RESTRICTEDWORLD TRADE
ORGANIZATIONTN/S/M/1
5 June 2002
(02-3127)
Council for Trade in Services
Special Session
REPORT OF THE MEETING HELD ON 19-22 MARCH 2002
Note by the Secretariat
1. The Council for Trade in Services held a Special Session from 19 to 22 March 2002.  The
agenda for the meeting is contained in document WTO/AIR/1744.
2. The Chairman indicated that item H of the agenda was erroneous and should read "Outline of
the Chairman's report to the Trade Negotiations Co mmittee", rather than "Outline of the Chairman's
report to the General Council".  He also indicated that the representative of Uganda would make astatement under Other Business on the establishment of modalities for the special treatment for least-
developed countries.  He proposed that the Council adopt the agenda as circulated, with the correction
he had pointed out and the item of Other Business raised by the delegation of Uganda.
3. The Council so agreed.
A. ELECTION OF CHAIRPERSON
4. The Chairman said that he was opening the meeting as Chairperson-designate, following the
consensus in the General Council at its meeting on 15 February 2002 on the slate of names for the
appointment of Chairpersons to the bodies established by the Trade Negotiations Committee.  Under
the first item of business, he proposed that the Council for Trade in Services formally confirm his
appointment as Chairperson.
5. It was so confirmed.
6. All delegations congratulated the Chairman on his appointment and assured him of their
collaboration in the course of his work.
B. ASSESSMENT OF TRADE IN SERVICES
7. The Chairman recalled that, at its December meeting, the Council had continued its
discussion of the assessment of trade in services mandated by Article XIX of the GATS and
paragraph 14 of the Negotiating Guidelines and Procedures.  The discussion at that meeting hadcentred on a group submission, contained in document S/CSS/W/114, which had been introduced by
Pakistan at the October meeting.  A new group submission, contained in document S/CSS/W/132, and
introduced by Zambia, was also discussed, as were the trade assessment aspects of submissions by
Costa Rica on tourism and computer-related se rvices in documents S/CSS/W/128 and 129.  A
Secretariat document containing a checklist of issues that Members might wish to take into account inconducting their own assessment, circulated as document S/CSS/W/117, was also referred to.
8. He recalled that, at the close of discussion of this item at the December meeting, he had
emphasized that the assessment was an ongoing exercise of great importance to delegations, and thatTN/S/M/1
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conclusions had to be reached at some point.  The assessment needed to proceed in stages, in a
continuous manner, and be conducted at the national level and overall.  Although individual Members
had to carry out their own assessments, the mandate in Article XIX:3 required Members to engage in
collective thinking.  He hoped that the recent Sy mposium on Assessment of Trade in Services, which
had taken place on 14 and 15 March, had provided Members with fresh ideas and a new momentum
with which to carry through this part of the Council's work.
9. The representative of Zambia speaking on behalf of the delegations of Cuba, Senegal,
Tanzania, Uganda and Zimbabwe, as well as his own, reminded Members that these delegations had
submitted a paper on assessment contained in document S/CSS/W/132, and looked forward to hearing
from other Members ideas that would enrich the discussion on the assessment.  A lot of work had
already been done on assessment:  developing countries had tabled submissions;  presentations had
been made by organisations, including the WTO and UNCTAD Secretariats;  and the previous weekgood presentations were delivered at the symposium on assessment.  All this indicated that enough
material was available for moving forward on assessment.  He appealed to all Members to move
forward and carry out the assessment.  He also reminded Members that the provision on assessment
was mandatory and needed to be respected.  It was one year since the negotiations had started, and
given the information available, Members needed to draw some preliminary conclusions, so thatnegotiations in the request-offer phase could be adjusted in the light of preliminary conclusions as
mandated by the negotiating guidelines.
10. The representative of Senegal fully endorsed the statement made by Zambia, with whom
Senegal had submitted the proposal on assessment.  He underscored two points.  First, the fact that the
assessment, as stated in Article XIX and reaffi rmed in the Guidelines, was mandatory.  The Doha
Ministerial Declaration had established dates for the start of the negotiations on request-offer.  The
assessment of trade in services should not be considered as a purely academic, theoretical or
ideological exercise, where some developing countries were trying to curb progress in the
negotiations.  The assessment was mandated and an integral part of the GATS, which, like other
GATS provisions, deserved respect and implementation.  Second, he asked Members to give dueconsideration to the assessment and to move forward concretely.  The assessment was a shared
responsibility of Members to be undertaken individually as well as collectively.  The negotiations
were a collective responsibility and he appealed to Members to demonstrate readiness in this respect
when submitting requests to developing countries, and especially to least-developed countries.  When
the time of submitting offers came, Members could be enlightened by the assessment and give
specific and concrete implementation to the objective of progressive liberalization helping developing
countries build the necessary infrastructure to enable them to attract investment.  He appealed toMembers to move to a new phase in the assessment.
11. The representative of Zimbabwe echoed the statements by Zambia and Senegal.  He recalled
that the negotiations had to be adjusted in light of the results of the assessment.  The exercise was
therefore important to determine if the objectives of the GATS, of increasing the participation of
developing countries in services trade and improving access to markets of export interest to them, hadbeen achieved.  He said that further commitments  would be undertaken only after the assessment had
been concluded.
12. The representative of Cuba expressed satisfaction with respect to the Symposium, which had
promoted a substantive debate, particularly on questions of interest to developing countries.  She said
that Members' submissions had shown the difficulties that developing countries were encounteringwith the assessment.  The exercise should not only be conducted at the national level, but was also a
shared responsibility of the Council.  In this regard, she noted that developing countries participated in
services trade less than developed countries, their industries had fewer resources and their service
suppliers could not compete in those sectors where they were facing competition from multinational
enterprises of developed countries.  These asymmetries existed independently of any dearth inTN/S/M/1
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statistical information, and should be reflected in the assessment, which could be of a qualitative
nature.  She echoed the statements made by previous speakers.
13. The representative of Indonesia reiterated the importance of the assessment for the market
access negotiations, called for conclusions to be drawn as early as possible, as these might affect the
negotiations, and indicated Indonesia's readiness to work with other Members, including on technicalassistance.
14. The representative of Egypt thanked the Secretariat for the organization of the Symposium.
GATS Article XIX recognized the importance of carrying out the assessment of services trade, on a
sectoral and overall basis.  This recognition had been supported by a strong reference to the
assessment in paragraph 14 of the Guidelines.  Her delegation was of the view that the assessment
was not only about data but also about evaluating this data to adjust the result in the negotiations
accordingly.  In anticipation of the need to hold a national and comprehensive assessment, Members
needed to determine how the results could be reflected in the negotiations.  For example, if the results
of the assessment indicated a need for more investment and capacity building, or pointed to the
negative impact of liberalization in certain sectors, Members needed to determine how these results
would be reflected in the negotiations.
15. The representative of Pakistan, thanked the WTO Secretariat for organizing a very successful
symposium.  He believed that the presentations and the contributions made during the symposium
were of a highly professional standard.  The Symposium provided procedures for the ongoing exercise
of assessment in terms of paragraph 14 of the Guidelines, as well as an opportunity to revitalize this
exercise.  The fundamental question which arose at that stage was what to do next and how best to
make use of the contributions presented at the Symposium.  He believed that the Symposium providedMembers with a certain direction which could steer future work.  From his delegation's standpoint, the
fundamental question of the mandate in Article XIX:3 was whether the objectives of the Preamble of
the GATS and of the Marrakesh Agreement had been met over the previous 6 years.  He believed this
to be the key to the success of the market access negotiations in services.  Unless and until the
Membership was clear about how liberalization in trade in services had fared since the conclusion ofthe Services Agreement, there would be immense practical difficulties in future market-access
commitments, particularly for developing and least-developed countries.  This point was becoming
increasingly important as the request-offer phase wa s about to commence.  He therefore appealed to
Members to make concerted efforts to move the process forward.
16. The representative of India thanked the Secretariat for the Symposium.  He supported the
broad thrust of the paper submitted by Zambia and the reasoning behind it.  In earlier debates on the
assessment, there had been differences as to the conduct of national assessments, and, as theChairman had pointed out, it was important to remember that Article XIX:3 mandated a collective
assessment.  It was only through a collective assessment that Members could come to some
judgement on the overall balance of advantages.  The negotiations were entering a new phase, with
the target date of 30 June for the submission of requests.  In this important step, Members needed to
carry their domestic constituencies with them and convince them about the benefits of furtherliberalization in services trade.  A collective assessment of trade in services would be an important
input in this respect.  In earlier meetings, India had already outlined why the assessment was
important, but he nevertheless highlighted that the assessment had to focus on market access in
sectors and modes of supply of export interest to developing countries.  Such an assessment needed
not wait for the availability of comprehensive or complete data;  even indicative findings could beuseful and Members could bear in mind the margin of error applied in such an assessment.  The
Council needed to focus on how to move things fo rward.  He wondered whether it would be useful to
request the Secretariat to attempt such an exercise, drawing on the experience and the data available
with relevant international organizations, which would perhaps be followed by a dedicated Special
Session.TN/S/M/1
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17. With respect to the suggestion that the Secretariat undertake some work on the assessment,
the Chairman said that it would be helpful to have a more precise idea of what the Secretariat would
be required to do and suggested that Members revert to this idea at the next meeting.
18. The representative of Venezuela expressed her delegation's satisfaction with the Symposium.
The event had allowed for the presentation of views not previously taken into account in the
discussion on the assessment and had provided a good balance between work that was already
available and work that could be done in the future, especially with respect to the sequencing of
regulation and liberalization to ensure that the benefits from trade liberalization were reaped, an issue
of importance particularly for developing countries.  The Symposium had also shown that some
progress had been done with respect to the collection and availability of statistical information;
significant efforts had been undertaken at the multilateral level and the challenge was now for national
administrations to implement this work.  She noted that the overall participation of developingcountries in services trade was low, but that differences existed in levels of participation and that it
was up to each Member to see how this situation could be improved.  In this sense, developing
countries' wish to strengthen their domestic capacity was justified.  She had taken note of the
interesting comments made by delegations on Article IV and the importance of commitments being
undertaken in sectors of export interest to developing countries.
19. The representative of Macao, China noted that the assessment was of concern to many
developing countries, and particularly to small economies.  His delegation was of the view that
technology transfers and capacity building could be seen as an effective means to strengthen small
economies' ability in the field of assessment.  He agreed that quantitative data was important, but that
a qualitative assessment could also prove valuable.
20. The representative of Turkey reiterated the importance of the Council carrying out a
collective assessment in line with the mandate in Article XIX:3 of the GATS, but noted that it was not
necessary to reach conclusions on the assessmen t in order for the negotiations to commence.
Negotiations would be adjusted in light of the asse ssment, as stated in the Guidelines, and hence they
could proceed, but this should not detract from the importance of the assessment.
21. The representative of Kenya underscored the importance of the assessment for Members to
undertake commitments on an informed basis and for liberalization to contribute positively to growth
and development.  The assessment had to be both qualitative and quantitative, conducted at the
national as well as international levels to enable Members to draw conclusions on the gains accrued as
a result of GATS commitments, the implications of further liberalization and the extent to which the
objectives of the GATS had been realized, particularly those set out in Article IV.  The assessment
was an ongoing exercise, but the process had to be enhanced for liberalization to be carried out on aninformed basis.  Efforts to improve the collection of  services trade statistics had to be continued and
resources needed to be devoted to continue this process at the national level.
22. Commenting on the main issues that had arisen from the Symposium, the representative of
Switzerland said that, first, problems did exist with respect to services statistics.  The situation was
improving, but significant work still needed to be done, mainly at the national level;  still, some
proxies could be used to draw approximate, qualitative conclusions.  Second, the Symposium had
shown that interest in services trade was widespread.  Virtually all Members could find sectors where
they had potential export interests, so that an outcome was possible where benefits would accrue to
everyone.  One of the main objectives of the assessment was to help identify such export interests, and
the Symposium was a contribution to this effect, as was technical assistance.  Third, services tradewas concentrated with developed countries, but it was important to note that developed countries had
a high share not only of services exports, but also of services imports;  developed countries' exports
went mostly to other developed countries, with trade also taking place on a regional basis.
Opportunities at the regional level might exist also for developing countries.  Fourth, with respect toTN/S/M/1
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concerns about de-regulation, these were unfounded, as Members' right to regulate was reaffirmed in
the GATS.  The Agreement was about services trade liberalization, not privatization.  He also noted
that mistakes with liberalization had been made not only by developing countries, but also by
developed countries.  No Member had an interest in asking another Member to do something that
would hurt them;  these were issues that could be usefully addressed in bilateral consultations.Turning next to institutional ideas with regard to the assessment, he underscored the importance of
finding a balance between national assessments and a collective one.  Initially the assessment had to
be conducted at the national level, but it was then important to discuss national results and
experiences collectively in a multilateral assessment.  For instance, the Council had played a major
role in organizing the Symposium on the issue and that was an example of taking collective
responsibility for the assessment.  But ultimately, it was only at the national level that national
conclusions could be reached from the debate and translated in requests and, eventually, offers.  Hesaid that neither third countries, nor the Council, nor other international organizations could interfere
with the content of individual Members' requests.  He also recalled that the assessment was ongoing
and should continue to be so.  He said that interventions by previous delegations were encouraging, as
they testified to their interest in the services negotiations.
23. The representative of the European Commun ities said that the Symposium had been very
successful and had provided a good platform to engage in substantive discussion.  Interesting ideas
were emerging, such as the need to move beyond a purely quantitative to a more qualitative, or mixed
approach to the assessment, as well as the importance of national experiences for multilateral
discussion.  He concurred with Turkey and Kenya that the assessment was a continuing exercise, but
was not a precondition for market access negotiations to begin.  It was not possible to state that theassessment had not started;  it was being conducted over time and Members were committed to a
collective assessment of services liberalization.  It was clear that problems existed with respect to
statistics, but these should not prevent efforts to improve the collection of statistical information and
the undertaking of national assessments.  Technical assistance was available from his delegation to
those Members that needed it to conduct their own as sessments.  He also noted that good progress had
been made with the assessment.  Members' submissions pointed to useful elements, such as services
liberalization under the GATS and national policy c hoices to ensure that services liberalization
worked properly, the need for appropriate regulation and the importance of introducing competition
and complementary policies, which were of greater significance than privatization.  He invited
Members who had conducted national assessments to share them with the Council Membership as
inputs to further discussion.
24. The representative of the Philippines said that the Symposium had provided useful insights
for conducting the assessment of services trade.  The assessment was a two-pronged exercise:  on the
one hand, it had to be conducted at the national level by individual countries to prepare for the
request-offer phase of the negotiations, and on the other it had to be a collective exercise as mandated
by Article XIX.  These two components were comple mentary, with the former  informing to a certain
extent the latter.  However, he stressed that the national assessment should in no way take the place ofthe collective one.  The assessment mandated by Article XIX was a multilateral exercise, and not just
a unilateral one, and it was a reality that it had not been carried out before the establishment of the
negotiating guidelines and procedures, as mandated by the GATS.  He stressed that national
assessments could not replace the collective one;  national assessments were not only conducted for
the purpose of request-offer negotiations, but to complement the collective assessment by the Council.The submission in document S/CSS/W/132 referred to platforms, such as Trade Policy Reviews and
documents produced by UNCTAD, drawn upon in order to arrive at preliminary conclusions which
would take the assessment forward.  Whilst it was premature to arrive at definitive conclusions on the
assessment, he stressed that at the end conclusion s would have to be drawn on the assessment in order
for the negotiations to be adjusted accordingly.TN/S/M/1
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25. The representative of Lithuania said that one of the issues that had emerged from the
Symposium was that the highest number of commitments, not only in quantitative terms but also in
qualitative ones, had been undertaken by recently acceded Members such as Lithuania.  For example,
the Symposium had shown that acceding countries ha d undertaken twice as many full commitments in
mode 3 and nearly 75 per cent more full commitments in mode 1 than the average WTO Member.Lithuania had undertaken substantial liberalization, in practically all services sectors.  However, with
regard to the assessment exercise, it was not possible to evaluate the impact of such liberalization, as
its implementation had only started in 2001.  Therefore, appropriate treatment had to be granted to
recently acceded Members with regard to the requirement in paragraph 14 of the Guidelines that
negotiations would be adjusted in the light of th e results of the assessment.  The representative of
Oman concurred, and called for special consideration to be given in the assessment to the extensive
commitments undertaken by recently acceded Members.
26. The representative of Mauritius stressed the importance of the assessment but pointed to the
difficulties that small countries faced in carryi ng out their own national assessments.  Developing
countries had benefitted little from services trade liberalization;  their participation in services trade
had mainly concerned primary types of services, whereas they were lagging behind in high-
technology, high-value added services.  The assessment had to take this fact into account, as well asthe importance of transfers of technology to increase developing countries' participation in services
trade as stated in Article IV of the GATS.
27. The representative of Malaysia acknowledged the importance of conducting national
assessments, but emphasized the difficulties faced by developing countries in that respect.  At any
rate, a collective assessment had to be carried out, as mandated by Article XIX, and while this couldbe conducted in parallel to Members' own individual assessments, these could not represent a
precondition for the collective assessment the Council had to carry out.  He called on delegations to
have a pragmatic approach in this regard.  He then noted that a great deal of material was available on
the assessment, and that, while statistics were still unsatisfactory, improvements had been made in this
area and the situation was evolving rapidly;  it was therefore possible, by combining a quantitativeand qualitative approach and national as well as collective assessments, to arrive at conclusions on the
assessment.  UNCTAD had performed a preliminary assessment of services trade a couple of years
earlier, and he was of the view that the WTO coul d now carry out its own assessment on the basis of
available information and material.
28. The representative of Canada said that at the core of the assessment was the objective of
increasing the participation of developing countries in services trade and called on delegations to bear
this in mind.  The Symposium had provided useful elements for the assessment and had led hisdelegation to drawn three conclusions.  First, any good assessment of trade in services was crucial in
order to develop a solid negotiating position.  Second, country-specific approaches played a key role;
the submission in document S/CSS/W/132 was us eful to evaluated the impact of services
liberalization on the economy of developing countries.  Third, while national assessments were the
main approach, there was value in going beyond national experiences and undertaking other types ofassessments, such as the contribution made in document S/CSS/W/132.  In reviewing progress made
on the assessment until then, he was of the view that a lot had been learnt, thanks to country
experiences and work carried out the WTO and UNCTAD Secretariats, about the impact that services
liberalization might have on economic development.  Canada would try to build these elements in its
negotiating position and would prepare for the request-offer phase hoping to integrate the concerns ofdeveloping countries.
29. Looking ahead, he recalled that the assessmen t would be ongoing and that the request-offer
phase would run in parallel to the assessment and be informed by the exercise.  He noted that many
interventions had raised issues that were not part of the services negotiations, such as the question of
regulatory capacity in document S/CSS/W/132;  soluti ons to such an issue, which included increasedTN/S/M/1
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regulatory cooperation, trade-related technical assistance and capacity building, were beyond the
WTO realm, but such questions would be passed on to the relevant government units, for them to
raise them in the appropriate fora.
30. Concluding the discussion on this item, the Chairman said that the Council had held an
extensive debate.  Most Members had referred to the Symposium held on the assessment on 14 and
15 March as a timely and very positive contribution to the debate and a good basis to proceed.  Many
delegations had reiterated the importance they attached to the assessment, which was an ongoing
exercise to be seen in the framework of the deadlines for the negotiations.  It was stressed that, while
the assessment should be conducted at the national level, the exercise was also a collective
responsibility of the Council and needed to be approached in both qualitative and quantitative terms,
against available data.
C. TREATMENT OF AUTONOMOUS LIBERALIZATION
31. The Chairman recalled that, at the December meeting, the Council had continued its
discussion of the treatment of autonomous liberalization.  The discussion had focussed on two new
submissions, one by Korea, contained in docum ent S/CSS/W/126, and one by a group of 19 Members
and introduced by Uruguay, contained in docu ment S/CSS/W/130.  A Secretariat note summarizing
the broad views expressed by delegations on the five main groups of issues under discussion on thisitem, and circulated as JOB(01)/141, was also referred to.
32. Since the December meeting, new submissions had been tabled by the European
Communities, in document S/CSS/W/133, and by H ong Kong, China, in document S/CSS/W/134.  In
addition, as requested by the Council at its last meeting, the Secretariat had circulated a note, in
document JOB(02)/23, intended to assist Members in reaching a conclusion with respect to criteriaand modalities for the treatment of autonomous liberalization.
33. A representative of the WTO Secretariat explained that, in response to the Members' request,
an attempt was made in this new paper to take account of the different elements of previous
discussions and papers into something that could be of use in an operational sense.  The paper was
divided into sections along the lines of previous discussions.  The paper also contained an attachment
that grouped all the main elements under concrete headings, that could be used as a starting-point for
the development of modalities.
34. The representative of the European Communities said that the document S/CSS/W/133 was
intended as a contribution to the debate on this topic.  The position was that it should be possible for
Members to come up with multilaterally agreed criteria or modalities.  A great deal of the work
however would need to be done on a bilateral basis.
35. Transparency was important but there should not be additional obligations in that regard.
Members wishing to seek credit should inform the Members from which the credit was being sought
about the liberalizing measures that were taken.  This could be done either bilaterally - to a particular
Member - or multilaterally if the Member concerned so wished.  The Member concerned should be in
control of the process.  The results of the discussions, even if they were conducted on a bilateral basis,
would be applied on an MFN basis.
36. The European Communities was of the position that there was a link between binding
liberalization and credits.  Binding was not necessary in advance of the negotiations but at the end of
the process.  If a Member wanted to have a credit, the measure from which the credit was sought
needed to be bound.  Otherwise, there was no legal certainty or predictability.TN/S/M/1
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37. The representative of Hong Kong, China introduced document S/CSS/W/134. In a previous
submission (Job No. 7580), Hong Kong, China sugge sted that Members might consider developing
multilaterally agreed factors to be taken into account during the bilateral negotiations where
autonomous liberalization was raised.
38. In this second submission Hong Kong, China ela borated further on its thinking in order to
stimulate the discussion on this topic. The representative drew Members' attention to a couple of
underlying principles, which governed the development of the paper.
39. Firstly, Hong Kong, China was of the view that all measures that would bring the
liberalization in relevant sectors over and above the bound commitments of the liberalizing Members
should potentially be of value in the negotiations.  Since it would be difficult to assess the value of the
de facto  measures – measures which are implemented in practice but not bound as specific
commitments – both the measures for which credit w ould be granted and the credit so granted should
be bound.  Secondly, the submission introduced the notion that the value of autonomous liberalization
measures should be judged both in terms of the actual and potential commercial value of the measure
to the liberalizing Member’s trading patterns;  and in terms of its role in facilitating the economic
development of the liberalizing Member itself.  Paragraphs 7 to 11 of the paper outlined some
possible criteria and modalities for the recognition of autonomous liberalization.
40. The representative of Uruguay commented on the Secretariat note.  First of all, it was
important to bear in mind that paragraph 10 of the negotiating guidelines and procedures established
that the starting-point of present negotiations were the current Members' schedules.  Secondly, it was
not clear to him whether autonomous liberalization was something to be carried out outside the
negotiating context or within the negotiating context.  This was an important point that neededclarification.  He reiterated his position that the present negotiations were about the exchange of
concessions and commitments.  This was somewhat different from the issue of autonomous
liberalization.  Regarding the issue of transparency and notification, he recalled that during the
Uruguay Round, several Members did notify measures concerning trade in goods. There was a
precedent in that regard.
41. Finally, the most important point, in his view, was related to developing countries.  As it was
clearly stated in document S/CSS/W/130, the issue of autonomous liberalization originated and was
developed during the Uruguay Round in order to promote the interests of developing countries.  This
was the whole purpose of the autonomous liberalization mechanism embodied in Article XIX of the
GATS.  He was therefore grateful to the European Communities and to the Secretariat for the
references made in their respective submissions, although he considered that was insufficient.  It was
not only a special consideration that his country was looking for but a lot more than that.  He believedthat developing countries should not be asked to grant credits for autonomous liberalization measures
taken by developed countries. Eventually, those measures by developed countries could be taken as a
contribution to the implementation of Article IV of the GATS, that is, as a contribution to the
increasing participation of developing countries in services trade.
42. The representative of Paraguay said that it was important that countries continue the
liberalization process between rounds of negotiati ons.  Over and above the benefits accruing as a
result of liberalization in the multilateral context, both developed and developing countries would
benefit from autonomous liberalization of their service sectors.  Even when autonomous liberalization
was carried out outside the multilateral framework, it should also be seen as a contribution to the
achievement of the GATS objectives.
43. In addition to the communication (S/CSS/W/130), which his delegation fully endorsed, he
presented a new document (S/CSS/W/140).  The document, which was submitted in Spanish and
English, supported the establishment of a multilateral framework allowing for the assessment ofTN/S/M/1
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autonomous liberalization measures, and suggested a way of making the concept of credit for
autonomous liberalization operational.
44. Many WTO Members had carried out unilateral liberalization in the area of services, both on
a voluntary basis and on a compulsory basis, as part of the programmes under the World Bank or the
International Monetary Fund.  Countries had also  followed up liberalization in the framework of
regional and bilateral agreements.  Even when these efforts had in fact promoted progressive
liberalization of services, not all these measures were included in the schedules as a legally binding
commitment.  Therefore the application of those measures on a MFN basis was not guaranteed.  Nor
could they be brought under the provisions of the WTO dispute settlement mechanism.
45. Assuming that the initiatives for autonomous liberalization bring real benefits to other trading
partners and contribute to the liberalization of the multilateral trading system, his delegation believed
that these positive effects should be recognized in the GATS negotiations by establishing amultilateral conceptual framework.  Such a framework should allow for the evaluation, assessment
and categorization of autonomous liberalization measures so as to allow Members to ask for credit,
thus recognizing their autonomous liberalization efforts on a more solid basis.  Such a conceptual
framework would further promote the binding of the measures concerned as well as a greater degree
of autonomous liberalization.  The establishment of a multilateral framework would furthermore serveas an incentive to encourage countries not to hold up the necessary policy reforms with the purpose of
ensuring trade concessions on a reciprocal basis in the future.  It would also encourage WTO
Members to bind the level of application of these trade liberalization measures, which originated
outside the framework of multilateral negotiations.
46. The representative of Chinese Taipei said, with regard to paragraph 1(c) of the attachment of
JOB(02)/23, that in addition to original Members, 17 countries or separate customs territories had
become WTO Members since the establishment of the WTO.  Compared with commitments made by
the original Members in the Uruguay Round, which usually only reflected the status quo of their
market access, the accession commitments made by these new Members often represented a degree of
liberalization far beyond the status quo, which required extra efforts by these new acceding Members.
47. Under such circumstances, if a newly acceding Member made any liberalization effort
unilaterally during its accession negotiations, such effort should not be denied credit simply because it
was made during accession "negotiations".  Without recognizing the unilateral efforts of these newly
acceding Members, the treatment of autonomous li beralization would simply become double jeopardy
to them.  Therefore, he proposed that the time-period used to value autonomous liberalization,
(i.e. "since previous WTO negotiations") should refer to the same time for both original WTO
Members and for Members completing their accession negotiations after the Uruguay Round.  Inother words, the "previous WTO negotiations" should mean the previous "round" of negotiations and
not include accession negotiations.
48. The exclusion of the accession negotiations did not compromise the unilateral nature of the
measures.  The element of the unilateral nature could be fully preserved by separating new Members'
liberalization measures undertaken since previous rounds of negotiations into two categories:(i) Category I contained scheduled liberalization measures which were the result of bilateral
negotiations or a reflection of the status quo  - these measures were not eligible for credit;
(ii) Category II contained scheduled or not scheduled liberalization measures undertaken unilaterally.
These measures should be deemed to be autonomous liberalization measures and therefore eligible for
credit.
49. Summing up, in order to equally recognize the liberalization efforts of new Members, the
phrase "undertaken by the Member unilaterally, si nce previous WTO negotiations" in paragraph 1(c)TN/S/M/1
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of the attachment to the Secretariat note should be understood as excluding the accession negotiations
provided that the liberalization measures had been undertaken unilaterally.
50. The representative of Switzerland said that time had come to produce some concrete results
on this issue, which could be of use in the negotiations. He shared the possible criteria and modalities
for the treatment of autonomous liberalization proposed by the European Communities. Heemphasized that the binding of the measure as part of the final outcome of the negotiations was of the
utmost importance.  Without binding, there was no legal certainty.  He also shared the view that
special consideration could be given to the situation of developing countries, in particular least-
developed country Members.  The mechanism proposed by the European Communities provided a
realistic and pragmatic framework to ensure that measures autonomously taken by Members were
duly considered in the request/offer process.
51. Concerning the Hong Kong, China paper, he shared the opinion contained in paragraphs 1 to
5, especially the importance of binding as described in the second part of paragraph 4.  The goal of
autonomous liberalization was to facilitate the economic development of the liberalizing Member
itself.  Often autonomous liberalization measures were taken for domestic policy reasons and not as a
concession to any trading partner.  This should also be taken into consideration.  Concerning
paragraph 6, he said that unbound measures could also be the subject of a request to bind them. Healso shared the views contained in paragraph 7.
52. Turning to the possible elements for modalities, he said that further thought should be given
to the elements contained in paragraphs 8 to 11.  As a preliminary view, he was not convinced that the
mechanism described in paragraphs 10 to 11 was realistic.  In practice, the envisaged overseeing role
might lead to endless discussions on the value of autonomous liberalization measures in the Council.The value of such measures was always different for different Members.  However, the mechanism
could provide some kind of guarantee to some Member s.  Hence, he would give further consideration
to this mechanism, to see more precisely how this could work in practice.
53. He said that Switzerland also shared many views contained in the Secretariat paper on the
definition of basic concepts, the assessment of the value of liberalization measures undertakenautonomously, the modalities, the transparency-related issues, and the relationship between binding
and autonomous liberalization.  The only way to deal with the latter was through bilateral
negotiations, since it would not be possible to achieve a multilateral determination of the value and
the credits to be given for a specific autonomous liberalization measure.  This would only be possible
in the context of a bilateral evaluation of mutual advantage associated with the measure.
54. Finally, he expressed some doubts about the notion of full or partial binding.  Either a
measure was bound and credit was granted, or the measure was not bound and there was no credit.The non-bound part of the measure would not be eligible for credit anyway.
55. The representative of the Republic of Korea said that the Secretariat note successfully echoed
the views of Members thus far.  He shared the views on two points:  (i) eligible measures should be
able to be scheduled under Article XVI, XVII, XVIII, or lead to the elimination of MFN Exemptions;
(ii) criteria for assessing the value of autonomous liberalization measures included legal certainty,predictability, fairness and commercial value.
56. However, the Republic of Korea had some difficulties with the view expressed in
paragraph 10.  In the Republic of Korea's view, the value of autonomous liberalization measures
could be gauged even without an agreed target.  Wh at would be needed would be just a comparison of
the value of a Member's schedule at two different moments: namely, an existing schedule versus anew schedule taking into account notified autonomous liberalization measures.  Credit would take two
forms:  either asking equivalent improvement of commitment on the part of other Members orTN/S/M/1
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offering less liberalization commitments to other Members.  The improvement index proposed by the
Republic of Korea would serve as a benchmark or a reference point in negotiations.
57. The Republic of Korea shared the view in paragraph 4 of the submission by Hong Kong,
China in that "the starting-point of the negotiations of specific commitments is the existing schedule",
and that "all measures that would bring the liberalization in relevant sector over and above the boundlevel of commitments of the liberalizing Member should potentially be of value in the negotiations".
58. The Republic of Korea also agreed with Hong Kong, China on three points:  (i) measures
eligible for credit should be able to be schedu led under Article XVI, XVII and XVIII or lead to the
elimination of MFN Exemptions;  (ii) autonomous liberalization measures should be bound at the end
of the negotiations to get credit;  and (iii) criteria for assessing the value of autonomous liberalization
measures include legal certainty, predictability, fairness and commercial value.
59. Lastly, he said that the submission by the European Communities had many things in
common with the Korean one.  The paper provided some important qualitative criteria.  Factors like
WTO conformity, binding nature, and liberalizing nature of autonomous liberalization measures
should be considered when determining eligibility for credit.
60. He also illustrated the European Communities' views on the two issues:  (i) measures that
could be considered for credit were those susceptible of being scheduled in the Members list ofspecific commitments;  and (ii) credit for autonomous liberalization measures would be granted on the
understanding that those measures would be bound at the end of the negotiations.
61. The representative of Brazil supported all the points raised by the delegation of Uruguay. He
added that Members should not lose sight of two basic issues. First, one of the most important
objectives of devising modalities for recognition of these kind of measures in negotiations was toprovide an incentive for Members, particularly developing country Members, to engage in regulatory
reform between rounds of negotiations.  Having this  kind of instrument or tool would provide some
reassurance that the results of regulatory re form would be recognized in negotiations.
62. Second, Members should not lose sight in this discussion of the developmental objectives of
the round of negotiations launched in Doha.  These developmental objectives would not be achievedsolely by the provision of technical assistance and capacity building. Rather, they would be better
achieved by market access in sectors of export interest to developing countries, not only in services
but also in any other area contained in the single undertaking.  In the case of services, these objectives
would be further achieved with modalities providing recognition for unilateral or autonomous
liberalization undertaken by developing countries.
