WORLD TRADE
ORGANIZATIONS/CSS/W/131
6 December 2001
(01-6215)
Council for Trade in Services
Special SessionOriginal:  English
COMMUNICATION FROM CUBA, PAKISTAN, SENEGAL, SRI LANKA,
TANZANIA, UGANDA, ZAMBIA AND ZIMBABWE
Increasing Participation of Developing Countries in International Trade in Services:
Effective Implementation of Article IV of GATS
The following communication has been received from the above-mentioned delegations with
the request that it be circulated to the Members of the Council for Trade in Services.
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1. The share of developing countries in the world exports of commercial services was less than
20% in 19991, despite the fact that they constitute about 90% of the membership of the WTO.
Moreover, this share has not shown any increase over the past few years.2  On the other hand,
developing countries' share in world commercial services imports has increased by about 15% during
the same period (1995-1999)3.  This is just one indication of lack of effective implementation of
GATS Article IV on “Increasing Participation of Developing Countries”.  As pointed out by
UNCTAD “Experience so far suggests that the structure of the GATS has proven to be of greater
utility to developing countries than declarations in their favour, such as GATS Article IV, which havenot to date been effectively implemented."
4  The need to rectify this shortcoming and to effectively
implement Article IV is even greater now when the mandated negotiations under Article XIX are
underway.  The present submission attempts to provide some ideas for this purpose.  It starts with a
brief discussion of Article IV as an integral part of special and differential treatment for developing
countries, analyses various elements in the Article, and then suggests certain actions to implement theArticle, particularly in the context of various on-going negotiations under GATS.  We are confident
that these ideas will generate positive discussions in  the Council for Trade in Services (CTS), leading
to the effective implementation of Article IV before the start of market access negotiations.
A. I
NTERPRETATION OF ARTICLE IV
2. It can be argued that the positive list approach of GATS and Article IV, that directly deals
with the issue of increasing participation of developing countries in international trade in services, are
interlinked parts of the same paradigm, that is, special and differential treatment for developing
countries in the multilateral trading system.  This paradigm is based on the peculiar structural features
of the economies of developing countries as well as distortions in the present international trading
                                                     
1 Based on International Trade Statistics 2000 by the WTO Secretariat.
2 For example, based on the WTO Annual Report 1997, Vol. II, this share was slightly above 20% in
1995.
3 Based on WTO Annual Report 1997, Vol. II and WTO International Trade Statistics 2000.
4 “Positive Agenda and Future Trade Negotiations”, UNCTAD, 2000, page 82.S/CSS/W/131
Page 2
patterns that arise from their lower levels of development.  In practice, this special and differential
treatment has two operational elements: (1) facilitation of exports, i.e., enhanced and non-reciprocal
access for developing country exports to developed country markets; and (2) flexibility and policy
discretion to developing countries in respect of  their own markets, i.e. , right to regulate to   pursue
developmental objectives, right to maintain some trade barriers and the right to provide appropriatesupport to their domestic services providers.  Article IV therefore should be interpreted in the context
of this broad special and differential treatment paradigm.
3. Article IV can also be regarded as an importa nt instrument to operationalize the commitments
in the preamble to the GATS, particularly in preambular paragraph 5, that states the desire “to
facilitate the increasing participation of developing countries in trade in services and the expansion of
their service exports including, inter alia , through the strengthening of their domestic services
capacity and its efficiency and competitiveness” (emphasis added).  But this is not the only
preambular paragraph that Article IV aims to operationalize.  At least three other preambular
paragraphs are also related, particularly in the context of the on-going negotiations under GATS.
Preambular paragraph 2 wishes “to establish a multilateral framework of principles and rules for trade
in services with a view to the expansion of such trade … as a means of … the development of
developing countries”.  And preambular paragraph 4, while recognizing the right of Members toregulate and to introduce new regulations on the supply of services within their territories in order to
meet national objectives, specifically recognizes “the particular need of developing countries to
exercise this right”.  Finally, preambular paragraph 6 takes “particular account of the serious difficulty
of the least-developed countries in view of their special economic situation and their development,
trade and financial needs".
