RESTRICTEDWORLD TRADE
ORGANIZATIONS/WPGR/M/25
2 November 1999
(99-4741)
Working Party on GATS Rules
REPORT OF THE MEETING OF 8 OCTOBER 1999
Note by the Secretariat
1. The Working Party on GATS Rules held its twenty-fifth meeting under the chairmanship of
Mr. Siva Somasundram of Singapore.  The age nda for the meeting was contained in WTO/AIR/1171.
It consisted of five items:  negotiations on safeguards under Article X of the GATS;  negotiations on
subsidies under Article XV of the GATS;  negotiations on government procurement under
Article XIII of the GATS;  date of the next meeting of the Working Party;  and other business.
2. The Chairman indicated that he would raise, under other business, the question of the
Working Party's Annual Report to the Council for Tr ade in Services. The agenda for the meeting was
adopted.
3. The Chairman drew attention to an informal Note (Job No. 5332) he had circulated on
16 September 1999, to assist delegations in their preparation for the meeting.
A. NEGOTIATIONS ON SAFEGUARDS UNDER ARTICLE X OF THE GATS
4. The Chairman recalled that the Secretariat had issued a second revision of document W/27
(S/WPGR/W/27/Rev.2, 16 September 1999) as well as a brief overview of trade and injury indicators
- based mainly on an informal paper from Venezuela - which could be used to identify safeguard-type
situations (Job No. 5294, 13 September 1999).
5. The representative of Thailand, speaking on behalf of ASEAN, indicated that ASEAN
intended to circulate a concept paper on possible rules for emergency safeguard measures before the
end of the year.  The objective was to produce a paper having the widest possible basis foracceptance.  Turning to the Secretariat informal Note (Job No. 5294), he said that this paper should be
made a formal document in due time.  As to the second revision of W/27, ASEAN was of the view
that it incorporated the essence of recent work.  Paragraph 7 rightly pointed out that the dividing line
between the concept of sector-specific safeguards and horizontal safeguards might be less sharp than
initially conceived.
(a) Concepts of injury and causality
6. The Chairman proposed to focus the discussion on potential injury and causality indicators
which might be used in any sort of safeguard mechanism, irrespective of whether it was sector-
specific or horizontal, or any other variant under consideration.  The informal note by the Secretariat
(Job No. 5294) provided a checklist of possible indicators, building upon the Venezuelan proposaland including comments made at the last meeting.  Quite a few blank spots remained, however, and it
would be useful to have delega tions' views on how to fill them.
7. The representative of the European Communities pointed out uncertainties surrounding the
term "party" which appeared on page 2 of Job No. 5294 (second column, third comment).  It was herS/WPGR/M/25
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understanding that this term referred to the industry seeking safeguard protection, rather than to the
Member concerned.  The Chairman said that it was also his understanding that the "invoking party"
was the industry making the petition for safeguard action.
8. The representative of Thailand, speaking on behalf of ASEAN, said that discussions on
Job No. 5294 should not prejudge Members' position on whether national or domestic suppliers
should be protected.  He suggested that the structure of the paper be adjusted to better suit the
objective of the Working Party's work.  The second part should be divided into two sections, one
dealing with indicators relating to changes in s upply or consumption of services, and the other one
dealing with the question of causality.  In the la tter context, the Working Party should discuss, inter
alia, procedures as well as criteria to determine what factors contributed to injury, apart from
increased foreign supplies of services.  A further element would be the determination of the relative
importance of these factors.  With respect to the content of the list, ASEAN was of the view that theindicators and criteria currently contained under both headings were normally available, or could be
made available, to the investigating authorities.  For instance, reductions in price or number of
suppliers could be monitored in a continuous manner and be a basis for safeguard action.  When
combined, these facts and figures were sufficiently detailed and comprehensive to allow for an
objective determination.  ASEAN strongly believed that the Working Party needed a consensus assoon as possible on these indicators and criteria, irrespective of the ongoing debate on whether a
safeguard mechanism should be sector-specific or horizontal.