63. The representative of Indonesia said that autonomous liberalization should be an integral part
of the negotiation on market access for trade in services.  Like many other Members, Indonesia had
undertaken various structural and regulatory reforms in the services sectors that resulted in
liberalization measures going beyond its commitments in the previous negotiations.  Such
liberalization should be given credit if it was bound in the WTO.  However, Members should have the
right to decide on the scope of autonomous liberalization that they were willing to bind.  With regard
to the joint paper submitted by a number of developing countries, including Indonesia(S/CSS/W/130), he suggested that Members consider the proposal so as to facilitate the efforts to
reach an agreement on this issue.
64. With regard to the assessment of measures taken autonomously by Members, Indonesia was
of the view that the assessment should be done on a qualitative basis.  While he shared the
Secretariat's view that the credit to be given migh t take the form of an exemption from liberalization
measures or of more ambitious liberalization to be requested from affected trading partners;  hisTN/S/M/1
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delegation was of the position that credit could also be given in the form of concessions in sectors
outside services, such as trade in goods. Giving concessions in other sectors of interest to Members
could provide a sense of fairness in negotiations to most developing countries, which were not service
suppliers.
65. The representative of the Slovak Republic said that previous discussions showed that a
majority of Members supported a mixed approach with regard to treatment of autonomous
liberalization.  According to this approach, multilateral criteria or modalities would be set up, and
credits would be worked out on a bilateral basis.  Her delegation also had a preference for this
approach.  At the same time, it was necessary to do further work on the modalities in order to ensure
that autonomous liberalization was treated in a pragmatic way.
66. The Slovak Republic attached great importance to the establishment of an appropriate general
framework of criteria which would help Members assess the value of the autonomous liberalizationmeasures, as underlined in the Secretariat note and in the submission by the European Communities.
All measures taken by liberalizing Members which were susceptible for scheduling under
Articles XVI, XVII or XVIII of the GATS should have a potential value for negotiations.  She raised
a hypothetical question:  what would happen if the Member notified the measures for which it wanted
to obtain credit but failed to obtain credit because of lack of interest of its trading partner on theground that the measure had little or no trading value?  She was of the opinion that Members should
try to find a mechanism to solve this problem. In this respect, she was very sympathetic to the ideas
put forward by Hong Kong, China regarding peer  review. Such a mechanism should prevent small
and open market countries from being overlooked.  Such multilateral examination should ensure that
all Members having undertaken autonomous liberalization measures were taken into account in thefinal outcome of the negotiation.
67. The representative of Mexico said that the whole idea of autonomous liberalization was based
on liberalization experiences carried out by developing countries over the past few years.  The idea
arose during the Uruguay Round, although at the end it did not lead to any practical result. This was
stated quite clearly by Uruguay and other speakers.  This was also Mexico's interpretation of thisissue. In fact, the issue of autonomous liberalization was conceived for the benefit of developing
countries, whose liberalization enhanced international trade and benefitted other developed trading
partners. The issue of credits could be tackled from two perspectives. On the one hand, there was the
bilateral front, since it was in bilateral negotiations where credit would achieve greater substance. On
the other hand, there was the multilateral front, where the Council for Trade in Services would have to
consider those cases in which there was some reluctance or refusal on the part of certain trading
partners to grant credits for autonomous liberalization measures. The Council's monitoring functionwould be important in order to ensure that the agreed criteria and modalities were respected and
complied with. In that regard, the issues raised in paragraphs 5 and 10 of the submission by Hong
Kong, China were very important.  There was a multilateral aspect where the Council must verify
what was happening bilaterally and perhaps devise ways and means to correct any distortion that
might occur in the application of the agreed criteria and modalities.
68. The representative of Thailand said that her delegation was prepared to work on the future
modalities based on the suggestions contained in the note by the Secretariat (JOB(02)/23).  She was
particularly interested in paragraphs 6 and 9 of the attachment to the Secretariat paper.  She said that
more things could be added to these paragraphs, although she understood that the Secretariat drew
from the interventions and written contributions by Members thus far.  These two paragraphs could befurther substantiated.  Credit should not be limited to only these two things.  She also said that the
paragraph on the special considerations for developing countries was simply too weak and felt it
should be stretched out further.  She expressed some doubts as to the desirability of paragraph 8.TN/S/M/1
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69. The representative of Singapore considered that the Secretariat note, in its attachment,
provided a useful framework of the pertinent issues for discussion. He provided comments on four
broad areas. Firstly, there appeared to be a convergence of views on some of the elements on the
criteria for determining the autonomous liberalization measures eligible for credit, such as the
following: the measure must be susceptible for scheduling under Articles XVI, XVII and XVIII of theGATS and must be in line with the MFN principle. The additional criteria provided in paragraph 7 of
the submission made by Hong Kong, China could also be usefully considered.  Any measure that
fulfilled the criteria should be automatically eligible for credit.  Secondly, there should be
multilaterally agreed factors that Members needed to  take into account in assessing the value of a
particular autonomous liberalization measure. It would be useful to have a sort of consolidated list for
the discussion. With respect to paragraph 5 of the submission by Hong Kong, China, he asked the
following: how would facilitating economic deve lopment be measured or valued and who would
value this particular aspect?
70. Thirdly, the granting of credit should be worked out between the Member requesting credit
and its trading partner in the bilateral process. This was the most practical way to proceed. He
wondered whether other forms of credit, apart from th e two identified in the Secretariat note, could be
envisaged. Fourthly, the Council for Trade in Services in Special Session could play a supervisoryrole in the process, by monitoring notifications by Members, for example.  The idea of a peer review,
as suggested by Hong Kong, China's paper, was ce rtainly very interesting in cases of disagreement,
but it was uncertain whether such a mechanism would be feasible since there was no guarantee that
other Members would be really in a position to assess the value of a particular autonomous
liberalization measure.  There was also the risk of overburdening the Council. Lastly, regarding theorganization of future work, he considered that the Secretariat could update its note, particularly the
attachment, to take into account the discussion and the submissions by Members. This new paper
would form the basis for future discussion in this area.
71. The representative of Turkey said that the issue of the peer review, raised in paragraph 10 of
the submission by Hong Kong, China deserved further consideration. In addition, she shared the
views expressed by Uruguay regarding the relationship between the issue of autonomous
liberalization and developing countries.
72. The representative of Nigeria said that the Secretariat note, in its attachment, already
contained all the basic elements for the discussion. He shared the views expressed by the delegation of
Uruguay on the weaknesses identified in that doc ument. He questioned the suggestion made to use
quantitative approaches as criteria for the assessment of autonomous liberalization measures. He
expressed his concern about the use of such quantitative approaches.  In terms of the organization offuture work, he suggested to focus on the subjects of criteria and modalities, which were crucial areas.
Sections 3 and 4 of the submissions made by the European Communities and Hong Kong, China,
respectively, provided vital points that could guide discussions in addition to the Secretariat note. All
the papers acknowledged the need to give special consideration to the needs of developing countries
and Least Developed Countries. He wondere d, however, what was the meaning of "special
consideration" in this context. He said that at the previous meeting, a group of developing countries
submitted a proposal in document S/CSS/W/130, whose aim was to dig into the background of the
subject of autonomous liberalization during the Ur uguay Round.  The major revelation of that paper
was that credit for autonomous liberalization was to be applied only to developing countries.
Somehow, however, it ended up in the GATS as being applied across the board. Finally, he requestedMembers, especially developed countries, to see the issue of granting credits to developing countries
for autonomously liberalized measures as one way of giving effect to the provisions of Article IV of
the GATS.
73. The representative of Japan said that the attach ment to the Secretariat note provided the major
elements referred to and discussed in the past. That attachment provided Members with the necessaryTN/S/M/1
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elements. The paper had a sufficient level of flexibility, and struck a good balance between the
multilateral element and the bilateral element. He considered, therefore, that it would be useful to
move the discussion forward on the basis of that paper, adding to it in the light of the discussions in
this meeting.
74. The representative of Egypt made some preliminary comments. First, all autonomous
liberalization measures that accomplished the objectives of the GATS agreement were eligible for
credit.  Thus, both measures undertaken in the GATS context and outside the WTO context (such as
those within the framework of the IMF and the World Bank) were examples of measures eligible for
credit.  Concerning the nature of credit, he agreed with the notion put forward by the European
Communities that Members, having implemented measures, should specify the credit being sought.
The credit might take different forms in the WTO context. In addition, he considered that a flexible
approach was needed regarding the assessment of the value of liberalization measures. A set ofgeneral criteria was needed so as to provide each c ountry with the necessary flexibility to address and
emphasise its interests. In this respect, he supported the proposal contained in paragraph 5 of the
submission by Hong Kong, China, in that the economic development of the liberalizing Member
should be taken into account when assessing the value of the liberalization measures.
75. Regarding the relation between binding and autonomous liberalization, he said that the credit
was to be granted for a benefit already gained by a country from an autonomous liberalization
measure undertaken by the liberalizing Member.  This was completely different for the negotiation of
commitments.  Among the measures eligible for credit were those undertaken to liberalize restrictive
regimes, and these measures required flexibility. Thus, there was no link between binding and
autonomous liberalization. Finally, he was of the view that credit for autonomous liberalization was adeveloping country issue, and in that respect he shared the views expressed by Uruguay.
76. The representative of Lithuania considered that credit should be given for the liberalization
made - and legally bound - during recent accessions.  Recently acceded countries, most of them small
economies, made substantive market-access commitments. He said that the rationale for Lithuania's
position was to be found in the preamble to the GATS, according to which negotiations should beaimed at promoting the interests of all participants on a mutually advantageous basis and securing an
overall balance of rights and obligations. The ne gotiating guidelines and procedures also stated
similar objectives and principles, and called for credit to be granted in the case of autonomous
liberalization.  Finally, paragraph 9 of the Doha Ministerial Declaration noted the extent of market
access commitments already made by newly acceding countries. Therefore, Lithuania sought
appropriate treatment for autonomous liberalization made and bound during the process of accession.
This should be taken into account when establishing modalities or other instruments for the treatmentof autonomous liberalization.
77. The representative of Jordan said that any modalities to be established for the treatment of
autonomous liberalization should take into account the level of liberalization in the existing Members'
schedules of specific commitments, particularly those of newly acceded Members.  Paragraph 9 of the
Doha Ministerial Declaration noted the extensive market access commitments already made by newlyacceded Members.  As elaborated by the delegation of Lithuania, newly acceded countries, including
Jordan, had made substantive liberalization covering a wide range of services sectors and modes of
supply. Appropriate consideration should be given to the bound liberalization undertaken by newly
acceded Members when assessing autonomous liberalization and accordingly granting credit.  Finally,
he expressed his interest in exploring suggestions made with respect to other forms of credit, such asconcessions on trade in goods.
78. The representative of Australia was of the view that a simple flexible framework for
autonomous liberalization was required to guide Members during the request-offer process. He
highlighted the Secretariat note's discussion on the nature of credit, helping demystify this concept.TN/S/M/1
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He then focused on three issues. Firstly, in relation to transparency, Australia was not attracted to a
framework that required Members to inform the Council of all autonomous liberalization measures for
which they were seeking credit.  Such a general transparency requirement would run the risk of
overloading the Council with information, much of which would be superfluous or irrelevant to many
Members. In his view, such notification or disclo sure requirements should be optional rather than
mandatory.
79. Secondly, with regard to the question of notifying trading partners of autonomous
liberalization measures, again he was not attracted to a prescriptive framework in terms of what
should be included in notification to trading partners. In his view, Members engaged in bilateral or
plurilateral negotiations had a natural incentive to inform their trading partners of all the relevant
factors in the autonomous liberalization measures for which they were seeking credit.  By the same
token, those who were granting credit had a strong incentive to uncover all the relevant details aboutthe relevant measure. Therefore, the information flows should work fairly freely and fairly efficiently
between trading partners without the need for highly prescriptive factors.  To that end, he said that in
paragraph 6 of the Secretariat note, where reference was made to the fact that a measure notified or
made known to a Member should contain information based on the above (criteria), a more
conditional expression such as 'may' or 'could' could be used.
80. Thirdly, regarding the role of the Council in ov erseeing the process, he expressed interest in
the concept of peer review mentioned in paragraph 10 of the submission by Hong Kong, China.
Members should be entitled to raise any issu es within the Council during the course of the
negotiations. That was in line with the responsibility of the Council for the overall conduct of the
negotiations.  However, there were certain risks associated with investing the Council with any kindof peer review role. This run the risk of distra cting Members and consuming an inordinate amount of
time with issues that arise in a bilateral or plurilateral context in which the majority of Members might
have very little interest, and which were, in any event, best resolved through bilateral or plurilateral
bargaining. He wondered what the Council would be ca lled to do in case of a complaint. The concept
of peer review started to imply questions about  mediation or making rulings, and going down that
path could be overly intrusive and represent unwanted interference in the bilateral and plurilateral
bargaining which would be at the heart of the request-offer process.
81. Finally, he raised two questions of clarification to the Secretariat regarding its note. Firstly, in
relation to paragraph 12, he asked what the last sentence meant when it indicated that whenever two
Members reach agreement on the credit to be granted to one of them or between them that agreement
would be promptly notified to the Council.  It was not clear why this information needed to be
promptly notified to the Council, particularly when the outcome would be expressed or become clearin the initial offers.  Secondly, in relation to the attachment, paragraph 2, he asked what the meaning
was of the phrase "such a measure can be scheduled or not scheduled". Did this mean that the measure
must be somehow linked to the services sectoral classification (MTN.GNS/W/120)?
82. The representative of Poland said, with reference to the submission by the Republic of Korea
(S/CSS/W/126), that it was possible to work on a universal method to evaluate the importance and
meaning of the autonomous liberalization made by ot her Members.  However, he was of the view that
the interested Members alone were in a better position to evaluate their autonomous liberalization
bilaterally, focusing on their own interests.  Commenting on the document S/CSS/W/130, Poland
agreed that special consideration should be given to developing countries, and especially least-
developed ones.  However, he did not share the view that because autonomous liberalization had beendeveloped during the Uruguay Round for the use of developing countries, only those countries could
be granted credit during the current GATS negotiations.  Poland was of the view that all GATS
Members should have the opportunity to give and receive credit for the liberalization they had made
autonomously.TN/S/M/1
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83. He then commented on the Secretariat note. With reference to the definition of basic
concepts, paragraphs 2 to 7, Poland was flexible to consider both sectoral and horizontal measures of
autonomous liberalization as eligible for credit.  However, only MFN-based liberalization should be
eligible for credit. He agreed that eligible measures were those undertaken by individual Members
unilaterally outside the negotiating context, but not necessarily bound at the WTO.  He also agreedthat liberalization measures resulting from the so-called “extended negotiations” would not be
recognized as autonomous liberalization. He also supported the last sentence of paragraph 4 of the
Secretariat note, where it was said that Members would be entitled to request credit for autonomous
liberalization measures that had been bound unilaterally after the conclusion of the Uruguay Round
and extended negotiations. Regarding the form credit might take, Poland was of the view that it was
essential to define the terms 'credit' and 'recognition' . For instance 'credit' would mean that the partner
would accept the liberalization undertaken autonomously provided that it was bound. 'Recognition'meant that the partner accepted the sole fact of liberalization measures undertaken autonomously.
84. With reference to the assessment of the value of liberalization measures undertaken
autonomously, he supported the view contained in paragraph 8 that mandatory benchmarks or targets
would be extremely difficult to establish and that it was not possible to determine the value of
liberalization measures globally for all Members in all sectors.  Qualitative assessments ofautonomous liberalization should be left to trading partners in bilateral negotiations.
85. Regarding modalities, Poland favoured a mixed approach towards autonomous liberalization,
according to which recognition and credit would take effect during bilateral negotiations.  However,
the multilaterally agreed criteria should be taken into account during those bilateral negotiations.
With regard to transparency-related issues, it was enough to provide information about theautonomous liberalization measures only to interested partners with whom bilateral negotiations were
conducted.  However, such decisions should be left to each Member intending to receive credit.
Members should notify to their trading partners only those liberalization measures for which the
Member wanted to get credit. The decision to bind autonomous liberalization measures should be
made at the end of bilaterals.  The process might entail several stages:  the first stage would be toinform a partner during bilateral talks, and on a voluntary basis, about autonomous liberalization
measures, this could be done for instance, by means of a notification;  the second stage might be the
recognition by the partner of the fact that autonomous liberalization measures were undertaken;  the
third stage would be the presentation of a conditiona l offer to the partner, including the readiness to
bind autonomous liberalization, either in full partially;  the fourth stage was the communication of the
partner's standpoint about the conditional offer-this could be done by modifying earlier requests or by
making the promise to grant a credit after the measures were bound;  the fifth stage would imply adecision on the binding of the autonomous liberalizat ion measures concerned;  the last stage would be
to inform the rest of the GATS Members,  through a notification to the Council for Trade in Services,
about the binding of autonomous liberalization measures on a MFN basis.
86. The representative of the United States noted the points made by Australia in its intervention.
He welcomed the idea contained in paragraph 7(g) of the submission by Hong Kong, China that one
of the criteria should be the significance of the autonomous liberalization measure in promoting the
economic development of the liberalizing Member. Regarding the concept of peer review, he was not
convinced that that would promote the interests that  many had already identified in these procedures.
He considered that the Secretariat note constituted a good basis for further work. He made two
suggestions. First, he suggested making it clearer that if the requesting countries were not prepared tobind their liberalization, they should have little expectation of a bound credit in return.  Second, in
assessing credit that might be offered in response to these requests, he said that account should be
taken of the situation of countries that already had extensive GATS commitments. These countries
would simply have less flexibility to provide as much credit as countries with more limited GATS
commitments. Finally, it was very clear to the United States that Article XIX intended theseprocedures to be open to all WTO Members, developed and developing, or those consideringTN/S/M/1
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themselves falling in other categories.  The United States would not be in favour of changes to
Article XIX in this regard.
87. The representative of Argentina agreed with the approach presented by the Secretariat note
and said it constituted a good basis for further work. He considered that the submission by Hong
Kong, China was very interesting because it brought up the relationship between the process ofexchange of credits due to autonomous liberalization and the requests/offers system.  On the other
hand, with regard to paragraphs 5 and 7(g),  he expressed some doubts as to what was meant by
"assessing the value of autonomous liberalization in terms of the economic development of the
liberalizing Member".  It seemed difficult to consider a credit for a measure that would produce a
benefit for the Member taking the measure. Finally, he wondered whether Hong Kong, China
envisaged any special and differential treatment.
88. The representative of Guyana said that his country was not a "demandeur" on the issue of
autonomous liberalization. He sought clarification on two matters raised in the submission by Hong
Kong, China. In section III, Hong Kong, China seemed to propose that the benefits enjoyed by the
participants of a free trade agreement be extended to all Members on an MFN basis. In his view, this
posed a conceptual and operational difficulty for his delegation. Free-trade areas enjoyed a specific
MFN exemption under Article V of the GATS and therefore could not be treated as autonomousliberalization.  The second issue was whether a free-trade area ceased to exist if MFN conditions were
granted to all Members outside of that free-trade agreement.
89. The representative of Croatia said that all Members' interests should be taken into account
when establishing modalities for autonomous liberalization.  He supported the statement made by
Lithuania on the extensive market access commitments made by countries that had recently acceded,among them Croatia, and the relationship between those commitments and the treatment of
autonomous liberalization.  The fact that these countries, and Croatia among them, had made
extensive market access commitments was recognised by WTO Ministers in Doha. This unilateral
liberalization was in itself an autonomous liberalization, legally bound under the GATS, which, as
such, should be recognized and credited.
90. The representative of Morocco said that her country was one of those who had undertaken
autonomous liberalization, particularly in financial services and basic telecommunications, but had
not notified these measures to the Council.  However, she said that transparency was an essential
element to promote the stability and predictability of the multilateral trading system.  She noted that
the autonomous liberalization measures that were notified during the Uruguay Round did not raise
any interest. This liberalization, carried out in agreement with the principle of progressive
liberalization under the GATS, should be encouraged since it benefits all WTO Members. That waswhy Morocco favoured the development of multila teral modalities rather than limiting them to
bilateral negotiations. Finally, she said that the point of departure for these negotiations was the level
of commitments in the current schedules. Morocco could not accept that the point of departure be the
status quo , as some delegations seemed to believe.
91. The representative of Senegal concurred with the statement made by Uruguay. Regarding the
Secretariat note, paragraph 3, he said that reference should be made not only to previous negotiations
but also to autonomous liberalization measures undertaken by developing countries in the context of
structural adjustment programmes.  These elements were not mentioned in the note, and he believed
that, having undertaken vast reforms in the framework of structural adjustment programmes,
developing countries deserved credits. Furthermore, credit should be granted mainly, if notexclusively, to developing countries. He paid tr ibute to the submission by the European Communities
in that regard. Additionally, he said that Members must make sure that the Doha prism cast a specific
light on these negotiations so that matters could be seen from the perspective of developing countries.TN/S/M/1
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92. The representative of the European Communities commented on the submissions by Hong
Kong, China and the Secretariat. An important point highlighted in the submission by Hong Kong,
China was the importance of considering the economic benefits that autonomous liberalization had for
the country that took such measures. He also concurred with the views expressed in that paper about
transparency.  A transparency mechanism was needed, but it should not be rigid or mandatory. Itshould be flexible, giving freedom to delegations to provide the kind of information they considered
necessary. It was clear that some information was necessary with regard to specific autonomous
liberalization measures for which credit was sought. With regard to the Secretariat paper, he
considered that the attachment contained all the key elements and provided a very good basis with
which to pursue the work. Finally, regarding the point raised by some delegations about the potential
beneficiaries of autonomous liberalization, he said that even though the text of Article XIX did not
make a particular reference to developing countries in that regard, the European Communities wereprepared to give a special consideration for these countries. However, it was out of the question to
consider a renegotiation of Article XIX, as that would imply a change in the balance of rights and
obligations of Members under the GATS.
93. The representative of Macao, China had no particular comment at this stage on the substance
of the papers on the table. He expressed the wish however that the modalities would be established as
soon as possible. On the calculation of credit, Macao, China was of the view that the modalities
should not only focus on the quantitative but also on the qualitative dimension, such as the economic
importance of the liberalized sector or sectors for the liberalizing Member.  Special consideration
should be given to the liberalization effort of small economies. More credit or more flexible
adjustments should be considered in those cases.
94. The representative of Brunei Darussalam said that many conceptual difficulties still remained.
His country had difficulties with quantitative-based criteria for assessing the value of autonomous
liberalization measures in absolute terms, as this  would be detrimental to the interests of Members
with small economies and markets. This issue should be seen from a development perspective.
95. The representative of Malaysia associated himself with the statement of Uruguay regarding
the special consideration to be given to developing countries in this matter. Document S/CSS/W/130
showed that there was a history behind this issue, and that some lessons could be learned from this
historical perspective. Developing countries were still at a disadvantage vis-à-vis  the developed
countries, so he appealed to developed countries to look at the issue of autonomous liberalization
from that perspective.
96. On the relationship between binding and autonomous liberalization, he considered that the
Secretariat note, in paragraph 14, clearly outlined the difference between those who believe thatbinding should come before the credit was given and those who think otherwise. Malaysia belonged
to the latter group. He made it clear that his country was not against binding  per se . In the course of
negotiations, when concessions were made, bindings had to be made to ensure that the concessions
were worthwhile. However, autonomous liberalization measures were completely different from the
current negotiations. A credit could take the form of leaving a certain autonomous liberalizationmeasure unbound, without putting and additional pressure on that country to open beyond that.
97. He said that the discussion had not yet got into the actual question of what the credits might
be.  The Secretariat had just pointed to two possibilities, while Indonesia had made reference to cross-
sectoral credits in the goods sector. Those were creative ideas, but there was a need to look at other
forms of credit. At the end of the negotiations, different situations could emerge. For instance,countries having undertaken extensive autonomous liberalization could end up binding part of it and
leaving the rest at status-quo level and unbound. Foreign suppliers would continue to enjoy the
benefits of that liberalization, and the country could get some credits out of that situation. There was
no need to think it terms of full bindings of those liberalization measures. There could be partialTN/S/M/1
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bindings. Also, he concurred with Hong Kong, Chin a that autonomous liberalization measures should
not be looked at only in terms of the effects for foreign suppliers but also in terms of their contribution
to the economic development of the country concerned.
98. The representative of New Zealand said that the Secretariat note essentially contained all the
basic elements that would be required for the modalities envisaged by Article XIX:3.  Obviously,
some elements outlined in that note would need to be refined. Like Australia, New Zealand
considered that the most appropriate way was to have a simple, flexible framework. He said that his
optimism as to the road ahead was however tempered by a certain sense of lack of political will on all
sides to help achieve the necessary consensus on this issue in as short a timeframe as possible. It
would be useful if the multilaterally agreed criteria could be agreed on before entering into the
request-offer phase. Like Poland and a range of other countries, New Zealand saw the notion of credit
for autonomous liberalization being applicable across the board.
99. The representative of Oman said that his country had made very extensive commitments on
services during the course of its accession negotiations. This was recognized by the Doha Ministerial
Declaration in paragraph 9.  A credit for this legally bound liberalization should be given.  The
government of Oman had a very liberal and open trade regime in services, even more open and liberal
than most WTO Members, including some devel oped countries. The government of Oman strongly
supported the idea of granting credit for autonomous liberalization not only to the old Members of the
WTO but also to the recently acceded countries. Finally, he supported the statements made by
Lithuania and Jordan in this regard.
100. The representative of Hungary said that the submissions by the European Communities, Hong
Kong, China, and the Secretariat all went in the same direction: to take account of and give credit for
autonomous liberalization measures on the basis of multilaterally agreed criteria in the context of
bilateral negotiations by providing for more optimal transparency. Hungary supported this approach.
He commented on some issues.
101. First, only a measure susceptible for scheduling, that is measures under Article XVI and XVII
and XVIII, should be considered as eligible for recognition and credit. He agreed that measuresleading to the elimination of Article II exemptions  were also eligible. Binding was of key importance.
Members wishing to get credit should be ready to bind the measure in question at least in part at the
end of the negotiations. In other words, binding should not be an up-front commitment.
102. Turning to  paragraph 5 of the Hong Kong, Ch ina paper, he asked whether the intention was
that autonomous liberalization measures in so-called infrastructural sectors that contributed to the
economic development of a Member be credited if those measures were of little value to trading
partners in general. In that regard, he considered that no distinction should be made between so-calledinfrastructural service sectors and other sectors for the purposes of granting credits.
103. Turning to the issue of transparency, he said th at a Member seeking credit should be free to
inform either the Council for Trade in Services or  specific Members about its interest in receiving
recognition or credit. Hungary was not in favour of setting up extensive procedures for notification to
the Council. Apart from that, he found the peer re view idea - raised in paragraph 10 of the Hong
Kong, China paper - interesting. This could help  relatively smaller Members in their bilateral
negotiations with bigger trading partners.
104. The representative of Tunisia said that credits should be basically granted to developing
countries.  Developed countries stood to benefit from liberalization in services.  Therefore, the
purpose of the autonomous liberalization mechanism should be to recognize the efforts made bydeveloping countries, many of which had opened up their markets even in the absence of sufficient
infrastructure.  This should be viewed as attaining the objectives of Article IV of the GATS on theTN/S/M/1
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increasing participation of developing countries in services trade. He supported the statement by
Uruguay in that sense.  That did not exclude the possibility of developed countries asking for credits
from other developed countries.  Concerning the nature of the credit, his delegation supported the
specific proposal made by Indonesia on the granting of cross-sectoral credit.  This type of credit
would take the form of concessions to developing countries in sectors of their interest, other thanservices.  For instance, this credit could take the form of additional concessions on tariff lines of
interest for the developing countries concerned, exempting them from the MFN obligation.
Concerning the organization of future work, he expr essed some concerns about the delays in reaching
an agreement on the modalities for autonomous liberalization measures.  He believed that the Council
should manage to reach agreement on this before the submission of negotiation requests.
105. The representative of India commented on two aspects.  Firstly, on whether credit for
autonomous liberalization should be given only to developing countries or to developed countries as
well, India had no problem if developed countries wanted to grant credits among them.  However, as
far as developing countries were concerned, India considered this issue as part of the obligations
towards developing countries under Article IV of the GATS. Secondly, on whether autonomous
liberalization should be bound or not, India considered that binding should not be a mandatory
condition for a credit to be given. Besides, he reminded Members that the question of binding was notentirely delinked from the debate on Emergency Safeguard Measures.
106. In addition, his delegation was of the view that the liberalization undertaken during the
extended negotiations should also be eligible for cr edit.  He agreed with the suggestions made by the
Secretariat regarding the two form s that a credit might take. However, he expressed doubts as to
whether bilateral negotiations would lead to any productive results given the asymmetry in thenegotiating strengths of different Members.  In that regard, he expressed his preference for a
multilateral approach, or at least for the major part of the work to be done in the multilateral process.
107. The representative of the Philippines said that there were several points of convergence
among the documents submitted by the European Communities, Hong Kong, China, and the
Secretariat.  Firstly, autonomous liberalization measures eligible for credit should essentially complywith the conditions provided for in paragraphs 1 and 2 of the attachment to the Secretariat note.  On
this point, most Members emphasized the need to recognize Members' existing schedules as the
starting-point for the recognition of autonomous liberalization measures. Secondly, Members seemed
to accept the criteria for assessing the value of autonomous liberalization measures set out in
paragraphs 3 and 4 of the attachment to the Secretariat note. He added that Members should recognize
the basic premise that prior bindings should not be a prerequisite for obtaining credit. He
acknowledged however, that bindings might be necessary at some point, after credit had beenobtained or at the conclusion of the negotiations.
108. He added that the issue of autonomous liberalization was especially conceived in favour of
developing countries, in order to grant recognition and/or credit for their autonomous liberalization
measures.  This did not preclude application to developed countries, especially if they sought credit
and recognition from other developed countries. Finally, regarding the organization of future work, hesuggested to fold in the proposals contained in the submissions by Hong Kong, China and the
European Communities into the Secretariat note, in order to use the new document as the basis for
future discussions.
109. The representative of Honduras spoke on be half of Guatemala, Honduras, Dominican
Republic and Nicaragua.  He recalled that these countries were part of the group of Members that
submitted the written communication on the treatment  of autonomous liberalization in S/CSS/W/130.
The main purpose of that communication was to stress that the subject of autonomous liberalization
was conceived to favour developing countries.  He expressed these countries' satisfaction that such aTN/S/M/1
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situation had been reflected in paragraph 9 of the Secretariat paper and among the general
considerations contained in the submission by the European Communities.
110. As to the modalities, he considered that the Council for Trade in Services should give a
general multilateral framework of factors that could be applied and taken into consideration in
bilateral negotiations.  The Council for Trade in Services should monitor the exercise. He concurredwith paragraph 11 of the submission by Hong Kong, China that one of the criteria to be taken into
account was the requirement to assess the value of autonomous liberalization also in terms of its
importance for the liberalising Member's economic development. This was more appropriate than an
approach that only took account of the value of the measure for those Members benefitting from it.
111. The representative of the Republic of Korea commented also on issues raised by delegations
during the interventions. He found the suggestion made by Hong Kong, China to make provision for
peer reviews interesting because it was becoming apparent that the issue of autonomous liberalizationwas going to be governed mainly in a bilateral or plurilateral context.  The issue of peer review
deserved therefore to be explored. Secondly, he said  that the two forms of credit identified by the
Secretariat note reflected the Republic of Korea's contributions. Another possibility suggested by
many developing countries was related to cross-sectoral linkages, in the sense of giving credit through
concessions in other sectors. Despite its practicality, this idea might turn out to be unpredictable.Therefore, it should be carefully studied.
112. Thus far, two different approaches had been identified: quantitative and qualitative. Korea
considered that it was very unlikely to agree on a definite set of criteria.  Therefore, he suggested the
development of options.  At the end of the day, it would be up to each delegation, during its bilateral
negotiations, to opt for a quantitative or a qualitative approach to assess the value of the measuresunder discussion.  That could be reflected in the attachment to the Secretariat note.  The Secretariat
note already contained these ideas in paragraph 3, where it said that a Member might use a
quantitative approach to facilitate the assessment of the value of autonomous liberalization measures.
113. The representative of Canada said that the Secretariat note would serve as an excellent basis
to move the discussion on autonomous liberalizati on forward.  In Canada's view, binding should not
be a prerequisite for the granting of credit.  Ideally however, an autonomous liberalization measure for
which credit was sought would be bound at the end of the negotiations.
114. The representative of Hong Kong, China replied to some of the comments made on its
submission.  First, on the question of how to measure an autonomous liberalization measure's value in
relation to the level of economic development of the liberalizing Member, he said that the
measurement work could actually be done both quant itatively, subject to the availability of credible
statistics, and qualitatively.  For those liberalization measures undertaken as part of an economicrestructuring programme, some form of assessment, done either by the Member itself or by an
external agent which might have recommended the in troduction of such measures in the first instance,
would probably give a good idea as to the value or importance of those measures for the level of
economic development of the liberalizing Member.
115. In addition, as it was suggested in paragraph 5, as a qualitative measurement, the coverage of
the autonomous liberalization measure (whether it was a horizontal or infrastructural) would also have
a bearing on the level of development of the liberaliz ing Member.  Most of the work for assessing the
value of measures in relation to economic development would take place in a bilateral context.
