RESTRICTED  WORLD TRADE  
ORGANIZATION  S/CSC/M/37 
2 September 2005 
 (05-3828) 
Committee on Specific Commitments  
  
 
REPORT OF THE MEETING HELD ON 21 JUNE 2005 
 
Note by the Secretariat
1 
  
1. The Committee on Specific Commitm ents (CSC) held a meeting on 21 June 2005.  The 
agenda for the meeting is contained in WTO/AI R/2593.  As no points were raised under Other 
Business, the agenda was adopted
 as proposed in the airgram. 
A. A PPOINTMENT OF THE CHAIRPERSON  
2. The outgoing Chairman, Mr Roberto Bosch (Argentin a) stated that according to the rules of 
procedure for meetings of the Committee, the hand-ov er of the chairmanship should have taken place 
at the end of the last meeting.  However, si nce the consultations on the chairmanships of the 
subsidiary bodies to the Council for Trade in Serv ices had not been finalized at the time, it was 
decided that the hand-over would take place at the be ginning of the current meeting.  Accordingly, he 
proposed that the Committee elect Mr Nicholas Ni ggli from Switzerland as the Chairperson of the 
Committee on Specific Commitments.  
3. The Committee elected  Mr Niggli by acclamation. 
B. SCHEDULING ISSUES  
4. The Chairman  reported on the discussions that took place during the informal meeting on 
3 May with regard to Member-specific questions ra ised in this Committee.  He noted that several 
addressees of these questions had made clear that th ey would not respond to them in the Committee, 
while others had confirmed that they  would be willing to reply to all or  some of the questions.  In this 
context, he noted that the delegation of Hong Kong , China had circulated it s replies to questions 
posed by Brazil in JOB(05)/116.  He reminded delega tions that they were free to respond in informal 
mode, without reflection of their statements in the record of the meeting. 
5. The representative of Brazil  stated that his delegation was in principle prepared to respond to 
some questions presented by Hong Kong, China; howe ver, as his delegation had already circulated its 
revised offer, it might be more fruitful if Me mbers identified potential questions on that new 
document.  He recalled that Brazil had raised several  questions with regard to  other Members' offers, 
i.e. questions to the United States, European Communities, Japan and Canada in September 2003 
(JOB(03)/189); to Australia, New Zealand, Swit zerland and Norway in March 2004 (JOB(04)/12); 
and a second round of questions to the United States , European Communities, Japan and Canada and 
Hong Kong, China in November 2004 (JOB(04)/174).  Except for Hong Kong, China, his delegation 
was still waiting to engage on a debate within the Committee.  Such a debate a would be important, 
although he recognized that some Members had tried to address the questions in bilateral meetings, 
and one Member had convened a multilateral meeti ng to address them.  His delegation was open to 
                                                      
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO. S/CSC/M/37 
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receive questions or answers in any format, but remained convinced that all delegations would  
benefit if the discussion took place in the CSC, whether in informal or formal mode.   
6. The representative of the United States
 stated that her delegation would address questions of 
the type posed by Brazil only bilaterally.  In orde r to facilitate the discussion of technical questions on 
offers, her delegation was prepared to engage in the context of the CSC in informal mode, provided 
all Members participated.  The United States wa s presenting its revised offer at an open-ended 
meeting next week and would take t echnical questions from Members.    
7. The representative of Japan  stated that her delegation had r esponded to all questions posed by 
Brazil in bilateral meetings and was ready for bila teral discussions with Brazil or any other delegation 
on Japan's revised offer. 
8. The representatives of Australia,  New Zealand , Norway , and Switzerland  remained 
unconvinced of the value of discussing specific sch eduling issues outside the established process of 
bilateral meetings.  Like Japan, their delegations  had responded bilaterally to Brazil's questions and 
remained open to responding to all Members in rela tion to any matters on the revised offer in future 
bilateral exchanges. 
9. The representative of th e European Communities  recalled that his delegation had replied at a 
private open-ended meeting to enable all delegations  to be aware of the EC position on the different 
questions.  Nevertheless, the questions posed by Br azil were not of a technical nature, but negotiating 
issues.  Therefore they should not be discussed in  the CSC.  As regards questions posed by the 
European Communities, only some Members had pr ovided replies to date.  He hoped for further 
answers, in bilateral or multilateral contexts, including in the CSC.   
10. The representative of Hong Kong, China  stated that his delegation remained open to discuss 
specific scheduling questions in both formal and info rmal mode.  He disagreed with previous speakers 
on the utility of discussing specific questions in the CS C.  Such discussions were useful in enhancing 
the understanding among the Membership of how th e different scheduling issues may be seen from 
different perspectives, and in particular how th e Scheduling Guidelines should be applied in a way 
that would conform with the majority view.  U nderstanding the various views on scheduling issues 
would also help evaluate the value of different offers.  The Committee could play a very important 
role in achieving a common understanding on these issues.   He recalled that the terms of reference of 
the Committee set out in paragraph 1 (b) that "t he Committee shall examine at the request of 
Members schedules of specific commitments and lists of exemptions from Article II of the GATS, particularly, with a view to improving the techni cal accuracy and coherence in the future."  The 
paragraph was pertinent, as the current offers woul d become schedules of commitments in the future.  
Replying to questions once multilaterally in the CSC was also more efficient than addressing them in 
several bilateral meetings, and would pa rticularly assist small delegations.  
