RESTRICTED  
 WORLD TRADE  
ORGANIZATION  S/C/M/80 
17 October 2005 
 ( 05-4711 ) 
  
Council for Trade in Services  
 
 
 
REPORT OF THE MEETING HELD ON 23 SEPTEMBER 2005 
 
Note by the Secretariat1 
  
1. On 23 September 2005, the Council for Trade in Services held a meeting chaired by 
Ambassador Claudia Uribe (Colombia).  The agenda  for this meeting was contained in document 
WTO/AIR/2656.  The Chairperson
 suggested that the agenda be adopted as circulated.   
2. The Council so agreed . 
A. ANNUAL  REPORT  OF THE  SUBSIDIARY  BODIES  TO THE  COUNCIL  FOR  TRADE  IN 
SERVICES 
3. The Chairperson  stated that, in accordance with WT O reporting procedures, the Council for 
Trade in Services was to consider the annual reports of its subsidiary bodies.  She drew the Council's 
attention to the following reports which had been adopted by the respective bodies during the course 
of the week: the Report of the Committee on Trade in Financial Services (S/FIN/14); the Report of the 
Committee on Specific Commitments (S/CSC/11); th e Report of the Working Party on Domestic 
Regulation (S/WPDR/8); and the Report of the Working Party on GATS Rules (S/WPGR/15).  The 
four reports were purely factual and self-explanator y.  She suggested that the Council take note of 
these reports on the understanding that they would be  annexed to the annual report of the Council and 
form an integral part of it. 
4. The Council so decided . 
B. ANNUAL  REPORT  OF THE  COUNCIL  FOR  TRADE  IN SERVICES  TO THE  GENERAL  
COUNCIL 
5. The Chairperson  reminded Members that in accordance with WTO reporting procedures, the 
Council for Trade in Services was to report every ye ar to the General Council on the activities in the 
Council, as well as in the subsidiary bodies.  She drew the Council's attention to the draft 2005 
Annual Report of the Council for Trade in Servi ces, contained in document S/C/W/264.  This Report 
was factual and self-explanatory, and the annual repor ts of the subsidiary bodies would be annexed 
for submission to the General Council.   She proposed  that the Council for Trade in Services adopt the 
draft Annual Report to the General Counc il, as contained in document S/C/W/264. 
6. The Council so decided . 
                                                      
