RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/M/32
14 January 1999
(99-0122)
Council for Trade in Services
REPORT OF THE MEETING HELD ON 14 AND 15 DECEMBER 1998
Note by the Secretariat
1. The Council for Trade in Services held a meeting on 14 and 15 December 1998.  The agenda
for the meeting is contained in WTO/AIR/992 a nd WTO/AIR/992/Add.1.  Under other business, the
delegations of Guatemala and Côte d’Ivoire  raised points concerning respectively the submission of a
schedule in basic telecommunications and of a schedule in financial services under the certificationprocedure.  The Chairman raised two points concerning the status of acceptances of the Fifth Protocol
to the GATS and the appointment of chairpersons of the subsidiary bodies.
A. MULTILATERAL DISCIPLINES ON DOMESTIC REGULATION IN THE
ACCOUNTANCY SECTOR
2. The Chairman drew attention to document S/WPPS/4 which contained the report by the
Working Party on Professional Services concerning its work on the development of multilateral
disciplines in the accountancy sector.  He then invited the Chairman of the Working Party on
Professional Services, Mr Michael Stone, to present the report.  Mr Stone introduced the report by
paying tribute to Members for reaching a compromise on the multilateral disciplines in the
accountancy sector.  He also thanked previous Chairpersons and the Secretariat for their efforts.  He
presented the report of the Working Party (S/WPPS/4) and four documents annexed to it: a Draft
Council Decision (Job No. 6481/Rev.1); the text of the Disciplines (S/WPPS/W/21); a Chairman’sNote on discussion of Articles VI, XVI and XVII (Job No. 6496); and the Decision on Professional
Services (S/L/3).
3. The representative of the United States recognised that the disciplines were the result of a
difficult compromise and that they represented a first step towards the development of multilateral
disciplines for other professional services and for all services sectors.  He affirmed that his delegationhad made a statement in the WPPS prior to the adoption of the report, on the basis of which they had
been able to accept it.  He further stated that it was clear that Members had undertaken to make these
disciplines legally binding by the end of the next round of services negotiations and that the current
text of the disciplines in accountancy could not be regarded as immutable. He said that it was now
necessary to begin work in the Council on horizontal multilateral disciplines on domestic regulation.
4. The Chairman suggested that the Council adopt the draft decision attached to the report
contained in document S/WPPS/4.
5. The Council so agreed.
6. Several delegations intervened to thank Mr. Mi chael Stone for his work as Chairman of the
Working Party on Professional Services.  Delegations also thanked previous Chairpersons and theSecretariat for their efforts in helping the WPPS to fulfill its mandate.S/C/M/32
Page 2
B. ELECTRONIC COMMERCE - IMPLEMENTATION OF THE WORK PROGRAMME
ADOPTED BY THE GENERAL COUNCIL
7. The Chairman recalled that at its last meeting, on 23 and 24 November 1998, the Council had
its first substantive discussion of the elements contained in the work programme on electronic
commerce as they related to the GATS framework on the basis of a note by the Secretariat
(S/C/W/68).  At the end of the discussion Members agreed to take up in more detail at this meeting of
the Council the issues of scope, classification, MFN, transparency and increasing participation of
developing countries.
8. Before inviting Members to hold their disc ussion in informal mode the Chairman drew
attention to a communication from the European Communities contained in document S/C/W/87,
which focused on issues relating to scope and classification.  He then invited the delegation of the
European Communities to present the paper.
9. The representative of the European Communities said that the GATS applied to all the various
elements of electronic commerce transmissions: internet access services (covered by the GATS Annex on
Telecommunications and WTO Members commitments on basic telecommunications);telecommunications services (covered by the various telecommunications’ services subsectors),
distribution services involved in the ordering of physical goods (covered under the distribution services
sector); and services ordered and delivered on-line (covered under the different services sectors and/or
subsectors applicable to the same services when provided in a traditional manner).
10. He argued that since access to the internet required access to and use of public
telecommunications transport networks, WTO Members had to ensure that providers of other Members
were accorded this access and use on reasonable and non-discriminatory terms and conditions, as
provided in the GATS Annex on Telecommunications.  Moreover, the GATS Annex on
Telecommunications required each Member to ensure that service suppliers of any other Member were
accorded access to and use of public telecom transport network and services on reasonable and non-discriminatory terms and conditions “for the supply of a service included in its Schedule”.  In this respect,
the Annex guaranteed that whenever a WTO Member had specific commitments in a particular sector,
such commitments applied also to those sectors when delivered in electronic form.  This was regardless
of whether the WTO Member in question had bound GATS commitments on telecommunications
services or not.  The rules applying to content services should be those relating to the content itself, not
those relating to the means of transmission.
11. He argued that WTO Members’ market access and national treatment commitments applied not
only when the services committed were provided in a traditional format but also when they were provided
via electronic means.  Unless specifically excluded in Members’ schedules, the services sectors or
subsectors applicable to services provided in a traditional manner were also the relevant ones when the
service was provided in an electronic form.
