RESTRICTED  WORLD TRADE  
ORGANIZATION  S/WPGR/M/54 
22 February 2006 
 
 (06-0763) 
Working Party on GATS Rules  
  
REPORT OF THE MEETING OF 10 FEBRUARY 2006 
 
Note by the Secretariat
1 
  1. The agenda for the meeting, contained in  WTO/AIR/2752, included the following items: 
emergency safeguard measures, subsidies, government procurement, date of the next meeting, other 
business, and appointment of the chairperson.  The agenda was adopted
. 
I. NEGOTIATIONS ON EMERGENCY SAFEGUARD MEASURES (ARTICLE X) 
2. The Chairperson  remarked that the state of the negotiations on this topic was well known to 
delegations.  After consultations, both his predecessor and himself had shared their views last year in 
that regard: there had been no significant progress in the negotiations, which had been characterized 
by important divergences of views.  No progress seemed likely to be made if the situation stayed the same and the gaps in negotiating positions and le vels of ambition were not addressed.  Delegations 
also needed to keep in mind that, while the thr ee topics under the responsibility of this Working Party 
had their respective timelines, the Ministerial Decl aration called for the broader services negotiations 
to proceed to a conclusion in 2006.  In that contex t, delegations should indicate what they realistically 
expected to achieve over the remaining period of time.  Some basic questions to consider might 
include the following: what avenues of work might be explored?  How might these contribute to improving the state of discussions in the Working Pa rty, to encouraging more focused exchanges, and 
to addressing the different concerns and sensitiv ities of delegations?  These remarks were also 
relevant for the other topics to be considered duri ng the meeting.  The Chairperson recalled that the 
Working Party had asked him, last September, to  undertake further consultations with regard to 
Brazil's questions on entries contained in the offers of some other Members that it considered similar to safeguards.  In his consultations, he had not de tected a change in positions.  While a Member was 
free to raise questions that it deemed relevant, view s continued to differ to a significant degree on the 
usefulness of addressing such questions in the Working Party.   
3. The representative of the Philippines
 introduced a room document co-sponsored by the 
delegations of Brunei Darussalam, Indonesia, Mala ysia, Myanmar, and Thailand.  The paper was 
intended as a basis for intensifying efforts to conclude negotiations under GATS Article X, as 
mandated by Ministers in paragraph 4(a) of Annex C to the Hong Kong Ministerial Declaration.  The 
paper dealt with a few central issues - not an e xhaustive listing - that had been raised in past 
discussions and that provided good starting points for further in-depth discussions of technical and 
procedural questions.  He recognized that at the e nd of the day there were also systemic and political 
questions that would need to be resolved.  The sel ected issues were: the concept of domestic industry, 
vested rights, determination of injury, modal i ssues, and special and differential treatment for 
developing countries.  For each issue, the paper attempted to highlight some of the concerns, 
questions as well as options with a view to arrivi ng at more convergence.  The options mentioned 
were not necessarily favoured by the proponents, bu t had been mentioned in previous discussions, and 
he hoped to hear reactions of delegations and receive suggesti ons on other possible options not 
                                                      
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/54 
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  mentioned in the paper.  He hoped that each of thes e issues could be tackled, and he underlined the 
role of informal exchanges in that process.   
4. In a preliminary manner, the representative of Pakistan
 noted that the room document 
provided a good basis for discussions by pinpointing ma jor areas on which there had been divergences 
and making useful suggestions.  The representative of Chinese Taipei  welcomed the contribution in 
the context of the call in the Ministerial Declara tion for more focused discussions on technical and 
procedural issues relating to an ESM.  She might comment further at a later stage. 
5. While the issue of desirability of an ESM rema ined to be addressed, the representative of the 
European Communities  thought that this did not preclude technical discussions, which were the only 
way forward for each of the three topics in the Wo rking Party.  Regarding domestic industry, his 
delegation disagreed with the possibility to have a non-agreed concept of domestic industry, where the 
definition would be left to each Member.  As mentio ned in previous meetings, this created conceptual 
and legal problems.  With respect to the first op tion suggested for special and differential treatment, 
he hoped to get clarification on why the injury would be different depending on the country from which the injury originated.  Why would one be allowed to take action if the domestic industry 
suffered injury from developed country exports, but not if the injury was caused by developing 
country exports? 
