RESTRICTEDWORLD TRADE
ORGANIZATIONS/WPGR/W/30
14 March 2000
(00-1015)
Working Party on GATS Rules Original:  English
COMMUNICATION FROM ASEAN
Concept Paper:  Elements of a Possible Agreed Draft of Rules on
Emergency Safeguard Measures for Trade in Services (GATS Article X)
The following communication is circulated at  the request of ASEAN to Members of the
Working Party on GATS Rules.
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This paper is an attempt by the ASEAN Members of the WTO, namely Brunei Darussalam,
Indonesia, Malaysia, Myanmar, Philippines, Singapore and Thailand, to conceptualize a number of
technical issues related to the topic.  It does not necessarily reflect the official positions of the
ASEAN Members on these issues.
I. Introduction
1. This paper is submitted to the Working Party on GATS Rules for consideration and
discussion, without prejudice to individual Members’ respective positions. As such, it is intended to
reflect the feeling of a number of Members that a standard set of rules  for the application of ESMs in
services may be agreed upon by all Members on the basis of the following elements.
II. Object and Purpose of the Rules
2. The object and purpose of such rules would be, inter alia, to clarify , implement , and reinforce
the object and purpose of the GATS, including that of:
2.1 recognizing the right of Members, particularly of developing countries, to regulate the
supply of services within their territories in order to meet national policy objectives;
2.2 facilitating the increasing participation of developing country Members in trade in
services and the expansion of their service exports including, inter alia , through the
strengthening of their domestic services capacity and its efficiency and
competitiveness;
2.3 allowing structural adjustment of the domestic service industry of Members, in
particular that of developing countries, with a view to enhancing competition in the
area of services, and facilitating the development of the services industry of
developing countries which are essential to their national economic development
programmes.S/WPGR/W/30
Page 2
III. Definitions1
3. Emergency safeguard measure is understood to mean “actions taken by a Member on the
supply or consumption of a service of another Member  with a view to temporarily withdrawing or
modifying its GATS specific commitments in order to temporarily safeguard its domestic industryagainst serious injury or threat thereof.”
4. Service of another Member  is understood to mean “a  service supplied:
4.1 from the territory of that other Member into the territory of the Member intending to
apply an emergency safeguard measure;
4.2 in the territory of that other Member to the service consumer of the Member
intending to apply an emergency safeguard measure;
4.3 by a service supplier of that other Member, through commercial presence in the
territory of the Member intending to apply an emergency safeguard measure
2; 
4.4 by a service supplier of that other Member, through presence of natural persons of a
Member3 in the territory of the Member intending to apply an emergency safeguard
measure”.
5. Domestic industry is understood to mean4:
Option 1
“Suppliers as a whole of the like or directly competitive5 services operating  within the
territory of the Member intending to apply an emergency safeguard measure, or those whose
collective output of the like or directly competitive services constitutes a major proportion of
the total domestic supply of those services”.
OR
                                                     
