RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/M/40
5 January 2000
(00-0129)
Council for Trade in Services
REPORT OF THE MEETING HELD ON 18 OCTOBER 1999
Note by the Secretariat
1. The Council for Trade in Services held a meeting on 18 October 1999.  The agenda for the
meeting is contained in document WTO/AIR/1196.
2. Under Other Business, the Chairman added a statement about requests for observer status in
the Council.  Two other statements were made, by the representative of the Dominican Republic on
the paper tabled by his delegation and the delega tions of El Salvador and Honduras concerning
tourism services, circulated as document S/C/W/127, and by the representative of Venezuela on the
paper submitted by her delegation to the General Council as document WT/GC/W/281, concerning
the next round of services negotiations.
3. The Chairman proposed that the Council adopt the agenda as circulated, with the addition of
the three items raised under Other Business.
4. The Council so agreed.
A. ASSESSMENT OF TRADE IN SERVICES
5. The Chairman recalled that, at its last meeting, the Council had had a very useful discussion
on the assessment of trade under Article XIX of the GATS.  The paper presented by the UNCTAD
Secretariat entitled "Assessment of Trade in Servi ces of Developing Countries:  Possible Contribution
by UNCTAD" had been examined in detail.  During the discussion, some delegations had said that
they would comment further at future meetings, while others had announced their intention of
submitting papers to the Council on the subject;  an informal document had been received from thedelegation of Norway, titled "Liberalization of Trade in Producer Services – The Impact on
Developing Countries".  The Chairman invited the delegation of Norway to present the paper.
6. The representative of Norway explained that the paper was the output of an independent
research programme by the University of Cape Town and the Chr. Michelsen Institute in Norway, and
bore the signature of two researchers from these institutes.  It analyzed the impact of liberalization oftrade in services, focusing on producer services such as financial, telecommunications and transport
services, and illustrated the experience of South Africa, Namibia and Tanzania as case studies.  One
finding was that access to better producer services improved productivity in all sectors of the
economy, with the magnitude of the gains depending on the presence of a transparent and sound
regulatory regime.
7. The representative of South Africa welcomed the contribution of the paper towards Members'
assessment of trade in services.  The case studies were particularly welcome, given the paucity of
contributions focusing on developing countries' expe riences.  He explained that his government had
started the research programme in 1997, and had received support from UNCTAD on capacity
building through the CAPAS programme.  Research papers assessing services trade for the SouthernS/C/M/40
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African economy had mainly been conducted on an overall basis or had focused on
telecommunications, financial, transport and tourism services:  such studies were useful for the
formulation of strategies to develop the services sector, which accounted for 65% of South Africa's
GDP.  In view of these considerations, negotiations had to be conducted within the existing GATS
architecture, with development objectives in mind, for which formulas might not be appropriate.  Inhis view, the key challenge of the next round was the full  integration of developing countries into the
system.  He said that the negotiations had to facilitate the structural adjustment in the economies of
the North, thereby encouraging a reallocation of resources in labour and resource-intensive sectors
where developing countries had a comparative advantage.  The magnitude of the gains depended on
developing countries' ability to participate in the supply chain, on the quality and availability of
infrastructure and capacity to improve and enforce regulation.  Gains from liberalization stemmed not
only from export opportunities in the services sectors subject to liberalization, but also from improvedproductivity an from the ability to exploit existing comparative advantage.
8. The Chairman noted that an increasing amount of information was available on the
assessment of trade in services;  he wondered wh ether the Council had taken the exercise as far as
possible at that stage and could agree to revert to it during the course of the negotiations.
9. The representative of India suggested that the assessment should be kept on the agenda of the
Council.  The representatives of the Dominican Republic, Cuba  and Morocco  agreed.
10. The representative of Switzerland favoured the Chairman's suggestion, also in view of the
limited number of interventions made by Members at this meeting.  He noted that the assessment was
linked to the negotiating guidelines, as stated in Article XIX;  given the state of work on the
guidelines, it was reasonable to drop this item form the agenda.  He suggested that it could bereintroduced whenever substantial contributions were brought to the discussion.
11. The representative of Argentina shared India's position.  He said that Article XIX was clear in
mandating that the Council assess trade in services;  making the assessment a standing item on the
agenda would allow the review of any additional in formation.  In addition, the paper tabled by the
delegation of Norway had not been sufficiently discussed and hence the assessment had to remain onthe agenda, at the very least, of the following Council meeting.  The representatives of Indonesia,
speaking also on behalf of Thailand, the Philippines, Malaysia and Brunei, and of Hong Kong, China
agreed with India's suggestion and shared Argentina's reasoning.  The representative of India added
that, in his introduction, the Chairman had noted that some delegations were still reflecting on the
contribution by UNCTAD.  The representative of Pakist an said that he thought it had been agreed that
the assessment would be an on-going exercise, give n its importance for developing countries and that
it would be a permanent item on the Council agenda.  The representative of Venezuela proposed that
the documents circulated at the recent WTO/World Bank seminar on developing countries be made
available to the Council for Trade in Services.
12. The Chairman said that he had no intention of drawing matters to a premature, albeit
temporary, close. Contributions still remained to be discussed, such as the paper tabled by the
delegation of Norway, and interest had been expressed in continuing the debate.  He thereforeconcluded that the assessment of services trade would remain on the Council agenda.
