RESTRICTED  
S/C/M/72 
29 April 2004 WORLD TRADE  
ORGANIZATION   
 ( 04-1907 ) 
  
Council for Trade in Services  
  
 
REPORT OF THE MEETING HELD ON 25 MARCH 2004 
 
Note by the Secretariat
1 
  
1. The Council for Trade in Services held a meeting on 25 March 2004 chaired by 
Ambassador Ousmane Camara (Senegal).  The age nda for this meeting is  contained in document 
WTO/AIR/2274. 
2. The Chairman
 said that he intended to make a brief statement regarding the second review of 
MFN exemptions under Other Business.   
3. The representative of Brazil  informed the Council that his delegation would seek 
clarifications from the European Communities rega rding the notification procedures to be pursued 
under the GATS as a result of the accession of new Member States to the EC on 1 May 2004. 
4. The Chairman  suggested that the agenda be adopted as circulated with the addition of the 
items raised under Other Business. 
5. The Council so agreed . 
A. NOTIFICATIONS TO THE COUNCIL PURSUANT TO ARTICLES III:3, V:7 AND VII:4 
OF THE GATS 
6. The Chairman  drew the Council's attention to the following notifications made pursuant to 
Article III:3 (Transparency) of the GATS: five  notifications (S/C/N/266-270 & S/C/N/266/Corr.1-
270/Corr.1) from the Former Yugoslav Republic of  Macedonia; twenty-six (S/C/N/271-296) from 
Switzerland; and two from Chinese Taipei (S/C/N/300-301). 
7. With regard to the notifications made by Switzerland, the representative of Japan  sought 
confirmation from the Swiss delegation that the notif ied changes in law were merely technical in 
nature and did not modify the specific commitment s made by Switzerland.  The representative of 
Switzerland  confirmed the consistency of the notified ch anges in law with th e specific commitments 
made by his government. 
8. The Chairman  proposed that the Council take note of these notifications. 
9. The Council so agreed . 
                                                      
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO. S/C/M/72 
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 10. The Chairman
 drew the Council's attention to five join t notifications made pursuant to Article 
V:7 (Economic Integration) of the GATS.  They  were: notification S/C/N/262 presented by the United 
States and Chile; notification S/C/N/263 by the United States and Singapore; notification S/C/N/264 by China and Hong Kong, China; notification S/C/N/265 by China and Macao, China; and notification S/C/N/299 by El-Salvador and Chile. 
11. The representative of Chile
 indicated that the notified fr ee trade agreement between the 
United States and her government had entered into force on 1 January 2004. This was a balanced and 
comprehensive agreement which addressed all bilate ral economic issues such as trade in goods, trade 
in services, electronic commerce, as well as labour and environment issues.  With respect to trade in 
services, this agreement guarant eed market access for exporters  to services sectors such as 
professional, financial, transportation,  energy and communication services.  
12. Referring to the US-Singapore Free Trade Agreement notified to the Council, the 
representative of Singapore  indicated that this agreement ha d been signed on 6 May 2003 and had 
entered into force on 1 January 2004.  A comprehens ive agreement, it covered areas such as trade in 
goods, trade in services, investment, government procurement, e-commerce and intellectual property 
rights. This agreement was consistent with Article  V of the GATS. It was the first FTA the United 
States had concluded with an Asian country, which would not only deepen the bilateral relationship 
between the United States and Singapore, but also  serve as the impetus for a deeper economic 
engagement of the United States in the ASEAN region.  The representative of Singapore said that his delegation looked forward to benef its from this FTA and believed it c ould serve as an useful template 
for future FTAs which could in turn materialize multilateral efforts.    
13. The representative of El Salvador
, on behalf of her delegation and the delegation of Chile, 
stated that the notified free trade agreement had en tered into force on 1 June 2002.  The services areas 
included in this agreement had been negotiated un der Article V of the GATS.  The two delegations 
wished to share more detailed information on th is agreement in the process of review by the 
Committee on Regional Trade Agreements.  
14. The representative of the United States  indicated that her delegation would like to join Chile 
and Singapore in notifying that the free trade ag reements her government had respectively concluded 
with Chile and Singapore were available for examination in the Co mmittee on Regional Trade 
Agreements.  These two agreements were fully in conformity with Article V of the GATS, paragraphs 1 and 4 in particular.  
