RESTRICTED  WORLD TRADE  
ORGANIZATION  S/WPGR/M/53 
30 September 2005 
 
 (05-4371) 
Working Party on GATS Rules  
  
 
 
REPORT OF THE MEETING OF 21 SEPTEMBER 2005 
 
Note by the Secretariat
1 
 
 
1. Due to the absence of the Chai rperson, the Working Party elected Ms. Clare Kelly, from New 
Zealand, to preside over this meeting.  The ag enda for the meeting, contained in WTO/AIR/2649, 
included the following items: adoption of the annu al report to the Council for Trade in Services, 
emergency safeguard measures, subsidies, government  procurement, date of the next meeting, and 
other business.  To assist delegations in the prepar ation of the meeting, the Chairperson had prepared 
an annotated agenda, contained in JOB(05)/189.  The agenda was adopted . 
I. ANNUAL REPORT OF THE WORKING PARTY ON GATS RULES TO THE 
COUNCIL FOR TRADE IN SERVICES (2005) 
2. The Chairperson  invited the Working Party to adopt the draft annual report contained in 
document S/WPGR/W/53 and to transmit it to the Council for Trade in Services.  It covered the 
meetings of the Working Party from November 2004 to June 2005. 
3. Some delegations proposed changes to the draft report.  The following delegations 
participated in the ensuing discussions: Hong K ong, China; United States; Chile; New Zealand; 
Switzerland; Thailand; Republic of Korea; Ch inese Taipei; the Philippines; the European 
Communities; and Brazil.  After some modifications had been made to the draft, the Working Party 
adopted  the Annual Report, which was circulated as document S/WPGR/15. 
II. NEGOTIATIONS ON EMERGENCY SAFEGUARD MEASURES (ARTICLE X) 
4. The Chairperson  reminded delegations of the need to fo cus their attention on work priorities 
and ways to carry them through.  The current state of the negotiations on the three topics was known to all and, in the context of th e broader negotiating agenda and time lines, delegations needed to think 
pragmatically about what could realistically be ach ieved over the remaining period of time.  This was 
relevant for the three negotiating issues under the r esponsibility of the Working Party.  On emergency 
safeguard measures, the delegation of Australia had indicated that it wished to report on the workshop 
on ESM that it had organized last July, and which it had announced at the last meeting.  In reacting, 
delegations should take the opportunity to express thei r views on work priorities.  At the end of the 
discussion at the last meeting of  the Working Party, as well as in the annotated agenda, the 
Chairperson had noted that core divergences remained , but that there seemed to be some openness to 
consider new or alternative ideas and approaches.  Some delegations had made  general suggestions in 
that regard at the last meeting.  She sought gui dance from delegations on any particular avenues of 
work that might be further explored.    
                                                     
 
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO.  S/WPGR/M/53 
Page 2  
 
5. The representative of Australia
 reported that the workshop, he ld in Bali, was conducted by 
Australian academics Malcolm Bosworth and Ray Trew in, as well as by Greg McGuire, currently an 
adviser to Indonesia's Ministry of Trade.  Vari ous ASEAN Members had sent capital-based officials 
to the workshop, which was designed to provide sen ior officials with an appreciation of the broad 
range of issues related to the application of an  ESM in services.  The workshop was divided in a 
number of thematic sessions, including the followi ng: ESM within GATS and the Doha Development 
Agenda; key issues in the application of an ESM  in services; the question whether an ESM for 
services could work and if so how; alternatives to an ESM and the role of domestic policy; regulatory 
regimes for telecommunications and ESMs; Austra lia's experience and lessons in liberalizing 
telecommunications; financial services under the GATS and the optimal level of financial regulation; 
Indonesia's experience and lessons in liberalizing fi nancial services; practicalities of applying an ESM 
to services; and possible ways forward.  As expected, no conclusions or recommendations emerged from the proceedings whose primary purpose was to pr ovide an opportunity for capital-based officials 
to look at the specifics of an ESM .  The issues relating to safeguards in services were very complex, 
and the workshop proved a useful forum to discuss th e various proposals put forward to date, and the 
benefits and disadvantages of safeguards in services.  
6. The representative of the Philippines
 thought that the workshop had contributed to a better 
understanding of the practicalities of an ESM.  Th e main economic theme w as the need to provide 
sufficient checks in any ESM model to ensure th at the mechanism was not captured by domestic 
protectionist tendencies.  One of the presenters ha d noted that most of the technical and feasibility 
concerns that had been raised in  the Working Party could be addressed  in one way or another.  The 
insulation of an ESM from protectionist tendencies was a policy objective shared by the governments 
from the group of ASEAN delegations.  This objectiv e was pursued within a policy framework that 
was also informed by vital political economy cons iderations.  ASEAN Members had demonstrated 
much flexibility in many of the issues involved, as reflected in their communication from November 
2004 (JOB(04)/175), and willingness to consider the c oncerns of others.  In the context of services, 
there inevitably was an array of potential safeguard situations.  Safeguards in services were not as 
simple as imposing tariffs or quotas at the border.  An ESM could therefore not be explained in a 
hypothetical scenario or addressed by a single rule of injury determination, or a single form of trade 
remedy.  The author of the UNCTAD paper had argue d that it was necessary to step back and look for 
simpler forms of resolving the most fundamental issues at hand.  While some Members would view 
such complexity as detrimental to an ESM in ser vices, he looked at it positively.  The situation 
required more creativity and coope ration on the part of WTO Members as well as greater flexibility 
for regulators, while bearing in mind the need  to preserve legal certainty of commitments. 
7. His delegation continued to be interested in how the Members that maintained safeguard-type 
measures in their schedules dealt with feasibility issu es.  This could provide additional insights.  The 
representative noted that there had been some info rmal discussion in the workshop on the possible 
link between the reduction or elimination of ENTs, par ticularly those that were not fully transparent, 
and the process of establishing an ESM in services.   Some delegations had raised in the Working 
Party the possibility of a waiver mechanism as a poten tial interim or alternative solution, and this had 
also been discussed in the workshop.  This discussi on had highlighted some concerns about what form 
such a mechanism might take or the procedur es it might embrace, as well as the possibility of 
experiencing similar feasibility issues in defining th e parameters of ‘exceptional circumstances’ or 
whatever criteria chosen for a wa iver.  The workshop had also suggested the possibility of exploring 
non-horizontal options, such as allowing Members to  inscribe an ESM in schedules on a sectoral basis 
along with a set of general disciplines, or devel oping a narrow safeguard-like instrument for sectors 
where liberalization concerns were greatest.  Howe ver, these approaches were ex-ante disciplines that 
might not be adequate to deal with political ec onomy interests.  While his group of delegations 
remained open to exploring such interim or altern ative solutions that might also be acceptable to 
Members, their authorities had fundamental concerns  on how effective temporary solutions could be. 
He hoped to hear the views of other Members on  these proposed solutions or approaches.  The 
negotiations were now at a crossroad.   While he recognized that there might be valid concerns that an  S/WPGR/M/53 
 Page 3 
 
