RESTRICTED  WORLD TRADE  
ORGANIZATION  TN/S/M/22 
6 November 2006 
 (06-5333) 
Council for Trade in Services 
Special Session  
 
 
  
REPORT OF THE MEETING HELD ON 14 JULY 2006 
 
Note by the Secretariat
1 
  
1. The Special Session of the Council for Trade in Services held a formal meeting on 
14 July 2006, chaired by Ambassador Fernando de Mateo of Mexico.  The agenda for the meeting 
was contained in document WTO/AIR/2860. 
2. The Chair
 suggested that items E and F on the proposed agenda (Review of Progress in 
Negotiations and Organization of Future Work) be d ealt with at the beginning of the meeting, after 
which the order of the proposed agenda would be fo llowed.  Under Other Business, he suggested that 
the Chair of the Working Group on Domestic Regul ation report about any progress made during its 
meetings.   
3. It was so agreed . 
E. R EVIEW OF PROGRESS IN NEGOTIATIONS , INCLUDING PURSUANT TO PARAGRAPH 15 OF THE 
GUIDELINES FOR NEGOTIATIONS  
F. ORGANIZATION OF FUTURE WORK  
4. The Chair  recalled the particular importance of these two agenda items, particularly as the end 
of July deadline for the submission of revised offers  was very near.  He thought that in the discussion 
of these items, delegations should take account of  the positive aspects of services negotiations thus 
far.  At the same time, it was important to  acknowledge that serious difficulties remained. 
5. On the positive side, it had been possible to comp ly with the first of the timelines agreed in 
the Hong Kong Declaration.  The level of engagement  in the plurilateral negotiations had been better 
than expected.  Plurilateral requests had been submitted on time as foreseen in Annex C of the 
Hong Kong Declaration.  In total, 22 such requ ests had been submitted and discussed in groups, and 
20 meetings had taken place in la te March and early April.   
6. A second round of plurilateral meetings had been organized in mid-May, the Chair recalled.  
The overall assessment was that the meetings had been useful and went as far as they could have been 
expected given the stalemate in the Agriculture and NAMA negotiations.  A th ird round of plurilateral 
and bilateral meetings had been organized for the co ming week.  It would not be surprising to hear 
that these talks had been affected by the situation in elsewhere in the negotiations. 
                                                      
