RESTRICTED  WORLD TRADE  
ORGANIZATION  S/WPGR/M/52 
7 September 2005 
 (05-3887) 
Working Party on GATS Rules  
  
REPORT OF THE MEETING OF 20 JUNE 2005 
 
Note by the Secretariat
1 
  1. The meeting of the Working Party on GATS Ru les was opened by Ms. Clare Kelly, from 
New Zealand.  The agenda for the meeting, contained in WTO/AIR/2595, included the following 
items:  election of the new chairperson, emerge ncy safeguard measures, government procurement, 
subsidies, date of the next meeti ng, and other business.  To assist delegations in the preparation of the 
meeting, the Chairperson had prepared an annotated  agenda, contained in JOB(05)/115.  The agenda 
was adopted. 
2. The Chairperson
 recalled that at the last meeting she had asked delegations to reflect on what 
should be priorities for this year and how to implemen t them.  In the annotated agenda circulated in  
preparation for the informal meeting of 13 June , she had shared her personal assessment of the 
situation in the light of consultations undertaken with the assistance of the incoming Chairperson.  
Discussions on subsidies were still at an early stage and discussions on ESM and government 
procurement were characterized by important dive rgences of views.  Accordingly, no substantive 
progress had been made in moving closer to any co nsensus, and it seemed unlikely that much could 
be achieved if divergences in positi ons and levels of ambition were  not addressed.  A reality check 
was indeed important as delegations now needed to think in a pragmatic manner about what could be 
done over the remaining short period of time.  In that context, she had made some suggestions 
regarding possible areas of focus for this year.   
I. ELECTION OF THE NEW CHAIRPERSON 
3. The Chairperson  noted that it had not been possible to proceed with the hand-over of the 
chairmanship at the first meeting of the year.  Th e consultations undertaken by the Chairperson of the 
Council for Trade in Services, last March, had s uggested that Mr. Sumanta Chaudhuri, from India, 
seemed to enjoy the support of the whole membersh ip.  She proposed that the Working Party elect 
Mr. Sumanta Chaudhuri as Chairman of the Working Party on GATS Rules.  Mr. Chaudhuri was 
elected  by acclamation.  The incoming Chairpers on thanked delegations for their confidence and 
thanked the outgoing Chairperson for the work don e under her tenure.  Delegations expressed their 
appreciation for the outgoing Chairperson's efforts and dedication, and congratulated the new Chair 
on his election.   
II. NEGOTIATIONS ON EMERGENCY SAFEGUARD MEASURES (ARTICLE X) 
4. The Chairperson  recalled that at the last meeting UNCTAD had been invited to present to a 
study on emergency safeguard measures.  Ms. Mina  Mashayekhi, Head of the Trade Negotiations and 
Commercial Diplomacy Branch of UNCTAD, would in troduce this paper, which had been presented 
last March at UNCTAD's Commission on Trade in Goods and Services and Commodities.   
                                                      
