possible outline of notification procedures could be
as follows :S/CSS/W/134
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(a) If a Member wishes to claim credit for an AL measure from its trading partners for its
requests, the AL measure should be inscribed alongside the Member’s requests for its
trading partners.
(b) If a Member wishes to claim credit for an AL measure from its trading partners in it
offers, the AL measure should be inscribed alongside the Member’s offer.
(c) Alternatively, a Member who wishes to claim credit for an AL measure may notify
the Council for Trade in Services, Special Session at any time its intention to claim
credit for that particular AL measure.
(d) All AL measures for which credit has been claimed and is to be granted should be
notified, if not already done under (c).
V. NEXT STEPS
12. This paper has not touched upon, inter alia, the important question of the nature and form of
the credit to be granted for eligible autonomous  liberalisation measures.  We look forward to
discussing the contents of this paper and other relevant issues with Members.
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