RESTRICTED  WORLD TRADE  
ORGANIZATION  TN/S/M/14 
26 April 2005 
 (05-1688) 
Council for Trade in Services 
Special Session     
 
 
REPORT OF THE MEETING HELD ON 21, 22 AND 25 FEBRUARY 20051 
 
Note by the Secretariat2 
  
A.
 ASSESSMENT OF TRADE IN SERVICES .........................................................................................2  
B. PROPOSALS RELATING TO THE NEGOTIATIONS UNDER ARTICLE XIX  OF THE GATS .............12  
(i) Telecommunications Services ...................................................................................................1 2 
(ii) Financial Services............................................................................................................. ........21  
(iii) Postal and Courier Services .................................................................................................... .29 
(iv) Environmenta l Services ......................................................................................................... ...38 
(v) Mode 4 ......................................................................................................................... .............42  
(vi) Logistics Services............................................................................................................. .........48  
(vii) Air Transport .................................................................................................................. ..........53  
(viii) Maritime Tr ansport............................................................................................................. ......58  
(ix) Computer and Related Services ................................................................................................59  
(x) Small and Medium-Sized Enterprises .......................................................................................60  
(xi) Legal Services ................................................................................................................. ..........64  
(xii) Other .......................................................................................................................... ...............67  
C. CONSIDERATION OF PROPOSALS ON S&D  TREATMENT PROVISIONS .......................................71  
D. WORK OF THE SUBSIDIARY BODIES – REPORTS BY THE CHAIRPERSONS .................................72  
E. REVIEW OF PROGRESS IN THE NEGOTIATIONS , INCLUDING PARAGRAPH 15 OF THE 
PROCEDURES FOR NEGOTIATIONS ............................................................................................74  
G.  ORGANIZATION OF FUTURE WORK...........................................................................................74  
F.  OUTLINE OF THE CHAIRMAN 'S REPORT TO THE TRADE NEGOTIATIONS COMMITTEE ............100  
H.  OTHER BUSINESS ....................................................................................................................102  
 
1. The Special Session of the Council for Trade in Services held a formal meeting on 21, 22  and 
25 February 2005. The agenda for the meeting, ch aired by Ambassador Alejandro Jara of Chile, is 
contained in document WTO/AIR/2506. 
                                                      
1 As the meeting was suspended on 25 February 2005 to be resumed at a later date, this document 
contains only the record of discussi ons which took place on 21, 22 and 25 Fe bruary.  The record of subsequent 
discussions will be issued in a supplement to this document in due course. 
2 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. TN/S/M/14 
Page 2  
 
 2. The Chairman
 drew the Council's attention to the report of the last meeting contained in 
document TN/S/M/13.  He said that under "Other Bu siness" the United States wished to raise a point 
regarding energy services and the Secretariat rega rding the database of specific commitments.   
3. The Chairman  suggested that the agenda be adopted with the addition of these points. 
4. It was so agreed . 
5. The Chairman  said, with respect to the item "Negotiating Proposals", that the Council had 
held an open-ended informal meeting on 30 Septem ber 2004 to discuss selected mode 4 issues.  As he 
had reported at the last meeting, in his consultati ons delegations had indicated a preference to pursue 
this discussion at the current cluster.  He recalled that it had been suggested that this discussion take 
place on 22 February.  With respect to the Review  of Progress, he said that he would make a 
presentation in informal mode about the state-of-play of the offers.  
A. ASSESSMENT OF TRADE IN SERVICES  
6. The Chairman  recalled that at the meeting in December, a number of questions had been 
raised by delegations about some of the statistic s and conclusions in the WTO's most recent World 
Trade Report.  The Council had agreed to invite  the Economic Research and Statistics Division to 
present this report.  This report was available on the WTO website. 
7. Mr. Patrick Low, representative of the Secretariat , said that he wanted to present the parts of 
the 2004 report which were particular ly relevant to trade in services.  He had also been made aware of 
some questions arising in a discussion in an earlie r meeting on statistical issues, which could be 
fielded if delegations wished.  He said he would s eek to isolate some of the more interesting and 
relevant findings of the report in relation to trade in  services.  In this regard, two parts of the report 
were pertinent:  a stand-alone essay on mode 4 and some pieces of work on in frastructure in relation 
to trade and development, including transport, telecommunications, financial and business services.   
8. Referring to the essay on Mode 4, he said that  he would touch upon the welfare consequences 
of temporary movement of natura l persons, removal of barriers to Mode 4 exchange and the degrees 
of liberalization that had occurred under the GATS, est imates of the magnitude of Mode 4 trade, and 
evidence on the patterns of movements.  He sai d that it was difficult to obtain reliable and 
comprehensive information on these elements.  He  said that a distinction was made between 
originating and receiving countries.  With respect to the former, there was no analytical reason to assume that the standard proposition from the gains of trade did not apply to the movement of natural 
persons.  The standard case for gains, including in creases in global wealth, efficient specialization, 
technology transfer, economic innovation, and wider choice and variety all applied in some measure 
to these types of transactions.  Looking at the costs and benefits of Mode 4 movements in the 
originating country, he said there was a familia rization and presence effect of temporary service 
suppliers that was likely to lead to the expansion of trading opportunities, in goods and services, and 
in relation to FDI.  If there were high unemp loyment and downward pressure on wages, Mode 4 
activity could ameliorate these problems.  As with all trade, opportunities for technology transfer and 
skills development could also flow from Mode 4.  Very importantly, workers abroad transferred 
significant resources back home.  In 2001, workers'  remittances were equal to 42 per cent of FDI in 
developing countries.  In terms of the costs of Mode 4, he said that there was a risk of a loss of skills in the originating country, often referred to as th e "brain drain" phenomenon, as well as a loss of 
returns to education and training when persons moved abroad, foregone tax revenue, possible upward 
wage pressure in skilled labour markets if that was where the Mode 4 transferees come from which 
led to possible skill shortages, and also to greater  income inequality to the extent that wages for 
skilled workers rose as a result of  decreased supply.  He said th at all of these losses could be 
temporary if labour returned home after the temp orary presence period.  However, if temporary  TN/S/M/14 
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 sojourners were replaced by further temporary sojo urners, or if temporary presence was converted to 
longer-term stays or immigration, the losses could be more permanent in character.   
9. With respect to the benefits for the receiving country, the representative of the Secretariat said 
that if there were labour shortages, either skille d or unskilled, these coul d be met through mode 4 
trade.  Many examples existed.  In 2000, for ex ample, Germany initiated a programme that permitted 
up to 20,000 information technology experts from non-EU  countries to enter the market for up to five 
years. Social security and pension funds faced problems in countries with aging populations, and these could be ameliorated to some extend through M ode 4 trade. The injection of additional workers 
into the economy raised incomes and offered new sour ces of tax revenue.  It was possible that demand 
for illegal immigrant labour would lessen with official Mode 4 exchanges, but to the extent that this 
labour was a supply push factor rather than a demand  pull element, this link might be more tenuous.  
As for the costs for the receiving country, he said that Mode 4 transactions could cause excess supply 
in the labour market, lowering wages, increased unemployment and intensified competition for scarce 
jobs.  Social and political pressures could emerge in the context of Mode 4 trade, especially if it occurred on a large scale and labour market conditions were tight.    
10. On the question of empirical evidence of the ga ins from Mode 4 liberalization, he said that 
some work had been done, including studies by Winters and Walmsley (2002) and Rodrik (2002) which suggested annual gains of $150-200 billion from liberalization of Mode 4.  These sorts of 
estimates were based on computable general equilibri um analysis and should be taken as very broad 
indicators and not precise estimates.  Many assumptions needed to be made and many aggregation issues were involved in these kinds of estimations, how ever, they did give a general indication.  Part 
of the reason why the movement of low-skilled work ers generated more benefits than that of high-
skilled workers was the relative size of each of th ese potential flows.  In these simulations, gains 
derived primarily from the narrowing the price a nd wage differentials between developed and 
developing countries.  Price and wage differentia ls between developed a nd developing countries 
exceeded a ratio of ten to one, while for merchandi se trade the ratio was two to one.  This helped 
explain why the gains from labour mobility, in genera l, were likely to be larger than those from 
expanding merchandise trade.  There were spill- over effects not captured by these simulations 
including such factors as skills and technology tr ansfers, and transfer of money abroad.    
11. With respect to Mode 4 commitments under the GATS, in 2004, 108 out of 147 Members had 
made horizontal commitments under Mode 4.  Virtually  all of them were in respect of highly skilled 
natural persons.  Predominant cate gories of natural persons included executives, managers, specialists, 
business visitors associated with commercial pr esence, business visitors negotiating sales, and 
contract suppliers.  The conditions frequently attach ed to Mode 4 access typically included economic 
needs tests, pre-employment requirements, a link to  Mode 3, numerical lim itations, minimum wages, 
and technology transfer. Intra-corporate transf erees accounted for some 69 per cent of all 
commitments, suggesting the importance of the link be tween Mode 4 and Mode 3.  In only about one-
third of the commitments was a reference made to th e specific time limitations attached to the access 
commitment.  Discriminatory measures scheduled appli cable to Mode 4 suppliers could relate to such 
areas as real estate, subsidies, foreign exchange, borrowing, taxation and mob ility restrictions.  He 
said that there was relative little use of GATS to lock  in Mode 4 commitments.  It seemed clear that 
much more Mode 4 trade took place than was reflec ted in Members' schedules of commitments.  On 
the other hand, a lack of clarity as to the meaning of temporary presence in addition to other factors, 
might complicate scheduling and hence influen ce the willingness of governments to undertake 
commitments.   
12. In terms the importance of Mode 4 flows in in ternational trade, he said that until governments 
agreed to a statistical framework and undertook sy stematic data collection only rough approximations 
of orders of magnitudes could be made.  Balance of payments data on compensation of employees and 
workers' remittances could provide a clue.  Using this  information gave an idea of the countries that TN/S/M/14 
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 relied heavily on Mode 4, including Luxembourg,  Bahrain, Saudi Arabia, Maldives, Oman, Tonga, 
Vanuatu, Guyana, Kuwait, UAE, Uganda, Côte d’I voire, Malaysia, Switzerland, Belgium, Spain, 
Germany, USA, Italy, France, and Japan, in d escending order of relevance for those economies.  
However, the economies toward the end of the list acc ounted for the bulk of this trade.  Countries that 
depended significantly on workers' remittances as  a share of GDP included Jordan, Jamaica, 
Nicaragua, Honduras, Dominican Republic, Philippi nes, Sri Lanka, Morocco, Bangladesh, Pakistan, 
Tunisia, Egypt, Mexico, and India.  For almost all of these countries, remittances had become more 
significant as a share of GDP between 1995 and 2002.   There were many technical reasons why the 
balance of payment categories did not coincide with Mode 4 definitions.  He said that in only a few 
cases was there the possibility of using national data .  For example, the United States issued some 
137,000 petitions for H-1B visas in 2000, leading to a value of Mode 4 trade of $6.5 billion.  Of this 
over half was related to computer-related services and dominated largely by India.  In the United 
Kingdom the comparable figures were 65,000 work pe rmits and mode 4 trade of $2.5 billion in 2000.  
He repeated that data problems made it impossible to judge what proportion of these transactions was 
covered by GATS commitments or would qualify under the definitions, that were not entirely clear, of 
what Mode 4 transactions were.  With respect to  who moved under Mode 4, he said that Mode 4 
transactions were more likely to take place between geographically proximate countries.  Some half of 
the EU's non-EU Mode 4 trade went to other European countries in 2000.  For the United States 90 per cent of transactions were within the region.  Mode 4 trade was not a North-North or North-South 
phenomenon only, but rather movement occurred ever ywhere.  There was evidence that more Mode 4 
trade was likely to occur if there were fac ilitating bilateral or regional agreements.   
13. Turning to the second part of his remarks on in frastructure services, he said that the main 
topic of the World Trade Report (2004) was "Cohe rence".  The essential idea was that good trade 
policy was not sufficient, but that there were many other factors at work in the domestic economy that 
would determine how far it followed that solid trade policy yielded real results in terms of growth and 
development in an economy.  The report focused not on the components of good trade policy, but 
rather how trade policy would be affected by th ese other elements.  The basic premise was not to 
question the gains from trade or the possibly costly consequences of disregarding them, but to argue 
that, in order to benefit fully from good policy, other areas of policy needed careful attention.  Trade 
liberalization was not always popular, sometimes beca use it challenged vested in terests in an existing 
structure of protection, and at other times because  of fear about the adjustment consequences of 
change.  But if countries turned away from trad ing opportunities from which the national economy as 
a whole stood to gain, this would impact negatively on the prospects for growth and development over 
time.  A core challenge for governments was to de ploy policy in a manner that created favourable 
domestic economic conditions in order to secure th e considerable benefits that engagement in 
international trade could deliver.  This was a ma tter of coordination and coherence across policy 
areas, as well as one of proper timing. Neither the notion of pacing liberalization to maximize 
benefits, nor of embedding trade policy in a wide r policy context domestically was alien to the GATT 
and the WTO.  The key policy areas covered in the report related to macroeconomic policy, 
infrastructure for trade and development, market structures, governance and institutions, and the role 
of international cooperation in furthering policy cohe rence.  This was not an exhaustive list of all the 
different areas where the nature and quality of polic y interventions would impact on trade, but these 
were among the most important policy domains th at determined whether economies could benefit 
from good trade policies.  The focus of the report was on infrastructure.  
14. The representative of the Secretariat said that  the distinction between infrastructure as a 
service traded in its own right and infrastructure as  an input into production, investment and trade 
throughout the economy was vital.  Often these two conceptually different aspects of infrastructure 
inter-mingled.  For example, if an infrastructural  service like telecoms was subject to competition 
through trade and thereby made more efficient, this  could have far-reaching beneficial effects for any 
economic activity relying on telecoms as an input.  The efficiency of infrastructural services did not 
only depend on the quality of investments made in th em, but also on the conditions of competition for  TN/S/M/14 
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 the supply of services. Although not all networ k services providing infrastructure necessarily 
flourished under market-based competition, some certainly did.  Furthe rmore, the quality of 
regulation, both in terms of design and administration was crucial for efficiency.  Transport costs were a key determinant of efficiency and the ability to co mpete in markets.  The most important elements 
in this context were the efficiency with which transport-related services we re delivered, the quality 
and cost of government services including customs formalities, and the quality of the underlying 
infrastructure.  
15. Referring to a number of slides that demonstrated  the underlying economic issues at stake, the 
representative of the Secretariat said that in 168 out of 216 countries, barriers to access in provision of transport services were greater than tariff barriers.  In sub-Saharan Africa, transport was five times 
more costly than the incidence of tariffs.  Tr ansport costs were, on average, 70 per cent higher in 
developing countries than developed countries.  Freight costs in Africa were twice as high as the world average.  If a country's infrastructure improve d so that it moved from being at the mid-point of 
a sample of 64 to being in the top 25, this  would increase trade volumes by 68 per cent or 
equivalently, would bring a trading country 2,005 kilo metres closer to its trading partners.  A table 
illustrating freights costs by region as a percentage  of imports indicated that these costs ranged from 
5.1 per cent in developed countries to 12.7 per cent in Africa.  He said that the statistics were 
unavailable to determine how much of this was attributable to infrastructure, how much to 
unchangeable geographic realities or to government po licy, which were research questions that could 
benefit from more attention.  One point however w as clear:  transport could be hugely important to 
determine the ability of countries to enter intern ational markets and to compete effectively.   
16. Turning to telecoms, the representative of the Secretariat said that more efficient, more 
accessible and lower-cost telecoms services had meant that the telecoms sector had contributed significantly to openness and competitiveness in othe r sectors, as well as improved the performance of 
economies.  The internet had also been a crucial element in broadening and deepening markets, and 
rendering exchange more efficient.  The digital ga p had narrowed faster than the income gap between 
the poorest and the richest countries in recent years.   While GDP per capita grew at about the same 
rate (2 per cent) in low-income and high-incom e countries between 1995-2001, new mobile telephone 
penetration per 100 inhabitants grew twice as fast in low-income count ries (63 per cent  instead of 32 
per cent).  The growth of mobile telephone use had b een particularly important in this regard in low-
income countries, where fixed-line penetration rat es were low.  With respect to policy issues, 
privatization had helped inject new funds into the modernization and extension of lower-cost telecoms 
services, but privatization without competition fre quently limited gains.  A recent study of 86 
developing countries found that both privatiza tion and competition had had a positive effect on 
telephone penetration and pr oductivity, but that these policies had reinforced one another.  Temporary 
privatized monopolies seemed to produce few if a ny benefits in the short-run and could complicate 
the introduction of competition.  The mix of competitive conditions and monopolized bottlenecks 
characteristic of the telecoms sector in many countries made well-designed regulation essential to the 
realization of benefits from new technologies and lo wer costs.  Universal service obligations were 
also important in spreading these benefits.  A mix of regulation and market dynamics could bring 
about an optimal outcome.  Financial services (ban ks, insurance, securities,  asset management and 
financial information) were crucial to the effici ent allocation of resources across time and space, to 
the maintenance of macroeconomic stability, to th e transfer of ownership, and to hedging risk.  
Financial services were also key for international tr ade, and helped shape comparative advantage.  
Domestic and foreign competition in the supply of financial services had proven central to increased efficiency and diversity of these services.  St udies showed a high correlation between financial 
openness and trade openness, although trade openness typically came before financial openness.  
Moreover, in most countries, financial openne ss did not mean unrestricted capital account 
transactions.  The role of prudential regulation and supervision in safeguarding financial stability and 
ensuring appropriate terms of competition was param ount in the financial services sector.  Efficiency 
levels varied widely among countries.  The net in terest margin (a measure of the spread between TN/S/M/14 
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 borrowing and lending rates which, to a certain degr ee, was a measure of efficiency), for example, 
averaged 14.4 percentage points in the ten count ries where it was highest, and only 1.8 percentage 
points where it was the lowest.  He observed that this  was an important difference.  Business services 
(computing and data processing, professional services, marketing services, technical services, leasing and renting, labour recruitment and operational services)  had been fast-growing in recent years.  In the 
European Union, business services had contributed as much to GDP as manufacturing in 2000 (21 per 
cent), while in the US business services were a larger share of GDP than manufactures (18 per cent). In South Africa, business services were worth almost 10 per cent of GDP in 2002.  In Brazil, business 
services sector employment was only slightly belo w that of manufacturing in the late 1990s (around 5 
million).  Business services had become an increa singly important intermediate input in the pro-
duction process, which was especially important fo r the diffusion of process and management 
innovations.  The share of business services inputs as total intermediate demand in manufacturing had jumped from 5 per cent to 20 per cent from 1972 to 1 998 in the Netherlands and from 3 per cent to 14 
per cent in the United Kingdom between 1968 and 1997. Business services were also increasingly 
traded, and this trade could be particularly advantag eous for smaller countries that did not have a large 
enough volume of domestic output across sectors to pe rmit specialization within the confines of the 
domestic economy.    
17. The Chairman
, on behalf of the Council, thanked the speaker for his interesting and 
informative report. 
18. The representative of Korea  said that, as a developing country, Korea had placed great 
importance on the Assessment exercise.  The exerci se was a helpful forum for information exchange 
on the direction in which Members should be headin g, why they should pursue reform, and how to get 
there.  Since these first two areas seemed to have b een discussed quite extensiv ely in past meetings, 
he wondered whether the time had come to focus on the third objective, namely, how the Council 
could reach its destination.  He fully supporte d the coherence argument elaborated upon by the 
Secretariat.  In this regard, Korea thought every economic entity should at tempt to maximise their 
utilities under the constraints they faced.  In order to move forward, it was best to address those 
constraints rather than try to change their utiliti es directly.  In his view, these constraints were 
represented by various regulatory concerns, among whic h were adjustment policy issues, fair trade 
practices, supervisory measures, and government actions to address externalities and asymmetric 
information.  He recalled that, at the meeting in Ma rch 2004, an attempt had been made in this regard 
in an informal context by the Chai rman.  He said that his delegation wished to pick up the issue of fair 
trade practices, as this was one of the most important concerns for regulators and private businesses in 
Korea.  By doing so, Korea was not trying to re vive discussion on competition policy issues such as 
hard-core cartels.  His delegation was simply seeking how best to address unfair practices of private businesses arising from their dominant positions.  Th ese unfair practices impacted not only on the 
functioning of the market per se , but also tended to deter diversif ication of services suppliers.  For 
these reasons, a key issue was whether the benefits of  continued trade liberaliz ation could be nullified 
by the unfair trade practices of private players, as th e Secretariat had clearly identified in its Report.  
Korea noted that several negotiating proposals in th e past had contained some suggestions in this 
regard, particularly for example, in tourism.   He wondered whether other sectors, including 
construction, distribution and trans portation also deserved discussion focused on fair trade practices.  
Referring to page 161 of the Secretariat report, he said it referred to the notion of atypical consumer 
preferences and how a reduction in product variety arising from openness could lead to welfare losses.  
He wondered whether this concept encompassed herd behaviour of c onsumers characterised by a lack 
of an assessment of the risks involved, particularly with regard to on-line transactions.  In conclusion, 
he hoped that the Assessment exercise would continue  to play a role as a forum for building bridges 
between regulators and trade negotiators.   
19. The representative of Mexico
 noted the high quality of the report.  Asking a question about 
the sectors and supply modes taken up in the study, he referred to remittances from Mexican workers  TN/S/M/14 
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 abroad.  He said that these remittances had grown in the preceding year by 500 per cent, and that 
remittances from Mexican workers in the United States totalled $16 b illion. This growth had occurred 
in the context of remittances being institutionali sed though entities present on both sides of the border.  
Earlier, remittances had been sent through informal channels and had not been recorded.  Currently, 
remittances could be transmitted quickly and easily , and had become Mexico's second source of 
income after oil (itself heightened by the increased price of oil) and ahead of tourism.  He said that 
these had been the three main sources of inco me for the Mexican economy in 2004.  On 
transportation, he recalled the speaker's comments th at the Secretariat did not explain why transport 
costs in developing countries were significantly higher compared to transport costs in developed countries.  He noted that the speaker had not expa nded on relevant infrastructure or policy reasons and 
thought that it might be useful to expand on these issues to determine to what the high cost of 
transport could be attributed.  He  said it would be interesting to look further into these issues.  One 
important aspect of this sector was the influences of  special interests in the United States, Mexico and 
elsewhere.  Small lobbies in various sectors managed these sectors.  He wondered about the role of 
the teamsters in the United States.  Secondly, he  asked a question about the importance of domestic 
regulation in the telecommunications and financial sectors.  He said that international legislation 
needed to be updated in order to meet the needs of  these sectors that were key to improving Mexico's 
national and international competition.  For Mexico , both of these sectors were important and Mexico 
had made commitments under both protocols in the extended negotiations that were of high quality in 
comparison to countries with a similar level of de velopment.  He said that developing countries had 
participated increasingly in these sectors, and he sought more statistics that would indicate how 
developing countries could increase their participati on in world trade.  His delegation thought that 
further discussion and an exchange of views in this  regard could help Members explore whether these 
elements indicated an interconnection of sectors. 
20. The representative of Senegal
 said the presentation had raised a number of important points 
for developed countries and developing countries.  Speaking as a representative of a LDC, he said that 
a number of elements had captured his attention.  It  was true that international trade could contribute 
to an economy and he agreed on the importance of  coherence in national policy and strategies to 
ensure benefits from international competition.  Fo r example, Senegal had begun to open its telecom-
munications market seven years earlier beginning with mobile services in which progress had been achieved in four years.  Mobile subscriptions out paced fixed line ones, there had been decreased 
telecommunications costs, and positive effects on empl oyment and investment.  The liberalization had 
occurred without deregulation, but rather a re gulatory agency had been created and worked 
effectively.  His country was preparing to open fi xed services and, in light of the seven years of 
liberalization experience, was in the process of eval uating results so that lessons could be drawn in 
planning the second stage.  He said that a number of shortcomings had b een observed.  Senegal 
wanted telecommunications to penetrate the entire c ountry, including poorer rural or urban areas.  
Senegal needed to examine its domestic policy to determine how its developm ent concerns could be 
taken up and services expanded.  He said that Senegal had a high qual ity telecommunications 
infrastructure despite its relatively small size.  Turn ing to mode 4 issues, he said that this was an 
important sector that had extraordinary potential.  He agreed that the liberalization of this mode could 
benefit developing countries and LDCs .  He said that categories subject to scheduling to date, such as 
business visitors or intra-corporate transferees, needed to be examined to see how countries like 
Senegal could benefit, namely through the movement of other types of persons.  He said that Senegal 
had a large amount of emigration, for example in construction services.  He noted that the proposals had not taken up these issues sufficiently and sai d these were areas that the Council should devote 
more time to.  He was convinced that services trade offered enormous de velopment potential and the 
economic situation of LDCs needed  to be taken into account.   
21. The representative of Ecuador
 noted that countries would need  to make commitments in the 
temporary movement of contractual services supplie rs, especially for low-skilled manpower.  There 
was the impression that workers were moving.  A number of recent reports reported that TN/S/M/14 
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 unemployment problems were due to the lack of t echnology.  She requested that the representative of 
the Secretariat expand on this point.  She said that this was not a matter of displacement of one group of people by another.  The trade report stated  that the manufacturing sector had experienced the 
greatest growth.  Referring to the fact that some Members were uncertain about which sectors related 
to manufacturing, she wondered whether it was possible that a Member might withdraw its 
commitments.  More information on this question w as required.  She requested that the presentation 
be made available to the Council.   
22. The representative of Zambia
 had three questions.  Citing the comments about work permits 
issued in the US that were predominantly in th e computer and related sector, she asked which sectors 
were at play for the work permits granted by the United Kingdom.  She further inquired whether a 
correlation had been observed between the institu tionalisation of remittances and the improved 
welfare effects.  She said that in  Africa the majority of remittances moved in an informal matter.  She 
asked whether a more institutionalised movement of remittances could lead to growth of other 
services sectors, such as business and financial serv ices.  Would this growth open the scope for mode 
4 negotiations?  On privatization and competition policy, she asked whether the lack of robust rules 
and regulation in Southern Africa had lead to a reduced positive effect of privatised services.   
23. The representative of the Secretariat , referring to the question from Korea, which he was not 
sure to have fully captured, said that it was indeed  difficult to determine what was a typical consumer, 
including because it was assumed that preferences of individual consumers could be added and consumer welfare in the aggregate referred to for th e purposes of analysis.  It was also assumed that 
consumers sought to maximise income, which was not always the case.  Responding to Mexico's 
comments and the increase in remittances, he underlin ed that, while it was true that the growth in 
remittances in recent years was in part a function of  the fact that they were channelled through the 
financial system and could be better counted, it wa s also true that services inputs to manufacturing 
were increasingly being outsourced and counted as ser vices in these remittances.  Hence, part of the 
growth figures was a statistical mira ge related to changes in production structures.  On transport costs, 
he said that there was a research deficit on what made these costs different.  He had referred to 
infrastructure, policy and geography, however, the na ture of market structures was a separate and 
relevant issue.  On the question from Zambia, he sai d that a large portion of the permits delivered in 
the United Kingdom had been granted to ICT industries,  largely to Indian and American persons.  The 
spillover effects of mode 4 presence was a topic on which there was little information.  However, he 
suspected that the spillover effects were significant in terms of technology transfer and trade.  He said 
there were externalities that were present and we re hard to measure.  On the question on the 
relationship between privatization and competition,  while he could not make observations about 
particular regions, he said that ge nerally it had been observed that where privatisation had not been 
accompanied by sufficient competition it was not clear that the anticipated benefits had been achieved.  
24. The representative of the United States
 said that the study contained interesting and useful 
information and hoped that the Secretariat could prov ide a copy of the presentation.  In addition, as 
her delegation had previously indicated, she thought  that it would be of use to Members if the 
Secretariat, as well as UNCTAD could be invited to discuss the resources that they had used to 
provide their analyses.  She recalled her delegati on's comments at an earlier meeting that there 
appeared to be some difference in the conclusions drawn by the two studies.  A discussion of that 
nature would enlighten delegations as to the data r esources used to come to the various conclusions.  
25. The representative of Colombia  said that, throughout the nego tiations, delegations had heard 
about the difficulties encountered in evaluating trade in  services for lack of statistics.  She said that an 
assessment had been conducted in Colombia in rece nt months about the statistical system and the 
deficiencies for services.  She suggested looking fo r some way to consider the disparities between 
countries in the collection of statistics in order to  see how tangible progress in this regard could be  TN/S/M/14 
 Page 9 
 
 
 made by the end of the round.  She said that the lack of statistics had been mentioned frequently, 
however, how the situation might be improved had not been examined.  She invited the Council to 
consider how statistics collection, perhaps through technical assistance, could be improved with a 
view to achieving a tangible improvement by the end of the round.   
26. The representative of Malaysia  sought to reiterate the comments made by Colombia.  
Members had discussed the evaluation of services trade, but little had been said about overcoming the 
problem referred to by Colombia.  She said that the assessment was not only useful to make comparisons between countries, but within countries, especially developing ones.  Noting the calls for 
market access and the tabling of initial offers, she said that for countries to make meaningful 
liberalization in the respective sectors and countri es, they needed to know the impact of this 
liberalization on their economies.  In the absence of an analysis of benefits, it would be difficult to 
convince stakeholders.  She said that giving techni cal assistance for collecting data and assessing the 
impact of liberalization should be considered.  
27. The representative of Uganda
 noted that his country had undertaken unilateral liberalization 
in many areas, including in telecommunications.  W ith respect to telecommunications, he said that 
before Uganda had liberalized, la nd line coverage was extremely low with fewer than 100,000 lines in 
the entire country.  Subsequent to liberalizati on coverage exceeded one million lines, and was 
expanding.  He explained that the monopoly initially negotiated by one of the service providers would 
expire in 2005 and would open the ground for other co mpetitors to enter the market.  He said that the 
question posed by Malaysia was relevant to his de legation, since he wondere d how benefits could be 
quantified.  Were the benefits assessed throu gh discussion among Members or increased contacts for 
business?  He further wondered about impacts in te rms of increased revenue in comparison to the 
resources that left the economy.  He said that a co st-benefit analysis had not been undertaken on the 
opening of the telecoms market.  Secondly, he said that when he had travelled to Malaysia he had 
compared per minute telecom prices which were about seven to one.  He said that the government had 
no information in hand to take up these matters with telecom suppliers in the absence of studies.  He 
hoped that the entry of other providers and competiti on would reduce prices.  He said that he would 
discuss this with other delegations that might be inte rested in investing in Uganda.  He hoped that his 
delegation could be assisted in obtaining such studies.  
28. The representative of South Africa  highlighted the importance of regulation in financial 
services.  She said that liberalization had to go ha nd in hand with appropriate  regulation, which was 
particularly evident for financial services.  She agre ed with the delegations of Malaysia and Colombia 
on the importance of the Assessment in seeking guidan ce based on past experience, good or bad.  She 
urged Members to continue work in this area. 
29. The representative of Pakistan  sought to make a few comments and share experiences about 
the telecommunications sector in his country.  He said that, over the past two years, this sector had undergone tremendous change in Pakistan.  He  said that the government-owned Pakistan 
Communications Company had been granted exclusiv e rights to supply fixed line telephony services.  
He said that a deregulation policy had been undert aken in line with Paki stan's WTO commitments 
which sought to end this exclusivity.  Licences ha d been granted for long-distance international and 
local services.  This process had been open and transparent and had attracted much national and 
international interest.  Twelve long-distance inte rnational licences and 83 local licences had been 
awarded.  In addition, in the cellular mobile sect or, two operators were a dded to the existing four 
through an open and transparent bidding process.  He  said that the amount of interest of both local 
investors and international invest ors had exceeded expectations.  He said that Pakistan was at an 
advanced stage of privatising and transferring th e management of the state-owned company to the 
private sector.  Expressions of interest had been i nvited and over a dozen international operators had 
responded.  He hoped that this process would be finalised  in the next four to five months.  As a result, 
prices of telecommunications services had been re duced tremendously, consumers had choice, the TN/S/M/14 
Page 10  
 
 quality of services had improved, and some $2 billion of investment had been attracted.  The existing 
companies, including the state-owned company, had improved professional management in order to survive in the market.  Infrastructure had grow n and the cost of bandwidth had been reduced 
substantially.  On average international and local  call charges and line rental had been reduced by 
some 40-50 per cent.  Overall, the winner was the consumer in terms of reduced charges, quality of 
service and the multiplicity of choices.  Moreover, an elaborate legal framework had been put in place 
including an independent regulatory authority.  The entire licensing process had gone ahead in a transparent manner.  The extent of confidence was such that, of six mobile companies, only one was 
Pakistani and the remaining were 90-100 per cent fore ign owned.  He said that the last two licences 
granted through auction had been to foreign compan ies.  He said that one basic requirement for 
developing countries was to have a proper regulator y framework in place.  Capacity building within 
the policy targets and the creation of regulatory au thorities was a prerequisite.  He said there were 
examples where deregulation had led to negative results.  While opening of these sectors could be beneficial, it needed to be accompanied by proper regulatory reform.   
30. The representative of Brazil
 was satisfied with the suggestions that had been made about 
revitalising the assessment of trade in services.  He had taken careful note of suggestions made, 
including those by Korea on issues related to fair trade and competition, and by Mexico regarding 
merging some of these areas.  His delegation sought more clarification on these two points.  His delegation was willing to participat e in any consultations the Chairman might hold on these points and 
how to improve the debate under this item.   
31. The representative of the Philippines
 wanted to share some insights from an OECD meeting 
on how liberalization had affected universal services in  certain selected sectors.   He said that in the 
sectors chosen the empirical evidence of a nu mber of countries demonstrated that a positive 
correlation was not necessarily observed between liber alization for the purpose of inviting foreign 
suppliers and the fulfilment of certain universal ser vices objectives set by a government in the context 
of that liberalization.  For instance, with refere nce to telecommunications, there had been a discussion 
that, even if liberalization was undertaken and even  if this led to greater penetration of telephony 
services, the kind of services required by rural reside nts in terms of internet access, apart from basic 
telephony, had not necessarily been provided.  In te rms of financial services, the conclusion had been 
drawn that, in many situations, foreign services suppl ied did not establish in the rural areas to provide 
the financial services that rural residents required to  carry out their economic activities.  There was a 
tendency for financial services operators to only pu rsue activities in certain urban areas where profit 
occurred.  In many instances, competition for th e provision of financial services in rural areas was 
taken up by domestic services suppliers.  For water distribution services, he said that a number of 
national experiences had been cited that showed th at, while there had been some attainment of 
universal service, the cost borne by the economy  might have outweighed the benefits of any 
incremental universal service that might have been ach ieved.  He said that many of these observations 
had been useful for assessing the impact of trade libera lization in services, particularly with respect to 
universal access to these critical services.  In the c ontext of this agenda item, he said it might be 
helpful to draw Members' attention to these discuss ions.  He echoed the comments by Colombia and 
Malaysia that, while the discussion was useful, a methodology needed to be found that would allow 
Members to harness data collection and fold this information into national assessments.  
32. The representative of Nigeria , referring to telecommunications services, said that his 
government in 2000 had liberalised this sect or which had been under a monopoly (Nigerian 
Telecommunications Company).  Liberalization ha d increased the number of lines, and improved 
coverage, quality and cost.  It was easier to communi cate and do business.  This was one of the gains 
that had resulted from the Government's policy.  The impact on the Nigerian economy had been tremendous as it allowed people to conduct business more easily.  He said that a regulatory agency 
was crucial to regulate the sector, or else the objectiv es that had been set might not be reached.  He 
said that Nigeria sought investment and had a large market of some 140 million citizens.  TN/S/M/14 
 Page 11 
 
 
 33. The representative of Hong Kong, China , recalling her remarks at the meeting in September 
said that Members needed to think about a way fo rward.  The presentation by the Secretariat had 
confirmed the significance of services to all Me mber, both developing and developed.  The study 
affirmed the benefits of liberalization in services, both in services of export interest to Members and, 
perhaps more importantly, in infrastructural services which were of importance to all.  She noted and 
agreed with the suggestion by some delegations th at what was has needed, apart from liberalization, 
was an appropriate regulatory framework.  She said that it was time to co mbine these elements and 
move forward the negotiations.  She noted under the next agenda item, Members would receive a 
number of recommendations from Members on ways forw ard in the negotiations.  She suggested that 
Members apply the discussion under the Assessment, including the Secretariat presentation, to the 
consideration of the merits of the proposals.   
34. The representative of Mexico , referring to Brazil's intervention that Mexico's proposal was to 
integrate some sectors, sought to clarify that hi s delegation was not suggesting that sectors should be 
merged.  He said that his suggestion had been that , based on a complete analysis of these sectors and 
possibly other sectors in national contexts, it coul d be possible for Members to make the necessary 
exchanges for negotiating purposes.  This would de pend on the progress made by the country, which 
could lead to such an exchange of views.  He reiter ated that he was not suggesting that this be done by 
merging sectors.   
35. The representative of the European Communities , referring to the intervention by the 
Philippines, wished to make a few further comments about the OECD seminar he had referred to.  He 
said that the seminar had highlighted the benefits and costs of liberalization in financial services, 
water distribution services and energy services.  In order to complete the information that had been 
provided, he said that it was true that in financial services, all speakers had indicated that foreign operators were less prone to expand into remote areas than domestic suppliers.  All speakers had also 
insisted on the beneficial role that FDI could play in this sector in order to reinforce the stability of the 
financial system.  He said that some domestic ope rator representatives of developing countries had 
explained that the market in rural areas could be much more profitable than, for instance investment 
banking, in urban areas.  Hence, even if ther e was some specialization by foreign or domestic 
operators, the presence of foreign ope rators could contribute to the stability of the financial system.  
The question of access was also important for water distribution, financial services and telecommunications services.  He said that, for water distribution, it was striking that the difference between the price sought by private operators in comparison to public operators was small in 
comparison to the difference to the cost of water wh en there was or was not network access.  This was 
also the case for telecoms, where the question was the cost of access rather then the cost of the 
services itself.   
36. The representative of the Secretariat
, on the question of statistics and the availability of data, 
recalled that the WTO was part of an inter-agenc y group that was seeking to improve the basis upon 
which data was collected both in terms of country coverage and the data itself.  The group had sought 
to match a GATS-type framework with the type of information that was collected, notably through balance of payments.  Balance of payments info rmation was not sufficient since it did not capture 
trade by foreign affiliates for example, which some  countries had begun to collect.  He said that, if 
Members believed that this was of interest, the Secr etariat could brief them on this work.  He said that 
other complementary data was often collected th rough case studies.  Many such case studies existed, 
for example in Africa, conducted by the Africa Economic Research Consortium which had sponsored 
specific studies in particular sectors, and the Worl d Bank which had done much work as well.  Hence, 
while there was much work on-going, for specific se ctors in specific countries, there was no substitute 
for case studies.   
37. The representative of Switzerland
, referring to comments on the OECD meeting, stressed that 
the meeting was on services and services liberalization as such and not a seminar related to GATS TN/S/M/14 
Page 12  
 
 specifically.  He said that there was a difference to be drawn between liberalising internally on the one 
hand and undertaking commitments on the other.  There was also a difference in terms of coverage of 
the services issues discussed, which had not been limite d to GATS, but rather to the universe of public 
services.   
38. The Chairman
 said there had been a good presentation and many points had been highlighted, 
especially about mode 4 and infrastructure.  Many delegations had shared their national experiences 
with emphasis on telecommunications.  He said th at the presentation had raised questions about 
under-reporting of trade flows, costs and benefits, the l ack of clarity of what was temporary, the fact 
that markets of developing countri es were important.  References had been made to the difficulties in 
data collection.  He had taken note of the sugges tion for further discussion with representatives of the 
WTO and UNCTAD about data collection.  He thought  this merited consideration and thought that a 
technical discussion might best not occur in a formal meeting.  He wondered whether a more 
structured discussion on data sources, collection and comparability could occur in an informal setting 
before the next cluster.  He recalled the comment s by Korea on fair trade practices as well as the 
comments on how to pursue further work under th is item.  He said that he would consult with 
delegations in this regard.  The Chairman said he had an additional piece of information that 
delegations could find interesting.  He recalled that it had been suggested in the context of a 
presentation by the ITC in 2004, that Members indi cate the existence of trade-related technical 
assistance projects.  He had recently learned that the Secretariat of COMESA (Common Market for 
Eastern and Southern Africa) was embarking on a major assessment exercise for 16 COMESA member countries (including 11 WTO Members).  He sa id that a representati ve of COMESA was in 
Geneva that week.   He invited the Council  to take note of the statements made.   
39. The Council so took note
. 
B. PROPOSALS RELATING TO THE NEGOTIATIONS UNDER ARTICLE XIX  OF THE GATS 
40. The Chairman  noted the heavy slate of business under this  agenda item.  He suggested that, in 
order to use time most efficiently and in line with  practise, new proposals be presented before existing 
ones, and that the discussion be grouped by sector and mode.  As had been discussed his 
consultations, he suggested that the Council discu ss Mode 4 related proposals on 22 February.  As he 
had been told that new proposals would be submitted in the course of the week, he suggested that this 
item remain open after that day's discussion.  He drew the Council's to a communication related to 
telecommunications contained in document TN/S/W/27 from the European Communities. 
(i) Telecommunications Services 
41. The representative of the European Communities  said that the document had been briefly 
introduced at the most recent meeting of the Co mmittee on Specific Commitments.  He said that the 
classification used for telecommunications was outdated and was based on business concepts and 
words that did not clearly match the current real ity of the telecom sector.  This created legal 
uncertainties on the scope of commitments made to date, as well as on the scope of commitments 
under negotiation.  His delegation pr oposed one solution to this situa tion in its communication, and he 
looked forward to discussing any others put fort h by Members.  While Members had different 
approaches, they shared the goal of making the scope  of commitments as clear as possible.  This goal 
of clarity had not been fully achieved and needed to  be remedied.  He said that commitments in the 
telecom sector was based on the W/120 classifica tion list in most cases.  However, W/120 was 
designed for the telecommunications sector, not on the basis of the function served, but on the basis of 
the business model and technology that had prevailed 15 years earlier.  Thus, some categories hardly 
made sense and there was legal uncertainly about othe rs.  For instance, it could be asked whether data 
and data transmission covered images.  Although this was th e understanding of operators and 
broadband users at present, the writers of the W/120 list lived in an age when they could not send and  TN/S/M/14 
 Page 13 
 
 
 receive images.  This uncertainty cast doubt of the WTO coverage of broadband services that 
supported the growth of telecommunications.  The W/120 list also made references to the CPC, 
however, in the telecommunications sector, these refere nces created confusion.  Contrary to other 
sectors, in the telecommunications sector this corre spondence was partial and unclear.  It was partial 
because not all categories of the CPC were referred  to.  It was not clear because a number of W/120 
categories referred to parts of CPC categories with out indicating which ones.  This raised doubts 
about the coverage of mobile data, mobile sat ellite services and video conference services.   
42. The representative of the European Communities said his delegation had been studying the 
ways to remedy this situation.  One solution c onsisted of establishing a new list, however, the 
evolution of business models made it more difficult to distinguish between services.  His delegation 
also believed that there was a clear risk of facing the same problem posed by the current classification 
in the future, because business models would continue  to change and any list would become out-dated 
and create confusion and uncertainty.  His delegati on therefore considered reverting to the basic 
functions of telecommunications.  Telecommuni cations meant transmitting some content by 
electromagnetic means irrespective of the format of th at content.  This was the definition contained in 
the Telecommunications Annex, the International Telecommunications Union and the laws of many 
WTO Members.  His delegation wondered whether it would be better to schedule telecommunications 
as "all services consisting of the transmission and rece ption of signals by any electromagnetic means."  
If Members made commitments on this basis, they would cover all services that were considered 
telecommunications services by all experts in the fi eld.  This would mean replacing the existing W/120 
list by a simple entry, "Telecommunications Se rvices" with the definition found in the GATS 
Telecommunications Annex.  Such a scheduling approach would cover all services identified in W/120 
and would end any uncertainty about those that might not be captured by W/120.  This approach would 
be completely technology ne utral, it would not prejud ice the content transmitted and its format, and it 
would not prejudice the business model used.  Th is approach did not prejudice the substance of 
commitments and was flexible enough to accommodate all kinds of situ ations and had been used in a 
number of regional free trade ag reements involving WTO Members at  all stages of development and 
liberalization of the telecommunications  industry.  In addition, the appro ach did not affect the ability to 
maintain or schedule regulatory co mmitments, in particular, it would not affect the scope of existing 
commitments.  He was aw are that there might be other solutions and his delegation looked forward to 
studying these.  He said that Members should bear  in mind that any solution should ensure certainty 
about the scope of commitments, remedy the problem he had menti oned and should not  affect other 
sectors so as not to create new problems.   The Eu ropean Communities felt that this was a technical but 
important issue.  The relevance of the telecommunications commitments for the telecommunications business was at stake and his delegation was determin ed to ensure that uncert ainty about the scope of 
such commitments did not jeopardise the rele vance of WTO commitments or of the on-going 
negotiations.   
43. The representatives of the United States
, Japan , Hong Kong, China , Chinese Taipei , 
Switzerland , Senegal , Canada , United States , Australia , Norway , Korea , Venezuela , Mexico  and India  
thanked the delegation of the European Communities for its proposal. 
44. The representative of the United States  said his delegation was encouraged by the fact that the 
European Communities was open to looking at altern atives to its paper.  While the United States 
appreciated the EC's efforts to clarify telecommuni cations commitments and saw the value of such an 
endeavour, the United States had concerns with the proposal because of its potential to limit the scope 
and coverage of the telecoms sector.  Specifica lly, the European Commun ities proposed classification 
scheme, contrary to its intended purpose, could add greater uncertainty to the coverage of the sector 
with respect to value-added telecommunications ser vices.  The generic nature of the proposal could 
leave many Members unclear about the scope of co mmitments in this sector.  It introduced some 
uncertainly as to the coverage of telecomm unications services that extended beyond mere 
transmission and transport of signals.  These value- added services were an essential component of the TN/S/M/14 
Page 14  
 