13. It was so agreed.
B. SYSTEMIC ISSUES ARISING FROM ARTICLE V OF THE GATS
14. The Chairman recalled that, at the last C ouncil meeting, the delegation of the European
Communities had submitted a paper entitled "Article V of the GATS:  Systemic Issues", contained in
document S/C/W/124, which had also been tabled to the Committee on Regional Trade AgreementsS/C/M/40
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as document WT/REG/W/35.  Since the paper had been submitted only a day before that meeting,
delegations had not been in a position to make detailed comments;  the Council had therefore agreed
to revert to the matter.
15. The representative of Japan said that discussions in the Council for Trade in Services were
useful to debates in the General Council on this matte r.  He favoured the step-by-step approach to the
discussion proposed in the European Communities paper, and agreed that it was appropriate to start
with Article V:1.  With respect to Article V:1(a), he stressed that the three criteria in the footnote
should all be given equal weight when assessing substantial sectoral coverage.  He felt that too much
emphasis had been placed by the European Communities on the volume of trade affected;  the
criterion relating to number of sectors, for example, should be given appropriate consideration, and in
this respect infrastructural services should be included.  With respect to Article V:1(b), he noted that
the paper supported the Japanese position, including the reference to a reasonable time-frame toeliminate discrimination.
16. Taking a broader perspective on the topic, the representative of Argentina said that the debate
was taking place at a premature time and could turn into a philosophical and academic exercise.  He
reiterated that, up to that moment, the experience with implementation of Article V did not warrant
any review of this Article, which, in addition, had been a delicate compromise.  Out of 102 notifiedagreements, only 10 concerned Article V, and only 6 of those were being reviewed or were
undergoing consultation under the auspices of the Committee on Regional Trade Agreements
(CRTA).  The problems which were being experienced concerned GATT Article XXIV, and hence
Article V did not need to be reviewed.  Commenting on the European Communities paper, he doubted
that economic integration in the presence of other regulations on matters such as mutual recognition
or harmonization of legislation was potentially more powerful;  these elements were in themselves not
sufficient to make economic integration more powerful, and Article V:2 did not need to be clarified
along those lines.
17. The representative of Brazil agreed with Argentina that the debate was premature and that its
implications were not clear.  He was not convince d of the need for the Council for Trade in Services
to discuss this issue, considering that the CRT A was already looking into such matters.  The
representative of Mexico concurred with Argentina.  The representative of Canada  said that his
delegations would be looking at the papers submitted in order to form a position for the next round ofnegotiations.
18. The representative of Hungary referred to the general comments he had made at the previous
Council meeting, and in particular to the need to clarify Article V without reopening a finely balanced
text, and without retroactively applying the results of such a clarification.  As concernedArticle V:1(a), he agreed with the European Communities' interpretation:  he stressed the requirement
that no mode of supply should be excluded and the importance of defining the volume of trade
affected, without, however, pursuing the idea of using percentages of sectors or trade excluded
because of the insufficiency of services statistics.  On Article V:1(B), he found paragraph 8 of the
paper interesting.  He said that separating sectors where a standstill would be sufficient to eliminatesubstantially all discrimination from those where a roll-back was needed was problematic, and was an
additional argument for not retroactively applying the results of the clarification exercise.  A
reasonable time-frame for the elimination of discrimination was appropriate also in the case of
services;  however, more time should be allowed than for goods in view of the greater complexity of
services liberalization.  He said that more thought was necessary on the suggestion in paragraph 11 ofthe paper that "regulatory integration" be given a clearer profile through Article V:2.
19. The representative of Switzerland said that the wording of Article V was meant to leave an
open margin of interpretation, and Members should keep with this original intent.  He said he could
agree with the European Communities' paper intellectually, and would give further thought to theS/C/M/40
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suggestion in paragraph 11, which seemed to depart from what the GATS prescribed, but was unclear
about where their proposal led in terms of process.
20. The representative of Hong Kong, China said that the clarification of Article V was critical
and that his delegation had submitted two papers on this subject, raising questions to which it had no
answers.  The fact that the CRTA had not concl uded any reviews up to then was another indication
that clarification was necessary.  He appreciated that many economic integration agreements were
being considered in the CRTA and could understa nd the wish for no retroactive application of any
clarification, but noted that provisions should be clarified all the same and that the treatment of
existing agreements had to be built into the discussion.
21. Responding to some of the questions raised by delegations, the representative of the European
Communities said that the timing of the discussion was appropriate, given that Article V was invoked
frequently and hence greater clarity was important.  He thanked the representative of Hong Kong,
China for having started the debate and found Members' contributions to the discussion useful.  He
stressed that his delegation did not seek any re-definition of the text of Article V, but only greater
clarity of its interpretation.  As concerned Japan's point on the volume of trade, he recognized that the
three items in the footnote to Article V:1(a) all bore equal weight;  his delegation's paper had
emphasised the volume of trade because very little indication was provided on this criterion.  Heagreed that financial and telecommunication services were important in defining substantial sectoral
coverage.  The reference to "regulatory integration" in paragraph 11 of the paper stemmed from the
European Communities' experience with Central and Eastern European countries with respect to
mutual recognition agreements and the approximation of legislation.  The suggestion was that
"regulatory integration" be given a clearer profile under Article V, but not be made into an additionalcriterion.
