RESTRICTEDWORLD TRADE
ORGANIZATIONS/WPGR/M/38
26 July 2002
(02-4172)
Working Party on GATS Rules
REPORT OF THE MEETING OF 15 JULY 2002
Note by the Secretariat1
1. The Working Party on GATS Rules held its thirty-eighth meeting under the chairmanship of
Mr. Thomas Chan, from Hong Kong, China.  The agenda for the meeting was contained in
WTO/AIR/1860.  It consisted of six items:  work programme for the Working Party;  negotiations onsafeguards under GATS Article X;  negotiations on subsidies under GATS Article XV;  negotiations
on government procurement under GATS Article XIII;  date of the next meeting; and other business.
The Chairperson drew attention to the Annotated Agenda  (JOB(02)/83) which proposed themes for
discussion under the three agenda items
2. The agenda for the meeting was adopted.
A. WORK PROGRAMME FOR THE WORKING PARTY
3. The Chairperson recalled that paragraph 2 of the Communication from the Chairperson of the
Working Party on GATS Rules  transmitting the Draft Fourth Decision on Negotiations on Emergency
Safeguard Measures  stipulated that, "the Chairman will carry out consultations to establish a
programme structuring future work of the Working Party"2.  At its meeting of 3 June 2002, the
Working Party had agreed that the consultations on a work programme for negotiations on emergency
safeguard measures should continue and that they should include work programmes for negotiations
on subsidies and government procurement as well.  Members had also agreed that the possible
elements for the work programmes be set out in a Note to be issued by the Chairperson under his own
responsibility.  On the basis of further informal consultations, he had issued a Chaiperson’s Note
(JOB(02)/82) setting out what were, in his view, the possible elements for the work programmes on
emergency safeguard measures, subsidies and government procurement.  On 10 July, the WorkingParty had held an informal meeting at which delegations had been consulted on the elements of the
draft work programme.  A number of delegations had indicated that they could support the elements
as they were.  Some delegations had raised concerns or suggestions on individual elements, while
others had expressed doubts on the need for changes.  After further informal consultations, the work
programme, as it now stood, struck an appropriate balance and represented, in his view, the basis onwhich an agreement could most likely be achieved.
4. Introducing this draft work programme, he stressed three points of understanding under which
this draft had been prepared.  First, the work programme should not in any way prejudge the outcome
of the respective negotiations on emergency safeguard measures, subsidies and government
procurement.  Members would remain free to bring up any relevant issues for discussion, includingthe questions of feasibility and desirability, as well as the scope of the negotiations under any of the
three subjects of negotiations.  Second, benchmarks for submissions were indicative, with a view to
encouraging Members to put forward submissions on the respective subjects as early as possible, and
                                                     
1 This document has been prepared under the Secretariat's own responsibility and without prejudice to
the positions of Members and to their rights and obligations under the WTO.
2 S/C/W/205/Rev.1.S/WPGR/M/38
Page 2
would be without prejudice to Members’ right to put forward further suggestions and raise relevant
issues by way of submissions at any time, under any of the three subjects of negotiation.  Third, the
undertaking of individual items of work should be without prejudice to each other.  For instance, the
identification, elaboration and consolidation of elements for ESM should be undertaken without
prejudice to addressing the question of feasibility and desirability of ESM and vice versa .  Similarly,
the raising of any relevant issues for discussion by Members should be without prejudice to the
continued discussion already being undertaken and vice versa .  He was aware that there were
remaining disagreements over some elements of the work programme.  However, many delegates had
pointed out that the work programme was no more than a tool to assist the Working Party to organize
its work, and had indicated that they were prepared to accept the programme as it was.  It was in this
same spirit that he wished to appeal to delegations’ flexibility.  He suggested to turn to informal mode
to have an exchange of view on the draft work programme.
5. Upon resuming the formal meeting, the Chairper son said that the informal discussion had
allowed a useful exchange.  Noting that there were some remaining concerns, he proposed that
Members consider adopting the work programme in JOB(02)/82 with the following changes:  (i)
"work programme" would  read "work programmes" th roughout the text to reflect that separate work
programmes were established for the respective subjects of negotiations, and the first paragraph
should be read as referring to all three work programmes;  (ii) a reference to paragraph 7 of the
Negotiating Guidelines would be added in paragraph 2 of JOB(02)/82.  Moreover, the work
programmes would be adopted taking note that the th ree subjects of negotiations were at different
stages of progress, and that benchmark for submissions were only indicative.  It was also understood
that the work programmes would not prejudge in any way the outcome of the negotiations.  Withrespect to the three subjects of negotiations, any issue could be raised, including on the scope of the
negotiations or the mandate.
