WORLD TRADE  
ORGANIZATION  RESTRICTED 
S/CSC/M/64 
22 October 2012 
 (12-5756) 
Committee on Specific Commitments   
  
 
REPORT OF THE MEETING HELD ON 4 OCTOBER 2012 
 
Note by the Secretariat
1 
 
 
1. The Committee on Specific Commit ments (CSC) held a meeting on 4 October 2012, chaired 
by Mr. Rodrigo Bardoneschi from Argentina.  The agenda for the meeting, contained in 
WTO/AIR/4003, was adopted. 
A. C LASSIFICATION ISSUES  
1. Changes of Services Classification in BP M6:  Presentation By WTO International Trade 
Statistics Section 
2. The Chairman invited Ms. Barbara D'Andreas, a member of the WTO statistics team, to speak 
about services-related classification changes in th e new IMF Balance of Payments Manual (BPM6) 
and their implications.  The focus would be on the statistical treatment of manufacturing services on a fee basis, as well as of maintenance and repair services.    
3. Ms. Barbara D'Andreas noted that the new IMF balance-of-payments manual, so-called 
BPM6, published in 2009, had brought a number of ch anges to the services classification.  Following 
the strict application of the change-of-ownershi p criterion in the system of national accounts 2008, 
which was a pillar in the IMF balance-of-payment s framework, certain inte rnational transactions 
which at present were recorded in the goods accoun t, would be moved to the services account, and 
vice versa .  In particular, the processing of goods in other economies, which currently was recorded 
under the goods account and known as goods for processing,  would be considered as a service and 
renamed as manufacturing services on physical inputs owned by others.  Similarly, international 
repairs or maintenance work on goods, which, according to BPM5, was recorded under the goods 
account and known as repairs on goods, would also be moved to the service account.   
4. There were 12 main services components or  categories in the new BPM6 services 
classification.  The first two categories were manufacturing services on physical inputs owned by 
others, and maintenance and repair services not included elsewhere.  While these were not the only 
changes that the BPM6 had brought to the servi ces classification, they were the focus of her 
presentation.  
5. Manufacturing services on physical inputs owne d by others in the BPM6 would cover 
activities such as processing of natural resources (e .g. oil refining, liquefaction of natural gas), 
assembly of clothing or electronics, packing, la belling, etc.  These services were undertaken by 
enterprises that did not own the goods and were paid a fee by the goods' owner.  They were 
manufacturing services on a contract or fee basis, i.e. contract manufacturing.  For the purpose of recording, only the manufacturing fee would need to be recorded under the services account, and not 
                                                      
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO. S/CSC/M/64 
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  the full value of the goods sent for processing and re turned afterwards, which was recorded under the 
goods account in present statistics.   
6. To explain how to calculate the manufacturing fee, she gave the following example:  a 
resident in economy X sent goods (e.g. toys) worth 1,000 units to be processed (e.g. packed) by a 
resident of economy Y.  After packing in economy Y, these goods were returned to their legitimate 
owner with a value of 1,300 units.  In this exam ple, the manufacturing fee was 120 unites.  It 
represented only a portion of the value difference of 300 units, because a number of other factors 
affected the final price of the finished goods, such  as know-how, financing of the goods, marketing, 
design, etc.  Economy X would record an import of manufacturing services of 120 units from Y, while Y would record a corresponding export of manufacturing services of 120 units.  The BPM6 
recommended that economies heavily engaged in in ternational manufacturing activities also record 
the full value of the goods for processing and return ed afterwards.  This was a simple example; 
manufacturing arrangements in a globalized world could be more complicated with more actors 
involved.   
7. In the second example, a resident of economy A bought crude oil of 10 units from a resident 
of economy B.  Rather than entering the territory of economy A, the oil was shipped to economy C, 
where it was refined by a resident over there.  For this processing, economy A would pay a processing fee of 15 units to economy C.  After refining, th e oil was put in barrels and shipped to economy D, 
where it was sold.  The resident of economy A w ould receive a payment of 30 units from economy D.  
