RESTRICTED  WORLD TRADE  
ORGANIZATION  S/C/W/237 
24 March 2004 
 (04-1342) 
Council for Trade in Services  
   
 
CONSIDERATION OF ISSUES RELATING TO ARTICLE XX:2 OF THE GATS 
 
Report by the Chairman of the Committee on Specific Commitments
 
  
1. At its meeting of 3 July 2003, the Council fo r Trade in Services (Regular Session) mandated 
the Committee on Specific Commitments (CSC) to cons ider issues relating to Article XX:2 of the 
GATS, with the request  to report back to th e Council before its first meeting in 2004. 
2. This report seeks to inform the Council about the discussions that have taken place in the 
CSC over the course of three formal and one informal meetings. 
3. In order to provide a basis for the discussi ons in the CSC, I presented a Chair Note 
(JOB(03)/213) which summarized the basic issue and outlined several conceivable approaches to 
address it.  The delegation of Switzerland presente d a document (JOB(03)/214), in which it addressed 
various aspects of the points raised in the Chair No te.  A large number of dele gations participated in 
the discussions of the issue.  The records of the discussions are contained in documents S/CSC/M/30 
and 31.  No delegation took the floor on the issue at the meeting of the Committee on 22 March 2004.  
The written communications as well as the relevant porti ons of the minutes are annexed to this report.  
4. The discussions revealed continuing diffe rences between delegations on the legal 
interpretation of the overlap between Articles XVI and XVII of the GATS.  While some delegations 
believed that a clear and consistent interpretati on of the overlap was possible, others had doubts 
whether such an interpretation could be found.  Se veral delegations expressed an interest in further 
exploring a practical solution of this matter in the context of the ongoing services negotiations.  It 
was, however, also noted by some delegations that  a practical solution should not extend to existing 
commitments and that the relationship between exis ting and future commitments would also need to 
be further explored..   
5. It is my belief that the technical discussions Members held in the CSC have helped clarify 
possible implications of the various approaches to address the overlap between entries in the market 
access and national treatment columns.  I am conf ident that we have obtained a deeper understanding 
of the issues involved.  This understanding may assist Members in making clear and unambiguous commitments during the services negotiations.  At this stage I feel that guidance from the Council might be needed to make further progress on the issue of Article XX:2. 
 
_______________ 
 S/C/W/237 
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ANNEX I 
 
 
JOB(03)/213 
 Committee on Specific Commitments
 20 November 2003 
   
CONSIDERATION OF ISSUES RELATING TO ARTICLE XX:2 OF THE GATS 
 
Note by the Chairman 
 
  A. I
NTRODUCTION  
1. At its meeting of 3 July 2003, the Council for Trade in Services (Regular Session) referred the 
issue of Article XX:2 to the Committee on Speci fic Commitments (CSC) for consideration, 
mandating the CSC to report back in time for the C ouncil to take up the issue at its first meeting in 
2004.  This note has been prepared as a contribut ion to the discussion in the Committee, and focuses 
on the technical aspects of the issues identified.  It is meant to enhance the understanding of the 
issues, as well as of implications of possible ways forward.  In line with the mandate of the CSC, the 
note does not seek to address procedural questions relating to the implementation of any possible 
solution, or issues related to the services negotiations .  The note first recapitulates the basic issue at 
hand, and then outlines possible approaches to th e issue, thereby flagging a number of issues for 
further consideration.  It draws upon previous contributions by delegations1, as well as Secretariat 
background notes.2  The note does not elaborate on questions that may arise with regard to the 
relationship between existing and new commitments , as these extend far beyond the question of the 
overlap, and are yet to be discussed by Members. 
B. THE ISSUE  
2. Paragraph 2 of Article XVI (Mar ket Access) contains an exhaustive list of types of measures 
which a Member shall not maintain in a given sect or where a full market access commitment has been 
undertaken.  The measures a Member may list comp rise four types of quantitative restrictions 
(sub-paragraphs a-d), as well as lim itations on forms of legal entity (sub-paragraph e) and on foreign 
equity participation (sub-paragraph f).  These measur es are subject to the obligations of Article XVI 
regardless of whether they are discriminatory (w ithin the meaning of national treatment) or non-
discriminatory.  While Article XVI is silent on this  point, this is clearly stated in the scheduling 
guidelines.3  Measures under sub-paragraph (e) that requi re specific types of joint ventures through 
which the service supplier may supply a service, as  well as those under sub-paragraph (f) relating to 
foreign equity participation are by their very natu re discriminatory, as they can only be imposed on 
foreign service suppliers.  
3. According to Article XVII (National Treatment), a Member grants full national treatment in a 
given sector and mode of supply when it accords in that sector and mode to services or service suppliers of other Members conditions of compe tition no less favourable than those accorded to its 
                                                     
 
1 Communication from Brazil, 13  December 2002, JOB (02)/215; Communication from Hong Kong, 
China, 21 February 2003, JOB (03)/34; Communication from Switzerland, 5 May 2003, JOB (03)/85. 
2 Secretariat background notes of  16 February 2001, JOB (01)/17; 16 July 2002, JOB (02)/89; and 24 
October 2002, JOB (02)/153. 
3 See S/L/92, paragraph 8; MTN.GNS/W/164, paragraph 4.  S/C/W/237 
 Page 3 
 
 
own like services and service suppliers.  Unlike Ar ticle XVI, Article XVII does not contain an 
exhaustive listing of the types of measures which would constitute limitations on national treatment. 
4. Due to the scope of Articles XVI and XVII, certain types of measures are captured by both 
Articles.  These are first all measures under Article  XVI:2 (a)-(d) in their discriminatory form.  
Further, discriminatory restrictions or requirements of a legal entity and measures that require specific 
types of joint ventures through which the service su pplier may supply a service (sub-paragraph (e)), as 
well as those under sub-para graph (f) relating to foreign equity pa rticipation, also fall under the scope 
of both Article XVI and XVII.   
 
 
 
    
 
     
 
  
  
5. This issue has been referred to as the "overlap" between Articles XVI and XVII.
4  T h e  
overlap does not pose a problem as long as, in relation to a given mode of supply, market access and national treatment are  both bound or both unbound.  If both disciplines are bound  (each column 
contains an entry of None , or limitations are entered), then a Member may depart from full market 
access and national treatment only to the extent inscr ibed.  In such cases, Article XX:2 provides that 
Measures inconsistent with both Articles XVI and XVII shall be inscribed in the 
column relating to Article XVI.  In this case the inscription will be considered to 
provide a condition or qualification to Article XVII as well. 
6. Article XX:2 hence removes any need to dupli cate the inscription, in both columns, of 
treatment inconsistent with market access and national treatment.   
7. If, on the other hand, a Member has maintained, in a given mode of supply, no commitment in 
both the market access and national treatment column, expressed through inscribing Unbound , the 
Member may introduce or maintain any limit ations it wishes in relation to that mode. 
8. Discussions of the overlap have focused on th e situation where a commitment has been 
inscribed in one column, and no commitment has been inscribed in the other column, i.e. an  Unbound  
in either the market access or national treatment  column.  For example, if a Member entered  
Unbound  under market access and None under national treatment, a question would arise as to 
                                                     
