RESTRICTED  
  
S/WPGR/M/80  
 
24 May 2013  
(13-2760)  Page: 1/5  
Working Party on GATS Rules    
 
 REPORT OF THE MEETING HELD ON 20 MARCH 2013 
NOTE BY THE SECRETARIAT1 
The Working Party on GATS Rules (WPGR) held a meeting on 20 March 2013, chaired by Ms Kyoko 
Hokugo from Japan. The proposed agenda and the Chairperson's annotated agenda for the 
meeting were circulated in documents WTO/AIR/4089 and JOB/SERV/144 respectively. The agenda was adopted. 
1  ITEM A: NEGOTIATIONS ON EMERGENCY SAFEGUARD MEASURES (ESM) UNDER ARTICLE X OF THE GATS 
1.1.  The Chairperson opened the floor to questions and observations on the revised room 
document tabled by the "Friends of ESM" (RD/SERV/79/Rev.1 of 4 December 2012) as well as to 
any ideas regarding future work.  
1.2.  The representative of the Philippines, on  behalf of the delegations of Brunei Darussalam, 
Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Thailand and Viet Nam, explained that their 
revised room document (RD/SERV/79/Rev.1) comp iled the proposals and positions taken by the 
"Friends of ESM" through the years, regarding ea ch of the 17 core elements identified in the 
Secretariat's Documentation Guide (JOB/SERV/106). Over time, these positions had been 
complemented by further elaborations and ideas in response to Members' questions and concerns. 
While some issues needed further clarification, he felt that the revised room document could serve as a systematic historical reference material and foundation for future work. 
1.3.  The proponents wished to highlight the positive developments in services trade statistics in 
terms of availability and accuracy. Since the su bmission of their room document entitled " Thoughts 
on the Way Forward in the ESM Negotiations " in March 2009, some new aspects had been 
identified, both in presentations in the Working Party and Secretariat work outside, which could 
serve as possible momentum-builders. On 24 March 2011, the Secretariat had made two 
presentations on ESM-relevant statistics: one on the availability at the international level of disaggregated data on services trade flows that could potentially be relevant in a safeguards 
context; and one on the types of statistics used  under the Safeguards Agreement in trade in 
goods. Regarding the first presentation, the "Friends  of ESM" felt encouraged by the improvements 
in the measurement of trade in services statistics.  They hoped that, with the proper coordination 
among agencies within and among governments, as  well as technical assistance and capacity 
building, statistics meaningful for negotiators and policymakers would become available. Regarding 
the second presentation, the proponents noted that difficulties in the use of merchandise trade statistics had not prevented safeguard rules from being made operational for goods. He thought 
that the same elements used for goods safeguards – determination of a surge in the volume of 
imports, serious injury of the domestic industry, and a causal relationship between the two – could 
be applied to trade in services. Statistics would only get better over time, and this would help 
address concerns regarding ESM feasibility. 
1.4.  The representative also drew Members' attention to a recent WTO Staff Working Paper,
2 
which surveyed how emergency safeguard measures had been dealt with in 13 RTAs involving 
                                               
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. 
2 Latrille, P. and Lee, J. (2012), " Services Rules in Regional Trad e Agreements: How Diverse and how 
Creative as compared to th e GATS Multilateral Rules? ", WTO Staff Working Paper ERSD-2012-19. S/WPGR/M/80 
 
