RESTRICTED  WORLD TRADE  
ORGANIZATION  S/C/M/79 
16 August 2005 
 (05-3635) 
Council for Trade in Services   
 
 
REPORT OF THE MEETING HELD ON 24 JUNE 2005 
 
Note by the Secretariat1 
 
 
1. The Council for Trade in Services held a meeting on 24 June 2005 chaired by 
Ambassador Claudia Uribe (Colombia).  The agen da for this meeting is  contained in document 
WTO/AIR/2599. 
2. The Chairperson  said that, under Other Business, she intended to make brief statements 
regarding the second review of ai r transport and the transitional review under Section 18 of the 
Protocol on the Accession of the People's Republic of China.     
3. The Chairperson  suggested that the agenda be adopted as circulated with the addition of the 
items raised under Other Business.  
4. The Council so agreed . 
A. NOTIFICATIONS  MADE  TO THE  COUNCIL  PURSUANT  TO ARTICLES  III:3,  V:5 AND  
V:7 OF THE  GATS 
5. The Chairperson  drew the Council's attention to  18 notifications pursuant to Article III:3 
(Transparency) by Albania, contained in doc uments S/C/N/321-324, S/C/N/329-342, and two 
notifications from Honduras, contained in documents  S/C/N/326-327.  She proposed that the Council 
take note of these notifications. 
6. The Council so agreed . 
7. The Chairperson  also drew the Council's attention to  two joint notifications pursuant to 
Article V:7 (Economic Integration).  The first, contained in document S/C/N/325, was made by 
Panama and El-Salvador.  The second, containe d in document S/C/N/328, was from Japan and 
Mexico. 
8. The representative of Japan  informed the Council that the Agreement between Japan and the 
United Mexican States for the Strengthening of th e Economic Partnership (Japan-Mexico Economic 
Partnership Agreement - EPA) had entered into force on 1 April 2005, which was the second such 
pact concluded by Japan.  Similar to the agreem ent between Japan and Singapore, the Japan-Mexico 
EPA covered a substantial range of  trade in goods and services. Several chapters of the agreement 
were related to services. They included: the Chap ter on Cross-border Trade in Services where Modes 
1, 2 and 4 were dealt with;  the Chapter on Invest ment where Mode 3 was covered;  the Chapter on 
Entry and Temporary Stay of Nationals for Busine ss Purposes that related to Mode 4;  and the 
Chapter on Financial Services. The negative listing appr oach was applied in the annex to the Chapters 
on Investment and on Cross-border Trade in Servi ces. In addition to these chapters on market access, 
the agreement also contained provisions on comp etition policies, improvement to the business 
                                                      
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO. S/C/M/79 
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 environment, training of human resources, and s upport for small and medium sized enterprises. The 
representative of Japan underlined that negotiati ons on this agreement had been conducted with a 
strong support from the Japanese industrial sector which wished to see improvements in Mexico's 
business environment. Japan believed that the im plementation of the agreement would greatly 
contribute to enhancing economic re lations between the two countries.  The text of the agreement and 
related documents were available at the website of Japan' s Ministry of Foreign Affairs.  
9. On behalf of Panama and El Salva dor, the representative of El Salvador
 notified the Council 
that the trade agreement between these two countries ha d entered into force on 11 April 2003.  Part of 
the agreement was on trade in services, which had been  negotiated in light of Article V of the GATS.  
The two delegations were willing to provide more de tails on this agreement when it was examined at 
the Committee on Regional Trade Agreements 
10. The Chairperson  proposed that the Council take note of the two joint notifications and the 
statements made, and that the notified agreemen ts be referred to the Committee on Regional Trade 
Agreements for examination of their consistency with the provisions of Article V of the GATS. 
11. The Council so agreed . 
12. Further statements made under this agenda ite m are contained in an informal document and 
will be circulated as an addendum to this report af ter the conclusion of the Article XXI negotiations 
and the certification of any changes to the relevant schedule of commitments. 
