RESTRICTED
WORLD TRADE S/C/M/8
29March 1996
ORGANIZATION(96-1225)
Council forTrade inServices
REPORT OFTHE MEETING HELD ON4MARCH 1996
Note bytheSecretariat
1. TheCouncil forTrade inServices heldameeting on4March 1996. Theagenda forthemeeting
iscontained inAirgram WTO/AIR/264. Under Other Business theChairperson added astatement
concerning theChairmanship oftheCommittee onTrade inFinancial Services.
ItemA:Procedures fortheImplementation ofArticle XXI(Modification ofSchedules)
2. TheChairperson drew attention toasecond revision ofthetextofthedraftprocedures for
themodification ofschedules dated 29February 1996. Shestated thatinformal consultations hadtaken
place inaneffort tofinalize thetextforsubmission totheCouncil. Although considerable progress
hadbeenachieved during those consultations, twoissues remained outstanding: Thefirst: incase
amodifying Member doesnotcomply withthefindings ofthearbitration regarding acompensatory
adjustment, should anaffected Member befreetotakeretaliatory action without anyprior procedural
step? Thesecond: iftheprocedures were torequire thearbitrator toidentify theappropriate level
ofretaliatory action, should thatfinding bemade atthesametimethearbitrator identifies theappropriate
levelofcompensatory adjustment? Inother words, should thearbitration process belimited toone
stage orshould itbedivided intotwoseparate stages (thefirstfortheconsideration oftheappropriate
levelofcompensatory adjustment andthesecond fortheappropriate levelofretaliatory action ifthe
process reaches thatstage)?
3. Severaldelegationsexpressedtheviewthat,whiletheyagreedwiththeChairperson'sdescription
ofthetwooutstanding issues, theywould stillliketoreserve thepossibility ofraising other issues
inthelightoffurther examination ofthetextbytheircapitals.
4. TheChairperson suggested thattheCouncil takenoteofthestatements made andthatinformal
consultations should continue withaviewtoproducing afinaldraftfortheconsideration oftheCouncil
atitsnextmeeting.
5. TheCouncil soagreed.
ItemB:Taxes andSubsidies attheSub-federal level-Interim report onthestatus oftheconsultations
6. TheChairperson recalled thatatthelastmeeting, theCouncil hadagreed thatinformal
consultations would continue onissues arising fromthecommunication bytheUnited States contained
indocument PC/SCS/W/4 dated 30June1994concerning taxes andsubsidies atthesub-federal level.
Accordingly, aninformal meeting hadbeenheldon18December 1995 atwhich ithadbeenagreed
thattheSecretariat would prepare aninterim report ontheprogress achieved inconsultations thusfar.
Shedrewattention todocument S/C/W/13 dated 13January 1996entitled "Interim Report ontheStatus
ofConsultations onTaxes andSubsidies attheSub-Central level". Arepresentative oftheSecretariat
introduced thereport.S/C/M/8
Page2
7. Therepresentative ofJapan stated thatthere wasaneedtowork outasolution rather quickly.
However, more consultations wereneeded toclarify theissues. Therepresentative ofCanada stated
thathisdelegation wasdisappointed withthelackofprogress ininformal consultations inspiteofa
wideagreement among participants thatcertain measures contained intheUScommunication were
notnecessary andcould prejudice thefuture interpretation ofthenational treatment provision ofthe
GATS. Hisdelegation wasconcerned withthelegaluncertainty surrounding thelistofreservations
submitted bytheUS. Inhisview, newprecise language would benecessary forthescheduling of
those measures. Henoted thatinformal consultations hadnotsofaraddressed measures relating to
subsidies contained inthecommunication bytheUnited States. Hesuggested thatfurther informal
consultations should focus onconcrete proposals bytheUnited States toresolve theoutstanding issues.
8. Therepresentatives ofAustralia, Argentina andIndiasupported theviews expressed byCanada
andadded thatfuture informal consultations should notbedirected toward factfinding. Itshould focus
onpractical solutions totheproblems identified inprevious discussion. Therepresentative ofArgentina
stated thatthelistsubmitted bytheUnited States should beconfined toexisting measures andnotfuture
ones.
9. Therepresentative oftheEuropean Communities stated thatherdelegation wasdisappointed
thatthestatement oftheChairman oftheGNS(MTN.GNS/50) hadbeenusedtothatextent. Shestated
thatthescheduling offuture orundefined measures wasnotpossible under theGATS. Shedisagreed
withaclaim bytheUnited States during consultations thattheimpact ofthemeasures ontradeinservices
wasinsignificant, pointing outthattheGATS doesnotcontain anydeminimis provision.
