WORLD TRADE  
ORGANIZATION  RESTRICTED 
S/C/M/108 
18 November 2011 
 (11-6005) 
Council for Trade in Services  
  
 
REPORT OF THE MEETING H ELD ON 3 NOVEMBER 2011 
 
Note by the Secretariat
1 
  
1. On 3 November 2011, the Council for Trad e in Services held a meeting under the 
Chairmanship of Ambassador De Mateo (Mexic o).  The agenda was contained in document 
WTO/AIR/3840. 
2. Due to an unforeseen engagement, the Chairper son of the Council for Trade in Services, 
Ambassador Erwidodo (Indonesia), could not be present to  chair the meeting.  Rule 13 of the Rules of 
Procedure for meetings of the Council for Trade in Services (S/L/15) stipulates that, if the 
Chairperson is absent from any meeting, and if no Vice-Chairperson had been elected, the Council 
shall elect an interim Chairperson for that mee ting.  Accordingly, the Council elected Ambassador 
Fernando de Mateo as interim Chairperson.   
3. The representative of Australia said that her delegation wished to add an item of Other 
Business concerning the entry into forc e of the certified EC-25 schedule.  
4. The agenda was adopted, as modified. 
A. ANNUAL REPORTS OF THE SUBSIDIARY BODIES TO THE COUNCIL FOR TRADE IN SERVICES  
5. The Chairperson recalled that, in accordance w ith WTO reporting procedures, the Council for 
Trade in Services was to consider the Annual Reports of its subsidiary bodies.  Accordingly, he drew 
Members' attention to the Annual Report of the Co mmittee on Trade in Financia l Services (S/FIN/25), 
the Annual Report of the Committee on Specific Co mmitments (S/CSC/17), the Annual Report of the 
Working Party on Domestic Regulation (S/WPDR/ 14) and the Annual Report of the Working Party 
on GATS Rules (S/WPGR/22), which had been adopted by the respective bodies. 
6. He suggested that the Council take note of th e four Reports, on the understanding that they 
would be annexed to the Annual Report of the Council for Trade in Services and form an integral part 
of it. 
7. It was so agreed. 
B. ADOPTION OF THE ANNUAL REPORT OF THE COUNCIL FOR TRADE IN SERVICES TO THE 
GENERAL COUNCIL  
8. The Chairperson indicated that, in accordance with WTO reporting procedures, the Council 
for Trade in Services should report each year to the General Council on the activities in the Council as 
well as in the subsidiary bodies.  He drew delega tions' attention to the draft Annual Report of the 
Council for Trade in Services on its activities in 2011, contained in document S/C/W/343.  The 
                                                      
