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S/CSC/W/61  
 
12 March 2013  
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Committee on Specific Commitments    
 
SERVICES CLASSIFICATION IN WTO JURISPRUDENCE 
NOTE BY THE SECRETARIAT1 
This Note has been prepared in response to a request by the Committee on Specific Commitments 
as input to its discussion on the classification of services. It begins with a background section 
describing the history and purpose of the Sectoral Services Classification List (MTN.GNS/W/120), 
the classification system generally used by Me mbers under the GATS. The following main section 
then examines services classification issues arising in the WTO jurisprudence, including the 
approach panels and the Appellate Body applied to the interpretation of sectoral entries in 
schedules. The Note concludes with some general observations. 
1. BACKGROUND 
1.1 W/120 and CPC 
1.1.  The Sectoral Services Classification List (W/120) was developed by the GATT Secretariat in 
1991 to aid Members in the negotiations on trad e in services and the scheduling of specific 
commitments during the Uruguay Round. It consists of eleven broad sectors as well as a residual 
category "Other Services Not Included Elsewhere". Further, it is divided into over 150 subsectors. As it is intended to be comprehensive, each sector and various sub-categories include a residual 
range of "Other" services. W/120 was prepared based on the 1991 Provisional Central Product 
Classification (CPC) system of the United Nations. Therefore, subsectors in the list, where possible, 
are annotated with CPC numbers. The corresponding explanatory notes of the CPC then describe what is covered by the services listed in W/120. 
1.2.  When W/120 was prepared, there were a num ber of international sectoral classification 
systems in existence or under development. It was then understood that these systems, while 
created for statistical purposes, could constitute the basis for drawing up a reference list for 
negotiations on trade in services. The choice of a particular system depended on whether the focus 
should be on the classification of international transactions in services, or of services activities, or of products.
2  
1.3.  In developing its recommendations on what kind of system would be appropriate for the 
needs of the (then) Group of Negotiations on Services, the GATT Secretariat made an evaluation of the strengths and shortcomings of the main international classification systems representing each of the three categories. The IMF Balance of Paym ents (BOP) classification was examined as the 
main example of the first type; th e International Standard Industrial Classification (ISIC) as the 
prime example of the second category; and the pr ovisional Central Product Classification (CPC) 
system as characteristic of the third type. 
1.4.  The focus of transaction-based classifi cations is on cross-border transactions and 
consumption abroad involving flows of foreign exchange and, unlike activity- or product-based systems, they are not designed to capture full y the universe of commercially supplied services. 
Activity-based classifications are usually incomplete in terms of statistical coverage of trade in 
services because recorded activities may not corresp ond with the actual production of services. It 
                                               
1 This document has been prepared under the Secret ariat's own responsibility and is without prejudice 
to the positions of Members and to their rights and obligations under the WTO. 
2 MTN.GNS/W/50. S/CSC/W/61 
 
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  is ultimately service outputs (what is traded), an d not the activity that generates the outputs (who 
is trading), which enter international trade and which are the subject of commitments.  
1.5.  The CPC approach was clearly preferred beca use of its implicit coverage of all modes of 
supplying services and its highly disaggregated na ture, which allows for a detailed description of 
services sectors and sub-sectors. For example, the CPC distinguishes nearly 600 service products 
in contrast to 300 services activities under ISIC . From the point of view of negotiations, an 
important characteristic of the CPC is that its explanatory notes contain a description of the broad 
spectrum of outputs or "service products" of heterogeneous service industries. The explanatory 
notes give sufficiently detailed descriptions of services for the purpose of delineating with some precision the scope of a specific commitment.  
1.6.  Conscious of on-going work in various inte rnational fora on conceptual and methodological 
issues relating to the classification of services, the cover note of W/120 states that the list could be 
subject to further modification in the light of developments in the services negotiations and on-going work elsewhere. 
1.2  Application of W/120 in GATS Schedules 
1.7.  While it is not obligatory for Members to use any particular classification system under the 
GATS, the Scheduling Guidelines (S/L/92) encourage Members to use W/120 and the CPC 
references when scheduling commitments in orde r to ensure the accuracy and clarity in the 
description of each sector or sub-sector scheduled. Although Members are allowed to use their own sub-sectoral classification or definitions, according to the Scheduling Guidelines, they should provide CPC concordances whenever possible or "give a sufficiently detailed definition to avoid any 
ambiguity as to the scope of the commitment".
3 
1.8.  For certain sectors, the GATS framework also offers other classifications which more or less 
deviate from W/120 or provide refined guidance for the scheduling of specific commitments. The 
Annex on Financial Services contains an alternativ e classification for financial services. The Annex 
on Air Transport excludes traffic rights and services directly related to the exercise of traffic rights from the GATS and specifically lists three sub-sectors that are covered: aircraft repair and 
maintenance services, selling and marketing of ai r transport services and computer reservation 
system services. The Maritime Model Schedule th at emerged from the negotiations on maritime 
transport presents a classification of maritime  transport which partly differs from W/120. In 
telecommunications, the Chairman's Note for Scheduling Basic Telecom Services Commitments 
seems to define the nature and scope of relevant subsectors in W/120 by introducing a 
"technology neutral" approach. 
1.9.  Members have generally followed the stru cture of W/120 to schedule their commitments. The 
majority of Members have used W/120 and CPC to describe most sectors and subsectors listed in 
their schedules. Some Members have chosen to use other classifications for certain sectors/subsectors. 
2  ISSUES ARISING IN WTO JURISPRUDENCE 
2.1.  In making rulings on services-related disputes, panels and the Appellate Body normally begin 
their analysis with the identification of the serv ices at issue as they first need to determine 
whether the measures at issue are "measures affecting trade in services" within the meaning of 
Article I of the GATS. The services at issue also define the scope of a dispute. If the inconsistency 
claims relate to GATS Article XVI and/or Article XVII, panels and the Appellate Body then need to 
determine whether any specific commitments have  been undertaken concerning the services at 
issue and what the scope of the commitments is.  
2.2.  To date, 23 cases cited the GATS in the requests for consultations, but only seven of these 
cases went through the adjudicatory process. GA TS-related legal issues arising in four panel 
reports were appealed. This note focuses on classification-related issues which arose in panel and 
Appellate Body proceedings.  
                                               
