RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/197
24 September 2001
(01-4583)
Council for Trade in Services
DRAFT
REPORT (2001) OF THE COUNCIL FOR TRADE IN SERVICES
TO THE GENERAL COUNCIL
1. Since its last report to the General Council, dated 23 November 2000, the Council for Trade
in Services has held four formal meetings.  Reports of the meetings are contained in documents
S/C/M/51 to 54.  The Council has also held one special meeting dedicated to the review of the Annex
on Air Transport Services, the report of which is contained in document S/C/M/50.  The reports of the
meetings should be read in conjunction with this report.  During the reporting period, the Counciladdressed the following matters:
I. REVISION OF GUIDELINES FOR THE SCHEDULING OF SPECIFIC
COMMITMENTS
2. At the Council meeting of 23 March 2001, the Council addressed the draft Revised
Guidelines for the Scheduling of Specific Commitments, contained in document S/CSC/W/30, and adraft decision by the Council to adopt these revised guidelines, document S/C/W/190.  The Chairman
of the Committee on Specific Commitments informed the Council that the Committee had agreed a
text reflecting the revision of the Guidelines for the Scheduling of Specific Commitments under the
GATS at its meeting on 22 March 2001.  The Committee recommended that the Council for Trade in
Services adopt that text according to the terms reflected in the draft decision.  The Council adopted
the draft decision (S/L/91), taking into account that the final version of the revised guidelines would
be rectified with regard to a typing error. Th e adopted Guidelines for the Scheduling of Specific
Commitments under the General Agreement on Trade in Services (GATS) are contained in document
S/L/92.
II. NOTIFICATION OBLIGATIONS PURSUANT TO ARTICLE V OF THE GATS
3. At the meeting held on 1 December 2000, the Council continued discussions of a statement
by the delegation of the United States, contained in document S/C/W/147, concerning the question ofhow to improve the timeliness of notifications of economic integration agreements pursuant to
Article V of the GATS, and their transmittal to the Committee on Regional Trade Agreements
(CRTA) for examination.  The Council requested the Secretariat to draw up a list of all economic
integration agreements notified to the Council for Trade in Services, with an indication of those which
had not been referred to the CRTA.
4. At the meeting held on 23 March 2001, the Council agreed to refer seven economic
integration agreements, listed as "not referred" in the Secretariat's list (JOB(01)/33), to the CRTA for
examination.S/C/W/197
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III. NOTIFICATIONS MADE TO THE COUNCIL PURSUANT TO GATS
ARTICLES III:3, V AND VII:4
5. At the meeting held on 23 March 2001, the Council took note of the following notifications:
(i) Notifications pursuant to Article III:3 of the GATS concerning modifications to
services regulations in sectors where specific commitments have been undertaken:
Egypt (S/C/N/116)
Kyrgyz Republic (S/C/N/177-120)
United States (S/C/N/121)
Costa Rica (S/C/N/123)
Slovak Republic (S/C/N/124)
Czech Republic (S/C/N/125-126)
Japan (S/C/N/127-131)Madagascar (S/C/N/132-137)
Poland (S/C/N/138-141)
(ii) A notification pursuant to Article V concerning an economic integration agreement:
Chile and Mexico (S/C/N/142)
(iii) A notification pursuant to Article VII:4 concerning recognition measures and
agreements or arrangements:
Costa Rica (S/C/N/122)
6. The Council referred the economic integration agreement between Chile and Mexico to the
CRTA.
IV. BRAZIL'S ARTICLE II (MFN) EXEMPTION IN BASIC TELECOMMUNICATIONS
7. Based on a communication from Brazil, contained in document S/C/W/160, the Council had
discussed the item in two meetings prior to the reporting period. The delegation of Brazil had
informed the Council of its consultations with other Members concerning their revised commitments
in basic telecommunications.  The delegation of Brazil had also referred to the proposed procedurewhich would allow Brazil to bind its basic telecommunications commitments and maintain the MFN
exemption listed during the negotiations of the Fourth Protocol.
8. At the Council meetings of 1 December 2000 and 23 March 2001, the representative of Brazil
informed the Council of the status of consultations with other delegations.  At the meeting of
23 March, Brazil presented a draft decision on the exemption from Article II (MFN) listed by Brazil
in Basic Telecommunications to the Council as a room document.
9. At the meeting held on 14 May 2001, the same draft decision was circulated as document
S/C/W/192.  The effect of the decision would have been to allow Brazil to maintain the MFN
exemption resulting from the negotiations and listed under the Fourth Protocol, which would have
taken legal effect upon the entry into force of Brazil's schedule of specific commitments in basic
telecommunications.  Brazil had further initiated a certification procedure for its draft schedule of
commitments in basic telecommunications, contained in document S/C/W/191.
