RESTRICTED  WORLD TRADE  
ORGANIZATION  S/C/M/75 
3 December 2004 
 
 (04-5333) 
Council for Trade in Services   
  
 
 
REPORT OF THE MEETING HELD ON 26 NOVEMBER 2004 
 
Note by the Secretariat
1 
 
 
1. The Council for Trade in Services held a meeting on 26 November 2004 chaired by 
Ambassador Peter Brño (Slovak Republic).  The age nda for this meeting is  contained in document 
WTO/AIR/2449. 
2. The Chairman  said that under Other Business, he intended to make two brief statements 
regarding the chairpersons of the subsidiary b odies to the Council for Trade in Services for 2005 and 
the date of the next formal meeting of the Council.     
3. The Chairman  suggested that the agenda be adopted as circulated with the addition of the 
items raised under Other Business and that the agen da item E be addressed before the agenda item B 
as requested by a delegation.  
4. The Council so agreed . 
A. ANNUAL  REPORT  OF THE  SUBSIDIARY  BODIES  TO THE  COUNCIL  FOR  TRADE  IN 
SERVICES 
5. The Chairman  stated that in accordance with WT O reporting procedures, the Council for 
Trade in Services was to consider the annual reports of its subsidiary bodies.  He drew the Council's 
attention to the following reports which had been adopted by the respective bodies during the course 
of the current week: the Report of the Committee on Trade in Financial Services (S/FIN/12); the 
Report of the Committee on Specific Commitments (S/CSC/10); the Report of the Working Party on Domestic Regulation (S/WPDR/7); and the Report of the Working Party on GATS Rules (S/WPGR/14).  Indicating that the four reports were  purely factual and self-explanatory, he suggested 
that the Council take note of these reports on the understanding that they would be annexed to the 
annual report of this Council and fo rm an integral part of it. 
6. The Council so decided
. 
B. ANNUAL  REPORT  OF THE  COUNCIL  FOR  TRADE  IN SERVICES  TO THE  GENERAL  
COUNCIL 
7. The Chairman  reminded Members that in accordance with WTO reporting procedures, the 
Council for Trade in Services was to report in No vember each year to the General Council on the 
activities in the Council as well as in the subsidiary bodies.  He drew the Council's attention to the 
draft Annual Report of the Council for Trade in Services on its activities in 2004, contained in 
                                                      
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO. S/C/M/75 
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 document S/C/W/244.  He indicated that this Repo rt was factual and self-explanatory and that the 
annual reports of the subsidiary bodies would be an nexed to this Report for submission to the General 
Council.   He then proposed that the Council for Tr ade in Services adopt the draft Annual Report to 
the General Council, contained in document S/C/W/244. 
8. The Council so decided
. 
C. NOTIFICATIONS  MADE  TO THE  COUNCIL  PURSUANT  TO ARTICLES  III:3  AND  
VII:4  OF THE  GATS 
9. The Chairman  drew the Council's attention to  three notifications pursuant to Article III 
(Transparency) by Uruguay, contained in documen ts S/C/N/306-308, and two notifications pursuant 
to Article VII (Recognition) from Armenia, contained in document S/C/N/304-305.   
10. The representative of Japan  requested Armenia to provide  detailed information of the 
agreements referred to in its notifi cations, and if possible, in writing. 
11. Given Armenia’s absence, the Chairman  asked the Secretariat to forward Japan's request to 
Armenia.  He proposed that the Council take note of these notifications and the statements made. 
12. The Council so agreed . 
D. REPORT  TO THE  COUNCIL  BY ALBANIA  – IMPLEMENTATION  OF SPECIFIC  
COMMITMENTS  IN TELECOMMUNICATIONS  SERVICES 
13. The Chairman  recalled that at its meetings held on 5 December 2003 and 1 March 2004, the 
Council for Trade in Services had examined Albania' s waiver request regarding the postponement of 
the implementation of its GATS commitments in in ternational public voice telephone services.  Based 
on the report (S/C/21) of the Council for Trade in Services, the General Council had granted to 
Albania the waiver by decision taken on 17 May 2004,  contained in document WT/L/567.   According 
to the General Council's decision, Albania was to provi de a status report on its preparations to fulfil its 
GATS commitments no later than the last formal meet ing of the Council for Trade in Service in 2004. 
14. The representative of Albania  informed the Council that his government had taken steps to 
fulfil its commitment of removing the exclusivity of Albtelecom in international public voice 
telephone services.  In the Albanian telecommunica tion market, there were actually more than 80 
operators. Albtelecom and 37 rural operators pr ovided fixed telephony services with about 255 
subscribers.  AMC and Vodafone were mobile opera tors with 1.1 million subscribers.  29 suppliers 
provided internet services to 30 thousand users.  About 20 operators had been licensed to provide value-added services.  In addition, 5 operators were  providing the service of prepaid telephone cards 
and another 15 operators had been licensed to supply this service. 
