RESTRICTEDWORLD TRADE
ORGANIZATIONS/CSC/M/30
1 December 2003
(03-6364)
Committee on Specific Commitments
REPORT OF THE MEETING HE LD ON 29 SEPTEMBER 2003
Note by the Secretariat1
1. The Committee on Specific Commitments held a meeting on 29 September 2003.  The agenda
for the meeting is contained in WTO/AIR/2169/Rev.1.  No points were raised under Other Business.
A. CLASSIFICATION ISSUES
2. The Chairperson informed delegations that a Communication from Indonesia on the
classification of energy services, which had been included in the airgram, would be issued at a later
date.   He noted that the discussion on the EC Communication on the classification of legal services
appeared exhausted for the time being.  At the last meeting, he had undertaken to consult withMembers on the parameters of a possible Secretariat Note on categories of natural persons subject to
Mode 4 commitments or a possible update of a background Note on Mode 4 dating from 1998
(S/C/W75).  However, shortly after the last meeting of the CSC,  the Secretariat had been requested in
the Special Session of the Council for Trade in Services to produce a short factual note on categories
of natural persons subject to Mode 4 commitments along similar lines as had been originally proposedin the CSC.  In light of this development, and with  a view to avoiding duplication of discussion in two
WTO bodies, he felt that at present the discussion on the various aspects of Mode 4 both technical and
on negotiating issues should be proceeding in the Special Session.  It might well be more efficient to
await this discussion and then take up subsequently in the CSC any technical work that might prove
necessary.
3. It was so agreed.
B. SCHEDULING ISSUES
4. The Chairperson recalled that it had been agreed at the last meeting to include a standing item
on "Scheduling Issues" on the agenda.  He info rmed Members that the Secretariat had in the
meantime issued its presentation on the scheduling of specific commitments which had initially been
prepared for the scheduling workshop of November 2002.  The presentation, contained in
JOB (03)/186, had been circulated in all three working languages.  He then turned to a newcontribution from the delegation of Brazil, contained in JOB (03)/189, which contained preliminary
questions on initial offers.
5. The representative of Brazil stated that his delegation had chosen to produce this set of
questions for four principal reasons:  first, the intention was to promote transparency in the
negotiating process by raising doubts and concerns on certain entries contained in offers.  He hopedthat the Note would promote a frank and open debate in the Committee on the way certain Members
scheduled commitments.  The second reason was to devote more time to the market access
negotiations during the services cluster.  Addressing open issues collectively would help to safe time
                                                     
1 This document has been prepared under the Secretariat's own responsibility and without prejudice to
the positions of Members and to their rights and obligations under the WTO.S/CSC/M/30
Page 2
in the bilaterals and go straight to the negotiating mode.  The third reason was to give a more active
and better defined role to the CSC and to use its expertise in a more focused fashion.  Finally, the
fourth reason was to promote the participation of developing countries through more efficient
resource use.  He recalled that during the negotiations of the "Modalities for  the special treatment for
least-developed country Members in the negotiations on trade in services" (TN/S/13) lack ofresources and capacity to evaluate offers had been raised several times.  The document was not
intended to "name and shame" any delegation.  Rather, the intention was to have a genuine and frank
debate of offers and provide an opportunity for Members to explain how they scheduled
commitments.  He expected a positive response from Members on the initiative.
6. The representative of the European Communities stated that her delegation was still
examining the paper and would revert to it at a later date.
7. The representative of the United States stated that it was her understanding that the CSC had
not adopted a "question and answer" exercise on initial offers at the last meeting.  She acknowledged
that any Member could raise any question within the terms of reference of the CSC.  Likewise, no
Member was under any obligation to reply.  She was interested why questions had been addressed to
only four delegations who had submitted offers. Her delegation would welcome an opportunity to
discuss the U.S. offer bilaterally with Brazil. The bilateral process was the main negotiating method in
the services negotiations, and the services clusters were designed to permit sufficient time to conduct
those meetings.  She failed to see the need for an institutionalized written exchange of questions and
answers.
8. The representative of Canada welcomed the circulation of the Secretariat presentation that
had been given during the scheduling workshop.  His delegation would respond to Brazil's questions
during the bilateral negotiations.
9. The representative of Japan stated that given existing time constraints, questions should focus
on technical aspects of the scheduling of commitments, but not on objectives, legitimacy or detailed
contents of national regulations.  Since there were still many Members that had not submitted initial
offers, he called for new submissions as early as possible.  His delegation was still examining how torespond to the questions posed by Brazil.
