RESTRICTEDWORLD TRADE
ORGANIZATIONS/WPGR/M/37
26 June 2002
(02-3540)
Working Party on GATS Rules
REPORT OF THE MEETING OF 3 JUNE 2002
Note by the Secretariat1
1. Mr. Hugo Cayrus, from Uruguay, opened the thirty-seventh meeting of the Working Party on
GATS Rules.  The agenda for the meeting was co ntained in WTO/AIR/1803.  It consisted of six
items: appointment of a new chairperson;  nego tiations on safeguards under GATS Article X;
negotiations on subsidies under GATS Article XV;  negotiations on government procurement under
GATS Article XIII;  date of the next meeting; and other business.  He drew attention to the Annotated
Agenda (JOB(02)/43, 24 May 2002) that had been prepared by the Chairperson designate,
Mr. Thomas Chan, to assist delegations in their preparation for the meeting.
2. The representative of Thailand, speaking on behalf of the ASEAN Members, referred to the
extension of the deadline for negotiations on emergency safeguard measures and called on Members
to reflect on how to make progress.  Work should focus on substantive issues.  Nevertheless, a work
programme should be established quickly, which should not prejudge future work.
3. The agenda for the meeting was adopted.
A. APPOINTMENT OF THE NEW CHAIRPERSON
4. The Chairperson recalled that, according to the rules of procedure for meetings of the Council
for Trade in Services (S/L/15), the hand-over of th e chairmanship should have taken place at the end
of the last meeting of the Working Party.  Howe ver, as the Chairman of the Council for Trade in
Services had not finalized his consultations on the chairmanships of the subsidiary bodies at that time,
it had been decided that the hand-over would take place at the beginning of the following meeting.
Accordingly, he proposed that the Working Part y elect Mr. Thomas Chan, from Hong Kong, China,
as Chairman of the Working Party on GATS Rules.
5. Mr. Thomas Chan was elected by acclamation.
B. NEGOTIATIONS ON EMERGENCY SAFEGUARD MEASURES  (ARTICLE X OF THE GATS )
1. Establishment of a Work Programme
6. The Chairperson informed the Working Party that his consultations on a work programme had
revealed much convergence in views among Members.  There was a common wish to arrive at a
simple, broad and flexible work programme as early as possible, to enable the Working Party to move
ahead with substantive work.  Members had made many useful suggestions in that regard.  At the last
open-ended informal consultation, on 29 April 2002, he had made a report on the guiding principles
and the suggested elements for the work programme.  Members had expressed support for these
guiding principles and had indicated that they agreed on, or had flexibility to accept many of thesuggested elements.  There remained, however, differences in views regarding some elements, which
                                                     
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/WPGR/M/37
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prevented him from putting forward a concrete proposal for the work programme.  He proposed,
therefore, to continue his consultations with a vi ew to identifying a possible formulation for a work
programme, which would be acceptable to all Memb ers. He would then set out in a Chairperson's
Note, circulated on his own responsibility, the elem ents which would hopefully form the basis for a
consensus.  He stressed that, in his view, delegations were very close to reaching a consensus, andappealed to their flexibility on this  matter so that an agreement could be reached as soon as possible.
The Working Party took note of this statement.
7. The representative of Thailand, speaking on behalf of the ASEAN Members, said that the
ASEAN Members were ready to participate constructively in the consultations on the establishment of
a work programme.  They hoped that it would be finalized by the next formal meeting of the Working
Party.  In the meantime, Members should also focus on substantive work.
2. Discussion on substantive issues
8. The Chairperson invited delegations to continue their examination of the Communication
from the European Communities and Their Member States on Modal Application of an Emergency
Safeguard Measure  (S/WPGR/W/38, 21 January 2002), as well as the Communication from Australia
on Elements for a Possible "Core Mechanism" for Temporary Suspension or Modification of
Commitments  (JOB(02)/8, 13 February 2002).  He recalled that the Annotated Agenda circulated for
this meeting identified four broad approaches emerging from the various proposals tabled by
Members.  Based on the elements contained in the Synopsis, Members might wish to compare these
four approaches in order to identify main differences as well as possible common elements. In
addition, delegations should feel free to raise any other issue relevant for the negotiations on
emergency safeguard measures.  Any suggestion as to how the Working Party might structure itsdiscussions in the coming months would also be welcome;  this was without prejudice to the questions
of desirability and feasibility of emergency safeguard measures.  He proposed that this discussion take
place in informal mode.
