. /.WORLD TRADE
ORGANIZATIONS/CSS/W/77
4 May 2001
(01-2364)
Council for Trade in Services
Special SessionOriginal: French
COMMUNICATION FROM SWITZERLAND
GATS 2000:  Distribution Services
The following communication has been received from the Swiss delegation with the request
that it be circulated to Members of the Council for Trade in Services.
_______________
I. INTRODUCTION
1. The distribution sector is a crucial link between producers and consumers. As such, it
constitutes an extension of trade in goods, for which it opens up essential new market opportunities.
The efficient operation of distribution services guarantees optimal allocation of resources and enables
supply to be matched as closely as possible to demand.
2. Distribution services have an important role to play from a macroeconomic point of view,
although no precise statistical indicators exist.  Distribution is the link between producers and
consumers.  Efficient distribution allows consum ers to enjoy freedom of choice from among a wide
range of products. Boosting distribution service efficiency can contribute significantly to reducing
prices, particularly in view of the important share of distribution in the price of the end product.
Finally, distribution services are labour-intensive.
II. TREATMENT OF DISTRIBUTION SERVICES IN THE GATS
3. The GATS classification list includes four types of distribution service:
(i) Commission agents' services
(ii) Wholesale trade services
(iii) Retailing services
(iv) Franchising
4. In principle, distribution services encompass the distribution of goods as well as a number of
related services, such as inventory management;  sorting and grading of goods into large lots;
breaking bulk and redistribution into smaller lots;  delivery services;  refrigeration services;  sales
promotion services rendered by wholesalers;  and services associated with retailers' businesses, e.g.
processing subordinated to selling, and warehousing and garage services.
5. Some goods, namely certain pharmaceutical, medicinal and orthopaedic products, toxic
substances and explosives, are often excluded from the scope of the commitments undertaken by
Members. Some foodstuffs, beverages and tobacco, together with arms, ammunition and precious
metals, are subject to specific provisions and often not included in the commitments. A number ofS/CSS/W/77
Page 2
import restrictions remain in force (e.g. for reasons of food security) and prevail over the distribution
of goods.
6. The delimitation of distribution services is not always easy.  Some restaurant chains, for
example, are involved in distribution when they sell take-away food.  It is interesting to note that, in
principle, cross-border electronic commerce in goods is covered by distribution service commitments,under modes 1 and 2.
7. As a general rule, few Members have made commitments in the distribution sector
(36 Members).  Most such commitments relate to wholesale trade (34) and retailing (33).  Likewise,
only a limited number of Members have liberalized commission agents' services (21) or franchising
(23). Even so, Members with commitments account for, on average, around 90 per cent of the GDP of
all WTO Members.
8. Switzerland is very liberal in this respect.  The four subsectors are completely open, with the
exception of a few cantonal restrictions under mode 3 (establishment of commercial presence) and the
horizontal restrictions related to mode 4 (presence of natural persons).
9. In mode 1 (cross-border trade) and mode 2 (consumption abroad) there are hardly any market
access or national treatment restrictions in the commitments undertaken by Members. Mode 3
commitments, on the other hand, carry a number of restrictions, the most common being the economicneeds test, licence issuing requirements and restrictions on investment.
10. Distribution, more than any other service sector, is dependent upon the existence and reliable
and transparent implementation of national regulations. Health, safety, urban planning and the
environment are among the reasons often adduced by Members in order to enact rules affecting the
supply of a distribution service. Although such rules are legitimate, they can at times be morerestrictive than is truly necessary.
III. PROPOSALS
11. We hope that more Members will make distribution sector commitments for all modes of
supply, cross-border supply in particular.  Commission agents' services and wholesale trade should be
largely liberalized since they are aimed at a sophisticated clientele.  Market access and nationaltreatment restrictions should be re-examined with a view to their elimination.
12. The list of goods subject to restricted distribution on the grounds of national security, food
security or public health should be re-examined and kept to a bare minimum.  In particular, limitations
on trade in pharmaceuticals, foodstuffs and luxury goods should be, if not abolished, at least confined
to those which are strictly necessary.
13. Given the significance of national regulations affecting distribution services, we feel that the
Services Council needs to examine, in a special session, the pertinence of Article VI (Domestic
Regulation) with a view to clarifying its scope in respect of distribution services.  Members must be
prevented from implementing disproportionate meas ures in accordance with their individual policy
objectives.  At the same time, commission agents' and wholesale trade services, which are directed at
a sophisticated clientele, should be largely exempted from regulatory restrictions.
__________