RESTRICTED  
  
S/C/M/131  
 
2 June 2017 
(17-2967) Page: 1/14 
Council for Trade in Services    
 
REPORT OF THE MEETIN G HELD ON 16-17 MARCH 2017  
 
 
NOTE BY THE SECRETAR IAT1 
The Council for Trade in Services held a meeting dedicated to the review of Article II (MFN) 
Exemptions on 17 March 201 7. The meeting was chaired by Ambassador Gustavo Vanerio 
(Urugu ay). The agenda for the meeting was contained in document WTO/AIR/ CTS/11 . 
 
The Chairman  suggested that the agenda be adopted as circulated.  
 
The Council so agreed . 
 
1  ITEM A - REVIEW OF THE MFN EX EMPTIONS LISTED  
1.1.  The Chairman  recalled that the Council was un dertaking the  fourth review of MFN 
exemptions , mandated by the Annex on Article II (MFN) Exemptions . More specifically, 
paragraph  4 of the Annex  called  upon the Council, in a review, to examine whether the conditions 
which had created the need for the exem ptions still prevail ed and to determine the date of any  
further review. T he Council  had formally started the  fourth review at its meeting held on 17 June 
2016, when organisational issues were discussed.   
1.2.  The procedural arrangements agreed for the f ourth re view of MFN exemptions, as outlined in 
JOB/SERV/238 , stipulate d that the review would  be conducted in a dedicated meeting organised 
on a sector -by-sector basis, following a question -and-answer pro cess, based on past practice.  
Members also agreed that quest ions for the review would be submitted in writing well in advance 
of the dedicated meeting, in order to provide Members concerned with sufficient time to prepare 
their answers.  Delegations having received questions would circulate their answers in writing,  in 
advance of the dedicated meeting, or deliver them orally at the meeting. Members were 
encouraged to submit written replies, to the extent possible, so as to make the dedicated sessio n 
more efficient and effective. F or the purpose of the review, the Sec retariat had  circulated three 
background documents:  two updated compilations of MFN exemptions, one organised by sector 
(JOB/SERV/29/Rev.1), and one organised by Member (JOB/SERV/30/Rev.1), and a document 
providing updated statistical information on the nu mber of MFN exemptions listed 
(JOB/SERV/31/Rev.1).  
1.3.  A representative of the Secretariat  indicated that the Notes had been  updated to include the 
Lists of Article (II) MFN exemptions of the 11 Members who had acceded to the WTO since the last 
MFN review held  in 201 0–2011.2 All tho se 11 Members had  a list of MFN e xemptions. Based on the 
Notes, a few observations could be made.  The total number o f MFN exemptions listed had 
increased to 566 , and the number of Members listing exemptions had risen to 104. Of the 566 
exemptions listed, 103 applied to "all sectors", while 463 applied to  specific sectors . Transport was 
the sector with the highest numbe r of MFN exemptions listed, with  199 exemptions in total, 
followed by audio -visual services,  which accounted for  143 e xemptions, and f inancial services, 
accounting for 51 exemptions. As always, the Secretariat would welcome any comments or factual 
corrections to its Note s. 
                                                
1 This document has been prepared under the Secr etariat's own responsibility and is without prejudice 
to the positions of Members or to their rights and obligations under the WTO.  
2 Accessions since 2011 included Montenegro, Samoa, Russian Federation, Vanuatu, Lao People's 
Democratic Republic, Tajikista n, Yemen, Seychelles, Kazakhstan, Liberia and Afghanistan.  S/C/M/131  
 
- 2 - 
 
  1.4.  The Chairman noted  that a number of delegations had  submitted written questions for the 
purpose of t he review. These had  been circulated to the Council in two  communication s: one from 
Hong Kong, China; Japan;  the Republic of Korea;  and the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu ( S/C/W/370/Rev.1); and another one from Australia (S/ C/W/371). In 
addition, the Council had received a communic ation from Costa Rica ( S/C/W/373) submitting its 
written answers to the questions received.  The Chairman invited those delegations who had  
submitted questions and wish ed to introduce them  to take th e floor. Similarly, he invite d any 
delegation s wishing to take the floor for comments on issues of general nature , to do so at that  
juncture.  
 
1.5.  The representative of Hong Kong, China  thank ed the Secretariat for the N otes and the 
preparatory work, including  their introd uction , and for the briefing session on MFN exemptions 
held last year . He also thank ed the co -sponsors for their support to the questions raised in 
document S/C/W /370/Rev.1, as well as Costa Rica for submitting its written replies to the  
quest ions. He welcomed  the opportunity to review MFN exempt ions, although his delegation was  
disappointed by the need to do so,  given that more than two decades had passed after the listing  
of the exemptions. The MFN principle was  the corn erstone of the multila teral trading system . GATS 
Article II:2 provided  that a Member could maintain a measure inconsistent with the MFN obligation  
under GATS, however such exemptions were  never meant to be perpetual.  As stipulated in 
paragraphs 5  and 6 of the Annex on Article I I Exemptions, such exemptions should terminate on 
the dat e provided for in the exemption,  should not exceed a period of 10 years in pri nciple  and 
were subject to negotiation in subsequent trade -liberalizing rounds.  
1.6.  His delegation was disappointed that the re were  566 exemptions  and nearly all had been 
listed wi thout a definite period. This proved the importance of the review in upholding the MFN 
principle , by ensuring that MFN exemptions were limited to exceptional circumstances and were 
phased out over tim e. His delegation  hoped that  all Members would recognise the impor tance of 
participating  constructively in the review in order to make it a substa ntive and meaningful 
exercise. As mandated by GATS, the review had to , among others, examine whether the 
condi tions which  had created the need for the exemptions still prevail ed. Hong Kong, China , 
together with the other co -sponsors, had  set out in the communication submitted to the Council a 
number of questions to Members maintaining MFN exemptions . They genuinel y hope d that the 
exercise would be  useful and productive  and that it would offer an opportunity for Members to 
examine the conditi ons creating the MFN exemptions  20 years after the GATS had co me in to force.  
In particular, Members having exemptions could ta ke a serious look at  their exemptions.  Was it  
still necessary for these exemptions to be in place?  Would some of them have already serve d their 
purpose and could they be removed? With Members'  active p articipation and support in the  review, 
the Council w ould be able to draw useful and constructive conclusions with a view to terminating 
the exemptions as early as possible.    
1.7.  The representative of the Republic of Korea  said that his delegation supported  the statement 
made by Hong Kong, China. The MFN obligati on was  one of the fundamental principles of the 
multilateral trading system . MFN exemptions should be exceptional and transitional , subject to  
specific conditions, and t hey should not be used as a disguised restriction  on trade . MFN 
exemptions should not e xceed 10 years and  should be kept to a minimum. His delegation was  
confident that the MFN review proc ess would  contribute to the eventual elimination of the  existing 
MFN exemptions  by clarifying and identifying various problematic aspects. He looked forwar d to 
seeing a constructive engagement by all Members.  
1.8.  The representative of Japan  said that , as one of the co -sponsors , his delegation  supported  
the statement made by Hong Kong, China. He wished to  thank Costa Rica for su bmitting its replies  
in writing , as this helped to understand the necessity of MFN exemptions.  As WTO Members kne w 
well, the MFN principle was  a cornerstone of the WTO system.  The review would help to deepen  
Members' understandi ng of MFN exemptions and enable  a common r ecognition of which 
exemptions  were truly necessary.  In the same way  as an annual health check , the rev iew 
contributed  periodically to  ensuring the transparency and soundness of MFN exemptions.  In so 
doing, the GATS would be kept revitalized. Japan hoped that the  MFN review wo uld be meaningful 
and productive for all Members.  
1.9.  The representative of the Chinese Taipei  echoed the statements made by  Hong Kong , China  
and the other co-sponsors. The MFN principle was one of  the main obligations  of the multilateral 
trading system  and a ny deviation from it represented  an exception , which should never be allowed S/C/M/131  
 