6. The representative of the United States
 thought that a focused discussion of technical issues 
was a productive way forward.  He shared some of the concerns expressed by the delegation of the 
European Communities, including on special and differe ntial treatment.  He might comment further at 
a later stage.   
7. The representative of Cuba  welcomed the room document, which would help advance work 
towards the establishment of an ESM.  In a prelim inary manner, she considered the suggestions with 
respect to special and differential treatment to be  sound, but, regarding option 1, she preferred the 
insertion of "should" instead of "may". 
8. The representative of Hong Kong, China  was ready to engage in more focused discussions on 
technical and procedural issues relating to an ESM , but was also expecting readiness on the part of 
other Members to similarly engage in the work on the other two topics.  He wished to make three 
preliminary comments on the paper by the group of ASEAN Members.  First, the discussion of technical and procedural issues did not supplant th e need to answer other fundamental questions 
which remained unanswered.  For example, whom was an ESM intended to protect?  Second, he was 
not sure about the statement in the third paragra ph of the section on vested rights, which said that 
most countries that faced the threat of damage fro m a surge of imports were developing countries.  
The paper seemed to limit its consideration to mode  3, but situations could be envisaged in other 
modes, especially mode 4, where damage from a su rge of imports could be  suffered by developed 
countries.  Third, regarding the first option under th e section on special and differential treatment, he 
was not sure whether the suggestion that a Memb er notify that it would not impose a safeguard 
measure on developing country exports was compa tible with the mandate in Article X, which 
provided that any ESM be based on the principle of non-discrimination.    
9. The representative of Brazil
 said that his delegation was willing to work with the sponsors of 
the paper in trying to sort out possible mechanisms that could be used by developing countries in 
these negotiations.   
10. The representative of Chile  thought that the issues mentioned in the non-paper would help 
focus discussions.  She agreed with the delegation of Hong Kong, China that a discussion of technical 
issues should not supplant the need to answer funda mental questions on the necessity of having an 
ESM.  Like the EC delegation, she had systemic c oncerns about self-definitions of domestic industry;  S/WPGR/M/54 
 Page 3 
 
 
  this could affect predictability and certainty.  With respect to modal issues, she still failed to 
understand how the proposed mechanism could apply in mode 1, let alone mode 2.  Concerning 
special and differential treatment, she shared the c oncerns expressed by the delegation of Hong Kong, 
China on option 1.  Regarding option 2, she was not sure whether the proponents were suggesting that 
the proposed assessment would be pe rformed at the multilateral level.  With respect to option 3, she 
wondered whether the proponents could specify the longer time-frames that they had in mind.   
11. The representative of China  appreciated the efforts made by the sponsors of the room 
document in heeding the call of Ministers for more  focused discussions in connection with technical 
and procedural questions.  She would comment at a later stage. 
12. The representative of Mexico  recalled that his delegation had consistently noted the 
importance of determining the necessity of such mechan ism.  With respect to modal issues, he thought 
that a discussion of the implications of the proposed  mechanism for mode 4 was overdue.  This was a 
fundamental issue.  Concerning special and diffe rential treatment, he asked the proponents whether 
the reference in option 1 to "a Member" was mean t to include any Member, be it a developed or 
developing country.    
13. The representative of Turkey  remarked that his delegation's view that an ESM was neither 
feasible nor desirable had not changed.  In a prelim inary manner, he noted that the lack of data in 
relation to the determination of injury was a key concern.   