3 S/L/92, para. 24. S/CSC/W/61 
 
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  2.1 Identification of the Services  at Issue in Individual Cases 
2.3.  In some cases, identification of the services at issue appeared straightforward: they were 
clearly indicated in the complainant's claims and coul d be easily identified as they explicitly figured 
in W/120 and CPC, and there was no disagreement between the parties on this matter. In some 
other cases, panels and the Appellate Body needed to identify the services at issues to see how 
they were related to the measures at stake and relevant commitments. 
2.1.1  Wholesale trade services  for bananas (EC - Banana III) 
2.4.  In EC - Banana III , the complainants (Ecuador, Guatemala, Honduras, Mexico, and the Unites 
States) claimed that the European Communities'(EC 's) banana import regime, in addition to its 
inconsistency with a number of provisions of GATT 1994 and the TRIMs Agreement, was also inconsistent with Articles II and XVII of the GATS because it discriminated against distributors of 
Latin American and non-traditional ACP bananas in favour of distributors of EC and traditional ACP 
bananas. The complainants considered such dist ributors to be suppliers of "wholesale trade 
services". The EC argued that its banana import regime could not be considered to be "measures 
affecting trade in services" within the meaning of the GATS and that "wholesale trade services" 
covered only the distribution of ripened (yellow) bananas, while the measures at issue related to 
the import of unripened (green) bananas. 
2.5.  The Panel examined the definition of "whole sale trade services" for the purpose of the case. 
It noted that the EC, like most Members, had adopted W/120 as the basis for scheduling their 
commitments and had inscribed CPC 622 in its schedule when scheduling commitments on "wholesale trade services". The Panel indicated: "Therefore, any breakdown of the sector should 
be based on the CPC. Consequently, any legal defi nition of the scope of the EC's commitments in 
wholesale services should be based on the CPC de scription of the sector and the activities it 
covers."
4 The Panel then examined how "wholesale trade services" were defined and described in 
the CPC. It noted:  
The CPC description of "wholesale trade services" is based on the identification of a core 
activity,that is "reselling merchandise", which could be accompanied by a variety of other 
related subordinate activities the objective of which would be to facilitate the delivery of the 
described services (i.e., reselling merchandise). In many instances, in order to resell merchandise it may be necessary to maintain inventories of goods, to sort and grade goods, to break bulk, refrigerate, and deliver goods to the purchaser. Thus, the subordinate activities 
listed in the headnote to CPC section 6 (such as maintaining inventories, breaking bulk, etc.), 
when they accompany the reselling of merchandise and are not performed as a separate service in their own right, are within the scope of wholesale trade service commitments. 
However, a distinction is made between performing any of these subordinate activities as a 
component of supplying a "wholesale trade service" and performing any of them as a service in its own right. In the case of the latter, that activity is classified in a separate CPC category 
with a different number and would be treated under the GATS as such.
5  
 2.6.  The Panel also noted that the CPC descrip tion did not make any distinction between green 
and ripened bananas. It concluded: 
We find that the distribution of bananas, regard less of whether they are green or ripened, falls 
within the scope of category CPC 622 "wholesale trade services" as inscribed in the EC's GATS 
Schedule of Commitments so long as it involves the sale of bananas to retailers, to industrial, 
commercial, institutional or other professional business users, or other wholesalers.
6 
 2.7.  The Appellate Body upheld the Panel's finding and stated: 
We note that the CPC Headnote characterizes th e "principal services" rendered by wholesalers 
as "reselling merchandise". This means that "reselling merchandise" is not necessarily the 
                                               
4 Panel Report, European Communities - Regime  for the Importation, Sale and Distribution of Bananas , 
WT/DS27/R/USA, adopted 25 September 1997, as modifi ed by Appellate Body Report, WT/DS27/AB/R, DSR 
1997:II, 943, para. 7.289. 
5 Ibid, para. 7.291. 
6 Ibid, para. 7.293. S/CSC/W/61 
 
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  only service provided by wholesalers. The CPC He adnote also refers to "a variety of related, 
subordinated services" that may accompany the "principal service" of "reselling merchandise". It is difficult to conceive how a wholesaler could engage in the "principal service" of "reselling" a product if it could not also purchase or, in some cases, import the product. Obviously, a 
wholesaler must obtain the goods by some means in order to resell them. In this case, for 
example, it would be difficult to resell bananas in the European Communities if one could not buy them or import them in the first place.  
 
The second issue relates to "integrated comp anies". In our view, even if a company is 
vertically integrated, and even if it performs other functions related to the production, importation, distribution and processing of a prod uct, to the extent that it is also engaged in 
providing "wholesale trade services" and is theref ore affected in that capacity by a particular 
measure of a Member in its supply of those "w holesale trade services", that company is a 
service supplier within the scope of the GATS.
7  
 