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO. S/C/M/108 
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  Report was factual and self-explanatory.  As he had mentioned under the previous agenda item, the 
Annual Reports of the subsidiary bodies would be  annexed to the Council's Report for submission to 
the General Council. 
9. He proposed that the Council for Trade in Se rvices adopt the draft 2011 Annual Report to the 
General Council contained in document S/C/W/343. 
10. It was so agreed. 
C. NOTIFICATIONS PURSUANT TO ARTICLES III:3  AND V:7 OF THE GATS 
11. Starting with the notifications made pursuant to Article III:3 of the GATS, the Chairperson 
drew delegations' attention to  the notifications received,  respectively, from Thailand (in document 
S/C/N/603) and from the Kingdom of Saudi Arabia (documents S/C/N/604 to 607). 
12. The Council took note of the notifications made. 
13. The Chairperson subsequently pointed to th e notification pursuant to GATS Article V:7 
received from Canada and Colombia (in document S/C/N/602). 
14. The Council took note of the notification, and referred the agreement notified to the 
Committee on Regional Trade Agreements for consideration. 
D. TRANSITIONAL  REVIEW  UNDER  SECTION  18 OF THE  PROTOCOL  OF ACCESSION  OF THE  
PEOPLE'S  REPUBLIC  OF CHINA  
15. The Chairman recalled that Section 18 of the Accession Protocol of the People's Republic of 
China provided for the review of the implementati on by China of the WTO Agreement and the related 
provisions of China's Accession Protocol.   
16. Paragraph 4 of Section 18 of the said Protocol (document WT/L/432) stated that the Review 
"will take place after accession in each year for eight years.  Thereafter there will be a final Review in 
year 10 or at an earlier date decided by the Gene ral Council."  Pursuant to that mandate, the Council 
for Trade in Services, like all WTO subsidia ry bodies involved in the Transitional Review 
Mechanism, had conducted a review of China's impl ementation of commitments and other obligations 
during the 8 years following Chin a's accession, from 2002 to 2009,  and was conducting the final 
review that year, the 10th year after accession.  
17. The Committee on Trade in Financial Services (CTFS) was the other services body in which 
the Review was to be conducted.  Upon conclusion of its Review, th e CTFS was to submit a Report to 
the Council, which would form part of the Counc il's Report to the Genera l Council.  The General 
Council would conduct its own Review. 
18. The Committee on Trade in Financial Services had conducted and concluded the transitional 
Review under Section 18 of China's Accession Prot ocol on Monday, 31 October 2011.  A Report had 
been submitted by the Committee, and was contai ned in document S/FIN/26.  A record of the 
discussion was included in the Report of the meetin g of the Committee, document S/FIN/M/71.  The 
Chairman proposed that the Council take note of th e Report by the Committee on Trade in Financial 
Services, on the understanding that it would form part of its own Report to the General Council. 
19. It was so decided.  S/C/M/108 
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  20. Turning to the Council's own ninth and fina l Review, the Chairman drew delegations' 
attention to the communication from China, circul ated in document S/C/W/344, dated 28 October 
2011, which provided information re quired by Annex 1A of China's Accession Protocol.  Two further 
communications had been received in advance of the meeting, from Japan (S/C/W/341) and the EU 
(S/C/W/342).   
21. While appreciative of China's continuous efforts to improve the level of liberalization in its 
service market, the representative of Japan highlight ed some key areas where China's implementation 
of its services commitments needed to be further secu red.  Examples included, first, entry barriers in 
the telecommunication sector.  Foreign affiliates seeme d to face discriminatory barriers to entry into 
the telecommunication market.  For instance, mini mum capital regulations in China, which were 
determined at a national and provinc ial level, had remained high.  Also, there was insufficient clarity 
with regard to the establishment of interconnecti on agreements or interconnection offers and their 
being made publicly available, even though China had undertaken the obligations in the Reference 
Paper.  Japan asked that China make further im provements in the transparency of the relevant 
regulations.  It was important to enhance furthe r development of the competitive environment and 
ensure transparency in the teleco m market in China, including through the elimination of limitations 
on foreign capital participation.   
22. Second, prompt implementation of Dispute Se ttlement Body (DSB) recommendations.  With 
respect to the DSB recommendations to China re garding measures affecting trading rights and 
distribution services for certain publications and audio-visual entertainment products, at the DSB 
meeting held on 25 March 2011, Chin a had reported that it had comple ted the implementation of most 
of the DSB's rulings and recommendations.  As the matter was a major concern for its industry, Japan 
continued to pay close attention to the progress in  China's implementation and encouraged China to 
make further efforts to enhance regulatory tr ansparency, thus maximising the benefits of 
liberalization.   
23. The representative of Canada recognized the si gnificant efforts China had made in the years 
since its accession to meet its WTO commitments.  However, China was encouraged to redouble its 
efforts, particularly in the area of transparency, where concerns had been raised by stakeholders.   
24. In its Accession Protocol, China had committed to  establish or designate an official journal 
dedicated to the publication of all laws, regulations and other measures pertaining to or affecting trade 
in services, and, after publication, to allow a reasonable period for comment to the appropriate 
authorities before such measures were implemented.   It was Canada's understanding that China had 
established the MOFCOM online gazette and the Chin a Trade in Services website to meet this 
obligation.  Further, China had made progress in publ ishing laws and regulations  more consistently in 
recent years. 
25. However, not all laws and regulations were  published in one place.  There was no single 
location where interested parties could find all laws and regulations pertaining to or affecting trade in 
services.  This might make it difficult to provide comments on the measures that were being 
developed within the prescribed comment period, or  for Members or their service suppliers to find 
relevant information.  Moreover, for those laws and regulations that were published there was not 
always adequate opportunity for comment, or  they were applied retroactively.  
26. Canada thus wished to encourage China to pu blish all laws, regulati ons and other measures 
pertaining to or affecting trade in services in one central location, and to allow sufficient time to 
provide comment on the measures being developed. 
27. The representative of the European Union recognised and welcomed China's continuous 
efforts over the past ten years to implement its  WTO commitments for services, and encouraged S/C/M/108 
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  China to continue with those efforts.  She noted th at the number of questions her delegation had raised 
already indicated significant challenges in realisi ng the benefits of many of the commitments that 
China had de jure  implemented, while de facto  it appeared that China continued to maintain or erect 
restrictive terms of entry in some services sect ors, particularly those touched upon in the EU 
submission.   
28. Entry barriers prevented or discouraged forei gn suppliers from gaining market access through 
informal bans on new entry, high capital requireme nts, branching restrictions, and cumbersome and 
non-transparent licensing procedures or restrictions  taking away previously acquired market access 
rights.  In this context, she expressed concern about the new investment catalogue which had added some service sectors to prohibited or restricted categor ies.  This was a step backwards.  She called on 
China to implement the letter and spirit of its comm itments and to continue to pursue further market 
opening.   
29. The representative of the United States also wish ed to share observations on China's first ten 
years of WTO Membership.  His delegation had pr ovided the statement as a room document.   
30. Over the previous ten years, China had implemented a set of sweeping commitments, 
including reducing tariffs, eliminating trade barri ers and making legal improvements in intellectual 
property protection and in transparency.  Neverthe less, even though China had taken many impressive 
steps to reform its economy since joining the WTO,  the overall picture remained complex, given a 
troubling trend in China toward increased state intervention in the economy in recent years.  
31. As for developments relating to services in pa rticular, China had taken steps to implement 
important commitments from its Protocol of Accession, and trade in services had expanded 
significantly.  However, while the United States we lcomed China’s progress in implementing many of 
its services commitments, China had seemingly not im plemented, or had only partially implemented, 
some of them.  
32. With regard to financial services, during the meeting of the Committee on Trade in Financial 
Services on 31 October, the United States had noted that China had made headway in many areas, 
while in others, including banking, insurance and pe nsions, China maintained various restrictions, 
including formal or informal licensing bans or other discriminatory treatment, and had to undertake 
additional work to ensure full implementation.  Al so, it appeared that China had not yet implemented 
electronic payment services commitments that were sch eduled to have been phased in no later than 
11 December 2006 – a matter that was being litigated at that time at the WTO (DS413).  The United 
States had also emphasized that China’s financial services regulators needed to make more regular 
their processes for meeting China’ s transparency commitments.   
33. With regard to other service sectors, challenges still remained in ensuring that the benefits of 
many of the services commitments that had been nom inally implemented were available in practice, 
as it seemed that China had continued to maintain or erect cumbersome terms of entry in some 
sectors.  These entry barriers prevented or discour aged foreign suppliers from gaining market access 
through informal bans on new entry, opaque or discriminatory licensing requirements to establish or 
to expand internally in China, high minimu m capital requirements, and other measures.  
34. For example, it appeared that Ch ina maintained an informal ba n on foreign entry in the basic 
telecommunications sector, and despite its commitmen ts to open this sector, China had not granted 
any new licenses since acceding to the WTO 10 years a go.  The requirement that foreign companies’ 
joint venture partners for basic telecommunica tions services be Chinese government-owned provided 
a direct, non-transparent mechanism for enforcing this  ban, and shut off fore ign suppliers from private 
Chinese enterprises that might be more attractive pa rtners.  China also seemed to apply an economic 
needs test in the sector to avoid what it considered  to be unhealthy competition.   In addition, although  S/C/M/108 
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  minimum capital requirements for this subsector had been reduced somewhat, these were still quite 
high by international standards.  With regard to value-added telecommunications services, China’s 
opaque and restrictive licensing system had made it di fficult for foreign companies to gain a foothold, 
and few of them had been licensed since China’s accession to the WTO.  Lack of clarity regarding 
which services a foreign company was permitted to offer as well as arbitrary classification of certain 
services had contributed to the lack of significant access in this sub-sector. 
35. In the distribution sector, a WTO compliance ma tter had arisen when China had failed to 
remove its restrictions on the right to import a nd distribute copyright-intensive products such as 
books, newspapers, journals, theatrical films, DVD s and music as of 11 December 2004, as required 
by the terms of its accession to the WTO.  Instead, China had continued to wholly reserve the right to 
import these products to state-trading enterprises and place restrictions on their distribution within 
China, as reflected in a complex web of measures issued by numerous ministries.  After bilateral 
engagement had failed to persuade China to revise its measu res, the United States had initiated a 
WTO dispute settlement case in 2007, challenging Ch ina’s importation and distribution restrictions.  
The panel hearing the case had issued its decision in 2009, ruling in favour of the United States on all 
significant issues.  Later that year, China had appe aled the panel’s decision, and the Appellate Body 
had rejected China’s appeal on all counts.  China ha d subsequently agreed to come into compliance by 
March 2011, but it had not yet taken all of the steps necessary.  
36. With regard to express delivery services, China had implemented its commitment to open its 
market to wholly foreign-owned subsidiaries by 11 December 2004.  However, it had also imposed 
measures or followed practices that made it difficult for foreign suppliers to fully exploit the access 
that they were supposed to have  to China’s market.  For exampl e, under the Postal Law that had 
become effective in October 2009, the process for ce rtifying foreign supplie rs of domestic express 
delivery package services had been very slow.  Genera ting further concern was the fact that the Postal 
Law excluded foreign suppliers from the document segment of China’s domestic express delivery 
market.  In addition, China still had not issued all of the implementing regulations for the Postal Law, 
so uncertainty remained regardi ng how certain aspects of the Post al Law would be implemented. 
37. With regard to legal services, China had i ssued measures intended to implement its WTO 
commitments.  However, these measures gave ri se to WTO compliance concerns because they 
imposed an economic needs test, restrictions on the types of legal services that could be provided and 
lengthy delays for the establishment of new offices. 
38. China had issued measures intended to impl ement its commitments on construction and 
related engineering and design services, although the se measures were problematic in many respects.  
For example, they imposed high minimum capital requirements, and China also did not follow 
international practice by allowing the use of fina ncial instruments to satisfy its minimum capital 
requirements.  China also imposed other measure s that limited market access, such as overly 
burdensome requirements on project management comp anies that needed to first obtain a separate 
construction license or engineering and design license be fore they could be licensed to provide project 
management services.  The United States noted that some improvements of a temporary nature had taken place recently in the engineering and design  sector, and it hoped that these improvements would 
be made permanent. 
39. Finally, it appeared that China’s services regulators had made progress, but had not yet 
implemented all of the cross-cutting transparency commitments that China had made when it acceded 
to the WTO.  Some concerns remained, ev en after 10 years of WTO Membership.   
40. First, with regard to the commitment to pub lish all laws, regulations and other measures 
pertaining to or affecting trade in goods or services (as set forth in paragraph 331 of China’s Working S/C/M/108 
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  Party Report), China’s services regulators had complie d in many respects.  However, it still did not 
appear that measures providing "inter nal guidance" had been published. 
41. Second, concerning China’s commitment to  publish measures for comment before 
implementing them (as set forth in paragraph 2(C)2 of Part I of China’s Protocol of Accession), although some services regulators often employed notice-and-comment procedures through their 
websites, they did not always seek comments for rele vant measures, and in some cases where they did 
allow for comments, the time-frame  was so short that it was unwo rkable.  The United States noted 
that, at the meeting of the U.S.-China Strate gic and Economic Dialogue in May 2011, China had 
committed to issue a measure in 2011 requiring its agencies to publish all proposed trade- and economic-related administrative regul ations and departmental rules on the State Council Legislative 
Affairs Office website for a public comment period of no less than 30 days from the date of 
publication, subject to specified exceptions.   
42. Third, with regard to China’s commitment to make available all laws , regulations and other 
measures pertaining to or affecting trade in goods or services in one or more WTO languages (as set 
forth in paragraph 334 of China’s Working Party Report), China’s National People’s Congress, 
through its website, sometimes provided English transla tions of its laws relating to financial services.  
However, with the exception of some financial services regulators, China had not made any progress in implementing this important commitment. 
43. Going forward, the United States urged China to take immediate steps to address the concerns 
that had been raised and further improve foreign companies’ access to its services sectors.  Also, 
China should improve transparency with regard to th e regulation of its services sectors.  Transparency 
was critical to the proper functioning of the interna tional trading system, and China needed to live up 
to its commitments.  The United States would con tinue to engage China, both at the WTO and 
bilaterally, until all of these outstanding issues were satisfactorily resolved.  
44. The representative of China noted that, upon WT O Membership, China made very extensive 
commitments in trade in services.  Over the previ ous ten years, China had strictly implemented its 
commitments to open market in about 100 service sectors.  Unprecedented business opportunities had 
been available for foreign investme nt in China.  Central and local governments at various levels had 
reviewed a large amount of laws, regulations a nd made great progress in legislation-building. 
45. China had unswervingly pushed forward with its  market opening policy.  This had not only 
provided a good and stable investment and operatin g environment for foreign service providers, but 
also promoted the fast and healthy development of China's domestic service industry.  In 2001, 
China's total services market amounted to US $71.9 billion.  By 2 010, it had grown to 
US$362.4 billion, more than quadrupling.  A large in crease had also been recorded for the inflow of 
foreign investment in China's service industry.  In 2010 there were 14,852 newly-established foreign-
invested enterprises in the service industry, accounti ng for a year-on-year increase of 21.6 per cent.  
The foreign investment in actual use amounted to  US$49.96 billion, showing a year-on-year increase 
of 29.6 per cent. 
46. China's liberalization in services trade had always been pursued in a progressive and managed 
manner.  Opening up had promoted development.  This had enabled the achievement of a win-win 
outcome for both domestic and foreign service providers. 
47. However, although China's trade in services had grown, services and goods trade had not 
developed in a balanced way.  Services trade only accounted for a small proportion of total trade.  In 
2010, the relevant share was 11 per cent, much lower than the world average (which stood at 19 per 
cent).  Second, services trade had long exhibited a deficit, which had tended to increase in recent 
years.  S/C/M/108 
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  48. China's service industry would steadily continue  to be opened up in the future.  Foreign 
enterprises could be expected to enjoy greater market access opportunities, as well as the enormous 
benefits brought about by the rapid development of the Chinese economy and its services market. 
49. The representative then provided replies to the questions raised by Japan and the EU, as well 
as some of the points mentioned in the previous oral statements.  He poi nted out that China's 
Permanent Mission to the WTO had received the questions from the EU at noon on 21 October, 
Geneva time.  This had left only a very short period of eight working days to ensure the coordination 
with the many competent departments in Beijing.  Re gardless, China had tried its best to respond to 
most of the questions raised by the EU.   
1. Computer Services 
50. In computer and related services, the part rela ted to the establishment and operation of data 
centres included data processing service (CPC843) and database service (CPC844).  According to China's accession commitments and its revised DD A offer, the limitation on the commercial presence 
of data processing services (CPC843) and its input preparation service (CPC8431) had been lifted.  
The relevant commitment had been offered for im provement from the original formulation that 
foreign investment was allowed "only in the form of  joint ventures, with foreign majority ownership 
permitted" to "wholly foreign-owned enterprises will be allowed".  At present, there was no 
commitment on database services (CPC844). 
2. Advertising Services 
51. The relevant provisions formulated by China were for the purpose of ensuring the healthy 
development of the advertising sector, protecting the just and lawful rights of investors, advertising 
agents and consumers, and were applicable to all advertising services providers.  China welcomed 
investment by overseas advertising agencies with  an advanced philosoph y, market operation and 
management experience, to promote the healthy development of China's advertising industry. 
3. Real Estate Services 
(a) Limitations on foreign capital 
52. China was gradually improving various administra tive regulations on foreign investment in 
the real estate area.  Relevant measures would be consistent with its accession commitments.  China would not issue regulations that violated its accession commitments with regard to the share of foreign capital participation. 
(b) Business operations of foreign enterprises 
53. In accordance with the Notice on Further Strengthening and Regulating the Examination, 
Approval and Supervision of Foreign Direct Investment in Real Estate Industry  (Shang Zi Han (2007) 
No. 50) jointly issued by the Ministry of Co mmerce and the State Administration of Foreign 
Exchange (SAFE), a foreign investor could appl y to establish a real estate company only if it 
complied with the principles of a real estate project  company, i.e. it had obtained, or signed the 
advance assignment (purchase) agreement on the right  of land use or the real estate title with the 
relevant land administration authorities and the land developer (i.e. the owner of the real estate). 
(c) Real estate project companies 
54. In accordance with the Chinese laws governing foreign investment, the contract and articles 
of association of a foreign-invested enterprise t ook effect only upon the approval of the examination S/C/M/108 
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  and approval bodies.  The operation and manageme nt activities of such enterprises had to be 
conducted in accordance with the approved contract  and articles of association.  Real estate 
enterprises, including foreign-invested ones, were  required specifically to define their scope of 
operation and allowed to conduct ope ration activities only upon approval. 
(d) Registered capital 
55. As for the provision that a foreign-invested r eal estate enterprise with a registered capital 
above US$10 million had to have registered capital  50 per cent higher than total investment, the 
representative indicated that different laws applied to foreign- and domestically-invested enterprises at 
that moment.  The minimum capital ratio of a domest ically invested enterprise and the ratio between 
registered capital and total investment were two completely different concepts which were by no 
means comparable. 
(e) Foreign debt 
56. Foreign exchange authorities had adopted meas ures to strengthen the regulation of foreign 
debt in the real estate sector, in a bid to rationa lly review China's inflow and outflow of foreign 
capital.  These measures did not violate China' s accession commitments and were different from 
China's commitments in the banking sector.   
4. Telecommunication Services 
57. The representative addressed first the questions raised by Japan. 
(a) Telecommunications Law 
58. In July 2004, the former Ministry of Information Industry had submitted the draft of the 
Telecommunications Law  to the State Council for deliberation.  Over the following seven years, the 
Ministry of Industry and Information Technolog y (MIIT) had conducted an extensive reviews and 
consultations in conjunction with the Legal Affa irs Office of the State Council (LAO).  The LAO had 
listed the Telecommunications Law  as the top priority in the legislative work plan of the State Council 
for six consecutive years.  The Telecommunications Law (Draft) was being constantly revised and 
improved. 
59. Over the last year, the MIIT had continued to revise the Telecommunications Law (Draft) in 
conjunction with the LAO.  The work had focused on  the content of the chapter entitled "Building and 
Protection of Telecommunications Facilities".  
60. In accordance with the procedures in the Legislation Law of the People's Republic of China, 
the Telecommunications Law  was subject to the deliberation of the executive meeting of the State 
Council before it went before the Standing Committee of the National People Congress for 
deliberation and vote.  The time schedule for the issuance of the Telecommunications Law  depended 
on the progress of the legislative work of the State Council and the Standing Committee of the National People Congress. 
(b) Map-searching services 
61. The services were governed by the Surveying and Mapping Law .  As provided therein, a 
foreign organization or individual seeking to engage in survey and mapping activities in the territory 
of the People's Republic of China was required to establish a joint venture or to cooperate with 
relevant authorities or institutions in accordance with the law.  The relevant activities must not 
involve national secrets or jeopardize national security.  S/C/M/108 
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  62. The Decision of the Ministry of Land and Res ources on Modifying the Interim Measures for 
the Administration of the Surveying and Mapping Con ducted by Foreign Organizations or Individuals 
in China  (Decree No. 52 of the Ministry of Land and Resources) provided that a foreign organization 
or individual applying only for the qualification of survey and mapping for internet map services 
within China was required to establish a joint ventur e, in accordance with the relevant law, with the 
share foreign investment limited to 50 per cent.  Such provision was consistent with China's accession 
commitments. 
(c) Registered capital and market vitality 
63. The situation in China's telecommunications market proved that existing provisions on 
registered capital had not caused any adverse compe titive effects.  At present there were no plans to 
lift or ease the provision on minimum registered capital. 
(d) Minimum registered capital and reselling service 
64. The Regulation on the Administration of Foreign-invested Telecommunication Enterprises  set 
minimum registered capital require ments for foreign-invested telecom enterprises.  Domestic service 
suppliers were subject to the same requirements, consistently with national treatment.  The telecom 
sector was capital-intensive and featured economies of  scale.  If telecom companies' registered capital 
was too low, investors and consumers would be inadequately protected.  All WTO Members had 
minimum registered capital requirements, based on their domestic situation. 
65. As far as resale was concerned, according to the Notes for Scheduling Basic Telecom 
Services Commitments (S/GBT/W/2/Rev.1), unless otherwise noted in the sector column, any 
scheduled basic telecom services could be provided on a facilities-basis or by resale. Therefore, resale 
was a way of supplying services, rather than a specific telecom service.  There was no connection 
whatsoever between the minimum registered cap ital requirement and the modes of reselling. 
66. Resale of basic telecom services had been removed from the List of Telecommunication 
Services revised in 2003.  This was consistent with WTO rules as well as Ch ina's commitments.  As 
long as service suppliers obtained the license for basic telecom services, they could decide on how to 
provide the service, either by building their own networks or utilizing leased networks to provide 
services through resale. 
(e) Questions raised by the EU 
67. The representative then turned to th e questions raised by the EU.  
68. He said that China had strictly honoured  its WTO commitments in telecommunication 
services.  It had removed geographical constraints on value-added telecommunication services as of 
2003, with foreign capital participation limited to  50 per cent.  China had lifted geographical 
restrictions on basic telecommunication services as of 2006, and foreign capita l participation could 
not exceed 49 per cent.  In 2008, China had furthe r lowered the threshold of registered capital for 
investment in basic telecommunication services. 
(i) Question 28(a) 
69. In its commitments, China had agreed to ope n up basic telecommunication services and allow 
foreign investors to enter its telecommunication mark et as joint ventures, without any restrictions on 
the number of investors.  However, in practice, the number of basic telecommunication operators had 
been limited due to constraints on scarce resources.  S/C/M/108 
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  (ii) Question 28(b) 
70. To date, no foreign-invested joint-venture ha d been created with non-telecom partners.  
(iii) Question 28(c) 
71. To date, the Ministry of Industry and Info rmation Technology (MIIT) had not received any 
applications to establish a foreign-invested equity joint venture to provide mobile or fixed services in 
China.  
(iv) Question 29(a) 
72. All of China's application procedures for VAS operations were open and transparent.  The 
Regulations on Telecommunications of the People's Republic of China , the Provisions on the 
Administration of Telecommunications  Enterprises with Foreign Investment , the Administrative 
Measures for the Licensing of Te lecommunication Business Operations  and other regulations 
stipulated detailed provisions on the qualifi cations and procedures for applications by 
telecommunication service operation.  These were available on the MIIT website.  
(v) Question 29(b)(i) 
73. To date, the MIIT had received 60 formal app lications from foreign investors in value-added 
telecommunication services and approve d 42 applications with the Examination and Approval 
Prospectus for Foreign Companies Investing or/and Managing Telecommunication Service . 
(vi) Question 29(b)(ii) 
74. To date, the MIIT had received 25 formal applications for telecommunication service 
operating licenses submitted by foreign-invested ente rprises.  All had been granted VAS licences and 
were now in operation. 
(vii) Question 30 
75. The MIIT was the regulatory authority responsib le for the supervision and administration of 
the telecommunication and information services markets, the distribution, administration and international coordination of telecommunication r esources, the promotion of universal service, and 
unified allocation and administration of radio -frequency spectrum resources, among others.  The 
MIIT applied open, fair and im partial regulation to the telecommunication market.  Detailed 
information about its major responsibilities could be found under the "Organizations and Duties" 
section of the MIIT website (www.miit.gov.cn). 
5. Audio-Visual Services 
(a) Censoring procedures 
76.  China imposed a censorship system on the substantive content of film and television 
programmes produced by Chinese producers, solely or jointly with foreign producers, or by foreign 
producers.  The basis for film  censoring was essentially the Regulation on the Administration of 
Films, the Regulation on the Record Registration of Film Script (Summary)  and the Administration of 
Film Copies  (Decree No. 52 of the State Administration of Radio, Film and Television).  The basis for 
censoring television plays, including television animations, was essentially the Regulation on the 
Administration of the Content of Television Plays  (Decree No. 63 of the State Administration of 
Radio, Film and Television).  In accordance with  relevant provisions, a lthough the censoring bodies  S/C/M/108 
 Page 11 
 
