The representative of Brazil considered that, while looking at hypothetical and concrete examples was a valuable exercise, it would also be useful if Members that had in their schedules or in regional trade agreements a safeguard-type measure pertaining to services explain how they met, in such instances, the issue of desirability and feasibility.
He stressed that more work needed to be done on the basis of this example and recalled that it had been suggested in a previous meeting to go through it in light of the different models that had been put forward in the negotiations pursuant to Article X.
Even in the absence of GATS commitments, there would be an intrinsic drive in Shangri La towards bigger distribution entities, as a result of capital accumulation in the private sector, which raised problems for small and traditional shops in any event.

The representative of Brazil sought clarification regarding the second stage mentioned by the representative of Switzerland, that is the period following entry into force of the commitment.
She invited delegations that had put forward the Shangri La example to explain whether the domestic regulation measures mentioned by Switzerland would not be appropriate.
He also stressed the importance of looking at other cases than just the Shangri La example, as an ESM might not be feasible in that particular case, but in other instances.

The representative of Thailand, speaking also on behalf of Brunei, Indonesia, Malaysia and the Philippines, wished to reply to questions raised in a previous meeting on the ASEAN draft ESM and the Shangri La example.
Of course, this was just an example of what domestic suppliers might do during the time that an ESM was in place, but did not in any way preclude the necessity of looking at other methods to boost competitiveness in the face of foreign competition.
" The group of delegations she was speaking for understood 'old' services providers to mean those, whether domestic or foreign, that were already established in Shangri La's market and 'new' service providers as those, whether domestic or foreign, which were not yet established in the market.
For example, in the situation contemplated in Shangri La, if a big foreign retailer had not yet established in Shangri La, then during the period that an ESM was applied, that retailer would not be able to enter the market of Shangri La, assuming that this was the nature of the temporary suspension availed of.
In addition, she asked whether domestic regulations could be transitional measures as envisaged in an ESM and whether a new regulation to protect small shops had to be gradually lifted over a certain period so as to not nullify market access.
He also indicated that, for those Members who had restrictions in place and decided to undertake a liberalization commitment under the GATS, the flexibility of the GATS allowed phase-in commitments, which entailed an adjustment period.

The representative of Indonesia expressed concerns about some of the alternative avenues proposed in the Swiss non-paper, namely the modification of commitments under Article XXI of the GATS and the possibility of seeking a waiver under Article IX(g) of the Marrakesh Agreement.
In addition, she wished to underscore the flexibility of the proposed framework, as it provided the possibility for each WTO Members to open government procurement in sectors where the Member would most benefit from international services, at its pace and to the extent it wished open.

The representative of Canada said the communication from the European Communities, while still being reviewed domestically, constituted a useful overview of the kind of issues that would need to be addressed in the Working Party to deal with the issue of government procurement in the GATS.

