RESTRICTEDWORLD TRADE
ORGANIZATIONS/CSC/M/20
7 June 2001
(01-2784)
Committee on Specific Commitments
REPORT OF THE MEETING HELD ON 9 MAY 2001
Note by the Secretariat
1. The Committee on Specific Commitments held a meeting on 9 May 2001.  The agenda for the
meeting is contained in WTO/AIR/1543.  No points were raised under other business.
2. The Chairperson said that she had circulated a Note on the organization of the meeting
(Job (01)/60, dated 3 May 2001) to assist delegations in their preparation.  The note highlighted some
points which had emerged from her consultations and which she put forward for Members
consideration.
A. CLASSIFICATION ISSUES
3. The Chairperson recalled that at the November 2000 meeting a first discussion had taken
place on the Chairman's Note Job No. 7294 of 16 November 2000, which had raised a number of
questions regarding the issue of manufacturing on a fee and contract basis, as well as the sectors under
consideration.  Additionally, at the March meeting the Committee had discussed a Note from theChairman containing a State of play on classifica tion issues (Job (01)/37 of 16 March 2001).  On both
occasions, delegations had indicated that the notes were still under consideration.  She invited
delegations to refer to relevant elements of those two notes in their interventions under the various
sub-items.
4. The representative of Poland recalled that at the previous meeting he had posed some
questions to those delegations that were sceptical about using the definitions contained in the CPC.
Those questions were raised in a horizontal manner, as relevant to the whole classification discussion,and not specifically concerning the issue of Manufacturing on a fee or contract basis.  The questions
were:  "On what basis do those Members who are op posed to using the definitions contained in the
CPC intend to identify specific services, if it were the case that the use of the CPC definitions was
rejected?  What is the obstacle to accepting the CPC definitions, the CPC being an established set of
concepts?  If the proposal to maintain consistency with the CPC classification were rejected, who isgoing to undertake drawing up definitions of each of the services contained in the W/120 list?".
Manufacturing on a fee or contract basis.
5. The Chairperson recalled that the latest discus sions on this issue had addressed the three
suggestions made in the Chairman's Note of November 2000.  As indicated in the Chairman's Note
dated 16 March 2001, most delegations had agreed, although with qualification, with those threesuggestions in substance.   Then the  question had been posed, at the March meeting, as to whether
any further work was needed in the immediate future.   At that meeting most delegations that had
addressed that question had said that discussions on the issue should be discontinued for the time
being.  She said that bearing that in mind, to gether with the views expressed during her own
consultations, it seemed that generally Members did not consider the issue to be a matter of priority atS/CSC/M/20
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that time.  She suggested that consideration of manufacturing on a fee or contract basis be concluded
at that stage without drawing any conclusion.
6. The Committee so agreed.
Environmental services
7. The Chairperson recalled that this sub-item had been considered on the basis of successive
proposals by the European Communities, the latest of those being Job No. 7612, dated
28 November 2000.  At the previous meeting, the representative of the European Communities had
announced that his delegation was considering technical comments which had been forwarded
informally by several delegations.
8. The representative of the European Communities said that the November 2000 meeting had
achieved significant progress towards the adoption of a new classification of environmental services
on the basis of their proposal.  Two of the three outstanding issues, i.e. recycling services andoperation and maintenance, had been resolved while the issue of water services was still outstanding.
Regarding the Job No. 7612, it continued to be the latest version of their proposal.  That version
incorporated some amendments introduced to gather  concensus, as specified in paragraph 2 of that
document.  Since that work was very advanced, her delegation wanted to continue to pursue those
technical classification issues in the Committee.
9. The representative of Canada reiterated a couple of questions on the EC proposal.  In
document Job No. 7612 there were bolded titles, namely 6A to G, with no corresponding CPC
numbers across them.  She wondered whether at the end, if and when the W/120 was revised, the
bolded titles would be preserved with corresponding CPC numbers across from them only, or whether
what was under the bolded titles, in the Classe s and Services column, would be retained instead in a
revised W/120.  The second question related to the column under CPC Version 1.0, where some of the
codes in that column had the expression "part of", e.g. 6C indicated part of 94900 and that continued
to 6G.  She sought clarification as to what that meant.  In replying the questions, the representative of
the European Communities said that her understanding was that only the bolded titles would be
retained with corresponding CPC numbers.  As to the second, the expression "part of" was a standing
practice in the W/120, and also in the schedules, referring to the fact that Members could take a
commitment on "part of" a sector as contained in a CPC description.  Such descriptions sometimes
covered more than what was meant to be covered under a heading in the W/120.  She asked for
clarification by the Secretariat on this point and said that she would offer definitive answers at the
following meeting.
