RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/M/67
17 September 2003
(03-4977 )
Council for Trade in Services
REPORT OF THE MEETING HELD ON 3 AND 7 JULY 2003
Note by the Secretariat1
1. The Council for Trade in Services held a meeting on 3 and 7 July 2003 chaired by
Ambassador Ousmane Camara (Senegal).  The agenda for this meeting is contained in document
WTO/AIR/2126.
2. The Chair informed the Council that he intended to make a statement regarding the Work
Programme on Electronic Commerce under Other Business.  He suggested that the agenda be adopted
as circulated and with the addition to Other Business to which he had just referred.
3. It was so agreed.
A. UPDATES TO THE ANNUAL REPORTS OF 2002 OF THE SUBSIDIARY BODIES TO
THE COUNCIL FOR TRADE IN SERVICES
4. The Chair stated that in accordance with the Decision on Institutional Arrangements for the
GATS, the Council's subsidiary bodies were to report to it annually or more often as necessary.  In
February 2003 the General Council had agreed to update its annual report in preparation for the Fifth
Session of the Ministerial Conference, which in turn required the Council to update its annual report,which had attached to it the four reports of the subsid iary bodies.  In this regard, he drew the Council's
attention to the updates to these annual reports which had been recently adopted by the Committee on
Specific Commitments (S/CSC/8), the Working Party on Domestic Regulation (S/WPDR/5), the
Working Party on GATS Rules (S/WPGR/12) and, through a written procedure, the Committee on
Trade in Financial Services (S/FIN/9).  He propos ed that the Council take note of these reports with
the understanding that they would be annexed to the Council's updated report and would form an
integral part of it.
5. The Council took note.
B. UPDATE TO THE ANNUAL REPORT OF 2002 OF THE COUNCIL FOR TRADE IN
SERVICES TO THE GENERAL COUNCIL
6. For the reasons he had outlined under the pr evious point, the Chair drew the Council's
attention to a draft update to the Council's a nnual report contained in document S/C/W/227.  He
recalled that the reports of the subsidiary bodies of which the Council had just taken note would be
annexed to the updated report of the Council.
7. It was so agreed.
                                                     
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/C/M/67
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C. RE-OPENING OF THE FIFTH PROTOCOL FOR ACCEPTANCE BY POLAND
8. The Chair drew the Council's attention to a communication that had been received from the
delegation of Poland requesting the re-opening of the Fifth Protocol on Financial Services and
contained in document S/C/W/225.  In this regard, he further drew the Council's attention to a draft
decision for its consideration contained in docume nt S/C/W/226.  He inquired as to whether a re-
opening of one month would be agreeable to the delegation of Poland.
9. The representative of Poland recalled that her delegation had informed the Committee on
Trade in Financial Services that Poland had completed its domestic procedures for acceptance of the
Fifth Protocol and that it had ratified the Fifth Protocol on 7 April 2003.  Poland requested that the
Council re-open the Fifth Protocol for its acceptance.  She underlined that all the necessary
instruments for acceptance had been provided to the Secretariat and that Poland was in a position to
accept on the date of the Council's Decision.  With regard to the time-period of the re-opening, herdelegation was in the hands of the Chair.
10. The representative of the United States welcomed the ratification of Poland of the Fifth
Protocol and sought confirmation regarding the pe riod for which the Protocol would be re-opened.
11. The representative of Poland reiterated that Poland could accept that day, but was flexible
bearing in mind administrative considerations.
12. The Chair proposed that the Council for Trade in Services adopt the draft decision contained
in document S/C/W/226 with the mention in its last paragraph that the Protocol would remain open
for acceptance by the Republic of Poland until 4 August 2003.
13. It was so decided.
D. PROPOSALS FOR A TECHNICAL REVIEW OF GATS PROVISIONS – ARTICLE XX:2
14. The Chair recalled that at the Council's last formal meeting Members had continued their
discussion on this item based on recent communicati ons from Brazil, Switzerland and Hong Kong,
China.  In the course of this discussion a number of delegations had suggested that the Chair hold
consultations with a view to focussing the Council's work on this item.  In this regard he had
convened an informal meeting in order to discuss the next procedural step.  At that meeting, the
suggestion had been made that discussion on this item could be taken up in the Committee on Specific
Commitments and a number of delegations had expressed support for this suggestion.  The general
view had been that work on this item could benefit from a technical discussion for a limited period in
the CSC and that the Council should consider a proposal to this end at the present meeting.
15. The representative of Canada wished to recall some statements made on an earlier occasion
by his delegation.  Canada's position on substance had been outlined at previous meetings.  In terms
of the next procedural step, different opinions had been expressed with regard to whether this issueposed a problem, necessitated a solution, and what the possible avenues to a solution could be.  It was
perhaps useful to examine the framework, principles and provisions of the Agreements of the WTO
which could guide the exercise.  The question at hand was one of the interpretation of paragraph 2
Article XX of the GATS, and as a result, it was important to be guided by paragraph 2 of Article IX of
the WTO Agreement which handled questions related to the interpretation of existing Agreements.This paragraph stated that the Ministerial Conference and the General Council had the exclusive
authority to adopt interpretations of the WTO Agr eement and Multilateral Trade Agreements and that
they would exercise their authority on the basis of a recommendation by the Council overseeing the
functioning of that Agreement, which in the present case was the Council for Trade in Services.  In
this context, any review and possible conclusions and solutions that flowed from it would need to beS/C/M/67
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referred in the required format to the Ministerial Conference or the General Council and in accordance
with paragraph 2 of Article IX.  As a result, it was important for the Council for Trade in Services to
proceed in such a way as to not prejudge paragraph 2 of Article IX of the Agreement Establishing the
WTO.
16. The Chair proposed that the Council take note of the statements made and refer this item to
the Committee on Specific Commitments for consideration on the understanding that the CSC would
report on this item in time for its consideration at the Council's first meeting of 2004.
17. It was so agreed.
E. IMPLEMENTATION OF ARTICLE VII OF GATS
18. The Chair said that this item had been included in the agenda at the request of the delegation
of India.  He drew the Council's attention to  a communication from India pertaining to the
implementation of Article VII of the GATS contained in document JOB(03)/120.
19. The representative of India, introducing th e communication contained in JOB(03)/120, stated
that it was meant to stimulate discussion on the implementation of Article VII of the GATS.  The
main purpose of the communication was to examine the extent to which Members had met their
obligations under Article VII and to discuss ways to remove any gaps in meeting these obligations.
He recalled that his delegation had requested that the Secretariat compile a list of all notifications byMembers pursuant to Article VII of the GATS, which had been distributed to the Special Session of
the Council for Trade in Services on 26 February 2003.  It appeared to indicate certain gaps in these
notifications.  He stated that the fact that only two such agreements had been notified in the preceding
three years appeared to indicate the possibility that all relevant agreements had not been notified by
Members.  He said that there could be the view that some of these agreements had not been notifiedbecause they were considered to be between private professional bodes, and that they were
subsequently not measures under the GATS.  However, he thought that this might require further
examination as to whether such professional bodies had been delegated powers by federal or state
governments to conduct the process of recognition of  professional qualifications.  In the case of such
delegated powers, his delegation felt that they w ould fall under government measures and would need
to be notified under Article VII of the GATS.  He also noted that the Secretariat compilation indicated
that all the relevant notifications had been post-facto  notifications and that they did not appear to
provide information in advance of the opening of negotiations on such agreements.  This gave rise to
doubts as to whether adequate opportunities had been provided to other Members to negotiate their
accession to these agreements or negotiating comparable ones.  His delegation believed that such
opportunities were vital, particularly for developing countries in order to facilitate recognition of
qualifications and was thus of crucial importance to market access in professional services.  India alsofelt Members could benefit from information sharing on paragraphs 3 and 5 of Article VII because it
was unclear how these provisions had been met by Members.  His delegation believed that discussion
of this issue was necessary in order to improve implementation.  He suggested that the Council focus
on three aspects:  how Members could meet notification obligations under Article VII:4 (a), (b) and
(c);  how Members could improve the content of notifications by clearly stating the sectors which theyaddressed and making available the actual text of the relevant agreements to the Secretariat for the
purposes of transparency and availability to other Members;  and information sharing on paragraphs 3
and 5 of Article VII.  He hoped that the communication would stimulate discussion and move the
process forward.
20. The representative of Pakistan recalled that this was not the first time that the delegation of
India had brought the Council's attention to this important element of the GATS.  He sought to
associate his delegation with India's statement and recalled that non-recognition of qualifications
served to impede market access.  He said that developing countries had a substantial interest inS/C/M/67
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mode 4 and he saw a direct linkage between mode 4 interests and GATS Article VII.  In his view,
Article VII had been rendered dysfunctional by the lack of mutual recognition of qualifications and
the fact that few notifications had been submitted to the Secretariat.  He took note that only two
agreements had been notified in the preceding three years, which raised questions on transparency.
Unless Members knew what qualification requirements existed, there could be little progress.  Hebelieved that the proposal contained in paragraph 9 of the document, which outlined five ways and
means to make progress, was a step in the right direction.  These dealt in part with the notification of
relevant measures to the Secretariat and the content of these notifications.  He underlined the non-
discriminatory nature of the obligations in Article VII:3.  He felt the Council should take note of a gap
in implementation of Article VII and should focus on the proposal with a view to making progress on
this issue.
21. The representative of Thailand recalled that her delegation had often stated that recognition
was of great importance to market access negotiations on mode 4.  She felt that lack of qualification
recognition was a major barrier to market access.  She shared the views expressed in the Indian
proposal and its suggestions for practical work on this issue.  With respect to the scope of Article VII,
she agreed that the issue was of particular importance to professional services;  however, she did not
feel that the scope of the Article was limited to professional services, since paragraph 1 of that Articlereferred to "services suppliers".  She shared India's particular interest in professional services and
understood that criteria on qualifications were more systematically set out in regard to them.  She said
that Thailand was establishing qualification criteria in other areas in a systematic and objective
manner.  She felt that the suggestions made by India could also be applied to other service sectors.
22. The representative of Cuba agreed with the importance of this issue and said that the obstacles
to the recognition of professional qualifications and licences had an impact on the supply of these
services by developing countries.  The negotiations on mutual recognition agreements should include
the recognition of professional qualifications.  She affirmed that there should not be discrimination
among Members in terms of granting licences to services suppliers.
23. The representative of Chile echoed the call for a review of Article VII and was of the view
that  commitments under Articles XVI and XVII were undermined if in the end service suppliers
could not gain access to the market for lack of recognition.  It was not a disguised but an explicit
barrier and failure to overcome this problem would undermine the value of market access and national
treatment commitments to service suppliers.  He said that Chile's private sector was concerned about
the lack of market access owing to the absence of mutual recognition agreements.  He felt that the
Indian paper would help advance work.  Drawing attention to paragraph 5(d) of the paper, his
delegation felt that it would be helpful to review the operation of Article VII:2 if it was not alreadyaddressed in the communication.  He felt that the mandate contained in that provision should be
reviewed in order to determine whether, in pract ice, Members had been provided ample opportunity
for accession to the agreements.
24. The representative of Mexico felt the document contained major elements worthy of
examination.   However, his delegation felt that other elements could be taken in the account of the
proposal.  Citing Mexico's experience, he said few such agreements had been reached.  He said that
many of the agreements were between private professional bodies and were not necessarily signed or
ratified by governments.  He cited the example of an agreement between the Association of Mexican
Architects and the  Association of European Architects that was not an intergovernmental agreement.
He felt it was necessary to be clear on the type of notifications that were required and includedagreements between or approved by governments.  He agreed with the proposal's elements on
transparency in the existence of such agreements.  He said that the proposal contained important
elements addressing the question of compliance with Article VII.  He said that the ability for
Members to join agreements negotiated between other Members was directly linked to the broadening
of commitments and trade flows under mode 4.  He indicated that he would revert to this item.S/C/M/67
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25. The representative of the Philippines stated the paper lent a higher profile to the issue of
recognition, which facilitated and improved market access obtained in the past or the current round.
