RESTRICTED  WORLD TRADE  
ORGANIZATION  S/CSC/M/39 
7 March 2006 
 (06-1003) 
Committee on Specific Commitments  
  
REPORT OF THE MEETING HELD ON 8 FEBRUARY 2006 
 
Note by the Secretariat
1 
  
1. The Committee on Specific Commitments (CSC) he ld a meeting on 8 February 2006.  The 
agenda for the meeting is contained in WTO/AI R/2750.  As no points were raised under Other 
Business, the agenda was adopted
 as proposed in the airgram. 
A. SCHEDULING ISSUES  
2. Drawing Members' attention to the annotated agenda for the meeting (JOB (06)/18), the 
Chairman  suggested that the Committee address first Member-specific questions on scheduling in 
initial offers, followed by general scheduling qu estions, and economic needs tests (ENTs).  No 
delegation intervened on the Member-specific sche duling questions;  all interventions on general 
scheduling questions were ma de in informal mode.   
3. On the issue of economic needs tests (ENTs) , the delegation of the Republic of Korea  
introduced its paper (S/CSC/W/49), which it had prep ared with a view to promoting more in-depth 
discussions of the criteria of ENTs and their appli cation.  While Members maintained the right to 
regulate trade flows through their schedules of specif ic commitments, most of the ENTs in Members 
schedules provided no guidance concerning the criteria on which the tests were based, nor did they describe the criteria as set out in the Scheduling Guidelines.  His delegation supported the idea of 
further discussing the meaning of and criteria fo r ENTs and sharing experiences and information 
about their application for transparency purposes.  Ko rea had inserted in its revised offer criteria for 
ENTs as specified in domestic laws and regulatio ns in order to improve clarity, certainty, and 
comparability in the scheduling of Article XVI limitations.  
4. The representative of the United States
 stated that the example of Korea's ENT on mode 3, 
market access, concerning wholesale trade services for used cars and gaseous fuels and related 
products, appeared to conform to the notion that EN Ts should be transparent and non-discriminatory.  
The scheduling of ENTs had the unfortunate resu lt of limiting trade in services by setting arbitrary 
quantitative restrictions in some ca ses.  She speculated that criteria me ntioned in the paper such as the 
"formation of reasonable prices" or "the number of  and impact on existing suppliers for balance of 
demand and supply" might be subjective in nature an d not apply uniformly.  She noted that the paper 
stated that these criteria were scheduled as they ex isted in the relevant laws, and that no further 
specificity could be provided.  This raised furthe r questions about the difficu lties of an exercise aimed 
at specifying ENTs.  
5. The representative of Hong Kong, China  stated that the purpose of the exercise was not to 
delve deeply into individual ENTs, but rather to  have a broad discussion on ways to improve the 
scheduling of ENTs.  Turning to Korea's submission,  he noted that the submission explained that the 
criteria were set out in legislation, and that no add itional specificity could be provided.  Certain of the 
                                                      
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO. S/CSC/M/39 
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  criteria did not appear to be of an objective nature:  he was generally interested in how criteria such as 
"formation of reasonable prices" and "healthy develo pment of the industry" and "local conditions and 
other local characteristics" and "public interest" w ould be objectively applied in practice, and whether 
administrative guidelines or regulations existed that elaborated on the implementation of the 
underlying legislation.  In paragraph 5, Kor ea had provided information that was crucial to 
understanding the specifications of ENTs, in par ticular that the ENTs were applied on a non-
discriminatory and on a case-by-case basis;  it was his understanding that the ENTs were actually applied to each prospective domestic and foreign service supplier.  He was interested to learn how non-discrimination could be ensured if the test was applied on a case-by-case basis.  Further, did Korea see the distinction between  ENTs and domestic regulation per se  as was described in the last 
sentence of paragraph 5, i.e. as criteria that were  subject to the overall market conditions and beyond 
the control of individual services suppliers.   
