RESTRICTED  WORLD TRADE  
ORGANIZATION  S/WPGR/M/51 
18 March 2005 
 (05-1118) 
Working Party on GATS Rules  
  
 
REPORT OF THE MEETING OF 7 FEBRUARY 2005 
 
Note by the Secretariat
1 
  
1. The meeting of the Working Party on GATS Rules was chaired by Ms. Clare Kelly, from 
New Zealand.  The agenda for the meeting, contained in WTO/AIR/2485, included the following 
items: subsidies, government procur ement, emergency safeguard measur es, date of the next meeting 
and other business.  To assist de legations in the preparation of the meeting, the Chairperson had 
prepared an annotated agenda, contained in JOB(05)/7.  The agenda was adopted. 
I. NEGOTIATIONS ON SUBSIDIES (ARTICLE XV) 
2. The Chairperson
 called attention to the three documents circulated since the last meeting.  
First, the Secretariat had prepared a synthesis No te on the definition of subsidies, contained in 
JOB(05)/4.  Further, the delegation of Singapo re had circulated an informal communication 
(JOB(04/180), which enumerated a number of relevant  issues for the negotiations, in particular with 
respect to definition.  Finally, an informal communication from the United States (JOB(05)/5) put 
forward some thoughts in relation to the informati on exchange.  She called on delegations to make the 
necessary distinctions between the issues of defin ition and information exchange since, in past 
meetings, many had seemed to feel that the exch ange of information was not conditional on prior 
agreement on a definition, or vice-versa.  On the information exchange, a basic question before the 
Working Party was how the provision of useful information could be encouraged.  On the definition 
of subsidy, an important issue to consider wa s whether the elements found in the Agreement on 
Subsidies and Countervailing Measures (ASCM) were adequate in the context of services or, if not, 
what modifications might be relevant.   
3. A representative of the Secretariat  said that the Note mentioned by the Chairperson provided 
a synthesis of the views expressed by delega tions, either orally or through submissions, on 
definitional issues since the beginni ng of the negotiations.  It was intended to assist discussions by 
refreshing delegations' minds on what had been said.  The Note was organized on the basis of points 
raised, e.g., price or income support, financial c ontribution, conferring of a benefit.  It was not 
intended to express views on what might need to form part of a definition of s ubsidy.  Neither did the 
Note wish to imply any form of consensus in the Working Party on this issue.   
4. The representative of the United States  said that the informal communication from her 
delegation was intended to assist in the discussions, in particular with regard to the information 
exchange.  While recognizing the obligation to exch ange information concerning all subsidies relating 
to trade in services provided to domestic suppliers, sh e stressed that this was not tantamount to having 
to provide all possible information in advance of  the negotiations.  She was concerned that the 
submission of much information in an unfocused  manner could create a significant burden without 
yielding useful results.  It would slow down work and, thus, be counterproductive for those having 
particular interests in these negotiations.  Narrowi ng the scope of enquiries to a manageable range 
                                                      
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO.  S/WPGR/M/51 
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would contribute to a more productive exchange of information.  One way would be to adopt 
provisionally a definition of subsidy for services.  Ma ny had suggested that the definition contained in 
the ASCM could provide a useful starting point.  Wh ile her delegation shared this view, the relevant 
definition was still broad enough to co nfront delegations with a vast a rray of potential subsidies.  To 
make the information exchange more worthwhile , other means of focusing efforts could be 
considered, such as analyzing examples of subsidi es on an industry-by-industry basis or concentrating 
on certain types of subsidies that caused trade-re lated problems. The Working Party might thus want 
to discuss which sectors could provide a useful star ting point.  Tourism could be considered because 
this was a sector of importance to a wide range of Members, although she did not want to preclude other sectors.  Similarly, it might be useful for the Working Party to consider which kinds of subsidies 
to examine initially, like those explicitly linked to ex port performance.  She hoped that such a targeted 
information exchange would help to assess the ex tent to which new disciplines on subsidies were 
merited and, at the same time, provide a foundation for considering the form that any new disciplines 
might take.   
5. The representative of Singapore
 recalled that he had provided an extensive preview of his 
delegation's informal communication at the last me eting.  The document suggested that the ASCM 
definition be used as a starting poin t for work on a definition of subs idy in services.  It also provided 
an illustrative list of issues that could relate to su bsidies in services.  Th e synthesis Note by the 
Secretariat captured some similar elements.   
6. The representative of Chile  wished to answer questions with  respect to the information she 
had provided at the last meeting on some domestic  support programmes.  One question was about the 
access of foreign-owned companies to programmes in  the sectors of telecommunications, electricity 
and maritime transport.  Her government did not im pose restrictions relating to foreign investments 
through any of these programmes.  However, the ne cessary entry requirements in relation to foreign 
capital had to be observed in each of the sector s.  Another question was whether the rural 
electrification programme was limited to families, which she said was not the case.  A delegation had 
also asked for more information on the programme re lating to maritime transport.  She said that she 
would provide the Secretariat with additiona l information on the programmes mentioned.  
Furthermore, documents produced for a recent OECD meeting of services experts already contained relevant information on two programmes.  
7. The representative of the United States
 wished to comment on the synthesis Note by the 
Secretariat and the informal communication from the delegation of Singapore.  She thought that the 
former Note effectively brought together the main ideas expressed to date on the subject.  The 
synthesis also showed that, on the issue of definition alone, many topics could be explored further, possibly for an indefinite period.  Many of the suggestions put forward seemed to be more about 
defining what was not a subsidy.  She wondered wh ether it could be inferred from the synthesis that 
Members were not foreseeing any par ticular type of subsidy as problema tic.  It would be good to have 
a better idea of the types of subsid ies that Members thought should be  disciplined, so as to get a sense 
of their prevalence.  This would help to determine the nature of the problem at hand, which in turn 
would help in crafting an appropriate definition.  On Singapore's contribution, she noted that the 
communication seemed to suggest that certain asp ects of subsidies might already be covered by 
disciplines, that other subsidies might be ex cluded because they achieved an important public 
purpose, and that some kinds of government suppor t, such as government purchasing, might not be 
relevant to services.  She wondered what was left  when all these elements had been stripped away.  
Were there any particular types of subsidies th at actually presented a significant problem in the 
services context?  She hoped to hear the views of other Members on this point.  While she would not 
like to see subsidy provisions interfe re with important public policy  objectives, it could not be said 
with certainty that policy measures designed to achieve a public purpose c ould never have adverse 
effects on trade.  Consequently, it seemed more prud ent to use a broad definition, at least from the 
outset.  The representative noted that Singapore referre d, in paragraph 3(c) of JOB(04)/180, to the 
concept of income or price support and that it questioned whether regulatory measures could be  S/WPGR/M/51 
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considered a form of price support.   She sought  further clarification on the kinds of regulatory 
measures that might be relevant.   
8. The representative of Hong Kong, China  said that he was puzzled by the interpretation given 
to the mandate on information exchange in the communication from the United States.  He thought 
that the mandate was sufficiently clear:  Members ha d to exchange informati on regarding all subsidies 
related to trade in services that they provided to  their domestic service suppliers.  The terms "for the 
purpose of negotiations", to which the United States had drawn attention, did not limit the scope of 
the information exchange.  It w as mandatory for all Members to pr ovide information relating to all 
relevant subsidies.  That being said, he thought that the ideas put forward by the United States were 
positive since they suggested practical ways to engage  in a more focused exch ange of information.  
One constructive idea was to agree provisionally on a definition of subsidy.  He noted that the ASCM 
was a useful starting point;  previous discussions on definition in the Working Party, as captured by the Secretariat Note, had often referred to it.  The synthesis Note served to remind delegations of the 
work ahead in reaching a definition of subsidy in th e context of services.  While he agreed that it was 
useful to try to develop a workable definition of  subsidies for the purpose of the negotiations, other 
areas of work should not be held hostage; th e chicken-and-egg syndrome that had plagued 
negotiations in the past should be avoided.  On th e sectoral focus proposed, he  considered that this 
was a constructive suggestion and a practical way of  proceeding.  His delegation had mentioned such 
an option in JOB(04)/127.  Providing information in a gradual manner could be a way forward if 
doing so at once proved too difficult.  He wished to know what information the United States would 
be able to provide under the approach it suggested.  On the choice of sector, he wondered whether the 
sector of tourism had particular problems with subsidies as compared to other sectors such as 
transport or construction.  These had been mentioned in the past as sectors where subsidies might be 
more prevalent.  In that regard, he wished to be updated on the status of the study undertaken by UNCTAD on services subsidies.  He did not think th at agreement of all delegations on a sector was 
needed before proceeding further;  it could be left  to individual Members to choose the sectors they 
thought would be useful for the purpose of informa tion exchange.  Leaving the choice of the sector to 
each Member would not lead to less focused discu ssions since mandated negotiations contemplated 
horizontal rules.      
9. Reacting to the communication from the Un ited States, the representative of Japan
 considered 
it was useful to narrow the scope of the informat ion exchange by focusing on certain sectors.  
However, his delegation was not convinced by the choi ce of the tourism sector.  It was a sector where 
subsidy programmes served, for example, to improve  the infrastructure or otherwise helped attract 
tourists.  Many levels of governments, as well as non-governmental organizations, were involved in 
providing support for this sector.  In that context, it might be difficult to determine which subsidies 
should be the subject of information exchange.  He also considered th at tourism was in certain regards 
quite different from other sectors, where the main focus was on how to supply services abroad.  In the 
case of tourism, the main focus was to promote activities within one's own territory.  He thus 
wondered whether tourism was the appropriate c hoice if the main purpose of the information 
exchange was to assist in the negotiations.   
10. The representative of Thailand  thought that the suggestion to focus on relevant sectors was 
useful. She did not mind starting with tourism, a lthough exploring subsidy schemes in infrastructural 
services such as telecommunications or transport could also be quite relevant.  She noted that the 
earlier communication from Chile (JOB(03)/218) include d an example in this sector.  While measures 
such as tax exemptions or duty free concessions might be seen to constitute a subsidy in the light of 
the ASCM definition, these would not be subsid ies under mode 2 because they did not restrain a 
Member's own citizens from going abroad.  In su ch cases, exports actually occurred within the 
country, and the GATS did not address this reverse terr itorial aspect of subsidies.  In Thailand, the 
board of investment offered, with conditions, corp orate tax exemptions to hotel and other tourism-
related services.  Foreign ownershi p was allowed in that sector.  She doubted that a modal approach 
was relevant to subsidization of this nature.  Th e determination of whether subsidies in the tourism S/WPGR/M/51 
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sector had distortive effects was problematic.  For one, the issue of like services was difficult, given the various consumer preferences at play.  How to  determine the degree of substitutability of staying 
in different locations?  Further, competition in the tourism industry was not based solely on, for 
example, the price of a hotel;  competition depended on many other factors, e.g., cultural or natural 
endowment of the destination country.  Possible trade-di stortive effects of subsidies, if any, had to be 
seen in that broader context and could be cancelled out  by other influences in the tourism industry.   
11. In a preliminary manner, the representative of Pakistan
 welcomed efforts by the United States 
to suggest ways towards a constructive informati on exchange.  She agreed with the suggestion to 
narrow down the scope of the information exchan ge by working on the basis of a provisional 
definition of subsidy, adopting a sectoral focus, and concentrating on particular types of subsidies, 
such as those directly linked to export performance.   She also took note of suggestions made in an 
earlier communication from Hong Kong, China and supported the proposal to invite UNCTAD to present its study on services subsidies.  In conc luding, she felt, in the light of the three 
communications discussed today, that it might be  advisable to try to agree upon a satisfactory 
definition while endeavouring to collect information on a step-by-step basis.   
12. The representative of Chinese Taipei
 asked whether the United States wished to develop a 
provisional definition of subsidy before proceeding w ith the information exchange or, alternatively, 
develop a definition on the basis of the information gathered on a sectoral basis.  She also wondered, 
in regard of examples provided in paragraph 5 of the document, whether the United States considered 
it necessary to formulate a definition that would excl ude the elements referred to or, rather, include 
such programmes in a definition but exempt them from legal challenge.  Further, she welcomed the 
proposal to proceed on the information exchange on a sector-by-sector basis.  However, other sectors 
mentioned in the Secretariat Notes on subsidi es covered by Trade Policy Reviews (S/WPGR/W/25 
and addenda) could also be examined.  On the communication from Singapore, she thought that the ASCM definition provided a useful starting point, but she had various specific comments.  With respect to paragraph 3(b), the notion of price or income support should be included in a definition of 
subsidy in services so as to cover all relevant meas ures.  Subsidy-like effects of regulatory measures 
should not form part of a definition,  but be covered by other provisions of the GATS.  On the issue of 
benefits, she thought that inadequate statistics,  as well as the complexity associated with multiple 
modes of supply, made the measurem ent of benefits conferred on reci pients particularly challenging. 
13. The representative of the Republic of Korea
 sympathized with concerns that too broad a 
definition might make the information process too burdensome;  the ASCM definition constituted a 
good basis.  She wondered whether concentrating on certain specific sectors would help to narrow 
down the definition.  She hoped that the information exchange could proceed, first, with tourism and 
then move on to other sectors.  While tourism might be a peculiar sector, gradually extending the information exchange to other areas could reveal other sectoral peculiarities.  She agreed with the 
suggestion by Chile to circulate the OECD papers mentioned.   
14. With respect to the communication from th e United States, the representative of Chile
 