22. Summing up the discussion, the Chairman said that the Services Council had had an
interesting debate on this item.  The General Council was considering proposals to clarify and
reinforce WTO rules on regional and integration agreements in the context of the next round of
negotiations.  He suggested that the Council for Trade in Services await for direction by the GeneralCouncil on this item and revert to it at an appropriate time in that light.
C. REVIEW OF THE ANNEX ON AIR TRANSPORT SERVICES UNDER PARAGRAPH 5
OF THE
 ANNEX
23. The Chairman recalled that, at its last meeting, the Council had agreed that the Secretariat
would prepare a note containing information on the work carried out by other organizations, as
suggested in the paper submitted by the delegations of New Zealand, Chile and Singapore
(S/C/W/113).  Accordingly, a paper had been prep ared by the Secretariat, titled "Recent Trade-
Related Activities of International Intergovernmental Organizations in the Field of Air Transport",
and circulated as document S/C/W/129.  The Chairman invited a representative of the Secretariat to
introduce the paper.
24. A representative of the Secretariat explained that the note had been intended as a resource
paper for the review.  It was based on a previous Secretariat paper on air transport, document
S/C/W/59.  It was confined to the activities of inter-governmental bodies and to trade issues, even
though it had proven difficult at times to draw a clear separation;  for example, competition issues
were generally not referred to, except for the outline of airline alliances, even though they might
influence trade.
25. The representative of Canada commented in general on the two mandated reviews, the one of
the Annex of Air Transport and the one of MFN exemptions, to voice his delegation's concern that
they might not take place.  He stressed that they had to be conducted, and suggested that they takeS/C/M/40
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place during the first six months of 2000, on the basis of a timetable to be decided after informal
consultations by the Chairman.  His delegation's only concern was that they should not begin before
the Seattle Ministerial, but he wanted to be given certainty that they would take place afterwards.
26. The representative of New Zealand said that he would revert to the Secretariat note at the next
meeting.  On a preliminary basis, he echoed the comment that the note was a very useful resource
paper going into the review, as well as a help ful means of developing the matrix suggested in
paragraph 14 of the paper submitted by his delegation and the delegations of Chile and Singapore,
which was intended as a Member-driven activity.  Responding to Canada's comment, he was of the
view that background work of the kind produced by the Secretariat in document S/C/W/129 was
needed before engaging in the review substantively.
27. The representative of Australia concurred that the Secretariat note was useful and shared
Canada's view that a concrete time-frame for the review was necessary to dispel Members' concerns.
The representative of Hong Kong, China noted that the Secretariat paper seemed to contain a wealth
of information.  On Canada's comment, he stressed the importance of including a reference to themandated reviews, and other Council matters, in the Ministerial Declaration, and added that Members
were not already in a position to decide on their time-frames.  The representative of India reserved his
delegation's position on Canada's suggestion.
28. The representative of the European Communities said that his initial thinking about how to
conduct the reviews of air transport and of MFN exem ptions was that the two reviews were similar in
terms of procedure and were part of the negotiations.  During the course of the negotiations, MFN
exemptions would have to be considered both bilaterally and multilaterally.  He did not have a
definitive view on Canada's proposal, but felt that, given that the review was part of the negotiatingprocess, it would probably follow its timing.  From a legal standpoint, the review was to start, at least
on a  pro forma  basis, in 1999, but its substantial part would be addressed only after the Seattle
Ministerial.
29. The representative of Japan said that the paper produced by the Secretariat was useful, and
would be studied further.  As concerned the conten ts of the matrix proposed by New Zealand, Chile
and Singapore, he said that elements of bilateral agreements, as well as competition policy-related
elements should be included.  On Canada's suggestion on timing, he agreed that informal
consultations by the Chairman would be appropriate.
30. The representative of Argentina said that he would comment on the Secretariat note at the
next meeting.  Responding to delegations' comments, he said that the air transport and the MFN
exemptions reviews were separate and distinct from the negotiations.  He acknowledged that the
Services Council was mandated to conduct both reviews, but added that beyond these mandates thetwo reviews were different in nature and scope.  On Canada's suggestion, his initial reaction was that a
time span of six months could work well for the MFN exemptions review;  he was also in favour of
having deadlines, so that work would not be unduly delayed.
31. The representative of Venezuela said that she was a priori  not opposed to including the
review in the negotiations, so long as work on GATS rules and on Article VI:4 disciplines was also
included.  To ensure consistency in the negotiations, the review should be started and pending tasks
be concluded before addressing other issues.
32. By way of preliminary comments, the representative of Singapore said that the Secretariat
note was a useful resource paper.  He concurred with Argentina that the reviews were separate and
distinct from the negotiations;  Members were obligated to begin these reviews, which would thenfeed into the negotiations.  On their time-frame, he ag reed that they should start before the end of the
current year and that setting deadlines would be useful;  he was quite open about the suggested sixS/C/M/40
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months period.  He stressed the importance of referr ing to the reviews in the negotiating guidelines, to
reaffirm the Uruguay Round mandate.
33. The representative of Cuba said that she would revert to the Secretariat note at a later
meeting, but noted the reference, in paragraph 12, to the UNCTAD Expert Meeting on air transport
held in June 1999.  She reserved her delegation's right to come back on Canada's suggestion.