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/80 
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 C. TRANSITIONAL  REVIEW  UNDER  SECTION  18 OF THE  PROTOCOL  ON ACCESSION  
OF THE  PEOPLE'S  REPUBLIC  OF CHINA 
7. The Chairperson  recalled that Section 18 of the Accession Protocol of the People's Republic 
of China provided for an annual review of the implementation by China of the WTO Agreement and 
of the related provisions of China's Accession Protocol.  The Committee on Trade in Financial 
Services and the Council for Trade in Services were tw o of the bodies in which this Review was to be 
conducted.  When concluding its review, the Committ ee on Trade in Financial Services was to submit 
a report to the Council, which would form part of  the Council's report to the General Council. The 
General Council would conduct its ow n review. She noted that the Co mmittee on Trade in Financial 
Services had conducted and concl uded the transitional review under Section 18 of China's Accession 
Protocol on Monday 19 September 2005, and that a re port had been submitted by the Chair of this 
Committee, contained in document S/FIN/15.  She proposed that the Council take note of the report 
from the Committee on Trade in Financial Services on the understanding that it would form part of 
this Council's report to the General Council. 
8. The Council so decided . 
9. The Chairperson  drew the Council's attention to a Communication by China, contained in 
document S/C/W/267, providing information required by Annex 1A of China's Accession Protocol. 
10. Turning to the review by the Council, she said that the Council would follow the same 
procedure as the one used in the previous reviews.  She would first invite China to respond to the 
comments and questions contained in the co mmunications from the European Communities 
(S/C/W/259), the United States (S/C/W/261), Japan (S/C/W/263), Chinese Taipei (S/C/W/265) and 
Australia (S/C/W/266).  Members would then ma ke comments and pose additional questions, and 
China would have the opportunity to respond. 
11. The representative of China  stated that, since the conclusi on of the previous transitional 
review, China had implemented several rules and regulations facilitating liberalization in service 
sectors, which included the Administrative Measures on Foreign Investment in Lease Industry; 
Implementing Measures on the Administration of Automobile Brand Sale; Amendment to the 
Provisional Rules on the Establishment of Fo reign Holding and Wholly Foreign-owned Travel 
Agencies, etc.  He underlined that these rules and regulati ons were in conformity with China's WTO 
commitments, but also contained some voluntary li beralization measures in some sectors, such as 
tourism, which showed that China took a positive  attitude towards market opening in services.  He 
indicated that, as China implemented its commitmen ts, the volume of its services trade had been 
growing.  In 2004, China’s total import and export of services had reached USD 129 billion, which 
made China the 9th biggest  services economy in the world.  More specifically, in 2004, China’s total 
import of services had reached USD 70 billion, an d its total exports of services USD 59 billion, 
respectively representing an increase of 30 per cent a nd 31 per cent, as compared with the previous 
year.  China, thus, had a trade deficit of USD 11 billion in services in 2004, which represented an 
increase of 12 per cent compared with the previ ous year.  These statistics could serve as a strong 
testimony to the level of libera lization of China’s services market.  In 2005, four years after its 
accession to the WTO, China had seen a moderate grow th of FDI in services.  From January to July 
2005, 4,006 new foreign services enterprises had been  established in China, representing an increase 
of 3.17 per cent compared with the same period of 2004;  this represented a total of USD 6.499 billion 
being actually realized in services sectors, accounting for 19.46 per cent of the total FDI realized in 
China during this period.  More specifically, in distribution services, 414 foreign projects had been 
established by the end of August 2005, with fore ign investments reaching USD 966 million and a total 
of USD 314 million actually being realized.  In le gal services, China’s Ministry of Justice had 
approved 75 new foreign law firms to set up represe ntative offices by September 2005;  these firms 
came from various WTO Members, such as the US, EC, Singapore, Japan and Korea.  In accounting  S/C/M/80 
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 services, since its accession to the WTO, China had approved the establishment of 18 foreign 
accounting firms or branches.  In medical services,  from China’s accession to the WTO till July 2005, 
China’s Ministry of Health had approved the establishment of 61 Sino-foreign equity or contractual joint venture medical programmes.   China’s efforts in implementing its WTO commitments and in 
expanding liberalization in almost all services sector s had been broadly recognized and appreciated by 
foreign investors and WTO Members.  Members c ould get more information by referring to the 
notification submitted by his delegation pursuant to  Annex 1A of China's Protocol of Accession.  
12. With respect to questions relating to legal services , the representative of China first addressed 
the concern expressed over one of the conditions imposed  on foreign law firms, i.e. “the need to start 
legal services operation” (paragraph 4 (a) of the Co mmunication from the EC).  This requirement had 
taken into account two factors.  The first one was the principle of prudence.  Profound expertise and 
experience in legal services were necessary for the protection of customers’ rights and interests.  
Therefore, it was important to test whether fore ign law firms could provide high quality services to 
clients in China by comparing their qualifications, legal practice history and field, as well as professional capability.
  The second factor was related to differe nt economic development levels and 
the actual receptivity for legal services in China.  China was a developing country with imbalances in 
terms of economic growth and leve l of legal services among different  areas and regions.  Moreover, 
the overall legal services market in China had yet to mature, market order needed to be straightened 
out, and a sound service mechanism had yet to be est ablished.  He stressed that taking these factors 
into consideration reflected China's responsible attitude. 
13. The 9-month duration required for the approval procedure was calculated on the basis of the 
actual time needed to complete the whole examination and approval procedure for the establishment 
of a representative office. Although the Provisional Regulations on the Establishment of Foreign Law 
Firms’ Representative Offices in China, promulgated in 1992, had provide d for a period of sixty days, 
the time required for pre-examination formalities had been in fact much longer.  The 9-month 
duration required in the Regulations on Administration of Forei gn Law Firms' Representative Offices 
in China  covered both the time needed to process appli cations, starting from the receipt of application 
documents, and the time required for pre-examin ation formalities. The latter referred to the 
examination of the completeness and authenticity of application documents, confirmation of the 
validity of qualifications and certificates, issu ance of notices for supplementary documents, and 
verification of the notarization and accreditation of relevant documents. 
14. Concerning the requirement that representativ e offices of foreign law firms established in 
China were to practice three consecutive years befo re establishing any additional office, he indicated 
that Chinese law firms intending to establish any additional office were even required to have 
practiced for four consecutive years before applica tion.  The 10-year history of representative offices 
of foreign law firms doing legal business in China showed that it normally took about 3 years for a 
representative office to get a license, open a business a nd regularly run the office.  Foreign law firms 
needed a transitional period before setting up any additi onal office.  As a matter of fact, a number of 
representative offices could not explore or expand businesses after their establishment, and some of 
them even kept doors closed for a long time.  But even so, many of them still applied for the establishment of additional offices.  He concl uded that the “3-year requirement” was not a 
quantitative limitation, but an administrative measure.  
15. With respect to the definition of "Chinese la w practice", he referred to Article 15 of the 
Regulations on Administration of Foreign Law Firms' Representative Offices in China , which 
prohibited representative offices of foreign law firms from engaging in Chinese legal affairs.  In accordance with the Implementing Rules , "Chinese law practice" included six types of activities.  This 
definition was based on the following points.  Firs t, China's specific commitments on legal services 
(CPC 861) excluded Chinese law practice.  The Regulations  and the Implementing Rules  had been 
formulated accordingly.  Second, to ensure th e quality of legal services, it was common practice for S/C/M/80 
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 most countries that only certified lawyers were a llowed to provide legal services, and only in the 
countries where they had obtained their certificates.  Third, taking into consideration the common 
practice of international legal services, as well as China's actual need for high-quality foreign legal 
services, “Chinese legal affairs” were defined with in a specific scope and representative offices of 
foreign law firms and foreign lawyers were allo wed to provide services related to international 
conventions, international practic es, international business operation and foreign law for a case under 
the jurisdiction of Chinese law. 
16. Concerning the meaning of "providing info rmation on the impact of the Chinese legal 
environment", he cited Article 33 of the Implementing Rules , which stipulated that, when requested to 
provide information on the impact of the Chinese le gal environment, representative offices of foreign 
law firms were not allowed to provide opinions or certification on the application of Chinese law in 
any specific case in China.  China's schedule of co mmitments did not cover Chinese legal affairs.  
Some representative offices and their lawyers introduced the Chinese legal environment to non-
regular clients free of charge so as to expand their business influence.  This practice was tolerated in 
China.  However, when providing information on the impact of the Chinese legal environment, 
foreign lawyers and their representative offices were  not allowed to provide  specific legal opinions 
and/or certification with regard to the application of Chinese law.  This requirement was consistent 
with China's commitments in legal services.  Fo reign lawyers in China were widely invited to 
comment on this issue and their common understanding was that information on the impact of the 
Chinese legal environment did not include the interpretation of Chinese law. 
17. Turning to telecommunication services , he stated that China had issued and implemented 
relevant laws and regulations, such as the Decision on Maintaining the Safety of Internet by the 
Standing Commission of the NPC , Telecommunication Regulations of China , Measures on the 
Administration of Intern et Information services  and Measures on the Administration of Foreign 
Invested Telecommunication enterprises .  These legislations had provided legal guarantee for market 
opening and fair competition in telecommunicatio n services.  All the application procedures were 
open and transparent, and no add itional requirements would be imposed on operators, except those 
stipulated in the relevant legislations.  He st ressed that China had fu lfilled the licensing approval 
procedures for foreign telecommunication enterpri ses, in accordance with its WTO commitments and 
aforementioned laws and regulations.  While noting that the Telecommunication Law  had been 
submitted to the State Council for review in August 2004 and that the legislative process in this regard 
had been accelerated recently, he pointed out that China would carry out this process in light of its 
Legislation Law . 
18.  On the resale of telecommunication services, he referred to the Notes for Scheduling Basic 
Telecom Services Commitments (S/GBT/W/2/Rev.1), which specified  that “unless otherwise noted in 
the sector column, any basic telecom service liste d in the sector column may be provided on a 
facilities basis or by resale.” China believed that “resale” was only a form of service provision, not a 
concrete telecommunication service, and, thus, had not inscribed an item “resale” in its schedule. 
Therefore, not listing "resale" as a kind of telecommunication service was completely consistent with 
China’s commitments and relevant WTO disciplines.  China’s policy with regard to resale was clear:  
there was no separate license for “resale” of teleco mmunications services.  After obtaining the license 
for operating basic telecommunications, an operator could freely choose the form of service provision, 
either through constructing its own basic infrastructure or through “resale” by leasing the facilities 
from other operators. 
19. With respect to interconnection, he stated th at seven types of telecommunication networks 
were currently subject to supervision in Chin a.  These networks included fixed local telephone, 
domestic long distance telephone, internationa l telephone, IP telephone, land cellular mobile 
communication, satellite mobile communication, an d internet backbone among China Telecom, China 
Netcom, China Mobile, China Unicom, China Sate llite, and China Tietong.  Interconnection relating  S/C/M/80 
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 to the leased circuit, frame relay and IP-VPN was not within the sc ope of interconnection supervision 
in China.  The Regulation on the Interconnections betw een Public Telecommunication Networks  
clearly specified network functions, equipmen ts, interconnection obligations, the setting of 
interconnection points, apportionment and clear ance of interconnection fees, interconnection 
agreements, and time limits for interconnection.  Th is regulation also ensured the transparency of 
interconnection arrangements in China. 
20. He indicated that China had not committed to open its internati onal telecommunication 
gateways.  All the international telecommunication se rvices were to be carried out through gateways 
established upon approval by telecommunication authorities in China.  
21. Concerning capital requirements on basic telecommunication services, he stressed that the 
minimum registered capital requirement fo r foreign enterprises, as specified in the Regulations on the 
Administration of Foreign-i nvested Telecom Enterprises,  was the same for domestic enterprises.  
Therefore, this requirement was in line with the pr inciple of national treatment.  Construction of the 
telecommunication network involved huge investment s due to the broad territory and large population 
of China.  According to preliminary data of Ch ina's telecommunication services market, the minimum 
investment required for constructing the network and operating basic telecommunication services was 
200 million RMB within a province (or autonomous region or municipality), and 2 billion RMB across provinces;  the minimum investment requi red for operating value-added telecommunication 
services was 1 million RMB within a province (o r autonomous region or municipality), and 
10 million RMB across provinces.  These data cons tituted the basis for determining the minimum 
registered capital requirement for telecommunication enterprises. 
22. Concerning the choice of partner, he explained that the Regulations on the Administration of 
Foreign-invested Telecom Enterprises  had taken into consideration complicated technology needs and 
rapid developments of new services in the te lecommunication sector when establishing relevant 
requirements on the major Chinese investor of  foreign enterprises engaging in basic 
telecommunication services.  These requirements aime d at promoting the protection of investors and 
consumers, and to ensure the healthy developm ent of telecommunication services in China.   
23. Regarding the telecommunication regulatory au thority, he indicated that China had 
established the Ministry of Information Indus try in 1998 as its telecommunication regulator,  thereby 
strictly following the requirement of an independent  regulator stipulated in the Reference Paper.  
China saw no need or possibility to create a second regulator outside the Ministry of Information 
Industry.  Under the leadership of the Ministry of Information Industry, local telecom authorities 
carried out supervision and administration duties in the telecommunication sector within their 
governing areas, in accordance with the Telecommunication Regulation  and other relevant laws and 
regulations.  With respect to whether China would further liberalize its telecom sector in the ongoing 
services negotiations, he recommended that Members consult with China's services experts in the 
appropriate forum, as the TRM was not the right instrument to address this issue. 
24. On construction and engineering services, he stated that the Ministry of Construction and 
the former MOFTEC had promulgated the Management Regulations on Designing Enterprises for 
Foreign Funded Construction Projects  (Decree No. 114) in September 2002, which set out 
establishment standards, as well as approval and in specting procedures for designing enterprises in 
foreign-funded construction projects.  Decree No. 114,  which had been established in light of China’s 
actual designing market and the need for furt her opening-up, was consistent with China's 
commitments, and there was currently no plan to  revise it.  Many countries, including the United 
States, applied an individual practice certificat e system without imposing requisitions on the 
qualification of enterprises and only those certified in their own countries had the right to sign on the 
design plan.  In accordance with China's commitments, foreign desi gning enterprises were allowed to 
establish in China within three years after China' s accession to the WTO.  Market access requirements S/C/M/80 
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 were the same for their domestic counterparts, ex cept those regarding the number and the duration of 
residency for foreign services providers.  At the same time, the designing of construction projects 
could be provided across borders and foreign servi ces providers, thus, could cooperate with Chinese 
designing enterprises.  China was currently working on the Detailed Implementation Rules  for Decree 
No. 114 to review the requirement on the proportion of foreign staff.  
25. Referring to the Regulations on the Management of Foreign-funded Urban Planning Service 
Enterprises  (Decree No. 116), he indicated that foreign urban planning service organizations seeking 
to provide urban planning  consultative services in China were to establish an agency in China’s 
territory;  the foreign staff in such agency were to account for no less than 25 per cent of the total 
staff.  This requirement was currently under review as well.  
26. In response to the questions regarding Decr ee No. 113 and the abolished Decree No. 32 
(paragraph 12 of the communication from Japan), the representative of China stated that China had 
undertaken commitments on three types of commercia l presence in construction services:  wholly 
foreign-owned enterprises, China-Foreign Joint Ve ntures, and China-Foreign Cooperatives.  There 
was no commitment on the project-contracting services directly provided by foreign enterprises.  Prior 
to China’s accession, an agreement had been reach ed between China and WTO Members, including 
Japan, to abolish Decree No. 32 of the Ministry of Construction.  And this agreement had been 
faithfully reflected in the negotiations memora ndum.  Decree No. 113 had been implemented in 
accordance with China’s commitments  in construction services.  Certain restrictions on foreign 
construction enterprises had been eliminated 2 year s ahead of China’s commitments.  For example, 
the registered capital requirement for China-forei gn construction joint ventures or cooperatives was 
not necessarily higher than that for domestic enterp rises, and wholly foreign-owned enterprises were 
allowed to set up.  Therefore, China's construction market had been further opened up.  In accordance 
with Decree No. 113, certified foreign investors pursuing project contracting within the Chinese 
territory would enjoy national treatment.  The regula tions on the four types of construction projects 
undertaken by wholly foreign-owned enterprises were made in accordan ce with China’s WTO 
commitments as well.  The requirements regardi ng the registered capital of foreign-invested 
construction enterprises and the number of financial or technical managers of the project were part of 
China's licensing requirements applicable to a ll enterprises applying for construction licenses, 
including domestic enterprises.  In order to gua rantee the legal rights and interests of project 
contractors within the territory of China, the Mini stry of Construction and the Ministry of Commerce 
had promulgated relevant documen ts facilitating foreign construction enterprises to fulfil licensing 
requirements and procedures.  First, a forei gn enterprise having received approval for project 
contracting could directly apply for the corresponding  construction enterprise license.  Second, project 
managers and financial or technical managers m eeting education or experience requirements could 
apply for corresponding certifications.  Third, fo reign enterprises could submit their overseas project 
performance report as the declaration of qualification.   Fourth, the implementation of Decree No. 113 
was subject to a relatively long interim period allo wing foreign enterprises to be established.  The 
Ministry of Construction and the Ministry  of Commerce had jointly promulgated the Circular on 
Several Issues about Qualification Management  of Foreign-Funded Construction Enterprise  (Jianshi 
[2004] No.159) in September 2004, which had exte nded such interim period until 1 July 2005.  
27. He indicated that the residency requiremen t for foreign staff in foreign construction 
enterprises established in China corresponded to ente rprises’ operational needs in this sector.  Given 
the special characteristics of engineering constructi on projects, managers of such projects needed to 
be available for management activities at any time,  so as to guarantee the quality and safety of the 
projects, and to ensure that the design and technolog y would meet the needs of the projects.  Foreign 
project managers needed to ensure that they could spend sufficient time on project management.  
  S/C/M/80 
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 28. Turning to computer and related services , the representative of China stated that his 
country's schedule clearly specified the telecommuni cation services and computer and related services 
that were committed.  China would strictly follo w its commitments and WTO rules.  The issue of 
overlapping between telecommunication services, on the one hand, and computer and related services, 
on the other, was currently under discussion among WTO Members;  those services whose 
classification was unclear were subject to Member s’ own regulations.  China had established its 
classification catalogue for telecommunication services.  The current services negotiations were based 
on the Services Sectoral Classification List of th e WTO, but Members could discuss the issue of 
classification during bilateral market access negotiations. 
29. On distribution services , he stated that China was tryi ng its best to secure a smooth 
transition as its commitments in this sector woul d be phased in by January 2007, and his country 
would strictly follow its commitments in opening this sector.  His delegation intended to address the 
question of trading and distribution of books, ne wspapers and magazines under the TRM agenda item 
in the Committee on Market Access.  With resp ect to direct selling, he stated that the Decree of Direct 
Sales  had been approved and issued by the State Co uncil in September 2005.  Competent authorities 
had undertaken a wide public comment solicitin g process through different channels, including 
seminars or symposiums in Xiamen City, in 2 003 and 2004.  Stakeholders, including foreign 
enterprises, had been involved.  The Decree of Direct Sales  had been revised, based upon written 
feedbacks from stakeholders, some of which were US companies, such as Amway.  The promulgation 
of the Decree of Direct Sales  had won the applause of both dom estic and foreign companies, 
including US companies.  Concerning franchising, he indicated that the MOFCOM had issued the 
Rules on the Administration of Commercial Franchising  on 31 December 2004, which specified the 
rules for foreign investors to engage in franchising activities.  The Decree on Commercial 
Franchising  was under drafting and the MOFCOM would amend the Rules on the Administration of 
Commercial Franchising  in light of the Decree on Commercial Franchising . 
30. With respect to tourism , and more particularly the establishment of branches of foreign travel 
agencies, he stated that China would continue to  implement its WTO commitments.  However, this 
did not mean that China had to start making an y laws and regulations in this regard.  The 
interpretation that some Members made of China’ s response at the previous TRM was inaccurate.  
China would make a prudential study on the tim eframe for removing the restrictions on the 
establishment of branches of foreign travel agencies.   The State Travel Bureau and the MOFCOM had 
amended the Provisional Rules on the Establishment of Foreign Holding and Wholly Foreign-owned 
Travel Agencies in 2005, which stipulated that the register ed capital for the establishment of a foreign 
holding or wholly foreign-owned travel agency w as to be no less than 2.5 million RMB.  Geographic 
restrictions on the establishment of such agencies had been removed two years earlier than China's 
GATS commitments. 
31. Concerning  express delivery services , he said that most posts reserved monopoly in letter 
services in order to guarantee universal postal service and to protect citizens’ right of communication.  
The scope of postal monopoly differed from country to  country, reflecting various circumstances and 
different levels of economic development.  Chin a would fulfil its WTO commitments and take into 
consideration the successful experience of other Me mbers when defining the scope of its postal 
monopoly.  As the State Council had approved the plan of the postal system reform, China Post had 
begun to undertake reforms vigorously and stead ily, including separating the regulatory and 
operational functions, and setting up the National Post al Regulatory Authority.  These reforms would 
ensure that postal enterprises provided universal postal service, and that the postal market was 
regulated.  Express delivery services would be  opened up and fair competition assured.  
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 32. He noted that several questions  had been raised regarding transport services .  With respect 
to freight forwarding agency services, he referred to the Notice on Simplification of Entrustment 
Procedures for International Freight Forwarding Agent Enterprises  (Guo You [2002] No. 556), 
issued by the National Postal Bureau in 2002, whic h required the validity period of the agency license 
and the agency scope to be in line with what  was approved by the MOFTEC.  In 2004, the State 
Council had abolished the MOFCOM (former MOFTEC)’s authority to  approve the establishment of 
an international freight forwarding agent enterprise.   The fact that China had made commitments on 
freight forwarding agency services under the sub-sector  heading of "Services Auxiliary to All Modes 
of Transport" did not mean that air freight forwar ding agency services were automatically included.  
So far, Members had agreed that only three sub-sector s in air transport services (i.e. aircraft repair and 
maintenance services, selling and marketing of air transport services, and computer reservation system services) were covered under the GATS.  Paragraphs 62 and 63 of document S/C/W/59, 
prepared by the Secretariat for the Review of air tr ansport services, stated that it was not clear whether 
freight transport agency services (CPC 748) were dir ectly related to the exercise of traffic rights.  
Moreover, at the meeting of the first review on air transport held on 4 December 2000, with respect to 
the criteria for defining “services directly related to the exercise of traffic rights”, the United States 
had stated that “the test that had to be used was what was necessary for the exercise of bilateral rights, 
not what services were bilateral rights necessary for” (paragraph 104 of document S/C/M/50).  China 
thought that, in the light of the criteria suggested by the United States, air freight forwarding agency 
services were directly related to the exercise of traffic rights and not c overed under the GATS;  
therefore, they were exclud ed from China’s commitments. 
33. Responding to the question raised by Japan on the ferry service between Shanghai and 
Shimonoseki, the representative of China recalled that the Chinese and Japanese maritime authorities 
had signed the Agreed Minute  in 1985, which had made a special arrangement for ferry services 
between China and Japan to be operated by Ch inese and Japanese shipping companies.  This Agreed 
Minute  was still in force and required that the launc hing of a new ferry service between China and 
Japan be agreed upon by the two parties.  When China’s Ministry of Comm unications examined the 
application for the ferry service between Shanghai and Shimonoseki, both the Regulations on 
International Maritime Transportation of China  and the Agreed Minute  had been taken into 
consideration.  China’s Ministry of Communications had also informed the applicant and the Japanese 
maritime authority that both the Regulations on Internati onal Maritime Transportation  and the 
Agreed Minute  needed to be observed.  China’s Ministry  of Communications had asked the applicant 
to fulfil the required procedures.  China had comp letely fulfilled its GATS commitments.  The ferry 
service between Shanghai and Shim onoseki was based on a special a rrangement between China and 
Japan, and was not an issue of implementing WTO commitments by China. 
34. Concerning the requirement of "the existence of a scheduled entering of a port where the 
wholly foreign-owned shipping company is planned to be located" (see Communication by Japan),  he 
referred to the Interim Provisions on the Examination and Approval of Wholly Foreign-owned 
Shipping Companies .  This requirement had taken into account  the fact that wholly foreign-owned 
shipping companies mainly provid ed services such as cargo soliciting, issuance of bills of lading, 
settlement of freight, and signing service contract s for parent companies’ vessels visiting Chinese 
ports.  If a parent company had business in the inner part of China, it could entrust Chinese shipping 
companies to provide the above-mentioned services.  Thus, there was no barrier to supplying services 
to customers residing in the inner part of China.   Some Japanese shipping  companies had established 
wholly-owned container consolidation service comp anies in China, which could provide services to 
their customers in the inner part of China. 
35. On the issue of Computer Reservations Servi ces (CRS), he indicated that the Chinese 
Administration of Civil Aviation (CAAC) had drafted the  Regulation on Ratifying Agents of Foreign 
Aviation Enterprises Access to Fo reign Computer Reservation Systems  in light of China’s 
commitments in air transport services. The CAAC had even invited some foreign computer  S/C/M/80 
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 reservation services (CRS) providers, such as Amadeu s and Abacus, to participate in a consultative 
meeting in early September 2005 in Beijing to co mment on this Regulation. The CAAC was also 
drafting the Code of Conduct for Computerized Reservation Systems  with a view to creating an 
environment for fair competition in civil aviation . 
36. While recognizing that China’s statement had answ ered most of the questions raised by her 
delegation, the representative  of the European Communities  indicated that some questions remained 
to be clarified, in particular concerning legal services.  In the view of her delegation, several 
requirements imposed on foreign law firms were eq uivalent to an economic needs test, though her 
delegation understood China’s legitimate concerns rela ted to the quality of legal services.  She asked 
China when it intended to remove these requireme nts in accordance with its commitments under 
GATS Article XVI, which prohibited a Member from maintaining ENTs, unless otherwise specified in its schedule.  With regard to telecommunications , her delegation noted that for the establishment by 
foreign investors of joint ventures in the basic tel ecom sector, there was a requirement to venture with 
a main Chinese partner in this sector.  This requireme nt appeared to be in contravention with China's 
commitments set forth under the Working Party Re port, and she asked when China would bring its 
legislation in line with its WTO commitments.  On tourism, she noted that Article 11 of the 
Regulations on Administration of Travel Agencies  established an ENT which was not reflected in 
China's schedule, and she enquired when China would align this legislation with its GATS 
commitments.  Noting that China’s postal refo rm plan had been adopted, she asked when WTO 
Members would receive the information on this plan. 
37. Noting that this was the fourth annual transiti onal review for China, the representative of the 
United States
 stated that such review continued to be a ve ry useful mechanism, particularly in the area 
of services where a lot of China’s commitments were  still to be phased in.  Through the transitional 
review, Members could take the opportunity to seek clarifications from China on its policies and 
practices, and China could in turn provide explan ations and prevent misunderstandings that might 
lead to trade questions. This was also a foru m for Members to convey to China what their 
expectations were with regard to China's impl ementation of its WTO commitments.  His delegation 
appreciated China for having provide d detailed responses.  His delega tion's questions concerned five 
areas including distribution services, express delivery services, telecommunications services, 
construction services and legal services.  On distribution services, he noted that China’s markets were 
fully opened, as China had phased in its commitmen ts in December 2004, and that China’s Ministry 
of Commerce was trying to address problems initia lly arising from setting up a new system.  Several 
guidelines had been issued during the last months, and hopefully this effort  would facilitate a full 
implementation of commitments in this area.  Howe ver, his delegation still had some concerns on this 
sector, in particular concerning direct selling.  As to  the two sets of regulations (one on direct selling, 
the other on anti-pyramid schemes) circulated by  China after the United States had submitted the 
TRM questions, he stated that his delegation understood China’s concern on pyramid schemes.  
However, one provision in the regulations on anti-pyramid schemes would outlaw practices used by 
the US industry in 170 countries where it operated around the world.  This provision would not allow 
compensation based on sales as a team where the upstream personnel were compensated based on 
downstream sales.  His delegation hoped that China c ould revise this provision to allow this kind of 
compensation, while at the same time still be able to address its legitimate concerns.  There were two 
other provisions in the regulations on which hi s delegation had concerns.  One was the 3-year 
experience requirement that was only applicable to foreign firms.  The other was the capital 
requirement which, to his delegation’s view, was too high, as in other sect ors.  Another question 
regarded the distribution of books, newspapers and periodicals, which, he understood, had two 
components. First, it was about the right to im port books, newspapers and periodicals.  Second, it 
related to the right to distribute these products thro ughout China once they were imported.  He noted 
that, as of December 2004, foreign firms were to ha ve the right to import all the products except those 
reserved for state trading listed in Annexes 2A a nd 2B.  Books, newspapers and periodicals were not 
included in those Annexes. While intending to submit questions regarding the right to import and S/C/M/80 
Page 10 
 