10. At the meeting held on 9 July 2001, the Chairman stated that the delegations of the
United States (S/L/94); Hong Kong, China (S/L/95); the European Communities and theirS/C/W/197
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Member States (S/L/96); as well as Japan (S/L/97) had notified their objections to Brazil's draft
schedule of commitments in basic telecommunications.  The representative of Brazil announced the
withdrawal of the draft schedule of specific commitments in Basic Telecommunications.  The formal
withdrawal of the draft schedule is contained in do cument S/L/98. He also requested that the item on
the draft decision on the MFN exemption be  withdrawn from the agenda of the Council.
V. DATE OF FURTHER REVIEW OF ARTICLE II (MFN) EXEMPTIONS
11. The Council discussed the date for a further revi ew of Article II (MFN) exemptions at the
meetings of 1 December 2000, 23 March and 14 May 2001.  At the May meeting, the Council decided
that a further review of MFN exemptions should take place no later than June 2004.
VI. ISSUES ARISING FROM THE REVIEW OF ARTICLE II (MFN) EXEMPTIONS
12. At the meeting of 1 December 2000, the Council continued its discussion of a communication
from Japan, Korea and Hong Kong, China, contained in document S/C/W/173, which addressed anumber of general issues raised during the review of MFN exemptions conducted by the Council.
The Council also started discussion of a paper by Chile, JOB(01)/34, on procedures for the reduction
and withdrawal of MFN exemptions.
13. At the meeting of 14 May 2001, the Council continued its discussion of the papers from
Japan, Korea and Hong Kong, China, S/C/W/173, and Chile, JOB(01)/34, and discussed a paperpresented by Hong Kong, China, contained in Job No. 7775, on MFN exemptions that purported to
grant less favourable treatment than that set out  in the schedule of specific commitments.  The
Council asked that the Secretariat examine the le gal aspects involved in the development of a
procedure for the withdrawal or reduction of MFN exemptions.
14. At the meeting of 9 July 2001, the Council continued its discussion of the earlier
contributions and discussed the paper produced by the Secretariat, contained in JOB(01)/106.  The
Council agreed to revert to the item at the next meeting.
VII. RECTIFICATION OF A TECHNICAL ERROR IN AN MFN EXEMPTION LIST
15. At its meetings of 1 December 2000, 23 March and 14 May 2001, the Council discussed a
communication from the Dominican Republic (S/C/W/175) concerning a technical rectification of itslist of Article II (MFN) exemptions concerning legal services.
16. At its meeting of 9 July 2001, Members agreed to omit the item from the agenda of the next
meeting and to address the issue once the question of procedures for rectifications of MFN
exemptions was settled.
VIII.  REVIEW OF THE UNDERSTANDING ON ACCOUNTING RATES IN
TELECOMMUNICATIONS
17. At the meeting held on 1 December 2000, the Council continued its discussions on the review
of the understanding on accounting rates, as provided for in paragraph 7 of the Report of the Group on
Basic Telecommunications contained in document S/GBT/4.  The representative of the ITU
Secretariat informed the Council of the conclusions reached at the World Telecommunications
Standardization Assembly, contained in Job No. 8211.
18. The Council continued its discussion at the meeting held on 23 March 2001; at the meeting of
14 May 2001, the delegation of Australia proposed terms of reference for a TelecommunicationsS/C/W/197
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Accounting Rates Review, contained in JOB(01)/73, which were further discussed at the meeting of
9 July 2001.  The Council agreed to revert to the item at its next meeting.
IX. PROPOSALS CONCERNING A TECHNICAL REVIEW OF GATS PROVISIONS
19. At its meeting held on 23 March 2001, the Council discussed, under Other Business, a
proposal by the delegations of Australia; the European Communities; Hong Kong, China; Japan;Norway and Switzerland, contained in JOB(01)/40, to place the item of Technical Review of GATS
Provisions on the agenda of the Council on a regular basis.
20. At the meeting held on 14 May 2001, the Council continued its discussions and agreed to
revert to this item at the next meeting.
21. At the meeting held on 9 July 2001, the Council continued its discussion of JOB(01)/40 and
considered a paper by Japan, JOB(01)/107, containing suggestions with regard to possible issues to be
addressed in a technical review.  The Council agreed to discuss in substance at its next meeting thevarious provisions that had up to that point been presented for a technical review, i.e. (i) Article XX:2;
(ii) Articles XVI – XVII; (iii) paragraphs 1 and 2 of Article XVI, and (iv) Article XXVIII:(g) together
with paragraph 5 (b) of the Annex on Financial Services.