10. A representative of the Secretariat said that Members could take commitments on "parts of" a
sector, at any level of disaggregation they wished.  The question remained as to the definition of that
part where a commitment was undertaken.  It was necessary to indicate clearly in the schedule what
part exactly was covered by the commitment, since in case of a dispute a determination of which
services were, and which were not, covered would have to be made.
11. The representative of Chile requested the results of the consultations by the EC in writing if
possible before the following meeting.  The repr esentative of the European Communities indicated
that the intention was to submit a revised proposal reflecting the results of those consultations, which
might be possible for the next meeting.
12. The representative of Brazil indicated that his delegation was open to continue to work on this
issue.  Concerning the use of clusters in the discussions on environmental services, his delegation
found it useful for the purposes of the classification exercise to the extent that it helped the Committeedefine core services, that was exclusively environmental services as opposed to related services.S/CSC/M/20
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However, the use of such a scheme, employed so far in the classification discussions, for negotiating
purposes was something that Members had to consider in the context of the negotiations.
13. The Chairperson said that the Committee would take note of the statements and would revert
to this item at the next meeting.
Energy services
14. The Chairperson recalled that some debate on this subject had taken place on the basis of four
questions raised by the Chairman, namely, a) to what extent W/120 covers the entire energy
universe?;  b) to what level of detail should this issue be pursued under W/120?;  c) is there a need to
improve the classification in this area and create a specific energy sector in W/120?;  and d) whether
the classification of energy services should be looked at from different energy sources?  Few
delegations had answered those questions and sometimes on a preliminary basis, while one delegation
had raised the additional question of whether all the activities in the energy chain could be defined asservices.
15. The representative of Venezuela recalled that her delegation had already answered the
questions posed by the previous Chairperson, as reflected in the minutes S/CSC/M/18/Rev.1,
paragraph 22, and S/CSC/M/19, paragraphs 17, 25 and 26.  She observed that in document
S/CSC/M/18/Rev.1 paragraph 22 under construction in fact related to energy.  Her delegation wasinterested in hearing the replies of other Members at that time.  Venezuela had submitted a proposal
for negotiation on energy services at the Special Session of the CTS in March.  That proposal
mentioned in a separate section the need to classify appropriately energy services and suggested a way
to achieve that goal. Venezuela would be submitting for consideration of the CTS a more specific
contribution concerning the classification of energy services.
16. The representative of the United States drew attention to the report of the previous meeting
reflecting their views with respect to the questions raised by the previous Chair.  His delegation had
also noted in that meeting that the submissions that the US and others had made in the Special Session
on this sector could provide further ideas for work either in the Special Session or in the Committee.
17. The representative of the European Commun ities reiterated the points made at the last
meeting on classification work in this sector:  first, there was a need to reflect in any classification list
the different regulatory systems that WTO Members might have in the sector;  second, the need to
evaluate carefully the correspondence of energy activities with the CPC categories, taking into
account the specific characteristics of the energy sectors;  and third, the need to exclude the non-
services activities from any classification list.  Her delegation was very interested in finalizing a list of
core energy services, or energy specific services, without prejudging the final outcome of the exercise
with regard to an eventual revision of existing cl assification.  The first objective of the exercise should
be to clarify the present classification of energy activities in the current W/120 and to identify any
unclassified activities.  The exercise should be started on an energy neutral basis, with the possibility
to have specific items on source basis when justified.  In relation to their negotiating proposal on
energy submitted to the Special Session, she said that the annex included therein aimed also at
contributing to the clarification exercise in the CSC on the basis of the approach explained previously.
