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.

World Trade
Organization RESTRICTED S/WPGR/M/20
17 March 1999 (99-1072) Working Party on GATS Rules

REPORT OF THE MEETING OF 19 FEBRUARY 1999

Note by the Secretariat


The twentieth meeting of the Working Party on GATS Rules was chaired by Mr. Harald Fries of Sweden. The agenda of the meeting was contained in WTO/AIR/1009. It consisted of five items: 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.
The Chairman indicated that in order to assist delegations in their preparation for the meeting he had circulated a Note, Job. No. 772 dated 10 February 1999. The Note recapitulated where the Working Party stood on the three issues and proposed a certain structure for the discussion.
ITEM A: NEGOTIATIONS ON SAFEGUARDS UNDER ARTICLE X OF THE GATS

The Chairma

World Trade
Organization RESTRICTED S/WPGR/M/23
6 July 1999 (99-2785) Working Party on GATS Rules

REPORT OF THE MEETING OF 21 JUNE 1999

Note by the Secretariat


The twenty-third meeting of the Working Party of GATS Rules was chaired by Mr. Siva Somasundram of Singapore. The agenda of the meeting was contained in WTO/AIR/1110. It consisted of five items: negotiations on safeguards under Article X of the GATS, including the extension of the deadline for the negotiations; 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.
2. The Chairman indicated that he had circulated a Note, Job No. 3432 dated 14 June 1999, to assist delegations in their preparation for the meeting. The Note recapitulated where the Working Party stood on its three negotiating issues and proposed a certain structure for the discussion.


ITEM

World Trade
Organization RESTRICTED S/WPGR/M/24
8 September 1999 (99-3731) Working Party on GATS Rules

REPORT OF THE MEETING OF 27 JULY 1999
Note by the Secretariat

The twenty-fourth meeting of the Working Party of GATS Rules was chaired by Mr.
It consisted of five items: 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.
speaking on behalf of ASEAN, said that a safeguard measure should be applied only after an investigation looking into all relevant factors of an objective and quantifiable nature.
The representative of Japan expressed reservation about the emphasis that some other Members had placed on the need for flexibility; clear procedures and criteria were required to arrive at objective and transparent decisions.

The representative of the United States said that the Venezuelan paper was useful in identifying how a possible emergency safeguard mechanism could be structured; concepts like increased imports, injury and causality were essential.
For example, should it matter if macroeconomic problems had played a role or an industry's capacity to adjust had been affected by government regulation rather than own weaknesses?
The representative of the United States noted that, depending on the relevant causality standard, the responsibility to prove that injury had been caused by increased imports, rather than by a change in government regulation, might rest on the invoking party.
These included the requirement to give adequate advance notice before invocation; use safeguards only temporarily and with a specified maximum period of duration; limit access to a given safeguards-type provision – for example, once during the course of a specified period of time – and prevent re-invocation during the specified period; apply safeguards on a degressive basis; clearly specify the envisaged action by mode and sector or sub-sector; respect "established rights" (although a different term was used in the paper) if limits were imposed on mode 3; and waive compensation if the rules are respected.
He sought further clarification on the "hybrid" approach proposed by the United States delegation, in particular on the question whether general framework rules would apply across all sectors while the measures would be sector-specific.
Several elements listed in the United States' paper should be used, such as adequate advance notice; degressive and temporary application; maximum duration (with special treatment for developing countries); MFN application; and objective and identifiable criteria.
A safeguard mechanism would be in place to respond speedily to emergency cases, which could be addressed and solved within a relatively short period of time, whereas Article XXI modifications dealt with longer-term changes in competitive conditions of a systemic nature.
Their application might prove more transparent, more predictable and less distortive from a supplier's perspective than, for example, quotas, while quotas might be deemed less costly and more efficient from the invoking country's perspective.
While its Article 5 prescribed the level at which any quantitative restrictions should be set, Article 6 provided that provisional safeguard measures be price-based.
he added that, given that the main purpose was to remedy injury (or threat thereof) caused by increased imports, quota-type restrictions tended to have shorter implementation periods and produce immediate results.
ITEM B: NEGOTIATIONS ON SUBSIDIES UNDER ARTICLE XV OF THE GATS
The Chairman drew the Working Party's attention to a recent submission from Hong Kong, China under the information exchange programme pursuant to Article XV.
This could help to clarify the meaning of national treatment under modes 1 and 2 and, in turn, might enable Members to schedule more significant commitments for national treatment especially under these modes.
Government procurement was thus considered to include all three categories in the hierarchy Australia had originally suggested: first, government purchases of services for consumption by the government; second, government purchases of services for consumption by the public; and, third, contracts between the government and private companies for the commercial provision of services to the public or to industry.
At previous meetings, it had been said that, in principle, entities at all government level should be covered, and that government ownership and control were important criteria.