supported the interpretation of the mandate put fo rward by the delegation of Hong Kong, China.  
Article XV contained an obligation to provide inform ation on all subsidies.  Second, while agreement 
on a provisional definition might be useful, this wa s not a prerequisite for exchanging information.  
From the Working Party's experience so far, she di d not think that the absence of a definition would 
lead to too much information.  Third, while  proceeding on a sector-by-sector basis was positive, 
sectors other than tourism, such as construction or transport, might be more relevant, given their 
clearer link to exports.  She understood that the Unite d States was also open to look at such sectors.  
Fourth, she thought that the Working Party could pursue various avenues in a simultaneous manner; 
the information exchange could proceed alongside a discussion on definitional issues, including the 
question of whether programmes with public policy objectives would be relevant.     S/WPGR/M/51 
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15. The representative also wished to provide preliminary comments with regard to the 
communication from Singapore.  On paragraph 3(a), she thought that the various elements forming a 
financial contribution in the ASCM would also capture  the reality of services trade.  Subsidization of 
such services as telecommunications, computer, tourism, or transport services through grants, tax credits, etc. was easily conceivable and could be the subject of further examination.  With respect to 
paragraph 3(b), she did not think that there w as a direct relationship between negotiations under 
Article XV and those under Article VI:4.  The subject matter of the latter negotiations was well 
defined, while types of subsidy disciplines that c ould be negotiated under Arti cle XV were still being 
discussed.   However, regulatory measures might have  subsidy-like effects.  While regulations could 
distort trade in services, a subsidy, in turn, might be considered to constitute an unnecessary barrier to 
trade.  From that perspective, there might be a link between the two Articles.  This topic should be 
further discussed.  On paragraph 3(d), she hoped th at Singapore could elaborate on the definition of 
the term 'benefit', and possibly provide more conc rete examples.  Concerning paragraph 3(e), she 
thought that a definition would have  to cover actions taken by all le vels of government.  With respect 
to paragraph 3(h), it would be usef ul to consider the "traffic light" approach in the context of services.  
It could assist in addressing particular sectoral sens itivities.  "Green light" or  non-actionable subsidies 
could be those used in the fulfilment of a public polic y objective.  Examples of such subsidies were to 
be found in the previously mentioned OECD documents on universal service, which could be circulated.     
16. The representative of Switzerland
 said that the communication from the United States was a 
constructive contribution to the negotiations.  Artic le XV:1 called for the provision of information on 
all subsidies relating to trade in services that gove rnments provided to their service suppliers.  This 
mandate was clear and not limited in scope.  It was also important to discuss how to proceed in fulfilling such an obligation.  She agreed with the United States' suggestion on the understanding that 
it did not deal with the scope of the information ex change or of the mandate, but with the procedural 
question of how to proceed.  It was up to each Memb er to decide how it wanted to fulfil that mandate, 
e.g., provision of information all at once or on a step -by-step basis.  Members did not have to proceed 
in the same manner.  However, she had concerns about using the information exchange as a basis for 
deciding whether disciplines were necessary or not.  The information provided might be partial and 
incomplete.  She was particularly concerned about  paragraph 7 in the communication from the United 
States, which stated that a target ed information exchange might help to assess the extent to which new 
disciplines on subsidies were merited.  Furthe rmore, the communication contained interesting 
thoughts about definitional issues.  A definition was re levant in two contexts, that of the information 
exchange and that of the negotiation of disciplines.  For the purpose of the information exchange, the 
definition contained in the ASCM could be used.  Relying on that definition did not carry any legal 
implications in terms of rights and obligations, but pr ovided an opportunity to test that definition, in 
addition to saving time.   
17. With respect to the synthesis Note by the Secr etariat, she appreciated in particular that it 
elaborated on the concrete critiques and proposals for improvements made by delegations in relation 
to the ASCM definition.  Paragraph 4 of that No te highlighted the concrete modification proposals 
made regarding the concepts of purchase of services a nd of income or price support.  Another specific 
point underscored in the Note concerned the issu e of the GATS carve-out for governmental services.  
She thought that the subsidy definition used in the ASCM provided a good basis for work on subsidy 
disciplines in services.   
18. The representative of India
 appreciated the efforts by the delegation of the United States to 
propose a practical way of moving ahead on the info rmation exchange.  Howe ver, he wondered about 
the choice of tourism as a focal sector and asked  if the United States considered that it caused 
particular trade-related problems.  Delegations might have to grapple with the fact that the choice of 
the sector depended on the information available.  Th e suggestion to focus on subsidies directly linked 
to exports might be a useful starting point.  With r espect to the Secretariat Note, he recalled that many S/WPGR/M/51 
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delegations had not expressed any views on the defi nition of subsidy and that there were many 
differences of opinion among those that had done so. 
19. The representative of Colombia
 believed that the terms "for the purpose of negotiations" in 
Article XV had been included so that the information exchange c ould proceed in parallel with, and 
contribute the necessary inputs to, the negotiation of  disciplines.  She welcomed the suggestion to 
adopt a provisional definition.  The Working Party should discuss the necessary elements.  The 
definition contained in the ASCM could be used  as a starting point.  Like the delegations of 
Switzerland and Hong Kong, China, she believed that  the mandated information exchange concerned 
all subsidies, not solely some of them.  Concerning the proposal to start with tourism, she thought that 
distortive effects were much more significant in ot her sectors, such as construction, audiovisual or 
maritime transport services.  An alternative appro ach might be to discuss, in a general manner, the 
different types of measures that might have tr ade-distortive effects, for example investment 
incentives, research and development subsidies, export credits and tied aid.   
20. The representative of Singapore  said that even though the Working Party had discussed this 
topic for the last 10 years, little progress had been made.  This highlighted the complexity of the 
issues involved.  The communication from his delega tion raised a number of questions that were 
relevant to the discussion, but did not aim to provide  answers;  the Working Party still had much work 
to do. Many Members still had not articulated their views on the issue of definition.  The 
communication from his delegation had highlighted that a number of GATS provisions already covered aspects of subsidies.  The ASCM might also  be relevant to aspects of services subsidies.  
These provisions had to be kept in mind so as to avoid duplication, e.g., as regards negotiations under 
Article VI:4.      
21. The representative of Indonesia
 believed that the ASCM definition could constitute a useful 
starting point for a definition of subsidy for services.  He agreed with the Un ited States that the scope 
of the information exchange might need to be na rrowed by focusing on selected sectors, which needed 
to be chosen with care.  It was preferable not to start with sectors that received government support 
for public service purposes, such as health and educa tion.  While committed to meeting its obligations 
under the WTO, his delegation thought that a suitabl e timeframe for developing countries might need 
to be considered with respect to the information exchange.  The information exchange amounted to an 
additional obligation to fulfil.   
22. The representative of Canada  believed that it might be useful to discuss what the Working 
Party was expecting the information exchange to  achieve.  There was no guarantee, even with a 
provisional definition, that Members would rush to provide information.  Informal discussions might 
be warranted.  It was not clear what the link was between the information exchange and the 
negotiations.  He agreed with the point made by the delegation of Switzerland that the information 
exchange should not represent a decision point to ag ree on either the need for disciplines or the form 
any disciplines might take.  An interesting avenue to  explore would be concre te examples of adverse 
effects.  Some had suggested a sectoral focus and, in that regard, it would be useful if Members that 
had been adversely affected could come up with specific sectoral examples.  This might allow the Working Party to determine whether there was a probl em and, if so, its magnitude.  One could then 
better determine how to proceed.     
23. The representative of Australia
 noted that these negotiations involved complex technical 
issues.  He agreed that Members needed to arrive at a provisional definition of subsidy, for which the 
ASCM provided a good starting point.  He supported the suggestion to start with the tourism sector, as 
this was a sector of interest to a wide range of Members.  Such a sectoral discussion should be of a 
generic nature rather than Member-specific.  It should proceed in parallel with efforts to further 
consider the definition of subsidy in the contex t of GATS.  As Singapore had noted, the Working 
Party had had discussions on the definition for a long time.  A previous communication from Poland 
(JOB(02)/207) had rightly pointed out that the issue of who was granting the subsidy was a basic  S/WPGR/M/51 
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element to be considered in the context of a definition.  The ASCM  could also provide some useful 
guidance to differentiate between trade in service s subsidized by governments and the provision of 
public services by governments.  The delegation of Hong Kong, China had pointed out the relevance 
of GATS Articles 1:3(b) and 1:3(c) in this context.   Members needed to distinguish between what was 
a public subsidy and what was a subsidy confe rring a benefit in the commercial sense.   
24. The representative of Hong Kong, China  thought that the point made in the communication 
from Singapore with respect to the relationship betw een Article XV and existing provisions under the 
GATS (e.g., Articles VI:4, VIII, IX, XVII, XXIII:3 ) should be examined further.  Given time 
constraints, he suggested that issues flowing from that communication, as well as from the Secretariat 
Note, be taken up in more detail during an informal meeting.  This would also help to reach a 
provisional definition of subsidy, as suggested by th e delegation of the United States.  Regarding the 
OECD studies, he considered that they contained a number of interesting observations about the role 
of subsidies in certain services sectors, in partic ular their contribution to the achievement of public 
policy objectives, which had to be recognized.  Examples provided in paragraph 5 of the 
communication from the United States alluded to this aspect.  Future discussions might shed light on 
what could be regarded as non-actionable subsidies.   He might share his delegation's thoughts on this 
issue at a later point.  In regard to the points ma de by the delegation of Ca nada about the information 
exchange, he said that, while it would be logical  to determine what might be achieved before 
embarking upon any exercise, the reality was that  issues relating to the Article XV mandate had 
already been discussed for 10 years.  It was now time to act upon the information exchange rather 
than talk about it.             
25. The representative of the European Communities  wished, at this point, to raise two questions 
on the communication from the United States.  First, he enquired what type of information would be 
the target of the proposed exercise.  Did the proposal  contemplate a notification of each subsidy or the 
sharing of information of a more  general nature?   Second, woul d it cover only direct and specific 
subsidies to a service supplier, and not indirect s ubsidies, for example the organization of Olympic 
Games which, by attracting tourists, might benefit a city?  Finally, he reiterate d that the best way to 
obtain information for the negotiations would be for those Members that considered themselves 
adversely affected by subsidies of others to shar e their experience in that regard.  Article XV:2 
provided for consultations in such instances.  Had any Member been adversely affected and requested 
consultations pursuant to Article XV:2 and,  if so, what had been the result?   
26. The representative of South Africa  welcomed the approach taken by the delegation of the 
United States in its informal communication.  While Article XV referred to subsidies that might have 
trade-distortive effects and also recognized the impor tant role of subsidies in relation to development 
programmes, the information exchange referred to all subsidies granted to service suppliers.  This 
complicated the situation.  For her delegation, it was more important to have disciplines on subsidies 
that had a trade-distortive effect than trying to ex amine a large amount of subsidies that might not be 
useful for the Working Party's purposes at this junctu re.  On the proposal to adopt a sectoral approach 
to the information exchange, she had doubts about the choice of the tourism sector and preferred 
discussing construction and transport services.        
27. With regard to the communication from the United States, the representative of Mexico  
believed that the mandate on information exchange c ontained in Article XV was clear.  It concerned 
all subsidies.  He thought that the suggestion to develop a provisional definition might facilitate the 
exchange of information, but it should not prejudge the final outcome of disciplines to be developed.  
His delegation needed to analyse further the imp lications of the proposed sectoral focus, but he 
thought, as others, that it might be best to start w ith sectors other than tourism.  He expressed some 
concerns with respect to the comment contained in  paragraph 7 of the communication from the United 
States to the effect that a sectoral focus could assi st in assessing the extent to which new disciplines 
on subsidies were merited.  The information excha nge was not a prerequisite for the development of 
disciplines.  The result of the in formation exchange would not determine whether disciplines should S/WPGR/M/51 
Page 8  
 