14. The representative of the Philippines  wished to stress that his group of delegations was 
listening to the concerns raised and questions asked.  It was in this context that the proponents had 
initiated a series of informal exchanges among delegati ons.  Regarding desirability, he agreed that the 
non-paper and the process that the sponsors hoped to undertake this year was not intended to supplant 
the systemic and political questions that would need to  be addressed at the end of the day.  Regarding 
the option not to agree on a common multilateral defin ition of domestic industry, he recognized this 
might not be the ideal outcome, but it needed to be assessed in the context of a requirement to notify 
the Council for Trade in Services.  This permitted  to address issues of predictability and legal 
certainty in the sense that  Members would not  be allowed to come up with these definitions 
arbitrarily at the time of applying emergency safegua rd measures.  With respect to vested rights, he 
agreed with the delegation of Hong Kong, China th at the statement that developing countries were 
more likely to be faced with threats of damage fro m a surge of imports was made in the context of 
mode 3, as opposed to modes 1 or 4.  He would ta ke account of these comments in a future revision of 
the document.  Regarding special and differential tr eatment, he thought that this was an issue for 
informal exchanges; it entailed options to which the proponents did not necessarily subscribe.  These 
options had been raised in the past and should rema in on the table so as to enable a discussion of their 
practicality and relevance.  He noted significant differentiation occurred within the WTO and that it 
might be easier to differentiate in respect of ESM  because developed countries had greater regulatory 
capacity which might spare the need to use an ESM.  In relation to a question from the delegation of 
Mexico, he said that both developed and developi ng countries could notify their intention not to 
impose a safeguard measure on a developing country.  Members should not, in their efforts to meet 
the mandates on market access and domestic regula tion, overlook the mandate in paragraph 4 of 
Annex C, which was clear.  He hoped that other de legations could maintain an open mind and engage 
constructively in discussions.   
15. The representative of the United States  said that special and differential treatment provisions 
in the GATS would be very controversial.  Such  provisions had not been included because of the 
nature of the Agreement, which was meant to pr ovide flexibility for developing countries.  There 
would be a fundamental problem with the notion of sp ecial and differential treatment in relation to an 
emergency safeguard mechanism in services.  Desp ite Article 9 of the Agreement on Safeguards, 
there was some controversy also in the context of  goods, including because there was no definition in S/WPGR/M/54 
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  the WTO of a developing country.  Many questions w ould be raised in relation to the concept of S&D 
treatment, not only implications vis-à-vis  developed countries, but also for trade between developing 
countries, including in relation to mode 4.  Ca ution should be exercised, and it should not be 
presumed that S&D treatment was somehow accep table for an ESM in the services context. 
16. The Chairperson
 remarked that Members had generally  found it useful to focus on specific 
points that had been previously raised.  At the sa me time, the importance of broader questions relating 
desirability and necessity had also been stressed.  Given the late circulation of the document, 
Members would likely come back to it at the next m eeting.  He suggested that the Working Party take 
note of comments made.   
II. NEGOTIATIONS ON SUBSIDIES (ARTICLE XV) 
17. The Chairperson  observed that the Hong Kong Ministerial Declaration called for more 
focused discussions on subsidies, including on the development of a definition, as well as for an intensification of efforts to expedite and fulfil the information exchange.  Regarding the former 
aspect, Members had most recently discussed a communication from Chile; Hong Kong, China; 
Mexico; Peru; and Switzerland on a provisional defin ition of subsidy (JOB(05)/96).  With respect to 
the information exchange, Switzerland had, sin ce the last meeting, provided a response to the 
questionnaire (S/WPGR/W/16/Add.5).  The other four Members that had responded to this 
questionnaire a few years ago were Norway; New Zealand; Hong Kong, China; and Poland.   
18. The representative of Switzerland
 said that the document provided responses to questions 
relevant to the information exchange required unde r paragraph 1 of Article XV.  The document aimed 
to provide as detailed information as possible so as to reach a high standard of transparency.  It also 
included general comments explaining how the info rmation had been compiled, provided estimates 
for the year 2006 when possible, and mentioned th e sources used for providing responses, including 
websites.  The document adopted a broad definition so  as to cover as many types of services subsidies 
as possible.  It covered only subsidies at the federal level, and not at cantonal or municipal levels even 
if cantons had competence in some sectors.  He wa s aware that the obligation of information exchange 
in Article XV:1 related to all subsidies, including at sub-federal level.  Some sectors had not been 
mentioned either because no subsidies were grante d or because subsidization occurred at the sub-
federal level. 