 
4 See JOB (01)/17), JOB (02)/153) Article XVI:2 (a)-(d), and 
(e) (legal entity) in non-
discriminatory form 
 Other discriminatory 
measures Art XVI:2 (a)-(d) in 
discriminatory form, (e) 
(legal entity) in discriminatory form; (e) 
(joint venture), and (f). ARTICLE XVI             ARTICLE XVII S/C/W/237 
Page 4  
 
whether that Member could maintain any discrimin atory measures falling within the scope of Article 
XVI.  Could it be argued that because there is no binding under Article XVI, any measure falling 
within the scope of that Article could be maintain ed?  Or, conversely, could it be argued that because 
there is a full binding under Article XVII (with the entry None ), no measure inconsistent with that 
Article could be maintained, including those fa lling within the scope of Article XVI?  More 
specifically, would that Member be in a position to apply a limitation on the number of foreign 
suppliers only, or would it have to be a limitati on on the number of all suppliers, of foreign and 
national origin alike?   
9. Does Article XX:2 provide any solution to these questions?  It was suggested that paragraph 
18 of the Scheduling Guidelines
5 might provide an answer to the question at hand.  Paragraph 18 
states:  
When measures inconsistent with both Articles XVI and XVII are inscribed in the 
column relating to Article XVI (as provide d for in Article XX:2), Members could 
indicate that this is the case (e.g. by stating 'also limits national treatment' in the market access column. 
10. It appears that the paragraph addresses only the case where a specific limitation on market 
access and national treatment is to be entered in  the market access column. It does not address the 
situation where either the market access  or national treatment column remain  Unbound, let alone how 
such an Unbound  should be understood.   
11. The Secretariat has noted that the wording and context of Article XX:2 within the GATS 
suggest that the paragraph is a scheduling conventio n and might be applicable only to situations in 
which bindings with limitations were inscribed in both columns
6.  This view has been supported by 
Switzerland.7  In its paper, Switzerland argues that an Unbound  in the market access column could not 
be considered as equivalent to a set of inscribed measures  and, thus, could not imply an application of 
Article XX:2.  In the same vein, the Unbound  could hardly be assumed to "provide a condition or 
qualification" to national treatment as there is no other way of providing conditions than specifying 
them in the schedule.  Switzerland furthe r argues that in the reverse scenario, a None  in the market 
access column could not be considered as an inscribed measure inconsistent with both Articles XVI 
and XVII  and, hence, Article XX:2 would not apply. 
12. Hong Kong, China, has questioned whether Ar ticle XX:2, especially the second sentence, 
presumed the existence of commitment in the na tional treatment column.  A plain reading of 
Article XX:2 suggested that whether Article XVII would be conditioned or qualified by the 
inscription in the market access column would not  depend on whether it had already  been conditioned 
or qualified by the presence of commitments in the national treatment column.8  It also appeared that 
the second sentence of Article XX:2 would not presuppose any commitment taken under 
Article XVII.  Hong Kong, China further posed the question how an Unbound  entry should be 
understood more generally, in par ticular whether such an entry implied the reservation of rights to 
undertake measures subject to the r espective Articles; or whether it represented a listing of all possible 
measures that could be undertaken in the future.  Could an Unbound  be understood to meant that the 
Member does not undertake any obligation in respect  of that mode of supply under the respective 
Articles?9 
                                                      
5  Scheduling Guidelines , S/L/92, para 18. 
6 See JOB(02)/89, para 9; JOB(02)/153, para 9. 
7 See JOB (03)/85, paragraph 4. 
8 See JOB (03)/34, para 7 (c) 
9 See JOB (03)/34, para 8 (c)  S/C/W/237 
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13. Brazil has stated that it could be argued that th e intended effect of Article XX:2 could be to 
render equal, for scheduling purposes,  measures that were exclusively quantitative and measures that 
are both quantitative and discriminatory, and distingui sh them from measures that were exclusively 
discriminatory.10  According to Article XX:2, quantitative limitations, whether discriminatory or not, 
would only be scheduled in the column related to Article XVI.  This was tantamount to stating that 
only measures that were exclusively discriminatory (but not of quantitative nature) were to be 
scheduled under the national treatment column.   
14. For the purpose of discussion, it would be useful to obtain an indication from other 
delegations as to whether they cons ider that paragraph 2 of Article XX applies to the situation where a 
commitment has been inscribed in one column, a nd no commitment has been inscribed in the other 
column, i.e. an Unbound  exists in either the market access or national treatment column. 
C. POSSIBLE APPROACHES TO THE ISSUE  
15. Conceptually, five types of a pproaches are conceivable to allocate measures falling under the 
overlap to either Article XVI or Article XVII.  These approaches are sketched out under points 1-5 
below.   
1. The area of the overlap would be a llocated to the Market Access Column  
16. One way could be to state clearly that all me asures referred to under paragraph 2 (a) – (f) of 
Article XVI would fall exclusively under the scope of  that Article, and that they would be excluded – 
even in their discriminatory form - from the scope of Article XVII.  In other words, Article XVI 
would become the lex specialis  for these measures.   
• Example : Under the situation of an Unbound in Market access and a None in National 
Treatment, any of the six types of limitations  could be introduced, regardless of whether in 
non-discriminatory or discriminatory form.  In the inverse situation where a commitment 
existed in the Market Access column, with an Unbound in the national treatment column, the 
Member would not be permitted to introduce any discriminatory market access type 
measures. The suggestions made by Brazil in JOB (02)/215) would produce this result.  
2. The area of the overlap would be alloca ted to the National Treatment Column  
17. Under this option, it would be made explicit th at Article XVI covers the types of measures 
listed in paragraph 2 (a) - (f) only in their non-discr iminatory form.  Any of those measures taken in 
their discriminatory form, would fall within the sc ope of Article XVII.   Under such a solution, 
however, it would be necessary to exclude from the scope of Article XVI those measures referred to 
in sub-paragraphs (e) and (f) which could only be  applied in a discriminatory form, such as joint-
venture requirements and limitations on foreign share-holding.   
• Example : In case of an Unbound in market access and a commitment in national treatment, 
the Member would only be permitted to take market access me asures in their non-
discriminatory form.  If the Unbound existed in the national treatment column, with a None 
under market access, the Member would be free to introduce any discriminatory measure, 
including any of those measures mentioned in Ar ticle XVI:2 (a-f) in their discriminatory form. 
3. The Unbound  entry prevails over the entry containing the commitment 
18. Under the third and fourth approaches, the overlap  would be allocated according to entries in 
the schedule rather than by looking at the column in  which the entries have occurred.  Under the third 
                                                      
10 See JOB (02)/215, para 5 and 1 S/C/W/237 
Page 6  
 
approach, an Unbound  entry in either the market access co lumn or the national treatment column 
would permit a Member to introduce discriminatory measures falling under the overlap regardless of the entry in the respective other column. 
• Example
:  An Unbound in the market access column with a commitment in national treatment 
would allow the Member to apply any discrimi natory market access limitation.  We would 
obtain the same result as concerns the overlap area in the inverse situation:  also an 
Unbound in national treatment together with a None in the market access column would 
permit the Member to apply any discriminatory meas ure, including those falling under Article 
XVI:2.   
4. The entry containing the commitment prevails over the Unbound  
19. This option would allocate the overlap in the opposite way as in the third approach.  The 
column containing the commitment would prevail in sofar as the measures falling under the overlap 
could not be maintained or introduced if not speci fically scheduled in eith er the market access or 
national treatment columns.   
• Example :  Under this situation, a commitment in the national treatment column, together with 
an Unbound under market access would allow th e Member only to operate measures falling 
under market access in its non-di scriminatory form.  In the reve rse case, i.e. a commitment 
under market access, and an Unbound under national treatment,  the Member could operate 
market access measures only to the extent sch eduled.  The suggestions made by Switzerland 
in JOB (03)/85 would produce this result.  
 
5. Avoiding instances of the overlap in schedules of specific commitments 
20. Another possible approach, albeit not of a genera l nature, would be to seek to avoid instances 
of the overlap in the schedules by introducing clarifying text as to the intended scope of the 
commitments.  Elements of such a "schedule-b ased" approach have been outlined by Hong Kong, 
China.11  Under this approach, the "issue" would not disappear, but cases giving rise to the issue 
would be reduced.  
• Example :  If a Member wished to schedule a situation of an Unbound in market access and a 
commitment in national treatment, the Member w ould clarify in its schedule whether the area 
of overlap would be covered by the Unbound, or by the commitment.  If the members wished 
to maintain a free hand with regard to discri minatory Article XVI-type measures, he could 
clarify this, for example, by inscribing under national treatment "None, except for 
discriminatory measures falling under Article XV I:2."  Conversely, if the Member wanted to 
allocate the area of overlap to the area covered by the commitment, he could enter under 
market access "Unbound, except for measures fa lling also under Article XVII.  Similar 
clarifications could be conceived of for th e situation where a Member wished to inscribe 
None in the market access column, and U nbound in the national treatment column. 
  