10. The representative of Hong Kong, China consider ed that questions relating specifically to the
market access negotiations and to the request and offer process should be discussed in the bilateral
negotiations rather than in the CSC, unless the bilateral partners chose to do so.  On the other hand,
technical clarifications of individual entries could be provided in a more open and transparent manner
in the CSC.  He noted that Members had emphasized the need to utilize subsidiary bodies to their
fullest extent possible.  His delegation considered that the subsidiary bodies had a role in supportingthe ongoing negotiations, including the negotiations on market access.  This would also enable
Members to better equip themselves for these negotiations.  Further, given that initial offers
represented prospective commitments, a multilateral understanding would be beneficial.
11. He then turned to a number of questions that had arisen from his delegation's examination of
initial offers.  In one case, a new category of independent professionals had been introduced underMode 4; he was not sure if the notion of independent professionals overlapped with the existing
category of employees of juridical persons, which had already been committed in that Member's
schedule.  In another case, an entirely new classification had been introduced by a Member in its
telecommunications commitments.  His delegation was not sure about the implications and, in
particular, the application of the reference paper.  In addition, some Members had scheduled underadditional commitments in legal services a prohibition of partnerships with local lawyers, while
having full market access and national treatment commitments.  He was interested in the status of
such an additional commitment that tried to limit the scope of market access and national treatment
commitments.  In another case, the number of beneficiary countries under an MFN exemption hadS/CSC/M/30
Page 3
been increased;  his delegation was not sure if that would represent a reduction or rather an extension
of the exemption.
12. While his delegation would pursue these issues in its bilateral negotiations, they raised
technical questions of a more general nature.  A common understanding among Members on the
meaning of entries, or at least an attempt to clarify ambiguities and differences of views, would beuseful.  Delegations could reconsider some of the issues which we had previously been addressed in
the CSC, including the relationship between Article XIX negotiations and Article XXI modifications,
or the scheduling of additional commitments and their relationship with Article XVI and XVII
commitments.  The discussion might bring into focu s certain new topics that might warrant further
technical clarification in the CSC, including the scheduling of Mode 4 commitments and the use of
categories; the scheduling of economic needs tests and the specification of criteria;  the interpretation
of Article XX:2 and its implications for scheduling;  as well as the scope of Article I:3 (c).
13. The representative of Argentina considered the document submitted by Brazil as useful for
both the bilateral and multilateral negotiations.  Many classification changes made it difficult to
analyse the real value of an offered commitment.  Wh ile some aspects of the negotiations were clearly
bilateral in nature, Brazil's paper raised an importa nt issue for multilateral discussion, i.e. the common
interpretation of scheduled commitments.
14. The representative of Cuba stated that the document presented by Brazil was useful.
Countries that were not able to engage in this type of analysis individually could draw benefits from
common discussions in the framework of the CSC.
15. The representative of Colombia said that the paper presented by Brazil would enable other
Members to better understand commitments that were on the table and allowed for better use of
resources and expertise.  Multilateral discussion could nurture the bilateral processes.
16. The representative of Bolivia commended the document presented by Brazil which would
help her delegation in the analysis of the various offers.  Many of her concerns were reflected in the
document.  It was important to obtain to the extent possible a common understanding of the issues
raised.
17. The representative of Guatemala shared this assessment.
18. The representative of Indonesia agreed that a multilateral discussion in particular of
classification issues would benefit other delegations and facilitate the tabling of offers.
19. The representative of China stated that the document presented by Brazil would help
developing countries which lacked the resources or abilities to handle offer as well as the four
Members to whom questions were addressed.  They were the most important trading partners for most
Members.  Answering the questions in this Committee would help to save time and energy.  Herdelegation also had questions regarding concrete cases of MFN exemptions and classification issues.
20. The representative of Brazil thanked the EC and Japan for their positive responses and
suggested that the document be kept on the agenda for the next meeting.  He noted that Canada had
indicated it would be willing to engage in a bilateral discussion on the questions posed.  He did not
fully understand the reaction by the United States;  the document was neither meant to accuse anyMember nor to replace the bilateral process, but rather to complement it.  It also contributed to
transparency, an issue often championed by delegations who had shown a reluctant reaction.
21. The representative of the United States stated that her delegation intended to discuss Brazil's
questions bilaterally.  It was for each Member to decide when and where to address questions.  She
took issue with the notion that answers would encourage the submission of offers.  While it was up toS/CSC/M/30
Page 4
Brazil to introduce the questions at the next meeting, her delegation would not join a consensus on a
formal process for doing so.
22. The representative of Chile remarked that a technical discussion of scheduling issues was a
useful addition to the bilateral request and offer process. However, many of the technical issues arose
from concrete commitments, and it was therefore difficult to respond generally.  Her delegation wasin principle interested in a multilateral process to clarify scheduling questions.
23. The representative of Chinese Taipei noted that Brazil's questions were either of
predominantly bilateral or multilateral character. The examples mentioned by Hong Kong, China
were cases for multilateral discussion.
