RESTRICTED
WORLD TRADE S/CSC/M/3
7July 1997
ORGANIZATION
(97-2823)
Committee onSpecific Commitments
REPORT OFTHE MEETING HELD ON16JUNE 1997
Note bytheSecretariat
1. TheCommittee onSpecific Commitments helditsthirdmeeting on16June1997 under the
chairmanship ofMrAsoke Mukerji ofIndia. Theagenda ofthemeeting wascontained inairgram
WTO/AIR/600.
I. Participation ofobservers
2. Regarding thefirstitem, participation ofobservers, thefourorganizations, United Nations,
UNCTAD, IMFandWorld Bank thathadobserver status onanadhocbasishavebeengranted observer
status onaregular basis. Therequest byOECD forobserver status wasalsoaccepted.
II. Classification issues: discussion ofdocument S/CSC/W/2 "Developments ininternational
classification system andimplications fornegotiations ontrade inservices"
3. Onthesecond item, classification issues, theChairman firstopened thedebate onSecretariat
document S/CSC/W/2 "Developments ininternational classification systems andimplications for
negotiations under theGeneral Agreement onTrade inServices" onwhich onlypreliminary views
hadbeenexpressed atthelastmeeting oftheCommittee. Hesuggested thatthedebate should concentrate
onthequestions raised asfrom paragraph 39ofthedocument andtoaddress those questions oneby
one.
4. Onthefirstquestion "How canaclassification system provide coverage fornewservices that
mayemerge inthefuture"? TheChairman firstasked theMembers iftheidentification ofnewservices
could beconsidered asauseful exercise asonecould argue thattechnological evolution andglobalization
create newservices thatmaynothavebeencommitted during theUruguay Round andthatmaynot
havebeenlisted inexisting nomenclatures. Inthecasemembers would judge thisexercise useful the
questions thenariseofhowtodefine anewservice andofwhowould define it.TheChairman took
theexample ofCD-ROM testing asapractical caseandasked ifithadtobeconsidered asanewservice
non-committed orasincluded incomputer services commitments.
5. Canada sawtwocentral questions inthatrespect: arenewservices suchasinternet genuinely
newservices andeveniftheyarenewcantheybeplaced within existing classes ofservices. The
decision-making process, whowould bevested withtheauthority ofdeciding whatisanewservice,
asathird question tobeaddressed inthecoming months.
6. TheEuropean Commission echoed Canada 'squestions andraised alsothelegalquestion of
thestatus ofnewservices withregard toexisting commitments. FortheEuropean Commission itwas
clear, intheexample ofCD-ROM testing, thatiftheservice didnotexistatthetimeofthecommitments,
thisservice wasnotcommitted. However theEuropean Commission wanted tocircumscribe thedebate
tothetechnical andprocedural aspects, thelegalquestion being ofacompletely different nature.S/CSC/M/3
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7. New Zealand requested concrete individual examples. Itconsidered useful thesuggestion
contained inparagraph 39ofdocument S/CSC/W/2 toconsider incorporating services thatarebeing
traded butwhich donotappear intheGATS classification norintheservices partoftheprovisional
CPC, suchasenergy services. However thissituation should bedistinguished from thecasewhere
newtechnologies create avariant ofanexisting service which would thenconstitute anewcategory
ofnewservices which maybealready covered byCPC. Thefirststage theninthiscasewould beto
examine iftheCPC canadequately cover this"new" service. NewZealand expressed concern that
thesearch foranimmediate technical solution maybring about excessive disaggregation which may
frustrate thecentral purpose ofthesystem, i.e.thatisitscomprehensibility andaccessibility forthe
end-user, thebusiness community, andfrustrate alsothetrade liberalization purposes ofthesystem.
8. Thailand, onbehalf onASEAN, acknowledged theneedforamore systematic examination
oftherevision anddevelopment ofinternational classifications andindicated thatthisexercise should
beguided bytwopreoccupations: close cooperation withtherelevant international organizations and
flexibility. Theimplications oftechnological changes ontradeinservices should betaken intoaccount.
However Thailand considered thatitmight bepremature toaddress thequestion ofnewservices as
theCouncil forTrade inServices hadyettoidentify alistofdifferent services sectors andpriorities
aspartofthework onguidelines forfuture negotiations.