 telecommunications sector and the United States would consider any classification approach that did 
not explicitly cover them difficult to accept.  A cla ssification scheme that did not explicitly cover 
value-added services could result in the rollback of  existing commitments, which ran counter to the 
purposes of the negotiations.  Many Members had a value-added services category in their scheduled 
commitments.  Given the vital role that telecommunications played in the development of other 
services and the economy in general, comprehensiv e coverage for this sector was important.  The 
United States sought to improve market access co mmitments in the telecommunications sector which 
he presumed was a goal shared by the European Communities.   
45. The representative of the United States announced  that his delegation would be offering an 
approach to classification in this sector to illustra te its objectives.  This forthcoming proposal would 
address the concerns his delegation had with the European Communities proposal and would offer an 
alternative that he believed improved upon the EC's  work by adding comprehensiveness and clarity.  
In particular, it would add sectoral coverage for so -called value-added services.  It was important to 
see these improvements to classification as an encour agement to Members to make commitments in 
this sector and not serve as an excuse to delay ta king commitments.  He hoped that the European 
Communities contribution and the United States forthcoming proposal would help Members make 
offers in this important sector.  He said that the interventions by Senegal, Uganda, Pakistan and 
Nigeria under the previous agenda item demonstrated  how liberalization of this sector could help 
economies expand.  He hoped that their experiences w ould inspire others to realize these benefits.   
46. The representative of Japan
 said his delegation appreciated the efforts by the European 
Communities to analyse current classification of te lecommunications services and devise a solution.  
Japan believed that the European Communities atte mpt had been made for the purpose of ensuring 
comprehensiveness of the offers and further the pursuit of liberalization.  Japan shared the EC's view 
in this regard.  For services sectors, such as tel ecommunications, characterised by rapid technological 
changes, classification was an on-going issue.  However, the bottom line was that classification 
should be constructive and help all countries undert ake substantial liberalization while avoiding any 
rollback, intended or unintended.  There were so me countries at earlier development stages in the 
telecommunications market that wished to make some reservations, although they agreed on the 
ultimate goal of full liberalization.  For all the countr ies, including the ones he had just referred to, the 
classification should be beneficial.  Making a few specific comments, he said that, firstly, Japan had a few concerns about the European Communities approach  from the viewpoint of legal certainty since it 
resulted in a reclassification of telecommunications services to other services and set aside the basic 
and value-added sub-categories as well as other sub-s ectors which the W/120 list included.  Secondly, 
the European Communities approach had a criterion in drawing the line between telecommunications 
services and other services.  Japan, however, recognised this criterion that was "intrinsically linked to the transmission and reception" was not necessarily an  adequate criterion to differentiate between the 
telecommunications services and other services.  This was because it would still be necessary to 
determine what function was "int rinsic" and how the function was "linked to the transmission and 
reception", which seemed somewhat difficult.  Thir dly, although it was proposed that this solution 
could be applied only on a voluntary basis, Japan recognised that it was important that a common 
approach be taken among all Members from the vi ewpoint of legal certainty, transparency and 
comparability of each Member's schedule of commi tments.  In this regard, any proposal on 
classification should be, in principle, one which was acceptable to all Members, including developing 
countries, so that commitments could be made in a uniform manner.  Finally, further 
telecommunications liberalization was one of the mo st important objectives in the current round.  
Japan thought that Members should pay great attenti on to further liberalization in each country while 
having this on-going classification in mind.  He hoped that the United States proposed classification 
would be a constructive one and his dele gation would analyse when received.   
47. The representative of Hong Kong, China
 said that, given the rapid advancement of technology 
in various directions, the overarching objec tive for Members should be to have as clear,  TN/S/M/14 
 Page 15 
 
 
 comprehensive and uniform a classification as possible.  She said that this would help ensure the 
clarity, certainty and comparability of commitments.  Having heard some of the interventions made, it appeared to her that some work would be needed in  order to find a common approach.  In this regard, 
her delegation was interested in the European Co mmunities proposal if it meant that it would help 
focus Members' minds to achieve a common unders tanding or approach on the classification for 
telecommunications services.  She said that her de legation had shared its detailed comments on the 
proposal when it was discussed at the previous meeti ng of the CSC.  Her delegation looked forward to 
further discussion of this or other proposals th at would help achieve a common approach for 
advancing the market access negotiations.   
48. The representative of Chinese Taipei
 appreciated the effort made by the European 
Communities to produce this proposal.  Chinese Ta ipei was of the view that the paper provided 
valuable examples and insights for Members' consideration.  It was important for Members to discuss classification issues so as to find a consensus that  the telecommunications sector was an important 
sector and a priority in the services negotiation.  Modern telecommunications infrastructures often 
served as an import driver of economic growth.  Liberalization could pave the way for continued 
innovation, prosperity and improved competitiveness for economies.  He agreed that the W/120 list 
and the provisional CPC was out-dated especially for the telecom sector.  In order to ensure that 
Members' commitments duly reflected the developmen ts in technologies, Ch inese Taipei shared the 
view that an appropriate classification approach need ed to be developed.  Bearing this in mind, the 
time was appropriate to discuss this issue.  Ch inese Taipei supported in principle the European 
Communities' proposed text by defining telecommunications services as "any services consisting of 
transmission and reception of signals by any electro magnetic means."  This simplified classification 
approach would cover the comprehensive scope of the telecommunications sector without prejudging 
business models, ways to provide services and techno logy.  He recognised that the proposal detailed 
in the European Communities pape r was a workable and feasible so lution for further discussion.  
Chinese Taipei believed that any solution involving a store and forward or store and retrieve function, 
which consisted of transmission and reception of  signals by any electromagnetic means, was a 
telecommunications service.  In sum, Chinese Taip ei was of the view that classification was an 
important systemic issue and a good classification approach would help ensure legal certainly, avoid possible disputes among Members and encourage Members to make a contribution to the liberalization process.  He encouraged Members to make such a contribution in the negotiations, bilaterally or multilaterally, with a view to de vising a common classification approach under the 
GATS framework.   
49. The representative of Switzerland
 recalled that his delegatio n had consistently favoured 
improving and updating the way in which Members sch eduled their commitments, an particularly on 
the basis of proposals that had received broad acceptance.  The proposal by the European 
Communities was positive in many respects.  It  was in line with business realities and more 
importantly with business plans that would evolve re latively quickly.  His delegation agreed with the 
proposal's all-encompassing approach, which was am bitious and emblematic of the ambition required 
for the negotiations overall.  He had taken note of some of the concerns put forth by Members and 
said that specific technical concerns could be de alt within the approach.  The proposal was an 
appropriate basis for discussion in terms of the a pproach it took, which was essentially to have one 
entry point that encompassed the world of tel ecommunications.  This was the main and very 
important feature, which would be a big step fo rward.  He called upon Members to devote their 
attention to this in order to reach a broa d acceptance on a proposal of this kind.   
50. The representative of Senegal  noted the rapid evolution of this sector which had a 
consequence on how business was conducted.  He said two objectives which were legitimate but 
could raise some problems should be borne in mind.  Firstly, as much as possible, work should reflect 
the practices of business in this sector.  Secondly, wo rk should seek to ensure the legal stability of the 
commitments.  He appreciated the in-depth wo rk carried out by the European Communities.  TN/S/M/14 
Page 16  
 
 Referring to the document summary, he had noted that the document seemed to indicate that the 
problem of classification could not be separated from regulations.  He said he sought clarification on a 
point on page 3, "CPC 7524 Program Transmission Services" and said that, from Senegal's point of 
view, the definition of telecommunications services excluded visual transmission.  While it was true 
that this technology allowed operators to transm it sound, image and data, for Senegal this was an 
audio-visual service.  He wondered about the re gulatory consequence of such a classification.   
51. The representative of Canada
, noting that a number of proposals under this agenda item dealt 
with the issue of re-classification, said he sought to make a general comment about re-classification 
before making a more specific comment on the telecommunications proposal by the European Communities.  It was Canada's view that when Me mbers sought to propose a re-classification in the 
context of the negotiations that the demandeurs  had two responsibilities to fulfil.  The first was to 
demonstrate a compelling case for new classification in the negotiations and the second to ensure the 
maintenance of the scope of Members' existing co mmitments.  In Canada's view, the second objective 
of maintaining the scope of commitments could be  met, even in the case of new classification for 
sectors.  He sought to suggest two possible mechan isms by way this could be achieved.  Firstly, 
Canada believed that greater consistency of comm itments could be achieved by requiring that the 
Member proposing re-classification provide a co rrespondence between the classification in the 
existing schedule and the one in the new schedule in  order to ensure that the scope of existing 
commitments was preserved by the classification change.  In most cases this would involve the inclusion of CPC codes and definitions.  The sec ond point was that Members and the Council should 
begin to think about the relationship between old an d new schedules in the context of the negotiations.  
At the conclusion of the Doha round, Members would need to establish a protocol or another legal 
instrument that would incorporate changes to Members' commitments.  Members had held some 
preliminary discussion on this point, in part owing to an informal note from the Secretariat in 2002, 
which made mention of having a protocol that coul d make explicit whether commitments in Members' 
new schedules should supplement or revise commitme nts in the old schedules or whether they would 
replace them.  In Canada's view, th is kind of unders tanding would play an important role in defining 
the relationship between existing and new commitments .  He suggested that Members begin to think 
about the elements such a protocol might contain wi th respect to the relationship between old and new 
schedules.   
52. Referring to the European Communities proposal  on telecommunications and the intervention 
from the United States, the representative of Canada said he appreciated the e fforts by the European 
Communities and the United States to improve classification on telecommunications services.  
Canada believed that a technology neutral approach to classification could make it easier to schedule 
commitments provided that it covered the whol e of the sector, both basic and value-added 
telecommunications services.  Canada would contin ue to study various classification options as well 
as the current classification system and encouraged  the European Communiti es and the United States 
to work with other interested parties to find a comm on solution.  It was Canada's preference to focus 
attention on proposals directly related to impr oving market access and quality of commitments.  
Given the relatively brief period of time to the Ma y deadline for improved offers and the Hong Kong 
Ministerial, his delegation was not sure whethe r Members should devote so much energy to 
classification change, especially if it came at the expense of progress in market access.   
53. The representative of Uganda
 said that Uganda sought to libera lise in telecoms as the benefits 
had been made clear by the Members that had spoke n under the previous agenda item.  He noted that 
his country was at the tail-end of development, es pecially in sectors such as telecommunications 
where change occurred quickly.  In terms of the negotiations, the differences  between Members were 
enormous and the discussion of classification was hi ghly specific and complex.  This was a problem 
faced in Africa by LDCs.  He recalled that Uganda had liberalised unilaterally and that, in the course 
of this liberalization, his country had had no nego tiating capacity.  Uganda s ought funds to engage in 
a national assessment of past liberalization, since although the benefits were visible, it was difficult to  TN/S/M/14 
 Page 17 
 
 
 quantify them and a way needed to be found to measu re the impact of liberalization.  In summary, 
there was little capacity, more of which needed to be built, in Uganda and other LDCs.  There was 
little capacity to negotiate and this reality should be borne in mind by Members.  He said that this 
problem needed to be appreciated and addressed.   
54. The representative of the United States  appreciated that this item would remain open for 
discussion on 25 February and clarified that the United States would be circulating its paper for 
discussion then.  Referring to the intervention by Canada, while the United States agreed with the 
need not to dwell on classification unnecessarily, th e United States believed that it was important to 
have an appropriate classification with which Member s were comfortable.  Otherwise, it could be a 
barrier to undertaking meaningful market access commitments.   
55. The representative of Australia  said that the proposal brought clarity for new and emerging 
technologies and Australia could support the proposal in its current form.  He was aware that not all Members shared this view.  He looked forward to  the forthcoming proposal from the United States 
and hoped that the European Communities would wo rk with the United States, Japan, Canada and 
others who had expressed concern to find a consensu s position.  Australia thought that some of the 
suggestions made by Canada were practical.  He  shared the view that it was important to get 
classification right, but also to get on with the work  of market access.  Australia would do what it 
could to bring consensus to classification in te lecommunications.  He acknowledged some of the 
points made by Uganda and hoped that a consensus position would bring greater clarity to telecommunications classification to be able to move forward with market access issues.   
56. The representative of Norway
 said that his country shared the view that the functional 
definition of telecommunications services, as laid out in the Annex on Telecommunications Services 
to the GATS, was a better way to classify te lecommunications services than the existing CPC 
classification.  In offering a technology neutral cl assification, the schedule would better cover services 
not envisaged in  the 1980s when the CPC was de veloped.  Technological developments since had 
created a number of problems which should be addressed by examining a better way to schedule 
telecommunications services commitments.  His dele gation welcomed a discussion on how best to do 
this and could support the proposal.  He hoped that the discussion would result in a unified approach.  
His delegation looked forward to the forthcoming United States proposal and an opportunity to 
discuss it.  However, a discussion on classification di d not prejudice Members'  ability to undertake 
market access commitment s in telecoms.  In Norway's view, the importance of undertaking full 
commitments in market access and national treatme nt was not dependent on classification.  Full 
commitments could be undertaken using the exis ting classification.  He sympathised with the 
comments made by Uganda about the complexity of these issues.  Nonetheless,  these were important 
issues that would determine the commitments Member s would undertake and saw merit in continuing 
the discussion.   
57. The representative of Korea  said that further liberalization was important in this infrastructure 
service.  He said that further discussion would be necessary to develop a simple classification.  For 
developing countries flexibility needed to be take n into account so as to allow them to commit to 
different telecommunications sub-sectors that refl ected their different commercial realities.  In 
addition, his delegation had a question about how to reconcile the diverse interests among Members 
about value-added services.   
58. The representative of Venezuela , referring to the comments by Canada on a protocol, said that 
this implied a reinterpretation of the commitments  that had been previously concluded.  He 
understood that classification in telecommunications should not dilute the value of prior commitments.  However, Members should not seek to  introduce retroactivity in the agreements.   TN/S/M/14 
Page 18  
 
 59. The representative of Mexico
 said that his delegation had not concluded its analysis of the 
document, which had been sent to the Mexican regul atory authorities.  From the Ministry of the 
Economy's viewpoint, he shared some of the concerns raised by others about the classification.  There were risks involved in seeking a reinterpretation of  the CPC and reinterpreting specific commitments 
in existing schedules.  Given these possible risks, his delegation sought more time to examine the 
paper in more detail.  His de legation looked forward to the United States paper and hoped that it 
would involve a general step forward in commitm ents taken in a sector of importance to many 
delegations.   
60. The representative of India
 said that the paper had had been sent to capital and he noted that 
the proposed classification seemed to suggest a fund amental shift to a functional definition, which 
was possibly not what was used in the W/120 list a nd CPC.  He was cautious, for other sectors as 
well, as to whether this represented a fundamental shift.  He said that, especially in developing 
countries, there existed a commercial reality of diff ering levels of development within the telecom 
sector.  It was not the case that ea ch and every activity of the sector wa s at the same stage.  Flexibility 
in this regard, when it came to market access co mmitments, would need to be factored into any 
classification.  Thirdly, India looked forward to the United States proposal.  He took note of the 
current classification and the a large number of proposals that had been submitted.  In terms of 
developing countries' ability to determine how each  classification proposal would impacted on them 
and in which ways was a difficult issue.  This w ould need to be borne in mind in examining the 
myriad of classification proposals.   
61. The representative of th e European Communities , responding to a few questions and referring 
to the comments about the comprehensiveness of the proposal and its coverage of the services in the 
W/120 list, said that the simple and neutral defi nition would cover all telecommunications services 
that were classified in W/120.  The only exception in this respect  was 2.C.n. "On-line database 
processing", which explicitly referred to CPC 843 in th e sector of computer related services.  All of 
the other telecommunications services in the W/120 list  were covered.  There were also services, such 
as content services, which were not covered, but this  was logical since these were services that, in his 
delegation's view, were not covered by the pr esent classification, were outside the existing 
classification and would continue to remain outside the proposed classification for telecommunications.  This also responded to the question on backtracking, since the definition his 
delegation was proposing was comp rehensive and covered all the different services on which 
commitments were made, and hence there was no risk  to back-tracking, except for sub-sector 2.C.n. 
which he had just mentioned.  Given that the overall level of commitments in the computer and 
related services areas was generally higher than in telecommunications, this risk was rather minimal.  
On a point related to the comment by some that re-classification was at play, he clarified that this was not a re-classification, but rather a clearer way of classifying existing commitments.  The only 
theoretical possibility for re-classification was to the extent that Members had made commitments for 
2.C.n. in the telecommunications area and would have to move these to the computer services area.  
This was the only area in which a reclassification th eoretically would take place.  Referring to the 
question from Senegal on regulatory aspects, he said that it was clear from the proposal that there was 
no impact on regulation through the classification that the European Commu nities was proposing.  
With respect to broadcasting, he said that para graph 25 of the communication explained that the 
system that was being proposed would allow a Member to exclude certain services from its 
commitments.  There would therefore be the possibility of excluding broadcasting commitments, as 
the European Communities did its own schedule and offer.  
62. The Chairman
 said that an important proposal had solicited many important comments, for 
instance about market access, back-tracking or the impact on existing commitments.  He said that 
other proposals had been promised.  He said that  under the GATS there was no mandatory obligation 
for Members to follow the same classification.  What  was important was for each Member to make its 
commitment perfectly clear in the scheduling process.  Some delegations had said that it was not a  TN/S/M/14 
 Page 19 
 
 
 prerequisite that Members agree on an approach to classification before scheduling commitments in 
any given sector and the discussion did not prejudice Me mbers' ability to undertake commitments.  A 
common classification sought desirable improved clarity, but did not prevent Members from making commitments in their offers.  The Chairman th en drew attention to a joint statement on the 
liberalization of financial services from a gr oup of Members contained in Job(05)/17. 
63. Speaking on 25 February, the Chairman
 drew Members' attenti on to document TN/S/W/35 on 
classification in the telecommunications sector from the United States.   
64. The representative of the United States , alluding to the presentation of the World Trade 
Report earlier in the meeting, recalled that teleco mmunications was a critical services sector.  Not 
only was it an important service by itself, but it was an essential building block for other economic 
sectors that relied on a well-functioning and robust telecommunications network.  The United States 
proposal on classification of this sector was meant to build upon the proposal put forward by the 
European Communities.  While the United States highl ighted some of its concerns with the EC's 
proposal in this communication, the United States was also offering an alternative way of being 
comprehensive for this sector.  Thus, while there mi ght be alternative ways to define this sector, her 
delegation was pleased to be working with the Eu ropean Communities and others in this endeavour, 
because ultimately the relevant delegations that had submitted proposals shared the same goal, which 
was securing robust and comprehensive coverage for th is very important sector.  The United States 
looked to improve upon the importa nt endeavour initiated by the EC's proposal.  In that regard, 
Members should not see the two complementary appr oaches to sectoral coverage as an excuse to 
delay making offers for this sector.  Simply because there was an alternative did not mean that there 
was disagreement on the objective for full liberalization of the telecommunication sector.  The one 
area that the United States proposal sought to ex pand and improve upon the EC's proposal was in the 
coverage of value-added telecommunications servi ces which had been typically scheduled in the 
Uruguay Round, whereas basic telecommunications  had been addressed under the negotiations on 
basic telecommunications.  In the current round  of negotiations, Members were combining two 
separate telecommunications categories, basic and value-added services.  The EC had set forth a 
definition that potentially left some question about the coverage of value-added services.  Thus, the 
US proposal sought to add clarity to the EC definition which captured basic telecommunications as the simple transmission layer of the service, which left unclear the coverage of value-added services that function at a level above pure transmission.   The United States was not comfortable simply 
shifting all the value-added services, such as store and forward and retrieval functions provided by 
many telecommunications operators, to the comput er and related services category.  Value-added 
services were a vital sector in and of themselves and not as an adjunct to the computer services.  Most countries' licensing regimes recognized this fact a nd, if Members sought to reflect up-to-date and 
evolving business models, they ought not diminish the importance of value-added services in the telecom sector.  Again, the challenge faced in this  sector was combining two different negotiations 
and securing the most robust coverage of this  sector without unwittingly scaling back existing 
commitments.  The United States  was very open to working with all Members in this endeavour.  She 
welcomed the EC's paper as a start and submitt ed the United States propo sal as building upon that 
step. 
65. The Chairman
 drew Members' attention to a room document on telecommunications. 
66. The representative of Canada  said he was pleased to introd uce a joint statement on the 
liberalization of telecommunications services from Australia, Canada, the European Communities, 
Hong Kong China, Japan, Republic of Korea, Norway ,Singapore, the Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu, and the United  States.  He said that in these negotiations, 
Members often spoke about one service or another as  an enabler of trade and that telecommunications 
was one such area.  Telecoms services were key inputs into a range of commercial activities making it 
possible for goods and services providers in virtually every sector of the economy to penetrate TN/S/M/14 
Page 20  
 
 markets around the corner or around the globe.  Th ey were also at the fore-front of new and 
innovative ways of doing business and were often at the core of new business processes or tools.  
Telecoms played a key role in enabling outsourcing , the Internet and electronic-commerce.  Telecom 
services, however, were about more than business a nd they were particularly powerful when they 
were combined with other ICTs.  Telecoms services were used by most persons between six and a 
dozen times a day.  They connected people to bus inesses, colleagues, families, friends and they 
connected own neighbourhoods and towns to the rest of the world.  Together with other ICTs, they 
made it possible to bridge distance and time th rough services like on-line education, e-government 
and e-health.  From a communications perspectiv e, a modern telecommunications infrastructure, 
combined with an open market for telecoms services,  encouraged investment in this sector and drove 
the innovation that bought new and innovative services at  competitive rates.  In short, the group saw 
telecoms networks in services as not only important  economic drivers in their own right, but as key 
inputs into trade and development goals with the pot ential to improve quality of life for developed and 
developing countries alike.  They believed that th ese benefits were most likely to accrue to countries 
with open and competitive telecoms markets.  Fo r these reasons, the co-sponsors encouraged all 
Members to actively participate in these nego tiations with the objective of achieving full 
commitments for all telecommunications services.  They urged Members to commit to all of the 
provisions of the Telecoms Reference Paper and en couraged the elimination of MFN exemptions in 
this sector.  The co-sponsors believed that such liberalization would pave  the way for continued 
innovation, prosperity and growth by making it easier  for countries to embrace the information society 
while leveraging their strengths in relation to international trade. 
67. The representative of th e European Communities
, noting that his delegation was a co-sponsor 
of the statement, said that he fully supported th e comments made by Canada.  Referring to document 
TN/S/W/35 introduced by the United States, he we lcomed this proposal that built on the European 
Communities proposal.  He was pleased that the United States took on board the European 
Communities' definition of telecoms which was the broadly accepted definition in the GATS Annex 
on Telecommunications.  In the European Communities ' view, this demonstrated that both approaches 
were fully compatible and that WTO Members s hould be encouraged to present revised offers 
referring explicitly to the GATS Annex definition of  telecoms.  The European Communities believed 
that a number of questions could be raised on th e United States proposed model schedule that seemed 
to shift some parts of W/120, namely 2.C.o., from basic to value-added and that there might be an impact on the scope of application of the regulator y reference paper.  The European Communities also 
took note that, in addition to taking on board th e EC definition, the US proposed model schedule 
sought to expand the telecoms sector by shifting to this sector computer and related services, opening 
up the value-added services category, and adding  a new undefined other value-added services 
category.  The European Communities was doubtful that  such a far-reaching re-classification at this 
stage of the negotiations would be warranted, but welcomed this paper and was ready to cooperate 
with the United States and to continue discussi ons on the basis of th e European Communities 
proposal.  Rather, the European Communities believed that the priority should  be to encourage WTO 
Members to further liberalize in this sector and to bind this liberalization in GATS commitments 
through revised offers using the classification with  which Members felt most comfortable and which 
referred to the GATS Annex definition on telecoms services. 
68. The representative of Japan
, noting that it was a co-sponsor of the room document, expressed 
its strong support for its content.  With respect to the United States proposal , Japan shared the idea 
that it was important to ensure that the classification covered telecommunications services comprehensively.  In that light, Japan appreciated the United States' efforts as well as those of the 
European Communities to improve the current classi fication of telecommunications services.  It was 
important to reach a common understanding of classification in a constructive way, by seeking to 
improve upon the European Communities' proposal.  Japan urged the United States, the European 
Communities and other Members to discuss the subj ect further with a view to finding a possible 
solution in a constructive spirit in order to reach  a broader understanding of  how to tackle this  TN/S/M/14 
 Page 21 
 
 
 classification issue.  Although Japan was still study ing the United States proposal, Japan considered 
that the United States proposal was beneficial in the sense that it had a greater degree of specificity.  
He said there were some countries at early devel opment stages in their telecommunications markets 
that wished to make some reservations, alt hough they agreed on the ultimate goal of full 
liberalization.  For those countries, as well as others, to have sub-sectors with telecommunications 
services, could be helpful in their consideration of new and broader commitments.  Japan emphasized 
that the further telecommunications liberalization was one of the most important objectives in the 
round. 
69. The representative of Australia  sought to endorse the comments made by Canada and he 
thanked the co-sponsors for their highly constructive and collaborative efforts.  With respect to the 
United States proposal, he thanked the US and said Australia hoped that the United States and 
European Communities proposals could be worked on  so that a consensus on classification could be 
reached and used as a basis for moving forward on market access. 
70. The representative of Chinese Taipei , noting her delegation was a co-sponsor of the room 
document, said it was very important to emphasize  the development of telecommunications services 
in the current round.  She expressed her appreciati on for the proposal from the United States proposal 
and said that her delegation would seek  to take up its technical issues at a later time in a bilateral or 
multilateral setting. 
71. The representative of Switzerland  thanked the co-sponsors of the room document for the 
important contribution it was to the negotiating pro cess.  He thanked the United States for its input on 
the scheduling issues.  Switzerland would continue to  work on the basis of a comprehensive approach 
to scheduling telecoms commitments. 
72. The representative of Pakistan  thanked the United States for its paper and reserved the right to 
comment on it at a later point in time.  Regarding the paper introduced by Canada, Pakistan supported 
it and endorsed its contents. 
73. The representative of Nigeria  thanked the co-sponsors of the room document on 
telecommunications services.  Nigeria saw merit in so me of the issues raised in the paper.  Regarding 
the role of telecoms services, some of the points ra ised, such as the role of economic drivers, growth, 
connectivity and innovations were a ll statements of fact.  His delegation underscored the need for a 
sound domestic regulatory framework for liberalization to succeed. 
74. The representative of New Zealand  thanked the co-sponsors of the joint statement and said 
her delegation supported its essence.  Liberalizatio n of telecommunications services had been a key 
driver in developing New Zealand's networks and its  ability to effectively compete in markets.  New 
Zealand therefore added its voice to the call for further commitments in the sector. 
75. The representative of the United States , noting that it was a co-sponsor of the joint statement, 
said that her delegation had taken note of the comments its paper and would take them into 
consideration. 
(ii) Financial Services 
76. Speaking on February 21, the Chairman  drew Members' attention to a communication from a 
group of Members on financial servi ces contained in Job(05)/17. 
77. The representative of the United States  emphasized that her delegation was introducing the 
statement because many experts of other co-sponsors had returned to capital and she reiterated her 
delegation's strong interest in it.  She noted that th e reference to a joint statement was very important, TN/S/M/14 
Page 22  
 
 that a number of Members were co-sponsors, a nd they were at different levels of economic 
development.  She said that it was her understanding th at a number of countries, in addition to the co-
sponsors, were interested in this topic, as evid enced by the discussion on the statement at the most 
recent meeting of the CFTS as well as in other in formal contacts between countries.  She said 
Members had worked to prepare this statement at this point in time because the financial services 
teams from different delegations had met to discuss important technical issues.  These Members, in 
observing the state of discussions in the Special Session on financial services, had noted that for several other sectors proposals had been submitted to indicate the importance of the sector and the pursuit of further work on it.  While many woul d assume that financial services was an important 
sector in the context of the DDA, many delegations  wanted to ensure that it received adequate 
prominence at the current stage in the negotiations  as Members were in the process of revising their 
initial offer or preparing their initial offer.  She outl ined the three parts to the paper.  The first was 
entitled "Importance of financial services liber alization for economic growth, stability and 
development" and drew upon studies and work of the World Bank, UNCTAD and the WTO Secretariat.  One could say that much of this info rmation was similar to some of the conclusions that 
the Director of the WTO Statistics Division had prov ided earlier in the meeting.  Summarising, she 
said that this first part of the paper noted that wh ile financial services was an important sector in and 
of itself, it was also very important because it he lped to develop infrastructure and helped Members 
become competitive traders in agricultural and industrial goods in addition to services.  Many 
countries had invited foreign partic ipants into their financial services market.  They had provided 
greater choice of financial services and in many case s had lowered the cost to consumers of financial 
services.  In the first two sections of the paper,  the important point was made that, as countries 
considered further liberalization of financial servi ces and worked on their offers on financial services, 
the importance for countries to have the flexibility to ensure the appropriate regulatory and prudential 
framework for this sector should be acknowledged.   She said that reference was made to the 
importance of liberalization for the stability of the fina ncial markets.  It was interesting to note that, as 
countries had invited foreign participants into thei r market and regulated or re-regulated as necessary, 
foreign participants had contributed to greater stability because they coul d provide deeper capital 
markets and help transfer risk that the original dom estic participants in the market were not able to 
supply. 
78. Referring to the second part of the paper entitled "Liberalization targets for Doha 
negotiations", the representative of the United St ates said that many countries in practice had 
liberalised their financial services regimes beyond what was included in their offers.  The co-sponsors 
hoped that in order to keep the negotiations movi ng forward at a good pace, Members could build 
upon the liberalization that had occurred in ma ny markets.  The section also contained some 
benchmarks for Members to consider when they  were scheduling meaningful GATS commitments.  
One was to use the agreed definition in the GATS An nex on Financial Services.  She recalled that for 
financial services there were agreed definitions that were part of the GATS itself.  A second 
benchmark was for countries to make the appropria te full commitments for commercial presence in 
mode 3 and, for appropriate sector s, to make mode 1 and mode 2 commitments.  She said there was a 
call for countries to remove discrimination between  domestic and foreign s uppliers, namely provide 
national treatment, and to remove non-discriminat ory limitations such as monopolies, numerical 
quotas or economic needs tests.  Also mentione d was the importance of transparency in the 
development and the application of laws and regulations in the financ ial services field, as well as 
other regulatory issues that might arise in the negotia tions.   She said that it should be emphasized that 
the inclusion of these benchmarks sought to prov ide a context for countries to consider when 
preparing their offers and that they were not mean t to substitute for bilatera l negotiations that were 
taking place and would continue to do so.  Indeed , the bilateral negotiatio ns would take up these 
issues in much greater detail and would provide th e flexibility for countries to take up particular 
issues or make particular points that were importa nt to them in their own context.  Finally, the 
conclusion in part III was straightforward.  It said that the co-sponsors of the statement were 
convinced that further liberalization of financia l services would help promote economic growth and  TN/S/M/14 
 Page 23 
 
 
 urged WTO Members to provide meaningful financ ial services offers with a view to achieving 
substantial liberalization in this key sector.  
79. The representatives of Switzerland , Singapore , Romania , Turkey , Chile , New Zealand , 
Guatemala , Hong Kong, China , China , Mexico , Dominican Republic , South Africa , Kenya , India , 
Rwanda  and Brazil  thanked the co-sponsors of Job(05)/17 for their statement. 
80. The representative of Switzerland  sought to underscore the importance of financial services 
for industry.  They needed national services provi ders, but more generally industry required an 
efficient, comprehensive and evol ving financial market on their territory.  The advantages were 
numerous, including the stability of the market.  From the view-point of the user of financial services, which were mostly private suppliers contributing to GDP, the main advantage of greater competition 
was in terms of risk.  Two aspects were important:  by having more financial actors in the market, 
there was a better opportunity to diversify risk, bo th in terms of insurance or deposits.  More 
importantly perhaps, he said there was an enhan ced chance of obtaining better risk on the market, 
which applied to modes 1, 2 and 3.  He said that one  of the merits in liberalizing the market and in 
taking the appropriate commitments was to allo w service providers and industrial companies, 
especially those that were conservative, to find the b est possible risk.  He said that financial services 
was comprised of two sub-sectors, but was a very di versified sector and required specialised persons 
to provide the corresponding services.  He did not k now of any financial ins titution that could have 
these specialised persons in all its subsidiaries and branches world-wide.  This spoke in favour of a 
comprehensive level of liberalization, and in some  cases beyond what existed.  He noted that the 
sector was very diversified.  There were relatively simple financial products sold to mass consumption 
markets and very sophisticated products to a differe nt market.  Accordingly, the policy objectives that 
were followed could vary radically from one of these niches to another.  In some niches problems of 
universal supply and accessibility were concerns, and in other niches the problem was one of 
increasing the competitiveness of the industry.  Reinsu rance was a well-known example.  He said that 
asset management for companies was also important fo r Switzerland.  On the state of the negotiations, 
he said that all sectors required progress and it was unfortunate when any sector  lagged behind.  Even 
through financial services was recognised as a key sector for the economy, compared to other sectors 
under discussion there was ample room for more progress, both in terms of sectors and the level of liberalization domestically which was often much higher than the proposed improvements in the 
offers.  Switzerland encouraged all Members in the c ontext of the revised offers to do their best to 
offer improvements in this key sector.  
81. The representative of Singapore
 recognised the benefits of well-managed financial sector 
liberalization.  Liberalization should proceed in tandem with a strengtheni ng of domestic financial 
institutions and effective pruden tial supervision.  Weak pruden tial supervision and weak banks 
presented substantial vulnerabilities that could be exacerbated by liberalization.  Greater competition 
could lead banks to take greater risks to sustain the profitability they previously enjoyed.  Bank 
failures in the face of greater competition, if not we ll-managed, could also pose risks to the financial 
system.  Singapore decided, subsequent to a major revi ew in 1997, that its policy to protect its local 
banks from competition in the domestic retail market would be untenable in light of the changing 
global banking environment.  Th e global banking sector had been increasingly dominated by mega-
banks and technology was allowing them to penetrat e markets and geographical barriers.  Singapore's 
banks had to keep pace to become competitive or  become marginalised.  Singapore's monetary 
authority had taken a phased approach to libera lize the domestic banking sector gradually.  The 
objective was to nurture stronger indigenous banks by providing them with a competitive impetus to 
raise standards and competencies at a pace which di d not destabilise them.  Singapore believed that it 
was important to have strong indige nous institutions that were prep ared to act in support of the 
stability of the domestic financial system and economy in times of cris is.  At the same time, Singapore 
had shifted its supervisory appro ach from focusing on "one-size-fits -all" prescriptive regulations to a 
risk-focused supervisory approach which gave incentiv es to financial institutions to improve their risk TN/S/M/14 
Page 24  
 
 management practices and allow th em leeway to undertake well-manage d risk.  The results had been 
positive.  Singaporean banks had maintained high prudential standards while improving efficiencies, 
service quality and product ranges.  Liberalization ha d encouraged consolida tions among local banks 
and, with a large enough size and competitiveness, th ey had expanded into overseas markets.  Foreign 
banks had continued to increase their activities in  Singapore and many had made it a regional or 
global platform for important banking services.  Singapore was encouraged by the results of 
liberalization and would continue to  strengthen its supervisory framewor k as an integral part of this 
process.  On behalf of ASEAN, he welcome the submi ssion of Indonesia's initial offer.  He said that it 
was a useful contribution to the services process.   
82. The representative of Romania
 noted the invitation to all Memb ers to ensure that meaningful 
financial services liberalization was included in the current round.  After the Uruguay Round Romania 
had taken an active part in the process of liberalizi ng trade in services and one of the sectors in which 
commitments had been taken was financial services.  Romania had ratified the Fifth Protocol and she 
was convinced that the benefits of liberalizing this market supported the process of transition in 
Romania.  As a consistent supporter of the multila teral trading system, Romania urged all Members 
which had not ratified the Fifth Protocol to do so as soon as possible.  Romania would continue to act 
positively for the entire services sect or, including for financial services, within a European spirit, 
context and approach.  
83. The representative of Chinese Taipei , noting that services were one of the three pillars of the 
round, reiterated that the services negotiations were  a critical element of the DDA.  Among all the 
services sectors, he said that finance was key to the economy, as had been mentioned by Switzerland.  
This sector provided essential tools to help economie s grow, diversify and become more competitive 
in goods and services.  Chinese Taipei was pleased to be  one of the co-sponsors of the joint statement.  
He thanked the United States delegation for its effo rts and echoed the points made by the other co-
sponsors.  Chinese Taipei had applied for accession in 1992;  however, a few years before this 
decision, Chinese Taipei had initiated the process of autonomous financial liberalization in the hope 
that, by the time Chinese Taipei had completed th e accession process, the financial industry would be 
able to withstand the impact.  Judging from the expe rience of the past 15 years, he could confidently 
say that Chinese Taipei had made the right decision to open its financial markets to greater foreign 
participation.  Chinese Taipei banking, securities and insurance sectors had emerged to be much more 
competitive than before.  Consumers of financial pr oducts had been able to enjoy greater services at 
lower costs.  It was evident that  financial liberalization had brought  tremendous benef its to the overall 
economic development of Chinese Taipei.  For this  reason, Chinese Taipei was committed to further 
liberalization of trade in financial services and had decided to endorse the joint statement.  He urged 
Members to consider the paper as they moved ahead in the request-offer proces s in financial services, 
which formed an integral part of the DDA nego tiations.  He welcomed the important announcement 
made by the representative of Indonesia on the tabling of its initial offer.  
84. The representative of Turkey  was aware of the importance of financial services liberalization 
for economic growth, stability and development.  She fully agreed with the benchmarks in paragraph 
7 of  Job(05)/17.  In this regard, Turkey supported the joint statement and welcomed the attention that 
had been drawn to this issue.   
85. The representative of Australia , referring to her delegation's st atement on this issue at the 
previous Committee on Trade on Financial Services , said that her delegation was co-sponsoring the 
paper because of the importance that financial ser vices liberalization clearly had for wider economic 
growth, stability and development of Members' ec onomies.  The statement highlighted some useful 
studies which provided evidence of these benefits and confirmed the view of the co-sponsors.  
Recalling the presentation under the previous agenda item, she said that the representative of the 
Secretariat had referred to further studies and anal ysis that pointed to the extensive benefits from 
financial services liberalization.  She noted that the GATS allowed Members, when taking financial  TN/S/M/14 
 Page 25 
 
 
 services commitments, to take into account appropr iate regulatory framework including that which 
was required for consumer protection.   
86. The representative of Japan  said that his delegation believed th at the availability of financial 
services attracted foreign investment.  Moreover, fi nancial institutions in foreign markets were well 
positioned to provide support for manufacturing firm s from their original countries in making foreign 
investment.  High-level commitments for financ ial services helped to attract financial service 
providers by making countries more attractive destin ations for investment.  There was no doubt that 
any liberalization needed to be supported by a st rong regulatory framework to safeguard prudential 
considerations.  In general terms, a balance be tween necessary regulation and liberalization was key 
to the sound and long-term development of the fina ncial services sector.  Taken together with solid 
and transparent regulatory frameworks, openness to fo reign financial instituti ons contributed to an 
increase in foreign investment, which in turn spu rred economic growth.  It was his delegation's hope 
that the statement would be instrumental in sharing such benefits.   
87. The representative of Chile  said that the document provided a good way to involve a greater 
number of Members in the negotiations on trade in  services.  The declaration contained many 
elements with which Chile agreed.  She highlighted in particular paragraphs  3 and 4.  Making a few 
brief comments about Chile's financial sector, she sa id that a well-regulated and competitive financial 
services sector supported the efficient assignment of savings towards productive transactions.  This 
was important and essential for economic growth and to increase the capacity of the economy to 
prevent or react to external shocks.  Foreign provi ders could contribute to the development of this 
sector under clear and appropriate rules incl uding prudential regulations and good corporate 
governance.  Chile had opened the financial sub- sector for the establishment of foreign services 
suppliers according to appropriate rules and dome stic regulations.  Chile had not weakened its 
capacity to regulate in opening its market to fore ign suppliers, nonetheless, the financial regulations 
had been modified and brought into line with the new circumstances.  During this time Chile had maintained restrictions such as on capital entries.  This liberalization process had allowed Chile to 
make a number of conclusions.  Liberalization,  understood as the elimination of restrictions on 
commercial presence of foreign providers, did not necessarily mean the full liberalization of capital 
accounts.  Liberalization did not entail a weakening of  the capacity to regulate the financial sector.  
She said that several elements, particularly in part II of the document, deserved greater attention at the formal and informal level.  She hoped that this  discussion would take place over the coming months 
in the process of the preparation of improved offers.  
88. The representative of Oman
, noting her delegation was a co-s ponsor, said that liberalization 
of financial services would help promote economi c growth and achieve development objectives.  
Oman recognised the importance and benefits of lib eralizing the financial services sector and had 
decided to make extensive market access commitment s in this area.  She urged all Members to make 
similar commitments with some flexibility for developing countries in the implementation of their 
commitments.   
89. The representative of New Zealand  said that her delegation thought that it was useful to have 
feedback of the kind in the joint statement on th e work being undertaken by active proponents of 
further specific commitments in financial services to  which her delegation attached importance.  She 
also said that her delegation welcomed the announ cement by Indonesia of the submission of its initial 
offer, which she was sure would make a significant contribution to the progress of the negotiations.   
90. The representative of Guatemala  said that his country was aware of the benefits of the 
liberalization process.  From his country's perspec tive, the opening of financial services, like opening 
of other important sectors, such as those related to communication and enviro nment, should have as a 
fundamental requirement the existence of a regulator y framework that was modern and adequate.  He 
said that if these requirements were not met, the resu lts might not be those expected.  He said that no TN/S/M/14 
Page 26  
 
 sector was a panacea and each had strengths and weaknesses that needed to be examined.  
Liberalization in services required a progressive pro cess and the capacities of each Member should be 
assessed regularly.  He said that the future offers of Guatemala would be subject to the degree to 
which its requests had been taken into account by other Members and the degree of progress overall in 
the negotiations in other areas of in terest to his delegation.    
91. The representative of Hong Kong, China
 said that Job(05)/17 contained a timely reminder of 
the importance of the liberalization of the financ ial services sector in the negotiations.  As an 
international financial centre, Hong Kong, China ag reed with the economic importance of financial 
services as an infrastructural service for the economy.  Hong Kong, China's own experience 
demonstrated that  liberalization and competition helped to create a healthy financial system.  
Liberalization in the financial services sector w ould bring external financial capital and, more 
importantly, the transfer of technological and ma nagement knowledge for th e continued development 
of a Member's own financial system and for its fi nancial services suppliers to mature and develop 
their own export potential.  All of these elements s hould enhance the efficiency of domestic financial 
intermediation and economic development.  The key was to manage the liberalization process rather 
than cast doubt on it.  Given the importance of fi nancial services and many Members' substantial 
interest in them, financial services provided much r oom for trade-off.  In this sense, it was a key 
sector which merited attention and efforts from all Members to translate liberalization initiatives into 
real commitments.  She noted that reciprocity MFN ex emptions in this area was also an issue.  Given 
that a Member could not afford less than favourable treatment for Members, full or nearly full market 
access and national treatment commitments would obviate the need for MFN exemptions.  Hong 
Kong, China understood that the statement sought  to stress the importance of substantial 
improvements in the context of the negotiations.  Her delegation was prepared to consider co-
sponsoring the statement if this understanding on th e intention of the statement was correct.  She 
extended a warm welcome to the offer that had been  introduced by the representative of Indonesia.  
Her delegation looked forward to studying it further and discussing it further, including a topic of 
particular interest to Hong Kong, China, na mely the removal of MFN exemptions.    
92. The representative of China  shared the view that the financial sector was an important sector 
in an economy.  Her delegation therefore attached great  importance to the liberalization of this sector.  
China recognised that sophisticated foreign financ ial institutions had strengthened capacity in many 
areas, such as risk management, internal control, pr oduct and technology innovation, etc.   Therefore, 
the opening of the domestic financial sector to th ese institutions would help the host country improve 
the efficiency of its financial sector.  This explai ned why China had embarked on the road to opening 
its financial sector in the early 1980s starting with  the banking sector.  However, in the course of 
liberalization of this sector, the government also ha d to pay attention to the concerns of its domestic 
financial institutions which were less sophisticated than foreign ones entering the country.  In China, 
domestic financial institutions were less sophisticat ed because they had limited experience in the 
commercialisation of their services.  The paper also pointed out that opening should be coupled with 
strengthened regulation and supervis ion.  The Chinese regulator had found it difficult to handle this 
issue.  China believed that it should continue to fo llow a progressive approach in the liberalization of 
financial services and Members should make their ow n decision concerning the liberalization of this 
sector in light of their development levels.  China was convinced by its own experience and that that 
had occurred elsewhere that the opening of this sector in a managed manner was more conducive to 
its development and the growth of the economy as a whole.  
93. The representative of Mexico  said Mexico recognised the importance of this sector and of the 
liberalization of trade in these services.  Since th e Uruguay Round, much work had been done in this 
sector which was reflected in the existence of the Annex and of many commitments in this sector.  
Mexico also had undertaken commitments.  In Mexi co, there was an large number of foreign suppliers 
that had made the sector highly competitive inte rnally.  He did not doubt the importance of 
liberalization of trade in services in this sector.  Mexi co agreed with the conten ts of the statement, but  TN/S/M/14 
 Page 27 
 
