RESTRICTEDWORLD TRADE
ORGANIZATIONS/CSS/M/13
26 February 2002
(02-0955)
Council for Trade in Services
Special Session
REPORT OF THE MEETING H ELD ON 3-6 DECEMBER 2001
Note by the Secretariat
1. The Council for Trade in Services held a Special Session from 3 to 6 December 2001.  The
agenda for the meeting is contained in document WTO/AIR/1686.
2. The Chairman proposed that the Council adopt the agenda as circulated.
3. The Council so agreed.
A. ASSESSMENT OF TRADE IN SERVICES
4. The Chairman recalled that, at its October meeting, the Council had continued its discussion
of the assessment of trade in services mandated by Article XIX of the GATS and referred to
paragraph 14 of the Negotiating Guidelines and Procedures.  A joint communication by a group ofdelegations, circulated as document S/CSS/W/114, had been introduced by the delegation of Pakistan.
At the end of the discussion, the Council had agreed to task the Secretariat with the preparation of a
checklist of issues that Members might wish to  take into account when conducting their own
assessment;  the Secretariat Note was contained in document S/CSS/W/117.  There was also a good
deal of support for a Dominican Republic proposal that a symposium be held on the assessment oftrade in services;  Members had asked the Secretariat to draw up an outline for the event, for
discussion at that meeting.  The outline was contained in JOB(01)/160.
5. A representative of the Secretariat said that the Note in document S/CSS/W/117 contained a
checklist of issues that Members might wish to  consider when conducting their own assessment of
trade in services.  He then introduced the draft programme for the symposium on the assessment of
trade in services contained in document JOB(01)/160;   he said that it was only a broad outline, which
would need to be further elaborated in light of Members' comments.  He also indicated that,differently from what was stated in the introducto ry paragraph, the symposium would not be held "in
preparation" for the March meeting of the Council but "back-to-back" with that meeting.
6. The representative of Costa Rica said that tw o submissions just tabled by his delegation in
documents S/CSS/W/128 and 129, on computer a nd related services and tourism services
respectively, contained an assessment with respect to the importance of these sectors.  That was thereason why his delegation was introducing the relevant sections under that agenda item, to contribute
to the assessment and to show the importance and potential of these sectors for Costa Rica.
7. Computer and related services held considerable importance for the Costa Rican economy,
given the high growth experienced over the previous years as a local industry with high value-added
content.  For example, studies carried out indicated that software production had a national value-added exceeding 90 per cent.  This sector was made up mostly of small and medium-sized suppliers
and of companies producing "tailor-made" application packages or systems for other companies or
offering advisory services in the area of software  development for other companies.  Many of the
enterprises had been set up during the 1990s, led by a few pioneers which had began their work in the
1980s.  Some 83.5 per cent of the companies were locally owned, 12.4 per cent were mixed capitalcompanies and the remaining 4.1 per cent were foreign owned.  Half of the companies were export-S/CSS/M/13
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oriented.  Costa Rican software exports had grown considerably over the previous few years, reaching
US$50 million in 2000.  This had meant that computer and related services accounted for a significant
share of total exports alongside other important Costa Rican exports such as hairdryers, plants and
shrubs, and melons.
8. Tourism services are of great importance to developing countries and could contribute
significantly to the goal of sustainable development by generating employment, preserving natural
resources, developing infrastructure and attracting foreign direct investment.  In Costa Rica, the
tourism sector was of considerable economic importance.  In 2000, total tourism-related earnings
amounted to US$1,145 million, accounting for 67.4 per cent of total services exports and almost
15 per cent of total exports of goods and services.  In terms of direct and indirect employment,
tourism had generated some 170,000 jobs.  Costa Rica had a capacity of 30,940 rooms, most of which
were managed and run by small and medium-sized enterprises.  Close to 58 per cent of the roomswere located in provinces which had the lowest development indices in the country.  As was to be
expected, however, the sector was directly affect ed by the economic slowdown in the industrialized
countries, and global performance in the economic, political and social spheres therefore impacted on
tourism in Costa Rica.  The terrorist attacks of 11 September in the United States had had serious
consequences, and the task of determining and measuring their magnitude was only just beginning.  Itwas estimated that tourism receipts in Costa Rica would drop by US$100 million in 2001 and by some
US$200 million in 2002.  Job creation was down by 14 per cent, with 18,000 lay-offs in the fortnight
that followed the tragedy.  The number of tourists fell by some 17.5 per cent as compared to the same
period the previous year.  As part of its assessment of trade in services, the Services Council should
evaluate the effects of these events on tourism, and Members could share information on measuresadopted in response to the crisis affecting the sector.  The WTO Secretariat could, moreover, update
its Background Note in document S/C/W/51, taking into account the results of this assessment.
9. The representative of Uruguay, speaking on behalf of MERCOSUR, highlighted the points
that he considered most important in the submission by a number of developing countries contained in
document S/CSS/W/114.  First, paragraph 3(i) on page 8 suggested that conclusions on theassessment be drawn by March 2002 as a first contribution to the mandate in Article XIX:3 and
paragraph 14 of the Negotiating Guidelines and Procedures.  In this respect, he felt that this element
was made more relevant by the benchmarks contained in paragraph 15 of the Doha Ministerial
Declaration, namely 30 June 2002 for the submission of initial requests and 31 March 2003 for the
submission of initial offers.  In this regard, he considered it positive to have such a contribution at the
suggested date.  Second, paragraph 3(iv) suggested that the assessment be carried out with the
assistance of UNCTAD.  He viewed this as a useful suggestion, that he fully shared, not only for thevaluable contribution that UNCTAD could provide on the issue, but also because the contribution of
UNCTAD was explicitly recognized in other paragraphs of the Ministerial Declaration, such as
paragraph 21, on trade and investment, and paragraph 24, on trade and competition.  The
collaboration between the WTO and UNCTAD had been suggested also in other WTO bodies, for
example in order to analyse issues related to the TRIM Agreement.  He supported all suggestionsaimed at improving Members' examination and understanding on the assessment issue.  Therefore, he
was of the view that the participation of UNCTAD in such work would be an important contribution
that would complement the work carried out by the WTO Secretariat. 
 He also felt that the
suggestions made with regard to the holding of a symposium on the assessment, as well as withrespect to taking into account the information contained in Trade Policy Reports, could be useful andcontribute to the debate.
10. The representative of Zambia introduced a new joint submission by the delegations of Cuba,
Senegal, Tanzania, Uganda, Zimbabwe and his own delegation on the assessment of trade in services,
which was later circulated as document S/CSS/ W/132.  The sponsors of the submission supported an
earlier submission on the assessment, in document S/CSS/W/114, tabled by a group of developingcountries at the October Special Session.  The new submission built on the earlier one and was aimed
at assisting in carrying out the mandatory assignment of the assessment.S/CSS/M/13
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11. According to the GATS, the assessment of trade in services was mandatory before any further
negotiations in services were carried out.  Article XIX:3 stated that "… For each round, negotiating
guidelines and procedures shall be established.  For the purpose of establishing such guidelines, the
Council for Trade in Services shall carry out an assessment of trade in services in overall terms and on
a sectoral basis with reference to the objectives of this Agreement, including those set out in
paragraph 1 of Article IV."  It was unfortunate that the assessment had not been carried out before thecompletion of the Negotiating Guidelines.  Neverthele ss, this call for the assessment was reiterated in
the Guidelines adopted in March 2001.  Paragraph 14 stated in fact that "…The Council for Trade in
Services in Special Session shall continue to carry out an assessment of trade in services in overall
terms and on a sectoral basis with reference to the objectives of the GATS and of Article IV in
particular.  This shall be an ongoing activity of th e Council and negotiations shall be adjusted in the
light of the results of the assessment."  There was therefore no question whether an assessment should
be carried out;  it was mandatory.  The issue was rather to provide some pointers to what an initialassessment should be evaluating and when this on- going exercise should in the first place commence.
Since the Doha Ministerial, Members had before them yet another set of dates for initiating requests
and offers.  This did not leave much time and in fact added further urgency that an initial assessment
be commenced immediately, and certainly before requests were made.
12. The sponsors of the paper were calling for the 
following actions to be taken.  First, the on-
going assessment should be started by having an initial assessment completed by March 2002.  This
should be jointly carried out by UNCTAD, the WTO, as well as other relevant agencies.  Second, the
assessment should be based on whether or not the objectives of the GATS and of Article IV had
materialized.  Third, further negotiations should only commence after conclusions from the initial
assessment had been drawn.  The process and content of the negotiations had to be adjusted inaccordance with the outcome of the assessment.  These were suggestions which had already been put
forward by a group of developing countries at the October meeting of the Council.
13. In addition to these suggestions, the sponsors pointed to some key problems that some of
them had experienced in services liberalization in general.  Some of these experiences might not have
been due to the GATS, but were rather a result of structural adjustment policies (SAPS).Nevertheless, they were very important.  While developing countries could open up at their own pace
under the GATS, liberalization could still potentially bring about similar problems as those
encountered under SAPS.  Their key recommendation, therefore, was that a study of services
liberalization under structural adjustment be included in the initial assessment.  There already was
much existing literature on these experiences.  They could provide a good indication of the pitfalls to
avoid when going about the liberalization of trade in services.
14. Some of the problems that had already been encountered in this area were the following:
First, the problem of inadequate, inappropriate or ineffective regulation.  This created tremendous
problems, since adequate and proper regulation was critical to ensure a positive liberalization
outcome.  Often, it was not simply a matter of putting 
in place regulatory policies on paper, but a
matter of building institutional capacity.  Second, the resultant privatisation taking place once a sector
had been liberalised.  In some cases, privatisation had been positive, but there had also been manynegative experiences, even from a national fiscal perspective.  Furthermore, the problems encountered
in a range of countries were not very dissimilar:  for example, price hikes in the provision of essential
services, or services in less profitable areas being discontinued, such as transport services
discontinued in less accessible regions.  Usually, it was the poor that were most affected.  Countries
therefore had to be cautious so as to avoid these negative consequences.  The paper they were puttingforward provided some concrete examples, highlighting these problems.
15. The sponsors of the paper were not against liberalization of services under the GATS.
However, given the large number of proposals submitted from countries with large service exporters,
and the much smaller export capacity they had, they were anxious that, unless a thorough assessment
was carried out based on the objectives of Article IV and those in the preamble of the GATS, andnegotiations adjusted accordingly, the outcome of the negotiations might not bring them reciprocal
benefits.S/CSS/M/13
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16. The representative of the European Communitie s said that the symposium would provide for
a useful discussion on the assessment.  Commenting on the Secretariat Note in document
S/CSS/W/117, he noted that it contained a number of useful elements and rightfully pointed to the
links between services liberalization in the framework of the GATS and national policy choices that
had to be made in order to make such liberalization work.  In that context, he welcomed the
connection that the draft programme for the symposium made between existing GATS commitments
and the overall role of services trade in development.  The key question to be addressed was how
trade in services within the framework of GATS could contribute to economic development.  The
general assessment discussion had focused on the pe rceived imbalance between the level and growth
of exports and of commitments of developed and developing countries.  A statistical approach had
important limits:  data could suggest that developing countries had been marginalized in services
trade, but it did not allow to draw the conclusion that the GATS had not worked for developing
countries.  It was important to bear in mind that the GATS provided an opportunity of access, but no
guarantee of results.  Adequate domestic policies were necessary to create synergies and to actually
benefit from the opportunities that had been created.  In his delegation's view, a qualitative assessment
was more appropriate.
17. He concurred with the representative of Zambia that the assessment needed to be carried out,
but disagreed that it still had to commence.  The assessment had started, a great deal of discussion had
taken place and numerous contributions had been tabled.  He was also puzzled by the comment that
the assessment had to be completed before negotiations could commence;  the assessment was an on-
going exercise but the link between it being completed and the start of the negotiations was nowhere
to be found.  The assessment would be carried out on a continuous basis and some general trendscould be derived from it, but it was essential, particularly for developing and least-developed
countries, that an assessment be conducted on a national basis, as this could not be replaced by an
assessment carried out collectively by the Council.  The national assessment was the most important
one to assist in getting the priorities right in the negotiations.  There were a lot of references in the
Doha Ministerial Declaration that more funding be provided for technical assistance and capacity-building;  he encouraged Members to tap on those resources at an early date to try to carry out an
assessment at the national level.  The assessment in the Council would be pursued in parallel to the
negotiations and was, by its very nature, a general type of exercise that would provide limited input in
assisting to define individual negotiating positions.
18. Commenting on the draft outline for the symposium contained in JOB(01)/160, the
representative of the Dominican Republic said that it contained all the necessary elements and
provided a good basis to organize the event.  Th e symposium would help Members evaluate how the
assessment had advanced and how it might best be continued, given that it was an on-going exercise.
19. Commenting on document S/CSS/W/114, the representative of Norway said that section III
raised a number of important questions.  A step-by-step approach had been proposed, with a first
assessment at the end of March 2002 and further negotiations be contingent upon conclusions from
such an assessment.  His delegation believed th at there would be no significant differences in
available data by March 2002 and that the questions therefore needed to be addressed with date which
was already available.  Within this framework, it would be useful if all Members made their best
efforts to answer the questions raised, whether or not the answers could be substantiated
quantitatively.  This would highlight what data Members actually possessed.  Input from relevantbusiness representatives, authorities, academics and so on could support such quantitative evaluations.Two of the questions raised in document W/114 could illustrate the point.  First, with respect to
question 1 of section (i), on page 6, the first part of the question could be answered by available data,
while the second part would have to be addressed from a more qualitative prospective.  One
possibility would be to indicate whether growth in trade in services had occurred in sectors that had
been committed or not.  Both direct and indirect economic impacts, as suggested in the SecretariatNote in document S/CSS/W/117, were important elem ents of any analysis of the effects of trade
liberalization.  As concerned question 2 of section (i), it should be possible to document whether
employment had occurred in a sector where commitments had been made.  In these exercises,S/CSS/M/13
Page 5
attention had to be given to aspects such as regulatory framework and external factors.  In parallel
with a country-by-country exercise, the WTO Secretariat, in collaboration with other relevant
international organizations, could be asked to produce an updated analysis of international trade in
services based on available data and provide an overview and summary of the available information
laid down in various special analysis and studies submitted by Members, such as the informal
submissions by South Africa and Norway.  The aim would be to examine if there might be anycommon features, from which conclusions might be drawn in areas relating to the questions raised in
document S/CSS/W/114.
20. The representative of Switzerland said that the symposium was a useful suggestion and
indicated that his delegation would participate actively.  Commenting on the submission in
document S/CSS/W/114, he expressed disappointment about the way in which the issue of assessment
had been addressed.  He felt that the paper was not balanced, not compatible with the negotiations and
presented some inconsistencies.  For example, paragraph 2 of the introduction and of section IV statedthat the assessment had not started, but paragraph 3 of the introduction quoted the sentence in the
Negotiating Guidelines that "the Council shall cont inue to carry out an assessment", which implied
that it had started.  In addition, the first recommendation of section IV referred to the assessment
being carried out on the basis of the submissions tabled, which was also an indication that the
assessment had started.  He acknowledged that the discussion was not 
making fast progress, but noted
that other issues on the agenda were proceeding equally slowly.
21. With regard to the statement in paragraph 14 on page 4 that re-regulation could be
incompatible with the provision of basic public services, he noted that re-regulation was neutral and
that no presumptions could be made about its effect;  regulation was a matter of national priority.   As
for the alleged expansion of multinational enterprises, he stated that this had started before 1995, andwas therefore unrelated to the entry into force of the GATS.  He also noted that most of the
information in the paper was based, at the latest, on data from 1998 and, considering that it took
between two and twenty years to set up investment, any observed effects on the behaviour of
multinational enterprises could not be ascribed to the GATS.  Commenting on the quote from
Hoekman, the statement in paragraph 18 about the risks of states transferring their responsibilities totransnational service providers and question 1 of section (iv) on page 7, he observed that the paper, on
the one hand, called for the supply of services not to be transferred to foreign service providers, but on
the other, wondered whether the GATS had brought about greater access to basic infrastructure to a
larger number of people.  If foreign suppliers were not allowed to provide services, then the answer to
the 
question about assessment to infrastructure was bound to be negative.
22. He observed that many of the quotes in th e paper, such as those in paragraph 15 on page 4,
focused on the imbalance in services trade, and he said that this was a narrow view.  The GATS, and
the WTO in general, were not about improving trade balances.  Switzerland, for example, had a
negative balance in agricultural trade;  in addition, it was not possible for all countries to exhibit a
trade surplus.  It was important to concentrate on the broad effects of progressive liberalization;
focusing on the overall impact of trade liberalization was different from the view taken on pages 6 and
7 of document W/114 and implied going beyond a mercantilist approach.  He stressed that the
assessment should not be abused to influence the course of the negotiations.
23. Commenting on the recommendations on page 8 of the paper, he could not subscribe to
drawing conclusions on the assessment by March 2002, as the assessment was an on-going exercise;
he noted that the negotiations and the assessment had to be conducted in parallel.  He underscored the
importance of Members making own contributions and said that inputs could also come from otherinternational organizations, whenever relevant.  He pointed to the bibliography contained in the
Secretariat Note, document S/CSS/W/117, and felt th at a summary of these contributions would lead
to more careful conclusions than those reached in W/114.  In a preliminary manner, he indicated that
his delegation might examine the possibility of contributing some analysis of the 
environmental
effects of the GATS, specifically linked to the impact of the liberalization of environmental services.S/CSS/M/13
Page 6
24. The representative of Indonesia welcomed the two Secretariat contributions.  He restated his
delegation's earlier intervention about the importance of the assessment looking not only at how
developing countries had benefitted from developed countries' services liberalization, but also at their
capacity to make use of such liberalization.  He said that the assessment had to focus on the economic
objectives of the GATS related to developing countries, such as promoting economic growth andincreasing their participation in services trade, including through liberalization of market access in
sectors and modes of supply of export interest to them.  He also stressed the need of having an
adequate regulatory framework in place.  He said that lack of data and analytical and methodological
problems should not delay the assessment.
25. The representative of Cuba noted that her delegation had always underscored the importance
of the assessment of services trade.  Following the Doha Ministerial, it was even more essential that
the Council reach conclusions on the assessment, which was of great importance to developingcountries;  the benchmark of June 2002 for the submission of initial requests was a clear
demonstration of this.  The submission tabled on the assessment by a number of developing countries
were aimed at helping the Council arrive at the conclusion that an imbalance and asymmetry existed
in world services trade and inform the negotiations in this sense.  Her delegation was of the view that,
in order to carry out national assessments, it was first necessary to acknowledge the general existingscenario that delegations had been discussing.  Next, many developing countries needed to receive
technical and financial assistance, which would be very difficult to obtain by June 2002.  She also
agreed with the Dominican Republic that the symposium on assessment, to be held in 2002, would
facilitate the reaching of conclusions or decisions by the Council and was of the view that the outline
in JOB(01)/160 offered a good basis in that respect.  She had also found the Secretariat Note indocument S/CSS/W/117 a useful contribution, as it provided an analytical framework that could be
used in conducting an assessment of the effects of services liberalization.
26. The representative of the United States said that, with respect to document W/114, his
delegation was surprised by the submission but ultimately welcomed it.  There seemed to have been a
fair amount of hyperbole included in that document, especially with regard to statements that the
assessment had not taken place and should start.  He noted that one of the sponsors of
document W/114 had recently been praising the progress achieved in the assessment.  His delegation
therefore concluded that the sponsors of W/114 we re dissatisfied with progress made with the
assessment and said that the point was taken.  He encouraged all delegations to work and figure out a
way to move forward Members' interests together.
27. Turning to more specific comments, he noted that section I of the paper, which cited a
number of objectives within the WTO with respect to services, left out perhaps the most importantobjective, which was the liberalization objective of the GATS, which for his delegation was the
overall criterion for the assessment.  For the United States, since liberalization by and large had not
occurred to date in the GATS, that was bound to in fluence the assessment.  In paragraph 4 of the
Secretariat note in document S/CSS/W/117 a simila r point was made.  Section II of W/114 claimed
that developing countries had not received benefits in the GATS:  one might therefore conclude that atleast the 10 sponsors of the paper had conducted their own assessment, perhaps on behalf of all
developing countries and he would be interested in hearing more about the basis for what appeared to
be their assessment.  The United States was sceptical about those conclusions, also in light of
standstill commitments that generally existed in Members' schedules, and did not consider the
conclusion to be accurate.  He requested clarification about the statements in section II of the paperabout regulation.  There were claims that developed countries had used regulation to keep developing
countries' exporters out of the market;  he stressed that, certainly with respect to the United States,
that was false.  The paper claimed that developing countries had re-regulated to remove trade barriers
and he wondered whether such statements were confusing GATS standstill bindings with re-
regulation, which were not the same thing.  The submission claimed that Article VI could lead tounwanted deregulation;  from the United States prospective, if the 10 sponsors had concerns about the
GATS reaching into the substance of regulation, he would welcome their support for the United States
scepticism about a horizontal necessity test discussed in the Working Party on Domestic Regulation.S/CSS/M/13
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With respect to the role of multinational enterprises discussed in section III, he would welcome the
sponsors' views on the other side of the coin of foreign investment, which were the interests of
business and individual consumers of these services and the link between access to these competitive
services and goods and other services.  He  noted that investment inflow from a GATS prospective
was a deficit in services trade and wondered whether this made it automatically a bad thing.  He was
not clear about section II.4 regarding privatization and sought clarification about the relevance of thediscussion on privatization to the GATS;  the quote by the Norwegian expert in the document showed
that governments had rights and responsibilities in the area of privatization and this section appeared
to draw on the misplaced criticism of  the GATS.  With respect to the is sues in section III, he said that
they were worth examining in trying to reach some consensus on their appropriateness, but noted that
what was missing was whether the GATS had achieved its objective of liberalization, of removing
restrictions and providing effective market access.  That was the overall reason for Article XIX and
from that perspective it made sense for the assessment to be held on a continuous basis, sinceMembers had a mutually agreed objective of removing restrictions as part of the services negotiations.
While it had already been agreed that the assessment would be on-going he could not accept any new
suggestions that there should be a link between the assessment and the next phase of the negotiations.
The Secretariat Note in document S/CSS/W/117 provided a good basis for countries to conduct their
own assessment and seemed to help respond to some of the concerns raised in this respect;  his
delegation was ready to discuss any additional steps needed to further enable individual Members to
conduct their own assessment.  He could subscribe to the outline of the symposium on the assessment,
which could represent a valuable contribution;  he asked that, to the extent possible, greater time be
devoted to the discussion of section 6.
28. The representative of Canada said that the many contributions tabled testified to the interest
shared by many delegations to better understand the interaction between trade in services, on the one
hand, and economic growth and development, on the other hand.  The negotiations could only benefit
from such an understanding which would allow the achievement of the GATS objective of
progressive liberalization of trade in services.  In this regard, his delegation would welcome any
initiative to make progress on the assessment.  He recalled that Canada had co-sponsored a seminar onservices trade statistics, which had proven useful to make progress on the assessment, but noted that
additional initiatives might be necessary.  This was particularly reflected in document S/CSS/W/114.
His delegation could not share several of the views and conclusions presented in that document;  that
was the reason why the symposium on the assessment was useful, for Members to share experiences
on how services trade liberalization had helped with respect to development, to share methodologies
and bring experts together from individual countries or other international organizations.  Canada had
conducted its own assessment of trade in services liberalization, and it had proven a complex exercise.The two tables in document S/CSS/W/117 showed what elements needed to be taken into account in
conducting such an assessment.  Canada had made use of studies by international organizations and
academic researchers as a basis from which to start, and then had held a seminar, commissioned
studies on the issue, including on the costs and benefits of trade and investment liberalization in
services, the measurement of barriers to services trade and on the structural shift in Canada's trade andinvestment in services.  His delegation would be interested in sharing these 
experiences with
Members at the symposium.
29. The representative of Pakistan welcomed the symposium on the assessment and hoped that
meaningful conclusions could be drawn from the event.  He asked those delegations having provided
extensive comments on document S/CSS/W/114 to provide them in writing, so that he could respondat the following meeting.  He was puzzled by the reaction of the delegation of Switzerland to the
document;  he felt that the paper deserved some positive comments and had hoped for a constructive
discussion.  The assessment was an on-going exercise , but needed to be more focused.  His delegation
was prepared to accept any conclusions, but conclusions had to be drawn;  in this respect, his view
was that the assessment had not started in any real sense.  The mandate in Article XIX:3 of the GATScontained objectives and direction, and conclusions  were necessary.  Document S/CSS/W/114 aimed
at eliciting responses to some questions relevant to the assessment.  He noted that paragraphs 3(i) and
3(iv), on page 8, had been supported by the MERCOS UR countries.  He looked to the Chairman to
steer the discussion on the assessment in some direction.  He stressed that the proposed cut-off dateS/CSS/M/13
Page 8
was of great importance to his delegation, as the assessment was necessary to convince domestic
constituencies that services trade liberalization was in their interest.
30. The representative of Australia said that the assessment was a very important activity, as
reflected in Article XIX:3 and in the negotiating guidelines and procedures.  He had taken note of
document S/CSS/W/114 and of the comments made.  He felt that the Secretariat Note in documentS/CSS/W/117 provided useful guidance for a met hodology that Members might use conduct their own
assessment.  He referred to three points that were of key importance to Australia in conducting the
assessment.  First, paragraph 12, which referred to the economy-wide effects of liberalization.  He
noted that liberalization of, for example, telecommunications had flow-on effects on the
manufacturing and agricultural sector, as well as on other services sectors.  Up- and down-stream
economic linkages were important for the assessment.  Second, paragraph 15, which pointed to the
dynamic nature of policy changes and to the internal and external variables that impinged on theeffects of liberalization, such as fluctuations in interest and exchange rates and changes in the overall
economic conditions.  These needed to be isolated and taken into account when analysing causality.
Third, paragraph 4, which noted that the GATS was a very young agreement and that the extended
negotiations in telecommunications and financial services and were concluded only in 1997 and 1998,
respectively, and that many Members were still ratifying their results.  Caution was thereforenecessary in drawing conclusions about the impact of GATS-induced liberalization, also in light of
the fact that, to a large extent, the commitments often bound the status quo or even less.  To date,
liberalization had tended to take place at governments' own pace, for domestic policy reasons rather
than relying on coordinated action through trade negotiations for trade liberalization.  Therefore, the
assessment had to be on-going, at the national level, in order to reach appropriate conclusions.  Tocapture the overall benefits of trade liberalization, it was essential to sequence liberalization of
national markets orderly and properly.  The starting-point had to be the constraints existing at the
national level, the home-grown impediments and barriers, and the analysis also had to begin at the
national level.  Over time, Members would conduct their own individual assessments, and that would
guide their participation and be reflected in the negotiations.  He welcomed the outline for thesymposium on the assessment in document JOB(01)/160 and would revert to it.
31. The representative of Hong Kong, China said that document S/CSS/W/114 was still being
considered by his authorities and that his delegation would revert to it.  He could accept in principle
the outline for the symposium on the assessment in document JOB(01)/160, but noted, with respect to
section 6, that many Members, including Hong Kong, China, had conducted their own assessment of
the economic impact of services liberalization a nd wondered whether, in light of the timeframe
envisaged, Members who might not be able to make a presentation could provide writtencontributions to share their experience in that regard.  A representative of the Secretariat said that the
suggestion was useful and explained that, given the timeframe for the symposium, it was necessary todraw on existing research.
32. The representative of Mexico supported the proposed symposium, which could prove
particularly useful in light of the discussion at that meeting, and wondered if any OECD and APEC
studies on services liberalization could also be included in the programme.  He concurred with the
United States and Canada that national experiences, particularly in infrastructural services, were
important for the assessment, that more time should be devoted to this issue and that the possibility of
written contributions be retained.  With respect to the Secretariat Note in document S/CSS/W/117, he
said that it contained useful elements for Member s to conduct their own assessment.  This national
assessment would be different from Member to Member, unlike the collective assessment that it was
up to the Council to carry out.  With regard to the submission in document S/CSS/W/114, he said that
it contained some elements that, from a developing country's point of view, were useful to conduct a
national assessment and that developed countries should also take into account.
33. The representative of Venezuela noted that  the submission in document S/CSS/W/114 had
generated important reactions, which testified to its relevance.  The submission underlined the
preoccupations and frustrations of developing countries with respect to the progress achieved in theS/CSS/M/13
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assessment.  She stressed that the fact that the assessment was on-going did not mean that it should
continue ad infinitum ;  at some point, it was necessary to bring the exercise to fruition and arrive at
conclusions, even if the assessment would then still continue.  Soliciting conclusions was important,
especially for those Members who had not progressed with an assessment at the national level.  She
added that there was no doubt that an imbalance existed in the number of negotiating proposals
submitted by developing and developed countries, even if developing countries had made aconsiderable effort and were catching up.  The process of submitting proposals was still open and the
benchmarks agreed at Doha were not final dates, but indicative dates for Members to begin to
exchange requests.  She stressed that Members had different capacities to engage in the negotiations
and different potential to conduct an assessment, and that this had to be taken into account.  She had
taken note of the statement by the European Communities about technical cooperation and allocating
additional funds to it, so as to assist countries to conduct their own assessment, which was useful and
testified to their goodwill.
34. With respect to the outline for the symposiu m, in document JOB(01)/160, in a preliminary
manner she called for consideration and emphasis to be given to small and medium-sized service
suppliers and reference to be made to the linkages between SMEs and large suppliers and
multinationals.  Under national experiences, she observed that services trade would not flourish
thanks to liberalization alone, and said that an ade quate regulatory framework had to be in place for
the benefits of liberalization to become more tangible.  She said that some developed countries, in
earlier stages of their development, had applied active development policies in order to promote
certain actors and services industries;  she was interested in hearing what such policies had been, even
if such policies could not necessarily be replicated.  She stressed that the focus of the symposium
should not only be on commitments and liberalization but also on the importance of the service sectorfor the economy in general.  With regard to th e Secretariat Note in document S/CSS/W/117, she
understood that it stated that there was no horizontal criterion applicable to all countries for the
assessment and said that it might be a preliminary approach to questions that might be raised in
Members' own assessment.  She felt that it could be taken up in the symposium along with the some
of the useful questions raised in document W/114, to arrive at a shared approach.
35. The representative of Turkey stated that the assessment was a legal obligation and that it was
an on-going exercise.  No conclusions were needed in order for the negotiations to start, but concrete
progress was essential and at some point the exercise had to be completed, or else some Members
could question the validity of the negotiations.  Delegations' interventions demonstrated to the
importance of the assessment and the need for concrete progress;  the symposium could be a useful
contribution in that respect.
36. The representative of Haiti echoed Pakistan's intervention on the reactions to the submission
in document S/CSS/W/114.  The submission contained pertinent points, such as paragraph 7, noting
that available data showed that developing countries exhibited a deficit in services trade, or
paragraph 9, stating that Members' commitments demonstrated that developing countries had received
few concessions in areas where they had export potential.
37. The representative of New Zealand supported the proposed symposium on the assessment as
well as the outline contained in document JOB(01)/160.  He concurred on the importance of
conducting an assessment at the national level, and said that the Secretariat Note in document
S/CSS/W/117 was a useful contribution, relevant not only in the context of the on-going negotiations
but also important to meet the interest in this area on the part of domestic constituencies, and in light
of the Doha timetable.  He noted that some of the questions raised in document S/CSS/W/114 had
also been raised at the domestic level and were a useful reminder of the issues that needed to be
looked at.
38. The representative of the Philippines said that his delegation was still studying the Secretariat
Note in document S/CSS/W/117.  As for the submission in document S/CSS/W/114, he said that the
assessment of services trade was a two-pronged exercise.  On the one hand, the mandate inArticle XIX:3 required that the assessment be conducted before the establishment of negotiatingS/CSS/M/13
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guidelines and procedures.  This had not happened, but, in a constructive spirit, it had been agreed that
the assessment would be an on-going exercise and a standing item on the Council's agenda.  On the
other hand, the assessment needed to be carried out by individual Members in order to ascertain to
what extent they were prepared to further op en up their markets in the negotiations.  Document
S/CSS/W/114 represented an attempt in this direction:  it raised queries relevant to the co-sponsors ofthe document as they moved into the request-offer stage of the negotiations, and at the same time
provided guidance to the Council as it continued with the on-going exercise of the assessment.
Document W/114 raised some questions that might not be relevant for all Members, but which were
of significance from the perspective of developing countries.  These questions might not be very
sound in terms of econometric analysis, but there was merit in addressing them.  In that light, his
delegation's perspective was that, while some Members had outlined their concerns with respect to
trade liberalization in their negotiating proposals, document W/114 also identified certainimpediments that developing countries might face in undertaking further liberalization if this was not
carried out in a reasonable manner.  He encouraged delegations to have a second look at the
submission, to see what the legitimate concerns a nd worries of developing countries were as Members
moved to the next phase of the negotiations.