He noted that while the paper focussed on professional services, Article VII:1 referred to "services
suppliers" in general, though he understood the emphasis given to the professional services in the
paper, as it was perhaps the most pertinent case.  He indicated that, while the focus of the paper wasprimarily on transparency, he said that it also provided a platform for a positive mindset toward the
issue of recognition in general and MRAs in particul ar.  He looked forward to further discussions and
indicated he would revert to this point.
26. The representative of Japan recognised that Article VII was an important element of the
GATS structure as it took into account the special nature of the recognition of qualifications in trade
in services.  He agreed that existing obligations, along with others contained in the Agreement, should
be implemented and respected by Members.  In this regard, he shared the general thrust of thecommunication and felt that the Council could explore possible problems related to the
implementation of existing obligations under Article VII.  One aspect that could merit discussion was
the scope of measures subject to notification, and specifically agreements between private and
professional organisations.  He wondered about the reasons that could explain why there had been a
limited number of notifications, for instance, the limited number of MRAs or the practical difficulty indetermining the starting point of such negotiations.  He agreed that some points raised concerning
implementation could merit further discussion.  Referring to paragraph 9 sub-item 5 and
"multilaterally agreed criteria", he asked if India had any specific professional or non-professional
sector of particular interest in mind.
27. The representative of New Zealand felt the submission would be useful in stimulating
discussion on this issue.  She agreed that recognition was vital to the full implementation of sectoral
commitments, particularly but not exclusively in professional services.  Although she acknowledged
that concrete collective action might be difficult to identify, her delegation was keen to identify
practical measures that could be taken to strengthen recognition and foster progress.  She felt that
further discussion of the role of professional bodies and delegated authority would be useful and thatthe points raised in relation to transparency marked a useful starting-point.
28. The representative of Korea believed that in the context of bilateral request-offer negotiations
on the liberalization of trade in services a clearer understanding of future recognition agreements as
stipulated in Article VII would be helpful in facilitating liberalization, particularly in professional
services.  In this regard, he directed a question to the Secretariat relating to whether it was technically
and practically possible to schedule a commitment with the condition that it was valid only for
Members with whom mutual recognition agreements were established.
29. The representative of Peru agreed that the provision of information on recognition was an
important topic for his delegation, particularly with respect to commitments on professional services.
However, he echoed comments that the issue was not related exclusively to professional services.
Generally, he shared the approach laid out by India, which focussed on measures that would seek to
improve transparency, and he supported the objectives outlined in the document.
30. The representative of Indonesia associated his delegation with the views expressed by India
on the Implementation of the Article VII of the GATS in JOB(03)/120.  His delegation had observed
that market access in mode 4 was restricted for developing countries due to barriers encountered by
professionals.  He recalled that for most developing countries mode 4 offered the most potential for
multilateral trade in services and he shared the concerns on mode 4 related to recognition.
31. The representative of Colombia felt the document was a basis on which to begin a technical
discussion on Article VII.  For her delegation, recognition was important to achieve the operability of
mode 4 commitments and a necessary element in order to provide services to other markets.  SheS/C/M/67
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agreed that the provisions of Article VII had not been implemented as hoped and, therefore, greater
analysis of these obligations was necessary.  She agreed that certain elements would require further
study if Members were to fulfil the obligations under Article VII, including scope of Article VII and
autonomy of private professional associations.
32. The representative of Canada underscored the importance his delegation assigned to issues of
recognition and the development of MRAs among competent professional regulators.  He thought that
matters relating to Article VII were appropriate topics for discussion in the Council for Trade in
Services.  He noted the benefits of transparency and information sharing by encouraging broader
participation in mutual recognition arrangements.  Referring to paragraph 4(b) of Article VII which
stated that the Council was to be informed "as far in advance as possible of the opening of
negotiations on an agreement", he inquired into what was meant by the phrase "opening of
negotiations" as it was often difficult to determine when these negotiations began.  For example, inthe Canadian context arrangements were reached between professional bodies and often began with
information exchange or exploratory talks before proceeding to formal negotiation.  He noted that the
process was a continuum which made it difficult to discern at what point the negotiations were
opened.
33. The representative of Bolivia felt that the document marked a good starting point for
improving the operability of GATS Article VII, particularly with respect to professional services.  As
reflected in Bolivia's requests, this was an area of interest to her country directly linked to mode 4.
She supported the suggestion that Council pay particular attention to this topic given its importance to
developing countries.
34. The representative of Kenya noted the importance of this issue to his delegation, because lack
of recognition had become one of the major barriers to market access particularly in mode 4.  He
agreed with the need to keep track of MRAs in addition to the other points raised by India, which
merited further consideration.  He indicated he wished to revert to this item.
35. The representative of Hong Kong, China stated  that recognition was an important issue and
essential in ensuring that market access was given full effect, both in professional and other services
sectors.  In this regard, the paper raised important points on Article VII and he looked forward to a
discussion which would improve transparency and clarity regarding notifications pursuant to Article
VII.  His delegation was open to discussing the scope of these notifications with a view to clarifying
their application and improving their transparency.  He noted that other aspects on recognition were
being pursued in other forums and looked forward to those discussions.
36. The representative of the United States stated that her delegation welcomed a discussion on
this paper and recalled a similar discussion in the Working Party on Domestic Regulation.  Her
delegation took note of India's point that many MR As were concluded by private entities, and stated
that this was often the case for United States, which explained why no notifications of those
agreements had been made in accordance with Article VII, as the later spoke of arrangements between
Members.  She said that her delegation was examining the point raised by India that agreements could
be arrived at through delegated powers.  She thought it would be helpful to reflect on Article I of theGATS in this regard which contained in paragraph 3(a) a specific indication of what constituted a
measure by a Member.  She felt that there could be a distinction between the two.  It was not clear to
her delegation that there was general agreement on how to define delegated powers outside of the
indication given in Article I.  She requested th at a communication from the United States on these
arrangements that had been circulated to the WPDR  be circulated in the Council in order to maintain
parity in the two discussions.
37. Making a few preliminary comments, the representative of Switzerland felt the paper had
raised a number of important points, including ones which had an impact on market access.  HisS/C/M/67
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delegation attached importance to the implementation of the agreement and was willing to have
information exchange and a discussion on Article VII.  Mutual recognition agreements were a
complicated issue regulated by the competent authorities and important for market access especially
in professional services.  He indicated he might revert to this item.
38. The representative of the European Communities st ated the paper raised interesting issues and
his delegation was reviewing it and might revert to it.  Making a few preliminary comments, he urged
caution in  drawing the conclusion that the absence of notifications indicated Members were not
complying with obligations contained in Article VII.  He noted that concluding MRAs was a complex
process, particularly in services.  He stated that the European Communities attached importance to
transparency obligations.  He understood that MRAs were important to ensure full effect of market
access in some services sectors.  However, he noted that full effect in market access hinged on the
existence of commitments and he hoped that the number and quality of these commitments would besubstantially improved in the current round.
39. The representative of China shared a number of the views expressed by India regarding the
importance of improved implementation of Article VII, and particularly with recognition related to
mode 4 and market access commitments.  This was necessary in order to maintain the balance of
Members' rights and obligations in the GATS framework.
40. Referring to the question from the delegation of Korea regarding the scheduling of
commitments that would only apply to trading partners with whom that Member had a mutual
recognition agreement, a representative of the S ecretariat said that Article VII permitted Members to
have such arrangements through a deviation from the MFN principle.  He said that it had been
necessary to include Article VII in the Agreemen t because Article II required that each Member
extend immediately and unconditionally treatment no less favourable to services and services
suppliers of any other Member.  Therefore, any deviation from Article II required legal cover
elsewhere in the Agreement.  This was the case for Article V (Economic Integration) and Article VII
(Recognition).  Articles such as these permitted Members to confer certain privileges to services
suppliers of some Members and not others.  However, he said that Article VII also distinguishedbetween procedural and substantive matters.  This was reflected in paragraph 3 which stated that a
Member could not discriminate in the application of the Article's substantive requirements.  He stated
that the provisions in Articles V and VII were, in legal terms, permissive or enabling provisions, as
they permitted Members to take actions that would otherwise not be consistent with other obligations
under the Agreement, such as Article II.  Expanding on this distinction, he stated that any rights
established pursuant to actions taken under such permissive provisions were the rights of partners in
an economic integration agreement or mutual recognition arrangement, were not protected by theGATS itself.  The WTO allowed Members to establish these rights for some Members and not others,
but did not undertake to enforce them.  By contrast, he said that the scheduling of a commitment
established a guaranteed right to other Members which would be enforced by the WTO through the
Dispute Settlement Understanding.  For the latte r, the GATS was a covered agreement within the
meaning of the DSU and subject to enforcement.  Any agreement pursuant to Article V or VII would
not, under the terms of the DSU, be considered a covered agreement.  In sum, he said that it was not
possible under the current Agreement to establish legal rights in a Member's Schedule that would be
enforceable only vis-à-vis  some Members and not others.
41. The representative of Pakistan said that the response by the Secretariat could be seen as legal
interpretation of Article VII.  He requested that the statement be distributed informally or included in
the minutes.  The Chair confirmed that comments made in the meeting, including the response
referred to, would appear in the report of the meeting.
42. The representative of the United States sought to underline for the record that Secretariat
comments were made on its own responsibility and that other delegations could have different views.S/C/M/67
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The representative of the Philippines suggested that  it be recorded in the minutes that the comment by
the Secretariat was provided on a consultative basis and was not a legal interpretation.  A
representative of the Secretariat confirmed that responses by the Secretariat were always made on its
own responsibility and solely on a consultative basis.
43. The representative of India thanked delegations who had contributed to the debate and sought
to respond to some of the points raised.  Regarding the scope of Article VII, he agreed that the
Article's and the discussion's scope was not restricted to professional services, but he had intended to
use this case as an example among others.  Second, on the question as to whether some of the
notifications were entirely private and did not fall within the purview of the Agreement, he felt that
question remained and should be explored in greater detail, particularly with respect to the issue of
delegated authority.  He wondered if the issue of delegated authority was relevant to these
arrangements and whether the Secretariat could be a resource in this regard.  He felt that this issuewas at the core of the proposal and might shed light on some of the reasons why few arrangements
had been notified.  Third, on the question of how to identify the start of negotiations, he agreed that
negotiations were often started by professional bodies;  however, he had noted that all had been
notified post facto .  Although he agreed that this point could be taken up, given that no arrangement
or agreement had been notified prior to its conclusion, he thought that a more urgent question waswhether obligations under Article VII:2 were being met.  Responding to Japan's query on multilateral
criteria, he stated that elements could be drawn, among others, from accountancy and architecture.  He
recalled that paragraph 5 of Article VII  made reference to multilateral criteria.  In conclusion, he felt
the issue had raised interesting areas for discussion and he thought that a good starting-point could be
the question of private versus delegated authority.
44. Given the interest that had been shown on the communication from India, the Chair suggested
that the Council take note of the statements made and revert to this item at its next meeting.
45. It was so agreed.
F. COMMUNICATION FROM THE EUROPEAN COMMUNITIES AND ITS MEMBER
STATES PURSUANT TO ARTICLE V OF THE GATS – ACCESSION OF AUSTRIA,FINLAND AND SWEDEN TO THE EUROPEAN COMMUNITIES (S/DCS/W/EEC)
46. The Chair stated that at the last formal meeting of the Council for Trade in Services in Special
Session a number of delegations had made statements on this communication.  On that occasion, the
request had been made for the item to appear on the agenda of the present meeting.
