RESTRICTED
WORLD TRADE S/WPGR/M/12
3September 1997
ORGANIZATION
(97-3574)
Working Party onGATS Rules
REPORT OFTHE MEETING OF23JULY 1997
Note bytheSecretariat
1. Thetwelfth meeting oftheWorking Party onGATS Rules waschaired byMsJillCourtney
ofAustralia. Theagenda wascontained inWTO/AIR/634 andWTO/AIR/634/Add.1. Theagenda
consisted ofsixitems: requests forobserver status; negotiations onsafeguards under Article Xof
theGATS; negotiations onsubsidies under Article XVoftheGATS; negotiations onGovernment
procurement under Article XIIIoftheGATS; dateofthenextmeeting oftheWorking Party; and
other business.
ITEM A:REQUESTS FOR OBSERVER STATUS
2. Members agreed thattheIMF, OECD, United Nations, UNCTAD andWorld Bank, whohad
previously beeninvited tomeetings onanadhocbasis, would begranted observer status onapermanent
basis.
ITEM B:NEGOTIATIONS ONSAFEGUARDS UNDER ARTICLE XOFGATS
3. TheChairpersonnotedthatsincethepreviousmeeting,asubmissiononthesubjectofemergency
safeguard measures hadbeenreceived fromSingapore (S/WPGR/W/19). Thesubstantive discussion
intheareaofsafeguards focused onthefourquestions identified bytheChairperson inaninformal
note (dated 3June1997):
1. Onwhose behalf would emergency safeguard action betaken?
2. Inwhat circumstances would emergency safeguard action betaken andwhatwould
bethepurpose ofsuchaction?
3. What approach should beadopted inrespect ofinjury/adverse effects, andtherelevant
causal linkbetween injury/adverse effects andcommitments under theGATS?
4. What measures would betaken under theemergency safeguard mechanism? Aresome
measures deemed more suitable thanothers?
4. Delegations agreed thatthese fourquestions captured thekeyissues which needed tobe
addressed. Several delegations saidthatquestion 2wastheonewhich wasmostimmediately relevant
andshould therefore begiven precedence indiscussions.
5. With regard toquestion 1,many delegations feltthatsafeguard actions should betaken on
behalf ofdomestic industry, butthere wassome difference ofopinion withregard tohow"domestic"
should bedefined. Several delegations feltthatthedefinition contained inArticle XIXofGATT 1994
andtheAgreement onSafeguards would beadequate, andnodistinction needed tobemade between
nationally-owned andforeign-owned domestic enterprises. However, afewdelegations suggested that
thelatter distinction mayberelevant indefining thepotential beneficiaries ofsafeguard actions. SomeS/WPGR/M/12
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delegations alsopointed tothedifficulty indefining "likeanddirectly competitive" services andservice
suppliers, andthelimitations oftheCentral Product Classification inthisrespect. Onedelegation said
thatsafeguard actions should onlybetaken onbehalf ofanindustry which already existed, while another
noted thatitmustaddress thedifficulties ofthewhole industry rather thanthose faced byonlyafew
firms.
6. Inaddressing question 2,mostdelegations wereoftheviewthatsafeguard actions should be
taken toremedy orprevent injury todomestic industry caused byanincrease inimports resulting from
unforeseen developments andGATS commitments. Some delegations, however, expressed doubts
overwhether thenotion of"unforeseen developments" could bemade operational. Onedelegation
suggested thatitmaybenecessary todevelop certain teststodetermine whether aparticular development
wasindeed unforeseen, forinstance normal increases intrade could beexempt, acertain lapse oftime
could berequired after entry intoforce ofthecommitment, andanappropriate level ofoverall
concessions could berequired tobemaintained. Another delegation said,however, thattheapplication
ofsafeguard measures should notnecessarily depend onasectoral liberalization commitment.
7. Alldelegations whospoke agreed thatsafeguard action mustbetemporary. Itwasalsogenerally
feltthatanemergency safeguard mechanism should dealwithsituations other thanthose covered by
theexisting exception provisions andArticle XXI. Some delegations pointed totheneedtotakea
wider viewofeconomic welfare thaninjury toanindustry asabasis forsafeguard action andtotake
intoaccount theeconomic costsofsafeguard action inkeyinfrastructural services liketransportation,
telecommunications andfinancial services. Onedelegation saidthatanemergency safeguard mechanism
inservices should bemore thanamere extrapolation ofthemechanism ingoods, andshould cover
newareas likeprotection ofconsumers andtheinfrastructure, aswellasaddressing problems arising
fromdominant positions inmarkets. Another delegation saidthatsafeguard measures should facilitate
adjustment andnotreflect long-term plans forindustrial development.
8. Inthecontext ofquestion 3,several delegations pointed tothesignificant empirical difficulties
thatwould ariseinestablishing injury, andtherelevant causal linkbetween injury andincreased imports
inservices industries. Butsome delegations wereoftheviewthatthese difficulties should notbea
barrier tocreative engagement intheissues under discussion. Itwasnoted thattheabsence ofstatistics
wasnotadifficulty faced onlyinthecontext ofanemergency safeguard mechanisms, butcould also
arise inthecontext ofother GATS articles, such asArticle XXIdealing with modification of
commitments. Theneedwasexpressed toestablish clearcriteria forthedetermination ofinjury, such
asthelevels ofsales, earnings andemployment.