39. Following on from what the representative of the Philippines had said, the representative of
Malaysia said that document S/CSS/W/114 was a way to quantify the assessment but also provided a
qualitative analysis when data was insufficient.  He shared some of the conclusions reached in thatsubmission and said that it contained arguments that should not be brushed aside.  The assessment
was important and the submission was a valid contribution to the exercise on the part of ten
developing countries.  The assessment could provide useful direction to the request-offer negotiationsand the two had to be conducted in parallel.  The assessment was a continuous process, but it should
not be an academic exercise;  it was therefore important that, from time to time, Members came to
cross-roads which could inform their position in the negotiations.  He had found the Secretariat Note
in document S/CSS/W/117 useful and could support the outline for the symposium in JOB(01)/160.
40. The representative of Paraguay echoed the statement by Uruguay on behalf of MERCOSUR.
He could support the proposed symposium and the outline of the programme contained in document
JOB(01)/160 and shared Mexico's comments about the contribution of other international
organizations to the event.  He said that th e submission in document S/CSS/W/114 was a useful
contribution, and observed that negative comments were not helpful to the assessment.  He expressed
concern with respect to the assessment not being linked to the negotiations and wondered how it
would be possible to conduct negotiations without it.  Also in light of the dates agreed in Doha, the
assessment had to be carried out as soon as possible.  Article XIX:3 required that the assessment becarried out with reference to the objectives of the GATS, including those in Article IV:1, and he said
that this was what should inform Members' interventions.
41. Concluding the discussion on this item, the Chairman said that the assessment was an on-
going exercise of great importance to delegations and that some conclusions had to be reached at
some point.  The assessment needed to proceed by stages, in a continuous manner, and be conductedat the national level and overall;  it was an important step to direct Members' policies and the thrust of
the negotiations.  He said that individual Members had to carry out their own national assessment, but
that the mandate in Article XIX:3 required Members to engage in collective thinking.  The possibility
of collaborating with other relevant international organizations had also been mentioned.  He was of
the view that further work would provide an opportun ity for Members to engage more directly in the
process and give direction to their position in the negotiations.  There were problems involved in the
assessment, such as data constraints, the limited level of actual liberalization brought about by the
GATS and other analytical difficulties.  But there had been a number of useful contributions to the
exercise, such as the Secretariat Note in doc ument S/CSS/W/117, Costa Rica's inputs, MERCOSUR's
comments, the submission in document S/CSS/W/114 and the comments it had generated and the newsubmission presented by the delegation of Zambia.  In addition, a symposium on the assessment of
trade in services would be held in March 2002.  The event was a useful way of engaging in a focused
assessment and could help draw some lines in the Council. There had been some comments on theS/CSS/M/13
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proposed outline for the symposium, namely the wish that more time be devoted to infrastructural
services and that structural adjustment difficulties and the relationship between regulation and
liberalization be addressed, and he suggested that the Secretariat revise the outline in the course of
that meeting for approval by the Council.
42. The revised programme was circulated as document JOB(01)/160/Rev.1.  The Chairman
suggested that the Council adopt it.
43. It was so agreed.
B. TREATMENT OF AUTONOMOUS LIBERALIZATION
44. The Chairman recalled that, at the October meeting, the Council had continued its discussion
of the treatment of autonomous liberalization.  The Secretariat had prepared a brief Note, circulated as
JOB(01)/141, summarizing the broad views expressed by delegations on the five main groups of
issues under discussion, namely definition of basic concepts;  the relationship between negotiations
and autonomous liberalization;  assessment of the value of liberalization measures undertakenautonomously;  transparency;  and bilateral/multilateral treatment of autonomous liberalization.  A
new submission had been tabled by the delegation of the Republic of Korea, titled "Treatment of
Autonomous Liberalization in the WTO Services Negotiations" and circulated as document
S/CSS/W/126.
45. The representative of the Republic of Korea recalled that his country had submitted a paper on
the treatment of autonomous liberalization in December 2000. That paper was revised, taking into
account comments and questions made by Members.  Unfortunately, Korea had been unable to find a
formula that could be multilaterally applied by all Members, in all sectors, and all modes of supply.
The new proposed formula could be applied to any particular mode, any particular sector, or any
particular national schedule. He then explained the basic differences between the new and theprevious paper.  The new proposal consisted of ce rtain numerical indicators that could be used in
bilateral or plurilateral negotiations. The main idea was to come up with a so-called Improvement
Index, whose details were explained in the attachment to the paper.  As a first step, a score would be
calculated for the commitments contained in the na tional schedules (including the latest commitments
made on Basic Telecommunications and Financial Services).  Then, the same type of score would becalculated with respect to notified liberalization measures.  To calculate the latter, notifications
became instrumental.  The Improvement Index would be calculated on the basis of both scores.
Unlike the previous paper (which foresaw the calculation of an Improvement Index for all the sectors
as a whole), the new proposal focused on particular service sectors or modes of supply.  Another
important difference between the two papers was that the previous one focused only on the
combination of market access and national treatment measures; while the current proposal focused on
the calculation of Improvement Indexes for market access, national treatment, or additionalcommitments separately. The scoring system was also made more flexible by introducing two
additional numerical scales –0.25 and 0.75.
46. The representative of Uruguay presented document S/CSS/W/130 - Autonomous
Liberalization and Developing Countries - on be half of the 18 WTO Members cosponsoring the
document, namely Brazil, Colombia, Cuba, Domini can Republic, Ecuador, Guatemala, Honduras,
Indonesia, Malaysia, Nicaragua, Pakistan, Panama, Paraguay, Peru, the Philippines, Senegal,
Uruguay, and Venezuela.  He said that it was not a legal text, and that its sole purpose was for
negotiations, which did not prejudge the position of any of the proponents concerning the issues being
addressed in the document.  The proponents reserved the right to modify this proposal in the course of
the negotiations. The paper took as its basis a note prepared by the Secretariat on Autonomous TradeLiberalization, contained in document WT/TF/COH/ S/1, dated 18 June 1999.  That Secretariat note
gave a historical background to the issue under the GATT.  It could be clearly seen that both the
historical origin and subsequent discussions on autonomous liberalization in the Uruguay Round
showed that this issue was considered to favour developing countries in particular.  The objective was
to determine how developing countries could get recognition and/or credit for their autonomousS/CSS/M/13
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liberalization measures.  This was more valid at the present date, taking into consideration the so-
called Doha Development Agenda.  The document S/CSS/W/130 proposed that the close link between
autonomous liberalization and developing countries be taken into account when establishing the
modalities and/or criteria for the treatment of autonomous liberalization, referred to in GATS,
Article XIX and paragraph 13 of the Guidelines and Procedures for the Negotiations on Trade inServices (document S/L/93).   
47. The representative of Turkey supported document S/CSS/W/130.  The points raised in that
document were relevant and the conclusions were a sound argument.  The link between autonomous
liberalization and developing countries must be one of the main pillars of the current negotiations. He
considered that the communication was timely and appropriate.  He then made comments on the
issues raised in the annotated checklist of issues contained in the Secretariat Note JOB(01)/65.
Regarding questions on paragraph 6 of the Secretariat note, he agreed that measures to be consideredfor the purposes of this discussion should only be those susceptible of being scheduled.  Both sector-
specific measures and measures of general application should be covered.  Only multilateral MFN
liberalization should be eligible for credit.  Liberalization undertaken in the context of regional trade
agreements should not be granted credit.  With regard to questions on paragraph 8, he agreed that
"liberalization undertaken autonomously" meant "liberalization undertaken by individual Membersunilaterally, outside a negotiating context", but he suggested adding the following: "but not
necessarily bound in the end".  Concerning the questions on paragraph 9, if the previous definition of
autonomous liberalization was to be accepted, then the results of the extended negotiations on
movement of natural persons, financial services, and basic telecommunications could not be
considered within the context of autonomous liberalization.  However, the efforts exerted by Membersduring the extended negotiations should also be taken into account during the process of granting
credit.  With reference to the difference between criteria and modalities, he preferred that a two-stage
process of developing criteria first, and modalities afterwards, be followed.  Multilateral modalities
for the granting of credit needed to be developed on the basis of multilaterally agreed criteria, as
stated in the Negotiating Guidelines and Procedures.  Regarding the questions on paragraph 16, hesaid that the term credit was to be used, instead of recognition, since credit was used in the
Negotiating Guidelines and Procedures.  With respect to the question whether Members should be
able to seek credit for liberalization undertaken autonomously in the past and ask their trading
partners to reciprocate on that basis, he considered that the issue depended on the progress of the
negotiations. Taking into account certain disadvantages of developing countries, a mechanism for
securing concessions from developed trading partners should be established.  The meaning of "trading
partners" should be clarified as well.
48. On the questions regarding paragraph 24, he said that credit for autonomous liberalization
measures should be granted first, and the measures for which credit had been granted might be bound
at the end of the negotiations.  Members, having obtained credit for autonomous liberalization in some
sectors, might be able to seek concession from their trading partners in other sectors or subsectors.
Regarding the assessment of the value of measures, it seemed to be very difficult to use quantitativeapproaches for each sector, subsector and Member.  Instead, multilaterally agreed model schedules
might be more practical and appropriate.  Regard ing the first two questions between paragraphs 35
and 36 on transparency, he considered that autonomous liberalization measures for which Members
were seeking credit might be notified before a date to be determined, preferably before the start of
negotiations on specific commitments.  Regarding the third question, Turkey preferred a collectivediscussion about the measures and their value in terms of liberalization.  Otherwise, there was the risk
that similar liberalization measures might be assessed on a different basis.  On the question of whether
to develop a multilateral or bilateral approach, it would be more appropriate to deal with autonomous
liberalization within a multilateral framework or, at least, to agree on a mixed approach (multilateral
and bilateral).
49. The representative of the European Communitie s considered that the Korean paper was a
serious attempt to establish some guidelines for quantitative assessment of autonomous liberalization,
but it showed the difficulties of such an approach.  This was particularly the case regarding the weightS/CSS/M/13
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to be attributed to particular modes and sectors.  The paper acknowledged that the only way to deal
with the issue was to give equal weights to every sector and mode of supply;  but that would not fully
reflect the relative importance of different modes or sectors.  This problem was apparent in the
examples given in page 20 of the paper, where a 51 per cent foreign investment limitation would get a
score of 0.75; a 49 per cent foreign investment limitation would get a 0.5; and a 33 per cent foreign
investment limitation would get a 0.25. He considered that, from a business perspective, there was notmuch difference between a 33 per cent and a 49 per cent limitation on foreign investment.
Additionally, he considered that document S/CSS/W/130 was a good recollection of what happened in
the goods area, but he considered that the situation was different in the services realm.  There was not
such a distinction in the GATS.  He noted with appreciation that it was not the intention of the
proponents to change the balance of rights and obligations of Members under the GATS.  Finally, he
considered that the document prepared by the Secretariat (JOB(01)/141) constituted a very good basis
for discussion, but he refrained from making detailed comments at this meeting.
50. The representative of Switzerland said that document S/CSS/W/126 constituted a substantial
improvement with respect to the previous submission by the Republic of Korea. He noted the point
made in that paper that if a process to take account of autonomous liberalization was put in place, the
results arising from it would be bound at the end of the negotiations.  He also noted that the proposed
formula would serve as a reference point or benchmark in those negotiations.  Such a flexibleapproach had more chance to be applied.  That being said, he considered that the main obstacle to
have a common approach applicable to all Members was that the value of individual autonomous
liberalization measures might vary from country to country and this obstacle should be taken into
account.  Regarding the document S/CSS/W/130, he shared the views expressed by the European
Union.  Although he agreed that special consideratio n could be given to developing countries, in his
view a bilateral approach, in the framework of requests and offers, gave the appropriate flexibility to
take account of the level of development of each country.
51. The representative of New Zealand, commenting on document S/CSS/W/130, said that the
Council was mandated to come up with a generic approach covering the interests of the WTO
Membership as a whole.  Concerning the submissi on by the Republic of Korea, New Zealand was not
convinced that that proposal presented the simple and practical formula that was sought.  For New
Zealand, the concept of credit implied an exchange, i. e. benefits conferred between parties.  For this
reason, there was some scope to reach understandings at the multilateral level, but the principal
mechanism to secure credit was the request/offer approach in the context of market access
negotiations.
52. The representative of Bolivia requested to be considered as co-sponsor of the document
S/CSS/W/130 on Autonomous Liberaliz ation and Developing Countries.
53. The representative of Japan shared the comments made by the European Union on the
limitations of the approach proposed by the Republic of Korea in document S/CSS/W/126.  Perhaps,
such a tool could be used by individual Members in the course of the negotiations, to carry out their
own evaluation of the measures presented by their counterparts.  Regarding the submission contained
in document S/CSS/W/130, Japan recognized and highly appreciated any autonomous liberalizationeffort undertaken by any Member, particularly those by developing countries. Such efforts should be
taken into account in the course of request/offer negotiations.  Although he recognized that special
consideration should be given to efforts made by developing countries in autonomously liberalizing
their markets, Japan would not agree on any modalities or criteria for the treatment of autonomous
liberalization which would be tantamount to denying the value of policy decisions and measures taken
by developed countries.
54. The representative of Hungary, speaking also  on behalf of the Czech Republic, Estonia,
Lithuania, Poland, Slovenia commented on the document S/CSS/W/130.  They agreed that developing
countries interests had to be taken into account when establishing modalities for the treatment of
autonomous liberalization.  However, this could not result in a situation in which the availability ofcredit and recognition for autonomous liberalization would be limited to developing countries.  Such aS/CSS/M/13
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decision would be extremely difficult to accept for this group of Members.  The last sentence of
Article XIX:3 of the GATS, as well as paragraph 13 of the Negotiating Guidelines and Procedures,
were clear on this issue and their general formulation did not support the attempts to limit the
availability of credit and recognition for a certain group of Members.
55. The representative of Mexico said that the document submitted by the Republic of Korea
presented the problem of assessing the subjective importance that each Member granted to each
measure.  In other words, a particular measure taken by a particular country could have different
values for different countries. Mexico still had some doubts about the approach.  On the other hand,
Mexico fully shared the content, views, and proposa ls in document S/CSS/W/130.  He said that there
was a close link between the issue of autonomous liberalization and developing countries.  This link
must be duly protected and monitored throughout the negotiating process.  Finally, he considered that
Members already had the necessary elements to move to a different stage in this discussion.  Thatcould be done on the basis of a new document by the Secretariat presenting a first draft of criteria and
modalities for consideration by Members.
56. The representative of Canada reiterated his country's flexibility for considering different
approaches to deal with the issue of autonomous li beralization.  A simple approach was needed.  For
Canada, the most pragmatic approach would be to deal with this in the context of market accessnegotiations, through requests and offers in bilaterals.  Canada was of the view that any credit for
autonomous liberalization was linked to the binding of  this liberalization in the schedules of specific
commitments.  Several approaches were possible in that respect.  One would be an immediate binding
at the end of the negotiations.  Another would be a progressive implementation of commitments that
had been bound, and to bind this progressive implementation in the schedules.  Canada had suggestedthe latter approach in its proposals on financial and distribution services, contained in documents
S/CSS/W/50 and 57, respectively.  Canada endorsed the point made in paragraph 5 of the document
submitted by the Republic of Korea (S/CSS/W/126) that if - in the context of the GATS negotiations -
a certain autonomous liberalization measure was not incorporated in the national schedule, then the
value of such a measure would be greatly diminished.  The objective of these negotiations was notonly to promote progressive liberalization but also to provide predictability for service suppliers in
Members' countries.
57. The representative of the United States said that two important points could be taken from
document S/CSS/W/130.  Firstly, no decisions were taken formally or informally in the Uruguay
Round on the matters discussed in this paper, which was correctly noted in item 6 of paragraph 3 of
the said paper.  Secondly, Article XIX of the GATS made no distinction as to whether developed,
developing or least-developed countries could have access to provisions to be developed for creditingand valuing autonomous liberalization.  The United States was not convinced that the points made in
document S/CSS/W/130 had direct relevance on how to carry out the provisions of Article XIX on
autonomous liberalization.  Of course, the GATS contained provisions regarding appropriate
treatment and flexibility for individual developing countries.  With respect to the submission by the
Republic of Korea, the United States remained unconvinced that a quantitative approach was the wayto go in terms of assessing credit and valuing auto nomous liberalization.  For the United States, the
Korean submission highlighted the subjective nature of valuing autonomous liberalization.
Subjective, in the sense that what might be important for one Member might be unimportant for
another.  The United States agreed with the point made by Turkey on the possibility of using model
schedules as a way of establishing benchmarks for measuring the extent of liberalization.  Finally, theUnited States provided comments on the note by the Secretariat JOB(01)/141 at the previous meeting
and found the document to be a good basis for moving the discussion forward.  A further revision of
this document could be considered.  Also, the United States was open to the idea of having a separate
document by the Secretariat, along the lines that had been suggested by Mexico.
58. The representative of India said that the issu e raised in document S/CSS/W/130 was of critical
importance in the ongoing negotiations.  India shared the view that credit for autonomous
liberalization undertaken since the Uruguay Round should be given to developing countries.  ThisS/CSS/M/13
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credit should not be linked to the binding of such autonomous liberalization.  India also shared the
view that the issue of credit for autonomous liberalization was linked to the increasing participation of
developing countries in services trade.
59. The representative of Argentina said that document S/CSS/W/130 contained clear and
unquestionable facts regarding the spirit and original objective of this issue in the multilateral trading
system, i.e. looking at the issue of autonomous liberalization and developing countries.  He felt thiswas therefore a very timely presentation.  Regarding the submission by the Republic of Korea, an
initial reading showed the limits of a purely quantitative approach.
60. The representative of the Slovak Republic associated her delegation with the statement made
by Hungary on document S/CSS/W/130.  The Slovak Re public fully recognized that special attention
should be given to developing countries when granting credit and recognition for autonomous
liberalization;  but this should not be limited only to developing countries.
61. The representative of Hong Kong, China recognized the importance of the autonomous
liberalization issue for developing countries.  Hong Kong, China was still studying the document
S/CSS/130 with a view to considering how it co uld contribute to deliberations on the issue.
Regarding the submission by the Republic of Korea, he said that it demonstrated the difficulty in
assigning values to Members' autonomous liberaliz ation measures.  However, that submission also
highlighted the need to consider the issues of notification and binding of autonomous liberalizationmeasures, when considering how to operationalize the granting of credit in a practical manner.  Hong
Kong, China considered that it was time to move to a next stage in the discussion, focusing on
concrete proposals for the procedures and mechanism through which autonomous liberalization
measures could be recognized and credited.  Finally, he was open minded to the idea put forward by
Korea of having a working group.
62. The representative of Singapore recognized the importance of autonomous liberalization for
developing countries, but he would like to reflect further on the approach suggested in document
S/CSS/W/130 on how it could help move the discus sion forward.  He also said that the new
submission by the Republic of Korea was an improvement on the previous one.  He could share some
of the views expressed in the paper, particularly on the scope of autonomous liberalization measureseligible for credit.  He agreed that, in order to be granted credit, liberalization measures must be of the
kind susceptible of being incorporated in a schedule of commitments.  He also agreed with Korea on
the questions of notification and of granting credit only for those autonomous liberalization measures
that would be bound at the end of the negotiations.  Although he considered that the Improvement
Index was an innovation, he considered that there could be practical difficulties to come up with a
scoring system for autonomous liberalization measures.  Singapore was ready to move to the next
phase in the discussion.  He noted that regarding two perspectives:  firstly, the development of criteria
to determine which autonomous liberalization measur es would be eligible for credit;  and, then, to
decide how the credits would be granted.  Perhaps,  the discussion should move forward with a view to
reaching an acceptable outcome regarding the first perspective, i.e., the development of criteria to
decide which liberalization measures would be eligible for credit.
63. Commenting on document S/CSS/W/130, the representative of Thailand said that the issue of
autonomous liberalization was raised in the Uruguay Round because of the concerns expressed by
developing countries.  Therefore, it was fair to give special consideration for developing countries in
the mechanism in order for them to deal with  autonomous liberalization.  She appreciated the
contribution put forward by the Republic of Korea (S /CSS/W/126), and considered that it was only a
part of the mechanism to be developed with regard to  this issue.  Even if a quantitative approach was
not finally chosen, the paper by Korea contained some elements that could be arranged in an eventual
qualitative approach that might be agreed upon.  Thailand believed that the discussion could move
forward with respect to three aspects:  criteria for identifying the measures eligible for credit;  criteria
for assessing the value of autonomous liberalization measures;  and transparency.  She proposed that
those three elements be included in future deliberations on the issue of autonomous liberalization.S/CSS/M/13
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64. The representative of Australia agreed with paragraphs 4, 5, 6 and 8 of the submission by the
Republic of Korea (S/CSS/W/126).  However, in her view, a simple and practical system should
prevail, specifically negotiations through request and offer.  Australia continued to believe that credit
was what a Member would receive in exchange for binding a particular liberalizing measure, and that
this credit would reflect the relative cost-benefit value to each side of binding such a measure.Regarding document S/CSS/W/130, Australia believed that autonomous liberalization was not
exclusively a developing-country issue.  The GATS had considerable flexibility built-in for
developing countries, and that could apply to the trade-offs agreed in potential bilateral negotiations
involving binding of autonomous liberalization measures.  She supported Mexico's suggestion to
move forward.  A further Secretariat note might be useful in this context.  She suggested that such a
note should focus on practical workable solutions to facilitate the request/offer negotiations.
Regarding proposals on a list of eligible measures, she thought that could be limiting sinceautonomous liberalization measures that emerged in the negotiations would be those that matter
commercially for each Members' trading partners.  Regarding horizontal solutions, Australia would
only agree to grant credit if the proposed package included clear commercial benefits for Australian
companies.
65. The representative of Indonesia said that multilaterally agreed criteria for the treatment of
autonomous liberalization should be agreed before embarking on further liberalization negotiations.
Credit should be given for autonomous liberalization measures undertaken by Members beyond
Uruguay Round commitments.  The submission made by the Republic of Korea could be used as a
basis for discussion in future meetings.
66. The representative of Croatia associated himself with the statement made by Hungary.
67. Concerning comments made thus far on docume nt S/CSS/W/130 in the sense that Article XIX
did not distinguish between developing and developed country Members on the question of
autonomous liberalization, the representative of Brazil said that that was quite apparent.  Regarding
comments made on flexibility for developing countries taking the form of phased-in commitments, hesaid that the flexibility provided in Article XIX we nt further than that.  Article XIX spoke of allowing
developing countries to open fewer sectors, and fewer types of transactions.
68. The representative of the Republic of Korea replied to some of the comments made about its
submission.  Regarding comments made by the European Union, he said that, having analysed the
schedules of commitments, in some countries 33 per cent of capital gave the shareholders the right to
block decisions made by the board of directors.  However, a 49 per cent foreign equity limitation was
just one percentage point away from majority shareholding, and that was why Korea introduced
different weightings for both situations.  Concerning comments made that the paper showed thedifficulties involved in a quantitative approach, he shared those views.  However, Korea was not
suggesting that that would be the only or exclusive way of measuring the value of autonomous
liberalization measures.  In his view, interventions showed that there was an emerging consensus that
autonomous liberalization measures should be notified and also bound at the end of negotiations.
Finally, he said that the Improvement Index could only be used by like-minded countries in theprocess of request and offer.
69. The representative of Uruguay, speaking on behalf of the 19 Members that had submitted
document S/CSS/W/130, reiterated that such document was factual.  The proponents' intention was to
show the history of this issue during the Uruguay Round.  He also asked other Members to read the
proposal attentively, in particular its paragraph 4.  Speaking only on behalf of Uruguay, he said that
what was important was the political will.  In other words, whatever was agreed should have a
practical effect.  The proposal being made was submitted in the context of both Article XIX of the
GATS and paragraph 13 of the negotiating guidelines and procedures.  Besides, he did not share the
comment made by one delegation that no decisions had been taken on this issue during the Uruguay
Round.  In fact, document S/CSS/W/130 showed that documents were produced at that time.S/CSS/M/13
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70. In concluding, the Chairman said that important contributions were made at this meeting by
the Republic of Korea (S/CSS/W/126), and by a group of 19 developing countries (S/CSS/W/130).
Many delegations also referred to the note prepared by the Secretariat (JOB(01)/141), saying that it
constituted a very good basis on which to proceed.  In his view, there was a widespread will to move
forward on this issue on the basis of a note to be prepared by the Secretariat.  Therefore, he proposed
that the Secretariat prepare a note for the next meeting, building on document JOB(01)/141, butgetting away from the structure of that paper, which was focused on questions.  Based on the
discussion thus far, the aim of the new note by the Secretariat would be to approximate Members to a
conclusion regarding the criteria and modalities for the treatment of autonomous liberalization.
71. The Council so decided.
C. WORK OF SUBSIDIARY BODIES – REPORTS BY CHAIRPERSONS
72. In keeping with what had been agreed concerning the regular reporting from the subsidiary
bodies to the Special Session, the Chairman invited the chairpersons of those bodies to present their
oral reports.
73. The Chairperson of the Committee on Trade in Financial Services, Mr. Jan Peter Mout of The
Netherlands, reported that the Committee had met on 27 November and addressed the following
issues:  Acceptance of the Fifth Protocol to the GATS;  Technical Issues;  Recent Developments in
Financial Services Trade;  and Other Business.
74. Under the item on the Acceptance of the Fifth Protocol, only the delegation of Uruguay
presented updated information on the status of its domestic ratification procedures.  Some delegations
expressed concerns about the delays in ratification of the Protocol on the part of certain Members, and
encouraged them to make every effort to accelerate those internal procedures.  Noting that most of the
Members that had not yet ratified the Protocol were not present at the meeting, the Committeeentrusted him to contact them, and to report back to the Committee at its next meeting.
75. No interventions were made under the agenda item on Technical Issues.
76. Regarding the item on Recent Developments in Financial Services Trade, the delegation of
the United States presented an informal paper, document JOB(01)/161, providing additional
information on their domestic rule-making process, with particular emphasis on prior consultationprocedures before new regulations were formally enacted.  The paper also provided a specific
example of how these procedures had been recently applied with respect to regulations affecting
financial services.  Since the paper was circulated on the day of the meeting, the Committee decided
to revert to it at its next meeting.
77. Under Other Business, the IMF made a statement suggesting to hold a briefing session to
explain how the IMF Financial Sector Assessment Programme was implemented.  At the request of
the Committee, the statement was subsequently circulated as an informal document in JOB(01)/163.The Committee would revert to the issue at its next meeting.
78. Finally, it was agreed that the Committee would meet again during the following cluster of
services meetings.  In that regard, it was worth noting that delegations had expressed an interest that
the meeting be scheduled back-to-back with the meeting of the Special Session in which proposals on
financial services would be discussed, in order to benefit from the presence of financial servicesexperts in both meetings.  He thought that the suggestion was reasonable and useful, and had
suggested to delegations and to the Secretariat that this aspect be taken into account when deciding on
the calendar of meetings for the next services clus ter.  Apart from that, he informed the Council that,
as he had announced at the Committee, it was his intention to address the organization of future work
at the next meeting.  He appealed to delegations to reflect on those matters in the meantime, in orderto have a productive discussion and better prepare for what he expected to be a year of intense
activity.S/CSS/M/13
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79. The Chairperson of the Committee on Specific Commitments, Ms. Pimchanok Vonkhorporn
of Thailand, reported that the Committee had not met formally during the previous two clusters of
services meetings in July and October.  The reason was that the only outstanding item before the
Committee were classification issues, and with the submission of many sectoral proposals to the
Council containing numerous classification issues covering and going beyond what had been raised inthe Committee, the discussions that had previously taken place in the Committee were shifted to the
Council.  The reason for this was understandable.  Members had found it useful to address
classification issues in the context of the sectoral proposals in which they were raised.  Additionally, it
was considered helpful to wait for the in-depth se ctoral discussion to develop in the Council, as that
might provide further elements to advance technical deliberations on classification and avoid
duplication of work.
80. Nevertheless, the Committee had considered it appropriate to meet formally during the
present cluster of services meetings, and did so on 30 November 2001.  As on previous occasions, its
agenda consisted of two items:  Classification Issues;  and Organization of Future Work.  In light of
the situation referred to previously, together with the fact that discussions in the Council would
continue that week with even more focus on classification issues as one of the five headings around
which sectoral discussions would be structur ed, the bulk of the Committee's discussion was
concentrated on the second agenda item, namely organization of future work.
81. Regarding classification work, the Committee continued to be of the view that the discussion
on classification issues by the Special Session that week could provide some guidance as to how the
Committee should proceed with its technical delibera tions.  Bearing in mind the benchmarks for the
submission of initial requests and offers contained in the Ministerial Declaration, the desirability ofconcluding the classification work expeditiously was highlighted.  Some delegations stressed that
such conclusion should take place preferably before the negotiations of specific commitments.
82. Regarding new areas of work, a few topics deemed relevant to the on-going negotiations and
appropriate for consideration by the Committee had been suggested for reflection by delegations.
These topics included:  possible criteria for introducing changes to the sectoral classification list indocument MTN.GATS/W/120;  any questions regard ing the scheduling of specific commitments;
different approaches to the listing of additional commitments under Article XVIII, and the
incorporation of new commitments resulting from current negotiations in Members' schedules.  The
Committee welcomed these suggestions and was reflecting on them.  She would be conducting
informal consultations on those questions before the next formal meeting of the Committee.
83. Taking this opportunity, she encouraged the Special Session to consider what useful role the
Committee could play in support of the present negotiating process.  A number of negotiatingproposals contained classification matters and, as a result, the question of the appropriate role of the
Committee in this area had arisen.  Similarly, a number of new issues deemed appropriate for the
Committee and relevant to the negotiations had been suggested during Members' discussions.
Bearing in mind that the Negotiating Guidelines called  for the subsidiary bodies to be utilised to their
maximum capacity, appropriate guidance from the Special Session in due course would ensure thatthe Committee was able to lead a productive and efficient process in 2002.  Needless to say, this
would also be extremely helpful to the consultations she intended to conduct on the organization of
the Committee's work in early 2002.
84. The Chairman of the Working Party on GATS Rules, Mr. Hugo Cayrus of Uruguay, reported
that, since the previous Special Session, the Working Party had held one formal meeting, on
28 November, at which it considered the three issues on its agenda:  safeguards;  subsidies;  and
government procurement.  The Working Party had also held an informal meeting on 23 November to
pursue the discussions on emergency safeguard measures.
85. The Working Party continued to devote most of its attention to the topic of emergency
safeguard measures.  On 23 November, it held an informal meeting at which it considered at lengthS/CSS/M/13
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various written submissions by Members.  These discussions continued during the meeting of
28 November.
86. Taking into account that the time-limit for negotiations on emergency safeguard measures
expired on 15 March 2002, the Working Party also devoted its attention to the organization of its
work until that date.  On 19 and 20 November, it held two informal meetings, which had enabled him
to receive the opinions of some 30 delegations on the issue.  He had also asked delegations to let himknow whether they were ready to work on the basis of a draft text.  Further discussions were held on
the matter during the informal meeting of the Working Party on 23 November.
87. These consultations revealed that, while a number of delegations wanted the Working Party to
start work immediately on a draft text, other delega tions felt that it was premature.  A third group of
delegations indicated that they would be flexible, a nd could accept either option.  In other words, for
the moment there was no consensus to work on a draft text.  This raised the question of how to
continue working in a constructive manner, i.e. moving forward without repeating what had beendone until then, taking account of the deadline of 15 March 2002 agreed by Members for those
negotiations.  A number of delegations made suggestions in that respect.  On the basis of these
suggestions, he had made two proposals as to how to  organize future work on the Working Party, on
which delegations agreed:  firstly, taking as a basis the different elements of the Synopsis that he had
circulated under his own responsibility in August 2001, delegations could examine where, in theiropinion, there were common elements, and where their positions differed;  and secondly, they could
examine what elements could be common both to a horizontal safeguard mechanism and to a sector-
specific mechanism, or scheduled safeguard.  As regarded the organization of meetings until
15 March 2002, he proposed the following timetable of meetings which was accepted by the Working
Party:  the next informal meeting of the Working Party would be held, tentatively, on 17 and18 January;  in February, there would be a further informal meeting of two days, scheduled tentatively
for 12 and 13 February;  and in March there would be a further informal meeting preceding the formal
meeting of the Working Party.  He hastened to poin t out that this timetable was tentative and that it
was important to maintain a certain amount of flexib ility in that respect, bearing in mind the deadline
approved by Members and the results that could emerge from the forthcoming meetings.
88. What he wished to stress once again was that the process was in the hands of Members.
Without the will of delegations, neither the Chairman nor the Secretariat could make the negotiations
move forwards.
89. With regard to subsidies, various delegations recalled the importance of this issue and
observed that a number of sectoral proposals submitted during the Special Session had addressed
matters related to the subject.  One delegation mentioned, in addition, the possibility of submitting a
contribution on the issue during the forthcoming meetings.
90. Lastly, with regard to government procurement, one delegation indicated its intention to
submit new elements in order to pursue discussions in 2002.
91. The Chairman of the Working Party on Domestic Regulation, Mr. Scott Gallacher of New
Zealand, reported that, since his previous report to the Special Session, the Working Party had held
one formal meeting, on 29 November.  Discussion throughout the meeting was based largely on a new
Chairperson’s Note circulated as JOB(01)/159.
92. Among the priority issues under the agenda item on Discussion of Concepts Relating to the
Development of Disciplines, Members agreed to update the informal Secretariat paper titled
"Examples of Measures to be Addressed by Disciplin es Under GATS Article VI:4", so as to take into
account recent oral and written contributions.
