RESTRICTED  WORLD TRADE  
ORGANIZATION  TN/S/20 
11 July 2005 
 (05-3075) 
Council for Trade in Services 
Special Session  
 
  
SPECIAL SESSION OF THE COUNCIL FOR TRADE IN SERVICES 
 
Report by the Chairman to th e Trade Negotiations Committee  
   The Council for Trade in Services in Special Se ssion met on 27 and 30 June , and 1 July 2005.   
 
I. REVIEW OF PROGRESS  
1. Members overwhelmingly reiterated that the services negotiations form one of the three 
pillars of market access in the single undertaki ng and said that balance among these three pillars 
would need to be found at the TNC.  They also re-affirmed the main negotiating bases – GATS 
provisions, the Doha Development Agenda, the Nego tiating Guidelines, and the July Package – as 
essential for preserving the flexibility of the GATS a nd preventing the creation of imbalances in the 
negotiations.  
2. On the number of offers, since the formal me eting in February, 17 new initial offers were 
tabled, and since May, 24 revised offers.  The total number of initial o ffers presented is 68, 
representing 92 Members.
1  Not including least-developed country Members, some 24 offers remain 
outstanding, and including LDC, 55 initial offers remain outstanding.2     
3. I updated the factual assessment, given at the Febr uary cluster, on the state-of-play of offers 
submitted to date.  Overall, alt hough the numbers have improved, th e quality remains poor.  For most 
sector categories, a majority of the offers do not propose any improvement.  If the current offers were to enter into force, the average number of sub-sectors committed by Members would increase only 
from 51 to 57.  Likewise, less than half of the schedules would contain commitments of any kind in 
sectors such as distribution, postal-courier, or road transport.  There is thus no significant change to 
the pre-existing patterns of sectoral bindings.  As  well, less than half of the offers envisage 
improvements to horizontal commitments on mode 4.  With respect to MFN exemptions, only 15 
offers propose improvements; some 400 exempti ons would remain.  These figures do not give 
information about the quality of what is offered nor the economic importance of the sectors covered.  
Ultimately, this can only be assessed by the Members concerned. 
4. Notwithstanding the fact that the number of offe rs has improved since my last report, it was 
widely acknowledged that the overall quality of initial and revised offers is unsatisfactory.  Few, if 
any, new commercial opportunities would ensue for service suppliers.  Most Members feel that the 
negotiations are not progressing as they should.  It is  clear that much more work will be necessary in 
order to bring the quality of the package to  a level that would allow for a deal.   
5. A considerable number of Members recognised that the request-offer method alone is not 
producing the desired results. The resource-intensiv e and time-consuming nature of this method of 
negotiation was stressed.  Many delegations stated that, in order to hasten progress, Members should 
                                                 
1  The European Communities' offer is counted as representing 25 Member States. 
2 Please see Annex 2. TN/S/20 
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explore all negotiating methods available within th e parameters of Article XIX of the GATS and the 
Negotiating Guidelines, i.e. bilateral, plurilateral and multilateral approaches.  The role of possible 
indicators to measure and promote progress in the negotiations was raised by some Members, while 
others expressed concern that these would undermin e the negotiating flexibility granted by the GATS 
and create or maintain imbalances.  
6. On rules, progress has been reported on discip lines on Domestic Regulation and I believe that 
the Working Party on Domestic Regulation (WPDR) should be able to provide some elements for 
disciplines before Hong Kong.  With respect to work on GATS Rules, a number of Members 
underlined the central importance they attach to a successful outcome on Emergency Safeguard 
Measures (ESMs).  Others said that a candid evaluation of what could be achieved at this stage would be necessary.  A few Members recalled their sugges tions to facilitate the information exchange on 
subsidies.  Views remain divergent with r espect to work on government procurement.   
7. A lot of attention was given to identifying Me mbers' expectations in the round and their 
assessments of the state-of-play.  In  response to a Note by the Chairman
3, delegations outlined their 
expectations on market access and rules negotiatio ns, and provided detailed individual assessments 
on: the specific barriers their services suppliers face , the dearth of offers in sectors and modes of 
particular interest, the need for improved clar ity of commitments in terms of scheduling and 
classification, and achievements or lack thereof in the rules negotiations.  Several groups of Members 
provided their assessments of various sectors, modes and MFN exemptions.  A group of recently 
acceded Members expressed their views on the extensiv e nature of their existing commitments.   
8. This exercise was very helpful in identifyi ng Members' expectations for these negotiations, 
including specific information on the levels of bi ndings sought in each sector and mode.  Given the 
particular nature of the request-offer method, the ne gotiating process needs to be informed by a more 
general view of Members' ambitions in specific se ctors and modes of supply in order to promote a 
satisfactory and balanced outcome.  While the info rmation participants provided will need to be 
further refined in the coming months, at this st age, it nonetheless gives a general profile of the 
package of results Members seek.  A summary of the specific information given by delegations is 
contained in Annex 1.   
9. Delegations reiterated the importance of the M odalities for the Special Treatment for LDCs 
and for increased LDC participation in the negotiations .  In this regard, LDCs recalled the crucial role 
of targeted technical assistance.  
10. On Consideration of Proposals on Special a nd Differential Treatment Provisions, continued 
interest was expressed by the demandeurs  and it was proposed that I pursue consultations.  In line 
with the relevant portions of paragraph 1(d) of th e July Package, my report to the General Council, 
prepared on behalf of the Special Session, is contained in document TN/S/21.  
II. OTHER ITEMS 
11. With respect to the Assessm ent of Trade in Services , a substantive discussion was held on the 
basis of a submission from Cuba, contained in  document TN/S/W/44, relating to services 
liberalization in under-developed economies.  A presentation from UNCTAD on a recent publication 
entitled "Trade in Services and Deve lopment Implications" referred, inter alia , to UNCTAD's 
"development benchmarks", and its assessment of  trade in services, as well as the role of 
infrastructure services, liberalization in modes 1 and 4, and increased investment and technology 
transfer for developing countries.   
 
