RESTRICTED  WORLD TRADE  
ORGANIZATION  S/C/M/83/Add.1 
16 February 2007 
 
 (07-0631) 
Council for Trade in Services  
  
 
REPORT OF THE MEETING HELD ON 22 JUNE 2006 
 
Note by the Secretariat
1 
 
Addendum  
 
 
As agreed at the meeting of the Council for Trade in Services held on 26 November 2004 
(S/C/M/75), the statements relating to the modification or renegotiation of specific commitments pursuant to Article XXI of the GATS, which were  contained in an informal document, are now 
circulated as an addendum to the meeting report.
 
 
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Statements Made at the Meeting of the Council for Trade in Services 
on 22 June 2006 Under Item B of the Agenda  
 
 
 This document2 contains statements made by Members of the Council for Trade in Services 
under item B (Negotiations pursuant to GATS Ar ticle XXI) of the agenda contained in 
WTO/AIR/2841, relating to the modification of specific commitments pursuant to Article XXI of the 
GATS.  
_______________ 
 
 
B. NEGOTIATIONS PURSUANT TO GATS ARTICLE XXI 
1. The Chairperson
 recalled that at the CTS meeting of 11 April 2006, Ecuador had made a 
statement, under "Other Business", regarding Artic le XXI negotiations under document S/SECRET/9.  
On that occasion, Ecuador had requested that this item be inscribed on the agenda of the next Council 
meeting. 
2. The representative of Ecuador  referred to document S/SECRET/9 (12 April 2005) and 
S/SECRET/9/Corr.1 (19 April 2005) where the Eu ropean Communities and its Member States had 
notified, pursuant to Article XXI, their intentio n to modify or withdraw horizontal and sectoral 
specific commitments contained in the schedules of Ma lta and Cyprus and which were of interest to 
developing countries.  She stressed that her de legation recognized the right for any Member to 
withdraw or modify, at any point in time, specifi c commitments pursuant to GATS Article XXI:1.  In 
this context, and in order to comply with paragr aph 2(a) of Article XXI, and pursuant to paragraph 3 
                                                      