93. The issue of whether regulatory disciplines developed by the Working Party could be
applicable generally, or only where a Member had scheduled specific commitments, generated the
greatest level of discussion.  Most Members were strongly of the view that disciplines should beS/CSS/M/13
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applicable only to those sectors with scheduled GATS commitments, while some Members wished to
decide this issue after progress had been made in creating actual disciplines.  Some Members stated
that the GATS itself implied that disciplines would be applicable only where commitments had been
scheduled.  Members agreed that further discussion was required.
94. Regarding transparency issues, Members agreed to request the Secretariat to compile an
overview of GATS notifications to date, by s ector and by level of government concerned.
95. Under the item on Development of Disciplines for Professional Services, no new reports on
domestic consultations with professional organisations, regarding the applicability of the accountancy
disciplines to other professions, were received.  Overall, the level of reporting remained low.  One
Member stated that a reason for this was the lack of domestic capacity in developing countries.
96. Members agreed that the next meeting of the Working Party would be held in March, as part
of the next round of services meetings.
97. The Council took note of the reports.
D. PROPOSALS RELATING TO THE NEGOTIATIONS UNDER ARTICLE XIX OF THE GATS
98. The Chairman recalled that, at the October meeting, the Council had completed its second
detailed discussion of the negotiating proposals submitted by delegations.  He also recalled that, when
discussing the organization of future work, the Council had planned its work for that session only,leaving the organization of further work to be decided upon at the end of the meeting, in the light of
the outcome of the Fourth Ministerial Conference.  Having delegations now returned from the
successful meeting in Doha, there was a need to thin k about how to organize the future work of the
Council.  That was why the next agenda item, item E, addressed the organization of further work.
The reason he was raising the issue at that point was that he was of the view that the discussion of thenegotiating proposals under item D would help inform deliberations under the following agenda item,
as well as the Council's decision on whether to schedule a Special Session meeting in February 2002,
in addition to the one already planned for March.  He recalled that the possibility of holding one
additional Special Session in February had been retained in the Work Programme which the Council
had agreed as part of its March 2001 stock-taking.  A February meeting would not necessarily have tobe a fully-fledged "cluster", but could be limited to a meeting of the Special Session and, possibly, of
the Working Party on GATS Rules, in view of the 15 March 2002 deadline for the safeguards
negotiations.
99. Another element that might be usefully borne in mind was the possibility, as stated in the
negotiating guidelines, of utilising existing subsidiary bodies to their maximum capacity.  Many
proposals touched upon issues, such as those related to classification, that were under discussion in
the relevant subsidiary bodies and that might be usefully referred to such bodies, should Members sodesire.  There could naturally be additional issues that delegations might like to discuss, but he
thought that it would be helpful to point to some of the elements that might be usefully borne in mind
in the course of 
the Council's discussion of the negotiating proposals.
100. Turning to the proposals, he recalled that, in October, Members had decided that, at that
meeting, the Council would discuss all the negotiating proposals, in all sectors, mode 4 and otherhorizontal issues.  In order for the discussion to be qualitatively different, particularly in terms of
sharpening the focus on the important issues raised, Member had agreed to organize it around a set of
items.  These were:  classification issues;  market access and national treatment commitments;
regulatory issues;  issues relating to the implementation of Article IV;  and any other issues, including
MFN exemptions.
101. The list of items had been circulated to delegations in the room at the end of the October
meeting.  It was also contained in a fax message from the Secretariat dated 19 October 2001 on theS/CSS/M/13
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organization of work at that meeting.  It had also been agreed that the items would be used as a tool to
structure Members' interventions on each of the sectors, but that delegations would not be invited to
take the floor on each of the elements separately.  As the discussion of the horizontal issues, other
than mode 4, did not lend itself to being structured according to the items identified, it was agreed that
these would be taken up separately at the outset.  Of course, it was underscored that this work plan
was without prejudice to the s ubmission of any new proposals.
102. Since the July meeting, new proposals had been submitted by New Zealand (S/CSS/W/115
and 116), Colombia (S/CSS/W/119 to 124), ME RCOSUR (S/CSS/W/125), the Republic of Korea
(S/CSS/W/127) and Costa Rica (S/CSS/W/128 and 1 29).  He also drew delegations' attention to
documents JOB(01)/63/Addendum 2 and Corrigendum 2, which, respectively, updated and corrected
the Secretariat synopsis identifying the main elements of the negotiating proposals.  In addition, the
Secretariat had compiled further sets of questions and responses with respect to Members' proposals,
contained in JOB(01)/96/Addenda 7 to 15.
(i) Horizontal Issues
103. The Chairman recalled that six issues had been identified as horizontal issues:  Article IV;
Article VII;  small and medium-sized service suppliers;  MFN exemptions;  transparency and other
aspects of domestic regulation;  and classification.
Article IV
104. The representative of Pakistan introduced a joint submission by the delegations of Cuba,
Senegal, Sri Lanka, Tanzania, Uganda, Zambia, Zimbabwe and his own, which was later circulated as
document S/CSS/W/131, on increasing the participation of developing countries in international trade
in services and the effective implementation of Article IV of the GATS.
105. He said that the share of developing countries in the world exports of commercial services
was less than 20 per cent in 1991, despite the fact that they constituted about 90 per cent of the
membership of the WTO.  Moreover, this share had not shown any increase over the previous few
years.  On the other hand, developing countries' share in world commercial services imports had
increased by about 15% during the same period, namely 1995 to 1999.  This was just one indication
of the lack of effective implementation of GATS Article IV on "Increasing Participation ofDeveloping Countries".  As pointed out by UNCTAD "…Experience so far suggests that the structure
of the GATS has proven to be of greater utility to developing countries than declarations in their
favour, such as GATS Article IV, which have not to date been effectively implemented."  The need to
rectify this shortcoming and to effectively implement Article IV was even greater now that the
mandated negotiations under Article XIX were underway.  The submission attempted to provide some
ideas for this purpose.  It started with a brief discussion of Article IV as an integral part of special and
differential treatment for developing countries, analysed various elements in the Article, and thensuggested certain actions to implement the Article,  particularly in the context of various on-going
negotiations under the GATS.  The co-sponsors were confident that these ideas would generate
positive discussions in the Council, leading to the effective implementation of Article IV before the
start of market access negotiations.
106. The paper therefore went on to address the interpretation of Article IV and its important
elements.  Perhaps the most important part of th e Article was the one referring to increasing the
participation of developing countries in services trade.  Significantly, and in line with the paradigm of
special and differential treatment and the objectives in the Preamble, it committed Members to
providing better market access to developing country services exports through liberalization in sectors
and modes of supply of export interest to them, and facilitating the strengthening of their domesticservices capacity and its efficiency and competitiveness.  Paragraph 1(a) therefore was related to the
flexibility and policy discretion of developing countries to strengthen their domestic service providers
through appropriate measures including domestic regulations, gradual, selective and conditional
access to their markets, and other support mechanisms to improve the efficiency and competitivenessS/CSS/M/13
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of their domestic service providers.  The section that followed dealt with the relationship of Article IV
with Article XIX.
107. The final section presented proposals to implement Article IV and suggested three types of
actions.  First, there were the actions to be taken before the start of the market access negotiations.
The Council for Trade in Services had to  carry out an assessment of trade in services and establish
modalities for granting credit to developing countries for autonomous liberalization.  It had to
examine, on the basis of notifications by developed country Members, the actions that had been taken
to facilitate developing country service providers' access to technology, distribution channels and
information networks;  this should facilitate the identification of best practices as well as gaps in
existing actions.  The Council had to assess the working of contact points established pursuant to
Article IV:2.  This assessment would be based on comprehensive notifications by developed country
Members proving detailed information regarding the use of these contact points by developingcountry service providers.  To effectively implement Article IV:1(c), sectors and modes of supply of
export interest to individual developing countries would be identified by developing countries.  To
preserve the present positive list structure of the GATS through the implementation of Article IV,
developing countries had the opportunity to  identify and submit to the Council list of sectors and
types of transactions that they could liberalize.
108. Second, there were the actions to be taken during the sectoral market access negotiations,
linked to the previous ones.  Developed country Members had to provide meaningful access which
were the sectors and modes of supply identified as of export interest to individual developing
countries. The Council needed to  carry out an assessment of the results of the negotiations to ensure
that there be mutuality of benefits and an overall balance of rights and obligations.  To preserve thepositive list structure of the GATS, developed country  Members, while making requests to developing
country Members, had to  focus only on the sectors and types of transactions identified by individual
developing countries for liberalization.   To achieve the objectives of Article IV, and as mentioned in
Article XIX, Members should  not insist on the removal of conditions that individual developing
countries had attached to their commitments.  To ensure  the exercise of the  right of developing
countries to take measures to strengthen their domestic service sectors and to pursue national policy
objectives through domestic regulations, such measures and regulations would continue to be dealt
with under Article VI in the Working Party on Do mestic Regulation.  In recognition of the fact  that
transfer of technology was a legitimate development objective of developing countries, they had to
have the right to impose conditions, specify types of transactions and undertake other measures for
this purpose, while undertaking liberalization commitments.  The Negotiating Guidelines had to be
implemented in letter and spirit.
109. Third, there were other actions.  Keeping in view the fact that Article IV was a practical
mechanism to implement special and differential tr eatment in favour of developing countries and
fulfill the objectives of GATS as given in the Preamble, it was proposed that the Council regularly
monitor the implementation of all the actions and measures required to effectively implement
Article IV and suggest necessary remedial action when needed.  Regular notification obligations fordeveloped country Members could be envisaged for this purpose.
110. The Chairman asked Pakistan if the approach they were proposing was applicable also
amongst developing countries.  The representative of Pakistan replied that in his view Article IV
contained special and differential treatment provisions meant to address the relationship of developing
and least-developed countries vis-à-vis developed ones.
111. The representative of India thanked Pakistan for the submission.  He welcomed efforts to
effectively implement Article IV of the GATS, and said that the submission was particularly timely
given the Doha benchmarks.  He would revert to the proposal presented by Pakistan but in a
preliminary manner agreed that there was a need for the Council to continue with the assessment and
to ensure an effective implementation of Articles IV and XIX:2, as provided for in paragraphs 14 and15 of the Negotiating Guidelines.  He added that, given the increasing importance of services trade toS/CSS/M/13
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the GDP of developing countries, it was essential that WTO Members, and especially developed
country ones, be flexible in the negotiations with a view to enhancing the share of developing
countries in services trade in particular in those sectors and modes of strong interest to developing
countries.
112. The representative of Cuba supported the presentation by Pakistan, which contained
suggestions to effectively implement Article IV of the GATS.  She stressed the relationship that
existed between the conclusions on the assessment and the need to increase the participation of
developing countries to services trade;  to this end, the negotiations needed to focus on the sectors and
modes of export interest to developing countries.  A mechanism needed to be created to implement
Article IV, and she hoped that the concrete suggestions raised would contribute to this end and be
taken into account.  She recalled that paragraph 15 of the Negotiating Guidelines stated that "to ensure
the effective implementation of Articles IV and XIX:2, the Council for Trade in Services in Special
Session, when reviewing progress in negotiations, shall consider the extent to which Article IV isbeing implemented and suggest ways and means of promoting the goals established therein."  She said
that the submission introduced by Pakistan complemented the Guidelines and was a useful
contribution to the discussion on the question of the effective implementation of Article IV.
113. The representative of Venezuela concurred with Pakistan about the importance of Article IV
and its direct link with the special and differential treatment of developing countries in the GATS.
This link was important as it was closely related to  Article XIX and the assessment of services trade
and the treatment of autonomous liberalization.  In addition, a link existed between Articles IV and
XIX and the Preamble of the GATS.  All of these elements of special and differential treatment in the
GATS were addressed in the submission introduced  by Pakistan, which highlighted the need for
effective implementation of Article IV.  She encouraged Members to study the suggestions putforward therein in order to arrive at a viable mechanism to implement Article IV.  There were also
important elements of flexibility in the GATS mentioned in the submission, especially with respect to
the pursuit of national policy objectives and the conditions that developing countries could attach to
their commitments.  As concerned transparency and active participation in the negotiations, she
stressed the importance that information about reque sts and offers be known in the Council in order to
assess how the negotiations were proceeding.  Finally, she recalled that Article IV was one of the
elements to structure the discussion of sectoral  proposals and she was looking forward to hearing
Members' views on how this Article could be effectively implemented.
114. The representative of Senegal said that Article IV contained the provisions for special and
differential treatment of developing countries in the GATS.  It had to be read in conjunction with
Article XIX, which explicitly granted flexibility to developing countries.  He said that the Doha
process had led to the recognition of the flexibility for developing countries contained in the WTOAgreements;  the advantage of the GATS was that th is flexibility was built into the whole Agreement.
In comparison with Articles VII and VIII of the Agreement on TRIPS, Article XIX of the GATS
contained an explicit reference to flexibility as well as an indication of how this should be applied.
Therefore, the submission presented by Pakistan was useful in order to consider what needed to be
done to make the GATS a pro-development agreement and to effectively implement Article IV,together with Article XIX.  He still wondered whether the Doha dates were prescriptive or indicative
benchmarks, but said that it was obvious that paragraph 15 of the Doha Declaration established dates
for the submissions of requests and offers;  as the GATS recognized explicitly flexibility for
developing countries, now was the time to see how they could benefit from Articles IV and XIX and
to take these provisions into account in the request-offer process.  The GATS mandate was very clearand implied no need to get into difficult negotiati ons such as those on the TRIPS Agreement;  it was
however important that the provisions of Article IV be fully implemented in the negotiations.
115. The representative of Canada said that the in terventions made testified to the importance that
developing countries attached to the implementation of Article IV;  his delegation was committed to
making all possible efforts to ensure that the Article be effectively implemented.  He stressed thatArticle IV needed to be read in the broader context of the GATS, including its Preamble.  Canada
supported the increasing participation of developing countries in the services negotiations and wasS/CSS/M/13
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encouraged by the growing number of negotiating proposals submitted by developing countries;  these
were useful to understand what were the sectors and modes of interest to developing countries and
how those could be integrated both in the nego tiating proposals and in the context of the market
access negotiations.  In its negotiating proposals, Canada had attempted to identify and address some
issues of interest to developing countries, such as commitments in mode 4 not linked to commercialpresence, barriers for the smaller service suppliers, the possibility of developing a mechanism for
phasing-in commitments in certain sectors, or, wi th respect to the strengthening of the domestic
services capacity of developing countries, as indicated in Article IV:1(a), the importance of industry
associations in the distribution sector to better maintain and inform domestic regulatory practices.  He
encouraged all Members to consider the special ne eds of least-developed countries, in the market
access negotiations, in terms of development, trade and financial needs, as one of the conditions to
achieve a satisfactory balance of rights and obligations for all Members.
116. The representative of Uruguay stressed the importance of Article IV in the negotiations and
recalled that paragraph 15 of the Ministerial De claration contained not only benchmarks but also a
reference to achieving the objectives of Article IV.  He would revert to the submission presented by
Pakistan, but noted that a concrete way of implem enting Article IV was for developing countries to
submit proposals in services sectors and modes of supply, as well as areas other than services, whichwere of interest to them.
117. The representative of Brazil said that he would revert to the submission presented by
Pakistan.  He shared the gist of the intervention by Canada and associated himself with the statement
by Uruguay, adding that an important conditi on to effectively implement Article IV was that
developing countries indicate those sectors and modes they had an export interest in by submittingproposals.  That was the reason why Brazil's proposals, submitted both in conjunction with
MERCOSUR and independently, had been tabled with in the framework of Article IV and of the
Negotiating Guidelines and Procedures
Article VII
118. No interventions were made under this heading.
Small and Medium-Sized Service Suppliers
119. The representative of Canada said that the issue of small and medium-sized enterprises
(SMEs) was linked to the market access negotiations.  The importance of SMEs in services trade was
widely recognized, as well as the fact that they faced greater challenges than other types of suppliers,
which often prevented their participation in services trade.  This needed to be taken into account in the
negotiations, and his delegation had proposed looking at two issues, namely the movement of natural
persons and regulatory transparency;  he encouraged Members to bear the situation of SMEs in mindwhen addressing those two issues.
120. Commenting on the submission by Canada on small and medium-sized service suppliers
contained in document S/CSS/W/49, the representative of Venezuela said that his delegation shared
the interest in examining barriers that affected the ability of SMEs to participate in services trade and
hoped that the negotiations would strengthen these suppliers and their international activities.  Heconcurred that it was necessary to overcome barriers related to discriminatory and non-transparent
regulatory frameworks.  As concerned the definition of SMEs, Venezuela used the traditional criterion
of employment to categorise its enterprises, and considered small those enterprises with between 5
and 20 employees, medium those with between 21 and 100, and big those with more than 101
employees.  He observed that, even if developed co untries had clear definitions of SMEs, they had no
notion "micro enterprises", even if a significant share of small enterprises had only between 1 and 5
employees.  Venezuela was not suggesting arriving at a common definition of SMEs, but considered it
important to come to a minimum understanding in order to determine what types of concessions and
conditions should be attached to market access for SMEs with given characteristics and how theyS/CSS/M/13
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could be strengthened technologically.  He reiterated the interest of his delegation in developing and
strengthening the capacity of its SMEs that were supplying services.  He also recalled that Venezuela
was looking at the services negotiations from a broader prospective than a purely commercial one;  it
was approaching them essentially from a development dimension, which implied the latitude to
pursue policies aimed at the development of the domestic capacity of developing countries.
MFN Exemptions
121. The Chairman recalled that, at the October meeting, the delegation of the Republic of Korea
had asked that the paper the OECD had produced on MFN exemptions be made available to
Members.  The paper, entitled "Trade in Se rvices:  A Roadmap to GATS MFN Exemptions" was
available in the room.
122. The representative of the Republic of Korea introduced the submission by his delegation in
document S/CSS/W/127.  He said that many Member s had sought MFN exemptions under the Annex,
and over 400 measures were exempted from the MF N obligation.  Almost all the measures did not
have a definite date for termination, even though the Annex stipulated that their duration be 10 years,
in principle. In this respect, there was a need to examine the current MFN exemptions as concerned
the conditions creating their need and their duration, with a view to exploring the possibility of
streamlining them.
123. The submission was structured in three parts.  The first part examined the conditions creating
the need for MFN exemptions.  According to th e OCED study the Chairman had referred to and
which was available to Members, there were as many as 92 per cent of the exemptions that related to
reciprocity and international agreements.  However, securing equal access or treatment in specific
sectors went against the general practice in the WTO.  Moreover, seeking MFN exemptions when
equal access or treatment was not secured could not justify ‘exceptional circumstances’.  Existence ofinternational agreement constituted 55 per cent of all MFN exemptions according to the OECD study.
This high percentage was all the more significant considering that several layers for flexibility were
provided in the GATS.  Upon scrutiny, many, if not all, conditions, such as foreign policy and
security considerations, would qualify as general exceptions or waivers, or could be addressed during
the upcoming negotiations, instead of MFN exemptions under the Annex.
124. The second part of the paper addressed the duration of MFN exemptions.  The Annex
stipulated that the duration of MFN exemptions was 10 years in principle.  Korea believed that this 10
year duration should not be viewed as a minimum period, but as a maximum period of transition for
Members.
125. The last part of the submission presented an alternative to MFN exemptions through waiver.
The analysis carried out suggested that Members should exert efforts during the remaining 5 years to
search ways to bring MFN-inconsistent measures into conformity with the GATS principles.  Also,most of the conditions creating the need for MFN exemptions could be addressed during the
upcoming concession negotiations, and any remaining conditions could be dealt with by means other
than MFN exemptions under the Annex.  One such means was already stipulated in paragraph 2 of the
Annex:  a waiver in paragraph 3 of Article IX of the Marrakesh Agreement Establishing the WTO.  A
waiver was an available means in the WTO regime where ‘exceptional circumstances’ could beadequately addressed.
126. The representative of Japan said that Korea's submission was useful and that his delegation
shared its main thrust, and particularly paragraph 2, stating that flexibility was granted under strict
conditions, paragraph 3, noting that the flexibility in the Annex on MFN Exemptions was procedural,
and the last sentence and conclusion reached in paragraph 4.  He had also noted with interest the fact,reported in paragraph 8, that certain exemptions would qualify as general exceptions;  in this respect,
exemptions should be reviewed, streamlined and reduced in the course of the negotiations.  He said
that the suggestions in paragraphs 8 and 11 with respect to a waiver, which was mentioned in the
Annex, were interesting and should be examined and considered further.S/CSS/M/13
Page 26
127. The representative of Mexico said that the submission by Korea was similar to the one on
MFN exemptions tabled by his delegation.  He stressed the importance of the duration of MFN
exemptions, which was 10 years in principle and, in Mexico's view, their maximum duration.  He
understood that there were political sensitivities and that there might be exemptions with longer
duration which might require such longer timeframes, but indicated that those were not theexemptions that needed to be addressed in the Special Session.  Rather, all exemptions based on the
Annex should undergo multilateral examination, under which the economic reasons for which they
were taken would be justified.  Such an examination would complement the procedures being
developed, which would allow making those technical corrections necessary in order to arrive at a
"clean" list of exemptions.  In a preliminary manner, he could support Korea's submission, and
particularly paragraphs 2, 9 and 10, as well as the conclusions in paragraph 13.  He said that the
waiver idea was interesting and that his delegation would revert to it.
128. The representative of Brunei sought a clarification from the delegation of Korea with respect
to the reference in paragraph 12 to paragraph 2 of the Annex on MFN Exemptions.  His understanding
was that the waiver was meant for MFN exemptions th at needed to be taken after the entry into force
of the WTO Agreements, and not for existing ones.  He said that Brunei had not listed many
exemptions, but that those that had been had listed were motivated by important reasons whichremained valid.  He had reservations on the work programme proposed in the submission by Mexico,
which referred to 2004 as the date for the elimina tion of exemptions, and could not agree to an end-
date being stipulated for those negotiations.
129. Responding to the question by Brunei, the representative of the Republic of Korea  said that
the basic idea behind their proposal was that MFN-inconsistent measures had to be brought in
conformity at the earliest date, and in principle before the 10 years had elapsed.  After the 10-year
period, if any Member wished to maintain an MFN-inconsistent measure, it should apply for a waiver.
130. The representative of Mexico explained that his delegation's proposal stressed the principle of
balance in the negotiations;  many MFN exemptions had been listed by developed countries and in
order to achieve a balanced negotiation it was necessary for developed countries to contribute to theirelimination.  The proposal also recognized that th e Negotiating Guidelines and Procedures guaranteed
flexibility to developing countries in the negotiatio ns, including in the negotiations on the elimination
of MFN exemptions.
131. The representative of Hong Kong, China agreed with many of the elements raised in the
submission by Korea, and especially the need to examine the conditions creating the need for MFN
exemptions with a view to eliminating them wherever this need no longer existed.  He stressed the
fundamental importance of the MFN principle and th e fact that 10 years was the maximum duration
of MFN exemptions, during which Members should actively seek ways of bringing MFN-inconsistent
measures into conformity with the MFN principle.  He shared the view that those exemptions relating
to measures qualifying for general or security exceptions, or that were not subject to the Article II
obligation, such as recognition, economic integration agreements and maritime transport services,
were not required and could be removed.  There could be alternatives to MFN exemptions, assuggested by Korea, that might provide for deviating from the MFN principle in exceptional
circumstances.
132. MFN exemptions were firmly on the negotiating agenda and were referred to in many
proposals.  In this regard, he observed that the OECD study on Korea's paper showed that 37 per cent
of all exemptions were based on reciprocity and another 55 per cent on international agreements,many of which also related to reciprocity.  He also noted that, as it had emerged from the MFN
exemptions review, many Members had explained that some measures exempted on the grounds of
reciprocity provisions had never been used in practice.  Therefore, he was not how such exemptions
would be eliminated through negotiations;  if MFN exemptions were negotiated solely through
bilateral processes, he wondered where the incent ive to remove such exemptions would come from.
There was, therefore, the risk that they might be left outside the scope of the negotiations.  In addition,S/CSS/M/13
Page 27
given that many of these exemptions had no specified duration, this might result in a permanent
departure from the MFN principle, which would be against the letter and spirit of the GATS and the
Annex on MFN Exemptions, which foresaw that exemptions last ten years in principle and in any
event be removed through negotiations.  In order to address this difficulty, he suggested three
alternatives:  the establishment of multilateral criteria for the elimination of reciprocity-based
exemptions;  the institution of a vigilant review with a clear deadline for their removal;  or theirvoluntary elimination within ten years.  Second, there were exemptions that had also never been used
in practice and that might not be susceptible to elimination through negotiations.  Third, there were
measures which had been made the object of exemptions that were not subject to Article II and that
therefore had no negotiating value.  He invited Members to consider these issues as systemic, in the
sense that they related to MFN exemptions that might not be subject to negotiations.
133. The representative of India reserved his delegation's position on the suggestion by Korea
relating to seeking a waiver for exemptions lasting beyond 2004, but stressed the importance of not
prejudicing the outcome of the negotiations.  He also noted the flexibility that developing countries
had been given with respect to MFN exemptions in the negotiations.
Transparency and Other Aspects of Domestic Regulation
134. The representative of the United States said that transparency was a horizontal issue but had
also been taken up in Members' sectoral negotiating proposals, such as those on financial,
professional, distribution and energy services, small and medium-sized enterprises and the movement
of natural persons.  He said that transparency in domestic regulation was seen as essential as a
complement to market access and national treatment by a number of WTO Members, and referred to
transparency and predictability in regulated sectors, including mode 4, in the application of economic
needs tests and other regulatory procedures and practices.  From the perspective of Article IV, it wasdeveloping countries' exporters that would benef it most from new GATS provisions on transparency
in regulation.  His delegation believed that clearer and earlier understanding of new and proposed
regulation and an opportunity to participate and ma ke their views known would allow developing and
developed countries exporters to make better use of GATS commitments.
Classification
135. No interventions were made under this heading.
136. Concluding the discussion on horizontal issues, the Chairman said that the Council would
take note of the statements made.
(ii) Movement of Natural Persons
137. The Chairman recalled that, in the course of the discussion on movement of natural persons at
the July meeting, it had been agreed that the Secretariat would produce a note on economic needs tests
and their application in all modes of supply, drawing upon available information in Members'schedules and work undertaken by other inter-governmental organizations.  This note was contained
in document S/CSS/W/118.  In July, the Council had also agreed that a symposium on the movement
of natural persons would be held in the first half of 2002.  At the October meeting, Members had
decided that the symposium would be a joint WT O/World Bank event, would last around two days
and would be an informal event, to be tentatively held in late March or early April 2002.  TheSecretariat had also been asked to circulate a draft outline 
programme for comments.
138. A representative of the Secretariat introduced the note in document S/CSS/W/118.  He
explained that it addressed economic needs tests (ENTs) and their application in schedules of
commitments, drawing upon analytical work carried out by UNCTAD and the OECD.  The Note
placed ENTs in the legal framework of the GATS, to clarify how they should be applied underArticle XVI.  It consisted of three sections:  the first one discussed the legal framework, the second
presented an overview of what had been scheduled, and the third considered some practical issues thatS/CSS/M/13
Page 28
might arise in the application of GATS provisions related to ENTs.  The Annex to the paper contained
a list of ENTs identified in Members' schedules.
139. As concerned the outline for the mode 4 symposium, he indicated that the Secretariat had
received some comments on the draft, which, however, did not fundamentally modify the broad
outline and which would be taken into account in the preparation of the final detailed programme.The event was scheduled for the first half of April 2002.
140. The Chairman informed Members that he had been approached by a number of delegations
concerning the possibility that the OECD Secretaria t be invited to present a paper they had recently
produced on the movement of natural persons under the GATS.  He thought that such a presentation
could contribute to the Council's discussion of mode 4 and therefore proposed that, at the following
meeting, a representative of the OECD Secretariat be invited to attend the discussion on mode 4 and
make a presentation of the work they had undertaken.
141. It was so agreed.
142. The representative of Uruguay said that he would revert to the Secretariat Note, but, by way
of preliminary comment, suggested that the issue be taken up as a horizontal issue in the agenda of the
following meeting of the Council, given its releva nce not only for mode 4 but for all modes.  He
wondered whether the Annex to the paper contained, as stated in paragraph 1, a "comprehensive list
of ENTs scheduled by Members";  his view was that the Annex was based on an analysis carried out
by the Secretariat and therefore only reflected the Secretariat's views of what constituted an ENT.  For
example, the measure scheduled by Uruguay was a precautionary measure, and not an ENT.  He then
observed that, as stated in paragraph 8, out of a total of 253 ENTs, one Member had scheduled
around 40, therefore accounting for around 15 per cent of all ENTs.  He said that an ENT could beassimilated to an "unbound" in practice, so that an  important contribution to services liberalization
could come from developed countries taking the lead in the elimination of ENTs.
143. The representative of Morocco thanked the de legation of the European Communities for the
organization of a seminar on services trade for African countries in Mauritius in November, as the
event contributed to strengthening the capacity of African countries.  She said that she would revert tothe Secretariat Note on economic needs tests once it had been made available in French.  She then
explained her delegation's position on mode 4.  In Morocco's view, the inclusion of the movement of
natural persons in the GATS definition of services trade responded to the concerns of developing
countries:  mode 4 was a mode of supply where developing countries had a comparative advantage,
and their aim was to maintain a symmetry in the movement of factors of production in view of the
GATS coverage of investment.  Nevertheless, the negotiations on mode 4 after the conclusion of the
Uruguay Round, which should have allowed for a higher level of commitments in this mode, achievedonly limited results.  An analysis of commitments in mode 4 allowed drawing some conclusions,
which needed to be addressed in order to consolidate the balance in commitments.  First,
commitments varied considerably depending on individual sectors and modes.  In most cases,
commitments were limited to managers, specialists and executives, skilled personnel or business
visitors.  Second, the least restrictive commitments had been scheduled in mode 3.  It was well knownthat only a few developing countries could take advantage of this mode of supply, given the high costs
of setting up a commercial presence in developed countries, the low level of financial and human
resources available to enterprises from developing countries and their limited access to information
and distribution networks.  Therefore, the immediate beneficiaries of the GATS were multinational
enterprises, who were able to establish a commercial presence abroad.  The movement of naturalpersons, instead, had mainly been the object of horizontal commitments, without any sectoral
specificity.  Only a few developed countries had allowed access of specialized professionals.  Third,
numerical quotas and recognition agreements and arrangements represented other types of market
access barriers.S/CSS/M/13
Page 29
144. In light of these observations, greater liberalization of mode 4 was essential for the effective
implementation of Article IV:1(c) of the GATS.  It was therefore important that, in the course of the
negotiations, developed countries undertake significant efforts to liberalize and improve their
commitments in this mode of supply and to avoid confusion of mode 4 with migration.  To that effect,
they should relax their regulations with respect to the recognition of qualifications and simplify their
visa and work permit regimes.  Her delegation hoped that clear and concrete measures would betaken, on the one hand, to improve the transparency of immigration laws and regulations and, on the
other hand, to avoid all discrimination vis-à-vis natural persons originating in developing countries.
Similarly, measures needed to be taken to diminish the restrictive effect of economic needs tests and
to exempt certain categories of service suppliers from their application.  It was also necessary to
address problems related to statistics and to the classification of services sectors linked to the
movement of natural persons, in order to allow developing countries to measure the challenges and
the level of market opening and to prepare themselves effectively to negotiate in this area.  In thatrespect, she highlighted the ambiguities that existed with respect to the terminology used in
connection with mode 4 and that, in order to avoid possible restrictive interpretations, it would be
advisable to elaborate common definitions for categories of natural persons such as managers,
executives and specialists, and for a duration of stay which would be considered temporary.
145. She acknowledged that the development and spreading of new information technologies was
redefining and promoting international trade, but said this new technology could in no way substitute
for the movement of natural persons.  In addition to its important role with respect to market access,
mode 4 also contributed to the transfer of knowledge and technology and to the exchange of cultural
experiences.  She suggested that the WTO Secretariat strengthen its collaboration with other relevant
international organizations in order to ensure better availability of data and information about themarket needs of developed countries, the qualifications required and procedures for access to these
markets.
146. The representative of the Republic of Korea  said that the Secretariat Note on economic needs
tests was a useful basis to address the issue on a horizontal basis and concurred that ENTs were
related not only to mode 4 but to all modes.  He sought a clarification from the delegation of Indiawith respect to paragraph 7 of its proposal in docum ent S/CSS/W/12;  he suspected that this reflected
market reality and said that eliminating these restrictions would raise the direct and indirect costs to
the host country and social and economic costs involved in enforcement and implementation of
immigration laws.  Accordingly it was essential to look at the costs to the host country and service
supplier.  He also wondered about the reference to an "adequate in-built safeguard mechanism" in
paragraph 18 and its relationship with a possible emergency safeguard mechanism in mode 4.  He
wondered what the appropriate remedy was to avoid that natural persons temporarily present tosupply services enter the labour market without increasing the cost of enforcement and
implementation.
147. The representative of Cuba said that she would revert to the Secretariat Note in document
S/CSS/W/118.  With respect to the symposium, she suggested that UNCTAD be invited to contribute
the results of the Expert Meeting it had held on the movement of natural persons.