2.1.2  Wholesale trade services fo r motor vehicles (Canada - Autos) 
2.8.  In Canada - Autos , the complainants (the European Communities and Japan) claimed that 
Canada's certain measures affecting the automobile industry violated Canada's obligations under 
several WTO agreements, including the GATS. Conc erning the GATS, the panel requests indicated 
that the measures at issue affected trade in whol esale distribution services of motor vehicles and 
were inconsistent with Articles II and XVII. 8 During the panel proceedings, the defendant argued 
that the measures at issue did not affect trade in wholesale distribution services for motor vehicles 
and, thus, were not "measures affecting trade in services" within the meaning of Article I of the GATS. The parties did not disagree on what services were concerned, but disputed on whether the 
measures at issue affected the supply of those services. In its report, the Appellate Body stated:  
The complainants in this case allege that the "trade in services" here relevant is "wholesale 
trade services of motor vehicles", which is a ca tegory of services recognized in the Central 
Product Classification. Canada does not dispute that there are service suppliers of the United 
States, the European Communities and Japan which are established in Canada and which provide wholesale trade services of motor vehicles. Accordingly, we hold that the "trade in services" here in issue is wholesale trade se rvices of motor vehicles supplied by service 
suppliers of certain Members through commercial presence in Canada .
9 
2.9.  It is worth noting that in this case, th e Panel addressed the issue of discrepancy between a 
CPC reference and the rele vant heading in Canada's schedule. It stated: 
We note that there is a discrepancy between the inclusion of the whole CPC entry 6111 and 
the heading of the commitment ("C. Retailing se rvices") in page 48 of Canada's schedule. 
However, the fact that entry 6111 has been listed under the heading C. Retailing services 
does not constitute sufficient evidence to exclude a commitment with respect to wholesale trade services of motor vehicles. If the heading were to prevail, the systemic impact would be 
that all unqualified CPC numbers in Members' sch edules of commitments, referring to clearly 
and precisely defined subsectors, would be undermined, at least when their combination with 
headings is inconsistent. For these reasons we consider that the description of the CPC should 
prevail and that the commitments contained in page 48 of Canada's schedule also apply to wholesale trade of motor vehicles.
10  
 
2.1.3  Telecommunications se rvices (Mexico – Telecoms) 
2.10.  In Mexico - Telecoms , the United States claimed that Mexico maintained certain measures 
inconsistent with its obligations under the GATS with respect to trade in basic and value-added 
                                               
7 Appellate Body Report, European Communities - Regime for the Im portation, Sale and Distribution of 
Bananas , WT/DS27/R/USA, adopted 25 September 1997, DSR 1997:II, 591, para. 226-227. 
8 WT/DS139/2 and WT/DS/142/2. 
9 Appellate Body Report, Canada - Certain Measures Affe cting the Automotive Industry , WT/DS139/ABR, 
WT/DS142/ABR, adopted 19 June 2000, DSR 2000:VI, 2985, para. 157 (original footnotes omitted). 
10 Panel Report, Canada - Certain Measures Affecting the Automotive Industry , WT/DS139/R, 
WT/DS142/R, adopted 19 June 2000, as modified by Ap pellate Body Report WT/DS139/ABR, WT/DS142/ABR, 
DSR 2000:VII, 3043, para. 10.281. S/CSC/W/61 
 
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  telecommunications service.11 In particular,  one of the claims was that Mexico had not met its 
commitment under Sections 2.1 and 2.2 of the Reference Paper with respect to certain basic telecommunications services supplied cross-border into Mexico by facilities-based and non-facilities-based United States suppliers. According to the United States, Mexico had failed to ensure 
that Telmex provided interconnection to United States' basic telecommunications suppliers on a 
cross-border basis with cost-based rates and reasonable terms and conditions. Mexico contested this claim, stating that "its GATS schedule contains no specific commitments that would trigger the 
Section 2 commitments in the Reference Paper, and that in any case the Reference Paper 
provisions on interconnection do not extend to services which originate abroad, or are subject to international accounting rates".
12 
2.11.  The Panel noted that in determining whether commitments in Sections 2.1 and 2.2 had 
been met by Mexico, it needed to examine whether Mexico had undertaken  an interconnection 
commitment with respect to the telecommunications services at issue in this case. It therefore needed first to determine what the services at issue were. It stated:  
The United States focuses its first claim on the supply of certain basic public 
telecommunications services for which United States suppliers seek to interconnect at the border with Telmex, or other Mexican operators, for termination in Mexico, and for which, 
according to the United States, Mexico has undertaken specific commitments in its schedule. 
The specific public telecommunications services  subject to the claims are voice telephony, 
circuit-switched data transmission and facsimile services. These services are, according to the United States, of two types depending on how the service is provided. First, there are 
"facilities-based" services, whereby the service supplier provides the services over its own 
facilities. Second, there are "non-facilities-based" services (services supplied by "comercializadoras" or "commercial agencies"), whereby the service supplier provides 
telecommunications services using facilities leased from other operators.  
 
We will refer to the public voice telephony, circuit-switched data transmission and facsimile 
services, both "facilities-based" and by a "comme rcial agency", that are raised by the United 
States in its first claim as "the services at issue.
13  
 2.1.4  Gambling and betting services (United State –Gambling)  
2.12.  In United States - Gambling , Antigua and Barbuda claimed that certain US measures were 
inconsistent with US obligations under the GATS with respect to the cross-border supply of gambling and betting services. The Panel first noted that "this dispute is about 'gambling and 
betting services'. After having looked into the me aning of these terms in various dictionaries and 
taken into account the indications given by the parties as to what activities should be considered as "gambling and betting" services for the purposes  of this dispute, the panel made the following 
statement: 
The Panel does not believe that it is necessary in the circumstances of this case to define 
exhaustively the service activities falling under "gambling and betting services", as these are 
not treaty terms in this dispute. Therefore, th e Panel does not need to "interpret" these terms 
as such. In light of the ordinary meaning of th e words, the submissions of the parties and the 
specialized literature to which we have made reference, the Panel considers that "gambling 
and betting services" include any activity involv ing the placing of a bet or wager, that is, 
instances where a person risks something of value (generally money) on the outcome of an 
uncertain event. A bet or a wager can be made with respect to casino-type games, lotteries and sporting events, irrespective of how these services are supplied. The Panel notes that the 
definition of "gambling and betting services" for the purposes of this dispute includes, at a 
                                               
11 WT/DS204/2. 
12 Panel Report, Mexico - Measures Affecting Telecommunications Services , WT/DS204/R, adopted 
1 June 2004, DSR 2004: IV, 1537, para. 7.18.  
13 Ibid, para. 7.22-7.23 (ori ginal footnotes omitted). S/CSC/W/61 
 