- 3 - 
 
  to become a common practice. The Annex on  Article II Exemptions stated that  the purpose of the 
review was to examine whether the need for  the exemptions still prevailed.  Her deleg ation, 
together with the other co-sponsors, had posed some general and some specifi c questions to 
Members that had  listed MFN exemptions. They had  refrained from repeating questions raised in 
past reviews. Answers to those questions would help to improv e Members'  understanding of 
whether the conditions for the listed exemptions still prevail ed. In that  regard, she thanked Costa 
Rica for submitting wri tten replies before the meeting and  looked forward to a fruitful discussion  
under the fourth  review.  
1.10.   The rep resentative of Norway  said that Members had gone through the  review exercise a 
few times in the past  without seeing many changes . However,  it did make  sense to have periodic 
reviews  of MFN exemptions , given that this forced  Members'  authorities to reflect on the MFN 
principle , which was one of the fundaments for the multilateral trading system . Therefore , she  
believe d that it would be useful to or ganize another review as set out in the GATS Annex on Article 
II Exemptions . Norway’s point of departure was  that there should be few or no MFN exemptions.  
Her delegation  recognize d that, in some cases , MFN exemptions were  necessary, and that most 
Members had a whole set of free trade agreements  that were  covered by a broad  MFN exemption 
in GATS Art icle V. However, for purpose s of the review, the remaining MFN exemptions  should be 
concisely drafted, sufficiently circu mscribed  and limited to what was  necessary to fulfil their 
purpose. They should not be so open as to cover future agreements. Where the conditions that 
had created the need for the exemption no longer exist ed, the Member concerned should bring 
itself into conformity with paragraph 1 of Article II of the GATS.  
1.11.   The representative of China  thanked the  constructive contribution of Hong Kong, China  and 
the other co -sponsors to promot ing the Council's review of MFN exemptions . His delegation was 
looking forward to the answers or clarifications from relevant Members concerni ng the questions 
raised in the communication .  
1.12.   In order to have an orderly and efficient d iscussion, as agreed by Members, t he Chairman  
suggested  that the C ouncil take each sector in turn,  for delegations who had received questions in 
that particular sector to respond.  It would be desirable if responding Members could structure their 
interventi ons as much as possible on the basis of the questions addressed to them. Before 
proceed ing by sector, the Chairman suggested that delegations wishing to respond to the first 
general question of Hong Kong, China and co -sponsors , which was  addressed to  all Members with 
MFN exemptions , do so at that juncture. Alternatively , if they so preferred, delegations could also 
reply when responding to the specific questions as the review proceed ed by sector.   
1.13.   The representative of Turkey  noted that, while her delegatio n had not received any specific 
questions,  she would respond  to the first general question raised by Hong Kong, China and co -
sponsors on whether the exemptions had been used for any actual measure since the previous 
review in 2010 -2011. In its MFN exemptio ns list, Turkey had listed  15 measures, four applicable to 
all sectors and 11 sector -specific ones. Turkey had signalled its readiness to remove four sector -
specific exemptions in its Doha initial offer, two in telecommunication services, one in postal 
services and one in financial services. These four measures that Turkey had offered to remove 
from its MFN exemption s list were currently not applicable. The remaining 11 exemptions were a 
result of Turkey’s international agreements, or Turkey’s related legis lation in force. Turkey had not 
suspended or  terminated any of its services -related international agreements and , therefore, the 
measures concerned were still use d. The remaining measures underlined reciprocity for 
application. They remained in Turkey's do mestic legislation and were still enforced.  
1.14.   The representative of the United States  responded that t he exemptions listed by his 
delegation reflect ed measures that remain ed in force  and, therefore , were still used on an ongoing 
basis. For example, different ial treatment resulting from double taxation treaties, bilateral 
investment treaties, or reciprocity requirements contained in certain legislation  were applied on an 
ongoing basis.  
1.15.   The representative of Costa Rica  stressed his delegation's commitment with  the GATS and 
its interest in having a meaningful exercise as part of the fourth review of Article II MFN 
exemptions.  Costa Rica had circulated written answers to the questions raised by Hong Kong , 
China and other delegations. On the first question address ed to all Members, he con firmed that 
Costa Rica's legislation in the areas covered by its MFN exemptions had not been modified since 
the previous review in 2010 -2011. Therefore, all exemptions were still in place and were S/C/M/131  
 