15. The Chairman
 proposed that the Council take note of these notifications and the statements 
made, and that the notified agreements be referre d to the Committee on Regional Trade Agreements 
for examination of their consistency with the provisions of Article V of the GATS. 
16. The Council so agreed . 
17. The Chairman  further drew the Council's attention to two notifications (S/C/N/297-298) 
respectively made by Australia and Japan pursuan t to Article VII:4 (Recognition) of the GATS.  
18. With respect to the notified mutual rec ognition agreement (MRA) entitled "A Bilateral 
Framework to Facilitate Mobility for Mutual Rec ognition of Registered/Licensed Engineers", the 
representative of Australia  indicated that this agreement had been signed on 1 October 2003 by four 
signatories: the Institution of Engineers Australia; the National Engineering Registration Board in Australia; the Institution of Professional Engineers Japa n; and Japan's Ministry of Education, Culture, 
Sports, Science and Technology.  The agreement woul d enable engineers in Australia and Japan, who 
have registered as APEC Engineers, to straight forwardly achieve registration/licensing in either 
country by removing the need for re-assessment of qualifications or professional experience and  S/C/M/72 
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 language capability.  This arrangement initially cove red engineers in the mechanical, chemical and 
electrical disciplines.  The representative of Australia  said his delegation believed that this MRA, as a 
model template, would support international mutual recognition of engineers wi thin the framework of 
the GATS.  The text of the agreement could be  obtained from the website: www.nerb.org.au.  The 
representative of Japan  echoed the statement made by the representative of Australia. 
19. Thanking Australia and Japan for notifying the mutual recognition agreement in relation to 
engineers, the representative of the European Communities  sought clarifications from the two 
delegations as to whether the various private orga nizations involved in the agreement would be acting 
under delegated authority and whether the provi sions of the agreement would be bound under 
international law. 
20. The representative of Australia  confirmed the Australian signa tories to the agreement were 
non-governmental bodies.  While recognizing the criteria adopted for demarcating non-governmental 
bodies falling under Article 1:3:(a), which exercised powers delegated to them by their governments, 
the Australian delegation considered its signatories to the agreement were the non-government bodies 
without delegated powers.   
21. Thanking Australia and Japan for their notifica tions concerning the Bilateral Framework, the 
representative of the United States  sought clarifications from the tw o delegations regarding the nature 
of the agreement.  Noting only one of the four signatories was a government ministry, she requested Australia and Japan to provide further details on the roles and responsibilities of each of these 
signatories, and especially to clarify which of these signatories had licen sing authority, and if 
possible, the basis for the delegated authority.  Her delegation's understandi ng was that the Bilateral 
Framework, as presented on Japan's Ministry of Forei gn Affairs website, was inte nded to facilitate the 
process whereby an engineer might be considered fo r a temporary or permanent licence.  Through this 
agreement, an engineer who (1) was qualified in the home country, (2) was listed on the APEC 
Engineers registry, and (3) could demonstrate one year of experience in the host country, would then be eligible for assessment by the relevant licensi ng authority in the host country.  This assessment, 
however, could still involve an examination, interv iew, or other process for evaluating qualifications. 
The U.S. delegation therefore questioned how a candida te might acquire one year of experience in the 
host country without first being licensed.  Noting that  a candidate for a license was to fulfil additional 
qualification requirements, such as examination, whic h were not reflected in the agreement, the U.S. 
delegation asked which requirements had been eliminat ed by virtue of the MRA.  Assuming the basic 
elements in determining professional qualifications  were education, experience and the successful 
completion of an examination, the U.S. delegation further asked: (1) whether the Bilateral Framework 
established that the educational requirements in e ach country were substantially equivalent; (2) 
whether the Bilateral Framework reduced the e xperience requirement by recognizing experience 
gained in the home market; and (3) whether th e Bilateral Framework provided for the mutual 
recognition of each country's examination. 
22. The representatives of Australia
 and Japan  said they would respond to the questions raised by 
the United States at the Council's next meeting. 
