RESTRICTEDWORLD TRADE
ORGANIZATIONS/WPGR/M/44
28 October 2003
(03-5703)
Working Party on GATS Rules
REPORT OF THE MEETING OF 1 OCTOBER 2003
Note by the Secretariat1
1. The Working Party on GATS Rules opened its forty-fourth meeting under the chairmanship
of Mr. Santiago Urbina, from Nicaragua.  The agenda for the meeting was contained inWTO/AIR/2173.  It included the following item s: emergency safeguard measures, government
procurement, subsidies, date of the next meeting, and other business.  To assist delegations in the
preparation of the meeting, the Chairperson had prepared an annotated agenda contained in
JOB(03)/190.  The agenda for the meeting was adopted.
I. NEGOTIATIONS ON EMERGENCY SAFEGUARD MEASURES (ARTICLE X)
2. The Chairperson recalled it was not possible to address this agenda item during the last formal
meeting, even though Members had an extensive disc ussion of ESM during the stocktaking.  He urged
delegations not to repeat the general points made then, as he was convinced that the views of all
Members had been registered, but rather to focus on new elements.  He invited delegations to
continue their discussion of actual or hypothetical situations where a safeguard action might beneeded, and which form such action should take.  Delegations could discuss examples against the
background of the various models and proposals that had been put forward.  This might help assess
common elements and the possibility of combining elements, and to address questions that have been
raised regarding such models, including process-related and technical issues, but also questions of
desirability and feasibility.
3. The representative of Brazil considered that, while looking at hypothetical and concrete
examples was a valuable exercise, it would also be useful if Members that had in their schedules or in
regional trade agreements a safeguard-type measure pertaining to services explain how they met, in
such instances, the issue of desirability and feasibility.  The Chairperson invited Members to give due
consideration to Brazil's suggestion.
4. The representative of Switzerland noted the interest in past meetings in the Shangri La
example, which was one of the major inputs to the Working Party's discussion.  He stressed that more
work needed to be done on the basis of this example and recalled that it had been suggested in a
previous meeting to go through it in light of the different models that had been put forward in the
negotiations pursuant to Article X.  Switzerland had tried to do that with respect to one of the models,
the status quo  model.  It attempted to do so in an objective manner, covering aspects it was not
necessarily supportive of.  He asked delegations to indicate, including at the next meeting, if theyshared the assessment or wanted to propose other considerations.  Switzerland's analysis would be
distributed to delegations in a non-paper, which discussed possibilities available to Shangri La in a
scenario without ESM.  The non-paper distinguished between the scheduling phase and the period
following entry into force of Shangri La's commitment regarding the distribution sector.
                                                     
1 This document has been prepared under the Secretariat's own responsibility and without prejudice to
the positions of Members and to their rights and obligations under the WTO.S/WPGR/M/44
Page 2
5. Regarding the first period, the paper pointed out that the GATS was very flexible, as
commitments could reflect the specific circumstances prevailing in each country and sector.  Shangri
La knew that its distribution sector was important and, most of all, very fragile.  Given the flexibility
of the GATS, one possible solution would have been for Shangri La to take only a partial commitment
and to schedule limitations.  A second point mentioned was that commitments did not always coincidewith the actual level of liberalization.  A Member could take GATS commitments only after a number
of years of experience at the national level, when it considered the internal situation to be mature.  In
other words GATS would have enabled Shangri La to start by liberalizing its distribution sector at the
national level only, monitor possible unwelcome affects, and finally consolidate the liberalization
under the GATS as appropriate.  The representative said that such an approach would have been even
more convenient for Shangri La in light of the modalities for autonomous liberalization.
6. Apart from scheduling flexibility, the GATS was also flexible regarding national policy
choices and regulation.  Full commitments under the GATS only limited the ability of Members to
introduce measures which did not comply with Articles XVI and XVII.  However, any measure that
was compatible with these Articles and respected the requirements set forth by Article VI could be
introduced.  Many countries had elaborated and enacted policies in the distribution sector to preserve
given structures.   For instance, countries had zoning plans and provisions regarding the openinghours for the retail business.  The issue at stake concerned national policy choice.  Even in the
absence of GATS commitments, there would be an intrinsic drive in Shangri La towards bigger
distribution entities, as a result of capital accumulation in the private sector, which raised problems for
small and traditional shops in any event.  Her delegation did not see how an ESM, which was by
definition a temporary measure, could solve such problems.  Switzerland thus considered theenforcement of appropriate sector policies, which, of course, did not need to be discriminatory, to be
essential in this context.
7. The representative of Brazil sought clarification regarding the second stage mentioned by the
representative of Switzerland, that is the period fo llowing entry into force of the commitment.   He
enquired what kind of measures could be taken after the scheduling of a commitment in order toovercome the kind of difficulties faced in the sector.  The representative of Switzerland said that, after
scheduling commitments, national policy measures such as zoning laws or opening hour provisionsfor retail businesses could be taken into consideration.
8. The representative of the United States said she looked forward to further discussions of the
scenarios put forward by the delegation of Switzerland.  The representative of Japan indicated that he
supported the general thrust of the ideas expressed by the Swiss delegation.  The GATS was flexible
and allowed for intermediate options that contributed to liberalization.  The Swiss delegation mightwant to elaborate on this specific question.  Reactions to this non-paper from demandeurs of an ESM
could help to launch a more focused discussion on the desirability and feasibility of such a
mechanism.
9. The representative of the European Communities stressed that her delegation, like the
representative of Switzerland, found it difficult to understand how a temporary suspension of
commitments could prove an appropriate remedy in the Shangri La example.  She invited delegations
that had put forward the Shangri La example to explain whether the domestic regulation measures
mentioned by Switzerland would not be appropriate.  In response to Brazil's intervention, she
indicated that her delegation had already replied earlier to such questions.  When the European Union
concluded agreements on services based on the GATS model, with the same flexibility, no safeguard-type provisions were included.  The EU did not see the need, desirability or feasibility for provisions
of this nature in such agreements.  The situation was different in other agreements that had no
exceptions or possibilities to withdraw commitments.S/WPGR/M/44
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10. The representative of Brazil, in reference to the bilateral agreements concluded by the
European Union, indicated he might come back to this  issue at a subsequent meeting.  With respect to
the presentation by Switzerland, he agreed that the GATS was flexible.  He stressed that many old
monopolies had been open to competition in the last few years, and that many governments were still
evaluating the consequences of a more liberal approach to some sectors.  In light of this, they mightbe more cautious in taking on new commitments.  An alternative could be to have an emergency
safeguard mechanism that would encourage Members to be less cautious and take more commitments.
Without an ESM, Members might avoid taking commitm ents that they might find difficult to comply
with later on.  Finding a middle ground could help governments, but also internal constituencies, to be
more flexible with respect to facing competition from foreign suppliers.  Agreeing on an ESM could
also level the playing field, as such a multilateral mechanism would be preferable, including for
transparency and predictability, than entries in schedules pertaining to safeguards or non-specifiedeconomic needs tests.   He also stressed the importance of looking at other cases than just the Shangri
La example, as an ESM might not be feasible in that particular case, but in other instances.
11. The representative of Chile, as a preliminary reaction, considered that the first situation
depicted by the delegation of Switzerland did not really address the issue facing this Working Party,
i.e., situations where a Member decided to liberalize and introduced a commitment and, later, faced asurge in imports that was not foreseen.  Thus, the alternatives 3 and 4 of the non-paper might be the
ones that Members needed to reflect upon, should th e approach of the Swiss delegation be followed.