34. The representative of the United States said that he would come back to the Secretariat paper
at a later meeting.  He stressed that there was no question that the reviews of the air transport Annex
and of MFN exemptions would take place and that they were distinct and separate from the
negotiations.  On their timing, he had no definiti ve position, but suggested that the two reviews be
considered on different merits and not necessarily on the basis of the same time-frame.
35. Commenting on the two reviews, the representative of Norway said that it was important to
go by the letter of the mandate in the GATS and start them in 1999, as the Council was already doing
in practice in discussing the relevant agenda items.  In his view, the reviews were separate from, but
would feed into, the negotiations.  As concerned their timing, she agreed that the Chairman should
consult informally and that setting deadlines was important.
36. The representative of Japan said that the relationship between the negotiations and the review
was important.  The Annex on Air Transport Servic es was clear in tasking the Council for Trade in
Services with the review of developments in the sector and the operation of the Annex.
37. The representative of Ecuador asked that the Secretariat note be made available rapidly also
in Spanish.  He agreed that the review was mandated and was distinct from the negotiations.  He felt
its timing could not be determined as yet, as it was linked to the time-frame of the negotiations and on
whether the negotiations would conclude with a single undertaking.  On the proposal that theChairman of the Services Council hold informal c onsultations on the timing of the review, he felt that
this was rather a matter for the General Council.
38. The representative of Canada said that there was a legal obligation to begin the review, which
was a distinct process from the negotiations.  He had suggested setting deadlines in view of
transparency considerations, and felt that the Counc il could agree that the review start in 2000 and
that the Chairman hold informal consultations to decide on their precise time-frame.
39. The representative of Guatemala said that the Secretariat note was a useful summary for
discussion, and concurred that it should be made available in Spanish quickly.  She said that the
reviews were distinct from the negotiations, and was in favour of setting out a work-plan to prepare
the review transparently.
40. The representative of New Zealand noted that paragraph 5 of the Annex on Air Transport
Services prescribed that the review start before 2000, and that his delegation would have problems if
it did not.  He agreed with the representative of Norway that the review had in practice already
started;  the Council had been discussing the Annex on Air Transport Services for the previous two
meetings and the Secretariat note S/C/W/129 was also available as a resource document.
41. The representative of the European Communities was unsure that the review had already
started;  he was in favour of the Chairman having informal consultations on the process.
42. Summing up the discussion, the Chairman noted that the Secretariat paper had generated a lot
of interest;  many delegations had requested more time to study it further and that the Council should
revert to it at its next meeting.  He also thought that Members had agreed that the review process was
separate from the negotiations.  He noted that the review of the Annex on Air Transport Services hadS/C/M/40
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been on the Council agenda for a couple of meetings, that a paper on the issue had been submitted by
the delegations of New Zealand, Chile and Singapore and that a note had been prepared by the
Secretariat;  it seemed reasonable to conclude that the review had started, at least on the planning and
organizational side.  He therefore suggested that Me mbers agree that the review of the Annex on Air
Transport Services, having started, be continued up early next year and that he consult informally withdelegations, after the Seattle Ministerial Conference, on its time-table and modalities.
43. The representative of Japan fully supported the Chairman's conclusions.  The representative
of Ecuador said that he could agree that the preparatory process for the review had started, but that its
substance would be taken up only after informal consultations by the Chairman.  The representative of
Hong Kong, China concurred;  he added that a close link existed between the review and the
negotiations, as the results of the former could feed into the latter.  The representative of Argentina
agreed with the Chairman's suggestion, and also noted that a majority of Members had said that thereview was a distinct process from the negotiations.  The representative of the European Communities
agreed with the Chairman's suggestion, but with the understanding that this carried no obligation onthe European Communities' part until the end of the year.
44. The Chairman concluded that the Council would take note of the statements made and
proceed as he had outlined.
45. It was so agreed.
D. REVIEW OF ARTICLE II (MFN) EXEMPTIONS
46. The Chairman recalled that, at its last meeting, the Council had held a discussion of this item.
It had been suggested that the Secretariat prepar e an updated compilation of all MFN exemptions,
those resulting from the Uruguay Round as well as from subsequent negotiations on financial servicesand telecommunications.  The Secretariat had accordingly produced a note containing that
compilation (Job No. 6116, dated 14 October).  It had been prepared as background material for the
review of MFN exemptions as required by paragraph 6 of the Annex.
47. The representative of Canada suggested that the understanding reached for the review of the
Annex on Air Transport Services be adapted, mutatis mutandis , to the review of MFN exemptions.
48. The representative of Japan reiterated that the review of MFN exemptions was a separate
process from, but would nonetheless contribute to, the negotiations.  He said that the Annex on Article
II exemptions stated that the review was to start wi thin five years from the entry into force of the
WTO Agreement;  given this mandate, and the importance of the exercise, the review should start as
soon as possible.  His delegation would be pragmatic and agree that the substantive part of the review
would start at the next Council meeting.  He said that the compilation prepared by the Secretariat was
valuable;  an initial examination had shown that th e sectors for which exemptions had been frequently
taken included, for example, transport and financial services.  He suggested that it would be useful to
conduct the review sector-by-sector, but had no specific idea about possible modalities;  he was in
favour of the Chairman holding informal consultations on how to proceed with the review.