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. 
2 Previously circulated as JOB(06)/214, dated 29 June 2006.  S/C/M/83/Add.1 
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  of the S/L/80 Procedures, Ecuador  had presented its claim of interest as affected Members and had 
informed the EC of its willingness to enter into ne gotiations with a view to reaching an agreement on 
a compensation which could be necessary in order to  maintain a general level of commitments which 
were mutually advantageous and no less favourable to trade than those which were already in the 
schedules before the negotiations.  This claim of inte rest implied that Ecuador and the EC had to start 
negotiations within three months following the last  date on which the claim could be made, i.e. 
between 27 May and 27 August 200 5.  During these three months, the EC had not held any 
negotiations with Ecuador, despite the specific mandate  in paragraph 4 of S/L/80 to do so.  In a letter 
dated 14 July 2005, the EC had asked for a six-month extension of the negotiating deadline, i.e. until 27 February 2006.  On 26 August 2005, Ecuador had accepted this re quest, with the understanding 
that the EC would have the will and the interest to negotiate in order to come to a mutually 
satisfactory agreement.  The other affected Memb ers, except Colombia, had also agreed to the 
lengthening of the negotiating period.  Colombia had withdrawn from the negotiating process related 
to S/SECRET/9, as their delegation explained during th e CTS meeting last February.  In this context, 
Ecuador was not aware of any document in the Secret ariat which certified this and, in that sense, the 
EC had terminated the negotiations without any basi s.  Indeed, there had been no negotiations, neither 
during the first three months nor during what Ecuador considered to be a mutually agreed six months extension.  On the contrary, the EC had taken un ilateral decisions and had interpreted the S/L/80 
Procedures in an unilateral manner, without inform ing affected Members, as already discussed at the 
February meeting of the CTS. 
3. Against this background, her dele gation had requested, at the CTS meeting of last April, that 
this item be inscribed on the agenda .  Ecuador was of the view that the unilateral way in which the EC 
had carried out this process created a dangerous precedent for the application of GATS Article XXI and the legal certainty which the GATS must have  for its Members.  As a developing country, 
Ecuador was concerned by the systemic effects of this type of process.  The fact that a Member, in this case the EC, made up of 25 developed c ountries, could modify and withdraw specific 
commitments in sectors and modes of interest  to developing without negotiating adequate 
compensation and using arguments without legal b asis, was something that Members should think 
about.  Consequently, Ecuador requested that the CTS began a follow-up to these processes and 
discuss the correct application of the S/L/80 Procedur es.  Ecuador also wished to ask the EC when 
and how it would comply with pa ragraph 5 of the S/L/80 Procedures, which stated that "[u]pon 
completion of each negotiation conducted under pa ragraph 2(a) of Article XXI, the modifying 
Member shall send to the Secretariat a joint letter signed by the Members concerned, together with a 
report concerning the results of the negotiations whic h shall be initialled by the Members concerned.  
The Secretariat will distribute the letter and the repor t to all Members in a secret document."  Ecuador 
further wished to know when and how the EC intend ed to comply with paragraph 6 of S/L/80, which 
stipulated that "[a] modifying Member which h as reached agreement with all Members that had 
identified themselves under paragraph 3 above shall, no later than fift een days after the conclusion of 
the negotiations, send to the Secretariat a final report on negotiations under Article XXI, which will 
be distributed to all Members in a secret document.  After completing the certification procedure under paragraphs 20 to 22, such a modifying Member  will be free to implement the changes agreed 
upon in the negotiations and specified in the report, and it shall notify the date of implementation to 
the Secretariat, for circulation to the Members of the WTO. Such changes shall not exceed the 
modification or withdrawal initially notified and shall include any compensat ory adjustment agreed 
upon in the negotiations."   
4. Ecuador also wanted to avoid that negotiati ons under GATS Article XXI become part of the 
negotiations under GATS Article XIX because there we re two different processes.  Ecuador did not 
want either that the EC mainta in the same incertitude as in their GATT tariff schedule where, ten 
years after the enlargement of the EC to Austria,  Finland and Sweden, the result of the negotiations 
was still not known and there did not exist technically a consolidated schedule.  One of the objectives 
of the GATS was to create a credible and viable sy stem for international trade and to guarantee fair  S/C/M/83/Add.1 
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  and equitable treatment to all participants.  It wa s also to move forward economic activity through the 