She also indicated, regarding alternative 3, that the flexibility of the agreement with respect to
domestic regulation was relative since regulation could not be used in a way that amounted to a
market access restriction.
12. The representative of Chinese Taipei, reacting in a preliminary manner, asked the Swiss
delegation to elaborate on the flexibility of GATS in terms of domestic regulation.  She wondered
why the imposition of different shopping hours for local small shops than for larger stores would not
amount to a modification of commitments.
13. The representative of Switzerland thanked delegations for their questions and looked forward
to pursuing this exchange of views.  He said it was important to keep in mind than an ESM was by
definition a temporary measure and, thus, could not address structural problems as those arising in the
Shangri La example.  The structural changes occurring in the distribution sector of Shangri La were
triggered by the accumulation of capital, which encouraged the creation of larger commercial
structures.  This would have happened with or without GATS commitments, and domestic regulations
needed to be introduced to address these structural changes.  He stressed that many regulations,
including zoning plans, could be used for preserving specific structures.  Also, bigger shops could berequired to close by a certain time and on some days.  He stressed that such use of domestic regulation
was consistent with Articles XVI and XVII.
14. The representative of Thailand, speaking also on behalf of Brunei, Indonesia, Malaysia and
the Philippines, wished to reply to questions ra ised in a previous meeting on the ASEAN draft ESM
and the Shangri La example.  The first question was "why Shangri La had made far-reachingcommitments or undertaken full commitments".  She thought that this question was not really
relevant.  There were many possible reasons for Shangri La to make far-reaching commitments, for
example political pressure that might have been brought to bear upon the authorities during the
negotiations, or conditionalities required under structural adjustment programmes, or Shangri La
might not have foreseen that liberalization commitments could lead to such serious injury.  Thesecond question was "whether there was a way, other than a safeguard measure, that could have
allowed Shangri La to deal with this problem, for example, modification of domestic regulation or
some other kind of legislative response".  She replied that alternative measures could complement a
safeguard measure, but not address completely or fully the problems sought to be rectified by an
emergency safeguard measure.  Domestic regulatory measures, like zoning ordinances or limited storeS/WPGR/M/44
Page 4
operating hours, did not really reduce the inflow or supply of foreign retailers, which had access to
more and less expensive resources, integrated network of vertical and horizontal affiliates, etc.  While
efficiencies on the part of the big foreign retailers might be difficult to match in any case, at least with
the possible resort to an ESM, domestic service supp liers would have time to adjust, if they could, to
the situation.  During the time that an emergency safeguard measure was in place, small domesticservice suppliers might, for instance, create cooperativ es in the same locality so as to try to benefit
from economies of scale.  Of course, this was just an example of what domestic suppliers might do
during the time that an ESM was in place, but did not in any way preclude the necessity of looking at
other methods to boost competitiveness in the face of foreign competition.
15. The representative of Thailand referred to th e third question: "How much time would Shangri
La need in order to adapt to the situation arisin g from the liberalization?".  She stated that for a
developing country like Shangri La, at least three years with the possibility of an extension wererequired, while such a period could be shorter for a developed country, for example from one and a
half to two years.  The fourth set of questions went as follows:  "At what point in time could we
distinguish between 'old' and 'new' service providers?  How could a one distinguish between national
and foreign providers, how do the authorities define domestic industry, and what would happen with
acquired rights?"  The group of delegations she was speaking for understood 'old' services providersto mean those, whether domestic or foreign, that were already established in Shangri La's market and
'new' service providers as those, whether domestic or foreign, which were not yet established in the
market.  This distinction became relevant only when an ESM had been determined necessary and
would be applied to the relevant industry, in this case the retail sector.  'Old' service providers which
qualified as domestic service suppliers would not be affected by an ESM.  'Old' service providerswhich did not qualify as domestic service suppliers and were therefore, following her proposed
definition, considered as foreign service suppliers would be susceptible to the application of an ESM.
Of course, the degree or extent to which an ESM would be applied to the latter would depend on the
acquired rights these old foreign service providers would be entitled to.  She recalled that recognition
of acquired rights was set out as options 1 to 3 in the ASEAN draft, and she invited Members tonegotiate on this issue.  On the other hand, 'new' service providers would always be susceptible to an
ESM.  For example, in the situation contemplated in Shangri La, if a big foreign retailer had not yet
established in Shangri La, then during the period that an ESM was applied, that retailer would not be
able to enter the market of Shangri La, assuming th at this was the nature of the temporary suspension
availed of.
16. She noted that the distinction between domestic and foreign service suppliers was  based on
the definitions already agreed upon by Members in GATS Article XXVIII and the intent was not tointroduce new definitions in that regard.  The distinction was relevant in determining who had the
right to request the initiation of a safeguard investig ation.  It was also pertinent in determining which
service providers were deemed foreign for purposes of assessing an increase in supply and the cause
of injury.  In concluding, she noted that Canada had also asked how the ASEAN draft ESM would
apply to the Shangri La example but indicated this could be addressed at a later point, possibly in aninformal setting.
17. The representative of the Republic of Korea rais ed some questions with respect to the aspects
of the Swiss non-paper pertaining to domestic regulation.  First, with regard to differences in opening
hours between supermarkets and small shops, she wondered whether these were “like” and how one
could actually distinguish between big supermarkets and small shops that one wanted to protect.Second, about zoning plans, she thought such regulations might be related to economic needs tests
found in schedules and wondered whether they could be treated as a domestic regulation issue.  Also,
she asked if, when facing a surge of imports, administrations could actually apply a stricter zoning
plan without nullifying market access.  In addition, she asked whether domestic regulations could be
transitional measures as envisaged in an ESM and whether a new regulation to protect small shopshad to be gradually lifted over a certain period so as to not nullify market access.  With regard to theS/WPGR/M/44
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non-discriminatory training programme for empl oyees in the distribution sector, she wondered
whether assistance should not rather be provided to owners of small shops since employees could
work in supermarkets and earn better wages.  She also sought clarification as to how a training
programme could be discriminatory under GATS since it would necessarily be for domestic workers
and not for foreigners.  She looked forward to more interactive discussion on the examples.
18. The representative of Canada sought a clarification from the delegation of Thailand regarding
the concept of domestic industry.  He thought that domestic industry, as defined in Article XXVIII of
the GATS, would be used in the ESM proposed by ASEAN in terms of the ability to initiate an
investigation and data collection, but not as regards the application of an emergency safeguard
measure.  He understood that Thailand was suggesting that suppliers already established in Shangri La
would not be subject to an emergency safeguard measure.  He wondered whether a supplier already
established would be prohibited, after applicatio n of such a measure, from undertaking further
domestic expansion, for example the opening of an additional branch.
19. The representative of Switzerland, in reaction to previous interventions, stressed that cases
where actual liberalization coincided with a commitment to liberalise under the GATS was the
exception rather than the rule.  In most cases, Members had a long experience of implementing
liberalization measures before a commitment came into force.  He thus thought that one should notoverstate the questions raised earlier about cautiousness and time to adjust, because emergency
situations arising from liberalization, if any, woul d have occurred before the commitment entered into
force. He also indicated that, for those Members who had restrictions in place and decided to
undertake a liberalization commitment under the GATS, the flexibility of the GATS allowed phase-in
commitments, which entailed an adjustment period.  He pointed out that Members could, for example,schedule an economic needs test only for a certain period of time, after which the possibility of using
it lapsed.