 
ESM be captured by protectionist interests or that it could potentially disrupt legal predictability, he 
believed that cooperation could solve technical issu es.  The capacities and experience of all Members 
could be harnessed towards solving many of the seemi ngly intractable technical, legal or policy issues 
raised in the last ten years.  Members coul d see their concerns addressed through compromise and 
negotiations, and should thus not reject the idea of an ESM altogether.  The question of feasibility and 
desirability could not be resolved by generati ng hypothetical scenarios, as some Members had long 
been suggesting.  Aside from the likelihood that such scenarios would be rejected as inadequate to 
make the case for an ESM, the services sector was so complex that negotiations  could not be reduced 
to one concrete scenario or the other.   
8. While there might be valid technical issues to grapple with, he believed that Members had to 
take strategic political and economic decisions, if the deadlock in these negotiations was to be broken.  
His group of delegations had considered the po ssibility of updating JOB(04)/175 or of presenting 
another proposal in the Working Party.  Some of  the relevant authorities, however, had wondered 
whether this would only lead to never-ending deba tes, which would not be constructive.  The 
authorities were presently studying this issue and re visiting fundamental interests.  The alternative 
approaches or interim solutions alluded to by Me mbers as well as at the Bali workshop were being 
considered in capitals; his group of delegations was presently expl oring avenues of moving these 
negotiations forward, but other Members were expected to be constructive in discussions.  
Consideration of the way forward lied as much with  the proponents as with other Members.  In that 
context, he asked delegations if informal consulta tions would truly be useful;  could they help to 
address the concerns of Members or were these too systemic and deep?  Noting that some delegations 
had approached his group of delegations to work  together on fundamental issues, he wondered 
whether bilateral meetings would be useful.  While  acknowledging that the proponents were supposed 
to drive the process, he asked whet her the Working Party would be ag reeable to the Chairperson using 
his good offices in terms of finding a feasible way forward.   An ESM was of fundamental political and economic importance for his grou p of delegations.  He was under no illusion that this issue, which 
had been discussed for the last 10 years, could be so lved in the next three months before the Hong 
Kong Ministerial.  However, delegations might be able to come to some common understandings and 
views, which could be built upon during the final stages of the Round.     
9. The representative of Malaysia
 said that the workshop had been a meeting point where 
participants discussed and strived to understand each others' concerns on the issue of an ESM.  She 
understood Australia's point of view in trying to  impress upon participants the practicalities of an 
ESM.  She supported the intervention from the delegation of the Philippines on the discussion derived 
from the workshop.  Interim and non-horizontal a pproaches had been mentioned in both the workshop 
and the WPGR, but her delegation was not ready to explore alternative approaches in the absence of 
substantive progress, despite strenuous efforts from ASEAN Members to facilitate the process.  She 
wished to thank the Chair of the Special Session of  the Council for Trade in Services for organizing a 
brainstorming session on ESM before the summer break.  Particularly notable was the information 
that a group of Members had entered into bilatera l agreements on services with provisions on ESM.  
She thought that questions of feasibility and desira bility would have been thoroughly considered at 
that stage.  This would be relevant to the Work ing Party's discussion and could enable to make quick 
progress.  Feedback from the workshop indicated co ncerns on the lack of checks and balances, and 
she proposed that such concerns, or any other con cerns that Members might have, be discussed further 
in the WPGR in order to advance work on an ESM.       
10. The representative of New Zealand  said that his delegation had been able to attend the 
workshop as an observer and considered that the even t had proved informative and constructive.  It 
highlighted the usefulness of an informal small- group process for dealing with such complex technical 
issues.  He thus supported the continuation of su ch discussions, including with the assistance of the 
Chairperson.  The representative of Indonesia  expressed appreciation for the assistance of Australia in 
organizing the workshop.  He associated his delegati on with the statements of the delegations of the 
Philippines and Malaysia.   S/WPGR/M/53 
Page 4  
 