 
 differed on what it did not contain.  Referring to paragraph 7, he said that only three modes were 
noted.  While these were important, it did not mention mode 4, which was important to his country.  Regarding the last point in paragraph 7, he said th at transparency was something sought not only in 
the financial sector, but across many sectors in the round.  To the extent that the question would be resolved horizontally, there would al so be a result for this sector.   
94. The representative of Dominican Republic
 said that any initiative focused on the 
liberalization of financial services was important  and would be studied fully, as the Dominican 
Republic considered it a vital inst rument for the effective developm ent of the negotiations.  Referring 
to cross-border financial services and paragraph 7 specifically, he said that it established a special 
treatment for mode 1 and mode 2 and that commit ments would be made depending on the sub-sector.  
He said that he would be interested in knowing th e logic underlying this paragraph.  His delegation 
considered that cross-border transactions were im portant for all of the services under discussion.  He 
reiterated his delegation's support for the idea cont ained in the document and said it would assess the 
proposal carefully. 
95. The representative of Panama , noting that Panama was a co-s ponsor of the statement and an 
international financial centre, th anked other Members that had we lcomed its declaration.  His 
delegation believed that the documen t could be of great utility to others and that there could be a 
substantial opening up of this sector that would be of benefit to developing countries.  He said that 
any regulations would be taken into account.   
96. The representative of South Africa  wished to welcome the announcement from Indonesia on 
the submission of its initial offer and congratulat ed his delegation on its difficult work.  As her 
country was still in the process of preparing its offe r, she well understood the work that was involved.  
With respect to the joint statement on financial servi ces, she said that it was one of the most important 
sectors for South Africa as it had been one of the most dynamic and had accounted for almost one-quarter of growth.  Noting that South Africa comprised the largest financial sector in Africa, she said that it had not played its fullest possible role in terms of supporting infrastructure projects, direct 
investment and government finance.  The levels of  domestic savings and inflows to Africa fell short 
of NEPAD goals.  In this challenging developmen t context South Africa could play an important 
supporting role.  For this reason, her government had developed a st rategy aimed at augmenting South 
Africa's role as a financial services centre for Afri ca that involved a process of co-operation between 
the National Treasury, financial regulators, exchang es and industry.  This strategy aimed to make 
South Africa's financial sector competitive, effectiv e, efficient and liquid.  Elaborating on this point, 
she said that the strategy involv ed six pillars:  market opening to African and global issuers, low 
trading costs and trade risk, investor protection, developing new markets, developing world-class talent, and creating a hub for fina ncial business process outsourcing.  As  this last point referred to 
mode 1, which was an important point under discussi on in the negotiations, she wished to make a few 
additional points regarding this last point.  She sai d that South Africa had many advantages that made 
her country an attractive location for business processi ng outsourcing of financial transactions and for 
managing global call centres.  She quoted figures ab out the fast rate at which financial services BPO 
was expected to grow globally, including the ev en faster rates at which cross-border BPO was 
growing in comparison to in-country outsourcing.  She said that such activities in South Africa would 
be an employment-intensive complement to other ac tivities.  It was for this reason that her delegation 
believed that it was important to discuss this sector and the connection that it had to modes of supply 
that were important to developing countries.   
97. The representative of Kenya
 agreed with the co-sponsors that the liberalization of financial 
services could significantly contribute to economic gr owth and development.  While he agreed that 
liberalization in many cases would lead to increased e fficiency, he sought to point out that in some 
cases it had been a point of sensitivity, particularly  if change was not accompanied by the appropriate 
institutions and regulations.  Without appropriate institutions and regulations, an opening of the TN/S/M/14 
Page 28  
 
 financial services sector could lead to instability and the associated conse quences for the economy.  
Therefore, where a lack of strong institutions an d microeconomic framework was lacking, there was a 
need for liberalization of the financial sector to be  approached with caution.  Of equal importance was 
the need to develop strong domestic financial institu tions.  He said that, in the course of liberalizing 
and establishing a level playing field between domestic  and foreign financial in stitutions of an equal 
size and strength, it was important to ensure th e development of strong  indigenous financial 
institutions.  Having strong indigen ous financial institutions had demonstrated that these contributed 
significantly to the stability of the sector.  He wi shed to share the concern expressed by Mexico 
concerning paragraph 7 and the om ission of an important mode of supply.  The representative 
welcomed the announcement of the submissi on by Indonesia of its initial offer.   
98. The representative of India
 shared the belief that financial services were critical for the 
growth of the domestic economy.  He did not think that there was any disagreement among the 
Members that had intervened about the importance of the financial services sector.  The question was 
one of managing the opening.  While it was true fo r all sectors that careful planning was important, 
for financial services it was particularly true that the issue of institutional structures and regulatory 
authority and the majority of financial instrument s that each Member had developed was key.  Given 
the integrated nature of global financial market s, it was important to open in a manner that was 
consistent with these elements.  Referring to earlier comments by the delegation of the Philippines, he 
said that the issue of service in rural and remote ar eas was an important issue for India.  In many cases 
the domestic financial institutions had, for instance, priority sector lending for rural development, etc., 
which became something that foreign financial inst itutions might not be subject to.  This was an 
element of universal access and rural banking which was of particular importance and needed to be 
factored in.  He indicated that he shared the c oncerns mentioned by Mexico.  He extended a warm 
welcome to the announcement by Indonesia. 
99. The representative of Rwanda  welcomed the initial offer submitted by Indonesia.  On the 
submission on financial services, she said it was an  important contribution and agreed that further 
liberalization of financial services could help to promote economic growth and improved standards of 
living for all Members.  She stressed that the rea lisation of economic gains from further liberalization 
could only be achieved if the appropr iate institutions and regulations we re in place.  From her point of 
view, the references to appropriate  institutions and regulations did not  involve simply the adoption of 
legislation, but rather a process of learning and capacity building.  She noted that for many developing countries it had been difficult to implement different codes and standards and at times very costly.  
She said that further liberalization, especially in  financial services, required caution and capacity to 
build the necessary institutions and regulations.  She said that the preparedness for further financial 
liberalization would depend on country-specific circ umstances and the points that she had referred to. 
100. The representative of Brazil
 noted that many of the ideas in  the statement had been discussed 
with the Coalition of Services Industries.  His de legation had had the opportunity to meet with a 
number of representatives of the sector and he had sh ared with them their concerns and views about 
financial services liberalization.  Referring to paragra ph 3, he said that the first sentence contained an 
approach dealing with market access and coupled w ith strengthened regulation and supervision.  He 
said that "coupled with" could be replaced with "preced ed by".  He said that Brazil believed that in 
this sector in particular, strong supervision and re gulation and experience in handling the co-existence 
of the internal market with foreign and private s uppliers of services was important.  Referring to the 
last sentence of paragraph 3 and no ting that he sought to flag areas of sensitivity for his delegation in 
financial services, he noted a reference to a report that "countries with fully open financial services 
sectors grow on average one percentage point faster than other countries" and he doubted whether a country with a fully open financial sector existed.  He said that this had been the conclusion reached 
in discussion with industry that had indicated that th ey had not allowed fully liberal trade in all modes 
because they did not see the proper regulation in pl ace developed by the international institutions.  
Referring to paragraph 7, he said that his delega tion had had discussions with  other delegations in  TN/S/M/14 
 Page 29 
 
 
 which they had had the opportunity to address some of  the sophisticated documents prepared by other 
organisations (UNCTAD, OECD etc.) about financ ial services.  Seeking to address some of the 
concerns his delegation had regardin g paragraph 7, the second bullet, so that they could be taken into 
account in the negotiations, he noted the difference between subsidiary and branches and said that in 
Brazil the legislation required, for financial services suppliers, that they abide by certain and specific 
rules related to juridical persons.  He said that th ere was an enhanced possibility of the regulator to 
supervise the service supplier.  On paragraph 7 and its  reference to cross-border trade, he recalled his 
delegation's concern about some sub-sectors and the liberalization of mode 1 and mode 2 in 
combination with footnote 8 of the GATS and Braz il's concerns with capital account liberalization.  
His delegation looked forward to further discussion on this issue.  Referring to the fourth bullet, he 
took note of the concerns and invited the co-sponsors to pursue these negotiations in the WPDR in 
which horizontal disciplines were under discussion.  He thought that most of the concerns raised 
could be addressed in that forum and he hoped that his question would be resolved with horizontal 
disciplines on domestic resolution.  
101. The representative of the United States , noting the joint nature of the statement, said it would 
be appropriate to give the co-sponsors some time to  reflect on the various comments and come back to 
delegations either at a future mee ting or in an informal mode.   
(iii) Postal and Courier Services 
102. Turning to proposals related to postal/courier, the Chairman  drew Members' attention to two 
communications contained in TN/S/W/26 from th e European Communities and TN/S/W/30 from a 
group of Members.  
103. The representative of European Communities  said that the paper included a set of additional 
commitments that the European Communities believed should be undert aken to complement market 
access and national treatment commitments in order to operationalise these commitments in the realm 
of postal/courier services.  The paper was a complement to the sectoral proposal that his delegation had put forward in S/CSS/W/61.  He sought to emphasize that this new communication was not an 
alternative to the other communication to which th e Chairman had drawn attention.  This latter  
document was also fully supported by the Euro pean Communities.  The two documents were 
complementary because, whereas Job(05)/13 indicated the way in which commitments could be taken regardless of the classification used, TN/S/W/26 prop osed that additional commitments be undertaken 
that would operationalise market access and nationa l treatment commitments.  The paper had been 
tabled by the European Communities in the rele vant friends group in 2 003 and his delegation had 
thought that, for transparency purposes, it would be he lpful to share it with Members.  The main issue 
of the paper was to look at some of the very sp ecific characteristics of this sector, such as the 
prominence of former or actual monopolies that were  often state-owned, as well as the existence of 
areas which were partly or fully liberalised.  His delegation believed that in order to make 
commitments effective, additional commitments we re necessary and that these commitments should 
be bundled in a reference paper similar to what ha d been done for telecommunications.   He said that 
the paper was fully consistent with the concept of universal service and thought that the paper could 
consolidate this concept and was consistent w ith the area that might be reserved for a postal 
monopoly.   
104. The representative of the European Communities said that the communication proposed the 
inclusion of four parts in additional commitments .  The first part would be dedicated to anti-
competitive practices and was inspired by the reference paper on telecommunications, although one 
difference between the two was that, while the te lecommunications reference paper contained a non-
exhaustive list of such practices, the communication on  postal/courier did not include such a list as the 
two sectors where quite different.  He said that his delegation might wish at some point to revert to this point to provide some examples of anti-compet itive practices that should be prohibited.  The TN/S/M/14 
Page 30  
 
 second part dealt with universal services which was a key policy in the European Communities and a 
number of other Members.  This paragraph was very similar to the same paragraph in the 
telecommunications reference paper.  The third pa rt dealt with licensing, which he said was an 
important part of postal/cour ier services.  At the same time, in ar eas that were completely liberalized, 
such as express delivery services, it had been identifie d as a possible barrier.  This part of the paper 
sought to combine the possible need for individual licences (licences that were granted individually to 
some service operators and were needed before the service could be provided) with the need to grant 
operators the freedom to conduct their business.  It  seemed to his delegation that it was possible to 
have a system where individual licences would apply in areas only where a universal service 
obligation existed.  He emphasized that this woul d not mean that Members would not have the ability 
to apply other systems of licences, such as general authorisation systems or a class-licensing system.  
Through these systems Members would be able to re quire, in areas not covered by a universal service 
obligation, from services operators that they abide by  certain rules, such as about the confidentiality of 
the mail.  An individual licence, when there was no universal service obligation, was not necessary in 
order to ensure that these rules were respected and hence it was possible to have a lighter system.  The 
fourth part was about the independence of the regulat ory body, which was a concept similar to that in 
the telecommunications reference paper.  He sought to underline elements that were not included in 
the paper, such as rules on interconnection as were found in telecoms, however, in this case he said 
that the question was less of an issue.  Also not included were rules on the relations between the WTO 
and the Universal Postal Union.  While stressing that  this issue was important, he said it had not been 
included in the proposal because the European Co mmunities did not think th at it could be addressed 
through a reference paper, but was more of a sy stemic issue which his delegation was willing to 
discuss.  He said that the paper had been discussed  by the Members of the friends group and was a 
communication for the European Communities only.  It was his delegation's view that it was 
necessary at the current stage of the negotiation to  put forth a full-fledged text and was open to 
discuss its drafting and the issue of additional commi tments in postal/courier services in the friends 
group and other fora.   
105. The representative of the United States
, referring to document TN/S/W/30, said that his 
delegation was pleased to introduce a joint co mmunication on postal/courier including express 
delivery services.  He said that the paper had been  prepared with contributions from the European 
Communities, Hong Kong China, Japan, New Z ealand, Switzerland and Australia.  The 
communication drew upon discussions that had been  taking place among friends of postal and courier 
services over the preceding months.  He hoped that th e information would assist in the development 
of revised offers that would address these services.   The group believed that the existing classification 
guidance provided by the sectoral classification list, W/120, and the UN CPC left considerable 
uncertainty concerning the treatment of services classified under courier services.  The existing 
classification guidance did not distinguish courier services from identical services provided by postal 
authorities on a competitive basis.  Instead, it created  a situation in which a specific service could be 
classified as a postal service when supplied by a postal authority and as a courier service when 
supplied by a private operator.  The existing CPC description for courier services was also flawed 
because it did not explicitly mention express deliver y services, a sector which employed nearly one 
million people in over 200 countries.  A more precise sector description would enhance the clarity of scheduled commitments.  Although this uncerta inty could be resolved by adopting a new 
classification, he said the paper proposed a pragmatic alternative that suggested that, if Members were 
to simply adopt a common approach to schedulin g commitments that included certain additional 
clarifying statements, much of the uncertainty coul d be resolved.  He said the paper spoke for itself 
regarding the details of these clarifications.  In general, what was proposed was that each Member 
would define the activities to which they were co mmitting using terms that accurately reflected the 
commercial reality in their own market.  Member that chose to use the CPC to define the sector 
should make clear that their commit ments, subject to any scheduled limitations, applied to measures 
affecting all competitive service suppliers.  Memb ers could also clarify whether there was a 
relationship between activities scheduled under postal  and courier services and those that could be  TN/S/M/14 
 Page 31 
 
 
 listed under other categories, such as transporta tion services.  The communication concluded by 
pointing out that a number of Members had identifie d the need for additional commitments, such as to 
address practices like anti-competitive cross-subsidisation.   He said that these could be inscribed in 
the fourth column of the schedule.  Finally, the paper provided an attachment containing two options to illustrate how these guidelines could be implem ented in practice.  The first option provided a 
general postal/courier headi ng and left it to each Member to deci de how to describe the activities to 
which their commitments applied.  This struct ure could be used to present a completely new 
classification of postal and courier services or it could be used to list only selected competitive 
activities such as express delivery services.  The second option essentially reproduced the existing 
CPC structure to show that this structure could s till be used assuming that certain clarifications were 
included.  In putting forward this paper, the gro up hoped to make it easier for Members to schedule 
commitments in the areas of postal, courier a nd express delivery services.  He looked forward to 
addressing any comments or questions.   
106. The representative of Mexico
 said that his delegation had rather extensive and specific 
comments with respect to the proposal presented by th e European Communities.  He said that in the 
future he would have comments about the United St ates proposal.  He said that viewing the postal and 
courier services as a single service, as done in the European Communities proposal, was consistent 
with proposals that had been presented by many count ries.  This notwithstanding, some countries had 
sought to single out courier services from postal services.   He said that postal services were defined as 
reception, transport and physical transmission of dispatches.  Most countries classified postal dispatches by their content and not by the speed of  transmission.  Mention was made of letters, 
postcards, periodicals, advertising, packages, etc.  He said that a minority of countries had started to 
classify dispatches by speed and as priority and non- priority mailings.  In this way, a letter sent by 
express mail continued to be a postal dispatch. Th e major difference was that the rapid services had 
never been reserved for States, which was differe nt from other postal services.  This position was 
accepted by the 196 Member States of the UPU, wh ich at a September 2004 conference in Bucharest, 
had established a consultative committee in which representatives of the postal sector and private 
courier services had participated.  For this reason, Mexico agreed to consider courier and postal 
services as a single sector.  However, it also needed to be recognised that some courier services also 
provided logistics services and cargo services which were not part of the postal sector.  This was in keeping with the UPU Convention which stated that  the maximum weight of a postal package was 50 
kilograms.  In this regard, there was no proble m in establishing a specific document for the postal 
sector, so long as it was limited to additional co mmitments adopted on a voluntary basis by each 
country.   
107. The representative of Mexico said that the Eur opean Union had many advantages in the area 
of regulating the postal sector.  He said that it had established eighteen years earlier a separation between the operating and regulatory functions as well as a specific definition of universal service and 
the criteria for the granting of licences.  However, th is regulatory activity had not been followed at the 
same pace in the rest of the world.  Only 19 pe r cent of the membership of the UPU provided postal 
service through an official agency, whereas in many  cases the service suppliers kept the regulatory 
functions.  In a significant number of countries, pos tal legislation had not been updated at the same 
pace.  It was for this reason that it would be diffi cult to acquire additional commitments.  In the case 
of Mexico, by constitutional mandate, the public mail service was under the authority of the State.  It 
was the federal government that provided these servi ces through a de-centralised public body.  In 
accordance with existing legislation, the public post al service was defined as the reception, transport 
and transmission of correspondence which was conten t in a sealed envelop, and included postcards, 
which met the requirement of certain  dimensions.  A courier service, or  the mailing of a letter with the 
required dimensions, would be within the law.  At present, Mexican law did not take into account any 
exception with respect to the speed of dispatch of  mailings.  Among the reasons to create a reference 
document for postal and courier services, the proposal  referred to the trend of postal operators to 
diversify their activities into the areas of finance,  telecommunications, internet and courier services.  TN/S/M/14 
Page 32  
 
 He said that courier services should not be include d as an activity that was different from the postal 
sector, but as an additional postal service.  While financial services could appear as different from 
postal activities, it needed to be recognised that  the postal bank accounts and postal savings accounts 
and other related services had been provided in many countries by the postal service, from the 
establishment of the postal service, and hence, this should not be considered as a new trend.  With 
respect to the content of the reference document  and its scope, Mexico had no problem in including 
fully the sector, namely the postal service per se  and the courier service.   
108. With respect to the definitions, the representative of Mexico agre ed that definitions should not 
be used that were applicable to other sectors a nd that specific ones should be drawn up for the postal 
sector. With respect to the prevention of anti- competitive practices, Mexico believed that the 
provision of universal service should not been viewed as an abuse by the public operator.  He agreed 
on the importance of maintaining the criteria of transparency and non-discrimination in providing 
universal service.  Under universal service, the propo sal recognised that universal service was a basic 
component of the postal sector for most of the Me mber States.  In fact, universal service was the 
essential purpose of public operators.  It was through the public operators that Members States of the 
UPU provided universal service.  However, Mexico believed that there was some confusion at play 
because the concepts of universal service and reserve d services appeared to be meshed.  He requested 
a clarification from the delegation of the European Communities in this regard.  All of the services 
that the state reserved for the public operator to guar antee the financing of its obligations known as a 
reserved area was only a mechanism for financing univer sal services.  It should not be considered that 
the area reserved included minimum postal service that the State was obliged to guarantee.  Universal 
service was broader than the area that was reserve d for service in each and every country.  The 
proposal of the reference document did not indi cate the composition of the reserved area in each 
country when this was a means of financing universal service.  In this area, he noted that the European 
Union in its postal directive granted a reserved area that was limited to collecting, classifying, transporting and transmitting na tional correspondence and cross-border correspondence entering the 
country without stating whether this was for a matter of emergency or urgent distribution in 
accordance with the limits of weight and price.  The limits had been reduced  gradually as of 1999.  
The weight limit was, as of 1 January 2003, 1 00 grams and 50 grams as of 1 January 2006.  The 
Commission on 31 December 2006 would present a report to the European Parliament and the Council accompanied by a proposal that would confirm the date of 2009 for complete liberalization of 
the postal market.  This report was to be presente d by 31 December at the latest.  To date, all 
Members of the European Union, except for Finlan d and Sweden, had completely liberalised their 
postal market.  With respect to the criteria for granting licences, Mexico sought to learn if the 
European Union was thinking of defining the granting of licences only for services that were not reserved, that made up universal service, and the EU would establish a registry for all postal service 
providers even if they would not be part of the uni versal service, which was what the EU practice was 
currently.  With respect to independent regulators, Mexico believed that this was a fundamental aspect 
needed to guarantee sound competition in the non-reser ved services.  However, he noted that after 15 
years of the enforcement of the EU postal directive,  the independence of the regulating bodies did not 
exist in all of the Member States.  The concept that  the regulator was not directly related to any postal 
operator should be met gradually.  In many count ries, the Ministry presided over the governing body 
of the public operator maintaining simultaneously a hi erarchical relationship with the postal regulator.  
A change of this type required a change in the exis ting legislation even if some of the Member States 
stayed outside it.  Mention had also been made of the ties to the UPU, and he pointed out that the WTO participated in the discussions of the UP U whereas the UPU did not participate in WTO 
deliberations.  He asked whether this should be changed with a view to having more fluid ties 
between both institutions.   
109.  On the matter of terminal dues, which was the right of the postal administration of the 
destination and origin jurisdictions to receive  charges for the transmission of international 
correspondence, the representative of Mexico said that  this relatively new concept in the postal sector  TN/S/M/14 
 Page 33 
 
 
 had been introduced in 1971 to compensate for the co sts of the destination mail and noted that it had 
never claimed to cover all costs in its concepti on.  The 1997 European directive required of its 
Member States that they use a system connected with  the real costs of transmitting mail, since the one 
in the UPU was the one of a universal rate.  The outcome of its work was the so-called REIMS system (Remuneration for the Exchange of International Mails ), which applied to approximately 17 European 
countries, although the Netherlands had never partic ipated in it and the United Kingdom had recently 
left this system.  This system was based on a speci fic country rate that was connected with costs and 
the quality of service.  The EU logically attempted to shift the system to apply to all UPU Members 
for whom the situation was very different.  Most countries outside the European Union did not have 
the analytical accounting ability enabling them to  determine the corresponding costs.  While the 
solution in the European Union had been that of applying an internal rate which was based 
obligatorily on operating costs, this was not possible in the rest of the world.  For example, in developing countries that lacked the elements to dete rmine costs, the internal rates were lower and in 
many cases were subsidised by the State which, fo r political reasons, sought to provide an economical 
postal service.  This proposal led to considerable  discussion within the UPU, and countries alleged 
that in this way they would be subsidizing the high living standard of the industrialised countries, 
whereas the industrialised countries said they were not covering their operating costs.  Elaborating on 
this further, he said that the cost of transmissi on to one's residence of one kilogram of mail in 
Germany was $18.65 whereas in Guat emala the transmission of one kilo of mail cost $2.42.  The 
difference in costs was due to several reasons, includi ng differences in wage leve ls and salaries, use of 
advanced technologies and government policies.  Gu atemala, would it accept this system, would have 
to mail 7.7 times more mail than Germany in order to maintain the balance between these countries.  
The new system would only generate major debts th at many developing countries would not be able 
to pay, which would threaten the continuity of the un iversal service in both countries.  It was for this 
reason that the UPU Congress of 1999, after many ne gotiations, had the industrialised countries apply 
among themselves a system similar to the European one in which they would pay 65 per cent of the 
domestic rates thereby connecting the payment w ith the meeting of quality objectives.  In the 
remaining exchanges, where the developing countries  would participate, a universal rate would be 
paid.  This notwithstanding, Australia and New Ze aland, which defined themselves as industrialised 
countries with low costs, felt that they were harmed by this and threatened action at the WTO in order 
to demand MFN treatment.  This apparent incons istency with WTO rules was resolved at a UPU 
Congress in 2004 whereby, in the system to be applied as of 2006, countries were not classified as 
industrialised or developing for the purposes of the new system, called the objective system, which 
was applicable to industrialised and developing countr ies which wished to participate in the system.  
The remaining countries were part of a trans itional system until 31 December 2012 that would 
gradually disappear.  There were mechanisms to guara ntee that the universal rate would apply only to 
non-commercial correspondence.  At present, in the terminal dues action group of the UPU, of which 
Mexico was a part, there was a sub-group on relati ons with the WTO whose mandate was to watch 
over compliance with WTO rules and the decisions take n at the UPU.  He said that the UPU and the 
World Bank had initiated projects to establish analytical accounting systems in the postal administrations of the LDCs.   
110. The representative of Norway
 thanked the co-sponsors for their guidelines for scheduling 
commitments concerning postal and courier services.  Norway supported the view that the basis for 
scheduling commitments in these areas should be to accurately reflect the commercial reality for the 
respective Member.  The proponents had included an example that consisted of listing the sub-sectors 
in which commitments were undertaken.  Another manner to accomplish this would be to schedule a 
commitment for postal and courier services and indicate an exclusion that would describe the services that were reserved for a postal monopoly.  On the proposal from the European Communities (W/26) 
on a reference paper, he said that his delegation strongly supported the idea of a reference paper and 
felt Members should be inspired by the good result that had been achieved in telecommunications to 
prevent anti-competitive practices by the postal incumbent.   TN/S/M/14 
Page 34  
 
 111. The representative of New Zealand
 said that as Members might be aware, New Zealand 
attached considerable importance to further comm itments on trade in postal and courier services.  
New Zealand's views had been expressed in a negotia ting proposal contained in S/CSS/W/115.  Since 
circulation of this paper, New Zealand had worked  with other friends of postal and courier services on 
issues including classification and scheduling.  New Z ealand had found the work done in this informal 
group to be valuable and accordingly was pleas ed to co-sponsor the communication on scheduling 
guidelines.  She emphasized a key point that the gui delines put to one side the issue of different 
classification approaches while allowing a clear, c oncise and comprehensible framework within 
which meaningful commitments could be scheduled .  The inherent flexibility of the guidelines 
allowed ample scope for Members to reflect varying degrees of private sector participation present in 
their postal and courier sectors, including monopoly provision of certain services.  New Zealand 
placed great importance on a common classification and would continue to work towards this end in 
postal and courier services.  He r delegation considered that Me mbers should not be deterred from 
expanding the scope of specific commitments in th is sector by differing approaches for classification 
and urged Members to consult the scheduling guidelin es as they prepared their revised offers.  With 
respect to the paper presented by the European  Communities, as her delegation had said in the 
informal group, there had been work on classification, scheduling and regulatory principles.  Her delegation considered that the discussion of such possible regulatory disciplines for the sector was a 
useful additional element to the parallel work on co mmon approaches to classification and scheduling.  
Her delegation looked forward to continued discussi on of this paper in future Special Sessions and 
informally. 
112. The representative of Japan
, referring to TN/S/W/30, noted that his delegation was a co-
sponsor.  He said it had been a challenge for all Memb ers to classify this sector.  He explained that 
Japan had decided to co-sponsor the paper for tw o reasons.  Firstly, the scheduling guidelines were 
intended to provide a reasonable level of clarity in  the schedule and would be useful for the market 
access negotiations.  Secondly, the guidelines also  provided enough flexibility for Members when 
making commitments in the postal and courier sector .  This flexibility would be useful for many 
Members in their future work.  With respect to the paper from the European Communities, Japan was 
giving it careful consideration and was yet not in  a position to convey a position because of certain 
concerns.  One concern was that Japan was not su re what constituted anti-competitive behaviour.  A 
second was whether it was appropriate to limit the scope  of individual licensing for universal services.  
Japan was willing to participate in the discussion at the Council or other informal fora as appropriate.  
113. The representative of Chinese Taipei  said that historically postal services were organised by 
way of a form of direct or indirect permissi on under a generalised monopoly regime or a highly 
regulated framework.  To reflect the commercial reality in most markets, however, postal and courier 
services worldwide had undergone changes in r ecent years.  The current W/120 and CPC 
classification in this sector no longer provided a rele vant basis for the market  activities.  Postal and 
courier services relied more on international labour.  Chinese Taipei believed that the issue of postal 
and courier classification required further discussion.  He expressed his appreciation for the informal paper, Job(05)/13, jointly tabled by the Eur opean Communities, Hong Kong China, Japan, New 
Zealand, Switzerland and the United States.  To re flect the commercial reality in most markets, 
Chinese Taipei supported the proposal that postal a nd courier services should be based on the types of 
items of services delivered for wh ich commitments were undertaken.  The distinction between those 
activities open to competition and those retained with in a monopoly needed to be clearly delineated.  
His delegation had two questions.  Fi rstly, referring to column one of the schedule in paragraph 3(a), 
he suggested it contained a description of activities th at accurately reflected the commercial reality in 
each Members' market.  He said that the purpose of the paper was to establish a common approach, 
however if the commercial realities of each Member  were fully respected, the result could be to 
follow different approaches which might not be in li ne with this purpose.  Secondly, he said it could 
be costly and inconvenient for service suppliers in  these sectors to decipher the different types and 
nature of commitments.  His dele gation sought clarification on th ese points.  With respect to the  TN/S/M/14 
 Page 35 
 
 
 European Communities proposal for a reference pape r, TN/S/W/26, Chinese Taipei agreed with the 
view that the disciplines on the prevention of an ti-competitive practices in the reference paper on 
basic telecommunications services provided a usef ul basis for developing a set of disciplines to 
address pro-competitive principles in the postal a nd courier sector.  Chinese Taipei supported the 
European Communities' proposal that the reference paper be an important mechanism to promote a 
framework of disciplines for competition.  However, cl ose attention should be paid to the context in 
which the reference paper operated.  He said th at Members were at different stages of overall 
economic development as well as at  different stages in their postal sector reform.  Chinese Taipei 
believed that the principles contained in any refe rence paper should offer Members the flexibility to 
cater for differences in local circumstances.  Furt hermore, principles should be simple enough to be 
implemented effectively by the regulators of all Members.  His delegation looked forward to 
exchanging views on these principles with the Euro pean Communities in bilateral consultations.   
114. The representative of the Philippines  welcomed document TN/S/W/30.  The Philippines 
wished to lend its support to the proposal as a possible set of guidelines for scheduling commitments 
in postal and courier services including express de livery.  His delegation agreed that, ideally, 
uncertainty created by divergent classification appr oaches could be reduced substantially if Members 
adopted a common approach to scheduling commitm ents.  However, the proposed guidelines allowed 
for Members to choose the option for scheduling th at was most suited to their commercial reality 
without departing substantially from the existed clas sification under the W/120 list.  He agreed with 
the encouragement from the proponents to seek  a more detailed understanding on a common 
classification.  Referring to section B on additional commitments under paragraph (f), he wondered if 
the proponents could provide concrete ideas about the standard set of commitments for negotiating 
purposes following the example of the reference paper in telecoms.  He noted that some examples had 
been listed in the attached illustrative paper, but  he thought that further elaboration might be 
worthwhile.  Turning to document TN/S/W/26, that  proposed a reference pape r for postal and courier 
services, he said that his delegation had had the opport unity to raise its concern in other fora about the 
appropriateness of a proposal for a reference paper in  this sector.  Members were at liberty to submit 
proposals as they wished, but his delegation had some concerns related to the nature and the scope of 
the anti-competitive behaviour that the reference pa per seemed to seek to address.  He said that his 
capital would wish to comment on other issues at a later time.  Some of these would relate to the 
experience with regard to the reference paper on telecoms.  Some capital-based officials were 
apprehensive about the results of particular di spute settlement procedures arising from the telecom 
reference paper commitments undertaken by one Member .  He said that it was in this light that the 
proposal for the reference paper was being examined with caution.  
115. The representative of Canada  said that the issue under discussion was important for many 
partners in Canada.  He wanted to  signal to delegations that Canada had not finished its consultations 
with these partners on the subject matter of the papers .  Canada would be pleased to revert to these 
papers at a future meeting.   
116. The representative of Argentina , referring to the communication from the European 
Communities in TN/S/W/26, said that his authorities had read it with great interest.  In 1993 Argentina removed the postal monopoly and made th e market open and competitive.  Argentina had 
also done away with the monopoly of the postal ma rket and included the activities developed by the 
courier services or similar services.  Hence, the ac tivities of the postal market were defined as being 
the activities developed for the admission, classifi cation, transport, distribution and handling of 
corresponding letters, postcards and any shipments of up to 50 kilogram s in the Republic of Argentina 
or abroad.  This definition was a definition which was accepted in different relevant international 
instruments.  The main doubt that his delegati on had about the communication was the part which 
referred to individual licences.  In paragra ph 5(a) the European Communities discussed the 
importance of regulation as a characteristic of the sector of postal and courier services.  It said that 
individual licences were only required for services whic h fell within the scope of universal services.  TN/S/M/14 
Page 36  
 
 He said that to talk about the importance of regul ation and limit the possibility of requiring licences 
seemed somewhat contradictory and the explanation seemed unsatisfactory.  He said that the right to regulate could not be limited because these activities were not yet regulated.  This was not logical.  
Turning to the document introduced by the United Stat es, he had a few prelimin ary questions.  Firstly, 
noting that many postal services were rendered on a m onopolistic basis, he said that there should be 
the possibility that the services be rendered th rough private-public organisations which had 
concessions with exclusive rights.  The documen t dealt with the form of consigning these 
commitments.  If this was the case, he wondered how Members could indicate that there were contracts that granted exclusive rights while at th e same time there could be national treatment for 
foreign services suppliers regarding these same contr acts.  Referring to paragraph (e) which said that 
Members could clarify the relationships of an activ ity scheduled under this sector and those scheduled 
in other sectors such as transport services, he asked why the co-sponsors believed that it was 
necessary to include such a clarification.  He aske d why the definitions that the CPC gave were not 
included.  Referring to the definition of express delivery services by the United States that these services did not include maritime transport services and services to which the Annex on Air Transport 
Services applied, he asked what would be the case fo r other transport services, such as rail, road and 
auxiliary transport services.  Was it possible that  through the inclusion of commitments in express 
delivery services there would be services that were found under the chapter on transport?  Finally, he 
asked what would happen to current commitments and asked for the view of the co-sponsors for 
Members with existing commitments with postal and courier services should they change their classification to what was being proposed.  What woul d the effects of this change generally and to the 
CPC reference. 
117. The representative of Switzerland
 thanked the European Communities for its paper.  His 
delegation found that the idea of a reference paper was a relevant one and that a result would be a 
useful part of a package of results for the ser vices negotiations.  Referring to the communication in 
TN/S/W/30, he noted that his delegation was a co-s ponsor and believed that it would be conducive to 
more transparent commitments and to enhance th e comparability and homogeneity of the scheduling 
of commitments.  This was an important benefit.  As had been noted by the US, the proposal urged 
more commitments.  He reiterated that, in term s of classification, while Switzerland had scheduled 
according to option 1 of the paper, it was import ant to have broad acceptance of alternative 
classifications.   
118. The representative of the European Communities  said his delegation, as a co-sponsor, fully 
supported TN/S/W/30 and believed it w as very important to table the paper which demonstrated that, 
whatever the classification used, it was possible and useful to make commitments which were 
significant and allowed for a fair and competitive e nvironment and at the same time respected the 
concepts of universal service and, if necessary, the postal monopoly.  The paper was a second-best 
approach because the best approach would be a co mmon and unified classification and he said that the 
European Communities would continue to strive for this.  He said that the European Communities had 
a specific proposal on classification and it would con tinue to discuss this with other Members and he 
remarked that the different proposals on the table di d not appear to him to be highly divergent.  The 
paper provided the basis for making commitments and he urged Members to undertake commitments 
in their revised offers.  With regard to the vari ous questions asked about the proposal contained in 
TN/S/W/26, and thanking the Mexican delegation for its comments on the European system, he said 
that it was true that Europe had undertaken refo rm and that one should not confuse the area for 
universal services on the one hand and the reserved area on the other.  He said that for many Members 
these were two different concepts and usually the area for universal service was broader than the area reserved for the postal monopoly.  He sought to em phasize that the proposed reference paper would 
fully respect the difference between these two concep ts.  The reference paper would only apply to the 
sectors which were committed and, therefore, we re there a postal monopoly, the paper would not 
apply to the area under the postal monopoly since ther e would be no competition.  Since there would 
be no competition, he said there would be three areas:   (1) a reserved area, which would not be subject  TN/S/M/14 
 Page 37 
 
 
 to commitments, (2) an area without a monopoly provider but a universal service obligation, for 
which a number of commitments could be made, such as the commitment on licensing, and (3) an 
area subject neither to a reserved area nor universal service, an example of which was express services, where there would be commitments and no individual licences.  On the question about anti-competitive behaviour raised by some delegations, he said he had taken note of these concerns and 
was open to discussion, for instance on the idea of a list  of such practices.  He said he would welcome 
any points of views, and that there was a real concer n on the part of industry players that needed to be 
addressed.  On the question of licences and whether it was contradictory to claim the right to regulate 
and require individual licences only when there was a universal service obligation, he did not believe 
that it was contradictory.  Proposing that individual licences be limited to the universal services area 
did not mean that all kinds of licences and all ki nds of regulations were prohibited outside of the 
universal service area.  This was not the case, for in stance, in the European Union where even outside 
the universal service area there were some oblig ations, for example on the right to enforce the 
confidentiality of the mail, territorial planning or  the duty to respect the postal monopoly.  These 
concerns where being dealt with through a system of registration or notification and not through a 
system as burdensome as that for individual licences.   Hence, the question was not one about the right 
to regulate, but rather addressed the need for a re gulation which was proportionate with the needs of 
the economy on the one hand and the public policy obj ective on the other.  He said more information 
could be provided about how this registration sy stem, which was not an individual licence system, 
operated in the European Union and he suspected that many delegations would find this system 
similar to the one in their country.  On the questi on about the independence of regulators, he clarified 
that the independence of the regulator was a central  principle of the postal directive and was being 
implemented.  While some initial implementation pr oblems had arisen, they had been settled, thereby 
making the principle effective.  On this issue of th e terminal dues system, he said that the purpose of 
the paper's paragraph on the relationship between  the WTO and the UPU was that the European 
Communities did not wish to address this point at th is stage in the context of a reference paper, 
although this did not mean that the point should no t be addressed in some way.  He emphasized that 
the paper did not have any consequence on the system of terminal dues.   
119. The representative of the United States
, referring to the paper on th e proposal for a reference 
paper from the European Communities, said that his delegation had sympathy for many of the principles it presented.  For example, the United St ates had expressed in the past its concern over the 
possibility of anti-competitive cross-subsidisation by  postal authorities and therefore considered that 
some additional commitments in this area might be  considered.  The United States also supported the 
idea that suppliers that did not supply universal services should not be treated like suppliers of universal services which the United States belie ved was the objective behind the European 
Communities proposal regarding licensing, although  he had taken note of the concerns raised 
regarding the right to regulate.  The United Stat es supported the general concept of independent 
regulation.  While the United States supported many of  the ideas in the reference paper, it remained 
somewhat uncertain about the specific form and the specific content.  In the United States the present 
regulatory policies might not fit neatly into the contours of the proposal.  For example, the United States did not have a licensing regime for postal servi ces, either individual or general authorisation.  
Universal services were provided exclusively by a free-standing government entity.  For the moment, 
the United States believed that the best course of action was to work with colleagues to consider 
specific elements within the paper and to attempt to develop those elements more fully.  Because of 
the United States' particular concern about anti-com petitive cross-subsidisation, he thought that this 
might be the most promising starting point for such a dialogue.   
120. Turning to some of the questions in connection with the joint paper, the representative of the 
United States said that, bearing in mind that it was a joint submission, he would answer questions 
posed more directly to the United States.  With respect the comments by Chinese Taipei and 
Argentina about the possibility of complexity cr eated by scheduling guid elines that would allow 
individual Members to make commitments in are as according to their own regime and how to TN/S/M/14 
Page 38  
 
 schedule a public-private partnership arrangement, he said that this complexity had been discussed in 
the knowledge that not every Member was at the same  level of regulatory advancement in the area of 
postal services.  The United States could be viewed as lagging behind in some respects.  This reality 
had been reflected in the paper, in that determ ining a single form of a classification that would 
effectively accommodate the different regulatory st ructures, was highly complex.  He said that 
classification could take on a life of its own.  His delegation's preference was to focus on those areas 
that were simplest and open to the most competition, which explained the United States emphasis on express delivery services.  Express delivery services were not regulated in most, if not all countries, and were competitive in over 200 countries.  To his knowledge, no country considered express 
delivery services to be a universal service.  The United States sought to use heading option one by 
listing under this heading those activities that were  most readily open to competition and that were 
most commercially viable, which from the United States' perspective would be express delivery 
services.  Referring to the question about existing co mmitments in, for example, the courier category, 
he said that a Member could place courier servi ces under the heading "postal/courier services" and 
then add a clarification as to what the commitment  applied, including the postal service if it was 
engaged in a competitive activity.  In this way the va lue of existing commitments could be preserved.   
(iv) Environmental Services 
121. The Chairman
 drew Members' attention to a prop osal on environmental services from a 
number of Members contained in document TN/S/W/28. 
122. The representative of the European Communities  said that the communication contained a 
report on the discussions that had taken place in th e context of the group of friends on environment 
services.  The group felt that, at the current stage of the negotiations and given the May 2005 
benchmark for revised offers, it was important and necessary to debrief the wider membership on the 
work that the group had undertaken and how the gr oup believed commitments could be made in this 
important area which could contribute strongly to  improving the global and local environment by 
facilitating investment and transfer of technolog y and knowledge.  The discussions had centred on 
three groups of questions.  The first was a question of cross-border provision of environment services.  
Whereas in the Uruguay Round a number of Memb ers had made commitments on environment 
services, the commitments undertaken under mode 1 were  in fact relatively limited.  This was notably 
the case for environment infrastructure services,  such as waste management or waste water 
management which had been widely considered to  be technically infeasible because they required 
infrastructure and prevented the possibility of cr oss-border supply.  The gr oup of friends had found, 
for instance, that full commitments in mode 1 in  most areas would not create problems including in 
the infrastructure services area, and that it was possi ble to have commitments in order to cover the 
consultancy aspects related to those services.  Sin ce cross-border supply of these services might also 
require temporary movement of natural pers ons or suppliers, the commitments should be 
accompanied by a clear definition of consultancy services.  This led to a second point on issues 
related to classification.  The European Commun ities proposal of 2000 had served as a basis and the 
group had worked on revisions in order to improve  the clarity and consistency.  He said that the 
question of the definition of consulting services ha d led to an interesting discussion since some of 
these might be covered in other sectors such as constr uction, engineering or business services.  It had 
been considered useful to have commitments on consultancy services under environment services.  It 
was important that these commitments cover, in the other sub-sectors, the envi ronment related activity 
and that the commitment be consistent across the sectors, i.e. environmental services and the other 
relevant services.  With respect to how to sche dule commitments for environmental infrastructure 
services, he said that provision through various form s of private-public partnership was important, but 
in some instances they could be provided directly  to industrial or commercial customers.  His 
delegation fully respected that these services were  key components of economic development and, 
with these principles in mind, a number of questions had been raised in which work could be done.  
He said that work on sub-sectors which could be subj ect to commitments would be pursued.  He said  TN/S/M/14 
 Page 39 
 
 
 that on the basis of these discussions and principles,  the report could lead to a better understanding of 
the stakes involved in environmental services and be useful in bilateral and multilateral negotiations.  
123. The representative of Switzerland  thanked those who had taken part in the drafting of the 
paper.  Switzerland wished to join those who had stressed the importance of the environment sector in 
the GATS and of greater commitments.  The environm ent and keeping it clean was becoming a higher 
priority on political agendas and more measures and policies were being put in place to meet the 
challenge of a clean environment.  He believe d that easing trade in environment services and 
technologies would make it possible to fulfil these environment regulations and standards more easily and at a lower cost.  Maintaining a cleaner environmen t at a lower cost was an important aim.  He had 
read with interest the portions of the proposal that  dealt with mode 1, and he thought the analysis 
presented was useful.  Notwithstanding Switzerland's  commitments, he believed that there was scope 
for mode 1 commitments, given the existence of mo nitoring services for the environment, which were 
supplied on a cross-border basis.  However, in light  of the CPC descriptions, he was not so sure that 
consultancy services were to be f ound under this chapter of the cl assification.  Switzerland believed 
that normal environmental consu ltancy had been committed by many Members in the corresponding 
sub-sector under business services, which was a point which could be further discussed.  In terms of 
the Swiss schedule, he said that his delegation was examining its schedule to see if its commitments could be improved or made more precise in view of  the May deadline.  Referring more specifically to 
classification, he recalled Switzerland's requests that had asked addressees to take on Switzerland's 
classification proposal included in S/CSS/W/76, date d 4 May 2001.  The classification proposal under 
paragraph 6 of this document proposed to split the present sub-sectors into 6 main sub-sectors and one 
residual category instead of three categories plus the residual.  These sub-sectors were waste water 
management, waste management, protection of ambien t air and climate, remediation and clean up of 
soil and water, noise and vibration abatement, pr otection of biodiversity and landscape, and the 
residual sub-sector other.  Switzerland believed that this classification proposal was up-to-date and he 
said that his delegation would revert to these request s in bilateral meetings.  Switzerland had taken up 
these classification issues in its offer.  As was the case with all classification proposals, his delegation 
was working on the assumption of a broad acceptance by the membership and he hoped that this could be reached.   
124. The representative of Colombia
 thanked the European Communities for the submission of the 
report and said that her delegation could support it.  She said that he r delegation had taken an active 
and constructive part in this group and had benefited from the different discussions that had taken 
place.  She said that over the course of the grou p's work, Colombia had had that opportunity to 
indicate Colombia's vision or interest in commercial activities in different activities that were different 
than those in the classification list in TN/S/W/28.  She said that some of these sub-sectors had been 
included in Colombia's commitments arising from th e Uruguay Round.  Colombia considered that this 
report had benefits and the advant age of allowing the group to indicate a consensus on its different 
elements.  It invited Members to continue discussion in the three areas within the different fora of the 
negotiations.  For Colombia, special emphasis had been given to the section on cross-border provision 
of environment services because there were activities,  some of which were related to consultation 
services, in which Colombia had competitive advantag es and an interest in obtaining market access.  
It was important to highlight that this market acce ss was required in both cross-border trade as well as 
the temporary movement of natural persons.  This was complementary if one sought to achieve real 
liberalization and access.  In the light of the ques tions on classification and commitments regarding 
environment infrastructure services, her delegation had some concerns that it would continue to 
analyse.  She hoped that the consideration that other Members would bring to this discussion would 
enrich knowledge in this sector.   
125. The representative of Chile , noting that her delegation was a friend of environment services, 
had found the document interesting and an excellent  update, and she looked forward to other updates.  
She said that the section on mode 1 was of particular interest to Chile and countries that had promoted TN/S/M/14 
Page 40  
 