9. India recalled thatthediscussion onclassification andnewservices waswithout prejudice
towhatwould ultimately bedecided onthescope ofthefuture negotiation. India understood thepoint
ofviewexpressed bytheEuropean Commission onthefactthatreally newservices thatdidnotexist
atthetimeofthecommitments should notbeconsidered ascommitted, butunderstood alsothepoint
made byNewZealand thatduerestraint should beusedinthequalification ofnewservices inorder
nottoempty thecommitments oftheirsubstance. Those twoextremes should beavoided. Asfaras
thequestion ofwhowould havetheauthority totakedecisionson newservices wasconcerned India
considered thatthemembership oftheWTO should havethisauthority.
10. TheUnited States recalled thatCPC andW/120 were optional means ofscheduling. Both
appeared insome instances defective andnotusable. ItwasthewishoftheUnited states toarrive
overtime atacommon system forscheduling commitments. They wanted tomonitor theevolution of
theclassification toseeifitwould make sense asapractical matter. Asfarasnewservices were
concerned itwastheviewoftheUnited States thatservices unforeseen atthetimeofthecommitment
could notbeconsidered ascommitted evenincases where thedefinition oftheCPCcould cover them.
IftheCommittee wastoexamine newservices astheyarose those services should bepartofthe
Committee 'sownrevision oftheclassification; theparties could theninthenextround ofnegotiations
select from thatlistofnewservices identified, services tobecommitted intheirnewoffer.
11. Japan agreed withIndia thattheultimate decision onclassification issues should remain in
thehands ofWTO Members. Italsodesired close cooperation withinternational organizations. Japan
hadnodefinitive position onthequestion ofnewservices andoftheexisting classification andwanted
toreflect further onthose questions.
12. Hong Kong wanted aflexible system thatwould takeaccount ofchanges anddevelopments.
Hong Kong wasnotsurethatanewservice wasautomatically notcovered byexisting commitments.
Thiswould depend onthenature ofthisnewservice andonhowcommitments hadbeenscheduled.
AsMembers proceeded tonegotiations invarious areas theywould encounter newservices andthat
would betherighttimetodealwiththemandtoinclude themintherevision oftheCPC. Thesystem
would therefore beflexible, theultimate goalbeing acommon system.S/CSC/M/3
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13. Chile recalled thatclassification wastobeseeninaregulatory context. Therefore forcertain
countries oneactivity maybeaservice while forothers thesameactivity maybeatechnological means
orvehicle forproviding aservice. Thiswould occur frequently inthecaseofnewservices. Therefore
thedelegations should bemindful oftheregulatory context when dealing withnewservices.
14. Mexicostressedtheneedforflexibilityandcooperationwithinternationalorganizations.Further
disaggregation wasneeded tomake progress. Members should focus oncertain services bybreaking
themdown inorder toclarify thesituation. Thisdisaggregation would havenothing todowithchanges
inschedules. Mexico shared thepoint ofviewexpressed byother delegations thattheMembers should
beultimately thedeciding power onthose questions.
15. Norway stressed theimportance ofthisdiscussion, which should concentrate onthetechnical
andprocedural questions, setting aside legalquestions. Theultimate goalwasaperfect CPCsystem.
16. TheChairman thenturned tothesecond question: "DoMembers agree thatthebasis for
classifying services continue tobetheCPC? Ifsowhich improvements arenecessary toensure abetter
definition ofthesectoral coverage ofcommitments?"
17. Canada considered thatasapractical matter members should continue touseCPCandelaborate
oradjust itasnecessary when practical problems arise. Canada stressed thatRev.1 didnotabandon
CPCbutelaborated onit.TheEuropean Commission recalled thatincertain instances adhocscheduling
classifications hadbeenusedasinfinancial services andintelecom andthatthiscould beexplained
partlybythelackofdisaggregationofCPCRev1mayproveanimprovementinthatrespect.Nonetheless
CPC hadprovided agood basis andshould normally continue tobeusedasitprovides abasis for
comparison andforstatistics. CPCwastheclearest listavailable atthisstage. Switzerland expressed
similar views ontheusefulness ofCPCandstressed theconceptual improvements ofRev.1 suchas
thewilltoexemplify better theservices covered. Morocco alsoconsidered CPCasasound basis, that
should beimproved bybetter disaggregation. Mexico andIndia expressed alsotheirappreciation of
CPC andtheirhopes ofimprovements ofthisframework byCPC.Rev1. NewZealand shared those
views andconsidered thatthemembers should concentrate onpractical issues. Therefore suggestions
bydelegations should bemade onspecific shortcomings thathavebeenidentified rather thanadopting
anacademical exhaustive approach.