                                                 
3 JOB(05)/99.  TN/S/20 
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12. Under the agenda item Implementation of the Modalities for the Special Treatment of LDC 
Members in the Negotiations on Trade in Services , a substantive discussion was held on the basis of a 
recent submission by the LDC Group (Job(05)/114).  The paper outlines a four-step process for the 
implementation of the Modalities, and focuses on the first step, namely information gathering on the 
programs and initiatives of Members in promoting th e objectives in the Modalities.  LDC expectations 
include:  realising LDC export opportunities in mode  4, appropriate mechanisms for effective access 
for LDC exports, and measures aimed at increasi ng LDC participation in trade in services.  
Delegations responded favourably to this paper and a few requested more time to study it.  
13. Under the item Proposals Relating to the Negotiations under Article XIX , discussion was 
based on new submissions or room documents related to financial services, mode 4 commitments and economic needs tests, transparency of horizontal  mode 4 commitments, construction and related 
engineering services, telecommunications services and cross-border supply of services.   
14. Under a separate item, the Council agreed to task  the Secretariat with preparing a series of 
notes as an information tool meant to assist delegations in their consideration of sector and mode-
specific issues raised in the negotiations.     
15. The OECD made a presentation on a recen t study entitled "Managing Request-Offer 
Negotiations under the GATS:  the case of enviro nmental services".  The presentation touched upon 
the changing characteristics, regulatory frameworks, classifications and public policy issues related to 
environmental services.     
III. FUTURE WORK 
16. In general, Members are dissatisfied with the l ack of progress in the negotiations.   They have 
pointed out that the offers present virtually no ne w business opportunities and, in most cases, do not 
even capture existing levels of liberalization.  In this regard, it is to be recalled that Article XIX:1 
mandates that "Members shall enter into successive rounds of negotiations [...] with a view to 
achieving progressively higher level of liberalizat ion."  The same is echoed in the Negotiating 
Guidelines.  
17. Members recognised that a tremendous amount of work remains to be accomplished, both in 
Geneva and capitals, in the short period of time prio r to the Sixth Ministerial Conference.  I would 
also recall that the Special Session is required, pursuan t to the July Package, to provide a full report to 
the TNC with possible recommendations for the purpose of the Sixth Ministerial Conference.
4  
Therefore, part of the effort after the summer break must be directed towards developing the 
recommendations that the Special Session could make, with a view to facilitating substantial 
improvement in coverage and quality of offe rs and progress in the rule-making areas.   
18. A number of ideas and proposals have been put forward to address the current situation.  
I therefore intend to engage in intensive consulta tions on a broad range of issues including, but not 
limited to, the following: 
• further identification of expectations by Members in all areas of negotiations, 
• means of intensifying the request-offer process, 
• use of complementary approaches as proposed by Members within the parameters of 
the GATS and the Negotiating Guidelines, 
• implementation of the Modalities for the Special Treatment for LDCs in the 
Negotiations, 
• consideration of category II proposals on S&D treatment provisions, and 
                                                 
4 Please see paragraph (g) of Annex C of the General Council Decision contained in document WT/L/579. TN/S/20 
Page 4   
• targeted technical assistance.  
 
