WORLD TRADE
ORGANIZATIONS/CSS/W/95
9 July 2001
(01-3394)
Council for Trade in Services
Special SessionOriginal:  Spanish
COMMUNICATION FROM MERCOSUR
Computer and Related Services
The following communication has been received from the delegations of Argentina, Brazil,
Paraguay and Uruguay with the request that it be circulated to the Members of the Council for Trade
in Services.
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1. The States parties to MERCOSUR (Argentina, Brazil, Paraguay and Uruguay) submit this
proposal1 for consideration by Members. Its purpose is to promote the liberalisation of this important
sector and to contribute to increasing the participation of developing countries in trade in services.Article IV of the General Agreement on Trade in Services (“Increasing Participation of Developing
Countries”), states in paragraph 1:
“The increasing participation of developing country Members in world trade shall be
facilitated through negotiated specific commitments, by different Members pursuant
to Parts III and IV of this Agreement, relating to:
c) the liberalisation of market access in sectors and modes of supply of export
interest to them.”
2. Also, the Guidelines and Procedures for the Negotiations on Trade in Services (S/L/93)
adopted on 28 March 2001, state, among other elements, that:
− the negotiations “... shall be conducted ... as a means of promoting ... the development
of developing countries” (paragraph 1),
− the negotiations “... shall aim to increase the participation of developing countries in
trade in services” (paragraph 2),
− “... Due consideration should be given to the needs of small and medium-sized
services suppliers, particularly those of developing countries (paragraph 3) and
                                                     
1 This proposal is not a legal text. It is submitted solely for the purpose of negotiation and does not
prejudge the position of MERCOSUR or its States parties regarding the issues raised in it. MERCOSUR and itsStates parties reserve their rights to modify the contents of this proposal at a later stage.S/CSS/W/95
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− “...Special attention shall be given to sectors and modes of supply of export interest to
developing countries” (paragraph 5).
I. INTRODUCTION
3. At the core of the information technology industry is the computer industry, comprised of
computer hardware, software, and computer services.  Software and computer related services refer to
both “packaged” (or standardised) and customised products and to computer consultancy services.
4. Strong demand for computer services stems from evolving business needs for an improved
and more efficient customer service and higher productivity.
II. DEFINITION OF THE SECTOR
5. The GATS Services Sectoral Classification List (MTN.GNS/W/120) includes computer and
related services as a sub-sector of business and professional services.  This sub-sector, designated 1B
in the List, includes 5 sub-categories:  (a) consultancy services related to the installation of computerhardware;  (b) software implementation services;  (c) data processing services;  (d) data base services;
and (e) other.  These are more amply defined in the corresponding items of the Provisional UN
Central Product Classification (UNCPC), which is reproduced below:
Computer and Related Services:
UNCPC Descriptions of the GATS Sectoral Classification List Entries
W/120 UNCPC UNCPC description
Ba 841 Consultancy services related to the installation of computer hardware:
assistance services to the clients in the installation of computer hardware
and computer networks.
Bb 842 Software implementation services:  all services involving consultancy on,
development and implementation of software, and defines "software" as thesets of instructions required to make computers work and communicate,
which may include a number of different programmes developed for
specific applications (application software) and  situations in which the
customer may have a choice of ready-made off-the-shelf programmes
(packaged software), specifically developed programmes for itsrequirements (customised software) or a combination of the two. The sub-
categories are:
8421 84210 Systems and software consulting services:  services of a general
nature prior to the development of data processing systems and applications.
It might be management services, project planning services, etc;
8422 84220 Systems analysis services:  include analysing the clients' needs,
defining functional specification, and setting up the team, as well as project
management, technical coordination and integration and definition of the
systems architecture;
8423 84230 Systems design services:  include technical solutions, with respect to
methodology, quality-assurance, choice of equipment software packages or
new technologies, etc;
8424 84240 Programming services: the implementation phase, i.e. writing and
debugging programmes, conducting tests, and editing documentation;S/CSS/W/95
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W/120 UNCPC UNCPC description
8425 84250 Systems maintenance services:  consulting and technical assistance
services of software products in use, rewriting or changing existing
programmes or systems, and maintaining up-to-date software
documentation and manuals and specialist work, such as conversions.
Bc 843/
843184310  Data processing services:  or "input preparation services" include
data recording services such as key punching, optical scanning or other
methods for data entry.
8432 84320 Data-processing and tabulation services consisting of services such
as data processing and tabulation services, computer calculating services,
and rental of computer time.
