RESTRICTEDWORLD TRADE
ORGANIZATIONTN/S/M/4
11 February 2003
(03-0870)
Council for Trade in Services
Special Session
REPORT OF THE MEETING HELD ON 28 OCTOBER AND 1 NOVEMBER 2002
Note by the Secretariat1
1. The Council for Trade in Services in Special Session held a meeting on 28 October and
1 November 2002.  The agenda for the meeting is contained in document WTO/AIR/1936.
2. The Chairman recalled that at its July mee ting the Council agreed to introduce a new item
on the agenda:  review of progress in negotiations amongst participants.  The purpose of this item was
to promote transparency in the negotiations and to allow the Special Session to fulfil its function as
the body responsible for the oversight of the negotiations.  It was also an opportunity for Members toraise issues of concern that had arisen and to communicate their impressions on progress in the
negotiations.  He noted that, as agreed, this item would be taken up on Friday, 1 November.
3. The Chairman stated that under "Other Business " he wished to inform the Council about two
letters received from the Chairs of the Special Session of the Committee on Trade and Development
and the Working Group on Trade and Transfer of Technology.  He also intended to make a brief
statement on the choice of sectors to facilitate the participation of capital-based experts, and the
contact points of missions in Geneva to facilitate the organization of bilaterals consultations.  He
suggested that the Council adopt the agenda as circulated.
4. It was so agreed.
A. ASSESSMENT OF TRADE IN SERVICES
5. The Chairman recalled that in July the Council had agreed to a request from South Africa to
invite Mr. James Hodge, a researcher at the University of Cape Town, to present a paper.  The paper,
presented in his personal capacity as an independent researcher, was entitled "The Experience withServices Liberalization in Southern Africa" and was available as a room document.  Mr. Hodge had
previously prepared an analysis of the economic impact of services co-authored with Norwegian
researchers, which had been presented to the Council under the assessment discussion in 1999.
6. The Speaker noted the lack of data for research in this area and the slow pace at which
liberalization was proceeding in some sectors.  He stated that telecom had seen the most dramatic
changes in technology, in the demand for, and the range of, its products, but cautioned that lessons
drawn from it could be unique.  He sought to describe the uniform approach, called "managed
liberalization", being used to inform liberalization in Southern Africa.  He noted that this approach
first focused on a change in ownership, then a gradua l increase in competition through the issuance of
one licence at a time, with exclusivity periods.  Reform was viewed as necessary because of gross
inefficiencies and because they were draining finances from government.  However, efficiency was
not the only concern in formulating policy.  Southern Africa was unique in terms of its small
population, dispersed geographically and relatively poor, which made it a less attractive market and
                                                     
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.TN/S/M/4
Page 2
might provide a case for adopting a different approach.  The primary goal of reform had been to raise
revenues from the sale of these assets.  This approach had its roots in IMF structural adjustment
programs, which focused on debt reduction, and this had created an incentive to increase the value of
assets through exclusivity periods and gradual liberalization.  Policy was also shaped by the fact that
the most important development goal might not be a phone for everyone, but basic health or thecurrent famine crisis.  Political energy and fiscal resources might be best placed elsewhere, and this
should be left up to governments.  Politically, because of poverty levels, the main goals were
accessibility and affordability, ahead of getting prices right for business.  The focus was on
investment levels and increased revenue levels.  Market characteristics were also important, for
example, in energy markets, where there was no scope for workable competition:  two or three major
generators did not constitute a market, and did not provide the basis for liberalization.  It was
important to recall that these markets were small and less attractive to foreign investment.Investments in utilities were long-term investments and countries had tried to increase the returns for
investors, thereby giving the investors enormous bargaining power.  The companies themselves had
been the drivers of reform.  These reforms, however, had faced political constraints, such as job losses
and affordability issues.  Studies pointed to the concern that poor regulation meant that any gains from
reforms were accrued to firms and not to consumers if their market power could not be constrained.Countries with weak regulation were concerned that the outcome of the reform process would not be
fair and the result would be private monopolies or cartels.  He further noted that there were no
emergency safeguard measures, which meant that large investors would enter and the government
could not then change the rules.  This dynamic engendered caution by governments, and from this
perspective, it was more attractive to grant a management contract that could be terminated than toinvite private investment.
7. The one exception, the speaker noted, was telecommunications, which had not experienced
a negative impact from reform and was politically easier to tackle.  He noted that no country studied
had introduced competition, except in mobile services.  Most fixed line operators were approachingthe end of their exclusivity periods, with planned refo rm in the next two years.  This meant that offers
in the sector could be made in the context of Doha; however, he noted that for most countries the plan
was to have one more facilities-based supplier.  This indicated governments' priorities:  the fastest
track to competition would have been to open the market in simple resale, but this was not the case in
Southern Africa, with most favouring the licencing of a second exclusive supplier so as to attract as
much investment as possible.  The second supplier was offered an exclusivity period so as to increase
investment levels.  In terms of the impact of reform, it had to be borne in mind that comparisons weredifficult because there had not been full liberali zation across all markets, but some lessons were
emerging.  Mobile providers served as a partial competitor to fixed line at the low end of the market
where mobiles were a substitute.  Growth in mobile outstripped growth in fixed line services in almost
every country, and some two-thirds to three-quarters of phones were mobile.  Often this growth was
generated by the lower end of the market, which was important in terms of development and accessgoals.
8. Observers concluded rashly that competition increased access, whereas the speaker's
research had shown that, on the contrary, it was the different technology with a different tariff
structure that had become important in determining access levels.  He noted that, whereas in fixed linethere tended to be high monthly fees and low call rates, with mobile telephony, the trends were the
opposite, which meant that obtaining a phone and using it on the basis of pre-paid calling increased
access, even though the price of calling was higher.  In fixed line, the initial growth was attributable to
rollout occurring as a result of the granting of exclusivity to some suppliers.  However, the current
trend was a decrease in the number of lines, for example in South Africa, where two millionsubscribers had disconnected in the last two years (nearly 30 per cent of existing lines).  This was
partly explained by the competition from mobile, and by rate rebalancing which was hurting low-
income consumers.  For example, a US$2 increase in monthly subscription would lead 10 per cent of
the South African population to disconnect.  In terms of efficiency, he noted that judgements on the
success of liberalization tended to be based solely on whether foreign equity partners were present,TN/S/M/4
Page 3
and said that they had indeed seen efficiency gain s.  With respect to the effects on employment, those
who had introduced partial privatization and competition had seen losses; those that had not pursued
this policy had not.  Initially, a government p act with the equity provider prevented employment
losses:  rollout and investment produced jobs and, until competition, there were minimal
retrenchments.  Employment gains resulting from new technologies, such as mobile and internet, didnot completely replace the losses in fixed services.  He reiterated the uniqueness of telecom in terms
of the radical changes and rise in demand for data services and mobile that had helped to offset
employment losses.  He doubted whether this would be the case for other utilities.
9. Pointing to other lessons which could be drawn, the speaker noted that what was known
about public provision, namely that firms and their investments were inefficient, explained why
countries wanted to liberalise.  In hindsight, what had replaced the managed liberalization approachwith exclusivity periods and rollout targets was public prescription of investment.  The lesson which
was emerging was that this was not necessarily an improvement:  the enormous rates of disconnection
suggested that much of the rollout investment had proved wasteful.  Therefore, the approach of
structuring a liberalization strategy, so as to raise the level of investment and revenue, might be self-
defeating because the investment might not be done wisely.  In South Africa, he estimated thatUS$2 billion of a US$4 billion investment had b een wasted.  A second lesson was that although a
public firm could be obliged to keep people connected, the same was not true for a private firm.  Any
strategy meant to boost investment had to be coupled with a consideration of the affordability of
tariffs:  rate rebalancing was inconsistent with the policy of rollout.  People had moved to mobile
because it had a more affordable tariff structure.  The general strategy had also proven unfortunate,because the process of staggered reform, meant to boost state revenue by increasing the value of the
asset, had lingered into the economic downturn, which was characterised by the collapse of telecom
stocks.  The conclusion was that rigging the rules did not give total control over the raising of
revenues.  The result had been slower reform as countries waited until they could obtain better prices
for these assets and companies were less willing to invest.
10. Pointing to a the third lesson to be drawn, related to a developing country's capacity to
regulate, he stated that all regulators did the jobs normally attributed to a regulator, however, it was
difficult to measure how effectively they did this job.  How constraining were their price controls?
Was their selection of the operators optimal?  Was their policy optimal given the market conditions?
The general impression was that regulators fixed lax price controls because they were seen as weak
and unable to challenge price controls in court.   Firms exercised huge power to influence the
regulator.  Developed countries relied on consumer groups, other firms, and competition agencies to
constrain firm power and increase the power of the regulator; these institutions were weak in
developing countries.  Much of the policy information upon which regulatory decisions were based
was fed by companies with their own interest, which was for less competition.  On a more positive
note, he said that consultants could be used to make these choices.  Indeed, the level of outsourcing inthis regard was often an indication of the weakness of the regulator.  This was naturally costly and, for
example, had prohibited the Namibian regulator from  issuing a licence because it could not afford a
consultant to assess the bid.  He recalled that the sensitivity of consumers to tariff changes led to large
effects.  Offering a few conclusions, he noted that the fulfilment of the development agenda in a
liberalised market was not merely adding a universal service subsidy to a fully liberalised market, butthat process had to be taken into account along with outcome in the pursuit of development objectives.
These approaches might be viewed from different vantage points abroad but were determined
domestically.  The process, however, that had been chosen had often been far from perfect, and
therefore, there was a need to be critical of the strategies chosen, and to do more research on which to
formulate a strategy that informed the development objectives.  He noted that the selling point of abound commitment at the WTO was to offer credibility to the liberalization process.  This was
perhaps less relevant to Southern African countries.  What was more valuable was perhaps the gaining
of market access in other sectors where a country did have interests.  Most countries understood that,
once a large foreign investor had been invited in to a country, forcing them out would have an
extremely negative effect on development, and they would not reverse their reforms.TN/S/M/4
Page 4
11. The representative of Djibouti stated that the speaker's comments described a situation
throughout Africa.  Regarding questions on the useful and less useful aspects of trade liberalization,
he asked how this discussion could be applied to other sectors susceptible to liberalization.  He noted
that Africa was not prepared to face full-fledged lib eralization in the area of services, because it was
not prepared to face foreign competition.  Liberalization in many sectors led to less efficient situations
than in the past, in part because the liberalization process had not been properly prepared, and Africa
could not cope with the requirement.  He stressed that these issues should be focused on at the WTO.
12. The representative of Colombia stated that  comments regarding regulatory capacity drew
attention to the need to ensure that services lib eralization took into account many elements to be
successful.  He noted that liberalising countries must consider that the problem of a strong regulatorysystem had been solved in developed countries and paved the way for privatization.  This gave
developing countries an appropriate model.  He inquired, with respect to the independence of the
regulatory body, how much independence it should have from the legislative and executive branches
of government in order to reduce the pressure they faced from ministries in implementing a regulatory
plan based on technical considerations.  He noted that, despite the presence of an independentregulator, it was not always free from political control.  It was one thing to have a lawmaker
attempting to influence tariffs and another for society to question the regulator with respect to how
they were applying the law, and the social, economic and developmental aspect of its decisions, which
were not always easy.  For example, who would finance subsidies, and would they be achieved
through tax revenue or cross-subsidies that sought to make access affordable for the lower revenueuser?  He noted that this raised the question as to what was the trade-off between efficiency and
access.  He noted that most Members charged an access fee from services providers and suggested
that this income should be used to set up and train regulators.  He emphasised that this type of plan
would give a social seal of good operations which we re required by modern sectors of society if they
were to compete on international markets.
13. The representative of Pakistan noted that telecom was a sector of interest for his country and
that the information provided on the Southern African experience was helpful.  He noted that the key
terms of the presentation were 'caution' and 'managed liberalization' and he posed the question as to
what the author meant by "strong political opposition to a managed liberalization strategy" and
whether this was meant to convey the idea that political leaders were not convinced that this strategy
could deliver.  He inquired as to why there was such strong opposition and whether it was thatpoliticians felt the strategy could not obtain development objectives.  He further inquired as to how
the author had come to the conclusion that developing countries had a small interest in the export of
these services, and whether he had based this conclusion on empirical fact or conjecture.  He
suggested that in the post-Uruguay Round period there had been an increase among developing
countries in the export of services.
14. The representative of the European Communities sought to share the EC's experience with
trade in telecom services with South Africa.  He noted that the speaker had stated that mobile was a
substitute for fixed services and asked if this was linked to the fact that competition in mobile services
had been encouraged by the regulatory framework, whereas in fixed, there had been little competitionand little interest in obtaining the second licence.  He felt that it was important for the fixed network
to be present for some users, but it would not remain if it was not efficient. Competition between
fixed and mobile resulted where fixed could not provide an attractive product.  On managed
liberalization, he inquired as to what Members could do concretely to complement this process and
ensure that there was penetration in isolated and less profitable areas where companies might not bewilling to invest.  What were some of the mechanis ms being considered in South Africa, including for
mobile?
15. The representative of China stated that the presentation had given factual information and
lessons for liberalization.  He believed that assessment work under Article XIX when implementedTN/S/M/4
Page 5
would help all Members, particularly developing Members, to participate in the market access
negotiations.  He stated that China was preparing an assessment on trade in services, which China
hoped would be available in December.  China was a new Member that had made extensive
commitments, and had done its utmost effort to fulfil these.  He noted that a phase-in period was
important in order to improve the legislative framework, enhance regulations and give domesticsuppliers the time to prepare for competition with foreign suppliers.  He noted that domestic
regulation must keep pace with liberalization changes in the market, and stated that proper regulation
should precede liberalization.
16. The representative of Norway recalled that Norway's experience in this sector had had
positive effects for consumers and industries and that the empirical evidence from some developing
countries showed that liberalization promoted business development.  Increased trade in servicesgenerally promoted economic and technological development.  Referring to the question from
Pakistan on the interests and results for developing countries on trade in services, he noted that studies
concluded that growth in trade in services was greater for developing countries than for developed
countries.  Developed and developing countries needed to make their own judgments about
liberalization through public debate.  He announced that Norway had prepared a paper on itsexperiences in the electricity and petroleum sectors.
17. The representative of Djibouti agreed that trade liberalization in this case was important for
development, but he had no illusions that Africa represented a special case and was at the beginning
of this process of liberalization.  He noted that countries, which had achieved independence in the1960s, were still not knowledgeable about this sector and had difficulties defining a strategy. He
wondered as to whether it could be asserted that Africa had an interest in this field.  He stated that he
did not know what development strategies of other Members looked like, nor how to evaluate a range
of options presented to him, and that he had no research capacity to carry out such an evaluation.
There was no way to prove that a new strategy would be an improvement over the current one.
18. The Speaker responded that in using the phrase "strong political opposition" he was
referring to full liberalization, and that a managed form of liberalization was often preferred, because
it took into account political considerations. Political sensitivity existed because utilities were central
to the issue of poverty elimination and, because of this, raised concern among consumer groups and
trade unions.  All countries accepted the need for liberalization, because old strategies had not proven
beneficial, and the question was which strategies could be employed to increase benefits, especiallyfor the poor.  The focus was on the process behind a strategy.  Regarding the question on export
interests, he agreed that for middle income developi ng countries there was an interest in the export of
services, as was the case for South Africa, which had a positive services trade balance and an interest
in US and European markets.  However, for poorer countries, the interests in services industries were
limited to tourism and some margin of travel services, for which in maritime and air, countries oftenimposed consumption obligations.  He noted that for these countries, particularly the least-developed
countries, the tendency was for service trade inflow s and little outflow.  Responding to the EC's
question on competition and mobile success, he noted that it was hard to disentangle the various
elements that led to success, although he believed that tariff structures were the defining feature and
cited the examples of Lesotho and Namibia, whic h had mobile monopolies but had seen growth levels
in mobile similar to those witnessed in other mark ets.  The penetration rate between countries with
two suppliers versus those with more suppliers did not differ substantially.  He elaborated that a
change had occurred with the move to a pre-paid structure with no monthly access fee, which allowed
lower-end consumers to control their spending.  He did not mean to say that a lack of competition had
negatively affected fixed line, but noted that fixed line services could be improved by greatercompetition.  Regarding the question on accessibility through a managed liberalization context, he felt
that a pure universal service subsidy would not work because most countries could not afford it.
Rather, incentives had been provided for rollout to improve access, but this strategy had lead to
inefficient investment decisions, the wasting of resources, and failed to take into account the
affordability of the service offered.  South Africa was examining the issue of tariff structures and howTN/S/M/4
Page 6
to reduce the monthly access fee.  He suggested that cross-subsidisation was not feasible in a
competitive market, but tariff structures could be influenced through regulation.  Regarding the
weakness of regulators, he noted that this weakness stemmed from all the areas alluded to.  Regulators
were often unable to make policy based on context.  Legislation copied from other countries or based
on best endeavour practices failed to give regulators the ability to adjust based on local conditions.Many did not have the capacity to monitor their decisions, such as rollout targets, and they depended
on firms for this information in order to determine compliance.  He agreed that the strength of the
judicial review exposed these weakness and that  court judgements exposed the narrow basis upon
which regulatory decisions were made, often to the fi rm's advantage.  He felt that the strategy to build
capacity seemed misdirected to those working for th e regulator, who then left.  The aim should be to
build expertise and research, and a broad base of people with the skills to replace those regulators who
left.  Regarding the comments on independence, he noted that it was desirable for policy to come fromgovernment, with operational independence for the regu lator.  He suggested that this depended to a
large extent on perception.  A country could copy the legislation of another, but companies sought to
see how the regulator operated in reality, and feared that there was political influence.  Unfortunately,
the regulator often inherited the unfavourable reputation in this respect of their governments.  He
noted that regulators required political guidance.
19. The representative of Venezuela asked whether the speaker knew of examples where, as a
condition for liberalization, national suppliers or a cluster of national suppliers were given preference.
20. The Speaker responded that there existed some preferences which sought to enhance the
quality of the national firm so that when competiti on arose, it had a larger market.  When competition
was then introduced, there were regulations that could be biased in favour of the incumbent who was
often seen as the national supplier to the poor.  For example, universal subsidies could be targeted to
the national supplier, giving them an advantage.