49. Commenting on the compilation of exemptions, the representative of Hong Kong, China said
that the document being over 200 pages long was in itself an indication of the importance of the
process.  He also supported the views expressed by the representatives of Canada and Japan.  He
wondered whether the information on which the compilation was based was organized in such a way
as to allow for different kinds of analysis, such as sector-by-sector or by rate of prevalence in
particular areas.  A representative of the WTO Secretariat explained that it was possible to examine
the exemptions following different kinds of approaches, and the that Secretariat was ready to conduct
any analysis that Members agreed to request.S/C/M/40
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50. The representative of Australia shared Canada's  view that the review continue early in 2000
and that the Chairman consult informally with delegations after the Seattle Ministerial on its
modalities and time-frame.  The representative of the European Communities was in favour of
adopting, mutatis mutandis , the understanding reached on the review of the air transport Annex.  The
representative of Argentina concurred, but was opposed to the idea that additional tasks be given to
the Secretariat, as these would go beyond the purpose of the review.
51. The representative of the United States was in favour of Canada's suggestion;  he raised a
procedural question of whether the circulation of the compilation of MFN exemptions produced by
the Secretariat had been premature.  The Chairman replied that, at the previous Council meeting, it
had been acknowledged that the compilation would be based on information which was already in thepublic domain and that it represented simply an update of a document which the Secretariat had
produced in 1994.  He stressed that no agreement had been reached about requesting any analysis ofthe information by the Secretariat.
52. The representative of the Philippines agreed with Canada's suggestion, but said that the air
transport Annex and MFN exemptions reviews might be different.  In the case of air transport,
Members were called upon to review developments in the sector and the operation of the Annex,
whereas in the case of MFN exemptions they had to decide whether the conditions, which had createdthe need for the exemptions, still prevailed.
53. In summing up the discussion on this agenda item, the Chairman said that the Council would
adopt the same approach as for the review of the Annex on Air Transport.  The compilation produced
by the Secretariat had generated interest;  many delegations had requested more time to analyse it
further and that the Council should revert to it at its next meeting.  He also thought that Members hadagreed that the review process was separate from the negotiations.  He noted that the review of MFN
exemptions had been on the Council agenda for a couple of meetings and that the Secretariat had
produced a compilation of all exemptions;  it seemed reasonable to conclude that the review had
started, at least on the planning and organizational side.  He therefore concluded that the review of
Article II exemptions had started and would be continued early next year;  he would consultinformally with delegations, after the Seattle Ministerial Conference, on its time-table and modalities.
On Japan's comment about dealing with the substanc e of the review at the next Council meeting, he
noted that the next meeting might be further away in the future than normally.
E. ELECTRONIC COMMERCE – CLARIFICATION OF THE RELATIONSHIP BETWEEN
EXISTING SERVICES COMMITMENTS AND THE INTERNET
54. The Chairman drew Members' attention to document S/C/W/130, which contained a
communication from the United States entitled "Clarification of the Relationship between Existing
Services Commitments and Internet".  He invited the delegation of the United States to present the
paper.
55. The representative of the United States explained that his delegation had been talking with
other delegations about this issue since Spring.  The rationale behind the paper was the fact that the
Internet was the main platform for electronic commerce and the need was felt to clarify itsrelationship with existing services commitments.  Paragraphs 4 and 5 explained what was meant by
the term "Internet", namely a network of networks founded on the use of the same protocol to link
different networks.  Paragraphs 6 and 7 related this to the provisions of the Annex on
Telecommunications negotiated in the Uruguay Round.  Paragraph 5(b)(iii) of that Annex prescribed
that Members permit the use of operating protocols of service suppliers' choice in the supply of anyservice, thereby underscoring the relationship between the Internet and existing GATS commitments.
His delegation and others were of the view that the Internet was important to electronic commerce;
hence S/C/W/130 suggested, in paragraph 2, that the Seattle Ministerial Declaration take note of thisS/C/M/40
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relationship.  The United States communication had been tabled in the Council for Trade in Services
because its points related to the GATS, but his delegation would introduce the idea and the paper,
possibly in a shorter version, also to the General Council.
56. The representative of Switzerland said that, whilst further reflection was needed, he agreed
with the notion that the Telecom Annex applied to all telecommunications services, including Internet
services;  it provided for obligations on public tel ecom services, so that Internet-related and Internet
access services were governed by the Annex to the extent that they were publicly offered.  He
wondered whether the connection with public availability was present in the United States paper.  As
concerned the proposal about the Ministerial Declaration, his initial thinking was that the issue was
linked to the standstill on customs duties, and would have to be viewed in that context.
57. The representative of Panama said that electronic commerce had acquired and continued to
acquire importance for trade.  The United States submission illustrated some of the confusion still
surrounding the issue.  For example, he noted that paragraph 4 of the United States submission was
tautological;  the Internet was being defined by explaining what it was.  Defining the Internet as a
global network of networks implied that the differ ent types of networks, what connected them, and
any other existing network which was in turn connected would be included.  The reference to the links
existing between networks being part of a global platform was unclear;  he felt that more work wasneeded in terms of definitions before any recommendation could be agreed.  He said that in
paragraph 5 there was a confusion about the use of protocols and the supply of services in the use of
these protocols.  It was not clear that a service supplied electronically was not in itself a new form of
supply and what the implications on the relationship between modes 1 and 2 was;  he suggested that
this paragraph added to the confusion.  A recommendation on electronic commerce might be adesirable end but the confusion which still existed on this subject demonstrated that further work was
needed before any such recommendation could be made.