18. TheUnitedStatesrecalledtheirdoubtsonCPCbothforstatisticalpurposesandfornomenclature
purposes. Rev.1 should beexamined fromapractical point ofviewtoseeifitmettrade negotiators
purposes better thanitspredecessor. Thiswasnotevident. Anexamination oftheunderlying objectives
oftherevision wasanecessary preliminary toanexamination sector bysector oftherevision. Japan
stressed thattherewasnoalternative toCPCalthough forinstance theannex onfinancial services was
agoodexample tofollow. Thailand alsoconsidered thattheCPCwasthebestbasisavailable andsaid
itwould beinabetter position toasses thisquestion atalaterstageafterthecompletion oftheanalysis
ofCPC.Rev1.
19. Onthethirdquestion "should theobjective oftheexcise firstbeagreed bymembers (e.g.better
coverage ofallcovered services, higher degree ofdisaggregation, more detailed definitions tobetter
distinguish between services)?" TheChairman asked delegations iftheyagreed these objectives and
ifthere were anyother relevant objectives .
20. NewZealand indicated thatitconsidered itpremature tosettheobjectives oftheexercise in
detail. Ahigher levelofdisaggregation should notbeconsidered asanendinitself butasapossible
result ofadetailed examination. Incertain instances more detailed definitions orahigher degree of
disaggregation maynotbetherightanswer. Theservice oftheGATS liberalization purposes andthe
service ofthebusiness community should betheobjectives. TheEuropean Commission, Canada andS/CSC/M/3
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Hong Kong agreed thatthedefinitions ofobjectives waspremature andontheneedtofocus onpractical
matters fortradepurpose. Hong Kong expressed concerns onthelackoftimeandexpertise toanalyze
CPCRev.1 andtheriskofstalling theCommittee 'sdebates onquestions ofdetails. India suggested
toaddthesentence "soastofacilitate thescheduling andtoimprove understanding ofcommitments"
inorder toalleviate theconcerns ofMembers thattheexercise would betootheoretical.
21. TheChairman thenturned tothefourth question "Istheagreement onthemain deficiencies
ofthecurrent system ofusing secretariat listbacked upwiththeCPC(e.g.lackofsufficient descriptive
detail ofservices, inadequate coverage ofaparticular service)? What should beconcluded from the
departuresfromthissystemthathaveoccurredinthetelecommunicationsandmaritimetransportsectors?
Istherescope foragreeing ondetailed definitions ofsectors andsubsectors asintheairtransport annex?"
andadded thatthefinancial services annex wasanevenbetter example toquote withrespect todetailed
definitions. Delegations hadnoremarks toformulate onthispoint.
22. Onthefifthquestion "Ifthereisorcould beagreement onthemaindeficiencies ofthecurrent
method ofclassification should therevision work begeared tocorrecting thedeficiencies orshould
itbebroader inscope andlooktomake recommendations forallservices sector covered bythemandate
oftheCommittee? What classification should bestudied inaddition toCPC? Should thework bedone
intheCommittee orshould outside expertise becalled upon?", theChairman recalled thatthisquestion
hadbeen partially answered bythemandate given bytheCommittee totheSecretariat tostudy
CPC Rev1.
23. Withregard tothequestion ofthedrafting ofdetailed definitions theUnited States expressed
theopinion thatthedefinitions ofthefinancial services annex should overtake thedefinitions ofthe
CPC. Another question waswhether weshould seektohaveacommon system forspecific sectors.
Telecommunications wasapossible caseforthat.Inthatrespect Chile'sremarks ontheimpact ofthe
definition given bythenational regulatory framework onthewaycommitment areformulated was
extremely relevant. Thatiswhyinstead ofexamining theentire revision ofCPC, Members should
examine areas where theyhaveexperience suchastelecommunications inorder toseeifacommon
system ispossible. Thiscould helpthefuture making ofcommitments.