19. The Chairs of the relevant subsidiary bodies will wish to engage in cons ultations to intensify 
work in their respectiv e areas, with a view, inter alia , to providing inputs for the review of progress 
by the Special Session as foreseen in  Annex C of the July Package. 
20. With respect to the review of progress, it is my intention at the next formal meeting to again 
organize the review of progress on the basis of an in -depth discussions by Members.  This would give 
delegations the opportunity to supplement and refi ne their expectations and individual assessments.  
In the light of this discussion I will update, as a ppropriate, the summary contained in Annex 1 in 
future reports to the TNC. 
21. The next cluster of services meetings, including a meeting of the Special Session, will be held 
from 19-30 September 2005.  It is also foreseen, in accordance with the July Package Decision, that 
the Special Session will review progress for the pur pose of the Sixth Ministerial meeting.  An 
appropriate date will be decided for such a review.    TN/S/20 
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ANNEX 1  
22. This Annex contains a summary, prepared under my own responsibility, of the sectoral, 
modal, rules-related and other discussions held un der the review of progress.  Each section is 
structured as follows:  participants' negotiating exp ectations, their assessments of the state-of-play and 
some factual information drawn from the presentation I made during the meeting.  This information 
consists of the number of offers that propose improvements in each of the sector categories indicated, broken down by developed and developing country Members.  In  this connection, the appropriate 
flexibility accorded to developing countries in Article XIX:2 and paragraph 12 of the Negotiating 
Guidelines should be recalled.  The figures are unref ined aggregates, and as has been rightly pointed 
out by a number of delegations, in no way can s ubstitute for Members' individual assessments of the 
value of their trading partners' offers.  Nonethel ess, the figures do give an approximate notion of the 
number of Members willing to undertake commitments in various sectors and modes.  The quality of these offers can only be determ ined by individual Members.
5  
Legal Services  
 
23. Three delegations provided a detailed assessme nt on Legal Services, while several others 
mentioned Legal Services only in passing, or referred broadly to  their interests in professional 
services.  They indicated their expectation that  the following barriers would be addressed in the 
negotiations: citizenship requirements, partners hip/association restrictions, restrictions on 
employment of locally qualified lawyers, prior r esidency requirements, and lack of Mode 1 and 2 
commitments.   
24. In assessing the offers submitted to date, one delegation noted that progress had been made 
with regard to the use of uniform terminology, and another spoke of some improvement, which was 
well below what would constitute critical mass.  One delegation noted that of 24 requests it made, 
only 2 Members had met its request in full and 3 in  part.  The absence of any commitments/offers by 
some Members was noted by these three delegations, as was the observation that those who had made offers on Legal Services had made only limited o ffers or improvements, which did not lead to 
effective market access.  One Member expressed con cern that certain other Members were not really 
engaging in the negotiations in legal services.   
17 offers propose improvements in the legal services  sector (8 of the 10 developed Member offer and 
9 of the 58 developing Member offers).  
Other Professional Services
 
 25. A number of Members referred to professional services in the context of their comments on 
trade in mode 1, mode 2 and mode 4 or domestic regulation.  In total, 11 Members indicated their 
interest in this sector.  Three Members identified barriers, such as economic needs tests (ENTs) or 
federal and sub-federal regulati ons, facing persons supplying professi onal services through mode 4.  
Another indicated it sought commitments to ensu re unimpeded cross border access in professional 
services.   
26. In assessments of the state-of-play in professiona l services, one participant deplored a lack of 
engagement, while two others, ac knowledging nevertheless some progress on the terminology used in 
schedules, said that a critical mass lacked in architecture, accounting and engineering services. 
                                                 
5  The EC offer, covering 25 Members, is counted as on e.  All 68 initial offers are taken into account; the four 
most recent revised offers are not incl uded.  Also indicated are how many of the offers, by sector, are from 
developed economy Members (out of a total 10 offers submitted) and from developing economy Members (out 
of a total of 58 offers submitted). TN/S/20 
Page 6   
28 offers have been made in other professional servi ces (i.e. other than legal services) (8 of the 10 
developed Member offers and 20 of the 58 developing Member offers).  More specifically,15 offers 
have been made in accounting, auditing and boo kkeeping services, 14 in architectural services, and 
16 in engineering services.  
Computer and Related Services   
 27. A cross-section of Members cited achieving a hi gher number of quality of offers in computer 
and related services as among their negotiating priorities.   These services were also one of the priority 
areas emphasised by Members that aim to improve commitments on cross border supply, given the 
sector's importance both as a cross-border export a nd as a facilitator of access. Most of the Members 
seeking commitments in this sector noted that, alt hough trade restrictions were not common in reality, 
schedules often did not reflect the existing trade e nvironment, either because there were no bindings 
or because commitments were more restrictive than the status quo .  Most of these Members called for 
full commitments, i.e. no limitations, on the en tire range of computer and related services. 
28. In assessing the state-of-play, the restrictions mentioned in existing commitments and offers 
included:  "unbound" entries in mode 1, foreign equity limits in mode 3 as well as residency requirements or establishment prerequisites.  Rega rding coverage, one technique proposed to achieve 
broad coverage of the sector in schedules was to co mmit at the two-digit level (CPC 84).  A related 
suggestion was to commit in an open-ended manner on  "other" computer and re lated services.  It has 
been suggested that, at a minimum, obtaining status quo  commitments from a broad range of 
Members and improvements from key economies would be critical.  Given the ambitions expressed in this sector, Members expressed disappointment  about the offers tabled thus far. 
29. Other Members, although not necessarily demandeurs  for liberalization, indicated a 
willingness to make commitments or improvements in recognition of the sector's role in economic 
development and enhancing domestic Information Technology (IT) capabilities.   
32 offers have been made in the computer and related  services sector (5 of the 10 developed Member 
offers and 27 of the 58 developing Member offers). 
 
