RESTRICTED  WORLD TRADE  
ORGANIZATION  TN/S/W/59 
28 March 2006 
 
 (06-1426) 
Council for Trade in Services  
Special Session Original:   English 
 
 
 
COMMUNICATION FROM THE REPUBLIC OF ZAMBIA 
ON BEHALF OF THE LDC GROUP 
 
A Mechanism to Operationali ze Article IV: 3 of the GATS  
 
  The following communication, dated 27 March 2006, was received from the delegation of the 
Republic of Zambia on behalf of the LDC group, with the request that it be circulated to Members of 
the Council for Trade in Services. 
 
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I. BACKGROUND 
1. Article IV:3 of the GATS provides the mandate for granting special priority to LDCs by 
stating that "special priority shall be given to the least-developed country Members…" in the 
liberalization of market access in sectors and modes of supply of export interest to them, among other things.  However, there is no mechanism through wh ich this 'special priority' can be accorded to 
LDCs,
1 which means that currently, any special trea tment accorded to LDCs would have to be 
extended on an MFN basis in order to comply wi th the MFN obligation.  This would nullify the 
"special priority" clause, a consequence that is not contemplated in the GATS.2 
2. WTO Members are aware of this gap and they have expressly recognized this in paragraph 7 
of the LDC Modalities3 which provides that:  
"Members shall work to develop  appropriate mechanisms  with a 
view to achieving full implementation of Article IV:3 of the GATS and facilitating effective access of LDCs' services and service 
suppliers to foreign markets "(Emphasis added). 
                                                     
 
1 The GATT, on the other hand, has several prefer ential treatment mechanisms, for example: the 
Decision on Differential and More Favourable Treatment , Reciprocity, and Fuller Participation of Developing 
Countries - Decision of 28 November 1979 (L/4903) (t he Enabling Clause), which replaced the GSP Waiver - 
Decision of 25 June 1971 (BISD 18S/24); and the Preferential Tariff Treatment for Least Developed Countries 
(Waiver adopted on 15 June 1999) (WT/L/304). 
2 "One of the corollaries of the "general rule of interpretation" in the Vienna Convention on the Law of 
Treaties (1969) is that interpretation must give meaning and effect to all the terms of the treaty. An interpreter is 
not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy 
or inutility": United States – Standards for Reformulated and Conventional Gasoline , WT/DS2/AB at p.23.  
This principle has been applied in many subsequent WTO cases: See Appellate Body Repertory of Reports and 
Awards 1994 – 2004 at www.wto.org .  
3 Modalities for the Special Treatment for Least-Developed Country Members in the Negotiations on 
Trade in Services (TN/S/13) – adopted by the Special Session of the Council for Trade in Services on 
3 September 2003. TN/S/W/59 
Page 2  
 
  3. Recently, paragraph 9 of Annex C of the Hong Kong Ministerial Declaration affirmed this 
provision by reiterating that Members shall expe ditiously develop appropriate mechanisms for 
according special priority to sectors and modes of suppl y of interest to LDCs.  This is in line with 
paragraph 3 of Annex C of the Hong Kong Minister ial Declaration which says Members shall pursue 
full and effective implementation of the LDC Modalities with a view to the beneficial and meaningful 
integration of LDCs into the multilateral trading system. 
4. The mechanism for operationalising Article IV:3, that is, providing special priority to LDCs, 
has to be developed by Members.  The LDC Modali ties have made this clear, as has Annex C of the 
Hong Kong Ministerial Declaration.  In additi on, Annex C says that Members shall develop the 
mechanism within the course of the negotiations.  Th is implies that the mech anism should be adopted 
in the present negotiations, as part of the single undertaking, and within the stated deadlines.  
Paragraph 11(e) of Annex C substa ntiates this view because it states that Members shall strive to 
develop the mechanism by 31 July 2006. 
5. In light of the above, LDCs could propose the following mechanism for negotiation among 
and adoption by the Members: 
II. THE PROPOSED DRAFT TEXT OF THE MECHANISM 
Understanding on Article IV:3 of the GATS 
 
Members , 
 Recognizing  the low level of participation in world trade in services by the least developed countries, 
and the need to ensure their effective participati on in the world trading system by taking further 
measures to improve their trading opportunities;  Reaffirming  the need for positive efforts to ensure th at developing countries, especially the least 
developed among them, secure a share in the growth  of world trade commensur ate with the needs of 
their economic development;  
 Recognizing  that enhanced market access has an important  role to play in ensuring that least-
developed countries secure a share in the growth of world trade commensurate with the needs of their 
development;  
Noting  that Article IV:3 of the GATS provides that speci al priority shall be gi ven to least-developed 
countries;   Recognizing that currently there is no operational m echanism for effectively implementing the 
provisions of Article IV:3; 
 
Considering  that Paragraph 3 of Annex C of the Hong Kong Ministerial Declaration requires full and 
effective implementation of the LDCs Modalities as an objective of the negotiations; and that 
Paragraph 47 of the Hong Kong Mi nisterial Declaration calls on Members to implement the 
Modalities for the Special Treatment for Least Deve loped Country Members in the Negotiations on 
Trade in Services and to give special priority to  sectors and modes of supply of interest to least 
developed countries; 
 Considering  also that Paragraphs 6 and 7 of the LDCs  Modalities and Paragraph 9 of Annex C of the 
Hong Kong Ministerial Declaration require Members to develop appropriate mechanisms with a view 
to achieving full implementation of GATS Article IV:3;  
  TN/S/W/59 
 Page 3 
 
 
  Desiring  to provide a mechanism to make Article  IV:3 operational, c onsistent with the 
abovementioned LDCs Modalities and the Hong Kong Ministerial Declaration; 
 Hereby agree  as follows: 
 
1. Notwithstanding any provision of the GATS, non-reci procal special priority shall be accorded 
only to least developed countries in sectors a nd modes of supply of interest to them.  
2. Developed country Members sha ll, and developing country Members declaring themselves in 
a position to do so should, accord non-reciprocal sp ecial priority to least developed countries. 
3. Any special priority provided under this Understanding: 
• shall be designed to facilitate and promote the exports of least developed countries; 
• shall be designed, and if necessary, modified, to respond positively to the development, 
financial and trade needs of least developed countries as identified by the least developed 
countries concerned; 
• shall be provided on a permanent basis and in a manner that ensur es security, stability and 
predictability. 
 
4. Members providing special priority under this  Understanding to least  developed countries 
shall notify the Council for Trade in Services of the sp ecial priority that they are providing.  Based on 
such notifications and Members' Schedules of co mmitments, the Council for Trade in Services shall 
annually review the special priority that Members are providing to least developed countries with a 
view to ensuring that positive commitm ents are made in favor of LDCs. 
5. All least developed countries shall be treated as affected Members for the purposes of Article 
XXI when a Member modifies the special priority provided pursuant to this Understanding.  
Compensatory adjustments will be made only in favour of least developed countries.  
6. The dispute settlement provisions of the GA TS and the Dispute Settlement Understanding 
may be invoked with respect to any ma tter arising from this Understanding. 
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