11. The representative of Pakistan
 thought that such discussions in a workshop could yield 
positive results.  Her delegation wished to see balanced progress on rules and market access.  
Members had to engage in this Working Party to ensure positive results on both ESM and subsidies.  
She supported the views expressed by the Philippine s and hoped to see further exchanges involving 
all sides.   
12. The representative of Hong Kong, China  said that he would support exploring alternative 
ideas and approaches.  He had an open mind in that regard, but it was important to make the necessary distinctions between, on the one hand, the question of  the need for an ESM and, on the other hand, the 
question of how it could operate in practice.  In formal exchanges should take place to explore any 
alternative ideas or approaches that delegati ons might come up with.  Willingness and open-
mindedness had to be shown by all sides.  He woul d be prepared to contribute his thoughts to such 
informal exchange.   
13. The representative of Chinese Taipei
 was encouraged to see that issues relating to an ESM 
could be discussed in the workshop.  An ESM wa s of fundamental importance to certain countries 
pondering further liberalization.  Therefore, she supported the suggestions by  the delegation of the 
Philippines to have additional info rmal exchanges, with the assistan ce of the Chairperson.  Some 
ideas touched upon in the seminar, such as non-horizon tal approaches, could be explored further.   
14. The representative of Thailand  said that her authorities had found the workshop very useful.  
She associated her delegation with the statement ma de by the Philippines, including the suggestions 
on the way forward.   
15. The representative of Cuba  expressed support for the intervention by the delegation of the 
Philippines.  She drew attention to the fact that, afte r so many years, the same difficulties persisted.   
While the proponents had show flexibility in trying to  find a solution, there was a lack of political will 
from others.  She underscored that this topic was he r delegation's priority in the Working Party.   
16. The representative of the European Communities  considered that the suggestions of the 
delegation of the Philippines for the way forwar d, such as informal discussions and bilateral 
consultations, had already been pursued in the past.  He supported the continuation of such efforts, but 
this should also be done in other rules areas su ch as government procurement.  In response to 
comments on safeguard provisions in bilateral trade agre ements on services, he said that this issue had 
already been discussed in past m eetings.  There were significant di fferences between such bilateral 
agreements and the GATS, especially regarding the leve ls of flexibility.  No safeguard provisions in 
services existed in bilateral trad e agreements that used a positive-list approach modelled on the 
GATS.   
17. The representative of Brazil  supported the suggestion that informal consultations be 
undertaken.  The Chair of the Special Session had organized a brainstorming last June, and he might be asked, along with the Chair of the Working Pa rty, to facilitate informal exchanges between 
delegations.  In principle, his authorities had no pr oblems with consultations on the other two areas 
within the remit of the Working Party.   
18. The representative of Trinidad and Tobago
 said that the issue of ESM was important for 
countries such as hers, which were  small and vulnerable.  She was interested in any documents 
coming out of the workshop, which could be draw n upon in the WPGR.  Many small economies were 
sometimes confronted with difficult situations.  E fforts to advance market access thus needed to 
proceed in a complementary manner to efforts on rul es so that sufficient fall-back positions could be 
ensured to face such difficult times.  Cooperation in  developing an ESM w as key and her delegation 
was looking forward to participate in consultations.    S/WPGR/M/53 
 Page 5 
 
 
19. The representative of India  welcomed the suggestions made by the delegation of the 
Philippines relating to the organization of future work.  His delegation was open to discussing various 
alternative approaches, which would help to take the negotiations forward.   
20. The representative of the United States  asked the delegation of the Philippines to clarify what 
it had in mind when referring to the good offices of th e Chairperson.  She agreed that some form of 
consultations should be contemplated, but this sh ould be done under the au spices of this Working 
Party.  The brainstorming undertaken by the Chai r of the Special Session had been under his personal 
responsibility.  Despite a productive exchange, a lot of questions remained unanswered and her 
delegation continued to question the need for and the feasibility of an ESM in services.  The onus for 
developing a workable proposal clearly rested with  the proponents.  Her delegation was very sensitive 
to the political needs of some Members and was in terested in consultations that would help to 
promote creative ideas. 
21. The representative of the Philippines  emphasized that all delegations needed to show the 
willingness and open-mindedness required to move forw ard on this issue.  The Chairperson would 
eventually decide whether to offer his good offices in  finding a way forward.  He was hoping that the 
Chairperson could facilitate such informal excha nges, but was also envisaging that ASEAN Members 
might convene consultations  among a small group.  He invited delega tions that had been less vocal in 
the Working Party to signal their interest in par ticipating in such discussions.  If some Members had 
no willingness to negotiate and had already taken th e decision that there was no need for an ESM, 
these might not prove very helpful however.  The Working Party would then be bound to repeat the 
discussions of the last 10 years.     
22. The representative of Brazil  said that he had learned much about the GATS by listening to the 
arguments of those in favour as well as those agains t an ESM.  The Working Party had so far engaged 
in two types of approaches.  One was to discuss fic titious examples.  Another avenue, favoured by his 
delegation, was to look at some schedules to examin e entries that had effects equivalent to that of 
safeguards so as to learn from experience.  This c ould help to clarify feasibility issues raised in 
relation to an ESM.  He had questions for some Members in relation to their scheduling entries, but 
understood that additional time might be needed si nce the questions had not been circulated in 
advance.  They were addressed to Japan, the Unite d States, the European Communities, and Canada.  
The revised Japanese offer (TN/S/O/JPN/Rev.1) cont ained an entry similar to a safeguard that 
allowed the introduction of future and temporary lim itations.  It was to be found in the commitment 
on freight transport by road (CPC 7123).  In Japan's Uruguay Round schedule, the entry for that sector 
clearly referred to emergency safeguard measures,  and the Japanese delegation had indicated in the 
past that this had been a mistake.   In the revised offer, the entry had been replaced, in mode 3 under 
market access, by the following: "None except th at on a temporary and non-discriminatory basis, 
limitations on the number of service suppliers and on the number of service oper ations or on the quantity 
of service output may be applied".  The inscription suggested that in some situations the number of 
service suppliers, service operations or the quantity of service output might be limited.  Since the 
measure affected mode 3, it might be used to limit 'expansionary activities' that could cause injury or 
threat thereof to the domestic industry and affect ac quired rights.  He asked for clarifications on the 
following aspects: What were the situations that jus tified the application of the measure?  What type 
of information would be considered in making a dete rmination of injury or threat thereof?  What 
would be the statistical source that the proponents would use?  Would these statistics need to be 
provided according to the mode of supply?  What type of evidence would be sought in determining 
the potential injury?  What parameters were consid ered in setting the quantitative limits?  Would these 
be applied to the established local and foreign su ppliers as well as on those wishing to establish?  
How would expansion of service supplies be defi ned (increases in turnover, profits, product range, 
regional representation, etc)? 
 S/WPGR/M/53 
Page 6  
 