15. The representative of Albania
 stated that further liberalization was his government’s main 
objective in the telecommunication sector.  For this purpose, the Policy Paper for the Development of 
the Telecommunication Sector had been amended by stipulating that international telephony services 
would be open to competition by 1 January 2005 so as  to fulfil Albania's commitment to create a fully 
liberalized telecommunication market.  He indicated that Albania's telecommunication sector was in 
transition from a monopolistic market into a liberalized  and competitive market.  In order to achieve a 
sustainable development and to increase efficiency  in this sector, taking into consideration of 
deregulation and institutionalization of regulat ory entities, the policy-making and regulatory 
institutions were working in co-operation with interna tional consultants to prepare a study.  This study  
would touch upon Albania's actual telecommunica tion market, wireless frequencies band, fixed 
telephony services in the urban area as well as new te lecommunication services. Therefore, measures  S/C/M/75 
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 necessary to improve and to further develop Albania' s telecommunication market would be identified, 
which would address issues such as interconnection,  tariffs, costs of telecommunication services, the 
major supplier's obligations, and ma nagement of frequencies.  This  study would not only help to 
prepare the new policy paper on telecommunication services, but also contribute to relevant amendments to the Telecommunication Law.  Im provements would take place in the following 
aspects: access to electronic networks and interconnection; licensing on electronic communication 
networks and services; normative framework on electronic communication networks and services; 
universal service and users' rights in the exploitation of electronic communication networks and services; and policy/regulatory framework on radio -frequencies.  Regarding privatization, the 
government of Albania had taken several steps such  as amendments to the Law on Privatization and 
other legal acts in order to increase company shares.   To ensure a transparent process and a broad and 
competitive participation, a privatisation prom otion plan had been approved, which included 
publishing privatisation announcements in thr ee international newspapers, addressing a Prime 
Minister’s letter to foreign governments, distributin g investment invitations through foreign embassies 
in Tirana and Albanian Missions abroad.  In conclu sion, the representative of Albania stated that his 
government was determined to con tinue liberalization in a most efficient way with a view to 
achieving a sustainable economic development and to enhancing its citizens' living standard.  
16. Thanking Albania for its detailed statement, the representative of the European Communities
 
indicated that much information provided by Albani a was related to reorgani zation and privatization 
of its telecommunication sector.  Noting that Albania's commitment was to open this sector to competition by 1 January 2005, she was pleased to see that this had been included in the policy 
document.  She believed that this  was also what would happen.  
17. Thanking Albania for updating information on  its progress in liberalizing telecommunication 
services, the representative of the United States
 noticed that this sector would be open to competition 
by 1 January 2005.  Noting that Albania's report pr ovided a description on the general steps that had 
been taken,  she hoped that each of these steps would indeed allow that to happen.  She looked 
forward to a subsequent update during the next servi ces cluster confirming what Albania had stated at 
the meeting.  
18. The Chairman  suggested that the Council take note of the statements made. 
19. The Council so agreed . 
E. TRANSITIONAL  REVIEW  UNDER  SECTION  18 OF THE  PROTOCOL  ON ACCESSION  
OF THE  PEOPLE'S  REPUBLIC  OF CHINA 
20. The Chairman  stated that Section 18 of the Accession Protocol of the People's Republic of 
China provided for an annual review of the implem entation by China of the WTO Agreement and of 
the related provisions of China's Accession Protocol .  The Committee on Trade in Financial Services 
and the Council for Trade in Services were two of the bodies in which this Review was to be 
conducted.  When it concluded its review, the Committee on Trade in Financial Services was to 
submit a report to the Council, which would form pa rt of the Council's report to the General Council. 
The General Council would conduc t its own review. He noted that the Committee on Trade in 
Financial Services had conducted an d concluded the transitional revi ew under Section 18 of China's 
Accession Protocol on Tuesday 23 November 2004, a nd that a report had been submitted by the Chair 
of this committee, contained in document S/FIN/13.  He proposed that the Council take note of the 
report from the Committee on Trade in Financial Services on the understanding that it would form 
part of this Council's report to the General Council. 
21. The Council so decided . S/C/M/75 
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 22. The Chairman
 drew the Council's attention to a comm unication made by China, contained in 
document S/C/W/249, which provided information re quired by Annex 1A of the China's Accession 
Protocol. 
23. Turning to the review by the Council, he said that the Council would follow the same 
procedure as the one used in the previous reviews.  He would first invite China to respond to the 
comments and questions which were contained in  the communications from Japan (S/C/W/241), the 
European Communities (S/C/W/242), the Unite d States (S/C/W/243), and Chinese Taipei 
(S/C/W/245).  Members would then make comme nts and pose supplemental questions, and China 
would have opportunity to respond. 
