RESTRICTED  WORLD TRADE  
ORGANIZATION  S/C/M/97 
5 March 2010 
 (10-1210) 
Council for Trade in Services  
  
 
REPORT OF THE MEETING HELD ON 11 FEBRUARY 2010 
 
Note by the Secretariat
1 
  
1. On 11 February 2010, the Council for Trade in Services held a meeting under the 
Chairmanship of Ambassador Yonov Frederick Ag ah (Nigeria).  The agenda was contained in 
document WTO/AIR/3503. 
2. Under Other Business, the Chairperson
 indicated that he intended to make a brief statement 
regarding consultations on the appointment of new Chairpersons to the subsidiary bodies to the 
Council for Trade in Services for 2010.   
3. The representative of Australia  said that her delegation wished to add an item of Other 
Business to the agenda concerning the entry in to force of the certified EC-25 schedule.  
4. The agenda was adopted , as modified. 
5. The Chairperson  asked representatives to speak at a modera te pace to facilitate interpretation. 
A. NOTIFICATIONS PURSUANT TO ARTICLE V:7 OF THE GATS 
6. The Chairperson  drew delegations' attention to the notification made pursuant to GATS 
Article V:7 (Economic Integration) received fro m Honduras and Panama, which was contained in 
document S/C/N/535.  
7. The Council took note  of the notification, and referred  the agreement notified to the 
Committee on Regional Trade Agreements for examination. 
B. COMPLIANCE WITH GATS NOT IFICATION REQUIREMENTS  
8. The Chairperson  recalled that the Council had last discussed the issue of compliance with 
GATS notification requirements at its meeting of Oc tober 2009.  Members' deliberations had been 
stimulated, inter alia , by a communication from Switzerland, contained in document S/C/W/297, 
entitled "Compliance with notification requirements under the GATS".  The item had not been taken 
up at the Council meeting held in November 2009, bu t the delegation of Switzerland had asked at that 
occasion that it be placed back on the agenda. 
9. The representative of Switzerland  recalled that the Council had last discussed the issue of 
compliance with notification requirements in Oc tober 2009.  Members had had a good, engaged 
discussion and many views had been expressed in a constructive spirit, but five months had since 
passed, during which changes had occurred.  He ther efore suggested that the Secretariat update the 
informal Note contained in JOB(09)/10/Rev.1,  which provided a statistical account of the 
                                                      
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/C/M/97 
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  notifications made under relevant GATS provisions.  Since the Note had been prepared a year earlier, 
he suggested that the update include all the notifi cations made for the whole of 2009, as well as any 
corrections to mistakes that delegations had identified in the original Note.   
10. He added that the proposal submitted by his de legation, in document S/C/W/297, contained a 
number of suggestions in its Section V.  Some delegations had offered comments, and he would 
welcome any further reactions so as to guide the discussion forward.   
11. The representative of the United States
 said that he needed to consult the Secretariat Note 
before endorsing the sugges tion made by Switzerland, and suggested to  revert to it at the next meeting 
of the Council. 
12. The representative of Chile  was in favour of producing an upda ted version of the Secretariat 
Note.  He said that it was useful to know the current  situation with regard to  notifications made under 
the different GATS provisions, and in this sense he  was surprised by the US concern.  As the 
discussion of compliance with notification require ments seemed to have lost steam, the Swiss 
proposal was helpful.  The Council needed to act on so me of the suggestions raised in order to remedy 
the lack of compliance with notification requireme nts that was reflected in the statistical account 
provided by the Secretariat.  He invited delegations  to consider the suggestions put forward in the 
Swiss submission. 
13. The representative of Mexico  supported the proposal made by Switzerland to update the 
Secretariat Note.  She thought that the number of notifications had increased in 2009, but would like 
to see if the figures confirmed her impression. 
14. The representative of the United States  said that he was not opposed to the Secretariat 
updating the numbers of the notifications made, but as yet could not endorse any of the suggestions 
made in the submission by Switzerland. 
15. The representative of Switzerland  explained that his proposal was that the Secretariat update 
the three tables in section III of its Note, which cont ained the notifications made since the entry into 
force of the GATS, by including all notifications ma de until end-2009.  Any corrections to mistakes in 
the original table that might have been highlight ed by delegations could also be included in the 
revised Note.  He concurred with the representativ e of Mexico that there was a diffuse, but as yet 
unverified, sentiment that transparency-related activiti es had intensified in 2009.  In that regard it 
would be useful to know if and to what extent this impression was correct. 
16. The representative of China  stressed the importance of transparency and said that this could 
be enhanced through notifications.  In genera l, she supported the Swiss proposal to strengthen 
notification obligations and endorsed the suggestion that the Secretariat note be updated for discussion 
at the next Council meeting.  She urged the Council to continue discussion on this issue. 
17. The Chairperson  thanked delegations for their comments.  On the basis of the discussion, he 
proposed that the Council revert to this item at its next meeting, to provide delegations sufficient time 
to reflect on the Swiss suggestion to update the Secretariat Note.  
18. The representative of Switzerland  said that, while not wishing to insist, he had hoped that a 
pragmatic decision could be taken.  He suggested  that, as only one delegation seemed to be needing 
more time to consider his delegation's proposal while others had expressed support, a mandate could 
be given to the Secretariat to update the Note if no objection was raised before the end of February. 
19. The Chairperson  said that his understanding was that there was no consensus on the proposal.  
Accordingly, it was better to revert to the sugges tion at the next meeting of the Council, to allow  S/C/M/97 
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  delegations to resolve any outstanding concerns they  might have.  He therefore suggested that the 
Council revert to this item at its next meeting.  