19. The representative of Hong Kong, China  hoped that the information provided by Switzerland 
could set a positive example for other Members that  had yet to contribute to the information 
exchange, including those that had indicated ca pacity problems in compiling comprehensive 
information on their subsidy programmes.  He encourag ed others to start the information exchange on 
a partial basis.  While he wished to obtain some cl arifications on the response, he did not see that the 
purpose of the information exchange was to submit individual programmes to a detailed investigation, 
but rather to build a base that allowed for a sufficiently informed  discussion on the development of 
possible disciplines on subsidies.  He first wished to know if Switzerland had adopted any particular 
definition or criteria in deciding what programmes to  include.  Second, he enquired whether the listed 
subsidies were non-discriminatory, given that Sw itzerland had a carve-out for subsidies in the 
horizontal section of its schedule of specific commitments .  Third, he wished to clarify that subsidies 
relating to exports had not been excluded from the r esponse.  In some cases, such as programmes in 
the tourism sector, the information seemed to suggest some links to at least export promotion.  Fourth, 
he remarked that many of the subsidy programme s concerned public corporations and that some 
concerned institutions which were either private or  with quasi-government links, such as the Swiss 
Academy for Natural Sciences, the Swiss Tourist Asso ciation, the Swiss Federal Railways.  He asked 
whether Switzerland considered that these provided g overnmental services under delegated authority.  
Such considerations were particularly important for sectors such as education and health, which had 
not been included in the response.  The sensitivity of these areas was perhaps one of the main reasons  S/WPGR/M/54 
 Page 5 
 
 
  why Members were hesitant to embark upon an info rmation exchange exercise.  Quite a substantial 
part of public education and health was provided through direct grants to schools, hospitals and 
institutions which might be of a semi-private nature .  This raised the old debate about what was the 
scope of governmental services under the GATS and wh ether all public services, however defined by 
individual governments, might be covered by such  a definition.  For both the GATS negotiations and 
the discussions on subsidies it would be useful, even indispensable, for this issue to be clarified.  
Leaving it to individual interpretation or construc tive ambiguity might only reinforce some of the 
somewhat unjustified criticisms of the GATS by N GOs.  It might also provide excuses for those who 
prefer not to do anything in certain areas.   
20. The representative of New Zealand  expressed appreciation for the submission by the Swiss 
delegation and would revert to  it at a later meeting.   
21. The representative of the United States  noted that the Swiss delegation had used as a basis the 
definition contained in the Agreement on Subs idies and Countervailing Measures (ASCM) and 
wondered whether they had gained insights on the usef ulness of that definition in the services context.  
Noting that some sectors, such as health and e ducation, had been excluded from the scope of the 
response, he wondered why some health-related research funding had not been excluded as well.  
From that response, it appeared that domestic subsid ies were prevalent in public transportation, rail 
transportation, and museums and libraries, which did not seem to have significant trade implications.  
Unlike the delegation of Hong Kong, China, he was not sure that the response represented a practical 
way forward.  Switzerland had invested much work to provide very comprehensive information, but 
yet this did not include sub-federal subsidies, wh ich, as learned from experience in the goods side, 
was possibly where most subsidies were granted.  It was a daunting task to capture all that 
information.  If one were to report on every single subsidy programme, voluminous information 
would be produced, which might not be most useful, nevertheless, in evaluating trade implications.  
More focus should be put on where actual trade di stortions might occur.  He indicated that his 
delegation was working on a number of submission s, on information exchange and on a working 
definition.     
22. The representative of China  welcomed the contribution from Switzerland and hoped that 
those Members with greater capacity to collect info rmation on subsidies could share such information 
with the Working Party as soon as possible.  The representative of the Dominican Republic  hoped to 
get further information on the point raised by th e delegation of Hong Kong, China with regard to 
Switzerland's tourism programmes.    
23. The representative of Pakistan  asked, with regard to transport programmes on pages 24-26, 
for greater details on the form of the compensati on provided through the programme 'compensation of 
the combined traffic' and enquired whether some railway services were run on a commercial basis.  
