RESTRICTED  WORLD TRADE  
ORGANISATION  S/WPGR/M/72 
24 March 2011 
 (11-1452) 
Working Party on GATS Rules  
  
 
REPORT OF THE MEETING HELD ON 14 FEBRUARY 2011 
 
Note by the Secretariat
1 
  
1. The meeting was chaired by Ms. Gabriela Kules za from Poland.  The agenda for the meeting 
was contained in WTO/AIR/3694.  The agenda was adopted. 
I. NEGOTIATIONS ON EMERGENCY SAFEGUARD MEASURES UNDER 
ARTICLE X OF THE GATS  
2. On emergency safeguard measures (ESM), the Chairperson
 recalled that Members had agreed 
to postpone the presentation on ESM-relevant data until after the discussion in the Council of the 
updated Secretariat Note on statistics on services trad e flows.  The Note and its Addendum had been 
issued on 22 December 2010 and 7 January 2011, respectively, in documents S/C/W/329 and Add.1.  They would be taken up by the Council in its re gular session in March.  Secretariat experts stood 
ready to make presentations to the Working Party on the availability of services statistics in relation to 
a potential safeguard mechanism.  The presentations could be given already in the March meeting.  
The Chairperson invited a representative of the Secr etariat to give further details on their possible 
content. 
3. The representative of the Secretariat
 explained that, following the Council discussion on 
statistics on services trade flows, the first presenta tion to the Working Part y, based on that same 
Secretariat Note, would focus on aspects relevant for safeguards.  This presentation could be 
complemented by a second one by a representative of  the Secretariat's Rules Division concentrating 
on the statistics and indicators used in safeguard ac tions in merchandise trade.  As a result, Members 
would be enabled to draw their own conclusions as to what could be relevant for a further discussion 
on services' statistics in the context of safeguards and as to the next steps they would wish to take in 
this regard.  At the last meeting, the delega tion of Thailand had made a request, which Members 
might also want to consider. 
4. The Chairperson  asked whether delegations would be agreeable to such an approach and 
whether they wished to address any other issue in this context.  She also enquired whether Members 
would be willing to provide speakers to presen t their national experience in this field. 
5. The representative of the Philippines, on behalf  of the delegations of Brunei Darussalam, 
Cambodia, Indonesia, Malaysia, Myanmar, the Philippines, Thailand and Vietnam , welcomed the 
timely presentations on ESM-relevant statistics by Secretariat experts.  These would provide a 
gateway for more in-depth and specific presentati ons, including possibly on national experiences.  In 
this regard, he informed that the proponents had been discussing among themselves other specific 
issues and topics for further presentations on ESM-rele vant statistics to be held in meetings from 
                                                      
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO.  S/WPGR/M/72 
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  April 2011 onwards, and that they planned to cons ult the WTO Secretariat for further assistance in 
due course. 
6. As there were no other suggestions for fu rther work from the floor, the Chairperson
 
summarized what she took as the agreed  way forward.  At the next meeting, a representative of the 
WTO Secretariat's International Trade Statistics Se ction would make a presentation on the availability 
at the international level of disaggregated sta tistics on services trade flows in the context of 
safeguards.  This was to be follo wed by a presentation of a member of the Secretariat's Rules Division 
on the type of statistics that were used in safeguard  investigations in the goods' area.  The Chairperson 
proposed that the Working Party revert to this ite m at the next meeting.  It was so agreed.  
II. NEGOTIATIONS ON GOVERNMENT PROCUREMENT UNDER ARTICLE XIII 
OF THE GATS 
7. The Chairperson  invited Members to proceed with th eir dedicated discussions based on the 
proposal of the European Union (RD/SERV/23).  This  time, the focus would be on the impact of the 
Plurilateral Agreement on Governme nt Procurement (GPA) on interna tional procurement markets.  
The topic was introduced by a presentation on " Services' Aspects of the Plurilateral Agreement on 
Government Procurement"  by a member of the Secretariat's In tellectual Property Division in charge 
of the GPA.  The presentation highlighted the main  elements of the currently ongoing GPA review 
and the increasing membership of this Agreement ove r time.  It provided evidence of the significance 
of the GPA for services trade, and explained the complementarity between the GPA and the GATS, notably regarding their respective scope.  For inst ance, unlike the GATS, the GPA did not provide the 
right of establishment for service suppliers, nor di d it distinguish between modes of supply.  