21. Noting the importance of the presentation on telecom for the work of the Council and
underscoring a few points of the speaker's presentation, the representative of Mexico stated that
telecom liberalization should occur in line with the needs of the reforming country, and required thetaking into account of new legislation.  He noted that care needed to be taken in applying the large
number of commitments undertaken in this sector during the Uruguay Round and through the Fourth
Protocol.  He noted the need to take into account the situation of both consumers and producers at the
national level.  The rates of tariffs and prices needed to be taken into account, but also the structure ofprices, and this was particularly the case for Mexico.  Over the past ten years the move from a closed
market to an open one in Mexico had demonstrated that this reform had an important bearing on other
sectors of the economy.
22. The Chairman again thanked the speaker for his very interesting and useful presentation
which had generated a number of questions and comments.  He recalled that at the Council’s July
meeting, the delegation of Thailand had introduced a new submission on the assessment of trade in
services, which was circulated as document TN/S/W/4.  A corrigendum was subsequently circulated
under symbol TN/S/W/4/Corr.1.  The communication generated a number of favourable preliminary
reactions and several delegations indicated that they wished to revert to it.
23. The representative of Cuba signalled her intention to revert to the oral presentation at the
next meeting and stated that Thailand's contribution was valuable because it gave a statistical analysis
on the impact of services reform in important systemic sectors, as well as the lessons drawn from its
experiences.  She noted that developing countries could use this to ensure in the negotiations thatmarket opening was successful.  In particular, she drew attention to paragraphs 63 to 67 of the
contribution and agreed that liberalization had to be a planned process and implemented in stages
rather than set out as a goal pursued incoherently, particularly if reform had a systemic effect on the
economy.  Cuba agreed that the progressive nature of liberalization and the context in which it was
carried out were important.  She concurred, as stated in paragraph 67, that successful liberalizationTN/S/M/4
Page 7
required effective regulation, including in developed countries, and that developing countries required
time to define a system tailored to their needs and to ensure that the benefits were shared by all parties
involved.  She considered that the document and the debate it triggered kept at the forefront of
discussions the importance of the development aspect of reform.
24. Speaking on the analysis on financial services contained in the Thai assessment, the
representative of the European Communities noted that a relevant question was whether the
liberalization of trade in financial services had been a major force behind the crisis that affectedThailand in the second half of the 1990s.  In his view, it was necessary to make a distinction between
liberalization in trade in financial services and liberalization of capital movements, even though there
was some overlap.  He shared the view that the liberalization of capital movements associated with a
tagged exchange rate and weak supervision of financial institutions had played a key role inmaintaining an unsustainable external situation and the build up of private external debt.
Liberalization of cross-border provision of certain financial services such as lending, which involved
the liberalization of capital movements, certainly needed to be sequenced carefully and certain
conditions, particularly with respect to regulation and supervision of financial institutions, needed to
be met in order for the benefits of liberalization to be reaped.  In contrast, cross-border provision ofservices such as reinsurance or advisory services, he stated, involved limited or no capital movements
were not responsible for financial crises.  He noted that liberalization of trade in financial services in
mode 3 involved no unstable capital movements, and contributed to the stability of the domestic
financial system, through increased competition and the transfer of know-how.  Liberalization of
mode 3 overall seemed to be beneficial, as noted by Thailand.  Indeed, since 1997, Thailand hadrelaxed the FDI regime in financial services and FDI had subsequently strongly increased.  He
concluded that the opening of financial services in mode 3 could be an effective tool for resolving
financial crises and in strengthening the resiliency of  domestic financial services.
25.   With respect to the analysis on distribution services, he stated that Thailand's had put forth
a case for progressive liberalization, and that the EC's position was that Members could liberalise
progressively or in a more accelerated fashion depending on its context.  In principle, both alternatives
were equally valid.  He concurred with the need to ensure fair competition, regulation, and other
legitimate interests.  Liberalization and regulation should be pursued in tandem rather than in stages.
He stated that effective regulation should be implemented in a non-discriminatory fashion.  He noted
that the taking of commitments in GATS in distribution services was consistent with modernising,
optimising and regulating this sector since the GATS gave flexibility in this regard.
26. The representative of Senegal noted that financial and distribution services occupied a
important place in his country's economy and stated that Thailand's contribution would help Senegal
conduct its own assessment for the purposes of the negotiations.  He agreed with the need for paced
liberalization in a strong regulatory framework that  occurred at the same time.  He underlined the
importance of the question posed in paragraph 72, that was, if liberalization was consistent with
regulation.  He felt that these were intellectually and practically challenging questions and hoped that
liberalization would occur properly.
27. Noting the importance of financial and telecommunication services in his country, the
representative of Paraguay thanked the speaker and Thailand for their pertinent comments on
liberalization and regulation.  He stated that teleco mmunications services were in the process of being
liberalised in Paraguay and that the presence of four competitors in the domestic market had attracted
foreign investment.  Regulation of the sector was efficient.  He noted that mobile telephony was in the
hands of the private sector and that the number of mobile subscribers surpassed the number of fixedsubscribers.  He stated that the provision of financial services was also fully liberalized, but that there
had been difficulties with the regulatory and supervisory operations.  He underscored the need to
strengthen the legal underpinning of each sector pr ior to liberalization.  He said that Paraguay was
addressing a reform of its financial services sector to strengthen the regulatory and supervisory
structure.  Finally, he noted that capital volatility was also a challenge for Paraguay, and in responseTN/S/M/4
Page 8
to the EC's comments, noted that the free movement of capital must be borne in mind when reforming
the financial system, as stated in Thailand's paper.
28. The representative of Indonesia agreed that liberalization needed to be implemented in a
progressive manner and commensurate with economic and social needs.  He requested more detailed
information from Thailand regarding how it had addressed the negative impact on traditional retailers,
for example through tighter regulation.
29. Responding to some of the questions put to it, the representative of Thailand reaffirmed its
belief that a sound regulatory framework was of the utmost importance in the process of services
liberalization, but establishing it was not an easy ta sk for many developing countries.  This was true of
financial and distribution services, but also for others, including telecom and tourism.  Responding tothe EC's comment on capital movements, she agreed  that they needed to be distinguished from
financial services, but felt that the two could not be completely delinked.  For example, liberalization
meant virtual capital movements.  Liberalization of financial services in mode 3 was very different
then in mode 1.  This did not change Thailand's belief that the liberalization of capital movements
needed to occur in a regulatory framework.  For example, a financial services crisis could beprecipitated by poor regulation and management of rapid and massive capital inflows.  Governments
had recognized this as a key weakness and had responded by considering the links between capital
movements and financial services because of the possible systemic effects.  Good regulation was
crucial.  Regarding Indonesia's question on distributi on services, she stated that the studies undertaken
by ministries and departments had concluded there was a need to help build the capacities of smallretailers in the face of increased competition.  The options considered included non-discriminatory re-
zoning or the capping of business hours, and attention was being focussed on giving traditional
operators an opportunity to modernize through government-instituted training programs in marketing
techniques and inventory management, for instance by encouraging joint ordering to benefit from
wholesale prices.
30. The representative of Norway sought to highlight some elements of a paper on electricity
and petroleum that had been made available to Members.  In the petroleum sector, he recalled that
Norway's policy had been based on the principle of attracting the best international experience and
competence.  Thirty years earlier when off-shore exploration began, Norway lacked such expertise
and thus granting liberal market access for petroleum-related services was indispensable for
promoting transfer of knowledge and for attracting foreign direct investment.  Consequently,multinational companies had been among the first to be granted permission to conduct geological
surveys off Norway and to develop the country's first oil fields.  The establishment of a new oil
company to undertake these tasks without the international oil industry would have been too time-
consuming and costly.  Since this time, the Norwegian off-shore industry had gradually evolved into a
sustainable competitive industry which offere d its services and expertise world-wide.
31. The representative of Norway stated that, over time, Norway had transformed its mining
process and maritime industrial base into a number of advanced technology clusters within the oil and
gas industry.  In certain areas, Norwegian suppliers to the oil and gas industry were among the world's
leaders.  Norwegian based companies were, for example, leading developers and suppliers ofintegrated sub-sea systems, and accounted for about 80 per cent of world demand.  The development
of a predictable regulatory and commercial framework had been the key to achieving pluralism and
competition in this sector.  The overall legal basis for the licensing system which regulated petroleum
operations in Norway was contained in the Petroleum Act of 1996.  Any undertaking, irrespective of
nationality, could be awarded a right to explore and produce petroleum.  Any undertaking which hadbeen awarded a right to explore and produce petroleum was also given the right to transport oil and
gas through pipelines as part of the authorities' approval of a plan for development and operation.
There were no nationality restrictions on the right to transport oil and natural gas through pipelines.TN/S/M/4
Page 9
32. In the electricity sector, the representative of Norway noted that the first phase of Norway's
development of its electrical industry had many similarities with the petroleum sector.  Foreign
companies had taken active part in developing the electricity supply already in the beginning of the
twentieth century.  The Norwegian electricity ma rket had been formally opened in 1991 and was
organised on the basis of a Directorate responsible for the administration of Norway's water andenergy resources, and regulator for the power market.  Statnett SF, an independent state-enterprise,
was responsible for the construction and operation of the central grid.  In 1993 the power pool
"Statnett Marked AS" (now Nor Pool ASA) was esta blished to channel the exchange of electricity
trading for balancing supply and demand in real time.   Later Sweden and Finland were integrated into
the power pool.  Denmark had also recently been integrated into the Nordic power market. The trade
in the Nordic Power Exchange (Nord Pool SA) was open to all, including outside the Nordic
countries, on equal terms.
33. The representative of Norway stated that the written materials, which had been made
available to the Special Session, included a survey of the organisation and functioning of the Nordic
Power Exchange.  He said that all end users were free to choose and change electricity supplier
without cost.  Household customers received invo ices based on a predetermined load profile, and
could change supplier without the need to meter consumption by the hour.  Change of power supplier
was not often done over the internet.  To make consumers more aware of their own electricity
consumption, the grid owner was required to include information on trends in the customer's
consumption on invoices.  The quarterly invoice had to show electricity consumption in the preceding
three months and a comparison with consumption in earlier periods.  The grid owner was not allowedto charge the customer for expenses the company might have in connection with customers' change of
power supplier.  The liberalization of the electricity market had kept prices down in a period where
consumption had increased.
34. Recalling the Norwegian proposal to liberalise energy services, the representative of
Norway stated that he saw great potential for modernising trade rules in this field and felt that
Norway's experiences have shown that, in order to  fully benefit from competition, the entire chain of
services related to energy needed to be considered.  Competition gave consumers choice and served as
an incentive for investment, and gave developing countries a better chance of making a leap towards
best technology.
35. On a procedural note, the representative of Pakistan inquired as to how assessment
submissions were annotated on the agenda, and noted that Pakistan along with other developing
countries had submitted papers.  He recalled that a past document from Argentina, among others, had
not been discussed in detail in the Council.  He wondered whether statements could only be made on
those assessments on the annotated agenda or on previous items as well.  He wondered if there was a
way to breathe new life into these assessments so as to permit Members to make more concretestatements on past submissions.
36. The Chairman noted that those documents listed in the agenda were meant to highlight
which were the most recent.  He reminded the Council that Members were free to revert to any
previous submissions and that he would reserve time for discussion on these.
37. The representative of Pakistan suggested that this agenda item could appear in annotated
form with all submissions that have been made under it.
38. Responding to the point of procedure the Secretariat noted that, for the purpose of
maintaining a complete record, all documents appeared on the agenda once.  It was not normal
practice to repeat the listing of the document and a cumulative list could prove impractical,
particularly because the agenda indicated standing items.  Recognising the desirability of having a
checklist, he suggested that the Secretariat prepare a list of the assessment documents submitted to
date and circulate this as a separate document.TN/S/M/4
Page 10
39. The Chairman proposed that the Council take note of the statements made and revert to this
item, at the next meeting.  He looked fo rward to a possible submission from China.
40. It was so agreed.
B. TREATMENT OF AUTONOMOUS LIBERALIZATION – PROGRESS REPORT
BY THE CHAIRPERSON
41. The Chairman noted that, pursuant to what had been agreed at the last meeting of the
Special Session of the Council for Trade in Services, he had held consultations with different groups
of Members as well as some Members individually, in order to see whether there was a possibility ofreaching a consensus.  In some instances, he noted that he had taken the initiative to extend an
invitation, in others, he had been invited.  An open-ended informal meeting on 16 October had been
convened in order to continue these discussions and the Chairman was grateful to delegations for their
contributions and suggestions in all these meetings.  He sought to report on the state of play regardingthe development of the modalities, drawing primarily  from the debate at the last open-ended informal
meeting.  The informal meeting and consultations had focused on four main issues:  the possibility of
obtaining credit through concessions on trade in goods; the relationship between autonomous
liberalization and bindings; the scope of these modalities, particularly with reference to developing
country Members; and the situation of recently acceded Members.  The Chairman felt that it was
worth noting that some Members raised other issues, such as the treatment of the so-called extended
negotiations on financial services and basic telecommunications; the perceived imbalance in the
identification of criteria to assess the value of autonomous liberalization measures; and the situation
of Members already having extensive commitments under the GATS.
42. The Chairman noted that he had some, but not enough, expressions of flexibility on all
sides, which had led to good progress on the first two issues – "goods" and "bindings" – and less on
the other two – "developing country Members" and "recently acceded Members.  The discussion on
"goods" and "bindings" showed that most delegati ons were willing to find an appropriate solution
within the draft modalities.  In the case of "goods", he noted that a possible solution could consist of
replacing the current reference about the possibility of obtaining credit through concessions on trade
in goods with a more general reference to the possi bility of granting credit in any form that the
liberalizing Member and its trading partners might agree upon.  This, he thought, would leave theoptions open for interested Members to find the most suitable way in the course of bilateral
negotiations and would be a reflection of reality.  In the case of "bindings", delegations seemed to
acknowledge that, on the one hand, making liberalizat ion measures known to trading partners in the
context of this exercise did not mean that such a Member would automatically bind those measures;
and, on the other hand, that none should be expected to grant bound credit in exchange for unboundautonomous liberalization measures, either total or partial.  As such, perhaps it was not necessary to
recall this in the modalities, although he offered that, if Members preferred to make those matters
clear in the text, appropriate wording could be found.
43. He noted with regret that less progress has been made on the other two issues – "developing
countries" and "recently acceded Members" – and as such regretted that he was unable to present
revised draft modalities.  Regarding the situation of "developing countries" he recalled that this issue
was whether developed countries would be prevented from requesting credit from developing
countries, or whether that possibility – remote as it might seem –  would be left open.  He recalled that
this was the thrust of the proposal put forward by a group of developing countries in documentJob(02)/77.  He confessed that he not perceived enough flexibility on all sides in order to yield a
solution amenable to all.  He recalled that sugge stions had been made to make reference to the
different levels of development instead of referrin g to specific categories of Members as well as to
what rights and obligations that would entail in terms of the modalities.  He believed that the issue
was not only a matter of wording but that some political compromises would be necessary.TN/S/M/4
Page 11
44. Regarding the situation of recently acceded Members, he recalled that the main issue here
was whether commitments undertaken by these countries in the course of their accession processes
would be considered as autonomous liberalization measures for the purpose of these modalities.  He
noted the wide opposition that existed to consider these bound commitments as autonomousliberalization measures.  He reminded the Council that at the informal meeting held on 16 October,
these Members had submitted a room document outlining a set of modalities for the treatment of
liberalization measures undertaken by recently acceded Members and noted that this approach had not
met with Members' agreement.  However, he stated that it was fair to acknowledge that liberalization
measures bound by most recently acceded Members in their accession processes had been more
extensive than ordinary commitments of original WTO Members of a similar level of development as
acknowledged by Ministers in paragraph 9 of the Doha Ministerial Declaration.  He suggested that atthe present time the only possible way of dealing with this issue would be through a separate
document, be it a decision or a statement by the Chairman.  Such a document could draw on different
elements, such as Article XIX of the GATS, the negotiating guidelines and procedures, and the Doha
Ministerial Declaration and would reflect the Members' understanding of the consideration that should
be given to the situation of recently acceded Members.  He declined to elaborate further.
45. He regretted that the modalities were not ripe for adoption and pledged to continue his
consultations on the matter.  He reiterated that he stood ready to meet with Members to hear their
suggestions and ideas.  He stated that he would be drawing on Members' expressions of flexibility in
order to make progress.  He was convinced of the importance of the issue for the progress ofnegotiations.  He hoped that the Council's next opportunity in December to resolve this issue would
not be missed.
46. Referring to the Chairman's reference to a draft from recently acceded Members at the
informal meeting, the representative of China s ought to clarify that it had not co-sponsored this
proposal.
47. The Chairman stood corrected and stated that only some recently acceded Members had
sponsored this document, and China was not among them.  He suggested that the Council take note of
the statements made and revert to this item at the next meeting.
48. It was so decided.
C. MODALITIES FOR THE SPECIAL TREATMENT FOR LEAST DEVELOPED
COUNTRIES
49. The Chairman recalled that Article XIX of th e GATS contained an obligation to establish
modalities for special treatment to be granted to least-developed country Members in the course of
this round of services negotiations and that least-developed countries had submitted document
JOB(02)/30 in this regard.  He further recalled that, as agreed, the Secretariat had prepared a checklist
of issues raised and comments made, that had been circulated as document JOB(02)/135, dated 30
September 2002.  To accelerate progress, an open-ended informal meeting had been convened on 7October, where Members had provided further comments on the issues raised by least developed
countries.  As a result of those consultations, he had understood Members as having an interest in
adopting these modalities as soon as possible and preferably by 31 March 2003.  He felt that, if
adopted in a timely fashion, the modalities could constitute a useful tool for the negotiations.  He
noted that during this informal meeting Senegal, speaking on behalf of the least developed countries,had announced their intention to submit a draft text of the modalities.  He stated that this was a
positive initiative welcomed by all Members as it would allow the Council to have a focused
discussion on specific elements that could be included in the modalities.TN/S/M/4
Page 12
50. The representative of Senegal thanked the Chairman for his efforts in this exercise and
confirmed that a group of least-developed countries hoped to finalise and table a document in advance
of the formal meeting in December so as to allow for substantive discussion at that time.  Reporting
on the status of the draft, he explained that it had been circulated among some LDCs and that the
group was working towards approval.  He hoped th at the draft would be made available well in
advance of the meeting.