1 Should there be inconsistency between the definitions herein contained and those provided under GATS
Article XXVIII, the definitions herein shall prevail to  the extent relevant to the application of  ESMs.
2 The Working Party needs to discuss further the issue of foreign companies (juridical persons of another
Member as defined in accordance with GATS Article XXVIII) already established through commercial
presence within the territory of the Member applying ES Ms at the time of entry into effect of the ESMs.
 ASEAN is of the view that, in order to achieve progress in this area, the Members should arrive as soon as
possible at a common understanding on a number of key issues related to the application of ESMs in thecontext of mode 3, which are raised the ANNEX to this Paper.
3 See definition in Article XXVIII (k)
4 This definition is based on Article 4.1 of the Anti-Dumping Agreement and Article 4.1 of the agreement on
safeguards.
5 “Like or directly competitive services” may be defined as “services which are similar in nature and are
supplied to consumers for the same end-purposes”. This is indeed only one of many possible definitions of thisconcept. An in-depth discussion and study by the Wo rking Party may be needed. GATT practices under Articles
III, VI and XIX may be referred to, but they remain vague. Also, one may refer to discussions in the Council for
Trade in Services under the E-Commerce agenda item.S/WPGR/W/30
Page 3
Option 2
“Suppliers as a whole of the like or directly competitive services who are natural persons or
juridical persons 6 of the Member intending to apply an emergency safeguard measure, or
such natural persons/juridical persons of the invoking Member whose collective output of thelike or directly competitive services constitutes a major proportion of the total domestic
supply of those services”.
6. Serious Injury  is understood to mean
7 “ a significant overall impairment in the position of a
domestic industry that is determined in accordance with the criteria and indicators for the
determination of serious injury referred to in Paragraph 13 below”.
7. Threat of Serious Injury  is understood to mean “serious injury that is determined to be clearly
imminent, in accordance with the criteria and indicators for the determination of serious injury
referred to in Paragraph 13 below.”
IV. Conditions of application
It is understood that:
8. ESM may be applied to a service of another Member only if the applying Member has
determined,  pursuant to the rules contained herein, that there is an emergency situation resulting froman increase in supply or consumption  of such service, in absolute terms or relative to domestic supply
or consumption of such domestically supplied service, and under such conditions as to cause or
threaten to cause serious injury to the domestic in dustry that supplies like or directly competitive
services.
9. ESM shall be applied only to the extent and within a period of time
8 necessary to prevent or
remedy the serious injury or the threat thereof and to facilitate adjustment of the domestic industry
concerned.
10. ESMs shall be applied only where serious injury or a threat thereof has been determined
pursuant to an investigation referred to in Part V below.
[11. ESM shall be applied to a service on an MFN basis, irrespective of its mode of supply.] 9  
V. Determination of Serious injury or Threat Thereof
It is understood that:
12. The determination of serious Injury or threat thereof shall be carried out pursuant to an
investigation to be conducted by the competent authorities of the Member intending to apply an
emergency safeguard measure, at the request of its domestic industry10. A determination of the
existence of a threat of serious injury shall be based on facts  and not merely on allegation, conjectureor remote possibility.
                                                     
6 Natural and juridical persons as defined by  GATS Article XXVIII (k), (l), (m), and (n).
7 This definition is based on Article 4.1 of the agreement on safeguards.
8 See Section VIII below.
9 The inclusion of this Paragraph is pending resolution of the issues raised in Section B of the ANNEX.
10 Members should agree upon procedural rules in the conduct of ESM investigation similar to    those
in Article 3 of the Agreement on Safeguards.S/WPGR/W/30
Page 4
13. In the investigation, the competent authorities shall11:
13.1 examine all relevant indicators and sources of information relating to the volume of
supply or consumption of the service of another Member concerned, in order to
demonstrate an increase in this supply or consumption; and
13.2 evaluate all relevant criteria of an objective, quantifiable nature having a bearing on
the situation of the domestic industry concerned, in order to demonstrate the existence
of a serious injury or threat thereof; and
13.3 demonstrate, on the basis of several injury criteria, that there is  evidence of a causal
link between increased supply or consumption of the service of another Member andserious injury or threat thereof.
12 When factors other than increased supply or
consumption of a service of another Member are causing serious injury to the
domestic industry at the same time, such injury shall not be attributed to increased
supply or consumption of such service.
VI. Applicable Measures
It is understood that13:
14. Where serious injury or threat thereof has been determined pursuant to an investigation
referred to in Part V above, the Member concerned may, with regard to a service of another Member,
apply safeguard measures only to the extent necessary to prevent or remedy serious injury or threat
thereof and to facilitate adjustment.  The applicable measures shall include any or a combination of
the following:
14.1 temporary withdrawal or modification of specific commitments undertaken pursuant
to GATS Article XVI;
14.2 temporary withdrawal or modification of specific commitments undertaken pursuant
to GATS Article XVII14;
14.3 temporary withdrawal or modification of additional commitments undertaken under
GATS Article XVIII15.
                                                     