Nonetheless, GPA services commitments could have  a significant impact on the competitiveness of 
individual service suppliers, and hence on their abilit y to effectively use establishment rights granted 
by Members under the GATS.  Copies of the presentation were available at the back of the room; it could also be downloaded from the Members' website (under "WTO Resources", "GATS Rules"). 
8. Following the presentation, the Chairperson
 opened the floor to Members for questions and 
comments. 
9. The representative of the European Union  thanked the member of the Secretariat for a rich 
and thought-provoking presentation th at would help Members to further advance their work at this 
meeting, and in future dedicated discussions.  Th e presentation had made it very clear that service 
procurement and commercial trade in services were two sides of the same coin, and that they mutually 
reinforced each other.  Firms competing internati onally had an interest in access to both procurement 
markets and commercial services markets as part of their strategy.  The on-going review of the GPA 
and the GATS negotiations had str ong interlinkages, and there was scope for increased exchange 
between the two processes.  The complementarities and possible synergies between the two agreements could be further examined as part of the Working Party's dedicated discussion on 
procurement in services.  Combining the two areas and fostering rules for access to services' 
procurement as well as to commercial services' markets would foster the competitiveness of 
individual service suppliers.  The Wo rking Party could usefully expl ore these themes in the future.  
Present GPA Parties and the ten WTO Members see king accession to the GPA obviously saw value in 
rules and commitments that improved access to inte rnational procurement markets.  So did those 
WTO Members who were negotiating on public procurem ent as part of their free trade agreements.  
The EU thought that these considerations were relevant as well at the multilateral level, especially 
since there was a mandate in that respect.   
10. She reminded Members of the EU proposal for including an Annex to the GATS on 
government procurement in services (S/WPGR/W/54 dated 20 June 2006).  The proposed annex was 
modelled on a simplified version of the GPA.  Fo r instance, it referred to several procedural  S/WPGR/M/72 
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  provisions of the GPA aimed at ensuring transpar ent and open competition, while simplifying them 
for use in a multilateral context.  Like in the GPA, only negotiated procurement activities would be 
covered, with significant flexibility for developing countries.  She expressed hope that the Working 
Party would revert to the EU's 2006 proposal in the future.   
11. The delegate of Switzerland  raised two questions in relation to the presentation.  Firstly, he 
observed that most of the ten WTO Members cu rrently negotiating their accession to the GPA, as 
mentioned in the slides, were recently-acceded Memb ers.  Presumably, their Working Party reports 
included a clause encouraging them to initiate such negotiations after WTO accession?  While 
understanding that each case was different, he enquire d what type of clause was foreseen as regarded 
GPA accession, and to what extent its terms differed between Members.   
12. Secondly, he sought further clarification on whether the Agreement on Government 
Procurement distinguished between locally-establishe d service suppliers according to ownership.  If a 
company established in country X was acquired by a foreigner, would it be treated differently under the GPA as a consequence of that foreign ownership?  Did the GPA distinguish between a company established in another GPA Member that made a bi d on a cross-border basis and a locally-established 
domestically-owned company?  To what extent could a supplier that was not locally-established 
invoke the provisions of the GPA?  Did the GPA di fferentiate between locally-established companies 
and companies of GPA Members operating on a cross-border basis (i.e., seeking participation in a procurement tender without being establishe d in the country organising the tender)? 
13. The representative of Pakistan
, recalling that his country was not Party to the GPA, had two 
questions for further clarification.  Firstly, he e nquired about the treatment of establishment rights in 
the GPA as compared to the GATS: did the supplier of  a GPA Party wishing to participate in a tender 
in another Party automatically obtain the right of est ablishment?  Or would he be allowed to establish 
only during the performance of the procurement transaction?  Secondly, beyond the obvious 
differences between a plurilateral (GPA) and a multilat eral (GATS) agreement, what other substantive 
variations in rights and obligations would ther e be between the GPA and a possible outcome under 
GATS Article XIII?  One could assume that there woul d need to be comparable rights and obligations 
in two WTO agreements covering the same matter, in  order to minimize regulatory arbitrage.  If so, 
what value-added would there be in an outcome under GATS Article XIII, except that it would apply 
to all WTO Members?   