- 4 - 
 
  continuously applied in his delega tion's relationships with its trading partners. The exemptions 
related to actual measures.  
1.16.   The representative of Brazil  said that, regarding the three MFN exemptions  listed by Brazil, 
the underlying  justification s were still the same.  Brazil still had copr oduction agreements that 
would require MFN exemptions for audiovisual services. The agreement s on international transport 
still existed and , therefore, the justification was the same. Likewise, Brazil still had cargo sharing 
agreement s and, therefore, the three MFN exemptions were still required.  In this regard, he 
clarified  that Brazil had , at the moment,  cargo sharing agreements only with Argentina, Chile and 
Uruguay.  It was a narrower scope as compared to what had been inscribed in the past.  With this, 
he also answered to the question  addressed to Brazil on its exemption  listed for specific sectors.  
1.17.   The representative of Australia  wished to provide an update on Australia's two MFN 
exemptions , both pertaining to  the audio -visual sector. The first exemption , on co -production, 
related to preferential treatment of screen productions produced under bilateral co -production 
arrangements. Under its co -production program me, Australia had entered into treaties with a 
range of partners. Since the previous review in 2 010-2011, Australia had entered into treaties with 
South Africa and the Republic of Korea and it was currently negotiating treaties with India, 
Denmark and Malaysia. Her delegation was renegotiating its treaty with the United Kingdom and 
its MoU with Franc e. The second exemption concerned measures taken to respond if another 
Member had taken unreasonable action in relation to Australia's audiovisual services. No measures 
had been taken under the "unreasonable action" exemption to date. Australia intended to  retain its 
audiovisual exemptions in their current form given that the cultural policy and industry stakeholder 
interests that had created the need for th ose exemptions still existed.  
1.18.   The exemptions were not intended to prevent trade in audiovisual servi ces and were not 
trade restrictive. Australia’s audiovisual sector was critical to the achievement of key social and 
cultural objectives. They reflected the high value Australia placed on social and cultural policy 
objectives, particularly the need to pres erve a vibrant audiovisual sector. The intention was to 
ensure the availability of material that reflected Australian identity, character and cultural diversity 
and to preserve a robust financial support framework for areas of greatest need in the industry . 
Australia’s support framework for the audiovisual sector focused on areas of greatest need, 
including film and television content, where activity would not otherwise occur or would fall to 
levels low enough to threaten the sustainability of the industry.  The mix of subsid ies, regulation 
and tax concessions that supported Australia’s audiovisual sector was not designed to present 
barriers to market access. It provided necessary financial support to sustain Australian creative 
resources and to ensure that A ustralians had access to their own images and stories in cinema s 
and on television.  
1.1  All Sectors  
1.19.   The Chairman  then invited delegations who had received questions on exemptions listed for 
"all sectors" to respond, pointing out that a large number of MFN -inconsistent measures had been 
listed under that category.   
1.20.   The representative of the  European Union  indicated that, before responding  to the question 
concerning the Cyprus MFN exemption applicable to all sectors, her delegation wished to make a 
few general re marks on the process of review. The scope of the MFN review was clearly defined in 
paragraph 4 of the Annex on Article II (MFN) Exemptions. The review was limited to examining 
whether the conditions which justified the need for MFN exemptions were still in  place. The 
European Union would respond to all relevant questions that had been addressed to her delegation 
with that purpose in mind , for the list of exemptions of EU -12 Member States  that had entered into 
force in 1995 and for the sixteen list s of exemp tions of the European countries that  had acceded to 
the European Union since that year . On the concrete question, the exemption was conditioned to 
Cyprus acce ssion to the European Union. Her  delegation wished to confirm that Cyprus was a 
member of the Euro pean Union. While the MFN exemption still remained, it had not affected other 
Members' rights.   
1.21.   Thereafter, she responded to other questions addressed to her delegation, which related to 
exemptions also applying to all sectors. First, she explained that th e reasons behind the exemption 
concerning bilateral agreements with San Marino, Monaco, Andorra and the Vatican City State, S/C/M/131  
 
- 5 - 
 
  related to the particular historical and political situation of those entities, which were in most 
cases, landlocked and highly inte grated in the EU, and had a particular relationship with certain EU 
Member States that needed to be maintained. The specific status of those principalities needed to 
be maintained for an indefinite duration as the political situation had not changed and, t herefore, it 
was necessary to maintain the exemption to preserve their unique place in history and politics.  
1.22.   The other exemption applying to all sectors related to citizens of the Commonwealth 
countries with a grandparent born in the United Kingdom for wh ich the requirement for a work 
permit was waived in all services sectors. This arguably allowed services suppliers from the 
mentioned countries under those situations to enjoy better treatment, as compared to services 
suppliers from other countries. The Eu ropean Union did not wish to cease offering such preferential 
treatment as it reflected strong historical links between the UK and the Commonwealth countries.  
1.23.   The representative of El Salvador  indicated that her delegation hoped that the fourth MFN 
review  would conclude in a manner satisfactory for all Members. Regarding the question received 
on the exemption listed by El Salvador for all sectors, this exemption  related to the process of 
economic integration in Central America. El Salvador, jointly with ot her countries from the region, 
participated in a process of economic integration that had started in the sixties. Its main pillar was 
the General Treaty which had , as main objective , the establish ment and consolidat ion of  a custom s 
union in Central America , providing  free movement of goods and services within the region. This 
agreement included several provisions giving pr eferential treatment to service  providers from the 
region in all or some services sectors. This preferential treatment was reflected in t he measure 
listed as MFN exemption , in order to safeguard those preferences . The measure was still valid and 
applicable given that the Central American countries continued carrying out efforts to promote 
further regional integration and consolidate a futur e customs union. Therefore, the duration of the 
measure at issue was indefinite. Since the launch of the process of economic integration in Central 
America and until that moment , the countries from the region had worked intensively on the 
process  and were in the process of elaborating a services regulatory framework at the regional 
level. Finally, she wished to confirm that the exemption was still in force.   
1.24.   The representative of Guatemala  said that  the exemptions listed by his delegation reflected 
the pref erential treatm ent provided to certain Members and that,  if not included as exemptions,  
would be incompatible with GATS Article II. To the extent that the measure s included in the list of 
MFN exemption s continued to be in force, their indefinite temporal v alidity would be justified. In 
the case of the MFN exemption related to the integration of the Central American countries, he 
wished to highlight that Guatemala , together with the other countries from the region, participated 
in the process since the sixti es. The main pillar was the General Treaty , whose main objective  was 
to establish and consolidate a custom s union in Central America, allowing the  free movement of 
goods and services within the region. The need for the MFN exemption  was justified , given th at the 
regional process of economic integration was an evolving process. The Central American countries 
were carrying out efforts to promote further integration and consolidate the customs union and , 
therefore, the duration of the exemption was indefinite.  On the fourth and fifth entries  in its list of 
MFN exemptions , Guatemala had started an internal process of review , to examine whether the 
relevant exemptions were still pertinent. His delegation was still embarked in this process and, 
upon its conclusion , the exemptions would be reviewed accordingly.  
1.25.   The representative of Honduras  responded to the question on its exemption applying to all 
sectors, which was the only specific question addressed to its delegation.  As the other countries 
from the region, Ho nduras had listed an exemption concerning the preferences provided under the 
Treaty of Central America n Economic Integration. Article XXV of that Treaty and Article 13 of the 
Guatemala Protocol provided that the State Parties agreed to keep their trade rel ations with third 
countries, the Central American Exception Clause, as well as the Central American preferences. At 
the same time, the Treaty included several provisions that allowed applying preferential treatment 
to service providers from the region in a ll or each of the services sectors ; this  had been reflected 
in Honduras's list of Article II (MFN) exemptions. The measures were still needed given that the 
Central American countries were carrying out efforts to promote further the process of economic 
integration within the region. Finally, he reaffirmed that the measure referred to in document 
S/C/W 370/Rev.1 was based on the General Treaty of Central American Economic Integra tion and 
the Guatemala Protocol .  
1.26.   The representative of Thailand  thanked delegati ons for the questions raised on Thailand's 
exemptions. At the outset, she noted that the scope of the review was clearly stipulated in the S/C/M/131  
 
