WORLD TRADE  
ORGANIZATION  RESTRICTED 
S/CSC/M/60 
12 October 2011 
 (11-5021) 
Committee on Specific Commitments   
  
 
REPORT OF THE MEETING HELD ON 29 SEPTEMBER 2011 
 
Note by the Secretariat
1 
 
 
1. The Committee on Specific Commitments (CSC) held a meeting on 29 September 2011, 
chaired by Mr. Robert Prochazka from Austria.  The agenda for the meeting, contained in 
WTO/AIR/3802, was adopted.  
A. C LASSIFICATION ISSUES  
2. The Chairman recalled that it had been agreed  that the Committee be informed on a regular 
basis of changes and developments in services classi fications.  At this meeting, Mr. Andreas Maurer 
from the WTO International Trade Statistics Section, was invited to give a presentation on recent classification work related to trade in services. 
3. Mr. Maurer stated that the new Manual on Statistics of International Trade in Services 2010 
(MSITS 2010) had recently been published on the Un ited Nations Statistical Division's website, and 
was currently being prepared for re lease as a paper publication.  The Manual had been drafted by the 
inter-agency Task Force on Statistics of International Trade in Services.  In particular, it presented the 
revised Extended Balance of Payments Services classification (EBOPS 2010, product classification) 
and the ISIC Categories for Foreign Affiliates Trade in Services (ICFA Rev.1, activity classification).  
These two classifications served statistical purposes fo r the collection, compilation and publication of 
data on trade in services.  The classification scheme for the purpose of GATS commitments, 
i.e. W/120, had been developed based on CPC Provis ional.  The recent work of the Task Force had 
concentrated on establishing the correspondence tables between EBOPS 2010 and ICFA Rev.1, 
EBOPS 2010 and CPC Version 2, and EBOPS and W/120.   
4. EBOPS was an extension of the main services components of the Balance of Payments.  The 
revised version of this classification, EBOPS 2010, updated what had b een recommended in the 
previous MSITS.  It provided for further breakdowns  of the sixth edition of the Balance of Payment 
Manual (BPM6) and included a number of supplementa ry items that were not always confined to 
services transactions.  Primarily product-based , EBOPS 2010 grouped services in 12 categories: 
manufacturing services on physical inputs owned by others;  repairs and maintenance;  transport; 
travel;  construction;  insurance and pension;  fina ncial services;  charges for the use of intellectual 
property;  telecommunications, computer and inform ation services;  other business services;  personal, 
cultural and recreational services;  and governme nt goods and services.  Among these, manufacturing 
services on physical inputs owned by others and repa ir and maintenance services had been introduced 
as new components.   
5. Revised recommendations contained in MSITS 2010 addressed certain new issues.  With 
respect to outsourcing, in particular services supplied by "call centres" and similar types of operations 
                                                      
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO. S/CSC/M/60 
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  should be classified according to the type of servi ces provided.  For example, call centres dealing with 
insurance were included in the subclass of insura nce services.  E-commerce was a method of ordering 
and/or delivering products by electronic means, such as through the Internet or other computer-
mediated networks.  In principle, charges for el ectronically delivered products were included in 
services, while goods ordered by electronic means and supplied across the border, were generally 
classified as goods. 
6. EBOPS 2010 was partially described in terms of  CPC Version 2.  While the latter was more 
detailed, there was a number of EBOPS 2010 com ponents, for which a correspondence with the CPC 
Version 2 could not be established, such as travel , construction and government goods and services, 
n.i.e. .  These three areas of EBOPS 2010 focused on the transactor and the mode of consumption of 
goods and services, rather than the type of product consumed.  On the other hand, most distribution 
services were not included in EBOPS 2010.  Theref ore, it was not possible to establish a one-to-one 
correspondence between EBOPS 2010 and CPC Version 2.  A detailed correspondence was available 
online.  
7. There was no one-to-one correspondence between EBOPS 2010 and W/120 either since the 
latter was based on CPC Provisional.  Yet EBOPS 2010 was analytically useful from the perspective 
of the GATS.  A correspondence between EBOPS 2010 and W/120 was also available online. 
