RESTRICTED
WORLD TRADE S/C/M/6
3November 1995
ORGANIZATION(95-3456)
Council forTrade inServices
REPORT OFTHE MEETING HELD ON4OCTOBER 1995
Note bytheSecretariat
1. TheCouncil forTrade inServices heldameeting on4October 1995. Theagenda forthe
meeting iscontained inairgram WTO/AIR/161. Under Other Business theChairman added statements
on(a)procedures forthemodification ofschedules, (b)theroster ofpanellists forservices, (c)a
computerized database forservices, and(d)thedateforthenextmeeting oftheCouncil. Thedelegation
ofAustralia made astatement concerning thenotification ofthebilateral agreement withNewZealand.
Thedelegation oftheUnited States made astatement concerning consultations withtheEuropean
Communities regarding theirregime fortheimportation, saleanddistribution ofbananas.
ItemA:Rules ofProcedure fortheCouncil onTrade inServices
2. TheChairman recalled thatatitsmeeting of30May1995theCouncil hadconsidered adraft
foritsRules ofProcedure (S/C/W/2). Heindicated thatthere hadbeenanoutstanding issue relating
toRule33(Decision Making), which wasrelevant tothethree sectoral councils ongoods, services
andintellectual property. TheCouncil forTrade inGoods andtheTRIPS Council haddecided to
addafootnote toRule33indicating that,when alegalprovision ofanAgreement specifically requires
adecision tobetaken byconsensus andthematter isreferred totheGeneral Council, theGeneral
Council shalltakeadecision onlybyconsensus. Hesaidthatsuchasolution wasappropriate forthose
twoCouncils since theagreements theyadminister contain suchprovisions. However, inthecaseof
theServices Council, theaddition ofsuchafootnote totheRules ofProcedure would notbenecessary,
since theGATS doesnotinclude anyprovision which specifically requires adecision tobetaken only
byconsensus. Hesuggested thattheCouncil should adopt thedraftRules ofProcedure astheystood
indocument S/C/W/2.
3. TheCouncil soagreed.
ItemB:Notifications bytheEuropean Communities pursuant toArticle VoftheGATS
4. TheChairman indicated thatunder thisitemtheCouncil should address twosub-items: first,
theterms ofreference fortheWorking Party ontheEnlargement oftheEuropean Union, andsecond,
thenotification oftheEuropean Union itself. Herecalled thatatitsmeeting of30March 1995, the
Council hadestablished aWorking Party ontheEnlargement oftheEuropean Union andithadbeen
agreed thatconsultations would takeplace onitsterms ofreference. Following theconsultations, the
chairman suggested thefollowing standard terms ofreference:
"Toexamine theTreaty ofAccession ofAustria, Finland andSweden totheEuropean Union
andtoreport totheCouncil forTrade inServices onitsconsistency withArticle Vofthe
General Agreement onTrade inServices".
5. TheCouncil soagreed.S/C/M/6
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6. With respect tothenotification oftheEuropean Union itself, theChairman recalled thatat
theCouncil meeting on30March 1995, thisquestion hadbeenraised andmostdelegations tookthe
viewthat,under theterms ofparagraph 7(a)ofArticle VoftheGATS, suchnotification would be
inorder. However, thepoint hadbeen made thatnotification would notnecessarily imply the
establishment ofaworking party. Thediscussion hadnotbeenconclusive andthematter wasyetto
beresolved.
7. Therepresentatives ofCanada, Japan, Mexico, Switzerland andtheUnited States expressed
concern thattheestablishment oftheEUitself hadnotbeennotified.
8. TherepresentativeoftheEuropeanCommunitiesstatedthatthenotificationwasunderpreparation
andduetoitscomplexity ithadnotbeenpossible tohaveitsubmitted totheCouncil intimeforthis
meeting. Heindicated thatitwould besubmitted intheverynearfuture. TheChairman suggested
thattheCouncil takenoteofthestatements made andrevert tothisitematitsnextmeeting.
