MULTILATERAL TRADE RESTRICTED

NEGOTIATIONS MTN.GNS/9
THE URUGUAY ROUND 6Special
AugustDistribution
1987

Group of Negotiations on Services

NOTE ON THE MEETING OF

29 JUNE - 2 JULY 1987

1 The Group of Negotiations on Services held its eighth meeting under

the Chairmanship of Ambassador F. Jaramillo (Colombia) on 29 June, 30 June,
1 July and 2 July 1987.

2. As indicated in airgram GATT/AIR/2442, the first two days of the

meeting were devoted to a consideration of statistical issues in trade in
services. During; the remaining two days the GNS discussed the five
elements listed in the programme for the initial phase of negotiations
(MTN.GNS/5). Regarding the question of observer status for international
organizations, the Chairman indicated that after further informal
consultations, it seemed to him that there was still a divergence of views
on this matter. He hoped that the issue could be settled by the Trade
Negotiations Committee which was scheduled to meet on 3 July 1987.
Statistical issues

3. Referring to document MTN.GNS/W/5 and Addenda 1 and 2, containing the

replies of all fourteen international organizations contacted concerning
their work on data in services, the Chairman said that the additional
replies did not alter the preliminary assessment he made at the last
meeting (paragraph 18 of MTN.GNS/8). As had been agreed at the last
meeting, representatives of the United Nations Statistical Office (UNSO),
the United Nations Centre on Transnational Corporations (UNCTC), the United
Nations Conference on Trade and Development (UNCTAD) and the International
Monetary Fund (IMF) had been invited to attend this meeting of the GNS on
an ad-hoc basis to describe the work carried out by them on statistics on
trade in services and to provide advance written statements on this
subject. The organizations mentioned had confirmed their attendance and
their statements had been circulated in MTN.GNS/WJ9 and Addendum 1. In
addition, communications from Australia (MTN.GNS/W/11), Canada
(MTN.GNS/W/10) and Poland (MTN.GNS/W/15) had been circulated.
4. Before hearing the presentations of the four international
organizations the Group had an exchange of views on statistics in the area
of trade in services. One member said that improving the measurement of
services statistics was a long-term problem. Her authorities were
currently developing a data base for the various services industries and
improving the recording of internationally traded services for the
preparation of the balance of payments accounts. One member pointed out
that the problems faced on statistical issues were similar in all

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administrations. Another member said that services statistics were now

needed for negotiations rather than balance of payments reporting.
Participants in the negotiations should exchange information and experience
they had in this field. While he strongly supported the improvement of
services data, he was of the opinion that problems in trade in services
could be tackled also without a complete data base. One member noted that
the purpose and the scope of the negotiations should be kept in mind when
referring to services statistics. Since balance of payments statistics
were not fully satisfactory for present purposes, he questioned whether
negotiating countries would want to accept these statistics for services
negotiations. Priority should be given to defining the scope of the
negotiations, that is the services transactions to be governed by a
multilateral regime.
5. One member said that there was need for a general working hypothesis
and an agreed definition of services. Regarding statistics, there should
be an agreement on how to compile data with a view to quantifying services
transactions across borders. The GNS should define the areas of priority
in developing a suitable data base. UNCTAD which had already some
experience in this field should be considered as a forum for carrying out
such work. This view was supported by several members of the Group. One
member said that there existed no detailed figures in the category of
"other services" in the IMF balance of payments statistics, which covered
various types of services of particular interest to the Group. New
methodologies should be developed to see how these services influenced the
global flows of trade in services.
6. One member said that although negotiators were conscious of the
limitations of existing services statistics, the objective should
nevertheless be to increase transparency in respect of all elements of the
programme for the initial phase of the negotiations. One Member emphasized
that expeditious work was needed in the GNS in order to remedy the current
deficiencies in services statistics in areas such as new computer services,
construction and engineering, where services were linked to goods and
services produced by affiliates and branches abroad. Another member said
that his authorities would respond positively to requests from countries
for assistance in improving their services statistics. In his view there
was need for a consensus as to the forum where work on the improvement of
services statistics should take place. As regards the sectoral coverage of
services, it was important to agree on a working hypothesis. Work on
statistics by outside organizations would be welcome, but the sectoral
coverage should be negotiated within the framework of the GNS.
7. The meeting continued with the representatives of UNSO, IMF, UNCTAD
and UNCTC present. Referring to their written communications circulated in
MTN.GNS/W/9 and Add.1, the representatives of these organizations
introduced briefly the work carried out by them. The representative of
UNSO said that given that services statistics were unsatisfactory, UNSO had
launched in 1965 a programme to improve these statistics. Three aspects
received high priority in the general programme of work, namely (i) the
elaboration of activity and product classifications within the services
industries, (ii) the improvement of the quantity and price index
computations for services, and (iii) the improvement of the measurement of
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the external trade of services. Although financial resources were limited,