23. The Chairman  proposed that the Council take note of the two notifications and the statements 
made and revert to this issue at its next meeting. 
24. The Council so agreed . 
B. PROPOSALS  FOR  A TECHNICAL  REVIEW  OF GATS  PROVISIONS  – ARTICLE  XX:2 
25. The Chairman  recalled that substantive discussions under this item had began in June 2002 
and had continued for about one year.  At its mee ting held on 3-7 July 2003, the Council decided to S/C/M/72 
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 refer this item to the Committee on Specific Commitmen ts for its consideration and report back at the 
Council's first formal meeting in 2004. The Ch airman drew the Council's attention to the 
communication (S/C/W/237) presented by the Chai rman of the Committee on Specific Commitments. 
26. The representative of the United States
 appreciated the efforts made by the Chairman of the 
Committee on Specific Commitments in presenting the not e on the consideration of issues relating to 
GATS Article XX:2.  She believed the note provided  a useful summary of the views Members had 
expressed.  She reiterated her delegation's position that  further work in this area should be solely 
aimed at providing general guidance or a checklist for scheduling of future commitments.  It should 
not involve a re-interpretation of existing commitmen ts or provide Members with the opportunity to 
modify existing commitments outside the GATS Article XXI process.  
27. The representative of Hong Kong, China  thanked the Chairman of the Committee on Specific 
Commitments for his leadership in technical discu ssions on issues relating to Article XX:2 and for 
presenting a detailed report which, he believed, provided a useful referenc e in this area.  He noted that 
the discussions held in the Committee on Specific Commitments not only had deepened Members' 
understanding of Article XX:2 issues, but also had broadened their awareness of the ongoing services 
negotiations.  He also noted that the ongoing servi ces negotiations would provide an opportunity for 
Members to clarify ambiguities in their schedul es through a pragmatic approach.  Hoping the 
broadened awareness would enable Members to  make a best endeavour in addressing these 
ambiguities in the process of bilateral request-o ffer negotiations, he suggested that the Council 
consider suspending discussions under this item for the time being.  He believed this could be a 
possible way to move forward under this item beca use it would allow Members to have time to 
engage in bilateral negotiations addressing relevant issues.  Thinking that the U.S. suggestion on 
checklist might provide a useful tool for Members to address Article XX:2 issues in negotiations, he said that after bilateral negotiations Members might consider to what extent ambiguities in schedules 
could be clarified, and that the Council might revert to this item upon request by any Member. 
28. Echoing the United States and Hong Kong, China in thanking the Chairman of the Committee 
on Specific Commitments for his comprehensive report, the representative of Australia
 expressed his 
delegation's view that all the available angles fo r pursuing the Article XX:2 issues through technical 
analysis had been exhausted.  Me mbers had two options: (1) simply putting the issue aside; (2) taking 
the opportunity of the current round to resolve percei ved ambiguities in scheduling, while at the same 
time setting the question of legal interpretation aside .  Australia would prefer the latter option if it 
could be brought into operation.  This option w as a bilateral solution which required a mechanism by 
which the value to the membership of improveme nts in schedules could be recognized, so that 
Members offering to remove ambiguities could be "paid" for their concessions through commitments by other Members.  The mechanism, through either a decision by the CTS or a note by the Chairman, could embody the recognition of the value added to  Members' schedules of commitments by offered 
changes that removed ambiguity with respect to Artic le XX:2.  In addition, in Australia's view, it was 
important to avoid an outcome where opportunities we re created for Members to  reduce their level of 
obligation.  Any changes made in offers were to  be either neutral or unambiguously positive with 
respect to the level of obligation.  While interested  in the U.S. suggestion, Australia was considering 
how to operationalize the mechanism it suggested in the context of bilateral market access 
negotiations.  The representative of Australia said  that his delegation wished to continue the 
discussions under this item at the Council's next meeting.  
29. After thanking the Chairman of the Committee on Specific Commitments for his report, the 
representative of Switzerland
 endorsed Australia's view that chan ges in offers should not reduce the 
level of liberalization and therefore should be neut ral or positive.  His delegation, however, had to 
question the feasibility of the Australia's proposal.  With respect to the U.S. suggestion, Switzerland 
was of the view that the acceptability of a checklis t would depend on its content.  Regarding further  S/C/M/72 
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 work on Article XX:2 issues, the Swiss delegation' s position was that these issues should be addressed 
bilaterally in the context of the current round.  
