RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/M/51
2 March 2001
(01-1073)
Council for Trade in Services
REPORT OF THE MEETING HELD ON 1 DECEMBER 2000
Note by the Secretariat
1. The Council for Trade in Services held a meeting on 1 December 2000.  The agenda for the
meeting is contained in document WTO/AIR/1451.  Under Other Business, the Chairman said that he
would make a statement about his report to the Ge neral Council on the Services Council's discussion
on electronic commerce at the October 2000 meeting, as well as invite the Secretariat to give aprogress report on the electronic database for consolidated schedules of commitments.  The
representative of Mexico said that he would make a statement on document Job No. 4427/Rev.1 on
enquiry and contact points.
2. The Chairman proposed that the Council adopt the agenda as circulated, with the addition of
the items raised under Other Business.
3. The Council so agreed.
A. REVIEW OF THE UNDERSTANDING ON ACCOUNTING RATES IN
TELECOMMUNICATIONS
4. The Chairman recalled that, at the last meeting on 6 October, the Council had intended to
discuss the issues involved in the review of the Understanding after having heard a report, from the
representative of the ITU, on the conclusions reached by the World Telecommunications
Standardization Assembly at its meeting in September 2000.  However, the representative of the ITUSecretariat had reported that the meeting of the Assembly had not ended and that no conclusion had
yet been reached on the matter of accounting rates.  Therefore, it was decided that the Council would
revert to the matter at this meeting.  He invited th e representative of the ITU Secretariat to inform the
Council of the conclusions reached at the World Telecommunications Standardization Assembly.
5. The intervention of the representative of the ITU Secretariat is reflected in document
Job No. 8211 of 12 December.
6. The Chairman invited delegations' comments on how they wished to continue the review of
the Understanding.  He recalled that at previous meetings it had been suggested that the Council
simply extend the Understanding, and wondered if delegations would find the idea acceptable in
principle and, if so, what timeframe they would envisage.
7. The representative of Mexico said that the purpose of the review was not to decide whether or
not to prolong the moratorium in the Understanding.  He said that the Council should not be deciding
on a date for terminating the Understanding, but rather take note that the circumstances had not
changed sufficiently to permit the elimination of  the Understanding and set another date for the
review.S/C/M/51
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8. Commenting on the statement by the representative of the ITU Secretariat, the representative
of Australia said that she had taken note of the list of countries who had decided that they would not
be applying the new provisions.  As for Mexico's comment that the conditions justifying the
moratorium continued to stand, she said that the Council discussion thus far had not determined that
this was the case.  Her delegation was planning to circulate a negotiating proposal that would coversome of the elements under discussion, in addition to other telecommunications-related matters, and
would take up the issues at that point to follow up on the outcome of the ITU World
Telecommunications Standardization Assembly and its implications.
9. The representative of Chile said that the reform process in the ITU was a lengthy
development.  He concurred with Mexico that the Understanding was still in effect, but noted that it
was a political understanding, so that it was important that Members be kept periodically informed of
events taking place in the ITU.
10. The representative of Turkey supported the extension of the Understanding, given that most
Members had government-controlled telecommunication sectors and that the application of different
rates might be inevitable due to objective criteria.
11. The representative of the European Communities said that the presentation by the ITU
Secretariat did not offer a clear sense of whether there was still discrimination with respect to
accounting rates, but he had taken note that accounting rates were going to disappear over the
following one or two years.  He concurred with Aust ralia that the Council did not have a clear view of
the issue and that a more complete examination would be useful to identify whether discrimination
existed and, if so, to what extent.  His delegation was in favour of maintaining the Understanding at
least until the stock-taking session.  He suggested that, at a future meeting, representatives of the ITUand national telecommunication experts be present to allow for a more in-depth discussion of the
issue.
12. Concluding the discussion of this item, the Chairm an said that the Council would revert to the
item at its next meeting.
13. It was so agreed.
B. NOTIFICATIONS TO THE COUNCIL PURSUANT TO ARTICLE V OF THE GATS
– STATEMENT BY THE UNITED STATES
14. The Chairman recalled that, at the previous Council meeting, examination of this item had
been postponed due to time constraints.  The Council had held preliminary discussions of the
statement by the delegation of the United States , contained in document S/C/W/147, concerning the
notification and examination of economic integration agreements (EIA) pursuant to Article V of the
GATS.  The statement raised the question of how to improve the timeliness of such notifications andtheir transmittal to the Committee on Regional Trade Agreements (CRTA) for examination.  Some
ideas were expressed on the issue but no conclusions were reached.