UNSO would circulate a questionnaire to countries to collect more
information on national practices in order to improve the methodology used
in recording services statistics. On the basis of the information
obtained, a report would be prepared and considered by an expert group
which would review the nature and scope of possible draft guidelines in
this field.
8. The representative of IMF said that the Fund was working with a number
of international and regional organizations in harmonizing methodologies in
several fields of statistics, including the balance of payments and the
System of National. Accounts. The Fund had planned to revise the existing
IMF (Balance of Payments Manual in conjunction -with the International
Secretariat Working Group on the Revision of the United Nations' System of
National Accounts. Early this year, the Fund had sponsored an expert group
on external sector transactions. The expert group agreed that a standard
list of services items be used as the basis of a harmonized presentation of
statistics on international trade in services, both in the balance of
payments and in the national accounts. Tentative proposals on
classification of services in the balance of payments would be considered
at a meeting to be held late this year.

9. The representative of UNCTAD said that his organization was a user

rather than a producer of statistics. The existing data base on services
comprised internationally comparable data in the area of trade, production
and employment in services. The objective of improving this data could
only be achieved over the long-term by building upon the work at the
national level to refine such data. It was desirable to establish a forum
for the exchange of information. This would include data on trade in
services (at a more disaggregated level than currently available) provided
by those countries which had made the most progress in overcoming the
inadequacies of the current system. A practical data base could only be
established through international cooperation in the exchange of
experiences and methodologies coupled with technical assistance to
developing countries.
10. The representative from UNCTC said th~at the Centre collected data on
foreign direct investment (FDI) and transnational corporations. The
sources of information were the balance-of-payments statistics of the IMF,
national statistics and corporate reports. The disparities among countries
concerning definitions, coverage, and methods of compilation of FDI placed
severe constraints on efforts to collect, compare and analyse flows and
stocks of such investments at the international level. For example,
practical problems arose with the various definitions of foreign direct
investment adopted by governments and international organizations. The
Centre used the IMF definition of FDI, where 10 per cent or more of equity
in an overseas investment was considered to be direct investment.
According to this representative, non-equity forms of FDI, such as
franchising and licensing, had increased in importance in recent years
Furthermore, due to technological, developments, in particular in
telematics, it could be foreseen that the tradeability of services might
increase in the long term and that the amount of FDI might decrease as a
consequence.
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11. Referring to the section on statistical problems and methodologies of

the analytical summary (MDF/7/Rev.2), one member recalled that the national
study of the United States had indicated that the paucity of comprehensive,
disaggregated, internationally comparable data on services trade
complicated efforts to examine the specific effects of such trade and to
place issues in proper perspective for resolving existing and emerging
problems in services trade. This member also said that since it was not
the purpr3e of the Group to set up a data base, cooperative work should be
launched at regional and international levels for improving statistics with
the association of developing countries. Although services statistics were
inadequate, they were the necessary underpinning for negotiations, since it
was important to know what was the net impact of the negotiations on the
economy. The communications circulated by the representatives of the four
international organizations showed that while existing statistics served a
useful function, they might not be directly pertinent to the work of the
Group. A great deal of effort in international cooperation was urgently
needed.