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  ASEAN members. Nine of them contained emergenc y safeguard provisions with some providing for 
more detailed and binding procedures than others . One stipulated that consultations had to be 
held upon request by an affected Party, the resu lts of which had to be notified. While the RTAs 
containing safeguard provisions permitted their application only in cases of "negative impact" or 
"substantial adverse impact", some agreements narrowed their use down to specific sectors. 
Others included a reference to GATS Article X to incorporate the results of WTO negotiations. 
1.5.  He stressed that their current negotiating proposal did not advocate a one-size-fits-all 
mechanism. It merely provided for rules to establish an emergency safeguard mechanism in 
Members' domestic frameworks. The proposed rules stipulated a grant of permission with some disciplines and parameters that Members would have to comply with (such as an illustrative list of the kinds of market conditions that should exist in deciding to apply an ESM). 
1.6.  Turning to possible future work, he suggested  two avenues: 1) a more detailed discussion of 
emergency safeguard provisions in existing RTAs/FTAs involving ASEAN members, and possibly other FTAs; 2) an examination of emergency safeguard measures in the context of the rising 
importance of global value chains. On the first po int, a possibility would be for parties to these 
agreements to share their experiences. The "Friends  of ESM" would consult with the Secretariat to 
see whether it could gather additional informat ion, and looked forward to a discussion with 
Members on these matters. He noted that RTAs/FTAs with ESM provisions involving ASEAN 
members had taken effect as early as July 2006 and as recently as January 2010. The "Friends of ESM" considered this as evidence of the cont inued significance and relevance of emergency 
safeguard rules in the 21
st century. In their view, the greater economic interconnectedness and 
increased reliance on services in the context of global value chains (GVCs) increased the need for 
an ESM. In this context, the representative dr ew attention to the UNCTAD report entitled " Global 
Value Chains and Development: Investment an d Value Added Trade in the Global Economy", 
according to which the value chains administered by transnational corporations accounted for 80% 
of the US$20 trillion in trade each year. Service activities contributed to about one-half of the 
value added in exports (and an even greater proportion in developed countries). 
1.7.  This begged several questions from a gove rnment and domestic stakeholder perspective: If 
transnational corporations (TNCs) accounted for 80% of world trade, how much policy space did economies have, especially developing ones? Did this de facto  openness neutralize the principle of 
progressive  liberalization? What role could emergency safeguard measures play in maintaining 
some policy space? What narrative could be given to domestic stakeholders to avoid backlash from 
a significant rise in foreign-supplied services, possibly beyond expected levels? If TNCs were responsible for 80% of trade flows through global value chains, what did such dominance imply for 
the ability of governments to formulate and im plement trade policies? How would governments 
react, and preserve policy space, in the case of a sudden influx of services "imports" through the value chain? Beyond simply liberalizing trade, co uld global value chains be "multilateralized", for 
instance, through the negotiation and effective implementation of "fair" trade rules that would 
allow for the cushioning of the impact of sudden  fluctuations? The "Friends of ESM" would be 
interested in further exploring these questions with interested Members. 
1.8.  The representative reiterated that the "Friends of ESM" viewed emergency safeguard 
measures as a tool to facilitate further market opening by addressing concerns and sensitivities of 
domestic stakeholders. Any attempts to deepen market access commitments while devising fair rules on services trade had to seriously consider the importance of possible disciplines on 
emergency safeguard measures. 
1.9.  The Chairperson thanked the "Friends of ES M" for raising these thought-provoking questions. 
She recalled that the use of safeguard provisions in regional trade agreements had already been 
touched upon in Secretariat Notes, notably in S/WPGR/W/2 and S/WPGR/W/4 (last revised in 
document S/WPGR/W/4/Add.2 in March 2009). It would be helpful if Members that had included safeguard provisions in their RTAs/FTAs shared their experience. The rise of global value chains and the role of emergency safeguards as a possible policy tool could indeed be further analysed. 
She suggested reverting to the item at the next meeting. S/WPGR/M/80 
 
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  2  ITEM B: NEGOTIATIONS ON GOVERNME NT PROCUREMENT UNDER ARTICLE XIII OF 
THE GATS 
2.1.  Turning to government procurement, the Ch airperson recalled that, at the last meeting, a 
request had been made to update the Secretariat Note on " Government Procurement-Related 
Provisions in Economic Integration Agreements " (S/WPGR/W/49/Add.1) in order to capture recent 
developments in these provisions. It had also be en suggested that the Secretariat supplement the 
Note with information regarding: 1) the scope of services-related government-procurement 
commitments in Economic Integration Agreements (EIAs); 2) relevant scheduling approaches; and 
3) whether EIAs made a link between government procurement and services market-access commitments. 
2.2.  The Chairperson informed that the Secretariat had consulted internally. Research was 
currently under way on services commitments and services-related procurement commitments, 
trying to compare the GPA and recent RTAs in that regard. The results would be published in a forthcoming WTO Staff Working Paper. The latter would discuss the relationship between services 
and government procurement-related disciplines, and compare the coverage of commitments on 
commercially-purchased services versus  government-purchased ones under recent RTAs. The 
Paper would also address commonalities and differences in the scheduling of services- and 
government-procurement commitments in the resp ective WTO Agreements and recent RTAs. It 
would review the treatment of government procurem ent in recent RTAs regarding entities covered, 
thresholds, and coverage of services including co nstruction. The Working Paper would be prepared 
by members of the Secretariat government-procurement team in collaboration with the Trade in 
Services Division. To avoid duplication, the Chairperson proposed that, as a first step, Members 
discuss the forthcoming WTO Staff Working Paper (most likely at the September meeting). Based on these discussions, they could then decide what  further work they would like the Secretariat to 
carry out. Regarding the second part of the re quest made at the December 2012 meeting, the 
Chairperson informed that a Secretariat presentation of the revised Government Procurement Agreement, with a particular focus on services, was planned for the June meeting. 
2.3.  The representative of the European Union thanked the Chairperson for conducting the 
internal consultation and following up on their request. Best use should be made of the fact that a 
Working Paper focusing on services and their inter-relationship with the GPA was currently under preparation in the Secretariat. Her delegation supported the approach suggested by the Chair. 
2.4.  The Chairperson took note of the support in favour of her proposal. Members would discuss 
the Staff Working Paper's main findings upon its finalization. They would then consider what 
further analysis they wanted the Secretariat to carry out. Secondly, a representative of the 
Secretariat in charge of government procurement would give a presentation on the revised GPA, 
with particular focus on services, at the Workin g Party's June meeting. These two elements being 
agreed, she suggested that Members revert to this topic at the next meeting. 
3  ITEM C: NEGOTIATIONS ON SUBS IDIES UNDER ARTICLE XV OF THE GATS 
3.1.  The Chairperson recalled that the Secretariat's Background Note on " Subsidies for Services 
Sectors ‒ Information contained in WTO Trade Policy Reviews " had been circulated shortly before 
the meeting (S/WPGR/W/25/Add.6). Responding to  a request by the Working Party, the Note 
presented updated empirical evidence of subs idy programmes in service sectors, based on 
information contained in WTO Trade Policy Review  (TPR) reports by the Secretariat. The first 
instalment of this Note covered 45 TPRs carried out from April 2007 to the end of 2009. For those 
Members for which a more recent TPR existed, the latest version (i.e. post-2009) was used. This 
was the case for nine Members. A new Addendum wo uld follow for the period 2010 to present. She 
then gave the floor to a representative of the Secretariat to present the Note. 
3.2.  A representative of the Secretariat explaine d that, given the huge amount of information, the 
Note had been divided into two instalments. This first one covered TPRs carried out between April 
2007 and the end of 2009 with the exception of those Members reviewed more frequently, for 
which the most recently available version was used.3 New information had been added, in italics 
and colour, to the "overview table" (Table 1) already contained in the previous versions of the 
                                               