 
  for film and television plays were established separ ately, with responsibilities determined on the basis 
of their division of labour, these bodies followed uniform  standards in censoring contents.  Applicants 
were required to submit their products to the rele vant censoring body.  Further improvement of the 
censorship system would take place within such a framework.  Relevant authorities in China would 
provide services as conveniently as possible to suppliers, in accordance with relevant laws, 
regulations and rules. 
(b) Film importing 
77. Since its accession, China had strictly followed its  commitments in this area.  Overseas films 
entered its market openly and smoothly.  The basis for China's commitments was that the consistency 
with China's laws and regulations on film administration must not be jeopardized.  In accordance with 
its commitments, China had revised its Re gulation on the Administration of Films  in 2001.  Specific 
provisions were made for film importing.  The film importing business had to be operated by film importing entities designated by the administrative de partments of radio, film and television of the 
State Council.  Without such designation, no entity  or individual was allowed to operate in that 
business.  At present, the revision of the Regulations on the Administration of Films  had not yet been 
listed in the legislative work plan of the State C ouncil.  Hence, the current policy would continue to 
apply with respect to the right to operate in the film importing business. 
(c) Publication importing 
78. In April 2011, China had published the revised draft Catalogue for the Guidance of Foreign 
Investment Industries .  The importation of books, newspapers, pe riodicals, audio-visual products and 
electronic publications were removed from the cate gories in which foreign investment was banned.  
The revision was consistent with the revised Regulations on the Administration of Publishing  (Decree 
No. 594 of the State Council) promulgated by the State Council on March 19th, 2011.  In Article 42 
of the Regulations, the conditions for the examin ation and establishment approval for publication 
importing entities had been revised.  The requireme nt that a publication importing entity must be a 
wholly state-owned enterprise had been  removed.  In accordance with the Regulations on the 
Administration of Publishing , the publication importing business had to be operated by publication 
importing entities established in accordance with the la w.  These entities had to meet the conditions in 
the Regulations on the Administration of Publishing , be approved by the General Administration of 
Press and Publication and obtain the Business License on Operating in Publication Importing  in order 
to get established. 
6. Construction and Related Engineering Services 
(a) Implementation of obligations 
79. China had implemented its accession commitments  and accordingly abolished or revised non-
complying regulations, rules and other regulative documents and promulgated others to meet its 
obligations.  Such actions legally  defined and guaranteed the access ion commitments.  China was also 
pro-active in implementing some of its commitments ahead of schedule.  For example, in 2002 it had 
promulgated the Regulations on the Administration of th e Qualifications of the Foreign-Invested 
Construction Enterprises  (Decree No. 113 of the Ministry of Construction and the Ministry of Foreign 
Economy and Trade).  Those Regulations had permi tted the establishment of wholly foreign-owned 
construction enterprises two years ahead of the time set in China's commitments.  At the same time, 
previous special requirements on the standards and qualifications of wholly foreign-owned 
construction enterprises had also been abolished.  The construction market had been further opened 
up.  China had fully implemented and honoured its commitments, as well as adhered to fundamental 
WTO rules. S/C/M/108 
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  80. In order to further promote the participati on of foreign, including Japanese, enterprises in 
design activities within China, the Measures on the Administration of Bidding and Bid Tendering of 
the Construction Project Plan Designing  had been promulgated in 2008.  The promulgation of such 
measures had had positive effects. 
(b) Qualifications of foreign invested enterprises 
81. Following China's accession to the WTO, the sa me qualification standards applied to both 
foreign-invested enterprises and Chinese construction enterprises, consistent w ith national treatment.  
The requirements on both were also identical with r espect to the minimum registered capital and staff.  
China had not established any differential requirement s for foreign-invested enterprises with respect 
to employees and capital. 
82. Wholly foreign-owned construction enterprises were permitted to undertake only four types 
of projects, consistently with China's commitmen ts.  This was not a discriminatory requirement 
against wholly foreign-owned construction enterpri ses.  Besides, according to China's commitments, 
foreign equity/contractual joint venture constructi on enterprises were not subject to the limitation on 
undertaking only four types of projects. 
83. In the Standards on the Grades of the Qualification of Construction Enterprises , specific 
descriptions were given of the scope of the project s that could be undertaken by enterprises with 
different types of qualifications.  Some qualifications  were subjected to the requirement that the value 
of a single contract for the project undertaken by an enterprise did not exceed five times the 
enterprise's registered capital.  This ensured the quality and safety of the project and the scope of the 
legal responsibilities that the enterprise could bear.  It  applied to foreign-invest ed as well as domestic 
construction enterprises and, thus, did not discriminate. 
84. China had implemented its accession commitments and formulated its current administrative 
measures on foreign investment in the construction in dustry accordingly.  At the same time, following 
its trade policy reviews, China had carefully exam ined the questions raised by Members and looked 
into its prevailing administrative systems and measures.  China's prevailing administrative measures 
were consistent with its WTO commitment on construction and relate d engineering services. 
(c) Registered capital 
85. The requirement on registered capital was one of the basic conditions for the establishment of 
construction enterprises as required by the Construction Law  and relevant regul ations.  Different 
requirements on registered capital were establis hed for different grades of qualification for 
construction enterprises.  China strictly observe d the principle of national treatment. The same 
qualification standards and registered capital require ments applied to foreign-invested enterprise as 
well as domestic ones.  Registered capital was a basic condition for a company to operate and bear legal responsibility; it was essential for a compan y to operate and develop and for a stable 
construction market.  At present, China did not e nvisage cancelling the registered capital requirement. 
(d) Constructors 
86. In accordance with relevant laws, regulations a nd rules, the persons in charge of large and 
medium-sized construction projects had to be certifie d constructors.  There were presently nearly one 
million certified constructors in China.  In Novemb er 2007, the Ministry of Housing and Urban-Rural 
Development had promulgated the transitional polic y on the provisional qualification of constructor 
for persons who were qualified pr oject managers.  The same requirements applied to national and 
foreign personnel.  The constructor qualificati on was valid for five years and would expire on 
27 February 2013.  S/C/M/108 
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  (e) Establishment of local offices 
87. Construction companies were required to estab lish a branch in order to undertake local 
business, as per the regulations and systems prom ulgated by local governments to strengthen the 
quality and safety of construction pr ojects.  This requirement ensured that construction enterprises set 
up necessary local management bodies and employ rele vant engineering, economic and technical 
management personnel, thus guara nteeing the quality and safety of construction projects.  This 
requirement did not discriminate against foreign-i nvested enterprises as it al so applied to Chinese 
construction enterprises that were not registered locally. 
88. As for the provision on the minimum floor area for offices, the municipal administrations of 
Tianjin and Guangzhou had never instituted such provisions.  Offices were the basis from which 
enterprises operated.  They ensured that constr uction enterprises establish permanent management 
bodies locally and that engineering, economical a nd technical management personnel carry out work 
in a regular way.  Construction enterprises needed to  have suitable office premises to carry out their 
work. 
(f) Treatment of foreign enterprises 
89. Foreign construction enterprises had always been welcome to invest and operate in China.  
China had noted the difficulties encountered by fore ign enterprises when investing in China and was 
looking to create an environment conducive to investment in the sector. 
(g) Recognition of degrees 
90. To register for the tests to qualify as a certifie d constructor or engineer, education in the 
relevant specialized fields and professional experi ence were required.  The requirement ensured that 
constructors or engineers had the necessary th eoretical knowledge and professional ability.  The 
verification of the educational background was esse ntial.  In 2008, China had signed the Canberra 
Accord on Architectural Education with the United States, the UK, Canada, Australia, Mexico and the 
Republic of Korea and concluded mutual recognition agreements of education in architecture.  In 
addition, China was actively pursuing membership of  the Washington Accord to arrive at a mutual 
recognition of the engineering education (or experience) with other countries and regions. 
(h) The EU's questions on Decree 114 
91. To effectively implement its commitments and comply with national treatment, the Ministry 
of Construction and the Ministry of Forei gn Trade and Economic Co-operation had jointly 
promulgated the Regulations on Administration of Forei gn-invested Construction and Engineering 
Design Enterprises , and issued the Implementing Rules for the Regulations on Administration of 
Foreign-invested Construction and Engineering Design Enterprises  in 2007.  These encouraged 
foreign-invested enterprises to engage in engineerin g design in China.  They explicitly stated that the 
proportion requirements and residency period of forei gn architects and engineers could not be applied 
temporarily, so as to further help foreign investors establish engineering design enterprises in China.  
China would duly revise and amend the implementing rules in accordance with the development of 
the engineering design industry. 
92. As per the Regulations on Administra tion of Foreign-invested C onstruction and Engineering 
Design Enterprises , foreign-invested construction and engin eering design enterprises were obliged to 
meet the requirements on the classification standa rd for construction and engineering enterprises 
(including the requirements on registered capital a nd technicians).  These requirements applied to all 
enterprises engaged in supplying construction a nd engineering design services through commercial S/C/M/108 
Page 14  
 