12. One member said that although his authorities were aware that it would.
not be possible to completely solve statistical problems in the Group, it
was evident that it would be impossible to proceed in the negotiations
without sufficient data to allow a better understanding of the issues.
Even if the four organizations were conscious of the existing problems of
collecting and processing information relating to production, use and trade
in services, they were not in a position to solve them. In her country
where exchange controls were applied, the impact of services activities on
the balance of payments was known since all services imports paid for in
foreign currency were registered by the official banking system. The same
did not apply to services exports to the extent that the profits earned
abroad were not systematically sent back. Efforts should be directed
toward obtaining a deeper knowledge of the economic behaviour of each
services sector. She invited the four representatives to reply in writing
to a list of preliminary questions on services statistics, drawn up by a
group of governmental officials from various national agencies in her
country. Another member said that the international meetings which had
been held so far on services statistics did not cover sufficiently the
concerns of developing countries. There was no adequate representation of
developing countries and this geographical imbalance should be corrected as
soon as possible.

13. One member said that for the purpose of the negotiations in the Group,
there should be a two-stage process, namely a stage for classification and
methodology and a stage for compilation and measurement. Reference was
made to the national study presented by his authorities, where it was
stated that services data would never have the same precision as goods
data. He added that the discussion and resolution of most of the important
conceptual trade issues in services could proceed on the basis of the
currently available statistical data. Another member said that since the
lack of viable statistics would prevent the use of traditional negotiating
techniques regarding the exchange of quantifiable concessions,
non-traditional negotiating techniques were likely to be necessary. He
supported the view that, although better statistics were not a sine qua non
for negotiations, they would nevertheless enhance the process.
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14. In reply to questions raised by members of the Group, the

representative of UNCTC said that no links had been set up between UNCTC
and UNSO in the area of services statistics, since UNSO did not deal with
FDI. It 'was worthwhile to consider the participation of his organization
in UNSO's work relating to the classification of services activities. The
coordination among international organizations could be intensified and
institutionalized. Regarding the measurement of sectoral flows, he
stressed that a great number of difficult questions had to be solved,
including the improvement of the collection of data from private
corporations. In comparison, it was somewhat easier to measure the
relative importance of FDI for the delivery of services to foreign markets.
For-example, the value of services sold in the United States by foreign
affiliates of non-United-States corporations was about four times the value
of United States services imports. Estimates for the United Kingdom showed
similar results.
15. In response to a question on the concordance between balance of
payments statistics and national accounts statistics, the representative of
the IMF said that work on the United Nations System of National Accounts
and the Balance of Payments Manual would presumably lead to a standard list
of services items to be used as the basis of a harmonized presentation of
statistics on international trade in services. With regard to the
appropriateness of the balance of payments statement for presenting
detailed data on international trade in services, he said that just as
commodity details were contained in external trade statistical
publications, rather than in the balance of payments statement, the
detailed statistics on services were best handled as supplementary details
(or as satellite accounts) rather than in the balance of payments statement
itself. Regarding the breaking down of balance of payments statistics into
geographical flows, he said that although such improvement was feasible in
the long run, it required the compilation of a large amount of additional
information. As concerns the global asymmetry in current account
transactions, some work had been done to review flows in shipping,
invisible income and transfers. With respect to the improvement of
national statistics, the mechanisms existed already to coordinate the
exchange of information, but more emphasis should be put on a better
coordination of the various groups and increased participation of
developing countries.
16. The representative of UNSO said that two meetings under the aegis of
UNSO had already been held with a limited participation of ten countries.
The UNSO intended to include developing countries at a later stage. On the
question of definition of services, consultations were needed between users
and producers to elaborate some conventions since there existed no
scientific definition of services. Regarding the differences between the
System of National Accounts and other definitions of services, governments
should eliminate inconsistences in meetings designed to elaborate a better
classification. The representative of UNSO confirmed that the two-stage
approach mentioned in his submission consisted, firstly, in preparing
guidelines on -definitions, classifications and compilation of data and,
secondly, in implementing these guidelines. As concerns the time schedule
needed to improve the measurement of trade in services, he said that it
would not take much time to prepare the methodological guidelines. These
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guidelines would be directed to obtaining information on export and import

