WORLD TRADE
ORGANIZATIONS/C/14
9 October 2001
(01-4902)
REPORT (2001) OF THE COUNCIL FOR TRADE IN SERVICES
TO THE GENERAL COUNCIL
1. Since its last report to the General Council, dated 23 November 2000, the Council for Trade
in Services has held four formal meetings.  Reports of the meetings are contained in documentsS/C/M/51 to 54.  The Council has also held one special meeting dedicated to the review of the Annex
on Air Transport Services, the report of which is contained in document S/C/M/50.  The reports of the
meetings should be read in conjunction with this report.  During the reporting period, the Council
addressed the following matters:
I. REVISION OF GUIDELINES FOR THE SCHEDULING OF SPECIFIC
COMMITMENTS
2. At the Council meeting of 23 March 2001, the Council addressed the draft Revised
Guidelines for the Scheduling of Specific Commitments, contained in document S/CSC/W/30, and a
draft decision by the Council to adopt these revised guidelines, document S/C/W/190.  The Chairman
of the Committee on Specific Commitments informed the Council that the Committee had agreed atext reflecting the revision of the Guidelines for the Scheduling of Specific Commitments under the
GATS at its meeting on 22 March 2001.  The Committee recommended that the Council for Trade in
Services adopt that text according to the terms reflected in the draft decision.  The Council adopted
the draft decision (S/L/91), taking into account that the final version of the revised guidelines would
be rectified with regard to a typing error. Th e adopted Guidelines for the Scheduling of Specific
Commitments under the General Agreement on Trade in Services (GATS) are contained in document
S/L/92.
II. NOTIFICATION OBLIGATIONS PURSUANT TO ARTICLE V OF THE GATS
3. At the meeting held on 1 December 2000, the Council continued discussions of a statement
by the delegation of the United States, contained in document S/C/W/147, concerning the question of
how to improve the timeliness of notifications of economic integration agreements pursuant to
Article V of the GATS, and their transmittal to the Committee on Regional Trade Agreements(CRTA) for examination.  The Council requested the Secretariat to draw up a list of all economic
integration agreements notified to the Council for Trade in Services, with an indication of those which
had not been referred to the CRTA.
4. At the meeting held on 23 March 2001, the Council agreed to refer seven economic
integration agreements, listed as "not referred" in the Secretariat's list (JOB(01)/33), to the CRTA for
examination.S/C/14
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III. NOTIFICATIONS MADE TO THE COUNCIL PURSUANT TO GATS
ARTICLES III:3, V AND VII:4
5. At the meeting held on 23 March 2001, the Council took note of the following notifications:
(i) Notifications pursuant to Article III:3 of the GATS concerning modifications to
services regulations in sectors where specific commitments have been undertaken:
Egypt (S/C/N/116)
Kyrgyz Republic (S/C/N/177-120)
United States (S/C/N/121)
Costa Rica (S/C/N/123)
Slovak Republic (S/C/N/124)
Czech Republic (S/C/N/125-126)
Japan (S/C/N/127-131)Madagascar (S/C/N/132-137)
Poland (S/C/N/138-141)
(ii) A notification pursuant to Article V concerning an economic integration agreement:
Chile and Mexico (S/C/N/142)
(iii) A notification pursuant to Article VII:4 concerning recognition measures and
agreements or arrangements:
Costa Rica (S/C/N/122)
6. The Council referred the economic integration agreement between Chile and Mexico to the
CRTA.
IV. BRAZIL'S ARTICLE II (MFN) EXEMPTION IN BASIC TELECOMMUNICATIONS
7. Based on a communication from Brazil, contained in document S/C/W/160, the Council had
discussed the item in two meetings prior to the reporting period. The delegation of Brazil had
informed the Council of its consultations with other Members concerning their revised commitments
in basic telecommunications.  The delegation of Brazil had also referred to the proposed procedurewhich would allow Brazil to bind its basic telecommunications commitments and maintain the MFN
exemption listed during the negotiations of the Fourth Protocol.
8. At the Council meetings of 1 December 2000 and 23 March 2001, the representative of Brazil
informed the Council of the status of consultations with other delegations.  At the meeting of
23 March, Brazil presented a draft decision on the exemption from Article II (MFN) listed by Brazil
in Basic Telecommunications to the Council as a room document.