11 This is based on Article 4.2 of the Agreement on Safeguards and Article 3 of the Anti-dumping
Agreement. Alternatively, this provision may contain all the details on the relevant indicators and criteria. For
example, the contents of Job 5294/Rev.1 may be inco rporated in the text or included as a footnote.
12The factual information used as basis must cover a certain period of time to be specified.
13The question as to whether the applicable measures should be mode-specific will depend on how the
issues in the ANNEX are resolved.
14 The issue of subsidies as ESM should be dealt with under this provision.
15The issue of special considerations for regulatory disciplines should be dealt with under this
provision.S/WPGR/W/30
Page 5
VII. Compensation (Level of Commitments)16
It is understood that:
15. A Member intending to apply the ESM shall en deavour to maintain a substantially equivalent
level of specific commitments to that existing under the GATS17 between it and the Members of
which service suppliers would be affected by such a measure.
16. To achieve this objective, the Members concerned may agree on adequate means of
compensation relating to trade in services for th e adverse effects of the measure on their trade in
services. If no agreement is reached within a certain period of time18, the Member of which service
suppliers are affected shall be free to suspend the application to the Member applying the ESM ofsubstantially equivalent level of specific commitments under the GATS, the suspension of which the
Council for Trade in Services does not disapprove.
17. The right of suspension referred to in Paragraph 16 shall not be exercised for the first three
years that an ESM is in effect, provided that the ESM has been taken as a result of an absolute
increase in supply or consumption of a service and that such ESM conforms to the rules contained in
this paper.
VIII. Duration
19
It is understood that:
18. A Member shall apply ESMs only for such period of time as may be necessary to prevent or
remedy serious injury and to facilitate adjustment. The period shall not exceed x years, unless it is
extended under Paragraph 19.
19. The period of application of an ESM may be extended only after a new investigation, made
pursuant to a request by the domestic industry concerned, determines that the ESM continues to be
necessary to prevent or remedy serious injury and that there is evidence, based on objective criteria,
that the domestic industry concerned is adjusting. The total period of application of an ESM including
the period of application of any provisional measure, the period of initial application and any
extension thereof, shall not exceed x years.
20.  In order to facilitate adjustment in a situation where the expected duration of an ESM is over
one year, the Member applying the measure shall progressively liberalize it at regular intervals during
the period of application. If the duration of the measure exceeds three years, the Member applying
such a measure shall review the situation not later than the mid-term of the measure and, ifappropriate, withdraw it or increase the pace of liberalization. A measure extended shall not be more
restrictive than it was at the end of the initial period, and should continue to be liberalized.
21. No ESM shall be applied again to a service that has been subject to such a measure, for a
period of time equal to that during which such measure had been previously applied, provided that theperiod of non-application is at least two years.
                                                     
16 This is based on GATT Article XIX:3 and Article 8 of the Agreement on Safeguards.
17 the wording of GATS Article XXI:2(a)  may be referred to as model.
18To be determined by the Members.
19 This is based on Article 7 of the Agreement on SafeguardsS/WPGR/W/30
Page 6
IX. Provisional Measures20
It is understood that:
22. A provisional ESM may be applied by a Member in critical circumstance where delay would
cause damage which would be difficult to repair, and pursuant to a preliminary determination of
serious injury. This provisional measure shall be of a limited, non-renewable, period of application
with the sole purpose of allowing the Member concerned to temporarily stabilize the situation pending
the result of an investigation.
X. Consultation, Transparency, and Notification
It is understood that:
23. A Member intending to apply or extend an ESM21 shall provide adequate opportunity for
prior consultations with those Members of which service suppliers have a substantial interest in the
matter, with a view to, inter alia , reviewing the information notified under Paragraph 26, exchanging
views on the measure and reaching an understanding on ways to achieve the objective set out in
Paragraph 15.
  