9. With respect to future steps, the Chairperson proposed to continue the consultations on a work
programme for emergency safeguard measures, with a view to setting out possible elements in a Noteto be issued by the Chairperson on his own responsibility.  It was so agreed.
C. NEGOTIATIONS ON SUBSIDIES  (ARTICLE XV OF THE GATS )
10. The Chairperson said that, in the course of his consultations on a work programme, some
Members had indicated an intention or willingness to discuss a programme structuring future work on
subsidies.  Taking into account paragraph 7 of the Negotiating Guidelines (S/L/93), he encouraged
delegations to exchange views on how the Working Party might proceed in the coming months, and
on suggestions to establish a work programme.  In addition, Members were also invited to continuetheir general exchange of views on this item.
11. The representative of Chile recalled that the Negotiating Guidelines, stipulated, inter alia , that
negotiations on subsidies had to be concluded "prior to the conclusion of negotiations on specific
commitments".  Her delegation proposed that a work programme be established for subsidies,
including a timeframe to present submissions, a date for a stock-taking, as well as a report to bepresented to the Fifth Ministerial Meeting.  The Checklist on Subsidies (Job No. 4519/Rev.1,
6 October 2000) should be revised, in particular point 2.  Article XV stipulated that the necessary
disciplines be developed to avoid trade-distortive effects of subsidies.  However, the exchange of
information provided for in the last sentence of Article XV:1 concerned all subsidies, which was
important since it would help determine the scope of work.  Various background notes by theSecretariat contained information on services subsidies, and four Members had made notifications
under a questionnaire circulated in 1997.  Her delegation proposed that the Chairperson shouldS/WPGR/M/37
Page 3
undertake informal consultations by the next meetin g with a view to establishing a work programme.
She drew attention to document S/WPGR/W/9, which co ntained a series of interesting questions to be
further discussed.
12. The representative of the Republic of Korea supported the proposal to undertake consultations
on a work programme for subsidies.  The Working Party should focus on information gathering and
analysis of the current situation.  The Secretariat could do some background work, including an
update of its Note on information contained in Trade Policy Reviews2 and a compilation of subsidy-
related information found in the various sectoral proposals submitted to the Special Session.  The
Checklist on Subsidies should be revised.
13. The representative of Hong Kong, China supported a work programme for subsidies, as well
as a stock-taking at the Fifth Ministerial Meeting.  The Working Party could review the references to
subsidies found in Members' sectoral proposals to the Special Session.
14. The representative of Argentina supported the proposal to set out a work programme on
subsidies, with a review at the Fifth Ministerial Meeting.  He agreed with Chile that the Checklist
should be revised and recalled that Article XV provided for an information exchange concerning all
subsidies related to trade in services.  He supported the proposal to update S/WPGR/W/25.
15. The representative of Mexico said that the mandate contained in Article XV to exchange
information had not been fulfilled.  A work programme should be established, building on the
information exchange.  The Fifth Ministerial Meeting was an appropriate date for a review.  His
delegation would like to participate in the consultations by the Chair.
16. The representative of Canada recalled that a questionnaire had been established in 1997 in
order to fulfill the mandate of Article XV to exchange information (S/WPGR/W/16).  However, very
few Members had responded.  Her delegation still considered that Members should first try to respond
to this questionnaire before envisaging the next step.
17. The representative of the European Communities indicated that her delegation intended to
make a similar proposal for a work programme on government procurement under the next agenda
item.  She suggested that the consultations to be unde rtaken by the Chair for the two issues be linked.
18. The representative of the United States said that his delegation needed a better understanding
of the concerns expressed by those Members who were requesting a work programme on subsidies, in
particular where, in their view, new disciplines were needed and what their objective should be.  He
pointed out the existing questionnaire, in respect of which his delegation had expressed its views.  He
requested further clarification regarding the proposed timeframe for submissions and the idea of
having a stock-taking at the next WTO Ministerial Meeting.
19. The representative of Chile replied that the purpose of the transparency exercise was to gain a
better understanding on existing subsidies with a view to, perhaps, classifying them.  Some kind of
status report or progress report could be prepared on the occasion of the Fifth Ministerial Meeting.
Informal consultations could be organized with a view to reconsidering the Checklist.