24. The representative of Japan stated that his delegation was still examining how to respond to
the questions raised by Brazil.  This did not necessarily mean that Japan would provide answers in
the CSC.
25. The representative of Canada explained that there was no link between a Members'
submission of an initial offer and Canada's willingness to bilaterally clarify open issues.
26. In summarizing the discussion, the Chairperson noted that many delegations had welcomed
the document by Brazil, while some others had expressed doubts.  The idea of a more generic
discussion of technical issues had been endorsed.  He suggested that delegations take note of thestatements made and revert to the issue at the next meeting.
27. It was so agreed.
C. CONSIDERATION OF ISSUES RELATING TO ARTICLE XX:2 OF THE GATS
28. The Chairperson recalled that the Council for Trade and Services, at its last meeting, had
referred the issue of paragraph 2 of Article XX to the CSC for consideration.  The Committee was
asked to report back in time for the Council to be able  to discuss this item at its first meeting in 2004.
The present meeting offered the first opportunity for the CSC to take up the issue.  The mandate to
consider technical aspects of course did not prejudice any delegation's position on a technical review
of GATS provisions.  Neither did the mandate fo resee that the CSC would prepare any type of
solution when it reported back in early 2004.  However, he believed that Members should reflect onhow the Committee could provide a useful input or value added.  There would be three formal
meetings to discuss this matter, including the present one. Turning to the issue itself, he stated that a
lot of detailed technical work had already taken pl ace in the Services Council.  Several contributions
had been received, namely from Brazil (JOB (0 2)/215), Hong Kong, China (JOB (03)/34), and
Switzerland (JOB (03)/85), and the Secretariat ha d prepared two background Notes (JOB (02)/89 and
JOB (02)/153).
29. In reviewing these papers, numerous delegations seemed to concur that the second paragraph
of Article XX did not provide a solution to all inte rpretive issues involved in what had been labelled
as the overlap between Articles XVI and XVII of the GATS.  In particular, situations of an 'Unbound'
in the market access column and a commitment in the national treatments column, but also the reverse
case, provided interpretational difficulties at least for some delegations.  Other delegations felt
reasonably comfortable with their interpretation, while a third group thought that for reasons of clarityand legal certainty it would be useful to arrive at a more widely shared understanding.  The
Chairperson invited comments on how delegations considered that the CSC could add value to the
discussion of this topic.
30. The representative of Switzerland stated that his delegation would remain engaged on this
issue.  The report to the Council for Trade in Services should primarily be a report from theS/CSC/M/30
Page 5
Chairman, complemented by the reports of the meetings in which the issue had been discussed.  He
considered that the issue under discussion was relevant for existing schedules as well as the ongoing
negotiations.  As far as the latter were concerned, the debate could help all Members to clarify some
technical aspects of their offers.  With regard to existing schedules, he thought that while several
interpretations might be conceivable, there had certainly been only one intention by the drafters of theGATS.  He was willing to discuss any difficulty that delegations might have with this issue, but it had
not yet been raised in bilateral meetings.
31. The representative of Hong Kong, China noted that the diversity of positions was the core of
the problem.  He concurred with Switzerland that the issue could be divided into two parts, which he
considered to be interlinked.  His delegation was concerned in particular about the clarity of schedules
that would result from the present negotiations.  He hoped that the Committee could take forward the
discussion as far as possible and, perhaps, even explore possible solutions, even though these were notmandated by the Council.
32. The scope for different interpretations had been well explored and the question now arose
what options would be open to delegations in general.  One option was to leave the issue to be settled
through future dispute settlement, which would amount to keeping the status quo.  Another option
would be to find a solution for the ongoing negotiations, and then to see how it could be applied to theexisting commitments.  His delegation had no particular stance on this matter, but preferred generally
not to leave ambiguities or uncertainties for future dispute settlement.
33. Without prejudice to Members' interpretation of the issue, he felt that there was a need to
address both new and existing schedules.  He looked forward to exploring the scope for pragmatic
solutions.  He suggested that the Chairperson conduct consultations to try to reach some commonunderstanding as to what could be included in the final report to the Council.  In the Chairperson's
report to the Council, his delegation preferred a practical approach in view of the ongoing
negotiations. He took note of Switzerland's willingness to address difficulties also in a bilateral
context.  However, this might result in different interpretations by different Members, which would be
a sub-optimal outcome.
34. The representative of Brazil felt that the discussions on this issue had been useful.  His
delegation had benefited from the arguments presented by Switzerland, Hong Kong, China and other
Members.  They would certainly help to prepare Brazil's initial offer.  His delegation welcomed any
form of consultations the Chairperson might wish to hold to prepare a possible solution.