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO.  S/WPGR/M/52 
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 5. The representative of UNCTAD
 said that the study, entitled "Emergency Safeguard Measures 
in the GATS:  Beyond Feasible and Desirable", had been authored by Mario Marconini, a consultant.  
The predisposition of the author was in favour of the inclusion of an emergency safeguard mechanism 
(ESM) in the GATS because it would improve the Agreement.  With appropriate provisions for 
special and differential treatment, an ESM woul d encourage progressive liberalization with due 
respect for national policy objectives by helping Members to sell the logic of GATS liberalization at 
home.  An ex-post instrument such as an ESM wo uld help to convince reluctant sectors to bind 
liberalization through commitments.  If the mech anism was adequate, it should make the GATS a 
more reliable and meaningful framework for libera lization.  The debate on an ESM in services had 
placed the burden of proof on those in favour of an  ESM, but if a similar burden of proof had been 
applied in relation to the Agreement on Safeguards and Article XIX of the GATT, there would be no 
safeguards in the area of goods.  The Europe Ag reements also containe d safeguard provisions.  
Accordingly, once the desirability was established, an ESM would become feasible.  The paper noted 
that while an ESM appeared to go against classical economic theory , the real world was different: 
governments needed to address adjustment costs, en sure orderly exit from a market and deal with 
impacts on employment.  Those losing out from li beralization needed to be brought on board by 
addressing imperfections in factor mobility; there was a need for breathing space to build capacities.  
Developing countries frequently lacked the regulat ory and institutional framework to address these 
issues in a GATS-consistent manner.  The case for an ESM was stronger in services because 
liberalization was a novel phenomenon and involved complex regulatory issues, which made it 
difficult to foresee the economic, social and developmental impacts.   
6. With respect to domestic industry, she noted that  differences in legal systems made it difficult 
to agree on common definitions.  Accordingly, the au thor had proposed that definitions of domestic 
industry, as well as the concept of like services, be left  to individual Members to decide.  This would 
be combined with stringent requirements, such as not ification.  National definitions would have to be 
notified at the beginning of the process and the reason for preferring one definition over another 
would have to be clearly specified.  The definitio n of domestic industry also related to mode 3, 
particularly the distinction between pre- and post-establishment, which raised questions about 
acquired rights, possible grounds for discriminatory treatment, and expansion of established suppliers' 
operations.  The paper argued that it was easier to apply an ESM at the pre-establishment phase because many countries would not want to force disinv estment.  With respect to modal application, 
the author recommended that an ESM apply to al l modes of supply so as to avoid imbalances.  
However, each mode faced specific problems.  For example, under mode  1, issues of enforcement and 
circumvention arose.  Regarding mode 4, some count ries had concerns about the possibility of abuse.  
She noted that the author proposed, in relation to mo de 4, the inclusion of provisions on special and 
differential treatment.   
7. In relation to indicators and criteria to en sure a stringent application of ESM, the 
representative of UNCTAD said that the focus wo uld be on a three-pronged investigation (import 
surge, injury or threat thereof, and causal link) based on the Agreement on Safeguards.  The author 
also proposed to apply an economic interest test and a public interest test.  Public notices and hearings 
as well as questionnaires to importers and other inte rested parties would guarantee a comprehensive 
analysis and thereby ensure that safeguards would not  be used for protectionist purposes.  In terms of 
applicable safeguard measures, she said that ther e was a convergence of views on:  applying an ESM 
on an MFN basis;  using the form of suspending specific commitments - possibly also in relation to 
Article XVIII;  resorting to such measures as subs idies, quantitative restrictions, or taxes, which 
would be least trade restrictive; and safeguard measures being temporary and degressive.  The paper 
noted that S&D treatment might, for example, provi de for renewal in the application of safeguard 
measures, greater duration of applicati on, non-application to mode 4, and a de minimis  clause.  The 
paper argued that compensation should be limited to unavoidable cases;  it would be best not to have 
compensation requirements, at least not in the in itial period of existence of an ESM.  Developing 
countries might be allowed not to compensate as a form of S&D treatment.    S/WPGR/M/52 
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 8. The author had tried to address a number of arguments made in the course of negotiations.  
Regarding lack of data, he pointed out that the pe titioning firm would usually be able to produce data 
to trigger the mechanism.  On ar guments that an ESM would entail costs for the invoking country by 
having negative economic impacts, the paper said th at countries should be able to determine for 
themselves whether or not policies would be harmfu l.  Regarding mode 4, the representative of 
UNCTAD said that commitments under this mode were  weaker than those under mode 3 and already 
had built-in safeguards.  An ESM might actually he lp to remove limitations on mode 4.  The paper 
also referred to the existence of economic needs te sts in schedules, which had equivalent effects to 
that of safeguards.  Regarding arguments on the burden of proof, she noted the lack of experience with an ESM.  A mechanism first had to be created, and it could then be tested and revised as greater 
experience was collected.  In terms of the modaliti es for ESM application, the paper mentioned three 
different approaches: a horizontal approach, whic h most developing countries supported and which 
was more in line with the GATS framework;  a re ference document, which would be optional and 
attached to national schedules, but which raised issues of bargaining power;  and a schedule-based 
ESM which might provide for the right to resort to  safeguards, but this would vary sector-by-sector 
and Member-by-Member and thus raised concerns of  fragmentation.  In terms of way forward, the 
paper emphasized that, in addition to contributions  from ASEAN Members, other contributions had 
been made and provided for simplified versions of an  ESM, such as for example Australia's model II.  
Constructive solutions were needed because an  ESM would improve the overall functioning of 
GATS, in particular given that the GATS lacked rules for antidumping and strong competition disciplines.  The key question was not whether the syst em should have an ESM or not, but rather what 
type of ESM was feasible and desirable to fit the aims and objectives of the GATS.  
9. The representative of Thailand
, on behalf of Brunei Darussalam, Indonesia, Malaysia, 
Myanmar, and the Philippines said that they genera lly agreed with the a ssessment made in the 
annotated agenda with respect to the three items  under the responsibility of the Working Party.  
Recent discussions had focused on the practicality of  a possible mechanism.  Doubts and concerns 
had been expressed over the availability of reliable sta tistical data at a sufficiently disaggregated level, 
the ways and means to keep track of cross-border transactions, the sort of measures applicable to 
mode 1, and determinants of 'like services'.  She did not believe that these technical and conceptual 
obstacles were insuperable.  Working with proxi es would allow to come to terms with them.  
Procedures were equally important.  Some Member s had invited her group of delegations to come 
forward with a set of commitments that they might  be willing to undertake if a safeguard mechanism 
existed.  She did not think this would be the mo st appropriate way to approach the question of 
emergency safeguards because it was based on power relations and because Members had different political and economic constraints.  Further, it was impossible to predict all possible eventualities.  
She preferred to approach the issue on the basis of ke y principles, such as the n eed for rules in a rules-
based system, as well as the analogy between trade in  goods and trade in services and the reasons why 
some suggested that the latter, which was more comp lex, should be deprived of a remedy that would 
make liberalization more manageable.  The repres entative considered that the lack of a single 
authoritative statement on whom an ESM would protect reflected the multiple purposes of a possible mechanism.  For example, it might aim to prot ect the domestic industry, diversify the economy, 
correct regulatory failures, and facilitate orderly ex it.  Purposes could be changing according to sector 
specificities, and might sometimes temporarily conflict with other policy goals.  Therefore, 
consultations were a very important element of future procedures in order to build confidence by 
being transparent about what was going to be done or not.   
10. Regarding future work, the representative said th at her group of delega tions was open to new 
ideas.  Certain issues had not been put into question so far, and these were key touchstones of a future 
safeguard mechanism: the first was that emergency safeguards should be applied on an MFN basis, 
consistently with the principle of non-discrimina tion in Article X;  second, the measures should be 
time-bound;  third, the show-just-cause obligation c ould in effect deter any potential abuse, as the 
burden of proof was upon invoking Members.  Article X could not be looked at in isolation, but put S/WPGR/M/52 
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 into the context of Article XXI procedures, as well as the negotiations under Article VI:4, on 
subsidies and on ENTs.  The UNCTAD paper cont ained recommendations that could be further 
reflected upon.  She agreed that political imperativ es made a strong case for an ESM;  this logic had 
never been called into question in the case of goods .  She believed that safeguards could also be 
positive economically by facilitating the adjustment process.  Therefore, the starting point should be 
what sort of ESM was practical and desirable in order to support the notion of progressive 
liberalization and make the GATS complete.  She agr eed that the impact of regulatory change induced 
by liberalization was very difficult to assess befo rehand.  By definition, unforeseen developments 
could not be predicted and trying to come up with  hypothetical examples did not seem relevant.  
Members tended to forget that safeguards were a te mporary recourse.  What mattered most were ways 
to enhance the transparency and predictability aspects of the mechanism through consultation or 
surveillance provisions. 
11. The representative of Malaysia
 thought that the UNCTAD paper was strongly supportive of 
the position that the group of ASEAN countries had put forward over the years.  The fundamental 
principle was the need to provide symmetry for both goods and services.  The Working Party should 
not deviate from what needed to be done, whic h was to address the goals and objectives behind an 
ESM.  She agreed with the consultant that ther e was no political will to advance the negotiations.  
Arguments about the need for concrete exampl es were a departure from the precedent of GATT 
Article XIX, where questions had been raised after the mechanism had been fully integrated into the 
multilateral system, and not before.  Currently, the GATS did not provide a sufficient safety net after 
commitments had been made.  Article XXI permitted a permanent withdrawal of commitments, but an 
ESM aimed at providing a temporary suspension while adjustment was made to address market 
failures.  Article XXI was the last option, not the first one, because it entailed a permanent 
modification of commitments, which would have negative impacts on fu rther liberalization efforts.  
The author's arguments on domestic industry were si milar to those of the group of ASEAN Members.  
The ideas in relation to S&D treatment were creative, in particular the de minimis  clause, the non-
application of ESM to LDCs, and the non-application of an ESM to mode 4 for developing countries.   
12. The representative of Pakistan  looked forward to further discussions on the various elements 
mentioned in the paper so as to be able to deve lop some type of mechanism in the future.  She 
appreciated the points made regarding the Agreemen t on Safeguards; it was incumbent on all to work 
towards the development of rules.  An ESM was to  address situations where no unfair trade practices 
were involved and where some foreign enterprises had fairly been able to dominate the field.  
Delegations had to see if some kind of protecti on should be provided to dom estic small and medium 
enterprises, which were particularly numerous in developing countries and LDCs.  The study was 
very useful in pointing out that provisions on S&D treatment could be used to ensure that such a 
mechanism would not be abused in the future, especi ally against developing country Members.  She 
hoped that UNCTAD could come up with more sta tistics on the extent to which the Agreement on 
Safeguards had been used; she suspected that safegua rd measures in goods were not used as much as 
anti-dumping measures, which were designed to coun ter unfair trade practices.  However, the GATS 
had no rules for unfair trade practices, neither for du mping nor for subsidies.  An ESM would be very 
useful for Members contemplating to liberalize and for those who already had liberalized in many services sectors.   
13. The representative of the United States
 thought that the UNCTAD paper was well written and 
quite interesting, but tended to oversimplify th e issues involved.  For example, while the GATT 
experience with safeguards was surely useful, th ere were fundamental differences between the GATT 
and the GATS.  One such fundamental difference was that the GATT had one mode of supply only, 
while the GATS comprised four modes of supply.  Another difficulty related to the intangibility of 
services.  These were basic and critical differences.  No safeguard mechanism had been included in 
the GATS because it was difficult to determine how it would work in the context of services.     
Article X had been developed so as to provide more ti me to analyse the issue.  It referred to "the  S/WPGR/M/52 
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 question of emergency safeguard measures", which was for a reason.  The only principle in Article X 
that guided the Working Party in this work was non- discrimination.  There was no consensus on other 
principles.  Most of the compromise options put fo rward in the paper were not consistent with the 
principle of non-discrimination, for example the proposals on domestic industry, on how to address modes 3 and 4, and on S&D treatment.  Regardi ng differences between the GATT and the GATS, the 
former was intended to cover all manufactured good s from the start, while the GATS used a bottom-
up approach and allowed for modification of commit ments and for some regulatory freedoms.  In her 
view, the examples seen so far did not deal with emergency situations.  She was not convinced that 
Members would do away with non-transparent ENTs or labour market tests if a way was somehow 
found to apply an ESM to services.  Therefore, such discussions only amounted to opening additional 
pandora's boxes.  She appreciated the argument presente d by the author that the flexibility of the 
GATS, in the absence of a safegua rd mechanism, might lead Members to be overly cautious about 
making commitments.  However, she had not been pe rsuaded that a case had been made for an ESM 
in view of what had been offered so far by way of  new commitments.  If the GATT approach were to 
be applied more faithfully, a pre-condition for a saf eguard should be that substantially all services 
sectors be covered by commitments.   
14. Wishing to focus on how a mechanism of this sort might actually work in practice, the 
representative noted that the paper seemed to cons ider the public interest provision as essentially 
equivalent to transparency provisions.  There seeme d to be a significant difference between what was 
described in the paper and the presentation by th e UNCTAD representative in terms of the economic 
interest and the public interest tests.  From the presentation, the examination of a causal link seemed 
to be precisely the same examination as contemplated by  the economic interest test, i.e., to investigate 
whether injury was caused by a factor other that an increase in foreign supply.   Moreover, to date, no 
safeguard measure under the GATT had ever been upheld under the WTO dispute settlement system, 
despite the relatively good state of  data available for investigations of increased imports of goods.  
Yet every panel that had looked into such investig ations had found data pr oblems that prevented it 
from upholding the action taken.  The paper seemed to gloss over this question by suggesting that data 
problems would not be serious, but they were a serious issue in the goods context despite better 
statistics.  How much more severe would this problem  be in the services context, given that the data 
was much less precise?   
15. The representative noticed that the paper said on page 6 that there were additional reasons 
why safeguards might be more relevant for services  than for goods, including the deregulation of 
important public services.  The author later went  on to argue that the GATT model could address 
relevant issues by finding an increase in supply, in jury and a causal relationship, but in the case of 
unforeseen effects from deregulation, the kinds of pr oblems encountered could include disruptions of 
supply, as opposed to an increase such as in the ca se of market failure.  Similarly, market failure 
might not result in injury to suppliers, but could in stead be beneficial to suppliers and harmful to 
consumers, for example, if poor market design enab led suppliers to capture excessive rents.  This 
suggested to her delegation that the GATT model mi ght not be very effective at addressing regulatory 
crises in the services context.  Her delegation was al so somewhat troubled by the way the paper failed 
to address how the causal link for each mode of supply could be established.   
16. The paper seemed to assume that it would be to  the benefit of developing countries to come 
up with a quick solution and dismiss a few other i ssues that needed to be ironed out, as opposed to 
taking time to negotiate and find out what was effec tive and what provided comfort to all Members.  
For example, the author seemed to say that since it was too difficult to develop a single definition of 
domestic industry, this should simply be left for e ach Member to decide.  He r delegation failed to see 
how such discretion could satisfy anybody.  Further,  such an approach was inconsistent with the 
principle of non-discrimination.  The question of  an ESM had been discussed for 10 years now and 
what was needed were insights on how to tackle the issues and concerns raised, as opposed to looking 
for an easy way out and relying solely on political will.  Her delegation could perhaps muster political S/WPGR/M/52 
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 will to use an ESM in certain sectors, but one had to be accountable to oneself in these negotiations.  
On S&D treatment, the paper suggested on page 23  that an ESM should not apply to developing 
countries' mode 4 exports.  She did not think that this proposal in anyway matched the concept of 
special and, in particular, differential treatment.  It  would not be acceptable to propose an ESM in an 
area where it was very difficult, even for the most de veloped countries, to produce data and to ensure 
enforcement, and where the procedures appeared to be more complex for developing countries.  The 
paper said that some developing countries had diffi culties in setting up regulatory procedures, but how 
would these countries then be able to set up the appr opriate procedures to use an ESM?  Further, the 
paper ignored the fact that even in the goods area Article 9 of the Safeguards Agreement did provide 
for S&D treatment, but with an implicit de minimis  rule.  No such rule was proposed here, which was 
strange given that the paper had ma de more general, albeit simplistic, comparisons to the goods area.  
She reiterated that S&D treatment might not be comp elling for services because the very nature of the 
GATS inherently lent itself to such treatment.  Regarding the points made by the outgoing Chairperson about the state of play and the need  for a reality check, she wished to correct the 
assumption that the Working Party was now under time pressure;  the negotiations on this issue did 
not have a deadline, as a distinct extension had b een negotiated.  If anything, proponents might make 
a case for the results to be captured in the current round.  She hoped that delegations would not resort 
to simplistic approaches by declaring that this was a matter of political will.  Valid issues had been 
raised and the answers provided by the proponents had been analysed very carefully.  However, in responding, the proponents had sometimes shot away fro m the target.  She feared that, on the basis of 
the proposals put forward, the only Members that would actually be able to use an ESM, should one 
be agreed upon, would be the more economically advanced countries.   
17. The representative of China
 thought that the in-depth analysis provided by UNCTAD helped 
clarify various misunderstandings.  The focus of cu rrent negotiations should not be on hypothetical 
cases, which would lead to endless technical disc ussions.  As in the case of the Agreement on 
Safeguards, an ESM in services was a policy issue ra ther than an economic concern.  The objective 
was to grant WTO Members sufficient confidence and useful leverage in further liberalizing their 
services sectors.  Experience in drafting and implem enting trade obligations in the goods area had 
demonstrated that it was much more important to grant Members recourse to ex-post instruments than ex-ante measures.  Only in doing so could Member s' doubts be dispelled and further liberalization 
commitments be taken.  A proper and feasible ESM should provide sufficient flexibility while at the 
same time observe rigid disciplines and standards.  It was necessary to respect Members' rights to take 
decisions according to their own national and sect oral situation, while establishing a code of 
acceptable standards and criteria at the multilateral level.  The current negotiation should go beyond 
the debate about feasibility and desirability.  A mu ltilaterally-accepted ESM with rigid standards and 
criteria would be far more predictable and balanced  than the prevailing quasi-safeguard measures such 
as ENTs which were favoured by so many WTO Members. 
18. The representative of Australia
 noted that the rules negotiations were complex and difficult, 
with many divergences of views and different levels  of ambition.  His delegation was still examining 
the paper by UNCTAD, but agreed with the former  chairperson's suggestion in paragraph 6 of 
JOB(05)/115, which suggested that it might be mo re constructive to discuss concrete examples of 
situations justifying the use of safeguards against the background of the commitments that a Member 
might contemplate taking in this round and of th e existing instruments available under the GATS to 
address such situations.  He announced that Au stralia was holding an ESM workshop for ASEAN 
Members, which was to take place in Bali from 13 to 15 July.  He hoped that the workshop would 
address many of the issues involved in a possible ESM  and that it would help equip participating 
officials with the skills and knowledge to  consider all relevant questions.   
19. The representative of Chinese Taipei , referring to the presentation by the representative from 
UNCTAD, noted with interest the comments sugges ting that once the desirability of an ESM was 
established it would also become feasible.  Regard ing the definition of domestic industry, it seemed  S/WPGR/M/52 
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 difficult to come up with a single definition for all Members and modes of supply.  Accordingly, the 
question of whom the safeguard measure would pr otect was particularly relevant.  In the goods 
context, the definition of domestic industry was quite broad, encompassing the concept of like or directly competitive products.  In services, it might  be up to the Member applying the safeguard to 
define the scope of protection under each mode.  Moreover, she noted that the paper by UNCTAD 
said on page 16 that an ESM in services should allow much room for the authorities to look into 
possible causes of injury other th an increases in the supply of foreign services.  The four modes of 
supply complicated the analysis.  Investigating authorities should clarify the mode of supply under 
evaluation and the safeguard measure should be speci fic to that mode.  While Members might have 
some discretion in applying a safeguard measure, in  the event of a dispute the burden of proof would 
be on the Member that had imposed the safeguard.  Further, she noted that the representative from 
UNCTAD had indicated that developing countries frequently lacked the regulatory or institutional frameworks, for example competition law, to address relevant issues in a GATS-consistent manner.  
While the UNCTAD representative had said that an ESM could address the GATS' lack of anti-dumping rules and of strong competition-related disciplines, these were different in nature from 
safeguards since they were not directed at unfair trade.   
20. The representative of Brazil
 considered that the paper from UNCTAD helped overcome 
several prejudices against the feasibility and the n ecessity of safeguard measures.  The paper was not 
simplistic, but clear and helpful in its suggestions.  Safeguards already existed in Members' schedules 
of commitments, as well as in offers.  A key issue w as how to deal with such a situation and how to 
balance the multilateral safeguards to be developed w ith the individual quasi-safeguards.  The lack of 
safeguard measures and, maybe, also of remedies against the unfair trade practices had clearly been a 
problem in the services negotiations.  A solution wo uld help contribute to achieving concrete results 
in these negotiations.  Concerning the intangibility of services, he observed that in some cases 
services imports could have very tangible effects,  for example in terms of affecting employment, 
developmental or technological policies.   The intangibility of services should not serve as an excuse 
not to develop safeguards to address those very tangi ble problems.  He noted that the quasi-safeguard 
measures included in schedules or offers were  non-emergency safeguards; in many cases they 
appeared to be systematic safeguards, such as ENTs , that could be applied without any proof and in 
the absence of data.  While it was difficult to achie ve a multilateral definition of domestic industry, 
the authorities had a very clear picture of the domestic industry when concrete problems arose.  This issue should therefore not serve as a deterrent to  negotiations.  His delegation intended to present 
shortly a paper on quasi-safeguard measures cont ained in schedules of specific commitments.  
21. The representative of Japan
 thought that the presentation by the representative of UNCTAD 
helped to better understand the arguments of the pr oponents of an ESM.  He wished to make a few 
points in reaction to previous interventions.  First, some had wondered why the GATS should not have a safeguard mechanism since the GATT had one.  He thought that the differences between goods 
and services were clear and significant.  In the good s area, safeguard measures were applied at the 
border, but in services they would be applied inside  the territory of a Member to companies which 
already had invested.  Therefore, the fact that safeguard measures we re available in the goods area did 
not substantiate the case for an ESM in services.  Se cond, a statement was made that there should be 
rules on safeguards because the WTO was a rule-mak ing organization.  The key question, however, 
was whether the proposed rules were desirable or  not; Members should make desirable and helpful 
rules.  Third, it had been said that the GATS lacked devices to deal with unfair trade, but at issue in 
these negotiations were measures to deal with fair tr ade.  Fourth, the point had been made that it was 
not fair to ask the proponents to present sectors where a commitment could not be made without an 
ESM because situations were unpredictable.  He did not think that such a stan ce helped to advance the 
negotiations.  If situations were tr uly unpredictable, it was impossible to know the appropriate rules or 
measures that might be devised to address them.  Like Australia, he asked the proponents to present 
concrete situations where a safeguard measure was needed.  Fifth, he was not comfortable with statements to the effect that this was a politi cal issue and that safeguard measures would give S/WPGR/M/52 
Page 8  
 
