RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/M/33
15 March 1999
(99-1015)
Council for Trade in Services
REPORT OF THE MEETING HELD ON 9 AND 15 FEBRUARY 1999
Note by the Secretariat
1. The Council for Trade in Services held a meeting on 9 and 15 February 1999.  The agenda for
the meeting is contained in WTO/AIR/1011 and WTO/AIR/1011/Add.1.  Under other business, the
delegations of Guatemala and Korea  made statements on the certification of a schedule in basic
telecommunications and an improved schedule in financial services respectively.
A. STATUS OF ACCEPTANCES OF THE FIFTH PROTOCOL
2. The Chairman recalled that the deadline for accepting the Fifth Protocol was 29 January 1999.
He informed delegations that the Protocol had been accepted by 53 out of 71 Members.  He pointed
out that, as not all Members concerned had accepted the Protocol by 30 January, those who had
accepted it had to decide on its entry into force within 30 days, their mandate to take such a decision
expiring on 1 March 1999.  A meeting of those Members had already been scheduled for 11 February
1999.  At that meeting the accepting countries were expected to decide whether the Protocol shouldenter into force on 1 March, as would automatically have been the case if all Members concerned had
accepted it by the deadline, or whether its entry into force should be deferred.
3. The accepting countries would then consider whether to request the Council to adopt a
decision extending the deadline for the acceptance of the Protocol, in order to allow those Members
who had not yet accepted to do so.  Such a suggestion had already been made by one or two speakers
at the meeting of the Financial Services Committee on 19 January 1999.  The Chairman suggested
that it would be desirable for the Council to reach such a decision as early as possible, in order to
avoid any unnecessary uncertainty.  He suggested that once the Council had taken up all the items on
the agenda, the meeting should be suspended and should be resumed on 15 February to address the
extension of the acceptance period of the Fifth Protocol.
4. The Council so agreed.
B. ELECTRONIC COMMERCE – IMPLEMENTATION OF THE WORK PROGRAMME 
ADOPTED BY THE GENERAL COUNCIL
5. The Chairman noted that the items for discussion by the Council at this meeting were
domestic regulation, market access commitments on electronic supply of services, national treatment
and access to and use of public telecommunications networks and services.  He invited delegations to
address each of the elements contained in the agenda of the work programme in a more detailed andanalytical manner.  The discussion was held in informal mode.  Subsequently, the Chairman provided
the following summary on his own responsibility:S/C/M/33
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(a) Domestic Regulation
6. Members agreed that the provisions concerning domestic regulations in Article VI of the
GATS applied to electronic commerce transactions in services and that its function, as in other
contexts, is to ensure that regulations in this area do not constitute unnecessary barriers to trade.  One
delegation added that in its view Article VI as it stood was sufficient for this purpose and that for thetime being no amendment of the Article was necessary to address regulation in this area.  It was noted
that electronic commerce was an area where rapid economic growth had been fostered by the
existence of very little regulation and that the emphasis in the field of domestic regulation should be
on keeping regulation to a minimum, in order to fa vour further growth.  It was also suggested that
consideration should be given to the constraints facing developing countries in fulfilling legitimate
regulatory objectives in this field and to ensuring that technical barriers to trade encountered by
developing countries were also effectively dealt with.
7. Some delegations pointed to the Reference Paper on regulatory principles in basic
telecommunications as a possible model for the development of rules on domestic regulation in
electronic commerce.   It was also pointed out that the development of Article VI disciplines and their
effective application was important in order to ensu re that existing specific commitments relevant to
electronic commerce were not nullified or impaired by measures of domestic regulation.