24. Canada considered thatCPCshould remain thebasisbutifitappeared deficient incertain sectors
thenacommon approach, distinct fromtheCPC, should beattempted. Morocco stated itsagreement
withthese opinions provided thatthispragmatic approach would notbegeneralized tothepoint of
rendering theCPC meaningless. NewZealand shared thisviewastheCommittee lacked timefora
global exercise.
25. Indiastated thattherewasageneral agreement toconsider CPCasagoodbasisifnotaperfect
one.While studying CPCRev1 theCommittee would certainly come toabetter understanding ofthe
areasinwhich CPCRev1 needs further elaboration andtheSecretariat would probably present atsome
stage asaconsequence ofthisprocess arevision ofW/120. Thedifficulties caused bytechnological
progress orthespecificities ofnational regulations could beaddressed through appropriate market access
restrictions. CPC should remain ingeneral thebasis ofthecommitments.
26. Finally theUnited states made clear thattheirintention wasnottocreate useless additional
work. However theshortcomings oftheCPCweresuch, forinstance infinancial services, thatincertain
sectors adhocapproaches were needed. Environmental services wasanother possible example.
27. TheChairman thenintroduced thefifthquestion: "Inconsidering howtheGATS classification
system could beimproved would itbedesirable orfeasible tointroduce anydistinctions according
tothefourmodes ofsupply? (Indeveloping astatistical framework which would meettheGATS needs
theSecretariat acknowledges thatdifferent statistical classifications -BOP, establishment trade, foreignS/CSC/M/3
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direct investment, production -correspond onlyinanincomplete waytothefourmodes concept of
tradeandthatsignificant improvements arerequired interms ofmethodology andstatistical systems").
Heinvited delegations tocomment onhowonecould achieve better correspondence between statistics
andGATS obligations.
28. TheEuropean Commission indicated thatitwaspremature todiscuss modes ofsupply asthe
questionofmode1and2wasstillpendingbeforetheFinancialServicesCommittee.Thelackofprogress
instatisticsbymodewasanotherelementinthesamesense.TheSecretariatexplainedthatafterreflection
thequestion wasmisleading asitseemed toimply- wrongly -thatthenature oftheservice varies with
themode ofsupply. Furthermore theprogress onstatistics bymode wasveryslow. Canada indicated
thatthiscompilation ofstatistics bymode wasalsolabour intensive andtimeconsuming foravery
imperfect result. India expressed caution ontheopinion expressed intheannotated agenda according
towhich classification bymode ofsupply might beseenasinconsistent withthestructure ofthe
agreement andindicated thatitwould come backonthissubject lateron.Asfarasstatistics were
concerned India thought thatatacertain point theCommittee should trytodevise methods ofhaving
statistics onmodes ofsupply, ascertain modes ofsupply areofessential interest tocertain Members
andasoneoftheobjectives oftheGATS isthatdeveloping countries derive reasonable benefits from
theagreement. Indiarecalled thattheSecretariat hadproduced lastyearaninteresting paper onstatistics
inservices thatshould beputagain ontheagenda. Morocco shared theopinion expressed byIndia
onstatisticsanddevelopingcountries'benefits.FurthermoreMembersneededstatisticsforthediscussions
onsafeguards andonbalance ofpayments. Therefore efforts toproduce statistics should becontinued
andencouraged. Thailand alsowished thatthose efforts should bepursued.
29. TheChairmanfinallyturnedtothelastquestioncontainedindocumentS/CSC/W/2:"IfMembers
dodecide togoahead andoverhaul thecurrent method ofclassifying services, what should be
recommended withrespect totheuseoftheresulting classification?"
30. India indicated thatiftheimproved classification wascommonly agreed there would beno
problem tomake itcompulsory: failing suchagreement thesystem would havetobevoluntary. Thailand
inthename oftheASEAN stressed theimportance itattached toflexibility andtheneedtotakeinto
account particular circumstances encountered byeachmember when making theircommitments. The
United States indicated thatatthisstage thisquestion wastotally hypothetical andpremature aseven
adecision ontheprinciple ofaglobal revision wasnotlikely.