B. REVIEW  OF ARTICLE  II (MFN)  EXEMPTIONS 
13. The Chairperson  recalled that the Council had held two dedicated sessions (on 30 November 
2004 and 23 February 2005) to conduct the se cond review of MFN ex emptions mandated under 
paragraph 4 of the Annex on Article II Exemptions . At these two meetings, delegations had engaged 
in a substantive discussion examining MFN exemptions sector by sector through a question-and-answer approach. Noting that a few delegations had indicated that some of the questions raised had 
yet to be answered, the Council had agreed at its  meeting on 23 February 2005 that the review of 
MFN exemptions would be included in the agenda of  this regular meeting of the Council so that 
delegations would have opportuni ty to address those outstanding questions.  In accordance with 
paragraph 4 of the Annex on Article  II Exemptions, the Council's manda te in a review also included 
the determination of the date of any further re view. Therefore, after addressing the outstanding 
questions arising from the discussion at the previous  meetings, the Council would determine the date 
of any further review. 
14. Referring to a question from Korea in documen t S/C/W/256 regarding an MFN exemption in 
the area of Road Transport, Passenger and Freight, the representative of Croatia
 said that his 
delegation had been asked to confirm that the liste d measure only pertained to Mode 1, for which the 
entry in the national schedule was unbound.  He conf irmed the presumption made by Korea regarding 
the mode of supply.  He added that taking into account the characteristics of all modes of supply of 
services, his delegation considered that only mode 1 could be affected by the listed MFN exemption. 
15. With respect to the questions posed to El Sa lvador regarding the Convention on facilitating 
financial integration of countries of the Central American Isthmus,  signed by El Salvador, Honduras 
and Nicaragua on 27 August 1993, the representative of El Salvador  stated that the main purpose of 
this convention was to facilitate the process of Ce ntral American integra tion through harmonization 
and opening up of financial systems.  The agreement provided for, as the first phase, the 
harmonization of macro economic policies, and ru les and regulations govern ing the operations of 
banks and other financial institutions  in the signatory countries. To da te, this convention had not come 
into force, although El Salvador had already c oncluded the process of ratification.  Given the 
legitimate objectives of the convention and its uncom pleted process of entry into force, this MFN  S/C/M/79 
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 exemption was maintained by El Salvador. The represen tative of El Salvador further stated that this 
region had made considerable progr ess in opening up its financial systems through internal reforms of 
its juridical frameworks, the strengthening of the regional bodies responsible for facilitating economic 
and  financial integration and the harmonization of prudential norms regarding the banking and 
securities services markets.  The measures related to banking services that were subject to this MFN 
exemption were in the following areas: establishm ent and operation of Central American bank 
subsidiaries, investment of banks, and interregiona l payments. In response to the questions on the 
exemption based on the General Treaty of Central American Economic Integration, the representative 
of El Salvador stated that her country and othe r Central American countries had participated in a 
process of economic and political integration since th e 1960s, but there had been a new impetus in the 
1990s.  The main objective of this treaty was to fo rm and consolidate an economic union in the areas 
of trade in goods and services so as to contribut e to economic development of the region. This 
objective had not been entirely achieved. This was th e main reason why El Salvador maintained this 
MFN exemption.  The measures of preferential nature under this treaty did not represent full integration of services market and therefore did not fall within the ambit of Article V.  The scope of 
the MFN exemption based on this treaty covered all the preferences that might be provided at the 
level of Central America in services trade.  
