RESTRICTEDWORLD TRADE
ORGANIZATIONS/CSC/M/5
6 May 1998
(98-1803)
Committee on Specific Commitments
REPORT OF THE MEETING HELD ON 2 APRIL 1998
Note by the Secretariat
1. The Committee on Specific Commitments held its fifth meeting on 2 April 1997 under the
Chairmanship of Mr Asoke Mukerji of India. The agenda of the meeting was contained in airgram
WTO/AIR/805.
I. CLASSIFICATION ISSUESA. Assessment of the Relevance of the Adoption of CPC rev 1 for Trade Negotiating purposes
2. The Chairman introduced ten new documents by the Secretariat:  six sectoral studies for
business services (S/CSC/W/6/Add.6 to 13), the qualitative assessment for business services
(S/CSC/W9/Add.1 and Add.1 Corr.1), and the systematic  paper on the potential impact of the revision
of CPC on sectoral definitions used in the schedules (S/CSC/W16).  He also introduced declarationsby the Voorburg Group and the UN statistical division (S/CSC/W/13 and S/CSC/W/17).  On this basis
he suggested that Members discuss the potential benefits and disadvantages of the adoption of CPC
rev1 as the basis for the negotiation and scheduling of commitments.
3. Canada complained that the length and late circulation of these documents had made it
difficult to review them, and questioned their value, in particular that of the sectoral studies, for the
practical problems addressed by the Committee.  W/16 seemed excessively academic, and the
conclusion in its fourth paragraph that a switch to CPC rev1 would seem to offer only marginal
benefits seemed to be premature and unsupported by factual evidence.  Further work of this kind
should not be undertaken.  The conceptual and global approach should therefore be abandoned and
practical problems of nomenclature raised by delegations should be addressed. In this context one
should look every time in rev1 to see if it solves the problems raised.  The fact that rev1 was going to
become a universally adopted statistical framewor k used by IMF, OECD and Eurostat for instance
should also be taken into account. Canada acknowledged that CPC rev1 did not have any relevance in
telecom and financial services but mentioned energy and transportation as possible areas of work.
4.  The United States expressed general support for the position of Canada.  Time and resources
should not be spent in exhaustive study of the CPC, which was inadequate not only for financial
services and telecoms but more generally.  That explained why some countries had chosen not to usethe CPC as the basis for scheduling and why scheduling in some sectors had been done on a sui
generis basis.  Rev1 would therefore never be generally adopted. Attention should focus on the
improvement of W/120.  Delegations should indicate which sectors seem to them poorly defined in
W/120 or else where and the Committee should work on an understanding to improve these
definitions.S/CSC/M/5
Page 2
5. The European Communities welcomed the documents, which they believed justified the effort
put into them.  As arid as the question of classification may be, it was determinant for the extent of the
commitments and therefore must not be neglected.  Work was needed in two areas.  First, efforts
should be made to improve W/120 , notably by taking into consideration the developments on
scheduling in financial services, telecom and maritime.  With regard to financial services in particularW/120 should in the view of the EC reflect the content of the financial services annex.  The
improvement and integration into W/120 of the non-binding model schedule in maritime was also a
possible avenue. On telecommunications the discussion on classification remained open.  Some
services activities which were not listed in W/120 were now listed in rev1 and could therefore be
integrated.  Concrete examples of new services could also be integrated - for example in
environmental services, where OECD had been doing interesting work.  Energy services might also
be revised in the light of rev1.
6. The Central Product Classification had the merit of describing the services listed, something
W/120 did not offer. Dissatisfaction with these de scriptions was certainly one of the reasons why
certain Members had chosen not to use the CPC as the basis for their schedules.  Nevertheless, the
description provided by rev1 in a given sector could usefully be studied with a view to improving,
changing or clarifying a commitment.  In th at case however a challenge mechanism should be
instituted in order to allow others to question a change if the conversion to rev1 appeared to
downgrade existing commitments.  When a schedule ma de no reference to the CPC, the interpretation
of the extent of commitments was difficult:  for instance in distribution are pre-sales and post-sales
services included?  Such countries might be required to submit a description of the sector before the
negotiation or to notify legislation describing the sector.
7. Japan said that several factors had to be taken into account: the influence of rev1 on W/120,
technological changes that may require frequent updating of the nomenclature, and on the other hand,
the need for legal stability.  If a decision were taken in future to revise W/120 according to rev1,
which would not be necessarily the case, due account would have to be taken of the practical needs of
the negotiations.