20. It was so agreed . 
C. SECTORAL AND MODAL DISCUSSIONS  
21. The Chairperson  recalled that, at the meeting held in October 2009, the Council had 
addressed four new Background Notes produced by th e Secretariat on services sectors and modes of 
supply, namely on:  modes 1 and 2;  mode 4;  ar chitectural services;  a nd construction and related 
engineering services.  As indicated in the airgram, de legations would have an o pportunity to revert to 
those sectors and modes at the end of the discussion of the agenda item. 
22. For today's meeting, the sectors up for discussion were:  audiovisual services;  energy 
services;  and financial services.  With regard to financial services, however, as delegations had been 
informed in the fax dated 5 February 2009, in li ght of the late circulation of the Secretariat 
Background Note and upon the request of several delegations, he proposed that the discussion be 
postponed to the following meeting of the Council.  A similar decision had been taken the previous 
week by the Committee on Trade in Financial Serv ices for the same reasons .  It was so agreed . 
23. At the outset, he recalled that the Secretaria t Notes were intended to provide a basis for 
Members' discussions in the Council on sectors and modes of supply.  The Notes should not be the sole focus of the deliberations.  Accordingly, he  encouraged delegations to offer their own written 
submissions, contributions and co mments on the sectors concerned.  
24. In line with the practice adopted at previous m eetings, the substantive pa rt of the debate under 
that agenda item would be held in informal m ode.  The presentations by the Secretariat and by 
international organisations, and the statements of any delegations wishing to place their interventions 
on record would be incorporated in the minutes of th e meeting.  For the substantive part of Members' 
informal debate, instead, the Chairman woul d produce, under his own responsibility, a non-
attributable summary.  The summary would be circul ated shortly after the me eting, and subsequently 
recorded in the minutes of the meeting.   
25. He also recalled that the Council had agreed that, for that meeting, the Secretariat would 
invite the OECD, UNESCO and the Energy Charter Treaty Secretariat, which were not observers to the Council, to share with Members any relevant work that they had produced for the sectors under 
discussion.  In line with the practice adopted at previous meetings, he would request these 
international organisations to briefly introduce thei r contributions immediately after the Secretariat 
had presented its own papers, a nd before opening up the floor for general discussion.   
1. Audiovisual services (Background Note by the Secretariat, S/C/W/310 and 
S/C/W/310/Corr.1) 
26. By way of introduction, a representative of the Secretariat
 said that the Background Note on 
audiovisual services was built on an earlier one from 1998, but that its structure and content had been adapted to account for the changes that had taken place over the previous decade.   
27. The Note underscored, like many delegations ha d done in the past, that the sector had both 
commercial and social-cultural components.  Accordi ngly, governments often pursued a wide array of 
objectives in relation the sector, from encouraging economic growth and attracting investment, to 
promoting diversity and pluralism, or  protecting intellectual property.   S/C/M/97 
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  28. After reviewing briefly the definition of the sect or, the paper then looked into the trade and 
economic profile.  It highlighted that international trade in audiovisual services had expanded rapidly 
over the previous decade.  While the largest expor ters were developed Memb ers, a number of other 
top exporters were developing economies.  A number of them had developed expertise in key areas.  
For example, as indicated in the table on page 7,  India was the largest producer of motion pictures, 
with over 1,100 movies per year, almost double the amount produced by the second-largest producer, 
the United States.  A number of developing countries exported movies and TV programming, especially in regional markets.   
29. Technological advances had also had an important  impact on the way the sector functioned.  
For example, greater quantities of content could be  delivered and consumers had been given more 
control over what they wanted to consume, where, when and how.   
30. Audiovisual services was one of the sectors with a particularly low number of commitments 
(30).  The sector was also characterized by a high number of MFN exemptions, relating, for example, 
to film co-productions.   
31. Section VI of the Note looked at government in terventions in the sector.  A wide array of 
government regulations applied to  audiovisual services, whether for the promotion of cultural 
diversity, protection of intellectual property, or th e prohibition of illicit content.  Of more immediate 
trade interest, subsidies were widely used in  the sector, and various Members applied domestic 
content quotas in one or more market segment.   
32. As he had indicated before, the representative stressed that the Background Notes were 
research pieces by the Secretariat.  He hoped that in terventions would not be limited to commentary 
on the Notes, but that Members would also share th eir own experiences with the various sectors and 
modes under discussion. 
33. Turning to a different, more general issue, the representative recalled that statistical 
information with regard to services trade was scarce .  However, some progress had taken place in the 
collection and analysis of data.  In 1997, the Secr etariat had produced a Note entitled "A Review of 
Statistics on Trade Flows in Services", in documen t S/C/W/27, which was subsequently updated in 
2000 (S/C/W/27/Add.1) and 2006 (S/C/W/27/Add.2) .  In the preparation of the Background Notes 
and in the course of technical assistance activities,  the Secretariat had received several requests for 
recent information on work on services statistics, thus felt that it might be opportune and helpful if a 
fresh update of that statistical Note were produced fo r Members to consider at the end of sectoral and 
modal discussions, scheduled to take place toward s the latter part of 2010.  Colleagues from the 
Statistics Division of the Secretariat could also be invited to give a presentation to the Council on 
statistical developments that had taken place during the previous five years.  He sought delegations' 
feedback on this suggestion. 