                                                     
 
11 See JOB (03)/34, para 11-13  S/C/W/237 
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D. CONCLUSION  
21. The description of the issue, and the various options outlined above are presented merely to 
provide a basis for discussion.  It should, however, be  noted that the approach mentioned last (under 5 
above) would for future commitments not involve an y particular formal procedure or agreement by 
Members.   
_______________ S/C/W/237 
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ANNEX II 
 
JOB(03)/214 27 November 2003   
 
Committee on Specific Commitments
 
 
  
COMMUNICATION FROM SWITZERLAND 
 
Consideration of issues relating to Article XX:2 of the GATS 
 
 
 
 The following communication, dated 25 Nove mber 2003 from the delegation of Switzerland 
is being circulated to the Members of the Committee on Specific Commitments. 
 
_______________ 
 
 
I. INTRODUCTION 
1. In a note dated 20 November 2003, the Chairman of the CSC presented some considerations 
of issues relating to Article XX:2 of the GATS and submitted some questions thereabout to the 
membership.1 This paper aims at following up on this, a ddressing in particular the so-called "overlap" 
between "Unbound" and "None" in the Market Ac cess and the National Treatment columns.  In 
May 2003 Switzerland had submitte d a communication focussing specifically on Article XX:2 of 
GATS.2 The issue discussed in this present paper is, per se , independent of the issue discussed in that 
previous communication.  The present issue wo uld arise equally well even in the absence of 
Article XX:2 though, as shown in fine , there is a connection to Article XX:2. 
II. THE ISSUES 
2. The Chairman's note identifies several appro aches to the meaning of a commitment where 
Market Access is not committed (" Unbound") and National Treatment is  fully committed ("None"), or 
vice versa.  They are numbered approach 1, 2, 3 and 4, plus a fifth approach which is procedural 
rather than substantial.  The issu e at stake is:  which regime is applicable to measures that are both 
restrictions to MA and restrictions to NT.  Accord ing to approach 1 the entry in the Market Access 
column prevails over the entry in the National Treat ment column, while in approach 2 the NT entry 
prevails over the MA entry (whatever the conten t of those respective entries).  According to 
approach 3, the "Unbound" would override the "N one", while according to approach 4 the full 
commitment under None would prevail over the over lap zone.  This paper aims at analysing the 
implications of each approach.  An emphasis will be  put on the internal c onsistency of the various 
approaches. 
3. To start with, it must be recalled that the prin ciple of symmetry has to be followed in any 
analysis.  Symmetry means that, when going thr ough the analysis of the implications of each 
approach, the same logic must apply in the case "Unbound – None" and in the case "None – 
Unbound". 
                                                      
1 Note by the Chairman, 20 November 2003, JOB(03)/213. 
2 Communication from Switzerland, 5 May 2003, JOB (03)/85.  S/C/W/237 
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III. IMPLICATIONS OF THE VARIOUS APPROACHES 
A. IMPLICATION ON THE HIERARCHY BETWEEN GATS  PROVISIONS (APPROACHES 1 AND 2)  
4. The main implication of approaches 1 and 2 see ms to be that a hierarchy would govern 
various GATS provisions, namely between Article s XVI and XVII.  To support any of these two 
approaches, it should thus be shown first where th e legal ground for a hierarchy lies, and second why 
one of the two approaches (or hierarchy) is more likel y to be valid than the other.  We did not find any 
wording to that purpose.  This must be considered in the light of the wordin g of Article XVII, which 
states that any limitation to NT is to be scheduled  as such (and Article XVII makes no reference to the 
Article XVI measures).  The wording of Article XVI makes it clear that any restrictions to MA must 
be scheduled in the MA column, as much as Article XVII makes it clear that all restrictions to NT 
must be scheduled in the NT column.  This creates obviously room for an overlap, but Article XX:2 is 
precisely there to deal with this issue (as will be shown infra ).  In a hierarchical GATS, Article XX:2 
would be worded differently.  As to approach 2,  it induces a further question as to why then would 
measure (f) is mentioned in Article XVI, if really an ything scheduled in the NT column would prevail 
over the MA column. 
5. We now turn in more depth to approaches 3 and 4. 
B. SITUATION "UNBOUND – NONE" 
6. According to approach 3 (overlap zone is unbound) , any restrictions to Market Access that at 
the same time are discriminatory would be perm itted, thus overriding the commitment not to 
introduce any discriminatory measure. 
7. Under approach 4 (overlap zone is committe d), such measures would not be allowed, 
consistent with the full commitment undertaken in the NT column.  Put another way, Article XVI 
measures are allowed as long as they do not co mpromise the commitment under the NT column. 
C. SITUATION "NONE – UNBOUND " 
8. By way of symmetry, under approach 3, the s ituation would remain exactly the same:   any 
measures which are inconsistent with both articles XVI and XVII GATS would be allowed.  In spite 
of the full commitment "None" for MA, some restri ctions to MA could still be freely introduced. 
9. Under approach 4, again, such measures are not  allowed as they are inconsistent with the 
commitment to grant full Market Access, i.  e.  the commitment not to introduce any measures of the 
types listed in Article XVI.  Put another way, di scriminatory measures are allowed as long as they are 
devised in a way that does not compromi se the commitment under the MA column. 
10. More specifically, under approach 3, Article  XVI-type measures that are non discriminatory 
could no longer be introduced, but if the Member  concerned still wanted to introduce an Article 
XVI-type measure, it could do so by devising it in a discriminatory way.  For example,  non-discriminatory economic needs tests could not be introduced, but ENT applied only to foreign service 
suppliers could.  Obviously, the Member would be  encouraged to choose measures that are more 
restrictive.  This would run against the spirit of progressive liberalisation. 
11. This further means that in approach 3 measures of   type (f), i.e.  limitations on foreign asset 
shares, could still be introduced in spite of the full commitment under MA. S/C/W/237 
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D. C
ONNECTION WITH ARTICLE XX:   2 
12. Obviously, the above considerati ons can be made even in the absence of Article XX:2.  On 
the other hand, those who seem to lean towards appr oach 3 happen to coincide with those who argue 
that Article XX:2 does apply to the situation "Unb ound – None".  Assume for the sake of argument 
that Article XX:2 did effectively apply to such a s ituation.  Approach 3 states precisely that in any 
case, the overlap zone remains unbound, i.e.  any measure inconsistent with both Articles XVI and 
XVII is allowed as long as one of the two columns is  unbound.  What would then be the purpose of a 
provision like Article XX:2 stating that measures inc onsistent with both columns must be inscribed in 
the MA column?  In fact, under approach 3, Article XX:2 would have  no added value and no raison 
d'être .  Clearly, the two views can hardly be held simultaneously. 
13. But in the more conservative view of Article XX:2 , there are some considerations to be given.  
If, as assumed under approach 3, an "Unbound" overri des the "None", then it must be also assumed 
that a restrictive measure inscribed  in any column equally overrides the "None" of the other column.  
When the "None" happens to be in the NT column , approach 3 would, as described in paragraph 12 
above, be a sort of substitute for Article XX:2.   Approach 3 would take away any purpose or raison 
d'être  to Article XX:2.  When "None" is in the MA co lumn, it is even more serious since the reading 
of the commitment through approach 3 would run against Article XX:2.  Approach 3 would say that the restrictive measure inscribed under NT extends  over the MA column, while Article XX:2 would 
advise the scheduling member to inscribe that measur e in the MA column with the effect of covering 
also NT concerns.  Such a system would be unviable. 
14. Going back now to approaches 1 and 2, th e same difficulties appear in relation to 
Article XX:2.  Approach 1 states that whatever the contents of the column, the measures scheduled 
under MA extend over the NT column.  Why then would we need a provision like Article XX:2?  The hierarchical construction of approach 3 would ach ieve an equivalent end as Article XX:2.  Under 
approach 2, the same inconsistency as above under approach 3 would prevail.  On the one hand one 
would assume that any measure inscribed in the NT column extends over the MA column, while on 
the other hand Article XX:2 would be there to advi se to schedule that measure exactly in the reverse 
way. 
15. Under approach 4 consistency is granted.  Commitments taken in whatever column are 
deemed to be firm.  Hence, when faced with a measure that restricts both MA and NT a Member would need to schedule the same measure in both co lumns.  This would make the schedule relatively 
heavy.  To streamline the schedules, the scheduli ng convention under Article XX:2 (and paragraph 18 
of the Scheduling Guidelines) has a full raison d'être  and is effectively needed. 
E. C
ROSS MODAL CONSIDERATIONS  
16. Approach 3 basically states that whenever a measure is relevant to both columns, the 
Unbound shall override the None.  It is a matter of f act that measures can not only be relevant to two 
columns, some are also relevant to two modes.  Why would people not attempt to apply the same 
approach to the latter too, since it is also a matter of overlap between Unbound and None?  For 
instance, an obligation to incorporate is a mode 3 restriction.  At the same time, it is a mode 1 
restriction.  Now, take the case of a full co mmitment under mode 3 (" None") and no commitment 
under mode 1 ("Unbound").  If approach 3 is to be tr ansposed consistently to such a situation, it 
would mean that no restriction targeting only mode  3 could be made, but that an incorporation 
requirement that applies to both modes 1 and 3 c ould be introduced, because it is permitted under the 
(absence of) mode 1 commitment. 
17. Under approach 4, on the contrary, any MA rest rictions to mode 1 can be introduced, but only 
if they are devised in a way that does not  compromise the mode 3 full commitment.  S/C/W/237 
 Page 11 
 