148. The representative of Japan said that discussions on mode 4 could take place bilaterally as
well as multilaterally in the Council.  In multilateral discussions, Members could arrive at a common
understanding on some issues, including disciplines to increase transparency with respect to mode 4,
clarification of the application of economic needs tests and definitions of terms as suggested by the
delegations of India and the European Communities.  His delegation would revert to the SecretariatNote in document S/CSS/W/118.  As for the symposium, Japan supported the outline and was
considering sending government officials from th e departments of immigration, employment and
social policy.  He drew delegations' attention to  the fact that the OECD Employment, Labour and
Social Affairs Committee would be meeting in mi d-April 2002 and wondered if the symposium could
be held at the end of March to avoid a possible overlap.S/CSS/M/13
Page 30
149. The representative of Canada said that mode 4 was a key area in the negotiations and one of
great interest to developed and developing countries alike.  Members should improve their horizontal
and sectoral commitments in this mode of supply, by including not only intra-corporate transferees
but also general business visitors and independent professionals, those entering on a contractual basis
snot linked to a commercial presence.  He concurred with the importance of increasing thetransparency and predictability of existing and new commitments in mode 4, and of arriving at a
common understanding of key categories of natural persons, as the European Communities had
suggested for intra-corporate transferees, business visitors and professionals;  if such common
definitions were not possible, his delegation would be open to exploring other alternatives.  As for the
symposium, his delegation would participate with experts from the departments of immigration and
employment.
150. By way of preliminary comments on the Secr etariat Note in document S/CSS/W/118, the
representative of Brazil said that economic needs tests were one of the most important barriers, not
only in mode 4 but also in mode 3, and that was the reason why the issue had been addressed not only
for mode 4 but across all modes.  He observed that economic needs tests were referred to in GATS
Article XVI:2(a) to (d), but they were defined nowhere in the Agreement.  As a result schedules were
unclear, as the references to ENTs were vague and generally did not specify the applicable criteria,giving Members discretion with respect to market access and in some cases making the commitments
similar to an "unbound".  If criteria were attached to economic needs tests, their purpose appeared to
be similar to those of an emergency safeguard mechanism.  It was sometimes claimed that economic
needs tests were aimed at legitimate social objectives;  he disagreed, noting that they were one of the
barriers under Article XVI and as such their intent was clearly protectionist and they were aimed atreducing competition in the domestic market.  Noting that paragraph 8 of the Secretariat Note stated
that ENTs were most common in mode 3 and that Korea had said that Members should look at the
relationship between ENTs and emergency safeguards in mode 4, he called for that relationship to be
examined also in mode 3.  Economic needs tests allowed Members to regulate market access in an
arbitrary fashion.  He concurred with Uruguay that the issue was of a horizontal nature and that theCouncil should take up its discussion as such.  Finally, as concerned the definition of ENTs, he said
that the Annex to the Note contained an entry for Brazil that he was unsure qualified as an economic
needs test.
151. The representative of the United States said that mode 4 was a horizontal issue and observed
that all Members recognized that the GATS only covered the temporary entry of natural persons
supplying service.  Regulatory transparency had a significant impact on trade through this mode of
supply, given the temporary nature of the movement, the fact that natural persons faced the sameentry restrictions anew each time they sought to provide their services and that they had fewer
resources than companies had to access information.  Mode 4 was important to many developing
countries but it was essential that all Members r ecognize the skills, know-how and expertise that
could be contributed by foreign natural persons.  With regard to proposals to work towards common
definitions for categories of natural persons, he said that this could improve access conditions, butcautioned against inadvertently blocking access, as international classifications might not be as nimble
as national ones.  He would revert to the Secretariat Note in document S/CSS/W/118, but noted that
the last sentence of the fist paragraph, stating that the Annex to the paper contained a "comprehensive
list" of ENTs, seemed a brave statement.  He looked forward to the symposium on the movement of
natural persons, to be held in late March or early April.
152. The representative of the European Communities sa id that he had just received the Secretariat
note in document S/CSS/W/118 and would revert to it in detail;  he just noted that there might be
many reasons why economic needs tests had been scheduled, including to address public service
concerns or as a result of the breadth of the commitments made.  He restated his delegation's interest
in mode 4 and recognised the great significance it had for developing countries.  He structured hiscomments along the issues identified at the previous meeting.  First, on classification, he said that
common terms and definitions would be useful to improve the clarity and uniformity of commitments;
he was open to discussing other feasible solutions to this end, including using work carried out byS/CSS/M/13
Page 31
other relevant international organisations.  Second, on market access and national treatment, he said
that the elaboration of a common code of practice for economic market tests could be desirable, but
that Members needed to discuss what its reach and detail would be. He added that it would already be
an improvement if all Members followed the scheduling guidelines more closely.  Mode 4
commitments could be improved for instance by including natural persons not linked to a commercial
presence and contractual service suppliers.  His delegation's approach was that horizontalimprovements should be pursued first;  sectoral ones might be considered afterwards, if considered
beneficial.  Third, on regulatory issues, he concurred that it was important to improve access to
information on laws, regulations and practices regarding mode 4 and to increase transparency in the
operation of commitments.  Fourth, with respect to the implementation of Article IV, it was clear that
mode 4 was one of the areas of greatest interest to developing countries, but it was also of significance
to his delegation.  He stressed that mode 4 was not an issue where a north-south divide existed, and
that developing countries' liberalization was also of interest to other developing countries and that thisneeded to be taken into account.  As concerned the symposium, he said that it would be a useful event
and added that his delegation would contribute to the event.  He wondered whether the symposium
might not be the ideal forum for the OECD Secretariat to present their work on the movement of
natural persons.
153. The representative of Australia said that her delegation would revert to the Secretariat Note in
document S/CSS/W/118.  She said that improving commitments in mode 4 was a central horizontal
issue in the negotiations, and one which was mentioned in Australia's proposals.  She strongly
supported the importance of improving access to information and transparency in the application
process for entry of natural persons.  Her delegation was open to discussing definitions of intra-
corporate transferees, executives and specialists, as well as economic needs tests and their applicationcriteria.  Australia was also interested in examin ing proposals that involved changes to regulatory
regimes, but she stressed the need to explore their costs and benefits and the possibility that the same
objectives might be achieved within existing re gimes.  She looked forward to the symposium on
mode 4, to be held in April.
154. The representative of Mexico said that he would revert to the Secretariat Note in document
S/CSS/W/118, which his delegation had only just received.  In a preliminary manner, he said that
economic needs tests had been scheduled by many Members, often without criteria, thereby leaving a
wide scope for arbitrary and discriminatory application.  He said that establishing a framework within
which economic needs tests would be better defined could be desirable and stressed the important role
of transparency.  He called upon those Members who had scheduled many ENTs to indicate the
criteria on the basis of which they were applied, or else a grey area would remain in their schedules.
He noted that most economic needs tests had been scheduled in modes 3 and 4 and indicated that hisdelegation was particularly interested in those scheduled in mode 4.  Commenting on the symposium
on the movement of natural persons, he said that the possibility of Members sharing their own
national experiences, also in bilateral agreements, should be foreseen.
155. The representative of Switzerland said that he would revert to the Secretariat Note in
document S/CSS/W/118.  He structured his comments on mode 4 along the issues identified at the
previous meeting.  First, on classification, he said that a harmonization of the various definitions of
the notions of specialist, manager, expert or intra-corporate transferee could be very useful and would
improve the coherence and transparency of schedules.  Second, on market access and national
treatment, his delegation was seeking improvements in the horizontal commitments in relation with
the transfer of intra-corporate key personnel, on a horizontal basis.  Concerning particular sectors,
Switzerland had already proposed, in its sectoral submissions, to discuss mode 4 in the fields of
professional, environmental and tourism services, particularly when related restrictions acted as an
impediment to the beneficial effects of abolishing restrictions under other modes of supply.  Third, on
regulatory issues, he concurred that transparency and predictability of existing and new mode 4
commitments should to be improved.  It had to be kept in mind that natural persons had fewerresources than juridical persons to obtain information on procedures and that it was more difficult for
them to manage those complex and time-consuming procedures for obtaining temporary entry.
Members had already talked about the importance of small and medium-sized enterprises, so that theS/CSS/M/13
Page 32
special needs of those "very SMEs" constituted by individuals needed to be taken into account.  Some
regulatory disciplines might be considered, as well as clear criteria for economic needs tests.  Fourth,
on the implementation of Article IV, his delegation supported thinking further about the needs of
developing countries and could support further liberalization of this mode of supply.
156. The representative of India said that he would revert to the Secretariat Note in document
S/CSS/W/118, but noted that it contained useful information for the negotiations.  His delegation
hoped to participate actively in both the symposium on the movement of natural persons and in the
one on the assessment of trade in services.  Mode 4 was of particular importance to his delegation and
that was why India had tabled a submission on the movement of natural persons, in document
S/CSS/W/12, and had reserved the possibility of submitting additional proposals.  He would respond
to the questions raised by the delegation of Korea at the following meeting of the Council.  He had
found the intervention by Morocco useful and shared most of the observations made;  in particular, heagreed that the strengthening of mode 4 commitments, especially on the part of developed countries,
was essential for the negotiations to progress.  He was encouraged by the comments made by
developed countries and their recognition of the interests of developing countries and hoped for real
action.  Given the importance of mode 4, he suggested that a negotiating group be set up on the
movement of natural persons.
157. The representative of Tunisia echoed Morocco's statement on the interest that developing
countries had in the liberalization of mode 4, given their deficit in trade through other modes of
supply and encouraged other Members to take this into account.
158. With respect to the timing of the symposium on the movement of natural persons, a
representative of the Secretariat explained that holding the event in March might be difficult given
that the two-week cluster of services meetings was scheduled for that month and that the symposium
on the assessment of trade in services would also take place around that time.  The first half of April
seemed like a viable option and the Secretariat would try to avoid any clash of dates with other events.
As for the agenda, he confirmed that the symposium would address national experiences under item 3,
and the participation of the UNCTAD Secretariat had already been factored in.  He apologised for thelate circulation of the Note on economic needs tests in document S/CSS/W/118;  he concurred that the
statement in paragraph 1, that the Annex contained a comprehensive list of ENTs scheduled by
Members, was brave and indicated that a note of caution in this regard was contained in paragraph 9
of the Note.
159. Concluding the discussion on the movement of natural persons, the Chairman said that many
delegations would revert to the Secretariat Note on economic needs tests and that the issue would be
taken up as a horizontal issue on the agenda of the following meeting of the Council.  There had beena great deal of support for the symposium on mode 4, which would take place as clarified by the
Secretariat.  A number of suggestions had been raised for further work on mode 4, including on
harmonising definitions and developing criteria for economic needs tests to improve the transparency
and predictability of commitments.
(iii) Business Services
All business services, with the exception of a ccountancy, legal and computer and related
services
160. The Chairperson noted that, since the previous meeting, the delegation of New Zealand had
submitted a new proposal regarding consulting services (W/116).  He suggested that, following the
introduction of New Zealand’s proposal, Members first address business services generally, followed
by specific discussions on accountancy, legal services and computer services.
161. The representative from New Zealand introduced his development proposal, stating that
consulting services were of considerable trade interest.  Although falling under the heading of
business services, consulting actually cut across many services sectors, he stated, and therefore facedS/CSS/M/13
Page 33
a wide range of potential barriers.  Modes 1 and 4 were the primary modes of supply, and the
providers of consulting services in New Zealand were predominately SMEs.  Inconsistencies in the
CPC treatment of consulting services were identified in the proposal, notably that the existing
classifications did not encompass the full range of consulting services provided in the market.  There
were a number of options to address the problem, the delegate stated, e.g. creating a discrete, but
broad, sub-sector under business services.  New Zeal and recognized that Members wished to preserve
the integrity of any existing commitments, as well as the W/120 structure.  Therefore, his delegation
suggested supplementing, rather than replacing, existing commitments.  Members would preserve
their flexibility, he stated.
162. The representative of the United States noted that his delegation had submitted a proposal on
advertising services (W/100) at a previous meeting, and said it remained very interested in learning
the views of other Members.  Advertising involved numerous sectors of the economy, and virtually all
businesses used it to compete effectively.  Significant barriers existed, the representative stated,including restrictions on the importation and broadcast of television commercials, residency
requirements for advertising production professionals, local participation requirements for the
production of advertising, and equity limits on ownership of advertising firms.
163. Regarding regulatory issues, the United States encouraged Members to liberalize trade in
advertising services, while also recognizing that governments retained the right to set and maintain
high standards of consumer protection.  Many countries had found that, as a complement to laws and
regulations prohibiting false or misleading advertising, high standards of business conduct,
established through self-regulatory guidelines and voluntary industry norms, also fostered consumer
confidence and promoted truth and accuracy in advertising.  In some 58 countries, for example, the
International Chamber of Commerce played a leadin g role in promoting high standards through its
Code of Advertising Practice.  The United States encouraged Members to consider voluntary codes of
conduct as a compliment to consumer protection legislation in the advertising sector.
164. With respect to Article IV, the United States representative said that, while itself covering a
broad range of services activities, advertising services were an input into the marketing of almost
every good and service.  Advertising was a powerful catalyst for economic growth, promoting theentry of new firms, new goods, and new services.  A restricted advertising market could limit
consumer information, and thus the ability to introduce new and improved goods and services into the
market.  The United States believed that improv ed market access commitments in advertising services
would not only benefit those entities directly engaged in the sale and purchase of advertising, but also
stimulate many other goods and services activities.
165. The delegate from Japan thanked New Zealand for analyzing and clarifying the classification
issues regarding consulting services.  Japan shared the view expressed in the first part of para 12 of
New Zealand’s proposal, i.e. that it would not be useful to conduct an exhaustive review.  Regarding
the second part of that para, however, Japan felt there might still be a classification problem,
concerning the relationship between the “management consulting services” category and the proposed
“other consulting services” category.  The delegate wondered whether New Zealand’s issues might be
covered under the existing category of “general management consulting services”.
166. Regarding market access and national treatment, especially for architectural and engineering
services, Japan wished to see improvements with respect to nationality requirements, restrictions on
foreign capital, joint venture requirements, prohibitions on the establishment of offices or branches,
and state-level residency requirements, the delegate stated.  For the advertising sector, Japan wished
to see the liberalization in areas such as local content requirements, and restrictions on foreign capital.Members should examine less trade restrictive alternatives, he stated.  Regarding domestic regulation,
Japan had concerns about administrative management, such as arbitrary changes in real estate
regulations.  Limitations on capital movements and the lack of transparency in domestic regulation
were also obstacles.  Mutual recognition was subject to Article VII, the delegate stated, and, therefore,
some MFN exemptions could be streamlined.  He noted that Japan was actively participating in theAPEC engineering mutual recognition project.S/CSS/M/13
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167. The delegate from Australia welcomed the significant number of proposals on professional
services.  She noted that architecture and engineering, like all professional services, were subject to a
fairly high degree of regulation, aimed at ensuring adequate standards of professional competence,
accountability, and consumer protection. Trade liberalization should not compromise regulatory
objectives, she stated, and those objectives should not be implemented in a trade-restrictive manner.Australia believed that Members could enhance their commitments in these sectors without
undermining the traditional goals of regulation.
168. Regarding market access and national treatment, nationality and residency requirements were
generally not appropriate as measures of professional competence or preconditions to practice, the
delegate stated.  Australia also saw considerable scope for the negotiations to achieve reduced
restrictions on commercial presence for foreign architectural and engineering firms.  On regulatory
issues, measures to facilitate the movement of professional services providers were a high priority, aswere the negotiation of strong disciplines on transparency and necessity.  The mandate in Article VI:4
was very important in that latter regard, and business services, including architectural and engineering
services, were uniquely placed to be at the forefront of that work, considering the disciplines which
had already been developed for accountancy.  Members could also examine the scope for more
effective implementation of Article VII, she stated, bearing in mind the complexities and challengesof establishing recognition procedures to ensure the equivalence of qualifications and competence on
a multilateral basis.
169. The representative of Switzerland observed that business services were one of the sectors
most highly related to mode 4, and therefore should be the focus of special attention.  He welcomed
New Zealand’s paper and gave his delegation’s preliminary support, especially to the classificationsuggestion in para 14.  Regarding market access and national treatment in professional services,
Switzerland’s proposal (W/75) had already mentioned that many obstacles to trade were related to
local conditions which, together with recognition re quirements, varied greatly between countries.  It
should be possible to reduce or eliminate nationality and residency requirements, the representative
stated, as well as to replace requirements on forms of establishment and membership requirements inprofessional associations with less trade restrictive measures.  Domestic regulation issues were
becoming an increasingly important aspect of trade liberalization, he stated, and the WPDR
discussions showed the need for disciplines in particular sectors.  The ongoing work on the horizontal
application of the accountancy disciplines was therefore very important, the representative stated.
170. The representative of Norway noted that its proposal (W/59) focused on six specific business
and professional services sectors.  Regarding market access and national treatment, Norway
considered residency requirements to be the main obstacle to trade in modes 1 and 2, and urged theybe replaced with less trade restrictive measures.  On mode 3, the representative urged Members to
reduce equity limitations and restrictions on forms of establishment.  For mode 4, Norway particularly
encouraged the reduction of restrictions on intra-corporate transfers.  MRAs were important to
facilitate trade, and he encouraged Members to observe the Article VII notification requirements.
Many business services were characterized by a high level of professional skills and know-how, therepresentative stated, and liberal market access for these services was indispensable for promoting the
transfer of knowledge and attracting FDI.  To make the provisions of Article IV effective, developing
countries should therefore make improved commitments for business services.
171. The representative of Thailand stated that, concerning New Zealand’s proposal, Thailand
recognized that consulting services activities of the accountancy firms had greatly expanded, and that
there appeared to be a high level of concentration within the industry.  In the New Zealand paper, the
proposed additional category seemed very broad, the representative stated.  She believed that New
Zealand’s paper went beyond consulting services, and asked for greater information on the scope of
the proposal.  Her delegation’s preliminary view was that the proposed scope was too broad.
172. The delegation of New Zealand said they were grateful for Members’ thoughts, and noted that
the primary purpose of their proposal was to encourage discussion, with the intention of creating aS/CSS/M/13
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broad, simple definition to be used if Members so wished.  Concerning Japan’s comments, they would
be considered, but New Zealand’s impression was that the existing classification was not broad
enough to reflect current business activities.
173. The representative of the European Communities, regarding the proposed additional category
in the New Zealand paper, asked for clarification on what would happen in cases where commitments
had not already been made in one or more of the existing sub-sectors. The representative wondered,under such cases, if all the other sub-sectors would also be covered when new commitments were
made.  Regarding market access and national treatment, the EC was also seeking to replace residency
requirements under mode 1 with less trade restrictive measures.  For modes 2 and 3, the representative
questioned whether any restrictions were justified.  Where possible, nationality and residency
requirements should also be replaced by less restrictive measures.  On mode 4, the EC sought
horizontal measures.  Concerning regulatory issues, the representative noted that some sectors had
higher levels of regulation, which were linked to consumer protection and other public policyobjectives.  On issues related to Article IV, he agreed with Norway that business services were
essential to attracting FDI.
174. The representative of New Zealand replied that, with respect to the EC question, they had
given much thought to the issue.  New Zealand did not wish their proposal to cut across Members’
existing schedules, he stated, but instead to give Members the option of making broad commitments.
Accountancy Services
175. The delegation of Australia noted there were a number of general proposals on professional
services, as well as two proposals specifically on accountancy, and welcomed the opportunity to
reiterate some of the objectives of its proposal (W/62).  As background, Australia observed thataccountancy was one of the most advanced sectors in terms of GATS, benefiting from both the MRA
guidelines and the accountancy disciplines.  In W/62, Australia did not see any significant
classification issues in the sector.  Regarding market access and national treatment, Australia saw
considerable scope for further liberalization, partic ularly through the elimination of citizenship and
residency requirements for licensing or certification, restrictions on the form of commercialestablishment, unreasonable qualification requirements, and restrictions on firm names.  Measures to
facilitate the temporary movement of accountancy practitioners were a high priority.
176. Concerning regulatory issues, Australia regarded the accountancy disciplines as an important
achievement, and noted they did not apply to measures subject to scheduling under Articles XVI and
XVII.  At the same time, however, the disciplines, especially the necessity and transparency tests,
should apply to the implementation of scheduled measures, the delegation stated, in order to ensure
that domestic regulatory measures did not undermine specific commitments.
177. The representative of the United States associated his delegation with Australia’s comments,
and said it was important to note that the CTS had been able to reach agreement on the accountancy
disciplines.  Together with market access and national treatment commitments, the disciplines made
an important contribution to liberalization, he stated.
178. The representative of the European Communities said his delegation was open to discussing
past proposals on classification, and underlined the importance of regulatory issues for the sector.
Members needed to build upon the work of the WPDR, he stated, and to pursue further efforts.
Legal services
179. The representative of Australia stated that his delegation's particular interest in legal services
was underscored by the separate proposal that his delegation had submitted. Progressive liberalization
of trade in legal services was very important and had to be based on certain key principles.  The most
fundamental of these was that a legal practitioner seeking to practice home country law, international
law or the law of a third country from an overseas base should not be required to meet all theS/CSS/M/13
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conditions necessary to practice the law of the host country.  This concept should be the fundamental
pillar for liberalization of the legal services sector in the present round of negotiations.  The main
liberalizing element of that approach was that it would overcome the need for an applicant to be
qualified in host country law in order to practice home country;  third country;  or international law
from the territory of the host country.  It would enable regulators to recognize these discretecategories of legal services as part of their regulation.
180. With regard to classification issues, there was a strong case for refining the W/120
classification of legal services to provide a framework that more clearly reflected the commercial
realities of international trade in legal services.  At present, W/120 had a single undifferentiated entry
for legal services; Australia's preliminary view wa s that the legal services category in W/120 needed
to distinguish between two broad types of service activity:  first, legal advice;  and second, legal
representation before the courts.  Within those two categories four specific subcategories should beidentified, namely host country, home country, third country and international law. These refinements
to W/120 would give Members enhanced flexibility to make market access and national treatment
commitments that were targeted and most beneficial in terms of expanding the range and quantity of
legal services available to consumers and client firms in their national economies.  He stated that
Australia would provide a more detailed paper in due course.  As part of future discussions, heforesaw that Members needed to discuss appropriate descriptions of providers of legal services.
181. On market access and national treatment, Australia's negotiating proposal set out a number of
restrictions that Australian exporters of legal services faced.  Many of these were found in other
professional service subsectors but they included restrictions on commercial presence, on fee-sharing,
on the uses of nationality and residency tests as preconditions of registration, and on the right toappear in international arbitration.
182. Finally, with regard to regulatory issues, th e main issue Australia was pursuing in the
negotiations was the adoption by the widest possible number of Members of the limited licensing
approach to foreign legal practitioners.  In addition, Australia was interested in two other regulatory
issues, i.e. the negotiation of strong disciplines encompassing transparency and necessity as part of thenegotiations mandated by Article VI:4, as well as Mode 4 which was a high priority for legal
practitioners.
183. The representative of the United States referred to his delegation's proposal on legal services,
which considered the drafting of a reference paper.  In reply to questions that his delegation had
received concerning the content of such a reference paper, he stated that the United States legal
community was currently exploring the possibility of something very similar to what had been
proposed by Australia in W/67/Suppl.1/Rev.1, i.e the id ea of limited licensing coupled with the ability
to form partnerships in the host country with host country lawyers and also to employ host country
lawyers.  This would help to liberalize the conditions under which lawyers can enter other markets
without having to learn the law of the individual host country and without obligation to take a
burdensome examination.  His delegation aimed at very similar results as Australia even though
through a slightly different approach.
Computer and related services
184. The representative of Costa Rica enumerated examples of some of the obstacles its producers
faced on other software markets. These included discriminatory fiscal treatment, excessive taxing of
repatriated capital, excessive requirements for entry and exit of temporary staff, limitations oncommercial presence and limitations on the movement of natural persons.  She proposed that
restrictions dealing with market access and national treatment should be eliminated and urged new
and deepened commitments in all four modes of supply and for all sub-sectors.  With respect to
classification, she recognised that there was a need for a review of this issue during negotiations, in
co-ordination with the UN Central Product Classification.S/CSS/M/13
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185. The representative of the United States noted the linkages that existed between this sector and
other sectors in creating a networked economy.  He noted that the Mercosur submission also
highlighted these linkages.  He agreed with calls for comprehensive commitments in this sector and
took note of Costa Rica's suggestion on the need to work on classification issues.
186. The representative of India underscored the importance of this sector for his country and
noted his intention to come back to the Council on this issue.
187. Regarding classification, the representative of Canada noted the utility of exploring the issue
in order to establish greater clarity and suggested that this be taken up in the appropriate forum as
negotiations proceeded.  He also noted a need to study the stakes involved in regulatory issues,
temporary entry and technical standards with respect to their impact on market access.
188. The representative from Uruguay noted the relevance of this sector to Article 4 of the GATS.
With respect to classification, he expressed satisfaction with the current classification, but noted that
there was also the room for improvement.  He observed that there were numerous limitations amongthose Members who did have commitments and fav oured future commitments without limitations.
189. Commenting on paragraph 5 of the proposal by Canada, the representative of Australia
requested further examples of emerging services, such as data warehousing, and of electronically
delivered services with a view to help clarify classification issues. In Australia's view, value-added
telecommunication and content publishing services should not be included in computer-relatedservices.  On the Mercosur proposal, Australia agreed that changing business activities fostered by
technological developments created a need for clarification of definitions.  Australia would seek to
avoid changes to existing definitions, and preferred clarifying definitions contained in the current list.
He reiterated Australia's position that Internet delivery services should be classified as a basic
telecommunications service, that is, a packet-switched data transmission service.
(iv) Communication services
Postal and courier services
190. Introducing his government’s proposal, the representative of New Zealand affirmed that the
sector's rapid change could be accommodated within the GATS framework particularly in terms of the
current classification system.  He noted the development of consulting services in this sector.  He
identified a linkage with aviation services and reiterated New Zealand's desire to liberalise areas of
this sector on which postal and courier services depended.  Article VIII:2 could also have some
bearing on developments in this sector.  Finally, he encouraged discussion on the relationship between
the GATS and the regulations of the UPU, particularly with respect to MFN treatment and the
terminal dues system.  He suggested that the UPU be invited to make a presentation to the Special
Council.
191. The representative of the United States, speaking on classification issues, stated that, under
the United States proposal, express delivery services  would become one of six categories under the
"communications services” classification.   He noted areas of overlap between the United States
proposal and other Members' proposals for these services.  He reiterated that this revised classification
would reflect current market realities which distinguish courier services (messenger services) fromexpress delivery services (which use advanced t echnologies).  With respect to the EC's proposal, he
inquired as to the relationship between postal services and GATS Article I:3 in terms of the types of
rules or obligations under the UPU that would be made subject to the GATS.  With reference to Hong
Kong, China's proposal on logistics services, he expressed support for the checklist approach but
questioned the need to include maritime transportation services in the negotiations.  He noted thesimilarities that logistics services had with transport services and business services.  The United States
urged Members to make market access and national treatment commitments on the basis of an express
delivery services category. As for regulatory issues, he noted the need to explore licensing and
authorisation requirements and transparency and fairness of administration issues.  He noted that anS/CSS/M/13
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efficient delivery service would contribute to development in all countries, including those concerned
with Article IV.
192. The representative of Korea noted that the current UN Central Product Classification did not
reflect the reality of market for this sector.  Korea expressed support for the idea of integrating various
services, such as document exchange and non-addressed items into other services.  With respect toclassification, she noted that further consensus and review was needed to ensure that no services were
excluded.  She favoured more study on the relationship between the GATS and the Vienna
Convention of the UPU.  Korea felt that international organisations should not contact one another, as
all Members of the WTO are also Members of the UPU.   Governments should seek to avoid conflict
between their obligations to both.  However, the Secretariats of both organisations could assist
Members in ensuring that compatibility was obtained.
193. The representative of Japan noted that because, in many countries, postal services were still
offered by a state-owned operator, the merging of postal and courier into one sector should be
avoided.  Responding to New Zealand, Japan felt that  a one-price termination dues system would not
take fully into account the universal service obligation among countries and the effects on developing
countries.  He encouraged closer co-operation between the WTO and the UPU in the form of a
Memorandum of Understanding, particularly in reconciling the question of MFN treatment andtermination dues.  Japan remained unconvinced of the necessity to create a separate express delivery
category, as it seemed difficult to clearly define it as separate from services listed in the current
classification.
194. The representative of Uruguay reminded delegations that Mercosur and Bolivia proposed to
combine courier and portal services under the rubric of postal services.
195. The representative of Switzerland reaffirmed the freedom of States to choose in what
framework, public or private, these services should be provided.  On classification issues, he recalled
that the distinction between postal and courier services was obsolete and that express delivery services
should be dealt with separately but as a sub-sector.  A key criteria of express delivery services was
speed, but Switzerland did not feel that it should be classified as a separate category of postal andcourier services.  In response to a question from Hong Kong, China regarding cross-subsidisation on
reserved services, Switzerland said it felt that the current GATS framework could not fully address
this issue.
196. The representative of the European Communitie s agreed with other delegations that the
current classification was out-of-date and inadequate and needed to be revised and updated.  He noted
that few commitments in this sector on market ac cess and national treatment were made in the past,
but felt that with increased liberalisation there was scope for commitments.  The EC would seek fullmarket access and national treatment in modes 1,2 and 3, perhaps being phased-in and in
compatibility with universal service obligations.  He  suggested that unnecessary trade barriers in this
sector be reduced, including regulatory barriers.  He further suggested the possibility of a Reference
Paper for this sector that would take into account the universal service obligations and reserved and
non-reserved areas.  He agreed with New Zealand on inviting the UPU to make a presentation to theSpecial Council.
197. The representative of Canada underlined that the distinguishing feature in the definition of
postal services was the involvement of a national postal administration that also addressed concerns of
universal service requirements.  Therefore, Canada expressed the usefulness of keeping postal and
courier services as separate categories, and remained unconvinced of the need to create a separateexpress delivery services heading.  With respect to market access and national treatment, Canada
encouraged countries to make commitments in these areas.
198. The representative of Australia agreed with New Zealand regarding the need for further
discussion on the relationship between the GATS and the UPU's terminal dues system.S/CSS/M/13
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199. The Secretariat reminded the Council that there had been contacts between itself and the
UPU, including the proposal for a Memorandum of Understanding with the WTO.  This request had
been considered by the regular session of the Council and it was decided to postpone consideration of
the request, as the Members felt that the UPU would need to be an Observer before a MOU could be
considered.  The Secretariat would keep in contact with the UPU while the question of Observers
continues to be considered within the WTO.  The Secretariat informed Members that it had receivedfrom the UPU Secretariat a background paper prepared which addressed the relationship between
terminal dues and GATS obligations.  The Secretariat requested and received from the Council the
permission to circulate this document to the all Members.
Telecommunication services
200. The representative of Colombia noted that, in his country, increased competition and
deregulation had led to more services, technological innovation, improvements in quality and lower
rates.  This had been beneficial for both corp orations and consumers.  Colombia noted that it
considered radio spectrum a scarce resource whose administration fell under the regulatory authority.
For this reason, it had not made market access commitments regarding spectrum availability in its
schedule of specific commitments.  The delegate noted that, for developing countries that have
implemented autonomous liberalisation, improvements in commitments on commercial presencecould be facilitated if market access to sectors of interest to developing countries was also increased.
Colombia stated that further liberalisation of trade in telecommunications services should be
accompanied by a policy of extending basic services and access to information networks whose
quality, capacity and cost met the needs of the user.  Barriers to Internet access needed to be
eliminated, particularly those of national service providers for connection to international Internetservice providers.  Universal coverage must also take into consideration satisfactory connections.  The
Reference Paper was an important advancement which ensured competition safeguards, transparency
of interconnection, allocation of scarce resources and publicly available licensing criteria.  These
items should be part of the Annex.  Finally, Colombia urged the phasing out of MFN exemptions.
201. The representative of Norway noted that, as a key infrastructure element of an economy,
telecommunications held high potential for developing countries.  Norway's experience with full
competition had created a strong communications sector characterised by low prices, the launch of
new services and generally beneficial results.  He underscored the importance of the adoption of the
Reference Paper, a technologically neutral approach to regulation and an independent regulator.  He
recalled Norway's study, presented to the CTS, which highlighted the benefits of liberalisation for
developing countries and urged all Members to undertake commitments, particularly in satellite,
mobile, fixed line telephony and internet services.
202. The representative of Korea, referring to paragraph 4 of the Colombian proposal, noted the
need to protect spectrum and agreed that it did not need to be included in a schedule.  He further noted
that according to Chairman's note (S/GBT/W/3), spectrum management policy need not be noted in
the market access column.  Moreover, he noted that Article VI of the GATS and paragraph 6 of the
Reference Paper refer to spectrum allocation and management.   Referring to paragraph 8 of theColombian proposal, the delegate requested that Colombia explain why it felt that elements of the
Reference Paper should be included in the Annex.