8433 84330 Time-sharing services: UNCPC states that there is no clear
distinction between 84320 and 84330, noting that computer time only is
bought;  if it is bought from the customer's premises, telecommunications
services are also bought. Data processing or tabulation services may also be
bought from a service bureau.
8439 84390 Other data processing services:  consisting of services which manage
the full operations of a customer's facilities under contract:  computer-roomenvironmental quality control services;  management services of in-place
computer equipment combinations;  and management services of computer
work flows and distributions.
Bd 844 Data base services:  all services provided from primarily structured
databases through a communication network. The UNCPC specifically
excludes "data and message transmission services"  which it classifies under
telecommunications services (as 7523) and  excludes  documentation
retrieval services classified as library services (as 96311).
Be 849 Other computer services:  services for which UNCPC lists two sub-
categories.
8491 84910 Data preparation services: services for clients not involving data
processing services.
8499 84990 Other computer services n.e.c.:  training staff of clients and other
professional services.
III. ECONOMIC IMPORTANCE OF THE SECTOR
World Market Values for So ftware and Computing Services
(in million US dollars at constant 1994 exchange rates)
Total 1995% Share
software% Share
servicesTotal 1997% Share
software% Share
servicesAnnual
growth
1995-
1997
Western Europe 94,336 37 63 107,259 39 61   6.6
Eastern Europe 1,766 37 63 2,191 38 62 11.4
United States 129,539 34 66 160,377 36 64 11.3
Japan 45,140 20 80 48,044 20 80   3.2
Rest of the world 40,865 16 84 57,163 23 77 18.3
World 311,645 30 70 375,031 33 67   9.7
Source: European Commission, Panorama of EU Industry '97S/CSS/W/95
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6. The most significant recent development in networked computing as demonstrated by its
dramatic growth, is the Internet. Besides the increasing use of software as an input for different kind
of services supplied electronically, Internet also allows the use of different software “on-line” insofar
as these software are located in a “host” that can be acceded directly by the consumer.
7. At the same time, the rapid market growth of  the information technology sector has led it to
be a substantial generator of new employment, in particular of skilled and well-paying jobs, not only
in industrialised markets but in emerging markets as well.  Given these labour-demand characteristics,
supply of computer and related services through the GATS mode of movement of natural persons
takes on a great deal of economic significance.  The imposition of measures related to qualification
requirements and procedures, licensing requirements and technical standards can give rise to
discretionary measures and can constitute a significant barrier to foreign suppliers of these services,particularly in commercial presence (mode 3) and movement of natural persons (mode 4).
IV. ANALYSIS OF NATIONAL SCHEDULES
8. According to the WTO Secretariat’s document  S/C/W/45 (dated July 24, 1998), an overall
total of 62 GATS schedules (counting the EU schedule as one) contain commitments on computer and
related services.  Of these, 52 commit on sub-sector (a) consultancy services related to the installationof hardware, 57 commit on (b) software implementation services, 55 commit on (c) data processing
services, 49 commit on (d) data base services and 30 on (d) "other" computer services.
9. Looking at the level of commitments for sub-se rvices (a)-(d) as a whole, the proportion of
unrestricted, or full, market access commitments on cross border supply ranges between sub-sectors
from 60-63%, the proportion of full commitments on consumption abroad from 70-76% and thecorresponding range for commercial presence is 68- 77% (but which falls to 29-33% when horizontal
limitations on mode 3 are taken into account).
10. The proportion of full commitments on market access for presence of natural persons is
lowest at 4-7% (falling to 2% when horizontal limitations are factored in).
11. In commercial presence (mode 3), there are important barriers such as the following as the
most significant ones:  a) restrictions to the level of participation of foreign equity;  and (b) limitations
to the type of legal entity or joint venture.
V. PROPOSAL
12. The States parties to MERCOSUR (Argentina,  Brazil, Paraguay and Uruguay) propose:
(i) that WTO Members make specific commitments in computer and related services, in
the following subsectors:
W/120 UN CPC UNCPC description
Ba 841 Consultancy services related to the installation of computer hardware
Bb 842 Software implementation services
Bc 843 Data processing services
Bd 844 Data base services
Be 849 Other computer services
andS/CSS/W/95
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(ii) that WTO Members eliminate the restrictions to market access and national
treatment in computer and related services, making commitments “without
limitations” (by entering “none” in the market access and national treatment columns)
in the above-mentioned subsectors .
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