of services either from the producers and users of services or from
monetary authorities. Questionnaires would be sent this year. After
processing the data and discussing the subjects with national experts, it
could be considered that some improvement in the measurement of export and
import of services might be available in 3 to 4 years. However it would be
too optimistic to expect that considerable improvement in the availability
of statistics could be achieved in a 10-year period.
17. The representative of UNCTAD referred to the similarity of the
difficulties encountered in measuring trade flows of commodities. The
problems dated from 1938. The first guidelines on the concepts and
definitions were sent to countries only in 1964. Concerning the exchange
of statistical information, any forum to facilitate this task should
consist of experts working to improve the data. Work might be based on an
existing national framework of statistics, e.g. the one circulated in
MTN.GNS/W/10.
18. Some members proposed the establishment of a working group on services
statistics concurrently with the work in the GNS. International and
regional organizations having an interest in this field should participate
in such a group. Thought should be given to the elaboration of a
methodology to measure, compile and improve national and international
statistics as well as to the provision of adequate technical assistance.
One member stated that although a common working hypothesis should be
developed in the GNS, this could only be achieved through international
cooperation. Another member suggested that the secretariat send
questionnaires to countries and that the GNS examine also the experience of.
the OECD in matters relating to services statistics. The secretariat could
prepare a background document summarizing the experience of international
organizations and the experience of developed countries.
19. One member pointed out that improvement of the statistical system for
recording trade in services was a long-term exercise and that this reform
would not benefit the current negotiations. The short-term problem was how
to use the available data. He therefore suggested that the existing
information be organized so as to be useful in the Uruguay Round. He added
that without an agreement in services, there would be no agreement in the
Uruguay Round. Delegations should consult informally on the idea of some
form of inter-secretariat working party, with the participation of experts,
to fill the information gap by using the available data rather than seeking
major reform
20. One member stated that the GNS should not be the forum for discussing
methodologies. He shared the perception expressed by the previous speaker
of Lhe distinction between short and long term problems. The efforts of
international organizations working on statistics should be encouraged and
the developing countries should be associated with the exercise to the
extent possible. It was also appropriate to determine how to relate work
done outside the GNS to the work in the Group since the mandate in Part II
of the Declaration referred to the possibility of requesting technical
assistance from international organizations. The question. the GNS should
be focusing on was how to provide a factual data base on trade flows
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necessary for the conduct of the negotiations. He could not accept the
view that the GNS should define rules and principles and evaluate the
impact of these rules and principles on trade in services without
statistical data.
21. One member said that the assumption that services activities and trade
in services were more dynamic than other sectors and activities did not
seem to find support in the data available. The IMF current account data
on invisible transactions indicated that trade in goods, in the last
decade, had grown more rapidly than trade in services. It would be
difficult to proceed in the GNS unless there was a clear picture of the
importance of trade in services at the national, regional and international
levels. The nature of the information needed for the work of the GNS could
be established only by the GNS itself. Even if the GNS arrived at some
negotiating techniques different form those traditionally used for the
exchange of concessions in goods, one could not imagine the possibility of
a negotiation without any quantitative evaluation.

22. One member said the GNS had exhausted the discussions on statistical
issues and the only practical way to proceed was to set up a joint working
group of the relevant international organizations. He expressed the view,
supported by some other delegations, that informal consultations should
define the mandate, priorities, composition and the time-limit of the
exercise in order to facilitate the work of the GNS. Another member stated
that one problem was that international organizations were sometimes
working with a limited amount of national support. More reflection should
be given to the improvement of statistics at the national level.