23. The representative further said that th e revised offer from the United States 
(TN/S/O/USA/Rev.1) contained an inscription similar to a safeguard.  It allowed exemptions on rural 
local exchange carriers to ensure interconnection.  The entry, which was found in a footnote to the 
Reference Paper on telecommunications, seemed to be  discriminatory.  It enabled a state regulatory 
authority to exempt rural local exchange carriers fo r a limited period of time from the obligations of 
section 2.2 of the Reference Paper with regard to  interconnection with competing local exchange 
carriers.  In relation to this inscription, he invite d the United States to provide clarifications about the 
following aspects:  In which situation was this exem ption applied?  What type of information would 
be considered in determining the exemption?  To which modes of supply would this safeguard apply?  
What data would be used?  Would statistics need to be provided according to the modes of supply?  
What was the type of surveillance applied and what were the elements considered in such a process?  
How was the limited period of application stipulated? 
24. The representative said that the revised offer of  Canada (TN/S/O/CAN/Rev.1) also contained 
an inscription similar to a safeguard measure.  It required a public convenience and necessity test in 
relation to distribution services.  The entry, which was found in the sub-sector 'Retail sales of motor 
fuel' (CPC 613) and applied to the province of Pr ince Edward Island under mode 3, read as follows: 
"Public convenience and necessity test. (criteria re lated to approval include: examination of the 
adequacy of current levels of service, market conditions establishing the requirement for expanded 
services, the effect of new entrants on public conve nience, including the continuity and quality of 
service, and the fitness, willingness and ability of th e applicant to provide proper service)".  He 
thought that the concept of “effect on public conve nience” might have a close relation to issues such 
as the consideration of consumers’ views, as well as to the broader economic impact of the application 
of a safeguard measure.  Therefore, he asked Cana da to explain the concrete parameters for the 
application of this measure.  Further, what type of information would be considered in determining 
the adequacy of current levels of service?  What type of statistics would be used?  Would they be 
disaggregated by sub-sector (e.g., three digit CPC, four digit CPC?)?  How would the requirement for 
expanded services be defined (increases in turnove r, profits, product range , regional representation, 
etc)?  Could the measure imply restrictions to th e acquisition of new facilities, new hiring, increased 
marketing, expansion of  consumer base, or new strategic alliances?  Would any limitations to 
expansion be discriminatory, or would they also apply to domestic suppliers?  Would the 
consideration of new entrants with regard to p ublic convenience take into account domestic suppliers 
and, if so, what would be the criteria?  Would discr iminatory restrictions be consistent with bilateral 
investment treaties providing for national treatment to established foreign investors, including foreign 
service suppliers?  Would the Parties to these agreements be exempted on the basis of acquired rights?  How could it be determined whether public conveni ence was affected by scheduled liberalization, as 
opposed to other factors?  What weight would be  given to public convenience compared to economic 
factors?  
25. The representative continued by referring to the revised offer from the European 
Communities (TN/S/O/EEC/Rev.1).  It contained a safeguard-type entry that required an economic 
needs test based on, in his view, unclear criteria in  relation to distribution services. The entry, which 
related to retailing services under mode 3 and was sp ecific to Belgium, Cyprus, Denmark, France, 
Italy, Malta and Portugal read: "(e)conomic needs test applied on a national treatment basis.  The economic needs test, when applied, sets a limit on th e number of department stores (large department 
stores in France and larger than 2000 sq. m. in Portug al).  Main criteria: The number of and impact on 
existing stores, population density, geographic spread , impact on traffic conditions and creation of 
new employment."  He askedwhat type of informati on would be considered in determining the impact 
on existing stores, what type of statistics would be  used, and whether these would be disaggregated by 
sub-sector (e.g., three digit CPC, four digit CPC)?  Further, how could it be determined whether the 
existing stores were affected by liberalization undertaken in accordance with the schedule of 
commitments, as opposed to other factors?  How would safeguard measures be different from the 
market access limitations listed, and would their use be less feasible than the use of such limitations?  
The representative encouraged the relevant Member s to engage in this discussion, at least in  S/WPGR/M/53 
 Page 7 
 