24. The representative of China  stated that since the conclusi on of the previous transitional 
review, China had made several rules and regulat ions facilitating liberalization in service sectors, 
which included the Implementing Rules of the Regulations on the International Freight Forwarding 
Services, Rules on Foreign Investment in the Sector  of International Mar itime Transportation, Rules 
on Foreign Investment in Advertising Enterprises, Rules on Foreign Investment in the Commercial 
Sector, and Policy on the Development of Automobile Industry.   She underlined that these rules and 
regulations not only were in conf ormity with China's WTO commitments, but also contained some 
voluntary liberalization measures, which shown that  China took a positive attitude towards market 
opening in services.  She indicated that as China implemented its commitments, the volume of its 
trade in services had been growing.  In 2003, Chin a’s total import and export of services had exceeded 
USD 100 billion for the first time in history, reaching USD 102 billion, which made China the 9th 
biggest economy in services in the world.  More sp ecifically, in 2003, China’s total import of services 
had reached USD 55.3 billion, and its total export of services USD 46.7 billion, respectively 
representing an increase of 19 % and 18 % compared w ith the previous year.  China thus had a trade 
deficit of USD 8.6 billion in services in 2003, which represented an increase of 26 % compared with the previous year.  From January to June 2004,  China’s total import of services had reached USD 
32.27 billion, 27 % higher than the same period of 2003.  These statistics could serve as a strong 
testimony to the level of liberalization of China’s service market.  The year of 2004, the third year of 
China’s accession to the WTO, had seen a rapid growth of FDI in services.  From January to June 2004, 3,920 new foreign-invested service enterprises had been established in China, representing an 
increase of 12.5 % compared with the same period of the previous year, which accounted for 24.5 % 
of the total FDI made in China, namely, USD 8.29  billion, 6 % higher than the same period of the 
previous year.  More specifically, China’s dist ribution services had received USD 4.4 billion of FDI 
until October 2004, with 282 foreign-invested dist ribution enterprises established, which had opened 
3,852 stores with a total operating surface of 8.03 million square meters.  Ma ny important retailers 
such as Wal-Mart, Carrefour and Metro had entered in to China's market and were developing rapidly.  
For example, Wal-Mart and Carrefour were allowe d to open over 55 large stores each.  In legal 
services, China’s Ministry of Justice had approved 26 new foreign law firms to set up representative 
offices in 2004, which came from WTO Members such as the US, EC, Singapore, Japan and Korea.  
In accounting services, since its accession to the WT O, China had approved the establishment of 3 
Chinese member firms and 9 branches of internati onal accounting firms.  In education services, 59 
Sino-foreign cooperative educational institutions an d programmes had been approved in 2004, which 
had made the total of this type of institutions and programmes 851.  With respect to construction 
services, in 2004, China’s Ministry of Constr uction had granted Class 1 qualification to 42 
construction enterprises, and approved the establishm ent of 17 engineering design joint ventures, 2 
urban planning service joint ventures and 32 Class 1 fo reign-invested real estate enterprises.  In 
medical services, from China’s accession to the WTO till July 2004, China’s Ministry of Health had 
approved the establishment of 52 medical joint ventur es.  The representative of China emphasized that 
China’s efforts in implementing its WTO commitm ents and in expanding liberalization had been 
broadly recognized and appreciated by foreign investors and WTO Members.   S/C/M/75 
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 25. Responding to questions on construction services , the representative of China  first addressed 
the issue of residency requirements.  He referred to paragraph 14 of the Guidelines for the Scheduling 
of Specific Commitments under the GATS, which stat ed: “regarding the need to schedule residency 
requirements, it should be decided on a case-by-case basis. ... If the residency requirement is not 
discriminatory, it would be subject to the disciplin es of Article VI:5.”  He indicated that China’s 
Construction Law  and its Regulations on the Administration of  Construction Engineering, Surveying 
and Designing  required all professional technicians enga ged in construction activities to obtain 
professional qualification certificates.  This requirement  equally applied to foreign service suppliers in 
accordance with the principle of national treatment.  Foreign service suppliers were required to stay in 
China for a certain period of time so as to ensure that they would be able to accomplish their duties 
and to deal with technical problems arising from engineering work.  This requirement also took into 
consideration the strong geographic characteristic of  construction project management in order to 
ensure the quality and safety of projects.  With re spect to the question relating to wholly foreign-
invested construction enterprises mentione d in Decree 113, he referred to the Circular on Questions 
Concerning Administration of Qualification of Foreign-invested Construction Enterprises  (Jianshi 
No. 159-2004). He confirmed that foreign companie s’ global experience was taken into account when 
they applied for qualifications in China.  He fu rther confirmed that limitations on the number of 
foreign project managers had been removed.  Decree 113 had been elaborated in accordance with 
China’s commitments in construction services.  A foreign investor might enter into China’s 
construction market in two ways: either setting up a wholly foreign-owned enterprise, or creating a 
joint venture.  China had made no other commitment s except these two types of entities.  Construction 
companies operated in China based on the grad ing system established by China’s Ministry of 
Construction.  In accordance with Decree 113, both foreign-invested a nd domestic construction 
enterprises were to acquire relevant qualificati ons for a certain grade in order to undertake 
corresponding projects.  In this regard, full nationa l treatment had been accorded to foreign-invested 
construction enterprises, including equal register ed capital and qualification requirements. In 
accordance with China’s WTO co mmitments in construction services, wholly foreign-owned 
construction enterprises were a llowed to undertake four typ es of construction activities.  