Other Business Services 
 
 
30. Two developing country Members expressed in terest in other business services, and 
particularly in management consulting services a nd advertising services.  They sought improvements 
in these two sub-sectors, especially by developed Members.  
31. One participant noted that few commitments ha d been made by developing Members in these 
areas.  Others spoke more generally about their interest in business services.  
37 offers have been made in other business se rvices (i.e. other than professional and computer 
services) (9 of the 10 developed Member offers and 28 of the 58 developing Member offers), including 
7 in advertising services and 12 in management consulting services.  
 
Postal and Courier Services  
 
32. A number of Members characterized postal or courier services as a top priority, however, 
their focus varied.  Some expressed interest in co mmitments on all postal or courier services no longer 
subject to monopoly, while others put the emph asis on courier or express delivery services.  One 
delegation suggested that Members commit in all se gments not under universal service obligations.  
Courier services were also a key sector for Members interested in logistics services.  In terms of 
ambitions, one delegation sought full commitments  on   modes 1 and 3 from a critical mass of  TN/S/20 
 Page 7 
  
economies for express delivery and courier services.  There was also a tendency among demandeurs  
to favour additional regulatory disciplines or othe r forms of clarification, for example, of the 
relationship between public and private sector supp liers that both provide services in competition. 
33. In assessing the progress made to date, a number of delegations pointed to classification and 
scheduling issues, which may have prevented some participants from offering commitments.  First, 
UN Central Product Classification (CPC) references do not reflect current market realities, but instead, define postal services as those provided by  public entities and courier services as those 
provided by private entities.  Some delegations s uggested resolving this issue through notations in 
schedules that recognize the overlapping functions of  both groups in supplying competitive services.  
Second, it was observed that the role of "public  service responsibilities" or "universal services 
obligations" do not appear to be clearly delineated in the context of commitments.  Some suggested 
clarifying this issue through entries in schedules or some form of regulatory undertakings or understandings.   
14 offers have been made in the Postal and Cour ier services sector (6 of the 10 developed Member 
offers and 8 of the 58 developing Member offers).  
Telecommunications Services
   
 34. Telecommunications services were cited as a sector in which virtually all developed 
Members as well as a number of developing economies have expectations for progress.  Many 
delegations indicated their interest in commitments covering the full range of telecom services in schedules.  They also identified a number of ba rriers to be addressed, including the reduction or 
elimination of mode 3 limitations, particularly foreign equity limits, and the adoption of the Reference 
Paper.  Some Members also emphasized the importa nce of  full commitments on modes 1 and 2, and 
the need to address exclusive rights and economic needs tests.  In addition, there was some support for 
the removal of the MFN exemptions currently applied to telecommunications.  Moreover, many 
Members, whether demandeurs  or not, recognized that liberali zation of the sector had advanced 
considerably since the conclusion of the negotia tions on basic telecommunications, leaving many 
recent developments outside the scope of existing commitments. 
35. In assessing progress, one delegation observed that, in spite of telecommunications being 
subject to many commitments and offers, market access and national treatment limitations remained 
common.  In addition, proposals were made to de fine more clearly the scope and coverage of 
commitments in this sector and, thus, add certain ty.  Although there was a prevailing view that the 
UN CPC references for telecommuni cations were out of date and that there did not yet exist a 
common view on possible alternatives or on whether the GATS classification list and the Chairman's 
"Note on scheduling of basic telecommunicati ons services" remained viable options.  
34 offers have been made in the telecommunications  sector (8 of the 10 developed Member offers and 
26 of the 58 developing Member offers). 
 
Audiovisual Services
 
 
36. The delegations of Hong Kong China, Japan, Me xico, Chinese Taipei and the United States 
presented a joint statement on audiovisual services (TN/S/W/49) in which they stressed the economic importance of the sector.  More specifically, one delegation said that it sought more commitments in particular with respect to the production, dist ribution and projection of motion pictures/videos.  
Another delegation identified the sector as one of its  key areas of interest and called for commitments 
on modes 1 to 3 that reflected the level of de facto  openness currently granted.   TN/S/20 
Page 8   
37. The co-sponsors expressed serious concern over efforts by some key participants to create an 
a priori  exclusion for that sector.  Noting that only few offers had been made, they stressed the 
Agreement's flexibility in adjusting commitm ents to national policy objectives.   
6 offers have been made in the audiovisual sector (1 of the 10 developed Member offers and 5 of 
the58 developing Member offers). 
 
Construction and Related Engineering Services   
 
38. In outlining its expectations for this sector, one delegation wanted the following restrictions to 
be addressed: foreign equity limitations, incl uding limitations on majority ownership, and 
discriminatory procedures or requirements for fore ign companies, including discriminatory licensing, 
registration and joint-venture requi rements.  Cuba circulated an assessment of offers in the sector, 
highlighting the generally deficient commitments as well as the restrictions imposed on the movement 
of natural persons in this sector (TN/S/W/45). 
39. A few Members had calculated the level of respon se, in terms of offers, to the requests they 
had addressed to trading partners.  Two Members indicated separately that only 20 per cent of their requests had been fully or partially met.  In one case, 40 per cent of the addressees had kept foreign 
equity limitations and 20 per cent joint-venture or  partnership requirements.  Another Member had 
focused its requests on full market access and national treatment commitments for all construction 
services under mode 3 and on related mode 4 commi tments;  less than 20 Members had met these 
requests.  One other developing Member noted the absence of full commitments in the offers tabled 
by developed Members. 
23 offers have been made in the construction and related engineering sector (6 of the 10 developed 
Member offers and 17 of the 58 developing Member offers). 
 