58. The representative of Norway shared the United States' clarification of the relationship
between existing commitments and the Internet, and suggested that the Council take note of the
proposals contained in paragraph 2 of the paper and revert to them in the appropriate forum.
59. The representative of the Dominican Republic said that the suggestion in paragraph 2 of the
United States paper was linked to the Work Pr ogramme on electronic commerce organized by the
General Council, including the need to consider the impact of the standstill on customs duties on
Members' revenues.  He said that the United States contribution dealt with a relevant issue, for which
there was no consensus and which merited consideration.  He was unsure of the need to re-consider
the Telecom Annex, its impact on electronic commerce, and in this respect sought clarification on
whether the reference to "relevant elements" in the United States paper implied that only some of the
Annex provisions would apply.
60. The representative of the European Communities said that the United States paper was useful
and should be taken into account in the run up to the Seattle Ministerial.  He felt that the same
reasoning explaining the relationship between existing commitments and the Internet could be
extended to commitments and electronic commerce in  general.  He stressed that the technological
means of supply should not affect, in any way, Members' commitments.  He reserved the right to
come back with further comments.
61. The representative of India said that he would revert to the United States paper at the next
Council meeting.  He stated that the Work Programme on electronic commerce was under discussion
in the General Council, and hence discussion of this issue should be taken up by the Council for Tradein Services only after receiving directions from the General Council.  On a preliminary basis, he
shared Panama's view that the Work Programme on electronic commerce had not been completed and
that it was not appropriate, at the present juncture, to include this issue in the Seattle Declaration.S/C/M/40
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62. Referring to paragraph 5(b)(iii) of the Telecom Annex, the representative of Japan said that
the term "operating protocols" was not meant to exclude any protocol a priori, and hence he had no
difficulty in agreeing that the Internet Protocol and the Transport Control Protocol were included.
However, on the proposal for a recommendation to the Seattle Ministerial, he said that such questions
had to be discussed in the General Council, to achieve an overall balance of recommendations takinginto account the different interests.
63. The representative of Australia sought clarification on three aspects.  First, she wondered if
the Internet might be handled as a single bundling of services of unlimited range, accessed through a
common transport system;  second, whether it was a value-added rather than a basic
telecommunications service;  and third, if it might constitute a private network, with some doubt about
the application of all current obligations.
64. The representative of Colombia said that he di d not have detailed instructions as yet, and
therefore could not endorse the recommendation in paragraph 2 of the United States submission.  He
felt that this was an important issue, which merited further consideration.
65. The representative of Canada offered general support for the elements suggested in
paragraph 2 of the United States paper, which he thought was practical and helpful.
66. The representative of Venezuela said that the United States paper was a useful document,
reflecting progress made in the Work Programme.  She supported the proposed recommendation for
the Seattle Ministerial, but asked clarification about the meaning of point 2 of paragraph 2.  She
agreed with Panama that confusion existed in relation to definition and noted the need to clarify it.
67. In a preliminary manner, the representative of  Hong Kong, China agreed with the underlying
thrust of the United States paper, and supported the line taken by the delegation of Switzerland, but
sought clarification on whether individual tele communications transport services were indeed
required, explicitly or in effect, to be provided to the public generally, as this question remained
unexplained.
68. The representative of Indonesia said that more detailed analysis of the United States paper
was needed and that he would provide further comments at a later stage.  He needed to consult his
authorities in particular on the proposal in paragraph 2, as this was part of an issue which the General
Council might want to include as an element for fu rther work in the area of electronic commerce.  He
also sought clarification on whether the Telecom Annex could be applied to committed services other
than telecommunications;  this needed to be clarified before any text could be proposed for inclusion
in the Ministerial Declaration.
69. The representative of the Philippines said that the United States proposal was linked to the
discussions on technological neutrality.  If technological neutrality was the common understanding,
then there was no need to reaffirm it in the Ministerial Declaration;  if it was not, then the implications
needed to be analysed concretely before making any recommendation with respect to the Declaration.
70. On a preliminary basis, the representative of Iceland said his delegation supported the
proposal in paragraph 2 of the United States paper.
71. The representative of Guatemala reserved her delegation's position, but by way of preliminary
comment supported the views expressed by the representative of Panama and noted that the Council
for Trade in Services was no longer the competent body on the issue, as the Work Programme on
Electronic Commerce was being discussed in the General Council.S/C/M/40
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72. The representative of the United States than ked delegations for their comments and said that
his delegation would modify its paper on the basis of some of these before submitting it to the General
Council.  Responding to the question by the representative of Indonesia about the nature of the
Telecom Annex and how it related to commitments on basic telecommunications, he noted that the
Annex applied to all scheduled services, as was implied in paragraphs 1 and 5(a).  On the DominicanRepublic's comment about the implications of the moratorium on the imposition of customs duties, he
noted that a study of the issue had been carried out, and a copy could be obtained from the WTO web-
site.  In the summary, it was stated that trade in potentially digitizable media goods, which currently
faced a tariff in some countries, represented less than one percent of total world trade, and that the
revenue collected on these products amounted to less than one percent of total tariff revenue in most
countries. Responding to the question about the application of the Telecom Annex, he stressed that
this applied in all its parts.