- 6 - 
 
  GATS Annex on Article II Exemptions, which provided that the Council shall examine whether the 
conditions which had created the need for the exemption still prevailed. Therefore, the questions 
related to the intended duration or termination of the exemptions had to be discussed in the 
context of the Doha round of negotiations, or any future rounds of negotiations. On the  question of 
why certain exemptions needed to be maintained, she noted that the application under the 
Bilateral Treaty had created the legal basis for the exemption. Since the Treaty on Amity and 
Economic Relations remained in force, the conditions leading  to the need for the exemption related 
to the services sectors stipulated in that Treaty continued to exist .  
1.27.   The representative of Hong Kong, China  sought clarification from the Chairman on whether 
he would have an opportunity to pose follow -up questions  to delegations  and, if so, when would 
that be . 
1.28.   The Chairman  responded that there would be an opportunity to pose follow -up questions 
after delegations had replied to questions pertai ning to  exemptions listed for  "all sectors", as well 
as after they had rep lied to questions pertaining to sector -specific exemptions . 
1.29.   The representative of Switzerland  said th at the  MFN review was crucial , as the MFN principle 
was indeed the cornerstone of the multilateral trading system. Having the review on a regular 
basis pro vided an opportunity for Members to revie w whether the exemptions were still needed in 
the form they had been  written in their Li sts of Article II Exemptions. He respond ed on behalf of 
Switzerland and Liechtenstein to a question addressed to both delegatio ns on an exemption 
related to  immigration measures applying to all sectors . Any s pecific questions to Li echtenstein 
would b e answered by that delegation. T he permission granting temporary stay and permanent  
residency had to be seen in its  historical contex t. The exemption  had been listed  when the  
agreement referred to in the exemption had not yet been negotiated. Whi le the exemption at issue  
was necessary at the moment the Lists of Article II Exemptions  were finalised , such measure was 
no longer  needed . It was also considerably large in scope and could be reduced in substance. 
Therefore,  Switzerland was ready to revise its exemption. His delegation had been transparent and 
would appreciate that other M embers proceeded in the same way .  
1.30.   The representative of Malaysia  explained that it was not possible for her delegation to 
remove its exemption applicable to all sectors given the different laws and regulations existing 
between federal state governments in her country. Besides, any amendments would be conditiona l 
to the overall balance of the DDA in services. Therefore, her delegation was not in a position to 
remove its exemption at that stage. However, Malaysia had been reviewing measures applied 
under the exemption at issue on a case -by-case basis. She wished t o stress that the purpose of 
her delegation's investment regime was to facilitate investment into her country, as Malaysia had 
an open regime to foreign investors, particularly in the area of services. She remained available to 
provide further information on its exemption, including bilaterally, if needed.  
1.31.   The representative of Hong Kong, China  thanked delegations for their answers , which 
provided useful information for enhancing Members' understanding on the scope and purpose of 
the exemptions.  He noted th at one delegation had indicated that it was reviewing some of its 
exemption s. Similarly, Switzerland had stated that its exemption for immigration m easures was no  
longer  needed. He suggested that Switzerland might wish to  consider when it s exemption  could be 
removed . He had two specific follow -up questions , one for Turkey and another one for the 
European Union . Turkey had signalled t he removal of  four sector specific exemptions in its Doha 
initial offer. However, that offer was con ditional upon a successful  outcome of the Doha 
negotiations.  If he understood correctly, t he exemptions were  not applicable anymore. He sought 
clarification from Turkey as to whether it  had any plans to review tho se exemptions  to examine if 
they were  still necessary  in order to rem ove them . Second , he wonder ed whether the exemption  
listed by Cyprus was covered by GATS Article V given that the country  was now a member of the 
European Union.  He sought further clarification from the European Union  as to why the exemption 
would not be c overed by Article V. If  the exemption was covered , it might  be possible to remove it.  
1.32.   The representative o f Turkey  replied to the follow -up question posed by Hong Kong, China 
on its exemption. Turkey had signalled its readiness to remove four sector speci fic exemptions 
conditional upon the finalisation of the Doha negotiations. As the negotiations were not finalised, 
the process of changing the legislation could not be finalised. Since the legislation was in place, 
her delegation was not in a position to d elete those MFN exemptions, although de facto they were 
not applied  at the moment.  S/C/M/131  
 
- 7 - 
 
  1.2  Business Services  
1.33.   The representative of New Zealand  said that its policy in relation  to Japanese interpreters 
allowed  domestic employers in tourism -related industries , who were unable to obtain suitably 
qualified New  Zealand residents , to recruit from Japan. Visas under this category were awarded for 
a maximum of three years. No other country was  currently involved in a specific arrangement of 
that sort. However, commitments  to provide temporary entry for certain categories of workers had 
been included in some of New  Zealand’s free trade agreements , including for Korean tour guides 
and language instructors, Mandarin teachers’ a ides and tour guides from the Peoples’ Republic o f 
China and chefs from Indonesia. More information about New Zealand's  immigration policy could  
be found at:  http://onlineservices.immigration.govt.nz/opsmanual/index.htm . Inform ation on visa 
categories related to New  Zealand ’s international commitments could  be found under the following 
headi ngs on the website : Temporary entry class visa/Work visas/ WI International/ Humanitarian 
work instructions. The intention of such policy was  to alleviate a need withi n New  Zealand’s 
tourism sector, which was a significant services export sector . Any future application of this policy 
would be on a similar basis.  
1.34.   The representative of Costa Rica  responded to the questi on addressed to his delegat ion on 
how its reciprocal agreements could ensure minimum standards of qu ality for professional services 
and whether Cosa Rica had  conducted any review on the effectiveness  of such arrangement s. 
Costa Ric an professional associations were responsible for assuring compliance with standards of 
quality of professional services. As sup ervisory organiz ations, they were  also responsible for the 
negotiation of any reciprocal agreement to ensur e that foreign professionals me t those standards 
of quality. At that mome nt, Costa Rica had  not conducted any review regarding such reciprocal 
arrangement s. He added that not al l professional associations applied  the reciprocity  requirement. 
The requirement applied to the professional associations of public accountants, p harmac ists, 
geologists, physicians and surgeons, veterinarians, lawyers (i.e. notaries), dental surgeons, 
optometrists, journalists, nurses, medical and surgical technicians and medical science b ranches.  
1.35.   The representative of Thailand  responded to the question addressed to her delegation 
relating to its exemption in auditing services. The more favourable treatment provided by that 
exemption was granted based  on reciprocity , as a result of bilateral agreement s between Thailand 
and its trading partners. The exempti on was essential to meet the national policy that auditing 
services in foreign market s should be equally open for T hai service suppliers. T herefore , her 
delegation consider ed that the conditions giving r ise to the exemption still prevail ed and it was  
neces sary to maintain it .  
1.3  Communication Services  
1.36.   The representative of Argentina  said that his delegation still needed to keep its exemption 
for telecommunication  services,  given that it was fundamental for the development of domestic 
satellite systems . Theref ore, he confirmed that the reasons behind the listing of the MFN 
exemption for telecommunication services  still prevailed . The exemption safeguarded market 
access conditions for the provision of satellite facilities in the national territory. A ccordingly, 
authorizations requested by foreign operators for the provision of satellite facilities were subject to 
the corresponding applicable regulations (Resolution SC No. 3609/99 - Part I, Regulation on 
Management and Satellite Services)  and his country's interna tional commitments, including the 
GATS and its exemptions . The conclusion of a reciprocity agreement between Argentin a the 
relevant foreign competent authority  was a condition "sine qua non" for the processing of 
authorization requests for the provision of  satellite facilities in  the national territory. As to the 
effectiveness  of the reciprocity requirement, it had proven  thus far to be appropriate to safeguard 
the developme nt of the satellite national system s. His delegation was constantly making efforts t o 
find alternative measures according to international trade principles. However, at the moment, the 
exemption constituted the most appropriate measure.  
1.37.   The representative of Colombia  thanked Hong, Kong and the other co-sponsors for the 
question addressed to his delegation. Colombia had participated in the process of modernising and 
liberalizing the telecommunications sector and, therefore, it had a modern regulation which 
provided non -discriminatory treatment to companies  from any country established in Colombia for 
providing such services. A considerable number of foreign companies were establishe d in Colombia 
and foreign operators maintained  the highest equity  participation in various telecom munication 
sectors , such as mobile phones and fixed -Internet acc ess. The exemption at issue responded to a S/C/M/131  
 