30. The representative of Japan  welcomed the pragmatism shown in the previous statements 
under this item.  His delegation wished to support the approach that ambiguities relating to Article 
XX:2 were to be addressed bilaterally in the current round of services negotiations.  
31. Thanking the Chairman of the Committee on Specific Commitments for his report, the 
representative of Brazil  noted that his delegation's position on the substance of the Article XX:2 
issues had been well reflected in the report.  He indicated that his delegation analysed these issues 
without taking any parameter that might make comm itments more or less liberal.  Recognizing that 
the clarification process relating to Article XX:2 would reduce scheduling ambiguities, he viewed it 
important that the way a Member scheduled its commi tments reflected its intention.  Regarding the 
way to move forward under this item, he said his de legation was flexible and would go along with the 
consensus that could be reached in the Council.  
32. The representative of Singapore  stated that his delegation was open to the suggestion of a 
checklist, but was concerned about the content of the checklist.  His delegation might support the 
temporary  suspension of the discussions under this item if Members agreed to do so. 
33. The representative of the United States  stated that her delegation would accept the suggestion 
to suspend this item, provided that the resumpti on of discussions in the Council would not be an 
exercise to actually change existing commitments, or that at least the views of those delegations not 
wishing to undertake such exercise in the Council would not be prejudged.  She emphasized that her 
delegation's approach coul d be endorsed in the bilateral request-o ffer process as an effort to make new 
commitments in a clearer manner in light of the i ssues raised by various delegations in discussions 
and analysed by delegations such as Brazil, Swit zerland, Hong Kong China in writing.  This did not 
mean that Members making requests in the course of  negotiations could not seek certain clarification 
of existing commitments.  There was no limita tion on how Members engaged themselves in the 
course of negotiations.  Thanking Australia a nd Hong Kong, China for their responding to her 
delegation's proposal for a checklist, the representative of the United States reiterated that it might be 
useful for Members to have a tool in the course of  negotiations in light of the discussions that had 
taken place with respect to the issues relating to Artic le XX:2.   Regarding the Australia's suggestion, 
she said that her delegation was concerned about the content of a ny CTS decision or Chairman's note 
as well as the idea that Members should be "compen sated" for clarification of ambiguities in their 
commitments.  The notion of compensation for ma king changes to existing commitments could be 
discussed by Members in the process of negotiations a nd there was no need to adopt any principle or 
amendment of Article XX:2 at the current stage.  The U.S. delegation's view was that the way to 
handle the Article XX:2 issue without affecting exis ting commitments was to proceed in a prospective 
manner.    
34. The Chairman  proposed that the Council take note of the statements made.  Given the 
importance of the issues involved and the efforts Members had devoted to analyzing and discussing 
these issues, the Chairman suggested that the Counc il revert to this item at its next meeting. 
35. The Council so agreed.  
C. IMPLEMENTATION  OF ARTICLE  VII OF THE  GATS 
36. The Chairman  recalled that the Council had held di scussions under this item at its three 
previous meetings in 2003 based on an informal note from the delegation of India (JOB(03)/120).  
Given the interest expressed by Members, the Council had agreed to revert to this item. S/C/M/72 
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 37. The representative of India
 recalled that the note presented by his delegation had stimulated 
discussions among Members in the Council's previous meetings, especially in the meeting of July 
2003.  Thanking Australia and Japan for notifying the mutual recognition agreement between them, 
he noted that the Council had not received notifi cations under Article VII for a long time.  He 
reminded Members that some main elements raised by the note of his delegation had been discussed 
in the Council.  Referring to the notifications made under Article VII, he drew the Council's attention 
to Article VII:2 which required that interested  Members were to be provided with adequate 
opportunity to negotiate their accession to a recogn ition agreement.  He invited Members to further 
reflect on the following issues:  how to improve the content of notifications in the spirit of 
transparency and make the texts of the notified agre ements available to the Secretariat; how to meet 
the obligation under Article VII:3; and how to conduc t the information exchange under Article VII:5.  
