RESTRICTEDWORLD TRADE
ORGANIZATIONS/WPGR/M/31
6 April 2001
(01-1767)
Working Party on GATS Rules
REPORT OF THE MEETING OF 21 MARCH 2001
Note by the Secretariat
1. The Working Party on GATS Rules held its thirty-first meeting under the chairmanship of
Mr. Tony Sims, from the United Kingdom.  The agenda for the meeting was contained in
WTO/AIR/1508.  It consisted of seven items:  ne gotiations on safeguards under GATS Article X;
negotiations on subsidies under GATS Article XV;  negotiations on government procurement under
GATS Article XIII;  organization of future work;  date of the next meeting;  other business; and
appointment of a new chairperson.  The agenda for the meeting was adopted.  The Chairperson  drew
attention to an informal Note (Job(01)/35, 14 March 2001) he had circulated to assist delegations intheir preparation for the meeting.
A. 
NEGOTIATIONS ON SAFEGUARDS UNDER ARTICLE X OF THE GATS
2. The Chairperson invited delegations to address the issue of compensation, and to revert to the
definition of "domestic industry" and the issue of "acquired rights" in informal mode.1
3. The representative of Venezuela indicated that his delegation was working on Article III of
the ASEAN Draft Agreement ("ADA") and intended to circulate a written contribution on indicators
and criteria.  The representative of Mexico said that his delegation intended to make a written
contribution on the issues of "domestic industry" and "acquired rights".  The representative of Guyana
said that the whole question of an ESM was linked to GATS Article IV.  The impact on smaller
economies and small services providers should be taken into account.  Multilateral rules had to be put
in place so as to avoid bilateral solutions.  His delegation wished to reserve its position on a possible
emergency safeguard mechanism until his government had studied the issue in details.
4. The Chairperson suggested that the Working Pa rty hold a two-day informal meeting in the
second half of April, to discuss the following topics, contained in the Chairperson's Checklist (Job
No. 1979/Rev.1, 6 October 2000):  (i) applicable measures (item 5);  notification, consultation,
transparency and surveillance mechanism (item 9);  indicators and criteria (item 4);  and
compensation (item 6).  The dates of 23 and 24 April had been booked tentatively.  It was so agreed.
5. Turning to future work, the Chairperson recalled that, at its meeting in December 2000, the
CTS had agreed to extend the deadline for negotiations on a possible ESM for services to
15 March 2002.  He assumed that all Members had agreed to this extension in good faith and were all
committed to ensuring there was no need for any further extension.  By 15 March 2002, therefore, the
Working Party should expect either to have concluded that a services safeguard would not be
desirable, or, alternatively, have completed work on a text which would enter into effect no later thanthe other results of the current round of negotiatio ns.  This raised the question of how the Working
Party should organize its work in the remaining time.  Having consulted with his successor, he
believed it was important to continue with an intensive series of informal meetings to explore key
                                                     
1 See Summary of Comments Made During the Informal Meeting on 21 March 2001 , Note by the
Secretariat, Job(01)/45, 5 April 2001.S/WPGR/M/31
Page 2
aspects of any ESM.  The Working Party would continue to work on a thematic basis whilst giving
due consideration to any texts which might be on the table – in line with the modalities agreed at the
7 July 2000 meeting.  In his view, the Working Party should aim to complete its run-through of issues
on the Chairperson's Note, Job No. 1979/Rev.1, by June.  As agreed, a two-day informal meeting
would be held in the second half of April.  Then, informal discussions could take place during theMay meeting.  A further two-day informal meeting could take place in June.  Informal and formal
discussions could be held in July.  Without wishing to bind his successor, he anticipated that the June
meeting could be in two parts:  (1) complete discussions on the items contained in Job
No. 1979/Rev.1 and any other substantive issues Members wish to raise;  (2) have a process
discussion which would (i) assess what the Working Party had achieved since the current phase of
work started in April 2000, (ii) consider whether and to what extent any preliminary conclusions
could be drawn on the issues of feasibility and, perhaps, also on desirability of any ESM, and (iii)consider whether work on a text would be useful.  He noted that it was too early to say much about
work in the autumn, but it was clear that many Members would wish to focus on the Fourth
Ministerial Meeting.  With the safeguard deadline of 15 March 2002, this suggested that the Working
Party would have a very intensive period of work between November 2001 and March 2002.