 liberalization in this mode.  She hoped that furthe r discussion on scheduling issues could take place as 
well as the application of these ideas to other areas  of interest, especially to developing countries.  
Chile was interested in the illustrative list referred to in point 6.  Chile believed that very focussed 
discussions in formal and informal session were needed in the coming weeks and months regarding 
this sector as well as those of interest to many Members.  
126. The representative of Hong Kong, China
 announced that Hong Kong, China was a co-sponsor 
of the report, but the name had not been included in the list of co-sponsors in time for circulation.  She 
said that the report was a good example of how to inj ect a measure of transparency into the work of 
friends groups because it would inform others about the work that was underway in such groups.  Her 
delegation looked forward to engage ment by all Members on the important issues raised in the report 
in order to make progress in the negotiations.  
127. The representative of the United States  was pleased to co-sponsor this report and thanked the 
other co-sponsors and participants in the envir onment friends group for their contributions to the 
report.  She looked forward to further work, partic ularly with respect to the scheduling of mode 1 
commitments and the further discussion of classifica tion issues.  Her delegation believed that the 
Swiss paper on classification was particularly help ful and thought it better reflected the commercial 
realities in the environment services sector.  The United States initial offer had incorporated a number of suggestions from the paper and she encour aged other Members to utilise this expanded 
classification in their revised offers.  
128. The representative of Australia
 said his delegation was pleased to co-sponsor the report as it 
believed that increased trade in environment services could support sustainable development.  
Australia urged Members to make commitments under mode 1, which had previously been listed by 
many Members as technically unfeasible.  Chang es in technology, communication and transport and 
environment strategies had made it possible for c onsultants and companies to provide services under 
mode 4 in many sub-sectors.  This was a clear area where there was scope for new commitments on cross-border trade with possible flow-on effects for commitments in mode 4.   
129. The representative of Chinese Taipei
, noting it was a co-sponsor of the report, thanked the 
European Communities for its introduction.  He sought to point out that the environmental sector had 
changed significantly since the end of the Urugua y Round.  It had undergone deregulation and 
privatisation and offered lucrativ e business opportunities for the private sector.  It was important to 
see that the effective environmental policies al ong with advanced envir onmental technology were 
both needed if Members were to improve th e global environment and successfully promote 
environment sustainability.  Liberalization of the e nvironment services sector would be of great help 
to attaining these goals and would yield consider able trade benefits to developed countries and 
developing countries.  He could not emphasize enough the need to establish a better system of classification of environment services, as it was not properly reflected in the W/120.  A classification needed to reflect the way in which businesses opera ted in reality and the shifting trend away from 
end-of-pipe pollution controls towards prevention.   His delegation sought more opportunities to 
discuss related technical issues in all possi ble groups or bilateral consultations.   
130. The representative of the Philippines
 said that his delegation was part of the discussion in the 
environment friends group.  He found that the report generally reflected the substance of debates and 
discussion in the friends group.  His delegation had participated in the discussion as part of an 
educative process and to assess the developmental aspect of environment services negotiations on a 
developing country such as his own.  He had found useful and ground for further discussion the issue 
of consultancy services as one possibility of pr oviding services cross-border and issues related to 
classification and scheduling commitments for envir onment infrastructure services.  These in-depth 
discussions should be continued in the friends group,  other groups and the Special Session as reflected 
in the conclusion of the report.  With respect  to the intervention by Switzerland on consulting  TN/S/M/14 
 Page 41 
 
 
 services, he recalled that in discussion in the frie nds group it had been pointed out that consultancy 
activities under business services referred to mana gement consulting services and not environment 
consultancy services.  Secondly, referring to paragr aph 10(c) about public-priva te partnerships which 
could be considered as government procurement, he said that, from his delegation's perspective, these 
activities, which could be considered as government  procurement as an area for possible scheduling, 
would more properly fall under the Agreement on gover nment procurement rather than Article XIII of 
the GATS, and noted his delegation's long-standi ng position on the manda te in Article XIII. 
131. The representative of Thailand  thanked the co-sponsors for the document that shared the 
current status of the discussion on environmental services in the friends group.  She noted with 
interest paragraph 5(a) which foreshadowed that  in actuality there could exist some problems in 
making commitments under mode 1.  Her delegation lo oked forward to the future illustrative list of 
services that could be provided under this mode.  She also looked at paragraph 10(b) and (c) with 
some caution and in the light of the results on the on-going discussions on Article XIII under the 
WPGR.   
132. The representative of Brazil  sought to highlight that the document contained a tone that 
should be used as an example for other contributions  in the Council.  Rather than advocacy for the 
sector, the co-sponsors rightly presented issues for whic h they did not have solutions and invited the 
membership to participate in the discussion.  He welcomed this approach.  On the issue of cross-
border supply, he requested more examples on ho w environmental services were being supplied 
cross-border and had become feasible.  Secondly, he  said that the paper's reflection on scheduling, on 
how to differentiate and capture properly public -private relationships, and on private supply to 
industrial and individual consumers was quite inte resting and would help Members prepare their 
schedules.  On item 3(c) and its reference to Ar ticle XIII, he said that Brazil, given its the 
interpretation on the issue of government procurem ent in GATS and the fact that market access on 
government procurement was outside of the GATS, unde rstood that the intention of this reference had 
been to indicate to Members not to schedule what  should not be scheduled because it was outside of 
the scope of the GATS.  Posing a question, he said that this area of environment services was 
characterised traditionally by abundant regulation ev en in countries with strong federal systems that 
had sub-federal or municipal releva nt legislation.  He wondered whether the co-sponsors had reflected 
on the right to regulate and commitments on market access and national treatment.   
133. The Chairman  underlined the point made that the report was a good example of information-
sharing with the Council. 
134. The representative of Canada  was pleased to note the joint communication which reported on 
the progress that the group had made with resp ect to environment services.  These services 
represented an important sector to Canada.  Canadi an firms had gained international recognition for 
their innovative and customised solutions in a numbe r of areas including climate change and clean air 
technologies, waste water technologies, solid an d hazardous waste management, engineering and 
environment consulting and air pollution control.  She was pleased to note the discussions that the 
group had held with respect to the cross-border pr ovision of environmental services, which Canada 
believed should be an important priority for Memb ers in the context of the on-going negotiations.  She 
noted that a number of Members had either not un dertaken mode 1 commitments for environmental 
services or had listed these commitments as unbound due to a lack of technical feasibility.  In Canada's view, mode 1 commitments for envir onmental services were technically feasible, 
particularly for services such as cleaning services of exhaust gases, noise abatement services and 
nature and landscape protection services.  Electronic monitoring services, for example, often formed a component in the delivery of such services.  Canada  was also encouraged by the discussions that the 
group had held with respect to the importance of  services such as technical testing and analysis 
services, scientific and technical consulting servi ces, and engineering and construction services which 
fell outside of the W/120 category for environmenta l services but that were nevertheless important for TN/S/M/14 
Page 42  
 
 the sector. Canada agreed that re-classification was not needed in order to include these activities, but 
that it could still be useful for Members to cons ider the linkages between these services and those 
covered under the W/120 and CPC category of e nvironmental services.  Canada was pleased to 
receive the report on the group's discussion and believe d that the short statement provided a useful 
model for future reports of the environmental services and other sectors.   
135. The representative of Mexico
 said that his delegation had partic ipated in this group, however, 
had not been not able to co-sponsor the report b ecause of a lack of a response from the relevant 
authorities.  He said that there were elements in the document which reflected the discussions that had 
taken place in the group and sought to extend this discussion to all Members with the purpose of 
having  additional inputs in order to see how the topi cs raised could be handled, particularly those in 
paragraph 10 (a), (b) and (c).  Mexico sought to have this exch ange and to see how Members could 
solve questions on cross-border trade, scheduling questions, etc.  
136. The representative of Japan , noting his delegation was a co-s ponsor, thanked delegations for 
their expressions of interest.  On the issue raised  by Switzerland and the Philippines on the supply of 
services cross-border, Japan understood that, due to technological developments, there were services 
which could be supplied that previous ly could not have been supplied.  With regard to the point raised 
by Switzerland, he thought there was a broad agreem ent that the classification that had been used was 
mutually exclusive.  The group had sought, as indicated  in paragraph 6, a list of services that could be 
provided through mode 1, in particular consulta ncy-like services, and those that had not been 
classified elsewhere.  
137. The representative of India  wished to flag his country's interest in the proposal.  In the 
interests of time, he would not repeat his country's  position on Article XIII, but simply recalled that 
this position had been made known on previous occasions. 
138. The representative of th e European Communities  thanked those that had made comments and 
the co-sponsors.  On the question of consultanc y services and the point raised by Switzerland and 
others, he said that it was true that some servi ces had already been committed under environmental 
services, but elsewhere, such as engineering services, other business services, etc.  This was an area 
where further work was required on an illustrative list.  He said that some occupations could 
correspond to some CPC categories that were outside  of environmental services, however, there were 
also some occupations which did not seem to be covered elsewhere and argua bly, could be covered 
under environmental services.  He said work woul d continue in this re gard and any additional 
information would be reported.  With regard to paragraph 10(c) and Article XIII of the GATS, he 
acknowledged that this was a complex issue, expl ained that the group had sought to take some 
examples of the very numerous forms of private- public partnerships and noted that these various 
forms needed to be looked at to see how they meshed with any relevant article of the GATS.  
Speaking solely for his delegation on a point not mentioned in the paper and referring to Brazil's 
question on the right to regulate and concerns with  various levels of government, he said that the 
European Communities sought to take these concerns into account, notably in its revised requests, and 
that it had taken an approach which was available by referring to the summary of its revised requests 
on the Commission's website.  The approach taken sought to reconcile the need for meaningful 
commitments and the necessary respect for the right to regulate.   
(v) Mode 4 
139. The Chairman  recalled that at the beginning of the meeting, he had said he would invite 
Members to focus on topics related to mode 4, namely the categories of natural persons and 
transparency issues.  He drew Members' atte ntion to two communications from two groups of 
Members contained in documents TN/S/W/31 and TN /S/W/32.  He proposed that any introductory 
statements be made before the Council turned to in formal mode, as had been requested by delegations  TN/S/M/14 
 Page 43 
 
 
 in order to facilitate the exchange of views.  He  said that after the discussion in informal mode he 
would make a summary for the reco rd under his own responsibility.  
140. The representative of India , introducing document TN/S/W/31, said that China had become a 
co-sponsor of the document.  India was thus intro ducing the communication on behalf of Argentina, 
Bolivia, Brazil, Chile, China, Colombia, India, Mexico, Pakistan, Peru, Philippines, Thailand and 
Uruguay.  Seeking to indicate the purpose of the pa per as well as to underline what it did not seek to 
do, he said that a discussion on the categories of mode 4 had occurred on a number of occasions, on 
the basis of other communications, and that there had been, by and large, keen interest on the part of 
the membership as these discussions sought practical ways of moving forward on mode 4.  He said that the paper took into account earlier work:  it drew on the Secretariat paper, on the earlier 
submission by the group, on the results of bilatera l and multilateral consultatio ns, and on some of the 
issues raised in mode 4 seminars in the WTO and outside the WTO.  The group had sought to incorporate these elements.  He said that while the paper was submitted by a group of developing 
countries, this group had sought to address the is sues and categories in which other Members had 
shown an interest.  He said that the paper had a mu ch broader scope in that the categories that had 
been indicated in requests and multilateral discussi ons as being of interest had been included.  
Referring to the paper's general premise, he said th at the paper looked at horizontal commitments in 
mode 4.  In terms of the Uruguay Round commitm ents, the initial offers, and the comments from 
many immigration experts,  he said that in most immigration regimes, a sectoral component did not 
exist.  It was easier and administratively better to  deal with these issues in horizontal commitments.  
This did not mean to suggest that one could not undertake sectoral commitments;  however, it could 
be argued that a much broader coverage of hor izontal commitments was needed and could be 
supplemented by sectoral commitments where deeper and wider commitments were sought by a particular Member in light of their interest.  This was the basic premise of the paper.   
141. The representative of India said that the paper sought to delineate possible categories of 
persons in terms of horizontal categories and that it w as divided into two parts.  The first part related 
to a description of the categories, which drew  heavily on the Secretariat note contained in 
Job(03)/195.  The paper sought to bring out some of  the common characteristics of these categories.  
The second part of the paper looked at possible market  access for each of these categories, since this 
was what many sought and was an important issue in the negotiations.  He recognised that different 
Members had different regimes and hence there was no suggestion in the paper that Members needed 
to harmonize their own domestic regimes in accordan ce with the contents of the paper.  Nonetheless, 
he thought that it was true that many of the categor ies were covered either mu ltilaterally or that people 
were familiar with them under bila teral or regional trading arrangem ents.  By and large there was a 
fair amount of common understanding in this rega rd and any divergences were not pronounced.  The 
paper sought to capture this commonality in its first part.  This would help to bring about uniformity 
and clarity in the scheduling of commitments wh ich was important and was a means to improve 
market access. 
142. Touching on some of the specific characteristics of the categories, the representative of India 
said that there were five categories, including intra-corporate transferees (ICTs), business visitors (BVs), contractual service suppliers (CSSs, whic h referred to employees of juridical persons), 
independent professionals (IPs), and a catch-all other category.  He recognised that different Members 
could have specific interests in particular categori es;  however, to delineate these interests would have 
been an impossible task.  These categories, including  the "other" category, he thought could respond 
to the many interests and needs of Members.  On ICTs and its definition, he said that Members had the same kind of definition, which was employees of some kind of juridical presence for the supply of 
a service through the commercial presence in the terr itory of another WTO Member.  He said that the 
paper indicated these categories which Members ha d used in the schedules, namely, executives, 
managers and specialists.  He noted that some Memb ers, in their requests, offers and discussions, had 
shown an interest in the fourth category he had mentioned, namely employees who were sent either TN/S/M/14 
Page 44  
 
 for training in business techniques and methods or were transferred for career development purposes 
in the context of the supply of a service.  He noted other sub-categories of interest in intra-corporate 
transferees concerning employees at certain levels who might facilitate the provision of a specific service to a specific client in the host country.  Wi th respect to BVs, he said that most Members 
considered BVs in two forms, in terms of servi ces sellers (although different  terms were used to 
describe these) and a category of persons who were responsible fo r setting up a commercial presence.  
The question of whether to maintain this sub-dis tinction or merge the two was an open one.  These 
were two categories which in many cases were linked to commercial presence and were the categories that had a much greater presence in the exis ting Uruguay Round commitments as well as the initial 
offers.  He said other categories in which the gr oup had expressed much interest were categories that 
were de-linked from a commercial presence, namely C SSs based on juridical entities and IPs.  Both of 
these were based on contracts, which was by defi nition a temporary arrangement.  In the case of 
CSSs, this could occur when a firm in a particular c ountry obtained a contract with a juridical entity or 
a natural entity in the other country and pursuant to that contract, the firm sent out its own employees 
to the other country.  In this case the remunera tion was paid by the firm in the home country.  
Independent Professionals involved a self-employe d person who, based on a particular service 
contract, moved to the territory of another WTO Member.  Finally, there was a catch-all other 
category.  
143. Turning to the core of the paper contained in Part II, the representative of India said that it 
dealt with the market access conditions that could be  attached to the categories he had outlined.  He 
recognised that in terms of market access certain major issues had been in dicated that the group 
believed were prevalent in offers or from the perspe ctive of the group would be important in terms of 
predictable market access.  Elaborating on these char acteristics he said that one of the major elements 
was including a specified duration of stay.  While the figures that had been included in the proposal 
were indicative, the group believed that these were  a minimum that all could seek to attain, for 
instance a one year initial stay and s lightly less for BVs.  He said that  predictability and certainty were 
compromised if the duration of the stay was too short.  It also did not necessarily correspond with 
business realities where the durations of the contracts could be longer.  Apart from this initial stay, the group also felt that there needed to be some opportuni ty for renewal.  The specification of the initial 
period of stay with a certain minimum and scope  for renewal was important.  A second issue he 
sought to highlight was that of economic needs tests (ENTs).  It was known that particularly in mode 4, this was a problem area that detracted from th e predictability of existi ng and future commitments, 
and needed to be tackled.  He noted that one of the major ENTs was a labour market test.  The group 
had suggested that the ENTs for these categori es, to the extent possible and unless there were 
exceptional circumstances, should no t be used.  He recognised that there could be some situations 
particular to a given sector or other areas where an ENT would be necessary.  He said that, even in this case, the ENT should indicate certain parameters, namely the sectors and occupations to which 
the ENT would be applied, the definition, the comple te list of criteria and conditions used in applying 
the ENT, and the duration of application of the EN T.  He said that market conditions could change 
and the ENT should reflect these changed conditions.  These should be common to the ICT, CSS, and 
IP categories.  He said that in the case of ICTs , he realised that there was a period of prior 
employment that almost all Member insisted upon.  While he recognised that this sought to ensure 
greater security of the person moving, at the same time this period of prior employment should be 
specified and should not exceed a certain time period. 
144. Making a few comments on the issue of  wage pa rity, the representative of India said that the 
group had noted wage parity as a condition of mark et access for CSSs and IPs.  The group understood 
the concerns that had been expressed that there was a social aspect to movement.  It was not 
suggesting that the welfare of persons that were  moving for temporary periods should not be taken 
into account.  The point he sought to make was th at at times wage parity became a pre-condition of 
entry, and while every country had the right to maintain minimum wage la ws and other conditions 
that would guarantee the welfare of temporary services suppliers, such requirements should be pre- TN/S/M/14 
 Page 45 
 
 
 conditions that took away the comparative advantage and a free play of market forces.  He recognised 
and took into account these legitimate concerns;  ho wever, wage parity should not be a pre-condition 
for entry.  He said it would be useful to list, for CSSs and IPs, sectors or occupations in which these 
categories would be provided market access.  This was a template which had been used by a number 
of Members in their schedules or offers.  This was one technique to indicate areas where one had a 
greater ability to undertake commitments on these cat egories while maintaining flexibility in areas 
where a Member was less comfortable.  For CSSs and IPs, the group had indicated that, in order to 
ensure that these persons' presence did not become permanent, their movement would only be related 
to the services activity that was the subject of the contract.  The person would only be in a position to 
carry out the service for which they had been c ontracted, which provided some comfort to the host 
country to ensure the provider did not move to other types of service supply.   
145. The representative of th e European Communities  wished to present document TN/S/W/32 on 
behalf of Bulgaria, Canada, the European Communiti es and Romania.  She said that she would not go 
into the document in great detail as it was highl y complementary to the paper presented by India, 
although the focus was somewhat different.  Th e group had also looked at categories of service 
suppliers;  however whereas TN/S/W/31 had as its main focus market access elements, TN/S/W/31 
sought to elaborate a practical tool that Me mbers could use when scheduling their mode 4 
commitments.  The reason that this approach had been taken was that, on market access, individual 
Members had different interests, whereas all had an  interest to ensure that commitments were 
mutually understood.  The co-sponsors had observed, when going through schedules, preparing requests and participating in  bila teral meetings, that at times it could be difficult to understand the 
market access commitme nts that Members had undertaken on mode 4 and there was scope for 
different interpretation.  This was particul arly the case when Members had scheduled their 
commitments by job type, for instance through a refere nce to executives, managers and specialists.  In 
this context the question could be asked whether th is applied only to ICTs or to all executives, 
managers and specialists, including when they were CSSs or BVs.  Uncertainty also could arise when 
Members referred to their domestic law.  The co-sponsors thought it could be helpful to the 
negotiations if Members were urged to follow a co mmon approach to formatting their commitments.  
This would allow negotiators to compare and co ntrast offers and more accurately assess their 
liberalization value and provide a comm on base for market access negotiations.   
146. Making some specific comments on the format that the co-sponsors were proposing, the 
representative of the European Commun ities stressed that it was intended to be a non-binding tool that 
Members would be encouraged to use as they prep ared their revised offers.  The paper sought to 
incorporate a good deal of flexibility in this format , which was set out in paragraph 4, in order to 
enable countries to adapt it to their own domestic re gimes.  She said that she would not elaborate on 
the categories outlined in the paper as they co rresponded very closely with those presented in 
TN/S/W/31.  Rather, the co-sponsors thought that it would be useful if Members scheduled their 
commitments according to these five categories as this would leave less room for ambiguity of 
interpretation than an approach based on job type .  The format proposed that, firstly, all Members 
would use the same terminology for each cate gory and sub-category of service provider.  For 
example, for CSSs, the commitment could be made  under the heading "Contractual Service Supplier" 
and in parentheses a Member could specify the name  used in its national temporary entry regime for 
comparability purposes, such as "(professionals on contract)".  This would give a common 
terminology as well as a reference to the national temporary entry regime.  A Member not wishing to 
undertake commitments on CSSs  would not indicate this category in its schedule.  For each category, the paper recommended that Members would list the de finitional elements that were relevant for each 
category and the paper included in an Annex a list of  common definitional elements that built on the 
note by the Secretariat and considered the offers th at had been presented.  The paper did not suggest 
that Members agree to common definitions.  Rather , it was suggested that Members, in setting out 
their definitions, incorporate as many elements of  that definition as possible from the list in the 
paper's annex.  This would give Members the ab ility to adapt the definitions to their national TN/S/M/14 
Page 46  
 
 temporary entry regimes.  A third element of the formatting would be, where applicable, to list the 
market access and national treatment conditions wh ich were relevant for each category or sub-
category.  She said that the issue was more appr opriately addressed through the request-offer process 
and hence was not extensively addressed in the paper.  She noted that India had referred to the type of 
market access elements that could be included in  that section.  The co-sponsors felt that it was 
important to indicate the length of temporary entr y and stay that was permitted as well as whether 
multiple entry and extensions were possible.  She sai d that these were the basic elements of the format 
and recommended it as a tool in preparing revised offers.  Finally, she underlined that it was not the intention of the proposal that any one categorisa tion be imposed on WTO Members.  The co-sponsors 
fully recognised that differences in national laws a nd practices meant that a particular category might 
be scheduled in different places according to domestic law.  She said that this could be very important 
because, from a domestic perspective, whether a person was a BV or a CSS would determine which 
migration regime applied, including any requirement for a work permit.  Members should be free to decide under which of the five categories they would schedule commitments for any one type of service provider.   
147. The representative of Colombia
, referring to document S/WPDR/W/29 on administrative 
procedures for the granting of visas or entry permits , wished to introduce this communication in the 
context of the present discussion.  She noted that Co lombia had tabled the paper in July 2004 in the 
technical discussion of the Working Party on Domestic  Regulation.  Given the debate that had taken 
place in the WPDR and her delegation's interest in this  issue, she said that some of the elements of the 
communication were directly related to the discussi on and contained subjects related to market access 
subjects.  Her delegation believed it was appropriate to introduce the document in the Council in order 
to request that the document be placed on the agenda  of the next meeting for more in-depth discussion 
should there not be time to discuss it at the present meeting.  She said that Colombia's requests on 
market access had sought the setting up of clear and transparent criteria which would guarantee the 
expeditious issuance of visas so that the differe nt categories of persons covered by mode 4 
commitments would enjoy market access.  She said that Colombian service providers had identified 
visa issuance formalities as the great est barrier to trade, whether th rough BVs, transferred personnel, 
CSSs or IPs irrespective of the service to be provi ded.  Technical discussions had demonstrated that 
certain matters related to transparency might impi nge on specific issues which Colombia had stressed 
in its paper.  These matters included the documenta tion required, the maximum duration of formalities 
and processing costs.  Her delegation sought to ta ke up matters related to good practices in the 
administrative practices governing these requirements.   The document was supplemented by a paper 
on transparency which Colombia, along with others , had presented at an earlier dedicated session.  
She said it permitted an improved u nderstanding and in-depth discussion of the matter at the Special 
Session.  For this reason, she sought to table the document and requested that it be distributed.   
148. The representative of Bolivia  announced that her delegation wished to become a co-sponsor 
of Job(04)/142 on mode 4 transparency issues.  Bo livia agreed that the lack of transparency 
represented a barrier to trade and that it was importa nt to have the required mechanisms that would 
permit for more predictable market access.  She sa id that improved information on issues such as 
categories of permits and their requirements, lengt hened validity of stay, possibilities and conditions 
for extension, relevant immigration laws, etc., w ould allow Members to achieve the desired result. 
149. The Chairman , making a few summary remarks, under hi s own responsibility, on the informal 
discussion that had taken place, said that all de legations had welcomed the two new submissions 
(TN/S/W/31 and TN/S/W/32) by groups of delegatio ns on categories of natural persons for scheduling 
specific commitments and noted that while TN /S/W/32 dealt only with common categories for 
scheduling, TN/S/W/31 also dealt with market a ccess issues.  It was noted, however, that the two 
papers used virtually the same categories and that this represented a very useful point of convergence 
in the negotiations.  Delegations remarked that bo th papers built on and went beyond the Secretariat 
paper on categories used in schedules (JOB (03)/195) .  Some delegations emphasized that, while the  TN/S/M/14 
 Page 47 
 
 
 work on categories was of paramount importance in  order to improve transp arency and comparability 
of commitments, the market access element, thus far reflected only in document TN/S/W/31, was also 
central to the negotiations on Mode 4.  One of the proponents of TN/S/W/32 responded that while 
their paper dealt only with categories, these categor ies clearly constituted a stepping stone for market 
access commitments.  Although it was the general vi ew that common categories represented a useful 
tool for the negotiations, many delegations noted th at the flexibility and non-binding nature of such 
categories were crucial to allow Members to take commitments also when th eir internal regulatory 
framework did not reflect the proposed categories.  In this respect one delegation noted that the proposed categories could improve greatly the transparency and comparability of commitments but should not result in the levelling down of Mode 4 co mmitments.  All delegations agreed that the 
proposed categories did not attempt to harmonize na tional differences on the regulations of Mode 4 
movement.  One of the proponents of TN/S/W/3 1 emphasized that while the paper suggested a 
horizontal approach to categories and market acces s issues, this was clearly without prejudice to 
individual Members using sector specific categories and making sector specific commitments on Mode 4 where appropriate.  Representatives of Le ast Developed Countries, while appreciating the 
usefulness of the two papers, emphasized the need to provide for better coverage of lower skilled 
natural persons in the current negotiations, c onsidering the comparative advantage many LDCs 
enjoyed with respect to the Mode 4 movement of  lower skilled natural persons.  LDCs called upon 
delegations and the Secretariat to include also lo wer skilled workers in future proposals and papers on 
Mode 4.  One LDC representative also referred to the significant administrative obstacles faced by LDCs' mode 4 suppliers in obtaining visas.  One of the proponents of TN/S/W/32 replied that the 
paper focused only on categories and that these we re without prejudice to the skill levels to be 
covered in a Member's specific commitments: it was a matter for the market access negotiations to decide which skill levels would be covered by Mo de 4 commitments.  This delegation also recalled 
that in addressing visa procedures, Members should always keep in mind the rules of the Annex on 
Movement of Natural Persons and that the GATS onl y covered the movement of natural persons in 
the context of the supply of a service.  Several delegations noted that the definition of common 
categories should also serve the purpose of identif ying categories of natural persons (such as CSSs 
and IPs) whose movement was not linked to a co mmercial presence, thus favouring the negotiations 
of specific commitments on categories where devel oping countries enjoyed a comparative advantage. 
150. Some delegations questioned why the categor y of Independent Pr ofessionals had been 
separated from Contractual Service Suppliers, while in  the Secretariat's paper (JOB(03)/195) IPs were 
a sub-category of CSSs, noting that under the proposed  definitions IPs were also based on contracts.  
One delegation pointed out that the category of "Independent Professionals" appeared to cover a 
broader range of natural persons than the ordinary meaning of th e word "professionals".  Some 
delegations expressed concerns about some of th e elements in the market access section of 
TN/S/W/31 and specifically the call to eliminate wage  parity requirements as a precondition to entry.  
One delegation stressed that in their country wage  parity requirements were also strongly supported 
by civil society and unions.  Another delegation noted that while they did not ask for wage parity as a precondition to entry, they wished to continue to  use minimum wage and salary thresholds (based on 
average salaries).  One of the proponents of TN/S/W /31 clarified that although their paper called for 
the elimination of wage parity requirements as a precondition to entry, it in no way suggested that 
Members should depart from other employment la ws, such as minimum wage requirements, in 
undertaking Mode 4 commitments.  Another delega tion noted that in analyzing wage parity 
requirements account should be taken of conditi ons in both the receiving and sending countries, 
especially in the case of BVs and CSSs who received their remuneration from home country 
employers.  Many delegations agreed that while economic needs tests might in some circumstances 
still be required, their application should be limited and based on clearly defined and objective 
criteria. 
151. 
Continuing his summary, the Chairman said that one delegation had requested clarification on 
the definitions of CSSs and IPs as not being "in a dependent working relationship with the client", TN/S/M/14 
Page 48  
 
 especially in the case of IPs, which by definition were self employed.  One of the proponents of 
TN/S/W/32 clarified that the requirement for CSSs and IPs was not to be in an employee-employer 
relationship in the host country, which in the case of CSSs meant to be in an employee-employer relationship in the home country while in the case of IPs to be a self employed person.  Some 
delegations expressed interest in the "other" cate gories that for example included installers, ship 
crews, athletes, etc., and suggested that more work  could be done on these definitions.  It was noted 
that while these categories could constitute useful catalysts for commitments, it was not clear whether 
some of them would deserve a separate category or would actually fit under Business Visitors (BVs), Contractual Service Suppliers (CSSs) or Independent  Professionals (IPs).  One of the proponents of 
TN/S/W/32 emphasized that the flexibility of the pro posed categories allowed each Member to decide 
whether a given natural person would fit under one category or another according to its domestic 
legislation.  It was the general view that this  round of discussions on Mode 4 had touched upon some 
very substantive issues and had been very productiv e.  It also appeared that, while delegations still 
maintained some distinctions in their views on categories and market access issues, a good degree of 
convergence on these two issues had started to emerge.  Some delegations suggested that multilateral 
work on Mode 4 continue within the Special Sessi on, while other delegations suggested that more 
work be pursued informally in dedicated meetings  that could be convened before the next services 
cluster.  Delegations indicated that they would hol d informal consultations on the specific format of 
future Mode 4 work.  At the end of the session, th e Chairman noted that the two new submissions had 
been very well received and that the discussions had been very productive.  As more work was clearly 
needed in this area, he suggested  that the item remain on the agenda of the Special Session, to be 
discussed preferably in informal mode.  He pointe d out that delegations might want to consider 
advancing informally multilatera l work on Mode 4 issues before the next service cluster. 
(vi) Logistics Services 
152. The Chairman drew Members' attention to a joint communication on the Liberalization of 
Logistics Services from a group of Members contained in document TN/S/W/34. 
153. The representative of Chile
, on behalf of the co-sponsors of document TN/S/W/34 on the 
liberalization of logistics services, said that he sought  to highlight some of the elements contained in 
the document.  He hoped that all Members would look  into these points.  Firstly, the document raised 
a point on the importance of logistics services as a cornerstone for the development of international 
trade.  The different sectors and activities covered by this sector played, in the co-sponsors' opinion, 
an important role to enhance the development of in ternational trade and to allow, for instance, that 
export products could reach markets in a smooth manner and at a lower price.  The co-sponsors 
believed that the liberalization of logistics services would enhance greater effectiveness in the running 
of the various activities and sectors covered by logist ics services.  He highlighted the broad and great 
number of sponsors of the proposal, both develope d countries and developing countries, which 
demonstrated the interest for logistics services in a cross-cutting manner.  All of the sponsors 
considered that logistics services were part of thei r policy to develop international trade.  In the case 
of Chile, which had built economic  development on international trade and the liberalization of 
logistics services, these services played an important role.  He hoped that the various elements would 
be studied by all Members and that they would, when preparing their revised offers, take broad 
commitments in the sectors concerned. 
154. The representative of Hong Kong, China  said that the logistics services statement had been 
co-sponsored by a wide range of Members, incl uding Hong Kong, China, and represented a good mix 
of the entire membership.  This refl ected the interests of both users and providers of logistics services.  
Logistics services was a strong underpin for world tr ade and every Member had a stake in it.  The 
worldwide nature of logistics services also mean t that liberalization and commitments had to be 
undertaken on a global basis in order to maximise the potential benefits.  The WTO, as a forum for 
multilateral trade negotiations, was the best place to  achieve this goal.  She called for the active  TN/S/M/14 
 Page 49 
 
 
 engagement by all Members in the negotiations on logistics services with a view to achieving 
substantial liberalization.   
155. The representative of Brazil  indicated that his delegation shared the thrust of the document 
and agreed with the importance of many of the ideas it contained, particularly in order to foster the 
supply-side capacities of developing countries in exporting services.  He understood how important it 
was to enhance the infrastructural basis.  Referri ng to paragraph 2 of the proposal on the importance 
for those receiving the services to modernise their infr astructure so that they could export, he said that 
it was also important that the co-sponsors consider opening sectors that fell under freight logistics.  
For example, in the area of distribution services, some of the co-sponsors restricted some important 
areas, such as wholesale distribution of agricultural products.  He said that if both sides of the 
equation were not subject to commitments, he di d not see how enhancement of the ability to export 
could occur if competition did not exist on the importing side to increase demand.  He said that it was not clear to him what sectors were encompassed under fre ight logistics.  In this regard, he noted that 
an earlier paper contained an illustrative list that included air transport services, although the paper 
noted a carve-out that these were outside the scope  of the GATS.  He asked whether distribution 
services, maritime transport services  or other transport were under the umbrella of logistics services.   
156. The representative of New Zealand
 wanted to add its support to the statement.  New Zealand 
was a major user of logistics services and reco gnised the importance, particularly for smaller 
economies that were far from their major markets, and the benefits that improved logistics services 
could bring in terms of other modes of export.  To this end, New Zealand encouraged developed 
country and developing country economies to recogni se the benefits of liberalization in the logistics 
areas and encouraged Members to consider making commitments in this important and developing 
area.  
157. The representative of Argentina  sought a better indication as to what services were included 
in logistics services and asked whether a list of ser vices that would fall under these services could be 
provided.  He also sought to know the relationshi p between logistics services and transport services 
bearing in mind that among the co-sponsors of  the proposal was a group that would present a 
document on air transport that was contradictory to a document presented.  He inquired about the link  
between logistics services, air transport services, mar itime services and services auxiliary to transport.  
He further inquired into any relationship between the logistics services and express delivery services.  
He asked if there was a minimum list of the logistics services covered which should be included in commitments so as to ensure the full supply of the logistics services.  
158. The representative of China
 said her delegation had followed the discussion on logistics with 
great interest.  China believed that logistics wa s an area that was experiencing rapid growth and 
unprecedented change.  Many innovatio ns in this area had integrated traditionally segmented services 
and logistics services had become a strong driv ing force for economic development in many 
Members.  Logistics played an important role in international trade.  China welcomed the 
communication on logistics services from a group of  Members.  She said that the connotation and 
scope of logistics services remained unclear and she hoped the discussion in the Special Session would lead to a clearer understanding on this point.  Referring to the comments by Brazil and Argentina and discussions in the logistics services group, she said that it appeared that maritime 
transport services was a core component of logistics services;  however, she also noted that this sector 
had been a sensitive sector for which some co-spons ors had expressed some reluctance.  She also 
sought clarification in this regard.  
159. The representative of Switzerland
 said that trade was global and logistics needed to be global 
as well.  Logistics costs were not a negligible part of overall costs and therefore were part of countries' competitive advantage.  She wanted to str ess the rarely mentioned fact that liberalization in 
logistics services, as a highly complex sector i nvolving elaborate processes, was a means of TN/S/M/14 
Page 50  
 
 transferring technology to developing countries.  She recalled to those Members that had inquired 
about the scope of logistics services that a check list was included in a pr evious document and her 
delegation would be pleased to discuss the issue further on this basis.   
160. The representative of Mexico
 thanked the co-sponsors of the document and said that an 
important effort had been made by them.  He said that his delegation had not been able yet to co-
sponsor it owing to some of the restrictions that Mexico believed were included in logistics services.  
In the case of transport for instance, and speci fically coastline transport services, some aspects 
remained allotted to national supplie rs.  His delegation was interested in the answers to the questions 
that had been posed by Brazil and Argentina.  He said that the joint effort was very important.   
161. The representative of Thailand  welcomed the statement by a group of Members on freight 
logistics services and believed that it was an area of  growth in terms of value-added jobs.  The 
development of logistics services was an impor tant part of productivity and competitiveness 
improvement policy, especially for small open eco nomies that were dependent on trade, such as 
Thailand's.  The speed of delivery and the dist ribution system had become a main feature of 
competition.  Supply chain management introduced th e concept of a single integrated plan in which 
all participants in the supply chain process worked together to reduce costs and increase efficiency.  
This integration was made possible by significant advances in information technology.  In Thailand 
geographic information and spa tial referencing with geographi c information systems (GIS) 
technologies was fast becoming a means to modernise a country's logistics and supply chain management operations and helpi ng to reduce time and transportation costs.  Thailand's national 
economic and social development board, in coop eration with the national economic and social 
advisory council were formulating a national pl an on logistics which focused on transport and 
inventory management.  These bodies were closely monitoring the development of the sector.  Thailand was also upgrading its legal and physical  infrastructure and the development of human 
resources in this area.  
162. The representative of South Africa
, thanking the co-sponsors, sought to highlight that her 
delegation shared many of the concerns raised by Brazil, China and Mexico with regard to the scope 
of the sector of logistics.  She said there had b een discussions on the aspects of logistics services with 
regard to express delivery at a meeting in Decemb er 2004, and her delegation had not been clear at 
that time as to what would be included under the um brella of logistics.  She emphasized that South 
Africa would look forward to discuss further the illust rative list to which Switz erland had referred.   
163. The representative of Chinese Taipei  said that his delegation was a proponent of re-
introducing logistics services into the current round of services negotiations.  He reiterated Chinese 
Taipei's view that, with logistics services play ing an increasingly key role in the commercial 
operations of the private sector, the strengthening of  logistics services could only help enterprises, 
especially SMEs. This would shorten their supp ly chain processes and reduce their costs of 
production.  Regarding the checklist contained in the earlier version of the paper, he emphasized that 
this checklist should be seen as a framework w ithin which Members could choose the commitments 
they wished to make depending on their respective stage of development.  The checklist demonstrated 
clearly that a whole-of-chain approach was highly important to establish the seamless movement of 
freight.   
164. The representative of Japan  agreed with others on the importance of logistics services.  It was 
a chain of services that allowed for the distribu tion and the supply of goods  and was an important 
element for economic activities.  Japan attached im portance to trade in these services, not only from 
the view-point of exporting services in a particular sector or sub-sector, but also from the view-point 
of industry seeking places for investment and in particular manufacturers.  Logistics services were very important for manufacturers that sought efficien t distribution and supply of goods.  In this light, 
Japan attached importance to the maritime services.  He said that the friends of maritime transport  TN/S/M/14 
 Page 51 
 
 
 might intervene at a later point in time.  Japan al so attached importance to the distribution services, 
and said that his delegation was interested in broa dening commitments on these and logistics services.   
165. The representative of India  thanked the co-sponsors for this paper and recognised that this 
was an area in which benefits could be obtained.  Like others, he had questions about the scope of 
logistics services.  He was aware of the checklist th at had been mentioned.  Taking an example, he 
said that in the area of transport there were diffe rent components which could have vastly different 
structures ranging from a public monopoly to a comple tely open market.  While at a theoretical level 
integration throughout the supply chain was an impor tant goal, he sought clarification about the 
different views about elements that Members could have.  
166. The representative of Australia  said that his delegation was a core Member of the group.  He 
did not think that anyone would question that intern ational trade could be facilitated by efficient and 
competitive transport and distribution services.  It was important for governments to encourage 
competitive supply in all transport services and sa id that there was wide  scope for increased 
liberalization and induced gains and efficiency in  many of the auxiliary services across the whole 
supply chain, including in port services, cargo handling, warehousing, freight forwarding, etc.  
Australia believed that a number of seminars at  the WTO had helped Members to recognise the 
benefits of liberalization in these sectors and the im portance of developing efficient and integrated 
point-to-point supply and distribution chains.  Australia  believed that an efficient and effective freight 
logistics industry would assist Members in achieving greater market reach for intermediate and consumer products.  Such an industry would lead to wider choice of inputs and end-products and to 
greater efficiency and less waste in the economy.  The rationale for making commitments in this 
sector was very clear.  Referring to questions about wh at freight logistics covered, he said that a key 
related question was how Members could make specific commitments in freight logistics services in the GATS.  He observed that the GATS did cover components of freight logistics services, but not in the aggregate.  The W/120 list did not have a category called freight logistics or logistics services.  He 
drew Members' attention to a proposal by a group of Members in 2004, contained in TN/S/W/20, that 
had put forth the idea of a checklist of propo sed commitments based on the existing services 
categories.  He drew Members' attention to that  document on how to make commitments in this 
sector.   
167. The representative of Panama
 echoed the comments by Australia and said Panama considered 
itself to be one of the proponents because logis tics services favoured greater access to markets and 
permitted more effectiveness and efficiency in the distribution of goods and services to the benefit of 
consumers.  More competitive access in this sector would improve the benefits derived from different 
transport services.  He said Panama would welcom e any country wishing to advance proposals in 
relation to logistics services.  
168. The representative of Korea  wanted to support the proposal by the logistics friends as a co-
sponsor.  Korea believed logistics services included im portant core infrastructural services, such as 
maritime and distribution.  Her delegation echoe d the comments by Japan on the importance of 
liberalization of construction services.  She reca lled that Korea had submitted proposals in 2001 in 
five infrastructural services sectors:  telecommunications, construction, distribution, financial and maritime transport services.  Korea believed that liberalization of infrastructural services would improve productivity in other sectors, such as ma nufacturing and agriculture due to the resulting 
access to a broader variety, better quality and less co stly inputs.  Korea had improved its offers in 
these sectors and had added new ones that were regard ed as logistics services, namely air transport 
services and international courier services.  He r delegation expected others to do so.   
169. Turning to her comments on other proposals, th e representative of Korea said that, although 
her delegation had not co-sponsored many of the reports of the other friends groups, this fact should 
not be interpreted to mean that friends groups activit ies were not important to Korea.  In fact, these TN/S/M/14 
Page 52  
 
 groups had been most helpful as informal fora to exchange views on scheduling and classification 
issues and other technical issues that helped to deepen Members' understandings of each sector.  It 
was critical that friends groups open their activitie s to a wider audience for further comments and 
inputs with an aim to make progress in the market ac cess negotiations.  In this sense, the papers that 
had been presented were timely.  With respect to postal courier services, the guidelines proposed and 
co-sponsored by a group of Members was a propo sal that suggested various ways to make 
commitments flexible enough to be tailored to individu al situations, given that the development of this 
sector differed among Members.  At the same time Korea supported the idea that schedules should be 
clear and transparent with respect to the scope of  the commitments.  With regard to the reference 
paper suggested by the European Communities, Kor ea did not see the need to develop a reference 
paper for this sector at the current juncture, given that these services often remained under 
government monopoly.  With regard to the proposal on environmental services, while many technical 
issues needed to be resolved, her delegation felt that  the questions posed in the paper could be shared 
with Members to obtain further insights.  Her de legation could not co-sponsor this paper because it 
had concerns that one element might be used by NGOs to raise their negotiating power in the 
domestic process.  Her delegation required more  time to prevent any misunderstandings.  
170. The representative of the United States
 said his delegation was pleased to co-sponsor the 
communication on logistics services, because his delegation shared the view that the liberalization of logistics and related services would support trade in  both goods and services, foster local employment 
and economic development and enhan ce consumer welfare.  He said that logistics was the business of 
controlling the flow and storage of goods, services and related information to achieve efficiency 
gains.  The essential skill of logistics suppliers was working within a set of constraints to attain an 
optimal result.  These constraints could in clude geographical limita tions, underdeveloped 
transportation infrastructure and policies that im peded the movement of goods, such as customs 
procedures.  Logistics suppliers provided a variety of services.  From the United States' perspective, 
the core services were management services, such as supply chain and inventory management 
services.  Computer and related services were also important to managing the flow of goods, such as 
to develop information systems that transmitted inve ntory levels in real time to producers around the 
world or to apply analytical modelling techniqu es to optimise global sourcing and distribution.  
Although logistics suppliers earned their money from working within constraints, reducing or 
eliminating these constraints could enable logistics networks to achieve greater efficiency gains.  
Consequently, in addition to liberalization of the ma rket for logistics suppliers, another goal should be 
to remove impediments to many services used thr oughout the supply and distribution chain, including 
storage and warehousing, express delivery, wholesale and retail distribution, etc.  As Members 
considered revised offers, the United States encour aged Members to examine their markets with an 
eye to identifying where the constraints lay on the fl ow of goods into, within and out of their markets, 
and to adopt appropriate policies to reduce such impediments and undertake meaningful commitments 
under the GATS.  He encouraged Members to consider how work outside the GATS on trade 
facilitation could play an important role in reducing impediments to the flow of goods.  He said that 
the United States had recently requested a study through its international trade commission of 
logistics services suppliers, and that the most important impediments that had been reported were problems with customs procedures and ports.  In this  respect, attention to the negotiations on trade 
facilitation could be particularly interesting.    
171. The representative of Chile
, addressing some of the questions raised by some Members 
regarding the presentation and recalling the comments in this regard by Australia and the United 
States, recalled that TN/S/W/20 contained an annex which included an illustrative list of sectors that 
fell within the category of logistics services.  This document referred to the purely illustrative nature 
of the list and sought to open a discussion among Me mbers about the different sectors that might fall 
within its ambit.  He said that the annex to this paper drew a distinction between a first category of 
sectors that were directly related to logistics se rvices, such as auxiliary  services for all modes of 
transport, and a second category of related services that referred to the different modes of transport.  A  TN/S/M/14 
 Page 53 
 
 
 sub-category within the latter category of other services related to logistics services concerned certain 
types of distribution.  He hoped that the discussion would allow Members to review the lists in the 
annex and to consider their use and relevance in undertaking of commitments in any sectors which it 
included.   
 