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  minimum, the services that Antigua seeks to supply cross-border to the United States as well 
as the other services the supply of which the United States allows cross-border .14 
2.1.5  Electronic distribution of sound reco rdings (China –Publications and Audiovisual 
Products) 
2.13.  In China - Publications and Audiovisual Products , a number of China's measures were 
challenged under its Accession Protocol, the GATS and GATT 1994. With respect to the GATS, the United States claimed that China maintained certain measures inconsistent with its specific 
commitments with respect to distribution services of reading materials, audiovisual products and 
sound recordings. In particular, under the claims concerning electronic distribution of sound recordings, the parties disputed on what the servic es at issue were. The Panel noted that the panel 
request had specified electronic distribution as "d igital distribution". It then looked into the 
meaning of "digital":  
In examining the dictionary meaning of "digital", we note that it refers in a technical sense to 
"signals or information represented by discrete numeric values of a physical quantity such as 
voltage or magnetic polarization (commonly representing the digits 0 and 1)". In a more 
general sense, the same dictionary states that "digital" can refer to "the use of computer technology or digital communications, especia lly digital multimedia and the Internet".  
 
Looking at this more general meaning of "digital", we take particular note of the use of the qualifying phrase "especially digital media and the Internet". This indicates to us that there can exist "digital" communications other than over the Internet, which might include, for 
example, mobile telephone networks. From this we deduce that there can also be "digital" 
distribution other than through the Internet. We see no contextual reason to restrict the scope of the term "digital" in the US claim solely to distribution over the Internet.  
 
We therefore find that the US claim relating to the "electronic distribution of sound recordings" include their distribution through th e Internet or by other electronic means. We 
shall refer to these services in this part as the "services at issue".
15  
  
2.1.6  Electronic payment services (Chi na - Electronic Payments Services)  
2.14.  In China - Electronic Payment Services , the United States claimed that China's certain 
measures affecting the supply of electronic payment services were inconsistent with its obligations 
under the GATS. The Panel noted that the services at  issue in this dispute were determined by the 
description in the panel request, which were electronic payment services for payment card 
transactions. The parties differed on whether the services at issue related only to "inter-bank 
payment card transactions" and whether the payment card company was a party to the payment card transaction. After having undertaken analysis, the Panel concluded: 
In our view, the services at issue are therefor e electronic payment services for all types of 
payment card transactions. These are the services the Panel must focus on, regardless of the labels used by the parties to refer to them. He reinafter, we will use the expression "electronic 
payment services for transactions involving the use of various types of payment cards" (EPS) 
and "electronic payment service suppliers" (EPS  suppliers) to refer to, respectively, the 
services at issue and the service suppliers supp lying those services. We find support for this 
terminology in the fact that: (i) China does not deny that the dispute is about services related 
to "payment card transactions"; (ii) transactions with all types of payment cards are 
envisaged; (iii) these services are currently conducted exclusively through "electronic" means; and (iv) as will become clearer in the discussion on classification (Section E below), the 
services at issue are, in our view, "payment services" .
16  
 
                                               
14 Panel Report, United States - Measures Affecting the Cross-Border Supply of Gambling and Betting 
Services , WT/DS285/R, adopted 20 April 2005, as modified by Appellate Body Report WT/DS/285/AB/R, DSR: 
2005: VII, 5797, para. 6.28. 
15 Panel Report, China - Measures Affecting Trading Rights  and Distribution Services for Certain 
Publications and Audiovis ual Entertainment Products , WT/DS363/R and Corr. 1, adopted 19 January 2010, as 
modified by Appellate Body Report WT/DS363/AB/R, para. 7.1151-7.1153. 
16 Panel Report, China - Certain Measures Affecting Electronic Payment Services , WT/DS413/R, adopted 
31 August 2012, para. 7.37. S/CSC/W/61 
 
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  2.2  Determination of the Sc ope of Specific Commitments 
2.15.  In addressing inconsistency claims with re spect to Article XVI and/or Article XVII, panels 
and the Appellate Body need to determine whether the defendant has undertaken any specific commitments concerning the services at issue and what the scope of the relevant commitments is. 
To this effect, they need to interpret relevant sectoral entries in the defendant's schedule. For 
example, in US - Gambling , the Panel and the Appellate Body interpreted the entry "Other 
recreational services (except sporting)" under subsector 10.d in the United States' schedule in 
order to find whether the United States had undertaken commitments on gambling and betting 
services. Similarly, in China - Publications and Audiovisual Products , with respect to claims on 
sound recordings, the Panel and the Appellate Bo dy had to ascertain the meaning of the entry 
"Sound recording distribution services" under su bsector 2.D. "Audiovisual Services" in China's 
schedule in order to determine whether the services at issue "electronic distribution of sound 
recordings" was covered by China's commitments. In China - Electronic Payment Services , in order 
to decide whether China has undertaken commitments on electronic payment services, the Panel 
interpreted the entry in China's schedule: "All pa yment and money transmission services, including 
credit, charge and debit cards, travellers cheque s and bankers draft (including import and export 
settlement)".  
2.2.1 Interpretative approach applie d by panels and the Appellate Body 
2.16.  In interpreting GATS provisions and sched ules, panels and the Appellate Body followed the 
general rules of interpretation as set out in Articles 31 and 32 of the Vienna Convention on the Law of Treaties (the "Vienna Convention"). For the purpose of this Note, here we focus only on the 
interpretation of sector entries in schedules. 
2.17.  Schedules, when interpreted, were seen no different from other treaty text. In US - 
Gambling , the Appellate Body noted that the task of a scertaining the meaning of a concession in a 
GATT schedule as well as in a GATS schedule, like the task of interpreting any other treaty text, 
was to follow the customary rules of interpretation of public international law.17 It stated: 
In the context of the GATT 1994, the Appellate  Body has observed that, although each 
Member's Schedule represents the tariff commitm ents that bind one Member, Schedules also 
represent a common agreement among all Members. Accordingly, the task of ascertaining the meaning of a concession in a Schedule, like the task of interpreting any other treaty text, 
involves identifying the common intention of Memb ers, and is to be achieved by following the 
customary rules of interpretation of public international law, codified in Articles 31 and 32 of 
the Vienna Convention.  
 