24. Each Member shall publish promptly and, except in critical circumstances, at the latest by the
time of their entry into force or their effective date, all relevant laws, regulations and administrativemeasures and procedures relating to the application of an ESM, including the results of an
investigation.
25. Each Members shall respond promptly to all requests by any other Member for specific
information on any of their laws, regulations and administrative measures and procedures of generalapplication, as well as those relating to the application of an ESM.
26. A Member shall immediately  notify the Council for Trade in Services upon:
26.1 initiating an investigation;26.2 making a finding of serious injury or threat thereof;26.3 taking a decision to apply a provisional ESM;26.4 taking a decision to apply or extend an ESM.
A Member shall also immediately notify the resu lts of consultations, reviews, as well as of
compensation and proposed suspensions of commitments to the Council for Trade in Services .
27. Members shall notify promptly the Council for Trade in Services of their laws, regulations
and administrative measures and procedures relating to ESMs as well as any modification made tothem.
                                                     
20 This is based on Article 6 of the Agreement on Safeguards
21 This provision shall not apply to provisional ESMs.S/WPGR/W/30
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XI. Developing Countries22
It is understood that:
28. ESMs, provisional or otherwise, shall not be applied against the supply of a service or a
service supplier of a developing country Member if its share of the total supply of the service
concerned in the territory of the Member intending to apply the measure does not exceed a certain
proportion to be specified.
29. Option 1
A developing country Member shall have the right to extend the period of application of an
ESM for a period of up to x years beyond the maximum period referred to in Paragraph 18
above.
OR
Option 2
A developing country Member shall have the right to extend the period of application of an
ESM for a period of up to x years beyond the maximum period referred to in Paragraph 18
above. It shall also be exempt from obligations referred to in Paragraphs 15 and 16  above.
XII. Surveillance
30. Members may agree to set up a mechanism of surveillance by an appropriate forum along the
lines of Article 13 of the Agreement on Safeguards.
XIII. Dispute Settlement
It is understood that:
31. The provisions of the Understanding on Rules and Procedures Governing the Settlement of
Disputes shall apply to disputes arising under these rules.
XIV. Review
It is understood that:
32. These rules shall be reviewed by the Members x years after its entry into force. The review
shall be completed within x years .
                                                     
22 This is based on Article 9 of the Agreement on SafeguardsS/WPGR/W/30
Page 8
ANNEX
Mode 3, Domestic Industry Definitions & Issues Relating to Acquired Rights
1. The application of emergency safeguard measures in the context of mode 3 raises several
important issues both in respect of Members’ existing MFN and National Treatment obligations as
well as the specific mandate contained in Article X of the GATS. It would be important for Membersto address these issues as they will be central to  their efforts in formulating an appropriate and
effective safeguard mechanism.
2. Suggested below are several questions, answers to which should assist Members thinking on
(a) the appropriate safeguard measures in respect of mode 3; (b) their impact on MFN, nationaltreatment commitments, and other modes of supply; (c) the appropriate definition of domestic
industry for the purposes of, inter alia, safeguards petitions as well as injury determination; and (d) the
issue of acquired rights. They are not intended to be exhaustive nor to be suggestive of the positions
that Members may take on these issues.
A. Mode 3 Safeguards
3. Should a safeguard measure be applied to only new foreign entrants? What if injury is
primarily being caused by already established foreign suppliers? Should a Member have the right to
invoke a safeguard measure in respect of such suppliers? Should not an effective safeguardmechanism provide for such a course of action?
B. Impact on National Treatment, MFN & Supply Modes
4. Assuming it is decided that Members will have the right to take safeguard action against
already established foreign suppliers. This would in effect allow a Member to discriminate against
established foreign suppliers for safeguard purposes. Such discrimination may be inconsistent with thenational treatment commitments of the invoking Member. It may also run foul of bilateral investment
protection agreements that Members may be party to. Should it thus be sanctioned? But again
presumably any safeguard measure would result in  a temporary withdrawal or modification of a
Member’s commitment (be it market access, nationa l treatment or an additional commitment). Why
should national treatment commitments in mode 3 be excluded from such temporary withdrawals or
modifications? Would such an exclusion modify “the conditions of competition” against service
suppliers making use of the other modes of supply?
5. Assuming that it is decided that Members will not take safeguard action against already
established foreign suppliers. Would this not be inconsistent with a Members’ MFN obligation
1 vis-à-
vis new entrants? If so, why should adherence to a fundamental principle such as MFN be made
secondary to protecting the rights of already established foreign suppliers? As the MFN obligation is a
horizontal commitment and is not dependant on scheduling, should it not be sacrosanct even in the
context of a safeguard situation?
6. But is there really a problem of MFN? It could be argued that in targeting only new foreign
entrants, there is no discrimination on the basis of nationality and hence no violation of MFN. A
distinction is made only on the basis of the particular situation of the foreign supplier i.e. whether the
foreign supplier is already established or not. Thus for example, suppliers from Member X already
                                                     