9. While some delegations feltthatquestion 4wasbestdealt withlater, others feltthatitwas
crucially linked toother questions. Forinstance, theissue ofwhocould bethebeneficiaries of,and
thecircumstances which would prompt, safeguard action maynotbeseparable fromthetypeofmeasures
thatcould betaken. Several delegations raised theissue ofmodal coverage ofsafeguard measures,
andexpressed concern about thepossibility ofmeasures being taken against locally-established foreign
firms which could leadtodisinvestment. Many delegations emphasized thatanysafeguard action must
betaken onanon-discriminatory basis. Some saidthatsafeguard measures should notbelimited to
restrictions onmarket access butcould alsoinvolve temporary suspension ofnational treatment.
However, some delegations expressed doubts about thedesirability ofthelatter possibility.
10. Itwaswidely feltthatfuture discussions, particularly ofquestion 2,should bebased onconcrete
examples, which theSecretariat wasrequested toprovide. TheChair, inhersumming up,identified
atleastthreeotherpossible sources forillustrative examples. First, certain Members 'internal legislation
maycontain safeguard-type provisions. Secondly, Members maywishtoexamine theirownschedules
ofspecific commitments toindicate thetypeofsituations where liberalization hadbeenstalled bytheS/WPGR/M/12
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absence ofasafeguard provision. Finally, other international organizations likeUNCTAD andthe
OECD maybeabletoprovide useful examples based ontheirexperience andresearch.
11. Several delegations wereoftheviewthataseminar orbrainstorming session should beheld
onthesubject ofsafeguards. Thiscould involve interested delegations, experts fromtheSecretariat
andfromother international organizations, aswellasacademics. Theprecise format andthetiming
ofsuchasession needed further consideration.
12. Some delegations broached thequestion ofwhether itwould benecessary toextend thedeadline
forthecurrent negotiations. Others feltthatitmaybesomewhat premature toconsider anextension.
Onedelegation saidthat,inanycase,therewasnoquestion oftheend-of-the-year deadline necessarily
implying anendtodebate onthequestion ofsafeguards. Itwasagreed thattheChair would begin
informal consultations onthesubject ofanextension.
ITEM C:NEGOTIATIONS ONSUBSIDIES UNDER ARTICLE XVOFGATS
13. Tworesponses tothequestionnaire onsubsidies hadsofarbeenreceived, fromNorway and
NewZealand, circulated asdocuments S/WPGR/W/16/Add.1 andAdd.2, respectively. Introducing
itsresponse, theNorwegian delegation noted thatitssubsidies regime didnotdiffer between goods
andservices, andallschemes covered both, withtheexception ofschemes forthemaritime transport
sector. Theresponse covered ongoing programmes, notone-shot subsidies. Norway hadfollowed
theformat ofthenotifications fortheAgreement onSubsidies andCountervailing Measures inits
response tothesubsidies questionnaire toreduce theadministrative burden. Introducing itsresponse,
NewZealand saidthatithadfocused onsubsidies which hadabearing ontrade inservices. The
response alsoincluded certain questions which might needtobeaddressed. Onedelegation noted that
itwasencounteringdifficultiesinrespondingtothequestionnairesincetherewaswidespreadsubsidization
ofcertain social services likeeducation, public hospitals andsocial welfare, andtaking account ofall
these subsidies would beamassive exercise.
14. TheChairperson urged other delegations tomake aneffort toprovide theirresponses soon.
ITEM D:NEGOTIATIONS ONGOVERNMENT PROCUREMENT UNDER ARTICLE XIIIOF
GATS
15. Intheareaofgovernment procurement, discussion focused onthesynthesis theSecretariat
hadprepared oftheresponses tothequestionnaire onnational regimes (issued asdocument
S/WPGR/W/20). TheSecretariat tooknoteofcertain modifications inthesynthesis suggested bysome
delegations tomore accurately represent theircurrent procurement regimes. Several delegations noted
thatthesynthesis revealed considerable similarity between national regimes aswellassome diversity.
Some delegations feltthattheinformation gathering exercise hadprovided anadequate basisforserious
negotiations ondisciplines. Onedelegation saidthatitmight bebesttobegin withthedefinition of
government procurement, since theWorking Group onTransparency wasaddressing theissue of
transparency. Another delegation suggested thattheprinciple ofnon-discrimination could alsobe
considered atanearlystage. Onedelegation emphasized theneedtotakeintoaccount thedecentralized
nature ofmost services procurement indevising disciplines, andindicated thatitwasintheprocess
ofpreparing apaper which ithoped would helptoadvance discussion. Theneedtocoordinate work
withtheWorking Group onTransparency wasemphasized byseveral delegations.S/WPGR/M/12
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ITEM E:DATE OFTHE NEXT MEETING
16. Itwasagreed thattheWorking party would meetnextonWednesday, 1October 1997.
ITEM F:OTHER BUSINESS
17. Nomatters were raised under other business.