Regarding the issue of delegated authority, he noted  that previous discussions at this meeting had 
shown there was a need to consider this issue more carefully.  He reiterated the importance of the implementation of Article VII, especially for de veloping countries, in order to facilitate the 
recognition of qualifications, which was crucial to market access in professional services.  He 
requested the Council to keep this item on the agenda  for its next meeting to allow more discussions 
on the elements contained in his delegation's note.  He also encouraged Members to bring up new 
ideas and new information on this issue. 
38. Referring to the issue of delegated authority, the representative of the European Communities
 
noted that only a limited number of agreements had been notified to the Council.  It was unclear whether they fell properly under Article VII and whet her they were properly notified.  Her delegation 
looked forward to further discussions under this item at a following meeting of the Council.  
39. The representative of Canada
 stated that MRAs among competent professional regulators 
were an important issue which could be discussed in the Council.  He further stated that transparency 
and information sharing were an appropriate mean s to encourage broader participation in mutual 
recognition arrangements.  
40. Expressing his delegation's interest in this item, the representative of Switzerland  said that 
further reflection was needed on the implementation of  Article VII, which, he  believed, was important 
for both developing and developed countries.  He looked forward to more discussions under this item 
at the Council's next meeting.  
41. The Chairman  proposed that the Council take note of th e statements made and revert to this 
item at its next meeting. 
42. The Council so agreed . 
D. OTHER  BUSINESS 
43. The representative of Brazil  noted that the European Communities had indicated at the 
meeting of the Council for Trade in Goods on 26 January 2004 that they would pursue the procedures provided in GATT with regard to the accession of the new Member States on 1 May 2004.  The Brazil 
delegation inquired whether the European Communities would take a similar initiative with respect to 
the procedures under the GATS. 
44. The representative of the European Communities
 stated that her delegation was considering 
the procedures to be followed as a result of the EC enlargement and would get back to the Council.  
45. The representative of Ecuador  noted that the EC Regulation No. 414/2004 of 5 March 2004 
had adopted specific measures with a view to ad apting the arrangements for administering tariff 
quotas on banana imports as a result of the accession of  new Member States to the EC on 1 May 2004.   S/C/M/72 
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 The Ecuador delegation considered that this Regulation incorporated changes which could alter the 
commitments undertaken by the EC under the GATS and the Understanding on Bananas signed by the 
EC and Ecuador (document WT/DS27/58).  Therefor e, the Ecuador delegati on sought clarifications 
from the EC in this regard and looke d forward to a prompt response.  
46. The representative of Ecuador stated that th e EC Regulation No. 4 14/2004 of 5 March 2004 
amended the conditions for qualifying as a "traditi onal operator" and the definition of "primary 
import" (Articles 3 and 6.2) established in EC Regulation No. 896/2001, as amended by EC 
Regulation No. 1439/2003.  In addition to the re quirements set out in EC Regulation No. 896/2001 
(that the operator had, on its own account, purchased  bananas from the producers and dispatched and 
sold them within the Community), the EC Regula tion No. 414/2004 incorporated another requirement 
that the sale had to be conducted with a view to the release for free circulation of the bananas in the 
new Member States.  For this purpose, it required th at the proof of release for free circulation in the 
new Member States, i.e., proof of primary imports and consequent ly of traditional operator status, be 
provided solely by means of import declarations or other appropriate customs documents.  These 
supporting documents to be produced were to be or iginal documents or certif ied copies thereof.  
Requiring the submission of original or certified copies of import declarations could lead to the 
establishment of a documentation purchase and sale mechanism, since only operators which had 
already imported bananas (i.e., existing operators of the 10 new Member States) could possess such 
documents, not operators of the EU-15.  This requi rement would substantially increase the marketing 
costs of Ecuadorian traditional operators established in  the EU-15 and would raise the overall level of 
barriers to trade in services. 
47. The Ecuador delegation therefore sought an e xplanation from the EC regarding the legal 
consistency of these changes with Article V:4 of the GATS. This article provided that any economic 
integration agreement was to be designed to fac ilitate trade between the pa rties to the agreement 
without raising the overall level of barriers to trad e in services in respect of any Member outside the 
agreement, compared to the level appli cable prior to such an agreement.  