34. All delegations who took the floor
 on the issue supported the suggestion that the Secretariat 
produce a fresh update of the statistical Note in document S/C/W/27/Add.2. 
35. The Chairperson  indicated that two contributions, which were relevant to the discussion of 
audiovisual services, had been received from UNESCO for distribution to delegations.   
36. A representative of UNESCO  thanked the Council for the invitation to attend the meeting and 
share with Members its work on the audiovisual services sector.  The representative explained that she was the Secretary of the 2005 Convention on the Protection and Promotion of the Diversity of Cultural Expressions that had entered into force as a legally binding instrument in March 2007.  At 
that stage, over 85 per cent of Parties to the Convention were WTO Members and actively  S/C/M/97 
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  participated in its governing bodies, namely th e Conference of Parties and the Intergovernmental 
Committee. 
37. The framework of priorities set by the Inte rgovernmental Committee at its meeting of 
December 2009 was aimed at moving into a more operational phase in the life of the 2005 Convention, including the introduction of a new Intern ational Fund for Cultural Diversity to provide 
support for developing countries to develop a norma tive, institutional and economic environment for 
their cultural industries. 
38. She complemented the WTO Secretariat for the very informative Note on currents trends and 
regulatory challenges in the audiovisual sector.  Th e issues raised coincided with many of those 
addressed in the context of the 2005 Convention in general and other activities undertaken by 
UNESCO in particular.  For example, the recognition of:  the complex nature of the audiovisual sector 
acknowledging its economic as well as its social and cultural components;  the role of national 
policies to promote domestic cultural content and ensu re diversity;  the key role developing countries 
were playing in the global audiovisual marketplace a nd could play in the future, particularly in the 
film and video production sectors;  the challenges that  digitalization posed to the traditional links in 
the value chain from creation to consumption;  and methodological issues of data and information 
collection. 
39. At that occasion of information sharing and ex change, she drew delegations' attention to two 
main areas of action undertaken by UNESCO in rece nt years.  The first were UNESCO activities to 
provide technical assistance for the development of regulatory frameworks and policies in the 
audiovisual sector, particularly in developing countries.  The WTO Secretariat had distributed the 
UNESCO publication "Trends in Audiovisual Mark ets:  Regional Perspectives from the South" 
(http://unesdoc.unesco.org/images/0014/001461/146192e. pdf), a study of the audiovisual landscape 
and regulatory frameworks in 15 countries of the globa l south.  It provided in-depth country profiles 
for film, television, music and radio services in countries from Latin America, West Africa and Asia.  It had been designed as a tool to provide country-specific assistance to develop a regulatory 
framework for audiovisual industries and made  reference to the WTO Trade Policy Review 
Mechanism.  The report also highlighted partic ular challenges for developing countries in the 
audiovisual sector, such as low disposable income, problems of access to electricity, low availability 
of consumer equipment (TVs, DVD player s) and lack of production facilities.   
40. She mentioned two other publications.  First,  the "Guidelines for Broadcasting Regulations" 
(http://unesdoc.unesco.org/images/0018/001832/183285e .pdf), published by UNESCO in cooperation 
with the Commonwealth Broadcasting Association in  2008.  These Guidelines reflected on issues of 
convergence in audiovisual services and their imp lications for government regulations or, as they 
called it, ‘the role of government in the digital switchover’.  They examined various ‘balancing acts’ 
between providing opportunities, market access and protection of citizen’s rights.  Second, the "UNESCO World Report:  Investing in Cult ural Diversity and Intercultural Dialogue" 
(http://unesdoc.unesco.org/images/0018/001852/185202e. pdf) of 2009.  Chapter five of the report 
reflected on the sources of creativity, means of di stribution and patterns of consumption and how 
these were influenced by connectivity, interac tivity and convergence; ac knowledging the imbalances 
in political and economic power that furthered the digi tal divide.  It also reflected on policies aimed at 
fostering cultural diversity and the global flow of cultural goods and services.  The main emphasis 
was placed on access to production and distribution channels that encouraged innovative content, 
promoted the diversity of cultural expressions and a balanced representation of different communities. 
41. The second main axis of UNESCO activities wa s in the setting of standards in the 
development of methodologies and classification syst ems to collect data.  The WTO Secretariat had 
distributed the publication "International Flow s of Selected Goods and Services, 1994-2003" 
(http://www.uis.unesco.org/template/pdf/cscl/IntlFlows_E N.pdf).  It represented the first effort to S/C/M/97 
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  create a framework to collect data  capturing the global flow of cultural goods and services.  Her 
delegation was very encouraged to see that the WTO Secretariat had built upon and further 
contributed to that framework in its Background Note.  Indeed, UNESCO had been working together 
with the WTO, WIPO and the OECD as part of a larger inter-agency group to further efforts on 
refining classifications for future data collection on audiovisual services.  One of the main challenges 
being addressed by this group was to captu re flows in intellectual property rights. 
42. She also mentioned the "UNESCO Framework for Cultural Statistics" 
(http://www.uis.unesco.org/template/pdf/cscl/frame work/FCS_2009_EN.pdf) that had just been 
published.  The Framework was built on the concept of the Cultural Cycle model, designed to better 
understand the relationship between different cu ltural processes from creation to production to 
consumption.  In other words, it embraced the to tality of practices and activities that transformed 
ideas into cultural goods and services and that were reaching consumers, participants and users.  The 
new framework addressed the breadth of cultural expressions, including new forms of production and 
consumption such as interactive media.  The u ltimate goal was to develop policy-based indicator 
frameworks that could help capture processes of economic and social development and ultimately 
lead to the production of reliable international data for policy making. 