23. One member stressed that the message that emerged clearly from the
four international organizations was that priority should be given to the
improvement of national accounts which constituted the first level of
possible improvement of services statistics. Another member asked the
representatives of the four organizations to provide a breakdown for trade
flows in services, by sector and by country, and to give the definitions
used by these organizations in accounting methods. Another member stated
that improving the availability of statistics was not the primary objective
in the programme for the initial phase of negotiations. It was important
that the delegations should be kept informed of the work in the area of
statistics proceeding in other international organizations. The GATT
secretariat should issue periodic surveys of their work. He was not in
favour of setting up an international body since the improvement of
statistics was a matter of priority for individual countries.
24. On the basis of the presentations, written submissions, and answers to
the questions by the four international organizations, the. Chairman
identified four main elements. First,. there appeared to be a consensus
that statistics on the trade and production of services were in need of
improvement, particularly when it came to analysing the international
dimension of services activities. A second element was that a number of
national and international institutions attached an importance to improving
the situation and were pursuing this goal. to the extent permitted by
resource constraints, It had also been suggested that improvement of
statistics was a matter for international cooperation, and the need for
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establishing a focal point or forum for this purpose had been mentioned.
Thirdly, the Negotiating Group should be able to see how it could influence
,the ongoing work in improvement of the statistics and identify its needs
for the negotiations. To this end, the Group should also be in a position
to use the GATT secretariat for maintaining liaison and contact with the
ongoing work under different auspices. Another idea put forward was that a
working group could be set up to examine what may be done over the
short-term to facilitate the negotiating objectives of this Group. It had
been suggested that informal consultations might be useful in this
connection. The fourth element related to the question of technical
assistance to developing countries in improving their statistics on trade
in services, and the importance of associating developing countries in the
ongoing work on improvement of statistics in trade in services. In the
light of this, it was his impression that the GNS should be able to come
back to problems relating to statistics at its next meetings and that
delegations should consult informally on how to proceed. The Chairman
thanked the representatives of the four organizations for their
presentations and comments.
25. In the discussion on Broad Concepts on which Principles and Rules for
Trade in Services, including Possible Disciplines for Individual Sectors,
might be based, views were expressed with regard to transparency and
non-discrimination respectively on the basis of communications from two
members of the Group (MTN.GNS/W/12 and 13). One member wondered whether
transparency provisions should apply to rules and practices which did not
relate to cross-border transactions. He also suggested that a distinction
should be introduced between existing and proposed rules and practices.
One should furthermore consider to include, in addition to the generally
recognized exceptions for safety, health environmental protection or
national security an exception concerning budget secrecy. Another member
said that there existed different systems of transparency at national
levels. Transparency should not only mean notifications. One main purpose
should be to provide knowledge of the regulatory environment in the various
services sectors and of available mechanisms for commenting on existing
rules and regulations. Another important element was predictability,
especially for foreigners.
26. One member said that transparency meant different things in different
countries. The question of implementation of that, concept should be
addressed at a later stage. There were various sub-concepts to
transparency, such as publication and notification of national regulations
affecting services, consultations or due process, and information about
market behaviour of private firms. Since transparency might be diminished
through the use of discretionary powers of regulatory authorities, the
question arose whether the GNS was in a position to discuss a reduction of
discretionary powers of regulatory authorities. In this context, the
criteria of desirability and feasibility should be kept in mind. Another
member said that there were two phases of transparency: first during the
negotiations, where it was important to have a better notion of the
regulatory situation in participating countries, and second the inclusion
of sub-concepts in the agreement. Notification procedures might be
difficult to deal with for practical. or legislative reasons.
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27 One member said that the proposal on transparency went far beyond the
existing GATT provisions relating to goods. The tabling of such ideas was
essentially premature. An obligation to notify could only be considered in
connection with barriers to trade in services and not as a general
obligation. It would also seem difficult to accept obligations for
consultations and dispute settlement in the context of proposed regulatory
measures, since this would imply the acceptance of outside intervention in
domestic legislation. The: ideas as presented went eLar beyond the mandate
and the negotiating objectives of the Group. At the present stage, the
paper on transparency could not be considered as a basis for negotiations.
It could be seen as an effort to project the outcome of the negotiations.
Another member said that the formulation in the paper that national
regulations often resulted in trade distortions was not his understanding
of the objectives of Part II of the Ministerial Declaration. Also the
application of the concept of transparency to intended legislation was
alien to the existing situation. in most countries. Furthermore, the
notion of due process of law worked at national level, but to apply it at
international level was ambitious and revolutionary. The question was not
to restrict the powers of sovereign governments, but rather to make
regulatory processes more transparent and effective by applying certain
principles. Another member said that transparency should be considered as
an auxiliary and not an automatic mechanism, which had to be negotiated
among parties. The notion of transparency in the Ministerial Declaration
was not one of limiting the right to make regulations. Transparency should
not cover all laws and regulations but only those which had potentially
adverse effects on trade in services.
28. Some members, referring to the idea of advance notice of all proposed
regulatory measures, considered it unrealistic to envisage a dialogue
between regulators and operators. One member stated that the concept of
transparency included the notion of rule of law which meant that decisions
were taken in accordance with rules or norms rather than on the basis of
the discretionary powers of administrative bodies. One member said that in
his view-the concept of transparency included publication of existing rules
or norms. He expressed hesitation about a notification procedure which
would be more burdensome than the present rules on notifications of GATT.
Another member said that the issue of transparency was closely related to
the question of perceived barriers to trade in services. Therefore,
discussions on transparency might be more useful after the discussion on
measures and practices which affected trade in services. Another member
said that the idea of putting the burden of the notification on the
exporting countries was a good one, since only exporters could know the
obstacles to trade in services.
29. One member said that transparency should be fully covered in the
framework agreement and should also be tested against specific services
sectors. Another member pointed out that the GNS should avoid establishing
a cumbersome mechanism for transparency which could not be enforced.
Attention should be concentrated on regulations in specific services
sectors. Another member stated that it should not be intended to request
notification of all laws and regulations. Another member stated that,
although transparency was necessary as a general rule, a distinction had to
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be made between the requirements of published information for companies.