This transaction would be recorded according to BPM6 from the perspective of economy A:  imports 
of goods of 10 units (the first purchase of crude oil); imports of manufacturing service on physical 
inputs owned by others of 15 units (the processi ng activities taking place in economy C); and exports 
of goods of 30 units (the final sal e to economy D of the finished goods).  Again, in this example, there 
was no change of ownership of the goods sent fo r processing.  Through the different phases of 
processing, the goods continued to belong to economy A.  This was the key principal of the BPM6. If 
the ownership of the goods sent for processing ch anged, the transaction would be a merchandise 
transaction.   
8. She gave an example of manufacturing on own account.  Suppose that a resident of economy 
X exported goods (e.g. clothing) wort h 1,000 units to be assembled by a resident of economy Y.  The 
manufacturer in economy Y acquired the ownership of these goods for processing.  After processing, 
these goods were then sold to economy Z for th e value of 1,300 units.  This was a case of 
manufacturing on own account where the owner of the goods for processing changed.  What occurred 
was a merchandise rather than services transaction and needed to be recorded under the goods 
account.  As manufacturing on own account and manufact uring on physical inputs owned by others 
were different arrangements, they should be treated  separately.  In the context of globalization and 
offshore outsourcing, it had become increasingly common for firms to fragment their production process across different economies.  To record tr ansactions on a change-of-ownership basis would 
attribute to the goods owner the value-added for d esign, financing, and know-how that was embedded 
in the finished goods, rather th an to the party who simply unde rtook the assembly or manufacturing 
process. 
9. This change in statistical treatment would si gnificantly affect the trade statistics of those 
economies heavily engaged in manufacturing activities, be it as exporter or importer.  It was not an 
easy task to gather information on the value of the manufacturing fee and to collect data on contract 
manufacturing as relevant information was not currently available.  In the traditional BOP statistics,  
manufacturing was recorded under goods account.  For th e purpose of the new statistical treatment, it 
appeared that the most efficient way to collect information on the value of the manufacturing fee was 
enterprise survey.  The compiling agency in a certain  economy, such as the national statistical office, 
could design specific surveys aiming at gathering the information needed.  Enterprises engaged in 
manufacturing activities on a contract basis could be asked to provide information about the value of  S/CSC/M/64 
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  the manufacturing fee received, the value of the gros s value of the goods before and after processing.  
The key was to understand contract manufacturing where information was contained in the service 
contract between the goods owner and the manufactu rer abroad.  Another possible source was the 
customs declaration in international merchandise trade statistics, but this could only be seen as a long-term option because the custom declaration forms wo uld need to be amended by requesting traders to 
provide the value of the manufacturing fee.  This ap peared to be quite difficult for a mere statistical 
reason.  International transaction reporting system, so-called ITRS, by commercial banks, could also 
be a possible source of information.  The inform ation about the payment by the goods owner to the 
manufacturer could be found in banking transactions .  However, the shortcoming of this source was 
that this payment could include payments for ot her types of services that were provided by the 
manufacturer to the goods owner and that the va lue of the manufacturing fee could actually be 
inflated.  Finally, administrative sources could also help gather information on manufacturing fee.  Since companies engaged in contract manufacturing of ten operated in Free Zones, in order to receive 
special tax concessions, they might be asked to prov ide to the tax authorities or customs authorities 
detailed information on incomes and expenses.  Overa ll, enterprise surveys app eared to be the best 
possible way to collect information on the value of the manufacturing fee.   
10. At the Global Forum on Trade Statistics which had taken place in the WTO last year, the 
Census and Statistics Department  of Hong Kong, China (HKC) had presented the preliminary results 
of a specific survey aimed at gathering the informati on in this regard.  In this case, the processing fee 
accounted for some 20 per cent of the value of go ods imports from China which involved outward 
processing.  In addition, the overall changes br ought by the BPM6 to the services and goods 
classification would have a profound impact on HKC's trade in goods and services statistics.  
