RESTRICTEDWORLD TRADE
ORGANIZATIONS/WPGR/M/16
10 June 1998
(98-2352)
Working Party on GATS Rules
REPORT OF THE MEETING OF 27 APRIL 1998
Note by the Secretariat
1. The sixteenth meeting of the Working Party on GATS Rules was chaired by Mr. Harald Fries
of Sweden.  The Working Party expressed its warm appreciation of the contribution made by the
outgoing Chairperson, Miss Jill Courtney of Australia.  The agenda for the meeting was contained in
WTO/AIR/815.  It consisted of five items:  negotiations on safeguards under Article X of the GATS;
negotiations on subsidies under Article XV of the GATS; negotiations on government procurementunder Article XIII of the GATS; date of the next meeting of the Working Party; and other business.
ITEM A: NEGOTIATIONS ON SAFEGUARDS UNDER ARTICLE X OF THE GATS
2. The Chairman recalled previous discussions on the issue of how to proceed with the
negotiations on safeguards. It had been suggested that work on the formulation of disciplines, both
general and operational, should proceed in parall el with an assessment of the desirability and
feasibility of a safeguard mechanism for services.  However, some reservations had been expressed
reservations about discussion of disciplines at that  stage.  In the Chairman's view, however, Members'
deliberations on feasibility and desirability would have greater content if these were based on some
idea of what a possible safeguard mechanism would look like.  Moreover, even in addressing the four
questions in the Chairperson's note of 3 June 1997, th ere appeared to be a close link between the twin
issues of what possible disciplines could be and whether they would be desirable and feasible.  The
Chairman, therefore, suggested that  it may be appropriate to explore these twin issues in the contextof the four questions.
3. Most delegations that spoke supported the Chairman's proposal.  Some were, however, keen
to ensure adequate emphasis on the issues of desirability and feasibility.  One delegation suggested
setting time limits for the examination of each of the four questions.  This suggestion was endorsed by
a number of delegations, though some felt that the questions should not be treated in acompartamentalised manner.  The Chairman sugge sted that the Working Party could aim to have
some provisional responses, not necessarily agreed, after the following meeting.
4. In relation to the first question, i.e. on whose behalf emergency safeguard action would be
taken, one delegation felt that the "national industry" could be protected;  this was believed to be in
line with the definition contained in Article XXVIII of the GATS.  In addition, it might be necessaryto examine the need for appropriate definitions of national and non-national services suppliers.  A
problem of defining nationality could arise in the case of joint ventures between national and foreign
suppliers, and it might be necessary to establish a threshold percentage of equity ownership.
5. Most delegations that spoke expressed reservations about this approach;  they preferred not to
distinguish between national and foreign-owned s uppliers in the context of establishment.  Some
indicated that such a distinction would be inconsistent with their domestic regimes.  One delegationS/WPGR/M/16
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suggested that it would be helpful to reach an understanding that would exclude the possibility of
distinguishing between foreign and domestically  owned suppliers with respect to commercial
presence.  Another  delegation indicated that the positive contributions made by established foreign
suppliers to domestic employment should be taken into account.
6. To assist the discussion, it was proposed that the Secretariat gather information on how
"national or domestic industry" had been defined in various WTO instruments and jurisprudence.  The
Working Party endorsed that proposal.
7. The Chairman recalled previous discussions on the idea of a "brainstorming" session.  He
proposed that the session be held soon after the summer break.  Working Party Members would meet
informally possibly outside of the WTO, as individuals rather than as country representatives, to allow
for a frank discussion unencumbered by the need to maintain national positions.  In order to give a
clear focus to the session, he offered to prepare a list of relevant issues.  The Working Party agreed tothis proposal.
ITEM B: NEGOTIATIONS ON SUBSIDIES UNDER ARTICLE XV OF THE GATS
8. The Chairman recalled that in previous meetings the need had been expressed for detailed
discussion on the scope of, and the reason for, subsidies in the services sector.  In addition, some
delegations had called for more analysis of the impact of subsidies on services trade to identifypossible trade distortions. The Chairman had offered to prepare a note addressing the conceptual
issues involved, which had been circulated as job no. 1931 on 3 April 1998.  The note suggested a
step-by-step approach starting with the question of the circumstances in which subsidies were likely
to have trade-distortive effects.