 
forthcoming meetings.  There was no presumption th at the entries he mentioned were safeguard 
measures.  However, some entries contained elements  that, if explained, could inform the debate on 
feasibility issues raised in relation to an ESM.  He reiterated that his delegation stood ready to respond 
to questions as well.   
26. The representative of Japan  noted that similar questions on Japan's schedule of commitments 
had been raised in the past and said that he woul d communicate the details of Brazil's intervention to 
his authorities and come back to this at a later time.   
27. The representative of the European Communities  said that the questions raised by Brazil 
related to an economic needs test which was not a pplied on a discriminatory basis nor in response to 
emergency or injury situations.  He did not think that such questions were relevant to the Working 
Party's discussions. 
28. The representative of the United States  said that the Working Party, in continuing discussions 
pursuant to Article X, had been looking at propos als on an emergency safeguard mechanism.  The 
questions put forward by Brazil were outside of  the mandate.  Neverthe less, her delegation had 
responded during the bilateral request-offer process.  She hoped to see the questions in writing and 
was open to again discuss these issues further with Br azil in the hope of addressing its concerns.  The 
entry in the US schedule that was highlighted by  Brazil was not an emergency safeguard mechanism 
nor was it intended to play such a role.  A diff erent standard was being applied for the Article X 
mandate.   
29. The representative of Canada , in a preliminary manner, saw little parallels between ENTs and 
an ESM.  ENTs in schedules had emerged from earlie r negotiations and, to the extent they were 
impediments to trade, they would be discussed in  the context of on-going and future market access 
negotiations.  Article XVI specifically contemplated ENTs.  Their existence did not militate in favour 
of equipping the GATS with an ESM, but highlight ed the flexibility already imbedded within the 
GATS. 
30. The representative of Hong Kong, China  hoped that the delegation of Brazil could share its 
questions with the whole Membership.  He asked the Secretariat to inform the Working Party of Notes 
prepared in the past on safeguard provisions in economic integration agreements.  When discussing 
safeguard-type entries in schedules, it was important to look at measures that, even if not using the 
word 'safeguard' as such, had the effect of in troducing uncertainty in specific commitments by 
providing an element of discretion in deciding the le vel of market opening granted in practice.  Two 
types of measures were closely related to safeguards.  The first were some entries referring to ENTs.  
ENTs were one way of specifying an Article XVI  limitation; however, many such entries did not 
specify a criterion nor the type of limitation that could be imposed.  One could presume that such 
entries had been included in schedules because the re levant Members had wanted to reserve a certain 
amount of discretion in terms of limiting market  access.  In that sense, there might be some 
resemblance between unspecified ENTs and safeguard -type provisions.  Second, subsidies could also 
act as very effective safeguard measu res for those Members that could afford it.  Subsidies could tilt 
the level playing field in favour of the domestic suppliers in situations where injury was caused by supplies of foreign service suppliers.  Various Me mbers had included in their schedules horizontal 
carve-outs on subsidies.  The representative was pu zzled by previous interventions suggesting that 
Brazil's questions were of no relevance to this Work ing Party.  Many resembled some of the issues 
raised in the Committee on Specific Commitments (CSC ).  He was looking for Members to respond to 
these questions, whether in this Working Party or in the CSC.  Such questions would continue to be 
asked until they were addressed in a substantive manner.  He was not intending to single out any 
particular Member, but rather aimed at addressing th e more general problem of unclear entries that 
might have effects similar to safeguards or that, in  their operation, would be posing the same type of 
feasibility questions.  If some Members considered th at such entries did not have similar effects to S/WPGR/M/53 
Page 8  
 
safeguards nor posed similar feasibility questions, he  was waiting for an explanation.  A solution to 
this issue was to eliminate or reduce these ty pes of entries through Members' offers.   
31. The representative of the United States
 said that, while it might prove interesting to look at 
the entries in all Members' schedules, this might detract from discussions on the question of an ESM.  She did not think that this was an appropriate wa y to respond to the proponents of an ESM, and she 
wondered whether the proponents thought that examin ing entries in every single Member's schedule 
would prove useful.  Further, there was no definition of what might be safeguard-type provisions.  She 
agreed with the delegation of Hong Kong, China that  the occurrence of certain limitations and other 
trade obstacles should be reduced.  This was a purpos e of the negotiations.  In the CSC, her delegation 
had supported informal discussions to address techni cal questions relating to schedules.  One could 
continue to ask questions, but, given that some might feel that these did not fall under the mandate 
and that Members were not obligated to answer, she wondered whether this would be a prudent way 
to advance the Article X mandate.  She had not  agreed to launch such an exercise.   
32. The representative of Chile
 noted that the approach, mentioned earlier, consisting of the 
provision of examples of situations requiring a safeguard was an important way to address this 
question.  She did not see such  examples as fictitious, but rather hoped that the proponents put 
forward concrete examples in order to see whether or not a safeguard-type mechanism was necessary and feasible.  She thought that the questions put  forward by Brazil were useful and did not mind 
whether they were discussed in the WPGR or the CSC.   
33. Reacting to previous interventions, the representative of the European Communities
 did not 
consider that ENTs were similar to safeguards.  Economic needs tests carried a certain level of 
discretion, but Members without commitments in certain sectors or with the inscription "unbound" 
had even more discretion.  This should be kept in mind when attempting comparisons.   
34. The representative of the Philippines  thought that Brazil's intervention was a positive and 
constructive contribution to help solve some feasibility  issues previously raised regarding safeguards.  
Delegations should not perceive this exercise as an attempt to target any particular delegation, but 
rather as a complement to on-going discussions about  an ESM.  Hopefully, reticent delegations would 
at least discuss such issues in the informal consultations that ASEAN would  convene.   
35. The representative of China  believed that Brazil's intervention was relevant to the discussion 
on Article X.  The examples mentioned were, in hi s view, equivalent to safeguards, and he was 
looking forward to answers from relevant Members.  He agreed with the suggestions made by the 
Philippines on organization of work.   
36. The representative of the United States  did not endorse the course of action proposed by 
Brazil.  The Chairperson might have to conduct consu ltations on how best to proceed on this point.  
Engaging in an informal discussion of Brazil's questions could mean that the Working Party would have to examine similar questions on every Member's schedule.  Her authorities would further consider this issue, but the US delegation woul d certainly not participate unless assured that every 
Member would be subject to the same questions.  In any event, she would not be interested in 
discussions in formal mode.  The burden was on th e proponents to demonstrate the need for an ESM; 
the burden was not on others to demonstrate why entries in their schedules were not safeguard-type 
provisions.  Trying to shift the burden in such a way was not acceptable.    
37. The representative of the Philippines
 did not see Brazil's intervention as an attempt the shift 
the burden, but as a constructive effort to further the negotiations on ESM.   
38. The representative of Brazil  was open to consultations by the Chairperson on this issue.  He 
would circulate the questions and revert to them at the next meeting.  He encouraged delegations to 
ask questions on his country's schedule, hoping that th is could help to avoid scheduling inaccuracies.   S/WPGR/M/53 
 Page 9 
 