51. The Chairman suggested that the Special Session of the Council hold an open-ended
informal meeting prior to December in order to allow Members to consider the draft and to organise
the discussion at the next formal meeting.
52. The representative of Djibouti welcomed the Chairman's suggestion and confirmed that the
draft was near finalisation.  He hoped that there would be a substantive document in December from
the least-developed countries on trade in services.  He recalled that this group was among the most
vulnerable in the WTO family and needed to be treated with special consideration, including Djibouti.
53. The Chairman suggested that in order to keep Members apprised of the best way to prepare
for the December meeting, that the Council take note of the statements made and revert to this item at
the next meeting.
54. It was so decided.
D. WORK OF THE SUBSIDIARY BODIES – REPORTS BY CHAIRPERSONS
55. The Chairman of the Committee on Trade in Financial Services, Mr. Syed Habib Ahmed of
Pakistan, reported that the committee had met on 21 October, and addressed the following issues:
Acceptance of the Fifth Protocol to the GATS; Transitional Review under Paragraph 18 of theProtocol on the Accession of the People's Republic of China; Technical Issues; Recent Developments
in Financial Services Trade; and a proposal to invite the World Bank to present its 11
th Policy Report,
entitled "Finance for Growth".
56. Under the item on the Acceptance of the Fifth Protocol, the Committee had heard updates on
the status of domestic procedures from the delegations of Bolivia, Dominican Republic, Poland and
Uruguay.  He recalled that the Council for Trade in Services in regular session had decided on Friday25 October to re-open the Protocol for Bolivia's acceptance and welcomed this good news.  In the
case of Uruguay, the Protocol had been accepted by the Chamber of Representatives and was now
being considered by the Senate's Commission on Inte rnational Affairs.  The Dominican Republic had
also made progress:  the Protocol was adopted by the Senate and would be considered by the Chamber
of Representatives.  Finally, Poland's procedure was in the very final stage, and the ratificationinstrument was awaiting the President's signature.
57. As regards to the second agenda item, the Committee had carried out the first transitional
review of the implementation by China of its WTO commitments, pursuant to section 18 of the
Protocol on the Accession of the People's Republic  of China.  Written communications had been
submitted before the meeting by the following Members:  the European Communities and their
Member States (S/FIN/W/18), the United States (S/FIN/W/19), Canada (S/FIN/W/20), Japan
(S/FIN/W/21) & (S/FIN/W/21/Add.1), and Chinese Taipei (S/FIN/W/22).  The Committee had
reported on this matter to the regular Council for Trade in Services and a detailed account of the
discussions during the meeting was to be found in the meeting report, contained in documentS/FIN/M/37, paragraphs 11 to 71.
58. He further reported that no particular issue had been raised under the item on Technical
Issues.  However, at the request of Thailand and Hong Kong, China, he had confirmed Members'
understanding that the Committee's broad terms of reference on technical issues allowed for theTN/S/M/4
Page 13
discussion of any technical issues the Members migh t wish to raise, includ ing those arising in the
bilateral requests. Included among the latter were regulatory issues, including transparency-related
issues.  In fact, he suggested, discussion of these issues could constitute a good combination of
bilateral negotiations and multilateral work.
59. Under the item on Recent Developments in Financial Services Trade, the Committee heard a
very interesting presentation by Australia on recent regulatory reforms in that country's financial
system.  The presentation was subsequently circ ulated as document S/FIN/W/23.  In addition, Hong
Kong, China announced its intention to present a paper on e-finance for the next meeting, where a
presentation would be arranged.  The United States had reiterated that this agenda item was a useful
vehicle to address issues, such as transparency in domestic regulatory procedures, and allowed
countries to relate their positive experiences from reforms in their financial services sector.
60. He stated that, following a proposal by Canada, the Committee had decided to invite the
World Bank to make a presentation of its 11th Policy Report, entitled Finance for Growth: Policy
Choices in a volatile world.  Depending on the World Bank availability, this presentation would take
place during the next cluster of services meetings, and would be organized back-to-back with theCommittee meeting.
61. The Chairman of the Committee on Specific Commitments, Mr. Niklas Bergström of
Sweden, reported that, since its last meeting, the Committee had held one formal meeting on 24
October where it addressed two substantive items:  Classification Issues, and Matters relating to theScheduling of Commitments.  Regarding classification issues, he stated that the Secretariat had
prepared a compendium of all classification proposals that had been submitted to the Special Session
and the Committee in order to facilitate discussions to clarify individual positions on the various
classification issues.  The European Communities introduced a proposal on Computer and Related
Services, document S/CSC/W/35, which was also issued as a Special Session document.  During thediscussion, some Members had felt that it would be necessary to hold more in-depth discussions on
the various classification proposals.  It had therefore been agreed to hold informal consultations on
classification issues in the very near future.
62. Under the item of Matters relating to the Sc heduling of Commitments, he noted that two
issues had been addressed at the meeting:  incorporation of new commitments into Members'
schedules, and approaches to the scheduling of Additional Commitments under Article XVIII of theGATS.
63. He recalled that Members had agreed in July in principle to submit at the end of the
negotiations a single, consolidated schedule containing both existing commitments as well as new
ones resulting from the present negotiations.  In orde r to facilitate the presentation of offers in one
consolidated document by each Member, the Secretariat was aiming to complete its work on
preparing draft consolidated schedules for Members by the end of November.  These draft schedules
were prepared to serve as useful tools for delegations when preparing their initial offers and did not
have any legal status.  Members would need to ensure that their commitments were accurately
reflected.  Members would have time throughout the negotiations to ascertain that their tradingpartners' existing commitments were reflected accurately in the offers presented.
64. The Committee also held a first discussion on the topic of approaches to the scheduling of
additional commitments under Art. XVIII of the GATS, based on a note prepared by the Secretariat
(document S/CSC/W/34).  Debate focussed mainly on the question of the scope of Article XVIII andhow it related to other provisions of the GATS, in particular Articles XVI and XVII; and the
negotiating mandate of Article VI:4.  It was stressed that the purpose of Article XVIII was to allow
for additional commitments to be scheduled in a positive manner, but that the Article should not be
used to subtract from obligations contained in the Agreement.  It was pointed out that several
commitments made by Members under Article XVIII appeared to constitute limitations that shouldTN/S/M/4
Page 14
have been scheduled in the Market Access or National Treatment columns, rather than under
"Additional Commitments".
65. Under "Other Business," the Secretariat updated the Committee on preparations for the
Scheduling Workshop to be held on 27-29 November, back-to-back with the next cluster of servicesmeetings.  Funding for one capital-based official from each developing country participating in the
negotiations had been secured.  The event was targeted at those officials responsible for the
preparation of offers and would provide an opportunity to address technical issues relating to
scheduling of commitments and the preparation of offers.  The Chairman had informed the Committee
about two letters received from the Chairpersons of the Special Session of the Committee on Trade
and Development, and the Working Group on Trade and Transfer of Technology, requesting
information by the end of November on any work carried out by the CSC with relevance to thedeliberations under their respective work mandate.  He stated that he intended to reply to these
requests by reporting in a factual manner on any relevant discussions that had taken place in the CSC.
66. The Chairman of the Working Party on GATS Rules, Mr. Thomas Chan of Hong Kong,
China, reported that the Working Party on GATS Rules had held a formal meeting on 23 October,
during which it had addressed the issues of emergency safeguard measures, subsidies and government
procurement.  He recalled that, at its meeting on 15 July, the Working Party had decided to adopt
work programmes for the three subjects of negotiations (JOB(02)/82/Rev.2), on an ad referendum
basis.  He reported that no objection had been received within the agreed deadline, which had been set
on 22 July 2002.  The work programmes could be considered as adopted and had been circulated indocument S/WPGR/7 dated 22 July 2002.
67. He stated that Members continued their exchange of views on the various approaches which
had been proposed for a possible emergency safeguard measure.  It was agreed that the Secretariat
would list the various proposals, formal and informal, which had been presented by Members on thissubject, highlighting the main issues they addressed.
68. On subsidies, there was a general feeling that more information was needed before
examining the need for specific disciplines.  In th is context, Members gave further consideration to a
simplified questionnaire put forward at the last meeting by the delegations of Argentina, Chile and
Hong Kong, China, for the purpose of informati on exchange (JOB(02)/82, 12 July 2002).  Moreover,
delegations gave preliminary consideration to a document prepared by the Secretariat compilinginformation on subsidies contained in TPR reports (S/WPGR/W/25/Add.3, 19 September 2002).
Delegations noted, inter alia , that, while information found in TPR reports contained interesting
elements, it was necessarily limited due to the nature and constraints of these reports.
69. Finally, delegations continued their exchange of views on a proposal on government
procurement by the European Communities and their Member States (S/WPGR/W/39).  At the same
time, several other delegations maintained their view that Article XIII excluded from the negotiations
the obligations of most-favoured-nation treat ment, market access and national treatment.
70. The Chairman of the Working Party on Domestic Regulation, Mr. Sergio Santos of Brazil,
reported that since July, the WPDR had held one informal meeting, on 9 October, and one formal
meeting, on 22 October.  Discussion during the informal meeting focused on the issue of Secretariat
consultations with international professional services organizations, while the formal meeting focused
on the examination of examples of regulatory measures.
71. On the issue of Concepts Relating to the Development of Disciplines, he stated that at the 22
October formal meeting, Members continued the examination of the regulatory examples listed in a
revised Secretariat paper (JOB(02)/20/Rev.2), according to procedures suggested in a new
Chairperson’s Note (JOB(02)/147).  He reiterated that this was an important element in satisfying the
services negotiating guidelines' mandate which aimed for the completion of GATS Article VI:4TN/S/M/4
Page 15
negotiations before the end of market access negotiations.  Among the issues raised during the formal
meeting on 22 October were the relationship, if any, between unscheduled regulatory measures and
GATS Article VI:4 in sectors where specific commitments have been made, and the need for more
formal definitions of the types of measures covered by the WPDR work on domestic regulation.  He
regretted that the number of interventions had been fairly small, despite the emphasis in the Chair’sNote that the most important element of the examination of regulatory measures was the full
participation of all Members, particularly developing countries.
72. On this issue of the Development of Disciplines for Professional Services, he stated that
significant progress was made at both the formal and informal meetings.  After some delay, Members
had agreed to request the Secretariat to consult with international professional organizations on the
suitability of elements of the Disciplines on Domestic Regulation in the Accountancy Sector to otherprofessional services sectors, as well as to request information on their regulatory activities.  Members
also continued to review the Secretariat paper, "Synthesis of Results to Date of the Domestic
Consultations in Professional Services" (JOB(01)/162, dated 27 November 2001).  Based upon the
interventions made, it appeared that Members, especially developing country Members, were giving
increasing attention to role of the WPDR with resp ect to the recognition of qualifications and other
issues related to the movement of natural persons.
73. Members agreed the next meeting would be held in December, as part of the next "Services
Week".
74. The representative of China thanked the Chairman of the Committee on Trade in Financial
Services for his report, and recalled that the transitional review mechanism was neither part of the
regular business of the Council for Trade in Services in Special Session, nor relevant to its work, and
that its mention under this item should not be cited as a precedent to raise it in future Council
meetings.
75. The Chairman expressed his understanding that the report in question had been made in the
interests of transparency and had no bearing on the work of the Special Session as such.
76. The representative of Uruguay noted that the reports of the subsidiary bodies appeared in the
minutes of the formal meetings, but that these minutes were not available before the Council's next
meeting.  He wondered if it would be possible for the written reports to be made available todelegations, perhaps by e-mail, for purely administrative reasons and to facilitate their work.
77. The Chairman stated that the reports would be communicated by e-mail after the conclusion
of the Special Session.  He suggested that the Council take note of the reports of the Chairs and the
statements made and revert to this item at the next meeting.
78. It was so decided.
E. PROPOSALS RELATING TO THE NEGOTIATIONS UNDER ARTICLE XIX
OF THE GATS
79. The Chairman noted that since its July meeting, two new proposals had been submitted to
the Council.  The first was a communication from the United States regarding small and medium-
sized enterprises, contained in document S/TN/W/5, and the second from Mauritius regarding small
economies as small suppliers of services, contained in S/TN/W/8.  He also noted that a number ofdelegations had indicated at the July meeting th at they wished to revert to the communication
introduced at that time by the European Communities and their Member States regarding Computer
and Related Services, contained in document CSS/ W/34/Add.1.  Other delegations had indicated their
desire to revert to an oral statement made by the representative of Chile regarding subsidies.  Finally,TN/S/M/4
Page 16
an informal note had been prepared by the Secr etariat entitled "Compilation of Existing Maritime
Transport Offers" in response to a request made at the Council’s June meeting.
80. Introducing its informal note on the Compilation of Existing Maritime Transport Offers, a
representative of the Secretariat stated that the note was self-explanatory.  He said that the cover note
referred to the methodology used to determine which offers were included.  The Compilation was
prepared pursuant to the Council's Decision on Mari time Transport Services, which suspended the
negotiations and stipulated that the negotiations would be resumed in the context of the present round
on the basis of "existing or improved offers".  In  preparing the document, the Secretariat attempted to
identify what would fall in the scope of existing or improved offers.  The cover note explained the
criteria, and if Members felt that it was not completely correct, he requested that errors might have
been made be indicated.  Secondly, he drew attention to the table on page 3 which tracked thechronological development in relation to the contri butions made by individual Members participating
in the negotiations from the pre-Uruguay Round conclusion point until the present day.  He also noted
that for ease of reference a copy of the Decision (contained in S/L/24) was included.  He welcomed
any comments that Members might have on the note.
81. The representative of Venezuela requested that the note be made available in electronic form
by e-mail.
82. The Chairman responded that the note had not been prepared in electronic format and that
the Secretariat would look into the matter.
83. Regarding the Secretariat compilation, the representative of Brazil noted that the document
would be useful in negotiations, but that in elaborating the compilation, the Secretariat had embarked
on a definition of the term "existing offers".  He understood that for the purposes of the exercise this
was necessary and that the Secretariat had taken the precaution of explaining the rationale it used, buthe underlined that this had been done solely for the purpose of the compilation and did not prejudge
what was meant by "existing offers", as referred to in the Decision adopted at the end of 1996.  He
reiterated that Brazil's offer of 2 April 1996 had been conditional upon a successful conclusion of the
negotiations with all Members making a high level of commitment on a broad MFN basis.  He noted
that these conditions had not been fulfilled and that they applied in the current negotiations.
84. The representative of the United States, introducing its proposal on small and medium-sized
enterprises, noted that it built on comments made at the October 2001 Special Session, as well as the
Canadian proposal of March 2001, contained in S/CSS/W/49.  She noted that SMEs were the drivers
of global economic growth and employment, and played an important role in the services sectors in
both developed and developing countries.  She noted that SMEs were typically defined by the number
of employees, with small firms having fewer than  100 employees and medium firms having between
100 and 500 employees.  SMEs accounted for over 95 per cent of enterprises in OECD countries and
were also important to developing countries because the private economy in much of the developing
world was comprised of SMEs.  The International Finance Corporation Small and Medium Enterprise
Department cited Ecuador as an example for where approximately 99 per cent of all companies have
no more than 50 employees.  She felt that reducing barriers to SME services exports in the currentnegotiations was a win-win scenario for developed and developing country Members.  The United
States' proposal identified five key trade barriers to SME services exports and suggested ways to
reduce these in the current GATS negotiations.  Firstly, with respect to the lack of transparency in
domestic regulation, she noted that discriminatory non-transparent regulations, complicated
paperwork, and delays in processing licence applications raised costs and restricted SMEs' marketaccess.  SMEs needed access to timely and accurate information on laws, regulations and procedures
affecting their business.  The United States suggested, as a first step and where institutional capacity
permitted, that information on new and existing regulations, procedures and measures affecting SMEs
be made readily available on the internet.  In addition, she noted that transparent domestic regulation
should give SMEs meaningful notice and an opportunity to comment on new regulatory measures,TN/S/M/4
Page 17
afford procedural reviews, and provide simplified procedures for obtaining, renewing or relinquishing
licences.
85. With respect to the second barrier, a requirement for commercial presence, the
representative of the United States recalled that in Canada's proposal, SMEs typically suppliedservices via modes 1 and 4, due to size and capital constraints, as well as the increased use of the
internet.  She stated that requirements in Members' schedules that foreign suppliers maintain a local
presence or other commercial presence requirements prevented market access by SMEs.  Removal of
these requirements, such as residency requirements  and mandatory requirement with local partners,
she felt would assist SMEs without interfering with Members' right to regulate in order to meet
national policy objectives, including consumer protection.  With respect to the third barrier, mode 4
restrictions, she stated that delays in visa processing were also significant barriers to SMEs.  TheUnited States proposed that Members provide greater access to information and procedural
transparency regarding entry and stay provisions for temporary personnel.  Additional ideas for
consideration could include multiple entry business visas, (providing stays of one year or less) and
short-term work permits for business personnel (professionals and highly skilled employees), as
means to expedite business travel by persons from SMEs.
86.  Fourthly, with respect to the electronic delivery of services, the representative of the United
States stated that SMEs used electronic commerce to customise services and manage supplies and
inventory, and expand their customer base.  Burdensome licensing requirements raised costs and
impeded access to the Internet.  The United States felt that Members should refrain fromunnecessarily regulating electronic commerce and should maintain a domestic environment that
promoted the entrepreneurship of SMEs and the development of new technologies.  Finally, she noted
the need for commitments in related services upon which SMEs relied in order to enter foreign
markets and felt that barriers in these related service sectors would restrict SME market access.  The
United States called for expanded commitments and full liberalization of services important to SMEs,including financial, telecom, distribution, express deliver, computer, advertising, education and
training, as well as legal and accounting services.