26. With respect to questions relating to legal services , the representative of China  first addressed 
the concern over one of the conditions imposed on fore ign law firms: “the need to start legal services 
operation” (paragraph 4 (a) of the communication from th e EC).  He was of the view that this was an 
issue of regulation rather than an ENT.  He stated  that there were in total 192 representative offices of 
foreign law firms in China and that 35 licenses had b een issued in 2004.  This fact shown that there 
was no quantitative restriction on foreign legal service suppliers.  He indicated that this requirement 
reflected the principle of prudence.  Expertise and experience were needed in legal services in order to 
protect customers’ rights and interests.   The re quirement of submitting a feasibility study report was 
in light of the same spirit.  Regarding the requireme nt of "one partner per office", he explained that 
China's legal services market, quite different from th at of developed Members, had not yet matured 
and that a sound service mechanism had not yet been  established.  This requirement was for the 
purpose of protecting consumers' in terests.  Responding to the request  for clarification on the balance 
between "Chinese law practice" and "information on the impact of the Chinese legal environment" (paragraph 4 (b) of the communication from the EC),  he referred to China's Schedule of specific 
commitments.  He indicated that "Chinese law pr actice" was excluded from China's commitments in 
legal services and that the business scope of representa tive offices of foreign law firms were limited to 
five types of activities as listed in  the market access column.  While foreign law firms in China could 
provide information on the impact of the Chinese lega l environment, they were not allowed to provide 
specific legal opinions and/or certification re lating to the application of Chinese law. 
27. Turning to telecommunication services , the representative of China
 first explained the 
requirement regarding a main Chinese partner (holding  more than 30 %) in a joint venture (paragraph 
12 of the communication from the EC).  Given the strong technicality of the telecommunication industry and the emergence of new services and technology therein, the Regulation on Administration S/C/M/75 
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 of Foreign-invested Tele communication Enterprises  required the major foreign party of a foreign-
invested telecommunication enterprise to satisfy rele vant qualification requireme nts in order to better 
protect the interests of investors and consumer s and to ensure a healthy development of the 
telecommunication industry.  It was for this purpose that the major Chinese partner in a joint venture 
was required to hold more than 30 % of the total capital.  With this requirement, major Chinese 
investors would take more obligations while foreign investors would have less risks.  In response to 
the request for providing information on inter-conn ection and leading telecommunication operators,  
the representative of China stated that the Regulations on Telecommunications, the Regulations on the 
Interconnections Between Public Telecommunica tion Networks (Decree 9 of the Ministry of 
Information Industry (MII)) and other relevant regulations had been  publicized and could be found at 
the website of MII: www.mii.gov.cn. In accordance with these regulations, leading 
telecommunication operators were to develop rules on interconnection, to submit them to the MII for 
approval prior to implementation, and to provide in terconnection within the required time limit.  They 
were not allowed to deny interconnection requests made by other telecommunication operators or 
private network operators. Nor were they allowed to, without permission, restrict the right of users to 
choose telecommunication services provided by other operators. Leading telecommunication 
operators were required to ensure that the qua lity of the inter-network connection service they 
provided to other telecommunication operators was the same as they provid ed within their own 
networks or to their subsidiaries or branches. In a ddition, they had the obligation to coordinate with 
users with telecommunication network code number resources. In accordance with the Regulations on 
the Interconnection Between Pub lic Telecommunication Networks , leading telecommunication 
operators were those who possessed necessary basic telecommunication facilities, whose market share 
was over 50 % in fixed local telephone services, and w ho were able to impose substantial impact on 
the market access of other telecommunication operators.  With regard to the restriction on the resale 
of telecommunication services, the representative of Chin a stated that this restriction also applied to 
domestic operators.  Given the actual development level of China's telecommunication market, it was 
still premature to remove this restriction.  On in ternational telecommunication gateways,  he indicated 
that China had made no commitments in this rega rd and that, as listed in China's Schedule, all 
international telecommunication services were require d to go through gateways established with the 
approval of China's telecommunications authoritie s.  Concerning the question on the code and 
protocol conversion (paragraph 11(c) of the communi cation from the US), he stated that given the 
rapid development of science and technology, the classification of telecommunication services was by 
no means an easy task for any WTO Member.  The a pproach to classification was to be based on each 
Member's development level, economic situation an d administrative measures, which varied greatly 
across the world.  The code and protocol conversi on was applied when technical criteria or standards 
in telecommunications were not unified.  Its pur pose was to ensure the interconnection between 
networks or services using different codes and protoc ols.  As technical criteria had been gradually 
unified at the international level, there was no de mand for this service in China.  This was why the 
MII's Catalogue had omitted the "code and protocol conversion" from the list of value-added services.  