43. The Council
 conducted the rest of the discussion in informal mode.  The Chairperson  
produced the following summary of the main points raised during the informal discussions of audiovisual services (also contained in JOB/SERV/3). 
44. Eighteen delegations took the floor to welc ome and comment on the Secretariat Background 
Note on Audiovisual Services.  Delegations also thanked UNESCO for participating in the meeting 
and making available some of its studies.   
45. A number of delegations highlighted the drama tic changes that the sector had underdone in 
the last decade due, in particular, to technological advances that reduced time and cost of transactions 
and broadened options available to  consumers.  The growing participation of developing countries in 
trade in audiovisual services was also underlined.  A number of delegations also underscored the 
limited number of commitments and the many MFN exemptions in the sector, despite the degree of 
liberalization achieved and the opportunities offered by technological advances.  The DDA was the 
occasion to address this gap.    
46. Some delegations emphasized that liberalizati on would benefit consumers as well as the local 
industry and culture.  A delegation stressed that trad e in the sector should not be hampered for cultural 
reasons, and hoped that content quotas, given thei r restrictiveness, would not be used.  Another 
delegation said that it was yet to be convinced that  cultural concerns should be a reason to treat the 
sector differently from others.  Liberalization bene fited the domestic industry by creating a conductive 
environment for new technologies and skills which,  in turn, would help develop new services, 
encourage investment, and foster local creativity  and innovation.  This was a more promising 
approach to promote cultural diversity, rather than erecting barriers.   
47. A delegation thought it was important to advance the liberalization of a ll services, and did not 
agree with some Members that tended to exclude a priori  certain sectors from negotiations.  This 
delegation currently had no commi tments on audiovisual services, but  hoped to contribute to the 
Round through such commitments.  Many measur es adopted for promoting cultural diversity 
constituted trade barriers that rendered trade almost  impossible trade in the sector.  These barriers 
should be gradually reduced, as cultural diversity was not achieved through discriminatory measures 
but, rather, through trade openness. 
48. A delegation drew attention to the Note's sec tion on the internationalization of production.  
This phenomenon cast doubt on the future of na tionality-based regulations, since it was increasingly  S/C/M/97 
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  hard to determine the nationality of a production.  As film production was increasingly sliced into 
various international component pieces, one could imagine ever more torturous criteria imposed on 
subsidy programmes and quota systems.  This dele gation understood the cultural objectives of much 
of these regulations and had little problems with suppor t programmes used in this context.  Much of 
the output in the sector was non-rivalrous in terms of trade.  The existence of support programmes 
was no barrier to taking commitments.  It was al so noted that the Note did not discuss the recent 
explosion of corporate videos, training videos, ma rketing and branding vi deos, as well as various 
other business-to-business services that we re not culturally sensitive.     
49. As regards motion pictures, a delegation stressed  that the domestic structure of the industry 
was different in developing countries than in othe r markets, for example, in terms of movie budget, 
audiovisual infrastructure, or ticket pricing.  The strong links between the industry and more 
traditional theatre and drama forms was also mentioned.   
50. Some delegations emphasized the dual nature of audiovisual services and the importance of 
cultural objectives in the sector.  They also highli ghted the relevance of the UNESCO Convention.  A 
delegation said that the Note should have discu ssed particular obligations arising from the 
Convention, including preferential treatment for de veloping countries, the fund for cultural diversity, 
the international consultation and coordination oblig ation, or the obligation to take the Convention 
into account when applying and interpreting other inte rnational treaties.  This delegation also referred 
to deep trade imbalances in this sector.  Th e few Members that had taken GATS commitments, 
essentially developing countries, had not had the opport unity to enhance and develop their audiovisual 
industry.   
51. Some delegations emphasized the importance of MFN exemptions in the sector.  One 
delegation said that for many countries co-p roduction agreements were the key means for 
international pooling of financia l resources and technical know-how.  Otherwise, many countries 
might have no productions.  A nother delegation recalled its position to abstain from taking 
commitments in the cultural sector.  Some delegati ons highlighted that data  showed their markets 
were open to foreign content, even if they had domestic content requirements in place.   
52. A delegation thought that mention of the UNESCO Convention in the paper might send 
wrong signals by suggesting that the Convention could ha ve some relevance in a trade context.  At the 
same time, it was underlined that the Note stat ed the GATS contained no specific exceptions in 
relation to cultural objectives or policies.  Anot her delegation noted that Article 20:2 of the 
Convention specified that the rights and obligations of parties under other treaties were not altered, 
including WTO Agreements.  Another delegation, while appreciating that the Convention had been 
mentioned, did not think that the Note needed to discuss its specific obligations.  Reacting to other 
views expressed, this delegation considered that the Convention was a reality that could not be 
ignored.    
53. A delegation deplored that the Secretariat pape r had not elaborated on the role of the WTO 
and the level of ambition sought in the DDA for the sector, for example as regards goals of the 
negotiations or priorities asserted by Members.  Anot her delegation would have wished that the Note 
more directly referred to DDA negotiations and the outcomes sought therein, as well as to the 
importance of liberalization.  These delegations thou ght that the approach taken in other background 
Notes had been different;  for example, plurila teral requests had been discussed.  These requests 
formed part of the factual analysis of the sector.    
