RESTRICTEDWORLD TRADE
ORGANIZATIONWT/GC/W/215
S/C/W/112
22 June 1999
(99-2524)
General Council
Council for Trade in ServicesOriginal:  English
PREPARATIONS FOR THE 1999 MINISTERIAL CONFERENCE
Focus and Priorities of the New Round of Services Negotiations
Communication from Hong Kong, China
The following communication, dated 21 June 1999, has been received from the Hong Kong
Economic and Trade Office.
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1. The World Trade Organization (WTO) is mandated to enter into successive rounds of services
negotiations with a view to achieving progressively higher levels of liberalization.  The first round ofsuch overall negotiations will begin not later than year 2000.  This non-paper outlines
Hong Kong, China's focus and priorities for the new round of services negotiations, and suggests
possible scope and modality for the services negotiations.
Objectives
2. Hong Kong, China's objectives for the next round of services negotiations are:
(a) to achieve progressive trade liberalization in the whole range of services sectors by
broadening and deepening the market access and national treatment commitments;
(b) to uphold the fundamental  WTO principle of non-discrimination by eliminating the
exemptions to the most-favoured-nation (MFN) treatment;
(c) to tackle vigorously barriers to trade in services arising from domestic regulations and
anti-competitive behaviour;
(d) to ensure that the GATS rules remain relevant and responsive to the needs of the
modern business world through clarifying and, if necessary, reviewing certain GATSprovisions and developing new rules and disciplines; and
(e) to enhance the transparency and certainty of the specific commitments through
improving the scheduling methods and clarifying the ambiguities arising from certain
commitments.
Scope of negotiations
3. Whilst the exact scope and coverage of the next round of services negotiations have yet been
discussed in the WTO, it is noted that the GATS mandates negotiations on a wide range of issues.  InWT/GC/W/215
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addition to the negotiations on specific market access and national treatment commitments, the GATS
mandates the WTO to develop rules governing emergency safeguard measures, government
procurement and subsidies; disciplines governing domestic regulations; and reviews of the Annex on
MFN Exemptions, the Annex on Air Transport Services and the Annex on Maritime TransportServices.  In addition, Hong Kong, China considers that the scope of the negotiations should allow for
consideration of and work related to other GATS provisions which warrant attention.
Focus and priorities
(a) Negotiations on Specific Commitments (Article XIX)
4. Hong Kong, China considers the negotiations on specific commitments should be the core
element of further broad-based negotiations to liberalize trade in services. Efforts should be devoted
to widening and deepening the market access and national treatment commitments of WTO Members
and to ensuring that these take account of the changing nature of services and service providers.  In
this regard, we support a comprehensive sectoral coverage  for the negotiations and propose that
Members should make their best endeavour to submit offers on all service sectors covered by GATS.To avoid protracted discussions, we do not see the need to prioritize the services sectors before the
launching of the sectoral negotiations.  Nonetheless, we do not rule out the need for more intensive
and focussed negotiations on specific sectors during the new round in case such are merited in order
to move matters forward more expeditiously.
5. In line with the objective of progressive liberalization in trade in services, we consider that
any changes to the existing Schedules of Specific Commitments (the Schedules) in the context of new
negotiations should be improvements.  It thus follows that any termination or reduction of existing
commitments should go through  Article XXI procedures so as to preserve the balance of rights and
obligations obtained in the Uruguay Round and the extended track of negotiations.  In this connection,
we agree that a more straight-forward mechanism should be installed to facilitate the scheduling ofnew commitments, improvements or rectification in a Member's existing schedule.
6. We consider that the traditional request-and-offer approach  should provide the basis on which
specific commitments should be negotiated.  Nonetheless, we believe other approaches (e.g.
horizontal or formula approach) may usefully supplement the traditional approach and help to
encourage specific commitments. The possibility of having a combination of approaches may also be
considered.  Related to this, Hong Kong, China proposes that the new negotiations should aim at the
complete removal of all existing MFN exemptions listed by Members by the conclusion of the newround or 2005, whichever is the earlier.
7. A related issue is how the existing scheduling methodology could be improved so as to
encourage further commitments and enhance transparency.  This requires reviews of the scheduling
guidelines  and the existing GATS sectoral classification.  On the former, the WTO Committee on
Specific Commitments (CSC) has identified a number of key issues arising from the existingscheduling guidelines.  These include, among other things, the need to clarify the distinction between
Modes 1 and 2, the interpretation of national treatment commitments in particular those under
Modes 1 and 2, the relationship between the commitments/limitations listed under Articles XVI
and XVII given the scheduling practice prescribed in Article XX:2, the legal status of headnotes and
footnotes in Schedules, etc.
