RESTRICTED  WORLD TRADE  
ORGANISATION  S/WPGR/M/71 
11 February 2011 
 (11-0736) 
Working Party on GATS Rules  
  
 
REPORT OF THE MEETING HELD ON 24 NOVEMBER 2010 
 
Note by the Secretariat
1 
  
1. The meeting was chaired by Ms. Gabriela Kules za from Poland.  The agenda for the meeting 
was contained in WTO/AIR/3666.
2  The agenda was adopted. 
I. NEGOTIATIONS ON EMERGENCY SAFEGUARD MEASURES UNDER 
ARTICLE X OF THE GATS   
2. On emergency safeguard measures (ESM), the Chairperson  recalled that Members had agreed 
to postpone any presentation on ES M-relevant data until after the discussion of the updated 
Secretariat Note on statistics on services trade flows.   Under current planning, the updated Note would 
be available in December 2010 and taken up in th e Council in the February 2011 cluster in the 
Services Council.3 
3. The representative of the Philippines  shared some broad observations on the main 
developments in the ESM negotiations since mi d-2005 and possible next steps as Members moved 
into an intensified DDA process.  He invited Me mbers to re-visit the 2005 study on "Emergency 
Safeguard Measures in the GATS: Beyond Feasible a nd Desirable" authored by Mario Marconini for 
UNCTAD.4  He also recalled a July 2005 workshop on emergency safeguard measures, co-hosted by 
Indonesia and Australia for capital-based officials of ASEAN in Bali.  It provided senior officials with 
an assessment of a broad range of issues related to the application of an ESM in services.  The 
workshop's main theme was the need to provide  sufficient checks on any ESM model to preclude 
against capture by domestic protectionist interests, with one presenter noting that most of the technical 
and feasibility concerns could be addressed in some way.5  In this regard, he underscored that the 
proponents shared with other Members the objective of protecting an ESM against domestic 
protectionist capture.  This was illustrated by so me important provisions in their 2007 ESM proposal, 
the roots of which could be traced back to the debates held in the Bali workshop.6   
4. Evoking the discussions preceding the December 2005 Hong Kong Ministerial, the 
representative of the Philippines pointed out that , from today's perspective, the wording of 
paragraph 4 of Annex C seemed ne utral and straightforward.  But in fact, the "more focused 
discussions" mandate of paragraph 4(a) of the H ong Kong Ministerial Declaration was a hard-fought 
compromise.  He recalled that, in the period imme diately before and after Hong Kong, the proponents 
                                                      
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.  
2 An annotated agenda for the meeting was circulated in document JOB/SERV/34 dated 19 November 
2010. 
3 Document S/C/W/329 dated 22 December 2010. 
4 Contained in the document UNCTAD/DITC/TNCD/2005/4 dated 9 March 2005.  
5 See the minutes of the WPGR meeting of 21 September 2005, contained in document S/WPGR/M/53 
of 30 September 2005, paras. 5-6. 
6 ESM proposal as contained in document JOB(07)/155 dated 19 October 2007.  S/WPGR/M/71 
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  hosted a series of 'informal informals', i.e., meetings with key interloc utors in variable geometry, 
providing an off-the-record opportunity to exch ange views on ESM proposals.  He acknowledged 
that, in the current ESM negotiations, there were  still a number of outstanding issues, and many 
Members remained to be convinced.  What rema ined vital were some fundamental policy and 
threshold challenges;  the technical issues could ev entually find their way to a smooth resolution.  
These challenges, he suggested, might be addressed best in a process like the 'informal informals'. 
5. At the WPGR meeting of 19 April 2007, the proponents had tabled a new proposal on ESM, 
which later was embodied in document JOB(07)/155.
7  This new text intended to provide for a general 
permission and rules for establishing an emergency safeguard mechanism (ESM) in Members’ domestic framework, not a "one-size-fits-all" mechan ism.  Flexibility and discretion were preserved, 
while some rules were prescribed.  The proposal al so provided an illustrative list of the kinds of 
market conditions that should exist for the applica tion of safeguard measures, and set out parameters 
that Members needed to observe.  His group of dele gations had attempted to strike a balance between 
protection in situations of emergency, on the one  hand, and the prevention of domestic regulatory 
capture, on the other hand, through a non-exhaustive enumeration of market conditions justifying a 
safeguard measure.  In addition to the formal pr oposal, the proponents had also circulated a room 
document dated 30 March 2009, whic h contained some thoughts on the possible way forward in the 
ESM negotiations.  The latter was based, inter alia , on ideas explored in the 'informal informals'.  The 
circulation of this room document led to a series of informal discussions held under the good offices 
of the then WPGR Chair, over the course of 2009.   The proponents had carefully noted the comments 
received in these discussions.  They would work to wards addressing them, as far as practicable, when 
further revising their ESM proposal, which they envi saged to table in due course, taking account of 
the overall environment in the DDA negotiations. 
6. The Chairperson
 took note of the statement made and pr oposed that the Working Party revert 
to this item at the next meeting.  It was so agreed.  
II. NEGOTIATIONS ON GOVERNMENT PROCUREMENT UNDER ARTICLE XIII 
OF THE GATS 
7. Turning to government procurement, the Chairperson  recalled that, at the meeting of 28 
September 2010, the delegation of the EU had presente d a proposal with more detailed suggestions on 
possible topics and timing for dedicated discussi ons on the broader econom ic and developmental 
importance of government procurement in services.8  At today's meeting, the Working Party was to 
hold its first dedicated discussion on the economic  importance of government procurement in 
services.  The debate was introduced by a presenta tion by Professor Simon J. Evenett, Professor of 
international trade and economic developm ent at the University of St Gallen.9   
8. In his presentation, Professor Evenett  discussed the economic importance of government 
procurement in services in deve loped and developing countries, both on the import and export side, 
focusing especially on health-related and education services.  Regarding the economic importance of 
government procurement in services in the current environment, he observed that, in times of fiscal 
austerity and budgetary constraints, governments were even more concerned to obtain for their 
purchases the best value for money.  This, in tu rn, underlined the challenge of setting the right 
policies.  Secondly, given concer ns about economic recovery and re -establishing the growth engine, 
the focus was on finding new services' sectors, which could sell abroad.  Thirdly, there was a 
particularly strong development dime nsion to government procurement in services , notably those 
                                                      
