RESTRICTEDWORLD TRADE
ORGANIZATIONS/WPGR/M/29
9 October 2000
(00-4148)
Working Party on GATS Rules
REPORT OF THE MEETING OF 27 SEPTEMBER 2000
Note by the Secretariat
1. The Working Party on GATS Rules held is twenty-ninth meeting under the chairmanship of
Mr. Tony Sims, from the United Kingdom.  The agenda for the meeting was contained inWTO/AIR/1381.  It consisted of five items:  ne gotiations on safeguards under GATS Article X;
negotiations on subsidies under GATS Article XV;  negotiations on government procurement under
GATS Article XIII;  date of the next meeting;  and other business.  The agenda for the meeting was
adopted.
2. The Chairperson drew attention to an informal Note (Job No. 5538, 15 September 2000) he
had circulated to assist delegations in their preparation for the meeting.
A. NEGOTIATIONS ON SAFEGUARDS UNDER ARTICLE X OF THE GATS
3. In the absence of new contributions from Members, the Chairperson proposed to revert to
items 1 (definition of "domestic industry") and 2 (issue of "acquired rights") of Job No. 1979
(29 March 2000).  Delegations were also invited to consider two informal papers prepared by theSecretariat following requests by the Working Party at  its informal meeting on 22 June 2000:  first, a
factual background note on GATT/WTO dispute settlement practice on the concept of "unforeseen
developments", as contained in GATT Article XIX (Job No. 5077, 18 August 2000);  and, secondly, a
technical paper on the possible forms of special and differential treatment in an emergency safeguard
mechanism (Job No. 5539, 15 September 2000).  Finally, in view of future thematic discussions in the
Working Party, delegations would also be invited to comment on whether the Chairperson's Note Job
No. 1979 should be revised.  He proposed to discuss these issues in informal mode.
4. The representative of Thailand, on behalf of ASEAN, informed the Working Party that
ASEAN was working intensively on a draft agreemen t on a possible safeguard mechanism for trade in
services.  He stressed that this draft was not based solely on ASEAN's position, but was an attempt to
take into account, to a very large extent, the disc ussion so far in the Working Party.  The draft was
nearly completed.  It would propose solutions to most  of the conceptual issues raised in the Working
Party.  ASEAN was trying its best to circulate a well-conceived draft in the very near future.
5. The representative of Poland replied to a question posed at the July meeting by the delegation
of Kenya (see para. 11 of S/WPGR/M/28) in relation to the communication presented by Poland in
S/WPGR/W/34.  The National Bank of Poland had c onfirmed that the Foreign Exchange Law was in
force since 12 January 1999.  The possibility, contained in Article 18 of the Law, to introduce asafeguard measure was not related to any particular reason existing in the Polish economy – there had
been no currency crisis in Poland in the nineties – but was justified by the fact that the Polish
economy was subject to an in-depth restructuring.  A progressive liberalization of capital flows had
been implemented in the country.  Such policy might entail foreign exchange or financial
disadvantages.S/WPGR/M/29
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6. The Chairperson suggested to turn to informal mode to discuss the issues mentioned earlier.
The Secretariat would prepare a note summarizing the comments made.1  It was so agreed.
B. NEGOTIATIONS ON SUBSIDIES UNDER ARTICLE XV OF THE GATS
7. The Chairperson drew attention to a communication circulated by the delegation of Poland in
document S/WPGR/W/16/Add.4/Suppl.1 (dated 20 September 2000).
8. The representative of Poland said that this paper was a supplement to the notification made in
document S/WPGR/W/16/Add.4, describing subsidy prog rammes and aids in services granted in the
years 1997-1998.  He recalled that, when presenting the initial document, his delegation had promised
information on aids granted in 1999 as soon as the data were available.  He noted that, although the
aids in 1999 were granted only under the second of the programmes listed, all three were still in force.
The third programme would be operational until 2009.  The sums indicated for these programmes
were in Polish zlotys (4 zlotys approximated 1 US dollar in 1999).  The Chairperson thanked the
delegation of Poland and urged other delegations to respond to the 1997 subsidy questionnaire.
9. The Chairperson recalled that, as agreed at the last meeting of the Working Party, he had
circulated a Checklist on Subsidies (Job No. 4519, 17 July 2000).  In preparing it, he had tried to
maintain a balance between, on the one hand, thos e delegations who wanted a comprehensive list,
and, on the other hand, those who were in favour of a short list.  He had attempted to present topics ina logical order, so as to allow for a sequential approach.  One item would proposed for each
successive meeting;  however, since all these issues were interconnected, it would be artificial to
ignore cross-linkages.  He intended, therefore, to ensure flexibility when addressing the items on the
list.  It should not become a straightjacket.  He enquired whether delegations had suggestions or
comments to make.
10. The representative of Brazil said that point 5 of the list should include a reference to the
possible need for additional GATS disciplines to avoid trade-distortive effects, including the
appropriateness of countervailing procedures.  This latter point was explicitly mentioned in the
Article XV:1 mandate.  The Chairperson said that the list would be revised to include this suggestion.
11. The representative of Canada supported the Chairperson's proposal to have a more structured
discussion on subsidies.  He reiterated his delegation's concerns about any discussion of the relevance
of subsidies granted for public policy objectives.  To the extent that WPGR wanted to engage in a
substantive discussion on this point, Canada would convey strong views on this issue.
12. The Chairperson suggested to turn to informal mode to discuss item 1 of the Checklist, i.e.
"Definition of a subsidy in services (including relevance of the definition in the Agreement on
Subsidies and Countervailing Measures").  The Secretariat would prepare a note summarizing the
comments made.  It was so agreed.2
C. NEGOTIATIONS ON GOVERNMENT PROCUREMENT UNDER ARTICLE XIII OF THE GATS
13. The Chairperson invited further comments on the informal communication presented at the
last meeting by the European Communities and its Member States ( Government procurement of
services – Possible developments of multilateral disciplines , Job No. 4021, 26 June 2000).
