WORLD TRADE
ORGANIZATIONWT/GC/W/116
20 November 1998
(98-4669)
General Council Original:  English
PREPARATIONS FOR THE 2000 SERVICES NEGOTIATIONS
Communication from Australia
The following communication, dated 20 November 1998, has been received from the
Permanent Mission of Australia.
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I. AUSTRALIA'S SITUATION
1. Australia is one of the most service-intensive economies in the world.  Services production
grew in June quarter 1998 to A$83.1 billion, and accounted for 71 per cent of total GDP.  The most
recent figures indicate that services production acc ounts for 79 per cent of Australian industry output
and 81 per cent of total employment.  The importance of the sector to us is reflected in the priority we
attach to the WTO services negotiations in 2000.
II. THE PREPARATORY PROCESS
2. Australia is beginning the preparatory process for the 2000 services negotiations on the basis
of the objective agreed by WTO Members, that of progressive liberalisation.  We have high ambitions
for the next round of services negotiations and therefore urge that preparations for the negotiations
proceed expeditiously.
A. T HE INFORMATION EXCHANGE PROGRAM
3. We place importance on the information exchange program (IEP), particularly because of the
valuable information on market practices, regulatory  barriers, current market access commitments and
MFN restrictions provided to all Members which assists us in developing negotiating goals and
strategies for the next round.  We are disappointed that earlier rounds of the IEP have not seen more
than a limited number of Members having input, thus arguably frustrating the objectives of GATSArticle XIX and limiting the ability of all Members to make adequate preparations.    It will be
important for the Council for Trade in Services to give greater priority to its work on regulatory
barriers to services trade, given the effect these can have on the implications and relevance of many
specific commitments.  We note the consistently thorough and insightful background papers produced
by the Secretariat.WT/GC/W/116
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B. B UILT-IN AGENDA ISSUES
1. Classification, statistics and scheduling guidelines
4. It is Australia's view that the scope for producing an updated list of services sectors for use by
all Members in the scheduling of specific commitments should be examined.  The list could
consolidate the various sectoral classifications currently used in the schedules, drawing on theServices Sectoral Classification List produced by the WTO Secretariat in 1991 and the ad hoc
scheduling arrangements for some sectors (for example, the list of services provided in the Annex on
Financial Services).  It would also update the CPC classifications used in the Services Sectoral
Classification List from the current provisional codes to the codes used in the first revision.   The
revised CPC code captures 'new' sectors such as environmental services.
5. Significant progress should be made on classification, statistics and scheduling guidelines
through the on-going work in the Committee on Specific Commitments before the beginning of thenegotiations.  We will continue to provide specific comments on particular classification issues
2. Rules/regulatory issues
6. The Built-in agenda provides for negotiations on three outstanding rules  questions -
emergency safeguards, government procurement and subsidies.  These negotiations are likely tocontinue into the next round, given the current pace of discussion.  On emergency safeguards we think
there would be merit in examining further the scope for which significant and meaningful market
access commitments in the next round could be encouraged through the provision of such a
mechanism.  On government procurement, we recognise the need for further work on possible GATS
coverage, along with the need to coordinate this work with on-going processes in other bodies of the
WTO.  We support discussions within the Working Party on GATS Rules on the type of subsidies
which have the most trade-distorting effect.   We think that definitional and scope issues for services
subsidies require more attention, in particular, in respect of how they may differ from such approaches
in respect of goods trade.
7. Australia believes that regulatory issues  will become an increasingly important aspect of
negotiations on the liberalisation of trade in services if effective market access is to be secured. The
conclusion of the Reference Paper on Pro-Competitive Principles for Basic Telecommunications
demonstrates that developing meaningful disciplines on domestic regulation is possible - but the slow
negotiations under the WTO Working Party on Professional Services (WPPS) show just how difficult
the exercise can be.  Given the importance of this issue, Australia will be placing high priority in the
next round on further negotiations on disciplines affecting domestic regulation for professional
services.  We want to give legal effect to those disciplines. We believe that a horizontal approach tothe professions which takes account also of profession-specific disciplines would be the most
effective way for the WPPS to proceed in the imme diate future. We would propose that a horizontal
approach include at least the legal, engineering, architecture and surveying professions.   If the WTO
cannot demonstrate capacity to make progress in this vital area in the next round of negotiations, we
could see attention shift to bilateral deals and other forums.WT/GC/W/116
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C. N EGOTIATING GUIDELINES AND PROCEDURES
1. Scope and sectors
8. Australia believes that the WTO negotiations on services commencing in 2000 should be
comprehensive and should automatically cover all services sectors.  A comprehensive approach offersbetter prospects of trade-offs and of a package agreement with substantive gains for all Members.