14. In reply to the Swiss delegate's first ques tion, the representative of the Secretariat  
acknowledged that, indeed, the majority of countri es mentioned in his presentation had undertaken a 
commitment eventually to seek GP A membership when they acceded to the WTO, as part of their 
accession protocol.  The specific terms of those co mmitments varied, depending on the Working Party 
negotiating process. Some commitments stated that the newly acceded Member should initiate 
negotiations for GPA membership by tabling an offe r within X years of WTO accession.  Others used 
more open-ended language, such as "as soon as possible".  The most recent trend in accession 
protocols, however, was to make time-bound commitm ents that foresaw the submission of an initial 
offer within a specified time period, typically with in one or two years of accession to the WTO.  This 
being said, China's envisaged accession to the GP A was apparently prompting other developing and 
transition economies to inform themselves of the pot ential costs and benefits of GPA accession.   
15. Turning to the second question posed by Switzer land, the representative of the Secretariat  
drew Members' attention to the provisions  of Article III, Paragraph 2 of the GPA ( National Treatment 
and Non-discrimination ).  It stipulated that each GPA Party s hould ensure that its procuring entities 
covered by the GPA (i.e., Ministries, agencies and so forth) did not treat one locally-established supplier less favourably than another on the basis of  its degree of foreign affiliation or ownership 
(Article III(2a)).  Nevertheless, the ability of a ser vice supplier to participate and make a successful 
bid for procurement contracts under the GPA could i ndeed be affected by the obligations undertaken S/WPGR/M/72 
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  by a Member under the GATS.  He took the exam ple of the GPA schedule of Party "A", which 
permitted the suppliers of other GPA Parties to bid on a telecommunications contract in its territory.  
The ability to do so would certainly be affected by the rights enjoyed by foreign telecom suppliers 
under that Member's GATS schedule.   
16. In response to the questions from Pakist an, the representative of the Secretariat
 admitted that 
he had not yet given thought to what would happen if the membership of the WTO collectively 
multilateralized certain government procurement commi tments.  Would these be the same as the GPA 
commitments?  Would they be different?  He c ould not provide an answer at this juncture. 
17. The representative of Pakistan  had a follow-up question regarding the interaction between 
access to procurement under the GPA and establishm ent rights under the GATS.  He understood the 
GPA to apply to any law, regulation, procedur e or practice regarding the procurement by entities 
covered by the Agreement, irrespective of the mode under which a supplier would service a given 
contract.  Thus, for example a Swiss services company established in Switzerland, whose headquarters and principle place of business were located in Switzerland, would have access to procurement tenders in any other GPA Party provid ed that procurement was covered by the GPA.  
And this would be irrespective of any market access rights granted under the GATS, be they related to 
mode 3 (commercial presence) or else.  Was his understanding correct?        
18. The representative of the Secretariat
 answered in the affirmativ e.  The GPA did not specify 
how a particular procurement contract was to be serviced, through a commercial presence or any other 
mode.  The GPA was about whether a given supplier had the right to bid on a given contract.  The 
interaction merely arose from the fact that, th e more extensive a service supplier's rights of 
establishment, the more competitive the bid he would be able to make.  Indeed, it was the GPA, and 
not the GATS, that determined whether a particul ar supplier was allowed to bid on a government 
procurement contract in the first place.   
19. The delegate of the Republic of Korea  pointed out the importance of competition.  A well-
functioning procurement market presupposed that  a Member had competitive and open services 
markets.  Therefore, before undertaking commit ments on government procurement in a given services 
sector, a Member needed first to ascertain its ob ligations under GATS Articles XVI and XVII.  Korea 
saw government procurement and services trade as complementary.     
20. Based on previous comments, the re presentative of the European Union  stressed that there 
were many advantages to bring procurement unde r the purview of the GATS and to list covered 
procurement in the GATS schedules.  Members often applied the same market access and national 
treatment regimes to suppliers irrespectively of whether they supplied their services to private 
consumers or to governments.  If the EU-proposed  scheduling approach was adopted, a supplier could 
see at one glance which market access and national treatment limitations applied in either area. 