ITEM D: DATE OF THE NEXT MEETING
The next meeting is scheduled to take place in the vicinity of the October meetings of the Committee on Government Procurement and the Transparency Working Group, possibly on Friday, October 8, 1999.

World Trade
Organization RESTRICTED S/WPGR/M/19
21 January 1999 (99-0216) Working Party on GATS Rules

REPORT OF THE MEETING OF 1 DECEMBER 1998

Note by the Secretariat

The nineteenth meeting of the Working Party on GATS Rules was chaired by Mr.
It consisted of six items: 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; report on the activities of the Working Party to the Council for Trade in Services; date of the next meeting of the Working Party; and other business.
The representative of Egypt indicated that any safeguard mechanism should combine elements contained in Article XIX of GATT 1994, Article 5 of the Agreement on Agriculture, and Article 6 of the Agreement on Textiles and Clothing.
The policy background was very different in agriculture and while there was no injury requirement, invocation of the Article relied on a considerable amount of empirical information which was lacking in the case of services.
The representative of Japan voiced concerns regarding the non-MFN basis of this mechanism but regarded as positive that the burden of proof was placed on the country imposing safeguards.
Definition and scope of safeguards in services
The representatives of Australia and the European Communities said that safeguard measures should be applied by the Members themselves, whether via government regulation or delegated powers.
The representative of Brazil felt that no distinction should be made between national and foreign own investment, and action should affect only new entrants.
While it could be argued that foreign suppliers might then focus on unrestricted modes, this possibility should not be overestimated, given the costs involved in switching between modes.
Type of injury
The representative of the European Communities noted that the Members arguing in favour of safeguards had failed so far to give compelling examples of situations calling for emergency protection.
The representative of Thailand, on behalf of ASEAN, pointed out that the Agreement on Textiles and Clothing contained provisions on the attribution of damage which should be taken into account; the burden of proof rested with the invoking Member.
The representative of Australia noted that while safeguard actions would involve the suspension of market access and national treatment commitments, it was doubtful whether they should affect additional commitments under Article XVIII.
Special and differential treatment
The representative of Australia, recognizing the importance of special and differential treatment, felt it premature to discuss details at that stage.
while the national treatment obligation does not impose any restraint on the level of subsidies that may be granted by Members, it is nevertheless a potentially powerful discipline with respect to the non-discriminatory use of subsidies.
The limitations scheduled with regard to subsidies compiled in document S/WPGR/W/13, suggested that other Members shared this interpretation; otherwise they would not have exempted subsidies from national treatment under Modes 1 and 2
Regarding import-substituting subsidies effects, it was useful to distinguish between services of national and of domestic origin.
In the context of the first question regarding what transactions constitute procurement, delegations had recognized that more information was needed on how concessions were defined and treated within national legislations.
The representative of Canada said that the EU paper suggested that the transaction for the service itself (as distinguished from the buying or hiring of the service) did not appear to be covered by the Agreement on Government Procurement.
On how to proceed with the work, he suggested requesting the Secretariat to prepare a note listing the types of policies that are applied to government procurement and may not be consistent with non-discrimination, both MFN and national treatment, with a brief explanation of each.
ITEM D: REPORT ON THE ACTIVITIES OF THE WORKING PARTY TO THE COUNCIL FOR TRADE IN SERVICES
The Chairman noted that the draft report of the Working Party to the Council for Trade in Services had been circulated as S/WPGR/W/28.