203. The representative of Australia, speaking on classification, noted that Australia felt that the
Internet should be viewed in terms of its component  services including aspects of basic, value added
and content services.  Internet delivery services, in the form of un-transformed packet-switched data
services from point to point, were a basic telecommunications service and the Reference Paper should
thus apply.  With regard to market access and national treatment, Australia supported better
commitments and fewer regulations on national presence, for example, restrictions requiring joint
ventures.  Australia supported wider adoption of the Reference Paper.  She stressed the need to clarify
its key concepts, including competitive safeguards (para. 1), interconnection (para. 2), transparency(paras. 2 and 4), independence of the regulators (para. 5) and allocation of scarce resources (para. 6).S/CSS/M/13
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Finally, she urged Members to promote fair competition for international Internet interconnection
rates.
204. Addressing the issues of market access and national treatment, the representative of Japan
encouraged improved commitments, particularly those pertaining to restrictions on the participation of
foreign capital, on the variety of services that can be offered, the number of operators, the movementof management personnel and residency.  Referring to Article IV of the GATS, he noted that
liberalisation in developing countries would contribute to economic growth.  Japan felt that MFN
exemptions were subject to negotiations and that countries should work to eliminate them, particularly
in satellite communication services.  Japan expressed interest in reducing unreasonably high licensing
charges and in harmonising regulations at the sub-state level.
205. The representative of the United States called on Members who had not yet done so to adopt
the Reference Paper. With respect to classificatio n issues, he noted that companies needed stable
investment environments, which were ensured by trade commitments.  Value-added services was a
broad enough a category that it could include new technologies including services offered over the
Internet.  The functional descriptions of these services in the current commitments captured Internet-
based services.  Regarding a distinction between basic and value-added services, the United States
considered this definition narrow in order to avoid imposing "legacy regulatory constructs".  Forexample, on the question of packet-switched transmi ssion services falling into the basic category, the
United States acknowledged the argument that some Internet services should be considered basic but
only inasmuch that they transmit telecommunication services but not where such services fell under
the enhanced or value-added category.  It could not be inferred from the fact that internet access
services required packet-switched transmission that Internet services were basic services.  Withrespect to market access and national treatment, the United States felt that greater liberalisation aided
in the improvement and expansion of telecommunications infrastructure, which was critical for
economic growth through a modern networked econom y.  With respect to regulatory issues, the
United States agreed with calls for countries not having done so to adopt the Reference Paper.
However, he noted that it may not be the appropriate time to apply these principles to other areas,particularly new services which were experiencing competition.  The document was applicable to so-
called "legacy monopolies" and useful in regulating major suppliers who leveraged their market
power in basic services into other sectors.  The Unit ed States stated it would be willing to explore how
the Reference Paper might address this potential issue and the possible role of the
Telecommunications Annex.  As for Article IV related issues, the United States reiterated its position
that Members could foster investment in advanced networks by removing barriers to investment and
competition, and particularly reducing monopoly power.  He urged the privatisation of the dominantprovider and the creation of an effective independent regulator. A vibrant telecommunications market
was promoted by privatisation.  This, along with the presence of an independent regulator, would
signal to investors that a country had opened its telecommunications market to competition.  The
effects were felt by all sectors who relied on telecommunications to order, market or deliver their
products.
206. In reaction to Colombia's proposal, the representative of Peru stated that his country had
pursued an open and autonomous policy in this sector characterised by its modernisation and
increased benefits to consumers.  Referring to paragraph 6 of the Colombian proposal he agreed with
the need to remove obstacles to Internet access, in particular excessive connection charges.  With
respect to paragraph 8, he inquired as to why Colombia considered only some aspects should beperfected and improved and not others.
207. The representative of Singapore agreed with Members who called for further liberalisation in
this sector and the need to adopt the Reference Paper.  She underlined the need to clarify terms such
as competitive safeguards, interconnection, transparency, independence of regulators and allocation of
scarce resources in the Reference Paper.  She stressed the need, in line with Article IV of the GATS,for flexibility on the issue of full liberalisation and suggested progressive liberalisation for developing
countries.  The ITU, APEC, WTO and individual  Members could help increase the transfer ofS/CSS/M/13
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technological know-how and assistance to developing  countries.  Finally, on the topic of international
charging arrangements for Internet services, Singapore expressed disapproval for regulated
settlements and a preference for commercial solutions supported by governments.
208. Commenting on the Colombian proposal, the representative from Hong Kong, China noted
that paragraphs 6 and 7 contained elements important to the development of e-commerce.  Hong
Kong, China also supported an end to MFN exemptions.  With respect to spectrum availability henoted that, under Article VI of the GATS, spectrum and frequency management measures did not
need to be listed.  These should not prevent countries from possibly undertaking further market-access
commitments.  He stated that Hong Kong's e xperience demonstrated that improvements in
infrastructure helped the delivery of other services and was beneficial to other sectors.  He agreed that
further liberalisation needed to be flexible and to take into account levels of development.
209. The representative of the European Communities, speaking on the issue of classification,
noted that most Members were of the view that the current classification under W/120 was acceptable.
On market access and national treatment commitments, the Communities called for full market access
and the adoption of the Reference Paper.  He noted that competition within a regulatory framework
provided a cheap, reliable telecommunications infrastructure, which supported the rest of the
economy.  He agreed with Colombia and Mexico that the Reference Paper could become a
multilateral framework for all WTO Members.  New rules should only be considered once all haveadopted the Reference Paper.  He recalled that the portions of the Reference Paper that deal with
universal service goals were sufficiently flexible to accommodate different levels of development.
Referring to Article IV, he noted the contribution that the telecommunications sector made to
development and to the economy as a whole.  Action to assist developing countries in establishing a
regulatory framework and an independent regulator should be considered.  Finally, he agreed withthose calling for an end to MFN exemptions particularly those relating to satellite services.
210. Referring to the United States statement with respect to the classification of basic versus
value-added services, the representative of Brazil suggested that the conclusions put forth by the
United States could be interpreted to imply that Internet telephony would be classified as a basicservice.  He observed that, by this implication, if IP telephony were a basic service, then thedisciplines of the Reference Paper would apply.
Audiovisual Services
211. The representative of Japan said that, in ligh t of recent developments in the information
technology industry, the economic importance of audiovisual services was increasing.  New
commitments should be undertaken.  The liberalization of audiovisual services was not incompatible
with the protection of cultural diversity.  A fr amework where liberalization and cultural diversity
would coexist could be elaborated.  MFN exemptions taken in this sector should be terminated early.
212. The representative of Hong Kong, China said that her delegation was interested in further
liberalization of the audiovisual sector.  On market  access and national treatment, there were problems
of discriminatory treatment both between national and foreign producers, as well as among foreign
producers.  Discriminatory taxes targeting foreign films or restrictions to channel distribution were
examples of such discriminations.  His delegation failed to see how cultural diversity concerns couldjustify discrimination among foreign suppliers and feared that cultural diversity might be a disguised
means of protectionism.
213. The representative of the United States noted that all proposals agreed on the need for work
on classification because this sector had changed significantly since the Uruguay Round.  One
proposal referred to the "new audiovisual sector",  another spoke of the IT revolution and a third
questioned the relevance of telecommunications, audiovisual and cultural policies to new services.   In
light of the numerous questions that Members had raised about the current classification of
audiovisual services in W/120, the United States t hought there was interest in reviewing the different
activities that constituted the audiovisual sector today to develop a clear and comprehensiveS/CSS/M/13
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understanding of where the different elements of the sector were classified in W/120.  The discussion
should also consider including in W/120 any audiovisual or audiovisual-related services.
Classification work might be carried out in conjunction with discussions of related issues, such as
market access and regulatory issues.  On scheduling market access and national treatment
commitments, virtually every Member referred to th e importance of scheduling such commitments in
the context of a public concern for the promotion and protection of cultural values and identity.  His
delegation concurred with that position.  The United States also agreed that the GATS seemed to
provide appropriate tools for achieving liberalization without losing the autonomy to regulate in order
to promote cultural objectives.  Should there be sufficient interest on the part of Members, it could be
useful to discuss further the relationship between these two objectives.  On regulatory issues,
Members were in general agreement on the right to regu late to foster cultural identity.  In this regard,
many Members noted the importance of being able to provide subsidies to their audiovisual sector.As stated in the United States paper, his delegation agreed with these objectives and, in conjunction
with negotiated commitments for audiovisual services, had indicated that Members might also want to
consider developing an understanding on subsidies that would respect each nation's need to foster
cultural identity, possibly by subsidizing theatrical film production.  He also noted that one Member,
whose focus was primarily on broadcasting, had raised a broad range of regulatory issues, includingpublic services obligations, diversification of the supply of audiovisual content, and protection from
socially harmful content.  All these issues should be further discussed.  The United States was
sympathetic to concerns raised in relation to the importance of progressive liberalization for
developing countries and the importance of mainta ining the right to regulate to protect cultural
identity.  When talking about liberalizing trade in audiovisual services, the focus should be ondeveloping an open and comprehensive set of rules.  This was especially important for this sector
since creating audiovisual content required costly fixed investments and commercial success, which
depended in part on the number of markets in which the creator could exhibit that content.  The
potential existed to provide all Members a policy instrument to address cultural identity issues without
creating market access uncertainties.  Another issue of interest to developing countries was the role ofcommercial entertainment in the creation of advanced telecommunications infrastructure.  At the same
time, as new technologies had transformed the audiovisual sector, the audiovisual sector was playing
a role in fostering new technologies.  Electronically delivered audiovisual products and services, for
example, which increased use of the network, were  helping to create an environment that would
encourage investment in the digital network of tomorrow.  Advanced telecommunications
infrastructure in turn benefitted the development and distribution of local culture, creating the
possibility of a win-win situation.  He noted that certain MFN exemptions provided flexibility toaccommodate legitimate cultural concerns.  For example, the high cost of producing a feature length
motion picture today was in many cases beyond the financial capacity of a single production company
in a given country.  Co-production agreements, which inherently favoured the signatory parties,
provided many countries with the possibility of financing a feature length film.  MFN exemptions
taken for co-production agreements could be viewed as one way for the GATS to accommodatelegitimate cultural concerns.
214. The representative of Brazil said that, at this stage, his delegation was of the view that the
discussion on classification was closely linked to the on-going debate on digital deliveries.  His
delegation recognized the importance of cultural identity objectives.  The flexibility provided by the
GATS might not be sufficient.  Hence, Members migh t look at trade remedies, such as anti-dumping,
safeguards, and/or competitive disciplines.  "Non-trade concerns" in this sector could be
accommodated within trade rules, as in other areas.  Subsidies might be considered for motion picture
production and distribution.
215. The representative of Uruguay supported the written communication presented by Brazil.
216. The representative of the European Communities said that this sector was very sensitive for
many Members.  The EC had a genuine concern to preserve cultural diversity and was not motivated
by protectionist intents.  Foreign film penetrati on in Europe already amounted to 80 per cent.  His
delegation remained to be persuaded that the sector had changed and that a classification exercise wasS/CSS/M/13
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therefore needed.  The delegation of Brazil had raised interesting ideas in relation to trade defense and
competition policy issues.
217. The representative of Turkey supported the comments made by the European Communities.
(v) Construction and Related Engineering Services
218. The representative of New Zealand said that the focus of its proposal was on classification
issues with the aim of allowing Members to make broad commitments to encompass the broad range
of activities in the construction area.  Regarding market access and national treatment, New Zealand
considered that there was a close linkage between the revision of the current classification and the
ability of Members to make further and meaningful commitments.
219. The representative of Japan supported the proposal made by New Zealand to include specific
commitments encompassing all stages of the construction process, ranging from pre-erection work at
the construction site to the building and finishing work.  In that regard, he asked New Zealand what
the relationship was between this new proposal and the previous proposal to establish a new subsectorcovering multistage construction services in document Job 5479.  Regarding the proposal made by the
European Communities of making further commitments under mode 1, he said that additional
discussion was necessary with a view to identify  the subsectors for which commitments under this
mode of supply could be undertaken.
220. The representative of Australia said that there were no major classification issues to be
resolved in this sector, although his country was open to consider the proposal put forward by New
Zealand that future specific commitments cover all stages of the construction process.  Australia's
focus was to improve the number and quality of commitments, particularly in relation to mode 3.
Australia was also interested in removing restrictions on the ability of firms who had established a
presence or won a contract overseas to bring in skill ed technicians from their home country to assist in
the project.  Therefore, Australia believed that there was considerable scope for greater liberalization
in modes 3 and 4.  Regarding regulatory issues, Australia considered that the development of
disciplines under Article VI.4 of the GATS, including necessity and transparency, would help
contribute to a more liberal trading environment for construction services.  In addition, regulatory
issues to be addressed under the mode 4 negotiations, particularly in relation to more timely,transparent and efficient visa and work permit procedures would be very helpful.
221. The representative of the Republic of Korea said that limitations on market access and
discriminatory treatment of foreign contractors should be removed.  Specifically, limitations on
commercial presence, such as the restrictions on the level of foreign equity ownership, and limitations
on the type of legal entity should be removed.  Similarly, prohibitions or limitations imposed on the
participation of foreign companies in bidding procedures, the discrimination of foreign companies on
bids, excessive requirements regarding local subcontracting, local procurement of materials, anddiscriminatory treatment of foreign companies in taxation and remittance of earnings should be
repealed.  These views, to some degree, were similar to those proposed by Japan, Chile, Australia, and
New Zealand in their respective papers.  Korea's view did not seek the complete dismantling of
inherent systems in place in each country such as the limitations on the participation of large
contractors in small scale projects or requirements concerning subcontracting a certain percentage ofthe project.  It was Korea's understanding that such requirements were the product of country-specific
needs developed over several decades.  Korea believed that flexibility must be exercised in these
matters, thereby permitting such practices provid ed the principle of national treatment was not
violated.
222. The representative of the European Communities said that their proposal covered dredging
services, and suggested the Members could make commitments to cover these services.  A number of
substantial barriers on market access and national treatment remained in the sector.  Negotiations
should focus in particular on restrictions affecting mode 3.  On regulatory issues, the European
Communities stressed the need to reduce trade-distorting barriers to the minimum necessary toS/CSS/M/13
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preserve the quality of the service, public safety and the rule of law.  In that regard, examples
mentioned in the European Communities proposal included controls on land use, building regulations,
technical requirements, zoning regulations, building permits and inspection, and registration of
contractors.  Regarding issues related to Article IV, he said that developing countries had expressed
an interest in construction services.  This sector played a vital role in economic growth and general
economic infrastructure, and could make a useful contribution for developing countries in these
negotiations.  Finally, he reminded Members of the importance of public procurement for construction
services. Dealing with construction services wi thout dealing with public procurement would amount
to leaving aside a large share of the construction activity.  The European Communities would be
pursuing discussions on public procurement in the Working Party on GATS Rules.
223. The representative of Norway noted that many Members had taken commitments on mode 3,
acknowledging the fact that the establishment of construction services suppliers near the site of the
construction project was generally necessary.  There were few MFN exemptions on construction
services, but substantial barriers to trade remained.  Members' commitments still contained a number
of limitations regarding commercial presence, for example on the type of legal entity, on the
participation of foreign capital, on economic needs tests, on the value of transactions or assets, etc.
Given that commercial presence was necessary to operate in this sector, Norway was of the belief thatthere should be freedom of establishment.  Restrictions or limitations in relation to mode 3 should be
reduced or eliminated. Finally, Norway agreed wi th the statement by the European Communities that
this sector could indeed make a very useful contribution to developing country interests in these
negotiations.
224. The representative of Brazil highlighted some of the issues raised in its proposal.  The
proposal was not on construction services per se  as defined in document MTN.GNS/W/120, but also
covered certain professional services, as described in paragraphs 4 and 5 of the said proposal.
Regarding classification issues, Brazil remained to be convinced on the need to adopt a category on
integrated construction services as proposed by Ne w Zealand.  In Brazil's view, if a Member made a
commitment on all the subsectors specified in the current sectoral classification, it would not benecessary to make commitments on integrated construction services.  On market access and national
treatment, the proposal put forward by Brazil made reference to the most common restrictions
affecting the four modes of supply, with an emphasis on mode 3.  On regulatory issues, the most
important issue raised in the proposal concerned trade-distortive subsidies.  This sector was one of the
few in which developing countries had developed a certain degree of competitiveness, which was
seriously hampered by the existence of trade-distorting subsidies granted mainly by developed
countries.  Effective market access was often denied to developing countries, not only because of thepersistence of numerous sectoral barriers but also because subsidy practices caused the diversion of
trade flows. Therefore, Brazil proposed that this issue be considered in the context of negotiations
under Article XV of the GATS.
(v) Distribution services
225. The representative of Colombia introduced his delegation's proposal on distribution services.
His intervention is reflected in document S/CSS/W/120.
226. The representative of Uruguay, speaking on behalf of MERCOSUR, reiterated the importance
of the distribution sector for MERCOSUR and said th at he shared several of the points raised by
Colombia.  He indicated that the proposal submitted by MERCOSUR on the sector had been tabled
within the framework of Article IV of the GATS; indeed, distribution services were a sector where agreater participation by developing countries wa s possible.  The MERCOSUR countries were seeking
the elimination of restrictions on the distribution of products of interest to them, namely agricultural
products and textiles;  this would contribute to increasing the participation of developing countries in
services trade.S/CSS/M/13
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227. The representative of the United States welcomed the submission by Colombia and said that
distribution services were also of interest to his delegation.  He structured his comments along the five
issues identified at the previous meeting.  First, on classification, he said that this could influence the
coverage of the sector.  For example, it had been suggested that, instead of belonging to distribution
services, the distribution of mail be classified as postal services, the distribution of gasoline as energy
services and the distribution of motion pictures as audiovisual services.  He called for clarification ofthis issue.  Second, on market access and national treatment, he indicated that Colombia and others, as
well as the United States, had identified a number of restrictions, including on ownership, number,
size and location of stores, and economic needs tests on pharmacies and groceries.  Third, on
regulation, he called for improvements in regulatory and administrative transparency fairness, an
opportunity for those with problems of zoning to  have an opportunity to present their views to
authorities and community representatives, greater  transparency in licensing and authorization
requirements.  Fourth, on the implementation of Article IV, he said that an efficient distribution sectorcontributed to development and to attracting foreign investment in developing countries.  Fifth, on
other issues, he noted that some elements were not related to services trade, such as restrictions on the
importation of goods, trade facilitation to allow goods to be moved quickly and issues related to
electronic commerce.
228. The representative of the European Communities said that, with respect to classification, his
delegation saw no major problems;  a number of technical issues had been raised in his delegation's
proposal, which he wished to pursue in a technical way in the appropriate forum.  Second, on market
access and national treatment and the implementation of Article IV, he noted that more proposals had
been submitted on the sector by developing than by developed countries, testifying to the sector being
of offensive interest to developing countries and to goods exporters interested in commitments on thedistribution of their exports, as mentioned by ME RCOSUR.  There appeared to be convergence of
views that this was a key sector for economic growth  and the exportation of goods;  substantial gains
could be derived from an efficient distribution sect or irrespective of who owned the network.  Few
commitments had been undertaken in services, so that substantial efforts where required on the part of
all Members during the negotiations towards full commitments.  Third, on regulatory issues, hisdelegation had not raised any sector-specific issue, but he noted that some horizontal restrictions
could have an impact on distribution services, such as unspecified approval requirements or
limitations on the acquisition or rental of real estate, and could be dealt with as regulatory issues.
229. The representative of the Republic of Korea  agreed with the statement by Colombia as
concerned classification and barriers.  He said that distribution was one of the most important service
sector, because of its contribution to enhancing the effectiveness of other sectors and to promoting the
welfare of consumers.  Therefore, the negotiations should aim at achieving further liberalization byeliminating unnecessary barriers and regulations to trade.  He called upon all Members to take into
account in the negotiations the particular situation of least-developed countries and the difficulties
they might be facing in liberalizing this sector.  On classification, Korea was of the view that the
concept of "supply chain" was too broad and migh t contain many issues overlapping with other
sectors, such as transportation.  For the purpose of achieving further liberalization, efforts wereneeded to eliminate or reduce remaining market access barriers and to make domestic regulation more
transparent, objective and impartial, particularly in mode 3.  His delegation would review all measures
and conditions relating to distribution services in order to remove any less favourable treatment.
230. The representative of Switzerland welcomed the submission by Colombia and said that his
delegation would revert to it.  With respect to market access and national treatment, he drew
Members' attention to his delegation's proposal on distribution services, and reiterated their belief that
commission agents' services and wholesale trade could be largely liberalized as they were aimed at a
sophisticated clientele.  As for regulatory issues, he said that distribution services depended first upon
the existence of national regulation and second on its reliable and transparent implementation.S/CSS/M/13
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(vi) Education Services
231. The representative of the United States recalled that questions had been raised concerning the
coverage of the United States proposal, which applied to higher or tertiary education, adult education
and training.  As indicated in that submission, higher education services would encompass both
degree and non-degree courses, whether provided in traditional institutional settings or outsidetraditional settings, including work places, home, or elsewhere.  The proposal also stated that training
services and educational testing services should be included in the concept of education.  Training
services related particularly to higher education, adult education and other education, whereas testing
services generally related to all types of education.  Training services were similar to education
services but generally less theoretical or more job-related, often requiring hands-on operation of tools,
equipment and certain devices.  Educational testing services were a fundamental part of the learning
process used to evaluate the students as well as the course materials.  Those services includeddesigning and administering tests as well as evaluating test results.  Those elements of education
services could be specified in the request and offer process without the need for revising the W/120
Classification list.
232. Concerning market access and national treatment issues, the main purpose of the United
States proposal was to seek commitments from countries that had not undertaken such obligations oneducation and training services.  Aside from all audiovisual services, education services had fewer
commitments than any other sector.  The United States proposal listed a number of obstacles to
education and training services, one of which was "inappropriate restrictions on the electronic
transmission of course materials".  The delegation of Japan and others had asked what was
"appropriate restrictions".  It was very difficult to see any reason that restrictions on electronictransmissions would be appropriate, if the transmissions consisted of nothing more than education
materials, general background and study materials on subjects such as history, business and computer
technology.  Appropriate restrictions might be, for instance, those imposed for reasons of public
morals.  The delegation of Hong Kong, China had asked several questions concerning the treatment of
subsidies, i.e. whether educational institutions would be regarded as supplying services in the exercise
of government authority;  whether mutual recognition or equivalency should serve as a prerequisite
for national treatment;  and how education should be treated by mode of delivery.  In his delegation's
view the GATS would focus more on the educat ion services than on education institutions per se .
Thus, if public or governmental education institutions provided education and training services on a
commercial basis, those activities would be covered by the Agreement as well as the services of
private institutions.  Subsidies or government funding would not be covered by the Agreement as
indicated in Australia's proposal.  Recognition of degrees and other qualifications awarded would bedesirable, assuming the education was of sufficiently high quality to that of host country.  His
delegation envisaged that Members would inscribe in their commitments the conditions under which
degrees and other qualifications would be granted recognition.  Mutual recognition would not be a
prerequisite for establishing local presence (Mode 3) or for transmitting educational instruction across
borders electronically (Mode 1).  For foreign students attending colleges in another country (Mode 2),Members would be able to inscribe in their commitments any exceptions which might apply with
respect to scholarships or grants that might be available for host country students but not for foreign
students.  His delegation expected that the temporar y entry of personnel (Mode 4) would be treated on
a horizontal basis rather than a sectoral basis.
233. With respect to regulatory issues, his delegati on suggested that negotiations address issues on
education and training services that related to lack of transparency and fairness in administering
regulations.  The delegations of the European Communities and Hong Kong, China had asked to
elaborate how domestic regulations on education might be unclear and unfairly administered.  In some
cases, providers of education and training services might find it difficult to obtain authorization to
operate in another country because information on applicable laws and regulations was absent orincomplete.  That placed exceptionally difficult and unwarranted administrative requirements on
foreign institutions, requirements far in excess of what was required for local educational entities,
which served as an example of unfair administration.  In any event, Members would retain the right toS/CSS/M/13
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regulate the sector.  Regarding issues relating to implementation of Article IV, education was
fundamental for developing and upgrading skills and knowledge necessary for economic growth and
development.
234. Regarding classification issues, the representative of New Zealand noted that his delegation's
proposal identified some areas for work, i.e. to expand the scope of the existing classification in
respect of adult education and of other education services.  In other words, what had been proposedwas to work within the existing W/120 structure and improve what was already there.  In respect of
regulatory issues, he said that there was no other sector where the right to regulate was cherished
more by Members and certainly by New Zealand.  His delegation recognized that Members wished to
strike a balance between pursuing domestic education priorities while equally wishing to explore
ways in which trade in education services could be liberalized.  As set out in New Zealand's proposal,
there was scope to achieve that balance including that international trade in education could
supplement and support education policies.
235. Regarding classification, the representative of Venezuela said that the current classification of
education contained definitions that were contrary to the realities prevailing in Member countries,
which had been clearly highlighted during the meeting held on the 5 October 2001.  At that meeting,
Venezuela had expressed its concern about the specific scope and coverage of the W/120, just as the
United States did in its proposal, paragraph 4 of document W/23, and New Zealand in paragraph 6 of
document W/93.  It was necessary to update the definitions in accordance with innovations in the
educational theory and specify the coverage of the W/120.  On market access and national treatment
issues, Venezuela reiterated the importance of respecting the spaces for the implementation of
national policies aimed at acquiring services supplied by developing countries as well as the level of
development of the different Members.  As esta blished in Article XIX of the GATS, developing
countries had the flexibility of opening fewer sectors and gradually increasing access to their markets,
with the possibility of establishing conditions to th at access consistent with the objectives mentioned
in Article IV of the GATS.  As far as the education sector was concerned, those requirements had to
correspond to conditions that ensured a basic level of quality and preserved the sovereignty that
Members should have in that area.  Regarding regu latory issues, she reiterated that in Venezuela
private education was part of the national education system, as laid down by the National
Constitution, Chapter on cultural and educational rights, Article 106.  Venezuela was carrying out a
lengthy process of reform to improve its institutions, which presupposed the disappearance of some
and the restructuring or creation of others.  The legislative body, i.e. the National Assembly, was
discussing a new organic law on education and there was a proposal for a new bill on higher
education, the approval of which would imply the doing away of the current legislation.  That
scenario implied that to define objectives of public policy Venezuela needed to wait for the definitionof the laws that would regulate education services.  However, Venezuela remained ready to discuss
education services under the GATS.
236. Regarding issues relating to the implementation of Article IV, she stressed that the Article
aimed at increasing the participation of developing countries in service trade.  Its implementation was
very important because Venezuela's interest, as a developing country, was to quantify the level ofbenefit that trade in services offered, taking into account that in most cases developing countries
purchased services offered by developed countries.  Her delegation considered that a better
implementation of Article IV could be achieved through additional commitments undertaken by
developed countries, in conformity with Article XVIII of the GATS, to ensure greater participation of
developing countries.  Venezuela urged developed countries that offered education services tofacilitate access to information on registration and recognition of titles and professional qualifications,
as established in paragraph 2:b of Article IV of the GATS.  That would make it possible to define the
mechanisms that were necessary to implement that Article.
237. The representative of Australia said that his delegation had a strong interest in the
liberalization of trade in education services, as indicated in the negotiating proposal presented in
October, document W/110.  Liberalization initiatives provided a means of supplementing and
supporting national education policy objectives, facilitating cross-national intellectual exchanges andS/CSS/M/13
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providing a wider range of choices and opportunities for prospective students.  With regard to
classification issues, his delegation was interested in the refinements and clarifications to the W/120
proposed by New Zealand and was open to further discussion of the merits of that approach.  With
regard to market access and national treatment, Australia's proposal listed a number of impediments
that his delegation wanted to see addressed during the negotiations.  Those impediments includedrestrictions on commercial presence, restrictions on the use and import of educational materials, and
qualification recognition issues that could act as a deterrent to gaining qualifications at overseas
institutions.  In addition, caution needed to be exercised in the regulation of education services
delivered through the Internet to ensure that the benefits of that technology were not stifled by new
and unreasonable restrictions.  On regulatory issues, improving the efficiency of visa procedures and
employment rules regulating the free flow of academics should be a high priority for the negotiations
as well as improving transparency of regulation relating to the education sector.  There wasconsiderable scope for Members to improve the number and quality of commitments in education
services in the GATS negotiations without undermining their national education policy objectives.
238. The representative of European Communities said that it was clear that education was a
sensitive sector as it raised a number of important concerns related to public service considerations.
His delegation had already made substantial commitments on private education, covering fromprimary to adult education, and wanted to stress the importance of training services.  The latter had an
important role to play for the whole economy and in  particular allowed companies to provide courses
to their personnel for specific training purposes.  Regarding Article IV, it was clear that the education
sector could make a very useful contribution to the economic growth and development of countries.
239. Regarding classification, the representative of Korea observed that specific proposals had
been made by the United States, on training and testing services, and by New Zealand on community
education, education agency services, and education services concerning the academic study and
teaching of a sport and recreational activities.  In his delegation's view the existing education
classification should be maintained in order to prevent any possible disruptions.  It was preferable first
to clarify the concept and scope of higher and adult education, and then classify any education servicenot appropriately covered by those under the other education services category.  With regard to
market access and national treatment, additional commitments should be specifically discussed on the
basis of a clear classification of education services, considering the public interest aspect of education.
To protect the public interest certain limitations on market access and national treatment should be
recognized and duly considered by Members.  Re garding regulatory issues, the sovereign right to
determine domestic funding and regulatory policie s should be reserved to individual countries.
(vii) Energy Services
240. The representative of Norway emphasized that the overriding objective behind his
delegation's proposal on energy services was to encourage and facilitate greater commitments in the
sector.  Regarding classification issues, it was essential to take a broad approach when defining
energy services in order to realize fully the benef its of efficient, competitive energy services and to
make economically meaningful commitments.  It was necessary to consider the entire chain of
activities involved in resource identification, production, transmission, transportation and distribution,
sales and marketing, irrespective of whether the activities took place onshore or offshore.  However,
Norway’s proposal was not meant to include the actual production of goods.  The rationale behind it
was that energy industries worldwide were unbundling and a number of independent servicesegments, such as transport, distribution, transmission and specialized services related to offshore
production of oil and gas, had emerged as separate activities provided by dedicated service providers.
However, those structural changes were not reflected in the current services sectoral classification list,
document W/120.  Furthermore, the W/120 did not include a separate entry for energy services, with
the exception of the sub-sector pipeline transportation of fuels, and important energy services werecovered by other categories only.  A model schedule or a checklist for energy services could serve as
a useful negotiating tool and assist Members in making commercial meaningful commitments.  TheS/CSS/M/13
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checklist contained in the proposal had been made for discussion purposes and should be regarded as
work in progress, thus Norway would welcome a di scussion on its content with interested Members.
241. On market access and national treatment, he said that energy services covered a wide range of
relatively different services and all modes of supply were important for improving trading
opportunities.  A significant share of the world production of oil and gas took place offshore and, as a
result, highly specialized equipment and services  for offshore resource identification, exploration,
extraction, production and transportation had been developed.  Those core functions relied on a wide
range of offshore supporting activities such as offshore storage, accommodation, safety and security
services, and transportation of supplies, etc.  Those activities were all key services in a value chain for
oil and gas products and consequently had a natural place in the field of energy services.  For those
services, cross-border mode commitments were indispensable to improve trade.   On regulatory
issues, improved access to reliable, efficient and competitively priced energy services was the main
objective for the liberalization of trade in energy services, which should be pursued by appropriateregulatory disciplines within the GATS framework.  The Norwegian proposal listed rules on
transparency, non-discriminatory  access to energy networks and grids, independent regulators, and
requirements to prevent anti-competitive practices as key elements of such disciplines.  On
implementation of Article IV, he said that improvin g trade would facilitate the effective participation
of all Members in the supply of energy services and increase access to energy services markets fordeveloping countries.  Liberal market access allowed service exporters to diffuse their knowledge and
technical expertise worldwide, while importers benefited from a broad range of energy services at
lesser costs.  Granting liberal market access for energy services was indispensable for promoting the
transfer of knowledge and for attracting foreign direct investment.  Energy services were an essential
infrastructure service and liberalization would in turn strengthen the capacities, efficiency andcompetitiveness for both the overall economy and domestic suppliers of energy services in developing
countries.
242. The representative of Switzerland said that discussions held over the past two years in the
Committee on Specific Commitments and in the Council had shown that the current classification in
the W/120 had to be updated in relation to energy services.  Members had to analyse the proposalssubmitted by different Members in order to achieve an energy services classification that better
corresponded to the market reality.  Regarding market access and national treatment, given recent
developments in the energy market Members should consider undertaking commitments under the
GATS.  However, many countries were at differ ent phases of regulatory development, and thus
competition for energy services varied significantly from one country to another.  All Members had to
understand that varying levels of competition might result in differences as Members undertook
commitments in the sector.  Regarding regulatory issu es, due to the specific nature of energy services,
Members' right to regulate was of crucial importance in the sector.  Members should be free to adopt
regulations related in particular to national policy objectives like supply security, the protection of
consumers, and the environment.  The achievement of objectives in relation with those three areas
should not be endangered by Members commitments for energy services.