Distribution Services
 
 40. In expressing their expectations, various Members noted the particular importance of 
distribution services in the negotiations and the need  for greater progress.  A participant said that 
commitments in all four sub-sectors were key.  Another stressed the developmental role of this 
infrastructure sector and the importance of better access under mode 3 in wholesale and retail trade.  
One delegation expressed dissatisfaction with prod uct exclusions in schedules and emphasized the 
need for improvements on mode 3, in particular with  regard foreign equity limitations, and on mode 1.  
41. In assessing the current situation, many observed the low number of existing commitments 
and the dearth of quality offers.  One participant re ported that only 8 per cent of its requests had been 
met in full or in part.  
21 offers have been made in the distribution servic es sector (8 of the 10 developed Member offers and 
13 of the 58 developing Members offers). 
 
Education Services
 
 
42. Four delegations stated that the offers tabled to date were very few in number and limited in 
scope, with the exception of some developing co untries.  One Member acknowledged some modest 
improvements in offers and outline d its continued interest in commi tments on higher, adult and other 
educational services;  these could include a carve-out for subsidies. 
18 offers have been made in the education services sector (4 of the 10 developed Member offers and 
14 of the 58 developing Member offers).  TN/S/20 
 Page 9 
  
 
Energy Services  
 
43. In terms of expectations in the negotiations, a group of countries circulated a room document 
in which they stressed the importa nce of the energy sector to economic growth and development, and 
the various beneficial effects of liberalizing market  access.  They stressed that ownership of natural 
resources was outside the scope of the negotiations and insisted that the GATS preserved Members' ability to regulate, inter alia , access to energy, reliability of supply , and consumer and environmental 
protection.  Several Members stressed the grow ing importance of undertaking specific commitments 
in energy services.  One Member called for meaningful commitments, based on the CPC, for all activities composing the energy sector and across all modes of supply. 
44. In its assessment of progress, one Member cons idered that the limited offers made, both by 
developed and developing Member s, did not reflect the importance of the sector.  The view was 
expressed that the absence of a section on ener gy in W/120 should not prevent Members from 
undertaking specific commitments.  Attention was dr awn to the "Scheduling Guide" proposed by a 
group of delegations aimed at assisting Members to undertake specific commitments.  Although the revised offers contained some limited pr ogress, there was still scope for improvement. 
12 offers have been made on energy services (4 of  the 10 developed Member offers and 8 of the 58 
developing Member offers).
 6 
 
Environmental Services  
 45. Two delegations indicated their expectation for increased liberalization of environmental 
services.  One explained that environmental servi ces benefited both importer and exporter economies, 
and recalled that the Doha Declaration made a specific reference to the liberalization of these services 
as a means of benefiting both trade and environmen t.  This delegation s ought further commitments, 
particularly in mode 3, but also in modes 1 and 2, since these modes were relevant for advisory 
services and helped to transfer technical know-how.   
21 offers have been made in the environmental servi ces sector (7 of the 10 developed Member offers 
and 14 of the 58 developing Member offers). 
 
Financial Services
  
 46. A statement by a group of Members (TN/S/W/43) explored ways to address the poor quality 
of proposed commitments.  One of the co-sponsor s indicated as its main expectations for the 
improvement of offers: use the classification contained in the Annex on Financial Services; 
commitments on commercial presence (mode 3) for all financial services, including the right to 
establish new and acquire existing companies and to  freely choose the most appropriate legal form 
(including direct branching); commitments on cro ss-border supply (modes 1 and 2) on appropriate 
sub-sectors; and a focus on transparency in the deve lopment and application of laws and regulations.  
Another Member indicated that it sought full commi tments for the cross-border supplies of marine 
and energy insurance services as well as of "provi sion and transfer of financial information and 
financial data processing".   
47. In assessing the offers submitted to date, a numbe r of participants expressed disappointment 
since their offensive interests had not been addressed.  One delegation stated that proposed 
commitments in insurance services did not improve on  the current poor commitments, and that offers 
                                                 