According to HKC, "the balance of trade in goods wo uld be revived / revised from a persistent deficit 
to a persistent surplus and the balance of trade in  services would be revised from a persistent surplus 
to a persistent deficit".  The same situation c ould arise in other economies engaged in manufacturing 
activities, whether as exporters or importers. 
11. Recently, for the first time, the Census and Sta tistics Department of HKC had published their 
new BOP figures according to BPM6, including a time series on manufacturing services on physical 
inputs owned by others.  In 2011, the imports of  manufacturing services on physical inputs owned by 
others represented 23.6 per cent of the overall va lue of HKC commercial services imports, i.e. about 
17.3 billion USD.   This significant amount was moved to the services account. 
12. Certain other transactions had also been moved from the goods account to the services 
account.  They were involved in maintenance and re pair services not included elsewhere (n.i.e.).  
These were the services performed by residents on goods owned by non-residents and vice versa , such 
as repair and maintenance of transpor t equipment (ships, aircrafts, etc. ) and other items (e.g. watches).  
Similar to the above-mentioned manufacturing opera tions, only the value of the maintenance and 
repair service had to be recorded under the servic es account, rather than the gross value of the goods 
sent for repair and received afterwards.  This new category did not cover all repair and maintenance 
services, for example, repair of computers, cleani ng of transport equipment or construction repairs 
were recorded under respective service category, i.e. computer services, transport services or 
construction services. 
13. The representative of Hong Kong, China noted that the presentation demonstrated how the 
calculation of trade statistics might change indi vidual Members' BOP situation.  The example 
provided by his government's Census and Statistic De partment showed that a different categorization 
of goods or services in the BOP would have huge impact on the popular understanding of external 
trade relationships.  Perhaps more importantly, it woul d also provide more accurate indications of the 
global supply chains.  His government hoped to see the completion of the transition from the BPM5 to the BPM6 by fellow economies so as to have a mo re accurate understanding on its role in the global 
supply chains.  He looked forward to forthcom ing presentations in the same series.   S/CSC/M/64 
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  14. The representative of the United States also f ound this presentation very useful as well.  
Interested in learning more about services statistic s, he supported additional presentations like this. 
15. The representative of Argentin a asked whether any other countries were applying the BPM6 
apart from Hong Kong, China and whether there was a risk of double counting if trade in goods and 
trade in services were considered together, there woul d be duplication in sta tistics.  She understood 
that services statistics for a given country based on the BPM6 would no longer be comparable to those 
for preceding years and that it would be problematic as well when comparing statistics from different countries. 
16. The representative of Turkey indi cated that to collect services trade data and to publish 
services statistics were complicated.  She was inte rested to learn more on services statistics and 
looked forward to other presentations in this series. 
17. The representative of Chinese Taipei was impres sed by the impact of the methodological 
change on the external trade statistics of HKC.  Other developing economies might face a similar 
situation.  She would also be interested in mo re such presentations and wondered where the new 
methodology would have any impact from a WTO perspective. 
18. The representative of China noted that in Ms. D' Andrea's first example, the manufacturing fee 
was 120 units while the difference of value before  and after processing was 300 units, and sought 
further clarification.  With this new methodology,  would the volume of goods trade as well as the total 
volume of trade in goods and services be significantly lower than before?   
19. The representative of the European Union welc omed improvements in the services statistics 
as this could contribute to more informed decision- making.  Unlike trade in good, liberalization gains 
in services could hardly be quantified.  As a resu lt, qualitative indicators were used which, however, 
were less impressive than real figures.  Like others, she appreciated the information provided and looked forward to receiving similar presentations in th e future.  She was also interested to know the 
future work programme for services statistics.   