- 8 - 
 
  strategic interest to approach the Andean Com munity countries and, therefore, the conditions 
justifying the need for the exemption still prevailed . Moreover, the measure had no adverse trade 
effects in telecommuni cation services.   
1.4  Construction and Related Engineering Services, Distribution Services and Education 
Services  
1.38.   The representative of Indonesia  indicated  that his delegation  had received two questions on 
its exemption listed for construction services, one fr om Hong Kong, China and co -sponsors and 
another one from Australia. In Indonesia,  construction services , specifically government -funded 
projects , fell under government procurement.  His delegation was not in a position , or had  any 
plans within the short fut ure, to remove its  MFN exemption in cons truction services.  The measure  
provided  preferential shortlisting in international competitive bid ding to contractors from 
neighbouring ASEAN  member countries consistently with Indonesia 's commitments in the ASEAN 
region, and  remained  crucial to Indonesia's economic development agenda as i t enhanced  the 
pursuit of investment in civil works and construction , with a view to industrialization .  
1.5  Financial Services  
1.39.   The representative of Indonesia  responded to the question addressed to his delegation on 
Indonesia's  exemption for banking services.  He clarified that the exemption was based on 
reciprocal arrangement s pursuant to Indone sia's Finance Minister D ecree N o. 220/KMK.017/1993 
dated 26 Feb ruary 1993. The measure applied  to all economic entities, meaning any joint -venture , 
and provided that banking licences could only  be granted to foreign bank s originat ing from  
countries which adopt ed reciprocal polic ies towards Indonesian banks . The idea was to guarantee 
equal treatment  to Indonesia's national banks wishing to establish bank operations abroad. 
However, as his delegation had stated in the  past, the exemption at issue had  been suspended. 
The suspension was  stipulated in the Second Decision on Financial S ervices adopted by the Council 
in July 1995. Therefore , to the best of his knowledge, the exemption was  no longer applied to  the 
Indonesia's banking sector. He thank ed delegations for their questions  and Members for the ir 
patience and indulgence on the  matter .  
1.40.   The represent ative o f the Philippines  thanked  Hong Kong, China and co -sponsors  as well as  
Australia for the questions  they had  submitted  in advance o f the meeting. To respond to the 
questions regarding the Philippine's  exemption for financial services, the Central Bank  of the 
Philippines had  not den ied any foreign banks' application for entry. I ndeed,  all nine applications 
received so far from foreign banks, since the passage of  the new law on the liberalization of banks 
in the Philippines, had all been granted. The co ndition s for the creation of the  exemption , full 
market access and national treatment , referred to specific commitments appearing in Members' 
Schedule s of Commitments.  Furthermore , in his delegation's view, the conditions that had created 
the need for these  MFN exemptions still prevail ed. W hile the exemption s on financial services in 
the Philippines' List of MFN Exemptions were indefinite, his delegation  continue d to look in to its 
measures going forward.   
1.41.   The representative of Peru thanked Hong Kong, China a nd the other co-sponsors for their 
question on Peru's exemption for financial services , which had encouraged his delegation to revisit 
its MFN exemptions under the GATS. As a Member supporting free trade, Peru recognized equal 
treatment to both foreign and  national investors . Therefore, up to that moment, Peru had not 
applied any measure discriminating against foreign investors. As set forth in the List of 
Exemptions , measure would only be applied, exceptionally, in case of impairment or risk of 
impairment of national interest s, if another Member adopted  protectionist or discriminatory 
measures.  He highlighted that t he exemption  had no adverse effects for other Members.   
1.42.   The representative of the European Union  said that her delegation had received similar 
questions on three  reciprocity exemptions listed by  Austria, Hungary and Slovakia,  respectively. 
She would address the  three exemptio ns jointly since the rationale was the same . She wished to 
acknowledge that, on the ground , the three countries  applied open market pol icies. She note d that 
the exemption s reflected  the general interest for other countries to be equally open and that such 
reciprocity  exemption s still appear ed in the List s of MFN Exemptions of a number of Members . 
Consequently , there was  merit and value in maintaining tho se ex emptions as listed. There was 
also an MFN ex emption in financial services concerning measures granting favourable tax S/C/M/131  
 
