RESTRICTED  WORLD TRADE  
ORGANIZATION  TN/S/M/13 
28 January 2005 
 (05-0362) 
Council for Trade in Services 
Special Session  
 
 
 
REPORT OF THE MEETING HELD ON 29 NOVEMBER AND 3 DECEMBER 2004 
 
Note by the Secretariat1 
 
 
A. ASSESSMENT OF TRADE IN SERVICES .........................................................................................2  
B. PROPOSALS RELATING TO THE NEGOTIATIONS UNDER ARTICLE XIX  OF THE GATS..............20  
C. CONSIDERATION OF PROPOSALS ON S & D TREATMENT PROVISIONS .....................................37  
D. SYMPOSIUM ON CROSS -BORDER SUPPLY OF SERVICES ...........................................................37  
E. WORK OF SUBSIDIARY BODIES – REPORTS BY THE CHAIRPERSONS ........................................40  
F. REVIEW OF PROGRESS IN NEGOTIATIONS , INCLUDING PURSUANT TO PARAGRAPH 15 
OF THE GUIDELINES FOR NEGOTIATIONS ..................................................................................42  
G. OUTLINE OF THE CHAIRMAN 'S REPORT TO THE TRADE NEGOTIATIONS COMMITTEE ..............62  
H. ORGANIZATION OF FUTURE WORK...........................................................................................63  
I. OTHER BUSINESS ......................................................................................................................65  
 
 1. The Special Session of the Council for Trade in Services held a formal meeting on 
29 November and 3 December 2004.  The agenda for the meeting, chaired by Ambassador Alejandro 
Jara of Chile, is contained in document WTO/AIR/2450. 
2. The Chairman
 drew the Council's attention to the report of the last meeting contained in 
document TN/S/M/12.  He said that under "Other Business" the Secretariat had two points that it wished to raise.   
3. The representative of UNCTAD
 said that her organization would wish to make an 
announcement.   
4. The Chairman  suggested that the agenda be adopted with the addition of these points. 
5. It was so agreed . 
6. The Chairman  said that a group of Members sought to introduce an informal document under 
item H and one delegation under item F on 29 November.  There were no objections in this regard. 
                                                      
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. TN/S/M/13 
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A. A
SSESSMENT OF TRADE IN SERVICES  
7. The Chairman  recalled that at last meeting, the Council had agreed to invite the OECD to 
present its recent paper entitled "Report on Services Barriers and Their Economic Impact:  Examples 
of Banking and Telecommunication Services in Select ed Transition Economies".  The study had been 
circulated in document Job(04)/168.  He further re called that the Council had also agreed to invite 
UNCTAD to present its "World Investment Report (2004)" which was sub-titled "The Shift Towards 
Services".  He suggested that the presentations be made in chronological order beginning with the 
OECD study on Services Barriers and their Economic Im pact.  On behalf of the Council, he thanked 
the authors of this study and he welc omed the representatives of the OECD. 
8. The representative of the OECD  thanked the Council for the opportunity to present its on-
going work on services which was proceeding along two parallel lines.  The first was a look at the 
GATS, modes of supply, architectural issues and how OECD work could support the negotiations.  
The second focused on the quantification of barriers and the impact of their elimination and welfare implications.  He said that work in this area wa s work in progress because it was difficult to quantify 
regulatory barriers into index numbers for use in modelling exercises.  There were two challenges in 
this connection:  the first was to compute the va lue of these barriers, and the second to attempt to 
simulate a GATS approach in models in order to measure  the effect of their removal.  He said that the 
presentation focused on barriers and their implications  in the context of transition economies in two 
critical services sectors.  He said that work in te rms of methodology and subs tance would continue.  
He hoped that at a future stage the number of case studies could be increased and said he would welcome any opportunity to present these. 
9. The representative of the OECD said that she would give a brief description of the method 
used to measure barriers to trade in services by focusing on two main aspects.  The first was the 
measurement of the level of barriers and the sec ond was the measurement of the effect of these 
barriers.  She would then turn to some results in  the telecom and banking sectors in selected transition 
economies.  These included the three Baltic States  and Russia (for telecommunications) and eight 
south-eastern European countries, namely, Albani a, Bosnia and Herzegovina, Bulgaria, Croatia, 
Former Yugoslav Republic of Macedonia (FYR OM), Moldova, Romania, and Serbia and 
Montenegro.  She would then briefly discuss th e advantages and the limits of the method of 
measurement before looking at some proposals to improve these measurements.  She would conclude 
with an overview of the on-going work at the OECD  in the area of quantifying services barriers and 
the measuring of the welfare implications of their removal.   
10. The representative of the OECD said that th e first step in the research method was the 
measurement of the level of barrier s.  This had been done by atte mpting to develop an index that 
measured the restrictiveness of barriers.  Info rmation was collected, mainly through a qualitative 
assessment, on the nature and the extent of restri ctions.  In the case of the selected transition 
economies, information from the GATS schedules a nd national legislation had been used.  For the 
eight south-eastern European countries, factual questionnaires sent to ministries and regulatory 
agencies had also been used.  The information pr ovided in the responses was then classified.  For 
instance, information on regulatory framework s was classified along a number of lines.  
Discriminatory barriers were differentiated from non-discriminatory ones and barriers to commercial 
presence were distinguished from those which affect ed other modes of supply.  The classification 
used sought to mirror the GATS classification with  a view to rendering the result useful to the 
negotiations.  She said that the main challenge of the research design lay in the following step, which 
involved transforming qualitative information on restric tions into quantitative information.  This was 
accomplished through a series of scores and weights for each restriction.  She explained that a score consisted of a number between zero (least restrictive)  to one (most restrictive) and was assigned to 
each category according to the degree of restrictiveness.  Examples were provided in tables 1 and 6 of 
the study which described in detail how the index es for the banking and telecommunications services  TN/S/M/13 
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had been computed.  Weights were also assigned to th e various categories of barriers.  The final index 
was arrived at by multiplying the selected score  by the weight assigned to each category.   
11. The representative of the OECD said that, once th e level of barriers had been established, the 
next step in the research involved the measurement of  the effect of those barriers.  The restrictive 
index had then been transformed into a tax equiva lent, for which two possibilities existed.  The first 
was an indirect method in which a benchmark price was determined and the price difference was then 
attributed in whole or in part to the restric tion.  The second was a direct methodology (which was 
used in the study):  the effect of the restrictions was estimated based on the trade restrictiveness index, 
the output in services, prices or other sectoral  performance measures.  For example, in 
telecommunications services, the impact of restricti ons on the penetration in  both fixed and mobile 
services had been estimated and the quantity impact ha d been converted to a price effect.  For banking 
services, the effect of services barriers on the performance of these sectors was measured by net interest margins.   
12. Turning to some examples and results and refe rring to table 1 of the study, the representative 
of the OECD said that for telecommunications, market access and national treatment related to 
commercial presence and other modes of supply had b een considered.  The table gave a global index 
that took into account the information related to all categories.  Among the analysed countries, the three Baltic States and Russia had seen the bigg est progress in opening their telecommunications 
markets.  The relatively high level of openness in Russia's telecommunications sector was largely attributable to the fact that the one-hundred pe r cent foreign ownership was permitted.  However, 
implicit restrictions continued to constrain the access and the operation of telecommunications 
operators.  The restrictive score for almost all of the south-eastern European countries analysed 
reflected a lack of competitiveness in fixed-line se rvices.  She said that the index could give a 
comparative assessment of the policy regimes in th e different countries.  With respect to banking 
services, a foreign index and a domestic index had been calculated.  The former measured barriers which affected foreign suppliers only.  She said th at Estonia led the process of liberalization in the 
group analysed, while the regimes in south-eastern European countries were relatively liberal if only 
market access and national treatment restrictions we re considered.  However,  contradictions emerged 
if one looked at other factors, such as non-perform ing loans.  She said that such information was 
needed to supplement the analysis.  With respect to the effect of barriers and the quantity impact in 
telecommunications, she said that less liberal policie s in fixed-line services were more important in 
this sector than for mobile services.  For example,  fixed-line penetration rates would increase by some 
five per cent in the Baltic States and Russia were ba rriers removed.  Liberalization would bring even 
higher performance returns to the south-eastern Eu ropean countries with an estimated 15 to 30 per 
cent increase in fixed line penetration rates and fi ve to 20 per cent increase in mobile penetration 
rates. This quantity impact had been transformed into tax equivalents of barriers in telecommunications.  It had been observed that high er tax equivalents were recorded in fixed-line 
telecommunications.  She said that barriers inflated domestic prices of fixed-line telecommunications 
services by some five per cent in Lithuania, Latvia and Russia, and by some three per cent in mobile 
telecommunications in Latvia and Russia.  Signifi cant tax equivalents had been observed in south-
eastern European countries.  These barriers resulted in  estimated price increases of some 15 to 35 per 
cent in fixed-line and some five to 20 per cent in  mobile telecommunications.  With respect to the 
results for tax equivalents in banking services, she said  that the trade regimes in the three Baltic States 
were moderately restrictive and that, for banking services in south-eastern Europe, market access and 
national treatment barriers were estimated to add some  two to four per cent to prices.  However, the 
econometric estimates also indicated that other rest rictions, such as excess capital and liquidity ratios, 
inflated the banking prices by some ten per cent in some south-eastern European countries.  This 
explained the higher values for Serbia and Montenegro, FYROM and Moldova.    
13. The representative of the OECD, making a few comments on the methodology used, said that 
the indexes, while not perfect, could be useful complements to the qualitativ e analyses because they 
facilitated comparisons across countries and sectors.  Such an analysis would be much more difficult TN/S/M/13 
Page 4  
 
if only qualitative information on existing regulatory frameworks were used.  Moreover, this method 
made it possible to illustrate the potential first-r ound benefits of removing ba rriers.  Improvements 
could be observed in terms of the increase in penetration rates or a decrease in prices.  The estimates of services barriers could also be used in more complex general equilibrium  models, which permitted 
an estimation of global welfare effects of services liber alization.  However, in this regard she recalled 
that the indexes were not perfect.  She explained th at the first problem was related to the availability 
of data and its quality.  She recalled that the GA TS schedules, national legisl ation and questionnaires 
examined highlighted that the information used needed to be rigorously controlled in order to 
construct the indexes.  With regard to the scope  of the restrictiveness index, she said that the 
contradictions observed in the banking sectors in so uth-eastern European countries, which seemed to 
be very liberal, suggested that the indicator needed  to be complemented with other sectoral indicators 
that captured sector specificities.  A third probl em was related to the assignment of scores and 
weighting which was done on a subjective basis.  She thought it might be useful to supplement the analysis with information from business surveys.  This explained why the OECD had embarked on 
further quantitative work with resp ect to the collection of data used .  She said that information from 
GATS schedules would be supplemented with other sources of information.  A more systematic 
control of the reported data would be undertaken  should self-assessment questionnaires be used.  She 
said that, in addition, in the financial and professional services sectors, which were sectors 
characterised by regulatory complexity, the sectoral indexes would be improved by adding new components.  The weighting of these components woul d also be examined in light of information 
from the business sector.  The main improvement would be to develop model indexes for each sector 
in order to obtain restrictiveness indexes for each mo de of supply in each of the sectors analysed.  The 
aim would be to use the restrictive indexes and ta x equivalences in economy-wide general equilibrium 
models which, it was hoped, would incorporate a ll modes of services supply and would be more 
useful for the GATS negotiations.  Finally, it wa s expected that the geographical and sectoral 
coverage of existing indexes would be expanded a nd would include assessing the effect of 
restrictiveness of selected services sectors.  She said that such wo rk was underway for selected sectors 
in China.   
14. The Chairman
, on behalf of the Council, thanked the representatives of the OECD and said 
that the work reminded him of very good work undert aken by the OECD in th e past, for instance with 
respect to agriculture which sought to measure of th e impact of subsidies and barriers.  He was very 
impressed by the work and by the possible impact th at these studies might have in the negotiations in 
terms of providing a methodology to measure barr iers in services.  He thought it represented a 
pioneering effort.   
15. The representative of Hong Kong, China  thanked the representatives of the OECD and said 
that the paper was a good follow-up to discussions in previous meetings on an earlier OECD paper on 
Services Trade Liberalisation:  Identifying Opportuniti es and Gains.  It was his understanding that the 
methodology used in the paper presented was the same  as that used in the previous studies on the 
assessment of services barriers.  He said that  the papers focused on financial services and 
telecommunications services, which were two importa nt sectors.  Making a few general comments, he 
said that his overall impression was that the presenta tion of the methodology was particularly relevant 
in terms of the economies studied, but more impor tantly in terms of the methodology the paper had 
attempted to use and the results obtained in their appli cation.  He said that the study was timely for the 
Council's work, both for the work under the Assessme nt of Trade in Services and for the negotiations 
on individual sectors.  With regard to the assessment, his delegation had noted that the paper had outlined a methodology for a sectoral approach in individual economies.  He said that this would be a useful complement to the qualitative assessment  that many Members and organisations had 
undertaken to date.  He agreed with the observa tion that quantitative assessme nts would be a useful 
complement and would help identify policy prioritie s.  Quantitative assessments would help Members 
achieve a more focused and targeted appraisal of the economic impact of liberalization which might not be underscored forcefully if only qualitative assessments were undertaken.  He took note of the 
limitations that the representative of the OECD had indicated, especially that the methodology might  TN/S/M/13 
 Page 5 
 
 
be more applicable in some sectors than in ot hers, such as those with a more complex regulatory 
structure.  In terms of the negotiations, the stud y was useful because it suggested a methodology that 
could yield a more objective cross-country compar ison of the levels of liberalization and more 
concrete indications of the de facto  regimes in those economies.  He said that both of these features 
would be useful in providing reference points a nd benchmarks for the negotiations on individual 
services sectors and in particular in key infrastru cture sectors.  In this regard, the methodology 
provided a possible way to define the level of ambition for liberalization as well as a quantitative indicator of the potential economic benefits arising from liberalization.  He expressed interest in future work of the OECD as indicated in paragra ph 75 of the study, especially in terms of expanding 
the work to other economies and sectors and in refi ning the existing methodology.  He hoped to see 
the methodology applied to other infrastructural  sectors such as logistics and transport.   
16. The representative of Hong Kong, China had taken note of the limitations of the methodology 
employed and of the role of regulatory complexity in the various sectors.  It  had been suggest that 
regulatory complexity was one of the factors that e xplained the different results in financial services, 
which were likely less representative then the resu lts obtained in telecommunications.  However, he 
said that the telecommunications sector often had a very sophisticated regulatory regime and he 
wondered whether an explanation c ould be given, in terms of the regulatory complexity, that would 
shed light on the application of the different methodologies in the two sectors.  Secondly, while noting that the present study focused on the application of  the methodology to measure the restrictiveness of 
the de facto  regime, he said he would be interested to know whether this same methodology could be 
used to measure Members' de jure  regime.  Specifically, he wondered about the level of 
restrictiveness in terms of the level of treatme nt specified in specific commitments, including any 
regulatory disciplines.  He asked whether the met hodology could be applied in such cases.  Thirdly, 
he inquired into the extent to which any non-MF N treatment had been taken into account.  He said 
that many economies studied had entered into econom ic integration agreements  and differentiated in 
terms of the measures applied to members and non-me mbers in these agreements.  To what extent had 
these differences been taken into  account in the restrictivenes s measurement?  If the Member 
maintained an essentially open regime, he presumed that  the differences in the level of restrictiveness 
would be minimal.  However, for those economies wh ich had yet to achieve fu ll liberalization, he said 
that the preferential treatment could imply a higher  level of barriers to non-members of the economic 
integration agreement.  Finally, referring to his dele gation's intervention at the last meeting regarding 
the way forward on this agenda item and how to dr aw conclusions from the assessment exercise to 
date, he hoped that the presentations and exer cise would provide the backdrop against which 
Members could begin to reflect on the specific conclusions that could be drawn from the assessment.   
17. The representative of the OECD
 said that some of the comments would be helpful in 
furthering her work.  Referring to the question about the taking into account of preferential treatment, 
she said that it had not been taken into account in the OECD's work, but that it had been taken into 
account in the Australian Productivity Commission's methodology on which the OECD's was based, 
and would be included in the OECD's further work.  With respect to the restrictiveness arising from 
additional components, she said that these component s could be included in a methodology adapted to 
that purpose.  On the differences between the sectors,  she said that a contradiction had been observed 
in banking services between the restrictiveness index a nd the effect of the services barriers.  This led 
her to the assumption that the indicator used lik ely needed to be suppl emented with additional 
components in order to better capture the economic s ituation in this sector.  What would be needed 
would be components of the restrictiveness index that were specific to the sector, and took into consideration the fact that the banking sector was a backbone sector and had an incidence on 
macroeconomic policy more broadly.  It could be imagined that sector specific barriers and 
components would need to be included in order to come to a finer result. 
18. The representative of Canada
 thanked the representatives of the OECD and said that an 
analysis of the sectoral restrictiveness could be a useful policy tool provided that the analysis was conducted using factors and weighting that were ta ilored specifically to the sector being reviewed.  TN/S/M/13 
Page 6  
 
With respect to the work on telecommunications, he said that it would be helpful if study of GATS 
commitments considered Members who had committe d to the telecommunications reference paper 
and the extent to which obligations therein had been implemented.  He asked the extent to which this 
had been taken into account.  He looked forward to following on-going work that had been outlined in 
the paper.  
19. The representative of the OECD
 responded that this aspect had not been taken into account to 
date.  She noted that paragraph 13 of the study suggested that the commit ments undertaken in the 
reference paper be included in  the restrictiveness index. 
20. The Chairman  again thanked the representatives of th e OECD for their work and presentation 
and looked forward to future work and improve ments to the methodology they had outlined.  The 
Chairman then welcomed the representative of  UNCTAD who had generously accepted to present 
UNCTAD's World Investment Report (2004) (WIR),  which focused on world investment, production 
and trade trends in services.  
21. The representative of UNCTAD  thanked the Council for the opportunity to present the World 
Investment Report (2004).  Given the length of the re port and the limited time available, he thought he 
might highlight three points which he hoped would be of interest to Members.   The first concerned 
overall FDI flows in 2003 and what was expected for 2004.  The second concerned the shift towards 
services.  The third point he wished to touch upon re lated to off-shoring given the interest generally in 
this topic.  He said that the report contained a chapter on international investment agreements in 
services, including discussion of the GATS.  He said that world investment flows in 2003 had fallen by 18 per cent to $560 billion.  This fall had take n place in developed countries and in central and 
eastern Europe.  In fact, the traditional host country of FDI, the United States, had seen its investment 
inflow decline to $30 billion, which was unusual a nd he did not expect would continue.  Foreign 
direct investment flows into developing countries, by contrast, had risen by nine per cent to $172 
billion.  China was the largest host country (if one excluded Luxembourg and trans-shipped 
investment) with some $54 billion.  This perfo rmance was uneven:  worldwide, 111 economies saw 
an increase in investment flows while 82 economies saw a decline.  With respect to developing 
country regions, Africa as a whole had seen an incr ease and the prospects for the coming years were 
positive, particularly in light of the development in commodity prices.  Asia al so had seen an increase 
to $107 billion and prospects were positive given th e economic situation and the performance of key 
industries in which FDI played a role.  For exampl e, FDI inflows in China in 2003 were $54 billion, 
which was a figure that had been reached in Septem ber 2004 and he said it was expected that China 
would attract a total of $62 billion in 2004.  Latin Am erica had seen a mild dec line for the fourth year 
in a row, from $51 billion to $50 billion.  Give n the economic performance of the continent, this 
figure was expected to increase in 2004.  Central a nd Eastern Europe had seen a considerable decline 
from $31 billion to $21 billion, which included the eight accession countries to the EU.  This was largely attributable to some large privatisations that  had taken place the year before and, in that sense, 
there had been an adjustment.  The prospects we re positive given the economic  growth and the quality 
of infrastructure and skills combined with low taxes a nd other subsidies.  Overall, he expected that a 
recovery was underway in 2004 and was driven by economic growth, the profitability of trans-
national corporations, the increase in stock market prices, the increase in mergers and acquisitions and 
the continuation of liberalization, in particular in  the services sector.  In fact, he said that UNCTAD 
had undertaken surveys of trans-national corpora tions as well as investment promotion agencies and 
locational experts and these surveys indicated a broadly-shared view that 2004 and 2005 would see an 
increase in investment flows.  The results of this survey would normally be published within a 
fortnight.  He noted that special attention had b een given to FDI from developing countries, which 
was an increasingly important phenomenon.  A numb er of developing countries, if one calculated 
outward FDI as a percentage of tota l investment, were bigger outward investors than some of the main 
developed countries.  Examples included Singapore a nd Malaysia.  In summary, there had been an 
overall decline in 2003, but a recovery was expected in 2004.  TN/S/M/13 
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22. With respect to the shift towards services, th e representative of UNCTAD said that one figure 
which was worth retaining was the substantial shift in the composition of FDI stocks and flows to the 
services sector.  In the 1970s, approximately 25 per cent of the world stock of foreign direct investment was in services, while in 2004 it was some  60 per cent.  This was equivalent to some $4.4 
trillion in FDI stock world-wide.  In terms of invest ment outflows, approximately two-thirds of flows 
over the past three years on average had been in se rvices sectors.  This did not include non-equity 
forms which could also be used to establish internat ional production systems.  This shift within the 
composition of overall FDI had been accompanied by a shift within the services sector.  More specifically, there had been a shift away from trad e and finance, which traditionally accounted for 
some two-thirds of FDI towards "newer service s" such as electricity, telecommunications, water 
services, business services, etc.  The share of these latter increased from less than  20 per cent to more 
than 40 per cent in the past decade.  The driver s of FDI in services included the ascendancy of the 
services sector itself:  in virtually all developed countries, some 70 per cent of GDP was accounted for 
by the services sector.  In the majority of devel oping countries, the services sector accounted for over 
half of GDP.  In this sense it was not surprisi ng that changes in the composition of GDP had 
translated into changes in the composition of FDI flows.  The phenomenon was amplified by the 
general non-tradable nature of services, which meant that most services needed to be produced where 
and when they were consumed and were difficult to trade in the traditional sense.  Therefore, if 
companies wished to service a fore ign market they needed to est ablish themselves abroad through 
FDI or other means that provided them with an o pportunity to produce and sell services in foreign 
markets.  This was an important factor in terms of determining outward investment.  The advantages 
of ownership also helped companies to compete succ essfully abroad.  As well, broad liberalization of 
the services sector combined often with priva tisation, had occurred, which allowed FDI and 
companies to enter markets.  This was partially fu elled by the recognition that services were important 
for development in terms of helping countries est ablish themselves in the international market.  
Referring to the benefits of FDI in services, he said that they were similar to those in the 
manufacturing sector:  FDI brought finance, technology, both hard and soft technology, employment 
and increasingly exports and links to the international market.  In a word, a strong services sector increased the systemic competitiveness of an ec onomy.  Policies were important in terms of 
maximising the positive effects of FDI and minimisi ng negative effects.  There were a number of 
areas where policies were particularly important, esp ecially with regard to privatisation, such as the 
risk that a public monopoly would become a private one, the abuses of market power (especially 
utilities), socio-cultural implications or systemic risks (for instance in banking).  Liberalization and 
increased inflows of FDI needed to be accompanied by careful policies that ensured that FDI was not 
only attracted but that it contributed as much as possible to development.   
23. The representative of UNCTAD said that one of the aspects of services trade that had 
received quite an amount of attenti on was off-shoring.  He first sought  to draw a distinction between 
out-sourcing and off-shoring.  The former occu rred when a company gave the production of a 
particular service to a third party at home.  The latter occurred when the out-sourcing occurred to a 
service provider abroad.  He further clarified that  he would employ the term only with relation to 
services.  Beginning with a commen t about the "big picture" of the underlying forces at play, he said 
that the single most important factor driving off-s horing was the tradability revolution.  As he had 
mentioned earlier, services typically needed to be  produced where and when they were consumed.  
With the advent of telecommunica tions and computer technologies, it had become possible to produce 
a service in one location and consume it, perhaps later,  in another location.  This meant that services 
increasingly were becoming tradable.  This applied in  particular to information intensive services that 
could be traded in the sense of mode 1 of the GATS.   This was important because for the first time, an 
international division of labour in the production of  services could potentially be established.  The 
potential for change could be better assessed if figures in manufacturing were considered:  some 50 
per cent of industrial production en tered international trade in comparison to 10 per cent in services.  
He was not saying that, as a result of the trad ability revolution, 50 per cent of services production 
would enter international trade in the near future .  Nonetheless, a potential existed which could be 
harnessed and there were indications that patterns were changing.  Firms from the United States and TN/S/M/13 
Page 8  
 
the United Kingdom were leading this process.  Other companies from other countries would have to follow suit lest they risk losing their competitive position vis-à-vis  their counterparts in those 
countries which took advantage of off-shoring.  These could create an international division of labour 
within their companies in order to reap the benef its of the trend and included lower prices for the 
production of particular services as well as the benefits  arising from consolidation and specialization.  
The total market was estimated at some $32 billio n in 2001.  The potential was high given the fact 
that the services sector accounted for the largest por tion of GDP, that cross-border trade to date was 
rather limited to date, that tradable services coul d be found in all sectors, as well as the increased 
tradability of information intensive services.  One estimation foresaw that, among the top 1,000 firms, 
70 per cent had not yet begun to off-shore to any signif icant extent.  He repeated that the key driving 
force was the tradability revolution which allowe d an international division of labour in the 
production of services to emerge.   
24. The representative of UNCTAD said that the ge ographical profile of off-shoring was another 
element worth underlining.  He said that off-shoring was not a North-South issue.  The top recipients 
of off-shored services were, in order, Ireland, Indi a, Canada and Israel.  Examples included, for 
individual services off-shored through FDI (as opposed through third party provision) in 2002 and 
2003, that over half of the call-centres establishe d worldwide through FDI were done so in developed 
countries and half of the IT services established were  in developed countries.  This was perhaps not 
surprising since, as in the manufacturing sector, economic activity took place where most of the 
economic activity was located, namely in the devel oped countries.  It was indicative that some four 
weeks earlier, a major Indian call-centre firm had announced a major expansion of its call-centre in 
Belfast, Northern Ireland, precisely because it sought to remain close to the mark et.  He said that the 
Department of Trade and Industry in the United Ki ngdom estimated that the number of call-centres in 
the United Kingdom and the employment associated w ith them would increase in the coming years.  
Finally, he sought to address the question of who benefited from these changes.  UNCTAD proposed 
that this scenario was a win-win-win situation provided that the underlying policies were right.  
Companies could win because they could concentr ate on their core competencies and outsource or 
off-shore non-core activities.  Competition drove firms to do so, otherwise they ran the risk of losing 
competitiveness.  Hence, the trend increased the comp etitiveness of firms.  Recipient countries could 
also win through the traditional benefits of trad e and FDI:  export earnings, new jobs and skills, 
technology transfer and potential for linkages.  Countries of origin could also win through the traditional benefits of trade and FDI:  lower costs for consumers, export opportunities, more 
competitive enterprises, and perhaps most importantly , structural change that incited economies to 
move to higher value-added activities.  In a word , at issue were all of the opportunities and costs 
associated with the emerging international division of  labour in the services sector.  However, he said 
that challenges would need to be me t if the benefits he had enumerated were to be realised.  He said 
that the principal policy challenges for recipient count ries were to have the appropriate infrastructure, 
for instance in terms of telecommunications, skills and quality of suppliers; an  appropriate regulatory 
framework; investment promotion agencies that  would increase focus on services companies; 
integrating off-shored services into a broader deve lopment strategy that would see a leveraging of 
export-oriented activities for growth  and development; and prudential regulation to ensure there was 
sufficient room and impetus for domestic services companies to grow and become internationally 
competitive.  For countries of origin, protectionism and measures to force services jobs to stay at 
home were would ultimately prove short-sighted and in the long-term would not be sustainable.  
Instead, these countries needed to focus on adjustment policies, including traditional instruments such 
as training, education and particularly research a nd development.  Other mechanisms that could 
facilitate adjustment also needed to be found.  Finally, the policy challenge for the international 
community was to maintain an open and enabling fra mework for off-shored ser vices.  In summary, he 
said that off-shoring was an important phenomenon driven by the tradability revolution.  The 
phenomenon was in its infancy and the tipping point mi ght be approaching rapidly.  It was at the 
cutting edge of the international division of labour.  It could be of benef it to all groups if policy 
challenges were met.  He recalled that copies of the WIR were available on UNCTAD's website, http://www.unctad.org/wir.  TN/S/M/13 
 Page 9 
 
