RESTRICTED
WORLD TRADE S/C/M/7
13December 1995
ORGANIZATION
(95-4098)
Council forTrade inServices
REPORT OFTHE MEETING HELD ON22NOVEMBER 1995
Note bytheSecretariat
1. TheCouncil forTrade inServices heldameeting on22November 1995. Theagenda for
themeeting iscontained inAirgram WTO/AIR/218. Under Other Business theChairman added
statements on(a)thereport oftheCouncil forTrade inServices totheGeneral Council, (b)certain
notification requirements under theGATS, and(c)aproposal onenquiry points. Also, thedelegation
ofNewZealand made astatement concerning theAustralia NewZealand Closer Economic Relations
Agreement.
2. Recalling therecent tragic death ofMr.A.AlaaElDinNazmi, Counsellor forCommercial
Affairs ofthePermanent Mission ofEgypt, theChairman observed amoment ofsilence inhishonour.
ItemA:TheEstablishment oftheEuropean Union -Notification pursuant toArticle VoftheGATS
3. TheChairman drewattention todocument S/C/N/6, containing thenotification bytheEuropean
Communities andtheirMember States ofthe"Economic Integration Agreement" asinstituted bythe
Treaty ofRome, subsequently enlarged, andmodified most recently bytheTreaty oftheEuropean
Union. Heinvited thedelegation oftheEuropean Communities tointroduce thenotification.
4. Therepresentative oftheEuropean Communities stated thatthenotification hadbeenmade
pursuant toparagraph 7(a)ofArticle VoftheGATS. Heindicated thathisdelegation wasready to
address anyquestions thatmayberaised byother Members.
5. TheChairman suggested thattheCouncil takenoteofthenotification andthestatement made
bytheEuropean Communities.
6. TheCouncil sotooknote.
ItemB:TheCommittee onSpecific Commitments -Terms ofReference
7. TheChairman recalled that,atitsmeeting on4October 1995, theCouncil hadestablished
theCommittee onSpecific Commitments. However, ithadnotbeenpossible toreach agreement on
itsterms ofreference anditwasagreed thattheCouncil would revert tothismatter atitsfollowing
meeting. Hedrew attention tothedraft decision ontheterms ofreference contained indocument
S/C/W/9/Rev.2 which hadbeenprepared onthebasis ofinformal consultations.
8. TheChairman suggested thattheCouncil adopt thedraftdecision.
9. TheCouncil soagreed.S/C/M/7
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ItemC:Taxes andSubsidies attheSub-Federal Level
10. TheChairman recalled thatatitsmeeting of4October 1995theCouncil hadagreed thatfurther
informal consultations were necessary ontheissues arising from thecommunication bytheUnited
States contained indocument PC/SCS/W/4 dated 30June1994. Heinvited theSecretariat toreport
onthese informal consultations.
11. Therepresentative oftheSecretariat stated thatthemostrecent oftheinformal consultations
onthissubject hadtaken place on20October 1995. Heindicated thatduetotimeconstraints, ithad
notbeenpossible toexamine thewhole listofmeasures contained intheUScommunication. Therefore,
progress hadbeenlessthanwashoped. During theconsultations, further questions hadbeenraised,
moreclarifications hadbeenprovided bytheUnited States delegation andotherdelegations hadrepeated
theirbasicpositions. TheUSdelegation reiterated itsviewthattheGATT Panel Report ontheso-called
"Beer II"casehadcaused legaluncertainties concerning thefuture interpretation ofnational treatment
intheGATS. During thediscussion ithadbeensuggested thatonepossible wayofaddressing such
uncertainties could betodevelop acommon understanding onhownational treatment would apply
under theGATS.
12. Therepresentative oftheUnited States stated that,during informal consultations, hehadnoticed
theabsence ofatechnical grasp ofthecomplex issues arising fromtheUScommunication. Hereiterated
theview oftheUSdelegation thatthereservations contained inthatcommunication didnothavea
material effect onthenegotiated balance ofrights andobligations under theGATS. However, the
absence ofafullunderstanding oftheissues hadcaused thelevel ofanxiety toriseamong other
delegations. Hehoped thatthenextround ofconsultations would provide anopportunity foramore
complete examination ofthose reservations inthepresence oftaxexperts before theendoftheyear.
Healsorecognized theneedtoaccelerate theconsultation process.
