WORLD TRADE  
ORGANIZATION  RESTRICTED 
S/WPGR/M/74 
19 July 2011  
 
(11-3596) 
Working Party on GATS Rules  
  
 
REPORT OF THE MEETING HELD ON 22 JUNE 2011 
 
Note by the Secretariat
1 
 
 
1. The meeting was chaired by Ms Tamsin Royson  from New Zealand.  An annotated agenda 
contained in document JOB/SERV/81 was circulated in  advance of the meeting.  The agenda for the 
meeting, included in document WTO/AIR/3720, was adopted. 
I. NEGOTIATIONS ON EMERGENCY SAFEGUARD MEASURES (ESM) UNDER 
ARTICLE X OF THE GATS  
2. The Chairperson recalled that, at the WPGR 's previous meeting on 24 March 2011, the 
Secretariat made two presentations: one on the availa bility at the international level of disaggregated 
statistics on services trade flows that could be rele vant in a safeguards' context;  the second on the 
statistics and indicators used in safeguard investig ations in the goods' sector.  The presentations had 
highlighted a number of practical and intellect ual challenges in the design of any safeguard 
mechanism in trade in services.  In the ensuing de bate, questions such as the definition of "domestic 
industry" and "imports" in trade in services, or the causal link between a surge in the volume of 
services imports and serious injury of the domestic industry had resurfaced.  A number of Members had indicated their interest in fu rther reflecting on those issues.   
3. As stated in the annotated agenda (JOB/ SERV/81), those topics had been the object of 
extensive analysis and discussion by Members in the course of the past  sixteen years of existence of 
the Working Party on GATS Rules.  The Chairperson thus suggested that the Secretariat prepared a 
"documentation guide", which woul d recap where key ESM-relevant concepts (such as "imports", 
"domestic industry", etc.) were addressed in exis ting documents.  It was hoped that such a guide 
would assist delegations in taking stock of the wealth of information contained in Members’ 
submissions, Secretariat Notes and meeting reports issued since 1995 to identify possible areas for future attention.  The guide would not, howeve r, attempt to summarize the substance of past 
discussions.   
4. Reminding delegations that no further presenta tion on ESM-related matters was foreseen for 
the time being, the Chairperson opened the floor on the proposed "documentation guide" and more 
generally on the way forward. 
5. The representative of the Philippines, also on be half of the delegations of Brunei Darussalam, 
Cambodia, Indonesia, Malaysia, Myanmar, Thailand and Viet Nam (hereafter the "Friends of ESM") 
thanked the Chairperson for her progress report of 14 April 2011 (S/WPGR/21) regarding, inter alia , 
the status of the negotiations on emergency safeguard  measures.  The report pointed out that Members 
deemed useful continuing with technical work fo cusing on ESM-relevant statistics.  Parts of that 
                                                      