12. The representative of the United States said that the statement made in paragraph 34 of document
S/C/W/68 that the United States applied custom duties to ship repair services purchased abroad was
incorrect.  He noted that under tariff schedule item HS 9802 was a sub-heading for “articles returned to
the United States after having been exported to be advanced in value or improved in condition by any
process of manufacture or other means.”  This portion of the United States tariff schedule was not specific
to ships and could apply to any good, more importantly it was clear that the duty applied to the good.  Infact, pursuant to HS 9802.0040 and 0050, the tariff was a “duty upon the value of the repairs or
alterations,” and pursuant to the headnote, the basis was that the good had been changed in condition
abroad.  He stressed therefore that the United States did not impose custom duties on services.S/C/M/32
Page 3
13. The representative of Egypt said that the supply of services through electronic means has
recently developed to an extent that many nego tiators did not expect when GATS was negotiated.
They were not aware at that time of the vast and complex implications of services delivery through
electronic means.  Furthermore, the GATS as a framework had not yet been developed to the same
extent as the GATT.  Several additional disciplines are still under consideration.  He argued that theadoption of electronic means of supply could not be regarded as a technological development that was
neutral as between different modes of supply under the GATS.  He said that the Secretariat note
suggested that electronic delivery can take place under any of the four modes of supply and that the
GATS makes no distinction between different t echnological means by which a service may be
supplied and, it therefore, covers electronic delivery of services.  However, it should be kept in mind
that such technological development had an impact  on the comparative strengths of the modes, for
example by favouring the cross-border supply of services at the cost of commercial presence andmovement of natural persons.  He noted that Members’ commitments according to the various modes
of supply were made on the assessment of the competitive strengths of modes at the time of the
negotiations. He said that it would have been useful to invite other relevant international
organizations, such as UNCTAD and the ITU to pres ent their views to the Council, in order to help
WTO Members to better understand this issue.  He emphasized that these preliminary comments wereintended to emphasize the complex nature of the subject at hand and the need to undertaken thorough
analysis of the issues involved.
14. The Chairman recalled that paragraph 1.4 of the work programme on electronic commerce
adopted by the General Council provided that consideration should be given to possible ways of
obtaining information from relevant non-governmental  organizations.  He noted that that inputs from
the private sector or from non-governmental sources could be made in two ways: in writing or by
inviting relevant organizations to make oral presen tations to the Council.  These two possibilities were
clearly not mutually exclusive.  He invited delegati ons to reflect on this matter with a view to holding
a discussion at the next meeting of the Council.
15. The Chairman invited delegations to address each of the elements contained in the agenda of
the work programme on electronic commerce in a more detailed and analytical manner.  The
discussion was held in informal mode.
16. On the basis of the informal meeting the Chai rman provided the following summary under his
own responsibility:
Scope
A number of delegations commented on the paper submitted by the European Communities on the
issues of scope and classification and introduced in the formal session. In discussing the relevance of
the four modes of supply for electronic commerce, Members agreed that services could be supplied
electronically under any of the modes; under modes three and four, for example, with respect to
established juridical and natural persons who used electronic means to reach their customers in the
host country.  Members also noted the importance of modes 1 and 2 for electronic commerce, and thedifficulty of allocating specific transactions as between these two modes.  Several delegations
expressed interest in the suggestion in the Secretariat’s paper (S/C/W/68) that the real function of the
modes is to classify commitments and measures taken under them rather than to classify transactions,
and that the essential distinction between modes one and two would be made according to whether the
measure in question restricts the ability of suppliers to supply the service on a cross-border basis orwhether it restricts the ability of domestic consumers to buy the service abroad.  One delegation noted
the importance of the issue of the place of jurisdiction, that is establishing the location of electronic
transactions for legal purposes. Members agreed that it was necessary to look at these issues in more
detail.S/C/M/32
Page 4
Members agreed that the GATS applied to all services regardless of the means of technology by
which they were delivered.  This was further reinforced by the fact that in no area of the WTO were
there different rules for different techniques of delivery.  It was noted that the principle of
technological neutrality also applied to sche duled commitments, unless the schedule specified
otherwise: it was therefore possible for Members to schedule commitments in a non-technologicallyneutral manner.  It was suggested that consideration should be given to how technological neutrality
in electronic commerce would apply to existing commitments and to certain new services.  There was
discussion of the classification of internet access services, of their status as services in their own right
and of their relationship to telecommunications commitments and the obligations in the Annex on
Telecommunications. It was agreed that this too required further study.
Some delegations noted that the process should still focus at this particular stage on identifying
questions rather than seeking definitive answers to all the issues raised by electronic commerce in
services.  In this respect one delegation noted that it was important to take advantage of the work on
electronic commerce which was being done in other international organizations.