20. With respect to remarks from the delegation of the Republic of Korea, he did not think that
likeness played a role in the examples of domestic regulation that his delegation had raised.  This
issue came up only in cases where there was discrimination.  Shop opening hours were frequentlydifferent for big and small shops.  Persons workin g in small shops were often self-employed, which
was not the case in supermarkets, where government s wanted to protect employees.  Such provisions
were in force in various countries that had full commitments in distribution services.  Concerning
zoning plans, he thought market access did not imply the possibility of constructing any type of
building anywhere in a city.  Since training programmes were directed at individuals who wanted to
get vocational training and did not involve service suppliers, they did not raise discrimination issues
under GATS.  However, one could also imagine cases of training programme that were aimed directlyat the service suppliers, to help them train their employees.  For such situations, if they existed, he
considered that a Member that had a commitment would have to treat all suppliers in a non-
discriminatory manner.
21. The representative of Indonesia expressed concerns about some of the alternative avenues
proposed in the Swiss non-paper, namely the modification of commitments under Article XXI of the
GATS and the possibility of seeking a waiver under Article IX(g) of the Marrakesh Agreement.  He
thought that the use of the latter provisions would be more problematic than those of Article XXI,
especially since issues falling under Article IX needed to be brought to the attention of the Ministerial
Conference.
22. The Chairperson thanked delegations for their interventions and took note of the statements.S/WPGR/M/44
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II. NEGOTIATIONS ON GOVERNMENT PROCUREMENT (ARTICLE XIII)
23. The Chairperson proposed to continue discussion of this topic by giving consideration to the
two most recent contributions.  He first recalled that, at the meeting of the Working Party in May of
this year, the European Communities had introduced orally a framework for negotiations on
government procurement of services.  The document was later distributed as S/WPGR/W/42, butcould not be discussed during the last meeting of the Working Party.  Second, he also drew the
attention of delegations to a Note from the Secretariat containing an Overview of Government
Procurement-Related Provisions in Economic Integration Agreements (S/WPGR/W/44), dated
24 June 2003.  The Secretariat had been asked, in May, to prepare a compilation of provisions relating
to government procurement found in the agreements that had been notified to the WTO under GATS
Article V.  He indicated that the initial intention was to provide delegations with a full reproduction of
the pertinent texts, but such a compilation would have amounted to more than 100 pages and, thus,proven too unwieldy for information.  Therefore, th e Secretariat opted for an overview of the main
provisions relating to government procurement in the 25 economic integration agreements notified so
far to the WTO under GATS Article V.  The annex to the Note contained a list of the relevant
provisions of each agreement and the Secretariat was ready to provide deeper analysis based on a
specific mandate from Members.  He said that discussions did not prejudge the scope and results ofnegotiations under Article XIII and urged delegations not to re-state well-known positions.
24. The representative of the European Communities wanted to take the opportunity to present
formally her delegation's communication of May 2003 and to highlight five points in particular.  First,
she indicated that the communication proposed to negotiate an annex to the GATS that would lay
down the conditions under which a number of GATS provisions would apply to governmentprocurement.  Second, such an annex to the GATS would extend the application of the MFN principle
to government procurement and at the same tim e provide for an exception for GPA commitments,
thereby ensuring compatibility between the GATS a nd GPA provisions on procurement.  Third, the
government procurement commitments of Members w ould be specified in the new columns that the
European Communities proposed that Members introduce in schedules of commitments.  As a startingpoint for the negotiations on government procurement, commitments would read “unbound” for all
sectors and all Members.  Fourth, she argued that the proposal for an annex to the GATS, as contained
in the communication, showed that such an agreemen t was feasible and could easily be put in place,
enabling negotiations of commitments for govern ment procurement within the framework of the
GATS.  Five, she considered that the benefits for all WTO Members and in particular for developing
countries would be meaningful, for example through the positive impact on national budgets and the
development of key infrastructures of high quality.  In addition, she wished to underscore theflexibility of the proposed framework, as it provided the possibility for each WTO Members to open
government procurement in sectors where the Member would most benefit from international
services, at its pace and to the extent it wished open.  She noted, in that regard, that the
communication mentioned that it would be possible  to open only certain activities, above certain
thresholds, for selected procuring entities and with  the limitations a Member might wish to maintain.
She also thanked the Secretariat for its note on th e overview of government procurement provisions
contained in economic integration agreements which clearly showed that it was possible to have
procurement agreements bilaterally and plurilaterally in parallel with the GPA.
25. The representative of Brazil said that the communication from the European Communities
had been submitted to domestic constituencies, but that no response had been received so far.  He
confirmed that his delegation would engage in discussions once responses were received, while
recalling Brazil’s interpretation of the mandate for negotiations on this issue.
26. The representative of Canada said the communication from the European Communities, while
still being reviewed domestically, constituted a useful overview of the kind of issues that would need
to be addressed in the Working Party to deal with the issue of government procurement in the GATS.S/WPGR/M/44
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In Canada's view, among the issues mentioned in the EC communication, the Working Party should
focus at this stage on the development of procedural rules.  He thought it was necessary to have a
more detailed understanding of the framework of rules that might be developed before looking at
issues such as scheduling modalities or integration with the agreement on government procurement.
In conclusion, he indicated that the Note from the Secretariat on government procurement ineconomic integration agreements provided a useful reference tool for examining the scope and types
of procedural rules in place.
27. The representative of Australia invited the EC to elaborate on the linkages between the
proposed framework of procurement rules under GATS and the GPA, given that many WTO
Members were not signatories to the latter agreement.   The representative of Norway said that the
communication from the European Communities could serve as a basis for possible rules ongovernment procurement under the GATS.  He considered that a clear set of rules in that area wasimportant to lowering trade barriers.  Such rules would offer some minimum legal certainty to service
providers, provide greater transparency, and foster competition, innovation, and investment.  He
stressed that his delegation believed that further discussion of rules should reflect, as contemplated in
the EC communication, the need for Members to open up government procurement opportunities
gradually, according to their national policy objectives.
28. The representative of the United States wanted to ask some questions on the communication
from the European Communities and also signalled he r intention to come back to some of the ideas
expressed in that communication at the next meeting.  She asked whether the EC could elaborate on
paragraph 19 of the communication, which indicated that various provisions of the GATS already
applied to government procurement of services, including regarding linkages.  She restated herdelegation's interest in transparency and, in that regard, appreciated the notion contained in
paragraph 18 of the communication.  Noting that paragraph 9 of the communication made reference to
Article I:3 of the GATS, she expressed interest in the status of the rest of Article I:3, in particular
I:3(a), in this analysis.
29. The representative of Japan considered that more in-depth discussion on government
procurement was needed and indicated that his delegatio n reserved the right, at this time, to express a
final position on this issue.   With respect to the mandate for negotiations on procurement, he did not
foresee any impediments to negotiations on market access, national treatment and MFN, in
accordance with GATS Article XIII:2.  While appreciating the benefits of disciplines on government
procurement for services, he raised some technical questions, for instance whether commitments
could be taken on procurement for each of the four modes of supply.  In particular, he wondered
whether commitments in procurement could be taken for modes 2 and 4 and said concrete exampleswould be useful to the discussion.  He also asked what the procurement situation would be in a sector
such as distribution services.  Regarding MFN, he said that account should be taken of the current
negotiations on the Government Procurement Agreement, including linkages.  Finally, he stressed that
the description of concrete situations or comm itments would be a useful contribution to future
discussions.