116. On the question of the peer review, his intentio n was to try to identify a multilateral forum
where conflicts about the application of the multilaterally agreed criteria in the bilateral context mightbe referred to for further consideration.  This might even lead to the modification of some of the
criteria should the situation so merit.  He was not however envisaging a mediation or resolutionTN/S/M/1
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process, as this would probably overwhelm the Counc il. It seemed appropriate, and indeed legitimate,
to provide a channel to feedback those difficulties ar ising from the application of the criteria to the
multilateral forum that originally established them.  Bilateral and plurilateral negotiations would be
the prime forum.   On the question raised by Argentina about special and differential treatment, Hong
Kong, China's reading of GATS Article XIX was that any autonomous liberalization mechanismshould apply to the whole membership.  Hong Kong, China had an open mind on Special and
Differential treatment and would be interested in looking into Members' views on this and in
considering possible mechanisms.
117. On the question raised by Guyana about paragraph 7(b) of the paper, he said that Hong Kong,
China had full respect for free trade agreements (FTA).  The paper was not suggesting that all FTA
parties should extend the benefits arising from such FTAs to all WTO Members.  Paragraph 7(b) of
the paper put forward the view that if the Party concerned was prepared to extend the benefits arisingFTAs to the whole WTO Membership on a MFN basis, then those measure should be eligible for
claiming credit.  If the parties concerned were not prepared to subject certain measures to the
multilateral process, then the autonomous liberalization mechanism would not apply to them.
118. Answering to a question posed by Oman, the representative of the United States said that his
previous comment assumed that the credit being sought by countries undertaking autonomous
liberalization would take the form of additional bindings by the trading partners. In that case,
countries with already extensive bindings would have  less flexibility to provide credit than countries
with fewer bindings.
119. The Chairman said that the discussion was very rich and substantive. Very good contributions
had been received from Hong Kong, China; Paraguay; the Republic of Korea; and the Secretariat. The
Secretariat's Note had been generally considered as very useful and as an excellent basis on which to
build up the Council's work in this area. The large number of interventions was a very good
demonstration of the importance that Members attached to this issue. It was clear however that the
discussion was not over, and that Members would therefore need to revert to this item at the next
meeting. As was pointed out, there was however a ce rtain degree of urgency. In fact, paragraph 13 of
the Negotiating Guidelines and Procedures called for the guidelines on autonomous liberalization to
be established prior to the start of negotiations on specific commitments.  Members were in fact
getting very close to the start of negotiations on specific commitments.
120. The question of how best to pursue the work was therefore relevant, and some suggestions
had been made. In that regard, he highlighted some attractive ideas raised during the debate. Some
delegations made reference to the convenience of having a simple and flexible framework. He added
that such a framework should also be workable, in order to assist Members in their negotiations.Many delegations also mentioned the idea of working on the basis of the attachment to the Secretariat
note, taking into account the views expressed both in the written contributions received thus far and in
the discussion.
121. He proposed to take note of the statements made. He also proposed to prepare a first
preliminary, tentative, draft of modalities for the treatment of autonomous liberalization. The ideawould be to have a flexible, simple, and workable fr amework. This first draft would be circulated well
in advance of the next meeting in June.
122. It was so agreed.TN/S/M/1
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D. WORK OF SUBSIDIARY BODIES – REPORTS BY CHAIRPERSONS
123. 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.
124. The Chairman of the Committee on Trade in Financial Services, Mr. Jan Peter Mout of the
Netherlands, reported that the Committee had met on 18 March and addressed the following issues:
Acceptance of the Fifth Protocol to the GATS;  Technical Issues;  Recent Developments in Financial
Services Trade;  Briefing session by the International Monetary Fund;  and Organization of Future
Work.
125. Under the item on the Acceptance of the Fifth Protocol, the Committee heard updates on the
status of domestic procedures from the delegations  of Brazil, the Dominican Republic, Jamaica, the
Philippines, Poland, and Uruguay.  In most of the cases, delays in the ratification process seemed tobe due to procedural matters.  In particular, he highlighted the encouraging news heard from the
Dominican Republic and Poland, who had indicated that formal ratification would take place in the
coming months.
126. Under the item on Technical Issues, the delegation of Thailand posed several questions
regarding the classification issues raised in the negotiating proposals submitted to the Special Sessionby Canada and Switzerland.  Canada promised to provide replies in the Special Session, while
Switzerland provided preliminary answers to the questions raised.
127. Regarding Recent Developments in Financial Services Trade, some delegations commented
on the informal paper submitted by the United States at the previous meeting in document
JOB(01)/161.  That document provided a case study on domestic rulemaking process, explaining howprior consultation procedures were utilised in developing implementation regulations for the Gramm-
Leach-Bliley Act.
128. Following the suggestion made by the IMF at the previous meeting, the Committee decided to
organize a briefing session on the IMF/World Bank  Financial Sector Assessment Programme.  The
session would take place in July and would be scheduled back-to-back with the meetings of theCommittee and of the Special Session in which proposals on financial services would be discussed, in
order to benefit from the presence of financial services experts in all meetings.
129. Members also exchanged views on the Organization of Future Work.  The discussion was
held in informal mode and at the end he had prov ided the following summary.  Firstly, it was clear
that, pursuant to paragraph 16 of the Negotiating Guidelines and Procedures, Members were willing
to use the Committee to its maximum capacity, avoiding overlaps with other subsidiary bodies,
particularly the Committee on Specific Commitments and the Working Party on Domestic Regulation.It was clear to him that horizontal discussions on ce rtain issues should not preclude discussions on the
specific implications for financial services.  S econdly, in that context, Members were willing to
discuss the financial-sector specificity of a wide range of issues, namely the classification of financial
service activities and domestic regulation issues.  Thirdly, it was clear that, in order to make progress
and to focus on the sector-specificity of the issues mentioned, discussions should be based onsubmissions by Members.  Fourthly, it was pointed out that subsidiary bodies should not be precluded
from taking up technical issues raised in the negotiating proposals submitted to the Special Session.
Thailand's initiative regarding classification issues was a clear example of a positive interaction
between discussions in the Special session and in the Committee.  Fifthly, it was the Members' will
that the incoming Chairman continue consultations in order to organize the Committee's activitiesproductively.TN/S/M/1
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130. It was agreed that the Committee would meet again during the following cluster of services
meetings.
131. The Chairperson of the Committee on Specific Commitments, Ms. Pimchanok Vonkhorporn
of Thailand, reported that, since the last report in December, the Committee had held two meetings:
one informal meeting on 28 February 2002, to discuss organization of future work, and one formalmeeting on 11 March 2002, to address classification issue and matters relating to the scheduling of
commitments.  She said that she would report the outcomes of both meetings simultaneously and
structured along the line of the items raised at the formal meeting.
132. Regarding classification issues, the main question before the Committee had been how to
move forward its work in light of the interface  between the Committee and the Special Session.  To
facilitate the informal debate, she had raised some questions relating to the desirability of resuming
work at the Committee level at that stage, includin g the aim and timing for such work and issues that
could be selected for that purpose;  desirability of open-ended subgroups;  and the prospects of having
new issues raised in the Committee.
133. Discussions suggested that while a number of delegation saw the merits and would wish to
resume discussions in the Committee without duplicating efforts with the Special Session, others felt
that in the present negotiating context, classification work could only be advanced once the process ofrequests/offers confronted delegations with the practical side of these discussions.  Similarly, on the
aim of the Committee's work, some delegations preferred the Committee to serve as a forum to reach
what was termed as "minimum common denominator" on classification, which was deemed necessary
as basis for the negotiations.  This group of delegations preferred to reach solutions to classification
problems at the multilateral level as soon as possible, preferably before offers needed to be submitted.However, other delegations were of the opinion that the Committee could play a more active role in
increasing transparency in negotiations.  These delegations believed that the request and offer bilateral
process would shed light on the best solutions to classification problems and in that context the
Committee would serve as a parallel forum to enhance delegations' understanding of each other's
positions on classification issues.
134. Most delegations felt that, should work resume, all sectors should be given the same attention.
On the idea of open-ended subgroups, various opinions were expressed and no consensus to create
them emerged.  Most of the delegations also indicated that, for the time being, they were not planning
to submit new proposals.  Finally, it was agreed that in any future undertaking on classification,
regardless of the forum in which they might take place, certain concepts should be observed, namely
transparency, multilateralism, attention to special needs of small delegations and Member-driven
process.
135. The formal meeting showed a more positive tone on classification.   An encouraging
development was the submission of two classi fication proposals, one on legal and one on postal
services.  Although no views were exchanged on those, this development could signal a readiness to
re-engage in substantive work at the Committee.
136. Regarding new topics for work, a few topics deemed relevant to the on-going negotiations
had been suggested at the November meeting.  Of those, the Committee had decided to take up the
incorporation of new commitments into Members' schedules and approaches to the scheduling of
additional commitments under Article XVIII of the GATS.  Regarding the former, most delegations
expressed the desirability of submitting a single schedule consolidating existing commitments, their
improvements, and new ones resulting from the current negotiations.  However, as some delegationsexpressed a desire to have more time to consider the issue, a conclusion was not drawn.  Additionally,
some views were expressed on the procedure that should be followed.  In that context, some legal
questions on the relationship between the resultin g consolidated schedules and the existing ones wereTN/S/M/1
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raised.  On the issue of approaches to additional commitments, a proposal for a stock-taking
discussion was tabled.  The Committee agreed to look at how additional commitments had been
undertaken to date as well as any suggestions related to additional commitments that might have been
made in previous negotiations.
137. Finally, she recalled the Chairman's invitation to subsidiary bodies' Chairpersons to consult
on issues that could be referred to subsidiary bodies for technical work.  She also recalled that
paragraph 16 of Negotiating Guidelines called for subsidiary bodies to be utilised to their maximum
capacity.  Bearing in mind what she had reported on her consultations on classification, the
Committee would welcome any further guidance from the Special Session on any useful role that the
Committee on Specific Commitments could play in support of the present negotiating process.  Such
guidance from the Special Session would, she believed, enable her successor to lead a productive and
efficient process in the Committee for the coming year.
138. The Chairman of the Working Party on GATS Rules, Mr. Hugo Cayrus of Uruguay, reported
that, since the previous Special Session in December, the Working Party had held one formal meeting,
on 13 March, at which it had considered the three issues on its agenda:  safeguards, subsidies, and
government procurement.  This meeting had continued on 15 March in order to address the one
remaining item on the agenda, namely the extension of the deadline for negotiations on emergencysafeguard measures.  The Working Party had also held two informal meetings, on 17 and 18 January,
and on 12 February, to pursue the discussions on emergency safeguard measures.
139. The Working Party devoted most of its attention to the topic of emergency safeguard
measures.  The two informal meetings held by  the Working Party on this topic allowed for an
informal, in-depth discussion on various writ ten submissions:  a communication from Cuba,
Guatemala, Honduras, Nicaragua and the Dominica n Republic;  a communication from the European
Communities and its Member States;  and a communication from Australia.
140. Taking into account that the deadline for negotiations on emergency safeguard measures was
to expire on 15 March 2002, the Working Party devoted most of its time to a discussion on the
extension of this deadline.  Over the previous two months, he had held numerous bilateral, plurilateraland multilateral consultations with delegations, in order to try to reach a consensus on an extension of
the deadline for negotiations.  These consultations had revealed that:  several delegations felt
frustration at the need to extend the deadline for a fourth time, whilst other delegations considered that
progress had been made during the discussions;  a number of delegations said that this should be the
last extension of the deadline;  no delegation stated their opposition in principle to extending the
deadline for negotiations on emergency safeguard measures;  there were, however, different opinions
as regarded the length of the extension.
141. After a number of consultations, at its formal meeting on 15 March the Working Party
approved a proposal to extend the deadline until 15 March 2004.  It was agreed that a note from the
Chairman mentioning the following two additiona l points would accompany the decision to extend
the deadline until the said date:  that Members noted that the WTO's Fifth Ministerial Conference in
2003 was an opportunity to carry out a "stocktaking" of progress made in the negotiations and that theChairman would hold consultations in order to establ ish a programme to structure the future activities
of the Working Party.  This decision was formally approved on the same day, 15 March 2002, by the
Council for Trade in Services.  He emphasized the cooperation, flexibility and trust shown by
delegations, which allowed the Working Party to reach the approval of this decision.
142. With regard to subsidies, various delegations recalled the importance of this issue.
143. Lastly, no statements were made with regard to government procurement.TN/S/M/1
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144. The Chairman of the Working Party on Domestic Regulation, Mr. Scott Gallacher of New
Zealand, reported that, since his previous report to the December meeting of the Special Session, the
Working Party had held one informal meeting, on 1 March, and one formal meeting, on 12 March.
Discussion during both meetings essentially centred upon the organisation of future work, based
largely on two new Chairman’s Notes.
145. As for organisation of future work, Members agreed that the Working Party should adopt a
more focused approach, which should see a move away from the abstract to the concrete.  In doing
this, it was generally accepted that an important part of this process would involve the Working Party
engaging more substantively on the issue of actual re gulatory issues that related to Article VI:4.  It
was also understood that, as the Working Party attempted to focus on the concrete, it would be very
important for it to actively explore ways to ensure that all Members, particularly developing and least-
developed, had an opportunity to participate in the discussions.
146. On the question of professional services, it was understood that the Working Party should
work through the Synthesis paper on a sectoral basis.  In so doing, it would be recognised that this
paper had inherent limitations in light of the limited number of contributions on the table.  But it was
acknowledged that, if Members could work through the results from the voluntary domestic
consultations that some Members had undertaken with selected professional services organisationsregarding the applicability of the Accountancy Disciplines, this might engender a better understanding
of the issues amongst all Members and might even result in more productive exchanges in this area of
the Working Party’s work.
147. He tended to see the most important task ahead for the Working Party to be an educative one,
which should help clarify for all Members the range of regulatory issues that related to Article VI:4and highlight the range of options that could be pursued for any disciplines that might be required to
address such regulatory issues.  It was a process that should hopefully raise everyone’s understanding
of this important provision of the GATS.
148. With regard to the development of regulatory disciplines under GATS Article VI:4, in their
discussion of concepts relating to the development of disciplines, Members worked through a range ofquestions posed in the Chairman Note in JOB(02)/4.  The question of whether “onerous visa
procedures” could potentially be covered by GATS Article VI:4 generated the greatest level of
discussion by Members, followed by the issue of the coverage of federal versus sub-federal measures.
149. The previously highly contentious issue of whether the regulatory disciplines that might be
developed by the Working Party should be applicable generally, or only where a Member had
scheduled specific commitments, this time generated little attention.  Indeed, a number of delegations
appeared more inclined to accept the Chair’s suggestion that each Member should ultimately decidefor itself.  That said, it was clear from other delegations that further exchanges were desirable.
150. As for the development of disciplines for professional services, once again, there were no new
reports on domestic consultations with professional organisations regarding the applicability of the
accountancy disciplines to other professions.  In this regard, a couple of Members expressed their
frustration at the slow pace of reporting, as the initial deadline was in 2000, and emphasised theimportance of the Working Party’s work on professional services.
151. This lack of substantive engagement in the area of professional services continued to
highlight the priority that had increasingly b een attached by Members to the question of more
horizontal or generally applicable disciplines, as opposed to the question of professional services
disciplines.  This was not a bad thing in and of itself as the work on more horizontal disciplines andprofessional services were not mutually exclusive, but complementary.TN/S/M/1
Page 27
152. Members agreed the next meeting would be held in May, as part of the next services week of
meetings.
153. In conclusion, he noted that his time as Chairman of the Working Party had been very
stimulating and he believed that the Working Party had managed to further clarify a range of issues on
the table.  Hopefully, the work that Members had participated in over the previous year or so wouldform a solid foundation for the Working Party’s future endeavours and help ensure that all Members
start to increasingly feel comfortable with the work and objectives of the Working Party.  He thanked
all delegations and the Secretariat for their support.
154. The Council took note of the reports.
E. PROPOSALS RELATING TO THE NEGOTIATIONS UNDER ARTICLE XIX OF THE GATS
155. Before entering into the substance of the agenda item, the Chairman reminded delegations
that under item "F" of the agenda, the Council woul d be discussing the organization of further work,
including, in very large part, the organization of work  under agenda item "E".  Before that discussion
on future work, and in order to provide delegations with some time to reflect, he put forward some
preliminary ideas which had emerged from consultations that he had held with delegations that had
submitted written proposals under that agenda item.  The basic points that had arisen from those
consultations were the following.
156. With the 30 June date for initial offers fast approaching, many delegations felt that, during the
next cluster of services meetings, some time should be made available for bilateral and plurilateral
meetings between delegations.  In addition, many delegations felt that the present format of
discussions of proposals under Article XIX would probably reach its useful limit at that meeting;
other ways should be found to focus the discussion on the important issues raised.  One way ofaccommodating these concerns, as some had suggested during his consultations, would be to limit the
next cluster of services meetings in May to one week, including meetings of the subsidiary bodies;
moreover, parts of the Special Session could be held in informal mode, in order to foster a fuller
exchange of views.   These were only preliminar y ideas that he put to Members for reflection.  The
Council would discuss the matter fully later in the meeting, under agenda item "F".
157. Turning to the substance of agenda item "E", he recalled that, at the December meeting, the
Council had completed its third detailed discussion of the negotiating proposals submitted by
delegations.  At the end of that meeting the Counci l had agreed that, in order to sharpen the focus of
the debate, the discussion of proposals on each of the sectors and mode 4 at this meeting would
continue to be structured around the following five elements:  classification issues;  market access and
national treatment commitments;  regulatory issu es;  issues relating to the implementation of
Article IV;  and any other issues, including MFN exemptions.
158. At that meeting, the Council's work would therefore proceed as described in the Secretariat
fax of 5 February 2002 referred to in the agenda.  In each sectoral discussion of this agenda item, he
would not ask delegations to take the floor on each of  the five elements separately.  Rather, he would
ask delegations wishing to take the floor to make one intervention structured around one or more of
the five elements.  Since the proposals on horizontal issues were different in nature, discussion ofthose topics did not need to be structured around those elements.
159. Since the December meeting, new proposals had been submitted by Australia;  Japan;  Costa
Rica;  the MERCOSUR countries;  India and Cuba.  He also drew delegations' attention to document
JOB(01)/63/Addendum 3, which updated the Secretariat synopsis identifying the main elements of the
negotiating proposals.  In addition, the Secretariat had compiled further sets of questions andresponses with respect to Members' proposal s, contained in JOB(01)/96/Add.15 to Add.20.TN/S/M/1
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160. As announced by the Chairman at the close of the last meeting of the Special Session, the
Secretariat is circulating excerpts from the speaking notes on which the Chairman based his
introductory remarks prior to the disucssion of individual service sectors under Item E of the agenda.
The aim of the introductory remarks was to stimulate discussion, and should not be taken in any way
as the Chair's summary of the issues raised so far, or as an indication of which issues the Chair
considers most important.
161. Excerpts from the speaking notes on which the Chair based his introductory remarks on
sectors under agenda item E (Proposals relating to the negotiations under Article XIX of the GATS)
of the meeting of the Special Session of the Committee on Trade in Services, 19-22 March 2002:
(i) Financial Services
162. So far in our negotiations, proposals on financial services have been submitted by Australia,
Canada, Colombia, the EC, Japan, Kenya, Korea, Norway, Switzerland, and the United States.
163. With respect to classification issues, all the proposals so far favour the use of the definitions
contained in the Annex on Financial Services. Do you agree with this? What would be the
implications for the specific commitments undertaken on the basis of other classifications?  One
Member proposes to address "ambiguities in the GATS framework, for example definitional or
classification problems that may result in uncertainty as to the scheduling and interpretation ofcommitments". However, no classification problems ha ve been raised so far in the Council.  Do you
think that there are problems or gaps in the current classification contained in the Annex? If so, how
should we proceed?  Should we task the Committee on Trade in Financial Services to tackle the issue?
164. With respect to market access and national treatment commitments, many proposals favour
the use of the Understanding on Commitments in Financial Services. However, one Memberconsiders that generalising the Understanding could force countries to go beyond what their
circumstances allow for. What do you think? Can the Understanding be used as a benchmark for
market access and national treatment commitments?
165. A broader policy issue has been raised by two proposals – that of gradualism. According to
this view, the supply of financial services withou t a commercial presence might lead to volatility in
capital movements, thus increasing the likelihood of financial crisis through contagion effects.
Therefore, a sequential approach is advocated, focusing the attention on getting more commitments on
commercial presence, and only limited commitments on cross-border trade. In fact, according to this
view, liberalization of cross-border transactions should be limited to those services which (i) assist
other economic activities and (ii) are not related to large-scale capital movements, such as financial
consulting services and credit rating business. What are your views about this?
166. With respect to regulatory issues, all the propo sals recognize the right of Members to regulate
for prudential reasons. However, some of them propose undertaking some work in the area of
Domestic Regulation. Only one of these submissions contains a concrete proposal on Transparency
and Other Regulatory Principles. Do you think that sector-specific disciplines are needed? Or should
we rely only on the work carried out by the Working Party on Domestic Regulation with a view to
establishing horizontal disciplines in this area?
167. With respect to issues relating to the implementation of Article IV, nothing specific has so far
been raised in the proposals.
168. With respect to any other issues, including MFN exemptions, work on the distinction between
modes 1 and 2 has been proposed. Do you think it is necessary? If so, how should we proceed?  Some
proposals have raised the issue of grandfatherin g, but concerns have been raised about the meaning ofTN/S/M/1
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this term for the purposes of undertaking commitments.  Finally some proposals raise the issue of
mutual recognition,  with one proposal stressing the importance of ensuring compliance with
Article VII of the GATS in the case of mutual recognition agreements covering prudential measures.
Do you think any particular action is needed in this area?
169. The representative of Cuba presented a proposal on financial services (S/CSS/W/143). Given
the special importance of financial services to national infrastructure, its liberalization had a
considerable impact on Members' economies. A well functioning financial system provided an
important vehicle for the efficient allocation of financial assets and the promotion of economic
competitiveness. Regulations should be drawn up to ensure that it was in keeping with each country's
level of development so that its operation and liberalisation did not overexpose countries to foreign
capital, which might trigger off instability and crisis. Members must strive to strengthen their
financial systems and ensure that the negotiations were conducted in accordance with their differentlevels of development. The current negotiations must take Members' individual levels of development
into account. Many developing countries had fragile financial systems, and therefore needed to
implement regulatory measures to protect themselves from speculative capital and asymmetrical
competition from transnational corporations. Bearing in mind this situation, market access
negotiations must be conditional upon the existence of a regulatory framework allowing progressiveliberalization in accordance with national policy objectives, as established in Article XIX:2 of the
GATS. Negotiations should facilitate the access of developing countries to the sectors of interest to
them in developed country markets and strengthen th e competitiveness of their services, as stipulated
in Article IV of the GATS. The nature of the sector should be taken into consideration when
liberalizing financial services.  The negotiations should not encourage excessive competition betweendomestic and foreign services and service suppliers, given the inherent risk of destabilizing national
economic systems.  In this respect, economic needs tests for commercial presence were legitimate
limitations for many developing countries. She added that the aim of the negotiations was to achieve
the increasing participation of developing countries in trade in financial services, through effective
access to markets of export interest, thus enabling Article IV of the GATS to be implemented. Cubahoped that these negotiations would result in the strengthening of its domestic financial services
capacity through the full implementation of Article XIX:2 of the GATS.
170. The representative of Canada replied to questions posed by the representative of Thailand at
the last meeting of the Committee on Trade in Financial Services. He said that Canada had four initial
objectives in the area of financial services. Firstly, Canada would like to seek greater market access
and national treatment opportunities. Secondly, Canada would like clarification on classification
issues that might exist. Thirdly, Canada would like to strengthen transparency disciplines. Finally, inorder to encourage the scheduling of additional commitments by a maximum number of countries,
Canada suggested the use of phase-in commitments. Regarding classification issues and the questions
raised by Thailand, he said that there were in fact two issues of interest. The first one was related with
the multitude of classification systems in financial services.  During the last round, Members adopted
a number of different classification systems.  A majority of delegations had adopted the classificationcontained in the Annex on Financial Services.  Others applied the classification contained in
document MTN.GNS/W/120 or original national classification methods. Some Members cross-
referenced their commitments using the United Nations Central Product Classification; while others
decided to use other codes or no codes.  What Canada would like to see and propose in the context of
these negotiations was that Members apply a uniform classification system. A clear majority ofMembers had expressed a preference for the classification in the Annex on Financial Services. Canada
supported that view. The second issue that Canada had in mind was the clarification of classification
issues related to the evolution of financial se rvices since the conclusion of the Uruguay Round.
Although Canada believed that the classification contained in the Annex on Financial Services was
comprehensive, it was not clear whether certain activities that had emerged since the last round ofnegotiations were captured by that classification. Such activities included for example trading
systems; venture capital; electronic bill presentment; and securitisation. How to address these servicesTN/S/M/1
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remained open. However, further refinement of the existing classification system in the Annex on
Financial Services might be warranted.  He finally considered that the Committee on Trade in
Financial Services was the best forum to examine these issues.
171. The representative of the European Communities considered that their submission on
financial services reflected many of the points made by Canada.  The European Communities was
among those who encouraged Members to schedule commitments in accordance with the
Understanding on Commitments in Financial Servi ces. He acknowledged the some concerns had been
expressed about the implications of commitments for capital flows and stability. In the European
Communities' view, an analysis of trade and investment flows showed that modes 1 and 3 were not
substitutes but complementary. Secondly, the European Communities did not believe that the serious
experienced by some countries were due to the activities that might be liberalized if the
Understanding were followed. Information and advisory services did not imply capital account
movements. The same was applicable to MAT insurance and reinsurance. He then replied to questions
raised by various delegations on the European Communities' proposal. Regarding the question raised
by the Republic of Korea regarding the specific sectors envisaged in paragraph 19 of the proposal, he
clarified that the European Communities' proposal referred to the so-called "contractual service
suppliers", i.e., service suppliers that had received a contract to provide services requiring thepresence of natural persons.  All financial services could potentially be concerned by this form of
delivery but it was especially relevant for services auxiliary to insurance and for advisory and other
auxiliary financial services as defined in the classification set out in the Annex on Financial Services.
172. The second issue that the European Communities had in mind is the clarification of
classification issues dealt with in the evolution of the financial services sectors since the conclusion ofthe Uruguay Round.  Although the European Communities believed that a classification system that is
contained in the Annex is comprehensive, there is a certain activity that has emerged since the last
round.  It was not clear in their mind that in all cases are captured by the existing classification, some
examples include:  trading systems;  venture capital;  electronic bill presentment;  and securitization.
How to address these services remained open, therefore it might suggest that further refinement of theexisting classification system in the Annex may be warranted.  The European Communities thought
that the Committee for Trade in Financial Services was probably the best forum to examine these
issues.
173. Regarding the question posed by Hong Kong, China - whether the European Communities
wanted to further clarify the boundaries between modes 1 and 2 in order to ensure the consistency of
commitments - he emphasized that it was important to have clarity and legal certainty in the
commitments.  In that regard, it might be necessa ry to do some work in order to have a shared
understanding about the relationship between modes 1 and 2, and what their respective boundaries
were. Although the concern was applicable to all services sectors, it was especially important for
financial services. Finally, he reminded Members of the questions raised in past meetings by the
European Communities regarding the negotiating proposals submitted by the United States, the
Republic of Korea, and Colombia, which remained unanswered.
174. The representative of Switzerland said that the Understanding on Commitments in Financial
Services provided an appropriate basis for further liberalization of financial services. Switzerland was
aware that liberalization under modes 1 and 2 might be highly sensitive, and therefore suggested
starting in those areas where regulatory considerations might be more easily addressed.  Switzerland
encouraged Members to schedule their commitments according to the classification contained in theAnnex on Financial Services.  Any other classification issue might be usefully addressed in the
Committee on Trade in Financial services, should negotiations reveal substantial problems.
Switzerland also supported discussions in the Committee on Trade in Financial Services with a view
to resolving the relationship between modes 1 and 2 as far as financial services were concerned.
Given financial services' essential in development, effective regulation and supervision were essential.TN/S/M/1
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Switzerland supported the idea of taking into account the development and the application of
generally accepted principles and standards.
175. The representative of Colombia replied to questions posed by other Members. The first
question was what were the non-prudential measures aimed at ensuring the stability and integrity of
the financial system. She replied that paragraph 2(a) of the Annex on Financial Services dealt with theconcept of domestic regulation of the financial sector and authorized Members to take measures that
were not in conformity with the provisions of  the Agreement, subject to the conditions and
circumstances established therein, inter alia , to guarantee the integrity and stability of the financial
system. Article VI of the GATS dealt with the administration of all measures of general application
affecting trade in services.  These measures affecting trade in services could be considered to include
the laws and regulations governing the conditions for the purchase and sale of financial services,
which might be adopted according to the circumstances set forth in paragraph 2(a) of the Annex onFinancial Services. The second question was on which criteria and for which Members would
economic needs tests be "legitimate". She answered that connotations attached to the financial sector
were very different from those attached to other sectors of the economy in that structural imbalances
in that sector could ultimately destabilize the economy as a whole.  Thus, it was legitimate for
Members with small or medium-sized economies to ensure that there was no excess of bankinginstitutions. The third question was whether Colombia could clarify the relation between mutual
recognition agreements and the current negotiations. She said that in Colombia's view, there was an
imbalance between the disciplines of Article VII of the GATS and paragraph 3 of the Annex on
Financial Services, although their scope was differen t.  Article VII contained a requirement to inform
the Council for Trade in Services as far in advance as possible in order to provide adequateopportunity to any other Member to participate in the negotiations, while the Annex on Financial
Services contained no such obligation.  The current negotiations provided therefore a good
opportunity to eliminate this type of asymmetry.
176. The representative of Uruguay referred to the Chairperson's introductory statement, saying
that, in his view, instead of reaching consensus on certain issues, Members should simply introduce
their proposals in order to permit everyone to be aware of their interests. It was important to put
forward proposals at the Special Session in order to show the specific interests of different
delegations.  If proposals were not made in respect of certain sectors, that did not mean that
Article IV:4 implementation problems did not occur. Whether or not proposals were made,
Articles IV and XIX of the GATS would always be in the forefront of these negotiations. Lastly,
regarding classification issues, Uruguay shared the view that it was advisable to follow a single
classification. However, the fact of life was that Members had followed different classifications, andthese would continue to be used in the future.
177. The Chairman agreed with the point made by Uruguay that the purpose of the meeting was
not to seek a consensus on the substance.  The importance of the meeting lay in the thinking of the
different delegations regarding what issues should be dealt with bilaterally.  It was in fact a mixture of
substance and procedure, in order to achieve th e greatest exchange of information and knowledge.
(ii) Transport Services
Maritime transport services
178. The Chairman introduced the debate by asking five questions. Firstly, since the 1996 Decision
on Maritime Transport Services stipulated that "negotiations will be resumed on the basis of existing
or resumed offers" and not on the basis of commitments undertaken, was there any multilateral workor Secretariat work, such as compilation of best offers, required?  Secondly, since the same Decision
required that "during the course of the negotiations the effects of the continued suspension of Article
II on MFN will be kept under review by the Council", should this review of the effects of theTN/S/M/1
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suspension of MFN become a standing item?  Thirdly was it time to address the remaining brackets in
the maritime schedule?  Fourthly should the maritime model schedule be multilaterally revised in
order to ensure that it addresses all restrictions commonly identified by negotiating proposals? And
fifthly it was not time to tackle multilaterally the four new issues emerging from the negotiating
proposals, namely  (i) feedering and the repositioning of empty containers;  (ii) offshore;  (iii) MFNexemptions and (iv) competition issues, as well as a possible fifth issue (v) the scheduling of the
provision of harbour services.  Was it not time to tackle these questions multilaterally?
179. The representative of Australia recalled that the responses to questions raised by various
Members in relation to Australia's negotiating proposal on maritime transport services were recorded
in JOB(01)/96/Add.18.  He highlighted that Australia, in raising the issue of competition, did not wish
to reopen the debate on the exemption of liner shipping conferences from domestic competition policy
provisions. Rather, it wanted to focus on the conditions and regimes under which port, auxiliary andmultimodal services were currently being delivered to all users of these services, both domestic and
foreign.
180. The representative of Poland supported the standpoint expressed in the negotiating proposal
of the European Communities (S/CSS/W/41),in the area of services connected with use of publicly
accessible port infrastructure, as well as the supply of port services on a commercial basis.  The issueof the harmonization of the names and kind of  port services required consultations between WTO and
OECD.  The offshore services sector was still of minor importance in Poland and the freighting
community was just start organize itself.  Poland however shared the Australian view that the
negotiations in the area of maritime transport should  have priority and should be dealt with in a
special way.  The elaboration of international regulations regarding multimodal transport, assupported by the OECD, should also be considered.
181. The representative of Turkey reiterated her opposition to the inclusion of multimodal services
into the negotiations, since this might violate cabotage rights.