8.  New Zealand indicated that its analysis of the documents confirmed its view that a full
conversion to rev1 would have minimal value for GATS purposes, especially in view of the high level
of aggregation of commitments.  New Zealand therefore favoured a more practical approach, i.e., to
identify where CPC rev1 had clear scheduling advantages and to test them.  In that respect the
qualitative assessment papers were of great help. The suggestion of the European Communities to
examine W/120 seemed useful, whether through the identification of specific problems by delegations
or in a more systematic manner.  New Zealand also saw merit in attempting to improve the clarity ofcommitments through cross references to explanations.
9. Australia agreed in general with New Zealand and the European Communities interventions.
Rev1 should be studied with a view to incorporating some of its features in the classifications used in
schedules.  The idea that countries not referring to CPC should clarify the scope of their commitments
in some other way was very useful, as was the proposed re-examination of W/120 on the basis ofsuggestions by delegations.
10. Hong Kong, China was also of the view that an exhaustive examination of rev1 was not
necessary.  The provisional CPC was merely an individual option for members, and so would be the
use of CPC rev1, with a legal challenge and negotiation mechanism to ensure that commitments
would not be downgraded. The revision of W/120 was an important question. But it had to be done on
the basis of concrete problems. Hong Kong,China wanted additional time to reflect on the suggestion
of EU of additional obligations of transparency for Members not referring to the CPC:  he saw merits
in it but also difficulties, such as the possibility of creating legal uncertainties as to the scope of
existing commitments.S/CSC/M/5
Page 3
11. Finally in response to the various observations made the Secretariat said that the papers
submitted by the Secretariat, particularly the sectoral studies, were not intended for discussion by the
Committee but were a purely factual analysis of the differences between the two versions of the CPC.
In this they were unique and it was hoped might be useful to governments in future consideration of
the use of CPC rev1, whether generally or in the revision of particular commitments.  The judgementstated in the fourth paragraph of W/16 was not of course based on the three preceding paragraphs of
that paper but on the 13 sectoral studies which had been carried out.  It was not implied that rev1 was
of marginal value, but that its adoption for scheduling purposes would make only marginal differences
to current commitments.  The question considered from the beginning had been the desirability of
complete conversion from the provisional CPC to rev1, which it now appeared that no delegation was
advocating.
12. The Chairman concluded that there was an agreement that further work on classification
should be pragmatic and based on contributions by Members, notably in identifying concrete
problems arising in scheduling.  In such work both the provisional and revised versions of the CPC
should be taken into consideration for their possible relevance to the problems identified.  There was
also agreement on the need to examine and if necessary revise W/120 in the light of developments in
scheduling, in trade and in the understanding of Members.  Suggestions and proposals by Members inregard to the revision of W/120 would be ex tremely useful.  The work undertaken by other
organizations in the field of classification, notably by the IMF and OECD, was also of interest and
would be followed up by the Secretariat;  the Chairm an also encouraged delegations to provide any
information they could on these matters.
B. Treatment of New Services
13. The Chairman recalled that in the previous discussion of this subject, on the basis of his non-
paper dated 10 October 1997, it had been agreed that future discussions would take place on the basis
of concrete examples brought forward by Members.
14. The European Communities had three comments on th is topic. First, the provision of a service
by a new means or another mode of delivery (for instance cross border instead of commercialpresence) did not mean that the service is new.  Secondly, if for a given mode a service had been
scheduled as unbound due to technical infeasibility, the fact that the service had later become
technically feasible for this mode would not create a commitment;  in these circumstances the entry
would simply become "unbound" and a possible comm itment would fall to be discussed in future
negotiations. Thirdly, if a genuinely new service were identified it should be added to the W/120 list.
Such new services would presumably be only subsectors or part of subsectors and might emerge, for
example, in particular in the financial services sector, where the management functions provided bybanks has tended to throw up new services.  The provisions of the financial services understanding on
new services was worth studying as a possible example for new services in general.
15. The United States recalled that a discussion during the Uruguay Round of a possible standstill
obligation for new services had produced no agreement as countries had wished to preserve their
rights for the future.  On the other hand the example of the financial services understanding wasinteresting;  products were evolving and this evolution needed to be "captured" in order to formulate
requests of commitments for these new services.  However, further progress on that point would
depend on the collective ability of Members to identify new services. The question of the mode of
delivery was not relevant, as the problem was posed in terms of nomenclature and sectoral coverage.
The conceptual approach to the problem of new services seemed both difficult and irrelevant. Theonly concrete manner to advance was to identify new services clearly, to define their boundaries and
to open them to negotiations. New products were more relevant in already identified sectors such as
financial services.S/CSC/M/5
Page 4
16. New Zealand shared the view of the European Communities on the absence of impact of  the
modes of delivery. The built in flexibility of the "other" category in CPC and in W/120 allowed the
coverage in most instances of the universe of services. Further disaggregation and explanation on new
services as an end in itself was irrelevant;if concrete examples could be identified.