10. Therepresentative oftheUnited States stated thatthroughout theconsultations thepositions
ofdelegations hadnotchanged. There wasaclear difference ofopinion onhownational treatment
intheGATS should beinterpreted. Further consultations toclarify theUSlistandtoprovide additional
information onmeasures would probably notbehelpful. They should focus onpractical solutions.
Headded thathisdelegation wasready tohaveconsultations onmeasures relating tosubsidies atthe
firstopportunity.
11. TheChairperson suggested thattheCouncil takenoteofthestatements made andagree that
informal consultations should continue atamultilateral aswellasthebilateral levelwithaviewto
reaching asatisfactory outcome. Shealsosuggested thattheCouncil revert tothismatter atafuture
meeting.
12. TheCouncil soagreed.
ItemC:Progress Reports onCurrent Negotiations onBasic Telecommunications and
Maritime Transport Services
13. TheChairperson stated thattheNegotiating Group onMaritime Transport Services hadheld
itseighth meeting on13and16February 1996. During thesameweek bilateral negotiations hadtaken
place onthebasis ofoffers andrequests submitted byparticipants. Atthatmeeting, three newoffers
hadbeensubmitted byKorea, Switzerland andChile, bringing thetotalnumber ofoffers submitted
thusfartonine. Also, asignificant number ofwritten requests hadbeenmade bilaterally. Most
participants intheNegotiating Group hadexpressed satisfaction withthebilateral negotiations which
hadtaken place during thatweek. Atthatmeeting, there hadalsobeenstatements bythedelegations
ofColombia andMexico indicating theirintention tosubmit offers inthenearfuture. Thedelegation
ofIceland hadsubmitted itsresponse tothequestionnaire onMaritime Transport Services, leaving
only7Members and13Observers todoso.TheNegotiating Group hadcontinued itswork onthe
draftschedule onMaritime Transport andinformal consultations hadbeenheldonissues relating to
multimodal transport. There were 42fullparticipants and16observers intheNegotiating Group.S/C/M/8
Page3
Thenextmeeting oftheNegotiating Group wasscheduled for26and29March 1996, withbilateral
negotiations taking place during thatweek.
14. TheNegotiatingGrouponBasicTelecommunicationshadheldits13thmeetingon28February-
1March 1996. Senior levelofficials hadparticipated tohelpprovide impetus tothefinalstretch of
bilateral negotiations leading uptothe30April deadline. Reports onthesenior-level bilateral sessions
hadbeengenerally optimistic thatsubstantial commitments onanMFN basis could beobtained but
ithadbeennoted thatthere ismuch yettobeaccomplished. Withtheannouncement ofThailand that
itwillparticipate fully, therewere50governments involved inthenegotiations. Fournewdraftoffers
hadbeen tabled during theweek, bringing thetotalnumber ofoffers to23,covering 37ofthe
participating governments. TheUnited States hadsubmitted arevised draftoffer reflecting itsnew
telecommunications reform law. Thisbrought to4thenumber ofrevised offers made thusfar.
Regardingworkbyparticipantsonregulatoryissues,considerableprogresshadbeenmadeonareference
textthatwould enable commitments tobeundertaken concerning certain regulatory disciplines. The
nextperiod ofnegotiations onbasic telecommunications wasscheduled for18-22 March. The
Chairperson reminded participants thatthiswould alsobethelastsession prior tothefinalphase of
negotiations inApril. Shehoped thatallparticipants weredoing theirutmost tobring thesenegotiations
toabalanced andsuccessful conclusion.
Other Business
Chairmanship oftheCommittee onTrade inFinancial Services
15. TheChairperson stated thataccording totheGuidelines fortheAppointment ofOfficers to
WTO Bodies (WT/L/31) of7January 1995, theoneyeartermoftheChairman oftheCommittee on
Trade inFinancial Services hadexpired. Thesame guidelines alsostipulated thattheincumbent
Chairperson maybeconsidered forreappointment whenever thisisfound tobeintheinterest ofthe
efficient functioning ofthebody. TheChairperson suggested that,unless by15March delegations
suggested otherwise, Mr.Frank Swedlove ofCanada, theformer Chairman should bere-appointed
foranother year.
Dateofnextmeeting
16. TheChairperson suggested thattheCouncil forTrade inServices should holditsnextmeeting
on21May1996.
17. TheCouncil soagreed.