182. The representative of the European Communities welcomed the proposal submitted by
Colombia and in particular its focus on the elements of the maritime model schedule. With regard tothe Colombian suggestion that the negotiations should cover competition issues, the European
Communities certainly did not object to consider these issues as other delegations had.  However
these discussions on competition should not be confined to maritime alone, but needed to have a
broader focus.  In addition if one looked at the factual developments, one could see that on many of
the international transport routes, rates for mari time transport had been going down by as much as
40 per cent or more from the high levels that were seen just a few years ago.  In the European
Communities' view, it was very difficult to conclude that rates were held artificially high as a result ofcompetition rules that applied to the sector.
Air transport services
183. The Chairman introduced the debate by recalling negotiating proposals from the European
Communities, Norway, New Zealand, Chile, Colombia and Costa Rica (S/CSS/W/138).
184. The representative of Costa Rica indicated that the objective of his proposal was to achieve
liberalization levels which would permit improved and more secure access in the field of repair and
maintenance of aircraft.  This was an example of sectoral interest for developing countries in addition
to the traditional mentioned sectors of tourism and informatics.  In addition those services required
skilled manpower and therefore could improve living conditions.  Repair and maintenance had grown
significantly over the past several years in Costa Rica, and was a high-added value industry.  Some70 per cent of the services provided in the sector were exports.TN/S/M/1
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185. Notwithstanding a competitive advantage, this sector suffered from obstacles which prevented
it from operating in other markets.  Examples of those obstacles were:  requirements that limit the
temporary entry and departure of specialized technical personnel;  approvals required to operate as a
foreign maintenance organization, where the granting of approvals is contingent upon economic needs
tests;  measures mandating the existence of contracts with local firms as a prerequisite for doingbusiness from abroad disproportionate administrative costs charged for obtaining the certifications
required to provide services in the territories of certain states;  discriminatory measures affecting
those foreign service providers seeking to offer repair services for aircraft flying under the national
flag;  and excessive taxes on outward payments and capital transfers.
186. The high standards of quality and safety required by specialized international bodies should
not, however, serve as an excuse for the adoption of discriminatory measures or measures which
prohibited foreign suppliers of services.
187. As indicated in the Secretariat document on air transport, S/C/W/59, modes 2 and 3 were the
most important in the sector.  Consumption abroad was in particular of decisive importance and the
number and quality of Members' commitments in this mode were not satisfactory.  For these reasons
the WTO Members should take further commitmen ts, in particular by eliminating excessive
restrictions governing the temporary entry and exit of skilled staff, the need for solvency and the
obligation to enter a contract with a domestic company to operate from abroad, as well as anything
violating MFN.  The delegation of Costa Rica also  invited Members, bearing in mind technological
advances, to re-evaluate mode 1 (cross border supply) and to take commitments accordingly.
188. The Chairman then introduced the general discussion by noting that there was an ongoing
parallel process, taking place in the regular sess ion of the Council in the form of the Air Transport
Annex review.  Apart from this procedural aspect and, without prejudging the outcome of that review,
he noted that there could be scope or multilateral work in three main areas.
189. The first area concerned the services which were explicitly covered by the Annex:  aircraft
repair and maintenance;  selling and marketing of aircraft services;  and computer reservation
services.  In the light of the emergence of on-line channels and global channels of distributions since1993, the sector has been completely reshaped:  (i) was there scope for multilateral work in discussing
classification, in particular, selling and marketing and computer reservation services?  and  (ii) was
there a need for multilateral work in the area of prevention of anti-competitive practices?
190. The second area covered sectors not explicitly mentioned in the Annex.  However, four out of
five of the proposals considered were already included in the GATS and therefore not related to traffic
rights.  These services included catering, freight forwarding, storage and warehousing, leasing and
franchising, fuelling, ground handling, airport management, air traffic control, general aviation hangerservices, cleaning and disinfecting, and another miscellaneous auxiliary services. For those services:
(i) was there potential for multilateral work on the classification/scheduling?  and (ii) was there
potential for multilateral work on regulatory disciplines for self-handling and for anti-competitive
practices in the management of airport infrastructure?
191. The third area included areas that all Members considered as traffic rights but which had
nevertheless been mentioned by some proponents as desirable subjects of negotiations.  These
services included transit, first and second freedom, non-scheduled services, dedicated freight services
and domestic air services. Was there scope there for multilateral work regarding the scope for
classification/scheduling of these services?
192. The representative of New Zealand pointed out an inaccuracy contained in paragraph 322 of
the report of the December special negotiating session (S/CSS/M/13), with respect to a statement
attributed to New Zealand on the Air Transport Annex.  The second sentence reads that "the AnnexTN/S/M/1
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should not be extended and thus the debate that focus on services that were not directly related to
traffic rights".  The delegation of New Zealand actua lly said that he considered that the focus would
be on the Annex as it currently stands in as much as the debate would therefore focus on services that
are not directly related to traffic rights.  New Zealand indicated it wanted this correction to be
incorporated in the Minutes of the present meeting.
193. The representative of El Salvador welcomed the proposal by Costa Rica on aircraft repair and
maintenance. On the Annex on Transport, he stated that many divergences remained.  However,
Members should keep on working on this Annex, since if no greater clarity was introduced it would
be very difficult to include certain sectors or activities. His country position was that traffic rights
were excluded from the Annex.  But there remained a "no-mans land" of services whose coverage had
to be clarified.
194. The representative of the United States echoed the point made earlier under financial services
by Uruguay that the aim of the exercise was to  introduce proposals by individual Members and for
other Members to take note and comment on them.  This process would then be supplemented by
requests/offers.  The concerns of the United states in this regard took on special significance in the
sector of air transport because it had stated earlier that a number items included in the negotiating
proposals, including some mentioned by the Chairman, were not covered by the GATS.  In the viewof the United States those sectors would not be appropriate for inclusion in requests.  This was the
case notably for ground handling, fuelling and traffic rights.
195. In response the Chairman indicated he had mentioned those sectors because they were part of
the negotiating proposals.
196. The representative of the European Commun ities, while acknowledging that traffic rights
were not covered, indicated that they had a strong interest in related activities and that they believed
were covered by the Annex, e.g. airport management and ground handling.  They indicated their
interest in pursuing commitments in that regard.
197. The representative of Chile expressed support for the European Communities position.  The
large number of services that facilitated air transport were not directly related to air traffic and should
not be excluded from the scope of these negotiations.
198. The representative of Brazil, recalling the debate of the third session of the Air Transport
Annex review, felt that there was no real consensu s on extending the operation of the Annex to those
services that are clearly excluded, particularly traffic rights and directly related services.  Only the
three services clearly mentioned in paragraph 3 of the Annex:  CRS;  aircraft repair and maintenance;
and selling and marketing should be the object of negotiations.  Brazil would not be in a position to
consider any requests that referred to segments of the sector outside the scope of those three services.In that regard, the Costa Rican submission was the only one exclusively dealing with  one service
clearly mentioned by the Annex.
199. The representative of Canada shared the procedural concerns expressed by the United States
and Uruguay and took note of the explanations given by the Chairman.  He agreed with the comments
made by the delegation of Brazil.  The Review of the Air Transport Annex had revealed a lack ofconsensus and therefore it had been agreed that th e Review would continue.  Consequently, anything
related to an interpretation of the scope of the Ai r Transport Annex should not be considered in the
forum of the CTSSS as this would be premature.
200. On substance, Canada believed that only CRS services, MRO services and services related to
selling and marketing of air transport services were encompassed by the Annex.  In addition, first andsecond freedoms were clearly traffic rights, as their definition in the Annex included the overflight ofTN/S/M/1
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national airspace.  No debate would be possible until Members had discussed the scope, classification
or the inclusion of commitments regarding these services under Review of the Annex.
201. The representative of Japan expressed concern about the reference to the second and third
categories of sectors identified by the Chairman.  Given that many countries still registered MFN
exemptions for repair and maintenance, selling and marketing, and CRS, Japan wanted to encourageMembers to focus on the improvement of the present commitments in the current regime.  Japan
considered that the two other categories, which had been referred to, should be kept outside the
request/offer process since they were outside of the scope of the GATS negotiations.
202. The representative of Poland considered that services directly related to the exercise of traffic
rights should remain excluded from the scope of the GATS.  Poland shared the view expressed in the
submissions of the United States and Brazil during the Air Transport Annex Review:  it was not
possible to replace the existing Chicago system of regulation by the regime of the GATS in a shortperiod of time, considering the difficulties of co-existence of those two systems.  Poland agreed with
other Members that to stop the development of GATS systems, particularly in services not related to
the exercise of traffic rights, would be harmful for development of transport services.  It seemed
useful under the WTO forum to work out the compromise aiming to make use of the developments of
both existing systems.  Poland was not in favour of  widening the general scope of the Annex on Air
Transport Services to the regulations concerning the capital ownership and structure, nor was it in
favour of extending the catalogue in paragraph 3 of the Annex to new services.  As far as possible,
Poland considered that the inclusion of air transport services in a potential tourism annex would
diminish the clarity of regulation and might lead to misunderstandings.
203. The representative of Australia indicated that it considered unacceptable that Members could
not discuss in this forum anything under discussion under the Air Annex Review on the basis with the
idea that it could prejudge the outcome of the review.  Australia had submitted a proposal during
Monday's session that provided a tool for Members to carry out a fairly objective examination of the
various activities that have been discussed, and which the Chair mentioned in his questions.  These
could provide a benchmark for assessing these activities, some objective criteria to determine if theycould possibly be included in two systems or under two systems set up that would be mutually
compatible, instead of incompatible as certain Me mbers suggested.  Australia did not agree with the
interpretation given by Brazil, Canada and the United States of what constituted a service directly
related to traffic rights.  However, Australia considered that this was an important classification issue
that needed careful reflection and which could be carried out in the ongoing request/offer negotiations
in a manner similar to the one used for other sectors, where new classifications were proposed such as
energy services, express delivery and computer and related services
204. The representative of Switzerland shared the point of view expressed by Australia.  The
Annex did not refer only to the three services explicitly mentioned, but also to a number of other
activities that were not directly related to traffic rights.  Hence, there were no reasons why requests
regarding ground handling should not be taken into account.  The representative of New Zealand
associated himself with the views of Australia and Switzerland .
205. The representative of Mexico considered that the Special Session of the Council should not
go over the ground already covered in a different forum. He recalled that Mexico was among the
countries requesting the termination of the review.  He considered that the position of his country on
the scope of the annex would be quite independent of what might be the outcome of bilateral
negotiations.  He welcomed the proposal by Costa Rica.
206. The representative of the United States welcomed  the proposal by Costa Rica  and indicated it
shared the interest of Costa Rica in the sector of repair and maintenance.  Responding to the
statements made by Australia and Switzerland he indicated that the United States understood theTN/S/M/1
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interest of other delegations in wanting additional services covered by the GATS.,  However if those
activities were already covered by the Annex, this would imply MFN  obligations in these activities.
It would seem odd that these delegations would assert that they had MFN obligations without anyone
ever having the chance to take an MFN exemption.  The United States therefore disagreed with the
statement that these services were covered.
Other Transport Services
207. The Chairman recalled that this residual category grouped together proposals made so far on
road transport, rail transport, logistics and auxiliary services.
208. On road transport, the two proposals received identified types of obstacles and areas for
potential commitments.  However, they did not appear to call specifically for multilateral work,
nor had Members mentioned this so far during their discussions. He therefore asked Members if there
was room for specific multilateral work on road transport and, if so, to state the nature of the work.
209. The situation was similar for rail transport, where the two proposals, by Japan and the
European Communities, showed areas for potential commitments and obstacles.  One of the proposals
mentioned policy considerations other than trade, but did not call for multilateral work. Nor had
Members called for multilateral work in the discussions.  So was there a need for multilateral work in
rail transport and, if so, of which type?
210. On logistics services, the only proposal available invited suggestions by Members to expand
the listing of logistics services.  The Chairman therefore asked Members if they were willing to
discuss this listing of logistics services in more detail.
211. Finally, on auxiliary services, one proposal focused on identifying areas for commitments,
while the other was centred around business problems faced by freight forwarders and combinedtransport operators, such as licensing, compulsory and discriminatory deposits, preferential prices and
access charges. The Chairman asked Members if they wanted to undertake multilateral negotiations
on scheduling and, possibly, classifications in auxiliary services.
212. The Members made no comments on those various suggestions.
(iii) Mode 4
213. The Chairman recalled that, at the Council meeting in December, Members had agreed that
the OECD Secretariat should be invited to present a paper they had recently produced on the
movement of natural persons under the GATS.  He therefore offered the floor to the representative of
the OECD Secretariat to present the paper.
214. Introducing the paper, the representative of th e OECD Secretariat said that the study, which
had been produced in 2001, was an analytical piece, copies of which could be downloaded from the
OECD web-site.
215. The paper was a largely factual study, looking at the changing context of mode 4, the main
issues it raised, the coverage of mode 4 under regional trade agreements, the issues of defining and
measuring mode 4, and the situation of current GATS commitments and how they might be improved.
216. By way of setting the scene, she noted that one would tend to assume that, in a period of
globalization, there would be greater movements of people than ever before.  However, this was not
the case.  Migration flows were no larger now relative to overall population size than they were
between 1815 and 1915.  Similarly, much of the movement that was occurring was inter-regional, asTN/S/M/1
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people moved mostly within their regions and also within and between developing countries.  Still,
one feature that had emerged was that the nature of the people that were moving were different:  they
were more skilled and were moving for shorter periods.  Similarly, the number of both labour-
exporting and importing countries had increased and a sort of hybrid effect had emerged;  countries
that used to be exporters were now both exporters and importers.  Finally, there were new drivers tothis increased mobility:  technological change had reduced transport and communications costs and
increased the need for people to move rapidly around the world;  global business networks had
created international teams to work on projects where this previously never happened.
217. Turning to the main issues w ith respect to mode 4, one of the concerns raised was that
temporary movement under mode 4 would become a stepping stone to permanent migration.
However, available information suggested that th ere was little evidence of large scale transfer
between temporary and permanent migration.  For the UK, which issued 70-80,000 work permits ayear, the latest statistics showed that only 3,000 people had applied to change categories for
permanent residence.  In fact, the effect might work the opposite way:  the availability of temporary
movement and temporary employment options might relieve the pressure for illegal migration.
218. Another concern was that if barriers were removed, countries would be flooded with foreign
labour and that the labour market would be ov erwhelmed.  The European Union experience was
instructive in this sense;  with most barriers to the movement of people removed, less than 2 per cent
of Europeans actually worked outside their country and that figure was true even of areas with very
high unemployment.  This might be attributable to the lingering presence of other obstacles, such as
language, lack of information, taxation regimes and recognition of qualifications.  Further concerns
had been raised about the impact of temporary wo rkers on the labour market.  A key question in this
regard was whether mode 4 workers were a substitute or a complement to nationals.  One argument
was that the availability of temporary foreign labour allowed governments not to address the reasons
for shortages in particular areas, as in the case of nursing:  the availability of foreign nurses meant that
governments were not required to address th e long hours and low pay which were behind many
nursing shortages.  Other issues concerned wages:  many countries argued that their comparativeadvantage lay in lower-cost labour and that stipulations that foreign workers be paid the same as
nationals fundamentally undermined their comparative advantage.  The counter-argument was that
while workers in their home countries might receive lower wages, as the cost of living was lower,
once working in countries with higher costs of living, they should have the same wage requirements
as nationals.  Similarly, questions had been raised about whether foreign workers should contribute to
social security schemes:  if foreigners did not contribute to such schemes, they became cheaper than
nationals, but at the same time many foreign workers contributed to schemes from which they couldnever receive the benefits.
219. A significant issue raised was that of brain drain, where a fine balance needed to be
considered between the benefits and costs of workers moving abroad.  The benefits were in the form
of remittances, of the value-added generated upon return of the worker returns in the terms of extra
skills, technology transfers and links.  In fact, the presence of foreign workers in a country oftencreated awareness of the skills available in that country and led to greater outsourcing and investment.
On the other hand, there were costs involved in temporary movement, for example if there was a
disproportionate impact of the loss of certain skills, such as in the case of health professionals of
which there was limited supply and high demand and where even temporary loss could result in the
closure of special units.  However, it was worth noting in this regard that the GATS did not forcecountries to export their workers and some countries had taken steps to limit brain drain, by devising
policies that made it attractive for highly skilled people to stay.  There was certainly a problem with
the "skills-cluster effects", where the loss of qualified workers made it harder to keep other qualified
staff, but there were examples of governments having created opportunities at home and attractive
incentives to draw skilled workers back home.  Overall, the impact of brain drain was hard to assessand the paper only made some preliminary observations.  Where liberalization had been undertaken, itTN/S/M/1
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had often been in the context of broader liberalization initiatives and causal relationships were
difficult to establish.  Equally, the impact of foreign workers was heavily determined by the
regulatory environment in both the sending and receiving countries.  Generally, short-term gains for
sending countries, in terms of remittances, and short-term losses of skills could be balanced against
gains over the longer term, in terms of technology transfers, human capital gains and links to marketsand to people.  The OECD was undertaking more work on the economic impact of mode 4 workers.
220. The paper also analysed the practices in a number of regional trade agreements (RTAs),
including specific initiatives under some of those agreements, to facilitate the movement of workers:
the "Trade NAFTA" visa and APEC Business Travel Card.  These agreements ranged from full
movement of workers to simple measures to facilitate existing entry.  Generally, the observations that
could be made were that nearly all RTAs gave better treatment to higher skilled workers and that there
were some similarities in the way in which such workers were defined.  However, the larger and morediverse the membership of a regional grouping, as with APEC, the greater the flexibility that was
allowed for countries to continue their existing national practices.  Administrative capacity was also a
significant issue, especially when countries were being asked to implement a specific visa regime.
The OECD had now almost completed further work on more agreements across more regions.
221. The paper also quickly looked at the definition of mode 4.  She recalled that "temporary" was
undefined in the GATS, but that "permanent" was excluded.  There was also a small question mark
over the state of foreign employers of domestic firms.  The paper adopted a definition of mode 4 on
the basis of duration and purpose of stay:  "mode 4 workers were abroad for a specific purpose, were
normally confined to one sector, did not move into the general labour market and their stay was
temporary".  The paper tried to measure mode 4 drawing from a number of sources;  immigrationstatistics and an industry survey by Pricewaterh ouseCoopers, both of which looked at the number of
people moving around the world, and trade in services statistics which looked at the value of trade.
But, measuring mode 4 presented a number of problems.  For example, the same terms had different
meanings:  "temporary" in the GATS could mean anything from a couple of weeks to several years,
however, for migration and balance-of-payments purposes the cut-off was strictly 12 months.Statistics were also incomplete, as many countries did not collect very detailed statistics on sectoral
skills of foreign workers entering, and they were not comparable.  Countries had different definitions
of "foreign":  countries of mass migration tende d to use the criterion of "foreign-born", whereas
countries with a large number of foreign workers tended to use a "citizenship" criterion.  This meant
that figures for foreign workers were often not comparable internationally and tended to overestimate
mode 4, especially as most migration statistics were too aggregated, whereas mode 4 required very
detailed information;  on the other hand industry surveys usually underestimated mode 4 because theyessentially only looked at intra-corporate transferees.  Overall, bearing all these caveats in mind, it
could be said that temporary movement, and particularly short-term movement, was increasing, but it
remained small relative to the overall labour market of most countries, relative to the other modes of
supply and relative to trade in goods.  Still, it remained very important for some countries and for
some industries.  However, there was no clea r breakdown between developing and developed
countries in that regard:  both were importers and exporters.  An additional observation that could be
made was that data tended to be better for skilled workers, which was perhaps due to the presence of
special programmes for those workers.
222. As concerned GATS commitments, delegations knew what the situation was and the paper
basically outlined very familiar problems.  She only noted that that a lot of trade was taking place,especially in areas such as health services, despite the fact that by looking at GATS schedules one
would think that there was no such trade.
223. In terms of what could be done to improve commitments, she indicated that the paper did not
look at economic needs tests, as they had been the subject of separate OECD work, but tried to
canvass a number of the options proposed and to give some background information that WTOTN/S/M/1
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Members might want to consider.  Two broad categories of measures were considered:  first,
measures to increase the effectiveness of existing access;  and second, measures to increase market
access itself.  The first category implied trying to improve the coherence of commitments.  Common
definitions of personnel would be a good start in this direction, as they would allow for clearer and
more precise commitments.  The paper looked at the possibility of using the ILO's InternationalStandard of Occupation, ISCO88, and indicated that this had some good potential, but that there were
some important limitations, as not all countries us ed ISCO88, there were variants in how countries
actually ranked the skills in various occupations and ISCO88 was not easily adapted to new jobs.
Another possibility for common definitions was to bu ild on what was already present in regional trade
agreements.  A further way to improve coherence might be to schedule the length of stay.  However,
agreeing on a minimum length of stay might be difficult, as a very wide range of practices existed and
attempts to agree on a minimum stay might result in the lowest common denominator approach.  Ifthe length of stay was not included in a schedule and made legally binding, then perhaps the
information could be made available by other transparency mechanisms as she would shortly explain.
It might also be possible, if Members considered the option of a GATS visa, to look at a specific time-
limits in that context.
224. The second category of measures were aimed at improving market access itself.  First, more
sectoral commitments could be scheduled, as current commitments tended to be horizontal.  This
would allow Members to target sectors of demand for both exports and imports and to have
definitions for particular sector-specific type of workers, thereby creating greater opportunities for
individual service suppliers.  However, these kinds of commitments might increase sectoral pressure
for safeguards or economic needs tests precisely because it became more transparent which workerswere allowed access.  There might also be a question about the degree to which under current
migration practices this could be enforced at the border;  many countries did not know the sectors in
which particular temporary workers would be workin g.  A second possibility was to look at better
access for some groups.  The suggestions made so far tended to revolve around intra-corporate
transferees, either by allowing blanket requests for companies that had a history of bringing people inand were reliable or for creating a system of fees for faster service for particular entrants.  This might
be possible for large companies but difficult, if not impossible, for small to medium sized enterprises,
public institutions and independent service suppliers.  Other options involved expanding the
categories of workers for which market access would be granted, either by broadening the categories
of "specialists" or "others" to include more middle and lower-skilled workers, or by looking at other
categories, such as "non-professional essential personnel", or training levels.  In this regard, she noted
that some regional agreements already included some such categories.
225. The paper then looked at some of the suggestions made to improve the administration of
mode 4 entry.  First amongst those was the proposal for a GATS visa, which implied carving out trade
from general migration practices.  This would have the benefit of giving easier access and generating
better statistics, but, if experience at the regional level was a guide, it might involve serious
administrative capacity issues and capacity building might be needed, as such procedures were veryintensive and complicated to administer.  The paper also considered ways that existing market access
could be better utilised by increasing the availability of information.  Additional transparency
disciplines could be agreed, either for mode 4, for example in the form of a reference paper, or as part
of a horizontal approach.  Looking at both schedules and notifications, countries might be reluctant to
bind their procedures in schedules, but they should at least be prepared to provide information viaother means.  Other options included something similar to what APEC had done, namely the creation
of a web-site where all members provided basic information about the access they provided for
temporary workers, including the categories of permits, documentation, fees, timing, conditions for
extension and dependents.
226. Given that labour markets fluctuated but GATS commitments did not, the paper also looked
at some suggestions made to increase Members' comfort level.  The first was the question of theTN/S/M/1
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relationship between mode 4 and a possible safeguard under GATS Article X.  The paper canvassed a
couple of the issues that Members might wish to consider:  How could supply be assessed in the
context of inadequate statistics on mode 4, especially at the sectoral level?  What would injury be?
Would that assume that mode 4 workers were a substitute or a complement for nationals?  And how
would causation be established?  The paper also raised the question of how a safeguard measure couldbe targeted to the problem, given the close linkages between mode 4 and other modes of supply.  One
issue raised in the context of possible special and differential treatment was how the nationality of a
service supplier would be identified.  The paper took the example of an Australian company sending
an Indian national to the UK as an intra-corporat e transferee and wondered if what would matter was
the nationality of the intra-corporate transferee or of the company.  This raised a number of
complicated questions, including whether this would result in independent service suppliers being
disproportionately targeted by a safeguard.  Finall y, the paper looked at the relationship between an
economic needs test which currently functioned as a form of safeguard and any other safeguard that
might be developed under GATS Article X.  Two other options were also looked at.  One was a
sanction against the use of a GATS-visa for a country if its companies had a pattern of abuse;  this
raised the question of how an entire country could be made responsible for the activities of one
company.  The second was the use of standing bonds to ensure that temporary workers did notbecome permanent or illegal entrants.  Again the question arose whether this would be equally
available to independent service suppliers as to intra-corporate transferees.
227. The key messages from the paper were that both developed and developing countries had
"offensive" and "defensive" interests in mode 4 and that the current negotiations, in a context of
global change, did represent a real opportunity for progress.  However, this was going to requiremoving in some ways from a migration mindset, which had shaped current commitments, to more of a
trade approach.  However, it had to be borne in mi nd that it was migration authorities who would both
be implementing any access given and be responsible for giving any kind of measurement of what
trade was taking place.  And from that point of  view, dialogue and coordination with other policy
communities remained essential.
228. The Chairman thanked the OECD Secretaria t for their presentation.  Turning to the
negotiating proposals, he recalled that the Council had so far discussed the proposals on mode 4
submitted by 7 delegations.  No new proposals on the issue had been submitted for that meeting.  On
the basis of the proposals on the table and the debate so far, his impression was that, apart from the
issue of economic needs tests, which was addressed under "horizontal issues", there were at least three
themes that had attracted attention and that might benefit from further discussion in the Special
Session.
229. First, with respect to what could be considered classification issues, there was the question of
the clarity and uniformity of terms and definitions used in schedules, such as managers, executives,
and the like.  He said that Members might wish to discuss how the clarity of mode 4 terminology
could be improved and whether it would be feasible to agree on common terms and definitions
without restraining Members' flexibility in undert aking commitments.  A second theme was the need
for additional regulatory disciplines to improve access to information and enhance transparency of
commitments.  He felt that discussion might provide delegations with a better idea of how to move
forward in dealing with this issue.  Third, there was in his view the question of how entry procedures
for natural persons supplying services under mode 4 could be simplified and facilitated.  All
delegations recognized that mode 4 covered only the temporary entry of service suppliers, and that itdid not influence a Member's immigration policy or the access to its employment market.  However,
several delegations had noted how natural persons faced the same restrictions each time they sought to
provide their services and had stressed the importance of simplifying administrative procedures
related to mode 4.  At the same time, the need to consider the costs and benefits of changing
regulatory regimes had been raised as a key consideration.  He wondered if Members had had achance to further consider this question and mi ght wish to share their views with the Council.TN/S/M/1
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230. The representative of the WTO Secretariat informed delegations that the joint WTO-World
Bank Symposium on the "Movement of Natural Persons (Mode 4) under the GATS" would be held on
11 and 12 April 2002 and that a programme of the symposium would be circulated well in advance of
the event.  He also drew delegations' attention to the letter received from the International
Organization for Migration (IOM), which had been distributed to Members as JOB(02)/29, expressing
an interest to be present at the symposium.  If th e Council agreed to the IOM's request, the implication
would be that a representative of the IOM would be present at the event.
231. The Council so agreed.
232. Responding to a question raised by the Republic of Korea at the previous meeting on his
delegation's submission on mode 4, the representative of India explained that the concept of
emergency safeguard measures was different from the concept of "in-built safeguard mechanism"referred to in paragraph 18(b) of India's proposal.  The concept of emergency safeguards was relatedto emergency circumstances, whereas concept of "in-built safeguard mechanism" was to prevent the
entry of temporary service providers into the labour market of the host country and had no
relationship to emergency circumstances.  The second question concerned the mechanism by which
mode 4 suppliers would be prevented from entering into a Member's permanent labour market; he
said that a separate visa could state that the person in question had no right to claim permanentemployment, residency or citizenship status.  Provisions could be made to make the transfer of such a
visa to other visa categories which entitled permanent residency or citizenship follow the due
procedures.
233. With regard to the IOM's observership at the symposium, the representative of Guyana said
that the presence of other international organizations would be beneficial.  He then expressed
concerns at the limited duration of stay for natural persons supplying services under the GATS and
called for the notion of "temporary" to be defined according to the type of profession involved and
taking into account the time needed to perform a gi ven service.  With regard to economic needs tests,
he said that there was no legal support for the scheduling of economic needs tests and that they
reduced the predictability of commitments.
234. The representative of Turkey said that most Members' interest in mode 4 liberalization had
been very limited up to then and that his delegation expected further liberalization in this mode of
supply, particularly from developed countries, as well as disciplines to increase the transparency of
regulations related to mode 4.  To this effect, he supported all the proposals in this regard, including
proposals from Canada on SMEs, which was an issue also related to mode 4.
(iv) Horizontal Issues
235. The Chairman recalled that seven issues had been identified as "horizontal" ones:  Article IV,
Article VII, small and medium-sized service suppliers, MFN exemptions, transparency and other
aspects of domestic regulation, classification, and, as a result of the Special Session meeting in
December, economic needs tests (ENTs).  A new proposal on economic needs tests had been
submitted since the previous meeting by the MERCOSUR countries and circulated as document
S/CSS/W/139.
236. The representative of Argentina, speaking on behalf of MERCOSUR, introduced the proposal
in document S/CSS/W/139.  He said that the purpose  of the proposal was to promote the liberalization
of trade in services in sectors and modes of supply of export interest to developing countries in line
with Article IV:1(c).  He recalled that the Guidelines adopted on 28 March 2001 stated, among other
elements, that the negotiations “... shall be conducted ... as a means of promoting ... the developmentof developing countries”, “... shall aim to increase the participation of developing countries in trade in
services” and that “... special attention shall be given to sectors and modes of supply of export interestTN/S/M/1
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to developing countries”.  Economic needs tests constituted one of the most important barriers to
international trade in services under the GATS, affecting a wide range of sectors mostly in mode 3
and mode 4.  Among the most affected sector s were tourism, distribution, professional,
telecommunication and financial services.  ENTs were not equally registered by all Members.  Rather,
a handful of Members, all of which were developed countries, accounted for approximately53 ENTs, 28 in mode 3 and 25 in mode 4.  In most cases, the criteria for the application of economic
needs tests were vague or simply non-existent.  This allowed for a large degree of discretion in the
administration of these barriers, thus seriously undermining the legal certainty and predictability of
commitments.  This situation seriously affected market opportunities in sectors and modes of supply
of export interest to developing countries.  In light of these considerations, and within the framework
of Article IV of the GATS and the Guidelines, MERCOSUR proposed that during the ongoing
services negotiations developed country Members eliminate their ENTs in sectors and modes ofsupply of export interest to developing countries.
237. The representative of Mexico said that, at first sight, he could agree with most of the
important elements raised by document S/CSS/W/139.  He noted that the quantitative analysis showed
that most ENTs had been scheduled in modes 3 and 4 and said that ENTs constituted a grey area
which restricted access particularly for developing countries, in light of their application to mode 4.He could support the MERCOSUR proposal that deve loped countries eliminate their ENTs in sectors
and modes of export interest to developing countries.  He also said that the same criteria that applied
to the disciplines to be developed under Article VI:4 should be taken into account with a view to
applying them in some form to economic needs tests.  He said that, where ENTs were scheduled,
certain disciplines should exist to make them more transparent.
238. The representative of Chile said that his delegation would revert to document S/CSS/W/139
but that he could share its thrust.  He agreed that ENTs created a grey area, which was difficult to
determine and which created uncertainty for services suppliers.  He called on Members to exert a real
effort to eliminate ENTs or at least to apply them in as transparent and objective a manner as possible.
He had found the idea that Article VI:4 disciplines be applied to economic needs tests interesting.
239. The representative of Kenya indicated his delegation's interest in the issue of economic needs
tests.  Even though he recognized that ENTs could attain certain legitimate national policy objectives,
they could minimize or nullify market access.  If administered in a discriminatory and arbitrary
manner, they could render market access unpredictable, nullify commitments and amount to a non-
binding in actuality.  An analysis of Members' schedules indicated that ENTs were penalizing in
particular sectors and modes of interest to developing countries, as had been also pointed out in the
work carried out by the UNCTAD Secretariat.  A balance had to be struck between the legitimate useof ENTs and their potential to undermine market  access.  He welcomed the MERCOSUR submission,
which could contribute to the implementation of Article IV of the GATS.
240. The representative of the United States said that his delegation would revert to the submission
by MERCOSUR.  With regard to the Secretaria t Note in document S/CSS/W/118, the United States
supported further work that would help improve the clarity of GATS commitments, including theelimination of vaguely worded economic needs tests.  Where they appeared, ENTs should provide
clear and objective criteria for government and non-government actors to understand their operation
and potential impact.  He also noted that, while aspects of ENTs inconsistent with market access and
national treatment would need to be scheduled as such, improved transparency disciplines in the
GATS would address implementation of ENTs.  He suggested that Members wanting to limit theimpact of ENTs should have an interest in work ing with the United States on transparency in the
GATS.
