WORLD TRADE
ORGANIZATIONWT/GC/W/295
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5 August 1999
(99-3317)
General Council
Council for Trade in ServicesOriginal:  English
PREPARATIONS FOR THE 1999 MINISTERIAL CONFERENCE
Further Negotiations As Mandated by the General Agreement on Trade in Services (GATS)
Communication from the United States
The following communication, dated 28 July 1999, has been received from the Permanent
Mission of the United States.
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I. PROPOSAL
1. Ministers recognize that competitive and innovative services assist our manufacturers,
farmers, and other citizens to exchange their products and improve their standard of living, andpromote integration of developing countries into the global economy.
2. Ministers agree that the new round of services negotiations shall expand the range of effective
market access opportunities to service providers by negotiating commitments to liberalize trade in
services across a broad range of sectors, such that  each participant shall ensure such access across a
significant portion of its economy.  This improved access shall be accomplished through (1) use of all
appropriate negotiating modalities, including request-offer and horizontal and sectoral approaches;
(2) an improved nomenclature for services to make the operation of the agreement more effective;and, where appropriate, (3) disciplines to underpin market access and national treatment commitments
by ensuring transparency and fairness in regulati on of services, while maintaining regulators’ ability
to meet legitimate objectives.
3. For each of these three areas, Members wishing to submit proposals will do so by the end of
1999, with an objective of reaching agreement in each area by June 2000.  All Members will presentinitial offers based on agreement in these three areas by September 2000.
II. RATIONALE
4. Services are the infrastructure that allows our industrial and agricultural sectors to function
productively:
• Efficient transport and distribution helps farm ers get their products to market without
spoilage and ensures that manufacturing components reach the factory in time for
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• An open and competitive financial services sector provides cheaper capital and
allocates it more efficiently in support of economic growth, and can better withstand
financial market instability.
• Legal and accounting services give businesses the contractual framework in which to
function and afford protection for consumers.
• Telecommunications, software, and information dissemination are essential to the
functioning of all modern industries.
• Energy services – for example, energy tr ansmission, distribution, and storage –
promote competitive energy markets; provide affordable energy to more industrial,
commercial, and residential consumers; promote economic growth; and improvequality of life.
• And rapid development of new technologies, including the internet and electronic
commerce, promises a vast increase in the efficiency and productivity of serviceindustries in the years ahead, with opportunities to increase the potential of all
economies to participate in world trade.
5. Since the end of the Uruguay Round, the WTO’s accomplishments in basic
telecommunications and financial services have demonstrated that Members understand the important
role of services in promoting equitable economic growth and building the infrastructure for a more
interconnected global economy of the 21st century .  And, in the view of the United States, our
constituencies expect us to continue working to make the WTO relevant to how they transact
business.  The GATS framework sets a good standard, but for it to serve our communities, it mustcontinue to address the issues our businesses and consumers consider important.
III. PREPARATIONS UNDER ARTICLE XIX
6. The United States welcomes progress over the past year in the Council for Trade in Services
in preparing for the mandated next round of services negotiations.  In particular, the sectoral
“information exchange” since June 1998, covering about 15 sectors, has helped develop a commonunderstanding among Members of the important role that services can play in their own economic
growth, the evolution in the nature of trade in services since the Uruguay Round, and, in many cases,
the very limited nature of country commitments in these sectors.
7. Already, this information base has served to reorient work on classification issues in the
Committee on Specific Commitments, and it similarly can serve as a resource for the work on GATSdisciplines for regulation in the Working Party on Domestic Regulation.
8. While the required “assessment” of trade in services, under Article XIX, is continuing, the
United States believes there already is a large body of information demonstrating the economic
benefits of maintaining open, and, where regulation is necessary, well-regulated services markets, as
well as the value of WTO bindings in providing transparency and predictability to consumers andsuppliers of those services.  For example, in the United States, services exports support about four
million jobs domestically – jobs in both the services and manufacturing sectors.
9. At the same time, Members have begun consideration of negotiating guidelines and
procedures for the next round of services negotiations.  These guidelines and procedures are intended
to carry out the objectives stated in Article XIX.  To contribute to a more focussed discussion ofWT/GC/W/295
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preparations for the next services round, the United States presents its views here with respect to each
of the article’s objectives.
A. “Members shall enter into successive rounds of negotiations . . . with a view to achieving a
progressively higher level of liberalization.  Such negotiations shall be directed to thereduction or elimination of the adverse effects on trade in services of measures as a means of
providing effective market access.”
10. In the area of services, the primary accomplishment of the Uruguay Round was the
framework agreement itself, the first multilateral agreement to create a set of rules to liberalize trade
in services.  However, in most cases, specific commitments in country schedules merely reflected
existing laws and regulations, including restrictive measures – essentially preserving the  status quo .
Many of the commitments were vague, and there were few sweeping commitments to remove
barriers.