20. The representative of Indonesia said that he r government was using the BPM5 for its 
statistical calculation and would implement the BP M6 in 2014.  The presentation enabled Indonesia to 
better understand the new method, in particular fro m the perspective of services operation involved in 
manufacturing goods.  She proposed that the WTO Secretariat cooperate with IMF to provide a 
seminar or capacity-building programme on this matter so as to better disseminate this new method to 
other Members, especially developing countries a nd LDCs.  Data sharing among Members was also 
important.  Noting difficulties in calculating maintena nce and repair services, she sought clarification 
on the method in this regard. 
21. The representative of Saudi Arabia enquired a bout the relationship between economies A and 
C in the example that had been provided on oil processing.  
22. The representative of Nigeria asked whether a government needed to have fully implemented 
the BPM5 before applying the BPM6.  Noting challenges for developing countries in collecting 
services data and updating statistical methods, he wondered what would be the best approach. 
23. Ms. Barbara D'Andreas answered the questions rai sed.    Duplication of statistics in goods and 
services trade could be avoided if merchandise trade was measured on a change -of-ownership basis.  
Measuring the global value chains was a long-term proj ect and there was no statistics available in this 
regards.  Overheads arising in manufacturing service s would be recorded under other relevant services 
items and that nothing would change in interna tional merchandise trade statistics.  Goods sent for 
processing abroad, with or without a change of ow nership, would continue  to be recorded in  S/CSC/M/64 
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  merchandise trade statistics.  Information on the gross value of the goods would help identify the 
merchandise trade on a change-of-ownership basis.   It was recommended that goods sent for, or 
received from, processing without a change of ow nership be identified in a special code in 
merchandise trade statistics.  Regarding the calcu lation of maintenance and repair services, the 
method was very similar to the calculation of manufacturing fee in manufacturing services.  
Concerning the enquiry from Saudi Arabia, she not ed that in the example given, there was no 
purchase of crude oil by economy B.  Economy A bought oil from economy B and the oil ownership 
did not change until it was sold to the final consumers in economy D.   
24. The work on services trade statistics was carried  out through an inter-agency task force on 
statistics involving seven internati onal organizations.  Related cap acity-building was also conducted 
by the inter-agency task force and the WTO play ed a coordinating role in terms of technical 
assistance.  The implementation of the BPM6 was the essential future work.  To date 15 economies 
were using the BPM6; all had applied the BPM5  before.  About 200 economies were compiling 
services trade statistics, but what was often missi ng was the level of detail needed for negotiations.  
Like Indonesia, a large number of economies would implement the BPM6 in 2014.  Economies did 
not need to go through the BPM5 before, and th e new manual contained detailed implementation 
recommendations.  Implementation was challe nging as there was no compilation guide for 
statisticians.  Such a guide was being prepared; once completed, it might provide more guidance to 
statisticians especially in developing economies on how to practically collect information.  Probably 
the best approach to make progress was co-operation among different agencies in charge of collecting 
data as well as the ministries involved in services trad e negotiations.  Statisticians wished to provide 
trade negotiators with detailed statistics by servi ces sector and by modes of supply, but this would 
take time and require significant resources. 
25. The representative of the Secretariat said that th e WTO Secretariat was pleased to respond to 
specific requests for technical assistance concerning statistics and related issues.  Each Member was 
entitled to two national events.  In addition, there w as the possibility of regional seminars.  The third 
option was to organize events under the auspices of  the Committee.  Whatever the approach, it was 
always demand-driven.  
26. The Chairman thanked Ms. Barbara D'Andreas for her good presentation.  He said that the 
Committee would continue to be updated on releva nt developments in services trade statistics. 
2. Energy Services 
27. The Chairman recalled that at the last m eeting the Committee had continued to examine 
classification issues relevant to energy services  based on the Secretariat's informal Note 
(JOB/SERV/94).   Delegations had addressed questi ons concerning the coverage of energy-related 
sectors in W/120, the distinction between trade in goods and trade in services, and classification of clean energy services.  The summary of the di scussion, contained in JOB/SERV/108, had been 
circulated under the Chairman's responsibility.  As several delegations had indicated that they were 
still reviewing the Note and would come back wi th comments, the Committee had agreed to keep 
energy services on the agenda.  The discussion would be in informal mode. 