With respect to the prog ramme 'investment in comb ined traffic' on page 25, she was looking for 
clarification of the sentence "with this subsidy, th e building of terminals for the combined traffic in 
Switzerland and abroad is supported".  From the in formation provided, many of the subsidies seemed 
benign in nature. 
24. The representative of the European Communities  observed that only five Members had 
responded to the questionnaire and recalled that his delegation had provided information through an 
informal note, if not through a response to the ques tionnaire, in addition to the information available 
on the internet.  The majority of Members, incl uding some of the proponents, had not exchanged any 
information.  He suggested that Members comm unicate to the Secretariat the information they 
deemed relevant, be it responses to the questionnaire or sources of information, including internet 
sites, where information on subsidies could be found .  Subsequently, the Secretariat could circulate a 
list with all such information.  Proponents would then be able to access the information that they 
needed to consult so as to be able to pr esent proposals for any necessary disciplines.   S/WPGR/M/54 
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  25. The representative of Thailand
 wished to make some general comments.  She observed that 
the degree of trade distortiveness was linked to the question of eligibility, namely whether subsidies 
were available on a non-discriminatory basis or  not.  Subsidies for research and development 
activities, for example cancer research, could have sp ill-over effects not only on the services side, but 
also on the goods side, depending on the recipients ' relationship with pharmaceutical firms or private 
hospitals.  The type of juridical persons involved mi ght also matter in defining the scope of any future 
disciplines. 
26. The representative of Switzerland  said that the definition used in preparing the response was 
broadly based upon the ASCM.  The term 'subsidy' as used in practice in Switzerland appeared to 
generally overlap with the definition used in the ASCM.  Regarding questions on sectoral coverage, 
he indicated that the response had not excluded part icular sectors.  Nothing in Article XV suggested 
that some sectors could be excluded.  All subsid ies at the federal level in all sectors had been 
included.  Some sectors were not mentioned eith er because no subsidies were granted or because the 
subsidization occurred only at sub-federal level.  Regarding the latter situation, paragraph 7 of 
S/WPGR/W/16/Add.5 mentioned some sectors where this  mainly occurred (i.e., education and health 
related and social services) and provided some expl anations.  Regarding questions by the delegation 
of the United States on cantonal subsidies, he was fully aware that the obligation under Article XV 
covered all subsidies at all leve ls of government.  For the moment, he did not have a full set of 
comparable information for cantonal subsidies, bu t he took note of the interest expressed by 
delegations and would continue to consider the issu e.  Regarding discrimination, he clarified that 
subsidies were non-discriminatory; any company with in Switzerland was eligible without regard to 
nationality.  In response to a question from the dele gation of Hong Kong, China, he indicated, even if 
the purpose of discussions was not to explain schedul es of commitments, that his country's schedule 
contained a horizontal exclusion for subsidies under m odes 1 and 2.  This was to ensure that service 
suppliers outside the country would not claim a right to subsidies, although he also drew attention to 
the Scheduling Guidelines in that regard.   
27. In response to another question from the delega tion of Hong Kong, China, he clarified that 
export subsidies had not been excluded from the res ponse.  Subsidies in the tourism sector included 
the promotion of tourism in Switzerland, including vis-à-vis  foreign potential consumers.  With 
respect to the recipient entities, his delegation had tried to approach the response to the questionnaire 
very broadly and might have overshot , but he had wanted to reach a high standard of transparency.  
Such an approach was preferable  to not saying enough.  Some subsidies were indeed granted to 
municipalities.  These were listed so as to fulfil th e obligation in Article XV as well as possible.  
Concerning the questions from Pakistan, he first indicated that in order to make combined traffic possible, a large infrastructure was needed at both e nds of the combined traffic line, which started and 
ended at the north and south borders of the country .  The word 'abroad' in the programme description 
referred to the fact that some of the infrastructur e was on foreign territory.  With respect to railway 
services, he said that Switzerland had a national railway company, as well as a few local private 
companies.  Compensation for combined traffic took the form of co-financing of equipments for combined traffic;  this was granted to the Swiss National Railways and to companies with concessions.  On the suggestion that delegations  communicate to the Secretariat sources of 
information on subsidies, he wondered whether the European Communities' view was that this would 
fulfil the information exchange foreseen in Article XV or complement it.   