With respect to the inquiry on the number of applications by forei gn telecommunication service 
suppliers and the number of denial and approval  of such applications, he referred to the 
communication made by his delegation, contai ned in document S/C/W/249, which provided 
information required by Annex 1A of  the China's Accession Protocol.  
28. With respect to courier services , the representative of China
 referred to China's GATS 
commitments in this sector, which stated "courier services except for those currently specifically 
reserved to Chinese postal authorities by law".  Chin a’s Postal Law stipulated: “Posting and delivery 
services of letters and articles with characteristics of  letters shall be exclusively operated by postal 
enterprises.”  He thus held that China's commitment s in courier services were limited to the express 
delivery of articles.  He, however, admitted that China's State Council did permit foreign operators to 
handle the service of international letters with the po stal authorities' entrustment, given the fact that 
foreign operators, such as UPS and FedEx, had alread y been providing services in China.  This act not 
only guaranteed the benefits of foreign operators  but also complied with China’s law and WTO  S/C/M/75 
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 commitments.  He recalled that China had provide d explanations on this issue in the previous 
transitional reviews.  Since then, foreign operato rs of express delivery services had followed relevant 
procedures to obtain the entrustment from China' s postal authorities, and their business in China 
continued to grow.  He hoped that the solved problem would not become a new problem.  He 
underlined that the final version of the Postal Law would be in conformity with China's WTO 
commitments including its horizontal commitments.  Re garding the questions on the draft  Postal Law 
dated 19 July 2004, he stated that this draft was for the purpose of seeking comments in the law-
revising process, not the final draft.  Some of its  provisions were still under consideration and review, 
and thus, there was no conclusion regarding some  Members' concerns, such as whether express 
delivery of letters weighing less than 350 grams would be in the scope of monopoly, how express 
delivery would be appropriately defined, whether paragraph 2 of article 94 would be removed from 
the final draft, and how the licensing procedure a nd scope would be regulated, etc.  He, however, 
confirmed that when preparing relevant provisions, China would take into consideration not only its 
actual conditions, but also the experiences of other Members and the comments made by all interested 
parties.  He reiterated that the revised Postal Law would not violate rele vant WTO agreements and 
China's commitments. With respect to the introduction of a review procedure for the regulator's 
decisions, he stated that China's administrative review and litigation system had provided a strict examination mechanism as well as procedures for admi nistrative enforcement, which also applied to 
the review of the postal regulator's decisions.  Concerning the scope of universal service, he 
confirmed that China would give a justifiable de finition, based on its actual conditions and other 
Members' experiences. He noted that “the scope of universal service” and “the scope of the postal 
monopoly” were two different concepts, and therefore,  would not be mixed up in the final draft of the 
Post Law.   
29. Turning to the questions on distribution services , the representative of China
 first drew 
Members' attention to a Notice issued by China' s Ministry of Commerce in the previous week 
regarding the procedure for the implementation of the Regulations on the Administration of Foreign 
Investment in the Distribution Sector .  As to the  Regulation on the Administration of Direct Selling , 
he noted that this instrument was still in the dr afting process. He confirmed that these regulations 
would be implemented in line with China's co mmitments.  Regarding the question on existing 
foreign-invested manufacturing enterprises' particip ation in the distribution sector by expansion of 
their business scope (paragraph 19 (a) of the communication from the EC), he confirmed that the distribution of goods by these enterprises after the expansion of their business scope would not be 
limited to those made by their parent companies.   As to the measure that distribution services of 
several products for service suppliers with more than  30 stores were subject to an equity limitation of 
49 % foreign ownership, he confir med that it applied onl y to retailing services as indicated in China's 
GATS Schedule.  On the issue of land use by fore ign-invested enterprises, referring to China's land 
law and regulations as well as to its GATS commitments, he stated that the maximum term of land use 
for commercial purposes was 40 years. However, fore ign-invested enterprises could apply for an 
extension of this term should they abide by China's land law and regulations.  Regarding the 
requirement that foreign-invested enterprises had to pay 100 % of their registered capital when 
applying for opening new stores, he pointed out th at this requirement equally applied to domestic 
service suppliers.  Thus, foreign-invested enterpri ses did enjoy national treatment in this regard.   
30. On tourism , one of the questions was related to the approval of foreign travel agencies.  The 
representative of China
 referred to the Administration Rules on Travel Agencies , which stipulated that 
the examination and approval of the application for the establishment of a travel agency were subject 
to the development plan of the tourist industry.  He explained that this requirement was for the 
purpose of regulating the whole travel agency mark et in China and did not constitute a market access 
limitation. He emphasized that this requirement app lied equally to domestic travel agencies.  So far 
there were 5 wholly foreign-owned travel agencies and 13 joint venture travel agencies in China.  