operating in foreign markets on the one hand, and what was needed for the
purpose of notification and due process on the other hand.
30. The member who had circulated the communication on transparency
(MTN.GNS/W/13) stated that the overriding premise was not that regulations
were barriers, but that all parties to the multilateral framework would
benefit from clear rules. Knowledge improved the functioning of the market
place. As to the coverage, two steps should be distinguished, namely the
definition of trade in services and the extent to which the regulations
should be made transparent. In addition reasonable time should be allowed
for governments and interested private parties to make comments concerning
a proposed regulation.
31. The member who had circulated the communication on non-discrimination
(MTN.GNS/W/12) said that unconditional MFN entailed extension to third
parties of the benefits of trade liberalizing measures agreed bilaterally.
Conditional MFN meant that parties to the agreement had to provide
reciprocal concessions in order to gain the benefits of an action available
under the agreement in question. It was important to remember that the
difference between conditional and unconditional MFN was one of degree. In
a strict legal sense, the General Agreement was a conditional MFN agreement
because one had to be a member to be assured of its benefits. In trade in
services, the key issue was non-discriminatory application of the benefits
of the agreement to all members of the agreement, particularly but not
exclusively in terms of market access. One of the basic issues in the
negotiations was not whether MFN or non-discriminatory access was granted,
but rather how, in a situation where choices had to be made concerning a
limited number of entrants, the principle of non-discrimination could be
guaranteed. This principle had to be embodied as a basic concept in the
agreement. The agreement also had to be framed in such a way that
mechanisms to give effect to non-discrimination were available.
32. One member said that his authorities wanted to negotiate an agreement
of universal understanding and that they considered that conditionality was
not an attempt to limit the benefits but to expand trade liberalization.
The extent of conditionality was linked to the nature of the agreement.
It was also suggested that the multilateral agreement i n services should
apply to all sectors and to all signatories and that subsidiary agreements
be conditional in their MFN application. One member said that his
authorities while supporting a multilateral agreement on services
benefiting all signatories might want to move faster at a regional level
than in the multilateral negotiations by following an Article XXIV-type
approach. One member thought that the notion of MFN treatment would have
to be adapted to the specific needs in services. Consideration should also
be given to optional MFN treatment with automatic applicability under
certain conditions. One member stated that, although in his country
unconditional MFN treatment applied to all GATT members in the case of the
Government Procurement Code, including to non-signatories to the Code, his
authorities were of the opinion that MFN treatment had to be conditional
with respect to certain services sectors. Another member said that the
two-tier approach of a multilateral framework with broad principles and
subsidiary sectoral disciplines was attractive to the extent that the
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framework could contain interpretative provisions on the application of