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO. TN/S/M/22 
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  7. There was overall agreement that the process of  preparing and discussing collective requests 
had been positive.  It had sharpened the focus on th ree aspects:  sectors/modes of interest; specific 
objectives within each; and target Members.  What was emerging, in effect, was the first approximation of what, for lack of a better name, could be called the "critical mass" of commitments 
to be expected at the end of the negotiations. The plurilaterals had offered an opportunity for 
delegations to engage in detaile d, substantive exchanges.  Stro ng presence of capital-based sectoral 
experts had been a very encouraging sign.   In a ddition, there had been substantial work done on the 
implementation of LDC Modalities and on regulatory disciplines, although more work still remained.  
So, looking on the positive side, the Chair took th e view that the process on services this year had 
progressed as well as might be expected in the light of the detailed ministerial guidance agreed in 
Hong Kong. 
8. It was important, however, to be candid about the problems that lay ahead.  The real test of 
substance would be in the submission of revised offe rs which were due by the end of July.  Since the 
quality of existing offers was considered as falling short of expectations, major improvements were 
needed.  The Chair recalled the pr e-Hong Kong evaluation of offers  during which the general view 
was that they left a lot to be desired.  The quality of revised offers was theref ore absolutely crucial.  
Revised offers that offered little could not provide a solid basis for the succe ssful conclusion of the 
services negotiations.  Since services negotiations we re time and labour intens ive, revised offers of 
good quality were needed as soon as possible. 
9. At the same time, one had to recognize linkages with other fields of the negotiations and the 
effect they could have on the quality of revised offe rs.  Nonetheless, the Chair urged participants in 
the negotiations to be careful in drawing these linka ges.  While the situation in those other areas was 
surrounded with uncertainties, Members had to address the services negotiations with the positive 
assumption that the situation would be unblocked in the near future. 
10. In the Chair’s view, participants had to consid er carefully the view that the first and most 
important priority was to ensure that the quality of the revised offers was satisfactory.  There could be 
no successful conclusion of the services negotiations w ithout revised offers that reflected the desired 
levels of outcomes of the participants.  While Mi nisters had established a date of 31 July for the 
submission of revised offers, a date which the Ch air urged Members to observe, it was absolutely 
crucial that any revised offers submitted were of  high quality to ensure the successful continuation 
and completion of the services negotiations. 
11. With respect to agenda item F, on the Organi zation of Future Work, the Chair’s own view 
was that it would be premature to enter into a de tailed discussion of this topic. Delegations might 
nonetheless wish to express views on these items and these views would be welcome. 
12. The representative of Brazil
 noted the positive attitude that the Chair tried to instil in the 
Council’s work.  Notwithstanding that, he thought th at having an item for this meeting session entitled 
Review of Progress in Negotiations might be somewhat of a misnomer.  At the outset, his delegation 
did not subscribe to the conventional wisdom that at  Hong Kong the quality of offers left a lot to be 
desired.  His evaluation was that the offers on the table outweighed those in other areas of the negotiations.  He did not accept the idea that services were in some way lagging behind in the Round.  
He thought that this meeting of the Special Session was emblematic of the general situation.  The 
meeting of the Special Session had b een postponed from its original date s in late June so that it could 
benefit from a positive impetus to be given to the Round as a whole as a result of a Ministerial 
gathering in late June in Ge neva that had been focused on essentially two other areas of the 
negotiations.  It was lack of progress in those areas  that had held back any progress in the services 
negotiations.  With regard to work this week, Braz il had held only 3 bilatera l meetings with a brief 
review of the overall situation.  In those meeti ngs, Brazil reiterated the positions it had been outlining 
since the beginning of the plurilateral process earlie r in the year, which Brazil agreed was a positive TN/S/M/22 
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  experience.  Brazil had been able to reemphasize th e margin it had for improving market access offers 
on the basis of bilateral and plurilateral requests Br azil had received.  Brazil had at the same time 
highlighted to its partners that the effective sc ope of any future offer would depend on progress in 
other areas of the DDA.  He agreed with the Chair on the organization of future work that it would be 
perhaps premature to take any decision on that  now when so much within the DDA as a whole 
required high level guidance. 
13. The representative of Bangladesh  noted that his country had just taken over as coordinator of 
the LDC Group, and that the statement he would make was on behalf of that group.  He was happy 
that the Chair had brought items related to th e review of progress in the negotiations and the 
organization of future work to the forefront.  It was important that delega tions exchange thoughts on 
this subject.  He appreciated the Chair’s re marks and positive tone.  In discussion on the LDC 
Modalities, he proposed to refer to some of the re marks by the Chair in his opening statement on the 
progress in that area.  The LDC group viewed this as  an opportunity to take stock and to map the way 
forward.  In his statement, he would concentrate on the areas of direct interest to the LDC group.   
14. The LDC Group was deeply appreciative of th e numerous statements made in different 
forums in support of LDCs, and desire of the memb ership to create a level playing field for them.  
There had also been many statements emphasizing the potential benefits of liberalization.  It had been 
underscored repeatedly the importance to create cond itions to enlarge the pie so that developing 
countries including the LDCs could benefit.  C onsidering such statements, he found it rather 
unfortunate that the membership was so slow in ta king steps to implement the decision taken in 2003 
regarding the Modalities for the Special Treatment  for LDCs.  The need for full and effective 
implementation of the LDC Modalities in a timely and meaningful manner had been agreed at the 
highest level of decision-making in the WTO.  To emphasize the point, at the Ministerial Conference 
in Hong Kong in December 2005, it had been specifically  agreed that the issue was to be resolved by 
31 July 2006.  Given the hesitation in coming up wi th proposals for implementing the modalities, the 
LDC group had made a submission.  They had hoped that there would be immediate engagement on 
the subject.  The 31 July was just two weeks aw ay, and the membership was fully aware of the 
approaching deadline and of the need to engage on this issue.  There needed to be progress on this 
subject.  The LDC group wished to emphasize the im portance it attached to these modalities.  In the 
view of LDCs, the modalities were perhaps the b est way in which the LDCs would be enabled to 
access international markets through improved participation in world trade in services. 
15. While many Members had engaged on this subj ect with the LDCs, there were no concrete 
proposals that resembled the implementation of the agreed modalities.  Under agenda Item C on 
modalities, the LCD Group wished to make further co mments.  On the question of increasing the pie, 
LDCs found the argument made in almost all sphe res of the negotiations that liberalization was 
desirable.  It was predicated on the belief held by many that with wealth increased, there would be 
much more to distribute.  LDCs found it strange that when it came to the area of interest to LDCs, this 
argument was ignored, including by those who espou sed it in other areas.  Study after study had 
demonstrated the immense potential benefit of even limited liberalization of mode 4, particularly in 
the movement of less-skilled natural persons.  It wa s estimated that opening barely 3 percent of the 
OECD labour market would yield benefits that were  at least two-thirds of the benefit of total 
liberalization of trade in goods.  LDCs did not expect  an overnight liberalization in labour markets of 
interest to them.  What LDCs did expect was that  the membership would start serious discussions to 
create a structure that would enable serious nego tiations to proceed in the right direction.   
16. With respect to the organization of future work, LDCs wished to establish a framework.  
First, acknowledging that LDCs we re the weakest and most vulnerable Members of the WTO, LDCs 
looked forward to a round of revised offers that t ook into account sectors and modes of export interest 
to them, particularly in mode 4.  Second, LDCs looked forward to the successful development of an 
appropriate mechanism to accord special priority to  the LDCs in accessing services markets.  Third, TN/S/M/22 
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  LDCs acknowledged the important role that targeted  technical assistance and capacity building could 
play in this sector.  There was a vital need for proper national assessments in LDCs performed by 
competent people, and not by consultants themsel ves learning in the process of helping with the 
assessment.  Finally, the LDC Group requested that  the issue of implementing modalities remain a 
standing item on the agenda of the Special Sessi on of the Council until a meaningful outcome was 
achieved. 
17. The representative of Australia
 concurred with the Chair’s introductory comments and his 
assessment of the state of play.  For its part, Aust ralia was continuing in capital with preparation of a 
high quality services offer.  The offer would res pond to key requests from trading partners made 
bilaterally and through the plurila teral requests, and would include new commitments in sectors that 
were previously uncommitted.  Australia would be in  a position to table its offer by the deadline of 31 
July, and would make a decision on whether to table at  that stage.  Australia encouraged all Members 
to ensure that they were also in a position to ma ke that judgement to table their offers by that 
deadline. 
18. The representative of the European Communities  noted that Members were once again in an 
important phase in the services negotiations.  The EC had recently organized an informal ministerial 
stock-taking which had been attended by some of th e key participants of the negotiations, and which 
showed that there was a general acknowledgement of the importance of the services negotiations and 
of their central role.  All recognized that services should be part and parcel of whatever geometrical 
shape that was used to describe the main topics of the DDA.  The EC had heard on the occasion of 
this informal ministerial stock-taking certain en couraging signals, and was expecting to see them 
translated into the upcoming revised offers.  The EC wished to urge strongly all WTO Members to 
comply with the commitments they had undertaken in Hong Kong, and to submit by the end of the July their revised offers containing substantia l commitments.  This was crucial to address the 
unsatisfactory situation which the Chair referred to, and which resu lted from the poor quality of what 
had so far been put on the table.  It was essentia l for the revised offers to be both timely and 
substantial.  Timing and quality we re two features that could not be dissociated.  For its part the EC 
was finalizing the preparation of its revised offe r, and it was expected to contain important 
improvements that responded to several parts of the majority of the collective requests that had been 
recently discussed.  The EC had notably examined w ith particular care the collective requests in the 
areas of mode 1 and mode 4 co-sponsored by many developing countries.  The representative of the 
EC wished to highlight that revised offers shoul d rectify all the instances where back-tracking had 
slipped into Members' current offers, and trusted th at this backsliding was in general unintentional.  
He warned that, should this situation continue  without the necessary procedures under Article XXI 
being initiated, the EC might request delegations co ncerned to undertake informal consultations.  The 
EC stood ready to communicate to the Members con cerned the back-tracking they had detected in 
their offers.  With respect to the relationshi p of other sectors of the DDA with the services 
negotiations, the EC saw this as a two-way street – substantial offers in the services area could also 
politically facilitate negotiations in other areas. 
19. The representative of Japan
 observed that, since the decision was made at the Hong Kong 
Ministerial Meeting, service negotiations had been conducted in a different mode.  There had been 
two rounds of plurilateral negotiati ons in a number of sectors and modes of supply. There had been 
more focused bilateral negotiations largely based  on these plurilateral requests.  Japan had been 
actively participating in these activities with experts in different areas. 
20. He noted that this particular cluster of mee tings was held when the Members were facing the 
last stage of preparation for their second revised o ffers.  Japan had held bilateral meetings with a 
number of delegations, where the primary focus was to exchange informal indications for the next 
revised offers.  Although Japan was not fully satis fied, the results of these meetings were generally 
positive.  Japan had been told of efforts in capitals of its key trading partners to try to meet some of TN/S/M/22 
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  the important elements of its requests.  The plur ilateral negotiation process had contributed to 
articulating priority items of requests, thus facil itating internal consultations with various relevant 
Ministries and agencies.  In those bilateral mee tings, upon request, Japan had also expressed its 
preliminary views con cerning the next revised offer, in partic ular stressing its efforts to meet the 
plurilateral requests from a number of developing country Members.  
21. He further observed that the results of the info rmal exchange of views would be duly reflected 
in the final decisions taken by Japan with respect to its next revised offer.  The next revised offer was 
an important step forward, and Japan expected offers of a good quality from its trading partners.  
What mattered was quality.  Japan was in the last stage of serious efforts to be ready to make a 
substantial offer by the deadline.  He therefore urge d other Members to continue their preparations so 
that they would also be ready to meet the given deadline. 
22. Japan believed that a discussion of future pro cess was premature.  However, Japan was ready 
to participate in the negotiations in services in an  active manner whenever there was a chance to do 
so.  In closing, he added that Japan was also  concerned by the issue of back-tracking.   
23. The representative of Canada  largely agreed with the Chair’s introductory remarks.  While the 
week had not been as dynamic as other GATS servic es clusters, from Canada’s perspective it was as 
productive and positive as possible under the circumstan ces.  Canada had engaged with its negotiating 
partners in a number of bilateral discussions in bot h market access and horizontal issues.  The week's 
meeting of the WPDR had brought Members one step  closer to developing a draft negotiating text, 
and Members would be discussing the issue of LD C Modalities during the present special session.  
While there was definitely an uncertainty in the air given the current situation in other negotiating 
areas, there continued to be engagement in services.  It was important that Members ensure that 
services negotiations continued to move in the ri ght direction.  The pl urilateral and bilateral 
discussions that had taken place after Hong Kong had provided Members with detail and clarity 
regarding the expectation and visions of trading pa rtners.  With this in mind, Canada wanted to 
emphasize the importance that Members be in a position to table their offers.  Canada came out of the 
Uruguay Round with a high quality schedule.  It fron t loaded its initial offer to help build momentum 
in the Doha Round negotiations and ha d added significantly to it in its revised offer.  In light of this, 
the preparations for Canada's second revised offe r required extensive consultations to examine the 
potential for further movements in areas of interest  to demandeurs, including developing and least-
developed countries.  This work continued, a nd Canada remained committed to moving the Doha 
services negotiations forward.  Canada was aiming to meet the 31 July deadline or very soon 
thereafter.  Finally, given the best case scenario, Canada looked forward to resuming plurilateral and 
bilateral market access discussions in the fa ll on the basis of the new round of offers. 
24. The representative of the United States  thanked the Chair for his update. The United States 
had held very aggressive bilaterals in March back-t o-back with the first round of plurilateral meetings; 
it had also held additional aggressive  bilateral meetings on the marg ins of the plurilateral meetings 
held in May.  The United States had been enga ged and impressed with the rich discussions that 
evolved from all of those interactions.  It appreciat ed the effort and work put into collective requests 
that enabled it as well as other Members to b ecome more focused on their objectives in these 
negotiations.  It was also working diligently on its  next offer and hoped that it responded to a number 
of particular interests that were refined in co llective requests, as well as in further bilateral 
discussions.  The United States expected to meet the deadline of  31 July, and looked forward to 
positive results with respect to quality and timeline of offers from other Members. 
25. The representative of the United States hoped to h ear from the Chair, perhaps in the form of 
consultations after the summer break, as to how the ne gotiations would be organized in the fall.  At 
that point, the end of the round would be close, and decisions would have to be made about additional 
plurilateral meetings, as well as bilateral meetings.  She reminded delegations that the United States TN/S/M/22 
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  had announced that it would be making further demarc hes concerning its bilateral requests, taking into 
account the fact that the plurilateral collective re quests co-sponsored by the United States would not 
supersede its bilateral requests.  In the demarches sent to other Members, the US had further refined 
its bilateral requests, and hoped that this would ai d Members in the preparation of their upcoming 
offers. 
26. The representative of Hong Kong China
 agreed generally with the Chair’s introductory 
remarks.  Hong Kong, China had held useful mee tings, including friends groups meetings, in a few 
sectors in the past week, mainly to exchange views on the latest state of play. While inevitably no one 
could say for sure what would happen by the end of  the month with regard to the bigger picture, 
services negotiators were gene rally positive and engaging. 
27. Hong Kong, China was in the final stages of pr eparation for the second revised offer.  There 
was much hard work on an offer of a level of quality commensurate with what would be called for 
under the best-case scenario, and to be tabled by end-July. Hong Kong, China hoped that development 
in the upcoming weeks would allow the deployment, on time, of its best-case scenario offer.  Since negotiations were in the final stages,  best use should be made of the re vised offer exercise to strive for 
progress. 
28. Looking ahead, Hong Kong, China had already been giving some thoughts to the organization 
of the next cluster in October. It would be d esirable to intensify both plurilateral and bilateral 
negotiations, in the light of the second revised offe rs, and with the objective of filling the remaining 
gaps. As stated by the Chair, the presence in Geneva  of experts from capitals  had had a very positive 
effect, and their continued participation would grea tly facilitate engagement in the plurilateral and 
bilateral negotiations. 
29. In closing, an important remaining element in  the negotiations was rule-making. A useful 
informal meeting of the Working Party on Domestic Regulation had recently been held, and consultations would continue during the current month. Hong Kong, China hoped that the spirit of 
engagement that had prevailed so far would ensure  that a constructive outcome would be achieved for 
this important pillar of the services negotiations. 
30. Finally, with respect to the EC paper on LDC Modalities, Hong Kong, China recognized the 
importance of continued positive engagement in th e implementation of the Modalities.  The EC's 
paper appeared to be a helpful contribution in th is direction, but would require further study. 
31. The representative of New Zealand
 stated that, when considering the issue of progress in the 
services negotiations, it was necessary to bear in mind a linkage to progress in other areas of the Doha 
Round.  However, New Zealand would be in a position to submit its 2006 revised offer around 31 
July.  It intended to submit a substantive revised offer in response to requests received from others.  
New Zealand had participated actively in the pl urilateral process both as a co-sponsor for some 
requests and as a recipient of others.  Its 2006 offer would include areas which were a direct result of 
the plurilateral process as well as others which would respond to requests which were received 
bilaterally.  New Zealand looked forward to re-e ngaging intensively in September in the market 
access negotiations. 
32. The representative of Chinese Taipei  recognized the importance of the week's meetings, not 
only because it provided Members with their last ch ance to talk to each other before the 31 July 
deadline for second revised offers, but also becau se it gave Members the chance for a general 
exchange of views on the consolidated text on domestic regulation. 
33. Domestically, Chinese Taipei was now in the pr ocess of consulting with its industries for the 
purpose of identifying the services sectors to be libera lized further.  In this context, Chinese Taipei TN/S/M/22 
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  had made the best use of the week to clarify with  Members some outstanding issues relating to further 
liberalization on market access. Chinese Taipei would be able to put forward its second revised offer 
on schedule, which would achieve further liberalizat ion in its services sectors. Chinese Taipei would 
make offers particularly in the areas of infrastruct ure and classification, for the purpose of maintaining 
the certainty and predictability of its commitments. 
34. At this critical juncture, the services negotiati ons were inevitably influenced to a certain 
extent by what happened in the NAMA and Agricultu re negotiations.  However, Chinese Taipei urged 
Members to stick to the end-July deadline, since the approach used in the services negotiations was 
different from that of NAMA or Agriculture.  In ad dition, after several months of plurilateral requests 
and bilateral negotiations, Chinese Taipei hoped to see the results of these efforts reflected in 
improved offers from other Members, in terms of both quality and quantity. When Members tabled 
their second revised offers, it would be clear whet her it was still necessary to hold another round of 
plurilateral meetings on particular sectors or modes. 
35. With respect to the negotiations on domestic  regulation, Chinese Taipei saw these as 
complimentary to the market access negotiations.  Th e text recently circulated by the Chair of the 
Working Party on Domestic Regulation was a very useful basis for domestic consultations and for 
moving forward to the next stage of negotiations.  Chinese Taipei would be actively engaged in the 
future negotiations, and looked forward to coope rating closely with the Chair and with other 
Members. 
36. Overall, it was important to stress how much Members were in need of an immediate 
injection of clear political will if there was any ch ance of getting real, tangible results for the services 
sector out of the round. 
37. The representative of Argentina  said that he had heard a number of delegations express 
concern about the quality of offers tabled.  He assu med that this concern re ferred to the quality of 
offers made by all Members, and not just developing countries.  In this respect, given that 31 July was 
looming, he wished to recall that the shared objec tive, in keeping with the negotiating mandate, was to 
promote the growth of the economies of all Member s, in particular the economies of developing 
countries.  Offers did have to take par ticular account of the situation in LDCs. 
38. He emphasized that many developing countries, when they tabled offers, would take into 
account the situation in different countries.  Theref ore, he hoped that there would be improved mode 4 
offers.  Noting linkages with other negotiations, he ha d to consider the quality of the offers tabled in 
agriculture and NAMA and be cautious. He believed th at other developing countries might share that 
pessimism.  He pointed out that the current agricultu re offers did not meet the concerns of Argentina 
and other developing countries.  What Argentina had to offer with respect to services would be linked 
to what was on offer in other areas. 
39. The representative of Uruguay  generally shared the views expressed by the Chair.  Uruguay 
had participated actively in the whole process of  negotiations.  In capital, technical work was 
underway to prepare the revised offer and plurilatera l requests were under consideration.  There was a 
great deal of concern about other negotiations, partic ularly with respect to agriculture, and this would 
affect what Uruguay was in a position to  say with its new revised offer. 
40. The representative of Norway  said that it had undertaken a number of bilateral consultations 
during the week.  The main focus of these consultati ons had been to explore the state of readiness for 
the submission of new revised offers, and what su ch offers could contain.  It was his general 
impression that many Members intended to submit thei r offers on time, or close to the deadline, and 
that many delegations believed it important not to let progress in the services negotiations be slowed 
as a consequence of the lack of progress in NAMA and Agriculture. TN/S/M/22 
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  41. In preparing its own offer Norway had in partic ular been taking into account the plurilateral 
requests and the concerns of developing countries.  It  expected to be in a position to table the revised 
offer by the deadline, but awaited a final political  decision.  For Norway, it was clear that an 
agreement in the services negotiations remained an  integral and key part to the Doha round of 
negotiations.  The lack of substan tial improvements in quality of offe rs generally remained a concern 
in the negotiations so far.  Norway looked forw ard to seeing Members making real efforts in tabling 
substantially improved offers by  this second round of revised offers.  The discussions on the 
plurilateral requests had been very useful.  Flexibility had been built into those requests and no Member would be expected to meet all targets on all areas.  It would be desirable to reengage in a 
plurilateral setting in the autumn to assess the state of play.  In assessing the progress of negotiations 
after the summer break, it would not be the number of  revisions of offers which would count, but the 
quality of the offers on the table. 
42. The representative of Mexico
 said that there were areas in which a greater impetus in the 
negotiations was needed.  There was a general need  to increase the speed of the negotiations.  The 
effect could be seen in the services negotiations , as opposed to elsewhere.  Mexico hoped that 
improved offers would reflect statements made by  Members in the plurilateral negotiations over the 
last month.  In particular, Mexico hoped that im proved offers would contai n substantial improvement, 
especially in mode 4, where a great deal was left to be done.  In spite  of the principle that there were 
to be no a priori exclusions in negotiations, th ere were offers which continued to exclude entire 
sectors.  Mexico was now preparing its revised offer,  working intensively at a national level in order 
to have a new offer on the table in time.  Neverthel ess, in order to present this offer, Mexico needed 
clear policy coordination with other areas of the negotiations, which were unfortunately linked.  
Mexico hoped that this policy coordination would be  forthcoming, enabling Members to see when and 
where they were going, and allowing Mexico to provide its revised offer. 
43.  The services negotiations were not only about ma rket access, but also about disciplines. The 
disciplines, especially those on domestic regulati on would govern the agreements and determine the 
scope of Members’ commitments at an internationa l level.  Issues of market access and disciplines 
were closely linked, and needed to be resolved in order to achieve a successful outcome of the 
services negotiations. 
44. The representative of Egypt  noted that recently there had been  no plurilateral negotiations and 
not many bilaterals.  These were indications of the kind of progress that was being made or not made.  
Services were clearly related to what happened in other pillars of the negotiations.  It was a very 
critical moment, and Egypt was wondering what ove rall improvement would be  found when it opened 
the box of the second revised offers.  The date of 31 July had been agreed on when there was an 
understanding that specific developments would take place in other important pillars by April 2006.  
Being realistic, the reality was that services were not  negotiated in a vacuum.  Members were asked to 
continue negotiations on the understanding that th e situations elsewhere w ould be unblocked in the 
near future.  Egypt had been doing so for a very long time.  
45. On a more positive note, efforts were being made  in the WPDR to move the negotiations into 
a text-based mode, a situation to be resolved by the end of the month.  The WPDR's report later in the 
day would provide Members with a clear picture on  where matters stood.  Egypt would be introducing 
later in the day a new document on S&D treatment on behalf of the African Group, an issue that had 
clearly gained a huge momentum.   
46. The representative of Pakistan  said that the plurilateral and bila teral meetings were useful in 
drafting the rationale behind making clear commitments in areas which would be beneficial for businesses.  For the purpose of preparing its revise d offer, the Pakistan government was making 
efforts to expedite consultations with stakeholders.  Considering the cumbersome internal process, 
Pakistan hoped to meet the 31 July deadline, or soon thereafter to table an ambitious revised offer TN/S/M/22 
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  largely meeting the requests made to it, which woul d be a meaningful and useful offer for foreign 
services suppliers. 
47. The representative of the Philippines  said that it stood in solidarity with other Members with 
its commitment to the meaningful and successful conc lusion of the DDA, and more particularly in the 
services negotiations.  Previous speakers had focused  primarily on market access.  The Philippines 
wished to highlight other areas that were equally vital to assessing any progress in the DDA 
negotiations in services in addition to  market access issues.  First, Me mbers had to remain faithful to 
the shared vision of facilitating the participation of developing countries in international trade in 
services, while taking account of their economic situ ations and level of de velopment.  It was 
important to remember that many developing c ountries, including the Philippines, were already 
providing real, effective and operational market ac cess.  Secondly, Members needed constantly to 
respect the GATS negotiating structure, particularly  that of Article XIX, and the full flexibilities 
currently enjoyed by Members under the GATS.  It was important to note that the development dividends of trade liberalization were not  reaped by market openings alone.   
48. The Philippines continued to believe that market  access and rules had to go together.  Safety 
nets had to be put in place to build the confid ence of domestic constituencies.  Work had to be 
intensified in order to develop any necessary discip lines in domestic regulation before the end of the 
current round of negotiations.  His delegation was al ways available to discuss all possible options for 
making the services negotiations more dynamic, more efficient and ultimately successful. 
49.  The representative of Korea
 said that its second revised offe r was in its final stages of the 
pipeline.  Korea was prepared to table a quality  offer around the deadline, duly taking into account 
bilateral and plurilateral requests from its trading partners.  Progress in market access and domestic 
regulation negotiations was important to secure a m eaningful services liberalization. In this regard, 
Korea was glad to see the consolidated text presented by the Chair of WPDR. 
50. The representative of China  said that, as a new WTO Member, China might make a wrong 
judgment in such a complex situation, but did feel  that the deadlock in Agriculture and NAMA had 
haunted both bilateral and multilate ral consultations on services.  The current week of services 
negotiations had once again been held in a foggy atmosphere.  The sense China got from formal and 
informal services meetings over the past few days was that many Members were seriously concerned about the impasse in other areas and were therefore reluctant to specify their individual roadmap for 
services.  Some Members always claimed that services should not be held as hostage to other negotiations, whilst others believed that a single undertaking was the overriding principle to be 
observed during the entire Doha Round.  Like most other Members, China was also worried that the 
deadlock in Agriculture and NAMA had effectivel y cast a shadow over the entire round.  China 
strongly believed that such a deadlock should be broken as soon as possible so as to move negotiations in other fields including services.  Du ring the current week, Chin a had repeatedly been 
asked about the timing and content of its further re vised services offers.  At the moment China was 
undergoing extensive and intensive internal consultations with a ll domestic stakeholders for the 
second revised offer.  This was a time-consuming exercise, as most sectoral agencies were still busy 
implementing China’s WTO Accession commitments, a nd analyzing the impact of liberalization thus 
far.  China was also soliciting views from the in dustry and consumers, which required dedicated 
coordination in the weeks ahead.  Politically, China was very serious about the deadline of submission 
of the second revised offers, which had been sti pulated in Hong Kong by Ministers.  Technically, 
China did need more time for the domestic work. 
51. Members fell into two categories with respect to the preparation and submission of the 
revised offers.  One group of Members already had offers available in their pocket, while the other 
group had no such mandate.  China definitely did not  belong to the first group.  For the next stage 
China hoped Members, especially developed Member s, would submit offers before the deadline, to TN/S/M/22 
Page 10  
 