  presence within China, and did not involve any par ticular restrictive condition for foreign-invested 
enterprises. 
93. As provided in the Article 17 under the Regulations on Administration of Qualifications of 
Construction Surveying and Design Enterprises  (Decree 160 of the Ministry of Construction), an 
enterprise could not apply for an engineering design qualification higher than a B-class qualification.  
This provision applied to domestic- and foreign-funded enterprises alike. 
94. Pursuant to the principle of national treatme nt, Decree 114 explicitly provided that China 
implement the qualification grade standards issued by the construction authorities under the State Council for foreign-invested construction and engineering design enterprises, and that the 
performance, capital and other conditions of the pare nt companies not be regarded as conditions for 
their subsidiaries.  This provision was applied equally to domestic- and foreign-funded enterprises. 
(i) The EU's questions on foreign professional staff 
95. Engineering design services were involved in all aspects of engineering construction.  It was 
thus crucial to ensure that designers had sufficient time to engage in engineering construction projects, 
so as to guarantee the quality of the construction.  Related residency requirements were imposed to 
ensure that architects, engineers and relevant tec hnicians registered in Ch ina for foreign-invested 
construction and engineering design  enterprises effectively performed their duties and were able to 
solve any technical problems during the implementation of any construction projects in a timely manner.  This helped to ensure the quality of the projects and their compliance with the design goals.  
They were not restrictive measures violating China's commitments. 
96. In 2007, the Implementing Rules for the Regulations on Administration of Foreign-invested 
Construction and Engineering Design Enterprises (Jian Shi [2007] No. 18) had been promulgated to 
encourage foreign-invested enterprises to engage  in design activities within China.  These Rules 
explicitly stated that the proportion requirements and residency period for foreign architects and 
engineers would not be examined provisionally.  Ma ny foreign-invested enterprises had obtained the 
qualification of construc tion and engineering design enterprises granted by the Chinese government.  
97. Pursuant to the Measures of the Ministry of Construction for the Implementation of the 
Qualification Management in the Regulations on the Management of Foreign-Invested Construction 
Enterprises (Jian Shi [2003] No. 73), foreign staff engaged in professional technologies and 
operational management in foreign- invested construction enterprises had to reside in China for a 
cumulative period of at least three months every year.  This residency requirement was imposed to ensure that engineering technicians and managers would effectively perform their duties and could 
solve any technical problems during the implementation of any construction projects in a timely 
manner.  It also ensured the quality of the projects and their compliance with the design goals.  They 
were not restrictive measures violating China's commi tments.  China currently had no plan to abolish 
this residency requirement. 
7. Distribution Services 
(a) Software distribution 
98. In accordance with the Regulations on the Administration of the Publication Market  
promulgated by the General Administration of Pr ess and Publication and the Ministry of Commerce 
in 2011, a foreign-invested enterprise could engage  in wholesale and retail distribution of electronic 
publications.  S/C/M/108 
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  (b) Distribution of refined oil products 
99. Regulation Guobanfa No. 38  [1999], more fully identified as the Circular of the General 
Office of the State Council on Distributing the Opinions Rectifying Small Refineries and 
Standardizing Distribution of Crude Oil and Oil Products by the St ate Economic and Trade 
Commission & Related Authorities , had been jointly formulated by the former State Economic and 
Trade Commission, the State Planning Commission, the Ministry of Public Security, the Ministry of 
Finance, the Peoples Bank of China, the State En vironmental Protection Administration, the State 
Administration of Industry & Commerce and the State Bureau of Quality and Technical Supervision,  
It had been distributed by the General Office of the State Council.  Pursuant to the provisions set forth in China's Legislation Law , the regulation Guobanfa No. 38  [1999] was deemed to be in force until 
corresponding agencies promulgated new regulations in line with the law or repealed it. 
100. Regulation No. 38 [1999] pertained to produc tion, processing, wholesale, retail and many 
other related activities while the Order of the Ministry of Commerce No. 23  [2006] only pertained to 
the distribution of refined oil products. 
101. Enterprises engaged in the crude oil and refine d oil products' business were required to have 
legal and stable supply channels, in a bid to redu ce intermediaries in the distribution of refined oil 
products in China, cut down costs and offer guidance for the operations of domestic enterprises.  The 
signing of supply contracts for refined oil produc ts by enterprises was market-based behaviour, 
negotiated and decided by the enterprises in questi on.  To date, some Chinese private enterprises and 
foreign-funded enterprises had signed long-term c ontracts on oil supply with state-owned incumbents 
and had consequently been qualifie d to engage in the wholesale dist ribution of refined oil products.  
Therefore, the alleged refusal of Chinese state-ow ned incumbents to negotiate long-term contracts 
with wholly or partly foreign-owned competitors was disproven.  According to statistics from the 
Ministry of Commerce, since 2007 the Ministry had accepted a total of 16 applications for foreign-funded wholesale enterprises of refined oil products and 11 applications for foreign-funded storage 
enterprises of refined oil products.  To date, 27 en terprises had been approved by the Ministry of 
Commerce.  Since the opening-up of the retail mark et, provincial-level commercial authorities had 
approved the construction of 1, 615 foreign-funded gas stations.  Foreign-funded enterprises had 
already entered the domestic market for wholesale, storage, retail and other related activities of refined oil products, either as joint-ventures or sole proprietorships, a nd had become important 
components of China's diversified market operators. 
(c) Foreign investment in the petrochemical sector 
102. The NDRC was in charge of examinations a nd approvals of foreign investment in the 
petrochemical sector in accordance with the Decision of the State Council on Reforming the 
Investment System , the Catalogue for the Guidance of Foreign Investment Industries  and other 
regulations related to foreign investment.  Pursuant to the Administrative Measures of the National 
Development and Reform Commission for Investment Consultation and Evaluation upon Commission , 
consulting departments were entrusted by the NDRC to evaluate investment projects on the basis of 
independent, impartial, sc ientific and reliable principles.  Th e members of the expert panel were 
selected and employed by the consulting depa rtments without government interference. S/C/M/108 
Page 16  
 