 
25. On behalf of the Council, the Chairman  thanked the representative of UNCTAD for the very 
impressive report and presentation. 
26. The representatives of Brazil , Canada , India , Mexico , Korea , Thailand , European 
Communities , China , Hong Kong, China , Switzerland , Chinese Taipei , Japan , United States , South 
Africa , Antigua and Barbuda , Philippines , Malaysia , Colombia , Australia  and Singapore  thanked the 
representative of UNCTAD for his presentation. 
27. The representative of Brazil  said that the UNCTAD report required careful analysis and 
reflection given the impressive amount of informat ion it contained and its ground-breaking nature.  
He said that the report would constitute an impor tant reference point, particularly for developing 
countries, in the GATS negotiations.  He wished to offer a few preliminary remarks on the World 
Investment Report (2004).  He said that the WIR highlighted the continued decline in global FDI 
inflows in 2003 for a third consecutive year to $560 billion.  This reflected a 25 per cent decline to 
developed countries.  The United States had regist ered a 50 per cent decline in inflows.  For 
developing countries as a group, FDI inflows had in creased by nine per cent to $172 billion, with 
different regions and groupings reco rding varying patterns.  While in Africa, Asia and the Pacific FDI 
inflows had increased in 2003, in Latin America and the Caribbean they had experienced a fourth year 
of reduced inflows.  The LDCs continued to receive less than two per cent of world FDI inflows.  While the significant increase in flows to Afri ca of 28 per cent in 2003 was notable, many low-
income, and particularly least-developed, countries continued to experience difficultly in attracting 
FDI in many industries in which investment coul d make a positive contribution to the economy.  He 
said that improving the ability of these countries to at tract FDI in targeted industries was important in 
light of the predominance of FDI from private sources of external financing.   
28. The representative of Brazil noted that the WIR (2004) had addressed, for the first time and in 
great depth, the important subject of FDI in the ser vices sector.  This focus was timely in light of the 
central importance of services industries in the e fficient operation of any national economy, which 
had only relatively recently gained its proper recogniti on.  The effective provision of various services 
was a critical element in the fight against povert y, which was a goal that necessitated policies to 
promote public access to services such as health, education, water and electricity.  He said that one of the salient features of the previous two decades wa s the shift of FDI towards services.  At present, 
services accounted for 60 per cent of world FDI st ock, which compared to only 25 percent in the 
1970s.  This applied to all groups of countries.  The composition of services FDI had shifted with the 
emergence of telecommunications, electricity and bu siness services as large FDI hosts in addition to 
the more traditional services industries of finance and trading.  Large services trans-national 
companies (TNCs) were increasingly active through foreign expansion, particularly mergers and 
acquisitions, which mirrored an earlier foreign expansion by TNCs active in manufacturing.  
Referring to the parts of the report which dealt with the GATS and FDI, which was an important 
aspect of the report in his view, he said that the document recognised that the GATS did not have as 
its main aim investment protection.  At the same  time, it reminded the reader that the GATS did not 
forbid recourse to performance requirements by deve loping countries.  He echoed the concern raised 
by UNCTAD about the importance of proper scheduling and reaffirmed Brazil's intention to discuss 
further the issue in the Committee on Specific Commitme nts, and particularly in the light of the two 
recent panels related to services.  Brazil supporte d further discussion of the issue of public services 
given its strategic importance to national policies.  In this light, Brazil had asked Members at the 
multilateral and bilateral levels to clarify their understanding about the rela tionship between private 
and public sectors in the GATS since this issue had a great impact on existing and future commitments as well as on government policy space.  Brazil also sought to draw Members' attention to the overview provided by UNCTAD with respect to  the actual changes that services regimes were 
undergoing.  He said that, were such changes witne ssed in developed countries, they were even more 
prevalent in the developing countries since in ma ny cases "the rules and regulations for services are 
not yet fully established with regulators experime nting, adopting different methods and ultimately 
seeking the regulatory approach that best suits th e developmental needs of their countries" (WIR, TN/S/M/13 
Page 10  
 
p. 233).  In relation to the commitment in the GAT S to engage in future negotiations, he sought to 
reiterate that market access should not be seen in  isolation, but should be negotiated hand-in-hand 
with the rules negotiations foreseen in the GATS.  Brazil supported the concern expressed by 
UNCTAD with regard to the necessity to ensure tr ansparency and objectivity to the economic needs 
tests applied by Members.  Brazil was also a s upporter of the notion of a comfort zone through the 
insertion of a safeguard measure to provide the n ecessary flexibility for Members to undertake further 
international commitments as well as through full rec ognition of the right to regulate principle.   
29. The representative of Brazil said that FDI in services could bring benefits and have costs for 
host countries.  It could attract capital and help me et domestic financing needs, lead to an improved 
quality of services, transfer soft and hard t echnology, and boost national and international 
competitiveness.  He said that these benefits, howev er, might not be realised, if conditions in host 
countries were not right.  He said that services FDI could entail three types of risks.  Firstly, a systemic risk where the absence of effective regul ation exposed the country to significant economic 
instability.  Secondly, structural risks when th e institution and instrume nts needed to manage 
privatisation and adequately supervise utilities threaten ed to turn state-owned monopolies in to private 
monopolies.  Thirdly, risks specific to socially or culturally sensitive areas where FDI could cause 
unintended harm.  He said that, as a large part of services FDI was market-seeking and did not contribute directly to foreign exchange earnings, but did entail external payments, it could have a 
negative impact on the balance of payments.  Ther e was thus a need for carefully designed and well-
conceived policies to ensure that the benefits that  FDI could bring would actually be realised and to 
reduce the potential negative consequences that c ould result from services FDI.  Deciding which 
sector to open and which type of r estrictions and exceptions to retain  in domestic regulations in order 
to promote national policy objectives required an extensive understanding of the various economic 
sectors.  He added that the investment report was a ve ry useful instrument in this regard.  He recalled 
the importance to develop the necessary tools to counter restrictive and anti-competitive business 
practices followed by trans-national corporations.  There was a need to avoi d an exclusive focus on 
restrictions arising from government mandated regula tions and ignoring the impact of restrictive and 
anticompetitive practices and policies followed by the TNCs.   
30. The representative of Canada
 said that one of the reasons that Canada had proposed at the last 
meeting to extend an invitation to UNCTAD was that the WIR (2004), which focused on FDI in 
services, had some particularly important messages for services negotiators.  It drew a very clear conclusion that investment in services was beco ming increasingly important to both developed 
countries and developing countries.  It also drew atte ntion, in Canada's view, to mode 3 in the context 
of the GATS negotiations.  The report was a rich and thorough document and various countries would 
draw on various elements it contai ned.  Canada wanted to focus on the meaning of some of the 
conclusions in a Canadian context, and in particul ar with respect to the negotiations.  Seeking to 
underline a number of points, he said that invest ment in services was of critical importance for 
Canada.  Canada was a prime example of a count ry whose long-term export success and productivity 
depended on both inward and outward investment.  Among G7 nations, Canada had the third highest 
outward FDI to GDP ratio and the second highest in ward FDI to GDP ratio.  Some 60 per cent of 
outward FDI was in the services sectors.  As compelli ng as the figures in the WIR were, he said that it 
had come to his delegation's attention that the official  statistics did not tell a full story in the Canadian 
context, and he suspected for other countries as well.   For example, a recent analysis by the Asia-
Pacific Foundation of Canada that found that Canadian services FDI to India was over twice the 
officially recorded value.  The report also indi cated that services trade from Canada to India was 
under-represented by a factor of three.  The conclu sions of the WIR were very compelling in this 
context and he thought should provide guidance in the negotiations.   
31. He said that it was in the context of mode  3 commitments in the GATS that Members could 
give expression to some of the realities surrounding services investment.  As Members knew from the 
last round of negotiations and from analyses undertaken  since, mode 3 in the services context was the 
most significant of the modes of supply and accounte d for 56 per cent of total trade.  According to  TN/S/M/13 
 Page 11 
 
 
WTO Secretariat analysis, mode 3 was characterised by the highest number of limitations and the fewest number of full commitments in market access and national treatment.  From a Canadian perspective, it was thus not surprising that Ca nada had put a great deal of emphasis on increasing 
liberalization commitments on mode 3 services.  He  said that when the Canadian requests were 
compared to the offers on the table submitted to da te, he regretted to report that Canada had seen a 
significant gap in progress.  Many of the issues and ba rriers that Canada had identified in its requests, 
in the form of restrictions related to the type of  legal entity or number of service suppliers or the 
participation of foreign capital, remained unaddressed  in the offers received to date.  While his 
delegation had noted some progress in a few specific areas, there remained significant progress to be made in his view.  From this perspective, GATS ne gotiators were significantly out of step with some 
domestic policy makers.  There were indicatio ns, including in the UNCTAD study, that all 
governments had come to realize that market opening policy steps provided transparent and 
predictable regimes for foreign investors in their markets.  Since 1995, he recalled that UNCTAD had 
recorded several hundred market opening measures annua lly, and yet, there remained a significant gap 
in terms of the offers on the table in 2004.  He fu rther recalled that Members had an opportunity in the 
context of initial or improved offers to recognise the need for progress on mode 3.  He said that for 
Canada this would be an important element of  any assessment or stock-taking of work achieved 
between the present and the Hong Kong Ministerial.  Mode 3 would not be a "litmus test" for Canada, 
as some had noted with respect to other modes,  however, mode 3 would be a very important 
consideration for Canada in its reflections on progress.  
32. The representative of India
 said that he had noted the changes in the composition of FDI and 
its geographical distribution reported by UNCTAD.  He said he wished to focus his intervention on 
the off-shoring portion of the presentation.  In this  respect, a number of points had struck him as 
particularly important.  Firstly, the issue was not a North-South issue, a large part of the benefits remained with developed countries, and the de veloping countries were only beginning to take 
advantage of these activities.  He underlined the importance of the points made by UNCTAD with 
respect to allowing an international division of labour.  Secondly, he had also noted that the 
phenomenon was a win-win combination for the host a nd recipient countries.  A third point he sought 
to underline was the importance of the tradability of these services and particularly in terms of cross-
border supply.  In this regard, he recalled that  a number of delegations had introduced a joint 
statement on the importance of liberalization of cross-border supply given the increasing importance 
of trade currently and in terms of future dyna mic trends.  He wondered whether UNCTAD had any 
insights into the sectors where trad ability had been enhanced in th e past few years or would be 
enhanced in the coming years.  Referring to item D of  the agenda, he said that many of the issues that 
had been raised in the present discussion could be in cluded in the proposed symposium, including that 
on off-shoring. 
33. The representative of Mexico
 sought to highlight three points referred to in the presentation.  
Firstly, global trends had matched or even surp assed realities on the ground that Members were often 
still in the process of identifying and for which they  had not developed disciplines, specifically on 
domestic regulation.  Secondly, with reference to the needs of various services areas, including 
infrastructure development and possibilities to de liver services through new technologies particularly 
in telecommunications, he said that telecomm unications had revolutionised and spawned the 
emerging international division of labour.  He noted that investment in certain economies had 
provided training and resources that were required to  supply services internationally.  Thirdly, with 
respect to the promotion of investment in services, while he could give specific figures related to geographical and sectoral investment flows for Mexi co as had been given by Canada, he said that 
growth and experiences in certain sectors had demons trated that FDI had grown in Latin America.  
Finally, he underlined that these various trends  necessitated the implementation of domestic policies 
tailored to the domestic situation.  He said count ries' FDI promotion policies would help countries 
contribute to the international division of labour that was unfolding. TN/S/M/13 
Page 12  
 
34. The representative of Korea
 said that the WIR was highly informative with regard to the 
recent trends of worldwide FDI, underlined policy im plications and provided a helpful contribution to 
the progress of the services negotiations.  He said th at the evidence and assessment offered by the 
report were in line with Korea's experiences.  FDI in services and mode 3 remained of vital 
importance despite the rapid growth of trade through mode 1 and mode 2.  In particular, he had noted 
the conclusion on page xxiii of the WIR that FDI in  services "can spur local service providers to 
become more competitive through demonstration an d skills diffusions, thus helping them improve 
efficiency."  In this regard, he sought to ma ke some complementary remarks based on Korea's 
experiences with the enhancement of competition th rough liberalization and efficiency gains that 
could bring new opportunities for domestic players if due  consideration was given to slower adaptors.  
Mirroring the worldwide FDI trend, Korea had obser ved the growing importance of services in overall 
FDI:  the share of services in total FDI inflow s had surpassed 60 since 2003, for which financial 
services was the largest recipient;  services in FDI out flow was also significant and reached nearly 40 
per cent in 2003.   
35. The representative of Korea noted that the distri bution sector represented the largest share of 
services FDI outflow and accounted for some 60 per cent.  Digressing on distribution services, he said 
that, subsequent to the near complete liberalization of distribution services in 1996 in Korea, the sector had become of export interest for actors th at had established retail outlets or franchises in 
overseas markets.  One side effect of liberalizati on was the displacement of small-sized stores and a 
certain level of job reduction in the industry.  However, Korea w as of the view that the business 
failure of small-scaled retailers was attributable to  their slow adjustment to changes in the market 
rather than to the opening of the market itself.  A survey of 370 retailers found that only 35 per cent 
had changed their business strategy to meet the challenge of liberalization and had invested in 
upgrading their out-dated stores.  Of these stores, 25 per cent had experienced an increase in sales by 
10 per cent subsequent to these changes.  In order to prevent these side effects from undermining the 
overall benefits of the liberalization, the Kor ean Government was providing various assistance 
programmes to small-scale retailers to assist their adjustment.  In particular, the Government had 
made efforts to assist retailers remodel or renovate  their facilities in order to improve their business 
environments.  In addition, the Government as sisted with management innovation, such as 
modernising commercial transactions using e-commer ce, facilitating joint development of products 
and brands, and modernising mana gement though education and establishing associations among the 
retailers in the market.  In light of these experien ces, Korea would continue to engage constructively 
in adjustment policies in response to liberaliza tion.  Korea acknowledged that it was difficult to 
establish the causality between observed efficiency  gains and liberalization due to insufficient 
statistics.  However, the fact that the distributio n services sector had converted itself into an area of 
export interest within ten years of liberalization was circumstantial evidence of efficiency gains. 
36. The representative of Thailand
 said that the report contained high quality research that had 
come at a timely juncture and she thought was useful  to all Members.  She inquired into the definition 
of FDI used in the report and, referring specifically to the top ten recipients of FDI, she noted that 
Luxembourg was ranked number one.  She inquired into  the reasons for this ranking and whether in 
included transactions related to mergers and acquisiti ons.  She recalled that earlier in the year the 
WTO had released international trade statistics fo r 2004.   It had reported that services trade as a 
proportion of trade in goods had declined and that  in 2003 growth in trade in goods had overtaken 
growth in trade in services.  She further recalled th at the export of financial services had declined and 
she presumed that, given that developed countries accounted for most services trade, the overall 
decline in services trade was owed to  the fact that developed countri es had been less active.  She said 
that she was attempting to reconcile these trade figures with the investment figures provided by UNCTAD which observed a decline in investment in financial services in comparison to other sectors 
such as telecommunications or business services.  She asked whether it was a fair conclusion to make 
that financial services trade and investment had declin ed or rather were these figures attributable to 
consolidation in the industry particularly in devel oping countries.  She further inquired about forecasts 
for services given that investment in services ha d increased despite fewer trade transactions.    TN/S/M/13 
 Page 13 
 
 
37. The representative of the European Communities  said that the report demonstrated in a 
convincing manner the importance of services FDI fo r development.  Noting the predictability was 
crucial for FDI, he said one of the best ways to attract FDI was to make meaningful commitments in mode 3 in the services negotiations.  This woul d have a positive effect on services investment, in 
addition to FDI in other sectors, given the crucial role that a competitive servi ces sector infrastructure 
played in a country's ability to attract FDI generally .  Services FDI, particularly in intermediate and 
infrastructure services, affected th e economic performance of a host country in all sectors, which he 
said was a point contained in the report that his dele gation had noted with interest.  It had also noted 
with interest the points made about off-shoring.   Off-shoring of corporate services was increasing 
rapidly owing to advances in information and co mmunication technologies.  However, the potential 
for such off-shoring could only be harnessed if the co untry adopted appropriate policies.  Thirdly, his 
delegation attached importance to the point that national policies mattered for attracting FDI, as well 
as in order to maximise benefits and minimize poten tial negative impacts.  Fourthly, he said that FDI 
in services remained more restricted than other types of FDI.  His delegation had noted that 71 per cent of FDI restrictions related to services and he  underscored that these restrictions were most 
prevalent in the transportation, banking and in surance, business and telecommunications sectors, 
which were of critical importance to economic devel opment.  Fifthly, locational advantages had also 
been highlighted in the report and these in cluded good access to information and communication 
technologies which could help the countries benefit from  these activities.  Finally, in certain sectors he 
noted that market entry was more likely to take place through mergers and acquisition than through 
greenfield investments.  In this regard, he highli ghted the importance of flexibility in terms of how 
commitments were scheduled because individual sectors would respond in different ways to the 
market opening that occurred in different countries.   
38. The representative of China
 said the WIR sought to understa nd the latest developments and 
characteristics of FDI in services sectors and wished to make a few preliminary comments.  Firstly, 
with regard to the general situation of China's FD I in services sectors, he said that China had become 
one of the top recipients of FDI in 2003, while no ting that the lion's share of this flowed to the 
manufacturing sector.  The volume of FDI in servic es sectors had been incr easing steadily.  In 2003, 
the contractual value of FDI in services sectors am ounted to $27.6 billion, which had increased by 46 
per cent over 2002 and accounted for 24 per cent of the total contractual value of FDI.  The increase 
in margin for services sectors had been larger than that for manufacturing sectors.  As indicated in the 
report, with the implementation of China's WTO commitments and the broader opening of services 
industries, the share of FDI in ser vices sectors was rising further.   
39. With regard to the positive and negative impact s of FDI in services sectors, the representative 
of China said that China generally agreed with the poi nts raised in the report that further liberalization 
of services sectors would give rise to greater comp etition, lower prices and improved services.  At the 
same time, China paid equal attention to the transfer  of technology.  As well, the negative impact of 
FDI in services sectors indicated in the report had attracted his delegation's full attention.  China 
deemed that these negative impacts were of greatest relevance to developing countries that sought to 
attract more FDI and were not always fully prepar ed for the consequences.  A better understanding of 
FDI would better prepare Members to deal with th e negative impacts of FDI while making full use of 
its opportunities.  One of the impacts of servi ces FDI was competition and the crowding out of 
domestic firms.  Subsequent to the full opening of the retail sector, Chinese retailers were facing 
tremendous pressure from multinational giants that  adopted new business strategies, pricing policies 
and improved marketing and mercha ndising methods.  Because of the underdevelopment of China's 
distribution sector and the huge gaps in capital resources between domestic firms and foreign 
counterparts, many Chinese retailers were being squ eezed out or had declared bankruptcy.  If he took 
only Carrefour and Walmart as examples, at pr esent, each had established over 55 large-scale 
supermarket chain stores in China and were rapi dly expanding.  The expa nsion of multinational 
companies posed greater challenges to governmental administration and survivors of domestic enterprise development.  In the banking sector, Ch ina would allow foreign banks to provide local 
currency services to Chinese residents by the end of 2006.  China was concerned about the possible TN/S/M/13 
Page 14  
 
scenario of a large-scale pulling out of customer s and a dramatic decrease in lending from domestic 
banks because this would greatly impair the poten tial development of these banks.  To address this 
problem, the report put forth two policy suggestions.  The  first was to set up an appropriate regulatory structure.  He said that  strong indepe ndent and competent regulatory structures were vital 
if potential benefits of FDI were to be tapped.  The second was to find a balance point between a 
closed-door policy and one of excessive opening that  consisted of step-by-step or progressive 
liberalization.  A programme of gradual liberaliz ation would enable policy makers to assess how 
enterprises would deal with a liberalised environmen t and allow them to gradually adapt after proper 
adjustment. 
40. The representative of China said that the report indicated that developed countries had an 
absolutely dominant role in terms of mode 3 e xports in services trade.  Referring to the regional 
distribution of FDI outflows in 2003, he said that the outflows from developed countries amounted to $570 billion which constituted 93 per cen t of total FDI outflows.  Deve loped Members were thus the 
main players in mode 3 and the liberalization of global  services trade in mode 3 in turn stimulated an 
increase in FDI.  However, due to the lack of cap ital and the lower development status of developing 
Members, they were in an apparent disadvantaged position.  China was of the view that the current 
round of negotiations should promote the liberalizati on of trade in mode 4 and mode 1, which were of 
keen interest to developing Members, in order to offset the disadvantages they  faced in their mode 3 
exports.  He said that this approach would stri ke a balance between all Members across different 
modes.  As indicated in the report, off-shoring offe red benefits to both de veloping Members and home 
countries; it was not a "zero-sum" but a "win-win -win" game.  He hoped that all Members could 
recognise this important conclusion and adopt a positive  policy toward the global services off-shoring.   
41. The representative of Hong Kong, China
 said that the previous delegations had made salient 
points, and hence he wished to confine his comment s to one particular point, namely the relationship 
between the GATS and foreign direct investment.  Recalling that the argument had often been made 
that the GATS did not have a direct bearing on th e amount of FDI flowing into economies, he said 
that he did not believe that this argument was valid  for a number of reasons.  Firstly, to date Members 
generally had only made commitments that reflected the level of liberalization that Members had undertaken autonomously.  In his view there was a direct link between the liberalization of services 
and the attraction of services FDI.  The fact that Members to date had made commitments which did not even always reflect their applied regime raised the question in his mind as to whether any perceived disconnection between the GATS and FDI was attributable to the GATS or to Members 
who generally had not used the agreement to go be yond existent regimes and achieving substantial 
further liberalization.  He said he  would be interested in hearing the views of the representative of 
UNCTAD as to whether a direct link had been pe rceived between the liberalization undertaken by 
individual Members and their ability to attract FDI.  Secondly, he said that, even though the direct 
effect of commitments under the GATS and the attr action of FDI might not be apparent, it was 
equally important to recall that foreign investors sought not only an immediate opportunity to make 
money but also a stable environment in which their investment was protected.  In this regard, the 
GATS provided Members with the legal certainty and stability in the regulatory and policy environment so that investors and investment would have the certainty they sought.  He said that, in 
this sense, the GATS held value and in the long -run would have an effect on FDI flows and the 
investors' perception with regard to the investment attractiveness of economies. 
42. The representative of Switzerland
 had found the portions of the presentations dealing with 
investment in general and on off-shoring of interest .  He thought that it underlined the link in practice 
between the different modes of trade in services a nd in particularly the fact that mode 1 trade 
facilitated trade or investment in mode 3.  In terms of the negotiations this fact meant that if Members 
sought to reap the benefits that were possible thr ough the GATS, services liberalization needed to be 
made across all four modes of supply.  Referring the call-centre example mentioned by the speaker, 
he said that trade in services under mode 3 allowe d the company in the host country to export more 
competitively and practically through mode 1.  He  said that Switzerland was an important exporter  TN/S/M/13 
 Page 15 
 
 
through mode 3 and big investor abroad, but also an important host of companies in the services sector.  He said that Switzerland's capacity to attr act investment was not owing to the size of the 
domestic market, but rather because the companies c ould be active worldwide.  He noted that many 
countries sought to attract foreign investment a nd supply of services through mode 3.  He wondered 
whether this was a factor underlying the dynamism of services investment.  He said that there was a 
higher awareness on the part of countries that offe ring better and more favourable conditions to 
foreign companies had overall economic benefits.  He said that the statistics were confirming the 
approach taken by policy makers, although he ag reed with the comments by Canada that GATS 
negotiators were sometimes not in step with realitie s on the ground.  Finally, he agreed that trade, 
including through mode 1, was more cost efficient, rapid and convenient than in the past.  He did not 
think that changes in tradability were unique to services, since in goods trade improved transportation 
and communication had made trade in goods more dynamic, although the changes were perhaps more 
pronounced in the case of services.  He said that it was becoming cost efficient to move services or 
service providers across borders.  
43. The representative of Chinese Taipei
 said that her delegation had been pleased to study the 
report, which highlighted the growth of FDI in ser vices and its implications.  She recognised FDI as 
an instrument of liberalization that was even more important to services industries than to 
manufacturing industries because many services were not tradable and the only way in which to 
access foreign markets was through foreign affiliates.   Other reasons for FDI included the need for 
proximity to clients in order to ensure effec tive delivery or because regulations required a local 
presence.  Some reasons were common to both the services and goods industries such as the 
possibilities for spill-over effects in the host economy.  However, she said that the cross-border export 
of services from developing economies had grown rapidly in recent years due to the rise of out-sourcing and off-shoring of back office activities to low-cost centres.  This trend was driven by 
advanced information and communication technologies,  pressures to reduce cost, the availability of 
low cost centres with a trained workforce and demographic trends. She recalled that the UNCTAD 
paper noted that new information and communicat ion technologies had dramatically changed the 
tradability of services.  Her delegation sought to reite rate these important points.  In the real world 
many services were provided simultaneously and often through more than one mode of supply.  Each 
had some influence on the other, which made it di fficult to exclude any mode from the negotiations.  
44. The representative of Japan
 said that the presentation had reminded Members of the rapidly 
changing environment wrought by globalisation and that a globalised society was increasingly 
interdependent, both in terms of br eadth and depth of rela tionships.  The first important element the 
presentation highlighted was the role of FDI as a key for development.  The presentation also highlighted where FDI flowed and the role of competition both in terms of trade in services and 
goods.  Trade in services in various modes contributed to enhancing competitiveness and his delegation believed that the trade in services negotiati ons were important to create an environment to 
maintain  competitiveness in an inte rdependent world.  It was important to promote the negotiations in 
trade in services and particularly in mode 3 which was directly linked to FDI.  At the same time, appropriate domestic regulations and the provision of appropriate pub lic services needed to be borne 
in mind.   
45. The representative of the United States
, commenting on the report in a preliminary fashion, 
noted that there might be some overlap between this discussion and the communication that the 
delegation of Canada might present under item B of the agenda.  In that light, she said that her 
delegation might modify its comments under the presen t item and might revert to some elements of 
the UNCTAD report when the Council would di scuss the communication from Canada.  She had 
found thought provoking the interventions by China and India in light of cross-modal implications, a 
reading of chapter three of the report and work about consumer goods, and the comparisons between 
production of services and manufacturing for goods.  In this regard and in the case of services, there 
existed TNCs for services and for manufacturing, however, manufacturing included important spill-
overs and linkages to services trade.  Services could not  be viewed in a vacuum with respect to goods.  TN/S/M/13 
Page 16  
 
Referring to the question from the representative of  Thailand who had cited a WTO study concerning 
services and trends, she said that she had investigated  a number of points raised in that study at the 
time it had been circulated to Members.  She had b een privy to a considerable amount of data which 
demonstrated that services trade was increasing ahead of goods.  She had spoken with the WTO 
division which had authored the re port and had verified that the growth rate of services trade was 
increasing faster than that of developed countries.  Pa rts of the study had raised questions in her mind 
as some of the data it contained did not seem to matc h data that she had read elsewhere.  She said that 
those that had prepared the report informed her that  most of their data relied on balance-of-payments 
figures.  She recalled it was difficult at times to co llect services data to assess trends.  In fact, she was 
told that the study was limited in terms of the p ool available and the reference periods used, which 
were not the same as those used in other studies re sulting at times in different information.  Bearing 
this in mind, she suggested that the economic research division present its study to the Council so that 
there was improved coherence about trends and data since these were extremely important to the 
Council's work under the Assessment.  She recal led that a number of Members had submitted 
communications which reflected their experiences and different data, including a two-year old study 
from the United States.  It had presented data th at the United States had observed in assessing various 
trade trends North-South, South-South or North-North. 
46. The representative of South Africa
 wished to make two brief ob servations.  The first was that 
off-shoring was not necessarily a North-South issue, th at much media attention had been given to this 
issue and that it was of interest that much o ff-shoring investment was largely between developed 
countries.  She had also noted the expectation that, over time, these flows would increase generally 
and also to developing countries.  Secondly, sh e sought to highlight was that the new emerging 
international division of labour should be pursu ed and should not be hampered through various 
policies that might seek to prevent off-shoring investments.  These policies would be counter-
productive while adjustments to accompany the outs ourcing trend would prove beneficial.  These two 
points were thus inter-related:  the issue was not a North-South issue and that an international division 
of labour and increased flows to developing countries were beneficial. 
47. The representative of Antigua and Barbuda  said the UNCTAD report would be important for 
policy making in the context of the negotiations particularly given the obvious linkages it highlighted with mode 3.  He noted the issues in the report relating to Latin America and the Caribbean and the 
apparent decline in investments.  Taking note of  the 40 countries concerned and the difficulties in 
obtaining statistics for the Caribbean, he said that th ey received 9.9 per cent of world FDI inflows, of 
which most flowed to Brazil and Mexico.  He was pa rticularly interested in a forthcoming study from 
Eden and Kudrle on tax havens which sought to determine the reasons why some countries become 
tax havens.  The answer it gave was that small and poor economies th at lacked natural resources used 
tax haven status to attract foreign banking comme rcial activities.  Historical ties could include 
preferential status for investments in the poorer pa rtner which encouraged low tax rates and the host 
tax rate became the effective rate.  Secrecy laws  and confidentiality were also used to attract 
investors.  The study seemed to suggest that tax havens might not provide a tax advantage to TNCs and it elaborated on some reasons why this was the case.  He said that it was a great challenge for small economies to diversify, bearing in mind the er osion of preferences in agricultural exports and 
their vulnerability to natural disaster s, into other areas in financia l services or tourism services given 
the various restrictions and OECD competitive regula tions and advisories.  He looked forward to this 
study to see if it could provide information to inform policy making.   
48. The representative of the Philippines
, making a few preliminary comments, wished to 
highlight the portions of the report that were impor tant from his country's pe rspective.  He recalled 
that previous delegations had referred to the wi n-win-win scenario which off-shoring offered to host 
and recipient countries.  It was in this light and in  the context of the GATS negotiations, he said, that 
those Members whose companies were preponderantly  engaging in off-shori ng should endeavour to 
maintain and commit to an environment which facilita ted off-shoring.  In para llel, domestic initiatives 
which sought to restrict the continued growth of of f-shoring in pursuance of  the short-term goal of  TN/S/M/13 
 Page 17 
 
 
protecting a relatively limited number of jobs, as point ed out in a number of sections of the WIR, 
should be seen as counter-productive.  While the ec onomic impact of such domestic initiatives might 
not be too important as the volume at play was sma ll, the significance of such  initiatives, as stated in 
the WIR, lay in its possible symbolic impact on lib eralization and globalisation by setting a precedent.  
This symbolic impact might negate the possible c ontinued growth and releva nce in the long-term of 
off-shoring particularly for developing countries. Viewed  in the light of the development thrust of the 
negotiations, it was perhaps worthwhile to reconsid er the domestic initiatives that might be evolving 
in certain jurisdictions.  He remark ed that his comments had been very focused in the interest of time.  
Given the preliminary nature of many interventions, he  wished to reserve the right to revert to this 
item at a future meeting.   
49. The representative of Malaysia  wished to make a few remarks on the policy challenges 
related to FDI which her country continued to welcome and from which it had benefited.  In 
Malaysia's experience, as borders became seamle ss and as financial flows surpassed trade flows, 
Malaysia had approached this challenging environment by increasing its resilience and tolerance 
level.  She said that three policy instruments were being used to ensure this objective.  The first was 
capacity building by strengthening its economic and financial base. The second was appropriate 
sequencing or the adoption of progressive liberalizat ion in the services sector.  The third was a focus 
on other dimensions to secure competitiveness, incl uding productivity and efficiency, labour quality, 
logistics, research and development, delivery syst ems, and supply chains.  The policy initiatives that 
had been undertaken sought to strengthen th e banking system, including the regulatory and 
supervisory framework, risk management and corporate governance, and best practices in 
transparency and disclosure.  These actions had cont ributed to a further strengthening of the system.  
These efforts had also been complemented by initiati ves to deepen the bond and equity markets to 
achieve a more diversified financial infrastructure.   As Malaysia's domestic financial system had 
developed, it had moved toward a mo re deregulated and liberalised environment.  She said that in the 
regulation of the banking institutions, balance w ould be made between promoting competition and 
innovation and maintaining prudence and stability.  Regulations would continuously be reviewed in 
order to provide greater operational flexibility for financial institutions without compromising 
prudential objectives.  As progress was achieved in enhancing the capacity and capability of domestic 
institutions the financial sector would continue to be gradually liberalised.  As this process moved 
forward, efforts would be made to simplify and liberalize regulations and administration rules for 
business.  In order to ensure stability as regulations  were lifted, technology would be relied upon to 
improve data monitoring systems, enhance the ability to monitor developments and assess any 
emerging risks to the system.   
50. The representative of Colombia  said that FDI was unquestionably a relevant issue to the 
services negotiations and for which further analysis w as required.  She said that the report highlighted 
certain fundamental elements that should be anal ysed further in the context of the negotiations.  
Chapter five (National Policies) and chapter six (National and International Policies) contained 
elements which not only required study in countries but could be used to infuse dynamism into the 
negotiations in the Special Session and the subsidiary bodies.  She was struck by the fact that, even 
though FDI in services was subject to restrictions greater than those for i nvestments in other areas 
such as manufacturing, in both developed countries and developing countries major steps had been taken to open services industries, with developing  countries liberalising more quickly over the past 
decade. In her delegation's view, while it was tr ue that mode 3 commitments in international 
agreements provided added legal stability for inv estment, this alone was not sufficient:  disciplines 
that would complement and guarantee effective liberali zation were also required.   These were relevant 
in order to achieve progress in multilateral disciplines for measures and regulations that were trade restrictive.  The report mentioned, for example, federal and sub-federal d ecisions and regulations 
which acted as obstacles to trade.  It also appropr iately stressed the restrictive effects of ENTs.  
Colombia believed that these diffi culties needed to be further ex amined with a view to their 
elimination.  She was interested to read the section that referred to subsidies and support programmes 
that governments provided for investment and particularly for the development of services industries.  TN/S/M/13 
Page 18  
 