  respond as much as possible to the requests of the deve loping Members.  In submitting a revised offer, 
China would not be left far behind. 
52. The representative of Thailand
 felt positively about how the time had been spent since the last 
meeting.  During the current week, Thailand had he ld a few bilaterals wh ich had been frank and 
represented a genuine exchange amongst colleagues.   Thailand welcomed the opportunity to meet 
with representatives of the private sector – the Keidanren of Japan, the Coalition of Services 
Industries (CSI), and Education International.  Th is exchange had been a valuable opportunity for 
Members to understand each other positions better, in cluding their objectives and their constraints. 
Thailand agreed with Canada that Members continue d to engage positively despite the negativities in 
other areas.  There was always time for negativity later on down the line.  At present, services 
negotiators were unique in that they were still very much hard at work.  
53. Thailand also welcomed the work that had been  done in the WPDR, and considered that the 
Chairman's text would provide colleagues in ca pital with enough work during the summer break.  
Thailand was working on its revised offer.  At the ministerial stocktaking hosted by the EU, Thailand 
had indicated some areas of improvement and hoped these would come through to the revised offer.  
Thailand hoped to be able to deliver its  revised offer close to the deadline. 
54. The representative of Cuba  recalled that the negotiating mandate was to promote the 
economic development of all Members, especially de veloping country Members.  Account had to be 
taken of the extremely difficult situation of LDCs, a nd that liberalization in the round was not an end 
in itself but to contribute to development for sp ecific needs.  For developing countries, these 
negotiations were part of a single undertaking.  Th ey could not be more ambitious than what the 
Members were prepared to negotiate in different sect ors and areas, for example in agriculture.  It was 
desirable to make offers on various modes and sect ors of interest to developing countries, especially 
on mode 4.  Negotiators would have  to intensify their work in order to agree on S&D treatment for 
developing countries and to establish a mechanis m for the effective implementation of LDC 
Modalities.  Sectors and modes of interest to developi ng countries meant that offers were to be of high 
quality.  Domestic regulation was a nother important area of negotiation.  In that respect, negotiations 
were to be intensified on the first text presented by the Chair. It was incomplete and did not reflect the 
contributions by the ACP and SVEs regarding speci al treatment for developing countries.  It also 
needed to introduce provisions on tr ansparency and on the right to re gulate.  On this point, it was 
important to have a result which respected and preserved the right of Members in general, but 
especially of developing Members, to establish do mestic regulation which would ensure their full 
development. In conclusion, Cuba thought that the date set out in Hong Kong was only indicative.  It 
was difficult for developing countries to meet the deadlines.   
55. The representative of India  shared the Chair’s assessment.  From India’s perspective, services 
was a critical element of the market access negotiations.  Services, in its own right and in terms of balance, was an area which should be looked at in the broader context of negotiations.  As far as its 
own revised offer was concerned, India was preparing to meet the 31 July deadline.  He added that in 
the run-up to Hong Kong, the issue that he had c ontinuously heard in the CTSS and other forums was 
the issue of quality.  In a sense, for the first time, the Hong Kong Minister ial Declaration provided 
guidance as to the kind of quality of offers that Members were looking at.  The quality was more 
important even than the deadline.  There were asymmetries to be corrected, including mode 4 and 
mode 1.  India was willing to contribute, and had pu t a very ambitious revised offer on the table, in 
spite of the fact that in many areas of its interest it had not received satisfaction.  Inida hoped that that 
imbalance would be corrected in the Round. 
56. Domestic regulation was a topic of critical impor tance for India, and was very closely related 
to the issue of market access.  Domestic regulatio ns were important in themselves but also as an 
important complement to market access, particul arly in areas where India was interested.  The TN/S/M/22 
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  consolidated text by the Chair was one important st ep forward.  India hoped that at the end of the 
Round there would be a set of disciplines that w ould complement the market access that had been 
obtained. 
57. The representative of Switzerland  said his government was prepared to table an offer as soon 
as it was back from the break in early August, whic h would contain considerab le improvements.  He 
wished to reiterate the importance of the nego tiating phase on which Members had just embarked.  
There were two technical points that were important to  his delegation.  First, the legibility, the legal 
security and quality of offers was important at this  point in the negotiations.  All delegations should 
seize the opportunity presented by the revised offers  to improve the quality of their texts.  Everybody 
was in a position to improve their offers.  The second point was back-tracking.  It would be good to 
do away with this particularly if it was inadvert ent.  In addition, his delegation was particularly 
committed to the domestic regulation negotiations. 
58. The representative of Paraguay  agreed that the state of the services negotiations was positive.  
However, there were very important links between  services and other sectors such as agriculture and 
NAMA.  In this regard, there had not been a signi ficant improvement. On the contrary, the situation 
seemed to be getting worse.  Paraguay hoped it woul d be solved in good time so that Members could 
successfully conclude this Round. 
59. The representative of Nigeria  said that Members needed to redouble their efforts to make 
further progress in the negotiations.  He believed that market access and rules had to go together.  He 
also believed there was a linkage between the services negotiations and other areas of the DDA such as Agriculture and NAMA.  Nigeria was looking for the submission of high quality revised offers 
with substantive improvement in market access, es pecially in sectors and modes of supply of export 
interest to developing countries, especially in mode 4.  Nigeria was carrying out domestic consultations with its relevant stakeholders w ith a view to submitting its initial offer, and was 
prepared to engage constructively in the next days of negotiations. 
60. The representative of Turkey
 said that services would continue to be influenced negatively or 
positively by other areas of negotiations.  This w as the very nature of the single undertaking.  
Members needed to preserve the good atmosphere in th e services negotiations so as to be prepared for 
all the pieces of the DDA negotiations to fall into  their places when the time came.  Turkey was 
working on its second revised offer, taking into co nsideration the requests addressed to it.  Due to 
technical reasons Turkey might not be able to tabl e it by 31 July.  In order to make headway in the 
negotiations on rules, Members needed to be realis tic on what was achievable and implementable.   
61. The representative of Israel  said that work was proceeding in Israel in order to finalize a 
revised offer by the 31 July deadline or as soon as po ssible thereafter.  Israel was very committed to 
this area of the negotiations. 
62. The representative of Ecuador  stated that Ecuador had participated actively in the request and 
offer negotiations, including the plurilaterals.  Ecuador  had made significant efforts to ensure that its 
initial, revised and final offers were  tabled, and was prepared to work constructively to table an offer 
even though its bound commitments were already c onsiderable in breadth and depth.  Noting the 
linkage between different areas in this round, Ec uador hoped that progress would be made in other 
areas .  Ecuador also hoped that there would be progress in negotiations on domestic regulation. 
63. The Chair  noted that Members had a clear sense that the services negotiations were not 
occurring in a vacuum and had lin ks with other areas of the nego tiations.  He also noted that 
delegations had emphasized the quality of offers and were ready to continue to work in constructive 
spirit bearing in mind that services were part of a broader set of negotiations in which Members had 
different interests. With respect to future work, ha ving heard different views, he suggested that after TN/S/M/22 
Page 12  
 