243. The representative of Korea said that his delegation was not opposed that energy service be
classified according to activities rather than resources, even though the levels of liberalization were
different among energy resources.  Regarding the distinction between core and non-core services, his
delegation favoured a discussion focused on core energy services.  On regulatory issues, Korea was
going through a restructuring and deregulatory process of the energy industry, such as electricity and
gas, for the enhancement of competition and transparency of the domestic regulation.  That processalso included the intention to privatise the state-owned companies.  On implementation of Article IV,
special and differential treatment should be positively considered in the process of negotiations on
trade in energy services.
244. The representative of Mexico said that in his country there was a monopoly on hydrocarbons,
hence its participation would be limited in terms of commitments.  Under the Mexican Constitution,
the State had sovereign rights to all natural resources such as petroleum and other hydrocarbons.  It
considered them as strategic resources and their management was entrusted to governmental entitiesS/CSS/M/13
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or enterprises appointed for this purpose by the State.  Private sector providers had to abide by
domestic legislation and by the restrictions imposed by the legal regime on the management of their
activities.  Consequently, the private sectors could not take part in the so-called strategic activities.  In
Mexico the State had direct domain over hydrocarbons found in the national territory and over the
strategic activities that were necessary for that industry, its management and operations, which wereentrusted to Petroleos Mexicanos (PEMEX) and its subsidiary entities.  The Mexican State reserved
for itself the following strategic activities:  the exploration and exploitation of crude oil and natural
gas; the refining or processing of crude oil and gas; goods obtained from the refining or processing of
crude oil and natural gas; and the production of artificial gas, basic petrochemical products, their
inputs and ducts; international trade, transport, storage and distribution, including the first hand sale of
crude oil, natural and artificial gas, and of goods obtained from the refining or processing of crude oil
and natural gas as well as from basic petrochemical products.  Even though Article 27 of the MexicanConstitution reserved to the State the exclusive public rights over natural resources, especially energy
resources, the participation of the social and privat e sectors were allowed in the transport, storage and
distribution of gas.
245. When signing commercial treaties with a number of nations, Mexico had maintained
reservations for a number of activities either for reasons of strategic nature or in order to ensure theappropriate application of existing regulations and implementation of policies for the development of
the country's population and industry.  In the list of specific commitments negotiated by Mexico
during the Uruguay Round, a number of reservations had been entered with regard to trade in fuels
derived from petroleum, the trade of liquid gas, and petroleum. Similarly, the GATS excluded
explicitly services provided under governmental authority, such as those mentioned above.  Some ofthe proposals that had been presented thus far in the negotiations could be considered incompatible
with the legislative and regulatory system appl icable in Mexico.  For Mexico, any commitments
should be consistent with its existing laws an d regulations, including the existing commercial
agreements in force, which had allowed Mexico to ma intain intact the activities reserved for the State
under the Constitution.  For instance, it was not possible to establish in Mexico service stationsbelonging to foreign companies, as PEMEX and its subsidiary entities were the only channels through
which such products might be marketed.
246. Regarding classification, he said that energy serv ices had not been dealt with in the Uruguay
Round as a specific sector and thus there was no adequate classification of the productive chain of
energy resources within the W/120.  In order to make  it possible in the future to include commitments
in the schedules, it was necessary to rely on a clear and precise definition of the activities that could
be services associated with the energy sector.  It would be necessary to analyse in depth the activitiesof the production chain, from exploration up to marketing to final users.  Mexico could agree to a
working party or subcommittee dealing with the issue of classification to draw up a list that could be
used as a voluntary instrument for the negotiations.  That effort should be made without altering the
balance achieved in the existing classification and the commitments made by a number of countries
thus far.
247. Regarding market access and national treatment, reducing barriers to trade for services
relating to energy was one of the objectives of the negotiations.  Analysing the commitments relating
to the different modes of supply in the classi fied subsectors, taking into consideration the
characteristics of the organization of the sector in each Member country, represented one of the main
challenges facing the negotiations.  Mexico could take part in that effort and negotiate specificcommitments to the extent that the basis for such negotiations were defined clearly and precisely,
including a classification in accordance with commercial reality, without prejudice to Mexico's
domestic legal regime.  Regarding domestic regulatio ns, as indicated in the preamble of the GATS,
the multilateral framework should respect national policy objectives and the right countries had to
regulate the supply of services in their respective territories.  Given that the energy sector and relatedservices were still highly regulated in many countries, Mexico reaffirmed that it was fundamental that
those regulations be managed in a reasonable, objective and impartial manner.  Therefore, hisS/CSS/M/13
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delegation agreed with many other countries that had suggested the setting up of independent
regulatory entities in each country, which would be in charge of the regimes established for the sector.
248. Regarding implementation of Article IV, the negotiation of services associated to the energy
sector would have to recognize the needs of developing countries, their specific level of development,
and the asymmetries between developed and developing countries.  In the GATS Members had agreed
to enhance the participation of developing countries in world services trade.  The United States'proposal on energy services had recognized that there were important differences in the level of
development of the sector among Members and thus each one should contribute in accordance to its
possibilities.  His delegation felt it appropriate that Members submitted proposals that would enhance
the supply of energy services for developing countries, taking into consideration their production
capacity.   Regarding other provisions of the GATS, it was necessary to recognize that due to
geographical limitations there were also natural constrains in the area of network interconnections
between border countries, which meant that the full implementation of MFN was not possible.  Thathad also been recognized in the proposal by the United States.  Regarding transparency, one of the
main objectives of the negotiations in the sector should be to enhance the mechanisms of
transparency, not only in the formulation and in publication of legislation, regulations, guidelines and
technical standards but also in their implementa tion.  In doing so, the respect for confidential
information relating to the sector should be recognised.  As far as government procurement wasconcerned, Mexico had a very clear regulatory framework in the sector of energy, which had to be
respected.
249. He added that the inclusion of energy services in the WTO could be one of the mechanisms to
enhance the development of the energy sector in countries so as to ensure the reliable and sustainable
supply of energy, both in quantity and at reasonable prices, for the present and the future.  Thedifferent negotiating proposals submitted thus far offered valuable elements that would enhance the
development and commercial expansion of the s ector.  Achieving an international consensus
regarding energy services trade under the GATS’ principles, such as MFN, transparency, market
access, national treatment and progressive liberalization, was a desirable challenge and a viable one as
long as WTO Members expressed their will and achieved specific commitments in the sector.  Even ifMexico could support some of the proposals that had been submitted thus far, his country had a
constitutional regime according to which the State had direct domination over natural resources and
strategic activities relating to such resources.  However, in the area of electrical energy some degree
of private participation was authorized in the generation and independent supply of electrical energy.
As far as transmission was concerned, individuals could only transmit electricity using their own
facilities, as long as those were not connected to the national electrical network.  The Federal
Electrical Commission of Mexico was able to supply services of energy transmission, in accordancewith the provisions applicable to it, to individuals who wished to take on all such services.  The
activities of distribution and sale were reserved to the State and entrusted only to the Electrical
Commission.  Nevertheless, there were possibilities of importing and exporting electricity.  Moreover,
private participation was also allowed in the area of natural gas storage, distribution and sale.  Mexico
would continue discussing the sector in a constructive manner and with an aim to taking part in thenegotiations of concessions where possible.
250. The representative of Canada considered the energy services sector for petroleum and gas to
be a very important one.  Over the past 10 years, there had been a major increase in those services,
including services relating to exploration of oil and gas, extraction services, sedimentation, and
specialized services.  The sector was characterized by a very strong presence of small and mediumsized companies, which required considerable efforts in the context of the negotiations to ensure their
full participation and benefit from the disciplines resulting from the negotiations.  Regarding market
access, he noted that only 33 WTO Members had undertaken commitments relating to services
pertaining to the extraction industry, and a few of those had limited their commitments to advisory
service.  Therefore, the current negotiations offered the opportunity for the liberalization of trade inthose services.  There were some typical barriers  in the sector, for instance, in relation to the
temporary stay of the specialists and professionals in the energy sector, the entry of equipment and
tools necessary for the provision of such services, and arbitrary business and licensing requirements.S/CSS/M/13
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Additionally, a major problem identified by Canada's industry was the lack of transparency, which
existed far too often in the regulatory frameworks pertaining to those services.  The vast majority of
those barriers could be addressed within the context of market access negotiations and within the
current W/120 classification.  Regarding regulatory issues, Canada's initial proposal stated that the
liberalization of oil and gas services did not correspond to a deregulated regime.  The servicesnegotiations did not call into question the rights of governments to regulate to be able to control the
quality of the product, to preserve the environment, and to continue to protect consumers.  However,
it was important that those regulations be clearly defined, transparent and implemented in a fair
manner.  In many countries, including Canada, governments were depositories of national resources
on behalf of their citizens and thus the negotiati on were not about the ownership of the resources.
251. The representative of the European Communities underlined the importance of identifying the
energy activities that would be addressed in the negotiations, as the existing level of awareness for the
classification of energy services was not very high.  Some key principles that should guide Members
when preparing a first checklist for the sector should be a substantial coverage; an energy neutral
approach, without distinctions between energy resources in principle and only taking those into
account where necessary; and excluding activities regarding the operation of production, in line with
what had already been discussed in the CSC.  Doing so would help identify any possible energy
service not covered already by the W/120 and the CPC, and then consider the best solution to take
commitments on those areas.  Regarding market access and national treatment, his delegation had
already stressed the important contribution of the energy sector to the competitiveness of the whole
economy and the fact that recent experiences in different countries opening the sector to competition
had shown, particularly in the EC, substantial decreases in electricity and gas prices withoutundermining important public services consideration.  An examination of the different regulatory
regimes and the organization of the energy sector could be undertaken jointly in order to explore the
possibilities offered in the various energy service activities and the removal of all eventual obstacles.
In doing so, it was necessary to take into account different experiences in terms of positive and
negative results.  That effort could help countries that were actually entering into a process ofliberalization of the energy sector.  Regarding implementation of Article IV, an increased access to
energy services would be beneficial to all Members and in particular to developing countries.  Those
countries, given the importance of an efficient en ergy sector for the whole economy, could gain from
the liberalization as experienced by other countrie s.  Countries could engage in the liberalization
process taking into account existing experiences and establishing the most appropriate framework.
The liberalization of the energy sector had to be accompanied by the establishment of appropriate
competition and regulatory frameworks to ensure effective competition, taking into account theconsiderations regarding national policies objective.
252. The representative of the United States  noted that during the October meeting of the Council
for Trade in Services some 17 countries had made interventions on classification of energy services.
Those interventions had acknowledged the need for further work to define the scope of energy
services and thereby focus the negotiations.  The United States agreed that energy services deserved aseparate negotiation and that further classification work was necessary.  In reviewing the seven
negotiating proposals on energy services, her delegation had noted significant differences among
them.  Five submissions advocated a broad approach, which would encompass the full range of
energy services from upstream exploration to downstream consumer services.  Two of the proposals
focused on opposite ends of the energy services chain: one listed only upstream oil and gas fieldservices, while the other listed only downstream transmission, distribution, and marketing services.
The submissions contained various suggestions conc erning where energy services fitted within the
existing classification system in the W/120, which contained no discrete energy services heading.
Several countries had proposed an index or checklist to show where the different subcategories that
contain energy services were to be found in the W/120.  The United States agreed that the discussionon those different approaches to classification needed to take place and suggested, as a useful starting
point for such a discussion, to extend the classification of energy services to the entire value chain of
that sector, thereby incorporating the different classification proposals that had been tabled to date.
Additionally, it would be helpful to consider moving the three energy specific subcategories alreadyS/CSS/M/13
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in the W/120 into a new energy services division.  S hould it be determined that some energy services
were not found in W/120, those services could then be added to the new energy services division.
253. On market access and national treatment, discussion on energy services indicated that GATS
market access and national treatment disciplines were relevant to the energy services sector.  Virtually
all other countries that had tabled energy services proposals called for liberalization of that sector
through the broadest possible market access national treatment commitments, while maintaininggovernmental abilities to address non-trade public policy goals.  The United States was in general
agreement with those negotiating objectives and had submitted to the Secretariat a copy of the
intervention made at the October meeting of the Services Council outlining a proposed process in
negotiating market access and national treatment commitments.  Inasmuch as most countries had
indicated reservations for broad public policy purposes, the United States felt it useful to clarify those
public policy objectives in relation to market access and national treatment commitments for energy
services.  It would also be useful to discuss the trade barriers that energy service providers would wish
to see addressed through the negotiations.  On regulatory issues, every country that had tabled an
energy services proposal had stipulated that introduction of liberalization, or competition, into the
energy services sector did not mean an unregulated energy sector; that negotiations would not address
ownership of natural resources; and that protection of the environment needed to be considered.  The
United States agreed with those statements.  In addition, the United States had suggested thatdiscussions on regulatory issues should recognize ongoing discussions on securing a transparent
regulatory system.  Several countries had indicated that they were in different phases of regulatory
development and that, as a result, competition for energy services varied significantly from one
country to another.  In that context, her delegation understood that varying levels of competition
might result in differences as Members undertook commitments in the sector.  The proposed outlinefor scheduling market access and national treatment commitments referred to previously took
different phases of regulatory development into account.  Several countries had suggested the need for
a reference paper; the United States felt that other work on energy services needed to advance before
considering the need for a reference paper.
254. On issues relating to Article IV, some Memb ers had indicated appreciation of LDCs' concerns
for capacity building for small and medium-sized businesses and access to technology.  Each of the
energy services proposals tabled pointed to the benefits to national economies, to both energy service
providers and to consumers, that would result from introducing competition in the energy services
market.  Most of those discussions did not distinguish between benefits to develop and developing
countries.  One Member had acknowledged the benefits of competition in energy services to
developing countries while simultaneously requiring special treatment for developing countries, such
as opening fewer sectors and liberalizing fewer types of transactions.  While the United Statesunderstood the needs of developing countries, it wondered at the consistency of that position: failure
to provide significant openings in energy services would result in far fewer benefits and investment to
countries that maintain a patchwork of restrictions.  On other issues, one proposal had pointed out that
since energy services was a sector where governments continued to control directly, own or reserve to
themselves, a significant portion of energy services activities, consideration should be given towhether market access commitments might need to be accompanied by government procurement
commitments to ensure meaningful market access.  The United States found it useful to explore
further that suggestion.
255. The representative of Venezuela reiterated that in the energy services sector the existing
classification was particularly limited and imprecise.   It was necessary to deal with that matter in
order to facilitate the process of requests and initial offers of commitments.  It was well known that
some energy services were to be found throughout the list W/120, which made it difficult to identify
such services.  Venezuela did not wish to make an exhaustive revision of the W/120 but to
concentrate on identifying the energy services sector.  Given the fixed deadline that had been set for
the submission of initial requests for specific commitments, i.e. 30 June 2002, there was a need for aprompt solution to that problem.  For Venezuela, the achievement of an agreement with regard to
classification was a prerequisite to the process of submission of requests and offers.  The existence of
a list of energy services would add certainty and predictability to the negotiations and resultingS/CSS/M/13
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commitments.  Such a list should reflect the comme rcial reality in terms of coverage and details,
offering sufficient flexibility and transparency co nsistent with the GATS and the guidelines for the
scheduling of commitments adopted in March 2001.
256. Regarding market access and national treatment, having resolved the classification issue
would ensure a better understanding of the scope of the commitments to be undertaken and wouldgive more visibility to the alternatives in a given sub-sector.  That in turn, would promote the adoption
of significant undertakings by developed and developing countries.  In taking commitments, it was
necessary to keep sufficient space for the implementation of domestic policies aiming at capacity
building of service providers in developing countries, such providers being mainly SMEs.  Promoting
partnerships and joint ventures between domestic and foreign companies, as well as technology
transfers and the use of human resources, could facilitate the negotiation of significant commitments
from developing countries, while helping such c ountries to meet their development objectives.
Regarding regulatory issues, all Members had acknowledge the right of each Member State to
regulate the provision of services in its territory with the aim of achieving public policy objectives, in
keeping with the GATS.  A related issue was the suggestion for a reference paper, which Venezuela
was carefully reviewing at that time based on the experience with the reference paper in the area of
telecommunications, a precedent that had produced positive results in Venezuela.  In the area ofenergy services, any possible reference paper should include a development dimension to
operationalise the provisions of Article IV of the GATS.  Moreover, it would be beneficial to establish
regimes that were more transparent, more predictable and well regulated for both domestic and cross-
border operations.   The concept of the right of access to a third party was particularly relevant, as it
was indeed a prerequisite for the creation of domestic and international competitive markets.  Therationale behind such a concept was to avoid the abuse of dominant position in facilities.  At a later
stage, Venezuela would give its position on the drawing up of such a reference paper.
257. Regarding implementation of Article IV, the issue was of vital importance for developing
countries, which were keen to determine to what extent they would be benefiting from trade in
services.  It would be a great danger for the liberalization process if those countries were to concludethat their benefits and participation in services trade had not improved.  An effective way of
enhancing the application of Article IV was through additional commitments by developed countries
that would allow developing countries to have an increased participation in the system, as provided
under Article IV.  In fact, Article XVIII of th e GATS stipulated the use of such additional
commitments with respect to measures affecting trade in services.  The Venezuelan proposal on
energy services urged the establishment of a mechanism that would lead to the implementation of the
provisions in Article IV, especially with regard to access to technology and improved access todistribution channel and information networks, in addition to the liberalization of market access in
sectors and modes of supply of interest to developing countries.  On other issues, Venezuela was
particularly interested in developing the existe nce of local service providers, mostly small and
medium-sized service providers (SMEs), and increasing their exporting capacity.  The results of the
negotiations should make it possible to strengthen and stimulate Venezuela’s SMEs service providers,as indicated in the proposal W/69, point 7, stating that Venezuela approached the negotiations from a
perspective broader than the commercial one.  One of the most important objectives was the
development of entrepreneurial capacity.  That required that Members recognize that market entry
obstacles had a higher negative effect on such SMEs because they had scarce resources, which
reduced their capacity to adjust.  Partnerships and joint ventures between domestic and foreigncompanies, as well as technological cooperation and the use of human resources, could facilitate the
negotiation of significant commitments by developing countries.  It was vital, therefore, to promote
complementarity between domestic and foreign companies and to ensure that domestic SMEs found
their place as providers of goods and services for transnational companies.  He reiterated the need to
respect the room for manoeuvre for the implementation of policies aimed at developing the capacitiesof SMEs in developing countries.S/CSS/M/13
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(viii) Environmental Services
258. Introducing the communication presented by her delegation, the representative of Colombia
noted that the specific commitments undertaken in environmental services were based on W/120,
whose focus was on pollution control and waste management.  Traditionally, environmental services
had been supplied by state enterprises owing to the fact that, first, some of these services were of
public benefit and, second, they sometimes constituted a natural monopoly on account of theeconomies of scale involved in the provision of the service itself.  However, the process of economic
deregulation initiated 20 years ago had led to the privatization of services provided by state
enterprises.  The idea underlying this process was that a private enterprise management approach, in
conjunction with a proper regulatory system, would lead to more efficient management in the
provision of the service and ensure wider coverage.  Taking into account that the provision of
environmental services required high levels of investment and expertise, the commercial presence of
foreign enterprises might be beneficial for the developing countries through (i) increased investmentand contribution to capital formation, (ii) technology transfer (iii) wider coverage and (iv) an
improvement in environmental and sanitary conditions.  However, in taking on commitments to
liberalize this sector, the level of development of  the Members should be taken into account.  For
international trade in services to become more ba lanced, developed countries would need to undertake
commitments on market access concerning the movement of natural persons.  With regard toenvironmental services acquired on the territory of another Member the competent authorities should
take into account professional qualifications, on the basis of equivalent levels of education, experience
and examination requirements.  For the negotiation of such services it would be useful to have a
model schedule, with a view to the incorporation of new services which were not envisaged in
document W/120, but which would be specific to the sector and would not duplicate activities alreadycovered in that document.  The proposed classification presented by the European Communities
provided a useful working basis.  In particular, Colombia proposed that the following services be
included:  the implementation and auditing of environmental management systems, the evaluation and
mitigation of environmental impact, and advice in the design and implementation of clean
technologies.
259. The representative of Norway said that the environment industry was a knowledge-based
sector and there was a growing world-wide recognition of the importance of environmental services to
improve environmental protection, remediation and prevention.  This had given rise to an increasing
demand for environmental goods and services.  At the Fourth Session of the Ministerial Conference
in Doha, Members had agreed to negotiate on trade in environmental services, to enhance the mutual
supportiveness of trade and environment.  The current classification in W/120 was too narrow to
cover the range of activities in this field.  Related services should therefore be included in thenegotiations.  As far as the classification of core environmental services was concerned, Norway
considered that the categorisation proposed by the European Communities better reflected trade and
sectoral realities and might increase the possibilities for Members to undertake specific commitments.
Trade and investment were the most direct channels for transfer of environmental technology.
Improved commitments on mode 3 were most important.  Norway also expected improved
commitments in relation to the other modes of suppl y, which would contribute to achieving diffusion
of knowledge and technical expertise.  Environmental services were both a capital- and knowledge-
intensive industry.  The removal of barriers in this sector would increase the availability of these
services and lower their cost.  Cheaper and better quality services would likely be most beneficial in
developing countries where financial concerns were often a key factor in the decision-making process.
He stressed that the liberalization of environmental services should not impair the right of
governments to impose environmental regulations.  Norway attached utmost importance to domestic
environmental regulations and policies.
260. The representative of Switzerland said that the current classification was no longer adapted.
Environmental services should include activities integrating environmental concerns in the production
process.  This was an area where results could be good for the image of the Organization.
Switzerland expected improved commitments on market access and national treatment, mainly on
mode 3.  There was also a need for commitments on mode 4 as the focus on prevention increased theS/CSS/M/13
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importance of consultancy and engineering services.  Liberalization in this sector would benefit
developing countries because transfer of technology and know-how was particularly important in this
sector.
261. The representative of Japan said that the classification of environmental services should be
revised.  His delegation supported the EC proposal but needed to further reflect on the issue of water
distribution services.  As far as core environmen tal services were concerned, Japan supported the
inclusion of services related to the protection of biodiversity, vibration abatement, as well as
remediation and clean-up of water.  Clusters would be useful for negotiations in related services but it
was not clear how they would be used in practice.
262. The representative of the European Communities noted that all the proposals focused on
classification and suggested that W/120 could be improved.  Barriers to trade were encountered
mainly in relation to mode 3, but also mode  4, and his delegation expected further liberalizationunder these two modes.  The demand for environmental services was directly correlated to the level of
environmental regulation.  The challenge was to strike the right balance between the need for
environmental regulation and the need to avoid unnecessary trade restrictions.  The Doha Declaration
had reaffirmed the importance of the "win-win" dimension of open trade and its relationship with
environmental protection, human health and economic development.  Trade in environmental serviceswas one of the most direct channels for the transfer of technology and could also provide incentives
for investing in new technologies.  He suggested th at classification work be sent back immediately to
the Committee on Specific Commitments, which would report regularly to the Special Session.
263. The representative of the Republic of Korea said that international trade in this sector could
help to solve environmental problems.  The current classification was no longer suitable and the
proposal presented by the EC was a good basis.  He supported the proposal made by Colombia that
implementation and auditing of environmental management systems, as well as evaluation and
mitigation of environmental impact be included as sub-sectors.  A checklist of related services could
be used as an aide-mémoire  during the negotiations.  Removal of trade barriers would provide cheaper
and better quality environmental services and, hence, improve environmental protection.Environmental services had been traditionally provided by public authorities but there was a trend
towards privatization.  The negotiations should take into account the different levels of privatization
in Member countries.  Markets should be progressively opened and capacity-building in developing
countries should be promoted.
264. The representative of the United States noted that Ministers in Doha has asked to give
particular attention to this subject.  Classification was the primary issue addressed in the United States
proposal because, as already noted, the current WTO classification failed to account for how businessoperated in this sector and did not reflect cost-effective regulations.  For example, this classification
focused on "end-of-pipe" clean-up services, as opposed to today's focus on engineering and designing
for pollution prevention.  His delegation supported the classification that incorporated a core list of
environmental services comprised primarily of the currently classified environmental services sectors,
along with related services that had not historically been classified as being environmentally-related(e.g. construction, engineering and consulting), but that were nevertheless significant to the provision
of environmental services.  The submissions from Canada, the European Communities and Australia
made reference to a core and related approach – although there appeared to be some dissension
regarding whether the core should be W/120 as it currently was, or, as suggested by the EC,
something broader.  At the same time, the paper by Switzerland, while not using the terms "core" and
"related" did recognize the "integration of environmental services with other services".  Several
examples of this integration were provided, such as professional services and consultancy relating to
the environment – both of which were sectors that would be incorporated into the approach currently
under review in the Committee on Specific Commitments.  He concurred with others that the new
classification would be used to address market access and national treatment barriers.  The UnitedStates was currently trying to assess what type of regulatory issues might be problematic for services
suppliers in this sector.  He stressed that liberalization should not impair the ability of governments toS/CSS/M/13
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impose performance and quality controls on environmental services and to otherwise ensure that
services providers were fully qualified and carried out their tasks in an environmentally sound
manner.  Paragraph 4 of the communication from Colombia noted the important role of investment
and expertise, which could help developing countries to meet their national policy objectives.
265. The representative of Australia said that his government had strong interests in the
multilateral liberalization of environmental services.  With respect to classification, the failure of
W/120 to reflect the economic realities of a rapidly expanding sector was a key theme of most of the
proposals tabled so far.  Australia supported, in principle, the new classification proposed by the
European Communities but considered that there was scope  for adjustment in three areas.  First, it was
not clear that activities such as emergency response to liquid waste spills and secondary waste
treatment, which encompassed composting and worm farms, would be covered under the six
categories proposed by the EC.  Secondly, the classification structure should be adjusted to
accommodate natural resource management activities, which were very important for the Australianeconomy and probably, also for developing country Members.  This set of activities would include
sanitary management, which was an important industry in rural Australia.  Thirdly, there might be
merit in separating the protection of (i) biodiversity and (ii) forests into separate categories to better
reflect Australian conditions.  In Australia, parks were managed solely or primarily for biodiversity
protection and there was a stronger distinction between ecology and habitat protection, on the onehand, and protection of forests, on the other.  His delegation supported the development of a
"checklist" of services related to the environment for use by negotiators.  With respect to market
access and national treatment, the Australian proposal identified a number of mainly commercial
presence restrictions that should be addressed in the negotiations.  Concerning regulatory issues,
Australia would support greater transparency of domestic regulation and efforts to ensure thatobligations and commitments made under the GATS were made operational at all levels of
government, as required by Article I:3(a).
266. The representative of Canada said that liberalization of environmental services could benefit
all countries.  This had been restated in the Doha Declaration.  Classification was an important
precondition for the negotiations on market access and his delegation intended to participate activelyin future discussion to amend W/120.  Environmental services had changed a lot since the Uruguay
Round and each Member should consider commitments which could favour the exchange of
expertise.
(ix) Financial Services
267. Regarding classification issues, the representative of Japan encouraged Members to make
commitments in accordance with the definitions co ntained in the Annex on Financial Services.  The
ambiguity in the distinction between modes 1 and 2 could be solved if each Member inscribed that
distinction in its schedule as clearly as possible.  On market access and national treatment, Japan
proposed that Members expand the level of liberalization in accordance with the Understanding on
Commitments in Financial Services.  Japan expected further liberalization of barriers such as foreign
equity limitations, restrictions on the legal form of commercial presence and nationality and residence
requirements of members of the board and its employees.  Concerning commitments under modes 1and 2, he said that liberalization should proceed with caution, starting in areas where the need for
regulation for consumer protection was relatively low.  The discussion proceeding in international
organizations on the desirable regulatory and supervisory framework should also be taken into
account.  On issues related to domestic regulation, Japan supported the enhancement of transparency,
taking into account discussions in international standard setting organizations.  Issues such aslicensing requirements and procedures were also very important with a view to preserving the
soundness of financial institutions and the stability of the financial system.  Consideration should be
given to discussing those issues in the Committee on Trade in Financial Services, which was the
forum for adequately addressing the particularities of the sector.  Regarding the possibility of
clarifying the definition of prudential measures, he said that Members should be cautious inembarking on a discussion that might limit the right of each Member to take regulatory measures for
prudential reasons in an appropriate and timely manner.  In addition, Members have already madeS/CSS/M/13
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commitments on that assumption.  On the issue of Article IV, Japan agreed with staged liberalization
for developing countries, but it would be essential th at in such cases these countries present a future
plan for liberalization.  In that regard, liberalization of commercial presence could enhance foreign
direct investment in the sector.  Finally, Japan sought the elimination of MFN exemptions based on
reciprocity.
268. The representative of Australia agreed that the financial services sector was essential for
development and, therefore, highly sensitive.  In her view, the various proposals on financial services
included a number of commonalties, including calls for:  (i) reducing restrictions on mode 3;
(ii) resolve the longstanding mode 1 and 2 scope issue;  and (iii) introducing more transparency in
financial system regulations.  Regarding market access and national treatment, Australia was of the
view that Members could benefit from reducing foreign equity caps and easing ownership, citizenship
and joint venture requirements.  Australia would like to see greater access to licenses and branches forforeign institutions, with clear or no requirements to operate in specific regions or lend to specific
sectors.  Australia also sought greater freedom to transfer company personnel and easier recognition
of qualifications obtained overseas. Regarding regulatory issues, harmonizing regulatory structures,
licensing, solvency and operating requirements, and reducing product by product approval
requirements would encourage investment and the deve lopment of healthy financial sectors.  Australia
encouraged prudential regulations that were both tran sparent and effective in ensuring the integrity of
the financial system.
269. The representative of the European Communities supported the use of a common
classification of financial services, and considered that the one contained in the Annex on Financial
Services was the best available.  On market access and national treatment, he said that commitmentsshould be scheduled on the basis of the Understanding on Commitments in Financial Services.  On
mode 3, the proposal made by the European Communities noted a number of restrictions on foreign
shareholding, business and geographical limitations, which need to be eliminated.  Progress was also
necessary with respect to direct branching, subject to prudential requirements in the host country, and
the elimination of economic needs tests.  He added that regulatory best practices should be promotedfor financial services.  In that regard, there was a need for greater transparency and for a necessity
test, particularly concerning licensing and operating conditions, and this should be based upon the
work of international standard setting organizations.  In terms of process, the work in this area should
be coordinated not only with the Working Party on Domestic Regulation but also with the Committee
on Trade in Financial Services, that could take up the work.  Referring to Article IV issues, he
considered that developing countries stood to benefit by making more commitments in financial
services.  Finally, he shared the views of Japan on MFN exemptions.
270. The representative of Norway said that the classification set out in the Annex on Financial
Services and the Understanding on Commitments in Financial Services provided a comprehensive and
transparent basis for scheduling commitments.  Norway encouraged all Members to adhere fully to
the broad definitions used therein when scheduling commitments.  On market access and national
treatment, he emphasized the need for further dismantling of trade barriers in the field of marineinsurance.  Ships transported about 80 per cent of the volume of world trade in goods.  The
development of an open and competitive regime fo r insurance relating to goods and ships - thereby
stimulating freedom of choice - would contribute to reducing the costs of trade.  An open and
competitive regime for insurance related to ships an d goods would also contribute to a more efficient
spreading of risk across countries, making both the industries concerned and the countries involvedmore resilient to shocks.  The Norwegian industry had identified several obstacles to trade in
insurance relating to goods and ships.  Restrictions included, but were not limited to, economic need
tests, demands that national flagged vessels be insured domestically, and overly burdensome licensing
demands and procedures.  Norway encouraged therefore all Members to inscribe the relevant parts of
the Understanding's items B.3 and B.4 in their sche dules, even if the Member should choose not to
schedule commitments on the basis of the Understanding itself.  He also encouraged Members to
consider including in their schedule commitments regarding insurance of risk related to offshore
exploration activities, since this was an area wi th much the same qualities as maritime shipping.S/CSS/M/13
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Regarding the implementation of Article IV, he said that the financial services sector was essential for
a sound economic development.  Granting liberal market access in this sector was indispensable for
promoting the transfer of knowledge and for attracting foreign direct investment.
271. The representative of the Republic of Korea commented only on classification and regulatory
issues.  He recognized that there was perhaps a need to unify the sectoral classification in order to
improve the comparability of Members' commitment s in the long run.  However, he suggested a
careful approach rather than simply adopting the classification contained in the Annex on Financial
Services. Since Members were divided on whether that classification in the Annex could
accommodate rapid changes in the field of electronic finance, Korea was of the view that further
discussion on this issue was necessary.  Regarding regulatory issues, he said that transparency of
prudential regulations should be enhanced to prevent any abuse with the purpose of restricting market
access to foreign suppliers, or for the purpose of reducing the range of foreign suppliers operations.
Account should be taken of discussions being held in the Working Party on Domestic Regulation, butalso reflect on the uniqueness of the financial services sector.