In the context of the GATS, Article XX:3 explic itly provides that Members' Schedules are an 
"integral part" of that agreement. Here, too,  the task of identifying the meaning of a 
concession in a GATS Schedule, like the task of  interpreting any other treaty text, involves 
identifying the common intention of Members.  Like the Panel—and, indeed, both the 
participants—we consider that the meaning of the United States' GATS Schedule must be 
determined according to the rules codified in  Article 31 and, to the extent appropriate, 
Article 32 of the Vienna Convention.
18  
 
2.18.  In applying general rules of interpretation to ascertain the meaning of a sectoral entry in a 
services schedule, panels and the Appellate Body no rmally consider all the elements of Article 31 
(1) of the Vienna Convention. According to Articl e 31(1): "A treaty shall be interpreted in good 
faith in accordance with the ordinary meaning to  be given to the terms of the treaty in their 
context and in the light of its object and purpose" . Therefore, panels and the Appellate Body first 
undertake a textual analysis of the ordinary meaning of relevant terms used to describe the 
services contained in the schedule. They then co nsider the ordinary meaning of these terms in 
their context which, under the GATS, includes, inter alia , the remainder of the schedule concerned, 
GATS provisions, and schedules of other Members.  They also take into account the object and 
purpose of the GATS and the WTO Agreement. They resort to the supplementary means of 
                                               
17 Appellate Body Report, United States - Measures Affecting the Cross-Border Supply of Gambling and 
Betting Services , WT/DS/285/AB/R, adopted 20 April 2005, as modified by Appellate Body Report, DSR: 2005: 
XII, 5663, para. 159. 
18 Ibid, para. 159-160 (original footnotes omitted). S/CSC/W/61 
 
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  interpretation pursuant to Article 32 to complete the analysis, if the interpretation pursuant to 
Article 31 has left the meaning ambiguous or obscure, or led to a result which is manifestly absurd or unreasonable. The Appellate Body in China - Publications and Audiovisual Products  stressed: 
…the purpose of the interpretative exercise is to narrow the range of possible meanings of the 
treaty term to be interpreted, not to generate  multiple meanings or to confirm the ambiguity 
and inconclusiveness of treaty obligations. Rather, a treaty interpreter is required to have recourse to context and object and purpose to elucidate the relevant meaning of the word or 
term. This logical progression provides a framew ork for proper interpretative analysis, bearing 
in mind that treaty interpretation is an inte grated operation, where interpretative rules and 
principles must be understood and applied as connected and mutually reinforcing components of a holistic exercise.
19 
 
2.2.1.1  "Ordinary meaning" 
2.19.  In discerning the ordinary meaning of the te rms used in sector entries in schedules, panels 
in various proceedings started by considering dict ionary definitions and parties' descriptions. The 
Appellate Body in US - Gambling  provided guidance in this regard, underlining that relying solely 
dictionaries was not sufficient. It indicated: 
In order to identify the ordinary meaning, a Pa nel may start with the dictionary definitions of 
the terms to be interpreted. But dictionaries, alone, are not necessarily capable of resolving 
complex questions of interpretation, as they typically aim to catalogue all meanings of 
words—be those meanings common or rare, universal or specialized.20  
 
2.20.  This position was reaffirmed by the Appellate Body in China - Publications and Audiovisual 
Products . It cautioned panels against equating the "ordinary meaning" of a term with the definition 
provided by dictionaries and reiterated that "…  interpretation pursuant to the customary rule 
codified in Article 31 of the Vienna Convention is ultimately a holistic exercise that should not be 
mechanically subdivided into rigid components".21 
2.21.  In China - Electronic Payment Services , when undertaking the textual analysis of the 
ordinary meaning of the terms "all payment and money transmission services" used in China's schedule, the Panel also examined industry sour ces in addition to dictionary definitions.  
2.2.1.2  "Context" 
2.22.  In undertaking contextual analysis of a se ctoral entry in the schedule, the Appellate Body 
made it clear that the "context" should be within the meaning of Article 31(2) of the Vienna 
Convention, i.e. the agreement or acceptance of the parties.22 The specific contextual elements 
and their relevance to the interpretation of sector  entries appear to depend on the substance of 
each individual case. 
2.23.  In US - Gambling , the Appellate Body found that the Panel had erred in categorizing W/120 
and the 1993 Scheduling Guidelines as "context" for the interpretation of the United States GATS 
schedule. It considered the following elements as "context": (i) the remainder of the United States' Schedule of specific commitments; (ii) the structure and substantive provisions of the GATS; (iii) the provisions of covered agreements other th an the GATS; and (iv) the GATS schedules of 
                                               
19 Appellate Body Report, China - Measures Affecting Trading Ri ghts and Distribution Services for 
Certain Publications and Audi ovisual Entertainment Products , WT/DS363/AB/R, adopted 19 January 2010, 
para. 399 (original footnotes omitted). 
20 Appellate Body Report, United States - Measures Affecting the Cross-Border Supply of Gambling and 
Betting Services , WT/DS/285/AB/R, adopted 20 April 2005, as modified by Appellate Body Report, DSR: 2005: 
XII, 5663,. para 164 (original footnotes omitted). 
21 Appellate Body Report, China - Measures Affecting Trading Ri ghts and Distribution Services for 
Certain Publications and Audi ovisual Entertainment Products , WT/DS363/AB/R, adopted 19 January 2010, 
para. 348. 
22 Article 31(2) of the  Vienna Convention  defines "context" as follows: The context for the purpose of 
the interpretation of a treaty shall comprise, in additi on to the text, including its preamble and annexes: (a) 
any agreement relating to the treaty which was made between all the parties in connexion with the conclusion 
of the treaty; (b) any instrument which was made by one or more parties in connexion with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty. S/CSC/W/61 
 
