RESTRICTEDWORLD TRADE
ORGANIZATIONS/CSC/M/26
7 February 2003
(03-0819)
Committee on Specific Commitments
REPORT OF THE MEETING HELD ON 5 DECEMBER 2002
Note by the Secretariat1
1. The Committee on Specific Commitments held a meeting on 5 December 2002.  The agenda
for the meeting is contained in WTO/AIR/1989.  No points were raised under Other Business.
A. A DOPTION OF THE ANNUAL REPORT TO THE COUNCIL FOR TRADE IN SERVICES
2. The Chairperson introduced the draft annual report of the Committee on Specific
Commitments, document S/CSC/W/36.  The report summarized in a factual manner the main areas of
activity of the Committee in the year 2002.  A typographical error in the second paragraph, where thedocument reference should be to S/CSC/W/33 instead of 36, would be corrected in the final report.
3. The Committee adopted the annual report with the proposed correction.  The report was
subsequently issued as document S/CSC/7.
B. CLASSIFICATION ISSUES
4. The Chairperson recalled that an informal meeting on classification issues had been held on
19 November, addressing issues as they related to the various sectors in the order set out in the
compendium, Job (02)/143.  He thanked those delegations who had made substantive contributions at
that meeting.  He drew the Committee's attention to a draft proposal by the delegation of Chinese
Taipei on computer and related services.2
5. The representative of Chinese Taipei supported the approach suggested by the EC to adopt a
two-digit approach to resolve the problem of classification issues arising with regard to computer and
related services.  Identifying the scope of "core" and "enabling" services would not be easy.  Thealternative approach proposed in his delegation's paper was meant to help clarify the scope of
CPC 84, while it was not the purpose to seek reclassification of computer and related services.  His
delegation had two concerns, one of which was related to the broad coverage of CPC 84.  The second
concern had to do with the problem of overlap of computer and related services and other services
sectors.  The paper introduced the concept of "value-chain" to identify the scope of computer andrelated services.  The value chain was divided into four stages, i.e. the pre-implementation stage, the
implementation stage, the operations stage, and the maintenance and support stage.  Difficulties arose
in the operations stage, for example if a banking service was provided and IT-intensive operations
were outsourced.  The outside service suppliers could be classified as supplying computer and related
services under CPC 84.  The commitment under market access for CPC 84 would only facilitate theprovision of banking services, but not change scope of the commitments made in banking services.
He registered his delegation's concern over "convergence services" that combined computer 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 The final version of the paper was subsequently issued as document S/CSC/W/37.S/CSC/M/26
Page 2
telecom technology to deliver internet-based telecom services or integrated computer and audiovisual
technology to deliver multimedia content.  As th ese convergence services significantly impinged on
the regulatory environment, he recommended their exclusion from the scope of computer and related
services.
6. The representative of Poland noted that some Members were delivering classification
proposals on the basis of different classification systems, such as CPC, CPC Rev.1, or the ILO ISCO
classification, while others referred to the specificity of particular sectors.  The variety of approaches
raised the question of the legal status of a new classification system, a problem that had not been
decided by the Committee.  She recalled Poland's submission on classification issues, contained in
document S/CSC/W/28 of July 2000, which had raised the issue of the status of a new classification
list that could be used by Members during the negotiations.  It was her delegation's understanding that
any new classification elaborated in the Committee would be non-binding.  Poland intended toundertake specific commitments with reference to the relevant CPC codes to the extent possible.
7. The representative of Peru stated the paper of Chinese Taipei raised the question how
Internet-based telecom services and multimedia content services should be classified.  This question
required urgent resolution.
8. The representative of Uruguay reminded delegations that the mandate of the CSC was to
address classification issues, and that issues related to market access and liberalization were dealt with
by the Special Session.  The proposal of Chinese Taipei related mainly to market access questions and
did not fall under the mandate of the CSC, and should therefore be presented in the Special Session.