241. He also had a few specific comments on the Secretariat Note in document S/CSS/W/118.
First, on page 40 a provision in the United States schedule had been identified as an economic needsTN/S/M/1
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test.  This had to do with temporary admission of natural persons who were fashion models or
speciality occupation aliens.  He believed that this case demonstrated the difficulty of identifying
economic needs tests when working exclusively from the language contained in national schedules of
commitments under the GATS.  He did not believe the requirements written into the United States
schedule for admission of these persons to constitute an ENT and he went on to explain why.  Therequirements in question were imposed upon United States employers of those persons who were
seeking admission into the United States.  While United States employers of these persons were
required to comply with the provisions, the result was not a quantitative restriction on Mode 4 service
suppliers.  The United States employers had to attest that they were in compliance with these
requirements;  if, however, a valid complaint was received, questioning the accuracy of these
statements, the alien, i.e. the natural person, was not prohibited from entering the United States and
being employed in the capacity for which the person's services were sought.  Further, if a UnitedStates employer was found not to be in compliance with these requirements, it was the employer who
might be liable for legal sanctions;  a natural person could remain in the United States and continue to
work for that employer.  Under these conditions, there was no quantitative restriction on the mode 4
movement of natural persons providing services that derived from the requirement cited in the
Secretariat paper, which should therefore not be included in the Annex.
242. Second, he suggested that two cases be added to  the Annex in the Secretariat paper.  First,
Canada's horizontal market access limitation, stating that "the acquisition of control of a Canadian
business by a non-Canadian is subject to approval for all direct acquisitions of Canadian businesses
with assets not less than a monetary amount establis hed and published in January of each year in the
Canada Gazette", which included a footnote listing the criteria for this approval.  Second, Chile'smode 3 horizontal market access limitation beginning with "authorization to deliver services through
a commercial presence may take into account the following criteria".
243. The representative of Ecuador could share th e fundamental objective of the submission by
MERCOSUR, but would revert to the paper.  He  suggested that the symposium on mode 4 might
address the effect of economic needs tests on the economic situation of developing countries.
244. The representative of Venezuela said that the MERCOSUR submission was a valuable
contribution, the views in which she shared, and to which she would revert.  It testified to the
importance of discussing the horizontal issue of economic needs tests.  Commenting on the
intervention by Kenya, she said that, while not questioning the fact that some ENTs might be used for
legitimate purposes, others represented hidden barriers to market access.  With regard to the proposal
in paragraph 7 of the MERCOSUR submission, she sa id that the elimination by developed countries
of ENTs in sectors and modes of export interest to developing countries had to be viewed in light ofArticle IV of the GATS, and she called on developed countries to take this request into account.
245. Commenting on the MERCOSUR submission, the representative of India said that it
contained very useful and valid points.  He shared the observation in paragraph 3 that ENTs were
important barriers as well as the proposal in paragraph 7.  He said that he would revert to the
comment by the representative of Guyana that there was no legal support for the scheduling ofeconomic needs tests.
246. With respect to the Secretariat note in document S/CSS/W/118, the representative of Japan
said that in the course of the negotiations, in order to achieve a higher level of liberalization, Members
should try to expand the scope of commitments and at the same time decrease their lack of
transparency and uncertainty.  In this regard, economic needs tests were in general terms an elementof non-transparency that should be reduced.  It was important to have a clear idea of what economic
needs tests were.  He said that the meaning and scope of ENTs should be limited to the enumeration
in Article XVI, namely the equivalent to a quantitative restriction or numerical quota.  For example, a
licencing procedure for individual operators which only reviewed their capacity to supply a serviceTN/S/M/1
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and which did not involve a quantitative restriction was not an economic needs test but fell under the
rubric of domestic regulation.  Having a precise reference to Article XVI:2 was useful to clarify the
nature of economic needs tests and he suggested that in future ENTs be scheduled with a reference to
paragraphs (a) to (d) in Article XVI:2, as the case might be.  He underscored the importance of
transparency in the application of economic needs tests and said that the application of ENTs shouldbe subject to Article VI.  For example, if a commitment had been undertaken and the measure was of
general application, then the ENT should be admini stered in a reasonable, objective and impartial
manner in line with the prescription in Article VI :1 of the GATS.  If an ENT was related to the
categories of Article VI:4, then Article VI:4 disciplines would ensure that it be based on objective and
transparent criteria.  He said that obligations existed in the GATS that would already apply to ENTs.
It would be useful to clarify if economic needs tests were applied on a national treatment basis or only
to foreign service suppliers, either through an interpretation of Articles XVI and XVII or through theinsertion of an appropriate footnote or indication to that effect.  He agreed with the Secretariat note
that limitations related to the allocation of scarce resources did not represent an economic needs test.
247. Responding to the comment by the United States on Chile's horizontal commitments, the
representative of Chile said that the entry in Chile's schedule concerned commercial presence with the
status of foreign direct investment.  It dealt with the authorization for foreign direct investment and
provided additional juridical certainty.  Chile's general regime for foreign direct investment did not
imply any discretion or prior authorization.  At any rate, he had no problem with the measure being
added to the Annex in the Secretariat note, as long as this contributed to further clarification on
economic needs tests.
248. The representative of Brazil said that pa ragraphs 3 to 6 of the MERCOSUR submission
contained his delegation's views with regard to th e Secretariat note in document S/CSS/W/118.  With
regard to the United States explanation that the measure listed on page 40 of the Secretariat note was
not an ENT because its effects were not of a quantitative nature, he wondered why it had been
scheduled as a market access limitation and whether it should therefore be removed.
249. The representative of the United States responded that the measure applied to employers of
foreign natural persons and attached obligations to  them, as they needed to show that they were
complying with such obligations.  In the event th at these employers were not in compliance, this
would not result in a quantitative restriction for foreign natural persons.
250. By way of preliminary comments, the representative of Canada said that the Secretariat note
in document S/CSS/W/118 was a useful inventory of the economic needs tests found in Members'
schedules.  As concerned the comment by the United States on Canada's horizontal limitation, he
disagreed that this was an economic needs test.  As stated in the Secretariat note, and as the UnitedStates had also said, the definition of economic needs tests was not clear and measures could
sometimes be mistakenly considered to be ENTs.  The measure in question in the Canadian schedule
did not fit the criteria in the Secretariat note, as the nature of the test was qualitative and not
quantitative.  He also noted that not only the WTO Secretariat but also the OECD and UNCTAD
Secretariats, who had also looked at ENTs, had not considered it to be an economic needs test.  Hesaid that his delegation was ready to further disc uss the issue bilaterally with the United States.
251. The representative of Cuba supported the prop osal by MERCOSUR, especially with regard to
developed countries eliminating their economic needs tests following the request made by developing
countries.
252. With regard to the Secretariat note on economic needs tests, the representative of Turkey
thought that the measure listed in the Annex for Turkey was a prudential measure rather than an
economic needs test.  As was mentioned in paragraph 7 of the Secretariat note, some Members had
also scheduled measures that were prudential in nature.TN/S/M/1
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253. The representative of Peru expressed support for the MERCOSUR submission, which
identified the main elements of economic need s tests and linked their elimination to the
implementation of Article IV.  He stressed in particular the fact that, as stated in paragraph 5, in spite
of the lack of a definition of ENTs in the GATS, these measures could be considered as quantitative
restrictions to foreign services suppliers on the basis of the extent of existing local suppliers in thedomestic market.  He strongly supported the proposal in paragraph 7 that developed countries
eliminate ENTs in sectors and modes of supply of export interest to developing countries.  The
representative of Bolivia also underscored the MERCOSUR proposal on economic needs tests.
254. The representative of Mauritius said that the issue of small and medium-sized service
suppliers was of direct interest to Mauritius, which was a small economy.  His delegation was of the
view that the term "suppliers" was more relevant to  the size of the WTO Members rather than to the
size of the enterprises.  This was the rationale when they were negotiating upon the language of theNegotiating Guidelines.  In reacting to those who would like to consider this issue from an enterprise
approach, his delegation wanted to emphasise that there was no comparison, but rather a world of
difference, between the SMEs of small economies, like Mauritius, and the SMEs of large service
suppliers both in terms of size and capacity.  In a small economy, an SME normally had around 10 to
20 employees, but in a large economy, an SME might have more than 100 employees.  His delegationwas of the view that the term "small and medium-sized service suppliers" had to be interpreted in a
manner that would effectively benefit those who really deserved it.
255. The representative of Hungary said that the issue of SMEs was of great importance for
Hungary, which was a transition economy.  The successful restructuring of the Hungarian economy,
the coming into being of the fully fledged competitive market economy was to a great extent due toforeign direct investment.  However, FDI had concentrated mostly in large projects.  The development
of financially sound SMEs could not keep pace with the coming into being of large enterprises.  In
order for Hungary to avoid the danger of a dual economy characterized on the one hand by large,
financially strong enterprises and on the other hand by small, poor and financially vulnerable ones,
efforts were needed also at government level.  One of the priorities of Hungary's economic policy wasto promote the setting up and development of viable SMEs.
256. Hungary's interest in the services negotiations was that these negotiations underpin this
priority of their economic policy.  He concurred with Canada that the negotiations underway should
facilitate market access for SMEs.  At the same time, he shared the view that no special rules should
be created for SMEs, discriminating between enterprises of different sizes.  The way to make market
access easier for SMEs could be the identification of those barriers to trade in services that hit in
particular the smaller enterprises.  Once identified, special efforts could be made to remove them.  Inhis delegation's view, such barriers were, inter alia , discriminatory, burdensome and non-transparent
regulatory systems, bureaucratic lengthy and costly qualification and licensing procedures as listed
among others in the Canadian proposal.  Besides, and without prejudging the outcome of the
negotiations under Article XV on subsidies, he noted that Hungary could imagine a de minimis  rule
favouring small or smaller service suppliers.
257. The representative of India said that the proposal by Canada sought to draw Members'
attention to the particular concerns of SMEs.  While many barriers affected all service suppliers, the
magnitude of the effect was often greater for the SMEs.  Hence the need to consider certain issues
from an SME perspective in order to address adequately the need of those suppliers.  He noted that the
proposal did not suggest that different rules be agreed specifically for SMEs.  The main elementshighlighted in the proposal were regulatory transparency, the importance of recognition and of
addressing mode 4-related barriers.  The barriers pointed out by Canada included discriminatory,
burdensome and non-transparent regulatory environments;  non-recognition of qualifications;
requirement of commercial presence for the cross-border supply of services, which particularly
hindered supply through modes 1 and 4, the main modes by which the SMEs supplied services;  andTN/S/M/1
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the need to facilitate e-commerce.  Commenting on the Canadian proposal, the United States had
stated that it defined small firms as, those with less than 100 employees, and medium-sized ones those
employing between 100 and 499 employees.  The United States considered SMEs to be a very
important sector, as did Australia, Norway and Venezuela.  He noted that the negotiating Guidelines
referred to consideration being given to the needs of SMEs suppliers, in particular those of developingcountries.  He could therefore go along with the suggestion made by Canada.  However, what was
understood as an SME in developed countries might be different from what SMEs were in developing
countries, as noted by Mauritius.  The definition of SMEs in Canada and the United States was based
on employment, whereas in India it was based on the amount of capital.  Furthermore, there was
another category of tiny enterprises.  Hence an understanding of what constituted an SME and the
related strengths and weaknesses needed to be understood in greater detail before problems and
solutions could be discussed.
258. With regard to the implementation of Article IV, he said that his delegation could support the
proposal introduced by Pakistan at the previous meeting.  He said that Article IV was central for the
interests of developing countries, and greater efforts should be made for its implementation, which
had to go beyond "best endeavours".  The most important part of Article IV related to commitments
being undertaken in sectors and modes of supply of export interest to developing countries;  he saidthat the negotiating proposals submitted by developing countries were an indication of such areas of
interest.  The limited number of proposals tabled was developing countries could be a source of
concern in this respect.  Therefore, developing countries should be encouraged to submit more
proposals and no time-limit should be set in this regard.  India's proposal on mode 4 manifested the
interest of developing countries in this mode of supply;  the implementation of the suggestions itcontained would greatly contribute to addressing the concerns of developing countries.  He said that
his delegation would be submitting additional sectoral proposals.
259. With regard to small and medium enterprises, the representative of the Philippines said that
the discussion until then had shown that there were huge differences in the way countries classified
SMEs.  The Philippines recognized a categorization on the basis of both capital and number ofemployees.  The way in which developed and developing countries categorised SMEs had to be seen
in the context of special and differential treatment for developing countries.  Turning to economic
needs tests, he lent his delegation's support to the submission by MERCOSUR.  As an exporting
developing country, the Philippines did encounter many ENTs in the schedules of its trading partners,
particularly in mode 4, which was a mode of supply of particular interest not only to the Philippines
but to several developing countries.  The Secretariat note was useful as it clearly identified all ENTs,
across sectors and across all modes of supply, and formed a basis for trying to identify those whichmight not be appropriate for retention in trading partners' schedules.
260. Responding to some of the comments made, the representative of Canada said that the issue
of small and medium-sized enterprises had generated a lot of interest.  With respect to the comment
made by Mauritius and India that there were enormous differences in the notion and criteria used to
establish what was an SME, he said that this was a point that needed to be taken into account.Canada's proposal was not trying to multilaterally define SMEs, as their size would naturally vary
enormously depending on the size of the economy in question.  He had also taken note that
employment was not the sole criterion to establis h what was an SME, and that others could be
employed, such as capital.  He concurred with H ungary on the reasons for discussing SMEs in the
GATS negotiations:  Canada did not want to establish rules for small and medium sized enterprises,nor did it want to define SMEs in the negotiations .  His delegation just wished to explore, in the
context of the request-offer process, what kind of commitments could be undertaken for smaller
service providers.  It appeared that in all countr ies smaller service providers faced greater challenges
with respect to market access than larger firms.  Therefore, when discussing with negotiating partners,
Members should try to look through the prism of smaller service providers to see how SMEs' abilityto take advantage of services trade liberalization could be enhanced.TN/S/M/1
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261. The representative of Guyana echoed the statement by Mauritius on small and medium-sized
suppliers.  SMEs in developing countries and small economies were different from SMEs in
developed countries.  He said that the assessment mandated by Article XIX was the only way of
addressing this issue.  He added that if developed countries such as Canada wanted to facilitate the
participation of SMEs, they should allow small service suppliers of developing countries to enjoy thesame national treatment, for example with rega rd to access to credit, as their own SMEs.
262. Commenting on classification issues, the representa tive of Brazil said that the ideal situation
would have been a minimum common basis defined multilaterally in a manner consistent with the
W/120 classification, which was the classification that most Members had used to schedule their
commitments.  From discussions until then, both in the Special Session and in the Committee on
Specific Commitments, there had emerged a tendency to treat the issue of classification bilaterally in
the market access negotiations.  If this were confirmed, it would be clear that without a common basisany Member could frame its requests based on any classification it chose;  the same would be true for
the submission of offers, which would be based on the classification that best suited Members' own
regulatory framework.  He noted that, while the W/120 classification was not binding, it bound
Members to the extent that they had used it.  However, the legally binding nature of the W/120
appeared to be provided for in Article 22 of the Dispute Settlement Understanding dealing with
compensation and the suspension of concessions.  Indeed, Article22:3(f) defined what was a sector for
the purpose of compensation and retaliation in th e event of non-implementation by stating that a
sector with respect to services was "a principal sector as identified in the current "Services Sectoral
Classification List" which identifies such sectors" and the footnote referred to document W/120.  He
said that it would be useful to clarify what was the status of rights under Article 22:3(f) in the event ofcommitments being scheduled in sectors not covered by the W/120.
(v) Business Services
All business services, with the exception of accountancy, legal and computer and related
services
263. The Chairman stated that, under this sub-item, he would first open the floor on “all business
services with the exception of accountancy, legal and computer and related services".  He would then
open the floor on accountancy services, followed by legal services and, finally, Members would
address computer and related services.
264. The Chairman noted that, at the previous meeting, New Zealand had introduced a new
proposal (S/CSS/W/116) on consulting services, raising a number of classification issues relating to
the sector.  The United States also explained their earlier proposal on advertising (S/CSS/W/110),raising such issues as voluntary codes of conduct as a complement to consumer protection legislation
in the advertising sector.  Since the last meeting, the delegation of Australia had submitted a new
proposal on business services, contained in document S/CSS/W/135.  The Chairman asked the
delegation of Australia to present its new proposal.
265. The delegate from Australia noted that business services were closely linked to other sectors,
and were both fast-growing and knowledge-intens ive.  Globalization and new technologies were
driving export growth, he stated.  While business services shared many of the same features as
professional services, they were less controversial and often subject to less regulatory control.  The
delegate encouraged Members to improve the quality and quantity of their business services
commitments, including transparency and mode 4 aspects.
266. The Chairman stated that he wished to make a few comments concerning business services,
and professional services in particular.  With respect to market access and national treatment in
professional services, he noted that many Members had commented at the previous meeting that theyTN/S/M/1
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wished to see nationality and residency requirements either eliminated or replaced by less restrictive
measures wherever possible.  One representative said they also wished to replace membership
requirements in professional associations with less trade restrictive measures.
267. Several Members had said they wished to see improvements in schedules with respect to
restrictions on foreign capital, joint venture requirements, and prohibitions on the establishment ofoffices or branches.   For modes 2 and 3, one Member had questioned whether any restrictions were
justified.  On mode 4, some Members had sought horizontal measures, including the reduction of
restrictions on intra-corporate transfers.  In some of the negotiating proposals on professional services,
Members had suggested less trade restrictive alternatives to residency requirements, including the
appointment of representative agents and liability insurance.
268. Regarding domestic regulation, one Member had expressed concerns about administrative
management, such as arbitrary changes in real estate regulations.  The lack of transparency indomestic regulation was also an obstacle.  Mutual recognition was subject to Article VII, the Member
stated, and, therefore, some MFN exemptions could be streamlined.  Another delegation said that
Members could also examine the scope for more effective implementation of Article VII.  One
Member said that MRAs were important to facilitate trade, and encouraged all Members to observe
the Article VII notification requirements.
269. Several delegations had said that the WPDR di scussions showed the need for disciplines in
particular sectors, and that the on-going work on the horizontal application of the accountancy
disciplines was therefore very important.  Trade liberalization should not compromise regulatory
objectives, one Member noted, and those objectives should not be implemented in a trade-restrictive
manner.  The Chairman observed that, in addition to the requirements of Article VII, there was alsothe requirement in Article VI:6 for adequate procedures to verify the competence of professionals of
any other Member.
270. On issues related to Article IV, several delegations had agreed that business services were
essential to attracting FDI.  Many business services were characterized by a high level of professional
skills and know-how, and liberal market access for these services was indispensable for promoting thetransfer of knowledge and attracting FDI.  To make the provisions of Article IV effective, developing
countries should therefore make improved commitments for business services, the delegations had
stated.
271. The Chairman then opened the floor for comments on business services.
272. The delegation of Thailand said they were interested in pursuing the issue of equivalence
under Article VI:6, and noted that Thailand had raised this interest at the last WPDR meeting.
Thailand might also raise the issue in the Special Session, the delegation noted.
273. The delegate from the United States stated they supported the focus of Australia’s new
submission, especially paragraph 3.  The United States had already indicated their interest in several
of the subsectors mentioned in Australia’s proposal.  The delegate enquired about paragraph 12
concerning the importance of recognition measures, noting that business services tended not to be
regulated.
274. The delegation of New Zealand said they supported the thrust of the Australian proposal,
stating that it usefully addressed areas where New Zealand had aligned interests.  Notwithstanding the
United States question, the delegation emphasized the importance of GATS Article VII.
275. The delegate from Uruguay said that the link made in Australia’s proposal between consulting
services and mode 4 was interesting, and noted the New Zealand proposal for the sector.  It would beTN/S/M/1
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interesting to continue exploring the issues related to consulting services, the delegate stated,
including the mode 4 link.  Regarding Brazil’s points, he said that, until there was an agreed
classification, Members should decide for themselves, especially in situations where there were no
existing W/120 or CPC classifications.
276. The delegation of Chile noted they had previously expressed interest in business services, and
had also made a proposal.  In addition to market access and regulatory barriers, the main problems
faced by Chilean exporters included the high standards required of mutual recognition agreements.
Chile wanted to improve the implementation of Article VII.  Regarding paragraph 8 of Australia’s
proposal, the delegation questioned what the dividing line was between business and professional
services, and whether there were any criteria for making the distinction.
277. The delegate from the European Communities observed that the Australian proposal followed
the thrust of the EC’s own proposal.  On paragraph 12, the delegate asked the sectors in which price
controls were applied.
278. The delegate from Australia thanked delegations for the comments on their proposal.  On the
United States question, he agreed that Article VII was more relevant to regulated sectors.  Still, the
delegate noted, highly specialized activities such as technical and scientific services were regulated.
Regarding Chile’s question, he said the distinction in Australia’s proposal was more economic thanlegal, and noted that Australia supported the W/120 classification.  On the European Communities
question, he said that they would refer the issue to capital and respond at a later meeting.
Accountancy Services
279. Turning to accountancy services, the Chairman noted that, at the previous meeting, Australia
had reiterated some objectives in its proposal on accountancy (S/CSS/W/62), and had seen
considerable scope for further liberalization, partic ularly through the elimination of citizenship and
residency requirements for licencing and certification, restrictions on the form of commercial
establishment, unreasonable qualification requirements and restrictions on firm names.  The Chairman
then asked whether delegations would like to further discuss the issues in the proposal, or any otherissues related to accountancy.  Members did not make comments.
Legal services
280. Turning to Legal Services, the Chairman recalled that at present two delegations had tabled
specific proposals on the issue.  One of these Members, Australia had expanded its initial negotiating
proposal with a supplement clarifying the concept of "limited licensing" of foreign legal practitioners.
Australia had recently submitted an additional paper (S/CSS/W/67/Suppl.2), in which it proposed toexpand the sectoral classification for legal services.
281. The representative of Australia stated that there was a strong case for refining the W/120
classification for legal services to provide a framework that more clearly reflected the commercial
realities of transnational trade in legal services.  At present, W/120 had a single and undifferentiated
entry for legal services.  The Uruguay Round co mmitments revealed some weaknesses both with
regard to their number and the way they were structured.  There was a need to amend W/120 to
introduce sub-categories of legal service activities based on the area of law and the type of service.
Most Members active in transnational legal services recognized four main areas of law namely:
home-country;  third-country;  international;  and host-country law.  Each of these areas of law should
be covered by W/120.  Each of these four areas should furthermore be classified to accommodate twotypes of services, namely advisory or consultancy services, and representational services.  To ensure
that the proposal was truly comprehensive, four additional sub-categories should be introduced,
covering international commercial arbitration services, other alternative dispute resolution services,TN/S/M/1
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preparation and certification of legal documents, and other legal advisory or consultancy services.
These proposed refinements would give Members the flexibility to target their commitments towards
those areas of the national legal services market that would most benefit from foreign participation.
In particular, Members could make market access and national treatment commitments for foreign
practitioners to enter their market to practice home-country, third-country or international law withouthaving to permit these practitioners to practice host-country law.  He noted that the paper had also
been submitted to the Committee on Specific Commitments where technical aspects of the proposal
could be addressed.
282. The Chairman observed that the schedules of many Members showed classification categories
similar to those proposed by Australia, which underscored that the classification systems in W/120
and the UN CPC did not reflect the reality of trade in legal services.  He recalled that it had also been
suggested that the classification of legal services should be understood to include the provision oflegal advice or legal representation in such capacities as counselling in business transactions,
participation in the governance of business orga nizations, mediation, arbitration and similar non-
judicial dispute resolution services, public advocacy, and lobbying.  In addition to classification and
the closely related limited licensing concept, the Ch airman recalled that with regard to regulatory
issues, it had been suggested that the disciplines developed for the accountancy sector in 1998 couldbe extended to the legal services sector, with some further strengthening.  Others sought ways to
address issues of recognition, scope of practice and association of foreign lawyers or foreign legal
consultants with local lawyers and law firms, as well as transparency of regulation.
283. The representative of Poland stated that the most important barriers to trade in legal services
were nationality requirements and the lack of a legal basis to recognize foreign qualification.  Foreign
lawyers should be permitted to practice home-country, third-country, and international law.  The
competent and independent authorities of Members should authorize the opening of practices
according to the skills and interest of the foreign lawyer.
284. The representative of Japan stated that his delegation was very interested in revising the
existing classification in legal services, because in  reality commitments were made according to the
areas of law and types of services.  A revision would clarify the scope of commitments that could be
made in the negotiations.  He welcomed the Australian proposal, but wondered whether the twelve
categories proposed therein were not too detailed.  Instead, a subdivision could be made by areas of
law, and then, under each area of law, the specific types of services in which commitments.  He was
not certain whether consultancy services and representative services were the only categories that
could be provided in each area of law.  Technical aspects of this issue could be addressed in the
Committee on Specific Commitments.
285. The representative of the European Communities ag reed with the thrust of the latest, as well
as the earlier, Australian negotiating proposals.  He agreed that there should be enhanced flexibility
for Members in making commitments in legal services.  However, he was not sure whether the
classification proposed by Australia would indeed ensure greater flexibility.  The classification
contained in W/120 was already sufficiently flexible.  A clear distinction could already be madebetween consultancy and advisory services on the one hand and representational services on the other.
As regards fields of law, a clear distinction might be made between international public law and
national law.  Further sub-distinctions on types of national law were not easy to make.  A simpler way
of overcoming the difficulties that the Australian proposal sought to address might be to establish a
simple link between national law and required title or qualification to practice that national law.  Hewondered whether the distinction between types of legal services and areas of law should not be
considered as an issue for a model schedule rather than a classification issue proper.  A discussion on
the basis of the latest Australian proposal might be useful with a view to improving the understanding,
and assisting Members with the scheduling of commitments.  Specifically, he sought clarification
from Australia on the following questions:  first, hom e-country legal services, in both their advisoryTN/S/M/1
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and representation form, were defined in Australia's proposal by reference to the law of the
practitioner's country or jurisdiction.  He was not certain about the purpose of referring to the law of
the home country as different from the law or jurisdiction in which the practitioner had a legal right to
practice.  He wondered whether legal practitioners could provide advice on their home country law
even if they were not qualified in that jurisdicti on; also, he was not certain how practitioners who had
qualified in more than one jurisdiction would fit into the classification.  Where a practitioner had
qualified in a jurisdiction other than his home-country jurisdiction, could his services be considered
both home - and host-country legal services?  Second, home-country legal advisory services were
defined as advice or consultancy services in the law of the legal practitioner’s home country or
jurisdiction in which the practitioner had a legal right to practise law.  The representative of the
European Communities was not clear whether the term "legal right" related to a title or qualification.
Third, unlike for home-country advisory services, the definition of home-country representationalservices did not refer to the legal right to practice law.  Fourth, concerning third-country law, both
categories of advisory and representational services were defined by reference to the law or
jurisdiction where the practitioner had "competenc y".  He wondered what was meant by competency
and how it could be proved.  The definitions of third-country law did not refer to the right or
qualification to practice.  International law was not defined, and it was not clear what would becovered by this term.  There was no further reference to qualification under international law.  Would
it be necessary that the practitioner was qualified in any jurisdiction?  Could Australia conceive of a
possible list of bodies which would be covered by the definition of international law?  Finally, the last
four categories in Australia's proposal did not follow the distinction proposed throughout the paper.
He wondered whether these categories were really relevant.  He was not certain whether alternativedispute resolution services could be considered as lega l services at all, and to what extent preparation
and certification of legal documents was not already covered by the first eight categories in the
proposal.
286. The representative of Korea stated there were three options of dealing with classification
issues in legal services, namely to stick with the classification contained in W/120, to introduce
definitions based on schedules, or to introduce a new category of foreign legal consultancy, as
previously proposed by his and other delegations.  The Australian proposal seemed to combined the
second and third option.  He looked forward to a discussion of that proposal in future.
287. The representative of Canada stated that the way of regulating legal services varied widely in
different countries, and was mirrored in the differences contained in the way commitments were
reflected in Members schedules.  The classification contained in W/120 had proven to give flexibility
to address those differences.  He believed that in the discussions on classification, the question oflegal certainty was of paramount importance.  The proposed expansion raised questions of legal
certainty with regard to the transition from old to new schedules.  This complex issue had been
already touched upon in the Committee on Specific Commitments but required further thought.
Australia's classification was an excellent descript ion of commercial realities.  One should not lose
sight that the negotiation of a legal instrument required a balance so that complex and diverseregulatory measures could be captured.
288. The representative of Cuba stated her delegation would like to revert to the Australian
proposal in the near future.
289. The representative of Australia stated he would respond to the questions and comments at a
later meeting.
290. The Chairman suggested that the Council take note of the statements made.TN/S/M/1
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Computer and related services
291. Introducing the topic of computer and related services, the Chairman noted that, to date, there
had been six submissions that addressed computer and related services.  These were from Canada,
Costa Rica, the European Communities, Japan, MERCOSUR plus Bolivia, and the United States.
292. With respect to classification issues, the Chairman noted that one of the proposals (Costa
Rica) suggested that classification should be reviewed to determine whether it corresponded to
developments in the sector and proposed that su ch a review should focus on the UN CPC.  Another
proposal (Canada) suggested that the line betwee n computer and telecom services had grown less
distinct, and called for an examination to achieve greater clarity as to whether certain on-line services
should be classified under computer or telecomm unications.  One of the proposals (MERCOSUR plus
Bolivia) put forward the view that the sector included both  “packaged” (or standardised) andcustomised products, as well as to computer consultancy services.
293. With respect to market access and national tr eatment commitments, the Chairman said that
proposals in this sector generally called for the elimination of restrictions on market access and
national treatment for all subsectors and across all modes of supply.  Most of the proposals
emphasised the importance for this sector of improvement to commitments in mode 4 and noted thatsuch limitations were often horizontal, rather than sector specific.  They called for elimination of
restrictions on the temporary movement of executives and employees linked with mode 3, as well as
specialised IT workers not associated with mode 3.  Two proposals (MERCOSUR, European
Communities) also noted the importance to this sector of on-line provision and, consequently,
improved commitments in mode 1.  In terms of specific limitations, two proposals (Japan,MERCOSUR) called for addressing limits on foreign eq uity.  Also cited as barriers were restrictions
on the type of legal entity (MERCOSUR), on types of business operations permitted (Japan),
discriminatory tax treatment and excessive capital transfer or repatriation taxes (Costa Rica).
294. With respect to regulatory issues, the Chairman  said that a number of the proposals suggested
that technical standards and licensing requirements could constitute significant barriers to trade incomputer and related services.  One of the proposals (Canada) noted that standards in other sectors
also had an impact addressing standards issues, as  well as obtaining improved commitments, in other
sectors served by the IT industry would help expand trade in this sector.  Other regulatory issues
mentioned included domestic procurement requirements for exports (Japan), lack of objectivity and
impartiality in administration of measures (Japan), and qualification requirements and procedures
(MERCOSUR).
295. With respect to issues relating to the implementation of Article IV, he said that a number of
the proposals pointed out that this was a sector whose liberalisation could contribute to increasing the
participation of developing countries.  One proposal (Canada) suggested that improving mode 4
commitments in this sector, especially for worker s not linked to commercial presence, would benefit
developing countries.
296.  With respect to other issues, including MFN exemptions, he said a number of proposals
stressed the relevance of this sector to electr onic commerce (Canada, EC, US).  One proposal (EC)
suggested that the Council initiate discussions specific  to this sector either in the Special Council or a
subsidiary body.
297. The representative of India noted that in his country, this sector was one of the fastest-
growing industries and generated employment and exports.  The sector had unique characteristics,
such as it required skilled man-power, few raw materials, was environmentally friendly and was an
important sector for both developed and developing countries.  India hoped that the current
negotiations would ensure continued growth.  He noted that, although this sector was comparativelyTN/S/M/1
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less restricted than other sectors, various horizontal limitations remained which restricted the free
flow of services.  For example, in sub-servi ces (a) to (d) full market-access commitments for
commercial presence were high (between 68 and 77 per cent), while those for the movement of
natural persons were low (4 to 7 per cent).  He underlined that this constituted a serious asymmetry in
the mode of delivery of services of particular inte rest to developing countries and added that further
barriers were included in horizontal commitments, particularly the supply of services via mode 4.  The
Indian proposal noted that, given the increasing proportion of offshore services and recent
technological developments, full commitments under mode 1 should be considered in the current
round of negotiations.  Furthermore, it proposed that the ISCO 88 classification of professional
categories could be superimposed on the professional services sectors of classification list W/120 as
indicated in Annex A of its proposal.  He noted that horizontal commitments taken under mode 4 had
not achieved the desired level of liberalisation and he proposed that Members make sector specificcommitments under mode 4 and remove all numerical restrictions on the entry of professionals in
foreign markets.  The specificity of this mode required the need for speed and flexibility in the
movement of personnel, notably, the provision of rapid visa requirements for short-term contracts and
on very short notice.  In addition he underlined the need for greater transparency, simplicity and
certainty of the visa regime.  Finally, India noted that social security levies and contributions leviedon such professionals should be removed as they stood to gain no benefit from the host country's
social security programs.  India hoped that those Members who had not made commitments would be
able to make sector specific commitments, and those with commitments would improve their
commitments.
298. The representative of Poland expressed its support for further opening this sector, as in
paragraph 7 of Costa Rica's proposal, which called for coverage of consultancy services related to the
installation of computer hardware, software implementation, data processing and data based services.
She noted that restrictions on national treatment and market access in this sector should be kept to a
minimum if not eliminated.