87. Taking the floor on a matter pertaining to item C of the agenda, the representative of the
United States noted that at a previous meeting a representative of the LDCs proposed that WTO
Members supplement their existing Article IV co mmitments with reference to the establishment of
contact points, and proposed that these be established in LDC country Members themselves.  Heinformed Members that the United States was establishing contact points in its embassies in WTO
least-developed country Members in order to assist service suppliers in obtaining information on the
United States' market.  He indicated that he would be informing individual LDC delegations on
specific United States' contact points in the United States' embassy in least-developed countries.
88. Introducing the proposal contained in document S/TN/W/8, the representative of Mauritius
stated that the proposal was self-explanatory and st raightforward and sought to highlight a few points
of particular importance.  He recalled that at Doha the negotiating guidelines had been reaffirmed
within the Doha Development Agenda.  He recalled that the negotiating guidelines had been adopted
by the Council for Trade in Services in Special Session on 28 March 2001, and that Members hadagreed that "the process of liberalization shall take place with due respect for national policy
objectives, the level of development and size of economies of individual sectors."  He recalled that
paragraph 15 of the negotiating guidelines called for the implementation of Articles IV and XIX:2,
and for the consideration of the needs of small service suppliers of developing countries.  It was in
this context that Mauritius submitted its proposal.  He noted that Mauritius, like others, faced severalconstraints owing to size the of its market, limited diversification possibilities, and vulnerabilities.
Small services suppliers of small economies were the smallest by any standard in terms of capital,
number of employed and market share.  He recalled that Mauritius was a Small Island Developing
State (SIDS) and that most of its services strategy was geared to tourism, which gave rise to concerns
over sustainability and expansion.  He noted that as a result of the tragic events of September 11
th,TN/S/M/4
Page 18
many small economies had suffered irreparable loss.  The proposal sought to set out elements,
especially with regard to the implementation of GATS Article IV.  The negotiating guidelines, he
recalled, made reference to a monitoring mechanism and the proposal put forth specific elements for a
follow-up within the purview of this mechanism, most particularly that of periodical reports from the
Special Session to the Council for Trade in Services  and to the General Council.  With reference to
the United States' proposal, he remarked that what constituted a small firm for the United States (a
firm with fewer than 100 employees, assets of under US$3 million and annual sells under
US$3 million) constituted a large company for Mauritius and underscored why small Members such
as Mauritius required special consideration.
89. The representative of Egypt sought clarification from the United States on section B,
paragraph 16 of its proposal which stated that Members should refrain from  unnecessarily regulating
e-commerce.  He requested that the United States elaborate on what was meant by unnecessary
regulations and whether there was a link with the working group on e-commerce.
90. The representative of Senegal stated that his country had a ministry which dealt with the
administration of small and medium-sized enterprises (SMEs).  He shared the concerns outlined in the
United States' proposal, and the thoughts expressed by the representative of Mauritius, particularly the
identification of various obstacles.  This underscored the need to give more flexibility to developing
countries and special priority to SMEs in these countries.  Senegal shared some of the concerns raised
in Mauritius' proposal on small enterprises in small economies and felt that, in line with the Doha
Agenda, small economies should be considered in the negotiations.  He thanked the United States forthe establishment of "focal points" in United States' embassies in least-developed countries and
requested that this list be sent.  He also hoped that modalities for the special treatment of least-
developed countries would soon be adopted.
91. The representative of Norway stated that the United States' proposal was an excellent
overview for the negotiations of the issues relevant to SMEs and supported the description of SMEs
as drivers of economic growth and employment. The flexibility of many SMEs was suited to reap the
fruits of globalisation, although he noted that SMEs were more sensitive to barriers to trade than their
larger counterparts.  He felt that the negotiations should focus on barriers that were difficult for
SMEs, a number of which were mentioned in the Un ited States' proposal and were relevant to the
negotiating agenda.  He recalled that the Confederation of Norwegian Business and Industry had
conducted research on barriers to trade for their members and underscored the need to removeunnecessary red tape.  He thanked Mauritius for its proposal and indicated that he might revert to it.
He stated that, given the importance of SMEs, it would be useful for the Council to include
information on progress for SMEs as part of its work, including review work under Article XIX of the
GATS.
92. The representative of Barbados stated that it concurred with points raised, particularly in
paragraph 4 that the United States had made an effort to distinguish the developing world by citing
firms with significantly fewer employees in Ecuador as an example.  Some of the concerns shared
were access to the internet, increased commitments in modes 1 and 4, with fewer mode 3 restrictions.
She noted that, with respect to mode 4, this was a problem for small service suppliers from developingcountries.  Coincidentally, many of Barbados' concerns surrounded the difficulties faced by Barbadian
small services suppliers seeking visas at the US Embassy in Bridgetown. She inquired as to which
procedures put forth by the United States it intended to institute in this regard.  She echoed Egypt's
question regarding how the reference to regulation of e-commerce fit into the work programme.  She
inquired as to who were the "others" when the United States referred to SMEs and others that shouldcomment on domestic regulation.  She asked whether the intention was to seek the transparency of the
domestic regulations or to have an impact on th e domestic regulation prior to their passage into
national law.  While she shared many of the United States' concerns, she emphasised that, if these
were the problems and constraints facing SMEs with an export service market of more than 18 per
cent of world trade in services and growing at si gnificant rates, one could imagine the difficultiesTN/S/M/4
Page 19
faced by small service suppliers from developing countries.  Barbados, for instance, accounted for
0.075 per cent of the world export services trade, and did not have clear access to the United States,
Canadian or Mexican markets.  She noted that these constraints were compounded by a definitional
issue, as raised by Mauritius and previously raised by Barbados at the time of the presentation of the
Canadian proposal on the same topic.  She recalled that, whereas the United States' definition of asmall supplier was a company with fewer than 100 employees and turnover of under US$3 million, in
Barbados it was a company with fewer than 25 employees and one-eighth of a million dollars in
turnover; a micro supplier was defined as having fewer than five employees and less than US$ 25,000
in annual turnover.  She noted that objective criter ia did not favour small enterprises from developing
countries.  She noted that the Council and the negotiations should find ways of encouraging their
participation, as stipulated in paragraph 15 of the negotiating guidelines.  She encouraged Members to
remove economic needs tests, increase mode 4 access, not apply any emergency safeguard measureon a small service supplier given their negligible impact, and increase discussion of trade facilitation
in services.  She encouraged that others follow the United States in considering expanding access to
information established through contact points in developing countries, which would benefit small
service suppliers.  She felt that seminars, trading seminars, web-sites that permit small service
suppliers to market their products to developed countries, and funding for trade missions fromdeveloping countries, would also be helpful.
93. The representative of Hong Kong, China stated that she appreciated the difficulties faced by
small economies as outlined in the proposal from Mauritius and might revert to it.  She noted that the
United States' proposal on SMEs drew attention to  the main component of almost all WTO Member
economies.  SMEs were a pillar of the Hong Kong economy and represented 98 per cent of all local
enterprises and over 60 per cent of private employme nt.  In Hong Kong, China, a company with fewer
than 50 employees was defined as an SME.  She shared the concerns outlined in the United States'
proposal, especially the impact of unnecessarily burdensome or restrictive domestic regulations,
which could render any market access commitment void de jure  or de facto .  She cited paragraph 8 of
the US proposal regarding increased costs as a result of discriminatory regulations and complicated
regulatory paperwork as an example.  She wished to see an increase in the level of transparency in
domestic regulation, and stated that merely providing timely access to information on laws,
regulations and procedures did not suffice to address the problems identified.  It was her view that
host Members' regulation should not be more trade restrictive than necessary and should not render
commitments meaningless.  Article VI:4 gave a mandate to identify solutions to these problems.
Hong Kong, China was also interested in the United States' view with regard to commercial presencerequirements and he requested that consideration be given to the removal of these barriers in the
negotiations.  With respect to mode 4 commitments, she agreed that this issue was important to
developing Members and that more must be done to increase transparency regarding entry and stay
provisions and streamline procedures of benefit to SMEs and encouraged Members to improve their
mode 4 commitments in the current round.  She noted that the US proposal cited a number of relatedservices as being relied upon by SMEs to enter foreign markets.  She agreed that financial services,
telecom, advertising, computer, legal, accounting and distribution services were essential for SMEs.
She pointed out that in the Hong Kong, China  context, SMEs could provide services in all areas,
many of which were inevitably also in support of trade in goods, which was also predominantly
driven by SME participation.  With respect to  logistics, transport, communication and storage
services, she stated that over 96 per cent of enterprises in this sector in Hong Kong, China were SMEs
and played an important role in facilitating international trade flows.  She encouraged Members to
make favourable commitments in these areas in the current round.
94. The representative of Venezuela remarked in a preliminary fashion that there appeared to be
agreement that SMEs were the basis for the development of economies and that SMEs were an engine
of growth.  However, he felt that common poi nts versus divergent points regarding SMEs in
developing countries and developed countries needed to be distinguished, as noted by previous
developing countries' interventions.  The United States recognized some of these differences when it
mentioned that a small enterprise in Ecuador was defined as a company with fewer than 50TN/S/M/4
Page 20
employees.  He noted that the United States' presentation was encouraging because it took into
account SMEs, but noted that special and differential treatment would also need to be taken into
account when discussing competition between de veloped and developing country SMEs.  For
example, he noted that there existed a corporate program which gave support to United States'
enterprises to export to Latin American countries.  This created an inequality, because Latin Americancountries did not have the same advantages as the United States.  He agreed in general with the points
raised in proposal, but underlined the need to take  into account special and differential treatment.
With respect to discriminatory regulations, paperwork, excessive administrative difficulties, he noted
that it would be helpful to see what papers were required by US embassies, to determine if there was
discriminatory treatment of Venezuelan SMEs attempting to enter the US market.
95. Responding to the comments of Barbados, the representative of Paraguay noted that it had
highlighted the need, given the differences between developed and developing countries, to define
what constituted a SME.  He felt that the Mauritius proposal from paragraph 8 onwards sought to
define special and differential treatment and he believed that it was contained in the structure of the
mandated negotiations.  He gave full support to the proposal.  Regarding the US proposal, he noted
that it expressed a concern and pointed out the differences to be found in trade where there existed anasymmetry.  Paraguay, he noted, would find itself closer to the position of Ecuador.  Transparency in
the national regulations was important, and agreed that access to information and regulations should
be provided.  Commenting on sub-heading C of th e US communication on the movement of natural
persons,  he reiterated that it was difficult to re ach the United States and that obtaining information
was costly.  For example, the form for requesting (n ot obtaining) a US visa cost US$100 to process
and was a substantial cost to a SME.  Regarding paragraph 18, he echoed Egypt's question and the
earlier discussion on what was constituted an adequate regulatory framework, and stated that it was
important to define "necessary" and "unnecessary".  He noted that, with respect to paragraph 19 and
the sectors in which negotiations were occurring,  he believed that it was important to take into
account the need for special and differential treatment, in particular for developing country SMEsactive in these sectors.  Their needs should be considered when liberalising markets.  He indicated
that he might revert to the proposals at a later point.
96. The representative of Pakistan noted that both developed and developing countries had
accepted the important role of SMEs in national economies as drivers of economic growth.  He
recalled that Pakistan had a national authority, SMEDA, which catered to the needs of SMEs.  He felt
that the Council should strive to come to a common understanding on classification and definitionabout SMEs, as it would lay a common ground for further work.  With respect to the discussion on
transparency in paragraph 10 and the need for SMEs to have the opportunity for prior comment in
addition to access to information, he reiterated th at transparency was important to business, but that
Pakistan had reservations regarding a multilateral agreement on prior comment.  He requested that the
US elaborate on this item.  Regarding paragraph 12 on commercial presence and the sentence that theremoval of mode 3 commercial requirements should not interfere with a Member's right to regulate in
order to meet national policy objectives, he requested that the United States elaborate on what the
implication of this sentence would have on mode 3 commitments that might ensue.  Echoing earlier
comments on mode 4 and visa difficulties, he agreed that this was a major problem for developed and
developing country SMEs alike and needed to be addressed.  He felt that this issue could be added tothe discussion on the movement of natural persons in addition to the discussion in the Special Session.
He felt that the United States' approach to cate gorisation was highly confined to highly skilled
personnel and professionals, and inquired as to whether the United States would be willing to expand
on this definition of business personnel, for example to include semi-professionals and technicians
which could cater to needs of developing countries.  He seconded Egypt's request for a clarificationon the comment that Members should refrain from unnecessary regulation in e-commerce and on
what the United States considered necessary and unnecessary.  He felt that the items raised in
paragraphs 17 to 19 had cross-cutting implications, because it referred to many aspects of the
negotiations issues, and might require further thought as they asked for full and immediate
liberalization of telecommunication services.  Comm enting on the proposal from Mauritius, he notedTN/S/M/4
Page 21
that Pakistan distinguished in a mutually exclus ive fashion small economies from small enterprises,
and should be dealt with separately.  He indicated th at he might wish to revert at a subsequent meeting
to the relevant difficulties faced by small economies pointed out by the proposal.
97. The representative of Canada agreed with statements made concerning the importance of
SMEs to national economies and development, and indicated she might revert to the proposal from
Mauritius.  She thanked Senegal for its comments on SMEs and took note of the establishment of a
new ministry for SMEs.  She noted that 86 per cent of services firms in Canada employ fewer than 50
persons and that most Canadian exporters were SMEs, who depended on trade and investment to
grow and create jobs.  SMEs accounted for almost 60 per cent of Canada's private sector employment
and 42 per cent of the private sector GDP.  She recalled that the Canadian proposal on SMEs
emphasised that the barriers most often encountered by SMEs related to discriminatory, burdensomeand a non-transparent  regulatory environment.  She encouraged Members to consider these barriers in
the context of the current negotiations with a view to improving liberalization for SMEs.  Canada
expressed support for the general thrust of the US proposal, but noted differences in the scope of
commitments of interest.
98. Seeking to offer preliminary comments on the US proposal and its discussion on the
movement of natural persons, the representative of Colombia recalled that the issuance of a visa was
an obstacle encountered by services suppliers regularly, and that it took approximately 18 months toobtain an appointment for a US visa.  She hoped th at the points raised in the discussion would help
progress.  With reference to the categories identified under mode 4, she inquired about othercategories such as representatives of management and other highly qualified personnel in order to
widen the category to help developing countries.  She echoed Barbados' comments regarding
transparency and information on procedures for the entry and temporary residence of staff and felt
that there should be more discussion on this in order to improve the situation.
99. Offering initial impressions, the representative of Mexico noted that the question of what
constituted a small enterprise in the United States was different then in other Members.  In Mexico,
for example, there existed the category of "micro" enterprises, which governed those enterprises
which were worst off, such as peasant SMEs, in the government's attempt to find programs to favour
their integration into the national economy.  He felt that the definition of what constituted a SME was
a matter of domestic regulation and that it should not be the Council's purpose to define what
constituted a SME in each Member.  Rather, he saw the United States' discussion as favouringmeasures that sought to assist SMEs, particularly in developing countries, for example, enterprises
with no access to electronic medium.  Their needs were more basic, particularly for micro businesses,
which might not even have a telephone or fax, and therefore the measures required were more basic in
their respect.  He underlined that this was a matter of domestic policies in the face of international
market opening.  He stated that for those not yet in an open market, it was important to adopt acautious approach and encourage competition nationally before opening at the international level, in
order to allow these participants to lay down roots.  He stated that there were areas in which Members
would have to be very cautious.  With respect to the United States' comments on transparency in
domestic regulation, he noted that these measures could have an impact on small enterprises because
of their lack of clout, and noted that in the negotiations on this matter, an agreement should helpsmaller participants obtain the information they required, for example, ensuring that inquiry points
were open to the private sector first.  He noted that SMEs should have direct access to information
through inquiry points, which would facilitate their work and offer concrete support.  With respect to
the movement of natural persons, he noted that not only time delays in processing visas but also an
increase in costs had a significant impact on providers.  This consideration should be included as onewhich affected SMEs significantly.  He indicated that he would study the portions of the proposal
pertaining to commercial presence and might revert to them.  Regarding the portions of the proposal
pertaining to commitments in related services, he noted that the intention of opening in certain sectors
was to create a multiplier effect that benefitted SMEs.  However, this opening was linked to the
negotiations and to the context for each Member.  In conclusion, he underlined that improvement ofTN/S/M/4
Page 22
the possibilities in the different sectors was, of cour se, helpful, but that the focus should be placed on
facilitation measures and general obligations.  He stated that national economic policies would
determine the possibility of national economic enterprises to set themselves up on the national scene,
in an environment characterised by a minimum degree of opening, in order later on to compete
internationally on a fair basis.
100. Reiterating the link between the US proposal on SMEs and Articles IV and XIX, the
representative of Guyana stated that the definition of what constituted a SME in different Members
did not further the discussion on how to encourage the participation of developing countries.  He feltthat the larger Members could assist with the definitional hurdles faced to move the process forward.
He suggested that the conditions outlined in the US proposal be used as the minimum set of
obligations which developed Members extend to developing country SMEs.
101. The representative of Chile shared the United's concern to recognise the barriers under
modes 3 and 4 which represented the main barriers SMEs.  Requesting further information on
paragraph 11 regarding the ending of restrictions on local presence (presuming Members' agreed on
what these restrictions were) she inquired as to whether eliminating restrictions would discriminateagainst larger companies offering the same service or a smaller companies that would grow: would it
still benefit from special treatment or would it see that treatment end?
102. Drawing a few preliminary conclusions, the representative of Brazil noted that some barriers
at the sub-federal level had a particularly negative impact on SMEs.  He noted the proliferation of
barriers SMEs encountered at the sub-federal level when they sought to break into markets.  He stated
that these regulatory barriers were diverse, if not contradictory, across sub-federal levels, and a draw
on the resources of developing country SMEs who attempted to enter the developed country markets
either through mode 1 or mode 3.  Regarding transparency and more specifically prior comment, he
underlined that developing countries had more difficulty implementing such policies and that not allSMEs benefitted from the process because they did not have access to the relevant information
necessary for prior comment, particularly at the sub- federal level.  He stated that this was important
because regulatory powers often were concentrated at the sub-federal level.  He felt that in order for
SMEs to benefit from transparency obligations, there would be a need to reinforce the existing GATS
transparency obligation.  He recalled that few notifications had been made since the Uruguay Round
regarding regulatory matters at the sub-federal level affecting market access and that the lack of
notifications was surely not a reflection of reality.  Finally, regarding subsidies given to SMEs, henoted that there were a number of developed country Members which granted discriminatory
subsidies to domestic SMEs across the board in all sectors, and although he saw the rationale for
assisting small enterprises, failed to see the reason for excluding foreign SMEs in this regard.
