RESTRICTED
WORLD TRADE S/WPGR/M/13
19November 1997
ORGANIZATION
(97-5096)
Working Party onGATS Rules
REPORT OFTHE MEETING OF1OCTOBER 1997
Note bytheSecretariat
1. Thethirteenth meeting oftheWorking Party onGATS Rules waschaired byMs.JillCourtney
ofAustralia. Theagenda forthemeeting wascontained inWTO/AIR/668. Itconsisted offiveitems:
negotiations onsafeguards under Article XoftheGATS; negotiations onsubsidies under Article XV
oftheGATS; negotiations ongovernment procurement under Article XIIIoftheGATS; dateofthe
nextmeeting oftheWorking Party; andother business.
ITEM A:NEGOTIATIONS ONSAFEGUARDS UNDER ARTICLE XOFGATS
2. TheChairperson noted thatsince theprevious meeting, onemore submission onthesubject
ofemergency safeguard measures hadbeenreceived fromPeru(S/WPGR/W/23), aswellasaresponse
tothequestionnairefromCuba(S/WPGR/W/15/Add.7).Thereportofthelastmeeting(S/WPGR/M/12)
hadnotmentioned thecommunication received fromASEAN onthesubject ofemergency safeguard
measures (S/WPGR/W/22). TheChairperson recalled thattheSecretariat hadbeenrequested toprepare
anoteon"Examples ofsituations inwhich emergency safeguards maybetaken", which hadbeen
distributed asdocument S/WPGR/W/24, andinvited comments from Members.
3. TheSecretariat paper wasseenasauseful contribution tothecurrent discussions, though two
delegations feltthatithadperhaps gonebeyond whathadoriginally beenrequested. Some delegations
noted thatthepaper wasconcerned withonlyoneofthefourkeyquestions identified bytheChairperson
inthenoteof3June1997, andaconsideration oftheotherquestions remained important. Inparticular,
howinjury would bedetermined, andhowacausal linkwould beestablished between injury and
increased services imports given thepaucity ofdata, were identified bysome delegations askey
questions.
4. Anumber ofdelegations emphasized theimportance ofanalysing thecircumstances inwhich
safeguard action maybetaken. Some delegations observed thatthebasicroleofsafeguard action should
betoprovide temporary relief inorder tomake possible gradual rather thanabrupt adjustment, and
thushelptoreduce thesocial costs ofadjustment. Afewdelegations expressed doubts about the
usefulness ofdistinguishing between injury-causing developments which wereprimarily domestic in
origin andthose which wereprimarily foreign inorigin (discussed inSection IIofS/WPGR/W/24).
Anincrease inservices trade could occur through thecombined effects ofdomestic andforeign
developments, andtodistinguish between thetwowould bedifficult. Thefocus, several delegations
felt,should beonwhether injury hadbeencaused byincreased imports, andtheunderlying reasons
should notberelevant todetermine thepermissibility ofsafeguards. Many delegations were ofthe
viewthat"unfair" trading developments should notbethebasis forsafeguard action since there were
other GATS provisions todealwithsuchsituations. However, some delegations feltthatthedoor
should notbeclosed tothepossibility ofsafeguard action todealwithinjury caused byunfair trade
practices.S/WPGR/M/13
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5. Addressing Section IIIofS/WPGR/W/24, theneedtolimitsafeguard action todealonlywith
unforeseen circumstances wasemphasized bynumerous delegations. However, some expressed doubts
about thefeasibility ofdeveloping objective criteria todetermine whether circumstances wereindeed
unforeseen.