9. Referring to what the delegation of Chinese Taipei considered to be controversial
convergence services, the representative of the European Communities recalled that these issues had
been raised in earlier negotiations.  During the basic telecom negotiations, the question arose whether
internet-based telecom services should be listed  as a separate heading in the commitments that
Members would make or whether these services were in fact already covered.  Since basic telecom
services could be delivered over any protocol, including the internet protocol to convey the telecom
signal, Members decided at the time in favour of the latter alternative.  As regards multimedia content,the decisive factor was what type of content was delivered.  The computer service itself was merely
the backbone onto which other service suppliers put their elements, be they audiovisual or of other
nature.  The computer service had only a support function and the classification depended on the
content that was supplied.
10. The representative of Argentina felt that the concept of the value chain might complicate
matters, particularly at the operations stage where difficulties arose with regard to Internet-based
telecommunications services and multimedia content services.  He considered that a more functionalclassification system along the lines presented by the European Communities was more useful for
clarifying technical difficulties.
11. The representative of Hong Kong, China we lcomed the concept of putting computer and
related services into a value chain and trying to differentiate them according to different stages.  He
sought clarification on the proposal that Members should make commitments at the two-digit ratherthan the three-digit level; and in particular, what  the implication of the value-chain approach was on
the scheduling of commitments.  His delegation had always advocated a functional definition and it
was not entirely clear how the suggested appro ach differed from a functional definition.  On
convergence services, he noted that other services sectors, such as audiovisual and telecom services,
had their own defined scope.  As to the recommended exclusion of convergence services from thescope of computer and related services, he sought clarification what criteria were envisaged to
exclude certain services.  This issue was related also to the question posed at the last meeting to the
European Communities on the criteria for separating enabling and core services.S/CSC/M/26
Page 3
12. The representative of the United States found the value-chain concept to be interesting.
However, he needed a better understanding of how clear rules could be established to distinguish
between convergence and computer and related services, in particular as there might be overlap
between the two categories as acknowledged by the submission of Chinese Taipei.  He requested a
revision of the compendium to take into account the proposed US classification on express deliveryservices.
13. The representative of Canada commented on the EC’s proposal for an “Understanding on the
scope of coverage of CPC 84" and invited the EC to comment on a number of areas to better clarify
the intent and potential implications of such an “Understanding.”  It was Canada's view that the
increasing use of electronic delivery in respect of a variety of computer and related services had
created some ambiguity with regards to the scope of coverage and application of CPC 84.  Canada’s
approach to computer and related services was to achieve maximum liberalization in the sector, while
ensuring legal certainty regarding the commitments that Members had previously chosen to
undertake.  Canada was supportive of multilateral discussions on the scope and application of CPC
84, and had a strong interest to ensure that Members’ commitments were not compromised by any
attempt to revise the classification scheme for these services.  In its March 2001 negotiating proposal
for computer and related services, her delegation had proposed that Members examine whetherelectronic modes of delivery had led to some uncertainty about the application of existing GATS
commitments and corresponding W/120 codes to a variety of services.  Canada’s preferred approach
had been to encourage discussion within the CTS and CSC.
14. Turning to the EC’s proposal, she stated that it seemed to assume that current W/120 and CPC
definitions failed to provide for an adequate description of the range of services which fell under theheading of computer and related services, thereby requiring a “functional definition” for the sector.
While there might be some merit in clarifying the scope and application of CPC 84 through
discussion, her delegation was not convinced that such an undertaking would necessarily require
Members to annex a special “Understanding on the Scope of Coverage of CPC 84” to their schedules.
Canada had recently examined a number of innovative computer and related services and had notbeen able to identify any example of a service that was not already captured by the W/120 and UN
CPC.  Moreover, Canada had concerns that such an Understanding might create confusion regarding
existing commitments which were based on standard W/120 titles and CPC codes.  The use of the
proposed “Understanding” would:  (i) distinguish so-called “enabling” computer and related services
(e.g. web-hosting or application hosting) from the content or core service which were being delivered
(e.g. banking);  (ii) explicitly include “packaged software” within the scope of coverage of CPC 84;
and (iii) preclude open-ended commitments by limiting the scope of CPC 8499: Other computerservices n.e.c.