272. The representative of the United States said that the adoption of certain fundamental
commitments in this key sector could contribute importantly to the development of the financial
sector in the country involved.  This in turn would permit greater efficiency and development of the
entire economy.  The potential benefits of liberalization were obviously greatest for those Membersthat had made limited or no commitments to date, a group that included - not incidentally - the poorer
countries.  For that reason, the United States was of the view that the fulfilment of the objectives of
GATS Article IV required the broadest possible participation in financial services negotiations and the
acceptance of fundamental liberalization by Members.  Regarding classification issues, the United
States found a wide degree of agreement that the definitions in the Annex on Financial Servicesprovided a flexible and commonly understood mechanism with which to structure commitments.  As
to barriers on market access and national treatment, all proposals highlighted the importance of
liberalization across the modes of supply.  Many urged that priority is given to commitments on
mode 3, or more directly, that all mode 3 restrictions be lifted.  Those proposals reflected the fact that
such commitments supported long term capital inflows into the country involved and enhancedtechnical capabilities in the financial sector.  The United States noted that classification issues would
be minimized if countries took comprehensive comm itments within a mode.  This would also tend to
maximize the efficiency benefits arising if a single entity could provide a full range of complementary
services.  Support for liberalization under modes 1 and 2 had been widespread, with several Members
supporting adoption of the cluster of commitments in  paragraphs B.3 and B.4 of the Understanding on
Commitments in Financial Services.  The United States noted that the general commitments
envisaged in paragraphs B.3 and B.4 would genera lly not lead to destabilizing financial flows.
Finally, concerning regulatory issues, almost all proposals had supported the maintenance of the
prudential measure provision in paragraph 2.A of the Annex on Financial Services.  Notwithstanding
this, one proposal urged a possible study and a more precise definition of what constituted a
prudential measure, an idea that was not well received by a number of delegations.  Alternatively,
many proposals and Members had supported greater transparency in regulation, especially in theprocess of developing and applying regulations or similarly administered rules.  Some Members
considered that such work should be general and left to the Working Party of Domestic Regulation.
Others considered that progress might be faster on a sector-specific basis and that the importance of
regulation to the financial sector justified an examin ation of transparency in particular, in conjunction
with the other core issues affecting financial services.
273. The representative of India said, with reference to market access and national treatment, that
this sector should be liberalized with greater ca ution than any other, taking into account national
policies and development of Members.  India would not  be able to support removal of restrictions on
forms of commercial presence and quantitative restrictions on the number of foreign service
providers.  On classification, he supported the use of the definitions in the Annex on FinancialServices.  As to the idea of undertaking commitments on all financial service subsectors, it should be
left to developing countries to decide the subsectors on which to make commitments depending uponS/CSS/M/13
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their level of development.  Finally, he supported fuller implementation of Article VII:4 on mutual
recognition agreements.
274. The representative of Uruguay kindly requested delegations to whom questions had been
posed at the last meeting to provide replies to them.  He added that there was no agreed classification
in matters regarding services, including financial services, and that every Member was free to adoptits own classification.  Every Member was free to ad opt the CPC classification or the one contained in
the Annex on Financial Services.
275. The representative of Malaysia reiterated the question posed to Colombia at the last meeting
regarding the meaning of paragraph 11 of the proposal submitted by the latter.  Referring to the
proposal submitted by Switzerland, he reiterated that Malaysia had no flexibility to introduce any
changes to the so-called prudential carve-out contained in the Annex on Financial Services.  Finally,
he supported the assertion that standards set by international standard setting organizations were of avoluntary nature and should remain as such.
276. Referring to their proposal regarding the definition of prudential measures, the representative
of Switzerland reiterated his belief that it would be helpful for financial suppliers because the current
definition was relatively broad. Consultations were carried out with the domestic industry, whichunanimously called for the ideas put forward in the proposal by Switzerland.  He considered that the
best place to discuss this issue was in the Committee on Trade in Financial Services.
(x) Tourism Service s
277. The Chairperson noted that three new proposals had been submitted since the previous
meeting, by Columbia (W/122), Mercosur (W125) and Costa Rica (W/128), indicating a strong
interest in tourism from the region.  He asked these delegations if they wished to introduce theirproposals.
278. The representative of Columbia thanked the other two delegations for their proposals, and
noted that Columbia’s proposal had several main points.  Tourism had become an industry of
paramount importance for developing countries, because it was an important source of foreign
exchange earnings and of employment creation.  The most important modes of supply as far as marketaccess was concerned were consumption abroad and commercial presence, and therefore full
commitments by Members were needed for both aspects.
279. Restrictions involving an economic needs test to gain market access to tourism-related
activities should be eliminated, the representative stated.  Market access conditions under the presence
of natural persons mode of supply should be improved as well, in order to facilitate the temporary
entry of natural persons supplying services in this sector.  Competent authorities should take account
of professional qualifications related to tourism services acquired in the territory of another Member,on the basis of equivalency of education and using the mechanism of qualification recognition.
280. Anti-competitive behaviour by dominant operators could result in imbalances in the
framework of liberalized trade in services, the representative stated.  Disciplines regulating this issue
could be dealt with in a general manner in accordance with the negotiating mandate from the Doha
Ministerial Conference.  The existing classification of trade in tourism and travel-related servicesshould also be revised to include all services characteristic of this sector. Nevertheless, care should be
taken that the resulting classification does not duplicate the services already included in W120.
281. The representative of Uruguay (speaking on behalf of Mercosur), introduced their proposal,
noted that Mercosur had already presented their views at the previous Special Session meeting.  Their
proposal was not a legal text, and did not prejudice Mercosur’s position in the  negotiations. Thepurpose was to promote liberalization, and to increase developing country participation in services
trade, as referred to in Article IV.S/CSS/M/13
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282. Broadly defined, tourism was regarded as the world's largest industry and one of the most
dynamic, the representative observed, representing over one-third of the total value of world services
trade.  Highly labour-intensive, it was a major source of employment, especially in isolated and rural
areas.  International tourism trade also had strong effects on trade volume and foreign currency
earning.  While tourism had the highest level of GATS liberalization, with over 120 commitments,
full liberalization had not yet been reached, he stated, even within the narrow definition under W/120.Members’ schedules contained a number of barriers and limitations, as noted in Mercosur’s proposal.
Without prejudice to their position on the listing of tourism characteristic products or the annex
proposal, Mercosur proposed that Members take full market access and national treatment
commitments in all four W/120 tourism sub-categories.
283. The delegation of Costa Rica thanked Members for all the tourism proposals submitted to
date, noting they showed the interest of Members in the sector.  Costa Rica had earlier referred to the
importance of tourism for their economy, as well as to the serious consequences of the 11 Septemberattack.  The elimination of barriers was now more important than ever before, the delegation stated,
and this was the main impetus behind the Costa Rican proposal.  Despite the high number of
commitments, obstacles still remained the delegation noted, including FDI limitations, immigration
controls, documentation requirements, currency restrictions and the lack of transparency.  Such
obstacles reduced the benefits from tourism trade, especially for developing countries.
284. The delegation stated it was necessary to recognize the interdependence of tourism with other
sectors, including distribution, publicity services, construction and particularly air transport and,
therefore, important for Members to look at barriers in tourism-related sectors, especially anti-
competitive practices.  Costa Rica considered it important to have a list of services characteristic of or
related to tourism, in order to assess the progress and results in the negotiations from an overallperspective.  The delegation noted that useful proposals had been submitted, but stated that their view
did not prejudice Costa Rica’s final position on the possibility of an annex.
285. Members needed to assume broader and deeper commitments in all modes of supply, the
delegation stated, in particular in Modes 2 and 3.  Disciplines were needed to prevent anti-competitive
practices, for consumer protection, and to ensure access to information.  Account should also be takenof progress in discussions on competition, in accordance with the mandate given by the fourth WTO
Ministerial Conference.
286. The representative of the Dominican Republic stated that his delegation fully supported the
Mercosur and Costa Rican proposals, and most of Columbia’s.  He welcomed the request in Costa
Rica’s proposal to assess the consequences of the 11 September attack, and supported the listing of
barriers in Member’s schedules as input for creating a model tourism schedule.  The representative
noted that the Working Group on Tourism Liberalization, at their recent Madrid meeting, had decidedto draw up a preliminary version of a model schedule, including requests relating to horizontal
measures and MFN exemptions.
287. By focusing on schedules, however, Members were ignoring other problems, the
representative stated, especially the anti-competitive practices of tour operators and airlines.  He asked
for views on this point, mentioning a press report stating that hotel managers in a  Mercosur countrywere forced to reduce their profit margins by 30% due to anti-competitive practices by certain tour
operators.  Unfortunately the Doha Ministerial Conference did not launch negotiations on
competition, he stated, but simply enumerated issues for further discussions, none of which were
substantially relevant for international tourism.
288. The anti-competitive practices of tour operators and airlines were examples of abuse of
dominant positions, the representative stated.  Airline practices were the result of sectoral exemptions
in the countries of origin, an issue not addressed in the Doha Ministerial Declaration.  Pro-competitive
disciplines must be adopted, he stated, in order to allow tourism destinations to retain a greater level
of value-added.  The representative re-emphasi zed the annex proposal, which now included Kenya,
and stated that it could only be discussed in the Special Session.S/CSS/M/13
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289. The delegation of Peru stated they felt the new proposals complemented W/107.  On
Columbia’s proposal, they agreed with virtually all points, especially on eliminating  ENTs and
increasing market access in all modes of supply.  On para 9 of the paper, however, they had a
different approach, and reiterated their support for W/107 and the creation of a tourism annex.  On
Costa Rica’s proposal, the delegation made special reference to the importance of para 7 regarding theanalysis of schedules.  They also agreed with the Mercosur proposal on the concrete linkage between
tourism and Article IV and the Negotiating Guidelines.  Regarding MFN exemptions, he questioned
how Mercosur intended to deal with them in the current negotiations.
290. The representative of Mexico thanked Members for the tourism proposals to date, stating they
all contained important elements.  Regarding Columbia’s proposal, Mexico agreed that the facilitation
of border flows was a fundamental issue, and believed that other facilitation measures should be
addressed as well.  The representative noted that Mexico had a national project for tourismfacilitation, including the listing of objectives, identification of the responsible authorities, follow-up
mechanisms, etc.  Very good coordination was required between authorities at different government
levels to facilitate efficient deregulation, he said, and to achieve this Mexico had created an executive
commission for tourism.
291. Mexico’s goal was to make its tourism industry more competitive, the representative stated.
Progress had been made, e.g. the creation of pre-documentation procedures for temporary vehicle
imports, which were a fundamental aspect of Mexi co’s tourism.  To facilitate nautical tourism,
Mexico had eliminated certain fees, established clear requirements for cruise ships, etc. Regarding
classification, Mexico believed it was essential to respect the structure of W/120 for the tourism
sector, but was now analyzing Members' proposals.  Tourism was a vital sector for Mexico, hereiterated, and deregulation and domestic openness were two sides of the same coin.
292. The representative of Pakistan said his delegation supported the general thrust of the three
new proposals, and observed that there was a commonality of objectives among the proposals.  There
was a mutuality of benefits for both developing and developed countries, he noted, and developing
countries had a deep-rooted interest in the sector.  Regarding para 9 of Columbia’s proposal, therewas a question of correlation, he stated.
293. The delegation of Morocco thanked the other delegations for their proposals, and stated that
tourism was important for Morocco, both in terms of employment and share of GNP.  The objective
of negotiations should be to improve GATS provisions so as to ensure fair trading conditions in the
sector, through the prevention of anti-competitive practices and international cooperation to ensure
sustainable development and the increased participation of developing countries in services trade.
The creation of a tourism annex, as proposed by  the Dominican Republic and other sponsors, was
therefore necessary, the delegation stated.
294. The representative of the European Communities thanked Columbia, Mercosur and Costa
Rica for their proposals.  All the tourism proposals noted the diverse, interrelated nature of tourism, he
stated.  The EC agreed it was possible, and desirable, to consider tourism and related sectors on that
basis, by means of a checklist for negotiators.  On market access and national treatment, the ECproposed that Members should, as far as possible, remove remaining limitations.
295. The link between tourism services liberalization and related services, e.g. distribution and
construction, and increased investment and economic development was made especially clearly in the
Costa Rican proposal, the representative stated.  The Mercosur proposal showed the considerable
margin for further liberalization.  Regarding re gulatory issues, the EC still had doubts on the
suitability of the annex proposal.  The proposed cluster still seemed very wide, and covered services
activities which did not necessarily share common regulatory problems.  Some issues addressed by
the proposal, such as consumer safeguards, fell outside of the GATS, the representative stated.  At the
same time, the proposal did raise important issues, such as the link between international trade and
competition issues.S/CSS/M/13
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296. On Article IV, the Mercosur and Costa Rican proposals clearly underlined the importance of
the sector for developing countries, the representative stated, as well as the contribution of tourism
liberalization to the economy as a whole.  He reiter ated the EC’s insistence that tourism liberalization
be consistent with sustainable development, and safeguard the environmental balance.
297. The representative of New Zealand welcomed the attention given to the sector, which was
also important for New Zealand.  He echoed the references made by the EC, Costa Rica and others on
the importance of tourism’s linkages to other services sectors, particularly transport.
298. The representative of India thanked the delegations for their new proposals, noting that India
had great interest in the sector.  He observed that India, as reflected in the Minutes, had previously
asked the United States for more information on their reference paper proposal, including asking
which regulatory principles the United States wished  to address, why such issues could not be dealt
with in the WPDR, and whether the United States intended to address any anti-competitive practices
in the reference paper.
299. The representative of Switzerland also thanked the delegations for their new proposals, saying
his delegation supported all the statements on the importance of tourism, and would especially give
careful attention to the tables in the Mercosur proposal.  On classification, Switzerland was not
convinced that the W/120 tourism classification must be revised.  They also felt that the cluster in the
annex proposal was still too wide.  As stated in Switzerland’s proposal, W/79, the “Other” categoryprovided flexibility, and allowed additional tourism commitments.  Some Members’ schedules
already contained such commitments, the representative noted, and the “Other” category could
potentially be used to include elements from a checklist.  In so doing, however, it was important to
avoid including services already covered in other W/120 classifications.  Members should explore the
checklist issue more thoroughly, he said.
300. Market access and national treatment commitments in tourism should be improved, the
representative stated.  Members first needed to examine the remaining hotel and restaurant
restrictions, then to eliminate restrictions and in crease the level of their commitments, especially in
modes 1, 2 and 3 regarding travel agencies and tour operators.  This would have a multiplier effect for
the entire economy.  Further commitments should also be considered for tourist guides, the
representative stated, and mode 4 restrictions also needed to be evaluated.
301. The representative of the United States noted that tourism was the world’s largest services
sector, and said it was therefore fitting that the first proposal in the Special Session was on tourism.
Regarding classification, although all the proposals addressed the broad scope of tourism, the United
States preferred a checklist approach rather than reclassification.  On market access, the United States
was pleased to see the new proposals, and agreed there was still much room for further liberalization.
Regarding regulation, the United States favoured use of transparent and non-discriminatory licensingmeasures, and the removal of arbitrary requirements, together with the elimination of residency and
nationality requirements.
302. To answer India, the representative noted that Members had been working on these issues in
the WPDR, and would also continue work on them in the Special Session.  On issues relating to the
implementation of Article IV, the United States recognized the need for increased participation ofdeveloping countries, and therefore was pleased that developing countries had an active role in the
tourism sector.  The United States hoped that, through further liberalization, the work market would
grow, and that developing countries would achieve their goal of expanded trade in services.  The
representative noted that the United States reference paper proposal included the suggestion to
increase duty-free allowances, as a means of increasing tourism purchases, and to facilitate theholding of international conventions by easing the entry of necessary equipment and supplies.  The
United States hoped that Members could find a way of addressing such issues in the current
negotiations.S/CSS/M/13
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303. Regarding the environment, the representative sa id that the United States statement at the
previous meeting had not been fully reflected in the Minutes.  To repeat, Jordan and other delegations
had asked for more explanation, regarding the United States statement that governments might wish to
take account of sustainable development and environmental goals as they defined their approach to
addressing obstacles. The United States had stated in response that there was concern that over-development would lead to degradation of the environment.  Each country needed to consider the
measures that would assure clean air, water and soil, and preserve natural beauty, historic landmarks,
and the habitat of plants and animals, and address any impact on local populations while developing
land and facilities to attract tourism.  The United States recognized the importance of those
environmental considerations, and the need to taken them into account in plans for tourism
development.  Decisions needed to be made at the national and local levels concerning the location
and amount of construction to take place, and their environmental consequences.  Consistent with theUnited States proposal on transparency in domestic regulation, the United States would hope that
enterprises, community leaders and any other inte rested parties would be given an opportunity to
present their information and views with regard to land use policies, zoning, and environmental
measures.  In this way, any conflicts that might occur between development and environmental effects
could be minimized or resolved, while enabling a broad interchange of ideas.
304. The representative of Columbia then responded to earlier comments by noting that para 9 of
their proposal had been prepared before the Doha meeting.  A clarification would be made in the near
future, the representative stated.
305. The representative of Uruguay (speaking on behalf of Mercosur) thanked the Secretariat for
the tourism background paper, which though written several years ago was still useful, as well as for
organizing the Symposium on Tourism Services, held in February 2001.  He noted that elements of
presentations from the Symposium had been included in Mercosur’s proposal.  The representative
also thanked Members for their comments on the proposal, and said he would transmit the questions
raised by the Dominican Republic and Peru to capital, for a reply as soon as possible.  Mercosur
believed that one of the factors that made tourism distinct from other sectors was the fact that themajority of the proposals were made by developing countries.  This fact should be kept in mind in the
current negotiations, the representative stated, especially with regard to the implementation of
Article IV.
306. The delegation of Costa Rica also thanked Members for their comments, and said they were
still open and flexible on the issue of an annex.  Their proposal had mentioned three main objectives,
which they hoped could be achieved in the current negotiations.  Whatever the outcome on
competition issues, the results should be included in Members commitments, the delegation stated.
307. The Chairperson concluded by suggesting that Members take note of the statements that had
been made.
(xi) Transport Services
Maritime transport services
308. The representative of Colombia introduced its negotiating proposal in document
S/CSS/W/123.  She underlined that maritime transport was an essential input for trade in goods.
Hence, the effective liberalization of this service should result in the elimination of cartels that fix
prices and frequencies, and consequently in lower tariffs and improved service.  The results of the
Negotiating Group on Maritime Transport Services had not been satisfactory.  It was now time to
resume the negotiations according to the 28 June 1996 decision.  Negotiations in the sector should aimto abolish the sector's characteristic market access barriers, such as limits on foreign equity,
nationality requirements for the ownership of national flag vessels and cargo reservations, and
restrictions on international transit between national ports.  Article II of the GATS and the annex onS/CSS/M/13
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MFN exemptions should enter into force.  The sc heduling of commitments should be made according
to the maritime model schedule and its three pillars.
309. The representative of Norway welcomed the Colombian proposal and shared its analysis on
the importance of the sector, on the obstacles, on the MFN issue and on the need to use the model
schedule.  On classification the model schedule adequately covered the sector at the present stage.
Norway had outlined in the checklist contained in its negotiating proposal ways to schedulecommitments in other transport sectors with relevance to maritime transport services,  in particular the
land modes of multimodal services.  Members should use the model schedule as the relevant tool to
schedule existing and future commitments.  This would facilitate the forthcoming request/offer
process by making commitments more transparent and comparable.  Norway had not identified any
question regarding classification that needed to be solved before the request/offer process.  It was of
particular importance that discussions on classification should not divert or delay the negotiating
process on commitments.  On market access and national treatment, Norway's goal was real andmeaningful liberalization, through substantial comm itments by more Members than at present, with
full entry into force of the MFN principle, with few or no MFN exemptions.  The starting point should
be existing or improved offers.  Norway was looking forward to the request/offer process to achieve
these aims.  On Article IV, Norway underlined that its industry recruited personnel from many
nations, among which were many developing countries.  The industry, together with the Norwegianmaritime authorities, provided comprehensive training and education programmes abroad.  A
competitive maritime industry was also a prerequisite for trade in goods that are of great interest to
developing countries.
310. The representative of Hong Kong, China welcomed the Colombian proposal.  On market
access Hong Kong, China associated itself with the Colombian objectives.  On MFN exemptions
Hong Kong, China shared the views expressed by  Norway.  On Article IV, Hong Kong, China
believed that a competitive and open shipping sector would be of significant importance for economic
development through trade.  On classification, the model schedule was a useful basis to work on.
Additional flexibility might be allowed for additiona l elements needed to reflect the business reality.
In particular, consecutive intermodal activities would be an area that deserved further consideration toreflect the increasing demand for integrated transportation services.  Non discriminatory access to the
use of these services could be a first step.  Hong Kong, China also drew Members attention to its
proposal of a checklist of logistics services.
311. The representative of Japan welcomed the Colombian proposal, as well as any future
proposals from developing countries.  He shared the views expressed by Colombia on MFN.  On
classification, he considered further discussions should be pursued on how to integrate multimodal
transport.  It would be practical and effective in that regard to focus discussions on container traffic.
On market access and national treatment in areas such as multimodal transport even commitments
limited to a part of the full service could contribute to liberalization.  The issue of cabotage should be
dealt with carefully in the presence of experts and at a later stage, in view of its sensitivity in many
countries, since it was excluded by Members from the scope of the NGMTS negotiations and from the
maritime model schedule.  On Article IV, an efficient transport system was essential for developingcountries trade.  Japan had provided technical assistance in that regard.  On other issues, Japan
considered that MFN exemptions could not provide a basis for countermeasures or a right to introduce
future restrictions.  On competition issues, Members should take into account the fact that conferences
and other agreements among shipowners were generally exempted from competition rules according
to international and traditional practice.
312. The representative of Korea welcomed the Colombian proposal.  On classification,
 Korea
considered that multimodal transport could be defi ned as transport involving an international blue
water sea leg with the exclusion of cabotage and a land mode (road and/or rail) as an integral part of
the transport chain.  On market access and national treatment, the objective was real and meaningful
commitments by all Members on an MFN basis leading to a higher level of liberalization through theelimination of major market barriers within a fixed timeframe.  The removal of the following
restrictions and barriers had to be sought:  restrictions on foreign  participation in capital;  restrictionsS/CSS/M/13
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on new entrants;  measures that favour national vessels;  and national companies such as cargo
reservation systems or cargo sharing schemes, restrictions on  commercial presence, such as
restriction on the establishment of branch offices by foreign carriers and restrictions on normal
commercial operations, discrimination against foreign carriers in the use of port services,
discriminatory port dues and taxation.  On the modalities of negotiations, some delegations hadmentioned the idea of a cluster approach and/or a logistical approach.  A large majority of delegations
preferred the multimodal schedule approach.  The logistics and cluster approaches would make the
maritime model schedule difficult to use.  In addition the logistic approach would extend the scope of
the negotiations beyond the maritime transport services sector.  Therefore, the multimodal schedule
should be used in the request/offer process.  Finally on MFN exemptions, Korea  supported
paragraph 42 of the Norwegian proposal and considered that MFN exemptions should be eliminated
or reduced at the earliest possible date.
313. The representative of Canada, considered that the 28 June 1996 decision was an effective
starting point for the negotiations. This was acknowledged by several delegations. Further
liberalization should take into account the right to regulate for safety consideration.  A satisfactory
balance of rights and obligations had to be achieved in the future commitments in the sector.
314. On classification the representative of the European Communities noted that all negotiating
proposals to date foresaw the use of the maritime model schedule.  Therefore, the European
Communities would encourage Members, including those who had used W/120 in the past, to use this
tool to schedule any future commitments.  The multimodal dimension was essential.  On market
access and national treatment, the negotiations should be resumed on the basis of the work done in
1995-1996 and subsequently on the basis of the model schedule and its four pillars.  He noted andstressed that the model schedule did not include cabotage.  He also noted that international maritime
transport was already largely liberalized especially when comparing it to other modes of transport.
315. The representative of Australia welcomed the existing negotiating proposals. On
classification, the negotiations should be based on the maritime model schedule and its three pillars.
Multimodal transport should be integrated into the negotiations and Australia was open to explore thedifferent ways through which this outcome could be achieved, such as amendments to the existing
model schedule or through a checklist approach.  On market access and  national treatment, the
removal of restrictions such as those on equities, compulsory joint venture arrangements, cargo
reservations for the national flag, discriminatory taxation and port dues should be addressed during
the negotiations.  On regulatory issues, Australia saw benefits in strong disciplines on transparency
and necessity in domestic regulations impacting on international maritime transport.  On competition
issues, Australia recalled that it had expressed, in its negotiating proposal, an interest in discussingcompetition policy issues relating to port, auxiliary and multimodal services.  Australia was still
considering how best to progress with these object ives bearing in mind that competition disciplines
already exist in Articles VIII and IX of the GATS.
316. The representative of Singapore welcomed the Colombian proposal.  On classification he
supported the scheduling of commitments according to the three pillars model.  The incorporation of
multimodal transport in the negotiations should also be sought and Singapore was open to how this
may be achieved.  On market access and national treatment, Singapore agreed with previous speakers
as to the type of barriers that should be eliminated.  The removal of MFN exemptions should be an
outcome of the negotiations.
317. The representative of the United States considered that the resumed negotiations on maritime
transport services should contribute to the basic principles of transparency and liberalization and to a
more up-to-date description of maritime transport services.  The negotiations should reflect point-to-
point operations as well as any recent developments in this sector.  He noted the support given to the
three-pillar approach, the focus on multimodal operations, and the fact that speakers seemed to
support the exclusion of cabotage from the scope of the negotiations, consistent with previousnegotiations.S/CSS/M/13
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Air transport services
318. The representative of the European Communities indicated that the review of the air transport
annex was a left-over of the Uruguay Round.  In that context the European Communities had
presented a list of activities where developments in the sector had clearly shown that the coverage of
GATS should be expanded.  This was the case in ground handling and airport management.  On
market access and national treatment the European Communities wanted to improve the number andquality of commitments for services explicitly mentioned in the annex.  Commitments should be
undertaken on activities facilitating air transport se rvices, in particular, ground handling and airports
management services.
319. The representative of Australia underlined the fact that, as far as classification was concerned,
the key issue was the definition of what constituted a service directly related to traffic rights.  Many, if
not most, air transport-related services were carried out by commercial providers with no direct link to
air carriers.  Hence, taking commitments for those sectors would merely amount to binding existingpractices as had occurred in other services.  Australia agreed with the European Communities and
New Zealand on the point that existing CPC/GATS classification should potentially cover all related
services.  This showed, once more, the adaptability and the universality of the GATS system.
Without prejudging the outcome of the review of the air transport annex it would be useful to identify
if there were any gaps.  On market access and national treatment, like others Australia encouragedfurther commitments.  Of particular interest were the areas of non scheduled services, dedicated
freight and ownership and control provision.  On regulatory issues, Australia was aware of the
sensitivities surrounding air transport, but underlined  the flexibility offered by the GATS, in terms of
national regulation.  Safety and security would not be imperilled by further GATS commitments.
320. The representative of Colombia introduced its proposal.  Recalling the Chicago convention
regime and the genesis of the annex, Colombia considered that the current system of exchange of
traffic rights between contracting states should be maintained.  Traffic rights and, as a general rule, all
aspects directly related to traffic rights should remain outside the disciplines of the GATS.  Members
should hold discussions on the definition of services directly related to the exercise traffic rights.  It
would be desirable for Members to examine alternative ways of embarking upon a liberalizationprocess for some services directly related to the exer cise of traffic rights, such as ancillary services -
in particular, those related to ground handling services, rental and leasing services, catering services,
and other supporting services, notably cleaning and disinfecting services.  This sector should be
liberalized without detriment to the regulatory and safety measures developed by the ICAO and
competent national authorities, as these measures come under GATS Article VI on domestic
regulation.
321. The representative of the United States, quoting the Colombian proposal to start discussions
on what constitute services directly related to traffic rights and on ways to liberalize them, considered
that these discussion should take place in the framework of the review of the air transport annex.
Such discussions were premature in the Special Session of the Council and it applied even more so to
proposals made to include negotiations of ownership and control of airlines part of the current round
of negotiations on services.
322. The representative of New Zealand welcomed the Colombian proposal.  He considered that
the annex should not be extended and thus the debate would focus on services that were not directly
related to traffic rights.  In that regard New Zealand had made suggestions in its own negotiating
proposal.  Designation was a key parameter in the hard right carve-out.  Numerous activities were not
directly related to traffic rights - ground handling and airport management services, for example.While in certain countries these activities remained the subject of a monopoly or of exclusive rights,
in others they were provided on a market basis.  Commitments should be improved in these areas in
the coming negotiations.S/CSS/M/13
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323. The representative of Canada considered that it was generally acknowledged that it was
preferable to complete the ongoing review of the air transport annex before considering issues not
currently covered by it.  Discussions in the Special Session of the Council were therefore premature.
324. The representative of Norway indicated that he was seeking further liberalization in the air
transport sector while preserving safety and security.  In this light, it would positively consider any
proposal put forward to liberalize air transport and auxiliary services.  Commitments should be
considered not only in the three services explicitly mentioned by the annex but also for areas such as
ground handling, services auxiliary to all modes of transport when delivered in an air transport
context such as storage and warehousing and customs clearance services.  In so doing, international
standards, set up by organizations such as ICAO and the European Civil Aviation Commission
(ECAC), should not be undermined.
325. The representative of Korea welcomed the Colombian proposal and indicated it shared its
main thrust.  Korea was willing to discuss services not directly related to traffic rights, such as ground
handling services.  In pursuing such discussions enough flexibility should be provided to
accommodate the particular situation of each Member, such as the ongoing process of re-
nationalization of those services that are taking place in certain countries for safety and security
reasons.
326. The representatives of Brazil and Morocco  agreed with the position expressed by the
delegations of the United States and Canada.
Other Transport Services
327. On classification, the representative of the European Communities considered that there were
few problems for land transport.  He showed great interest in the proposal made in that regard by
Hong Kong, China on logistics and by Switzerland on auxiliary services.  On market access and
national treatment, the European Communities proposal covered international passenger and freight
transport, maintenance and repair of equipment.  Some exceptional restrictions may need to be takeninto account on a case-by-case basis, particularly for mode 3.  Auxiliary services were also covered
for mode 1,2,and 3, freight forwarding being the most important activity in that regard.
328. On regulatory issues, and more generally on all modes of transport, the European
Communities representative stressed that there was a strong link with trade facilitation.  Some
regulatory practices such as licencing and customs paperwork were of great importance, and close
attention should be paid to these issues during market access negotiations.  On Article IV, the
representative of the European Communities stressed that an efficient transport system was essential
for developing countries.  The sector had high barriers to entry and low returns and was characterized
by tough competition.  Hence, in development terms, the question was more about maintainingcompetition than securing national ownership
(xii) Recreational Services
329. The Chairperson opened the floor for discussions on recreational, cultural and sporting
services.
330. The representative of New Zealand highlighted his delegation’s proposal on sporting services
(W/94).  Essentially a classification proposal, it picked up on a sector experiencing rapid growth, he
stated.  New Zealand’s proposal was intended to fill in the gaps in the existing classifications, as a
range of activities appeared to not be covered.  There was a growing commercial basis, he noted,
especially in the areas of instruction and sporting disciplines;  health, leisure and fitness activities;
and the development and management of sports and fitness facilities.S/CSS/M/13
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331. The delegation of Uruguay thanked New Zealand for their proposal, saying that they were
still analyzing it and might give comments in the future.
332. The Chairperson concluded by taking note of the statements made.
333. By way of conclusion of the discussion on item D, the Chairman said that the Council would
take note of the statements made.  He encouraged Members having raised questions on the proposals
to have them circulated in writing before the next m eeting;  the replies should also be circulated to the
Membership.
E. ORGANIZATION OF FURTHER WORK
334. The Chairman said that, as he had mentioned earlier, the Council should address the
organization of future work taking into account the discussion of negotiating proposals under the
previous item.  He had heard no comments in favour of holding an additional meeting of the Special
Session in February, the possibility of which had been left open.  In his opinion, there were a number
of elements to bear in mind.  First, the Trade Negotiations Committee would be meeting at the end ofJanuary and would decide, amongst other things, which body would be negotiating on services.
Second, the Doha Declaration contained the date of 30 June 2002 for the submission of initial
requests, which was not too far off.  In order to advance work, he considered it important to make
progress particularly on classification and he thought  that a useful way forward would be to entrust
the subsidiary bodies with some of the issues addressed in the Special Session.
335. The representative of Uruguay, speaking on behalf of MERCOSUR, said that the discussion
of the organization of future work would need to take into account the results of the Doha Ministerial
Conference.  It was also important to bear in mind some elements which had been agreed for the work
programme for the services negotiations.  First, in March 2002 the Council would have a stock-taking
session at which it would review progress made in the negotiations and prepare future work.  Second,as foreseen in paragraph 46 of the Doha Ministerial Declaration, the Trade Negotiations Committee
(TNC) would hold its first meeting before the end of January 2002 and establish appropriate
negotiating mechanisms as required to supervise the progress in the negotiations.  Therefore, he
suggested that any decision on the organization of further work be taken only after the TNC had met;
still, given the June benchmark, the opportunity to address this issue should not be lost.  As forholding an additional meeting of the Special Session in February, he was open, but it was first
important to be clear on the what the objectives of such a meeting would be, in order not to duplicate
the work Members would be carrying out at the March meeting.  With regard to the Chairman's
consultations on the subsidiary bodies, he was interested in hearing other Members' views but said
that some caution was necessary in deciding on the organization of future work before direction was
provided by the TNC.