The mandate for the negotiations provided by Article XIX of the GATS does not, a priori , exclude
any sector from the scope of the negotiations.
9. We will be encouraging all Members to make expanded commitments in all sectors, even the
ones that have proved difficult in both regional and multilateral services negotiations.   We have a
particular interest in addressing sectors with limited coverage (eg air transport services and maritime);
sectors which will need revisiting because of commercial  changes and limited offers (financial,telecommunications and professional services); and sectors in which preliminary comments from
Australian companies indicate we have a particular interest (environmental, educational and
distribution).  Across the sectors, we will be look ing at how commercial presence restrictions hinder
trade in services.  We will be building on the successful conclusion of negotiations on financial
services and telecommunications.  The results already achieved in those sectors show the benefitswhich can flow to Members.
2. Architecture of the GATS
10. Two key objectives for the Australian Government will be to promote transparency, and to
expand coverage of commitments.  Existing schedules are difficult to read without expertise and, asfar as industry or the public is concerned, do not promote transparency.  We therefore welcome debate
on options on developing generic or quasi-formula approaches to negotiating the liberalisation of
market access barriers.  We will closely examine the real feasibility of any options proposed -
including negative list schedules, sectoral commitments, horizontal commitments or revised modes of
supply - and will not reject them at this early stage simply because counter-arguments might existagainst any one of them.  We will also examine how the patterns of services trade are evolving,
including through technological advances, and the impact this may have on the four modes of supply.
We will be making more detailed proposals ourselves, closer to the start of the negotiations.
11. We will take into account the need for contin ued flexibility to promote the interests of
developing countries. We urge developing countries to use the next round of services negotiations to
secure concessions from other Members, and to use the opportunity the negotiations present to review
and revise their own offers and regulatory systems.
3. Negotiating structures and timeframes
12. As preparations for the services negotiations gain momentum, negotiating structures and
timeframes will  become  important issues for discussion.  One suggestion which we could explore is
whether we may need to establish subsidiary bodies to the Council for Trade in Services along thelines of the Committee on Financial Services.  Such bodies could focus discussions in particular
sectors or groups of sectors.WT/GC/W/116
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D. E LECTRONIC COMMERCE
13. Electronic commerce  is a cross-cutting issue, being discussed in a number of WTO bodies.
Trade in services could be significantly affected by the spread of electronic commerce.  It will be
particularly important to examine the rules of the GA TS in the light of this.  Again, the Secretariat's
background papers provide a good analytical framework for the discussion.  Australia believes thatexisting trade rules, including the GATS, will be la rgely sufficient to deal with questions raised by
electronic commerce.  We wish to avoid any unnecessary duplication of them.  A pragmatic approach
should be followed, recognising that there are some distinctive characteristics to electronic
transactions - such as the difficulty of determining where a transaction took place.  Many of the
challenges thrown up by electronic commerce are accentuated forms of existing trends in international
trade in goods and services.
III. CONCLUSIONS
14. Article XIX specifies that Members will enter into the 2000 services negotiations "with a
view to achieving a progressively higher level of liberalisation" and that "Such negotiations will be
directed to the reduction or elimination of the adverse effects on trade in services of measures as a
means of providing effective market access".  It is worth restating these agreed and ambitiousobjectives, because the services negotiations present us all with an opportunity to make further
progress in developing disciplines and covering sectors as envisaged in the GATS, to strengthen the
efficiency and competitiveness of our domestic services sectors, and to build on the technological
advances which are transforming trade in services.
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