RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/M/60
10 July 2002
(02-3849)
Council for Trade in Services
REPORT OF THE MEETING HELD ON 5 JUNE 2002
Note by the Secretariat1
1. The Council for Trade in Services held a meeting on 5 June 2002.  The agenda for the
meeting is contained in document WTO/AIR/1810.  The Chairperson proposed that the Council adopt
the agenda as circulated.
2. The Council so agreed.
A. PROCEDURES FOR THE CERTIFICATION OF TERMINATIONS, REDUCTIONS
AND RECTIFICATIONS OF ARTICLE II (MFN) EXEMPTIONS
3. The Chairperson drew the attention of Members to a revised draft of the Procedures for the
Certification of Terminations, Reductions and Rectifications of Article II (MFN) Exemptions,
contained in document S/C/W/202/Rev.2.  The new draft was produced following an informal
meeting on 22 May 2002, at which some delegations had expressed difficulties with some of thelanguage contained in the earlier draft.  The new revised draft contained three sets of changes. The
first changes concerned the first two sentences of paragraph 2, dealing with terminations of MFN
exemptions.  In that paragraph, the first sentence  had been streamlined with the first sentence of
paragraph 3; the changes introduced were of a purely editorial linguistic nature.  A change in the
second sentence, however, added a substantive element to the notification of a Member.  At the last
meeting of the Council, Japan had pointed out that there could be cases where a Member had changed
its understanding of whether a measure required the listing of an MFN exemption.  In such cases, theMember would retain the actual measure, but could remove it from its list of MFN exemptions.  In
order to distinguish these cases from cases where a the MFN-inconsistent measure itself would be
abolished, the revised draft now provided that the notification shall "contain information on the
reasons for the intended termination".
4. The second change in the draft procedures related to paragraph 4, which contained two
options for sentence 3.  The first option had been inserted into the earlier draft to clarify that a
Member may "not object on grounds of loss of any preferential treatment resulting from the proposed
modification."  However, the delegation of the United States believed that that formulation might
introduce an element of uncertainty as to the status of an objection, where a Member's motives for an
objection were not clear.  Therefore, the sec ond option was suggested at the informal meeting of
22 May 2002 to reduce the possibility of cases where such a doubt could arise.
5. The third change in the new draft concerned merely the introduction of a new title before
paragraph 6, to clarify that that paragraph related to the entire set of procedures, and not only to the
procedures for reduction and rectification.
                                                     
1 This document has been prepared under the Secretariat's own responsibility and without prejudice to
the positions of Members and to their rights and obligations under the WTO.S/C/M/60
Page 2
6. The Chairperson recalled that the issue of the procedures for MFN exemptions had been with
the Services Council for some time.  She was confid ent that the current text would adequately fill a
procedural vacuum that had existed since 1995, and hoped that the Council could adopt these
procedures at this meeting.  She requested delegations to indicate whether they had any difficulties
with the text in option 2 of paragraph 4.
7. The representative of India stated that his delegation originally had had difficulties with
paragraph 2 of the procedures, concerning termin ation of MFN exemptions.  One issue of doubt was
the question whether the procedure set out in paragraph 7 of the Annex on Article II Exemptions also
applied to exemptions that were listed without a specified time-period.  Another issue was whether an
MFN exemption conferred rights to those countries  listed therein.  After careful consideration and
after obtaining the views of legal experts, his delegation was nevertheless ready to adopt the
procedures in its present format today.  His delegation could go along with either option inparagraph 4.
8. The representative of Korea requested clarification on the discussions surrounding the two
options in paragraph 4.  He was not convinced that the first option would give rise to legal
uncertainty.
9. The representative of the United States stated that the first option in paragraph 4 allowed for a
degree of subjectivity in the analysis of the intentions behind an objection, while the second option
made it clearer what the intentions behind a possible objection were.
10. A representative of the Secretariat stated that for the case of reduction or rectification of an
MFN exemption, a parallel had been drawn to the situation of changes to schedules of specific
commitments, where each Member had the right to object to a proposed change in another Member'sschedule.  The question arose whether the right to object in the case of MFN exemptions should be
qualified, since MFN exemptions did not establish rights for other Members in the way that schedules
of commitments did.  Therefore, it was suggested to introduce language that made clear that a
Member who was benefitting from an MFN exemption did not have the right to object to a reduction
or rectification on grounds of loss of this preferential treatment.  The concern with the firstformulation was that it might leave open the question of interpreting the intention of the objecting
Member.  Rather, the objection should be based on a more factual element that was easy to verify.