 
IV. CONCLUSION 
18. This paper has attempted to go through all implications of approaches 1 to 4 of the 
Chairman's note.  It was seen that many appro aches raise logical inconsistencies when they are 
considered under all their contours.  Or they lead to scheduling results that are definitely unwelcome 
and could hardly be the idea behind the GATS provi sions (e.g.  that under "None - Unbound" a limit 
on foreign shareholding could be introduced).  Or they are not compatible with the spirit of the 
agreement (e.g.  by encouraging Members to take  more restrictive measures when less restrictive 
measures are not allowed under a full ("None") commitment). 
19. It seems to us that approach 4 is the only one that does never show any internal inconsistency, 
even when considered in the more global constructi on of GATS:   all restrictions to MA must be 
scheduled in the MA column while all restrictions to  NT must be scheduled in the NT column.  This 
creates an overlap zone.  Measures incons istent with both MA and NT should thus a priori  be 
scheduled in both columns (this is by the way th e explicit working assumption of Article XX:2).  
Since this would make the schedules somewhat cumbersome, a scheduling convention had to be 
added in this system to ensure streamlining.  Th is is why Article XX:2 was needed.  Furthermore, 
approach 4 does not need a hierarchy to be intr oduced between various GATS provisions.  Finally, 
Approach 4 does not compromise the prin ciple that a commitment is there to be applied:   restrictions 
allowed under other columns (or modes) can still be ma intained, but they must be devised in a manner 
that does not compromise the "None". 
20. Approach 1 could be seen as the "second-best" from the logical perspective.  It does not show 
any internal inconsistency stricto sensu .  But it pre-assumes the existence of a hierarchy between legal 
provisions – a hierarchy that is not supported by any GATS wording.  Furthermore, one could wonder 
why then Article XVI was drafted in an universal ma nner (all limitations to NT are to be scheduled), 
and why it was complemented by Article XX:2, if in  final analysis Article XVI is to override both 
provisions anyhow as assumed in approach 1. 
21. As to approaches 2 and 3, they suffer from very serious internal contradictions. 
22. On a more political score, it must be noted that in national legal regimes policies of  the type 
"Unbound – None" are commonplace.  It is very of ten the case that national legal orders aim at 
granting a full national treatment, while leaving room for a set degree of – non discriminatory – limitation to market access.  This is precisel y the purpose achieved with "Unbound – None" under 
approach 1. 
23. As mentioned in our communication of May 2003,  we still believe that the prime avenue to 
solve the problems that some Members may face is by applying systematically the Scheduling 
Guideline, in particular its paragraph 18. 
 S/C/W/237 
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ANNEX III - EXCERPT OF DOCUMENT S/CSC/M/30 
  
C. C
ONSIDERATION OF ISSUES RELATING TO ARTICLE XX:2  OF THE GATS 
28. The Chairperson  recalled that the Council for Trade and Services, at its last meeting, had 
referred the issue of paragraph 2 of Article XX to  the CSC for consideration.  The Committee was 
asked to report back in time for the Council to be able to discuss this item at its first meeting in 2004.  
The present meeting offered the first opportunity for the CSC to take up the issue.  The mandate to 
consider technical aspects of course did not prejudi ce any delegation's position on a technical review 
of GATS provisions.  Neither did the mandate for esee that the CSC would prepare any type of 
solution when it reported back in early 2004.  Howe ver, he believed that Members should reflect on 
how the Committee could provide a useful input or  value added.  There would be three formal 
meetings to discuss this matter, including the present one . Turning to the issue itself, he stated that a 
lot of detailed technical work had already taken pl ace in the Services Council.  Several contributions 
had been received, namely from Brazil (JOB ( 02)/215), Hong Kong, China (JOB (03)/34), and 
Switzerland (JOB (03)/85), and the Secretariat ha d prepared two background Notes (JOB (02)/89 and 
JOB (02)/153).   
29. In reviewing these papers, numerous delegations  seemed to concur that the second paragraph 
of Article XX did not provide a solution to all inte rpretive issues involved in what had been labelled 
as the overlap between Articles XVI and XVII of the GA TS.  In particular, situations of an 'Unbound' 
in the market access column and a commitment in the national treatments column, but also the reverse 
case, provided interpretational difficulties at least for some delegations.  Other delegations felt 
reasonably comfortable with their interpretation, wh ile a third group thought that for reasons of clarity 
and legal certainty it would be useful to arrive  at a more widely shared understanding.  The 
Chairperson invited comments on how delegations c onsidered that the CSC could add value to the 
discussion of this topic. 
30. The representative of Switzerland  stated that his delegation would remain engaged on this 
issue.  The report to the Council for Trade in Services should primarily be a report from the Chairman, complemented by the reports of the meet ings in which the issue had been discussed.  He 
considered that the issue under discussion was rele vant for existing schedules as well as the ongoing 
negotiations.  As far as the latter were concerned, the debate could help all Members to clarify some 
technical aspects of their offers.  With regard to  existing schedules, he t hought that while several 
interpretations might be conceivable, there had certain ly been only one intention by the drafters of the 
GATS.  He was willing to discuss any difficulty that de legations might have with this issue, but it had 
not yet been raised in bilateral meetings. 
31. The representative of Hong Kong, China
 noted that the diversity of positions was the core of 
the problem.  He concurred with Switzerland that the issue could be divided into two parts, which he 
considered to be interlinked.  Hi s delegation was concerned in partic ular about the clarity of schedules 
that would result from the present negotiations.  He hoped that the Committee could take forward the 
discussion as far as possible and, perhaps, even e xplore possible solutions, even though these were not 
mandated by the Council.  
32. The scope for different interpretations had b een well explored and the question now arose 
what options would be open to dele gations in general.  One option wa s to leave the issue to be settled 
through future dispute settlement, which would amo unt to keeping the status quo.  Another option 
would be to find a solution for th e ongoing negotia tions, and then to see how it could be applied to the 
existing commitments.  His delegation had no particular stance on this  matter, but preferred generally 
not to leave ambiguities or uncertainti es for future dispute settlement.    S/C/W/237 
 Page 13 
 