6. The representative of Thailand, speaking on behalf of the ASEAN Members, agreed that the
list of themes contained in Job No. 1979/Rev.1 should be exhausted by the summer break.  In the
course of the discussion, reference should be made to  the relevant provisions of the ADA.  In view of
the negotiating deadline, it was imperative to begin the drafting process as soon as possible after the
summer break and the ADA was a suitable basis for this. The representative of the United States said
that, with respect to future work, consideration of feasibility and desirability issues would influence
his delegation's decision regarding a text.  The representative of Brazil agreed with the proposal made
by the Chairperson regarding future work.  Issues of feasibility and desirability should be addressedbefore the summer break.  The definition of "domestic industry" remained a fundamental question for
Brazil.  In his view, this would be one of the main preliminary conclusions to be reached before
engaging in more substantive work.  The representative of Cuba asked whether the Secretariat could
provide input for the next meeting in the form of concrete examples of applicable measures and how
they could be applied.  The Chairperson replied that this kind of information should come primarily
from Members.
B. NEGOTIATIONS ON SUBSIDIES UNDER ARTICLE XV OF THE GATS
7. The Chairperson invited delegations to address item 3 of the Chairperson's Checklist (Job
No. 4519/Rev.1, 6 October 2000).2  Delegations wishing to come back on item 1 or 2 of the Checklist
were welcome to do so.  He recalled that, in November 2000, Members had asked the Secretariat toprepare a new update of relevant information contained in WTO Trade Policy Reviews.  The revised
document had been circulated on 12 December 2000 (S/WPGR/W/25/Add.2) and covered nine
Reviews, completed between May and December 2000.
8. The representative of Hong Kong, China said that existing GATS disciplines for subsidies
were not sufficient.  She noted that GATS Article II, VIII and XVII were relevant provisions.  The
latter was potentially the most relevant one, but did not solve all the problems, partly because the
number of specific commitments on Article XVII was limited.  Moreover, it would not apply to cases
where, in the absence of foreign-established suppliers, a Member wishing subsidized its domestic
industry and caused import substitution.  She further noted that GATS disciplines did not apply vis-à-
vis services suppliers established in another country and that there was a lack of jurisprudence
                                                     
2 Item 3 reads as follows: To what extent do WTO rules, in particular the GATS and its national
treatment and most-favoured-nation disciplines, already discipline services subsidies or provide the means to do
so?  This would include consideration of technical issues related to the GATS, including mode specificity and
the concept of "like service" .S/WPGR/M/31
Page 3
concerning the likeness of services supplied under different modes.  In her view, disciplines on
domestic regulation could have an indirect relevance on the adverse effect of services subsidies.
Hong Kong, China hoped to present in a near future a written contribution on the questions of the
relationship between modes 1 and 2, as well as on the scope of national treatment.
9. The representative of Switzerland said that MFN was a relevant discipline in the absence of
national services suppliers.  When looking at the types of subsidies described in
S/WPGR/W/25/Add.2, it was difficult to imagine si tuations where MFN would be capable of limiting
the negative effects of a subsidy.  National treatment was a potentially powerful instrument.
Extending it to all services for the purpose of subsidy disciplines, and not only to those services for
which specific commitments existed, appeared to be  very ambitious.  However, with respect to trade-
distorting subsidies, national treatment might be subj ect to general disciplines.  National treatment
should not be used to prohibit certain measures, but only to limit possible trade-distortive effects ofsubsidies.  The questions of likeness of services and specificity of modes were linked and should be
further examined.