9. The representative of Japan sought further clarification on certain injury-related criteria listed
on page 1 of Job No. 5294, i.e. criteria number 2 ("Decline in consolidated offers"), number 7
("Reduced capacity utilisation") and 11 ("Changes in the level of inventories").  Secondly, sheemphasized the importance of objective rules and procedures governing the application of any criteria
and indicators. In this context, Japan believed that the GATT Agreement on Safeguards (AS) was
relevant, as pointed out in paragraph 15 of document W/27/Rev.2.  In particular, the first sentence of
Article 4:2(b) of the AS might deserve further consideration.  Finally, her delegation felt that certain
data, such as those found in IMF Balance-of Payments statistics or OECD foreign direct investmentstatistics could be a useful underpinning of certain indicators.
10. The Chairman recalled that the list on page 1 of Job No. 5294 was a summary of the points
contained in Venezuela's submission as well as of proposals made by Members at the last meeting, in
particular Korea.  He invited these Members to further elaborate on why they considered these
indicators to be useful.  The second issue raised by Japan was a relevant point which could be taken
up in future discussions.  Finally, the availability of IMF and other statistics could be reflected in the
comments section of Job No. 5294.
11. The representative of the United States indicated that his delegation had taken note of the
request that the Working Party should reach a consensus as soon as possible on various criteria and
indicators.  While the United States remained prepared to engage in a general discussion, he wished to
reiterate that delegations should attempt to describe real-life situations, which could assist the
Working Party in reaching some kind of common understanding on appropriate indicators or criteria.
12. Referring to the concepts of "unforeseen" and "unforeseeable" developments, the
representative of India concurred with previous ASEAN statements that the term "unforeseen" was
intended to capture developments which a Member could not reasonably have foreseen at the time ofscheduling its commitments.  Thus, it was not a totally subjective criterion;  it did have scope for
objective application. The concept of "unforeseeable" development might be even more subjective.On the question of injury, India considered that th e relevant indicators in the goods area could be
examined with a view to deciding on their adaptability to services.  The indicators contained in the
Venezuelan paper and additions made in the Working Party should be considered. Examples should
be provided to better understand their applicability.  India supported the statement made by Thailand,S/WPGR/M/25
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on behalf of ASEAN, concerning the need for an early  consensus on the indicators to be applied for
determining injury and causality.  In services, greater flexibility than in the goods area might be
needed to cope with the complexity of the sector as well as problems in data collection and analysis.
13. The representative of New Zealand said that Job No. 5294 provided a starting-point which
could help the Working Party to identify and understand how a possible emergency safeguard
mechanism might work in the services area.  New Zealand agreed with comments made at the last
meeting that, given the inadequacy of statistics in the services area, it was important to have a broad
list of indicators.  Several criteria must have been met before action could be taken.  Concrete
examples might be needed.
14. The representative of Mexico was of the view that the two documents prepared by the
Secretariat helped to focus the discussion and to define some concepts which had been discussed in an
abstract context.  Her authorities were asking for more concrete examples so as to better understandthe desirability and scope of various criteria when applied to specific situations.  It would be very
useful if delegations having some kind of experience in this area could share it with the Working
Party.
15. The representative of the European Communities said that the question of whether the reasons
contributing to sectoral adjustment problems should  affect the permissibility of a safeguard action was
important.  It might influence, for example, the ac tual form that such a mechanism could take.  On
previous meetings, there had been suggestions that, if government regulation were in some way
contributing to an emergency situation, most governments would be reticent to admit it.  The
appropriate action could involve changes in regulation.  The reasons contributing to the adjustment
problems could thus be relevant in determining the type of safeguard measure and its period ofapplication.  Like others, the European Communities was looking for concrete examples.  Although it
was likely that, if there were such examples, th ey might already have been raised in the GATS
Council under Article X.
16. The representative of the United States concurred with the European Communities that the
Working Party should look more closely at the question of changes in regulation.  There could be
situations, as identified by the European Commun ities, in which regulatory changes might be the
cause of increased imports, which in turn caused injury, and it was understandable that governments
were hesitant to recognise that fact.  Second, there might also be situations in which a change in
regulation itself was the cause of injury, regardless of trade developments.  For example, while
imports might not be increasing, a change in regulation could lead to product innovations and shifts in
sectoral demand.