21. The delegate of Chinese Taipei  emphasised the importance of government procurement in 
overall government spending.  His government was very proud to have joined the GPA at the end 
of 2008.  However, there were two sides to it.  On the one hand, the GPA provided potential market 
opportunities of about US$200 billion; on the othe r hand, it increased the competition faced by 
domestic industries.  Concerning the size of internationally-contestable procurement markets, he enquired whether relevant statistics existed at l east among GPA Members and, if not, whether the 
WTO Secretariat could help remedy this problem in the future. 
22. The representative of the Secretariat
 endorsed the comments made by Korea and the 
European Union on the benefit to ensure that services-related commitments under the GPA and GATS 
were consistent.  In this context, he pointed out that a number of GPA Parties had a footnote in their 
GPA schedule, which referred to their GATS comm itments.  In reply to the question from Chinese  S/WPGR/M/72 
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  Taipei, he indicated that the statistical reports provided by the GPA Parties were posted on the WTO 
website.2  While the reports were useful, GPA Members had expressed their intention to base the 
reports on more convergent statistical methods, to  improve comparability and to be more specific 
about issues such as the extent to which contracts were won by foreign suppliers.  These intentions 
could inform the GPA review. 
23. The Chairperson  thanked the representative of the Secretariat for his stimulating presentation.  
Turning to the second part of the deliberations under this agenda item, she invited Members to indicate how they wished to organize the dedicated discussions on the remaining topics outlined in the EU proposal (RD/SERV/23 dated 24 September 2010).  In particular, a date needed to be found on 
which the Working Party could invite GPA experts to share national experiences on the reform and 
opening-up of domestic procurement markets as well as on access to foreign markets.   
24. Following the ensuing discussion, it was agre ed that the WPGR and the GPA Committee 
Chairs would stay in touch to work out a suitable date, hopefully before the summer break.     
III. NEGOTIATIONS ON SUBSIDIES UNDER ARTICLE XV OF THE GATS 
25. The Chairperson
 recalled that, at the Working Party's last meeting on 24 November 2010, 
delegations had a first dedicated discussion and info rmation exchange on subsidies in services.  She 
invited delegations to c ontinue their discussion based on the information submitted so far.   
26. The representative of India  took the floor to present his delegation's Communication 
submitted jointly with two co-sponsors, Chile a nd Mexico (contained in document JOB/SERV/37 
dated 24 January 2011).  The joint Communication w as an attempt to move forward the negotiations 
on subsidy disciplines in services trade.  The mandate of Article XV was clear and specific.  It 
contained an unambiguous recognition by Members of the potential trade-distortive effects of 
subsidies.  The second sentence of Article XV stipulated that "Members shall  enter into negotiations 
with a view to developing the necessary multilateral disciplines to avoid such trade-distortive effects" 
(emphasis added).  The mandate was not only clear  and specific; it was also couched in strong 
obligatory language.   
27. India and its co-sponsors agreed that the gather ing of evidence of trade-distortive effects of 
subsidies was useful for the ongoing negotiations.  However, this was not a precondition  to initiating 
negotiations.  In analogy to trade in goods, discip lines on subsidies were needed to ensure a level-
playing field amongst service suppliers from different countries.  The proponents fully appreciated that any future treatment of subsidies relating to trade in services would be different from the one in 
goods' trade.  Disciplines on services' subsidies were co mplicated by the existence of different modes, 
the prevalence of subsidies for public policy and social objectives, the impact of regulatory 
interventions, issues like the appropriateness of  countervailing duties, development needs of 
developing countries, etc.  It was also difficult to measure the magnitude of service subsidization, assess its impact on domestic industries, define domest ic industries, cope with the absence of trade 
data, decide on likeness of services and service s uppliers, and deal with the embodiment of many 
services as parts of goods, as well as the issue of specificity. 