(vii) Air Transport 
172. The Chairman  drew Members' attention to two documents related to air transport services 
contained in TN/S/W/29 and TN/S/W/33.   
173. The representative of New Zealand  said that the paper had been circulated previously as an 
informal document and had been submitted as a formal document TN/S/W/29 co-sponsored by 
Australia, Chile, European Communities, Norway a nd Switzerland.  He recalled that the informal 
version of the paper had been presented at the last meeting in order to inform the Council of the work 
of air transport friends and to provoke more de tailed discussion at the present meeting.  The purpose 
of the paper was to demonstrate that meani ngful commitments could be undertaken on ground-
handling services and other services that supported air tr ansport without infringing on air traffic rights 
that were excluded from GATS.  The paper used a question and answer format to address possible 
concerns about making commitments on aviation su pport services, which were sometimes referred to 
as "soft rights".  It also attached examples of gr ound-handling commitments included in the offers of 
the co-sponsors.  There was a mistaken view that  these support services were outside the scope of the 
GATS.  The Annex on Air Transport Services carved out measures affecting air traffic rights and measures affecting services directly related to the exer cise of those air traffic rights.  It did not provide 
a positive list of the only aspects of aviation servi ces that were included within the GATS.  It 
therefore did not exclude services that merely supported air transport.  These support services included inter alia  catering, cleaning and ramp handling.  The need for commitments in this area was 
stronger than ever.  Much had changed since the orig inal air service agreements had been negotiated.  
Air transport services had become a $27 billion industry per annum and an industry providing services 
entirely independent of airlines.  Yet these services providers could not enjoy any of the advantages of 
GATS trade liberalization enjoyed by the providers of similar support services to other modes of transport.  This differential treatment was manif estly unjustifiable.  The sponsors recognised some 
Members' concerns about hard rights;  however, th ey hoped that the paper would demonstrate that 
these concerns were unfounded.  Commitments on support services would not prejudice the positions 
Members might wish to take with respect to hard tr affic rights at the next review of the Annex on Air 
Transport.  Furthermore, the exclusion of measures affecting traffic rights and services directly related 
to those rights made it safer to undertake commitments on ground-handling in the knowledge that the exclusion guaranteed that any commitments made we re only made to measures that would not affect 
those hard traffic rights.  His delegation underst ood that Canada, the United States and Japan had 
circulated a paper suggesting that it was not possi ble to undertake commitments in ground-handling 
and he said that it would provide further comment on ce it had been presented.  He reiterated that the 
paper he was presenting was not a back door to hard rights, but rather was a response to unjustifiable 
differential treatment towards an independent industr y that Members could no longer afford to ignore.  
The European Communities, New Zealand, Switzerla nd and Australia had already included offers on 
soft rights and other Members had agreed in princi ple.  The co-sponsors strongly urged Members to 
consider commitments in this important sect or in formulating their revised offers.  
174. The representative of Canada
, referring to document TN/S/W/33, said that Canada, Japan and 
the US felt compelled to respond to the communication in the document presented in TN/S/W/29 and believed that other Members might share the views e xpressed in the paper he was presenting.  In the 
co-sponsors' view, communication TN/S/W/29 from Australia, Chile, the European Communities, 
New Zealand, Norway and Switzerland presented a questionable interpretation of the Annex on Air 
Transport services and contained an overly ambiti ous definition of the scope of ground-handling TN/S/M/14 
Page 54  
 
 services.  Moreover, the co-sponsors were concerned that the issue had been raised at the present 
juncture when it more appropriately fell within the purview of the review of the Air Transport Annex.  
He wanted to ensure that the Council was aware th at not all Members shared the views expressed in 
the joint communication W/29 and, as such, Canada, Japan and the United States had produced W/33 to address some of the points put forward.   
175. Summarising the views of the co-sponsors of W/33,  the representative of Canada said that the 
co-sponsors of W/29 argued that soft rights services, including ground-handling services, were covered by the GATS since these were not directly re lated to the exercise of traffic rights.  The co-
sponsors of W/33 did not share this interpretation, bu t rather believed services directly related to the 
exercise of traffic rights did indeed include what the co-sponsors of W/29 referred to as soft rights.  
On one hand, paragraph 2 of the air annex excluded from the scope of the GATS coverage all services 
directly related to the exercise of traffic rights.  On the other hand, paragraph 3 of the Annex carved 
back into the scope of coverage three services, two of which corresponded to the concept of soft rights 
of the co-sponsors of W/29.  The co-sponsors of W/33 concluded that the scope of exclusion in 
paragraph 2 included both hard and soft ri ght services.  Ground-handing services had been 
characterised by the W/29 co-sponsors as a soft  rights service.  Yet these services had not been 
included in the exhaustive list in paragraph 3 of th e Annex.  It followed that they were currently 
excluded from the scope of GATS coverage.  This was confirmed by the understanding by the co-
sponsors of W/33 of the negotiating history of the Ai r Transport Annex which indicated that there had 
been a conscious and collective decision by Memb ers not to include ground-handling services in the 
exhaustive list in large part because many prefe rred to handle these services under bilateral Air 
Service Agreements (ASAs).  ASAs treated gr ound-handling services as a requisite extension of 
traffic rights exercised by designated carriers.  The co-sponsors of W/33 believed that the provisions of ground-handling services were included in some of the ASAs of some of the proponents of W/29.  Secondly, on the definition of ground-handling ser vices described in the various offers appended to 
joint communication, he said that these offers  included services such as airport operations, ground 
administration, flight operations and crew administrati on.  In this respect, he recalled that there had 
been no consensus among Members on a single defin ition of ground-handling services.  In summary, 
Canada, Japan and the United States were of th e firm belief that ground-handing services fell outside 
the scope of GATS coverage, and c onsequently, it was not possible for Members to take commitments 
in this sector.  He noted that during the next revi ew of the Air Transport Annex in 2005, there would 
be an opportunity for Members to further consider this issue.  The Review was the proper forum in 
which to examine the issues raised in TN/S/W/29.  
176. The representative of Brazil
 thanked the co-sponsors of TN/S/W/29 for their thought-
provoking document and said that his delegation entirely supported the message conveyed to the membership by Canada.  Brazil did not believe that  many of the issues contained in W/29 related to 
the discussion of the Special Session and said that discussion could occur at the appropriate time 
which, in Brazil's view, was the Review of the Annex on Air Transport.  
177. The representative of South Africa
 thanked the delegation of Canada, Japan and the United 
States for their views and highlighted that South Afri ca shared many of the points that they had raised.  
She said that other discussions on these matters were taking place at ICAO and that there was no common definition.  Those discussions needed to  take place to arrive at a common understanding 
before Members could enter into an exercise of making commitments in some of these sectors.  She 
sought to emphasize for the record that her dele gation did not agree with the co-sponsors of 
Job(04)/185 on trade and services to the aviation i ndustry.  South Africa did not agree with their 
interpretation of paragraph 2 of the Annex on Air Transport.  Specifically, her delegation did not 
share their understanding of the measures affecting services directly related to the exercise of traffic 
rights;  however, it looked forward to more in-depth discussions on this issue at the next review of the 
Annex.  More generally, the liberalization of  air transport services for South Africa and the 
concomitant regulatory framework would be guided by the principl es embedded in the Yamoussoukro  TN/S/M/14 
 Page 55 
 
 
 Declaration of 1999 which aimed to  gradually liberalize intra-African air transport services.  The 
Yamoussoukro Declaration, which had been endorsed  by the heads of state of the OAU Summit in 
2000, took precedence over all multilateral and bilatera l agreements affecting air transport services 
between and within the signatory States. 
178. The representative of Chinese Taipei  thanked the co-sponsors of the papers on the subject of 
trade in services in the aviation industry.  Chinese Taipei saw much value in the ideas in TN/S/W/29 
in terms of generating discussion and moving the negotiations forward on aviation services.  Having 
reviewed the paper and having liste ned to the preliminary remarks by Members at the last meeting, 
she said that Chinese Taipei was unconvinced by the argument of the co-sponsors of W/29 on the 
interpretation of the scope of the exemption in  the Annex on Air Transportation Services.  An 
acceptable interpretation of the relationship between paragraph 2 and paragraph 3 would be met if the 
types of measures in paragraph 3 needed to be e xplicitly exempted from paragraph 2.  As the Annex 
did not contain a definition of services that were di rectly related to the exercise of traffic rights, 
Members should not rush to the conclusion that th e services listed by the co-sponsors in paragraph 9 
of W/29 were not related to the exercise of tra ffic rights.  In Chinese Taipei's view, these services 
were subject to the periodic review envisaged in pa ragraph 5 of the Annex.  Chinese Taipei associated 
itself with the communication contained in W/33.  Chinese Taipei agreed with the contents of 
paragraph 2, as the Annex applied to measures and not sectors or sub-sectors as such, which made it 
possible to voluntarily make a commitment in air transport services, including those services directly 
related to the exercise of traffic rights.  Member s were free to schedule commitments in the areas 
identified by the co-sponsors.  She pointed out that  Chinese Taipei had voluntarily undertaken certain 
commitments related to ground-handling services wh ich in some cases were scheduled with MFN 
exemptions subject to bilateral ASAs.  She said that it was important to note that GATS allowed 
sufficient flexibility for Members to make comm itments in line with policy objectives.   
179. The representative of Peru , thanking the co-sponsors of W/29, shared the idea that it was 
possible and wise to enter into significant commit ments as laid down in the air transport agreement 
since these would fall within measures not affecting tra ffic rights.  Peru concurred that catering, ware-
housing and cleaning could be provided by specialised providers without the exercise of air rights.  Although Peru was not a co-sponsor, his delegation we lcomed the ideas it contained.  He said that it 
would be of interest to continue to examine the Air Transport Annex as well as the bilateral 
agreements entered into under ICAO in order to de termine whether bilateral ASA covered disciplines 
such as market access and national treatment.   
180. The representative of New Zealand
 said that others co-sponsors would address policy issues 
and his intervention sought to indicate that the co -sponsors were working on a comprehensive written 
response to the interpretive communi cation in W/33.  He said that the Annex carved out some sectors 
from aviation services in GATS.  The Annex did not  provide an exhaustive list of the aviation 
services that could be negotiated within GATS.  He said that paragraph 3 of the Annex that the co-
sponsors referred to as an exhaustive list in point  7 of W/33 was simply a list of services which 
directly affected air traffic rights and, therefore, would be excluded by paragraph 2(b) of the Annex 
but for the exception in that paragraph.  Thus, only  air traffic rights and measures directly affecting 
the exercise of air traffic rights were excluded.  Ground-handling could not be a measure directly 
affecting the exercise of air traffic rights under 2(b) .  To come within paragraph 2(b) it was not 
enough for a service to be associated or closely associat ed with air traffic services; the service needed 
to be directly related to the actual exercise of lega l air traffic rights.  It was unlikely, in the co-
sponsors' view, that ground-handling services could do th is in many cases.  Furthermore, contrary to 
the co-sponsors' point in paragraph 5, the mere f act that something was in  a bilateral ASA did not 
make it a service directly affecting the exercise of air traffic rights.  The inclusion of multimodal transport services in some of the bilateral agreemen ts demonstrated this, and he asked whether these 
were to be excluded by the Annex simply by their in clusion in a bilateral ASA.  In conclusion, in the 
view of the co-sponsors of W/29, as there were no ba rriers to making commitments in this area, there TN/S/M/14 
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 was no need to wait for the review to do so.  The review would decide whether additional rights, 
including hard rights, could be accommodated within the GATS.  Howe ver, this question did need not 
be considered at the present juncture and thus commi tments could be made within the support services 
discussed in W/29. 
181. The representative of Korea
, referring to the question of ground-handling services, agreed 
with Canada, Japan and the United States that the A nnex did not specifically include them.  She also 
wondered whether the market development was suffi cient across Members to agree on a multilaterally 
agreed rule even if it was true that some commerc ial companies had grown in some regions in recent 
years.  She asked whether the MFN principle applied to these new services according to the 
interpretation of New Zealand and the friends.  She said that, before discussing the issue of enlarging 
the scope of the Annex on Air Transport Services, Korea would find it meaningful if Members could 
first make commitments in the three areas referred to  in the Annex.  Further, Korea believed that 
implementing the existing GATS provisions on CRS was important.   
182. The representative of Australia  said that the paper was prepared to stimulate discussion on 
ground-handling services and how they were considered  in the GATS, which he thought it had done.  
His delegation could associate itself with many of  the comments made by New Zealand.  Australia 
recognised that, generically, ground-handling was d ealt with in the bilateral system, although it was 
interesting that 90 per cent of agreements register ed with ICAO did not cover ground-handling.  From 
Australia's perspective, ASAs did not regulate ground-handling per se  and GATS commitments in 
ground-handling would no t affect services directly related to the exercise of air traffic rights, other 
than to increase opportunities for raising efficien cies and reducing costs where commitments were 
undertaken.  He emphasized that the supply of suppor t to the international air transport industry was a 
recognisably separate sector from the provision of p assenger and freight air services and that globally 
many airlines were using other service providers  for ground-handling services.  Given the size and 
importance of this independent services industry, Australia did not believe that there was any 
justification for excluding it from the GATS.   
183. The representative of Japan  said that his delegation fully supported the argument put forward 
by Canada on this issue.  He sought to emphasize  that Members had not r eached a consensus on these 
issues and that not all Members shared the vi ews expressed in the joint communication in W/29 
despite the fact that a discussion on these issues had b een held during the first review of the Annex on 
Air Transport on the coverage of the GATS and the Annex, including the treatment of ground-
handling services.  Based on the Annex, air trans port services, which included air freight services and 
services directly related to the exercise of air tra ffic rights, which included ground-handling services, 
were excluded from the GATS.  In Japan's view, ground-handling had a direct  relationship with air 
traffic rights and, hence, was outside the scope of  the GATS.  Referring to paragraph 7 of W/33, if 
Members were to extend the coverage of the GATS, they would need to make a formal amendment of 
the Air Transport Annex in order to make the cove rage of the Annex clear.  He said that he was 
unsure about the view that had been expressed that it was possible to undertake commitments on 
services outside of the scope of the GATS.  He said that this matter would be discussed at the second 
review of the Annex.  Japan did not believe that  the Special Session was the proper time or forum to 
discuss this issue.    
184. The representative of Switzerland , making some preliminary remarks, said that he strongly 
supported W/29, invited Members to undertake commitments on ground-handling services, and 
echoed the comments by New Zealand and Australia.  The sector had gained economic importance, as 
was also recognised in the paper from Canada, Japan and the United States.  The argument put 
forward in W/33 rested on a special interpretation of the Annex on Air Transport Services which Switzerland did not share.  Although there were cert ain bilateral agreements that included various 
aspects of air transport services, this did not preclude Members from taking commitments in this area.  
He recalled comparisons that had been made w ith carve-outs in other sectors where no one would  TN/S/M/14 
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 conclude that, because of a carve-out, it would not be  possible to take commitments in these sectors.  
To the contrary, carve-outs gave legal security an d certainty that commitments were possible.  
Countries did not need to wait for any review on this  subject because they we re already free to take 
commitments and to include services such as ground-ha ndling.  He reiterated that in Switzerland's 
view paragraph 3 of the Annex was not an exhaus tive list and that paragraph 2 of the Annex was a 
carve-out that made it possible to take commitments  that did not apply to measures affecting services 
directly related to air traffic rights.  Therefore, a discussion on the taking of commitments in air transport services should be addressed in the negotiations.   
185. The representative of Hong Kong, China
, thanking the co-sponsors of both communications, 
said that these papers would be referred to capit al experts.  Noting that his comments were 
preliminary and raising the point about the appli cation of the MFN obligation, he referred to the 
representative of Chinese Taipei and their support of the views in W/33 and said that he had noted 
that the MFN list of Chinese Taipei had inscribed  MFN exemptions in re lation to supporting and 
auxiliary air transport services.  He said that ther e was specific reference to cargo handing services.  If 
this was the case and the views of the co-sponsors of  the delegation of Chinese Taipei was that such 
services were not covered by the GATS, then he ho ped that some good news would be heard on the 
necessity of elimination of this MFN exemption fro m the lists at the MFN review scheduled for 23 
February 2005.   
186. The representative of the European Communities  wished to associate his delegation with the 
comments made by the delegations of New Zealand, Australia and Switzerland.  Seeking to add some 
elements in support of undertaking commitments in ground-handling, he said that, with regard to the 
development of the industry, the first review on air transport services had provided extensive 
documentation of developments in  the 1990s and underlined that the traditional structure of the 
aviation industry had changed.  A key notion was th at the aviation industry had changed significantly 
since the drafting of the GATS and an increasing nu mber of airlines hived off their ground-handling 
activities to sell and make individual divisions.  To day, the independent ground-handling industry was 
a dynamic part of the modern transportation worl d and airlines changed ground-handlers on a yearly 
basis.  Such changes were made freely among the ope rators that offered the best deals.  This had 
become routine in all major European airports.  He said it was important to note that the ground-
handling business was regulated in its own right and sep arately from airlines.  For instance, there were 
no ownership restrictions or requirements for designation as was typically the case for airlines.  The simple notion that no final classification was curren tly available was not an impediment to undertake 
commitments.  In fact, the offers that included gr ound-handling indicated several  different in which to 
reach a certain and practical scope for the commitments.  He said that the co-sponsors of W/33 had given no suggestions as to the precise activities they  considered were excluded from the GATS.  To 
avoid further confusion about the position of th e co-sponsors of W/33 in relation to ground-based 
activities, the European Communities requested the co-sponsors to identify clearly the activities in 
relation to air cargo they considered were meas ures excluded from coverage.  For instance, he 
enquired whether storage or warehousing, or air frei ght forwarding were covered.  How far would the 
exclusion, in their view, in the Annex reach? 
187. The representative of the United States
, noting that her delegation was a co-sponsor of W/33, 
said that her delegation wished to express her support for the comments by Canada, Japan and Brazil 
and to express the United States' general concer n with the December 2004 statement by Australia, 
Chile, the European Communities, New Zealand, Norway and Switzerland proposing that Members 
take commitments with respect to activities that were excluded under the Annex on air transport 
services and specifically ground-handling.  The United States believed that the fact that ground-handling was becoming a major service in international aviation was irrelevant to the issue of whether 
it was intended and was, as a legal matter, excluded from the air annex.  The United States believed 
that, in point of fact, it was very clear that gr ound-handling was excluded as it was related to traffic 
rights for the reasons that were outlined in the st atement.  She shared the views that had been TN/S/M/14 
Page 58  
 
 expressed by others that if Members wished to raise the issue of possible commitments on ground-
handling that it would be more appropriately  done under that next air annex review.  
(viii) Maritime Transport 
188. The Chairman
 drew Members' attention to a joint statement contained in Job(05)/22 on the 
importance of commitments on maritime transport services.   
189. The representative of Japan , speaking on behalf of Australia, Canada, the People's Republic 
of China, Croatia, the European  Communities, Hong Kong China, Iceland, Japan, the Republic of 
Korea, the Kyrgyz Republic, Mexico, New Zeala nd, Norway, Panama, Singapore, Switzerland and 
the Separate Customs Territory of Taiwan, Pe nghu, Kinmen and Matsu, sought to make an 
introduction of the joint statement on the importa nce of commitments on maritime services.  The 
group jointly submitted the statement hoping to re present the common view of many developing, 
least-developed and developed coun try Members and to remind all Members of the importance of 
commitments on maritime transport.  As Memb ers recalled, 52 sponsors had submitted a joint 
statement on the negotiations of maritime transpor t services to the Council for Trade in Services in 
March 2003 in advance of the deadline for initial offers  which had called for activ e participation of all 
Members in the ongoing negotiations.  He recalled that  the negotiations were to be based on the 1996 
offers or improved offers according to the decision on maritime transport services.  He said that it was 
regrettable that two years had passed and that only a limited number of quality offers had been tabled 
in the maritime sector.  To reiterate the importanc e of this sector, Japan, on behalf of the other co-
sponsors, wished to report that on 16 February a Maritime Transport Services Seminar had been held 
with more than 100 participants.  Thanks to a wide range of excellent speakers such as shippers, 
shipping companies, international freight forwar ders and government regulators, as well as UNCTAD 
that had elaborated upon developing countries' persp ectives, the seminar had led to lively discussions 
referring to the rapidly developing nature of ma ritime industries and the evolving needs of the 
shippers.  He thanked the Secretariat for its assistance .  He said that all of the seminar participants had 
one clear message, namely, that the realization of reliable, efficient and effective transport services 
was vital to trade and economic de velopment, contributed to employment, and was a key factor in 
investment decisions.  Predictable, transparent a nd open-market conditions based on foreseeable rules 
were critical to all stake-holders in the maritime transport sector.  Therefore, the global liberalization 
of maritime transport services under GATS woul d benefit all Members,  both developed and 
developing whether they were littoral or land-lock ed.  Japan believed that many Members, whose 
names were not on the joint statement, shared these  views.  The seminar clearly demonstrated that 
taking commitments in the maritime sector was fac ilitated by the use of the maritime model schedule 
which provided flexibility and accommodated various re gulatory regimes.  The co-sponsors, given the 
critical importance of this sector in the negotiati ons and recognizing the May time-frame for tabling 
revised offers, sought to urge all Members to reas sess their current positions and to contribute to the 
negotiations by tabling high quality and meaningful initial and revised offers. 
190. The representative of Guatemala , thanking the co-sponsors for the joint statement, said his 
delegation shared the concern about the lack of pr ogress in maritime transport and was aware of the 
consequences of this lack of openness in trade.  His delegation believed there were benefits to be 
gained through the liberalization of maritime transport services within the framework of the 
agreement. 
191. The representative of India  said his delegation supported the basic thrust of the paper in terms 
of the importance of the sector and particularly th e importance of commitments in light of the special 
circumstances surrounding the sector.  In terms of th e need for maritime transport as a facilitator to 
trade, his delegation agreed with the views of the group.    TN/S/M/14 
 Page 59 
 
 
 192. The representative of th e European Communities  thanked the Secretariat for its role in the 
organization of the seminar and said that  it had been well attended and useful. 
193. The representative of Chile  said his delegation fully agreed with the elements submitted in the 
document presented by Japan.  Chile was convinced of the high importance of liberalization in this 
sector and urged Members for improvements in revised offers in this sector. 
194. The representative of Bolivia  wished to express its gratitude for the document and highlighted 
the importance of this sector.  She said that it was also important for land-locked countries. 
195. The representative of Japan  thanked delegations for their comments and urged Members to 
pursue work in this area for the success of negotiations. 
(ix) Computer and Related Services 
196. The Chairman  drew Members' attention to a commun ication contained in TN/S/W/38 related 
to computer and related services.   
197. The representative of Mexico  wished to make a statement on behalf of Argentina, Australia, 
Canada, Chile, Korea, the United States, Hong Kong China, India, Japan, th e European Communities, 
the Separate Customs Territory of Taiwan, Pengh u, Kinmen and Matsu, New Zealand, Norway, 
Singapore and Mexico.  The computer sector and its related services had experienced tremendous 
growth in recent years.  These sectors had become  a driving force for development in an economy 
which was based on knowledge.  There were estimates wh ich indicated that the market in this sector 
in 2003 reached US$569 billion, and it was expected that by 2007 this figure would reach US$700 billion.  He said that both develope d and developing countries had made  reference to the benefits of 
liberalizing computer and computer-related services  in the respective presentations of negotiating 
proposals related to this sector as well as in rela tion to business and professional services.  Computer 
and related services were frequently considered as a tool for economic development due to their role 
in building infrastructure.  The impressive role of the market for this sector had brought employment in both developing and developed economies.  The li beralization of these services had not only helped 
in the expansion of existing market activities but also had created totally new exports, notably to the 
benefit of developing economies in possession of well-educated and productive workforces.  The 
computer-related service industry provided importa nt inputs to many other sectors and brought 
competitiveness to nearly all industries.  Th e group of Members which co-sponsored the joint 
statement believed that CPC 84 covered all activities in this sector.  Therefore, they invited all 
Members to refer to nomenclature CPC 84 in their li sts of specific commitments in this sector.  The 
co-sponsors invited all Members to actively participat e in the ongoing negotiations so as to reach full 
liberalization of computer services.  In particular , the co-sponsors believed that the objective could be 
achieved by making full market access and national treatment commitments for the sector in its 
totality. 
198. The representative of Colombia
 endorsed the content of the joint statement.  Colombia 
believed that this sector was a very important sect or for negotiations on services.  It was directly 
linked with other sectors such as professional services. 
199. The representative of Malaysia  shared the view that this sector was an important and 
fundamental sector for the economic development of  Members.  She said that her delegation would 
continue to participate in discussions on computer-related services. 
200. The representative of the Philippines  said that his delegation supported the general thrust and 
direction of the joint statement on computer and related services.  The Philippines shared many of the 
views expressed in the statement, as well as its effort to encourage Memb ers to continue positive TN/S/M/14 
Page 60  
 
 engagement in discussions of the various complicated issues related to negotiations in this sector.  He 
encouraged Members to look at the positive benefits of  liberalization in this sector.  He noted at the 
same time that each developing or  developed country could have its  own concerns relating to this 
sector, particularly in relation to certain sensitiviti es which they might have, but which his delegation 
believed could be approp riately addressed through regulatory measures. 
201. The representative of Australia
 said that Australia believed th at the statement was significant 
for two reasons.  Firstly, its reference to a st rong commitment on market access and, secondly, 
because the support for the statem ent came from a diverse range of Members including developed and 
developing economies.  Australia was glad to have  made a contribution to the development of the 
statement and thanked all the co-sponsors, and par ticularly Canada and Argentina, for taking the 
original initiatives.   
(x) Small and Medium-Sized Enterprises 
202. The Chairman  drew Members' attention to a communication on small and medium sized 
enterprises contained in document TN/S/W/36. 
203. The representative of Canada  recalled the title of document TN /S/W/36, "Working to ensure 
benefits from the GATS for Members' small and medium sized enterprises".  He said that SMEs were 
the driving force of both developing and highly in dustrialized economies.  They were the primary 
source of innovation, growth and new employment for all of economies.  Research suggested that 
SMEs were much more active in services trade than had been previously thought and that the number 
of exporting services firms was growing.  He recalle d that Canada had tabled an initial negotiating 
proposal in March 2001 on the subject of SMEs.  At  the present stage, his delegation had thought it 
useful to remind Members of the importance to keep SMEs in focus as Members moved to the 
improved offer phase of the negotiations.  He said th at SMEs in Canada had asked the Government 
for additional detail when they had read Canada's earlier negotiating proposal, as they sought to know 
how work under the GATS could be of benefit to them.  Canada had been thinking about additional 
detail to that proposal, including how Canada wo uld know whether the negotiations would have 
delivered on SMEs' needs, and how to evaluate  improved offers effectively.  The Canadian 
Government had done some work and identified fi ve areas in which Members could work towards a 
GATS outcome that would benefit services SMEs.  In th e interests of time, he said that he would not 
refer to the statistical elements of the paper, but rather would confine his comments to the five areas 
that Canada believed Members could work through th e GATS to the benefits of Members.  Firstly,  
Members could take into account sectors of importan ce to SMEs.  This would suggest that Members 
should look at sectors such as computer and relate d services, research and development services, and 
marketing and business services.  Members should al so give consideration to sectors that were 
becoming more important for developing country SM Es such as tourism.  Secondly, Members should 
take into account the core sectors that supported SM E competitiveness, namely, transport, financial 
services and telecommunication services.  Thirdly, with respect to modes, Members could seek an 
ambitious outcome in both Modes 1 and 4.  Resear ch suggested that both modes were the preferred 
modes of delivery for SMEs.  A strong outcome in th ese areas would allow them  to take advantage of 
a number of opportunities internationally.  Fourthly , Members should work towards the elimination of 
a variety of regulatory measures that could limit SM Es' global reach.  In this regard, he referred 
specifically to commercial presence or local partnership requirements, taxes specific to foreign suppliers, residency citizenship requirements and similar measures.  Finally, one of the most 
important benefits that GATS could deliver for services trading SMEs was to encourage simple, 
transparent and stable regulatory environments.  SMEs faced many challenges when they sought to 
trade internationally.  While the GATS was not e quipped to solve all of the problems they faced, 
Canada's work suggested that there were ways th at the GATS could be used to improve the trade 
policy framework that they faced.  This set of criteri a or benchmarks had been an internal exercise in 
the Government of Canada and he hoped th at it would be useful to other Members.  TN/S/M/14 
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 204. The representative of Mauritius  thanked Canada for its paper a nd he recalled the existence of 
the Mauritius paper submitted in 20 02.  He noted that the broad thrust of the Canadian paper 
coincided with much of Mauritius' thinking on this is sue.  He wished to point out that, in comparison 
to Canadian SMEs, Mauritius might be dealing with  micro-firms.  He was pleased that the paper 
provided an opportunity to reflect on this important dimension of th e services negotiations.  He said 
that his delegation would revert on this issue. 
205. The representative of Thailand , thanking Canada, said that her delegation recognized the role 
of SMEs in sustaining economic development in  terms of employment generation, income 
distribution, as a source of innovation and also a mo vement towards specializat ion.  Thailand saw the 
merit of the arguments in the document and bore in  mind that different Members established different 
criteria to characterize small and medium ente rprises according to their social and economic 
environment.  She agreed with the idea in paragr aph 8, sub-paragraph 1 and said that Thailand, for 
example, had greatest export interest potential in bu siness services in general and restaurant services 
in particular.  She shared some of the concerns  over difficulties encountered by Thai SMEs, which 
included trade and non-trade barriers, inadequate networking, and shortage of funds for setting up 
business channels.  She noted with interest th at the upcoming symposium on cross-border supply 
could give a clearer picture of the types of m ode 1 commitments that, in combination with an 
appropriate regulatory framework, could fac ilitate SMEs' international business operations. 
206. The representative of India , thanking Canada, said he shar ed views on the importance that 
SMEs played, including in Indian economy.  He agreed with its contents related to modes 1 and 4.  He 
hoped that the cross-border symposium would give a better idea of the kind of progress that could be 
made on SMEs.  In terms of some of the limitations  that were mentioned, he acknowledged that these 
were important;  however, he noted that Members c ould also have other policy considerations that 
might need to be balanced out in terms of public  policy objectives, prudential regulations, etc.  On 
regulatory transparency, which was important, he said that SMEs issues relating to licensing and 
qualification requirements and pr ocedures were also important. 
207. The representative of Egypt  thanked Canada and noted that his comments were preliminary.  
He said that Egypt was concentrating on the promotion of SMEs through a national plan.  He said that such plans would remain incomplete if they were  not complemented by adequate market access for 
SME services and service suppliers in foreign market s.  Egypt believed that addressing the regulatory 
uncertainties was a crucial factor.  The submission addressed a cross-cutting issue and should be well-
placed in discussions.  Referring to paragraph 8, sub-paragraph 1, he acknow ledged that the list it 
contained was not exhaustive.  He highlighted that professional services was also considered to be of 
great export potential for SMEs, as referred to in sub- paragraph 3.  Referring to  sub-paragraph 4, he 
agreed with the need to facilitate  accessibility for SMEs to foreign markets;  however in Egypt, some 
of the regulatory requirements outlined were essen tial to realize national policy objectives including 
transfer of technology and enhancing institutional cap acities.  He said that his delegation might wish 
to revert to this communication at a later stage.  
208. The representative of Hong Kong, China
, thanking Canada, said that it was a reminder of 
some key points raised in previous papers fo rm Canada, Mauritius and the United States.  He 
reiterated his delegation's strong interest in th e issue of SMEs.  His delegation recognized the 
importance of SMEs as the driver for economic gr owth, and said that this was the case for Hong 
Kong, China's economy.  More than 85 per cent of  Hong Kong China's employment was comprised of 
SMEs, which was a statistic that underscored th e importance of SMEs in Hong Kong, China's 
economy.  Turning to some specific points highlighted  by Canada, he said that focus on SMEs in the 
negotiations was essential.  He thought that sectors in  which SMEs had a particular interest could be 
an area of increased focus.  He said that the meaning of an SME varied in different economies as did 
their interests.  Focus on this issue could be enhanced in the negotiations by taking an SME 
perspective on liberalization and market access negotia tions at the level of individual sectors.  This TN/S/M/14 
Page 62  
 