9. One delegation indicated that before adopting the path suggested by the note, the Working
Party needed to address the fundamental issue of how subsidies should be defined in the area of
services; he felt that the goods definition should not be automatically applied.  Some shared the view
that the goods' definition was far too encompassing; it had already complicated the response to the
subsidies questionnaire and hindered the exchange of information required for discussion.  Other
delegations noted that the only practical way to proceed was using the broad definition applied in thegoods area.  Some participants supported a discussion on definitional issues, but pointed out that such
a discussion could not be conducted without more information on actual subsidy policies.
Information submitted by Members would help to determine whether the definition for goods was
suitable for services as well.  The Chairman suggested that in responding to the questionnaire,
Members could use their discretion in the choice of definitions and sectoral coverage. However, some
concerns were expressed regarding the implications  of such an approach for the comparability of
information.
10. Questions were raised concerning the feasibility of countervailing procedures in services
areas, given the information and definition problems involved.
11. In summing up, the Chairman observed that delegations wished to continue the discussion of
definitional and feasibility issues in parallel with the questions suggested in the Chairman's note of 3
April 1998.  He urged Members to make increased efforts to provide responses to the questionnaire.S/WPGR/M/16
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ITEM C: NEGOTIATIONS ON GOVERNMENT PROCUREMENT UNDER ARTICLE XIII
OF THE GATS
12. The Chairman informed delegations that another response to the questionnaire had been
received, from Costa Rica (circulated as S/WPGR/W /11/Add.22).  He observed that the information
gathering exercise had provided a sound basis for discussion of possible multilateral disciplines.  Inconducting such a discussion, it would be helpful to keep in mind the non-paper submitted by New
Zealand (dated 30 September 1997) which examined some of the issues arising from the application
of fundamental WTO principles to government procurement in services.  He also suggested that the
discussion of issues could follow the order contained in the indicative tabulation relating
questionnaire responses to possible elements  of multilateral disciplines (Chair's note dated 21
February 1997).  This would be consistent with suggestions made by delegations that work should
focus initially on the definition of government procurement and then move on to the issue of non-discrimination.
13. The paper submitted by the European Communities at the previous meeting identified three
relevant questions:  what transactions constitute procurement, who is the procuring entity, and what is
being procured?  As to the first question, some delegations favoured an approach consistent with that
in the Agreement on Government Procurement. Others felt that transactions excluded from therelevant definitions in Article I of the GATS provided a clue as to what transactions constituted
procurement.  One delegation stressed the difficulties faced in her country in defining procurement
and, particularly, whether concessions should be included.  Other delegations echoed the reservations
and indicated that more discussion on the matter was necessary.  Regarding the second question, i.e.
who is the procuring entity, some stated that the level of public control should be the main
consideration and that all levels of government should be included.  However, others felt that in the
case of enterprises owned by the government, the decisive factor should be whether the entity
operated like a private enterprise in a competitive context.
14. The Chairman drew delegations' attention to the fact that the Working Group on Transparency
in Government Procurement was also discussing questions of definition and scope of procurement.One delegation emphasized that the Working Party should aim to provide an input to the Working
Group on Transparency and suggested that discussions focus on the specificities of government
procurement of services.  The Chairman indicated that he would continue consultations on how best
to coordinate work with other fora dealing with government procurement.
ITEM D: DATE OF THE NEXT MEETING
15. It was agreed that the Working Party would meet next on 24 June 1998.1
ITEM E: OTHER BUSINESS
16. One delegation requested that meetings dealing with services issues be scheduled closer
together to facilitate the participation of experts fr om capitals. The increasing complexity of the issues
involved necessitated more inputs from capitals.
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1 However, in light of the suggestion made under "Other Business", and to avoid a clash with another
meeting, the date of the meeting was subsequently changed to 23 June 1998.