RESTRICTEDWORLD TRADE
ORGANIZATIONS/CSC/W/21
19 July 1999
(99-2980)
Committee on Specific Commitments
DRAFT
PROCEDURES FOR THE IMPLEMENTATION OF ARTICLE XXI OF
THE GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)
(MODIFICATION OF SCHEDULES)
Notification of Modification or Withdrawal
1. A Member intending to modify or withdraw a scheduled commitment in accordance with
Article XXI (the "modifying Member") shall transmit a notification to that effect, no later than three
months before the intended date of implementati on of such modification or withdrawal, to the
Secretariat which will distribute the notification to all other Members in a secret document. The
intention by a Member to modify or withdraw scheduled commitments shall be included in the agenda
of the next meeting of the Council for Trade in Services.
2. The notification shall include a list of the commitments which it is intended to modify or
withdraw.  For each such commitment the notification shall indicate whether the intention is to
modify or to withdraw it, in whole or in part;  the proposed date for implementing such modification
or withdrawal;  and the exact nature of any proposed modification.
Negotiations on Compensation
3. Any Member which considers that its interests under the Agreement may be affected by the
proposed modification or withdrawal ("affected Me mber") shall communicate its claim in writing to
the modifying Member and at the same time notify it to all other Members through the Secretariat.
Such claims of interest must be made no later than 45 days after the date of circulation by the
Secretariat of the notification referred to in paragraph 1 above.  If by that date no Member has
submitted a claim that it is an affected Member, the modifying Member shall be free to implement theproposed modification or withdrawal, after completing the certification procedure under
paragraphs 20 to 22 and shall submit a notification of the date of such implementation to the
Secretariat, for circulation to the Members of the WTO.
4. The modifying Member and any affected Member which has identified itself under
paragraph 3 above shall negotiate with a view to reaching agreement within three months following
the last date on which such a claim of interest may be made.  This period of negotiation may be
extended by mutual agreement and the terms of such  an agreement, including the period  of extension,
shall be notified to all other Members through the Secretariat.
5. Upon completion of each negotiation conducted under paragraph 2(a) of Article XXI, the
modifying Member shall send to the Secretariat a joint letter signed by the Members concerned,together with a report concerning the results of the negotiations which shall be initialled by the
Members concerned.  The Secretariat will distribute the letter and the report to all Members in a secret
document.S/CSC/W/21
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6. A modifying Member which has reached agreement with all Members that had identified
themselves under paragraph 3 above shall, no later than fifteen days after the conclusion of the
negotiations, send to the Secretariat a final report on negotiations under Article XXI, which will be
distributed to all Members in a secret document.  After completing the certification procedure under
paragraphs 20 to 22, such a modifying Member will be free to implement the changes agreed upon inthe negotiations and specified in the report, and it shall notify the date of implementation to the
Secretariat, for circulation to the Members of  the WTO. Such changes shall not exceed the
modification or withdrawal initially notified and shall include any compensatory adjustment agreed
upon in the negotiations.
Arbitration
7. If the modifying Member and a Member that had identified itself under paragraph 3 above do
not reach agreement by the end of the period of negotiations referred to in paragraph 4, such an
affected Member may request arbitration.  Such a request shall be made in writing to the modifying
Member and the Secretariat no later than 45 days after the end of that period.
8. If no Member that had identified itself under paragraph 3 above submits a timely arbitration
request under paragraph 7, the modifying Member shall be free to implement the proposedmodification or withdrawal, after completing the certification procedure under paragraphs  20 to 22 .
In cases where agreement has been reached with some but not all affected Members and no request
for arbitration has been made, the modifying Member shall be free to implement in accordance with
the procedures of paragraph 6 above, after completing the certification procedure under paragraphs 20
to 22, the proposed modification or withdrawal with the compensatory adjustments agreed upon in thenegotiations, but not exceeding the proposed modification or withdrawal initially notified. The
modifying Member shall notify the date of implementation to the Secretariat, for circulation to the
Members of the WTO.
9. If an affected Member submits a timely arbitration request under paragraph 7, the modifying
Member shall not implement any modification or withdrawal until it has received the arbitrationbody's findings and is in conformity with those findings.
10. The appointment of the arbitration body shall be subject to mutual agreement of the parties
concerned.  If the parties to the arbitration can not agree on the arbitration body within twenty days
from the date of request for the arbitration, the arbitration body shall be appointed at the request of
any party by the Director-General of the WTO, after consulting the parties, within ten days thereafter.
The arbitration body shall consist of three arbitrators, unless the parties agree to a different uneven
number.  The arbitration body shall be chosen from among persons with relevant legal, economic,financial or technical expertise, including expert ise in the agreement, with respect to the matter
referred to the arbitration body.  Except as the parties otherwise agree, the arbitration body shall not
consist of citizens of any of the parties to the arbitration. Where a party to an arbitration is a
developing country Member, the arbitration body shall, if the developing country Member so
requests, include at least one arbitrator from a developing country Member.
11. The "Rules of conduct for the understanding on rules and procedures governing the settlement
of disputes" shall apply.  The arbitration body may seek information from any relevant source and
may consult experts to obtain their opinion on certain aspects of the matter.  The arbitration body shall
inform the parties to the arbitration of any c onsultations with experts.  There shall be no ex parte
communications with the arbitration body concerning matters under consideration by the arbitrationbody.