6 For ease of reference and given the abse nce of an agreed classification of th is sector, this evaluation looks at 
offers in "pipeline transportation of fuels", "services in cidental to mining", or "services incidental to energy 
distribution". TN/S/20 
Page 10   
in banking and other financial serv ices were far from capturing the many existing open regimes.  One 
Member acknowledged that some schedules already pr ovided for a high level of commitments in this 
sector;  however, some participants with poorer co mmitments had made no offers or no meaningful 
offers.  A number of participants echoed comments th at many offers did not capture existing levels of 
liberalization.  
48. Referring to criteria used in assessing the offers, one participant reported that it had submitted 
17 requests;  in insurance, close to 30 per cent of  the Members concerned had kept foreign equity 
ceilings; over 20 per cent had maintained restrict ions on certain business lines and/or nationality 
requirements for the composition of boards of dir ectors; and slightly less than 20 per cent did not 
allow the establishment through branches.  On banking  and other financial services, 35 per cent of the 
Members to whom requests had been addressed had ke pt restrictions on the form of establishment 
and/or restrictions on new establishment or initial en try;  close to 30 per cent maintained restrictions 
on the composition of boards of directors;  about one-fifth had kept foreign investment ceilings in 
non-bank financial institutions and/or restrictions on the expansion or on the number of branches.  
Another Member indicated continued severe limita tions on mode 3, including restrictions on legal 
form (e.g. direct branching), limitations on foreign equity participation, and discriminatory licensing 
requirements.  
32 offers have been made with re spect to insurance and insuran ce-related services (all developed 
Member offers and 22 of the 58 developing Member off ers). 30 offers have been made with respect to 
banking and other financial services (all developed Member offers and 20 of the 58 developing 
Member offers). 
 
Health Services  
 
49. Three developing country Members indicated thei r interest in further liberalization of the 
health sector, one of which stressed the importanc e of supplying these services through modes 1 and 
2, including through insurance portability.   
10 offers have been made in the health servic es sector (all of the developing Member offers). 
 
Tourism Services  
 
50. Several Members reiterated their interest in tourism services without formulating specific 
expectations.  Two participants highlighted that th ey sought commitments in mode 4 related to this 
sector.   
27 offers have been made in the tourism services se ctor (6 of the 10 developed Member offers and 21 
of the 58 developing Member offers). 
 
Maritime Transport Services  
 51. The delegation of Japan delivered an oral stat ement, on behalf of a group of Members, that 
provided an assessment of the offers and the group's expectations in maritime transport services.  In 
the view of the group, only a lim ited number of quality o ffers had been submitted, which was far from 
satisfactory.  Twenty-one of 61 offers included no offer on maritime transport, 13 Members offered to 
commit on maritime transport for the first time, but some at a less than status quo , and 15 offered to 
improve existing commitments.  A nother delegation noted that the absence of some participants' best 
offers from the 1995-96 extended maritime transport negotiations in the current round, as required by 
a Council decision contained in S/L/24, would need to be corrected.  TN/S/20 
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52. A number of delegations flagged their disappointment with the quality of offers in transport 
services, including one recently-acceded Member that co mpared the offers to the level of its existing 
commitments.  In one delegation's view, despite th e increase in the number of offers, the quality 
remained insufficient and not in-line with the impor tance of this sector as a key facilitator of world 
trade.  Another noted that only a small percentage of offers proposed commitments in this sector.  
While acknowledging that some good offers covered in frastructural services and included maritime 
and logistics, one Member noted that negotiators  had shunned difficult issues thereby reducing scope 
for trade-offs.  Another delegation recalled the u se of sectoral "packages" of commitments in the 
1995-96 extended negotiations;  this method that could be extended well beyond maritime.  One 
Member observed that some major partners in the negotiations had not offered commitments in this 
sector.  
24 offers have been made in maritime transport serv ices (including maritime auxiliary services) (7 of 
the 10 developed Member offers and 17 of  the 58 developing Member offers). 
 Other Transport Services
 
 53. A number of Members stated that offers for logistics services and ser vices auxiliary to all 
modes of transport were slightly more encouraging than those for maritime.  Nevertheless, more was needed.  One delegation observed that progress had b een incremental, but was still not inspiring and 
emphasized the need for commitments in freight fo rwarding, ground transport, storage services, and 
computer services related to the provision of logistics services. 
54. One delegation deplored the very small number of offers in air transport services, including in 
those sectors explicitly listed in the Air Transport A nnex.  Another indicated its disappointment with 
the lack of offers on road and rail transport, par ticularly in mode 3.  One delegation stressed its 
interest in pipeline transport services.  
14 offers have been made in air transport services (6 of the 10 developed Member offers and 8 of the 
58 developing Member offers),13 in road transport services (6 of the 10 developed Member offers and 
7 of the 58 developing Member offers),and 9 in rail transport services (4 of the 10 developed Member 
offers and 5 of the 58 developing Member offers).  13 offers (4 of the 10 developed Member offers and 
9 of the 58 developing Member offers) have been made  in services auxiliary to all modes of transport 
(not including maritime auxiliary services).  
Modes 1 & 2
 
