World Trade
Organization RESTRICTED S/WPGR/M/45
18 December 2003 (03-6654) Working Party on GATS Rules

REPORT OF THE MEETING OF 2 DECEMBER 2003

Note by the Secretariat

The Working Party on GATS Rules opened its forty-fifth meeting under the chairmanship of Mr.
In light of some of the issues mentioned by delegations at the last meeting, he suggested that questions that could be addressed related, for example, to the following: in responding to a given situation, what was the role and relevance of domestic regulation and of other measures permitted by GATS,
Delegations might also wish to consider whether other ESM models or approaches, or other hypothetical situations, might help bring forward relevant considerations.
While measures such as zoning or shopping-hour regulations might help to alleviate, to a certain extent, injury suffered by domestic industry, he did not think these were sufficient to address fully the problem sought to be rectified through an emergency safeguard measure.
He thought it was preferable to discuss the issue multilaterally so as to design a mechanism that could be supervised collectively, rather than to have individual Members craft and list their own ESM in their schedules.
Regarding the role and relevance of domestic regulation in responding to a given situation, he thought that the GATS, by permitting non-discriminatory domestic regulations, provided ample flexibility to governments in dealing with any situation that might arise, even when full commitments were undertaken.
he wondered, in the event all the large retailers were foreign and all the small retailers were domestic, and if the intent of differential treatment related to national origin, whether the possibility of a de facto national treatment violation would arise.
She did not see how the protection of domestic industry for a period of time would allow small retailers to adjust to competition from large retailers and felt that such an issue would be more appropriately dealt with through domestic regulation than by keeping foreign suppliers out of the market.

The representative of Switzerland indicated that the non-paper by his delegation examined a range of possibilities available to a government in a given situation, but recalled that it did not express a preference for any of the particular measures mentioned.
With regard to a point previously raised about the link between zoning plans and specific commitments, he considered that zoning plans, because they were not listed as a market access limitation in Article XVI, were deemed prima facie to be a domestic regulation.
Concerning the point made by Switzerland that an ESM was not needed because a government could use a variety of measures even when commitments had been made, he said that he saw domestic regulations as something that should not be used to discriminate against foreign suppliers.
With respect to comments by the delegation of Switzerland that the situation justifying the emergency safeguard measure needed to be "unforeseeable", he felt that this issue only arose because of the decision of the Appellate Body in US – Lamb, where unforeseen circumstances were treated as an additional element that an investigative authority needed to take into consideration.
Since the structure of the GATS was different from that of agreements on goods, the Agreement on Safeguards could not simply be used as a model for services, given the basic differences between the sets of relevant disciplines.
Whether foreign suppliers established in Shangri La would be subject to the application of an emergency safeguard mechanism depended to a large extent on the degree of acquired rights that would be granted to such suppliers, as agreed by Members.
The representative of the United States indicated she could not support that suggestion, as she did not consider that such sessions would change the position of Members on the question of an ESM.
Various delegations had made observations and asked questions relating, for example, to the role and relevance of procedural rules, the relevance for each mode of supply, and the possible use of concrete examples to facilitate discussions on the applicability of the proposed framework.
Point (a) referred to the differences of views regarding the interpretation of the mandate contained in Article XIII and asked whether the negotiating history could shed some light on the issue, as hinted in paragraph 15 of the latest communication from the EC (S/WPGR/W/42).

The representative of the European Communities intended to answer key questions raised at the October meeting of the Working Party and to react, on a preliminary basis, to some of the points in the communication by Singapore.
In waiting for an agreement on transparency in government procurement to be developed, the WPGR could, as suggested by various delegations, discuss procedural rules on the basis of those contained in either the GPA or in bilateral or regional agreements.
For example, should a foreign service supplier of construction services win a procurement contract in the market of a Member that had a commitment in government procurement for that sector, that supplier would still need to respect the conditions and limitations listed by the Member under Article XVI or Article XVII for that sector, for each relevant mode.
On the issue of domestic review procedures, he noted that Article VI:2 of the GATS already touched upon this issue and that Members might want to consider whether that Article was sufficient or whether more precise provisions would be needed as part of a GATS annex on government procurement.
Finally, since procurement often involved a variety of services that could be brought together in a given tender, did the EC envisage developing rules to determine in which of these services sectors it might fall into?
With respect to the question by the delegation of Canada on thresholds, he said his delegation hoped to develop an agreement providing for maximum flexibility; each Member should be free to specify a threshold for each of its commitments.
He thus thought it might be more useful if each Member wishing to do so used this available information as a possible source of inspiration for providing anonymous examples of subsidies that might distort trade in services.
Finally, regarding the question raised at the outset of this meeting about UNCTAD's work on subsidies, he said that such work had not yet been completed yet.
Since little information had been exchanged pursuant to paragraph 2 of Article XV, it was essential, in order to develop disciplines pursuant to paragraph 1 of Article XV, to know the subsidy programmes that Members currently had in force, so as to identify types of programmes and their sectoral focus, and to distinguish those that did distort trade in services from those that did not.
He noted that his delegation had encountered various subsidies relating to air transport and maritime transport services, but preferred not to focus discussion on such issues on this occasion, although it seemed important to discuss them in the future.
Third, he wondered whether those delegations that had disciplines in economic integration agreements could explain how they operationalized them, including how they addressed the issue of definition of subsidy and how they determined the appropriate criteria for invoking such disciplines.
While some Members had scheduled limitations to national treatment for such subsidies, it was obvious that many governments provided very significant funding for technology and human resources development so as to enhance the competitiveness of their economy.
in order to assist discussions on definition, as well as on the points raised by the delegation of Chile, would consider further updating the Chair's Checklist of Issues, so as to cover points raised in recent meetings.
Another avenue to consider was Article XV:2, which provided that any Member that considered itself adversely affected by a subsidy of another Member might request consultations with that Member, and that such requests shall be accorded sympathetic consideration.
He thought that in considering whether certain subsidy programmes had distortive effects, it was important to determine the extent to which existing GATS obligations, especially national treatment, could help in addressing potential effects of subsidies.
He noted, however, that the circumstances under which such disciplines were used might be different in the context of regional trade agreements than in GATS, since the levels of integration envisaged were quite different.

The representative of Australia stated that the Secretariat Note on subsidy disciplines in economic integration agreements confirmed the view that it was possible to consider subsidy rules for services in a manner which, if not identical, might parallel and be based on rules already applying to subsidies in goods.
The questions raised by India were interesting, and her delegation had some doubts regarding the issue of services embodied in goods as well as the application of the obligation of national treatment.
With respect to negotiations on government procurement, the contribution from Singapore had helped stimulate the discussion, including with regard to the proposal from the European Communities for a framework of rules in this area.