 
33. Without prejudice to Members' interpretation of the issue, he felt that there was a need to 
address both new and existing schedules.  He looked forward to exploring the scope for pragmatic 
solutions.  He suggested that the Chairperson c onduct consultations to try to reach some common 
understanding as to what could be included in the fi nal report to the Council.  In the Chairperson's 
report to the Council, his delegation preferred a practical approach in view of the ongoing 
negotiations. He took note of Switzerland's willingn ess to address difficulties also in a bilateral 
context.  However, this might result in different in terpretations by different Members, which would be 
a sub-optimal outcome.   
34. The representative of Brazil  felt that the discussions on this issue had been useful.  His 
delegation had benefited from the arguments presented by Sw itzerland, Hong Kong, China and other 
Members.  They would certainly help to prepare Brazil's initial offer.  His delegation welcomed any 
form of consultations the Chairperson might wi sh to hold to prepare a possible solution.  
35. The Chairperson  suggested that the issue be addressed in a dedicated informal meeting ahead 
of the December formal meeting; he also consider ed circulating a Note or checklist of issues to 
structure further discussions.  
36. The representative of Switzerland  stated that a formal discussion would be desirable ahead of 
an informal meeting, if only to take stock of a nd address questions that had already arisen in earlier 
meetings.  A checklist might be more useful afte r the issue had been discussed at least once.   
37. The Chairperson  noted that he had no intention to preclude a discussion on substance at this 
meeting.  Alternatively, the dedicated meeting in N ovember could consist of a formal and an informal 
part.  The conditions for spontane ous and interactive discussion could more easily be created in an 
informal context. 
38. The representative of Hong Kong, China  recommended that a formal discussion be initiated at 
the present meeting.  He was also interested in an informal discussion to explore possible common 
ground.  A checklist of relevant issues might be helpful. 
39. The representative of Switzerland , turning to substance, mentioned that everybody seemed to 
agree that there was no hierarchy between entries in  the national treatment column and those in the 
market access column.  Secondly, he thought that any interpretation had to be symmetrical, meaning 
that if applied from market access to national treat ment, it had also to apply vice versa.  A 'None' 
indicated that a Member would not maintain any measure inconsistent with Articles XVI or XVII, 
while 'Unbound' meant that it was not taking any commitment on either of those Articles.  In the case of an 'Unbound' for market access and a 'None' for national treatment, the Member concerned 
committed not to discriminate under any circumstan ces, but did not take any obligation regarding 
market access.  The Member could not introduce discriminatory measures even if these qualified also 
as market access restrictions.  A problem would ari se with regard to Article XVI:2 (f), which by 
definition provided cover for discriminatory measure s.  He did not see any compelling reason why in 
this case a Member would be allowed to introduce such a measure simply because it would always be 
discriminatory, while measures falling under subparagr aphs (a) through (e) could not be used in a 
discriminatory form.  He had a fundamental problem with this approach which would compromise the 
commitment under national treatment.  
40. The above reasoning could be applied symmetrica lly to a scenario where a 'None' was entered 
in the market access column, and an 'Unbound' in th e national treatment column.  In this case, the 
Member would grant full market access, but had reserved the right to discriminate.  This should not 
imply that any national treatment restriction could be  used even if it fell al so under market access, as 
there was a 'None' in the relevant column.  It was ha rd to believe that the drafters of the agreement 
would have wanted Members that had a full market access commitment to be able  to introduce market 
access limitations in their more restrictive discriminatory form. S/C/W/237 
Page 14  
 
41. His delegation felt that the problem was fair ly limited in practice.  It related to 
subparagraph (f), and he was not aware of any conc rete case where the problem had arisen as most 
'Unbound/None' situations occurred under Modes 1 and 2 where the relevance of subparagraph (f) 
was almost nil.  In Mode 3, limitations of the ty pe set out in subparagraph (f) were usually scheduled 
or a double 'Unbound' existed.  He suggested that the Secretariat screened the schedules to allow 
delegations to assess the size of the problem.  He was willing to consider any difficulty a delegation 
had concerning subparagraph (f), if it had intended to capture such limitations under an 'Unbound' in 
market access.  The Committee could seek to find a solution.  
42. The representative of Hong Kong, China
 noted that the limitations in Article XVI:2 (a)–(e) 
could also exist in discriminatory form.  Follo wing the interpretation of Switzerland, a Member, 
which had an 'Unbound' in the market access column  and a 'None' in the national treatment column, 
could not apply any of the measures in Article XVI:2  (a)–(e) in discriminatory form.  If that was the 
case, how would this scenario compare with a case where a Member which had scheduled 
discriminatory market access measures under all t ypes mentioned in Article XVI:2 (a)–(f), had 
scheduled 'None' under national treatment?  According to the Swiss interpretation, the Member that 
had scheduled 'Unbound' in the market access column would not be able in future to change its 
schedule by introducing a discriminatory measures wh ich fell  under Article XVI:2 (a)–(f).  On the 
other hand, the Member that had scheduled specific limitations rather than 'Unbound' in the market 
access column would be able to ma intain those, and any elimination of one of them would still be 
considered an improvement.  Perhaps there wa s no presumption under Articles XVI, XVII or XX as 
to the level of openness that a Member was supposed to inscribe in its schedule of commitments.  He 
wondered what a Member was supposed to do if it want ed to reserve the right to introduce in future 
any or all of the measures that were within the sc ope of Article XVI, including those which could be 
discriminatory in nature. 
43. The Chairperson  suggested that Members take note of the statements made.  He proposed to 
consult on the precise format of a dedicated meeti ng in November.  As there were no interventions 
under the agenda item of Other Business, he sugg ested that, in accordance with the practice of 
grouping meetings of subsidiary bodies close to meet ings of the Council, the next formal meeting be 
held before the next CTS in December.  
44. The Committee so agreed.   S/C/W/237 
 Page 15 
 
 
ANNEX IV - EXCERPT OF DOCUMENT S/CSC/M/31 
  
C. C
ONSIDERATION OF ISSUES  RELATING TO ARTICLE XX:2 
31. The Chairperson  recalled that the Committee had held a first discussion of issues related to 
Article XX:2 at its last meeting in September.  Also, at a dedicated informal meeting on 
20 November, he had presented a Chairman's Note  (JOB (03)/213), in which he had tried to 
summarize the various issues as they had emerged from prior contributions and interventions by delegations.  He had also sketched out possible a pproaches to the issue, some of which had been 
mentioned previously by various delegations.  He felt that the Committee might provide some added 
value to the discussion of this issue by first consid ering its substance in a more clinical way before 
exploring how best to address the issue in practi ce.  Ahead of this meeting, the delegation of 
Switzerland had submitted a paper, JOB (03)/214.   
32. The representative of Switzerland
 stated that his delegation's paper had been prepared in 
response to the questions and options raised by the Chair and should be read together with the Chair’s 
paper.  The paper only dealt with approaches 1-4 of  the Chair's paper and did not cover the issue of 
Article XX:2 per se, as this issue had been addressed  in an earlier paper by Switzerland, JOB(03)/85.   
33. The first issue that the paper tackled was the question whether there was a hierarchy between 
Articles XVI and XVII.  Switzerland believed that there was no indication that would point towards 
such a hierarchy.  In fact, the only possible sour ce for such an indication was Article XX:2.  If one 
supposed, for argument’s sake, that Article XX:2 in troduced a hierarchy, it would do so in a very 
indirect and unclear manner.  However, if it was indeed the purpose of Article XX:2 to stipulate a 
hierarchy between Articles XVI and XVII, then th e question arose why the Article was worded the 
way it was; rather than simply stating that market  access extended into some elements of national 
treatment, or that there was a hierarchy between those Articles.  However, it did not seem that Article XX:2 was designed to introduce such a hierarchy.  Instead, it was worded as a scheduling convention.  
This was also made clear by the title of Article XX, which reads “Schedules of Specific 
Commitments”. 
34. The second issue that needed to be examined were the scheduling functions of "None" and 
"Unbound".  Schedules were positive lists of commitme nts, in the sense that they listed sectors with 
partial or with full commitments.  Where no comm itments were intended, there was no need to list a 
sector and then inscribe "Unbound" for all modes under market access and national treatment.  In 
other words, not listing a sector at all, or listi ng a sector and scheduling "Unbound" everywhere would 
have the same meaning.  From this, one coul d infer that "Unbound" had a different scheduling 
function than "None".  The latter entry could not be ignored.  For example, a Member could not 
introduce new legislation that would be inconsiste nt with the entry "None", while a Member could 
always alter its legislation where it main tained an "Unbound" in its schedule.  
35. The next question to be tackled was the meani ng of Article XX:2 within the four approaches 
identified in the Chair's Note.  Under the first approach, market access essentially extended into 
national treatment as concerned the zone of overlap .  This established a hierarchy between market 
access and national treatment.  If this premise was accepted, there would be no purpose for Article XX:2.  However, provisions of a treaty must not be  interpreted in a way th at made them redundant.  
Only one interpretation of Article XX:2 was po ssible, namely that the second paragraph was 
introduced solely to extend mark et access into national treatment.  However, as we had pointed out 
before, if this was the goal of Article XX:2, why w as it not stated in an unequivocal way?  And why 
had it been included under Article XX on scheduling conventions, rather than under Part III of the 
Agreement?  In sum, under the first approach, e ither Article XX:2 was totally useless, or it was 
drafted in a very unclear or even misleading wa y.  Either interpretation should be avoided. S/C/W/237 
Page 16  
 