35. The Chairperson suggested that the issue be addressed in a dedicated informal meeting ahead
of the December formal meeting; he also considered circulating a Note or checklist of issues to
structure further discussions.
36. The representative of Switzerland stated that a formal discussion would be desirable ahead of
an informal meeting, if only to take stock of and address questions that had already arisen in earlier
meetings.  A checklist might be more useful after the issue had been discussed at least once.
37. The Chairperson noted that he had no intention to preclude a discussion on substance at this
meeting.  Alternatively, the dedicated meeting in November could consist of a formal and an informal
part.  The conditions for spontaneous and interactive discussion could more easily be created in an
informal context.
38. The representative of Hong Kong, China recommended that a formal discussion be initiated at
the present meeting.  He was also interested in  an informal discussion to explore possible common
ground.  A checklist of relevant issues might be helpful.S/CSC/M/30
Page 6
39. The representative of Switzerland, turning to substance, mentioned that everybody seemed to
agree that there was no hierarchy between entries in the national treatment column and those in the
market access column.  Secondly, he thought that an y interpretation had to be symmetrical, meaning
that if applied from market access to national treatment, it had also to apply vice versa.  A 'None'
indicated that a Member would not maintain any m easure inconsistent with Articles XVI or XVII,
while 'Unbound' meant that it was not taking any commitment on either of those Articles.  In the case
of an 'Unbound' for market access and a 'None' for national treatment, the Member concerned
committed not to discriminate under any circumstances, but did not take any obligation regarding
market access.  The Member could not introduce discriminatory measures even if these qualified also
as market access restrictions.  A problem would arise with regard to Article XVI:2 (f), which by
definition provided cover for discriminatory measures.  He did not see any compelling reason why in
this case a Member would be allowed to introduce such a measure simply because it would always bediscriminatory, while measures falling under subparagraphs (a) through (e) could not be used in a
discriminatory form.  He had a fundamental proble m with this approach which would compromise the
commitment under national treatment.
40. The above reasoning could be applied symmetrically to a scenario where a 'None' was entered
in the market access column, and an 'Unbound' in the national treatment column.  In this case, theMember would grant full market access, but had reserved the right to discriminate.  This should not
imply that any national treatment restriction could be used even if it fell also under market access, as
there was a 'None' in the relevant column.  It was hard to believe that the drafters of the agreement
would have wanted Members that had a full market access commitment to be able to introduce market
access limitations in their more restrictive discriminatory form.
41. His delegation felt that the problem was fairly limited in practice.  It related to
subparagraph (f), and he was not aware of any concrete case where the problem had arisen as most
'Unbound/None' situations occurred under Modes 1 and 2 where the relevance of subparagraph (f)
was almost nil.  In Mode 3, limitations of the type set out in subparagraph (f) were usually scheduled
or a double 'Unbound' existed.  He suggested that the Secretariat screened the schedules to allowdelegations to assess the size of the problem.  He was willing to consider any difficulty a delegation
had concerning subparagraph (f), if it had intended to capture such limitations under an 'Unbound' in
market access.  The Committee could seek to find a solution.
42. The representative of Hong Kong, China noted that the limitations in Article XVI:2 (a)–(e)
could also exist in discriminatory form.  Following the interpretation of Switzerland, a Member,
which had an 'Unbound' in the market access column and a 'None' in the national treatment column,
could not apply any of the measures in Article XVI:2 (a)–(e) in discriminatory form.  If that was thecase, how would this scenario compare with a case where a Member which had scheduled
discriminatory market access measures under all types mentioned in Article XVI:2 (a)–(f), had
scheduled 'None' under national treatment?  According to the Swiss interpretation, the Member that
had scheduled 'Unbound' in the market access column would not be able in future to change its
schedule by introducing a discriminatory measures which fell  under Article XVI:2 (a)–(f).  On theother hand, the Member that had scheduled specific limitations rather than 'Unbound' in the market
access column would be able to maintain those, and any elimination of one of them would still be
considered an improvement.  Perhaps there was no presumption under Articles XVI, XVII or XX as
to the level of openness that a Member was supposed to inscribe in its schedule of commitments.  He
wondered what a Member was supposed to do if it wanted to reserve the right to introduce in futureany or all of the measures that were within the scope of Article XVI, including those which could be
discriminatory in nature.
43. The Chairperson suggested that Members take note of the statements made.  He proposed to
consult on the precise format of a dedicated meeting in November.  As there were no interventions
under the agenda item of Other Business, he suggested that, in accordance with the practice ofS/CSC/M/30
Page 7
grouping meetings of subsidiary bodies close to meetings of the Council, the next formal meeting be
held before the next CTS in December.
44. The Committee so agreed.
__________