30. The representative of Chinese Taipei considered that the communication from the EC could
serve as a basis for discussing the technical issues pertaining to government procurement in services
and had some preliminary questions to raise.  She first noted, as the Canadian delegation, that
paragraph 18 of the EC communication invited Members to discuss procedural rules.  She had some
reservations on this issue, because many procedural rules would put too much of an administrativeburden on entities.  While special attention should be paid to the inclusion of transparency
requirements, she did not think that certain proced ural features such as tender publication, bidding
period, tender opening, or contract awarding should be included.  Instead, these should be left to each
Member to regulate.  Second, regarding the European Communities' proposal to include a fourth
column in schedules where commitments on procurement could be made for each specific sector, sheS/WPGR/M/44
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wanted to remind delegations that procurement in services is often characterized by clusters.  For
example, a tender for mass transit systems might involve various service sectors, such as legal,
accounting, engineering, architecture, transport, construction and other related services.  Some of
these sectors might be subject to commitments and others not.  Therefore, she thought Japan's
suggestion to discuss concrete examples could help shed some light on this aspect of the EC proposal.
31. The representative of Singapore said that his delegation had an open mind regarding the
proposal by the European Communities, given that Singapore was party to the GPA and had
experience with procurement disciplines in its various bilateral agreements.   While still reflecting on
the mandate for negotiations contained in Article XIII, his authorities thought that the EC
communication provided a useful basis for domestic consultations.  His first preliminary question
referred to paragraph 1 of Article XIII of GATS.  He sought clarification as to whether the European
Communities thought that provisions such as those contained in Articles III or VI applied togovernment procurement in services.  Second, regarding the link between the GPA and Article XIII of
the GATS, he asked how the EC proposal addressed the overlap with obligations undertaken by
Members in the GPA.  He wondered, for example, whether paragraphs 8 and 9 of the EC
communication would duplicate GPA commitments and obligations.  The representative then referred
to paragraph 16 of a previous Note from the Secretariat on government procurement in services,S/WPGR/W/3 of 1995, which stated that Article 3.3 of the GPA made it clear that the GPA only
contained rules on the government purchase of services and did not deal with other measures affecting
market access and national treatment, as these measures remained the subject of GATS.  He wondered
how the EC proposal would affect Article 3.3 of th e GPA.   Third, regarding transparency, he noted
that the EC stated, in paragraph 16 of its communication, that a GATS Annex on governmentprocurement could provide that the provisions of a future Agreement on Transparency would apply to
procurement of services under the GATS.  Given the post-Cancun uncertainty about the work of the
Working Group on Transparency in Government Procurement, he wondered whether one needed to
wait for this issue to mature in other fora and thought it would be useful to look at precedents on such
procedures in RTAs and in the GPA.  Fourth, in reference to questions raised by Japan, he soughtclarification on how the proposal by the EC would relate to the modal nature of GATS schedules.  In
summing up, he welcomed the proposal from the EC, noting in particular that the creation of a fourth
column in schedules provided flexibility, and said the EC might want to provide further clarification
regarding the proposal to allow MFN exemptions, as this might address some issues related to the
overlap with the GPA.
32. The representative of Colombia, while noting the communication from the European
Communities was still being examined domestically and that her delegation's position on the issue
was well known, asked whether the EC could explain the types of benefits that the proposed
disciplines on procurement might bring to developing countries.  She also enquired whether the EC
could elaborate on paragraph 6 of its communication, concerning procurement involving a
combination of goods and services, as she understood that the GATS did not apply to aspects
pertaining to goods.  She asked whether concrete examples could be provided in order to illustratesuch situations.
33. The representative of Switzerland reiterated the importance its delegation attached to this
topic, including from the point of view of service s uppliers.  She considered that the proposal from the
EC was workable, as it would allow Members to liberalise their government procurement markets in a
flexible manner, sector by sector.  She considered that the flexibility contemplated in the EC proposalwas in line with the structure of the GATS and took into account development levels and national
policy objectives.  She asked whether the EC delegation could elaborate on paragraph 16 of its
communication.
34. The representative of India, noting that the position of his delegation on the mandate of
Article XIII was well known, indicated that there was uncertainty regarding the WGTGP and that, inS/WPGR/M/44
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consequence, his delegation wanted to reserve its position for the time being.  Regarding this point,
the Chairperson said that the situation might become clearer towards year-end, which would assist
delegations in their evaluation.
35. The representative of the Republic of Korea noted that her delegation was open to further
discussions regarding the development of disciplines on government procurement in services.
Regarding paragraph 6 of the communication from the EC, she wondered how the proposed definition
would relate to what is being discussed in the GPA and also to the definition of public services, and
thought further examination of these issues would be needed.  Regarding the proposal to discuss
procedural rules, she thought such rules were quite technical and was not sure whether the Working
Party had sufficient expertise as compared to other fora.  While acknowledging there was uncertainty
regarding the WGTGP, she noted the importance of ascertaining the kind of work that would be done
in that Working Group.  Also, she supported Japan’s proposal to discuss concrete examples and askedthe EC whether it could present statistics on go vernment procurement in services, including the
proportion of procurement provided by foreign suppliers.
36. The representative of Malaysia noted the uncertainty surrounding the issue of government
procurement after Cancun and recalled the position of its delegation concerning the mandate
contained in Article XIII.  He wanted to come back at the next meeting when, possibly, there wouldbe greater clarity about how government procurement would progress in other fora.
37. The representative of the European Communities appreciated the comments, questions, and
suggestions made and indicated that she would report to her authorities and that her delegation would
reply at the next meeting.  In the meantime, she wanted to respond to three points.  First, regarding the
GPA, she explained that her delegation proposed that the MFN obligation apply to governmentprocurement in services but, at the same time, was fully aware that the GPA represented more
favourable treatment amongst parties to that agreement.  She indicated that one possibility, should it
be decided to apply MFN to government procurement in services, was to provide for specific
exemptions to protect more favourable treatment among signatories to the GPA.  Second, she
reiterated that her delegation considered that a number of GATS provisions, including Articles III, VI,VII, XII, and XXIII did already apply to governme nt procurement.  While Article XIII:1 mentioned
Articles II, XVI and XVII of the GATS, it was silent regarding other provisions of the GATS, which
was why the proposal from her delegation examined Articles II, XVI, and XVII and how to have them
apply to government procurement.  Third, concerning the question raised by the delegation of
Colombia on procurement that involved both goods and services, she considered that any GATS
agreement on procurement, in order to be meaningful, should cover all contracts whose main object
was the procurement of a service, even if such contract incidentally involved procurement of goodsnecessary for the supply of the service.  She stressed that her delegation did not intend to extend the
scope of GATS to trade in goods, but rather that the intent was to avoid reducing the meaningfulness
of disciplines on procurement in services.  This would be the case if services procurement contracts
could be excluded simply because they also involved, for example, procurement of some construction
materials, or computers, or pens and papers necessary for the provision of the service, the latter beingthe main subject of the contract.  In conclusion, she reiterated the intention of her delegation to
provide further responses at the next meeting.