11. The representative of South Africa
 stressed the importance of multilateral discussions of the 
specific questions, particularly for smaller delegati ons which did not have the technical capacity to 
analyze many of the issues that had cropped up in th e offers.  It was difficult to assess the actual value 
of an offer without appreciation of its technical a ccuracy.  While the market  access value of offers 
was discussed in the Special Session, the CSC wa s the appropriate body to examine their technical 
accuracy. 
12. The representative of Brazil  stated that his delegation woul d examine the revised offers of 
other Members in light of the replies that his delegation had received bilaterally, and determine 
whether the bilateral agreements had indeed transl ated into amended offers.  As necessary, Brazil 
might prepare new questions on these offers.  S/CSC/M/37 
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13. The representatives of Bolivia,  Chinese Taipei , Trinidad and Tobago , and Thailand  echoed 
the statements by Hong Kong, China and South Afri ca.  For small delegations in particular, it was 
important to have technical exchanges on offers on an informal basis in this Committee.  A common 
understanding of what was being offered was necessary.   
14. The representative of Mexico  saw a number of advantages in discussing the issues in the 
Committee, whether formally or informally.  Most importantly, it would facilitate a broader and hence 
more useful participation of Members in the whole process.  However, he recognized that there were 
some questions which could only be answered bilatera lly.  He suggested that the specific questions be 
generalized without attribution to an  individual delegation.  This woul d allow delegations  to engage in 
the discussions. 
15. The representative of the European Communities  generally agreed with Mexico's view and 
reiterated that on certain specific issues, his de legations would not depart from the negotiating 
process.  He recognized that a number of smal l delegations did not have the resources for 
comprehensive bilateral negotiations; for them, an acceptable mode for bilatera l negotiation needed to 
be devised without departing from the necessary nego tiating procedures.  The EC had held an open-
ended informal meeting to address these concerns; however such a meeting was different from an 
informal Committee meeting. 
16. The representative of Japan  stated that one of the Committee's tasks was to give guidance on 
scheduling issues.  She suggested that a technical  seminar for small delegations be organized.   
17. The representative of South Africa  reiterated her view that the Committee was not used 
appropriately.  The terms of reference clearly set out that the Committee should be used to discuss 
technical questions relating to scheduling.   Th e negotiating guidelines did not elevate the bilateral 
request/offer process over the plurilateral and multilatera l request/offer processes.  Hence, also market 
access issues could be discussed in  the appropriate Committees.  
18. The representative of Norway  supported the idea of generalizi ng questions so that they could 
be discussed in the Committee. 
19. The representative of Canada  supported a general discussion in  the Committee in informal 
mode.  He sought clarification on South Africa's pe rspective of the relation between the questions and 
answers on offers and the market access negotiations.  
20. The Chairman  noted that the discussion showed that  there was no agreement on how specific 
scheduling questions should best be addressed.  Th ere had been substantial demand from Members to 
discuss these issues in the Committee, but other Members had expressed their view that these 
questions should be addressed outsi de the Committee.  He encourag ed those Members who were in 
principle willing to address specific questions in the Committee to do so, be it informal or formal 
mode.  Given the strong interest and participation in this procedural discussion, he would further 
consult interested Members regarding ways to move forward with the discussion of specific questions.   
21. Turning to the more general scheduling questions , the Chairman recalled that at the informal 
meeting on 3 May delegati ons had welcomed his proposal to circulate an annotated agenda, on his 
own responsibility, in preparation of the formal meeting.  The annotated agenda, which aimed to 
encapsulate the arguments raised in the previous discussions on scheduling issues, was contained in 
JOB(05)/109.  Introducing the agenda , the recalled that a discussion on a set of questions provided by 
Hong Kong, China had been progressing for about one year.  On certain issues, most of the delegations who had spoke n seemed to hold similar views, while on others, a variety of diverging 
opinions had been expressed.  Generally, it appeared  that in some cases (for example questions 3 
or 4), most delegations appeared to agree that th e examples provided were not fully consistent with 
the Scheduling Guidelines.  However, some delegati ons had taken an additional step and tried to S/CSC/M/37 
Page 4  
 
provide a legal interpretation on such entries, considering them either not to constitute valid 
limitations, or, conversely, regarding them as not  containing any type of binding.  He was not 
convinced that such efforts of legal interpretati on were particularly helpful in the present context 
which had the main purpose of discussing ways impr oving clarity and predictability of entries in the 
schedules.  He hence suggested that it might be more beneficial to concentrate on a general theme that 
had emerged from the discussions, i.e. an expectation of greater specificity of entries.  The Chairman 
hoped that delegations would carry that expectati on over into the bilateral negotiations, when they 
were confronted with entries of the kind referred to in the questions.  He further recalled that many 
delegations had stressed the importance of work on scheduling questions in the context of formulating 
requests and offers, and encouraged delegations to bring to the table any additional issues that they 
would like to see discussed.   
22. The representative of Hong Kong, China
 introduced a room document intended to 
complement the annotated agenda.  It contained a ser ies of concrete examples  that corresponded to the 
various questions which he  had raised in his earlier submissions .  The purpose of the document was to 
facilitate a technical discussion under this item on ge neral scheduling issues, and it was not intended 
to put any Member's schedule under the spot light.   
