RESTRICTED
WORLD TRADE S/C/2
1December 1995
ORGANIZATION(95-3959)
Council ForTrade inServices
COUNCIL FOR TRADE INSERVICES
Report onWork since 1January 1995
Thisreport hasbeenprepared pursuant totheprocedures foranAnnual Overview oftheWTO
Activities andforReporting under theWTO (WT/L/93).
TheCouncil forTrade inServices hasheldseven meetings in1995. Reports onsuchmeetings
arecontained indocuments S/C/M/1 -7andshould bereadinconjunction withthisreport.
Rules ofProcedure fortheCouncil onTrade inServices
1. Atitsmeeting of30May1995 theCouncil hadconsidered adraftforitsRules ofProcedure
(S/C/W/2). There hadbeenanoutstanding issue relating toRule33(Decision Making), which was
relevant tothethree sectoral councils ongoods, services andintellectual property. Therefore itwas
agreed thattheCouncil would revert tothematter atafuture meeting. Atthemeeting oftheServices
Council on4October 1995 theChairman stated thattheCouncil forTrade inGoods andtheTRIPS
Council haddecided toaddafootnote toRule33indicating that,when alegalprovision ofanAgreement
specificallyrequiresadecisiontobetakenbyconsensusandthematterisreferredtotheGeneralCouncil,
theGeneral Council shalltakeadecision onlybyconsensus. InthecaseoftheServices Council, the
addition ofsuchafootnote totheRules ofProcedure would notbenecessary, since theGATS does
notincludeanyprovisionwhichspecificallyrequiresadecisiontobetakenonlybyconsensus.Therefore
hesuggested thattheCouncil adopt thedraftRules ofProcedure without amendment. TheCouncil
adopted theRules ofProcedure (S/L/15).
Decisions Referred totheCouncil forTrade inServices byMinisters
2. TheFinalActoftheUruguayRoundcontainedfourDecisionsrelatingtotheGATStobeadopted
bytheCouncil forTrade inServices. Atitsfirstmeeting, on1March 1995, theCouncil adopted
theDecisiononInstitutionalArrangementsfortheGeneralAgreementonTradeinServices,theDecision
oncertain Dispute Settlement Procedures fortheGeneral Agreement onTrade inServices, theDecision
onProfessional Services andtheDecision onTrade inServices andtheEnvironment. TheDecisions
arecontained indocuments S/L/1 -4respectively.
Participation ofObservers
3. Inaccordance withtheadhocprocedure agreed bytheGeneral Council, theCouncil forTrade
inServices decided ateachofitsmeetings onwhich inter-governmental organizations weretobeinvited
toitsfollowing meeting. TheCouncil continued toinvite thefourorganizations which hadparticipated
asobservers initsfirstmeeting, namely theIMF, World Bank, UNCTAD andtheUN.S/C/2
Page2
Guidelines forNotifications
4. TheSub-Committee onServices haddeveloped asetofGuidelines forNotifications under the
GATS. Atitsmeeting on29November 1994, theSub-Committee hadagreed thatthedraftGuidelines
contained indocument PC/SCS/W/8 besubmitted totheCouncil forTrade inServices foritsapproval.
Atitsfirstmeeting, on1March 1995, theCouncil approved theGuidelines (S/L/5).
Notifications under Article XXVIII(k)(ii) oftheGATS
5. Documents S/C/N/1, 2,3and5contained notifications fromCanada, NewZealand, Australia
andSwitzerland, pursuant toArticle XXVIII(k)(ii) oftheGATS, totheeffect thattheyaccord
substantially thesametreatment totheirpermanent residents astheyaccord totheirnationals withrespect
tomeasures affecting Trade inServices andthattheyassume withrespect tothose permanent residents,
inaccordance withtheirlawsandregulations thesame responsibilities thatother members bearwith
respecttotheirnationals.InaccordancewithArticleXXVIII(k)(ii),thefourGovernmentshadsubmitted
theirnotifications totheWTO atthetimeoftheiracceptance oftheWTO Agreement. Inaddition,
theytransmitted them totheCouncil forTrade inServices forinformation. TheCouncil tooknote
ofthenotifications.
Issues Relating totheScope oftheGATS
6. Thestatement oftheChairman oftheGNS dated 14September 1993 (MTN.GNS/W/260)
provided themandate forparticipants toconsult onissues relating tothescope oftheGATS foran
additional year, until15December 1994, andstipulated thattheresult ofsuchconsultations would
bereported totheCouncil forTrade inServices. However, attheendoftheconsultation process,
ithadnotbeenpossible toreach agreement intheSub-Committee onServices ontheadoption ofa
report totheCouncil. Therefore, theChairman oftheSub-Committee presented areport (contained
indocument S/C/1) onhisownresponsibility totheCouncil. Thereport stated thatconsultations had
taken place onthefivecategories ofmeasures referred toindocument MTN.GNS/W/177/Rev.1. On
twocategories, namely measures relating tojudicial andadministrative assistance andmeasures relating
toentry andstayofnatural persons, agreed conclusions hadbeenreached andwere contained in
paragraph 6ofthereport. Insofarastheother three categories were concerned, namely measures
relating tosocial security, measures relating tothesettlement ofdisputes under bilateral investment
treaties andmeasures relating totheentry andtemporary stayofcertain categories ofnatural persons,
noagreed conclusions hadbeenreached. TheCouncil adopted theconclusions contained inparagraph 6
andtooknoteoftheremainder ofthereport atitsfirstmeeting, on1March 1995.
