RESTRICTED
PREPARATORY COMMITTEE PC/SCS/M/1
FOR THE 6June1994
WORLD TRADE ORGANIZATION Special Distribution
(94-0999)
SUB-COMMITTEE ONSERVICES
REPORT OFTHE MEETING HELD ON19MAY 1994
Note bytheSecretariat
1. TheSub-Committee onServices helditsfirstmeeting on19May1994under thechairmanship
ofAmbassador Christer Manhusen ofSweden. Theagenda forthemeeting iscontained indocument
PC/AIR/3. Thepurpose ofthemeeting wastoconsider organizational matters relating totheactivities
oftheSub-Committee.
2. TheChairman recalled thattheSub-Committee wasestablished bytheMinisterial Decision
establishing thePreparatory Committee fortheWTO withtheresponsibility forpreparatory work on
GATS matters.
Membership andparticipation ofobservers
3. Withrespect tothemembership oftheSub-Committee theChairman stated thatitwillfollow
thesamerulesasthePreparatory Committee, namely, thatitwillbeopentoallsignatories oftheFinal
ActoftheUruguay Round, andtoanycontracting party eligible tobecome anoriginal member of
theWTO inaccordance withArticle XIoftheWTO Agreement. With respect toobservers inthe
Sub-Committee, theChairman suggested thattheUnited Nations, theInternational Monetary Fund,
theWorld BankandUNCTAD, aswellasthose governments which hadbeenassociated withthework
oftheTrade Negotiations Committee oftheUruguay Round, would beinvited toattend formal meetings
oftheSub-Committee asobservers. Healsosuggested thatanyfurther requests forobservership should
beaddressed onacasebycasebasis.
4. TheSub-Committee soagreed.
5. With respect toobservers intheNegotiating Groups, hesuggested thefollowing:
(a) Inthecaseofthenegotiating group onMovement ofNatural Persons, participation
would beopentoallMembers oftheSub-Committee. Anyrequests forobservership
would beaddressed onacasebycasebasis.
(b) InthecaseoftheNegotiating Group onBasic Telecommunications aswellasthe
Negotiating Group onMaritime Transport Services observership should beopen, upon
request, tocountries which have notnotified their intention toparticipate inthe
negotiations. Suchrequests should betransmitted totheSecretariat. Observers would
beinvited toattend formal meetings ofthesetwonegotiating groups andwould receive
alldocumentsproducedbytheSecretariat.RequestsforobservershipfromInternational
Organizations would beconsidered onacasebycasebasis.
6. Themajority ofdelegations supported theChairman 'sproposal. They wereoftheviewthat
allowing countries toparticipate inthose meetings asobservers, byensuring transparency, would
eventuallyleadtowiderparticipationinthenegotiationsthemselves.Also,theparticipationofobservers
would notbeofanyhindrance tothework oftheNegotiating Groups since observers would notPC/SCS/M/1
Page2
participate indecisions andwould beallowed tospeak onlyuponinvitation fromtheChairman atthe
endofadiscussion. Onespeaker, onbehalf ofagroup ofcountries, however, expressed theviewthat
meetings should beconfined tothose countries which announced theirintention toparticipate; the
Decision onNegotiations onMaritime Transport Services andtheDecision onNegotiations onBasic
Telecommunications require countries wishing toparticipate inthenegotiations tonotify theirintention
totheSecretariat. Transparency would inanycasebeachieved through thesupervisory rôleofthe
Sub-Committee. Itwastherefore suggested thatinvitations tofuture meetings ofthese Negotiating
Groups should beaddressed onlytothose countries which hadnotified theirintention toparticipate
inthenegotiations.
7. TheChairman concluded that,while inthecaseoftheNegotiating Group ontheMovement
ofNaturalPersonstherewasnodisagreementwithhissuggestion,inthecaseoftheothertwonegotiating
groups further informal consultations would benecessary ontheissue ofobservers.
Election ofChairman forthenegotiating groups
8. TheChairman gaveaprogress report onhisconsultations concerning theelection ofchairmen
forthethreeNegotiating Groups. Heindicated that,although progress hadbeenmade, therewasstill
aneedforfurther consultations. Heexpected thatpriortothenextmeetings oftheNegotiating Groups
hewould beinaposition tomake concrete proposals. Onedelegation proposed that,since Movement
ofNatural Persons isacross cutting issue, theNegotiating Group should bechaired bytheChairman
oftheSub-Committee himself. TheChairman tooknoteoftheproposal.