9. TheCouncil soagreed.
ItemC:Taxes andSubsidies attheSub-Federal Level -Communication bytheUnited States
10. TheChairmanrecalledthatthisitemrelatedtothecommunicationbytheUnitedStatescontained
indocument PC/SCS/W/4 dated 30June1994onmeasures concerning Taxes andSubsidies attheSub-
Federal level. Aprocess ofinformal consultations hadbeenunderway since thesubmission ofthat
communication. Thedelegation oftheUnited States hadbeenproviding responses toquestions by
otherdelegations, some ofwhich hadbeencirculated intwoinformal communications dated 26January
and11April 1995. ItwastheChairman 'sunderstanding thatthedelegation oftheUnited States had
beenconsulting bilaterally withsome interested delegations. Heinvited theUSdelegation, aswell
asothers withwhom consultations hadtaken place, toinform theCouncil ofanyfurther developments.
11. Therepresentative oftheUnited States stated thatinformal consultations hadtaken place with
some delegations. Thediscussions weretechnical innature andhadbeenaiming atclarifying theissues
arising fromthereservations contained intheUScommunication. Concerns wereexpressed byothers
regarding theneedformore clarity withrespect towhat thereservations actually cover. TheUS
delegation hadprovided further explanations during thediscussions. However, more questions were
raisedandithadbeenagreedthatfurtherclarificationswouldbeprovided.Concernswerealsoexpressed
thatsomereservations werenotnecessary sincethesituations theyweremeant tocover didnotconstitute
violations ofArticle XVII (National Treatment). Hesuggested thatitmight beuseful toexplore the
possibility ofreaching some formofunderstanding ontheapplicability ofArticle XVII tocertain tax
measures atthesub-federal level. Hisdelegation didnotregard thereservations contained inits
communication ashaving asubstantive impact onthebalance ofrights andobligations under theGATS.
Inanycase, further consultations atthemultilateral levelwere necessary.
12. TherepresentativeofCanadanotedthatMembershadnotyetacceptedthereservationscontained
inthecommunication oftheUnited States. While Canada shared theunderlying concerns behind the
listofreservations submitted bytheUnited States, further review wasnecessary toclarify thecontent
ofthose reservations prior totheiracceptance. Heexpressed hisdelegation 'sconcern thatthisitem
hadbeenontheAgenda oftheCouncil forsuchalongtime.
13. Therepresentative ofChile stated thathisdelegation hadasystemic concern withrelation to
thisissue. TheGeneral Agreement onTrade inServices seemed tohave, intheviewofsome Members,
anambitious scope ofapplication. Some ofthereservations contained inthelistpresented bytheUnited
States related tomeasures which aimed atpromoting equal opportunities between different social
categories. Theindirect effects ofsuchpolicies onother areas suchasTrade inServices should notS/C/M/6
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besubject todiscussions intheWTO. Oneofthepresent challenges, inherview, wastoestablish
clearcriteria onthebasis ofwhich thescope ofapplication oftheGATS would belimited tomatters
relating toTrade inServices. Anyanalysis ofthemeasures submitted bytheUnited States should
focus onwhether theywereaimed atachieving acertain trade advantage which could nototherwise
beachieved.
14. Therepresentative oftheEuropean Communities stated thatinformal consultations withthe
United States had,tosome extent, raised theleveloftheirconcerns duetothegeneral nature ofthe
reservations submitted bytheUnited States. Thisissue hadbeenontheAgenda oftheCouncil for
alongtimeandanurgent solution wasneeded. Hisdelegation heldtheviewthatsuchreservations
could undermine thevalue ofcommitments made bytheUnited States. Therefore, itreserved allits
rights under theGATS.
15. Therepresentative ofArgentina stated thatinorder toassess theimpact ofthemeasures notified
bytheUnited States, more clarifications were needed. Further informal consultations were needed
inorder todiscuss thedetails ofthetechnical issues involved.
16. TheChairman suggested thattheCouncil takenoteofthestatements made andrevert tothis
itematitsnextmeeting.
17. TheCouncil soagreed.
ItemD:Statistics onTrade inServices -Note bytheSecretariat
18. TheChairman recalled thatatprevious discussions oftheCouncil, ithadbeenrecognized that
improvement inthequality ofservices statistics wasurgently needed toensure theproper functioning
oftheGATS andtofacilitate future negotiations. Atthemeeting oftheCouncil on30March 1995,
ithadbeennoted thattheproblems relating totheavailability andcomparability ofstatistics weremost
serious andrequired urgent attention. Accordingly, theSecretariat hadbeen asked toprepare a
background noteonservices statistics andclassification asabasisforinitiating work inthesetwoareas
andtoassist delegations intheirconsideration oftheissues involved. TheChairman drew attention
todocument S/C/W/5 which contained thatnote. Itfocused primarily onissues relating tothecreation
ofastatistical framework toserve GATS needs.