8. One delegation noted that Article VI applied to all aspects of domestic regulation affecting
electronic commerce.  It would therefore cover, in  transactions involving the electronic delivery of
services, regulations affecting both the transport function and the content of the transaction, as well as
the regulations affecting distribution services provided electronically.  Three issues required
consideration in the area of domestic regulation:  (i) whether it would be desirable to agree underArticle VI a group of regulatory policy objectives justifying the imposition of regulatory restrictions
in electronic commerce, with a view to minimising unnecessary barriers to trade;  (ii) whether it
would be advantageous to distinguish between regulations applying to content and regulations
applying to transport;  and (iii) whether it would be desirable to request an Internet service provider to
make inaccessible to consumers a web site which does not comply with domestic regulation.
9. Another delegation suggested that it was important to be informed about the relevant work of
other international organizations in this field, for example that of UNICITRAL on a proposal for an
international convention on electronic transactions which covered important aspect of domestic
regulation.
(b) Market Access
10. Members agreed that the principle of technological neutrality applied to GATS commitments,
meaning that market-access commitments cover the supply of the committed service by all
technological means, including electronic means.  It was however suggested that there were a number
of services highly relevant to electronic commerce in which there were very few specific
commitments, and that the Council might conduct an examination of the implications of this
phenomenon.  A number of Members expressed agreement with the categorization in the Secretariat's
Note (S/C/W/68) of electronic commerce in services under three types of transaction – (a) Internetaccess services;  (b) electronic delivery of services;  and (c) use of the Internet as a medium for
distribution services – the sale of goods and services subsequently delivered in non-electronic form.
11. One delegation noted that while a number of Members had included a specific entry on
"Internet access services" in their telecommunications commitments many others had not, even
though the commitments were intended to cover these services:  consideration should be given to theneed for a specific entry in all cases.  Another delegation stated that the GATS fully applied to all
transport and content aspects of electronic commerce.  Only a few Members had specificS/C/M/33
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commitments in access services, but the obligations of the Annex on Telecommunications on access
and use would apply to all other Members in sectors where they had specific commitments.
Commitments on telecommunications would apply to the use of Internet as a means to provide
telecommunications services such as voice telephony and e-mail, and commitments on distribution
services would apply to the on-line ordering and delivery of products.  Regarding content services, therelevant sectoral commitments would apply on the basis of technological neutrality.
12. Another delegation noted that there was no doubt that the GATS applied to electronic
transport services and to all traditional services supplied electronically.  It was also clear that the
GATS applied to the transport of other digitalized information, which, if supplied in a non-electronic
form, might not constitute a service.  The delegation suggested however that while the digitalized
information content, as opposed to the supply of the content, might in some cases be regarded as a
product subject to the application of GATT principles, such as MFN, national treatment and theprohibition of quantitative restrictions, the question whether it should be so regarded needed further
reflection.  Another delegation concurred that in the case of electronic commerce in intangible goods,
the transmission clearly represented a service, while the content might not.  However it was said in
reply that it was not possible to apply the principle of technological neutrality to the provision of some
services but not to others.
13. It was noted that the use of the Internet by consumers to conclude transactions abroad would
greatly increase the economic significance of commitments under Mode 2 - consumption abroad.
14. A question was raised concerning the possibility of applying restrictions on the technological
means of supplying a service under Article XVI.
(c) National Treatment 
15. It was the general view that the principle of technological neutrality applied to all GATS
specific commitments, including all market access and national treatment aspects.  One delegation
noted that on the basis of technological neutrality services provided electronically and services
provided non-electronically were like services under the GATS, and thus subject to the national
treatment rule.  Another delegation noted that there could have been differences between the conceptsof likeness under GATT and GATS and that further work was needed to clarify this issue.
(d) Access and Use of PTTNS
16. Delegations noted that the Annex on Telecommunications applied to access to and use of the
Internet network.  One delegation also suggested that point 5 in the Annex, which requires access to
and use of public telecommunications transport networks and services for the supply of a service
included in the schedule, also prohibited technical restrictions.  Another delegation noted that the
Annex only applied to sectors where specific commitments had been undertaken and that in a numberof sectors crucial to electronic commerce there were limited or no commitments.  Moreover, the
Annex on telecommunications did not apply to certain issues such as points of interconnection and
numbering, which were important for electronic commerce.