336. The representative of Mauritius thanked the European Communities for the organization of a
seminar on services in Mauritius.  As for the organization of future work, he stressed the issue of
participation was crucial.  The Doha benchmarks, the March 2002 stock-taking and the TNC meeting
in January 2002 were all dates to be taken into account.  As the seminar in Mauritius had shown, one
of the biggest problem in ensuring effective negotiations was the participation of developing
countries, and especially that of least-developed countries and small economies, particularly fromAfrica.  This problem needed to be tackled very urgently.  Mauritius had tabled a submission to the
WTO on what it saw as requirements for the effective participation of developing countries and
particularly of small economies like his own.  For the negotiations to be successful, meaningful and
with the participation of all Members, it was essential that capital-based experts be involved;  this
might prove difficult for developing countries who did not have sufficient resources to this effect.  Hecalled for special consideration to be given to this issue, and for some funds to be ear-marked to allow
for capital-based participation for important meetings, such as the January and March ones, and in
preparation for the June benchmark.S/CSS/M/13
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337. The representative of Venezuela said that even if the discussion of both the horizontal and
sectoral negotiating proposals had significantly progressed, there still remained questions to be
answered, proposals to be analysed as well as the possibility for new proposals to be tabled.  The
latter was particularly important to developing countries, who were in the process of strengthening
their domestic capacity for the negotiations and w ho could make use of the Council to let their
interests be known in the form of negotiating proposals.  The other issues contained in the Negotiating
Guidelines and Procedures, such as the assessment of trade in services and the modalities for the
treatment of autonomous liberalization, needed to continue to be discussed.  Her delegation was
pleased that two important symposia had been agreed for 2002, one on the assessment in March and
one on the movement of natural persons in April.
338. Then, she wished to make two important clarifications with respect to the Doha Ministerial
Declaration.  First, as concerned the benchmarks for the submission of initial requests and offers, shenoted that the Spanish version of the Declaration contained a possible translation error as the
expression "a mas tardar el"  was used.  This expression corresponded in English to "no later than",
which had been used in the Declaration in the paragraph on agriculture where Members' intention was
to set a deadline to agree on modalities for negotiati ons in this area.  However, the term used in the
paragraph on services was "by". The drafters of the Declaration thus made a distinction between "nolater than" (used for agriculture) and "by" (used fo r services).  Her delegation wanted to make clear
that the dates agreed for the services negotiations were indicative dates - and reserve Venezuela's right
to submit initial requests and offers after those dates, which in her delegation's view were not intended
to establish cut-off points in the negotiations - al so in light of progress in other outstanding issues,
including the results of the assessment of services trade and classification.
339. Second, with respect to the negotiations on trade and environment, paragraph 31 of the
Ministerial Declaration stated that "with a view to enhancing the mutual supportiveness of trade and
environment, we agree to negotiations, without prejudging their outcome, on: …(iii) the reduction or,
as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services".  In
her delegation's view, as concerned services, the negotiations had to be conducted under the umbrellaof the Negotiating Guidelines and Procedures agreed for the services negotiations.  The negotiations
on trade in services did not exclude any sector a priori  and as a matter of fact, and environmental
services had been included from the start.
340. As mentioned by MERCOSUR, Venezuela was of  the view that the meeting in March 2002
would be important to review progress made on a ll outstanding issues which required the Council's
attention in order for the request-offer process to be as just and inclusive as possible.
341. The representative of Pakistan concurred with  what Uruguay and Venezuela had stated with
respect to future work:  until clear directions were provided by the Trade Negotiations Committee, it
was not possible to decide on how future work should be organised.  He also recalled that the Council
would hold a stock-taking meeting in March 2002, which would provide adequate guidance and some
useful insights.  Regarding consultations, he was of the view these might be needed, but that Members
should await directions from the TNC.
342. The Chairman said that, irrespective of whether the benchmarks were indicative, they had
been agreed and therefore suggested that Member s make the most of the time leading up to them,
even before more precise directions were provided by the Trade Negotiations Committee.  He thought
that, without prejudice to directions from the TNC, he might conduct consultations about entrusting
work on classification to the Committee on Specific Commitments, a forum open to all Members,which would better prepare delegations, and particularly small ones, for the negotiations.
343. The representative of Peru echoed the statements by Uruguay and Venezuela on the
interpretation of the Doha Ministerial Declaration.  He stressed the importance of technical
cooperation in all areas under negotiation, including services, and supported the comments by
Mauritius in this respect.  With regard to scheduling an additional Council meeting in February, heS/CSS/M/13
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said that his delegation was open and flexible, bearing in mind the March stock-taking.  He
underscored that developing countries had to be able to continue to submit negotiating proposals.  As
for referring work to the subsidiary bodies, he said  that a balance needed to be struck between the
caution expressed by MERCOSUR, and the need, expressed by the Chairman, to make progress so as
to arrive at an understanding amongst Members on a number of issues;  in this respect, he reiterated
his delegation's interest in making progress on classification, the assessment of trade in services andthe treatment of autonomous liberalization.
344. The representative of New Zealand said that, w ith respect to referring work to the subsidiary
bodies, it was important that clear direction and purpose come from the Special Session.  His view
was that this had not been achieved yet, as it was necessary to mandate specific, rather than generic,
tasks to the subsidiary bodies.  He therefore suggested that the issue be discussed explicitly and that
an item on the role of the subsidiary bodies in the negotiations be inscribed in the agenda of the
Special Session.  As for how the discussion should be structured at the March meeting, he was of theview that the present format, including the five headings identified, was working well and should be
retained.  He noted that Members' participation increased at every meeting, thereby favouring greater
understanding and the level of comfort.  As for the possibility of holding an additional meeting in
February, his delegation was flexible, but he observed that some time in February might be needed for
work to be carried out in capitals.
345. The representative of Mexico echoed the comments by MERCOSUR, Venezuela, Pakistan,
New Zealand.  He had also taken note of the statement by Mauritius, which deserved Members'
attention, in particular as concerned technical assistance.  In this regard, he observed that the
Ministerial Declaration of Doha referred in several instances to the need for a technical assistance.  In
his delegation's view, the balance of the negotiations  included three elements:  first, what had been
decided with respect to the Trade Negotiations Committee, which would meet at the end of January
2002;  second, the stock-taking exercise which th e Services Council would carry out in March 2002;
and, third, the Negotiating Guidelines and Procedures, which were adopted and ratified by Ministers
in Doha.  On the suggestion that an additional meeting of the Special Session be held in February, his
delegation was not necessarily in favour, but could agree if the meeting had a clear objective and asubstantive content, and in light of the fact that it would provide an opportunity to Members to make
additional proposals.  On the question of subsidiary bodies, he thought that guidance given by the
TNC would be crucial, also to plan the Council's futu re work and in light of the stocktaking exercise.
He felt that the Chairman's proposal to hold informal consultations with the Chairpersons of the
subsidiary bodies was useful and could help to identify concrete specific points on which delegations
still had to work on.
346. The representative of Malaysia observed that, with the start of the negotiations in other areas
in January 2002, Members would find themselves in a different situation, at least in terms of the
organization and management of the negotiations.  Therefore, he believed that guidance from the
Trade Negotiations Committee, which would meet by the end of January 2002, would provide the
Services Council with a sense of direction.  Wh ile not prejudging what the TNC would decide, he
imagined that there might be some differences in terms of organization and management, but that thesubstantive issues would remain unchanged.  This was important to his delegation, because as far as
Malaysia was concerned, the Negotiating Guidelines agreed in March 2001 would continue to form
the basis of the services negotiations.  When looking at the work ahead, he stressed a number of
concerns of consequence to his delegation.  First, he underscored the importance of effective
participation by all countries, and especially developing countries.  Second, while accepting thosetime lines had been agreed by Ministers, he concurred with Venezuela about those time lines being
indicative dates.  In this respect, he asked for understanding from those countries who were more
advanced in terms of preparation for the market access negotiations themselves, as there could
realistically be some delegations who might not be as ready as others in terms of requests and offers;
he therefore called for flexibility with respect to those time-lines.  Third, many delegations, mainly
from developed countries but increasingly also from developing countries, had submitted negotiating
proposals, and he was concerned whether, with the time-lines in the Ministerial Declaration, theS/CSS/M/13
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process of tabling negotiating proposals would come to an end.  In Malaysia's opinion, this would
continue into 2002, to allow Members to state their positions.
347. As for the holding of an additional meeting in February, he shared the point raised by Mexico.
It was not clear what the  purpose of the February meeting would be;  if it were to be like the current
one, he felt that it would not be productive.  While his delegation was open to discussion, at that stagehe felt that a February meeting might not be necessary unless it was shown to be clearly beneficial.
With respect to the work of the subsidiary bodies, his delegation would need to reflect further;  he
simply noted that, in light of the deadline for the negotiations on emergency safeguards, the Working
Party on GATS Rules would have to meet in 2002 in a more active fashion.  He reiterated Malaysia's
concern with respect to the time-lines set in Doha, as the six-months benchmark was approaching fast;
therefore, his delegation viewed those time-lines as indicative.
348. The representative of Hungary said that his delegation associated itself with the statement
made by the European Communities under environmental services on the question of classification.
He also shared the view that the appropriate place to deal with classification issues was the
Committee on Specific Commitments.  As to a possible meeting of the Special Session in February,
his delegation was flexible.
349. The representative of Nicaragua echoed comments by Venezuela, Uruguay, Pakistan, Peru
and New Zealand.  He firmly believed that positive participation, such as the one shown in the
Services Council, would make it possible for delegations to negotiate effectively.  He also recalled
that, just as in agriculture, the services negotiations were only one part of the whole, and called for a
coordinated and balanced programme to be maintained.  He expressed his country's concern with
starting a negotiating process, which implied undertaking new commitments, without being fullyprepared and in the absence of clear mechanisms, such as modalities for the treatment of autonomous
liberalization, or precise definitions of key topics such as small service suppliers, or clarity about
whether the special and differential treatment provisions were binding or non-binding in the GATS.
He underscored that Members had a shared responsibility of ensuring that a balance was maintained
in the negotiations.  Turning to future work, he did not consider it appropriate to schedule a cluster of
services meetings in the final phase of the preparatory process for the market access negotiations;  the
constraints of small delegations had to be taken into account.
350. With respect to the issue of further work, the representative of India said that his delegation
was flexible on the holding of an additional meeting of the Special Session in February 2002, while
recognizing that further work in the services negotiations would depend on the decisions taken by the
TNC.  He concurred with Mauritius about the importance of ensuring greater and active participation
of all Members, and especially of developing countries, including least-developed countries andsmaller economies.  On the issue of classification, he reiterated his delegation's position that
classification issues, including those arising from the negotiating proposals, should be addressed in
the Committee on Specific Commitments.  Accordingly, he could respond positively to the
Chairman's suggestion that the Chairperson of the Committee on Specific Commitments hold
informal consultations on classification issues.  He agreed that, given the benchmark agreed at Doha,it was highly important for the Committee to address t hose issues in a meaningful way, so as to arrive
at a common understanding before the request and offer stage.  He had similar comments with respect
to the Working Party on GATS Rules.  He concurred with comments about the importance of the
stock-taking meeting in March 2002, could serve to consider how to make progress, subject to overall
guidance and direction of the TNC.  Finally, he agreed with Malaysia that Members could continue tosubmit negotiating proposals in 2002.
351. The representative of the United States supported the idea that the door be left open for
delegations to submit additional negotiating proposals and would certainly welcome additional
proposals.  With respect to the question of a February meeting, his delegation was open:  if there was
important work that could be accomplished at a February meeting, then they could support it;  if not,they understood, like other delegations, that time would need to be devoted in capitals to theS/CSS/M/13
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preparation of requests, and perhaps of additional negotiating proposals, and that it was important to
consider the best use of the time available.  With regard to the organization of future work, he
supported the comment by MERCOSUR about not gettin g ahead of the questions that the TNC would
address at its January meeting.  He had noted the Chairman's statement about the importance placed
by Ministers on the start of the request-offer process.  In the Services Council, as well as in other
WTO bodies, Members had made clear their preference for the request-offer approach to thenegotiations, which would begin on 30 June 2002.  The request-offer approach would reorient his
delegation's work and he believed that it should reorient the work in the Council as well.  On the
question of the role of subsidiary bodies, he was not opposed to the Chairman's suggestion that the
Chairpersons of those sub-committees be asked to consult with Members, but said that, at that stage,
he saw the United States negotiating proposals be st discussed in the Special Session, or in the
negotiating forum to which the TNC would assign responsibility for the services negotiations.
Finally, he restated the interest that his delegation had in making progress on the assessment of tradein services and on the question of modalities for the treatment of autonomous liberalization;  he
remained optimistic that in a near term some progress could be made, and perhaps conclusions
reached, in both these areas.
352. The representative of Cuba endorsed the statements by MERCOSUR and by Venezuela and
stressed the importance of technical and financial assistance being provided to developing countries in
order to ensure their greater participation in the negotiations.  Cuba also agreed that the Services
Council needed to wait for guidance from the TNC, so that, after having carried out the stocktaking in
March 2002, Members be in a position to consider the organization of future work.
353. The representative of Tunisia stressed the importance of the effective participation of
developing countries in WTO negotiations.  In view of the limited resources of developing countries,
in terms of the size of the Geneva-based delegations and of the possibility of financing the presence of
experts from capital, and in light of the considerable work programme ahead, which implied around
13 negotiating mandates, including agriculture and services, and in view of the benchmarks agreed, he
had a few suggestions to improve developing countries' participation in the negotiations.  First, the
holding of simultaneous meetings of the various WTO bodies, and particularly of the ServicesCouncil and the Committee on Agriculture, had to be avoided.  Second, efforts should be made to
provide documents and reports in all three official working languages of the WTO and on time.
Third, he urged the WTO Secretariat, if possible, and developed countries to organize a workshop on
how to prepare and handle negotiating request and offers in services, and in this respect he thanked
the European Communities for the organization of a seminar on liberalization of services under the
GATS.  He fully endorsed what had been stated by Mauritius, and drew delegations' attention to the
fact that developing countries did effectively participate in the workings of WIPO and UNCTAD,mainly because of the presence of capital-based experts, the cost of which was borne by the
organisations themselves, and wondered why the same could not be done also in the WTO,
particularly in view of the negotiations.
354. The representative of Nigeria endorsed and reiterated the concerns expressed by the
representative of Mauritius regarding the participation of developing countries, especially from
Africa, as exemplified by the number of African countries present at that meeting.  The Doha
Ministerial Declaration contained benchmarks, or tim eframes, for the submission of initial requests.
Therefore, the question of participation became even more important.  If a delegation did not
participate in the process leading up to the stated timeframe for the submission of requests, how was it
going to be possible for this delegation to meet the obligations of the given timeframe?  Hisdelegation did not foresee the possibility of getting a delegation which did not follow the process, not
understanding the issues involved, to come forward in June 2002 to submit requests.  It was for that
reason too that Nigeria also shared the views expressed by Venezuela that the timeframe for the
submission of requests was rather indicative.
355. Linked to the question of participation was the issue of technical assistance.  The Doha
Ministerial Declaration contained renewed commitments to improving funding for capacity-building
and technical assistance.  Getting a renewed commitment to improved funding for technical assistanceS/CSS/M/13
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was one thing;  and another was getting the funds in order for the actual delivery of technical
assistance to take place and, in the case of services, at the appropriate time for it to be useful for
meeting the June timeframe.  In Mauritius, the European Communities renewed its promise to address
the technical assistance funding;  he thanked them for their commitment and hoped that the issue of
time would be taken into consideration.
356. On the organization of the future work of the Services Council, his delegation continued to
support the position that all subsidiary bodies should be utilised to their fullest capacity.  Nigeria
would be averse to the proliferation of subsidiary bodies just for the sake of doing so.  He also noted
the two built-in agenda items in the Services Council, namely the stock-taking exercise scheduled for
March 2002 and the deadline for the negotiations on emergency safeguards.  He concurred that some
of the subsidiary bodies could use the time to look at some of the issues in the negotiations, which
touched on their scope of responsibility.  However, he suggested that this take place at the informallevel.  Whatever preliminary views they were able to come up with could be further considered at the
stock-taking exercise.  While making that suggestion, his delegation was however not oblivious of the
important subject of the role of the TNC in its oversight functions in the negotiations.  As had been
suggested by other delegations, any concrete future work would depend on directions which the TNC
would give.  He therefore suggested that whatever future activities Members decided to take by theend of the meeting remain at the informal level, until such a time the TNC was in a position to give
concrete directions.
357. As for the future work programme, the representative of Turkey said that his delegation was
quite flexible and had no difficulty with the Chairman's suggestion.  As for the February meeting, he
said that such a meeting it could be useful, after the TNC had met and before the stock-taking, if itsagenda was clearly determined, but he understood the concerns raised by some Members and was
flexible.  With respect to delegating some work to the subsidiary bodies, his delegation saw no
difficulties;  some of the discussion was of a technical nature and might be best conducted in the
relevant subsidiary bodies, even if these were not in a position to replace this Council, and any
decisions would finally be taken by the Council.  In this regard, he noted that classification issues hadbeen raised in the discussion of specific sectors.  While the W/120 was the main reference for
classification and would remain so until otherwise agreed, there was also an evident need to revise the
classification of some sectors and subsectors, in li ght of developments that had taken place since the
conclusion of the Uruguay Round.  Therefore, he supported the suggestion by the European
Communities;  discussion of this issue in the Council would not be appropriate, given its technical
nature, and would need to be conducted in the Committee on Specific Commitments on the basis of a
work programme and a mandate provided by the Council.  Regarding the work programme onclassification, he felt that the proposals tabled, if the relevant Members so wished, could be discussed
in the Committee on Specific Commitments.  Such discussions, if concluded within a reasonable
period, could provide clarification and be helpful to the work of the Council in Special Session, which
was the competent body for the negotiations.  He could also support the holding of informal
consultations on this issue.  As for the proposal by Mauritius about technical assistance, he believedthat possible action should be taken to that effect within the limit of available resources.
358. As concerned the submission of negotiating proposals, the representative of Japan agreed that
the possibility was still open in 2002 and indicated that his own delegation might also wish to submit
new proposals.  With regard to holding a Council meeting in February, he did not see a need to
convene a heavy Special Session at that juncture, also  in light of the fact that the stock-taking session
would be held right after, in March, but could be flexible if a concensus emerged.  As far as further
work was concerned, he was of the view that there might be room for useful technical work to be
carried out in the Committee on Specific Commitments in the area of classification and possibly also
in the area of technical issues related to the request-offer process.  The usefulness of such a meeting
would depend on the willingness of Members to move things forward in that forum, and he was of the
view that consultations on the issue might be necessary first.  If such a meeting were to take place, he
asked that it be scheduled back-to-back with other subsidiary bodies to allow for the participation of
capital-based experts.S/CSS/M/13
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359. The representative of the European Communities said that his delegation was flexible with
regard to the February meeting and ready to join a consensus.  He had not seen strong support for
such a meeting, and he fully understood those delegations who felt that it was more important to carry
out work in capitals in order to prepare requests.  On the TNC, he concurred that it was important to
see what directions it would provide and what the implications might be for the work of the Services
Council, even if Members had already adopted the Negotiating Guidelines for the servicesnegotiations.  As for the subsidiary bodies, his delegation's suggestion had not been to ask them to do
anything different from what they did, but only to try to use and re-invigorate their work.  He was
flexible with respect to holding informal consultations.
360. The representative of Switzerland said that he saw no difficulties with submissions continuing
to be tabled and recognized that some delegations might have limited resources and required more
time.  As far as the February meeting was concerned, he believed that the March meeting would
suffice, but added that, if a number of delegations were in favour of an additional meeting in Februaryand there was a substantive agenda to discuss, his delegation could be flexible.  Concerning the
organization of further work, he recognized the central role that the TNC would play.  He could also
support the suggestion that consultations be held by the Chairpersons of the subsidiary bodies.  His
delegation attached great importance to the issue of classification, because progress on classification
would facilitate the request-offer stage, and the di stinction between mode 1 and mode 2 in different
sectors, including financial services.  He was of the view that in the immediate future the Council
could continue to work with the existing struct ure, but said that directions from the TNC would
obviously have to be taken on board and implemented.  He said that his delegation was very interested
in seeing progress and reaching well-grounded results in the area of assessment of trade and supported
efforts made in that direction.
361. On the question of the February meeting, the representative of Australia said that his
delegation was not convinced that there was a strong need for such a meeting, but was flexible and
open to joining a consensus.  He thought that the March stock-taking meeting was the appropriate
time to assess the implications of any decisions the TNC might take for the services work programme.
As for the organization of future work, he was of the view that the current structure of the agenda andthe discussion should be retained, at least in the short and medium term, because it ensured the
maintenance of an open process for the discussion of important multilateral issues, such as assessment
and autonomous liberalization, and also of the horizontal and sectoral issues.  The agenda provided an
on-going opportunity for Members to table new negotiating proposals, to ask questions on other
Members' proposals and to respond to those questions.  On the question of subsidiary bodies and the
idea of tasking the Chairpersons of those bodies to engage in informal consultations, he said that the
issue was finely balanced.  At a broad level, the intensity of the work activity of each of the subsidiarybodies would change and evolve over time.  For example, the Working Party on GATS Rules faced a
period of very intense activity in the lead-up to the March deadline for emergency safeguards, while
other committees had less on their agenda at the mome nt.  He thought that classification issues would
receive a new lease of life as the request-offer process moved forward, since Members would need a
forum to explain to each other the classification structure on which their requests were based, if andwhen those requests deviated from the W/120 structure.  He thought that there was a natural
evolutionary process and that it might be difficult to force the pace of this process prior to the 30 June
benchmark by asking Chairpersons to engage in informal consultations.  In the long term, his
delegation was of the view that a Member-driven process was more sustainable;  for example, in
classification, Members who wanted to help lay the groundwork for their requests would take it uponthemselves to introduce issues and to participate more vigorously in the Committee on Specific
Commitments, if they saw benefit in that.  Still, his delegation had an open mind on the issue and was
open to ideas Members might have on ways to use the subsidiary bodies more effectively and
efficiently and would not oppose the Chairpersons of those bodies engaging in informal consultations
if the balance was in favour of that suggestion.
362. The representative of the Slovak Republic, speaking also on behalf of the Czech Republic,
said that she was flexible about the holding of a February meeting, provided that there was a clear
picture of the aim of such a meeting and its usefulne ss.  Concerning the role of subsidiary bodies, sheS/CSS/M/13
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agreed that there were some issues in which progress had to be made before starting the request-offer
process.  Classification was one of those, given its great importance in this process.  Therefore, she
supported holding informal meetings of Committee on Specific Commitments on classification issues.
She said that the definition of the role of the TN C would be determinant for the future work of the
Council.
363. The representative of Canada said that, in the Doha Ministerial Declaration, the paragraph on
services reflected the decision taken by Ministers that negotiations on market access be launched
during the summer of 2002 through the submission of initial requests by 30 June 2002.  Therefore, the
objective of Council's discussion should be to agree on a way to proceed so as to make progress and
be in a position, by 30 June, to launch market access negotiations.  If the TNC was to deal with the
structure of the negotiations in a broader way, he believed that the decision of the TNC would not
prevent the Services Council from addressing what its work programme should be up until the launchof the market access negotiations, and even beyond.  In this context, he believed that Members could
not only submit negotiation proposals beyond that date, but that new proposals could be submitted at
each Member's convenience, as Canada had reserved its right to do as indicated in its negotiating
proposals.  He believed that, during the period leading up to the submission of initial requests, a lot of
work could be done in Geneva, both in the Special Session and in the subsidiary bodies.  These twotypes of fora offered the level of transparency required so that real progress could be achieved in the
negotiations.  Having said that, he did share the opinion expressed by most delegations that a meeting
in February might not be necessary and added that the time might be better used to prepare for the
submission of requests by 30 June 2002.
364. The representative of the Republic of Korea agreed that there was little time until 30 June
2002 and that progress should be made in the examination of proposals and on technical issues.  On
the question of an additional meeting in February, he did not feel a need for such a meeting, since the
Special Session was already scheduled to meet in March, but his delegation could be flexible on the
matter.  As for the organization of future work, he said that this would depend largely on the decisions
taken by the TNC, which would provide clear guidan ce, including on the structure of the negotiating
body.  At the March meeting, the Council should continue reviewing proposals in a more focused
way, on the basis of the five headings identified;  in this regard, he requested the Secretariat to
continue to update its synopsis of the negotiating proposals.  Since a stock taking session was
scheduled for March, Members should try to extract common elements on each of the five headings
under discussion in the context of preparations for the request-offer stage, and also try to decide on
future work until the end of March 2003.  With respect to the subsidiary bodies, he concurred that
they should be utilised to the maximum capacity;  he wished for the subsidiary bodies to be givenclear and specific mandates to discuss classification, regulatory issues, financial services and so on in
a more intensive way.  If a February meeting were to be held, a mandate could be given to the
subsidiary bodies then.  As for horizontal issues, he said that some of them, such as mode 4, the
treatment of autonomous liberalization, MFN exemptions and emergency safeguards, could be closely
related to concessions in the negotiations;  therefore, discussion of such issues should be completed atthe earliest possible time, and to that end a sort of timetable might need to be established.
365. The representative of Jordan echoed comments highlighting the importance of enhancing the
participation of developing countries in the negotiations.  Given the limited financial resources and
technical capabilities available in developing countries, it was essential to provide technical and
financial assistance to ensure an effective participation of all WTO Members in the negotiations.With respect to the work of subsidiary bodies and taking into account the deadlines agreed, she was of
the view that classification issues would be more appropriately dealt with in the Committee on
Specific Commitments.  With regard to a February meeting, she was flexible, as long as the meeting
was substantive and beneficial.
366. The representative of Panama stressed that Members should continue to be able to submit
negotiating proposals.  As for the holding of a meeting in February, his delegation would prefer thatS/CSS/M/13
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such a meeting not be scheduled, given that the Special Session would meet in March.  He said that
the outcome of the TNC meeting in January should not be prejudged.
367. Concluding the discussion on this agenda item, the Chairman observed that, without prejudice
to what the TNC might decide, delegations generally saw little purpose in holding an additional
meeting of the Special Session in February.  He therefore suggested that the Special Session meet
next, as had been agreed, in March 2002.  Members faced a heavy workload in March, as the SpecialSession would need to address the assessment of trade in services, the treatment of autonomous
liberalization and existing as well as any new negotiating proposals, using the same organisational
structure adopted for the December meeting.  The Council's review session of the progress made in
the negotiations, as agreed at the March 2001 meeting, would also take place in March 2002.  He said
that the March agenda would also need to include an item on the organization of future work, which
would naturally be addressed in the light of decisions taken by the TNC.  He would be holding
informal consultations in that regard in due course.  He felt that delegations had not provided a clearsense of direction with respect to issues that might be usefully referred to the relevant subsidiary
bodies for a more technical discussion.  He therefore suggested that the Chairpersons of the subsidiary
bodies be invited to hold consultations in that respect.  The participation of developing countries in
the negotiations, and particularly of least-developed countries and small economies, was a concern
that needed to be considered very seriously, also in light of the 30 June 2002 benchmark for thesubmission of initial requests.  He encouraged delegations to let him and the Secretariat know what
their needs were in terms of technical assistance.  He had noted the suggestion made by one
delegation that a workshop be held on how to prepare and handle negotiating requests in services and
said that he would consult with the Secretariat on how such a workshop could be organized, with the
aim of ensuring better and fuller participation in the negotiations.  He said that the possibility ofsubmitting new negotiating proposals remained open for all WTO Members.  Finally, he noted that a
June benchmark for the submission of initial requests had been agreed in Doha, but presumed that
such a benchmark would not prevent additional requests being tabled later.
368. It was so agreed.
369. The Chairman then invited delegations, for purely logistical reasons, to take note of a notional
and tentative timeframe of meetings for 2002;  this was advisable in light of the intense programme of
work in the WTO in 2002 and the competition for rooms with other WTO bodies.  He proposed that,
in addition to the March cluster, scheduled from  11 to 22 March, delegations retain the following
dates for meetings in 2002:  27 May to 7 June;  15 to 26 July;  21 October to 1 November;  2 to 13
December.
370. The Council took note.
F. OUTLINE OF THE CHAIRMAN 'S REPORT TO THE GENERAL COUNCIL
371. Based on Members' discussion over the previous days, the Chairman indicated that, in his
report to the General Council, he would state that the Council for Trade in Services in Special Session
had met from 3 to 6 December 2001.
372. Under the item on the assessment of trade in services, he would report that two new
submissions had been received by two groups of developing countries, in documents S/CSS/W/114
and 132.  The Council discussed a note that it had requested from the Secretariat, containing a list of
issues that Members might wish to take into consideration when conducting their own assessment.
The outline of a symposium on the assessment of trade in services was also discussed, and the
Secretariat produced a revised draft, taking into account Members' comments.  The draft outline had
been adopted and it was agreed that a symposium would be held within the March cluster of servicesmeetings.  Many delegations stressed the importance they attached to the assessment, which was an
on-going exercise.  Members had to conduct their own assessment, but also think collectively about
the issue.  Further work would provide Members with  an opportunity to engage in the assessment and
help to give direction to their position in the negotiations.S/CSS/M/13
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373. As for the item on autonomous liberalisation, he would state that two new proposals were
submitted, one by Korea and one by a group of developing countries.  The treatment of autonomous
liberalisation was a complex issue, with a number of pending questions.  However, there was
widespread and shared will in the Council to make progress.  As a basis to advance work, Members
asked the Secretariat to prepare a note for the following meeting of the Special Session, building uponan earlier Secretariat note in document JOB(01)/141 and approximating conclusions on criteria and
modalities for the treatment of autonomous liberalisation.
374. With regard to the negotiating proposals, he would report that new submissions were tabled
by a group of developing countries, and the delegations of Korea, New Zealand, Colombia, Costa
Rica and the MERCOSUR countries.  Members addressed all the issues raised in the negotiating
proposals, but, in order to focus the debate on the important issues raised, mostly structured their
interventions on the movement of natural persons and on the services sectors under discussion around5 issues:  classification issues;  market access and national treatment commitments;  regulatory issues;
implementation of Article IV; and other issues, including MFN exemptions.  A Secretariat note on
Economic Needs Tests was also discussed, and it was decided that the issue would be taken up as an
additional horizontal issue at the next meeting.
375. As for the organisation of further work, he would make a brief reference to what had been
decided under item E of the agenda.
G. 
OTHER BUSINESS
376. The representative of Canada said that, at the previous meeting of the Special Session, his
delegation had submitted to the attention of Members a proposal to make available to the public the
Chairman's report to the General Council after every meeting of the Special Session.  In fact, what hisdelegation was suggesting be made available to the public was the outline of the Chairman's report
that had just been presented under item F.  His delegation was making such a proposal for two
reasons:  first, there was significant interest in Canada, and he suspected also in other countries, in the
GATS negotiations from a wide array of organizations as well as from individual companies and
citizens.  He also noted that paragraph 10 of the Doha Ministerial Declaration contained acommitment to "making the WTO's operations more tr ansparent including through more effective and
prompt dissemination of information, and to improve dialogue with the public".  He thought that the
outline of the Chairman's report contained information useful for those people not attending the
meeting to understand the purpose and the type of issues which were being considered in the
negotiations.  While he understood the legitimate concerns expressed by several delegations at the
previous meeting concerning the dissemination of documents, his delegation's proposal focused
exclusively on the type of information that the Chairman had just outlined.  It was not Canada'sintention to suggest that the procedure for the derest riction of other types of documents, such as the
minutes of the meeting, be changed.  His delegation was of the view that the release of the Chairman's
outline to the General Council would be extremel y useful, and understood that other negotiating
bodies in the WTO were already following that practice.
377. The Chairman said that, given that he issue had been raised under Other Business, a decision
on the issue could not be taken.  He added that this was an issue that would be addressed by the Trade
Negotiations Committee but also drew delegations' attention to the fact that, as a matter of practice,
the Chairman's report to the General Council, which was drafted on the basis of an outline presented
at the meeting, was circulated as an unrestricted document within a few days of the meeting.
378. While recognizing the reasons outlined by the delegation of Canada, the representative of
Pakistan said that the issue of the derestriction of documents was under consultation in the General
Council.  Rules existed in this respect, which had been agreed to by the entire Membership, and hecould not support any proposal to deviate from the standard rules of procedure regarding the
derestriction of documents.S/CSS/M/13
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379. The representative of India noted that this issue had come up for discussion also at the
previous Special Session.  While he appreciated the delegation of Canada meeting its proposal, and
agreed that there should be transparency, both for Members as well as for the general public, he
concurred with Pakistan that the derestriction pro cedures agreed to by Members should be followed.
He noted that the Chairman of the General Council was consulting on this issue, along with other
transparency issues, and said that the decisions by the General Council in this regard should not beprejudged.  He added that the Chairman of the Council for Trade in Services was not alone in making
a statement to the General Council and called for sim ilar treatment to be given to all such statements.
380. The representative of the Secretariat said that he had been asked by the Chairman of the
General Council to announce to the Membership th at, following his consultations on the chairmanship
of the Services Council, he would propose that Ambassador Jara of Chile continue to chair the
Services Council for the balance of the tenure of Ambassador Amorim of Brazil, which was until the
appointment of a new chairperson for the new year.
381. It was so agreed.
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