  the summer break, he hold consultations to see how to  proceed.  He hoped that things would become a 
little clearer in other areas of the negotiations so that Members could negotia te more productively and 
would be in a position to conclude work at the end of this year.  
64. It was so agreed
. 
A. ASSESSMENT OF TRADE IN SERVICES  
65. The Chair  then turned to Item A of the agenda on "Assessment of Trade in Services".  At the 
Council's meeting on 7 April, in response to a suggestion by Cuba, it was agreed that UNCTAD would be invited to introduce a paper regarding development implications of trade in services 
(TD/B/COM.1/77).    It was also agreed that the Se cretariat would be asked to update two papers:   
"Review of Statistics on Trade Flows in Services" (S/C/W/27/Add.2);  and "Overview of Sectoral 
Services Statistics" (JOB(06)/227).   He wished to  first ask Mrs Lakshmi Puri, Director, Division on 
International Trade in Goods and Services, and Commodities, to make a brief presentation of the 
UNCTAD paper, and then ask Andreas Maurer, Chief,  International Trade Statistics Section, to 
present an update to the first Secretariat paper. 
66. The representative of UNCTAD
 was pleased to present a report on its work on assessment of 
liberalization of trade in services.  The objective of the UNCTAD’s services assessment work was to 
monitor global trends in trade in services in re lation to developing countries, bring UNCTAD research 
and analysis experience gained in technical c ooperation and capacity building to bear on the 
assessment, and feed it into national policy making.   This enabled developing countries and their 
partners to derive horizontal and sector-specific le ssons, including in the context of negotiations.  She 
hoped that this "activity with insight" would prove useful in the WTO and GATS context. 
67. She noted that there had been quantitative and qualitative change taking place with regard to 
services trade and development.  Despite the succe ss that developing countries had registered, there 
was marginalization of certain players both domestica lly and internationally in terms of bilateral and 
regional versus multilateral services liberalization.   Regional liberalization was outstripping that 
undertaken in the multilateral context.  There were  major shifts taking place in services markets, and 
services reforms were expanding into areas wher e assessment exercises had been previously 
undertaken.  There was a shift taking place towards services at low levels of per capita income in 
developing countries, and there was domination of traditional, non-tradable local activity services, 
particularly in the formal sector. 
68. A positive relationship between services and manufacturing was only present in a few 
developing countries.   There was no automatic translation of liberalization of services, or even 
services sector growth and development, into inco me growth and development. There were problems 
of definition, scale, scope, base and levels of services sector development.  These were vastly 
different between developed and de veloping countries, and this was a factor which had to be taken 
into account when undertaking an assessment.  
69. Looking at trade liberalization and developmen t gains, the conventional wisdom held that 
there was a very positive linkage.  However, going beyond theory and looking at the situation on the 
ground, there were concerns about the impact on acc ess to essential services, so cial policy, magnitude 
of adjustment costs, distribution of gains amongst stakeholders and countries.  The knowledge gap in 
impact assessment added to that ch allenge. There were also challeng es of specificity of services, trade 
liberalization, and social, political and cultural sens itivity of services trade.  Additionally, there were 
problems with respect to the double jeopardy of the specificity of developing country services sectors, 
the low base lines from which to make assessments, and how to benchmark the link between services 
liberalization and development gains. UNCTAD ha d, however developed some criteria. In the 
assessment exercise it had tried to draw lessons fro m past experiences, and then provided developing TN/S/M/22 
Page 13 
 
 
  countries a basis from which to estab lish their policies. In terms of  coverage UNCTAD had tried to 
cover different developing coun tries from different regions, a nd different sizes and levels of 
development.  In doing so, it had taken into acc ount both domestic liberalization and reform, the 
liberalization being undertaken in the context of regional trade agreements, and GATS liberalization. 
It was a work in progress, but already provided some very important markers for developing 
countries.  Donor support was invaluable, and more than 30 countries and sectors had been covered in 
the assessment studies. 
70. Now that UNCTAD had developed some criteria , it would be easier for developing countries 
to draw up a balance sheet, to look at the costs a nd benefits, both on a country and sector basis.  There 
were urban-rural trade-offs and human resource-re lated impacts, including on employment.  The 
technology factor was very important: how would f actor endowments get best leveraged,  how would 
they support more FDI and transport technology, improve services quality and lower cost.  All these 
were crucial issues which were used to draw lessons with respect to development gains from 
liberalization.  The crucial issues seemed to be the extent of local capacity creation, the nurturing of 
employment and social purposes.  These were key elements because of UNCTAD's focus on 
Millennium Development Goals related work.  Prelim inary findings suggested that liberalization itself 
was not sufficient, and that supportive policies were  important.  A level playing field was crucial for 
domestic suppliers, and priority setting was important  in terms of regulatory efforts and investment, 
particularly given capacity constraints.  Prioritization was therefore an important issue.  There were winners and losers in the liberalization game, and th is had been borne out by the studies.  A critical 
mass of benefit was required to win political suppo rt and to have credibility and sustainability for 
domestic reforms in the context of internati onal agreements, including the multilateral trade 
agreements.  The key message was that one size did not fit all.   
71. In examining some sector/country experiences in the telecommunications services, with 
Kenya and Indonesia for example, UNCTAD had learned a number of lessons. It was clear that in these countries the telecommunications sector was a crucial activity, both nationally and 
internationally.  Indonesia, for example, was an  archipelago, and the main problem was market 
concentration and anti-competitive practices.  How to  ensure universal access was the other issue, and 
the preparedness of developing country firms to  participate domestically in a very competitive 
environment and internationally was so mething that needed to be addressed. 
72. Studies on tourism in Indonesia and Kenya had revealed that countries could have a very high 
dependence on this activity.  Developing countries ha d been open and committed in the WTO, both in 
terms of national treatment and market access.  It was important to ensure the integration of the 
domestic productive sector in undertaking liberaliza tion, to increase value retention. Leakages had 
been noticed from both these count ries.  Access to global inform ation networks, channels and 
distribution networks was a key for co mpetitiveness and for value-retention. 
73. Construction and engineering services was a se ctor that was the backbone of physical 
infrastructure, and contributed to social infrastru cture like housing, schools, and hospitals. This had 
been borne out in a study of Jordan.  What was cr ucial was how local partne rs could be involved in 
joint ventures, and how local productive sectors c ould be involved.  Nationally and multilaterally 
funded projects to encourage local and foreign join t ventures could also be important.  That would 
give an impetus to local domestic sectors in construction and engineering services, and increase the 
participation of developing countries in the services trade. 
74. Distribution services had been examined in Zambia, Ecuador, Thailand and ANDEAN 
countries.  The main issue related to reconciling e fficiency and best technology choice for consumers 
that was positively provided by the opening up of distribution services, foreign participation with 
employment, entrepreneurship, and social consider ations.  Most important was the displacement of 
local shop keepers in the informal economy, but al so small retailers and s uppliers in the formal TN/S/M/22 
Page 14  
 
  economy.  The other important element was an ti-competitive practices  which could engender 
oligopoly.  In Chile, liberalizati on and initial participation of global  retailers in the domestic market 
had given way to a success story whereby Chilean retailers had become global, and had successfully 
become active participants in intern ational trade and distribution services. 
75. The experience in ANDEAN countries of courier se rvices had also been very positive, and the 
balance that had been struck between domestic a nd international operators was a very interesting 
result of the assessment.   
76. To summarize, the positive aspects of liberalizati on were many.  It had stimulated FDI flows, 
skills and transfer of technology.  In many cases it had set in motion the virtuous circle between 
domestic productive capacity building and foreign par ticipation, and foreign value-added in that 
sector.  That was something that had to be nurtured,  and the conditions required for that had to be put 
in place.  At the same time, there were challenges to developing countries – the most important being access to capital and finance, especially for SM Es in these countries, regulatory weaknesses and 
scarce local productive resources, the crowding out of local service providers, restrictive global business practices, and market information gaps. Articl e IV of the GATS needed to be implemented in 
various ways to help developing  countries overcome these challenges. 
77. A continuous cost/ benefit analysis of reform  and liberalization by developing countries was 
needed.  No one size fit all.  Liberalization c ould result in different outcomes and be based on 
different base-line scenarios in different countri es.  The establishment of flanking policies and 
domestic regulatory frameworks was a necessary pre- condition.  The assessment s had been used to 
develop a series of checklists on managing the requ est and offer process in the GATS negotiations to 
help developing countries in collaboration with th e OECD. Assessment in the GATS had to be an 
ongoing activity to provide input into negotia tions.  The advantages and disadvantages for 
development outcomes on the ground would determin e the final assessment on the sustainability of 
services liberalization and reform in developing countr ies.  It was therefore important to have some 
way of feeding this in a continuous way into the GATS negotiations.  For UNCTAD, the way forward 
was to remain ready to contribute through its work (in over 30 countries so far) in response to requests 
from developing countries, and with donor support fr om countries like the UK, Germany, Spain and 
France.  UNCTAD was happy to create synergies among projects, and with other agencies.  As 
regards the GATS negotiations UNCTAD hoped that  the assessment exercises would build the 
knowledge base necessary for developing countries to  engage and commit with greater confidence in 
the negotiations, and to get a better deal for themselves. 
78. A representative of the Secretariat
 said that the paper on "Review of Statistics on Trade Flows 
in Services" (S/C/W/27/Add.2) had been prepared by  the international and trade statistics section of 
the Economic Research and Statistics Division.  It  focused on two aspects.  First it provided an 
overview of recent achievement and progress with r espect to the measurement of trade in services. 
Second, on the basis of currently available statis tics, it discussed global developments in trade in 
services and the performance of individual economies and regions.  The document contained a wealth 
of individual country data.  It reflected a few im provements in measuring trade in services compared 
to the previous papers that were issued in 1997 and 2000.   
79. The sectoral and modal structure of commitments under GATS did not coincide with the 
existing structure of trade statistics.  The scope of  the agreement was far wider than what statistics 
conventionally measured.  Accordingly, trade nego tiations and analysts provided statistics for the 
individual service sectors, trading partner and m ode of supply.  To respond to these needs, an 
interagency task force on statistics of international trade in services had started work in 1995, shortly 
after the end of the Uruguay Round, and adopted  a manual in 2002 – the Manual of Statistics in 
International Trade in Services (MSITS).  This manual included guidelines and recommendations on 
the measurement of trade in services.  Two building blocks were identified – the balance of payments TN/S/M/22 
Page 15 
 