47. The representative of the European Communities said that his delegation welcomed the
inclusion of this item on the agenda.  Repeating what his delegation had said at the Special Session,
the European Communities and Its Member States had notified the Chair on 9 April 2003 underArticle V of the GATS the consolidation of the European Communities (15) following the last
enlargement to Austria, Finland and Sweden.  The consolidated schedule included both the list of
specific commitments and the list of MFN exemptions.  With respect to the list of MFN exemptions,
his delegation considered that Article V allowed the Communities to extend existing MFN
exemptions and in no way did they constitute new exemptions.  With regard to specific commitments,he recalled the European Communities' intention to modify or withdraw some commitments, as
required by paragraph 5 of Article V, and his delegation had duly notified to the Council on
9 April 2003.  He said the that this communication stat ed explicitly the EC's intention to modify and
withdraw some commitments following the last en largement, and he said that his delegation had
followed the procedures contained in S/L/80 by attaching a list of specific commitments where the ECproposed to modify or withdraw commitments.S/C/M/67
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48. The representative of Argentina sought to reiterate the main points contained in a
communication from his delegation contained in documen t S/L/123.  First, he said that Argentina had
been informed during the Special Session of the Council for Trade in Services on 22 May 2003 that
the European Communities considered document S/DCS/W/EEC to constitute a notification pursuant
to Articles V:5 and XXI:1(b) of the GATS.  Second, in his delegation's view, the communication inquestion did not constitute a notification under the terms established in the Procedures for the
Implementation of Article XXI of the GATS (S/L/80) and the Guidelines for Notifications under the
GATS (S/L/5).  He said that the document had not been distributed to Members nor had it been
included in the agenda of the subsequent meeting of the Council for Trade in Services.  In his
delegation's view, the posting of the communication on the Members website did not constitute
circulation pursuant to the procedures set out in document S/L/80.  His delegation believed that
compliance with the procedures outlined in the docu ments he had referred to was essential in order to
guarantee transparency in the procedures and to properly assess of the intended modifications on
Argentina's rights under the GATS.  Furthermore, he said that the document series concerned,
S/DCS/W/, was a one-off series to be used exclusively for the consolidation of Members' Schedules.
He said that documents bearing this symbol had no legal status, since they were to be used as a model
to facilitate the presentation of initial offers in the course of the negotiations.  He recalled that this fact
was reflected in document S/CSC/W/28, as well as in the Secretariat communication and the body's
minutes referring to this document series.  He said that the absence of a legal status of the documents
was further corroborated by Members in the update to the annual report contained in S/CSC/8.
Argentina believed that the fact that the procedures  had not been properly followed had an impact on
the ability of Members to correctly assess and evaluate the way in which their rights could have beenaffected by the proposed modifications to commitments.  Given that the deadline for the
implementation of the proposed modification was sufficiently long, he took the liberty of suggesting
to the delegation of the European Communities that it consider the presentation of a notification
pursuant to the provisions of the procedures to which he had referred.  He acknowledged that it was
not for Argentina to pronounce itself on the appropriateness of a given procedure, which was theprerogative of Members.  He sought the views of Members and the Secretariat with respect to the
procedural aspects of this case.
49. The representative of Chile sought to reiterate points made by her delegation in its
communication contained in document S/L/127.  She underlined that her intention was not to
challenge the European Communities, but to draw the attention of all Members to possible defects in
the procedures.  She saw the case as an opportunity to clarify an issue with great systemic impact in
order to avoid similar situations in the future.  Chile had taken note of document S/DCS/W/EEC at themeeting of the Special Session on 22 May 2003.  On that occasion it was indicated that the document
should be considered a notification pursuant to GATS Articles V:5 and XXI:1(b).  She recalled the
view expressed in her delegation's communication that the EC communication did not constitute a
notification.  As pointed out in the most recent report of the Committee on Specific Commitments, the
symbol which appeared on document, S/DCS/W/EEC, was one in a series that did not have any legalstatus that was a one-off exercise in the compilation of the consolidation of WTO Schedules.  She
stated that notifications were to be distributed under the S/C/N/ series and should be recorded by the
Central registry of notifications.  According to the Procedures for the Implementation of Article XXI,
that notification should be distributed to all Members and placed on the agenda of the subsequent
meeting of the Council, which she noted had not occurred.  The document had not been circulated, butrather had only been posted on the Members' web-site.  In her view, this did not constitute circulation
of the document.  She said that compliance with the procedures and guidelines in documents S/L/80
and S/L/5 were of paramount importance in order to guarantee the transparency in procedures to
which Chile attached great importance.  It was only in this fashion that Chile could assess the impact
of the intended modifications on Chile's rights under the Agreement.  She echoed Argentina'ssuggestion for the EC to issue a notification in accordance with the procedures to which she had
alluded.  She recalled that much time had been spent in drawing up the procedures and that theyS/C/M/67
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should be implemented in the agreed manner.  She said that, should there were gaps in these
procedures, they should be discussed openly in the Council.
50. The representative of Paraguay, referring to her delegation's communication contained in
document S/L/129 and regarding the communication from the European Communities indicating its
intention to amend or modify its specific commitments, expressed her delegation's concern with themanner followed by that delegation in making its amendment.  She said that the statement by the
European Communities at the meeting of the Special Session on 22 May 2003 was not due
notification in accordance with the provisions outlined in Article XXI, the Procedures for the
Implementation of Article XXI of the GATS (S/L/80) and the Guidelines for Notifications under the
GATS (S/L/5), for the reasons outlined by Argentina and Chile.  Paraguay felt that due compliance
with the procedures was vital to guarantee legal certainty for all Members.  She was convinced that
full compliance with the agreed-to rules and procedures was necessary in order to avoid a negativeprecedent.  She stated that it was not for her delegation to determine whether a procedure had been
properly followed, which was rather  left to the Members.
51. The representative of Peru stated that his delegation had learned of the proposed EC
amendments at the meeting of the Special Session on 22 May 2003 and had taken note of document
S/DCS/W/EEC on that occasion.  He noted that Peru had not submitted a communication in relationto this document.  However, he wanted to make it cl ear that his delegation had a systemic interest in a
matter which was related to transparency and compliance with procedures that all Members had
undertaken to respect.   Reiterating his delegati on's position, he stated that the communication from
the European Communities did not constitute a notification under the terms of the Procedures for the
Implementation of Article XXI of the GATS (S/L/80) and the Guidelines for Notifications under theGATS (S/L/5).  He felt that these provisions were key to ensuring transparency in procedures which
permit Members to assess properly the effects of any proposed amendment that affected Peru's rights
obtained in the Uruguay Round.   He stated that th e procedures concerning Article XXI agreed to by
the Council on 19 July 1999 stated that Member could modify their schedules in accordance with
Article XXI through a proper notification that would be distributed by the Secretariat to all otherMembers in a secret document and would be included in the agenda of the subsequent meeting of the
Council for Trade in Services.  He stated that these requirements had not been met by the
communication from the European Communities.  The fact that the document had been posted on the
Members' web-site was positive;  however, it did not substitute for the obligations of Members.  He
said that clear guidelines were laid out in specific documents approved by the Council and by all
Members.  He echoed Argentina's comments regarding the legal effects of modified scheduled
commitments, and agreed with the suggestion that the notification be re-submitted.
52. The representative of Hong Kong, China thanke d the EC for the explanations it had provided
at the meeting of the Special Session held on 22 May and contained in the report of that meeting
(TN/S/M/7).  He welcomed the opportunity to address issues of systemic concern to his delegation
and stressed that his objective was to clarify the legal provisions and procedures that were applicable
to the type of actions intended by the EC communication.  He said that while the case underdiscussion was the first to consider the types of actions concerned, it would probably not be the last.
He therefore felt that it was of systemic interest to have the legal provisions and applicable procedures
clarified.  On the question of the procedures followed in the communication, he shared others'
discomfort with the intention for it to be a notification.  In his view, these doubts raised systemic
concerns and he looked forward to clarifying them.  On a practical note and notwithstanding thequestion of whether the communication was a proper notification, it remained a matter of fact that the
document came to the attention of delegations only in the days prior to the Special Session meeting of
22 May because of the procedural issues that others had referred to.  Even if it had been argued that
the procedures could have been complied with, Members had not been able to avail themselves fully
of the timeframe or provisions for responding to the communication.  He therefore felt that thereS/C/M/67
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could be a case made for a longer timeframe prior to pressing ahead with any applicable procedures,
both legal and practical.
53. Turning to the substance of the communication, he  took note that it combined two courses of
action:  (1) the replacement of the Schedules of Specific Commitments of the European Communities
and Its Member States with the consolidated schedule of specific commitments and (2) thereplacement of the existing List of MFN Exemptions of the European Communities and Its Member
States with the consolidated list of MFN exemptions.  It appeared to his delegation that different legal
provisions and procedures were applicable to these two separate courses of action.  Notwithstanding
the fact that the two actions arose from the same ec onomic integration agreement, he felt that the two
actions should be examined separately in terms of the applicable legal provisions and procedures.
Regarding the consolidated schedule of specific commitments, he had taken note of the EC's
statement at the last formal meeting of the Special Session that the consolidated schedules involvedthe modification or withdrawal of specific commitments and that it had made a notification under
Article V:5.  The EC had further explained that Article V:5 referred to paragraphs 2 to 4 of
Article XXI which were silent on notification, since only Article XXI:1 referred to notification.  He
recalled that the European Communities had further explained that it had done more than required by
Article V:5 by mentioning its intention to modify and withdraw a list of certain commitments inaccordance with paragraph 1 of Article XXI.  This explanation had prompted a number of questions in
his mind.  He asked whether the procedures set out in document S/L/80 were applicable to a
notification under Article V:5 and the withdrawal or modification of commitments arising from such a
notification.  His impression from the explanation that had been given was a positive response;
however, he sought to ascertain if paragraphs 1 and 2 of S/L/80 were applicable, and if not, what
would be the procedures for the notification and the withdrawal or modification of commitments as a
result of any action pursuant to paragraph 5 of Article V.
54. Turning to the consolidated list of MFN ex emptions, he noted that no legal provision or
applicable procedures had been expressly cited in the EC communication for the replacement of
existing lists of MFN exemptions with the consol idated lists of MFN exemptions attached to the
communication.  He had taken note of the EC stat ement recorded in paragraph 181 of document
TN/S/7, that the EC considered that GATS Article V allowed this action because these were existing
MFN exemptions and did not extend the scope of these exemptions.  However, he noted that it
appeared to him from the records of meetings of the Committee on Regional Trade Agreements that
there had been no concensus on the European Communities' interpretation of Article V and whether it
allowed the consolidation or extension of MFN exemptions.  It appeared that the consolidated list of
MFN exemptions did introduce new MFN exemptions in respect of Austria, Finland and Sweden.This being the case, it appeared to Hong Kong, China that the only applicable provision for the
consolidation of the lists of MFN exemptions would be paragraph 3 of Article IX of the Marrakesh
Agreement, in accordance with paragraph 2 of the GATS Annex on Article II Exemptions.  Citing to
the fourth sentence of paragraph 181 of the minutes contained in the report TN/S/M/7, he sought to
record that in his delegation's view, the term "Sched ule" as referred to in Articles XX and XXI did not
include the lists of MFN exemptions, which were legal documents based on the Annex on Article II
Exemptions which set out the exemptions of indivi dual Members according to Article II.  They were
therefore distinct from the Schedules which were based on Article XX and contained specific
commitments pertaining to Articles XVI, XVII and XVIII.  He requested that the European
Communities clarify the issues and questions to which he had referred.  He also hoped that theSecretariat could shed light on the procedural and systemic points he had raised.
55. Referring to the recent communication from the European Communities and Its Member
States pursuant to Article V of the GATS regarding the accession of Austria, Finland and Sweden to
the European Communities and the intervention by  the delegation of the European Communities at
the previous meeting of the Special Session, the representative of Colombia said that there was a lack
of clarity as to what elements made it possible to identify a communication as a notification underS/C/M/67
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Articles V:5 and XXI of the GATS.  Her delegation's interpretation of the communication in question
was that it related to the work on the consolidation of schedules and thus had no legal value.  As such,
her delegation did not see how the communication could constitute a notification under the terms of
these Articles.   She said that the concerns expr essed by Argentina and Chile in their communications
and statements needed to be reviewed.  She added that documents in the S/DCS/W/ series were nottranslated into the official working languages, which made it difficult to understand their contents.
The procedures outlined in the Procedures for the Implementation of Article XXI of the GATS
(S/L/80) and the Guidelines for Notifications under the GATS (S/L/5) had not been met in this case.