17. In summing up the discussion, the Chairman noted that Members acknowledged the particular
importance of trade and injury indicators, irrespective of what safeguard mechanism would be in
place. It was necessary to consider more than one  indicator in order to establish an increase in
supplies and ensuing injury.  Second, hypothetical or real-life examples would advance discussions in
the Working Party.  Third, to further clarify the indicators listed in Job No. 5294, it might be useful to
make a distinction between, on the one hand, indicators or criteria that were relevant in establishingchanges in consumption of services and, on the other hand, the causal link between a surge in imports
and injury.  That distinction might prove difficult to make, but was potentially very useful.  Job
No. 5294 might be developed in this regard.  Fourth, delegations which had suggested individual
indicators should try and provide answers to the questions raised during the meeting.  Fifth, flexibility
was a recurrent theme:  the dearth of statistics on trade in services might have an impact on the kindof indicators the Working Party would eventually be able to agree upon.  He noted that it might be
difficult to arrive at an early consensus on indicators until the Working Party started examining their
use in concrete - real-life or hypothetical - situations.S/WPGR/M/25
Page 4
18. Referring to the interventions by the United States and the European Communities, the
representative of Thailand, speaking on behalf of ASEAN, said that government regulation might be
at the origin of certain adjustment problems.  As a matter of principle, account should be taken by theinvestigating authority of all reasons contributing to injury as factors affecting the permissibility of
safeguard actions.  Article 4:2(b) of the AS might be used as a basis for developing rules in thisregard.
(b) Horizontal versus  sector-specific safeguards
19. The Chairman noted that the Working Party had agreed, at its last meeting, to focus on the
criteria and principles which would need to govern any type of safeguard action, regardless of the
basic mechanism (sector-specific, horizontal or other) which might ultimately be chosen.  Relevant
examples were contained in previous submissions by Hong Kong, China and the United States
(S/WPRG/W/26, 10 February 1998 and S/WPRG/W/17, 13 March 1997).  These referred, inter alia ,
to principles such as MFN treatment, advance no tice, temporary and degressive application, clear
specification of the measures envisaged, and protection of "acquired rights" of established suppliers.
While the Working Party might be able to agree in principle on all these points, implementation in
practice might raise difficult questions.  For example, one might ask whether and how MFN treatment
could be ensured if a Member, which was committed to allow only for a small number of suppliers ina sector, intended to further restrict entries on short notice.  If a schedule contained very limited
access guarantees in a sector, should the Member be entitled to further tighten access conditions under
safeguard provisions?  In past meetings, many delegations had rejected  the idea of linking the use of
safeguards to the quality of commitments undertaken in a sector.  However, it might be useful at least
to discuss the potential implications for MFN.  How the protection of "acquired rights" could beguaranteed in practice would be another question.  Would foreign-owned suppliers, which were
already established under mode 3, continue to have exactly the same rights as any other domestically
established supplier – including the right to expand their market shares through take-overs, mergers,
new investment, etc.?  Or was the concept of "acquired rights" meant only to protect the status quo  of
foreign suppliers – in terms of production, market share or other business indicators?  If so, whatwould be the relevant benchmark?  He felt it was important that such basic concepts be further
specified and, thus, made applicable in practice.
20. The representative of Thailand, speaking on behalf of ASEAN, suggested that the Working
Party discuss the basic principles that should form part of a possible set of rules governing safeguards.
As reflected in document W/27/Rev.2, paragraph 7, this discussion should not prejudge the final
conclusion of the Working Party on the approach to be adopted.  As the first point proposed by the
United States in document S/WPGR/W/171 was at the very heart of the debate on horizontal vs.