6. The representative of Mexico said that his delegation wished to advance work on all three
agenda items.  However, the modifications just suggested by the Chairperson did not fully address the
concerns of his delegation.  Further clarification was needed, in particular with respect to governmentprocurement.  Moreover, it was not appropriate to repeat the first paragraph under each agenda item
because the first sentence of paragraph 1 of JOB(02)/82 related only to emergency safeguard
measures.  He proposed that the three points of understanding that the Chairperson had just read out in
his introductory statement be included in the work programme instead of the current paragraph 1.
7. The representative of India took note of the views expressed in the informal discussion which
had just taken place.  His delegation wanted a work programme in place to be able to proceed with the
substantive work.  However, India had some remaining concerns.  First, it should be explicitlyreflected in the work programme that the benchmarks for submissions under the various items were
only indicative and that Members could put forward submissions after that date.  Second, there should
be an understanding on the negotiating mandates, to ensure that delegations had a clear idea on what
the Working Party was aiming at.  It would be useful to have a revised proposal in writing and come
back to it later on.
8. The representative of Brazil thanked Mexico for hi s suggestions.  In the interest of adopting a
work programme as quickly as possible, his delegation was ready to consider any proposal to
accommodate remaining concerns.  Brazil had always worked under the assumption that benchmarks
for submissions were indicative.  He enquired whether India could circulate its drafting suggestions in
writing.
9. The representative of the Philippines, speaking on behalf of ASEAN, said that his delegation
could support the changes proposed by the Chair.  ASEAN was cognizant of the concerns expressed
by Mexico and India, and wished to see drafting suggestions by these delegations.  He noted that the
deadline of 15 March 2004 for negotiations on emergency safeguard measures was compulsory and,S/WPGR/M/38
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thus, was not an indicative benchmark.  The Chairperson noted that the references to the benchmarks
concerned only the benchmarks for submissions.
10. The representative of the European Communitie s said that her delegation had come prepared
to accept the text as it was in JOB(02)/82, although it did not necessarily contain everything the EC
wanted.  After listening to the informal debate, th e EC would also have been open to the changes
suggested by the Chair.  Her delegation would be pr epared to look at the suggestions made by Mexico
and India, but could not give any guarantee as to what it would do with them without having seen
them in writing.  She enquired why Mexico insisted on three separate work programmes.  In her view,
the proposal by the Chair to add an "s" to "w ork programme" throughout the text would clearly
indicate that the Working Party was dealing with three different work programmes.  Should it be
necessary to adopt them separately, then the Uruguay Round principle "nothing is agreed until
everything is agreed" would apply.
11. The representative of the United States said that his delegation could accept the work
programme contained in JOB(02)/82, as well as the changes proposed by the Chairperson during this
meeting.  The United States took careful note of the three points made by the Chair in his introductory
statement and agreed with them.  He noted that the reference made, in JOB(02)/82, to the Fifth
Ministerial Meeting was similar to the reference made in the Communication from the Chairpersoncontained in S/C/W/205/Rev.1, i.e. that the Fifth Mi nisterial Meeting provided an opportunity for a
stock-taking.
12. The Chairperson invited the Working Party to reve rt to this item at the end of the meeting.
13. At the end of the afternoon session, the Chairperson drew attention to document
JOB(02)/82/Rev.1, which contained a revised work programme, taking into account concerns raised
during the morning.  The main change was that the three points made earlier in his introductory
statement were now reflected in the text and replaced the first sentence of former paragraph 1.
Moreover, in line with the suggestions he had made in the morning:  (i) an "s" had been added to
"work programme" (title, paragraphs 1(a) and 2), to make it clear that each item had a separate work
programme, and to recognize the fact that they were at different stages of progress;  and, (ii) areference to paragraph 7 of the Negotiating Guidelines had been added to the work programme on
emergency safeguard measures.  These changes were meant only to clarify the work programmes and
he hoped that the text as it then stood could form the basis for a consensus.