Functions oftheSub-Committee
9. TheChairman drew theSub-Committee 'sattention totheNote prepared bytheSecretariat
(PC/SCS/W/1) dated 11May1994 asabasis forthediscussion ofthisitem. Heindicated thatthe
mainpurpose ofthediscussion wastohaveabetter common appreciation oftheworkload andpriorities
oftheSub-Committee withaviewtoarriving atawork programme andacalendar ofmeetings for
theremainder of1994. Thediscussion thenproceeded ontheitems contained intheNoteasfollows:
(a) Oversight ofon-going negotiations
10. TheChairman recalled thattheMinisterial Decisions establishing theNegotiating Groups on
Maritime Transport, Movement ofNatural Persons andBasic Telecommunications callupon the
respective Negotiating Groups toreport periodically ontheprogress ofnegotiations. Healsorecalled
thatparagraph 8(c)(ii) oftheMinisterial Decision establishing thePreparatory Committee fortheWTO
refers to"overseeing negotiations inspecific services sectors" asoneofthefunctions oftheSub-
Committee onServices. InthecaseofFinancial Services, theChairman indicated thatthesituation
isdifferent inthesense thatthereisnoNegotiating Group established. Therelevant Ministerial Decision,
however, callsupon theCommittee onTrade andFinancial Services tomonitor theprogress ofany
negotiations undertaken under theterms ofthatDecision andtoreport totheCouncil forTrade in
Services nolaterthanfourmonths aftertheentry intoforce oftheWTO Agreement. Therefore, the
Chairman suggested, prior totheentry intoforce oftheAgreement, theSub-Committee onServices
might provide theforum foranymultilateral discussions thatmaybenecessary onfinancial services.
11. Delegations ingeneral agreed withwhattheChairman saidconcerning therôleoftheSub-
Committee inoverseeing on-going negotiations. Some delegations emphasised thattheyattach great
importance tonegotiations onfinancial services andbelieved itwould bedesirable toestablish aseparate
Negotiating Group onfinancial services. Other delegations tooktheviewthatthere wasnocurrent
needforanegotiating group andthattheSub-Committee would be,atleastforthetimebeing, the
appropriate forum foranymultilateral discussions onfinancial services.PC/SCS/M/1
Page3
12. TheChairman indicated thathewould beconsulting further onthematter ofwhether, and
when, aNegotiating Group onfinancial services could beestablished. Heconcluded that,untilsuch
decision ismade, theSub-Committee willbetheforum foranymultilateral discussions onfinancial
services, which would appear asanitemontheagenda ofthenextmeeting oftheSub-Committee.
(b) Issues relating tothescope oftheGATS
13. TheChairman recalled thatdiscussions onissues relating tothescope oftheGATS tookplace
during thefinalstages oftheUruguay Round negotiations andduetothelackoftimethen, nospecific
conclusions were reached onanumber ofquestions. Therefore, theChairman oftheGNS issued a
statement dated 14December 1993(MTN.GNS/W/260) which provided participants withanadditional
period upto15December 1994 toconsult onsuchmatters. TheSub-Committee onServices would
betheappropriate forum forsuchdiscussions andwould finally report onthemtotheCouncil forTrade
inServices. Hesuggested thatdiscussions beresumed onthebasis oftheNote prepared bythe
Secretariat dated 4November 1993 (MTN.GNS/W/177/Rev.1). Healsodrew theSub-Committee 's
attention totheaddendum tothatdocument (MTN.GNS/W/177/Add.1) which registers anagreement
byparticipants thattheprovisions ofArticle II(Most-Favoured-Nation Treatment) donotapply to
measures relating tojudicial andadministrative assistance.
14. Delegations agreed thatthisitemisapriority fortheSub-Committee particularly inthelight
ofthedeadline referred tobytheChairman. There weresuggestions thattheChairman might start
aprocess ofinformal discussions intheverynearfuture.
15. TheChairman saidthathewould startinformal discussions ontheissues relating tothescope
oftheGATS andreport onthem totheSub-Committee.