6. Withregard toSection IVofS/WPGR/W/24, some delegations stated thatitwasnotdesirable
toimpose additional conditions forsafeguard action -beyond demonstrating thatinjury wascaused
byincreased imports. Onedelegation feltthattheintroduction offactors liketheonesmentioned in
paragraph 16ofS/WPGR/W/24 would make themechanism toocomplicated toimplement. Afew
delegations alsodoubted thedesirability ofcreating apresumption infavour ofeconomically superior
instrumentsofsafeguardaction,suchassubsidies.Onedelegationidentifiedthereasonsforitsopposition
totheidea. First, aMember might needtousemeasures witharealimpact onimports overashort
period oftime,andsothequantitative restrictions listed inArticle XVImaybemoreefficient. Secondly,
theimplementation ofasubsidy asasafeguard could violate national treatment, which wasnotfeasible
incertain countries duetothenature oflegalregimes. Afewdelegations feltthatitwould bedesirable
toinclude apublic interest clause inanemergency safeguard mechanism. Such aninclusion would
ensure thatauthorities tookintoaccount notonlythebenefits toanindustry butalsothecoststoother
sectors fromsafeguard action. Onedelegation expressed theviewthatiftherewasaneedforasafeguard
action atall,itshould berelated tonational welfare objectives rather thantradepolicy-related objectives,
since thelatter were covered byGATS provisions and/or scheduled reservations.
7. Several delegations feltthattheissueofhowfarpolicy objectives should bebuiltexanteinto
theschedules, andhowmuch scope thereshould beforexpostsafeguard action needed tobecarefully
considered (discussed inSection VofS/WPGR/W/24). Some delegations noted thatmeasures listed
inaschedule, toprotect ortoallow timeforgradual adjustment, would besafeguards, butnotemergency
safeguards. Anemergency safeguard would betocope withanemergency situation which was
unforeseen. Thedelegation ofMexico saidthatthesafeguard contained inNAFTA withrespect to
financial services, referred toinSection V,wasduetocertain Mexican legislation, anddidnotconstitute
asafeguard measure tocope withanunforeseen oremergency situation. Theverynature ofan
emergency situation, duetounforseen circumstances, made itdifficult forthosesituations tobeprovided
forinlegislation andtobewithin thecontrol ofthegovernment. Onedelegation suggested thatitwas
important toconsider howfaraMember could anticipate andspecify thecircumstances inwhich it
would invoke asafeguard measure. Itfeltthatthenotion ofscheduled safeguards, asopposed toa
moregeneralprovision,shouldbeexaminedonamoreexhaustivebasiswhileconsideringthedesirability
andfeasibility ofasafeguard provision inGATS. However, some delegations feltthatscheduling
safeguards inadvance didnotseem veryuseful. Onedelegation noted thatnotevery injury situation
andrelevant remedy instrument could befullyexamined inadvance, andsotheprocess ofnegotiating
scheduled commitments would become toocomplicated. Another delegation saidthatMembers should
becautious about theideaofscheduled safeguards since asituation could becreated inwhich the
possibility torespond tounforeseen circumstances, which wereapriori thesameforeverybody, would
beavailable tocertain countries andnottoothers.
8. Several delegations addressed themodal issues raised bysafeguard action. Onedelegation
noted thatinthecontext ofmode 1,itwould bedifficult torestrict transactions attheborder, especially
electronic transactions, andthatsafeguards would rarely beneeded formode 2asconsumption did
notoccur inthecountry wishing toapply thesafeguard. Another delegation wasoftheview that
increased"consumption"offoreignservicesmaybeamoreappropriateconceptthanincreased"imports"
since itwasnotclear astohowthelatter notion could beapplied tomodes 2,3and4.Several
delegations expressed doubts about thedesirability ofapplication ofsafeguards post-establishment but
some feltthat,eventhough acquired rights should bepreserved, theycould besuspended during an
emergency. Onedelegation observed thatthestageatwhich aperson wasconsidered aforeign services
supplier wasnotalways clear. Frequently foreign service suppliers participated injointventures whereS/WPGR/M/13
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theirequity might beintheminority. Moreover, itwould create anunpredictable element intheGATS
iftherights thatforeign suppliers hadascorporate citizens ofthecountry inwhich theywereoperating
could belessened.
9. Thedelegation ofThailand informed theWorking Party thathisdelegation hadorganized a
seminar on"Emergency Safeguard Measures inGATS". Abriefoutline ofthecontent oftheseminar
wasprovided bytheSecretariat.
