RESTRICTED
PREPARATORY COMMITTEE PC/M/11
FOR THE 16January 1995
WORLD TRADE ORGANIZATION
(95-0040)
PREPARATORY COMMITTEE FOR THE
WORLD TRADE ORGANIZATION
MINUTES OFMEETING
Held on21December 1994
1. ThePreparatory Committee fortheWorld Trade Organization (WTO) helditseleventh meeting
under theChairmanship ofMr.Peter D.Sutherland.
2. TheChairman recalled thatatthemeeting ofthePreparatory Committee heldontheoccasion
oftheImplementation Conference on8December, hehadindicated thatthree main issues remained
outstanding, namely, theHeadquarters Agreement, thedateandprovisional agenda forthefirstmeeting
oftheGeneralCouncil,andthecompositionandchairmanshipoftheTextilesMonitoringBody.Progress
ontheHeadquarters Agreement andontheTMB issuewould bereported onbytherespective chairmen
oftheSub-Committees onBudget, Finance andAdministration andonInstitutional, Procedural, and
Legal Matters. Hehimself would takeupthequestion ofthedateandprovisional agenda forthefirst
meeting oftheGeneral Council.
A. Review ofwork under theSub-Committees
3. Mr.Szepesi(Hungary),ChairmanoftheSub-CommitteeonBudget,FinanceandAdministration,
saidthatsincehispreviousreporttotheCommittee,theSub-Committeehadheldonemeetingtoconsider
thefinalreport oftheconsultants onthemanagement review andthesituation regarding thenegotiations
ontheHeadquarters Agreement. Withregard tothemanagement review, theconsultants hadpresented
theirfinalreporttotheDirector-Generalandtohimselfon16December,incompliancewiththedeadline
defined intheirmandate. AttheSub-Committee 'smeeting on19December, anextract ofthereport
hadbeendistributed toeachmember. Fortechnical reasons, thefullreport would bemade available
thefollowing day,andeachdelegation would receive onenumbered copy. Hewould insist on
maintaining theconfidential nature ofthisreport, since thewhole process, anditsresults asembodied
inthefinalreport, hadbeendesigned fortheexclusive useofPreparatory Committee members and
theSecretariat 'ssenior management. Nobody outside thiscircle should haveaccess tothereport, either
infullorinpart. Thereport might beused, whenever appropriate, asapoint ofreference infuture
discussions regarding thestructure oftheWTO Secretariat, theoptimal useofitsavailable resources,
theinternal organization ofwork within theSecretariat aswellasitsrequirements interms ofstaffing.
TheSub-Committee recommended thatthePreparatory Committee takenotethatareport onthe
management review hadbeenpresented, andagree toforward thereport tothecompetent bodies of
theWTO forconsideration.1
4. Withregard tothenegotiations ontheHeadquarters Agreement, herecalled thatinhisreport
totheCommittee atitsmeeting on30November, hehadindicated thatprogress hadbeenmade on
1Foraction taken bytheCommittee onthismatter, seeunder Section Cbelow.PC/M/11
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certain technical aspects ofphysical facilities butthatanumber ofanswers were stillawaited from
theSwiss authorities. These concerned acommitment forthelong-term accommodation oftheWTO
ifandwhen theCentre William Rappard became inadequate, thepossible division ofthenewconference
room intotwosmaller rooms ofsome 300seats, andtheaccommodation forandfacilities infavour
oftheleast-developed country members. With regard totheequally crucial matter ofprivileges and
immunities,detailedrepliesandamoreforthcomingpositionfromtheSwissauthoritieswerealsoawaited
onsome major sticking points suchastaxation, inparticular theValue Added Taxandthetaxation
ofpensions, work permits andresidence permits. Although theChairman hadindicated atthe
Implementation Conference thattheprocess ontheHeadquarters Agreement would beaccelerated,
hehadtoreport, regrettably, thatsince theSwiss authorities needed more timetoprepare thedetailed
andhopefully more favourable replies toanumber oftheseimportant questions, nonegotiating session
could bescheduled inDecember. Inthesecircumstances, heandtheChairman hadorganized ameeting
ofalimited number ofPreparatory Committee members withkeySwiss negotiators inorder tohave
theirmainanddeepest concerns recorded sothattheSwiss authorities, atthepolitical level, could create
theconditions forgreater flexibility andpragmatism intheirapproach tosome ofthekeyissues. On
19December,hehadreportedtotheSub-Committeeonthesedevelopments,andanumberofdelegations
hadexpressed theirserious preoccupations inthediscussion thathadfollowed. TheSwiss authorities
hadindicated atthatmeeting thattheywould beready toresume negotiations from12January 1995,
withaviewtoachieving substantial progress bytheendofthatmonth. Theaimcould thenbetoreach
anoverall agreement during thefirsthalfofFebruary. Hewasconfident thatthiswasarealistic objective
iftheSwiss authorities adopted amore flexible andpragmatic position, andwereprepared tosatisfy
some basic expectations andrequirements regarding issues thattheymight consider tobesensitive.
5. Accordingly, theSub-Committee recommended thatthePreparatory Committee agree toextend
themandate ofthenegotiating teamacting onbehalf oftheGATT/WTO. TheSub-Committee also
recommended thataprogress report onthenegotiations bepresented tothefirstmeeting oftheGeneral
Council oftheWTO andthattheoverall results ofthenegotiations betransmitted forapproval toa
subsequent meeting oftheGeneral Council.2
6. The Chairman noted that the Preparatory Committee 'sdraft report tothe
WTO (PC/R/W/1/Rev.2) hadidentified anumber ofissues related tothework oftheSub-Committee
onBudget, Finance andAdministration onwhich ithadnotbeenpossible toconclude consideration
thisyear. These would require earlyattention anddecisions byWTO bodies. Inthisrespect, hewished
tounderline theurgency oftheissues thatwere particularly important tothestaffandthegood
functioning oftheSecretariat. Itwasgenerally recognized thatGATT staffhadprovided anefficient
andhighquality ofservice throughout theUruguay Round negotiations andinmanaging thetransition
fromtheGATT totheWTO. Hewasconvinced thatthestaffrepresented averyprecious asset, and
itwasimportant, inmaking thetransition totheWTO, thatthisstrength wasnotlost.