28. There was no discussion on energy services. The Chairman said that Members might come 
back to issues of particular interest to th em or raised new issues if they wished. 
3. Climate-related Services 
29. The Chairman recalled that at the last meeting the Secretariat had presented an informal Note 
on climate-related services (JOB/ SERV/100) following a request made  by the Committee.   The Note 
provided an overview of relevant work carried out  in the WTO and other institutions (OECD, ITCSD S/CSC/M/64 
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  and WMO), and invited Members to consider questions in three areas: what criteria should be used to 
circumscribe and identify climate-related services in the context of the GATS?  Where were these 
services classified in W/120 and CPC provisional?  How should services that had various end-uses be dealt with when undertaking specific commitments?  Members had responded actively to the questions raised.  They had been divergent on how to deal with climate-related services.  There had 
been three main views.  Some delegations saw va lue in identifying climate-related services and had 
suggested working on a collective classification or clarifying existing instruments in this regard.  
Others were open to the discussion on this topic, but  believed that the identification and classification 
of climate-related services should be left to Me mbers wishing to undertake specific commitments on 
such services.  According to the third view, th ere was no need to have any discussion on climate-
related services and that such discussion should be  off the Committee's agenda as climate-related 
services should be better addressed in the discussion on environmental services.  Given that several delegations had expressed their interest in conti nuing the discussion, this sub-item was kept on the 
agenda. 
30. There was no discussion on climate-related servi ces. The Chairman said that Members might 
come back to issues of particular interest to  them or raised new issues if they wished. 
4. Distribution Services 
31. The Chairman noted that to facilitate discussions , the Secretariat had prepared an informal 
Note (JOB/SERV/111) on distribution services providing an overview of the issues and summarizing 
views expressed by Members in the past.  He then  invited the Secretariat to introduce the Note. 
32. The representative of the Secretariat said that this sector mainly consisted of four sub-sectors 
– commission agents services, wholesale, retail and franchising.  Building on some of the 
classification issues that had been raised in the pr evious sectoral note by the Secretariat (document 
S/C/W/326), the Note had two parts: Part I briefly discussed the main features of distribution services 
under the existing classification and highlighted how the sector was dealt with under CPC Version 2; 
Part II raised questions for discussion on different set s of issues.  The questions for considerations 
were organized under three general topics: the issu e of differences between subsector names in the 
W/120 and their corresponding CPC categories; issues relating to franchising; and questions relating 
to the scope of wholesale and retailing services.  
33. Delegations discussed distribution services in informal mode.     
34. The Chairman understood that some delegati ons might be still reviewing the Note.  He 
suggested that the Committee continue to discu ss distribution services at its next meeting. 
35. It was so agreed. 
5. Postal and Courier Services 
36. The Chairman referred to another informal  Note (JOB/SERV/110) prepared by the 
Secretariat.  It was on postal and courier services. He invited the Secretariat to introduce the Note. 
37. The representative of the Secretariat noted that postal and courier services were a peculiar 
sector in terms of classification.  The Note consisted of two parts.  The first part described the current 
W120 and CPC classification, which highlighted the p eculiarity of this sector, i.e. the classification 
based on the nature of the service suppliers rather than the nature of services supplied.  In other 
words, the distinction between postal and courie r services would depend on the entity that supplied 
the service.  Postal services referred to the service supplied by the national postal administration, while courier services were the services provided private companies.  All past discussions had pointed  S/CSC/M/64 
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  to this peculiar classification.  The second part  of the Note presented alternative classification 
approaches to deal with that peculiarity, including  Members' proposals, the CPC version 2, and the 
ISIC version 4.   
38. Delegations discussed distribution services in informal mode.     
39. The Chairman suggested that the Committee con tinue to discuss postal and courier services at 
its next meeting. 