X. WORK PROGRAMME ON ELECTRONIC COMMERCE
22. At its meeting held on 23 March 2001, the Council discussed a communication from the
European Communities on electronic commerce, contained in document S/C/W/183. The Council
agreed to revert to this item at the next meeting.
23. At the meeting held on 14 May 2001, the Chairman noted that the General Council, at its
meeting on 8 May 2001, had agreed that the subsidiary bodies should continue their discussions and
report back to the General Council.  The dele gation of Cuba introduced a contribution to the
electronic commerce work programme, contained in document S/C/W/193. The Council agreed to
revert to this item at the next meeting.
24. At the meeting held on 9 July 2001, the Council continued its discussion on the work
programme, including on a communication from Mercosur to the General Council, WT/GC/W/434,
which identified a number of sectoral issues on which the Services Council should continue its work.The Council agreed to revert to the item at the next meeting.
XI. NEGOTIATIONS UNDER ARTICLE X OF THE GATS ON EMERGENCY
SAFEGUARDS
25. At the meeting held on 1 December 2000, the Council received a communication from the
Chairperson of the Working Party on GATS Rules proposing to extend the deadline for the
negotiations under Article X of the GATS on the question of emergency safeguard measures,
contained in document S/C/W/184.  The Chairman of the Working Party on GATS Rules presented  aproposal for the new deadline of  15 March 2002, and provided that the final date for the entry into
effect of the results of these negotiations  shall be no later than the date of entry into force of the
results of the services round. The Council adopted the draft decision proposed by the Chairman of the
Working Party, (S/L/90).S/C/W/197
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XII. REOPENING OF THE FIFTH PROTOCOL FOR ACCEPTANCE
26. At the Council meeting of 1 December 2000, following requests from Kenya and Nigeria, the
Council adopted a decision, contained in document S/L/89, to re-open the Fifth Protocol to the GATS
relating to financial services for acceptance by Kenya and Nigeria.
XIII.  PROPOSAL FOR A CO-OPERATION AGREEMENT WITH THE UNIVERSAL
POSTAL UNION (UPU)
27. At the meeting held on 1 December 2001, the Council addressed a communication from the
UPU Secretariat containing a draft "Memorandum  of Understanding on cooperation between the
Universal Postal Union and the World Trade Organization", as set out in a note by the Secretariat in
document S/C/W/180.  At an earlier meeting in February 2000, the Council had received a
communication from the Universal Postal Union (U PU), circulated as Job No. 865, containing a
proposal by the UPU that a cooperation agreement in the form of a memorandum of understanding be
concluded between the UPU and the WTO.  The Council  agreed to revert to this item at a future
meeting.
XIV. COOPERATION BETWEEN THE INTERNATIONAL CIVIL AVIATION
ORGANIZATION (ICAO) AND THE WTO
28. At its meeting held on 14 May 2001, the Council discussed a note by the Secretariat,
JOB(01)/64, containing a letter from the Secretary-General of ICAO with the proposal to develop a
memorandum of understanding or a co-operation agreement between ICAO and the WTO.  The
Council agreed to revert to this item at its next meeting and to invite a representative of ICAO to the
next meeting in order to clarify the objectives of the envisaged cooperation agreement. At the meeting
on 9 July the items was further deferred to the following meeting.
XV. REVIEW OF THE ANNEX ON AIR TRANSPORT SERVICES UNDER
PARAGRAPH 5 OF THE ANNEX
29. The second meeting devoted to the review was held on 4 December 2000.  The Council
discussed a paper produced by the Secretariat, contained in document S/C/W/163/Add.1 and 2, as
well as communications from the European Communities, S/C/W/168, and New Zealand, S/C/W/185.A representative of ICAO introduced its revised policies on the economic regulation of airport and air
navigation, S/C/W/188.  The report of the m eeting is contained in document S/C/M/50.
XVI. WORK OF SUBSIDIARY BODIES
30. The activities of subsidiary bodies are reflected in their respective reports which are annexed
to this report as follows:
Annex I Report of the Committee on Specific Commitments (S/CSC/--)
Annex II Report of the Committee on Trade in Financial Services (S/FIN/--)Annex III Report of the Working Party on Domestic Regulation (S/WPDR/--)
Annex IV Report of the Working Party on GATS Rules (S/WPGR /--)
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