Classification issues
Members agreed that all services delivered electronically were covered by the GATS.  Several
delegations said that they had not developed a position on the classification of electronically delivered
products which if delivered by non-electronic m eans would not be considered services.  One
delegation argued that electronic commerce could involve two categories of products, services andintangible goods; electricity was an example of a product considered as an intangible good in the
WTO system.  Another delegation argued that some  physical goods, such as magazines, incorporated
many services: it was not clear that if the magazine were  supplied on-line, incorporating  the same
services but not the physical supports, it should not itself be considered a service.  It was also said that
with respect to digitalised information which co uld be downloaded and incorporated into physical
goods there were aspects which had to be examined by the TRIPS Council.
One delegation said that there were three different kinds of transmission involved in electronic
commerce: (1) electronic transmissions consisting solely of telecommunications, such as electronic
mail; (2) electronic transmissions used to order goods over the internet, which were subsequently
delivered physically; and (3) electronic transmissions in which services are ordered and delivered
electronically. All of these transactions fell within the scope of the GATS, due to the technologicallyneutral nature of the Agreement;  and internet  access services were covered by existing commitments
in telecommunications and by the GATS Annex on telecommunications.
MFN
It was noted that the issue of likeness was central to the application of MFN.  One speaker suggested
that the overall objective of a discussion on this point should be to further the liberalisation and
growth of electronic commerce.  The first question to be addressed was whether electronically
delivered products and those delivered by more traditional methods should be considered “like
products”.  In this respect account should be taken of the important role of customisation in electroniccommerce and of the fact that the customisation process included a wide range of operations such as
designing, marketing, wholesaling, retailing and delivery, which went beyond distribution services, as
currently covered by the GATS.  The delegation also stressed the specific nature of digitalised
content, which could be stored and accessed  repeatedly. Another delegation argued that likeness
depends on the attributes of the products in question, rather than on the technological means of theirdelivery.S/C/M/32
Page 5
Transparency
As in the preliminary discussion held in the Council meeting of 23 and 24 November 1998, it was
noted that the application of Article III on transparency to electronic commerce was straightforward.
Increasing participation of developing countries
Members agreed that work in the Services Council should focus also on the Secretariat paper on
electronic commerce presented before the Committee on Trade in Development.  Several delegations
supported the idea of holding a seminar next year to examine development aspects of electronic
commerce.  There was support for the idea that appropriate non-governmental and private sector
organizations should be invited to participate.   It was suggested that the seminar should provide theopportunity to examine examples of success stories by developing countries' service suppliers in
electronic commerce and to share ideas on how to increase technical assistance in this area.  It was
also suggested that the seminar could focus on all is sues relating to electronic commerce, including
development.  If the seminar were to focus on development issues only, it might be combined with the
seminar on that subject being organised by the Co mmittee on Trade in Development.  The point was
made that Article XXV as well as Article IV was relevant to the increasing participation of
developing countries.
C. ASSESSMENT OF TRADE IN SERVICS – ARTICLE XIX:3 OF THE GATS
17. The Chairman recalled that paragraph 3 of Article XIX of the GATS provided that for each
round of negotiations guidelines and procedures be established.  For that purpose, the same provision
called upon the Council to carry out an assessment of trade in services in overall terms and on a
sectoral basis with reference to the objectives of the GATS, including those set out in paragraph 1 ofArticle IV.  In order to prepare for that assessment, Ministers in Singapore endorsed the proposal that
the Council conduct an information exchange exercise, the main part of which was represented by the
on-going sectoral discussions.
18. At the previous meeting of the Council the Chairman had suggested that as the conclusion of
the exchange of information exercise was approaching, it might have been useful that the Council
held a preliminary exchange of views on how the assessment should be carried out.  He said that in
his view there were two main elements: (i) the collection and presentation of data which may beavailable and (ii) a discussion in the Council leading to a joint assessment of the way in which trade
flows and regulatory developments had progressed since the coming into force of the Agreement.  He
added that Members were aware of the serious deficiencies in the statistics and other data available to
the Council, but stressed the need to undertake all pos sible efforts to present them in the most helpful
way with the assistance of the Secretariat.
19. The Chairman invited delegations to express their preliminary views on the way in which
discussion in the Council should be organized and on the documentation that they might wish to
request from the Secretariat.
20. Members agreed that the assessment represented an important aspect of Article XIX of the
GATS and that it would not have been appropriate to set a fixed time-frame for it.  It was, however,the general view that the assessment should take no more than one or two meetings of the Council,
taking into consideration that in the next year the Council was called upon to begin other important
work under Article XIX and namely the negotiating guidelines.