be developed.  Both avenues were complementar y.  Discussion of the objectives of the information 
exchange should not prevent it from taking place.  Concerning the intervention by the European 
Communities, he believed that Article XV:2 wa s independent from Article XV:1 and did not 
substitute for the information exchange foreseen in paragraph 1.   
28. The representative of China
, in a preliminary manner, thought that the suggestions by the 
United States might represent a practical way forward.   However, further consideration was needed by 
his authorities, in particular with respect to the selection of tourism as a starting point for the information exchange.   
29. The representative of the United States
 wished to react to some of the questions raised.  She 
recalled that the purpose of the communication from her delegation was to stimulate a more fruitful 
discussion and, hopefully, encourage a substantive exch ange of information.  She appreciated that the 
delegation of Thailand did not want to await a c onsensus before providing examples in the tourism 
sector.  Her delegation was not wedded to any partic ular sector, but had simply thought that a large 
number of delegations shared an interest in t ourism.  She took note of the suggestion that the 
Chairperson conduct consultations on the organi zation of work, but the communication had been 
introduced with a view to simplifying the exchange , not to create more discussions about where to 
start.  Her delegation had reiterated that the ASCM definition could be a useful starting point, but it 
had to be recognized that this definition had its  limits.  In that regard, paragraph 5 of the 
communication gave examples of certain types of me asures that might not reasonably be considered 
as part of a definition in the context of services.  In  response to the question by India as to whether the 
U.S. had experienced particular s ubsidy-related problems, she said that the intent was to stimulate 
discussion of what might be problematic and not to invoke paragraph 2 of Article XV.  It was not 
implied that any problem raised should be acted upon or disciplined.  It was important to get a better 
sense of what the problems were, and a way to do so was to proceed sector by sector.  This would prevent delegations from getting lost in details.   
30. Reacting to comments from Mexico and Switzer land in relation to paragraph 7 of the 
communication, the representative said that her dele gation did not want to condition the information 
exchange, but help to provide the Working Party with a better idea of where disciplines might be 
needed and where they were not.  She did not see wh at was problematic with such an approach given 
the mandate in Article XV.  This was not prej udging how the negotiations might evolve.  The 
proposed alternative - putting aside different views about the interpretation of the last sentence of 
Article XV:1 - to amass information on all possibl e services subsidies might take up all of the 
Working Party's time and resources, and ensure th at work on disciplines never advanced.  Her 
delegation's communication wished to avoid protract ed debates about interpretation and to propose a 
practical way of moving ahead.  This was not prejudging future disciplines and whether such 
disciplines, if any, should deal w ith concepts such as actionable/non-actionable subsidies.  Problems 
had to be identified, notwithstanding the fact that  paragraphs 1 and 2 of Article XV were completely 
separate.  The first two sentences of paragraph 1 were clear and provided direction to the work on 
information exchange.  The Working Party's goa l was to come up with disciplines to address 
problems, and the purpose of the information exchange  should be seen in that context.  She took note 
of the interest of some delegations in other sector s.  Her delegation had not  intended to start with 
sectors where trade distortive effects might be of par ticular concern to the United States, but with a 
less controversial area that was of inte rest to many developing countries.   
31. The representative of Hong Kong, China
 sought some clarifications on the intervention by the 
delegation of the United States.  He understood that  the suggestion was to leave it to each delegation 
to identify focal sectors for the purpose of the in formation exchange.  Pa ragraph 7 of JOB(05)/5 
suggested to exchange information by focusing on one or two sectors at a time, such as tourism, or on 
certain types of subsidies, like those directly lin ked to export performance.  He wondered why there 
would be a need for the Working Party to express further recommendations in that context.  The 
provision of any information about subsidies that mi ght affect trade in services would be a useful  S/WPGR/M/51 
 Page 9 
 