17. It was noted that the Annex guaranteed access and use of public telecommunication networks
for Internet access providers, but it was not clear whether it also guaranteed service suppliers access toand use of Internet providers' services.  Since it might be important for service suppliers to have the
right of access to Internet providers' services, there was a need to further clarify this matter.S/C/M/33
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C. DERESTRICTION OF SECTORAL PAPERS
18. At an earlier meeting the Council had agreed that at each following meeting it would consider
for derestriction those sectoral background papers prepared by the Secretariat for the information
exchange exercise, which had been discussed at the previous meeting.  The Chairman suggested that
the Council agree to derestrict those papers which had been discussed at its last meeting, that is to say
documents S/C/W/72 to 75.  Derestriction would only take effect when all documents were available
in the three official languages.
19. The Council so agreed.
D. COUNCIL INFORMATION SESSION ON TELECOMMUNICATIONS - REQUEST BY 
THE UNITED STATES
20. The Chairman recalled that at its last meeting the Council had a preliminary discussion of the
request by the United States to hold an information session on telecommunications.  Some delegations
expressed support for holding such a meeting, while others were not in a position to give a formal
response.  It was therefore agreed to revert to this item at this meeting.
21. In order to provide a basis for discussion, the representative of the United States introduced
an informal paper containing more detailed information on the specific items proposed for discussion
(Job No. 589 dated 3 February 1999).  He said that the paper contained some ideas on the proceduraland substantive aspects of the information session, and that his delegation was open to comments and
suggestions from other delegations and from the Secretariat on how to structure the discussion.  He
argued that the session might examine in depth technical assistance to developing countries on
regulatory issues such as the establishment of  an independent regulator, interconnection and
competitive safeguards.  In this respect it might be  useful to invite experts form the International
Telecommunication Union and the World Bank as well as delegations’ sectoral experts from capitals.
He suggested that the session might take the fo rm of a special one day meeting of the Services
Council and requested that the Council take a decision on this matter at its next meeting.
22. Several delegations welcomed and expressed support for the more detailed proposal by the
United States.  It was noted that the emerging agenda for the information session might includetelecommunications issues beyond those relating to the Reference Paper.  However, the discussion
should be contained within an exchange of views on technical assistance.  In this respect some
delegations suggested that the information session might require more than one meeting of the
Services Council.  There was also general support for the participation of experts from other
international intergovernmental organizations, but several delegations expressed doubts with respect
to the participation of representatives of non-governmental organizations and of the private sector in
an information session taking place within the Serv ices Council.  The Chairman suggested that the
Council take note of the statements made and revert to this matter at its next meeting.
23. The Council so agreed.
E. OTHER BUSINESS
24. The representative of Guatemala recalled that on 11 December 1998 her delegation had
submitted a schedule on basic telecommunications for certification.  At the last meeting of the
Council the delegation of the United States had asked Guatemala to provide the reasons for the
elimination of the words “based on costs” and “rea sonable” from the Reference Paper attached to the
new offer, as opposed to that which had been attached to the schedule in the Fourth Protocol.  She
explained that the telecommunications law did not exclude that operators could in the first instance
negotiate cost-based and reasonable interconnection rates, but in the case of a controversy theS/C/M/33
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provision on interconnection dispute settlement did not guarantee the same result.  For this reason it
was not possible to maintain the language referring to reasonable terms and cost-oriented rates in the
Reference Paper.
25. The representative of Korea drew attention to document S/C/W/93 containing Korea’s revised
schedule in financial services.  He said that this schedule improved significantly Korea’s
commitments, especially with respect to commercial presence, and represented an important
contribution to the liberalization of trade in financial services.  He pointed out that the improved
commitments contained in the revised schedule should be taken into account in the next round of
negotiations according to Article XIX:3.