For her delegation compliance with these procedures was vital to guarantee transparency and due
process.  She had understood that the intent of the European Communities in document
S/DCS/W/EEC was to notify the modification or withdrawal of its bound specific commitments.  To
that end, she felt that clarity needed to be guaranteed through the issuing of a new document with aproper title so as to begin the proper notification procedures.
56. The representative of Chinese Taipei echoing similar views expressed by others regarding
systemic issues, said that her delegation believed that the communication contained in S/DCS/W/EEC
did not constitute a notification as outlined in documents S/L/80 and S/L/5.  She felt that compliance
with these procedures was essential to ensure the transparency of procedures and to properly assess
the impact on Members' rights under the GATS of intended modifications.  She recalled that in May
2002 her delegation had followed the procedures outlined in document S/L/84 to rectify a technical
error in Chinese Taipei's Schedule.  In the relevant documents, her delegation had clearly indicated
the relevant timeframes and she hoped that the European Communities could publish their notification
following the appropriate procedures and with the appropriate title.  She said that the ECcommunication did not imply or launch the timeframe s indicated in paragraph 3 of document S/L/80.
Her delegation sought to reserve its rights in the context of the existing notification procedures,
particularly under Article XXI of the GATS.
57. The representative of Japan sought to touch upon both the withdrawal or modification of
specific commitments and the consolidation or replacement of the MFN exemptions list.  With regard
to the first, Japan was concerned that the procedures for the withdrawal of  specific commitments
subsequent to the enlargement of the European Communities, and its notification, had been "poured
into" the larger process of the consolidation of Members schedules.  This course of action had raised
confusion and doubt, especially with respect to the circulation of the notification to Members and
whether action had occurred in a legally correct manner.  It also had raised questions on the
translation into the working languages, the circulation of hard copies, the inclusion of the item on the
agenda of the next Council meeting, etc.  He stated that the notification, which was much more than asimple consolidation of different agreements of a Member, had been conducted in a manner which did
not meet the reasonable expectations of Members, as witnessed by the fact that an important
notification had gone unnoticed by most Member s two weeks after its so-called circulation.  He
sought to hear the views of the delegation of the European Communities and the Secretariat in this
regard.  He thought that the fundamental issue concerned the legal basis of the procedure, and heunderstood that the withdrawal or modification of commitments as a consequence of enlargement,
even if notified in virtue of Article V:5 would be based on Article XXI procedures.  However, he
thought that he had understood the contrary from the statement of the European Communities in the
previous meeting of the Special Session, namely, that Article XXI:1(b) had been invoked and Article
XXI procedures possibly followed on a voluntary basis.  He felt that a clear understanding on thispoint was necessary, and that procedures should be applied in a transparent and strict manner in the
compliance with the spirit of progressive liberalization.  Such clarification was all-the-more pressing
given that similar cases were likely to arise in the near future.  He felt that if clarification and a clear
understanding could not be arrived at the current meeting, then discussion should continue on the
interpretation and implementation of Articles V and XXI.S/C/M/67
Page 13
58. Turning to the point concerning the MFN exemption list, Japan questioned the legal basis and
the procedure that the delegation of the European Communities had outlined in its intervention.  His
delegation did not share the view that the consolidation or replacement of the MFN exemption list
was a mere extension of existing MFN, since in his view for those countries who had not listed a
particular exemption, such action amounted to the introduction of a new MFN exemption, which wassubject to Article IX:3 of the WTO Agreement pursuant to the Annex on Article II Exemptions.  On
this second point too, he felt that there was a need for more discussion to clarify the procedures and
the legal basis of this action.
59. The representative of China stated that his delegation had followed the debate regarding the
procedural issues surrounding the EC consolidated schedule.  As this was the first case of a
modification to or withdrawal of commitments unde r the GATS, he stated that China also had an
interest in determining whether the proper procedur es had been followed.  Referring to a situation in
which parties to a regional integration agreement modify or withdraw specific commitments under the
GATS, he asked to which body these changes should be notified.  He said that, as agreed among
Members in the CSC, consolidated schedules in the S/DCS/W/ series were working documents and
had no legal status for market access negotiations and Article XIX.  He asked whether negotiations
relating to the modification or withdrawal of specific commitments could be conducted based  on thisseries of working documents.  He recalled that document S/DCS/W/EEC contained no reference to
the procedures related to the consolidation of lists of MFN exemptions and he asked what procedure
the European Communities had followed to consolidate its MFN exemptions.  He shared other
Members'  concern that Members had not been duly informed of changes in the European
Communities' Schedule and felt it was necessary to take action that would redress this situation.
60. The representative of Korea echoed others' concerns on procedural matters regarding the
European Communities' consolidated schedule of specific commitments, as well as MFN exemptions.
He stated that the communication from the European Communities contained in S/DCS/W/EEC was
not in line with the procedures contained in document S/L/80 for a number of reasons.  First, the
document had been circulated in the document seri es S/DCS/W/ and not the necessary series, S/C/N/.
Second, the Secretariat had not circulated the communication as a secret document.  Third, the issue
had not been included as an agenda item for the subsequent meeting of the Council for Trade in
Services  in May 2003.  Korea could not accept the communication in question as a basis for further
bilateral negotiations nor could it take 22 April 2003 as the starting-point of the negotiation
timeframe.  He requested that the European Comm unities make a notification in accordance with the
proper procedures.  Turning to the question of extended application of MFN exemption measures he
said that the communication in question noted that the existing MFN exemptions were to apply toAustria, Finland and Sweden.  He said that the European Communities claimed that this was in
conformity with Article V:5 of the GATS;  however, his delegation's view was that MFN exemptions
were to be distinguished from commitments under Articles XVI, XVII and XVIII.  Therefore, Article
XXI:1(a) and the provisions and procedures cont ained in document S/L/80 could not be taken as
being applicable to this case.  In addition, the territorial scope of the MFN exemptions had beenenlarged, and he said that the procedures for the reduction of MFN exemption measures, as contained
S/C/W/203 could not be applied.  The extended application of MFN exemption measures did not
comply with Article V:4 of the GATS, which prohibited new or more discriminatory measures
through economic integration.  In principle, as was the case with new MFN exemption measures, the
procedures under Article IX:3 of the Marrakesh Agreement should be applied in this case inaccordance with paragraph 2 of the Annex on Article II Exemptions.  Korea reserved all its rights
related to this matter.
61. The representative of Uruguay recalled that his delegation had refered to the Communication
from the European Communities and Its Members States Pursuant to Article V of the GATS –
Accession of Austria, Finland and Sweden to the European Communities (S/DCS/W/EEC) dated 22April 2003 in document S/L/116.  He further recalled  that the communication stated that pursuant toS/C/M/67
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Article V:5 and Article XXI:1(b) of the GATS, the European Communities and Its Member States
notified the Council for Trade in Services of their intention to modify or withdraw the specific
commitments set out in the annex on page 3 of that communication.  His delegation's communication
stated clearly that the EC communication  was wi thout prejudice to the opinions of Uruguay on the
provisions and procedures applicable within the WTO framework to modifications and changes itintended to introduce to legal documents, as well as whether such documents were receivable from
the procedural point of view, as indicated by Uruguay in the first paragraph of its communication, and
he reserved Uruguay's right to adopt the corresponding measures.  Citing paragraph 1 of document
S/L/80, which established the procedures for Arti cle XXI of the GATS, he said that any "Member
intending to modify or withdraw a scheduled commitment in accordance with Article XXI (the
"modifying Member") shall transmit a notification to that effect, no later than three months before the
intended date of implementation of such modification or withdrawal, to the Secretariat which willdistribute the notification to all other Members in a secret document.  The intention by a Member to
modify or withdraw scheduled commitments shall be  included in the agenda of the next meeting of
the Council for Trade in Services."  In this regard, he sought to raise a few procedural questions that
were of systemic importance with respect to the procedures to be followed.  First, he asked why the
communication not been circulated following the normal circulation procedures for documents in theWTO.  Second, why was document given a symbol from the document series S/DCS/W/ ?  He noted
that the recently-adopted update to the annual report of 2002 of the Committee of Specific
Commitments clearly stipulated in paragraph 5 that the "draft consolidated and converted schedules
had been circulated in a one-off document series as S/DCS/W documents [and it was] the agreement
of Members that these draft schedules were not legal documents and were intended to serve astemplates to facilitate the presentation of initial o ffers in the negotiations."  Third, he asked why the
item had not been included in agenda of May formal meeting of the Council as stipulated clearly in
documents S/L/80.
62. Turning to points on substance, the representative of Uruguay agreed with other delegations
that two different issues were at play:  one which referred to Article XXI and the other to the list ofMFN exemptions.  Reiterating points outlined in do cument S/L/116 and pursuant to paragraph 2(a) of
Article XXI and paragraph 3 of the Procedures fo r the Implementation of Article XXI of the GATS
(S/L/80), Uruguay had identified itself as an affected  Member and stated its claim of interest.  In this
same document, Uruguay had recorded its objection to the replacement of the existing lists of
Article II exemptions (GATS/EL/31, GATS/EL/ 7, GATS/EL/33 and GATS/EL/82) with the
consolidated list of MFN exemptions containe d in document S/DCS/W/EEC.  Concretely, Uruguay
observed that no reference was made to a provision or procedure that related to a replacement whichappeared to introduce a change to the existing legal documents.  He believed that it would be useful to
consider examining the provisions and procedures applicable to such a replacement in the framework
of the WTO Agreements.  He recalled that the reports of the meetings of the CRTA relating to the
review of the enlargement of the European Communities – Accession of Austria, Finland and
Sweden, had recorded that several Members appeared  to have held different positions on this issue.
He said that he had before him the nine relevant reports, which included:  WT/REG3/M/8 dated 21
July 1998;  WT/REG3/M/7 dated 19 June 1 998;  WT/REG3/M/5 dated 12 August 1997;
WT/REG3/M/4 dated 3 June 1997;  WT/REG3/M/3 dated 23 April 1997;  WT/REG3/M/2 dated 23
April 1997;  WT/REG3/2/Add.3 dated 7 July 1997;  WT/REG3/2/Add.1 dated 23 April 1997;  and
WT/REG3/2/Add.4 dated 29 April 1998.
63. The representative of Mexico sought to flag  his country's interest on this point without
prejudice to its rights.  He said that commitments that had been contracted needed to be respected.
His delegation did not question the right of the European Communities to modify certain
commitments;  however, he stated that this needed to be done in strict compliance with the relevant
procedures and guidelines.  He shared the questions raised by delegations such as Japan, Uruguay,Korea, and Hong Kong, China and he looked forw ard to the responses provided by the European
Communities.  He further inquired as to the lega l value that the European Communities attached toS/C/M/67
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the procedures contained in S/L/80 and the guidelines contained in S/L/5 adopted by consensus by the
Council for Trade in Services.  More importantly, did the European Communities intend to comply
with the provisions of those procedures and guidelines?
64. The representative of India sought to voice his concern about a systemic issue of crucial
importance relating to the procedures for the withdrawal and modification of commitments by
Members.  India believed that the procedural requirements set out in document S/L/80 for the
withdrawal and modification of commitments did no t appear to have been met in the case under
discussion.  First, the document S/DCS/W/EEC had not  been issued formally in hard copy to WTO
Members but simply posted on the Members' web-site.  In this delegation's view, notification
obligations required the issuance of hard copies.  Second, for proper transparency, he said it would
have been proper to separate the intended notification under Article XXI from the notification under
Article V:5 as this would have drawn the specific attention to the former and enabled them to initiatesuitable action immediately upon receipt of notification under Article XXI.  In the present case, he
said that Members had been unaware of the notification until a much later date.  Third, he said that the
point regarding the consolidation of the MFN exemption lists seemed to be a separate issue for which
the legal basis had not been expressly cited by the European Communities.  Recalling that this was the
first instance in which a Member was seeking to withdraw or modify it commitments under
Article XXI and also of the application of the pr ocedures adopted under document S/L/80, he stated
his delegation's belief that Members would need to be extremely cautious that the precedent being
established was fair and balanced and that it did not leave any loopholes which could impair or nullify
the process in the future.  It was therefore necessary for Members to consider all aspects of the issue
in its entirety and establish a healthy and transparent precedent in a crucial area.  He felt that it wasfrom this perspective that the present case needed to be viewed.