- 9 - 
 
  other  Members.23 More specifically on the relevance of the structure of the GATS, the Appellate 
Body observed:  
To us, the structure of the GATS necessarily implies two things. First, because the GATS 
covers all services except those supplied in the exercise of governmental authority, it follows 
that a Member may schedule a specific commitm ent in respect of any service. Secondly, 
because a Member's obligations regarding a particular service depend on the specific commitments that it has made with respect to the sector or subsector within which that 
service falls, a specific service cannot fall within two different sectors or subsectors. In other 
words, the sectors and subsectors in a Memb er's Schedule must be mutually exclusive.
24 
 2.24.  Further, concerning the relevance of other Members' schedules, the Appellate Body in US - 
Gambling  echoed the Panel's observation: "this is the logical consequence of Article XX:3 of the 
GATS, which provides that Members' Schedules are 'an integral part of the GATS'; but "use of 
other Members' Schedules as context must be tempered by the recognition that 'each Schedule 
has its own intrinsic logic'". 
25 The Appellate Body in China - Publications and Audiovisual Products  
also cautioned that schedules of other WTO Members might be "of limited utility in elucidating the meaning of the entry to be interpreted".
26 
2.25.  In China - Publications and Audiovisual Products , the Panel and the Appellate Body reviewed 
the contextual elements relevant to discerning th e ordinary meaning of the entry "Sound recording 
distribution services" in China's GATS Schedule. Those elements consisted of: (i) the heading of the sector "Audiovisual Services" and the other entries scheduled under this heading; (ii) market 
access, national treatment and additional commitments in this sector; (iii) the entries scheduled 
under "Distribution Services"; (iv) provisions of the GATS, in particular Article XXVIII(b); (v) other Members' GATS schedules.
27 
2.26.  In China - Electronic Payment Services , the Panel analysed the contextual elements of the 
phrase "all payment and money transmission services", which included: (i) the rest of subsector (d); (ii) the headings in the sector at stake; (iii) market access, national treatment and 
additional commitments in the sector at stake;  (iv) the structure of the GATS; (v) the GATS 
Annex on Financial Services; and (vi) the schedules of other WTO Members.
28 In particular, the 
Panel made the following observations relevant to the classification of services:  
In our view, classification of services is not an abstract exercise; due regard should be had to 
market and regulatory realities. A classification approach reflecting, and in accord with, those 
realities contributes to the clarity and, therefore,  security and predictab ility, of GATS specific 
commitments.29 
… 
 
To summarize our interpretation of subsector (d) based on the structure of the GATS as 
context, we are of the view that the classification under a single subsector of a service made 
up of a combination of different services is not incompatible with the principle of mutual exclusivity if these services, when combined to gether, result in a distinct service that is 
supplied and consumed as such. Moreover, the me re fact that separate suppliers provide one 
particular component of a service does not in itself imply that that component should be 
classified as a distinct service, or that the comp onent is not part of an integrated service. In 
our view, what is relevant in relation to the classification of an integrated service is not 
whether it is supplied by a single supplier or by several suppliers, but rather whether the 
                                               
23 Appellate Body Report, United States - Measures Affecting the Cross-Border Supply of Gambling and 
Betting Services , WT/DS/285/AB/R, adopted 20 April 2005, as modified by Appellate Body Report, DSR: 2005: 
XII, 5663, para. 178. 
24 Ibid, para. 180. 
25 Ibid, para. 182. 
26 Appellate Body Report, China - Measures Affecting Trading Ri ghts and Distribution Services for 
Certain Publications and Audi ovisual Entertainment Products , WT/DS363/AB/R, adopted 19 January 2010, 
para. 383. 
27 Ibid, para. 358-388. 
28 Panel Report, China - Certain Measures Affect ing Electronic Payment Services , WT/DS413/R, adopted 
31 August 2012, para. 7.102 - 7.204 
29 Panel Report, China - Certain Measures Affect ing Electronic Payment Services , WT/DS413/R, adopted 
31 August 2012, para. 7.162. S/CSC/W/61 
 
- 10 - 
 
  component services, when combined together, result in a new and distinct service, the 
integrated service. This confirms our view that subsector (d) encompasses the services 
essential to the processing and completion of transactions using payment cards.30 
 
2.2.1.3  "Object and purpose" 
2.27.  In considering the object and purpos e of the GATS and the WTO Agreement in the 
interpretation of schedules, the Appellate Body in US - Gambling  found that the purpose of 
transparency contained in the Preamble of the GATS supported the need for precision and clarity in 
scheduling GATS commitments, and underlined the importance of having schedules that were readily understandable by other WTO Members, as well as by services suppliers and consumers.
31  
2.28.  In China - Electronic Payment Services , the Panel noted that its interpretation of the scope 
of the China's relevant commitment was consistent with the objective of transparency. It 
explained: 
We find that our interpretation of the scope of the China's commitment under subsector (d) is 
consistent with the objective of transparency because it classifies under a single 
subsector services which, when combined together, result in a new and distinct service, the integrated service. This integrated service is supplied and consumed as such. Furthermore, by 
reconciling the classification of EPS with the commercial reality of those services, our 
interpretation reinforces the predictability,  security and clarity of GATS specific 
commitments.
32 
 
2.29.  In China - Publications and Audiovisual Products , the Appellate Body considered the 
relevance of the principle of progressive liberalizati on to the interpretation of the scope of specific 
commitments. It noted:  
The principle of progressive liberalization is reflected in the structure of the GATS, which 
contemplates that WTO Members undertake specific commitments through successive rounds of multilateral negotiations with a view to lib eralizing their services markets incrementally, 
rather than immediately and completely at the time of the acceptance of the GATS. The 
scheduling of specific commitments by servic e sectors and modes of supply represents 
another manifestation of progressive liberalizat ion. In making specific commitments, Members 
are not required to liberalize fully the chosen sector, but may limit the coverage to particular 
subsectors and modes of supply and maintain limitations, conditions, or qualifications on 
market access and national treatment, provided that they are inscribed in their Schedules. We 
do not consider, however, that the principle of progressive liberalization lends support to an 
interpretation that would constrain the scope an d coverage of specific commitments that have 
already been undertaken by Members and by which they are bound. 
 