14. The representative of the European Communities sought clarification regarding the last two
sentences of paragraph 1(c).3  The Chairperson replied that these sentences were meant to illustrate
the first sentence.  This sentence reflected Members' understanding in previous consultations that the
treatment of individual items of work should be without prejudice to each other.  The representative ofthe Philippines, speaking on behalf of ASEAN, expressed concerns regarding paragraph 1(c), in
particular the second sentence.  He understood that the first sentence referred to the relationshipamong the three agenda items, and not to different elements within an item.  The last sentence of the
paragraph was not problematic.  The Chairperson said that the second sentence of paragraph 1(c) was
meant to clarify the relationship between the two elements of paragraph 3(a).4
                                                     
3 Paragraph 1(c) of JOB(82)/82/Rev.1 reads as follows: "The undertaking of individual items of work
should be without prejudice to each other.  For instan ce, the identification, ela boration and consolidation of
elements for ESM should be undertaken without prejudice to addressing the question of feasibility anddesirability of ESM and vice versa.  Similarly, the raising of any relevant issues for discussion by Membersshould be without prejudice to the continued discussion already being undertaken by Members and vice versa."
4 Paragraph 3(a) reads of JOB(02)/82/Rev.1 reads as  follows:  "to identify, elaborate and consolidate
elements for ESM and to address the question of feasibility and desirability of ESM;"S/WPGR/M/38
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15. The representative of Uruguay agreed with the European Communities that the last two
sentences of paragraph 1(c) lacked clarity.  He suggested to delete them and add, at the end of the first
sentence, the following words:  "… under each negotiating mandate".
16. The representative of India recalled that his delegation had concerns, in particular with
respect to the benchmark and the scope of the negotiating mandate under GATS Article XIII.
Paragraphs 1(a) and (b) partly addressed these concerns.  With respect to paragraph 1(c), he shared
the doubts of other delegations and would cons ider the suggestion just made by Uruguay.
17. The representative of Switzerland said that, in spite of remaining concerns, his delegation had
come prepared to support the work programme as contained in JOB(02)/82, which would have
enabled the Working Party to proceed in a precise manner on the substantive issues.  However, the
delicate balance which had been reached was once again put into question.  He needed to consult his
capital on this new version.  He shared the concerns expressed with respect to paragraph 1(c).
18. The representative of the United States understood the concerns expressed regarding
paragraph 1(c).  However, the second sentence was important for his delegation and should be
retained or reflected somewhere else.
19. The Chairperson felt that the Working Group was very close to an agreement.  The proposal
made by the representative of Uruguay could alleviate the concerns expressed with respect to
paragraph 1(c).  The second and third sentences of this paragraph were on record in his introductory
statement and could be deleted from the text.  He proposed that Members consider adopting the work
programmes on an ad referendum  basis, which meant that the text would be adopted, unless any
Member(s) objected to it within one week from that meeting. The text proposed for adoption was
contained in JOB(02)/82/Rev.1, with the modifica tion proposed by Uruguay on paragraph 1(c), i.e.
the second and third sentences of that paragraph would be deleted, and the words "under each
negotiating mandate" would be inserted at the end of  the first sentence.  The one-week deadline would
allow the Working Party to take advantage, for any further consultations, of the services week, should
it be necessary.
20. The representative of Mexico said that the Working Party was very close to achieving a
result.  Paragraph 1(c) would be acceptable with the modification suggested by Uruguay.  In the
absence of any objection, the text could be agreed on an ad referendum  basis.  The representative of
the Philippines also said he could support the ad referendum  procedure.
21. The representative of Uruguay said that, with some flexibility, the text could be adopted at
this meeting.  He proposed to include a reference to feasibility and desirability in the new
paragraph 1(c), so as to take into account the concern expressed by the United States with respect to
the proposal his delegation had just made.  Thus, a reference to "including the question of feasibilityand desirability" could be inserted into the first sentence, between the words "work" and "should".
The representative of the United States said that his delegation could accept this suggestion.
22. The representative of Switzerland sought further clarification concerning the ad referendum
procedure.  A representative of the Secretariat replied that the ad referendum  procedure was used
when, although there was no complete consensus, Members were very close to agreeing on a text. The
ad referendum  procedure provided a period of time during which those delegations which might still
be in doubt as to whether they could join the consensus, could come back and notify the Secretariat
that they were not able to join the consensus.  In such as case, the ad referendum  adoption of the text
would be void and the Working Party would go b ack to the status quo, i.e. a draft instead of an
adopted work programme.  The Chairperson had su ggested that Members would have one week, i.e.
until Monday 22 July, for expressing any objection to the text.  The representative of Switzerland said
that his delegation could go along with this procedure.S/WPGR/M/38
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23. The Chairperson  clarified that the text he submitted to the ad referendum  adoption procedure
was the text contained in JOB(02)/82/Rev.1, with  a new paragraph 1(c) which would read: "The
undertaking of individual items of work, including the question of feasibility and desirability, should
be without prejudice to each other under each subject of negotiations".