8. In MSITS 2010, statistics describing the overall operations of foreign-controlled affiliates 
were termed "Foreign Affiliates Statistics", or "FATS".  FATS variables were classified primarily on an activity basis.  Data for a given foreign affilia te were classified under the primary activity that, 
based on some key variables (such as employment or sales), was the largest.  MSITS 2010 
recommended that, for reporting to international organizations, FATS variables be classified by 
activity according to ISIC and grouped according to  the ISIC Categories for Foreign Affiliates in 
services (ICFA Rev.1).  This approach allowed act ivities of services enterprises to be viewed in a 
more detailed manner.  In addition, it also provi ded a framework for displaying services produced as a 
secondary activity by enterprises classified as goods producers.  As a longer-term goal, countries were 
encouraged to work toward providing product detail s for the items that could be classified on this 
basis.  FATS variables such as sales, imports and exports should also be broken-down by product 
according to EBOPS 2010.  Therefore, to a limited extent, ICFA could be linked to EBOPS and a 
correspondence between EBOPS and ICFA might be useful.  For these purposes, the EBOPS 
categories corresponding most closely to the ICFA categories in services activities had been indicated 
in the online version of MSITS 2010.   
9. Future work of the inter-agency Task Force on Statistics of International Trade in Services 
included continuous discussions on the corresponden ce between different classifications, amending 
EBOPS and CPC, providing technical assistance, etc.   The next meeting of the inter-agency Task 
Force was scheduled for 10 November 2011. 
10. The representative of India noted from the presen tation that services supplied by 'call centres' 
would be classified according to the type of services provided.  This meant that various services 
provided by call centres would be classified in various sectors.  He asked whether there would be a category for such centres in general.  In CPC 1.1,  there was a subclass 'telephone call centre services' 
(85931) which included: taking orders for client s by telephone; soliciting contribution or providing 
information for clients by telephone; and telemark eting.  If there was no corresponding category for 
call centre in new classification systems, this w ould be a lacuna from the perspective of trade 
negotiations. 
11. Mr. Maurer confirmed that, for statistical pur poses, the general approach chosen by MSITS 
2010 was to classify call centre services according to  the type of services provided.  However,  S/CSC/M/60 
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  EBOPS also provided a complementary grouping of call centre services where countries were free to 
create an additional item encompassing all services provided by call centres. 
12. The representative of India sought confirmation that, different from CPC 1.1, there was no 
separate category for call centre services in the new classification system.   
13. Mr. Maurer replied that there was no change in terms of CPC.  CPC Version 2 maintained the 
subclass 'telephone call centre services' (85931).  The change only occurred in EBOPS whereby 
compliers were encouraged to compile call centre services according to the services provided.    
14. The representative of the United States noted th at the classification of digital products was a 
complex issue.  While the approach taken by statisticians simplified it for statistical purposes, from a 
trade perspective, this issue remained open a nd the Work Programme on E-commerce would be the 
appropriate forum for discussion. 
15. The representative of the Dominican Republic sought further clarification as to how MSITS 
2010 related to W/120, given that the Manual might  be useful for services negotiations.  He also 
enquired about the principles governing the pro cess of updating the Manual.  This process was 
important as it guided countries to compile statistical  information on trade in services internally.  On 
the other hand, it was also linked to trade nego tiations.  Regarding the classification of digital 
products, the Committee was the appropriate forum for discussion.  He then sought more information 
on the next meeting of the inter-agency Task Force on Statistics of International Trade in Services 
which would take place on 10 November 2011. 
16. Mr. Maurer said that this meeting would look into correspondences between various 
classification systems.  These systems had been upda ted for statistical purposes, such as CPC Version 
2, in order to take into account new services or new products.  The overall objective of the process 
was to better reflect economic realities to facilitate statistical work at the national level.  Regarding 
W/120, it was for Members to decide whether and how to use it in trade negotiations, but from a 
statistical perspective, it was getting more and more  difficult to link W/120 to the new versions of 
classification systems such as CPC Version 2. 
17. Another representative of the Secretariat stated that there was no legal requirement to follow 
one classification system or the other.  Commitme nts in schedules were made sector-by-sector.  The 
GATS defined "sector" of a service as "… one or more, or all, subsectors of that service, as specified in a Member's Schedule" (Article XXVIII (e)).  Unde r the GATS, it was up to each Member to define 
the sectoral scope of its commitments as clearly as possible.  There was no mandatory classification 
system under the Agreement, and the CPC had been used simply as a reference when W/120 had been 
developed.  Since the CPC had been originally desi gned and used for statistical purposes, it might not 
always meet the needs of trade negotiations.    