299. The representative of the Philippines noted with interest the paragraphs in Costa Rica's
proposal concerning discriminatory tax treatment for foreigners, excessive capital transfers or
repatriation taxes, and excessive restrictions for temporary entry and exit of specialised personnel.  He
noted that the Philippines faced similar barriers for exporters in this sector.  He thanked India for its
submission and noted the Philippines' similar interest in facilitating the movement of natural persons
across sectors.  He noted that mode 1 (cross border) supply of this service was of increasing
importance for developing countries who have been developing competitiveness in this sector.
(vi) Communication services
Postal and courier services
300. The Chairman noted that there had thus far been six proposals that addressed postal and
courier services. These were from the European Communities, Hong Kong, MERCOSUR plus
Bolivia, New Zealand, Switzerland, and the United States.
301. On classification issues, he noted that all the proposals pointed to an inadequacy of W/120
with respect to postal and courier services.  Ho wever, views differed on how to update W/120 to
reflect the current business and regulatory situation.   He noted that it might be worth considering that
how to organise a more representative classification scheme and what activities to take commitments
on as two different questions:  decisions or positions on the first question could be taken withoutprejudice to decisions on the second.
302. On market access and national treatment commitments, in general terms, the proposals
favoured negotiations on market access and national treatment that would result in more extensiveTN/S/M/1
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coverage of these services in schedules.  However, the proposals diverged concerning whether to
address the full scope of such services or only some of these.  As a result, to some extent the kinds of
barriers considered most important differed depending on the approach favoured.  In identifying
barriers to market access and national treatment, some proposals emphasised the existence of
monopolies, while others focused on measures that discriminate against or otherwise impede foreignsuppliers already participating in many markets.  A number of proposals suggested the importance of
cross-sectoral linkages, i.e. that commitments in some of the transport sectors would benefit these
services or, conversely, that liberalisation of postal and courier services could enhance trade in
logistics services and electronic commerce.
303. The Chairman noted that the proposals dedicated much thought to regulatory issues, and that
this reflection was driven by inter-related developments: the postal sector undergoing regulatory
change in the direction of liberalisation (Mercosur), at the same time as reserved and liberalisedmarkets continued to co-exist (Switzerland).  In addi tion, an increased interest in these services, which
were not subject to close scrutiny in the Uruguay Round, had possibly led to a number of problematic
regulatory practices that, to date, had not been given much thought.  These ranged from licensing
practices and customs procedures to the need to set up independent regulators.  One suggestion (US)
noted that “additional disciplines” of some type we re needed to address regulatory issues in these
sectors.
304. The Chairman noted two other issues:  a suggestion to bear in mind the role of “universal” or
“public” service obligations that had been fairly commonly applied in the postal sector, and a
suggestion to explore the relationship between the GATS and UPU legal instruments.
305. The representative of Argentina restated an earlier question from Hong Kong, China put to
MERCOSUR (regarding proposal CSS/W/108) which as ked whether government agencies providing
postal services do so whilst exercising government authority or whether they subcontract to private
entities and how could this relate to cross-subsidization?  The delegate noted that the answer was
implicit in the services agreement, which states that a service supplied exercising government
authority means any service that is not provided on a commercial basis or in competition with any
other services supplier.  He further noted that  the communication by MERCOSUR and Bolivia stated
that the official postal and courier services providers compete on equal conditions in the postal market
for services which were not reserved to those public agencies responsible for universal postal services.
In this new scenario, the separation made between the regulatory function and the actual supply of the
service, maintained the important role of governments in ensuring the physical and economical access
of the population to a basic set of services.
Telecommunication services
306. Turning to telecommunication services, the Chairman noted that there had been 11 proposals
received concerning this sector namely:  Australia, Canada, Chile, Colombia, European Communities,
Japan, Korea, Mexico, Norway, Switzerland, and the United States.
307. First, with respect to classification issues, the Chairman noted that it appeared from proposals
made to date that the existing classification had not posed a problem.  Most proposals stressed the
value of continued application of a broad, technology neutral interpretation of the services in a
manner that took into account technical innovations as well as commercial and regulatory
developments.  They largely implied that the existing services sectoral classification, read together
with the “Chairman’s Note on Scheduling of Basic Telecommunications”, could accommodate theseobjectives.  Proposals, however, identified the need to consider the coverage of telecom commitments
in the light of media convergence  (Chile), th e distinction between telecom services and on-line
computer services (Canada), and between “basic” and “value-added” services (Australia).TN/S/M/1
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308. The Chairman noted that the various proposals were remarkably uniform in calling for further
improvements in market access and national treatm ent, the undertaking of commitments by Members
that had not yet done so, and more widespread adoption of the Reference Paper commitments.  While
all proposals called for market access negotiations on the full range of services, some stressed that
value-added, Internet and satellite services should not be overlooked.  Among the barriers mostcommonly mentioned were limits on the number of  suppliers (including continuance of monopoly
rights) and foreign equity restrictions.
309. With respect to regulatory issues, the Chairman  noted that the fairly broad range included in
proposals, which had important implications for the telecom sector and its commitments.   Nearly all
proposals recognised the Reference Paper on regulatory principles as an important contribution to this
sector and called for commitments on these principles.  Other regulatory issues raised included
universal service, management of the spectrum, licensing requirements and technical standards.
310. He further stated that almost every proposal submitted to date addressed the implementation
of Article IV, and recognised the relevance of the telecommunications sector, particularly in view of
the results of reform that have been undertaken, in furthering the goals of economic development.
311. Commenting on other issues, including MFN exemptions, the Chairman noted that four
proposals (EC, Japan, Colombia, Australia) addressing MFN treatment, called expressly for efforts toeliminate the exemptions taken in this sector.  One of these (EC) stressed, at a minimum, the
elimination of those related to satellite services and accounting rates. Another proposal (Chile) urged
Members to consider the relationships between trade in telecom and supplementary services and other
areas such as intellectual property rights, trade-related investment measures and e-commerce.
312. The representative of Korea, responding to the Colombian proposal, said that many issues
needed to be addressed in the telecom sector if the negotiations were to be successful.   Countries such
as Norway, Austria, the United States, Singapore and the European Communities emphasised the
need for the wider adoption of the Reference Paper.  He noted that a set of pro-competitive regulatory
principles, as outlined in the RP, form an important pillar for enhancing the value of existing and
future market access commitments.  Similarly, the Annex on telecom created in the Uruguay Round
provided an additional pillar for supporting best regulatory practices.  However, he reminded the
Council that the legal status of the two pillars was quite different:  the former was binding only for
Members which have included it in their schedules while the latter was common to all Members
regardless of whether they have undertaken specific commitments.  He stated that Columbia's
suggestion that the principles of the Reference Paper be incorporated into the Annex as a means to
facilitate a more competitive environment in the world telecom market warranted attention.  He noted
that, after the creation of the Reference Paper in the NGBT, negotiators considered how to make the
principles binding; however, they found that the amendment of the Annex was not feasible because it
required ratification by two-thirds of WTO Members in accordance with Article X of the WTO
Agreement.  As a result, the Members agreed to include those principles on an individual country
basis in the form of Additional Commitments as pursuant to GATS Article XVIII.  Korea wished to
make two suggestions on this matter should such a process of incorporation arise.  There should be adiscussion that renders clear the adjustments to the scope of the two documents which were currently
defined differently, i.e. for the former, the applicability was confined to basic telecommunications,
while the latter related primarily to public telecom transport network and services (PTTNS).  Korea
felt that simply merging the former with the latter could be desirable in the sense that the coverage of
pro-competitive regulatory principles could be made wider in terms of number of Members withobligations.  However, he noted that the benefits could be more limited than expected so long as the
coverage of services in the two documents remain ed uncertain, for example, how broadband internet
access and the network services would be treated.  He noted that the incorporation of the Reference
Paper into the Annex could create a practical problem of asymmetry between developed and
developing countries or between the Members of the 4
th Protocol who have already adopted theTN/S/M/1
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Reference Paper and the others not having done so yet.  He underlined that the latter group was
relatively unprepared for adoption due to lack of regulatory experience and thus less likely to attain
effective competition in their telecom service market in the near future.  Korea shared the view of the
European Communities and Singapore who stressed the need to assistance developing countries.
313. The representative of the European Communities said that the points made in its proposal had
been covered in the Chairman's introduction.  He noted the importance of this sector as an
infrastructure sector key to the development of other sectors, particularly  electronic commerce.  He
further noted that the European Communities would look for the introduction of competition in this
sector  and would seek the elimination of MFN exemptions, which should allow for discussion on
accounting rates.
314. Referring to the Chairman's summary remarks on the classification of some
telecommunication services as value-added services, the representative of Brazil said that these
considerations might be complimented by the examination of why and how the consideration of
services (such as I-internet protocol telephony) as a value-added service would be consistent with the
concept of technological neutrality as discussed in the negotiations on basic telecommunications.
Audiovisual Services
315. The Chairman recalled that four proposals had been presented in this sector, namely: United
States (S/CSS/W/21), Japan (S/CSS/W/42), Switzerland (S/CSS/W/76) and Brazil (S/CSS/W/99).
They generally recognized the "dual" nature of audiovisual products, as having both a cultural and a
commercial components.  Several Members did not see any contradiction between increased
liberalisation in this sector and the implementation of cultural policies and considered that the GATS
provided sufficient flexibility in this respect.  Othe r Members said that they wanted to preserve their
ability to promote and implement cultural policies.  Several issues might deserve further
consideration.  Firstly, one Member had suggested reviewing the classification of audiovisual services
in order to take into account technological devel opments.  This suggestion had received some support,
although one Member "remained to be persuaded" that  the sector had changed and that a classification
exercise was needed.  He enquired whether classification work should be undertaken in the sector ofaudiovisual services.  Secondly, three proposals called for increased liberalization in this sector and
one Member added that MFN exemptions should also be negotiated.  The question arose as to whether
these issues deserved some kind of multilateral consideration or whether they should be left to the
market access negotiations, in particular the request/offer process.  Thirdly, a number of regulatory
issues had been raised.  They included possible disciplines on subsidies, consideration of a "cultural
diversity safeguard", examination of the issues of public services and of illicit content.  It had also
been proposed to discuss competition issues.  In this regard, one Member had suggested to develop"appropriate trade defense mechanisms", such as antidumping disciplines or emergency safeguard
measures.  The Chair needed further guidance as to how these questions should be addressed.  Finally,
one proposal indicated that negotiations in the audiovisual sector should contribute to increasing the
participation of developing countries in trade in services and, in particular, that specific commitments
should be made taking into account the objectives of Article IV of the GATS. Several Memberssupported the focus put on developing countries' interests and prospects.  He enquired whether issues
related to the implementation of Article IV in re lation to audiovisual services should be given
consideration in the Special Session.
316. The representative of Brazil said that the question of competition could be addressed in
conjunction with the issues of anti-dumping or the trade defense mechanisms.  It remained to be seen
which one of these mechanisms could be more ap propriate.  Audiovisual producers of developing
countries encountered difficulties to have access to distribution channels, not only on international
markets, but also in their own territory;  this was due  to a high level of concentration in this sector.
Reference to anti-dumping in the Brazilian proposal referred to questions of pricing and to the factTN/S/M/1
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that audiovisual products entered the market with costs which had already been recouped in the home
market.  He noted that one Member had taken a MFN exemption in order to apply duties against
foreign products.  Competition issues related to access to channels.
317. The representative of Thailand said her delegation was concerned that so many regulatory
disciplines were proposed in this area.  Thailand would not be able to compete with new subsidies.
She wondered why Switzerland, which had always be en sceptical regarding the desirability of an
emergency safeguard mechanism, proposed a "cultural diversity safeguard".  More explanation was
needed regarding the proposed anti-dumping disciplines.
318. The representative of New Zealand said that subsidies were not available to a large proportion
of the membership.
(vii) Construction and Related Engineering Services
319. The Chairman said that proposals in this sector have been submitted by eight delegations.
With respect to classification issues, questions have been raised with respect to the coverage of
"dredging services", and "multi-stage" construction projects.  It has been proposed that future specific
commitments encompass all stages of the construction process ranging from “pre-erection work at
construction sites” (CPC 511) through to “build ing completion and finishing work” (CPC 517), in
order to ensure that services suppliers that are engaged in “multi-stage” construction projects obtain
the range of commitments that they require so as to effectively carry out their work.   Further,
questions have been raised about the interrelations hip between the supply of construction services and
the supply of other services, particularly professional services. Construction-related services identified
include architectural (CPC 8671), engineering, (C PC 8672), integrated engineering (CPC 8673) and
urban planning and landscape architectural services (CPC 8674).  Should these issues be discussedfurther?
320. With respect to market access and national tr eatment commitments, most barriers identified
relate to modes 3 and 4. However, the possibility of undertaking commitments under mode 1 has also
been raised.  Additionally, one proposal notes that the absence of multilateral rules for procurement is
probably the most important non-tariff measure affecting trade in this sector.  Another proposalindicates that subsidies also play a crucial role in restricting access to foreign markets by developing
country firms.
321. With respect to regulatory issues, the lack of  recognition of foreign-earned qualifications has
been raised by some proposals as one of the main regulatory issues affecting trade in this sector. One
Member has suggested that the issue of recognition be addressed in the negotiations so as to make the
provisions of Article VII effective in terms of market access for developing country firms and
professionals; while another Member advocates the full implementation of Article VII:3 and 5 of theGATS.  Other regulatory issues raised in the proposals relate to licensing and qualifications
requirements.  However, only one Member has proposed specific sectoral disciplines, such as the
establishment of a necessity test for licensing procedures and requirements for construction firms and
subcontractors.  The others seem to prefer that these issues be addressed in the context of the
development of horizontal disciplines on domestic regulation under Article VI:4 of the GATS.  Wouldfurther discussion be useful on concrete steps that could can be taken to ensure full implementation of
Article VII?
322. With respect to issues related to the implementation of Article IV, some Members have
indicated that this sector is of particular importance to developing countries, who in many cases have
attained some competitive advantage and have started to export construction and related services.However, effective market access is often denied to them not only because numerous barriers persist
in the construction sector itself and in construction-related services, but also because of the totalTN/S/M/1
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absence of commitments in some professional services mentioned before. Furthermore, subsidy
practices that cause deviation of trade flows have resulted in the loss of competitiveness by
developing country exporters.
323. In the specific case of mode 4, beside licensing and qualification requirements and
procedures, barriers take the form of non-recognition of professional qualifications, as well asresidency and citizenship requirements. In the case of recognition, there seems to be the perception
that the provisions of Article VII have not resulted in benefits for developing countries.  Should there
be further discussion on how what can be done to remedy these shortcomings?
324.  With respect to any other issues, including MFN exemptions, the issues of government
procurement and subsidies have been raised in discussions concerning this sector. In the case of
subsidies, one Member has proposed that the issue of trade distortive subsidies be addressed in the
negotiations in the context of the development of horizontal disciplines on subsidies under Article XVof the GATS so as to ensure a level-playing fi eld between developed and developing countries.
Would discussion of government procurement practices and subsidies issues be relevant to our
discussions in this sector?
325. The representative of Cuba presented a proposal on Construction and Related Engineering
Services (S/CSS/W/145). She said that all Cuban proposals were focused on the effective application
of Article IV:4 of the GATS. Economic globalization gave rise to major changes in consulting, design
and construction activities. With the opening up of the world economy and the digital technology
revolution in materials, products and engineering and construction systems, these activities were
forming an increasingly strategic sector for the creation of production and service capacities. The
developing countries and integration schemes between developing countries must set up and developtheir own design and consulting firms and build up their domestic construction capacities in order to
be able to compete effectively on their home markets and prepare such firms to tackle other markets.
326. Typical limitations on access to developed country markets included restrictions on the form
of commercial presence, where the presence of natural persons was allowed only occasionally in the
form of specialists and advisors, making it difficult for developing countries to profit fromliberalization in this sector. The result of foreign involvement in design and construction services in
developing countries had been penetrated by means of financial credits on onerous terms, inadequate
technical and technological transfer, assignment of the least professional work to local entities and the
undermining of participation in the domestic industry, as well as the mandatory use of foreign
supplies and technology, technical and architectural conceptions which were not suited to local
conditions and the absorption and takeover of small entities. The liberalization process should foster
the increasing participation of developing countries.  This should therefore be conditional upon thetransfer of technology and know-how in order to e nhance the competitiveness of the services and the
modes of supply of export interest to them with a view to strengthening their domestic capacity
pursuant to Article IV of the GATS and paragraphs 1, 2, 3 and 5 of the Guidelines and Procedures for
the Negotiations on Trade in Services. The negotiations on access to developing country markets
should take professional qualifications into consideration as a requirement for recruitment, licensingand the registration of foreign service providers for the purposes of exercising a profession in the host
country. Negotiations must abolish developed countries' discriminatory regulations establishing
nationality and citizenship registers and introduce possible variations as regards residence for the
duration of the provision of the service in those countries.
327. Given that the construction and related engineering services sector was crucial to establishing
public infrastructure and promoting economic growt h, Cuba hoped to attain the following objectives.
First, permit the commercial presence and temporary movement of natural persons for the provision
of specific services, favouring access to developed country markets under modes 3 and 4, basically in
design services, architectural services, engineering services, integrated engineering services,TN/S/M/1
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construction and related engineering services, urban planning and landscape architectural services,
and other related consulting services.  Second, extend and improve developed country commitments
in service provider categories involving middle- and lower-level professionals and specialists,
including specialists without a qualifications but with recognised skills.  Third, eliminate restrictions
on the movement of natural persons so that formalities for service providers authorised under thismode of supply were handled quickly to ensure that services were provided in a timely manner.
Fourth, secure non-discriminatory commitments conducive to the implementation of Article VII of the
GATS to make licensing and the mutual recognition of professional qualifications practicable in
developed countries.  Fifth, secure commitments which prevent discriminatory practices with regard
to economic needs tests, which hinder the effective implementation of Article IV of the GATS.
328. Finally, with regard to classification, she said that  in the light of the existing interrelationship
between the building and related engineering services with professional services such as architectureand engineering, Members should first have a debate in order to examine possible definitions which
would enable services related to this sector to be more comprehensive and focussed.
329. The Chairman said that several classification issues had been raised in the proposals received
thus far. In terms of market access and national treatment commitments, questions had been raised
about the absence of multilateral rules for procurement and subsidies. On regulatory issues, the lack ofrecognition of fully earned qualifications was one of the main concerns raised. This had to do with
ensuring the full implementation of Article VII:7 of the GATS. With respect to Article IV:4, of
particular importance to developing countries, numerous barriers had been identified, not only
affecting this particular sector but also other professional services.
330. The representative of El Salvador expressed interest in this sector, particularly as regards the
movement of natural persons. His country had detected limitations for getting specialists especially in
certain areas of the building sectors which would help the company complete a given project. It was
often the case that construction companies supplyin g services abroad lacked the necessary trained
labour force. El Salvador had got a critical mass of experienced workers, specialised in some critical
areas of the sector.
331. The representative of the European Communities sa id that this sector was of great interest to
developing and developed countries alike. This had been reflected in a number of proposals submitted
thus far. Issues of importance to this sector included regulatory aspects, movement of natural persons
and the recognition of qualifications, to name a few. Greater liberalization of construction services
would bring great benefits in terms of facilitating infrastructure development. He added that the most
important non-tariff barrier affecting this sector was the absence of rules on government procurement.
It made no sense to deal with this sector without addressing government procurement, whichaccounted for more than half of the demand in the sector. He finally underlined that the European
Communities would continue to attach importance to these issues in future discussions.
(viii) Distribution services
332. The Chairman recalled that, until then, nine negotiating proposals had been submitted and
discussed on distribution services.  A new submission had been tabled by the delegation of Australia,
in document S/CSS/W/136.
333. The representative of Australia introduced the proposal contained in document S/CSS/W/136.
He said that the more efficient distribution services were, the more optimal the allocation of resources
and the matching of supply and demand.  From a consumer perspective, these benefits could be
considerable, taking the form of reduced risk, lower costs and prices, better quality and wider choice.The distribution services sector was of key importance for economic growth and development.  It
accounted for a large share of economic activity.  In Australia, wholesale and retailing servicesTN/S/M/1
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contributed 10 per cent of GDP and made up approximately 20 per cent of full-time employment.
The sector was essentially a domestic on, but this might change as business processes and supply
chains were transformed by globalisation and new technologies.  The most important of these new
technologies for distribution services was likely to be Internet-delivered e-commerce.
334. Within the sector, many regulatory controls governed the movement of products.  These
included restrictions on arms, ammunition and explosives;  pharmaceutical, medical and orthopaedic
goods;  agricultural raw materials and live animals;  food, beverages and tobacco;  and precious
metals.  Other obstacles could include:  restrictions on the level/percentage of foreign equity
ownership;  limitations on ownership of specific assets, such as real estate;  limitations on the type of
corporate entity that firms could establish abroad;  limitations on the scope of operations;  the
requirement (or prohibition) to form joint ventur es with local suppliers;  citizenship/residency
requirements.  His delegation's proposal sought liberalization in the distribution services sectors inorder to expand domestic and export markets and raise productivity without compromising service
quality and consumer protection.  This could occu r through minimising trade-distorting barriers
within a framework of national interest policies.
335. In the GATS negotiations, Australia encouraged Members, amongst others, to examine
market access and national treatment restrictions within their distribution services sectors with a viewto reducing or eliminating them;  examine the list  of goods subject to restricted distribution, with
restrictions to be limited to sensitive products;  improve the level of transparency in domestic
regulation.
336. The Chairman said that the proposal by Australia touched upon one of the three issues that he
perceived to have attracted particular attention in proposals on distribution services and that
delegations might wish to give further thought to, namely the exclusion of certain goods from the
scope of the commitments undertaken.  He said that Members might wish to consider whether this
issue should be left to bilateral request-offer negotiations or whether it might benefit from multilateral
discussion in the Special Session.  Another set of questions had been raised concerning classification,
for example with regard to the classification of the distribution of some goods.  Some delegations hadalso referred to "additional activities", "related se rvices", or "after-sales services" being necessary for
the efficient operation of the distribution sector.  He wondered if delegations had given additional
thought to those questions, on whether they represented significant problems and on how they could
best be addressed, and in which forum.  Finally, a number of proposals had touched upon issues of a
regulatory nature.  Some delegations had referred to the importance of regulatory transparency and
fairness of administration and had encouraged Members to improve the level of transparency of their
domestic regulation.
337. The representative of Argentina, speaking on behalf of the MERCOSUR countries, said that
the proposal by Australia shared a number of elements that were also present in the MERCOSUR
proposal and that, in a preliminary manner, he could support it.  He shared in particular the suggestion
for the elimination of market access and national treatment restrictions, for the reduction in the goods
subject to restrictions and for commitments to be undertaken without limitations, as sectoralexclusions represented the main barrier, especially for foodstuffs and textiles, and for the elimination
of economic needs tests, especially in modes and sectors of export interest to developing countries.
338. Like the MERCOSUR countries, the representa tive of Norway shared the Australian view
that distribution services constituted an important link between producers and consumers and that
these services had an important role to play from a macroeconomic point of view.  The efficientoperation of distribution services channelled the optional allocation of resources and enabled supply
to match demand as closely as possible.  However, in spite of the importance of this sector, less than
50 Members had undertaken commitments in distribution services.  Norway therefore supported
proposals from amongst others Colombia and Australia as contributions towards increasing theTN/S/M/1
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liberalization of the distribution services sector .  This could occur through the minimization of
barriers within a framework of national interest policies.
339. The representative of the European Commun ities concurred with Australia on the need to
examine restrictions with a view to reducing or eliminating them.  Distribution was an important
sector, where more commitments were needed as the coverage of the sector in schedules was limited.He sought clarification from the delegation of Australia with respect to the list of products in
paragraph 10 and paragraph 14 referring to goods subject to restricted distribution being limited to
sensitive products;  he wondered whether these sensitive products were the ones in paragraph 10.  The
representative of Australia said that he would reflect on the question posed by the European
Communities, but in a preliminary manner responded that the products in paragraph 10 were not allsensitive products and that he would discuss the policy rationale underlying the restrictions in the
negotiations, to see if these related to consumer protection, safety or quality considerations.
(ix) Education Services
340. The Chairman recalled that proposals had been submitted by Australia, New Zealand and the
United States.  He drew Members' attention to a new submission from the delegation of Japan,
circulated as document S/CSS/W/137.
341. In introducing the proposal, the representative of Japan said that to improve the quality of
education and research, it was effective to promote a certain level of liberalization while taking
various governmental policy measures.  Japan encouraged each Member in the course of the
forthcoming request and offer process to promote liberalization in the education services sector
through better market access, further assurance of national treatment, and deregulation of related
domestic regulations.  His delegation also recognized the importance of the role of the government inthe education sector.  In the course of liberalizing this sector, it was necessary to take into
consideration aspects of government policy objectiv es and the specificity of education systems.  In
that respect, three points should be considered by Members in the negotiations:  (a) Any measures in
the education sector should be considered with a primary objective of maintaining and improving the
quality of the service, including the protection of consumers (students), and measures to ensureinternational equivalence of degrees and diplomas;  (b) as the educational systems and the laws of the
central and local governments governing them varied from country to country, those differences
should be carefully considered while seeking the liberalization of the sector;  and (c) the issue of how
to maintain the quality of higher education supplied across borders.  To protect consumers, Members
should recognize the significance and necessity of constructing information networks on higher
education supplied across borders, including collabor ative research in international organizations such
as OECD, as well as in international groups consisting of university evaluation bodies in eachcountry.
342. The Chairman observed that Members attached a great deal of importance to the sector, where
governments continued to play a very important role both as regulators and suppliers.  In fact the
Members that had proposals on the sector had stressed that liberalization could be used as a tool to
support national education policy and to complement the existing supply of education services.Although, there was no disagreement on that there we re, however, other elements coming out of the
proposals that would benefit from more discussion.   For example, on classification there had been
concrete suggestions for clarifying whether certain activities were covered within the categories "adult
education" and "other education services", particularly from the submissions by the United States and
New Zealand.  Proposals had also de alt with measures identified as barriers, which might be better
addressed in the request and offer phase.  However, some attention to the actual nature of those
measures and their treatment under the GATS might be worthwhile at that stage.  For example,
measures on qualification recognition, foreign exchange requirements, the treatment of franchising,
and  discriminatory funding or subsidies framewor ks.  Those were issues which Members would haveTN/S/M/1
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to decide at some point in time, whether they should be dealt with bilaterally or multilaterally.  He
recalled that at the last meeting the United States had elaborated on how domestic regulation could be
unclear and unfairly administered, in relation to its suggestion for additional disciplines in addressing
regulatory issues.  In addition, a very interesting point had been made by Venezuela on additional
commitments and registration and recognition of titles and professional qualifications in the educationsector and the pursuit of Article IV objectives.
343. Regarding the proposals by Japan, the representative of Switzerland shared the view on the
importance and necessity of constructing an information network on higher education services
supplied across borders.  In relation to proposals by other Members, Switzerland had welcomed the
fact that some of them, like the one from the United  States, had been explicitly limited to higher and
adult education services.  He wondered whether that also applied to the Japanese proposal.  He also
sought clarification as to what was meant by Japan in the last sentence of paragraph 3 of the proposal,concerning deregulation of related domestic regulations.  Members' right to regulate was of crucial
importance for all delegations and the education services was not a sector to make an exception to that
extremely important principal.
344. The representative of Australia strongly endorsed the statement in paragraph 3 of the Japanese
proposal on the promotion of liberalization through better market access, further assurances of
national treatment and deregulation of related domestic regulations.  Australia also supported
measures to maintain and improve the quality of the service and considered that orderly liberalization
could provide greater choice and stimulate competition leading to higher education standards.  The
proposal for measures to ensure international equivalence of degrees and diplomas was very
interesting and quite ambitious in scope, particularly given that paragraph 4 of the submission notedthat degree granting systems and "e-learning" quality varied widely from country to country.  Mutual
recognition arrangements provided for in GATS Artic le VII afforded the means to address recognition
of qualifications at the multilateral level.  The proposal to construct an information network on higher
education supplied across borders was also very interesting.  Australia supported the need for
Members to monitor and assess the quality of higher education supplied across borders.  However,whether an information network was required to achieve the consumer protection objectives
underlined or any other mechanisms, such as better coordination and cooperation, was an open
question.  His delegation was certainly not convinced that the establishment of a centralized
international accreditation agency, if that had been  meant by an information network, was necessarily
the best approach for achieving the outcome that was being sought.
345. The representative of Korea supported the suggestions contained in the Japanese submission,
particularly those in paragraph 4 pointing out to the need to take into consideration aspects of
governmental policy objectives and the specificity of the education sector in liberalizing this sector.
Liberalization of education services should not be pursued solely on commercial grounds.  Despite the
various merits of liberalization, it would be necessary to pay particular attention to any negative
effects, which might derive from it.  One of the concerns that needed to be addressed was how to
protect the individual Members' education system s and environments from commercial presence of
foreign education institutions of low quality.
346. In addressing the questions posed by the representative of Switzerland, the representative of
Japan said that the proposal concerned higher education because, as said in paragraph 4 of the
submission, primary and secondary education were reserved to states.  Therefore, the focus of thenegotiations was on higher education services.  As to the second question of the Swiss delegation, acertain level of regulation was necessary in domestic higher education fields.  However, deregulation
of some domestic aspects was also necessary, as proposed in paragraph 3.TN/S/M/1
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(x) Energy Services
347. The Chairman recalled that several proposals had been submitted:  by Canada, Chile,
European Communities, Japan, Norway, United States, and Venezuela.  Additionally, a statement
made in October by the United States about negotiating objectives had also been circulated at the
request of delegations as JOB(01)/167 of 4 Decembe r 2001.  He drew delegations' attention to a new
submission from the delegation of Cuba, circulated as document S/CSS/W/144.
348. In introducing the submission, the representative of Cuba said that new technologies
introduced over the past years had made it possible, together with an increase in trade, to bring about
a certain degree of liberalization in energy services, which had been accompanied by new regulations
in many developing countries.  Given the strate gic importance of energy services for developing
country Members, the inclusion of the sector in the negotiations should look at developing national
capacities through improved access to new technologies coupled with the promotion of a sustainableenvironment.  The negotiations should not address issues relating to ownership of rights, of access to
and use of, natural energy resources.  The right of developing countries to regulate the supply of
energy services in their territories for the purpose  of meeting their national policy targets should be
ensured.  Thus, negotiations should contribute to the increasing participation of developing countries
in international energy services trade by strengthening their national capacities.  The opening up ofmarkets resulting from the negotiations should increase the energy supply capacity of all Members but
particularly of developing countries.  Negotiations should enhance competitiveness of developing
country energy service suppliers and their access to technologies on favourable commercial terms.
The extent to which developing countries benefitted from increased share in energy services trade
should  be assessed in order to meet the objectives of GATS Article IV.  As to classification, theservices sectoral classification list in W/120 did not fully reflect the whole range of existing services
in the energy sector.  Cuba supported a debate on classification in any context decided upon by
Members to identify the criteria for analysis and formulation of definitions of the activities
corresponding to the different processes.  It wa s important to ensure that commitments bound in the
Uruguay Round would not be impaired by a new classification.
349. The Chairman observed that all existing proposals had stated the importance of public policy
objectives such as preservation of resources and the environment, energy security and supply
reliability, quality control, and public service obligations.  They had also emphasized governments'
right to regulate to pursue those objectives.  The most important issue before Members was the
classification question.  In that respect, previous discussions in a different forum had addressed the
matter of activities involved in the production of energy.  That point had also been introduced in
current discussions by the proposals themselves, as six of the seven submissions referred to "servicesinvolved in", or "related to", or "the necessary for the production of energy", when indicating what
was meant by energy services.  Thus, further work needed to be done in that area.
350. The representative of Chile reiterated the importance attached by his delegation to
negotiations in this sector.  Energy was one of the areas where the interdependence between countries
and the relevance of harmonization of regulatory systems to facilitate trade was most obvious.  Anopen and competitive energy services trade system would help countries to ensure security and quality
of the supply.  Chile had undertaken a policy which ensured full participation of the private sector,
promoted competition, and a price system in the energy sector that reflected the real cost of producing
and distributing energy.  That policy of openness had brought many benefits in terms of investment,
supply, and environmental and consumer protection, but even so there were many challenges yet toovercome.  The current negotiations presented an opportunity to face and overcome, in coordination
with other countries, those many challenges.  The negotiations on energy services trade should
involve the whole services chain associated with the sector, that was services relating to electricity as
well as hydrocarbons in their different phases of exploration, transport and distribution.  A broad
approach would enable flexibility and facilitate the identification of specificities of each country.TN/S/M/1
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Chile would contribute to this process in order to have an open and competitive markets in energy
services, where the existing barriers would be eliminated allowing for market access and national
treatment.  It should be kept in mind that many countries were at different phases of liberalization of
the energy sector, particularly with regard to the inclusion of private actors.  Additionally, commercial
structures and legal regimes varied very much from one region to another or from country to another.For that reason, the progress made in services trade liberalization should not in anyway question the
capacity of countries to regulate their own sectors according to their own practices and regimes of
ownership of energy resources.  As to classification, the need for reviewing the W/120 list to adapt it
to the realities of the energy sector had been stated.  Chile supported such a review and making
changes, if necessary, adopting an approach favouring a description of activities rather than sectors
and concentrating in essential services activities.  There had been many questions on the reference
made to subsidies in the Chilean proposal, specifically, what was meant and how to deal with theissue.  The energy sectors was highly subsidized and his delegation felt that the issue should be kept
in mind and ways to tackle it should be explored.  The subsidies issue was not only relevant to the
energy sector, as there were other services sectors that presented the same characteristic.  Chile was
flexible as to how to deal with subsidies in services trade, be it horizontally or any other way, perhaps
in the Services Council or in the Working Party on GATS Rules.