 
starting point.  He was looking forward to the inform ation that might be provided by the United States 
at a later stage.       
32. The representative of the European Communities  recalled that it would be useful, in preparing 
more detailed comments on the communication, to r eceive answers to the two questions that his 
delegation had raised.  In relation to a comment by the delegation of Mexico, he agreed that 
paragraphs 1 and 2 of Article XV were distinct.  Article XV:1 said  that Members had to exchange 
information on their own subsidies, but most of the information brought to the Working Party in recent years had nothing to do with this provision.   Many Members were still asking for additional 
information not falling within the ambit of para graph 1, e.g., Secretariat Notes on provisions 
contained in RTAs or information contained in Trade Policy Reviews.  Information pursuant to 
paragraph 2 would not be most useful in assessing what kinds of problems existed, their magnitude, 
and possible means to address them.  The European  Communities had never asked for consultations 
pursuant to Article XV:2 since the entry into for ce of the GATS, nor had any Member requested such 
consultations with the EC.  Regard ing Article XV:1, he recalled that his delegation had circulated an 
informal communication with information on the subs idy regime of the European Union.  He thus 
thought that the EC had complied with this aspect of Article XV.            
33. The representative of the UNCTAD
 wished to inform the Working Party that her 
organization's paper on government support measures would be made available at the forthcoming 
meeting of the UNCTAD Commission on Trade in Goods and Services and Commodities on 14-18 March 2005.   She hoped that it would help to build  consensus in the Working Party and to improve 
the understanding of relevant facts and issues.   
34. In summing up, the Chairperson
 said that while not all delegations shared the U.S.' 
interpretation of the mandate for the information exchange, many found the suggestion of a sectoral 
approach to be useful.  However, views differed on which sectors to start with.  Tourism had attracted 
much support, although its peculiar characteristics had been noted.  Transport, telecommunications and construction had also attracted some interest .  Another key element emerging from the meeting 
was the degree of support for using the definition of the ASCM as a basis for a working definition for 
the information exchange.  Support had also been expressed for this definition to serve as a basis for 
discussion on disciplines.  Some delegations had al so emphasized public policy objectives as an area 
for further work.  Others had noted the importanc e of discussing concrete examples of problems.   
Some delegations had called for informal discu ssions on the information exchange as well as on 
definitional issues.   
35. Recalling that 2005 was an important year in the negotiations, the Chairperson called on the 
Working Party to focus its work if progress was to be  made.  This was not an academic exercise.  It 
was now time to concentrate on the key issues, and she urged delegations to consider whether the 
various proposals put forward would allow for informa tion to be tabled at the next meeting.  This 
could be done in relation to tourism or any other sec tor on which delegations c ould offer information.  
Proponents should lead the way.  Further, she not ed that many delegations had not yet expressed 
detailed views on various issues under consideration,  including on definition, and it would be 
important for them to participate as the Working Party moved forward.   
36. The representative of Chile
 suggested to circulate the previously mentioned documents from 
the OECD.  The Chairperson  agreed and invited delegations to take note  of the comments made.      
II. NEGOTIATIONS ON GOVERNMENT PROCUREMENT (ARTICLE XIII) 
37. The Chairperson  invited Members to pursue their discussions, which had centred recently on 
the proposal by the European Communities (S/WPG R/W/48).  While divergent views and different 
levels of ambition remained, delega tions had examined a number of issues related to the proposal for 
a framework of rules in this area.  These included:  the application of the MFN obligation, concrete S/WPGR/M/51 
Page 10  
 