13. TherepresentativeofSwitzerlandstatedthatthereservationsbytheUnitedStatesmustbelimited
toexisting measures andshould bemore specific. Furthermore, several ofthem werenotnecessary
because theydidnotviolate national treatment. Theapplication ofdifferent taxrates indifferent
jurisdictions didnotconstitute aviolation ofnational treatment. Hesuggested thatsuchmatters could
beclarified bywayofaChairman 'sstatement reflecting acommon understanding among Members
onhowNational Treatment would apply under theGATS. Such astatement should bebased onthe
statement bytheChairman oftheGNS dated 11December 1993.
14. Therepresentative ofCanada expressed hisdelegation 'sconcern thatthediscussion onthis
subject hadbeensolongdrawn out. Hesuggested thatitwould behelpful toobtain from theUS
delegation further clarification ofissues raised, including apossible common understanding onnational
treatment.
15. Therepresentative ofArgentina stated thatitwould beuseful toreceive, priortothenextround
ofinformal consultations, written suggestions fromtheUnited States onhowtoresolve theissues under
consideration.
16. Therepresentative oftheEuropean Communities noted whattheUnited States representative
hadsaidconcerning accelerating theprocess ofconsultation. Healsostated thatmore precision was
needed from theUnited States indescribing themeasures contained initscommunication. Itwould
alsobehelpful toindicate which ofthose measures could bedeleted onthebasis ofacommon
understanding relating totheapplication ofNational Treatment. Heexpressed theconcern ofhis
delegation regarding thewidescope ofthereservations submitted bytheUnited States.S/C/M/7
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17. Therepresentative ofKorea stated that,given theserious implications ofthemeasures notified
bytheUnited States, hisdelegation reserved allitsrights under theGATS.
18. Thedelegations ofIndia andJapan stated thattheywereconcerned about theimplications of
theUScommunication andthattheywerelooking forward toparticipating infuture consultations on
thematter.
19. Therepresentative oftheUnited States stated thathisdelegation would consult withitsexperts
onthesubmission offurther clarifications inwriting intimeforthenextround ofconsultation. He
stated thathehadheard several suggestions concerning anunderstanding ontheapplication ofnational
treatment; however, hewould notpursue theideaunless there wasconsensus among Members on
thedesirability ofconcluding suchanunderstanding.
20. TheChairmansuggestedthattheCounciltakenoteofthestatementsmadeandagreethatinformal
consultations would takeplacebefore theendoftheyearwithaneffort fromtheUnited States toprovide
written contributions tohelptheprocess.
21. TheCouncil soagreed.
ItemD:TheCommitteeonSpecificCommitmentsandtheWorkingPartyonGATSRules-Appointment
ofChairpersons
22. Based onhisinformal consultations, theChairman suggested thatMsAnnie Tang (from
Hong Kong) beappointed asChairperson oftheCommittee onSpecific Commitments and
Mr.Stuart Carre (from Canada) beappointed asChairman oftheWorking Party onGATS Rules.
23. TheCouncil soagreed.
ItemE:Participation ofObservers
24. 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, World Bank, UNCTAD andtheUN.
25. TheCouncil soagreed.
Other Business
(a) Thereport oftheCTStotheGeneral Council
26. TheChairman stated thattheGeneral Council atitsmeeting on15November 1995called upon
thethreeCouncils forGoods, Services andTRIPs tosubmit reports toitontheiractivities during 1995
atitsmeeting on13December. Since thedecision hadbeentaken recently, thematter hadnotbeen
previously discussed. However, adraftofthereport hadbeenprepared bytheSecretariat andcirculated
asdocument S/C/W/12. TheChairman suggested thatunless by29November hewasinformed of
some difficulty thatwould require consultation onthereport, itshould beconsidered adopted. If
Members hadanyminor corrections orcomments tomake, theyshould communicate them directly
totheSecretariat whowould incorporate them inthefinalversion ofthereport.
27. TheCouncil soagreed.S/C/M/7
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(b) Astatement oncertain notification requirements under theGATS
28. TheChairman stated that,since itwasthelastmeeting oftheCouncil before theendofthe
year,itwould beappropriate toremind Members ofcertain notification requirements under theGATS.
Hedrew attention todocument S/C/W/11 dated 14November 1995 which recalled thatinaddition
tomany adhocnotification requirements intheGATS, some arerequired byaprecise date.Paragraph 3
ofArticle IIIrequires thattheintroduction ofanynew, oranychanges toexisting laws, regulations
oradministrative guidelines which significantly affect tradeinservices covered byspecific commitments
under theAgreement should benotified "promptly andatleastannually". Original Members ofthe
WTO should make anysuchnotifications by31December 1995. Also, paragraph 4ofArticle VII
requires eachMember tonotify totheServices Council, within twelve months fromthedateofentry
intoforce oftheAgreement forit,anyexisting recognition measures falling within thescope ofthat
Article. TheChairman noted thatnonotifications hadbeenmade sofarpursuant tothesetwoprovisions
andsuggested thatdelegations should remind theircapitals ofthese twonotification requirements.