 
He was not trying to shift the burden of proof, but rather attempted to ease the burden of rejoinder.  Many questions had been put to the proponents in relation to feasibilit y.  The four large economies at 
which the questions were directed could share th eir experience.  They were in a good position to 
respond because they had sophisticated bureaucracies, but  the intent was not to target any Member in 
particular.   
39. The representative of Thailand
 was grateful for Brazil's intervention and looked forward to 
further discussions on this topic.  The scheduling entr ies mentioned could lead to a form of suspension 
of specific commitments, which was why there was no impending need for an ESM.  In some ENTs, 
the criteria could serve as a trigger point similar to what might be used for an emergency situation in 
safeguard provisions.   
40. The representative of Hong Kong, China  noted that the Secretariat Note S/CSS/W/118 
contained a list of ENTs in Members' schedules.  A similar list relating to s ubsidies could be found in 
the Secretariat Notes S/WPGR/W/13 and addenda.  Like  the delegation of Chile, he was interested in 
pursuing this discussion either in this  Working Party or in the CSC.   
41. In response to a previous question, the Chairperson  said that the Notes prepared by the 
Secretariat on safeguard-type provisions in economic integration agreements had been circulated as 
S/WPGR/W/2, S/WPGR/W/4, and S/WPGR/4/Add.1 (incl. Corr.1).  In summing up, she noted the appreciation of Members for the seminar held in Indonesia on ESM issues, as well as the strong 
interest of some delegations in  advancing on this question.  Pr oponents, as well as other delegations, 
had signalled their openness to considering possible alternatives and approaches on the way forward.  
Some delegations had stressed that the responsibili ty for advancing this negotiation lied with the 
proponents.  It had been suggested that the Chairperson should undertak e consultations and hold 
informal exchanges as appropriate, and ASEAN Members had said they might hold additional meetings.  In addition, Brazil had made an inte rvention on what it considered as limitations in 
schedules resembling safeguards, and had invited co mments from other delegations in reaction to its 
questions.  Views differed to a significant degree on  the utility of answering such questions in this 
Working Party, and it was noted that the Chairperso n should include this point in his consultations.  
She invited the Working Party to take note
 of comments made.    
III. NEGOTIATIONS ON SUBSIDIES (ARTICLE XV) 
42. The Chairperson  suggested that delegations pursue their discussion of the communication 
from Chile; Hong Kong, China; Mexico; Peru; and Switzerland (JOB(05)/96) on a provisional 
definition of subsidy for the purpose of informat ion exchange and of the suggestions contained 
therein.  It would be of interest to know, from those that had not given a view to date, what steps were 
envisaged regarding the provision of information as per Article XV:1.  While having all Members 
agree on a working definition and select sectors migh t prove useful, delegations should keep in mind 
that these were not pre-conditions for the provision of information.   
43. The representative of Hong Kong, China  wished to emphasize three general points in relation 
to JOB(05)/96.  First, he was not looking for a perfect and agreed definition of subsidies for the 
purpose of developing disciplines, but rather for a working definition that individual Members could 
use as a basis for initiating the information exchange  as mandated in Article XV:1.  That mandate was 
clear and he did not see any reason for such an exerci se to be confused with notifications.  Both the 
1997 Secretariat questionnaire and the 2002 simplifie d questionnaire by Hong Kong, China and others 
had suggested that delegations use either th e definition of the Agreement on Subsidies and 
Countervailing Measures (ASCM) or their own defin ition.  The proposal for a provisional definition 
was a response to the repeated co mplaints by some Members that the lack of a definition made it 
difficult to exchange information.  Second, th ere was no need for a common definition before 
proceeding with the information exchange.  That w ould be ideal, but the discussions would be shaped 
by the information coming forward.  It was important  for the information exchange to go ahead, rather S/WPGR/M/53 
Page 10  
 
than to dwell on details.  In any event, no defin ition used by individual Members for the purpose of 
the information exchange would prejudge any eventual  definition or the scope of disciplines.  Third, 
sponsors of the communication had suggested the po ssibility of self-selecting a certain number of 
sectors, along with a certain timeframe.  Specific suggestions had been made in the communication, but he was open to other Members' views as to what  would be realistically achievable.  He recognized 
the capacity constraints that some developing Members might face and was open to ideas on how this 
might be addressed, e.g. by providing information on fewer sectors, by having a longer timeframe, or - as had been suggested by the EC - by setting a de minimis  level.   
44. Turning to specific issues rais ed at the last meeting, th e representative noted that a 
comparison had been made between the US proposal  and JOB(05)/96.  While there might be some 
small differences, JOB(05)/96 built upon the US proposal in regard to both a provisional definition 
and the sector focus.  A difference between the tw o proposals was that the sponsors of JOB(05)/96  
did not believe that there was a need to narrow do wn the focus to one sector.  Drawing information 
from only one or two sectors might introduce a bias in  the analysis of subsidies and of their trade-
distorting effects.  Letting Members exchange in formation by starting from a few sectors of their 
choice would yield information of a sufficiently broad range to permit a ppropriate analysis.  A 
question had also been raised about the terms "on te rms more favourable than those available to the 
potential recipient or beneficiary in the market", used  in the proposed working definition.  He said that 
this wording had been drawn from jurisprudence on  the notion of "conferring of a benefit", which 
figured in the ASCM definition.  Regarding questio ns on the choice of sectors, for example whether 
they should be based on W/120, he did not think that this should be a hurdle given that it was left to 
individual Members.  The concept of specificity had been retained in the provisional definition partly 
to address the concerns of some Members over the pot entially wide scope of the definition.  At the 
same time, he thought that the notion of specificity  might not be readily transposable to the services 
context and might need modifications.  Members that did not consider that this notion was relevant to 
the definition could decide not to use it for the purpose of the information exchange.  The Members 
that used the concept could explain how they  applied it in gathering information.   
45. Regarding non-governmental bodies, he thought that every Member would have an idea of 
the meaning of these terms since they were found in  Article I of the GATS.  He recalled that the 
provisional definition was not intended to be perfect , but to help the information exchange.  With 
respect to questions on general infrastructure and pub lic services, he said that 'general infrastructure' 
was a notion used in the ASCM.  The terms 'pub lic services' were introduced to cover services 
provided by the government to the public in general.  This also was an attempt to address concerns 
that the information exchange might be too broad an d thus hurt some sensitivities.  He was ready to 
consider suggestions on how to be tter define this concept.  He stressed that the references in 
paragraph 3(d) of the annex in JOB(05)/96 did not prejudice the scope of Article I:3 of the GATS.  
Paragraph 2 of the annex specified that only subsidi es within the scope of Article I:3 were covered.  
With regard to flexibility for developing countries, he was aware of the recognition in Article XV of 
the role of subsidies in relation to the devel opment programmes of developing countries and the 
importance of taking into account the needs of Members, especially developing economies, for 
flexibility in this area.  Such flexibility might be something to further consider during the negotiations 
of disciplines.  Regarding comments that the provision of information was sensitive, he pointed out the high aspirations of some Members on transpar ency in other areas.  In JOB(05)/96, the sponsors 
had made many suggestions, relating for example to the choice of sectors or public services, to 
address sensitivities and he was open to further ideas in that regard.   
46. The representative of Turkey
 saw utility in the information ex change and believed it would be 
important to develop a provisional definition, whic h would not prejudice the positions of Members.  
The definition could be based upon existing WTO provi sions and jurisprudence.   A limited number 
of service sectors of interest to the entire Membership might be chosen, for example two sectors.  
There might be merit in selecting the same sectors for all Members.  The Working Party might  S/WPGR/M/53 
 Page 11 
 