 
  statistics, current accounts which covered trade in services according to 10 major commercial services 
items.  MSITS proposed further breakdowns of these items.   
80. The second building block that MSITS proposed w as the expansion of statistical definitions 
of international trade in services to  include the measurement of services supplied by foreign affiliates.  
The new framework of foreign affiliate trade in services provided for the compilation of a number of 
indicators.  A third annex – movement of natural persons – was included in the MSITS and indicated 
further methodological work, but did not fully develo p the concepts and definitions for measuring the 
movement of natural persons.  These guidelines of the MSITS were implemented by an increasing 
number of economies.  However, many Members were at the beginning of the implementation 
process and much remained to be done.  For exam ple, there was a need for more detailed sectoral 
statistics broken down by trading partners.  The number of economies reporting this information or 
providing additional detail to inte rnational audits had increased c onsiderably.  However, data 
available was far from being complete.  Only 20 to 30 economies, mainly OECD Members, had begun compiling these statistics.  Nevertheless, this  data indicated sales of services through mode 3 
were more important than trade across border s measured in balance of payments figures. 
81. The balance of payment in services classifica tion proposed by MSITS was built upon the 
extended balance of payment classification (EBOPC).   Overall, EBOPC had added more than 15 new 
categories of service transactions.   Although repor ting to IMF according to the EBOPC category was 
still voluntary, EBOPC reporting had doubled or tripled in many sectors.  For example, computer services in 1995 was reported by 15 countries and now was reported by 61 countries.  Such a detailed 
breakdown of services transactions could be particular ly useful in the context of the GATS.  The 
MSITS contained a table of correspondences betw een the EBOPC classification and the services 
sectoral classification used in the context of GATS.  Another example was other commercial services.  This accounted for approximately 48 percent of to tal commercial services in 2005, and had been the 
most dynamic service category, increasing on average by 12 percent per year in the last 5 years.  In using this data, especially at the detailed sectoral level, differences in reporting, reliability, definition 
and collection methods had to be taken into account .  Another core recommendation that came out of 
the MSITS was to collect statistics by trading partne r.  At present, only a few economies in the world, 
mainly developed economies compiled statistics.  Da ta by trading partner was collected by the OECD, 
Eurostat and, recently, by UNSD. 
82. Foreign affiliate trade (FAT) statistics were useful for assessing the importance of GATS 
mode 3.  FATS was in the early stage of devel opment.  Up until recently, only the United States 
published data.  However, since the implementation of MSITS, other economies mainly in the OECD 
area had been collecting such statistics and their dissemination was increasingly important.  There was 
more information on FATS on the inward side rather  than the outward side.  Inward statistics were 
much easier to collect for countries.  FAT statis tics were compiled according to activities, whereas 
balance of payment statistics were recorded acco rding to the services products.  They were not 
necessarily comparable, but the MSITS provided a correspondence table between these activities and 
products. 
83. The MSITS acknowledged that compilers would not be able to allocate each EPOBC type of 
service by GATS mode of supply in the near future.  However, as a first step MSITS proposed a simplified approach.  Items seemed to be predomin antly delivered through one mode. For example, 
transportation was allocated to mode 1 and travel to mode 2. But there were services sectors where 
services were predominantly supplied through two diff erent modes, for example, mode 1 and mode 4 
for computer and information services, recreational and cultural services.  Some countries had started 
to make estimates broken down by modes of supply.   The estimate showed the problems encountered 
in measuring mode 4.  Whereas mode 3 could be id entified through the FAT statistics, and mode 2 in 
balance of payments statistics could be approxi mated through travel, nonetheless some of the 
components included both modes – computer and information services.  In this estimate, modes 1 and TN/S/M/22 
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  4 were lumped together.  Work was being undert aken on identifying how to measure modes 1 and 4 
for those sectors separately. 
84. In conclusion, the aim of the paper was two-fold: to update statistics included in the previous 
notes that were circulated in 1997 and 2002 and to provide an overview of progress made with respect 
to the compilation and publication since the implementation of the manual on statistics on 
international trade in services.  It could be said that the quality and quantity of statistics on 
international trade in services had dramatically improved over the past years.  Some 150 economies 
provided aggregated services trade according to the balance of payments and some now compiled this 
information by identifying flows with their main  partners.  Depending on respective needs, an 
increasing number of economies had started breaki ng down this information into further detail 
according to the extended services classification as d escribed in the MSITS.  Much progress had been 
achieved in terms of FAT statistics.  Until recen tly, only the United States had compiled information 
on the activities of foreign affiliates; now the 25 OECD Members had started to compile and publish 
this type of information.  A number of non-OECD countries also envisaged collecting such data.  For 
example, the European Union was about to adopt a regulation on EU FAT statistics which would 
oblige each member to report this kind of informa tion.  This regulation would also include some 
compilation information which could be useful for other countries.  However, even if the recommendations of MSITS were fully implemente d, it would only be a first step for providing 
information by modes of supply.  This was seen as the long-term goal in the MSITS. 
85. The representative of Brazil
 said that his country through the Ministry of Development 
Industry and External Trade was structuring an integr ated system of external trade in statistics. It 
would be an important tool for the development of public policy in the services sector as well as for 
the assessment of its external trade in services.  With the new system, Brazil intended to improve its 
statistics based on balance of payments and develop statistics for mode 3 under the FATS 
methodology and mode 4.  Brazil would be work ing with the agencies responsible for producing 
external trade statistics in services in Brazil such as the Central Bank of Brazil, the Brazilian Institute 
for Geographical Statistics, and the Ministry of La bour.  The updating of international trade statistics 
presented by the Secretariat was very relevant to the improvement of Brazil’s system of statistics.  Finally, he asked if the statistics group of the WTO Secretariat could provide guidance and capacity 
building for Brazil in developing and structuring this work. 
86. The representative of Colombia
 said that it and other countries of the ANDEAN community 
were working on a project for statistics in trade in services, and would be interested in contacting the 
Secretariat in order to obtain assistance in this area. 
87. The representative of Nigeria  said that it had taken significant steps to liberalize and reform 
the services sector of the economy with the aim of  diversifying the production base of the economy, 
and to respond to the increasing demand for services fo r Nigeria's economic growth and development.  
Nigeria had no option but to embark on bold and courageous measures to turn around the economy 
and make the services sector respond to the in creasing demand for better services delivery.  
Significant reforms had therefore been made, for exam ple, in the financial, communication, transport, 
and tourism sectors.  The overall goal of the reform s was to make services sectors competitive and 
efficient.  In the communication sector, for example,  his government had taken measures to bring to 
an end the monopoly status of a state-owned co mpany, which had allowed competition by permitting 
other privately-owned companies to operate.  In the area of financial services, the government had 
also embarked on reforms to li beralize the sector and make it more competitive and efficient.  His 
government was highly committed to carrying out furt her reforms in the Nigerian economy including 
in the services sector.  The entire Nigerian invest ment regime had been liberalized, and foreigners 
could now own a 100 percent stake in any business in Nigeria, and they were free to repatriate their 
profits and dividends. TN/S/M/22 
Page 17 
 
 
  88. Nigeria had reached an advanced stage in prep aring its initial offer on services.  The goal was 
to conclude domestic cons ultations and present Nigeria’s offer very soon.  Nigeria would remain 
engaged in the ongoing negotiations with the hope th at on their conclusion the benefits would accrue 
to all Members. 
89. The representative of Cuba  said that the work presented by UNCTAD and the Secretariat was 
what Cuba had been requesting for some time.  As  had been stated by the representative of UNCTAD, 
this work was to be carried out on a continuous b asis.  It was useful because it enabled Members to 
improve their compilation of statistics with regard to sectors and modes of supply. UNCTAD's presentation had provided Members with some important  conclusions to be taken into account in the 
negotiations.  Cuba wished to emphasize that a dozen  developed countries concentrated all or at least 
two thirds of the world trade in services.  While it  was shown that links between trade in services and 
development had been positive in a few developi ng countries when services and manufacturing could 
be brought together, more time was needed to di gest all of the information contained in the 
documents.  Cuba hoped that there would be an opportunity to debate on the substance of the 
information provided.  Cuba also hoped that wo rk would continue and that before the end of 
December 2006 there would be an evaluation of the effects of trade in services not only on 
development in general, but also on that specifi cally in developing countries, so that important 
decisions could be taken during the negotiation process.  
90. The Chair
 suggested that the item be place on the agenda of the Council’s next meeting, in 
order to allow for the continuation of assessment of trade in services. 
91. It was so agreed .  
B. PROPOSALS RELATING TO THE NEGOTIATIONS UNDER ARTICLE XIX  OF THE GATS 
92. The Chair  noted that there were no new submissions on agenda item B, no doubt because 
many Members were focusing their efforts on bilate ral and plurilateral reque st/offer negotiations in 
order to reach the timeline set out in Annex C. 
C. I MPLEMENTATION OF THE MODALITIES FOR THE SPECIAL TREATMENT FOR LDC S IN THE 
TRADE IN SERVICES NEGOTIATIONS  
93. The Chair  stated that the Council's mandate on this topic was set out in paragraph 3 of 
Annex C of the Hong Kong Declaration.  The D eclaration required that Members pursue full and 
effective implementation of the LDC Modalities with  a view to the beneficial and meaningful 
integration of LDCs into the multilateral trade syst em.  Paragraph 9 of Anne x C specified the methods 
to be developed in the implemen tation of LDC Modalities, including inter alia  mechanisms for 
according special priority to modes and sectors of  interest to LDCs in accordance with GATS 
Article IV:3 and paragraph 7 of the LDC Moda lities.  Annex C of the Hong Kong Declaration 
stipulated that such mechanisms were to be deve loped and completed before 31 July 2006.  Clearly, 
there was little remaining time, and Members had to  move forward expeditio usly on this topic. 
94. The representative of the European Communities  said that at the last meeting of the Council 
on 23 June it had reiterated its commitment to th e implementation of the LDC Modalities, and had 
announced its intention to submit a communication on the implementation of paragraph 9(a) of the 
Annex C of the Hong Kong Ministerial Declaration.  Since the last meeting, it had continued its 
efforts and was now pleased to introduce on behalf of  Canada, Japan, the United States, and the EC a 
proposal for an appropriate mechanism for providing sp ecial priority to LDCs in sectors and modes of 
supply of interest to them. TN/S/M/22 
Page 18  
 