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/WPGR/M/74 
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  report were incorporated in the CTS-Special Session Chair’s report on the status of the negotiations 
on trade in service (TN/S/36) dated 21 April 2011.   
6. The Friends of ESM were encouraged by the improvements in service statistics, and noted the 
need to be forward-looking and proactive in an a pproach towards an ESM.  They were confident that 
the same elements used to operationalize safeguards in trade in goods could eventually be used for a 
safeguard in trade in services.  Members had rec ognized the importance of having timely and reliable 
service statistics and quantitative indicators.  The Friends of ESM thought that the presentations by the Secretariat could serve as a gateway for subsequent presentations.  During the informal consultations held by the WPGR Chair on 30 Ma rch 2011, they had identified possible topics for 
future presentations.  Those included the sharing of  national experiences and best practices in the 
compilation and use of service statistics and of possible types of ESM-relevant indicators for 
investigations by mode and by sector.  At those in formal WPGR consultations and at the April 2011 
Special Session meeting of the Council for Trade in Services, some Members had indicated their 
willingness to continue the discussi ons on ESM-related statistics.  
7. The Friends of ESM recalled that, regardless of the status of the Doha Round, Members were 
mandated by Article X of the GATS to negotiate on the question of emergency safeguard measures.  
The Friends stood ready to continue with the presen tations, in-depth studies and other aspects of their 
proposal in the future, guided by their March 2009 paper entitled "Thoughts on the Way Forward in 
the ESM Negotiations".
2 
8. The representative of Australia sought more information on the purpose and background of 
the proposed Secretariat documentation guide.  Sh e also remarked that, while the ESM proponents' 
interests were framed by their March 2009 proposal , there had been quite some discussion since, 
which ought to be taken into account.   
9. The Chairperson responded that the envisaged documentation guide was not a proposal of 
new substance, but simply a tool to assist Members in identifying what had already been discussed in 
the ESM negotiations so far, and where there might be unexplored issues that could be further looked 
into.  Given that delegations had si xteen years of WPGR negotiations to  draw on, it might be useful to 
prepare a guide to the discussions and positions expr essed, so that Members could refer back to them 
and identify any remaining gaps.  The guide would simply list concepts (such as "domestic industry", 
"imports", "causal link", "serious injury", "like or  directly competitive services", modal application of 
an ESM, etc.) and the papers and proposals that addressed those topics. 
10. A representative of the Secretariat added that th is suggestion had been made in view of the 
sheer passage of time during which these subjects ha d been negotiated.  Members might find this 
approach useful to follow also in other areas where there was an accumulation of documentation and 
information over the years.  A documentation gu ide simply consisted in a matrix listing the 
documents in which certain key issues  such as "domestic industry", etc.  appeared.   
11. In light of these explanations, the delegate of Australia lent support to the initiative.  Such a 
documentation guide could be replicated  also in other GATS negotiating areas. 
12. The representative of Canada also supported the proposal.  It could not only usefully provide 
some background to the ESM discussions but also, given the transitory presence of many delegates, 
assist the latter in getting up-to-speed on issu es that had been discussed for a long time.   
                                                      
2 Communication from Brunei Darussalam, Indonesia, Malaysia, Myanmar, the Philippines, Thailand 
and Viet Nam, WPGR room document dated 30 March 2009.  S/WPGR/M/74 
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  13. The delegate of Pakistan suggested, if practicable , that the Secretariat not simply referred to a 
document, but also included the substance of the defi nition or position covered in that document.  One 
further step could be to prepare non-attributable summaries of the discussions on various concepts.   
14. A representative of the Secretariat said that the Secretariat would further look into the 
proposal of the delegation of Pakistan and provide a considered response.  A concern, however, was 
that attempts to summarize a concept in a su ccinct way could unintentionally misrepresent a 
Member's interpretation of the latter.  
15. The delegate of the United States considered a documentation guide on key concepts related 
to emergency safeguard measures to be useful.  However, his delegation did not wish to set a 
precedent for other negotiating areas under the GATS for the time being.   
16. The representative of Chinese Taipei supported the idea of a documentation guide.  His 
delegation wished that such guide incorporated  also informal Notes by the Chairperson and 
Secretariat Notes, if any, which summarized pr evious discussions.  He also enquired whether the 
envisaged documentation guide would cover only ESM-related issues or also those relating to 
government procurement and subsidies. 
17. The Chairperson thanked the Members who had indicated their support for going ahead with 
this tool.  The latter would first be tried for ESM to see how it worked.  Certainly, it was possible that 
such a guide might also be relevant for other negotiating issues under the GATS.  At this stage 
however, the focus would be on ESM-related concepts.  On ESM more generally, she took note of the 
comments made and thanked the proponents for their intervention and their readiness to continue with 
presentations on ESM-related statistics.  She looke d forward to the proponents' further advice on 
future work.    
II. NEGOTIATIONS ON GOVERNMENT PROCUREMENT UNDER ARTICLE XIII 
OF THE GATS 
18. Turning to government procurement, the Ch airperson recalled that Members had signalled 
their willingness, on a number of occasions, to pursue dedicated discussion on the remaining topics as 
outlined in the proposal by the European Union c ontained in document RD/SERV/23.  Members also 
welcomed the idea of inviting national GPA expe rts to a dedicated discussion to share national 
experiences with the reform of domestic procurem ent markets and access to foreign ones.  This 
corresponded to "Session 2" in the European Un ion's proposal.  Given the difficulty already 
experienced in finding a suitable date to engage both government procurement and services experts, it 
was proposed to try to organize such a dedicated discussion at the next possible opportunity after the 
summer break.  The Chair then opened the floor for Members' suggestions in this regard.   
19. The representative of the European Union expr essed the hope that such a joint dedicated 
discussion could be organized during the next GPA Committee meeting week tentatively planned for 
19-23 September 2011.  Her delegation envisaged a half-day dialogue session on national experiences 
on the reform and opening of domestic procurement systems and, on the export side, on access to 
foreign procurement markets.  Her delegation hope d that both GPA Members and non-Members, as 
well as developing and deve loped countries would contribute to this dialogue on procurement reforms 
and their possible trade benefits.   
20. The Chairperson noted that the next GPA Committee meeting week was scheduled to start on 
19 September whereas the services cluster was tentativ ely planned for the following week, starting on 
26 September.  This confluence of dates might fa cilitate the organization of the envisaged joint 
session.  Following the advice of the GPA Committee Chair, she would write to the latter proposing 
that the session be scheduled for a morning or af ternoon in the September GPA cluster.  The GPA S/WPGR/M/74 
Page 4  
 