Regarding the question on the establishment of branch es by foreign travel agencies, referring to the 
horizontal commitments in China's GATS Schedule,  he indicated that the entry regarding the S/C/M/75 
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 establishment of branches by foreign enterprises w as "unbound unless otherwise indicated in specific 
sub-sectors, as the laws and regulations on branches of foreign enterprises are under formulation".     
31. Regarding maritime transportation services , the representative of China
 first stated that the 
wholly foreign-owned shipping company was not pr ohibited in China. Foreign shipping companies 
could establish their subsidiaries based on the princi ple of reciprocity as indicated in China’s MFN 
Exemption List. So far, foreign shipping comp anies had established 33 wholly foreign-owned 
subsidiaries and 137 branches in Ch ina.  Then, he addressed the qu estions on Non-vessel Operating 
Common Carrier (NVOCC) as well as the scope of freight forwarding and NVOCC.  Not thinking that the requirement for providing RMB 800,000 yuan  as surety bond was burdensome, he explained 
that the surety bond was used for the payment of fines or debts incurred from non-performance or 
improper performance of obligations by an NVO CC, as an NVOCC did not possess any vessel. Non-
vessel-operating services meant those international maritime transportation business in which a non-
vessel-operating common carrier accepted shipments from  the shipper as a carrier, issued its own bills 
of lading or other shipping documents, procured th rough international shipping operators the carriage 
of goods by sea against the payment of freight by the shipper, and assumed the responsibilities of a 
carrier.  International freight forwarders meant t hose traders entrusted by consignors and consignees 
of export and import, who conducte d international freight forwarding and related business for their 
clients and collected remunerations for their servi ces in their own names or in the name of their 
consignors.  In China, the competent aut hority regulating NVOCCs was the Ministry of 
Communications, and the competent authority regu lating international freight forwarding was the 
Ministry of Commerce. 
32. On aviation services, the issue of Computer Reservations Services (CRS) in particular, the 
representative of China
 indicated that the draft regulation on CRS would be soon ready for comments 
by both domestic and foreign CRS pr oviders. This regulation was expected to enter into effect in 
June 2005. 
33. In response to the concern on relevant provisions in China's Foreign Trade Law, the 
representative of China  confirmed that Article 49 of this Law did not provide any specific safeguard 
measures. This article stipulated that the competent authorities of the Chinese government might establish pre-warning and emergency response mechan ism for foreign trade so as to cope with any 
contingencies and unusual circumstances that might o ccur in the course of foreign trade and thus to 
maintain the security of national economy. This artic le was fully consistent with WTO Agreements.  
He further confirmed that Article 45 of this Law,  which concerned trade remedies in services, would 
be applied in a way consistent  with China’s WTO obligations. 
34. Thanking China for its responses to th e questions, the representative of Canada
 wished to 
have a copy of China's statement. 
35. Noting that the TRM was a very important exercise for both China and other Members,  the 
representative of the United States  recalled that it had been created partly because China had been 
allowed to accede to the WTO without having all its tr ade laws and regulations in  order at the time of 
accession and thereby China had been allowed to have  a certain transitional period.  The TRM could 
help to clarify China's implementation efforts and c onvey to China what Members' expectations were.  
It also helped to clarify areas of agreement a nd disagreement.   While expressing his delegation's 
appreciation for China's efforts in preparing the transitional review, he wished to highlight the 
concern underlying his delegati on's questions which had cove red various sectors including 
distribution services, express delivery services, transport services, telecommunication services and 
construction services.  On distribution services, his delegation looked forward to reviewing the 
regulations referred to by China.  Noting that China's commitments in direct selling services would 
become effective by 11 December 2004 and that the regulation on direct selling services was being drafted, his delegation was concerned about the direction the draft regulation was taking. One  S/C/M/75 
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 problem of this draft regulation was that it might not  be justified on the grounds of national treatment, 
because it only allowed sales representatives to doo r-to-door sell domestic goods, not imported goods.  
Another problem of this draft regulation was th at China's market access commitments might be 
adversely impacted.  The draft regulation appeared  to limit the remuneration of sales representatives 
to 25 % of the retail price. It also included requi rements regarding the numbe r of fixed locations per 
municipality as well as certification of sales representatives. These provisions seemed to be 
inconsistent with practices in this  area and would make it very difficult for direct sales to operate in 
China  His delegation hoped to be able to work w ith China to resolve these  concerns before this 
regulation was finalized.   With respect to expr ess delivery services, noting that China was still 
drafting amendments to its Postal Law, he said that  his delegation had a numbe r of concerns in this 
area.  The key concern was that the draft amendmen ts tended to create the monopoly of China Post in 
express delivery of letters below 350 grams.  His delegation was pleased to note China's assurance 
that old problems would not become new problems a nd that the final law would comply with China's 
horizontal commitments.  Regarding telecommunication services, he stated that the questions raised 
by his delegation in this area reflected their concern with the slow pace of liberalization in general.  