65. The representative of the United States stated that, like other delegations, her delegation had
concerns regarding the propriety of the manner in which an intended notification had been made in
this case.  She noted that the 22 April 2003 communication from the European Communities and its
Member States pursuant to Article V of the GATS (S/DCS/W/EEC) indicated an intention towithdraw or modify its specific commitments and with respect to MFN exemptions.  Recalling that
the language of the document referred to GATS Arti cles V:5 and XXI:1(b), she said it was the view of
the United States that the intended modificatio n of specific commitments was subject to the
procedures set out in paragraphs 2 to 4 of Article XXI and the Procedures for the Implementation of
Article XXI (S/L/80) adopted by the Council as specified in Article XXI:5.  She further recalled that
paragraph 1 of the Procedures for the Modification of Schedules stated that no later than three months
prior to implementation, a Member intending to modify or withdraw a scheduled commitment was totransmit a notification to that effect to the Secretariat which would distribute the notification to all
other Members in a secret document.  In addition, th e intention of the Member to modify or withdraw
commitments was to be included in the agenda of  the next meeting of the Council for Trade in
Services.  It was her understanding that in this instance a secret document meant the document was
not public.  The United States understood and noted the questions raised by others about the filing anddistribution of the communication and was concerne d that the item had appeared on the agenda, as
required by paragraph 1 of the Article XXI procedures (S/L/80), but the present meeting even though
the document had been filed on 22 April 2003.  The United States believed that the communication
had been properly placed on the agenda at the present meeting and hoped that this was the first step
towards a positive resolution of the questions raised regarding the communication.  She noted that anumber of delegations of varying levels of development had expressed concerns about the process and
their ability to exercise their rights.  The United States also noted that like others, in the context of the
lack of clarity about the status of the request, its scope and applicable timelines, it had sent
preliminary responses to the EC communication noting claims of interest while reserving its rights
with respect to the ultimate resolution of legal and procedural issues.  Nonetheless, due to the lack ofclarity and the fact that Members had not had a full opportunity to discuss the communication in the
Council until the present meeting, the United States be lieved that in the interest of procedural fairnessS/C/M/67
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to all Members, the procedures and deadlines applicable under Article XXI procedures should be
prospective as of consideration of this agenda item at the present meeting.
66. Turning to the question of MFN exemption, the representative of the United States noted that
the communication included modifications to its GATS Article II MFN exemptions.  The United
States believed that pursuant to paragraph 2 of the GATS Annex on Article II Exemptions, any newexemptions applied for subsequent to the date of  the entry into force of the WTO Agreement was to
be dealt with under paragraph 3 of Article IX of that Agreement.  Her delegation believed that the
modification of the European Communities' MFN ex emptions to cover Austria, Finland and Sweden
amounted to new MFN exemptions that required a waiver under Article IX of the WTO Agreement.
As such, the United States believed that, separate from a GATS Articles V:5 and XXI:1(b)
notification, the European Communities had to request a waiver for its proposed modification to its
MFN exemptions.  The United States appreciated and respected the importance of the enlargement
process to the European Communities and its Member States and its desire to proceed with this
process in an expeditious fashion.  It was important for Members to bear this in mind.  At the same
time, she felt that since the Council was dealing with  the challenge of applying procedures which had
never been used before, it was in the interest of all Members to ensure that this was done so in a
manner that ensured procedural fairness and set a positive precedent and a healthy tone.
67. The representative of Switzerland took note of the previous statements and felt they had been
interesting and useful.  He shared the view expressed by some that there were gaps in the first use of
the procedures relating to Article XXI.  His delegation had a systemic concern on this issue and
believed that at the end of the exercise, the Council should achieve greater clarity in the procedures
both in the present case and in the future.  In general, Switzerland attached great importance topredictability and clarity in the rights and obligations contained in the GATS, which was the sole
guarantor of a legal framework for multilateral trad e.  He said that the same principle had to be
applied to the implementation of Article XXI.  He recalled that his delegation had notified the
European Communities of its desire to be involved  in the procedures involving Article XXI, and that
the three countries concerned were closely tied economically to Switzerland.  Given these closeeconomic links, Switzerland could be affected by a deterioration in the commitments by those
Members.  He said that his delegation was analys ing the modifications in the commitments of the
three Members concerned in order to assess their trade impact.
68. The representative of Bolivia stated that her delegation did not consider the document under
discussion to be a notification under Articles V:5 and XXI:1(b), nor under the guidelines and
procedures laid out for that purpose.  For this reason, Bolivia did not think that it was timely to submit
a notification of interest;  however, it reserved the right to do so once the steps to be followed hadbeen clarified by the Council for Trade in Services.  She was concerned by the precedent of legal
uncertainty that could arise from the case under discussion, especially because it could have an impact
on bound commitments in existing schedules.
69. The representative of Israel, noting that many substantive comments had been made with
respect to the European Communities communication contained in document S/DCS/W/EEC,
expressed her delegation's interest of a systemic nature, particularly in terms of transparency and
procedural certainty.  She said that her delegation was studying the implications that the
communication from the European Communities could have on her country and reserved the right to
revert to it.  She shared many of the concerns and questions expressed by previous delegations,
particularly those relating to the fact that modifications or withdrawal of commitments should be dealtwith so as to ensure legal certainty.
70. The representative of Australia considered that there were valid grounds for a range of
concerns with respect to the technicalities invo lved in European Communities' notification.  These
concerns related to both the consolidated schedule of specific commitments and the consolidated listS/C/M/67
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of MFN exemptions.  He echoed the shortcomings with the notification process and the breaches in
procedural requirements outlined by other delegations.  He shared concerns such as whether the
notification was made under Article XXI or Article V:5 and the implications for the notification
procedure, such as the failure to place the notification on the agenda of the May meeting of the
Council, the posting of the document only on the Members' web-site and not providing a hard copy,and the absence of a versions translated into the WTO working languages.  Like others, his delegation
was also concerned that no legal provisions or applicable procedures had been cited in the
communication for the replacement of existing MFN exemptions with the consolidated list.  Given the
legal uncertainties surrounding the MFN issue, and as noted in Australia's claim of interest (S/L/120),
Australia wished to reserve its rights under all WTO provisions and procedures relevant to this
process.  More generally, he said that the systemic issue of establishing transparent, predictable and
proper procedures for the modification of GATS commitments was of paramount importance in termsof precedent, particularly since the European Communities would be repeating this notification
process in the future to incorporate the accession of new Members.  He said that the European
Communities' approach could set a precedence for the modification or withdrawal of specific
commitments under Article XXI for other emerging customs unions, and therefore it was important
that the Council for Trade in Services clarify the procedures involved with the notification.
71. The representative of New Zealand recalled that her delegation had submitted a
communication in document S/L/121 and she noted that her delegation had a systemic interest in the
issue.  As this was the first time that an adjust ment to specific commitments was being examined, it
was important that an appropriate precedent be set.  Her delegation was concerned with the extent to
which the process that had been followed met the requirements of formal notification and wasreflecting further on this point.  She said that certain practical consequences had flowed from the
nature of the document, which was designed to facilitate the request-offer process, such as the
distribution of a hard copy to all Members, and the absence of translation.  She said that these
practical consequences had practical impacts on the ability of Members to give consideration to the
communication from the European Communities.  She said that the format set out in the Annex ofdocument S/L/5 appeared to be a more appropriate format for the type of notification required in this
context.  She was also concerned that the matter had not been placed on the last agenda of the Council
as suggested in document S/L/80.  Turning to the MFN issue, she noted that this was a separate issue
from the specific commitments issue and had a separate process, even though it arose from same
economic integration agreement.  In her delegation's view it seemed clear that the proposed MFN
adjustments were substantive in that the three new Members of the European Union would seek to
take advantage of MFN exemptions from which, prior to their accession, they would not have
benefitted.  New Zealand felt this was a substantive change and should be dealt with in accordance
with the Annex on Article II Exemptions.  Given the practical difficulties which had arisen from the
process followed, she felt that it was important th at Members be given additional time to assess the
matter.  She said that her delegation would welcome comments from the European Communities and
the Secretariat on the nature of the process which had been followed.
72. The representative of Canada said he had taken careful note the European Communities'
explanations as well as the comments by Members and would consider them.  Canada saw this as an
important issue and had notified its claim of interest through document S/L/117 dated 10 June 2003.
He said that given the potential importance of the systemic implications of the issue, his delegation
would support further discussion of the procedures in the Council for Trade in Services.
73. The representative of Thailand sought to express support for many of the points that had been
raised, and looked forward to hearing the replies to  questions posed by Korea, China, and Hong Kong,
China.  She thought that the level of participation was testimony that the issue at play was systemic,
and noted that many Members who could only afford to take the floor when issues were of particular
importance had done so.  She sought further clarification and a solution as soon as possible, inS/C/M/67
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particular given that the European Communities would face enlargement again shortly and it would be
necessary to have clear procedures.
74. The representative of the Philippines understood and appreciated the underlying reasons for
the expansion of the European Communities and hoped that his comments would be taken in a
positive light, since they were intended to help the Membership understand the procedure forundertaking the enlargement, particularly given that the European Union would be enlarging again in
the foreseeable future.  He said that if the procedures were found to be inadequate, then the Council
could consider how these could be improved.  If they were found to be adequate, then the Member
concerned could take the appropriate steps to rectify the situation and set a positive precedent.  He
associated his delegation with earlier statements and sought to emphasise points of particular interest
to his delegation.  He said that the European Communities  in its communication had intended to
notify two types of modifications:  those to schedules of specific commitments and those in theconsolidated list of MFN exemptions.  He noted that the communication refered to the replacement of
specific commitments, which he took to imply the withdrawal and modification of specific
commitments.  However, he stated that the replacements for the list of MFN exemptions clearly
contained new MFN exemptions.  He felt that a determination on this point rested with the Members
and was not for the Member concerned to unilaterally assert.  Focussing on the modification ofspecific commitments, he said that the European Communities had cited as a legal basis Articles V:5
and XXI:1(b).  He believed that the application of Article XXI:1(b) called for the corresponding
application of the relevant procedures drawn up in accordance with Article XXI:5 and contained in
S/L/80.  He highlighted one relevant provision of those procedures, namely that the Member "shall
transmit a notification to that effect".  He said th at the notification 'to that effect' referred to the
modification of a scheduled commitment in a legal document, and as such, it could only be concluded
that the notification 'to that effect' necessarily required that the notification occur in a legally binding
manner through legal documents and not through non-legally binding documents, or through web-site
postings, or through the consolidated schedule process.  He associated himself with other questions
and comments raised by other delegations previously.
75. Turning to the questions relating to MFN exemptio n lists, it appeared to the representative of
the Philippines that the contention that the modification of MFN exemption lists were susceptible to
an Article V:5 or XXI process was erroneous since the modification referred to in Article V:5 was in
relation to a specific commitment.  He recalled that Part III of the GATS listed the precise elements of
what constituted specific commitments, and this did not include MFN exemptions.  Furthermore, he
said that the commitments were set out in schedu les, and Article XX set out what was contemplated
as part of schedules, and again did not include MFN exemptions.  He pointed out that the Annex onArticle II Exemptions provided for a separate list of MFN exemptions to be annexed to the treaty copy
of the WTO Agreement.   He argued that had it been the intention of the drafters of the GATS to
include these exemptions as part of Members' schedu les, they would have explicitly stated that MFN
exemptions formed part of Members' schedules or were annexed thereto, and would not have
provided, in the Annex on Article II Exemptions, for the lists to be annexed to the treaty copy of theWTO Agreements.  His conclusion was that MFN exemptions did not form an integral part of
Members' schedules and could not be modified or withdrawn simply through an Article V:5
notification.  For the same reasons, he stated that Article XXI did not provide the adequate legal basis
for changes to MFN exemption lists.  Therefore, in his view the logical legal procedure to be applied
was that contained in paragraph 2 of the Annex on MFN Exemptions which provided that "any newexemption […] shall be dealt with under paragraph 3 of Article IX" of the Marrakesh Agreement
Establishing the WTO.  He considered that the modification of withdrawal of specific commitments
which formed the substance of the EC communication constituted new MFN exemptions which were
to be dealt with through the waiver process laid down in the provision to which he had just referred.