18. The representative of India agreed that ther e was no compulsory classification for trade 
negotiations.  However, the more the classification used in negotiations diverged from the system 
used for the compilation of information, the more problems were created.  For example, if no data 
were collected with respect to call centre services,  India would not have the information needed for 
negotiations in this regard.   
19. The Chairman thanked Mr. Maurer for the presenta tion.  He then recalled that at the last 
meeting, the Committee had had an initial discussi on regarding classification issues relevant to 
audiovisual services , based on the Secretariat's informal Note (JOB/SERV/76).  As reflected in the 
summary of the informal discussion (JOB/SERV/82), interesting points had been made with respect to 
the classification of digital content.  According to  certain delegations, the GATT, rather than the 
GATS, was the WTO agreement applicable to digital content distributed through the Internet.  Further S/CSC/M/60 
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  elaboration was desirable on this issue.  In addition,  several delegations needed more time to consider 
the issues raised in the Secretar iat's Note concerning services relating to motion pictures, television, 
radio and sound recording.  He invited delegations to share their views in th is regard. The discussion 
was in informal mode.   
20. The Chairman then recalled that for the revi ew of classification issues in each sector, the 
Committee had agreed on a follow-up small-group process after informal discussions.  He invited 
interested delegations to approach him after the mee ting.  After the last formal meeting, he had held 
small-group consultations on comput er and related services (CRS).  Delegations would continue to 
consider whether any guidelines or understandings would help Members to improve the clarity and 
predictability of commitments when using the cu rrent classification schemes.  After the present 
meeting, he would continue the cons ultations on CRS and telecommunications. 
21. After the discussion on audiovisual services, th e Committee started to consider classification 
issues relevant to environmental services .  To facilitate and stimulate the discussion, the Secretariat 
had prepared an informal Note (JOB/SERV/84).  Th e Chairman invited the Secretariat to introduce it. 
22. According to the representative of Secretariat, the informal Note provided a condensed 
version of the classification issues raised in th e 2010 Secretariat Background Note on Environmental 
Services (S/C/W/320, Section IV) and introduc ed some new issues.  The W/120 defined 
environmental services in a relatively narrow manner, with a focus on three  sectors:  sewage services, 
refuse disposal services, and sanitation services.  A residual "other" category was generally understood to include the four remaining items of th e CPC 94 category [i.e. cleaning of exhaust gases, 
noise abatement services, nature and landscape protection services, and other environmental 
protection services n.e.c].  Other activities relevant for environmental protec tion were to be found 
under other sectors, such as business and construc tion services.  Appendix 2 of the Note listed 
services with an explicit environmental end-use which were found in the CPC Provisional.  In 
previous discussions, various delegations had expressed the view that the classification of 
environmental services, as contained in W/120 and CPC Provisional, hardly reflected the formidable 
evolution that the environmental industry had e xperienced over the last 20 years.  A comparison 
between the environmental services section of, r espectively, CPC Provisional and CPC Version 2 
(relevant excerpts reproduced in Appendix 3) illustrated the obsolescence of the former.  The Note 
recalled briefly that various proposals had been ma de to update the W/120 classification.  None of 
these proposals had led to a formal modification of the environmental services classification so far, 
but, in the DDA negotiations, several Members had used them when tabling offers in this sector.  The 
Note also addressed the question of how to classify c onsultancy in the area of environmental services.  
This was an issue to be revisited as diverging vi ews had been expressed in the past.  Finally, three 
new topics were raised, inspired, inter alia , by the discussion which had taken place in the CTS on 30 
September 2010.  The first related to the respec tive definitional scope of  environmental goods and 
services.  Recognizing that the various categories of  environmental goods unde r consideration in the 
Special Session of the Committee on Trade and E nvironment  (CTE-SS) were broader than the 
traditional definition of environmental services, the Note invited Members to consider whether on-
going work in the CTE-SS should be taken into account when discussing classification of 
environmental services. Second, regarding the recen tly emerging concept of 'climate-friendly services' 
which aimed at identifying services that could play a role in mitigating green-house gas emissions, the 
issue was whether work on environmental services s hould be broadened accordingly.  The third issue 
was how to classify "new" environmental technolog ies, such as carbon capture and storage.  The 
questions proposed for Members' consideration in  this Note were only suggestive and delegations 
were encouraged to raise any additional point they found useful.  