11. Moreover, in many cases Members left some service sectors entirely unbound.  So, while the
agreement contains the outlines of a global regime to promote trade in services, it does not fully
encompass the important areas of market access and national treatment.  In general, the GATSbecomes effective only to the extent that countries subscribe to these disciplines by listing sectors in
its schedule of specific commitments.  Indeed, a country that has listed no MFN exemptions cannot
claim to meet any particular standard of openness, as MFN treatment in itself does not necessarily
mean openness to trade in services.
12. Thus, to date many Members have not included in their country schedules even their current
levels of access for trade in services.  The stated objective of the negotiations under Article XIX,
moreover, is to bind new  market access and national treatment in country schedules; that is, to remove
restrictions on market access and national treatment and bind this liberalization in the WTO.
13. The United States believes it is appropriate to make the Article XIX negotiating objectives
more specific.  One way to do this is to develop negotiating modalities or methods that aim toaccomplish the stated objective, with the understanding that all WTO Members would, in general,
subscribe to these modalities.  It may be appropriate to address liberalization of certain types of
restrictions occurring across sectors, or to undertake to provide certain minimum levels of openness.
In this case, Members may develop “horizontal” negotiating modalities that would apply across
sectors.  Such a horizontal approach could address all or part of a particular mode of delivery – for
example, a commitment to electronic delivery of serv ices, across sectors, subject to specified sectoral
exceptions.  Another example could be a commitment to provide access for certain commonly-definedcategories of natural persons as service suppliers.
14. Alternatively, it may be appropriate to develop “sectoral” negotiating modalities, where
Members have identified common sector-specific interests in promoting greater trade in services, to
the benefit especially of their domestic consumers.  Many services provide an intermediate function in
economies and, like telecommunications and financial services, underpin economic growth through aninfrastructural role.  For example, in their submissions, some developing-country Members already
have identified sectors in which they have an ex port interest, including some or all of the following
sectors:  audiovisual services, tourism, private healthcare, computer services, and professional
services.  In addition to financial services and telecommunications, other examples might include
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15. The United States looks forward to continued discussion of these and other potential
alternatives, all of which should be aimed at meeting the interests of the broadest possible range of
WTO Members, and which could supplement the re quest-offer approach used in the Uruguay Round.
16. Article XIX also calls for the negotiations to result in effective market access.  In some cases,
commitments to market access, national treatment, and MFN treatment may be sufficient to ensure
effective market access.  WTO Members have acknowledged, however, that especially in many
regulated sectors it may be appropriate to develop new disciplines to ensure that regulations
themselves do not have an unnecessarily restrictive – and perhaps unintended – effect on trade in
services.  These disciplines must ensure that governments can achieve legitimate domestic regulatory
objectives.  At the same time, they can facilitate competition in domestic markets.  Indeed, in many
cases, domestic regulation can supplement and reinforce GATS obligations, as in the case ofadditional commitments undertaken in the basic telecommunications “reference paper.”  A transparent
and effective regulatory framework provides businesses with the guidance and certainty they need to
make long-term decisions, and assures citizens that policies are in place to promote their interests.
17. For the United States, it will be important to pair commitments to market access, national
treatment, and MFN treatment with disciplines that promote transparency and fairness in regulation.In discussions under GATS Article VI, we will work with other Members to determine whether it is
most appropriate to develop cross-sectoral disc iplines, sector-specific disciplines, or some
combination of the two.
18. There is an additional component of effective market access.  The value of scheduled
commitments is diminished if descriptions of the service activities covered are imprecise,  outdated,or incomplete.  Further, both governments and private sectors are disadvantaged when countries use
different classifications systems in their individual schedules. To date, there is no agreed classification
system used to schedule commitments in the GATS.  Members have agreed that it is important to
develop classifications used by all, to promote clarity of commitments across schedules.  It is equally
important that the classifications reflect commercial realities – that is, that they accurately and fullycapture the service activities of our private sectors.  The United States has contributed proposals for
sectoral classification to the work underway in the Committee on Specific Commitments and looks
forward to early conclusion of this work.
B. “This process shall take place with a view to promoting the interests of all participants on a
mutually advantageous basis and to securing an overall balance of rights and obligations.”
19. The United States has welcomed the constructive discussions – both formal and informal – to
lay the groundwork for the next GATS round.  In particular, in contrast with the Uruguay Round it is
evident that in this next round WTO Members are ve ry interested in working jointly to consider the
possibility of alternative negotiating approaches.
20. In the Uruguay Round, specific commitments were the result of bilateral request-offer
negotiations.  To a large extent they reflected individual interests of participants, with their differinglevels of activity in the negotiations, such that the final result of the Uruguay Round in this area was
merely the summing up of all of the individual bilateral negotiations.