38. The Chairperson thanked delegations for their participation and took note of statements made.
III. NEGOTIATIONS ON SUBSIDIES (ARTICLE XV)
39. The Chairperson suggested that discussion on the issue of subsidies take place on the basis of
the revised Checklist  on Subsidies  (JOB(03)/57), which was a tool to help delegations address in a
systematic manner issues that had been raised in the negotiations under Article XV.  For example, the
first issue in the Checklist  suggested that Members consider what might be an appropriate definitionS/WPGR/M/44
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of subsidies in services, what would be the relevance of the Agreement on Subsidies and
Countervailing Measures (ASCM) in that regard, and whether and how services subsidies should be
categorized.   Another issue addressed in the Checklist  related to concepts relevant to what should be
regarded as trade-distortive subsidies and permissible or non-actionable subsidies.
40. He indicated that, as suggested at the last meeting, he had made available as room documents
some past communications on the definition of subsidies so as to facilitate discussion.  These
communications were from Hong Kong (Job 5870), Argentina (Job 6629), and Poland (JOB(02)/84).
He noted that the lack of significant progress in the information exchange certainly did not prevent
discussion of such issues, although meaningful information would greatly facilitate it.  He recalled
that Article XV said that "Members shall exchan ge information concerning all subsidies related to
trade in services that they provide to their domes tic service suppliers".  In sharing such information,
Members were free to use their own working definition, possibly the one they used in schedulinglimitations relating to "subsidies" in their schedules of commitments.  They did not necessarily need
to collect and present all information at once, but could also do it step by step.  He noted that the
checklist did not prejudge the position of any Member, but might help, along with submissions from
Members, to focus discussions.  With respect to UNCTAD's work on subsidies in services, he
understood that such research was still ongoing.
41. The representative of Poland noted the interest of his delegation in further discussions on
multilateral disciplines on subsidies in services, as well as in greater transparency in this area.  He
thought that discussing the definition of subsidy was a logical starting point in the development of
disciplines.  He also considered that such a discussion could contribute to the information exchange,
which had been disappointing to date since a number of delegations blamed the absence of an agreeddefinition for lack of progress in that regard.  Nevertheless, he considered that delegations could
provide information on the basis of their own definition.
42. The informal paper earlier circulated by his delegation aimed at asking some questions that
would need to be answered in order to make prog ress.  He considered that the problems identified
were the same as those identified in communications from Hong Kong, China and Argentina, whichsuggested there was a common ground to agree on a definition.  He argued that two key issues for
further discussion would be, first, the broad definition of subsidy, such as found in Article 1 of the
ASCM, and, second, possible exclusions from such a broad definition.  Regarding the latter, he noted
the concepts of specificity and non-actionable subsidies in the ASCM.  He thought that the text of the
GATS, including Article XV, could suggest other exclusions but that attention should first be given to
the broad definition of subsidies.  It could be buil t on answers to four questions: who was granting the
subsidy, to whom, what was the form of the subsidy, and, possibly, what were the benefits to therecipient of the subsidy.
43. Regarding the first question, he indicated that Article I:3(a) of the GATS provided some
answers as suggested previously by the delegation of Argentina. He noted the suggestion by the
delegation of Hong Kong, China to elaborate a detailed list of entities in that regard, but thought it
might be technically difficult to do.  He wondered whether the delegation of Hong Kong, China wasthinking of a list of entities similar to what was used in the GPA.  With respect to the second question,
i.e., to whom was the subsidy granted, he cons idered that the issue essentially consisted in
determining whether Article I:3(c) of the GATS was sufficient.  Regarding the third question, the
form of the subsidy, he considered that Article 1.1. of the ASCM provided a good basis and noted that
this was also identified in earlier contributions from Hong Kong, China and Argentina.  He thoughtthat considering purchases of goods and services by governments as a form of subsidy could be
problematic for services.  This element of Article 1.1 of the ASCM, as well as the concept of price or
income support, would need, in his view, to be the subject of further elaboration.   Finally, regarding
the question of benefits, he indicated that the preliminary view of his delegation was that the conceptS/WPGR/M/44
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of benefits to the recipient should be part of the definition.  He noted this would imply such matters as
calculation of a benefit.
44. The representative of Chile said that the contributions from Hong Kong, China, Poland and
Argentina clearly suggested that a common basis fo r working on a definition was emerging.  He noted
that the three documents mentioned the concepts of financial contributions, benefits, who provided thesubsidies, etc.  Members thus had the necessary elements to develop a consensus definition.  Turning
to the issue of the information exchange on subs idies, he indicated that efforts to obtain more
transparency in that regard had not be fruitful over the last years and underscored that exchange of
information was fundamental in order to develop disciplines on subsidies.  In considering ways to
enhance the information available to delegations, he considered that Members could undertake an
exercise similar to the one taking place in the Working Party on Domestic Regulation, where
Members were working on a list of examples of measures that fell within the ambit of Article VI:4 ofthe GATS.  Such examples had been submitted on a voluntary basis.  It would be of interest to
conduct a similar exercise in this Working Party with  respect to subsidies that affected services, but
without mentioning the Members that provided such subsidies.  For instance, he suggested that Chile
could provide information on subsidies which affected its private sector, without identifying the
Member providing the subsidy.   He considered that this could allow for more information onsubsidies to be collected.  Such information might then be used to work on some sort of a typology or
to try to classify such information by areas such as social, cultural, environmental, research and
development subsidies, assistance to small and medium size enterprises, subsidies contingent on
exports, assistance to underprivileged regions, etc.  Members could also consider the sectors, the type
of contribution, the direct beneficiary, etc.  In concluding, he indicated that such an exercise wouldhelp to provide more information, without Members feeling pressured or blamed, and recalled that
responding to the questionnaire on subsidies prepared by the Secretariat remained important.
45. The Chairperson asked delegations to consider this proposal by the delegation of Chile and
see how it could help further work in the Workin g Party, including on the definition of subsidies.
46. The representative of Hong Kong, China noted the importance of the definition of subsidies,
but emphasized that agreeing on such a definition should not be a pre-condition for proceeding with
the information exchange.  He concurred with Poland that sufficient common ground existed to move
forward.  He looked forward to reactions and engagement from Members that had not made
contributions on the issue of definition.  In response to the specific question raised by Poland
regarding who provided the subsidy, he explained th at his delegation's starting point was Article I:3(a)
and that enumeration of entities simply referred to the elements contained in Article I:3(a).  He
clarified that his delegation was not envisaging an explicit listing of entities and agreed with Polandthat this would be a difficult exercise.   Recalling the importance of fulfilling the mandate to provide
information on all subsidies related to trade in services, he wondered why many Members were not
able to provide such information based on their own definition.  He stressed that the purpose of
information exchange was not to target the practices of certain Members, but rather to evaluate the
scale and types of subsidies in existence so that Members would be better equipped for discussingpossible elements of disciplines, although the absence of information should not prevent such
discussion either.  He expressed support for the proposal earlier made by Chile and said that the
Working Party should remain open to other sources of information on subsidies, including from other
parts of the WTO and from other international organizations, including UNCTAD and the OECD.
47. The Chairperson noted that the delegation of Norway had put forward some years ago ideas
similar to the one advanced today by the delegation of Chile.
48. The representative of the United States raised some questions regarding the presentation from
the delegation of Poland and the non-paper previously distributed by that delegation.  She thought,
after consulting the various submissions made in the Working Party, that the situation for servicesS/WPGR/M/44
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seemed different and more complex than for goods.  She believed that the means by which
governments supported private services were wide ranging, as governments could, for example, offset
private sector risk by payments, by regulatory policies, or by legislation.  She stated that her
delegation was interested in considering whether it was possible or desirable to develop rules to
govern these various instruments.  Defining services subsidies would help to specify the type ofinformation to be exchanged as well.  For example, she wondered whether information would be
sought on subsidies such as education grants, federal support for women's sports programs or
scholarships, and whether these would be relevant.
