From 3-7 June, Members convened at the WTO Council for Trade in Services (CTS) and its subsidiary bodies for a short one-week services cluster to advance discussions on sectoral proposals as well as on horizontal issues such as assessment of services liberalisation, credits for autonomous liberalisation, the development of an emergency safeguard measure (ESM) and the development of disciplines for domestic regulation. As expected by observers, Members did not make much progress on the horizontal discussions, because they were busy at their capitals and missions preparing for bilateral sessions, which commence in early July after initial requests have been tabled.

Horizontal issues

As Members failed to adopt the recent Chair's negotiating text on autonomous liberalisation at a 29 May informal special (negotiating) session of the Services Council (see BRIDGES Weekly, 4 June 2002), the related debate was not resumed during the 5-6 June formal negotiations as "just too many controversies remained," sources commented. In particular, Members are divided on three points: firstly, whether commitments made by acceding countries could be eligible for credits; secondly, whether developing country Members as well as developed countries could request credit from trading partners; and thirdly, whether or not credits should only be given in the services sector or, for example, in goods as well. Sources reported that the CTS Chair, Chile's Ambassador Alejandro Jara, did not indicate any date for issuing a revised draft but explained in his statement to the Council how he would undertake consultations with Members in an effort to overcome disagreement on the three contested issues.

Sources further reported that Pakistan tabled a new informal paper on assessment, building on the points raised in a previous joint submission by Cuba, Pakistan, Senegal, Sri Lanka, Tanzania, Uganda, Zambia and Zimbabwe (S/CSS/W/131). In this joint communication, Pakistan et al. argue that the CTS should carry out an assessment of services trade with a special focus on whether or not services trade liberalisation has so far achieved the objectives of Article IV of the General Agreement on Trade in Services (GATS) (Increasing Participation of Developing Countries).

Sectoral negotiations

In the 2-day CTS special session which concluded on 6 June, Members further addressed new negotiating proposals by Cuba -- one on tourism and travel-related services (TN/S/W/1) and another on telecoms (TN/S/W/2) -- together with four March proposals on environmental and financial services, as well as on energy and construction (S/CSS/W/142- 145). Members welcomed the new submissions and asked preliminary questions on certain points of the four earlier submissions, but did not enter into substantial discussions on any of the proposals.

Under the agenda items 'submission of initial requests', the CTS Chair presented some preliminary considerations on how to structure the multitude of bilateral negotiations to be conducted after the delivery of the initial requests in end-June. Further discussions on the issue are expected for the next services cluster from 22-26 July.

Subsidiary bodies

The Working Group on GATS Rules -- one of the four subsidiary bodies to the CTS -- met on 3 and 7 June to continue its discussions on the desirability and feasibility of inscribing an emergency safeguard measure (ESM) in the GATS as mandated by Article X as well as by the so- called Guidelines for services negotiations. Discussions mainly focused on a new informal paper tabled by Australia as well as an end-January EC communication (S/WPGR/W/38, searchable at http://docsonline.wto.org/gen_search.asp) on a modal ESM application.

In its submission, the EC considered the issue of whether it would be technically possible to develop a "uniform set of rules" applying to all four modes of service supply or whether a rather "mode-specific solution" was required. The EC argued that a cross-modal approach should not be precluded from the discussions, as it was often difficult to separate a safeguard under one mode from another mode. Furthermore, the paper identified several procedural aspects which could be tackled across the board, whereas other, rather normative elements, were considered to require a mode-specific approach.

Despite the EC's detailed analysis, a South American trade source contested the EC's good faith regarding an objective discussion on the workability of an ESM, stating that "the EC, by citing so many difficulties and systemic problems, does actually imply that an ESM is rather impossible!" According to observers of the negotiations, trading partner Uruguay critically commented on the EC's contribution to the ESM debate by highlighting provisions in several free trade agreements (FTAs) with EC participation as well as the EC treaties themselves which were all said to contain safeguard measures. "If a safeguard is possible in other EC trade agreements, why should it be such a problem in the GATS context then?" the source asked.

Australia, on the other hand, tabled an informal paper in which it mainly focused on procedural aspects of an ESM, but not on their feasibility, as in the EC submission. As sources reported, Australia proposed a two-model approach: under the first model, consensus amongst the WTO Membership was required prior to the application of a safeguard measure; the second model, so the source explained, outlined a procedure according to which a Member applying an ESM would be required to notify the safeguard measure as well as to consult with the Member affected by the ESM. It was reported that Members especially welcomed the second model, as it was seen as a productive contribution to the ESM discussion.

In parallel, the Working Group on Domestic Regulation (WPDR) met on 3 and 7 June to discuss, inter alia, whether Members should establish a timeframe for the negotiations on disciplines for domestic regulation under GATS Article VI:4. In a recent note, WPDR Chair Sergio Dos Santos, Brazil, proposed March 2003 as the initial benchmark for the development of the basis and general shape of possible future disciplines. Sources, however, reported that Members such as the US and several developing countries had met the Chair's proposal with some resistance.

As paragraph 16 of the Doha Declaration provides that initial offers are to tabled by 31 March 2003, Members are under pressure to further develop ideas on future disciplines before that date so as to be able to address the issue of domestic regulation on the multilateral level. Otherwise, sources caution, the question on how to discipline regulatory elements could be left to the bilateral negotiations under the request/offer mechanism. The first requests need to be submitted by 30 June this year.

ICTSD reporting.