103. The representative of Macau, China thanked the United States for its proposal which had
identified barriers of particular relevance to SMEs.  He felt that the negotiations on SMEs could be an
instrument to make Article IV more precise, operational, and effective.  He agreed that the definition
of what constituted a SME varied from one Member to another.
104. The representative of Ecuador highlighted the reference in paragraph 4 of the US proposal to
the differences between developed and developing country SMEs, and hoped that these would be
taken into account in the bilateral and multilateral negotiations.  Concerning subsidies given by
developed Members to SMEs, he hoped that the situation would be clarified with a view to
determining the real opportunities for developing country SMEs to enter the developed country
markets, including the possibility of liberalising some of the sectors in which there was an interest andin which subsidies led to inequalities.  He noted with respect to mode 3 issues, that commercial
presence requirements were not favourable to the situation of developing country SMEs.  He agreed
with earlier statements that the US proposal should  not be limited to some categories of the movement
of natural persons and related services, but should be expanded to include other sectors, such asTN/S/M/4
Page 23
tourism, building, professional, informatics and related services.  This would provide more positive
access for developing country SMEs to developed country Member markets.
105. The representative of Switzerland underlined that most Members in the discussion had
identified a common goal of giving special consideration to SMEs because they formed the backbone
of the economy and were highly dynamic.  With respect to the question of the definition of a SME, he
noted that, in addition to the definition being rela tive to each Member, it was also subject to change
over time.  In this regard, he noted that the OECD definition essentially defined a SME as an
enterprise with fewer than a "given" number of employees, in part because the "given" number of
employees was a moving target and recently the tendency had been to refine the given number at a
higher level.  He felt that the importance of the issue need not be overstated.  With respect to the
problems faced by SMEs in entering markets and the interests at stake, he noted preliminarily that noMember was exemplary in this regard and that work remained.  The US proposal had served to
identify Members' interests and might help them by providing substantive requests language for
concrete objectives they sought to include in their requests.  Regarding transparency, he agreed that it
was important for SMEs to have access to information and noted that Switzerland in this regard had
programmes which provided information on regulations applying to import (import promotionprogrammes), and that ITC/UNCTAD had a similar initiative on the international level.  Regarding
part E of the US proposal, he noted that not all SMEs had the same capacity to change the way it did
business for the sake of one contract in one country, and that finding new business infrastructure
(financial and telecom services) could be a hurdle, because they were used to dealing with their
traditional suppliers (their insurer, bank, logistics handler).  In this regard, it was important to haveadditional openness in upstream services if Members sought to assist the entrance of foreign SMEs
and indeed that such steps could have spillover effects for domestic SMEs.  Regarding the Mauritius
proposal he reaffirmed that Switzerland was committed to taking the needs of least-developed
countries or small economies into account.  He recalled the decisions at Marrakesh and Doha in this
vein.  Switzerland had taken this language into consideration in formulating its requests, which werefair and reflected these special needs.  He made a distinction between the size and the performance of
an economy, which Switzerland, among others, had also taken into account.  He further stated with
regard to the proposal, that the GATS already contained language that had advanced the
implementation of these issues in the negotiations.  He questioned whether another monitoring
mechanism was required or whether it would be preferable to look at developments in the bilaterals
and react upon any of these.  He feared that new mechanisms would prove impractical and overburden
the Council from a procedural point of view, and felt that these were unnecessary given the existingobligations in the Agreement.  It was more important to focus on whether these obligations had been
implemented.
106. Expressing a few preliminary comments, the representative of Uruguay shared the interest
that all had voiced in SMEs.  He recalled the references made to SMEs in the Procedures for the
Negotiations and the attempts to find ways to increase the participation of SMEs.  The discussion
allowed for a further exchange of ideas and new proposals that in the long run could identify how to
best help SMEs.
107. The representative of the United States was glad that the proposal had promoted so much
discussion.  Speaking to the points made regarding the definition of a SME, she acknowledged
Members' different perspectives and underlined that the approach used in the proposal was that used
by the United States Small Business Administration and was for research purposes only, and that
there was no reason to be overly fixed on a definition based on the number of employees.  With
respect to transparency she noted that the provisions applied to all SME suppliers, and that the USproposal on SMEs was consistent with horizontal proposals for domestic regulation.  She noted that
access to information was a critical first step, particularly for SMEs without a commercial presence.
With respect to prior comment, she posited the va lue that any services supplier would attach to
provisions which gave them the ability to comment on US regulation, including for foreign SMEs.
She reiterated that the important first step remain ed having access to regulatory information.  SheTN/S/M/4
Page 24
noted that the US market was a highly desirable ma rket in terms of the movement of natural persons
and the United States was proud of its openness to temporary entrants.  The United States emphasis
for temporary entrants was put on business pers onnel and skilled personnel, although she understood
that others had other interests.  She noted in this regard that GATS issues must be distinguished from
issues not covered under the GATS.  On e-commerce portions of the proposal she noted that the SMEproposal was submitted in this context and that the issu es raised should be seen in this context.  The
United States had a long-standing tradition of avoiding barriers to e-commerce and she felt that the
work programme was complementary to the work of the Special Session.  She noted the work
programme was not a negotiating group.  If regulations were necessary, the United States felt that
they should follow WTO principles such as non-discrimination and transparency, and should not
serve as a barrier to trade.
108. The representative of Mauritius thanked those Members who had commented on its proposal
and expressed support.  He looked forward to cont inued discussion in the weeks to come.  He noted
that there was a consensus that the one-size-fits-a ll model did not provide the best solution for the
particular needs of developed and developing countries.
109. Introducing its proposal on Computer and Related Services, the representative of the
European Communities noted an earlier EC proposal introduced in July outlining its interests and
remarking on the need to clarify the coverage in this sector, as described in CPC chapter 84.  Thisdiscussion had generated a number of questions, comments and requests for clarification.  The EC had
taken these into account in a text which could be used as the basis for an understanding of the scopeof coverage of CPC 84, and was contained in TN/S/W/6.  He noted that it was a first draft which
sought to encourage debate, and not to re-classify this sector, which would continue to be defined
pursuant to CPC 84.  The understanding being presented would be an explanation in clear terms of the
services covered by CPC 84 and was not an exhaustive list, that would become out-of-date, but rather
a functional approach.  Members could list under the sector column in schedules, under CPC 84computer and related services, that they signed up to the understanding which would be appended to
the schedule of specific commitments.
110. The representative of Djibouti requested that a French translation of the proposal be made
available in order that it contribute.
111. The representative of Pakistan inquired as to what the implications were between a normal
versus a functional definition, given the fact that computer and related services were a growing sector
for Members.  He felt that there was no need to categorise given the speed of the technological
development.  He further inquired as to whether the understanding approach was the only approach
and confined to this sector.  He noted that the EC stated that it did not intend to expand this approach
into other sectors but wondered how it would be poss ible in the future to prevent a Member who has
such an interest from putting forth a functional definition and an understanding on the scope of
coverage of classification for the consideration of Members.
112. The representative of the Republic of Korea stated that the proposal spoke to the importance
of this sector and the fact that the fast pace of technological change obscured the coverage of CPC 84
and that it could be enhanced by adding clarity to the coverage of CPC 84.  He noted that it was
appropriate to exclude the content and core services from the scope of computer and related services.
He noticed and welcomed the fact that e-commerce considerations had been left out in the EC's
second proposal.  He felt that the e-commerce work programme should take the initiative on this
matter.  The proposal to attach an understanding in the sector column, he felt, seemed toaccommodate more extensively new services that evolved from a combination of existing services,
particularly on CPC 841 and 842, but noted the need for further work.  He felt that it was difficult to
envisage how improvement in the clarity and scope of the current classification would be made, given
that the proposal sought to re-arrange the services in CPC 84.  It seemed inadequate for addressing
undeveloped yet prospective future services.  He expressed concern for making a commitment at theTN/S/M/4
Page 25
two-digit level, since there would need to be a consideration of whether the commitment included
future services.  He appreciated that the intention was to improve the transparency of Members'
overall commitment.  In order for this to be achieved, all Members would need to attach the
understanding to their schedules.  He inquired as to whether a more qualitative and dynamic definition
would be needed in an understanding in order to ensu re the scope included future services.  He further
inquired as to how the lack of consistency betw een commitments made under the current regime with
those under an understanding would be handled.
113. The representative of Canada recalled that country's proposal contained in document
S/CSS/W/56.  She stated that Canada would examine the proposal with interest and particularly with a
view to ensuring that an understanding was fully consistent with W/120 and CPC descriptions, since
this would be imperative for any initiative seeking to clarify the nature of the computer and relatedservices sector.  She sought supplementary information with respect to the mechanics of including the
understanding in Members' schedules.
114. The representative of Mexico, sharing Canada's concern, noted that he had doubts to which
he might revert, and expressed a concern over including maintenance and repair services for office
equipment in this category since these services did not relate exclusively to computers.  He inquired
as to the purpose of including these services.  Re garding the reference to maintenance, technical
assistance and training, he indicated that he wished to discuss this bilaterally or in the Council.  He
further inquired as to what goal underlay the proposal and whether this goal could be achieved with
current CPC by giving detailed entries based on national classifications and internationalclassifications.
115. The representative of Argentina recalled Mercosur's and Bolivia's proposal on computer
services.  Regarding the need to have a clear view of the activities included in CPC 84, he stated that
he supported the thrust of this, and that a functional definition referred to the basic operations whichwere covered by this type of service.  He noted that the reasons for covering these basic services was
to ensure they remained covered as the technology through which they were provided changed.
Functionally speaking, a change did not occur in the service, but in the manner in which the service
was provided, be it in data processing, support services, storage, etc.  He shared Korea's concern
regarding ensuring consistency of the commitm ents between Members who would sign on to an
understanding and those who would not.  He felt that there was no need for an understanding since it
would become clear in the request-offer process which services were being asked for and committedto.  In order to ensure the coverage of all services under CPC 84, he stated that the commitments
would need to be bound under the different chapter headings of CPC 84.
116. Welcoming the initiative, the representative of Norway noted that bilateral negotiations had
demonstrated the need for a clarification of the coverage for the scheduling of commitments made in
this sector in accordance with W/120.  An understanding on the basis of a functional definition, he felt
would be a useful tool in the negotiations that  would increase transparency and legal clarity.
Norway's point of view was based on the presumpti on that an annex describing the sub-sectors would
be in accordance with CPC 84.  The text would not exclude or include any new sector.  He agreed that
it was not appropriate to negotiate an annex to the GATS with a list of services covered by CPC 84, assuch a list  would be overtaken by technology.
117. Responding to the question on the nature of a functional definition as opposed to a normal
definition, the representative of the European Communities stated that a functional definition was not
an exhaustive list of services.  It was a definition of basic functions covered as they appeared in CPC
84.  He noted that the proposal would not change the scope or the nature of the coverage of CPC 84,
but that it was important to have a clear view as to what services were covered under CPC 84 given
that more and more combinations of sub-sectors in CPC 84 were being used in the provision of these
services.  He cited the example of recent evolved services that were merely a combination of
functions already covered under CPC 84 and affirmed that it was not the EC's intention to expand orTN/S/M/4
Page 26
reduce the existing scope of CPC 84.  This would mean that there would be no lack of consistency
between Members so long as they referred to CPC 84.  Responding to the question on repair and
maintenance of office equipment and the training of staff, he recalled CPC 845 and CPC 8425
referred to specific maintenance services related to computers and computer programs, which was
separate from the more general section on maintenance services under Business Services.  Similarly,for training he recalled that CPC 8499 referred only to staff of clients on the software developed for
clients, which excluded software training courses, which would fall under education services.
118. The Chairman suggested that the Council take note of the statements made, recess and
reconvene as previously agreed on Friday 1 November 2002.
119. It was so agreed.
F. REVIEW OF PROGRESS IN NEGOTIATIONS AMONGST PARTICIPANTS
120. On 1 November 2002 the Chairman reconvened the meeting of the Special Session of the
Council for Trade in Services.  He recalled that the agenda for this meeting was contained in
WTO/AIR/1936.  He invited the Council to turn to the next item, Review of Progress in the
Negotiations Amongst Participants.
121. He recapitulated that the purpose of this item was to promote transparency in the
negotiations and allow the Special Session to fulfil its function as the body responsible for theoversight of the negotiations.  It also allowed Members to bring up any issues of concern that might
have arisen in the course of their consulta tions, and provided them with an opportunity to
communicate their impressions on how the negotiations were progressing.
122. He drew the Council's attention to a communication which had been received from Bolivia,
Barbados, Colombia, Cuba, Ecuador, Nicaragua, Peru and Trinidad and Tobago regarding the
Implementation of Paragraph 15 of the Guidelines and Procedures for the Negotiations on Trade in
Services, which was contained in document TN/S/W/7.
123. Speaking on behalf of Bolivia, Barbados, Cuba, Ecuador, Nicaragua, Peru and Trinidad and
Tobago, the representative of Colombia stated that the purpose of the proposal was to implement the
review and evaluation agreed upon in paragraph 15 of the Guidelines and Procedures for the
Negotiations on Trade in Services.  The review and evaluation in paragraph 15 of the negotiating
guidelines were an integral part of the principl e of special and differential treatment for developing
countries and least-developed countries, which should be taken into account fully in the negotiations.
As per paragraph 50 of the Doha Ministerial Declaration, and in accordance with the negotiating
guidelines adopted by the Special Session of the Council on 28 March 2001, the negotiations processshould be subject to different kinds of reviews before the conclusion of the negotiations.  The
objective of these reviews was for the Special Session to adopt the necessary decisions to ensure
effective implementation of objectives established in Articles IV and XIX:2 of the GATS in favour of
developing countries and LDCs.  She stated that, on the one hand, paragraph 14 of the negotiating
guidelines established that an evaluation would be an on-going activity of the Council and thatnegotiations would be adjusted in light of its result s.  She reiterated that this involved an on-going
activity by the Council, which referred in particular to the objectives of Article IV.  When the
evaluation provided for in Article XIX:3 of the GATS was completed, the Council would have to
decide on the degree of adjustment that was required in negotiations.  This review was essential to
developing countries, such as Thailand and South Africa, who recognised the importance of this issueas witnessed by the national reviews they had conducted.  She recalled that paragraph 15 of the
negotiating guidelines introduced clear guidelines on the type of review and evaluation that the
Council should undertake during the negotiations.  Paragraph 15 stated that to ensure the
implementation of Articles IV and XIX:2 the Council for Trade in Services, when reviewing in its
Special Session the progress of negotiations, should consider the extent to which Article IV was beingTN/S/M/4
Page 27
implemented and suggest the ways and means of promoting the goals established therein.  In
implementing Article IV the needs of small service suppliers of developing countries would be taken
into account.  The Council should also conduct, before the completion of the negotiations, an
evaluation of the results obtained in terms of the objectives of Article IV.
124. As a result and in line with this paragraph, the representative of Colombia said that the
Special Session should undertake two types of tasks.  Firstly, it should carry out a review of progress
in the negotiations in order to evaluate to what extent the objectives of Article IV had been
implemented in specific commitments.  Secondly, the body should carry out an overall evaluation of
the findings obtained with respect to the objectives contained in Article IV prior to the conclusions of
the negotiations.  Proper and effective implementation of these reviews, progress in negotiations and
evaluation of these prior to the completion of negotiations was a priority for developing countries.She felt that it was only through these tasks that developing countries could be sure that special and
differential treatment provided for in the agreement on services would be accounted for.  As a result,
the delegations presenting the proposal sought to undertake actions to implement the mandate in
paragraph 15 of the negotiating guidelines, with respect to the review in the negotiation process and
implementation of Article IV.  The delegations proposed that the Special Session establish amechanism in which was included a review of the progress in negotiations as an on-going objective
on its agenda.  These discussions should begin within one month after the circulation of initial offers.
In order to undertake a systematic review of progress in the negotiations in relation to the objectives
in Article IV, she believed that it was appropriate to have reference indicators that would include
reviews of tenders in light of the objectives contained in Article IV, a review of the flexibility thatdeveloping countries had in regard to their schedules according Article XIX, a review of the special
priority given to LDCs under Article IV:3, and the needs of small service suppliers of developing
countries as in paragraph 15 of the negotiating guidelines.  She believed it was important to establish
procedures and a review mechanism that would be based on information from benchmarks supplied
by Members.  Analytical information on the implementation of Article IV would come from theWTO, UNCTAD and others.  Each one of the discussions on this agenda item should suggest
appropriate ways and means to operationalize Article IV.  The implementation of these
recommendations should also be subject to review at subsequent meetings and would fold into the
stock-taking exercise in Cancun, in particular with reference to Article IV.  This stock-taking exercise
should take as its basis the results of discussions and suggestions in Special Sessions of the Council
and should provide any necessary political guidance to continue the process.  Finally, she suggested
that this mechanism might also contribute to an overall evaluation foreseen in paragraph 15, whichshould take place prior to the close of negotiations.
125. Speaking on behalf of the MERCOSUR delegations, namely, Argentina, Brazil, Paraguay
and Uruguay, the representative of Brazil noted that this new agenda item provided an opportunity for
Members to exchange information on the bilateral process of market access negotiations as well as on
the services negotiations as a whole.  It was good for the sake of transparency as it enabled Members
to make an assessment of the state-of-play.  MERCOSUR had been fully engaged in the services
negotiations since before their incorporation into  the single undertaking of the Doha Development
Agenda.  Evidence of this was not only seen through the negotiating proposals presented, individually
or as a group, but also through the enormous effort carried out by its governments in conjunction withthe private sector in identifying export interests, whilst bearing in mind Article IV of the GATS.  He
also noted in this regard that MERCOSUR supp orted the proposal presented by Colombia on behalf
of a number of developing country Members.  He  noted that in this process MERCOSUR attached
great importance to the deadline established in paragraph 15 of the Ministerial Declaration for the
presentation of initial requests.  Mercosur was pleased to see that this deadline had been observed by anumber of other WTO Members, thereby putting to a good start the market access track of the
services negotiations.