21. The Council requested the Secretariat to submit a document in preparation for the assessment
of trade exercise to be conducted in early 1999.  The representative of Japan said that this documentS/C/M/32
Page 6
should summarize issues, but not results of an assessment.  The delegation of the European
Communities noted that  it would be useful if the Secretariat provided the Council with material for
discussion, using W/26/Add.1 as a model.  The representative of the United States argued that the
Council might be said to have already engaged in an assessment over the past few months during the
information exchange exercise.  In this respect relevant material had already been produced by theSecretariat, in particular in the papers on the economic effects of services liberalization and statistics
(S/C/W/26 & Add.1 and S/C/W/27) and the sectoral background papers prepared for the exchange of
information.  He said that a new paper should flesh out only the elements which were possibly lacking
in previous Secretariat documents, that is to say the relationship between Articles XIX and IV.  The
delegation of Egypt said that it would be useful if the Secretariat’s paper could focus on, and provide
some details of, costs and benefits of services liberalization for developing countries.  New Zealand
and Indonesia on behalf of ASEAN  argued that a paper from the Secretariat should put together and
reorganize material which was already available.  Australia and Hong Kong  saw no particular need
for a new Secretariat document as it was difficult to see what could be added to existing material suchas documents S/C/W/26 & Add.1 and S/C/W/27.  The representative of Uruguay asked how the
Services Council’s work on the assessment would be coordinated with the work on implementation,which was taking place in the General Council.  The Chairman replied that the work programme of
the General Council did not affect on-going work in the subsidiary bodies and that Members were
expected to undertake work on the assessment in the Services Council, independently of other
activities in the General Council.
D. REOPENING OF THE FOURTH PROTOCOL TO THE GATS FOR ACCEPTANCE:
REQUEST BY GHANA – DRAFT DECISION BY THE COUNCIL
22. At the previous meeting of the Council the representative of Ghana had made a statement
under other business requesting the Council to adopt a decision to temporarily reopen the Fourth
Protocol to the GATS relating to basic telecommuni cations in order to allow its government to accept
it.  The deadline for accepting the Fourth Protocol was 31 July 1998.  In order to allow Ghana to
accept the Secretariat had prepared a draft Decision by the Council contained in document S/C/W/85.
The representative of Ghana said that his government had signed the Fourth Protocol subject to
ratification well before the deadline, but it had taken a long time to ratify it.  As ratification had nowtaken place, he asked the Council to re-open the Protocol temporarily in order for the ratification to
become effective and to allow his government to accept the Protocol.
23. The representative of Japan said that in principle deadlines should always be respected.  He
stressed that his government was concerned that re -opening of a Protocol should happen again, as this
should be the exception rather than a common practice.  The representative of the United States
welcomed the fact that Ghana was able to accept the Fourth Protocol, but agreed with Japan thatdeadlines should be respected and that the re-opening of a Protocol should constitute the exception
rather than a common practice.  The delegations of New Zealand and Hong Kong
 echoed the
comments made by Japan and United States and asked whether there were also other Members, who
could take advantage of this re-opening of the F ourth Protocol to accept, having missed the previous
deadline.  The delegations of Brazil and Philippines , who had not yet accepted the Protocol, informed
the Council that ratification of the Protocol was still pending before their respective parliaments andthat at this point in time they could not indicate a date when they would be able to accept the Protocol.
24. Following some changes suggested by delegations, the Chairman suggested that the Council
adopt the decision, contained in document S/C/W/85, to re-open the Fourth Protocol in order to allow
Ghana to accept it.
25. The Council so agreed.S/C/M/32
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E. CO-OPERATION WITH THE ITU
26. The Chairman drew attention to an informal note by the Secretariat (Job No. 5340/Rev.1)
which contained a revised draft of a cooperation agreement between the WTO and the ITU.  This
revised draft was prepared upon request by Members and in the light of the discussion held at the
October meeting of the Council.  He encouraged delegations to move towards a decision on this
matter, which had been pending for some considerable time.  Before opening the discussion on the
details of the revised draft prepared by the Secretariat, he asked delegations to focus on the question
of the desirability of entering into such an agre ement.  Regarding the form the Secretariat explained
that an exchange of letters or a formal agreement would have the same legal value.
27. The representative of India said that his delegation had no objections to a cooperation
arrangement with the ITU.  On the point of form, th eir preference was for an exchange of letters, but
if there was a consensus for another form of agr eement they would not oppose it.  Mexico said that
considering that the legal value was the same their preference was for an exchange of letters.  The
representative of the European Communities agreed with India and Mexico, that an exchange of
letters was the appropriate form for cooperation with the ITU, but added that his delegation would not
oppose a formal agreement.  The representative of the United States supported a formal cooperation
agreement with the ITU, but said that his delegati on was prepared to join a consensus on an exchange
of letters.
28. The Chairman invited delegations to comment on the revised text prepared by the Secretariat.
Members agreed that the new draft text represente d a significant improvement with respect to the
previous draft.  In particular Members welcomed the fact that in the new draft observer status no
longer included the Dispute Settlement Body and Di spute Settlement Panels.  Some delegations also
suggested that the list of bodies excluded from observer status in paragraphs 3 and 5 of the draft text
should also include the Appellate Body.  Other sugge stions included: the identification of the areas of
common interest referred to in paragraph 2; the deletion of the reference to Opinion A and Opinion Bof the second ITU World Telecommunication policy Forum in the fifth indent of the Preamble –
although one delegation asked for the reference to be retained; changing the references to the
“Parties” into “the ITU and the WTO”; and keeping the comments, which in the draft appeared after
each Article.  The Chairman asked the Secretariat to put the reference to Opinion A and Opinion B in
square brackets and verify the legal implications of such a reference.  He said that the comments oneach Article would remain in the background document to be approved by the Services Council, while
the would disappear from the final text to be fo rwarded to the General Council for approval.  The
Chairman also asked the Secretariat to report at the next meeting of the Council on the state of
consultations with the Secretariat of the ITU.