24. The Working Party adopted the work programme in JOB(02)/82/Rev.2, as modified, ad
referendum .
B. NEGOTIATIONS ON EMERGENCY SAFEGUARD MEASURES  (ARTICLE X OF THE GATS )
25. The Chairperson invited delegations to give further consideration to the Communication from
the European Communities and Their Member States on Modal Application of an Emergency
Safeguard Measure (S/WPGR/W/38), as well to the Communication from Australia on Elements for a
Possible "Core Mechanism" for Temporary Suspension or Modification of Commitments
(JOB(02)/8).5  Delegations might also wish to continue their comparison of the various approaches on
the table with a view to identifying possible common elements.  In this regard, delegations might give
some thought to what they would see as possible outcomes from a broader perspective, taking into
account not only their standpoints, but also the views and positions expressed by other Members.  He
proposed that this discussion take place in informal mode.6
26. The representative of Australia said that the informal communication presented by her
delegation in JOB(02)/85 reflected the intervention she had made at the informal meeting of 3 June.
A few major points needed to be emphasised.  The two models had been discussed, at least in general
terms, and this discussion should not be repeated.  The Australian model was based on less
prescriptiveness and more accountability, and would allow Members in genuine emergency situations
to take corrective action by temporarily suspending the commitment that was causing the emergency.A number of delegations had suggested that it might be useful to seek a compromise that would be
broadly acceptable to all Members.  Her delegation had suggested that a possible compromise could
lie in a strengthened CTS role, somewhere between the two models suggested.  The CTS role should
have enough "teeth" to discourage abuse, while allowing Members facing genuine difficulties to take
temporary remedial action without having to obtain explicit CTS approval.   Australia had found thatmost of the elements of the Synopsis either clearly applied or were not relevant to the core
mechanism.  For example, points A to H of the Synopsis could be dealt with expeditiously since both
Australian models dealt with these issues in a fairly extensive fashion and made clear whether they
were applicable or not.  It might, however, be useful to focus efforts on process-related issues (point I
of the Synopsis), where the two models centered on guidelines and disciplines aimed at upholding
good faith and creating a credible and effective mechanism for dealing expeditiously with the
temporary suspension of commitments.  There were a number of remaining questions, the main onesbeing the duration of the process once the CTS was notified and the precise role of the CTS.
Notification and surveillance were important issues, which were addressed in points 1 to 5 of
JOB(02)/85.  But the key issue that had to be resolved a priori  was whether a Member had an
absolute right to suspend a commitment.  At the next meeting, Members could focus on the issue of
absolute right, and the Working Group might well conclude that Members did have a qualified right tosuspend commitments in certain conditions.  She wa s unsure, however, what these conditions would
be.  After having reached some understanding on this issue as soon as possible, Members would be
ready to move on to the next step, which was designing a mechanism or procedure governing
Members' temporary suspension of their commitments .  She urged Members to avoid falling back into
the trap of loosing sight of the forest for the tree,  in other words in getting bogged down in irrelevant
details or in details that were not going to lead  to anything practical.  The focus should be on
                                                     
5 See also Communication from Australia on Questions raised at the informal meeting of the Working
Party on GATS rules held on 12 February 2002 , JOB(02)/9, 13 February 2002.
6 See Summary of Comments Made During the Meeting of 3 June , JOB(02)/96.S/WPGR/M/38
Page 6
designing a practical and workable mechanism and, then, on looking at the respective roles of the
invoking Member and the CTS.  Under the core mechanism proposal, Australia had spelt out quite
clearly the role and the disciplines on the invoking Member, but had not managed to do so for the role
of the CTS, mainly because there were too ma ny outstanding questions in terms of process.
C. NEGOTIATIONS ON SUBSIDIES  (ARTICLE XV OF THE GATS )
27. The Chairperson invited delegations to continue their general exchange of views on subsidies.
He noted that, on 12 July, an informal paper had been circulated by the delegations of Argentina,
Chile and Hong Kong, China (JOB(02)/84) and invited the delegation of Chile to introduce it.