9. At the meeting held on 14 May 2001, the same draft decision was circulated as document
S/C/W/192.  The effect of the decision would have been to allow Brazil to maintain the MFN
exemption resulting from the negotiations and listed under the Fourth Protocol, which would have
taken legal effect upon the entry into force of Brazil's schedule of specific commitments in basic
telecommunications.  Brazil had further initiated a certification procedure for its draft schedule of
commitments in basic telecommunications, contained in document S/C/W/191.
10. At the meeting held on 9 July 2001, the Chairman stated that the delegations of the
United States (S/L/94); Hong Kong, China (S/L/95); the European Communities and theirS/C/14
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Member States (S/L/96); as well as Japan (S/L/97) had notified their objections to Brazil's draft
schedule of commitments in basic telecommunications.  The representative of Brazil announced the
withdrawal of the draft schedule of specific commitments in Basic Telecommunications.  The formal
withdrawal of the draft schedule is contained in do cument S/L/98. He also requested that the item on
the draft decision on the MFN exemption be  withdrawn from the agenda of the Council.
V. DATE OF FURTHER REVIEW OF ARTICLE II (MFN) EXEMPTIONS
11. The Council discussed the date for a further revi ew of Article II (MFN) exemptions at the
meetings of 1 December 2000, 23 March and 14 May 2001.  At the May meeting, the Council decided
that a further review of MFN exemptions should take place no later than June 2004.
VI. ISSUES ARISING FROM THE REVIEW OF ARTICLE II (MFN) EXEMPTIONS
12. At the meeting of 1 December 2000, the Council continued its discussion of a communication
from Japan, Korea and Hong Kong, China, contained in document S/C/W/173, which addressed anumber of general issues raised during the review of MFN exemptions conducted by the Council.
The Council also started discussion of a paper by Chile, JOB(01)/34, on procedures for the reduction
and withdrawal of MFN exemptions.
13. At the meeting of 14 May 2001, the Council continued its discussion of the papers from
Japan, Korea and Hong Kong, China, S/C/W/173, and Chile, JOB(01)/34, and discussed a paperpresented by Hong Kong, China, contained in Job No. 7775, on MFN exemptions that purported to
grant less favourable treatment than that set out  in the schedule of specific commitments.  The
Council asked that the Secretariat examine the le gal aspects involved in the development of a
procedure for the withdrawal or reduction of MFN exemptions.
14. At the meeting of 9 July 2001, the Council continued its discussion of the earlier
contributions and discussed the paper produced by the Secretariat, contained in JOB(01)/106.  The
Council agreed to revert to the item at the next meeting.
VII. RECTIFICATION OF A TECHNICAL ERROR IN AN MFN EXEMPTION LIST
15. At its meetings of 1 December 2000, 23 March and 14 May 2001, the Council discussed a
communication from the Dominican Republic (S/C/W/175) concerning a technical rectification of itslist of Article II (MFN) exemptions concerning legal services.
16. At its meeting of 9 July 2001, Members agreed to omit the item from the agenda of the next
meeting and to address the issue once the question of procedures for rectifications of MFN
exemptions was settled.
VIII.  REVIEW OF THE UNDERSTANDING ON ACCOUNTING RATES IN
TELECOMMUNICATIONS
17. At the meeting held on 1 December 2000, the Council continued its discussions on the review
of the understanding on accounting rates, as provided for in paragraph 7 of the Report of the Group on
Basic Telecommunications contained in document S/GBT/4.  The representative of the ITU
Secretariat informed the Council of the conclusions reached at the World Telecommunications
Standardization Assembly, contained in Job No. 8211.
18. The Council continued its discussion at the meeting held on 23 March 2001; at the meeting of
14 May 2001, the delegation of Australia proposed terms of reference for a TelecommunicationsS/C/14
Page 4
Accounting Rates Review, contained in JOB(01)/73, which were further discussed at the meeting of
9 July 2001.  The Council agreed to revert to the item at its next meeting.
IX. PROPOSALS CONCERNING A TECHNICAL REVIEW OF GATS PROVISIONS
19. At its meeting held on 23 March 2001, the Council discussed, under Other Business, a
proposal by the delegations of Australia; the European Communities; Hong Kong, China; Japan;Norway and Switzerland, contained in JOB(01)/40, to place the item of Technical Review of GATS
Provisions on the agenda of the Council on a regular basis.
