World Trade
Organization RESTRICTED S/C/M/69
15 December 2003 (03-6601) Council for Trade in Services

REPORT OF THE MEETING HELD ON 5 december 2003

Note by the Secretariat

The Council for Trade in Services held a meeting on 5 December 2003 chaired by Ambassador Ousmane Camara (Senegal).
He stated that one notification had been made by Japan, contained in document S/C/N/234, two notifications from Bolivia, contained in documents S/C/N/235-236, one notification from Armenia, contained in document S/C/N/237, as well as twenty-three notifications from the People's Republic of China, contained in documents S/C/N/238 to S/C/N/260.
REQUEST FOR A WAIVER FROM SPECIFIC COMMITMENTS UNDER THE GATS PURSUANT TO ARTICLES IX:3 AND 4 OF THE MARRAKESH AGREEMENT ESTABLISHING THE WORLD TRADE ORGANIZATION

The Chairman drew the Council's attention to a request for waiver made by the Government of Albania to allow Albania to postpone until 31 December 2004 the implementation of commitments undertaken in its GATS Schedule with respect to the
exclusivity granted to Albtelecom SH.
He indicated that a request for a waiver concerning the GATS were to be submitted initially to the Council for Trade in Services for examination within a period of 90 days, and that at the end of this period, the Council were to submit a report to the General Council.
He pointed out that the postponement was mainly due to external factors including the war in Kosovo during 1999, the terrorist acts of 2001, the recent global recession and the shift of interest of major global operators toward capital investments in third generation services, which had led to the lack of interest in the privatization of Albtelecom in several failed attempts over the preceding three years.
She said that, like the European Communities, the United States was not in a position to be able to react to the request at this meeting but looked forward to having further clarifications on some points her delegation was studying.
He further inquired as to how the General Council would make a waiver decision, namely by three-fourth majority according to Article IX:3 (a) of the WTO Agreement or by consensus according to footnote 4 under the same provision.
Hoping he would respond to the questions raised by the representative of Japan, a representative of the Secretariat said that the report of the Council for Trade in Services submitted to the General Council should include the waiver request stating the exceptional circumstances, the views expressed by Members as well as a recommendation for the decision to be adopted by the General Council acting on behalf of the Ministerial Conference.
This included the status of market access in sectors and sub-sectors listed in the China's Schedule of Specific Commitments; a list of administrative authorities responsible for specific services sectors and sub-sectors; information on the independence of regulatory authorities from service suppliers; information related to the MFN Exemption List; and laws,
Regarding improvement of the legal system and trade policy transparency, he stated that a series of new regulations and administrative rules governing trade in services had been promulgated since the previous review, which included the Regulation on Sino-Foreign Cooperative Educational Institutions; the Implementing Rules on the Regulation on International Maritime Transportation; the Rules governing the Foreign Invested Urban Planning Service Enterprises; the Provisional Rules on the Establishment of Travel Agencies with Majority Foreign Equity and Solely Foreign Investment; the Rules on the Administration of Foreign invested Enterprises for Book,
A total of 5,540 new foreign-invested enterprises (FIEs) had been established in China's services sectors in the first seven months of 2003, which represented an increase of 28 percent over the same period of 2002 and accounted for 25 percent of all the FIEs established.
He referred to the Provisional Rules on the Establishment of Travel Agencies with Majority Foreign Equity and Solely Foreign Investment, which allowed the establishment of travel agencies with solely foreign investment in certain cities upon the approval by State Council and National Tourism and Vacation Zones.
(a publication jointly sponsored by the American Chamber of Commerce in China and AmCham Shanghai,) he said that a vast majority of United States companies operating in China deemed that business conditions and climate had improved substantially in the past five years: in 2003, 93 percent of respondents reported their five-year business outlook in China as either optimistic or cautiously optimistic.
He stated that, due to the need for complicated expertise and the new services emerging in the telecom industry, this regulation required that the major Chinese investor in a foreign-invested enterprise should have technical personnel suitable for the operation of the enterprise in order to better protect the interest of investors and consumers and to ensure the sound development of the telecom industry.
Second, he said that in order to guarantee commercial interests of foreign enterprises, the stability of transition, and the implementation of the existing contracts already signed by foreign companies, the Implementing Rules on the Qualification Management for Facilitating Foreign Enterprises to Invest in the Construction Sector required that "for all the engineering contracts signed before 1 October 2003, or contracts remaining valid after 1 October 2003, the foreign companies might continue to complete the works".
Regarding questions on the Closer Economic Partnership Arrangement between Hong Kong, China and China (CEPA), he responded that China would notify the relevant WTO bodies of the CEPA in due time.
He further stated that the European Communities had noted the progress made by China in several services sectors over the preceding year and expressed his delegation's appreciation to the Chinese authorities for having engaged in substantive dialogues on the remaining questions and for having improved their legislation in a number of areas.
He expressed his delegation's hope that China would be willing to work together with them on the new regulatory framework so as to ensure that conditions imposed on foreign contractors were reasonable, in compliance with China's GATS commitments, and not more restrictive than they had been under the previous system.
He said that the Japanese services business community had repeatedly expressed their concern with the delay in implementation of commitments related to trading rights and that this was also one of the major concerns of various Japanese services sectors.
With respect to the Chinese commitment to permit foreign service suppliers to supply wholesaling services and commission agents' services through majority foreign-owned joint ventures subject to certain exceptions and within two years after accession (or by 11 December 2003), she said that she had taken note of the statement made by the Chinese delegation.
In this regard, he asked how many FITE applications had been lodged and of the FITE applications lodged, how many had been approved, as well as how many FITEs had been issued with a Telecommunications Business Operational Permit.
the representative of China said that, with respect to the question on accounting services which related to
the qualification
of
a Certified Public Accountant
(CPA)
in China
, any
accountant from
any
other WTO
M
ember
who wished to apply
for a
license
to practice as a CPA in China
had to have
accumulat
ed
at least two years
’
experience
and must have
one year
of residency
and a fixed residence or fixed contact point within China.