binding of commitments, and foster development th rough trade liberalization.  Commitment s aimed at 
ensuring stability and predictability in trade and c ould be changed only against compensation.  The 
WTO could not guarantee trade volumes, but it could guarantee trade opportunities for Members to use at the appropriate time without prejudging their development. 
5. The representative of Hong Kong, China
 thanked the delegation of Ecuador for its statement 
and recalled that his delegation's position on the on going Article XXI negotiations with the EC had 
been set out at the CTS meeting of February.  H ong Kong, China's situation was similar to Ecuador's 
and his delegations shared a number of the con cerns expressed by Ecuador.  There appeared to be 
certain procedural gaps arising from that partic ular application of GATS Article XXI and of the 
S/L/80 Procedures, and his delegati on would welcome the opportunity to look at those gaps at a later 
stage.  At his juncture, his delegation wished to  note that there was another process ongoing under 
S/SECRET/8, for which the negotiating dead line had been recently extended until 1st July.  His 
delegation hoped to see a satisfactory completion of  these negotiations.  Hong Kong, China wished 
that the experience under this latter negotiating pro cess be taken into account when looking at the 
procedural loopholes in S/L/80.  He echoed Ecuado r's call for response from the EC regarding the 
procedural issues raised. 
6. The representative of the United States  echoed the statement by Ecuador and Hong Kong, 
China concerning procedural problems faced in the pro cess.  It was the first time that Article XXI was 
used and the particular case at hand was perhaps not  the normal case that Members might put forward.  
At the same time, there were strong systemic a nd substantive concerns about how the negotiations 
were conducted.  Nevertheless, the United States  appreciated the fact that the deadline for 
negotiations had been recently extended until 1st July.  The United States and a number of affected 
Members had put forward proposals for compensatio n and were anticipating a counterproposal from 
the EC before 1st July.  It would be highly important and imperative for the Members engaged in this 
negotiations to have the appropriate opportunity to react to such a counterproposal.  In addition, the 
United States would strongly discourage any attemp t to delay certification and implementation of any 
agreed compensation, especially in the light of the procedural problems that had already been faced.  
The United States expected that certification and implementation would take place in the most expeditious manner before the end of the Article XIX negotiations since concerns had already been 
expressed regarding possible overlaps between the two processes. 
7. The representative of Cuba
 said that his delegation had also declared itself an affected 
Member in this process, as notified in S/L/174.  Cuba fully supported the statement and concerns 
expressed by Ecuador, especially concerning possible systemic consequences.  Cuba wished to 
reiterate its concerns with regard to the reinterp retation by the EC of the S/L/80 Procedures.  The 
document S/SECRET/8 notified by the EC also set out conditions going beyond the mandate of 
GATS Article XXI by stating the possible ways and means of undertaking negotiations.  More 
precisely, the EC was setting up conditions, such as requiring affected Members to demonstrate the 
way in which their services trade was impacted upon.  This gave rise to deep  concerns because it was 
beyond the mandate of Article XXI a nd S/L/80.  Thus, it was important that the EC provide prompt 
response regarding compensation.  The EC should also reply to the questions put by Ecuador. 
8. The representative of China  said that his delegation had had several rounds of negotiations.  
On 15 May, China had presented its compensation propo sal to the EC.  There was only one week left 
before the expiration of the deadline and a lot of work  remained to be done.  China wished to urge the 
EC to give serious cons ideration to China's proposal for compen sation and to table its counterproposal 
as soon as possible.  China hoped that both sides w ould be able to conclude negotiations before 
1st July and was ready to work constructively with  the EC in the coming weeks.  Like the United 
States, China was interested in knowing when  the compensation would enter into effect. S/C/M/83/Add.1 
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  9. The representative of Chinese Taipei
 associated her delegation with the statements made by 
other delegations, in particular  Ecuador, Hong Kong China and the United States.  There were 
important systemic interests at stake and her dele gation expected the EC to handle this case in an 
appropriate manner, so as to set up an adequate precedent.  Chinese Taipei thanked the EC for the 
mutual agreement to extend the deadline until 1st July.  Her delegation had transmitted its 
compensation list in early June a nd hoped to cooperate in the coming weeks with the EC to reach a 
workable compensation.  She stressed that ma rket access negotiations under GATS Article XIX 