15. The first element of the EC’s proposal which Canada was examining was whether CPC 84
was necessarily ambiguous with respect to whether 'content' was included under the heading of
computer and related services.  In other words, would a well-defined carve-out be required if
Members deemed that the CPC did not actually include 'content'.  She wondered whether Membershad identified specific 3-digit level sub-headings under CPC 84 where it was necessary to distinguish
so-called 'enabling' computer and related services fr om the 'content' or 'core' service which were being
delivered or stored.  Furthermore, she was also interested to hear the views of Members with respect
to what would be included in the concept of 'conten t' if the EC’s proposal were to be endorsed.  A
second element of the EC’s proposal, namely the extent to which it explicitly included “packagedsoftware” within the scope of coverage of CPC 84, caused Canada some concern.  Under the heading
of CPC 842, “software” was defined in the context of CPC 84 for the sole purpose of providing
clarification to the CPC’s definition for software implementation services (“all services involving
consultancy services on, development and implementation of software.”). That definition did not
include packaged software when delivered in a physical format.  On the contrary, the media on whichthe content of software was stored, such as magnetic diskettes, magnetic tapes and discs for laserS/CSC/M/26
Page 4
reading systems (e.g. CDs and DVDs), were clearl y provided for as “recorded media” under heading
85.24 of the HS.  In Canada’s view, “packaged software” when stored on one of these carrier media,
clearly fell under Members obligations under the GATT, and in particular, was provided for under the
ITA, which currently bound 58 participants, includin g the EC, to provide duty-free access to software
products.  Further, the EC’s proposal would seem to preclude open-ended commitments by limitingthe scope of CPC 8499:  Other computer services  n.e.c.  The EC’s functional definition for computer
and related services appeared to be a closed list to the extent that it did not include any reference to
"Other computer services not elsewhere classified", which went beyond the EC’s proposed reference
to “training services…not elsewhere classified.”  To date, Canada had not identified any examples of
so-called “new services” which were not already classified under CPC 84; however, she believed that
Members had to maintain adequate flexibility in th e event of future technological change.  In the
meantime, she requested the views of WTO Members with respect to two key elements of the EC’sproposal: first, whether CPC 842 did in fact include “packaged software” as the EC seemed to
indicate in its proposal; and (2) whether a “closed” definition for computer and related services was
appropriate in view of the potential for new services to arise, even though Members had yet to
identify anything that was not currently covered by the W/120 and UN CPC.
16. The representative of Chinese Taipei stated that if the EC concept of core or content services
were to apply, difficulties could arise in classifying certain convergence services which were
technologically indistinguishable from computer-related services, value-added telecom services, or
audiovisual services.  Several countries maintained heavy regulation on those services, except for
computer-related services, and it might therefore be easier to reach consensus if not too much time
was spent on discussing those convergence services.  Besides, he noted that several informationrelated services required database, network or data-processing functions and it was therefore in
general better to negotiate these related issues at the CPC 84 two-digit rather than three-digit level.
17. The representative of the European Communities reiterated that his delegation's paper was not
seeking reclassification, but tried to explain the EC's understanding of the coverage of CPC 84,
without any changes to the scope of that chapter.  He considered that CPC 8499 was covered in the
EC text.  The functional definition was broad e nough and not technology dependant to include also
new computer and related services.  His delegation was of the view that the definition of the term
software in CPC 842 covered both packaged and customized software.
18. The representative of Hong Kong, China sought clarification from the delegation of Chinese
Taipei regarding the proposed exclusion of convergence services.  He enquired whether in those
cases, for example for the online provision of information, Chinese Taipei also considered that the
setting up of the computer system, both as concer ned hardware and software, would be excluded from
the scope of CPC 84.