18. The representative of Brazil indicated that his delegation attached importance to the exercise
of revising the W/120, provided that Members observed certain terms and conditions.  For example,
any modification should not impinge on the legal certainty of the commitments already made and
should preserve the current organization of the W/120, namely the mutually exclusive nature of the
services listed in that document.  As for energy, his delegation attached significant importance to that
sector and capital experts were still analysing the proposals put forward by the United States and
Venezuela.  One important point to bear in mind in relation to all the classification work was that aS/CSC/M/20
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balance had to be struck between, first, a classification that was focused enabling Members to make
commitments, and second, a classification flexible enough to accommodate the differences among
Members' internal regulatory frameworks.  This was illustrated particularly in the case of energy
services, since in many countries, including his, the regulatory framework was structured according to
the energy source.  That did not mean that the issue could not be discussed, at least on an initial basis,from an energy neutral perspective.  However, regulatory peculiarities should be taken into account
concerning the source of energy.  Brazil concurred with the EC concerning approach to classification
work on this sector, particularly as to clarifying aspects that were not covered by the GATS.
19. The Chairperson said that the Committee would take note of the comments, including the
reference to negotiating proposals on the sector, and would revert to this item at the next meeting.
Legal services
20. The Chairperson recalled that discussions had been conducted on the basis of the proposals by
the United States (Job No. 2157, dated 14 April 1999) and by Japan (Job No. 3186, dated
23 May 2000), and a communication from the Republic of Korea on "Points for Discussion
concerning the Definition of Foreign Legal Consultancy Services" (Job No. 4977, dated
9 August 2000).  During previous meetings some Members had stated their support for these
proposals, others had expressed preference for the current W/120 classification, and a third group hadconsidered that the distinction between host/hom e/third country and international law, followed
frequently by Members in their schedules, was the best solution.  At the last meeting one delegation
had expressed flexibility on this issue as long as certain conditions were met, such as having
correspondence tables with the Provisional CPC, should any new classification of legal services be
developed.
21. No discussion took place under this item.
Postal and courier services
22. The Chairperson recalled that work had been based on proposals by Australia (Job No. 6077,
dated 9 November 1998), the European Communities (Job No. 4146, dated 14 July 1999), and the
United States (Speaking points on express services, dated 11 April 2000).  She noted that no proposalhad yet reached a consensus and that Members were still expecting further explanations from the
proponents, on definitions in the case of the EC, and on rationale in the case of the US.
23. The representative of the European Communities said that the current WTO Sectoral
classification list  W/120 had been established on the underlying assumption that postal services were
carried out exclusively by national postal administrations, while private operators performed courier
services.  However, that distinction at regulatory level was no longer valid.  For instance, the
distinction at the regulatory level in the EC was not between postal and courier services but ratherbetween those services which were reserved to the public postal operator, universal service provider,
and those which were opened to competition. The past discussions in the Committee had clearly
shown that the existing W/120 classification no longer reflected the market reality given that some
types of postal services were being offered by private operators, i.e. those services open to
competition, while on the other hand, many public postal operators also provided express courierservices.  That explained why the EC classification proposal had merged both postal and courier, or
express delivery, services and then divided it into 8 categories, based on the types of transported items
and also on the speed of the delivery.  That classification approach had been integrated as part of the
EC's postal and courier services negotiating proposal, which reflected better the current nature of the
services concerned while at the same time provided enough flexibility to accommodate differentnational approaches and levels of development of the postal sector.  The objective was to prepare the
ground for the taking of commitments which would be valuable for consumers and suppliers of postalS/CSC/M/20
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and courier services.  Her delegation was ready to continue discussions on the technical aspects of
postal and courier services classification in the CSC.
24. The representative of the United States said that the point made by the EC was perhaps one of
the best examples of the inadequacy of the W/120.  As mentioned by the Chairperson, his delegation
had made a statement on how W/120 could be improved in the Committee, reflecting a slightlydifferent approach from that of the EC but with some commonalties.  The fact was that the proposal
that the US had made in the Committee had been overtaken by the proposal made in the Special
Session.  His delegation expected some good discussions on the proposals on that sector in the Special
Session.  Members might wish to think through what role the CSC could play that would help and
support the discussion taking place in the Special Session.
25. The Chairperson noted the interest of the EC in continuing the classification discussion on
this sector in the Committee.  She said that the Committee would take note of the statements and
revert to this discussion at the following meeting.