F. COUNCIL INFORMATION SESSION ON TELECOMMUNICATIONS
29. At the previous meeting of the Council the delegation of the United States proposed that the
Council hold an informal session on the telecommunication services agreement.  The written text of
the proposal was contained in document S/C/W/69.  It  indicated that it would be useful to exchange
views among Members on the results of the agreement and to discuss any technical assistance which
might be needed in that context.  Since this proposal was raised under other business the Council wasnot in a position to take a decision at the last meeting and it was agreed that it would be inscribed on
the agenda of this meeting.
30. The representative of the United States proposed to hold a special session of the Council
devoted to the agreement on basic telecommunications.  The purpose of such a session would be to
debate technical assistance and regulatory reform in the telecommunications sector.  He said that ifS/C/M/32
Page 8
the agreement with the ITU were finalised on time, such a session could constitute the right
opportunity for the ITU to be involved.  He added that it was important to schedule the session at a
convenient and early date.
31. The representatives of the European Communities and Japan  fully supported the proposal
form the United States and asked questions concerning procedural issues.  The representatives of
ASEAN and Mexico  welcomed and took note of the proposal from the United States, but could not
yet give a formal response as the proposal was being considered by their respective authorities incapitals.  ASEAN also questioned the linking of th e information session with the issue of cooperation
with the ITU.  On the point of procedure the Chairman said that the session might take place in the
Council for Trade in Services.  He suggested that the Council inscribe the proposal on the agenda of
the next meeting with a view to taking a decision.
G. ANNUAL REPORTS OF SUBSIDIARY BODIES
32. In accordance with the procedures adopted by the General Council for annual reporting, the
following subsidiary bodies submitted their re ports to the Services Council: the Committee on
Specific Commitments (S/CSC/3); the Working Party on Professional Services (S/WPPS/3) and theWorking Party on GATS Rules (S/WPGR/3).  A report had not been received from the Committee on
Trade in Financial Services which to that date ha d not held any meetings in 1998.  A meeting of the
Committee on Trade in Financial Services was scheduled for 17 December 1998.  The Chairman
proposed that the Council take note of the reports.
33. The Council took note.
H. NOTIFICATIONS PURSUANT TO ARTICLE III:3 OF THE GATS
34. Paragraph 3 of Article III of the GATS requires Members to inform the Council for Trade in
Services, at least once a year, of the introduction of any new, or any changes to existing laws,regulations or administrative guidelines which significantly affect trade in services covered by its
specific commitments under the GATS.  The Chairman  drew attention to the following notifications:
- COMMUNICATION FROM NIGERIA (S/C/N/69)
- COMMUNICATION FROM SWITZERLAND (S/C/N/70)
- COMMUNICATION FROM PERU (S/C/N/71)
- COMMUNICATION FROM THAILAND (S/C/N/72)
- COMMUNICATION FROM THAILAND (S/C/N/73)- COMMUNICATION FROM JAPAN (S/C/N/74)
- COMMUNICATION FROM JAPAN (S/C/N/77)
- COMMUNICATION FROM INDONESIA (S/C/N/78)
- COMMUNICATION FROM INDONESIA (S/C/N/79)
- COMMUNICATION FROM INDONESIA (S/C/N/80)- COMMUNICATION FROM INDONESIA (S/C/N/81)
- COMMUNICATION FROM JAPAN (S/C/N/82)
- COMMUNICATION FROM JAPAN (S/C/N/83)
- COMMUNICATION FROM JAPAN (S/C/N/84)
- COMMUNICATION FROM THE UNITED KINGDOM (S/C/N/85)
35. He suggested that the Council take note of the notifications.
36. The Council took note.S/C/M/32
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I. NOTIFICATIONS PURSUANT TO ARTICLE VII:4 OF THE GATS
37. Paragraph 4 of Article VII of the GATS contains notification requirements regarding
recognition measures, whether based upon agreements, arrangements or in the form of unilateralmeasures.  The Chairman drew attent ion to the following notifications:
- COMMUNICATION FROM AUSTRALIA (S/C/N/67)
- COMMUNICATION FROM THE UNITED STATES (S/C/N/68)
- COMMUNICATION FROM SWITZERLAND (S/C/N/75)
- COMMUNICATION FROM LIECHTESTEIN (S/C/N/76)
38. He suggested that the Council take note of the notifications.
39. The Council took note.
J. DERESTRICTION OF SECTORAL PAPERS
40. At its last meeting the Council had agreed that at each following meeting it would consider
for derestriction those sectoral background papers prepared by the Secretariat for the information
exchange exercise, which had been discussed at the previous meeting.