 
 export books, newspapers and periodicals in connection with th e transitional review before the 
Committee on Market Access, his delegation sought cl arifications in this Council on several measures 
that seemed unclear regarding the right to distribut e books, newspapers and periodicals after they had 
been imported.  Regarding telecommunication services , his delegation had raised a range of questions, 
such as high capital requirements, classification of basic and value-added telecom services, 
independent regulator, international gateways, choice of partner, and transparency issues. With regard 
to high capital requirements, although China pointed  out that they were in line with some other 
Members' practice, he stated that it was not the case in the area of telecommunications.  After a review of capital requirements in basic telecommunication services around the world, his delegation 
had found that there was no capital requirement in the United States, the Member States of the 
European Communities, Canada, Japan, Australia, Ar gentina, Brazil or Chile, and very low capital 
requirements in some other Members. For ex ample, Hong Kong only required a performance bond; 
India required a bank guarantee ranging from 5 to 80 million US dollars, depending on the geographic 
scope; Korea required 2.5 million US dollars of performance bond or bank guarantee; and Singapore 
required a performance bond, scaled according to busin ess scope.  Only one Member had maintained 
capital requirements comparable those in China, and this Member had been scaling them back.  
Another question his delegation had raised was ho w many applications for basic and value-added 
telecom services had been received by the Chinese re gulator and whether these applications had been 
approved or denied.  Noting that bilateral dialogue  had been created in telecommunications between 
the Chinese regulator and the US government, his government looked forward to addressing these and 
other issues in the dialogue.  On express delivery services, construction services and legal services, he 
hoped that China would take into account the concerns his delegation had expressed. 
38. Thanking China for having provided detailed r esponses, the representative of Chinese Taipei
 