  Committee Chair had indicated that he would comm unicate this proposal to government procurement 
delegates for their silent approval before the su mmer break.  It was hoped that this would provide 
sufficient time for advance planning of the meeting. 
III. NEGOTIATIONS ON SUBSIDIES UNDER ARTICLE XV OF THE GATS 
21. As announced at the previous meeting and also  in her annotated agenda (JOB/SERV/81), the 
Chairperson proposed reverting to some fundamental  "scoping issues".  She stressed that the latter 
were raised without prejudice to any further cons ideration of existing Members' proposals and to the 
resolution of other outstanding issues.  She believed, however, that at this point it was important that 
Members reconfirmed their common understanding of the scope of the negotiating mandate in GATS 
Article XV.  Before the need for additional di sciplines and the appropriateness of countervailing 
measures could be properly assessed, it was helpful to have a clear understanding of existing GATS 
disciplines, which already applied to subsidies.   
22. Insofar as they affected trade in services, s ubsidies were already subject to the GATS.  
Consequently, all general obliga tions, including Most-Favoured-Nati on treatment, applied to them.  
Furthermore, in scheduled sectors, the nati onal treatment obligation must be respected  subject to 
any limitations that had been inscribed in a Member 's schedule.  That obligation did not impose any 
restraint on the level  of subsidies that might be granted by Members.  But it promoted the non-
discriminatory use of subsidies.  It was noteworthy that this approach to the relation between national 
treatment and subsidies differed from that adopted in  the GATT.  In trade in goods, Article III.8(b) of 
the GATT 1947 exempted  subsidies from its (non-negotiable) national treatment obligation.   
23. So-called "additional commitments" pursuant to GATS Article XVIII could also be used to 
undertake obligations with regard to (non-discrimin atory) subsidies.  A case in point was the 1996 
Reference Paper for basic telecommunication services , which included a pro-competitive safeguard to 
prevent anti-competitive cross-subsidization .  Finally, the provisions in GATS Article VIII dealing 
with monopolies and exclusive service suppliers were also relevant.  
24. Assuming that Members did not, in considering possible subsidy disciplines, aim to change 
the architecture of the GATS, she wondered whethe r delegations would agree that the focus of the 
Article XV mandate rested on non-discriminatory  subsidies that might distort trade in services.  By 
the same token, would Members concur that discriminatory  subsidies were already adequately 
addressed by the GATS' existing disciplines, most notably Most-Favoured-Nation treatment and national treatment?   Could Members thus, for the purpose of future discussions, disregard  those 
potentially trade-distortive subsidies that were al ready subject to Articles II and XVII of the GATS? 
25. Finally, bearing in mind the submissions made in this regard, she invited further comments on 
the status of subsidies having effects in market s outside the subsidizing Member, such as export 
subsidies, import-displacing subsidies or subsidies to attract company headquarters.  The Chairperson 
then opened the floor for Members' views. 
26. The delegate of Switzerland doubted that th e questions raised under paragraph 11 of the 
Chairperson's annotated agenda (JOB/SERV/81) w ould allow Members to make any headway.  At 
this stage of the negotiations, it was important that  delegations based their discussion on (existing and 
future) concrete  proposals.  In this context, he recalled  that his delegation had already submitted a 
proposal on disciplines on export subsidies, contained in document JOB/SERV/36 dated 
2 December 2010.     
27. The representative of India thanked the Chai r for her annotated agenda, which raised 
important questions of scope of the possible di sciplines under GATS Article XV.  His delegation was 
yet to formalize its views on what the scope should be and on the criteria and timing for any such  S/WPGR/M/74 
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  formalization, notably whether it should come before or after an agreed definition of what constituted 
a subsidy.  Therefore, at this stage he could share only some preliminary thoughts.  
28. The annotated agenda rightly observed that, in sofar as subsidies affected trade in services, 
they were already subject to GATS.  The existi ng obligations of MFN and national treatment were 
important to prevent the discriminatory use of subsid ies.  However, they did not place any restraint on 
the level  of subsidies that could be granted.  Furtherm ore, their effectiveness was limited by the extent 
to which Members had scheduled commitments, a nd those commitments were free of any national 
treatment limitation or MFN exemption.  Thus, his delegation's preliminary view was that the existing 
GATS disciplines might not suffice to tackle the issue of trad e-distortive effects.  That is why 
Article XV had been devised. 
29. Article XV did not restrict its scope to either discriminatory or non-discriminatory subsidies.  
Nor did it exclude sectors where no commitments ha d been made.  The obligation to exchange 
information in Article XV:1 explicitly applied to  "all subsidies related to trade in services that 
[Members] provided to their domestic service suppliers ".  The requirement to enter into negotiations 
was linked to a subsidy's trade-distortive effect.  Similarly, Article XVII did not foresee that 
limitations scheduled on subsidies under that Arti cle would protect those subsidies from any future 
disciplines under Article XV.  Article XVII might pr otect Members' ability to maintain discriminatory 
subsidies, but it did not include protection from an y future disciplines for any particular type or 
amount of subsidies.  
30. At this stage of the negotiations, his delegation did not see any reason why discriminatory 
subsidies (e.g. an export subsidy granted only to domestic service suppliers) should be exempted from 
any possible future disciplines merely because they were covered by a national treatment limitation.  