 approach could help to bring the interest of SMEs  into focus as issues specifically relevant to SMEs 
would be addressed.  He associated his delegation wi th the comments by others on the availability of 
strong and competitive infrastructural services that were important for the growth of SMEs in different economies.  He agreed that modes 1 and 4 were particularly relevant  to SMEs and he looked 
forward to further discussion in this regard at the symposium on cross-border supply and he hoped 
that any conclusions and observations in light of the symposium could be discussed in the Special 
Session.  Regarding the removal of barriers wh ich were pertinent to SMEs, Hong Kong, China 
identified with the comments on establishment restrictions, but also bore in mind other types of restrictions, such as foreign equity limitations and ENTs.  Regarding regulatory issues, he said that it 
was important for SMEs to find themselves in a simple and transparent regulatory environment.  This 
was one of the objectives of the important work th at was being undertaken by the Working Party on 
Domestic Regulation.  He underlined that transp arency, while important, was not sufficient given 
SMEs capacity and resource constraints.  SMEs would benefit from a regulatory environment which 
took into account the burdensomeness of various pro cedures or requirements that would be posed on 
small and medium sized service suppliers.  Concerni ng the definition of SMEs, while recognizing that 
SMEs had different definitions a nd criteria among Members, it was important to keep in focus the 
issue of whether there were issues that were  common to SMEs across different economies and 
whether Members could address them in the negotiations. 
209. The representative of Rwanda
 said her delegation believed that  SMEs remained important for 
many countries, including Rwanda.  Rwanda believed that SMEs coul d play an important role in a 
country's economic growth and development.  For Rwanda, the economy was dominated by and 
dependent on SMEs for employment, local invest ment and social economic welfare, including in 
sectors such as tourism and professional services.  Sh e therefore encouraged further discussions on 
SMEs and said she would be interested in participating any further discussions. 
210. The representative of Malaysia , making preliminary remarks, said that her country's nascent 
services industry was comprised mainly of SMEs in professional services and computer related 
services.  These companies faced resource and capac ity constraints in exporting their services and 
expanding their global reach.  Barriers to SME partic ipation further limited their export interests.  
Malaysia had established a small and medium i ndustry development corporation to assist the 
development of its SMEs and focused on provid ing technical assistance, capacity building and 
transfer of skills and technology.  Malaysia w as open to discussions within the GATS context to 
facilitate a better regulatory environment for services SMEs. 
211. The representative of Chinese Taipei  said her delegation strongly supported Canada's 
initiative in encouraging Members to focus on the importance of SMEs in service sectors worldwide 
to find ways of ensuring the benefits of services lib eralization.  In Chinese Taipei services accounted 
for 67 per cent of the total GDP and 98 per cent of businesses were SMEs.  However, SMEs accounted for only 15 per cent of service exports a nd only 30 per cent of domestic services market 
volume.  She fully recognised that SMEs had alwa ys represented a high proportion of world services.  
It was for this reason that Chinese Taipei was co mmitted to the service negotiations so as to help 
SMEs improve their competitiveness.  Chinese Taipei  had demonstrated over many years its support 
of local SMEs by voluntarily liberalizing a number of service sectors in which SMEs played a particularly important role such as logistics, financial, telecoms, maritime and computer services.  Her delegation also fully endorsed the paper's comment s about the potential benefits to SMEs of new 
technological development, especially in the area of  telecommunications, and their potential growth in 
areas such as computer management.  Services were an extremely important market for SMEs especially in modes 1 and 4.  Chinese Taipei  supported the notion that Members should be 
encouraged to make commitments in this area.  She underlined that her delegation placed importance 
on mode 3, although noted that SMEs, by nature, of ten did not have the r esources to establish a 
commercial presence abroad.  Modes 1 and 4 increasi ng were going to become the most cost-effective 
modes of supply of services.  Referring to the last tw o paragraphs in Canada's paper, she agreed that  TN/S/M/14 
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 more work under the GATS could be done to prom ote a more SME-friendly regulatory framework.  
She called on Members to concentrate their effo rts on eliminating unnecessary constraints that 
hampered the global reach of SMEs, as they were a central element of a strong and dynamic economy 
and would remain key to the future of the services sector in particular. 
212. The representative of Senegal , noting that his comments were preliminary, said it was a very 
interesting topic, as witnessed by the communicati ons that had been submitted, including those from 
the United States and Mauritius.  He thought that they  provided a very interesting perspective in that 
many developing countries such as Senegal depended to a large extent  on SMEs.  With respect to the 
few services that Senegal exported, such as financ ial agencies, architectural services, and cultural 
agencies and music, he said that  companies frequently encountered  difficulties in gaining access to 
foreign markets.  He therefore applauded the very  good idea to look at the question of SMEs within 
the WTO.  Although the definition of an SME differe d from one country to another, he said that this 
should not be an obstacle to discussion.  Rather, it posed a challenge to take on the discussion with 
greater imagination and creativeness.  With respect  to supply, he echoed comments by others that 
modes 1 and 4 were the modes through which most SMEs  in Senegal exported.  In this regard, he said 
that the scenario put forward by Canada in its pa per should be taken into account.  He said that all 
three papers would be referred to cap ital.  Senegal attached particular importance to this sector and he 
said that, two years earlier, Senegal had adopted an  SME charter after national consultations which 
had taken several months.  Numerous stakeholders had participated in its elaboration so that the 
Government could identify priorities.  The charter was very important in helping SMEs to develop 
and, through their growth, helping Senegal to deve lop economically and socially.  He said that his 
delegation would participate activel y in reflection on this matter. 
213. The representative of South Africa , seeking to highlight the point raised by the delegation of 
Hong Kong, China and emphasized by Senegal, said th at the definition of an SME was different in 
different contexts.  In South Africa, the term likely referred to small and micro enterprises.  
Nonetheless, her delegation shared many of the points that were highlighted in the proposal especially 
the important role played by SMEs in job creation.  She said that Members, in preparing their revised 
offers, should bear in mind the capacity and interest of small businesses. 
214. The representative of the Philippines  welcomed the submission from Canada and said that 
liberalization commitments which catered to interests or sectors of interest to SMEs both in developed and particularly developing countries would signal  that the services negotiations would yield results 
for SMEs and not only multinational companies.  A lthough he was mindful that criteria or definitions 
of SMEs varied by country, he invited Members to further reflect on how issues related to SMEs from 
developing countries could better be addressed.  Differe nt criteria or definitions did not detract from 
the value of the Canadian submission as it drew attention to issues relevant to SMEs in the 
negotiations.  Bearing in mind the various constrai nts faced by SMEs, as was referred to in paragraph 
7, his delegation looked positively on the suggestions  contained in the ensuing paragraphs about the 
approaches that could be considered to take the i ssues forward.  His delegation agreed strongly with 
the observation in paragraph 3 regarding how research  had indicated that modes 1 and 4 were perhaps 
prime areas through which SMEs could gain concrete and tangible benef its, particularly in the context 
of outsourcing or off-shoring.  He looked fa vourably on the comments about how mode 4 
commitments could prove beneficial to SMEs by pr omoting trade in services, particularly in the 
categories of contractual service suppliers, business  visitors, independent professionals as well as 
under the 'other' category through which much movement was taking place but was not sufficiently 
captured through the more known categories of mode  4.  His delegation sympathized with the 
reference in sub-paragraph 4 of pa ragraph 8 regarding the need to look at ways  to eliminate specific 
regulatory measures that were particularly problematic  for SMEs.  In this regard, while transparency 
as an element of these regulatory measures was a useful starting point, it would be of equal or greater 
utility if Members examined other elements that  posed constraints for SMEs.  Progress on these 
elements would help SMEs jump over the regulator y hurdles alluded to in the communication.  Apart TN/S/M/14 
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 from the bilateral request and offer process, he sa id that the issues identified and ways forward 
suggested in the Canadian submission would benefit from a plurilateral or multilateral approach that 
would help Members and particularly those who sought  to move SMEs' interests forward by attaining 
the objectives set out in the paper. 
215. The representative of Mexico
 sought to support the proposal  submitted by Canada and said 
that this issue had been discussed a few years ear lier, but had disappeared from the Council's agenda.  
As with many other countries, SMEs in Mexico gene rated the greatest number of jobs but less wealth 
at the national level.  He hoped that SMEs would, at  some point, generate as much wealth as jobs.  He 
agreed with Canada on the points it  raised in its paper;  however, he believed that Members faced a 
major challenge linked to designing political instrume nts and mechanisms which, at the international 
trade level, could promote SMEs.  Domestically, much was being done by many countries;  however, 
in terms of international trade, it seemed that it was difficult to develop mechanisms and tools to 
promote SMEs' activities preferentially.  He hoped that  Canada or others might have some ideas or 
suggestions in this regard.   
216. The representative of Nigeria  welcomed the communication from Canada and said that it was 
an important contribution to the Council's work.  He remarked that SMEs, in many countries, formed 
the backbone of the economy and ge nerated employment and prosperity.  He said that he agreed with 
the findings of a study from UNCTAD, referred to in pa rt II of the Canadian proposal, on the role of 
SMEs in economic development of many countries.  The elements raised by Canada merited further 
consideration and he said that his de legation might revert to them.   
217. The representative of Colombia  expressed thanks to Canada and said that it brought a 
horizontal topic back into the Council's discussion s at a propitious time.  In Colombia, SMEs 
represented a major area for the economy.  In the ser vices sector, SMEs were conducting most of their 
services export trade in sectors such as professi onal services, services companies, tourism among 
others.  Colombia believed that the inter-relations hip between the modes and the regulatory barriers 
described in the document were the ones which SM Es in Colombia had identified as barriers to 
market access.  An additional barrier was the di fficulty in obtaining visas and entry permits, which 
made it more difficult for small companies to c onduct business.  Colombia believed that it would be 
important to keep this item on the agenda to continue discussion at a future occasion. 
218. The representative of the United States  welcomed the paper and recalled that some two years 
ago her delegation had circulated a paper on small and medium-sized enterprises.  She said that her 
delegation would examine it in line with the pa per the United States had previously submitted. 
219. The representative of Canada  thanked delegations that had s poken and expressed support.  He 
looked forward to discussing the paper at a future time. 
(xi) Legal Services 
220. The Chairman  drew Members' attention to documen t TN/S/W/37 which contained a joint 
statement on legal services.   
221. The representative of Australia  recalled that the co-sponsors of the joint statement were:  
Australia, Canada, Chile, the European Communi ties, Japan, Korea, New Zealand, Singapore, 
Switzerland, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu and the United 
States.  The statement identified points of converg ence on issues discussed by the friends of legal 
services group.  It was this group's belief that the disaggregation of CPC 861, which referred to the 
disaggregation of legal services into lower digit leve ls, failed to accommodate the practical nature of 
international trade in legal services.  This resu lted in the friends group focusing its discussion on 
developing and meaningful terminology that better refl ected international trade in legal services.  The  TN/S/M/14 
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 co-sponsors were pleased to note that discussions in  the friends groups had resulted in identifying 
terminology that they believed better reflected in ternational trade in legal services and would thus 
assist Members in scheduling meaningful and transpar ent commitments.  In addition to contributions 
by Members of the group, the discussions had also been informed by the work and presentations by 
the International Bar Association.  Of paramount  importance to the friends group's members was the 
need to identify terminology that would provide  maximum flexibility in scheduling commitments.  
The co-sponsors suggested that Members use terminol ogy identified at sub-paragraphs 3(a)1-4, which 
included familiar terms such as legal advisory services and legal representational services, in 
scheduling commitments on legal services.  In add ition, to assist in making commitments on the basis 
of progressive liberalization and to give Members a mechanism to accurately reflect in schedules their 
domestic regulatory situation, sub- paragraph 3(b) of this statemen t provided Members with further 
guidance and extended the terminology to include th ree areas of law.  These were domestic law, 
foreign law and international law.  These areas of la w were described with a view to directly assisting 
Members in scheduling and understanding GATS commitmen ts on legal services.  In concluding, she 
sought to note that the joint statement went beyond being purely a report from the friends group to the 
wider membership.  It was also an important guide  and reference point that  provided, in the group's 
view, a common understanding of terminology th at Members could use in scheduling their 
commitments on legal services in such a way that provided for the concept of progressive liberalization and also had sufficient flexibility to  facilitate the undertaking of transparent legal 
services commitments that better reflected host country regulatory environments. 
222. The representative of Singapore
 said his delegation supported the GATS framework for 
liberalization of services in a progr essive, orderly and transparent manne r.  It gave Members the full 
freedom to chose and decide whether, when a nd how market opening should be achieved so as to 
address market failures and secure non-economic and soci al policy objectives.  As  a participant in the 
informal friends group, Singapore was pleased to co -sponsor and recommend to all Members that they 
adopt the proposed terminologies in the statement as  a guide or reference point for scheduling their 
respective legal commitments in the Doha Roun d.  Many Members would no doubt find this 
terminology flexible and user-friendly as well as c onsistent with the regulatory framework for the 
legal services sector.  Members could certainly schedule their commitments using these terminologies in a manner that appropriately reflected their resp ective domestic situation and, at the same time, 
maintained their respective rights to impose appr opriate domestic licensing, qualification and other 
regulatory requirements.  In Singa pore's view, any liberalization of the legal services sector needed to 
take into account the legitimate role of the respective governments of all Members to intervene to 
offset market failure and to achieve non-economic  and social objectives.  These objectives included 
the need to take into account whether the size of the domestic legal services market allowed room for 
the practice of domestic or host country law by foreig n law firms and foreign lawyers, and the need to 
attract and retain local legal talent so as to build  a strong local bar with sound knowledge of local 
cultural customs and circumstances and for key govern ment and judicial appointments.  Domestic law 
firms should be given the opportunity to impr ove the quality of services by collaborating or 
associating with foreign law firms, subject to conditi ons such as transfer of legal skills and knowledge 
as well as training of domestic lawyers by the forei gn law firms involved in any such collaboration or 
association.  Singapore was of the view that the cap acity for foreign lawyers of foreign law firms to 
either employ, collaborate or associate with domestic lawyers or domestic law firms should be 
considered by all Members after having taken into  account whether and how the respective domestic 
situation could permit such employment, collabora tion or association, in order to facilitate the 
provision of legal services such as by clients c overing multiple domestic fo reign and international 
jurisdictions.  While Singapore reserved the right to decide at the appropriate time about the question 
of whether and how Singapore intended to liber alize trade in services in the Doha Round, the 
proposed terminologies in the joint statement whic h Members could use to identify specific legal 
services and also qualify the market access and national treatment complements on legal services, would undoubtedly help Singapore to make the right decisions in due course. TN/S/M/14 
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 223. The representative of Turkey
 welcomed the contribution on legal services which had been 
relayed to authorities in capital.  She sought to r eserve the right to revert to the communication at a 
future meeting. 
224. The representative of the European Communities , noting his delegation was a co-sponsor, 
sought to stress the importance in the EC's view of the liberalization of trade in legal services in the 
creation of a business-friendly environment for in vestment.  He invited Members to undertake 
commitments in this sector and to use the termi nology which was proposed in the statement in doing 
so.  He recalled that, in the EC's view, liberali zation should encompass all legal services, except those 
performed by service suppliers entrusted with public functions.  Foreign lawyers should be allowed to 
provide all legal services regarding the law of any ju risdiction in which they were qualified to practise 
and foreign law firms should be allowed to provi de all legal services regarding the law of any 
jurisdiction in which the lawyers of the law firms we re qualified to practice.  He reminded delegations 
that, for the purpose of using the terminology propo sed in the common statemen t, EC law, even if 
arising from international treaties, was to be consider ed as either domestic or foreign country law, for 
the reason that the EC as a whole was a WTO Member. 
225. The representative of the United States  said the United States was pleased to have joined in 
co-sponsoring the joint communication from several of the friends of legal services.  The United 
States sought to thank all of the friends for contri buting so constructively to this endeavour and the 
Australian delegation in particular for their leadersh ip in bringing this document to fruition.  The 
United States believed that the paper showed th at there was a considerable degree of common 
thinking on trade and legal services.  While the speci fic terms used in each country might vary, there 
was a general understanding of what legal services were  and how they were traded.  There was also an 
understanding that a number of Members had chosen to adopt more liberal policies for market access 
provided that the scope of practice was limited such as to the practice of foreign law.  The paper recognized the desirability of enabling domestic and foreign lawyers to freely associate whether 
through partnerships, employment or other commerc ial relationships.  Perhaps more importantly, 
however, was the observation that different a pproaches to scheduling commitments need not 
undermine their value, provided that their meaning was clear.  She hoped that by providing some guidance as to common terminology the paper would enable Members to move beyond classification 
discussions and facilitate the process of scheduling meaningful market acces s commitments for legal 
services. 
226. Making comments related to a number of the proposals under discussion, the representative of 
Korea
 said his delegation welcomed the various propo sals or reports by the groups of friends.  He 
noted that Korea had co-sponsored the reports on te lecommunication, maritime transport, computer-
related services and legal services which Korea rega rded as infrastructure services to enhance overall 
efficiency of the economy.  His delegation also s upported the proposal by Canada on the importance 
of SMEs in trade and services and in particular sh ared the concerns on fair trade practices issues 
arising from the reduced ability to capture gains from vertical integration as expressed in paragraph 7 
of the paper.  In this context, Korea sought to  follow up on the point made by Hong Kong, China and 
Mexico, namely, to take an SME perspective in deliberations on specific sectors and in designing 
instruments.  He said that over the past two week s a number of delegations had sought to identify 
some specific stumbling blocks on this aspect of fair trade practices in various fora such as bilaterals, 
friends groups meetings and seminars, and the MFN exemption review.  The specific obstacles 
identified included concerns on c ode of conduct on mode 1 on computer reservation services in air 
transport, which was in some way related to tourism services.  On fair practices in ports in maritime 
transportation, there were also concerns over fair  conduct in mode 4 of professional services arising 
from collaboration with local professionals, for instan ce, in legal services and architectural services, 
as well as practices in film distribution, transpor t pricing practices in education services, and unfair 
recruitment practices by dominant players in insu rances services.  With regard to these various 
concerns about fair trade practices, his delega tion thanked several Members and Secretariat for  TN/S/M/14 
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 providing possible solutions.  Canada suggested pr omoting more transparent regulatory practices for 
SMEs and the European Communities presented a way to address cross-subsidisation concerns 
involved in postal and courier services.  Furtherm ore, the Secretariat at a seminar had recalled 
suggestions by some delegations a bout a possible reference paper on ma ritime transportation.  He said 
that friends groups had a role to play in finding more constructive solutions while taking into account 
the specificities of different services areas.  He w ondered whether these solutions could be made more 
effective with a contribution from the Secretariat.   He said that there had been some ideas from 
Members to invite Secretariat experts to particip ate in the friends groups.  He wondered whether the 
time was appropriate to call on their expertise and e xperience in planning future activities.  He further 
wondered whether Members could reinforce the cons tructive relationship with the Secretariat in 
designing pragmatic solutions to problems. 
(xii) Other 
227. The representative of Japan  wished to make a short statement on construction services, to 
which his delegation attached importance.  Japan be lieved that these constituted a fundamental part of 
the economy.  Liberalization would definitely cont ribute to economic development including that of 
developing country Members.  In this  regard, he sought to highlight three points.  Firstly, construction 
services would provide an opportunity to create new infrastructure which was indispensable for the 
economy.  Secondly, the liberalization of constr uction services would lead to technology transfer 
through the collaboration of different players to ach ieve one project.  Thirdly, the liberalization of 
construction services would be an important el ement to create a sound environment for future 
investments.  Japanese manufacturers were also interested in receiving high quality construction 
services abroad provided in a competitive environmen t.  Among other issues, Japan was particularly 
keen on liberalization of mode 3, including the liber alization of foreign equ ity participation and the 
elimination of restrictions on types of legal entities.   Japan was willing to work with all Members and 
in particular those that shared a similar interest. 
228. The representative of th e European Communities  sought to support the statement by Japan 
and to highlight the fundamental importance of th e construction sector which was an activity that 
permeated all economic sectors and provided economi es with essential infrastru cture.  He joined 
Japan in urging all Members, and particularly deve loping countries, to foster increased foreign 
investment in construction on their territory by making improved revised offers in this sector as a 
whole, and notably for commercial presence and fo r the movement of intra-corporate transferees. 
229. The representative of the United States  welcomed the statement from Japan on construction 
services.  Construction services included a broad range of activities ranging from infrastructure 
services, such as the building of roads and bridges to the construction of po wer plants, residential 
buildings and installation of pipelines.  As such, th e construction sector, either directly or indirectly, 
affected the international competitiveness of virt ually all aspects of a nation's economic activity.  
Scheduling commitments that liberalised this sector  would help to introduce competition that would 
bring down the cost of infrastructure development.   Construction was inherently local and was an 
important creator of employment.  Foreign firm s brought expertise to their projects and provided 
important training of local employees, such as in project management techniques and application of new technologies.  She noted that over the preced ing three weeks her delegation had heard some 
interest from developing countries in this sector  and looked forward to continued engagement. 
230. The representative of Egypt
 welcomed the statement made by Japan and said that Egypt 
attached considerable importance to the construction services sector, in terms not only of obtaining 
market access for Egyptian services and service suppliers in foreign markets, but as well in 
undertaking liberalization measures at the national leve l to attract foreign investments and transfer of 
technology.  In this spirit, his country had undert aken extensive commitments on construction services 
in the Uruguay Round and he said that constructi on services was also the main theme of Egypt's TN/S/M/14 
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 initial offer.  He joined Japan in  asking Members to place priority on  this sector in the request and 
offer negotiations. 
231. The representative of Turkey
 supported greater liberalization of construction services and 
encouraged Members to schedule more liberalized co mmitments in their initial and revised offers.  In 
this regard, she concurred with the points made by Japan. 
232. The representative of Korea  endorsed the comments by Japan on construction services and 
recalled Korea's negotiating proposal in this sector of  May 2001.  Korea stressed that the liberalization 
of the construction services sector would greatly contribute to the development of infrastructure and the creation of employment, especially in developing countries. 
233. The representative of Norway
 expressed his delegation's support for the views expressed by 
the Japanese delegation.  Construction services we re important to building infrastructure and 
liberalization in this sector would bring down the cost of building projects.  In this spirit, Norway had 
improved its commitments on construc tion services in its initial offer. 
234. The representative of Mexico  welcomed the statement made by Japan on this sector as well as 
the support given by other countries.  He hoped that  the level of ambition demonstrated would be 
reflected in the offers, including in mode 4.  Although the sector was a generator of infrastructure, it 
was also a generator of employment and for this  reason he hoped that the commitments made would 
include all modes. 
235. The representative of Australia  said his country considered construction to be a very 
important sector in any economy.  He noted that Aust ralia had made commitments in five out of eight 
sub-sectors in the Uruguay Round and was looking at the possibility of making further commitments. 
236. The representative of China  agreed with many of the points referred to by the representative 
of Mexico and reiterated that c onstruction services was one of the many examples where developing 
countries, including LDCs, might have a special interest. 
237. The representative of Chile , in the interests of time, indicat ed that her comments were similar 
to China's. 
238. The representative of Chinese Taipei  welcomed the statement made by Japan and agreed with 
others on the importance of liberalization in construc tion.  Chinese Taipei believed that construction 
services were the cornerstone of the infrast ructure which supported a Member's economy. 
239. The representative of South Africa  said that construction was one of the key service sectors 
and her delegation looked forward to more engagement and discussi on on the liberalization of this 
sector. 
240. The representative of Malaysia  shared the view that construction services supported all 
sectors of the economy.  It was an important element for the development of a country.  Malaysia shared the view of Japan and urged more Members, especially developing countries, to submit offers on this sector. 
241. Before turning to education services, the representative of Switzerland
 sought to note that the 
fact that his delegation had not intervened on all of the very interesting papers that had been presented 
was not a sign of disinterest.  On the contrary, Switzerland was supportive of the process and he shared the views presented by the various sponsor s regarding computer services, construction and 
legal services.  He observed that the discussions over the course of the meeting highlighted the 
importance of all sectors.  Switzerland was committed to all of them and he encouraged Members to  TN/S/M/14 
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 take note of the positions expressed and to respon d with quality offers.  The discussion had also 
vividly confirmed a point made by  many delegations regarding the Review of Process, namely, that 
there was no reason to exclude any sector a priori because all had some merit.   
242. Turning to education services, the representativ e of Switzerland sought to inform the Council 
that his delegation had finalized a submission on the education sector and said that it would be 
transmitted formally to the Secretariat shortly.  The submission described the Swiss experience in 
education services, including the role of public e ducation services and private education services in a 
modern and dynamic economy.  As Switzerland was one of the countries that had undertaken rather 
substantial commitments in the Uruguay Round in th e education sector, he thought that it would be 
interesting to share Switzerland's experience with th ose commitments.  The main conclusion of the 
paper was that Switzerland had encountered no proble ms in terms of education policy or markets or 
services over the ten years since the implementation of  rather liberal commitments.  The paper also 
presented the market environment and broadly the le gal regime in relation to GATS commitments and 
their relevant implement.  The paper drew two impor tant conclusions.  Firstly, that it was possible to 
have, in the same system, a strong and performi ng public educational system and an open, non-
discriminatory and dynamic private educational sector.  Secondly, GATS commitments were an 
important element in achieving a liberal and attractive regime in the educational sector.  He encouraged Members to consider the appropria te way to undertake commitments in education 
services.  He assumed that the paper would be ready for discussion at the next meeting and he said that he would welcome any questions on it.  He ho ped that sectoral experts from capital would also be 
present on that occasion.   
243. The representative of Mexico
 wished to draw attention to a topic which had become one of 
concern in his country because of the implications  it could have on trade and for the international 
negotiations that Members were undertaking.  He  recalled comments by delegations throughout the 
week on the need for greater efforts, a change in p ace, greater clarity in the process, etc., with a view 
to going to Hong Kong with a result that would be fair for all and said that these objectives were 
positive.  At the same time, however, he said that so me of the key participants in this process were 
undertaking efforts and actions at the international level to convince certain major economic sectors in 
many countries that they should be developing an international instrument which could be used as a 
safety valve to exclude certain sectors from the negotia tions.  He said that this would obviously work 
against existing and potential commitments and oblig ations.  He pointed out that in Mexico, the 
cultural sector and specifically those activities prot ected by copyright, represented some six per cent 
of the GDP with significant export and import activiti es with many regions of the world.  Mexico 
wished to reiterate its concern in this regard  and have it recorded in this forum.    
244. The representative of Hong Kong, China  sought to echo the statement made by the delegation 
of Mexico.  Hong Kong, China shared the concerns  with the position taken by certain major trading 
partners.  He said that some of Hong Kong, China's key trading partners had indicated in bilaterals 
that they would not be prepared to make an offer in the important sector of audio-visual services or 
what they regarded as cultural ser vices until the particular international instrument which was being 
deliberated in another inter-governmental body, to  which the representative of Mexico had alluded, 
had come into being.  In Hong Kong, Ch ina's view, this was tantamount to an a priori  exclusion of 
such services from the negotiations which defied th e negotiating guidelines.  Elaborating on a point 
alluded to by the delegation of Me xico, he sought to highlight that the GATS was flexible and that the 
same Members that had expressed reluctance to enga ge in the negotiations on audio-visual services 
had emphasized the flexibility of the GATS in accommodating national policy objectives in their support of liberalization in other sectors.  It seem ed that the flexibility of the GATS was itself a very 
flexible concept.  He echoed the comments by Me xico about the economic importance of the audio-
visual sector.  He stated that it was a sector of economic importance to many economies including that 
of Hong Kong, China. TN/S/M/14 
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 245. The representative of the United States
 sought to echo the sentiments expressed by Mexico 
and Hong Kong, China as well as to highlight the be nefits for liberalization in the audio-visual 
services sector to domestic industry and in generating broad economic and social benefits by bringing 
new techniques and technologies to domestic industr y.  New technologies had in turn led to the 
development of a multitude of new services that ma ny countries were, for the first time, offering 
internationally.  These new technologies would increase the use of the network, and help to create an 
environment that would encourage investment in the digital networks of the future.  It was for this 
reason that the United States believed that it was so important, in light of these economic 
developments, that the United States join Hong Kong China and Mexico and other members of the 
audio-visual friends group who were emphasizing th e importance of promoting broader market access 
in this round and discouraging any effort to create what was, in effect, a de facto a priori exclusion of 
this sector from the negotiations.  Her delegation believed that this kind of de facto a priori exclusion 
from this Round would have adverse economic conseq uences to the growing number of Members that 
understood their sectoral and broad economic interests in this area.  Her delegation urged Members to 
avoid any efforts to exclude this sector from the negotiations and to avoid creating a systematic 
problem within the WTO.  The United States believed that this problem was more regrettable in view 
of the flexibility, as mentioned by the delegati on of Hong Kong China, that governments enjoyed 
when scheduling commitments in a way that r ecognized public concern for the preservation and 
promotion of cultural values and identity.  Countries  could make full or partial commitments should 
they so desire and when undertaking those commitme nts could continue to re gulate services covered 
by the commitments so long as the regulation was not  administered in a way that represented an 
unexpected trade barrier.  Additionally, in its current form, the GATS did not prevent governments 
from funding audio-visual services, which was a sensitive issue for many Members, where for 
example, local theatrical film production was depe ndent on government support.  For these reasons 
the United States considered the negotiation of au dio-visual services as crucial to the continued 
growth of the sector and to the wide economic and social benefits it offered to all countries.   
246. The representative of Japan  sought to support the statements made by Mexico, Hong Kong 
China and the United States.  Japan noted that the discussions on the culture diversity convention 
were ongoing at UNESCO and that some countries had certain sensitivities in this area.  As had been 
stated by Hong Kong, China, Japan considered that the GATS had a flexible structure to enable 
countries to make commitments which could accommodate its country's national policy objectives.  It was Japan's view that it was possible to make progr ess in the liberalization of audio-visual services 
while making reservations in certain sensitive areas.   The free flow of culture would not be to the 
detriment of cultural diversity.  On the contrary, Japan considered that liberalization might provide 
substantial benefits to developi ng countries through increased foreign investment which would lead to 
the opening of new markets for each country's cultu re.  Bearing these elements in mind, Japan sought 
to stress that the audio-visual sector was a sector which Japan continued to consider as important in 
the negotiations and hoped that c ountries would consider Japan's request positively while remaining 
mindful of its their national policies in this area. 
247. The representative of Chinese Taipei
 wished to support the statements made by Mexico, 
Hong Kong, China, the United States and Japan.  She wish ed to point out that liberalization in the area 
of audio-visual services could bring an increase in foreign direct investment, tourism and the 
promotion of cultural activities to a wider audience.  As she had noted in an earlier intervention, it 
was very difficult to subscribe more weight to one sector over others.  She agreed with the point made 
by other delegations that the GATS provided flexib ility that would allow Members to pursue their 
national policy objectives.   
248. The representative of the United States , making a brief statement in support of energy 
services week,  indicated the United States' strong su pport for this event and encouraged Members to 
attend.  She sought to note that energy services represented a wide pallet of activities ranging from 
initial geological, geophysical and other prospective identification work to project management for  TN/S/M/14 
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 drilling, transportation and marketi ng of the resource.  Most of these activities could be found within 
the W/120 classification list.  The competitive provisi on of these energy services helped to ensure that 
energy consumers, both residential or commercial,  had access to efficiently produced and market-
priced reliable energy.  The availability of effi ciently-produced and market-priced reliable energy 
resulted in broad economic benefits  which provided the catalyst for ec onomic growth and stability.  In 
addition to meeting the demand of developing countries, which was estimated to increase by 50 per 
cent over the next 20 years, a competitive market fo r energy services would create jobs, enhance job 
skills and provide training for local populations.   
249. Referring to the summary by the Chairman of the mode 4 informal discussion, the 
representative of the United States sought to state for the record that, with respect to the discussion on 
the Secretariat categories paper, it was her delega tion's understanding that the Secretariat categories 
paper had been prepared under terms of reference that  had been agreed to by Members, that the paper 
had reflected only what was contained in existing commitments, and that it had not intended to be 
comprehensive with respect to all of the possible categories that Members had desired to see included 
in the course of the negotiations. 
250. The representative of Oman  wished to underline her delegation's support for the energy 
services week.  As an oil exporting country, Oman believed it was an important event and she invited 
all Members to participate. 
251. Noting the lateness of the hour, the Chairman  said that many of the proposals that had been 
presented were very important and that there had been a very positive interaction among Members.  
Some of the proposals had been submitted very recently or would be su bmitted shortly.  Many 
delegations indicated their wish to revert to th ese proposals at a later stage after they had had the 
opportunity to consider them more fully.  He thou ght that the consideration of these proposals merited 
a lot of attention and discussion among Members because  they could prove relevant, particularly in 
the context of the work to be accomplished before May.    Bearing this in mind, he suggested that he 
keep this agenda item open so that Members could re vert to them in the coming weeks.  He suggested, 
for example, that the meeting could be resumed the same week as the Symposium on Cross Border 
Supply of Services.  This would give Members an opportunity to more carefully consider the issues.  The Chairman recalled his summary of the info rmal discussion on mode 4, made on his own 
responsibility, and said that this summary would be  included in the record of the meeting.  The 
Chairman invited Members to take note of all the statements made and proceed as he had outlined. 
252. It was so agreed
. 
 
C. CONSIDERATION OF PROPOSALS ON S&D  TREATMENT PROVISIONS  
253. The Chairman  recalled that the General Council's July Decision, in paragraph 1(d), "instructs 
all WTO bodies to which proposals in Category II have  been referred to expeditiously complete the 
consideration of these proposals and report to the General Council, with clear recommendations for a 
decision, as soon as possible and no later than July 2005."  As he had proposed at the last meeting, he 
had held informal consultations with the proponents of the proposals.  They had reviewed their 
proposals and had indicated that they would soon be in  a position to interact with other Members.  He 
expressed his intention to follow up on this matter  shortly in different formats.  Once it was 
determined that consultati ons had been completed, he would inform the Chairman of the CTD-Special 
Session of developments.  He said that at the next formal meeting of the Special Session in June he 
would outline his report on this issue.  The Chai rman proposed that the Council take note of his 
statement and that the Council revert to this item at its next meeting. 
254. The Council so took note . TN/S/M/14 
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D. W
ORK OF THE SUBSIDIARY BODIES – REPORTS BY THE CHAIRPERSONS  
255. In keeping with what had been agreed con cerning the regular reporting from the subsidiary 
bodies to the Special Session, the Chairman  invited the chairpersons of these bodies to make their oral 
reports. 
256. The Chairperson of the Committee on Specific Commitments , Mr. Roberto Bosch of 
Argentina,  reported that since December the Commit tee had held one formal meeting, on 11 February 
2005, at which the Committee had endorsed a set of  editorial conventions for the submission of 
revised offers, and had addressed its regular agenda items of classification and scheduling issues.  The 
Committee had agreed to proceed with a set of ed itorial conventions for the submission of revised 
offers, as proposed in a Note he had presented (Job(05)/6).  These new conventions would apply 
together with the earlier conventions set out in Job(02)/88, i.e., the use of bold, strikethrough, and italics in the offers, which Members had generally  followed.  For the revised offers, Job(05)/6 
suggested that Members use shadi ng to indicate any changes from their initial offers.  It was further 
recommended that Members indicate in the cover note to their revised offers the sub-sectors in which 
they offered new commitments, and in which colu mns or other parts of their schedules they were 
introducing changes to previously scheduled or o ffered commitments.  Under the first standing item 
on its agenda, scheduling issues , the Committee had continued its ex amination of general scheduling 
questions, including issues relate d to economic needs tests, on the basis of various written 
contributions from Hong Kong, China and Chinese Ta ipei.  A larger number of delegations were 
participating in these discussions, and some of them  had opted to make their comments in informal 
mode.  The Chairperson had hoped that this possib ility also would encourage other delegations to 
actively participate in these discussions.  As for th e more specific questions posed with regard to 
Members' offers, some of the addressees had s uggested possible formats in which they would 
consider replying to these questions.  The Chairpers on had undertaken to consult on this matter with a 
view to facilitating this process.  Under the agenda item of classification issues, the Committee had 
continued its discussions on Indonesia's revised proposal on the classification of energy services 
(S/CSC/W/42/Rev.1 and Corr.1), as well as on lega l services.  The European Communities introduced 
a new communication on classification in the telecoms sector (S/CSC/W/44).  In informal mode, the Committee discussed classification issues in the area of audiovisual services.    
257. The Chairperson of the Working Party on GATS Rules
, Ms. Clare Kelly of New Zealand, 
reported that the Working Party on GATS Rules had held a formal meeting on 7 February 2005.  The 
three usual items had been on the agenda.  On subs idies, papers relating to the definition of subsidy 
had been presented by the Secretariat and the delegation of Singapore.  The United States had 
presented a communication on the information excha nge.  Many had felt that the suggestion by the 
United States to focus the information exchange on one or two sectors at a time was useful.  This 
might help get a better handle on particular problems to address, if any, and, consequently, on the 
necessary disciplines.  Delegations had held different  views as to the sectors with which to start.  
While some had mentioned tourism,  others had preferred sectors such  as transport and construction.  
The Chairperson had invited delegations, in particular  the proponents, to make appropriate efforts to 
provide information on tourism or other sectors of th eir choosing at the next meeting.  On government 
procurement, delegations had continued their discussion of the proposal by the European 
Communities for a framework under GATS for govern ment procurement in services.  Interventions 
had focused on the application of the MFN obliga tion, including possible derogations, as well as on 
procedural rules.  Various delega tions had reiterated their view th at the negotiating mandate did not 
cover market access issues.  On emergency safegua rd measures, delegations had continued their 
discussion on the basis of the answers provided by a group of ASEAN Members to questions raised with respect to their proposal.  Issues touched upon in cluded:  the availability of appropriate statistics, 
the relationship between safeguard measures and obliga tions in bilateral investment treaties, the link 
to progressive liberalization (in particular whet her an ESM would be relevant for any type of  TN/S/M/14 
 Page 73 
 
 
 commitment), and the use of alternative scheduli ng devices.  The Chairperson pointed out that the 
UNCTAD had been invited to present papers at the forthcoming meeting on two topics: subsidies and 
emergency safeguard measures.  She said that in  concluding the meeting, she had stressed to 
delegations that 2005 was an important year in th e negotiations and that Members would have to 
develop a clear view as to what was achievable in  view of the Hong Kong Ministerial.  While the 
issue of subsidy disciplines had not yet been the subject of negotiating proposals, the Working Party 
had received such proposals on ESM and government  procurement, but delegations remained far 
apart.  Many delegations clearly did not share the hi gh level of ambition displayed by the proponents.  
In that context, as the Chairman had pointed out to the TNC, it was difficult for substantive 
negotiations to take place.  Delegations needed to  focus on what was realistic and doable.  Members 
needed clearer ideas in these areas by the June cluste r.  With that in mind, she said she would consult 
delegations over the next weeks and looked forward to an informal meeting before the next cluster.   
258. The Chairperson of the Committee on Trade in Financial Services , Ms. Mi-yon Lee of the 
Republic of Korea, reported that the Committee on Tr ade in Financial Services had met on Thursday, 
10 February. The delegations of Brazil, Jamaica,  and the Philippines had yet to accept the Fifth 
Protocol to the GATS.  Jamaica explained that  acceptance had been delayed as more time was 
required to complete the process of putting in place certain measures to strengthen the regulatory and 
institutional framework of the financial sector, par ticularly in the areas of pension supervision and 
anti-money laundering. Brazil explained that accept ance of the Protocol had been delayed, not 
because of substantive objections, but due to le gal and juridical problems encountered with the 
passage of recent legislation on insurance that was necessary to implement Brazil's promised 
additional commitments. A number of delegations expressed their concern about the delay in the 
acceptance of the Protocol by these three Member s and encouraged them to accelerate those 
procedures. No specific topics were raised under the agenda item on Technical Issues. In that regard, 
the Chairperson had encouraged Me mbers to reflect further on any possible technical matter that 
might arise in the bilateral negotiations and that might benefit from a multilateral discussion at the 
Committee.  Egypt had announced its intention to ma ke a presentation on recent developments in its 
securities market at the forthcoming meeting.  Under Other Business, Australia had presented a 
statement on the importance of financial services liberalization for economic growth, stability and 
development; and setting some objectives for these ne gotiations. This same statement, which was co-
sponsored by an important number of delegations, had been circulated to the Special Session.  The Committee would meet again in June 2005, with in the next cluster of services meetings.  
259. The Chairperson of the Working Party on Domestic Regulation
, Mr. David Cairns of the 
United Kingdom, reported that since the December 20 04 meeting of the Special Session, the Working 
Party on Domestic Regulation (WPD R) had held one formal meeti ng, on 8 and 18 February 2005.  
Switzerland, India, the United States, and a group of countries (Brazil, Colombia, Dominican Republic, Peru and the Philippines) had presented new proposals for regulatory disciplines, which had 
been well received and prompted extensive preliminary discussions.  Switzerland's proposal 
(S/WPDR/W/30) was for regulatory disciplines for technical standards in services; India's proposal (circulated as a room document, as were the other proposals) concerned elements for disciplines on qualification requirements and procedures.  The Unite d States' proposal covered regulatory disciplines 
on transparency, and that from Brazil, Colombia, the Dominican Republic, Peru and the Philippines 
was a comprehensive proposal for disciplines.  In addition to these new pape rs, Mexico had given a 
detailed presentation as a follow-up to questions raised  at the previous meeting on its paper regarding 
technical standards (S/WPDR/W/30). Members ha d discussed briefly Colombia's paper on visa 
procedures (S/WPDR/W/29).  Members had agreed th at the Secretariat should compile a listing of 
regulatory elements in the FTAs and RTAs notified to the WTO.  The Secretariat had updated its 
examples paper, and Members had agreed that they would continue discussion of a possible matrix 
approach to the examples exercise at the next meeting. The Secretariat also had updated its report on 
consultations with international professional ser vices organisations, including comments from the 
International Union of Lawyers.  The next form al WPDR meeting would be held during the next TN/S/M/14 
Page 74  
 
 cluster and the WPDR had agreed to hold an inform al meeting on 31 March.  The WPDR had made a 
purposeful start to its work in 2005. The work ing party had seen four new proposals, followed by 
some hundred interventions and calls for further info rmal meetings to take work forward.  Members 
were sending clear signals that they attached importa nce to the work of this working party and that 
they wished to make progress in 2005.  
260. The Chairman
 thanked and congratulated the Chairpersons on the considerable amount of 
work they had done over the past year.  He proposed that the Council take note of their reports.  
261. The Council so took note . 
 
E. REVIEW OF PROGRESS IN THE NEGOTIATIONS , INCLUDING PARAGRAPH 15 OF THE 
PROCEDURES FOR NEGOTIATIONS  
G.  O RGANIZATION OF FUTURE WORK 
262. Speaking on 21 February, the representative of Indonesia  wished to inform the Council that 
Indonesia had submitted its initial offer to the Secr etariat for technical proof-reading and would be 
subsequently circulated to all Members.  The initial offer served as Indonesia's positive contribution 
to the on-going negotiations as well as a commitmen t to carry out the mandate in the DDA and the 
Decision adopted by the General Council on 1 Augus t 2004.  By means of its offer, Indonesia 
reiterated its WTO commitments to achieving gradua lly progressive liberalization that took into 
account its capability as a developing country.  His capital had worked hard to prepare the initial 
offer.  The process was both complete and challengi ng.  It involved lengthy  domestic consultations 
with individual sectors and all relevant stake holders.  Indonesia had taken into account specific 
requests and suggestions that had been received  from its trading partners.  The offer included 
improvements to Indonesia's existing commitments in the sectors of construction, financial and maritime services.  Indonesia had also provided a new offer of specific commitments in professional (legal), education, health, energy and construction services.  In maritime cargo handling services, Indonesia was offering a new commitment on the foreign equity shares allowed for joint ventures.  In 
addition, in the horizontal commitments, Indonesi a was offering to make new commitments on the 
entry and temporary stay of business visitors.  Ind onesia also proposed to eliminate all exemptions 
scheduled under Article II of the GATS with a view to urge other Members to do the same.  
Highlighting some of the new commitments that In donesia was offering, he said that in construction 
services, Indonesia would allow up to 55 per cent fo reign participation in building constructions.  
Indonesia also offered new commitments in found ation work, including pile driving, gas fitting 
construction work, fire alarm cons truction work, burglar alarm system construction work, and lift and 
escalator construction work.   In the sector of education services, Indonesia offered new commitments in the sub-sectors of secondary education services, higher education services, adult education and other education services.  In the sector of hea lth services, Indonesia offered commitments in the 
hospital services in specialised and sub-specialised ser vices or tertiary care.  In energy services, 
Indonesia made new commitments in the core analysis and other laboratory test (only for Isotop 
analysis), and geological and geophysical service (for seismic data acquis ition and liquefaction and 
gasification for coal).  In this regard, Indonesi a's initial offer on energy services was based on its 
proposal on energy services classification.  Moreover, in financial services, Indonesia offered an improvement in the acquisition of local existing ba nks up to 51 per cent of the shares of locally 
incorporated banks listed in the stock exchange.  In donesia also proposed to delete the limitations on 
national treatment in terms of the different require ment in paid up capital.  In addition, the new 
schedule would include further liberalization of ge ographical limitations for foreign banks and joint 
venture banks.    TN/S/M/14 
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 263. The representative of Indonesia sought to underlin e some of the parameters that had guided 
and would continue to guide his de legation's approach in the negotiati ons.  Firstly, the initial offer was 
conditional upon a balanced outcome, not only within the services negotiations, but also on the overall 
DDA negotiations.  Paragraph 47 of the Doha Declaration stated, "the conduct, c onclusion and entry 
into force of the outcome of the negotiations sh all be treated as parts of a single undertaking".  
Moreover, paragraph 49 emphasized the need for all areas of the present negotiations to be conducted 
with a view to ensuring benefits to all participan ts and to achieving an overall balanced outcome.  In 
this connection, his delegation sought to emphasize th at Indonesia's final level of commitment in the 
services negotiations would be determined by th e development and result in other areas of the 
negotiations.  Bearing in mind the principles of pa ragraphs 47 and 49 of th e Doha mandate, Indonesia 
believed that a concrete result was required on issues of interest to developing countries, particularly 
on Agriculture, NAMA, and Development and Implemen tation issues.  In this regard, he was pleased 
to inform the Council that Indonesia was prepar ing to make some requests for market access 
liberalization in sectors of its interest.  The wr itten communication of his delegation's requests would 
be forwarded to respective Members through their diplomatic missions during the course of the 
session.  Secondly, his delegation was of the position that the conclusion of the services negotiations 
required a balanced outcome with regard to ma rket access and rule-making within the GATS.  
However, while the market access track of the ne gotiation had evolved at a steady pace, the rule-
making aspect had lagged farther behi nd, particularly on the issue of ESMs.  Given the concern of 
Indonesia's domestic services suppliers on the absence of a safety net provision for trade in services, 
the extent of Indonesia's commitment would very much depend on the outcome of the negotiations 
stipulated in GATS Article X on ESMs.  Thirdly, the Doha Mandate required that the negotiations on 
trade in services be conducted with a view to pr omoting the development of developing and least-
developed Members.  In this regard, his delegati on called upon Members to ensure positive results of 
the negotiations in terms of improved market acce ss for developing countries' services suppliers and 
efforts to strengthen their domestic supply capacity.  Members needed to ensure  that the negotiations 
in services truly contributed to the goal of this de velopment round.  With these parameters in mind, it 
was pertinent to underline Indonesia's right to modify, extend, reduce, or withdraw in whole or in part 
any of its offer at any time prior to the conclusion of  the negotiations.  Finally,  he sought to express 
his delegation's gratitude for the technical assistance  that had been extended by the Secretariat in 
drawing up its offer.  Indonesia welcomed any comm ents Members might wish to make on its initial 
offer.  
264. The Chairman  said that Indonesia's offer was an important contribution from an important 
Member to the negotiating process.  On behalf of  all the Members, he thanked Indonesia for its 
announcement. 
265. The representative of Australia  sought to record her delegation's reaction to Indonesia's 
announcement.  She very much welcomed Indonesia' s new offer which had been long awaited by her 
delegation.  Indonesia was Australia's closest ne ighbour and her delegation placed a particularly 
strong emphasis on offers from the region.  The sectors that Indonesia had outlined were all of interest 
and her delegation looked forward to seeing the deta il of the offer when circulated.  Referring to 
Indonesia's comment that it would be making re quests, her delegation understood that it would 
receive some and looked forward to working with Indonesia on offers and requests.   
266. Speaking on 25 February, the Chairman  drew attention to a facsimile message sent to 
delegations informing them that, in the interests of time, he intended to take up items E and G of the 
agenda simultaneously. 
267. The representative of Djibouti  said that his participation in the meeting would be made 
difficult because the Secretariat had not taken the tro uble to translate the few pages of documents for 
consideration.  The African Group hence did not wi sh to participate.  Responding to a question from TN/S/M/14 
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 the Chairman, the representative speci fied that the documents to which he was referring were the new 
documents that had been distributed that morning.   
268. The Chairman
 said that he had been told that the documents in question had been transmitted 
to the Secretariat on the evening of 24 February, which was indicated on the documents concerned, 
thereby making it impossible to have them transl ated for 25 February.  While he regretted the 
situation, he said that this was not the responsibility of the Secretariat but of the delegations that had 
submitted them in an untimely fashion.   
269. The representative of Djibouti  said that this phenomenon was becoming a regular occurrence, 
excluded a large number Members and often was not  related to the timing of the submission of 
documents.   
270. The representative of th e European Communities , said that his delegation was among the 
Members that gave great importance to the fact that all documents were circulated in English, French 
and Spanish.  He said that it was important for hi m that Djibouti participate in the discussions and 
appealed to the representative in this respect.   
271. The Chairman  recalled that on 21 February the repres entative of Indonesia had announced the 
imminent submission of its initial offer.  He reca lled that he had also made, in informal mode, a 
factual presentation on the state-of-play of the initial  offers.  In addition to the worrying number of 
initial offers outstanding, the presentation sought to illustrate the point that the quality was poor and 
that there were many sectors in which new commitments were not forthcoming.  He said that numerous comments had also been made in the past on work on rule-making.  He recalled that he had 
made a frank statement to the Trade Negotiations  Committee at its meeting on 14 February, which 
was contained in Job(05)/16.  He did not wish to re peat himself in this regard.  He recalled that two 
important benchmarks lay ahead.  The first was in  May and concerned improved offers.  The second 
was the Sixth Ministerial Meeting.  Members would need to begin to seriously consider the progress 
that they sought in the negotiations by that me eting.  He would welcome under the present agenda 
item, and in consultations over the coming week s through a regular process of consultations, 
Members' views and expectations.  This would greatly determine how  work would be organized.  He 
stressed the importance of carrying this work out in  good time, because a first check would need to be 
conducted at the next cluster of meetings.  This me ant that the conclusions drawn in June would be 
greatly determined by the quality of the offers that  Members would submit in May.  In the light of 
these conclusions, Members would be better able to ev aluate their expectations for progress in market 
access and rule-making.  He said that greater awar eness had been made on the necessity to redress the 
situation of the services negotiations and he noted th e large number of heads of delegations present.  
He said the point needed to be forwarded to senior officials and ministers.  He said Members needed 
to act urgently and seek greater political support as necessary.  He drew attention to Job(04)/176 
which appeared for the first time on th e agenda for formal consideration. 
272. The representative of Barbados
 said that he had the pleasure to announce that Barbados would 
be tabling its initial offer to the Secretariat in the coming days and Members would be in receipt of the 
offer shortly thereafter.  The offer underscored the im portance that Barbados attached to the fulfilment 
of the mandate for the negotiations on services as contained in Article XIX of the GATS, the Doha 
Ministerial Declaration of 14 November 2001, and the General Council Decision of 1 August 2004.  
The offer, which had been the subject of an exte nsive multi-stakeholder process, as well as regional 
consultations, included new and improved market access and national treatment commitments across 
various sectors and sub-sectors.  In this respect a nd in recognition of the need to attract computer 
services and technology-driven research and developmen t services, Barbados ha d offered to undertake 
commitments in computer and related services as well as research and development services.  New commitments had also been taken in sectors such  as business services, environmental services and 
transport services, among others.  This undertakin g also served to highlight the challenges and  TN/S/M/14 
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 opportunities presented by the liberalization of trad e in services for small and vulnerable economies 
such as that of Barbados.  He said that his country  sought to build domestic capacity by safeguarding 
the well-being of the most vulnerable sectors of Barbados' economy while seeking to exploit potential 
benefits from market access opportunities in other coun tries.  For this reason, and in line with GATS 
Article IV and XIX objectives as well as the princi ples outlined in the Guidelines and Procedures for 
the Negotiations on Trade in Services, it was critical that the process of liberalization took place with 
due respect for national policy objectives.  The le vel of development and the size of economies of 
Members, with due consideration being given to the needs of small and medium service suppliers 
particularly in developing countries,  were note-worthy.  It was paramount  that, in the round, particular 
attention be given to the modes of supply of export interest to developing countries in order to more 
effectively realize the development objectives of the DDA.  Barbados looked forward to a 
development-oriented outcome in the negotiati ons that would reflect new and meaningful 
commitments in the market access area as well as development-sensitive rule s and disciplines.  He 
thanked the WTO Secretariat for the valuable assistan ce rendered in the preparation of the offer.  He 
thanked as well the Chairman for his efficient res ponse to a request for assistance.  Barbados was 
firmly committed to playing its part in a successful  outcome of the negotiati ons and looked forward to 
constructive engagement with Members in the time ahead. 
273. The Chairman , on behalf of the Council, thanked Barbados for its contribution to the 
negotiations and said that it was an important and va luable step.  He thanked the representative of 
Barbados for his kind words to the Secretariat and himself.  
274. The representative of Mexico  said that his delegation believed that what had been 
accomplished in the cluster was positive and important .  Progress had been made in different areas.  
Members had discussed technical aspects of great impo rtance for the development of the negotiations.  
Mexico believed that Members were moving in a good direction.  For Mexico, the commitment to this 
negotiation was most important, as it lent great importance to the multilateral trading system.  For his country, the negotiations were of the highest importan ce.  He said that Mexico had been very active, 
and noted that its offer was attractive in relativ e and absolute terms.  He said that, since 2000, 
progress had been considerable, although perhaps not as considerable as Mexico would have liked.  
He recalled that some delegations had noted th at progress in services was lagging behind progress 
made in other areas.  Although Mexico considered th at the pace of work need ed to accelerate in order 
to achieve an outcome, Mexico did not believe that work in the Special Session was out of step.  The 
negotiations in services had made similar progress to what had been achieved in other areas.  What 
was vital was that ministers become more involved, along with those in capital so as to ensure that the 
services negotiations by June and for the next cluster would have made sufficient progress for 
Members to assess progress.  Mexico hoped that, by th is point in time, a critical mass of initial offers 
would have been made in order to have an id ea as to what could occur by Hong Kong.  As the 
Chairman had pointed out, he believed that it would be necessary to have a greater number of offers 
on the table, and in this regard he thanked Indon esia and Barbados for their announcements.  He said 
that it was necessary for the quality of the offers on the table generally to be  improved substantially.  
If the appropriate signals were not made through the offers forthcoming in the coming months, then it 
would be difficult to justify internally the particip ation of different delegatio ns in the negotiations.  
Unfortunately, Members found themselves in a negotia ting phase in which they needed to report back 
and in which they needed to balance what was sought for with what would be received.  He wanted to 
mention a point of concern of fundamental impor tance for his delegation.  Whereas at the WTO 
Members were seeking to liberalize trade in services with a measure of success, in other organisations apparently, attempts had been made to go backwards, at least as concerned sectors that were of interest to those organisations.  He sought to draw  the Council's attention to this problem.  What was 
needed was liberalization of trade in services on an  ambitious scale.  He said that the developed 
Members in the current round should not only bind ex isting liberalization in various sectors, but also 
open sectors of interest to developing countries in te rms of services and modes.  From the view-point 
of developing countries, special interest should be given, including to the LDCs, in order to bring TN/S/M/14 
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 positions closer and to the level of liberalization whic h currently existed.  He said that his delegation 
hoped for an ambitious result and as such Member s needed to prepare for the next step.  
275. Turning to work on horizontal rules, he said that  his delegation viewed with satisfaction that 
various bridges were being built as a result of propo sals and discussions that had been held in the 
WPDR.  He said that there was a possibility of fi nding consensus, and that the discussion should be 
focused so as to draw up rules pursuant to the mandate  contained in Article VI:4.  He said that greater 
content should be given to the discussion related to  subsidies without overlooking the fact that other 
subjects deserved additional attention.  The delegati on of Mexico considered it necessary that by June 
Members would have accomplished the following.  Firstly, in the ministerial meetings, greater 
relevance should be given to the subject of services.  In the informal meetings of ministers, discussion 
needed to be promoted.  Members needed to continue  work in all areas of interest to Members.  His 
delegation did not think that a sectoral approach  on market access would be appropriate, although 
bilateral and plurilateral meetings  should be pursued between meeti ngs that would allow for greater 
progress, particularly on the basis of revised offers .  He said that a great contribution had been made 
within the friends groups.  Members needed to make this work more transparent and needed to favour 
greater participation of the representatives of th ese groups who could give insight into the various 
sectors.  Resources in Geneva should be used to a maximum and progress in subsidiary bodies should 
be made between clusters with the aim that by July Members would have a clearer idea of progress made and with respect to the Ministerial Meeting in Hong Kong.   
276. The representative of Switzerland
 said that it was a fact that since the early days of the round 
services had attracted relatively little attention at the political level.  Consequently, until recently, one 
could have had the impression that work was progr essing smoothly.  Unfortunately, this impression 
did not reflect the real state of play.  At the current stage, the area of services was presenting a 
disappointing picture.  The total number of initial offers presented was low and the quality of the offers was generally low.  The present situation w as a cause of serious concern to his delegation.  
Despite the impressive activity that had been depl oyed over the past three years under the Chairman's 
able guidance, which he hoped would continue to be so in the futu re, the major part of the work 
remained to be done in order to ensure a meaningful  result in this key area of the DDA.  In this sector 
the Council needed to change gears and to start work  in earnest on market access as well as on rules.  
If negotiations on services were to fall short of expectations, a sub-optimal outcome could well 
jeopardise the progress of work and lower the leve l of ambition in other areas of the round.  He 
believed that such an outcome would not be desi rable for any Member.  He took it that, under the 
present circumstances, services would necessarily come  under closer political scrutiny by ministers.  
Members should welcome and encourage such a de velopment in order to ensure the necessary 
increased engagement in capitals as well as in Gene va.  In this regard, May 2005 was the most 
immediate challenge faced.  On the road to th e Hong Kong Ministerial Conference, the May date 
would represent an early signal of what could be achieved in the services area at the year's end.  He 
urged all Members who had not done so to submit their initial offers and requests expeditiously.  
Switzerland expected Members to table, by May 2 005, qualitatively meaningful revised offers not 
excluding a priori  a sector or mode of supply.   His de legation believed that it was the collective 
responsibility of all Members, and of the developed Members in particular, to do so. He stressed that 
if Members wanted the Hong Kong Ministerial C onference to be a success, this first step, among 
others, was a necessary cond ition in the services area. 
277. The representative of Norway
 said that numerous studies, including the World Trade Report, 
made evident the large economic benefits of op ening services markets.  The case for liberalization 
was particularly strong with services directly rela ted to supporting overall economic activity, such as 
telecommunications, computer, transport and financia l services.  Many Members had taken advantage 
of the benefits of liberalization by autonomously liberalizing their services markets.  Unfortunately, 
the political will to liberalize had not been paralleled by the political will to table offers for binding 
commitments in the Doha Round.  Asking why Members should commit under the GATS and not  TN/S/M/14 
 Page 79 
 