sector-specific safeguards, it would be useful to revert to it once the Working Party had a clearer idea
of common principles.   ASEAN felt that there were a number basic principles that most, if not all,
Members could readily agree on.  For instance, at least four principles, which ASEAN countries
viewed as relevant, were common to the papers by the United States (S/WPGR/W/17) and by
Hong Kong, China (S/WPGR/W/18):  (i)  advance notice;  (ii) temporary application;  (iii) MFNtreatment;  and (iv) objective criteria as a basis for action.  Two additional principles - referred to in
the Hong Kong, China paper - were also of relevance:  (i) an ESM should be limited to the minimum
necessary to tackle the problems arising from an emergency situation;  and (ii) any action would be
subject to dispute settlement under GATS Article XXIII.  With respect to the proposed clear
specification of the measure, the US paper was more specific than the Hong Kong, China paper;  inASEAN's view, rules in services mi ght go a step further than those in the goods sector by specifying
the particular safeguard measures that might be applied if the investigation established injury caused
by increased consumption of foreign services. Possible measures had to include suspension of
                                                     
1 This point reads: "inclusion in a schedule of a safeguards-type provision in a given sector must be
paired with a commitment to liberalization in that sector".S/WPGR/M/25
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obligations under GATS Articles XVI, XVII and XVIII, and should be applicable across all sectors.
With respect to other principles identified in the US paper, ASEAN would like to have more details,
for instance:  on degressivity, what kind of timeframe was envisaged for the phasing-out period and
would Article 7 of the AS be a suitable model?  On the question of frequency in invoking safeguards,
what kind of timeframe and other conditions were envisaged?  On the principle of compensation,should there be no such possibility at all or would an adapted version of Article 8 of the AS be
acceptable?  On this last point, ASEAN was of the view that the purpose of Article XXI was different
from that of a safeguard mechanism:  while the former provided for longer-term or permanent
adjustments, a safeguard was of temporary nature.  With respect to the Hong Kong, China paper,
ASEAN wished to have further clarification on two principles (contained in paragraphs 11 and 12):
(i) public policy concern;  and (ii) remedying the injury identified.
21. On a preliminary basis, the representative of the Unites States noted that the concept of
degressivity, similar to that of limited duration, was linked to the stated purpose of an ESM:
structural adjustment.  Thus, while there could be temporary relief, an industry should be taking
necessary measures to become competitive in the domestic and global market.  Article 7 of the AS set
forth the principle but did not contain any concrete rules on how it might be applied.  His authorities
were currently considering whether greater precision was needed for services.  The concept offrequency was also linked to the concept of structural adjustment, in that relief should not be granted
over and over again.  Finally, the concept of non-compensation was related to the basic objective of a
safeguard, which was distinct from that of Article XXI.  The history in the goods area, predating the
existence of the AS, showed that when governments were faced with requests from industries to
provide relief, they would look at the various opti ons available to them,  including GATT Article XIX
and Article XXVIII.  The latter path was often preferred because it was the easiest one.  Both
provisions required compensation, but Article XIX required in addition that there be findings of injury
and causality.  The authorities concerned thus tended to address structural adjustment problems with
Article XXVIII and, as a result, Article XIX had become a dead letter.  The solution, found in the AS,
was a provision allowing for safeguard measures during a short period of non-compensation.  Theobjective was to create an incentive to use the proper measure, i.e. a safeguard, as opposed to
Article XXVIII.
22. With respect to the issue of compensation and possible relevance of Article 8 of the AS, the
representative of India noted that the compensation should depend on the nature of the safeguard
measure adopted.  This issue should be separated from GATS Article XXI.  The need forcompensation should be considered later, once the Working Party had reached a common
understanding on the circumstances under which an ESM could be used and the types of measuresthat would be permissible.
23. The representative of Hong Kong, China said that the objective of the paper previously
presented by his delegation was to see whether a mechanism not open to abuse could be set up and be
workable.  Hong Kong, China saw the need for flexibility, but also wanted to ensure that the scope for
abuse was minimized.  This was the intention underlying the two points identified by Thailand -public policy concern and remedying the injury identified.  His delegation had a kind of "necessity
test" in mind:  the envisaged measure had to be ne cessary to address the emergency.  Turning to the
issue of MFN introduced by the Chairman in his opening remarks, he failed to see a problem.  As to
"acquired rights", he agreed this was a difficult issue which needed to be further discussed.  Its
relevance depended on whether an ESM differentiated between national and domestic servicesuppliers.