ways in which contracts covering both goods and servi ces might be dealt with, and modal distinctions.  
Delegations might also want to express specific view s with respect to procedural or transparency 
provisions.  Recent Notes by the Secretariat on g overnment procurement provisions and scheduling 
approaches in RTAs might provide useful background material.     
38. The representative of th e European Communities
 recalled that at the last meeting a number of 
delegations had said that they were ready to work on procedural rules that could be developed for 
government procurement in the context of the GATS.   The Secretariat Note S/WPGR/W/49, on the 
government procurement provisions contained in ec onomic integration agreem ents (EIAs), provided a 
good working basis and a useful source of inspiration in regard to procedural rules.  Most of the  agreements reviewed in that Note contained proced ural rules typically covering such topics as: non-
discrimination, valuation of contracts, technical specifications, procurement methods, qualification of 
suppliers, procedural rules regarding invitations to participate, time limits for tendering and delivery, 
tender documentation, and award of contracts.  This  provided the structure of an annex to the GATS 
on procedural rules for government procurement and the question now was what types of rules should be developed under relevant headi ngs.  His delegation believed that these rules should be simple, easy 
to understand, and easy to apply.  They would apply to committed sectors.  The intent was to use the 
flexibility of the GATS to develop a framework on government procurement that suited everyone and 
enabled each Member to undertake relevant govern ment procurement commitments in the sectors it 
wished to open to international competition and accord ing to the limits it would set in order to fulfil 
its public investment and developmen t needs.  His delegation was reflecting on rules of procedure that 
met such objectives, and he invited interested dele gations to provide suggestions, in particular in 
regard to special and differential treatment in favour  of developing countries.  He underscored that the 
negotiations on the three topics falling under the res ponsibility of this Working Party should advance 
at the same rate and invited all delegations to engage in discussi ons on government procurement as 
they did for other topics.   
39. The representative of Egypt
 wished to reiterate the position of his delegation according to 
which the mandate of Article XIII did not include MF N, market access or national treatment.  He did 
not think that the approach proposed by the Eur opean Communities fell within the scope of that 
mandate.  He also wished to echo the views expressed  by some delegations regarding the implications 
of the July Package, which had dropped the issue of transparency in government procurement from 
the negotiations under the Doha De velopment Agenda.  For the negotiations to proceed in a more 
meaningful manner, it would be essential for the Wo rking Party to agree on the scope and purpose of 
the mandate under Article XIII before engaging into  in-depth and complex discussions on matters on 
which serious reservations had been repeatedly expressed.     
40. The representative of Canada  thought that the Secretariat Note on government procurement 
provisions in EIAs (S/WPGR/W/49) clearly pointed out extensive commonalities of procedural rules across the different agreements.  Many useful preced ents and references thus existed for the Working 
Party in identifying rules that might be appropria te for government procurement commitments in the 
GATS.  On that basis, she believed that there was value in continuing to discuss this issue, 
particularly with respect to transparency and other rules.   
41. The representative of the United States
 first wished to answer some of the questions included 
in the Chairperson's annotated agenda, even if these might have been mainly directed at the EC.  The 
first question was whether the MFN obligation should apply in sectors where no government 
procurement commitments had been taken.  Her de legation thought that, in principle, the same 
rationale would seem to apply to procurement as to other policies already covered by the GATS, 
namely that Members should endeavour to treat all other Members on an equal basis.  The second 
question was whether any of the suggested de rogations from the MFN obligation (e.g., MFN 
exemptions, Article V, provisions on the relationship with the GPA) would allow a Member to deviate 
from the level of treatment committed in the propo sed government procurement column in schedules.  
In her view, it would seem necessary to allow for deviations from the MFN principle in order to  S/WPGR/M/51 
 Page 11 
 
 
accommodate EIAs, existing obligations under the GPA, and existing policies that accord more 
favourable treatment to selected countries.  She hoped that the EC could provide answers.  In reaction 
to the intervention from the delegation of Egypt, sh e reiterated that the mandate in Article XIII had 
been reaffirmed by the General Council in Annex C of that document.  The decision on transparency 
in government procurement in the context of the July  Package related to the relevant Singapore issue 
and did not affect Article XIII.  This interpreta tion was reinforced by the content of Annex C.   
42. The representative of India  wished to lent support to the dele gation of Egypt.  He recalled that 
these points at been raised by his delegation and vari ous others at every meeting.  There was a serious 
divergence on the scope and purpose of the mandate.  Ignoring it was not the best way of moving 
forward.  Even on the issue of transparency in government procurement, a large number of Members 
had expressed serious reservations.  As a result, the issue got dropped from the Doha Development 
Agenda.  Since the situation had not changed, a r eality check was needed.  On the procurement rules 
contained in EIAs, he wished to recall that ma ny Members had no experience with such types of 
provisions.  The fact that some Members had agreed upon such rules amongst themselves should therefore not suggest that their multilateral extension would be the best option.   
43. The representative of Brazil
 shared the concerns expressed by Egypt and India on this 
question.  The scope of the mandate  should be examined carefully befo re entering into negotiations on 
an annex as proposed by the EC.  Article XIII pointed in a different direction.  Paragraph 1 of that 
Article provided that MFN, market access and nati onal treatment were not part of the negotiating 
mandate in paragraph 2.   
44. The representative of Hong Kong, China  wished to respond to questions included in the 
annotated agenda.  Concerning the first question, he understood that the EC's proposal followed the 
structure of the GATS.  If so, the MFN obligation shoul d logically apply as provided in Article II, i.e., 
across all sectors irrespective of whether gove rnment procurement commitments had been 
undertaken.  Concerning the second question, he wished  to stress that derogations from MFN (be it 
Article V, a provision on the relationship with the GPA or MFN exemptions) would not allow a 
Member to grant less favourable treatment than had been inscribed in its sch edule of commitments.  
He recalled that his delegation was willing to pursue discussions under this agenda item without 
prejudice to the question of the mandate.  Focusing on substance would be preferable to protracted 
debates about what the mandate effectively covered.  He wished to note that other provisions of the 
GATS, apart from those excluded by Article XIII, al ready applied at present to measures pertaining to 
government procurement, assuming these measures affect ed trade in services pursuant to Article I.  
Therefore, government procurement was already su bject to Article III on transparency, insofar as it 
related to measures of general application which pertained to or affected the operation of the 
Agreement, or significantly affected trade in services .  Accordingly, he was not sure why there was a 
need for further debate in that regard.   
45. The representative of Canada  wished to support the delegation of Hong Kong, China in its 
call for focusing on substantive issues.  Members ha d to engage constructivel y and positively in all 
discussions in this Working Party.  
 
46. The representative of Switzerland  wished to answer the questio ns in the annotated agenda, 
and hoped that the delegation of the European Communities could do likewise.  She thought that confining the MFN obligation to sectors where government procurement commitments had been 
taken would not be compatible with the structur e of the GATS.  The GATS' MFN obligation was a 
general obligation which applied across the board.  The MFN obligation should thus apply to all 
government procurement in services under the GA TS, irrespective of specific commitments.  
Concerning the need for MFN exem ptions, she wondered whether many preferential arrangements in 
this area actually lied outside the ambit of Article V and of the GPA.     S/WPGR/M/51 
Page 12  
 
47. The representative of Japan
 said that Article XIII covered market access issues and not only 
transparency.  Like the delegations of Canada a nd Hong Kong, China, he did not think it was very 
productive to further discuss the mandate.  It would be preferable to assess how practical and useful 
the framework proposed by the EC really was.  In  reference to the intervention by the delegation of 
India, he considered that the Singapore issue of  transparency in government procurement was 
different from what was discussed under this agen da item.  The EC was proposing a framework 
allowing Members to include government procur ement commitments in their GATS schedules;  
Members who did not want to undertake such commitments were free not to do so.  The Singapore issues had concerned rules applying to all Members,  which had made some delegations hesitant to 
engage in negotiations.  Given the flexibility of the GATS, it was not unrealistic to discuss such a 
framework of rules for procurement.         
48. Concerning the questions contained in the annotated agenda, the representative of the 
Republic of Korea
 agreed with other delegations that the MFN obligation should also apply to sectors 
where no commitments on government procuremen t were taken.  MFN derogations might be 
necessary for GPA Members or for agreements fa lling under Article V, although this could be 
discussed further in the course of negotiations.  She was disappointed that the Singapore issue of 
transparency in government procurement had been  dropped from the Doha negotiating agenda, but 
that did not change the releva nt mandate under the GATS.   
49. The representative of South Africa  wished to support the interventions of the delegations of 
India, Egypt and Brazil in regard to the mandate.  A reality check was needed;  it did not seem wise to 
proceed without having a clear idea of what the Wo rking Party sought to achieve.  The same applied 
to the topic of subsidies.    Agreement on the sc ope of the mandate was needed before proceeding to 
any substantive negotiations.   
50. The representative of the United States  wished to react to some of  the previous interventions 
regarding the mandate.  She thought that, while the July Package did not, from a legal point of view, 
affect the transparency aspects of the mandate under Article XIII, the delegation of India had 
indicated political concerns to negotiate on transp arency, whether in the context of the Singapore 
issues or elsewhere.  India had not questioned th at transparency was included in the mandate under 
Article XIII.  She would be concerned if argum ents relating to transparency in government 
procurement in the GATS were made contingent on the existence of a mandate under the Singapore 
issues.  In the past, her delegation had said that it was useful to bear in mind any results achieved in 
respect of the Singapore issues, but this was not in tended to prevent negotiati ons under Article XIII or 
conditioning them on discussions on Singapore issu es.  Her delegation had never implied that the 
Article XIII mandate excluded transparency or w as linked to the Singapore mandate.  She could not 
concur with any insinuations that the Article  XIII mandate had been rendered superfluous by 
decisions on the Singapore issue of transparency in  government procurement.  Annex C of the July 
Package explicitly affirmed the negotiating mandate  under Article XIII.  If, as some seemed to 
suggest, transparency was not part of the Article XIII mandate, what would be left?  No delegation 
had ever implied a link between Article XIII and the Singapore issues in the context of the discussions 
on the July Package.   
51. The representative of Egypt  reiterated the view that it might be suitable for the Working Party 
to address the implications of the July Package on th e mandate of Article XIII.  The representative of 
Mexico  supported the interventions by the delegations of Egypt, India, Brazil and South Africa, in 
particular with regard to the need to clarify the mandate.   
52. The representative of th e European Communities  recalled his delegation's long-held views on 
the mandate.  Paragraph 2 of Article XIII provi ded for negotiations on government procurement 
without any qualification.  It did not limit the negotiations to transparency aspects.  If the intent had been to exclude market access from the negotiations, th is would have been specified.  A distinct issue 
was that certain Members might not want, or did not ha ve the political will, to negotiate on this topic.   S/WPGR/M/51 
 Page 13 
 