16. Responding to the question raised by Hong Kong, China in document S/C/W/253, the 
representative of Bolivia
 stated that although Bolivia was a landlocked country, the exemption it had 
registered was about maritime and multi-modal tr ansportation, based on the rules of the ANDEAN 
Community, a sub-regional integration framework  established under Article V of the GATS. The 
ANDEAN rules regarding maritime and multi-moda l transportation were as follows: Decision 314 :  
Freedom of access to maritime freight transportation and policies for the development of the domestic merchant navy;  Decision 288
:  Freedom of access to maritime freight transportation destined to and 
from countries within the sub-region;  Decision 390 :   Modification to Decision 314 "Freedom of 
access to maritime freight transportation and polici es for the development of the domestic merchant 
navy";  Resolution 422 :  Regulations for the application in the Community of the principle of 
reciprocity in maritime transport.  These rules were  in force and, in the case of Bolivia, the exemption 
as such had not been used yet.  With these rules,  Bolivia had eliminated the cargo reserve at the 
ANDEAN level and made it possible a significant reduc tion of freight and a good supply for trade in 
goods.  It had defined policies for the development of the domestic merchant navy in the ANDEAN 
countries.  Its objective was to harmonize maritime transport policies and to improve competitiveness 
of enterprises in the sector. It would establish m echanisms so that Member countries could act 
together vis-à-vis third countries which discriminated  enterprises of this sub-region.  It had also 
adopted the principle of reciprocity to be applied in the ANDEAN Community.  In this sense, the 
measures related to the ANDEAN rules corresponded to the MFN exemption and remained in force.  
17. With regard to the question related to the C onvention on international land transport of the 
countries of the Cono Sur, the representative of Bo livia referred to the an swer her delegation had 
provided to the Japanese delegation at the Council's pr evious meeting. She pointed out that Bolivia 
had signed this convention which had been ratifie d with Law 1158 in May 1990. Article 15 of this 
convention established that the signatory countries were to grant each other free transit and not to 
maintain restrictions on transport.  By means of this convention, the signatory countries agreed on the 
need to adopt a single legal norm which reflec ted the essential principles adopted by their 
governments.  
18. While thanking all the delegations that had responded to the questions raised by her 
delegation in document S/C/W/246, the representative of Japan  noted that her delegation was still 
waiting for answers from the following delegations regarding MFN exemptions in relevant sectors: 
Bangladesh and India in telecommunication services;  Côte d'Ivoire, Nicaragua, Senegal and the UAE 
in financial services;  Cyprus, Morocco, and Swaz iland in transport services. Her delegation looked 
forward to substantive responses from these delegations.  S/C/M/79 
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 19. The representative of Canada
 informed the Council that in its revised offer, Canada had 
offered to withdraw an MFN exemption related to  financial services, including lending of all types 
and trading for own account of certain securities by loan and investment companies.  This exemption had been retained in the interest of main taining an existing historical precedent, i.e. preferential 
treatment in Quebec for allocation of licences pr ovided by the Province of Quebec to loan and 
investment companies incorporated under the laws  of the Parliament of the United Kingdom and 
Ireland for the purpose of obtaining a licence to carry on business.    
20. On behalf of China;  Chinese Taipei;  Hong K ong, China;  Japan;  Korea and Mexico, the 
representative of Hong Kong, China
  delivered a statement on the second review of MFN exemptions. 
The co-sponsors thanked the Chairperson of the Council for Trade in Services for conducting this 
review and the Secretariat for their efforts in preparing the useful background materials for the 
review.  They also thanked all the Members who had actively participated in the dedicated sessions of 
the Council held on 30 November 2004 and 23 February 2005 for the purpose of the review.   
21. The co-sponsors reiterated that the MFN princi ple was the cornerstone of the multilateral 
trading system and that any deviation from the MFN principle was to be treated with utmost 
seriousness as it could undermine the basis for non-discriminatory trade among WTO Members.  
Under the GATS framework, MFN exemptions were: 
(a) One-off : In accordance with Article II and the Annex on Article II Exemptions, a 
Member was exempted from its MFN obliga tions, at the entry into force of the 
GATS, only if its inconsistent measures were  listed in, and met the conditions of, the 
Annex on Article II Exemptions.  Any new ex emptions applied for afterwards were to 
be dealt with by waiver. 