3 This was the case for China, the European Union,  India, Japan, Norway, the Republic of Korea, 
Singapore, Turkey and the United States. S/WPGR/M/80 
 
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  Note. Annex 1 listed all TPR reports covered in the Note, while Annex 2 contained relevant 
excerpts of individual TPR reports with some minor editing (such as highlighting of specific services 
sectors and/or subsidy measures). Annex 3 provid ed a table of contents of all reviewed TPR 
reports for ease of reference. Compared to prev ious versions of the Note, additional service 
sectors had been included, notably: road transport (including public transport), research and 
development, education, health/hospital services, and other utilities services (added to energy). 
Previous versions tended to concentrate only on those subsidy measures that were specific to a 
given service sector. In addition, this Note encompassed incentive schemes that applied 
horizontally or across several service sectors, as covered in the TPR reports. Based on the definition of "specificity" contained in Article 2 of the Agreement on Subsidies and Countervailing Measures, only subsidies that were specific to an enterprise or industry, or group of enterprises or 
industries, supplying a service had been included . The Note did not cover subsidies granted to 
consumers , including depositors (e.g. deposit guarantee schemes), investors (e.g. investment 
guarantee schemes), insured persons (e.g. government-sponsored premiums for basic health 
insurance), patients, etc. 
3.3.  The Note's main findings could be summarize d as follows. Firstly, government assistance for 
individual service activities was granted for a va riety of purposes and in many different forms, 
including loan guarantees, government revenue foregone (e.g. fiscal incentives such as tax 
credits), supply of services other than general infrastructure, government payments to funding 
mechanisms (such as universal service funds), etc. Secondly, public support was, quite naturally, most salient in key infrastructural services with sectors like transport (especially maritime and air, 
but also rail and road transport), financial services, and telecommunications taking the lion's 
share. Hotels and tourism were also greatly concerned. 
3.4.  Compared to previous editions, two trends were noteworthy: Firstly, software development, 
ICT-related and information-processing services were found to enjoy an increased incidence of tax 
incentives (as well as other support measures within special economic/free zones). Secondly, a number of Members' manufacturing schemes in free zones treated services as directly related to, 
and an integral part of, the industrial process. Th is was the case notably for services incidental to 
manufacturing, distribution and trading, logistics,  warehousing, packaging, storage, inspection, 
and certification services. Subsidy schemes ofte n did not distinguish between manufacturing and 
services activities, thus extending the benefit of the subsidy to the latter. This evolution was 
reflected in the significant rise of entries in the ca tegory "Other or unspecified sectors" (Table 1 of 
the Note). Finally, the representative of the Secr etariat drew Members' attention to the fact that, 
in the absence of major policy changes between reviews, TPR reports did not usually repeat 
information that was contained in previous editions. Addendum 6 of the Note detailed only the 
subsidy-related information contained in the reports listed in Annex 3. Additional information in relation to particular subsidy schemes might be found in previous TPR reports. Therefore, the 
current Background Note should be read in conjunction with previous versions. 
3.5.  The Chairperson thanked the representative of the Secretariat for his introduction. As the 
Note had been circulated only recently, she assumed that a number of delegations would only 
have preliminary comments at this stage. Nevertheless, and despite well-understood limitations, 
she thought that the Note revealed a number of interesting patterns and new trends: notably the 
apparent increase of tax incentives in the field of ICT-related and information-processing services; and the fact that a number of subsidy schemes te nded not to distinguish between manufacturing 
and service activities anymore. She then opened the floor for comments. 
3.6.  The representative of Hong Kong, China thanked the Secretariat for its document. His 
delegation was particularly interested in the observations relating to policy patterns described in 
paragraphs 3.1 to 3.3. However, more time was needed to digest the information. He wondered 
whether the fact that Hong Kong, China was not included in the list of reviewed reports in Annex 3 meant that the Secretariat had not found relevant new subsidy-related information in the latest TPR report. He also observed that some of the entries in Table 1 regarding Hong Kong, China 
seemed to relate to subsidy measures that were no  longer in force. His delegation could live with 
both options: the Secretariat Note could either record past as well as existing financial assistance measures, or constitute an update only of measures currently in force. However, the Secretariat 
should clarify which approach it was taking, and specify those measures appearing in Table 1 that 
were still in force, and those that were not. S/WPGR/M/80 
 