126. He informed the Council that over the preceding two weeks, the MERCOSUR delegations
had had fruitful bilateral contacts with their trading partners, with a view to clarifying each other'sTN/S/M/4
Page 28
interests in terms of specific commitments as well as  in terms of more systemic or cross-cutting issues
like classification and regulatory disciplines.  As for the latter, MERCOSUR did not think at the
present stage that they could be tackled in a bilateral context, but rather required multilateral treatment
under the negotiating mandate contained in Article VI:4 of the GATS for disciplines on domestic
regulation.  This mandate was further reinforced by the commitment made by Members inparagraph 7 of the services negotiating guidelines with a view to completing these negotiations before
the conclusion of the market access negotiations.
127.   MERCOSUR's assessment was that the servi ces negotiations had been progressing in a
broadly satisfactory manner.  However, Members should not lose sight of the overall picture of the
Round.  From this perspective, he noted with concern that, unlike in services, a number of other
important issues, particularly from the point of view of developing countries, had not been advancingsatisfactorily.  This was the case as regards the implementation issues under paragraph 12 of the Doha
Declaration as well as on special and differenti al treatment.  MERCOSUR hoped that the deadlines
for the resolution of those issues was also met.  He noted that of course the most important of all
topics of the Doha Development Agenda for ME RCOSUR was agriculture.  In this case, however,
what had been seen thus far was in sharp contrast to the engagement that most Members of theOrganization had shown in the liberalization of trade in services, where arguments of "win-win"
scenarios and efficient allocation of resources were often heard.  When it came to agriculture, for
some reason, all these principles of economic theory simply did not seem to apply.  It was
inconceivable that, at the present stage in the process of global trade negotiations, the most inefficient
producers of agriculture commodities found themselves in a position to have the largest shares ofexport markets.  He felt that there had been a clear lack of engagement in the agriculture area on the
part of some key Members.  The situation was in contrast to what had been seen in the services
negotiations.  He believed that it was clear to everyone that unless meaningful results were attained in
agriculture, the Doha Development Agenda would be compromised.  He recalled that as the 31 March
2003 deadline approached for the services initial offers and for the definition of modalities inagriculture, MERCOSUR expected to see some symmetry between the two areas.  This was essential
to ensure that all sectors under the single undertaking would progress harmoniously in time and in
substance.
128. Speaking on the previous two weeks of bilateral meetings, the representative of Norway
noted that the negotiations had been comprehensive, result-oriented, that there had been a large
number of bilateral meetings and that Norway had had over 30 meetings.  Many of the informalmeetings moved issues forward in a constructive manner and were designed to make progress.  He
noted that the negotiating atmosphere was constructive and that the positive experiences Members had
had with liberalization since the Uruguay Round had contributed to signals of willingness to extend
areas of liberalization.  There had been a constructive dialogue with developing country Members on
how to reach concrete results that served their inte rest, and Norway took these seriously as spelled out
in the GATS and in paragraph 15.  Norway was working on the ways and means operationalize the
mandate in the negotiations.  He stated that Norw ay would study the new proposal closely.  He noted
that some bilateral meetings had focussed on sectors and that there was interest on further
commitments in maritime, energy, telecommunications and education services.  Overall, he expressed
satisfaction with the meetings and looked forward to more consultations in December.  He hoped that,in the interim, more requests would be circulated, since it was upon this working method that concrete
results on the goals of all Members could be expected.
129. Offering preliminary comments on the proposal  introduced by Colombia, the representative
of Senegal noted that the proposal was headed in the right direction.  The GATS was a development
oriented agreement and commitments flowing from it had development fallout in particular for the
development of infrastructure, which was the basis of economic and social development.  He noted
that the structure of the Agreement, namely Articles IV and XIX, were specifically for developing
countries, while the other provisions applied to all.  In this light, he welcomed and supported theTN/S/M/4
Page 29
initiative to implement these articles, as well as the initiative suggesting work to be done on SMEs
and LDCs.
130. The representative of Cuba noted that Colombia had made a clear statement outlining clear
objectives of the proposal.  Adding to statements made on paragraph 15, she stated that it was based
on proposals from developing countries during the negotiations, because it was felt that it was
necessary to have multilateral means to ensure the increasing participation of developing countries.
She noted that this was not the first contribution on the need to increase the participation of
developing countries, for example document S/CSS/ W/131 had voiced the same concern about Article
IV and the increasing participation of developing countries.  She felt that the present proposal was an
effort to the same end and welcomed its suggesti on for an improved follow up as foreseen in the
negotiating guidelines.  She felt that it was important to highlight that the proposal was a supplementto the bilateral work of developing countries.  She noted that at times the bilateral negotiations were
not necessarily tilted to the benefit of the developing countries, and that this explained why many
developing countries were making submissions.  Echoing the statement from Brazil, she agreed that
there were areas where expected results had not been seen that were of great importance to developing
countries.  She reminded the Council of the importance for developing countries to achieve symmetrywithin the WTO, in particular to the benefit of developing countries.
131. Noting that the new proposal focused in on the work needed on this item and set the tone for
an on-going review, the representative of Malaysia expressed support in principle for the proposal.
He recalled that since the submission of initial requests and with respect to the initial offers date of
March 2003, Malaysia believed these to be indicative timelines that depended on the situation of the
negotiations.  He felt that Members unable to meet, for administrative reasons, initial requests by
March 2003 should not be pressured, since requests could be circulated at anytime.  He indicated that
Malaysia might circulate a request at a later time, although it was working as quickly as possible.  He
stated that in bilateral meetings Malaysia had reiterated, particularly to developed Members, certainoverriding principles.  In his view the GATS was development friendly with rules and obligations to
be adhered to, including those with respect to national policy objectives.  He noted that some requests
had asked for changes to some national policy objectives, to which Malaysia could not comply,
because the objectives were in place for legitimate reasons.  In this regard, he requested the
understanding of Members and recalled that the national policy objectives in question were in line
with the GATS.  He noted that domestic consultations had revealed apprehension as to how far
liberalization could move forward in the current round.  He stressed that the negotiations were
progressive in nature and that attention needed to be drawn to this fact in bilateral consultations.  He
recalled that there would be subsequent rounds of negotiations.  He further noted that the pressure
Malaysia had been put under recently had made domestic sectors apprehensive and suggested that
reduced pressure would give Malaysia more room.  He emphasised the importance of Articles IV and
XIX, particularly with reference to the use of the positive listing of sectors.  He recalled that the factthat Malaysia had not made a commitment in an area did not mean that it was against liberalization,
but that it felt some sectors were not prepared for increased liberalization.  He recalled that Malaysia's
position took into account the situation on the ground and that, although its Uruguay Round
commitments might seem modest, in fact since 1995 de facto  liberalization had occurred in many
sectors of interest to its trading partners.  In th is regard, the question of autonomous liberalization was
important, as was the question of whether autonomous liberalization could be bound.  Malaysia was
considering this but also stressed that it did not intend to roll-back because of the benefits wrought by
liberalization.
132. The representative of Malaysia stated that the comprehensive nature of some Members'
requests had put the domestic sector on the defensive and hoped that the negotiating approach could
be made more realistic.  He requested that the Members concerned prioritise the sectors in which they
had an interest, so as to facilitate Malaysia's processing of the request.  He reiterated that
comprehensive requests posed difficulties for domestic sectors.  Commenting on Brazil's statement,
he shared its concerns that the services negotiations could not stand alone, but needed to be seen in theTN/S/M/4
Page 30
context of the Doha Development Agenda and the development-friendly nature of the GATS.  He
noted that the results to date were not reassuring, particularly in areas of interest to developing
countries, such as special and differential treatment.  He noted that Malaysia had not seen movement
in agriculture and believed that there should be movement in these areas so that what was said about
development would be more concrete.  He hoped that by December, some of these concerns wouldhave been considered by trading partners.  Finally, with respect to logistics and the timing of
meetings, he felt that the October-December schedule of meetings placed strain on human and
financial resources.  He hoped that this would be taken into account in the planning of next year's
meetings so as to improve the participation of capital experts.
133. Commenting on the proposal introduced by Colombia, the representative of Thailand noted
that paragraph 15 had been overlooked and that it was a concrete and practical proposal.  Despite the
fact that it required some fine tuning, she supported its basic thrust and wished to revert to it and the
next meeting.  She felt it would be useful and be neficial to developing and least-developed countries.
Regarding the progress in the negotiations, she shared many of the points raised by Brazil that the
momentum in services was good but that it was less satisfactory in other areas, particularly in
agriculture.  She hoped that there would be more engagement on the part of key developed countriesin this area and reiterated that agriculture was a priority for Thailand.  With respect to the rules
negotiations and emergency safeguard measures, she recalled that paragraph 7 of the negotiating
guidelines stated that the negotiations were to have ended and that the deadline had been extended.
She urged Members to engage further on this issue.  With respect to multilateral and plurilateral
discussions, she noted that many issues being discussed should be done so in a multilateral fashion inthe interests of transparency.  Many informal groups had been meeting, and although she understood
the practical need to keep these groups small, sh e encouraged Members to inform the Council about
any progress.
134. The representative of Paraguay noted his full agreement with the five points outlined in
section II of the proposal presented by Colombia as well as his full endorsement of the initiative.  He
agreed with Brazil's statement and added that prior to Seattle there had been an understanding that
services and agriculture needed to proceed in parallel.  Whereas there had been progress in services,
this had not been reflected in the other sectors of the Doha Round.  He noted that services were
especially important for developed countries, as well as for developing countries, but that developing
countries identified other sectors of more importance to them.  He felt that the process was proceeding
in a somewhat backwards fashion, namely that in agriculture there was a monologue instead of adialogue, which he hoped would emerge at that 18- 19 November meeting.  He noted that agriculture
was essential to the success of Doha and hoped that a deal would be a win-win situation for all
participants.  On the topic of special and differential treatment he noted that discussions had not made
progress and that discussions on implementation remained at their starting-point.  He reiterated
Paraguay's participation in bilateral and general discussions in the hopes of seeing progress in othersectors.  He was encouraged by the progress in services but noted that the absence of progress in
agriculture and other sectors was jeopardising Doha.
135. The representative of Chile recalled that subsidies were especially relevant to the request-
offer process and that, if the goal was increased openness in services sectors, the presence of trade
distorting subsidies went against this ambition.  The proposed simplified questionnaire was a way to
promote increased transparency; bilateral consultations was a second.  Information collected could
then be given to the Special Session or in the working group on standards on a multilateral basis.  She
noted that Chile was not questioning the legitimacy of subsidies, and that few subsidies might be
found in the course of an information gathering exercise.  If this were the case, there would be noneed for new disciplines, but she stated that this conclusion could not be arrived at without
transparency.  The objective was to foster a discussion on subsidies in the working party in order to
make progress in compliance with Article XV of the GATS, and felt that the discussion in that body
could not be separated from the discussions of the Special Session.  They were separate processes but
also provided feedback to each other.  Chile stated there was a need for more information on subsidiesTN/S/M/4
Page 31
and regretted the lack of such information on subsidy programmes.  She felt that political will to
increase transparency would help move the process forward.   With respect to the proposal introduced
by Colombia, she felt that it was helpful in fulfil ling the mandate outlined in paragraph 15 of the
negotiating guidelines, and posed two questions in this regard.  Firstly, she inquired as to the
difference between the establishment of this mechanism and what the Special Session sought toachieve under the item being discussed.  Secondly, regarding the procedures outlined, she inquired
into the role of the Secretariat in  reviewing the information.  Finally, she echoed Brazil's comments on
the need for progress in agriculture.  With respect to Thailand's suggestion on progress reports from
some of the sectoral discussions, she request ed that Members respond to this suggestion.
136. The representative of Mauritius expressed support for the general thrust of the proposal put
forth by Colombia and the co-sponsors, and in particular the establishment of a mechanism to monitor
progress in the implementation of the review and evaluation as agreed in paragraph 15 of the
Guidelines and Procedures for the Negotiations on Trade in Services.  He recalled that earlier in the
week Mauritius had presented a paper on small economies as small suppliers of services.  One of the
proposals contained in the document related to the estalishment of a monitoring mechanism for the
follow-up of the operationalization of Article IV of the GATS.  This mechanism would report at threemonthly intervals to the Special Session of the Council for Trade in Services and the General Council
on the implementation of the provisions of paragraphs 3 and 15 of the negotiating guidelines for the
benefit of the small services suppliers of the small economies.  In his opinion, the proposal was not
intended to create another mechanism, but rather felt that the mechanism proposed in the Colombian
paper could accommodate the follow-up requirements in the implementation of provisions of smallservice suppliers.
137. Responding to the call for the sharing of information for the sake of transparency in the
negotiations, the representative of Hong Kong, China was pleased to report that it had conducted a
dozen bilaterals and had attended a number of discussion sessions amongst interested Members on
various sectors in the preceeding two weeks.  Hong Kong, China had generally received positive
responses towards trade liberalization in services, from both developing and developed Members.
She found the bilaterals useful not just for ne gotiations, but also for sharing information and
deepening mutual understanding.  She stated that since the purpose of the agenda item was to share
information, and to reflect on issues of interest to the Membership for collective consideration, she
sought to not just outline her impressions of the bilaterals, but also to share her views on how the
bilaterals might guide the direction of multilateral work.  Hong Kong, China was also encouraged bythe fact that quite a number of developing Members had put their requests for specific commitments
to it, or have informed Hong Kong, China that they were in the process of doing so, and that many
had brought their sectoral experts to Geneva for bilaterals.  She sensed that there was a general
willingness to engage in services negotiations to ripen the potential benefits that could be unleashed
by services liberalization.  In this regard, Hong  Kong, China thanked Colombia and other co-sponsors
for the document they submitted.  She also noted the emphasis placed on national policy objectives
mentioned by previous speakers.
138. Speaking from Hong Kong, China's own experi ence, she firmly believed that services
liberalization was a win-win situation.  Services li beralization undertaken by a Member benefitted not
only its trading partners, but also the liberalizing Member, through the development of a more vibrant
and efficient services industry and the resultan t gain to the economy as a whole, including in
particular the manufacturing sector which was among the strongest component sector for many
developing Members, and trade in goods generally.  On negotiations regarding market access and
national treatment, she noted the good progress made in clarifying the respective requests amongtrading partners, as well as the sharing of information regarding existing regimes in various services
sectors and the background and rationales of the identified restrictions.  In this regard, she was glad to
note that many of Hong Kong, China's bilateral partners had indicated that their existing regimes had
already been liberalised beyond the level of their existing commitments, and would be prepared to
consider commitments provided that there was a general willingness from trading partners to do so.TN/S/M/4
Page 32
Apart from market access and national treatment issues, she noted that Hong Kong, China had also
touched upon, in its bilaterals, issues that would have a significant impact on market access and
national treatment, such as MFN exemptions and domestic regulations.  She shared the view of the
importance of ensuring clarity and consistency in classifications, as well as wide adoption of common
classification approaches to scheduling specific commitments.  In this regard, she believed that itwould be important to discuss classification issues not only in bilateral or plurilateral forums, but also
at the multilateral level including in the Council and in the Committee on Specific Commitments
charged with the responsibility to look into classification issues.  It was clear from the bilaterals that a
common approach in classification would allow easy reference to commitments and more accurate
understanding of their real commercial meanings.  Consensus on the classification for services that
were not currently systemically classified would also provide much-needed comfort for Members to
consider commitments positively.  With respect to domestic regulation, she believed that Membersshould re-double their efforts in the work of the WPDR to develop disciplines on domestic regulation,
recognising that regulatory issues, especially licencing and qualification requirements and procedures,
were often cited in bilaterals as potential barriers to trade.
139. She believed that Members had started on a fairly good basis to take forward the services
negotiations, although there remained issues of divergence.  In this regard, she appealed to Members
to approach the issue of autonomous liberalization constructively with pragmatism and flexibility,
with a view to reaching an amicable compromise, because these were becoming more and more
relevant in bilaterals.  She also appealed to Members not to lose sight of the need to put in serious
efforts in the work of the WPGR, so as to fulfil the mandates for multilateral negotiations with respectto emergency safeguards, subsidies and government procurement.  Looking ahead, she hoped to see
more requests submitted by Members, especially from developing Members, so as to ensure a
balanced negotiation agenda, and in order not to lose the momentum that had been built up thus far.
She hoped to see the continued involvement of sectoral experts and focused discussions with regard to
individual sectors.  In this regard, she sought th e guidance of the Chair on how to best organise the
effective and efficient participation of experts, as this would be particularly important for smaller
delegations and experts who came from far away.  As a final remark, she noted some delegations'
remarks on the indicative nature of deadlines.  She sincerely hoped, however, that Members would
abide by the benchmark of 31 March 2003 to submit their initial offers, so as to provide a concrete
basis for further negotiations.
140. The representative of Honduras offered his support for the proposal introduced by
Colombia, and noted that it would be helpful in creating a multilateral mechanism to check on
compliance with Article IV and the Doha Developm ent Agenda.  It revived an issue which had been
on the backburner.  He recalled that the request-offer dates were indicative and Honduras reserved the
right to put forth requests at a later point in time during what was a dynamic process.  He noted that
the later date would allow Members to check if countries' interests had been taken into consideration,particularly those relating to Article IV and implementation.  He noted that Honduras was working to
meet the 31 March 2003 deadline.  The deadlines were not a straightjacket and further requests were
possible once general requests were in circulation.  He echoed comments that there had been little
movement in other areas of the negotiations, such as special and differential treatment and on the
vitally important topic of agriculture.  The rhythm in these areas went hand in hand with that inservices, especially with regard to market access.  With respect to services negotiations, he noted that
little had happened on the multilateral exercise of evaluation, as well as on autonomous liberalization,
emergency safeguard measures and subsidies.  These different levels of progress did not reflect the
needs of developing countries.