54. Some other delegations felt that Secretariat Background Notes should not address Members' 
levels of ambition or other negotiating aspects.  Th e Secretariat was presenting factual information, 
and there was no need to refer to politically sens itive issues.  The discussion was taking place in the 
Regular Session of the Council, which functioned re gardless of the Doha negotiations.  The Special S/C/M/97 
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  Session of the CTS dealt with the negotiations and was the appropriate forum for the Secretariat to 
present, should Members so demand, information in  relation to negotiating proposals, positions and 
requests. 
55. A delegation emphasized that the CPC Prov. did not explicitly reflect market realities, given 
the technological changes that had occurred in the sector.  This delegation also agreed that 
commitments on telecommunication would generally c over the transmission of signals, but not entail 
commitments on the supply of audiovisual content.  Some delegations also highlighted the relevance 
of certain issues associated with convergence.   
56. A delegation thought that the Secretariat No te sometimes inopportunely viewed certain 
regulatory aspects through the prism of barriers to tr ade.  As regards competition and state aid, there 
was only one Member that prohibited state aid, subject to a limited number of exceptions or 
limitations.  The protection of cultural diversity  was not a formal exception under the relevant 
framework, but a limitation that was strictly framed a nd defined.  It was also noted that the MEDIA 
programme related to pre-  and post-production.   
57. A delegation stressed that a special situation had not been addressed in the Note.  It concerned 
a Member that had taken no commitments, but was receiving, against its will, radio and television 
transmissions from abroad.  A future document on the sector should include a legal analysis of such a 
situation.  Another delegation thought that the sectoral papers should contain a section on the 
realization of the objectives under GATS Article IV concerning the increasing participation of 
developing countries in international trade.  The n eed to protect property rights was also mentioned. 
58. A delegation noted that some of the studies circulated by UNESCO were not recent;  the 
organization might be invited more regularly to present relevant studies to the Council so as to avoid 
such situations.   
59. A representative of the Secretariat said that  the discussion was testament to the sensitivities 
surrounding the sector.  He also indicated that, while the various Secretariat Notes had all adopted different approaches with regard to references to the DDA, any references to the negotiations 
concerned issues of a technical nature (e.g. classifi cation, etc), rather than levels of ambition. 
60. The representative of UNESCO
 replied to the question raised regarding updates to the data 
she had presented by indicating that she would prov ide any fresh information to the Secretariat.   
2. Energy services (Background Note by the Secretariat, S/C/W/311) 
61. Turning to energy services, a representative of the Secretariat  recalled that energy was one of 
the biggest markets in the world, with an estimat ed value of US$6 trillion.  The energy sector was 
extremely vast, involving very different industries, each having specific characteristics.  Over the 
previous 15 years, there had been an overall trend to wards greater involvement of the private sector as 
structural reforms and technology developments ha d contributed to create new trading opportunities, 
including for service suppliers.  The energy sector w as confronted with difficult challenges, arising 
from development needs, demographic growth, res ource scarcity and environmental concerns.   
62. With regard to the Secretariat Note, he indicated  that the first part contained a description of 
the various segments composing the energy industry (oil and gas, coal, renewable, nuclear, electricity 
and new energy related activities) and explained the activities involved, broad market patterns and 
overall investment needs.  The second part discussed the definition and classification of energy services under the GATS.  The W/120 listed three sectors  which explicitly referred to energy (services 
incidental to mining, services incidental to energy distribution, and pipeline transportation).  
Moreover, other relevant services  were found under various sections of the W/120 (business services,  S/C/M/97 
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  construction, distribution, transport, etc.).  The Note then discussed the application of the GATS to 
energy services, including the relevance of the four m odes of supply.  It also gave an account of the 
specific commitments undertaken by Members in relevant sectors.   
63. The Background Note represented research efforts.  It did not claim to provide an exhaustive 
review of all issues arising in relation to energy services nor to provide an interpretation of the GATS 
and of Members' commitments.  He invited delega tions to be forthcoming with any comments and 
observations. 
64. A representative of the Energy Charter Secretariat  thanked Members for the invitation to this 
session of the Council for Trade in Services.  The Energy Charter Treaty (ECT) Contracting Parties, 
most of whom were Members of the WTO as well, had emphasised the necessity of cooperation 
between the two organisations in order to enhance synergies while avoiding duplication.  She recalled 
that the ECT was the only international treaty setting legal norms specific to energy trade (including 
transit by fixed infrastructure) and investment.  The ECT trade regime was based on the rules of the multilateral trading system.  Non-derogation from WT O provisions was the cornerstone of the ECT.  
At the outset, the ECT had integrated the GATT by re ference only, but with the recent entry into force 
of the Trade Amendment to the ECT, on 21 Janua ry 2010, other relevant WTO agreements had 
become applicable under the ECT.  Among its 52 me mbers across the Eurasian  continent, the ECT 
included countries that were not yet WTO Members.   WTO rules were applicable to energy trade 
relations between ECT Contracting Parties, of which at least one was not a WTO Member. 
65. Her delegation wished to commend the Background Note prepared by the Secretariat, which 
was timely as the energy sector was facing major ne w challenges.  The Note highlighted that the 
sector was highly capital-intensive:  significant co sts were needed to find, produce and transport 
energy.  Moreover, it underlined the basic trade differences of various energy materials and products – trade in electricity and gas had been mainly regiona l due to particular transportation characteristics of 
these products.  Transportation of natural gas, fo r instance, took place mainly through pipelines, 
although the share of LNG trade had been increasing st eadily.  Power needed to be transported over 
grids that were costly to duplicate.  Finally, both electricity and gas were difficult to store.  These 
characteristics and the fact that a substantial part of trade took place through fixed infrastructure posed 
significant challenges. 