24. The Chairman said that MFN issues related, fo r instance, to the situation of the already
established foreign services supplier, vis-à-vis  foreign services suppliers which were outside the
invoking country.  Assuming that the invoking country did not impose restrictions on the establishedS/WPGR/M/25
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services suppliers, what would be the impact, in terms of access, on foreign services suppliers not
established.
25. The representative of Japan noted that the AS was relevant for the discussion of the Working
Party.  A safeguard was an exceptional action in emergency situations, which required advance notice,
temporary application,  degressivity, clear specification of the measures envisaged.  Moreover, themeasures taken should be limited to the minimum necessary to tackle the problem, and as closely
specified as possible.  Japan considered that any action should be taken on behalf of all domestic
suppliers in a sector, irrespective of ownership.
26. The representative of the Republic of Korea said that it was necessary to clarify the meaning
of "acquired rights", since it might be inconsistent with the MFN principle.  The notion of "acquired
rights" had to be interpreted strictly, to exclude the suspension of basic business requirements.  With
respect to degressivity, there was a need to examine the relationship with the principle of temporaryapplication:  if a safeguard action was temporary and short, degressivity might not be relevant.
27. In summing up, the Chairman encouraged Members to contribute to clarifying the concept of
"acquired rights" in submissions.  The relationship between Article XXI and any possible safeguard
mechanism under Article X also needed to be further explored.  This was closely related to the issue
of compensation.
(c) Applicable measures and other relevant issues
28. The Chairman invited delegations to comment on three points.  First, while many Members
had expressed the view that it should be possible in safeguard cases to suspend commitments under
Article XVIII, others had raised doubts as to whether this should include the suspension of regulatory
principles (e.g. principles spelled out in the telecommunications Reference Paper).  Second,delegations might want to introduce any new thoughts on whether certain types of safeguard
measures, e.g. subsidies, should be preferred to others, e.g. quotas (W/27/Rev.2, para. 27).  Third,
delegations might need to further discuss the idea that safeguard actions under certain modes, e.g.
modes 1 and 2, should be given priority over actions under other modes (W/27/Rev.2, para. 14).
29. The representative of Japan noted that a safeguard action could include the suspension of
commitments under Articles XVI and XVII, but also under Article XVIII.  As additional
commitments varied among Members, this opened different options.  His delegation felt that, in
principle, it should be up to the Member concerned to choose.
30. The representative of Thailand, speaking on behalf of ASEAN, said that suspension of
additional commitments under Article XVIII should be possible.  However, some issues, such as
regulatory disciplines, might need special consideration.  ASEAN was prepared to further examine
this point.  Subsidies and other measures suspending national treatment commitments should betreated on an equal footing with the suspension of other obligations.  Given the particularities of each
mode of supply, ASEAN was willing to discuss the idea of prioritising actions under certain modes,
although this might raise difficult questions.
31. The representative of the Republic of Korea said that trading conditions under modes 3 and 4
tended to be more restricted than under other modes.  Considering that safeguard situations required
immediate action, he doubted whether actions under certain modes should unconditionally be given
priority.  It was up to Members to choose the proper mode to remedy serious injury.
32. In summing up, the Chairman suggested that the Working Party come back to the points
raised by Japan with respect to Article XVIII.  The question of whether it should be possible to
suspend regulatory principles under a safeguard mechanism was important;  it went beyond the scopeS/WPGR/M/25
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of the Reference Paper in telecommunications.  Should a distinction be made between the different
modes of supply in safeguard situations?  He noted that several views had been expressed on this
question. He encouraged delegations to make written submissions to support the work of the Working
Party.
B. NEGOTIATIONS ON SUBSIDIES UNDER ARTICLE XV OF THE GATS
33. The Chairman recalled that the delegation of Norway had proposed at the April meeting that
Members discuss subsidy-related problems they might have encountered in export markets.  No
submissions had been received so far on this subject.
34. The representative of New Zealand proposed that the Working Party focus on the two issues
contained in the Chair's Note (Job No. 5352). His delegation intended to provide a more detailed
contribution at a future meeting.  The Secretariat's paper S/WPRG/W/9, dated 6 March 1996, was still
a useful starting point.