23. The representative of the United States  sought clarification on which document by Hong 
Kong, China was being discussed.  She expressed th e view that nothing said in the exchange on 
scheduling could be used to interpret Members' ri ghts and obligations under the agreement.  Members 
were not interpreting schedules of Members under the guise of discussion of general scheduling issues.  She suggested that the Chai r, in future notes, make an additional point to that effect.  She 
expressed concern with the last sentence in paragr aph 12 which spoke of "broad agreement" that 
entries referring generally to licensing, authoriza tion, approval procedures or appointments should be 
avoided.  Whether or not this was a general feeli ng of Members, she felt it was preferable to avoid 
using such expressions, because they suggested that Members had taken some sort of decision.  She 
reminded Members that the Scheduling Guidelines were a note by the Secretariat and that there was a 
decision that they should not be used for legal interpretative purposes.  
24. The representative of Canada
 stated that it was important th at the Chairman's note had the 
necessary disclaimers, as the content did not n ecessarily reflect the views of all Members. 
25. The representative of the European Communities  stated that his delegation had provided 
replies to all questions posed by Hong Kong, China in informal mode at the last meeting.  Hong 
Kong, China's new room document required analysis, but he preliminarily commented that its first 
entry appeared to be correct, namely that a new limitation in the horizontal section could not apply to 
existing commitments.  It was necessary to fi nd a way of expressing different application of 
horizontal limitations in a transparent way.  Turning to an issue that had appeared in the context of 
preparing offers, he turned to the question of the scheduling of residency requirements which was 
addressed in paragraphs 13 and 14 of the Scheduling Guidelines, but was not sufficiently clear.  
Residency requirements were sometimes found in schedules in the market  access column, which 
might be understandable for modes 1 and 2, but w as questionable for modes 3 and 4, where residency 
requirements appeared to constitute national treat ment limitations.  His delegation had seen entries 
referring to "residency required for licensing", or  "residency needed for accreditation".  The latter 
entry suggested that residency was required for the use of a title or credentials.  He failed to see a 
difference between "residency required" and "resi dency required for licensing".  If a licence was 
needed to provide the service in question, both entrie s amounted to the same.  More generally, he was 
interested in hearing other delegations' views as to when residency conditions needed to be listed 
under national treatment, as paragra ph 14 of the Scheduling Guidelines was not sufficiently clear.  His 
delegation considered that a prior residency require ment should be listed; more difficult was the case 
of other residency requirements, particularly tho se that were easily obtainable.  Such requirements 
would likely constitute limitations w ith regard to modes 1 and 2, but it was less clear for modes 3 
and 4; e.g. if an intra-corporate transferee or a contractual service supplier were required to be  S/CSC/M/37 
 Page 5 
 
 
residents for the length of their stay.  Finally, he was interested to hear other Members' views as to whether requirements of legal or professional dom icile should be scheduled as national treatment 
limitations.  His delegation tended to think that this was not the case, but was open to other views. 
26. The representatives of Japan
, Switzerland , and Chinese Taipei  stated that they would revert to 
the room document by Hong Kong China at the next meeting. 
27. The representative of Pakistan  stated that several of the issues addressed in the room 
document had come up in the preparation of her delegation's offer.  On the specific point of how to schedule new horizontal limitations, her delegation had chosen to inscr ibe the limitations at the level 
of the specific sector entry for each new sector committed.   
28. The representative of New Zealand
 considered the room document to be useful as it focused 
on broad-based questions of interest to all Memb ers and therefore lent itself to discussion in the 
Committee.   
29. The representative of Hong Kong, China  stated that he did not intend to implicate any 
particular Member through the examples chosen in the room document.  He hoped that the examples 
could provide supplementary information for the a nnotated agenda and encour aged other delegations 
to put forward their own scheduling questions.  He suggested that a focused technical discussion in 
informal mode be convened in Ju ly or September.  He also suggested that an updated annotated 
agenda include the issues raised at the present meeting. 
30. Turning to the specific point raised by the Eu ropean Communities, he stated that residency 
requirements appeared in a number of different variations and applications.  Some residency 
requirements made it necessary for the service supplie r not only to be resident but to have been 
continuously resident for a certain period of time in the territory where the service was supplied.  
Such requirements remained national treatment limita tions that affected the supply of the service in 
mode 3.  He noted that other entries referred to  local experience, obtaining certificates or going 
through certain programmes which were specific to pa rticular local institutions, or following certain 
processes which could only be followed within the territory of a Member.  These requirements were 
not called residency requirements but had the same e ffect.  He was interested in the views of other 
Members as to how such measures should be scheduled  and whether there could be greater specificity 
to such entries. 
31. The representative of th e European Communities  stated that the Scheduling Guidelines, in 
paragraph 14, said that "regarding the need to sch edule residency requireme nts it should be decided 
on a case-by-case basis".  He supported the suggesti on to discuss the issue further at the informal 
meeting proposed by Hong Kong, China.  A disc ussion on the issue would help Members decide 
whether a decision could be taken, and whether some schedules could be cleaned up. 
32. The representatives of Chile  and Mexico  supported the interventions by the European 
Communities and Hong Kong, China.  The room docum ent was particularly useful for capital-based 
officials working on the revision of offers.  They su pported the idea of an informal meeting to address 
the issues in detail.   