Construction Services
26. The Chairperson recalled that discussions had been conducted on the basis of a paper by New
Zealand (Job No. 5479, dated 22 September 1999) suggesting to clarify the classification of
multistage or turn key construction projects and to examine the merits of the creation of an "integratedconstruction services" item in the classification.  On that subject the Committee had requested the
Secretariat to get in contact with the drafters of the CPC, i.e. the United Nations Statistical Division
(UNSD) and the Voorburg group,  in order to seek clarification on their initial intentions.  The
Secretariat had reported briefly on those contacts in November 2000.  Since then, those contacts had
been pursued and exchanges had been taking place.  However, no complete and clear answer had sofar been brought to the WTO Secretariat on the question of the coverage of multistage projects by the
various constructions sub-items of the CPC Provis ional.  The WTO Secretariat had raised further
detailed questions to the UNSD and would report to the Committee as soon as it received further
answers.  She underlined that the UNSD  opinion had no legal value for the Committee by itself, as it
would have to be endorsed by Members to b ecome an element of interpretation for future
commitments.
27. The representative of the European Communities expressed interest in the results of the
exchange between the WTO Secretariat and the UNSD on this matter.
28. The representative of India expressed interest in the work on construction services.  In general
the W/120 was a good basis for classification and, while recognizing that some changes might have to
be made, his delegation had not decided the extent of, and sectors involved in, the necessary changes.
The concern of India was that some of the classification proposals might have been motivated moreby negotiating outcomes rather than pure interest in classification issues.  His delegation wanted to
reflect further as it was torn between the extent of necessary changes and its preference for preserving
as much as possible the W/120 intact so as to use it as a basis for the market access negotiations.  His
delegation would provide more substantive inputs perhaps at a later stage.
29. The representative of Mexico said that his delegation had similar concerns to those expressed
by India as to the possible need to change some parts of W/120.  Members should not forget the initial
nature of the sectoral list compiled by the Secretariat, which experience was showing needed some
work on details or further break downs in some sectors.  Some of the proposals had already broken
down to a large degree the W/120, which could be used in the formulation of specific commitments
by those countries that had proposed them, as concessions, when appropriate.  The general approachto  possible changes to some parts of W/120, and more specific beak downs to it, could be included in
the list of commitments of each of the countries that wished it to be so.  Mexico had interest in theS/CSC/M/20
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various sectors under discussion at that time, but his delegation was still in the process of analysing
each one of the proposals.
30. The representative of Venezuela concurred with Mexico regarding the possible need for
breaking down the classification of certain services sectors in the W/120.  Those comments were
along the lines of views expressed by Venezuela in supporting classification work in other sectors,where there might be a need to introduce changes to the W/120.  If the list in W/120 were to be more
specifically broken down, it would give Member s greater flexibility when scheduling commitments,
particularly to developing countries. The latter needed to choose among the various services sub-
sectors those that had the greatest potential for exports, or if they needed to increase the supply of a
service into their markets, they would have greater possibilities of attaching the necessary conditions
to carry out national policy objectives.  In the construction sector, the proposal by New Zealand
seemed to be contrary to the approach favoured by her delegation as far as the break down wasconcerned.  In fact that proposal tried to create a category of integrated construction services,
including a number of services within a single category, which would basically be a cluster.  The
greater aggregation would not enable a country that wanted to make a specific commitment for one
particular activity, or intermediary activity within  the chain of construction services, to do so without
having to make a general commitment for all the services.  That comprehensive commitment would
not leave any space for an activity in the construction sector to be carried out by other players within
each project.  Therefore, Venezuela did not consider the proposal of New Zealand for creating a more
aggregated category of construction services appropriate or necessary in that sector.
31. The Chairperson said that the Committee would take  note of the statements and revert to this
discussion at the following meeting.
B. ORGANIZATION OF FUTURE WORK
32. The Chairperson recalled that this item had be en incorporated in the agenda following a
suggestion by the Services Council that Members consider how on-going work in the subsidiary
bodies could be structured in the most efficient and productive way, while taking into account the
concerns and constraints of small delegations.  At the previous meeting this had been brieflydiscussed and delegations wanted to reflect further on it.  She suggested to divide the discussion into
two parts, first, future work on classification issues and, second, any new subjects for work.  As an
introduction to each part, she would be briefing the Committee on the results of her consultations.