28. The representative of Chile recalled that the primary objective was to increase transparency in
the area of subsidies, so as to comply with the mandate contained in Article XV and with paragraph 7
of the Negotiating Guidelines.  Against this background, Chile, together with Argentina and
Hong Kong, China presented a simplified questionnaire, which was based on the 1997 questionnairecirculated in document S/WPGR/W/16, to which only four Members had responded so far.  Various
Members had considered at the time that it was difficult to respond to the questionnaire, because there
was no agreed definition for subsidy in services and the questions were too detailed.  The new
informal paper suggested that the definition contained in the Agreement on Subsidies and
Countervailing Measures (SCM Agreement) be used as a working basis, but Members might use anyother definition of subsidy, as long as it was specified.  Argentina, Chile and Hong Kong, China had
kept only five of the ten questions in S/WPGR/W/ 16, and had simplified them.  It was important to
obtain replies, even if, in a first round, the level of precision was not very high.  What mattered was to
increase transparency in services subsidies.  This was particularly important at the beginning of a
market access negotiations.
29. The Chairperson welcomed this new contribution which would allow to continue the debate
on the need for more and improved information on services subsidies.  He recalled that, at the last
meeting, delegations had addressed issues such as scope, modalities, problems encountered, results
achieved – or not achieved – in this information exchange to date.  It had also been suggested that
Members might provide information on subsidies they encountered in other markets, withoutidentifying the trading partner(s) concerned. Moreover, several Members had suggested that the
Chairperson's Checklist on Subsidies (Job No. 4519/Rev.1) be revised.  He was ready to consider such
a revision, should Members so wish, but concrete proposals were needed.
30. The representatives of the Republic of Korea, Canada
, the United States , Mexico , Uruguay ,
Canada thanked Argentina, Chile and Hong Kong, China for the written contribution.
31. The representative of Hong Kong, China reca lled that the Working Party had a mandate to
fulfill on subsidies and hoped that this simplified questionnaire in JOB(02)/84 would help Members to
address seriously the issue of subsidies.
32. The representative of the Republic of Korea sa id that the proposed simplified questionnaire
represented a good start to gather information on subsidy programmes.  At the last meeting, his
delegation had suggested that the Secretariat update its note on information contained in WTO Trade
Policy Reviews (S/WPGR/W/25), and undertake a compilation of subsidy-related information found
in the various sectoral proposals.  This information would be very helpful to facilitate discussions.
33. The Chairperson recalled that, at the last meeting, the Working Party had an inconclusive
discussion on the background work that the Secretariat could usefully undertake under this agenda
item.  Having addressed this issue in his informal consultations, he understood that there was no
objection to ask the Secretariat to update its background note on information contained in WTO TradePolicy Reviews (S/WPGR/W/25 and Addenda).S/WPGR/M/38
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34. The representative of Canada said that the simplified questionnaire proposed in JOB(02)/84
did not seem to make it less difficult for Members to notify relevant subsidies in services.
Fundamental questions remained, such as how to define a subsidy.  Moreover, it was not clear
whether governmental assistance to service sectors was trade-distortive.  He asked further clarification
with respect to the sentence, in paragraph 4, that the existence of subsidies in different markets was
"relevant".  The representative of Chile said that the information exchange under Article XV covered
all subsidies, not only trade-distortive ones.  In a second instance, the Working Party could examinethe nature of the subsidies and address the various questions in the Chair's Checklist.  Chile was ready
to participate in market access negotiations, but wanted to be assured that its market would not be
distorted by subsidies granted in other markets;  this was the message that the word "relevant" tried to
convey.
35. The representative of the United States said that the purpose of the discussion was to look at
the need for any possible new disciplines to address trade-distortive effects of subsidies.  He
wondered how the Secretariat could distinguish between trade-distortive and non trade-distortive
subsidies in collecting information contained in TPR reports.  If the Secretariat did not make that
distinction, then the undifferentiated information was not really helpful for the discussion under
Article XV.  A representative of the Secretariat said that the initial demand for this compilation had
been triggered by the feeling that, as the information exchange under Article XV was not taking off,
there was a need to find a substitute.  As indicated in relevant disclaimers to documents
S/WPGR/W/25 and its Addenda, the Secretariat neve r attempted to propose whether a given subsidy
was trade-distortive or not.  It was up to Members to make this judgement.