noted that some of the questions raised by his delegation had been addressed.  His delegation 
recognized the efforts made by China over the past  few years to improve its business environment and 
to implement its WO commitments with a view to further integrating into the global economy.  His 
delegation wished to see China continue to carry out  further liberalization in the area of services and 
provide a greater degree of market access. 
39. While thanking China for giving detailed information, the representative of Japan  noted that 
some of the questions raised by his delegation had not been fully answered.  On legal services, 
echoing the statement made the European Communiti es, his delegation thought that the explanation 
provided by China seemed to be what the ENT stood fo r.  Such measures were not to be maintained, 
unless otherwise specified in the schedule.  On te lecommunication, despite China's explanation, his 
delegation did not think that inte rnational gateways were excluded from China's commitments.  His 
delegation would continue to request  China to comply with its commitm ents in this regard.  He sought 
clarifications from China on one issue regarding co nstruction services.  While noting that experience 
obtained outside China was taken into account re garding a new application for qualification or 
certificate, he wished to know wh ether this was still the case for renewal or reviewing of certificates.  
Concerning distribution services, his delegation foun d that China's licensing requirements were not 
transparent and needed to be improved.  As to the issue of international liner services between 
Shanghai and Shimonoseki, Japanese comp anies had to wait for a long time, even if they had fulfilled 
the required procedures.  He invited China to specify what had not been fulfilled by Japanese 
companies in this regard.  Apart from the above qu estions relating to individual sectors, his delegation 
wished to stress that market liberalization w as twofold, including both the establishment of a 
regulatory framework and the implementation of th e framework.  While Japan believed that China 
had made great efforts to establish a regulator y framework, Japanese business in China had made 
complaints regarding operational inconsistency with  Chinese laws and regulations. Therefore, Japan 
wished to emphasize the importance of implementati on of laws and regulations all over China.   
   S/C/M/80 
 Page 11 
 