15. The representative of the United States said that a number of interesting suggestions had been
put forward at the previous meeting.  His delegation had found two particularly relevant, and
suggested that the Council consider them further.  The first proposal suggested that the Secretariat
compile a list of economic integration agreements notified but not referred to the CRTA;  the second
suggested setting up an automatic procedure for tran smittal of agreements to the CRTA, recalling that
a difference existed between the GATS and the GATT, whereby agreements notified under the GATT
were automatically sent to the CRTA, whereas they were not under the GATS.S/C/M/51
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16. The representative of Canada noted the importance of the issue and in particular of ensuring
transparency.  Her delegation had made three suggestions to that effect:  first, that the Secretariat draw
up a list of agreements notified but not yet referred to the CRTA;  second, that referral to the CRTA
be automatic 60 days after notification, unless otherwise indicated by the Members concerned;  and,
third, that, to encourage notification, the Secretariat review recent Trade Policy Review reports toidentify agreements which could require notification under Article V.  She had noted that some
Members had expressed concern with regard to the last suggestion, but she stressed that a similar
exercise had been carried out in the Working Party on GATS Rules with regard to Members' subsidy
practices.
17. The representative of Japan supported Canada's first two suggestions and concurred that it
was useful that notified EIAs be reviewed in the CRTA.  His delegation would give further
consideration to the third suggestion.
18. The representative of Argentina expressed support for Canada's first proposal.  However, his
delegation had serious reservations about a mechanism for automatic referrals to the CRTA, given
that the GATS contained no such automatic mechanism, but merely stated that the decision for
referrals rested with the Council.  He would reflect further on the third suggestion, but noted that it
was not the duty of the Secretariat to indicate whether Members had complied with their notificationobligations.  As to Canada's reference to the earlier compilation on subsidies, he noted that this had no
consequence for Members in terms of the fulfilment of their obligations.  The representatives of
Brazil and Uruguay fully endorsed Argentina's comments.
19. The representative of Switzerland supported Canada's first proposal.  With respect to the
second suggestion, he stressed that it run counter to Article V:7, which only prescribed that the
Council might refer EIAs on a case-by-case basis.
20. Concluding the discussion on this agenda item, the Chairman said that the Secretariat would
draw up a list of all economic integration agreements notified to the Council for Trade in Services and
indicate the ones which had not been referred to the CRTA.  With respect to the other two suggestions
by the delegation of Canada, some Members had expressed concern and others had indicated that theyneeded further reflection, and therefore suggested that the Council revert to them at its next meeting.
21. It was so agreed.
C. COMMITMENTS IN BASIC TELECOMMUNICATIONS – COMMUNICATION
FROM BRAZIL
22. The Chairman recalled that, at its last meeting, the Council had held a brief discussion of this
agenda item.  The delegation of Brazil had informed the Council of its consultations with other
Members on their submission in document S/C/W/160, concerning their revised commitments in basictelecommunications.  The delegation of Brazil had also referred to the procedure they were suggesting
for adoption, which would allow Brazil to bind its basic telecommunications commitments and
maintain the MFN exemption listed during the negotiations on the Fourth Protocol.  At the end of the
short discussion at the previous meeting, the delegation of Brazil had indicated that there would be
further consultations on the substantive and procedural aspects of its submission.  Therefore, it wasagreed that the Council would revert to the ma tter in the light of further consultations.
23. The representative of Brazil said that, since the previous meeting, his delegation had been
exchanging information with Members but regretted that, despite its best efforts, its
telecommunications expert had been unable to be present at the meeting.  He therefore asked that this
item be maintained on the Council's agenda for further consideration at the following meeting.S/C/M/51
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24. The Chairman said that the Council would revert to this item at its next meeting.
25. It was so agreed.
D. REVIEW OF ARTICLE II (MFN) EXEMPTIONS
26. The Chairman recalled that, at its last special meeting held on 5 October for the review of
MFN exemptions, the Council had completed the discussion of the compilation prepared by the
Secretariat in document Job No. 1551.  At that meeting, a preliminary discussion of the question of
the determination of the date of any further review , as provided in paragraph 4(b) of the Annex on
Article II Exemptions, had taken place.  In that context some suggestions had been made;  for
example, the delegation of Mexico had suggested that the next review take place six months prior to
the end of the negotiations or in 2004, whichever was earlier.  Another suggestion had been to discuss
the matter at the stocktaking exercise scheduled for March 2001 in the Special Session.  He also
recalled that it had been agreed that the discussion would not be confined to the question of the date ofany further review, but would also cover any other outstanding issues that Members might wish to
take up in the context of the MFN exemptions review.