36. A similar reasoning would prevail for the second approach mentioned in the Chair's Note.  
Simply put, under this appr oach, national treatment would extend in to market access.  In this scenario, 
the wording of Article XX:2 would even be inconsistent with the second approach.   
37. Under the third approach, an "Unbound" would ove rride a "None".  Again, there was no need 
for Article XX:2, which could even be deemed inc onsistent with this approach in certain cases, 
namely in the event of a "None" for market access and a scheduled measure for national treatment. 
38. Finally, approach four, where "None" would override "Unbound", was the only scenario from 
which it would follow that measures inconsistent w ith both Articles XVI and XVII would have to be 
inscribed in both columns to provide a condition or qualification to Article XV I and XVII.  In other 
words, in the absence of Article XX:2, only the fourth approach would lead to double listings of 
conditions and qualifications.  Since such double lis tings were cumbersome and should be avoided, 
Article XX:2, as a scheduling convention, served the useful purpose of streamlining the schedules.   
39. Turning to systemic considerations, the representative of Switzerland stated that the second 
and third approaches would produce peculiar results .  Namely, in cases where there was no limitation 
under market access, and national treatment remain ed "Unbound", the Member could introduce only 
discriminatory market access measures.  Members thus would be induced to take such more restrictive 
measures compared to cases where they had no  commitments whatsoever.  This would run 
systemically against the principle of progressive lib eralization.  He was not advocating, however, that 
certain ways of scheduling should not be possible at all.  Somewhere, there might be a political 
intention to inscribe contents of a restrictive na ture, which technically would remain possible under 
conditions and qualifications.  Bu t more importantly, the preferre d approach to choose should be, 
from a systemic point of view, in line with the overall aim of the GATS, i.e. progressive 
liberalization.  Many other overlaps were conceiva ble, such as overlaps of modes or sectors.  For 
systemic reasons, it seemed that the most coherent  approach was to assume that full commitments 
remained full commitments, whether any overlaps could be found or not. 
40. The representative of Australia
 stated that his delegation found the argument put forth by 
Switzerland in this technically complex area very pers uasive.  However, he also recognised that those 
delegations with opposing views we re unlikely to be swayed to accep ting a legal interpretation that 
was not in their favour.  Clearly, there was a pref erence for technical issues like this to be kept 
separate from procedural considerations associated with  the negotiations.  However, in this instance, 
Members were faced with a technical problem on wh ich there seemed to be little progress, and there 
was a negotiating round that offered the potential to deal with a quirk in legal interpretation or 
scheduling patterns.  The Committee could suggest to  the Council for Trade in Services the option of 
setting the question of legal interpretation aside wh ile encouraging Members to make offers during 
the negotiations that removed the existing ambiguities.   
41. The representative of Chile  remarked that the paper by Switzerland helped to better 
understand the problems at hand.  Chile agreed that approaches one and two assumed a hierarchy 
which was not spelt out in the Agreement.  While  it might be difficult to arrive at a joint 
interpretation, approach number five in the Chai r's Note might offer a realistic way out.  This 
approach should be further explored.   
42. The representative of Brazil  stated that the discussion was not just a theoretical exercise but 
addressed very important issues, especially in a negot iating round.  It was essential to understand what 
other Members were putting on the table, and how to express own intentions.  Leaving this question 
aside with regard to the current schedules would not do anything to resolve existing problems, even if 
a solution was found for future schedules.  Also, solu tions for future schedules might have an impact 
on existing schedules.  Therefore one should first try to clarify this issue and then find a solution.     S/C/W/237 
 Page 17 
 
 
43. His delegation agreed that there was no hierarchy between Articles XVI, XVII, and XX:2.  It 
seemed that there were actually not only market access and national treatment restrictions, but a third category of restrictions that combined market access and national treatment restrictions.  For these three restrictions, three Articles existed in the Ag reement.  Article XVI dealt with market access 
restrictions, Article XVII with national treatment rest rictions, and Article XX:2 with those restrictions 
that combined market access and national treatment restrictions.  Looking at those three Articles as 
having an independent justification would be consistent with Appella te Body jurisprudence that an 
Article of an Agreement could not be read to nullif y another Article of the same Agreement.  If every 
Article must be given meaning, it followed that the market access column actually addressed two 
issues.  First, it could be used to schedule mark et access restrictions as stated in Article XVI, and 
secondly, it would also be used to schedule restrictions  that fell under Article XX:2.  An inscription in 
the market access column could hence stand for two different things because the GATS stipulated that 
two different types of information were to be scheduled in the same column.  An "Unbound" under 
Article XVI could be understood to encompass both the restrictions set out in Article XVI:2 (a)-(f), as 
well as those in Article XX:2, because both Articl es state that any inscription of the respective 
restriction should be made in the market access column.  Having said that, it seemed that the first 
approach in the Chair's Note did not impose any hierarchy between Articles XVI, XVII and XX:2.   
44. He thus disagreed with the statement in para graph 20 of the paper by Switzerland, that the 
first approach presumed the existence of a hierarchy between Articles XVI and XVII.  Although paragraph 19 of the paper stated that approach number four did not imply any hierarchy between Articles, it nevertheless advocated a solution by which a "None" would override "Unbound." This 
would in fact introduce a hierarchy between an "Unbound" and a "None."  As the question of 
hierarchy was a central element of the discussion,  he requested the Secretariat to prepare a 
compilation of jurisprudence regarding the question of hierarchy between Articles within the same 
Agreement.   
45. The representative of Chinese Taipei
 stated that her delegation's preferred solution was to 
employ a schedule-based approach, along the lines of approach five in the Ch air's Note.  Approaches 
one and two introduced a hierarchy between Articl es XVI and XVII, while there was no legal ground 
for assuming such a hierarchy.  One needed to be careful with the th ird and fourth approach,  because 
these approaches could lead Members to interpret the scope of commitments in a way that might 
either diminish the commitments or change their dire ction.  The current negotiations provided an ideal 
opportunity to use bilateral negotiations in order to clarify certain entries in schedules that might be 
modified in the context of the schedule-based a pproach.  Any new commitment in each Member's 
offer would then follow this approach.   
46. The representative of Hong Kong, China  welcomed the opportunity to address the problem on 
a technical basis and to put aside legal and procedur al considerations for the time being.  He agreed 
that the fifth approach was a pragmatic way of tryi ng to avoid that the problem would repeat itself in 
respect of new commitments.  Even if no decision came out of the current discussion, it had already 
achieved the purpose of raising Members' awareness of the problem.  In the course of the negotiations, delegations would pr esumably be aware of the ambiguities arising from those entries 
and would try, as far as possible, to clear up those entries.  It was now clear that the problem was wider than concerning only Article XX:2.  It concerned more generally the overlap between 
Articles XVI and XVII and the resulting overlap of commitments in the market access and national 
treatment column in individual schedules of specific commitments.   
47. These observations on the various approaches di d not necessarily represent the interpretation 
of his delegation and were intende d only to take the discussion forward.  In his view, approaches one 
and two did not establish a hierarchy between Articles XVI and XVII, but actually aimed at 
eliminating the overlap by assigning the overlapping area to one of the Articles.  In approach number 
one, the overlapping area would be assigned to Article  XVI, and therefore Article XVI would govern 
all the measures in paragraph 2 (a)–(f) in both non-discriminatory and discriminatory form.  Under S/C/W/237 
Page 18  
 