 
 limit themselves to the benefits of autonomous liber alization, he then responded that, in Norway's 
view, the benefits of making binding commitments were clear.  They ensured predictability and 
transparency in the framework for trade in services and thus stimulated trade and reduced the risk for 
both domestic and foreign service providers.  Norw ay believed that all had a common interest in 
narrowing the gap by adjusting GATS commitments to the actual situation in services markets.  
278. The representative of Norway said that his dele gation considered the May deadline for revised 
offers as a milestone for assessing the effectiveness of the bilateral request-offer process after nearly 
three years of negotiations.  By May, revised or  initial offers needed to contain comprehensive 
sectoral coverage and high quality commitments in all modes of supply.  It was not significant 
whether an offer was initial or revised, but rather it was the quality of the offers on the table by May 
which needed to be assessed.  He ur ged those Members who had not subm itted an offer to bear this in 
mind.  In order to succeed, it was particularly important that the major economies, including large 
developing economies, lead the way forward by tab ling ambitious offers.  Noting that almost three 
years had passed since the deadline for the tabling of initial request s and two since the deadline for 
initial offers, he said that Members had had time to c onsider and reconsider the state of affairs.  The 
time had come to make some brave moves if there was to be a result in the services negotiations by 
the Hong Kong Ministerial.  In this respect, he th anked Barbados and Indonesia for their forthcoming 
submissions.  He said that if the bilateral requ est-offer process did not produce significant progress in 
terms of high quality offers, Members would need to  embark on other ways to secure a result in the 
services negotiations.  The urgency of making substa ntial progress in the services negotiations needed 
to be seen in the context of a successful conclu sion to the DDA as a whole.  Protracted services 
negotiations could furthe r delay the conclusion of the DDA.  This delay would be particularly 
detrimental to the interests of small economies a nd developing countries which lacked the negotiating 
muscle to keep pace with the preferential treatme nt offered through regional or bilateral FTAs.  
Norway had held a large number of bilateral cons ultations over the past weeks and increasingly, he 
had heard references to on-going bilateral FTAs as a justification for not tabling improved offers.  
Norway was concerned that this tendency would in creasingly hamper the possibility of concluding the 
negotiations.  He reiterated that the success of th e negotiations would depend on Members' ability to 
find an appropriate balance reflecting the interests of all Members.  Such a balance would need to 
contain substantial commitments in core services sector s in all modes of supply.  In the months ahead, 
Members would need to work hard to reach a satisf actory level of ambition in the revised offers and 
to secure negotiating mandates that were suffici ently flexible to succ essfully conclude the 
negotiations on services.  He said that the Chairman had left no doubt about what was at stake, in 
particular in the Chairman's last report to the TN C.  Norway strongly believed that Members needed 
to follow the Chairman's advice and face up to their responsibilities.   
279. The representative of the United States  said that the Chairman had regularly reminded 
Members in the TNC about the importance of the ser vices negotiations to the round.  She sought the 
opportunity, before the close of the GATS cluster,  to echo the Chairman and to underscore the 
importance of services market access and achieving a balanced package in the Doha Round before the 
end of 2006.  The DDA had treme ndous potential to promote global gr owth and development for all 
economies and this needed to include meaningful liberalization commitments in services.  Between 
the present and the December Hong Kong Ministerial m eeting, there was a great deal of work that 
needed to be done in order to ensure that servi ces had a solid framework that would secure a positive 
result in 2006.  As the next step in achieving th at goal, all Members needed to focus on preparing 
meaningful revised offers by the May deadline.  Sh e continued to urge all those that had not submitted 
initial offers to do so as soon as possible so that they  could be taken into account as the revised offers 
were being prepared.  She agreed with the Ch airman that it was good news that Indonesia and 
Barbados had announced that they would be tabli ng their initial offers and she appreciated this 
evidence of their engagement.  She said that Memb ers needed to begin to develop a framework for 
services for the first approximation in July and fo r Hong Kong that provided an effective means to 
produce real results on market access that would be nefit developed countries and developing countries TN/S/M/14 
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 alike and that would strengthen the foundation for market access.  Also required would be a package 
on domestic regulation that included meaningful transparency disciplines and a reasonable work plan for the discussion on rules issues.   Finally, fo r the first approximation and Hong Kong, Members 
would need to promote the linkage between servic es liberalization and de velopment.  The United 
States appreciated the Chairman's leadership and expressed its strong support for meaningful services 
liberalization as a result of the negotiations.   
280. The representative of India
 said that the current cluster had been useful in many ways.  It had 
led to discussion on a number of important areas a nd provided an opportunity to engage in a number 
of constructive bilaterals.  Importa ntly, it had prepared the basis fo r further constructive engagement.  
He was aware that much of this was due to th e Chairman's leadership, for which he expressed 
gratitude.  He sought to highlight the interest th at his delegation had in the services negotiations and 
the imperative need for proper bala nce in the three market access areas.  The May 2005 benchmark 
for the submission of revised offers provided a ma jor opportunity to address this balance and he 
hoped that there would be a substa ntial improvement in the offers, especially in the sectors and modes 
of interest to developing countries.  There was need  for intensive work in capitals and Geneva to 
attain this outcome.  He shared the perception that little or no progress in this sector had the potential 
of jeopardising the success of the round.  His de legation had repeatedly drawn attention to the 
unsatisfactory quality of initial offers  in general and in particular in mode 4.  India had discussed 
specific proposals in this session intensively, whic h indicated a practical approach for effective 
market access in mode 4 and he hoped that Memb ers would take this into account while preparing 
their revised offers.   His delegation looked fo rward to the Symposium on Cross-border supply on 28-
29 April and hoped that valuable lessons for the ne gotiations would emerge from it.  Commitments in 
cross-border supply across a broad range of sectors th at locked in the current regimes should be an 
important outcome beneficial to all Members.  He was also encouraged by the progress made 
regarding the formulation of disciplines on domestic  regulations and hoped that specific benchmarks 
would be arrived at by Hong Kong regarding licensing and qualifica tion requirements and procedures, 
transparency, etc., which would greatly enhance th e value of market access commitments.  There was 
need for capitalising on these initiatives through inte r-sessional meetings in various formats apart 
from the formal clusters.  The May revised offers provided Members a great opportunity to test their collective commitment to a successful  outcome to the negotiations.  India believed that an evaluation 
undertaken by Members of these offers would provide them with a good basis for a first approximation for the Hong Kong Ministerial Conference.   He requested that the Chairman consider 
how such an evaluation would be taken up. 
281. The representative of Colombia
 expressed her thanks for the good news from Barbados and 
Indonesia.  Recalling her comments in the TNC meeti ng, Colombia's interest in the negotiations was 
to work intensively throughout the year in the prio rity areas of the DDA.  This would enable Members 
to have the elements for success at the Ministeria l Meeting in Hong Kong.  In this context, she 
reiterated Colombia's commitment to the services negotiations process.  This was shown by the active 
and constructive participation by her delegation throughout the negotia tions.  It was in Colombia's 
interest to achieve a balanced outcome that could turn into tangible trade opportunities for Colombia's 
exports.  She repeated that the results in this area needed to be linked to the results achieved in all 
other areas of the negotiations.  For Colombia, a re alistic result in services would enable Members to 
guarantee fair benefits for all Members that would give  exporters the real access to markets of interest 
and sectors and modes of provision in which they had clear competitive advantages.  Hence, mode 4 
was fundamental if Members were to achieve this  objective.  This was the area through which the 
basic link between market access in services and development for developing countries would be found.  The negotiation needed to make possible a strengthening of national capacity in services and 
better access to means of distribution and information ne tworks.  It was important that at this stage in 
the process clear signals be given for an increase in Members' participation in world trade in services.  
These signals needed to be firm ed up throughout 2005 and by Ju ne they needed to give the 
information Members needed in order to achieve a refined services package.  The contents of the  TN/S/M/14 
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 revised offers would be a milestone in market access.  Progress in rules and the binding of 
commitments were important and objectives and prioriti es needed to be set in this regard.  She said 
that in these areas, her delegation was prepared to work intensively over the coming months with a 
view to increasing the pace of work in order to take more specific elements to Hong Kong.  It was 
vital to have technical assistance programmes by the Secretariat and other international bodies in 
order to permit greater participation by developing countries and LDCs in the negotiations, as well as 
to strengthen institutional capacity in terms of re gulations, gathering of statistical data, inter-
institutional coordination, etc.   
282. The representative of Colombia said that the first half of the year should be used to carry out 
technical work to refine elements in domestic re gulation and other rules areas.  In May, Members 
would present revised offers and therefore, Memb ers needed enough time to assess their content.  
Colombia supported the initiative expressed by others that the meetings of ministers in the future 
needed to include and di scuss in detail the services negotiations.  Colombia felt that this would be 
useful in allowing Members to recognise and solve difficulties that were being met by some of the 
larger demandeurs.  It would also help Member s deal with the requests of some of the small 
developing countries.  The June cluster would allow Members to assess the process and establish 
priorities with respect to organising work and s ubstantive elements.  From  June to September, 
Members could refine at the national and the mul tilateral levels those el ements which should be 
included in a first approximation of what could be taken to Hong Kong in the area of services.  She 
said that over the previous three weeks there had b een an intensive exchange of opinions in formal 
and informal meetings and formats on the best way to carry out work.  A range of ideas had been put 
forward that were different from the July package and the Negotiating Guidelines.  It was worthwhile 
to continue this examination in various formats before Members took hasty decisions that did not 
enjoy consensus or the proper level of transparen cy and inclusiveness.  She reiterated Colombia's 
commitment to the services negotiations.   
283. The representative of the European Communities  said that the participation of many 
ambassadors at the meeting underlined not only the importance Members attached to the service 
sector, but also the mounting concern on the state of the negotiations.  He recalled that the Chairman 
of the Special Session had, at the previous meeting of the TNC, made a wake up call which had been echoed by quite a number of delegations including his own. Market access in services was an essential 
component of the overall balance within the single undertaking.  If Members were to fail to create 
new business opportunities in services, it would not  only be a missed opportunity for developed and 
developing countries alike, but it would also risk to compromise the overall conclusion of the round as 
a whole. The state of affairs was not so much due to the work of the Council, which the Chairman presided over with much determination and a very ab le hand.  Rather, it was due to the inaction of 
capitals to formulate initial offers or to come fo rward with revised offers that went beyond Uruguay 
Round commitments.  What was needed most urgently was to make a qualitative leap in terms of new 
commitments that would secure genuine new mark et access opportunities.  There was a huge potential 
in the services sector, particularly for developing coun tries, to which some of the earlier speakers had 
referred.  Trade ministers were probably well aware of this fact.  However, what counted presently 
was to mobilise governments as a whole.  Trade mini sters needed to engage sectoral ministries and 
regulators to secure movement.  He was sure that when a number of ministers would meet in Kenya, they would call for an all-out mobilisation in the services sector.  He was sure that Commissioner 
Peter Mandelson would also do the same.  There needed  to be a strong commitment at a political level 
to table genuinely improved offers by the May deadline.  Possibly the service sector, which was 
complex by nature, had been too long been a domaine réservé  of experts, a fact which he understood 
given the sector's complexity.  It was time that mi nisters and regulators of various disciplines became 
engaged in the nitty-gritty of the negotiations.  In  the months to come Members should secure such a 
political monitoring and follow-up of further process in  order to avoid an impasse by the Hong Kong 
Ministerial.  He was well aware that in some cases,  particularly for developing countries, there was 
not so much a lack of political will, but a genuin e problem of capacity to formulate offers.  The TN/S/M/14 
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 European Union was prepared to assist where need ed.  This was particular ly the case where initial 
offers were lacking and some technical assistance was warranted.  However, the backbone of further 
progress was substantially improved offers, becau se what was on the table did not open any 
perspective of improved marked access.  He fully ag reed with previous speakers that much was at 
stake and well beyond the service sector.  He was enc ouraged by the statements he had heard.  They 
had underlined that there was a general concern on the state of negotiations.  He called on Members to 
build collectively on that momentum in view of th e next cluster at the end of June.  By the summer 
break, Members needed to have the sentiment that so mething substantial could be done in the service 
sector.  He said that in the months to come it was important to raise awareness on the state of affairs 
in capitals.  In order to stimulate this awareness bu ilding, he said that he would favour the Chairman's 
personal involvement in informal c onsultations with delegations in Ge neva and capitals.  He said that 
the Chairman's personal advice and wisdom could help smooth the way to genuine progress.  He 
thanked the Chairman for his commitment and engagement in his tasks.   
284. The Chairman
 thanked the representative of the Euro pean Communities for his kind words. 
285. The representative of Korea  shared the prevailing sense of urgency on the need to make 
substantial progress in the negotiations.  The numb er of initial offers was disappointing and their 
quality was surprisingly poor.  His delegation was aw are that there was con cern that the current 
services negotiation might end up with some of the current liberalization in services rather than a much broader harvest of future liberalization.  In  order to keep pace with other negotiations, notably 
on Agriculture and NAMA and a balanced outcome  in the overall DDA negotiations, the services 
negotiations required more attention in Geneva and capitals and among trade ministers, along with far 
more constructive efforts.  The submission by Me mbers of high quality revised offers by the May 
deadline was indeed a top priority for the negotiating group.  For those Members that had not submitted their initial offers, the delegation of Korea sincerely urged them to meet the deadline.  In 
this regard, he welcomed the initial offers recently  submitted by Indonesia.  His delegation was most 
encouraged by its willingness to eliminate its MFN list.  The MFN principle was the bedrock of the 
multilateral trading system and all needed to work to  solidify it within the GATS.  He said that more 
good news had been heard from Barbados and he tha nked that delegation for their contribution.  He 
informed Members that Korea was preparing its revi sed offer by taking into account the requests of its 
trading partners even though doing so was a demanding and painful task.  This was particularly true, 
especially since Korea's initial offer was a substan tial one.  He placed a high priority on enhancing 
transparency and user-friendliness of commitments.  He urged other Members to do the same.  He 
said that it was time to move beyond rhetorical statements on the importance of the services 
negotiations and take concrete step s to bring about a substantial outcome in the form of a critical 
mass.  He said that if the DDA negotiations were  to be concluding on time, concrete objectives and 
benchmarks needed to be laid out at the Hong K ong Ministerial Conference.  For this to happen, 
Members needed to be in a position to provide a fi rst approximation by July in order to achieve a 
substantial result.  Quoting Dr. El Baradei of the IA EA, he said that the positive side of the situation 
was that the window of opportunity remained open.  He said that it was because of this window of 
opportunity and the Chairman's leadership that hi s delegation remained positive about progress.  He 
was confident that most Members, regardless of their level and size of the economic development, understood that they could not achieve sustained economic growth without taking advantage of the 
market opening possibilities provided by the DDA nego tiations.  He said Korea would do its utmost to 
meet the expectations of its trading partners a nd fulfil its responsibilities in bringing the services 
negotiations to a successful conclusion.  He calle d on other Members to be cooperative and pro-active 
in order to move the negotiation forward.   
286. The representative of Hong Kong, China
 was pleased to join dele gations that had thanked 
those that had submitted initial offers recently, incl uding Indonesia and Barbados.  He recalled that 
services was an important part of a much wider and complex negotiation.  It was a negotiation that 
would, by removing barriers and reducing distor tions, create new commercial opportunities which in  TN/S/M/14 
 Page 83 
 