The issues of particular concern from his delega tion included high capital requirements, the re-
classification of certain value-added services and basic services, choice of joint-venture partner.  He indicated that three questions raised by his dele gation had not yet been answered by China. They 
concerned the timetable for comments on the draf t telecommunication law, the freedom to choose 
joint venture partner, and China's commitment in its Accession Protocol to further liberalize this 
sector in the new round of trade talks.  On cons truction services, his delegation was concerned that 
China's Decrees 113 and 114 seemed to create capital, staffing and residency requirements which, his 
delegation believed, were  burdensome and difficult to satisfy.  His delegation was having dialogue 
with China on these issues and hoped to achieve mu tual and agreeable solutions.  Regarding legal 
services, he stated that his delegation shared many concerns raised by the EC. 
36. Thanking China for giving detailed answers, the representative of Japan
 stated that his 
delegation regarded the TRM as a very good exercise a nd attached high importance to it.  Noting that 
China's economy was developing rapidly, his delega tion thought that China's implementation of its 
commitments merited attention.  He requested fo r a copy of China's responding statement.  The 
written questions raised by his delegation covere d professional services, computer and related 
services, telecommunication services, construction services, distribution services, tourism, transportation services and other issues.  Referring to  the questions relating to distribution services,  
he asked when the implementing rules or guidelines of the Regulations on the Administration of 
Foreign Investment in the Distribution Sector would be issued.  His delegation hoped that the draft of 
these rules or guidelines could be published for public comments.  On the issue of granting licences, his delegation urged China to pay attention to transp arency and fairness.  His delegation did not wish 
to see the situation in which licences were granted only to some foreign investors, licensing criteria 
and procedures were not clear, and the reasons fo r not granting licences were not made public.  
Concerning direct selling, his delegation wished to see the draft of the relevant regulation published 
for public comments.    
37. The representative of the European Communities
 thanked China for its detailed responses and 
looked forward to the circulation of its statement.  She thought the information provided by China in 
various sectors would help in the examination of how the progress was being made.  Noting the draft 
of regulations was ongoing, she hoped that the fina l version of these regulations would be in full 
conformity with China's WTO commitments.    
38. The representative of Chinese Taipei  thanked China for its efforts in implementing its 
commitments and for its detailed responses.  She thought that the TRM was a good exercise and that 
China's faithful implementation of its commitments  was in the interest of all the Members.  S/C/M/75 
Page 10  
 
 39. In response to some Members' concern on Chin a's legislative process, the representative of 
China
 stated that the draft telecommunication law had been submitted to the State Council for review. 
He further stated that Chinese government had to stri ctly follow the country's legislative procedure.  
On the concern over China's further liberalization in the telecommunication sector, he thought this 
was an issue to be discussed in another forum.  Regarding distribution services, he reiterated that a 
Notice had been issued by Chin a's Ministry of Commerce in th e previous week regarding the 
procedure for the implementation of the Regulations on the Administration of Foreign Investment in 
the Distribution Sector .  Concerning the request for a copy of his delegation's responses, he said that 
the statement made by the head of his delegation w ould be available to Members and that to provide 
the responses in writing was beyond the TRM.  He reminded Members that his delegation had 
submitted a communication as required by Annex 1A of the China's Accession Protocol, which had 
been circulated in document S/C/W/249. He thoug ht this document had provided substantive and 
comprehensive information regarding the implem entation by China of its WTO commitments in 
services.  
40. The representative of the United States  sought further clarifications from China on the issue 
of choice of joint venture partner in telecommunication services. 
41. Referring to the Regulation on Administration of Foreign-invested Telecommunication 
Enterprises , the representative of China  reiterated that the major foreign party of a telecommunication 
joint venture was to satisfy rele vant qualification requirements. 
42. The Chairman  thanked China for its responses and s uggested that before moving on to the 
issue of the report to the General Council, the Coun cil take note of the statements made and conclude 
the third transitional review pursuant to Section 18 of China's Accession Protocol. 
43. The Council so decided . 
44. Regarding the report to the General Council, the Chairman  suggested that the Secretariat 
prepare a factual report stating:  that pursuant to Section 18 of the Protocol on the Accession of the People's Republic of China, at its meeting he ld on 26 November 2004, the Council for Trade in 
Services conducted the third transitional review  of the implementation by China of the WTO 
Agreements and of the related provisions of th e Protocol; that written communications had been 
received from four WTO Members, namely Japan, th e European Communities, the United States, and 
Chinese Taipei; that the details of the discussion c ould be found in the meeting report; and that the 
report (S/FIN/13) from the Committee on Trade in Financial Services
 would form part of the 
Council's report.   