28. The proponents were thus fully aware of the complexities and challenges involved in the 
process.  Members should nevertheless start a ddressing them.  Against this background, the 
                                                     
 
2 Pursuant to Article XIX:5 of the GPA, Parties are obliged to collect and provide to the GPA 
Committee on an annual basis, statistics in relation to procurements undertaken u nder the Agreement.  These 
include statistics on the number and estimated value of contracts awarded.  These statistics, which have been 
notified by Parties are accessibl e through the following link: 
http://www.wto.org/english/trat op_e/gproc_e/gpstat_e.htm S/WPGR/M/72 
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  Communication proposed a roadmap for the negotiations, without  prejudging their outcome.  The 
Communication also recognized the very useful c ontributions made by different Members on the 
issue, notably the Communication from the United States (S/WPGR/W/59) and the Swiss proposal on export subsidies (JOB/SERV/36), although the latter was not explicitly mentioned.  The proponents 
hoped to see further discussion on these subm issions as the negotiations proceeded.  
29. The prevalence of subsidies in service sector s was evidenced in a number of documents, 
including Trade Policy Reviews, documents prepared  by the WTO Secretariat and various studies.  
There was evidence of subsidies in particular in tran sport, health, education, entertainment, tourism, 
financial, telecommunications, and informati on technology services.  Many of these subsidies 
underpinned social, cultural or developmental objectiv es, or were granted on prudential grounds.  The 
proponents were open to exclude them from the ambit of any disciplines.  Furthermore, a 2008 OECD 
Trade Policy Working Paper provided ample evidence that export subsidies for services were used by 
many countries, both de veloped and developing.
3  Nobody could deny the trade-distortive character of 
export subsidies. 
30. Following the 2010 Chair's Work Programme on Information Exchange on Subsidies, the 
proponents believed it was time to move ahead and fu lfil the remaining part of the mandate of GATS 
Article XV.  That is why they proposed a road map for future discussions to develop necessary 
multilateral disciplines.  In terms of actual action, th e proposal was very flexible.  Its elements were 
not prescriptive: it was a non-exhaustive list, and the proponents were open to suggestions.  This 
being said, the crafting of an acceptable definition of subsidies would be the first logical step.  
Regarding the "Other issues" that should constitu te part of the work programme, the proposal 
deliberately did not attempt to go into any technicalities at this stage.  Relevant topics were likely to 
evolve in the course of the discussion.  Nor did th e roadmap contain any specific timeline, given the 
current intensification of the DDA.  Following his presentation, he invited the other co-sponsors to 
add their views.     
31. The delegate of Mexico  explained that their Proposal for a Work Programme for the 
Development of Disciplines in Subsidies  was complementary to the other proposals currently on the 
table.  She invited Members to reflect on its conten t, bearing in mind the need to comply with the 
mandate in GATS Article XV. 
32. The representative of Chile  emphasized the need to meet the mandate of GATS Article XV. 
The proposal aimed at providing a suitable roadmap to fulfil this mandate.  The proposal was very 
flexible and did not prejudge any results, nor set any deadline.  Based on the work that had already 
been achieved on subsidies, he expected that the work programme would contribute to further 
progress.  
33. The delegate of Brazil  thanked the proponents for their presentation.  The work programme 
proposed by India, Chile and Mexico raised releva nt issues in the discussion on future disciplines, 
without prejudging the outcome, and provided the n ecessary flexibility.  The proposal could easily be 
combined with other proposals and the questions put forward in the Communication by the United 
States.  He agreed with the Indian delegation th at these questions should not constitute a condition for 
further work in this area.   
34. Devising disciplines for subsidies in services was by no means easy, given the specificities of 
services' trade, the lack of statistics, etc.  The r estraint displayed during the information exchange also 
made clear that developing disciplines in this ar ea would be challenging.  Thus, Members needed to 
intensify their work.  The roadmap/work program me proposed by India, Chile and Mexico would 
                                                      
3 Geloso Grosso, M. (2008), "Analysis of Subsidies for Services: The Case of Export Subsidies", 
OECD Trade Policy Working Papers , No. 66, OECDE Publishing (doi 10.1787/244346861402).   S/WPGR/M/72 
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  greatly contribute to this task.  His delegation lo oked forward to constructive engagement in this 
respect. 