17. The Chairman concluded that Members felt that these issues could usefully be addressed only
when sufficient practical and concrete examples were available.  It was also felt that consideration
could usefully be given to the question of the fate of an "unbound due to lack of technical feasibility"
entry in the context of a technological evolution, and to the possibility of defining in W/120 and in the
schedules services now entered under the "other" category.
C. " Ad hoc " Sectoral Scheduling
18. The Chairman recalled that the secretariat had produced a background historical note on the
specific scheduling classifications used in the past for certain sectors (S/CSC/W/11) and askedMembers if they felt that further work was needed in this area.
19. The European Communities indicated that the telecommunications, air transport and maritime
transport sectors were included in their proposal to revise W/120.  Options should be kept open with
regard to future work on ad hoc  sectoral scheduling.  Australia indicated that it would revert to these
matters at a latter meeting.  The Chairman conclu ded that this item would remain on the agenda for
the next meeting.
II. PROCEDURAL AND COST IMPLICATIONS OF THE DEVELOPMENT OF
ELECTRONICALLY MAINTAINED SCHEDULES
20. The Chairman recalled that the compilation and checking of electronic schedules could only
begin, due to lack of financial resources, in 1999 and that the Secretariat had however undertaken tosubmit a draft format. He then introduced Secretariat document S/CSC/W/14 which explained the
difficulties in assigning the effective dates of commitments in the schedules and therefore proposed,
contrary to its earlier suggestion, that such dates should not be included, at least for the time being, in
the electronic schedules.
21. Delegations expressed strong interest in this work and requested the secretariat to ascertain
whether it could be advanced through use of the budget reserve.  The Secretariat undertook to do so
and said that the degree of priority attached to this matter by Members would be emphasized in its
budget proposals for 1999.
22.  Members also agreed that the definition of the date of commitments for the purposes of the
three-year "freeze" following their entry into force was important, but that it could be considered
separately from the question of electronic schedules. Canada suggested that work on the former
question should begin after the finalization of the Article XXI guidelines.
23. As to the inclusion of dates in the electronic schedules, some delegation suggested that, since
the electronic schedules would have no legal status in any case, inclusion of the dates would be useful
and would entail no risks.  Others however felt that the legal and technical difficulties were such that
no mention of dates would be preferable.
24. Japan recalled its question on the intellectual property rights on the compilation.25. The Chairman concluded that the Secretariat should inquire about the possible use of the
budget reserve in 1997.S/CSC/M/5
Page 5
III. SCHEDULING GUIDELINES
26. Discussions of this subject took place on the basis of the proposals contained in an informal
paper submitted by the delegation of Switzerland.  This gave rise to the following comments.
27. On the idea of substantiating document GNS/W/164/Add.1 by concrete examples, Argentina
indicated it found the idea interesting.  The European Communities however said that they wereopposed to any illustrative list of examples and especially to lists distinguishing between Article XVI
and Article XVII measures. Such lists would entail judgement on a legally grey area and would also
be a bad precedent for another grey area, the overlap between Articles XVII and VI.  This might
preempt the future Article VI disciplines and incline to a lenient interpretation of those disciplines.
The long-term objective of strong disciplines on domestic regulation was worth the sacrifice of the
short-term objective of scheduling clarifications.
28. The proposal of drafting an abbreviated version of the scheduling guidelines seemed to
Argentina to pose too many practical problems:  experience showed that what was needed was more
detailed guidelines.
29. On the proposal of drafting an illustrative list of examples to clarify how reservations should
be formulated regarding licensing requirements, New Zealand and Argentina found the idea useful.
The United States found the question important, as shown by the negotiations on accession andfinancial services, but were nevertheless concerned that an illustrative list would run the risk of
misleading acceding countries or regulators about a rule which is in itself straightforward:  Articles
XVI and XVII were the only elements available on that question and they were clear in themselves - a
list of examples would not add anything valuable to them. The European Communities shared the
same opinion. Hong Kong, China generally shared the views of the United States, although it was nothostile to a list of examples provided it was agreed to be non exhaustive. It was anyhow difficult,
whatever the clarifications, to prevent Members scheduling those kinds of requirements, as the
negotiation on financial services had shown.  For the European Communities the recurrent scheduling
of licensing requirements during the financial services negotiation proved their earlier point that such
an illustrative list would  be counterproductive, as it was likely that future disciplines on Article VIwould simply disallow those kind of entries where the absence of criteria meant that decisions were
merely discretionary, or would make it clear that they did not have to be scheduled where they had no
restrictive effect.