27. The representative of Japan suggested that the next review should take place not later than
June 2004 because all exemptions should not exceed a period of 10 years in principle.  Regarding
outstanding issues, he informed the Council that written replies to the questions posed to thedelegation of South Africa had been received by his delegation.  The representative of South Africa
indicated that his delegation had provided written replies to outstanding questions by Japan andAustralia, which would be distributed to all Members.
28. The representative of Peru addressed a question related to Peru's exemption for recreational,
cultural and sporting services.  That exemption allowed Peru to provide greater facilities for the
presence of Latin-American artistes interpreting Latin-American themes, which consisted of a greater
quota for their participation than that for artistes from other countries.  The delegation of Japan had
asked why Peru was the only Latin-American country  listing such an exemption and the answer was
that in the case of Peru the measure was based on a domestic legislation and not an international
agreement.  The National Decree 013-87 ED provided in its first article that the general limit oftwenty per cent for the participation of foreign artistes in shows carried out in Peru could be increased
to forty per cent if the artistes came from other Latin-American countries.  He also complemented the
information given at the previous meeting relating Peru's exemption for transport services.  The
question was about the specifics of the favourable  treatment within the Andean Pact region for
maritime transport.  It had to be taken into account that, at the time, there was freedom of access for
freight coming from or going to the Andean regi on for maritime transport providers of the Andean
region or third countries.  For instance, Ecuadorian flag vessels or those from third countries couldembark or disembark in Peruvian ports freight origin ated in the subregion or Peruvian ports.  In this
context the preferential treatment related to the freedom of cabotage.  In the same example,
Ecuadorian flag vessels could carry freight originated or not in the Andean countries from and to
Peruvian ports, while third country flag vessels could not do that when the freight did not originate
from the Andean region.
29. In relation to the date for any further review, the representatives of Korea and Chile
 favoured
having a fixed date rather than one linked to another event and thus supported Japan's proposal for a
further review in June 2004. The representatives of Costa Rica also supported that proposal.  The
representative of Hong Kong, China recalled that his delegation had been favouring a date not later
than mid 2004 or the end of the services negotiations, whichever was earlier, because it was importantto review the exemptions again before they should have expired in principle.  However, his delegation
could support Japan's proposal.  In supporting Japa n's proposal, the representative of New Zealand
noted the flexibility incorporated in such a proposal.  Some Members wanted to attach  the nextS/C/M/51
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review to the end of the negotiations and having the words not later than June 2004 meant that if the
negotiations concluded prior to 2004 it would be possible to start the review then.
30. The representative of Switzerland said that the natural time-frame for a further review would
be another 5 years, considering paragraph 10 of the Annex which referred to a 10 year duration in
principle.  In any case such review should not take place before the conclusion of the servicesnegotiations since the exemptions most probably would be part of those negotiations.  The
representative of Australia felt that determination of the date of the next review was one of a number
of deadline issues that needed to be discussed in the context of the March stocktaking session.  Sheadded that her delegation strongly supported the paper presented by Japan at the previous meeting
regarding MFN systemic issues that the Council could address.
31. The representative of the European Communities said that there was a clear provision in the
Annex for the date of the first review, which was no t the case for any further review.  A date for the
next review should be selected in the light of the negotiating work that had been undertaken and
bearing in mind that a review would be necessary at the end of the negotiations as a kind of cleaning
work.  Therefore, it was premature to set a date for a further a review at that stage and his delegation
could not support Japan's proposal.  His delegation fa voured addressing the issue of the date at the
March stocktaking session where the organization of the negotiations would be more clear todelegations.
32. The representative of the United States said that the next review should be organized around
the date noted in the Annex for when the MFN exem ptions should in principle be removed; thus his
delegation supported Japan's proposal that the review would begin not later than June 2004.  He
questioned whether it was in fact appropriate to discuss the date as part of the March stocktakingexercise since that addressed the negotiations and the MFN exemptions review was separate from
them.
33. The representative of Mexico indicated that, although his delegation had proposed a formula
for determining the date for a second review, Japan's proposal was in principle acceptable, but that his
delegation needed time for further consideration.  He also observed that the paragraphs related to thereview did not refer to negotiations and that, even though the Annex prescribed that the exemptions
would be the subject of negotiations, the review pr ocess was a different matter.  The review had the
purpose of determining whether the conditions that led to the exemptions still existed, and thus it had
no linkage with the negotiations.