(b) Time-limited : In accordance with the Annex on Article II Exemptions, an MFN 
exemption terminated on the date provided for in the exemption, and in principle such 
exemptions should not exceed a period of 10 years, in addition to being subject to 
negotiations in subsequent  trade liberalizing rounds. 
(c) Subject to review : In accordance with the Annex on Article II Exemptions, all MFN 
exemptions were subject to review by the Council for Trade in Services, and in such a review the Council was, inter alia , to examine whether the conditions which had 
created the need for the exemption still prevailed. 
22. The co-sponsors believed that the context for MF N exemptions as set out above represented 
the balance of the agreement reached at the time of  the Uruguay Round and formed an integral part of 
the GATS framework.  This context was also part  and parcel of the prerequisites under which a 
Member could be exempted from its MFN obligati on.  In particular, given the supposedly time-
limited nature of MFN exemptions and in view of the in principle time-limit of 10 years, it was a 
norm that MFN exemptions were to expire within  10 years, and maintaining exemptions beyond 10 
years was the exception rather than the norm.  A subs tantive and meaningful review to examine, and a 
positive conclusion on, whether the conditions which had created the need for the exemptions still 
prevailed were thus instrumental to fulfilling th e prerequisites for continuing to maintain the 
exemptions. 
23. The co-sponsors noted that a number of Member s had put forward both general and specific 
questions for the purpose of the review
2.  They appreciated the answers provided by many Members, 
                                                      
2 Please see documents JOB(04)/131 dated 22 September 2004 from Chile;  China;  Hong Kong China;  
Japan;  Korea;  Mexico and Chinese Taipei, S/C/W/246 dated 19 November 2004 from Japan, S/C/W/247 dated 
19 November 2004 from Hong Kong, China, S/C/W/248 dated 19 November 2004 from Korea, S/C/W/250 
dated 23 November 2004 from Chinese Taipei, S/C/W/251 dated 23 November 2004 from Mexico, paragraphs  S/C/M/79 
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 in particular, the intention expressed by some Memb ers to remove MFN exemptions in the on-going 
services negotiations.  The co-sponsors were pleased  to note that some Members had offered to 
remove all
 their MFN exemptions in their offers. 
24. The co-sponsors further expressed their appreci ation to those Members who had addressed 
the review in a substantive and meaningful manne r by stating why the conditions which had created 
the need for the exemptions still prevailed.  Th ey thought that such answers had enhanced the 
transparency of those MFN exemptions and fac ilitated the understanding of other Members for the 
purpose of the review.  A number of Members had pr ovided further clarifications regarding their 
MFN exemptions, including the measures covered by  the MFN exemptions, the countries to which the 
measures applied, and the conditions which had crea ted the need for the exemptions.  For the purpose 
of enhancing the specificity of the descriptions of the MFN exemptions and ensuring their legal clarity 
and certainty, the co-sponsors urged Members to revise the descriptions of their MFN exemptions to 
reflect the clarifications made.   
25. The co-sponsors noted that many answers had also raised important issues concerning MFN 
exemptions such as treatment less favourable than  specific commitments, durations of exemptions, 
exemptions for economic integration, reciprocity conditions for market acces s, measures subject to 
GATS provisions or exceptions, and expanded app lication of exemptions to new measures or 
agreements. The co-sponsors considered that these i ssues deserved further deliberation.  For instance, 
a number of Members had confirmed that their MFN exemptions did not purport to grant less 
favourable treatment than what ha d been committed in their sche dules of specific commitments.  
Believing that this was the only position consistent  with the provisions of the GATS, the co-sponsors 
urged all Members to ensure that treatment acco rded under any MFN exemptions was no less 
favourable than the respective speci fic commitments.  The co-sponsors reserved the rights to revert to 
these issues at a later stage. 
