RESTRICTEDWORLD TRADE
ORGANIZATIONS/WPGR/M/33
10 July 2001
(01-3442)
Working Party on GATS Rules
REPORT OF THE MEETING OF 2 JULY 2001
Note by the Secretariat
1. The Working Party on GATS Rules held its thirty-third meeting under the chairmanship of
Mr. Hugo Cayrus, from Uruguay.  The agenda for the meeting was contained in WTO/AIR/1577.  It
consisted of five items:  negotiations on safeguards under GATS Article X;  negotiations on subsidiesunder 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.  The Chairperson
drew attention to an informal Note (JOB(01)/95) he had circulated to assist delegations in theirpreparation for the meeting.
A. 
NEGOTIATIONS ON SAFEGUARDS UNDER ARTICLE X OF THE GATS
2. The Chairperson recalled that, during the last informal meeting on 26 and 27 June, Members
had had an extensive exchange of views on the ten topics listed in the Chairperson's Note, Job
No. 1979/Rev.1, and had addressed in a preliminary manner an informal communication from Chile,
Costa Rica and Switzerland on a Possible Comprehensive Approach for an Emergency Safeguards
Mechanism (ESM)  (JOB(01)/81).1  Three other informal written contributions had been circulated
since that meeting;  Emergency Safeguard Mechanism:  a Multilateral Surveillance Procedure , by
Canada (JOB(01)/100);  Negociaciones sobre Medidas de Salvaguardias Urgentes:  Relación de
Causalidad , by Venezuela (JOB(01)/101);  Non-paper by Japan on Emergency Safeguard Measures
(JOB(01)/105).  He suggested to turn to in formal mode to discuss these contributions.2
3. With respect to the organization of future work, the Chairperson said that, as a result of the
last informal meeting of the Working Party, as well as the various bilateral and plurilateral informal
consultations he had held over the last weeks, it appeared that there was no consensus to work on adraft text.  Taking this into account, he wished to make the following suggestion as a possible way to
organise work, at least until November 2001.  First, he would prepare, under his own responsibility, a
synopsis which would outline the current situation of the discussion under the ten items identified in
the Chairperson's Checklist (Job No. 1979/Rev.1).  Th is synopsis would take into account written and
oral contributions.  It would present, in a synthe tic way, the main options introduced until the end of
July 2001 (written contributions, minutes, etc.) and indicate the main comments made by Members.
The synopsis would be intended to facilitate further analysis by Members and would be without
prejudice to the question of feasibility and desirability, nor to the form of a possible ESM.  The
synopsis could be presented at the beginning of September.  Secondly, taking into account that the
Fourth Ministerial Conference might require most of delegations' attention, he proposed that theWorking Party should hold two meetings before November 2001 in order to continue the current
negotiations on ESM.  Tentative dates were:  (i) an informal meeting on Tuesday 25 September, and
(ii) a formal meeting on 3 October, during the October services "cluster".  Thirdly, he wished to point
out that, taking into account the deadline of 15 March 2002, the Working Party might have to
                                                     
1 See Note by the Secretariat, JOB(01)/108.
2 See Note by the Secretariat, JOB(01)/109.S/WPGR/M/33
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consider, in November, the possibility of working on a draft text.  He anticipated that work would be
very intensive between November 2001 until the expiration of the deadline.
4. It was so agreed.
5. Regarding how work should be structured in September and October, the Chairperson
proposed that the Working Party should continue its analysis of the written contributions and work on
the basis of the synopsis.  Delegations might also want to concentrate on some key topics which were
central to the debate, and for which different positions existed.  The framework for discussion should
nevertheless be flexible enough to allow delegations to address any issue they deemed appropriate.
He recalled that delegations wishing to do so could raise the questions of feasibility and desirability of
an ESM.
6. The delegations of the European Communities said that issues such as the exclusion of
mode 3 or the link with future liberalization we re among the key policy topics to be considered.
B. NEGOTIATIONS ON SUBSIDIES UNDER ARTICLE XV OF THE GATS
7. The Chairperson invited delegations to address item 5 of the Chairperson's Checklist (Job
No. 4519/Rev.1), i.e.:  Is there a need for additional GATS disciplines to avoid trade-distortive
effects?  This would include consideration of the appropriateness of countervailing procedures.  Next
steps .  He noted that, after completion of discussion on this topic, the Chairperson's Checklist of
issues would have been exhausted.  Therefore, he encouraged delegations to consider how the
Working Party should continue its work under this agenda item.
