Thomas Chan (Hong Kong), Chair of the Working Party on GATS Rules (WPGR), has warned that WTO Members are reaching a stalemate in the negotiations on a possible emergency safeguard measure (ESM) for the services sector. According to the latest Chair's report (S/WPGR/9, searchable at http://docsonline.wto.org), it is unclear that the current mode and pace of discussions in the WPGR would enable negotiations to be finalised by the March 2004deadline. Despite ongoing discussions in 2002 and 2003 on the elements for an ESM and its feasibility and desirability, fundamental differences remain among Members. Association of Southeast Asian Nations (ASEAN) states are the demandeurs for an ESM, while some Members, such as the EU, have questioned its feasibility. These differences have prevented further work on common elements for an ESM in services and ultimately the preparation of a draft text. In this regard, the Chair stressed the need for Members to engage substantively in order to reach an outcome by the deadline, irrespective of its direction. In the absence of political will, it seems that the WPGR would be unable to finalise negotiations under article X of the GATS, which would also affect negotiations on subsidies and government procurement. While the original deadline for concluding negotiations on the ESM was 1 January 1998, it has been extended several times, most recently in March 2002 (see BRIDGES Weekly, 19 March 2002).

WPGR reviews checklist of subsidies issues

According to the Services Negotiating Guidelines (S/L/93), WTO Members "shall aim to complete negotiations on services subsidies under Articles XV of the General Agreement on Trade in Services (GATS) prior to the conclusion of the services negotiations on specific commitments". In undertaking this work, the WPGR recently revised its checklist on issues in subsidies negotiations, so as to add focus and add new discussion elements. The new checklist on subsidies (JOB (03)/57) includes the following new issues:

*definition of subsidy -- the need for a definition and possible way to categorise services subsidies;

*trade distortive subsidies -- concepts relevant to what should be regarded as trade distortive subsidies, including specificity, public policy objectives, nature of subsidies and permissible or non- actionable subsidies; and

*disciplines to be developed -- consideration of the appropriateness of countervailing procedures.

This new list of issues could provide impetus to negotiations on differentiating the types of subsidies that governments can use. It could also lead to more emphasis on the need to analyse public policy objectives when designing new disciplines on subsidies and services. The inclusion of consideration of whether countervailing procedures are appropriate or not could open the door to discussion of alternatives to the WTO Agreement on Subsidies and Countervailing Measures framework.

ICTSD reporting.