  8. Transport Services 
(a) Maritime transport services 
(i) Establishment of wholly foreign-owned shipping companies 
103. In 2000, China had promulgated and implemented the Interim Measures for the Examination 
and Approval of Wholly Foreign-owned Shipping Companies .  It permitted foreign shipping 
companies registered in the countries that ha d signed bilateral inter-governmental maritime 
agreements with China to establish wholly foreign- owned shipping companies in China.  The scope of 
operation of these companies was limited to: collec ting cargo, signing and issuing bills of lading, 
settling freight, and signing service contracts for th e vessels owned or operated by their parent 
shipping companies.  As to the administration of  wholly foreign-owned shipping companies, such 
matters were listed in the relevant MFN exempti on.  At present, China was not planning further 
openings in this regard. 
104. On 15 August 2011, the Ministry of Transport had issued the Notice on Strengthening the 
Administration Work on the Examination and Approv al of wholly foreign-owned Shipping Companies  
(Jiao Shui Fa [2011] No. 40).  The Notice had eased  the conditions to establish wholly foreign-owned 
shipping companies and permitted their establishment in those open port cities where they had a stable 
source of cargo or passengers.  After a wholly fore ign-owned shipping company had paid up all of its 
registered capital and operated for a whole year, it was allowed to open branches in open port cities 
with such a stable source of cargo or passengers. 
(ii) Unfair competition 
105. The Chinese government attached great importa nce to dealing with instances of unfair 
competition, such as the "zero or minus" freight rat es that had been applied by certain international 
maritime shipping lines.  In June 2009 and Se ptember 2010, the Ministry of Transport had 
promulgated and implemented, respectively, the sy stem of record registration on the freight of 
international container liner ships and the system of record registration on the freight of non-vessel 
operating common carrier businesses.  International lin er shipping operators and non-vessel carriers 
had been specifically prohibited from collecting cargo by  applying "zero or minus" freight rates.  If an 
operator applied such a freight rate, the record  registration application would be rejected.  
International liner shipping operators and non-vessel carriers had to quote prices strictly in accordance 
with registered prices.  Supervision and inspection were being constantly strengthened in order for the 
parties concerned to quote prices ac cording to the registered ones. 
106. As to international sea transportation prices,  shippers and ship-owners were advised to 
strengthen their communication and coordination to  jointly resolve relevant issues properly. 
(iii) Inconsistent custom supervision and administration 
107. The regulations on the supervision and admini stration of Chinese customs were uniform and 
consistent. 
(b) Air transport services - Computer Reservation Systems (CRS) 
108. CRS services had been listed in China's sche dule of commitments, subject to the following 
mode-1 market access limitations for foreign supplie rs.  Accordingly, these were allowed to:  (a) 
provide services to Chinese airlines and Chinese av iation agents by connecting with Chinese CRS 
when they had signed agreements with these air lines and CRS;  (b) provide services to representative 
offices and sales offices established in the destination cities in China by foreign airlines which had the  S/C/M/108 
 Page 17 
 
 
  right to engage in business in accordance with bila teral aviation agreements;  and (c) be directly 
accessed and used by agents of Chinese airlines a nd foreign airlines only upon the approval of the 
Civil Aviation Administration of China (CAAC).  China had not made commitments for commercial 
presence.    
109. In sum, foreign CRS were allowed to provide services to four types of customers, namely 
Chinese airlines, foreign airlines, sales agents of Chin ese airlines, and sales agents of foreign airlines, 
through cross-border supply and through bot h direct and indirect connections.  
110. Since its accession to the WTO, China had stri ctly complied with its commitments.  Foreign 
CRS were allowed to provide their services freely to  Chinese airlines and sales  agents through their 
connection with Chinese CRS.  Operations and repres entative offices in Chines e air destination cities 
were also permitted to freely use their own CRS, mostly foreign CRS.  At the same time, in order to 
further promote competition in the CRS market, th e CAAC had eliminated the requirement that 
Chinese airlines seek permission to directly access and use foreign CRS.  
111. The Interim Regulations on Administering the Review and Ratification of Direct Access to 
and Use of Foreign Computer Reservation System  by Foreign Airlines' Agents in China  ("Interim 
Regulations ") were issued to enable agents of forei gn airlines to directly access and use foreign CRS 
in line with China's commitments.  Before  the finalization and promulgation of the Interim 
Regulations , foreign airlines could file applications in accordance with the Interim Measures on 
Administering the Use of Computer Reservation System s by Foreign Airlines and Their Sales Agents 
in China (Min Hang Yun Fa [1995] No. 51).  
(i) Question 8(a)  
112. In accordance with relevant rules, the promul gation of a regulation underwent two stages:  
drafting by the competent departments and subsequent review by the legal bodies.  
113. At the beginning of 2011, the drafting departme nt of the CAAC had solicited public opinions 
on the Interim Regulations  on its website.  The department had also invited relevant foreign CRS 
suppliers and discussed the opinions they had prov ided.  The drafting department had submitted the 
Interim Regulations  to the legal department of the CAAC fo r examination and review in July.  In 
accordance with the provisions in the Regulations on the Procedures for Formulating the Regulations 
and Rules of the Civil Aviation Administration of China  (Decree No. 185 of the CAAC), the CAAC 
legal department had solicited written opinions from various stakeholders in August.  Currently, the 
legal department, in coordination with the draf ting department, was processing the written opinions 
received.  Thereafter, the legal department would invite stakeholders, including foreign CRS, to an 
examination and review meeting.  The Interim Regulations  would be further revised on the basis of 
the discussions at that meeting and then submitted to the administration meeting of the CAAC for discussion and decision.  The final version of the Regulations would be promulgated as quickly as 
possible in accordance with  the procedure outlined. 
(ii) Question 8(b) 
114. In accordance with the provisions in the 
Decree No. 185  of the CAAC and its current work 
schedule, the legal department of the CAAC woul d hold the examination and review meeting on the 
content of the Interim Regulations  in November.  Stakeholders would be invited to participate in the 
discussions.  S/C/M/108 
Page 18  
 
  (iii) Question 8(c) 
115. The "Explanation" to a regulation included information on the need for the regulation, the 
main issues it addressed, the main content of its provisions, the status of the coordination and processing of the opinions from various parties.  As per China's legislative procedures, the 
Explanation to a regulation did not constitute a com ponent part.  It constitute d explanatory material, 
provided to facilitate the deliberative process by th e competent legislative authorities.  Its content 
would be deliberated together with the draft of th e regulation.  An Explanation was helpful for the 
user of a regulation to understand the background to the legislative process and its intent.   
(iv) Question 8(d) 
116. The Interim Regulations  contained a detailed formulation of the original administrative 
procedures.  China had always worked hard to main tain a competitive environment in the CRS market 
and would continue to encourage foreign CRS to compete with Chinese CRS, in accordance with its 
accession commitments.  
(v) Question 8(e) 
117. The establishment of a Chinese CRS service provi der and its provision of services were not 
subject to the administrative permission of the CAAC  at present.  In accordan ce with China's current 
market practice, contracts were signed between  Chinese airlines and Chinese CRS and between 
Chinese airlines and their sales agents to define th e rights and obligations between these parties.  
(vi) Question 8(f) 
118. The requirement that Chinese airlines obtain pe rmission to have direct access to and use of 
foreign CRS had been abolished.  The answ er to question 8(e) was also relevant. 
(vii) Question 8(g) 
119. In the Free Trade Agreements signed by Ch ina with ASEAN, Chile, New Zealand, and 
Singapore and the Closer Economic Partnership Arrangements between the Mainland and Hong 
Kong, China and Macao, China (CEPA), service providers from WTO Members were allowed to form joint venture enterprises in China with Chin ese CRS service providers, provided that the Chinese 
parties had a controlling shareholding status.  
(viii) Questions 8(h) and (i) 
120. The establishment of a Chinese CRS and its service provision were not subject to the 
administrative permission of the CAAC at present.  The answer to question 8(e) was also relevant. 
(ix) Question 8(j) 
121. China had made no commitments on the commercial presence of foreign CRS in China.  The 
CAAC had received no applications for establishment by a foreign CRS.  
(x) Question 8(k) 
122. The answers to questions 8(h) and (i) were relevant.  S/C/M/108 
 Page 19 
 