She said that further progress and concrete results  could be made on this point in the current 
negotiations.  Her delegation agreed that greater specific commitments were  positive, however, these 
commitments needed to be complemented with gr eater disciplines in order to attain the results 
Members hoped to achieve. 
51. The representative of Australia
 said that a key message of the report was that, although the 
value of services trade and investment was growing,  it still suffered from understatement.  This was of 
interest to policy makers and negotiators particip ating in the DDA.  On the topical issue of off-
shoring, she said that there were differing views in  Australia on the benefits or otherwise of off-
shoring.  For example, some industry bodies were  concerned about the impact on domestic jobs, 
which was a familiar argument.  Others agreed with UNCTAD's finding that a win-win scenario 
existed for off-shoring.  She endorsed the view in  the report that off-shoring was an activity which 
crossed North-South boundaries.  The report also emphasised the point that many services providers 
needed to establish abroad if they were to expand their activities.  This finding touched upon issues 
under negotiation in respect of mode 3.  She took from the report the view that, in order to support increasing trade and investment in services, it was important to look at all of the relevant modes of 
delivery. 
52. The representative of Singapore
 agreed with Korea and others that FDI and investment 
liberalization with appropriate or complementary regulatory framework could bring positive spill-over 
effects and developmental benef its.  The economic development of many countries, including 
Singapore's which had adopted outward oriented and more  liberal investment policies, testified to this 
fact.  Secondly, he highlighted that liberalizati on and commitments in the various modes of supply, 
including mode 3, was important for the economic de velopment of all Members.  As such, the various 
modes of supply were relevant in the DDA nego tiations and were critical to their success. 
53. The representative of UNCTAD  thanked delegations for their kind words about the report.  
Referring to the comment that the GATS did not address performance requirements in the services 
sector, he said that the report documented a number of  other international agreements, typically at the 
bilateral and regional level, wh ich explicitly dealt with perform ance requirements in the services 
sector.  With regard to Canada's comment on market opening, he said that UNCTAD had been 
tracking changes in FDI laws since 1991 and had id entified over 1,300 such changes in developed, 
developing and transition economies.  Ninety-five per cent of these changes were in the direction of 
facilitating inward foreign direct investment, which indicated that the trend was broad-based.  If a 
sector was being opened and the economic conditions  were right, which he iterated was a basic 
determinant, this could lead to further foreign di rect investment.  On the question from Thailand about 
the performance of Luxembourg, he said this was i ndeed an unusual situation.  The ranking was not 
related to mergers and acquisition, but rather "tra ns-shipped" investment, which was typically in the 
form of long-term loans given to a company in Luxembourg by a foreign company, which was then used for FDI elsewhere.  As the amounts were quite high, this distorted the picture overall, since it 
was not foreign direct investment in Luxembourg.  He clarified that the Central Bank of Luxembourg 
and the European Union reported these figures as forei gn direct investment and, as a result, the WIR 
reported it with a footnote explaining trans-shipped in vestment.  He said that this was not specific to 
Luxembourg, as for instance, this phenomenon also  existed in Hong Kong, China and Singapore.  
With respect to the question about services trade and decreased FDI in financial services, he said that 
the data used by the WTO study was based on bala nce-of-payments data, as was the WIR.  He sought 
to clarify that while the share of financial service s in FDI had declined from about 40 per cent to less 
than 30 per cent, this did not mean that the abso lute amounts had declined.  On the contrary, the 
absolute amount of foreign direct investment stock in finance had increased over the past 15 years from $400 billion to $1.2 trillion, which was a substan tial absolute increase of FDI stock in finance.  
However, FDI stock in other services, in particular bu siness services, had increased at a faster rate.  In 
fact, the stock of services FDI overall had increased four-fold.  It was only seen from this perspective 
the share of finance had "declined".    TN/S/M/13 
 Page 19 
 
 
54. In response to the question from India about whic h sectors would in the future be affected by 
the tradability revolution, the representative of  UNCTAD said that the example of call-centres 
indicated that the process had begun with services that  were labour intensive and fairly simple.  He 
explained that the cost factor often triggered o ff-shoring, but the activity subsisted because of the 
quality of the service and because the back-office service of one company expanded to become the 
front-office service of another.  Referring to page 150 of the WIR, he said that it contained a list of 
some of the services involved in the tradability re volution, including:  audio-visual and cultural 
services, business services, computer and related services, higher education and training services, financial services, health services, internet related services, and various professional services.  Many 
services activities could thus become subject to off-s horing, and not only those related to the services 
sector, but the primary and manufacturing sectors as well.   In a word, anything which was information 
intensive and could be sent via telecommunications was possibly tradable.  Whether they would be 
traded depended in addition on a number of other factors.  The implication which followed was that 
investment flows or economic activities in this area would increase, however, they would not flow 
only to developing countries.  As in the manufacturi ng sector, a good part of the activities, particularly 
sensitive or skilled activities, would remain in the de veloped countries and closer to markets.  There 
was an opportunity for developing countries, both tho se that were currently benefiting and those that 
stood to gain, to attract off-shore services.  He fore saw a development of an international division of 
labour that would lead to different patterns of prod uction, however, the pattern would not involve only 
a massive shift to developing countries.   
55. In response to some of the comments made by Canada about the efforts undertaken in recent 
years by countries to liberalize, the representative of UNCTAD said that his organization had 
observed that the liberalization was basically driven by autonomous efforts at the national level.  This 
did not mean that international investment agreements did not play a role.  Indeed, the report studied the interaction between an autonomously driven lib eralization process and an investment agreements 
liberalization process.  The study revealed that ther e were some effects, for instance in investment 
agreements that had a "built-in" agenda for gr eater liberalization, which furthered autonomous 
country processes.  Also, a number of agreem ents had time-bound reservati ons which helped push 
liberalization at the national level.  Some economie s had liberalised because of their multilateral or 
bilateral commitments.  For example, during thei r accession to the WTO, China and Chinese Taipei, 
had made liberalising efforts, called "investment agre ements driven interaction" in the study.  In 
addition, some type of commitments, such as tr ansparency or follow-up provisions in investment 
agreements at the bilateral and regi onal level, helped further liberali zation at the national level.  He 
said that it was difficult to establish in quantifiabl e terms whether the liberalization was driven by 
international agreements or aut onomous liberalization.  As regard ed the impact of international 
investment agreements in the servi ces sector on investment flows, he agreed with Hong Kong, China 
that these needed to be seen as one important elemen t in a set of determinants for FDI, which also 
included economic determinants.  The impact of re gional integration agreemen ts in encouraging FDI 
flows had also been examined.  In comparison to the manufacturing and mining sectors, these appeared to have less effect in the case of services.   He said there were also fewer investment creation 
effects in the regional integration agreements in  the case of services.  These were some of the 
preliminary findings, although he re iterated that quantitative data was difficult to gather since it was 
difficult to distinguish effects arising from po licies from other determinants for FDI.   
56. On the issue of interaction, the representativ e of UNCTAD said that caution on the part of 
countries in liberalising the services sector at th e international level had been observed.  Seven 
investment agreements based on a negative list approach had been examined, from which an 
indication of sensitivities could be inferred based on the reservations that had been made.  About 
4,800 non-conforming measures included in the sev en investment agreements had also been 
examined, and it had been found that, in the case of  investment, 71 per cent of the reservations were 
in the services sectors, 15 per cent in horizontal restrictions and 14 per cent in other sectors.  Within the services sector, the reservations were concentrat ed in transportation, banking and insurance, 
business and communications services, which accounted  for 85 per cent of the services related TN/S/M/13 
Page 20  
 
services.  This demonstrated that countries were sens itive to liberalization in the services sector.  It 
followed that one main finding was that there was a need for flexibility in international investment 
agreements, as had been mentioned by Brazil.  Flexibility was needed for a number of reasons, 
including the rapid evolution of the services sectors,  the early stage of development in developing 
countries, the sensitivities he had just referred to, and the observation that some developing countries 
did not have optimal regulatory systems.  Policy ma kers were still experimenting with liberalization 
and regulation with a view to building a more competitive services sector through FDI and other 
means.  He noted that GATS did provide flexibility in  this area.  He was very encouraged that the 
work and research contained in the WIR had been of  such interest to delegations.  He hoped that 
further work by UNCTAD would be of equal interest.   
57. The Chairman
 thanked the representatives of UNCTAD for their informative presentation.  
Not wishing to summarise the discu ssion, the Chairman said that tw o substantive contributions had 
been made.  The OECD Secretariat had made a pres entation on, in his view, an important contribution 
on a methodology that sought to assess and quantify barriers to services trade.  Despite the many limitations that had been outlined, the work w as innovative and ground-breaking.  He looked forward 
to progress and further work as it could be a power ful instrument in the negotiations.  UNCTAD had 
made a highly interesting presentation on the Worl d Investment Report (2004) which focused on 
services.  He recalled that there were good prospect s ahead in world economic and FDI flows.  This 
included a shift towards services and towards new se rvices.  There had been a good analysis of off-
shoring, which stemmed from the "tradability revol ution", its non-North-South geographical nature, 
the beneficiaries, the needs for appropriate policies,  and the current stage of its development.  There 
had been a suggestion that the economic research division present some of the data in the World 
Trade Report which would be taken into account in pl anning the next meeting.  He had noted requests 
from delegations for an opportunity to revert to the WIR at a future meeting.  He suggested that the 
Council take note of the statements made. 
58. It was so agreed
. 
B. PROPOSALS RELATING TO THE NEGOTIATIONS UNDER ARTICLE XIX  OF THE GATS 
59. The Chairman  said that Australia and Chile wished to  make presentations under this agenda 
item. He welcomed two representatives of Austra lia to make a presentation on Australia's Mode 4 
Temporary Entry Arrangements. 
60. The representative of Australia  said that the presentation sought to address the administrative 
procedures for temporary entry for long-stay access into  Australia and in particular Australia's e-visa 
system. Australia recognised that temporary entry arrangements facilitated business. These 
arrangements were being streamlined continuously an d feedback in Australia indicated that businesses 
sought transparency and speed in processing and d ecision-making affecting temporary entry.  The 
presentation therefore focused on the procedural arra ngements that had been put in place to respond to 
private sector interest and it picked up a number of issues that had been raised by other delegations in 
their discussions in mode 4 in the Special Session.  Australia's e-visa arrangements were introduced in 
November 2003 and, from the perspective of the regu lator and trade facilitation, they were working 
quite well.  She wished to emphasise that the pr esentation related to one element of Australia's 
temporary arrangements, namely, long-stay tempor ary entry.  There were other categories for 
temporary entry in Australia's current arrangement s that covered contractual services suppliers, which 
she was aware was of str ong interest to a number of delegati ons.  These were not covered by the 
electronic e-visa arrangements, however, they were part of the temporary entry arrangements and the 
normal arrangements for these groups.  It was the in tention of the immigration authorities to include 
these in electronic visa arrangements in the future , however, at present they were focused on long-
term temporary entry.  She drew attention to a recently-circulated communication on this topic, 
contained in TN/S/W/25, on which the presentation sought to elaborate.  TN/S/M/13 
 Page 21 
 
 
61. The representative of Australia wished to gi ve some introductory comments to put the 
presentation in context.  He said that Australia had a population of some 20 million, of which just 
over 50 per cent were in the labour force.  Austra lia's fertility rate was 1.73 or below replacement 
level, and hence, Australia had a rather substa ntial immigration programme, totalling about 120,000 
persons per year and 13,000 persons in the humanitarian programme.  The combination of 
replacement and immigration meant that the population of Australia was increasing at about 1.2 per 
cent per annum.  A high proportion of Australians we re born overseas, which Australia felt was an 
advantage for its trade:  23.1 per cent of the population was born overseas and over 43 per cent of the population was either born overseas or had one parent born overseas.  The immigration programme focused on skilled persons, and did not seek to a ddress labour shortages, but rather to increase the 
skills base of the population. There was also large family migration and large humanitarian 
programmes.  He said that total unemployment stood  at 5.1 per cent overall, 1.6 per cent for skilled 
labour, and 8.5 per cent fo r unskilled labour.   
62. With respect to the temporary visa programme, which was separate from the immigration 
programme where persons were give n permanent residency status, the representative of Australia said 
that this programme addressed the long-term needs of business.  The migration programme increased 
the size of the workforce and addressed populatio n issues, whereas the temporary business visa 
programme addressed skills shortages and other business needs, including in mode 4.  It authorised 
periods of stay from between 3 months and 4 year s although this could be extended.  It allowed 
multiple travel to and from Australia.  Periods less than three months related to business visitors who 
could conduct a range of activities during that peri od.  Initiatives on short-term entrance included the 
APEC business travel card which was a business vis itor facilitation mechanism.  Australia issued 
some 40,000 long-stay temporary business visas each year and the cohort of visa holders in Australia at any time was approximately 60,000, of which ha lf were skilled.  The balance of holders were 
mainly family members.  There was a range of cate gories that were not included in these figures such 
as specialist categories including medical practitioners, religious workers, entertainers, sports persons, 
media and academics.  These figures included neith er the working holiday maker programme, which 
concerned about 100,000 persons a year from vari ous countries who could work and travel around 
Australia, nor the student programme, which c oncerned about 150,000 persons.  The visa holders 
concerned only businesses established in Australia  or Australian businesses that had needs which 
could not be met locally.   
63. The representative of Australia said that sponsor ship was the main feature of the programme 
and was the means by which employers took respon sibility for persons coming to Australia under the 
programme.  One of the key roles of the Department was to ensure that only genuine employers were 
approved.  "Genuine" referred to employers who had a genuine need and were able to meet their 
commitments under the sponsorship programme.  On e of the key reasons for sponsorship was the 
protection that it afforded to individual workers from exploitation as indicated through low wages or 
poor working conditions.  It also protected to some  extent Australian taxpayers by making employers 
responsible for issues such as hea lthcare and the costs related to the person.  This arrangement helped 
to maintain public support for the programme.  He  said that, in a recent meeting of the regional 
European hearings of the Global Commission on Inte rnational Migration which would report to the 
Secretary-General of the UN in 2005, a key feature of the hearings related to the human rights issues 
related to immigration and in particular those that s ought to stop exploitation.  He said that there was 
some non-sponsored entry under this category, but th at it was rather small.  For example, services 
sellers who needed to come for more than thr ee months could come under this programme without 
sponsorship.  In addition, some were immune , such as persons belonging to international 
organisations.  
64. Turning to the key requirements of the progra mme, the representative of Australia said that 
the persons concerned needed to fall into skilled categor ies.  There were four major categories of skill:  
managers and administrators, professionals, associ ate professionals, and trade persons and related 
workers.  He said that there was no labour market  testing for any of these skill categories, however, TN/S/M/13 
Page 22  
 
there was a minimum salary level, which, he specifi ed, was slightly higher for ICT professionals.  The 
actual average salaries of visa holders under this  programme substantially exceeded the minimum 
salary levels.  These were the two key requirements,  namely skill level and salary threshold.  These 
could be proxies for some form of economic needs test s.  All of the applicants needed to meet health 
and character requirements.  This was done obj ectively based on WHO and other research which 
identified health risks.  For example, Australia ha d a low incidence of tuberculosis.  Applicants from 
countries with similar low rates of tuberculosis were  not required to have any form of chest X-ray, 
however, any person coming from a country where the ri sk of tuberculosis was higher was required to 
undergo a chest X-ray before arrival.  Any signs of t uberculosis would not lead to a refusal of the visa, 
but it being deferred during treatment.  Other objec tive criteria were carefully examined, such as the 
non-return rate, which was the ratio of persons entering Australia in a visa category who overstay 
their visa or had their visa cancelled because they were not engaged in the activity they had indicated.  This information helped develop objective risk factors.   If a country had a low risk factor, that country 
did not require a visa label in the passport.  Austra lia was hoping to extend this approach considerably 
so that no one would required a visa label in their passport.  The data would be stored on electronic 
systems to which airlines would have access when they decided to board someone on a flight.   
65. Turning to electronic visa services, the representa tive of Australia said that his country had a 
range of electronic visas and was in a transitional phase that would probably see the elimination of 
traditional visa applications (temporary, long-term, wo rk, humanitarian entry, etc.) within three to five 
years.  Australia was looking at transforming its bus iness practices so that all of those who had access 
to internet could apply on-line.  On the temporary bu siness entry, it was one of many on-line services.  
Most tourists, working holiday makers and students applied on-line.  Most business entrants also 
applied on-line through an employer in Australia.  Elaborating on the on-line application, he said that 
the approved visa was a one-step process valid for uplif t, travel and entry to Australia and authorised 
residence and work in Australia.  The single applic ation covered the applicant's partner and family 
members.  There was no other contact required with the Department.  The applicant for the temporary 
business visa could be overseas or in Australia.  An electronic application was processed more 
quickly than a paper application and tended to be submitted by employers on behalf of the person or 
migration agents on behalf of the business.  The advantages of this approach included that the 
application did not need to be submitted in person and no interview was required, although the 
Department reserved the right of refusal or to an inte rview, the rate of which was only 2 to 3 per cent.  
In most cases a passport was not required, and in the fewer cases where a visa label in the passport 
was required, the passport itself was not required during processing.  The system was available 24 
hours a day and seven days a week.  It reduced the reliance on missions overseas which were often 
distant from the applicant with inconvenient opening hours.   
66. The representative of Australia then explaine d the layout of the Departmental website, 
including the E-Visa or on-line services link.  Eventu ally, all of the services available would be found 
under this heading, although at present the services  included visitors services, permanent resident 
services, student and business services.  An app licant under business services was prompted for a 
number of questions that established the category in which they should make their application.  The 
website advised the number of steps involved in an application and the time required, which was 
relatively short.  He explained that some fields a llowed for free text and, increasingly, attachment of 
scanned documents.  He said that the questions were  straightforward and larg ely related to bio-data, 
information about the company and position.  Additi onal information that the applicant might require 
was available in drop-down menus.  Once completed,  the application was saved and run against the 
Department's system to ensure that the person coul d lodge a valid application before the payment of 
any fee.  Once all of the relevant information ha d been provided, a message appeared that indicated, 
for example, if the applicant needed to undergo a h ealth check.  If so, the health application form 
could be downloaded to be taken to any of the radi ologists indicated on a list provided.  Radiologists 
and panel doctors, under the superv ision of a few doctors based in Australia, were available 
throughout the world.  After completion, the att aching of new information or tracking progress was 
possible.  One of the benefits of this appro ach was that, once downloaded, it was completely  TN/S/M/13 
 Page 23 
 
 
integrated and all of the fields on the data base we re populated and did not require manual data entry.  
This system freed up data entry resources for decision-making.  The system generated an acknowledgement, and in most straightforward cas es, a decision could be made in 24 hours.  If 
research were required, the processing could take a few weeks or, in exceptional cases, longer.  He 
also said that Australia sought to move increasingly to an "auto-grant" system, in which regulations 
would allow for straightforward cases (where th e company profile was good and there were no known 
risk factors associated with a particular applican t) to be handled with no human intervention.  The 
computer system would decide to grant the request .  He said that the system integrated links to 
security organisations, which was another benefit of the system.   
67. The representatives of Japan
, Colombia , China , India , Chile , Mexico , Senegal , Rwanda , 
Switzerland , Indonesia , Chinese Taipei  and Zambia  expressed their gratitude to the delegation of 
Australia for its presentation.   
68. The representative of Japan , referring to the comments on sponsorship, asked whether the 
employer concerned needed to be in Australia.   
69. The representative of Colombia  said that her country had researched this question and had 
found presentations of this nature to be helpful.  She was struck by a number of elements which had 
been flagged and which she viewed as a major advant age.  The e-visa system did not require personal 
interviews which meant that travel and the associated  costs for employers were avoided.  It also did 
not require withholding the passpor t during the course of the procedur e.  The procedures in general 
took 24 hours, which was of vital importance for business trips that were not necessarily planned months in advance.  She inquired into the cost to implement this system and the time that it had taken 
establish it.   
70. The representative of China
 said the paper was useful and ha d shed light on mode 4 related 
administrative procedures in Australia.  He sought clar ification that the e-visa system was available to 
all Members.  Referring to the requirement for a s ponsor, he inquired who coul d act as a sponsor and 
whether this was limited to the business in questio n.  He looked forward to  further opportunities to 
discuss the issues raised. 
71. The representative of India  said that the Australian initiative aimed to make the system faster, 
simpler and more effective.  This was an area in  which a number of countries, including India, had 
highlighted as being of importance.  He had observe d that Australia had been able to separate its 
regime into temporary long-term entry from the overa ll immigration regime.  He further observed that 
the system was a one-point system that combined the entry, residency and work application in one 
form and procedure.  It also touched upon questions of transparency, and in this regard, he recalled a 
informal paper from a number of developing countries on the importance of transparency.  He said that Australia's experience would be of benefit.  Regarding the sponsorship requirement, he said that 
he had understood that the basic aim of this requi rement was to ensure that the system was not 
misused.  He wondered how it related to contract ual services suppliers or a juridical person or 
independents with a contract and how would they relate to this sponsorship.   
72. The representative of Chile
 said that the presentation touched upon a subject of interest to her 
delegation.  In light of the figures that had been  provided, she asked about the relationship between 
new applicants and the exit of existing visa holders.  Sh e inquired into the cost of the application.  She 
further asked whether the representative of Australia could provide statistics into the sectors in which 
visas had been granted or the distribution in term s of the originating countries of applicants.  
73. The representative of Mexico  asked if there were any statistics about whether the foreigners 
that provided services were covered by investments in Australia from abroad, which would suggest a link between the movement of persons and investme nt.  He asked whether they were involved in 
services companies or in the manufacture of goods.  Like Chile, he was curious to know which sectors TN/S/M/13 
Page 24  
 
were mostly concerned and the origin of the app licants.  Referring to paragraph 5 of the Australian 
communication, he asked about the criteria that were  used to determine a sponsor and how a decision 
was taken as to who constituted a good sponsor. 
74. The representative of Senegal
, referring to the issue of a sponsor, said that usually a company 
could recruit personnel directly or use an agency.  He asked whether a recruitment agency could be a 
sponsor, including those outside Australia.  With re gard to the monitoring of the system, he asked 
how any matter for litigation would be resolved dur ing the stay of the person.  He asked whether 
forms other than on-line payment were possible.   Referring to paragraph 8 of the Australian 
communication, he inquired as to how objective risk cr iteria in the case of a visa refusal or application 
could be assessed if the person did not need to provide  a passport during the application procedure.   
75. The representative of Rwanda  sought an elaboration on the issue of health requirements.  
Referring to Australia's comment that a visa could be deferred during treatment, she inquired into the 
procedure if the disease was incurable.  She also asked about the circumstances under which health 
checks subsequent to entry might be required.   
76. Speaking on behalf of the African Group, the representative of Rwanda wished to make a 
general statement on the importance of mode 4.  The African Group attached great importance to 
mode 4 liberalization.  Several discussions and st udies that had been conducted had indicated that 
mode 4 was a mode of export interest to the African  countries.  It was therefore of great importance 
that market access in this mode be enhanced.  Furthermore, liberalization of mode 4 would significantly contribute to the achievement of the aims and objectives of Article IV of the GATS and 
the modalities for the special treatment for LDCs.  However, in Members' commitments in mode 4, 
the categorisation of movement of natural pers ons had traditionally focused on intra-corporate 
transferees.  The African Group sought to see an e xpansion to business visitors, contractual services 
suppliers and independent professiona ls, as well as inclusion of skill le vels of interest to African 
countries.  Particular emphasis should also be given to sectors of interest to African countries and other developing countries, such as tourism, constr uction and health services.  Furthermore, the 
W/120 services classification list did not clearly include services occupations of interest to African 
countries.  These areas of interest were found in International Standard Classification of Occupation 
(ICSO-88).  The African Group sought to ensure that the classification used by Members for negotiations allowed for the increased liberalization of  mode 4 in the areas of interest to developing 
countries, and particularly the African countries.  Regarding the recognition of qualifications,  many 
African services providers faced market access barr iers resulting from the lack of recognition of 
professionals and licensing requirements.  These barr iers had limited the scope of services providers 
to services to a level below their qualifications as re cognised in their countries of origin.  The African 
Group wished to support earlier proposals, includ ing TN/S/W/14, that called for additional 
commitments to be laid down for transparen t procedures for recognition, as well as for a 
strengthening of the framework for recognition agreements under Article VII of GATS and the 
development of disciplines under Article VI:4 relati ng to qualification require ments and procedures.  
The African countries wished to underscore the n eed for clearer and transparent administrative 
procedures while avoiding undue delays on the entry a nd stay of African services providers, including 
those related to visa or work permit processing.  Ec onomic needs tests in developed countries had also 
proved to be major barriers to market access.  The African Group called for a more simplified and 
transparent administration of ENTs based on object ive criteria.  The African Group proposed more 
intensive work on the issues raised in the Special Session of the Counc il for Trade in Services so that 
Members could incorporate their concerns and interest s in their revised offers.  In the interim, the 
African Group urged Members to incorporate their c oncerns and interests as set out in her statement 
in the revised offers.  
77. The representative of Switzerland
 said he was interested in more information on the contracts 
between the applicant and the sponsor.  Did the app licant require a contract when applying on-line or 
was the contract signed only after the application ha d been accepted?  He underlined one point raised  TN/S/M/13 
 Page 25 
 
 
in the Australian communication, namely that the syst em was of benefit to the applicant, the business, 
and the immigration administration for whom the syst em reduced costs.  Citing paragraph 9, he said 
that the system allowed immigration officials to  focus on the core decision-making aspect of their 
work instead of data entry.  He said that this wa s very relevant in the context of mode 4 and was 
complementary to these commitments.   
78. The representative of Indonesia  recognised that the e-visa system was one aspect of the 
administrative entry procedures that affected trade in services, and particularly mode 4.  He further recognised that the visa system outlined was beneficial  to foreign services suppliers in that it allowed 
for easier and faster processing of the visa.  He noted that the visa scheme in question was for long-
term temporary stay and was designed to facilita te the entry of sponsored and skilled temporary 
entrants.  In this regard, his delegation sought cl arification on the nature of long-stay temporary 
business visa and the differences between a tempor ary business visa and other visas.  He also sought 
clarification about the correlation of skilled tempor ary entrants with the application of various 
categories of personnel, specifically business vis itors and contractual services suppliers.   
79. The representative of Chinese Taipei
 said her delegation firmly believed that the purpose of 
the scheme was to facilitate the movement of te mporary entry for skilled workers and business in 
Australia.  She was interested in more informa tion regarding sponsorship and asked whether the 
employer had to be based in Australia or elsewh ere.  She further asked whether the minimum salary 
requirement aimed at ensuring the quality of the service provider.   
80. The representative of Zambia  sought to endorse the comments made by the representative of 
Rwanda on behalf of the African Group.  He inquired as to how the system had been set up to handle 
photographs.  
81. The representative of Australia , responding to the question from Zambia, said that the system 
obviated the need for passport photographs.  He said  that the only time that a passport photo would be 
examined would be when the airline check-in sta ff embarked the passenger and verified that the 
passenger present was carrying a genuine passport.  He said that it was anticipated that passport 
initiatives, including on biometric in formation, would form the basis of this verification rather than 
the passport photo.  Referring to the question about wh ether the sponsor needed to be in Australia, he 
said that overwhelmingly the sponsorship requirement  related to Australian companies or companies 
with a commercial presence in Australia.  Under th e e-visa system, this was mandatory, but as he had 
indicated, the Australian immigration department hoped to  extend this system to cover all categories.  
He said the category "self-sponsorship" did exist, an d that this could occur when a company wanted to 
establish a presence.  The question was not so much  where the company was based, but rather how 
the company proposed to behave in Australia, whic h included with respect to its personnel and, for 
example, its training record.  It would be of c oncern to the Government and the population if the 
company relied exclusively on personnel from overseas,  although he could envi sage situations with a 
high reliance on foreign personnel.  The compan ies that brought personnel from overseas undertook 
serious obligations.  The key factor in a sponsor ship was whether the company could meet these 
obligations.  For example, persons  under this category did not receive  access to the national health 
system and the sponsor had to provide for health care.  If a person overstayed the visa the company 
had to undertake to pay removal costs.  Much of the onus and responsibility was thus placed on the 
company needing the person.  Whether the compan y was based in Australia, which made the case 
straightforward, or overseas in instances of self-sponsorship, the company could meet the 
requirements.  Clearly, an assessment of the tr ack record of an overseas company was necessary, 
which made the process more straightforward for a company established than with one starting.  
Turning to the question of the costs of implementing the system and the time required to date, he said 
that his answer could vary depending on the histor ical timeframe to which the question referred.  If 
one sought to look at the formation of Australia's  approach to immigration and temporary entry, he 
said this had happened gradually over a long pe riod of time.  He said that, as a country of 
immigration, Australia had been required to mana ge immigration for some time and therefore the TN/S/M/13 
Page 26  
 