specific rules in particular services sectors. The subsidiary
understandings would have to be generally in line with the multilateral
framework. One member said that, while the principle of general
application should be the basis for any multilateral framework, a mechanism
would have to be found in order to respond in a flexible manner to the
problems countries were facing in the application of the agreement.
33. One member asked whether the principle of non-discrimination would be
applicable in all services sectors, including labour services. Another
member said that the issue of non-discrimination should not be linked with
the issue of liberalization since non-discrimination might be the most
important element in promoting trade in services. Some members stated that
unconditional MFN treatment should apply to all participating countries in
the negotiations. One member did not share the view that the unconditional
MFN principle contained in the GATT could apply in abstract terms to trade
in services. Only the concept of balance of rights and obligations in the
context of mutual advantage could ensure the highest degree of adherence to
the multilateral framework. One member said that his authorities were not
prepared to accept any kind of derogation from the principle of
non-discrimination or equal treatment. The legal technique for the
application of this principle was unconditional MFN treatment, meaning that
all benefits or privileges were automatically and immediately extended to
third parties participating in the framework. This principle would have to
be included not only in the multilateral framework but also in sector
specific regulations or subsidiary understandings. The subsidiary
understandings would have to supplement, specify or in some cases adapt the
general rules, but they should not derogate from them. Concerning the
relationship of non-discrimination and liberalization, he said that
although. these were two separate principles, they were intrinsically
interrelated by their common function and purpose of expanding
international trade.
34. The member who had circulated the communication on non-discrimination
said that this concept should apply to all sectors of the multilateral
agreement. Concerning the linkage between liberalization and
non-discrimination, he considered that the objectives of Part II of the
Ministerial Declaration could not be achieved if there was no liberalizing
effect on trade in services. In fact the concept of non-discrimination
could be operated in a negative way if it was not linked to liberalization.
35. One member said that, while the principle of non-discrimination should
be included in the multilateral agreement, it might prove difficult to
apply full MFN treatment even among participants because of existing
obligations of a bilateral character.
36. No specific views were expressed on the elements dealing with Coverage
of the Multilateral Framework for Trade in Services and Existing
International Disciplines and Arrangements. On the latter point, the
secretariat confirmed that the factual background paper requested by the
Group (MTN.GNS/8, para. 46) would be available before the next meeting in
September.
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37. Concerning Measures and Practices Contributing to or Limiting the

Expansion of Trade in Services, including pecifically any Barriers
perceived by Individual Participants, to which the Conditions of
Transparency and Progressive Liberalization might be applicable, the member
which had circulated a communication on an inventory of barriers to
services exports (MTN.GNS/W/14) said that, in this document, the focus was
more on the approach, methodology and classification than on the barriers
themselves. The document outlined the structure of a larger inventory
which could be made available later in the fall.
38. Several members stated that their authorities had the intention to
launch similar surveys or were already in the process of compiling
information on measures and practices having an effect on trade in
services. They considered the communication to be a useful and informative
document. It helped to understand better the two elements of coverage and
concepts although a full inventory was not considered a prerequisite for
advancing in the negotiations. One member said that the document could
help countries in their presentation of problems encountered in trade in
services. He encouraged other delegations to submit similar
communications. A document containing an illustrative list of selected
problems encountered by national services industries in foreign markets had
already been submitted by his authorities in September 1985. One member
said that his authorities reserved their right to discuss individual items
in the document at a later stage. He noted that in compiling the inventory
the views of the private sector and other sources concerning their export
interests in services had been sought. The results should not necessarily
be construed as reflecting national negotiating priorities. He asked
whether the delegation which had submitted the document had the intention
of seeking the elimination of the measures listed.
39. Some members said that, although the GNS needed to have a clear
perception of what constituted a barrier to trade in services, in their
view the mandate of the GNS did not cover the compilation of available
national inventories into one world-wide inventory of barriers in trade in
services. In the absence of defined parameters, such a global inventory
would be absolutely premature. Furthermore, the document did not clearly
distinguish between different categories of services and no separation was
made between services needing establishment/investment and those that did
not. Before compiling such an inventory, it was essential to discuss the
questions of methodology and concepts in the GNS.
40. The member which had circulated the communication said that it would
be preferable to use and adapt existing classification systems of
barriers to services exports rather than to draw up new ones. Furthermore,
in keeping with the approach to the negotiations which her authorities had
taken earlier, all entries which referred only to establishnment/investment
barriers had been omitted. However, it had not been possible to avoid all
references to establishment/investment issues in the document because some
entries involved a combination of different types of barriers. Finally,
the list of barriers was by no means a negotiating list since it was far
too premature to indicate priorities or negotiating targets.
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41. In concluding, the Chairman said that unless a decision on this matter
was taken in the meantime in the Trade Negotiations Committee, the question
of observer status for international organizations should be put as the
first item on the agenda for the next meeting to be held on 15-18 September
1987. He would report under his own responsibility to the TNC on the
current status of the activities of the GNS. It was so agreed. He invited
delegations to submit papers on the five elements of the initial
negotiating plan in time for the next meeting.