7 The Minutes of the meeting are contained in document S/WPGR/M/57 of 9 May 2007.  
8 Government Procurement in Services: Proposal by the European Union for work in the WPGR , 
contained in document RD/SERV/23 of 24 September 2010. 
9 Copies of his slides were available in the room.  S/WPGR/M/71 
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  supplied to the poor, such as social, health-related a nd education services.  The relevant procurement 
regimes had important impacts on life chances and poverty reduction.  Finally, many of the services that were provided to governments were also used by the private sector when it engaged in domestic 
and international commerce.  Exporting firms critica lly relied on the quality of publicly provided 
transport, telecommunications and other infrastructures.  There was thus an important indirect effect 
that government purchases had on the quality of services supplied to and by the private sector in 
general and, in turn, on a country's export perform ance.  There was a growing amount of evidence that 
the availability of high-quality business, trans portation and telecommunications services affected 
exports, both in developed a nd developing countries.   
9. The lack of reliable data made it difficult to estimate the overall size of procurement markets 
in services.  Numbers were either too big because th ey aggregated private sector spending on services 
as well as government spending, or too small if they took into account only actually measured trade 
flows.  The most comprehensive attempt to achi eve a standardised quantification of government 
procurement markets was made in a 2002 OECD  study, which had not been updated since.
10  Another 
source of information were the occasional submi ssions of GPA Members to the GPA Committee.  
These had been assembled in a couple of studies but th eir coverage was, by definition, limited to GPA 
Members.    
10. According to Professor Evenett, a key contribution of a country's services-related 
procurement policy to export performance was the sta ndards to be met by domestic service suppliers.  
As a substantial buyer of certain services, the gove rnment could thus contribute to raising the quality 
standards of local suppliers.  This could have an  export pay-off, provided standards were high enough 
to attract an international clientele.  He cited,  for instance, the case for health services exported by 
leading emerging and developing countries.     
11. Professor Evenett referred to three empirical findings for government procurement that, in his 
opinion, applied to services as well as to goods.  The first finding was that competition for domestic 
government contracts mattered.  Increases in the numb er of qualified bidders reduced the unit cost 
paid by governments, with the biggest payoffs stemming from increasing the number of bidders up to 
five.  Allowing international co mpetition could thus reduce the unit cost born by governments, 
especially for countries that did not have  five qualified domestic bidders.  The second  lesson was that 
not all government interventions, which distorted competition in procurement bidding, had the same 
effect.  Measures that excluded bidders were part icularly expensive to the government budget.  
Measures, which unnecessarily raised the costs of bidders were almost as bad, while price preferences 
tended to be the least problematic.  The third  finding was that vigorous rivalry at home was an 
important source of export success.  There thus tended to be an export payoff to intensified 
competition in the domestic government procurement market. 
12. Describing the policy regime conducive to gettin g the most out of government purchases of 
services, he concluded that favoured bidders should not be sheltered from international, or indeed 
domestic competition as this would blunt incentives for cost control and innovation.  If governments 
wanted to stimulate their domestic services sector, th ey needed to be active and demanding buyers.  
However, even if a government was able to enc ourage local service suppliers to provide high-quality 
services to it, the latters' ability to translate these into exports depended on the trading partners' 
policies as well.  This explained the offensive interest in negotiating better access to foreign 
procurement markets and foreign services markets in general.   
13. Following the presentation, the Chairperson  opened the floor to Members for questions or 
comments. 
                                                      
10 OECD (2002), The Size of Government Procurement Markets , Paris. S/WPGR/M/71 
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  14. The representative of the European Union
 informed that, according to several studies, 
procurement in services was estimated to account for about one-third of commercial services' trade.  
This number might have increased in recent years following the stimulus packages adopted by some 
governments in the aftermath of the financial cr isis.  Inviting other delegations to provide 
corresponding information in the on-going dedicated  discussion, she informed that total public 
procurement in the EU – i.e., the purchases of goods, services and public works by governments and 
public utilities – was estimated at about 17% of th e Union’s GDP.  Of this, supplies of services 
represented roughly 78 per cent (of which 53 pe r cent were construction services), while goods' 
supplies amounted to 22 per cent.  In the EU, publ ic procurement was subject to Community rules, 
i.e., EU directives that were then translated into Me mber States' national law.  EU directives applied 
only to procurement above certain thresholds, which were similar to the ones in the GPA.  Purchases 
above these thresholds represented about 3.1 per cen t of the EU's GDP, or 20 per cent of the entire 
procurement market.  However, the proportion va ried significantly between Member States.  
Purchases below thresholds were under Member States ' individual competence but had to  respect the 
principles of the EU Treaty.  As a result, the EU procurement system was very open, not only within 
the EU but also to bidders from outside the EU.   
15. The delegate of the United States  asked whether Professor Evenett had any thoughts about 
how WTO Members could distinguish disguised subs idies from actual procurement in the services' 
context.  Clearly, distortions could occur in procurem ent markets.  In the goods' context, the issue of 
subsidies disguised as procurement was well known.  It was addressed by well established 
mechanisms under the Agreement on Subsidi es and Countervailing Measures, based on the 
measurement of the production costs of the goods .  However, market-based production costs of 
services, particularly in areas such as education a nd health, could be quite difficult to determine. 
16. The representative of South Africa  asked for an elaboration of the link between revenues from 
exports of health services mentioned in one slide, which referred to private  health care expenditures, 
and government procurement.  Sec ondly, he wondered why the OECD did not have updated statistics 
on the size of government procurement markets and what the cause of this gap might be. 
17. The delegate of Uruguay  noted that the presentation described the benefits that developing 
countries would derive from opening their public procur ement markets to efficient competitors.  He 
wondered to what extent the mechanisms currently in place to secure these benefits were insufficient, 
and whether further opening to international competition was needed. 
18. The representative of China  asked how Professor Evenett related the revenues from exports of 
health services described in one of the slide to government purchases of health services.  Where could 
statistics on health services covered by government -provided health insurance schemes be obtained? 
And how could the price differences mentioned in a nother slide be translated into actual market 
opportunities for cost-effective exporters of health  services?  Finally, he enquired about Professor 
Evenett's views regarding the portability of health insurance, especially in developed countries, and 
how the current market access negotiations could be tailored to reap some of the potential benefits 
stemming from further opening of health services c overed by government-provided health insurance 
schemes.  
19. The delegate of the Republic of Korea  asked how governmental  subsidy programmes, 
especially those related to health and educati on, differed from government procurement in these 
sectors.  Secondly, construction services were an  important component of public procurement 
contracts worldwide, which saw the emergence of new ways of procuring projects, such as Build-
Operate-transfer (BOT), Private-Public-Partner ships (PPP), etc.  What was the present economic 
importance of public procurement in construction servi ces in various countries?  Thirdly, she stressed 
that, beyond the opening of domestic procurement markets to foreign bidders, having in place 
transparent domestic bidding procedures, notably by pr omoting e-procurement, was essential.  In this  S/WPGR/M/71 
 Page 5 
 
 
  context, she wondered how the domestic procedures could contribute to creating a transparent and 
competitive procurement market. 
20. In response to the comments made, Professor Evenett  observed that those GPA Members who 
submitted information about their procurement markets to the GPA Committee – which did not include all GPA Members – provided comparable info rmation to the one cited by the EU, notably on 
the size of their procurement markets.  In repl y to the question posed by the United States, he 
acknowledged that, in the absence of clear market pr ices in many services' sectors, one was left with 
cost estimates.  Indeed, calculating the average co st of production of certain health or education 
services was extremely complex.  However, if more s uppliers of health and education services were to 
win contracts on international markets, and if these ma rkets were to develop more of an international 
dimension as a result, the price data would eventually  become richer.  And this could help alleviate 
the problem over time.   
21. Professor Evenett next turned to the question posed by South Africa regarding the link made 
in his presentation between revenues from exports of  health services, which were private healthcare 
expenditures, and government procurement.  The li nk he had wanted to suggest was that, by using 
government procurement practices to encourage the upgrading and meeting of foreign standards by 
domestic service suppliers, governments could help domestic suppliers meet those standards and 
thereby win more customers abroad.  Regarding the lack of updated statistics quantifying the size of 
government procurement markets, he clarified that the 2002 OECD study analysed the government procurement expenditures of over one hundred juri sdictions, both in services and non-services areas, 
based on statistics of the United Nations System of  National Accounts (SNA), not on data reported to 
the OECD by its Members.  In his view, the lack  of updated statistics was not so much a reporting 
constraint, but rather a matter of resources and w illingness to re-compute the relevant magnitudes.  
Quantifying the potentially contestable shares of in ternational government procurement markets was 
by no means easy, owing to missing data and differences in methodological approaches.   
22. Replying to the delegate of Uruguay, Prof essor Evenett clarified that one needed an 
expansion in the scope of gove rnment procurement, which fe ll under international competitive 
bidding and was above the relevant  thresholds.  With respect to  the questions from China, he 
explained that the link between revenues from exports  of health services and government procurement 
was that governments could encourage domestic he alth service suppliers to upgrade their quality 
standards, thus making them more attractive for the supply of services to foreign consumers via 
mode 2.  He further clarified that the price di fferences in selected health services arose principally 
from differences in capital costs and wages across count ries.  For those price differentials to translate 
into actual market opportunities for cost-effective e xporters of health services, however, a range of 
other public policy measures needed to be in place, such as medical malpractice liability regulations.  
He recognized that some jurisdictions had sought to frustrate the overseas movement of their nationals 
wishing to consume health services abroad by trea ting foreign providers diffe rently from domestic 
ones under their national liability laws.  A similar set of concerns existed with respect to education 
services, where a major issue was the recognition of  diplomas and qualifications offered by foreign 
educational institutions. 
23. Regarding the comments and questions from Kor ea, he endorsed the point that construction 
services were a very important sector where a fair  amount of internationa l competition was happening 
already.  In an era where many emerging markets were experiencing rapid gr owth, which triggered a 
strong demand for infrastructure upgrading and expa nsion, construction was in many respects a 
booming sector.  He stressed to the importance of transparent domestic government procurement 
procedures, the improvement of which encouraged many more small and medium-sized enterprises 
(SMEs), both domestic and foreign, to bid.  In addition, transparent domestic bidding procedures tended to shift governments' spending away from mo re differentiated products, where the potential for S/WPGR/M/71 
Page 6  
 