(c) Guidelines fornotifications
16. TheChairman indicated thattheNote bytheSecretariat refers toalistofGATS Articles
containing notification requirements Article V(bis) should beadded tothislist. Hesaidthatitis
understood thatupon theentry intoforce oftheGATS, Members willhavedifferent notification
obligations depending ontheirindividual situations. Forexample, notifications under Article XII
(Restrictions toSafeguard theBalance ofPayments) willberequired onlyfromthose Members which
invoke thatArticle andmaintain suchrestrictions. Therefore, notallMembers willbesubject toall
notification requirements upontheentry intoforce oftheagreement. Nonetheless, headded, inorder
toensure consistency inpresentation andcontent ofallnotifications under eachoftheprovisions,
guidelines needtobeestablished. Hesuggested thatwork onthisitemcould startonthebasisofdraft
guidelines tobeprepared bytheSecretariat.
17. TheSub-Committee soagreed.
(d) Future negotiations
18. TheChairman drew theSub-Committee 'sattention tothelistofGATS provisions referred
toinpage3oftheSecretariat paper. Hesuggested thatthere maybeaneedtoclarify thetimeframe
fornegotiations oncertain subjects since notallofthose provisions areclearinthatrespect. Healso
suggested thattheremaybeaneedtoestablish anorder ofpriority among different items andtoassess
theneedfortheestablishment ofsubsidiary bodies forcertain areasofnegotiations. Delegations, while
recognizing theimportance ofsuchfuture negotiations, were oftheview thatthework oftheSub-
Committee onthisitemshould beconfined tothepreparation oftheprocedural aspects ofsuchfuture
negotiations. They were alsooftheviewthatthisitemshould nothavethesame degree ofpriorityPC/SCS/M/1
Page4
astheonesthatpreceded it.TheChairman therefore suggested thatatthisstage itwould notbe
necessary torequest background papers from theSecretariat.
(e) Theworking party onprofessional services
19. TheChairman suggested that,onthisitem, theefforts oftheSub-Committee should bedirected
tothepreparation ofmodalities andrulesofprocedures fortheWorking Party onProfessional Services.
20. Anumber ofdelegations emphasised theimportance ofthefuture work oftheWorking Party
asapartofthework programme envisaged under paragraph 4Article VIoftheGATS. They also
recalled thattheMinisterial Decision onProfessional Services identified accountancy astheareaof
priority among professional services. However, mostofthemagreed withtheChairman thatthework
oftheSub-Committee inthisareashould beconfined tothepreparation ofmodalities andrules of
procedures fortheWorking Party. Itwassuggested thattheSecretariat might startestablishing contacts
withtherelevant specialized international bodies inpreparation foranefficient startbytheWorking
Group upon theentry intoforce oftheAgreement.
(f) TermsofreferencefortheCouncilandSubsidiaryBodies,andexaminationofschedules
21. TheChairman recalled thattheSub-Committee onServices doesnothavethemandate tomake
finaldecisions inrelation tothose twoitems. However, headded, theSub-Committee mayverywell
becalled upon toaddress issues relating toterms ofreference andrulesofprocedure fortheCouncil
forTrade inServices aswellasmake proposals concerning suchmatters inrelation tothesubsidiary
bodies.HedrewtheSub-Committee'sattentiontotheMinisterialDecisiononInstitutionalArrangements
fortheGeneral Agreement onTrade inServices, which addresses inspecific terms theresponsibilities
ofsubsidiary bodies andsectoral committees. Headded thatitisalsoexpected thattheverification
ofthetechnical aspects ofnewschedules ofspecific commitments would more appropriately takeplace
intheSub-Committee while thefinaldecisions concerning acceptance oraccession willbemade in
thePreparatory Committee. TheChairman alsoindicated that,inthisprocess, hewould beconsulting
withtheChairman ofthePreparatory Committee.
22. TheSub-Committee soagreed.
Work programme andcalendar ofmeetings
23. TheChairman suggested thattheSub-Committee would address, asamatter ofpriority, issues
relating tothescope oftheGATS. Heproposed tostartconducting informal discussions onthose
issues andreport backtotheSub-Committee. Inthesecond order ofpriority, hesuggested thatthe
Secretariat would prepare draftguidelines fornotifications which willbethebasisforfuture discussions
intheSub-Committee. Withrespect totheWorking Party onProfessional Services, hesuggested that
theSecretariat should startitscontacts withtherelevant specialized international bodies inthearea
ofaccountancy andprepare theground work fortheWorking Party soastoensure anefficient start
upon theentry intoforce oftheAgreement.
24. Onfuture meetings, theChairman suggested thatthenextmeeting oftheSub-Committee would
beheldon12July1994. Healsosuggested thattheSub-Committee might holdthreeformal meetings
during theperiod September-December 1994: dates would bedecided atalaterstage.
24. TheSub-Committee soagreed.