28. Turning to the definition of subsidies, the representative of Hong Kong, China
 wondered how 
best to build upon previous discussions, including on the communication from Chile, Mexico, Peru, Switzerland and his own delegation (JOB(05)/96), as well as on the Secretariat's synthesis of views on the definition of subsidies (JOB(05)/4).  He noted  that Switzerland had faced no significant problems 
in using the ASCM definition for information exch ange.  A definition was not meant to be perfect 
from the outset, but was rather to be refined gradua lly in light of experience, including in relation to 
the information exchange and the possible devel opment of disciplines.  Discussions on definition  S/WPGR/M/54 
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  were no substitute for the mandated work to exchan ge information.  He welcomed the suggestions 
from the delegation of the European Communities to make known, through the Secretariat, the 
availability of information on subsidies on the inte rnet.  Past discussions on definition seemed to 
focus on the differences between the provisional defi nition put forward by hi s group of delegations 
and the ASCM definition.  While many thought that the ASCM was a useful starting point, the need 
to make certain adjustments in the context of services had also been widely acknowledged.  For 
instance, a question had been raised as to why the provisional definition mentioned the concept of 
specificity in relation to financial contributions, bu t not other forms of income or price support.  He 
remarked that the sponsors of JOB(05)/96 were not  sure how the latter notion would apply in the 
services context, especially since there was limited jurisprudence on the goods side on this particular 
issue.  They had therefore opted for a more cauti ous approach.  This illustrated that in developing a 
working definition for the information exchange and the elaboration of disciplines, delegations should 
not be too perfectionist; the definition woul d evolve on the basis of discussions.   
29. On future work, his delegation wished to continue discussions on the development of a 
provisional definition, building upon the synthesis of views as well as subsequent discussions.  He had 
three specific suggestions in that regard.  First, he  suggested that the Secretariat update JOB(05)/4 so 
as to reflect subsequent contributions and discussi ons.  Second, since many questions focused on the 
differences between the ASCM definition and the pr oposed provisional defin ition, the Secretariat 
could prepare a background Note to compare these two definitions, drawing from jurisprudence on the 
goods side.  Third, these two documents could lead to a more focused discussion at the next meeting 
so as to clear up any remaining technical questions  about the provisional definition, including any 
refinements and adjustments that might be necess ary.  Hopefully, it could be used as a working 
definition for the information exchange and for further discussions on the development of possible disciplines.  While the information exchange remain ed the most important source of information for 
the negotiations of disciplines, the Working Pa rty should not loose sight of other sources of 
information that had previously been menti oned, including studies by other international 
organizations.   
30. The representative of Pakistan
 lent support to the proposals for Secretariat work.  Many 
developing countries did not have the necessary expertise or resources to do such work.   
31. The representative of the United States  was concerned that the changes to the ASCM 
definition proposed by the sponsors seemed more driv en by legal or philosophical interpretations of 
the ASCM than by specific ch anges necessitated by the services context.  His delegation was 
preparing further comments on this question and it seemed premature to consolidate contributions.  
He considered that the suggestion made earlier by the EC was interesting and his authorities would 
give further thought to it.   
32. The representative of Hong Kong, China  clarified that his first proposal was for an update of 
JOB(05)/4.  The second proposal was to compare th e proposed provisional definition with the ASCM 
definition and to draw upon the experience with th e relevant jurisprudence on the goods side.  The 
intent was not to transpose the ASCM ju risprudence to the services context.   
33. The representative of the United States  said that at this time her delegation could only 
contemplate an update of JOB(05) /4.  Her delegation's views on re ferences to other agreements' 
jurisprudence were well known.  Interpretations of the ASCM could be dealt with in the relevant 
WTO body.   