  corruption was higher, towards more homogenous ones.   As a result of transparency, the composition 
of government spending was thus changing as well.   
24. The representative of Pakistan
 observed that the potential benefits from liberalising 
government procurement in services needed to be weighed against the political and security 
constraints and sensitivities faced by a number of count ries.  These constraining factors needed to be 
discounted when evaluating the size of internati onally contestable public procurement markets.  
Pakistan was not a Party to the GPA but, even  amongst GPA Parties, government procurement 
transaction flows from developing to developed countr ies remained small, especially in the services 
field.  Developing countries were competitive in some sectors, such as construction services, where 
transaction flows from developing to developed countr ies were indeed taking place.  Several factors 
caused this imbalance in transaction flows.  Di fferences in the level of competitiveness between 
service suppliers from developing a nd developed economies played a role.  There were, however, also 
structural factors, such as the size of the transac tion.  In most procurement tenders, the size of the 
transaction was so huge that it de facto acted as a barrier to trade;  companies from least-developed 
and developing countries often lacked the size, ability  and access to financing required to operate big 
projects outside their country of origin.  This made  procurement markets in services less smooth than 
the ones in goods.  In addition, not all government  procurement was open to competition:  some was 
totally closed to private sector participation, be it domestic or foreign.  High applied thresholds and 
preference margins further reduced the size of intern ationally contestable procurement markets.  In 
many developing countries, the tendering and proc urement processes for big infrastructure projects 
were run by the World Bank or other international institutions.  This reduced the local government's 
ability to intervene in th ese processes.  Finally, he expressed c oncerns in the wake of two recent 
investor-state arbitration cases in the services' area , which Pakistan faced as a result of its bilateral 
investment treaty (BIT) obligations.  Before considering any possible disciplines in the government procurement area, a clear line needed to be drawn between such disciplines and a Member's 
obligations under its BITs that could be subject to investor state arbitration. 
25. The delegate of Turkey
 echoed the need to get a better idea of the actual size of 
internationally tradable procuremen t.  The examples given in the presentation,  namely health and 
education services, were difficult to apply in the real  world, due to language and other barriers.  He 
asked about examples of services sectors that would better lend themselves to international 
procurement transactions and open up real export opportunities.       
26. The representative of India  remarked that the presentation had drawn attention to the fact that 
total health and education spendi ng was running into trillions of dolla rs worldwide.  The presentation 
had mentioned exports of the health sector, the mark et potential area and several developing countries' 
cost-competitiveness in this area.  India was a majo r destinationfor health tourism.  However, its 
exports suffered from the lack of re imbursement of costs by foreign h ealth insurance providers.  That 
had become a major bottleneck for health services e xports through mode 2.  She enquired whether the 
GPA itself could lead to the removal of such limitations.  Wouldn't corresponding changes in 
regulations on insurance portability in partner c ountries be required beforehand?  What was the link 
between the two?  Would GPA coverage lead to an automatic expansion of the health services’ 
market for developing countries?      
27. The representative of Chinese Taipei  asked whether the figures given on worldwide spending 
on health and education included only services or also goods.  If they included goods as well, what 
were the respective shares? 
28. Professor Evenett  observed that the questions fell into tw o main categories:  i)  the actual size 
of the markets in government procurement of servi ces; and ii)  the factors that could limit the 
commercial opportunities.  Regarding the size of the market, he conceded that the data was quite 
unsatisfactory.  Numbers were either too big b ecause they aggregated private sector spending on  S/WPGR/M/71 
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  services and government spending, or too small if th ey reflected only actually measured trade flows.  
Yet, in a world economy of roughly 50 trillion do llars of national spending every year, of which 
roughly 10 per cent was spent on education and hea lth, this still represented a half-a-trillion dollar 
market for just two sectors.  He agreed that the key question was how much of the procurement market was contestable internationally. In this context, legitimate points had been raised about 
threshold levels, domestic security and political constraints and language barriers.       
29. The Chairperson
 thanked Professor Evenett and Members fo r their participation in this very 
stimulating discussion.  Turning to the second part  of the Working Party's deliberations under this 
agenda item, she invited delegations to examin e how they wished to organise the dedicated 
discussions on the remaining topics outlined in the EU proposal, as well as on any other topic they 
wished to raise.  She recalled that, at the Wo rking Party's meeting on 28 September 2010, several 
Members had welcomed the idea of inviting GPA e xperts to a dedicated discussion on government 
procurement.  The question was when such a joint session could best be organised.  One option would 
be, for the Working Party on GATS Rules' meeting in February 2011, to focus on the second bullet 
point of the first session outlined in the EU proposal , namely: "International procurement markets: the 
impact of domestic procurement systems and intern ational rules/commitments".  Following this, a 
joint session gathering services as well GPA experts could possibly be organised during the April cluster, subject to further verification.  She then opened the floor for Members' views on the 
organisation of the forthcoming dedicated discussions.   
30. The delegate of Switzerland speaking in his capacity as Chairman of the Committee of the 
Agreement on Government Procurement (hereafter GPA)  confirmed that he stood ready to contribute 
to the dedicated discussions proposed by the Eur opean Union.  Since the GPA Committee was in a 
very intensive negotiating phase, it was difficult to commit on a date at this point.  However, he 
should have a clearer view of the GPA Committee's timetable in early 2011.  Referring back to the 
presentation by Professor Evenett, he informed that the question of statistics was also debated in the 
GPA Committee. There was an obligation for Member s to submit information, notably on the size of 
their contestable markets.  However, statistical  practices among the 41 GPA Parties differed widely.  
A working group had been set up to study how to achieve more harmonised statistics, but work in this regard was at a very early stage.   
31. The representative of the European Union
 thanked the Chairman of the GPA Committee for 
his availability and for helping creating a link betw een services and GPA experts.  She supported the 
proposal of inviting GPA experts to the WPGR Apr il 2011 meeting.  For the February cluster, she 
suggested that a government procurement expert from the WTO Secretariat made a presentation to 
introduce the discussion on "the impact of dom estic procurement syst ems and international 
commitments on international procurement markets" (see the second bullet point of the first agenda 
item in the European Union's proposed Work Pr ogramme, as contained in document RD/SERV/23). 
32. In reaction to the European Union's sugg estion, the delegate of the United States  expressed 
interest in this idea pending further verification. 
33. The representative of Turkey  commented that, if the Workin g Party was to discuss and share 
national experiences on the reform and opening of domestic procurement systems, his delegation 
would be volunteering to provide a presen tation regarding the Turkish experience. 
34. The Chairperson  took note of the statement made by the delegation of Turkey.  In 
February 2011 the Working Party would tentatively focus on the second bullet of the first point of the 
European Union's proposal.  To conclude this agenda  item, she would consider the possible next steps 
in due course. S/WPGR/M/71 
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  III. NEGOTIATIONS ON SUBSIDIES UNDER ARTICLE XV OF THE GATS 
35. The Chairperson
 announced that she would start with th e information exchange on subsidies.  
Thereafter, Members would have the opportunity to comment upon the Swiss proposal on export subsidies (contained in document RD/SERV/4) and on the Communication from the United States 
entitled "GATS Article XV: Questions for Members by the United States" (contained in document 
S/WPGR/W/59).   
36. Starting with the information exchange on s ubsidies, the Chairperson reported that 18 
submissions, counting the EU as one, had been recei ved to date.  They had been circulated in 
documents JOB/SERV/Add.1 to 12.  Counting indivi dual Member States of the EU, the submissions 
now covered 44 WTO Members.  Despite the great variety in the level of detail provided in the 
submissions, a good start had been made.  She encour aged those delegations that had not yet done so 
to submit their responses as soon as possible. 
37. She clarified that the purpose of the dedicated  discussion was to allow Members to exchange 
views on the information provided, and to begin iden tifying potential systemic issues, which could be 
relevant for the negotiations on necessary multilatera l disciplines.  She recalled that the negotiating 
mandate of GATS Article XV stated that, "Membe rs recognize that, in certain circumstances, 
subsidies may have distortive effects on trade in services. Members shall enter into negotiations with 
a view to developing the necessary multilateral disciplines to avoid such trade-distortive effects.  [...]  
For the purpose of such negotiations, Members sha ll exchange information concerning all subsidies 
related to trade in services that they provide to th eir domestic service suppliers".  The requirement to 
exchange information was thus for the purpose of  the negotiations.  The dedicated discussion would 
be a useful step to make greater sense of the data submitted so far.  In this connection, the information 
exchange could help Members to better understand: (i) how subsidies were provided;  and (ii) the 
trade effects, including any distortions, that might be involved.  Any delegation that had submitted, or 
was about to submit, information would be given the opportunity to briefly present its submission.  
After the presentations, the discussion would be conti nued in informal mode.  She then opened the 
floor for any Member who wished to present its submission.  
38. The delegate of Norway
 expressed the view that the info rmation exchange was useful and 
necessary in order to fulfil the negotiating mandate  of GATS Article XV.  Norway's submission listed 
a number of subsidies on services, which, in the view of the Norwegian government, were 
representative of the kind of subsidies it granted in  services.  Through Norway's participation in the 
European Economic Area (EEA), Norwegian legisl ation under which subsidies were granted was 
consistent with the legislation of the European Union in this area.  State aid rules in the EEA 
Agreement were broadly equivalent to State aid ru les in the EC Treaty.  Like the latter, the EEA 
agreement contained a general prohibition of State aids to prevent distortions of competition and 
negative effects on intra-EEA trade.  However, th e prohibition was subject to exceptions, recognizing 
that aid may be necessary to correct market failur es or to pursue social objectives.  State aid might 
therefore be allowed under certain circumstances, such as to promote the development of certain 
economic activities or regions, where it did not adve rsely affect trading conditions to an extent 
contrary to the common interest.  The general pr ohibition on State aid applicable in Norway was 
enforced by the EFTA surveillance authority.  In pr inciple, aid schemes needed to be notified to the 
EFTA surveillance authority for approval before im plementation.  Subsidies to services in Norway 
were provided in various ways.  Direct grants, an d tax exemptions and reductions were probably the 
most commonly used forms.  However, guarantees, so ft loans and interest rate subsidies were also 
used in some cases. 
39. Regarding the purpose of the subsidies, aid was given for example to disadvantaged regions.  
As described in the submission, su ch aid included a regional trans port aid scheme, directed towards 
undertakings in the manufacturing industry located  in remote areas.  The policy objective was to  S/WPGR/M/71 
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  promote regional development in regions situated  far from central areas by offsetting additional 
transport costs for undertakings located in these region s.  The subsidies were provided in the form of a 
grant calculated as a percentage of the total transpor t cost of individual shipments.  Secondly, Norway 
had in place a scheme providing exporters with officia lly supported loans at a fixed interest rate.  The 
loans were granted in accord ance with the OECD Arrangement on Officially Supported Export 
Credits.  The policy objective was to offer Norwegia n exporters loans on par with those provided in 
other OECD countries.   
40. Norway provided assistance to certain industry sect ors, such as the shipping, the maritime and 
the cultural sectors.  The aid scheme for research , development and innovation in the maritime 
industry was provided in the form of grants to maritime industry based in Norway.  The ownership 
was not relevant, and grants may be provided to fo reign-owned undertakings located in Norway.  The 
aim of the scheme was to develop new, profita ble services, production methods and markets for 
maritime businesses.  It also attempted to strengthe n the maritime sector's ability to innovate through 
improved cooperation between compan ies, knowledge centres and authorities.  Another example was 
the Special Tax System for Shipping Companies direct ed at companies engaged in maritime transport 
internationally and on the Norwegian continental sh elf.  All profits from shipping activities under the 
programme were exempt from the ordinary Norwegia n company tax, which currently stood at 28 per 
cent.  Instead, a tonnage tax based on the net tonnage of the ship w as applied.  The policy objective 
was to maintain a competitive Norwegian shipping industry.    
41. Finally, support was also provided to certain cu ltural activities, such as audiovisual services.  
Independent audiovisual production companies established in Norway, an EEA country or 
Switzerland may qualify for such subsidies.  A requirement was that the firm must be registered in the 
Norwegian central register for business enterprises.  Th e subsidies were provided in the form of grants 
for the development and production of feature films,  short films, television series and co-production 
of feature films and the development of interactiv e productions.  The policy objective of the subsidy 
was to support audiovisual productions based on the Norwegian or Sami language, culture and 
society.  Norway did not believe that the aid schemes described in its submission affected trade 
between the Members of the WTO. 
42. The representative of Canada  would welcome more submissions from other Members, but 
believed, nevertheless, that the pa rticipation rate of Members in the current exercise was satisfying, 
considering the sensitivity of the subject as we ll as the extensive work required to prepare the 
submissions.  Canada's responses were submitted wit hout prejudice to it's present and future position 
at the WTO.  The communication covered support s ubstantially related to services provided by the 
Canadian Federal Government.  It did not incl ude, however, support programmes, which had no 
substantive services-related component.  Nor did it cover programmes previously notified by Canada 
under the Agreement on Subsidies and Countervaili ng Measures (SCM Agreement).  Also, in the 
absence of an agreed definition of subsidies for th e services sector, Canada had used the concept of 
financial contribution as defined in Article 1.1(a)  of the SCM Agreement as a guide. However, the 
fact that a programme was included in the submission did not imply that it conferred a benefit, or that 
it was 'specific' in the sense of the SCM Agre ement.  Canada was guided in structuring the 
information collected for this exercise by the 1997 questionnaire developed in the WPGR for the 
exchange of information on service subsidies.  He also mentioned, in relation to question 9 of the 
questionnaire, that Canada had never undertaken e xplicit subsidy disciplines related to services in any 
of its bilateral or regional free trade agreements.  Looking ahead to potential next steps, he thought 
that the questions raised by the United States (i n document S/WPGR/W/59 of 28 May 2010) went to 
the heart of the matter when referring to the need for rules on services subsidies, i.e., to potential 
trade-distorting effects from such programmes.  Canada would support further work on these 
questions followed by a dedicated discussion by Members along these lines. S/WPGR/M/71 
Page 10  
 