 
initially focus on subsidies based on export performan ce.  The concerns of Members, as expressed at 
the last meeting, needed to be addressed.   
47. The representative of Guatemala  reiterated her support for proceeding with the information 
exchange, subject to the development of a provision al definition of subsidy.  It should only aim at 
facilitating the information exchange and not prejud ge positions of Members in the development of 
disciplines.  Any deadline should provide the necessa ry time for allowing government institutions to 
gather the information.  Since a deadline before the Hong Kong Mi nisterial would be difficult to 
comply with, further discussion of this aspect was n eeded.  The selection of sectors should be left for 
each Member to decide.  Flexibility for developing  countries should be provided in terms of the 
number of sectors chosen.    
48. The representative of Pakistan  encouraged Members to start the process of information 
exchange.  The proposal by the United States (JOB(05) /5) had made some useful suggestions in that 
regard.  The Working Party might consider asking UNCTAD or the OECD to make presentations if 
they were doing work in this area.  On the definiti on, she agreed with the use of the ASCM definition 
as a provisional basis for facilitating the informati on exchange.  Elements could be added to it.  
Subsidies could entail specific financial contribut ions or concessions made by a government at 
federal, state, provincial or lower levels to an  entity providing services locally or exporting and 
competing with entities not enjoying these benefits.  The definition would only target sectors where Members had already made commitments.   
49. Regarding the timeframe proposed in JOB(05)/96, the representative of Switzerland
 said that 
she was open to other Members' views as to what w ould be realistically achievable.  She understood 
that some Members would need more time and her delegation was ready to accommodate such needs.  
However, she thought that a strong positive signal would be given if Members could exchange 
information on the selected sectors by the Hong Kong Ministerial.  It would be regrettable if the proposed timeframe was not further considered. 
50. The representative of Thailand
 reiterated her support for developing a provisional definition 
for the purpose of facilitating the information exchange .  Some elements contai ned  in paragraph 8 of 
JOB(05)/96 could be used as a flexible basis for shar ing information.  Any future disciplines could be 
looked at in the light of Article IV, the purpose of which was to increase the participation of 
developing countries.  Certain forms of government  assistance could create an artificial and unfair 
competitive advantage for domestic suppliers.   
51. The representative of the European Communities  said that his delegation had provided 
information in all sectors.  He recalled the communication from his delegation from 6 July 2000, as 
well as his intervention at the last meeting (parag raph 62 of  S/WPGR/M/52), which mentioned the 
websites where relevant information on subsidies could accessed.   
52. The representative of Hong Kong, China  thought that the steps taken by the EC might be a 
good example of how one could get started on the info rmation exchange.  He asked if the EC could 
provide insights on the definition used in gathering such information.  The representative recalled that 
the US had suggested to focus on export subsidies, a nd he thought this was an interesting idea.  He 
asked the delegation of the United States how they would define export subsidies for the purpose of 
sharing information.  In view of the need for th e Working Party to focus on what was realistically 
achievable, a reality check was needed regardin g the information exchange.  Since the first 
questionnaire, only four Members had provided  written replies and one Member had provided 
information orally.  Apart from a few Members th at had reported difficulties in gathering and 
providing information for the information excha nge, no Member had indicated any attempts or 
signalled any progress in responding to the questionnaire  or otherwise gathering information.  He had 
shown willingness and made suggesti ons to try to accommodate the concerns of those that had 
experienced difficulties.  A problem mentioned w as the absence of definition, which his group had S/WPGR/M/53 
Page 12  
 