  95. Members were determined to help LDCs in im proving their integration in world trade in 
services.  The LDC modalities was the vehicle for pr ogressing towards this objective in the context of 
the current Round. One way of doing so was to include  in offers commitments that LDCs could best 
take advantage of.  In order to assess how each of  the non-LDCs Members could contribute in its own 
way to this objective by providing special priority  to LDCs, and how it could further improve its 
contributions to this effort, the European Comm unities was proposing a speci fic mechanism linked to 
the final phase of the DDA negotiations. This was an interactive mechanism requiring, first, that each 
non-LDC Member table a report by 12 September i ndicating how it provided in its current offer 
special priority to LDCs. In a second step, the mechanism provided th at LDC Members submit 
questions or make comments on those reports tabled  by non-LDCs Members.  In a third step, the 
Chair of the Council would be mandated, on the basis of a discussion in a dedicated session of the 
Council, to prepare a report presenting conclusion s based on a collective assessment and, more 
importantly, on best practices. Non-LDCs Members would of course be encouraged to follow those 
best practices in finalizing their final offers for eseen for end of October. For the co-sponsors, this 
interactive and operational mechanism constituted an appropriate mechanism and implemented the 
provisions of paragraph 9(a) of the Hong Kong Mi nisterial. Of course this mechanism had to be 
distinguished from the general review of the LD C Modalities which was mentioned in paragraph 13 
of the Modalities, and which was referenced in po int 9(e) of Annex C. If this mechanism was 
endorsed, the EC for its part in preparing its repor t would intend to put a specific emphasis on actions 
taken regarding Mode 4. 
96. The representative of Bangladesh
, on behalf of the LDC Group said that the Group welcomed 
the proposal presented by the European Communities.   It concerned a subject which was among the 
most important for the LDCs in the current Round.   The LDC Group noted the usefulness of the EC 
communication in contributing to this Council's role  in assessment. In general, the Council for Trade 
in Services would need to carry out an assessment of  the quality of offers presented by Members, and 
to see whether they presented new market opportuniti es, particularly in light of the plurilateral 
negotiations. The Group viewed this as a pre-exis ting obligation. The EC proposal could also be 
useful for reviewing progress. Here, the Council would need to assess whether, in general, the 
objectives of Article IV of the GATS were being achie ved. This would have beneficial effects for all 
developing countries. 
97. The LDC Group felt that the EC communication contributed to fulfilling the requirement in 
Paragraph 9 (e) of the Hong Kong D eclaration, which addressed the need to develop, in the course of 
negotiations, a reporting mechanism to facilitate the review requirement in paragraph 13 of the LDC 
Modalities.  However, the requirements in Paragr aph 9 (a) of the Hong Kong Declaration remained 
outstanding, and had not been addr essed. Paragraph 9 (a) of the Hong Kong Declaration stated that in 
the course of negotiations, Members should de velop methods for the full and effective 
implementation of the LDC Modalities including expe ditiously "developing appropriate mechanisms 
for according special priority including to sectors and modes of supply of interest to LDCs in 
accordance with Article IV:3 of the GATS and paragraph 7 of the LDC Modalities".  Following this 
agreement, the LDCs had proposed  an Understanding that would allow Members to accord special 
priority to the LDCs. The proposal was crafted so that it resulted in access to sectors and modes of LDC export interest. The group wished to emph asize that the issue of access was critical.   
98. From a conceptual and practical viewpoint, th e EC proposal differed in substance from the 
intended objective of the exercise. The LDCs wish ed to achieve priority market access as envisaged 
by Article IV:3 of GATS, the Modalities for the Special Treatment for LD Cs, and the Hong Kong 
Declaration.  Since the tabling of the LDC proposal on 28 March 2006, the LDC group had been engaging with a number of Members, on a bilatera l basis, to discuss the substance of the LDC 
proposal. As indicated at previous meetings, some of  the concerns raised included: (a) the sacrosanct 
nature of the MFN principle, (b) issues of compensatory adjustments vis-a-vis  Article XXI of the TN/S/M/22 
Page 19 
 
 
  GATS, (c) whether non-reciprocal treatment could be accorded on a permanent basis, and (d) DSU 
applicability. 
99. The LDC Group had taken these concerns seriously , and had undertaken further analysis to 
see how they could be addressed. In its view, the c oncerns conveyed appeared to be related to the 
legal form of the proposal, and technical aspects of  drafting. The LDC Group was quite prepared to 
address these, and other genuine concerns.  With the right political will, as expressed in the Hong 
Kong Declaration, the "mechanics" of the proposal could be worked out.  Work was in progress on this issue, and the LDC Group looked forward to en gaging in further consultations with Members on 
the basis of their proposal. What was expected from the membership were concrete suggestions, with 
texts of amendments to the LDC proposal, so that what was intended could be easily understood. The 
LDC Group hoped that others would be as transpar ent as it had been. The LDC Group remained fully 
committed to a successful and meaningful implementation of the Modalities for the LDCs. 
100. The representative of Norway
 said that when it had submitted its communication of 22 June, 
its aim was to contribute to the process of achie ving effective implementation of the LDC Modalities 
in the trade in services negotiations.  Through the responses set out in that communication, Norway 
had wanted to a) highlight the importance of fa cilitating the LDC participation in international 
services trade and  b)  inform Members about all th e elements it believed relevant.  There were no 
easy solutions, and all elements needed to be addressed in a holistic manner.  The Council had 
focused today on market access in sectors and modes of  supply of special interest to LDCs.  Important 
questions had been raised with respect to deve loping appropriate mechanisms with a view to 
achieving increased participation by LDCs in services  trade.  Norway’s communication stated that it 
would support further work to explore the feasibility  of possible alternative mechanisms, and this was 
to be done with due regard to domestic laws and regul ations.  Norway supported the communication 
from Canada, EC, Japan and US as it represented a we lcome and constructive proposal in order to 
meet the mandate in the Hong Kong Declaration on co mpleting the requirements in paragraph 9 (a) of 
Annex C by the deadline of 31 July, without pr ejudice to the review mechanism mentioned in 
paragraph 13 in the LDC Modalities.  It would also im prove the basis for the preparation of final draft 
schedules and commitments to be submitted in Oct ober as stated in the communication.  In that 
context, Norway was actively considering how to improve its services offer in a way which would 
meet some of the more important requests raised by the LDCs in mode 4. 
101. The representative of Uganda  stressed that it supported fully the statement made by 
Bangladesh on behalf of the LDC Group.  It wished  to thank the European Communities and other co-
sponsors for their contribution.  The contribution cont ained very useful elements particularly, for the 
fulfilment of the already existing obligation to have  an assessment of what would be the outcome of 
the revised offers.  This in fact fit more square ly within the requirements in paragraph 9(e) of 
Annex C of the Hong Kong Declaration.  Paragraph 9( a) was outstanding and needed to be fulfilled in 
a meaningful manner.  Members therefore had to look again at the LDC proposal and the specifics 
contained therein and come to the table to engage in a discussion on the basis of that proposal, with a 
view to finding a meaningful implementation of the LDC Modalities. 
102. The representative of the United States  stated that her delegation co-sponsored the proposal 
presented by the EC.  She did not agree that the me chanism contained in it was the same envisioned in 
paragraph 9(e) of Annex C of the Hong Kong Declar ation.  The difference was that Members would 
be fulfilling the requirements under the LDC Modalities be fore the final offer had been tabled, and not 
the assessment of the final results of the negotiations  at the end.  Within this mechanism, a value 
added was that an assessment would be done with r espect to LDCs before the final results of the 
negotiations.  The proposal did in its final paragraph provide further clarification of the distinction, in 
particular with respect to paragraph 13 of the LD C Modalities.  She reiterated that the United States 
was not in a position to accept the current proposal made by the LDCs.  The United States had had 
several consultations with the LDCS, bilaterally a nd also in this forum  The United States did not TN/S/M/22 
Page 20  
 
  interpret paragraph 9 or anything in the LDC M odalities as equating with preferential access, and the 
reference to special priority was not defined as such.  This was the US understanding when the 
language in paragraph 9 of the A nnex C and the language in the LDC Modalities was agreed to.  The 
United States hoped that a solution could be fou nd, and it remained engaged. The submission 
introduced by the EC was an example of the United States efforts to analyse where the issue was and 
how the mandate could be fulfilled. 
103. The representative of Canada
 reaffirmed its support for the LDC Modalities and Article IV of 
the GATS, and confirmed its commitment to meet ing the objectives set out by ministers in Hong 
Kong to pursue the full and effective implementati on of LDC Modalities.  Canada had continued to 
support work towards identifying ways to achieve  the full and effective implementation of LDC 
Modalities, in particular, the goal of ensuring that special consideration be accorded to sectors and 
modes of interest to LDCs in the request/offer process .  In this regard, Canada had contributed to this 
important work by submitting detailed writte n responses to the LDC communication on the 
implementation of the LDC Modalities in the trade in services negotiations.  In that document, Canada had emphasized its commitment to engage in a mechanism to assess the activities and measures 
undertaken in furtherance of the LDC Modalities.  In  keeping with the timeline set forth in the Hong 
Kong Declaration, Canada was pleased to co-sponsor  with the European Co mmunities, Japan and the 
United States a proposal to estab lish a mechanism to assess the provi sion of special priorities in 
sectors and modes of supply of interest to LDCs in the services offers of non-LDC Members.  In Canada’s view, it provided the framework for a mech anism to assess special priority as required by 
Article IV of the GATS and as directed by minist ers at Hong Kong.  Canada drew a distinction 
between this proposal and others which in its view  went beyond the requirements of Article IV.  It 
was absolutely legitimate that LDCs identify a range  of interests in these negotiations and discussions 
in this regard would continue.  Canada’s point here was to emphasi ze that its proposal was aimed at 
meeting directly the objectives set out in the GATS and the LDC Modalities and the direction 
provided by ministers in Hong Kong.  It was not meant to address issues that went beyond this.  
Canada was committed to this process and hoped that  the proposal presented today would effectively 
and efficiently contribute to the development of a mechanism as directed by ministers in Hong Kong 
Declaration. 
104. The representative of Brazil
 said that appropriate mechanism involving special priority in 
sectors and modes of interest to LDCs would not only  enhance their participation in trade in services 
but also ensure their economic and social developm ent in the Round.  Brazil also welcomed the joint 
communication co-sponsored by Canada, EC Japan and the United States, which provided food for 
thought for future discussions.  More time was needed to study the document in detail. 
105. The representative of Cuba  supported all efforts made for th e rapid adoption of a decision 
which would make it possible to establish a me chanism making Article IV:3 of the GATS and 
paragraph 7 of the LDC Modalities operational, in othe r words, to grant special  priority to sectors and 
modes of supply of interest to LDCs.   In the 1990s, LDCs had carried out serious trade liberalization 
which was not however accompanied by interna tional and national policies to enhance their 
participation in international trade for services.  Ev en if it were true that, as the indicators showed, 
that there had been a gradual increase of LDC and developing country particip ation in the export of 
services, focus had been in developed countries.   The LDCs achieved merely a 0.4 percent 
participation in exports of services internationally.  The multilateral trading system had to change this 
trend.  Paragraph  11 of Annex C set out  31 July 20 06 as the deadline for the ma ndate to be fulfilled.  
All Members had to consider in a constructiv e fashion the proposal contained in document 
TN/S/W/59, and to implement their commitments, incl uding the revised offers, and to ensure special 
priority for LDCs in sectors and modes of supply which had been indicated as a priority for their 
development policies in line with paragraphs  6 and 9 of the M odalities adopted in 2003.  Cuba 
regretted hearing other delegations indicate that  they could not accept the proposal submitted in 
March this year by the delegation of Zambia on be half of the LDCs.  The mandate on LDCs was the TN/S/M/22 
Page 21 
 
 
  minimum in the area of S&D for developing countri es.  If S&D for LDCs was not granted, how could 
an agreement be reached in this round, when th e interest of a group representing approximately one 
quarter of the membership would not be fully satisfied.  .  
106. The representative of Brazil  said that it was positive that an additional contribution had been 
put on the table to try and move the negotiations fo rward.  However, Brazil’s initial evaluation of the 
document presented by the European Communities coincided with what Bangladesh had said on 
behalf of the LDCs.  A mechanism for reporting and assessing was an essential part of what Members had to do, but there was still a gap between that a nd a mechanism for accordi ng the special priority 
contained in Article IV:3.  So there was still work ahead to achieve consensus before the end of the 
month.  A couple of things in the joint paper gave rise to concern.  First, the paper seemed to ignore 
the fact that Article IV:3 was an integral part  of Article IV, which was designed to ensure the 
increasing participation of all developing countries in international trade in services.  Article IV.3 
highlighted the particular case of the LDCs.  The way the paper was couched seemed to separate the 
Membership of the WTO into LDCs and non-LDC countries, which was unfounded and entirely inappropriate.  In fact, the general concept in Ar ticle IV was that of developing countries as a group, 
and within developing countries the LDCs who deserv ed more particular attention because of their 
special needs.  Another point which gave cause fo r reflection arose in the beginning of the second 
page, where, having delegated to the Chair the task of preparing a report, it ask ed the Chair to identify 
best practices.  Brazil was not sure what that me ant within the context of market access offers.  
Identification of best practices seemed to be contra dictory to the flexibilities accorded to developing 
countries in Article XIX. 
107. The representative of Zambia
 endorsed the statement made by Bangladesh on behalf of the 
LDCs, and that of Uganda in support of the LD C cause.  The LDCs looked forward to a full and 
effective implementation of the LDC Modalities in a manner that was most beneficial and meaningful to the LDCs. 
108. The representative of Senegal
 associated his delegation with the statement made earlier by the 
delegation of Zambia.  The docum ent presented by the European Co mmunities was not a step in the 
right direction.  What was important for LDCs was to  be able to take part in international trade in 
services.  Many countries had started to do that well be fore the entry into force of the WTO.  But is 
was a very complex area which required capacity.  If LDCs  were to take part in  a beneficial manner in 
international trade in services, LDCs as all ot her WTO Members wished to benefit from the huge 
potential.  Zambia quite rightly said that LDCs want ed their share of the cake.  But for that to be 
possible there had to be recognition of the specific nature of LDCs.  Since LDCs lacked both capacity 
and means, they requested S&D treatment which was part and parcel of the Doha mandate.   
109. Even if LDCs were exempt from commitments in  the Round, they had made efforts to take 
part and be very proactive in the negotiations by  making requests.  They had put two proposals on the 
table, one on a special safeguard mechanism st emming from the Hong Kong Declaration, and the 
other on mode 4.  He wished to particularly tha nk the delegation of Norway which had always been 
ready to examine seriously this issue.  It was to be  hoped that in the revised offers to be submitted at 
the end of July, there would be new opportunities o ffered to LDCs. LDCs were interested in market 
access.  It was true that a mechan ism to assess this was a very good thing, but it was not sufficient.  
What LDCs were waiting for was that, at the end of  the Round, there would be the  opportunity to 
take part in international trade in services,  and that Members would take into account LDC 
weaknesses to allow them to do so.  With the current  architecture of the GATS, and with the offers on 
the table, it was extremely difficult for LDC service s uppliers to compete with other service suppliers.  
LDCs were fully committed to the process, and wanted Members to understand that.  LDCs were 
really looking forward to the 31 July deadline to see to what extent Members were taking into account 
their concerns. TN/S/M/22 
Page 22  
 