  43. The delegate of Hong Kong, China
 thanked the Members who had submitted replies to the 
information exchange exercise.  It had been an  interesting experience to read through those 
submissions, and he had encountered entries, whic h he would not have thought to fall under the 
subsidies' purview of the GATS.  The submissions  certainly enriched Members' knowledge base and 
informed the ongoing discussion.  Presenting Hong Kong, China's submission, he made the following 
clarifications.  The submission deliberately exclude d cases where financial contributions were made 
by the government or public authorities in pursuit of broad social objectives, typically those for providing social services to the public.  He noted, however, that a good number of such types of subsidies were included in other Members' subm issions.  Hong Kong, China's submission included 
three entries on subsidies.  With respect to the fi rst two – namely a subsidy programme contributing to 
innovation and technology upgrading in the manufact uring and services industries, and one supporting 
small and medium-sized enterprises –, there were similar cases in other Members' submissions.   
44. The third entry covered a stamp duty exemption, respectively remission, for certain categories 
of financial product transactions.  Though arguably not a trade measure per se , it was deemed useful 
to include a case of subsidy, which took the form of revenue foregone by the government.  While in 
most other cases reported by Members, the measures involved a direct transfer of funds or a direct 
grant to the benefiting entities.   
45. The delegate of Australia
 prefaced her comments by noting th at Australia's services industries 
had not expressed concerns regarding trade-distortive subsidies in service sectors.  She thus supported 
further work on the questions raised by the United States in document S/WPGR/W/59 of May 2010.  Australia had provided informati on on its TQUAL Grants programme on 'a without prejudice basis', 
recognising the Chair's efforts to move this discu ssion forward.  The TQUAL Grants programme was 
designed to stimulate sustainable growth in the Australian tourism industry with grants totalling 
approximately $A7.5 million.  Many Members pr ovided support to their local tourism industry, 
recognising the prevalence of small and medium-s ized enterprises in the tourism sector and the 
important job opportunities that it created.  She hi ghlighted the fact that foreign companies were 
eligible to apply for these grants with the only conditi on being that they be used in relation to tourism 
activity in Australia.   
46. The representative of Chile
 thanked all delegations that  had submitted information on 
subsidies in services.  The number of notifications  was satisfactory, and the information contained 
therein would allow Members to move their wo rk forward.  The process was still under way and 
could definitely not be completed within a c ouple of dedicated discussions.  The information 
contained in the other submissions would be very useful to complement the material provided by 
Chile.  The latter focused particularly on the cultura l sector, with support schemes mainly in the form 
of grants.  One entry related to telecommunications services, by way of a Telecommunications Development Fund aimed at promoting increased servi ce coverage in low-income areas, especially in 
localities in remote or isolated regions.   
47. The delegate of Mexico
 stated that the responses submitted were without prejudice to 
Mexico's present and future position regarding the wo rk of this Working Party.  Mexico reserved its 
right to complement or amend its responses in th e future, by adding information on the same or on 
additional sectors.  The Mexican submission used the definition of subsidies of the Agreement on 
Subsidies and Countervailing Measures as reference.   The information exchange exercise had had a 
very positive impact domestically, as it had captured the interest of agencies and led to a lot of 
discussion.  This was a benefit worth sharing w ith other delegations w ho had not yet submitted 
information.  The Mexican submission focused on the audiovisual services sector where subsidies 
were granted in the form of dir ect support and tax incentives.  It di d not include support offered below 
the federal level as this information was not availa ble for the time being, nor was information on the 
trade impact of these support measures.  However, wo rk to collect this info rmation from the agencies 
was ongoing.  He invited delegations who had not yet done so to submit information.   S/WPGR/M/71 
 Page 11 
 
