RESTRICTED
WORLD TRADE S/C/W/1
15February 1995
ORGANIZATION
(95-0316)
Council forTrade inServices
FIRST MEETING OFTHE COUNCIL
FOR TRADE INSERVICES
Note bytheSecretariat
1. Insetting upthestructure oftheWorld Trade Organization, Article IVoftheWTO Agreement
established interaliatheCouncil forTrade inServices, withamandate tooversee thefunctioning
oftheGeneral Agreement onTrade inServices, operating under thegeneral guidance oftheGeneral
Councilandestablishingsubsidiarybodiesasrequired.MembershipoftheCouncilforTradeinServices
isopentoallMembers oftheWTO.
2. Atitsfirstmeeting theCouncil forTrade inServices willneedtoaddress anumber ofmatters
relating tothefunctioning oftheGATS andtheorganization offuture work. Itisalsocalled upon
byMinisters toadopt certain decisions. Thisnoteprovides abriefdescription andbackground forcertain
items ontheagenda ofthatmeeting inorder toassist discussions.
Decisions tobeadopted bytheCouncil
(a) DecisiononInstitutionalArrangementsfortheGeneralAgreementonTradeinServices.
TheDecision laysdown general guidelines forthesubsidiary bodies thattheCouncil
might establish. Italsolaysdown, inmore detail, thebasicresponsibilities forsectoral
committees. Finally, theDecision establishes aCommittee onTrade inFinancial
Services which willassume theresponsibilities referred tointheDecision inrelation
tothatsector, inaddition tomonitoring progress inthecurrent negotiations onfinancial
services. Inorder toensure anexpeditious startofthework oftheCommittee, the
Council should, atitsfirstmeeting, agree ontheappointment ofaChairman forthe
Committee.
(b) Decision oncertain Dispute Settlement Procedures fortheGeneral Agreement onTrade
inServices. TheDecision calls fortheestablishment ofaroster ofqualified
governmentalandnon-governmentalindividuals,fromwhichpanelistsmaybeselected.
Thenames ofsuchindividuals aretobesuggested byMembers. TheDecision also,
ingeneral terms, indicates thetypeofqualifications thatsuchindividuals arerequired
topossess. However, itshould benoted thatParagraph 4ofArticle 8ofthe
Understanding onRules andProcedures Governing theSettlement ofDisputes (DSU)
alsocallsupontheSecretariat tomaintain anindicative listofgovernmental andnon-
governmental individuals possessing thenecessary qualifications fromwhich panelists
maybeselected. Theroster tobeestablished under theGATS pursuant tothisDecision
would form partoftheindicative listreferred tointheDSU.
(c) Decision onProfessional Services. TheDecision stipulates thatthework programme
foreseen inparagraph 4ofArticle VIoftheGATS (Domestic Regulation) should be
putintoeffect immediately. TothisendtheDecision establishes aWorking Party onS/C/W/1
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Professional Services withamandate toexamine andreport, withrecommendations,
onthedisciplinesnecessarytoensurethatmeasuresrelatingtoqualificationrequirements
andprocedures, technical standards andlicensing procedures andrequirements inthe
fieldofprofessional services, donotconstitute unnecessary barriers totrade. The
Decision requires theWorking Party, asamatter ofpriority, tomake recommendations
fortheestablishment ofmultilateral disciplines intheaccountancy sector. Itwillbe
necessary toappoint achairman forthisWorking Party.
(d) Decision onTrade inServices andtheEnvironment. With aview todetermining
whether anymodification ofArticle XIV(General Exceptions) isrequired inorder
totakeaccount ofmeasures necessary toprotect theenvironment, thisDecision calls
upon theCouncil forTrade inServices torequest theCommittee onTrade and
Environment toexamine certain issues relating toservices tradeandtheenvironment,
andreport, withrecommendations ifany,tothefirstbiennial meeting oftheMinisterial
Conference.
Guidelines fornotifications
3. Given thevarious notification requirements intheGATS andinorder tofacilitate their
consideration bytheCouncil forTrade inServices, theSub-Committee onServices developed guidelines
tobefollowed byMembers infulfilling suchrequirements. Thepurpose oftheguidelines istoensure
theconsistency ofthepresentation andcontent ofnotifications. Atthemeeting oftheSub-Committee
on29November 1994, agreement wasreached onthedraft guidelines contained indocument
PC/SCS/W/8 anditwasalsoagreed thattheywould besubmitted totheCouncil forTrade inServices
forapproval. Atitsfirstmeeting, theCouncil willbeconsidering thatdraftwithaviewtoitsadoption.