7. TheCommittee took noteofthestatements andofthereport bytheChairman ofthe
Sub-Committee.
8. Mr.Kesavapany (Singapore), Chairman oftheSub-Committee onInstitutional, Procedural
andLegal Matters, saidthat,regrettably, theabsence ofpolitical goodwill andflexibility hadresulted
inanimpasse onthequestion ofthecomposition oftheTextiles Monitoring Body. Under the
circumstances, hecould onlyurgetheparties concerned toshow greater understanding fortheneed
toaccommodate eachothers 'interests, without which itwould bedifficult tofindasolution tothis
2Idem.PC/M/11
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problem. Inthelightofthisimpasse, herecommended thatthequestion ofcomposition oftheTMB
bereferred totheWTO forappropriate action.3
9. Onanother matter, herecalled thathehadrecently senttodelegations fortheirconsideration
adraftdecision onthecontinued application under theWTO Agreement onCustoms Valuation of
invocations ofprovisions fordeveloping countries forthedelayed application andreservations under
theTokyo Round Customs Valuation Code. Since itappeared nowthatthismatter required further
consideration, herecommended thatthisissuealsobetransmitted totheWTO forappropriate action.4
10. Therepresentative ofHong Kong saidthat,inaspirit ofcompromise, Hong Kong, together
withthemajority oftheparticipants involved intheprocess ontheTMB issue, hadnotrejected the
non-negotiable finalproposal submitted bythePreparatory Committee Chairman, eventhough ithad
notfound theproposal entirely satisfactory. Since then, however, there hadbeennoclearresponse
onthepartoftheimporting countries, andthere appeared nowtobeanimpasse asaresult ofthe
intransigence ofonlyafewparticipants. TheWTO would enter intoforce on1January 1995, which
should bethebeginning oftheimplementation phase ofalltheresults oftheUruguay Round, asalso
oftheintegration ofthetextiles andclothing sector intotheWTO, which wasoneresult oftheUruguay
Round thatbenefitted developing countries inparticular. However, theintegration programme under
theWTO Agreement onTextiles andClothing wasbased onasystem ofnotifications andmultilateral
surveillance thatwasbuiltaround theTMB. Since notifications were tobemade totheTMB and
circulated andexamined byit,onecould notevenmake astartwithout thisbody. Itappeared therefore
thattheAgreement onTextiles andClothing would notafterallbeimplemented asfrom dayoneof
theWTO. Theselective implementation ofUruguay Round results inthiswayhadnotbeennegotiated,
andwasnotsomething thatthose involved inthenegotiations onthissector should beasked toaccept.
Therefore, untilthecomposition oftheTMB wasfinalized, Hong Kong would finditdifficult toaddress
arrangements formaking otherWTO institutions operational. Theexporting countries hadconsistently
shown awillingness, andremained willing, towork forasolution. However, theirgoodwill should
nowbequickly matched byacorresponding attitude onthepartoftheimporting countries iftheWTO
wastobelaunched satisfactorily.
11. Therepresentative ofIndia associated hisdelegation withHong Kong'sstatement. Itwas
regrettable thatthePreparatory Committee 'smandate remained unfulfilled because ofanoutstanding
issueconcerning theTMB. AsHong Kong hadstated, itwasdifficult toseehowtheimplementation
phase oftheWTO could possibly begin without agreement onanissue ascritical astheTMB. Non
resolution ofthisissue wasallthemore regrettable because thedeveloping exporting countries had
demonstratedflexibilitytimeandagainonlytobeconfrontedbytotalinflexibilityonthepartofimporting
countries. TheWTO Agreements wereasingle legalundertaking, andselective implementation would
undermine theverylegalbasis oftheUruguay Round results. India considered therecent proposal
submitted bythePreparatory Committee Chairman tobetotally non-negotiable andfinal. Ifthisissue
remained unresolved, Indiawould beforced intoasituation inwhich itsability tocooperate infinalizing
arrangements formaking theWTO Agreement operational would beseriously jeopardized.
12. Therepresentative ofBrazil saidthatoutsiders would besurprised tolearn thatthisissue
remained unresolved, given thatgovernments hadbeenabletoagree onsomany other issues ofno
lesscomplexity. Thisclearly demonstrated thattextiles andclothing continued tobeanareaofmajor
concern formany WTO members-to-be. While itshould therefore begiven special careandattention,
itshould notjeopardize amajor collective goal, namely thefaithful andtimely implementation ofthe
3Idem.
4Idem.PC/M/11
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WTO Agreements. Adecision onthecomposition oftheTMB wasaprerequisite fortheimplementation
oftheWTO, andshould betaken before theWTO Agreement came intoforce. While thefinalproposal
submitted bythePreparatory Committee Chairman didnotaddress alltheconcerns oftheexporting
countries, ithadnotbeen rejected bythem intheexpectation thatallparties could agree toit
expeditiously. Brazil, likeothers, stillhoped thatallthose thathadaspecific interest inthisissue
would respond quickly andpositively tothatproposal.