 Members comfort.  It was important to understand that safeguard measures in services would also 
give many Members and many service suppliers di scomfort.  While his delegation was ready to 
discuss issues in a substantive manner, general st atements regarding the comfort level provided by 
safeguard, as well as exchanges of political mess ages, would not help to achieve progress.   
22. The representative of Canada
 highlighted the differences with trade in goods as well as the 
experience regarding safeguards in the goods area.  Aside from its modal structure, the inherent 
flexibility of the GATS could not be ignored as well as  the challenges in determining injury or finding 
adequate data.   While a premis e of the paper seemed to be that an ESM would be helpful in 
overcoming political resistance to liberalization, all Members faced some political challenges when 
pondering liberalization, but an ESM was not the proper answer.  Solutions might rather lie in public 
consultations, outreach, and information sharing.  The author seemed to assume that an ESM was 
needed and that Members should not worry if it di d not work, if the methodology was questionable or 
if the data was problematic.  The assumption seemed to  be that such problems would be resolved over 
time, after the creation of an ESM.  This was a dangerous approach.  An ESM risked rendering 
uncertain the commitments undertaken under existing rules.  The representative felt that it might be 
useful to further consider the issue of the poten tial for circumvention by service providers if a 
safeguard was applied in one mode of supply.  Fo r example, a safeguard under mode 3 might lead to 
further service supplies through modes 1, 2 or 4.   Coming back to challenges in using the goods 
model, he was not sure how border measures might be applicable in the area of services.  Given technical complexities in the application of a safe guard, his delegation remained unconvinced of its 
desirability and feasibility in services.  The representa tive informally circulated  to delegations a chart 
on the application of safeguards in goods from 1995 to 2002, which showed that the number of 
investigations initiated went from 2 in 1 995 to 152 in 2002.  An investigation per se  had a significant 
chilling effect.  Regarding comments about caution in undertaking commitments, his personal view 
was that initial and revised offers already showed that Members were very cautious.  Members needed 
to conduct the necessary consultations before they  undertook commitments in any event.  He 
wondered whether UNCTAD could organize a meeting with the author of the paper. 
23. The representative of Hong Kong, China
 believed that many of the issues raised in the 
UNCTAD paper recalled very detailed and in-depth discussions that had taken place over many years 
in the WPGR.  A key problem was that delegations did not have answers for many of the issues.  In contrast, the paper appeared simplistic in assuming that  there were very clear answers to all questions.  
The author presumed that there was a case for ESM and then focused on the various technical aspects 
and on how some sort of political compromise might be  achieved.  One argument made in the paper to 
substantiate the case for an ESM in services was that such an instrument already existed in goods.  He 
echoed points made by ot her delegations on the deep differen ces between goods and services.  One 
element in that regard was the number, extent a nd structure of commitments.  On the goods side, only 
tariffs could be used as a means of protection a nd full national treatment was already provided for 
measures behind the border.  These aspects could no t simply be brushed aside as insignificant to the 
consideration of an ESM in services.  The paper also argued that an ESM was needed for political 
reasons.  However, political will was not one-sided, but had to come from all sides.  Proponents needed to specify the political problems they were facing.  The political will of other Members would 
then be needed to examine these problems and see how to address them.  If this issue was a political 
problem, the appropriate way to proceed seemed  to be along the lines of what the outgoing 
Chairperson had suggested in the annotated agenda.  The Working Party should not confine itself to 
solely look at possible mechanisms within Article  X, but rather examine the broader context and 
consider other alternatives that might help address the political issues that the proponents had raised.  
This might help to break the dead lock in the present negotiations.   
24. The representative thought that the section of  the UNCTAD paper entitled "true concerns" 
missed one of the most important concern, i.e., wh y there was a need for an ESM in the first place.  
This related to such basic questions as: for what  purpose would an ESM be used, from what would it  S/WPGR/M/52 
 Page 9 
 