should be clearly differentiated from the compensation negotiated under Article XXI. 
10. The representative of Brazil  joined other delegation in e xpressing concerns regarding the 
process of deconsolidation of commitments unde r S/SECRET/9.  His delegation endorsed the 
intervention of Ecuador in this rega rd and was interested to hear the responses of the EC in relation to 
procedural aspects related to S/SECRET/9.  Brazil also wanted to stress that it would be detrimental to the overall negotiations if, as the end of July was approaching, the same confusion persisted with 
respect to the schedule of one of the key, if not th e most important player in the services negotiations.  
Brazil therefore strongly encouraged the EC to do their utmost efforts to separate the outcome of 
Article XXI negotiations from  Article XIX negotiations. 
11. The representative of the Republic of Korea
 shared the concerns expressed by Ecuador and 
other delegations, especially with respect to the systemic implications that could arise from the unilateral interpretation of the S/L/80 Procedures ma de by the EC.  Concerning S/SECRET/8, Korea 
had been engaged in the negotiations with the EC and had delivered its proposal for compensation.  
His delegation expected the EC to submit their counterproposal before 1
st July.  He stressed that 
negotiations under Article XXI shoul d be distinct from negotiations under Article XIX, and that MFN 
exemptions were subject to a different procedures. 
12. The representative of Colombia  said that his country was also  an affected Member in this 
process and had had constructive discussions with th e EC.  Colombia had submitted its request for 
compensation and hoped the EC would present a count erproposal within the ag reed deadline so as to 
allow his delegation to consider it.  He supporte d the statement by Ecuador and hoped that the EC 
would be able to answer all the questions raised.  The EC should respect the relevant procedures as 
this was an important precedent for the application of Article XXI. 
13. The representative of Australia  wished to associate his delegati on with what had been said by 
the delegation of Brazil on this matter. 
14. The representative of Japan  supported the points made by the previous speakers.  His 
delegation wished to address more specifically the i ssue of MFN exemptions.  He noted that there was 
an attachment to document S/SECRET/8, which cont ained a consolidated list of MFN exemptions.  
Should the round of negotiations conclude by the end of the year, lists of MFN exemptions would 
have to be compiled, together with schedules of  specific commitments.  The EC should follow the 
relevant procedures with respect to the extension of MFN exemptions, i.e. initiate a request for a 
waiver. 
15. The representative of th e European Communities  said her delegation had listened carefully to 
the statements made.  She would appreciate receiving a written copy of the statement by Ecuador.  Her delegation had little to add to what they had said at the CTS meeting in February.  The EC 
followed the same procedures for S/SECRET/8 and S/ SECRET/9.  They had proposed to extent the 
deadline for negotiations, and had alwa ys made it clear that it was under the condition that all affected 
Members should sign the corresponding agreement.  Concerning S/SECRET/9, one of the affected 
Members, namely Colombia, had informed the EC that  it was not willing to co-sign the extension.  As 
a result, there had been no agreement, the EC had not signed any letter and had not sent any agreement to the Secretariat.  The legal situation was clear:  th e period for negotiations and for  S/C/M/83/Add.1 
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  requesting arbitration concerning the changes in S/SECRET/9 had elapsed and could not be reopened 
retroactively.  The situation was different for S/ SECRET/8 – where the EC followed exactly the same 
procedure:  the deadline had been extended since all affected Members had agreed to the extension.  
The EC would look carefully at the statement made by Ecuador, but could not be accused of refusing to negotiate since they had consistently inv ited affected Members to discuss.  Concerning 
S/SECRET/8 and the deadline of 1
st July, the EC wished to info rm Members, for the sake of 
transparency, that they were in the process of  finalizing their decision-making process on possible 
counterproposals and were optimistic that, probably ne xt week, they would contact affected Members.  
The EC also hoped to reach an agreement within th e deadline with each of th em.  She wished to seek 
clarification concerning Ecuador's request to the Council.  The EC would be opposed to discussing in 
the CTS the procedure under S/SECRET/9, since it had elapsed and the CTS would have no mandate 
to look into this procedure.  However, the EC wa s ready to discuss in the CTS the functioning of the 
S/L/80 Procedures. 
16. The representative of Ecuador  said that, if, as stated by the representative of the EC, 
S/SECRET/9 was now a closed case, her delegation wi shed to know when the EC would notify their 
letter to the Secretariat in order to put an end to th e process.  With regard to work in the CTS, Ecuador 