49. She considered that the contribution by Poland constituted a useful basis to continue
exploring such issues.  In particular, regarding  to whom the subsidy was granted, she asked what
were the reasons for addressing such an issue for se rvices if it was not dealt with in the ASCM.  She
wondered whether such reasons related to service suppliers not acting on a commercial basis, for
example, whether some concrete examples could be examined, and what were the commercial
interests involved.  She also asked why Article I: 3(c) would not be adequate in that regard and
expressed interest in hearing more from other delegations on this issue.  She also invited the
representative of Poland to explain what was meant by the terms receipt of the benefit on the third line
of page three of the informal paper.  Concerning the suggestions made by the delegation of Chile, shesaid these ideas would be transmitted to her author ities for further examination.  The list of examples
used in the WPDR was illustrative; it was not presum ed that these examples were indeed restrictions.
Her delegation considered it important to address the question of scope and definition of services
subsidies because this would help to define the type of information to put in a list of examples.  She
concluded by indicating that she would revert later to the proposal by Chile as well as related effortsto address the question of definition and scope.
50. The representative of Argentina did not foresee significant difficulties in coming to an
agreement on what a subsidy was, especially for purposes of the exchange of information.  Many
Members had entries in their schedules that pertained to subsidies.  He gave support to the proposal
by Chile; the exercise would be straightforward, us eful, and would essentially consist of providing
examples of subsidy-related problems encountered by exporters of services.  Once a sufficient number
of examples were collected, Members could try to develop some classification, taking into account
possible exclusions for particular policy objectives or with regard to trade distorting effects.
51. The representative of Colombia agreed that similarities existed between the elements of a
definition identified in the contributions from Pola nd, Argentina and Hong Kong, China.  Therefore, a
good basis existed for moving to more technical discussions on this issue.  She thought that, in the
future, a matrix that would link the four elements highlighted by Poland to the earlier contributions byArgentina and Hong Kong, China might be help to structure discussions on the definition of subsidies.
She supported the proposal by the representative of Chile, arguing that complementing the mandate of
information exchange with concrete examples of support programmes that might cause trade obstacles
would be useful.  In addition, similarly to the representative of Hong Kong, China, she thought that
the Secretariat should explore with some other international organisations such as the OECD, theWorld Bank, or perhaps some regional organisations, whether they had information on support
programmes.  She also wondered, while taking into account the workload this might involve, whether
the Secretariat could analyse the notifications made by Members in the Subsidies and Countervailing
Duties Committee so as to identify those that related to services.
52. The representative of Australia considered that one of the main problems with using the
definition drawn from Articles 1 and 2 of the ASCM for the purpose of the information exchange was
that the principle of territoriality could not be applied directly to a service.  Although most subsidies
in services were provided domestically this did not preclude a subsidised entity from providing
services to third countries, for instance the prov ision of a subsidy to a company that establishes a
commercial presence in another country or the provis ion of a subsidy to a firm sending service expertsS/WPGR/M/44
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to a third country for work.  Also, he considered that  the contributions from Argentina and Hong
Kong, China alluded to, but did not directly consider the possible ramifications of subsidy disciplines
for public services, education, health and related social services.  In practice, subsidies for these types
of activities should not be an issue because of the carve-out under Article I:3(b) of the GATS.
However, he stressed that such sensitivities needed to be kept in mind in developing any subsidyprinciples on services.  In this regard, point (e) in the conclusion of Hong Kong, China's paper might
be further expanded.  His delegation agreed with the proposition in Hong Kong China's contribution
that since not all subsidies were trade distorting, the definition of measures covered by subsidy
disciplines should be limited to those that actually distorted trade in services.  Experience so far with
goods and agriculture, seemed to suggest that the objectives of disciplining distortive subsidies and
implementing public policy were not incompatible  per se , but that services had to be treated
differently given the importance of regulatory structures and public services.  He said that Membersmight consider the framing of common elements for the reduction, phasing out or even outlawing of
certain subsidies, while at the same time permitting governments to pursue public policy objectives.
53. The representative of Cuba considered that the proposal by the delegation of Chile would help
in obtaining more information on subsidies and could provide a basis for defining and categorising
them.  She also emphasized the need to look into possible other sources of information, such asUNCTAD and the OECD.  She wondered whether the Chair could clarify the situation with respect to
the presentation of work by UNCTAD in this Working Party.
54. The Chairperson said that studies by such organizations as UNCTAD could be used by WTO
Members for their own analysis. He indicated that, once UNCTAD published any study, whether
pertaining to subsidies or other relevant issues, there would be no problem in their coming to ameeting of the Working Party to present the study a nd inform delegations.  He had been informed that
UNCTAD was working on a study on subsidies, which was not yet completed and thought that, once
finalized, the study would be presented within UNCTAD.  Delegations would most certainly be
invited to such a presentation and, subsequently, could consider the steps to be taken regarding the
study.
55. The representative of Switzerland attached great importance to the definition of subsidies and
the obligation of information exchange contained in Article XV, which did not depend on a common
definition of services.  More information on existing types of subsidies was needed in order to identify
trade distortive measures and to proceed with the negotiations.  Her delegation was convinced that the
work on the definition of subsidies and the exchange of information could very well be carried out
simultaneously.  Regarding the proposal by Chile, she indicated that her delegation would give further
consideration to it.  She also asked whether those Members that had scheduled limitations regardingsubsidies could elaborate on the scope of such limitations.
56. The representative of Brazil expressed support for the proposal from the delegation of Chile.
He also wondered whether Members would agree, and whether the Secretariat thought it would be
possible, to prepare a note on subsidy disciplines pertaining to services contained in RTAs notified
under Article V of the GATS.  Regarding the work being conducted by UNCTAD, he thought thatMembers had agreed during the last cluster of services meetings that a similar position would be
adopted regarding work from the OECD and UNCT AD.  Accordingly, UNCTAD would be invited to
present their study in the WPGR once it was completed, without having to wait for a presentation to
UNCTAD Members.
57. The Chairperson said that, once finalized, the UNCTAD study would be circulated and
discussed and that it could also be looked at in this Working Party.
58. The representative of the United States agreed with Brazil and noted that there might have
been a misunderstanding as the concerns previously expressed related more to this Working PartyS/WPGR/M/44
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commissioning a study from another organization.  She considered that, as had been done in the past
for example with respect to the OECD, Members could request that an observer organization, which
had done a paper, present it in this Working Party.
59. The representative of Brazil wanted to confirm that UNCTAD, after having finished its study,
was invited not only to circulate but also to presen t the study in this Working Party.  The Chairperson
said that he thought he was basically in tune with the representative of Brazil and hoped this
discussion had clarified the issue.
60. The representative of Indonesia thought that no opposition had been expressed over past years
with respect to the proposed definitions by Po land, Argentina and Hong Kong, China.  Members'
views were apparently converging on this issue and some more work could be done so as to further
clarify and crystallize agreement.  Spelling out more explicitly areas of agreement would be helpful in
that regard.  He stressed that a more concrete discussion on subsidies was needed in the WPGR in thefuture, especially regarding scope and definition.