29. TheCouncil tooknote.
(c) Enquiry points
30. TheChairman drew attention toS/ENQ/1 containing acommunication from Hong Kong on
theestablishment ofanenquiry point infulfilment oftheobligations under Articles IIandIVofthe
GATS. Heindicated thatthiscommunication wasthefirstofitstype. Herecalled thatunder Articles III
andIVMembers should establish enquiry points, andwhere appropriate contact points, within two
years fromthedateofentry intoforce oftheAgreement. Rather oddly, these Articles didnotrequire
notification oftheestablishment andlocation ofsuchagencies, butitseemed verydesirable, given
thepurpose ofsetting uptheenquiry points, thattheirexistence should bemade known. Hesuggested
thatthenextCouncil meeting should consider whether theestablishment ofenquiry points andcontact
points should benotified, asHong Kong haddone. Suchnotifications could, atalaterstage, becompiled
inonesingle directory which could beperiodically updated following thepractice established bythe
Committee onTechnical Barriers toTrade.
31. TheCouncil soagreed.
(d) Statement byNewZealand
32. Therepresentative ofNewZealand speaking onbehalf ofAustralia andNewZealand stated
thattheyhadsubmitted ajointcommunication pursuant toparagraph 7(a)ofArticle VoftheGATS
notifying theservices protocol under theAustralia NewZealand Closer Economic Relations Trade
Agreement, which entered intoforce on1January 1989. TheProtocol provided theframe-work for
freetrade inservices between Australia andNew Zealand, including MFN, national treatment,
transparency andencouraged mutual recognition ofqualifications. Consistently withtheProtocol both
countries hadprogressively liberalized barriers totrade inservices. Alistreflecting theamendments
made todate, including those which hadjustbeenconcluded, wasprovided intheNotification.
(e) Progress report onthenegotiations onBasic Telecommunications andMaritime Transport
33. TheChairman stated thatatthemeeting oftheNegotiating Group onBasic Telecommunications
on17November twonewfullparticipants hadbeenannounced: Israel andPoland, bringing thetotal
number ofparticipants tothirty-one (representing forty-five governments). TheUnited ArabEmirates
andtheCaribbean Telecommunications Union hadbeengiven observer status. Additional initial offers
hadbeensubmitted bytheCzech Republic, Norway, Singapore andVenezuela. Thatbrought thetotal
number ofoffers tofourteen (covering twenty-eight governments). Participants inthenegotiating groupS/C/M/7
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hadindicated thatnumerous bilateral request/offer negotiations hadbeenheldwithaviewtoimproving
initial offers andtoencouraging participants whohadnotyettabled offers todoso.
34. Atitsmeeting on30October, theNegotiating Group onMaritime Transport Services continued
toexamine responses tothequestionnaire onmaritime transport services. New responses tothe
questionnaire hadbeenreceived from theCzech Republic andIndia. TheGroup hadheldabrief
discussion onamatter raised concerning adherence tothestand-still commitment inparagraph 7of
the"Decision onNegotiations onMaritime Transport". TheChairman oftheNegotiating Group had
noted thatthirty-two outofforty-six Members hadmaintained theiroffers attheendoftheUruguay
Round, andthatsixMembers haddecided toreinstate theirbestoffers. Hehadexpressed concern
thatnotallmajor orsignificant participants hadyetsubmitted offers, particularly inviewofthefact
thatnegotiations were tobecompleted by30June1996.
(f) Dateofthenextmeeting
35. TheChairman suggested thattheCouncil forTrade inServices should inprinciple, andsubject
toconsultation withthefuture chairman, holditsnextmeeting on30January 1996.
36. TheCouncil soagreed.
37. Inconclusion many delegations expressed gratitude andappreciation totheChairman,
Ambassador Manhusen, notonlyfortheefficiency andgood humour withwhich hehadconduced
thebusiness oftheCouncil initsfirstyearofexistence, butalsofortheimportant contribution hehad
made, asChairman oftheSub-Committee onServices throughout 1994, inestablishing theworking
procedures oftheCouncil andthestructure ofitssubordinate committees.