 
  48. The representative of Japan  indicated that their submission included three support 
programmes.  The first one was offered to local public services providers – such as local 
governments, non-profit organizations and third-sec tor companies – to promote the introduction of 
information and communication technologies (ICT) in communities.  The eligibility criteria for this 
subsidy focused on whether the project had positive effects on local employment and fostered "ICT 
human resources", which enhanced the use of IC T-based solutions in local public services.   
49. The other two subsidy programmes aimed at s upporting small and medium-sized enterprises 
(SMEs) and regional development.  The first one  promoted local SME providers of information 
technology so that they collaborated on joint pr ojects to supply efficient IT services to user 
enterprises.  It aimed at revitalizing rural economies  by promoting the informatization of local SMEs.  
In Japan, small and medium-sized ICT firms in  the regions often depended on subcontracts from 
larger ICT firms located in large cities such as Toky o.  They thus often faced cash flow difficulties 
and lacked business stability.  Moreover, ICT SMEs often lacked the capacity to meet local demand.  
The programme thus aimed to pool the resources of  individual small and medium-sized ICT firms 
located in rural regions, creating synergies to enable  them to better serve the ICT demand of the local 
economy.  The support took the form of grants.  Projects such as the development of software or the 
use of foreign ITC engineers were one of its targets. 
50. The second programme was aimed at revitalizing of regional city centres.  The background to 
this subsidy was a change in lifestyle where ma ny people preferred suburban shopping centres and, 
secondly, there was a continuous flow of populatio n from regional cities to large cities, such as 
Tokyo.  This resulted in the hollowing of regiona l city centres.  Therefore, the subsidy programme 
aimed at subsidizing any project – including the utilization of vacant stores, the creation of local 
events or festivals – that would contribute to rev italize city centres and foster an inflow of population 
or tourists. 
51. The delegate of India  thanked all those Members who had made submissions and encouraged 
others to follow suit.  The greater response to th e information exchange programme this time was not 
only due to the flexibilities built in the programme, but  also to increased interest amongst Members in 
subsidies in services trade.  The information exchange was a step fo rward as it resolved the deadlock 
over whether to first agree on a definition or first share information.  The submissions displayed a 
great variety of sectoral coverage and subsidy fo rms. The information exchange would certainly 
contribute to a better understanding of th e nature of subsidies in services.  
52. India was still in the process of analysing th e submissions made by other Members and may 
not be in a position, as of yet, to make detailed analytical comments from a systemic point of view.  
Part of the difficulty arose from the diversity of in formation in terms of sectoral coverage, and also 
from the fact that not all submissions followed the format outlined in the Work Programme.  
However, he hoped that the submissions could ser ve as basis for future work under Article XV of 
GATS for the development of disciplines.  
53. While preparing its submission, India had faced th e problem of how to define subsidies.  Like 
many other Members, India took recourse to the concept of financial contribution as outlined in 
Article 1.1(a) of the Agreement on Subsidies and Countervailing Measures, as a general basis for the 
inclusion of schemes in its submission.  The incl usion of a scheme did not, however, imply that it was 
‘specific’ or that it conferred a benefit as, at this stage of the negotiations, these concepts had yet to be 
clarified.  India's submission included only subsid ies provided by the Central Government.  India did 
not have a centralised database for subsidies, and information on subsidies granted by ministries was 
not readily available at a single source.  To partic ipate in the information exchange, information had 
been requested from all concerned Ministries and Departments, and interministerial meetings conducted. As a result, information could be tabl ed on some of the schemes run by the Science and 
Technology, the Tourism and the Rural Developm ent Ministries.  A total of ten schemes were S/WPGR/M/71 
Page 12  
 