26. The co-sponsors expressed their disappointment at  the fact that a number of questions put 
forward for the purpose of the review remained unans wered or had not been answered in a substantive 
and meaningful manner.  They were also disappoi nted that many Members had indicated that they 
would continue to maintain their MFN exemptio ns notwithstanding the supposedly time-limited 
nature of MFN exemptions, without any attempt to  address the conditions which had created the need 
for the exemptions with a view to eliminating th ose exemptions.  In particular, some answers had 
merely stated that the conditions which had created th e need for the exemptions still prevailed, or that 
the legislation or instrument for which an exemp tion was purported to cover continued to exist, and 
thus the exemptions would continue to be maintain ed.  Some answers had failed to clarify what were 
the precise measures to which the exemptions app lied, and what were the conditions which had 
created the need for the exemptions  in the first place. In particular, many answers failed to state what 
the exemptions were to be used fo r, and whether the original conditi ons continued to exist since their 
introduction. It was especially important to know whet her an MFN exemption had been used to justify 
any actual measures, whether the original conditions  still prevailed, and whether any action had been 
taken, or contemplated, to eliminate such conditions. 
27. The co-sponsors were of the view that these answers hardly met the requirements of the 
review for the Council to examine whether the conditions which had created the need for the 
exemption still prevailed, for which the Members maintaining the exemptions were to provide 
information and justification to the Council.  In par ticular, in order to enable the Council to review in 
a substantive and meaningful manner whether the conditions which had created the need for an 
exemption still prevailed, the Member maintaining the exemption was to provide sufficiently clear 
                                                                                                                                                                     
32 of S/C/M/76 containing questions from China, paragraphs 141-143 of S/C/M/76 containing questions from 
the United States, S/C/W/252 dated 28 January 2005 from Chinese Taipei, S/C/W/253 dated 8 February 2005 
from Hong Kong, China, S/C/W/254 dated 9 February 2005 from Norway, S/C/W/255 dated 11 February 2005 
from China, and S/C/W/256 dated 11 February 2005 from Korea. S/C/M/79 
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 information on the MFN exemption and the conditi ons which had created the need for it, and 
substantiate why the conditions still prevailed not withstanding the time-limited nature of the MFN 
exemptions especially the in-principle 10-year dur ation.  The failure to address the review in a 
substantive and meaningful manner a nd to substantiate that the conditions which had created the need 
for the exemptions still prevailed contravened the provisions of Article II a nd the Annex on Article II 
Exemptions and upset the balance of the agreemen t reached at the time of the Uruguay Round.  The 
co-sponsors thus held that such exemptions should cease to have effect. 
28. Recognising that MFN exemptions were subject to  negotiations in subsequent rounds of trade 
liberalization negotiations, the co-sponsors stated that they were prepared to engage with Members in 
pursuing the elimination of MFN exemptions in the on-going services negotiations.  They would share 
their thoughts on negotiations for eliminating MFN ex emptions in due course and in the appropriate 
forum.  Finally, the representative of Hong Kong, Ch ina stated that his delegation like that of Japan 
looked forward to responses Members might provide to the outstanding questions his delegation had 
put forward. 
29. The representative of Japan
 stated that her delegation as a co-sponsor of the joint statement 
wished to reiterate that MFN was the fundamental  norm of the GATS framework and that the core 
value of the agreement as well as the balan ced outcome of the Uruguay Round was not to be 
undermined by the MFN exemptions that were mainta ined without justifications.  While appreciating 
the efforts Members had made and the support th e Secretariat had given for this review, her 
delegation shared those concerns expressed in the a bove joint statement.  In particular, her delegation 
understood that those MFN exemptions had expired when their clearly indicated deadline had been 
reached. 
30. The representative of Chile  stated that her delegation shared the view expressed by Hong 
Kong, China and Japan that the MFN principle was the centre of the multilateral system. Her 
delegation was concerned about new MFN exemptions  within the system.  The review offered a good 
opportunity to examine MFN exemptions. Her delegation was in the process of reviewing its own 
exemptions to see how a greater clarity could be built in the description of the exemptions that would 
be kept in the list.  Referring to the issues poi nted out in Hong Kong, China's statement, her 
delegation believed that these issues needed to be discussed in the near future in the appropriate 
forum.  