 
 40. Thanking China for its detailed responses, the representative of Australia  stressed that the 
TRM was an important forum for clarifying China's trade practices of key interests to his country, 
namely telecommunications, legal services and constr uction services.  He indicated that the questions 
raised by his delegation were specifically related to China's implementation of its WTO commitments 
and that the WTO was the appropriate forum to as k such questions.  Nevertheless, his government 
would also be pursuing its commercial interest with China bilaterally in FTA negotiations. In 
responding to China’s responses, he wished to high light his delegation’s concern about the seeming 
economic needs test imposed through Clauses 1 and 2 of Article 4 of the Provisions on the Execution 
of the 'Regulation of Foreign Law Firms Representati ve offices in China' (Min istry of Justice Order 
No. 73 promulgated on 4 July 2002) .  Echoing the interventions by  the European Communities and 
Japan, he enquired whether any app lications for the establishment of  representative offices of foreign 
firms had been rejected as a result of failure to satisfy the above criteria since July 2002. 
41. In response to the question relating to appli cation status in legal services, as well as in 
telecommunication services, the representative of China  referred to the communication from his 
delegation, contained in document S/C/W/267.  Regarding the follow-up questions on some of 
China’s requirements on legal services, he reite rated that these requirements were based on the 
principle of prudence and took into account diffe rent economic developmen t levels and the actual 
receptivity for legal services in China.  China was st ill at the preliminary stage in terms of opening its 
legal services market and would continue to open.  However, his delegation could not agree that such 
requirements constituted an ENT.  Members shoul d study the detailed responses provided by his 
delegation and try to understand the particular s ituation that China, as well as other developing 
countries, were facing.  On telecommunication services, noting that the follow-up questions would 
involve very technical discussions, he suggested th at interested Members ta lk with Chinese telecom 
experts after the meeting.  China had made great e fforts to set up and complete its services regulatory 
framework since its accession to the WTO.  Referring to his introductory statement regarding foreign 
investments in services, he pointed out that all th ese figures and data could testify that China had not 
only fulfilled its WTO commitments by setting up and improving its regulatory framework, but also 
tried its best to enforce those commitments.  Ch ina’s achievements had to be recognized by other 
Members.     
42. The representative of the United States  sought clarifications from China on the issue of 
distribution of books, newspapers and periodicals.  He wished to know whether China was going to 
address this issue in the Committee on Market Access. 
43. The representative of China  reconfirmed that this issue would be addressed in the Committee 
on Market Access. 
44. The Chairperson  thanked China for its responses and sugg ested that, before moving on to the 
issue of the report to the General Council, the Coun cil take note of the statements made and conclude 
the fourth transitional review pursuant to  Section 18 of China's Accession Protocol. 
45. The Council so decided . 
46. Regarding the report to the General Council, the Chairperson  suggested that the Secretariat 
prepare a factual report stating that:  (i) pursuant to  Section 18 of the Protocol on the Accession of the 
People's Republic of China, at its meeting held on 23 September 2005, the Council for Trade in 
Services conducted the fourth transitional revi ew of the implementation by China of the WTO 
Agreement and of the related provisions of the Protocol; (ii) written communications had been 
received from five WTO Members, namely the Eu ropean Communities, the United States, Japan, 
Chinese Taipei and Australia;  (iii) the details of the discussion could be foun d in the meeting report; 
and (iv) the report (S/FIN/15) from the Committee on Trade in Financial Services  would form part of 
the Council's report.   S/C/M/80 
Page 12 
 