6. As for the relationship of ENTs with Article XVI, it would be useful to know what exactly 
were the quantitative limitations that would result fr om the application of the ENTs, in particular 
whether they would result in limitations on the number of service providers or in any other 
quantitative limitations in Article XVI.  The appli cation of ENTs was exclusively for the purpose of 
applying a quantitative limitation under Article XVI.  Tests that resulted in other measures were not 
subject to scheduling under Article XVI.  
7. He was not entirely comfortable with Korea's views in paragraph 6 on the possible role of 
ENTs as a comfort measure for regulators of host countries, an issue that had been discussed exhaustively in the Working Party on GATS Rules.   He recalled that ENTs were different from 
safeguard measures, and did not serve to provide a comfort zone.  If structural adjustment was an 
issue, rather than using ENTs, a liberalization programme could be transposed into appropriate 
commitments, or commitments could be phased in.  Tu rning to paragraph 7, he agreed with Korea that 
ENTs were typically applied as ex ante  measures, and it was questionable if they applied to those 
suppliers already established in a market.  Th ere was a need to guarantee a stable business 
environment for suppliers that had already been subject  to the ENT.  On paragraph 9, he agreed that 
the key issue in the specification of ENTs was to enhance the level of objectivity and predictability 
associated with the ENTs. 
8. It would be useful if the Committee could discuss what kind of specifications scheduled 
ENTs should comprise, and how far these could be pr ovided in the context of further clarifying and 
specifying ENTs.  The upcoming round of revised offers would provide an opportunity for Members 
to incorporate any progress made in the discussions.  He echoed the point made by the Chairman, that 
discussions in the CSC could contribute to achieving the ENT-related objectives in Annex C of the Hong Kong Ministerial Declaration. 
9. The representative of Chinese Taipei
, making preliminary observations on Korea's paper, 
stated that several of the criteria inscribed in  the schedule involved characteristics of quantitative 
restrictions, safeguarded domestic interests, and related to environmental objectives similar to those 
available under Article XIV.  If applied on a non-discr iminatory basis, several of the criteria appeared 
to be part of domestic regulations.  He requested  the delegation of Korea to provide sources of the 
regulations to which the criteria were linked.  
10. The representative of Korea,  reacting to some of the comments, stated that the criteria of 
"formation of reasonable prices" a nd "the number of and impact on existing suppliers for balance of 
demand and supply" were applied as part of the EN T with the purpose of controlling the total volume 
of suppliers subject to overall ma rket conditions.  These criteria applied to foreign and domestic 
suppliers, both ex ante and ex post, and were dissi milar from quotas.  To date, the application of the 
criteria had not led to the rejection of any suppliers , be they foreign or domestic.  As for the criterion 
of "healthy development of the industry", it was not further specified in the respective regulation, and  S/CSC/M/39 
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  could hence not be further specified in the sche dule.  An important diffe rence between ENTs and 
domestic regulation was the fact that even if a supplier met all necessary qualification and licensing requirements, he was not able to influence macr oeconomic conditions such as those set out in the 
ENTs.  His delegation would provide Chinese Taipei with the relevant regulations.  
11. The Chairman
 noted that no delegation wished to take the floor on any of the other 
communications listed in the airgram, and suggested  that the Committee take note of the statements 
made and revert to the item at the next meeting.   
12. It was so agreed . 
B. CLASSIFICATION ISSUES  
13. The Chairman  recalled that certain delegations had indi cated that they would wish to revert to  
Indonesia's revised proposal on the classification of energy services (S/CSC/W/42 Rev.1 and Corr.1.)  
14. The representative of the European Communities  welcomed the work undertaken by 
Indonesia which showed the importance of energy ac tivities and the extent to which most of these 
activities were covered by the W/120 classification.  The proposal added more detail to previous 
submissions, in particular to that by Venezuela as well as to the guide for scheduling commitments on 
energy services by Chile, the EC, Japan and the Unit ed States of May 2003.  The Indonesian paper 
could help to find a correspondence between comm ercial activities and the CPC classification.  