Therefore it was proposed in option 2 to refer to the citation of the loss of preferential treatment.
11. The representative of the European Communities requested clarification on the last sentence
of paragraph 2 of the draft, which provided that "the Secretariat shall issue a communication to all
Members to the effect that the termination of the Article II exemption has been certified".  He
wondered whether the certification could be carried out by the Secretariat, or rather would have to bedone by Members?
12. A representative of the Secretariat stated that the certification process consisted of several
stages.  Technically, a certification was effected when the Director-General, in his function as
depositary of the agreements, certified a change in the treaty copy of the agreement itself.  The
content of the certification was then communicated to Members.  However, a certification wasnormally based on a substantive procedure that took place beforehand, in which Members were
involved through their right to object to any pro posed changes to schedules of specific commitments,
or in the present case, MFN exemption lists.  In the case of terminations of MFN exemptions, there
was no approval stage needed prior to the legal act of certification, since the termination of an MFN
exemption did not require the approval of any other Member.
13. The representative of Korea, supported by the delegation of Mexico
, reiterated that MFN
exemptions should not exceed a maximum period of 10 years in principle, as stipulated in the AnnexS/C/M/60
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on Article II Exemptions.  Paragraph 6 of the draft procedures stated that following "three years from
the date of entry into force of these procedures, the Council for Trade in Services shall, at the request
of any Member, review the operation of these procedures."  The representatives of Korea and Mexico
made clear that the joining of the consensus on the procedures did not prejudice the position of his
delegation as to the permitted maximum length of MFN exemptions.
14. The representative of the European Communitie s pointed to an inconsistency in the French
version of paragraph 2 compared to the English version.  The French version did not mention the
requirement that a notification shall contain information on the reasons of the intended termination.
The representative of Chile stated that the same inconsistency existed with regard to the Spanish
version.
15. The Chairperson suggested that the Council adopt the draft Decision on Procedures for the
Certification of Terminations, Reductions, and Rectifications of Article II (MFN) Exemptions,
contained in document S/C/W/203 with the two changes.  First, all square brackets in the text of the
draft decision would be removed; second, in light of today's discussion, the text of the draft decision
would be amended such that the Council for Trade in Services decided:  "to adopt the procedures for
the Certification of Terminations, Reductions, and Rectifications of Article II (MFN) Exemptions,
contained in document S/C/W/202/Rev.2, with deletion of the text contained in the first squarebrackets in paragraph 4 of that draft."  The inconsistencies in the French and Spanish versions would
be rectified in the final version of the procedures.
16. The Council so decided.
2
B. PROPOSALS FOR A TECHNICAL REVIEW OF GATS PROVISIONS –
ARTICLE XX:2
17. The Chairperson recalled that the proposal to carry out a technical review of GATS
provisions arose out of discussions last year on th e guidelines and procedures for the negotiations on
trade in services.  At the request of Members, the Secretariat prepared an informal note (JOB(01)/17)
that illustrated possible areas of review.  A propos al by several Members followed, suggesting that the
Council for Trade in Services (CTS) conduct a technical review of the GATS to improve its overall
legal consistency and remove ambiguities, on the basis of submissions of Members (JOB(01)/40).
Several Members had since provided papers as input to this discussion.  She observed that the focus
of the discussion had gradually shifted from the overall procedural question of whether a
comprehensive review should be conducted to a more pragmatic approach of looking at specific
substantive issues that might require attention by Members.  At its informal meeting on 22 May, there
appeared to be an interest that the Council conti nue its discussion on the technical review of GATS by
examining paragraph 2 of Article XX of the GATS.
18. Article XX:2 attempted to resolve a scheduling issue arising from the overlap between
Articles XVI (on market access) and XVII (on national treatment).  The provision stated that
"(m)easures inconsistent with both Articles XVI and XVII shall be inscribed in the column relating to
Article XVI.  In this case the inscription will be considered to provide a condition or qualification toArticle XVII as well."