was asking that the Council review or discuss th e S/L/80 Procedures because a precedent had been 
created which required some analysis, in  particular for developing countries. 
17. The representative of Hong Kong, China  said that MFN exemptions were not related to the 
ongoing negotiations under Article XXI which dealt only with specific commitments.  He recalled 
that, in discussions preceding the circulation of S/SECRET/8, the EC had confirmed that Article XXI 
negotiations pertained only to specific commitments and that they would initiate the appropriate 
procedures to deal with MFN exemptions in due cour se.  Since that time, there had not been further 
indications from the EC.  There was a concern, ther efore, with respect to the procedure that the EC 
would initiate to deal with the list of MFN exempti ons, which was part of the consolidation process.  
His delegation wanted to have an opportunity to come back to this issue. 
18. The representative of Chinese Taipei  wished to echo the statements made by Hong Kong, 
China, Korea and Japan regarding MFN exemptions.  There was also a systemic interest there. 
19. The representative of the European Communities  said that the EC was fully aware of the need 
to consolidate some fourteen separate lists of MF N exemptions into a single one.  She recalled that, 
when the EC had included the draft consolidated lis t of MFN exemptions, they had made it clear that 
it was for transparency purposes.  The consolidated  list of MFN exemptions would be notified at an 
appropriate time and in full accordance with the a ppropriate procedure.  She reiterated that her 
delegation wished to see the statement by Ecuado r before responding to the legal arguments it 
contained, perhaps at the next meeting of the CTS. 
20. The representative of Japan  said that the geographical enlargement of MFN exemptions was 
an important issue for his country.  If the EC were not comfortable discussing this issue under the 
agenda item related to Article XXI, his delegati on would then propose to include another specific 
agenda item for this purpose. 
21. The representative of the European Communities  said that her delegation was ready to discuss 
MFN exemptions under this agenda item, but had unde rstood that other delegations were of the view 
that MFN exemptions did not fall under Article XXI  negotiations.  The CTS was not the right place to 
discuss the enlargement of the EC.  Her delegation would not accept a separate agenda item to discuss 
MFN exemptions since there was no reason so far to discuss this.  A notification would be made in 
due time, at which point negotiations would start. S/C/M/83/Add.1 
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  22. The representative of the United States
 said her delegation appreciated that the EC was 
optimistic about coming forward with a counterpr oposal in response to Members' proposals for 
compensation, and would report back to her capital.   She thanked the EC for confirming again, and 
assuaging some concerns, that the appropriate pr ocedure would be followed with regard to MFN 
exemptions.  The misunderstanding might have stemme d from the fact that a consolidated list of MFN 
exemptions had been included in S/SECRET/8.  The United States understood that the appropriate 
procedure was that referred to in the Annex on Ar ticle II Exemptions, and would require a waiver. 
23. The representative of Australia  asked the EC whether it could confirm that they would notify 
the consolidated list of MFN exemptions under the appropriate procedure, independently and well in 
advance of any final certification of schedule agr eed in the context of Article XIX negotiations. 
24. The representative of Hong Kong, China  said that the handling of MFN exemptions was 
separate from Article XXI negotiations.  But the qu estion of MFN exemptions was related to the 
issues arising in S/SECRET/8 because this document incl uded a consolidated list of such exemptions.  
Until such time the EC initiated the appropriate pro cedure for the list of MFN exemptions, this would 
remain an issue related to the negotiations under S/SECRET/8.  This was the reason why his 
delegation would like to have the opportunity to  revert to this issue in that context. 
25. The representative of the Republic of Korea  reiterated that negotiati ons under, respectively, 
Articles XIX and XXI were two separate processes.  The appropriate procedures for MFN exemptions should be brought to a conclusion before  the negotiations under Article XIX. 
26. The Chairperson
 suggested that the CTS take note of th e statements made.  With respect to 
the statement made by Ecuador concerning the S/L/ 80 Procedures, he proposed that the CTS take note 
of Ecuador's statement pursuant to paragraph 24 of S/L/80, which stat ed that "the Council for Trade in 
Services shall, at the request of any Member, revi ew the operation of these Procedures".  As far as 
S/SECRET/9 was concerned, he encouraged affected  Members and the modifying Member to engage 
in constructive consultations to resolve the issue to  the satisfaction of all.  The Council would revert 
to this item at its next meeting. 
27. The Council so agreed . 
 
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