141. Expressing his support for the proposal from Colombia and the co-sponsors, the
representative of Venezuela felt that to not support the proposal would be to not support an initiative
that would benefit developing countries.  He noted that the proposal stressed special and differentialtreatment and, as mandated by paragraph 50 of the Doha Declaration, supported initiatives which
strengthened paragraph 15.  He indicated that he might revert to the document's initiative toTN/S/M/4
Page 33
strengthen Article IV.  He echoed Thailand's and Honduras's statements that the request-offer dates
were indicative and that Members should not be pressured in this regard.  He informed the Council
that Venezuela hoped to circulate its requests by December.  He noted that in July there had been a
seminar in Caracas in services negotiations around which the government attempted to create inter-
institutional synergy together with the private sector.  He noted that in the preceding week a servicesdelegation had been present in bilaterals and he hoped that a full delegation would come in December
to participate in negotiations.
142. The Chairman noted that his understanding was that the request-offer dates were for initial
requests and offers.  He also indicated that he intended under other business to raise the question of
the presence of sectoral experts in organising the Special Session's work.
143. The representative of Chinese Taipei noted that it had held 18 bilateral meetings that were
fruitful, result-oriented, and had allowed for the clarification of most unclear points.  He stated that
Chinese Taipei requests were aimed at developing a genuine commercial interest and had taken into
account the Development Agenda.  He hoped that the negotiations would further mutual relations in
the development of trade.  He noted that Chinese Taipei identified the Development Agenda in a 10-
15 year timeframe.  He echoed the statement by Malaysia that comprehensive requests posed
difficulties and highlighted the priority areas for Chinese Taipei, including maritime, computer and
related services, distribution, energy, audiovisual and telecommunications services.  He also touched
upon Thailand's comments that there were many informal groups, and although lacking a point of
comparison in the Uruguay Round, he thought that it would be helpful if these groups could give theSpecial Session an idea as to what their agenda and intentions were.  With respect to the deadlines, he
noted that Chinese Taipei attached importance to the deadline because they helped maintain
momentum, but also stated that they were not a straightjacket.  He urged Members to communicate in
writing any clarifications they required of Chinese Taipei requests.
144. Commenting on the newly submitted proposal, the representative of the United States noted
that it raised issues that could be of relevance to the Special Session, that could be of relevance to
individual Members, or that were outside of both, and indicated he would revert to it.  Expanding on
the United States' experience in the negotiations, he stated that United States' sectoral experts had
been present and that he was encouraged to see that there were capital and sector-based experts from
other Members, particularly from developing country Members, who were present.  He requested that
Members indicate well in advance of meetings the presence of such experts.  The United States foundthat the bilaterals had been a good forum to exchan ge views, request clarifications, provide initial
reactions and discuss cross-cutting issues, such as those referred to by Brazil.  The United States
placed emphasis of Article XIX, which stated that  each Member should seek to provide effective
market access, and believed that this included at times commitments beyond market access and
national treatment.  It appeared to him that this was a view shared by others.  He noted the increasednumber of requests being received, particularly from developing countries.  In response to Malaysia's
statement, he noted that it was not normal WTO- GATS procedure to reverse requests.  Finally, he
noted that the United States was and would remain fully engaged in all areas of the Doha Agenda,
including agriculture.
145. The representative of Indonesia noted his full agreement with the five points outlined in
section II of the submitted proposal and looked forward to further discussion on it at the next meeting.
With regard to the progress of negotiations, he informed Members that Indonesia had not sent
requests and that it had outstanding items of concern.  He echoed Malaysia's and Thailand's
statements regarding emergency safeguard measures and credit for autonomous liberalization andstated that these were important to Indonesia's future negotiations.  He requested that Members reach
an agreement on these items before the end of negotiations.
146. Speaking on the proposal introduced by Colombia, the representative of Peru stated that it
laid the basis for the effective implementation of paragraph 15 and did not seek to reopen theTN/S/M/4
Page 34
negotiations on the existing guidelines.  Responding to the question from Chile on the analysis of
offers by the WTO and other agencies, he noted preliminarily that information would be compiled at
the request of Members and would be factual.  Th e Secretariat would not be requested to evaluate
offers, since this was the work of Members.  He was not asking the Secretariat to compile qualitative
information.  With regard to the analysis of offers, the purpose was to meet the objectives of ArticleIV, which was one among others.  He noted that Peru remained open to other suggestions from
Members on how to meet the objectives laid down.  He echoed Brazil's statement regarding the lack
of substantive progress in agriculture and noted that this was important for Peru, which was a net
importer of foodstuffs and which suffered from the subsides that affected producers who could not
compete in the face of such subsidies.  Regarding deadlines, he recalled the one for the modalities for
agriculture as well as the one for the circulation of initial offers and noted that Members must take
seriously the decisions taken at Doha.  However, he recalled that there must be flexibility forMembers with less technical capacity who had problems meeting the deadlines.  Peru had not yet
circulated its requests but hoped to do so before the end of the month.  He expressed concern over the
lack of progress in the WPGR, especially on emergency safeguard measures, as well as on
autonomous liberalization.  He supported Chile's comments regarding transparency in services
subsidies.  Noting that some Members dedicated a significant portion of their requests to domesticregulation he stated that he was wary of the possible in-depth analysis of domestic regulation in
bilateral negotiations.  The information provided was constructive but best handled in a multilateral
forum.
147. The representative of India welcomed the new proposal as an effective move forward with
respect to the implementation of Article IV, expressed support for its thrust, and looked forward to
substantive negotiations on the matter.  Regarding the indicative request-offer benchmarks, he echoed
Malaysia's comment, and noted that Members should try to adhere to these dates but that not all
developing country Members could meet them due to capacity constraints.  Finally he agreed with
Brazil's statement on the need for balanced progress under Doha.
148. The representative of the European Comm unities reiterated the Communities' commitment
to all areas outlined in the Doha Development Agenda.  Regarding services, he noted that the EC had
held a number of bilaterals that had proved fruitful, allowed for the clarification of mutual requests,
helped to understand Members' positions on horizontal and cross-cutting issues, and had also seen
some substantive discussion on some sectors.  He strongly welcomed the presence of sectoral
capital-based experts, especially those from developing countries, and proposed that those sectors notcovered in an in-depth manner in October be the focus in December.  He requested that Members
notify the presence of experts in advance.  He agreed that there was a need to move ahead on the
issues of autonomous liberalization and LDCs' modalities and conclude negotiations on them as soon
as possible.  He sought to revert to the new proposal submitted at the next meeting.
149. The representative of Pakistan remarked that the comments by Brazil recalled the broader
perspective of the negotiations.  With respect to the pace of the negotiations, he agreed that the
quantity of requests and offers was important, but that this was not the only relevant issue in
negotiations, and pointed to other objectives contained in Marrakesh and the preamble of the GATS.
He stressed that the political facet of the work before the Special Session needed to be borne in mind.He recalled that a number of Members had reminded the Council about the importance of other
developmental related parts of the Doha Agenda, for instance agriculture, special and differential
treatment and implementation issues.  Commenting on the joint proposal introduced by Colombia, he
stated that its contents reminded him of a submission presented in December 2001 and contained in
document S/CSS/W/131 (co-sponsored by Cuba, Pakistan, Senegal, Sri Lanka, Tanzania, Uganda,Zambia and Zimbabwe) which also spoke about increasing developing countries' participation in trade
in services and about ways and means of effectively implementing Article IV.  The earlier
submission, he stated, reflected on the philosophy behind the provisions of Article IV; and made
practical recommendations to the Council for Trade in Services in terms of action prior to market
access negotiations, during market access negotiations and for a monitoring mechanism.  He recalledTN/S/M/4
Page 35
the strong correlation between the S/TN/W/7 and S/CSS/W/131 because the contents and rationale of
Article IV had not changed, and noted that the difference was that market access negotiations had
started.  He applauded the fact that a review had been undertaken and noted that it was premature to
expect results from the initial meetings.  He noted that the submission put forth a mechanism for
offers and expressed support for it.
150. Speaking to the question of what might be expected from the review, he stated that some
information had been gathered from the assessment of trade in services, at present a review
mechanism had been proposed, and in the future there would be an evaluation.  He felt that, although
these were parallel concepts, they were also mutually exclusive and that it was important to maintain
conceptual clarity about what each exercise would attempt to achieve.  Responding to Malaysia's
statement, he shared the view that the request-offer dates were indicative and flexible, and he agreedwith the good case put forth for respecting national policy objectives, especially through progressive
liberalization and increasing participation.  He recalled that Marrakesh described the GATS as
seeking to increase standard of living, full employment, and growth in income.  Paragraph 2 called for
the need of positive efforts designed to ensure that developing countries and least-developed countries
secure a share in international trade commensurate with the needs of their economic development.  Heexplained that he was reiterating known provisions  to recall that at issue was not the number of
requests or offers, but rather larger political objectives that Members should bear in mind.  Pakistan's
view of the negotiations was that Article IV was not solely about market access, but included other
issues and objectives as outlined in Marrakesh.  The negotiations needed to fulfil these larger
objectives of the multilateral trading system and he believed that GATS provided a vehicle forensuring socio-economic development in developing and least-developed countries.  Regarding the
establishment of a mechanism, he expressed support for the new proposal and noted the need to seek
political guidance from ministers at the Fifth Ministerial in order to ensure that the direction of the
negotiations was not overtaken by only market access concerns but included consideration of other
provisions.  He recalled that there needed to be effective implementation of these provisions.
151. The representative of China noted that the review and evaluation of paragraph 15, was an
integral part of the review, and in that light offered support to the proposal introduced by Colombia on
behalf of the co-sponsors.  She also echoed Brazil's comments that there had been a lack of
substantive progress in other areas of the Doha Development Agenda, which were of great interest to
China.
152. Reporting on his country's experience with the negotiations, the representative of
Switzerland informed the Council that Switzerland had made requests to 60 Members and had had
bilateral meetings with 20 Members in each July and October.  The results had varied, but overall heconfirmed that the meetings had been open, fruitful and result-oriented, and he was satisfied with the
process.  He particularly appreciated the fact that delegations were well prepared, had studiedcarefully the Swiss requests, and were well represented.  Turning to the new proposal submitted under
this item, he concurred that Article IV was important, but that how to deal with it remained an open
question.  He noted that Switzerland had made an effort to implement and abide by its provisions, and
believed that implementation could be done directly.  This was reflected in the Swiss approach with
developing countries in the bilaterals, in which Switzerland had explained its implementation ofArticle IV.  This explanation was met at time with scepticism, but he encouraged further discussion
on this topic.  He stated that the proposal raised the question of methodology regarding the
implementation of a paragraph of the guidelines.  He felt it was important not to reintroduce at the
stage of implementation elements which had been rejected during the original negotiations.  He drew
a parallel with the implementation of national laws, where the implementation procedures did notinclude what had not been included in the law itself.  He felt it was important not to overburden the
Council with systematic reviews.  The current revi ew of the implementation of Article IV, he thought,
could be done at any time, was being done at the meeting, and could be done in bilaterals.  In this
regard, he said there were areas that could be explored, but noted that no Member had stated that it
had difficulties with the way in which Switzerland was implementing the article.  Finding part II ofTN/S/M/4
Page 36
the proposal disturbing, he noted that there was agreement in the guidelines to review the
implementation of Article IV.  The five points in part II of the proposal spoke to this, but it sought to
establish a review of the implementation of the review.  He reiterated that it would be better to stop at
this point and to not overburden the Council.  He recalled that Article IV was important and that
Switzerland would abide by it, but what was at issue was how and under what conditions it wasimplemented.  Regarding indicating which sectors should be treated with priority, he noted that
Switzerland was open to discussing priorities.  With respect to the deadlines in the request-offer
process, he noted that a deadline was a deadline and that the services chapter of the Doha Declaration
did not state that they were indicative.  Switzerland could demonstrate flexibility in terms of Members
facing some difficulty, but this did not mean that Switzerland recognised that the deadline was no
longer a deadline.  Finally, he stated that Switzerland was committed to the whole of the Doha
Agenda.
153. The representative of Canada stated that his delegation was pleased with the progress being
made in the services negotiations, and noted that Canada had held a broad range of useful meetings
with developed and developing countries.  He indicated that Canada would study the proposal tabled
by the group of eight Members, and revert to it in December.  Finally, he requested some clarification
with respect to the scheduling workshop and the timing of the December meetings.
154. The representative of Japan informed the Council that his delegation had had 25 plenary
bilateral meetings and numerous sector specific bilateral and plurilateral meetings.  He noted that they
had occurred in a constructive atmosphere and had helped clarify many points.  He noted that hisdelegation had often been out-numbered by capital-based experts, and expressed his satisfaction in
this regard.  He stated that Japan would be seeking to hold bilateral consultations with those Members
with whom it had not yet been able to meet.  He requested the Secretariat's assistance in acting as an
information point regarding the presence of capital-based experts.  He reiterated that Japan was
committed to all the areas contained in the Doha Declaration.
155. The representative of Kenya stated that he attached importance to the newly submitted
proposal as it sought to ensure that the services negotiations took into account the negotiating
guidelines and that he supported the general thrust of  the proposal.  It highlighted that the review and
the evaluation, as outlined in paragraph 15 of the negotiating guidelines, constituted an integral part of
special and differential treatment for developing countries.  He recalled paragraph 14 of the
guidelines, and especially the need to adjust the negotiations in light of the assessment, from whichhad emerged important observations.  The question of how to ensure that these observations remained
relevant to the process was addressed in the five points laid out in part II of the proposal, for which he
expressed support.  He sought to revert to this item with more substantive comments in the future.
With respect to the issue of deadlines, he noted that these were indicative and should remain so.  With
respect to the links between the progress in the negotiations in services and in other areas, he agreedthat the momentum in services depended on progress in other areas.  Finally, he agreed with the
statement made by Brazil.
156. The representative of Mexico noted the usefulness of the proposal introduced by Colombia,
shared its spirit, and looked forward to continued discussion along the lines it laid out.  Reporting on
the progress of negotiations, he noted the need to ensure a balance within the services negotiations
that took into account the needs of developing country Members.  He also concurred with others that
development was a critical cross-cutting aspect and it was important to strike a balance between what
was proposed for services and elsewhere.
157. The representative of Uruguay, taking note of the statement made by Switzerland, recalled
that deadlines outside of services needed to also be respected.  With respect to the level of
engagement in other areas, he noted that the options were to make progress, maintain the status quo,
or to step back from the achievements of the Uruguay Round.  Uruguay considered that engagement
in other areas to move forward would facilitate negotiations in services.  He recalled the secondTN/S/M/4
Page 37
sentence of paragraph 136 of the report of the last  meeting, contained in TN/S/M/3, in which Uruguay
had expressed its support to maintain this item on the agenda.  He said that he had suggested that this
agenda item be called "review of progress in negotiations" and that it was best not to refer to
"participants" because the negotiations were open to Members and acceding Members.  He requested
that the report for the present meeting note that he reiterated his suggestion.  He requested that aperiod be inserted after the word "negotiations" and th at the reference to "participants" be eliminated,
if Members so agreed.  He felt that the notation of "participants" would convey that only some could
participate and failed to recall that the negotiations were open to Members and acceding Members.
He proposed this suggestion in so far as it could be met.
158. The Chairman noted that this suggestion would be considered.
159. The representative of the Republic of Korea  indicated that he would review and revert to the
submission presented.  With respect to the bilateral consultations, he noted that Korea had held about
20 meetings and that the exchange of questions prior to the meeting had helped focus discussion and
facilitate the understanding of requests.  Korea hoped it could hold bilaterals along these lines in the
next cluster.  He echoed the United States' and EC's request that Members inform the Secretariat inadvance of the planned participation of sectoral experts.  Regarding the submission of requests, he
encouraged those who had not yet done so to submit their requests as soon as possible, and noted that
the deadlines were important for moving forward and keeping momentum in the request-offer
process.  He also hoped that there would be early completion of the modalities for the treatment of
autonomous liberalization and noted that in requests submitted to Korea and in bilaterals, Korea hadbeen asked to bind areas in which it had liberalised autonomously, with no suggestions for obtaining
credit.  He felt that clear guidance might be needed in terms of the Council's discussions on
autonomous liberalization measures.
160. Speaking on the new proposal, the representative of Bolivia noted that it would help in the
exchange of ideas and in implementing mandates adopted by all and included in WTO documents.
The increasing participation of developing countries she felt referred to negotiations that should
proceed on the basis of progressive liberalization through specific commitments.  Turning to the need
to implement Article IV, she stated that in order to achieve results and ensure implementation, the
Council needed to evaluate the process of negotiations.  She solicited comments from Members on the
new proposal.  She expressed support for the comments made by Brazil regarding the need to achieve
an overall balance in the negotiations, the fact th at services did not exist in isolation, and the
importance of agriculture.
161. Reporting on the positive progress in the negotiations, the representative of Australia noted
that his delegation had held bilateral consultations with developed and developing countries and that
much work remained.  He said that in some sectors discussions had moved beyond the preliminaryexchange of views and into substantive negotiatio ns.  He underlined the need for the work in the
subsidiary bodies to move forward because the requests process created a more concrete context in
which to consider the issues on the table.  He noted that the subsidiary bodies and the Council would
have an important role in tackling technical definitional and scheduling issues, as well as more far-
reaching domestic regulation disciplines.  He noted that with the arrival of the offers stage, work onemergency safeguard measures would be more urgent.
162. The representative of Nigeria expressed support for the general thrust of new proposal,
particularly the need for an evaluation by the Council to ensure that Article IV and XIX:2 were
implemented as outlined in paragraph 15 of the negotiating guidelines.  Regarding deadlines Nigeriahoped that it could send its requests soon.  He expressed support for the statements on this matter
made by Brazil and Malaysia.
163. The representative of Ecuador expressed gratitude for the support voiced in favour of the
proposal it co-sponsored and would seek to respond to the comments made.  Regarding the progressTN/S/M/4
Page 38
in the negotiations, she noted that in the bilaterals some requests had been made which dealt with
issues currently under examination by the working parties and went well beyond the areas under
consideration.  She said that the results in services was linked to progress in other areas.