61. The Chairperson explained that the Secretariat had provided an overview of services subsidies
as referred to in Trade Policy Reviews (TPRs)  (S/WPGR/W/25 and corresponding addendums).  On
the provisions governing services subsidies in RTAs, the Secretariat had prepared a note in 1996
(S/WPGR/W/12).  He thought further work could be done but that there might be overlaps.
62. The representative of the Republic of Korea considered it useful to exchange views on
subsidies, including those that might be trade distortive, although this should not prejudge any
position.  It should be kept in mind that subsidies were one of the legitimate means used by all
countries to promote the development of domestic industries.  She welcomed the suggestion by Chile
and thought it was important to maintain the anonymity of the source of the subsidy.  While it was tooearly to specify a classification or typology, as also suggested by Chile, her delegation would be open
to discuss classification suggestions, including legitimate policy objectives such as environment or
cultural protection or restructuring of domestic services industries.
63. Regarding the Secretariat Note on services subsidies in TPRs, she noted that the last update
had been done in September 2002 and thought the Note could be updated or re-circulated.  On thedefinition of subsidies, she thought that the GATS Article I:3 already provided answers with regard to
who was granting the subsidies.  She indicated that her delegation considered that the definition found
in the ASCM was sufficient, excluding any regulatory measures; however, she had doubts about
income and price support.  She thought this could be further explored and was not sure how it would
be applied in services.  Rather than determining beforehand what might be trade distortive, it would
be preferable to concentrate on basic issues such as the definition of subsidies and information
sharing.
64. The representative of Thailand considered it useful to further discuss the definition of
subsidies and emphasized that there was a clear mandate in the GATS to develop disciplines on
subsidies.  She acknowledged that the ASCM could provide a very useful starting point for the
definition of subsidy in services but was still reflecting on whether this definition was sufficient in
order to cover the particular characteristics of services compared to goods.  She expressed support inprinciple for the proposal by Chile but asked for further clarifications.
65. The representative of Chile provided further explanations on his delegation's proposal.  He
had suggested that work could be carried along similar lines as in the WPDR, where Members had
provided examples of measures that fell within Ar ticle VI:4, but not Articles XVI or XVII.  Members
could, on a voluntary basis, provide information on subsidies that they themselves were providing oron the subsidies provided by others that affected their service suppliers.  He stressed that the purpose
would be to collect as much information as possible on subsidies that affected trade in services, so asS/WPGR/M/44
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to help develop disciplines.  The elaboration of a typology to classify subsidies would only take place
at a later stage.  He recalled that information would be provided on a voluntary basis and that
Members granting the subsidies should not be identified.
66. The representative of Hong Kong, China hoped to address the concerns expressed by some
delegations with respect to the proposal by Chile.  He stressed that the information would be provided
on a voluntary basis and that it should be up to  Members to draw from their own and preferred
sources of information.  The examples put forwar d would only represent the views of that Member.
He hoped that these clarifications could help alleviate some concerns.  On the definition of subsidy,
he underscored that the concepts of scope and definition of a subsidy, on the one hand, and that of
trade distortion, on the other hand, were quite distinct concepts which should not be equated.  On the
question raised by the delegation of Australia concerning public services, he indicated that the starting
for looking at this issue was Article I:3, in particul ar I:3(a).  Article I:3(c) excluded services provided
under the exercise of governmental authority, but the fact that other services would not be excluded
did not necessarily mean that they could not be legitimately help to attain certain public policy
objectives.  He thought it would be important to obtain further information of those types of subsidies
in order to elaborate the concepts of trade distortive subsidies and non-actionable subsidies.
67. The representative of Poland reacted to comments and questions made following his
intervention on the definition of subsidy.  Regarding the first question put forward by the
representative of the United States, he said that the definition in Article I:3(a) was quite clear and
straightforward.  He noted that different elements were to be found within Article 1 of the ASCM,
particularly in sub-paragraphs 1.1(a)(1) and 1.1(a)(1)(iv), and wondered whether each of these
elements had the same meaning as what was covered by Article I:3(a) of the GATS.  His delegationcould agree that the definition in Article I:3(a) was sufficient, but wanted to draw attention to this
issue.  He thought that a more important issue conc erned Article I:3(c).  Looking at a situation where
private suppliers of medical or education servi ces would operate alongside public providers, he
considered that Article I:3(c) would not be sufficient in order to address the question of to whom the
subsidy was granted.  Further consideration should be given to this issue.  The concept of benefit wasan important part of a definition and should be developed depending on the form of subsidies agreed
to.  He noted that Article XIV of the ASCM could be  used and could be modified so as to take into
account the specificity of the services sector.  He  thought the Australian intervention raised the
question of a possible division of subsidies al ong different categories, for example prohibited
subsidies, actionable subsidies, and non-actionable subsidies, but this would be a matter to be further
developed after reaching agreement on the definition of subsidies.  Concerning the intervention by the
representative of the Republic of Korea, he considered price and income support, especially the latter,to be an important element of the definition, maybe more in services than in goods.  However, this
was a complex issue given the various modes of supply, although it also depended on how specificity
was defined in the services area.
68. The representative of Singapore indicated that it was important to be clear about what the
negotiating mandate under Article XV did not cover.  In this regard, he mentioned that discriminatory
subsidies were governed by the national treatment obligation, needed to be scheduled in order to be
maintained, and that they were consequently not covered by Article XV.  He also considered that,
pursuant to Article I:3(c), subsidies granted in the context of services supplied in the exercise of
governmental authority would fall outside the scope of the negotiating mandate of Article XV.  One
would also expect subsidies granted to achieve such legitimate objectives as, for example, educationand health to be carved-out from Article XV.  He also thought, looking at paragraph 1 of Article XV,
that subsidies that did not have distortive effects would not be covered either.  It might thus be said
that the mandate, limited in scope, covered non-discriminatory subsidies that might have distortive
effects.  Regarding the definition of subsidy, while the ASCM might provide a good starting point, it
should be kept in mind that the GATS had four modes of supply and that this raised the issueterritoriality as mentioned by Australia.  This mi ght mean that the ASCM was not readily applicableS/WPGR/M/44
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in a GATS context; a Note by the Secretariat prepared in 1996 (S/WPGR/W/9) had discussed this
issue.  The representative also referred to implicit subsidies, which some might associate with certain
regulations or lack thereof.  He did not think that the ASCM covered such subsidies nor that GATS
disciplines should do it.
69. On the question of the information exchange, the representative of New Zealand thought, like
other delegations, that it was possible for Members to provide information before reaching agreement
on a definition of subsidies, and that Members could also share information gradually through partial
submissions.  She considered favourably the proposal by Chile to compile a list of examples, but
stated that such an exercise should complement, ra ther than substitute for, efforts already undertaken
to exchange information through the use of the questionnaire.  Turning to the contribution from
Poland, she considered that the issue of public services would be crucial as discussions moved
forward and thought that services falling under Article I:3(c) would naturally not be covered bysubsidy disciplines.  In that regard, her delegation saw it perfectly possible for public services to co-
exist with private services without being in competition with them.
70. The Chairperson wondered whether the delegate of New Zealand could further elaborate on
how she viewed the co-existence be tween private and public services in the context of subsidies.  The
representative of New Zealand said her delegation had given careful thought to this question and that
addressing subsidy disciplines in a way that was consistent with Article I:3 would be helpful to
discussions.  She thought that addressing clearly the issue of public services, taking into account
national policy objectives and the close interest from civil society and others groups, would help raise
the level of ambition of negotiations on market access or subsidies.