1  Assuming that the invoking Member has not claimed an MFN exemption in respect of the affected
sector - in which case the issue would not arise at all.S/WPGR/W/30
Page 9
established in the invoking Member Y will not be subject to a safeguard measure, but new entrants
from X would be subject to such a measure as would new entrants from Member Z. Given the equal
discrimination against new entrants from X and Z, there is no violation of MFN.
7. Nevertheless, under this latter scenario, is there a de-facto violation of MFN? This could
possibly be argued by the new entrant from Z.
8. Another issue relating to MFN treatment is the relationship between the existing MFN
exemptions of Members and the invocation of a safeguard measure. Assume that under an MFN
exemption claimed by Member A, it is able to extend preferential treatment to Member B. Also now
assume that A is faced with an emergency situation in respect of the concerned sector and is forced to
impose a safeguard measure to restrict imports. Does A have the right to continue to providepreferential treatment to B under its MFN exemption and thus exempt B from the safeguard measure?
9. Article X specifically states that the “multilateral negotiations on the question of emergency
safeguards measures (be) based on the principle of non-discrimination”. Safeguard measures targeted
against already established foreign suppliers may run foul of the invoking Member’s national
treatment commitments. Similarly a carve-out for such suppliers may run foul of the Member’s MFN
obligation. It would appear that whatever position Members take on this issue, we may not be able to
satisfy the principle of non-discrimination. How should we get around this problem?
C. Domestic Industry Definitions
10. The definition of domestic industry for the purposes of safeguard petitions and injury
determination will be dependant on the position that Members take on actions against already
established foreign suppliers. Should domestic industry constitute both national suppliers as well as
established foreign suppliers? Or should it constitute only national suppliers so as to allow  Membersto cushion injury caused to national suppliers by established foreign suppliers? If domestic industry
were to be defined as comprising both types of suppliers could not a situation arise where established
foreign suppliers
2 attempt to keep out other foreign entrants by seeking safeguard action? This
scenario may be particularly insidious; although similar competition concerns could arise even if
domestic industry were to be defined as comprising national suppliers.
D. Acquired Rights
11. The issue of acquired rights has also been raised in the Working Party’s discussion of
safeguard measures in mode 3. It has been suggested that any safeguard mechanism should protect
acquired rights and exclude the possibility of disinvestment. This may be an important principle to
maintain but much would depend on how acquired rights are defined.
12. Take for example a narrow definition based on ownership such as that provided for in Articles
XXVIII(m) and (n). Members may categorically exclude safeguard actions that result in
disinvestment. Thus, established foreign suppliers wo uld still be allowed to retain their current equity
holdings. But could a Member freeze the status quo as a form of safeguard action, preventing anyincrease in equity holdings? Would this be still consistent with protecting acquired rights as defined
by ownership? Could a Member wi thdraw or modify national treatment commitments in respect of
established foreign suppliers if these do not impact on ownership (and acquired rights as so defined)?
13. The flipside would revolve around a broader definition of acquired rights. Could acquired
rights, for instance, be defined both in terms of ownership as well as the rights accruing from being
                                                     
2  By virtue of accounting for a major proportion of the total domestic supply of the concerned services.S/WPGR/W/30
Page 10
granted permission to operate within a Member’s territory. The latter rights would include for instance
national treatment. If so defined, would the protection of acquired rights prevent Members from
withdrawing or modifying national treatment commitments as a safeguard action against established
foreign suppliers?
14. There is also the issue of acquired rights and compensation. Assume that an invoking Member
agrees to compensate affected Members with a “substantially equivalent level” of market access in
mode 3 in respect of another sector other than the affected one. Can the invoking Member withdraw
such compensation upon the termination of the safeguard measure? If so, would this be an acceptable
impact on commercial presence an d acquired rights however defined.
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