RESTRICTED
PREPARATORY COMMITTEE PC/SCS/W/1
FOR THE 11May1994
WORLD TRADE ORGANIZATION Limited Distribution
(94-0865)
SUB-COMMITTEE ONSERVICES
FUNCTIONS OFTHE SUB-COMMITTEE ONSERVICES
Note bytheSecretariat
1. Atitsmeeting atMinisterial levelinMarrakesh (12-15 April 1994), theTrade Negotiations
Committee (TNC) adopted theDecision ontheEstablishment ofthePreparatory Committee forthe
World Trade Organization. Paragraph 3ofthatDecision provides fortheestablishment, interalia,
ofaSub-Committee onServices responsible forpreparatory work onGATS matters andopentoall
members ofthePreparatory Committee. ThePreparatory Committee anditsSub-Committees will
cease toexistupon theentry intoforce oftheWTO Agreement.
2. ThisNoteisprepared attherequest ofdelegations asabasis forageneral discussion ofthe
functions oftheSub-Committee withaviewtoarriving ataworkprogramme andacalender ofmeetings
fortheremainder of1994.
3. Pending theentry intoforce oftheWTO Agreement, thefunctions oftheSub-Committee will
include thefollowing:
(a) Oversight ofon-going negotiations
ThethreeNegotiatingGroupsestablishedbyMinisterialDecisionstakenattheMarrakesh
meeting-onBasicTelecommunications,MaritimeTransportServicesandMovementofNatural
Persons -arerequired toreport periodically ontheprogress ofthose negotiations. TheSub-
Committee willfulfil thesupervisory roleofoverseeing thenegotiations andwillreceive the
reports oftheNegotiating Groups. Inthecaseoffinancial services, theMinisterial Decision
doesnotrequire theestablishment ofaNegotiating Group, butstipulates thatupon theentry
intoforce oftheAgreement, theCommittee onTrade inFinancial Services shallmonitor the
progress ofsuchnegotiations. Intheinterim, ifnoNegotiating Group isestablished, theSub-
Committee could provide aforum foranymultilateral discussion thatmight benecessary on
thenegotiations onfinancial services.
(b) Continuing discussions onissues relating tothescope oftheGATS
During theUruguay Round negotiations, discussions tookplace onwhether certain
categories ofmeasures fallwithin thescope oftheGATS. Attherequest ofdelegations, the
Secretariat prepared aNote dated 4November 1993 (MTN.GNS/W/177/Rev.1) aimed at
providing abasis forafocused discussion oftheissues involved. Towards theendofthe
negotiating process, theChairman oftheGNS issued aformal statement dated 14December
1993 (MTN.GNS/W/260) reflecting acommon understanding among participants thatmore
discussion isneeded onthese issues. Hestated that"Anumber ofdelegations haveraised
concerns about theextent towhich thecategories ofmeasures contained intheSecretariat 's
Note entitled Issues Relating totheScope oftheGeneral Agreement onTrade inServices
(MTN.GNS/W/177/Rev.1) fallwithin thescope oftheGATS. Accordingly, participants will
begiven anadditional period upto15December 1994 toconsult withaviewtoreaching a
better common understanding oftheways inwhich measures ofthiskindmayaffect trade in
services. Theresult oftheconsultations shallbereported totheCouncil forTrade inServicesPC/SCS/W/1
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forappropriate decision." Thecategories ofmeasures referred tointheNotebytheSecretariat
are:
(i) Measures relating tosocial security, including those pursuant tobilateral
agreements ontheavoidance ofdouble contributions to,and/or double benefits
from social security systems.
(ii) Measuresrelatingtojudicialandadministrativeassistancebetweengovernments,
including those pursuant tointernational agreements onsuchmatters.
(iii) Measures relating tothesettlement ofdisputes pursuant tobilateral investment
protection agreements.
(iv) Measures relating totheentry andstayofnatural persons, including those
pursuant tointernational agreements onlabour mobility.
(v) Measures relating totheentry andtemporary stayofnatural persons pursuant
tobilateral agreements on:
- entry andtemporary stayofagricultural workers onaseasonal basis;
- working holidays andyoung workers programmes;
- programmes fortheexchange ofUniversity professors andschool
teachers;
- cultural affairs.
Inaccordance withtheChairman 'sStatement, theSub-Committee willprovide the
forum forsuchdiscussions andprepare areport onthemtotheCouncil forTrade inServices.