immigration systems had been in place for a l ong period.  The e-visa initiative built on these systems 
and use of the internet in the system had become mo re widespread in the preceding three years.  He 
said that the internet and the existing systems had been  integrated and that the ability for others to do 
this would depend on how developed their existing systems were.  In response to the question as to 
whom the system related, he said that the tempor ary business category was dr iven by sponsorship and 
hence the company was important in providing th is answer.  A company could process requests for 
personnel it required and hence, it was available to all Members si nce the company could choose to 
bring personnel from all countries.   
82. Turning to the questions from India, the represen tative of Australia said that the key focus of 
sponsorship was to ensure that the system was not abused and, more importantly, that the person was 
not exploited.  He said that he could not state strongly enough how important a consideration this was 
in Australia.  When a company made sponsorship u ndertakings, they also undertook to be monitored 
and all companies were monitored mainly through su rveys and questionnaires.  In 25 per cent of cases 
immigration officials were sent to the premises to ensure that the contract was being properly 
delivered, namely, that the person was being paid wh at had been indicated on the sponsorship form.  
He said that there had been a number of incidents in which persons were paid next to nothing and 
lived in squalid conditions.  These incidents were unacceptable and had severely embarrassed the 
Minister.  He said that monitoring was necessary to  deal with unscrupulous co mpanies.  The key issue 
of sponsorship was to ensure that companies met their obligations.  Sponsorship was often refused 
when a company could not demonstrate the ability to meet their obligations because they did not have 
the financial wherewithal or had a bad track record.  With respect to how the system related to other 
categories, such as contractual service suppliers or  independent professionals with a contract, he said 
that these were difficult questions and would need to  be taken up in bilateral discussion and improved 
offers.  He said that there was some scope w ithin the self-sponsorship arrangements to sponsor 
oneself.  If one could demonstrate that one could be responsible for oneself and any employees, then 
this was a form of self-sponsorship.  For those not  in this position, the Department would ask the 
company with whom the person had a contract to sp onsor them given the high level of concern about 
exploitation.  This could be the case even though th ey were slightly outside of the labour market as a 
contract was involved.  He said that most of the costs and fees for this visa were imposed on businesses.  The actual application fee was small and the unit price depende d on how many persons 
the company was sponsoring.  He said that very detailed statistics in terms of the number and 
geographical and sectoral distribution of visas were  kept and he would make them available if 
approached.  In terms of the question from Mexi co as to whether the movement was linked to 
investment, he said that many applications rela ted to companies with a commercial presence in 
Australia and equally, there were Australian compani es that sought skills that persons overseas had to 
offer.  There were links to independent professiona ls and contractual services suppliers that he had 
mentioned.  He could not give a precise figure, howev er, he estimated that it was likely less than half.  
He said that the requests mainly related to servi ces and not manufactured goods.  He said that detailed 
statistics did give a breakdown by sector.  With respect to the origin of visa holders, he said that this 
reflected main trading partners, although he suspected  that there were few countries that would not be 
represented in the 40,000 visas delivered each year. 
83. Turning to the question about recruitment agen cies, the representative of Australia said that 
this was an issue that the Department had grappled  with over the years.  The policy had varied and 
was one of the concerns related to bound commit ments, since a very high value was placed on 
flexibility by immigration regulators.  He said that recruitment agencies could act as sponsors, however, the Department did require a direct empl oyer-employee link.  Hence, persons could be 
sponsored, and so long as the company paid them, th ey could be hired out to other companies in 
labour-hire arrangements.  He said that this type of  activity had been tightened up owing to concerns 
of abuse of this particular provision.  This occu rred in particular when the employer-employee link 
was tenuous and the person was required to find a th ird employer and their pay with the sponsoring 
employer was based on their ability to find this thir d employer.  His view was that there existed an 
employer-employee link and the risk and liability lay with the labour hire company regardless of  TN/S/M/13 
 Page 27 
 
 
whether the person worked or not.  With respect to the question about litigation, he said that any 
persons exploited tended to  approach the unions that represented them and the unions would fight 
these cases in court.  Some of the persons who had been exploited had left Australia with a healthy 
settlement.  Although this was perhaps not the best wa y to do business, recourse to litigation did exist.  
At the same time, measures were not taken to rem ove someone in the course of litigation even though 
they were not working for the employer who had spons ored them.  With respect to the question about  
on-line payment, he said that credit card use varied in different countries.  For the temporary business 
entry, payment was less of a challenge for employers and other means were being explored for alternative modes of payment.  On the question a bout assessing risk in the absence of a passport, he 
said that an immigration practitioner would say that  the passport provided very little information in 
this regard.  He said that the aim was to determine whether someone was genuine and a specialist in a 
certain domain as claimed.  If the person was not who they claimed and had a different motive then 
the one given, then they would not work for the company and move into other parts of the labour 
market.  However, he did not want to give the impression by answering the question that abuse was widespread and underlined that the level of abuse was in  fact very minimal.  In general, he said that if 
the company was genuine, then often the person spons ored was genuine as well, since this was in the 
company's interest to nominate someone who had th e particular skill sought.  He said that the skill 
level component was not a proxy for ensuring the genui ne nature of the applicant.  Rather, the reason 
for the skill requirement was that unemployment rate s for low-skilled workers were far higher than for 
skilled workers.  The economy favoured people po ssessing skills with manufacturing and other 
activities moving off-shore.  The entry of large numbers of unskilled workers who would compete 
with unemployed persons present in the mark et would not be a desirable policy.   
84. The representative of Australia, turning to the qu estion on health requirements, said that their 
primary purpose was to protect Australians from cond itions which had been eliminated in Australia 
and were easily communicable.  The case of tuberc ulosis was a good example of a disease of great 
concern for this reason.  This was not the case fo r many other conditions and hence were not a public 
health risk, however, they were a public cost issu e.  If a person had a condition that could indicate a 
high public cost, then this was weighed against the be nefits that person would bring to Australia.  In 
some cases this could result in the visa being refu sed, and in other cases it could lead to the visa being 
approved.  He clarified that no condition specified  a determined course of action and there were many 
conditions that, in the case of short-term stay, we re not tested for.  He was aware that a common 
concern for many countries was HIV, the testing for which he said was a major part of immigration 
requirements because these persons were coming to  the country permanently.  Few people would be 
tested for HIV for a four year visa unless they indicated  differently in their answ ers in the application.  
With respect to the contract between the sponsor and the applicant, he said that most would have 
entered into a contract before applying for a visa.   Businesses in Australia sponsoring persons had a 
high degree of certainty that they would be able to bring the sponsored employee.  Companies tended 
to use migration agencies that kne w the Australian system well, some of whom had spoken at the 
Trade and Migration Seminar held at the end of  the meeting cluster in September 2004.  These 
speakers had highlighted that business needed certa inty.  In response to the relationship between 
temporary business entry and other categories of stay, he said that generally the persons under 
discussion arrived for a long-stay, namely between 3 m onths to four years, with most staying for one 
to two years.  Temporary business visitors gene rally stayed for up to three months and their 
movement was facilitated.  The applicants under the programme under discussion were differentiated 
because they were entering the labour market.  The wo rk of some other categories of persons, such as 
students or working holiday makers, was incidental .  The feature of the category under discussion was 
that persons primary purpose for coming to Australia was to enter the labour market.   
85. The Chairman
, on behalf of the Council, thanked th e representatives of Australia for their 
informative presentation.  TN/S/M/13 
Page 28  
 
86. Resuming the meeting on 3 December, the Chairman
 invited the delegation of Chile to make 
a presentation entitled "Experience of Chile Rega rding the Temporary Movement of Business 
People."   
87. The representative of Chile  said she was grateful for the opportunity to share its experience 
with the temporary movement of business persons in  mode 4.  She said that the document on which 
the presentation was based would be made available in all three languages, however, she apologised 
that the presentation would be made in English.  Sh e said that the instruments that would be presented 
had as their aim to supplement liberalization standa rds in services.  Chile understood the granting of 
these rights and facilities as being important for the effective use of the trade opportunities.  She highlighted that Chile's presentation of its experi ence came at an opportune time, because mode 4 
aroused interest among all Members and was also a sensitive issue.  Chile, as a developing country, 
had sponsored a number of documents  relating to mode 4 with a view  to obtaining more commitments 
from all Members and increased transparency with r espect to these commitments.  She hoped that the 
revised offers would respond to this expression of interest and she assured Members that her country 
would do so with regard to expressions from ot hers.  She said that the presentation sought to 
demonstrate how developing countries had addressed central elements in mode 4, such as 
transparency, and more significantl y the definition of categories and conditions for market access.  
Finally, the presentation would refer to Chile's  experience within APEC.  She said that the 
presentation would be in two parts.  The first wa s the temporary movement of business persons under 
the free-trade agreements that Chile had signed with at least five areas:  Canada, Mexico, Central America, United States and Korea.  The second was Chile's experience in APEC.   
88. Referring to the chapters on the temporary move ment of persons in the FTAs that Chile had 
signed, the representative of Chile said these contained four categories:  business visitors, professionals, intra-company transferees and trader s and investors.  Each of these categories had 
definitions and certain conditions attached.  Ther e were some common rules for all four common 
categories which included that business persons could apply for any of the four visa categories at any 
Chilean general consulate abroad.  Visa applicati ons could also be submitted at the Aliens and 
Migrations Department of the Ministry of the In terior in Santiago and at the respective provincial 
governorships in Chile's regions.  The provisions in the chapters did not alter the general immigration 
requirements nor the requirements relating to public  order, national security, sanitary regulations or 
passports.  The provisions were intended to facilitate  the temporary entry of business persons but did 
not entitle business persons to apply for permanent r esidency in Chile.  They did not supersede other 
requirements regarding licences, certification or revalidation that temporary residents had to meet to 
practice a profession or activity according to the sp ecific regulations in force in Chile for that 
profession or activity.  Finally, family dependents could accompany business persons to Chile if they 
met the general immigration regulations.  Speaking about  the benefits of these categories, she said that 
if a business person qualified under any of the four  visa categories he or she would be given a 
temporary resident visa which authorised him or  her to enter Chile.  The business person who had 
been granted the temporary resident visa was allo wed to work in Chile without express authorisation 
for that purpose.  It was possible to work for more than one employer, provided that the jobs concerned were within the category applied for as in the relevant application.  During the term of the 
temporary resident visa, business persons and their dependents could enter and re-enter Chile as many 
times as they wished.  Upon the expiration of the vi sa, both the applicant and his family could renew 
it or apply for any of the immigration categori es prescribed by Chilean laws according to the 
requirement and procedures set out their in.   
89. Turning to the definition of a business visito r according to the FTAs, the representative of 
Chile said that a business visitor was a person who applied for temporary entry to Chile with the 
intention of participating in international business activities related to research and design, growth, 
manufacturing and production, marketing, sales a nd after-sales services activities, and general 
services stated in each of the appendixes to the ch apters of the various FTAs.  The appendix also 
contained a limited list of activitie s which qualified the applicant as a business visitor and whose  TN/S/M/13 
 Page 29 
 
 
practice in Chile would not require express work au thorisation once the temporary residence had been 
obtained.  The business visitor could stay in Chile fo r up to six months and the stay was renewable.  A 
professional was defined as (i) a person who applie d for temporary entry to carry out professional 
activities, held theoretical and practical special ised knowledge, and held a post-secondary degree in 
the particular field of at least four years duration,  or (ii) a person who had the intention to carry out 
business activities within the scope of  any of the professions enumerated  in the annex to the chapter, 
so long as the business person met the minimum educa tion requirements therein established, or (iii) a 
person who would carry out training functions related to a particular profession including the holding 
of seminars.  In order to practice each of th ese professions, the specific rules prescribed by each 
party's domestic regulation needed to be observe d, including licences, revalidation or recognition 
mechanisms.  A professional could stay in Chile fo r up to one year renewa ble and they could not 
practice independently.  A trader was a person who s ought to carry out substantial trade in goods and 
services mainly between the territories of the parties to the agreement.  An investor was a person who 
sought to establish, develop, manage or render key assistance or technical services to administer an investment where a person or his or her enterprise had committed or was in the process of committing 
a considerable amount of capital.  Traders and i nvestors had also to hold supervisory or executive 
offices or possess technical skills that were consider ed necessary to the business or investment.  These 
business persons could stay in Chile for up to one  year.  Intra-company transferees consisted of 
executive officers, managers or personnel with speci alised training who worked for an enterprise and 
were seconded by that enterprise to work in its ma in office or in any of its branches, agencies, 
subsidiaries or affiliates in Chile.  The term 'enterprise' included legal entities of both parties as well 
as natural persons.  The transferee could stay in Chile  for up to one year.  She said that she had only 
outlined the basic conditions and definitions.   
90. The representative of Chile said that the agreem ents also included some additional migration 
facilities for these business persons.  Firstly, the dura tion of the application process was shorter than 
the general one.  General procedures averaged around two months, while applications filed in 
accordance with the agreements' nor ms averaged 15 days.  The requirements to obtain the temporary 
residency visa were fewer and the documentation tended to be simpler and fewer in number.  Finally, 
business persons could extend indefinitely their temporary resident visa without applying for 
permanent residence as they would need to do under the regular immigration scheme.  She said 
specific transparency provisions were included in the chapters on the temporary movement of people.  All of these chapters had these provisions, which were  aimed at providing information with respect to 
the applicable migration rules and the procedures to  be followed for obtaining a temporary resident 
visa.  In addition, within a reasonable period afte r an application for a visa had been filed, the 
immigration authorities were to inform the applicant on the decision concerning that application.  At 
the request of the applicant, they should also provi de information on the status of the application.  
Appropriate mechanisms to respond to inquiries fro m interested persons regarding these regulations 
were also established.  Committees and sub-comm ittees existed under these agreements to discuss and 
study the operation of these provisions.   
91. Turning to the Chile's experience in APEC, th e representative of Chile said that the APEC 
business travel card allowed persons previously qua lified by their economy (APEC was made up of 
21 economies) as business persons to enter the terri tory of another APEC economy without a tourist 
visa.  The duration of the entry visa was usually 90 days, although for some it was 60 days, and at 
present 16 APEC economies participated in the progr amme. The travel card was available to business 
people engaged in trade and investment activities who travelled frequently and for short stays to 
conduct trade and investment activities in participa ting APEC economies.   The card was valid for a 
three year period.  She said that Chile had join ed this programme in 1999 and no modification had 
occurred to the existing migratory regime as no ne w category had needed to be established.  The 
Government of Chile, in order to define business persons who could qualify fo r this card had ascribed 
agreements with its chambers of commerce.  The ch ambers made determinations  as to who fell within 
the scheme.  As many of the other APEC initiatives had been referred to in the earlier presentation by 
Australia, and in the interest of time, she would not repeat these points.  In conclusion, the TN/S/M/13 
Page 30  
 
representative of Chile said that the government website contained information on Chile's FTAs and 
the chapters on the temporary entry of people, at www.direcon.cl.  Information was also available 
from her delegation.  She said that she would welc ome delegations' questions and would endeavour to 
answer them.  In this regard, she said that all e fforts were being made to have Chile's migration 
official present at the next meeting 
92. The representatives of Japan
, Venezuela , China , India ¸ Brazil , Argentina , Colombia  thanked 
the representatives of Chile for their presentation. 
93. The representative of Japan  sought a clarification with regard to the FTAs.  Referring to the 
four categories that had been included in the chap ters on the temporary entry of people, he assumed 
there was another chapter dealing separately with trad e in services.  In this connection, he asked how 
mode 4 entry was dealt with in the FTAs and wh ether other elements dealing with mode 4 were 
included in the trade in services chapter or that we nt beyond elements included in the chapter on the 
temporary entry of persons.  How did the se two chapters relate to each other? 
94. The representative of Venezuela , referring to the programme for business persons, inquired 
into the process was for revalidati ng titles, licences, diplomas, etc., and the timeframes involved in 
this regard.   
95. The representative of China  sought clarification on the duration of the intra-company 
transferees' stay.  He had noted that this transferee could stay up to one year, however, he said that in practice intra-company transferees often stayed longer and he wondered whether their stay in Chile could be extended and renewed beyond one year. 
96. The representative of India
 said the presentation clearly illustrated how the issue of temporary 
movement could be managed separately while m eeting overall immigration concerns that each 
Member might have.  He said that the delineati on of categories and the kinds of market access 
conditions that had been explained for each category were the types of possible categories and market 
access conditions (duration of stay and requirements)  to which many Members had been referring.  
With regard to the comments on professionals, he inquired whether this category covered contract 
professionals.   
97. The representative of Brazil , referring to the question on the renewable nature of some 
categories of visas, asked how many times these could be renewed. 
98. The representative of Argentina  inquired into the opinion of the delegation of Chile as to the 
lessons that could be drawn from its bilateral a nd plurilateral experience in  the multilateral process 
about the movement of natural pers ons in general.  Regarding the movement of professionals, he said 
that he believed that they had to observe the standa rds and rules of each party with respect to licences, 
registration, recognition of titles, etc.  In addition to the facilities that had been outlined, he asked 
whether there were any further provisions or facilities for the recognition of titles and professional qualifications.  He further inquired whether ther e were quotas that applied to the movement of 
professionals and how they were administered. 
99. The representative of Colombia
, referring to the movement of professionals, asked whether 
the visa was the document that permitted entry and was the licence to provide services, or whether a 
separate document was required for the latter.  She sought more information about the activities that 
were covered and whether the appendix that had been  referred to in the presentation contained a list of 
activities. 
100. The representative of Chile  thanked delegations for the co mments and questions.  Responding 
to the question from Japan, he said that each of the FTAs contained a chapter on trade in services, the 
coverage of which included mode 4.  These chap ters laid out the rules on liberalization for each  TN/S/M/13 
 Page 31 
 
 
agreement.  The rules on the temporary entry of persons were instruments which complemented the 
liberalization granted in the services chapter in orde r to allow parties to take better advantage of the 
access granted in the relevant services.  The rela tionship between the migration facilities and the 
rights for temporary persons on the one hand and liberalization rules outlined in the chapter on services trade on the other, was therefore a close one .  In response to the question from Venezuela and 
elaborating on the applicable rules that had b een outlined in the presentation, he said that the 
professional entering the country and benefiting from the facilities in the chapter on temporary entry 
had also to comply with the domestic regulations concerning titles, licences, etc.  Professionals had to observe and comply with the rules and standards of the University of Chile and other the rules that 
were valid in Chile.  Without prejudice to the professional holding a visa, the professional had to 
ensure that his qualifications were in line with thos e of the University of Chile.  In other words, the 
rules in the chapter did not replace the fact that  the professional was required to comply with 
requirements relating to titles, qualifications, etc.  With respect to the duration of the visas in the 
various categories that had been outlined, he sai d that, in the case of professionals and an intra-
company transferees, the duration was one year but  there was the possibility to renew and extend the 
visa for the time necessary if the person so requested .  This ensured that the person could carry out the 
activities for which he had entered Chile.  The visa was valid for one year in principle and could be 
extended by the immigration authorities as often as n ecessary.  In response to the question from India, 
he said that the rules for this category of pers ons foresaw that the professional possessed a contract 
which covered the delivery of a service and, subseque ntly, facilities were accorded.  With regard to 
the question from Argentina about the rules on th e recognition of professional qualifications, he said 
that each agreement contained rules on the provision of service which regulated the liberalization of 
services, including through mode 4, as well as an  annex on mode 4 which included rules on the 
recognition of qualifications.  The objective of the annex was to encourage professional associations 
to establish principles and criteria on the recognition of the experience obtained and studies completed in a professional's country of origin in order to provide services in the territory of the other party.  
This annex was therefore important because it pr ovided the framework for the facilitation of the 
movement of professionals from one country to anot her.  Agreements by mutual associations were 
very important for the movement of persons.  On th e question of quotas, he confirmed that there were 
quotas.  He said that the administration of the qu otas in Chile was carried out by the migration 
authorities who had participated in the negotiations on  the relevant chapters and were thus well aware 
of the rules they contained.  They applied the ru les and determined the criteria for administering the 
quotas.  On the question about the lessons that coul d be drawn from Chile's perspective, he said that 
the involvement of migration authorities in the negotia tion of the relevant chap ters had been important 
because it had allowed for their experience to be factor ed into the result.  Their involvement had also 
given the migration authorities an in depth knowledg e of the rules negotiated.  The experience in 
general had highlighted the important role of migr ation rules in the facilitation of the liberalization 
and provision of services.  In summary, their invo lvement had been highly useful and the internal 
discussions in the course of the negotiations had highlighted the important link between migration 
issues and service provision.  He thought that this could be a model for further reflection on the links between these two spheres.  In response to the qu estion from Colombia, he explained that the visa was 
temporary and did not replace licences or certificates required by professionals to  provide the relevant 
services.  He said that the professional who entered th e country on the temporary visa needed to also 
comply with the requirements for the validation of his titles and present himself to the relevant 
authorities in Chile.  With regard to the activitie s of business persons, he said that there was an 
appendix that enumerated the activities included in  the scope of business persons which covered a 
series of activities for which the persons can carry out services for a period of six months.  The business persons could apply for this six month period as many times as they wished. 
101. The Chairman
 thanked the representatives of Chile  for their interesting and useful 
presentation.  He recalled that at the last meeti ng, the Council had held a discussion on the basis of 
two presentations and three communications.  With re ference to the communications, he recalled that 
two were from Switzerland: "On the Importa nce of Improving the Scheduling of GATS 
Commitments" TN/S/W/21) and on "E-Work Permits in Switzerland" (TN/S/W/22).  He said that a TN/S/M/13 
Page 32  
 
number of delegations had indicated that they might wish to revert to these communications.  
Discussion was also continued on an earlier joint statement on "Liberalization of mode 1 under GATS negotiations" from Chile, India and Mexico (Job(04) /87).  Discussion under this item had included a 
suggestion that a symposium be organised on cr oss-border supply of services, for which he had 
engaged in consultations, and which the Council would discuss under item D of the agenda.  He 
further recalled that he had briefly reported to th e Council about an open-ended informal meeting held 
on 30 September to discuss selected topics related to m ode 4.  He said that he  had held consultations 
regarding any appropriate follow-up to that informal  meeting.  He said that Members with whom he 
had consulted expressed a preference to hold furthe r discussions on selected mode 4 issues during the 
first cluster of 2005.  He said the Council could take  this up when dealing with the item Organization 
of Future Work.  The Chairman also drew Memb ers' attention to a communication from Canada "On 
the Importance of Mode 3 Commitments" containe d in document TN/S/W/24, which Canada had 
introduced at the last meeting under Other Business.  Finally, he drew Members' attention to a recent 
communication from a number of delegations containe d in Job(04)/185 on Trade in Services to the 
Aviation Industry. 
102. The representative of New Zealand
 wished to present an informal paper entitled "Trade in 
Services to the Aviation Industry:  A case for co mmitments under the GATS".  The co-sponsors of the 
paper were Australia, Chile, the European Co mmunities and its Member States, Norway and 
Switzerland.  Apologising for the late circulation of th e paper that morning, he said that the paper was 
the product of the Friends of Air Transport Services and that some had been able to obtain clearance 
from authorities to co-sponsor the informal presentation at the meeting.   In the interests of informing 
the wider membership about the work of the Air Transport friends as soon as possible, the group had 
thought it best to table it as an informal document dur ing the current cluster in order to permit a more 
detailed discussion of it at the next meeting.  The purpose of the paper was to demonstrate how 
meaningful commitments could be taken in ground-handling services and other services that supported air transport, without in any way infringing on air traffic rights that were excluded from 
GATS.  The co-sponsors urged Members to make commitments in ground-handling services and to 
further consider the characterisation of other av iation support services prior to the next round of 
negotiations.  The paper followed on from work  presented by New Zealand and other Members 
during the first review of the GATS Annex on Air Transport Services, and the excellent and comprehensive Secretariat note prepared for the revi ew on "Developments in the Air Transport Sector 
since the Conclusion of the Uruguay Round" (S/C/W/163/Add.1 dated 25 October 2000).  The 
informal document Job(04)/185 used a question and an swer format to address possible concerns about 
making commitments on aviation support services, which were sometime referred to as "soft rights".  
It also attached examples of ground-handling comm itments included by some of the co-sponsors in 
their initial offers.   
103. The representative of New Zealand said that there was a mistaken view that these support 
services were outside the GATS.  The Annex on Air Transport Services carved out measures affecting 
traffic rights and measures affecting services directly related to the exercise of traffic rights.  But it did not exclude services that merely supported air transport.  These support services included, among others, services such as catering, cleaning and ramp -handling.  The need fo r commitments in these 
areas was stronger than ever owing to the fact that  much had changed since the original air services 
agreements were negotiated.  Ai r transport support services was a $27 billion per year industry, and 
these services were increasingly being provided entirel y independently of airlines.  Yet these services 
providers could not enjoy any of the advantages of GATS trade liberalization enjoyed by other 
providers of similar support services to other modes of transport.  He said that this differential treatment was unjustifiable.  Furthermore, effici ency gains through competition in this area would 
assist tourism and would be particularly welcome at  a difficult time for the global air industry.  The 
co-sponsors of the communication recognised Member s' concern about protecting hard rights, but 
hoped through the paper he was presenting to s how that these concerns were unfounded.  
Commitments on support services would not prejudice the positions Members might wish to take in 
relation to traffic rights at the next Review of the Annex on Air Transport.  Furthermore, the exclusion  TN/S/M/13 
 Page 33 
 
 
of measures affecting air traffic rights and services dir ectly related to those rights made it in fact safer 
to undertake commitments on ground-handing in the knowledge that the exclusion guaranteed that 
any commitments made related only to measures that di d not affect traffic rights.  He reiterated that 
the paper was not a backdoor to hard rights, but rather that it was a response to unjustifiable and differential treatment toward an independent indus try that GATS Members could no longer afford to 
ignore.  The European Communities and its Member s States, New Zealand, Switzerland and Australia 
had already made offers, including on "soft rights", and other Members had agreed in principle.  They 
strongly encouraged other Members to join the co-sp onsors in supporting their initiative.  He said that 
he appreciated that delegations might not be in a pos ition to react to the paper that day, given its late 
circulation.  Nevertheless, the co-sponsors welcomed any preliminary questions and looked forward 
to discussing these issues further at the next meeting and the coming months.   
104. The representatives of Brazil
, Japan , Turkey , Costa Rica , Chile  and Korea  thanked the co-
sponsors for their submission. 
105. The representative of Australia  reiterated her delegation's suppor t of the paper and wished to 
acknowledge the work undertaken by colleagues in  putting forth the presentation.  As had been 
mentioned by the representative of New Zealand, the paper had been prepared in order to stimulate 
discussion on ground-handling services and how they were considered under the GATS.  Australia 
recognised that, generically, ground-handling was d ealt with in the bilateral system, although she 
underlined that 90 per cent of all air services agreem ents registered with ICAO did not cover ground-
handling.  Nonetheless, she said that it was important  to look at the context in which ground-handling 
was covered in bilateral air services agreements.  When bilateral air services agreements did cover 
ground-handling services, they did so to guarant ee access by airlines designated under the agreement 
either through self-handling or by engaging the gro und-handler of their choice subject to security and 
safety concerns.  Air services agreements th erefore did not regulate ground-handlers per se  and GATS 
commitments in ground-handling would not affect serv ices directly related to the exercise of traffic 
rights other than to increase opportunities for raising efficiencies and reducing costs where 
commitments were entered into.  Au stralia emphasised that the supply of support to the international 
air transport industry was a recognisably separate se ctor from the provision of passenger and freight 
air services.  Globally many airlines were using other services providers for ground-handing services.  Given the size and importance of this independent services industry, there was no justification in Australia's view to argue that it was excluded from the GATS, particularly as many services covered under the broad heading of ground-handling were al ready negotiated in the GATS. Examples included 
catering, which was included under tourism services , and other services that could be considered 
auxiliary to all forms of transport, such as storag e and warehousing.  She said that in urging other 
Members to make offers related to support services, no attempt was being made to interfere with the 
rights of Members to control access to their air space.  The reality was that ground-handing was 
subject to negotiation in the Doha Round.  The paper was put forward so that Members could deal 
with those requests and offers from the poi nt of greater confidence and assurance.  
106. The representative of Brazil
 said that his delegation would need to reflect on the paper.  His 
preliminary reaction was that it contained many in teresting elements to be considered under the 
review, which was scheduled for the end of 2005.  He said that Brazil's views vis-à-vis  the coverage 
of the GATS with respect to air transport was known and he did not wish to anticipate any debate in 
the review.  Nevertheless, he said that the paper would be submitte d to regulators in Brazil and he 
reserved the right to comment on the paper at the next meeting.  Referring to paragraph 11, and 
specifically the third bullet point, he inquir ed into which round was being referred to. 
107. The representative of Japan  stated that, at first glance, his delegation had a different view 
about the coverage of the GATS.  He quoted pa ragraphs 2 and 3 of th e Annex on Air Transport 
Services and said that the three sub-sectors noted in paragraph 3 were the exception to what was not 
covered under the GATS according to paragraph 2(b).  Any other services related to the exercise of 
traffic rights, including many of the services referred to in the paper, were not included in paragraph 3 TN/S/M/13 
Page 34  
 
