. /.WORLD TRADE
ORGANIZATIONS/CSS/W/89
14 May 2001
(01-2480)
Council for Trade in Services
Special SessionOriginal:  Spanish
COMMUNICATION FROM THE MEMBERS OF THE ANDEAN COMMUNITY
BOLIVIA, COLOMBIA, ECUADOR, PERU, VENEZUELA
Definition of Criteria for Classification of Services
The attached communication has been received from the members of the Andean Community,
(Bolivia, Colombia, Ecuador, Peru, Venezuela) with the request that it be circulated to Members of
the Council for Trade in Services.
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1. The issue of service classification is addressed in a number of the negotiating proposals
submitted by Members in the context of paragraph 2(c) of the work programme for the first phase of
the negotiations under GATS Article XIX.  Several proposals suggest changes to the sectoral
classification list drawn up by the Group of Negotiations on Services (GNS), document
MTN.GNS.W/120, hitherto used by most Members as a basis for undertaking specific commitments.
Some of the proposed changes consist of reallocating activities from one sector or sub-sector of the
above-mentioned classification to another, while others propose the inclusion of new activities not
included in the classification.
2. The ideas for changes in the classification, incl uded expressly or tacitly in the negotiating
proposals, reflect the need for a new reference list for the negotiations which is better suited to the
economic realities of trade in services.  There are a number of reasons for making changes to the list,
the most powerful perhaps being that the development of services has led to the emergence of new
activities that were not considered during the Uruguay Round and so were not included in W/120.Moreover, some Members are interested in negotiating more comprehensive packages so as to ensure
better access to an integrated group of activities which are directly or indirectly related to a specific
service.  Meanwhile, many developing countries need a more disaggregated list which will give them
greater flexibility for opening – or not – their service activities to international competition.
3. The inclusion of new classifications in the negotiating proposals submitted in effect shifts the
discussion on classification, hitherto carried on in the Committee on Specific Commitments, to the
domain of sectoral negotiations.  We nonetheless believe that an evaluation of the new proposals for
classification in the sectoral negotiations should be founded on a single set of concepts and criteria
common to all the sectors and agreed on multilaterally.  This would facilitate orderly and coherent
discussions on the changes to the classification suggested in the sectoral negotiating proposals alreadyreceived and the new ones which will doubtless be submitted.S/CSS/W/89
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Proposal
4. At its Special Session the Council for Trade in Services will address the issue of
classification, starting out by identifying and negotiating classification criteria.  Such criteria will add
clarity to discussions on classification in the context of the evaluation of the sectoral proposals
submitted for negotiation and any further sectoral analyses of classification undertaken in theCommittee on Specific Commitments.
5. We propose initially and by way of illustration a few minimum criteria to be taken into
account in the work on classification and particularly in establishing the reference list  (a) uniformity:
(b) specificity;  (c) disaggregation.
(a) Uniformity:  The reference list or document must be agreed on by consensus.  This
will help to ensure unity of language and a better understanding of the scope of
commitments.  In the interest of consolidating statistics and coherence, and in ordernot to upset the balance of specific rights and obligations negotiated in the Uruguay
Round on the basis of the nomenclature in document W/120, the reference list should
use as a basis some internationally recognized classification such as the United
Nations Central Product Classification (CPC) (the basis of W/120), the Annex on
Financial Services, the ILO International Standard Classification of Occupations.This would make negotiating instruments more transparent and enable Members to
base their future commitments on their own trade and development objectives.
(b) Specificity:  This criterion must be taken into account in establishing the
classification.  An activity's intrinsic characteristics are what determines its allocation
to one category or another.  In every production process there are both core activities,which are specific to and inherent in the process, and others which are merely support
activities.  Each sub-sector has a number of core characteristics which differentiate it
from others yet are necessary for the development of other activities.  For instance,
one regularly hears that 75 per cent of tourism involves air travel.  However, air
transport has its own specificity which makes it fully identifiable and distinct fromtourism.  Consequently, it is not classified  under tourism but has its own category in
the classification.
(c) Disaggregation:  This is necessary to help countries, particularly developing
countries, with the task of evaluating and undertaking commitments.  Distinguishing
between activities will not only clarify the options available in a given sector, but will
enhance choice and confidence an hence increase market-opening commitments.
Developing countries may have an interest in opening up some of their activities tointernational competition in order to benefit production and/or consumers.  But at the
same time, there may be other activities which for national policy reasons it is in their
interest to protect by denying access to foreign competitors or subjecting it to
conditions.
6. A single reference list adapted to economic realities in terms of coverage and detail will
afford a sounder basis for the negotiation of specific commitments and would contribute to
encouraging the least-developed countries to undertake more substantive and meaningful
liberalization commitments.  Only a detailed and specific classification will ensure the flexibility and
discretion provided for in the GATS and reflected in the Negotiating Guidelines and Procedures
adopted in March 2001.
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