34. The Chairman said that considerable support existed for the proposal made by Japan, i.e. that
the next review take place no later than June 2004, but that a couple of delegations favoured reverting
to the issue at the stocktaking meeting of March.  Two delegations had argued that the MFN reviewwas separate from the negotiations and thus questioned the appropriateness of addressing the issue at
the stocktaking.  He said that the Council would revert to this item, including the question of the date
of any further review and any other outstanding issues, at its next regular meeting.
35. It was so agreed.
E. RECTIFICATION OF A TECHNICAL ERROR IN AN MFN EXEMPTION LIST –
COMMUNICATION FROM THE DOMINICAN REPUBLIC
36. The Chairman drew the Council's attention to the communication from the Dominican
Republic contained in document S/C/W/175 concerning the rectification of a technical error in its list
of Article II exemptions relating to legal services.  In that communication the Dominican Republic
was referring to a technical error in its list which had been there since the conclusion of the UruguayRound.  He recalled that the Council had adopted pro cedures for the certification of rectifications toS/C/M/51
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schedules of commitments but the question of certifying rectifications to MFN exemptions had not
been specifically considered.  He invited delegations' views on whether the same procedures that the
Council had adopted for schedules of commitments should also be applied to certify rectifications to
MFN exemptions.
37. The representative of the Dominican Republic explained that his delegation was requesting
that a technical error in the exemption for legal serv ices, which had been overlooked at the end of the
Uruguay Round, be corrected.  The exemption for legal services  erroneously indicated that it applied
to architects and engineers, while in fact it applied to lawyers.  Thus the correction would consist of
replacing the words "architects and engineers" for the word "lawyers". It was obviously a technical
mistake that his delegation hoped the Council woul d assist in correcting.  His delegation would
support any procedure the Council decided to be the most appropriate in that case.
38. The representative of Hong Kong, China observed that Chile had submitted a paper regarding
general issues arising from the review which might be relevant to the issue under consideration.  He
requested clarification as to whether the mistake in question had been contained in the original
submission by the Dominican Republic, as suggest ed by the second paragraph of the communication
requesting the rectification.  In replying the representative of the Dominican Republic said that the
request suggested that the original submission had been correct;  however, at that point in time it
served no purpose to determine at what stage of the process the mistake had been made, given that the
mistake had been overlooked anyway at the conclusion of the Uruguay Round and its rectification
was necessary.
39. The representative of Chile said that the real issue was not whether the Council was willing to
accept what the Dominican Republic was requesting but rather the lack of a provision in the GATS
for addressing the specific situation, i.e. rectif ication of an MFN exemption list, something that
Members needed to tackle.  The request from the Dominican Republic provided a concrete example,
to be added to other examples included in his delegation's paper, to be discussed under the following
item.
40. The representative of the United States said that his delegation would consider the request and
revert to it at the following meeting.  In respect to  the procedure to follow, it seemed that there was a
need for procedures to allow Members to modify, id eally lessen the impact of, their MFN exemptions.
As it had been suggested by other delegations, it might make sense to consider whether there should
be a counterpart to Article XXI with respect to MFN exemptions.  His delegation would be interested
in hearing views on the basis that would exist for creating such new procedures;  they were
appropriate in practice, but it was a question of ensuring that all delegations were comfortable with
their basis.
41. As to the content of the rectification requested by the Dominican Republic, the representative
of Japan indicated that in his delegation's view it represented a technical error that should be rectified.
As for the procedures, his delegation had raised the issue in its paper submitted during the previousmeeting as they saw the need to develop procedur es for the autonomous elimination of exemptions.
In that connection it would be helpful to discuss the paper submitted by Chile.
42. In addressing the Chairman's question regarding the applicability of the existing procedures to
rectification of MFN exemption lists, the representative of Argentina said that in principle those
procedures would be applicable by analogy.  It would be preferable to be pragmatic and avoid havinglengthy discussions on procedures, unless the Secretariat voiced reasons against that solution.  The
representative of the Secretariat said that there were no reasons preventing the application of the
procedures for certification of technical changes or improvements in schedules to rectifications of
MFN exemptions in cases where the rectification had no substantive effect, such as the one under
consideration, or where improvements in the situation would be introduced.  What was underS/C/M/51
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consideration were not procedures to allow MFN exemptions to be extended or to allow new ones to
be introduced.  As suggested by Argentina, having spent the time developing the certification
procedures it would be worthwhile using them and not recommencing the exercise.
43. The representative of the European Communities understood that the change proposed by the
Dominican Republic was one of a technical nature but on the question of using Article XXI
procedures his delegation reserved its position as further consideration was necessary.