of the Annex and therefore was not covered under the GATS.  He said that this topic had been 
discussed very thoroughly in the preceding review of  air transport services and would be the subject 
of the next review that would begin towards the end of 2005.  He said that this topic should be 
discussed in that forum.  He said that these were  his preliminary comments and that his delegation 
reserved the right to come back with any further comments.   
108. The representative of Turkey
 appreciated that the contribu tion would allow further discussion 
about the liberalization in air transport services trade in  the light of recent developments in this sector.  
Noting that Turkey had extensive commitments in this  particular area, he said that Turkey expected 
that more Members would consider to undertake more commitments under th e GATS in the current 
negotiations.   
109. The representative of Switzerland  sought to reiterate that the co-sponsors were not seeking to 
make an anticipated start to the review of the a nnex on air transport services, but rather the paper 
sought to explain that it was possible and meaningf ul at the present juncture to make offers and 
commitments on ground-handling.  He said that, in draf ting the paper, the friends of air transport, had 
looked at the annex on air transport services very car efully.  He noted that the annex included two 
types of measures:  it excluded measures affecting air traffic rights and it excluded measures affecting 
services directly related to the exercise of traffic ri ghts.  The friends wanted to note that this second 
exclusion was not an exclusion of entire sectors or s ub-sectors, but rather it referred to measures.  It 
followed that the Annex on Air Transport Services di d allow for commitments to be undertaken in all 
sectors.  Quoting paragraph 1 of the Annex, he said that "any specific commitment or obligation 
assumed under this Agreement shall not reduce or a ffect a Member's obligations under bilateral or 
multilateral agreements that are in effect on the date  of entry into force of the WTO Agreements."  
With respect to ground-handling, he said that th e Annex allowed Members to make commitments, 
which would not apply to measures a ffecting services directed related to the exercise of traffic rights.  
However, he said that such commitments would a pply to measures not affecting services not directly 
related to the exercise of traffic rights.  He said that the reference to the word "measure" was 
important because it meant the measures needed to be evaluated in terms of whether they were linked 
to air traffic rights or not.  This made it clear th at the Annex did not exclude any sub-sectors as such.  
He added that market realities gave more importance to his reasoning.  At play were not theoretical questions about market activities such as ground-ha ndling and the measures for activities such as 
ground-handling that were not directed related to the exercise of traffic rights.  From a legal point of 
view, he concluded that commitments on ground- handling services could be taken, and from an 
economic point of view that such commitments we re important.  The friends were inviting Members 
to consider the communication carefully.   
110. The representative of Costa Rica
 said that his delegation would consider the document 
positively and would evaluate it with a view to improving existing commitments in air transport 
services irrespective of the paper.  He said that airc raft maintenance and repair was of interest to 
Costa Rica.  He recalled that the annex recognised th at services directly related to the exercise of 
traffic rights were not contained in the scope of th e agreement, but that Costa Rica would consider the 
paper positively.   
111. The representative of Chile  wished to reiterate his delegation's support and said that there was 
a need in the current round of negotiations for Members to undertake commitments on ground-handling services.  He echoed comments by Swit zerland, that from the legal and economic 
perspectives, in Chile's view, there were no reasons to  justify the exclusion or differential treatment of 
these sub-sectors from other services sectors.  There was therefore no justification for not undertaking 
commitments in the current round and that it afforded an opportunity to correct this omission.  At the 
end of the negotiations, Members should be in a position to undertake significant commitments in 
these sub-sectors.  Chile urged other Members to consider the document care fully and appreciate the 
point of view the paper proposed, namely, that the pur pose was not to interfere with the exclusions in  TN/S/M/13 
 Page 35 
 
 
the Annex on Air Transport Services.  He said it was important for Members to undertake commitments in the areas outlined in the document.    
112. The representative of Norway
 reiterated his delegation's view  that ground-handling and other 
services which supported the aviation industry were c overed by the GATS.  Meaningful commitments 
could, should and had been offered by Member s on services that supported the aviation industry, 
which contributed to better and cheaper services th at facilitated the moveme nt of persons and goods, 
as well as services.  He associated his delegation with  the statements made by other supporters of the 
paper.  
113. The representative of Korea , giving a preliminary reaction, said that although the 
communication contained several interesting points,  it had sensitive implications for the overall 
picture of air traffic services.  His delegation sought to study the paper further and to reserve its right 
to revert to it.  
114. The representative of New Zealand  welcomed the comments that had been made particularly 
given the paper's recent circula tion and hoped that it would be given due consideration over the 
coming months. He thanked the co-sponsors for their comments and had taken on board the 
comments made by others.  He said that many inte resting issues had been raised and he had no doubt 
that these would be considered in the time prior to  the submission of revised offers in May.  His 
delegation looked forward to discussing th e paper with Members in the future.  
115. The representative of Canada , referring to document TN/S/W/24 on the importance of mode 3 
commitments, said that attention had been drawn to the paper at the very end of the previous meeting 
and that he wished to situate the paper at the pr esent meeting.  Canada had had two objectives in mind 
when putting forward the proposal.  The first had b een to suggest that UNCTAD be invited to present 
its World Investment Report (2004).  In Canada's view, the report made some highly relevant remarks 
about the importance of services FDI and made par ticular reference to services FDI to developing 
countries and developed countries.  In Canada's vi ew, the report also drew significant conclusions 
about services investment and other modes of serv ices supply.  This objective had been met by the 
presentation by UNCTAD and the related discussion ear lier in the meeting.  The second objective had 
been to provide an opportunity for Members to re flect on mode 3 in the negotiations.  Canada had 
some views in this regard that it had expressed under agenda item A, and he summarised that his 
delegation had taken a significant interest in obtaining greater mode 3 commitments in the negotiations.  He said that Canada had found signifi cant gaps between requests and offers in this 
mode and that there were even significant gaps between the liberalization that UNCTAD had noted 
had taken place over the past decade and the offers th at were on the table.  He urged all Members to 
redouble their efforts with respect to work on mode 3 and recalled that all m odes had a relationship to 
services investment and that movement forward on mode 3 should be done in concert with other 
modes.  He hoped that the submission of the paper w ould allow others to give their views with respect 
to mode 3 at the present meeting or at a subsequent meeting.   
116. The representative of the United States
 thanked Canada for raising the issue about mode 3 and 
sought an opportunity to revert to its proposal .  She said that the presentation by UNCTAD and 
subsequent discussion, along with the Canadian co mmunication, could be addressed in tandem at the 
next meeting.  In particular, she had noted, in one of the submissions made in a subsidiary body, that mode 3 was the mode where there existed the larg est number of ENTs in comparison other modes of 
supply.  She said that more time in the other forum could be taken to discuss this point, but that with 
regard to market access linkages, her delegation soug ht to explore further some of the findings made 
by UNCTAD in its study.  
117. The representative of Japan
 thanked Canada for its proposal and said that the presentation by 
UNCTAD had been informative.  Many issues raised in both instances merited further reflection and 
discussion.  He sought to revert to this item at  the next meeting to deepen understanding on how TN/S/M/13 
Page 36  
 
investment in services was moving forward and how th is analysis could be developed in the context 
of the negotiation on mode 3.  Japan was also inte rested in improvements in commitments in mode 3, 
which was an important part of the services negotia tions, in addition to other modes of supply.  
118. The representative of India
, referring to the joint statement by Chile, India and Mexico 
contained in Job(03)/87 on cross- border supply, recalled that India had made the suggestion that it 
would be useful to organize a symposium on this topi c.  He was aware that this point would be dealt 
with under another item.  Assuming that the sym posium would be approved, however, he suggested 
that the Special Session could meet after the sympos ium in order to allow for lessons to be drawn 
from the symposium and further thoughts on the informal communication to be shared and how the issue would be carried forward in the negotiations.  He therefore requested that this item remain on 
the agenda for this purpose.  With respect to the orga nization of future work and mode 4, he noted that 
the Chairman had said he would address this under another item.  With respect to the paper from 
Canada, he agreed that all modes of supply were im portant.  On the point that gaps existed between 
requests and offers and perhaps with regard to auto nomous liberalization, he recalled that there were 
few Members who were in a position to exploit mode  3.  This was not to discount the importance 
mode 3, but to underline that the ability to exploit these commitments was limited to certain 
Members.  Apart from this issue was the question of  the types of commitments that had been obtained 
in areas of interest, and he said there was a direct link in this regard, including areas of mode 4 and cross border supply.   
119. The representative of the European Communities
 supported the communication from Canada 
and welcomed the attention that had been drawn to  this issue.  He said that the evidence of the 
importance of foreign direct investment in services as presented and illustrated in the UNCTAD 
report argued for higher prominence of mode 3 commitments in the negotiations.  His delegation 
would welcome an opportunity to revert to this item at a future meeting.  
120. The representative of Norway  shared Canada's view that the GATS was well placed to strike 
an appropriate balanc e between investment related trade agreements as a part of a strategy to attract 
FDI and keeping national flexibility with respect  to necessary measures to pursue development 
policies.  Norway believed that the WIR made a clear case for stronger commitments by all countries 
in mode 3.  High quality commitments in mode 3 was conducive to an increase in FDI by providing a 
stable and predictable framework.  The absence  of high quality commitments in mode 3 from a 
number of Members appeared not to be in their ow n interest and Norway believed that all Members 
stood to benefit from undertaking commitments in mode 3.  
121. The representative of Korea , referring to the communication from Canada, said that as a 
developing country, Korea understood the importan ce of mode 3 in the services negotiations.  
Recalling his delegation's earlier comments on the WIR,  he said that investment in mode 3 was 
important for both outflows and inflows.  He e xpressed support for the communication from Canada 
and wished to reserve an opportunity to re vert to the issue at a future occasion. 
122. The Chairman  thanked Australia and Chile for the presen tations they had made.  He said there 
had been a good discussion.  He noted the measure of transparency that had been demonstrated by the 
friends of air transport services and the good discussion that had occurred.  He noted that the Council 
had reverted to a communication on the importance of mode 3 by Canada which had received a good deal of interest and support by other Members, as well as an interest to revert to it at the next meeting.  
He suggested that the Council take note of  the statements that had been made.  
123. It was so agreed
.  TN/S/M/13 
 Page 37 
 
 
C. CONSIDERATION OF PROPOSALS ON S & D TREATMENT PROVISIONS  
124. The Chairman  recalled that the General Council's July Decision, in paragraph 1(d), "instructs 
all WTO bodies to which proposals in Category II have  been referred to expeditiously complete the 
consideration of these proposals and report to the General Council, with clear recommendations for a 
decision, as soon as possible and no later than July 2005."  He also informed Members that he had 
received a letter from the Chairman of the Comm ittee on Trade and Development in Special Session, 
in which the Chairman of the CTD informed him of  the Committee's desire to  monitor the work in 
other WTO bodies to which Category II proposals have been referred.  He further recalled that three 
GATS-specific proposals had been refe rred to the Special Session of the Council for Trade in Services 
in May 2003 by the General Council.  The Counc il had discussed these proposals at an informal 
meeting held on 11 June 2003.  These proposals and a checklist of issues raised had been circulated in 
document Job(03)/118.  Further cons ideration had been given to the proposals at the formal meeting 
on 4 and 10 July 2003.  In addition,  he had held informal consulta tions with the proponents of the 
proposals and interested delegations on 9 July 2003.  His report to the General Council on the 
Council's consideration of the three proposals was cont ained in document TN/S/12.  He proposed that 
he hold consultations on this matter in diffe rent format in the near future.     
 
125. The representative of Rwanda , speaking on behalf of the African Group, thanked the 
Chairman for including this item on the agenda.  It considered the discussion that day to be the 
beginning of a longer discussion on the issue of S&D treatment that was important to the Members of 
the African Group as well as other developing countr ies.  She expressed support for the approach the 
Chairman had outlined.  She thanked the Secret ariat for the compilation in Job(03)/118, which 
showed that some 30 questions had been raised and was an indication to the African Group of the keen interest Members had in this issue.  She said th at some of the questions had been responded to in 
the June 2003 and she expected that other responses would be provided during the suggested informal 
consultations.  The African Group had been the main  proponent of these issues and favoured further 
discussion aimed at positive integration of developi ng countries in the world trade system through 
trade in services.  She reiterated that the African Group remained very committed to the issue of S&D 
treatment and in particular to ope rationalising Article IV of the GATS.  She noted that Article IV 
contained important provisions that indicated developed countries commitment to provide S&D 
treatment to developing countries.  The Africa n Group therefore strongly believed that these 
provisions should be facilitated through a mechanism w ithin which Article IV could be realised.  The 
African Group would continue its consultations with  interested Members and groups on this issue. 
126. The Chairman
 presumed that his approach was acceptab le to delegations and he proposed that 
the Council take note of the statements made. 
127. It was so agreed . 
D. SYMPOSIUM ON CROSS -BORDER SUPPLY OF SERVICES  
128. The Chairman  recalled that at the last meeting the suggestion had been made that a 
symposium on cross-border supply of services be or ganised in 2005.  A number of delegations had 
expressed support for this initiative.  He said th at he had held consu ltations with numerous 
delegations.  With respect to the timing of the sym posium, it appeared that most delegations favoured 
holding the symposium on cross-border supply of services in early 2005 and preferably during an "extended" three-week cluster of meetings in Fe bruary 2005, which itself would be discussed under a 
separate agenda item.  He informed Members that the proposed dates fell in the second week of the 
"extended" cluster on 17-18 February  2005.  With respect to potential topics and speakers, he recalled 
that a revised draft programme outline by the Secr etariat had been communicated to delegations by 
facsimile.  He said that the suggested topics were  based on input received from delegations.  He said 
that a possible list of speakers was being compiled that also included suggestions from delegations.  TN/S/M/13 
Page 38  
 
On the assumption that the Council would agree to hold the symposium, he urged delegations to 
communicate to the Secretariat any further names as soon as possible.  Finally, he recalled that at least one delegation had inquir ed about whether the participation of capital-based participants from 
developing countries could be financed by the WTO.  In this regard, he reminded delegations that the 
Technical Assistance and Training Plan (2005) did foresee one major Geneva-based technical 
assistance activity in services next year.  The releva nt entry allowed for the participation of one 
capital-based delegate from each developing country Memb er for a period of stay of up to three days.   
Appropriate funding had been made available.  Hence, he said that should the Council agree to 
conduct a symposium on cross-border supply of servi ces, it should simultaneously determine whether 
this symposium would constitute the single Gene va-based activity referred to in the Technical 
Assistance Plan for 2005 and, accordingly, would qualify for funding.   
129.   The representative of India
 thanked the Chairman for his detailed consultations and the 
Secretariat for the draft outlined based on delegations ' input.  His delegation felt that this was a useful 
exercise, that the funding suggest ed was appropriate, and that the dates he had suggested would be 
helpful given other benchmarks.   
130. The representative of Hong Kong, China  thanked the Secretariat for the detailed draft 
programme it had prepared and supported the organi zation of a symposium.  He noted as well that 
funding was available for the participation of devel oping Member participants.  He said it would be an 
important occasion to address an important issue.  Recalling comments at the previous meeting on 
background materials and a note by the Secretariat on the structure of commitments for modes 1, 2 
and 3 (S/C/W/99 dated 3 March 1999), he said that an  update of this note would provide useful input 
to the symposium, and in particular more focused analysis of modes 1 and 2.  
131. The representative of Venezuela  said she was pleased that funding could be made available 
for the participation of developing-Member capital-ba sed participants.  In terms of the proposed dates 
of the symposium, she recalled the dates of the preparatory meeting for the second Summit for 
Information Society, which involved a high number of participants.   
132. The representative of the United States , referring to the intervention by Hong Kong, China, 
said her delegation would need more informati on on the note he had referred to as well as an 
opportunity to review it before she could support updating that note.  She agreed that it might be useful to have some background materials and hoped th at this might be discussed in consultations.    
133. The representative of the European Communities
 said that his delegation supported the 
initiative to hold a symposium on cross border supply of services in the February 2005 cluster.  He 
hoped that the symposium would cover a broad range of services sectors and said that those related to 
cross-border supply were of particular importa nce.  The European Co mmunities hoped that, for 
example, it would be possible to include sectors such as telecommunications, postal and courier, 
financial and transportation services.  He said it was appropriate to invite highly recognised experts 
from the private sector and regulatory agen cies to the event to make presentations.  
134. The representative of Peru  thanked the Secretariat for the revised programme.  Referring to 
the comment from Hong Kong, China, his delega tion could go along with updating the note in 
S/C/W/99 and possibly any other information whic h might be useful or necessary and had been 
produced by the WTO or any other organisation.  He said that the symposium would allow for a discussion and would not prejudge the undertaking of commitments.  Referring to the programme, he 
recalled that his delegation in the informal consultations had suggest ed incorporating into the first 
substantive section, on the economic importance of cross-border trade, a discussion of the importance 
of this mode of supply with other modes of suppl y.  He wondered whether 'other modes of supply' 
could be included under this first session.    TN/S/M/13 
 Page 39 
 
 
135. The representative of Canada  said his delegation was pleased to support the symposium on 
cross-border supply of services.  He said this was a sector of growing importance and looked forward 
to further exploration of the issues.  He thanked those Members, and India in particular, which had 
initiated the proposal.  He noted that the draft pr ogramme addressed a wide range of issues and his 
delegation looked forward to consid eration in the symposium on the importance of so-called carrier 
services which, in Canada's view, were vital to fostering an enabling environment for cross-border 
trade.  He noted that liberalization in the telecommunications, computer and related services and financial services were important in enabling trade in a wide range of areas, and particularly on a mode 1 basis.  He encouraged broad participation and hoped that there would be strong participation 
by developing countries experts.  
136. The representative of Antigua and Barbuda
 welcomed the holding of a symposium on cross 
border supply of services as well as the funding of  the participation of capital-based experts from 
developing countries.  Antigua and Barbuda saw  cross border supply of services as being of 
fundamental importance to developing countries in aiding their efforts to diversify their economies, 
and particularly small developing countries.  He supported the suggestion for background documents 
and hoped they could be presented in electronic form at and in advance of the symposium to allow 
participants to contribute effectively. 
137. The representative of Chile  thanked the Secretariat for the programme and supported the 
symposium.  Referring to Peru's intervention, sh e said that it was her delegation's view that the 
relationship with other modes of supply was included in the second half of the programme on the first 
day.  
138. The representative of Japan  said his delegation supported the symposium and hoped that it 
would be a useful exercise for develope d countries and developing countries.   
139. The representative of Malaysia  supporting the organization of the symposium since this mode 
of trade was becoming increasingly important for developing countries.  Echoing comments by India, she said that mode 3 was available only to so me countries, and hence cross-border trade was 
increasingly becoming an important source of supply of services for developing countries.  With 
respect to the timing, she said she would make her comments under the appropriate agenda item.  
140. The Chairman
 said that the dates for the meeting needed  to be examined in light of the overall 
planning for the next cluster.  With respect to b ackground materials, he had noted the suggestions and 
request for more time that had been made.  He  welcomed further suggestions for speakers and 
suggested 10 January as a cut-off date in order to  finalise the programme.  He proposed that the 
Council agree to hold a symposium on cross border supply of services during the next cluster of 
meetings and that the participa tion of developing Members' capital- based participants be funded from 
the Technical Assistance plan as he had outlined earlier.  
141. It was so decided . 
142. A representative of the Secretariat , having noted the comments by Peru and Chile, said that 
the revised programme outline appeared to be accepta ble.  He said that the programme remained an 
outline and that the exact content would become cl earer once the speakers had been designated and a 
decision on their presentations made.  He said that a preliminary view of available materials and potential speakers indicated that th e area was under-rese arched.  To some extent, the final details of 
the programme would depend on the speakers and th eir final contributions.  He encouraged any 
further input from delegation as soon as possible for planning purposes. TN/S/M/13 
Page 40  
 
E. W
ORK OF SUBSIDIARY BODIES – REPORTS BY THE CHAIRPERSONS  
143. The Chairperson of the Working Party on Domestic Regulation  reported that since his 
previous report to the June meeting of the Special Session, the Working Party on Domestic 
Regulation had held one formal meeting on 22 November 2004.  The Working Party had adopted its 
annual report to the Council for Trade in Services  with some small ame ndments. The draft annual 
report had been circulated as document S/WPDR/W/31 on 11  November 2004.  During the meeting 
Hong Kong, China presented an informal paper, en titled "Comparison of Regulatory Examples with 
the Accountancy Disciplines and Pr oposals for Regulatory Disciplines" .  This paper analysed in a 
matrix fashion the regulatory measures contained in the Secretariat Examples paper.  Together with 
the submission of some new regulatory examples by Brazil, as well as extensive comments by a 
number of delegations in informal mode, this prompted a good discussion by delegations.  Members 
continued to discuss Mexico's paper on technical st andards, entitled "Mexico's paper on technical 
standards" and Colombia's paper on visa procedur es.  Members also further commented on the paper 
from Hong Kong, China, on the "Relationship of Regulatory Disciplines with National Treatment".  The Secretariat presented an updated version of its  consultations with international professional 
services organizations.  The paper contained furthe r comments from the International Federation of 
Surveyors.  There were no further reports from Memb ers' regarding their own domestic consultations.  
The next formal WPDR meeting was expected to be he ld during the next cluster.  He said that, given 
that he was delivering the last report of the Working Party in 2004, he wished to make a few comments about the progress made.  His sense was that the Working Party had made some good progress on the subject of domestic regulation in 2004.  He said that this progress was largely 
attributable to the efforts of his predecessor, and in particular the workshop th at he had organised in 
March 2004.  That workshop had brought together  regulators as well as negotiators and had given 
impetus to the Working Party's discussions.  Si nce then, a positive and constructive commitment 
towards the development of possible disciplines had been seen.  He said that it was clear that 
delegations were hoping that moment um would continue.  He understood that a number of delegations 
were working hard to ensure a best possible start in 2005.   
144. The Chairperson of the Committee on Trade in Financial Services
 reported that the 
Committee on Trade in Financial Services had met on Tuesday, 23 November. The Committee had adopted its annual report, which had been subse quently circulated as document S/FIN/12.  The 
delegations of Brazil, Jamaica, and the Philippin es had provided some information on the status of 
their respective domestic procedures for the acceptance of the Fifth Protocol annexed to the GATS.  A 
number of delegations had expressed their concern for the delay in the acceptance of the Protocol by 
these three Members and sought further information on the likely timetables for the completion of 
those procedures.  No specific topics were raised  under the agenda item on Technical Issues.  Under 
the agenda item of Recent Developments, the Ch airperson of the recently established Financial 
Supervisory Commission in Chinese Taipei made  a thorough presentation about the objectives, 
approaches, structure and organization of this entity.  Some Members urged that such presentations of 
experiences in regulatory reform would be welcome in the future.  She expressed, on behalf of the 
Committee, her appreciation for the presentation.  Under Other Business, Antigua and Barbuda made 
a statement on the "Experience of Small Developing Members of the WTO with Plurilateral Financial 
Standards and their Regulation".  In its statemen t, Antigua and Barbuda expressed its interest in 
continuing the discussions in the future on the prop osal submitted jointly with other Members on this 
matter.  The Committee would meet again in Februa ry 2005, within the next cluster of services 
meetings.  
145. The Chairperson of the Working Party on GATS Rules
 said that the Working Party had held a 
formal meeting on 24 November 2004.  The first ite m on the agenda had been the consideration of the 
annual report of the Working Party, which Member s had adopted with a few amendments and as 
contained in S/WPGR/14.  On subsidies, delega tions discussed issues relating to the information 
exchange, the definition of subsidies, and trade di stortion.  The delegation of Chile orally provided 
some examples of activities to which it extended gover nmental support.  This effort at transparency  TN/S/M/13 
 Page 41 
 
 
was welcomed and Members undertook to comment further at a later time.  Singapore made a 
substantive intervention on definition of subsidi es and other subsidies issues, which would be 
circulated to Members.  Following a suggestion by Hong Kong, China, Members asked the Secretariat to prepare a synthesis Note on issues raised by delega tions with respect to the definition of subsidies.  
On emergency safeguard measures, delegations continued their discussion on the basis of the answers 
provided by a group of ASEAN Members to questions raised with respect to their proposal.  Issues 
covered included:  situations justifying the use of a safeguard measure; the definition of domestic 
industry; availability of appropriate statistics; compatibility of certain safeguard measures with 
obligations in bilateral investment treaties; and lin ks to progressive liberalization.  The issue of 
feasibility of safeguard measures was also raised  in light of ENTs and entries in schedules of 
measures resembling safeguards.  On government pr ocurement, the Secretariat presented its Note on 
approaches taken in government economic integr ation agreements regarding commitments on 
government procurement.  Delegations also pursued their discussion of the proposal by the European Communities for a framework under GATS for governme nt procurement in services.  Issues raised 
included the application of the MFN obligation, in  particular in the light of the reciprocity 
requirements in the GPA, the relevance of moda l distinctions for procurement commitments, and 
implications of distinguishing between goods a nd services.  The importance of focusing work on 
possible procedural rules was also underscored by some delegations.   
146. The Chairperson of the Co mmittee on Specific Commitments
 said that since his last report in 
October, the Committee had held one formal mee ting, on 25 November 2004 at which it had adopted 
its annual report to the Council for Trade in Servi ces (S/CSC/10) and had addressed its regular agenda 
items of classification and scheduling issues.   U nder the agenda item of classification issues, the 
delegation of Indonesia had presented a revised proposal on the classification of energy services (S/CSC/W/42/Rev.1 and Corr.1), incorporating comment s and suggestions by Members.  In informal 
mode, the Committee was informed by representativ es from the International Bar Association (IBA) 
on its "Resolution in support of a system of te rminology for legal services for the purposes of 
international trade negotiations".  The Committ ee continued its informal discussion of sectoral 
classification issues in consulting services, and had debated questions related to postal and courier 
services.  He said that, at the next meeting, the Committee would address classification issues in 
audiovisual services, which it had had to postpone because of time constraints.  Under the second standing item on its agenda, scheduling issues , the Committee had continued its examination of 
general scheduling questions, with new contributi ons from Chinese Taipei (JOB(04)/172), and Hong 
Kong, China (JOB(04)/171) on economic needs tests.   New papers containing questions on individual 
initial offers were presented by Brazil (JOB(04)/ 174), and Hong Kong, China (JOB(04)/173).  Due to 
time constraints, the latter questi ons would be taken up at the next  meeting, and he said he would 
consult on a possible format that would facilitate repli es.  In his view, the level of engagement in the 
informal classification discussions has been encourag ing, and he was confident that they would prove 
useful for Members confronted with classification issues in the preparation of their offers and 
analysing the offers of other Members.  Similarl y, the continuing discussion of scheduling issues 
should enable Members to make good use of the sch eduling guidelines.  Wh ile the Committee's work 
in this field had so far concentrated on a limited number of important questions, owing to a lack of 
time, he said he would encourage more delegations, both from devel oping and developed countries, to 
share their views and raise issues that they felt merited discussion.   
147. The representative of the Philippines
 thanked the Chairpersons for their reports and the 
Chairperson of the WPDR for his kind words.  He  said that work built on the work of previous 
Chairpersons, and he said that thanks in this rega rd was owed to previous chairpersons from Brazil, 
New Zealand and Canada.  Referring to the report by the Chairperson of the WPGR and particularly 
the comment that the issue of the feasibility of saf eguard measures raised in light of ENTs, he said 
that it appeared to his delegation that the issue of ENTs was raised in the context of allowing 
Members to be in a position to schedule or inscribe in their schedules an entry that would allow them 
to anticipate a situation that would otherwise be su sceptible to a safeguard measure if such an ENT 
were not scheduled in the first place.  Thus, refere nce to ENTs was made in the context of a front-TN/S/M/13 
Page 42  
 
loaded type of safeguard entry rather than ENTs being raised which would question the feasibility of 
safeguard measures.  He said it was important to underline this point to avoid any indication that 
ENTs would question the feasib ility of safeguard measures.  
148. Thanking the Chairpersons of the subsidia ry bodies for their ha rd work, the Chairman
 
proposed that the Council take note of the reports and the statement made.  
149. It was so agreed . 
F. REVIEW OF PROGRESS IN NEGOTIATIONS , INCLUDING PURSUANT TO PARAGRAPH 15 OF THE 
GUIDELINES FOR NEGOTIATIONS  
150. The representative  of El Salvador, speaking on 29 November, apologised for making his 
intervention that day and explained that he would not be in Geneva later in the meeting.  He said that 
he had a statement to make with re gard to an important issue under this  agenda item.  On behalf of the 
Republic of El Salvador he sought  to take the opportunity to inform Members that his delegation 
would be submitting its initial offer to the Secretar iat in conformity with the mandate set out in 
paragraph 15 of the Doha Declaration and the Decision by the General Council on 1 August 2004.  
El Salvador was firmly committed to achieving th e objectives which had been set out in the Doha 
Development Agenda, particularly as regarded th e multilateral trading system which El Salvador 
believed was an indispensable tool for the developmen t and economic growth of all countries.  In this 
context, the presentation of El Salvador's initia l offer in services was a demonstration of its 
commitment to the process.  The initial offer from El Salvador contained technical improvements in 
addition to improved access in various sectors, for example, in computer and related services, 
development and investigation services and professional services.  He underlined that El Salvador was 
making its initial offer taking into account the need to  ensure an overall balance in the results of the 
negotiations.  As well, he said that it was of vital im portance that particular attention be given in the 
current round to the modes of supply of export inte rest to developing countries.  El Salvador hoped 
that by the end of the negotiations a balanced  result would be achieved in the form of new 
commitments in market access as well in rules.  Referring to Negotiating Guidelines adopted by the 
Special Session of the Council for Trade in Se rvices on 28 March 2001 a nd paragraph 4 of GATS 
Article XIX, he said that El Salvador continued to participate in the ne gotiating process by putting 
forth requests in bilateral, plur ilateral and multilateral fora.   
151. The Chairman  thanked the delegation of El Salva dor on behalf of he Council for the 
submission of its initial offer which was an importa nt step.  He hoped that other Members who had 
not submitted their initial offer would follow this ex ample.  He noted that, with El Salvador's 
announcement, 45 offers had been received representing 69 Members. 
152. The representative of Brazil  congratulated the delegation of El Salvador for the presentation 
of its initial offer.  In lig ht of the Chairman's earlier procedural comment, he also sought to clarify that 
item H would remain open for discussion on 3 December. 
153. The Chairman  responded that the item H would remain open for further discussion on 3 
December. 
154. The representative of the United States , referring to the statement by El Salvador, expressed 
her gratitude for this submissi on and looked forward to discussing it further.  Her delegation was 
encouraged by the announcement and it hoped to see further initial offers from the region. 
155. The representative of Chile , speaking on 29 November, drew Members' attention to document 
Job(04)/176 co-sponsored by Australia, Canada, Ch ile, European Communities, Hong Kong, China, 
Iceland, India, Japan, Korea, Mexico, New Zeala nd, Norway, Singapore, Switzerland, Chinese Taipei 
and the United States.  In general terms, the purpose of the paper was to reflect the sponsors' approach  TN/S/M/13 
 Page 43 
 