If discriminatory subsidies subject to a national tr eatment limitation were to be excluded from the 
purview of these negotiations, what would be the im plications for those Members that had scheduled 
horizontal  national treatment limitations on subsidies?   How effective would the proposed subsidy 
disciplines be?  The ability of certain Members to  subsidize without restraint would undermine the 
value of the commitments in scheduled sectors.  
31. At this stage of the negotiations, his delega tion did not wish to disregard discriminatory 
subsidies or subsidies subject to MFN exemptions.  He also noted that his delegation's joint paper 
with Mexico and Chile did not restrict its scope  to either discriminatory or non-discriminatory 
subsidies.  This being said, his delegation was r eady to participate in any further discussions on these 
matters and looked forward to hearing other Members' views. 
32. The delegate of Hong Kong, China thanked the Chairperson for her annotated agenda and for 
the reference made therein to the 1996 Secret ariat Note on "Subsidies and Trade in Services" 
(S/WPGR/W/9).  However, his delegation disagreed with the observations made in paragraphs 9 and 
11 of the annotated agenda, for two reasons.  Firstly, as mentioned by th e delegate of India, the GATS 
Article XV mandate made no distin ction between discriminatory and non-discriminatory subsidies.  
Therefore, his delegation very much doubted whethe r Members were entitled to limit the scope of the 
negotiations.  Secondly and more importantly, the annotated agenda seemed to imply that, because 
there was no a priori  exclusion of the applicability of the MFN and national-treatment principles to 
any "measures by Members affecting trade in services", the GATS itself  without any additional 
disciplines  already provided sufficient  regulation of discriminatory subs idies.  His delegation did not 
agree with this view inter alia because, as pointed  out also in the 1996 Secretariat Note, the precise 
scope of the national-treatment obligation in the GA TS, as it currently applied to subsidies, was not 
always clear-cut.  For all these reasons, drawing a line between discriminatory and non-discriminatory 
subsidies to define the scope of the Artic le XV mandate might be dangerous.     S/WPGR/M/74 
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  33. While acknowledging the importance of the scoping question, the representative of the 
United States endorsed the view expressed by th e Swiss delegate that the proposals submitted by 
Members raised some important issues as well.  Referring to the questions raised by his delegation in 
its Communication (S/WPGR/W/59, dated 28 May 2010)  he thought the latter were fundamental in 
this discussion.  The reference in the Chair's annot ated agenda to the Telecom Reference Paper was 
interesting in this regard.3  Negotiators obviously had identif ied a problem with anti-competitive 
cross-subsidization practices, and developed a rule to discipline them.  His delegation reiterated that 
Members needed to identify the particular problems that they were trying to address. 
34. With regard to paragraph 11 of the annotated agenda, the delegate of Japan agreed that 
discriminatory subsidies were covered by Artic les II (Most-Favoured-Nation Treatment) and XVII 
(National Treatment) of GATS.  While it might ther efore not be necessary for future disciplines to 
apply to discriminatory subsidies, their application to non-discriminatory subsidies that had trade-distortive effects would be beneficial.  He recalle d that his delegation had always stressed that any 
work on disciplines needed to be based on concrete expressions of interest on the part of the private-
sector and clarity about the trade-distortive effect to be addressed.           
35. The representative of the European Union reiterated the need to develop a better 
understanding of the " certain circumstances " that might cause trade-distortive effects and what those 
effects could be.  Members should investigate concrete examples of subsidies having a trade-
distortive effect. 
36. The Chairperson took note of the various poi nts made.  Clearly, Members were not in 
agreement on the proposed set of questions, but it was useful to have a first ex change of views.  She 
wondered whether, at least for now and as a preliminary  working assumption, Members would 
subscribe to the view that discriminatory subsidies were by nature trade-distortive  leaving aside for 
future discussion the question of whether and how they ought to be disciplined.   
37. Furthermore, she recalled that, at the Working Party's last meeting on 24 March 2011, certain 
delegations had offered to consult informally on how  to move the discussion on subsidies forward, 
based on actual examples of trade distortions.  She th us invited any interested delegation to provide an 
update as to whether it remained willin g to engage in such consultations.   
38. The delegate of Hong Kong, China stated that hi s delegation did not subscribe to the view that 
discriminatory disciplines were necessarily trade-di stortive and should therefore be subject to some 
form of disciplines.  In past discussions, the necessi ty to ring-fence certain types of (discriminatory) 
subsidies that served legitimate social policy objectiv es had been evoked.  He therefore suggested that 
the question be left open for further discussion by Members.      
39. The representative of Pakistan sh ared the view expressed by H ong Kong, China.  It would be 
difficult to assume even in the abstract that all disc riminatory subsidies were trade-distortive in nature.  
Any trade-distortive effect would depend among othe rs on the nature, objectiv es and magnitude of a 
given subsidy.   
40. The delegate of India echoed the positions of Pakistan and Hong Kong, China.  It would be 
difficult to make a categorical statement that all disc riminatory subsidies were trade-distortive.       
41. The representative of Canada shared the reluctance conveyed by previous speakers.  The 
discussion should start from concrete  examples of trade distortions: what  were these distortions?  From 
what subsidies did they arise?  Members would then be much better positioned to decide what, if any, 
                                                      