20. The representative of the United States said that his delegation's understanding of Article XV
was that the Working Party's mandate was limited to addressing trade-distortive subsidies, and not all
subsidies.  Members having information on trade-distortive subsidies should share it in order to help
focus the debate.  The representative of Chile agreed that Article XV mandated to negotiate the
necessary disciplines to avoid trade-distortive effects of subsidies, but noted that the information
                                                     
2 S/WPGR/W/25 + Add 1 and 2.S/WPGR/M/37
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exchange referred to in the last sentence of paragraph 1 of Article XV concerned all subsidies.  On the
basis of the information gathered with respect to all subsidies, the Working Party might then be able
to identify subsidies having trade-distortive effects.
21. The representative of Venezuela recalled that the mandate referred to the "necessary"
disciplines to avoid trade-distortive effects.  Any information in this respect would be useful.  She
drew attention to the fourth sentence of Article XV:1, which stipulated that negotiations should
recognize "the role of subsidies in relation to de velopment programmes of developing countries and
take into account the needs of Members, particularly developing country Members, for flexibility in
this area".
22. The representative of Pakistan agreed with Chile that the information exchange concerned all
subsidies.  Identifying the subsidies that had a trade-distortive effect entailed subjective judgement.
23. The representative of Paraguay supported the proposal for establishing a work programme
and stressed the importance of the information exchange to increase the level of transparency.
24. The representative of Brazil said his delegation was open to any suggestion which would
contribute to moving the discussion ahead on this subject-matter.  The exchange of information was a
prerequisite for further work and covered all subsidies.  The necessary disciplines to be established
would then address only subsidies with trade-distortive effects, and a definition would be required forthis latter concept.  In the past, the Working Party had already addressed various interesting issues
under this agenda item and it might be useful to refer to reports of past discussions.
25. The representative of Ecuador supported Chile's proposal to establish a work programme.
More information was needed on subsidies.  Ecuador did not grant subsidies to its producers, but
considered that subsidies were a problem in services trade.
26. The representative of Canada added that very few Members had replied to the 1997
questionnaire on subsidies, mainly because they did not know what kind of information should be
included.  There was no agreed definition of "subsidy", let alone of "trade-distortive" subsidy.
Addressing all subsidies was too big an exercise and delegations needed to determine a focus.  It
could be more useful to discuss the five points contained in the Checklist.
27. The representative of Peru supported the proposal for a work programme, including a stock-
taking.  Transparency was fundamental in this area and the information exchange in Article XV
encompassed all subsidies.  It was important to agree on common criteria to define the concepts of
"subsidy" and "trade-distortive".
28. The Chairperson noted that various suggestions  had referred to the need for gathering
information.  In that regard, submissions by Members on issues related to subsidies were welcome
and could form the basis for further work.  Information on subsidies in services should come primarilyfrom Members.  Only four Members had responded to the 1997 questionnaire so far.  More responses
would be welcome.  He further suggested that the Secretariat update the background note on
information contained in WTO Trade Policy Re views (S/WPGR/W/25 and Addenda) and undertake
to compile subsidy-related information contained in  the sectoral proposals presented by Members to
the Special Session.  He was prepared to review the Checklist on Subsidies (Job No. 4519/Rev.1) andwould wait for Members' concrete proposals in this respect.  A representative of the Secretariat added
that, following a proposal made by a delegation some time ago, Members might also want to considerproviding information on subsidy problems encountered in third markets, without identifying the
trading partner(s) concerned.S/WPGR/M/37
Page 5
29. The representative of Pakistan enquired what kind of information would be included in the
background note on information contained in WTO Trad e Policy Reviews.  His delegation needed to
further reflect on the implications of such a Note.  A representative of the Secretariat replied that
S/WPGR/W/25 and its Addenda contained informat ion found in individual Trade Policy Review
reports, on a sector-specific basis.  Since these reports were not meant to address specifically subsidyissues, TPR-based information did not necessarily provide a comprehensive picture, nor allow
judgement on whether those subsidies had trade-distortive effects or not.  The Secretariat had made
this clear in its previous overviews.  With respec t to the compilation of subsidy-related information
contained in sectoral proposals, the representative of the United States suggested that, in order to ease
the Secretariat's task, Members should let the Secretariat know what information they wanted to beincluded.  According to the representative of Canada, it was up to each individual delegation to
examine subsidy-related information in sectoral pr oposals and to bring it to the attention of this
Working Party.
30. The representatives of Hong Kong, China enquired why it was problematic to compile the
information contained in the sectoral proposals, since they were already public.  The representative of
Mexico said he had difficulties to understand why some delegations objected to the Secretariat
compiling existing information.  The representative of Brazil noted that the background note on TPR-
related information had already been updated twice and asked why it was problematic to undertake athird update.