Notifications under Article XXVIII(k)(ii)
4. Thedelegations ofAustralia, Canada, andNewZealand havesubmitted notifications tothe
WTO pursuant toArticle XXVIII(k)(ii) totheeffect thattheyaccord substantially thesame treatment
totheirpermanent residents astheyaccord totheirnationals withrespect tomeasures affecting trade
inservices andthattheyassume, withrespect tothose permanent residents, thesame responsibilities
thatother Members bearwithrespect totheirnationals. Those notifications were submitted atthe
timeofacceptance oftheWTO Agreement bythethree countries. Inaddition, theyhavetransmitted
thenotifications totheCouncil forTrade inServices fortheinformation ofitsMembers.
Issues relating tothescope oftheGATS
5. During thefinalstages oftheUruguay Round, discussions tookplace onissues relating tothe
scope oftheGATS. Duetothelackoftimethen, nospecific conclusions werereached onanumber
ofquestions. Therefore, theChairman oftheGNS issued astatement on14December 1993
(MTN.GNS/W/260) which provided participants withanadditional period upto15December 1994
toconsult onsuchmatters andreport theresult totheCouncil forTrade inServices forappropriate
decision. According tothatstatement, theconsultations were aimed atreaching abetter common
understanding oftheways inwhich certain measures mayaffect tradeinservices. Atthefirstmeeting
oftheSub-Committee onServices on19May1994, itwasagreed thatcontinuing workonissues relating
tothescope oftheGATS wasamatter ofpriority fortheSub-Committee andthattheChairman should
startaprocessofinformalconsultationsonthesubject.Accordingly,theChairmanoftheSub-Committee
conducted aseries ofconsultations onwhich hereported regularly totheSub-Committee. The
consultations were concerned with thefivecategories ofmeasures referred toindocument
MTN.GNS/W/177/Rev.1. Although agreement wasreached ontwocategories -measures relating
tojudicial andadministrative assistance andmeasures relating totheentry andstayofnatural personsS/C/W/1
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-noagreement wasreached ontheotherthreecategories: measures relating tosocial security, measures
relating todispute settlement under bilateral investment treaties andmeasures relating totheentry and
temporary stayofcertain categories ofnatural persons. Attheendoftheprocess itwasnotpossible
toreach agreement ontheterms ofareport bytheSub-Committee tobetransmitted totheCouncil
forTrade inServices. TheChairman oftheSub-Committee onServices willtherefore present areport
onhisownresponsibility totheCouncil forTrade inServices atitsfirstmeeting.
Organization ofwork
(a) Future negotiations
6. Duetothetimeconstraints oftheUruguay Round, thenegotiations onthetextoftheGATS
leftsome aspects oftheAgreement thatneeded further development. Therefore, anumber ofArticles
intheGATS callfornegotiations aftertheentry intoforce oftheAgreement withaviewtodeveloping
certain disciplines. These provisions are:
(i) Article VI(Domestic Regulation), paragraph 4states: "With aviewtoensuring that
measures relating toqualification requirements andprocedures, technical standards
andlicensing requirements donotconstitute unnecessary barriers totradeinservices,
theCouncil forTrade inServices shall, through appropriate bodies itmayestablish,
develop anynecessary disciplines. Such disciplines shall aimtoensure thatsuch
requirements are,interalia:
(a) based onobjective andtransparent criteria, suchascompetence andtheability
tosupply theservice;
(b) notmore burdensome thannecessary toensure thequality oftheservice;
(c) inthecaseoflicensing procedures, notinthemselves arestriction onthesupply
oftheservice."
TheMinisterial Decision onProfessional Services states that: "Thework programme
foreseen inparagraph 4ofArticle VIonDomestic Regulation should beputintoeffect
immediately."ItalsoestablishesaWorkingPartyonProfessionalServicesandidentifies
theaccountancy sector asanareaofpriority.
Before work starts onthedevelopment ofsuchdisciplines inother areas itmight be
necessary forMembers oftheCouncil todiscuss certain basicquestions. Forexample,
onwhich sectors other thanaccountancy should work startinthenearfuture andwhat
would betheorder ofpriority among them? Would thisexercise proceed exclusively
onasectoral basis orwould there beanyhorizontal issues tobeconsidered? What
institutional structure should theCouncil establish forthose negotiations?
(ii) Article X(Emergency Safeguards), paragraph 1states: "There shallbemultilateral
negotiations onthequestion ofemergency safeguard measures based ontheprinciple
ofnon-discrimination. Theresults ofsuchnegotiations shallenterintoeffect onadate
notlaterthanthree years fromthedateofentry intoforce oftheWTO Agreements."