66. Energy trade by fixed infrastructure put partic ular emphasis on two issues:  the framework for 
investment in highly capital-intensive infrastructur e projects;  and the conditions for access to these 
networks, i.e. access to transportation services with r estricted capacity.  Construction of transportation 
pipelines and transmission grids required substan tial investments.  Such transportation facilities 
involved significant economies of scale in the c onstruction phase and, once completed, had limited 
capacity.  Thus, capacity had to be decided on a long-time basis. For most manufactured goods (transported by vessels, trucks or railway) capacity constraints could be solved by queuing without 
adverse implications for the transportation.  Because grid-bound energy was difficult to store, 
availability of capacity at the right time mattered.  It might be physically impossible to provide access 
to transportation due to lack of capacity as it was unusual to invest in pipeline projects with substantial spare capacity.  Investment rules were  therefore necessary to ensure that additional 
infrastructure could be built, should the existi ng one fail to provide the necessary capacity.   
67. There were thus two major questions to consider  in discussions of energy services.  To what 
extent would the GATS (or possibly a Reference Paper as mentioned in the Secretariat's Note) tackle:  
(i) the non-discriminatory use of existing infrastructure;   and (ii) the conditions to create an additional 
transportation capacity if available capacity was not  sufficient.  For the latter purpose an effective 
investment framework was needed.  The WTO had already experience with negotiating specific rules 
for another network industry, i.e. the telecommunica tions sector.  Here too, international trade might 
involve transmission by wires, although, in contrast to electricity and gas infrastructures, the fixed S/C/M/97 
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  grid was now contestable by wireless telecommunicati ons.  While some lessons could be learned from 
these negotiations, the energy sector had some specific features, especially with respect to security of 
supply and environmental concerns, which should be addressed.  Finally, in order to effectively tackle 
network access questions, disciplines going beyond the GATS might be needed.  While the GATS ensured market access for energy service suppliers, disciplines were needed to ensure that energy 
trading companies (not being service suppliers) could get access to transportation systems or be able 
to build one, should existing infrastructure be insu fficient, in order to deliver their products to 
consumers. 
68. The representative of Saudi Arabia
 thanked the Secretariat for its very interesting and useful 
Background Note on energy services.  This was the first revision of the Background Note in over ten 
years, and his delegation was pleased that this cr itically-important sector was getting the attention and 
analysis it deserved.  The paper was well-written an d informative, though naturally within its short 
compass it could only provide a basic introduction to the huge and very dive rse group of industries 
with which it dealt.  There were many things in the paper which his government considered agreeable, 
and one or two on which they would sound a note of  caution.  His delegation was still reviewing the 
paper in more depth;  hence, it would provide pr eliminary views on six different areas and issues of 
interest to the Kingdom.   
69. First, his delegation had noted the statement of  the International Energy Agency, quoted in 
paragraph 8, that what was needed was an “energy  revolution”, including a rapid transfer to a low-
carbon system of energy supply.  Nobody would qu estion the need for mass ive investment in the 
development of new energy sources.  But it should be ke pt in mind that in the foreseeable future and 
for decades to come the world would continue to  rely most heavily on traditional sources.  In 
particular, paragraph 15 of the pape r noted that upstream investment in oil and gas was likely to rise 
to US$600 billion by 2012, mostly for the developmen t of new fields, and that , by 2030, national oil 
companies were expected to account for over 60 per cent of world oil production and close to 80 per cent of incremental production.  Notwithstanding th e "energy revolution", this was an indispensable 
contribution to economic security and human welfare. 
70. His delegation welcomed the paper’s useful  commentary on carbon capture and storage 
technology and its statement that energy efficiency  could contribute to reducing CO2 emissions by as 
much as one-fifth.  Saudi Arabia agreed that these were vitally important technologies.  In the Doha 
Round negotiations on environmen tal goods, Saudi Arabia had proposed the inclusion of goods 
related to carbon capture and storage technologi es, gas flaring emission reduction technologies and 
efficiency technologies.  It was important that the negotiations on environmental goods, like the Doha 
Round as a whole, be seen to serve the needs of  all Members, both energy producers and energy 
consumers, developed and developing.   
71. Third, the Secretariat’s discussion of the defi nition and classification of energy services was 
very useful.  His delegation did not disagree with the apparent consensus among Members that there 
was no need at present to attempt a comprehensive r eclassification of energy services.  As the paper 
noted, it seemed that nearly all relevant services  had found their place somewhere in the CPC and 
W/120 classifications.  However, his delegation wi shed to suggest that the Committee on Specific 
Commitments should consider the few cases identif ied in paragraph 47 where services were omitted 
from W/120, like retail sales of motor fuel, or from both W/120 and the CPC.  The CPC was not within WTO Members' control, but it should be pos sible to make some modest revisions of W/120, 
which was, after all, over 20 years old.   
72. Fourth, the delegation of Saudi Arabia was st ruck by the table in paragraph 69 which drew 
attention to the very large proportion of commitme nts on the three energy-specific services which had 
been made by acceding countries, as compared with  existing Members in the Uruguay Round.  Nine 
out of twelve commitments on pipeline trans portation, for example, had been made by acceding  S/C/M/97 
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  countries.  This illustrated the serious gaps in th e overall coverage of GATS commitments – not just 
in the energy sector – that ought to be filled by  a successful Doha Round.  If new Members could 
make such extensive commitments, so could and s hould other Members with si milar or higher levels 
of development.   