  110. The representative of Mexico
 said that it was committed to the full implementation of the 
LDC Modalities, and that there should be different  responsibilities between Members on this issue.  
Therefore, Mexico had a similar view to Brazil’s on the need to make a distinction between developed 
and developing countries and, amongst developing countries, the LDCs.  Mexico was of course open 
to further discussion, and welcomed the room doc ument presented by the European Communities.  
The document did not appear to contain anything  new, in particular on how modalities should be 
implemented in the negotiations.  Mexico believed that the proposal  should have established clearer 
criteria on how developed countries were going to co ntribute to the implementation of the modalities, 
and how developing countries were going to be able to do so.  This had to be done within the 
framework of the flexibility recognized by the GATS.  Mexico looked forward to coming back to this 
issue at a later stage. 
111. The representative of Japan  joined others in making efforts to develop appropriate 
mechanisms for according sp ecial priority including to sectors and modes of supply of interest of 
LDCs, a task that was mandated under paragraph 9( a) of Annex C of the Hong Kong Declaration. 
Efforts had to be made to complete the requireme nts before the end of the month.  The document 
presented by the European Communities was positive, realistic and operational, allowing Members to 
fulfil their mandate. Japan looked forward to work ing with Members to achieve a consensus on this 
basis.  With respect to the proposal made by Za mbia on behalf of the LDC Group, Japan shared the 
view of some other Members that this proposal might go beyond the mandate that had been given in the Hong Kong Declaration, and that it would therefore be difficult to work on that basis.  However, 
Japan wished to continue workin g with LDCs in order to achie ve the objectives set out in the 
Modalities. 
112. The representative of Colombia
 said the communication presented by Zambia on behalf of 
LDCs raised concerns about its impact on other de veloping countries.  Colombia, like Brazil, wanted 
to see LDCs considered as part of other developing  countries, with their concerns shared by other 
developing countries.  To export services through the movement of service suppliers was not only of 
interest to LDCs, but also to other developing coun tries such as Colombia.  Colombia believed that 
LDCs also needed to open their markets to this mode  of supply in particular.  Any special priority 
given to LDCs should also take into account the concerns of other developing countries. 
113. With respect to the document presented by the European Communities on behalf of a group of 
Members, Colombia believed, like Brazil, that there were elements in it that could be applied to all 
developing countries, not only LDCs.  An example of  this would be the provision of information on a 
specific date with regard to commitments.  The do cument should have taken into account the situation 
with respect to other developing countries.  Were the interests of LDCs directed at other developing 
countries, or at developed countries?  Colombia was also concerned to see suggestions in the 
document about best practices, a concept that n eeded to be better explained and clarified. 
114. The representative of Australia  supported the paper circulated by the European Communities 
and others as an appropriate contribution at this stag e of the Doha round.  It met the instructions given 
by ministers and the mandate in the LDC Modalities.  The requests and interests of no other group were getting such attention, and there was little doubt  that this represented a special priority.  
Australia looked forward to working with LDCs a nd others as the round progressed to ensure that the 
special prominence and priority given to LDC intere sts did result in an increasing participation in 
world trade.  It was important also to note the ro le that the immediate geographic neighbours of LDCs 
would pragmatically need to play in this. 
115. The representative of Switzerland
 said that it was committed to Article IV and to its 
implementation by all Members.  The proposal made by the LDC Group had contributed to an 
interesting discussion, and Switzerland had at the last meeting given its opinion on that proposal, 
including some criticism.  Switzerland fully suppor ted the paper presented at this meeting by the TN/S/M/22 
Page 23 
 
 
  European Communities.  It was always good to have  more information before Members in order to 
see how obligations were implemented.  As far as Switzerland was concerned, it was not a problem to prepare such a report on what had been done to meet the interests of LDCs, and Sw itzerland was 
ready to do that in connection with the next offer, hoping that others would do the same.  In realizing 
an effective integration of LDCs in the world trad e in services, there were many aspects to be taken 
into account.  One was market access.  As the repr esentative of Senegal had said, it was certainly a 
very key and central aspect.  Commitments played a big role, but it was not the only one – other ways 
were through assistance, capacity building, and ma king the international trade system simpler to 
handle.  It was important to ensure that countri es without extensive regulatory capacity could find 
their way through the rules set up in the WTO.  It  was important to keep in mind the common aim, 
which was to help the poorest to get their share of the pie.   
116. With respect to the order of business on the ag enda, the delegation of Switzerland wished to 
state that, although it was always very keen to hear input from outside the house and from other organizations, as was done in the morning, these ou tside presentations should come after Members' 
business on the agenda.  
117. The representative of Bangladesh
 said that concerns expressed about the LDC Group proposal 
had been noted by LDCs.  He invited the propone nts of the paper presented by the European 
Communities to look again at the LDC proposal.  Wh ereas the LDC paper emphasized paragraph 9(a) 
of Annex C of the Hong Kong Declaration, the room document emphasized paragraph 9(e).  He 
reiterated that LDCs expected c oncrete textual amendments from Members so that they could 
understand what was expected from them.  LDCs looke d forward to engaging in  further consultations 
with Members on the basis of their proposal. 
118. The representative of Rwanda  said that it agreed fully with what Bangladesh had said at the 
beginning of the discussion. The proposed reporting and assessing mechanism was part of existing obligations, and would not assist in implementing the mechanism for the special priority for the 
sectors and modes of interest to LDCs.  With respect to the proposal that the Chair be burdened with 
suggesting best practices, it was an issue to what extent his suggestions had to be endorsed by 
Members as appropriate.  Rwanda  didn’t see how this would achieve the objectives being sought.  It 
was welcome to hear that some delegations wished  to push work forward with LDCs on this topic, 
and it was to be hoped that this engage ment could take place as soon as possible. 
119. The representative of the European Communities
 wished to make three brief points to respond 
to comments made during the discussion.  First, he was surprised to hear the comments made by 
Brazil on having a paper which created a separati on between the LDCs and non LDCs.  He recalled 
that the mandate came from both paragraphs  3 and 9 of Annex C of the Hong Kong Declaration, 
which referred specifically to the LDC Modalities.   The LDC Modalities adopted by the Council on 
3 September 2003 referred to modalities for LDC Memb ers in the negotiations on trade in services.  
Each paragraph of these modalities referred to Memb ers and to LDCs.  The only two concepts that 
one could find in the LDC Modalities were LDCs on the one hand and Members of the WTO that 
were not LDCs on the other.  He could not therefore understand the comment on a supposed separation between different categories of Members.  The European Communities was only following what was said in the LDC Modalities. 
120. Second, with respect to best practices, he had tried to explain that what would happen in the 
implementation of the proposal: each Member would come with a report explaining how in practical 
terms through its offer it provided special priority to LDCs; LDCs would then come forward with 
comments and questions, which would focus on thei r specific needs; and on that basis Members 
would have a discussion.  It would only be after the concrete experience of each Member, and the 
concrete questions and comments from LDC Member s, that Members would be in a position to 
discuss and draw conclusions about what appeared to be more interesting in terms of providing TN/S/M/22 
Page 24  
 
  special priority.  It was difficult therefore in advan ce to identify best practices.  Trust could be put in 
the Chair to draw conclusions on best practices, furt her to the discussion in the dedicated session.   
121. Third, the European Communities joined tho se delegations who took the view that the 
mechanism proposed in the paper submitted by Zamb ia on behalf of the LDC Group went beyond the 
mandate set out both under Article IV and the Hong Kong Declaration. 
122. The representative of Brazil
 admitted to being confused by th e last statement by the European 
Communities.  According to that statement, th e organization was divided between Members and 
LDCs, from which one could conclude  that the LDCs were not Members.  The point Brazil was trying 
to make was that the WTO recognized among the Members a subset of developing countries.  And within that subset, there was a further subset of LD Cs, to which attention had to be given with respect 
to their particular situation.  No document provi ded that Brazil or other non-LDC Members had some 
kind of equal status or common obligation towards th e LDCs.  Brazil was fully prepared to contribute 
and to assist in finding appropriate solutions for th e problem of the LDCs.  However, this did not 
mean that Brazil was on the same level as developed countries.  There was a clear distinction between 
developed countries and developing countries. 
123. This issue was aggravated by th e idea of best practices.  The proposal provided that after the 
reporting and the discussion with the LDCs, the Chair would be asked to present a list of actions that 
all Members should take in favour of LDCs.  This however would detract from the flexibilities 
accorded to all developing countries to decide  on commitments and how to best undertake 
commitments, taking into account their particular development needs.  This principle would apply 
also for the commitments Brazil would be prepared to make for the LDCs.  For this reason, it was 
important to tread very carefully in this area. 
124. The representative of the United States
 wished to assuage Brazil’ s concerns.  What the 
European Communities was referring to concerning  non-LDCs and non-LDC Members was the fact 
that Article IV, which was the focus of discussion on LDC Modalities, provided in its third paragraph 
that special priority was to be given to the LDC Members in the implementati on of paragraphs 1 and 2 
of the article.  Paragraphs 1 and 2 of Article IV were critical.  Pa ragraph 1 referred to the increasing 
participation of developing country Members in world trade that should be facilitated through 
negotiated specific commitments by different Member s.  Paragraph 2 made a specific reference to 
developed country Members and, to the extent po ssible, other Members.  Paragraph 2 was about 
contact points, so it was relevant to the LDC Modalit ies, but perhaps not in the context of the present 
discussion on market access offers.  But it was only in paragraph 2 of Article IV in which a specific 
distinction was made between de veloped and other Members, presumably those other Members or 
developing countries read broadly.  In paragraph 1,  there was no distinction made between developed 
and developing when it came to what was supposed to  be done in negotiating specific commitments.   
125. From the United States’ perspective, it was th erefore not exclusively developed countries that 
had to fulfil paragraph 1 of Article IV.  There was also reference to Parts 3 and 4 of the Agreement.  
Part 4 contained Article XIX.  This provision, in particular paragraph 2, referred to the level of 
development of individual Members, but didn’t speci fically refer to developing country Members.  In 
another sentence, appropriate flexibility for indi vidual developing country Members for opening 
fewer sectors was to be provided. It was clear that there was a different responsibility with respect to 
developed and developing country Members.  Th ere was no requirement that developing countries 
had the same responsibilities as developed country Me mbers, but this did not imply that developing 
countries did not have to follow the LDC Modalities.  There was a responsibility on developing 
country Members as well as developed country Me mbers, but it was not the same responsibility.  
126. Observing that the discussion could not be conc luded before the end of the day, the Chair  
proposed that he hold informal consultations on this topic in order to finalize it in time to meet the TN/S/M/22 
Page 25 
 