45. The Council so decided . 
F. IMPLEMENTATION  OF ARTICLE  VII OF THE  GATS 
46. The Chairman  recalled that the Council had continued to discuss issues relating to the 
implementation of Article VII of the GATS at its previous meeting.  Given the fact that delegations 
had expressed their interest in further discussions under  this item, the Council had agreed to revert to 
this item.  Noting that many issues had been rais ed at the previous meetings under this item, he 
invited Members to consider how to better structur e discussions.  He reminded Members that at the 
previous meetings, discussions had tended to focus on the following issues: (1) improving 
notifications under Article VII; (2) delegated authority; (3) transparency; (4) information sharing.   
47. Given the request by the delegation of India prior to the meeting, the Chairman  proposed that 
the Council revert to this item at its following meeting.  S/C/M/75 
 Page 11 
 
 
 48. The Council so agreed . 
G. DERESTRICTION  OF DOCUMENTS 
49. The Chairman  recalled that this item had been placed on the agenda of the Council's previous 
meeting at the request of the delegation of the European Communities.  This item concerned the 
European Communities' request for continued rest riction of parts of the minutes (contained in 
document S/C/M/73) of the Council's meeting on 24 J une 2004, and thus involved the application of 
the General Council's Decision on Derestriction of Documents (WT/L/452).  A few Members had expressed concern over this issue at the previous me eting. The Council had agreed that the Secretariat 
would temporarily keep minutes S/C/M/73 restricted and that the Council would revert to this item. 
50. The Chairman
 said that he had held consultations on th is item.  Delegations  he had consulted 
with had suggested a manner in which the Council might apply paragraphs 2 (c) and 2(d) of the 
General Council decision in the type of situation be fore the Council.  He thought the approach might 
have offered a practical solution to the issue raised  under this item.  To this effect, he proposed the 
following.  With respect to future discussions wh ich might take place under the agenda item mandated 
in paragraph 1 of document S/L/80, the Council woul d agree that paragraphs 2 (c) and 2(d) of the 
General Council decision contained in document WT/L/452 would be applied in the following 
manner. The record of the discussion relating to Ar ticle XXI would be circulated in an informal 
document shortly after the meeting. The minutes of th e meeting would note, under the relevant agenda 
item, that the "Statements made under this agenda  item are contained in an informal document and 
will be circulated as an addendum to the meeting report after the conclusion of the negotiations under 
Article XXI and the certification of any chang es to the relevant schedule of commitments. " As stated 
in the minutes, after the conclusion of the negotia tions and the certification of any changes, the 
statements contained in the informal document woul d be re-issued as an unrestricted addendum to the 
meeting minutes.  The formal minutes would be circulated and derestricted in accordance with 
paragraph 2 (c) of the General C ouncil decision contained in document WT/L/452.  With respect to 
the current case, i.e. the minutes contained in document S/C/M/73, the Council would instruct the 
Secretariat to ensure that the minutes would reflect  the application of the General Council decision in 
the manner outlined above. 
51. The representative of Ecuador  wished to add two points to the approach proposed by the 
Chairman.  First, the document recording the discussion would be circulated immediately  after the 
meeting.  Second, any informal document or adde ndum would be in three working languages.  
52. While supporting the Chairman's proposal, the representative of Australia  noted that the 
proposed arrangement would not prejudice any Ge neral Council's reviews and amendments of the 
derestriction procedure. 
53. The representative of the United States  stated that her delegation supported the Chairman's 
proposal.  She understood that the proposed solutio n was consistent with the General Council decision 
on derestriction (WT/L/452).  In addition, she noted th at this solution might also have implications for 
negotiations under GATT Article XXVIII,  given the horizontal nature of the issue.  Therefore, it 
would be important to have the overriding issue rec tified by the General Counc il regarding paragraphs 
2 (c) and 2 (d) of the General Council decision on derestriction (WT/L/452).   
54. The Chairman  proposed that the Council take note of  the statements made and adopt the 
approach he outlined above. 
55. The Council so agreed . S/C/M/75 
Page 12  
 
 H. OTHER
 BUSINESS 
56. Referring to his remarks at the beginning of the meeting, the Chairman  reminded Members  
that in accordance with the rules of procedure (WT/L/31 and S/L/15), the outgoing chairperson of the 
Council would normally conduct consultations on the appointment of the new chairpersons of its 
subsidiary bodies, and the election of the new chairpersons of the subsidiary bodies was to take place 
at the first meeting of the year and was to take effect  at the end of that meeting.  For this purpose, he 
announced that he would conduct c onsultations on the list of new chairpersons of the subsidiary 
bodies at the beginning of the new year.  
57. With respect to the Council's next meeting, the Chairman  said it was expected to take place 
during the next cluster of services meetings, wh ich had been tentatively scheduled from 7 – 25 
February 2005. The exact dates for the Council' s regular session and its dedicated session on the MFN 
exemptions review would be communica ted to delegations in due course.  
58. The Chairman  suggested that the Council take note of  the statements made and adjourn the 
meeting. 
59. The Council so agreed . 
__________