13. Therepresentative ofPakistan saidthattheWTO Agreement onTextiles andClothing was
ofprimary interest foralarge number ofdeveloping countries, including Pakistan. Oneofthemost
critical areas oftheAgreement wastheestablishment oftheTMB, which would beresponsible for
supervising theimplementation oftheAgreement andexamining theconformity ofanymeasures taken
thereunder. Pakistan, along withanumber ofother countries, hadparticipated ingood faithinthe
consultations onthecomposition oftheTMB. Although theChairman 'sfinalcompromise proposal
hadfallen short ofitsconcerns, Pakistan hadnotobjected totheproposal. However, owing tothe
inflexibility ofsome countries, ithadnotbeenpossible tofinalize theagreement. Hisdelegation joined
others inexpressing regret atthissituation, andwasunable tovisualize howtheWTO could become
operational without aresolution oftheissue ofcomposition ofoneofitsmostimportant bodies. He
urged thatgoodwill andgood faithbereciprocated byothers, andthatthecomposition oftheTMB
beagreed sothatitwould bepossible tomake theWTO operational.
14. Therepresentative ofMalaysia, speaking onbehalf oftheInformal Group ofdeveloping
countries, saidthatalthough theChairman 'sfinalproposal hadnotbeentothedeveloping countries '
liking, theyhadregarded itasawayoutoftheimpasse. Itwastherefore regrettable, anddisappointing,
thatthismatter stillremained unresolved. While 1995 would seetheintegration oftextiles intothe
general disciplines ofthemultilateral trading system, itwould alsoseethebirthortheenlargement
ofcertain regional groupings which would involve some realignments andcomplicate thetradesituation
fordeveloping countries. Hehoped thattheTMB question would beresolved assoonaspossible so
thatmany ofthesecomplications could beaddressed bythatbodyassoonastheWTO began operating.
Hecalled onthecountries concerned tobegenerous onthisissuesothatitcould beresolved byearly
January.
15. Therepresentative ofThailand, speaking onbehalf oftheASEAN countries, shared theprevious
speakers 'concerns thatanimportant element oftheWTO hadnotyetbeensettled eventhough the
WTO would enter intoforce inafewdays'time. Inaspirit ofcompromise, theASEAN countries
hadagreed totheChairman 'sfinalproposal despite finding itunsatisfactory. However, nothing had
beenheard from theimporting countries. Theimplementation oftheWTO would getofftoabad
startwithout anagreement onthecomposition oftheTMB. Indeed, without theTMB inplace, the
WTO could noteffectively operate. Itwasinappropriate tobeselective onissues tobeimplemented
andtoleave others forfuture negotiations. Heurged thatefforts bemade bytheimporting countries
tobring thisissue toasuccessful conclusion.
16. Therepresentative ofTurkey regretted thataconsensus hadnotproved possible onthisissue.
Hisdelegation hadbeenconstructive andflexible intheconsultations, andhadexpressed itsreadiness
foracompromise solution when theChairman hadpresented hisfinalproposal. Itappeared, however,
thatasimilar forthcoming approach from some other countries waslacking. Afailure todecide on
theTMB composition should nothavenegative repercussions onthesmooth operation oftheWTO
institutions attheveryoutset oftheirestablishment early in1995.
17. Therepresentative ofMorocco regretted thattheWTO would enter intoforce on1January
without theTMB issuehaving beenresolved, andthatthismight bedamaging fortheimplementation
oftheWTO since itmight giverisetosuspicion, distrust andconfrontation instead ofconfidence and
cooperation.WhileMoroccohadrespondedpositivelytotheChairman'sappealforflexibility,flexibilityPC/M/11
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should notbeaone-way street. Hehoped thatwithgoodwill onallsides, arapid solution would be
found.
18. Therepresentative ofKorea saidthathisdelegation, likeothers, wasconcerned overthefailure
toreach agreement onthisissue, which remained oneofthemostimportant difficulties encountered
ontheeveofthelaunching oftheWTO. Hecalled onalltotakeawider viewonthecomprehensive
andambitious agreement reached afterseven years ofpainstaking negotiations. Hisdelegation believed
thattheChairman 'sproposal atthisstage reflected thegreatest efforts ofeachdelegation.
19. Therepresentative ofUruguay associated hisdelegation withthestatements byHong Kong
andotherprevious speakers. Uruguay considered thiselement ofthePreparatory Committee 'smandate
veryimportant,andcouldseenosubstantivereasonfortheChairman'sproposalnottohavebeenadopted
yet.Thiswasaninappropriate situation which hadtoberesolved immediately.
20. Therepresentative ofEgypt saidthatthiswasanimportant matter forEgypt too,andsupported
thestatements byHong Kong, India andother previous speakers. Hehoped thatanagreement on
thecomposition oftheTMB could bereached asearly aspossible inJanuary.
21. Therepresentative ofMexico saidhefullysupported thestatement byMorocco.
22. Therepresentative oftheEuropean Communities saidthathehadnoted theprevious speakers '
statements, andunderstood theimportance theyattached tothequestion oftextiles andclothing, which
wassensitive bothforimporting aswellasexporting countries. However, questions ofprocedure
andsubstance should notbeconfused. Allwere entering anewphase, oneinwhich theMultifibre
Arrangementwouldbedismantled,withtimeframesandobligationsonallthatwouldresultinliberalized
trade inthissector. Tohisknowledge, however, thequestion ofthecomposition ofthemonitoring
bodyhadatnotimebeenraisedinthenegotiations.Forsometwenty-oneyears,theTextilesSurveillance
Body hadoperated tothesatisfaction ofall,based upon acertain criterion ofcomposition. Onewas
suddenly nowtoldthatthiscomposition wasnolonger convenient. More time, andabetter explanation,
wasneededinordertounderstandwhythispreviouslysatisfactorycompositionwasnolongerconsidered
tobeso.Once thiswasunderstood, perhaps some flexibility inpositions could befound.
23. Therepresentative oftheUnited States saidthattheUnited States hadconcerns similar tothose
oftheCommunity regarding theneedforabalanced, impartial TMB. Itwasclear thataconsensus
didnotexistonthecomposition ofthisbody. Hisdelegation wasprepared toresume discussions on
thisissue inearly January inthehopeoffacilitating anearly resolution tothisimportant matter.