(c) Guidelines fornotifications
Thefollowing Articles oftheGATS contain specific notification requirements:
(i) Article III:3(Transparency)
(ii) Article V:7(Economic Integration)
(iii) Article VII:4 (Recognition)
(iv) Article VIII:4 (Monopolies andExclusive Service Suppliers)
(v) Article XII:4 (Restrictions toSafeguard theBalance ofPayments)
Inorder tofacilitate consideration ofsuchnotifications bytheCouncil forTrade in
Services andbytheGeneral Council itwillbenecessary toensure their consistency in
presentation andcontent. Forthispurpose theSub-Committee mayneedtodevelop guidelines
tobefollowed byMembers when theyarerequired tomake notifications under theseprovisions.PC/SCS/W/1
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(d) Future negotiations
Thefollowing Articles oftheGATS contain mandates fornegotiations which areto
beundertaken aftertheentry intoforce oftheAgreement.
(i) Article VI(Domestic Regulation). Paragraph 4states: "With aview to
ensuring thatmeasures relating toqualification requirements andprocedures,
technical standards andlicensing requirements donotconstitute unnecessary
barriers totrade inservices, theCouncil forTrade inServices shall, through
appropriate bodies itmayestablish, develop anynecessary disciplines. Such
disciplines shallaimtoensure thatsuchrequirements are,interalia:
(a) based onobjective andtransparent criteria, suchascompetence and
theability tosupply theservice;
(b) notmore burdensome thannecessary toensure thequality ofthe
service;
(c) inthecaseoflicensing procedures, notinthemselves arestriction on
thesupply oftheservice."
Itisalsorelevant inthiscontext torecall theMinisterial Decision on
Professional Services adopted inMarrakesh which states inparagraph 1:"The
workprogramme foreseen inparagraph 4ofArticle VIonDomestic Regulation
should beputintoeffect immediately."
(ii) Article X(Emergency Safeguards). Paragraph 1states: "There shall be
multilateralnegotiationsonthequestionofemergencysafeguardmeasuresbased
ontheprinciple ofnon-discrimination. Theresults ofsuchnegotiations shall
enterintoeffect onadatenotlaterthanthreeyears fromthedateofentry into
force oftheWTO Agreement."
(iii) Article XIII(Government Procurement). Paragraph 2states: "There shall
bemultilateral negotiations ongovernment procurement inservices under this
Agreement within twoyears from thedateofentry intoforce oftheWTO
Agreement."
(iv) Article XV(Subsidies). Paragraph 1states: "...Members shallenter into
negotiations withaviewtodeveloping thenecessary multilateral disciplines
toavoid suchtrade distortive effects. Thenegotiations shallalsoaddress the
appropriatenessofcountervailingprocedures.Suchnegotiationsshallrecognize
theroleofsubsidies inrelation tothedevelopment programmes ofdeveloping
countries andtakeintoaccount theneeds ofMembers, particularly developing
country Members, forflexibility inthisarea...."
Inorder tofacilitate anefficient startofsuchnegotiations, andgiven thewiderange
andcomplexity oftheregulatory andpolicy issues involved, itwillbenecessary toundertake
preparatory work onthemodalities andpriorities ofthese negotiations, particularly where
deadlines arestipulated.PC/SCS/W/1
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(e) TheWorking Party onProfessional Services
TheMinisterial Decision onProfessional Services adopted inMarrakesh provides for
theestablishment ofaWorking Party onProfessional Services which isto"...examine and
report, withrecommendations, onthedisciplines necessary toensure thatmeasures relating
toqualification requirements andprocedures, technical standards andlicensing requirements
inthefieldofprofessional services donotconstitute unnecessary barriers totrade." The
Decision alsostates: "Asamatter ofpriority, theWorking Party shallmake recommendations
fortheelaboration ofmultilateral disciplines intheaccountancy sector, ..."
Given thewiderange ofissues involved inthisprocess, preparation forthesubstantive
work oftheWorking Party, aswellasitsrulesofprocedure andmodalities, willbenecessary
toensure itsexpeditious start.
(f) Terms ofreference fortheCouncil andsubsidiary bodies
TheSub-Committee onInstitutional, Procedural andLegal Matters established bythe
Preparatory Committee iscalled upon tomake proposals concerning terms ofreference and
rulesofprocedures forthesubsidiary bodies oftheWTO, inparticular those established under
Article IVoftheWTO Agreement. TheSub-Committee onServices maybecalled upon to
prepare proposals concerning theterms ofreference andrules ofprocedure fortheCouncil
forTrade inServices aswellasforitssubsidiary bodies, suchastheCommittee onTrade
inFinancial Services, fortheconsideration oftheSub-Committee onInstitutional, Procedural
andLegal Matters.
(g) Examination ofschedules
TheDecision ontheEstablishment ofthePreparatory Committee fortheWorld Trade
Organization callsupon theCommittee: "Tocarry outtheexamination ofandapprove the
schedules submitted toitinaccordance with the"Decision onAcceptance ofandAccession
totheAgreement Establishing theWorld Trade Organization" andtopropose terms ofaccession
inaccordance withparagraph 2ofthatDecision". TheSub-Committee onServices maybe
calledupontoexamineandreportonservicesschedulessubmittedtothePreparatoryCommittee.