19. Previous notes and discussions on the issue had shown that the overlap between the two
Articles did not create a technical or a legal problem in scheduling commitments so long as, in
relation to a given mode of supply, both market access and national treatment were either fully bound
or unbound.  However, a problem could arise in other cases, for example where, for a given mode,
                                                     
2 The decision adopting the draft procedures was issued as document S/L/105.  The procedures were
issued as document S/L/106.S/C/M/60
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market access was bound and national treatment was not, or vice versa.  If, for example, a Member
entered "Unbound" under market access and "None" under national treatment, a question arose as to
whether that Member could maintain any discriminatory measures falling within the scope of
Article XVI.
20. The representative of Hong Kong, China reiterated his delegation's interest in issues raised in
the context of the proposals for a technical review.  The difficulty that could arise with Article XX:2
had to do with the interpretation of the scheduling language.  If an entry in the market access column
provided "unbound" and the corresponding entry under national treatment provided "none", did this
imply that the "unbound" also applied to measures inconsistent with both market access and national
treatment?  If that was the case, the "none" entered in the national treatment column should be further
qualified to make this clear.  As for the reverse case where market access was fully bound, and
national treatment was left unbound, the problem was just reversed.  The more general problem washow Members could ensure sufficient clarity when making commitments.
21. Members should consider whether the scheduling guidelines needed further elaboration on the
possibilities of such discrepancies in the interpretation of schedules.  There was a need to suggest a
common scheduling format to eliminate discrepancies. One possible example could be a footnote in
Members schedules to clarify relationship between the two columns.  Perhaps the drafters of GATS
had not been totally unaware of the problem.  He wondered whether the Secretariat or Members could
shed light on the question whether there were at the time of drafting any particular needs or reasons
for the current situation as regards Article XX:2.  Lastly, if a solution to the problem was found, what
were the implications with regard  to the existing commitments.  One needed to reflect whether such a
solution should apply to existing, or only to future commitments.
22. The representative of Canada underscored the last point raised by the previous speaker, i.e.
what any solution for this problem would imply for new schedules that would come out of the present
negotiations.  She emphasized that Members agreed that any changes from a technical review should
under no circumstances affect the balance of rights and obligations arrived at by Members to date.  If
Article XX:2 was clarified such that is was required to indicate where a market access limitation alsoimplied a  national treatment limitation, would there be a possibility to retroactively list national
treatment limitations across the board?  It could be argued that any market access limitation also
contained a national treatment limitation.  She further requested clarification whether Japan favoured
any of the three solutions it had proposed to the problem in JOB(01)/107.
23. The representative of Switzerland recalled from discussions in the Committee on Specific
Commitments some years ago that Article XX:2 was indeed not clear.  He supported that the Council
address the questions raised by Hong Kong, China.
24. The representative of Brazil stated that his delegation had submitted a paper (JOB(01)/165) in
order to help the Council identify issues that coul d possible form part of a technical review of GATS
provisions.  Such a clarification was important before engaging in a substantive exercise.  The
question of how different modes of supply relate to the basic obligations of the agreement such as
MFN and national treatment was of utmost importance in order to ensure legal certainty andpredictability for present and future specific commitments.  He emphasized that his delegation was
not intending to introduce any alien concepts into the GATS.  The notion of "like circumstances" was
solely for the purpose of illustrating that the basi c disciplines should be understood to apply within
each mode of supply, and not across modes.  The question of mode-specificity of commitments was
not limited to a narrow range of cases, such as the case mentioned at the previous meeting.  Otherexamples where mode specificity could become relevant included taxation measures, subsidies and
many others.  His delegation remained interested in several other issues, as mentioned before,
including Article XX:2 of the GATS.S/C/M/60
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25. The Chairperson concluded that delegations had raised some pertinent questions at this
meeting.  She suggested that the Secretariat provide information requested by delegation on the
drafting history of Article XX:2 and the other que stions raised.  She also suggested to convene
informal consultations to discuss the issue further, as well as the question of other issues on which a
substantive discussion could take place in future.