73. He said that existing commitments were related to the use of Internet protocols over public
telecommunications transport networks and service (PTTNS) by service suppliers.  If a Member had
no services commitments, no other Member would have a right to supply a service in the territory of
that particular Member using the Internet.  As to the question concerning value-added versus basic
telecom services, his delegation had talked to several others about their domestic regulatory systemsand had received differing views;  therefore, he was not suggesting that Members take a unified
approach in this regard.
74. He agreed that the electronic supply of a service was not a new form of supply, as referred to
in paragraph 5(a) of the Annex.  However, he did not agree that Members should arrive at a new
definition of PTTNS or of the Internet before making recommendations about the relationshipbetween existing commitments and the Internet in th e Ministerial Declaration.  The question had been
decided by the definition in paragraph 3(b) of the Telecom Annex:  it was up to every Member to
decide what networks should and which should not be regulated as PTTNS.  In the United States
paper, the Internet was defined as a unique combination of public and private telecom transport
networks.  However, the United States was not taking any position in this regard, as it was up toMembers to define which telecom transport networks were public, and regulated as such, and which
ones were private.  He also noted that the Internet had been successful because it had been left as a
private network and had remained largely unregulated.
75. On the point relating to technological neutrality raised by the representative of the
Philippines, he explained that the United States paper was not implicitly endorsing technological
neutrality;  it addressed existing commitments and how the use of Internet Protocols over public
telecommunication transport network was permitted under such commitments.  As concerned doubtsthat the discussion on the relationship between existing commitments and the Internet would go
beyond what was in Members' commitments, he specified that the United States paper only referred to
the relationship between existing commitments and the Telecom Annex obligations and was not
suggesting that there was a need to come up with new commitments.  He said that noting in the work
programme that confusion existed was important, but existing commitments already offered themeans of dispelling such confusion.
76. The representative of the Dominican Republic said that the point about definition raised by
the United States delegation was interesting and merited further thought.  He acknowledged that a
study on the effects of electronic commerce had been carried out and was available on the WTO web-
site, but noted that the paper was not an official WTO Secretariat document and represented solely theopinions of the author.  This had to be taken into account in the debate, together with other issues,
such as discussions taking place in the General Council.
77. The representative of Argentina noted that point 2 in paragraph 2 of the United States paper
referred to "any service" listed in a Member's schedule.  He therefore sought clarification on whether,S/C/M/40
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if it was agreed that the Internet was covered by the Telecom Annex, services supplied through the
Internet would have to be permitted regardless of Members' commitments, for example, where no
commitments had been undertaken with respect to modes 1 and 2 for a particular service sector.
78. The representative of Panama observed that the Internet was not a platform, as stated in
paragraph 2 of the United States paper, but rather a network of networks dialoguing through different
platforms.  He also doubted that, even if it were a platform, the Internet would be "the main emerging
global platform for electronic commerce", as the volume of electronic commerce taking place over the
Internet was still small with respect to the one taking place over intra-firm networks.
79. The representative of the United States said that the paper analysing the potential revenue
effects of the moratorium on the application of customs duties to electronic transmissions had not
been mandated by the 1998 Declaration on Global Electronic Commerce, but had been discussed in
meetings and that the report which was now available was what Members had been expecting.  Asconcerned Argentina's question, he replied that if a Member had acceded to the WTO with no
commitments, then that Member would have no oblig ation to allow the supply of any service on the
Internet.  Responding to Panama's comments, he agreed that the volume of transactions on private
networks was much higher than on the Internet.  In the Telecom Annex, the right to designate PTTNS
was reserved to each Member;  the United States delegation was not suggesting changing thedefinition of PTTNS.  He also agreed that that the term "global platform" in paragraph 2 of his
delegation's paper could be changed to "publicly accessible global platform".
80. Summing up the discussion of this item, the Chairman noted that the Council for Trade in
Services had reported to the General Council on the Work Programme on Electronic Commerce and
was waiting for directions in preparation for the Seattle Ministerial.  He also recalled that the UnitedStates delegation would follow up the issues raised in their submission in the General Council.
F. ACCEPTANCE OF THE FIFTH PROTOCOL
81. The Chairman said that this item had been placed on the agenda at the request of the
delegation of the United States.  He drew Members' attention to an updated list prepared by the
Secretariat, dated 30 September, of Members who had accepted the Fifth Protocol.  He invited thedelegation of the United States to take the floor.
82. The representative of the United States expressed concern and disappointment about the
status of acceptances of the Fifth Protocol.  His delegation was pleased by Costa Rica and Nicaragua's
acceptance.  However, ten Members were yet to accept:  Bolivia, Brazil, Dominican Republic, Ghana,
Jamaica, Kenya, Nigeria, Philippines, Poland and Uruguay.  He stressed full and immediate
implementation of WTO obligations was important;  the acceptance of the Fifth and Fourth Protocols
was one of the issues requiring attention.  His delegation would welcome an update from the tenMembers on whether they had not accepted because of procedural reasons, and from the Chairman of
the Committee on Trade in Financial Services about his efforts to encourage acceptance.