19. Several delegations reiterated their views concerning theimportance ofreliable statistical
information andtheneedtostartserious work inthisarea. Theviewwasalsoexpressed thatsuch
work needed tobeincoordination withtheongoing efforts inother international fora. Onedelegation
expressed theview thataddressing questions relating totheclassification ofservices would bean
important steptowards establishing reliable statistics. Anumber ofdelegations stated that,although
thesubject wasofgreat importance, itseemed premature totakeanydecisions ontheestablishment
ofaspecial body toconduct thenecessary work. Some questions were addressed totheSecretariat
inrelation todocument S/C/W/5. Arepresentative oftheSecretariat responded withclarifications
tothepoints raised.
20. TheChairman noted that,although delegations agreed ontheimportance ofthesubject, itwas
feltpremature totakeanydecisions ontheestablishment ofaspecial body. Hesuggested thattheCouncil
takenoteofthestatements made andrevert tothisitematafuture meeting.
21. TheCouncil soagreed.S/C/M/6
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ItemE:TheEstablishment ofaCommittee onSpecific Commitments
22. TheChairman recalled thatattheCouncil meeting of21July1995, ithadbeenagreed that
Members would givesympathetic consideration totheestablishment ofaCommittee onSpecific
Commitments. Accordingly, hedrewattention todocument S/C/W/9 which contained adraftdecision
bytheCouncil establishing suchaCommittee. Heindicated thathisinformal consultations hadled
himtobelieve thatthere were noobjections toitsestablishment.
23. Anumber ofdelegations stated theirsupport fortheestablishment ofaCommittee onSpecific
Commitments. Some delegations, however, tooktheviewthatfurther clarity wasneeded witharespect
totheterms ofreference oftheCommittee, inparticular insofar asthework oftheCommittee related
toSchedules ofSpecific Commitments andtothesectoral coverage ofitsmandate. Some delegations
stated thatthework oftheCommittee mustfocus onhowtoimprove thetechnical accuracy ofschedules
inthefuture andnotaffect thesubstance ofcurrent schedules.
24. TheChairman noted thattherehadbeennoobjections totheestablishment oftheCommittee,
however, there weredifferent views concerning itsterms ofreference. Hetherefore, suggested that
theCouncil should takeadecision toestablish theCommittee onSpecific Commitments andrevert
totheterms ofreference atitsnextmeeting inthelightoffurther informal consultations.
25. TheCouncil soagreed.
Item F:Verification ofSchedules ofSpecific Commitments. Schedules ofCommitments and
Lists ofMFN Exemptions referred toin(WTO/AIR/154)
26. TheChairman stated thataninformal meeting oftheCouncil hadbeenheldon26September
1995 forthepurpose ofverifying theSchedules ofCommitments listed indocument WTO/AIR/154.
Subsequently, document S/C/W/10 hadbeenissued containing arevised listing oftheSchedules which
hadbeenverified. Thelistcontained 31Schedules and16Lists ofMFN Exemptions relating to
Financial Services, 6Schedules relating toMovement ofNatural Persons, aswellastwoSchedules
relating toSaint Christopher andNevis andtheSoloman Islands. TheChairman suggested thatthe
CouncilconsidertheSchedulesofCommitmentsandtheListsofMFNExemptionscontainedindocument
S/C/W/10 tobeverified.
27. TheCouncil soagreed.
28. TheChairman announced thatasof6October 1995, thesecond Protocol totheGeneral
Agreement onTrade inServices would beopenforacceptance byMembers whohadannexed toit
theirSchedules ofCommitments inFinancial Services. Also, asofthesame date,thethirdProtocol
totheGATS would beopen foracceptance byMembers whohadannexed toittheircommitments
relating tomovement onnatural persons. Heindicated thatthecertified treaty copies oftheseProtocols
were available forsignature inRoom 2026/2027 intheCentre William Rappard.