31. Thanking the Secretariat for its efforts in pr eparing the background documents for the purpose 
of the review, the representative of Pakistan  stated that these documents were very useful not only for 
delegates in Geneva but also for capital official s. Supporting the statements made by Hong Kong, 
China, Japan and some other delegations, noting th at some Members had offered to eliminate MFN 
exemptions in their revised offe rs, her delegation looked forward to  other Members doing away with 
their MFN exemptions as well.  
32. The representative of China  stated that his delegation, as a co -sponsor of the joint statement, 
also appreciated the efforts Members had made in participating in the review.  In particular, his 
delegation  thanked those Members that had answer ed the questions raised by China.  Highlighting 
the importance of the MFN principle, he pointed ou t that a substantive and timely review of MFN 
exemptions would contribute to maintaining the ba lance of rights and obligations under the agreement 
reached during the Uruguay Round.  Bearing this in  mind and believing that the second review was an 
important exercise, his delegation had actively particip ated in it.  While recognizing that this review 
had enabled his delegation to unde rstand other Members' MFN exemptions to a further degree, his 
delegation noted that the review also raised certa in concerns to be addressed in the future. For 
instance, some measures that were beyond the scope  of the Annex on Article II Exemptions were 
claimed by some Members as MFN exemptions.  In add ition, lack of  specificity in the description of 
MFN exemptions might result in reduced transparen cy and legal certainty.  Referring to paragraph 6 
of the Annex on Article II Exemptions, he stressed that MFN exemptions were subject to the on-going  S/C/M/79 
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 services negations and that his delegation was convi nced that the elimination of MFN exemptions 
would be an important parameter to assess the quality of initial and revised offers.  
33. The representative of Korea
 stated that her delegation, as a co-sponsor of the joint statement, 
also wished to emphasize the importance of the MF N principle in the WTO system.  While thanking 
those Members that had made responses to the qu estions raised, her delegation found that some 
responses did not meet the expectation her delegation had had for the review.   Her delegation was of 
the view that no MFN exemptions could be less favourable than the commitments made in the 
schedule.  Noting with regret that many exemptions  were still maintained despite the 10-year time 
limit, her delegation urged Members to eliminate the MFN exemptions that did not conform to GATS 
principles and commitments as well as those MFN exemptions that had lost justifications.  Believing 
also that the MFN exemption was an important pa rameter for assessing the qualify of offers in the 
current services negotiations, her delegation look ed forward to further elimination of MFN 
exemptions.  
34. The representative of Chinese Taipei  stated that the MFN was one of the fundamental 
principles of the GATS and that MFN exemptions, as de viations from this principle, were to be kept  
to a minimum. Disappointed at some responses  provided in the review, but noting that MFN 
exemptions were subject to negotiations in subse quent trade liberalizing rounds, her delegation was 
prepared to engage with other Members in pursu ing the elimination of MFN exemptions during the 
on-going services negotiations.  In this  regard, her delegation welcomed the effort Canada had made 
in its revised offer. 
35. Supporting the joint statement made by Hong Kong,  China on behalf of a group of Members, 
the representative of Oman  stated that her country, as a rece ntly acceded Member, maintained no 
MFN exemptions.  She encouraged other Members to  review their MFN exemptions with a view to 
eliminating them.   
36. In response to the statement made by Japan regarding Cyprus' MFN exemption on transport 
services, the representative of the European Communities  referred to paragraph 99  of the report of the 
Council's previous meeting (S/C/M/78) stating that his delegation had answered the question raised by 
Japan.  Nevertheless, his delegation was willing to di scuss this exemption with Japan in greater detail 
if necessary.  Commenting generally on the second revi ew, he stated that it was a useful information 
exchange which made all Members engage in reviewing their MFN exemptions and thus was 
particularly useful for the preparation of revised offers and the follow-up of services negotiations in 
the DDA framework. 