 
with regard to the work that Memb ers needed to carry out, particularly  in light of the July Package on 
revised offers, in such a way so that Members c ould make progress on market access in the course of 
the negotiations.  He hoped that Members would be ab le to discuss the content of the document when 
the Council resumed its meeting later in the week.  It was in this light that he sought to draw 
Members' attention to this paper at this time. 
156. The representative of Switzerland , referring to his comments at the last meeting on installers 
and services, said that he would revert to this point un der item F of the agenda.  He said that this point 
would be presented to the countries that Switzerla nd had approached.  He confirmed that formal 
requests had been sent to a number of Members on installers and services and that he would present 
this to the broad membership when the meeting resumed.   
157. Speaking on 3 December, the representative of Malaysia  said that Malaysia was pleased to 
announce that it was submitting its initial offer.  It was a contribution from Malaysia to the realisation 
of the Doha Work Programme in the area of services.  He said that the details of the offer were being 
proof-read as he was reading his statement.  He recalled that Malaysia had made extensive commitments in 64 sectors under the Uruguay R ound.  The offer he was referring to were 
improvements to existing commitments in the sectors of computer and related services, 
telecommunications, construction and related services,  architectural services and health related and 
social services.  In addition, Malaysia was al so undertaking new specific commitments in higher 
education services.  In this connection, the Mala ysian Government would encourage universities that 
met their objectives to take this opportunity under th ese commitments to establis h a local presence in 
Malaysia.  He said that Members might wish to par ticularly note that Malaysia was totally eliminating 
restrictions on foreign equity in the commitments ma de on computer and related services.  This was in 
the context of efforts to develop a knowledge-based  economy.  It was hoped that the full commitment 
in the sector would provide the necessary enablin g environment towards deepening and widening 
Malaysia's industrial base in this sector.  He said that his delegation had undertaken bilateral 
consultations in the preceding week and remained av ailable to other likewise interested delegations.  
He said that these offers were Malaysia's cont ribution to forward the work on market access in 
services.  Malaysia had done so based on its capaci ty and in line with the principle of progressive 
liberalization.  He recalled that the July packag e had emphasised the need for a balance outcome in 
regard to market access and rule-making.  However, satisfactory results had yet to materialise in the 
rules area.  Given the continuing concerns on the part of Malaysia's domestic services suppliers 
regarding liberalization commitments in the absen ce of a safety net for trade in services, he said 
Malaysia was making its initial offe r conditional upon the outcome of the negotiations stipulated in 
the GATS in Article X on emergency safeguard measures.  He recalled that the DDA was intended as a development round.  In regard to services, the DDA provided for progressive liberalization, the right 
to set national policy objectives and the right to regu late the supply of services.  In this context, his 
delegation called on Members to ensure positive re sults of the negotiations in terms of improved 
market access for developing countries' services s uppliers and efforts to strengthen their domestic 
supply capacity.  He expressed his delegation's grat itude for the technical assistance that had been 
extended to Malaysia by the Secretariat in drawing up its offer.  He assured the Chairman of his delegation's continued support in steering th e negotiations to a meaningful outcome.  
158. On behalf of the Council, the Chairman
 said that he was grateful for the very important step 
Malaysia had taken in tabling its in itial offer.  He thanked the representative for his words of support.   
159. The representative of Egypt  said that, on behalf of his ambassador, he had the pleasure to 
inform the Council that Egypt would be tabling its initial offer to the Secretariat within the coming 
days.  The offer would be, subsequently, circulated to  the Members.  He stated that the initial offer 
emphasised the seriousness Egypt attached to the progressive liberalization of the services sector as it contributed to more than 50 per cent of GDP.  It also envisaged Egypt's constructive engagement in 
the current round of negotiations and underlined the fulfilment by Egypt of the mandate contained in 
the Doha Development Agenda, the General Council Decision of 1 August 2004, and Article XIX of TN/S/M/13 
Page 44  
 
the GATS.  He said that the offer included new and improved market access  and national treatment 
commitments in various modes of supply and for a number of sub-sectors.  As well, it demonstrated 
an efficient partnership at the national level among all interested and concerned stakeholders who had 
been engaged in an intensive and challenging process of coordination and consultation to ensure that 
the offer would clearly reflect Egypt's national policy objectives.  The offer was conditional and 
subject to the "single undertaking" as well as to the progress made in other areas of negotiations in the 
WTO.  Egypt reserved the right to modify or withdraw, in full or in part, its offer at any time before the conclusion of the negotiations.  It also reserved the right to make any technical rectifications or 
amendments for the purpose of further clarification of its terms and conditions .  He said that it was 
important for the Members of the Council to bear in mind when viewing Egypt's initial offer, that 
recently Egypt had unilaterally and in accordance with Article XIX of the GATS undertook a broad 
range of extensive commitments in a crucial services sector to its economy, namely, basic 
telecommunications.  He sought to take the opportuni ty to express his delegation's substantial and 
tremendous efforts at preserving the credibility of the important process Members were engaged in.  
He expressed his gratitude to the Secretariat of the WTO as well as UNCTAD for providing his 
delegation with effective technical assistance whic h proved to be extremely valuable in preparing 
Egypt's initial offer.  His delegation remained fully committed to constructively engage in the 
subsequent phases of the negotiations.   
160. The Chairman
 thanked the representative of Egyp t for the important announcement he had 
made.  He anticipated that Members would view this important offer with keen interest.  He said that, 
counting these announcements, 47 offers representing 71 Members had been tabled.  Notwithstanding 
these positive announcements, he said that no fewer than 45 offers remained outstanding.  He said that 
a year and a half had passed since the benchmark set down in the Doha Ministerial Declaration.  
Referring to his confessionals and cons ultations, he said that this situation was deeply preoccupying to 
many Members.  He said he would report this concern to the TNC.  He said he was compelled to underline that further serious delay in the submission of initial offers would ha ve a detrimental effect 
on the dynamics of the negotiations.  He re-affirm ed the sense of urgency with which work would 
need to advance in 2005, particularly in light of the crucial Ministerial meeting in Hong Kong at the 
end of the year.  He said large measures of goodw ill and imagination would be  necessary and he stood 
ready to listen to Members' suggestions.  He re called that many pieces were at play, including the 
bilateral request-offer process, the benchmark for th e submission of revised offers, outstanding initial 
offers, proposals on sectors and modes, informal work by groups of Members, the work of subsidiary 
bodies and that these would need to coalesce in good tim e to make a report to the TNC, the General 
Council and Ministers.  He acknowledged that this was not an easy task, and he said that he would 
rely on Members' ideas.  He said that by the end of  the February cluster, the Council needed to have a 
common vision or understanding on how these pieces w ould come together as well as an indication of 
a level of ambition until and beyond the meeting of  Ministers in Hong Kong.  The Chairman drew 
Members' attention to a proposal from 10 Members on tourism services contained in document 
TN/S/W/23.  He recalled that the document had been  introduced on behalf of the co-sponsors at the 
last meeting by the delegation of Colombia and th at a few delegations had indicated they might seek 
an opportunity to revert to the communication. 
161. The representative of India
 thanked El Salvador, Malaysia and Egypt for announcing the 
presentation of their initial offers.  He said that th e main purpose of his statement was to reiterate 
India's interest in the services negotiations.  Services  had been a major driver of India's growth in 
recent years.  India believed that effective libera lization in the ongoing negotiations could contribute 
significantly to increasing the participation of developing countries like India in world services trade.  He recalled that India had consistently highlighted th at services was one of the three pillars of market 
access in the round along with agriculture and NAMA  and that all had to be treated on an equal 
footing in order to attain a balan ced outcome for all Members.  India was pleased that the membership 
had acknowledged this fact in the July package.  It was in this light that India viewed the recommendations contained for services in the package.   He also noted the special nature of services 
negotiations based on primarily the request-offer pro cess which required, in Indi a's view, a continuous  TN/S/M/13 
 Page 45 
 
 
exchange of requests and offers before Members co uld achieve a desired outcome.  It was in this 
perspective that the benchmark of May 2005 for revi sed offers had a special significance.  The July 
package also referred to the need to strive for a high quality of offe rs especially in sectors and modes 
of supply of export interest to developing countries.  A number of delegations, including India, had on 
several occasions indicated the unsatisfactory qualit y of initial offers, especially in sectors and modes 
of supply of export interest to developing countries.  He hoped that the revised offers would 
particularly look into this last aspect, given that  developmental nature of the round and development 
as its central theme.     
162. The representative of India sought in particul ar to highlight the need for substantial 
improvements in commitments related to mode 4 and cross-border supply.  He recalled that his 
delegation had noted in the past the existing asymmet ries in the commitments in mode 4 especially of 
categories de-linked to commercial presence, whic h had not been addressed suitably in the initial 
offers.  The revised offers presented an opportunity for meaningful commitments in such categories, 
especially contractual service suppliers and indepe ndent professionals.  The growing emergence of 
cross border supply as an important mode of deliv ery and its spread to new sectors and activities 
beckoned Members to respond appropriately and lock in  the current liberal regimes in order to prevent 
any possibilities of protectionist actions in future.  This would require commitments across a fairly broad range of sectors where cross-border supply was becoming commercially significant.  He said that in order to best prepare for this objective, th e Council needed to structure its work over the next 
year bearing in mind the two benchmarks of May 2005  and the Sixth Ministerial Conference.  He said 
that this would involve a combination of bilatera l, plurilateral and multilateral approaches, albeit in 
varying degrees and focused work by all Members.  He was also fully cognisant of the need not only 
to maintain the right balance within the mark et access negotiations in services, but also to 
simultaneously maintain the balance between mark et access and rules negotiations within services so 
as to provide an overall balanced outcome for all Memb ers.  In this connection, he noted the need for 
intensification of efforts in the various rule-maki ng areas contained in the July  package.  Specifically, 
he sought to emphasise the need for disciplines in domestic regulations given their direct link with 
effective market access, particularly for the moveme nt of natural persons.  India had highlighted the 
need to address, amongst others, issues like recogn ition of qualifications, transparency and the 
streamlining of administrative procedures relating to work permits and visas as priority areas of work.  
He believed that such disciplines would substantially  add to the value of market access commitments.  
India looked forward to working with all Member s to achieve the desired outcome in services 
negotiations which was increasingly becoming the dr iver of growth and development in many 
economies.  
163. The representative of Norway
 said that his delegation ha d had a number of bilateral 
negotiations that week and that they had been u seful and informative.  However, he said that 
Members were not prepared to engage substantially in  negotiations.  This appeared to confirm that the 
services negotiation were lagging behind negotiati ons in other areas.  Despite some positive 
developments in terms of new initial offers fro m Members, including El Salvador, Malaysia and 
Egypt, he said that his delegation had not reached a point where the offers could be examined and 
envisage an outcome at the end of the negotiations.  In his view, this was owed partly to the large 
number of initial offers missing and partly to the lo w quality of some of the offers on the table.  
Norway was particularly worried that a number of  key players had not tabled offers of a quality 
conducive to bringing the process forward.  Mo reover, linking progress to other areas of the 
negotiations at the current stage could seriously ha mper progress in any area of the negotiations.  For 
instance, there was no merit in using the progress of negotiations in agriculture or NAMA as a 
justification for failing to table a substantial offer on services.  The services negotiations were part of 
the single undertaking and nothing was agreed until everything was agreed.  He said that the 
complexity of the services negotiations, including th e bilateral request-offer process, would make it 
difficult if not impossible to reach an agreement quickly should negotiations in other areas move 
towards finalisation.  Hence, failing to table s ubstantial offers in services could only undermine and 
did not support the process of the round.  He said th at it would be a sad day if the result of the round TN/S/M/13 
Page 46  
 
could not be harvested pending agreement in the services negotiations.  He said that Members were already facing the consequences of the delay in su ccessfully concluding the DDA.  He said that when 
Members could not achieve the desired level of trad e liberalization in the WTO, they would seek to 
secure their trade interests through bilateral and re gional trade agreements.  The number of free trade 
agreements was rapidly increasing, which dimini shed the significance of the multilateral trading 
system.  This process of fragmentation was not to the benefit of small economies and often 
developing countries which could lack the administ rative capacity and negotia ting muscle would not 
keep up with preferences given to others under FTAs.   The core principle of international trade, 
namely the most-favoured nation principle, was quickly being reduced to provide least-favoured 
nation treatment.   
164. The representative of Norway said that no one disagreed that the negotiations on trade in 
services should be conducted with a view to promoti ng the economic growth of all trading partners.  
In this respect, it was particularly important to in tegrate developing countries in international trade in 
services.  He reiterated the modalities for the speci al treatment for LDCs adopted by the Special 
Session of the Council for Trade in Services adopted on 3 September 2003.  He said that it was 
particularly in consideration of the developing c ountries that Norway sought to see their active and 
constructive participation in the negotiations.  Moreover, the presentations by the OECD and 
UNCTAD earlier in the meeting clearly built the case for undertaking substantial commitments in 
services and in particular in sectors that were an in tegral part of economic activity in other areas such 
as telecommunications, transport and financial services .  Openness, predictability and stability in trade 
in services was paramount to attracting investment and improving economic development.  In fact, 
contrary to the conventional give -and-take wisdom of traditional trade negotiations, Members should 
commit themselves out of sheer self-interest.  He said  that one idea that might hasten progress in the 
negotiations would be to encour age friends and groups to tabl e specific proposals on commitments, 
and perhaps even model schedules.  The statemen t tabled on air transport services was a good 
example of how friends groups could contribute to the Council's work.  He said that the responsibility 
for progress in the services negotiations remained w ith Members themselves, and that no other way 
forward was available other than Members to table high quality and meaningful offers.  His 
delegation expected at least a quality of offers wh ich would represent, to a much larger extent, the 
present level of liberalization amongst Members.  The quality of offers needed to be assess against the 
background of existing commitments as well as the im proved offers.  The February cluster would be 
crucial and of particular impor tance considering that it would be the last opportunity for many 
Members to consult bilaterally before submitting their revised offers.   
165. The representative of Uruguay
 said that his comments echoed many of the points made by the 
representatives of India and Norway.  He said that some of his comments under this item related to agenda items G and H.  Seeking the Chairman's indul gence in this regard, he said that, as this was the 
last Special Session in 2004, it was important and necessary to make a brief statement to summarise 
the message his delegation thought it was appropria te to convey to the Chairman of the TNC and 
about the progress achieved.  He said that Uruguay ha d expressed its concern in different fora that in 
the course of the DDA the principle of single undertak ing needed to be borne in mind.  This was 
particularly valid in the case of services.  He thought that the compliance with the goals set for 
services and in particular with the May 2005 date as the benchmark for the presentation of revised 
offers was particularly relevant and important  for the negotiations as a single undertaking and 
required a strong commitments on the part of all.  The commitments were both technical and political 
and therefore he concurred with the sense of urge ncy that the Chairman had made in his opening 
remarks.  Like others, Uruguay was conscious of the technical aspects of the process ahead.  
Nonetheless, he said the political decision of the Members and the co-operation of the WTO system needed to exhibit their best prac tical results.  He said that no negotiations would be possible if 
services were disaggregated to processes with di fferent speeds and which might frustrate the 
negotiations as time wore on.  He said that ther e would be no negotiations unless a critical mass 
existed in requests and offers, particularly for the modes which were of most interest to the 
developing countries, unless this was done in the s hortest time possible.  There would be no  TN/S/M/13 
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negotiations unless Members agreed, within the forthcoming months, that a qualitative leap forward 
was necessary so that individually and collectiv ely movement forward could be made.  The 
representative expressed his gratitude and congratulations to the Chairman for his work.   
166. The representative of China  welcomed the initial offers submitted by Malaysia and to be 
submitted by Egypt.  He said that market access ne gotiations would be accelerated if Members, as 
required, submitted their initial offers  as soon as possible.  He said th at his delegation appreciated the 
efforts made by the Members, especially deve loping Members and LDCs, in overcoming difficulties 
in tabling their offers.  China also welcomed the joint statement on market access submitted by 16 
Members that called upon Members to engage subs tantively in the request -offer process.  With 
reference to the revised offers, China highly exp ected that the developed Members could undertake 
more substantial commitments in the sectors and m odes of supply of export interest to developing 
Members, for instance in construction services, maritime transportation services and mode 4.  He did not want to enter into any discussion about a certain  mode of supply being of greater importance than 
another and stated that his delegation held the view that all modes were equal.  It could not be said 
that one mode was more important than any other,  however, China believed that, in terms of market 
access, mode 3 was relatively more sophisticated while  the others remained underdeveloped.  In order 
to achieve a fair and balanced outcome and the development objective of the round, China believed 
that more attention needed to be paid to the m odes and sectors of trade interest to developing 
Members.  China appreciated the contribution made by Members at the informal meeting on mode 4 liberalization.  Discussions on mode 4 would facilitate  the preparation of revised offers.  China hoped 
that the outcome of the discussions in this regard could be truly reflected in  Members' offers.  He 
reiterated that the market access negotiations in tr ade in services was a significant component of the 
market access negotiations in the DDA.  He hoped that a positive outcome in the market access 
negotiations in services could be achieved.  He said that over the course of the cluster China had held 
bilateral consultations with Members such as Switz erland, Norway, Korea, Mexico and Japan.  In 
these consultations, China had reiterated that the cu rrent level of commitments made by China as a 
new Member and the difficulties in implementing th ese commitments should be taken into account by 
all requesting Members.  He explained that the si tuation in China was different, as China had made 
substantive commitments in the course of its access ion rather than simply committing to an existing 
situation.  Consequently, China was confronted  with greater difficulties in implementing these 
commitments.  China had moved into a crucial stage of implementing its commitments and many 
important sectors such as banking, insurance and distribution would be completely opened by the end 
of 2004 and within two years.  The challenges for the Chinese government to implement these 
commitments were unprecedented.  He said that in spite of these difficulties, China would continue to 
engage substantively with other Members in the request-offer consultations as well as GATS rules 
negotiations with a view to achieving a positive outcome in the round.   
167. The representative of Switzerland
 welcomed the announcements by Malaysia and Egypt and 
said they were positive signals.  He referred to th e statements made by these countries that requests 
were not forgotten and that they had the intention to keep track of them, which he said was equally 
important.  Referring to Job(04)/176,  he recalled that it was a joint statement on market access in 
services, which was co-sponsored by 16 Members.  He said that the timing of the joint statement was 
not a coincidence, and as delegations were aware,  there remained six months until the May deadline, 
12 months until the Hong Kong Ministerial and one cluster remaining until May.  It was in this 
context that the 16 Members that co-sponsored the paper had decided that it was important and timely 
to make the statement.  It was important to give the best possible opportunity to all Members to participate effectively in one important aspect of the negotiations, namely the request-offer process.  
By ensuring the active participation by all Member s, an opportunity would be given to everyone to 
contribute substantially to the services negotiations.  By doing so, they would contribute to the Doha 
Development Agenda and outcome.  The statement had to be seen in this broad framework and 
bearing the question in mind as to how best or ganize work on the road to a successful Sixth 
Ministerial Meeting.  In this regard, he said that the appropriate level of ex change of views and of 
interaction between Members in the limited amount of  time remaining was required, and in particular TN/S/M/13 
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between experts from capitals in all sectors and mod es.  It was only by doing so that Members would 
be able to engage substantially in the request -offer process.  He said it was Members' collective 
responsibility to have revised offers in May that we re of high quality in te rms of substance and in 
terms of format and formal aspect.  He underlin ed that this was one aim of the paper.   
168. The representative of Switzerland said that a second point raised in the statement concerned 
initial offers.  It was crucial for Members who ha d not done so to table their initial offers 
expeditiously, as had been done over the course of the meeting by three Members.  The co-sponsors 
were concerned that a lack of initial offers coul d have a negative impact on the outcome of the May 
benchmark, both in terms of the quantity of the revi sed offers, and more importa ntly, in terms of their 
quality.  The membership needed to state clearly  what was the level of ambition sought in the 
negotiations.  He said that he believed that initial of fers at the current stage was a key indicator.  A 
third point raised in the paper concerned requests th at some Members might wish to submit in the near 
future.  He was aware that there had been some delays in submitting requests.  Underlining the tight 
timelines ahead, he said that the present was the last opportunity to table requests.  The co-sponsors believed that it was crucial at the present juncture for all to assess more clearly their priorities and to 
flag the ambitions they have for the negotiations.  He said that the joint statement had been made 
without prejudice to any of the other important issu es that needed to be dealt with in the services 
negotiations.  He was certain that all Members had an interest in other dossiers, and in particular in 
rule-making.  However, he said that all Members needed to remain aware of the structure of the 
market access process, including the Special Sessi on which was a useful and effective forum.  
Important work was accomplished in bilateral consulta tions.  It was against this background that it 
seemed to him that a special emphasis on the mark et access negotiation was needed.  The purpose of 
the paper was to assist the membership to bette r organize itself and to focus on making the best 
possible use of the time remaining until the May benchm ark.  It also sought to focus attention and 
awareness of Members on the importance of prepar ing and making improved commitments in sectors 
and modes of supply of interest to the membersh ip and to negotiate such commitments.  Members 
were encouraged to proceed through the bilate ral request-offer process, informal groups and the 
Special Session, and to communicate their priorities fo r offers to other Members by the conclusion of 
the next cluster.  He said that this was the main  message, namely, that one cluster remained and two 
months to prepare for it in capitals, that it was key that the cluster be a full success, and that all the 
interaction needed in order to have meaningful an d quality offers in May be concentrated during the 
February cluster.  He thanked the delegation of China which had indicated its support for the joint 
statement, as well as the delegations of India a nd Uruguay whose statements he understood to follow 
the same direction as the joint statement.  He ho ped that more positive statements would be made on 
the very important process that lay before Members.  
169. The representative of Brazil
 welcomed the announcements fro m El Salvador, Malaysia and 
Egypt on the presentation of their initial offers.  He indicated that Brazil had held bilateral 
consultations with Canada, European Communities, United States, Norway, New Zealand, 
Switzerland, Australia, Mexico and Japan over the course of the cluster, and had not been able to meet 
with Chile as intended owing to time constraints.   Brazil thanked the co-sponsors of Job(04)/176, 
which highlighted some important elements of the services negotiations which Members would have 
to consider in delineating the Council's programme in 2005 towards the Sixth Ministerial Meeting.  
Brazil shared the views expressed in the first paragraph about it being of interest to all Members to 
participate in the services negotiations, both to secu re a positive outcome in services and in support of 
wider DDA objectives.  Brazil noted with satisfaction the conclusion implicit in this paragraph that 
services could not be seen in isolation from other areas of the round.  Brazil also believed that, in 
accordance with the July package, May 2005 was an important benchmark in the market access 
negotiations.  He recalled, however, that the date for the circulation of the revised offers was one of a 
series of recommendations relating to services that we re incorporated in the General Council decision.  
He said that Annex C of the July package contai ned an expanded list of items that the Council for 
Trade in Services had to deal with in order to bridge the gaps and find the necessary equilibrium 
within the GATS negotiations.  Apart from the refere nces to initial and revised offers, Annex C also  TN/S/M/13 
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reiterated the call for higher quality of offers partic ularly in sectors and modes of supply of export 
interest for developing countries.   
170. The representative of Brazil sought to cite a Secretariat note recently circulated in the 
Committee for Trade and Development, which c ontained an interesting assessment about the 
circumstances around trade in general and trade in ser vices in particular.  It contained an interesting 
analysis on how developing countri es had evolved in terms of their integration into the trading 
system, and in particular in services.  Referring to  paragraph 30 of this document, he said that the 
share of developing economies in world trade in  services had declined over the period 2000-2003 as a 
result of a smaller year-on-year increases compared to  the rest of the world; while world exports of 
commercial services had increased on average by 7 per cent annually between 2000 and 2003, 
developing economies' exports only increased by 5 per cent per year.  He said that he thought this was 
important because, in May, one of the parameters was how the revised offers would take into account 
the export interests of developing countries.  He sought  to share Brazil's expectations in this regard.  
He said that the July package recognised the importa nce that developing countries attributed to mode 
4 as had been eloquently underlined by the representa tive of India in his comments.  The July package 
renewed the appeal for further engagement of the membership in addressing rule-making within 
GATS.  The July package stressed the importance of technical assista nce to enhance the participation 
of developing countries in the negotiations.  He said  that, as a corollary of this last point, the July 
package mandated the Special Session to review "t hese" negotiations, and he underlined that the use 
of the demonstrative pronoun "these" in order to ma ke it clear that this review would encompass 
market access and rule-making alike, and include possible recommendations for both.  The statement 
in Job(04)/176 did not mention the technical work  that Members needed to undertake on classification 
and scheduling issues.  Brazil attributed great importance to these two issues.  Firstly, a clear 
understanding of what would be negotiated would be essential.  Secondly, how commitments should be scheduled also needed to be determined in order to ensure clarity, certainty and comparability.  To 
illustrate the point, he recalled that recent pane ls related to GATS had challenged the prevailing 
assumption about the flexibility available to developi ng and developed countries to handle freely their 
classification and scheduling methodologies.  Citing a recent panel related to GATS, he said, "WTO 
negotiators sometimes praise the political wisdom  of resorting to 'constructive ambiguity' as a 
diplomatic means of enabling consensus on WTO rules.   The limited legal task of dispute settlement 
findings is very different.  It is to decide on the legal claims, in a particular dispute, based on the 
'ordinary meaning' of the WTO provisions concerned 'in their context' and in light of the 'object and 
purpose' of the agreement."  He said that he cited th is passage in order to underline, in the negotiating 
context, the legislating role of dispute settlement because the membership had been quite reluctant to 
address what Brazil had called the grey areas of the GATS.  His delegation wanted to renew the involvement of the membership in the subsidiary bodies and particularly in the Committee on Specific 
Commitments in order to bridge these gaps and rein force the underpinning elements of the market 
access negotiations.   
171. The representative of Turkey
, referring to Job(04)/176, said that that his delegation supported 
and associated itself with this joint statement by this  group of Members and requested that Turkey be 
included in the list of co-sponsors.  The elements  of the joint statement had been voiced by his 
delegation, formally or informally, within the GA TS context and other relevant WTO bodies.  Turkey 
had been positively and constructivel y engaged in the services trade negotiations since their inception.  
It was in this spirit his delegation had been e ngaged in the request-offer process, the outcome of 
which was reflected in its initial conditional offer submitted in August 2003.  Turkey believed that 
services trade liberalization held the key to future development of developing countries.  In this 
regard, its experience had been a positive one.  Henc e, Turkey called on and urged all Members which 
had not submitted their initial offers to date to do so as soon as possible and engage in the services 
trade negotiations so as to attain the objectives of th e DDA negotiations in gene ral.  He welcomed the 
news of the submission of new offers.  TN/S/M/13 
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172. The representative of Argentina
, referring to the joint statement contained in Job(04)/176, 
thanked the co-sponsoring delegati ons and expressed his delegation's support for the statement that it 
was in the interest of all Members to participate in  the negotiations on services.  However, he said that 
the possibilities for active involvement in the request -offer were not equal for all Members.  This 
concerned the offers of a number of Members.  He said that there was a lack of resources for 
participating actively in the negotiations for many de veloping countries.  While this was not an excuse 
for not participating in the negotiati ons, they were elements that need ed to be taken into account when 
speaking about encouraging more active participati on among Members.  He said that another element 
was that active participation woul d be dependent on the perspectives for progress in other negotiations 
and remarked that the Special Session could do little in this regard.  He said that a possible solution 
would be to promote a more inclusive process th rough active and substantiv e participation in the 
multilateral aspects of the process.  This would provi de a clearer way forward and allow for responses 
to some of the specific offers put on the table.  More active analysis from the Secretariat could 
encourage the participation of Members with fewer resources.  This would help in terms of assessing 
the scope of changes to offers, particularly wher e the scope of changes in schedules was not always 
clear.  The quality of offers was not only linked to increased commitments but to the form in which 
they were made.  The use of the scheduling guide lines and the reference to recognised classification 
systems would also facilitate the high quality of offers.  It would also promote more informed 
participation by all Members.  The delay in the rules-negotiations on market  access he said should 
also be taken into account.   
173. The representative of Hong Kong, China  welcomed the initial offers from Egypt, El Salvador 
and Malaysia.  He sought to start with a rather obvious observation that the services negotiations were 
a key pillar in the DDA and that market access w as a necessary, indeed vital, component of the 
services negotiations.  Services were increasingly importa nt in global economic and trade terms.  He 
said that this had been overwhelming confirmed by  various studies presented in the Council.  He said 
that he had been delighted to see this point highlight ed by the representative of India.  He agreed with 
the analysis of other Members that the level of am bition in the offers on the table was too low.  He 
said that if the same level of ambition was to apply to agriculture or other areas of negotiations as had 
been witnessed in the Special Se ssion, then he seriously doubted whether the proponents in other 
areas of the negotiations would be signalling their a pproval.  It was important for all Members that 
progress in the areas of interest to all make progress at roughly the same level so that the agenda could 
move forward to a successful conclusion.  He observe d that in devising the request-offer approach for 
services in the past, many had thought that this  approach would avoid the traditional and often 
unproductive approach of tariff negotiations.  He thoug ht that it would be unfortunate if that spirit 
would be abused and allowed to encourage larger trading partners to seek refuge in sub-optimal 
regional trading arrangements.  As had been under lined by others on numerous earlier occasions, he 
said that it was important that the negotiations procee d in an atmosphere of trust and that all Members 
seriously engage in services negotiations, as in other areas of the negotiations, with a consistently high 
level ambition across the spread of the negotiations in  order to bring results in all areas forward in a 
balanced manner.  This would enable the Council to  signal in advance to ministers that there was 
scope for a substantial outcome at the next Ministeria l meeting.  Elaborating on this point, he said that 
it was important that Members aimed for concrete  results, namely, substantive improvements in 
market access commitments.  A starting-point was determined and substantive improvements sought.  
Credibility needed to be injected in to the process by injecting substan ce.  He recalled that the revised 
offers were due in May 2005 and said that this w ould provide an opportunity for Members to "take the 
temperature" of the negotiations and to judge the level of real ambiti on.  He said that it was important, 
not only to send collectively a signal to ministers on th at occasion, but for them to be able to use the 
evidence of an ambitious potential package to send a positive signal to  their domestic constituencies.   
174. Turning to the rules negotiations, the representa tive of Hong Kong, China affirmed that rules 
for his delegation was an important part of the negotiations.  Hong Kong, China had been a firm 
advocate of a rule-based multilateral system which had informed its approach to the negotiations.  He 
assured Members that rules were not sought for their ow n sake, but rather were essential to ensure that  TN/S/M/13 
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the effectiveness and certainty of market access commitments won through hard negotiations was a 
reality.  He said that it was not meaningful to have rules without substantial market access 
commitments to secure and substantive progress was required in both.  Refe rring to the organization 
of work, he said that his delegation would reserve its comments for that agenda item, but said that Hong Kong, China was committed to proceed with ne gotiations in all appropriate formats, including 
bilateral, informal groups or the Special Session.   
175. The representative of Colombia
 said that she wished to touch upon number of points raised in 
the joint statement by a group of Members in Job(04)/176, as well as on some events related to progress and the organization of future work.  She began by thanking the co-sponsors of the joint 
statement.  Her delegation wished to highlight a number of points contained in it that were, in 
Colombia's opinion, relevant to the process.  She said that a numb er of elements had also been 
omitted in Colombia's view and would need to be taken into account in the organization of work in 
the coming months.  She said that Colombia welcomed  the appeal made in the statement with respect 
to the importance of obtaining meaningful and high -quality revised offers.  In Colombia's opinion, 
this objective did not depend exclusively on the pr esentation of additional initial offers.  It also 
depended on the feasibility of securing clear indicati ons which would address the concerns which her 
delegation had pointed out throughout the negotiations  and which to date had been omitted from the 
initial offers and in some cases from the multilatera l discussions.  She said that these signals should 
include the interests in market access that had be en expressed by developing countries, including 
Colombia, and should also clarify horizontal i ssues which directly or indirectly affected the 
negotiations.  She appealed in this regard to th e co-sponsors of the statement.  Her delegation was 
convinced that the participation of the developi ng countries in the negotiating process in terms of 
market access as well as horizontal t echnical issues could generate ma jor benefits and positive results.  
However, her delegation appreciated the difficulties i nvolved in this process, especially owing to the 
limited capacity available to some countries, and pa rticularly the developing countries, which was a 
factor that limited their participation.   
176. The representative of Colombia said that, while it was true that the participation in the 
negotiations on trade in services depended largely on th e individual interest of the Member, collective 
work was indispensable to achie ve success.  This collective work permitted a greater degree of 
confidence and lessened the gap between defensive and offensive interests of the Members.  It was for 
this reason that she sought, through her intervention, to draw attention to the urgent need to send out 
clearer signals to inform the process.  This would help promote the interest of all Members in a 
mutually advantageous manner as well as an overall  balance between rights and obligations as laid 
down in Article XIX, including with respect to the fl exibility contained in paragraph 2 of Article XIX.  
She said that Colombia was an importer of services and had comparative advantages in a limited number of sectors.  In spite of this, her country had made a considerable effort to pay due attention to 
the negotiations.  Her delegation sought to achieve new opportunities for Colombian service providers 
and render more effective existing opportunities.  With  this goal in mind, her country had contributed 
actively throughout the process, had submitted various  negotiating proposals, had sent initial requests, 
and had tabled a substantive initial offer.  She sa id that the response of major trading partners, 
particularly with regard to the major services expor ters, did not satisfy Colombia's expectations to 
date.  Her delegation was confident that the im proved offers and the work that Members would 
achieve in the coming months would cover these interests and would satisfactorily respond to 
Colombia's concerns.  In this regard, she said that liberalization of market access in sectors and modes 
of export interest to developing countries should be  incorporated.  She urged the Members to make an 
effort on the critical issues involved in the negotia tions.  To this end, she said that Members should 
take maximum advantage of the time remaining so as to address market access issues in parallel with 
horizontal issues including GATS disciplines and classi fication issues.  In Colombia's opinion, the 
elements contained in Annex C of the July pack age were parameters whic h should be taken into 
account when organising future work and kept in mind in preparation for the Ministerial meeting in 
Hong Kong.  She said that it was necessary to stru cture this work in a manner which would give TN/S/M/13 
Page 52  
 