Neither are we persuaded that, if the Panel ha d based its analysis on the meanings of the 
terms "sound recording" and "distribution" at the time of China's accession to the WTO — that is, 2001 — it would have reached a different conclusion on the interpretation of the entry "Sound recording distribution services" in Chin a's GATS Schedule. The term "sound recording" 
can be used to refer to "recorded content", irrespective of how it is distributed. We have 
already considered above that the GATS, which entered into force in 1995, contemplates in Article XXVIII(b) the distribution of services—t hat is, of intangibles. This lends support to 
interpreting the meaning of "distribution" as appl ying to both tangible and intangible products, 
and would equally have done so in 2001, and at the time the Panel interpreted the entry "Sound recording distribution services" in China's GATS Schedule.
33 
 
                                               
30 Ibid. para. 7.188. 
31 Appellate Body Report, United States - Measures Affecting the Cross-Border Supply of Gambling and 
Betting Services , WT/DS/285/AB/R, adopted 20 April 2005, as modified by Appellate Body Report, DSR: 2005: 
XII, 5663, para. 188. 
32 Panel Report, China - Certain Measures Affect ing Electronic Payment Services , WT/DS413/R, adopted 
31 August 2012, para. 7.198. 
33 Appellate Body Report, China - Measures Affecting Trading Ri ghts and Distribution Services for 
Certain Publications and Audi ovisual Entertainment Products , WT/DS363/AB/R, adopted 19 January 2010, 
para. 394-395. S/CSC/W/61 
 
- 11 - 
 
  2.30.  In this context, the Appellate Body expre ssed its position on whether, in interpreting the 
terms of GATS specific commitments, the ordinary meaning to be attributed to those terms could only be the meaning that they had at the time the schedule was concluded. It stated:  
More generally, we consider that the terms used  in China's GATS Schedule ("sound recording" 
and "distribution") are sufficiently generic that what they apply to may change over time. In 
this respect, we note that GATS Schedules,  like the GATS itself and all WTO agreements, 
constitute multilateral treaties with continuing obligations that WTO Members entered into for 
an indefinite period of time, regardless of wh ether they were original Members or acceded 
after 1995. 
 
We further note that interpreting the terms of GATS specific commitments based on the 
notion that the ordinary meaning to be attrib uted to those terms can only be the meaning 
that they had at the time the Schedule was concluded would mean that very similar or identically worded commitments could be given different meanings, content, and coverage 
depending on the date of their adoption or the date of a Member's accession to the treaty. 
Such interpretation would undermine the predicta bility, security, and clarity of GATS specific 
commitments, which are undertaken through successive rounds of negotiations, and which 
must be interpreted in accordance with customary rules of interpretation of public 
international law.
34 
 2.2.1.4  "Supplementary means of interpretation" 
2.31.  In US - Gambling , the Appellate Body found that the application of the general rules of 
interpretation set out in Article 31 of the Vienna Convention  left the meaning of "other recreational 
services (except sporting)" ambiguous and did not answer the question whether the commitment 
made by the United States in subsector 10.D of its Schedule included a commitment in respect of 
gambling and betting services. It then considered W/120, the 1993 Scheduling Guidelines, and a cover note attached to drafts of the United States' Schedule as "the supplementary means of 
interpretation, including the preparatory work of the treaty and the circumstances of its 
conclusion" within the meaning of Article 32 of the Vienna Convention. (See below) 
2.32.  In China - Publications and Audiovisual Products , the Panel resorted to the supplementary 
means of interpretation under Article 32 of the Vienna Convention to confirm its preliminary 
conclusion based on the application of Article 31.  The Appellate Body did not find that the Panel 
erred in this respect. Nevertheless, having reache d a conclusion on the interpretation of China's 
commitment on "Sound recording distribution services" under Article 31 of the Vienna Convention, 
the Appellate Body indicated that there would be no need to proceed to an examination of 
supplementary means of interpretation pursuant to Article 32.
35 
2.33.  In China - Electronic Payment Services , the Panel considered that its interpretation of 
China's Schedule pursuant to Article 31 of the Vienna Convention did not leave the meaning 
ambiguous or obscure, nor did it lead to a result which was manifestly absurd or unreasonable. It therefore decided not to resort to supplementary means of interpretation under Article 32 of the Vienna Convention.
36  
                                               
34 Ibid, para.396 -397.  In original footnote 705, the Appellate Body stated:  
"We consider such reading of the terms in China's GA TS Schedule to be consistent with the approach 
taken in US – Shrimp, where the Appellate Body interpreted the term "exhaustible natural resources" in Article XX(g) of the GATT 1994. (Appellate Body Report, US – Shrimp, paras. 129 and 130) We observe that the International Court of Justice, in Costa Rica v. Nicaragua, found that the term "comercio" ("commerce"), contained in an 1858 "Treat y of Limits" between Costa Rica and Nicaragua, 
should be interpreted as referring to both trade in goods and trade in services, even if, at the time of the conclusion of the treaty, such term was used to refe r only to trade in goods. (International Court of 
Justice, Judgment, Case concerning the Dispute regarding Navigational and Related Rights (Costa Rica v. Nicaragua), 13 July 2009)" 
35 Ibid. 400. 
36 Panel Report, China - Certain Measures Affect ing Electronic Payment Services , WT/DS413/R, adopted 
31 August 2012, para. 7.206-207. S/CSC/W/61 
 