- 9 - 
 
  treatment in Italy to service suppliers trading with countries to which the measure a pplied . The 
exemption  still provide d Italy the policy space needed to develop its policy in that  regard.   
1.43.   The representative of the Republic of Korea  thanked all Members who  provide d responses . 
She noted that some Members had  emphasized that their measure s were applied  on a non-
discriminatory basis, but it  was not clear whether the  conditions that had create d the need for the 
exemptions still  prevail ed, as  stated in the GATS. Therefore, she encourage d Members to explain 
the validity of their measu res from this angle . She also invited previous speakers who did not 
elaborate on this angle to do  so at that juncture .  
1.44.   The representative of Israel  thank ed Hong, Kong China and the other co-sponsors for the  
question on its exemption for financial services, as well as  the Secretariat fo r the background 
documents.  Israel support ed the process of review of MFN exemptions and believed that reflecting 
on the  question at issue had  been useful in capital. No foreign supplier up to that moment had  
been denied a licence to supply financial servi ces in Israel on the basis of reciprocity , as provide d 
in the specified MFN exemption. The condition which had created the need for the exemption still  
prevailed , given that A rticle VI of the Israel B ank Licensing L aw provided that, among the matters 
that would  be taken into account with regard to the issuance of licences under the law , was foreign 
bank reciprocity as to the licensing of banking corporation s between Israel and the Member  in 
which the cent re of the applicant 's business was  situated. It was b asically a reciprocity condition 
and it had  not affected substantiall y Israel's obligations under the GATS.  
1.45.   The representative of Hong Kong, China  thanked  all delegations that had provided detailed 
replies. First, h e echoed Korea's  statement and encourage d all deleg ations to elaborate more on 
the conditions that had created the need for the MFN exemptions , given that these were  important 
to all delegations in order to consider whether such  conditions still prevail ed. Second, he had a 
follow -up question f or the representative of Indonesia, who had mentione d that some of its 
exemptions  had been suspended in the law. If that was  the case , would  that mean that the 
exemptions were no longer required? If so, why were  they still maintained, even tho ugh the 
relevan t legislation had been suspended in that regard ?  
1.46.   With regard to  the follow -up question posed by Hong Kong, China , the representative of 
Indonesia  said that he would have to revert to capital  on the de tails of the answers provided .  
1.6  Health -related and Soci al Services, Tourism and Travel -related Services, and 
Recreational, Cultural and Sporting Services  
1.47.   The representative of the European Union  responded to a question addressed to  Cyprus 
regarding its MFN exemption on health services . The primary focus of  the exemption concerned  
cooperation between health authorities about patient s' access to treatment , where relevant.  
Bilateral agreement s with  third country concern ed medical serv ices to Cypriot  citizens that were  
not available in Cyprus. T he conditions that h ad created the need for this exemption still prevail ed.  
1.7  Transport Services  
1.48.   The representative of Canada  said that he would respond to the general question and the 
specific question relating to Canada's air safety standards exemption . He t hanked Hong Kong , 
China  and Australia for their diligenc e in drafting questions for the MFN  review.  The conditions that 
had given  rise t o Canada's  exemption were  unchanged since the last review of Article II 
exemptions.  With respect to the specific question on air transpor t, the exemption was justified by 
air safety standards procedures. Canada had  concluded agreements or technical arrangements 
with certain countries that recognize d the certifications of those countries made by individuals, or 
organizations, perform ing main tenance. Under such  an agreement or arrangement , Canada 
accepted  the certification of maintenance by the review and acceptance of the national regulations 
of the foreign countries involved. These agreements or arrangements might  be between countries , 
or be tween civil aviation authorities , and they varied  in scope according to the circumstances and 
compatibility between nation al systems. Canada had  bilateral agreements with the United States 
and the Europe an Union, and technical arrangements between civil av iation authorities with 
Singapore;  Hong Kong, China;  New Zealand and Brazil. Canada maintained  MFN reservations in all 
its free trade agreeme nts. This MFN exemption remained  necessary in part to ensure the integrity 
of Canada's aircraft safety standards. A s a result, this exemption needed to remain and Canada S/C/M/131  
 
- 10 - 
 
  was not contemplating its  removal. Elimination of the conditions that created the need for the 
exemption would necessitate multilaterally harmonized technic al and safety standards that were  at 
least eq uivalent to Canadian standards.  
1.49.   The representative of Singapore  responded  to the question raised by Hong Kong, China and 
the other co-sponsors on his delegation's  exemption for maritime transpor t services.  Singapore 
maintained  an MFN exemption relating t o certain maritime auxiliary services , such as storage, 
warehousing, freight forwarding  and inland trucking, container station and depot  services , in light 
of unsatisfactory access for Singaporean  companies in those sectors in some other co untries.  As a 
follow-up, his delegation  had not signed any other bilateral shipping agreements since t he last 
review in 2011. Up to that moment, Singapore  continue d to maintain bilateral shipping 
agreements with the Republic of Korea, China, Vietnam, India, Myanmar and Germ any.  
1.50.   The representative of India said that,  with regard to the specific question  on India's 
exemption on maritime transport services , his delegation had listed two exemptions in the 
shipping sector, one related to cargo sharing between bilateral partners and the second one to 
cargo reservation. India did not have cargo -sharing agreements with any country . On the 
exemption related to cargo reservation, i n India's revised conditional offer, the exemption 
pertaining to cargo reservation had already been offer ed for elimination. However, the revised 
offer was conditional on other Members making substantive and satisfactory offers in sectors and 
modes of supply of interest to  India. Therefore, the removal of that exemption was subject to the 
result s of the DDA n egotiations.  
1.51.   India wished also to make comments on its other exemptions for which his delegation had 
not received specific questions. With regard to India's exemption in t elecommunication services, 
he clarified that India  practice d MFN in its autonomous r egime. India was  willing to consider 
relaxing the exemptions in the  sector subject to the result of the DDA nego tiations at an 
appropriate time . The exemptions pertaining to audio -visual services had  been used for the 
negotiation of co -production a greement s. Since 2011, India had  signed audio -visual co -production 
agreements with New Zealand (2011), Poland (2012), Spain (2012), Canada (2014), China 
(2014), and Korea (2015). These audio -visual co -production agreements had been signed with the 
objective of con tributing to the developm ent of the film industry and the intensification of cultural 
and economic exchange between the Parties.  Finally, regarding its exemption for recreational 
services, the waiver on the prohibition of the sale  of lottery tickets by Bhu tan had been listed  by 
India as part of a comprehensive bilateral agreement between India and Bhutan.   
1.52.   The representative of the European Union  said that his delegation would respond  to the 
question concerning the MFN exemptions listed by Bulgaria for mari time transport services . In this 
regard, she indicated that the termination of the exemptions in question should be evaluated 
during the market access negotiations.   
1.53.   The representative of the United States  thanked Hong  Kong, China  for the question 
addresse d to his  delegation specifically on  road transport services.  In reply to the question as to 
whether the need for such exemption still prevailed , he responded in the affirmative , given that 
the conditions that had necessitate d this exemption still exist ed. In that  regard, he said that g rants 
of authority for the supply of truck services through a commercial presence in the United States 
were subject to reciprocity.  
1.54.   The representative of Thailand  responded to the question raised by Hong Kong, China and 
co-sponsors relating to Thailand's exemp tion on the collection of the value added tax for  selling 
and marketing o f maritime transport services. T he relevant regulations had been modified to 
reflect the practice under 0% for the selling and marketing of maritime  transport  services and, 
therefore, there was  no inconsist ency with the MFN application. Thailand had included in the 
revised offer the possibility of eliminating this exemption. However, the termination of the 
exemption was  subject to the outcome of the DDA negotiations . Therefore,  the permanent removal 
of th e exemption from the list had  to be discussed in the context of the ongoing services 
negotiations , or any future round of negotiation s, as it was conditional upon the overall overcome 
of those negotiat ions.  
1.55.   The representative of the Philippines  responded to the question on its exemption for 
maritime cabotage transport. He said that his delegation had existing bilateral agreements with S/C/M/131  
 