351. The representative of Venezuela felt that the proposal submitted by Cuba and that of his
delegation had many points in common.  The best way to participate in the negotiations and reflect the
interest of developing countries was through the presentation of proposals.  He restated the need to
preserve spaces for the implementation of policies that would enable developing countries to create
and foster their service suppliers, which represented an effective implementation of Article IV andArticle XIX:2 of the GATS.  As to classification, he clarified that "core" services were an essential
part of the value added chain, i.e. those intervening in the principal processes, without which the
process would not be possible.  Those were essentially services inputs into the energy sector, whereas
the "non-core" services were related services, which supported the chain and were closely connected
to the processes.  For example, a "core" servic e would be the drilling activity, while a "non-core"
service would be construction.  It was important to note the difference between construction of a
building and construction of a refinery for oil processing.  This distinction between "core" and "non-
core" was not exclusive to the energy discussion, it was also relevant to the environmental services
classification  deliberations.  He wondered whether such a distinction resulted more subjective in the
energy discussion than in the environment one.  Venezuela noted with concern the closeness of the
date for commencing the submission of initial requests.  It was an essential requisite to reach an
understanding on classification of energy services for the undertaking of substantive commitments inthe sector.  Given that concern, Venezuela had been working on a classification list, as reflected in
presentation of document S/CSS/W/69/Add.1, and had continued those efforts involving other
proposals with the aim of reaching a common understanding that would then serve as a basis for a
broader discussion by all Members of WTO.
352. The representative of Mexico said that his delegation had intended to present a more concrete
contribution, however, the preparatory work was still in progress.  The Cuban proposals had very
valuable elements, especially from the point of view of developing countries and the pursuit of
Article IV objectives concerning the participation of developing countries.  As to classification,
reaching a definition of energy services was not a prerequisite to the submission of requests, a
statement applicable to all sectors, as requests could be submitted in various forms.  An agreementwould be necessary at the stage of presenting offers, when it would be necessary to go into details as
to what would be committed.  Mexico was considering this issue and assessing the degree to which
the W/120 and the CPC reflected the reality of the se ctor and to what extent they would be useful.
Mexico did not oppose a breakdown of the W/120 but first wanted to have a closer look domestically
to see to what extent it needed improvements, in energy services as well as in other sectors.TN/S/M/1
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353. As to subsidies in the energy sectors, he said that it was necessary to differentiate between
upstream subsidies and downstream ones.  As mentioned at the outset of the discussion, there seemed
to be a convergence between the various proposals that the regulatory regimes should not be part of
the negotiations as well as the question of ownership of resources.  In some countries there were tariff
systems inherited from before, where differential tariffs might exist in accordance with the variousincome levels of the population.  In that respect, the long term objective was to create, for instance in
the electric energy sector, competitive tariffs and gradually eliminate the subsidy component in the
cost of electricity.  That would be a matter related to public policy, which was not part of the
negotiations on trade in energy services, and which also pertained to the independent regulatory
mechanism of each country.  The proposals acknowledged that Members were at different stages of
development of regulatory schemes as far as competition was concerned.  That was a reflection in
relation to subsidies for energy consumption domestically.  In the case of subsidization of energyproducts used as industrial inputs, its treatment was already covered by other disciplines.  It was
important to clarify what type of subsidies were being referred to in the discussion on energy services.
Some pertained to national policies and regulatory regimes, which varied and were not under
discussion in the negotiations, while others were considered either domestic subsidies or export
subsidies, which are well categorized and covered by other disciplines in the WTO.  Bearing that inmind, Members should reflect on whether subsidies should be included.  Additionally, very recently a
group of countries represented in the meeting had taken very important decisions regarding the
gradual liberalization of the energy sector.  That development called for reflection as to the true
impact of that decision in the negotiations on energy services in WTO.
354.  In expressing his appreciation for the intervention by Mexico, the representative of Chile said
that it was this sort of exchange his delegation wanted to promote.  Not only regarding energy
services but also in other sectors, his delegation would like to see an exchange of views as to what
subsidy systems were applied by countries and how subsidies would be treated in the services context.
355. The representative of Poland supported a discussion on classification of energy services.  She
favoured the separation of energy services from other sectors in order to increase transparency of the
commitments taken by Members and for ease of m onitoring the eventual changes in that regard.
Members should initiate the intensive work to prepare an adequate classification of energy services
and thus develop the conditions of further liberalization of their trade.
356. The representative of Canada felt it very useful to have a discussion on classification,
especially in the light of market access negotiations.  It was important to ensure that the W/120
classification did actually cover all energy services.  His delegation favoured the submissions of
proposals in that regard and encouraged Members to consider whether the W/120 excluded any partsof the energy sector.  Canada had been looking clos ely at W/120 over the past year and had not been
able to identify any energy service left out thus far, therefore, it considered that it was not necessary to
change it to obtain comprehensive commitments in the sector.  In light of the general concern for legal
predictability, it would be preferable not to have to modify the existing classification but his
delegation was open to further discussion of the matter.
357. The representative of Venezuela wondered whether Mexico could elaborate on their views
regarding classification of the sector.  The representative of Mexico replied that there was no uniform
thinking or convergent positions on classification.  There seemed to be three positions: first, that
W/120 would be sufficient; second, that a new more detailed classification was required; and thirdly,
a view that was developing in the internal assessm ent by his delegation, which would be expressed as
soon as possible.
358. The representative of Cuba clarified that the proposal by her delegation had not been formally
distributed yet but would be available shortly.TN/S/M/1
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(xi) Environmental Services
359. Introducing the negotiating proposal presented by her delegation (S/CSS/W/142) the
representative of Cuba said that environmental services were particularly important for sustainable
development.  Over the last years, the overall behaviour of trade in environmental services had shownan increased dynamism which should be beneficial to Members, and in particular for developingcountries, which had less capacity to adjust themselves to the new rules required by this form of trade.
Opening up markets generated favourable conditions for the development of the sector in developing
countries, but conditions should be established to protect health, security and environment. The
liberalization process did not automatically enhance the competitiveness of developing countries.
These countries had to strengthen their domestic capacities with a view to facing competition from
transnational companies with access to their market.  Therefore, negotiations should take into account
the different levels of development among Members and promote progressive liberalization.  Specialand differential treatment was a prerequisite in order for liberalization to contribute to the
strengthening of national providers.  Qualitative disadvantages stemming from the technological gap
caused by difficulties in accessing technolo gy and related know-how should be eliminated.
Negotiators should bear in mind the right of Members to regulate.  Commitments in developing
countries should be based on the right to establish the most appropriate environmental policies.  It wasessential that negotiations take the sustainable development needs of the developing countries into
account.  National capacity building had to be one of the guaranteed results of the negotiations on
environmental services.  For this purpose, market access negotiations should provide appropriate
guarantees with respect to:  (i) a real transfer, on a favourable commercial basis, of technologies
which guaranteed the required level of competitiveness;  (ii) a transfer of associated know-how;(iii) the creation of national technical capacities, both human and institutional, which ensured
subsequent national development of these services;  and (iv) the adoption of specific commitments
which would guarantee the export of services from developing countries in the modes of supply
identified as being of interest to them.
360. The Chairman recalled that six proposals had been tabled in this sector:  the United States
(S/CSS/W/25), the European Communities (S/CSS/W/38), Canada (S/CSS/W/51), Switzerland
(S/CSS/W/76), Australia (S/C/W/112), and Colombia (S/CSS/W/121), in addition to that recently
introduced by Cuba.  They generally shared the premise that increased liberalisation in environmental
services could play a positive role to improve environmental protection and human health, assuming
that appropriate domestic instruments were in place.  This found an echo in the Doha Declaration
(paragraph 31), which called for negotiations on environmental goods and services "with a view to
enhancing the mutual supportiveness of trade and environment".  Three main themes seemed toemerge.  Firstly, while increased liberalization was generally called for, commercial presence was
often singled out as being the most important mode.  A number of market access barriers were
identified for this mode.  Some Members also stressed the need for further liberalisation of mode 4.
Secondly, some proposals raised regulatory issues, su ch as:  need for increased transparency, need to
ensure the implementation of Article I:3(a) of the GATS, recognition of environmentally-relatedprofessional qualifications acquired in the territory of another Member.  It was not clear, however, to
what extent actual work was proposed on these issues.  Thirdly, classification remained a significant
issue for this sector.  Five proposals took the view that the current classification contained in W/120
was obsolete and did not properly reflect how the industry currently operated.  The most
comprehensive classification proposal came from the European Communities and built on previouswork in the Committee on Specific Commitments.  Other Members had also mentioned specific sub-
sectors which should be part of a new classification.  In addition, an issue linked to classification was
that of a "cluster" or "checklist" of environmentally-related services.  The possible content of a
"cluster" or "checklist" and how it might be used in services negotiations should be further discussed.
Members should decide how and where (Special Session or Committee on Specific Commitments) totackle these issues.TN/S/M/1
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361. The representative of Venezuela said that paragraph 31(iii) of the Doha Declaration, which
called for negotiations on environmental goods in services, should be looked at in the context of
GATS Article XIX as well as the Negotiating Guidelines, stipulating that no sector should be
excluded a priori . The Chairman should indicate to the TNC that negotiations on environmental
services would continue in the Special Session of the Council for Trade in Services.  Similarly,negotiations on environmental goods should take place in the Negotiating Group on Market Access.
362. The representative of Mexico said that, although protection of the environment was a national
priority, measures in this sector should not beco me an unnecessary obstacle to trade.  The regulatory
framework was being revised in Mexico, with a view to liberalizing the sector, while keeping in mind
the need to reflect domestic interests and requirements.  It was the duty of each government to
guarantee human health and the protection of the natural environment in which the population lived.
Specific measures were sometimes needed to protect the environment, but they should notdiscriminate foreigners.  Distribution of competence at different levels of government was important
in this sector (it was the case, for instance, for waste water treatment), and GATS Article I:3(a) should
be respected.  With respect to classification, Mexico considered that W/120 should be updated.  As a
starting-point, his delegation identified seven sub-sectors which should be contained in a revised
classification, including supply of water for human consumption; management of solid and hazardouswaste; protection of air and climate; reestablishmen t and cleaning of soil and water; reduction of noise
and vibrations; protection of biological diversity and landscape; and other essential services directly
aimed at reducing adverse environmental impacts.  The details of these subsectors would require more
detailed discussion.  Particular attention should be given to the last subsector, i.e. "other essential
services", which could include services such as studies of the evaluation and/or reduction ofenvironmental impacts and consulting in the field of management of environmental policies.  Further
clarification was needed with respect to the inclusion of some services, such as those related to
construction or architectural services.
363. The representative of India said that his delegation supported continuing classification work
in the Committee on Specific Commitments;  this work should be completed before starting the
market access negotiations.  Each country should be free to decide to what extent it wanted to open its
market, depending on national priorities and level of development.  Market access negotiations should
take place on core and related environmental services.  India generally supported all proposals for
liberalization of mode 4, as well as the proposal by Canada to reduce or eliminate restrictions on entry
and stay of managers, professionals and experts.  Governments' right to regulate and to strike a
balance with trade liberalization should not be questioned.  His delegation was opposed to the cluster
approach suggested by Australia with regard to scheduling commitments.
364. The representative of the Republic of Korea recalled paragraph 31(iii) of the Doha
Declaration and enquired how negotiations should proceed in order to avoid any duplication of work
between the Special Session of the Council for Trade in Services and the Special Session of the
Committee on Trade and Environment.  Guidelines might be needed in this regard.
365. The Chairman said that the mandate of the Special Session of the Council for Trade in
Services had not been reduced by the Doha Ministerial Declaration.  This Special Session should feel
free to negotiate environmental services.  Members should ensure that there should be no duplication
of activities.  The Special Session of the Committee on Trade and Environment could play a useful
role in promoting the negotiations.  The same problem arose in the goods sector and he intended to
consult on this matter with the two chairpersons concerned.
366. The representative of Poland said that the protection of the environment was a priority.  Her
delegation supported proposals to revise classification.  It was essential to maintain the control of the
state on some of these services in order to ensure their quality.  Liberalization could not mean that theTN/S/M/1
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state had to renounce setting quality standards.  Environmental services should not be included in
other negotiating sectors, but should be negotiated separately.
367. The representative of Paraguay said that his delegation agreed with the Chairman that the
Special Session of the Council for Trade in Services had a mandate to negotiate all services.  The
representative of Peru concurred with the delegations of Venezuela and Paraguay that negotiations onenvironmental services should take place in the Special Session of the Council for Trade in Services.
(xii) Tourism Service s
368. The Chairman noted that, at the previous meeting, three new proposals had been introduced,
by Columbia (S/CSS/W/122), Mercosur (S/CSS/W /125) and Costa Rica (S/CSS/W/128).  In the
subsequent discussions, comments were made on a wide range of issues.
369. Regarding regulatory issues, one Member’s proposal had advocated that competent
authorities take account of professional qualifications related to tourism services acquired in theterritory of another Member.  The Member also stated that anti-competitive behaviour by dominant
operators could result in imbalances in the framework of liberalized trade in services, and that
disciplines regulating this issue could be dealt with in a general manner.  Another Member stated that
disciplines were needed to prevent anti-competitive practices, for consumer protection, and to ensure
access to information.
370. With regard to Article IV issues, a Member had stated that obstacles such as documentation
requirements and the lack of transparency reduced the benefits from tourism trade, especially for
developing countries.  The Member also said it  was necessary to recognize the interdependence of
tourism with other sectors, including distribution, publicity services, construction and particularly air
transport.
371. During the discussions, with respect to market access and national treatment issues, most
Members had advocated increased market access and national treatment commitments for all modes
of supply, and several advocated the elimination of ENTs.  One Member had supported the listing of
barriers in Member’s schedules as input for creating a model tourism schedule.  The issue of ENTs
had already been raised under Horizontal Issues, the Chairman noted, asking whether Memberswished to comment on whether the specificities of tourism added any additional dimensions to the
ENT debate.  He observed that another issue which might be raised was whether full liberalization
should to be extended to all modes of supply, including mode 4.
372. Members had also emphasized that all the tourism proposals noted the diverse, interrelated
nature of tourism, and the importance of tourism’s linkages to other services sectors, including
transport.  Many Members were not convinced that the W/120 tourism classification must be revised,
however, and some felt that the cluster in the annex proposal was still too wide.  It was noted that thetourism “Other” category provided flexibility, and allowed additional tourism commitments.  Many
Members preferred to consider tourism-related sectors by means of a checklist for negotiators.  The
Chairman asked if Members would find it useful to discuss further how the “Other” category could be
made more specific without overlapping the existing W/120 classifications.
373. Regarding regulation, one delegation had favoured the use of transparent and non-
discriminatory licensing measures, and the removal of arbitrary requirements.  Several delegations
raised the issue of anti-competitive practices, and indicated their support for the proposed GATS
tourism annex.  Other delegations still had doubts on the suitability of the annex proposal. The
Chairman then asked if it would it be useful to discuss further the issue of anti-competitive practices,
including the proposed tourism annex.  One topic for discussion might be the apparent lack of specificTN/S/M/1
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examples or case studies for Members to consider, he noted.  Another might be the question of why
domestic competition measures alone might be insufficient.
374. The linkages between tourism, Article IV and the Negotiating Guidelines were also noted
during the discussions.  Members recognized the need for increased participation of developing
countries, and were pleased that developing countries enjoyed an active role in the tourism sector.One Member stated that the two of the proposals clearly underlined the importance of the sector for
developing countries, as well as the contribution of tourism liberalization to the economy as a whole.
Many delegations stated that tourism liberalization must be consistent with sustainable development,
as well as safeguard environmental considerations.
375. The Chairman then opened the floor for comments by Members.
376. The delegation of Argentina, responding to an earlier question from Peru regarding the
position of Mercosur on MFN exemptions in tourism, stated that they believed these should be
removed.
377. The delegate from the Dominican Republic said that, in addition to tourism, he would also
address issues related to assessment and air transport.  While noting the importance of air transport to
tourism, he stated that his delegation, in collaboration with the work of the World Tourism
Organization, would in the future discuss tourism and air transport issues separately.  Tourism issuesshould therefore be included in the discussions regarding air transport and the Annex on Air Transport
Services, he stated.
378. The delegate also noted that the Working Group on Liberalization in Tourism, since
November 2001, had decided to carry out additional research, for example to determine the existence
of anticompetitive practices affecting tourism;  to examine both tourism leakages and linkages;  and toanalyze tourism norms and standards.  Once the studies were finalized, his government intended to
hold a conference in the Dominican Republic to di sseminate the research results, inviting tourism
representatives at the regional, national and international levels.
379. The delegation of Poland, regarding the new tourism annex proposal (S/CSS/W/107), said
they believed changes were required, and that the proposed list of tourism services was too wide.
They believed a listing should serve as a checklist for negotiators, and that air transport should be
excluded.  Including air transport in the tourism annex might actually increase the strong competitive
position of some carriers.  Regarding Mercosur’s proposal, the delegation stated that they supported
the request for full liberalization.  On Costa Rica’s proposal, the delegation stated that Poland was
interested in the continuation of work on the annex proposal.
380. The delegation of Japan, noting that international tourism had been in recession after the
events of 11 September 2001, encouraged Members to increase their commitments, especially in
regard to eliminating nationality requirements for tour guides.  Regarding classification, the
delegation reiterated their preference for a checklist than a cluster approach.
381. The delegate from New Zealand thanked the Dominican Republic for their intervention.   He
agreed that air transport was an integral part of any discussions on tourism services, and noted that
virtually all visitors to New Zealand arrived by air.  New Zealand was willing to work with otherdelegations to ensure that tourism-related air transport issues were addressed, he stated, without,
however, undermining the sectoral discussions on air transport where New Zealand had tabled a
substantial proposal.TN/S/M/1
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382. The delegate from El Salvador stated they wished to better understand the concerns of Poland
with regard to not including air tr ansport, noting that the tourism annex proposal did not really attempt
to include the air transport sector, but rather to address some of the problems encountered.
383. The delegation of Poland said they would need to refer the question to capital.
384. The Chairman concluded by stating that the Special Session would take note of the statements
that had been made.
(xiii) Recreational Services
385. The Chairman observed that, at the last Special Session, New Zealand had highlighted its
proposal on sporting services (S/CSS/W/94).  Essentially a classification proposal, it was intended to
fill in the gaps in the existing classifications, the Member stated, as a range of activities appeared to
not be covered.
386. Delegations had not made many comments at the previous meeting, the Chairman noted.  In
earlier meetings, questions had been raised regarding the distinction between health and sporting
services, especially in regard to drug testing services, as well as the distinction between sporting and
educational services.
387. The Chairman then opened the floor for discussion.
388. Members did not make comments.
389. Concluding the discussion on agenda item E, the Chairman said that the Council would take
note of all the statements made.
F. REVIEW OF PROGRESS IN THE NEGOTIATIONS
390. The Chairman recalled that, at the meeting of the Special Session on 28-30 March 2001, when
the Council had adopted the Negotiating Guidelines and Procedures, Members had also agreed on a
work programme for the year ahead.  As part of this work programme, the Council had agreed that at
this meeting of the Special Session, in March 20 02, Members would review progress made in the
negotiations.
391. He did not plan to structure the debate under this item, as he did not wish to unduly constrain
delegations.  He left it up to Members to comment on the negotiations from their own perspectives.He understood that Members might look at the process from different angles and might evaluate
progress according to different considerations.  He also asked delegations, when making their
comments, not to refer to how future work should be organized since this would be addressed more
directly under the following agenda item.
392. The representative of Thailand, speaking on behalf of ASEAN, said that, since the earlier
stocktaking in 2001, progress had been made in the Council's examination of the negotiating
proposals tabled by Members.  A number of new proposals had been submitted by both developed anddeveloping countries.  The Council had also us efully examined the proposals according to the
elements of classification, market access and national treatment, regulatory issues and so on.
However, the same could not be said of the ongoing  rules negotiations.  She was disappointed by the
lack of progress in the Rules negotiations over the previous year.  Once again, the deadline on the
emergency safeguards negotiations had to be extended without much substantive development in2001.  Another important negotiating issue, domestic regulation, had also not advanced as much as it
should have.  While she noted that Members' positions on these issues remained divergent and thatTN/S/M/1
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many delegations seemed to focus more on bilateral negotiations, she nevertheless felt that Members
should not lose sight of their mandate, namely the importance of negotiations on horizontal rules.
Indeed, the safeguard negotiations were now set to conclude by March 2004, while negotiations under
Articles VI:4, XIII and XV were expected to be c oncluded at the end of the round and become part of
the specific commitments negotiations.  In this light, she called for more progress on thosenegotiations during the coming year, so that Members would have a clearer idea about the disciplines
in the rules area that they would have to think about when negotiating sectoral commitments.  Not
much had been achieved in the negotiations of horizontal issues such as assessment of trade or
autonomous liberalization, but she was encouraged by the participation of least-developed and
developing countries in the Council's meetings.  Sh e looked forward to further developments of ideas
in these two areas for Members to arrive at mutually satisfactory results as soon as possible.
393. The representative of Guyana expressed concern that much progress had not been made with
respect to the negotiations under Article X of the GATS on emergency safeguard measures.  Guyana
was of the view that the GATS had to make adequate provision for emergency situations and reserved
its right to impose or trigger an emergency safeguard measure if it was so required.  Guyana also
considered that every single Member had that right.  The Council had a grave responsibility to arrive
at multilaterally agreed rules to deal with an emergency situation.  Guyana hoped that, given the two-year extension agreed for these negotiations, the matter could be resolved as soon as possible.
394. The representative of Argentina, speaking on behalf of the MERCOSUR countries, said that it
was difficult to separate progress up to then from future work, as part of what had happened was
going to impact on what was to take place.  In the period under review, many proposals had been
tabled and progress had also been recorded.  Developing countries had made efforts to presentproposals and MERCOSUR had presented proposals on tourism, distribution, postal services,
information technology and also on ENTs.  Also individually, or as MERCOSUR collectively, they
had participated in the work of the subsidia ry bodies.  In general, MERCOSUR was somewhat
concerned that no solution had been found to the horizontal issues of classification, autonomous
liberalization, assessment and in the rules area.  It would have been advisable to do so before the startof the request-offer period, as this would have he lped Members to know the context in which they
were tackling the request-offer phase.  Without clear rules, when the process became more bilateral
developing countries found themselves in a more difficult situation.  They also considered it useful to
include in the Chairman's report of the meeting, as  a sign of stocktaking, a complete list of the
proposals that had been submitted until then in specific sectors as well as on horizontal issues.  This
would give Members a clear picture of the subjects dealt with and it would help to organize the
Council's future work.
395. The representative of the European Communities was of the view that some good work had
been done over the previous year, particularly  on the submission of negotiating proposals on various
services sectors by many countries.  He would have wished for a greater participation in the
submission of these proposals, but they were good inputs and had formed a good basis for discussion
and would continue to do so as Members entered the request-offer phase.  In some other areas moreprogress could have been made, such as on classification, domestic regulation and rules overall, but
he understood that the issues being discussed were complex and required more consideration and
examination.  Nevertheless, some good work had also been accomplished in that regard.   He was of
the view that Members had created a good starting-point from which to enter the request-offer phase.
396. The representative of Venezuela said that the period under review had been an important
learning phase, especially for developing countries which were getting better prepared for the services
negotiation.  In spite of a slow start, developing countries had become more pro-active and were
trying to step up their inputs and proposals.  To some extent, she shared the concern that no
conclusions had been reached on subjects that that would have been useful to agree on before moving
on to the next phase of negotiations, such as classification, assessment of trade in services, emergencyTN/S/M/1
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safeguard measures, autonomous liberalization.  She supported the proposal by MERCOSUR with
regard to the consolidated list of all proposals tabled, both sectorally as well as horizontally.  This
would facilitate capitals' preparation in the negotiations.  Whilst there had been more participation by
developed countries, developing countries still had time to submit proposals.
397. The representative of Mexico fully subscribed to the statements made by Venezuela as well as
the MERCOSUR countries.
398. The representative of the United States said that Members had come quite far.  There were a
large number of negotiating proposals on the table, from both developed and developing countries,
and participation was perhaps wider than one might have thought at the start of the process.  As
Venezuela had noted, the possibility of submitting new negotiating proposals should not be foreclosed
and a number of Members had announced that they were working on additional negotiating proposals.
The discussions of the proposals had highlighted a number of interesting issues, and in his openingremarks the Chairman had highlighted those issues, many of which would be taken up in the request-
offer process.  With respect to the horizontal issues, his delegation took a different perspective than
had been presented by Thailand on behalf of ASEAN.   In fact, looking at the previous year it was
clear that the pace of work was actually faster and deeper and more productive than any previous time
in the preceding 6 years.  There was no consensus on some issues as yet, but from the United Statesperspective that did not mean that there had not been progress.
399. The representative of Cuba said that a lot of substantive discussion had been held on the
negotiating proposals submitted, which had also pointed to the need to go into greater detail in each
issue.  Despite the great number of proposals tabled, there was an imbalance in the number of
proposals submitted by developed and developing countries,  this imbalance could partly be ascribedto the level of participation in international trade in  services.  With regard to the assessment of trade in
services, Cuba was not satisfied with work carried out until then.  No multilateral conclusions had
been reached on the issue;  such conclusions which would enable developing countries to assess
whether the services trade liberalization under the GATS had brought them benefits and, if so, to what
degree.  This was essential in order to make further progress in the negotiations.
400. The representative of El Salvador said that the negotiating process until then had been
forward-looking.  There were always divergences in negotiations, which would be solved in the
course of the negotiations themselves.  Services trade was a relatively new issue, that had developed
gradually and he believed that progressively the necessary disciplines would be developed.  He
stressed the importance of flexibility and progressive liberalization to ensure that all participants
benefit from the negotiations.
401. The representative of India associated his delegation with the statement made by Cuba.  He
stressed the importance that the Special Session make progress in the assessment of trade in services
as mandated by the GATS and required under the Guidelines.  He also concurred that the number of
proposals from the developing countries was insufficient and that developing countries should have
the flexibility to submit additional proposals.
402. Concluding the discussion on this item, the Chairman said that services were a relatively new
area in international trade, and Members were still undergoing a learning process.  He noted that the
Doha Ministerial Declaration  contained benchmarks for the services negotiations, which were to take
place under the guidance of the Trade Negotiations Committee and would be part of a single
undertaking.  All delegations concurred that progress had been achieved in the services negotiations
over the previous year;  for some, progress had been insufficient, but at any rate good work had beencarried out.  Many negotiating proposals had been tabled, several by developing countries, and the
negotiations had witnessed greater participation and more interactive discussion.  Disappointment had
been expressed at the lack of consensus on the negotiations on emergency safeguard measures, but itTN/S/M/1
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had been pointed out that the debate had proceeded at a faster and deeper pace.  It was noted that no
conclusions had been reached on the assessment, which was a standing item on the Council's agenda
and which needed to be completed.  As for the MERCOSUR proposal that a list of submissions be
attached to the Chairman's report, he said that the suggestion would be taken up under item G.
403. The Council took note.
G. ORGANIZATION OF FURTHER WORK
404. The Chairman recalled that the Council had already agreed on a schedule of meetings for the
rest of 2002, involving four more meetings of the Special Session, during the week of 3 June, of
22 July, of 28 October and of 9 December.  With specific dates in the Doha Declaration for the
submission of requests/offers, 30 June 2002 and 31 March 2003 respectively, Members needed to
consider carefully how to organize the Council's work to ensure optimal allocation of time and
resources.  He first of all wondered what would be the best time horizon over which to organize futurework, whether until the end of 2002 or March 2003.  He  then noted that, with the submission of offers
at the end of June there would be an increasing need for allocating more time to bilateral
consultations.  The time allocation balance between multilateral meetings and bilaterals would
gradually shift in favour of the latter.
405. There were fixed items on the agenda of the Special Session, such as assessment and
autonomous liberalization, which did not need an y major organizational decisions.  However,
negotiating proposals were a different matter.  So far delegations had discussed them on a sectoral
basis according to a pre-organized structure.  It seemed that this method had reached the limit of its
usefulness and Members needed to consider an alternative way to proceed.  This could imply going
back to the initial simple way of having a standard item on the agenda to cater for any new proposalsas well as any further comments on old ones, but without any detailed plan for sectoral discussions.
406. He had held informal consultations with those delegations who had submitted written
proposals, which were very useful and had revealed the following themes:  there seemed to be no
need for continuing sectoral discussions of proposals in the current form;  there would be a need to
allocate more time for bilateral and plurilateral meetings and less time for multilateral meetings;  therewas a suggestion that the next cluster of meetings, scheduled for the last week of May and first week
of June, be reduced to only one week.  He felt that it might be useful to envisage a "book-ends"
arrangement according to which the formal meeting of the Special Session would start at the
beginning of the week, be suspended to allow sufficient time for bilateral and plurilateral meetings,
and then resume towards the end of the week to take stock of progress, and of course dispense with
any remaining items on the agenda.  An alternative way to proceed could be for delegations to decide
only on the organization of work for the meeting in June, at which point Members might be in a betterposition to draw a roadmap for the rest of the year or even up to March 2003.
407. The question of smaller delegations, and of where the negotiations were taking place, also
needed to be taken into account.  Looking at the negotiating proposals, his feeling was that a number
of the elements they contained could be dealt with bilaterally, whereas others could benefit from
multilateral discussion, either because the issue was horizontal or because it entailed specificdisciplines for given sectors, in the forms of annexes or reference papers.  With the deadline for the
conclusion of the negotiations in view, not much time was available and it was therefore important to
decide sooner, rather than later, which issues migh t be taken up multilaterally so as to start working
on those without delay.  He invited delegations to start reflecting on this issue.
408. The representative of New Zealand said that his delegation's message for the road ahead was
"steady as you go".  In New Zealand's view, delegations should not attempt to straightjacket
themselves in relation to future work.  It was im portant to ensure that the specific interests andTN/S/M/1
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objectives of all Members were effectively addressed as and when they arose.  Bearing in mind the
mandate of the Doha Declaration and the Guidelines, there was no need to try to add or take anything
away from those fundamental documents.  They were delegations' guiding lights and they seemed to
be doing a fairly decent job.  In looking at the agenda, he said that the assessment would obviously
need to be retained.  This was an on-going item on the agenda which would remain with the Councilfor the duration of the negotiations.  The same could be said of the Reports of the Chairpersons of the
Subsidiary Bodies.  The issue of autonomous liberalization would also remain on the agenda until
such time as Members managed to agree to some multi lateral rules on its trea tment.  Turning to the
item on the negotiating proposals, he believed that this should remain on the agenda, but saw no need
to attempt to further refine it.  It was important to make it clear that it was always possible for new
negotiating proposals to be submitted into the process and this had been clearly highlighted by a
number of Members over the course of the meeting.  The right of Members to raise any issues inrelation to any of the proposals already on the table also had to be ensured, and retention of the
current agenda item would achieve this.  He saw no need  for anything further than that, at least for the
time being, or at least until it became apparent that things needed to change.
409. He underscored the importance of retaining suffic ient flexibility for the Council's future work.
New Zealand's views on flexibility were particularly related to the fact that Members were enteringthe new request-offer phase of the negotiations and a lot of substantive work was not being conducted
in the Council, but back in capitals, as well as in the missions in Geneva, as delegations worked
towards the tentative deadline for initial requests.  This had been demonstrated in part during that
meeting, where it was clear that some of the discussion had started to run out of steam.  This was
natural, as a number of the proposals had been discussed a number of times and there was thereforeprobably not much new to say, at least for the time being.  In New Zealand's view, as Members
worked their way through the following year or so, there might be issues that delegations might wish
to air in the Council as a result of the request-offer phase.  This was to be expected, but it was
important to be flexible and not prejudge future discussions.  In essence, the negotiations had to
continue to be Member-driven.  Such flexibility should also be the guiding principle for the meetingsthemselves, particularly their length.  Members had agreed to a further four meetings of the Special
Session in 2002, but they should not insist that such  meetings stretch out over a whole week.  Indeed,
he would not be surprised if the following few m eetings only required a day or so, as most Members
were likely to be finalising their initial requests at that time.