Notifications under Article VoftheGATS
(a) Enlargement ofEU
7. Document WT/L/7 dated 19January 1995 contained acommunication from theEuropean
Communities informing theWTO oftheaccession ofAustria, Finland andSweden totheEuropean
Union on1January 1995 andnotifying theirreadiness toparticipate, asappropriate, infuture work
inaccordance withtherelevant provisions oftherespective Agreements oftheWTO. TheEuropean
Communities considered thatnotification tobeinfulfilment, inter alia,oftherequirement in
paragraph 7(a)ofArticle VoftheGATS andindicated atthefirstmeeting oftheCouncil fortrade
inServices thatitintended tosubmit amore detailed notification providing information onallaspects
oftheenlargement oftheEuropean Union relating toservices, including anewschedule ofcommitments
oftheEuropean Communities anditsfifteen Member States. Atitsmeeting on30March 1995 the
Council forTrade inServices established aWorking Party ontheEnlargement oftheEuropean Union.S/C/2
Page3
Atasubsequent meeting on4October anagreement wasreached onthefollowing terms ofreference
fortheWorking Party:
"Toexamine theTreaty ofAccession ofAustria, Finland andSweden totheEuropean
Union andtoreport totheCouncil forTrade inServices onitsconsistency with
Article VoftheGeneral Agreement onTrade inServices".
(b) North American FreeTrade Agreement
8. Atitsfirstmeeting, on1March 1995, theCouncil forTrade inServices received ajoint
communication fromCanada, Mexico andtheUnited States (S/C/N/4) notifying theNorth American
FreeTrade Agreement totheServices Council pursuant toparagraph 7(a)ofArticle VoftheGATS.
Atitsmeeting on30May1995, theCouncil established aWorking Party withthefollowing terms
ofreference:
"Toexamine theNorth American FreeTrade Agreement andtoreport totheCouncil forTrade
inServices onitsconsistency withArticle VoftheGeneral Agreement onTrade inServices".
(c) European Union
9. Atitsmeeting on22November 1995, theCouncil forTrade inServices received a
communication from theEuropean Communities andtheirMember States notifying the"economic
integration agreement" asinstituted bytheTreaty ofRome, subsequently enlarged, andmodified most
recently bytheTreaty ontheEuropean Union. Thenotification wasmade pursuant toparagraph 7(a)
ofArticle VoftheGATS.
Verification ofSchedules
10. During 1995 theCouncil forTrade inServices hasverified thetechnical accuracy andlegal
consistency ofschedules ofcommitments asfollows:
(a) Atitsmeeting on30March 1995, theCouncil forTrade inServices verified the
Schedules ofCommitments covered bytheDecision oftheGeneral Council adopted
on31January 1995 concerning Finalization ofNegotiations onSchedules onGoods
andServices (WT/L/30).
(b) Atitsmeeting on30May1995, theCouncil forTrade inServices verified theSchedules
ofCommitments ofLeast-Developed Countries, which according totheMinisterial
Decision onMeasures inFavour ofLeast-Developed Countries, hadbeen given
additional timeofoneyearuntil15April 1995 tosubmit theirschedules.
(c) Atitsmeeting on4October 1995, theCouncil forTrade inServices verified the
Schedules ofCommitments listed indocument S/C/W/10. Thelistcontained thirty-one
schedules andsixteen listsofMFN Exemptions relating toFinancial Services, six
schedules relating toMovement ofNatural Persons, aswellastwoschedules relating
toSaint Christopher andNevis andtheSolomon Islands.S/C/2
Page4
Taxes andSubsidies attheSub-federal Level
11. Inaccordance withtheStatement bytheChairman oftheGNS dated 13December 1993
(MTN.GNS/50),participantsintheUruguayRoundweregivenanadditionalperiodoftimeuntil15June
1994 tocomplete thescheduling ofmeasures relating totaxes andsubsidies atthesub-federal level
which were inconsistent withArticle XVII (National Treatment) oftheGATS. Thestatement also
stipulated that"Itisunderstood thatthisprocess willnotresult inanyalteration inthenegotiated balance
ofrights andobligations. Foraperiod ofthirty daysstarting on16June1994, ifanyparticipant
considers thatsuchbalance hasbeenaltered asaresult ofscheduling additional measures, itmayconsult
withtheparticipant orparticipants concerned withaview toreaching asatisfactory adjustment".