20. At the meeting held on 14 May 2001, the Council continued its discussions and agreed to
revert to this item at the next meeting.
21. At the meeting held on 9 July 2001, the Council continued its discussion of JOB(01)/40 and
considered a paper by Japan, JOB(01)/107, containing suggestions with regard to possible issues to be
addressed in a technical review.  The Council agreed to discuss in substance at its next meeting thevarious provisions that had up to that point been presented for a technical review, i.e. (i) Article XX:2;
(ii) Articles XVI – XVII; (iii) paragraphs 1 and 2 of Article XVI, and (iv) Article XXVIII:
(g) together with paragraph 5 (b) of the Annex on Financial Services.
X. WORK PROGRAMME ON ELECTRONIC COMMERCE
22. At its meeting held on 23 March 2001, the Council discussed a communication from the
European Communities on electronic commerce, contained in document S/C/W/183. The Council
agreed to revert to this item at the next meeting.
23. At the meeting held on 14 May 2001, the Chairman noted that the General Council, at its
meeting on 8 May 2001, had agreed that the subsidiary bodies should continue their discussions and
report back to the General Council.  The delegation of Cuba introduced a contribution to theelectronic commerce work programme, contained in document S/C/W/193. The Council agreed to
revert to this item at the next meeting.
24. At the meeting held on 9 July 2001, the Council continued its discussion on the work
programme, including on a communication from Mercosur to the General Council, WT/GC/W/434,
which identified a number of sectoral issues on which the Services Council should continue its work.The Council agreed to revert to the item at the next meeting.
XI. NEGOTIATIONS UNDER ARTICLE X OF THE GATS ON EMERGENCY
SAFEGUARDS
25. At the meeting held on 1 December 2000, the Council received a communication from the
Chairperson of the Working Party on GATS Rules proposing to extend the deadline for the
negotiations under Article X of the GATS on the question of emergency safeguard measures,
contained in document S/C/W/184.  The Chairman of the Working Party on GATS Rules presented  aproposal for the new deadline of  15 March 2002, and provided that the final date for the entry into
effect of the results of these negotiations  shall be no later than the date of entry into force of the
results of the services round. The Council adopted the draft decision proposed by the Chairman of the
Working Party, (S/L/90).S/C/14
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XII. REOPENING OF THE FIFTH PROTOCOL FOR ACCEPTANCE
26. At the Council meeting of 1 December 2000, following requests from Kenya and Nigeria, the
Council adopted a decision, contained in document S/L/89, to re-open the Fifth Protocol to the GATS
relating to financial services for acceptance by Kenya and Nigeria.
XIII.  PROPOSAL FOR A CO-OPERATION AGREEMENT WITH THE UNIVERSAL
POSTAL UNION (UPU)
27. At the meeting held on 1 December 2000, the Council addressed a communication from the
UPU Secretariat containing a draft "Memorandum  of Understanding on cooperation between the
Universal Postal Union and the World Trade Organization", as set out in a note by the Secretariat in
document S/C/W/180.  At an earlier meeting in February 2000, the Council had received a
communication from the Universal Postal Union (U PU), circulated as Job No. 865, containing a
proposal by the UPU that a cooperation agreement in the form of a memorandum of understanding be
concluded between the UPU and the WTO.  The Council  agreed to revert to this item at a future
meeting.
XIV. COOPERATION BETWEEN THE INTERNATIONAL CIVIL AVIATION
ORGANIZATION (ICAO) AND THE WTO
28. At its meeting held on 14 May 2001, the Council discussed a note by the Secretariat,
JOB(01)/64, containing a letter from the Secretary-General of ICAO with the proposal to develop a
memorandum of understanding or a co-operation agreement between ICAO and the WTO.  The
Council agreed to revert to this item at its next meeting and to invite a representative of ICAO to the
next meeting in order to clarify the objectives of the envisaged cooperation agreement. At the meeting
on 9 July the items was further deferred to the following meeting.
