WORLD TRADE
ORGANIZATIONWT/GC/W/296
S/C/W/120
5 August 1999
(99-3319)
General Council
Council for Trade in ServicesOriginal:  English
PREPARATIONS FOR THE 1999 MINISTERIAL CONFERENCE
Negotiations on Trade in Services Negotiating Guidelines and Procedures
Communication from Indonesia and Singapore
The following communication, dated 28 July 1999, has been received from the Permanent
Mission of Singapore.
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I. PROPOSAL
1. Article XIX of the General Agreement on Trade in Services (GATS) requires the next round
of services negotiations to begin “not later than five years from the date of entry into force of the
WTO Agreement” i.e. not later than the year 2000.  It requires WTO Members to establish negotiating
guidelines and procedures for each successive round of services negotiations.
2. This paper proposes the elements that should be included.  The negotiating guidelines should
specify the objectives, scope, modalities and time-frame of the services negotiations.  The negotiating
procedures, in turn, would have to specify the admi nistrative framework within which the negotiations
would be conducted.
II. NEGOTIATING GUIDELINES
A. OBJECTIVES
3. Article XIX provides a clear overall direction of what the objectives of these negotiations
should be:
(a) they should aim to achieve progressively higher levels of liberalization;
(b) they should be “directed to the reduction or elimination of the adverse effects on trade
in services of measures as a means of providing effective market access”;
(c) they should promote the “interests of all participants on a mutually advantageous
basis” and secure an “overall balance of rights and obligations”;
(d) they should take into account national policy objectives and “the level of
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(e) they should provide for “appropriate flexibility for individual developing-country
Members” including measures taken by the latter “aimed at achieving the objectives
referred to in Article IV” of the GATS.
4. There is no need for the Seattle declaration to spell out anything more on the objectives of the
negotiations than what is already contained in the Preamble, Article IV and Article XIX of the GATS.
B. SCOPE
5. The negotiations would need to encompass the following three elements: (a) specific
commitments, (b) rule-making and (c) framework issues.
(a) Negotiations of specific commitments (i.e. market access and national treatment)
6. This will form the core of the next round of services negotiations. The guidelines should
reflect the following key themes in respect of the negotiations on specific commitments:
- Keeping in line with the objective of progressive liberalization, the negotiations
should aim to widen and deepen Members’  sectoral commitments both in terms of
reducing existing market access and national treatment limitations as well as
scheduling additional sectors. However, the negotiations should also take into
account liberalization measures undertaken autonomously by Members beyond theirexisting commitments.
- There should be no a priori exclusion of sectors or modes. Comprehensive
negotiations are the only way of securing an “overall balance of rights and
obligations”.
- Whilst the negotiations could proceed on all sectors concurrently, it may be useful for
Members to consider the scope for an added focus on those sectors that are
“economically significant”, particularly for developing countries.
- The negotiations should also cover MFN exemptions listed by Members and
consider: (a) the scope for their reduction; and (b) possible criteria for renewal of
MFN exemptions in light of “whether the conditions which created the need” still
prevail.
(b) Rule-making (used in the generic sense rather than in reference to safeguards, subsidies and
government procurement only)
7. The built-in agenda of the GATS on domestic regulation, professional services, safeguards,
subsidies and government procurement and technical clarifications of existing GATS disciplines
should also feature prominently in the next round of services negotiations. For example, Members
may wish to consider: (a) the scope for further regulatory disciplines to underpin market access that
has been negotiated; and (b) the need for a clarification of existing GATS disciplines such as therelationship between Articles VI (domestic regulation), XVI (market access) and XVII (national
treatment).
8. The guidelines should, thus, reflect the following key themes:
- Most (if not all) measures that affect trade in services arise from domestic
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as to ensure that they do not “constitute unnecessary barriers to trade in services”.  A
balance, however, must be struck between such multilateral disciplines and the right
of Members to have an adequate domestic regulatory framework to achieve legitimate
objectives.
- The accountancy disciplines, concluded last year, were a step in the right direction.
They, however, represent only a partial fulfilment of the mandate contained in
Article VI.4 of the GATS and the Decisi on on Professional Services. Members
should, in the course of these negotiations, aim to fulfil this mandate in full.
- As required by Article VI.4, Members should develop horizontal disciplines in
respect of “qualification requirements and procedures, technical standards and
licensing requirements” so as to ensure that they “do not constitute unnecessary
barriers to trade in services”.
- Members should, pursuant to Article VII.5, work towards the “establishment and
adoption of common international standards and criteria for recognition and common
international standards for the practice of relevant services trades and professions”.
- Members should also take up the question of the appropriate disciplines for the other
professional services. A useful starting point would be the accountancy disciplinesthemselves. Members could first identify which among these may be applicable
horizontally to all professional services. They could then progress on to formulating
profession-specific rules.