41. The representative of Brazil said that his delegation remained convinced that the proposal of
derestriction of the Secretariat’s Background Notes for the Services Council, according to paragraph
2(b) of the Procedures for the Circulation an d Derestriction of WTO Documents , adopted by the
General Council on 18 July 1996, was not the most appropriate way of addressing the need for more
transparency to the work of the WTO, as recommended by the Singapore Ministerial Declaration.  He
stressed that, as a matter of concern for all WTO bodies, the question of transparency was being dealt
with in the General Council.  He agreed to th e derestriction of documents S/C/W/59 to 62 and
S/C/W/72 to 75, on the understanding that this decision was an exceptional measure, taken in thecontext of the Council for Trade in Services, which did not set a precedent for similar decisions by
other WTO bodies.  He added that his government understood that the decision to derestrict the
Secretariat’s papers did not prejudge eventual results of the on-going discussions in the General
Council on derestriction nor the inclusion of the sectors reviewed by the background papers in the
services negotiations due to start in the year 2000.
42. The representative of Mexico expressed support for Brazil’s position with respect to the
derestriction of the sectoral papers and said that her delegation agreed to the derestriction of
documents S/C/W/59 to 62, provided that also the Spanish version was available at the time of
derestriction.  The representative of Uruguay agreed to the derestriction of the Secretariat’s papers;
however, it would have been desirable to have uniform criteria applicable to all WTO bodies and itwas important that the Spanish version of the documents was available before derestriction took place.
43. The Chairman suggested that the Council agree to derestrict those papers which had been
discussed at its last meeting, that is to say documents S/C/W/59 to 62.  As for the other set of
documents referred to on the agenda as S/C/W/72 to 75, he suggested that they be derestricted at the
next meeting of the Council since they were being discussed for the first time at the current meeting.
44. The Council so agreed.S/C/M/32
Page 10
K. REQUEST FOR OBSERVER STATUS FROM THE SOUTH CENTRE
45. The Chairman introduced an informal note by the Secretariat (Job No. 6652) which contained
a communication from the South Centre requesting observer status in the Council for Trade in
Services.
46. The representative of India expressed strong support for the request from the South Centre,
which had been pending for some time.  The representative of the Argentina said that his delegation
could agree to grant observer status to the South Centre, provided that a decision was taken also on
the requests by other international intergovernmental organizations, which had been pending for a
long time.
47. The Chairman said that it was regrettable that no progress had been made on those requests.
He suggested that the Council take note of the request from the South Centre and that such request be
added to the list of similar requests from other international inter-governmental organizations
contained in document S/C/W/19.  He proposed the insertion of a formal agenda item on observer
status for the next meeting of the Council.  He urged Members to move towards a decision on all such
requests, some of which had been outstanding for a considerable amount of time.
48. The Council took note.
L. PREPARATION FOR NEGOTIATIONS UNDER ARTICLE XIX – EXCHANGE OF
INFORMATION, SECTORAL DISCUSSIONS
49. The Chairman invited participants to refer back to the five main questions which Members
had agreed in order to structure the sectoral discussions: (1) What are the regulatory authorities,
governmental and/or non-governmental?  (2) Are there any special or common problems encountered
as regards transparency or the application of the most favoured national principle?  (3) What are the
most prevalent types of restriction on market access or national treatment?  (4) Are there other types
of regulation - for example in the areas of licensing, technical standards or qualification requirements- which commonly restrict trade in the sector?  and (5) What are the main barriers exports face in the
markets of other Members?
50. The discussion focused on the following sectors: Financial Services, Accountancy Services,
Telecommunication Services and Presence of Natural Persons.  The Secretariat introduced the papers it
had prepared on each of these sectors, in documents S/C/W/72 to 75.  The Chairman also invited
participants to raise points concerning sectors discussed at the last meeting of the Council.
51. The following informal papers were submitted by delegations on the services sectors under
discussion: (a) Accountancy Services: Australia, and Japan ;  (b) Financial Services: Australia , Japan
and Turkey;  (c) Telecommunications Services: Australia , and Japan ; (d) Presence of Natural Persons:
Australia.  The United States submitted formal paper on Financial Services (S/C/W/89), Accountancy
Services  (S/C/W/90)and Telecommunications Services (S/C/W/91).
52. Regarding sectors discussed at previous meetings of the Council, the delegations of  Czech
Republic and Poland  submitted informal papers on Health Services and on Health Related and Social
Services respectively.