XV. REVIEW OF THE ANNEX ON AIR TRANSPORT SERVICES UNDER
PARAGRAPH 5 OF THE ANNEX
29. The second meeting devoted to the review was held on 4 December 2000.  The Council
discussed a paper produced by the Secretariat, contained in document S/C/W/163/Add.1 and 2, as
well as communications from the European Communities, S/C/W/168, and New Zealand, S/C/W/185.A representative of ICAO introduced its revised policies on the economic regulation of airport and air
navigation, S/C/W/188.  The report of the m eeting is contained in document S/C/M/50.
XVI. WORK OF SUBSIDIARY BODIES
30. The activities of subsidiary bodies are reflected in their respective reports which are annexed
to this report as follows:
Annex I Report of the Committee on Specific Commitments (S/CSC/6)
Annex II Report of the Committee on Trade in Financial Services (S/FIN/6)Annex III Report of the Working Party on Domestic Regulation (S/WPDR/3)
Annex IV Report of the Working Party on GATS Rules (S/WPGR /6)S/C/14
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Annex 1
Committee on Specific Commitments  S/CSC/6
3 October 2001
REPORT OF THE COMMITTEE ON SPECIFIC COMMITMENTS
TO THE COUNCIL FOR TRADE IN SERVICES
1. Since its last report to the Council for Trade in Services, the Committee on Specific
Commitments held three formal meetings between 1 November 2000 and 30 September 2001.  The
reports of these meetings are contained in documents S/CSC/M/18, 19 and 20.  The Committee’s
work in this period focused on two items:  the revision of the scheduling guidelines and classification
issues.
2. At its meeting on 1 November  2000, the Committee considered the organization of its work
and, in the light of the best endeavours deadline of March 2001, decided to give priority to the
completion of the revised guidelines for the sche duling of commitments under the GATS.  Following
intense consultations on the draft of the revised guidelines conducted by the Chairperson, the
Committee was able at its 22 March 2001 meeting to agree on a revised text, which it  recommendedto the Council for Trade in Services for its adoption as a non-binding set of guidelines.   The Council
for Trade in Services adopted a Decision to that effect at its meeting of 23 March 2001.  The text of
the Guidelines for the Scheduling of Specific Commitments under the GATS and the Decision taken
by the Services Council on its adoption are contained in documents S/L/92 and S/L/91 respectively.
3. The Committee continued its work on classification issues regarding five services sectors:
environmental services;  energy services;  legal services;  postal and courier services;  and
construction services.  Discussions were without prej udice to the inclusion of any other sector, whose
classification Members might want to revise, and to the positions of Members as to the outcome of
this exercise.  During the reporting period, discussions of the sectors took place in informal and
formal modes, on the basis of existing or revised proposals submitted by Members which focused on
possible amendments to the existing Secretariat's services classification list (document
MTN.GNS/W/120).  As in the past, regular accounts of the informal discussions on the sectors weregiven by the Chairperson to the Committee and are contained in the reports of the formal meetings
referred to above.  Members also continued their discussion of "manufacturing on a fee or contract
basis", on the basis of a paper prepared by the Secretariat and questions posed by the Chairperson.  At
its May meeting, the Committee agreed on this issue not being a matter of priority at that stage.S/C/14
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Annex II
Committee on Trade in Financial Services S/FIN/6
3 October 2001
REPORT OF THE COMMITTEE ON TRADE IN FINANCIAL SERVICES
TO THE COUNCIL FOR TRADE IN SERVICES
1. Since its last annual report to the Council for Trade in Services, the Committee on Trade in
Financial Services has held three formal meetings, on 29 November 2000, 2 April 2001, and 9 May
2001.  Reports of those meetings are contained in documents S/FIN/M/29 to 31.  The discussions of
the Committee focused on four items: the acceptance of the Fifth Protocol to the GATS; the sectoral
classification of financial services; other issues for future discussion; and recent developments in
financial services trade.