B. I
MPORTANT ELEMENTS OF ARTICLE IV
4. The important elements of Article IV, in the context of the broad special and differential
treatment for developing countries, and as providing practical means to implement the objectives
given in the preamble of the GATS, can be outlined as under:
(a) Increasing Participation:  This is perhaps the most important part of the Article.  Significantly,
and in line with the paradigm of S&D and the objectives in the preamble, it commits
Members to both:  (1) providing better market access to developing country services exports
through liberalization in sectors and modes of supply of export interest to them (sub-para 1-c);
and, (2) facilitating the strengthening of their domestic services capacity and its efficiency and
competitiveness (sub-para 1-c.  Para 1-a therefore is related to the flexibility and policy
discretion to developing countries to strengthen their domestic service providers through
appropriate measures including domestic regulations, gradual, selective and conditionalaccess to their markets,
5 and other support mechanisms to improve the efficiency and
competitiveness of their domestic service providers.  Para 1-c, of course, is clearly about
linking liberalization of trade in services with better market access for services exports of
developing countries.  From this perspective, sub-para 1-b is relevant to both sub-paras 1-a
and 1-c.  Hence improving developing country access to distribution channels and informationnetworks (sub-para 1-b) , overwhelmingly owned and operated by enterprises of developed
countries, will improve their competitiveness as well as, facilitate their access to developed
country markets.
(b) Contact Points:   Paragraph 2 of the Article commits the developed country Members to
establish, latest by end 1996, contact points to facilitate access by developing country service
                                                     
5 Imposing developmental conditions, while opening selected services sectors, is not only allowed to
developing countries but seem desirable under the GATS.S/CSS/W/131
Page 3
suppliers to information that, generally speaking, will improve their competitiveness and
market access to developed country markets.  Certain elements in this paragraph are
noteworthy.  One, it does not specifically say that these contact points should be established in
the territories of concerned developed country Member.  Two, the types of information
mentioned in sub-paras a to c are quite comprehensive and go beyond the export interests ofdeveloping country service suppliers.  Three, sub-para 2-b has particular relevance to the
movement of natural persons and hence emphasises the importance for developing country
service suppliers of commitments in this mode of supply.  Four, sub-para 2-c is linked to sub-
para 1-a, further strengthening the relevan ce of access to technology for improving the
competitiveness of developing country service suppliers.  All these elements need to be
present in any mechanism that is devised to implement the obligations in this para.
(c) Special Priority to the LDCs:  Para 3 of the Article clearly states that the LDCs will be
accorded special priority while implementin g the commitments in the preceding two
paragraphs.  Moreover, one concrete way of doing this will relate to lower levels of negotiated
specific commitments by the LDCs which shou ld be in line with their special economic
situation and development, trade and financial needs.
5. To sum up the above analysis, Article IV is mandated to:
(i) provide broad special and differential treatment to developing countries, with special
priority for the LDCs;
(ii) through specific commitments, mainly by developed country Members;
(iii) that leads to tangible increase in the participation of developing country Members in
world trade in services;
(iv) through liberalisation of market access in sectors and modes of supply of export
interest to developing country Members and through access to information,
distribution channels and technology;
(v) by facilitating the strengthening of their domestic services capacity and its efficiency
and competitiveness; and
(vi) by providing flexibility and policy discretion to developing country Members to
support their domestic service suppliers.
C. RELATIONSHIP OF ARTICLE IV WITH ARTICLE XIX
6. Finally, the relationship of Article IV with Article XIX should not be overlooked: indeed the
very first sentence of Article IV mentions Part s III (Specific Commitments) and IV (Progressive
Liberalization) that includes Article XIX.  Articl e XIX of GATS, that mandates successive rounds of
negotiations and provides the legal basis for the pres ent negotiations, is intrinsically linked to the
objectives in the preamble and its operationalization mechanism as given in Article IV.  Specifically,
paragraph 2 of Article XIX provides some practical examples of implementing the objectives of
Article IV by mandating that (1) the process for liberalization shall take place with due respect for
national policy objectives and levels of development of Members, not just in over  all terms but,
significantly, also in terms of individual sectors;  and (2) there shall be appropriate flexibility fordeveloping countries to open fewer sectors, to liberalize fewer types of transactions, to extend market
access in line with their development situation and to attach conditions to this access.   Similarly,
paragraph 3 of Article XIX links the achievement of objectives of Article IV to the establishment of
Negotiating Guidelines for each round of negotiations that are based on the assessment of trade inS/CSS/W/131
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services with reference to the objectives in the preamble.  Moreover, the last sentence of paragraph 3
also mandates that the Negotiating Guidelines shall establish modalities for the treatment of
autonomous liberalization as well as for the special treatment for the LDCs.
7. It should be clear from the above that not only various parts of GATS, e.g., objectives in the
preamble, commitments under Article IV and mandated negotiations under Article XIX, are closelyinterlinked, but also that the drafters of this Agr eement have tried to provide certain practical means to
operationalize these commitments.  The lack of implementation, therefore, is not so much due to lack
of means provided in the Agreement but to the disregard shown by some Members to these
provisions.