33. The Chairman  suggested that the Committee switch to  informal mode at its next formal 
meeting in September in order to discuss the issues  raised in the non-paper, as well as the questions 
raised by the European Communities.  He would tr y to have the meeting scheduled as late as possible 
in the first week of the cluster.  Turning then to the question of economic needs tests (ENTs), he 
recalled that a paper on the subject by Ho ng Kong, China (JOB(04)/171) had been under 
consideration of the Committee.  At the last in formal meeting of the Committee on 3 May, he had 
suggested an information exchange on the concrete  operation of individual ENTs.  He continued to 
believe that a closer look at some practical exampl es of ENTs and their operation might be useful, if S/CSC/M/37 
Page 6  
 
only to put delegations in a bette r position to distinguish ENTs from  regulatory measures not subject 
to scheduling.  One of the main themes that had emerged in the discussions on ENTs was the type and 
degree of specification that a scheduled ENT shou ld comprise.  If one was to reflect on minimum 
specifications for criteria, the implications for EN Ts that were currently inscribed without such 
specifications, or with specifications falling short of a perceived minimum should be considered.   
34. The representative of Canada
 introduced a paper on Mode 4 commitments and Economic 
Needs Tests (S/CSC/W/47).  Canada agreed with many Members that it was important to provide greater clarity to ENTs.  To do so, it was key to apply the Scheduling Guidelines.  Members were not 
supposed to use ENTs to limit the number of natu ral persons.  However, if Members wished to 
continue to use such ENTs, they were supposed to  describe them in their schedule.  Some Members 
were, for example, describing their investment screen ing mechanisms with respect to mode 3 and the 
same should be done with respect to mode 4 measure s.  Mode 4 ENTs were essentially various types 
of labour market tests leading to the issuance of wo rk permits, authorizations or visas.  Depending on 
the specific national temporary entry regimes, ENTs had various names and were understood and 
applied differently by immigration and labour offici als.  For example, they might be called labour-
market opinions or confirmations, labour certifications, la bour attestations or certificates of eligibility.  
Trade negotiators and other experts needed to l ook within these labour market tests to understand 
better the precise requirements that a prospective empl oyer of a foreign worker needed to satisfy.  In 
existing schedules some Members had indicated that EN Ts or labour market tests were not applicable 
to certain categories of natural pers ons covered.  However, because of the lack of transparency in the 
commitments or available information on the national and sub-national regimes, it sometimes 
appeared as if ENTs or labour market tests were being operated.  Other Members had not mentioned 
explicitly that ENTs or labour market tests did not  apply to certain categories of natural persons 
covered, and consequently the natu re and application of their ENTs or labour market tests were not 
clear.  Canada had provided this information in it s revised offer to clarify for Members that no 
category of business persons covered by Canada's existing commitments or offer was subject to an 
ENT or labour-market opinion before obtaining a work  permit.  For greater transparency, Canada's 
offer provided the link to details on Canada's labour market opinion wh ich applied to other categories 
of business persons.  Canada had submitted the paper in the CSC to promote further substantive 
discussions on ENTs in mode 4 and to propose th at Members exchange information on ENTs or 
labour market tests applicable to their mode 4 co mmitments.  The paper was meant to get Members to 
adhere to the existing scheduling and transparency rules, which would be a major achievement of the 
negotiations.  Such a collective action from Me mbers would significantly improve the quality and 
transparency of mode 4 commitments and would help  compare and assess the value of various offers.  
It would further enable business to bette r understand the mode 4 commitments.   
35. She encouraged delegations to engage in furt her substantive discussion on mode 4 ENTs and 
work towards identification of common elements.  An illustrative list of such elements was included 
in Appendix B of Canada's paper.   Appendix C contained a description of Canada's current labour 
market opinion, which did not apply to categories of natural persons covere d by Canada's existing 
mode 4 commitments.  She hoped that Members would follow the format of Appendix C in the information exchange, or provide supplementary information along the lines of the transparency 
template on mode 4 commitments which was bei ng discussed in the Working Party on Domestic 
Regulation. 
36. The representative of Korea
 introduced a room document, which was a follow-up to the 
communication made by Hong Kong, China and responde d to suggestion in the annotated agenda for 
an information exchange with regard to ENTs.  Ko rea had inserted in its revised offer the criteria for 
ENTs to enhance clarity, certainty and comparability of the schedule.  The criteria were based on the 
relevant laws and had existed for some time.  Her delegation held the view that it was preferable to 
inscribe any criteria that could result in market access limitations, regardless of their form, until a 
discussion in the Committee had further clarified the issue.  She encouraged Members to follow suit 
and inscribe the criteria of their ENTs and put them for discussion to the Committee.   S/CSC/M/37 
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37. The representative of India  agreed with Canada's assessmen t of ENTs in mode 4 as being a 
major barrier, and frequently unclear in their sche duling.  Certain economic needs tests in mode 4 
added to the uncertainty and unpredictability of m ode 4 commitments.  Where ENTs were maintained 
in the schedules, their criteria and specifications should be clearly indicated, and not merely be 
mentioned in an information exchange.  Commen ting on the illustrative list of common elements 
provided by Canada, he wondered whether a minimu m skill threshold for certain occupations might 
not fit in the realm of qualification requirement s rather than being an economic needs test per se .   
38. The representative of the Philippines  reiterated his delegation's c oncerns with ENTs that did 
not have clear specifications, particularly with rega rd to implications on market access.  He supported 
the statement by India on mode 4 generally, and stated that further discussions in the Committee were 
necessary to promote adherence to the Scheduling Guidelines.   