31. The representative of Pakistan said that his delegation needed to reflect whether this would
set a precedent with systemic implications.  He had doubts about the modalities and the ultimate
objective of addressing the Article XV mandate via TPR-reports.  The representative of theUnited States said that the purpose of the consultations to be undertaken by the Chair should be to
come up with a full approach for a work programme ;  TPR-based information could be an element.
32. The Chairperson noted that no Member opposed the suggestion to establish a work
programme for subsidies.  He would, therefore, include this issue in his consultations, with the
objective of setting out possible elements which would be included in a Chairperson's Note circulatedon his own responsibility.  Noting Members' wish to  discuss certain suggestions for work which might
usefully be undertaken by the Working Party in the coming months, he proposed that these issues be
addressed as well during the consultations.  No request for documents would be made to the
Secretariat for the time being.  It was so agreed.
D. NEGOTIATIONS ON GOVERNMENT PROCUREMENT  (ARTICLE XIII OF THE GATS )
33. The Chairperson said that, as in the case of subsidies, some Members had indicated an
intention or willingness to discuss a programme structuring future work on government procurement.
Members were, therefore, invited to exchange views on how the Working Party might proceed on this
item in the coming months, and to make suggestions for a possible work programme.  Members were
also encouraged to continue their general exchange of views on this item.
34. The representative of the European Communitie s recalled that the Negotiating Guidelines
provided that negotiations on government procuremen t in services should be completed prior to the
conclusion of negotiations on specific commitments.  Substantive discussions on this issue should
start in the coming weeks, and the Working Party n eeded to structure its work under this agenda item.
The European Communities wished a work programme to be established for government
procurement, which could include a call for Members to make submissions and provide for a stock-
taking in March 2003.  The report that the Working Party would present to the Fifth MinisterialMeeting should include a section on government procurement.  He said that government procurement
represented more than fifty per cent of activities in certain services sectors, some of which were of
particular interest to developing countries.  The absence of multilateral disciplines in governmentS/WPGR/M/37
Page 6
procurement was particularly problematic for these sectors.  The European Communities intended to
work actively on this issue in the Working Party and was ready to discuss with interested delegations
their specific interests.  Informal consultations might be needed.
35. The representative of India took note of the suggestion made by the European Communities.
He proposed to discuss the scope of the mandate contained in Article XIII before undertaking
substantive work.  In his view, Articles II, XVI and XVII were excluded from any negotiations on
disciplines for government procurement in services.  His delegation wished to participate in informal
consultations.
36. The representative of Chile supported the proposal to establish a work programme on
government procurement.  Her understanding of Article XIII was that Articles II, XVI and XVII did
not apply pending the entry into force of negotiated disciplines, which did not mean that these
provisions were excluded from the scope of the negotiating mandate.  She enquired whether theSecretariat could give some indications on the intentions of the drafters of Article XIII.
37. A representative of the Secretariat said that this point had already been debated, but no
conclusion had been reached.  The Secretariat could undertake some research by looking at minutes of
past meetings.
38. The representative of Peru supported the interpretation given by the delegation of India with
regard to the scope of the mandate.  Article XIII did not mandate market access negotiations for
government procurement.  His delegation was ready to participate in consultations on a work
programme.
39. The representative of Pakistan agreed with the delegations of India and Peru.  His delegation
could agree that a work programme be established for government procurement.  The work
programmes for the three issues under consideration in this Working Party should be included in a
single document.
40. The representative of Mexico agreed that a work programme for government procurement be
discussed during the consultations on the work programme for emergency safeguard measures and
subsidies.  With respect to the scope of the mandate, his delegation considered that Articles II, XVIand XVII were not applicable to government procurement and, therefore, were outside the
negotiations.  Consultations should not go beyond the scope of Article XIII.
41. The representative of Venezuela agreed with the delegation of Mexico.  Venezuela was ready
to take part in consultation on a possible work programme, which should not go beyond the purview
of Article XIII.  No actual request had been made to the Secretariat to prepare any material under this
agenda item.  She could not support a request for a Secretariat's note on the historical background, but
only a list of existing contributions by Members.  The outcome of this negotiation should not beprejudged.