35. The delegate of Hong Kong, China  commended the proponents for a very timely and useful 
intervention.  The Working Party should build upon  the work carried out so far.  The Communication 
usefully recapitulated a number of submissions ma de in the past regarding the development of 
disciplines in subsidies.  He thought the questions liste d at the end of the proposal to be very pertinent 
and worthy of further consideration by Member s.  His delegation therefore supported the work 
programme. 
36. The representative of Japan  remarked that an acceptable work ing definition of subsidies was 
premise for any future work on possible disciplines.  Members should adopt a cautious approach 
when laying down the foundation for possible future  disciplines.  So far, the Working Party's 
discussions had centred on subsidy definitions close to  that used in trade in goods.  His delegation, 
however, thought that, owing to the many specificities of trade in services – the four modes of supply, 
sector particularities as well as the wider context – the definition in services should be different from 
that in goods.  Members should devote the necessar y time to carefully examine this issue.   
37. He believed that in particular the provisions on the calculation of benefit and countervailing 
measures could not be translated directly from goods to services.  He urged Members to profoundly 
consider the particularities of trade in services.  Wh en drafting disciplines, the most important point to 
bear in mind was the interest and potential concerns  of business.  Therefore, he encouraged Members 
to share concrete examples of subsidies having di stortive effects on trade in services, identified by 
commercial operators or following a request, made under GATS Article XV:2. 
38. The delegate of the United States  went through some of his delegation’s concerns with the 
Communication from India, Chile and Mexico.  He recalled that the United States had been pressing from the outset for a serious examination of the "certain circumstances" mentioned in Article XV 
which "may" cause trade-distortive effects.  The pr oponents, by their own admission, had started from 
certain untested assumptions about subsidies, namely that “subsidies disciplines  were as important in 
services as they were in goods", and that the lack of such disciplines was “a major gap in the rules-
based global trading system”. 
39. In the view of the United States, the Work ing Group would not make much progress until 
Members stopped basing their work on mere assump tions, and figured out whether these were true.  
The drafters of Article XV had been aware of th e importance of having facts on which any disciplines 
could be based.  That was the purpose of the inform ation exchange.  Unfortunately, he could not share 
the proponents' view that the in formation exchange had been an  unqualified success.  While the 
information received had been quite useful, most Me mbers had not participated.  Further, and more 
importantly, while the reported information gave a mu ch better picture of this area, the United States 
was not able to draw any clear conclusion from it con cerning trade distortions.  If others were able to 
draw such conclusions, these should be shared.  Th e mandate in Article XV instructed Members to 
develop disciplines found to be "necessary" to addr ess such distortions.  However, as long as these 
had not been identified, nobody knew which disciplines were “necessary”. 
40. At present, his delegation believed the proposed  work programme was premature, and could 
not support it.  This was because it skipped over at least two important steps, without which further progress was not possible.  Firstly, the information exchange needed to be completed by broadening 
the range of participating Members.  An appropri ate goal could be to double the number of responses 
by the April 2011 meeting, and to hold a dedicated  session to allow for presentations and questions.  
He therefore encouraged Members who had not su bmitted information to do so.  Secondly, based on 
this information exchange, the membership had to  develop a firm understanding of where trade had 
been distorted.  His delegation had tried to advance this process with its questions in June 2010.  Yet, S/WPGR/M/72 
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  except for a broad oral reply from Switzerland, there had been no responses.  His delegation was open 
to alternative approaches to getting evidence of trade distortions caused by subsidies.  It went without 
saying that Members had to know which distortions th ey were trying to discipline.  Otherwise, there 
was a serious risk of unintended consequences. 
41. The representative of Switzerland
 expressed his delegation’s full support for the timely 
proposal submitted by India, Chile and Mexico in JOB/SERV/37.  Organizational aspects enabling 
Members to make headway in the ongoing negotia tions under Article XV needed to be tackled 
urgently.  As the Communication summarized, many  of the substantive elements needed to make 
progress were already available.  For instance, a provisional definition of subsidies in services could 
be based on the Agreement on Subsidies and Count ervailing Measures (SCM Agreement) as proposed 
in the Communication from Chile; Hong Kong, Chin a, Mexico; Peru and Switzerland (JOB(05)/96 
dated 9 June 2005).  Other submis sions had explored the possible relevance of the notion of non-
actionable subsidies under the SCM Agreement an d of the "green box" under the Agreement on 
Agriculture (JOB(07)/27 dated 7 March 2007), as well as the Swiss proposal on export subsidies 
(JOB/SERV/36 dated 2 December 2010).  Each of these submissions could be the object of a rich and 
interesting debate.  He felt that  developing a roadmap, as suggested in the Communication from India, 
Chile and Mexico, would also be beneficial in vi ew of the objective to conclude the Doha Round by 
year-end. 