34. The Chairperson  proposed that the Secretariat Note JOB(05)/4 be updated to reflect 
subsequent discussions and communications.  He al so took note of concerns expressed regarding the 
second proposal for work by the Secretariat.  The document to be updated would remain a JOB document.  The Chairperson proposed that the Working Party take note
 of comments made.   S/WPGR/M/54 
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  III. NEGOTIATIONS ON GOVERNMENT PROCUREMENT (ARTICLE XIII) 
35. The Chairperson
 recalled the points he had made at the outset of the meeting on the need to 
focus work in a realistic way that took into acc ount the short timelines and the state of play.  
Delegations might therefore ask themselves what was the best thing to do, at least on a provisional basis, and where there might be a degree of conve rgence.  He asked Members to avoid restating well 
known views.   
36. The representative of the European Communities
 recalled that the Hong Kong Ministerial 
Declaration specified that Members should enga ge in more focused discussions on government 
procurement and, in that context, put greater emphasis on proposals by Members.  Through four communications (S/WPGR/W/39, S/WPGR/W/42, S/WPGR/W/48 and S/WPGR/W/52), his 
delegation had put forward concrete  and constructive proposals.  Fu rthermore, the delegations of 
Singapore (JOB(03)/216) and of Hong Kong , China (JOB(04)/130) had submitted two 
communications on this topic.  It was now rele vant to focus discussions.  Before responding to 
questions previously asked regarding the latest communication from the Community, he wished to 
recall the elements that were on the table and that , in conformity with the Hong Kong Declaration, 
formed the working basis.  Proposals had been ma de on a framework for government procurement in 
the GATS, on how commitments on government pr ocurement could be in serted in schedules of 
Members, and on procedural procurement rules that could be developed within GATS.  In addition, 
the Secretariat provided useful contributions on  government procurement provisions in economic 
integration agreements (S/WPGR/W/44 and S/WP GR/W/49).  These provisions covered some 10 
topics which could form part of an Annex to the GA TS on procedural rules.  The Secretariat had also 
prepared a Note on main approaches to the sche duling of commitments on government procurement 
in economic integration agreemen ts (S/WPGR/W/51).  The Note showed how such commitments had 
been undertaken and provided a concrete basis for discussing guidelines in the GATS.  It was time to 
clarify objectives and use all available information so as to conclude this negotiation before the end of 
the Doha Round.   
37. The representative wished to react to comments previously made in relation to the latest 
communication from his delegation, S/WPGR/W/52, on rules of procedures that could form part of an Annex to the GATS.  On the question of threshol ds, a question had been raised on whether these 
should be defined in relation to the size of the dom estic services market, with different thresholds on 
the basis of the level of development of Members.  He considered that his delegation's proposal was 
very flexible and enabled Members to choose the thresholds they thought appropriate.  However, 
experience had shown that companies were not inte rested in services contracts abroad below a given 
value.  There was therefore a minimum level which w ould not need to be varied.  Above that level, 
the interest in defining harmonized thresholds wo uld lie in its simplicity and coherence, but the 
question remained open and his dele gation had no objection to discussi ng a modulation of thresholds.  
With respect to S&D treatment, it had been suggest ed that developing countries be allowed to use 
such mechanisms as offsets or other forms of industrial co-ope ration in conjunction with their 
commitments on market access.  His delegation had indeed proposed that the flexibility inherent to 
the scheduling of commitments, e.g., selection of sectors and of entities, possible selection of thresholds, be accompanied by this type of m easures.  The Annex would have to specify the 
conditions under which they could be used, and his delegation was open to proposals from developing 
countries in that regard.   