Delegations were also free to raise any other point.
                                                     
1 This Note is contained in Job No. 3449/Add.2 (6 October 2000).
2 This Note is contained in Job No. 6142, (6 October 2000).S/WPGR/M/29
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14. The representative of the European Communities  said they were still reflecting on a number
of issues and, following the discussion at the last meeting, examining the possibility of presenting a
list of points for further consideration.  These included, inter alia , the issues of transparency, market
access and national treatment, and MFN.
15. The representative of Poland said that his delegation supported work on transparency in
government procurement of services as transparency was of basic importance in this field.  She noted
that GATS Article III already covered transparency.  Similar issues were being examined by the
Working Group on Transparency in Government Procurement ("WGTGP"), and provisions ultimately
agreed to in the WGTGP would cover a wider range of products, including services.
16. The representative of Thailand, on behalf of the ASEAN Members, considered that the scope
of the Article XIII mandate should be discussed before embarking on a more ambitious exercise.  The
relationship, if any, between the first and the second paragraphs deserved further consideration.  Themeaning of the phrase "government procurement in services under this Agreement", in para. 2, was of
fundamental importance.  He enquired whether this meant that negotiations in the Working Party were
subject to the exemptions specified in Article XIII:1  or whether these could be modified in the course
of the negotiations.
17. The representative of Brazil said that the Article XIII mandate was not necessarily conducive
to market access negotiations.  The question of MFN was difficult to dissociate from market access
issues.  Work on transparency should concentrate in the WGTGP so as to avoid duplication, but also
because of the nature of government procurement:  Brazilian legislation on government procurement
did not distinguish between procurement of goods an d services.  Economic reality also showed that, in
many cases, both goods and services were involved in the same transaction.  For instance, a purchaseof computer equipment would often include after-sale services.
18. The representative of Venezuela said that it was important to look at the scope of the mandate
of Article XIII.  It was important to bear in mind the incentive mechanisms that might be used by
developing countries to promote competitivity of local suppliers.  All provisions related to
transparency, both in goods and services, should be analyzed in the WGTGP.  Work on this subjectshould also take into account relevant discussions in the Special Sessions of the GATS Council
concerning the assessment of services trade and the benefits of trade liberalization for developing
countries.  The representative of the Republic of Korea considered that work on transparency should
be conducted in the WGTGP.  The representative of Canada said that further reflection was needed on
the scope of Article the XIII mandate, as presented in the EC paper.  Canada agreed with the approach
outlined by the EC whereby possible disciplines should be considered first, followed, at a later stage,
by discussions on market-access commitments.  Canada agreed that non-discrimination andtransparency obligations were two important aspects of potential disciplines that could be examined
by this Working Party.  The possibility of additional disciplines that might be appropriate in a services
agreement, with a focus on market access, should not be precluded.
19. The representative of India disagreed with the interpretation in para. 2 of the EC
communication.  His delegation felt that the intention of the negotiators was to exclude the three
Articles referred to in Article XIII:1 from being part of any procurement disciplines in services, while
the second paragraph mandated Members to consider whether – and negotiate the extent to which –
the other provisions of the GATS should apply to government procurement.  The representative of
Argentina expressed interest in the points raised  by Brazil regarding the negotiating mandate and
ways to organize work in this Working Party.  He noted that the scope of the negotiating mandate was
a question which had already been raised in other contexts in this Working Party.  The representative
of the United States expressed doubts as to whether it was useful to examine the mandate of
Article XIII.  Should the mandate exclude national treatment, market access, and MFN, he wonderedwhat it would actually cover.  His delegation was pleased with the progress achieved on transparencyS/WPGR/M/29
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in the WGTGP, which covered both goods and services.  The representative of Hong Kong, China
said that his delegation understood that the multilateral negotiations covered all GATS Articles.  He
shared India's view that the first sentence of Article XIII should not be interpreted to mean that all
other GATS provisions already applied, but disagr eed with the suggestion that Articles II, XVI
and XVII would not be part of the negotiations.  The representative of Egypt supported the position
expressed by India on the mandate of Article XIII.  The representative of Japan expressed doubts
whether it could be inferred from the first paragraph of Article XIII that all GATS provisions, exceptArticles II, XVI and XVII, already applied.  However, his delegation was of the view that these three
provisions were part of the negotiations.
20. The representative of the European Communitie s maintained that the explicit reference to
Articles II, XVI and XVII in the first paragraph of Article XIII clearly implied that the other GATS
provisions did apply.  He said that it was desirable to establish disciplines on transparency andsuggested that this work might be pursued in pa rallel in this Working Party and the WGTGP which
could be mutually supportive.
21. The representative of Canada said that work on transparency in government procurement was
important on its own merits.  It was not, however, the only element of an agreement to improve
market access in government procurement.  Discussions on transparency should therefore continue inthis Working Party and in the WGTGP.
22. The Chairperson recalled that, as agreed in July, the Secretariat would circulate before the
next meeting of the Working Party: (i) a checklist of documents dealing with relevant activities in the
Committee on Government Procurement and in the WGTPG, and (ii) a factual note compiling
services concessions included in the framework of the Agreement on Government Procurement
D. DATE OF THE NEXT MEETING
23. The Chairperson informed the Working Party that  the next formal meeting would take place
on 30 November and 1 December 2000.  He recalled that, as agreed during the informal session on
safeguards, he would hold a three-day informal meeting on the issue of emergency safeguard
measures on 1, 2 and 3 November.
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