- 11 - 
 
  Bangladesh, Brunei Darussalam, Cyprus, Iran, the Netherlands, Norway  and Viet  Nam. Under 
those agreements, MFN generally referred  to MFN treatment  and not M FN exemption s. The MFN 
provisions  in those agreements generally applied to customs formalities, the levy of charges and 
port duties, freedom of access to and the use of  ports, as well as facilities awarded  to shipping 
services, such as warehousing, containers of freight stations in respect of vessels and cargo, 
particularly the allocations of berths at piers , as well as loading and unloading facilities in other 
port serv ices. In addition, under the MoU between the governments of Brunei Darussalam, 
Indonesia, Malaysia  and the Philippines on establishing and promoting effi cient integrated sea 
linkages, m utual and reciprocal arrangements might  be carried out on a bilateral b asis, or on a 
trilateral or multilateral basis , between participating p arties. The exclusive right should  not exceed 
a period of five years from the date of the granting of t he temporary exclusive rights. As provided 
by the Republic Public Act 9295, which promoted  the development of domestic shipping, ship 
building, ship repair and ship breaking  and ordering  reforms in government policies towards 
shipping in the Philip pines and for other purposes, l imited access to domestic shipp ing could  be 
granted even to  countries with which the Philippines had no bilateral agreements . Foreign vessels 
should  be allowed to transport passengers or cargo between ports or places within the Philippines 
territorial waters only upon the grant ing of a specia l permit by the Philip pine maritime industry 
authority, or Ma rina, when no domestic vessel was  available or suitable to provide the needed 
shipping service, and when public interest warrant ed the same.   
1.56.   The representative of Norway  said that it was s till a ser ious caveat that  maritime transport 
services were  not covered properly by the GATS and, therefore , the MFN obligation . Given 
Norway's interest, she would focus on the MFN exemptions listed for maritime transport services . 
Some MFN exemption s on cargo reservation under the U N Convention on a Code of Conduct for 
Liner Conferences were  stated to apply to signatories to that Convention. Norway was a  signatory 
to that Convention. However, Norway did  not recognize or allow , according to its  competition law, 
cargo sharing to take p lace for transport of cargo between Norway and other countr ies. Such MFN 
exemptions could not  apply to Norway. The  Norwegian competition policy was  based upon the 
legislation of the European Union, as committed through the European Ec onomic Area Agreement,  
and did  no longer allow liner conferences.  In respect of Members having taken an MFN exemption 
for “cargo sharing” based on the UN Convention on a Code of Conduct for Liner Conferences, she 
also question ed how such  MFN exemption s were  considered to be in accordance with the terms of 
ratific ation of the Convention by the S ignatories. The Convention did  not apply to total trade 
volumes, but only to cargoes transported within liner conferences.  Some MFN exemptions on 
maritime transport also contained  an eleme nt of reciprocity. An MFN exemption based on 
reciprocity between two Members was  contradicting the WTO basic principle that a Member should 
grant unconditionally to any other Member treatment no less favo urable than that accorded by the 
specific commitment  inscribed in its schedule, notwithstanding any MFN exemption s. 
1.57.   The representative of Australia  thanked all Members that had answered her delegation's 
questions.  
1.58.   The Chairman  said that the Council had concluded its examination of the MFN exemptions 
listed.  He thanked all delegations who had taken the floor and noted that Members had had a very 
useful discussion, which had provided more information on Members' MFN exemptions.  He 
suggested that the Council take note of the statements made.  
1.59.   It was so agreed . 
2  ITEM B - DETERMINATION OF THE  DATE OF ANY FURTHER REVIEW  
2.1.  The Chairman  recalled that paragraph 4(b) of the Annex on Article II Exemptions mandated 
the Council for Trade in Services, in the review, to determine "the date of any further review" ; he 
invited de legations' comments in that regard.  
2.2.  The representative of Hong Kong, China  thanked all Members for their  participation. They had 
provided useful information for enhancing understanding of  the scope and purposes of MFN 
exemp tions.  The review had  provided a  good opportunity for Members  to better understand the 
exemptions and , more importantly,  whether the conditions that  had created the need for the 
exem ptions still existed after t wenty years that the GATS had co me into force . In particular, S/C/M/131  
 