With respect to
t
ransparency issues concerning, for instance, the current formula for interconnection fees and the possible revision
o
f the terms and conditions of individual licences, he referred to the
relevant regulations, such as
Regulations on the Methods for the Settlement of Inter-network Call Charge
,
and Administrative Measures on Licensing for Operation of Telecommunication Services.
He referred to Article 9 of the Regulation on Telecommunications, which stipulated that "New types of telecom services other than those in the Catalogue of Telecom Service Classifications that are carried out on a experimental basis using new technologies should be submitted to telecom regulatory authorities at the provincial level for record".
With respect to a question on the dual distribution system for automobiles, his delegation was of the view that this policy did not violate WTO rules or China's commitments and that foreign and domestic investors would be treated equally in establishing automobile distribution enterprises selling either imported cars or domestically produced cars.

With respect to a clarification sought on
the approval of travel agencies
subject to "the
development plan of trave
l
ling industry
"
,
he referred to t
he Administrative Rules on Travel Agencies
, which
stipulated that
the examination and approval
of
applications for the establishment of travelling agencies must be in line with the development plan
of
travel industry
.
While reiterating her delegation's appreciation for China's efforts to draft legislation as quickly as possible, she insisted that, with respect to legislation for which the implementation dates had either passed or would pass in the following days, her government sought to look at those pieces of legislation before they were implemented and enforced,
Regarding the report to the General Council, the Chairman suggested that the Secretariat prepare a factual report stating: that pursuant to Section 18 of the Protocol on the Accession of the People's Republic of China, the Council for Trade in Services conducted the second review of the implementation by China of the WTO Agreement and of the related provisions of the Protocol, in its meeting held on 5 December 2003; that written communications had been received from five WTO Members, namely, Japan, the European Communities, Australia, Chinese Taipei, and the United States; and that the details of the discussion could be found in the meeting report.
Referring to his suggestion for a contribution from the Secretariat, the representative of India clarified that suggestion that the Council look at the existing notifications made under Article VII of the GATS.
He noted that pursuant to the rules of procedure (S/L/15), the election of the new chairpersons should take place at the first meeting of the year and should take effect at the end of that meeting.
He suggested that once this problem was resolved, the Chairman could proceed with consultations with interested Members on the appropriate schedule for the next cluster of services meetings and then could notify the Members at large of the dates fixed.