attempted to address in their proposal.  Second, some  delegations had pointed to the potentially broad 
scope of the information exchange and its resource implications, and he had consequently suggested 
to start with few sectors at a time.  Third, some  delegations had felt that the information exchange 
should focus only on areas where the subsidies were causing trade distortion.  In that regard, he 
reiterated that the purpose of the information excha nge was to provide an information base that could 
serve for analysing the problems and devising appropriate solutions as necessary.  He strongly 
believed that the information exchange was require d for enhancing discussions on trade distortion and 
possible disciplines.  The exchange would also pr ovide a better basis to decide on an appropriate 
definition.  The mandate in Article XV:1 w as clear and remained to be fulfilled.   
53. The representative noted that many schedules cont ained carve-outs for subsidies.  Like for 
safeguards, it might be that Members with such car ve-outs were hesitant to engage in a substantive 
way in the negotiations on subsid ies because they already had prot ected their position.  Subsidies 
could be effective safeguard measures, so long as a Member could afford it.  While the information 
exchange was not necessarily a pre-condition for m oving forward, it was an important component of 
the negotiations.  The fact that the mandate could not be fulfilled by Members over the last 8 years 
had been a matter of great concern and he wonde red about Members' willingness.  This situation 
contrasted with the emphasis put by some dele gations on transparency in other areas.  The 
representative therefore requested the Chairperson to reflect, in her report to the Special Session of the 
Council for Trade in Services, the fact that the mandate had remained unfulfilled until now.  The 
Chairperson should also conduct informal consu ltations on ways to facilitate progress on the 
information exchange.  The Chairperson's report to the Special Session should be made with a view to 
seeking guidance on this matter, keeping in mind that the subsidy negotiations were part of the overall 
services negotiations.  Progress should be made in parallel in both the market access and the rules 
negotiations. 
54. The representative of Chile
 agreed with the delegation of Hong Kong, China regarding the 
importance of the information exchange.  Many Me mbers had not fulfilled the mandate.  While some 
had said that they had encountered difficulties, othe rs clearly had the resources needed to provide the 
information and should therefore do so.  She was open to discuss the difficulties faced by those delegations with more limited resources.  It was important first to constitute an information base 
before moving on to other aspects of the negotia tions.  Hopefully, the information on subsidy 
programmes mentioned in Trade Policy Reviews a nd in other sources could be shared with the 
Working Party.  Delegations could then analyse wh ether there was a problem to address.  She thought 
that subsidies would, as pointed by the delegation of Thailand, lead to an uneven playing field.  
Regarding the way forward, she agreed with the suggestions made by the delegation of Hong Kong, 
China, in particular the undertaking of informal consultations.     
55. The representative of the United States
 said that she needed to consult with her authorities 
before agreeing to any proposal to request the Chairp erson to make certain statements or take actions 
in the Special Session of the Council for Trade in Services.   
56. In summing up, the Chairperson  noted that no more Members had provided information today 
pursuant to the exchange mentioned in Article XV:1.  Different sugges tions had been made to address 
the concerns that Members might have regarding th e provision of information.   Several delegations 
had expressed support for energizing the information ex change.  The idea had been  raised that, in the 
light of the lack of fulfilment of the mandate , some guidance should be sought from the Special 
Session, although opposing views had been expressed.  It also had been suggested that the 
Chairperson undertake informal consultations on th e way forward.  She urged Members to make 
efforts to provide information as appropriate and hoped that the proponents could lead the way.  
Delegations should inform the Working Party of an y problems that they were facing in gathering 
information, so that these could be addressed.  She invited the Working Party to take note  of 
comments made.    S/WPGR/M/53 
 Page 13 
 
 
IV. NEGOTIATIONS ON GOVERNMENT PROCUREMENT (ARTICLE XIII) 
57. The Chairperson  invited delegations to continue their discussion on the basis of the latest 
communication from the European Communities (S/WPGR/W/52) and to focus on possible procedural rules.  A key question was whether th ere were such rules around which there could be a 
greater degree of support for advancing discussions.   
58. The representative of the European Communities
 recalled that his delegation's communication 
referred to procedural rules that could be devel oped for government procurement in services.  He 
underscored that delegations should participate activ ely and in good faith in all three topics under the 
responsibility of the Working Party.  Of course, dele gations with particular interests in one of the 
topics could take the lead, as the EC was doing on pr ocurement.  However, other delegations needed 
to participate to ensure progress in the negotiations as a whole.  All three areas had to advance at the 
same pace.   
59. The representative of Hong Kong, China  said that he conducted the negotiations in the three 
areas in good faith, but, in the light of the discussi on on the information exchange mandate, he feared 
that not everybody shared this view.  Concer ning the EC proposal, he had not yet received a 
satisfactory answer to the question on how the proposed framework for government procurement 
would square with reciprocity provisions in th e Government Procurement Agreement (GPA).  The 
answers given so far had suggested that th e EC was relying upon exemptions from the MFN 
obligation similar to existing exemptions pursuant to Article II of the GATS.  He still was puzzled 
about how this approach would allow for a reconc iliation of the reciprocity provisions in the GPA 
with the multilateral commitments that the proposed EC framework envisioned.  He hoped to obtain 
clear answers in order to progress in the discussions.     
60. The representative of Brazil  reiterated that he disagreed with  the delegation of the European 
Communities regarding the scope of the mandate in Article XIII.  His delegation was therefore not 
prepared to engage in any discussion relating to market access or national treatment.  He might be willing to address, however, other parts of the communication from the European Communities.   
61. In response to the question from the delegati on of Hong Kong, China, the representative of 
the European Communities
 said that under the EC proposal Members' commitments would apply 
multilaterally.  If the GPA contained additional elem ents that applied only amongst GPA Members on 
the basis of reciprocity, these would be preserved by a specific provision to that effect.  He did not see a major problem with the relationship between the framework and the GPA, but was open to 
suggestions.  He took note of Brazil's views a nd welcomed the Brazilian delegation's readiness to 
engage on some parts of S/WPGR/W/52.  Should the Chairperson undertake informal consultations 
on subsidies and ESM, he should also do so  on government procurement.      
62. The Chairperson
 invited the Working Party to take note  of comments made.   
V. DATE OF THE NEXT MEETING 
63. The Chairperson  suggested that the Working Party hol d its next formal meeting during the 
next cluster of services meetings after the Hong Kong Ministerial.  She noted the interest on the part 
of delegations for the Chair to undertake informal consultations and to take  appropriate steps to 
facilitate informal exchanges.   
VI. OTHER BUSINESS 
64. No issue was raised under this agenda item.   
__________