ItemG:Negotiating Groups onBasic Telecommunications andMaritime Transport Services -Progress
Reports
29. TheChairman stated thattheNegotiating Group onTelecommunications hadhelditseighth
meeting on20September 1995. Thenumber offullparticipants inthenegotiations hadreached 28
(counting theEUanditsMember States asone). There were30governments participating asobservers.
Withthenegotiations duetoendinApril 1996, theGroup hadagreed toholdmonthly meetings from
thenon.Ahighlevelmeeting oftheGroup hadbeenscheduled for6October 1995 todiscuss goals
andpriorities.Throughoutthisyear,participantshaddiscussedawidevarietyoftechnicalandregulatoryS/C/M/6
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issues. They hadalsoengaged inseveral rounds ofbilateral negotiations onpossible commitments.
They hadbegun submitting initial offers inwriting on31July1995. Thus far,teninitial offers had
beentabled.
30. TheNegotiating Group onMaritime Transport Services hadhelditssixth meeting on
17-19 July1995. Mostofthemeeting hadbeendevoted totheexamination ofreplies totheSecretariat 's
questionnaire onMaritime Transport Services, aprocess which hadbeenstarted during thesecond
halfofJanuary 1994. Nineoutof42participants hadthusfarnotsubmitted theirreplies. Only one
observer government outof15hadsubmitted itsreply. Sixparticipants hadsubmitted conditional
offers. TheEuropean Union hadsubmitted anofficial communication bringing totheattention ofthe
Negotiating Group onMaritime Transport Services ameasure, under consideration bytheUnited States,
which itconsidered tobeinviolation ofparagraph 7oftheDecision onMaritime Transport Services.
Themeasure would endtheprohibition ontheexport ofAlaska North Slope Oilandreserve the
transportation ofsuchoiltoUSflagships.
31. Therepresentative oftheEuropean Communities stated thathisdelegation hadsubmitted on
thatdayitsoffer totheNegotiating Group onBasic Telecommunications. Henoted theimbalance
inprogress achieved inthetwoNegotiating Groups. IntheNegotiating Group onMaritime Transport
Services there wasonemajor participant thathadnotthusfarsubmitted anoffer.
32. Therepresentatives ofNorway saidthattheaimofmultilateral negotiations wastoachieve
abalanced setofcommitments inallservices sectors along withtheestablishment ofinternational trading
rules. TheGATS hadbeenconcluded asawhole, consisting oftheframework agreement andscheduled
commitments invarious sectors. Negotiations infourareashadbeenextended attheendoftheUruguay
Round.Twohadalreadybeenconcludedwhilebasictelecommunicationsandmaritimetransportservices
were tocontinue untiltheendofApril andJune1996 respectively. These twosectors could notbe
seeninisolation from thetotalpackage. Hesuggested thatthemeeting oftheCouncil should give
aclearsignal thattheaimofthenegotiations should betoreach balanced overall solutions inaddition
toacceptable sectoral results. Headded thatitwascrucial thatallparticipants putforward conditional
offers before thenextmeeting oftheNegotiating Group onMaritime Transport Services. Healso
stated thatNorway intended tosubmit anofferinBasic Telecommunications before thenextmeeting
oftheNegotiating Group.
33. Therepresentatives ofCanada, Japan andNewZealand welcomed theconditional offer by
theEuropean Communities andstressed theimportance ofreaching satisfactory results inboth
negotiations inBasic Telecommunications andMaritime Transport Services.
34. Therepresentative oftheUnited States stated thatoneofthechallenges inthesetwonegotiations
waswhether trueliberalization could beachieved. Inspiteofthesubmission ofanumber ofoffers,
suchliberalization wasyettobeseeninthemaritime transport sector.
35. TheChairman suggested thattheCouncil takenoteofthestatements made.
36. TheCouncil tooknote.
ItemH:Participation ofObservers
37. TheChairman recalled thataccording totheadhocprocedure agreed bytheGeneral Council,
theServices Council wastodecide ateachmeeting which inter-governmental organizations should
beinvited asobservers toitsfollowing meeting. Hesuggested thattheCouncil should continue to
invite thefourorganizations which hadsofarparticipated asobservers inthemeetings oftheCouncil
namely, IMF, theWorld Bank, UNCTAD andtheUN.S/C/M/6
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38. TheCouncil soagreed.