26. The Chairman reminded delegates that the date of the next meeting in March was still being
explored, although it was difficult to finalize.  He stated that it was his intention to finalize
consultations on the chairmanships of subsidiary bodies in time for the next Council meeting.  He alsorecalled that in the next meeting, it was nece ssary to consider the interim report on electronic
commerce to be submitted to the General Council for its interim review in April.
F. RESUMED MEETING ON THE STATUS OF ACCEPTANCES ON
 THE FIFTH 
PROTOCOL (15 FEBRUARY 1999)
27. The Council for Trade in Services resumed its meeting in the afternoon of 15 February to
address matters relating to the entry into force of  the Fifth Protocol to the General Agreement on
Trade in Services, under agenda item A: Status of Acceptance of the Fifth Protocol (WTO/AIR/1011).
In the absence of the Chairman of the Council, Ambassador Nobutoshi Akao, Mr. David Hartridge of
the Secretariat chaired the meeting, following the Chairman’s suggestion made on 9 February.
28. The Chairman recalled that at the meeting of the Council suspended on 9 February, the
Chairman of the Council had stated that the m eeting would be resumed to discuss any necessary
decision by the Council with regard to the period for acceptance of the Fifth Protocol to the GATS.  The
Chairman reported to delegates that a meeting of the Members which had accepted the Protocol by 30January had taken place that morning, and a communi cation (S/L/67) had been issued by this group of
Members to the effect that they had decided that  the Protocol would enter into force on 1 March 1999.
Those Members had also requested that the Council for Trade in Services decide that the Protocol
should be open for acceptance until 15 July 1999, in order to allow those Members which had not yet
accepted to do so.
29. The Chairman then introduced a draft deci sion by the Council (S/C/W/95) developed in
consultation with  the Members which had accepted the Protocol.
30. In response to an invitation from the Chairman to provide any information on the situation if
the Members which had not accepted the Protocol, Australia indicated that it expected to be able to
ratify and accept the Protocol by the end of March, if parliamentary procedures continued to go
smoothly.  The Philippines indicated that it hoped to finalize its ratification procedure within 5 to
6 months, although it could not say precisely how long the procedure would take.  Poland undertook
to do its best to meet the new deadline to be decided, but could not say when the procedure would be
completed.
31. The representative of the United States emphasized that it was necessary to use all possible
means to encourage the Members concerned which had not yet accepted the Protocol to do so as soon
as possible, and within the agreed deadline.  He suggested that, based on the information available,
the proposal to extend the period of acceptance of the  Protocol until 15 July was considered too long,and 15 June would be more appropriate as the new deadline.  The representative of the European
Communities reminded delegates that Luxemburg would require two months to ratify.  It was statedS/C/M/33
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that Brazil would need 9 to 10 months to ratify, and Costa Rica  until May or June.  The delegation of
Bulgaria stated that it was waiting for the final document of acceptance to arrive, and was ready to
accept.  The representative of Uruguay emphasized that the commitments annexed to the Fifth
Protocol were already being implemented in his c ountry.  Parliamentary procedures were well under
way, but it was not possible to say when the procedure would be finalized.  The Chairman added that
it was understood that Slovenia would be ready to accept very soon.
32. The Council subsequently agreed that the Protocol should be open for acceptance from
15 February until 15 June 1999.  It also agreed to renew the standstill commitment not to take any
measures inconsistent with the schedules annexed to the Protocol before the entry into force of theProtocol (Decision on Acceptance of the Fifth protocol to the General Agreement on Trade in
Services, S/L/68 of 15 February 1999).
33. After the adoption of the decision, the representative of the United States stated that his
government continued to have serious concerns with Japan’s implementation of its commitments
under the bilateral insurance agreement between th e two countries.  Those commitments would be
multilateralized with the entry into force of the Fifth Protocol, and the U.S. reiterated that it would
reserve its rights with respect to Japan's implementation of its commitments under the Protocol.  Japan
responded by restating that it had been faithfully implementing the commitments made under the Fifth
Protocol even before its entry force, and that it intended to continue doing so.
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