37. The representative of Mexico  stated that his delegation, as a co-sponsor of the joint statement, 
wished to reiterate one point whic h might need in-depth discussion at a later stage.  Referring to the 
Annex on Article II Exemptions, he said that th e 10-year time limit for MFN exemptions was a 
general principle and that only under exceptional circ umstances could exemptions be maintained for a 
period longer than 10 years, and that in these cases Members were to provide justifications for those 
exemptions.  He regretted to note that the exce ption had become the rule and that reasons or 
explanations given during the review were irrele vant regarding the duration of exemptions.  For 
example, the explanation that exemptions were ke pt because of the need to comply with national 
legislation was obviously not a substantive reason fo r maintaining those exemptions.  His delegation 
urged Members to undertake a proper review of th eir exemptions and eliminate them as far as 
possible in their offers.  Finally, his delegation than ked all the Members that had actively participated 
in the review, in particular those Members that ha d provided responses to the questions raised by his 
delegation.   
38. On the statement made the European Communities, the representative of Japan  said that she 
took note of it and would forward it to her capital.  S/C/M/79 
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 39. Regarding the determination of the date of any further review, the Chairperson
 recalled that at 
the meeting of 23 February 2005, the Council had held  a preliminary discussion on this issue and that 
as agreed, she had conducted consulta tions after the meeting.  Dele gations she had consulted with 
were of the view that a further review of MFN exemptions was still needed.  As to the date, one 
suggestion put forward by delegations was that the Council conduct the next review around 2010.  
She invited delegations to make comments or suggestions on this issue. 
40. The representative of Canada  stated that her delegation would support a stock-taking in the 
late fall of 2006 and then consider a date  for the further review at that time. 
41. The representative of the European Communities  pointed out that in accordance with 
paragraph 4 of the Annex on Article II Exemptions, the Council in a review was to determine the date 
of any further review.  His delegation thought it appropr iate to decide the date of the next review at 
this meeting so that the present review could be concluded.  Regarding the date proposed by the 
Chairperson, he said it was acceptable to his delegation.  
42. The representative of Chile  stated that her delegation supported the Chairperson's proposal. 
She sought clarification from Canada on the remarks of "stock-taking". 
43. Responding to Chile's inquiry on "stock-taking", the representative of Canada  explained that 
in late 2006 Members would have a better idea of where they stood.  However, she said that her 
delegation could go along with the broad ag reement on the date of the next review. 
44. The representatives of Australia , Thailand  and Norway  stated that their delegations could 
support the proposal that the next review take place in 2010. 
45. Seeking clarifications on the proposal, the representative of Hong Kong, China  asked whether 
the next review would take place in 2010 or start by 2010.  He also invited the representative of 
Canada to clarify the suggestion of stock-taking.  
46. The Chairperson  stated that she was proposing that the Council begin to conduct the next 
review in 2010, but no later than June 2010. 
47. The representative of Hong Kong, China  thought that the present review was to be concluded 
by the determination of the date of the next review .  While admitting that the idea of stock-taking did 
have certain merits, he pointed out that the elim ination of MFN exemptions was to be pursued in 
another forum. 
48. The representative of Romania  stated that her delegation believed that a decision could be 
taken at this meeting regarding the date of the ne xt review.  In this rega rd, her delegation supported 
the Chairperson's proposal that the next review take place in 2010. 
49. The representative of Turkey  stated that his delegation could support the proposal that the 
next review start by June 2010, but depending on the closure of th e present review.  He understood 
that five years were to elapse until the next review started.  Recalling a view put forward in the 
consultations that the present review could be c oncluded by fall 2005, he suggested that the stock-
taking could be undertaken in fall 2005.  
50. The representative of Korea  suggested that the next review start at the Council's first formal 
meeting of 2010 and that the issue of st ock-taking be considered separately.  