both approaches, the intention was to eliminate th e overlapping area and to dr aw a clear line between 
Article XVI and XVII.  A measure would then either  fall within Article XVI or Article XVII but not 
within both at the same time, th ereby eliminating the need for deciding which Article should take 
precedence over the other because the two Articles w ould not be applicable at the same time.   
48. Another observation was that Article XVI:2 re fered to well-defined categories of measures 
which, of course, were only a subset of the measure s that were governed by the GATS.  On the other 
hand, the scope of Article XVII was in principle th e same as that of Article I of the GATS, capturing 
the discriminatory aspects of all possible measures.  Conceptually and structurally, there might hence 
be merit in retaining the scope of Article XVII, but to reduce the scope of Article XVI because the 
latter contained a well defined subset of measur es.  This would ensure that the notion of 
discrimination was retained in its entirety in Article  XVII.  From a structural point of view, it might 
be less desirable to carve out segments from th e scope of Article XVII and allocate them to 
Article XVI.  Thus, approach two might have a mer it over approach one.  There were further practical 
considerations in comparing the two approaches.   For instance, when Members crafted their 
schedules, they had to decide whether to inscrib e limitations under the market access or national 
treatment column.  If the national treatment colu mn was reserved entirely to any discriminatory 
measures, and the market access column was entirel y reserved for quantitative or other restrictions on 
legal form or equity, then a decision might be easi er to make than a decision between measures which 
were quantitative and discriminatory and measures which were non-quantitative and discriminatory. 
49. As an alternative to assigning the overlapping area to either one of the two Articles, it would 
be conceivable to simply require all measures fa lling into the overlapping area to be scheduled under 
either the market access column or the national tr eatment column.  While the first two approaches 
outlined in the Chair's Note see med to involve a change to th e architecture of the GATS, the 
alternative merely required an agreement on where the entries under the two Articles should appear in 
the schedule.  This alternative would of course not eliminate the overlap.  Yet at least in terms of scheduling, it might provide greater clarity.  In th eory one could also envi sage a scenario with three 
columns one of which was assigned specifically to th e overlapping area.  Conceptually, the alternative 
essentially tried to find a place for what w as to be put in this third column.   
50. Approaches three and four in the Chair's Note retained the overlap of the two Articles, but 
provided that the commitments in the overlappi ng area would be governed by the scope of 
commitments being undertaken in either column, i.e. either "Unbound" prevailed over "None", or 
"None" over "Unbound".  In this regard, the pape r by Switzerland contained a very interesting 
analysis.  Contrary to that analysis, he believed th at approaches three and four introduced a hierarchy, 
albeit not between Articles XVI and XVII, but be tween "None" and "Unbound".  If one had only the 
choice between approaches three and four, he would agree with Switzerland that approach four would 
appear more convincing.  No matter how one read  Article XX:2, if "None" was scheduled in the 
market access column, and "Unbound" in the nationa l treatment column, it could hardly be argued 
that the Member could still introduce a measure under Article XVI which was discriminatory in 
nature, because such a measure, by the logic of Ar ticle XX:2, should have appeared in the market 
access column of the schedule.  A "None" in the market access column could only mean that there 
was no such limitation in place.  Another reason in support of approach four over approach three was 
that Articles XVI and XVII represented obligations that Members assumed by inscribing entries in their schedules. Scheduling an "Unbound" for a certa in mode, or omitting a sector altogether from a 
schedule did not absolve the Member from any other obligations for the sector, such as the 
unconditional MFN obligation.  By the same token,  an "Unbound" in either the market access or 
national treatment column only meant that the Memb er did not assume obligations under that column.  
However, this did not absolve the Member from obligations assumed elsewhere, for instance through 
entering "None" in the corresponding other column.  Seen in this light, there were good reasons that 
"None" should prevail over "Unbound".  S/C/W/237 
 Page 19 
 
 
51. To further the analysis of the four approaches,  it seemed that the following issues needed to 
be examined: (i) whether there were any substan tive differences between removing or retaining the 
overlapping area; (ii) whether the notion of market access restrictions should be reduced to their non-
discriminatory form, and discrimination be reserved in entirety to national treatment, in terms of GATS architecture, conceptual tidiness and practical  ease in scheduling; and (iii), whether there 
should there be any hierarch y between "None" and "Unbound". 
52. The representative of Japan
 proposed to distinguish between the two scenarios at issue, 
depending in which column the "Unbound" was sche duled.  Article XX:2 obviously related to a 
situation where a measure was inscribed in the market access column.  Where a commitment was 
inscribed in this column, and an "Unbound" was ente red in the national treatment column, it appeared 
that the commitment should not be decreased by that "Unbound".  For example, if in the market 
access column no limitation was maintained except fo r a quantitative limitation on the number of 
licenses, and the national treatment column was left "Unbound," it would be unreasonable to assume 
that the Member would nevertheless be able to intr oduce restrictions for fo reign capital because they 
were discriminatory in nature.  As far as this pa rticular situation was conc erned, his delegation was 
basing itself either on the logic of approach one or  approach four where the market access column or 
the commitment would prevail over the "Unbound" situation.   
53. More problematic was the situation where th e "Unbound" was in the market access column 
and a full or partial commitment was inscribed in the national treatment column.  Having heard the 
different statements and different interpretations of the meaning of "Unbound," and also given that 
measures which would be subject to  national treatment obligations were  not specified in Article XVII, 
he believed that there was ultimately no other way of understanding the underl ying intention of the 
schedule other than to seek clarification from the Me mber who had originally submitted that schedule.  
In other words, there was no choice other than opti on five for these cases.  Of course, this would need 
to be done in a very cautious manner, so that the domain of "Unbound" would not prevail beyond the 
original intention of the Member who had made the commitment.  Countries seeking an extensive 
interpretation of "Unbound" should be required to explain their intentions, and, so to speak, carry the 
burden of proof.  
54. The representative of Canada stated it was difficult to deal with  the issue in a purely clinical 
way, because any solution had implications for Members current and future schedules.  These 
implications needed to be taken into account.  Hi s delegation was still examining the Chair's Note and 
in particular the question posed in paragraph 14.   His delegation was further exploring the exact 
meaning of "Unbound", and whether, as had been sugg ested in an earlier paper by Hong Kong, China, 
it could be understood as a listing of a ll existing and possible limitations.   
55. The representative of the United States,  in making preliminary comments, stated that one of 
the important questions in the de bate related to the meaning of  "Unbound".  More precisely, the 
question was whether "Unbound" w as equivalent to what Article XX:2 described as measures 
inconsistent with both Article XVI  and Article XVII, if it was inscribed in either place.  Was an 
"Unbound" tantamount to a measure inconsistent with  something?  Looked at the question in that 
way, one found oneself going back to the title of Article XX "Schedules of Specific Commitments," and the first paragraph which set out how to sch edule specific commitments.  The question arose 
whether inscribing "Unbound" actually meant listi ng a specific commitment.  One should also ask 
whether paragraph 2 of Article XX should in any wa y be read in conjunction with paragraph 1 in 
order to determine what was meant by "measures in consistent with both Articles XVI and XVII".  On 
the issue of hierarchy, one needed to distinguish between hierarchy of substance and hierarchy of how 
to inscribe.  Some guidance was given by pa ragraph 18 of the scheduling guidelines which she 
reiterated should be looked at.  However, she noted  that the Chair's Note stated that paragraph 18 
might be deficient to resolve the issues at hand.   She did not suggest, however, that paragraph 18 
needed to be revised to incorporate some of the many questions at hand, since the discussion was 
nowhere near a solution.   S/C/W/237 
Page 20  
 