D. P
ROPOSALS TO IMPLEMENT ARTICLE IV
8. Based on this analysis, and in view of the fact that the mandate of Article IV, for whatever
reason, has not been fulfilled thus far, following action is proposed.  Members should committhemselves to these actions.  Such a commitment, particularly by developed country Members, will
not only effectively implement Article IV but also will create a conducive environment to conduct and
successfully conclude the present round of services negotiations.
I. Actions Before the Start of Market Access Negotiations
The following actions should be taken before the start of sectoral market access negotiations:
1. The Council for Trade in Services shall  carry out an assessment of trade in services.
This assessment should examine the participati on of developing countries in world trade in
services including existing liberalization commitments by developed country Members insectors and modes of supply of export interest to developing country Members; identify major
problems faced by developing country service providers; and assess whether the objectives in
the preamble and Article IV have been achieved and, if not, what are the causes.   
2. The Council for Trade in Services shall  establish modalities for granting credit to
developing countries for autonomous liberalization, and for the special treatment of LDDS.
3. The Council for Trade in Services shall  examine, on the basis of notifications by
developed country Members, the actions that have been taken to facilitate developing country
service providers` access to technology, distribution channels and information networks.  This
should facilitate the identification of best practices as well as gaps in existing actions.  Based
on this exercise, concrete actions can be outlined that Members must take to discharge theirobligations under Article IV.
4. The Council for Trade in Services shall  assess the working of contact points that have
been established pursuant to paragraph 2.  This assessment will be based on comprehensive
notifications by developed country Members that provide detailed information regarding theuse of these contact points by developing country service providers.  The outcome of this
exercise will be to establish the minimum standards for the working of the contact points so
that they are fully functional, properly funded, known and linked to developing country service
providers, and proactive in responding and disseminating the relevant information.   Issues such
as the establishment of the contact points in the embassies/consulates/commercial offices ofdeveloped countries in developing countries and extending their role to include facilitation of
access to technology and information and distribution networks, can also be part of this
exercise.S/CSS/W/131
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5. To effectively implement Article IV.1c, sectors and modes of supply of export
interest to individual developing countries will be identified by developing countries.  This
will facilitate the Council for Trade in Services in assessing the offers and commitments by the
developed countries in these sectors and modes of supply of export interest to developing
countries.
6. To preserve the present positive list structure of the GATS through the
implementation of Article IV,  developing countries have the opportunity to   identify and
submit to the Council for Trade in Services, list of  sectors and types of transactions that they
could liberalize so that the requests made to them by developed countries during market access
negotiations focus only on these sectors and types of transactions.
II. Actions During the Sectoral Market Access Negotiations
These actions will be linked to the actions mentioned above.
1. Developed country Members shall  provide meaningful access in the identified (as in
I.5 above) sectors and modes of supply of export interest to individual developing
countries.  These commitments should be specifically mentioned in country
schedules.  Moreover, the Council for Trade in Services  should assess these specific
commitments in sectors and modes of supply of interest to developing countries
before the finalization of negotiations so that any shortcomings can be made upbefore the conclusion of the negotiations.
2. The Council for Trade in Services shall  carry out an assessment of the results of the
negotiations to ensure that there is mutuality of benefits and an over all balance of
rights and obligations.  Of course, the negotiated commitments will have to beadjusted, if needed, in the light of this assessment which will be carried out before the
final agreement is reached.
3. To preserve the positive list structure of the GATS, developed country  Members,
while making requests to developing country Members, shall  focus only on the
sectors and types of transactions that have been identified by individual developing
countries (as in I.6 above) for liberalization.   
4. To achieve the objectives of Article IV, and as mentioned in Article XIX,  Members
shall  not insist on the removal of conditions that individual developing countries have
attached to their commitments.
5. To ensure  the exercise of the   right of developing countries to take measures to
strengthen their domestic service sectors and to pursue national policy objectives
through domestic regulations, such measures and regulations will continue to be dealt
with under Article VI only.
6. In recognition of the fact  that transfer of technology is a legitimate development
objective of developing countries, they shall  have the right to impose conditions,
specify types of transactions and undertake other measures for this purpose, while
undertaking liberalization commitments.
7. Negotiating Guidelines shall be implemented in letter and spirit.S/CSS/W/131
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III. Other Actions
Keeping in view the fact that Article IV is a practical mechanism to implement S&D in
favour of developing countries and fulfill the objectives of GATS as given in the preamble, it is also
proposed that the Council for Trade in Services shall   regularly monitor the implementation of all the
actions and measures required to effectively implement Article IV and suggest necessary remedial
action when needed.  Regular notification obligations for developed country Members can be
envisaged for this purpose.
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