36. The representative of Mexico said that TPR reports did not allow to tell whether a subsidy
was trade-distortive and it was up to Members to judge that.  The informal paper by Argentina, Chile
and Hong Kong, China in JOB(02)/84 contained useful  ideas on what to do before discussing the need
for new disciplines.  It would be useful if the Secretariat could update its compilation of TPR-related
information.
37. The representative of the Republic of Korea said that factual information provided by the
Secretariat, such as updating information contained in TPR reports and compiling relevant elements in
sectoral proposals, could be considered as part of the information exchange in Article XV, which
concerned all subsidies.  This was a first step which should not pose difficulties.
38. The representative of Uruguay said that there were two sources of information for subsidies.
First, the information contained in TPR reports was interesting and did not prejudge whether these
subsidies were trade-distortive.  Second, Members could provide information on the subsidies they
found in notifications or in legislations.  He wondered whether the replies to the simplified
questionnaire proposed in JOB(02)/84 would be given on a voluntary basis.
39. The representative of Canada enquired whether the information contained in TPR reports was
based on the notifications made under Article 25 of the SCM Agreement.  Should this be the case, the
information would have to be read in the particular context of the SCM Agreement, in the light of the
definition contained in Article 1 of that Agreement.  It was important to keep in mind the distinctionbetween trade-related and trade-distortive subsidies.  Moreover, some subsidies might concern goods,
but had no relevance for services.  A representative of the Secretariat said that TPR reports were
based on any information available.  They did not distinguish between trade-distortive and non trade-distortive subsidies, nor did they necessarily indicate whether the objective of the subsidy was trade-
related or, say, social.
40. The representative of Argentina said that the purpose of the simplified questionnaire was to
comply with the information exchange, but not to decide whether subsidies were trade-distortive or
not.  He trusted that all delegations, and in partic ular those who traditionally emphasised the need forS/WPGR/M/38
Page 8
transparency, could support the approach proposed in JOB(02)/82.  The representative of Chile said
that it was up to each Member to decide whether to reply to the simplified questionnaire.
41. The Chairperson understood that there was a general feeling among Members that more
information was needed.  Such information could come from Members and the Secretariat.  Members
were invited to give consideration to the simplified questionnaire proposed by Argentina, Chile andHong Kong, China.  The Secretariat would undertake to update its note on TPR-related information
for the next meeting of the Working Party, on the same basis as in the past.
D. 
NEGOTIATIONS ON GOVERNMENT PROCUREMENT  (ARTICLE XIII OF THE GATS )
42. The Chairperson invited delegations to continue their general exchange of views on
government procurement.  He noted that, on 11 July, the European Communities and their Member
States had circulated a communication on govern ment procurement of services (S/WPGR/W/39).
43. The representative of the European Communities said that the communication in
S/WPGR/W/39 underscored the size of government procurement markets, as well as the particular
interest developing countries would have to liberalise this sector.  The EC proposed to make the best
use of the flexibility provided by the GATS and to discuss the implementation of a number of general
principles applying to services, and, where necessary, the possibility of choosing which sector could
be opened up.  In other words, each Member would be free to undertake commitments where it wouldbe in its interest and have the possibility of opening up on a partial basis, indicating which restrictions
were maintained.
44. The Chairperson recalled that, at the last meeting, Members had exchanged views on the
scope of the mandate contained in Article XIII. The Annotated Agenda  prepared for this meeting
identified some references to previous discussions on the issue of the mandate, which had been firstraised at this Working Party in July 2000.
45. The representatives of Chile, Japan
, Canada , Venezuela , India , Philippines , Mexico , Peru  and
Pakistan thanked the European Communities for the communication.
46. The representative of Chile said that her delegation was aiming at the best effective access to
procurement markets.  In Chile, government procurement was open and transparent.  Her delegation
could shared the objective of the EC proposal to  do away with unnecessary restrictions, increase
transparency and achieve simplified procedures.  She enquired what the EC position was with respect
to thresholds, since this issue was not mentioned in the EC communication;  yet, it was an important
one.  Secondly, the relationship between the MFN principle and the Agreement on Government
Procurement should be specified.  Thirdly, more information was needed on the linkage between
development of general disciplines (Section A) and sectoral disciplines (Section B).