83. The representative of Switzerland thanked the United States delegation for raising the issue,
and joined in urging outstanding Members to accept the Protocol, if possible before the start of the
new round.  The representative of Canada concurred.
84. Mr Jean Le Cocguic, Chairman of the Committee on Trade in Financial Services, thanked the
United States delegation for its intervention.  He noted that the Annual Report on the activities of the
Committee reflected that the issue had been discussed in 1999 and would be discussed in the future
meetings.  In May, a letter requesting information on the status of the ratification process had been
sent to Members who had not, up to that point, accepted the Protocol.  Since then, Costa Rica and
Nicaragua had accepted, and other Members had indi cated that the problems they were facing wereS/C/M/40
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procedural in nature, but had not indicated a specific date for acceptance.  The second paragraph of
the letter read:  "It is of course understood that domestic procedures for the ratification and acceptance
of international agreements are often time-consuming and can be unpredictable, but I am sure you
would also agree that it would be very unfortunate if procedural delays were to call in question the
commitment of governments to carry through these important undertakings or to weaken the powerful
message of support for the multilateral system which the success of the negotiations represented."  He
said that the issue would be a matter of priority on the agenda for the next Committee meeting.
85. The Chairman said that the Council for Trade in Services would take note of the statements
made and hoped for progress in due course.
G. ANNUAL REPORT TO THE GENERAL COUNCIL
86. The Chairman drew Members' attention to the draft annual report to the General Council on
the activities of the Council for Trade in Services in 1999.  He said that the symbol of this document,
originally S/C/W/126, had been changed to S/C/W/128.  The report was factual and self-explanatory;
some reference would be added on the two mandated reviews, of MFN exemptions and of the Annex
on Air Transport Services, and on the two decisions taken by the Council, on Article XXI procedures
and on the extension of the deadline of negotiations on emergency safeguard measures.  The last
section on the activities of subsidiary bodies would be completed once the Council received the
reports of those bodies, which would then be annexed.
87. A number of Members commented on the draft text.  The essence of Members' remarks is
reflected in the revised text of the report, contained in document S/C/W/128/Rev.1.  The Chairman
suggested that Friday, 22 October be set as the deadline for any further comments by delegations on
the revised text;  provided that these were not substantial, but only editorial in nature, the Secretariatwould work them in the text, which would then be agreed as circulated and submitted to the General
Council.
88. The Council so agreed.
H. OTHER BUSINESS
89. The Chairman drew delegations' attention to three informal notes concerning three requests
for observer status in the Council for Trade in Services, from the World Health Organization, the
Islamic Development Bank and the League of Arab States.  Since the requests had been raised under
Other Business, he did not suggest that a decision be taken at the present time, but proposed that the
Council take note and revert to the matter at its next meeting.
90. It was so agreed.
91. He then offered the floor to the representative of the Dominican Republic to present the paper
on tourism services tabled by his delegation and the delegations of El Salvador and Honduras,circulated as document S/C/W/127 and as docume nt WT/GC/W/372 in the General Council, and to
the representative of Venezuela, who had asked for an opportunity to present the paper by her
delegation on the new round of negotiations, circulated to the General Council as document
WT/GC/W/281.
92. The representative of the Dominican Republic gave a brief introduction of the paper by his
delegation and the delegations of El Salvador and Honduras, hoping that more discussion could take
place at the next meeting.  The document, which had been prepared at the request of several members
of the World Tourism Organization, consisted of two papers, circulated together as one text;  the first
one dealt with the background and rationale for a specific treatment of tourism services, and theS/C/M/40
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second one contained a draft Annex on Tourism.  It did not contain any definitive proposals and did
not intend to pre-empt other proposals.  He suggested that the issue be placed on the agenda for the
next Council meeting for a more substantial discussion.
93. It was so agreed.
94. The representative of Venezuela presented the paper by her delegation.  The first part
summed up the unfinished business and unresolved issues from the Uruguay Round, arguing that
these should be taken up during the next round of negotiations as an independent process from the
general negotiating exercise and as a pre-requisite for wider opening up of services trade;  it then
outlined the imbalance in levels of commitments on the part of developing and developed countries,
as shown by the results of the extended negotiations on telecommunications and financial services,
where developing countries commitments had been greater than those of some of their more
economically advanced trading partners.  Such issu es needed to be resolved before moving on with
further liberalization.  The second part of the paper dealt with the guidelines and procedures for the
next round of negotiations.  It stressed that the existing GATS architecture and positive listing system
should be maintained, all sectors and modes should be included, the integration of developing
countries in the international trading system should be facilitated through the full application of
Article IV of the GATS.  Amongst new issues to be dealt with were the development of multilateralcompetition rules and the development of suitable mechanisms to make Article IV effective and
operational.  On the logistics side, the proliferation of meetings and working groups, as well as
parallel meetings, should be avoided, to enable  smaller delegations to participate fully in the
negotiations.
95. The Chairman thanked delegations for their attention.  As concerned the date for the next
Council meeting, he said that this was still unclear due to the preparatory process for the Seattle
Ministerial Conference.  He suggested that the Council entrust him with the task of calling the next
meeting as and when necessary and in view of delegations' other commitments, bearing in mind the
need not to delay it too long.
96. It was so agreed.
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