  covered.  The flexibility provided by the Chair's Wo rk Programme proved to be  quite helpful in this 
regard.   
54. The subsidy schemes detailed in the submission were in line with the developmental needs of 
a developing country like India.  They had been d esigned to encourage growth in sectors, which had 
not received adequate attention from private commer cial enterprises for a variety of reasons.  The 
schemes were non-discriminatory and available to  all enterprises working toward fulfilling the 
objectives.  They covered different sorts of fi nancial contributions, such as grants, equity 
contributions, loans, etc.  For many schemes, detaile d information on their impact on trade in services 
was not available.  Most of the schemes were con tinuing and did not have any specified time limits. 
55. Under the Science and Technology Ministry, the submission provided information on four 
schemes:  a) Under the New Idea Fund Scheme, assist ance was given on a competitive basis as grants 
to support path breaking ideas and pre-competitive resear ch in the Council of Sc ientific and Industrial 
Research;  b) under the Technology Development a nd Utilization Programme for Women, assistance 
was provided as grants for projects relevant to tec hnology development and utilization by women;  c) 
under the Technology Development and Demonstrati on Programme, grants were  provided to promote 
industry efforts for the development and demonstratio n of indigenous technologies;  and d) under the 
Industrial R&D Promotion Programme, in-house R& D units recognized by the Department of 
Scientific and Industrial Research, in the area of pharmaceuticals and biotechnol ogy were eligible for 
duty free imports of specified goods.  Assistance in this case was in the form of revenue foregone. 
56. Under the Tourism Ministry, information w as provided on five schemes:  a) Under the 
Scheme of Assistance for large Revenue Generati ng Projects, assistance in the form of loans and 
equity contributions was provided to projects like t ourist trains, cruise vessels, cruise terminals or 
convention centres;  b) under the Scheme for Support to Public-Private Partnerships in Infrastructure, 
the Government provided one-time or deferred gr ants with the objective of making a project 
commercially viable;  c) under the Scheme of Mark et Research, funds were provided as grants for 
hiring consultants to carry out market research ;  d) under the Scheme of Market Development 
Assistance for the promotion of domestic tourism, assistance was provided to tourism service 
providers in the State of Jammu and Kashmir and th e North Eastern States for participation in travel 
marts, annual conventions for tour operators, et c.  These states were economically under-developed 
and needed special assistance;  and e) under the Sche me of Financial Assistance to Institutions,  grants 
were given with the objective of creating institution al infrastructure that could foster and facilitate 
professional education and training specific to the t ourism, travel and hospitality industry.  Finally, 
under the Rural Development Ministry, assistance was given to companies engaged in the field of 
providing better water harvesting methods.   
57. The delegate of India looked forward to an y observations or questions from Members.  
Regarding the questions raised by the United Stat es (contained in document S/WPGR/W/59) and the 
part of the Work Programme pertaining to trade-di stortive effects, the government was working with 
stakeholders and hoped to be able to  provide information in due course. 
58. The representative of Brazil
 clarified that the submission used the definition of subsidies 
contained in Article 1 of the Agreement on Subs idies and Countervailing Measures, as well as other 
provisions of that Agreement.  The latter had pr ovided useful guidance for analysis.  Like other 
Members who submitted information, Brazil availed itself of the flexibilities offered by the Work 
Programme.  Brazil's submission included the Indust rial Technology and Agricultural/Cattle Breeding 
Technology Development Programmes (PDTI & PDTA) created in 1993. Their purpose was to foster 
technological improvement through research and development initiatives.  The latter comprised directed basic research, applied research, experiment al development and technical support services.  
The programmes also sought to promote partners hips between research centres and universities, 
institutes and enterprises through a permanent in frastructure of technological management.   S/WPGR/M/71 
 Page 13 
 
 
  Government support was given thr ough deductions of income tax due  on the sum of the expenses in 
technological R&D activities, and deductions of the tax on industrialized products (IPI) due on 
equipment, machinery and devices allocated to res earch and technological development.  Although 
the programmes were not targeted exclusively at th e services sector, they had a significant impact on 
areas such as research and development services, e ducational services and capacity-building of human 
resources. 
59. The representative of Brazil thought that the Work Programme had generated an important 
contribution to the Working Party's future discu ssions regarding the development of disciplines on 
subsidies in trade in services.  The greater number of submissions showed that Members were more engaged in the fulfilment of the mandate of Artic le XV of the GATS.  From the indications on how 
the subsidies were provided, it was possible to iden tify considerable similarities to practices in the 
area of goods, which in his view meant that the SCM Agreement may be a source of inspiration, 
especially in relation to the definition of subsidy co ntained in that Agreement.  Of course, one could 
not lose sight of the specificities of trade in servi ces and the need to have disciplines that addressed 
such specificities.  Brazil's own anal ysis, for instance, had revealed that  the lack of clarity in rules of 
origin for services, combined with the different m odes of supply, would make it difficult to identify 
who actually granted a subsidy, which might reduce the value of disciplines.  However, the difficulties in developing disciplines should not discourage Members.  The growing level of 
liberalization in the sector would gradually underline the need of multilaterally agreed rules in order 
to deal with the trade-distortive effects of subs idies in services. Obviously, any discipline should not 
unduly interfere with the policy space of Members.  Th e exchange of information was a first step in a 
long and hard process.  By engaging in this ex ercise, Members contributed to implementing the 
mandate of the Hong Kong Declaration of 'more focused  discussions' in this area.  Brazil believed that 
such discussions would provide greater clarity on how to proceed if Members were to develop disciplines for subsidies in services.  
60. The delegate of Colombia
 stressed that his government's covered a large number and variety 
of programmes important for development policy.  The contribution followed the format agreed by 
Members over ten years ago.  It described how the support was granted, the requirements that needed 
to be complied with, whom the support was given to, and its magnitude when available.  As indicated 
in the introduction of the docum ent, most of the programmes made no express distinction between 
domestic and foreign services and service providers.  In several cases it could not be distinguished 
whether the programmes were intended solely for services or for goods.  He expressed his readiness to 
reply to any questions that Members might want to raise. 
61. Turning to more general comments, he thanked all Members, for the contributions made and 
specially those delegations that had provided de tailed information of significant content, the 
evaluation of which would allow the Working Party to progress in its discussions.  There were notable 
differences in the formats, in which the various c ontributions had been made.  In some cases, this 
rendered the discussions more difficult, and he wish ed to draw the Members' and the Secretariat's 
attention on the fact that this issue would require further work.  His delegation would request further 
support from the Secretariat on this matter. 
62. He thanked the delegation of the United Stat es for their questions contained in document 
S/WPGR/W/59 of May 2010.  These pertinent questions  showed the concerns that the United States 
had with respect to all the elements relating to  the definition of disciplines under the Agreement on 
Subsidies and Countervailing Measures.  Therefor e his delegation wished to continue working on 
these disciplines, once more comprehensive and comp lete information was received from the United 
States and others on their domestic support programmes.   
63. The representative of Switzerland  took the floor to make a few general comments following 
the statements of the delegations of Chile, India,  Colombia and others.  He expressed his delegation's S/WPGR/M/71 
Page 14  
 