53. The Council followed the same procedure as at the previous meetings.  It conducted the
discussions in informal mode and reverted to formal mode at the end of the meeting.  In the formal
session the Chairman gave the following summary of the main points raised during the informaldiscussions on each of the sectors:S/C/M/32
Page 11
(a) Financial Services (S/C/W/72)
The delegations of Japan and the United States  submitted informal notes highlighting recent
developments in financial markets, the growth outlook, possible areas for future discussion and work,
and the commitments made by those countries under the GATS.  Turkey submitted an informal note
providing detailed answers to some key questions on the regulatory regime and trade restrictions in
financial leasing, factoring, insurance, securities markets and the banking sector.  Delegations of those
countries, as well as a number of other delegations explained the regulatory regimes and commitments
under the GATS for their countries in the meeting.
Delegations underscored the importance of the financial services sector in the economy, and for
growth and development.  In light of the global financial crisis, intense work was being carried out inreviewing the international financial architecture.   A lesson from the current crisis was that the
benefits of liberalization in financial services trade must be underpinned by sound macroeconomic
policy and appropriate prudential regulation and supervision.  It was pointed out that liberalization
under the GATS involved longer-term structural reform, and must not be unduly affected by short-
term fluctuations in the financial markets.
The most immediate and important task ahead was for the Members concerned to accept the Fifth
Protocol to the GATS incorporating the results of the financial services negotiations, and to ensure
that it entered into force by March next year, as scheduled.
Despite the broad commitments made as a result of the most recent negotiations, there existed an
important potential for improving the commitments of Members in market access and national
treatment, and for reducing MFN exemptions in financial services.  It was stated that the objective
should be to extend the coverage of commitments to all subsectors of financial services, not to
introduce any new restrictions, and to protect existing establishments of foreign financial servicesuppliers.  Wider use of the Understanding on Commitments in Financial Services, a discussion on the
scope of prudential measures as provided in the Annex on Financial Services, and the development of
regulatory disciplines in financial services were also possible areas for future work.
It was pointed out that there might be a need to harmonize sectoral classifications of financial services
employed in Members' schedules, and that the classification in the Annex served as a good basis for
such harmonization.  On the other hand, more detailed analysis was required in order to be able tojudge whether further disaggregation of the classification in the Annex was appropriate.  An interest
was also expressed in considering the appropriate classification of new financial services, and
possible further clarification of existing service categories.
(b) Accountancy Services (S/C/W/73)
On accountancy services, some Members provided details of their domestic regimes.  Other Members
stated that sufficient information was already available as a result of the activities of the Working
Party on Professional Services.  Members welcomed the Council's adoption of the accountancy
disciplines the day before.
The importance of accountancy services for the economy as a whole was noted, as well as the
broadening scope of accountancy activities, now extending to such areas as investment and
management consulting.  The range of accountancy services offered internationally was also
constantly expanding, benefitting from advances in computer and telecommunications technology.The advantages of further liberalization and regulatory reform were emphasized, with one Member
stating that an open accountancy services sector, with access to the highest-quality services at
internationally competitive rates, contributed to a strong financial sector.S/C/M/32
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Attention was also drawn to issues raised in the Secretariat report, including the questions for further
discussion concerning MRAs and small- and medium-sized firms.  Differences in the scope of
accountancy activities, as defined at the national level, were noted, and the question raised as to
whether this issue might be discussed in the context of the Committee on Specific Commitments.
(c) Presence of Natural Persons (S/C/W/75)
Most statements were of a preliminary nature as delegations had not had sufficient time to assess the
Secretariat's Background Note in detail and consult their authorities.
Diverging views were expressed about the economic importance of current commitments for Mode 4.
It was noted, on the one hand, that scheduled access conditions were very restrictive in general,especially for natural persons whose presence was not related to establishment.  In a number of cases,
vague terminology and unspecified economic needs tests deprived commitments of any substance.Other delegations noted the economic and social sensitivities associated with movements of natural
persons.  While schedules tended to reflect these sensitivities, future liberalization might be possible
in areas requiring advanced technical specialization, expertise and skills.
Delegations felt that a range of issues raised by the Secretariat needed further discussion and
clarification.  These included the coverage of intra-corporate transferees and other staff under either
Mode 3 or Mode 4;  uncertainties related to the legal status of foreigners employed by domestically-
owned companies;  the absence of an agreed definiti on of terms such as "business visitors" or "senior
executives";  Members' failure to schedule maximum periods of stay for the persons covered;
potential contradictions between horizontal and sector-specific entries;  the use of economic needs
tests without transparent criteria;  and the status under Article XVI, XVII or VI of regulatory
interventions affecting wages, working hours etc.  Answering to an enquiry concerning the
establishment in the form of self-employment, it was clarified that it was covered by Mode 4 only ifthe service supplier was not a juridical person.  Some participants were also interested in further
exploring the general implications of new information and communication technologies for Mode 4
trade.
Several delegations noted that they were preparing own submissions for discussion at a later Council
meeting.  The Secretariat regretted that it had not been able to produce yet a background paper on the
other three modes of supply and undertook to do so in time for a discussion at a subsequent Councilmeeting.