40. It was so agreed.  
41. Concerning future work under this item, the re presentative of the Secretariat, referring to 
internal organizational needs and resource constraint s, proposed that instead of examining transport 
and logistics services at the December cluster, the Committee consider legal services.  Transport and 
logistics services could be covered in the first cluster of next year. 
42. The Chairman noted that since the entry into  force of the GATS in 1995, a number of WTO 
dispute settlement cases had involved services trad e.  Each services case normally started with the 
identification of the services at issu e as the first step to address the claims raised under the GATS, to 
which the classification of services was relevant.  In  order to deepen delega tions' understanding of the 
classification of services and the GATS, he thought that the Secretariat could produce a factual note 
on relevant WTO jurisprudence, which might benef it the current exercise.  The idea was to have a 
reference document that would help Members unde rstand how Panels and th e Appellate Body had 
addressed classification issues so far.  He would hold consultations with Members to see if there was value in having such a paper, and if so, what it should look like.   
43. The representatives of the European Union, S outh Africa, Turkey, Colombia, Chile, Canada, 
Nigeria, Australia, Singapore, New Zealand, Indon esia, the United States, and Thailand supported the 
Chairman's initiative and wished to be in volved in the further consultations.   
44. The representatives of South Africa also suggest ed the note to address the advantages of 
formal reclassification and its possible effect s on existing commitments.  The representatives of 
Canada and the United States sought cl arification on this suggestion.  
45. The representative of Saudi Arabia looked forw ard to the Chairman's consultations, but 
cautioned about value that could be added by the proposed note.   
46. The Chairman confirmed that he would hold c onsultations on his proposal and proposed that 
the Committee revert to this agenda item at its  next meeting. The following sectors would be 
discussed: distribution services; postal and courier services; and legal services.    
47. It was so agreed. 
B. SCHEDULING ISSUES  
48. There was discussion under this item.   
49. The Chairman suggested that the Committee re vert to this item at its next meeting. 
50. It was so agreed. S/CSC/M/64 
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  C. R
EVIEW OF PROCEDURES UNDER ARTICLE XXI  
51. The Chairman recalled that at its last meeting,  the delegation of Australia had suggested that 
the Committee undertake a review of the procedur es for the implementation of GATS Article XXI, 
contained in document S/L/80, and the procedures for the certification of rectification or improvements to schedules, contained in document S/ L/84.  Accordingly, this item was included in 
the agenda at the request of Australia.  Noting that  Australia had also had s ubmitted a written proposal 
for this purpose (S/CSC/W/59) a few days ago, he first invited Australia to introduce its proposal. 
52. The delegations of Australia said that this age nda item could be more properly described as a 
review of the operation of procedures under Article  XXI.  The two documents developed in this 
Committee, S/L/80 and S/L/84, formed an important part of the WTO rule-making on services 
commitments.  Australia felt that Members s hould share their views on how the procedures had 
worked to date; it did not propose at this stage a review of the procedures themselves.  The discussion 
could be supported by a report from the Secretaria t on the application of the procedures since their 
entry into force in 1999 and 2000, respectively.  It would be interesting to know how often the 
procedures had been used and how many WTO Me mbers had been affected by them.  These 
procedures had an important role to play in a llowing Members to adjust their commitments and 
providing certainty for affected Members.  In both of the documents mentioned, a review had been 
envisaged 3 years after entry into force, and it was indicated in the procedures that any Member could 
request a review of the operation of the procedures.  Such a review was part of the regular work of 
this Committee.  The terms of reference for the Committee included overseeing the application of the 
procedures of GATS Article XXI on the modification of schedules.  Undertaking the review would 
contribute to the common objective of strengthening the functioning of this WTO Committee, and an 
important way of contributing to the regular work.  Australia would be interested to hear Members' 
views on the proposed work. 