39. The representative of Chinese Taipei  stated that her delegation wa s concerned that most ENTs 
in Members' schedules did not provide any guidance concerning the criteria on which the tests were based.  She supported Canada's suggestion to discuss how to improve the transparency, predictability 
and relevance of mode 4 commitments for trade negotiations, and business people.  She requested 
more information with regard to the minimum skill and minimum salary elements in Appendix B.  In 
Appendix C, she requested clarification of the li nkage between the labour market tests and the 
economic needs test. 
40. The representative of Mexico
 wondered what the need was in Canada's paper to draw a 
distinction between ENTs and la bour-market tests.  He supported the idea of an exchange of 
information so as to arrive at clear criteria for ENTs . 
41. The representative of the United States  requested clarification on one point in Canada's 
presentation of its paper, where Canada had indicated that it had tabled an offer which eliminated the 
requirement for labour-market tests and ENTs before  obtaining a work permit.  She did not see the 
same distinction being made in th e paper and wondered whether labour market tests or ENTs could be 
required after the work permit was obtained, or whet her they were simply not required at any stage 
before or after the work permit was granted. 
42. Turning to the annotated agenda, and the questi on in paragraph 6 as to how delegations would 
react to a Member's clarification on the scope of an  ENT in the context of its offer, her delegation 
supported such clarifications, but believed that th e request/offer process provided a suitable forum to 
address such concerns.  She would not want criteria and clarifications inscribed in the schedules that 
would narrow the scope of existing commitments.  Members would probably want an exchange about 
ENTs to take place in informal mode so that th ere was no risk of putting in question the scope of 
existing commitments.  Participation in an informa tion exchange should be voluntary, and take place 
in informal mode in the context of the regular CSC meetings. 
43. The representative of Chile  stated that absent the elimination of ENTs, Members should strive 
to improve their transparency and predictability.  She requested clarification on the use of the 
illustrative list of common elements in Appendix B of Canada's paper.  
44. The representative of Thailand  stated that any ENT should have  a legal basis in national laws 
and legislation.  ENTs should not be scheduled in  a legal vacuum and should indicate the main criteria 
on which the test was based with a concise desc ription.  Commenting on Appendix B of Canada's 
paper which mentioned skills, and Ko rea's paper, where certain criteria appeared to overlap with 
licensing procedures or licensing requirements, she no ted that ENTs should be carefully distinguished 
from qualification requirements, technical standards and licensing requirements.   
45. The representative of China  associated himself with those delegations who believed that 
ENTs created major obstacles for the further liberaliza tion of mode 4.  He we lcomed Canada's efforts S/CSC/M/37 
Page 8  
 
to eliminate ENTs on mode 4 and increase the transp arency of any remaining ENTs.  With regard to 
paragraph 11 of Canada's paper, he wondered whether in the absence of a labour market opinion for 
any of the categories inscribed in Canada's schedule, work permits would be issued to any nationals of 
another Member or whether they would be based on ENTs.  He encouraged other delegations to 
follow Korea's example of exchanging informati on on economic needs tests.  In preliminary 
comments, he stated that the criteria of traffic, e nvironment, pollution and public interest mentioned in 
the Korean ENTs appeared to be non-trade concerns  and should not be consid ered as pre-conditions 
for setting up ENTs.  The reasoning behind elements of  "healthy development of industry" or "orderly 
trade" was reminiscent of safeguard-type measures.   
46. The representative of Hong Kong, China
 supported the idea of an information exchange 
among Members on the operation of ENTs, not just in mode 4 but also in the other modes of supply.  
While adding clarity to ENTs was the second-best option to their elimination, any specifications of ENTs which would improve the legal certainty were we lcome.  He agreed with India that the exercise 
should be put into its proper context.  Two separate parts of the exercise should be distinguished.  The first part would be an information exchange on the operation of specific ENTs in practice; and 
building on such an exchange could follow a discu ssion of the specifications that should be scheduled. 
47. His delegation's objective was to try to reach a common understanding among Members on 
the level of specification for ENTs in schedules as a r esult of the application of the relevant elements 
of the Scheduling Guidelines.  Certain elements of ENTs would also fall under the transparency 
obligations contained in Article III.  Commentin g on the papers by Canada and Korea, he was 
interested in the exact operation of the ENTs that were addressed therein.  For instance, he wondered 
whether the ENTs applied individually in each cas e, or whether they were invoked on the basis of 
certain conditions.  Were they applied only to fo reign service suppliers or in the same manner to 
domestic suppliers?  On the query by previous sp eakers on the notion of labour market tests, he 
remarked that a wide range of terminology ex isted in Members' schedules and that numerous 
inscriptions were not specifically labelled as ENTs, but in substance constituted an ENT.  Regardless 
of what a measure was called, whether it was in f act an ENT within the specifications of Article XVI 
could only be seen from an examination of criteria and application of the test.   
48. Concerning Appendix B of Canada's  paper, he was interested to obtain more information on 
the administration of certain of the elements listed.  He expressed a doubt on the validity of point 2, 
which referred to a foreign worker's salary being a bove a certain level stipulated for the prospective 
job.  Part of the basis for comparative advantage in  trade was a difference in terms of labour costs.  