(d) Telecommunication Services (S/C/W/74)
Representatives stressed the importance of continuing comprehensive work on trade in
telecommunications services under the GATS and building on the accomplishments of the
negotiations on basic telecommunications.  There was also a need to rekindle interest in negotiation of
commitments on value added telecommunications services.
The role of the sector in relation to trade in other industries and the role of the private sector in
infrastructure build-out in developing countries were underlined. Also, a risk that the mergers and
acquisitions in the industry could lead to greater concentration was cited.  The need to ensure a level
playing field for new market entrants and small companies was pointed out.  It was noted that
restrictions on the number of suppliers and restrictions on investor participation were prominent
among the limitations scheduled in the sector and that these could act as a disincentive to investment.In relation to definitional issues, it was suggested that two forms of convergence could have
implications for the sector: the convergence of various forms of telecom infrastructure and services
and the convergence of  telecom services with other kinds of services.S/C/M/32
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Many themes were proposed for future work on telecommunications. On rulemaking issues, these
included conducting a review of the Reference Paper, considering whether it might be incorporated
into the GATS, and the development of internationa l best-practices guidelines for the measures it
addresses, re-examining the Telecom Annex, consid ering reforms of the international accounting rates
system, developing international internet traffic pricing and access principles, and elaborating rules(under Article VI) on measures such as licensing requirements and procedures.  On the negotiation of
commitments, suggestions included the removal of existing scheduled limitations on market access
for basic and value-added services, particularly exclusive rights of long duration, more commitments
on market access and the Reference Paper by Members who have not yet done so, the removal of
most-favoured-nation exemptions, improved commitments on cross-border supply and consumption
abroad, particularly in view of their role in e-commerce, and the removal of limitations on market
access, privileges and immunities that give competitive advantages to some satellite operators. Onhow to list commitments, delegations suggested impr oving the uniformity of scheduling, in line with
technical neutrality and other aspects of the GBT Chairman's note (S/GBT/W/2/Rev.1) and reviewing
the GATS classification list for telecom services.
M. OTHER BUSINESS
Status of acceptances of the Fifth Protocol
54. Regarding the status of acceptances of the Fifth Protocol on financial services, the Chairman
said he was increasingly concerned about the small number of acceptances registered to that date.
Only 15 Members had accepted and 55 acceptances were still outstanding.  He noted that this issue
was also being addressed by the Committee on Trade in Financial Services, but the Council also had
responsibilities in the matter.  He asked Members to bring this issues to the urgent attention of their
authorities.  The representative of India said that on the 9th of December 1998, they had signed the
protocol.  The representative of the European Communities said that they were in the process of
completing all their ratification procedures: a majority of the Member States had completed theirinternal procedures, while the others should complete them on time in order to accept the protocol by
the deadline of 29 January 1999.  The delegation of Slovenia said that they had signed the protocol
subject to ratification and that as their Parliament was close to ratifying, they would accept on time.
55. The representative of Ghana argued that if some Members were not able to accept on time, it
might have been desirable to extend the deadline rather than being faced with the issue of re-opening
at a later stage.  The representative of the United States said that his delegation was not in favour of
extending deadlines.  He stressed that in the current global financial situation it was important thatMembers met the deadline, which was set last year at the end of the financial services negotiations.
Submission of schedules under the certification procedure
56. The representative of Guatemala said that his government had not been able to accept the
Fourth Protocol on basic telecommunications, due to some changes in the telecommunications
legislation, which were not correctly referred to in the schedule.  She introduced a new schedule for
consideration by the Council under the certification procedure.
57. The representative of the United States said he regretted that Guatemala had not been able to
accept the Fourth Protocol.  He added that his delegation wanted to discuss with Guatemala the
reasons which had led them not to accept the protocol, and in particular the language on cost-oriented
interconnection, which in the new schedule had been removed from their commitments on the
regulatory principles in the reference paper.S/C/M/32
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58. The representative of Côte d’Ivoire introduced a schedule of commitments in financial
services for consideration by the Council under the certification procedure.  He said that in submitting
this schedule autonomously and unilaterally, his country wanted to send a strong signal to WTO
Members and to investors that it was committed to an open multilateral trading system, in which
developing countries participate fully.  He expressed the wish that these new commitments wouldcontribute to favour the establishment of foreign financial services providers in Côte d’Ivoire, and to
help the development and the modernisation of the market in this sector.  He informed the Council
that document S/C/W/86 contained the schedule of specific commitments in financial services as well
as a list of Article II exemptions, which had been submitted on 12 December 1997.  The MFN
exemption list contained a slight technical change in its last page, clarifying the exempted measures in
the stock exchange services sector, but which did not affect the substance of the derogation.
Appointment of Chairpersons of subsidiary bodies
59. The Chairman informed Members that in accor dance with the Rules of Procedures for the
Council for Trade in Services, and as outgoing Chairman, it was his intention to start consultations on
the appointment of Chairpersons for subsidiary bodi es during the month of January.  He invited
delegations to communicate any suggestions they may have in this respect.
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