53. Invited by the Chairman to further explai n her request for a Secretariat report, the 
representative of Australia said that it would be usef ul to have some statistics on how the procedures 
had been applied.  She did not expect the Secret ariat to describe Members' experiences which should 
be the subject of discussion in this Committee.  It would be interesting to know how often the 
procedures had been used, and how many WTO Memb ers had notified that they had been affected. 
54. The representative of Brazil stated that his delegation also had systemic concerns with the 
implementation of Article XXI procedures and that a review of current procedures would be justified 
and opportune along the lines proposed by Australia.  The exercise would be carried out on an 
experience-sharing basis, focusing on the effectiv eness of the procedures without reopening them.  
His delegation's short experience with respect to th ese procedures showed that negotiating processes 
involved could be rather lengthy, thus led to legal uncertainty and lack of predictability. 
55. The representative of Canada said that her dele gation had a systemic interest in effective 
mechanisms in the WTO, including Article XXI proc edures.  Therefore, Canada supported Australia's 
proposal and would welcome a frank and open discussion on Members' experiences with these 
procedures.  While still waiting for instructions fro m capital, she indicated that her delegation might 
support a factual Secretariat paper along the lines that Australia had described. 
56. The representative of the United States found th e Australian proposal interesting and agreed 
that it might be timely to review the procedures contained in S/L/80 and S/ L/84.  His delegation had 
come across specific technical concerns with the pr ocedures or other unanticipated problems with the 
text.  That said, the current rules had some flexib ility and Members should be cautious about trying to 
wring out such flexibility.  Procedural flexibility was often the key to substantive outcomes.  The 
United States fully agreed with Australia that th e procedures under Article XXI should be viewed as 
regular work of this Committee, and this exercise could be an important contribution to strengthening  S/CSC/M/64 
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  the functioning of this Committee.  However, th e discussion might be very technical.  Moreover, 
much of the experience of Members in the functi oning of the procedures was derived from bilateral 
discussions under Article XXI, which were treated as se cret under the rules.  Therefore, he urged the 
Chairman to consider a process that was inclus ive and also allowed for an informal and frank 
discussion that might evolve into a serious cons ideration of relevant text.  Formal Committee 
meetings might not be conducive for this type of di scussion.  In this regard, while he agreed with 
Australia that the procedures needed not be reopene d, such possibility should not be precluded if it 
seemed both productive and prudent to do so.  He  understood Australia's proposal as focusing on 
mechanics and strongly endorsed this focus.  Howeve r, having heard the Australia's explanations, he 
felt that the proposed review might sound more like an examination of Article  XXI rather than an 
examination of Article XXI procedures.  In addition,  he was sceptical about the utility of a Secretariat 
report on this matter, because much of the procedures were conducted out of sight of the Secretariat. 
His delegation would need to consider this matter further before it could agree to such a report.  
57. The representative of Bolivia said that his dele gation was concerned at Australia's proposal.  
Any review of procedures implied something was not  working properly.  He wondered whether that 
was the reason for the Australian proposal.  He was not clear on why Australia was proposing the 
review.  If the problem was the difficulties of wit hdrawing commitments, the review might not be the 
best way of tackling the problem.  His delegation was open to the discussion on this matter, but on the basis that the procedures under Article XXI would not be reopened. 
58. The representative of Japan added his voice to  the support for the Australian proposal.  His 
delegation had a systemic interest in this issue.  It  is now a good time to review the procedures based 
on Members' experience so far.  As it was a very technical issue, it would be useful to have the 
Secretariat factual paper prepared for this purpose. 
59. The representative of the European Union said th at her delegation, in principle, had no 
problem with an exchange of experience or a st atistical information-gathering.  However, she 
wondered whether the Secretariat could really c ontribute to this item.  This was normally a 
confidential process between two Members involved in the negotiation.  But her delegation would not 
be against the Secretariat paper, if it was deemed necessary and supported by other Members.  Before 
touching upon Article XXI, Members should be clear  about what kind of exercise they wanted to 
conduct since, by and large, the procedures were functioning well.  She was not convinced that 
Members should start reopening the procedures. 