31. TheEuropean Commission stated thatitwould beverydifficult tocome toanagreement on
amandatory system, which mayevencomplicate negotiations onsubstance whereas CPCwasalready
providing auseful andflexible basis. Japan, Hungary, Canada andHong Kong judged alsothequestion
premature andhypothetical. Hong Kong nevertheless insisted onthedesirability ofacommon view
attheendoftheprocess andtohaveasmuch similarity aspossible inscheduling techniques.
32. TheChairman summed upthediscussion ondocument S/CSC/W/2 bymaking thefollowing
points:
- Onnewservices thegeneral feeling wasthattheCommittee should haveatechnical
andpractical approach which should beflexible andwhich would takeintoaccount
thework doneinother international organizations. Onthequestion ofpossible further
disaggregation ormaintenance oftheactual system thefeeling wasthatitwould be
uptotheMembers todecide eventually onthebalance. Dueaccount would haveto
betaken ofregulatory issues andthepurpose ofthewhole exercise would betoclarify
theissues raised. Therefore thechair would circulate toMembers before thenext
meeting anotecollating alltheideas thathadbeenexpressed.S/CSC/M/3
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- Onthesecond question thegeneral feeling wasthatCPChadproved avaluable basis
andthattheCommitteeshouldexaminetheunderlyingrationaleoftherevisioncontained
inCPC Rev1. Delegations were therefore invited bytheChairman tocommunicate
anyshortcomings theyhadencountered inusing theCPC asinputs forfurther
discussions ofthissubject.
- Onthethirdquestion thefeeling wasthatthedefinition ofobjectives waspremature
andthatapractical approach wasneeded.
- Nocomments were raised onthefourth question.
- Onthefifthquestion thefeeling wasthatCPCshould notbeundervalued butthatdue
account should betaken ofexperience ofdepartures from it.TheCommittee should
examinetheareasthatcouldbenefitfromthisexperience.Howevertheapproachshould
notbeadhocinnature.
- Thesixthquestion, onstatistics, would berevisited atthenextmeeting andthe1996
paper bytheSecretariat would beinscribed again ontheagenda.
- Theseventh question, thepossible mandatory nature ofthesystem, wasjudged
premature.
II. Procedural andcostimplications ofalooseleaf system withandwithout legalvalue
33. Ontheinvitation oftheChairman, theSecretariat presented document S/CSC/W/5 andstressed
inparticular thatthenewproposal wastoabandon theconcept ofapaper looseleaf system, physically
maintainedandupdatedbydelegations,andtoadoptanelectronicallymaintainedandcontinuallyupdated
national schedules. Thesecond main proposal wasthatthese single documents should nothavelegal
value likethetreaty copies.
34. There wasageneral agreement ontheproposal made bytheSecretariat. TheEuropean Union
stressed thefactthatthecommitments, forinstance inthetelecommunications andinfinancial services,
could beonlycompiled aftertheyhadbeenratified. Itwasmade clear bytheSecretariat thatonly
thetreaty copies would havealegalvalue incaseofdispute settlement. Canada indicated thatitwas
assuming thatthecountry concerned andnotthesecretariat would havetheultimate decision onthe
wayitscommitment were listed. India expressed concerns onthatopinion. TheSecretariat recalled
thattheabsence oflegalvalue ofthecompiled schedules would minimize theimportance ofthatquestion.
Hungary expressed thewishthatthiscompiled schedule would beavailable intheformofaCD-ROM
withthefinancial services commitment tocome, attheminimal costpossible. Switzerland underlined
theinterest ofhistorical tracking ofcommitments allowed bytheformat suggested bytheSecretariat.
35. TheChairman concluded thattheCommittee hadfeltaneedforaconstantly updated schedule
inanelectronic format, without legalvalue. Theavailability ataminimal costofaCD-ROM containing
thecommitments onfinancial services would beexamined bytheSecretariat.
III. Detailed analysis ofthemodifications brought bytherevision ofthecentral classification
products (CPC Rev.1)
36. OntheinvitationoftheChairmantheSecretariatdescribedthestructureofdocumentS/CSC/W/6
andS/CSC/W/6/Add.1 to5,explained thecooperation ithadundertaken withtheVoorburg Group
andindicatedthestateofadvancementoftherevision,whichwillbecomedefinitiveonlyafterpublication
inSeptember 1997 andwhich isstillsubject tominor editorial changes. TheSecretariat confirmedS/CSC/M/3
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thatthisrevision hasnolegalimplications withregard tocommitments already undertaken onthebasis
oftheCPC, andthattheopinions oftheVoorburg Group werenotlegally binding forWTO Members.