 
 protect, whom would it protect, and by what means should protection be provided.  These 
fundamental questions needed to be addressed.  The concern not to create a monster, as mentioned in 
the paper, did not arise solely because of the potentia l complexity of a mechanism, but also because of 
the lack of a clearly defined purpose to benchmark the use and impact of any potential mechanism.  A 
monster was fearsome because nobody knew what it might do next.  Similarly, his delegation had 
concerns about an ESM because it did not know what it might be used for.  The experience in the area 
of goods clearly showed that it was extremely difficult to contain a monster once it had been let out of the box.  Accordingly, he would be extremely cautious to create something and see later what might be done about it.  The expression of political will should come through the presentation of real-world 
situations that might justify the use of an ESM.  Turning to the paper's mention of some past 
proposals made in the Working Party, he recalled th at the Australian proposal had two variants.  One 
was the core mechanism and the other was an approach  akin to a fast-track waiver-type mechanism.  
If delegations wished to look back at past contribu tions in order to search for alternatives, the latter 
option should not be overlooked.  Regarding co mments on quasi-safeguard type provisions in 
schedules and related concerns, he felt that the best  way to proceed might be to ensure that such 
provisions became less of a concern. 
25. The representative of the European Communities
 drew attention to the comment by the 
UNCTAD representative that an ESM might be n eeded because some countries did not have good 
competition regimes.  He also noted the remarks by  the delegation of Thailand on the importance of a 
rules-based system.  The EC was attached to the de velopment of necessary rules in the WTO, but such 
thinking was not shared by all Members and the rules agenda had diminished since the Seattle 
Ministerial.  Members should not attach importance only to one aspect of the rules agenda, including 
within this Working Party's agenda.  Delegations ne eded first to clarify the problem and see whether 
means were already available to address it.  If not, one would then look at what might be put in place 
and how it should look like.  Most likely, negotiato rs went through these steps when putting together 
rules on safeguards in the area of goods.  He thought that the UNCTAD paper did not care whether a 
problem existed or not.  There was a call for an ESM because one existed already for goods, without 
discussing the fact that the Working Party had b een unable to identify situations justifying a 
safeguard.  The paper further said that the lack of data was not an obstacle to the development of an 
ESM, but made it difficult to provide compensation.  He thought this was a contradiction and should 
be further explored.  Noting that the Europe Agr eements had been mentioned in the discussion, he 
recalled that these were part of a system of pre-in tegration and did not allow for the kind of flexibility 
enjoyed in the GATS.  The Agreements provided for full national treatment and full market access 
and included specific provisions to overcome the l ack of flexibility during a limited window of 10 
years.  After such time, the provisions could not be invoked.  He noted that the UNCTAD paper did 
not mention the concept of a limited window, whic h had been put forward by a group of ASEAN 
Members in 2004.  Further, while the UNCTAD pa per suggested that the concept of unforeseen 
developments did not need to be taken into accoun t, it remained relevant in the goods area since 
GATT Article XIX still applied.  The representative also  asked, in reference to the approach taken in 
the Europe Agreements, whether a safeguard me chanism would be necessary when a Member had 
already used the flexibility of th e GATS, for example by limiting the quantity of service suppliers.  
Alternatively, could safeguards only be applied in situations where a Member had undertaken either 
full commitments or very extensive commitments no t subject to quantitative limitations?  The paper 
also mentioned the financial crisis of the 1990s, a nd he wondered whether the author was aware of the 
Annex on Financial Services and the releva nt policy carve-outs it contained.   
26. Since the problem at issue had not been iden tified, it was difficult to know whether means 
were available to address it.  The GATS already contained many safety valves, and caution should be 
exercised in considering additional ones.  Concerni ng Article XXI, some delegations seemed to think 
that its use was limited to a definitive withdrawal  or modification of commitments, but this was not 
clearly supported by the relevant provisions.  It might be possible to modify commitments for a temporary basis; for example going from "none" to "unbound until 2011, none afterwards".  S/WPGR/M/52 
Page 10  
 
 Moreover, the paper said that degressivity woul d be difficult to implement and he hoped the 
UNCTAD representative could explain why.  With resp ect to S&D treatment, he failed to understand 
why there should be no compensation and why safegua rds on mode 4 should not be applied against 
developing countries.  Practically all mode 4 co mmitments were subject to quantitative limitations.  
Finally, the paper said that pre-approval was out of question and he wonde red why this possibility 
should be excluded.  Article XXI did not need pr e-approval, but provided for compensation, while 
waivers did not provide for compensation, but required pre-approval.  
27. The representative of Chile
 shared many of the concerns expressed by the delegations of 
Japan, Canada and Hong Kong, China.  The UN CTAD paper was based on a number of debatable 
assumptions, for example that an ESM would improve  the overall functioning of the GATS or that it 
would lead to more commitments.  She was concer ned about suggestions that  Members should simply 
adopt a mechanism, see how it worked and then improve upon it.  Experience with anti-dumping 
rules, for example, showed the difficulties and she did not want to go down the same path with an 
ESM in services.  The main issue was that the probl em had not been defined.  Like others, she hoped 
that the proponents could come up with some concrete  examples of situations justifying an ESM.  It 
might be helpful to ask regulators for information in that regard.  Most commitments in the GATS 
simply bound liberalization that had previously b een undertaken.  Such liberalization, before being 
bound in schedules, might have given rise to some situations justifying an ESM.  Rather than discussing in abstract terms, delegations might ask  their regulators how liberalization had proceeded 
and whether such situations had occurred, and then share such information with  the Working Party.   
28. The representative of New Zealand
 said that her preliminary views on the UNCTAD paper 
were similar to those heard ear lier from the delegations of the United States, Hong Kong, China, 
Japan, and Canada, particularly regarding the need  to develop good rules rather than to proceed 
quickly.  She agreed with Canada's suggestion to ha ve an informal meeting with the author of the 
paper.  Regarding the suggestion in the Chairper son's annotated agenda, her delegation had views 
similar to those put forward earlier by the delegatio n of Hong Kong, China.  If there was a political 
problem, the Working Party needed to look for pract ical political solutions.  The proposal to examine 
concrete examples against existing instruments would be helpful in that regard.  She had no problems 
with further discussions of technical issues of interest to proponents, but the burden for reinvigorating the discussion naturally lied with them.   
29. The representative of the Republic of Korea
 thought that today’s discussion highlighted that 
there was nothing new under the sun.  The issue ha d been discussed for 10 years and it was important 
to have a reality check this year.  Her delegation ha d concerns about applying an ESM to mode 3, if 
only because it would undermine investment.  In th e goods area, her country had applied safeguards, 
lost the ensuing dispute, and been subjected to  retaliation.  Her country also had successfully 
challenged other Members' safeguard measures in tw o years of dispute settlement procedures and it 
took another year for the measure to be lifted.  Her delegation was thus s till examining whether it was 
useful and appropriate to have safeguard measures  in services, but wanted to provide constructive 
inputs to the discussion.  Should an ESM be developed, some basic principles had to be followed: first, services should be liberalized as much as goods  trade; second, a mechanism should have strict 
procedures; finally, safeguards would have to be a pplied in a non-discriminatory manner.  On the link 
established in the UNCTAD paper be tween the need for an ESM and the lack of strong competition 
regimes, she thought that it was more important to solve the problem by improving competition 
regimes.  She also wondered about the differenc es between ENTs and an ESM, and why an ESM 
would be more needed than ENTs.   
30. The representative of the Philippines
 associated himself with the statement made by the 
delegation of Thailand, also on behalf of Brunei Da russalam, Indonesia, Malaysia and Myanmar.  He 
was grateful for the paper by UNCTAD, which cam e at a critical juncture.  His delegation was 
conscious of the political, technical and strategic c oncerns expressed in rela tion to an ESM, but upon  S/WPGR/M/52 
 Page 11 
 
 
 further reflection remained convinced that these ne gotiations were of fundamental importance.  He 
hoped that the paper by UNCTAD could be a soli d starting point for renewed discussions in the 
Working Party, in particular the proposal on de finitions coupled with stringent information and 
notification requirements, as well as proposals on S&D treatment whereby developing countries, for example, would be exempt from mode 4 safeguard s.  The recommendations in the paper were well 
reflected and recognized the complexities and difficulti es of services.  He did not wish to characterize 
UNCTAD's comparison of the GATT and the GATS as simplistic.  A more appropriate question might be whether the differences between goods  and services were deep enough to support the 
argument that there should be no ESM.  Ther e were strong political economy considerations 
underlying the proposal for an ESM.  Desirability an d feasibility issues had been held against an ESM 
over the last 10 years, but they were not insurmount able.  Desirability was a matter of both perception 
and choice.  What was desirable to one Member might  not be desirable to another.  It seemed more 
important to give Members the choice of using saf eguards or not.  This was a political and economic 
choice of sovereign governments that should not be  precluded through the non-inclusion of an ESM in 
the GATS.  On the question of feasibility, there was enough information that could provide a basis for 
resolving some difficult aspects.  His delegation hoped to table focused discussion papers on 
outstanding issues such as those identified by the outgoing Chairperson in her annotated agenda.  He 
was ready to continue to explore the potential for an ESM with a view to making liberalization more 
manageable to developing countries.  He took good note of Japan's urging to not confine discussions 
to political messages but to engage in substantiv e and productive technical discussions, as well as the 
concrete suggestions made by Chile and Hong Kong, China.  He did not pretend to possess all 
answers, but many delegations had much greater capacities and technical experience in services which 
might be harnessed toward solving many previous ly raised technical, legal or policy issues. 
31. The representative of Singapore
 noted that an overarching theme in the paper was the 
relationship between liberalization and the need fo r an ESM.  However, he stressed the different 
structure of GATT and GATS, with the latter being mo re flexible.  He wished to refer the Working 
Party to a paper that his delegation had tabled  in 1997 (S/WPGR/W/19).  Among other issues, it had 
highlighted that adequate mechanisms were alre ady present in the GATS and the WTO Agreement to 
address possible safeguard situations, including the WTO waiver provisions.  The delegation of Hong 
Kong, China had already alluded to a fast-track waiver mechanism.  As mentioned by others, many technical issues had not been resolved yet, incl uding the concepts of domes tic industry and acquired 
rights.  In approaching the ESM issue, his delegati on was informed by two pr actical considerations.  
On the export side, domestic services suppliers, which were largely SMEs, needed a stable 
environment to operate in foreign markets.  SMEs , unlike multinational enterprises, had less financial 
resources and know-how and often undertook significant risks in investing overseas.  Safeguards that 
limited the expansion of operations might frustrate  the business plans of these companies.  While 
Members might face challenges in selling liberalization domestically, there was a parallel challenge to 
ensure certainty for one's own suppliers.  A prope r balance was needed.  On the import side, it was 
important to keep in mind that foreign investors cr eated employment.  He drew attention to the section 
of his delegation's 1997 paper that discussed the impact of safeguards on economic welfare.  Unlike the GATT, the use of ESMs in the GATS could reduce the overall
 domestic output and employment.  
While the output of national serv ice suppliers would increase, the out put of foreign service suppliers 
might decline due to new restrictions.   
32. The representative of Switzerland  recalled her country's long-standing position on the issue of 
an ESM.  The UNCTAD paper claimed that an ESM w as needed to sell the logic of liberalization at 
home.  However, GATS commitments did not always co incide with the actual level of liberalization.  
The GATS enabled a Member to start by liberalizin g a sector at the national level only and monitor 
the effects, and finally consolidate the liberaliza tion under the GATS as and when appropriate.  This 
was an important aspect that had to be taken into account.  Further, like other delegations, she stressed 
the flexibility, including with respect to scheduling, provided by the GATS.  She also disputed the S/WPGR/M/52 
Page 12  
 