60. The representative of Nigeria st ated that Members should be very clear about the objective 
and the scope of the exercise, the role of the Secret ariat and their possible contribution to the process.  
He was open to the discussion. 
61. The representative of Australia agreed that th e proposed discussion would possibly be a very 
technical exercise.  Her delegation's experience w ith the procedures suggested that the technicalities 
affected the process and thus it was motivated to  make the proposal that Members share their 
experience of how the procedures had operated.  He r delegation had no intentio n to go into the detail 
of any negotiations or of singling out any delegations in the discussion.  What was proposed was a technical discussion about how the procedures operated.  The United States had hinted at their experience with gaps in the procedures which in so me cases inhibited Members' ability to conclude an 
Article XXI process.  Australia was proposing a review  of the operation of the Article XXI procedures 
rather than reopening them.   It wished to have  an exchange of experiences with Members.  She 
sought clarification from the Secretariat on the conc erns over the confidentiality of the Article XXI 
negotiations.  Based on the understanding that the not ification of invoking Article XXI and the claim 
of interest afterwards were not secret, it should be pos sible for the Secretariat to make a factual report.  
Otherwise, her delegation would probably have to  revise the parameters of its proposal for a 
Secretariat paper. S/CSC/M/64 
Page 10  
 
  62. The representative of Nigeria sought clarifica tion from the Secretaria t on the role of the 
Council in the process, particularly in relation to paragraph 5 of Article XXI. 
63. The representative of the Secretariat said that the Secretariat had a role in the procedures, not 
in terms of the negotiating content, but of the mech anics of the process itself.  The Secretariat served 
as the depositary of the WTO treaty, including the GATS.  According to the procedures, the 
notifications of invoking Article XXI were submitted to the Secretariat for circulation, and then the 
Secretariat issued the necessary documents in a secret series, which were numbered copies.  The notifications of claim of interest followed the sa me procedure.  Subsequent notifications for the 
extension or conclusion of the negotiations or the reso rt to arbitration were also sent to the Secretariat 
for circulation.  So the Secretariat was administering the process, but not interfering with the content.  
The Secretariat could provide a factual statistical account of invocations, claim of interest, extension 
of negotiations, and time taken for each process, if  this was the request.  When Members concluded 
the negotiations, they would need to go through th e certification procedure, which should result 
eventually in the modification of schedules in accordance with the agr eement or compensatory 
adjustments.  The latter was also submitted to  the Secretariat who would initiate the 45-day 
certification procedure accordingly.  In sum, all these functions performed by the Secretariat were 
derived from the depositary function of the WTO Secretariat, which was instated in the WTO 
Agreement itself and applied to a ll multilateral and plurilateral agre ements.  Paragraph 24 of the 
procedures (S/L/80) provided for the possibility of a review which took place at the request of any Member.  That was separate from introducing chang es to the procedures, because the same paragraph 
stated that, through that review, the CTS might agree to any amendments to the procedures.  In other 
words, any change to the procedures needed to go through the same procedure that produced the 
procedures themselves, based on consensus in the C ouncil.  The responsibility of the review had been 
effectively transferred to this Committee by virtue  of the Council decision that had established the 
Committee and its terms of reference.  The Comm ittee functioned within these parameters, while the 
Council would be the authority to change the procedures, upon recommendation from this Committee 
as a result of the review. 
64. The representative of Australia suggested that the proposed discussion could be conducted in 
informal mode if Members would feel more comfortable. 
65. The Chairman noted that several delegations ha d supported Australia's proposal while others 
had raised questions about the request for a Secretar iat paper.  He suggested that the Committee take 
noted of the statements made and revert to this item at its next meeting and that he would hold 
consultations on this issue in conjunction with the consultations concerning a Secretariat note on 
WTO jurisprudence.   
66. It is so agreed.   
D. OTHER BUSINESS  
67.  Noting that no delegation intended to raise an y issue under this item, the Chairman adjourned 
the meeting. 
 
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