Including the salary as an element of administeri ng an economic needs test would undermine the 
whole basis for a fair and non-discriminatory envi ronment for the purpose of allowing different 
countries to exploit their comparative advantage for getting a bigger share of trade.  He wondered how 
the salary element was applied in the labour market test.  
49. The representative of Pakistan
 welcomed the papers and requested clarification on the 
criterion in Korea's paper of "formation of reasonable prices" which was listed along with "healthy 
development of industry" and "establishment of or derly trade", as criteria used for an ENT.   
50. The representative of Canada  stated that the paper was not addressing market access issues 
but the importance of greater clarity in ENTs, especial ly those in respect of mode 4.  The paper sought 
to encourage further discussion of ENTs and an in formation exchange on the operation of ENTs.  It 
indicated a two-step process by first applying th e Scheduling Guidelines in respect of ENTs, and 
secondly having an information exchange in order to improve delegations' understanding of ENTs, 
especially in mode 4.  Turning to specific comment s by delegations, she stated that Appendix B was 
an illustrative list based on common elements iden tified by existing WTO and OECD studies.  As 
indicated in paragraph 4, several studies had show n that within the category of labour-market tests, 
the most frequent factor was the availability of sim ilar workers in the host-country.  Analysis of the 
labour-market tests of various Members showed th at although terminology and individual elements  S/CSC/M/37 
 Page 9 
 
 
differed, certain commonalities existed.  Canada di d not suggest a format for ENTs, and the list was 
merely a compilation of common elements.  It was her understanding that different terminology, e.g. 
labour-market tests, or labour-market opinions, conf irmation, certifications, etc. could all amount to 
ENTs. 
51. The representative of Korea  considered that the criteria inserted in the revised offer were 
improvements.  Even though the criteria had existed for a long time, their specification constituted an 
improvement as it narrowed down the specific criteria of the respective ENTs.  With regard to the 
distinction between the criteria and qualitative elem ents of licensing requirements or qualification 
requirements, she stated that the latter requireme nts could be met by individual service suppliers, 
whereas the criteria set out under the ENT were i ndependent from the qualification of the individual 
service suppliers and were based more on macroec onomic policy considerati ons.  With regard to 
China's comments whether there were safeguard-lik e elements in the ENTs, she noted that ENTs 
differed at least insofar from safeguards as they we re decided upon before service suppliers were 
permitted to supply the service, while safeguards related to treatment of  suppliers after licensing.  The 
element of formation of reasonable prices related to the macroeconomic or price policies of the 
government concerning basic commodities. 
52. The Chairman  noted the wide support among Members for an information exchange which 
was of value independently of a discussion on specificity of criteria, but would also provide a useful basis for such a discussion.  He looked forward to a mo re in-depth debate of th e papers by Canada and 
Korea, and encouraged other Members to provide information on the operation of their ENTs.  He 
asked Members to take note of the statements made  and suggested that the Committee revert to this 
item at the next meeting. 
53. It was so agreed
. 
C. CLASSIFICATION ISSUES  
54. The Chairman  recalled that under the agenda item of  classification issues, the following 
communications were under discussion: Indonesia's proposal on the classification of energy services 
(S/CSC/W/42/Rev.1 and Rev.1/Corr.1); the European Communities' (S/CSC/W/44) and the United 
States' proposals on Telecommunication Services (S/CSC/W/45 and Corr.1.) and a joint statement by a group of Members on Legal Services (S/CSC/W/46). 
55. The representative of Indonesia
 thanked delegations who ha d presented questions on the 
revised proposal on the classification of Energy Services .  In reply to the first question by Japan 
(JOB(04)/165) on liquefaction and re -gasification services, he stated that Indonesia had revised its 
proposal as it assumed that these services were manuf acturing activities.  In response to the comment 
in paragraph 3 regarding the difference between tr ansportation, transmission and distribution of 
petroleum products such as gas and coal, Indonesia was now aligning item 2.7.3 concerning transportation and distribution of coal to CPC 72129  (transportation of other freight, which covered 
transportation by seagoing vessels of freight not el sewhere classified) and CPC 72229 (transportation 
of other freight which covered transportation by non-seagoing vessels of freight not elsewhere 
classified)  Unlike coal transportation, transportatio n of liquid petrol products and gas were clearly 
classified under CPC 72122 and 72222.  On the ques tion in paragraph 4, regarding wholesale trade 
and retailing services, he stated that Indonesia w as aware that wholesale trade services of electricity 
and town gas were not to be found in the CPC.  Indonesia had linked this activity to CPC 622 (Wholesale trade services).  At a later stage, his delegation would propose a new CPC number 
appropriate for this activity.  The same approach was used for item 3.2.2, retailing services of 
electricity and town gas, which was not explicitly covered by the CPC.  Indonesia classified this 
activity under CPC 6329 which included other specia lized retail sale of non-food products.  With 
regard to Japan's comment in paragraph 5 concer ning transmission and distribution of electricity, 
Indonesia had included this activity in CPC 887, denominated as transmission and distribution S/CSC/M/37 
Page 10  
 
services on a fee or contract basis of electricity, gaseous fuels and steam and hot water to household, industrial, commercial and other users.  In In donesia's commercial reality, transmission and 
distribution of electricity were conducted on a fee or contract basis.  He stated that the responses 
would also be provided in writing and circulated to Members.  