He looked forward to the European Communities revisiting its position regarding the appropriateprocess for notifying a MFN modification as indicated in its submission and earlier statement.S/C/M/67
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76. The representative of Brazil said that his delegation shared the points of view and concerns
raised by the delegations of Argentina, Uruguay, Paraguay, and Hong Kong, China regarding the
procedural and substantive issues raised by the EC notification.  He sought to raise two further
questions on the procedures under Article XXI in order to clarify which procedures were the correct
ones.  First, he enquired as to how this item came to be included in the agenda of the present meetingas in the interim period since the last formal meeting circumstances had not changed.  Second, on a
point related to the symbol of the document, he wondered whether the fact that the item appeared on
the current agenda meant that the communication was considered a proper notification.  He noted that
the document symbols of the claims of interest of the affected Members had been circulated in the
S/L/ series and that the agenda contained a reference to the European Communities draft consolidated
schedule of the European Communities.  He sought to ascertain if this was sufficient to fulfil the
notification requirement.
77. The representative of Indonesia expressed support for the views outlined by other delegations,
including Argentina, Chile, Colombia, Philippines and Hong Kong, China regarding their concerns
about the procedures that the European Communities should have followed in the process of
modifying its commitments as well as on the substantive issues on the proposed withdrawal or
modification of specific commitments and MFN exemptions.  He supported the proposal to includethis item the agenda of the next Council meeting if a solution could not be found at the present
meeting.
78. The representative of Ecuador considered that this issue was of systemic interest and
expressed support for the comments made by Argentina, Colombia, the Philippines and Thailand.  Her
delegation reserved right to revert to this issue once the question regarding the modification ofschedules had been clarified.  She further supported the insertion of this item on the agenda of the
next meeting.
79. The representative of Malaysia said it was clear that the discussion had raised systemic and
legal issues which he agreed Members needed to clarify.  He echoed comments made by the
representative of the Philippines that the Council should explore if there were any weaknesses and totake action if necessary.  Since the question of precedent was at play he felt that the issue needed to be
clarified.  He stated that a proper and positive precedent was important, as a negative example would
weaken the system the Council had established.  He supported pursuing discussion of this item at the
next meeting.
80. A representative of the Secretariat said that a good number of the questions that had been
raised had been answered in the course of the discussion.  He said he would confine his comments to
elements that he felt could be useful.  Turning to the points raised regarding procedure and in terms ofthe form in which the document had been circulated, he said that what made the present case peculiar
was that it combined two processes:  the consolidation of schedules for the submission of initial offers
and the invocation of Article XXI.  The document therefore had a dual character.  He said that the
combination had implications for the manner in which the document had been circulated.  He recalled
that when the process of the consolidation of schedules of specific commitments had been agreed to,certain parameters in terms of the circulation of the document had also been agreed.  For instance, it
had been agreed that the documents would not be circulated in hard copy because of their voluminous
nature and the fact that some 130 schedules of specific commitments were involved.  As well, it was
agreed that the documents would not be translated and each schedule would be produced in
consolidated format in its original language.  These were limitations on the process.  In this regard, hesaid that the combination of the two processe s had led to the document having some peculiar
characteristics.  Responding to the question as to how this item had come to be included in the
agenda, he recalled that the question had been raised at the last formal meeting of the Special Session
of the Council in relation to the EC consolidated schedule as the basis on which the conditional offer
had been submitted, and it had been agreed at that time that the item would appear on the agenda ofS/C/M/67
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the present meeting.  Responding to the question from Hong Kong, China as to why this item had not
appeared on the agenda of the 14 May meeting of the Council, he stated that in accordance with
procedures contained in S/L80 the item should have appeared on the agenda.  He admitted that there
might have been an omission on the part of the Secretariat to draw the attention of the delegation of
the European Communities to the fact that the item should have been included in the agenda, and heapologised for that omission.  He asked Members to bear in mind that this was the first time that this
procedure had been put to use.
81.  Responding to the question on the applicability of procedures adopted by the Council and
contained in S/L/80, the representative of the Secretariat recalled that the procedures pertained to the
implementation of Article XXI.  He recalled that GATS Article XXI governed the modification or
withdrawals of schedules of Members.  In the GATS, he said that five "gateways" to this Article
existed, including Article V:5.  For reference, he recalled that the five gateways were Articles V:5,VIII:4, X:2, XXIII:3 and XXI.  Putting aside the instance where Article XXI was invoked directly, he
said that some of the provisions of the other four gateways that lead to Article XXI provided a
qualification.  For example, in the case of safeguards, the provision discounted the three year delay
required in Article XXI:1.  Paragraph V:5 he noted referred to paragraphs 2, 3 and 4 of Article XXI
and left aside paragraph 5 of Article XXI (because it was not relevant in this context), and paragraph1.  He said that the absence of a reference to Article XXI:1 had raised a question about the
applicability of the totality of Article XXI.  He noted that paragraph 1 of Article XXI contained
elements (a) and (b).  The first was the requirement of the passage of three years from the date of
entry into force of the commitment before a Member was allowed to notify its intention to modify,
and the second, which required Members to notify at least three months in advance the intention ofmodify.  He said that Article V:5 contained the same requirements contained in paragraph 1(b) of
Article XXI, and thus it was not surprising that the European Communities had made this same
reference.  He said that the only element excluded from Article XXI:1 in a process undertaken
pursuant to Article V:5 was the three-year delay requ irement.  This could lead to the conclusion that
Article XXI in its totality was applicable to the si tuation at hand, as were the procedures contained in
S/L/80.  He sought to clarify that his was a re ading based on the provisions as they stood and he
hoped that they could provide some explanation to some of the points raised.
82. The representative of the European Communities, responding to questions raised, recalled that
his delegation had provided some explanations for the procedures it had followed at the last formal
meeting of the Special Session.  He said that he would try to address the questions and concerns that
had been expressed.  Starting with procedural issues, he regretted that he had heard implied
accusations that his delegation had not respected its obligations or not followed the procedures, thatthe document did not constitute a notification or was without legal value, and he begged to disagree
entirely.  He said that it was not for his delegation to discuss whether the notification had been
circulated in the correct document series, whether it was submitted in one or three languages, or
whether it had been included in the agenda or posted on the website.  He said that this issue had been
explained at the Special Session and at the present meeting by the Secretariat.  He reaffirmed thatthese issues had no bearing on the regularity or propriety of the EC notification and could not affect
the rights of the European Communities.  He said that these issues concerned the distribution of the
EC notification.  He recalled that the European Communities had notified the Chairman of the
Council for Trade in Services by letter on the 9 April with a copy to Secretariat.  He said that it would
not be appropriate for the Communities to comment on procedural issues which had been explainedby the Secretariat.  He could see how some confusion could have arisen due to the informal exercise
of consolidation for the purposes of assisting Members with the preparation of initial offers and the
EC notification.  However, he said that the notifi cation was clear in terms of the provisions it was
invoking, the procedures involved and the European Communities' intention.  He thought this
confusion regrettable;  however, he reiterated that his delegation's rights could not be called intoquestion on this basis.S/C/M/67
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83. Turning to some of the other questions posed such as whether Article V:5 or Article XXI had
been invoked, the representative of the European Communities stated that his delegation had invoked
Article V:5 and he echoed the comments of the Secretariat that Article V:5 was an enabling clause to
Article XXI.  He said such provisions were commonplace and found in the GATS and other
Agreements of the WTO.  On the question as to whether his delegation considered that Article XXIapplied, he stated that his delegation believed that Article XXI did apply and pointed out that
reference was made to Article XXI in Article V.  He responded in the affirmative that the provision of
document S/L/80 applied, since even though paragraph 5 of Article V did not refer to paragraph 5 of
Article XXI, the later simply stated that procedures should be drawn up to implement the whole of
Article XXI.  He said that since the Communities were evoking Article V:5 which by reference
mentioned Article XXI, it was normal that S/L/80 applied.  On the question as to which body should
be notified, he replied that it was the body which the European Communities had notified, namely theCouncil for Trade in Services.  On questions regarding MFN exemptions, he reiterated that the
notification had notified the intention to consolidate the lists of MFN exemptions and he agreed with
those delegations that had stated that these should not be confused with schedules.  He explained that
his delegation had never confused the two, as witnessed by the reference in the notification to Article
V:5 and by reference Article XXI in as far as commitments were concerned.  Regarding MFNexemptions, he reiterated his delegation's view th at Article V:5 entitled the Community to enlarge
existing MFN exemptions, which were not new exemptions.  He agreed with the statements made to
the effect that a concensus on this point had not been  reached in the CRTA;  however, he said this fact
did not imply that there was no legal basis for the procedures.  He considered this to be a technical
issue and he indicated that in due time, his delegation would proceed with the proper procedures thatthe European Communities were required to follow in this regard.  He reiterated that the proper
procedures would be followed in due time and that his delegation was not doing so in the context of
the under discussion communication.  He said that when the Communities launched, in its view, the
proper procedures Members would have the opportun ity to express their views.  The communication
did not indicate that it was launching any specific procedures regarding MFN, and thus it waspremature to debate the issue.  He explained that the European Communities was launching the proper
procedures as far as specific commitments were concerned.
84. With respect to remarks referring to tran sparency, the representative of the European
Communities fully agreed with these and said that th e procedures, called to use for the first time, had
been followed in good faith.  He hoped that Memb ers in context of the current negotiating round,
when seeking to change a commitment, would follow  the Communities' example.  This did not always
appear to be the case in some of the offers.  Re ferring to suggestions that the European Communities
should re-submit or give additional time, he reiterated that his delegation did not intend to put in
jeopardy its rights and had followed the procedures.  He indicated that his delegation had received 16
claims of interest, that it was prepared to discuss with Members, but that it was not prepared to re-
submit because it had not proceeded incorrectly.  On the contrary, he said that if Members felt that the
current procedures were insufficiently clear and required further discussion to clarify theirimplementation,  his delegation would remain open to this suggestion.  However, he reiterated that
this discussion should not call into question the re gularity of the European Communities' notification.
He reiterated that his delegation had notified by letter the correct body with a clear indication of its
intention and he hoped that the discussion that day would fully clarify the issues.
85. The Chair noted that comments had been made in a spirit of open dialogue, and that a number
of delegations had indicated that they would like to have to opportunity to continue discussion of this
issue.  He sought the Members' views in this regard.
86. The representative of the Philippines sought an additional clarification with regard to the
statement by the delegation of the European Communities pertaining to MFN exemptions.  He said
that he had understood that the Communities had not invoked or launched the procedure for notifyingthe Council regarding MFN exemptions, and that what it notified in S/DCS/W/EEC was an intentionS/C/M/67
Page 22
to modify or withdraw the commitments set out in the list attached to the document pursuant to
Article V:5 and in accordance with Article XXI:1( b).  He asked for an indication as to the plans
envisaged, and for the delegation of the European Communities to clarify if he had misunderstood its
earlier explanation.
87. The representative of the European Communities confirmed that the impression of the
representative of the Philippines was correct and th at, following the last enlargement, the European
Communities was presenting the consolidated schedule of specific commitments and the consolidated
list of MFN exemptions.  With respect to specific commitments he confirmed that his delegation had
launched the procedure for the modification and withdrawal of certain commitments, had invoked the
basis upon which it was doing so, indicated the relevant dates, and attached the list of those
commitments which the European Communities intended to modify or withdraw.  In terms of MFN,
he said that the European Communities would launch the procedures his delegation found to be thecorrect ones in due time.  He said that the question would be raised at that time and his delegation
would discuss any possible divergent views with rega rd to the process and the substance.  However,
he felt that it was premature to discuss the issue of the MFN, and assured that the European
Communities would be prepared to revert to this question once the it had launched the procedure,
which it had not done.  With respect to the suggestion made by the Chair, his delegation saw nodifficulty with discussing at the next meeting of the Council the possible need to change the
procedures on Article V:5 or contained in S/L/80.  Ho wever, he failed to see the purpose of discussing
the EC consolidation, as his delegation had followed the procedures, had provided explanations, and
he did not see what more remained to be discussed.