24. Therepresentative ofCanada saidthathisGovernment 'sposition onthisissuehadbeenstated
onprevious occasions. Hisdelegation wasprepared towork hardtobring thismatter toasuccessful
conclusion early onintheWTO.
25. TheCommittee took noteofthestatements andofthereport bytheChairman ofthe
Sub-Committee.
26. Mr.Manhusen(Sweden),ChairmanoftheSub-CommitteeonServices,saidthatthefinalmeeting
oftheSub-Committee onServices, heldon16December, haddealt withthenegotiations onbasic
telecommunications, theverification ofservices schedules andthescope oftheGATS. The
Sub-CommitteehadheardareportonthemeetingoftheNegotiatingGrouponBasicTelecommunications
heldon12and13December, which hadlargely beendevoted todiscussion oftheresponses tothe
questionnaire onbasic telecommunications. Future meetings oftheGroup would focus toagreater
extent onoutstanding technical andconceptual issues related tothenegotiation andscheduling of
commitments. Thenextmeeting oftheGroup would beheldon27and28February 1995andwouldPC/M/11
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befollowed bybilateral consultations among delegations. Following aninformal meeting on
15December, theSub-Committee hadcompleted theverification oftheschedules ofcommitments
inservices submitted byEcuador andSlovenia, which werenowbefore thePreparatory Committee.
Theinformal meeting hadalsoexamined theschedules ofsixothercountries, namely, Angola, Burundi,
Mali, Qatar, St.KittsandNevis andtheUnited Arab Emirates. Ithadbeenmade clearinthese cases
thatbilateral negotiations werenotfinished andwould beresumed in1995. Verification oftheschedules
would takeplace when thenegotiations hadbeencompleted.
27. With regard totheissues relating tothescope oftheGATS, hewasreporting, onhisown
responsibility, tothePreparatory Committee ontheoutcome oftheconsultations, sinceithadregrettably
notbeenpossible fortheSub-Committee toproduce anagreed report. Herecalled thatduring the
Uruguay Round negotiations, questions hadbeenraised astowhether certain categories ofmeasures
fellwithin thescope oftheGATS. Towards theendofthenegotiations, many participants hadfelt
thatthequestions raised hadnotbeen sufficiently discussed bytheGroup ofNegotiations on
Services (GNS). Atthefirstmeeting oftheSub-Committee onServices, ithadbeenagreed that
continuing work onissues relating tothescope oftheGATS should beamatter ofpriority forthe
Sub-Committee inthelightoftheagreed deadline of15December 1994, andthattheChairman should
startaprocess ofinformal consultations onthesubject.
28. TheSub-Committee hadreached agreed conclusions onthefollowing items:
(a) measures relating tojudicial andadministrative assistance AttheendoftheUruguay
Round,ithadbeenagreedbyparticipants,asreflectedin
documentMTN.GNS/W/177/Rev.1/Add.1,thatArticleIIoftheGATSwouldnotapply
tomeasures relating tojudicial andadministrative assistance. Thisagreement hadbeen
based ontheviewthatdiscrimination between service suppliers ofdifferent Members
arisingfromjudicialandadministrativeassistancemeasures,apartfromwhatwasalready
stipulated bytheprovisions oftheGATS, would nothaveanysignificant effect on
conditions ofcompetition between service suppliers. Inthesubsequent consultations,
ithadbeenagreed thatthesame logiccould beapplied tothewhole oftheGATS and
thattherefore noneoftheprovisions oftheGATS would apply tosuchmeasures. It
hadfurther beenagreed thatthisconclusion should beembodied inadraftdecision
tobesubmitted totheWTO Council forTrade inServices foradoption;
(b) measures relating totheentry andstayofnatural persons, where themain question
addressedhadbeenthebasisonwhichadistinctionwouldbemadebetween"temporary"
and"permanent" residency andemployment. Thisquestion hadbeenraised during
theUruguay Round negotiations inanattempt toclarify commitments byparticipants
intheareaofmovement ofnatural persons. Participants intheconsultations had
considered whether thedefinitions contained innational schedules weresufficient to
make clear whatparticipants meant by"temporary" stayorwhether there wasneed
forfurther clarification. Ithadbeenconcluded thatwhatappeared intheschedules
ofparticipants wassufficiently clear, andtoreport thatthere wasnoneedforfurther
multilateral work onthisissue.
29. Withregardtothethreeremainingcategoriesofmeasuresunderconsideration,namely,measures
relating tosocial security, measures relating tothesettlement ofdisputes pursuant tobilateral investment
protection agreements, andmeasures relating totheentryandtemporary stayofnatural persons pursuant
tocertain bilateral agreements, ithadnotbeenpossible toreach agreement. Some delegations had
maintained thatthese measures were outside thescope oftheGATS, others thattheywere inside.
Discussion ofwaysinwhich suchmeasures might affect tradeinservices hadnotresolved thisdifference
ofviews. InaccordancewiththestatementbytheGNSChairmanonPC/M/11
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14December 1993 (MTN.GNS/W/260), hewould bereporting theoutcome ofthese consultations
ingreater detail, andonhisownresponsibility, totheCouncil forTrade inServices forappropriate
decision.
30. Therepresentative ofIndia saidhewished toplace onrecord hisdelegation 'sappreciation for
theefforts bytheChairman oftheSub-Committee onServices andbytheSecretariat during thecourse
ofconsultations onissues relating tothescope oftheGATS. Hisdelegation hadstated itsposition
onthismatter atthefinalmeeting oftheSub-Committee. AstheSub-Committee Chairman hadmade
clear, hisstatement hadbeenonhisownresponsibility, since ithadnotbeenpossible fortheSub-
Committee toagree onaformulation. While hisdelegation hadnodifficulty withthePreparatory
Committee taking noteofthestatement bytheSub-Committee Chairman, itwished tomake clearthat
itdidnotacquiesce inthestatement.