 
  (xi) Question 8(l) 
123. The answer was in the positive.  In order to  facilitate application and simplify relevant 
procedures, the Interim Regulations  permitted an airline to apply for a number of sales agents to use 
the same foreign CRS in a single application, rather than having to file separate applications for each 
agent.  
(xii) Question 8(m) 
124. Before 2001, the CAAC had approved the app lications of 42 sales agents.  In 2002, 
Scandinavian Airlines System (SAS) had filed an app lication for 11 of its sales agents to use foreign 
CRS.  However, because of problems with their appli cation, this could not be handled.  SAS had not 
filed a new application.  Since 2003, the CAAC ha d not received any applications of the kind.  
(xiii) Question 8(n) 
125. At present, there were no administrative permission requirements that demanded the CAAC's 
approval for air travel agents to use Chinese CRS.  
(xiv) Question 8(o) 
126. At present there was only one traditional domestic  CRS service provider in China, namely 
TravelSky.  
(xv) Question 8(p) 
127. The representative offices or operations establis hed in air destination cities in China by 
foreign airlines that had the right to operate in accordance with bilateral aviation agreements were 
allowed to use foreign CRS at their own discretion.  Foreign CRS could provide their services to Chinese airlines and Chinese sales agents by signing agreements with them and connecting to Chinese 
CRS.  Sales agents of foreign airlines could directly use foreign CRS upon the approval of the CAAC.  
128. At present, all major CRS in the world we re providing services in China as previously 
described.   
(xvi) Question 8(q) 
129. The regulations and rules applicable to China's domestic CRS included:  Regulations on 
Foreign Investment in the Civil Aviation Industry (III)  (Decree No. 189 of the CAAC), Regulations on 
Domestic Investment in the Civil Aviation Industry  (Decree No. 148 of the CAAC), and Regulations 
on Administering on the Combination, Restructuring and Equity System Reform of the Enterprises 
and Airports in the Civil Aviation Industry  (Decree No. 149 of the CAAC). 
130. Before the promulgation of the Interim Regulations , the regulation applicable to foreign CRS 
had been the Interim Measures on Administering the Use of Computer Reservation Systems by 
Foreign Airlines and Their Sales Agents in China  (Min Hang Yun Fa [1995] No. 51). 
(xvii)  Question 8(r) 
131. Part 1.  In accordance with the provision in Article 8 of the Regulations on Domestic 
Investments in the Civil Aviation Industry  (Decree No. 148 of the CAAC), China's domestic CRS 
were prohibited from investing in State-owned airlin es.  However, investment in all-cargo airlines was 
permitted, up to 25 per cent of the company's capit al and provided the CRS did not have a relative S/C/M/108 
Page 20  
 
  controlling stake.  Other specific requirements specif ied in the Regulations, such as the qualification 
requirement for management personnel and the exam ination and approval for equity operations, all 
applied to domestic CRS enterprises in China.  
132. Part 2.  In accordance with the Regulations on Administering the Combination, Restructuring 
and Equity System Reform of the Enterprises and Airports in the Civil Aviation Industry  (Decree No. 
149 of the CAAC), approval by the CAAC was needed  when China's domestic enterprises wished to 
conduct equity operations, such as mergers or equity changes.  
(xviii)  Question 8(s) 
133. The supply of CRS services and the CRS market  were under the responsibility of the CAAC.  
Matters related to information technology in the supply of CRS services were under the responsibility 
of the information technology departments, and thos e relating to information security under the public 
security departments.  Questions of registra tion and supervision and taxation issues were, 
respectively, under the responsibility of the industr ial and commercial administration departments and 
the taxation departments.   
9. Express Delivery Services 
134. As stipulated in the Article 5 of China's revised Postal Law , "The correspondence delivery 
services within the scope prescribed by the State Council shall be exclusively provided by postal 
enterprises".  The Regulations of the State Council on the Exclusive Business Scope of Postal 
Enterprises  were supporting administrative regulations of the Postal Law , which was being 
formulated by the Legislative Affa irs Office of the State Council. 
135. China had agreed to open up express delivery ser vices when it joined the WTO, but with the 
exception of the express delivery services exclusively operated by Chinese postal departments, in line 
with the law.  Pursuant to the Postal Law  promulgated on 2 December 1986, which had entered into 
force on 1 January 1987, all letter services had to be exclusively provided by China Post.  Therefore, China had only committed to open up the expr ess delivery services of goods at the time of WTO 
accession, and had never agreed to open up the dom estic express delivery services of letters.  The 
related provisions in the Catalogue for the Guidance of Foreign Investment Industries  promulgated in 
April 2011 were in line with China's accession commitments.  There were no limitations on foreign investment. 
136. The revised Postal Law  that had entered into force on 1 October 2009 established a licensing 
system for express delivery businesses, and the Measures for the Administration of Express Delivery 
Business Permits  stipulated specific conditions and approval procedures for business licenses.  
China's State Post Bureau examined and approved the applications for the operation of domestic or 
international express delivery services in China by fo reign-funded enterprises,  in accordance with the 
Postal Law  and other related laws, regula tions and rules, and granted a business license to qualified 
enterprises. 
137. The establishment of branches by  foreign-funded enterprises wa s subject to the examination 
and approval by trade authorities in line with the la w.  The State Post Bureau examined and approved 
the operation of express delivery services by bran ches, and handled corresponding registration and 
other formalities in line with the law. 
138. In conclusion, the representative said that, ove r the previous decade,  China has spared no 
efforts to comprehensively and seriously fu lfil the enormous commitments made upon WTO 
accession.  After that final transitional review, Ch ina would continue to actively engage in the  S/C/M/108 
 Page 21 
 
 
  Council's activities in a most open and cooperative sp irit and looked forward to efficient and effective 
dialogue with Members under the regular m echanism of the Council in the future. 
139. He also thanked the Secretariat for its suppor t for China's transitional review during the 
previous ten years. 
140. The Chairman thanked China for its responses.  He proposed that the Council take note of the 
statements made and consider China’s Transitional Review to be concluded. 
141. It was so decided. 
142. Regarding the Council's Report to the General Council, the Chairman suggested that it be 
prepared by the Secretariat in accord ance with previous practice.  It would be a factual Report, stating 
basically that:  at its meeting on 3 November 2011,  the Council for Trade in Services had conducted 
the Ninth, and final, Transitional Review of th e Implementation by China of its WTO commitments 
and of the related provisions of the Protocol, pursu ant to Section 18 of the Protocol of Accession of 
the People's Republic of China; written communicati ons had been submitted before the meeting by 
Japan and the European Union; a detailed account  of the discussion during the meeting could be 
found in the meeting report, which woul d be issued in document S/C/M/108. 
143. It was so decided.  
E. SECTORAL AND MODAL DISCUSSIONS  
144. The Chairman recalled that recent discussions  under that agenda item had focused in 
particular on the role of SMEs in services trade.   In September, the delegation of Switzerland had 
submitted a communication on this issue, entitled "The services sector, small and medium-sized enterprises and employment: the case of Switzerland".  A number of other delegations had intervened 
over the previous two meetings of the Council, to provide information about SMEs in their economy.  
A body of knowledge on the issue was slowly emerging from the Council's deliberations under this item. 
145. He also recalled Canada's observation that one of the most critical barriers facing SMEs was 
lack of transparency about market-operating conditions  in other countries.  Canada had suggested that 
the Council could play a role in enhancing transp arency for SMEs, as one way of promoting their 
participation in services trade.   
146. Ensuring that Members' policies were conducive to the electronic supply of services had also 
been mentioned as another possible initiative to  support SMEs domesti cally and in trade. 
147. The representative of Canada reiterated her dele gation's view that transparency was a key 
issue for SMEs.  These suppliers sought to know the actual operating conditions to do business in a 
sector in a country, but did not always have access to  the same resources as larger services companies.  
As an example, it was often hard to determine exac tly what the economic needs tests were in mode 4, 
an issue which had been raised in the Committee on Specific Commitm ents.  Canada believed that 
WTO Members should think about how to make a co ntribution to increased transparency which was 
based on actual conditions and not linked to negotia tions or scheduled commitments.  Her delegation 
was giving some thought to the matter and would we lcome speaking with other Members about their 
ideas for transparency before coming back to the Council with a more concrete proposal. 
148. The Chairman said that the Council would take not e of the statement made and revert to this 
item at its next meeting. S/C/M/108 
Page 22  
 
  149. It was so agreed. 
F. DEDICATED DISCUSSION ON INTERNATIONAL MOBILE ROAMING  
150. The Chairman recalled that dedicated discussions  on international mobile roaming (IMR) had 
been held during the previous two meetings of th e Council.  In September, the Council had received a 
communication from the International Telecommunica tion Union on the work that organisation had 
undertaken on the issue.  Several delegations had shared experiences with their own roaming markets, 
and many had offered their views on the applicability of the GATS to international mobile roaming.  
It had been generally the view that further t echnical discussions on this issue were necessary. 
151. The representative of Australia said that the Council had had two very substantive discussions 
so far.  Many Members had indicated that th ey saw the GATS MFN obligation and the Annex on 
Telecommunications as being relevant to IMR.  Howe ver, some interesting questions had also been 
raised which were still being considered by some Members. 
152. Australia recognized that there was a range of measures that Members could take to 
unilaterally address IMR rates (such as raising c onsumer awareness, domestic regulations and 
fostering substitute services).  But economic ally sensible policy responses were likely to require 
reciprocal arrangements to reduce rates, and one option might be to try to find a way of 
accommodating such reciprocal arrangements within the GATS framework.  It was important that the 
Council focused on reaching a shared understandi ng of the applicability of the GATS MFN pro vision 
and the Annex on Telecommunications, partic ularly paragraph 5(a), to the IMR i ssue. 
153. Australia and other Members had rai sed the question of the applicability of the Reference 
Paper and the definition of interconnection.  Views diffe red significantly in that regard.  However, 
this was not central to the issue of how GATS obligations might interact with any actions Members 
might take to address IMR rates and could perhaps be  left to one side.  Rather, Members should focus 
on the Annex obligation s to provide international mobile roaming at reasonable rate s and also on the 
MFN  and non-discrimination provisions of the Annex,  to achieve a shared understanding on how they 
applied to IMR.  Again, for the sake of clarity discussion should focus on wholesale rates, rather than 
retail ones.  
154. In Australia's view, deliberations in the Council on the IMR issue had reached a stage where it 
would be useful to hold some open-ended, info rmal discussions, perhaps led by the Chairman, to 
allow for a more detailed and free-flowing discu ssions of both the technical and policy issues 
involved.  All Members would be invited to such  discussions.  Given that the next Council meeting 
would be held in March 2012, such discu ssions would best be organised inter-sessions. 
155. Australia wished to ensure that Members could also hear perspectives from other important 
stakeholders on the IMR issue.  To  that end, it was her delegation's intention to hold a symposium on 
IMR in the margins of the following CTS meeting.  All WTO Members would be invited.  
Regrettably, as the issue of non-observers' participati on in such events could not be solved, Australia 
would not be able to hold the Symposium under the auspices of the CTS.  Given the importance it 
attached to the symposium element of the discussi on, Australia was prepared to convene it itself. 
156. The symposium would provide perspectives from industry operators, including on the 
relationship between IMR costs and the prices charged and the possible implications of intervention in 
the IMR market.  It was Australia's intention also to have the views of consumers of telecommunications services , including business users, on the impact of IMR charges and the possible 
implications of intervention in the IMR market .  Equally, the contribut ions of other expert 
organisations such as the ITU and the OECD would be sought .  Regulators' views would be very 
important, particularly as to approaches they considered would deliver effective and efficient  S/C/M/108 
 Page 23 
 