73. Fifth, the section on the ownership of natural r esources was of particular interest to Saudi 
Arabia.  His delegation was firmly of the view that national sovereignty over natural resources was 
unquestioned, and outside the scope both of WTO rul es and the current negotiations.  Indeed, this was 
a matter of settled law.  He noted the Secretariat’ s reference in paragraph 78 to the absence from the 
GATS of an exception, equivalent to that in Artic le XX(g) of the GATT, for measures relating to the 
protection of exhaustible natural resources.  His dele gation presumed, and agreed with that view, that 
the Secretariat's point was that this omission was deliberate, not an oversight .  Since natural resources 
were goods, measures relating to them were outside the scope of the GATS, and so no such exception 
was necessary or appropriate.  He also agreed that commitments permitting the supply of a given service did not confer any right to the ownership or  control of natural resources on which the service 
was performed.   
74. Sixth , with regard to the section in the Note on whether there was a need for additional rules 
on energy services, his delegation wished to soun d a note of caution.  The relevant section was 
essentially about the possibility of negotiating co mpetition disciplines for energy services along the 
lines of the Reference Paper on Basic Telecommunications, which concerned access to networks for the supply of services.  However, there were many different business models in the energy sector, and 
it was by no means clear that the telecoms precedent was relevant to all of them.  Very different 
considerations – capacity constraints, for example – applied to telecoms networks and to pipelines.  
But the box relating to gas transport on page 5 of  the Note appeared to assume that disciplines like 
those of the Telecoms Reference Paper were appli cable – in fact necessary – in gas transport.  
However, it should not be presumed that the telecoms  model would be the model of the future in all 
networked services.  These were complex questi ons, on which a lot more thought was needed. 
75. The Council
 conducted the rest of the discussion in informal mode.  The Chairperson  
produced the following summary of the main points ra ised during the informal discussions of energy 
services (also contained in JOB/SERV/3). 
76. Several delegations complimented the Background Note on energy services for providing a 
good and balanced overview of the sector.  Vari ous delegations thought the description of the 
different energy sectors and technologies was useful , as well as the link made with the climate change 
agenda.  Some delegations welcom ed the reference made to new en ergy-related technologies, such as 
carbon capture and storage (CCS) and energy efficiency.  It was noted that CCS technology would play a crucial role in implementing climate change mi tigation policies in the years to come and that its 
global deployment was needed. 
77. One delegation said that huge investment effort s would be needed to switch to a low-carbon 
economy and maintain levels of s upply, and that there appeared to be limited impediments to 
liberalization in this sector.  The legislative frame work of the European Union was a good example of 
how liberalization could be reconc iled with security of supply.  Pr oblems relating to definition and 
classification did not preclude efforts to liberalize.  Liberalization could brin g various benefits, such 
as technology and skill transfers. 
78. Some delegations stressed the key importance of the energy sector, which conditioned most 
other economic activities.  Several delegations deplored the low leve l of specific commitments on 
energy and energy-related services.  Two delegations drew attention to the comparatively higher level 
of specific commitments undertaken in the sector s concerned by recently acceded countries;  it was 
noted in this regard that Members ought to fill the ensuing gap in the DDA.   One delegation noticed S/C/M/97 
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  that a number of Members had undertaken extensiv e commitments on energy services in preferential 
trade agreements.  Two delegations stated that mode  4 commitments would be useful also if extended 
to a wider range of suppliers, i.e. ordinary pe rsonnel de-linked from mode 3.  One delegation 
underlined that the Note listed several common barrier s in the sector.  Another delegation considered 
that de facto  technology transfer requirements were not obstacles to trade, but needed by developing 
countries to strengthen their energy sector. 
79. Several delegations stated that liberalization di d not imply any change in ownership of natural 
resources.  One delegation added th at sovereignty concerns seemed to be adequately protected and 
compatible with services liberalization and security of supply. 
80. According to one delegation, the Note indicat ed that developing countries had strong export 
potential in the energy sector.  Another delega tion felt that the Note should have addressed 
development aspects of energy policies.  One delegati on was of the view that paragraph 2 of the Note 
gave the misleading impression that growing energy needs were due mainly to developing countries. 
81. With respect to liberalization in the electricity  sector, one delegation said that the five steps 
described in paragraphs 31-32 of the Note did not ap ply in a uniform manner across Members.  It also 
noted that the definition of "services incidental to energy distribution" (CPC 887) was still under 
discussion and that Members did not have a common understanding in this regard, as indicated in 
JOB(03)/89. 
82. One delegate noted that the collective request on energy services seemed to be incomplete as 
it did not cover the whole energy supply chain:  for instance, electricity generation and transmission were not covered.  This helped to explain the mi ssing link with actual investment.  In his country, the 
electricity sector was open, but inward investment wa s very limited.  In many countries, the electricity 
sector was still subject to monopolies and heavy re gulations, including in the requesting Members. 
83. Regarding possible additional disciplines, sever al delegations cautioned against using the 
telecom Reference Paper as a model.  In their view, there were important differences between telecom and energy networks, and also among different ener gy industries.  Hence, disciplines in the telecom 
Reference Paper were not necessarily transposable to  the energy sector.  One delegation supported the 
idea of developing a reference paper for energy servi ces as an area for further work;  the extent to 
which the telecom Reference Paper could serve as a model should be discussed.  One delegation asked that the reference to the proposal by Japan in  footnote 67 be deleted because this proposal did 
not entirely fit in this context.   