 assumption that the establishment of an ESM woul d carry no costs, if only because an ESM would 
render the legal environment less certain.   
33. The representative of Argentina
 thought that the UNCTAD paper would be helpful in 
advancing discussions in the Working Party.  His delegation was generally in  favour of a complete 
system of rules for trade in services.  However,  like others, he had doubts about the technical 
possibility of developing an ESM.  Regarding comment s by other delegations on the flexibility of the 
GATS, he suggested having a look at certain sector s to see whether an ESM might help in securing 
better commitments, for example in maritime transpor t and audiovisual services .  Regarding the latter 
sector, if such work was not done in the WTO, it would end up being done in other agreements 
administered by other international organizations.  
34. The representative of Turkey  said that his delegation had not made up its mind on the issue of 
an ESM.  Doubts persisted on whether an ESM was desirable and feasible.  His authorities lacked 
appropriate statistics in services, which also had implications for the assessment of trade.  His delegation was open to continued discussion of the issu e and thought that the existing flexibility of the 
GATS could be sufficient to tackle relevant situations.  The representative of Indonesia
 considered 
that the UNCTAD paper was a constructive contributio n.  He reiterated the importance attached to 
this issue, as earlier stated by the delegations of  Thailand and the Philippines.  An ESM provided a 
certain level of comfort to the domestic industry whic h was encouraged to take an active part in the 
liberalization process.   
35. The representative of UNCTAD  remarked that the paper mentioned not only the political 
need for an ESM, but also, on page 5, the adjust ment costs flowing from liberalization.  An ESM 
would deal with these temporary costs, for example negative impacts on employment.  Regarding data 
problems, she thought that these permeated all area s of services negotiations.  However, petitioning 
firms would be able to put forward data at the fi rm level, for example relating to the occurrence of 
losses, decline in profits or price reductions.  Th e burden would be on petitioning firms.  Regarding 
compensation, the paper said it would be difficult to  quantify substantially equivalent levels of 
concessions.  The ongoing Article XXI process woul d give some indication on how to do such 
calculations.  The public interest and economic inte rest tests should be seen as complementary.  The 
tests went beyond transparency because views expressed should be taken into account.  On the definition of domestic industry, the approach taken in the paper was not simplistic; it just took into 
account the fact that different countries had differe nt definitions.  Constitutional requirements could 
not be ignored.  Strict notification and transparen cy requirements regarding national definitions would 
prevent abuse and would not undermine the predic tability of GATS commitments.  With respect to 
S&D treatment, one suggestion in the paper was that consideration be given to non-application of an 
ESM to mode 4.  Regarding ENTs, she observed that  many had been scheduled without criteria and 
thus provided ample discretion, while an ESM woul d be based on strict indicators and criteria, and 
include a monitoring mechanism.  An ESM woul d thus be preferable to ENTs.  Concerning 
degressivity, the paper was in favour of this concept a nd, in this context, refe rred to varying levels of 
quantitative restrictions and subsidies.  The repr esentative concluded by indicating that she would 
convey questions and comments to the author of th e paper, and that UNCTAD would try to provide 
an opportunity for interested delegations to meet with him.  
36. The Chairperson
 hoped that delegations would be able to use the opportunity for an informal 
meeting with the author organized by  UNCTAD.  The representative of Japan  asked for further 
elaboration from the UNCTAD representative on th e differences between an ESM and ENTs.  The 
representative of UNCTAD  said that safeguards were supposed to deal with emergency situations that 
countries faced when opening up their market, whil e ENTs were ex-ante measures that acted as 
proxies for an ESM.  Currently, most countries scheduled no criteria for their ENTs.  They thus had provided full discretion to decide on establishment and expansion on a case-by-case basis.  An ESM  S/WPGR/M/52 
 Page 13 
 
 
 would be less amenable to abuse since it would arguably be accompanied by strict notification 
requirements, review processes, indicators and criteria.   
37. The Chairperson  noted that the core divergences that had been mentioned in the annotated 
agenda had again surfaced in the discussion.  At  the same time, he discerned some openness from 
both sides in terms of looking at new ideas and altern ative mechanisms.  Some suggestions were made 
to consider earlier models presented in the Work ing Party and examine real world situations of 
liberalization and any ensuing problems.  There wa s some support for the outgoing Chairperson's 
suggestion, in the annotated agenda, regarding the n eed for concrete examples of situations justifying 
the use of safeguards against the background of commitments that a Member might contemplate undertaking in this Round and of instruments pot entially available under the GATS to address such 
situations.  He invited the Working Part y to take note of comments made.   
III. NEGOTIATIONS ON GOVERNMENT PROCUREMENT (ARTICLE XIII) 
38. The Chairperson
 remarked that the European Communities had recently circulated a 
communication, S/WPGR/W/52, on a proposal for an Annex to the GATS on government procurement in services.  He invited delegations to focus their discussions on this contribution and 
also recalled the importance of a reality check in a ll three areas under the responsibility of the WPGR.   
39. The representative of the European Communities
 said that the communication aimed at 
identifying the structure of a GATS Annex on procedural rules for government procurement.  The annotated agenda of the Chairperson suggested th at efforts on government procurement might this 
year focus on aspects other than market access.  The latter topic had already been the subject of 
various contributions recently, but less time had been spent on procedural rules.  During the last 
meetings, some delegations had ca lled for deepening work on this asp ect, including on the basis of the 
Secretariat Note on Government Procurement Pr ovisions in Economic Integration Agreements 
(S/WPGR/W/49).  The delegation of Singapore had also noted, last November, that most of the agreements reviewed by the Secretariat contained rules covering a number of recurring topics, such as 
non-discrimination, valuation of contracts, technical specifications, procurement methods, 
qualification of suppliers, procedural rules regard ing invitations to participate, time limits for 
tendering and delivery, tender documentation, and awar d of contracts.  His delegation had tried to 
develop proposals for procedural rules on government procurement in services with respect to these 
topics.  The proposals were guided by some key principles: that the rules be simple, easy to understand and easy to apply.  This had led his dele gation to propose thresholds at the same level for 
all WTO Members.  While he had previously pointed  out that the flexibility of the GATS could allow 
each Member to set a threshold at the level it wish ed, some delegations had expressed concerns about 
a non-transparent and too complex system.  The use of common thresholds would provide for simplicity and transparency, and implied that many  procurement markets in developing countries or 
small economies would not be covere d by the relevant rules to be developed in the GATS.  His 
delegation had also taken due note of some delega tions' call for provisions on S&D treatment.   
40. Past discussions had suggested that Members pref erred that the MFN obligation in respect of 
government procurement apply to all sectors, including where no commitments had been made, along with the possibility of MFN exemptions and the incl usion of an exception relating to the plurilateral 
Government Procurement Agreemen t (GPA).  Regarding technical specification, qualification of 
suppliers, award of contract, and appeal procedures, he recalled the applicable rules in the context of 
Article VI of the GATS, in particular  paragraphs 2, 3, and 4.  It w ould be useful to consider specific 
rules applicable to government procurement in a ddition to those of Article VI.  With regard to 
valuation of contracts, procurement methods, time limits for tendering and delivery, and tender 
documentation, the communication put forward questi ons which should help define the procedural 
rules to be developed and suggested some options in that regard.  Noting the Chairperson's comments 
on the need for a reality check, he believed that the problem at issue was clear: a significant part of S/WPGR/M/52 
Page 14  
 
 services markets were not subject to the obligations of market access and national treatment.  In 
certain sectors, government procurement represente d more than 50% of business opportunities.  
Solutions appeared increasingly clear and it was desi rable and technically feasible to advance on this 
topic.  He hoped to focus discussions on procedural rules and on the structure and content of a possible GATS Annex on government procurement.  
41. The representative of Brazil
 recalled that the issue of government procurement had been 
dropped from the Doha Development Agenda in 2004.  While the topic might have proved of interest 
to some delegations who wished to postpone di scussion on issues of vital importance for the Round, 
such an exercise should not be repeated in th e area of services.  Negotiations on government 
procurement as suggested by the EC communication, did not fall under the mandate of Article XIII.  
Market access, national treatment and MFN clearly did not apply to government procurement.  The 
procedural aspects mentioned in the EC paper contai ned elements of market access and therefore also 
fell outside the scope of Article XIII.  His delegati on thus had serious concerns about the proposal for 
an Annex on Government Procuremen t.  In addition to the issue of  mandate, he had concerns about 
the points made in relation to Article VI and the idea of a negative list of entities.   
42. The representative of Canada  said that the paper was still being reviewed by her authorities 
and that comments would be made at a later stage.  The representative of Switzerland  said that 
government procurement in services was an important  topic and that the EC contributions formed a 
good basis for further discussions.  Part I, para graph 10 said that, according to studies conducted by 
the EC, no effective cross-border procurement took place below certain thresholds and that the EC 
therefore considered that all Members should apply th e same level of thresholds, regardless of the size 
of their procurement market.  She thought that it was a valuable idea to combine the general flexibility 
of the framework proposed with in creased efficiency and transparency in that regard.  She sought 
further information on the thresholds above whic h effective cross-border procurement took place.  
What did 'effective' mean in that context?  Did the EC propose to apply the same thresholds for all 
sectors?   Concerning Part II of the communication,  her delegation was ready to discuss procedural 
rules because these were relevant to ensuring ef fective opening of procurement markets.  The 
Secretariat Note S/WPGR/W/49 provided a useful sour ce of inspiration in that regard.  Paragraph 17 
of the EC communication said that valuation ru les should enable Members to identify whether 
services were the primary subject of a given gove rnment procurement contract.  She hoped the EC 
delegation could elaborate.  She also asked for an explanation of the terms, used in paragraph 19, 
"when technical specifications are drawn up in terms of functional performance".  
43. The representative of India  thought that the EC communication was not different in substance 
from that of May 2004.  He therefore reiterated pr eviously expressed concerns on the scope of the 
mandate under Article XIII;  paragraph 2 was guided by paragraph 1.  While the EC paper claimed to 
focus on procedural rules, it covered such a funda mental principle as non-discrimination, despite the 
exclusion of national treatment and MFN treatment through Article XIII.  Other elements such as 
valuation of contracts, procurement methods or i nvitation rules had been di scussed in the Working 
Group on Transparency in Government Procurement and strong concerns had been expressed in that 
context about the overly prescriptive character of such norms.  This had to be kept in mind.   
44. The representative of Chinese Taipei  wondered whether it would be appropriate to have 
different threshold levels for countries at uneven stages of economic development.  Moreover, she 
asked the EC to elaborate on paragraph 17 of th e communication, which said that valuation rules 
should enable Members to identify whether services were the primary subject of a given government 
procurement contract.   
45. The representative of Japan  remarked that paragraph (e) of Annex C of the July Package 
required Members to intensify their efforts to conclude the negotiations  on rule-making under GATS 
Articles VI:4, X, XIII and XV in accordance with th e respective mandates and deadlines.  He did not  S/WPGR/M/52 
 Page 15 
 