51. The representative of Mexico  stated that his understanding of the Chairperson's proposal was 
that the next review start no later than June 201 0 without setting the deadline for the conclusion of the 
review.  S/C/M/79 
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 52. The representative of the United States
 sought confirmation as to whether the present review 
would conclude in 2005 and whether the next review would start during the year of 2010. 
53. To clarify her proposal, the Chairperson  reiterated that the Council was to conclude the 
current review by deciding the date of the next revi ew, at this meeting if possible.  For this purpose,  
she suggested that the Council start its next review in 2010, and no later than June 2010. 
54. The representative of Hong Kong, China  stated that his delegate supported the Chairperson's 
proposal.  Taking note of the statement made by Kor ea on the idea of stock-taking, he suggested that 
the stock-taking could be addressed at a later stage. 
55. The representative of Japan  echoed the statements made by Korea and Hong Kong, China that 
the stock-taking was to be dealt with separately.  He r delegation could go along with the proposal that 
the next review start no later than June 2010. 
56. The representative of Canada,  the United States , and China  stated that their delegations 
supported the conclusion of the sec ond review and could go along with the proposal that the next 
review begin in 2010.  The representative of Chin a further stated that his delegation echoed the 
statement made by Hong Kong, China. 
57. While also supporting the Chairperson's proposal on the date of the next review, the 
representative of Thailand  asked what was to be done between now and 2010 regarding MFN 
exemptions. 
58. In response to Thailand's question, and referring to the mandate of the Council in a review set 
out in paragraph 4 of the Anne x II Exemptions, the Chairperson  stated that the Council had no 
obligation to decide what was to be done between now and 2010. 
59. The representative of Peru  referred to the statement made by Mexico regarding the 10-year 
time limit for MFN exemptions.  While noting that the Council was trying to decide the date of the 
next review,  he was concerned a bout the fact that most of the MFN exemptions would be maintained, 
even including those whose clearly indicated 10-year duration had expired.  
60. The Chairperson  stated that the third review of MFN exemptions that Members had agreed to 
conduct might address the concern expressed by Peru  and shared by some other Members.  She 
further stated that at this stage what the Council wa s to do was to decide the date of the next review 
and hereby conclude the second revi ew.  She thus reiterated her proposal that the Council start the 
next review in 2010 and no  later than June 2010. 
61. The Council so decided . 
C. OTHER  BUSINESS 
62. Referring to her remarks at the beginni ng of the meeting, the Chairperson  reminded Members  
that at the conclusion of the first review of air transport on 24 October 2003, it had been decided that the formal commencement of the second review was to take place at the last regular meeting of the 
Council in 2005.  According to the current schedule of meetings for 2005, the last meeting of the 
Council would be the next meeting due to take place during the week of 19 September 2005.  Noting 
that it would be the first time for the item to app ear on the agenda, the Chairperson thought it would 
be reasonable for the Council to focus the di scussion on organizational matters as well as any 
preparatory work that might be undertaken by th e Secretariat. In order to prepare for such a 
discussion, she proposed to hold informal consultations  at an appropriate time prior to the September 
meeting. S/C/M/79 
Page 10 
 
 63. The representatives of New Zealand
, Australia  and Thailand  stated that their delegations 
wished to be included in the consultations the Ch airperson would hold regarding the review of air 
transport.  
64. Regarding the transitional review under Section 18 of the Accession Protocol of the People's 
Republic of China, the Chairperson reminded Me mbers that the Committee on Trade in Financial 
Services (CTFS) and the Council for Trade in Services were the two services bodies where this 
review was conducted annually.  After its review, the CTFS would report to the Council for Trade in 
Services which would conduct its own review and report to the General Council.  The General 
Council would also conduct its own review.  She announced that the next transitional review of 
China's specific commitments would be conducted by the Council for Trade in Services at its next 
meeting.  In terms of how to conduct the revi ew, she proposed that th e Council follow the same 
procedure as the one that had been used in the previous reviews. 
65. The Chairperson  suggested that the Council take note of the statements made and adjourn the 
meeting. 
66. The Council so agreed . 
__________