44. The Chairman said that the Council would revert to this item at its following meeting.
45. It was so agreed.
F. ARTICLE II (MFN) EXEMPTIONS – GENERAL ISSUES ARISING FROM THE
REVIEW
46. The Chairman recalled that, at its last meeting on 6 October, the Council had received a
communication from Japan, Korea and Hong Kong, China contained in document S/C/W/173.  The
paper addressed a number of general issues raised during the review of MFN exemptions conducted
by the Council.  A number of delegations had welcomed the paper and thought that it had raised
several questions that needed to be addressed in multilateral discussions.  Some, however, were of the
view that certain issues might best be discussed between individual delegations.  The discussion had
been quite preliminary in light of the recent submission of the document and it had been thereforedecided that the Council would revert to it at this meeting.
47. The representative of Chile announced that his delegation had just submitted an informal
document, which related to point D of document S/C/W/173, i.e. procedures on autonomous
reductions or eliminations of MFN exemptions, a very important issue not only because of its legal
implications but also because of its impact on future negotiations.  The purpose of the informal paperwas to discuss procedures whereby the elimination or reduction of the scope of exemptions might take
place, possibly in the process of negotiations as stated in the Annex or at any other time.  The review
of the MFN exemptions had aimed to determine whethe r the conditions that had led to the need for an
exemption still prevailed and theoretically if the initial conditions no longer existed a Member could
eliminate the exemption.  However, no procedure existed in the GATS to that effect.  As a result ofthe review, certain Members had decided unilaterally to eliminate some of their exemptions and thus
it was necessary to determine how that would be done with legally binding effect.  Given that the
Annex on Article II Exemptions was part of the GATS, would a change of the MFN exemption list
constitute an amendment to GATS requiring the application of Article X of the WTO Agreement?
His delegation felt that the Council could explore the use of the mechanism provided for under
Article XXI:5 for the modification or rectification of commitments in those cases involving a
reduction on the scope of an exemption, which would allow the Council to certify whether theproposed change was in fact a reduction.  In the case of elimination of an exemption, Chile proposed
that the Council examine whether the procedure of simple notification, contained in paragraph 7 of
the Annex on Article II, could be applied.  Those alternatives should be the subject of a decision by
the Council and, furthermore, should result in a m odification of the Annex in order to incorporate
those procedures for the rectification, reduction or elimination of an exemption.  His delegationwanted to place those thoughts before the Council for its consideration.
48. Regarding reductions and technical rectifications of MFN lists, the representative of New
Zealand supported a pragmatic solution to the procedural question. Given the fact that the procedures
developed for Article XXI were pursuant to a decision of the Council, he could envision another
decision by the same body indicating that those procedures would apply mutatis mutandis  to the
reduction or technical rectification of MFN exemptions.  In relation to the withdrawal of exemption,S/C/M/51
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his delegation supported Chile's solution as contained in paragraph 7 of the informal paper, i.e. the
application of the procedure in paragraph 7 of the Annex.
49. The representative of Argentina reiterated his support for a pragmatic solution to avoid a
lengthy procedural discussion.  With respect to the elimination of an exemption, he concurred with the
content of paragraph 7 of the Chilean informal paper and with New Zealand's view that a notificationto the Council would be binding on the notifying Member.  A different situation would be the one
facing the Dominican Republic or that of those Members that referred to the possibility of reducing
the scope of an exemption, in which case the Council could decide that the procedures for certification
of technical rectifications and improvements of commitments would be applicable.  In relation to
exemptions, any other change was out of the question, given that the GATS was very clear that no
new exemptions, or the extension of the scope of existing ones, was possible.  The representatives of
Japan and Australia
 concurred with the procedural solutions suggested by the Chilean informal paper.
The representative of Hong Kong, China agreed with the previous speakers.  He announced the
submission of a paper elaborating on an issue that had been identified in the joint paper S/C/W/173,i.e. MFN exemptions that purport to grant less fa vourable treatment than that set out in specific
commitments.
50. The representative of Canada said that furthe r consideration of the proposed procedures was
necessary and suggested reverting to this issue at  the next meeting.  The representative of Korea
requested clarification as to whether the word "modification", in the second line of paragraph 6 of the
Chilean paper, meant "improvement".  The representative of Chile clarified that paragraph 6 referred
to Article XXI:5 which provided for the rectifications or modifications of schedules.  In suggestingthe application of that procedure, the following sentence utilised the term mutatis mutandis , in the
sense that the procedure for MFN exemptions would apply only to corrections and improvements of
the situation, as  those were the only possibilities.