33. Regarding how to proceed with the on-going work on classification, she said that in her
consultations some delegations had said that given the fact that negotiating proposals covering the
sectors under discussion in the CSC had been, or would be, submitted to the CTS Special Session, it
might be desirable to seek guidance from the CTS before introducing any changes to the CSC courseof action.  Discussions at the Special Session might not only assist the Committee in setting priorities
but also could result in a specific mandate.  The timing of receiving such input was very difficult to
estimate at that point, given the agenda of the sectoral discussion in the Special Session.  It had been
suggested that in the meantime the sectoral work could continue, where some felt that good progress
could be made particularly in relation to environment.  Initially she had felt that Members did notwished to advance work at that stage, except for en vironment; however, some interest in other sectors
had been expressed.  Additionally,  the consultations had revealed an interest in taking up a general
discussion on classification issues.  In that regard, a few delegations would like to further look at the
classification exercise in overall terms.  It had been suggested that such an exchange of views could,
for instance, address the status of the Services Sectoral Classification List (documentMTN.GNS/W/120) and provide background information on the previous work done by the
Committee in relation to the examination of its adequacy since 1996.  A couple of delegations had
been of the view that for the purpose of a possible revision, the Committee could attempt to developS/CSC/M/20
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“criteria” for introducing amendments to W/120.  She invited Members views on her report and on
how to proceed.
34. The representative of Uruguay felt that it was necessary to discuss the objectives for the
classification work, and once that would be clear the Committee could decide how to proceed in the
next 12 months.  Regarding the objectives, it was fundamental for Members to address somequestions: first, what Members wanted from classification; second, what Members wanted to do with
W/120; and thirdly, why Members did not want to use the CPC UN classification system.  As to the
second point, i.e. how to proceed, Members would have to agree on the means that should be used in
order to achieve the objectives of the classification work.  Another related question was the
relationship between the classification discussions in the CSC and the proposals submitted by some
Members in the Special Session.  In that regard only one delegation had indicated clearly its interest
in pursuing the classification work in the CSC, that was on environment. One possible answer to thatquestion was that those Members with an interest in continuing work on classification in the CSC
could submit the classification issues contained in their negotiating proposals as specific proposal in
the Committee.  The negotiating proposals before the Special Session should continue to be dealt with
in that forum, but nothing prevented Members from pursuing the questions of classification in the
CSC.  As to the questions regarding document W/120, not all Members had decided what to do in thatregard.  His delegation favoured leaving the classification in W/120 unchanged because so far no
major problems had been identified.  That approach could be strengthened by the use of the CPC UN
classification system, which provided definitions for the various sub-sectors in services.
Nevertheless, Uruguay was willing to analyse possible changes to the W/120, in relation to those
sectors where deemed absolutely necessary.  Rega rding the new topics suggested by Members during
the Chair's informal consultations, the Committee could deal with the question of how to include the
new commitments resulting from the current negotiations in the schedules of Members.
35. The representative of Chile said that the question of classification was necessarily linked to
that of negotiations.  The dilemma faced by Members was that changes in W/120 could lead to
uncertainty of existing commitments, which would be a negative outcome, on the other hand,introducing necessary changes could lead to greater clarity in future commitments, which was
desirable.  Many negotiating proposals suggested variations to the existing classification in W/120, so
the question of using new classifications, either representing a further break down of activities or the
inclusion of new activities, would emerge in the request-and-offer process anyway.  Therefore, the
question was whether Members wanted to deal with that bilaterally or multilaterally.  Chile would be
interested in having multilateral discussions on classification issues in the CSC for the purpose of
transparency and also because it was the right forum to deal with that.  Thus the link betweenclassification and negotiations should be addressed in that forum.
36. The representative of Venezuela referred to the questions raised in paragraphs 5 and 6 of the
Chairperson's Note dated 3 May 2001.  Her delegation felt it desirable to have a revision of W/120 at
that stage, prior to the negotiations on specific commitments.  Adopting a classification of services,
specifically on energy services, was a pre-condition for a possible negotiation of commitments giventhat the services sectoral classification list contained in document W/120 did not reflect the current
market of energy services.  As to whether the objective of the classification work during the year
should be something else, such a suggestion did not seem appropriate as priority should be given to
the conclusion of on-going work.  Venezuela hoped that the discussion on the various proposals for
negotiations in the Special Session could provide some ideas to move forward the work of theCommittee.