31. Therepresentative ofPakistan saidthathisdelegation 'sposition onthesubject ofthescope
oftheGATS waswellknown andhadbeenfullyreflected atthefinalmeeting oftheSub-Committee.
Article I:1oftheGATS provided thattheAgreement applied to"measures bymembers affecting trade
inservices", which wasanall-inclusive formulation. Nomeasures could beexcluded unless thiswas
expressly provided for.TheSub-Committee Chairman hadgiven someexamples ofspecific exclusions.
Pakistan hadparticipated intheconsultations ontheconcerns expressed bysome participants inrelation
tosome measures, including theso-called social security measures. These consultations hadshown
thatitwasdifficult toconclude thatanycategory ofsocial security measures wasbydefinition incapable
ofgiving risetodiscrimination likely toaffect thesupply ofservices. While there wasnoalternative
buttoaccept thedisagreement, thiswould clearly notprejudice theposition ofanyWTO member,
andthemechanisms available under theWTO could beutilized bythem toraiseandtodealwithany
problemsarisingoutoftheimplementationoftheGATSandthecommitmentsmadethereunder.Pakistan
wished toseeasatisfactory conclusion tothisissue.
32. Therepresentative ofSwitzerland saidthathisdelegation fullyagreed withthereport bythe
Sub-Committee Chairman and,likehim,regretted thatwork hadnotbeenfinalized onanumber of
issues relating totheclarification ofthescope oftheGATS, particularly inrespect ofsocial security
measures. Switzerland hadcontributed substantially tothediscussion onthese issues, andhadmade
constructiveproposalsthathadbeensupportedbymanyparticipants.However,ithadprovedimpossible
toconclude discussion onallthespecific items inthismandate within theagreed deadline, inparticular
onsocial security. Thelackofagreement onthese subjects meant thatthere would benobasis for
members toassume theirresponsibilities thereon. Switzerland believed thatthemandate given in
December 1993hadnotbeenfulfilled, andthatconsultations should becontinued. Switzerland would
cooperate constructively insuchconsultations sothatasolution acceptable toallcould bereached,
anditawaited withinterest thereport tobemade bytheSub-Committee Chairman tothefirstmeeting
oftheCouncil forTrade inServices.
33. Therepresentative ofEgypt saidthattwenty-four hours before theconclusion ofthe
Uruguay Round negotiations inDecember 1993, thestatement bytheGNSChairman hadbeenadopted
without sufficient discussion, andintheabsence ofanumber ofdelegations, including hisown. Despite
that,Egypt hadhonoured itsresponsibility intheprocess laiddown inthatstatement. Egypt, like
some others, hadbelieved fromthebeginning, andcontinued tobelieve, thatthequestion ofwhether
ornotthemeasures inquestion fellwithin thescope oftheGATS wasthewrong question toaskbecause
thescope wasclearly defined inArticle I:1oftheGATS tocover "measures affecting tradeinservices".
Egypt hadparticipated intheconsultations ingood faithintrying tofulfil themandate laiddown in
December 1993, which, hereiterated, hadbeenadopted atthelastmoment andintheabsence ofsome
delegations. Theconsultations, despite being informative andeducational, hadnotrevealed anynew
elements inrelation tothescope oftheGATS.PC/M/11
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34. Oneofthemostimportant issues raised inthediscussions wasthatrelating tosocial security
measures. Herecalled thatthisissue hadbeendiscussed fullyinthecontext oftheUruguay Round
negotiations ontheAnnex toGATS concerning theMovement ofNatural Persons, andithadbeen
concluded thenthatthismatter should belefttotheapplication oftheGATS onacase-by-case basis,
andthatthere should notbeanyexplicit exclusions fromthescope oftheGATS. Egypt appreciated
thatsomeotherparticipantshadalsoshowngoodfaithinthecourseoftheconsultationsandhadrefrained
fromlisting MFN exemptions pending theoutcome thereof. Egypt wassurprised thatsome participants
were notkeentotakeupthelegal coverage available tothem, andbelieved thattheysubscribed to
certain interpretations oftheGATS thatEgypt didnotshare. Theonlyappropriate course ofaction
forthecredibility ofthesystem, andonethatwould befairtotherights ofallmembers, would be
touphold thelegalprovisions oftheGATS andtoapply themingoodfaith. Theconsultation process
hadnowended without anyagreement onareport totheCouncil forTrade inServices. Thismeant
thatthematter wasclosed andthatanyconcerns should nowberaised before theServices Council
andbesubject totherulesandprocedures oftheWTO. Thepastconsultations andthefinaldisagreement
onthereport should notandcould notprejudice therights ofanyWTO members. TheDecember 1993
statement oftheGNS Chairman, which hadprovided forthese consultations, hadnovalidity beyond
itsspecified deadline of15December 1994.
35. Therepresentative ofKorea saidthathisdelegation hadnoessential problem inputting the
three remaining categories ofmeasures under consideration intheconsultations outside thescope of
theGATS. However, itwould beappropriate toallow more timetoexplore aviable solution. In
theevent thataconsensus wasnotreached onthese questions, Korea reserved itsrights totakeany
possible future action inanappropriate form, including MFN exemptions ornational treatment
reservations.
36. Therepresentative ofAustralia expressed disappointment thatithadnotbeenpossible totake
thenegotiations onthescope oftheGATS further. Australia hadhoped thatitwould havebeenpossible
during thecourse ofthepastyeartoresolve these issues. Theproblem thatarose nowwasthat
delegations were notyetintheposition toexercise theirresponsibilities inregard tothescheduling
orexemption ofmeasures intheparticular areaofthesocial security questions thatwerestillunresolved.
Australia remained ready toparticipate infurther multilateral work toensure thattherights ofall
delegations inthisissue would notbeprejudiced.