Pursuant tothatstatement, theUnited States submitted aCommunication through theSub-Committee
onServices contained inPC/SCS/W/4 dated 30June1994. Upon request from delegations, the
communication wassubject tomultilateral consultations under theauspices oftheSub-Committee on
Services during 1994. Consultations continued under theauspices oftheCouncil forTrade inServices
during 1995. TheCouncil hasreceived reports ontheconsultations atitsmeetings on1and30March,
4October and22November.
Statistics onTrade inServices -Note bytheSecretariat
12. Atthemeeting oftheCouncil on30March 1995, itwasnoted thatproblems relating tothe
availability andcomparability ofstatistics required urgent attention. Accordingly, theSecretariat was
asked toprepare abackground noteonservices statistics andclassification asabasisforinitiating work
inthese twoareas andtoassist delegations intheirconsideration oftheissues involved. Accordingly,
theSecretariat produced thenotecontained indocument S/C/W/5 which waspresented totheCouncil
anddiscussed atitsmeeting on4October 1995. Itfocuses primarily onissues relating tothecreation
ofastatistical framework toservice GATS needs. Anumber ofdelegations stated that,although the
subject wasofimportance, itseemed premature totakeanydecisions ontheestablishment ofaspecial
body toconduct thenecessary work.
TheWorking Party onGATS Rules
13. Atitssecond meeting on30March 1995, theCouncil decided toestablish aWorking Party
toconduct negotiations onSafeguards, Government Procurement andSubsidies, asstipulated in
Articles X,XIIIandXVoftheGATS respectively. Itwasagreed thattheWorking Party should take
upthethree subjects intheorder inwhich theyappear intheGATS, thatissafeguards, government
procurement andsubsidies, andstartwork onthethree subjects onstaggered dates withintervals of
fourmonths, sothatwork onsafeguards would startinJulyandongovernment procurement and
subsidies inNovember andMarch respectively.
Decisions onFinancial Services
14. Atitsmeeting on30June1995, theCouncil forTrade inServices adopted theDecision on
theApplication oftheSecond Annex onFinancial Services (S/L/6). TheDecision provided forthe
extension ofthedeadline provided forintheSecond Annex onFinancial Services, bywhich Members
maymodify theircommitments and/or MFN exemptions, from 30Juneuntil28July1995.
15. Atitsmeetingon21July,theCouncilforTradeinServicesadoptedthetwofollowingDecisions:
(a) Decision onCommitments inFinancial Services (S/L/8), which stipulates thatifthe
Second Protocol totheGeneral Agreement onTrade inServices, towhich new
commitments onfinancial services areannexed, doesnotenter intoforce, MembersS/C/2
Page5
mayduring aperiod ofsixty days beginning on1August 1996 modify their
commitments and/or MFN exemptions relating tofinancial services.
(b) Second Decision onFinancial Services (S/L/9), which stipulates thataftertheentry
intoforce oftheSecond Protocol totheGATS, Members may,during aperiod ofsixty
days beginning on1November 1997, modify their commitments and/or MFN
exemptions relating tofinancial services.
These decisions follow theDecision Adopting theSecond Protocol totheGATS which had
beenadopted bytheCommittee onFinancial Services on21July1995. ThatDecision contained the
adoption oftheSecond Protocol totheGATS towhich newcommitments onfinancial services were
annexed. Italsoprovided that,pending theentry intoforce oftheProtocol, tothefullest extent
consistent withtheirexisting legislation, Members shallnottakemeasures which would beinconsistent
withtheirundertakings resulting from thenegotiations inthissector.
Decisions onMovement ofNatural Persons
16. Atitsmeeting on30June1995, theCouncil forTrade inServices adopted theDecision on
Movement ofNatural Persons (S/L/7) which provided fortheextension ofthedeadline provided for
intheMarrakesh Ministerial Decision onNegotiations onMovement ofNatural Persons from30June
until28July1995.
17. Atitsmeeting on21July1995, theCouncil adopted theDecision onMovement ofNatural
Persons Commitments (S/L/10). TheDecision contained theadoption oftheThird Protocol tothe
GATS towhich newcommitments onmovement ofnatural persons wereannexed. Italsoprovided
that,pending theentry intoforce oftheProtocol, tothefullest extent consistent withtheirexisting
legislation, Members shall nottakemeasures which would beinconsistent withtheirundertakings
resulting from thenegotiations inthisarea.
Establishment ofaCommittee onSpecific Commitments
18. Atitsmeeting on4October 1995, theCouncil decided toestablish theCommittee onSpecific
Commitments. Atitsmeeting on22November, theCouncil adopted theDecision ontheTerms of
Reference fortheCommittee onSpecific Commitments (S/L/16).
Progress reports onon-going negotiations
19. TheCouncil forTrade inServices hasbeenreceiving progress reports onon-going negotiations
inbasic telecommunications andmaritime transport services. Italsoreceived progress reports onthe
negotiations onmovement ofnatural persons andonfinancial services uptotheirconclusion on21July
1995.