proper impetus without harming transparency and inclusiveness in the process.  Her delegation was 
flexible and ready to work in tensively in the coming year.  
177. The representative of Chile
 said that her delegation had co-sponsored Job(04)/176 because it 
believed it was essential to move to the next stage of  the negotiations at the present juncture.  She said 
that the joint statement had a practical goal to help  organize work in an effective manner in the period 
between the present and the presentation of revised o ffers.  She said that the objective was to ensure 
high quality offers in terms of content and format  and would respond to the priorities signalled by 
Members in various fora, and in particular those of  developing countries.  She noted that the content 
of the job document was not very different from that on the services offers agreed to by APEC 
Ministers at their most recent meeting.  She said that the meeting in which 19 members participated 
had been very interesting because several ministers had referred to services.  This was novel since on 
other occasions no mention had been made of servi ces or else in summary fashion.  She recalled 
ministers' interest in services as laid out in their statement, in which they "Highlighted the growing 
importance of services trade and called on all members to submit improved revised offers by May 2005.  Members, which had not done so, should table initial offers expe ditiously."  She said that this 
interest of the Ministers was reiterated in various bilateral meetings and, more importantly, the issue 
had been taken up by the leaders who, in their decl aration "agreed [t]o work with a renewed sense of 
urgency to achieve a balanced overall outcome that would meet the high levels of ambition set for 
these negotiations [...p]articularly in the core ar eas of agriculture, non-agricultural goods, services, 
and rules, the outcome should be substantially greater market access and fewer distortions."  Chile 
and many other Members had been given a task for which her country was willing to accomplish with 
full efforts in the coming months.   
178. The representative of Chile wished to underline two additional points.  Firstly, she agreed 
with others that Members were at a critical moment in which they were preparing their revised offers, 
which should give momentum to the negotiations a nd allow them to reach completion.  While it was 
crucial for all Members to present their initial and revised offers, and in this regard she thanked 
Malaysia, Egypt and El Salvador, she said that a greater responsibility lay with those who played a 
main role in trade in services.  She therefore urge d the main exporters of services to signal clearly in 
their revised offers that they had heard other Members and would demonstrate a willingness to meet 
their requests.  Without this signal, she said that it would be difficult to improve participation in the negotiations and find the true trade-offs in the en d.  Secondly, she said that Chile was committed to 
the preparation of disciplines and regulations in GATS so as to achieve greater legal certainty and 
transparency in commitments.  She said that in  December 2005 Members should be clear about how 
work could move forward in the WPDR and the WPGR  with a view to achieving concrete results at 
the end of the negotiations.  Chile agreed with th e comments by Brazil and Argentina about the need 
to deepen work on classification and scheduling of co mmitments.  She said that the last meeting of the 
CSC had been a productive one and that  it would be useful to have greater flexibility in terms of the 
time allotted to some of the subsidiary bodies in order to take full advantage of  the time available and 
discuss in depth many of the issues.  With respect  to transparency, she reiterated her delegation's 
interest in this topic and urged Members to make  their initial and revised offers public documents.  
This would favour and improve dial ogue and it would support progress in the negotiations.  Chile also 
thought that greater transparency should apply to groups of friends in order to have improved 
knowledge of the status of discussions in all areas.   She urged these groups to put forth the proposals 
or conclusions to the Special Session or the subsidia ry bodies so that all could participate in these 
discussions.  She said that greater transparency a nd more discussion would also increase the visibility 
of services which to date had been in the shadow  of agriculture and NAMA.  Keeping in mind the 
large amount of technical work ahead, she said that ways and means to improve visibility, incorporate 
the private sector and involve political authoriti es needed to be found.  She said that progress by 
December 2005 would require political will.  
179. The representative of Korea
, noting that his delegation was a co-sponsor of the 
communication, wished to stress the importance of the market access aspect of the services  TN/S/M/13 
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negotiations.  Together with rule-making, market access was one of the most important elements in 
the services negotiations.  He said that the basis of  the market access negotiations was a sufficient 
number of offers of good quality.  In this spirit, his delegation congratulated  El Salvador, Malaysia 
and Egypt on the submission of their initial offers .  Korea, as a developing country, had already 
submitted its initial offer for which trading partne rs had expressed their appreciation for its good 
quality.  He said that Korea was preparing its revi sed offer which it hoped to submit in line with the 
timeframe set out in the July decision.  According to Korea's experience, the preparation of the offer 
was not an easy task, but rather was time and human  resource intensive.  He underscored paragraph 3 
of Job(04)/176 which emphasised the preparatory work from the present until the next cluster of 
meetings.  He agreed that it was important to change gears and accelerate the negotiating process.   
180. The representative of Thailand  welcomed the indication by El  Salvador, Egypt and Malaysia 
that they were submitting their initial offers a nd thanked the co-sponsors of the joint statement 
contained in Job(04)/176, the general thrust of which her delegation could broadly support as her 
country also sought a positive outcome on services and to ensure that this outcome was in support of 
wider DDA objectives.  She said that trade in services had received a relatively equal amount of 
attention from her capital compared with other key areas of the round, namely, agriculture and 
NAMA.  Thailand nonetheless sensed that certain key el ements did not appear in the statement, which 
were inseparable aspects of market access.  Since th e levels of market access were influenced by a 
wide range of government regulations, Thaila nd believed that rule-making, including possible 
disciplines under Article VI:4, should take priority.  In addition, classification and scheduling were 
fundamental issues which sustained and bolstered the quality of specific commitments.  She said that 
rules and principles relating to the issues that sh e had just mentioned were under preparation and 
differences among Members were not settled.  Her de legation did not think that Members could not 
meaningfully speak of high quality and meaningful  revised offers if the specific commitments 
contained in the offer were subject to conjectural vari ations caused by a lack of  rules.  She wished to 
take the opportunity to reconfirm Thailand's commit ment to constructive participation in the services 
negotiations in order to achieve a ba lanced outcome in the Doha Round. 
181. The representative of Singapore  expressed his delegation's appreciation for the offers 
submitted by Egypt, El Salvador and Malaysia.  He also wished to express his delegation's 
appreciation for the detailed statements made, partic ularly by China and India.  He concurred with 
comments by India that services was becoming a major driver of economic growth of all economies.  He also noted the statement's timely and important  reminder that the services market access pillar 
should be treated in a similar manner as other market access pillars of the DDA.  Noting that his 
delegation was a co-sponsor of the joint statemen t under discussion, he said that the essence of the 
statement referred to the organization of work to  facilitate progress with respect to the General 
Council decision relating to the submission of revised  offers by the May 2005 benchmark.  Singapore 
recognised that the May benchmark was but one of the various decisions by the General Council.  
Singapore in particular recognised the other elemen ts of the services negotiations as highlighted in 
Annex C of the General Council decision.  It went  without saying that all decisions and the DDA 
mandates were important for the success of the ove rall DDA negotiations.  It was natural for Members 
to make linkages between and within issues in a ne gotiating context, however, if progress were to be 
made in the various elements of the DDA, it would also be useful to treat each element of the DDA on its own merit.  As his delegation had indicated in the past, it would continue to participate 
constructively and would do its part to fac ilitate progress in the various aspects of the DDA 
negotiations, including services, both market access and ru les.  It was with this constructive spirit that 
Singapore was approaching the May 2005 benchmark for revised offers.  He stressed that the 
statement should not be seen in any way to accord lesser importance to the various rules negotiations.  
He reiterated that this was not the intention of the statement.  He clarified that the statement focused 
purely on the organisational aspects of the May 2005 benchmark.  Singapor e had co-sponsored the 
statement in order to highlight the importance of quality market access offers, including the revised 
offers.  However, Singapore wished to stress th e General Council decision relating to rules.  In 
keeping with this mandate, Singapore was actively e ngaged in the various rules negotiations and, like TN/S/M/13 
Page 54  
 
other Members, Singapore had submitted technical pa pers on all four rules issues with a view to 
facilitating progress in these negotiations.  His dele gation looked forward to working with other 
Members to forward the rules negotiations.  In c onclusion, his delegation looked forward to a good 
outcome in both market access and rules pillars of the services negotiations.  
182. The representative of Japan
, like other co-sponsors of Job(04)/176, said he wished to stress at 
the present juncture the importance of facilitating th e process on market access and in particular initial 
offers and revised offers.  In this context, Japan jo ined others who had welcomed the initial offers to 
be presented by Egypt, El Salvador and Malaysia.  Although the initial offers had been increasing, he 
noted that there remained others which had not been presented and he encouraged those Members, 
which he was aware were working very hard, to su bmit their initial offers as soon as possible.  He said 
that any need for assistance from the Secretariat should be requested and provided.  He said it was 
also important to make good preparations for the re vised offers in May 2005.  For the purpose of 
facilitating this process, he said it was important for Members, including his own, to present their interests to their trading partners so that the revised  offers could attain a high quality in time for their 
submission in May.  His delegation also attached importance to the negotiations on rules, however, it 
felt that the linkage between the two should not be stressed so as to create negative linkages.  Japan 
understood that the negotiations on rules were very important and it sought to actively participate in 
the negotiations, in particular the negotiations on di sciplines on domestic regulations so that concrete 
results would be achieved in the current round.  Referring to the Chairman's introductory comments 
on preparations for the meeting in Hong Kong, he agreed that this meeting would be extremely 
important for the negotiations.  He further agreed th at a substantial package needed to be achieved and 
that Members needed to begin to think about the shap e of such a package.  He thought that it might be 
useful to have informal discussions as to what th is package would consist of and said that Japan 
would be willing to participate in any such discussions.   
183. The representative of the European Communities
 wished to express his delegation's shared 
sense of urgency and concern about the status of the services negotiations.  He said that the services 
negotiations, in his delegation's view, was la gging behind other negotiating areas.  This was 
particularly worrying for two reasons.  Firstly, ser vices were a key pillar of the DDA and a substantial 
outcome in this area would weigh heavily in the European Communities' determination as to whether 
overall balance had been achieved in this round.  Secondly, the particular nature of the services 
negotiations was a source of concern.  His delega tion believed that it was important to realize the 
different nature of the services negotiations:  they  covered a wide range of sectors and negotiations 
would have to address very complex regulatory issues.   He underlined that these were not issues that 
could not be addressed at the last minute but re quired substantial preparation.  The representative 
stated that Members faced two challenges at the pr esent juncture.  The first was the lack of initial 
offers, in particular from a number of important developing countries.  In this connection, he 
welcomed the announcements by Mala ysia, Egypt and El Salvador re garding their initial offers and 
looked forward to seeing these offers and engaging with these countries on their content.  The second 
aspect was the minimal quality of many offers and th e resulting imbalance in the offers currently on 
the table.  In the European Communities' view Members faced a rapidly closing window of opportunity to redress the situation and were required to ensure a change of gear in the negotiations.  
He noted that one cluster remained before the Ma y 2005 deadline in which to discuss and help ensure 
that the revised offers reflected a higher level of ambition from Members.  He said that all bore 
responsibility for organising the work in a way conduci ve to moving the negotiations forward.  It was 
for this reason in particular that his delega tion had supported the organization joint statement 
presented by Switzerland.  He said that the Eu ropean Communities intended to submit revised 
requests to its trading partners in the near future .  The preparation of these requests had provided his 
delegation with an opportunity to revisit its initia l requests and to refocus and adjust them as 
necessary.  The European Communities would also begin shortly on the EC revised offer and was 
firmly committed to submitting it by the May deadline.   In this regard, he added that it would be 
difficult for the EC to move further or perhaps ev en maintain the current level of ambition in the 
services negotiations and perhaps other areas as we ll if his delegation continued to see little sign of  TN/S/M/13 
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movement from partners in the negotiations.  His delegation was encouraged by work underway in the 
friends groups and would do its part to ensure that th e results of this work became available and could 
be harvested, where possible, in time for the presenta tion of revised offers.  He said that May would 
present an important milestone and w ould provide all Members with an opportunity to take stock as to 
whether these negotiations were beginning to catch  up with other negotiating areas and to judge the 
level of commitment from all Members to secure an overall balanced outcome in the DDA.  The 
European Communities recognised the development di mension to the round and had tried to address 
issues of particular interest to developing countries in its initial offer such as mode 4.  He stressed, in 
this context, that mode 4 did not require move ment solely from developed countries, but that 
developing countries also had an effort to make be cause of the south-south dimension of mode 4.  His 
delegation also stood ready to con tinue its active engagement in the rules issues, although it expected 
others to do so as well on rules of particular  interest to the European Communities, such as 
government procurement and domestic regulation.  Finally, he acknowledged the capacity constraints 
that many developing countries faced and encouraged  the Secretariat to continue its critical work in 
the area of technical assistance.  He said that  the European Communities had provided support in 
2004 to the International Trade Centre for its techni cal assistance and was looking into continuing this 
work in 2005. 
184. The representative of Peru  expressed his delegation's gratitude for the initial offers from 
Malaysia, El Salvador and Egypt.  He shared th e Chairman's concern that some Members had not 
presented their initial offers.  Even though there were  some difficulties, particularly in developing 
countries, his delegation confirmed that it would make all efforts to submit its revised offer.  He said 
that all areas of services were important and that a discussion of which were more or less so was not 
productive.  Rather, Members needed to recognise th at more attention should be paid to sectors and 
modes of interest to developing countries becau se Article IV and the July package set out clear 
guidelines in this regard.  He said that mode 4 and t ourism were areas of particular interest to Peru.  
He said that overall the commitments on mode 4 should be the subject of attention in the next phase of 
the negotiations.  He said that the May 2005 deadline would be an opportunity to submit such offers 
and would bolster the credibility of the process.  While he shared the concerns outlined in 
Job(04)/176, he concurred with othe r delegations that account needed to  be taken of the fact that for 
many Members, including Peru, market access was very important but was not the only question in 
services.  Improved quality of access also needed to be pursued through work on standards and 
classification.  He agreed that dispute settlement findings did not necessarily reflect the desires of 
Members.  He said that market acc ess commitments should be reflected  in generous offers and this 
regard he agreed with others that by May 2005 Members should have a clearer idea of progress in the 
next phase of the negotiations.  He said that he hope d that the offers would be in line with paragraph 
15 of the negotiating guidelines for the negotiations.  Peru hoped that a better outcome for the areas of 
special interest for developing countries would be po ssible, that this would be reflected in bilateral 
negotiations, and that progress in standa rds and classification would occur.  
185. The representative of Cuba  thanked the co-sponsors of Job(04)/176 for having put forward 
their interests and priorities.  She noted, however, that with respect to the process of negotiations on 
services and in the report of the last meeting, the English version of Cuba's statement was not properly 
reflected.  She said that she did not have a lot of time to read the records, however, the statements by 
Cuba appeared to be very short.  She request ed that the Secretariat avoid summarising Cuba's 
statements, as this did not appear to be the same treatment given to other colleagues.  Since Cuba's 
positions had already been put forward, she said that a balance of interests in all of the negotiations 
should be pursued.  She said that her capital was ma king full efforts to put forward its offer as soon as 
possible.   
186. The representative of South Africa  wished to make a few re marks about the review of 
progress and issues related to the organization of futu re work.  South Africa wi shed to congratulate 
El Salvador, Egypt and Malaysia for the announcement of the submission of their initial offers.  She 
was aware of the hard work invo lved in preparing an initial offer and genuinely commended them for TN/S/M/13 
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this work.  She also wished to  thank the delegations that had prepared the joint statement in 
Job(04)/176.  South Africa wished to highlight that  it was important that all countries, both developed 
and developing, participate activ ely and substantively in the request-offer process.  Thus, South 
Africa agreed with the statement that meaningful and high quality offers were important in securing a 
positive outcome of the services negotiations.  Nonetheless, South Africa wished to stress a number of 
points.  Firstly, she said that the considerable te chnical difficulties and the resource intensive process 
of properly managing the request-offer process could not  be overlooked.  She said that the challenges 
of efficiently coordinating intra-governmental i nputs into the request-offer process and consulting 
adequately with private sector and other inter ested stakeholders, such as NGOs and labour unions, 
could not be ignored.  She said that South Africa had had to build capacity in the form of structures 
and fora to manage the process.  It had been a great challenge for a young democracy where all 
stakeholders demanded to be cons ulted on every issue and hence the process of consultation could not 
be aborted or overly hastened.  The input of dom estic stakeholders was necessary since, for her 
government, trade was a means to an end.  It w as committed to the process to the extent that it 
supported South Africa's developmental objectives.  She had reiterated these points for the sake of 
communicating the important point to South Africa' s trading partners that her country had faced 
genuine difficulties in preparing its requests and offe rs.  She further reiterated that a lack of active 
participation on South Africa's part was not a lack of interest.   
187. Secondly, with regard to the higher quality of offers, the representative of South Africa said 
that her country had examined some of the initial o ffers tabled in the context of the DDA negotiations 
and the wider history of services negotiations, and a cu rsory glance at the offers by developed country 
partners since the Uruguay Round indicated that sp ecific commitments made were generally in the 
areas of comparative advantage for industrialised countries and included financial services, business 
services and environment services.  These commitments did not reflect the comparative advantage that developing countries had in the labour inte nsive services such as construction services and health 
services.  She recalled earlier references to the asymmetrical nature of mode 4 commitments.  She 
said that she would be negligent if the she did not view the current negotiations in the proper 
historical context.  She said they needed to be  situated in the proper market access context for 
developing countries.  She said that a proper assessm ent had never been carried out to highlight these 
asymmetries in the commitments schedul ed in the past.  She raised th is point to say that even the 
current initial offers tabled by de veloped country partners  still fell short of the modes of supply and 
sectors of interest, for example in health servi ces, where non-portability of health insurance had 
stunted the growth of this important sector for coun tries such as South Africa.  She sought to highlight 
that market access needed to be properly situated  in its historical context and the commitments 
scheduled by developed country part ners.  Thirdly, she would be remiss if she did not address the 
artificial dichotomy made by some on rules an d market access negotiations.  For instance, in 
construction services, direct government services for feasibility studies, government guarantees and 
tied aid which was accessed by firms from deve loped countries and from which these firms benefited 
meant that developing country firms were at times shut out of various markets and projects.  This 
situation was acute in Africa where South African companies would have an advantage owing to their 
geographical proximity to some major construction projects.  Hence, the advantage offered by these subsidies diminished the advantages of South Afri can companies.  She wished to stress that the 
market access and rules negotiations were interlinke d and needed to proceed in parallel.  Expressing a 
word of caution, she said that Members needed to properly manage the process of harvesting work in 
discussions of the friends groups since some had not participated in these discussions.  She said that it 
would be important to ensure that that plurilatera l positions were not multilateralized in the absence of 
a proper examination and discussion of this wo rk.  South Africa remained committed to the 
negotiations and to working with the Chairman in this regard.  
188. The representative of Indonesia
 joined others in welcoming the submission of the initial offers 
of Malaysia, Egypt and El Salvador.  His delegati on wished to express its appreciation for the joint 
statement submitted by a number of Members on market  access in services.  He shared the view that it 
was in every Member's interest to participat e in the services negotiations to achieve a positive  TN/S/M/13 
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outcome.  In this context, he sought to unde rline the importance of achieving progress in the 
negotiations on both market access and rule-maki ng.  His delegation wished to emphasise that 
attention needed to be given to achieve a comp lementary balanced outcome between market access 
and rule-making in order to reach an equitable r esult in the services negotiations.  There was also a 
need for substantive progress to be made in rule-m aking in the coming services negotiation.  In this 
regard, he renewed the call for the maximization of the use of subsidiary bodies in support of the 
negotiations.   
189. The representative of Chinese Taipei  joined others in welcoming the submission of the initial 
offers of Malaysia, Egypt and El Salvador.  Chinese Taipei, for the sake of maintaining the 
momentum of the negotiations, called on those Member s that had not presented their initial offers to 
do so as soon as possible.  Her delegation wished to voice its full support for the introduction by 
Switzerland of the communication in Job(04)/176, of which Chinese Taipei was a co-sponsor.  She 
said that several important elements  contained in the paper had been highlighted by Switzerland.  She 
concurred with the representative of India that servi ces was one of the three market access pillars in 
the Doha Round.  She hoped to see that the outcome  of the services negotiations would be given the 
same prominence as agriculture and NAMA in term s of market access negotiations.  Chinese Taipei 
reiterated that the quality, and not only the quantity, of offers mattered.  Meaningful offers in services 
sectors would be the best way to assess the success of the negotiations.  In Chinese Taipei's view, 
given the increasingly important role that services played in economic growth and development of all 
Members, there should be no a priori  exclusion of any mode of supply or sectors. 
190. The representative of the United States  wished to voice her delegation's strong support as a 
co-sponsor of the statement on the importance of market access in services.  Her delegation sought to 
underscore the statements of many other delegati ons earlier in the meeting on how it was crucial for 
Members at the present stage to engage substantively in the request-offer process.  In light of the great 
amount of work that lay ahead, all delegations needed  to re-engage with a sense of urgency to move 
forward in the process.  The United States believed that  this was particularly true in the market access 
negotiations because, were Members not to do so, th is would become a source of deep concern that 
services would lag behind the other key areas of the negotiations of agriculture and NAMA.  It was for this reason that the United States had joined  others in stressing the urgency for Members to 
organize themselves in the most efficient manner in  order to produce the highest quality outcome in 
the market access negotiations.  Her delegation did so  in no way ignoring the importance that many 
Members placed on accomplishing considerable work in the rules area and on domestic regulation.  
Her delegation understood the importance that ma ny Members had attached to this work and it 
appreciated this view.  With respect to market acc ess the United States believed that the first step in 
securing high quality, meaningful offers was to con tinue to press those Members that had not done so 
to submit their initial offers as expeditiously as possible.  In this regard, the United States 
congratulated Malaysia, Egypt and El Salvador on th e efforts that they had made to submit their initial 
offers.  The United States believed that each of th ese countries and the statements that they had made 
were extremely positive contributions and a step in  the right direction towards a substantial re-
engagement in the request-offer process.  Her dele gation had also been particularly pleased with a 
series of bilateral meetings held with other countri es that had not submitted their initial offers, but had 
been pleased with the statements that they had ma de on their plans to proceed towards a point where 
they would table their initial offers in the fu ture and she took this as a very positive sign and 
encouraged them to continue their work.  The United States believed that it was vital that initial offers 
be tabled sufficiently in advance of the May dead line so that Members could take into account the 
provisions of those initial offers in preparing their May revised offers.  She particularly congratulated 
Malaysia, Egypt and El Salvador for th e accomplishments they had announced.   
191. Turning to her comments on how work could proceed in the coming months, the 
representative of the United States said that her delegation believed that it  was important to be 
organised in such a way as to operate as effici ently as possible with respect to market access 
negotiations from the present to the February cluster.   This could be done in a variety of ways, for TN/S/M/13 
Page 58  
 