37. Therepresentative oftheEuropean Communities saiditwasregrettable thataconclusion to
these discussions hadnotbeenreached. Toconclude simply thatagreement could notbereached was
notsufficient, andhisdelegation hoped thatadialogue could beresumed again. Itwasclearthatthere
wasnoagreement atthisstage, which theCommunity regretted. Itbelieved thatsocial security measures
didnotenter intothescope oftheGATS. Under thecircumstances, theCommunity would assume
itsresponsibility when thesituation arose andreserved itsrights forthefuture. However, itbelieved
thatitwould bewisetocontinue thedialogue.
38. Therepresentative ofCanada regretted thattheSub-Committee hadnotbeenabletoreach any
common understanding ontheextent towhich thethree remaining categories ofmeasures under
consideration affected trade inservices. More regrettably, intheabsence ofsuccess forthepastyear
toreach acommon understanding onthese issues, some participants werenotprepared toseeanysort
ofmechanism setuptocontinue thediscussion thereon. Canada wasalsosurprised anddisappointed
bythesmall number ofparticipants thathadrefused toapprove areport oftheSub-Committee submitted
forapproval byitsChairman atitsfinalmeeting. These participants hadineffect refused toallow
afactual description ofthedifferent views heldoverthepastyeartoberecorded inthereport ofthe
Sub-Committee totheWTO Council forTrade inServices, which would make itverydifficult towork
byconsensus inthefuture. Inlegalterms, itremained unclear which categories ofmeasures were
covered bythedisciplines oftheGATS, andtowhich extent. Inpolitical terms, theinability notonlyPC/M/11
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toreach acommon understanding inthisareabuteventoagree onamechanism forfurther discussion
wassetting theGATS offtoaverybadstart. Intheabsence ofacommon understanding, Canada
reserved allitsrights withrespect toitsposition regarding whether andtowhatextent certain categories
ofmeasures fellwithin thescope oftheGATS.
39. TherepresentativeofNewZealandsaidthathisdelegationtoo,likeothers,hadbeendisappointed
bytheoutcome ofthisprocess, andbelieved thatmore work wasclearly needed. Fortherecord, he
wished todraw attention toastatement hisdelegation hadmade jointly withAustralia attheSub-
Committee 'smeeting on16December. NewZealand hadstated thenthattheabsence ofanyagreed
common understanding hadmade itdifficult fordelegations toexercise theirresponsibilities. His
delegation would tryandwork onthese issues together withothers inthenewyear, butwished, in
themeantime, toreserve itsrights onthequestion ofwhether certain categories ofmeasures fellwithin
thescope oftheGATS.
40. Therepresentative ofFinland, speaking onbehalf oftheNordic countries, saidthattheyfully
shared theCommunity 'sviews onthecomplex issueofthescope oftheGATS. TheNordic countries
wished torecall theirstatement atthemeeting oftheSub-Committee on16December, inwhich they
hadprovided theirperspective onthehistory ofthenegotiations aswellasonthesubject matter of
scope. TheNordic countries believed thatthethree unresolved categories ofmeasures felloutside
thescope oftheGATS, andwished toreserve theirrights forthefuture onthese issues.
41. Therepresentative ofHong Kong saidthattheissueofthescope oftheGATS hadturned out
tobemore controversial thanexpected. Ofthethree remaining issues under consideration, theone
onsocial security measures hadoccupied mostattention andyethadeluded acommon understanding
thusfar. However, thiswasanissue thathadalimited impact ontrade inservices, andthe
Sub-Committeehaddoneagoodjobinexamininghow,underthesecircumstances,theMFNandnational
treatment implications could behandled. Since these principles formed thecornerstone oftheGATS,
itwasoftheutmost importance togetthisright. Hong Kong didnotwanttoseethese twocardinal
principles compromised evenbefore theGATS entered intoforce. There wereareas thatneeded to
befurther clarified, suchasthescheduling ofnational treatment limitations. Further workwascertainly
needed, andHong Kong looked forward tocontributing constructively toitinduecourse. Meanwhile,
given thatthere wasnoagreement, andashort break inthediscussions onthisissue, Hong Kong
welcomed theopportunity tocatch upwithother substantive issues thatwould bebefore theCouncil
forTrade inServices.
42. Therepresentative ofJapan regretted thatithadnotbeen possible toreach acommon
understanding ontheoutstanding issues, including onsocial security. Hisdelegation wished tonote
thatithadmade clearitsfundamental position atthemeetings oftheSub-Committee, namely thatsocial
security measures should beconsidered tobeoutside thescope oftheGATS. Since acommon
understanding onthese issues hadnotbeenachieved, itwasunderstood thatdelegations wereunable
toexercise theirownresponsibilities concerning theschedules. Japan believed thatworkontheseissues
needed tocontinue, andwasprepared toparticipate infuture work inacooperative spirit.
43. Therepresentative ofAustria saidthathisdelegation tooregretted thatacommon understanding
hadnotbeenpossible onthequestion oftheapplication oftheGATS tocertain measures, including
social security measures. Austria, likethemajority ofparticipants intheconsultations, believed that
these measures felloutside thescope oftheGATS. However, some participants thatheldadifferent
viewhadrefused tocontinue discussion onthismatter, which therefore remained unresolved. Inthe
absence ofacommon understanding, Austria wished toreserve itsrights.