26. The Council so agreed.
C. REVIEW OF THE UNDERSTANDING ON ACCOUNTING RATES IN
TELECOMMUNICATIONS
27. The Chairperson recalled that the review of the understanding on accounting rates in
Telecommunications had been on the agenda of the Services Council for a long time.  At the last
meeting, Australia had submitted a proposal, JOB(02)/25, on a survey of Members' practices relatingto accounting rates.  The suggested survey was intended to help Members evaluate the extent to which
a removal of the moratorium would give rise to MFN issues.  It was the common understanding at the
end of the meeting that delegations could voluntarily reply to the questions presented by Australia,
and the Secretariat would circulate the replies for all Members' information.  To date, no replies had
been received by the Secretariat.
28. The representative from the United States stated that his delegations had no objections to the
survey on accounting rates that Australia had proposed.  In today's age of competition, concerns about
the MFN-consistency of accounting rates appeared to be moot.  In many cases, WTO Members
provided telecom service providers with opportunities to negotiate competitive alternatives to
accounting rates. Therefore, in conducting the survey that Australia proposed, the United Statesbelieved that it would be useful also to ask Members the following questions: "Is the accounting rate
the only means that the Member permits suppliers to settle international traffic?  Or does the Member
government allow suppliers to negotiate alternatives to the accounting rate?"
29. The representative of Mexico reiterated that any replies to the proposed survey by Australia,
as well as answers to the questions posed by the United States, could be made on a voluntary basis.  It
was Mexico's view that the Understanding was presently still in effect.
30. The representative of Chinese Taipei stated that there were no regulations for
telecommunications accounting rates in Chinese Taipei.  However, if a country was a non-WTO
Member or there was only one international telecom operator in that country, it was required that the
principles of International Proportional Returns and Parallel Accounting Rate were complied with and
that the accounting rate was negotiated by the re presentative chosen from Chinese Taipei's domestic
fixed-line operators and the foreign telecom operator(s); or, alternatively that it just followed theexisting rate.  If the country of the counter-party was a WTO Member and there were no less than two
international operators in that country, the accounting rates were negotiated respectively by the
involved operators in both countries.  He suggested that Members increase the pace for market
opening and hoped that the accounting rates could be  based on cost as soon as possible.  Besides, if
the results of the survey showed that there was over 50 per cent international tariff being evaded fromthe existing accounting rate system (e.g. by Internet), he suggested that the existing accounting rate
system should not be maintained any more.
31. The representative of Cuba restated his view that the understanding on accounting rates was
still in effect.  This system was still the predominant system for developing countries.  Any change to
the understanding required consensus.
32. The Chairperson suggested that the Council take note of the statements made and revert to the
item at a future meeting.S/C/M/60
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33. The Council so agreed.
D. REOPENING OF THE FOURTH PROTOCOL FOR ACCEPTANCE BY PAPUA
NEW GUINEA
34. The Chairperson drew the attention of the Council to document S/C/W/209 containing a
communication from Papua New Guinea requesting that the Council reopen the Fourth Protocol to the
GATS relating to Basic Telecommunications, for acceptance by Papua New Guinea.  The Secretariat
had prepared a draft decision for consideration and adoption by the Council in this regard,
S/C/W/210. She suggested that the Council adopt the draft Decision.
35. The Council so decided3
E. NOTIFICATIONS MADE TO THE COUNCIL PURSUANT TO GATS
ARTICLES III:3, VII:4, AND V:7
36. The Chairperson informed the Council that since the last time an item on notifications had
been on the agenda of the Council, in December 2001, notifications by Latvia had been made
pursuant to paragraph 3 of Article III of the GATS, S/C/N/ 183 and 184.
37. She then drew Members'  attention to notifications made by Latvia made under paragraph 4 of
Article VII (Recognition), S/C/N/185 and 186.
38. The Chairperson then drew the attention of Members to the following notifications pursuant
to Article V (Economic Integration).
European Communities and Latvia S/C/N/187
European Communities and Estonia S/C/N/188European Communities and Lithuania S/C/N/189
European Communities and Slovenia S/C/N/190
Chile and Costa Rica S/C/N/191
39. She suggested that the Council take note of the notifications made under these provisions and
that the agreements notified under Article V:7 of the GATS be referred to the Committee on Regional
Trade Agreements.