instance, through each Members' review and refinement  of its initial requests so that delegations could 
come prepared to the February cluster, and thereaf ter as appropriate, to be able to communicate to 
other Members a sense of their strongest areas of in terest and to be prepared to listened to other 
Members' equal expressions to them of their areas of  priorities and greatest interest.  Her delegation 
intended to participate in the February cluster prep ared to do so in a series of intensive bilateral 
meetings.  She commended the initiatives of a numb er friends groups that had announced at that 
meeting that they were working on the continuatio n of intensive sector specific negotiations, which 
she said she thought could be an effective means to  move forward with respect to the market access 
negotiations.  She echoed the senti ments expressed by Chile and other Members in urging friends 
groups to share the products of their discussions with the Special Session as other friends groups had 
done so in the past and as she hoped they would continue to do so.  The United States believed that 
this was a very positive contribution.  She also sough t to thank the distinguished ambassadors of India 
and Uruguay for their strong statements of support for the joint statement on market access.  Her 
delegation believed that the sentiments that they  had expressed and their presence sent an important 
message about the importance of re aching a successful outcome in the services negotiations.  It also 
joined others in urging the importance of clea rly defining ambitious market access and other 
objectives for the services negotiations so that mini sters in Hong Kong would be presented with clear 
set of recommendations that would help lead them to a successful conclusion  with respect to the 
services negotiations.  In doing so, she said that it was important to cover the area of market access and to provide clear objectives, to acknowledge that  the on-going work on rules within the agreed 
mandates was very important, and in particular to th e United States, to continue to work to reach a 
consensus in the area of transp arency, which was an aspect of making market access commitments 
meaningful.  She said that her delegation would also  continue to encourage the broader participation 
of developing countries in the services negotiations, particularly through the provision of technical 
assistance in the preparation of offers and requests.  
192. The representative of Canada
 said that his delegation supported the joint statement and its call 
on all Members to engage substan tively and constructively in the on-going request-offer process.  For 
Canada, significant progress on services liberalizati on was key to promoting global growth and 
development and a key to ensuring a successful conc lusion to the Doha negotiations.  There had been 
some very positive signals in the previous week, including the announcement of the submission initial 
offers by El Salvador, Malaysia and Egypt for which he expressed his de legation's gratitude, and 
constructive efforts to draw increas ed focus to some key sectors.  He said that, nevertheless, Canada 
was not convinced that the current pace of work and the current level of engagement would produce 
the results sought.  On engagement, he was compe lled to say that his delegation did not find it 
constructive that some Members remained on the sidelines of the negotiations.  Achieving necessary 
progress on services required more time than other ne gotiating areas given the inherent complexity of 
the services regulatory environment and the breadth of the sectors under discussion.  It should not be 
assumed that the services negotiations could be comp leted quickly once other areas would come close 
to resolution.  Canada was of the view that st eps towards achieving progress on services needed to 
begin immediately given the short time remaining be fore the ministerial meeting in Hong Kong.  
From Canada's perspective, Members should be prep ared to use the meetings of the Special Session, 
friends groups, methods to report progress in friends  groups to the Special Session or other bodies, 
subsidiary bodies, or any other interaction that Members might have outside of the Organization to 
advance the project.  In taking creative steps in these areas, he noted that it would not suffice to take 
these steps in the WTO and that a way to communicate these steps to stakeholders was also necessary.  
It was only through their increased interest and re-engagement in the project that, ultimately, the political direction and attention required by the ne gotiation would be obtained.  In keeping with the 
Chairman's desire to provide work with more impe tus, he announced that Canada was considering the 
creation of a friends group that would assist the Ch airman and would be open-ended to those able to 
accept the obligations of the group.  The suggested tentative name of the group was the friends of 
punctuality and he said that he would advise the Chairman of its membership.  TN/S/M/13 
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193. The representative of Malaysia  welcomed the tabling of offers from El Salvador and Egypt 
and said, that given her delegation's similar earlie r announcement, some progress was being made in 
the request-offer process in the area of market access.   In the interest of time, she said that she would 
make only a brief statement.  As mentioned by  other delegations, services was becoming increasingly 
important for world trade.  It was for this reas on that market access comm itments undertaken in the 
negotiations needed to take into account the need for meaningful market access commitments and in 
particular the interests of developing countries.  As had been reiterated by others, these commitments 
needed to be undertaken in sectors of export interest  to developing countries.  Malaysia had taken an 
important step through its market access offer,  which was its contribution to the market access 
negotiations in the services negotiations.  Malaysia expected to see, at its conclusion, a balanced 
outcome in the Doha round of negotiations, especia lly in the area of rule-making under GATS.  As 
had been stressed by others, while progress had been made in market access, Malaysia was 
disappointed with the lack of a satisfactory outcome  in rule-making.  Malaysia, along with a number 
of other ASEAN members, had tabled several pr oposals on ESMs and looked forward to constructive 
engagement with other Members that would allow a positive outcome on this issue in order to fulfil 
the objective of a balanced outcome in the negotiations.  
194. The representative of New Zealand  said that he had listened with attention and interest to the 
points raised by delegations under this agenda ite m.  The range of views expressed had caused his 
delegation to reflect on how close Members were to a common vision of the negotiation.  He said he 
thought that there was a common vision of the successful services outcome as a critical component in a successful overall Doha outcome.  However, diffe rences amongst delegations about the elements 
they would need to see in a services outcome in orde r to judge it a success persisted.  It was clear to 
New Zealand that delegations would need to wo rk constructively to more closely align these 
perspectives in the coming year and particularly in  the coming months.  New Zealand shared many of 
the views expressed by earlier delegations, includi ng India, Norway and Hong Kong, China, and 
recalled the importance of all the elements of the July decision.  This included work on the rules 
underpinning trade in services in which his delegation had engaged constructively.  He noted that his 
delegation was a co-sponsor of Job(04)/176 and said  that its motivation in doing so was to focus 
attention on the practical issue that lay ahead of  Members, namely how to prepare for the next 
concrete benchmark in the services negotiations of revised offers by May 2005.  He said that missing 
the opportunity afforded by this benchmark to accelerate the negotiation would, in New Zealand's 
view, be a serious set-back and not only for work in services.  In this regard, he thanked the 
delegations of El Salvador, Mala ysia and Egypt for the important contribution they had made in 
services and in support of the wider negotiation with  the announcements of the submission of their 
initial offers.  He hoped that more good news would be forthcoming in the near future.  On the issue 
of the quality of offers, as his delegation had noted  on a previous occasion, he said that New Zealand 
had "front-loaded" its initial offer with the inte ntion of making a positive contribution to a high level 
of ambition for the services negotiation.  His delegati on wished to continue to seek an ambitious level 
for its own sake and in support of the wider round.   However, he said that the approach that New Zealand would take to the revised offers would be  shaped by the signals New Zealand saw from key 
players in the coming months about the extent to wh ich they shared New Zealand's level of ambition.  
New Zealand looked toward these key players to take the lead in tabling high quality revised offers.  
In New Zealand's view, this step would greatly assist efforts to crystallize a common vision on 
services.   
195. The representative of Australia
 said that her country was comm itted to a successful outcome 
in the Doha services negotiations and therefore believ ed that it was critical to have meaningful offers 
submitted by May 2005.  Market access and the ser vices negotiations could not truly begin until such 
meaningful offers had been submitted.  Observing that services negotiations proceeded differently 
from those in NAMA and agriculture, she said that a comparison of the pace of each was difficult.  
What was clear was that, without meaningful offers  by May, delegations ran the risk of having little 
progress to report by the Hong Kong Ministerial meeti ng.  She stated that Australia would have an 
improved offer ready for May and that it would includ e an offer on mode 4 which was an obvious gap TN/S/M/13 
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in the initial offer.  Australia was willing to work on rules issues and thought that it might be 
necessary to identify ways of progressing work between  clusters in 2005.  She said this from the 
perspective that it was not a question of whether market access or rules was more important and she did not adhere to the view that both of these needed  to move in tandem at each and every step, but 
rather that a package would need to be delivered at the conclusi on which would include both market 
access and rules.  She said that technical issues on cl assification and scheduling had been discussed in 
subsidiary groups and in friends groups.  She said th at in the friends groups in which her delegation 
had recently participated, there had been a focus on the February cluster and she suggested that it 
would be useful to have friends groups report at th at cluster with recommendations if possible to help 
steer future work.  On a logistical level for the Febr uary cluster, she further suggested that it would be 
helpful in the organization of bilateral meetings if the co-ordinators of friends groups could meet in 
advance of the February cluster and identify the timi ng of the relevant meetings.   She noted that, in 
terms of programming for the February cluster, it wa s important to allow sufficient space for bilateral 
consultations, which was one of the reasons for th e holding of an extended cluster.  She said that 
sufficient time for bilateral consultations was cr itical in order to bring the necessary experts from 
capitals.  She welcomed the news of El Salvador 's initial offer and the advice from Malaysia and 
Egypt that they would table their offer soon, a nd she looked forward to seeing the detail of these 
offers.  
196. The representative of Mexico
 wished to begin his statement with a point related to Mexico's 
offer.  As he had said on previous occasions and in  order to underscore the point, he said that the 
quality of Mexico's offer would be  maintained inasmuch as mark et access from its main social 
partners, particularly in sectors and modes of in terest to Mexico, was substantially improved.  
Secondly, he said that a level of maturity in some of the issues under discussion in some friends groups had been reached and that in  those cases it would be useful to change the format and open the 
exercise to all Members interested in the issues.  This would enri ch the discussion and possibly allow 
for a general agreement on the different issues discu ssed at the friends groups level.  Thirdly, with 
respect to disciplines, he said that  this was work which needed to be achieved between the present and 
the Hong Kong Ministerial meeting.  He said that commitments in market access were necessary and 
that in order to reach this point more moment um was needed in discussion.  From Mexico's 
perspective, more dynamism was necessary on domestic regulation in general, on specific 
commitments in order to reach concrete understandi ngs and ensure clear schedule entries, and in 
subsidies particularly in GATS rules in order to hasten progress and reach an outcome in the near 
future.  He expressed his delegation's gratitude for the announcements by El Salvador, Malaysia and 
Egypt on the submission of their offers. 
197. The representative of the Philippines
 welcomed the announcements from Egypt, El Salvador 
and Malaysia about the submission of their initial o ffers which would provide impetus to the services 
negotiations overall and to the Philippines' efforts at expediting the preparation of its offer.  He said 
that in bilateral consultations over the past week , his delegation had indicated that it was hoping to 
table its offer in the first quarter of 2005.  The Ph ilippines' review of the progress of the negotiations, 
he said, informed its perspective on the way fo rward in the negotiations.  While his delegation 
appreciated other trading partners' reference to th e danger signs in the market access aspect of the 
negotiations given their perceived lack of initial offe rs and the inadequate qua lity of offers submitted, 
he pointed to similar danger signs in the rules- based aspects of the negotiations.  The complexities 
involved in preparing and scheduling commitments pe rsisted in rule-making, albeit in a different 
form.  When trading partners spoke about the inter est of every Member to participate in the services 
negotiations, he trusted that such interest extende d to active, constructive engagement in the rules 
negotiations as well.  Members' sense  of urgency should also be exte nded to the rules negotiations and 
any organization of future work should allow for progress to obtain concrete results or 
recommendations by the Hong Kong Ministerial.  A brief perusal of the meeting dates in 2005 seemed 
to indicate only three formal clusters in which ru les work could be pursued.  While this did not 
discount the possibility of informal meetings betwee n clusters, he noted that rules-negotiations were 
process driven and would require organization of th e Special Session's work in order to accommodate  TN/S/M/13 
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the rules process.  On the other hand, market access negotiations seemed to be less process driven and 
more dependent on work in respective capitals.  He  said that this was not to disregard the call by 
certain Members for an effective organization of work on market access, but rather was meant to 
highlight the fact that it was equally important to or ganize and accord urgency to work on rules.  With 
reference to various calls to harvest the useful work  of friends groups, he said that much of this, from 
his delegation's perspective, woul d depend on appropriate timing.  He said that only the substance on 
which genuine agreement would ha ve been reached within those groups should be the subject of 
presentations on the outcome of their work.  He said that this should not preclude other members of 
those friends groups from sharing their insights on other areas or elements not agreed upon in friends 
groups.  His delegation looked forw ard to constructively engaging in the Special Session or in 
consultations on the appropriate way fo rward for negotiations in 2005.   
198. The Chairman  said that he would not attempt to summarise all the views expressed, but 
thought a few remarks might be helpful.  He said  that the discussion had been rewarding because it 
had been very thorough.  Some de legations had underlined that a good point of departure for services 
had been set in the July package.  He had per ceived a widespread degree of awareness about the 
dissatisfaction with the quality of tabled offers ge nerally, the need to improve them and the serious 
problem faced in light of the large number of outsta nding offers.  The latter affected the balance in the 
negotiations and the possibility of substantial improveme nts in May.  In this context, he welcomed the 
announcement of the submission of three initial offers  by El Salvador, Malays ia and Egypt.  There 
was awareness that the request-offe r process remained central and key, although others had recalled 
that it was not the only issue under consideration.  In this regard there was a good deal of important 
work to be done in rule-making, including on ESMs and domestic regulation as well as on 
classification and scheduling in order to make co mmitments more effective.  He had noted the 
emphasis placed on certain issues, including the sectora l negotiations at various levels such as friends 
groups and the work on different modes of delivery such as in modes 1, 3 and 4. 
199. The Chairman said that he had had the impressi on that many delegations believed that the 
services negotiations were lagging behind other areas in  terms of process and level of ambition, or the 
lack thereof, which needed to be  corrected.  Some had referred to their expectations and desire for 
improvement, and their view that commitments shoul d reflect the status quo in order to capture the 
level of unilateral liberalization achieved by many.  There were also expectations that, as offers were 
improved, there would be responses to the sectors a nd modes of interest of developing countries.  
Many had indicated the need to complete the request  process and to refine or indicate their priorities 
from previous requests.  This would be an important way in which to make progress at the next 
cluster.  Many had underlined the very effective a nd mature level of work in  friends groups and some 
had encouraged those groups to come forward a nd table their proposed ideas in different sectors in 
order to achieve greater transparency, but also  in good time so that Members would have an 
opportunity to seek a multilateral consensus around those initiatives.  At least one delegation had 
referred to results for least-developed countries a nd the approved modalities for the special treatment 
for these Members and he said that he had taken note of this.  He said that mention had made of the 
extensive nature of commitments arising from the accession process and the situation that some were 
facing in this regard.  He said that some Members had referred to the convenience of tabling offers as 
unrestricted documents in terms of improving transp arency and in helping dialogue with NGOs and 
the process of assessing the offers by governments an d independent sources.  Some had alluded to the 
need for him to hold informal consultations in orde r to start to think about a package for the Hong 
Kong Ministerial.  He had perceived a widespread sense that the Council need ed to proceed with a 
sense of urgency, engage with trust, work towards a high level of ambition, and to inject credibility by 
injecting substance.  Many had indicated that there we re links to other areas.  A number of delegations 
had reminded colleagues that, given the complex natu re of the services negotiations, a "rushed job" in 
services that would come after progress had been achieved in other areas would be insufficient.  Some 
had mentioned the need to do more efficient work in the subsidiary bodies and he had noted that at 
least one delegation had suggested that additional meetings might be necessary.  While organization 
in this regard was clearly up to Members, he truste d that the Chairpersons of the subsidiary bodies had TN/S/M/13 
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taken note of this suggestion, and at a first glance,  he thought that Members could decide to meet as 
they saw necessary.  He said that he would be in contact with the Chairpersons of the subsidiary 
bodies in this regard to ensure smooth communication.  He invited the Council to take note of the statements that had been made.  
200. It was so agreed
. 
G. OUTLINE OF THE CHAIRMAN 'S REPORT TO THE TRADE NEGOTIATIONS COMMITTEE  
201. The Chairman  said that in his report under the sub-heading "Status of Work" and with respect 
to the Assessment for Trade in Services, he would report that the Council had welcomed 
representatives of the OECD and UNCTAD to present two reports, respectively, "Services Barriers 
and Their Economic Impact:  Examples of Banki ng and Telecommunication Services in Selected 
Transition Economies" and the "World Investment Re port (2004):  The Shift Towards Services".  The 
OECD study sought to elaborate a methodology for meas uring the level and effect of barriers in trade 
in services, while UNCTAD's WIR reported, in part, on the levels and effects of FDI in services and discussed the drivers and possible dividends associated  with trade in services generally.  Members had 
demonstrated a high level of interest in the presentations, and particularly that from UNCTAD.  
Among others, Members had drawn attention to the benefits the report indicated could accrue from 
appropriately planned off-shoring as well as to the central importance of a stable and predictable 
investment environment in order to promote long-term export success and productivity through 
mode 3 trade.  The Council invited WTO Secretariat to present the "World Trade Report (2004)" at its 
next meeting.  Under the item Proposals Relating to the Negotiations under Article XIX, the Council 
heard two presentations related to  the movement of natural pers ons:  one on Australia's Mode 4 
Temporary Entry Arrangements and the other on Ch ile's Experience with the Temporary Movement 
of Business Persons.  A good level of interest was demonstrated with some 14 delegations intervening 
with questions and statements.  He would note that  discussions on mode 4 at the last two meetings 
have been characterised by information sharing on concrete experiences.  A number of Members 
reverted to an earlier proposal On the Importanc e of Mode 3 Commitments and some judged that a 
significant gap existed in mode 3 in the negotiations .  A group of six Members introduced an informal 
communication on trade in certain supporting services to air transport.  Members' views on the interpretation of the relevant provisions of the A nnex on Air Transport Services and the fora in which 
to discuss these issues re mained divergent.  Under the item Consideration of Proposals on S&D 
Treatment Provisions, with respect to the Category II proposals which had originally been referred to 
the Special Session by the Chairman of the Gene ral Council in May 2003 and to which the General 
Council Decision of 1 August 2004 re ferred, he would note that he had recalled for Members the 
consideration undertaken to date on these propo sals as well as the July 2005 reporting deadline 
contained in the Decision.  A statement was made by the African Group on the importance of these proposals and the Council had agreed that he wo uld hold consultations on this matter.  Under a 
separate agenda item, the Council decided to orga nize a two-day Symposium on Cross-Border Supply 
of Services on 17-18 February 2005.  This event wo uld be financed by the WTO with funds allocated 
in the Technical Assistance and Training Budget (2 005).  With respect to the Council's Review of 
Progress in Negotiations, Including Pursuant to Para graph 15 of the Guidelines for Negotiations, he 
would report that a new offer was tabled by El  Salvador, and offers had been announced as 
forthcoming by Malaysia and Egypt.  The total nu mber of initial offers presented was 47 representing 
71 Members.  He would note that some 45 offers  remained outstanding not including least-developed 
country Members.   
202. Under the sub-item "Outstanding Issues" he w ould report that the Council had engaged in a 
frank discussion in reviewing progress in the negotiati ons.  Some 29 delegations representing a cross-
section of the Members made highly useful interven tions.  Generally speaking, delegations sought to 
sound a procedural warning bell to their trading part ners and to the TNC.  The absence of a significant 
number of outstanding initial offers, referred to in  the recommendations adopted by the General  TN/S/M/13 
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Council in Annex C of its 1 August 2004 Decision,  was deeply preoccupying to a large group of 
Members.  Delegations urged those Members that ha d not done so to submit their initial offers as 
quickly as possible in order to allow the negotiations  to proceed to the next benchmark for revised 
offers in May 2005.  Indeed, numerous delegations  drew attention to the short timeline remaining 
until the Sixth Ministerial meeting and the substantial amount of work to be completed, in all areas of 
the negotiations, in the interim.  In this connecti on, it was reiterated that the nature of the services 
negotiations, in comparison to other market access  negotiations, differed in that they proceeded 
through a rather laborious process of requests a nd offers.  The preparation of and responses to 
requests and offers required longer periods of time wh ich needed to be factored into the schedule of 
work with a view to fulfilling Members' collectiv e responsibility in their preparations for the Hong 
Kong Ministerial.  Members also emphasized that the Council should bear in mind the very short 
period of time next year for fulfilling its duties and th at failure to do so would have negative results.  
Members needed to signal the level of ambition they  sought in the services negotiations in advance of 
the May benchmark for revised offers.  The nature of the request-offer process was such that delays in 
indicating intentions would preven t these constructive signals from being fully considered in the 
negotiations.  The regrettable outcome  could be negotiating results that  fell short of what could have 
been achieved and jeopardized work in other areas.   Numerous Members also referred to the other 
areas of work which needed to benefit from intensiv e efforts in 2005 in order to ensure a complete 
contribution by the Council to preparations for th e next Ministerial Meeting.  Some delegations 
expressed their view that technical work in s ubsidiary bodies and in some friends groups was 
maturing and might be ready for harvest in the near  future in the Council.  However, a number of 
delegations also expressed serious concern that some work in the subsidiary bodies which was 
complementary to the market access negotiations, ha d fallen behind.  In this regard, a number of 
Members drew particular attention to all aspects of rules negotiations, as well as work on classification and scheduling issues in the Comm ittee on Specific Commitments. Some Members 
expressed the view that the subsidiary bodies could m eet between clusters of meetings in order to 
effectively address the substantial amounts of work  before them. He would note that from his 
vantage-point, the views expressed by Members, alt hough rather grave, were constructive:  they 
pointed to areas of serious concern on which the Counc il needed to remain focu sed in order to ensure 
it could make a satisfactory report to the TNC in its preparations for the next meeting of Ministers.  
He said he would engage in intensive consultatio ns in the coming weeks in order to discuss the 
important issues that had been raised by Member s.  Finally, the he would report that the Council 
would next meet during an exceptionally extended cl uster of meetings from 7-25 February 2005.  The 
Chairman proposed that the Council take note of the outline of his report. 
203. The Council so took note
. 
H. ORGANIZATION OF FUTURE WORK 
204. The Chairman  drew attention to the proposed meeting dates for 2005 and the specific dates of 
meetings for the February "extende d" cluster.  The dates for the February cluster took into account the 
views of Members expressed in his consultations as well as the meeting dates of WTO bodies and the 
availability of rooms.  He was aware that the me eting dates did not satisfy all of the concerns 
expressed; however, he trusted that delegations w ould understand the constraints faced in light of 
other meetings and obtaining meeting space.  He recapitulated the proposed meeting dates for the 
cluster of meetings from 7-25 February 2005, incl uding subsidiary bodies, the Regular Session, an 
open-ended meeting on mode 4 and the Special Sessi on.  For delegations' information, the possible 
cluster dates for other meetings in 2005 were al so indicated, including a possible "wrap-up" meeting 
in October or November in order to finalise th e Council's work in advance of the TNC's final 
preparations for the Sixth Ministerial meeting.  While he was aware that no decision had been made 
on this point, he said it would be further discussed in light of the Special Session's work as well as the 
overall organization of preparations for the Ministeria l meeting.  He said that considerable work lay 
before the Council and that the benchmark dates also  needed to be borne in mind.  He hoped that 
delegations would work in earnest and with a sense of urgency and that by the end of the February TN/S/M/13 
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cluster the Council would have a clearer idea about the organization of its work and its objectives for 
the remainder of the year and in light of the Mi nisterial meeting Hong Kong.  He had noted under an 
earlier agenda item the work occurring in friends gr oups, as well as encouragements to bring forth this 
work in good time so that, should there be a level of maturity in these discussions, outcomes could be 
folded into the Council's work, which could become pa rt of the package that would be prepared.  He 
said that these steps needed to be taken in good tim e owing to the complex nature of the elements at 
play and because delegations would need time to  consult with capital and stakeholders on any 
proposals that might come forth.   
205. The representative of Malaysia
 wished to express her delegation's reservation about the idea 
of a three week cluster in February 2005.  While recognising the importance of the services 
negotiations to the success of the overall Doha  negotiations and reite rating her delegation's 
commitment to the negotiations, she expressed concern about resource constraints faced by Geneva- and capital-based officials.  She said that a cluster of long duration affected not only the contribution of capital-based officials, since they would not be able to participate for three weeks, but that in 
addition the participation of Gene va-based delegates would be aff ected as they had responsibilities 
elsewhere in the WTO.  She recognised that there was a convergence of views about this cluster in 
terms of the number of additional meetings which needed to be undertaken before the May 2005 
deadline for revised offers.  She urged that meet ings be scheduled within the normal two-week 
cluster, including the possibility of scheduling some of the additional meetings during the week set aside for the subsidiary bodies.  Doing so could leav e the third week solely fo r bilateral consultations 
so that delegations that needed to leave early woul d be able to do so without being absent from any of 
the plenary meetings.  While she recognised the s hortage of meeting space and the need to advance 
work, she hoped that delegations would appreciate th e concerns that her delegation held about this 
extended cluster.  She reiterated he r concerns about her delegation's participation and contribution in 
the negotiations and hoped that for future meetings, the Council would revert to the two-week cluster 
format. 
206. The representative of India
 said his delegation was comfortable with the proposed dates.  He 
had noted the Chairman's point that there were many constraints that prevented an ideal solution.  As 
this issue had been discussed a number of times, he hoped that the question of dates could be resolved 
quickly so as to focus on substance.  Referring to th e Chairman's remark on mode 4, he recalled that a 
number of specific proposals on mode 4 had been put fo rth in the Special Session and, in the course of 
the related discussions, two points had been raised.  The first was that, given the range of issues, it 
would be preferable to have focused discussions on pa rticular topics so that the relevant experts could 
be present for a more focused discussion.  In this connection, some had also felt that it might be useful to have an informal session given the various sen sitivities that might exist around these topics.  He 
recalled that it was in this context that an inform al dedicated session on mode 4 had been held in the 
previous cluster.  It was his impression that it was generally felt by all Members that this meeting had 
been useful.  Noting that the meeting had lasted a ha lf day, he said that many of the issues had not 
been fully discussed.  In this regard and with refe rence to the February cluster, he suggested, on 
behalf of the group, that there be flexibility in the time set aside for this di scussion in the allocation of 
time for the Special Session.  He said that he was flexible with regard to moving between informal 
mode, depending on the level of interest and papers  to be discussed, etc., and formal mode of the 
Special Session.  He said that it would be useful to focus discussion on particular topics as had been 
done at the previous meeting.  He recalled that  the two issues that had been discussed and which 
likely could continue to be discussed were the issu es of transparency and categories of persons.  He 
recalled that the group was working on a contribu tion and perhaps a comprehensive approach to the 
issues related to mode 4 liberalization.  He said that  it would be the group's view to revert to these 
topics for a focused view and to allow for the possib ility to shift between formal and informal mode in 
order to make efficient use of meeting time.  
207. The representative of Hong Kong, China
, despite the taxing nature of a three-week cluster, 
said that his delegation was prepared to agree to this suggestion, bearing in mind that only two  TN/S/M/13 
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clusters would be held before the summer break a nd the heavy workload for delegations.  He said he 
thought it was important for delegations to recogni se that time was limited and that, given capacity 
restraints, it was important to focus work and use ti me efficiently.  In this regard, he said creativity 
and flexibility would be important.  In response to some of the points made by his colleagues, he wondered how best the meeting of the subsidiary bod ies might be organised in order to use any time 
that one might not require and that another might need to discuss proposals.  He said he left this 
suggestion in the Chairman's able hands.  He said that work might need to be done outside of the 
cluster and he urged delegations to  show flexibility for the subsidiary bodies to organize their work 
and to meet as necessary.  With regard to the work  of the market access in bilaterals, friends groups, 
symposia or other fora, he said that flexibility in organization was important and he thought that 
concerned Members might wish to coordinate in order to maximise the use of time and presence of 
capital-based experts.  In particular, he said that sectoral experts should be present in Geneva at the 
same time.  He hoped the time of experts could be ma ximised in order to justify their travel.  He said 
that his delegation would bear these elements in mind in organising the next cluster and was interested 
in discussing this organization further with colleagues.  He said it was important to bear in mind the 
possibilities that might arise when experts gathered, perhaps outside the cluster, and the use made of 
any such possibilities. 
208. The representative of Japan
 reiterated that the February clus ter was important and particularly 
important for bilateral consultations , and he urged Members to bring sectoral experts to Geneva.  With 
respect to the meeting of subsidiary bodies, he agreed with others that greater organisational 
flexibility might be necessary, including the possibility  of convening a meeting outside of the cluster.  
He assumed that each subsidiary body would refl ect on how it might wish to organize its work in 
2005 in order to achieve their objectives.  He said th at flexibility was necessary in terms of gathering 
experts, including outside of clusters. 
209. The Chairman  said that he had noted that for Malays ia, like others, the three-week extended 
cluster posed challenges.  He said that for most, if not  all, a three-week cluster remained preferable to 
adding a cluster in May.  He had also taken note of Malaysia's reservation that this cluster not become 
a precedent, a remark for which he expressed his sy mpathy.  He said that he understood that this 
would be an exceptional meeting.  Noting that the or ganization of meetings in the next cluster would 
be finalised early in 2005, he suggested that the Council agree to the three-week extended cluster from 
7-25 February 2005.  With respect to discussions on mode  4, he said that to his mind there appeared to 
be agreement in principle and he further suggested that a dedicated discussion take place.  He said that 
a focused discussion could be done in an open-ende d informal meeting or it take place within the 
meeting time of the Special Session and that time c ould be set aside for it based on contributions.  He 
said that these points could be further discussed in  consultations.  He had noted the idea that 
subsidiary bodies could meet outsi de of clusters, although this was up to Members and the subsidiary 
bodies.  He invited the Chairpersons to consult in th is regard.  In addition to the two earlier points he 
had invited to Council to agree to, the Chairman further invited the Council to take note of the 
statements that had been made.   
210. It was so agreed .  
I. OTHER BUSINESS  
211. The representative of Japan  wished to announce, on behalf of the friends of maritime 
transport, that an event would take place during the Fe bruary cluster.  He said that the realisation of 
transport services that were stable, low-cost and effi cient was an important factor in decision-making 
for investors.  In this regard, the liberalization of  maritime transport services played an important role 
in increasing trade investment, economic developmen t and employment.  The growing liberalization 
of maritime transport services under the GATS was beneficial to all countries and especially developing countries.  With this in mind, and on behalf of the eleven maritime friends Members, 
namely Australia, Canada, China, Hong Kong, Ch ina, European Communities, Japan, Korea, New TN/S/M/13 
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Zealand, Norway, Singapore and Chinese Taipei, he invited all Members to the maritime liberalization seminar.  The seminar would focus on the importance of the liberalization of maritime 
transport services under the GATS, how it benefited the global trading system and how effectively 
commitments could be made using the model schedule.   The group of friends was thinking of inviting 
appropriate speakers from various groups, such as sh ippers (as users of maritime services), service 
providers (namely shipping companies, freight fo rwarders, terminal operators) and regulators, 
governments and international organisations.  The se minar would be held during the first cluster of 
meetings in 2005 and specifically on 16 February fro m 15:00 to 18:00.  The group wanted to stress 
the importance of the participation of capital-based  experts, particularly from developing countries in 
this seminar.  He called on Members to actively par ticipate and cooperate in this seminar.  He said 
that a notice would be circulated th rough the Secretariat in due time. 
212. The representative of Canada
 wished to make a statement rela ted to energy services.  He said 
that a group of Members with interests in the energy services sector was planning in early 2005 a series of workshops, seminars, and bilateral and plurila teral meetings to consider further issues related 
to the energy services sector in the context of  the on-going GATS negotiati ons.  Specific details 
would be provided to all Members as soon as po ssible to allow for their forward planning. 
213. A representative of the Secretariat
 said that the Secretariat, based on requests, was 
contemplating the organization of a training seminar  for recently arrived delegates to Geneva.  The 
suggestion was to organize a two-day "briefing" that  would cover the entire range of subjects that a 
delegate would deal with.  He solicited any su ggestions that delegates might have about the 
programme, the timing or any particular points they might  wish to draw to the Secretariat's attention.  
He said that the Secretariat would plan to hold this  seminar in the last week of January, unless it was 
approached by delegations with alternate sugges tions.  Secondly, with respect to the electronic 
bulletin board for organising bilatera l meetings, he said that more de legations had made use of it for 
the present cluster and he encouraged delegations to communicate to the Secretariat any relevant 
information at their earliest convenience. 
214. The representative of Switzerland  thanked the Secretariat for devoting resources to training 
new delegates.  He said that the timing proposed, ahea d of a key cluster, was appropriate.  He said that 
he would make his suggestions known to the Secretariat. 
215. The representative of UNCTAD  sought to inform the Council that UNCTAD would be 
holding an expert meeting on trade and devel opment aspects of professional services and regulatory 
frameworks from 17-19 January 2005 at the Palais des Nations.  She said that professional services 
were among the fastest growing services sectors worldwide with double-digit growth rates and 
approaching one per cent of global GDP.  UNCTAD hope d that the expert meeting would provide an 
opportunity for actors from public and private sectors, professional associations and trade negotiators to explore different facets of professional services in  an open debate at the international level.  The 
main objectives were to bring about a convergence of  views on a set of options necessary to ensure 
progress in GATS negotiations on professional serv ices, including on domestic regulation and 
recognition, and to discuss what policies would have  to be pursued in liberalising market access and 
to facilitate trade in these services.  UNCTAD was aw aiting confirmation of the participation of high-
level experts from academia and the in ternational organisations that were  expected to contribute to the 
debate.  The meeting would take place over three days and would aim at addressing a number of 
issues.  Firstly, the developments in the global markets for professional services, professional services 
and development implications, and the importance of trade in services in modes 1 and 4.  Secondly, 
the emergence of new regulatory frameworks and ch allenges facing developing countries.  Thirdly, 
national experiences of trade in services in professi onal services of developing countries.  Fourthly, 
experiences with regional integration and mutual recognition agreements and fifthly, professional 
services in the GATS and the interests of developing countries.  She said that the participation of 
WTO delegates would be cordially welcomed, as would their contribution from the GATS 
perspective.    TN/S/M/13 
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216. The Chairman  said that the meeting had been a very  productive one and that work had 
proceeded in an efficient and expeditious manner.  He said that a serious and profound exchange of 
views had occurred.  He said that the Council's good working atmosphere was an important element 
of the process and he thanked delega tions in this regard.  He said  that the widespread sense of 
disappointment and dissatisfaction with the situa tion was in fact positive because it would provide 
impetus to move quickly in the right direction in the coming year to meet the challenges and 
expectations held.  He said that an intensive peri od of work lay ahead.  He proposed that, before he 
adjourned the meeting, the Council take note of all of the statements made. 
217. The Council so agreed . 
 
__________