21. In contrast, for this round Members appear willing to consider joint efforts aimed at
producing results that (a) are more coherent from a commercial perspective, and (b) reflect interests of
a wide range of countries.  That is, Members appear interested in building into the negotiations anapproach intended to produce meaningful results.  One way to do so is through alternative horizontal
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other Members to develop such approaches aime d at meeting the interests of a broad range of
participants.  Also, as noted above, these approaches could supplement a request-offer approach.
C. “The process of liberalization shall take place with due respect for national policy objectives
and the level of development of individual Members, both overall and in individual sectors.”
22. In the post-Uruguay Round period, the GATS has proven itself to provide great flexibility in
accommodating national policy objectives.  For example, in the important and sensitive sectors of
financial services and telecommunications, some 70 Members, from a broad range of economic
circumstances, undertook market access and national treatment commitments using similar
approaches.  In some cases, Members used phase-in of commitments as a way to correlate their GATS
and domestic objectives.  In other cases, however, Members undertook identical commitments,regardless of level of development, as reflected in the basic telecommunications “reference paper,”
incorporated into country schedules.
23. In addition, since the end of the Uruguay Round acceding countries, even at relatively low
levels of development, have undertaken specific commitments guaranteeing open and
non-discriminatory markets in large numbers of sectors, in many cases beyond even what somedeveloped countries provided in the Uruguay Round.  These countries that have joined the WTO since
the end of the Uruguay Round, or are close to concluding their accession negotiations, have shown
great leadership for the direction of the next GATS round.
D. “There shall be appropriate flexibility for individual developing-country Members for
opening fewer sectors, liberalizing fewer types of transactions, progressively extendingmarket access in line with their development situation and, when making access to their
markets available to foreign service suppliers, attaching to such access conditions aimed at
achieving the objectives referred to in Article IV.”
24. An important objective of Article IV is access for developing countries to technology on a
commercial basis as a means to strengthen their domestic services capacity, efficiency, and
competitiveness, and to improve these countries’ access to distribution channels and information
networks.  In the view of the United States, the primary means of accomplishing these objectives is to
ensure that consumers in developing countries – service suppliers, manufacturers, and farmers, as well
as individuals – have access to affordable, high-quality, innovative services that meet their needs and
budgets.  Some of these services will be provided  on a cross-border basis, but most will be provided
through commercial presence.  For this reason, it should be in a country’s economic interest toremove restrictions and provide guaranteed access for foreign service providers to enter its market
through branches, subsidiaries, representative offices, and other forms of commercial presence.
25. Article IV also states the importance for all Members – developed and developing – of
undertaking “liberalization of market access in sectors and modes of supply of export interest” to
developing-country Members.  As noted above,  some developing-country Members already have
identified their interests for the next round.  The United States hopes that other such Members will do
the same and looks forward to discussion of how to meet those interests.
26. With respect to paragraph 2 of Article IV, the United States also would be interested in views
of developing-country Members on possible improvements to the “contact points”  established under
that provision.  Based on informal consultations, it does not appear that these contact points,established by developed countries for use by service suppliers from developing countries, are being
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E. “Negotiating guidelines shall establish modalities for the treatment of liberalization
undertaken autonomously by Members since previous negotiations . . .  .”
27. Many WTO Members, from the least-developed to developed, are proceeding to deregulate
their services sectors and remove other restrictions to market access and national treatment.  Also,
many Members are reforming the regulations they re tain to ensure that they promote rather than
restrain competition.  The GATS negotiations should recognize and encourage these initiatives.
28. Generally, the United States believes that existing services regimes should be the starting
point for negotiation of specific commitments.  We are prepared, however, to consider
acknowledgement of liberalization undertaken before the next round when this liberalization would be
bound in the country’s schedule.  We look forward to discussion of how to meet these objectives.
F. “Negotiating guidelines shall establish modalities . . . for the special treatment for
least-developed country Members under the provisions of paragraph 3 of Article IV.”
29. Least-developed WTO Members have undertaken a variety of specific commitments.  Some
of these Members have included only one or two se ctors in their country schedules.  Others, however,
have included extensive commitments in sectors such as audiovisual services, telecommunications,
financial services, and distribution services.  These latter countries have shown that their status as
least-developed is not incompatible with their desire to undertake GATS commitments comparable
with countries at higher stages of development.
30. The United States wishes to work with least-developed countries, and other WTO Members,
to promote their participation in the negotiations and to ensure that the negotiations assist these
countries in their own economic and other national policy goals.
G. “The process of progressive liberalization shall be advanced in each such round through
bilateral, plurilateral or multilateral negotiations directed towards increasing the general
level of specific commitments undertaken by Members under this Agreement.”
31. The United States seeks broad participation in the next GATS round and looks to all
WTO Members to contribute to the round’s objectives.  As noted above, the United States has
welcomed the interest and willingness of a large number of WTO Members in discussing joint efforts
to promote results in the next GATS round that will meet the interests and objectives of a broad range
of participants.  Service consumers and suppliers in each WTO Member country can benefit from
significantly improved commitments by each Member.
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