71. The representative of Hong Kong, China thought  that one example of co-existence without
competition of public and private services related to cases where governments provided certain
services, for example utilities, to residents in remote areas where no private supplier was present.
Since the mandate in Article XV referred to subsidies that might have distortive effects on trade in
services and to the development of the necessary disciplines to avoid such effects, he did not agree
that discriminatory subsidies would be outside the scope of such disciplines, simply because theywould be subject to scheduling under Article XVII.  He signalled that the meaning of discriminatory
subsidies was not necessarily always very clear given that modes 1 and 2 were defined by territory,
while modes 3 and 4 were defined by the nationality of the supplier.  The concept of discriminatory
subsidies was not entirely clear in the context of export subsidies.  In his view, the issue had not yet
been settled and it seemed preferable to reserve such discussion for a later stage.
72. The representative of Poland thought that the co-existence without competition between
private and public services was the exception rather than the rule.  In his view, Article I:3(c) would
not appear to be sufficient for the purpose of su bsidy disciplines, and this issue would need to be
addressed in some way in the development of disciplines, for example through the definition of to
whom the subsidy was granted, or in elaborating further the concept of policy objectives that appeared
in the GATS.
73. The Chairperson summarized the status of work to be undertaken on subsidies.  He indicated
that the Secretariat could first undertake an update of its earlier Note from 1996 on subsidy disciplines
relating to trade in services in RTAs.  With respect to the proposal to update the Secretariat Note on
services subsidies found in WTO Trade Policy Reviews, he noted that the last update was quite
recent, less than a year ago.  Consequently, it seemed reasonable to work on the document on RTAs
and to update the Note on TPRs at a later point.  Regarding the proposal by the delegation of Chile, hethought that in order to make progress discussions would need to concentrate on the specific problems
encountered with respect to subsidies that might cause trade distortions.  He asked delegations to give
further consideration to the exercise proposed by Chile and recalled that such an exercise would be
voluntary.  Each delegation would use its own s ources, and the Member granting the subsidy wouldS/WPGR/M/44
Page 17
not be identified.  Delegations might want to raise this issue with their authorities, and he would soon
like to undertake some consultations to prepare for the next meeting of the Working Party.
74. The representative of Colombia wondered about the status of the two suggestions she had
made regarding further work.  The first one was that  the Secretariat explore with other international
organizations the information existing on support programmes or subsidies.  The second possibilitywas that the Secretariat develop a document that would look at the notifications that had been made to
the Subsidies and Countervailing Duties Committee to highlight subsidies related to services sectors.
She understood this was a lengthy task, but wondered whether the Secretariat could do it.
75. A representative from the Secretariat indicated, regarding the first proposal by Colombia, that
the Secretariat could communicate with other international organizations with which it usually had
contacts such as UNCTAD, the World Bank, and the OECD, and later come back with some
feedback.  With respect to the second proposal, he noted that the Secretariat was always ready toconduct work Members thought useful but said he wa s somewhat reluctant to analyse the notifications
under the ASCM because trying to extract the elements that might be services related might involve
some policy judgements and interpretations by the Secretariat.
76. The representative of Canada wondered how on e could avoid that the various examples of
subsidies that would be compiled be characterized as subsidies that necessarily distort trade in
services.  Some kind of caveat should be provided in that regard.  The Chairperson indicated that, in
his view, the purpose of the proposal was to gather as much information as possible and that, furtherahead, this information could be used to help Members think about whether certain subsidies were
trade distortive or not.
77. The representative of the United States considered that the explanation given earlier by the
Chairperson on the proposal by Chile contributed to accommodating the concerns and interests of
delegations.  Regarding the analysis of notifications in the Committee on Subsidies and
Countervailing Duties, she indicated that the kind of  interpretative exercise this might involve raised
concerns.  She noted that her delegation was interested in suggestions that had been put forward,
including the suggestion by Chile, the parameters of which were clarified by various interventions.She also thought that updates to the Secretariat Notes on TPRs and RTAs might be of use, although
one would need to keep in mind the risk of value judgements.  She saw as constructive the suggestion
that the Secretariat find out the kind of research and information that other international organizations
had available.  However, her delegation had strong objections over the proposal that the Secretariat
investigate subsidy notifications and try to dete rmine those relating to services.  Regarding the
intervention made by Canada, she understood that the examples would be supplied on a voluntary
basis and would not amount to a mechanism of reverse notification.
78. Regarding the suggestion by Chile, the Chairperson thought that time was needed for
consultations as well as for further evaluation by Members.  He emphasized that examples relating to
subsidies in services sectors could already be found in the various updates of the Secretariat Note on
information contained in Trade Policy Reviews.
79. The representative of Chile, with regard to the intervention from the delegation of Canada,
explained that the fact that some Members would provide examples of subsidies would not mean that
other Members agree that these were indeed subsidies.  He then sought clarification from the
Chairperson regarding the steps that would be taken up to the next meeting concerning the proposal
from his delegation.
80. The Chairperson said he preferred leaving time for delegations to reflect further on this
proposal and to conduct consultations and possibly an informal meeting in order to prepare for the
meeting planned for December.S/WPGR/M/44
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81. The representative of Mauritius thought that the issue needed to be approached with caution
and that the work to be undertaken by the Secretariat should be factual rather than analytical.
Information already published by other organizations should be the focus of information gathering,
rather than information that would be more subject to value judgements.  He was not sure that
consultations should be held before seeing what is available in terms of published information.   Therepresentative of Argentina sought clarification on the work to be undertaken.
82. The Chairperson explained that it had been agreed that the Secretariat would prepare an
update of the Note on RTAs and would consult with other international organizations.  Afterwards,
the Secretariat could do an update of the Note on TPRs.  He also indicated that he would hold
consultations on the proposal by Chile.  The representative Argentina thought that agreement of all
other Members was not necessarily needed in order for a Member to present a communicationindicating the subsidies that caused problems to its suppliers, although he considered it would bepreferable if all could agree beforehand.   The representative of Brazil suggested that the forthcoming
consultations also be used to see whether common ground could be found on the proposal byColombia to examine the notifications.  The Chairperson said that concerns had been expressed by
delegations on this suggestion, but that possibilities of finding common ground could be explored.
83. The Chairperson thanked delegations for their constructive engagement on each of the issue
discussed.  On emergency safeguard measures, he recalled that various questions would need to be
studied at the next meeting, in particular those raised in the discussion of the non-paper by the
delegation of Switzerland and the responses provided by the representative of Thailand on previously
asked questions.  On government procurement, the Chairperson noted that a significant number of
Members commented and asked questions on the proposal presented by the European Communities.Some Members had reserved the right to comment on the proposal at a later stage, given the current
status of work in the Working Group on Transparency in Government Procurement.  Concerning
subsidies, he highlighted again the progress made.
IV. DATE OF THE NEXT MEETING
84. The Chairperson said that the next formal mee ting of the Working Party was expected to take
place during the next cluster of services meetings, which had been tentatively scheduled for the
beginning of December.
V. OTHER BUSINESS.
85. The representative of Brazil announced that UNCTAD would be holding an expert meeting
on foreign direct investment and development, wh ich would address the experience of developing
countries in privatizing services sectors.  The seminar would take place in Geneva from 29 to
31 October 2003.
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