12. Any affected Member that wishes to enforce a right that it may have to compensation must
participate in the arbitration.  However, if an affe cted Member having reached an agreement with theS/CSC/W/21
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modifying Member under paragraph 4 above were to decide not to participate in the arbitration, it
shall nonetheless be deemed to have participated in the arbitration with respect to the modification or
withdrawal in question.
13. The arbitration body shall have the following terms of reference unless the parties to the
arbitration agree otherwise within ten days from the request for arbitration:
"To examine the compensatory adjustments offered by (name of modifying Member) or
requested by (affected Member requesting the arbitration) and to find a resulting balance of
rights and obligations which maintains a general level of mutually advantageous
commitments not less favourable to trade than  that provided for in Schedules of specific
commitments prior to the negotiations.  In su ch examination, the Arbitration body shall take
into account any agreement reached, in negotiations under paragraph 4. above, between the
modifying Member and any affected Member".
14. The arbitration body's findings shall be communicated to the parties to the arbitration through
the Secretariat within three months of the appointment of the arbitration body.
15. When an arbitration has been conducted in accordance with paragraphs 7 through 14 above,
the modifying Member shall be free to implement a modification or withdrawal which is inconformity with the findings of the arbitration body  after completing the certification procedure under
paragraphs 20 to 22, and shall notify the date of implementation to the Secretariat for circulation to
the Members of the WTO together with the findings of the arbitration.
16. If the modifying Member implements its proposed modification or withdrawal and does not
comply with the findings of the arbitration, any affe cted Member that participated in the arbitration
may modify or withdraw substantially equivalent benefits in conformity with those findings.
Notwithstanding Article II, such a modification or withdrawal may be implemented solely with
respect to the modifying Member.
17. The affected Member shall notify the Council for Trade in Services of the measures it intends
to take in accordance with paragraph 16, one month before exercising its right to take these measures.
18. Modifications or withdrawals implemented in accordance with paragraph 16 shall be
terminated if the modifying Member complies with the findings of the arbitration body under
paragraph 14.
19. The modifying Member may withdraw at any tim e its notification under Article XXI:1 of the
Agreement and paragraph 1 above, by notice to the Secretariat.  Upon receipt of such a withdrawal,
Article XXI and these procedures shall cease to apply and the modifying Member shall be obligated
to maintain the commitment in question in confor mity with its Schedule and Part III of the
Agreement.
Formal aspects of the procedures for modification of schedules of commitments
20. Modifications in the authentic texts of Schedules annexed to the GATS which result from
action under Article XXI, shall take effect by means of Certification.  The draft schedule clearlyindicating the details of the modifications shall be communicated to the Secretariat for circulation to
all Members.  The modifications shall enter into force upon the conclusion of a period of 45 days
from the date of their circulation or on a later date to be specified by the modifying Member, provided
no objection has been raised by a Member on the ground that the draft schedule does not correctly
reflect the results of the action under Article XXI and/or that the modification or withdrawalcontained in the draft schedule exceed those initially notified.  A Member making an objection shouldS/CSC/W/21
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to the extent possible identify the specific elemen ts of the modifications which gave rise to that
objection.  At the end of the 45-day period, if no objection has been raised, the Secretariat shall issue
a communication to all Members to the effect that the Certification procedure has been concluded,
indicating the date of entry into force of the modifications.
21. Any Member wishing to object shall submit a noti fication to that effect to the Secretariat for
circulation to all Members and shall enter into consultations with the modifying Member with a view
to reaching a satisfactory resolution of the matter as soon as possible.  When an objection has been
notified, the Certification procedure shall be deemed concluded upon the withdrawal of the objection
by the objecting Member or the expiry of the period in which objections may be made, whichever
comes later.  Such a withdrawal shall be communi cated to the Secretariat.  When more than one
objection has been raised, the Certification will be deemed concluded upon the withdrawal of the
objections by all objecting Members.  The Secretariat shall issue a communication informing allMembers of the withdrawal of the objection(s) and the conclusion of the Certification procedure,
indicating the date of entry into force of the modifications.
22. If the consultations referred to in paragraph 21 result in any changes to the draft schedule
submitted for Certification, the modifying Member shall promptly submit them to the Secretariat for
circulation to all Members.  This modification shall enter into force provided no objection has beenraised by a Member within 15 days from the date of its circulation or on later date to be specified by
the modifying Member, on the grounds referred to in paragraph 20.  A Member making an objection
should to the extent possible identify the specific elements of the modification which gave rise to that
objection.  If no objection is raised by the end of the 15 -day period, the Secretariat shall issue a
communication to all Members to the effect that the Certification procedure has been concluded,indicating the date of entry into force of the modifications.  If an objection has been raised, the
procedure described in paragraph 21 shall apply .
General Provisions
23. In the application of these procedures Members shall take full account  of the special
situations of individual developing countries, in particular the least developed countries.
24. Following the lapse of three years from entry in to force of these Procedures, the Council for
Trade in Services shall, at the request of any Member, review the operation of these Procedures.  In
such a review, the Council for Trade in Services may agree to amend any of the provisions of the
Procedures, including those relating to arbitration.
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