 
Lack of political will had been apparent in the case of the Singapore issues, but the current context 
was different since the relevant mandate directly  came from an international agreement that bound 
every Member.  Further, while various delegations  had serious doubts about other mandates in the 
area of rules, this did not prevent them from activel y participating in the discussions.  With respect to 
the application of the MFN obligation, his delegati on shared the interpretations put forward by some 
delegations.  The intent was to extend to government procurement the obligations of the GATS: the 
MFN obligation would apply, but as in the GATS certa in derogations would be  permitted, taking into 
account economic integration agreements and the specifi cities of the GPA.  He invited delegations to 
participate actively in all areas of the rules agenda and not just in some of them.   
53. The representative of Mexico  confirmed that his delegation did not share the interpretation of 
the European Communities with respect to th e mandate on government procurement.   
54. The Chairperson  noted that discussions had focused on the scope of the mandate and that 
divergences of opinion were clear.  Some delegati ons thought that it would be more productive to 
focus on substance rather than engage in a circul ar discussion on the mandate.  Others had said that 
the mandate needed to be addressed before discussing substance.  Concerning the issue of MFN, there 
had been a good degree of support for broad applicati on, consistent with relevant principles of the 
GATS.  However, there would be a need for der ogations to take into account preferential trade 
agreements and the GPA.  She wish ed to reiterate that 2005 was an im portant year in the negotiations 
and that time was running short.  Delegations now  needed to focus on what they considered doable 
and achievable.  She invited the Working Party to take note  of the comments made.        
III. EMERGENCY SAFEGUARD MEASURES (ARTICLE X) 
55. The Chairperson  suggested that Members pursue their discussion in the light of the latest 
document brought to the Working Party's attention, JOB(04)/175, in which a group of Members from ASEAN provided written answers to previously ra ised questions.  Issues raised included the 
availability of statistics, the definition of domestic industry, the relevance of obligations contained in 
bilateral investment treaties, the link between an  ESM and progressive liberalization in the market 
access negotiations, and the relevance of certain entries in schedules.   
56. The representative of the Philippines
, speaking also for the delegations of Brunei Darussalam, 
Indonesia, Malaysia, Myanmar and Thailand, elaborat ed on issues previously raised in the light of 
questions listed in the annotated agenda.  With respec t to statistics, relevant issues related, on the one 
hand, to the determination of injury and, on the ot her hand, to the increase in  imports.  Concerning the 
former element, he recalled that the delegation of the United States had said at the last meeting that 
the information provided for a particular exampl e, optometry, did not make a compelling case to 
suggest that a domestic industry had been injured or that injury had been due to trade.  The U.S. 
delegation had not only mentioned a number of indica tors which would need to be considered (e.g., 
past sales volumes, revenue of the sector, employment, compensation of opticians), but expressed doubts whether such information actually existed.  The representative said that such data should be 
provided by the firms constituting the domestic indus try or associations representing the industry.  If 
they could not produce the required statistics to subs tantiate their claim of injury, the investigation 
would conclude that the case for a safeguard measure  had not been made.  The following data might 
be generated by petitioning firms: decline in prof its, returns on investment, cash flow, occurrence of 
losses, price reductions, fundamental changes in the pr ice structure in relation to losses or decline in 
profits, reduction in the number of domestic suppliers, decline in the gr owth of output or sales, change 
in market share, reduced level of capacity utiliza tion.  These indicators were drawn from the original 
ASEAN non-paper (Job. 6830) from 2000.  A point had also been made that employment, wages and sales volumes could have increased for the sector as a w hole.  In this case, there would be no injury to 
the domestic industry.     S/WPGR/M/51 
Page 14  
 
57. Turning to the use of relevant import statistics,  the representative considered that this aspect 
merited further thought.  The original non-paper from ASEAN had referred to a number of indicators 
either in absolute or relative terms.  These include d information provided by professional associations, 
affected firms, regulatory authorities, and immigrat ion or labour authorities, as well as, for mode 3, 
statistics on foreign investment, such as data on cap ital flows compiled by the central bank, the board 
of investment or the securities and exchange comm ission.  Research institutes, think-tanks or even 
consulting firms might also have useful data.  Rele vant statistics for modes 3 and 4 might not appear 
to be too problematic.  Even data sources for imports  under modes 1 and 2 might exist.  Again, if the 
key question of increased imports could not be addressed by the petitioning industry, the case for applying a safeguard measure would presumably fail.   
58. The representative wished to come back to a qu estion put at the last meeting with respect to 
the temporary suspension of regulatory reform.  The point had been made by a delegation that more 
competition, not less competition, was the most effective means of achieving universal service 
objectives.  He agreed that this might indeed be the case in several situations, although there could be 
others where liberalization would not ensure the kind of universal service that a government might 
want to achieve.  In such cases, governments had to  intervene and implement the necessary regulatory 
measures.  This was evident from the documents di scussed during a recent meeting at the OECD.  The 
example that the group of delegations from ASEAN had provided was one where the initial measures 
that a Member had bound proved ineffective in ensuring access to universal service.  A related 
safeguard measure was not intended to restrict comp etition, but to temporarily modify the regulations 
bound in order to ensure provision of universal service.         
59. On the relationship between bilateral investme nt treaties (BITs) and the application of 
safeguard measures, he thought that this issue was dict ated to a large extent by the mandate in Article 
X, which underscored the principle of non-discrimina tion.  Any safeguard would need to be applied 
on an MFN basis.  Some had raised the concern that a Member party to a BIT might face the possibility of having its safeguard measure challenged not in the context of the WTO but in that of a 
BIT or free trade agreement.  While not foreclos ing such a possibility, he thought that a Member 
intending to invoke a safeguard that would deroga te from BIT obligations would have to decide 
whether it wanted to comply with the non-discrim ination obligation of the GATS and risk legal 
challenge under the BIT or, alternatively, whether it wanted to exempt the other party to the BIT from 
the application of the safeguard measure.  The second scenario was a non-starter given that an ESM 
would have to be applied on a non-discriminatory basis.  The Member would have to make a 
judgement as to what legal challenge  it would want to risk facing: one under the WTO for violation of 
the MFN obligation or one under a BIT.     
60. Turning to the link between an ESM and progressive liberalization in the market access 
negotiations, he reiterated that it wa s up to individual Members to make the kind of links they deemed 
appropriate.  Some of the delegati ons for which he was speaking had previously indicated that they 
would be more flexible in terms of undertaking further commitments in the presence of an ESM.  
These commitments might vary from one Member to a nother.  With respect to concerns that an ESM 
might not yield greater commitments than would ot herwise have been the case, the representative said 
that all Members had high levels of ambition in the services negotiations, as reflected in the types of 
requests received.  Developing countries had also e xpressed clear offensive interests.  A safety net 
would be needed to safeguard the higher levels of liberalization proposed in offers, assuming that they 
actually materialized.  With respect to a point made by Mexico about other measures to address 
similar situations, he thought that, should an ESM not be available, the alternative might be to adopt a 
scheduled approach whereby each Member would co ndition its commitments on the application of a 
safeguard mechanism as already appeared in some schedules.  Another alternative would be to use 
Article XXI procedures, although the purpose of th at Article was to address situations where a 
Member wanted to permanently modify its schedul e of commitments.  A Member could also inscribe 
as many economic needs tests (ENTs) as possible in its schedule.  He had not advocated such an 
alternative, because a more transparent and objective use of ENTs, if not full elimination, was being  S/WPGR/M/51 
 Page 15 
 