40. It was so agreed.
F. IMPLEMENTATION OF COMMITMENTS BY THE PEOPLE'S REPUBLIC OF
CHINA – STATEMENT BY THE UNITED STATES
41. The Chairperson stated that the United States had requested that an item on the
implementation of commitments by the People's Republic of China be placed on the agenda of both
the last as well as the present meeting.  At the last meeting, the United States had made it clear that
this item was raised independently from the review mechanism established under Section 18 of the
Protocol of Accession of the Peopl e's Republic of China.  She noted that the present item was not
linked to the following agenda item, which addressed preparations in connection with the ReviewMechanism.
42. The representative of the United States recalled that his delegation had raised a number of
serious concerns with China's implementation of its GATS commitments relating to insurance and
                                                     
3 The decision was issued as document S/L/104.S/C/M/60
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express delivery services at the meeting of the Council on Trade in Services on 19 March 2002.  At
the time, China had not been in a position to respond to the substance of those concerns.  As the
concerns that were raised back in March remained unresolved today, he was looking to the Chinese
delegation for substantive responses at this meeting.
43. As far as the insurance sector was concerned, China had clearly scheduled a commitment to
allow non-life firms to establish as a branch in China upon accession and to permit internal branching
in accordance with the lifting of China's geog raphic restrictions (see  WT/ACC/CHN/ 49/Add.2).  In
addition, China had committed in paragraph 313 of the Working Party Report that "the qualifications
for foreign insurers applying for a license to ente r China's market would not apply to foreign insurers
already established in China that were seeking an authorization to establish branches or sub-
branches." Notwithstanding these clear GATS commitments, China's insurance regulatory authority
continued to insist that non-life firms that were already in the market as a branch and that wished tobranch or sub-branch could do so unless they first established as a subsidiary, which was a costly and
unjustifiable proposition.
44. His delegation continued to have concerns with a lack of transparency in the relevant
regulations. These regulations invited considerable bureaucratic discretion and offered very little
certainty to foreign insurers seeking to operate la wfully in China's market.  To date, this lack of
transparency had manifested itself particularly in the licensing process, where, for example, more than
one foreign insurance company seeking a license had fulfilled all licensing requirements yet remained
unlicensed.
45. As also stated at the meeting of 19 March 2002, the United States remained unconvinced that
China's very high and redundant solvency requirements were appropriate.  China had a justifiedinterest in maintaining an appropriate prudential  environment, but China's solvency standards were
significantly more exacting than those of other countries with no less an interest in preserving a
healthy insurance market.  His delegation believed that the effect of these requirements was to limit
the ability of foreign insurers to make necessary joint venture arrangements, and thus limited the
viability of foreign participation in the Chinese insurance market.  He renewed the offer to assistChina's insurance regulators to bring China's requirements in line with those of other trading partners.
46. Turning to express delivery services, he recalled that the United States had sought to have the
Chinese authorities modify or rescind two post-accession measures that called into question China's
compliance with its horizontal commitment on acquired rights which would undercut China's
commitments related to express delivery services.
47. Under the first measure, issued on 24 December 2001, China required express delivery
companies already licensed by the Ministry of Foreign Trade and Economic Cooperation to file so-called "entrustment" applications with China's postal authorities in each province where they currently
operated.  That requirement was not only overly burdensome, but also inappropriately gave broad
discretion to the postal authorities to accept or reje ct applications.  Given that the postal authorities
were direct competitors of foreign-invested expr ess delivery companies, the United States was very
concerned that the postal authorities would exercise their discretion in a way that restricted trade.  Asecond measure, issued in February 2002, placed new, unwarranted restrictions on the same foreign-
invested express delivery companies. Essentially, through weight and rate limitations, that measure
narrowed the scope of activities and operation of these companies in China and therefore limited their
previously acquired rights.
48. Since the last meeting of the Council, there had been some developments. In particular, his
delegation understood that Chinese authorities postponed the effective date of the two measures in
question so that they could engage in internal discussions aimed at addressing these and other
concerns that were raised.  He appreciated those efforts, and hoped that the Chines authorities wouldS/C/M/60
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remedy the problems that his delegation had described.  Although the United States had received
some reports on the status of China's efforts to remedy the problems with the two measures in
question, both in our bilateral discussions with Chinese officials in Beijing and from other sources,
these reports were conflicting.  He therefore requested the Chinese delegation to provide the United
States with an update on the status of China's efforts in this area.