 
 turn would promote develo pment to the greater benefit of all.  Progress in one area of the negotiation 
would ultimately impact on all other areas.  He said that if Members were not sufficiently courageous 
in one area, then the attractiveness of the whol e package to several Members that had specific 
interests in that area or other areas would be radical ly reduced.  On the other hand, courage in the area 
of services would raise the likelihood of a better deal across that board.   
287. Bearing that point firmly in mind, the represen tative of Hong Kong, China turned to what his 
delegation believed needed to be  done in the services negotiations until the summer and up to the 
Hong Kong Ministerial.  In a word, what was needed  was the submission of quality revised offers in 
good time; the identification of clear objectives for th e current round for presentation to ministers, as 
part of the first approximation for summer; as well as thereafter developing a credible services 
package for Ministers' endorsement in Hong Kong.   Elaborating on this and commenting on the state-
of-play, he remarked that Members had ended a th ree-week extended cluster.  There had been much 
activity.  On the bilateral front, Me mbers appeared enthusiastic and pos itive.  On the plurilateral front, 
a great deal of valuable work had been done in th e friends groups and this had begun to yield some 
work which brought with it a measure of confiden ce and, as a consequence, many of the groups had 
become more open and transparent.  At the multila teral level, there had been many new proposals, 
statements and initiatives, and in particular, th ere had been a focused discussion on mode 4.  
Notwithstanding this activity, the question that needed to be faced was whether, at the present pace of 
work, Members would reach the goal.  He had noted  a change of tempo among delegates.  He said 
that the Chairman's wake-up call at the previous TN C meeting had been loud and clear:  if the pace of 
submission of initial offers were to continue for the revised offers and if each reiteration of the offers 
carried only minimal improvement, then the round would not end for a very long time indeed, which 
was not reason for comfort.   
288. The representative of Hong Kong, China observed that services clusters, despite their length 
and the intensity of discussion, only took place on a quarterly basis and in between momentum tended 
to be lost.  He could not see how all the work wh ich needed to be done by year's end could be 
accomplished in the two remaining clusters.  He said three elements were needed:  political guidance, 
a services package, and a process of work.  On pol itical guidance, he said that the message from a 
recent gathering of ministers was that too few o ffers had been presented a nd their quality generally 
was disappointing.  He thought this was common gr ound, clear enough to the observer, and merited a 
response from officials in capitals and Geneva.  He  remarked that the wider implication was that, 
without services, the round would not successfully conclude.  Unless a decent services package was 
worked out, concessions in other areas might be more difficult to make or not realised.  He said that 
this message needed to be relayed to officials and the stumbling blocks honestly identified.  While an 
exchange of meaningful revised offers was needed to address the concern of Ministers, he said this 
would not be possible unless ministries and agencies in capitals were fully aware of the importance of 
this work and given the necessary resources and authorit y to work out offers that were in the national 
interest and allowed room for some trade-off.  The scope was enormous and he recognised the point 
about the enormous amount of autonomous liberaliza tion that had been put into effect.  He believed 
that a collective call from minister s was needed for an orchestration in capitals followed by calls to 
their counterparts to move things forward.  In brief, the political input needed was the personal 
attention of ministers, their colleagues and senior officials on substance rather than procedure.  
Referring to the second element, he said that c oncrete ideas on the shape and size of the package 
needed to be presented to Ministers before the end of the summer.  They needed something that could 
be measured and balanced against the costs and bene fits of other components of the negotiation.  On 
market access, a few ideas that came to mind were how to refine objectives and assess progress 
towards them;  how best to pursue market access ne gotiations in different sect ors and modes; and the 
timelines for 2006.  On rules, ideas included: how to conduct a realistic appraisal of the deliverables 
within the current round.  While others no doubt had other ideas in mind including steps by May, 
which he looked forward to discussing, he nonethel ess submitted that there should be no disagreement 
that all of these ingredients needed to be present in order for the recipe to be achieved by summer.  He TN/S/M/14 
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 said that also needed was more work in the ser vices negotiations.  While the good work of friends 
groups would continue, intensify and be shared with the membership in a timely manner, he urged the 
Chairman to lead the continuation of the Council' s work between clusters, including by conducting 
consultations to see how the work of various friends  groups could be dovetailed into the work of the 
Special Session, for example by facilitating the organization of activities and initiatives on market 
access negotiations to ensure that they were organi sed in an efficient manner and by inviting ideas of 
what would enter into the first approximation of the Hong Kong package for services.  He said that 
doing so flexibly and informally might be more accep table to Members.  He also recognised that there 
were difficulties faced by all delegations because of resource constraints, but he urged renewed efforts 
in this regard.  He said that, if as pledged by mi nisters, Members sought a ba lanced outcome, then it 
was incumbent on all to devote the necessary resources in Geneva and capital.   
289. Separately, the representative of Hong Kong, Ch ina noted that the subsidiary bodies were 
continuing to deal with issues related to negotiatio ns between clusters and said that the message 
should be sent that the work of subsidiary bodies s hould aim to enable a realistic assessment of the 
deliverables.  He noted the energy services week sc heduled for mid-March, which he suggested could 
be used to focus work in other areas.  He said th at the Chairman and delegations had a daunting task 
and he praised the Chairman's energy, leadership and determination.  He was confident that the 
Chairman would lead work forwar d and asked the Chairman and the Chairpersons of the subsidiary 
bodies to engage Members in the coming months on these issues.  He said that his delegation would work flexibly and earnestly  with the Chairman.   
290. The representative of Singapore
 endorsed the comments by Hong Kong, China and shared the 
concerns about the current state of the negotiati ons in services.  Making a few general observations, 
he said that, as Members reviewed progress, it was important to bear in mind fundamentals.  In services, the fundamental starting point was initial offers  and the fact that all participated.  In this 
regard, he commended Indonesia and Barbados on their announcements which reflected their 
commitment to fulfil the Doha mandate.  He said that  when ministers would meet in the near future, 
the point would need to be made that every de legation needed to participate in the services 
negotiations and all remaining Me mbers who had not submitted an o ffer needed to make an extra 
effort to do so.  He said that he would not under estimate the importance of ensuring that all Members 
had tabled initial offers.  This was a point that mi nisters should underline when they met.  On quality, 
he agreed that substantially improved offers we re needed.  He said that obtaining quality was a 
process, and hence the revised offers and the May deadline for their tabling were important.  In 
Singapore's view, the tabling of an  initial offer was the beginning of  the engagement process and not 
its end.  While there could be a temptation for Member s to think that they had participated sufficiently 
by tabling an initial offer, he said that his dele gation would not succumb to this temptation.  His 
delegation was committed to making its revised o ffer because Singapore recognised the link between 
initial offers and revised offers.  He said it was important for ministers to underline that both initial 
and revised offers were important, as well as their s ubmission by May 2005.  Th irdly, he believed that 
all were in agreement that a good outcome on services  was necessary for a bala nced outcome in Hong 
Kong.  He underlined that services was an importa nt aspect of the market access pillar of the Doha 
Round, and he added that an outcome on the rules negotiations was necessary if a decent package was 
to be arrived at in services.  On rules, he said that candour was necessary in order for Members to ask 
themselves which rules issues were most ripe for an  outcome in Hong Kong in order to act on those in 
a timely fashion.  He said that engagement should continue in services in both market access and 
rules;  however, he noted that more time and resour ces needed to be allocated.  He observed that only 
two clusters remained before Hong Kong, which did not appear to be sufficient.  Members needed to 
consider how best to maximise productive work during these clusters.  He congratulated the Chairman on his leadership. 
291. The representative of Egypt
, speaking on behalf of the Egyptian ambassador, communicated 
his delegation's prevailing sense of concern about  the current pace and level of progress of the  TN/S/M/14 
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 services negotiations.  He said that these concerns not  only related to the present situation, but also to 
this state of affairs continuing until Hong Kong. He said that this would have a considerable impact 
on the credibility and prospects of the negotiations and other negotiating areas.  He said that the 
starting-point was the current state of affairs.  Although Members might arrive at an understanding about the general level of ambition that Member s should aim to achieve by Hong Kong, what was 
truly at issue was determining how to realize thos e objectives.  Referring to the informal presentation 
made by the Chairman earlier in the week, he sai d it had reaffirmed that the services negotiations had 
not delivered what could have been expected to  have been delivered at the present phase of the 
negotiation.  He said that if Members wished to produce for Hong Kong a reasonable package of 
deliverables which considerably differed from th e state-of-play summarised in this informal 
presentation, Members needed to address a number of challenges and considerations.  He was aware 
that, under this item, that with which the Chairm an could most usefully be provided were specific 
suggestions on the way forward rather than genera l considerations.  Noneth eless, his delegation had 
identified a number of issues as very relevant to th e reality of the negotiations.  As some delegations 
had previously indicated, Egypt believed that ther e was space for more political will to inject the 
negotiations with new and sustained momentum .  Political will would likely have multiple 
interpretations by Members, such as the need for more engagement in the ne gotiations by capitals, or 
involvement of higher levels of de cision makers or the need to gene rate this political will from the 
Geneva process.  In this context, his delegati on agreed that services should be well placed in the 
informal gatherings of ministers in the coming months.  Secondly, he said there was a need to fully realize and comprehend the inhere nt legal and technical complexities of the negotiations and its 
regulatory implications in many of the developi ng countries.  For Egypt, the process of national 
coordination among the various services sectors a nd the management of relevant consultative 
mechanisms had proven to be an extremely challe nging endeavour in preparing its initial offer, 
particularly if the proposed commitments exceeded the level of liberalization reflected in domestic 
legislations and regulations unlike most  experiences in the Uruguay Round.   
292. Referring to the May benchmark, the representativ e of Egypt said his delegation viewed it as 
a crucial phase, since it would subsequently outli ne and determine the level of deliverables on 
services for Hong Kong.  In this regard, he wished to  stress the importance of the leading role of the 
major trading partners in the negotiations and strong ly encouraged them to materialise this role by 
addressing, through their revised offers, the imbala nces in the negotiations and the concerns of the 
developing countries and LDCs.  His delegation wa s fully aware that the General Council 1 August 
2004 Decision had not limited the May benchmark to a certain group of Members.  The benchmark 
applied to all Members.  However, his delegation believed that if Members' collective endeavour to 
carry the negotiations forward in a satisfactory mann er was not featured by such leadership from the 
major trading partners, it would be difficult for the negotiations to deliver or adequately reflect the 
developmental aspect of the DDA.  Egypt expressed  its sincere appreciation for the Chairman's 
tremendous efforts in preserving the credibility of the process.  His delegation strongly encouraged 
the Chairman to continue his efforts, includi ng on suggestions relate d to achieving a first 
approximation by July.  He congratulated Barba dos and Indonesia on the submission of their initial 
offers and appreciated the statement by Uganda.   
293. The representative of Chile
 said her delegation was pleased that Barbados and Indonesia, as 
well as Uganda, had indicated that their offers w ould be shortly submitted.  Addressing the state-of-
play, she said that Chile believed that the Chairm an's earlier informal presentation had illustrated the 
situation in the services market access negotiations:  th ere was a lack of offers in sectors and modes of 
interest to many Members, a low level of bindings in  mode 1 and mode 4, absence of transparency in 
many sectors, 432 remaining MFN exemptions, et c.  Taking these elements, as well as the work 
achieved over the course of the cluster, into account , her delegation's conclusion was mixed.  There 
was a marked lack of ambition overall.  However, there was also a growing sense of awareness of the 
situation and a willingness to address it.  One problem appeared to be the lack of clarity regarding 
potential trade-offs in the area of services.  While it w as true that the lack of initial offers was a source TN/S/M/14 
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 of concern, the quality of the offers presented was more troublesome, as well as the aversion by many 
to undertake binding commitments.  She acknowledged th at the benefits could be difficult to measure 
at the present juncture, but said Chile believed that  Members should strive in the coming months to 
shed some light on an eventual p ackage in services.  For Chile, this  package would need to include 
improved market access for all Members as well as rules, and in particular, disciplines on domestic 
regulations.  To achieve this, Chile asked Memb ers to reflect on the underlying purposes and possible 
achievements of the negotiations.  Firstly, she reca lled that a pledge had been made in Doha to 
conduct negotiations with a view to  promoting economic growth and development.  Secondly, Chile 
believed that an outcome would include concrete benefits from multilateral liberalization through the 
adoption of specific commitments and improved disci plines.  Her delegation believed this was the 
case because only at the WTO could Members achieve  potentially greater liberalization in all sectors 
and modes of supply.  Binding commitments would not  benefit a few, but rather all trading partners 
by creating business opportunities and increasing legal certainty, transparency and competition.  Secondly, it was in the Special Session that Member s could ameliorate the clarity and transparency of 
schedules through the adoption of reference papers , model schedules or improved classifications.  
Thirdly, Members could develop horizontal discip lines in domestic regulations to assist services 
providers.  Fourthly, it was in the negotiations that  the objectives of Article IV of the GATS could be 
fully realised.  Finally, the negotiations provided an opportunity to uphold a cornerstone of the multilateral trading system, namely the MFN principle.  It was with a firm belief in this regard that 
Chile would submit its revised offer in accordance with the dates agreed to in th e July Package.  Chile 
would endeavour to reflect the interests of trading pa rtners as well as to be coherent with the positions 
Chile had espoused in the Special Session.  Sh e said that all Members had a responsibility to 
participate in this process.  It was her delegation's view that the responsibility fell more heavily on the 
largest trading partners and she urged them to sign al, in their revised offers, that they have heard 
Members' requests, particularly those from devel oping countries and were willing to address them.  
She urged Members to be as ambitious in their offers  as they had been in their requests.  Recalling her 
comments in December, without a clear signal from developed countries as well as many developing 
countries, Members would neither improve participati on nor achieve an acceptable package for all.   
294. Turning to ways forward, the representative of Chile said that Members needed to ensure that 
ministers, recognising the key role of services in the DDA, gave services the attention it deserved and 
provided specific instructions.  Ministers had to be  asked to provide instruct ion for harder work in 
Geneva and capitals.  She said that urgent tasks we re at hand.  In the coming months, revised offers 
were to be prepared through interaction of negotia tors, regulators, relevant ministries and agencies, 
and stakeholders.  Ministers needed to clearly st ate that this process would be given priority in 
capitals.  In Geneva, the instructions should be to work between sessions and at every cluster, towards 
a common understanding and definition of a concrete objective in domestic regulation, as well as for 
more technical discussions in other subsidiary bodies.  They should call for closer cooperation 
between the friends and the Committee on Specific Commitments and the Special Session so as to 
bring their initiatives to fruition.  She said that all were cognizant of the lack of resources, but also 
that the failure to achieve promptly the work th at she had outlined, would yield meagre results in 
Hong Kong and would bode ill for the services compone nt of the final DDA package.  She urged the 
Chairman to pursue his active role in the negotiati on.  She suggested that he undertake consultations 
to set up a work programme for inter-sessional pe riod and the longer period, which could include 
formal meetings, informal meetings, and bilatera l, plurilateral or multilate ral groupings.  Members 
should be ready to tackle specific issues, includi ng the parameters of the Hong Kong package, the 
merging of the proposals in domestic regulations, LDC participation, further discussion of specific 
sectoral or modal proposals and the issue of benchm arks.  Her delegation urged the Chairman and the 
Members to take advantage of energy services week in March as well as the Symposium on Cross 
Border supply of services to deepen work.  Rega rding friends groups, her delegation welcomed the 
numerous statements made.  She said that the co-sp onsorship and support of many of these by her 
delegation was a sign of the priority Chile gave to cer tain sectors, including logistics, maritime and air 
transport services, computer and related, and professi onal services.  In addition, Chile attached great  TN/S/M/14 
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 importance to other areas such as telecommunications, financial and audio-visual services.  Regarding 
the latter, she pointed out that Chile firmly believe d that the negotiations should cover all sectors and 
modes of supply.  Chile believed that it was time  for the friends groups to come up with concrete 
results that could become tools to be used by all Members in the adoption of commitments in the 
diverse sectors.  Finally, with respect to mode 4,  her delegation thanked the Chairman for holding the 
earlier informal session which had been lively, inter active and technical in nature.  She was pleased to 
see the number of proposals in this area, some of which her delegation had co -sponsored, and thanked 
many of the friends of mode 4 for their continued hard work to highlight those issues which needed 
further study.  Her delegation consid ered mode 4 to be a "gateway" issue and an integral part of the 
services package.  Therefore, she urged all Members to look closely at the proposals on the table with 
a view to integrating them into the revised offers.  She said that the time for in-depth discussions on 
mode 4 had come, and her delega tion was open to using all venues to discuss this sensitive yet key 
area.   
295. The representative of Chinese Taipei  shared the concerns of other Members that the services 
negotiations were lagging behind other areas, such as NAMA and Agriculture.  She said that, if these 
other sectors could arrive at a first approximation of a possible outcome at the Hong Kong Ministerial 
meeting by July, this prospect should inject a great er sense of urgency into the services negotiations.  
She had a number of observations on how to move the negotiations forward.  She said that Members needed to present meaningful revised offers and urged them to do so by May, as it was vital to submit 
revised offers sufficiently in advance to ensure an outcome in Hong Kong.  Chinese Taipei firmly 
believed that the offers needed to be meaningful.  She thanked Barbados and Indonesia for the tabling 
of their initial offers.  Her delegation was concerne d about the quality of the revised offers.  Some 
Members sought to define benchmarks as a wa y to assess and improve quality and her delegation 
expressed an interest in discussing the types of benchm arks that could be envisaged.  Chinese Taipei's 
position was that it was difficult to give greater weight to some sectors or modes and identify the common interest within the same services sectors among the Members.  Her delegation bore in mind 
that the GATS provided for sufficient flexibility for Me mbers to be able to make commitments in line 
with policy objectives.  Given that all Members stood to benefit from multilateral liberalization of 
services sectors, and in particular those sectors that we re related to infrastructure, it was important to 
recognise that services liberalization had a beneficial impact on manufactured goods and the wider economy.  In this context, her delegation was a co-sponsor of numerous liberalization proposals, inter 
alia, logistics, maritime, environmental, computer, financial and telecommunications services.  On 
rules negotiations, in view of the diversity of inte rests of Members, Chinese Taipei believed that in 
the limited time available prior to the Hong Kong Ministerial Conference, Members should 
concentrate on their more substantive interests base d on the proposals, such as horizontal transparency 
disciplines on domestic regulations that applied to all sectors.  Moreover, she said that many Members 
had liberalised some of their services sectors vol untarily, but had not been willing to inscribe this 
situation in a GATS framework.  She said that one of the greatest and most worthwhile challenges 
was to use the multilateral channel to bring these liberalised sectors into  the GATS framework.  
Finally, she assured the Chairman that her dele gation was willing to participate actively in the 
negotiations, including in any process that could infuse the services negotiations with increased 
impetus.   
296. The representative of Brazil
 shared the view that it was in  the interest of all Members to 
participate actively and constructively in the ser vices negotiations both to secure a positive outcome 
on services and in support of the wider DDA objectives.   He welcomed the initial offers which had 
been made by Barbados and Indonesia.  His dele gation was encouraged by the work that had been 
undertaken over the course of the cluster and he noted the substantive discussions in the subsidiary 
bodies, the intense bilateral negotiations on market  access and the breadth and depth of negotiating 
proposals presented at the Special Session of the Coun cil.  These reinforced Brazil's view that services 
negotiations were regaining momentum after the July  Package.  Brazil believe d that the July Package 
contained the ingredients that would allow the ser vices negotiations to succeed.  Annex C contained TN/S/M/14 
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 an extended list of items for the Council to deal with  in order to bridge the gaps and find the necessary 
equilibrium within the GATS negotiations.  In add ition to references to initial and revised offers, 
Annex C reiterated the call for higher quality of offe rs, particularly in sectors and modes of supply of 
interest for developing countries, recognised the importance developing countries attributed to mode 4, renewed the appeal for further engagement of the membership in addressing rule-making within the 
GATS, stressed the importance of technical assistance to enhance the participation of developing 
countries in the negotiations, and as a corollary , mandated the Special Session to review the 
negotiations.  He said that Annex C was well known to  delegations, but he thought it worthwhile to 
bear in mind the parameters under which Members were working.   
297. The representative of Brazil stated that his delegation believed that there was need for 
renewed engagement on the technical work on classi fication and scheduling issues.  Brazil attributed 
great importance to these two issues.  He said that a clear understanding of what was being negotiated 
was needed, as was the knowledge to schedule commi tments to ensure clarity, comparability and 
certainty.  Recent panels had started to challe nge the conventional wisdom about the flexibility 
available to handle freely classification and schedulin g methodologies.  In this regard, he renewed the 
call for the maximisation of the use of subsidiary bod ies of the Council, and in particular the CSC, in 
support of the negotiations.  The GATS could not be re duced to its market access dimension.  Market 
access commitments could be nullified without the certainty accruing from a multilaterally developed 
set of rules affecting services on subsidies, safeguards, domestic regulation and classification.  In domestic regulation there appeared to be increasing convergence among Members on the needs to develop disciplines on the various aspects of the s ubject, such as licensing, qualifications, technical 
standards and transparency following the mandate in Article VI:4.  Brazil was open to consideration 
of the arguments in relation to sectoral approaches to domestic regulation;  however, his delegation 
believed that this initiative would be more appropriately considered  after Members had finalised the 
negotiation of horizontal disciplines.  On governme nt procurement, Brazil re iterated its understanding 
that Article XIII of GATS explicitly carved out nego tiations related to market access.  Brazil also 
believed that, in accordance with th e July Package, May 2005 was an important milestone in the 
market access negotiations.  Brazil was committed to  the deadline for the presentation of its revised 
offer.  In this regard, he informed the Council th at his delegation had held  bilateral consultations 
recently with the United States, the European Co mmunities, Canada, Japan, New Zealand, Norway, 
Switzerland, Korea, Australia, Chile, Chinese Taipei and Mexico.  While a number of initial offers 
remained to be tabled, he believed that the accomp lishments in the services negotiations should not be 
underestimated.  He said that Members should be realistic about any quan titative assessments that 
could be undertaken.  Each Member had its own perspective on the relative importance of each sector 
and mode of supply, and therefor e quantity and quality remained subjective.  The Council for Trade in 
Services had been able to approve Modalities for the Special Treatment for LDCs and Modalities for 
Autonomous Liberalization.  Moreover, the offers on the table constituted the bulk of international 
trade in services.  Much remained to be done and he  did not underestimate the need for improvement.  
Lack of progress in mode 4 was striking.  He said that Members should seek to be pragmatic and 
reassess the situation once a clearer picture had emerged.  In June or July, Members would be in a better position to evaluate the situation in the services negotiations in and of themselves and in 
relation to other areas of the round.  
298. The representative of Canada
 said that his delegation shared the perception of a number of 
Members on the overall position of the services nego tiations and the DDA.  However, in thinking 
about the present cluster, he said that his delega tion had been encouraged by signs of increased 
momentum and engagement in the negotiation.  He  thanked Barbados, Indonesia and Uganda for the 
good news they had given.  He said that his delegati on had held a range of bilateral meetings over the 
course of the cluster and from his perspective th ese had had a greater focus and intensity than 
previously, which was encouraging news.  However, he said that the best news over the cluster had 
been the number of new negotiating proposals and ideas that had come forward.  He was pleased that 
so many of these spoke to the issue of market acc ess, which from Canada's perspective, needed to  TN/S/M/14 
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 remain the focus of work moving forward.  He sai d that these proposals were the result of much good 
work being done by various informal friends groups.  On mode 4, for instance, it was Canada's sense 
that the productive discussion that had taken place was due in some part to detailed technical 
discussions that had taken place in advance of the Council's meeting that involved a number of 
informal groups.  Given that there was much techni cal work remaining on mode 4, which was clearly 
a central issue in the negotiations, he reminded Me mbers of one of these informal groups, namely the 
friends of mode 4 that had been established in July  2002.  This was a group that Canada had convened 
since that time with a view to focussing on some of the complicated technical issues associated with 
mode 4.  Membership of the group was open, in c ontrast to other friends groups, and he stressed that 
Canada encouraged all Members to participate in the informal sessions discussing mode 4.  He said 
that since July 2002 the group had met at each clus ter with approximately 20 delegations attending.  A 
range of issues had been discussed.  He said that  the productive discussion that had been held on 
categories earlier in the week could be seen at least partly as having arisen from work done on categories in an informal context.  Canada was enc ouraged by the fact that other friends groups had 
come forward to share the results of their work with the broader membership.  Having observed these 
positive signs, it was clear that the pace of work needed  to be accelerated in advance of the ministerial 
meeting in Hong Kong as limited time remained.  Memb ers would have to devote time and effort to 
preparing for Hong Kong, beginning with a first a pproximation in July;  however, this could not be 
done at the expense of further work needed to a dvance negotiations on market access and rules.  On 
the contrary, this work would need to be accelerat ed as well.  It was his perception that Members had 
not had time to consider and discuss fully the importa nt proposals that had been submitted that week.  
He encouraged the Chairman to explore whether fu rther time could be devoted to them.  In this 
regard, Canada supported further informal sessions and off-cluster work to give delegations an 
opportunity to discuss and further refine the proposals.   From Canada's perspective, this informal 
work could include small group discussions, open-ende d consultations or informal meetings of the 
Special Session.  At the same time, Canada encour aged the Chairpersons of the subsidiary bodies to 
advance the agendas of these groups in informal m ode.  He stressed that his delegation could see 
informal consultations proceeding on two tracks:  the first to define the July approximation for 
services leading to Hong Kong and the second to a ddress the substance of the negotiations, namely 
market access and rules.  Finally, he urged all Members to remain cognizant of the May deadline for 
the submission of revised offers.   
299. The representative of Australia
 informed the Council of her de legation's intention to submit 
its revised offer in May and believed that it was critical  that others did the same.  She said that without 
good, quality offers on the table by that time across a ll modes of interest to all, it was difficult to see 
how progress could be made and delivery of anything worthwhile in Hong Kong.  The offers to date 
had been disappointing overall but the objective for all was to overturn this disappointing situation 
and make good quality offers in May.  She agreed with those that saw a need for additional work 
between clusters both in Geneva and capitals.  Sh e believed that the work of the friends groups 
presented that week in the Special Session could be harnessed to help guide Members in making market access offers.  The friends groups were we ll placed to identify indicators of quality offers.  An 
assessment of the May offers would be useful and necessary as individual Members examined the 
offers against their market access in terests.  She suggested that it might be useful if the Secretariat 
updated the presentation by the Chairman earlier in the w eek in time for the June cluster.  For the July 
first approximation, she agreed that a framework was needed to move ahead, not only on market 
access but also on rules issues and in particular on domestic regulation.  She welcomed again Indonesia's advice that it would table its offer as well as the advice from Barbados and Uganda. 
300. The representative of New Zealand
 said that services was an essential component of the 
DDA.  He associated his delegation with those dele gations that had emphasized the need for increased 
momentum in the services negotiations.  New Zealan d's participation in the services negotiations had 
been driven by its own interest in services, but also  by a recognition that the various elements of the 
round were interlinked.  He was not  arguing that there should be an exact parallelism in advancing the TN/S/M/14 
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 three market access pillars;  however, he said it was important that all Members keep in mind that 
ambition would be measured across each of these co re sectors.  An issue of overriding concern 
expressed by others and shared by New Zealand wa s how to define expectations for the Hong Kong 
ministerial meeting and work towards their achievement.  A recurrent theme was that Members would find themselves in a situation of crisis if new mome ntum could not be built.  The submission of more 
initial offers in the recent months was a positive development and he welcomed the submission of 
initial offers by Indonesia, Barbados and Uganda.  The fact remained, however, that the most tangible 
demonstration that there was momentum would be th e tabling of high quality revised offers by the 
May deadline and he was encouraged by the numbe r of Members that had informed the Council of 
their intention to do so.  One element that was critical to generating momentum was more political 
attention to the services negotiations.  New Zeala nd would take the opportunity of a forth-coming 
meeting in Kenya to reaffirm that services was high on its agenda and that the achievement of 
substantial progress was a necessary part of a balanced outcome.  He encouraged others to do likewise.  He welcomed others' intentions to work on the margins of other meetings and in capitals.  
Concrete direction on levels of ambition was anot her critical element.  In order to obtain this 
direction, Members needed to provide ministers w ith meaningful assessments of progress so that they, 
in turn, could look at balance and set specific levels  of ambition for the remainder of the negotiation.  
This could include asking ministers, and them aski ng each other, some key political questions such as 
whether Members were prepared to bind a minimum proportion of existing levels of liberalization or 
whether Members were willing to look at areas in wh ich commitments had been made in bilateral and 
regional free trade agreements above GATS commitmen ts and existing offers.  He said that high 
quality offers would achieve an appr opriate depth of commitments but also meet the expectations of a 
wide range of Members.  Informal assessments indi cated that commitments to date had tended to be 
concentrated in few areas.  Ne w Zealand believed that Members s hould use revised offers as an 
opportunity to broaden the scope of sectors and modes of supply covered in the negotiation.  
Improved commitments were needed  on all modes of supply.   
301. The representative of New Zealand said that one way in which the interests of a wider range 
of Members might be met would be to give furt her consideration of commitments to mode 4.  
Echoing a comment by Chile, he said that this had emerged as a "gateway" issue of the round.  In 
particular, it was a key interest for developing coun tries and, as such, was an important part of the 
DDA.  New Zealand believed that, in the interests of movement on services overall, a signal needed to be sent immediately that more movement on mode 4 could occur.  However, mode 4 was not just in 
the interests of developing countries.  New Zeal and, as an economy composed mainly of SMEs, had 
an interest in improved mode 4 commitments.  Ho wever, he said that what the GATS was designed to 
deliver on mode 4, namely the temporary entry of pe rsonnel to deliver a pre-agreed service, needed to 
remain borne in mind.  It was important to be very clear, both in the Special Session and for domestic constituencies, that entry into general markets to seek employment was a matter of immigration policy 
and therefore, beyond the scope of the GATS.  New Zealand's understanding of the many complex 
mode 4 issues had been enhanced through its partic ipation in the friends of mode 4 group.  That 
group, as noted by Canada, was an open group an d provided a value opportunity for dialogue and 
exchange of views.  There had been much discussi on at the present cluster of benchmarking.  This 
seemed to encompass two distinct  concepts:  first, an assessme nt of process to date beyond 
quantitative analysis, and second, targets which woul d roughly approximate the goals of modalities in 
the other areas of the negotiation.  Several ideas had been circulated on how to formulate both 
assessments and targets.  He said it would be useful  to bring these ideas together in some concrete 
way in order to analyse the various options and to  determine what level of support existed for each.  
To facilitate this, his delegation supported informal consultations by  the Chairman.  Finally, he said 
that the extent of the issues under discussion meant that significant work needed to take place inter-
sessionally in order to meet Members' expectations  for Hong Kong, including in those areas of the 
rules agenda where there was wi despread support for concrete outcomes.  New Zealand supported 
suggestions that the Chairman should take an y initiatives necessary to facilitate this work.  TN/S/M/14 
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 302. The representative of Argentina  said that it was in the interest of all to participate actively in 
the negotiations on services so that mutually benefici al results were achieved, not only in the services 
negotiations, but in the round as a whole.  As me ntioned by Mexico, Argentina believed that the 
services negotiations were not behind other areas in  the negotiations.  However, there were certain 
signals which needed to be taken into account.  For his delegation, progress in the negotiations was 
not measured solely through more commitments or o ffers, as this was not the only method to evaluate 
progress.  The guidelines and procedures for the ne gotiations approved in March 2001 had set forth 
different parameters in order to evaluate pr ogress achieved.  Referring to paragraph 2 of the 
negotiating guidelines, he said that it referred to in creased participation and ap propriate flexibility of 
developing countries in the negotiations.  Paragra ph 3 referred to national policy objectives and the 
development of countries.  Paragraph 5 spoke of spec ial attention to be paid to sectors and modes of 
interest to developing countries.  Paragraph 7 spoke about negotiations on rules and domestic 
regulations.  Paragraph 12 referred to the appropriate flexibility so that developing countries would 
open fewer sectors and liberalize fewer types of transactions, but participate progressively in accordance with their development needs.  For Argentin a, it was of the highest importance, in order to 
measure the progress achieved in the negotiations, to  find out whether Members had the capacity to 
understand the scope of existing and future comm itments.  The GATS was a young agreement and it 
regulated trade and investments ranging from the production and distribution of films to the distribution of water for human consumption, a nd from on-line trade to secondary schools.  He said 
that his country had received requests for all these sectors, among others.  Th e capacity to understand 
what would be the impact of undertaking commitmen ts on such varied areas should be one of the 
parameters used to measure the progress achieved .  He said that this possibility of understanding 
remained unsatisfied because the cap acity of so many countries was lacking.  There was also a lack of 
priorities in the requests received from some Members.   He said that the conditions he had mentioned 
should be taken into account.  He suggested th at when the Chairman would assess the progress made, 
according to the format he would choose, the Chairm an take into account all of these elements that 
were part of the GATS and the guidelines that the Council had approved, and wh ich were essential in 
order to develop the mandate of the DDA.   
303. The representative of Bangladesh
 said that there was no commonly-agreed definition of 
different service provider categories across Members.  He referred to the Secretariat note contained in 
Job(03)/195 which had sought to identify some common features across the schedules in each 
category.  It identified that the frequently used  categories of natural persons under mode 4 in 
Members' schedules of specific commitments included, inter alia , intra-corporate transferees, 
business visitors, services sales persons, contr actual service suppliers and other speciality 
occupations.  He remarked that these were all hi gher skilled categories of service providers and were 
mostly related to commercial presence.  As LDCs  sought for Members to undertake commitments to 
provide less skilled persons supplying services under GATS, this group believed that future work 
should focus on this particular aspect.  They theref ore reiterated their awareness of the sensitivity of 
the issue, while asking the member ship to focus on the sensitivities surrounding the subject of natural 
persons with lesser skills.  Having said that the LDCs  believed that the membership needed to open up 
in order to take into account the on-the-ground realiti es and concerns of the LDCs with respect to the 
movement of less skilled natural pe rsons under mode 4.  It was in th is respect that he wanted to 
reiterate that the future work of the Council, incl uding the Secretariat, should have adequate focus on 
this aspect.  The Secretariat future inputs to th e Council should therefor e be broadened and its 
coverage should also focus on the other categories in a more detailed manner which could incorporate 
the concerns of LDCs with regard to the l esser skilled occupations.  The LDC group sought and 
would make every effort to help the Chairman a nd the Secretariat, by way of providing guidelines, 
which would be used to prepare a paper that coul d be discussed and provide inputs to the Council's 
discussion in the June cluster.  
304. The representative of Japan  said that the negotiation on trad e in services was at a critical 
moment.  Japan recognised that, with the Chairman's  "wake-up call" in the TN C,  the negotiations had TN/S/M/14 
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 started to move in the right direction;  however, th e speed of this movement remained unsatisfactory.  
The negotiations were lagging behi nd and more attention needed to be paid at a higher, including 
political, level.  The negotiations on trade in ser vices were part of the overall DDA negotiations.  
When the Hong Kong ministerial meeting came up w ith a substantial package, services should be a 
part of it.  The May timeframe for revised offers would be an important target that Members should 
face.  Japan had held a number of bilateral meetin gs on the basis of its revised requests in order to 
demonstrate its priorities.  He said that more capital experts had been present, which had made the bilateral meetings productive and u seful and he thanked those Members that had brought an extensive 
number of experts to Geneva.  He was encouraged that Indonesia, Barbados and Uganda had indicated 
their intention to submit their offers.  Japan rema ined concerned that a number of Members had not 
been able to submit their offers and he urged those important partners in the negotiations to expedite 
their work and to present their offers as soon as po ssible and before the May deadline.  With respect 
to revised offers, Japan was in the process of in ternal consultations with a view to making its 
preparations.  It was extremely important for all Me mbers to undertake to submit revised offers of a 
high quality.  Japan attached importance to trade in services, not only from the viewpoint of exporting 
services, but also from that of industries, in pa rticular manufacturers, who sought a comfortable 
business environment for their future investments.  The interest of industry stemmed not only from 
the viewpoint of the exporter, but also from the viewpoint of the consumer of the service who sought a good quality service.  In this context, Japan was in terested in the liberalization of a wide range of 
services, including maritime transport, financial, construction, distribution, telecommunications and 
computer and related services.  Japan welcomed the joint statements by friends that demonstrated the 
importance of these sectors.  Japan also attached impo rtance to rules.  Like others, the current state-of-
play suggested that domestic regulation was a promin ent area for progress in the immediate future that 
Members might wish to focus on.  Japan sought to be engaged with other Members to achieve a way 
forward and a concrete result in Hong Kong.  With  respect to the preparations for the Hong Kong 
ministerial, his delegation believed that it was time for the Chairman to begi n informal consultations 
regarding what elements should be included in th e first approximation and in the Hong Kong package 
eventually.  It was important that a balanced package be achieved and that services remain an 
important part of the balance.  Japan was ready to  assist the Chairman in his work and expressed its 
gratitude to the Chairman for his efforts.   
305. The representative of Malaysia
 welcomed the announcements by Barbados and Uganda and 
congratulated its close neighbour Indonesia for th eir submission.  Her delegation concurred that 
services played an important role in the economic de velopment of Members, particularly developing 
countries.  However, she drew Members' attenti on to the preamble of the GATS that acknowledged 
the existence of asymmetries with respect to the de gree of the development of services regulations in 
different countries and the fact that due respect shoul d be given for national objectives.  To this end, 
attention should be given to both market access, in areas of interest to developing countries, and rule 
making, with outcomes that would facilitate the pa rticipation of developing countries in trade in 
services.  Credits for autonomous liberalization undert aken by countries such as Malaysia should also 
be given greater consideration as Members examined the cost-benefit of further market opening.  The 
principles of progress liberalization, a main pillar of the GATS, should guide Members' approach in 
the negotiations.  In the context of the single undertaking mandate of the DDA, she assured the 
Chairman that her delegation would continue to wo rk with him in contributing to the progress of the 
services negotiations in order to ensure a balanced  outcome, not only in the services negotiations, but 
in the overall DDA negotiations.  
306. The representative of China  said that, like other Members, China also believed that services 
played a significant role in a Member's economy an d that liberalization undertaken in a manageable 
manner could make positive contributio ns to the development of that Member's services sector. China 
had therefore committed itself to participating ac tively in the ongoing negotiations on progressive 
liberalization of trade in services which was part of  the Doha agenda.  Such commitment had been 
reflected not only by the fact that China had presente d its requests to its trading partners, but also by  TN/S/M/14 
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 the fact that, even though China had made extensiv e and deep commitments on the eve of the launch 
of the Doha agenda, China had tabled its initial offer in 2003, which was one year after its accession 
to the WTO.  Her delegation was pleased to see th at, under the Chairman's able leadership, the 
services negotiations had thus far progressed steadily without the variations that had been seen in 
other areas of the negotiation. Though a number of Members had not submitted their initial offers, and 
China encouraged them to do so as soon as possible,  the offers that had been submitted to the Council 
for Trade in Services, Special Session seemed to cons titute the bulk of international trade in services.  
At present, Members were working hard on the prep aration of their revised offers, which could be 
demonstrated by the intense bilateral consultati ons among Members in this services cluster. China 
expected that Members with the resources would tabl e their revised offers by May, which was the so-
called benchmark.  She said that, in the present cl uster, there had been a high number of written 
proposals, statements and reports.  Her delegation sh ared the view that the quality of most of the 
initial offers could be questioned, and in particular initial offers from Members that had a significant 
stake in services exports.  She said that this i ssue should be seriously addressed when Members 
prepared their revised offers.  The asymmetry be tween different sectors and modes of supply that 
resulted in the Uruguay Round negotiations also needed  to be properly redressed so that all Members 
could benefit from the multilateral liberalization of services trade, which her delegation believed 
would arouse all Members' interest in more active participation in the ongoing services negotiations.  
In this regard, China echoed the view of some of the previous speakers that Members should aim at a 
development-oriented outcome of the services negotiations.   
307. The representative of China said that the rules part of the services negotiations was lagging 
far behind in the sense that they had been undert aken many years earlier. China believed a fuller-
fledged rules framework would enable market acce ss commitments to be effectively implemented.  
Her delegation therefore attached equal importance to  the rules negotiations.  In this regard, China 
believed that the positive consideration of develo ping Members' concerns, such as their concerns 
about the ability of their service providers to supply services abroad, would give impetus to the 
negotiations.  She said that even though China did not share the view that the services negotiations 
had been given less attention by Members, it did be lieve that there was an area which had received the 
least attention, namely, MFN exemptions.  She underlined that more than 400 MFN exemptions remained and most of them related to the majo r services exporting Members. No doubt this was a 
disturbing factor in the services negotiations.  Ch ina wondered if, at the end of the round of services 
negotiations, there remained a large number of MF N exemptions, whether Members would be able to 
evaluate the results of the negotiations, since the multilateral trading system was built on the MFN 
principle.  Finally, she said that Annex C of the July Package had provided  guidelines for services 
negotiations until July 2005.  In the interim, she re called that two important events would take place 
by the end of July, namely the tabling of offers , including initial offers and revised offers, and the 
June cluster.  China agreed with some of the Me mbers that all would be in a better position to assess 
the situation after these two events and make decisions in their light. 
308. The representative of Thailand
 said that to achieve the objectiv es envisaged in Annex C of the 
July Package General Council Decision, Thailand was prepared to work harder in co-operation with 
other Members until May and subsequently Hong Kong on the underlying premise that a balance 
between rules and market access was kept, that a ma ximum degree of transparency and inclusiveness 
was observed and that genuine consideration was give n to ways and means to increase participation of 
developing countries and least-developed countries in global services trade.  Her delegation was 
aware that much work need ed to be done in Geneva and in capit als.  On the market access front, it 
appeared that off-cycle events were on the horiz on.  She noted that two weeks after the present 
meeting an entire week would be dedicated to the energy sector and a symposium on cross-border supply in two months.  Members whose resources a llowed for participation of  capital-based experts  
would most benefit from these events.  They woul d consequently facilitate the process of industry 
consultations domestically.  Only those with se rious resources constraints would be put in a 
disadvantaged position.  On the rule-making front, where progress was less tied to the actual physical TN/S/M/14 
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 presence of capital-based experts, inter-sessional info rmal meetings of subsidiary bodies could move 
the discussions ahead.  Her delegation hoped that by mid-year or the third quarter of the year, Members would be in a position to identify what they could meaningfully achieve in Hong Kong and to the benefit of all Members. 
309. The representative of Peru
 wished to begin by thanking the Chairman for his leadership.  He 
said that the cluster had been useful, productive an d positive for the future of the process.  He was 
satisfied with the major contributions that had been  made in domestic regula tion, mode 4 categories, 
financial services liberalization, and communications inter alia  on telecommunications, logistics and 
environmental services.  All of these contributions  were intended to ensure that countries undertook 
greater commitments to liberalization and de velopment of services disciplines which would 
strengthen access to markets that had been achieved and which could be achie ved before the end of 
the round.  Much work was outstanding in rules and market access.  With resp ect to the former, Peru 
believed that Members should move towards specifi c results on the various topics that were under 
discussion, and particularly domestic regulation.  Peru believed that it was necessary to go beyond 
mere transparency to include procedures and re quirements for obtaining licences, for providing 
services, and for dealing with specific problems arising from visa granting which could have an 
impact on service provision, particularly in developing countries such as his own.  Members should also do everything possible in order to ensure that  the discussion on subsidies criteria moved ahead in 
line with Article XV.  With respect to market  access, he welcomed the good news about the 
submission of initial offers by Indonesia and Barb ados.  He encouraged Members to submit their 
revised offers by May and seek to achieve as much as possible without any exclusion of any specific 
sector.  Peru was looking with great interest at the process of revised offers and hoped that major 
signals of greater progress would occur in the outstanding disciplines.  He said that access to markets would only be ensured if accompanied by disciplines on rules.  He reiterated that his delegation believed that by May revised offers should be tabled which would include sectors and modes of 
particular interest to developing countries in line w ith Article IV of the GATS and with a view to the 
assessment to be carried out in line with para graph 15 of the Negotiating Guidelines. Echoing 
comments by Chile, he agreed that the level of commitment achieved in mode 4 would open the 
"gateway" for Members to move forward and accelerat e the services negotiations.  It would also help 
Members to assess the extent to which they were complying with the common goal of increasing the 
participation of developing countries in services trade.  He said that, before the summer break, 
Members should have a road-map that would give Members a clear indication of how they should be 
moving forward in disciplines as had been done w ith subsidies.  The ser vices package should be 
available for Hong Kong which w ould require Members to meet in the subsidiary bodies in the 
interim. 
310. The representative of Zambia
 joined others in paying tribute to the manner in which the 
Chairman had presided over the proceedings of the Council and assured him of his delegation's 
support.  He wished to make three points.  Firs tly, he endorsed the comments made by the delegation 
of Bangladesh with regard to mode 4 and the movement of natural pers ons.  He recalled that this issue 
had been raised several times by LDCs in previous meetings.  He said that Members needed to update 
the state of affairs and to take into full account th e current views on mode 4.  Secondly, on offers, he 
thanked and congratulated Barba dos, Indonesia and Uganda for their good news.  Uganda, being an 
LDC, was an inspiration to his delegation.  The LDCs had made de facto  high quality offers even 
before their formal rights to the WTO and they had done so following the pressures that the IMF, the 
World Bank and other partners ha d exhibited on LDCs in the early 1990s.  He said that LDCs had 
surrendered their insurance, telecommunications a nd banking sectors to multinationals or to those 
from outside LDCs who had the wherewithal or m oney to take over these services.  LDC economies 
where not in their own hands but in the hands of the international private sector.  Thirdly, although 
this was the state of affairs, he said that Zambia was seriously studying the matter.  Despite the fact 
that LDCs were not required to undertake commitm ents that went beyond their capacity, they hoped 
nonetheless to present something in due course that w as in line with their capacity and ability.  He  TN/S/M/14 
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 was encouraged by the statement from the European  Union which clearly stated that there was good 
political will in developing countries, including the LD Cs.  He concurred with the EU statement that 
one of the difficulties faced by developing countries  was a lack of understanding and the ability to 
formulate offers.  He said that he trusted that  Members would continue to understand the LDCs.  
There was little doubt that the priorities for LDCs remained development issues, including capacity 
building and technical assistance.   
311. The representative of Uganda  sought to reiterate that this de legation had carried out extensive 
unilateral liberalization in all sectors of the economy except water.  A national assessment exercise on the impact of unilateral liberalization and structural adjustment programmes was being carried out.  He hoped that it would serve as a guide to Uganda's revised policy on trade in services which was also 
under discussion.  He said that his delegation would be offering its requests and offers in the coming 
week.  He said that the quantity and quality of offe rs that his delegation had seen in mode 4 were not 
satisfactory, but rather were narrow and did not correspond to the areas of export interest to his 
country.  Bearing this in mind, he requested th at Members, in preparing their revised offers, 
accommodate Uganda's interest by including low-skille d categories of workers.  He said that these 
workers were referred to as "low" skilled because they  did not have higher degrees, but he underlined 
that they remained workers with skills who did good work.  As much as possible, he said that 
Members should seek to accommodate Uganda's interest , as this would allow Uganda to yield benefits 
from the negotiations.  The issue of low-skilled cat egories had been raised by Members in the 
informal meeting on mode 4, including by Bangladesh , which had raised the issue again at the formal 
session.  His delegation supported Bangladesh because the issue was of high importance to Uganda.   
312. The Chairman
 thanked the representative of Uganda  for his important announcement.  
313. The representative of Rwanda  welcomed the announcements  by Barbados, Indonesia and 
Uganda on their forthcoming initial offers.  She had noted the statements by other delegations that 
new momentum needed to be injected into the servi ces negotiations in order to achieve more than had 
been accomplished to date.  While her delegation's vi ew did not differ, she sought to underscore that 
the development dimension of the DDA should be a central element of the negotiations and that 
momentum was needed to keep this element central.   She sought to stress two further issues that her 
delegation believed would contri bute to achieving the required improvements in the services 
negotiations.  Firstly, on technical assistance, fo r many developing countries and least-developed 
countries, technical assistance remained an important  element for their participation in the services 
negotiations.  She noted that some technical as sistance had been provided to some countries;  
however, much more was needed.  She called for mo re targeted technical assistance as envisaged in 
Annex C of the July Package that should assist in the identification of sectors and modes of interest to these countries as well as for institutional and domes tic services capacity building.  Secondly, her 
delegation believed that better quality commitments in  sectors and modes of interest to developing 
and least-developed countries would significantly improve  the pace of the negotiations.  In particular, 
she noted that mode 4 remained important and sh e believed that these discussions should incorporate 
the concerns of all Members, including those of  LDCs.  Finally, her delegation was committed to 
making its contribution in the negotiations a nd in supporting the Chairman's efforts. 
314. The representative of Nigeria
 welcomed the announcements by Indonesia, Barbados and 
Uganda on the submission of their initial offers .  His delegation believed in making progress in the 
services negotiations and in tabling quality initial and revised offers.  Greater political will and 
commitment was needed in order to make progress.  As much as work on technical issues could move 
forward, this did not substitute for renewed po litical commitment and guidance to inject momentum 
into the process.  In Nigeria's view, the personal i nvolvement of senior officials, including Ministers 
would be crucial and would be required in the m onths ahead.  He believed that in the services 
negotiations, Members needed to go beyond Urugua y Round commitments and table offers with 
genuine market access openings in sectors and modes of  supply of export interest to all, especially TN/S/M/14 
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 developing countries.  His delegation was of the vi ew that the remaining two clusters before Hong 
Kong should be used more efficiently and be r esult-oriented to enable Members to achieve a 
reasonable package on the services negotiations by Hong Kong.  Members needed to move beyond 
rhetoric to complete these accomplishments.  His de legation was of the view that services was a key 
pillar of the DDA negotiations and, as a devel opment round, any outcome should reflect the 
development dimension of the round and result in a win-win situation for all.  His delegation stood 
ready to participate in the process to achieve a pro-development outcome.    
315. The representative of the Philippines
 apologised for the absence of his ambassador and said it 
was owed to his being in capital in part to spur th e finalisation of work on his delegation's initial offer 
and to try to impart to domestic authorities the cr itical importance of tabling it as soon as possible.  He 
congratulated Indonesia, Barbados and Uganda on their announcements.  Notwithstanding the lack of 
an initial offer on the part of his de legation, he hoped that trading part ners would not see it as a lack of 
interest or willingness to engage on the part of the Philippines.  His delegation remained keen and 
committed to the negotiations both in terms of market access and rules.  In this  respect, he noted that 
his delegation had jointly submitted a number of proposals with a number of developing countries 
since the beginning of the negotiations.  He recalle d that his delegation had endeavoured on many an 
occasion to meet with trading partners that had requested bilateral meetings.  He said that his 
delegation had prepared for these by reviewing initia l and revised requests and providing information 
on the stage of progress of the preparation of its initial offers.  His delegation had also indicated the sectors in which domestic authorities had been encourag ed to give focused attention for the purpose of 
making commitments.  His delegation had also indicated  where its interests lay and, in a number of 
cases, had pointed to concerns about the initial offers which did not seem to go far enough in 
addressing these interests.  On the rules side, he r ecalled the high profile his delegation attached to 
these negotiations and the active role the Philippines had played in tabling proposals and responding 
often to questions in relation to  an ESM in services.  That week his delegation had presented, on 
behalf of a number of developing countries, a proposal on elements for disciplines on domestic 
regulation which had been identified by practically all Members as a key area in the rules negotiations 
where an early harvest might be achieved.  In th is respect, he reiterated that his delegation was 
engaged and hoped that trading partne rs would not interpret the lack of an initial offer at present as a 
lack of willingness or interest to participate in the negotiations.  With respect to the way forward, he 
noted that in the fall of 2004, his delegation had indi cated in various fora that  it had seen the value of 
seeing more clusters for 2005 rather than a mega-clust er.  He recalled that he had indicated at that 
time his delegation's preference for a session in Fe bruary and April because he had seen value added 
in meeting as frequently as possible.  He said that Members were now faced with the situation where there remained only the June and September clusters to  take stock of work in those clusters.  He saw 
the value for Members to work at inter-sessional mee tings perhaps in both informal or formal mode.  
He said that there would be value added in taking advantage of the meeting on mode 1 as well as the 
energy seminar.  Insofar as preparing for Hong Ko ng and beyond, it was critical to the process that 
Members undertake to address the substance as well as the definition of the package that would be 
before Ministers in Hong Kong.  He said it would also be important, with regard to looking beyond 
Hong Kong and given the indications on  the extent of ambition of revised  offers in May, to look at the 
possibility to have another round of offers after Hong Kong.  If this were to be a consideration, then 
his delegation believed that sufficient time should be  allocated in setting an indicative agreement for 
additional benchmarks for the servi ces negotiations.  He believed th at the inter-sessional meetings 
should focus on issues other than market access, incl uding rules, classification and scheduling.  If, as 
had been indicated by panels in their reports, th e schedules arising out of the negotiations would be 
negotiated as multilateral agreements and not simply on the basis of the party making the scheduled 
commitment, then it was critical that all Member s come to an understanding of what each Member 
sought to inscribe in its schedule for it to have a mu ltilateral character.  In this respect, he echoed the 
call for active engagement in the Special Session a nd the subsidiary bodies relating to rules and the 
CSC which had jurisdiction over classification and sche duling issues.  He emphasized the need for the 
inter-sessional meetings to provide a venue for c ontinuing discussion on mode 4 issues as well as  TN/S/M/14 
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 others that were of keen interest to developing countries.  Referring to the informal discussion on 
mode 4, he said that this was a good example of a way to explore complicated technical and substantive issues related to mode 4 and should not be seen as a conclusion, but rather a continuation 
of discussion of these issues.  On the overall apprecia tion of the negotiations, he agreed with others 
that the services negotiations should not be seen in isolation of the other fields of negotiation under 
the DDA.  Members should seek to strive for a ba lance within the services negotiations as well as a 
balance with other areas of negotiations.   
316. The representative of South Africa
 welcomed the announcements from Indonesia, Uganda 
and Barbados on the submission of their initial offer in the near future.  Her delegation understood the 
hard work required to prepare an initial offer and commended the delegations for the hard work.  She 
sought to emphasize that the service industry was im portant for South Africa, since according to the 
recent statistics from the South African Reserve Bank, the services industry was the single most important economic sector accounting for 65 per cent of South Africa's GDP.  The service sector accounted for a major part of South Africa's total employment figures and in addition the sector had 
exhibited stronger than average growth in the previ ous years and this trend was likely to continue.  
These facts helped to underline the point she sought to  emphasize, namely, that the lack of an initial 
offer from South Africa should not be interpreted by trad ing partners as a lack of interest.  She agreed 
with other countries, both devel oped and developing, that all countries needed to actively and 
substantively participate in the ne gotiating process.  She recalled that a number of initial studies into 
the South African services industry indicated that South Africa was home to a number of leading companies in several service sectors mainly in fina ncial, construction, telecommunications and energy 
services.  She noted that a recent study had found that world export of services ran into trillions;  
however, the flow of these imports and exports was greatest in Asia, North America and Western 
Europe.  These regions together accounted for 88 pe r cent of service exports.  The rest of the world 
accounted for a mere 12 per cent.  While accurate and recent figures for South Africa's share of world 
service exports were harder to illicit, she said it w as possible that South Africa's share was less than 
the world-wide average.  Thus, in her delegati on's view, there was clearly room for growth and 
expansion of South Africa's market share in global economy in the services.  In this regard, she sought 
to emphasize the following points.  Firstly, South Africa was not interested in high quality offers per 
se.  Rather, South Africa was interested in revised o ffers that catered to sectors and modes of export 
interest for South Africa.  Taking the example of fi nancial services, the tendency of capital to look for 
high quality skills and high capital raising capacity was known, which was a tendency that resulted in 
the consolidation of finance in a few international financial centres.  Thus, South Africa did not intend 
to liberalize its financial services sector if this would adversely expose its domestic markets to global 
financial centres.  She had in mind an adverse exposure which would not build on the strong South 
African financial services sector and extend the benefits a well-regulated efficient market to all African investors and insurers.  In other words, South Africa was interested  in specific commitments 
that reflected South Africa's comparative advantage.  This logic applied not only in financial services 
sector but also in the sectors that were labour-inten sive, such as construction and health services.  
Therefore a positive signal from the developed worl d through development-fri endly revised offers 
would certainly be met with a favourable outlook.   
317. Turning to the subject of the rule-making ne gotiations, the representative of South Africa said 
that it was obvious that there had been very limite d progress in this area.  Domestic regulations 
seemed to be proceeding rather steadily;  however, she said that South Africa was not interested in 
domestic regulation per se .  Rather, South Africa was only interested in developing domestic 
regulations, for instance, in standards that would not make it hard for South African service providers 
to supply services in the world.  In other words,  South Africa was only interested in developing 
domestic regulations that were appropriate and took into account development levels and South 
Africa's capacity to supply the services in which it had a comparative advantage. She recalled that the 
negotiating guidelines and the July Package, in A nnex C, stated that special attention should be 
accorded to the modes of supply of export interest to developing countries.  The modes of supply of TN/S/M/14 
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 South Africa's interest were mode 4 and mode 1.  The liberalization of mode 4 was very critical for 
developing countries' economic de velopment and, citing the Annual WTO World Trade Report, she 
said that it had rightly focused on this mode of supply and had lucidly identified win-win scenarios.  The Negotiating Guidelines reiterated that the "negotia tions shall aim to increase the participation of 
developing countries in trade in services".  More over, the current negotiati ng round had been branded 
the development round.  Hence, the question posed  was which service sectors and modes of supply 
were of interest to developing countries.  South A frica believed that a step in this direction would be 
to ensure that the negotiation meaningfully engage d all the Members.  She said that because of the 
lack of genuine engagement in these negotiations, small developing countries had tended, sometimes 
wrongly so, to assume that there was very little for them to gain in making commercially meaningful 
commitments or actively participating in the negot iations on rules and domestic regulations.  Of 
course, the limited improvements in the schedules of  some of the more developed partners was not 
helping to build confidence.  Therefore, her dele gation hoped that developm ent partners would begin 
to engage developing countries in a more meaningful way in this regard.  Fina lly, she emphasized that 
South Africa was committed to the multilateral process and would participate actively in the 
negotiations.  However, echoing comments by Thaila nd, she said that her delegation would do so on 
the basis of genuine and transparent inclusiveness. 
318. The representative of Djibouti
 thanked Barbados, Indonesia and Uganda for their 
announcements that they would submit their initial offers in the near future.  Referring to the 
comments by various delegations that had spoken ab out technical assistance, he said that, as Members 
were fully aware, technical assist ance was essential for his country and was a fundamental issue, not 
only in the framework of the services negotiations, but  also in the evolution of world trade.  He 
insisted on the need to strengthen technical capac ity and on the quality of the technical assistance so 
that receiving Members could face their responsibility vis-à-vis  the WTO Agreements and favour their 
participation in the negotiations.  It was for this reason that both beneficiaries and donors should work 
together with the Secretariat to see the ways in wh ich Members could continue to evaluate and study 
in-depth the best way to ensure capacity-building and the maximum benefit from technical assistance.  
Technical assistance was a key to the success of  WTO negotiations and merited the corresponding 
importance.  Referring to the comments of the Euro pean Communities, he said that it was not a lack 
of will from developed countries, particularly those that had made contributions, but there were other 
barriers.  For example, developing countries were be ing asked to liberalize;  however, they did not 
understand the economic benefits or consequences of liberalization.  The concerned countries needed 
a clearer idea of the benefits and losses that might arise in economies and in different sectors in order 
to make an informed decision.   
319. The representative of Oman , referring to earlier comments about the importance of improving 
the quality of offers submitted, recalled that Oman was a recently acceded  Member and had made 
extensive market access commitments in services.  She noted that the extensiveness of Oman's 
commitments and their quality in many cases was bette r than others currently on the table.  She said 
that the number of MFN exemptions some Member s maintained was troubling to Oman.  Oman urged 
all Members to improve the quality of their offers and make commitments similar to or better than 
those made by Oman.   
320. The representative of Nepal  congratulated Barbados, Indonesia and Uganda on the 
announcement of the circulation of their initial offers and hoped that more offers  would be tabled that 
would take into account the concern of LDCs .  Noting that trade in services was becoming 
increasingly important and that Nepal was a recently acceded LDC, he said that his delegation agreed 
with the comments made by Zambia, the LDC coordina tor, that Nepal's interest lay in mode 4 and 
particularly in the movement of natural persons in the lesser-skilled levels.  He said that liberalization 
in this area would be beneficial to both recipi ents and providers.  He hoped that the Council's 
deliberations would lead to a meaningful conc lusion which would help LDCs in the process of 
integrating their economies into the multilateral trading system.  TN/S/M/14 
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 321. The representative of Norway , speaking on behalf of a group of Members, sought to remind 
delegations about the informal energy services week  which would be held in March.  He said there 
would be seminar sessions which would be comprised of presentations from Members on energy services liberalization.  He said discussions w ould focus on scheduling specific commitments for 
energy services.  Time would also be set aside fo r bilaterals.  The objective for the informal energy 
services week was to clarify requests and offers on energy services.  He drew attention to a Secretariat 
prepared announcement about the energy services w eek and he said that a detailed outline of the 
programme would be submitted to  delegations shortly.   
322. The representative of Brazil
, referring to the informal factual assessment of the state-of-play 
that the Chairman had made earlier in the week, said that his delegation had not had time to assess this 
presentation, about which he had many  questions rather than conclusi ons.  He said that he would be 
interested to discuss this with  the Chairman in order to share his delegation's perceptions. 
323. The Chairman  said he would welcome any feedback fro m Brazil or others as it would help 
improve the presentation in the future.  He informed  the Council that initial offers had been received 
from Grenada and Guyana, and on behalf of the Council he expressed his gratitude and 
congratulations on their important submissions.  Making a few non-exhaustive remarks about the 
discussion, he said that this brought the number offe rs made to 50 with two more committed.  This 
was good news, and he expected that Members that had not made their initial offers would do so in 
the coming weeks.  He had remarked from the discuss ion that there was a shared sense of urgency and 
a widespread concern about the state of play and a co ncern about the quality of the offers on the table.  
He said Members could be encouraged by the leve l of engagement and commitment that delegations 
had shown in their comments and the hard work that  had been undertaken in  the past weeks, as well 
as by the expectations that they had for the near  future which would entail a tremendous effort and 
amount of work to be completed before the next  cluster.  In particular, this would involve 
consultations and meetings in many formats and with the expecta tion that this would lead to improved 
offers in May.  Comments had been made that there had been much lib eralization in the real world;  
however, there was little will to commit to it at the WT O, which was a comment to be kept in mind.  
The expectation had been expressed that in May dele gations had to have subm itted improved offers in 
a comprehensive manner in terms of coverage including all modes of delivery.  Members had 
underlined the need to be ambitious and many dele gations had underlined the modes of interest to 
developing countries, including, but not limited to, mode 4.  Delegations had expressed themselves in 
a positive way about the extended cluster.  Progr ess had been made but more was needed.  He 
commended delegations for their extensive efforts.   The comment had been made that the offer-
request process was the centrepiece of the negotiati ons but that Members had to be open to other 
modes of negotiations should this become necessar y.  Other delegations had indicated that Members 
needed to be cautious and prudent in this regard.  A few delegations had pointed out that in some 
instances FTAs had been used as an  excuse not to improve offers.  Many delegations had signalled 
their concern about the large number of MFN exemptions.   
324. The Chairman had noted that there remained commitment to the objectives and mandate that 
had been set out at Doha which would need to beco me better defined in order to determine the stages 
at which Members wished to find the process in July, in Hong Kong and beyond.  The point had been 
made that services was a very important part of th e package of the negotiations and that unless there 
was substantial improvement, lack of progress woul d have a negative impact on other areas of the 
negotiations.  As one Member had pointed out, progress was a necessary condition for success at 
Hong Kong.  Another had said that without services, the round would not happen.  Members needed to increase the pace of work and need ed to work in several formats a nd modes until the next cluster.  
In order to bring to fruition the offers, Ministers'  attention, their guidance and support on substance 
was needed.  They had a role to pl ay internally in terms of mobilising the resources of other ministries 
to improve offers.  They needed to be made aware of the necessity to allocat e the resources in capital 
and in Geneva in order to increase the pace of work and bring about good results in May and beyond.  TN/S/M/14 
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 Some delegations called for an intens ification of work in rule-making areas and, to this end, he said he 
would be in touch with Ch airpersons of the Regular Session and the subsidiary bodies.  In this respect, 
many delegations had pointed out the prospects in  the negotiations on domestic regulation.  These 
subsidiary bodies would have work to do in a formal  mode before the next cluster.  One delegation 
had expressed concern over activities undertaken in  other multilateral bodies which did seem not to 
point in the direction of liberalization.    
325. The Chairman had noted that groups of friends  in many different sectors had done good work.  
There was improved transparency, which built confiden ce and helped to improve the expectations for 
substantial improvement in th e negotiations.  Many delegati ons, both developed countries and 
developing countries including LDCs, had underlined th e need for increased and sustained technical 
assistance and capacity building.  There were genuine problems with technical issues and full 
understanding of requests and of undertaking comm itments.  The Secretariat stood ready to provide 
assistance, and he as aware of other modes of assista nce, bilateral or throu gh other multilateral or 
regional organisations.  He had been requested to  become personally engaged in increasing the level 
of political awareness as well as to engage in extens ive consultations in different formats and modes 
to discuss both process and the consideration of ta rgets for the end product wanted for Hong Kong, 
but also with work that needed to be undertaken , for example on mode 4 and other issues.  The 
upcoming symposium on cross border supply of ser vices would also provide an opportunity for 
follow-up.  On LDCs, as he had announced, he had b een in touch with them, and it was his impression 
that there was an agreement that in the July clus ter time would be reserved for LDC issues and in this 
regard he recalled the modalities.  He said that ther e would be a meeting with them and the Secretariat 
in order to give particular attention to the LDCs and to give this work an appropriate format and 
allocate resources and assistance.  He would consul t, as had been requested, in terms of papers on 
mode 4 as indicated by several LDCs.  He said that a clear definition of the terms of reference and any output would need to be discussed and he said that  he would consult widely on this matter.  He 
recalled comments on the need to maximise the use of subsidiary bodies and he would coordinate 
with them.  He had heard from a number of delega tions that there had been a number of important 
new proposals and that delegations would need more  time to study these proposals and to react to 
them.  He expected that Members would envisaged that, before May or June , Members would look to 
hold any meetings, formal or informal, that woul d be dedicated to deepening the analysis and 
consideration of the proposals.  Delegations had invited the Chairman  to hold consultations to explore 
ways and means to evaluate offers in good time fo r a first approximation and to enable Members to 
deal with any stumbling blocks.  One delegation had also pointed out that each Member would assess 
the quality of the offers.  He believed that this w ould be a first step to exchanging, over time, views 
about the level of expectations.  He said it could be useful for Members to begin to share expectations 
and he wondered whether it could be helpful for de legations to exchange ideas.  There had been 
mention to have all of the elements in the Negotiating Guidelines taken into account in this 
assessment, individual or collective.  The Chairm an thanked delegations for their participation, 
engagement and commitment, and thought that a pos itive conclusion could be drawn on the level of 
commitment from delegations.  He invited the Coun cil to take note of the statements made and 
suggested that he proceed as he had outlined. 
326. It was so agreed
.  
 
F.  O UTLINE OF THE CHAIRMAN 'S REPORT TO THE TRADE NEGOTIATIONS COMMITTEE  
327. Turning to the outline of his report to the TNC, the Chairman  stated he would report that the 
Council for Trade in Services in Special Session ha d met on 21, 22 and 25 February 2005.  Owing to 
the heavy workload of the Council, the meeting ha d been suspended and would be resumed.  Under 
the sub-heading Status of Work and with respect to  the Assessment for Trade in Services, he would 
report that a presentation on the World Trade Report (2004) had been made by the Director of the  TN/S/M/14 
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 Economic Research and Statistics Division which c overed the two main points related to services 
trade in the Report, namely liberalization th rough Mode 4 and infrast ructure in trade and 
development.  This had touched off a discussion about telecommunications liberalization as well as 
known difficulties about the dearth of statistical data for undertaking comprehensive assessments.  Attention had been drawn to a planned non-WTO assessment project in COMESA countries, eleven 
of which were also WTO Members.  He would indica te his intention to hold consultations on how to 
organize work under the Assessment in line with  the mandates in Article XIX and the Negotiating 
Guidelines at the current stage in the negotia tions.  Under the item Proposals Relating to the 
Negotiations under Article XIX, he would note that a total of 16 proposals had been tabled in the 
following sectors:  legal, computer, posta l and courier including express delivery, 
telecommunications, construction, environmental, fi nancial, air transport, maritime transport and 
logistics services as well as Mode 4 and small- and medium-sized enterprises.  A number of these proposals reiterated sectors of negotiating interest to groups of Members.  Others resulted from 
classification and scheduling work undertaken by so me Members in groups th at they had constituted 
informally, usually on a sectoral basis, which were known as "friends groups".  These negotiating 
proposals had benefited from a convergence of view s in the respective "friends groups" and were 
being reported to the wider membership for their consideration.  Delegations expressed satisfaction 
that the work of "friends groups" had reached this level of maturity, and further discussion would help 
to set the groundwork for undertaking specific comm itments in these sectors in the coming months.  
Discussion of Mode 4 issues had occurred in a half-day, mostly informal meeting.  He would note the summary of the discussion he had made in formal mode and under his own r esponsibility, as well as 
the fact that this was the second such time that the Council had held an informal discussion focused 
on new negotiating proposals on Mode 4.  Unde r the item Consideration of Proposals on S&D 
Treatment Provisions, with respect to the Category II proposals which had been referred to the Special 
Session by the Chairman of the General Council in May 2003 and to which the General Council 
Decision of 1 August 2004 referred, he would report that he had informed the Council that he had 
consulted with the proponents of these proposals, a nd that they intended to put forth a proposal for 
discussion in the near future.  He would recall his in tention to meet with Members in various formats 
in order to organize further work and would report to the Council on this matter at its next meeting.  
With respect to the Council's Review of Progress in Negotiations, Including Pu rsuant to Paragraph 15 
of the Guidelines for Negotiations, he would report that new offers had been tabled by Barbados, 
Grenada and Guyana.  The total number of initial offers presented was 50 offers representing 74 
Members.
3  Some 42 offers remained outstanding not including least-developed country Members.  
Firm commitments to table initial offers in the n ear future had also been made by Indonesia and 
Uganda.   
328. The Chairman said that under the sub-heading "O utstanding Issues" he would recall the rather 
frank remarks he had made to the TNC at its mee ting on 14 February, which had been subsequently 
circulated in JOB(05)/16.  He would report that at  the meeting of the Special Session, a number of 
delegations had acknowledged that th ey had heard the "wake-up call" he had signalled to the TNC.  
He would also make note of the factual presentation he had made in informal mode on the state-of-
play of initial offers, as well of the fact that the presentation had sought to illustrate, using relevant 
indicators, that the high quality of offers called fo r in the July Package was far from being realised.  
He thought it would be worth noting that a larg e number of heads of de legations had personally 
attended the Special Session to communicate to trad ing partners their concerns about progress in the 
negotiations.  He would report that he had detected a clear change in tone in Members' interventions 
characterised by a deepening concern that the servi ces negotiations might be heading toward a crisis, 
but also by a firm commitment to deploy their fu ll efforts to infuse the negotiations with substance 
and momentum to avert this scenario.  Failure to  respond quickly and substantially to the current 
situation would have a negative im pact on expectations for the level of ambition for the services 
negotiations and hence on objectives for the Hong Kong Ministerial Conference and beyond.  The 
                                                      
3  The European Communities' offer is counted as representing 25 Member States. TN/S/M/14 
Page 102  
 
 submission of revised offers in May would be th e sole opportunity to supply inputs for the market 
access portion of a first approximation in July.  In th is context, a broad group of Members had called 
for high quality revised offers, ch aracterised by comprehensiveness in  terms of sectors and modes, to 
be tabled in May.  This would likely require par ticipants to ask tough questions about how to respond 
to the requests put forth by their trading partners .  As alluded to by a number of delegations, he 
believed that it was of paramount importance that Mi nisters be made aware of the acute seriousness of 
the situation faced in the services negotiations a nd the remedies needed.  The request-offer approach 
in the negotiations was a human- and time-intensiv e activity and, as such, required considerable 
resources allocation.  In this regard, a large number  of Members had stated that senior officials and 
Ministers must provide the political instruction with in their governments to allocate these resources.  
They had also expressed the view that support on substance in the months ahead needed to be 
provided.  In light of the urgency of the situa tion, a few Members had suggested that he himself 
become personally engaged in this regard.  While  political guidance was the most pressing issue, 
Members had not lost sight of other elements of the Council's work that needed to remain at the centre 
of attention on the way to defining a "first approxi mation" before the summer.  In this regard, some 
Members had suggested that he engage in consu ltations with Members and Chairpersons of the 
subsidiary bodies on how to intensify work on rul es negotiations.  He said he would communicate that 
he was fully aware of additional elements that might be used in compiling a first approximation, 
including areas of interest and targets for achievi ng high quality offers, th e participation of LDC 
Members and targeted technical assistance to allow all Members to participate in the negotiations.  
With regard to Future Work, he would inform the TNC of the Council's agreement to resume its 
meeting under the item "Proposals Relating to th e Negotiations under Article XIX" in order to 
consider further the numerous proposals that woul d have benefited from study in capital.  The 
resumption of the meeting would likely occur in April.  The next cluster of services meetings, including a meeting of the Special Session, would be  held from 20 June to 1 July 2005.  He invited 
the Council to take note of his report. 
329. The Council so took note
. 
 
H.  O THER BUSINESS  
330. A representative of the Secretariat , referring to the point he ha d intended to make about the 
database and the available facilities and noting the hour, said he would have made available a written 
communication to delegations.  
331. The representative of Canada , noting that the meeting would be the last meeting for the 
representatives of Austria, Colombia, Guatemala and the Philippines in their present capacities, 
expressed his sadness at the news of their departure and his heartfelt gratitude  for their contributions 
they had made to the services community in Geneva.  
332. The Chairman , on behalf of all delegati ons, thanked the representatives of Austria, Colombia, 
Guatemala and the Philippines for their contributio ns to the Council's work and wished them all 
success in their future endeavours.   
333. The representatives of Austria , Colombia  and the Philippines  thanked colleagues for the many 
kind remarks they had made in informal mode. 
334. The Chairman  invited the Council to take note of all the comments that had been made. 
335. The Council so took note . 
__________