 
advocated in other fora.  However, if there was no ESM, a viable option for many Members would be 
to include many ENTs in their schedule.  This might  not be the best solution for the system, given that 
many ENTs suffered from a lack of transparency  and objectivity of criteria.  An ESM seemed 
preferable because it would be multilaterally agreed u pon, with clear and transparent criteria.     
61. The representative of the United States  wished to draw attention to the question of like 
services.  For an injured industry to produce releva nt information to the government, similar things 
needed to be compared.  For example, a memoranda  from one lawyer might not be exactly like that 
from another lawyer; the quality of the service might be different.  She still felt that no clear answer 
had been put forward on how to establish injury.  How could it be ascertained whether the cross-
border supply of legal services by fax, mail, e- mail or telephone was causing injury?  She was 
concerned that Members at lower levels of econo mic development might face difficulties, because of 
resource constraints, in amassing all the types of  information mentioned by the delegation of the 
Philippines.  She wondered, in that context, which Members might be most likely to use an ESM.   
62. The representative wished to register a clarifica tion with respect to paragraph 49 of the report 
of the last meeting (S/WPGR/M/50) in relation to an intervention by her delegation.  It was noted that 
the delegation of the United States had said that it w as not useful to look at other tools that were 
available in the GATS.  She clarified that this re mark related to attempts to compare the type of 
analysis that was needed for an ENT and that for an  ESM.   Questions with respect of an ESM related 
to a tool that would be negotiated multilaterally fo r all Members to use on an  MFN basis, while ENTs 
tended to be customized by the particular Member that was including them in its schedule.  What was 
under consideration pursuant to the mandate of Ar ticle X were negotiations on the question of a 
multilateral mechanism.  If criteria were to be deve loped for such a mechanism, the kind of questions 
asked would be different from those posed in respect of customized entries in a Member's particular 
schedule.  The relevant section of S/WPGR/M/ 50 should be read accordingly.        
63. The representative of Mexico  said that the points made by the delegation of the Philippines in 
response to previous comments from his delegation ha d not alleviated his concerns.  He wished to 
reflect further on the issue and hoped to come back w ith examples of measures that could be useful in 
addressing the types of situations mentione d by the group of Members from ASEAN.   
64. The representative of Hong Kong, China  remarked that the issues mentioned in the annotated 
agenda all pertained to feasibility, which was understandable since these were the topics that 
delegations had recently focused upon.  However, fo r his delegation, the funda mental questions were: 
what were the circumstances justifying a safeguard  and, especially, who was going to be protected by 
its application, and against what would protection be provided?  These remained to be answered 
satisfactorily.  While he had said at the last meeting that it might not be useful to try to exhaust all 
circumstances where a safeguard might be necessary, he clarified that he would deem it useful if proponents could demonstrate to other Members, in at least a few cases, the circumstances where a safeguard would be needed as opposed to other available means.  This might yield more information 
on the desirability of an ESM.  Concerning feasibility aspects, he was not trying to suggest that ENTs 
raised the same issues as an ESM.  Safeguard  measures and ENTs were designed for different 
objectives and were to be used for different purposes.  He was thus not arguing in favour of the use of 
ENTs in order to substitute for an ESM, or vice-ve rsa.  Neither did he want to pass judgement on 
whether one of these was more desirable than the othe r.  However, he was trying to shed some light 
on feasibility questions.  Issues pertaining to the appli cation of an ENT could be very similar to those 
relating to the application of an ESM.  He wondere d about the extent to which issues relating to the 
determination of economic harm in the context of an ESM would not also arise with respect to the 
determination of economic needs in the context of an ENT.  In the latter case, would a Member have 
to substantiate the notion of economic needs thr ough statistics on trade in services?  In the last 
meeting, the delegation of the United States had ci ted some statistical elements that a government 
might have to compile in order to substantiate th e use of an ESM, such as past sales volumes, revenue 
of the sector, employment, compensation of opticians.  Would these elements also be relevant for the S/WPGR/M/51 
Page 16  
 
application of ENTs?  If so, it might be instructive to learn about the experience of Members in applying ENTs.  If feasibility issues had been resolv ed for ENTs, could one assume that they would 
not be a problem in the context of an ESM?  Conver sely, if feasibility questions were a problem for an 
ESM, they might also be problematic in the contex t of ENTs.  He thought that the second avenue was 
the most likely.  He also asked Members that had either safeguard-type entries in their schedule or 
safeguard-like mechanisms in free trade agreements to explain how they had resolved feasibility 
issues.  He was not questioning the purpose of such  mechanisms in free trade agreements, which had 
been discussed in past meetings, but ask ed how feasibility issues had been dealt with.                  
65. With respect to the relationship between BITs  and ESM, he reiterated that the Article X 
negotiations were based on the principle of non-discr imination.  This would mean that safeguard 
measures would have to be applied on an MFN basi s.  In that context, rather than discussing the 
compatibility of safeguard measures with BITs, the more relevant question might be that of the 
compatibility of BITs with the MFN obligation.  Another issue was the extent to which an ESM, 
should one be developed, related to the free tr ade agreements concluded by WTO Members.  A 
previous Secretariat Note (S/WPGR/W/4 and addend um) had highlighted that some EIAs contained 
safeguard-type provisions, while others did not.  To what extent would those Members that had no 
such provisions in their EIAs be able to apply an ESM that might be elaborated in the WTO?  Reacting to a point made by the representative of th e United States with respect to the determination 
of likeness, the representative believed that such issu es would be relevant not only for the application 
of a safeguard, but also for various other measures.  For example, likeness had to be taken into account in the context of the national treatment obligation.   
66. The representative of the European Communities
 considered that the discussion had still not 
yielded sufficient insights regarding situations justif ying the application of a safeguard.  He asked the 
group of delegations from ASEAN whether, in th eir proposal, a safeguard would apply to all 
commitments or only to commitments that were not subject to quantitative restrictions.  For example, 
if a Member had a horizontal limitation providing that foreign ownership was limited to 30%, it 
seemed difficult to conceive that an established fo reign supplier could cause injury to local service 
suppliers.  If a Member had taken a commitment limiting to three the number of licences for foreigners, would it be possible to apply a safeguard  measure to any of the three foreign suppliers 
allowed?  He also wished to obtain more info rmation on possible sources of injury.  Would it be 
solely an increase in the number and/or an increase in  the value of services provided?  Would it be in 
absolute terms or rather in relative terms compared  to local service suppliers?  With respect to the 
point raised by the delegation of Hong Kong, China on the relationship between an ESM and 
provisions in EIAs, he thought these issues were already being addressed for goods trade in the Negotiating Group on Rules.  This issue might also need  to be considered in the context of services, 
but he did not want to prejudge the work of the Negotiating Group on Rules. 
67. The representative of the Republic of Korea
 wished to ask some questions to the group of 
delegations from ASEAN in relation to suggestions that ENTs might become an alternative approach 
to an ESM.  First, would ENTs address issues such as injury caused by the in crease of trade?  Second, 
would they target consumers or providers?  Third, would they allow for discriminatory measures as in 
the case of an ESM?  Fourth, if ENTs were to be u sed as an alternative, would this mean that they 
would be linked solely to future commitments?   
68. The representative of Canada  said that the challenges associated with an ESM had been 
discussed for about 10 years because of a lack of convergence within the Working Party over its 
relevance in the context of trade in services.  Con cerning data collection problems, he noted that the 
issue of causality had not been addressed by proponents.  Given the characteristics of trade in services, a safeguard measure could have a wide a nd quick effect on various sectors of the economy 
that were not intended to be affected by the measur e in the first place.  He was not certain about the 
points made with respect to the relationship be tween BITs and an ESM, given that bilateral 
investment agreements did not have the same characteristics as free trade agreements.     S/WPGR/M/51 
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69. The representative of the United States  associated herself with some of the questions raised 
by the delegations of the EC and the Republic of Kor ea with regard to ENTs.  She reiterated that even 
if an ESM were – despite efficiency problems – negotiated, this would provide no guarantee that 
ENTs would not continue to be used.  Bringing ENTs into a discussion on the question of an ESM 
thus did not appear very productive.  She would ha ve doubts about a Member that decided to include 
various ENTs in its schedule solely for the sak e of strengthening its position in the Article X 
negotiations.  The ineffective use of any tool should not be encouraged.  She doubted that efforts to 
include as many ENTs as possible in schedules would be a good solution from a systemic point of view, whether an ESM existed or not.  The dele gation of Hong Kong, China might produce, if it 
wished, examples of ENTs that displayed direct si milarities with safeguard measures.  However, it 
would not be for delegations that were not demandeurs  to bear that burden.  The delegation of the 
Philippines might be contemplating that the existe nce of an ESM would lead governments to forego 
using ENTs, but she doubted that every Member would wa nt to make that commitment.             
70. The representative of Chile
 wished that the Working Party further discuss what might be the 
scope of a safeguard measure in relation to the di spute settlement provisions of BITs or EIAs.  It 
might be interesting to hear the views of Members in  that regard.  He also hoped to further deepen the 
analysis of issues relating to ENTs.            
71. The representative of Brazil  suggested that UNCTAD be invited to present its paper on ESM 
which, he understood, would be made availabl e for the next UNCTAD Commission on Trade in 
Goods and Services and Commodities.  The representative of UNCTAD  confirmed that the document 
would be circulated at the Commission meeting on,  14-18 March and welcomed the opportunity for a 
representative of the organization or the author of the document to present it in the WPGR.   
72. The representative of the United States  sought clarification of Brazil's request with respect to 
circulation and presentation of the UNCTAD document.  The representative of Brazil  said that he 
proposed that that  UNCTAD be invited to present th eir document.  It would be useful if Members 
could obtain a copy at the UNCTAD meeting in Ma rch so as to prepare themselves for discussions.  
His delegation was still planning to eventually presen t a paper on safeguard-type entries contained in 
schedules of Members. 
73. The representative of the Philippines  wished to offer preliminary responses, on behalf of the 
group of delegations he was speaking for, to some  of the questions raised.  Concerning the link 
between ENTs and an ESM, he understood that this  topic had been raised so as to see whether 
questions of feasibility existed in both contexts.  In responding to a question of what might be 
alternatives to an ESM, he had suggested that one such alternative might indeed the scheduling of 
ENTs in relevant sectors, although he recalled that this was not an idea that had originated from his 
delegation.  Because of the lack of transparent and objective criteria, it was often unclear whether ENTs were intended to address situations of injury  to the domestic industry.  While ENTs and ESM 
were not the same instruments, they were not comple tely different either.  From his perspective, ENTs 
were not the preferred option, but they were tools that were available under existing rules.  While the 
delegation of the United States had said that ther e were no guarantees that, with an ESM in place, 
ENTs would not be scheduled, it could also be sai d that the existence of an ESM might strengthen 
arguments for keeping ENTs to a minimum.  Memb ers that had experience with using ENTs could 
share their insights as this might shed some light on feasibility issues in the context of an ESM.  In 
response to a question from the delegation of th e Republic of Korea on whether ENTs would be 
linked to future commitments, he thought that Me mbers could only schedule new ENTs in respect of 
future commitments, and not of existing commitment s.  He was not suggesting that one tool was 
better than the other, but clear multilateral rules a nd criteria appeared to offer greater certainty and 
predictability in comparison with a tool that lacked transparency and objective criteria.    
74. Concerning the link with BITs, many relevant qu estions had been put forward, for example, 
whether Members that had no safeguard provisions in  their trade agreements could have recourse to a S/WPGR/M/51 
Page 18  
 