51. The representative of Panama said that it was clear that all Members wanted to see a
reduction of exemptions to Article II.  He observed that the joint document S/C/W/173 referred to the
possible need to include exemptions in relation to maritime transport and his delegation had beenunclear as to what that meant.  The previous discussion had clarified that delegations supported the
elimination, rather than the inclusion, of MFN exemptions.
52. The representative of the European Communitie s said that the informal document presented
by Hong Kong, China on MFN exemptions that purport to grant less favourable treatment than in
specific commitments was still under considera tion.  However, in a preliminary manner, his
delegation had no difficulties with the position presented in that document.  Regarding document
S/C/W/173, his delegation had a few comments.  On  paragraph 8, his delegation concurred with the
need to clarify the situation of bilateral investment agreements.  Regarding paragraph 10, concerning
maritime services, his delegation had reservations as to the conclusions reached;  he inquired what
would happen when the MFN principle applied to maritime transport, i.e. at the conclusion of the
maritime negotiations.  On paragraph 11, on the procedure for autonomous reductions or eliminations
of exemptions, more consideration was necessary.  On paragraphs 12 and 13, regarding the durationof MFN exemptions, his delegation's understanding was that the Annex foresaw the possibility of
exemptions exceeding 10 years, although the principle was 10 years;  the reference to indefinite in a
list corresponded to the case where a Member wished to introduce an MFN exemption that exceeded
the normal duration.  On paragraph 18, regarding policies for the promotion of culture, the paper
seemed to indicate that Members would have to specify the cultural identity they wanted to protect,the means to be used, and justify why MFN exemptions were the only way to protect it;  his
delegations was concerned because that seemed to indicate a specific standard of justification to
qualify for the use of such MFN exemptions which would be higher than the normal standard.  The
Annex did not define criteria under which Members could introduce exemptions; on the contrary, itS/C/M/51
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appeared that it was up to Members to decide when it was appropriate to introduce an MFN
exemption.
53. Given the broad support that had been expressed for the proposals by Chile, the representative
of Japan suggested that the Secretariat prepare a draft decision by the Council to allow for the
adoption of those procedures as soon as possible.
54. The Chairman observed that there seemed to be convergence along the lines proposed by
Chile;  however, a couple of delegations had requested time for further consultation.  To avoid
prejudging the outcome of those consultations, he suggested postponing any request to the Secretariat
for a draft decision and revert to this issue at the next meeting.
55. It was so agreed.
G. NEGOTIATIONS UNDER ARTICLE X OF THE GATS ON EMERGENCY
SAFEGUARDS
56. The Chairman drew Members' attention to document S/C/W/184 which contained a
communication from the Chairman of the Working Party on GATS Rules proposing that the Council
adopt the decision on the extension of the deadline for the negotiations on emergency safeguard
measures under Article X of the GATS.
57. The Chairman of the Working Party on GATS Rules, Mr Tony Sims of the United Kingdom,
stated that the Decision was needed because the mandate for the negotiations on emergency safeguard
measures expired on 15 December 2000.  He indicated that all Members regretted that it had been
necessary to extend the deadline, recognized that progress had been made and hoped that no further
extensions would be required.  He thanked delegations for their flexibility during his consultations.
58. The Chairman proposed that the Council adopt the draft decision.
59. The Council so decided.
60. Whilst supporting Members' desire to extend the deadline of the negotiations on emergency
safeguards until 15 March 2002 and not wishing to prejudice the decision just adopted by the Council,
the representative of Panama said that the legal foundations of the decision were doubtful.  He stated
that paragraph 1 of Article X contained an obligation to negotiate and a deadline, and paragraphs 2
and 3 contained special provisions for the modification of commitments, as well as the date when
such special provisions ceased to apply.  Paragraphs 1 and 2 of the decision in S/C/W/184 aimed to
extend the duration of the obligation to negotiate and of the special provisions for the modification of
commitments in Article X, thereby modifying Members' rights and obligations under one of the WTO
Agreements.  However, specific procedures had to be followed to amend a WTO Agreement, which
he doubted had been followed with respect to the safeguard decision.  The fact that two similar
decisions had been taken in the past was no justification for the current one, as the WTO Agreementswould prevail over any non-conforming decision taken, no matter how many times, by a WTO body.
However, he supported the wish to continue negotiations on emergency safeguard measures;
Members could decide at any time to negotiate over any issue during whatever period and, even if he
questioned the validity of the process which had been used, he said that, in the circumstances, the
decision just adopted was the clear expression of Members' commitment to negotiate in good faith onsafeguards, and was as such binding.  He hoped that, were it necessary to negotiate beyond the 15
March 2002 deadline, the Council would find an alternative procedure to fulfill Members' wishes.
