REPORT OF THE MEETING HELD ON 7 december 2023

Note by the Secretariat[1]

Addendum

As agreed at the meeting of the Council for Trade in Services held on 26 November 2004 (_S/C/M/75), the statements relating to the modification or renegotiation of specific commitments pursuant to Article XXI of the GATS, which were contained in an informal document, are now circulated as an addendum to the meeting report.

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This document contains statements made by Members of the Council for Trade in Services under item H (Notifications pursuant to GATS Article XXI) of the agenda contained in _WTO/AIR/CTS/37, relating to notifications made by Australia and Canada pursuant to Article XXI of the GATS (documents _S/SECRET/13 and _S/SECRET/14).

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1  ITEM H: NOTIFICATIONS PURSUANT TO GATS ARTICLE XXI

1.1.  The Chairperson noted that two notifications pursuant to GATS Article XXI on "Modification of schedules" had been received, respectively by Australia (contained in document _S/SECRET/13) and Canada (contained in document _S/SECRET/14). Paragraph 1 of the "Procedures for the Implementation of Article XXI of the GATS" contained in document _S/L/80 stipulated that "[a] Member intending to modify or withdraw a scheduled commitment in accordance with Article XXI (the "modifying Member") shall transmit a notification to that effect, no later than three months before the intended date of implementation of such modification or withdrawal, to the Secretariat which will distribute the notification to all other Members in a secret document. The intention by a Member to modify or withdraw scheduled commitments shall be included in the agenda of the next meeting of the Council for Trade in Services." Since the notifications were "Secret" documents, they were not contained in the pack of documents for the meeting, but each delegation had received a numbered copy. The record of Members' statements under this agenda item would be circulated in an informal document, to be re-issued as an unrestricted addendum to the minutes of the meeting upon certification of any changes to the relevant Schedules of specific commitments.

1.2.  The representative of Australia stated that, pursuant to Article XXI:1(b) of the GATS, Australia had notified Members of its intention to modify its Schedule of specific commitments to incorporate new additional commitments relating to services domestic regulation in those sectors in which Australia had already made commitments, for the benefit of all Members’ services suppliers in respect of the transparency and efficiency of regulatory frameworks as they related to services.

1.3.  Australia had earlier initiated the certification of these additional commitments under the _S/L/84 procedures on 16 March 2023. In accordance with paragraph 4 of _S/L/84, and pursuant to the notification circulated on 17 November 2023 (_S/SECRET/13), Australia had now initiated the certification of these commitments under the _S/L/80 procedures.

1.4.  Australia intended to implement the additional commitments no earlier than three months from the date of its notification, in accordance with GATS Article XXI:1(b) and paragraph 1 of the _S/L/80 procedures. Australia was ready to engage constructively with Members regarding its notification and the improved additional commitments it sought to undertake.

1.5.  The representative of Canada noted that, in December 2022, her delegation had initiated certification under the _S/L/84 procedures to bring into force the Joint Initiative on Services Domestic Regulation through the unilateral improvement of its Schedule of specific commitments.

1.6.  Canada had now initiated the other option built into WTO procedures for Members to modify their commitments under the GATS. As a result, all Members had received Canada’s notification relating to GATS Article XXI on 28 November 2023. This standard procedural step taken unilaterally was a continued effort to bring the Joint Initiative on Services Domestic Regulation into force.

1.7.  The representative of India stated that her delegation took note of the notifications submitted by Australia and Canada pursuant to GATS Article XXI under the _S/L/80 procedures. In these notifications, both delegations had informed of their intention to modify their respective Schedules to incorporate new specific commitments relating to services domestic regulation as set out in document _INF/SDR/2. Both Australia and Canada had earlier initiated the certification of these additional commitments under the "Procedures for the Certification of Rectifications or Improvements to Schedule of specific commitments" as contained in document _S/L/84. India had raised objections to these certification requests, and, on that basis, it had held consultations with Australia and Canada. However, these consultations had not addressed the concerns raised by India. Therefore, India had been unable to lift its objections to the certification requests by Australia and Canada.