30. The suggestion to clarify the distinction between market access and national treatment
reservations was considered worth studying by  New Zealand. Argentina and Hong Kong, China
considered that this problem was important but stemmed from the agreement itself (Article XX:2) and
not from the scheduling guidelines and that it should be addressed at a later stage and in anothercontext. Hong Kong, China mentioned also the scop e of national treatment as being a partially unclear
provision of the GATS which had to be addressed at a later stage. The United States considered that
nevertheless the guidelines could clarify the distinction between market access and national treatment
in accordance with the provisions of Article XX:2.
31. The proposal to clarify the relationship between the modes of supply and the various services
was welcomed by New Zealand and Argentina. Hong Kong, China pointed out that the mode 1-
 mode 2 distinction in particular was a real problem, especially in the context of electronic commerce,
but was not sure that an illustrative list was the best way to address it.  The European Communities
were open to the idea of clarifying this question, which could not be addressed during the telecoms
and financial services negotiations, and which might trigger at a later stage a debate on the relevanceof the four modes.S/CSC/M/5
Page 6
32. The proposal to draw up guidelines for standa rdized application of terms, with a view to
achieving uniformity in references to regulatory measures, was judged of interest but needing
concrete examples to begin with by New Zealand.  Argentina and the European Communities found it
difficult to imagine how one could standardize terms coming from different national legislations.  For
the European Communities this again showed the need for real improvements in transparency.  Theprovisions of the agreement on transparency could certainly be improved and the additional precision
required by Members during bilateral negotiations on the scope of commitments was not a complete
solution to the problem.
33. The suggestion to draft a list of examples of measures covered by Article XIV and XIV bis
was welcomed by New Zealand on the condition that  concrete examples of problems would be given
to initiate the discussion.
34. The idea of adding an explanatory paragraph to document GNS/W/164/Add.1 in order to
clarify if the visa regime has to be listed seemed inopportune to New Zealand and Argentina.
35. Finally the suggestion to update the references to the Articles of GATS in the scheduling
guidelines was welcomed.
36. New Zealand introduced its informal paper dated 2 April 1998 and indicated it was inspired
notably by difficulties of scheduling encountered during accession negotiations.  On licensingrequirements, New Zealand suggested that the Committee should draw up a check list of questions
which would help a Member to determine whether or not a particular licensing requirement should be
scheduled.  Additionally the Committee should reflec t on the way to capture transparency information
that do not need to be scheduled as such but are useful to understand the commitments.  Secondly on
the technical feasibility question, the scheduling experience should be studied in order to identifywhere Members have found technical constraints.  The Committee should then on this basis have a
broader discussion including for instance the impact of the evolution of technology on services
delivery.  This discussion would aim at a common understanding on a short list of sectors and
subsectors where certain modes of supply are generally considered as unfeasible, though this would
not preclude some activities within such sectors and subsectors being considered technically feasible.
37. Argentina welcomed the proposal on licensing requirements.  The United States indicated that
they had the same concern about this checklist idea that they had about the illustrative list of
examples:  Articles XVI and XVII were in their view straightforward and self sufficient.  The
European Communities found interesting, although complex to conceive and implement, the idea to
improve transparency.
38. On the technical feasibility question Hong Kong, China recalled that according to the
scheduling guidelines "where the mode of supply thoug ht to be inapplicable is in fact applicable, or
becomes so in the future, the entry means unbound" and indicated that it would revert to this question.
39. The Chairman concluded that there was an agreement by the Members to correct the misprint
mentioned in the informal paper of Switzerland and the scheduling guidelines would need to be
examined to see whether and how they could be improved.  He indicated that the papers submitted by
Switzerland and New Zealand would be discussed agai n at further meetings and encouraged Members
to contribute to the debates with similar papers.
IV. STATISTICS
40. Members decided to maintain this item on the agenda of the Committee.S/CSC/M/5
Page 7
V. OTHER BUSINESS
41. The European Communities indicated that it felt the need of a more formal procedure for the
certification of new commitments and new schedules.  Japan supported this idea.  The Secretariat
indicated that it also had felt that the ad hoc procedures now being followed should be reviewed and
revised;  for example, the 30 days which had been provided for comment on commitments, followingtheir circulation to Members, was probably too short.
42. The Committee installed its new Chairman, Mr Juan Marchettti from Argentina.
43.  The Chairman indicated that he would conduct informal consultations on the Article XXI
procedures before the end of April on the basis of the fourth revision which had been distributed on
23 March 1998.
44. The date of the next meeting was agreed as 9 July 1998.
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