RESTRICTED
WORLD TRADE S/WPGR/M/2
14November 1995
ORGANIZATION(95-3523)
Working Party onGATS Rules
REPORT OFTHE MEETING HELD ON18OCTOBER 1995
Note bytheSecretariat
1. Thesecond meeting oftheWorking Party onGATS Rules waschaired byAmbassador Christer
Manhusen ofSweden. Theagenda consisted offouritems: appointment ofachairperson, safeguard
negotiations under Article XoftheGATS, thenextmeeting oftheWorking Party, andother business.
Appointment ofaChairperson
2. TheChairman indicated thatdespite consultations ontheappointment ofachairperson forthe
Working Party, aconsensus hadstillnotbeenachieved. Hestressed thatMembers should come to
adecision intheverynearfuture.
Safeguard negotiations under Article XoftheGATS
3. TheChairman noted thatnodelegations hadyetmade written submissions onthequestion of
safeguards forservices. Therepresentative ofAustralia indicated thatherauthorities wereworking
onapaper thatmight beavailable forthenextmeeting oftheWorking Party. TheChairman reminded
delegations thatabackground paper bytheSecretariat (S/WPGR/W/1) hadbeenbefore theWorking
Party atitsfirstmeeting, andalsonoted thatanother Secretariat paper (S/WPGR/W/2) hadbeenprepared
forthesecond meeting, which examined safeguard provisions onservices inanumber ofregional trade
agreements. Heinvited delegations tocomment onthese papers, andtooffer anyother ideas they
mayhaveontheissues before theWorking Party.
4. Noting thatanargument forhaving an"emergency" safeguard provision inGATS, similar
tothatofArticle XIXofGATT, wasthatsuchamechanism might induce further liberalization, one
delegation wondered whether thiswould indeed betheeffect ofsuchaprovision. Thepossibility that
aliberalizing outcome might result from theintroduction ofasafeguard should beweighed against
theriskthatsuchamechanism might alsobeturned toprotectionist ends. Moreover, there were
formidable technical difficulties tobeovercome inestablishing aviable safeguard. Among theissues
thatwould havetobeaddressed werethedefinition of"likeproduct," thedetermination ofinjury and
causality, thedefinition of"domestic" industry inthelightofcommercial presence, andthenature
ofappropriate remedies. Inaddition, thestatistical requirements formanaging asafeguard instrument
were considerable, andtherequisite information wassimply notavailable atpresent.
5. Thisdelegate saidthatthequestion ofsafeguard action under Mode 3(commercial presence)
wasparticularly delicate, asonceacommercial presence hadbeenestablished, safeguard action might
imply some formof"disestablishment" --aprospect thatmore thanonedelegation considered highly
undesirable. Inanyevent, itwould bedifficult toreconcile thenotion oftemporary relief viasafeguard
action withanydisestablishment requirement under Mode 3,although itmight bepossible toenvisage
asafeguard measure under Mode 3thatwould inhibit investments thathadnotyetoccurred. Asregards
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cross-border trade (Modes 1and2),safeguard measures would often prove difficult toenforce.
Enforcement would beeasier under Mode 4(movement ofnatural persons), butwould nevertheless
require theestablishment ofenforcement machinery.
6. Several otherdelegations thatspoke supported theseviews regarding thecomplications involved
indesigning andimplementing anemergency safeguard. Allthedelegations thatacknowledged these
problems alsostated thatitwould bepremature tocloseoffthediscussion. More reflection wasneeded,
aswellasmoreexperience withtheoperation ofGATS. Arepresentative wasoftheviewthatreflections
onthecaseforanemergency safeguard inservices should takeaccount oftheabsence ofprovisions
onanti-dumping andcountervailing actions under GATS. Onedelegation raised thepossibility of
adapting Article XXIofGATS inorder toprovide anaccelerated procedure formodifying aschedule,
comparable towhat isalready permitted inArticle X:2asatemporary arrangement pending the
completion ofnegotiations onemergency safeguard measures. Another delegation wasoftheview
thatinthelongrun,therewasindeed acasefordeveloping asafeguard instrument. Hesaidthatwhile
"safety valves" ofvarious kinds already existed, these were notadequate inthekindofsituation
envisaged under emergency safeguards. Other representatives suggested thatthose whobelieved there
wasaneedforaservices safeguard should explain inwritten submissions whytheyconsidered that
thiswasthecase.
7. Onedelegation wondered whattheimplication would beforaMember 'srighttouseaservices
safeguardprovidedforindomesticlegislationifnosuchprovisionexistedintheGATS.Arepresentative
oftheSecretariat expressed apreliminary viewonthematter. Hesaidthatintheabsence ofasafeguard
provision intheGATS, Members would beunable tosuspend theapplication oftheir specific
commitments inthemanner permitted, forexample, under Article XIXofGATT. Thepossibility
always existed, however, ofrenegotiating acommitment under Article XXI. TheChairman suggested
thattheWorking Party might revert tothisquestion induecourse ifanydelegation sowished.
8. Insumming upthediscussion, theChairman saidthattheexchange ofviews intheworking
Party hadbeenuseful, andmore work would berequired along these lines. Itwasclearly premature
forconclusions tobedrawn. Heurged delegations tomake written submissions totheWorking Party,
particularly those whoperceived aneedforasafeguards mechanism. TheChairman alsoindicated
thatinresponse torequests made atthemeeting, theSecretariat would trytoidentify instances inwhich
safeguard mechanisms inagreements relating totrade inservices hadbeeninvoked, andwould also
provide available information onprocedures andcriteria established under regional trading agreements
fortheinvocation ofsafeguard measures.
Next meeting oftheWorking Party
9. Itwasagreed thatthenextmeeting oftheWorking Party would beheldonFriday,
8December 1995. TheWorking Party would firsttakeuptheGATS Article XIIImandate on
negotiations inrelation togovernment procurement, andthenresume itsdiscussion onsafeguards.
Other Business
10. Nomatters were raised under other business.