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/25
2 November 1999 (99-4741) Working Party on GATS Rules

REPORT OF THE MEETING OF 8 OCTOBER 1999

Note by the Secretariat

The Working Party on GATS Rules held its twenty-fifth meeting under the chairmanship of 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.
Concepts of injury and causality
The Chairman proposed to focus the discussion on potential injury and causality indicators which might be used in any sort of safeguard mechanism, irrespective of whether it was sector-specific or horizontal, or any other variant under consideration.
While the United States remained prepared to engage in a general discussion, he wished to reiterate that delegations should attempt to describe real-life situations, which could assist the Working Party in reaching some kind of common understanding on appropriate indicators or criteria.
Her authorities were asking for more concrete examples so as to better understand the desirability and scope of various criteria when applied to specific situations.
Although it was likely that, if there were such examples, they might already have been raised in the GATS Council under Article X.
In summing up the discussion, the Chairman noted that Members acknowledged the particular importance of trade and injury indicators, irrespective of what safeguard mechanism would be in place.
He noted that it might be difficult to arrive at an early consensus on indicators until the Working Party started examining their use in concrete - real-life or hypothetical - situations.
Horizontal versus sector-specific safeguards
The Chairman noted that the Working Party had agreed, at its last meeting, to focus on the criteria and principles which would need to govern any type of safeguard action, regardless of the basic mechanism (sector-specific, horizontal or other) which might ultimately be chosen.
Would foreign-owned suppliers, which were already established under mode 3, continue to have exactly the same rights as any other domestically established supplier – including the right to expand their market shares through take-overs, mergers, new investment, etc.
With respect to the proposed clear specification of the measure, the US paper was more specific than the Hong Kong, China paper; in ASEAN's view, rules in services might go a step further than those in the goods sector by specifying the particular safeguard measures that might be applied if the investigation established injury caused by increased consumption of foreign services.
The history in the goods area, predating the existence of the AS, showed that when governments were faced with requests from industries to provide relief, they would look at the various options available to them, including GATT Article XIX and Article XXVIII.
The representative of Hong Kong, China said that the objective of the paper previously presented by his delegation was to see whether a mechanism not open to abuse could be set up and be workable.
With respect to degressivity, there was a need to examine the relationship with the principle of temporary application: if a safeguard action was temporary and short, degressivity might not be relevant.
while many Members had expressed the view that it should be possible in safeguard cases to suspend commitments under Article XVIII, others had raised doubts as to whether this should include the suspension of regulatory principles (e.
He thought it would be useful to have more background information and suggested that the Secretariat look at other papers, for instance in the area of investment, where services subsidies might have been discussed.
Entities having some exclusive rights, without being directly controlled by the government, might be an obstacle to market access, but should not raise procurement-related issues, especially if there was no government ownership.
The representative of New Zealand recalled that the paper presented by his delegation was an attempt to explore possible areas of common understanding in the application of fundamental WTO principles to government procurement in services.
In this regard, New Zealand acknowledged that Members, whilst seeking the best price or the economically most advantageous tender, might wish to ensure that domestic suppliers were not overlooked and had a full and fair opportunity to compete.
The representative of Canada agreed that the Working Party should proceed on parallel tracks and, in doing so, examine the questions raised in the New Zealand paper as well as any other pertinent issues.
At this stage, the Working Party should be focusing on more general procurement disciplines rather than pursuing the type of sectoral approach adopted in the Understanding on Commitments in Financial Services.
Date of the next meeting
The Chairman proposed that, in view of the preparation of the Seattle Ministerial Conference, the Working Party should hold its next meeting early next year, at a date to be announced in due course.
other business
The Chairman said that the decision not to schedule an additional meeting this year had implications for the Annual Report which had to be submitted to the Council for Trade in Services.

World Trade
Organization RESTRICTED S/WPGR/M/25
2 November 1999 (99-4741) Working Party on GATS Rules


REPORT OF THE MEETING OF 8 OCTOBER 1999

Note by the Secretariat


The Working Party on GATS Rules held its twenty-fifth meeting under the chairmanship of Mr. Siva Somasundram of Singapore. The agenda for the meeting was contained in WTO/AIR/1171. 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 he would raise, under other business, the question of the Working Party's Annual Report to the Council for Trade in Services. The agenda for the meeting was adopted.
The Chairman drew attention to an informal Note (Job No. 5332) he had circulated on 16 September 1999, to assist delegations in their preparati

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/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.