10. TheChairperson saidthatshewould holdfurther informal meetings tocontinue thediscussion
based ontheSecretariat 'spaper, taking intoaccount thecomments already made, andtoaddress the
other questions intheChairperson 'snoteof3June1997. Shealsonoted thatherconsultations had
revealed thatMembers agreed, inprinciple, thatitwould notbepossible toconclude thenegotiations
onemergencysafeguardmeasuresbeforetheend-of-the-yeardeadlinespecifiedinArticleX.Sherecalled
thatattheprevious informal meeting, Members hadagreed toconsider whether adeadline of30June
1999would beacceptable. Sheproposed thattheWorking Party takeadecision inprinciple onextending
negotiations until30June1999under theexisting terms stipulated inArticle XoftheGATS. Onthis
basis, theSecretariat would prepare adraftdecision tobecirculated toMembers forcomments within
thenexttwoweeks. Members agreed totheChairperson 'sproposal.
11. Onedelegation sought clarification oncertain aspects oftheSecretariat 'snoteof1October
1997 on"Extending thenegotiations onsafeguards". Some Members indicated thattheywould need
toreflect onthemodalities fortheextension.
ITEM B:NEGOTIATIONS ONSUBSIDIES UNDER ARTICLE XVOFGATS
12. TheChairperson indicated thatonlytworesponses tothequestionnaire onsubsidies hadso
farbeenreceived, from Norway andNewZealand, circulated asdocuments S/WPGR/W/16/Add. 1
and2,respectively. Sheurged delegations tomake aneffort toprovide responses soonandstressed
theimportance ofsuchinformation forsubstantive discussions onthesubject.
ITEM C:NEGOTIATIONS ONGOVERNMENT PROCUREMENT UNDER ARTICLE XIIIOF
GATS
13. TheChairperson indicated thattwomoreresponses tothequestionnaire hadbeenreceived since
theprevious meeting, from Peru (S/WPGR/W/11/Add.20) andTurkey (S/WPGR/W/11/Add.21).
Sheobserved thatthesynthesis prepared bytheSecretariat ofthefirst19responses andthemore recent
responsesprovidedalargecorpusofinformationonnationalregimes.ShealsodrewMember'sattention
toanon-paper submitted byNewZealand onthesubject ofgovernment procurement.
14. Inintroducing thenon-paper, therepresentative ofNewZealand saidthatitspurpose wasto
examine issues andquestions arising fromtheapplication offundamental WTO principles togovernment
procurement inservices andexplore possible areas ofcommon understanding onsuchprinciples. The
non-paper didnotattempt toexamine thequestion ofthepossible formthattheoutcome ofnegotiations
might takenordiditseektocomment onanypossible relationship between thenegotiations andother
work inthegovernment procurement field.
15. Norway provided some clarification regarding itsprocurement ofconstruction services, which
wasreferred tointhesynthesis ofdifferent procurement regimes (S/WPGR/W/20), under theheading
Laws andRegulations inForce. According tothedocument, procurement above specified thresholds
tookplace through acentral specialized agency. InNorway, stateconstruction works above theWTOS/WPGR/M/13
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GPAthresholds wereusually undertaken byeither theDirectorate ofPublic Construction andProperty
orbytheNorwegian Defense Construction Service, thelatter being responsible fordefense entities.
AllNorwegian municipalities andcounties, which werealsocovered bytheWTO GPA, werehowever
responsible fortheirownconstruction services andorganised theseindependently andonanindividual
basis.
16. Onedelegation suggested thatsubstantive discussion could begin bylooking atthequestion
ofhowgovernment procurement should bedefined. Asafirststep,Members needed toexamine what
services would becovered byanyprovisions ongovernment procurement thatresulted fromthecurrent
negotiations. Thenextstepwould betoexamine whatentities would becovered, anissue forwhich
Article IoftheGATS would berelevant. Another delegation suggested thatitwould beappropriate
toaddress theprinciple ofnon-discrimination, andemphasized theimportance ofclarifying howthe
work oftheWorking Party would relate toongoing work onprocurement inother WTO fora.
17. TheChairperson noted thatmore discussion wasnecessary inrespect ofdefinitions and/or
theprinciple ofnon-discrimination. Shesuggested holding aninformal meeting on6November 1997
todiscuss issues related bothtogovernment procurement andsafeguards. Members agreed withthe
Chairperson 'ssuggestion.
ITEM D:DATE OFTHE NEXT MEETING
18. Itwasagreed thattheWorking Party would meet nextonWednesday, 26November 1997.
ITEM E:OTHER BUSINESS
19. Nomatters were raised under other business.