23. The Chairman opened the floor for informal discussions.  S/CSC/M/60 
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  24. The Committee switched back to formal mode  after the discussion.  Considering that 
delegations might need more time for reflecti on and consultation with capitals, the Chairman 
suggested that the Committee con tinue to discuss audiovisual and environmental services at its next 
meeting.  After that, he might hold small-group consultations . 
25. Finally, the Chairman suggested that the Co mmittee take note of the statements made and 
revert to this agenda item at the next meeting . 
26. It was so agreed. 
B. SCHEDULING ISSUES  
27. The Chairman recalled that at the last meeting, delegations had taken up again the 
examination of scheduling issues related to econo mic needs tests (ENTs).  Paragraph 9 of the 
Scheduling Guidelines required that entries relating to ENTs "indicate the main criteria on which the 
test is based".  However, as the Secretariat's previous Note on ENTs (S/CSS/W/118, 
S/CSS/W/118/Add.1) had pointed out, most entrie s relevant to ENTs in schedules provided no or 
minimal indications of the objectives and criteria a pplied in the test.  Such entries were obviously 
inconsistent with the Scheduling Guidelines.  The resulting lack of transparency on the operation of 
ENTs undermined the clarity, certainty and predic tability of commitments.  The discussion thus 
focused on how ENTs could be specified in sch edules so as to improve the quality of specific 
commitments.  
28. More precisely, at the last meeting, dele gations had supported the suggestion that the 
Committee examine ENTs on a modal basis starting with mode 4.  This approach was aimed at adding value to past discussions and avoiding unnecessary repetiti on.  In this context, delegations had been 
invited to consider:  (i) what kind of measures might qualify as an ENT for mode 4, (ii) which criteria would be used for assessing "economic needs" under  this mode, and (iii) how relevant measures 
should be scheduled in a manner cons istent with the Scheduling Guidelin es.  At the last meeting, the 
delegation of Canada had identifie d labour market tests as a type of measure that qualified as ENTs 
for mode 4.  Canada had also explained its crit eria for assessing the underlying "economic needs" and 
the approach to scheduling labour market tests in  accordance with the Sche duling Guidelines.  The 
Chairman encouraged delegations to continue to share their views and experience in scheduling and 
applying ENTs for mode 4. 
29. The representative of India stated that the issue of ENTs was particularly important for 
mode 4 where a large number of ENTs were scheduled.  As indicated in the Secretariat's Note, of the 
49 ENTs scheduled horizontally, 39 we re in mode 4.  The least transparent entries relating to ENTs in 
mode 4 simply stated that "economic needs test is required".  These were found in the schedules of some major trading partners.  There were no indica tions as to what such tests would entail, what 
criteria would be used, how these tests would be applied, and by whom.  Such entries made 
commitments unpredictable.  Labour market tests th at did not specify their content were equally 
problematic.  Entries such as "authorization subject to  short supply of local labours", or "authorization 
subject to measures fixing overall numbers of work pe rmits allocated" required further clarification, 
specifying, for example, the meaning of "short supply"  or "local", the overall number of permits, etc.  
In one or two cases, tests included multiple conditions  such as "conditions of work will not adversely 
affect working conditions for those similarly employed ", which were not very clear either.  Other than 
these, unspecified residency requirements and auth orization or approval requirements might also 
contain elements of ENTs.  One fundamental prin ciple underlying ENTs was that there should be 
clear procedures for dealing with applications.  This was essential to ensure the certainty and 
predictability of commitments, consistent with the Scheduling Guidelines.  ENTs needed to be 
specified in terms of definition, criteria, conditions for the application, and duration, etc.  This was a S/CSC/M/60 
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  systemic concern and India looked forward to wo rking substantively with other Members on this 
issue.  
30. The representative of Switzerland sh ared the interest in eliminating ENTs.  In addition, there 
was a need to specify remaining tests.  This con cerned not only the relevant criteria but also the 
implementation process and the authorities in charge.   