49. The representative of Japan shared the concerns raised by the Untied States on the
introduction of more restrictive measures on courier services, and requested China to further clarify
the content of those measures.  His delegation was ready to engage in discussions with China, as
necessary. discussions
50. The representative of Canada stated that her delegation also had problems with China's
implementation of its specific commitments, particular as regards financial services and
telecommunication services.  Canada had raised these issues bilaterally and looked forward toexamining them in greater detail in the co ntext of the transitional review mechanism.
51. The representative of the European Commun ities acknowledged that the deadline for the
entrustment procedures had been postponed in order to allow for consultations.  She was concerned
that local initiatives were tending to restrict th e activities in the postal and courier area of joint
ventures even before the expiry of the deadline.  She was looking forward to finding a solution tothese problems in a timely fashion.
52. The representative of China took note of the statements by the previous speakers.  He had no
instructions to respond or comment on the substance of the issues raised by the United States.  His
delegation looked forward to further bilateral consultations on these issues.
53. The representative of Switzerland stated in consultations of the Swiss government with Swiss
companies, the latter had criticised the recent massive increase of the branch, work and capital
requirements by China's insurance regulation commission.  This move had impacted Swiss
companies, as it was difficult to achieve adequate returns on the requested working capital.  Given the
weakness of worldwide capital and financial markets, multinational financial services companies
found find it very difficult to run overcapitalised business in these days.  This new laws wereimplemented shortly after China's accession to the WTO and were considered unfair by all companies
concerned.
54. The Chairperson suggested that the Council take note of the statements made.
55. The Council so agreed.
G. PREPARATIONS IN CONNECTION WITH PARAGRAPH 18 OF THE PROTOCOL
ON THE ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA
56. The Chairperson stated that this agenda item had been requested by the delegation of the
United States.  Section 18 of the Accession Protocol of the People's Republic of China provided for an
annual review of the implementation by China of the WTO Agreement and of the related provisions
of China's Accession Protocol.  As indicated in Section 18, the Services Council was one of the
bodies in which this review had to be conducted.  Th e results of the Services Council's review, as well
as those of other bodies referred to in Section 18 of the Accession Protocol would then be reported tothe General Council, which in tu rn would conduct its own review.
57. The representative of the United States stated that China's WTO Accession Protocol gave
Councils and Committees a specific role in developing the basis for the General Council Transitional
Review Mechanism later in the year.  In the weeks preceeding this meeting, the United States hadS/C/M/60
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been working with China and other WTO delegations to establish a practical and pragmatic timeline
for developing the information and receiving the no tifications necessary to conduct the review.  In
particular, his delegation sought an understanding of when Members could expect the required
information so that it allowed for time for an exchange of written questions and answers in advance of
the meeting.  It should be noted that the development of such guidelines should allow sufficient timefor translation to all official WTO languages and circulation by the Secretariat.
58. The main objective was to allow sufficient time to receive information as well as answers to
questions that would allow Members to adequately prepare for the meeting.  His delegation proposed
a 90-60-30 day formula as a possible approach.  Notifications and information by China would be
submitted 90 days in advance of the meeting;  any questions would be provided 60 days in advance;
and the answers to these questions would be provided at least 30 days in advance.  The United States
sought to ensure that the standard practice for si milar notification and exchanges was applied to the
procedure in question.  It was also worthwhile considering how the Council should deal with
questions that China may not be able to answer at th e meeting.  He was interested in China's views, as
well as other delegations' views on the appropriate timeline would be that would allow to manage the
work in order to make the Transitional Review Mechanism a meaningful and efficient exercise.  He
underscored that the United States were not interested in negotiating China's protocol commitments.
59. The representative of Canada stated that the Transitional Review Mechanism was an
important provision of China's Accession Protocol and would contribute to maintaining transparency
and build confidence among WTO Members that China's obligations were being met.  China had
issued a number of important regulations since its accession.  Members needed to examine these in
the context of the Review, in particular in financial and telecom services.  China had the opportunityin the Transitional Review Mechanism to give Members an appreciation of the larger scope of its
implementation efforts.  Canada supported constructive measures that would begin this process soon.