- 12 - 
 
  Members now understood more about the rationale for  those exemptions , although his delegation 
did not nec essarily agree with them.  
2.3.  He wished to highlight some  important take -aways from the discussion. First, his 
understanding was that some Members were actually reviewing their exemptions. He  encourage d 
them to seriously consider whether the conditions for the ir exemptions still prevail ed. Second, it 
was also his understanding that some of the exemptions were  actually no longer in u se. Some 
Members had  maintained the exempt ions, although they had  never used the m. For some 
Members, the legislation which had given  rise to the exemption had  been suspended . He 
encourage d those Members  to consider  whether the conditions for th ose exemption s still prevail ed. 
Given the value of such important information , Hong Kong, China urged  Members to keep th eir 
exemptions under continue review. He repeat ed the call  he had made at the start of the dedicated 
session:  Could Members take a serious look at  their exemptions ? Was it still necessary fo r those 
exemptions to be in place?  Would some of them have already served the ir purpose and could they 
be removed?   
2.4.  For Hong, Kong , China, the MFN principle was  crucial for the multilateral trading system. A  
review of MF N exemptions every five years was  a key mechanism for upholding the MFN principle. 
For his delegation, a nother review was  obviously necessary and well justified , as there were still a  
large number of MFN exemptions maintained  by Members and most of them were  without  a 
definite tim e-frame for  elimination.  In this regard, s ome Members had  suggested that the  
conditions which created the need for the ir exemption might not prevail, or that  the legislation 
which had given rise to the exemption had  already expired. Another review would  shed light on  
this important information. Therefore, i n line  with paragraph 3 of the Annex on A rticle II (MFN) 
Exemp tions, and previous practices, h e propose d that the next review be held no later than five 
years from the present one, i.e. by 2022. This time the  review  had demonstrated that Members 
could stream line procedures and yet have meaningful results . He recall ed that,  in previous 
reviews , the dedicated session had  taken one or two days , or even three days. On that occasion, 
Members had concluded the review  in one morning. His delegation was flexible on  the structure 
and procedures for the next review  and would be happy to let the Council  determine the format .  
2.5.  The representative of the Republic of Korea  echoed the statement made by Hong Kong, China 
and said that there should be another review no later than 2022. The MFN principle was a 
cornerstone  of the multilateral trad ing system  and, therefore,  any exemptions t o that  principle 
should be closely scrutinized. The MFN exemption review ensure d that the exemptions were 
questioned, examined and addressed on a global basis . The review m ight not result in the 
complete elimination of all exemptions, but it did remind all Members that any exemptions to the 
fundamental principle of Most -Favoured Nation should not remain un checked. His delegation saw 
the review as a meaningful mechanism to uphold the MFN principle. Korea strongly believe d that 
there should be another review in five years.  
2.6.  The representative of the United States thank ed those delegations who were interested i n 
taking the leadership role and putting forward questions for doing so in a very efficient manner . 
His delegation believe d that some real improvements had been made in that review, in comparison 
to previous ones. His delegation  would favour a more practic al and non -prescriptive approach as to  
how Members  move d forward , to maintain some flexibility . He was not sure where Members would  
be, or what they would  be doing , in five year s' time and, as such , it was important to leave  some 
margin of manoeuvre . The U nited States believed that it would be more appropriate to agree to 
reconvene at a date certain for the purpose  of assessing where Members stood on setting  an 
appropriate timing  for the next review . He would be happy to fix a "rendez -vous" in five years ' 
time, without the obligation to have a new review  but with the obligation to disc uss th e timing  
issue. None of the representatives  present at th at meeting had been  given the option of deciding 
whether they  wanted to have that  review ; the decision  had been handed to them by their 
predecessors. It would be useful to give their successors some fle xibility as to  how they would like 
to manage the process  in the future . While some  Members might  wish to have certainty , others did 
not necessarily want  a prescriptive  approach. Therefore, he suggested that Members might agree 
to reconvene at a set point in time in the future without having to make a decision  on the timing of 
the next review as yet , but rather  taking  a decision at that point.   
2.7.  The representative of Australia supported  the statement made by H ong Kong, China and 
Korea in relation to the date of the next review. Australia would like the next review to start no 
later than five year from then, namely by  2022. Her delegation agree d that the MFN principle was S/C/M/131  
 
- 13 - 
 
  one of the c ore principle s of the GATS . While there were MFN exemptions remaining, Australia saw 
value in  continuing to review those exemptions.  
2.8.  The representative of the European Union  noted that nothing in the GATS prescribe d 
Members  to review MFN exempt ions every five years and, therefore, her delegation could support 
the U nited States proposal to have a  "rendez -vous" clause  to meet in five years to discuss the 
timing for the next review.   
2.9.  The representative of the Chinese Taipei  thank ed all delegations who had taken the floor to 
provide replies and was appreciat ive of  the Chairman's  efforts. Like Hong Kong, China, her 
delegation support ed the proposal that the next review should be held  no later than 5 years from 
the current one. The MFN exemption review  was an important exercise , which was  based on a 
GATS mandate. In her  delegation's  view, it was  still essential for such reviews to be c onducted at 
regular intervals. Her delegation's proposal, therefore, was  that Members should consi der this 
issue and con tinue discussions at the next Council meeting.  
2.10.   The representative of Turkey  said that her delegation support ed the proposal  made by the 
United States .  
2.11.   The representative o f Brazil  said that  he had some  sympathy for the US suggest ion. The 
idea was  to try to find a way of  inject ing some flexibility  into the process, f or instance by  
reassessing the need  for the review  at some point in time. There was  some  merit in considering 
whether Members should a lready agree now to having the next review in five years ' time, or 
whether to leave  this decision open. For instance,  Members could agree in principle to have the 
next review in  five years ' time , but reassess  that timing at some point in the future . He said that 
some flexibility might be in Members'  interest.   
2.12.   The representative of Canada  joined the United States in noting that the arrangements for 
the fourth review had  been streamlined  and recognized that efforts had  been made to reduce the 
burden on Members. With that in min d, he was sympathetic to the US suggesti on that an abs olute 
time-frame for having the  next review might not be the best approach. A number of Members 
indicated at that meeting  that the conditions which had created the need for the ir exemptions had 
changed and  that some of the exemptions could be  removed.  However , most of those Members 
also indicated that they would only do so in the  context of  WTO market access negotiations. In his 
view, the process lacked  credibility in the absence of such negotiations  going on in parallel. 
Members' Lists were 20 years old and  he was sure that a number of  exemptions  could be 
removed.  However, absent a broader process, Members would  simply have a one hour meeting 
with a two hour s debate on when to have the next  MFN review.  Echoing Brazil , some kind of 
flexibility might be a g ood idea. Members did not have to me et in five years ' time  to decide if they  
would meet again. Members could agree to meet within five years  and, given developments with 
the rest of the agenda , they might want to decide then whether the time ha d come to have the 
next review .  
2.13.   The representative of Hong Kong, China thanked all delegations who  had given their views 
on the issue of the date of the next meeting. He could  assure Canada that the Coun cil would not 
be spending a one -hour debate on wheth er Members needed to ha ve another two -hour meeting. 
His delegation  support ed having  another review in five year s' time, by 2022. He had  also listened 
to other Members ' thoughts,  and h e heard  with some  interest the suggestion made by  Brazil . He 
agree d with the Chairman that Members could continue  discuss ing the timing  issue at the next 
regular meeting  of the Council . In the meantime , Members could  also have bilateral consultations 
on the issue. For now , his delegation  would maintain its  position that the nex t review should be 
held in five years ' time .  
2.14.   The representative of China  echoed the statement made by Hong Kong, China that a 
periodic review of MFN exemption s was  necessary and beneficial for all Members concerned . The 
Annex on Article II (MFN) Exemption s provided that " [t]he first review shall  take place no more 
than five years after the entry into force of the WTO Agreement ". The Council had held all 
subsequent  review s every five  years. T herefore, in that  spirit, his delegation believed that it was 
appropriate to conduct another rev iew within five years ' time. His delegation had heard  other 
Members' views and was willing to engage further with them. However, China support ed the S/C/M/131  
 
- 14 - 
 
  proposal made by Hong, Kong China , and hoped that th rough the MFN exemption  review Members 
could live up to the spirit  of the WTO and the GATS .  
2.15.    The Chairman  suggested that the Council take note of the statements made and  that 
Members continue their deliberations related to this issue under an item on the Council's agenda  
for its next meeting , rather than by scheduling a further dedicated meeting of the Council.   
2.16.   It was so agreed . 
3  ITEM C - OTHER BUSINESS  
3.1.  No items of Other Business were raised.   
3.2.  The meeting was adjourned . 
 
__________