 
 understand why the delegation of Brazil thought that th e situation had changed as a result of the July 
Package.  He wished to come  back to the EC communication at the next meeting.   
46. The representative of Malaysia  echoed the statements made by Brazil and India on the scope 
of the mandate under Article XIII and on the fact  that, through the July Package, Members had 
dropped the issue of transparency in government procurement from the Doha Development Agenda.  
Elements proposed for discussion by the EC related to what had been discussed in the Working Group 
on Transparency in Government Procurement.  Sh e did not want to see these issues brought back in 
the WPGR.  
47. The representative of Hong Kong, China  said that he was open to discussing substantive 
issues without prejudice to the question of the ma ndate.  A protracted discussion on the mandate 
would not lead anywhere.  Nevert heless, he wondered whether a sugg estion had been made about the 
need to seek clarification or guidance regarding the specific mandate under Article XIII:2.  He was 
perplexed by some of the previous interventions, wh ich seemed to suggest that the mandate in Article 
XIII:2 was devoid of any content.  Turning to th e communication from the European Communities, he 
considered that some of the questions raised  previously, such as in JOB(04)/130, remained 
unanswered, including on the relationship between the proposed government procurement framework 
and the GPA.  Regarding the section of the EC co mmunication on non-discrimination, he took note of 
the suggestion that the MFN obligation should be ap plied across the board, which was consistent with 
the position of his delegation.  However, apart from the suggested exception from MFN treatment for 
the GPA, no solid argument had been made for ot her MFN exemptions for government procurement 
in services.  Judging from experience with current exemptions under Article II, including the past two 
MFN reviews, his delegation would be extremely h esitant to consider any such exemptions for 
government procurement, unless there were compelli ng reasons for doing so.  Any such exemptions 
would need to be carefully circumscribed and limited in their application.  Regarding thresholds, he 
supported the questions put forward by Switzerland.   He hoped that the EC delegation could put 
together a comparison between the provisions it had put forward so far and those of the GPA and of 
other economic integration agreements as identified in S/WPGR/W/49.   
48. The representative of the United States  echoed the delegation of Japan's comments 
concerning the mandate under Article X III, including in the context of Annex C to the July Package.  
She recalled her remarks in past meetings.  Turn ing to the EC communication, her delegation was 
hard-pressed to make a distinction between good s and services when dealing with government 
procurement.  In the context of the Tokyo Rou nd Agreements, goods were clearly covered as were 
services incidental to the supply of goods.  The GPA negotiated in the Uruguay Round drew no 
distinctions in the rules covering the procurement of  goods and services.  From her perspective, there 
was an interest in keeping the relationship of goods and services as in the GPA, despite the existence 
of the mandate under Article XIII.  She acknowledged the challenge in reconciling that mandate with 
that of the GPA.  In her view, Article XIII clearly  encompassed transparency aspects.  She took note, 
in particular, of paragraphs 10 and 23 in th e EC communication regarding transparency.  Her 
delegation was interested in further discussing specifically these elements.   
49. The representatives of China  and Indonesia  shared the concerns of Brazil and India on the 
interpretation of the mandate under Article XIII.  The representative of Indonesia believed that the 
scope of the mandate should be examined car efully before entering into negotiations.  
50. Reacting to comments made by the delegati ons of Japan and the United States, the 
representative of Brazil  agreed that Annex C of the July Package called for negotiations on 
government procurement and other rules areas within  the mandates provided by the GATS.  However, 
the communication by the EC did not comply with the relevant mandate.  He hoped that the United 
States and Japan would pay similar attention to ot her paragraphs of Annex C, namely the call for 
offers in sectors and modes of supply of interest to developing countries.  He also felt that some S/WPGR/M/52 
Page 16  
 
 delegations had earlier put into question what was mandated in Annex C and in Article X by saying 
that safeguard measures might not be needed.  Ar ticle X provided for negotiations and not for an 
examination of whether safeguards were desirabl e or feasible.  The mandate to negotiate on 
government procurement did not entail derogati on from paragraph 1 of Article XIII.  Nothing 
suggested that paragraph 1 was temporary in nature.   
51. The representative of Chile
 echoed the questions put forward by the delegation of Switzerland 
regarding thresholds.  She also wondered whether thresholds woul d differ for different government 
entities.  Concerning S&D treatment, she observed th at paragraph 12 included an example and invited 
the EC to provide others.  Regard ing MFN treatment, she agreed fully with the delegation of Hong 
Kong, China in relation to paragraph 15.  On the va luation of contracts, she requested clarification on 
the common rules mentioned in paragraph 17.  Finall y, regarding paragraph 19, she asked whether the 
EC wanted to engage in work additional to th at being conducted under Artic le VI:4, and under what 
mandate.     
52. The representative of Argentina  agreed with the delegations of Brazil, India and China 
regarding the scope of the mandate.  As pointed  out by the delegation of Hong Kong, China, a 
discussion of the mandate might not lead anywhere , but the same was true for the discussion of non-
mandated topics.  The Working Party was supposed to negotiate and not simply to engage into 
discussions for the sake of discussions.  The demandeurs  on this topic should aim to limit themselves 
to the mandate so that their communications might be met with interest.   
53. Reacting to the intervention by the delegati on of Brazil, the representative of the United 
States  said that her delegation was complying with Annex C of the July Package, including with 
respect to giving special attention to sectors and mod es of supply of interest to developing countries.  
Nothing in Annex C said that a Member had to respond to every single request.   Concerning     Article XIII, her delegation was con cerned about suggestions that the decision in the July Package to 
put aside the Singapore issue of transparency in  government procurement somehow affected the 
mandate under that Article, which was specifically r eaffirmed.  While her delegation might have some 
questions about Article XIII, she strongly disagreed w ith the view that transparency was outside of its 
mandate.  Nothing in the July Package took the notion of transparency out of the negotiations under Article XIII.  That said, she had indicated that he r delegation was struggling with the notion of how to 
approach government procurement in services given that, domestically, rules for goods and services 
were linked.  Concerning points made in relation to Article X, she did not think that discussions in the 
past 10 years on the question of emergency safegua rd measures amounted automatically to a mandate 
to negotiate an ESM.  Her delegation ha d thus fully complied with Annex C. 
54. The representative of the Republic of Korea
 was open to discussions on this issue regardless 
of the mandate.  She welcomed the focus on proced ures, but thought that elements of market access 
were also contained in the EC communication.  Concerning paragraph 18,  she wondered about the 
intentions of the EC in making links to the negotia tions on domestic regulation.  The representative of 
Pakistan  wished to associate her delegation with statements made by Malaysia, China, India and 
Brazil.  It was important to have clarity on this issue, especially since 50% of the activities in some 
services sectors related to procurement.   
55. The representative of Singapore  recalled his previously expressed views on Article XIII, 
including on the mandate.  He took note of th e suggestion in paragraphs 15 and 16 of the 
communication from the EC to address the relationshi p between the GPA and a possible Annex in the 
GATS.  This provided a good way forward.  On domest ic regulation, in partic ular paragraphs 18 and 
19, he asked the EC to give examples of the pr oposed additional provisions on technical specification 
and qualification of suppliers for government  procurement that might be needed.    S/WPGR/M/52 
 Page 17 
 
 
 56. The representative of the European Communities  believed that Article XIII was clear.  
Paragraph 1 said that obligations under Articles II, XVI and XVII did not apply to government 
procurement, which meant that all other provisi ons of the GATS already applied.  Paragraph 2 
contained a general mandate for ne gotiations on government procurement in the GATS, which, so as 
to be meaningful, related to Articles II, XVI and XVII.  He wished to associate himself with the 
position expressed by the delegations of the Unite d States, Japan and Hong Kong, China concerning 
the first intervention by the delegation of Brazil.   He also disagreed w ith the comment by the 
delegation of Brazil to the effect that a negative listi ng of entities would be contrary to the spirit of the 
GATS.  The EC had suggested to adopt either a pos itive or a negative list of entities.  Regarding the 
possibility of different threshol d levels according to stages of development, his delegation had 
considered such an approach.  However, some delegations had commented that it would be too 
complex.  Further, internal studies had showed that service suppliers did not make the effort to bid for 
a procurement contract in a foreign market below a certain level.  It thus seemed simpler and more 
consistent with business practices to have common th resholds.  In most agreements, the thresholds 
used were the same for all services sectors, except for construction where they were typically higher.  
One could thus envisage a higher threshold for co nstruction and a common threshold for all other 
sectors.  He did not want to prejudge negotiations by  suggesting what the specific levels should be.   
57. Regarding questions on valuation of contracts,  the representative said that the scope of the 
provisions would be limited to situations where se rvices were the primary subject of government 
procurement contracts.  The best way of determin ing the primary subject would be decided by the 
Working Party.  One option would be to focus on wh en services represented the majority of the value 
of a contract, but other options were possible.  W ith respect to comments by the US delegation on the 
distinction between goods and services, the repr esentative pointed out that, while the GPA's 
procedural rules covered both goods and services, it contained different schedules of commitments for 
goods and for services.  He did not see problems in  developing rules of procedures in the GATS 
which would be compatible with each Member's  domestic system.  Concerning the relationship 
between the GPA and the proposed framework und er the GATS, it would be necessary to have an 
exception from the obligation of MF N treatment so that commitment s undertaken by Parties to the 
GPA were not automatically extended to all WTO Members.  The communication also proposed the 
possibility to take exemptions to the obligation of MFN treatment.  It seemed appropriate to offer the 
possibility to take such exemptions since the need to do so when the GATS entered into force did not 
exist.  These exemptions would be subject to nego tiations.  With regard to  questions relating to 
Article VI, the communication had noted the possi ble usefulness of negotiations on domestic 
regulations for similar issues in respect of governme nt procurement, while indicating that there might 
be a need to develop rules specific to government pr ocurement.  The intent was not to bring aspects of 
Article VI:4 negotiations into the negotiations pursuant to Article XIII,  but rather to try to benefit 
from the former in order to develop rules adap ted to government procurement on, for example, 
qualification of suppliers and technical specification. 
58. The Chairperson  observed that, since the paper had been recently circulated, a number of 
delegations had expressed a desire to come back with  substantive comments at the next meeting.  The 
well-known and wide divergences on the scope of th e mandate, in particular whether it covered 
market access issues, had again surfaced in the discu ssions.  The EC had indicated an intent to focus 
on procedural rules, but some delegations said that  elements of the paper concerned market access as 
well.  Specific questions were put forward in resp ect of varying versus co mmon threshold levels, as 
well as in relation to the studies re ferred to in the communication.  Suggestions were also made 
regarding the need to further look at the relationshi p with the GPA.  Some de legations had also sought 
greater clarity regarding the links made to Article VI and hoped that  examples could be presented.  He 
proposed to revert to this paper at the next meeti ng and invited the Working Party to take note of the 
comments made.   S/WPGR/M/52 
Page 18  
 