However, while the paper facilitated the schedul ing of commitments for energy services, his 
delegation did not consider that it provided a classification as such.  From a classification perspective, 
a distinction between core and non- core services would have been u seful, given the broad range of 
activities covered by the list, some of them being pure energy services while others were useful but 
incidental to energy services, and could not be classified as “energy services".  The latter included 
"Other Energy services – 5.1.7.: Lodging and catering", all education services, or fire fighting services.   
15. As specific comments on the proposal, he noted that construction works for energy-related 
equipments and facilities were often considered  as being included in engineering services.  
Construction services were a distinct sector, and c onstruction works were separated from engineering 
services.  Moreover, important construction sub-sector s, such as “construction works for long distance 
pipelines, communication and power lines (cables) ” (CPC 51340) and “construction works for local 
pipelines and cables; ancillary works” (CPC 51350) , which were essential for the development of 
energy transmission and distribution networks, did not appear in the paper.  He would welcome 
precisions about the reference to CPC 5114 (excava ting and earthmoving work) for “coal excavation”, 
which was a production activity.  The paper refe rred to “engineering services” for activities which 
seemed rather linked to manufacturing: for example,  most of the activities included in 2.4 “handling 
and treatment of energy products”, like coke maki ng, were referred to as “engineering services”.  His 
delegation agreed that “transmission and distributi on of electricity” were covered under CPC 887.  He 
further welcomed the mention of wholesale and retail trade services of electricity, while 
acknowledging that there was no corresponding CPC numbe r.  Nevertheless, it was important to keep 
these elements in the “wholesale and retail supply of energy” parts of the document, as a reminder for 
those willing to use it as a checklis t that commitments could be taken for these activities through an 
additional precision in the wholesale and retail trade in services part of schedules of commitments.  He noted that under “professional services”, numerous  references to “human resources training and 
development services” had been made, while these should fall under education services.  The same 
comment could be made for “other energy services” which contained a number of references to 
research and development services. S/CSC/M/39 
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  16. The representative of Indonesia
 stated that he would revert to the questions at the next 
meeting, where he would also give an indication of his delegation's further intention with regard to the 
proposal, and whether it should remain on the agenda of the CSC.    
17. The Chairman  suggested that the Committee take note of the statements made and revert to 
classification issues at the next meeting. 
18. It was so agreed.  
C. ORGANIZATION OF FUTURE WORK 
19. The Chairman  recalled that "Classification Issues" and "Scheduling Issues" were regular 
items on the agenda of the CSC.  In light of the objectives set out in paragraph 1 (f) of Annex C of the 
Hong Kong Ministerial Declaration, he sought inputs as to how the CSC should organize itself to optimally support this collective endeavour.  In the annotated agenda for the meeting, JOB (06)/18, he 
had outlined suggestions for future work that Members had made earlier.  In providing their inputs, he 
encouraged delegations to suggest priority areas for work, also in light of the timelines contained in 
the Hong Kong Ministerial Declaration.
 
20. The representative of Hong Kong, China  recalled the importance of the objectives set out in 
the Ministerial Declaration with regard to clarif ication of scheduling issues and ENTs.  As for the 
former, he hoped that the discussions held to date  had raised awareness, and that ambiguous entries 
would disappear when the next round of offers was submitted.  If ambiguities persisted, Members 
would need to look at the issues in a broader c ontext, in accordance with the Hong Kong objectives.  
The clarity of commitments could not be separated  from their substantive value, and was of equal 
importance. 
21. Concerning ENTs, he suggested to put to one side questions concerning the legal 
requirements for the scheduling of such tests, and to focus on deliverables to improve their 
transparency and certainty.  Canada and Korea's contributions in the information exchange where 
useful to stimulate the discussion in that regard .  In addition, one should keep track of the 
improvements that had been introduced in the contex t of offers, as this would provide an insight as to 
what could be done to improve clarity of ENTs.  He was looking for substantive progress, not for a 
discussion on procedural steps.   