TheSecretariat alsodrew theattention ofMembers tothefactthattheprinciples ofconstruction of
CPC wereofastatistical andnotofalegalnature, andthattherefore itwassupposed toinclude all
services, existing andfuture, andthatthisinclusion could beimplicit andnotnecessarily described
inthedefinitions.
37. While acknowledging thework donebytheSecretariat, delegations requested ashortsynthesis
ofthereasons underlying thechanges andputting them incontext. They alsorequested thata
representative oftheVoorburg Group attend thenextmeeting onthissubject. TheChairman tookon
those suggestions andindicated thatdocuments W/6/Add.1 to5would beinscribed ontheagenda of
thenextmeeting.
IV. Scheduling guidelines
38. TheChairman recalled thatithadbeenagreed atthelastmeeting toholdamore detailed
discussion. Hesuggested todelegations tosubmit inwriting iftheysowished questions andproblems
encountered asregards scheduling asabasis forageneral discussion onthesequestions. TheCommittee
soagreed. TheChairman requested thatthose submission should besentasfaraspossible before mid-
September inorder toallow adebate onthissubject atthenextmeeting .
V. Statistics
39. TheChairman invited theSecretariat topresent anoralreport onthework oftheInteragency
Task Force onStatistics, whose textisannexed tothepresent minutes.
40. Morocco suggested instead ofawaiting hypothetical results from theInteragency group, the
Secretariat should study thefeasibility forservices ofasystem similar totheWTO integrated database,
thatwould, inthebeginning, belimited tocertain sectors butofanevolutive nature andtailored to
theneeds oftheGATS suchasfuture negotiations ortheevaluation oftheimpact ofliberalization.
41. India stressed theinterest ofhaving statistics notably bymodes ofsupply andencouraged the
secretariat tocontinue itsefforts. India asked alsoifthesecretariat hadthetechnical possibility to
compile global statistics about major services committed tillnowbymodes ofsupply.
42. Thailand inthename oftheASEAN recalled thattheworkundertaken byUNCTAD todevelop
adatabaseonmeasures affecting trade inservices ("MAST") could alsobeuseful tothework ofthe
Committee.
43. TheChairman tooknoteoftherequests forstudies bytheSecretariat expressed bydelegations.
TheSecretariat replied thatasfarasthepossibility ofcreating anintegrated dated databasewas
concerned, ithadalready maintained acompilation BOPstatistics reported totheIMF. Thiscompilation
willbeenhanced ascountries begin toreport onamore disaggregated basis. However unless countries
begin tocollect andreport dataindependently itdoesnotseem conceivable thatthedatabasedomore
thancompile existing statistics. Aproblem ofresources alsoarose asonlytwopersons wereworking
onstatistics inservices within theWTO Secretariat which issignificantly lessthaninnational statistical
institutes andintheIMF. With regard tothesuggestion toexplore therelative importance ofmodes
ofsupply, theSecretariat haddonesome preliminary work inthisarea. Most ofthiswork relied on
statistics from theUnited States which istheonlycountry reporting comprehensive figures on
establishment trade. (U.S. affiliates abroad andforeign companies established intheUnited States).
Itwastherefore difficult tojudge howgeneralizable those results are.S/CSC/M/3
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44. Japan underlined thatitsdelegation hadworked hardonthequestion ofstatistics intheregional
trade agreements context andencouraged theSecretariat topursue itsefforts .
45. TheChairman indicated thatthequestions ofstatistics would beinscribed ontheagenda of
thenextmeeting inorder tomonitor progresses.
VI. Other business
46. TheChairmanrecalledthatatthelastmeetingoftheCouncilforTradeinServices,theChairman
oftheCouncilhadproposedthattheCommitteeonSpecificcommitmentsshouldundertakeconsultations
ontheGuidelines ofProcedure forArticle XXIoftheGATS. Heproposed therefore thatthese
consultationswouldbeheldbeforethesummerbreakandindicatedthathewouldconsultwithdelegations
tofixthedateofthose consultations which would beopentoallMembers.
47. ItwasagreedthatthenextmeetingoftheCommitteewouldtakeplaceinthefirsthalfofOctober.