48. The Ecuador delegation noted that some of the acceding countries to the EC had maintained a 
generally restriction-free regime with regard to specific commitments on the wholesale distribution 
services set out in their Schedules (CPC 622), which also  applied to the banana trade.  In Ecuador's 
view, the EC enlargement and the adoption by acceding countries of the acquis communautaire  which 
included the Community banana regulations, inter alia , EC Regulation No. 896/2001 and in particular 
EC Regulation No. 414/2004, would raise the overall level of barriers to trade in services, and thereby 
would involve the withdrawal or modification of sp ecific commitments incons istently with the terms 
and conditions set out in the Schedules of the accedi ng countries.  As a result, pursuant to Article V:5 
of the GATS, the EC might have to provide at le ast 90 days advance notice of these modifications or 
withdrawals, and apply the procedures set forth in pa ragraphs 2, 3 and 4 of Article XXI of the GATS.  
The Ecuador delegation asked whether the EC would proceed in accordance with Article V:5 of the 
GATS, and if so, how and when the EC intende d to deal with compensatory adjustments.  
49. The Ecuador delegation also noted that Article 8 of Annex I to the Understanding on Bananas 
between the EC and Ecuador (document WT/DS 27/58) required the licensing regime to be 
administered in good faith and on a non-discriminatory basis. In the view of Ecuador, the EC 
Regulation No. 414/2004 presupposed major changes to the definitions of "traditional operator" and 
"primary import", which had been established in Annex I to the Understanding on Bananas.  The 
Ecuador delegation was concerned that such change s could in practice prevent operators of the new 
Member States from being able to register as tr aditional operators, thereby entailing the nullification 
or impairment of the benefits accruing directly or indirectly to Ecuadorian exports to the markets of 
the new Member States under the GATS and the Unde rstanding on Bananas.  Ecuador would reserve 
the right to explore these concerns in greater depth. S/C/M/72 
Page 8  
 
 50. The representative of the European Communities
 said that given the detailed, legal and 
technical nature of the statement made by Ecuador , she would report it to her capital, and that her 
delegation would discuss the issue with Ecuador at a later stage. 
51. As he had indicated at the beginning of the meeting, the Chairman   wished to make a brief 
statement regarding the second review of MFN exemp tions, which, he recalled, was to be conducted 
no later than June 2004 as the Council had decide d at its meeting held on 14 May 2001.  The 
Chairman proposed that the Council take note of th e statements made and start the second review of 
MFN exemptions at its next meeting. 
52. The Council so agreed.  
E. APPOINTMENT  OF THE  NEW  CHAIRPERSON 
53. The Chairman  said he had enjoyed working with Members of the Council and appreciated 
their cooperative and constructive spirit in fulfilling  the mandate of the Council. He thanked the 
Chairpersons of the Subsidiary Bodies, the Secretaria t, and the interpreters for their efforts. Based on 
the consensus reached in the General Council, he wi shed to pass on the Chairmanship of the Council 
for Trade in Services to Ambassador Peter Brño of  Slovak Republic.  He be lieved Ambassador Peter 
Brño's experience and wisdom would guide the future  work of the Council efficiently.  He was thus 
very pleased to propose that the Council elect Ambassador Peter Brño by acclamation as its new Chairman. 
54. The Council so decided.
 
55. The representatives of Czech Republic  (also on behalf of Slovak Republic), the United States , 
Canada , the European Communities , Switzerland , Brazil , China , India , Norway , Nigeria , Malaysia  
(on behalf of the ASEAN states), Chinese Taipei expressed their appreciation for the excellent work 
of the outgoing Chairman, Ambassador Ousmane Camara  of Senegal.  They also assured that they 
would fully support the new Chairman, Ambassador  Peter Brño of Slovak Republic, in the Council's 
future work. 
56. The new Chairman , Ambassador Peter Brño, thanked Am bassador Ousmane Camara for his 
kind words, and thanked all the Members of the C ouncil for their trust.  Hoping the work of the 
Council would move forward smoothly, he said that he would do his best to chair the Council in co-
operation with Members and the Secretariat.  He adjourned the meeting. 
__________