22. The representative of New Zealand  found the ongoing discussion of general scheduling issues 
to be valuable, as it helped delegations reflect on sc heduling in their respective offers.  Likewise, the 
classification discussions had been useful, and should  best be continued on ad hoc basis whenever 
issues arose.  While the transparency and clarity of ENTs was important, today's discussion had shown that it was difficult to find ways to sche dule quantitative limitations resulting from measures 
that were in effect sliding scales.  Ultimately , the value of such commitments was a negotiating 
subject.  She was not convinced that much time s hould be devoted on issues for which there could not 
be a definite outcome. 
23. The representative of Thailand
 stressed that the Committee had a clear mandate from the 
Hong Kong Ministerial Meeting.  A large number of  scheduling questions remained under-examined.  
She encouraged Members to reply to the specific te chnical questions posed to them, preferably in a 
multilateral forum.  The discussion on classification issues should best be continued on an ad hoc 
basis.  The examination of ENTs was at an early  stage, and she encouraged participation in the 
information exchange.  She supported discussion of  the elements set out in paragraph 13 of 
JOB(04)/171.  With regard to the informal clas sification discussion, she hoped that the technical 
errors identified could be addressed;  in order to lock in progress on the ot her issues, she suggested  S/CSC/M/39 
 Page 5 
 
 
  that the Chair circulate a compilation of the issu es and the state of the discussion under his own 
responsibility and with the necessary disclaimers. 
24. The representative of Brazil  stated that discussions in the CSC had benefited his delegations 
greatly over the last years.  For various reasons , the CSC should have a prominent role during the 
remainder of the negotiations.  Firstly, its educa tional role was important.  The CSC should not be 
removed from the two-week cluster as this would make  it difficult for capital-based experts to attend.  
Secondly, like the CTSS, the CSC was a platform  for ensuring transparency; and thirdly, his 
delegation was considering to pose further speci fic questions in light of revised offers. 
25. The representative of Australia  did not see a possibility of addressing Member-specific 
questions in the Committee, but agreed that the work undertaken had proven to be of educational 
value.  For reasons of timing, he considered furt her work on scheduling to be more important than 
work on classification, in particular as it might be too late to address anomal ies in W/120 during this 
year.  Other issues needed to be addressed, in particular the relationship between old and new 
commitments.  He saw paragraph 1 (f) of Annex C to the Hong Kong Ministerial Declaration as a 
mandate for individual delegations that did not re quire multilateral operationalization.  He did not 
foresee any CSC output with regards to the objectives set out therein. 
26. The representative of Switzerland  considered that the past discussions on classification issues 
along the lines of W/120 had been helpful, and wished  to see a resolution of the issues shortlisted by 
the Chairman.  He also appreciated discussion on generic scheduling questions, which he hoped 
would continue with contributions from more Memb ers.  The relationship of old and new schedules 
was an important area in which it was indispensable to arrive at a result.  
27. The representative of the United States  felt that in light of the amount of work and the 
shortage of time, streamlining of  work would be appropriate, thereby perhaps focussing less on ENTs 
and classification.  His delegation's view had not ch anged with regard to answering specific questions. 
28. The representative of Canada  supported further work on ENTs, specifically concerning the 
necessary elements for their scheduling, and encour aged Members to participate in the information 
exchange by providing information similar to that  provided in Annex C to Canada's submission on 
ENTs and Mode 4 commitments.  As classificati on and scheduling issues arising from individual 
offers were better suited for the request-offer process, her delegation supported a more general 
approach.  She underscored her delegation's interest  in clarifying the relationship between old and 
new commitments;  her delegation was curre ntly working on a paper on that issue.  