35. The representative of Hong Kong, China agreed with New Zealand that W/9 should be used
in future discussions and noted that, as reflected in that paper, the interpretation of the national
treatment obligation was relevant in addressing subsidies.  He thought it would be useful to have more
background information and suggested that the Secretariat look at other papers, for instance in the
area of investment, where services subsidies might have been discussed.
36. With respect to export-enhancing subsidies, th e representative of Japan recommended that the
Working Party consider which of the arguments used in the goods sector would be relevant for
services.  For example, if a government subsidized a university to attract foreign students, should this
be considered as an export-enhancing subsidy under mode 2?  Subsidies could result in very different
types of trade distortions depending on the areas involved, and it might be necessary to develop asectoral categorisation.
37. The representative of the European Communities noted that the subsidy programmes referred
to in point (b) of the Chair's Note (Job No. 5352) appeared to be de facto export subsidies, although
the Note did not explicitly mention it.  He called for a restrictive definition of export subsidies, as laid
down in Article 3 of the Agreement on Subsidies and Countervailing Measures.  The interpretation ofde facto  export subsidization developed by some recent panels should be kept in mind.
38. The Chairman proposed that the Working Party address the various points contained in W/9
before considering the need for rules in this area.  The relevance of the rules existing in the goods area
could also be discussed in that context.  He suggested that the Secretariat be requested to look at the
work done in other WTO bodies, to see what could be relevant for this Working Party.  It was so
decided.
C. NEGOTIATIONS ON GOVERNMENT PROCUREMENT UNDER ARTICLE XIII OF THE GATS
39. The Chairman recalled that, at its last meeting, the Working Party had discussed the range of
entities which might be deemed to carry out "government procurement".  Nevertheless, doubts had
remained as to whether and in what circumstances entities that were not directly owned and controlled
by the government should be covered.  This could include, for instance, private companies mandated
to exercise some exclusive rights (such as monopoly providers of telecommunication or transportservices).  Another question was whether government-owned entities operating under competitive
market conditions should fall under possible government-procurement disciplines.
40. The representative of Japan said the definition of "government procurement" needed to be
elaborated further, based on concrete examples.  He noted that the disciplines contained inS/WPGR/M/25
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Section B.2 of the Understanding on Commitments in  Financial Services were expressed in general
terms.  The question which arose was how to concretely ensure MFN and national treatment. Such
issues were being considered in the context of the review of the Agreement on Government
Procurement.  Japan considered it would be appropri ate to wait for the outcome of this review.  This
would be particularly relevant for the definition of entities deemed to carry out governmentprocurement.  Japan had submitted informal proposals on this topic in the review of the Agreement on
Government Procurement.
41. The representative of Thailand, speaking on behalf of ASEAN, said that, while it was
important to develop a definition of government procurement under Article XIII, ASEAN would
support the idea of working on possible disciplines, including non-discrimination, at the same time.
Speaking on behalf of Thailand only, he suggested that the Working Party concentrate on the wording
contained in Article XIII and try to define the term "governmental agencies".
42. The representative of New Zealand asked whether it would be possible to circulate the papers
Japan had referred to in its intervention, noting that not all Working Party Members participated in the
Agreement on Government Procurement.  The representative of Mexico supported this proposal.  The
Chairman indicated that he would explore this possibility.
43. The representative of the United States said that, with respect to definitions, there was a need
to concentrate on the text of Article XIII.  The definition contained in that provision was sufficient
and had worked well in other contexts.  As to the notion of government agencies, his delegation
understood that it covered a wide variety of entities .  Entities having some exclusive rights, without
being directly controlled by the government, might be an obstacle to market access, but should not
raise procurement-related issues, especially if there was no government ownership.  The question ofgovernment-owned enterprises engaged in commerc ial activities in competitive markets was more
difficult.