The lesson to be drawn from this decision was that occasions existed when Members' desire to take a
course of action resolved concerns about strict compliance with procedural requirements.  This had to
be borne in mind when, in the context of other discussions in the WTO, certain Members argued thatS/C/M/51
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decisions, which would fulfil the aspirations of others, could not be taken because they would involve
a modification of the WTO Agreements.  The representative of the Dominican Republic concurred
and said that he would recall the decision just adopted by the Council whenever the argument wasraised that certain issues could not be resolved because they would require amending the WTO
Agreements.
61. The representative of Egypt said that his delegation attached great importance to reaching an
agreement on emergency safeguards and would have favoured a shorter deadline, but was nonetheless
pleased with the adoption of the decision.  He stressed that substantial progress had been achieved in
the Working Party on GATS Rules, and hoped that the political will would be forthcoming so that an
agreement could be reached by 15 March 2002.
62. The Council took note of the statements.
H. RE-OPENING OF THE FIFTH PROTOCOL FOR ACCEPTANCE BY KENYA AND
NIGERIA
63. The Chairman drew the Council's attention to two communications, from the delegation of
Kenya and from the delegation of Nigeria, contained in documents S/C/W/176 and 177 respectively,
requesting the reopening of the Fifth Protocol on financial services for their acceptance.  He also drew
Members' attention to a draft decision prepared by the Secretariat for adoption by the Council,contained in document S/C/W/178.  This draft had been prepared along the lines followed in previous
similar decisions by the Council, with the only difference that it applies to two Members.  Since the
substance of the decision was identical for both cases, namely the re-opening of the Protocol for
acceptance, it had not seemed necessary to have two separate decisions.
64. The representative of Kenya said that the financial services sector in Kenya had remained
fairly open over the years, in line with the government's programme aimed at harnessing the potential
of the services sector so as to foster economic development and improved standards of living.
Kenya's participation in the financial services negotiations in 1997 had been viewed as necessary in
order to underpin the government's reform programme and in recognition of the role that an efficient
and modern financial services sector could play in attaining economic growth and developmentobjectives.  The internal process of ratification of the results of the negotiations had taken longer than
expected.  He thanked Members for their understanding and stressed that the delay had not resulted
from hesitance in giving legal effect to the commitments undertaken.  He requested that the Fifth
Protocol be re-opened for acceptance.
65. The representative of Nigeria explained that Nigeria's inability to conclude the domestic
ratification process for early acceptance of the Fifth Protocol had been due to the peculiar political
circumstances in his country, which had only recently returned to civil democratic governance.  Inspite of the difficulties encountered, concerted efforts had been made to bring the ratification process
to an early conclusion, and Nigeria's present request that the Protocol be re-opened for acceptance was
testimony to those efforts.  The Fifth Protocol was one of the first pieces of legislation to be enacted
by the National Assembly.  This was an indication of Nigeria's commitment to the principles of the
multilateral trading system as well as of the impor tance that the government attached to its WTO
obligations.  It sent a message to Nigeria's trading partners on the efforts being made at putting in
place the right economic climate, restoring investor confidence, boosting economic growth and taking
advantage of its rights in the WTO.  The government had also recently concluded a domestic review
of its trade policy, to further streamline it in line with its WTO obligations and for purposes of greater
transparency and predictability.  Nigeria was now in a position to formally accept the Fifth Protocoland he therefore requested, thanking Members for their understanding while the domestic ratification
process lasted, that it be re-opened for acceptance.S/C/M/51
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66. The Chairman proposed that the Council adopt the draft decision to re-open the Fifth Protocol
for acceptance until 31 December 2000.
67. The Council so decided.
I. PROPOSAL FOR A CO-OPERATION AGREEMENT WITH THE UNIVERSAL
POSTAL UNION (UPU)
68. The Chairman recalled that, at its meeting of 25 February 2000, the Council had received a
communication from the Universal Postal Union (UPU ), circulated as Job No. 865 dated 16 February
2000, containing a proposal by the UPU that a cooperation agreement in the form of a memorandum
of understanding be concluded between the UPU and the WTO.  The Council had taken note of the
communication without further discussion.  The S ecretariat had recently received a communication
from the UPU Secretariat containing a draft "Memorandum of Understanding on cooperation between
the Universal Postal Union and the World Trade Organization", contained in a note by the Secretariatin document S/C/W/180.