- With respect to work in the areas of safeguards, subsidies and government
procurement, it would be important for Members to complete the discussions in these
areas and seek an early agreement on emergency safeguards.
- Article IX of the GATS explicitly recognises the anti-competitive effects that “certain
business practices of services suppliers” may have. It does, however, fall short of
stipulating mechanisms
1 by which such business practices can be tackled. In parallel
to the market access negotiations, it may be useful for Members to consider: (i) thescope of these problems. on a sectoral basis; and (ii) the need for and the types of
mechanisms that will allow Members to address them.
- Members’ experience with the GATS has highlighted several grey areas. These
include for instance the ambiguity surrounding the term “economic needs test” inArticle XVI and the possible overlaps between Articles VI, XVI and XVII.  The
negotiations provide Members an opportunity to bring greater clarity to the operation
of these provisions, and such systemic issues like grandfathering.
                                                     
1 Article IX merely requires each Member, at the request of any other Member, to “enter into
consultations with a view to eliminating” such practices. It should, however, be noted that the Reference Paper
on Basic Telecommunications does provide a mechanism for dealing with such problems at least in the context
of the telecoms sector.WT/GC/W/296
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C. FRAMEWORK ISSUES
9. The ongoing work in the Services Council and the Committee on Specific Commitments have
highlighted various definitional, scheduling and classification problems. These include:
- the lack of standard definitions of frequently used concepts, e.g. “foreign
investment”, “partnership”, “sole proprietorship”, “subsidiaries” are often used in
schedules, but rarely defined;
- classification of “new” services and uncertainty as to whether a so-called “new”
service is covered by an existing commitment;
- perceived ambiguities in the distinction between modes 1 and 2;- bindings that are vague and unclear. (There are many examples of imprecise and
vague language in schedules, particularly in the “horizontal” sections of schedules);
and
- classification problems as identified during the Information Exchange Programme
(Job No. 5353). These have and could lead to conflicting interpretations of the
commitments made.
10. It would be important to have such framew ork issues addressed early since an improved
scheduling methodology would remove the uncertainty involved in making commitments and help
encourage more substantive and meaningful commitments. We should also consider ways and means
of making the national schedules of commitments more user-friendly to the business community. The
existing schedules are complex and difficult to read.
D. N
EGOTIATING MODALITIES
11. The basis for negotiations should be the existing schedules of specific commitments.
12. The “request and offer” method employed during the Uruguay Round is likely to be also the
modus operandi of the new round of services negotiations.  However, in view of the objective to
broaden and deepen commitments, as referred to in paragraph 6 , we may also wish to consider, in the
course of the negotiations, alternatives such as “cross-cutting” approaches to supplement this method,
taking into account the interest of all Members.
13. Members could develop general negotiating guidelines and targets, against which progress
and results could be benchmarked.  For certain types of barriers, it might be possible to apply a
formula to all sectors, while for other barriers it may be necessary to develop approaches adapted to
the unique characteristics of that sector.
14. In formulating the appropriate modalities for negotiations, Members would also need to
address three other issues (mandated by Article IV and XIX respectively:
(a) the treatment of liberalization undertaken autonomously by Members since the
Uruguay Round under Article XIX.3;
(b) the scope for facilitating the increased participation of developing countries through
negotiated specific commitments under Article IV.1;  andWT/GC/W/296
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(c) the treatment for least-developed countries under Article IV.3.
15. In respect of the treatment of autonomous liberalization, credit should be given on the basis of
bound commitments.
16. To ensure that the market access concerns of developing countries are taken into account in
the negotiations, it would be important for these to be identified early.  It would, however, also be
important for developed-country Members to willingly table commitments that accommodate the
market access interests of developing countries.  Members may wish to consider ways in which
Article IV could be operationalized and made more effective. For example, it may be useful for
Members to review the operation of the contact points provided for in Article IV.2. Improvement in
technical assistance, in particular for the least-developed countries, should also be a key outcome of
the new negotiations.
E. TIME-FRAME
17. The time-frame for the services negotiations s hould be within three years.  To ensure the
success of the services negotiations, the results would have to be adopted at the same time on the basis
of a single undertaking.
III. NEGOTIATING PROCEDURES
18. Members would in Seattle have to decide on the administrative arrangements for the
negotiations.  Decisions would have to be taken in respect of the participation of observers, other
intergovernmental organizations, the bodies to be task ed with the negotiations, etc.  One key question
that would have to be addressed is whether the existing bodies dealing with the GATS would suffice
for the purpose of the new negotiations or whether there is a need for additional mechanisms.  TheCouncil for Trade in Services could provide overall direction for the negotiations, or alternatively a
Services Trade Negotiating Committee could be established.
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