84. One delegation considered that the Energy Char ter Treaty should have been mentioned in the 
Note because it was an important organization in this field. 
85. A representative of the Secretariat clarified that the Background Note did not suggest that 
Members should follow the telecom Reference Pape r.  It only raised the question of whether 
disciplines additional to market access and national treat ment would be needed.  He also noted that, in 
this regard, the two sectors raised  similar questions, even though impor tant differences existed.  The 
Reference Paper was the only institutionalized preceden t in this field and had been referred to in 
delegations' proposals on energy services, as the Background Note indicated.  There was a parallel with the negotiations on domestic regulation.  The scope covered by Article VI:4 and Article XVIII 
overlapped to a very large extent, and the kind of regulatory disciplines that delegations were 
referring to should be looked from this perspective. 
86. Commenting on the Secretariat's clarification with  regard to the applicability of the telecom 
Reference Paper to energy services, one delegation c oncurred that telecom and energy were different  S/C/M/97 
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  sectors, with different characteristics.  On the basi s of the same rationale, the delegation urged caution 
with regard to a horizontal approach to domestic regulation, as one size did not necessarily fit all.  
3. Sectors and modes discussed at the meeting held on 5 October 2009 (modes 1 and 2;  
mode 4;  architectural services;  constr uction and related engineering services) 
87. No interventions  were made on the four topics that had been discussed at the Council meeting 
held on 5 October 2009 (i.e. modes 1 and 2;  mode 4;  architectural services;  and construction and 
related engineering services).   
4. Further comments 
88. The Chairperson  thanked Members for their contributi ons.  He recalled that, as agreed, he 
would be producing a summary, under his own res ponsibility, of the main issues raised.  This 
summary would be circulated rapidly (document JOB/SERV/3) and subsequently recorded in the 
minutes of the meeting.  The minutes would also contain the presentations of the various papers 
circulated and the statements by international or ganisations, as well as interventions that delegations 
had asked to be placed on record.   
89. He said that the Council would revert to this ite m at its next meeting, when it would address:  
financial services;  mode 3;  accountancy services;  and education services.  For those topics, the 
following organisations, which were not observers  to the Council, had produced relevant and 
interesting work that they could helpfully shar e with Members:  the OECD, the International 
Federation of Accountants (IFAC), the Interna tional Accounting Standards Board (IASB), UNESCO 
and the International Association of Universities.  In line with previously adopted practice, he would 
be inviting them to the next meeting of the Counc il to offer their contributions.  Delegations would 
also be able to revert to the sectors discussed at that meeting. 
90. In light of the fact that financial services were  going to be addressed at the next meeting, the 
representative of South Africa  asked if the representatives from the IMF and the World Bank would 
also be invited to the meeting.  The Chairperson  replied that as these two organisations were already 
observers to the Council, they would be au tomatically invited to attend the meeting. 
D. OTHER BUSINESS 
91. The Chairperson  recalled that, in accordance with th e Guidelines for the Appointment of 
Officers to WTO Bodies (WT/L/510), the outgoing chairperson of the Council would normally conduct consultations on the appointment of the new chairpersons of its subsidiary bodies, with a 
view to proposing a list of names to these bodies.  He announced that he intended to conduct such 
consultations in the weeks that followed.  Delegations  interested in the matter would be provided with 
a schedule of when the Chairperson would be ava ilable for consultations after the meeting of the 
General Council on 22-23 February. 
92. In accordance with the rules of procedure (S/L/ 15), the election of the new chairpersons of the 
subsidiary bodies to the Services Council should norma lly take place at the first meeting of the year 
and should take effect at the end of that meeting.   Since the subsidiary bodies had held their first 
meeting of the year over the previous 10 days , before the Chairperson could undertake the 
abovementioned consultations, he indicated that the election of the new chairpersons to the subsidiary 
bodies would take place at the beginning of the next meeting of those bodies. 
93. The representative of Australia
 said that her delegation remained concerned that more than 
three years since the European Union had notified the certification of the EC-25 schedule, this had 
still not entered into force.  Her delegation was one  of a number of affected Members with whom S/C/M/97 
Page 14  
 
  compensation arrangements had been agreed.  From her delegation's perspective, a delay of unknown 
duration was unacceptable and undesirable on both sy stemic and commercial grounds.  She called on 
the European Union and its Member States to expedite  the entry into force of the amended schedule of 
commitments, and sought an update on progress to that end. 
94. The representatives of Brazil
, India , Japan , Canada , South Africa  and China  supported the 
statement made by Australia. 
95. The representative of the European Union  indicated that, at that point, 16 EU Member States 
out of the 25 concerned had completed their nationa l ratification procedures.  These were:  Austria, 
Germany, Denmark, Finland, Hungary, Greece, Latv ia, Lithuania, Malta, the Netherlands, Poland, the 
Slovak Republic, Slovenia, Spain, Sweden and the United Kingdom. 
96. The Council took note of the statements made. 
E. APPOINTMENT OF THE NEW CHAIRPERSON 
97. The Chairperson  noted that the Chairperson of the General Council had started consulting 
delegations on the appointment of the Chairpersons  for 2010.  As those consultations were still on-
going, he suggested that the Council postpone the el ection of the new Chairperson of the Council for 
Trade in Services to the beginning of its next formal meeting. 
98. It was so agreed . 
99. The meeting was adjourned . 
__________