 
 47. The Council so decided . 
D. REVIEW  ON AIR  TRANSPORT  UNDER  ANNEX  ON AIR  TRANSPORT  – DISCUSSION  
ORGANIZATIONAL  MATTERS 
48. The Chairperson  stated that, in accordance with paragr aph 5 of the Annex on Air Transport, 
the Council for Trade in Services was to review periodically, and at least every five years, 
developments in the air transport sector and the opera tion of the Annex with a view to considering the 
possible further application of the Agreement in this  sector.  At the conclusion of the first Review, on 
24 October 2003, the Council had decided that th e formal commencement of the second Review was 
to take place at the last regular meeting of the Co uncil in 2005, which was this meeting according to 
the schedule.  Therefore, this item was include d in the agenda and the second Review formally 
started.  It would be reasonable for Members to first address organizational matters, such as the modality of the Review as well as preparatory work that might be undertaken by the Secretariat.  She 
recalled that she had held consultations on 28 July 20 05 to this effect.  With respect to the modality of 
the Review, the consensus resulting from the consu ltations was that the second Review was to be 
conducted in dedicated meetings w ith the participation of capital-b ased experts, following the practice 
of the previous Review. Regarding the preparatory wo rk, it had been agreed that the Secretariat was to 
update the background documents circulated for the fi rst Review.  However, some issues remained to 
be addressed regarding how to conduct this Review.  The first issue was whether the Council was to 
have a schedule for the Review.  She suggested that Members should try to decide the date of the first 
dedicated meeting.  Her proposal was that the first dedicated meeting of the Review take place during 
the first services cluster of 2006, back-to-back with the regular session of the CTS, i.e. probably in 
February or March of 2006.  The second issue was related to the background documents to be updated 
by the Secretariat:  she invited Members to discuss which subject matters these papers were to address 
and which form they would take. The third issue concerned what topics should be discussed during 
the second Review.  She recalled that in the previo us Review, Members had requested the Secretariat 
to establish a list of issues for their consideration.   This List, circulated as Job 2451 and dated 19 
April 2000, was entitled "Issues for possible consider ation in the Review of Air Transport".  Her 
understanding was that the List of Issues contai ned in Job 2451 remained valid, and, thus, she 
suggested that the Council proceed from the assumption that this list could be used as a starting-point 
for the discussion during the second Review.  She enquired whether delegations wished to include 
additional items in the List.  Before opening th e floor, she invited the Secretariat to provide 
background information regarding the documents prep ared by the Secretariat for the first Review. 
49. A representative of the Secretariat
 stated that the two documents  included in the package for 
this meeting, namely the List of Issues and th e list of background documents prepared by the 
Secretariat for the first review, were self-explan atory.  The core background documents were 
document S/C/W/163 and its six addenda, as well  as two executive su mmaries (S/C/W/200 and 
S/C/W/200/Add.1). Noting that document S/C/W/163 and its six addenda still retained high degree 
relevance for the second Review, he suggested it would be practical to consolidate all these 
documents in one package, and circulate them as a booklet.  The Secretariat would produce updates to 
these documents.  The updated documents would theref ore cross-refer to the relevant parts of the 
booklet, when needed.  The timeframe for updati ng the documents would depend on Members' 
decision on when to start the substantive discussion for this review. 
50. The representative of Japan  stated that the Review was to be  properly organized to avoid an 
unproductive discussion.  The first Review had taken three years, and its last two sessions had been 
held just to decide when to end the Review and wh en to start the next one.  Therefore, to discuss the 
timeframe and the agenda for each meeting in the first place was a possible solution to manage the 
Review effectively and efficiently.  After a d ecision was adopted on a timeframe, additional sessions 
could be organized, only when necessary and on a con sensus basis.  The purpose of the Review was, 
as stated in paragraph 5 of the Annex on Air Trans port, to review developments in the air transport  S/C/M/80 
 Page 13 
 
 
 sector and the operation of Annex.  Since air trans port services were developing drastically under the 
current civil aviation system, the development in this  sector was to be reviewed.  For this purpose, the 
Secretariat paper analysing air transport was essential and it was crucial to analyse it and discuss it extensively during the Review.  It would be inap propriate to prejudge the result of the Review.  
Assessment of developments in the air transpor t sector would be a basis for the discussion on the 
operation of the Annex.  The Review itself was not  a negotiation.  Given the special and technical 
nature of the sector, the participation of aeronauti cal authorities, as well as the ICAO, was necessary.  
ICAO was playing a significant role in the developmen t of the sector.  The further application of the 
GATS to air transport services would bring serious  and critical influence on aviation policies.  
Aeronautical authorities and ICAO that had expe rtise and responsibility on aviation issues had to 
participate in the discussion.   
51. The representative of New Zealand
 reiterated the points her delegation had made at the 
informal meeting held on 28 July 2005.  Her dele gation supported the proposal that the dedicated 
meetings of the Review be held back-to-back w ith the CTS regular session and that the first such 
meeting take place in February or March 2006.  It was crucial to update the documentation prepared 
by the Secretariat for the first Review.  She agr eed that the List of Issues contained in document 
Job 2451 remained valid.  In terms of areas to be updated in the documents, one specific interest to 
her delegation was general aviation, aero-fire fi ghting and developments in these areas. While 
agreeing with the point made by Japan that a proper organization of the Review was essential to 
ensure an effective and productive discussion, he r delegation could not accept the suggestion to limit 
the number of meetings.  It was inappropriate to pr ejudge the outcome of the Review at this stage. 
52. The representative of Korea  stated that his delegation shared a number of points made by 
Japan on organizational matters.  Members should focus the discussion on su bstantive issues, and 
therefore decide the timeframe for the Review and the number of meetings as early as possible.  His 
delegation supported the proposals that the first dedicat ed meeting take place during the first cluster of 
2006 and that the Secretariat update the background documents.  The participation of representatives 
from relevant international organizations, especia lly ICAO, was essential to provide more detailed 
information and to deepen the discussion.   
53. Supporting the launching of the second Revi ew, the representative of Australia  stated that 
paragraph 5 of the Annex indicated two specific elements on which the Review was to focus: 
developments in the air transport sector and the operation of the Annex.  This paragraph also 
established the objectives of the Review, namely "cons idering the possible further application of the 
Agreement in this sector".  The second Review o ffered WTO Members an opportunity to explore and 
commit further liberalization of ancillary air transport services in the GATS.  His delegation 
supported the Chairperson's proposal that the Revi ew be conducted in dedicated meetings back-to-
back with the regular session of the Council, and th at the first dedicated meeting take place during the 
first cluster of 2006.  There was no need at this stag e to attempt to fix the duration of the Review, nor 
the number of the meetings:  the Review was to c ontinue as long as the substantive discussion was not 
exhausted.  His delegation wished the Secretariat to  update the documentation on the first half of the 
mandate (developments in the air transport sector), and was also interested in additional work being 
undertaken on airfreight services, services to tourism destinations, air charter services.  While open to 
other Members’ suggestions, his delegation's chief in terest was to explore fully the second part of the 
mandate, i.e. the operation of the Annex with a view to considering the possible further application of 
the Agreement in this sector.  Noting that this ha d not happened during the first Review, he stressed 
that it was essential for the second Review to concentr ate on the second part of the mandate.  In this 
regard, he believed that part II of the List of Issu es continued to cover the key questions to which his 
delegation sought answers. His delegation looked forward to the commencement of the substantive 
discussion in early 2006 and would engage constructively.  S/C/M/80 
Page 14 
 