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  3.7.  A representative of the Secretariat responded that Hong Kong, China's most recent TPR had 
been conducted in December 2010, and was thus issued after the December 2009 cut-off date of 
this instalment. That is why Hong Kong, China was not listed in Annex 3. It would, however, be 
captured in the following instalment. He invited all delegations who detected any kind of 
inaccuracy or measures that were no longer in force, to inform the Secretariat. The way the TPR 
reports were conducted − and notably the fact that the measures covered for any given Member 
varied from one report to the other – made it difficult for the Secretariat to clearly identify the 
measures that were no longer in force. 
3.8.  The representative of Uruguay thanked the Secretariat for its valuable work and wondered 
whether the information included in the Note was exclusively based on the 45 TPR reports that 
appeared in Annex 3. Indeed, Uruguay was not incl uded in Annexes 1 and 3, but appeared several 
times in Table 1. He inquired where that information came from. 
3.9.  A representative of the Secretariat explained that the references to Uruguay contained in 
Table 1 emanated from previous  versions/Addendums of Note S/WPGR/W/25. Therefore, they 
appeared in normal fonts − and not in italics and colour, as was the case for newly  included 
measures. The Secretariat had made the choice to keep information from previous TPRs in Table 1 simply because they, in a sense, provided "cumulative" information. The amount of subsidy-
specific information for any given Member often varied from one report to the other, as measures 
already covered in a previous version were not necessarily repeated in the following ones, in the absence of major policy changes between Reviews. At  the same time, however, it was difficult, if 
not impossible, for the Secretariat to ascertain wh ich of these measures "kept on the books" were 
still in force. 
3.10.  The representative of Switzerland thanked the Secretariat for its well-researched document. 
His delegation was still studying the compilation. 
3.11.  In the absence of further comments, the Chairperson thanked delegations for their inputs, 
and recommended that Members revert to this item at the next meeting. 
4  ITEM D: OTHER BUSINESS 
No topic was raised under this agenda item. 
5  ITEM E: APPOINTMENT OF THE NE W CHAIRPERSON FOR THE WORKING PARTY 
5.1.  Based on the consensus reached in the Ge neral Council, the Chairperson indicated that she 
was happy to propose that delegations elect Mr Felipe Sandoval from Chile as the new Chairperson 
of the Working Party. As the outgoing Chairperson, she wished to thank Members for their 
continuous co-operation and support. Although m eetings had been relatively short in the past 
year, the Working Party had conducted some useful  exchanges that had helped deepen Members' 
understanding. She hoped that this could be continued under the new Chairperson. She also 
thanked the Secretariat for its support. 
5.2.  She then proposed that the Working Party elect Mr Felipe Sandoval by acclamation as the 
new Chairperson of the Working Party on GATS Rules.  
5.3.  The Working Party elected Mr Felipe Sandoval by acclamation. 
5.4.  The new Chairperson thanked the outgoing Ch airperson on behalf of all Members for having 
skilfully led the Working Party at this difficult juncture. The Working Party had greatly benefited 
from her dedication and conscientiousness. He intended to approach his chairmanship in a 
proactive way, encouraging Members to increase their levels of engagement in order to make the Working Party more productive. 
5.5.  He then suggested that the Working Party take note of the statements made.  
5.6.  The meeting was adjourned. 
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