8. On classification, in view of the technological changes and the emergence of new services
after the Uruguay Round, it may be necessary to review the scope of certain services sectors (e.g.
energy services, environmental services and distribution services) as well as to examine the possible
overlaps between different service sectors (e.g. audio-visual and communication services,WT/GC/W/215
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postal/courier services and transport services, etc.).  Hong Kong, China considers that these technical
issues should be clarified at the early stage of the negotiations since an improved scheduling
methodology would remove the uncertainty involved  in making commitments and help encourage
more substantive and meaningful commitments from Members.
(b) Domestic Regulations (Article VI)
9. In addition to specific commitments, we cons ider that an important focus for the new
negotiations is the development of disciplines and guidelines on domestic regulations to ensure that
they would not become disguised barriers to trad e (Article VI:4).  A set of disciplines for the
accountancy sector have been developed and adopted by the CTS last year to ensure that
qualifications/licensing requirements and procedures and technical standards do not constituteunnecessary barriers to trade.  The work needs now to be advanced on a much wider footing, pursuant
to Article VI:4 of the GATS.  Building on the guidelines for the accountancy sector, we are of the
view that the newly established Working Party on Domestic Regulations should conduct parallel work
on the development of general disciplines on domestic regulations and horizontal disciplines for other
professional services. In this regard, Hong Kong, China has submitted a paper proposing a wayforward for domestic consultation with the professional bodies.
10. In addition to the Article VI:4 principles, WT O Members should also examine how to ensure
that the value of market access commitments would not be compromized by anti-competitive
behaviour in the domestic markets (e.g. cartel, exclusive franchise, etc).  These include a lack of
access to basic information and facilities such as physical infrastructure and other supportingfacilities.  In this regard, the Regulatory Principles on Basic Telecommunications (the Reference
Paper) took a major step in the telecoms sector.  Members should consider seriously whether similar
pro-competition principles should be developed and adopted for other services sectors in the
negotiations, particularly those which are prone to anti-competitive behaviour.  Alternatively,
Members may consider whether the elements contained in the Reference Paper could be appliedhorizontally to other sectors or to specific sectors.
(c) Rule-making issues
11. It is necessary to inject fresh momentum into three mandated rule-making work,  particularly
with regard to Government Procurement (Article XIII) and Subsidies (Article XV), as well as
Emergency Safeguard Measures (Article X), progress on which has been unsatisfactory.
12. Furthermore, the services work programme should allow for the clarification and, if
necessary, review of certain GATS provisions.  Several provisions are not as clear as they ought to be,
in particular the interpretation and application of Article V on economic integration agreements.  The
WTO Committee on Regional Trade Agreements (CRTA), which is tasked to examine, among other
things, the systemic implications of the RTAs, has not yet focussed on the interpretation of Article V.
In view of the proliferation of RTAs in recent years, it is imperative that the WTO should look at therules and see if they need to be clarified and streng thened to meet the changing environment.   In this
regard, Hong Kong, China has submitted to the General Council a paper proposing that "the existing
WTO rules and decisions relating to RTAs should be clarified and, where appropriate, reinforced."
13. In this connection, Hong Kong, China believes that it would be desirable if the rules and
disciplines and clarifications described above could be agreed at an early stage of the new round ofnegotiations – to be brought into effect at the end of the round - so as to provide a degree of certainty
and to encourage improvements in specific commitments.WT/GC/W/215
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(d) Increasing participation of developing and least-developed economies
14. Article IV mandates that the increasing participation of developing Members in world trade
should be facilitated through negotiated specific commitments relating to, inter alia , the liberalization
of market access in sectors and modes of supply of export interest to them.  Special attention should
be given to the needs of the least-developed economies in this respect.  For example, Members should
strive to improve developing Members' access to their markets in sectors where the latter have a
competitive edge (e.g. construction and related services, tourism, health services and computer-related
services) .  This requires the developing members to articulate their interests from the new
negotiations, and the developed Members to make a genuine effort to accommodate them.   In
addition, Members should consider, perhaps in the wider context, how to enhance the capacitybuilding and technical assistance for the least-developed economies to enable them to benefit from
trade liberalization and implement their market access commitments.
Negotiations guidelines and way forward
15. The GATS mandates that negotiating guidelines and procedures should be established for
each round of services negotiations.  These Negotiating Guidelines should be agreed at the Seattle
Ministerial Conference.  Clearly some elements of the negotiating principles (such as "standstill" and
"early harvest") and modalities will be linked to the broader package of negotiations to be agreed
upon.  The level of specificity of the guidelines for the differing subject areas under WTO
Agreements will need to take account of the differing needs and requirements of the areas to benegotiated.  Also, the Negotiating Guidelines for services should set out in clear and precise terms  the
scope, structure and timeframe of the new round of services negotiations.
16. We have discussed above the scope and coverage Hong Kong, China considers appropriate.
In our non-paper of 26 April 1999, we also disc ussed the possible administrative arrangements  that
should apply to services negotiations.
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