3 Paragraph 10 of the Chair's annotated agenda (JOB/SERV/81).  S/WPGR/M/74 
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  disciplines were needed in addition to the already ex isting ones.  Indeed, subsidies provided useful tools 
for governments for a variety of purposes.       
42. The delegate of China believed that the consen sus view was that the discussions should focus 
on the trade-distortive effects of non-discriminatory  subsidies, while Members' positions diverged on the 
trade-distortive effects of discriminatory  subsidies.  Regarding discri minatory subsidies, Members 
should concentrate on subsidies in scheduled sector s, for which the Member concerned had not sought 
exemptions from the national-treatment principle.   Otherwise there was a risk to infringe on 
governments’ right to schedule discri minatory subsidies as guaranteed by  Article XVII of the GATS.     
43. The Chairperson thanked the Members for contribut ing their thoughts to the debate.  She took 
note of the diverging views not only on how to take th e discussion forward, but also on what the actual 
focus of the Article XV negotiations should be.  In light of that, she proposed to hold further informal 
consultations, possibly before the summer break, to clarify further some of the positions expressed at 
this meeting, as well as the way forward.     
IV. OTHER BUSINESS 
44. No topic was raised under this agenda item.  The Chairperson thus suggested that the 
Working Party adjourn the meeting.   
45. The meeting was adjourned. 
 
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