31. The representative of Turkey noted that ENTs we re important restrictions on market access.  
Subparagraphs (a) to (d) of Article XVI:2 of the GATS listed the relevant cases.  As noted in the 
submission of Hong Kong, China (JOB(04)/171, da ted 22 November 2004), a Member might inscribe 
an ENT in its schedule to indicate a partial commitment on market access in accordance with 
Article XVI:2(a)-(d).  This would mean that a quantitative restriction was imposed on the admission 
of service suppliers by means of an ENT.  Howeve r, in the view of Turkey, ENTs were not just 
"means" of operating a quantitative li mitations on the entry of service suppliers into a market, but in 
themselves constituted Article XVI limitations. 
32. As the term "economic needs test" was not defi ned in the GATS, it was important to ensure 
clarity in schedules when it came to such tests.  The vagueness of relevant entries in many schedules, 
as described in the Secretariat Note (S/CSS/W/118), made it difficult to assess the value of Members' 
specific commitments.  Whenever ENTs were sc heduled, they should be accompanied by concise 
definitions and clear implementation criteria as requi red by the Scheduling Guid elines.  For instance, 
in many schedules, the horizontal entries under m ode 4 established "the non-av ailability of qualified 
personnel in the local market" as the sole criterion for the admission of a foreign service supplier.  
Such entries certainly qualified as an ENT, yet it needed to be questioned whether they were 
sufficiently clear and specific to qualify as an Article  XVI limitation.  Paragraph 9 of the Scheduling 
Guidelines stated that "regarding economic needs test s, the entry should indicate the main criteria on 
which the test is based".  It wa s important that Members paid due attention to the Guidelines when 
inscribing ENTs and relevant impl ementation criteria in their schedules.  Further discussions on how 
to increase the transparency of ENTs in mode 4, su ch as labour market tests, could help improve the 
predictability of relevant commitments.  The criteria of an ENT were to be inscribed in a Member's 
schedule if the test was criteria-b ased.  If the test was quota-based, th e Member needed to specify the 
numerical restriction in place.  
33. Regarding the criteria for assessing "economic n eeds" under mode 4, the Secretariat Note 
(S/CSS/W/118) indicated that ENTs differed from qualification requirements, technical standards and licensing requirements.  The very nature of EN Ts distinguished them from regulatory measures, 
mostly falling under the scope of Article VI, because the former were "based on criteria the fulfilment 
of which is beyond the control of the affected ser vice supplier".  As show n in the schedules annexed 
to S/CSS/W/118, "lack of availability in the local ma rket", "labour market tests" or just "economic 
needs tests" were some of the criteria for mode 4 limitations.  These definiti ons were quite broad and 
left ample discretion to governments in their implementation.  Therefore, further discussions were 
needed on how to ensure transparent scheduling of ENTs in a manner consistent with the Scheduling 
Guidelines.   
34. The representative of Australia welcomed the discussion on ENTs under mode 4, which 
furthered Members' understanding of labour market test s.  Australia had limited labour market testing 
requirements in its Uruguay Round commitments and ha d offered to remove these as part of the Doha 
Round negotiations.  Labour market testing referred to any requirement to test the availability of local 
labour before hiring people from foreign sources.  In Australia, labour market testing had consisted of 
the requirement to advertise vacant positions pe rmanently in the national and local press for a 
specified period of time.  Employers were then requi red to attest that they had been unable to source 
an Australian before being permitted to contract a foreign service worker.  This requirement was a 
rather blunt policy tool and simply added burden on employers without benefitting local employment.   S/CSC/M/60 
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  She wished to hear other Members' view on the us efulness of labour market tests and supported the 
view that more information on ENTs would be useful.  
35. The representative of Canada welcomed the statem ents made by India, Turkey and Australia.  
There was scope for further discussions, bearing in mind the purpose of improving commitments in 
mode 4.  She agreed with India that this was important for transparency.  
36. Responding to the Australian delegate, the represen tative of Switzerland stated that there was 
a basis for labour market tests in the Swiss legal fra mework.  Similar to what  had been described by 
Australia, employers in Switzerland were required to  show that they had first tried to fill vacant 
positions in the domestic market.  He shared the view of Australia that such requirement were 
burdensome for employers and the administration.  During the Uruguay Round, Switzerland had 
decided to renounce labour market tests under the GATS. This was why its commitments did not 
include such tests, which had not caused problems.   
37. The Chairman suggested that the Committee take  note of the comments made and revert to 
this item at its next meeting. 
38. It was so agreed. 
C. OTHER BUSINESS  
39. There was no intervention under this item. The Chairman adjourned the meeting. 
 
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