410. The representative of Switzerland concurred with the Chairman's introduction.  He said that
the existing structure in the Council was adequate, but encouraged delegations to be prudent and to
take into account the fact that the discussion of the existing sectoral proposals had come toexhaustion, that the bilateral request-offer phase was fast approaching and that on some issues not
much progress had been achieved due to differences in positions.  Against this background, his
delegation's views were as follows.  First, the discussion of the negotiating proposals should not be
structured by sectors but organized under one sing le agenda item, which would allow also for the
possibility of submitting and discussing new proposals.  Second, there should be flexibility as to thelength of the meeting in June, bearing in mind that this would be the last meeting before the deadline
for the submission of requests and that certain delegations might wish to seek or provide clarifications
in order to finalize their requests.  Third, the work of the subsidiary bodies required time, but they had
a clear mandate and importance needed to be attached to their work.  Fourth, and most importantly,
the relationship between the bilateral and multilateral component of the negotiations was crucial indetermining their outcome.  He stressed the importance of multilateral work for reasons of
transparency, effectiveness, as the same concept would only be explained once, and homogeneity, as
the results of the negotiations would be clearer and more user-friendly, thereby increasing the
readability of the GATS.  With regard to horizontal issues, he stressed the importance of the
assessment and of making progress on the issue.  A sound and objective assessment could helpdeveloping countries better identify their export interests and help them decide on the content of their
offers.  On classification, little progress had been made;  the discussion would inevitably continueTN/S/M/1
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bilaterally while no multilateral agreement was reached, but at one stage, sooner rather than later, the
issue would have to be discussed in a multilateral framework.  He was flexible as to the forum, but a
parallel approach was necessary to ensure homogeneity and readability of GATS schedules and
interpretation of the results of the negotiations, as any preparatory work and the aim of the negotiating
parties were elements which would be used to interpret the results of the negotiations.  As it was notclear how bilateral negotiations would best be organized, he stressed the importance of being flexible
in order to adapt to the evolution of the Council's work.
411. The representative of Argentina, speaking on behalf of the MERCOSUR countries, supported
the Chairman's introduction.  He said that the negotiations were entering a new phase, during which
multilateral discussions should be focused in order to obtain concrete results and to facilitate the work
that might be carried out bilaterally or plurilaterally.  The Council had an important role to play in
ensuring transparency, advancing multilateral discussions and addressing outstanding horizontalissues, as well as providing a forum for the discussion of any proposals.  The subsidiary bodies had to
be used to their full extent, as stated in the Guid elines, under the overall guidance of the Council.  As
for the number of meetings and their duration, he said that the agenda Members were facing was
heavy and that the constraints of smaller delegations, as well as the fact that other negotiations were
proceeding in parallel and would result in a single undertaking, had to be taken into account.  Heagreed that the elements of transparency, effectiveness and homogeneity, and of flexibility, were all
necessary at that stage of the negotiations.
412. The representative of Japan echoed the statement by New Zealand on the need to be flexibile
and not to prejudge the Council's future work.  He could support the idea of having shorter
multilateral meetings of the Special Session, to deal with some outstanding issues, and of allowingmore time for bilateral and plurilateral meetings.  He said that the issue of facilitating capital-based
participation would still need to be addressed.  He was of the view that multilateral work on
classification and domestic regulation should continue in the relevant subsidiary bodies, in order to
use these bodies effectively, and that later on Members could consider whether to take this work up in
the Special Session.
413. The representative of Chile echoed the Chairman's statement.  He agreed with New Zealand
that flexibility in the organization of work was essential, especially after initial requests had been
tabled, and that striking a balance between bilateral and multilateral discussions was crucial.
Multilateral discussions had to continue, in order to address outstanding issues as well as new ones.  It
was also essential that subsidiary bodies be utilised to their maximum capacity.  As for the length of
meetings, he said that the June meeting could perhaps be shorter, especially in view of the constraints
of smaller delegations, but that the question of capital-based participation also had to be borne inmind.  As for the organization of work, he appealed to delegations to try to avoid repeating positions
or views they had already stated.  He felt that the Secretariat could helpfully produce summaries
containing the main issues under discussion, in th e form of Chairman's notes, to help organize the
debate.   These notes would not be exhaustive or constrain delegations' interventions, but might
facilitate the streamlining of the discussion.  Bearing in mind the need for flexibility, he called forbilateral meetings to be organized in such a way that the issues be up for discussion would be known
in advance, to help delegations prepare adequately.
414. The representative of Thailand, speaking on behalf of ASEAN, said that, in anticipation of the
request-offer process, she sensed that activities had begun to shift away from the Special Session.  No
delegation could deny that a natural companion to the request-offer negotiations were bilateral andplurilateral negotiations, to which they would participate actively.  However, multilateral discussions
should not become secondary to bilateral or plurilateral ones, as the WTO was a multilateral
negotiating forum and that no Member should be marginalized.  She said that, while in the near future
more time would be devoted to bilateral discussions, some horizontal issues, such as assessment,
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should not be relegated to the backburner.  These issues were all part of the broad multilateral
framework and hence open discussion was preferable to only bilateral consultations.  Classification
and domestic regulation issues raised in the proposals would benefit from a more open discussion in
multilateral fora, particularly in the relevant subsidia ry bodies, in order to ensure the participation of
smaller delegations.  Items such as assessment, autonomous liberalization and the reports of theChairpersons of the subsidiary bodies would continue to figure on the agenda of the Special Session,
as would a general item for the negotiating proposals submitted under Article XIX of the GATS.  She
was of the view that the balance between bilateral,  plurilateral and multilateral discussion would be
worked out along the way, but noted that the Special Session was also a monitoring body in this
regard, where Members could raise any issue.  She called for due attention to be given to the issue of
transparency and the participation of smaller delegations from developing countries.
415. The representative of Senegal echoed the statement by Thailand on the participation of
developing countries.  With regard to new proposals, he said that there had to be flexibility for the
submission of any new proposals fr om developing and least-developed countries;  they might have
been unable to table proposals that they might wish to submit subsequently and there should be time
and opportunity for them to do so.  As for modalities, he said that opaque areas existed which needed
to be clarified, especially as they related to developing and least-developed countries.  With respect tothe balance between bilateral and multilateral discussions, he said that anything discussed bilaterally
would need to be endorsed at the multilateral level, for the benefit of all Members.  He noted that
some guarantees did exist in this sense, but stressed the importance that bilateral results be reflected
multilaterally.  At the same time, bilateral discussions might be well-founded in certain areas, but the
multilateral level had to take precedence.  As for horizontal issues, he stressed the importance ofassessment, autonomous liberalization and modalities for the treatment of least-developed countries
and called for due consideration to be given to them in the bilateral request-offer phase.  He called for
a solution to be reached in these areas in order to shed light on the next phase of the negotiations.
416. The representative of the European Communities echoed the statement by New Zealand.  He
agreed that the detailed sectoral discussion had come to exhaustion, which was natural.  At that stage,
the bilateral phase of the negotiations would have a more important role, but he concurred with
Thailand that striking the right balance was crucial and added that this balance would change as the
negotiations progressed.  He agreed that the June meeting could be shorter and address the horizontal
issues of assessment, autonomous liberalization and the negotiating proposals.  As for the
organization beyond June, this should be left flexible, with sufficient time for bilateral contacts.  As
bilateral negotiations proceeded, some issues mi ght need to be taken up multilaterally, so that
flexibility in organizing future work was essential.  He was of the view that, over time, more and moreissues would return to be addressed in the Special Session and at that time there might be a need for
the Council to think again about how to organize its work.  At the June meeting there would be a need
to consider how to best attract sectoral experts, given that the agenda would not mention the sectors
up for discussion;  one solution might be to assign different sets of sectors to different meetings, or for
delegations to notify all Members, through the Secretariat, that certain experts would be coming togiven meetings.  He called on delegations to further reflect on this issue.
417. The representative of Venezuela recalled that the Guidelines referred to appropriate flexibility
for developing countries in the negotiations and stressed the importance of bearing this in mind.  She
said that the agenda of the Special Session s hould continue to include items on assessment and
autonomous liberalization;  Members were close to reaching preliminary conclusions on these issuesand should continue working on them.  The agenda should also include an item on the negotiating
proposals;  the discussion did not n eed to be organized by sectors, but Members needed to reflect on
how to best manage the debate.  The outline of the Chairman's report to the Trade Negotiations
Committee should also continue to figure on the agenda.  She understood the services dates in the
Doha Declaration to be only indicative dates for th e submission of initial requests;  they were not
fixed deadlines, but rather signalled the commencement of the request-offer phase of the negotiations.TN/S/M/1
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Members with less resources could continue to submit requests after 30 June 2002, and in this regard
she underscored the need for flexibility.  She then soug ht a clarification with regard to the role that the
Chairman and the Secretariat would play after 30 June with respect to requests.  She wondered
whether there was an obligation for Members to inform the Secretariat of requests and whether there
would be a contact point from which to obtain inform ation and to seek answers to technical questions.
418. The Chairman replied that it was up to each Me mber to decide whether to inform the Council
of the requests that it had tabled or whether to keep it confidential.  The representative of the WTO
Secretariat added that, if one were to take guidance from previous negotiations, requests had not been
circulated, but that this was up to each Member to decide.  As for offers, in the past these had usually
been circulated to Members through the Secretariat in the form of draft revised schedules.  He also
said that the Secretariat had no role to play in th e negotiations, as it was up to Members to organize
bilateral meetings, but that the Secretariat was alwa ys available for advice with regard to technical
questions.
419. The representative of the Republic of Korea said that the key elements to guide the Council's
future work were flexibility and balance.  With re gard to the organization of future meetings, he said
that the existing structure of discussion had exhausted its usefulness and appealed to delegations to
avoid repetition.  At the same time, new proposals had to continue to be catered for and encouraged.He suggested that the Secretariat might prepare notes highlighting outstanding issues for discussion,
particularly as they related to the request-offer phase, along the lines of the Chairman's introductory
remarks at that meeting.  As for the June meeting, he felt that more time would need to be devoted to
horizontal, rather than sectoral issues, and particularly to the question of modalities for the treatment
of autonomous liberalization, which were important for the request-offer phase.  After initial requestshad been tabled, Members would need more time for bilateral and plurilateral discussions, and he
could support the idea of having the meeting of the Special Session start at the beginning of the week,
be suspended to allow sufficient time for bilateral and plurilateral meetings, and then resume towards
the end of the week to raise any outstanding issues.  With regard to offers, he said that these would
reflect the specific interests of Members and called for flexibility in the negotiations.  He said thatgrey areas existed, such as the question of whether certain measures, relating, for instance, to air
transport services, should be included in requests.  However, without agreed binding guidelines,
Members might have the liberty to include any m easures in their requests, including autonomous
liberalization measures or MFN exemptions;  it would then be up to bilateral discussions and
subsequent agreement after discussions in the multilateral context whether to reflect such requests.
As concerned the subsidiary bodies, he said that the negotiations were conducted in the Special
Session, in accordance with paragraph 8 of the Guidelines, but that it was important to consider howthe subsidiary bodies could be utilised to their maximum capacity.  He called upon Members to
provide more specific guidance to the subsidiary bodies, as some issues of a technical nature could be
usefully addressed in those fora.  He then asked the Secretariat if the presentation on requests/offers
given at the GATS seminar for delegations could be made available to Members in writing.
420. The representative of Mauritania addressed three points raised by the Chairman.  First, as
Thailand, Senegal and the European Communities had mentioned, priority should be given to the
multilateral context.  It was from the multilateral context that the bilateral context would arise.
Bilateral negotiations concerned countries with large shares of the services market and therefore could
result in the marginalization of some countries if they were given priority.  Second, he raised a
concern with regard to the frequency and duration of meetings.  That services Special Session meetinghad been held at the same time as the Committee on Trade and the Environment.  In future, the
Council should try not to have too many simultaneous meetings, so that small delegations could
participate fully.  Third, he said that documents from other international organizations, such as
UNCTAD or the OECD, could be usefully made available for future meetings.TN/S/M/1
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421. The representative of Mexico agreed that flexibility was essential in organizing the agenda of
the Special Session, so as to allow for the discussion of those issues which were required in different
phases of the negotiations.  He also concurred that the length of meetings could be reduced to one
week.  He was of the view that the question of cl assification needed to be further discussed in a
multilateral forum, and that the Committee on Specific Commitments should be given clear guidanceto address this issue.  Along the same lines, he ca lled for the subsidiary bodies to play a bigger role
and to be utilised to their maximum capacity.  He underscored the importance of facilitating the
participation of capital-based experts starting from th e July meetings and of striking the right balance
between bilateral, plurilateral and multilateral meetings.
422. The representative of Colombia stressed the importance of using subsidiary bodies to their
maximum capacity.  There were a number of horizontal issues that deserved more discussion and
could be dealt with technically in those bodies.  With regard to Mexico's point on classification,Colombia concurred that it was an important issue which could be dealt with in the Committee on
Specific Commitments with clear guidance from the Special Session.  With respect to the structure of
the June meeting, Colombia suggested including a general point on the agenda for submitting new
proposals and clarifying existing ones.  This could reduce the duration of meetings and allow
Members to focus more on the discussion.  Further, Colombia supported the proposal made by Chileto circulate summaries containing the main issues under discussion for the meetings.  Colombia
stressed the importance of flexibility in the discussions, as mentioned by other delegations.
423. The representative of Mauritius welcomed the idea  of flexibility.  This flexibility needed to
take due account of the special situation of a small country like Mauritius, which had administrative
and capacity constraints.  With a small staff, his delegation had to cover a large number of issues onthe table in the negotiations.  The services negotiations already dealt with a wide range of issues and
in the case of Mauritius his delegation would have to cover the broad range of issues in other areas of
negotiations arising from the Doha Declaration.  He  appealed to Members to take into account the
specificity of their problems, especially when scheduling bilateral consultations.
424. The representative of Australia made a few observations on the way forward.  First, he agreed
that discussions of sectoral negotiating proposals were slowing down, though at the same time he had
detected a higher level of engagement and interest in the issue of autonomous liberalisation and a
renewed interest on the question of assessment.  Australia had also observed an apparent new
determination on the part of Members to utilise subsidiary bodies to their maximum extent, which was
very important for the future of the negotiations particularly in subjects like classification, emergency
safeguards, and domestic regulation.  The Doha declaration had set deadlines for the market access
phase of the negotiations and his delegation agreed that Members needed to adapt the structure ofdiscussion to the forthcoming request-offer phase.  At the same time, Australia did not think that any
radical adjustments were needed.  It was more a question of shifting the balance in terms of the
allocation of time, to give more space to the bilateral and plurilateral discussions.
425. Responding to the Chairman's proposals, he could agree to the June meeting lasting only one
week, but called for sufficient time to be devoted to the question of autonomous liberalization andappealed to Members to make a special effort to br ing the issue to conclusion at that meeting.  He
could also agree with the suggested structure of meetings, convened at the beginning and end of the
week, with time in-betw een for bilateral consultations, beyond the 30 June deadline.  Similarly, he
agreed that the agenda should contain a single, not further broken-down item for the negotiating
proposals, with adequate flexibility to address ne w issues and proposals as well as to pose, and
respond to, questions on existing proposals.  He echoed the comments by Chile, the European
Communities and Japan on the participation of sectoral experts.  The request-offer phase would be
more efficient and effective if sectoral experts were present, especially if classification questions or
reference paper proposals were raised.  It was therefore important to know when given sectors would
be discussed.  This could be achieved either by disseminating the information informally, or using theTN/S/M/1
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Secretariat as a clearing house or by adding a footnote to the agenda indicating which sectoral experts
would be present.
426. The representative of India said that, with the request-offer phase fast approaching, bilateral
and plurilateral meetings would come into prominence, but stressed that multilateral discussions,
which the Special Session signified, were equally important and underscored the statement made byThailand in this regard.  The Special Session would cater for new proposals and allow for discussion
of old proposals and horizontal issues.  He said th at the list of horizontal issues raised by the
Chairman was only indicative, as other issues existed.  He felt that it was still useful to discuss old
proposals, such as his delegation's submission on mode 4, as some of the issues that they contained
required multilateral resolution.  The Special Session was also to review the progress of work in the
subsidiary bodies, which had to continue work in accordance with their respective mandates.  He
could agree to the duration of meetings, especially the June one, being reduced, but was unsure aboutthe suggestion that the meeting be opened, suspended and then resumed at the end of the week, as he
wondered whether all Members' concerns would be accommodated by this arrangement and as, in his
view, the discussion of horizontal issues required more time.  He could also support Chile's practical
suggestion.
427. The representative of the United States could support the Chairman's introduction as
concerned the time, duration and structure of meet ings.  He stressed the oversight and transparency
role played by the Special Session, but called for sufficient time to be devoted to bilateral
consultations for the discussion of requests.  He was open to discussing the topics raised in the
proposals in a multilateral setting, but noted that these could also be taken up in bilateral
consultations.  The same consideration was relevant to the suggestion that the Secretariat mightproduce a note on outstanding issues for discussion.  Article XIX of the GATS and the Guidelines
recognized that the negotiations would take place bilaterally, plurilaterally and multilaterally, and the
United States would look at all the three possibilities.  He said that he would revert to the Secretariat
comment on the circulation of requests/offers.
428. The representative of Nigeria concurred with New Zealand and Switzerland that the basic
tenets of the future work of the Council were flexibility, transparency, effectiveness, homogeneity and
open-mindedness.  He said that the new phase the negotiations were entering would witness bilateral,
plurilateral and multilateral processes and stressed the importance of flexibility, particularly for
African countries that lacked resources.  He conc urred that the possibility of tabling new proposals
should be left open, that the meetings of the Special Session should be shorter and that the request-
offer phase would require bilateral consultations, but stressed that the ultimate purpose of the Special
Session was to allow multilateral debates which would ensure transparency, homogeneity andparticipation of all Members.  He underscored the importance of making progress on the assessment
and  on autonomous liberalization, in accordance with th e mandate in Article XIX, as well as with the
work on rules, domestic regulation and classification.  He added that technical issues should be
addressed in the relevant subsidiary bodies.  He said that African countries were late-starters and were
not demandeurs in the services negotiations and appealed to Members to understand if they were notkeeping pace with the negotiations.  He also stressed the importance of technical assistance.
429. The representative of Cuba concurred with the importance of utilising the subsidiary bodies to
their maximum capacity.  She said that the assessment and autonomous liberalization would continue
to figure on the agenda of the Special Session and stressed that multilateral discussions should not be
secondary in importance to bilateral and plurilateral ones, but should rather be the centre of theCouncil's work.  As of July, more attention might be devoted to bilateral meetings.  She echoed the
statement by Senegal calling for flexibility for developing and least-developed countries with regard
to the submission of new proposals, even if she recalled that Members had the right to submit new
proposals at any time.  As for the June benchmark, she said that Members with less resources shouldTN/S/M/1
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be granted flexibility to submit new as well as additional requests.  In this regard, she had taken note
of the comment by the Secretariat with respect to technical assistance.
430. The representative of the Slovak Republic said that there would be a greater role for bilateral
consultations as the request-offer phase approached, but that multilateral discussions were equally
important, as some issues were still outstanding, such as assessment and autonomous liberalization.With regard to the sectoral discussions, the represen tative said that the format could change but that a
lot of useful work had been undertaken until then which should not be forgotten or undermined and
from which Members should benefit.  Bilateral mee tings might also raise new issues that Members
had a right to bring up in the Special Session.  The representative supported the idea that flexibility,
transparency and homogeneity should guide the negotiations and called for work on classification to
be solved before the start of the request-offer phase and for delegations to engage more seriously in
discussions in the subsidiary bodies.  At that stage, it was essential to continue working by striking theright balance between the bilateral and multilateral approaches.
431. The representative of Honduras agreed with the importance of flexibility, transparency and
effectiveness and concurred with statements about the length of meetings.  As concerned assessment
and autonomous liberalization, he said that these issues should not be just items on the agenda but that
concrete progress was essential and appealed to Members to advance to a more concrete phase.  Hecalled for conclusions to be reached on the assessment before offers were submitted.  This was
particularly important for small delegations, which had fewer resources.  He stressed that the
assessment at the national level could not be more important than the multilateral assessment, which
could lead to better implementation of Article IV of the GATS.  He called on Members to arrive at a
multilateral understanding on classification, which would add predictability and transparency tocommitments, and to give more direction to work on the issue in the Committee on Specific
Commitments.  As for horizontal issues, he recalled the implementation of Article IV aimed at
increasing the participation of developing countries in services trade and the issue of small and
medium-sized suppliers, which was also of interest to developing countries.  He also stressed that
horizontal issues should not lose importance even if more time was devoted to bilateral consultations.He also called for the introductory statements made by the Chairman on the sectoral proposals to be
made available.
432. The Chairman said that the discussion under this item had been constructive and that
positions were convergent.  All Members agreed that the negotiations were entering a new phase
which would imply bilateral consultations;  these, however, should not detract time from multilateral
work.  Some of the standing items on the Council agenda were of particular importance at that stage,
namely assessment and autonomous liberalization.  The need to be efficient and utilise the subsidiarybodies to their maximum extent was underscored, particularly on the issue of classification.  Whilst no
formal decision could be taken, he would welcome delegations' views on how to give guidance and
structure to the work of the Committee on Specific Commitments.  As for the discussion of the
negotiating proposals, all concurred that the item should remain on the agenda, but that the discussion
should not be structured by sectors.  The possibility of submitting new proposals should bemaintained, and flexibility should be granted to developing countries in this regard.  As for the length
of meetings, he said that he would be consulting with the Chairpersons of the subsidiary bodies to see
whether the June cluster of meetings could be reduced to one week.  With regard to the organization
of the July meeting, he suggested that a decision be taken in June, so as to retain maximum flexibility.
As concerned the participation of capital-based experts, he concurred about the importance of theissue and would be giving further thought to possible  loose procedures to facilitate their participation.
He indicated that his introductory comments on the negotiating proposals, which were just meant to
stimulate the debate and were not exhaustive, had been made under his own responsibility and would
be made available to delegations as such.  Similarly, the presentation made by the Secretariat at the
GATS seminar for delegations on requests/offers would be made available to interested delegations.TN/S/M/1
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433. The Council took note.
H. OUTLINE OF THE CHAIRMAN 'S REPORT TO THE GENERAL COUNCIL
434. Based on Members' discussion over the previous days, the Chairman indicated that, in his
report to the Trade Negotiations Committee, he would state that the Special Session of the Council for
Trade in Services met from 19 to 22 March 2002.  Members had confirmed his appointment asChairman of the Special Session of the Council for Trade in Services.
435. Under the item on the assessment of trade in serv ices, he would report that the Council had
held an interesting and full discussion.  Many dele gations reiterated the importance they attached to
the assessment, which was on-going exercise.  It was stressed that, while the assessment should be
conducted at the national level, the exercise was also a collective responsibility of the Council.
Several delegations also referred to the symposium on the issue, held on 14 and 15 March, as a timely
and very positive contribution to the debate and a good basis to proceed.
436. With respect to the item on autonomous liberalisation, he would state that three new proposals
were presented, by the European Communities, Hong Kong, China and Paraguay, which were
valuable contributions to the discussion.  A Secretariat note, containing "Possible Elements for
Modalities for the Treatment of Autonomous Liberalization" was also discussed.  The debate was
very rich, with interventions by close to 50 Members.  Delegations generally considered theSecretariat note a good base to continue work on autonomous liberalization.  The Council therefore
agreed that, using the Attachment in the Secretariat note as a basis, and taking into account the many
written and oral contributions, the Chairman w ould produce a first draft of modalities for the
treatment of autonomous liberalization.  An informal meeting of the Council would be held in
advance of the next Special Session in June to discuss the draft modalities.
437. As for the discussion of negotiating proposal s, he would state that new submissions were
tabled by the delegations of Australia, Japan, Costa Rica, the MERCOSUR countries, India and Cuba.
Members addressed all the issues raised in the negotiating proposals and the Council took note of the
statements made.  The discussion of the item on review of progress in the negotiations revealed
Members' concurrence that progress had been achieved in the negotiations, even if a few delegationswere of the view that progress had not been sufficient;  still, all Members agreed that a great deal of
good work had been carried out.  Many negotiating proposals had been submitted, by developed
countries and, if somewhat less, by developing countries.  Disappointment had been expressed at the
lack of consensus on the negotiations on emergency safeguard measures, but it was also noted that the
debate on the issue had proceeded on a faster and deeper basis.  Some delegations had pointed to the
fact that no conclusions had been reached on the assessment of trade in services and that the exercise
needed to be brought to closure, but it was also noted that the assessment was a standing item on theCouncil's agenda.  As for the organization of further work, he would make a brief reference to his
concluding remarks under item G.
438. The representative of Canada asked that the outline Chairman's report be circulated beyond
the WTO Membership and be de-restricted.  The Chairman indicated that his report as a rule was
issued shortly after the meeting and circulated as an unrestricted document.
439. The representative of Uruguay asked that two points be added to the Chairman's report.  First,
the extension of the deadline for the negotiations on emergency safeguard measures, as they were part
of the services negotiations.  Second, the MERCO SUR suggestion that an Annex be added to the
Chairman's report containing a list of all proposals submitted on the different sectors and horizontal
issues.  The representative of Brazil supported the suggestion by Uruguay.  The representative of
Venezuela concurred and stressed that the Trade Negotiations Committee should be informed of
progress in the negotiations on emergency safeguards, which were part of the services negotiations.TN/S/M/1
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She also asked that her delegation's position with regard to paragraph 31 of the Doha Ministerial
Declaration and the subsequent discussion be reported in the Chairman's report.  The representative of
the United States said that the decision on the extension of the deadline for the safeguard negotiations
could be referred to as part of the reports of the Chairpersons of the subsidiary bodies to the SpecialSession.
440. The Chairman said that the points mentioned would be added to his report.
441. The Council took note.
I. OTHER BUSINESS
442. The representative of Uganda, speaking on behalf of the least-developed country Members,
said that the paucity of negotiating proposals submitted by developing countries, and particularly by
least-developed countries, was indicative of their capacity.  He requested that, at the following
meeting, a separate item be included on the agenda of the Special Session on the establishment, asmandated by Article XIX:3 of the GATS, of modalities for the special treatment of least-developed
country Members under the provisions of paragraph 3 of Article IV.
443. He then introduced the submission contained in document JOB(02)/30.  He said that least-
developed countries (LDCs) recognized the importance of services trade for the attainment of
development objectives and as a direct contributor to trade.  LDCs recognized the provisions of theGATS in their favour and supported the progressive liberalization of trade in services as a means of
promoting development and economic growth.  They were seeking to ensure that the negotiations
result in a balanced and sustainable outcome which would take into account their development, trade
and financial needs.
444. They recalled that Article XIX:3 provided that the negotiating guidelines establish modalities
not only for the treatment of liberalization undertaken autonomously by Members since previous
negotiations, but also “modalities … for the special treatment for least developed country Members
under the provisions of paragraph 3 of Article IV.”  Paragraph 3 of Article IV recognized that
“Special priority shall be given to the least developed country Members in the implementation of
paragraphs 1 and 2” aimed at increasing participation of developing countries.  Though theNegotiating Guidelines had not established these modalities, paragraph 2 of the Guidelines set as an
objective and the principle that “Special priority shall be given to the least-developed country
Members as stipulated in Article IV:3”.
445. For the implementation of the Agreement and the objectives of the Guidelines, LDC Member
countries requested the Council for Trade in Services  to establish modalities by which special priority
would be granted to the least developed country Me mbers.  Modalities should establish how special
priority could be given to LDCs in the course of the trade in services negotiations.  They shouldprovide for the ways on effective participation of LD Cs in the negotiations in light of their limited
human resources and abilities to engage fully in all the complexities of negotiations.  These modalities
should foresee that the special needs of LDC Member countries be taken into account in deciding how
credit would be granted for autonomous liberalization.
446. These modalities should include the following list of elements, which was not exhaustive and
allowed LDCs to make further proposals in future .  First, LDCs should not be requested to make
specific commitments in more than four services sectors.  Second, developed countries should clearly
indicate their commercial interest and commitment to invest in those areas where LDCs would be
making specific commitments.  Third, in each services sector where LDCs undertook specific
commitments, Members should give special consider ation to opportunities for LDCs to encourage
foreign suppliers to assist in transfer of technology, training, and other activities that supported theTN/S/M/1
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development of their specific services sectors.  Fourth, developed countries should extend full market
access and national treatment in their specific commitm ents to services and suppliers of services of
LDCs in sectors and modes in which LDCs had specific export interests.  Fifth, developed countries
were invited to notify regularly on their trade by services sectors with LDCs, so that implementation
of effective market access to the services and service suppliers from the LDCs could be demonstrated.Sixth, LDCs should receive effective assistance to undertake national assessments of services sectors
and impact of any structural adjustment programs .  Seventh, an evaluation of the outcome of the
negotiations had to be carried out in order to assess whether the special needs of the LDCs had been
adequately addressed.  Modalities were a necessary instrument which could establish that concrete
steps had been taken to ensure that LDCs reaped benefits from the negotiations.
447. He added that the Brussels report of the Third United Nations Conference on the Least-
Developed Countries gave indications to the international community, in paragraphs 69 and 70, toassist least-developed countries' efforts to improve export promotion and marketing and to remove
restrictions and enhance market access opportunities for service exports from least-developed
countries, as provided for in relevant WTO Agreements in areas of export interest to them.
448. The Chairman said that the item would figure on the agenda of the next meeting of the
Special Session.
449. The representative of Senegal fully associated his delegation to the statement made by
Uganda on behalf of the LDCs concerning the modali ties for special treatment of LDCs.  This was a
shared responsibility of the Council.  Article XIX:3 of the GATS mandated the Council to establish
such modalities in the negotiating guidelines.  However, the Guidelines were adopted in March 2001
and did not contain such modalities.  This would be the first step in the implementation of the specialtreatment for the LDCs, as referred to in Article IV:3.  He noted that document
WT/COMTD/W/77/Rev.1/Add.1/ Corr.1 of February 2002 recognized the mandatory nature of GATS
Articles IV:3 and XIX:3.  The Council should ensure that such special treatment be given to LDCs
and take decisive action to make sure that the benefits of services liberalization accrue to least-
developed countries.  Senegal appealed to the Council to make headway in this respect and see to itthat the market access negotiations allowed for greater participation of developing and least-
developed countries.  The full implementation of Articles IV and XIX was very significant in this
exercise.
450. The representative of Mauritania fully supported the statement made by Uganda as it testified
to the important link between Article IV and Article XIX of the GATS.  This was important as trade
in services could produce potential benefits for Members.  He noted that income from services trade
was still lower than from goods exports.  The obstacles to trade in services were not easy todetermine, contrary to trade in goods where obstacles were very often in the form of custom duties.
Mauritania stressed the importance of implementing Article IV so that liberalization could lead to true
market access especially for the sectors and modes of export interest to developing countries.  He
underscored the importance of maintaining the current positive listing structure of the GATS, which
allowed for progressive liberalization.  He also called for the links between the WTO and the BrettonWoods Institutions to be borne in mind, as well as autonomous liberalization carried out in the context
of structural adjustment programmes, which cut across all sorts of important sectors such energy,
financial services and insurance services.  He also suggested that Members focus on the negotiations
on subsidies and on their trade-distortive effects.  He called for an organic link between liberalization
and transfers of technologies and know-how so as to ensure universal access to services.  Technicalassistance should help LDCs draw up new schedules of commitments;  prior to this, studies had to be
carried out to enable LDCs to assess the impact of liberalization measures and to allow them to fully
benefit from it.TN/S/M/1
Page 84
451. The representative of Zimbabwe supported the statement made by Uganda on behalf of
LDCs.  He stressed the link between the various parts of the GATS, and particularly Articles IV and
XIX.  Zimbabwe believed that there could not be increased participation by LDCs and developing
countries in trade in services without assessment, which had a bearing in determining levels of
autonomous liberalization by these countries and hence credit due and increased market access.  Itbecame increasingly difficult for LDCs to negotiate fairly market access without clarity and
information on issues of concern to them.  He appealed to Members not to disregard the linkage
between these provisions, which would help LDCs address special and differential treatment issues.
Furthermore, modalities to be established should take these linkages into account.
452. The representative of Zambia expressed support for the statement made by Uganda on behalf
of LDCs regarding modalities for special treatment of LDCs in the GATS negotiations.  He added that
LDCs were confident that, based on their submission, clear and simple modalities to give specialtreatment to the LDCs in the negotiations a nd their outcome would be established soon.  They
believed that, given the political will, the task should not be difficult.  When Ministers directed the
Services Council in Article XIX:3 to establish modalities, their expectation was that these would form
the basis for LDCs negotiations.  Aware of the special problems of LDCs, they were conscious that
requests made by developed countries to LDCs without clear modalities would not help LDCs in thenegotiations.  Therefore, modalities for LDCs were an essential instrument for LDCs to benefit from
the negotiations.  It was one way to demonstrate and reinforce in practice the special place of LDCs in
the WTO.  The good statements that Members had made until then on many occasions in the Council,
including in the negotiating guidelines, stating that priority would be given to LDCs, were
appreciated.  But the difference between these statements and what they were proposing was thatmodalities transcended good statements.  Modalities were a way towards translating good statements
into concrete outcomes.  LDCs had been told before that often they did not clearly state what they
wanted and what their needs were.  However, here the same statement could not be true.  For a
constrained group such as theirs, the proposal before Members was beyond reproach.  It was clear,
simple and realistic and in return required a corresponding clear, simple and realistic set of modalitiesagreed at the multilateral level.  This was a legitimate proposal because, like autonomous
liberalisation, which the Council was considering, there was a legal requirement for the Services
Council to establish modalities for LDCs.
453. The representative of Haiti echoed the statement by Uganda and all subsequent statements.
454. The representative of the European Communities thanked the delegation of Uganda and said
that he would revert to the submission in JOB(02)/30.
455. On a different matter, the representative of the WTO Secretariat informed Members that, as a
result of the establishment of the Trade Negotiations Committee, there would be a change in
document symbols.  The current document series S/CSS/* would be replaced by the series TN/S/*.
456. It was so agreed.
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