 IV. NEGOTIATIONS ON SUBSIDIES (ARTICLE XV) 
59. The Chairperson
 invited delegations to consider the recent proposal from the delegations of 
Chile, Hong Kong, China, Mexico, Peru and Switzer land, contained in JOB(05)/96 on a provisional 
definition of subsidies in services.  It also calle d on Members, for the purpose of the information 
exchange under Article XV, to provide information in five sectors of their choice by November 2005.  
Delegations might also want to come back to communi cations circulated just prior to the last formal 
meeting which touched upon related issues, namely the Secretariat's synthesis of views expressed on 
the issue of definition, JOB(05)/4, and a comm unication from the United States on the information 
exchange, JOB(05)/5. 
60. In presenting the communication, the representative of Hong Kong, China  said that it 
followed up on previous discussions on the definiti on of subsidy, including the suggestion by the 
United States in JOB(05)/5 to agree provisionally on a basic definition as a first step to have a focused 
information exchange.  Many delega tions had expressed the view that the definition contained in the 
Agreement on Subsidies and Countervailing Measures (ASCM) could be a useful starting point for considering a definition for services.  Part of th e motivation for the paper was that the lack of a 
definition had been mentioned by some delegations  as reason for the chicken-and-egg problem that 
had plagued discussions under Article XV.  The lack of definition had also been cited as a reason for 
difficulties in fulfilling the mandate on information exchange.  The communication put forward some 
ideas to help move towards a working definition fo r the purpose of both the information exchange and 
further work under Article XV.  Such a working de finition should not prejudge any definition that 
might be adopted for the purposes of possible disciplines.  The communication did not presume that 
subsidies falling under the provisional definition s hould be disciplined or that they were trade 
distortive.  The provisional definition would facilitate  the information exchange, which in turn would 
facilitate Members' consideration of relevant issues.   Elements of the provisional definition contained 
in the annex to the communication were primarily  based on the ASCM, subject to some necessary 
adjustments in the context of services.  The communi cation thus retained the core notion of financial 
contribution, as well as the concept of price or inco me support.  On the issue of benefit or advantage 
conferred, the sponsors had largely followed the ju risprudence on the goods side.  The concept of 
specificity was also retained as part of the definition,  but without trying to define it in detail at this 
stage.  It should be further developed over time.  In  addition, the proposal referred to Article 1:3(a) to 
further define the scope of relevant measures, namely those taken by central, regional or local 
governments and authorities, as well as non-governmental bodies in the exercise of delegated 
authority.  The annex also included a list of circ umstances of financial contributions, with small 
adjustments in relation to the ASCM.  For example, point (d) referred to government services and the 
notion of general infrastructure was extended to include the provision of public services by 
governments; and point (e) referred to government purchases of services.  The working definition was 
not intended to be perfect, but to facilitate work  on information exchange and other substantive 
discussions.  The communication also suggested that Members provide information in five sectors of 
their choice by November 2005.  Failure to fulfil th e mandate for information exchange would be of 
major concern and would have to be brought up for further attention at higher levels.   
61. The representative of Japan
 compared the proposal by the group of Members with the 
previous one by the United States.  Though both st ressed the importance of narrowing down the scope 
of subsidies examined, they significantly differed in some respects.  The more recent one suggested 
that information be provided in five sectors, while the US proposal suggested that one or two sectors 
be selected.  As seen at the last meeting, it was difficult to get Members to agree on one or two sectors.  On the other hand, leaving it to each Me mber to choose relevant sectors might undermine the 
comparability of the data.  In contrast to the more recent proposal, the United States was concerned 
that a working definition close to that of the ASCM  would capture too wide an array of subsidies.  
The proposal by the group of Members therefore seem ed more user-friendly at the stage of collecting 
information, while the US proposal was more user-frie ndly at the stage of analysing information.  The  S/WPGR/M/52 
 Page 19 
 
 
 issue was to agree on the priority.  Regarding JO B(05)/96, he wondered how broadly the five sectors 
mentioned were to be defined: should they be picked out of the 12 sector groupings of 
MTN.GNS/W/120?  Further, was it necessary to co llect information exhaustively for each sector 
selected?  If so, it seemed very difficult to complete  this exercise by November.  He also wondered 
whether the elements listed in paragraph 8 were me ant to be exhaustive, since some elements might 
be missing.    
62. The representative of the European Communities  thought, in a preliminary manner, that any 
definition that might be developed for services would not be very different from what existed in the 
context of goods.  The definition of subsidy used w ithin the EC was the same for goods and services.  
While the first part of the provisional definition in paragraph 1 of the annex seemed clear, this was not 
the case for the last part, i.e., "on terms more favourab le than those available to the potential recipient 
or beneficiary in the market".  Even if the propo sed definition was meant to be provisional, the anti-
circumvention provision of the ASCM did not seem to have been taken into account.  Also, it was not clear whether the sponsors were calling for an exchange  of information or rather for a notification of 
all subsidies in five sectors.  His delegation had pr eviously said that notification should take place 
only once an agreement had been set up, not before .  The information exchange pursuant to Article 
XV should not be confused with a notification.   He wondered whether the sponsors of the 
communication would be able to offer by November a ll the information they were asking for.  In the 
EU, notification requirements comprised a de minimis  rule;  only subsidies beyond a certain level, 
where distortive effect might be considered to arise,  were notified.  It did not seem realistic to omit 
such a rule.  He recalled that the EC had concerns  regarding notifications, not information exchange, 
and said that information on subsidies in the EC c ould be found at: http://europa.eu.int/grants (for aids 
at the community level) and http://europa.eu.int/c omm/competition/state_aid/scoreboard (for aids at 
the level of Member States).   
63. The representative of Pakistan
 was interested in rules on subsidies in order to respond to 
concerns from domestic stakeholders when mark et access commitments were undertaken.  Subsidies 
by the home country of multinational service comp anies might artificially boost the competitiveness 
of these firms when operating abroad and negativel y impact upon small and medium size enterprises 
in the host country.  Regarding the communication,  she asked the sponsors whether the information 
exchange would be confined to those sectors wher e specific commitments had been made and where 
market access was being sought.  She thought that the burden of information exchange might be 
avoided where no commitments had been taken and where there was no competition with suppliers of 
other countries.     
64. The representative of El Salvador  did not think that the establishment of a deadline for the 
submission of information, as suggested in pa ragraphs 7 and 10 of the communication, was 
appropriate.  The representative of Turkey  considered that the concept of specificity found in the 
communication from the group of Members did not exist as such in the definition of subsidy in the 
ASCM.  Rather, specificity was used for the definition of the scope of a subsidy.  In the 
communication, specificity was one of the essential elements and it was therefore necessary to clarify 
its meaning so as to facilitate the information exchange.   
65. The representative of Thailand  felt that the proposed provisional definition was a practical 
approach given the lack of progress on the informa tion exchange mandated by Article XV.  The lack 
of a definition had made Members unsure of what in formation to share.  The proposed approach was 
flexible, as modifications were possible along the way.  She agreed that  the ASCM was a good 
starting point.  Regarding the definition in the a nnex, she had concerns about the exclusion of non-
specific assistance schemes from the outset, but unde rstood that this was a starting point and that 
sponsors might have wished to narrow down the sc ope to subsidies more likely to have trade 
distortive effects.  Concerning paragraph 2 of the annex, she wondered if th e term “non-governmental 
bodies in the exercise of delegated powers” included private bodies in the sense of S/WPGR/M/52 
Page 20  
 