42. The representative of Uruguay said that the undertaking contained in doc. S/C/W/205/Rev.1
to establish a work programme concerned only emergency safeguard measures.  Nevertheless, his
delegation considered it made good sense to establish a work programme for subsidies and
government procurement as well.  Should the Secretariat be asked to undertake background work, itcould only be a list of documents containing releva nt contributions and discussions.  The Secretariat
should not be put in the difficult situation of having to make contributions which should come in fact
from delegations.S/WPGR/M/37
Page 7
43. The representative of Indonesia supported the statements made by the delegations of India,
Peru and others.  Before starting consultations on a work programme, his delegation would like to
know what elements would be discussed.
44. The representative of Switzerland said that consultation on a work programme for
government procurement should not prejudge the outcome of the negotiations.  It would be more
efficient to have one work programme encompassing the three issues under consideration in the
Working Party.  With respect to Article XIII, it migh t be worthwhile to go beyond the actual text and
look at the preparatory work.  Article XIII:1 might mean that, except for Articles II, XVI and XVII,
all other GATS provisions already applied to public procurement.  Pursuant to such an interpretation,
what remained to be negotiated would be precisely Articles II, XVI and XVII.
45. The representative of Chile considered that the legal commitment in doc. S/L/W/205/Rev. 1
to establish a work programme concerned the three agenda items of the Working Party.  The
Negotiating Guidelines also mandated the completion of the negotiations on subsidies and
government procurement.  Her delegation would be ready to envisage some work from the Secretariat
on this issue, such as a compilation of minutes.  She noted that a list of documents already existed for
this Working Party.
46. The representative of Canada said it was encouraging to see that delegations started to look at
this issue.  His delegation could agree that the Secretariat prepare a factual background document but
work should otherwise be Member-driven.  Consu ltations on a work programme should not prejudge
the outcome of the negotiations.  A work programme should not prevent Members from presenting
submission at any time.
47. The representative of the European Communities welcomed the readiness of Members to
discuss a work programme for government procuremen t.  Looking at the minutes of the last meeting,
he understood that the Chairperson was requested to carry out consultations to establish a work
programme for the three issues.  He agreed that it should not prejudge the outcome of negotiations.
Limiting the scope of discussion would amount, however , to prejudging the outcome.  The mandate in
Article XIII:2 did not contain any limitation of the negotiating mandate.  While paragraph 1 ofArticle XIII exempted government procurement from the application of Articles II, XVI and XVII,
other GATS provisions did appl y to government procurement.
48. The representative of Argentina said that no contribution from the Secretariat was needed for
the time being.  Any future contribution should be  discussed within the overall framework for the
negotiations, where it could be adjusted to the work programme Members might agree on.
49. The representative of Brazil said that the discussion on the scope of Article XIII mandate had
a strong taste of "déjà vu".  His delegation was ready to discuss it again, although this might not be
very productive.  Defining a work programme seemed to be the task at hand, and Brazil wished to
associate itself with the statement made by Uruguay.
50. The representative of the United States said that his delegation was ready to consider work
programmes for the issues of subsidies and government procurement, with the understanding that they
should not prejudge the outcome of the negotiations.  Since some progress had already been made inthe discussions for a work programme on emergency safeguard measures, it might not necessarily be
helpful to pursue one single work programme for the three issues.  The scope of the mandate in
Article XIII was ambiguous, and different interpretations might be possible.  A detailed debate could
be useful at a later stage.
51. The representative of Mexico said that Article XIII indicated that Articles II, XVI and XVII
did not apply.  Whatever was agreed to in negotiations under paragraph 2 of Article XIII would thusS/WPGR/M/37
Page 8
not be applicable to these provisions.  There was no consensus for the time being to ask anything from
the Secretariat.  Any Member could make any contribution at any time.  There was a need for
concrete propositions in order to be able to establish a work programme.
52. The Chairperson noted that, while no Member was opposed to establishing a work
programme for government procurement, some delegations had raised the need to look at the elements
which might be included.  He proposed to address the issue of a work programme for government
procurement in his consultations, including possible elements for such a work programme.  The
outcome would be set up in a Chairperson's Note to be circulated on his own responsibility.  He
remarked that the work programme should not prejudge the result of the negotiations and, in that
sense, it might not be advisable to debate the scope of the mandate in this context.
E. DATE OF THE NEXT MEETING
53. The Chairperson indicated that the next formal meeting of the Working Party was expected to
take place during the week of 15 July  The definitive date would be communicated in due time.
F. OTHER BUSINESS
54. Nothing was raised under this agenda item.
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