1.8.   India had consistently outlined its concerns in the meetings of Working Party on Domestic Regulation (WPDR) held between December 2019 and March 2022, as well as during the consultations under the _S/L/84 procedures. India had raised concerns regarding the Joint Initiatives which were subverting the fundamental principles of the WTO, and undermining the existing multilateral mandates arrived at through consensus. Further, in the context of the Joint Initiative on Services Domestic Regulation, India had noted that Members' right to schedule additional commitments in their Schedules under GATS Article XVIII could not directly or indirectly amount to a variation – i.e. dilute, amend or clarify – any of the provisions of the GATS.

1.9.  India wished to draw Australia' and Canada's attention to the fact that the present outcome on domestic regulation had started with the Joint Ministerial Statement issued in December 2017, which had set out the aim of concluding disciplines on domestic regulation pursuant to the mandate contained in GATS Article VI:4. The valuable multilateral work and the mandate of the WPDR had been acknowledged in the Ministerial Statement. The Reference Paper on Services Domestic Regulation (contained in document _INF/SDR/2) also acknowledged the objective of developing disciplines pursuant to GATS Article VI:4. Since Australia and Canada were seeking to bring forward the GATS Article VI:4 mandate, it was only appropriate to seek approval of the WPDR.

1.10.  India also noted that the scope of undertaking additional commitments under GATS Article XVIII was broader than that of GATS Article VI:4. In this light, while additional commitments could be a mechanism to undertake commitments pursuant to Article GATS VI:4, India considered that this could not be the sole reason to bypass the WPDR. Therefore, India urged Australia and Canada to seek approval of the WPDR and not to undermine the process and body multilaterally mandated as per GATS Article VI:4 to perform this role.

1.11.  The representative of South Africa took note of the notifications submitted by Australia and Canada. South Africa's concerns were as follows: firstly, the _S/L/84 procedures had been triggered earlier in 2023 and included consultations with Australia and Canada during which South Africa had posed specific questions but had not found reasonable responses. Despite this, consultations with other Members had proceeded to find middle ground and South Africa had found a solution pending imminent finalization and implementation. South Africa assumed that, based on the notifications just circulated by Australia and Canada, this imminent solution would not be applicable to these two delegations.

1.12.  Secondly, South Africa was concerned that Australia and Canada had not met the requirements set out in the of _S/L/80 procedures, which stated that the notifications shall include a list of commitments intended for modification or withdrawal, and that for each such commitment the notification shall indicate whether the intention is to modify or withdraw in whole or in part a commitment and the exact nature of the proposed modification. The generic horizontal schedule circulated by Australia and Canada did not provide the required details with respect to how the proposed commitments modified the specific scheduled commitments in whole or in part. South Africa stated that the wording of the _S/L/80 procedures reinforced that Schedules were meant to cover specific sectorial commitments and did not extend to generic rules. As such, the notifications by Australia and Canada did not comply with paragraph 2 of the _S/L/80 procedures as these did not indicate the exact nature of the specific commitments which were intended for modification.

1.13.  Thirdly, South Africa stated that the horizontal section modifications intended by Australia and Canada referred to the content of the Joint Initiative's Reference Paper which added new general rules under the GATS. The Chair's Note acknowledged that a number of the Reference Paper disciplines related to existing rules under Part II of the GATS and were designed to improve Members' regulatory frameworks. This confirmed the intention of the Reference Paper disciplines to interact with or expand on Part II of the GATS, which covered general obligations and disciplines. South Africa noted that the scope of the _S/L/80 and _S/L/84 procedures assumed that entries in Schedules, and changes to such entries, related to one of the three rules under GATS Article XX concerning specific sectoral commitments. The objective of the _S/L/80 and _S/L/84 procedures was to allow Members to further liberalize sectoral commitments in ways that would not disrupt the balance achieved in the request-offer negotiations and that had been adopted in binding Schedules. In this light, the use of the procedures beyond those purposes, as in this instance, importing into the GATS new rules could be classified as an amendment to Part II of the GATS.

1.14.  Both the _S/L/80 and _S/L/84 procedures were clear on the modifications of Schedules and did not include the making of general rules to apply to trade in services. The procedures had never been intended for the purpose of making new rules. The notifications by Australia and Canada constituted a misuse of GATS Schedules and the procedural rules stipulated in the _S/L/84 document. As such, South Africa considered the misuse, including non-compliance with paragraph 2 of the _S/L/80 procedures, as affecting its interests under the GATS.

1.15.  The Chairperson suggested that the Council take note of the statements made.

1.16.  It was so agreed.

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