(iii) ArticleXIII(GovernmentProcurement),paragraph2states:"Thereshallbemultilateral
negotiations ongovernment procurement inservices under thisAgreement within two
years form thedateofentry intoforce oftheWTO Agreement."S/C/W/1
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(iv) Article XV(Subsidies), paragraph 1states: "...Members shallenterintonegotiations
withaview todeveloping thenecessary multilateral disciplines toavoid suchtrade
distortive effects. Thenegotiations shall alsoaddress theappropriateness of
countervailing procedures. Suchnegotiations shallrecognize theroleofsubsidies in
relation tothedevelopment programmes ofdeveloping countries andtakeintoaccount
theneeds ofMembers, particularly developing country Members, forflexibility inthis
area...."
7. Inview ofthewide range andcomplexity oftheregulatory andpolicy issues involved, the
Council should consider themodalities andpriorities forthese negotiations inthelightofthedates
specified andanyother factors thatMembers would wishtotakeintoaccount.
(b) Procedures forthemodification ofschedules
8. Paragraph 5ofArticle XXIoftheGATS (Modification ofSchedules) callsupon theCouncil
forTrade inServices toestablish procedures for"rectification ormodification ofschedules" tobe
followed byMembers evoking theprovisions ofthisArticle. While paragraph 1(a)setsthegeneral
rulethatschedules maybemodified onlyafterthelapse ofthree years from thedateonwhich a
commitment entered intoforce, there areother provisions intheGATS which envisage, inspecial
circumstances, thepossibility ofmodification ofschedules before theexpiry ofthethree-year period.
Such circumstances areforeseen inparagraph 5ofArticle V(Economic Integration), paragraph 4of
Article VIII(Monopolies andExclusive Service Suppliers), paragraph 2ofArticle X(Emergency
Safeguard Measures) andparagraph 3ofArticle XXIII (Dispute Settlement andEnforcement). The
Council might therefore consider itnecessary toestablish suchprocedures inthenearfuture. Itshould
alsoberecalled thatduring theUruguay Round agooddealofwork tookplace onthedrafting ofthese
procedures. Thelatest version ofthedraft(dated 14.12.1991) willbecirculated toMembers ofthe
Council; itwasregarded bythenegotiators asahelpful basis forfuture work onthisitem.
(c) Services statistics andclassification
9. During theUruguay Round negotiations itwasgenerally recognized byparticipants thatwhile
reliablestatisticsontradeinservicesareessentialfortheproperfunctioningofanymultilateralagreement
onthesubject, existing statistics werehighly inadequate. Similarly participants haverecognized that
theabsence ofacommon classification system forservices activities would present practical andlegal
difficulties fortheimplementation oftheAgreement. Participants seemed toagree thatwork onthese
subjects should startsoonaftertheconclusion ofthenegotiations. Members oftheCouncil forTrade
inServices might startadiscussion oftheissues involved withaviewtoinitiating work intheseareas.
Verification ofschedules
10. Anumber ofschedules ofcommitments which were submitted prior to31December 1994
arestillsubject tonegotiation. Thedecision oftheGeneral Council ontheFinalization ofNegotiations
onSchedules onGoods andServices (WT/L/30) requires thatnegotiations onthese schedules be
concluded andtheschedules besubmitted totheCouncil forTrade inServices nolaterthan31March
1995. Failing tomeetthisdeadline, thecontracting party concerned would havetoapply foraccession
totheWTO andinitiate theprocedures ofArticle XIIoftheWTO Agreement. There arealsoanumber
ofleastdeveloped countries which havenotyetsubmitted theirschedules ofcommitments andshould
dosobefore 15April 1995. Before those schedules aresubmitted totheGeneral Council forfinal
approval, theyneedtobeverified bytheCouncil forTrade inServices interms oftheirtechnical
accuracy andconsistency withthescheduling guidelines.S/C/W/1
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Oversight ofon-going negotiations
11. The three Negotiating Groups established bytheMinisterial Decisions onBasic
Telecommunications, Maritime Transport Services andMovement ofNatural Persons arerequired
toreport periodically ontheprogress oftheirnegotiations. Asatransitional arrangement, during 1994
thethree Negotiating Groups were reporting periodically totheSub-Committee onServices. The
Negotiating Groups willhenceforth report periodically totheCouncil forTrade inServices. Inthe
caseoffinancial services, theCommittee onTrade inFinancial Services shallreport totheCouncil
onprogress inthenegotiations inthatsector nolaterthan30April 1995.