8. The representative of Hong Kong, China said that  some subsidies, such as tax reliefs or direct
financial contributions from governments (either at the federal or sub-federal level), could have
significant effects on trade.  Her delegation was trying to collect evidence of trade-distortive subsidiesin order to make a contribution to the Working Party.  However, since Hong Kong, China seldom
applied trade-distortive subsidies, this evidence was difficult to find.  In her view, there was no
ground to believe that, unlike industrial or agricultural subsidies, services subsidies had no trade
effects and that no additional rules were needed.  She suggested that Members could further discuss
the issues raised in an informal paper presented by her delegation in September 2000 (Job No. 5870),including, for instance, the definitions of "financial contribution", "government", "specific supplier",
and "services", as well as whether consumer subsidies should be addressed in future disciplines.
9. The representative of Chile felt that work on emergency safeguard measures took most of the
time of the Working Party and that, as a result, subsidies and government procurement were not
sufficiently addressed.  She wondered how this concern could be addressed.  The Chairperson said
that negotiations under Articles XIII and XV were in the hands of Members who were always free to
submit proposals.  The emphasis put on emergency safeguard measure was also due, in part, to thefact that the Working Party had a deadline to complete this negotiation.
10. The representative of Mexico supported what had been said by Hong Kong, China and Chile.
He agreed that it was up to Members to make contributions to move the process ahead.  He noted that,
while some subsidies could be justified due to their social objectives (health or education, for
instance), other subsidies had trade-distortive effects.
11. The representative of Brazil agreed with Hong Kong, China that it could not be assumed that
services subsidies did not have the same trade-distortive effects as similar subsidies in goods.  With
respect to item 5 of the Checklist, his delegation did not have specific views on the issue of
countervailing measures.  He noted that item 5 was closely related to item 3.  Existing disciplines
were not sufficient to address trade-distortive effects of subsidies, in particular because the scope ofS/WPGR/M/33
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national treatment across modes was not clear.  In addition, the national treatment obligation did not
solve the question of competition in foreign markets.  He noted that several sectoral negotiating
proposals tabled in the Special Session referred to subsidies (in audiovisual or distribution, for
example).  In some instances, it was proposed to negotiate sectoral rules on subsidies.  Brazil wanted
to caution against such work being carried out in the Special Session because it might prejudge thenature of possible disciplines to be discussed in this Working Party.  With respect to future work, he
suggested that Members continue their discussion on the basis of the Checklist, going back to the first
item, without prejudice to the possibility of introducing new elements.
12. The representative of New Zealand said that the negotiating deadline of 15 March 2002
explained why the focus had increasingly shifted to emergency safeguard measures.  With respect to
future work on subsidies, his delegation would support any initiative that would stimulate work. One
option could be to address all the elements of the Checklist, which would favour an overallperspective.  Keeping in mind the specific mandate in Article XV, which was to address trade-
distortive subsidies, any information that Member s might provide with respect to such subsidies
would facilitate discussions.
13. The representative of the United States said that since trade in services was different from
trade in goods, it could not readily be assumed that subsidy-related problems were similar.  The
mandate contained in Article XV was ambivalent sin ce it pointed out that, "in certain circumstances",
subsidies "may" have trade-distortive effects.  More information on actual trade distortions associated
with subsidies was therefore needed.  He agreed that national treatment could not necessarily solve all
the problems but it was still a powerful requirement.  With respect to the question of subsidies in the
audiovisual sector, he suggested that a pragmatic approach could rely on scheduling.  As to futurework, his delegation was open, but had a preference for discussing the five items of the Checklist at
the same time.
14. The representative of Australia said that, both with respect to subsidies and government
procurement, it would be useful to go back to basic issues and have a clear idea on what the Working
Group was mandated to do.  A structure and a timeframe would greatly help discussions.  Key issuesshould be identified.
15. The representative of the European Communities supported the proposal to address all issues
of the Checklist.
16. The Chairperson concluded that the Checklist would remain on the table.  Delegations having
an interest in the subject were encouraged to make contributions.
C. NEGOTIATIONS ON GOVERNMENT PROCUREMENT UNDER ARTICLE XIII OF THE GATS
17. The Chairperson proposed that delegations should continue their general exchange of views
on any aspect of government procurement of services.
18. The representative of the European Communities said that work on emergency safeguard
measures should not preclude progress on the other two items of the agenda.  She stressed the
economic importance of government procurement and considered that their exclusion from the scope
of the GATS reduced the value of specific commitm ents.  WPGR should, however, not duplicate the
work of the Working Group on Transparency in Government Procurement (WGTGP), but
complement it.  In that regard, WPGR could focus on issues directly linked to the procurement
process, such as qualifications of bidders.  This issue was dealt with in WGTGP, but only to ensure
that transparency was achieved.  WPGR could go further and examine, for instance, when
qualifications could be required or to what extent could a purchaser require that a service suppliershould demonstrate technical capability.S/WPGR/M/33
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D. DATE OF THE NEXT MEETING
19. The Chairperson indicated that the next formal meeting of the Working Party had been
tentatively scheduled for 3 October 2001.
E. OTHER BUSINESS
20. Nothing was raised under this agenda item.
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