Other Business
(a) Procedures forthemodification ofschedules
39. TheChairman recalled thatattheCouncil meeting on30March 1995ithadbeenagreed that
informal consultations should beheldonthedraftprocedures dated 14December 1992 withaview
toproducing afinaltextby30June1995forconsideration bytheCouncil. Asother priorities imposed
themselves ontheServices agenda andattherequest ofdelegations, suchconsultations hadnottaken
place. Itappeared thatsome capitals werestillconsidering thedraftandweretherefore notready to
decide ontheoutstanding issues. Hesuggested thattheSecretariat should startinformal consultations
aspreviously planned, withaviewtoproducing afinaldraftforconsideration bytheCouncil assoon
aspracticable.
40. TheCouncil soagreed.
(b) Theroster ofpanellists forservices
41. TheChairmanstatedthattheGeneralCouncilhadtakenadecisionatitsmeetingon27September
1995 toestablish theindicative listofgovernmental andnon-governmental panellists contained in
document WT/DSB/W/8. Thatlistwhich hadbeenestablished pursuant toArticle 8(4)oftheDispute
Settlement Understanding oftheWTO, contained names ofpanellists inallareas covered bytheWTO
including services. TheServices Council hadalsoadopted aDecision onDispute Settlement Procedures
atitsfirstmeeting on1March 1995 (S/L/2) calling fortheestablishment ofaroster ofpanellists for
services. TheChairman saidthatgiven thecomprehensive nature oftheindicative listestablished by
theDSB, there might notbeaneedfortheServices Council toestablish aseparate roster ofservices
panellists. Hesuggested thattheCouncil should consider thenames ofservices panellists onthe
indicative listoftheDSBtoconstitute theroster ofpanellists referred tointheDecision ofDispute
Settlement Procedures adopted bytheCouncil on1March 1995.
42. TheCouncil soagreed.
(c) Acomputerized database forservices
43. Fortheinformation ofMembers oftheCouncil, theChairman invited arepresentative ofthe
Secretariat tomake astatement onthework currently underway ontheestablishment ofacomputerized
database forservices.
44. Therepresentative oftheSecretariat saidthattheNational Schedules andExemption Lists
currently existed onpaper (2800 pages) andincomputerized form onWord Perfect files. The
information inthefilescould atpresent beretrieved onlyinoneform -bycountry -andcould not
besubjected toanysophisticated analysis. Theobjective oftwoinitiatives nowinprogress inthe
Secretariat wastomake theinformation easily accessible andtopermit meaningful analysis. First,
aCDROM wasbeing produced, forpublic release inNovember, which would store, ineasily retrievable
form, allschedules andexemption lists. Second, acomputerized data-base wasbeing created inthe
Trade inServices Division which would make itpossible toretrieve andanalyze thedatanotmerely
onacountry orsector basisbutalsoaccording tomodes ofsupply andtypes ofmeasure. Thisdata-base
would bemade accessible through theWTO network toalldelegations andtherestoftheSecretariat.
45. TheCouncil tooknote.S/C/M/6
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(d) Thedateforthenextmeeting oftheCouncil
46. TheChairman suggested thatameeting oftheCouncil should takeplace on
Wednesday 22November 1995. There would beapossibility forconvening another meeting in
December ifnecessary.
47. TheCouncil soagreed.
48. Therepresentative ofAustralia recalled thatattheCouncil meeting on30March 1995, the
delegations ofAustralia andNewZealand announced theirintention tonotify theServices Protocol
totheCloser Economic Relations Agreement, pursuant toArticle VoftheGATS. Sheindicated that
negotiations hadtaken place ontherevision oftheAnnex totheProtocol. InlateSeptember, Ministers
hadapproved theresults. Shestated thatanotification wasexpected intheverynearfuture.
49. Therepresentative oftheUnited States stated thatinaccordance withtheDispute Settlement
Procedures oftheWTO, arequest forconsultations hadbeenmade totheEuropean Communities
regarding theirregime fortheimportation, saleanddistribution ofbananas. Therequest hadbeen
made bytheUnited States, Guatemala, Honduras andMexico.