  satisfaction with the work achieved under the au spices of the Work Programme, as contained in 
document JOB/SERV/1 of 28 January 2010.  The Work  Programme was an excellent first step for 
Members to prepare themselves for to the more subs tantial task of fulfilling the information-exchange 
obligation as defined in GATS Article XV.  He shar ed the point of view expressed by the Chilean 
delegation that the exchange of information on subsid ies was a continuous task.  This being said, he 
thought that Members were on the right path with the finalization of the Work Programme.  The latter 
had demonstrated that, despite the absence of an agreed definition of subsidies, it had been possible 
for a large number of Members to provide useful, inform ation in this regard – even if still incomplete.   
64. He acknowledged that, in line with the terms of  the Work Programme, the submissions were 
partial.  Most of them covered only certain sectors and certain types of subsidies.  Some Members had 
excluded subsidies with a social character, like h ealth and education, from their submission, whereas 
others had done exactly the reverse by covering only  subsidies with a social character.  The level of 
quality also varied between the submissions.  These  differences, however, though regrettable, were in 
accordance with the terms of the Work Programme, whic h granted this flexibility.  In the future, the 
gaps would need to be filled once Members woul d again operate under the purview of Article XV 
directly.  In line with the mandate of Article XV, his delegation's objective remained to obtain the 
information "concerning all subsidies related to trade in services" provided by Members to their 
domestic service suppliers.   
65. The delegate of New Zealand
 expressed her satisfaction with the increase in Members' 
participation in this mandated exercise.  There wa s a reasonable body of information before Members, 
even though the door remained open for delegations w ho may yet wish to submit information or to 
amend their submissions in the light of ongoing discussions.   
66. New Zealand's submission included information on grants and loans available in the areas of 
education, broadcasting including M āori broadcasting, film produc tion and business development.  
These were available, variously, on a sectoral or cross- sectoral basis.  All of the subsidies and grants 
cited were open to any company operating in New Zealand regardless of ownership, and were non-
contingent on export performance.  She felt that the information in the submi ssion was clear and self-
explanatory, and expressed her readiness to take qu estions from interested Members, preferably in 
writing in advance of any dedicated discussion 
67. The representative of the United States  explained that, in providing the information, his 
delegation had tried to give a re presentative picture of government  actions potentially within the 
scope of GATS Article XV.  As others had stated , this reporting should not  be understood to imply 
that any reported government measure was a s ubsidy either under the definition of the SCM 
Agreement, or under any eventual definition adopted by the WPGR.  That said, the measures reported 
involved both a financial contribution to a service s upplier and a benefit conferred, in the sense that 
the government had not directly received any clearly commensurate and quantifiable item of economic value in exchange. 
68. Rather than focussing narrowly on specific CP C subsectors, or generally on government 
programmes, his delegation had chosen an approach, which was both broad in scope and granular in 
focus, to provide the best picture possible in fu lfilment of the obligations under Article XV.  The 
report covered both the great major ity of government monies granted in services, as well as precise 
information on the legal context as described in the Chair’s Work Programme.  In addition, the 
submission provided exhaustive historical information on the identity of past recipients, as well as the 
dates and amounts received.  It did not cover just a few programmes, but hundreds (or perhaps 
thousands) of items of potentially relevant informati on.  This information was made available in an 
electronically searchable and sortable format so th at Members could identify desired information with 
precision.    S/WPGR/M/71 
 Page 15 
 
 
  69. In carrying out this exercise, as well as reviewing the information provided by other 
Members, his delegation had formed some preliminar y views on the distinction between subsidies in 
the goods and services contexts.  First, rather th an promoting "national champions" as often seen in 
goods, in services governments seemed to be focused  more on areas of market failure.  Second, 
whereas subsidies for goods tended to be directed toward domestic production, in services available 
information suggested that governments in many  cases seemed more willing to subsidise services 
provided abroad.  Third, while subsidies in goods we re frequently limited to national producers, in 
services they were often provided on a national treatment  basis.  Indeed, this seemed to be true even 
where Members had scheduled national treatment excep tions for subsidies.  Finally, his delegation 
was struck by the fact that subsidies did not seem  to be focused, in general, on the sectors often 
referred to as "infrastructure services." 
70. Looking at these trends in light of their own reported information, the representative noted 
that the United States' reporting included, in additi on to monies granted to US producers, in the areas 
of health services and research and developmen t services, over US$800 million granted to foreign 
service suppliers in the fiscal year 2009 alone.  Alth ough totals were not yet available for the fiscal 
year 2010, actions which might constitute subsidi es to service suppliers included almost US$4 million 
granted to the Indian Council of Medical Research  for research and development and health services 
focused on influenza, almost US$1.5 million to the University of Botswana to provide educational 
services in medicine and over US$1.8 million in subs idies to the government and university in Ghana 
for health and research and development services.  Almost US$5 million for subsidies to the national 
blood transfusion service in Kenya for health services and to give a local flavour, over US$500 000 
for research and development services to the Univers ity of Geneva related to pancreatic cancer and 
genetics.  These were just a few examples of all of  the various subsidies provided in fiscal year 2010 
and of course they were not all provided to fo reign service suppliers.  Many were provided to US 
domestic service suppliers.   
71. Finally, regarding the issue of trade distortion,  he noted that his delegation was still struggling 
with the concept of what it meant to "distort" a market in the areas where subsidies seemed to be 
focused.  For example, was it a market distortio n for a government to take an action to induce 
research and development service suppliers to focus on  certain issues?  These questions would need to 
be very carefully thought through if Members wished to move the discussion forward. 
72. The delegate of Chinese Taipei  recalled that he had introdu ced his delegation's submission 
(contained in JOB/SERV/1/Add.9) at the previous meeting.  The submission identified two subsidy 
programmes:  one on Preferential Loans to Pr omote Service Industry Development, which was 
scheduled to end in 2011; and the Private Univ ersities Development Promotion Programme.  He 
emphasized that all lawfully registered services pr oviders were eligible under these two programmes, 
including both domestic and fo reign-invested providers. 
73. The representative of Korea  referred to the submission contained in JOB/SERV/Add.8, which 
had already been mentioned at the Working Party's last meeting held on 28 September 2010.  In that 
context, she wished to correct the report of that  meeting regarding the information submitted by her 
delegation.  They had provided two examples of su bsidies: the first one was the FDIs and the second 
one was cash grants to bus companies.  Th ese were the two sectors separately mentioned. 
74. When submitting examples, her delegation trie d to focus on those subsidies that were 
provided to private enterprises that did not ser ve any governmental purposes and, secondly, on 
whether there was a specific financial contribu tion such as cash grants and tax reductions.  She 
observed that the information submitted so far s eemed to focus on subsidies in the health and 
education sectors, which were more of a public policy matter – as well as on public facilities, like 
airport transportation or water supply, which were more of a public facility subject to government 
procurement.  But she also identified many subsidi es that were provided more in general, to promote S/WPGR/M/71 
Page 16  
 
  cultural development, SMEs or regional developmen t.  Echoing the delegate of Hong Kong, China, 
she emphasized that subsidies provided for social services by the government or for services supplied 
in the exercise of governmental authority should not  be included and not be regarded as subsidies.  
Similarly, foreign aid was also different from subs idies discussed in this Working Party.  Yet the 
overall information on service subsidies gathered in the Information Exchange was very useful, and 
she hoped that Members would be able to discuss further the scope and definition of subsidies. 
75. The Chairperson
 thanked all Members who took the floor for their presentation.  She stressed 
that it had been a very useful and interesting exch ange.  The Working Party conducted the rest of the 
discussion under this agenda item in informal mode.  For the substantive part of Members' informal 
debate, the Chairperson would produce, under her ow n responsibility, a non-attributable summary.  
The summary would be circulated shortly after the me eting, and subsequently recorded in the minutes 
of the meeting.   
76. The Chairperson produced the fo llowing summary of the main points raised (also contained in 
RD/SERV/36).  
A. C OMMENTS BY MEMBERS REGARDING THE INFORMATION EXCHANGE ON SUBSIDIES  
77. Following the presentation by Members of their submission on information exchange on 
subsidies pursuant to GATS Article XV, the Chairper son switched to informal mode to open the floor 
for any questions or comments that Members wished to share, based on the submissions made to date. 
78. One delegation stressed that the Work Progra mme on Information Exchange had made an 
important contribution to future discussions regard ing the development of disciplines on subsidies in 
trade in services.  The level of responses was much higher than in the previous information exchange, 
showing that Members were now more committed to fulfil the mandate of GATS Article XV.  Based on the indications received on how subsidies were provided in services, many similarities could be 
drawn to practices in the goods' area.  This meant that the Agreement on Subsidies and Countervailing 
Measures (SCM Agreement) may be a source of inspir ation, especially in relation to the definition of 
a subsidy.  Nevertheless, one should not lose sight of the specificities of trade in services, and the 
need for any disciplines to a ddress such specificities.   
79. For instance, that delegation's analysis had revealed  that the lack of clar ity in services' rules of 
origin, combined with the different modes of supply, would make it difficult identifying the 
government that actually granted the subsidy.  Th is might reduce the value of any disciplines.  
However, such difficulties should not discourage Member s.  As the level of liberalization in services 
increased, the need for multilaterally ag reed rules to deal with the trad e-distortive effects of subsidies 
in services might become more evident.  Obviously, any discipline should not unduly interfere with Members' policy space.  The Information Exchange w as a first step in a long and hard process.  By 
engaging in this exercise, Members contributed to implementing the mandate of the Hong Kong 
Declaration of more focused discussions in this area. 
80. Another delegation expressed the view that it was di fficult, if not impossible, to draw definite 
conclusions from the responses received by Me mbers under the Information Exchange.  The 
information submitted was not required to be exha ustive, nor could it be, given the absence of an 
agreed definition of subsidies and the resource implic ations.  The delegation noted that subsidies were 
a policy instrument commonly used by Members.  While many programmes related to services, these 
were not necessarily the primary target in many cases.  The majority of subsidy programmes probably 
posed no major concern under GATS Article XV: for example, subsidies granted to public services 
including hospitals, schools, etc.  Those subsidies were normally granted either under the exercise of 
governmental authority or for leg itimate social objectives.  The challenge was to find a way to 
exclude such legitimate programmes from possibl e future GATS disciplines on subsidies, without  S/WPGR/M/71 
 Page 17 
 