88. The representative of the United States thanked the delegation of the European Communities
for its clarification concerning the MFN exemp tions stated in document S/DCS/W/EEC dated 23
April as being part of the consolidation exercise.  The document had indicated that the attached
documents would replace the previous Schedules of specific commitments and Lists of MFN
Exemptions as from 30 April 2004.  She said that the question of the legal status of the document
remained outstanding from the discussion and her delegation was not clear about the statement in thecommunication that the MFN exemptions would be replaced as from 30 April 2004.  She had
understood from the intervention of European Communities that it had not launched the procedure
concerning the MFN exemptions and she enquired as to what the European Communities considered
to be the procedure.  Echoing earlier interventions, she said that the United States believed that the
appropriate procedure was contained in the GATS Annex on Article II.  She requested an explanation,
and in particular confirmation that the European Communities had not launched any procedure on the
treatment of the MFN exemptions listed in the docu ment in question and in the uncertain legal state it
stood.  She said that the United States was willing to revert back to this agenda item, but she said that
the purpose of this reversion could not be to clarify S/L/80, as it was her delegation's position that the
procedures did not pose a problem, but rather their implementation in the context of their first use.
Underlining that the purpose of the comments made had not been to place blame, it appeared to her
that those Members  who were the 'victims' of the process would need to remain in that state and
commence a discussion on revising procedures for which it remained unclear as to how they had been
utilised in some instances.  Her delegation was w illing to move forward, but she was not sure that
other delegations would bear the brunt.  She thought that there could be a conciliatory manner to
proceed and recognise concerns without placing blame.  She recalled that her delegation's
communication document S/L/113, specifically stipulated that "[w]ithout prejudice to the UnitedStates position as to whether this communication was properly notified in compliance with GATS
Article XXI and the Procedures for the Implementa tion of Article XXI of the GATS, S/L/80,  the
United States requests that the European Communities enter into negotiations with a view to reaching
an agreement on any necessary compensatory adjustme nt […]".  She reiterated that the United States
communication was without prejudice her delegation's position on the issue that had been discussedby the Council.S/C/M/67
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89. The representative of the Philippines thanked the delegation of the European Communities for
the explanation it had given that the MFN exemption procedure was not contemplated as part of the
notification.  From his point of view, this did not remove his delegation's confusion as to why it had
been included in the notification dealing exclusively with the replacement, modification or withdrawal
of the schedules of specific commitments.  He hazarded to guess that the reference to MFNexemptions had been included for presentational purposes, and that since the European Communities
was offering to replace a schedule, it had judged it appropriate to include the replacement of the MFN
exemption lists.  He recalled that in his interventions and in his delegation's claim of interest was
articulated his delegation's position that, as far as the modification of the MFN exemption lists were
concerned, it appeared that the appropriate procedures were contained in paragraph 2 of the Annex on
Article II (MFN) Exemptions.  He had understood from the intervention of the representative of the
European Communities that the representative had agreed that there was a distinction to be drawnbetween what was contained in schedules as opposed to MFN exemptions lists.  To his mind, this
distinction led to the conclusion that the appropriate procedures were laid out in the Annex on Article
II Exemptions.  Without prejudice to his delegation's position with respect to the validity of the
notification, he observed that from a practical standpoint the situation remained that the modification
of specific commitments were contained in a legally non-binding form of documentation.  Given thatall Members had agreed that document S/L/80 contained the applicable procedures, he enquired as to
whether there would be a document available to Members for them to verify how the replacements
related to the relevant existing schedules.  Remembering previous situations, he said that there had
been instances when voluminous documents had been made available for Members to inspect.  In a
reserved room this would not address all of the problems raised, but he thought it could be helpful topoint this situation out.
90. A representative of the Secretariat, referring to the point made by the representative of the
Philippines, said that circulation of the document in question to all Members in hard copy would not
create a difficulty for the Secretariat but that the Secretariat was in Members' hands on this issue.
Seeking to clarify his comment about ways to rectify a situation in which a document did not appearin a legal form, the representative of the Philippines said he was mindful that the Secretariat would
have no difficulty to circulate the document.  His intention was to indicate that in cases where hardcopy circulation did pose a difficulty, as an alternative, he could recall instances in which several
copies of the document in all the working languages had been made available to delegations for the
purposes of inspection.
91. The representative of Uruguay recalled that his main objective was to have properly applied
the procedures that had agreed upon by consensus in 1999 and were contained in document S/L/80.
His delegation's interest lay not in examining earlier events, but rather in determining how to proceed
from the current point forward.  Speaking from an obje ctive point of view, he said that some errors in
procedure had been recognised.  He recalled the earlier statement by the delegation of the European
Communities that any problem in the procedure was not related to the European Communities and he
respected that position as it was understandable from the point of view of that delegation.  He soughtto be firm in stating that it should not been seen as a problem of other Members.  In other words, if an
error in procedure had occurred, it did not seem acceptable for these delegations to bear the
responsibility for a situation that should not have occurred.  He stated that at the end of the day, this
situation would also affect the rights of other Members.  According to his calculation, some
24 delegations had taken the floor under this item and 23 delegations had expressed concern thatprocedures had not been followed.  This was an objective fact and the statements made should be
taken into account.   Clearly, there had been a problem.  He reiterated an earlier question as to why the
document had been attributed a symbol in the S/DCS/W/ series, since all Members had agreed by
consensus that documents with this code would have no legal value and would be solely a document
to prepare Article XIX type instruments.  He reca lled the fact that documents in this series had no
legal value, as had been agreed by the Committee on Specific Commitments and in the Council earlier
in the week.  He said it remained unclear as to why the document had been distributed under theS/C/M/67
Page 24
symbol it carried.  He repeated that the problem remained that the document carried a symbol that all
Members had agreed by consensus had no legal value;  however, according to its contents it related to
Articles V:5 and XXI.  He felt if Members took a positive and constructive approach, it could be
helpful in moving forward.  He echoed suggesti ons that the process could recommence without
prejudice to who had acted in any particular way.  He recalled that the vast majority of Members hadidentified errors and expressed the view that pr ocedures should be followed.  He hoped that this
discussion could be promoted in order to find a satisfactory outcome.
92. The representative of Argentina, referring to th e comment by the Secretariat, believed that the
problem had arisen from the combination of two different processes:  on the one hand the
consolidation of commitments without legal value and on the other had a procedure under Article
XXI, which triggered changes that had an effect on the rights and obligations of Members.  In the
context of this two channel procedure, he wondered whether the symbol lent itself to the consolidationrather than to the notification, since the symbol appearing on the document had no legal value.  With
respect to the manner in which the documentation had been circulated, he was surprised that the
format that had been used was not one that reflected the obligatory procedure.   He said that some 120
schedules had been bound and only one was proposed to be modified.  He felt that part of the solution
could lie in drawing a distinctio n between the two procedures and the manner in which they should be
dealt with.  In order to study the contents of an initial offer, he said that it was necessary to have a
consolidated schedule as it currently stood;  a different type of schedule was required for Article XXI
procedures.    He said that two processes had been combined, and as a result the situation was that
there was either a consolidated list and no notification or a notification and no draft consolidated
schedule.  If there was a notification, then it should be recorded by the Central registry ofnotifications.  He affirmed that it was not his delegation's intention to impair the rights of the
European Communities and indeed many delegations had stated that this Member was entitled to
make the modifications it felt was necessary under Article XXI.  However, other delegations had
indicated that they felt that their rights should be not affected in this context and he was concerned
that the entire procedures had not been respected fully.  He retrained from responding to the EuropeanCommunities' view that any errors were not attributable to it;  however, he felt that part of the solution
remained in its hands.  Many of the delegations that had spoken had said that they had not been able
to properly assess whether their rights had been affected because of a mistake.  He said that the
European Communities had underlined its good will, and he thought that it could give a period of time
starting that day in which Members could indicate that they could be affected.  Echoing a comment
made by the delegation of the United States, he said that he was not convinced that question regarding
S/L/80 pertained as much to its contents as to how they had been applied.  He felt that this was thetopic that required clarification.
93. The representative of Peru agreed that the objective was not to place blame, but to solve a
practical problem, since some delegations were concerned that the procedure had not been followed.
He felt the objective should be to solve the probl em in a creative manner and with flexibility being
shown on all sides.  He believed that pursuing the discussion at next meeting on how to resolve theproblem would not serve this objective.  He proposed that consultations begin immediately so as to
find an ad hoc  solution that would rapidly resolve the problem and allow delegations to identify
whether the modifications affected their interests and balance of rights and obligations taken on in the
previous round.  In addition, the solution could fix a reasonable time period, for instance an additional
45 days or mutually agreed period, so that delegations who had not done so would have anopportunity to study a consolidated document with legal value and could express interest their
compensation.
94. The representative of Hong Kong, China noted from the explanations given that there
appeared to be no disagreement that procedures contained in document S/L/80 were applicable in
their totality to the modification or withdrawal of commitments notwithstanding that such a processwas initiated through the route of Article V:5.  If this was the case, then it appeared logical that theS/C/M/67
Page 25
other four pathways mentioned by the Secretariat for the modification or withdrawal of commitments
would also be subject to the same procedure in their totality.  Second, he had noted from the
explanations given by the European Communities that it had not yet initiated any procedures
regarding the consolidated list of MFN exemptions and that they would do so in due time.  He shared
the curiosity expressed by other delegations regarding the reason why the European Communities hadmade reference to the replacement of the existing MFN exemption list by the consolidated on in the
communication under discussion.  Turning to a more practical issue and notwithstanding his
delegation's position on the legal status or propriety of the notification, he said that the fact remained
that the communication had not been distributed in hard copy or in the official working languages.
He had taken note that this was the case because the communication had been distributed under the
document series S/DCS/W and that it had been issued, as decided upon by Members, without
distribution in hard copy or translation into ot her official languages.  He noted, however, that
Members had agreed to these parameters on the clear understanding that the documents issued under
that series were not supposed to be legal documents.  If his understanding was correct, the document
had taken on the dual characteristic of a draft consolidated schedule and Article XXI procedures.  He
presumed that a notification pursuant to Article XXI  would need to be contained in a document with
legal value.  If this was the case, it had led to confusion and it remained a practical problem fordelegations in capital who were awaiting the French or Spanish versions of the document in order to
determine whether they had been affected by the ini tiation of these procedures.  He felt that the rights
of these Members should be also considered.  His delegation was willing to further discuss procedural
issues that had been raised;  however, he felt that  this practical issue needed to be addressed with
urgency.  He wondered whether there were ways to address the problem from a practical perspective,as had been suggested by the delegations of Uruguay and Argentina.  Recalling that the next formal
meeting would be held in three months, he said th at he was not sure how the running of time would
affect the relevant procedures and thus he felt that a clearer understanding needed to be found at the
present meeting.  Although he realised the C ouncil was sitting in a mode not appropriate for
brainstorming, he wondered whether there could be a way to separate the notification from theconsolidated schedule in order to ensure that the notification element was handled through a
document which was issued in the usual series, distributed in hard copy and translated into official
languages.  On whether to continue discussions, he reiterated that his aim was to clarify the applicable
procedures.  He agreed with the United States, Uruguay and Peru that the discussion should revolve
around the implementation of those procedures, and he felt that the discussion had not allowed him to
draw a definitive conclusion in this regard, neither for the case before him nor for future cases.  He
said the discussion had left outstanding procedural and systemic issues which had not beensatisfactorily resolved with respect to the impl ementation of Article XXI procedures and he looked
forward to continued discussion on this point, in order to set a positive precedent.
95. The representative of Thailand expressed her support for the suggestion by Peru.  She
explained that one reason why Thailand had not entered a claim of interest arose from the confusion
surrounding this process and the lack of time to assess whether the communication from the EuropeanCommunities could have an adverse impact on her country.  She stated that she had received
instructions one week subsequent to the supposed deadline, and had been told, in response to her
enquiries, that her delegation could no longer enter a claim.  In this regard, she stated that her
delegation's rights had been somewhat infringed.  She felt that it was necessary to have clear
procedures in order to allow for smaller delegations to have ample time to assess the potential impactof undertakings by other Members.