- 12 - 
 
  2.2.2  Role of W/120 in the interp retation of specific commitments 
2.34.  As noted above, in US - Gambling , the Appellate Body found that the Panel had erred in 
treating two documents from the Uruguay Round, namely W/120 and the 1993 Scheduling Guidelines, as relevant context within the meaning of Article 31(2) of the Vienna Convention . The 
Appellate Body took this opportunity to clarify the role of W/120 in the interpretation of schedules. 
It stated:  
We note that Article 31(2) refers to the agreemen t or acceptance of the parties. In this case, 
both W/120 and the 1993 Scheduling Guidelines we re drafted by the GATT Secretariat rather 
than the parties to the negotiations. It may be true that, on its own, authorship by a delegated body would not preclude specific documents from falling within the scope of Article 31(2). However, we are not persuaded that  in this case the Panel could find W/120 and 
the 1993 Scheduling Guidelines to be context. Such documents can be characterized as 
context only where there is sufficient evidence of their constituting an "agreement relating to the treaty" between the parties or of their "a ccept[ance by the parties] as an instrument 
related to the treaty". 
 
We do not accept, as the Panel appears to have done, that, simply by requesting the 
preparation and circulation of these documents and using them in preparing their offers, the 
parties in the negotiations have accepted them as agreements or instruments related to the treaty. Indeed, there are indications to the contrary. As the United States pointed out 
before the Panel, the United States and several other parties to the negotiations clearly 
stated, at the time W/120 was proposed, that, although Members were encouraged to follow 
the broad structure of W/120, it was never meant to bind Members to the CPC definitions, nor to any other "specific nomenclature", and that "the composition of the list was not a matter 
for negotiations".
37 
 2.35.  The Appellate Body had recourse to W/120 and 1993 as the supplementary means of 
interpretation identified in Article 32 of the Vie nna Convention. It made the following observations 
on the characteristics of W/120 and CPC: 
… we observe that W/120 sets out a much more  aggregated classification list than the one 
found in the CPC. Whereas W/120 contains 12 sectors (11 and one "other") and more than 
150 subsectors, the CPC classification scheme is  comprised of 10 Sections, 69 Divisions, 295 
Groups, 1,050 Classes and 1,811 Subclasses. The first draft classification list prepared by the GATT Secretariat, W/50, explained that one of the reasons for selecting the CPC as a basis for 
classification in the services negotiations was that such a product-based system "allows a 
higher degree of disaggregation and precision to be attained should it become necessary, at a later stage." Thus, the CPC's level of disaggregation was one of the very reasons it was 
selected as a basis for a sectoral classification list. As the CPC is a decimal system, a 
reference to an aggregate category must be understood as a reference to all of the constituent parts of that category. Put differe ntly, a reference to a three-digit CPC Group 
should, in the absence of any indication to the contrary, be understood as a reference to all 
the four-digit Classes and five-digit Sub-classes that make up the group; and a reference to a 
four-digit Class should be understood as a refere nce to all of the five-digit Sub-classes that 
make up that Class.
38  
 
2.36.  The Appellate Body also noted that the Sc heduling Guidelines expressed a clear preference 
for Members to use W/120 and the CPC classification in their schedules. It stated: 
W/120 and the 1993 Scheduling Guidelines were prepared and circulated at the request of 
parties to the Uruguay Round negotiations for the express purpose of assisting those parties in the preparation of their offers. These docume nts undoubtedly served, too, to assist parties 
in reviewing and evaluating the offers made by others. They provided a common language 
and structure which, although not obligatory,  was widely used and relied upon. In such 
circumstances, and in the light of the specif ic guidance provided in the 1993 Scheduling 
                                               
37 Appellate Body Report, United States - Measures Affecting the Cross-Border Supply of Gambling and 
Betting Services , WT/DS/285/AB/R, adopted 20 April 2005, as modified by Appellate Body Report, DSR: 2005: 
XII, 5663, para.175-176. 
38 Ibid, para. 200 (original footnotes omitted). S/CSC/W/61 
 
- 13 - 
 
  Guidelines, it is reasonable to assume that parties to the negotiations examining a sector of a 
Schedule that tracked so closely the language of the same sector in W/120 would—absent a clear indication to the contrary—have expected the sector to have the same coverage as the 
corresponding W/120 sector. This is another way of stating that, as the Panel observed, 
"unless otherwise indicated in the Schedule, Me mbers were assumed to have relied on W/120 
and the corresponding CPC references."
39 
 
3  GENERAL OBSERVATIONS 
3.1.  We have examined issues related to services classification that arose in the WTO 
jurisprudence. It should be noted that the findings made by panels and the Appellate Body are only applicable to each individual case concerned and should not be considered to be automatically 
transferrable to future cases. This review allows us to make some general points which may be of 
interest to the discussion in the Committee on Specific Commitments.  
a. W/120 is a services classification system created as a tool to assist Members in the 
negotiation and scheduling of specific commitm ents under the GATS. It was prepared in 
1991 based on the CPC Provisional and theref ore makes reference to corresponding CPC 
definitions. 
b. The use of W/120 and CPC is not obligatory under the GATS. The Scheduling Guidelines 
encourage Members to use W/120 and CPC to ensure the accuracy and clarity of sector descriptions in schedules. While Members may use their own sub-sectoral classification or definitions in schedules, they should make sure that the scope of commitments is 
defined as clearly as possible. 
c. Schedules are an integral part of the GATS. In interpreting schedules, panels and the 
Appellate Body follow the general rules of interpretation as set out in Articles 31 and 32 
of the Vienna Convention. 
d. In the interpretation of GATS schedules , the Appellate Body considers W/120 as a 
supplementary means of interpretation under  Article 32 of the Vienna Convention.  
 
__________  
                                               
39 Ibid, para. 204.