69. A representative of the UPU Secretariat noted the importance of WTO regulations for the
UPU and the postal sector in general, and said that the two international agreements should be
compatible.  He explained that the UPU Membership comprised all WTO Members plus a few other
countries.  In 1999, the UPU Plenipotentiary had decided that the UPU should seek a co-operationagreement with the WTO, along the lines of the IT U-WTO co-operation agreement, in the form of a
memorandum of understanding (MOU).  The UPU C ouncil of Administration approved the draft
MOU on 19 October 2000.
70. The representative of Pakistan reserved his delegation's right to revert to the draft MOU and
raised a concern of a procedural nature.  In the course of the General Council discussion on the co-
operation agreement between the ITU and the WTO, his delegation had stated that such agreements
should not be signed before observer status had been granted.  Paragraph 2 of the draft MOU granted
observer status to the UPU;  he noted that th e UPU was one amongst many organizations still
awaiting a decision on their request for observership and that the co-operation agreement with the ITU
should not set a precedent in this respect.  He also recalled that at its last meeting the Council haddecided that, given that Members were still awaitin g guidance from the General Council with respect
to the issue of observership, and pending the outcome of such discussions, any future requests for
observer status would be circulated to Members, added to the list contained in document
S/C/W/19/Rev.4, but not inscribed in the agenda of the Services Council.
71. The representative of Mexico echoed Pakistan's comments.  He said that the logical procedure
would involve getting observer status first, to al low for a preliminary exchange of work, and then
possibly concluding an agreement of larger scope.  The representative of Malaysia said that the issue
had systemic implications and noted that the question of observership was still pending.  In a
preliminary manner, the representative of Egypt supported Pakistan's comments;  he asked the
representative of the UPU Secretariat if the objectives of the proposed MOU could be achievedthrough different means.
72. The representative of Hong Kong, China said th at his delegation was still examining the draft
MOU, but sought clarification from the representative of the UPU on the reason for the lack of
balance in the treatment of UPU and WTO observers in points 2 and 3 on page 3 of document
S/C/W/180.
73. The representative of the UPU Secretariat explained that the request for a co-operation
agreement had originated from governments of countries members of the UPU through the
Plenipotentiary as the best way of formalising co-ope ration.  Its main aim was for the UPU to have theS/C/M/51
Page 12
possibility of being an observer to WTO meetings, of exchanging views and receiving documents.
With respect to the question raised by Hong Kong, China, he said that any imbalance was
unintentional and that obtaining observership for WTO representatives to more UPU meetings would
not be problematic.
74. Concluding the discussion on this item, the Chairman said that the Council would take note of
the comments made and revert to this item at a future meeting.
75. It was so agreed.
J. OTHER BUSINESS
76. The Chairman recalled that, on 17 July 2000, the General Council had invited the four
subsidiary bodies to pick up where they had left off in their work on electronic commerce and, within
their respective spheres of competence, identify cross-sectoral issues and report back to the General
Council at its meeting in December 2000.  Pursuant to that decision, the matter had been taken up atthe previous Council meeting.  Members had held a brief discussion and it was agreed that the
Chairman would draw up a report to the General Council, on his own responsibility, reflecting the
general mood of the discussion.  It had also been agreed that he would share the report with
delegations before presenting it to the General Council.  The report, contained in document S/C/13,
was brief, factual and did not prejudge any future decisions.  He suggested that Members take note ofthe report.
77. The Council took note.
78. A representative of the WTO Secretariat informed Members that the Electronic Database for
Consolidated Schedules of Commitments, which contained Members' schedules in a form allowing
for sophisticated search and analysis, would be available to delegations on the Internet by mid-December.  The WTO Members' web-site would contain an icon called "Services electronic
schedules", which Members could access using their DDF username and password.  Given that
schedules had required special formatting to allow for search facilities, the database was only
available in English;  countries which had acceded to the WTO in 2000 were as yet not included.  The
programme had a "help" file, as well as a contact e-mail address;  a demonstration meeting could alsobe organized if delegations were interested.  Each delegation would also receive two copies of the
CD-Rom version of the database.  He recalled that the schedules in the database had no legal status.
A number of delegations expressed interest in a demonstration meeting.
79. The representative of Mexico requested a correction of the information contained in
document Job No. 4427/Rev.1 on enquiry and contact points.
80. The representative of the European Communities drew delegations' attention to a
communication from his delegation on the electronic commerce Work Programme, circulated in
document S/C/W/183, and said that he looked forward to a fruitful discussion at the following
Council meeting.
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