44. Therepresentative ofIndia, noting thereference bysome speakers toacontinuation of
discussions, saidthatIndia hadmade clear intheSub-Committee 'smeeting thatthediscussion thatPC/M/11
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hadbeenheldwithin theframework ofthe14December 1993 statement bytheGNS Chairman was
nowover. There hadbeennoagreed conclusion, andthemandate given bythatstatement hadbeen
completed without anyresult. However, thisdidnotpreclude delegations fromraising theissueafresh
within theframework oftheWTO Agreement, asandwhen theysowished. Indiawasunable toagree
totheideathattherecould beacontinuation ofdiscussions. Thisclearly meant thatallparties should
assume theirresponsibilities. Some speakers hadsaidthatasmall number ofparticipants hadblocked
theadoption ofthereport oftheSub-Committee. Hewished tonote, inthisregard, thatthere had
beendisagreement overonlyonesentence inthedraftreport. Even though asmany asfivealternatives
hadbeensuggested byseveral delegations, including Australia andtheUnited States, noneofthese
hadbeenacceptable toonemajor delegation.
45. TheCommittee took noteofthestatements andofthereport bytheChairman ofthe
Sub-Committee.
46. TheChairman, onbehalf oftheChairman oftheSub-Committee onTrade andEnvironment,
saidthatthere were nodevelopments toreport inthisareabeyond those reported atthemeeting of
theCommittee on8December.
47. TheCommittee tooknoteofthestatement.
B. Paragraph 8(b)(i) oftheDecision establishing thePreparatory Committee
48. TheChairman recalled thatmarket access schedules ongoods ofthefollowing seven countries
hadbeenannexed provisionally totheMarrakesh Protocol subject toverification: Bangladesh, Benin,
Congo, Mauritania, Niger, Tanzania, andUganda. These schedules hadnowbeenverified. Twelve
newschedules, including theFrench version oftheCanadian schedule, hadbeenreceived afterthe
Marrakesh Ministerial meeting. Ofthese, threehadbeenverified, namely those ofBurkina Faso, Mali
andSlovenia. TheFrench version oftheCanadian schedule hadalsobeenverified. Eight schedules
therefore remained yettobeverified. Asregards schedules ofleast-developed countries, herecalled
thatinaccordance withparagraph 1oftheDecision onMeasures inFavour ofLeast-Developed
Countries, these countries haduntil 15April 1995 tosubmit their schedules andretain original
membership status. Atpresent, there werestillthirteen least-developed countries which would have
tosubmit theirschedules bythatdate. Herecalled alsothatintheverification exercise before the
Marrakeshmeeting,fourcountries,namelyCameroon,Côted'Ivoire,GabonandSenegal-theschedules
ofwhich hadbeenverified andannexed totheMarrakesh Protocol -hadbeengiven until15April 1995
tocomplete missing information onother duties andcharges.
49. With regard toservices, thePreparatory Committee hadalready noted theoralreport ofthe
Chairman oftheSub-Committee onServices thattheverification ofschedules ofcommitments submitted
byEcuador andSlovenia (documents L/7566 andPC/W/31) hadbeencompleted. Theschedules of
sixother countries, namely Angola, Burundi, Mali, Qatar, St.KittsandNevis andtheUnited Arab
Emirates, were stillsubject tobilateral negotiations toberesumed inthenewyear.
50. Asregards thefinalization ofnegotiations onschedules ofconcessions andcommitments in
goods andservices, itappeared thatanumber ofgovernments, including Angola, Burundi, Grenada,
Mozambique, Qatar, St.Kitts&Nevis andtheUnited Arab Emirates would notbeinaposition to
conclude theverification oftheirschedules before theentry intoforce oftheWTO. Inprinciple,
therefore, theywould needtofollow accession procedures under Article XIIoftheWTO Agreement
inorder tobecome Members oftheWTO. Thismatter hadbeenbrought upintheinformal verification
meetings forgoods andservices schedules, heldon15and16December, anddelegations hadgenerally
beenoftheviewthatitwasdesirable tofacilitate theaccession ofthegovernments concerned. ThePC/M/11
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draft decision concerning thefinalization ofnegotiations onschedules ongoods andservices in
document PC/W/29, which hewould propose foradoption atthepresent meeting,5hadbeenprepared
withthisendinview. Itintended tofacilitate theaccession ofthose governments thathadbecome
contracting parties totheGATT 1947 inthecourse of1994 andthatwould needadditional timeto
finalize negotiations onthese schedules withother Uruguay Round participants under Article XIIof
theWTO Agreement onterms identical tothose which would haveapplied hadtheybeenabletofinalize
negotiations ontheirschedules prior totheentry intoforce oftheWTO Agreement.
51. Onanother matter, herecalled thatexisting working parties ontheaccession ofstates orseparate
customs territories totheGATT 1947 hadalsoconducted work onaspects offoreign trade régimes
inrespect ofgovernments thathadexpressed interest inWTO membership. Heproposed thatthe
Preparatory Committee recommend that,asandwhen requests weremade bythese states orseparate
customs territories toaccede totheWTO Agreement, theGeneral Council agree thattheexisting
GATT 1947 working parties continue theirwork asWTO Accession Working Parties, withstandard
terms ofreference andunder theirrespective current chairpersons.6
C. Action bythePreparatory Committee
52. TheChairman noted thatacertain number ofrecommendations hadbeenmade atthepresent
meeting, particularly onquestions onwhich work could notbeconcluded under thePreparatory
Committee andwhich should, therefore, befurther examined andacted uponbytheappropriate bodies
oftheWTO. These recommendations related tothefollowing areas: theHeadquarters Agreement;
thereport oftheconsultants onthemanagement review; theTextiles Monitoring Body; theWTO
Customs Valuation Agreement; andtheGATT 1947 Accession Working Parties. Heproposed that
theCommittee approve these recommendations, which would beincorporated, inappropriate textual
form, inthereport oftheCommittee totheWTO.
53. TheCommittee soagreed.
54. TheChairman thendrew attention totheDraft Decision onFinalization ofNegotiations on
Schedules onGoods andServices indocument PC/W/29, andproposed thatitbeadopted.