96. The representative of Singapore stated that the depth of the discussion had indicated that there
were substantive procedural and notification gaps in the European Communities consolidated draft
schedule.  He also believed that systemic issues were at play and that Members needed to find a
practical way forward.S/C/M/67
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97. The representative of Chile expressed his support for the comments made by Argentina,
Uruguay and Hong Kong, China.  For his delegation, this was a difficult and systemic issue.  He noted
the interest expressed by a large number of delegations to achieve greater clarity on the
implementation of the procedures.  He believed a problem had arisen from the combination of two
different processes, and that a practical solution needed to be found, for instance, the separation of thetwo processes that would give one process a legal symbol that would be translated.  This would give
all Members the opportunity to study the document and determine whether they were affected.  He
was prepared to further discuss this issue at the next meeting.
98. The representative of the Philippines, recalled the need to safeguard Members' rights in the
process and to find a practical solution that would allow for claims of interest and he could see a legal
reason to favour this outcome.  Citing paragraph 3 of document S/L/80 he said that "[s]uch claims of
interest must be made no later than 45 days after the date of circulation by the Secretariat of thenotification referred to in paragraph 1 above", which itself indicated that the Secretariat "will
distribute the notification to all other Members in a secret document".  He said that the document had
not been circulated, and hence the circulation of the notification by the Secretariat had not occurred.
He underlined that his comments did not affect the European Communities' view on the validity of its
notification, but rather touched upon the act of circulation by the Secretariat.  Without prejudice to hisdelegation's position on the validity of the European Communities notification, he said that the fact
remained that the circulation had not occurred as was required by the procedures in S/L/80, which the
representative of the European Communities had stated were relevant..  In this regard, the practical
and legally consistent approach would be to have the circulation occur in the manner prescribed in
paragraph 1 of document S/L/80 and allow Members to register their claims in the 45 days followingthat circulation.
99. The representative of Brazil said that many important and relevant explanations had been
given;  however, a concrete solution to the problem had not emerged.  In his view, there were three
questions outstanding.  The first pertained to document S/L/80 and its application to the case being
discussed.  The second related to determining how this particular situation of the notification by theEuropean Communities had come about.  The third and most relevant was to agree on how to move
forward from this point.  In this regard, it appe ared that there was consensus that document S/L/80
applied to the situation under discussion.  The problem was that this document established very
specific timeframes regarding the steps to be taken by Members.  In this regard, he said that divergent
views remained as to whether the initial step for th e first timeframe had been taken.  The view of the
delegation of the European Communities was that it had taken the appropriate steps and therefore the
period in which Members could indicate that they were affected had elapsed.  The view of otherdelegations was that, because of various procedural issues, the timeframe had not begun.  For
example, one reason for this view was that a formal notification was contained in a non-legal
document, which raised the question as to how it could initiate a formal process and its related
timeframes.  He stated that it was important to solve this question at the present meeting since, if the
period in which Members could register their claims of interest had elapsed, there was a second periodof 90 days in which negotiations on compensation were to occur.  He pointed out that under this
scenario, this second period would elapse in early Se ptember, and hence when the Council next met, it
could be in the third phase of the process, namely arbitration.  He reiterated that the crux of the
discussion was to determine whether the first period of the timeframe had commenced or not, since
Members' actions would hinge on this determination.  The current practical situation needed to bedistinguished from a possible more general discussion on document S/L/80.
100. The representative of Chinese Taipei indicated that her delegation had reservations about the
process underway.  She sought an explanation from the Secretariat as to the procedures that flowed
from the EC notification and Article V:5, which made reference to paragraphs 2, 3 and 4 of Article
XXI.  She said that the uncertainty and confusion surrounding the process explained why herdelegation had not submitted a claim of interest.  As she had explained in her earlier intervention,S/C/M/67
Page 27
when Chinese Taipei had sought to make a technical rectification to its own Schedule in May 2002, it
had followed the relevant procedures contained, inter alia , in S/L/80.  She stated that earlier in the
current process her capital had drawn attention to the 45 day window at play, and she had indicated to
them that the 45 day period had elapsed, even though  no hard copy of the document had been received
given the particular nature of the document.  She said the process had led to confusion and expressedconcern over the situation becoming a precedent for fu ture cases.  Second, she said that she shared the
caution expressed by the United States regarding the EC statement that the procedure pertaining to
MFN exemptions had not been launched since, in her view, these exemptions should be dealt with
through Article IX:3 of the WTO Agreement.  Confusion arose, however, because the initial offer of
the EC had been based on the communication.  She expressed concern for the practical uncertainty
and systemic issues that were at play and agreed that the central preoccupation was ensuring that the
appropriate procedures were properly applied.
101. The Chair said that the problems identified were  of vital importance, and he recalled that the
Council had the responsibility to monitor the application of the Agreement in its spirit and letter.  He
said that Members should bear in mind that all Members needed to be treated in a fair and equitable
manner.  He agreed that time was an important factor in the equation, and suggested that an informal
meeting be arranged in the coming week in order to explore avenues out of the current practicalimpasse whilst strictly respecting the rights of all Members.
102. The representative of Malaysia stated that the issue was of paramount importance.  He agreed
with others that the objective was not to place blame but to ascertain whether the procedures had been
fully followed.  He stated that the European Communities' rights were protected and that the question
which remained was to ensure that those affected by this action had the ability to enter a claim ofinterest in the light of the procedural set-backs which had alleviated some Members of this right.  His
delegation was looking for a rapid practical solution, and he felt that the uncertainty surrounding his
delegation's rights persisted in an urgent manner.
103. The representative of the Philippines, referring to the suggestion to hold an informal meeting,
pointed out than any decision on the matter under discussion would only be endorsed at the next
formal meeting in October and he suggested th at an alternative approach forward be found.
104. The representative of Mexico indicated he had no objection to the suggestion of an informal
meeting;  however, he felt that there were elements which needed to be resolved with the utmost
urgency.  He said divergent opinions had been expressed, with some indicating the opinion that the
requirements had been met and many others believing there had been shortcomings in the application
of the procedures.  His delegation stated that there was a problem in this case since form was related
to substance.  He suggested that legal expertise fro m the Secretariat might be helpful in order to help
further examine the issues.  He agreed that the main concern was to find a practical solution,
otherwise, alternative solutions would need to be explained.
105. The representative of Peru indicated he was seeking a constructive solution and could agree to
study the issue from a legal perspective bearing in mind that the objective was to solve the problem
and not to complicate matters.   He suggested that one way to proceed would be to suspend and takeup the current formal meeting after the informal meeting had taken place.  This would allow Members
to revert to the formal meeting in order to endorse any decision.  The representative of Chile
expressed his support for this suggestion.
106. The representative of the United States noted the conciliatory nature of the remarks being
made and said her delegation had hoped to resolve the problem without attributing blame and by
simply deeming the  notification to have invoked the 45 day window as of that meeting.  However,
she noted that others have indicated very practical concerns and she thought that perhaps a creative
manner to solve the issue could be found, which would require the cooperation of all.  She took noteS/C/M/67
Page 28
of the intervention from the representative of Mexico, but she echoed the comment by Peru that a
complicated analysis of the procedures could be avoided to the benefit of finding a practical way to
address the problem.  She expressed her reservation about pursuing a legal analysis.  She recalled that
her earlier intervention pertained to the difference between the procedures and their application, and
that the issue presently at hand was to address the practical problem.  She indicated that her delegationcould agree to a suspension of the meeting in order to leave time for any subsequent decision,
provided that suspension did not frustrate the Council's work.
107. The representative of the European Communities sought to reiterate his delegation's clear
position, namely that it had taken normal steps that any Member would have taken in the same
situation.  His delegation's rights were protected and underway.  He said he was willing to consider
any suggestions on the clear understanding that it would be without prejudice to the on-going rights of
the European Communities in this case, including the deadlines set out in the procedures in documentS/L/80.  This needed to be clearly stated.  He said he was willing to participate in any meeting
convened by the Chair, however, this should not call into question the regularity of his delegation's
notification.
108. The representative of Uruguay said that the concern expressed by the European Communities
was understandable and that the suggestion by the Chair was without prejudice to its rights, but also
without prejudice to the rights of all other Members.  He believed that the Chair's suggestion was a
positive one, and that the current meeting could be suspended and reconvened subsequent to an
informal constructive discussion with a view to finding a solution.
109. The Chair indicated that he would proceed taking on board the views Members had indicated
and proposed that the meeting be suspended.
110. It was so agreed.
111. Reconvening the meeting, the Chair recalled that the he had suspended the Council's
discussion under the agenda item pertaining to the recent communication from the European
Communities.  He indicated that he had taken advantage of the interim period to continue
consultations on the matter that had produced an outcome, which he hoped would be acceptable to allMembers.
112. The representative of the European Communities recalled the long debate that had been held
earlier in the meeting on this issue.  He said that his delegation he was extremely perplexed and
disappointed with the earlier debate in the Council.  He stated that the European Communities had
notified under Article V:5 by 8 April and that it had followed all the right procedures with regard to
the notification.  He said that in the earlier debate there were some delegations that directly or
indirectly put into question the good faith the Communities had followed in the process of thenotification.  He sought to make it extremely clear that it had never been the intention of the
Communities to call into question in any way the ri ghts of any other Member with regard to this
matter.  Given the very regrettable situation in which the European Communities found itself, he
stated that his delegation had taken the unprecedented step of deciding to request by letter to the
Secretariat that the notification of the Communities of 8 April along with the Annex which listedthose specific commitments it intended to modify  or withdraw be issued in the three working
languages and according to the appropriate procedures as soon as possible.  From the time of that
circulation, which he hoped would occur quickly, the European Communities was prepared to accept
that the 45 day period for the notification of claims of interest be re-started.  He said that those
Members which had submitted notifications of interest would need to re-submit their claims and allMembers would have an opportunity to notify if they felt they were affected within the 45 days as
from the circulation of the notification.  At the same time, he requested that this item appear on the
agenda of the next meeting of the Council for Trade in Services.  He sincerely hoped that, with theS/C/M/67
Page 29
unprecedented decision, the rights of the European Communities and other Members were fully
guaranteed and that any possible doubts that could have existed with regard to the good faith of the
Communities in this case were cleared in the light of this step.
113. The Chair thanked the European Communities for its statement and hoped that it had met with
Members' agreement.  He proposed that the Council take note of the statements made.
114. It was so agreed.
G. OTHER BUSINESS
115. As he had indicated at the beginning of the meeting, the Chair wished to inform the Council
that he would have issued a formal note from the Chair regarding the Work Programme on Electronic
Commerce for the attention of the General Council in the context of its preparations for the next
Ministerial Conference.  He indicated that the note would recall that in paragraph 34 of the Doha
Ministerial Declaration, Ministers agreed to continue the Work Programme on Electronic Commerce,and instructed the General Council to consider the most appropriate institutional arrangements for
handling the Work Programme and to report on further progress to the Fifth Session of the Ministerial
Conference.  Pursuant to this mandate, the Genera l Council agreed on 15 October 2002 to maintain,
for the duration of the work until the Fifth Ministerial Conference, the current institutional
arrangements for handling the Work Programme on Electronic Commerce, namely that the Councilsfor Trade in Services, Trade in Goods and TRIPS, and the Committee on Trade and Development
would examine and report on aspects of electronic commerce relevant to their respective areas of
competence.  It was also agreed that the General Council would play a central role in the entire
process, would keep the Work Programme under continuous review and would consider any trade-
related issue of a cross-cutting nature.  The note would indicate that the Council for Trade in Serviceshad last considered this item at its meeting held on 4 October 2001 and that the understanding had
been that the Council would revert to this item at  the request of any Member.  No such requests had
been made and in the interim delegations had devo ted their attention to unresolved cross-cutting
issues in the context of the dedicated discussions under the auspices of the General Council.  He
suggested that the Council take note of his statement in addition to all the statements made at themeeting.
116. It was so agreed.
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