164. The representative of Thailand disagreed with the comments made by Switzerland regarding
its view that these deadlines were specific.  She reiterated that Thailand considered them as indicative,
and recalled that capacity differed between Members and that this must be taken into the account of
the request-offer process.  Regarding Switzerla nd's comment on the absence of specific problems
identified by developing countries on the implementation of Article IV, she stated that one of the
goals of the current round was to elaborate on Article IV and that the proposal was a concrete step in
this direction.  She encouraged Members to consider proposals in a constructive light and work
positively on the issue.  With respect to earlier comments on the inclusion of previously deleted textsin new texts, she inquired as to where the Member had seen this in the new proposal.  She felt that the
fact that text had been previously deleted did not mean that the text was not good, but that it might
have been dropped in the interests of achieving a co mpromise in the negotiating context at that time.
This did not preclude Members from reintroducing language given the present context.  She
encouraged Members to look at the proposal in a positive manner and for developed country Membersto make suggestions.
165. The representative of Pakistan echoed the disappointment felt by others in regards to the
comments made by Switzerland on deadlines.  He felt that in order to keep a constructive and positive
atmosphere in the Council for Trade in Services, it would be very prudent for Members not to bringup such contentious issues.  He noted that all remembered the context in which paragraph 15 had been
negotiated, and he requested that Switzerland not push too hard on this issue.  He reiterated that the
deadlines were indicative and that harmony on this issue could have consequences on other deadlines
in other areas.
166. The representative of Colombia thanked Members for their positive comments on the
proposal it had co-sponsored.  She felt that the exch ange had helped make known the special interests
of developing countries with respect to the implem entation of Article IV.  She hoped future comments
and proposals could be done in this same positive spirit.  She recalled that the intention was to put the
item on the table and to create ground for discussing the implementation of Articles IV and XIX:2.
167. Speaking on the topic of transparency, the representative of Peru was aware that meetings
other than bilaterals had been held on specific issues and requested that Members keep the Council
apprised of such meetings.  He noted that if a Member had not been invited, then it did not need to
attend, but it was important for it to know that the meeting had occurred.  He stated that he had
consulted Switzerland bilaterally regarding the issu e of the reintroduction of matters left aside from
the negotiations on the guidelines and noted that the proposal did not touch upon this.  Peru remainedopen to the possibility of improving the proposal .  Regarding concerns that a mechanism would
overburden the Council, he said that the proposed mechanism would neither be complicated nor
require a special session, and had been suggested early in the process to permit discussion.  Regarding
the benchmarks to permit practical evaluation of offers, he noted that the indicators needed not be
numerous or complex, but were necessary to ensure that the process would be carried out.
168. Summarizing the discussion under this item, the Chairman noted the large number of
interventions had made for a substantive and useful discussion.  Members expressed gratitude for a
communication submitted by Bolivia, Colombia, Cuba, Ecuador, Nicaragua, Peru and Trinidad and
Tobago, contained in document TN/S/W/7 regarding the Implementation of Paragraph 15 of theGuidelines and Procedures for the Negotiations on Trade in Services (S/L/93).  Some support was
shown for this proposal, some questions raised and some Members stated they required more time to
study the document and would revert to it at the next meeting.  Members had also highlighted the
importance of concluding work undertaken in other services bodies, for instance on domestic
regulation, emergency safeguard measures and subsidies, which were at the forefront of delegations'TN/S/M/4
Page 39
minds as having an important bearing on the progress in the negotiations proper.  There had been a
great deal of bilateral contacts and a large number of meetings held, some of which had proven
particularly fruitful due to the large number of capital-based delegates in attendance and particularly
from developing countries.  This was a reflection of a healthy level of engagement and Members
expressed that the progress of negotiations and the bilaterals had been conducted in a satisfactorymanner and in a constructive atmosphere, which was a good sign for the future.  Members
underscored that these negotiations were linked to progress in other areas of the Doha Development
Agenda, and there were some expressions of dissatisfaction and concern over the lack of progress,
which could have an impact on the progress of negotiations on services.  All Members expressed
commitment and engagement to progress in all areas of the negotiations.  Some difficulties were
highlighted, especially by developing country Members, regarding the comprehensive nature of
requests and the lack of time and capacity to fully analyse them and requested that Members indicatewhich sectors they should treat with priority.  Concerning deadlines, it could be said that Members
recognized that these are not a straightjacket, but that they must be kept in mind in order to keep
negotiations moving forward.  The Chairman suggested that the Council take note of the statements
made and revert to this item at its next meeting.
169. It was so decided.
G. OUTLINE OF THE CHAIRMAN’S REPORT TO THE TRADE NEGOTIATIONS
COMMITTEE
170. Before outlining his report, the Chair info rmed the Council that the Trade Negotiations
Committee had circulated a memo suggesting that the reports it received from the negotiating bodies
be structured according to a standardized format.  For this reason, he suggested that his report to the
TNC be divided under three sub-headings:  Status of Work, Outstanding Issues and Future Work.
Based on the discussions held over two days, he would report to the Trade Negotiations Committeethat the Council met in formal session on 28 October and 1 November 2002.
171. Under the sub-heading "Status of Work" he stated  that he would report that, with respect to
the Assessment for Trade in Services, the Council had substantive discussions based on a presentation
of the results of trade liberalization in the telecommunications sector in Southern Africa.  This
presentation raised numerous questions on regulation and managed liberalization.  Members also
provided more in-depth comments on a communication from Thailand presented in July.  Finally,Members showed a renewed interest in re-examining previously submitted Assessment
communications.  With respect to the treatment of autonomous liberalization, he would report that the
Council had held an informal meeting on this issue on 16 October.  Of the four issues being
considered by the Council under this item, without prejudice to other issues that had been raised,
progress had been made with respect to the possibility of obtaining credit through concession on tradein goods and the relationship between autonomous liberalisation and bindings.  Less progress,
however, had been made on the two other issues, name ly, the scope of the modalities particularly with
reference to developing countries, and the situation of recently acceded Members.  On the modalities
for the special treatment for least-developed countr ies, the report would say that this process was
moving forward at a promising pace.  Members appeared committed to achieving agreement prior toend March 2003.  Under the item of negotiating proposals, he would report that substantive
discussions had been held on the basis of three Member communications on small and medium-sized
enterprises, computer and related services, and small economies as small suppliers of services.  These
proposals were focussed on specific facets of the negotiations and were perhaps a reflection of the fact
that negotiations were shifting into higher gear as the request process moves forward.  Finally, hewould draw the Committee's attention to the Secretariat note, prepared at the request of Members,
compiling existing offers in Maritime Transport Services.  Finally, he stated that under the item of the
"Review of Progress in Negotiations Amongst Participants" he would report the summary he had
made at the end of the consideration of that item.TN/S/M/4
Page 40
172. Under the second sub-heading "Outstanding Issues" the Chair would report that, in the case
of the treatment of autonomous liberalisation, agreem ent remained to be reached regarding the scope
of the modalities, particularly with reference to developing countries, and the situation of recently
acceded Members.  Flexibility and political compromise would be required by Members in order to
reach consensus.  The Council was aware of the im portance of this issue and he hoped that enough
progress would have been made by its December meeting to consider draft modalities for adoption.
On the topic of the modalities for the special treatment for LDCs, the report would state that the Chair
was optimistic that movement forward would accelerate once draft modalities currently in preparation
had been tabled by a group of least-developed countries.
173. Under the sub-heading "Future Work"  the Chai r suggested that he would report that the
next cluster of meetings in December would be held over a two-week period and would be organizedin order to maximize the opportunities for bilateral consultations with capital-based experts.  He noted
that he might include comments on this item that were to arise under "other business"  He would
recall that he would seek consultations with delegations and would welcome their initiatives in order
to find further common ground with respect to the modalities for the treatment of autonomous
liberalization.  Finally, he stated that he would inform the TNC of the intention to convene aninformal meeting on the modalities for the spec ial treatment for LDCs prior to the Council's
December meeting.
174. The Council took note.
H. OTHER BUSINESS
175. As he had foreshadowed earlier in the week, under this agenda item the Chair sought to
inform the Council about two letters he have receive d, as well as about the list of contact points in
Geneva missions and the presence of capital-based sectoral experts in Geneva to facilitate theorganization of bilaterals.
176. The Chair noted that on 21 October, he had received a letter from Ambassador Smith,
Chairman of the Special Session of the Committee on Trade and Development.  The letter stated that,
during its meeting held on 28 January – 1 February 2002, the TNC had agreed that "the review of all
special and differential treatment provisions with a view to strengthening them and making them more
precise, effective and operational provided for in paragraph 44 of the Ministerial Declaration shall becarried out by the Committee on Trade and Development in Special Sessions."  Pursuant to that
mandate, the Chair of the Special Session of the CTD was requesting information on any discussions
or other developments relating to special and differential treatment that had taken place in the Special
Session of the Council for Trade in Services.  He noted that the information was to be conveyed to the
Special Session of the CTD by 30 November 2002.
177. The Chair further noted that on 22 October he had received a letter from Ambassador
Jóhannesson, Chair of the Working Group on Trade and Transfer of Technology, with the request to
inform him of any discussions, submissions and/ or other developments relating to trade and
technology transfer that had taken place in the Spec ial Session of the Council for Trade in Services.
The letter stated that the working group had decided at its last meeting to request this information
from other WTO bodies, with the request to provide such information by 20 November 2002.  The
Chair stated his intention to write factual letters to the Chairs of both bodies, informing them about
any relevant information that might have arisen in the Council.  The Chair stated that this would be
without prejudice to the position of any Member on these issues.
178. The Council so took note.
179. The Chair recalled that at the Council's July meeting a request had been made that Members
communicate to the Secretariat the names and coordinates of contact points in their Geneva missionsTN/S/M/4
Page 41
in order to facilitate the organisation of bilateral meetings.  As the Director had mentioned on
Monday, 84 Members had provided contact information and this list had been made available
informally a few weeks earlier electronically and in hard copy.  He encouraged delegations wishing to
add their name to this list, to forward the contact information to the Secretariat, who, could circulate a
revised list if necessary.
180. The representative of UNCTAD informed the Council that it was organizing, according to
the mandate received from the Trade Commission, an ex pert meeting, entitled "Audiovisual services:
Increasing participation of developing countries".  The meeting was to be held from 13 to
15 November in the Palais des Nations.  A number of representatives from the field of culture and the
audiovisual industry were expected to attend the meeting.  She felt that this would provide an
excellent opportunity for Geneva-based trade negotiat ors to discuss in an informal setting all possible
issues of interest.  She wished to use the opportunity to extend an invitation to contribute to the debate
at the meeting.  She noted that the main objectives of the expert meeting were, firstly, to identify what
were the development and trade policy options for developing countries in promoting their
audiovisual sector, and secondly, to identify the possible ways for addressing their concerns in the
context of the commitment by WTO Members towards progressive trade liberalization in all servicessectors while ensuring the preservation of cultural diversity.  Additional information and
documentation was available from the UNCTAD web-site (www.unctad.org) under the section
"meetings".  She noted that in this context and w ith the aim of promoting high-level policy debate on
issues of relevance to the debate on audiovisual services, UNCTAD was organising a high-level panel
on the eve of the expert meeting in room XXVI of the Palais des Nations.  The panel was to featureprominent policy makers in the area of trade and culture, influential actors from the private sector and
culture, both from developed and developing countries.  The panel was organised jointly with
UNESCO.
181. Turning to the organisation of future work, the Chair recalled a suggestion made at the July
meeting that Members communicate to the Secretariat the presence of capital-based sectoral experts
during future services clusters.  The idea was that the Secretariat could play a "clearing-house"
function that would allow Members to know well in advance that sectoral experts would be present in
Geneva and available for bilateral consultations.  He regretted that little such information had been
received – only four delegations had made indications to the Secretariat.  He noted the potential value
of such information and the need for delegations to know well in advance which sectoral experts
would be present.  He noted that the discussion on the review of progress in the negotiations haddemonstrated the concern that Members had on this issue.  He invited the Secretariat to respond to
requests made earlier regarding this matter and on the organisation of future meetings.
182. With respect to the issues of the organisation of the next cluster of meetings, a representative
of the Secretariat stated that, in light of the workshop on the drafting of initial offers organized back-
to-back with the December cluster, he was sugges ting to organise meetings in such a way as to
maximise the utility of bilaterals given the presence of these officials in Geneva in the first week of
the meetings.  Moreover, he noted that the overall picture of WTO meetings made the organisation of
the second week difficult, because of meetings of the TNC and the General Council.  Given these two
facts, he suggested that the subsidiary bodies and the regular session of the Council for Trade inServices meet in the first week of meetings, and that these meetings be limited to morning sessions so
as to set aside the afternoons for bilateral consul tations with the experts, who had attended the
workshop and were still present in Geneva.  The Special Session would then be held on the second
week (the week of the 9
th of December), but would not be based on the "book ends" approach used for
the present meeting, and would last only one day, given the tight schedule of meetings in the WTOoverall.  He underlined that this arrangement would be made for the December cluster only.  He noted
that the great difficulty in booking rooms meant that he was not in a position to confirm whether the
Special Session would occur on the 9
th, 10th, or 11th of December, but said that he would try to
eliminate clashes with other meetings.  He stated  that if this was agreeable to the Council the
workshop would proceed as planned, the meetings of the subsidiary bodies and the regular session ofTN/S/M/4
Page 42
the Council would meet on the mornings only of the first week, and the Special Session of the Council
would meet for one day at the beginning of the second week.  The exact date was to be confirmed by
fax.
183. Turning to the issue of organising the participat ion of capital based experts in bilaterals, the
representative of the Secretariat noted that an indicative list of sectors had been drawn up by the
Secretariat based on interest as expressed through the number of negotiating proposals submitted.  He
suggested, given the fact that the "clearing-house" approach had not worked, that Members could try
this approach again, or that the list of sectors could be divided into two or three groups and faxed
along with the schedule of December meetings for the organisation of bilaterals.  He underlined that
these would be only be suggested sectors, and he sought to hear Members' ideas on these two items.
184. The Chair stated that regarding dates, the C ouncil for Trade in Services was being crowded
out by meetings of the General Council and the TNC, making the organisation of meetings difficult.
185. The representative of Mexico requested that the Secretariat read out the list of sectors to
which it had referred.
186. The representative of the Secretariat stated that the list was comprised of 12 sectors and
mode 4 issues in the following order, based on the number of proposals submitted on each:   tourism
services, communications services, distribution services, business services, transport services,
financial services, computer services, construction services, movement of natural persons, energyservices, environmental services, education services and recreational services.
187. The representative of Malaysia stated he was not clear as to whether the Secretariat
suggestion was for bilaterals to take place in the first week only or also in the second week of
meetings.
188. The representative of the Secretariat noted that the intention was to maximize the benefit of
the presence of capital-based experts already in Geneva for the scheduling workshop by organising
bilaterals in the first week.  This being said, if experts wished to stay on into the second week for
meetings, this was up to Members.  The suggestion was made with a view to providing a space in time
for meetings sooner so as to benefit from their presence.
189. The representative of Malaysia stated that his delegation had assumed that the bilaterals
would be held on the week of the 9 December and that this would be more comfortable since
Ramadan ended on 6 December.  He stated that, under the scenario suggested by the Secretariat,
Malaysian officials could be present around 7-8 December, and noted that he would reflect on the
matter.
190. The representative of Japan suggested that it would be useful if, in drawing up the list, the
Secretariat could indicate which sectors could be treated in the first half and the second half of the
week so as to avoid having experts stay the entire week.  For example, the list could suggest
Education services from Monday to Wednesday, and Financial services from Wednesday to Friday,and coinciding with the CTFS.
191. The representative of Canada said that the Secretariat suggestion seemed useful given the
organisation of the workshop.
192. The representative of Colombia endorsed the suggestion because capital-based experts
would already be in Geneva.  She explicitly requested, for budgetary reasons and the inability to keep
experts in Geneva for two weeks, that the meetings be concentrated in the first week.
193. The representative of New Zealand recorded her support for the Secretariat suggestion.TN/S/M/4
Page 43
194. The representative of the European Communities noted that his delegation remained open to
both suggestions regarding the presence of capital-based experts, either the Secretariat list approach or
the clearing-house approach.  He underlined that the list approach would be indicative and that
Members would be able to pursue sectors not indica ted on the list of suggested sectors, for example,
the EC sought to take up environmental services in December.
195. The representative of Uruguay recognised the difficulty faced in organising meetings and
indicated that he gave flexibility to the Chair in this regard.  He suggested, however, that overlap of
meetings be avoided and noted, in particular, the meeting on 3 December on investments, and the
General Council meeting on 11 December.
196. The representative of Malaysia requested that an attempt be made to keep the December
meetings short because of human resources constraints.  He suggested that, since the workshop was
being held on 27-29 November 2002, bilaterals could also be organised in that window.
197. The Chair noted that use of Members' time during the workshop was up to Members.
198. The representative of Thailand expressed concern over the length of the meeting and did not
want to see the bilaterals sessions extended.  She suggested that the bilaterals and the Special Session
occur in the first week of December, and that th e reports from the Chairs of the subsidiary bodies
might be pushed back, or that the subsidiary bodies could re-organise their meetings so as to splitthem between December and next year.
199. The Chair noted that no uniform view had taken form in the Council because of the various
concerns at play, such as not to overburden delegations; to reduce costs for delegations; to ensure that
the meetings occurred; to take into account the workshop, the meetings of the TNC and the GeneralCouncil, and the availability of rooms; and, to consider religious feasts.  He noted that no definitive
answer could be given, and he proposed that he take note of all the issues at play, consider the other
meetings, give time to refine thoughts on the matter, have consultations if fundamental problems
arose, and come back to Members.  He stated that he understood the presence of capital-based experts
to be a priority, and that in principle, there was no objection to rescheduling subsidiary body
meetings.
200. The Council so took note.
201. The representative of the Secretariat noted that one further possibility would be to
reschedule the subsidiary body meetings in such a way as to hold only two of them in December 2002
and the other two in March, which might free up enoug h time to hold the Special Session in the first
week.  He sought suggestions from Members.
202. The representative of the European Communitie s suggested that if it were possible, some
subsidiary body meetings could occur in the same week as the workshop.
203. The Chair acknowledged that this was a preferred option, but was not possible due to the
unavailability of rooms.  He further noted that he would keep a reasonable degree of flexibility and
consider the other meetings.  He invited the Council to take note of the statements made and to
adjourn the meeting.
204. It was so decided.
__________