55. TheCommittee soagreed.7
56. TheChairman thendrew attention toasetofrequests foraccession totheWTO from the
Kingdom ofCambodia (PC/W/19), theformer Yugoslav Republic ofMacedonia (PC/W/18) andthe
Republic ofUzbekistan (PC/W/20), andproposed thattheCommittee agree toestablish working parties
toexamine these requests andreport totheGeneral Council oftheWTO.
57. TheCommittee soagreed.
58. TheChairman thenproposed that,inaccordance withtheprocess agreed bytheCommittee
inMay(PC/M/2, paragraphs 17-23), andtherecommendation justadopted withregard toGATT 1947
Accession Working Parties, theexisting working parties currently examining therequests foraccession
toGATT 1947bytheRussian Federation andUkraine, examine therequests bythesetwogovernments
5Idem.
6Idem.
7TheDecision wassubsequently issued asPC/17.PC/M/11
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foraccession totheWTO contained indocuments PC/W/26 andPC/W/30 respectively, andreport
totheGeneral Council.
59. TheCommittee soagreed.
D. Dateandprovisional agenda ofthefirstmeeting oftheGeneral Council
60. TheChairman recalled thatattheImplementation Conference hehadindicated hisintention
tomake aproposal forapproval bytheCommittee atitspresent meeting onthedateandprovisional
agenda ofthefirstmeeting oftheGeneral Council. Inmaking hisproposal, hewasbasing himself
ontheviews ofanumber ofdelegations, allofwhom clearly shared thebasic objective thattheWTO
should getofftoasprompt andefficient astartaspossible. With regard tothedateofthemeeting,
heproposed 31January 1995, which wasexactly thirty daysfollowing theentry intoforceoftheWTO.
Thiswould alsoprovide adequate timeforgovernments tomake thenecessary preparations incapitals
andinGeneva forthismeeting. Asregards theprovisional agenda, heproposed thatthefirstmeeting
oftheGeneral Council bedevoted entirely tothemostimmediate andpressing "housekeeping" tasks
related toputting inplace theWTO 'sworking structure, adopting thePreparatory Committee 'sreport
totheWTO including theDecisions andRecommendations contained therein, designating theofficers
toconduct thework ofthemain WTO bodies, andsoon.Theaimwould betogettheWTO offto
aquick start, forwhich theworld trading community, aswellasgovernments, hadwaited longenough.
Inkeeping withtheprovisional rulesofprocedure fortheGeneral Council, anairgram convening the
meeting andsetting outtheprovisional agenda would beissued bytheSecretariat notlaterthanten
calendar daysbefore themeeting.
61. TheCommittee agreed totheChairman 'sproposals.
E. Report ofthePreparatory Committee totheWTO
62. TheChairman drew attention tothedraft report oftheCommittee totheWTO in
document PC/R/W/1/Rev.2. Heproposed thattheCommittee adopt thereport totheWTO, onthe
understanding thatthedraftreport before itwould beupdated toreflect theproceedings oftheCommittee
atthepresent meeting, asalsothestatus ofratifications asofthedateofentry intoforce oftheWTO.
Thefinalreport would becirculated tomembers shortly.
63. Therepresentative ofCanada saiditwashisunderstanding thatareport totheCommittee had
beenprepared bytheInformal Contact Group onAnti-Dumping andSubsidies concerning thematter
ofarbitration procedures, andasked whether thiswould bementioned intheupdate oftheCommittee 's
report totheWTO.
64. TheChairman saidthatthiswould bereflected intheupdated version ofthePreparatory
Committee 'sreport.
65. TheCommittee tooknoteofthestatements andadopted itsreport totheWTO onthebasis
oftheunderstanding asstated bytheChairman.
F. Ratification
66. TheChairman saidthatitwasimportant, forseveral reasons, thatallgovernments inaposition
todososhould deposit theirinstruments ofratification by31December. Delegations wishing toobtainPC/M/11
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information ontheprocedures involved should contact theSecretariat immediately. Hedrewattention
todocument PC/5, which setouttheAdministrative arrangements putinplace bytheSecretariat for
theperiod 23to31December toenable governments totransmit instruments ofratification orletters
ofacceptance rightuptotheWTO 'sentry intoforce.
67. Therepresentative ofPerusaidthat,on15December, hiscountry 'sCongress hadunanimously
approved theWTO Agreement andtheMultilateral Trade Agreements contained intheFinal Actof
theUruguay Round. Byvirtue ofthisdecision bythelegislative authority, Peru'sPresident had,on
16December, subscribed totheinstrument ofratification, which hisdelegation would deposit with
theSecretariat shortly. Thisactshowed hiscountry 'sinterest incontributing tothefunctioning of
theWTO from theveryfirstdayofitsbirth. Peru'scommitment didnotendwiththeratification
oftheWTO Agreement, anditwasready toparticipate inanyinitiative which might betaken bythe
Director-General towards theliberalization ofworld trade.
68. TheChairman reiterated theimportance ofdepositing instruments ofratification intime, a
matter thatwasdirectly related toparticipation intheGeneral Council. AssetoutinArticle XIV:1
oftheWTO Agreement, acceptances aftertheWTO 'sentry intoforce, i.e.after1January 1995, would
takeeffect onthethirtieth dayfollowing thedateofsuchacceptances. Hewished tounderscore the
factthatgovernments which accepted theWTO after1January would onlybeabletoattend thefirst
meeting oftheGeneral Council, scheduled for31January 1995, onthebasis ofthePreparatory
Committee 'sDecision of8December regarding theparticipation inWTO bodies ofcertain
signatories (document PC/10), andnotasmembers. Asofthepresent, 71governments hadeither
formally ratified orconcluded theirdomestic processes, asignificant number ofwhich hadnotyet
formally ratified bydepositing theirinstruments ofratification. Itwashisexpectation thatthevast
majority ofgovernments would ratify theWTO Agreement before theendoftheyear.
69. TheCommittee tooknoteofthestatements.