 
  creating loopholes that could be abused.  This was an  area of work that the Working Party should 
undertake in the future.   
81. Secondly, the delegation observed that a num ber of subsidy programmes in Members' 
submissions were 'non-specific' according to the terms of the Agreement on Subsidies and 
Countervailing Measures.  Such programmes ranged fro m assistance for the building of infrastructure 
to subsidies for research and development.  In mo st cases, they did not target specific industries or 
enterprises, and the amount of subsidies granted w as generally small relativel y to the unit output of 
the industry or enterprise.  For these types of subsid ies, a very cautious approach needed to be taken 
when assessing their trade impact and deciding whether or  not to subject them to possible disciplines.   
82. Thirdly, many Members had region- or service-industry-specific schemes, for instance those 
related to regional development or supporting the audio-visual sector.  Those subsidies might take the 
form of direct grants or revenue foregone.  In many cases there were strong, or at least strongly held 
policy reasons for the support of the regions, industrie s or service sectors – such as the preservation of 
cultural diversity, or development needs of the industry or service sector.  These subsidy schemes 
were generally available to the whole industry or ser vice sector.  In contrast, subsidies specific to an 
enterprise seemed to be rather rare in Members' submissions.   
83. Finally, precise information or statistics on th e impact of subsidies seemed not generally 
available to all Members.  The difficulty in co llecting such data ought to be acknowledged.  To 
estimate the impact, one could assess the scale of the subsidies in absolute terms or relatively to the 
unit output.  In addition, it also mattered whethe r the subsidies were available to foreign service 
suppliers present in the territory, and how open th e market was to foreign service suppliers.   
84. The delegation concluded by ask ing two general questions.  Firstly, it was not always clear 
from Members' responses whether their subsidy schem es applied equally to domestic and foreign like 
services and service suppliers;  although, in some cases, the submission made it explicit that the 
benefiting enterprise must be a national one.  Secondl y, the submissions were not always clear as to 
whether the subsidies granted were contingent upon export performance.  The delegation therefore 
encouraged Members to elaborate on these two as pects when presenting their submissions.  The 
delegation stressed that the subsidy schemes cont ained in its own submis sion made no difference 
between domestic or foreign enterprises, and that they were not contingent upon export performance. 
85. Another delegation questioned some of the point s made in the preceding statement.  Firstly, 
regarding the position held that many of the subsid ies reported by Members were not specific, there 
was no agreement on what 'specific' meant within the context of services.  Indeed, some of the 
proposals put forward excluded any kind of provision related to specificity entirely.  But even 
assuming there were such provisions in the service s context, based on the information reported by 
Members, it was impossible to know at this junctu re whether the subsidies granted were specific or 
not.  Although they may not be targeted on their face to a particular industry, it was impossible to know whether, in fact, they were specific in effect  because targeted at partic ular enterprises.  That 
could only be known if Members reported exact recipients of their subsidies, and not merely the 
programme itself.   
86. Secondly, that delegation noted that, while not  making extensive arguments on this point in 
the market access context, it did have private sector  trade interests in the areas of both health and 
education.  Finally, as of yet, no principled way ha d been proposed to distinguish between subsidies to 
some sectors and subsidies to others.  Though some terms had been mentioned, like social goals or 
social goods, there was not yet such a basic distin ction.  Indeed government s often cited legitimate 
social goals in providing subsidies in the goods contex t.  However, a legitimate  social goal was not an 
exception, and there was no general exception in  the Agreement on Subsidies and Countervailing 
Measures based on the purpose of the subsidy. S/WPGR/M/71 
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  87. The Chairperson
 thanked all delegations for the very informative discussion.  It seemed that 
some Members needed more time to digest the in formation contained in the 18 submissions received 
so far.  In addition, there may be more submissi ons to come.  It was positive that several Members 
had indicated their intention to further supplemen t their submissions on subsidies, for instance by 
covering additional sectors.  Many Members had re called the mandate in GATS Article XV.  This 
debate had confirmed, in her view, that the Working Party needed to continue its work on this topic.  
She thus proposed to revert back to the dedicated  discussion on subsidies at the next meeting.   
88. To conclude this item and discuss possible next steps, the Chairperson  proposed to switch 
back to formal mode.  She recalled that, at the last  meeting, several delegations had suggested that the 
Secretariat carried out analytical work on the inform ation provided in the submi ssions.  At the time, it 
was suggested to reconsider this issue once Me mbers would have conducted their first dedicated 
discussion.  She suggested that Members and the Secr etariat come back to this question in informal 
consultations early January.   
89. Subsequently, she invited Members to turn to the Swiss proposal on export subsidy 
disciplines contained in the room document da ted 28 January 2010 (RD/SERV/4) and to the 
Communication from the United States entitled "GA TS Article XV: Questions for Members by the 
United States" (contained in document S/WPGR/W/59).  She first gave the floor to the proponent Members.   
90. The representative of Switzerland
 recalled that the Swiss proposal had been first introduced in 
early 2010.  Questions had been raised at that time,  which had all been answered.  Since then, no new 
questions had been received.  This might indicat e that the exploratory phase was over, and that 
Members might enter into a more active negotiating phase.  He also reminded delegates of the Swiss 
request for an expert on subsidies and countervailin g duties from the WTO Secret ariat to come to the 
Working Party and discuss elements of the Ag reement on Subsidies and Countervailing Measures 
related to export subsidies. 
91. The delegate of Canada  reiterated her position that, should there be a discussion of the SCM 
Agreement, it should also cover how  this Agreement came to be a nd of the kind of problems it was 
designed to address. 
92. The representative of the United States  expressed concerns about the proposed presentation 
by a Secretariat expert on the SCM Agreement,  given the frequently litigated nature of that 
Agreement.  It would thus be necessary to have some very specific guidelines in advance about what 
the Secretariat would say about the SCM Agreemen t.  Turning to the US Communication (contained 
in document S/WPGR/W/59), he noted that no respon ses had been received to the questions raised.  
He had not provided any answers to these questions  because he had none. Very few concerns had 
been raised by the private sector in  the area of subsidies in services. 
93.  The delegate of Japan  noted that the Swiss proposal w as based on the assumption that the 
subsidy disciplines for goods could directly be ap plied to services.  He expressed strong doubts about 
this assumption.  The disciplines for goods could perh aps be used as a reference, but they were not 
directly applicable to services.  It was also indi spensable, before discussing an y disciplines, to achieve 
a common understanding of the needs of bus iness for such disciplines, if any. 
94. The representative of the European Union  reiterated her question of why a mechanism such as 
the one suggested by Switzerland would be needed.  It would very much help the discussion to focus 
on a concrete case of export subsidy. 
95. The Chairperson  took note of the statements made and proposed that the Working Party revert 
to this matter at its next meeting.    S/WPGR/M/71 
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  IV. OTHER BUSINESS 
96. No topics were raised under this agenda item. 
 
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