The representative of the United States wanted to ask some questions on the communication from the European Communities and also signalled her intention to come back to some of the ideas expressed in that communication at the next meeting.
Second, regarding the European Communities' proposal to include a fourth column in schedules where commitments on procurement could be made for each specific sector, she wanted to remind delegations that procurement in services is often characterized by clusters.
Given the post-Cancun uncertainty about the work of the Working Group on Transparency in Government Procurement, he wondered whether one needed to wait for this issue to mature in other fora and thought it would be useful to look at precedents on such procedures in RTAs and in the GPA.
The representative of Colombia, while noting the communication from the European Communities was still being examined domestically and that her delegation's position on the issue was well known, asked whether the EC could explain the types of benefits that the proposed disciplines on procurement might bring to developing countries.
Regarding paragraph 6 of the communication from the EC, she wondered how the proposed definition would relate to what is being discussed in the GPA and also to the definition of public services, and thought further examination of these issues would be needed.
Third, concerning the question raised by the delegation of Colombia on procurement that involved both goods and services, she considered that any GATS agreement on procurement, in order to be meaningful, should cover all contracts whose main object was the procurement of a service, even if such contract incidentally involved procurement of goods necessary for the supply of the service.
For example, the first issue in the Checklist suggested that Members consider what might be an appropriate definition of subsidies in services, what would be the relevance of the Agreement on Subsidies and Countervailing Measures (ASCM) in that regard, and whether and how services subsidies should be categorized.
He argued that two key issues for further discussion would be, first, the broad definition of subsidy, such as found in Article 1 of the ASCM, and, second, possible exclusions from such a broad definition.
of the ASCM provided a good basis and noted that this was also identified in earlier contributions from Hong Kong, China and Argentina.
Such information might then be used to work on some sort of a typology or to try to classify such information by areas such as social, cultural, environmental, research and development subsidies, assistance to small and medium size enterprises, subsidies contingent on exports, assistance to underprivileged regions, etc.
For example, she wondered whether information would be sought on subsidies such as education grants, federal support for women's sports programs or scholarships, and whether these would be relevant.
She supported the proposal by the representative of Chile, arguing that complementing the mandate of information exchange with concrete examples of support programmes that might cause trade obstacles would be useful.
Although most subsidies in services were provided domestically this did not preclude a subsidised entity from providing services to third countries, for instance the provision of a subsidy to a company that establishes a commercial presence in another country or the provision of a subsidy to a firm sending service experts to a third country for work.
He had been informed that UNCTAD was working on a study on subsidies, which was not yet completed and thought that, once finalized, the study would be presented within UNCTAD.
Regarding the work being conducted by UNCTAD, he thought that Members had agreed during the last cluster of services meetings that a similar position would be adopted regarding work from the OECD and UNCTAD.
While it was too early to specify a classification or typology, as also suggested by Chile, her delegation would be open to discuss classification suggestions, including legitimate policy objectives such as environment or cultural protection or restructuring of domestic services industries.
On the definition of subsidy, he underscored that the concepts of scope and definition of a subsidy, on the one hand, and that of trade distortion, on the other hand, were quite distinct concepts which should not be equated.
He thought the Australian intervention raised the question of a possible division of subsidies along different categories, for example prohibited subsidies, actionable subsidies, and non-actionable subsidies, but this would be a matter to be further developed after reaching agreement on the definition of subsidies.
In this regard, he mentioned that discriminatory subsidies were governed by the national treatment obligation, needed to be scheduled in order to be maintained, and that they were consequently not covered by Article XV.

On the question of the information exchange, the representative of New Zealand thought, like other delegations, that it was possible for Members to provide information before reaching agreement on a definition of subsidies, and that Members could also share information gradually through partial submissions.
Since the mandate in Article XV referred to subsidies that might have distortive effects on trade in services and to the development of the necessary disciplines to avoid such effects, he did not agree that discriminatory subsidies would be outside the scope of such disciplines, simply because they would be subject to scheduling under Article XVII.
In his view, Article I:3(c) would not appear to be sufficient for the purpose of subsidy disciplines, and this issue would need to be addressed in some way in the development of disciplines, for example through the definition of to whom the subsidy was granted, or in elaborating further the concept of policy objectives that appeared in the GATS.
With respect to the second proposal, he noted that the Secretariat was always ready to conduct work Members thought useful but said he was somewhat reluctant to analyse the notifications under the ASCM because trying to extract the elements that might be services related might involve some policy judgements and interpretations by the Secretariat.

The Chairperson said he preferred leaving time for delegations to reflect further on this proposal and to conduct consultations and possibly an informal meeting in order to prepare for the meeting planned for December.
The representative Argentina thought that agreement of all other Members was not necessarily needed in order for a Member to present a communication indicating the subsidies that caused problems to its suppliers, although he considered it would be preferable if all could agree beforehand.
On emergency safeguard measures, he recalled that various questions would need to be studied at the next meeting, in particular those raised in the discussion of the non-paper by the delegation of Switzerland and the responses provided by the representative of Thailand on previously asked questions.