 
  outcomes to users.  Presentations from any Memb ers who had undertaken or were considering 
undertaking reforms to address IMR charges would also be welcome.  Members interested in 
participating or proposing any stak eholders who might want to take part were invited to contact her 
delegation.   Australia would also share with th e next CTS meeting the outcomes of the symposium 
and looked forward to hearing the r esults of any informal consultations.  
157. The representative of Norway said that her de legation was a co-sponsor of the initial proposal 
to discuss mobile roaming issues, together with the United States and Australia.  The Council had had 
an interesting and useful initial discussion of Me mbers’ views on the applicability of the GATS.  
There seemed to be wide support for further discussi on of some of the issues.  During the previous 
meeting of the Council, Norway and other Member s had shared experiences on the deliberations on-
going in other fora regarding international mob ile roaming, as Members could greatly benefit from 
work done elsewhere.  Norway continued to think that discussions in other organisations, but also 
between Members on a bilateral or regional basis, would provide very useful input to the Council's 
deliberations.  
158. Among the issues raised was the question of furt her work and how to continue the debate.  
Her delegation was interested in hearing other Memb ers’ views.  From Norway's viewpoint, further 
discussions would be very valuable and could help reach a common understanding on key issues 
related to the applicability of the GATS, esp ecially at the wholesale level, to IMR.  
159. Given that the following Council meeting would not  be until March next year and some rather 
technical issues were on the table, Norway supported Australia’s proposal that the Chairman invite all 
interested Members to informal consultations, to  facilitate a good discussion.  Norway was also 
supportive of the proposed symposium, and looked fo rward to working closely with Australia and 
other interested Members to make it successful.    
160. The representatives of the United States, Chile, the EU, New Zealand, Japan, Chinese Taipei 
and Indonesia all welcomed Australia's sugges tion and looked forward to the symposium. 
161. The representative of South Africa said that, like most Members, South Africa was still 
exploring the applicability of the GATS, the Annex and the Reference Paper to IMR.  He concurred 
that there was a problem of high roaming charg es, but highlighted that these were outside the 
regulatory scope of South Africa's regulator.  He  looked forward to further discussions, to see if the 
legal questions about the applicability of the GATS a nd its integral instruments could be resolved.  
Notwithstanding those concerns, he supported the id ea of the symposium, in which his regulators 
would be interested in participating, to better understand if the issue could be brought within their 
reach.  He noted that this question was not unique to telecommunication services.  A similar situation 
existed for derivatives, where there were also a ttempts to bring OTC credit transactions into the 
regulatory fold.  Members should try to see whether the WTO could resolve the issue, given the legal 
limitations that might possibly exist. 
162. The representative of the Republic of Korea s upported Australia's proposal to explore how 
trade rules applied to IMR.  As was the case in ma ny countries, IMR was not regulated and was left to 
commercial arrangements amongst telecom operators in  Korea.  As IMR was outside the regulatory 
purview, high international roaming prices could not  be effectively addressed.  One solution was to 
ensure greater transparency of pricing regimes a nd the provision of consumer friendly-information.  
Such mechanisms were already in  place in Korea, in accordance with  the APEC consumer guidelines 
and other best practice guidelines offered by in ternational bodies such as the OECD.  Yet, the 
exploration of IMR from a trade angle had not been  undertaken, in spite of the importance of the 
relevant communications for international trade.  His delegation believed that the issue of IMR could 
be more effectively dealt with through interna tional coordination among regional regulators.  He 
therefore welcomed greater discussion on how the principles in the GATS Annex on S/C/M/108 
Page 24  
 
  Telecommunications on reasonable access to and u se of public telecommunications transport 
networks and services applied to IMR.  Discussion w as also needed on the implications of MFN for 
IMR.  His delegation was ready to engage with othe r interested Members in order to have a fruitful 
and meaningful outcome.   
163. The representative of Pakistan expressed his dele gation's support for Australia's suggestions.  
Nevertheless, Pakistan still had a number of reservations as Members might be moving towards a set 
of principles that could lie outside the GATS amb it.  While his delegation could discuss market access 
and domestic regulatory issues with regard to IMR, the pricing issues might be outside the scope of 
the GATS obligations.  Hence Pakistan had objections about developing any principles in that regard.  
He indicated that domestic stakeholders had raised  similar concerns about the extraordinarily high 
shipping charges or courier charges, so the qu estion was whether the WTO should address those as 
well.  Members should be careful wh en considering what they were tr ying to achieve by way of trade-
related principles. 
164. The representative of Canada indicated that sh e supported Australia's proposal of technical 
discussions in the Council and a symposium.  Cana da would be receptive to further technical work 
clarifying the application of the GATS to internati onal mobile roaming, with a focus on wholesale.  
Nevertheless, her delegation's anal ysis suggested that, while the GATS did cover the wholesale aspect 
of international mobile roaming services agreemen ts between telecom operators, it had little or no 
legal application with respect to retail pricing of su ch services and that it was therefore not practical to 
address that issue under the GATS.  However, it w as premature to consider any potential further 
initiatives ensuing from that technical work.  The focus of the discussions should be on providing 
Members with clarity on how the GATS and international mobile roaming interacted.  
165. The representative of Turkey was also supportive of Australia's proposals.  Turkey's own 
industry and regulators would be interested in activel y participating in the initiative.  However, she 
echoed Pakistan's and Canada's concerns that IMR charges shoul d be determined by market 
conditions and that there was still uncertainty about  the applicability of the GATS in this regard. 
166. The representative of India shared Members' c oncerns that the IMR rates were high and not 
reflective of the cost incurred by providers.  This was a clear example of market failure and there was 
a general case for lowering those rates in the interest  of consumers.  However, India was of the view 
that GATS obligations did not apply to roaming agreements which were entered into by private 
service suppliers and thus were outside the real m of GATS obligations.  The GATS could not be 
applied simply because there was market failure.  He shared Pakistan's reservations that Members 
needed to be very careful in further engaging on the issue, as they seemed to be entering into the area 
of pricing.  In India's opinion, the issue was be tter handled in other fora, like the ITU which was 
already looking into IMR rates.  However, in th e special case where some Members entered at the 
government level into arrangements on IMR charges with other Members, which were discriminatory 
vis-à-vis  non-particpiants, MFN, transparency and other relevant GATS obligations would apply.  In 
sum, however, his delegation was generally cautious a bout taking further steps in that direction.   
167. On the issue of the symposium and the par ticipation of entities other than Members and 
Observers, the issue had been discussed previously  and India had expressed its reservations.  In 
September, his delegation had indicated its openness to consultations on the broader issue involved.  
However, so far the delegations concerned had not  taken up the offer and hence India's reservation 
about holding a symposium under the auspices of th e CTS still remained.  However, he understood 
that Australia's proposal was different since the event would be convened by Australia. He would 
therefore not raise objections.  
168. As for the Chairman's consultations, he still n eeded to seek advice from his authorities.  His 
delegation was comfortable with the existing process and would revert to the proposal.  S/C/M/108 
 Page 25 
 
 
  169. The representative of China said that his delega tion was in general supportive of Australia's 
proposal and flexible about the format of the discuss ion.  However, he also shared the view expressed 
by some Members that the GATS was relevant for th e setting of wholesale rates but not of retail rates. 
He would be interested in hearing more views,  including about what governments could do with 
regard to IMR. 
170. The representative of Nigeria said that his de legation was open to further discussions and 
having a symposium on the issue of IMR.  Neverthe less, the objectives of such  symposium needed to 
be clear.  It could for instance carry out an assessment  of the global trends and present situation, as 
well as facilitate the sharing of best practices.  Howe ver, he cautioned with respect to a future work 
programme, particularly because, as several de legations had pointed out, further technical 
clarifications were needed. 
171. The Chairman said the Council had had a very interesting discussion.  In light of the many 
points of view that had emerged it would be useful to continue discussing, as suggested by many 
delegations, in an informal manner.  He understood the reservations raised by India but these did not 
affect the Chairman's possibility of holding info rmal, open-ended discussions.  India could express 
any objections to addressing the IMR issue in that context.  He suggested that Ambassador Erwidodo 
hold informal consultations early in the New Year. 
172. The representative of India said that Australia had proposed that the Chairman hold informal 
consultations and his delegati on had objected.  He wondered wh ether this objection was being 
disregarded. 
173. The Chairman said that it was the Chairman's pr erogative to call informal consultations in the 
interest of the process, given that views diverged on what was at stake with regard to IMR.  The 
Indian delegate could consult his authorities and express his government's point of view in those 
consultations.  It was important for Members to c ontinue their deliberations as, even though positions 
differed, many delegations had indicated that in thei r opinion the GATS applied to IMR.  Hence, more 
discussions were necessary.  With regard to the sy mposium announced by Australia, he said that the 
Council took note of Australia's offer to host the event. 
174. The representative of India requested that his objection be formally recorded.  The Chairman 
confirmed that it would be recorded in the minutes of the meeting.  
G. WORK PROGRAMME ON ELECTRONIC COMMERCE  
175. The Chairman recalled that, at the Septembe r meeting of the Council, two new documents 
had been addressed under the E-Commerce Work Pr ogramme:  a Communication from the European 
Union and the United States, in document S/C/W/ 338, entitled "Contribution to the Work Programme 
on Electronic Commerce";  and a Communication from the United States, in document S/C/W/339, entitled "Work Programme on Electronic Commerce:  Ensuring that trade rules support innovative 
advances in computer applications and platforms, such as mobile applications and the provision of 
cloud computing services". 
176. Several delegations had shared preliminary reacti ons to the two submissions, so he offered the 
floor for any additional comments on the two documen ts or the Work Programme in general.   
177. The representative of the European Union said that the EU welcomed the reinvigoration of 
the E-Commerce Work Programme.  There were ma ny proposals and ideas on the table and Ministers 
would be able to recognize the efforts undertaken.  At the same time, the EU was well aware that 
there was a great amount of work still ahead.   S/C/M/108 
Page 26  
 