56. In response to Canada's comments, he noted th at the proposed energy classification basically 
reverted to CPC provisional, and that the CPC Ve rsion 1.1 was used for reference only if the CPC 
provisional did not cover a certain activity.  As for items 3.1.2 (wholesale sale trade of electricity and 
town gas) and 3.2.2 (retail sale of electricity and town gas), Indonesia proposed to classify these items 
under CPC 622 (Wholesale trade services).   Turning to the questions by Singapore, he stated that item 1.A.4.9 (Distribution services (separator, pipeline, storage)) included
 installation of separators, 
pipeline, and storage.  Item 2.3 (operation and ma nagement of energy netw orks) covered planning, 
monitoring, evolution for the energy networks.  Item  2.7. (transportation of fuels and energy 
transmission and distribution services) included both  transmitting electricity and transporting piped 
gas.  This item differed from item 2.3 as it excluded management services.  Item  2.7.5. (Services supported to the operation of energy distribution) referred to any services related to energy 
distribution.  Item 3.2.2 (retailing services of electricity and town gas) was aimed at accommodating 
the selling activity of electricity and town gas.   
57. His delegation believed that the detailed classification provided a comprehensive and 
transparent approach to simplify negotiations on real commitments.  In this regard, he appreciated the 
input from the delegation of Norway.  The proposal aimed at enhancing transparency and sought to 
promote a better understanding of the complexity of energy-related services.   
58. The representatives of Japan
 and Canada  stated that they would revert to Indonesia's 
comments at the next meeting. 
59. The representative of Qatar  mentioned the general exception in the GATT related to natural 
resources that he wanted to put for consideration to Members.  
60. Speaking on Legal Services , the representative of Australia  reminded Members that the joint 
statement had been presented by Australia on beha lf of a number of co-sponsors at the February 
Special Session.  The joint statement was an im portant guide and referen ce point that provided a 
common understanding of terminology to assist Me mbers in the unambiguous scheduling of legal 
services commitments.  Australia had adopted this term inology in its revised offer for the purpose of 
defining the scope and coverage of legal services.  He welcomed the revised offer of the European 
Communities, New Zealand and Switzerland which al so had used the terminology in the joint 
statement.  The terminology had been developed by  the friends of Legal Services, and was informed 
by the work of the IBA; it reflected the group's belief that the aggregation in CPC 861 failed to accommodate the practical nature of international tr ade in legal services.  The joint statement better 
reflected the reality and provided maximum flexib ility to Members in scheduling meaningful and 
transparent commitments.  All Members were enc ouraged to consider using the terminology in 
scheduling legal services commitments.   
61. The representative of th e European Communities
 stated that his delegation, as co-sponsors, 
had followed the proposed terminology in its revised offer and invited all Members to follow suit.  He 
noted that the specific field of law called "Eur opean Community Law" arose from international 
treaties but was nevertheless the law of the EC member states and therefore was considered as domestic law and not as international law. 
62. The representative of Turkey
 stated that legal services were one of the critical services sectors 
with an essential dimension regarding the exercise  of regulatory authority in Member countries.  
Legal services liberalization was hence a critical ar ea for developing countries, whose suppliers had 
limited capacity to compete with large companies from developed countries.  In this regard, he  S/CSC/M/37 
 Page 11 
 
 
recalled the statement by Singapore during the last cluster meeting.  In his delegation's view, 
paragraph 3(A)(i) on legal advisory services should be amended with the words "services performed 
by lawyers" to clarify that legal advisory services we re to be performed only by lawyers with licences.  
In the following paragraph,  3(A)(ii) on legal representational services and paragraph 3(A)(iii) on 
legal arbitration, conciliation and mediation services, he envisaged a similar addition to clarify that 
such services would be performed by lawyers.  In paragraph 4, he suggested to exclude the reference 
to notary services which were services of a different  nature than the other services mentioned in the 
same paragraph.  In his delegati on's view, national law, foreign law and international law definitions 
could be regarded as comprehensive enough to  capture international and national market 
developments.  He emphasized that the issuance of licences to perform law and operate as a lawyer in 
a Member country fell strictly under the regulatory authority of each Member, provided that 
international commitments were observed.  At this stage, the majority of Members might not be ready to adopt a limited licence regime due to le gislative, economic and other reasons.   
63. The representative of New Zealand
 stated that his delegation was a co-sponsor of the joint 
statement and had scheduled the revised offer consiste ntly with the terminology contained therein.  He 
commended its flexibility and its ability to comprehens ively cover commitments.  As a Member with 
full commitments in legal services, New Zealand found the terminology particularly useful in 
clarifying the extent of the commitments across  domestic, foreign and in ternational law.  He 
encouraged other Members to adopt the terminolog y for the sake of transpar ency and to ensure a 
comprehensive and clear expression of their commitments. 
64. The representative of Canada  stated that her delegation was pleased to be part of the joint 
statement on legal services which provided a usef ul and flexible guide for the scheduling of 
commitments in legal services in line with individual Members' domestic situation.  Legal services, and particularly foreign legal consultancy services, represented an important sector for Canada in the 
context of the ongoing negotiations.  Unfortunately, few Members had come forward with improvements in that sector in the initial offers.  The by far largest shortcoming was the complete 
absence of any commitments for the sector by a larg e number of Members.  Other limitations included 
a requirement for commercial presence, or a minimum duration of stay, as well as a variety of restrictions specific to mode 3, such as fore ign equity participation caps and incorporation 
requirements.   