47. The representative of Japan noted that the EC communication made a reference, in Section A,
to the need for consistency between this Working Party and the Working Party on Transparency in
Government Procurement (WGTGP).  He enquired how the European Communities intended to
ensure this consistency.  Japan was open to a discussion on sector-specific rules, but would be
interested in having more details on the kind of issue that should be addressed in this context.  Japan
had particular interest in the sectors of construction, engineering and architecture, and, in the light offurther explanations from the EC, might want to s ubmit an own contribution.  Section C, dealing with
commitments was ambitious, but, given the importance of government procurement in trade in
services, the Working Party should work towards this objective.
48. The representative of Canada said that th e EC communication contained a number of new
ideas.  His delegation intended to come back to it at future meetings.S/WPGR/M/38
Page 9
49. The representative of Venezuela said the negotiations should be driven by contributions from
Members.  The European Communities had announced on several occasions in the past that it
intended to deepen this issue.  As the document was not available in Spanish, it had not been possible
for her delegation to analyse it.  Venezuela was prudent since procurement of services was an
important aspect of development policies, and should remain so.  She noted that paragraphs 8 and 15of W/39 acknowledged that flexibility was necessary for developing countries in order to take into
account national policy objectives.  A mere liberalisation of markets might bring benefits, but would
need to be complemented by adequate policies.  She enquired which criteria had been used by the
European Communities to select the various sectors referred to in paragraph 13, and whether only
those sectors should be discussed.
50. The representative of India recalled that he had indicated the position of his delegation on the
scope of the mandate contained in Article XIII at the last meeting, i.e. paragraph 1 of Article XIII
exempted government procurement from the application of Articles II, XVI and XVII.  The
discussion on government procurement should be in accordance with the mandate in Article XIII.
Whether transparency and the provisions on domestic regulation applied to government procurement
was a matter for discussion.  Transparency issues were examined in the WGTGP, which had not yet
reached any conclusion.  It would therefore be difficult to address the transparency issues raised inW/39.  It was India's understanding that Members could not be asked to take more extensive or
onerous commitments that what appeared in their schedules.
51.    The representative of the Philippines, speaking also on behalf of Malaysia
, took note of the
direction taken in the EC proposal.  Philippines and Malaysia understood, however, that the
negotiating mandate under Article XIII included only transparency issues;  Articles II, XVI and XVIIwere outside the negotiations.  He expressed concern regarding paragraph 10 of W/39 and wondered
how the Working Party could discuss MFN since Article II was excluded from the scope of the
negotiations.  Section C, which spoke about "access to" and "national treatment" raised similar
concerns.  The Article XIII mandate was limited to transparency issues.
52. The representative of Mexico did not share the EC view, in paragraph 10 of W/39, on the
applicability of various GATS provisions to govern ment procurement.  On paragraph 12, he noted
that the respective coverage of the various provisions of Article VI remained unclear .  He enquired
how the European Communities had selected the sectors mentioned in paragraph 13 and said that
governments' participation in other sectors, such as energy, telecommunication or audiovisual services
was still important in a number of countries.  He asked what the difference was between the approach
proposed by the EC and the undertaking of commitments under Article XVIII.
53. The representative of Peru said that the mandate in Article XIII covered only transparency-
related issues in government procurement.  The representative of Pakistan stressed, like others, that
Articles II, XVI and XVII fell outside the scope of the negotiating mandate of Article XIII.
54. The representative of the European Communitie s thanked delegations for their comments and
questions.  The negotiating mandate in Article XIII did not contain any limitation.  The issue of
thresholds was important and should be further examined.  With respect to the relation between theMFN obligation and its impact on the Agreement on Government Procurement, one could envisage
exemptions from this obligation.  The list of sectors in paragraph 13 was illustrative and his
delegation was open to further suggestions.  It might be useful to take one sector of interest to various
Members and see which rules could be developed in that particular sectors.  The respective mandates
of this Working Party and of the WGTGP were different, and it should be possible to continuenegotiating in the two bodies, while ensuring consistency.  He reiterated that the EC proposal aimed at
ensuring a maximum of flexibility, in particular for developing countries, which should be able to
open their procurement markets while pursuing national policy objectives.S/WPGR/M/38
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55. The Chairperson proposed to revert to the EC communication and to continue the general
debate on the scope of the mandate under Article XIII.  The minutes of past discussions on this latter
issue could be found in S/WPGR/M/28 and S/WPGR/M/29.
E. DATE OF THE NEXT MEETING
56. The Chairperson indicated that the next formal meeting of the Working Party was expected to
take place during the week of 21 October 2002.  The definitive date would be communicated in due
time.
F. OTHER BUSINESS
57. Nothing was raised under this agenda item.
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