  178. With regard to the US Communication in doc ument S/C/W/339, the EU supported further 
work on cloud computing and mobile applications.  Neither topic was entirely new, but the scope of 
the current and future use had dramatically changed over the years.  Therefore, there was a need to 
ensure that Members' respective trade policies addre ssed those issues in the appropriate way.  The EU 
agreed with some of the conclusions of the US su bmission, notably that CPC 84, especially combined 
with the understanding on computer services, di d cover the essence of cloud computing.  Further 
discussion might be needed to grasp the variety and di versity of mobile applications.  He also agreed 
that discussions on cloud computing and mobile applica tions needed to consider the enabling factors, 
i.e. sufficient telecommunication infrastructure servi ce provision, safe payment mechanisms, but also 
a high level of consumer confidence and the right balance between liberalization on one side and the 
protection of privacy and service secrecy on the other.   
179. The joint EU-US Communication in document S/ C/W/338 proposed a series of ICT-related 
principles that supported the growth and developm ent of electronic commerce.  The representative 
then turned some of the specifi c questions that had been raised by Members.  Many had wondered 
about the legal status of the document distributed, and he clarified that the principles therein were not 
being proposed for adoption, but rather for discussi on.  The submission was the outcome of bilateral 
discussions between the EU and the United States.  The co-sponsors wished to share those ideas with 
the Membership and also see if they could be taken forward together.  As per the questions relating to 
privacy, data protection, intellectual property, cons umer protection and public health, he underlined 
that those issues had been addressed in the subm ission's headnote.  He would welcome further 
discussion on how to balance those legitimate policy objectives with other objectives enshrined by the 
principles.  Other issues raised by Members, such as competition or non-discrimination, could be 
integrated into such a project.  With regard to next  steps, the EU would be very interested in having 
detailed discussions with Members on the implementa tion of the principles and their relevance in 
supporting the growth of e-commerce in their respective economies.  The EU would develop 
proposals on how to do that concretely in the future.   
180. Referring to the submission in document S/C/W/ 338, the representative of the United States 
said that his delegation was fully supportive of c ontinued work on ICT principles.  His authorities 
were still reviewing the specific questions raised by Pakistan and New Zealand.   
181. With regard to his delegation's submission in  document S/C/W/339, he echoed what the EU 
had said in terms of reinvigorating the Work Programme in the CTS in particular.  He noted the Ministerial Decision taken in 2009 about continued di scussions of the trade treatment of electronically 
delivered software which had encouraged the US  submission.  The goal was to have a detailed 
discussion and examination of those fast-growing ar eas relating to e-commerce and ensure that trade 
rules continued to allow them to grow globally.  Some concerns had been raised by India about the 
balance of gains from market participation accruing to all Members.  He noted that a quick Google 
search had brought up a number of mobile application companies in India (e.g. Rapidsoft 
Technologies, Hidden Brains, SynapseIndia) that we re all providing software development, data 
storage and web design solutions that helped sma ll and medium-sized businesses perform and grow.  
He would be curious to know if Members were prep ared to tell their stakeholders that the WTO was 
going to ignore those growing business opportunities.   Brazil had raised some concerns about 
discussing the issue, but it was the 5
th largest mobile market in the world and had many developers of 
mobile applications, including some that were trying to develop products indepe ndent of Apple.  That 
was another example of the expansion opportunities fo r software developers in developing countries.  
Indeed, Brazil's largest software firm had just been  reported as seeking to become a global enterprise 
with presence in the main emerging markets, such as Argentina, Chile, Colombia, Russia, India and 
China.  Software development was often a collabora tive effort.  Developers in faraway places could 
develop applications and trade them.  The United Stat es wished to ensure that  market access barriers 
did not prevent that development chain from growing.  S/C/M/108 
 Page 27 
 
 
  182. Finally, the United States endorsed the continua tion of the Moratorium on the application of 
customs duties on electronically transmitted products, a goal that was important for the continued development of mobile applications as we ll as other digitally traded products.   
183. The representative of Brazil recalled that in September his delegation had expressed 
reservations on the submission in document S/C/W/338 because it considered it as an attempt to use 
the CTS for discussions related to the negotiations on market access and domestic regulation.  Those 
reservations persisted and his delega tion might explain them directly to the proponents, to ensure that 
the CTS discussions did not result in a mere repe tition of the market access and domestic regulation 
negotiations.  
184. The representative of Canada recognized the growth opportunities provided by electronic 
commerce and was supportive of the reinvigoration of the Work Programme.  Her delegation 
supported the proposal to share Members' resp ective experiences on electronic commerce-related 
issues.  In particular, a discussion on the use by SMEs could prove informa tive.  Her delegation was 
also in favour of further discussions of the papers  submitted, but would appreciate more clarity on 
their objectives.  Concerning the ICT principles in pa rticular, while there were some interesting ideas 
in the US-EU submission, her delegation was not in a position to endorse them at that time.  She also 
expressed Canada's continuing support for the cu stoms duties Moratorium on e-commerce.   
185. The representative of China stressed the im portance of e-commerce and supported in 
principle the extension of the Moratorium and the reinvigoration of the Work Programme.  However, 
like many other Members, China was concerned about  the inclusion of market access issues in the 
discussion, and believed that non-trade related issues  should be addressed through other channels.  On 
the EU-US proposal, the ICT sector supported only part of e-commerce.  However, the ten principles 
were more closely related to  ICT rather than e-commerce per se .  With the demands of modern 
technologies, the form and character of trade in a cyber-environment were very different from the 
traditional ones, which created both challenges and opportunities.  For the regulator, there was a need 
to balance free trade and regulatory objectives, wh ile for the trade negotiator it was important to 
remember that different countries might apply di fferent regulatory regimes in e-commerce-related 
sectors due to their different levels of developmen t and national conditions.  Based on the principles 
of equality and mutual respect Members should find common ground to further explore the topic.  
186. The representative of South Africa supported the reinvigoration of the Work Programme.  
However, he echoed the comments made by China and Brazil on the market access slant of the 
discussion in document S/C/W/338, which his delega tion would caution against.  There were other 
fora to discuss market access issues.  With regard to the US submission, he looked forward to further 
exchanges of views.  
187. The representative of Australia supported the re invigoration of the Work Programme and the 
continuation of the Moratorium on the application of  customs duties to e-commerce transactions.  Her 
delegation also welcomed the discussion of the EU-US submission as a fruitful area of work.  
Australia believed that there were some omissions from the ICT principles paper that were essential to 
correct.  In particular, she referred to on-lin e consumer protection and on-line personal data 
protection.  There needed to be an appropriate balance between informati on flows across borders and 
the protection of personal data.  It might also be useful to include an add itional principle advocating 
that Members implement measures dealing with on-line commercial electronic messaging.  Such 
unsolicited messages were an annoying consequen ce of e-commerce in Australia and should be 
minimised.  Her delegation was working on some concre te suggestions in that regard.  She was also in 
favour of further discussing the US proposal in document S/C/W/339. 
188. The representative of Japan also welcomed the reinvigoration of Work Programme.  On the 
ICT principles, Japan considered that the EU-U S proposal was moving in the right direction by S/C/M/108 
Page 28  
 
  capturing such services as CRS and telecom as ICT servi ces.  The fourth principle, related to local 
infrastructure, would be relevant to addressing cloud computing or data centres.  Japan believed that 
those principles contributed to the developmen t of the ICT sector and electronic commerce and 
wished to discuss them further.  His delegation was also interested in further information on how 
Members implemented them.   
189. With regard to the US proposal on mobile applications and cloud computing, he noted that 
these were relatively new services that had not yet been  discussed in the GATS context.  It would thus 
be useful to share information about the trade barri ers encountered in providing those services.  As the 
fourth principle was particularly relevant to cloud computing, that discussion would provide an opportunity to further recognize the significance of new principles as well.  
190. The representative of Hong Kong, China s upported the reinvigoration of the Work 
Programme and the continuation of the Moratori um on the application of customs duties to e-
commerce.  With regard to the EU-US submission, he said that, after having heard that it was not meant for adoption, his delegation was ope n-minded about discussing it further.   
191. The representative of India expressed his delega tion's support for the reinvigoration of the 
Work Programme.  However, he had reservations on the two proposals being discussed, as already 
indicated in his intervention at the September CTS.  On the EU-US submission, he echoed the 
statements made by Brazil, China and others that those issues had been addressed in the negotiations 
without arriving at a consensus, so resumption was u nhelpful.  With regard to the US submission, he 
noted that the mobile applications market was n ear-monopolistic.  A Google search had revealed that 
in 2009 Apple's share of the market was over 92 per cent.  His delegation had consulted with 
stakeholders and those consultations had revealed  that developing countries' participation in the 
market was very limited.  India was therefore not  convinced of developing countries' interest in 
discussing the issue. 
192. Echoing previous interventions, the representativ e of New Zealand said that her delegation 
also supported and welcomed the reinvigoration of the Work Programme.  She noted that the Work 
Programme in its current form  provided for discussions related to market access and domestic 
regulation amongst other issues to be examined  by the CTS.  New Zealand also supported 
continuation of the Moratorium.  As for the EU-U S submission, her delegation looked forward to 
further discussions.   
193. In reply to some of the questions raised, the representative of the European Union said that 
the aim of the joint submission was to discuss those ICT principles with Members.  The submission 
was one element in the discussions of e-commerce en ablers.  Going further, the US and the EU had 
agreed to promote those principles or a revised set of  principles, for instance with the inclusion of the 
elements suggested by Australia.  He wished to  reassure Members that there was no hidden agenda, 
the submission was not a way to engage in disgui sed market access negotiations, and no commitments 
were being sought.  Rather, it was meant to stimul ate debate on what could be put into place to 
support e-commerce.  Turning to China's comment about  what further elements could be included, the 
EU looked forward to discussing additional elements to  underpin the growth of e-commerce.  Finally, 
Japan's suggestion to share experiences was useful. 
194. The representative of Chile also supported the re invigoration of the Work Programme and the 
continuation of the Moratorium on the application of  customs duties to e-commerce.  Work on the two 
submissions should continue beyond the Ministerial Conference. 
195. The representative of Pakistan said that the Work Programme should be a standing item on 
the Council's agenda.  His delegation welcomed the two papers submitted, but  encouraged additional  S/C/M/108 
 Page 29 
 
 
  contributions from Members.  Pakistan still ha d some questions on the EU-US submission, and 
additional consultations would be useful. 
196. The Chairman said that the Council would take note  of the statements made and revert to this 
item at its next meeting.   
H. OTHER BUSINESS  
197. The representative of Australia expressed her de legation's on-going concer n about the lengthy 
delay in the entry into force of the certified EC-25 schedule.  She recalled that it had been more than 
three years since Australia had first raised th ese concerns.  The delay posed both systemic and 
commercial concerns for Australia.  She urged once again the European Union and its Member States 
to expedite the entry into force of the amende d schedule of commitments, and sought an update on 
any progress to that end. 
198. The representatives of Canada, Brazil, India,  Hong Kong, China and China echoed the 
statement made by Australia.  
199. The representative of the European Union said that his delegation had taken note of the 
concerns expressed, but it did not have  any additional information to share with Members since its last 
briefing on the issue. 
200. The representative of the Secretariat informed  Members that the Director-General had 
proposed to the Budget Committee that, in an atte mpt to make some savings, minutes be produced 
only as summary records, in as concise a form as po ssible while retaining all essential points raised.  
He urged Members to be open to this approach an d inform the Secretariat of any difficulties they 
encountered.  The representative of Turkey suggested that Members might send their statements to the 
Secretariat highlighting those elements that they c onsidered essential to be reflected in the minutes. 
201. The Council took note of the statements made. 
202. The meeting was adjourned. 
 
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