65. The representative of th e European Communities
 commented on Turkey's suggestion to add a 
reference to the terminology specifying that the ser vices were supplied by a lawyer.  He considered 
that it was sufficient to identify obj ectively the scope of the service rather than the nature of the 
supplier.  The terminology would leave complete fr eedom to Members to decide who could provide 
the services.  In paragraph 2(d), the joint st atement had clarified that "Members undertaking 
commitments for legal services maintain the right to require that suppliers of a specific legal service 
fulfil qualification and/or licensing requirements to provide that specific legal service."   
66. Speaking on the issue of Telecommunication Services , the representative of the United States  
stated that her delegation's paper was not a propo sal but reflected the United States' understanding of 
the dynamic nature of telecommunication services and the type of commitments that her delegation had been looking at in the WTO.  The paper recognized that it was important to include both basic and value-added services in schedules.  Her dele gation had been critical of the somewhat dated 
classification of telecommunication services in W/120.  The US approach maintained W/120 as a 
basis for scheduling, but provided some context to  distinguish basic and value-added services.  The 
approach did not collapse all telecommunication servi ces into the transmission functions which was a 
limiting approach and might be perceived as a ro ll-back to those who had made value-added 
commitments in the past.   
67. The representative of the European Communities
 agreed that the W/120 classification was 
outdated and needed to be reviewed to better corr espond to today's business realities.  W/120 referred S/CSC/M/37 
Page 12  
 
to models and technologies that had prevailed at the time it was established but did no longer make sense, e.g. storing facsimile services.  The W/120 also  referred to the CPC which, in this case, created 
a partial and unclear correspondence and led to confusion.  The correspondence was only partial 
because not all categories were referred to CPC re ferences, and unclear because a number of W/120 
categories referred to parts of CPC categories without specifying the exact part of the CPC 
description.  His delegation's paper proposed to revert to the functions of telecommunications, 
i.e. communications by means of transmissions of electromagnetic signals irrespective of the technology used.  That definition was used in the GA TS Annex, in the ITU, and in the domestic laws 
of WTO Members.  It appeared hence sensible to schedule telecommunications as all services 
consisting of the transmission of signals by elect ro-magnetic means.  Such a scheduling approach 
would cover not only all services identified in W/120 but also clarify any uncertainty about those 
services which were not unambiguously captured by W/120.  The approach was completely 
technologically neutral, and did not prejudice th e business model used or the substance of 
commitments.  He was glad to note that the Un ited States' paper built on his delegation's proposal and 
took on board the functional definition of telecomm unication services.  However, he wondered about 
the apparent transfer of some activities from basic services to value-added services.  He encouraged 
Members to present revised offers by referri ng explicitly to the GATS Annex definition on 
telecommunications.  He was ready to co-operate with the United States and others to refine the 
definition of the sectoral description of telecommun ications whilst avoiding any back- tracking on 
existing commitments or overlap with other sectors.   
68. The representative of Japan
 agreed on the necessity of discussing a new classification 
reflecting the reality of the telecommunication sector, while ensuring legal stability and enabling 
developing country Members to make new commitments in telecommunication services.  The ongoing classification debate should not be used  as a pretext to avoid making offers in 
telecommunication services. 
69. The representatives of Australia,
 Switzerland,  and Chinese Taipei  welcomed the objectives 
expressed by both the European Communities and the United States proposals.  They noted that any 
new classification proposal as an alternative to the W/120 would need broad acceptance among 
Members. 
70. The representative of Brazil  stated that his country's legislation defined telecommunication 
services as the transportation of signals and distingui shed it from the content transported, i.e. the 
value-added.  He warned that in order to gain  acceptance by Members, the discussion on the proposals 
should take place in an open forum and could not be replaced with a negotiation in an informal group. 
71. The representative of the United States  stated that discussions among friends would be useful 
for progress on the issues.  The intention of her de legation's paper was to improve upon the European 
Communities proposal by providing further clarity where her delegation saw deficiencies.  She was 
willing to discuss classification issues also beyond the friends group, if necessary in informal mode in 
the CSC.  
72. The representative of India  shared the views of the Eur opean Communities and the United 
States with regard to the need for a classification th at was in tune with business realities.  He noted 
that there were often different degrees of libera lization and regulation of various telecommunication 
activities, the differences of which might not be well served through the use of an aggregated 
functional definition. 
73. The representative of the European Communities  stated that the fact that the proposed 
functional definition was aggregated did not prejud ice the substance of commitments.  It remained 
possible to make commitments for all or some tele communication services within this definition, e.g. 
to maintain certain types of limitations for certain  services.  The definition was flexible enough to  S/CSC/M/37 
 Page 13 
 
 
accommodate all kinds of situations and had been used already in a number of regional free-trade 
agreements.   
74. The Chairman  stated that the interventions indicated a strong interest in the classification of 
telecommunication services.  He encouraged delegati ons to continue work on the issue and suggested 
that delegations take note of statements made.   
75. It was so agreed.  
D. OTHER BUSINESS  
76. The Chairman  suggested that, in accordance with the practice of grouping meetings of 
subsidiary bodies close to meetings of the Council,  the next formal meeting be held in conjunction 
with the next services cluster.   
77. It was so agreed . 
__________