 Article 1.1(a)(1)(iv) of the ASCM.  Finally, she thoug ht that elements contai ned in paragraph 8 would 
allow to obtain sufficiently detailed information to  better understand assistance programmes; analysis 
of potential trade distorting effects and the info rmation exchange could thus go hand in hand. 
66. The representative of Norway
 supported the outgoing Chairp erson’s assessment and thought 
that a reality check was highly needed.  There wa s merit in agreeing on a provisional definition of 
subsidy to advance on the information exchange.  As a preliminary comment, he was somewhat 
concerned about the proposed deadline of November  2005, just before the Hong Kong Ministerial.  
He asked the sponsors to clarify whether they were cal ling for a notification of subsidies by such date.   
67. The representative of Canada  remained sceptical that the con cepts and rules contained in the 
ASCM could be readily transposed to the services c ontext.  Some issues raised in the communication 
required further clarification.  While she supported conceptual consistency be tween agreements to the 
extent possible, services sectors were unique and di d not easily lent themselves to the determination 
of like services.  This gave rise to problems in su ch areas as the definition of domestic industry.  The 
use of the ASCM also presumed the existence of consistent and internationally-agreed sources of 
statistical data.  In the absence of such data, it would be difficult to assess the magnitude of any 
alleged subsidy and to engage in a meaningful in formation exchange concerning relative levels of 
subsidization.  The scope of any new definition of  subsidy, as well as any resulting disciplines, should 
not compromise policy imperatives in respect of access to, and delivery of, public services.   
68. The representative of Chinese Taipei  shared the view that it was unavoidable to touch upon 
definitional issues in order to have a focused inform ation exchange and consider possible disciplines.  
The same had applied in the goods context.  Th e development of a provi sional definition would 
encourage Members to share their subsidy informati on.  Regarding paragraph 1 of the annex and in 
particular the concept of specificity, she wondered if the sponsors could further elaborate.  In the ASCM, subsidies granted not only to particular sector s, but also to certain groups of enterprises, were 
considered specific.  She further asked about the level of aggregation of the proposed sectors and the 
number of subsidies to be notified per sector. 
69. The representative of Brazil
 anticipated some difficulties with the proposed provisional 
definition as well as the deadline of November 2005.   Like others, he hoped the sponsors would 
clarify whether they were looking for a notification or an exchange of information.  In approaching 
this debate, his delegation was guided by some pa rameters.  First, the ability to provide public 
services should in no way be harmed by any discipl ines.  Second, Article XV specifically provided 
additional flexibility for developing countries and this should be taken into account.    
70. The representative of China  saw the benefits of a provisional definition for the purpose of 
information exchange and further negotiations.  However, the limited capacity and resources of 
developing Members might cause some difficulties in collecting information on subsidies in a short period of time;  those more capable could take th e lead.  Regarding the annex, the representative 
hoped that item (c) of paragraph 3 could be made more specific a nd that a definition of "general 
infrastructure and public services" could be provide d so as to clearly differentiate with services 
provided in the exercise of governmental authority.  He also enquired how the sponsors wanted to address subsidies in sectors other than general in frastructure and public services when these were of 
no trade distortive effect such as subsidies gran ted in relation to universal service.      
71. In a preliminary manner, the representative of the Philippines
 thought that the information 
exchange would be an important basis for deve loping the necessary disciplines contemplated under 
Article XV.  However, given the time and resour ces implications, the process needed to be governed 
by a coherent framework so as to make it as useful as  possible to the negotiations.  With respect to the 
communication from the US, he wondered if the propo sed approach would be helpful for collecting 
and analyzing relevant information since services sectors seemed diverse and complex.  Regarding  S/WPGR/M/52 
 Page 21 
 
 
 JOB(05)/96, he wondered whether the sponsors had taken into account the concern expressed by the 
US that relying upon the ASCM definition for the information exchange might lead Members to list a vast array of potential subsidies.  Was it correct to presume that sectors not subject to any specific 
commitments would be included?  Would it be more useful to agree on the same five sectors for all 
Members?  While some Members might not have subsidies in these sectors, common benchmarks 
could nevertheless provide useful insights on su bsidies being granted, including on disparities 
between developed and developing countries.  He al so asked whether there was a particular relevance 
for the date of November 2005 which might be too s oon.  The challenge was to strike an appropriate 
balance between avoiding informa tion overload and having too little in formation to be useful.   
72. The representative of Guatemala
 favoured the use of a provisional definition in order to assist 
the exchange of information, without prejudging th e future development of disciplines.  Regarding 
paragraph 3(e) of the annex, on government pur chases of services, the representative of India  asked 
whether the sponsors saw any link with Article XIII of the GATS on government procurement.  With 
respect to paragraph 3(d) of the Annex, on govern ment goods and services, he asked the sponsors how 
this squared with the scope of the GATS, especially pa ragraphs 3(b) and 3(c) of  Article I.  Finally, he 
thought that the proposed deadline for the provision of information might prove very demanding, 
especially given the upcoming Ministerial Conference.   
73. While the communication used elements fro m the ASCM, the representative of Qatar  thought 
that its use was controversial and sponsors needed to  do more work on the definition.  The deadline of 
November 2005 was not realistic and c ould be decided upon at a later time.  Disparities in capacity to 
provide statistical information exis ted; many developing countries did not have readily available data. 
The characteristics of services, including their inta ngibility, did not seem to be properly captured by 
the proposed definition.  He supported th e comments made by Canada and Norway. 
74. The representative of Australia  saw the merit of a provisional definition which might help to 
overcome the chicken-and-egg situation.  There might be difficulties in applying the proposed 
definition in certain sectors, and Members might u sefully identify elements of the definition that 
would pose difficulties in that regard.  It was clear that for many Members the provision of 
information proved sensitive.  His delegation w as thus still reflecting on the proposal to submit 
information in five sectors and had some concerns regarding the November deadline.  This might not 
be the best way to build confiden ce in the process, and he wondered whether it would not be better for 
Members to provide generic examples wit hout identifying particular subsidies.   
75. The representative of New Zealand  said that her delegation was one of the few that had 
provided information in the 1997 exch ange on the basis of the ASCM definition.  In doing so, her 
delegation had been clear that it was not notifying subsidies, nor making assumptions about the transposition of the ASCM definition to services.  The provision of information had not proved very 
demanding in terms of resources, nor had it had adve rse or unanticipated results.  The representative 
of Singapore
 said that some commentators had noted that the GATS might not necessarily cover 
export-oriented measures.  He thus wondered wh ether the sponsors intended to cover subsidies 
granted in relation to exports.  Second, he full y associated his delegation with comments made by 
Canada and Brazil regarding subsid ies for public services, as well as with Brazil's reference to Article 
XV:1 on flexibility for developing countries.   
76. The representative of the United States  considered that the communication was a pragmatic 
approach to encourage progress in connection with the information exchange.  However, regarding 
the proposed provisional definition, his delegati on remained somewhat uncertain as to the kind of 
subsidies that Members might be expected to report.   For example, how might one report on subsidies 
in health care, education or public utility servi ces without providing an elaborate description of the 
domestic regulatory regime for these sectors, if these were to be part of a de finition.  While this was 
not to say that subsidies in these areas should be excl uded or not, further guidance would be needed to S/WPGR/M/52 
Page 22  
 
 narrow down the scope of the enquiry.  It could address the nature of subsidies to be reported, such as 
subsidies that could reasonably be considered to have  a direct effect on exports.  Focusing initially on 
such subsidies would advance work towards deve loping necessary disciplines in the area that mattered 
most.  Such a targeted approach would also make any exchange of information more manageable and 
productive.  He agreed with the sponsors of the communication that the substance of a provisional 
definition could largely be drawn from the AS CM.  However, as noted in his delegation's 
communication, there might be scope for appropriate changes.  He was not entirely certain about each of the changes that had been made to the ASCM  definition in order to produce the proposed 
provisional definition.  He wondered whether the speci ficity concept of the ASCM really applied to 
the provisional definition proposed.  The adjective sp ecific in paragraph 1 of the Annex only modified 
the terms financial contributions and this differe d significantly from the ASCM.  Even within a non-
specific subsidy programme, each financial contribution went to a particular firm and was by definition specific.  He thus wondered why specifi city would modify 'financial contribution', as 
opposed to 'subsidy' or 'programme'.  Further, the adjective specific did not seem to modify the terms 
'income or price support' and he wondered about th e intent of the sponsors in that regard.  With 
respect to paragraph 3 of the anne x, he thought that some changes to the ASCM terminology appeared 
to fundamentally change the meaning of the discip lines and might not be required by the different 
characteristics of services.   
77. The representative of Bolivia
 hoped that the sponsors could cl arify the scope of paragraph 
10(b) of the communication, where it was suggested  that Members provide information on subsidies 
in five sectors by November 2005.  The representative of Malaysia  sought clarification on whether the 
sponsors were contemplating a notification exercise or an exchange of information.  She had concerns 
about the deadline of November 2005.  She also drew  attention to paragraph 1 of Article XV, which 
recognized the role of subsidies in relation to development programmes of developing countries.   
78. The representative of Hong Kong, China  said that the sponsors of the communication were 
encouraged by the apparent interest in making substantive progress.  The proposal was squarely 
within the mandate for information exchange in Ar ticle XV:1 and did not imply a notification process.  
The information exchange had to be useful for the purpose of the negotiations, which was why the 
communication proposed some parameters.  He wa s interested in knowing whether any of these 
parameters, as set out in paragraph 8, were causing particular problem s.  He did not have strong views 
as to what five sectors should be selected or whether these sectors should be committed or not.  The proposal had emphasized that this was a matter of  choice for individual Members, at least for the 
purpose of starting the information exchange.  Given the different interests of Members, proceeding in 
such a way would yield information on a reasonabl y wide array of sectors to enable appropriate 
analysis and discussions.  Concerning public servi ces, the purpose of a provisional definition was to 
facilitate the information exchange and there w as no presumption that these subsidies were trade 
distortive or that they should be disciplined.  In  supplying information on subsidies, Members might 
also provide their views on subsidies that in thei r opinion served important public policy objectives 
and deserved special consideration in any subseque nt discussion.  With respect to the question put 
forward by the delegation of Singa pore on export-related measures, he thought that the US delegation 
had provided an answer by mentioning export subsidies in its communication.  He asked the 
delegation of Singapore to indicate what part of Article I of the GATS, which defined the 
Agreement's scope, precluded the discussion of subsid ies relating to exports of services.  He would 
come back to other questions raised, including on definition, at the next meeting.   
79. The representative of Singapore
 said that his comment was based on the observation that 
some commentators had suggested that the GATS'  four modes of supply covered import-related 
measures only.     
80. Taking note of delegations' comments in regard  to the proposed deadline of November, the 
representative of Hong Kong, China  said he hoped that delegations would indicate what they saw as a  S/WPGR/M/52 
 Page 23 
 
 
 reasonable timeframe, especially since the sponsor s of the communication were not proposing an 
exhaustive notification of subsidies in the cho sen sectors.  Regarding the intervention by the 
delegation of Singapore, he noted that the inte rpretation of the GATS was the prerogative of 
Members.  He wished to know whether Singapor e thought that the GATS only covered measures 
relating to the import of services and, if so , what was the basis for such a view.   
81. The Chairperson  suggested that delegations continue the discussion of this communication at 
the next meeting and invited the Working Party to take note of comments made.   
V. DATE OF THE NEXT MEETING 
82. The Chairperson  indicated that the Working Party would hold its next formal meeting during 
the next cluster of services meetings, the exact date  of which would be announ ced in due course.   
VI. OTHER BUSINESS 
83. The representative of Brazil  wondered why documents from the OECD had been made 
available for the meeting.  The Secretariat  said that this had been done at the request of delegations, as 
noted in the report of the last meeting.  The representative of Chile  recalled that her delegation had 
initially raised this issue because these OECD documents contained some examples of subsidies, even 
if many were not trade distortive.    
 
__________