2. Concerning the acceptance of the Fifth Protocol, the Council for Trade in Services decided at
its meeting on 1 December 2000 to reopen the Protocol to allow for the acceptance by Kenya and
Nigeria.  The two Members accepted the Fifth Protocol on 1 and 7 December, respectively.  Seven
Members have not yet accepted the Protocol: Bolivia, Brazil, Dominican Republic, Jamaica,
Philippines, Poland, and Uruguay.  As part of its monitoring function, the Committee invited thoseMembers to report on the situation regarding their domestic ratification processes and acceptance
procedures.  In the period under consideration, the Committee heard progress reports from Brazil,
Jamaica, Poland, Philippines, and Uruguay.  Deta ils of those reports are contained in documents
S/FIN/M/29 to 31.
3. Regarding the sectoral classification of financial services, discussions focused on an informal
note submitted by Japan on the classification of activities carried out through the Internet, such as
Electronic Communication Networks (E CNs) or Internet Initial Public Offerings (IPOs).  While a few
delegations felt that the issues raised by Japan deserved further attention by the Committee, others
considered that the broad definitions contained in the Annex on Financial Services already covered
those service activities.  At the meeting held on 9 May 2001, the delegation of Japan indicated that
even though it still considered that the classification of those services would merit further analysis, it
had no intention to insist on its original proposal if, as it appeared to be the case, most Members didnot wish to pursue the discussion at that stage.  Ho wever, a few delegations indicated that they might
revisit the issues raised by Japan at future meetings since they were still considering them.
4. Under the agenda item on other issues for future discussion, the Committee agreed to
organize an informal briefing session by three international standard-setting organizations, namely the
Basel Committee on Banking Supervision, the Intern ational Organization of Securities Commissions,
and the International Association of Insurance Supervisors, to be held on 10 October 2001.  The
objective, modalities and agenda are contained in document JOB(01)/56.
5. With respect to recent developments in financial services trade, at the meeting held on
29 November 2000, the Committee heard a statement by Argentina on its financial reforms.  At
subsequent meetings, although no particular presentation was heard, some delegations considered thatthis agenda item represented a good opportunity for Members to provide information on national
experiences regarding regulatory reform processes in the area of financial services.S/C/14
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Annex III
Working Party on Domest ic Regulation S/WPDR/3
3 October 2001
REPORT OF THE WORKING PARTY ON DOMESTIC REGULATION
TO THE COUNCIL FOR TRADE IN SERVICES
1. Since its last annual report to the Council for Trade in Services, the Working Party on
Domestic Regulation (WPDR) held five formal meetings and one informal meeting.  Minutes of theformal meetings are found in WTO documents S/WPDR/M/9 to M/13.
2. Since November 2000, formal papers were submitted to the Working Party by Mexico,
Canada, the European Communities, Australia, Switzerland and Thailand (S/WPDR/W/12 to W/16,
and W/18), together with informal papers from the Chairperson,
1 Member2 and the Secretariat.3
3. Discussions of the Working Party with respect to the development of horizontally applicable
disciplines on domestic regulation have continued to focus mainly on necessity and transparency
issues, as identified by Members in the informal document  Checklist of Issues for WPDR
(Job No. 5067, dated 17 August 2000) at the meeting of the WPDR on 11 May, Members agreed to
revise the Checklist (JOB(01)/92, dated 19 June 2001) to add issues related to equivalency and
technical standards.  As requested by delegations, an updated informal summary of the Checklist
discussions was added as an annex to the minutes of each WPDR meeting.
4. The Secretariat presented an informal paper, Examples of Measures to be Addressed by
Disciplines under GATS Article VI:4  (JOB(01)/62, dated 10 May 2001) at the meeting of the WPDR
on 11 May.  A number of Members stated that additional examples, and greater specificity, would be
useful.  Delegations also discussed issues related to distinguishing between the scope of GATSArticle VI:4 and that of Articles XVI and XVII.
5. With respect to the development of horizontal disciplines for professional services, the
Secretariat at the WPDR meeting on 29 November introduced its Synthesis of Results to Date of the
Domestic Consultations in Professional Services   (Job No. 7667, dated 29 November 2000) which
was subsequently revised (current version is JOB(01)/145, dated 26 September 2001) to include
additional Member reports on their domestic consulta tions with professional services organizations.