 
  31 July deadline for the implementation of LDC Moda lities.  He encouraged Members to try to find 
bilaterally and plurilaterally a solution to this prob lem.  He believed that the gap between the positions 
of the different delegations had been reduced, but w as still wide open.  What was needed was to try to 
continue discussion in order to fulfil what ministers had mandated.   
127. The representative of th e European Communities  said that the US delegation had made many 
of the points he wished to make. He wished to r eassure the delegation of Brazil, that the European 
Communities was perfectly aware of the flexibility provisions in the GATS.  But that was not the 
point today.  The main point was to discuss what Members were doing for the LDCs and how 
Members could help LDCs to integrate into the worl d trading system and the world trade in services.  
Accordingly, the flexibility argument should not be u sed as a distraction in order not to address the 
main question at issue which was the implementation of the LDC modalities. 
128. The representative of Brazil  said that the United States had made precisely the point Brazil 
was trying to make.  There were certain diffe rentiated responsibilities between developed and 
developing countries with regard to  LDCs.  Brazil did not deny that it had responsibilities in this 
respect.  What it did take exception to was a paper that presented, or presumed to lump non-LDC 
countries together implying that their responsibiliti es were the same.  LDCs accepted this, since in 
their paper they took up language by minister s approved in Hong Kong with regard to goods: 
"developed countries shall and developing countri es declaring themselves in a position to do so, 
should".  LDCs themselves already recognized this  differentiated responsibility.  Brazil objected to 
any attempt to create a new category of Members in the WTO, "the non-LDCs", when there were 
specific instructions from the Doha Declaration that  no new categories of countries should be created. 
129. The Chair  said that the Council would revert to th e item as soon as practical.  He encouraged 
delegations to meet among themselves to try to develop a text that could allow the ministerial 
mandate to be achieved.   
130. It was so agreed . 
D. C ONSIDERATION OF PROPOSALS ON S&D  TREATMENT PROVISIONS  
131. The Chair  said that this was one of the important tasks of the Council for the year. In 
accordance with the Hong Kong Declaration, the Council was to complete expeditiously such 
consideration with a view to making clear reco mmendations for a decision to be adopted at the 
General Council by December 2006.  At the Council' s formal meeting on 23 June, the African Group 
stated that for technical reasons the Group was not ab le to submit their proposal at that meeting, but 
that it would submit it shortly and would continue to hold consultations with other Members on this 
issue.  The African Group had now requested that the Secretariat make available at this meeting a 
refined version of the African Proposal on S&D treatment. 
132. The representative of Egypt , speaking on behalf of the African Group, wished to present a 
revised contribution on S&D.  The African Group was committed to S&D, since it was the main 
proponent of this issue.  For the African Group, it was a means to further integrate its economies in 
the multilateral trading system.  And for this, th e Group had submitted its proposal, and had tried to 
provide comments and answers for the questions and concerns raised by Members.  As the Group had 
mentioned in the last meeting of the Special Session,  the proposal was refined in an attempt to narrow 
the differences with other Members in order to reach  a clear recommendation by the end of this year.  
The revised contribution reflected what the Afri can Group was taking from the exercise, which was 
establishing an effective mechanism by which Article  IV of the GATS could be realised.  The Group 
was looking forward to Members' positive c onsultations on its revised contribution. TN/S/M/22 
Page 26  
 
  133. The Chair
 said that the Council could take up the topic again as soon as was practicable and 
have a substantial discussion on the item.   
134. It was so agreed .   
H. O THER BUSINESS  
135. The Chair asked Peter Gonvindasamy, the Chair of the Working Party on Domestic 
Regulation, to report on the meetings that had taken place that week. 
136. The Chair of the Working Party on Domestic Regulation  reported that the Working Party had 
met in an informal setting the previous day.  A number of documents had been circulated for the 
meeting, including a revised job document from th e group of small and vulnerable economies, and a 
US job document outlining its position on the draft consolidated text.  The Working Party had also 
considered the consolidated working paper on po ssible regulatory disciplines JOB(06)/225 that the 
Chair had circulated under his own responsibility.  Th is working paper had been prepared in response 
to requests by Members at the Working Party meeting held on 19 and 20 June.  As had been clarified 
when the mandate had been given to him to prepar e the paper on 20 June, the working paper was not a 
Chairman's negotiating text as such containing co mpromise language on all the proposed elements.  
He clarified that he was not yet in a position to pr epare such a text given the divergent positions and 
views that Members continued to have on many pr oposed elements.  Obviously more negotiations 
were needed.  It was for Members to negotiate an d bridge these divergent positions and views.  He 
had characterized the working paper as a common working tool firstly to facilitate domestic 
consultations and secondly to facilitate the work in the working parties, so that Members could fulfil 
the mandate that ministers gave to them in H ong Kong to have a text on domestic regulation for 
adoption at the end of the Round.  The cover note to  the working paper had described very clearly the 
context and various caveats.  At the meeting on the previous day, Members had provided general 
comments on the working paper.  Several Member s, including a number of developing countries, 
indicated that they needed to send the paper b ack to capital for domestic consultations.  Some 
Members indicated that they also needed to consu lt with other Members of their relevant grouping.  
The next informal meeting of the Working Party w as scheduled for the 27 Ju ly and, if necessary, for 
28 July.  He hoped and expected Members to engage  in real negotiations on the various aspects and 
language in the working paper during that meeting.   As always, he would continue to talk to 
Members.  If Members wanted to discuss anythi ng with him while they undertook their domestic 
consultative process, he would be available.  Bu t most importantly, if Members were to make 
headway, they had to engage with each other, nego tiate, try to bridge gaps and find creative ways 
forward.  This was not the time for Members a nd proponents to continue maximalist positions on any 
of the elements of the paper, including certain hor izontal issues.  This would not be helpful to the 
process.  There should be a willingness all around to fi nd creative solutions if Members were to move 
forward.  There were no shortcuts.  He was conf ident that Members would engage, negotiate and find 
creative ways forward.  As Chair, but not a magician, he would continue to do everything he could to 
help facilitate progress in the negotiations. 
137. A representative of the Secretariat  wished to remind Members of the usual process of 
submission of offers.  He requested Members submitti ng revised offers to include also a hard copy, 
Sometimes the use of editorial conventions and shad ings etc. produced complications that were not 
intended.  It was extremely important to verify a ha rd copy of the revised o ffer against the results of 
the Secretariat’s electronic processing.  As befo re, once the formatted and processed document was 
ready, it would be sent to the delegation concerned for a final check with a very short turn-around 
time of no more than three days.  Those three days  represented each Member’s opportunity to check 
its revised offer for the last time.  If the Secretar iat heard nothing at the conclusion of the three day 
period, it would presume that the Member had conf irmed that the revised offer was correct, and the TN/S/M/22 
Page 27 
 
 
  offer would be issued.  The Secretariat would be  circulating a written communication describing these 
procedures in more detail. 
138. The representative of the United States  pointed out that one point in the report just given by 
the Chair of the Working Party on Domestic Regul ation was not adequately covered. The United 
States, as well as some other delegations, had voiced very strong concerns about the Chair’s paper 
that had been tabled at the meeting on the previ ous day.  The United States had gone through these 
concerns in detail at that meeting, but wanted to reiterate them.  The paper was very heavily weighted 
to a maximalist approach on a few particular issues, notably the necessity test.  It was also not quite 
what the United States expected based on the lengthy consultations that Members had participated in 
before the paper was drafted.  In particular, the Un ited States had not expected to see anything at such 
level of detail to the necessity test.  This might  not be a step forward for the negotiations, but 
potentially a very serious step backward.  If negotia tions proceeded on the basis of this text, there 
would be a protracted lengthy debate on issues that the United States had disagreed on for a long time.  
The United States looked forward to further consulta tions on the issue, but wanted to clarify those 
very strong concerns it had voiced. 
139. The representative of Brazil  said it was not an easy task for the Chair of the Working Party on 
Domestic Regulation. It was not always possible for a chair to produce a middle ground immediately acceptable to all.  Like for the United States, the Ch airman's working paper that was circulated for the 
previous day’s meeting was not exactly what Brazil had expected for many of the same reasons that 
the United States had highlighted.  Brazil had one partic ular concern.  On the basis of its evaluation of 
a happy ending at the end of the year, stake-holde rs back home had been considering the market 
access offers they were going to make.  If, as the Un ited States had highlighted, there seemed to be a 
step backwards, this might have an impact on the co nsideration of market access offers.  There was an 
undeniable link in the level of comfort that regulat ors were going to have in  domestic regulation and 
the offers they were willing and able to put on th e table in the market access negotiations.  Brazil did 
not understand the Chair's position that he did not yet feel ready to put a first negotiating draft on the 
table.  For Brazil, that step was inescapable, a nd it was ready to come back on 27 and 28 July, and 
reiterate substantive positions that had already been  outlined with regard to the different proposals 
which had gone into the Chair’s consolidated text .  The only way forward was for the Chair, on the 
basis of those comments, to prepare a draft negotiating text.  It had to be his best judgment for a possible compromise text, which was not an easy task.  There was however no way out.  Progress 
would be difficult if Members tried to build on re visions of the current working paper.  What was 
needed was a bold step to put on the table a te xt which could function as a basis for effective 
negotiation between Members. 
140. The representative of Switzerland
 warned that Members could not create new GATS 
provisions through a new interpretation of existing ob ligations under the GATS.  He wished to recall 
that what was referred to as a kind of necessity test in fact related to an obligation that was already 
applicable and in force under paragraph 5 of Ar ticle VI.  Switzerland assumed that Members were 
abiding fully by the obligations of this paragraph. 
141. The representative of Japan  said that in the informal meeting of the Working Party on 
Domestic Regulation, Japan had contributed to th e newly submitted working paper by the Chair and, 
although this was not a negotiating text as might ha ve been anticipated, Japan understood the Chair's 
judgment, which reflected the reality of existing di vergent views on some of the key questions.  In 
Japan’s view, what was important was for Members to give a certain level of further direction to the 
Chair so that he would be in a position to issue a re al consolidated text that could be used for the 
purposes of negotiation.  The Chair's working paper c ould be a useful instrument for that purpose, but 
during the next discussion the status of the working pa per should not be altered.  In this light, Japan 
was willing to join others in discussions and cons ultations providing a constructive path for reaching 
an agreement. TN/S/M/22 
Page 28  
 
  142. The delegation of Mexico
 said that Members had to be very cautious, and not repeat in the 
present forum the discussion that had been held the previous day.  He was surprised to hear some 
delegations reacting to a factual report by the Chai r.  The mandate was clear, and a Member could not 
change or challenge the mandate simply because the results did not favour it.  The document that the 
Chair had drawn up could not give everything to one group of Members.  It would always be a 
document to be negotiated.  Mexico wanted to negot iate, to start a new phase in the discussions in the 
Working Party on Domestic Regulation.  The docum ent, from Mexico’s point of view, could have 
been more ambitious,  but the Working Party  had to hold discussions  and respect the mandate given to its chair. 
143. The representative of Hong Kong, China
 wished to place on record a few points.  First, he  
thanked the Chair for his hard work in coming up with a consolidated text, which was Members had 
asked him to do.  Whether or not Members agreed en tirely with the text was beside the point.  To be 
forward looking, Members were now entering into negotiation.  Second, from the previous day’s 
meeting, it was obvious that further consideration and further consultations were necessary.  That was 
the reason why Members would all be coming back by the end of the month on this important pillar of 
the negotiation.  He urged all Members to be forward looking. 
144. The Chair  then opened the floor for tributes to tho se delegates who were departing Geneva.  
Many delegates spoke, underlining the hard work , professionalism and the human qualities of those 
who were leaving. 
145. The Chair  suggested that the Council take note of all the statements made before he adjourned 
the meeting. 
146. It was so agreed . 
__________