44. The representative of the European Communities said that the Working Party should
concentrate on the mandate contained in Article XIII, i.e. consider multilateral disciplines on
government procurement.  Procurement was also discussed in other fora and work was currentlycarried out to arrive at multilateral rules on transparency.  It was important for this Working Party to
explore substantial rules, i.e. the application of the MFN principle and national treatment, and to
examine existing discriminatory practices.
45. The Chairman invited delegations to comment on the three points contained in his Note (Job
No. 5352), which built upon a paper previously submitted by New Zealand (Job No. 5446,
30 September 1997).  The three points related to the substantive mandate contained in Article XIII.
46. The representative of New Zealand recalled that the paper presented by his delegation was an
attempt to explore possible areas of common understanding in the application of fundamental WTO
principles to government procurement in servic es.  First, the Working Party should confirm the
importance of the MFN and national treatment obligations.  Second, it should examine measures
departing from these obligations and weigh them against other criteria used by Members for
procurement decisions.  This examination should be based on an analysis of different types ofmeasures rather than on individual Members' pract ices. Third, the Working Party should discuss the
concept of "full and fair opportunity" for domestic suppliers and the extent to which it was compatible
with the non-discrimination principle.  In this  regard, New Zealand acknowledged that Members,
whilst seeking the best price or the economically most advantageous tender, might wish to ensure that
domestic suppliers were not overlooked and had a full and fair opportunity to compete.  It shouldtherefore be examined how the concept of "full and fair opportunity" for domestic suppliers could be
given effect in ways which were compatible with the non-discrimination principle.  In New Zealand's
view, the concept as such was consistent with MFN and national treatment.  Further discussion on theS/WPGR/M/25
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ways in which it could be given effect might help to meet some concerns that MFN and national
treatment obligations in government procurement could disadvantage domestic suppliers vis-à-vis
foreign competitors.  New Zealand's preliminary thinking was that "full and fair opportunity" might
call for public advertising of opportunities to tender, openness to registration of interest, market
research, etc.  Fourth, the Working Party might need to explore the possibility of transitionmechanisms to ensure gradual implementation of the non-discrimination principle.
47. The representative of the United States said that the Working Party should continue its work
on parallel tracks, i.e. on definitional issues and on possible disciplines, as mandated in Article XIII.
It should take into account the work on transparency in government procurement which was going on
in another forum and avoid duplication.
48. The representative of Canada agreed that the Working Party should proceed on parallel tracks
and, in doing so, examine the questions raised in the New Zealand paper as well as any other pertinent
issues.
49. The representative of Hong Kong, China said that the MFN principle was a very important
starting-point for government procurement in services.  National treatment was negotiable under the
GATS but there should be as little departure as possible.  Transparency was a very important
principle, and the work done in the Working Group on Transparency in Government Procurement wasfully relevant.  At this stage, the Working Party should be focusing on more general procurement
disciplines rather than pursuing the type of sectoral approach adopted in the Understanding on
Commitments in Financial Services.
50. In summing up, the Chairman noted that Members were ready to focus on the substance
contained in the Article XIII mandate.  There seemed to be broad agreement that the Working Party
should get beyond discussions on definition and begin to consider multilateral disciplines.  Useful
work had been carried out by other WTO bodies dealing with government procurement and the
Working Party should draw on that work in fulfilling its mandate.  The New Zealand paper provided a
good basis but delegations should be open to additional questions.  The Understanding on
Commitments in Financial Services was referred to as an example but it should not prejudge the scopeor direction of future work.  The Chairman encouraged delegations to submit contributions.
D. D
ATE OF THE NEXT MEETING
51. The Chairman proposed that, in view of the preparation of the Seattle Ministerial Conference,
the Working Party should hold its next meeting early next year, at a date to be announced in due
course.
52. The Working Party so agreed.
E. OTHER BUSINESS
53. The Chairman said that the decision not to schedule an additional meeting this year had
implications for the Annual Report which had to be submitted to the Council for Trade in Services.
He intended to circulate first draft, which was modelled largely on the Working Party's last year
report.  He suggested to adopt an ad referendum  procedure, i.e. delegations could forward their
comments, if any, to the Secretariat by 20 October.  If no comments were received by that date, theAnnual Report would be considered adopted.
54. The Working Party so agreed.
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