multilaterally established ESM.  Because of the non-di scrimination principle enunciated in Article X, 
he thought that Members that did not have safeguard -type provisions in their BITs would still be able 
to use a multilaterally agreed ESM and apply it to othe r parties to that BIT.  With respect to the issue 
of like services, he believed that it might be difficult to determine likeness a priori.  Relevant contexts 
would have to be taken into account on a case-by-case basis.  This issue of likeness had many facets, 
including, for example, with respect to the national treatment obligation and not solely in relation to 
an ESM.  In response to a comment that the amount  of information needed for the operation of an 
ESM might make its use by developing countries more difficult, he noted that the special and 
differential treatment provisions proposed might help to address such concerns.  At the same time, his group of delegations had not wanted to propose an ESM that would cater solely to interests of 
developing countries.  While, on the goods side, cases  attracting most attention were those where 
developed countries invoked a safe guard, experience with the Agre ement on Safeguards showed that 
the propensity for developing countries to impose safeguard measures had increased over the years.  
This trend suggested that an ESM could be releva nt to both developing and developed countries.  A 
challenge for this Working Party might be to ensure that the criteria to be complied with would not be 
so onerous as to prevent use of an ESM by developing countries.        
75. Concerning a question by the delegation of the European Communities on whether a 
safeguard would apply in a situation where there we re only three licensees in a particular sector, the 
representative considered that the answer depende d on how domestic industry was defined.  If the 
three foreign licensees were considered as part of  the domestic industry under a Member's domestic 
legislation, they would obviously not be subject to  a safeguard measure.  If the licensees did not fall 
within a Member's definition of domestic industr y despite having a commercial presence, a safeguard 
measure could be applied.  He thought that unanticipated conse quences could still occur, despite 
efforts by the government to calibrate the commitm ent.  This needed to be examined on a case-by-
case basis.  Even if a government had estimated that the granting of three licences would not cause 
serious injury, it was possible that the increase in th e supply of services by the three licensees, or their 
dominance of the market, went beyond of what had been foreseen.  Concerning a question by the 
delegation of the EC on whether injury would be me asured in relation to the increase in number or 
value, he recalled that the original proposal fro m ASEAN had said that no single criterion might be 
decisive.  Again, the circumstances would have to  be examined case by case.  The same logic would 
apply to the question of whether values and number s should be examined in relative or absolute 
terms;  it might be useful to look at both aspect s.  In addition, he recalled that under the proposed 
ESM causality would have to be established on a case-b y-case basis as well.  It had to be ascertained 
that injury arose from the increase in imports a nd related unforeseen developments, and was not due 
to other factors.    
76. In summing up the discussion, the Chairperson
 noted the broad range of issues raised, 
including the relationship between BITs and an ESM , the link with ENTs, the relationship of an ESM 
with progressive liberalization, as well as issues rela ting to statistics.  UNCTAD had been invited to 
present a paper on safeguards at the next meeting, to which no objections were voiced.  She invited the Working Party to take note
 of the comments made.   
IV. DATE OF THE NEXT MEETING 
77. The Chairperson  indicated that the Working Party would hold its next formal meeting during 
the next cluster of services meetings, the exact da te of which would be announced in due course.  
Noting that some delegations had mentioned the possibility of holding an informal meeting, she 
thought that this was a sensible idea and suggested th at such a meeting be considered before the next 
cluster of services meetings.  It was important howev er that delegations came prepared with clear 
ideas of what they saw as being achievable this year, their priorities in terms of what could be done in 
the light of the Hong Kong Ministeria l, and how to implement them.  Reality checks had to be applied 
across the board in the Working Party;  delegations  needed to focus on what was achievable, doable 
and realistic.     S/WPGR/M/51 
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78. The representative of the Philippines  asked whether particular date s were being contemplated.  
The Chairperson  said that possible dates included the first week  of April or the week of 25 April.  She 
would consult delegations about timi ng and content of such an informal meeting.  While he agreed to 
work on the assumption that one informal meeting would be held before the next cluster, the 
representative of the Philippines  said that the possibility to hold additional meetings should be kept 
open, given the possibility that new contributions might be circulated.   
79. While not opposing additional meetings, the representative of Japan  doubted that these would 
be productive if no new inputs were put forward by  the proponents.  The representative of South 
Africa  wished to be consulted in due course.   The representative of Hong Kong, China  said that, since 
some recent contributions to the Working Party on  the topic of subsidies had not yet been fully 
discussed (e.g., JOB(05)/4 and JOB(04)/180), the deci sion to convene an informal meeting should not 
hinge upon the submission of new contributions.  He  recalled that his delegation was also working on 
a paper on the topic of subsidies.  The Chairperson  said that an informal meeting should add value to 
on-going work, as opposed to repeating the same points that had been made over the last 10 years.   
V. OTHER BUSINESS 
80. The Chairperson  wished to clarify that her successor would only be elected at the beginning 
of the next formal meeting.   
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