37. The representative of India said that his delegation was still reflecting on this matter.  As to
the questions posed in the Chair's note for the meeting, his delegation reserved its right to revert to it
at a later stage.S/CSC/M/20
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38. The representative of Switzerland said that the work on classification should be continued,
especially in areas where it was obvious that the W/120 needed update to better reflect the market
realities and where discussion was close to completion, such as environmental services.  The objective
of the year should be to go as far as possible with those discussions to provide a useful basis for the
current negotiations.
39. Regarding the future work on classification, the representative of Korea said that in order to
give guidance to delegations for the market access negotiations the CSC work on classification should
continue, and preferably be concluded before the commencement of negotiations on specific
commitments.  From a practical view point, however, some of the outstanding classification issues
might need more time than expected, so the possibility of having discussions on the classification
issues in parallel with the request-and-offer process should not be foreclosed.  On the revision of
W/120, he would not preclude the possibility of modifying it in order to reflect changes in theeconomic reality since the conclusion of the Uruguay Round.  However, the basic structure of W/120
should be kept intact in order to minimize the confusion that might be created in the negotiation of
specific commitments.  It was true that some of the classification work of the CSC overlapped with
the work of the Special Session since many negotiating proposals touched upon classification issues.
It was not necessary to confine the classification work in the CTS because the Committee was theright body to handle the classification issues in negotiating proposals from the technical point of view.
Therefore, until the CTS Special Session instructed otherwise the CSC should continue its work on
classification.
40. The representative of Mexico concurred with Uruguay regarding the need to define the
Committee's objectives for the next 12 months.  Concerning the Chair's note, paragraph 5, Mexico
was not opposed to carrying out clarifications to W/120 when justified, but it attached a lot of
importance to certain requirements being met before changing that list.  Members had used the W/120
as the basis for the scheduling of specific commitments and therefore that list represented the legal
certainty of obligations among Members.  It was extremely important that any changes be considered
necessary and technically justified.  Moreover, any change should guarantee the legal certainty ofexisting as well as future commitments and maintain the architecture and neutral nature of the W/120.
Finally, any amendment to W/120 should be decided by concensus of Members.  As to how to
proceed, his delegation was ready to continue the classification work within the CSC as it had been
conducted thus far.  Should the Special Session deci de to give a mandate to CSC, then the Committee
would seek the necessary adjustments to adopt such mandate.  He stressed that all sectors should be
granted the same priority, regardless the progress made until then.  Regarding paragraph 6 of the
Chair's note, in a preliminary manner, his delegation had no problem with the topics suggestedtherein.
41. The representative of Indonesia concurred with those favouring the use of W/120 as a basis
for negotiations.  However, Members needed to further consider classification issues aiming at
convergence of views on proposed changes.  Thus, his delegation was willing to continue the
classification discussions at the following meeting.
42. The representative of Japan supported the idea of asking for guidance from the CTS Special
Session.  Such guidance could take the form of some kind of deadline for CSC work on classification
or ideas about the horizontal classification issues.  However, until such guidance was given the
Committee should continue discussions on classification from a technical point of view.  Regarding
the status of the W/120, while not precluding the possibility of revising it, Japan felt that caution wasnecessary as the legal certainty of the specific commitments had to be preserved.  Concerning the
sequencing between conclusion of classification work and the negotiations, some delegations had
expressed the desirability of concluding classification prior to market access negotiations, which was
understandable due to its usefulness.  However, the conclusion of classification discussions was not a
prerequisite for the starting of access negotiations.S/CSC/M/20
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43. The representative of Australia felt that it would be more productive to wait for guidance
from the CTS Special Session.  The discussion of the proposals in that forum would help identify
what needed to be done and thus help move beyond conceptual discussions conducted in the
Committee thus far due to lack of concrete commercial basis to dealing with the problems.  On
paragraph 6 of the Chair's note, it contained a number of practical and useful issues and she wouldlike to hear from others what was involved in that type of work.  Any other work to be undertaken by
the CSC should be based on Members suggestions.