 
 54. The representative of the United States  stated that her delegation could agree on the proposal 
to continue to use the List of Issues.  Her de legation needed the full Secretariat documentation in 
order to engage in the substantive discussion.  Sh e was concerned that US experts would not have 
adequate time to prepare the firs t dedicated meeting if the documenta tion was available just before the 
first cluster of 2006.  She therefore suggested that Members consider having the first dedicated 
meeting during the second cluster of 2006 if the full  documentation could not be provided adequately 
before the first cluster of the year.  She shared the concern expressed by Japan about the protracted 
debate that had taken place in the previous Review  and about the time spent on deliberating when to 
close the Review.  Hence, a work plan for this Re view was needed, so as to have a clear idea on how 
and when to proceed in dedicated meetings.   Her delegation was interested in including an end-date 
in the work-plan upfront.  Noting that some delegati ons were concerned about the idea of an end-date, 
her delegation was open to any potential ideas on how to build necessary comfor t in the work-plan so 
as to avoid what had happened in the previous Re view.  The work-plan could include the number of 
dedicated meetings.  She reiterate d that her delegation could not s upport the proposal to hold the first 
dedicated meeting during the first cluster of 2006 without the full documentation ready well in 
advance.  Nor could her delegation support the plan without a clear idea on an end-date or a fixed 
number of dedicated meetings as one possible opti on.  Her delegation was open to any ideas that 
could provide necessary comfort.  For the Review to be valuable and to enable Members to fulfil the 
mandate, it was necessary to have  experts' participation.  
55. A representative of the Secretariat  recalled that, in the first Review, Members had picked up 
issues from the List to proceed with the discussion.   At the first dedicated meeting, Members had 
addressed items from (a) to (f) under Part I of the Li st.  If the first dedicated meeting of the second 
Review dealt with the same cluster of items, th e Secretariat could complete the documentation 
covering these items and circulate it by the end of Ja nuary 2006.  The Secretariat would also try to 
cover the following three items, from (g) to (i), in the documentation.  The remaining items on the 
List would be covered shortly after and the full do cumentation would be available well in advance of 
the second dedicated meeting.  He recalled that the Council had taken the decision, on 23 July 1998, 
to grant ad hoc  observer status to ICAO and ITU, which meant that they would be invited to the 
meetings of the Council whenever there was an agen da item relevant to their activities.  Therefore, 
ICAO would be invited to the dedicated meetings of the Review.  
56. The representative of Mexico  stated that his delegation shared several points made by the 
United States and Japan.  It was important to have a clear date for the conclusion of the Review.   
57. The representative of the European Communities  supported the proposal that the first 
dedicated meeting be held back-to-back with the C TS regular session in the first cluster of 2006.  The 
first nine items on the List of Issues would enable  Members to have a substantive discussion.  Her 
delegation opposed setting an end- date and believed that it was essential to have a productive and 
substantive discussion.  Her delegation did not wi sh to discuss the work-plan or the number of 
meetings, which would delay the substantive discussi on.  Also, her delegation wished to discuss the 
issues of charging policies of airport and rental leasing services. 
58. The representative of Chile  supported the proposal that the substantive Review start in the 
next cluster.  There was already a work-plan for this review, namely Job 2451.  Her capital was 
holding consultations to see whether other issues shoul d be raised.  It would be premature to decide 
now the number of meetings or when to conclude the Review. Her delegation hoped that the Review 
could meet its objectives and be as efficient and effective as possible. 
59. The representative of Switzerland  supported the statements made by Australia, New Zealand, 
the European Communities and Chile.  The idea of fixi ng the number of meetings or an end-date did 
not correspond to WTO practice.  Secretariat’s assi stance was very important and it should be given a 
broad mandate to update the background documents .  His delegation agreed that Job 2451 could be  S/C/M/80 
 Page 15 
 
 
 used as starting-point, including further items that might be proposed by other Members.  A full 
documentation did not need to be ready before the fi rst dedicated meeting, as the priority was to have 
a good and exhaustive documentation.  
60. The representative of China  stated that, when the first review had started in 2000, China was 
not yet a WTO Member.  Therefore, his delegation was glad to participate in the second Review to 
discuss the coverage of the Annex.  Noting that  the Chicago Convention on International Civil 
Aviation had covered air transport for more than 60 years, his delegation considered that Members 
needed to find out a way to establish a balance be tween bilateral and multilateral regimes.  While a 
schedule of meetings was necessary to facilitate the pa rticipation of air transport experts, it should be 
indicative only.  His delegation was flexible  concerning the details of the schedule. 
61. The representative of Canada  supported the proposal that the first dedicated meeting be held 
during the first cluster of 2006 on the understanding  that the documentation was received within a 
reasonable period of time to allow for review by  her capital and experts.  Her delegation supported 
any solution that would avoid the reoccurrence of the situation in the last two meetings of the first 
Review.  The Secretariat documentation would be f actual and would not touch upon the interpretation 
of current GATS coverage of the air transport sect or.  Any consideration relating to the further 
application of the GATS to the sector  was to await the conclusion of the first two parts of the Review.  
Her delegation could agree on the issues listed in Pa rt I and Part II:A & D of Job 2451, but did not 
support Part II:B because it involved the considera tion of services that were not identified in the 
Annex and, thus, were beyond the mandate of the Re view.  Her delegation could not support Part II:C 
either because it presupposed that Members had ag reed to develop additional disciplines under the 
GATS and it also involved the consideration of servi ces that were not identified in the Annex.  
Part II:C implied an assessment that would need to  be made by individual Members.  Members were 
free to submit negotiating proposals as they saw fit, but the determination that additional disciplines 
were required would be subject to negotiations. Her delegation could support a modification of 
Part II:C that was limited to "Identification of the possible need for clarified disciplines under the 
Agreement for services covered under A".  
62. Echoing the point made by the European Communities, the representative of New Zealand  
insisted that the Review should avoid a protracted  procedural debate and get to the substantive 
discussion as soon as possible.  She supported the Secr etariat's suggestion to begin with items (a) to 
(f) from Job 2451.  She sought further explanations fro m Canada on its view regarding Part II:B & C, 
which was different from her delegation's understanding.  
63. The representative of Trinidad and Tobago  supported any suggestion that would avoid 
reoccurrence of delay in the previous Review.  She sought clarification from the European 
Communities concerning the issues to be added to the List. 
64. The representative of Norway  supported the proposal that the first dedicated meeting be held 
in the first cluster of 2006.  He shared the statem ent made by New Zealand, and stressed a few points.  
First, the second Review was to be kept open a nd should not be limited to a specific number of 
meetings, although he agreed that the meeting schedule or the work-plan should ensure a broad 
participation of air transport experts.  Second, gi ven the profound changes in the air transport sector 
since the previous Review and the clear tendency to wards liberalization of air transport policies, his 
delegation held a firm conviction that only a thor ough discussion could facilitate the undertaking and 
fulfilment of the mandate.  Third, to meet this goa l, it was crucial that the Secretariat be free to 
prepare all the relevant background documents, inter alia , by updating the background documents.  
Finally, agreeing that it was premature to prejudge the outcome, he hoped that this Review could at 
least aim at including additional soft rights and that its focus was to be on the operation of the Annex. S/C/M/80 
Page 16 
 