56. She recalled that, in the informal discussion, Chile had asked whether situations involving an 
"Unbound" were actually situations where Article XX: 2 applied.  It had been pointed out that an 
"Unbound" might include some restrictions that we re not in effect at the moment, but could be 
introduced at a later stage.  The "Unbound" would al so reserve the right to inscribe limitations at a 
later stage.  On the question of whether Article XVII should be viewed as the only domain for 
discrimination, she noted that Article XVI:2 (f) al ready covered discriminat ory measures.  Following 
this approach might require to amend Article XVI to clean up any indication of discrimination.  She 
therefore urged for restraint in the debate.  Her delegation appreciated Aust ralia's suggestion.  The 
present debate should not lead to a legal interpreta tion, and she was not suggesting to tamper with 
existing commitments.  As for future commitments, one would of course have  to take into account 
some of the questions that had been raised in th e various papers and discussions.  She suggested that 
Members started to think in that light, also becau se the Committee had to report back to the Council 
for Trade in Services.  Members were relying on the Chair in finding the best way to produce a report.   
57. The representative of Singapore
 stated that his delegation was broadly inclined towards the 
first approach.  As everyone recognized, Article  XVI dealt with both discriminatory and non-
discriminatory aspects of the six types of measures contained therein.  Thus, the "Unbound" entry in 
the market access column should by definiti on apply to both the discriminatory and non-
discriminatory aspects of the six measures.  If th ere was a "None" entry in the national treatment 
column, it should only apply to those measures that fell strictly under national treatment.  Given the 
structure of Article XVI, as it applied to both th e discriminatory and non discriminatory aspects of the 
six measures, option one would not create a hierarch y.  His delegation was still assessing this complex 
issue.  The current round presented a useful opportunity to clarify ambiguities.  In this regard, his 
delegation was also looking at approach five with  an open mind.  That approach could provide a 
useful modality for future work in this area, although it might not solve ambiguities with respect to 
existing commitments, as some delegations might rega rd certain interpretations as a nullification of 
commitments.  This created a major challenge, na mely how to balance the integrity of current 
commitments with Members' interpretations of their existing schedules.  These problems might not 
necessarily be resolved through bilateral negotia tions, as Members held differing views on these 
issues.   
58. The representative of the Republic of Korea  stated the discussions thus far had proceeded in 
two parallel tracks without much convergence of ideas.  Korea was of the view that the fifth approach 
was most appropriate at this moment.  He fully appreciated that this would not solve existing 
problems, but hoped that all Members would try to  reduce discrepancies by maintaining effective 
market access liberalization.   
59. The representative of Australia  said that option five should onl y relate to new or improved 
commitments, but could not serve to clarify existing problems through applying any of the less liberal interpretations or approaches such as, for example,  option three.  A Member could also choose to 
resolve an ambiguity in existing commitments by ma king an offer consistent with the most liberal 
interpretation, which was option four, or by unamb iguously expanding its obligations.  For example, a 
situation of "Unbound" and "None" could beco me "Unbound except for measures falling under 
Article XVII" and "None," or it could become "N one" and "None".  There might be concerns about 
how to give credit in the negotiations for improvi ng schedules in this way, which was one issue his 
delegation was looking into.  Australia was pr eparing a paper to explain its position.   
60. The representative of the European Communities
 stated the Chair's Note and the paper from 
Switzerland were currently examined in Brussels.  The latter paper seemed to follow a very clinical 
approach; however, its para graph 23 also implied the possibility to look at approach number five.  The 
Chair's Note provided a useful summary of the debate  so far.  It was clear from paragraph 21 in the 
Chair's Note that approach number five might only he lp in relation to future commitments, and that 
there was a reluctance on the part of many Member s to apply it to existing commitments.  Whatever  S/C/W/237 
 Page 21 
 
 
course of action was followed, it would have to a ddress the question of the potential overlap between 
old and new commitments. 
61. The representative of Switzerland  replied to the comments.  He did not agree with the view 
taken by Brazil that there were three types of measures and three corresponding GATS provisions to deal with them for mainly three reasons.  First, the structure and sequence of the GATS, which placed 
the substantive provisions on commitments in Artic les XVI and XVII in Part III and Article XX in 
Part IV, preceded by Article XIX on negotiations . . Article XX had the heading "Schedules of 
Specific Commitments," and was a technical provision aimed at setting out how to draw up schedules, which was different from the substantive provisions on market access and national treatment in Part 
III ("Specific Commitments").  Secondly, the wordin g of Article XX:2 clarified that it was merely a 
scheduling convention.  Third, if Article XX:2 indeed  contained a third type of measure, it would be 
difficult to see why Article XVI:2 (f) already covered a measure of this third type, which would fall 
under the Brazilian approach under Article XX:2.  
62. If the second approach in the Chair's Note w as correct, there would be no possible way to 
explain why Article XVI explicitly covered a meas ure which was discriminatory in nature, namely 
maximum foreign capital participation (Article XVI :2(f)).  It was always possible to find specific 
arguments in favor of any of the four approaches.  Switzerland, in contrast, had tried to consider all 
approaches in a holistic manner and test each appro ach against any possible internal inconsistency, 
taking into account the architecture of the GATS.  In doing so, only approach number four had proved 
to be truly robust.  Even if one accepted that a pproaches one and two did not imply a hierarchy, but 
only an allocation of the overlap zone, the questions  would remain the same.  It was not clear where 
such an allocation was provided for in the GATS.  The existence and content of Article XX:2 could 
not be explained, if an allocation was already fo reseen in other GATS provisions such as Articles XVI 
and XVII.  And, finally, the mere existence of Article XVI:2(f) raised problems especially if one 
wished to follow approach two. 
63. Turning to process, he felt that the discussions on this issue had been exhausted.  It was 
unlikely that the Committee would be able to reac h a consensual conclusion.  It was thus up to 
delegations to consider the ideas exchanged in the Committee and draw their own conclusions. In this 
context, it was certainly helpful that that the discu ssions had occurred at the start of the request and 
offer process.  Finally, the mandate received by the CSC was limited both in terms of time-frame and scope.  The Services Council had referred the item to the CSC for consideration on the understanding 
that the Chairperson of the CSC would report b ack to the Council on the discussions, complemented 
by the reports of the relevant CSC meetings. 
64. The Chairperson
 stated that he sensed that some delega tions were still looking at the issues.  
These delegations would need at least another formal meeting.  As the next such meeting was the last 
possible opportunity before the report to the Serv ices Council was finalized, he requested delegations 
to consider whether another informal meeting would be of use.  After the next formal meeting, he 
would prepare a technical report to the CTS under his own responsibility. 
65. The representative of Brazil stated that consideration of the issue should continue even after 
the report to the Services Council had been made.  It was important to find a possible solution for 
future schedules, even if it appeared that a solu tion for the current schedules was not possible.  He 
was in favour of convening an informal meeting.  
66. The representative of Switzerland  stated that prior to deciding on the need for an additional 
informal meeting, one should consider the purpose of such a meeting.  He was not opposed to an 
informal meeting if it served to bring any additiona l views into the discussion.  He suggested that the 
Chairperson consult on the issue.   S/C/W/237 
Page 22  
 
67. The representative of the United States
 concurred with the point made by Switzerland.  If 
there was an urgent need to have an informal meeti ng, she would like to hear more about the reasons.   
68. The representative of Canada  supported the Swiss suggestion.  The Chairperson could 
undertake consultations to determine what exactly would be discussed at an informal meeting.  
Members could then decide whether they wanted such a meeting to take place.  
69. Further to the comments made by delegations, the Chairperson  suggested that he would 
explore with delegations whether any additional ma terial for discussion or other motivation for an 
informal meeting existed among delegations.  He w ould ensure that the next formal meeting was 
convened for a full day to avoid th e time constraints that had handicapped the present meeting.  He 
felt that the discussion had been very deep and substa ntive.  As some delega tions had indicated, the 
discussion itself had raised awareness of the issu es involved and would he lp delegations during 
bilateral and other negotiations.  He  noted a sense of pragmatism on th e part of several delegations, as 
well as expressions of concern by some other dele gations about how to deal with the relationship 
between old and new commitments.  
70. Addressing the suggestion by Brazil for Secretariat research on the question of hierarchy in 
WTO Agreements, a representative of the Secretariat  noted that there were some clear principles 
establishing hierarchy, for example between exception provisions and provisions establishing obligations.  If one wanted to look into other more subtle distinctions, it might be useful to clarify the 
parameters of such a paper.  He felt that the relationship between Articles XVI and XVII was not so 
much a question of hierarchy, but rather one of the delineation of the scope of these provisions.  He 
requested more time to reflect and discuss the question with the delegation of Brazil. 
71. The representative of the United States
 stated that her delegation would like to be a part of 
any consultation on this issue.  She reiterated th at her delegation did not want to see a legal 
interpretation.  However, if the request was merely  to factually compile what panels had said about 
certain provisions, there c ould be consultations.  
72. The representative of the European Communities  stated that it would be useful to come back 
to the CSC and report on any consultations before th e Secretariat was tasked with the preparation of a 
paper.   
73. The Chairperson stated that the purpose of the consultations was merely to clarify the 
intended scope of the request by Brazil.  There wa s no prejudice to the question whether such a paper 
should be prepared or not.  He proposed to consu lt whether a further informal meeting prior to the 
next cluster was needed.  Due to the time constrai nts at this meeting, item D (Scheduling Issues) 
would be taken up at the next meeting.  He suggested  that Members take note of the statements made.  
As there were no interventions under the agenda item of Other Business, he suggested that, in 
accordance with the practice of grouping meetings of  subsidiary bodies close to meetings of the 
Council, the next formal meeting be held befo re the next regular meeting of the CTS.  
74. The Committee so agreed.  
 
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