29. The representative of Korea  stated that Annex C provided a clear mandate for work on ENTs, 
and that the CSC was the most appropriate foru m for a focused discussion on the scheduling aspects 
of such tests.  The discussion should address criteri a, procedures, and application of ENTs, aim to 
provide a clearer picture on the core issues, and a guide to Members on how to address existing tests 
in accordance with the Hong Kong mandate. 
30. The representative of Mexico  stated that the Committee's p ast discussions had been very 
useful, and saw potential for future work particularly  on ENTs and the "four C's."  The significance of 
Annex C should not be prejudged;  while implementation of the objectives was up to Members, the 
Committee might usefully work on certain aspects of the Annex.  
31. The representative of the European Communities  saw scope for further work within the limits 
of the Committee's mandate.  He looked forward to  Canada's paper on old and new commitments, but 
thought that, in line with the principles followed und er the GATT, at the end of the negotiations the 
new commitments would replace the old ones.  His delegation was willing to work on ENTs, but 
associated itself with Australia's and New Zealand' s comments in that regard;  the CSC should limit S/CSC/M/39 
Page 6  
 
  its work to monitoring compliance with Article XV I, paragraph 9 of the Scheduling Guidelines, and 
Article III.  There was room for further progress on classification issues, in particular in areas of convergence of views.  While he understood the sens itivities, there was a clear benefit from obtaining 
clarity on some issues, such as the classification of dredging services.  Agreement would be better 
than continuing ambiguity that would ultimately have  to be resolved through dispute settlement.  The 
discussion on horizontal scheduling issues should also be  continued.  His delegation was interested in 
a thorough discussion of the scheduling of various typ es of residency requirements (prior residency, 
ex-post residency, and legal domicile) as nati onal treatment, and, potentially, market access 
limitations for the various modes of supply.  
32. The representative of Hong Kong, China
 stated that Annex C set objectives which could be 
achieved in various ways.  The question was to what extent the Committee could play a.  The terms of 
reference of the CSC already pe rmitted work on all issues that were presently under discussion, 
including the very specific sche duling questions that the delegation of Brazil had raised.  The 
information exchange on ENTs should be furthered, either by linking it to the questions contained in 
paragraph 13 of his delegation's pa per, or the template provided by Canada.  Perhaps the information 
exchange could be facilitated by elaborating some of  the questions in a questionnaire that would help 
Members share information on the application of th eir ENTs.  The issue of old and new commitments 
was well worth pursuing.  Certain entries in offe rs might constitute backtr acking, which added an 
interesting nuance to that issue. 
33. The Chairman  noted that Members held different vi ews on Annex C, but did not see that the 
Annex could preclude any work in the Committee that  was deemed beneficial.  From the discussion, 
he gathered that Members were in favour of c ontinuing work of generic scheduling issues, and he 
believed that most specific technical questions could be generalized.  On clarity of ENTs, he felt that 
the information exchange should be better operationa lized, and he might consult in that regard.  He 
would provide a further Note on how to deal with the already identified inaccuracies in classification 
instruments.  Finally, he looked forward to a discussion on the issue of old and new commitments, 
and recalled that document S/CSC/W/33 addressed the issue. 
D. OTHER BUSINESS  
34. The Chairman  suggested that, in accordance with the practice of grouping meetings of 
subsidiary bodies close to meetings of the Council,  the next formal meeting be held in conjunction 
with the next services cluster.   
35. It was so agreed . 
E. APPOINTMENT OF CHAIRPERSON  
36. The Chairman  said that according to the Rules of Procedure, the Committee should elect its 
Chairperson at the first meeting of the year, effectiv e at the end of the meeting.  However, given that 
the consultations on that matter by the Chair of  the Council for Trade in Services had not yet 
concluded, he suggested that the formal election of the Committee's Chair for this year and the hand-
over take place at the beginning of the next meeting, following the adoption of the agenda. 
37. The Committee so decided . 
__________