19. The representative of Brazil concurred with Uruguay that the paper of Chinese Taipei
contained elements that were more suitably addressed in the Special Session.  He agreed with the
delegation of the European Communities that the coverage of CPC 842 included both packaged and
customized software.  His authorities were currently looking at the classification of two specificservices, namely time stamping and the certification of electronic signatures.
20. Turning to the organization of future work, the Chairperson noted that several delegations had
expressed their desire for further clarification of the issues involved.  He requested delegations to
share their views on the evolution of classification work over the next months.  In particular, he was
interested to learn whether Members saw a need for any additional background documents in additionto the compendium, and whether further informal meetings on classification were needed before the
submission of initial offers in March 2003.S/CSC/M/26
Page 5
21. The representative of Korea stated that the existing classification based on W/120 and the
provisional CPC should be upheld to the extent possible.  While it was true that technological
advances in some areas made it more difficult to decipher the exact scope of certain services sectors
precisely, there was a need for stability in the classification system.  Even the most detailed
classification could become obsolete over time.  Opening up too many areas would make it moredifficult to table offers.  Members were free to effectively define the scope of their commitments by
providing descriptions in addition to what was contained in W/120 or the CPC if the scope of any
sector appeared ambiguous.  However, there were some areas where a real need for multilateral work
existed, for example in the area of environmental services, where the present classification might well
omit some subsectors.  In that light, he proposed that Members identify a limited number of key
services sectors and then proceeded with sincere discussions to reach feasible conclusions in a timely
and focused manner.
22. The representative of Canada stated that an important issue in discussing whether to revise
W/120 was whether a Member already had commitments in that sector based on the current W/120.
If revisions were adopted, the issue arose what to  do with old commitments, and how to overlay the
new classification.  More discussion was needed on the legal relation of existing commitments to
future commitments in such circumstances.
23. The representative of Brazil stated that Canada's concern was important if revisions to the
current classification were agreed on a multilateral basis, but he was not convinced that the process
was going into that direction.  Nothing prevented a Member from using any classification or
definition it wanted to use.  While this was perhaps not the best outcome with respect to the
comparability of commitments, it was nevertheless possible.  Where a Member introduced a newclassification into its offer, it was up to Members to verify if any proposed commitment based on a
different definition was conflicting with an old commitment.  He did not consider that any decision on
this question was necessary.
24. The representative of Hong Kong, China h oped that Members would not use excessively
disparate classifications, as this would jeopardize the comparability of schedules, and diminish the
legal clarity and certainty, and hence their real value for businesses.  He agreed that some sectors
commanded more interest than others, and it was perhaps better to focus on priorities.  He noted that
many ideas on classification were discussed outside this Committee, and considered it important that
those ideas could be conveyed to the membership at large as soon as possible.  Even if no agreement
could be reached on all ideas, it was important to obtain a fuller picture of the ideas that were on the
table.  The usefulness of any future meeting depended on the willingness of Members to contribute
and share their ideas, and to identify areas of priority.
25. The representative of Thailand supported the statements by Korea and Hong Kong, China.
She hoped that the small groups which were pondering classification issues would present their
thinking to the membership at large in a timely fash ion so that these ideas could be taken into account
in the presentation of offers.
26. The representative of the European Commun ities stated it was important to keep the
possibility open to discuss any classification issue.  The initiative by delegations in certain sectors
would naturally lead to a concentration of disc ussions on areas that attracted most interest.
27. The Chairperson stated that he would consult on the question of another informal meeting.
He considered it useful if smaller groups could report back to the Committee in such an informal
meeting.  He suggested that the Secretariat revise the compendium to take account of new proposals,add footnote references to helpful documents, and rectify omissions as the one noted by the United
States.  In that context, he invited delegations to contact the Secretariat if they wished any otherS/CSC/M/26
Page 6
changes to be introduced into the compendium.  He further suggested that the Committee take note of
the statements made and revert to the item at the next meeting.