6. Members discussed the organization of future work at the Working Party meeting on 11 May,
based on a Chairperson’s Note (JOB(01)/59, dated 27 April 2001).  They agreed to continue focusing
on necessity and transparency issues, in regard to the development of any necessary regulatory
disciplines, but also to begin discussion of equivalency and technical standards, on the basis of
submissions by Members, if any.  Members also discussed ways in which the work to develop
horizontally applicable disciplines on domestic regulation and the work to develop horizontaldisciplines for professional services could be made more complementary.
                                                     
1JOB(01)/59, dated 27.04.01;  JOB(01)/93, date d 21.06.01;  and JOB(01)/130, dated 14.09.01.
2Job No. 1954 dated 20.03.01 (Communication from Japan);  JOB(01)/69, dated 10.05.01
(Communication from Australia);  and JOB(01)/77, dated 28.05.01 (Communication from Japan).
3Job No. 7630, dated 29.11.00;  Job No. 7667, dated 29.11.00;  Job No. 1872, dated 16.03.01;
Job No. 1873, dated 16.03.01;  JOB(01)/62, dated 10.05. 01; JOB (01)/92, dated 19.06.01;  JOB(01)/98, dated
28.06.01;  JOB(01)/99, dated 28.06.01;  and JOB(01)/145, dated 26.09.01.S/C/14
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Annex IV
Working Party on GATS Rules S/WPGR/6
3 October 2001
REPORT OF THE WORKING PARTY ON GATS RULES
TO THE COUNCIL FOR TRADE IN SERVICES
1. Since its last annual report,4 the Working Party on GATS Rules has held five formal
meetings.  Minutes of the meetings are contained in documents (S/WPGR/M/30-34).  In eachmeeting, the Working Party considered the three negotiating mandates:  emergency safeguard
measures (Article X);  government procurement (Article XIII);  and subsidies (Article XV).
I. NEGOTIATIONS ON EMERGENCY SAFEGUARD MEASURES UNDER GATS
ARTICLE X
2. At its meeting on 20 November 2000, the Working Party agreed to extend the negotiating
mandate under Article X until 15 March 2002 (doc. S/C/W/184).  This proposal was adopted by the
Council for Trade in Services at its meeting on 1 December 2000.
3. Differing views continued to be expressed regarding the desirability and feasibility of an
emergency safeguard mechanism (ESM) in services.  Most discussions were held on the basis of the
illustrative list of themes circulated by the Chairperson (Job No. 1979/Rev.1).  The list includes issuessuch as situations justifying safeguard action, the definition of "domestic industry" and the issue of
"acquired rights", the modal application of a safeguard mechanism, the concept of "like service", the
identification of indicators and criteria for determining injury and causality, the possible forms of a
safeguard measure, the questions of compensation and special and differential treatment, and relevant
procedural matters.  A number of delegations presented informal written contributions on specificaspects of a possible ESM.  Moreover, a group of delegations presented an informal Draft agreement
on emergency safeguard measures for trade in services , on 31 October 2000.  All issues were
examined in both formal and informal meetings.
4. The Working Party also discussed the organization of future work, keeping in mind the
negotiating deadline of 15 March 2002.  In July 2001, the Working Party requested the Chairperson to
prepare, under his responsibility, a synopsis which would outline the current state of the discussion
under the ten items identified in the Chairperson's Note, Job No. 1979/Rev.1.  The synopsis wascirculated on 7 August (JOB(01)/122) and is without  prejudice to the questions of desirability and
feasibility, nor to the form that a possible ESM might take.  It presents, in a synthetic way, the main
options proposed until July 2001, and indicates comments made by Members.
II. NEGOTIATIONS ON GOVERNMENT PROCUREMENT UNDER GATS
ARTICLE XIII
5. Discussions have continued on definitional issues as well as on possible multilateral
disciplines in this area.
                                                     
4 S/WPGR/W/35, 3 November 2000.S/C/14
Page 10
III. NEGOTIATIONS ON SUBSIDIES UNDER GATS ARTICLE XV
6. The Working Party has continued to consider the need for, and possible scope of, disciplines
on subsidies which may have trade-distortive effects.  Delegations proceeded on the basis of the
Chairperson's Checklist (Job No. 4519/Rev.1), and took up one item at each successive meeting.  The
fifth and last item was addressed in July.  At that meeting, it was decided that the Checklist wouldremain on the table for the time being and that the five topics it contains would remain open for
discussion.
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