38. Concerning non-discrimination, it had been underscored that an additional column in the 
schedules might not permit to simultaneously address questions of market access and national 
treatment.  He recalled that his delegation's co mmunication of May 2004 had provided a number of 
examples showing how government procurement commi tments could be undertaken.  The column for 
commitments on government procurement would have  to be read in conjunction with conditions 
inscribed in the market access and national treatment  columns.  These dealt with conditions governing  S/WPGR/M/54 
 Page 9 
 
 
  the supply of the service itself, once the contract had been granted.  The column for government 
procurement would deal only with conditions in  which government procurement would be open to 
foreign bidders in the relevant sector.  By their ve ry nature, such conditions would be very limited: 
these would essentially be restrictions regardi ng adjudicating entities or thresholds, along with 
possible discriminatory limitations providing, for example, for price preferences.  The proposed 
additional column could deal with all possible situa tions that could arise.  If a Member wished to 
propose a simpler and clearer format, which could m eet all the relevant situations, his delegation 
would be open to examining it.  Moreover, recent discussions seemed to show a convergence of views 
on the fact that, for government procurement, national treatment should apply where each Member chose, while MFN treatment would apply to all sector s.  The representative noted that some questions 
had been raised on the relevance of providing for the possibility for MFN exemptions, in addition to 
specific provisions protecting the preferential treatme nt deriving from the Government Procurement 
Agreement (GPA).  The EC proposal took into account the fact that the need to take MFN exemptions 
for government procurement had not arisen at the time of entry into force of the GATS.  Such a 
possibility might now be raised, should it be decided to extend Article II to government procurement.  
While such exemptions should be as limited as possible, they should not be excluded at the outset, 
given the need, for example, to take into acc ount possible bilateral agreements on government 
procurement or to grant more favourable treatment to developing countries.   
39. With respect to the valuation of contracts, he to ok note of the suggestion to define rules so as 
to prevent governments from dividing contracts with the intention of circumventing thresholds and to 
deal with contracts covering both goods and service s on the basis of the primary subject of a given 
procurement contract.  His delegation had already proposed to draw a parallel with the GATT Code 
on government procurement, which had used the concep t of services incidental to the supply of goods.  
Concerning technical specifications and qualification of suppliers, he had take n note of the suggestion 
to define more detailed rules, beyond Article VI of the GATS.  With regard to procurement methods, 
he noted the suggestion to give preference to ope n and selective tendering procedures, and to specify 
circumstances that would justify recourse to limite d tendering procedures.  He had also taken note of 
the suggestion to define clear rules for the use of selective tendering procedures.  Concerning tender 
documentation, it had been suggested that this be made available not only through a specific 
publication by public entities, but also through the use of an internet site.  He was in favour of further 
exploring this idea, bearing in mind that such a so lution would not require exorbitant technical means 
and took into account any difficulties that might arise for least-developed countries.  With respect to 
contract award procedures, aside from the fact that c ontracts should be granted to the lowest tender or 
to the tender determined to be economically the most  advantageous in terms of the specific evaluation 
criteria earlier set in the procurement notice or th e tender documentation, it had been proposed that 
procedural rules define useful elements for determ ining when to select the method of lowest tender 
and when to select the method of the most advantage ous tender.  He thought that it might be difficult 
to specify such rules for all government procuremen t of services, bearing in mind the diversity of 
situations which might arise and the flexibility that  should be provided for in the Agreement.  He 
hoped to go into greater depth on these points, but this  should be done with the active participation of 
all delegations.  Other interested delegations should associate themselv es with this work and point out 
the particular points that they would like to explore further.   
40. The representative of Switzerland
 welcomed the comprehensive response to questions raised 
and hoped that this could help to move ahead in these negotiati ons.  The representative of Chinese 
Taipei  took note of the response provided, especia lly on questions relating to thresholds.   
41. The Chairperson  proposed that the Working Party take note  of comments made.   
42. The Working Party then reverted to informal mode to discuss the organization of work on the 
three topics under its responsibility.     S/WPGR/M/54 
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  IV. DATE OF THE NEXT MEETING 
43. The Chairperson
 said that the next meeting of the Working Party should be held during the 
next cluster of services meetings, but that this w ould be subject to the on-going consultations by the 
Chair of the Special Session of the Council for Trade in Services regarding the organization of meetings.   
V. OTHER BUSINESS 
44. No issue was raised under this agenda item.  
VI. APPOINTMENT OF CHAIRPERSON 
45. The Chairperson
 indicated that the consultations by the Chairperson of the Council for Trade 
in Services regarding the appointment of the Ch airpersons of the subsidiary bodies were still on-
going.  He therefore suggested that the Working Party postpone the election of the Chairperson of the 
WPGR to the beginning of the next formal meeting.  
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