28. The Committee so agreed.
C. MATTERS RELATING TO THE SCHEDULING OF COMMITMENTS
29. The Chairperson recalled that in late November, the Secretariat had conducted a Workshop on
the Scheduling of Commitments following a request by the Committee on Specific Commitments.  Of
the 180 participants overall, about 100 were capital-based officials from developing countries whose
participation was financed by the WTO, making the event one of the biggest technical cooperation
events in 2002.  The workshop sessions were held in small groups and in all WTO languages, to allow
for a high degree of interactivity.  He had personally received very good feedback, and also the
Secretariat had received indications that participants had considered the event very relevant, timely
and useful.  He thanked the Services Division for their efforts, and invited delegations to complete theWTO evaluation form for technical assistance projects  and return it to the Secretariat to allow for a
accurate evaluation of the workshop.
30. A representative of the Secretariat stated that the Secretariat's work on the consolidation of
Members' schedules was progressing, albeit not as quickly as was initially foreseen.  He hoped that
the consolidated schedules would be circulated by the end of the year.
31. Reverting to the discussion on approaches to the scheduling of additional commitments under
Article XVIII of the GATS, the Chairperson recalled that at the last meeting several delegations had
commented on the background note that had been prepared by the Secretariat on this issue, containedin document S/CSC/W/34.  A number of interesting points had been touched upon in the discussion:
for example, it had been stressed that Article XVIII was wider in scope than Article VI:4, allowing forindividual commitments with respect to measures affecting trade in services, while Article VI:4
contained a mandate for the establishment of multilateral disciplines on a limited category of
measures, i.e. those relating to qualification requirements and procedures, licensing requirements and
procedures, and technical standards.  Another interesting issue that had been raised was the question
of the relationship between additional commitments and commitments under Articles XVI and XVII.Some delegations had observed that a number of additional commitments appeared to run counter to
commitments taken under these Articles.
32. The representative of Hong Kong, China noted that any necessary disciplines developed
pursuant to the mandate of Article VI:4 would apply to all Members, whereas commitments under
Article XVIII only applied to those Members who had included them in their schedules.
Commitments taken under Article XVIII could not contravene commitments under Articles XVI and
XVII, as it was the nature of those commitments to add to liberalization, but not to impose additionalrestrictions.  Commitments under Article XVIII could also include commitments not to take
regulatory measures in a restrictive manner.
33. The representative of China requested a corrigendum to document S/CSC/W/35 with regard
to the editorial comments she had made at the last meeting.
34. The representative of Australia agreed that additional commitments could only be positive
commitments adding to the meaning of a commitment in a relevant sector within the schedule. The
term itself already suggested that additional commitm ents were positive contributions that could not
constrain, limit or reduce commitments taken under Articles XVI or XVII.
35. The representative of Chinese Taipei was uncertain whether the additional commitments
taken by his delegation in banking services, and referred to in paragraph 63 of documentS/CSC/M/26
Page 7
S/CSC/W/35, actually constituted additional commitments, market access or national treatment
limitations, or whether they were of a prudential nature.
36. The representative of Côte d'Ivoire stated that his country had undertaken the full and
unconditional liberalization of maritime transport as well as some integrated and multimodal transport
services as a result of a structural adjustment program.  This autonomous liberalization had given riseto classification problems.  He wondered whether countries outside Africa had also undertaken such
liberalization in maritime transport and encountered classification problems.
37.  The Chairperson suggested that the Committee take note of the statements made and to revert
to the item at the next meeting.
38. It was so agreed.
D. DATE OF NEXT MEETING
39. The Chairperson proposed that, in accordance with the practice of grouping meetings of
subsidiary bodies close to meetings of the Council, the next meeting be held during the week before
the next formal meeting of the Council for Trade in Services in February 2003.
40. The Committee so agreed.
E. OTHER BUSINESS
41. No points were raised under other business.
__________