World Trade
Organization RESTRICTED S/WPGR/M/21
7 May 1999 (99-1882) Working Party on GATS Rules

REPORT OF THE MEETING OF 16 APRIL 1999

Note by the Secretariat

The twenty-first meeting of the Working Party on GATS Rules was chaired by Mr.
It consisted of six items: installation of new chairman; negotiations on safeguards under Article X of the GATS; negotiations on subsidies under Article XV of the GATS; negotiations on government procurement under Article XIII of the GATS; date of the next meeting of the Working Party; and other business.
He gave a brief summary of points raised during the informal discussion held on 24 March in the Working Party: First, it was generally agreed that work should continue on the basis of the "List of issues for future discussion" contained in a Secretariat Note of November 1998 (S/WPGR/W/27).

Second, the notions of temporariness and degressivity of safeguard actions appeared to be broadly accepted as well; Article 7 of the Agreement on Safeguards (AS) might provide a model.
the delegation of Japan had proposed at the previous meeting a distinction between three principal approaches for safeguards: (i) horizontal (available to all Members in standard format across all sectors); (ii) sector-specific (available to all Members in sector-specific format); and (iii) sector-specific/scheduled safeguards (available only if included in schedules).
The representative of the European Communities observed that ex-ante safeguards required reasonably precise information on the situation to be addressed, while an ex-post mechanism could be more general and, thus, cater for unforeseen circumstances.
(ii) Situations justifying the application of safeguards measures
The representative of Thailand, on behalf of ASEAN, mentioned a situation where, as a result of unforeseen developments and of GATS obligations, a Member's market was inundated by foreign services supplied via commercial presence and/or presence of natural persons.
Those terms suggested that the mechanism was meant to cope with situations that were unexpected when the commitments were made; there was no need to repeat this notion in the Safeguards Agreement.
rapid technological changes might permit developed countries to supply services electronically through mode 1 although such supplies had not been considered feasible at the time of scheduling.
The Agreement on Implementation of Article VI of GATT (Antidumping Agreement) thus provided for flexibility and allowed injury determinations to be based, for instance, on concepts such as constructed value, best information available, and even consultations with affected Members during an investigation.
The representative of Venezuela gave examples of indicators that could be used in establishing injury: losses experienced by domestic suppliers; decline in capacity utilisation; capacity reductions; decline in sales in a sector; reduction in productivity; reduction in prices or changes in the structure of prices; declining number of domestic suppliers; and decreasing employment in the sector concerned.
The representatives of Canada and the United States reiterated their delegations' basic position concerning the desirability of safeguards; however, the discussion of feasibility issues might provide helpful insights in this context.
The representative of Thailand, on behalf of ASEAN, noted that special and differential treatment for developing countries was consistent with the objectives of the GATS; Article 9 of the AS would be of relevance.
ITEM C: NEGOTIATIONS ON SUBSIDIES UNDER ARTICLE XV OF THE GATS
The Chairman recalled the two issues which had been raised in the preparatory Notes for previous meetings: the applicability of current GATS disciplines to either "import-substituting" or "export-enhancing" subsidies.
Without prejudging Japan's position, he noted the different forms that they might take: (a) a contract between a government agency and a private company for the purpose of developing natural resources; (b) a government contract with a private company for the purpose of constructing and managing industrial sites,
Examining the question of what constituted "governmental purposes" would help to clarify which concessions could be considered government procurement and which would be subject to normal GATS disciplines.
A footnote to the Guidelines stated that the terms property and services covered all goods and services, including: consultancies and professional services of all types; real property activities; construction and related services; financial and operating leases for equipment and real property; individual and collective training and educational programmes; services obtained from public utility suppliers; and outsourcing or contracting,
The representative of the European Communities mentioned a recent draft document on the treatment of concession under Community law which could be of interest to other delegations (Draft Interpretative Document on Treatment of Concessions under Community Law; Official Journal of the EC, C94, 7 April 1999).
The representative of the United States said that it was apparent from the Secretariat's Note that the existing precedents (negotiating history or dispute panels) did not provide sufficient guidance for the interpretation of the relevant terms in GATS.
He observed that there was no authoritative WTO interpretation of the term; the existing interpretations by various GATT/WTO bodies of Articles III:8 and XVII:2 of GATT were, however, useful.
The representative of the United States emphasised that, although the panel arrived at a questionable conclusion, its report illustrated some of the difficulties implied in defining government procurement of services, as in many cases government contracts combine the supply of goods and services.