42. He then turned to the questions posed by  the United States concerning his delegation's 
Communication on export subsidies (JOB/SERV/36 dated 2 December 2010).  At the WPGR's 
informal meeting of 17 January 2011, the United States had asked why, although many WTO 
Members considered the SCM Agreement to be a good basis for a definition of subsidies in the 
services context, Switzerland's proposal had varied this  definition.  For example, with respect to the 
direction of credit covered in the SCM Agreement,  the United States had noticed that there was no 
similar provision in the Swiss proposal.  The repr esentative of Switzerland answered that such a 
provision could be included if Members so wished.  He also reiterated his delegation's view that 
export subsidies should be addressed as a matter of priori ty since they were clearly distorting trade.   
43. The delegate of the European Union , while stressing that service subsidies represented an 
important issue that his delegation was willing to continue discussing, considered that Members had 
not yet identified concrete cases of trade dist ortions.  Any proposed work programme for the 
development of disciplines could achieve positive resu lts only if underpinned by concrete examples of 
trade distortions.  
44. The representative of Colombia  thought that the Communication from India, Chile and 
Mexico was useful.  It recalled in a proper manner th e Working Party's objectives in the subsidy field.  
The suggested roadmap for future negotiations was efficient and offered sufficient flexibility.   
45. His delegation believed that the information exchange on subsidies had been relatively 
successful.  More important than the mere numb er of Members responding was the quality of the 
information submitted, and the share of world trad e covered.  He noted two comments made by the 
US delegation that could help Members advance thei r discussions:  firstly, the need to complete the 
exchange of information.  He agreed that some  Members had not provided the information ideally 
required to conduct a well-informed discussion.  Secondly, the need to develop a good understanding 
of actual trade distortions and how these affected companies.  His delegation believed that the two 
areas of work – identifying trade distortions and discussing measures with a view to developing 
disciplines – were complementary and should be pursued  in parallel.  One shoul d not be a prerequisite 
for the other.  He appealed to th e Chair to use her good offices to he lp move the negotiations forward. 
46. The delegate of Australia  thought that more information about the trade-distortive effects of 
subsidies was needed.  A better understanding of the circumstances that might cause such effects  S/WPGR/M/72 
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  should underpin future work.  There would be va lue in a focused exchange among Members on this 
issue before adopting any roadmap for developing disciplines.   
47. The representative of Chinese Taipei  recalled that, at the last meeting, several delegations had 
asked the Secretariat to carry out  analytical work on the information submitted under the information 
exchange.  The Secretariat was to respond to Members on this question following informal 
consultations in January 2011.  He wondered what the result of these consultations had been. 
48. A representative of the Secretariat  underscored the Secretariat’s readiness to produce any kind 
of analytical work that Members deemed useful fo r the discussion.  However, given the diversity of 
the information submitted – in terms of form, conten t and level of detail –, it was difficult to extract 
common analytical elements.  The Secretariat might  be in a better position to do so once Members 
discussed the information in an interactive manner.  At the first dedicated discussion, the Chair had 
made two specific proposals to Members:  to clar ify how subsidy schemes worked, and identify any 
resulting trade-distortive effects.  However, si nce no focused discussion had taken place, it was 
difficult for the Secretariat to provide useful input.   
49. The delegate of India  thanked Members for their useful comments on the Communication.  
Regarding the points raised by the United States a nd Japan, he had stressed in his opening statement 
that the list of elements provided was not meant to  be exhaustive.  To the contrary, the proponents 
welcomed contributions that would add mo re elements.  He agreed with the need  expressed by Japan 
for Members to adopt a cautious approach when laying down the foundation for any possible future 
disciplines on service subsidies.  In view of the complexities involved, this was very important.  While appreciating the advantage of having furthe r concrete examples of trade distortions, lack 
thereof should not paralyse the negotiations.  For inst ance, he failed to see how the lack of concrete 
examples of trade-distortive effects prevented Members from starting work on a subsidy definition.   