44. The representative of the United States indicated that his delegation’s understanding had been
that one of the important objectives of the CSC was to develop an agreed classification list because
none existed at that point.  Based on the comments made that day, he wondered if there might be
some confusion on that situation and reiterated that there was no agreed classification system for
scheduling GATS commitments.  That meant that the US took a slightly different focus from that ofothers with respect to whether changes should or should not be made to the W/120.  Some delegations
had identified specific criteria that would need to be met before considering or introducing any
changes to the W/120.  Instead the US felt that the CSC should work towards an agreed document,
whether it be W/120 or some alternative, supported by all Members as a means of scheduling GATS
commitments, which was an important objective.  The Committee started that project on an overallbasis and had agreed that it was not feasible to attempt a whole revision of W/120.  So the Committee
had been working on a Member driven basis focusing on particular sectors that had been of interest to
Members, something that should still be left open.  There was merit in one point made by Japan and
Australia that it might be a good opportunity to allow the Special Session of the CTS to provide the
Committee with guidance as appropriate on how to take forward the classification work.  Herequested clarification as to what was said in the Chair’s note as to some Members being interested in
looking at classification issues on a horizontal basis in overall terms, since the CSC had started out
that way some year ago.
45. The representative of Hong Kong, China felt that CSC was actually the best forum to carry
out the technical work relating to classification.  However, given that classification issues were
contained in the negotiating proposals to be discussed in the following week at the CTS, at that stage a
wait-and-watch approach seemed sensible.  More classification issues would arise from those
discussions and then it would be more appropriate for the CSC to look at what would be necessary to
do in classification to facilitate market access negotiations. Regarding the revision to the W/120, her
delegation did not think that it needed a substantive revision, but of course if there were cases where
the current document did not reflect market reality her delegation would consider possible changes.
As to the horizontal discussion referred to in the Chair’s note, she requested clarification as to whatproponents would like to address in such a discus sion.  Her delegation wondered whether any further
discussion on the horizontal issues could actually add to the process; in other words, what benefits
could be derived from such a horizontal discussion.
46. The Chairperson said that her understanding was that such discussion would cover whether
Members agreed on the need to revise the W/120, if so how to do that.  In that regard, some suggested
the development of criteria for introducing change s to the classification system.  Also the idea to
discuss the general use of CPC provisional or CP C Version 1.0 had been suggested in that context.
47. The representative of Brazil concurred with Uruguay and Mexico.  The classification
discussion was linked to the negotiations and there was merit in addressing those issues regardless of
the guidance that might be received from the Special Session of the CTS.  There was merit inconsidering criteria for introducing any changes to the W/120.  He did not address the points made in
paragraph 6 of the Chair’s note at that stage but noted that the terms of reference of the Committee
were broad enough to accommodate any issue raised by Members.  He took note of the statement by
the US regarding the W/120 not having legal value and stated that Brazil's schedule, which had legal
value, had been largely based on the W/120, which explained the concerns with revising the W/120.S/CSC/M/20
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48. The representative of New Zealand felt that the work program for the CSC would emerge
from the consideration by the Special Session of the negotiating proposals.  Forthcoming proposals,
including those from his delegations, would suggest classification issues for clarification.  It would be
useful to have that clarification prior to the reques t-and-offer process, but even the latter issue could
be guided by instructions from the Special Session.
49. The representative of Colombia recalled that at the last Special Session meeting her
delegation had talked about the need for a more general discussion on the question of classification of
services.  There were a number of suggestions for changes in classification, either explicit or tacit,
included in the negotiating proposal.  That reflected a need to have a new list of reference for the
purposes of negotiations better adjusted to trade policy in services.  The inclusion of classification
issues in the proposals had moved in practice the classification discussion that had been conducted in
the CSC to the area of the negotiations.  Therefore, the CTS should give the CSC instructions as tohow to continue to deal with the question of classification.  It was necessary to define criteria for the
modification of the W/120 classification in the Special Session, which would enlighten the technical
discussions to take place in the CSC.  Her delegation would be submitting to the Special Session a
document outlining criteria for any modification of the W/120.  Colombia felt it was necessary to
change the W/120 but it should be done on the basis of criteria agreed upon Members.  As toparagraph 6 of the Chair's note, the topics indicated therein would be of interest to her delegation.