 55. Various Members emphasized their expectations for modes 1 and 2, and underlined the huge 
potential of cross border trade.  Full liberali zation of IT and telecommunication services would 
contribute to the realization of this potential.   
56. In assessing the progress made to date, one participan t considered the offers on mode 1 to be 
insufficient;  there were still large gaps in importa nt sectors.  While cross-border trade had become 
feasible in many sectors, unlike 10 years ago, this  was not reflected in the offers.  There were 
continued indications that a binding was not possi ble because of technical infeasibility or mode 1 
remained subject to various restrictions, such as  the need to establish a commercial presence.  One 
participant said Members should lock-in current ope n regimes to prevent protectionist backlash in 
sectors such as business services, R&D, computer  services, management consulting services, 
telephone answering services, etc.  One delegation noted that commitments under mode 1 needed to 
be complemented with commitments under mode 2.   Another considered that it was premature to 
decide whether Members had to advance in a concerted manner with respect to mode 1. 
 TN/S/20 
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Mode 3  
 57. In addition to the expectations that had been e xpressed in a sector context, Australia, Canada, 
European Communities, New Zealand, Norway  and United States presented a communication 
recalling the importance of mode 3.  A few Members stated that the lack of relevant commitments on this highly dynamic mode was out of touch with  economic realities and had to be addressed.  One 
Member highlighted that the focus would need to be on barriers such as restrictions on the form of 
legal establishment, real estate ow nership and broadl y defined  ENTs. 
Mode 4
   
 58. In outlining their expectations for Mode 4, sever al Members said they considered this mode 
as their main area of export interest in services an d a fundamental element to ensure a balance in 
terms of comparative advantage among develope d and developing countries in the services 
negotiations.  Many Members felt that significantly more  work was still needed in  the offers to extend 
coverage to categories not linked to commercial pr esence.  Some Members also suggested that the 
scope of commitments be expanded to c over also lower skilled natural persons.  
59. Several Members identified specific expectati ons they held for improvement of Mode 4 
commitments, which included addressing the followi ng: (i) broader coverage of categories not linked 
to commercial presence ( e.g. contractual service suppliers (C SSs) and Independent Professionals 
(IPs)); (ii)  removal of ENTs and quotas, (a fe w referred to basing ENTs on non-discriminatory and 
objective criteria in schedules), and increasing quotas; (iii) extension of periods of stay and the 
possibility of renewal; (iv) removal of limitations su ch as citizenship and residency requirements; (v) 
removal of labour market conditions; and (vi) inclus ion in the negotiations of rules on transparency 
and administrative procedures affecting entry and stay, especially regarding visas.   
60. Regarding the periods of stay, Members sought more generous time pe riods tailored to the 
specific needs of each category of natural persons .  Some Members said renewal should always be 
available and the related formaliti es for renewal less burdensome than those to obtain the first entry 
permit. Although many Members called for the elimina tion of citizenship and residency requirements, 
some Members expressed appreciation for those offe rs that converted citizenship requirements into 
residency requirements.  Some Members argued that  the application of certa in conditions, such as 
wage parity, should be avoide d given that they undermine developing countries' comparative 
advantage in this mode of supply.  Finally, many  delegations called for more work in the area of 
domestic regulation affecting the entr y and stay of natural persons.   
61. Some participants noted that two recent proposals on categories of natural persons 
(TN/S/W/31 and TN/S/W/32) had been used to prepare some of the offers, leading to improved 
quality and clarity of commitments.   
62. On the issue of transparency, Canada and Au stralia presented proposals aimed at improving 
the transparency of Mode 4 commitments.  Th e proposals provided templates for providing ready 
available information on Mode 4 trade, such as rele vant legislation and administrative procedures.   
63. In assessing the state-of-play in Mode 4, many participants welcomed the improvements 
made in some offers, which included coverage of  new categories not linked to commercial presence, 
such as contractual service suppliers and independent  professionals, the expansion in the coverage of 
intra corporate transferees and business visitors, th e elimination of some restrictions, such as 
economic need tests and nationality requirements, and the extension of the periods of stay.  
Nevertheless, many delegations felt that the quan tity and quality of Mode 4 offers fell short of 
expectations, in terms of the categories of natu ral persons subject to a commitment and issues of 
interest to developing countries, such as key market access and regulatory concerns.  TN/S/20 
 Page 13 
  
64. An informal communication presented by India on behalf of Bolivia, Chile, Colombia, 
Dominican Republic, Guatemala, India, Indonesia, Mexico, Pakistan, Peru, Philippines and Thailand 
outlined proposed parameters for an assessment of Mode 4 offers.  While some improvements had 
been made on the inclusion of categories of natura l persons not linked to Mode 3, offers did not 
adequately address the categories of main interest  for developing countries, namely contractual 
service suppliers and i ndependent professionals, inter alia .  Many ENTs had not been removed or 
improved and no work had been done to address the issues of transparency of visa procedures.   
65. Cuba  presented a paper assessing the offers on Mode 4 submitted to date.  It concludes that 
the proposed results on Mode 4 fall short of the re quirements of GATS Article  IV.  It observed that 
qualification requirements, visa procedures and conditi ons on entry and stay have not been addressed.   
Most-Favoured-Nation Exemptions  
66. Some delegations touched on the question of  the removal of MFN exemptions in the 
negotiations.  They emphasised that the removal of  MFN exemptions lists was an important element 
in the negotiations and that as such it should be considered as a objective.  These delegations noted 
that MFN exemptions often undermined the eff ect and scope of market access commitments and 
might also have a chilling effect on future commitme nts.  They expressed disappointment at the fact 
that out of more than 400 existing exemptions, thus far only a handful had been deleted in the offers.   
GATS Rules  
 