50. Members had recognised in GATS Article XV that , in certain circumstances, subsidies might 
have distortive effects on trade in services.  T hose Members who now questioned the mandate ought 
to demonstrate what new circumstances had intervened  since.  In his view, incidences of subsidies had 
increased, not diminished.   
51. The delegates from Australia and the European Union
 had stated that they needed to be 
convinced of the trade-distortive effects of service subsidies.  Nevertheless, the same Members had 
included provisions on service subsidies in thei r regional trade agreements.  According to the 
Secretariat Note (S/WPGR/W/12 dated 20 May 1996), the  Protocol on Trade in Services to the 
Australia-New Zealand Closer Economic Relatio ns Trade Agreement (ANZCERTA) envisaged 
explicit obligations for new or expanded service subs idies.  Article 11 of the Protocol stated that 
"Member States shall not introduce new, or expand ex isting, export subsidies, export incentives and 
other assistance measures having a direct distorting effect on trade between them in services and shall work towards the elimination of  any such measures by 30 June 1990".  These obligations were 
enforceable through the consultation (dispute settle ment) provisions containe d in Article 19 of the 
Protocol.  The same Secretariat Note also cited Article 92 of the EC Treaty, which stated that unless 
otherwise provided, "any aid gran ted by a Member State or through State resources in any form 
whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the 
production of certain goods shall, in so far as it aff ects trade between Member States, be incompatible 
with the common market".  The Note specified that Article 92 did apply to certain service sectors, including air transport and banking.  An updated Se cretariat Note (S/WPGR/ W/46 dated 2003) reviewed 
24 notified free trade agreements and identified incidenc es of disciplines related to service subsidies in 
13 of them.  Thus, some of the Members who were no w questioning the need for disciplines did address 
possible trade-distortive effects of subsidies in thei r preferential agreements.  He wondered whether and 
how the circumstances had changed since.  S/WPGR/M/72 
Page 10  
 
  52. The joint proposal was flexible in its nature a nd approach.  It merely stated that there was a 
mandate to negotiate without prejudging the outcome.  He urged Members to respond in a constructive 
and flexible spirit.  Insisting on a particular issu e and presenting it as a precondition could only lead to 
paralysis.  He therefore requested the Chairperson to hold informal consultations on how to move the 
matter forward. 
53. With respect to the Secretariat Note cited by the delegate of India (S/WPGR/W/12 
dated 20 May 1996), a representative of the Secretariat
 cautioned that the subsidy-related provisions 
in the regional trade agreements n eeded to be viewed in the context of the legal architecture of those 
agreements, and the disciplines and obligations they contained.  When discussing disciplines on 
subsidies, this Working Party needed to be mindful  of the legal structure of the GATS.  In other 
words, the logic of a particular provision in a regional trade agreement was not automatically 
applicable to the GATS context.   
54. The delegate of India  thanked the Secretariat for the explanation.  When citing those 
agreements, he had merely wished  to point out, at a conceptual level, that various Members had 
recognised the potential ly trade-distortive effects of subsidie s in their regional trade agreements. 
55. The Chairperson  thanked all Members for their contributions to the debate.  Several delegations 
had referred to the considerable wo rk on subsidies already conducted by this Working Party and to the 
wealth of information contained in the submissions made in the past 15 years.  She believed that there was a lot of substance for further exploration.  Se veral delegations had pointed out the need to have 
more information about trade-distortiv e effects, so clearly discussions ought to continue on this topic as 
well.  She would hold informal consulta tions before the next meeting.   
IV. OTHER BUSINESS 
56. The Chairperson drew Members' attention to th e fact that the Chairm anship of the Working 
Party was normally handed over at the end of the firs t formal meeting in the new year.  However, as 
the overall selection process was still on-going, she sugg ested that Members turned to this issue at the 
beginning of the next meeting.   
57. No other issues were raised under this agenda item. 
 
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