 
 65. The representative of the United States  reiterated that her delegation needed to see the full 
documentation ready before engaging in the discussion on developments in the air transport sector.  
She indicated that each item included in Part I of the List was interrelated with the items in Part II.  
US experts needed to await all the information and de termine the level of substance they were able to 
engage in.  Her delegation had not  been able to engage appropria tely in the substance during the 
previous Review as the ordering of the items in th e List was rather random.  Therefore, her delegation 
was reluctant to proceed, unless they could receive the full documentation in advance.  Reiterating the 
need to have a schedule, she stated that her de legation would not accept any proposals that could not 
help avoid an open-ended review.  Her delegation was concerned about some Members' interest in an 
open-ended Review, and requested that her dele gation's concern be accomm odated.  Having taken 
note of the comments made by Canada regarding the List, she said that her delegation was also 
concerned about some items on the List, in particular  about the way Part II:C had been drafted.  Her 
delegation was open to Canada's suggestion with regard to Part II of the List. 
66. The representative of Brazil  stated that his delegation shared some concerns expressed by 
Japan, Canada and the United States.  He said that  his original intention had been to suggest a 
compromise that, at the first dedicated meeting in the first cluster of 2006, Members could have both 
substantive and procedural discussions. Taking into  account the statement by the United Stated, he 
suggested that another option would be to have a meeting in early 2006 devoted to resolving the 
procedural issues and, then, to  decide how to proceed.   
67. With regard to how to proceed, the Chairperson  stressed that the experience of the previous 
Review was to be taken into consider ation.  Therefore, she wished to suggest that, first, the Secretariat 
would work intensively to complete the documentatio n covering the items from (a) to (i) on the List 
by the end of January 2006.  Second, at the dedicat ed meeting that might take place in February or 
March 2006, a decision might be taken on procedural issues.   
68. Responding to Trinidad and Tobago, the representative of  the European Communities  stated 
that her delegation had no intention to include ad ditional issues to the List contained in document 
Job 2451, but was specifically interested in unde rtaking a substantive discussion on two issues:  
charging policies of airport and rental leasing services.  She indicated that her delegation might be open to discussions on procedural issues, but could not accept the suggestion to have a meeting 
dedicated for that only purpose.  The substantive discussion should start during the first cluster of 
2006, on the basis of the documentation prepared by the Secretariat.  
69. The Chairperson
 clarified that her suggestion was to have both substantive and procedural 
discussions during the first dedicated meeting.    
70. Responding to the question raised by New Zealand, the representative of Canada  stated that, 
in the view of Canadian air policy experts, some  of the items listed in Job 2451, under Part II:B 
“operation of the Annex for services not directly rela ted to traffic rights” and Part II:C "identification 
of the possible need for clarified and/or add itional disciplines under the Agreement for services 
covered under A and B above" pres upposed agreement among Members to extend the agreed mandate 
for the review in the Annex.  Her delegation w ould revert to this point at a later stage. 
71. The representative of New Zealand  could support the Chairperson's proposal to have the 
substantive discussion followed by a procedural discu ssion at the first dedicated meeting.  However, 
her delegation could not accept setting arbitrary cap on the duration of the Review.  Nonetheless, her 
delegation could enter into constr uctive conversation about how to ensure that the Review would 
proceed effectively.  She was not satisfied with Ca nada's response and pointe d out that her delegation 
did not agree that the mandate of the Review c ould only cover those sectors that had already been 
covered by the Annex.  Her de legation looked forward to furthe r explanations by Canada.   S/C/M/80 
 Page 17 
 
 
 72. The representative of Mexico  thought that the proposal by Brazil concerning the procedural 
discussion could be acceptable.  Considering that th e Review was to have a broad participation by 
Members, he was concerned that only developed Members would be able to participate in the 
substantive discussion because the documentation woul d be too technical.  Members needed adequate 
time to consult experts in capital and the documenta tion had to be translated.  The conclusion of the 
Review could not be decided by a small group of Members. 
73. Echoing the statements made by the European Communities and New Zealand, the 
representative of Chile  stated that it would be better to go along with the Chair's proposal.  Sharing 
the concern expressed by Mexico regarding the docu mentation, she encouraged the Secretariat to 
update and translate it as soon as possible.  Commen ting on Brazil's suggestion, she indicated that 
Members might consider discussing procedural issu es informally from now on till the first cluster of 
2006, as experts were supposed to participate in the substantive discussion.  
74. In response to the statements by Brazil and Chile, the representative of the United States  
agreed that the first dedicated meeting was to discuss  substantive issues rather than procedural ones.  
She reiterated that her delegation would not enga ge in the substantive discussion until the full 
documentation was completed, covering the whole lis t of issues.  She suggested that the first 
dedicated meeting take place during the second cluster of 2006, as the Secretariat implied that the full 
documentation would not be ready by the first cluster of the year.  On the issue of the number of 
dedicated meetings or the end-date, she wished to  address it upfront to avoid the situation that had 
happened in the previous Review.  With regard  to the concerns expressed by Canada and her 
delegation in relation to the content of the List, she suggested that the Chairperson have informal 
consultations.  While acknow ledging that the Review had started,  she indicated that there existed 
disagreement regarding how it shoul d be conducted.  Her delegation reserved its acceptance of the 
List until these problems were resolved and looked forward to having the first dedicated meeting in 
the second cluster of 2006 on the condition that info rmal consultations could resolve these problems. 
75. The Chairperson  recalled that the Council had had tw o dedicated meetings to conduct the 
review of MFN exemptions, which had been concl uded only with the agreement of all Members.  
Regarding the present Review of air transport, she stressed the importance to proceed.  She suggested 
that the documentation to be prepared by the Secr etariat cover as much information as possible by the 
end of January 2006, and that the first dedicated m eeting take place during the first cluster of the year 
to have the substantive discussion based on the documentation received .  It would also be possible to 
start the substantive discussion in the second cluster of 2006 if some Members needed more time to 
study the documentation.  On procedural issues, she would hold consultations.  She assured that the 
review would not be concluded until all Members agreed.  
76. The representative of New Zealand  supported the proposal made by the Chairperson.  
Regretting that the United States had a different view on how to proceed with the review, she 
encouraged the United States to participate. 
77. The representative of Norway  also supported the Chair's pr oposal. Echoing the statement by 
Chile, he stressed that it was important to sort ou t procedural issues through informal consultations 
before the first dedicated meeting. 
78. The representative of the United States  could not concur with the Chair's proposal. 
79. A representative of the Secretariat  stated that the preparation of the documentation was a hard 
work and would take time, especially to ensure the quality Members required.  He recalled that it had 
taken more than one year to prepare the documenta tion for the first Review and said the Secretariat 
would do its best to complete the full documentati on covering all the items under Part I of the List by 
May 2006.  However, it would be up to Memb ers to decide how to schedule the meetings. S/C/M/80 
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 80. In view of the fact that no agreemen t had been reached, the Chairperson  suggested that the 
Council take note of statements made and indicated  that she would hold informal consultations.  
81. The Council so agreed . 
E. NOTIFICATIONS  PURSUANT  TO ARTICLE  III:3  OF THE  GATS 
82. The Chairperson  drew the Council's attention to four notifications made pursuant to GATS 
Article III (Transparency):  (S/C/N/343-346) fro m Albania and two from Macao, China (S/C/N/347-
348, S/C/N/347/Corr.1-348/Corr.1).  She suggested that the Council take note of these notifications. 
83. The Council so agreed . 
F. OTHER  BUSINESS 
84. No statements were made under this item. The Chairperson  suggested that the Council 
adjourn the meeting. 
85. The Council so agreed . 
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