Sufficient time needed to be available for the CTS and the Committee on Trade in Financial Services
to conduct their reviews as set out in Section 18 of China's Protocol of Accession, and, in turn, to
report to the General Council in time for its December meeting.
60. The representative of the European Commun ities was also interested in ensuring that
appropriate procedures were in place to allow the transitional review mechanism to take place.  As
China had indicated, it was open to receiving and replying to questions in advance.  She noted that the
Council for Trade in Services had to consider input from the Committee on Trade in Financial
Services and would have to refer to the Genera l Council's in time for th e General's Council's own
review.  Therefore, there was a need to ensure that  the review was conducted in a timely fashion.  A
horizontal solution would help.  In any case, she suggested that the Chairman conducted consultations
on this issue.
61. The representative of China emphasized that as a new Member of the WTO, China took its
membership very seriously.  China was willing to fulfil its obligations including those in Section 18 of
its accession protocol.  In making good efforts in the preparations for the Transitional Review, China
was determined to do its utmost in trying to overcome the practical difficulties in this regard.However, as far as the Transitional Review is concerned, China had no more obligations than what
had been stipulated in Section 18.  However, any suggestion to go beyond these obligations and to
increase the obligations of China in terms of a specific timeframe, procedure etc. had to be rejected.
Section 18 already established important guidelines on the procedure, scope and substance of the
Transitional Review.  It was  inappropriate for any subsidiary bodies to try to renegotiate or redefinethe terms of the Review.  According to Section 18, subsidiary bodies of the WTO which were given
mandates in that section could conduct the Transitional Review once a year.  China was of the view
that such a review may in principal take place at  the last regular meeting of each subsidiary body
concerned for that year.  Once a specific regular meeting was chosen and a date was fixed for the
Transitional Review to be included as one of its agenda items, it was hoped that the WTO SecretariatS/C/M/60
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could inform China of the schedule for the meeting as soon as possible so that China could make the
necessary preparations.  To facilitate the process of the Transitional Review, Members were welcome
to raise relevant questions and concerns well in advance of the review.  China was prepared to do its
best to address these questions under Section 18. On the other hand, China was also entitled under the
same Section 18 to ask questions and raise concerns to other Members who were maintainingmeasures against imports from China which were inconsistent with the WTO rules and inconsistent
with their commitments with regard to China's acce ssion. He hoped that through such an exchange of
views and dialogue, better understanding would be reached among WTO Members on how to
improve the implementation of obligations by all Members.
62. The representative of Cuba refered to the fact that in less than 24 hours the same issue had
been discussed in two different meetings.  Given that it was a recent Member of this organization, he
stated that China deserved far more flexible tr eatment, more in keeping with the progressive
adjustment to the mechanisms operating in this organization.  Generally, delegations should not
demand of them more than what was set out in Section18 of the Accession Protocol.
63. The representative of Djibouti shared the view of Cuba. As a country that had just acceded to
the WTO, China should be given special treatment to enable them to meet all the requirements of the
WTO Agreement.  Each new Member needed a certain amount of time to meet the differentrequirements and therefore no exaggerated demands should be placed on China to satisfy its
requirements.
64. The representative of Pakistan supported the statements of Cuba and Djibouti.
65. The representative of the United States took note of Chinas' statement and requested that the
Chair consult informally with China and other delegations to find a solution.
66. The representative of Paraguay drew the attention of Members to the fact that Section 18
referred not only to services related bodies, but also several other bodies of the WTO dealing with
goods, rules, or TRIPS.  All these bodies were facing the same questions as regards timing.  A
horizontal solution to this issue was desirable to avoid repetition of  the same points in each one of the
WTO bodies.
67. The representative of Switzerland understood that the proposal of the United States was not a
question of introducing any new obligations which would go any further than what was stated in
Section 18 but simply to create a framework wh ich would make it possible to have a serious
preparation of this Review.  Switzerland therefore believed that it was a constructive and useful
proposal to prepare for this very important exercise.
68. The Chairperson stated that any consultations that she would hold on this matter would be
open-ended.  She suggested that Members take note of the statements made and revert to the item at
the next meeting.
69. It was so agreed.
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