10. The representative of Brazil recalled that, at the last meeting, his delegation had suggested
that the Secretariat could use the OECD document on "Arrangement on Guidelines for Officially
Supported Export Credits", the so-called "yellow book", as a source of information since it was apublic document.  Turning to the applicability of existing disciplines, he said that national treatment
would not capture export-enhancing subsidies.  Moreover, the concept of likeness as well as the scope
of national treatment deserved further consideration.  Should national treatment be mode-specific,
then the question of likeness might be obviated.  He drew attention to paragraphs 27, 28 and 29 of
document S/WPGR/W/9.  The first sentence of para graph 27 raised a fundamental question.  Another
crucial question, raised in paragraph 28, was that of mode-specificity, which pertained to the structure
of the GATS.  Brazil's preliminary view on the matter was that, should these disciplines not be
considered mode-specific, there might be an inconsistency with the schedules of commitments.
11. The representative of Korea said that the MFN and national treatment obligations were
insufficient to discipline the complex nature of services subsidies.  Article II being a general
obligation, the MFN principle should also apply to subsidies referred to in Article XV, except in the
case of an MFN exemption.  National treatment only applied if there were specific commitments.
Different sets of rules for subsidies might be needed, depending on whether specific commitments
existed or not.  When trying to define a services subsidy, account should be taken of the fact that trade
in services was different from trade in goods.  The application of countervailing duties in services
would be difficult, due to the lack of data.  Specificity should not be the only criterion for regulating
subsidies.
12. The representative of Guyana said that the issue of national treatment was complex.  Its scope
was different from country to country.  In his view, there was a need for some form of standard.
13. The Chairperson said, referring to Brazil's suggestion, that the Secretariat would examine
what kind of contribution it could make on the basis of the OECD "yellow book".  He recalled that
empirical data should come primarily from Members.  He proposed that, at its next formal meeting,the Working Party address item 4 of the Checklist Job No. 4519/Rev.1.
3
                                                     
3 Item 4 reads as follows: "(a) The wider role of subsidies, including to pursue public policy objectives;
(b) the role of subsidies in relation to development, and the needs of developing country Members for flexibility,
including special and differential treatment".S/WPGR/M/31
Page 4
C. NEGOTIATIONS ON GOVERNMENT PROCUREMENT UNDER ARTICLE XIII OF THE GATS
14. The Chairperson proposed that delegations should continue their general exchange of views
on any aspect of government procurement of services.
15. The representative of Australia said that her delegation intended to submit a written
contribution under this agenda item at the next meeting of the Working Party.
D. ORGANIZATION OF FUTURE WORK
16. The Chairperson recalled that, at the informal meeting of the Council for Trade in Services
held on 20 February, delegations had discussed the organization of future work.  It had been
suggested that Members should consider how on -going work in the subsidiary bodies could be
structured in the most efficient and productive way, in terms of issues which might need to take
priority and of how to allocate time among them, while taking into account the concerns andconstraints of small delegations.  It had been agreed that an item to that effect would be inserted in the
agenda of each of the subsidiary bodies.
17. The representatives of the European Communities, Hong Kong, China
, Australia  and Mexico
recognized that a deadline had been fixed for the negotiations on emergency safeguard measures, but
stressed that work should proceed equally on the other two agenda items of the Working Party.  Therepresentative of Australia added that the Working Party should address the terms of reference on
government procurement.  Members should provide information to help the process in this regard.The representative of Brazil recalled that, in th e discussion of the Negotiating Guidelines in the
Special Session, his delegation held the view that the negotiations in all three areas should be
completed.  The representative of Japan noted that some kind of interaction with the Working Group
on Transparency in Government Procurement would be useful.  The Working Party took note of the
comments made.
E. DATE OF THE NEXT MEETING
18. The Chairperson indicated that the next formal meeting of the Working Party had been
tentatively scheduled for 14 May 2001.
F. OTHER BUSINESS
19. Nothing was raised under this agenda item.
G. APPOINTMENT OF A NEW CHAIRPERSON
20. The Chairperson recalled that the Chairperson of the Services Council had consulted
Members on the appointment of chairpersons for the four subsidiary bodies, at the informal meetings
of the Council for Trade in Services held on 7 February, 20 February and 15 March.  On this basis, he
proposed that the Working Party elect Mr. Hugo Cayrus, from Uruguay, as its next Chairperson.
21. Mr. Hugo Cayrus  was elected by acclamation.
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