50. The representative of Turkey said that the Committee should not question the legal aspects of
the W/120.  It was a binding document and it remained so until agreed otherwise.  On the various
proposals in the  CSC suggesting revisions, it was necessary to conclude those discussions to at least
answer those Members submitting them.  A general discussion on classification issues was neededand should be the basis of future work.  Since the classification proposals concerning some sectors
had also been tabled in the Special Session, the work  in the CSC would have a direct or indirect effect
on the market access negotiations.  The results of CSC discussions might provide Members a concrete
ground for the negotiations.  Unless otherwise agreed on the classification discussions, they should
not prejudge the negotiations and the existing architecture should be preserved.
51. The representative of the Philippines indicated that the existing classification system, while
non-binding among Members, was relatively sufficie nt without prejudice to forthcoming discussion in
the Special Session.  The technical issues involved in the proposed amendments were complex and
while interested in evaluating the proposed amendments to the classifications, his delegations felt that
discussions along those lines would be dependent on  the discussions of negotiating proposals.  As
discussions in the CTS would intensify, and then technical discussions on classification in CSC might
continue, he warned against a future work program that could constitute an undue burden on smalldelegations.  He reiterated that classification work would have to be concluded prior to conclusion of
market access negotiations.
52. The representative of the European Communities ag reed that there was a strong link with the
work that would be carried out at the Special Session, as many proposals contained classification
annexes.  At the same time, Members should remain  free to raise any issue of technical nature they
would want in the CSC.  The Committee should aim to tackle those sectors which were most
advanced, notably environmental services.  Classification discussions had been very useful in
clarifying for WTO Members the scope and commercial realities in various sectors.  Therefore, it was
important that those discussions be held at a multilateral level, in a transparent way, and thus should
be continued. Regarding the status of the W/120, its whole revision was not desirable because of theneed to maintain the legal security of past co mmitment, to maintain th e main architecture and
specially the neutrality of that list.  However, at the same time real gaps had been identified in several
sectors of the W/120 and those should be resolved.  The need to revise certain sub-sectors of that list
would become evident in the forthcoming discussions and during the actual negotiations.  Regarding
the question posed in the Chair's note, paragraph 5, whether  to attempt a revision of W/120 prior toS/CSC/M/20
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the negotiations of specific commitments, because of the cross-fertilization between negotiations and
the revision of the W/120 referred to before, concluding the revision should not be a prerequisite to
starting negotiations.  Regarding the criteria cited by some Members, very important to distinguish
between the aim of establishing a coherent classification system reflecting market realities and the
undertaking of commitments.  The former should not be made too burdensome to achieve.
53. The representative of Oman supported previous speakers regarding W/120 as the basis for the
Committee's discussions and also on avoiding undue burden for developing countries.  Her delegation
was especially interested in the classification of energy services and would provide a position at a
later stage.
54. In summarizing the first part of the discussion, the Chairperson said that it seemed that
Members needed more time to reflect on the organization of classification work.  No delegation had
suggested suspending the classification discussion s in the CSC, however, all interventions had been
mostly about work on classification in general rather than work on specific sectors.  Most Members
preferred to wait for guidance from the CTS discussion of the negotiating proposals.  She would
continue informal consultations on how to proceed with classification issues.  Some delegations had
mentioned the idea of developing criteria for introducing changes to W/120 and others had added the
desirability of concluding classification work prio r to the negotiation of commitments.  She invited
Members to reflect on those points in advance of the informal consultations to be convened.
55. Regarding possible new subjects in addition to classification, the Chairperson recalled that her
note had mentioned some possible topics, namely, MFN exemptions and procedures for the
presentation of requests and offers, which had been suggested by Members during her consultations.
As for MFN exemptions, two procedural aspects had be en mentioned: first, to revise an informal note
by the Secretariat on the listing of MFN exemptions (Listing of Article II exemptions – Explanatory
note by the Secretariat, Job No. 2061, dated 15 September 1993), which might be useful for the
upcoming maritime negotiations and for acceding countries; and second, the procedural aspect of
modifications to MFN exemption lists.  Another suggestion was to have a general discussion on how
Members should present their initial requests and offers.  In that context, the issues of how toincorporate the commitments resulting from the current negotiations into the schedules of Members
had also been mentioned.  Given that the negotiations were taking place in the CTS Special Session,
any work related to those issues in the CSC would have to be of a technical nature and avoid any
duplication with on-going work in the CTS.  Given the time constrains, she suggested to postpone the
discussion on those possible new subjects to the following meeting of the Committee.
56.  The Committee so agreed.
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