67. A number of Members underlined the central im portance that they attach to progress on the 
issue of an emergency safeguard measures, stressi ng that a successful outcome should be part of a 
balanced package on services.  Some Members recalled their longstanding concerns with respect to such a mechanism and others said that a reality check  of what might be achieved or not was required.  
Recognizing the importance attached to the issue by some Members, a delegation said that it was time 
to move beyond the impasse and explore ways in which movement might be possible.  Another 
delegation emphasized the need to explore other alte rnatives, including perhaps interim ones; concrete 
examples of how a safety valve could be devised for liberalization commitments had to be presented.   
68. Some Members noted that they hoped to see furt her substantive work in the context of the 
discussions on subsidies.  More specifically, they un derlined the lack of progress on the exchange of 
information and recalled proposals made in that regard as well as on a provisional definition of 
subsidy.  However, it was also noted that more intensive discussions are needed concerning the scope 
and content of the information exchange and the pr ovisional definition of subsidy.  One Member said 
that guidance might be sought from Ministers on th e information exchange if the mandate in that 
regard was unfulfilled.  On government procuremen t, a few Members noted the relevance of work in 
this area, including on transparency aspects.  A nu mber of Members reiterated their concerns about 
the scope of the negotiating mandate, stressing that it  should not include market access issues.  Some 
Members called for an evaluation of the state-of-play and a realistic assessment of the scope for progress in the rules areas.   
Disciplines on Domestic Regulation
 
 69. Many delegations said there was good progress in the Domestic Regulation negotiations, and 
that momentum was building for a meaningful resu lt in time for the Hong Kong Ministerial.  Some 
delegations said, however, that there was a need at this point to focus the work of the WPDR through 
means such as an outline of possible elements, or a thematic outline, that would be realistic but not 
prejudice the final outcome.  For several delegations  it was important that the WPDR better organize 
its work to facilitate focused discussion and he nce the development of disciplines pursuant to 
Article VI:4.   TN/S/20 
Page 14   
70. The outcome of the negotiations had to re flect, for many delegations, a proper balance 
between the right to regulate and the need to ensu re that commitments were not impaired.  Several 
delegations stressed the importance of having disciplines on all aspects of Article VI:4.  A number of 
Members stressed the importance of rules on transpar ency.  Some delegations added that disciplines 
in domestic regulation should facilitate mode 4 co mmitments, ensuring that technical standards and 
licensing procedures were not burdensome to comply  with, and establishing effective mechanisms to 
recognise foreign qualifications.   
Scheduling and Classification Issues  
 
71. During the review of progress, several delegations mentioned the importance of clear, 
comparable, and predictable commitments, and emphasi zed that further work was needed in order to 
arrive at a common understanding in the area of sche duling.  A number of delegations referred to the 
need to conduct more specific work on ENTs.  It  was also highlighted that the on-going work on 
scheduling issues would help Members in the preparati on of their offers and the evaluation of others.  
With regard to classification, it was noted that unambiguous classification was necessary to improve 
clarity and legal certainty, and thus the value, of commitments.  A number of Members stressed the 
importance of resolving scheduling and classification issues and that work should be pursued actively 
in the CSC.  
 
 
 
  TN/S/20 
 Page 15 
  
ANNEX 2 
 
Twenty-four developing country Members have not submitted an in itial offer:  Antigua & Barbuda, 
Armenia, Belize, Botswana, Cameroon, Congo, Côte  d'Ivoire Ecuador, Form er Yugoslav Republic of 
Macedonia, Georgia, Ghana, Kuwait, Kyrgyz Re public, Moldova, Mongolia, Namibia, Nigeria, 
Oman, Papua New Guinea, Romania, South Africa, Swaziland, Venezuela, Zimbabwe. 
 Thirty-one LDC Members have not submitted an in itial offer:  Angola, Bangladesh, Benin, Burkina 
Faso, Burundi, Cambodia, Central African Republic , Chad, Democratic Republic of Congo, Djibouti, 
Gambia, Guinea, Guinea Bissau, Haiti, Lesotho, Ma dagascar, Malawi, Maldives, Mali, Mauritania, 
Mozambique, Myanmar, Nepal, Niger, Rwanda, Sierra Leone, Solomon Islands, Tanzania, Togo, 
Uganda, Zambia.  Twenty-four Members have submitted a revised offer:   Australia, Bahrain, Brazil, Canada, Chile, 
China, Colombia, European Communities, Egypt,  Hong Kong China, Iceland, Japan, Korea, 
Liechtenstein, Mexico, New Zealand, Norway, Pe ru, Singapore, Surinam, Switzerland, Chinese 
Taipei, United States, Uruguay. 
 
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