2. The Minutes of the meeting on 13^th June 2000 were approved. Under Matters Arising, the Chairman made two points. (i) In the discussion on E-Commerce, reference had been made to the possibility of the WTO setting up a new horizontal group. This idea had now been shelved in favour of dealing with E-Commerce matters in existing WTO committees, although it was possible that the Japanese might wish to revive the question later in the year. (ii) On the future of BI, the review process was taking longer than had been expected. We could still expect a new name for the organisation and be confident that the activity of LOTIS would continue given the acknowledged usefulness of the task.

3.1 Reports from Geneva and Brussels. The Chairman invited Tony Sims first to set out the general scene from Geneva and then to cover the position reached by his Committee on GATS Rules. Welcoming the opportunity to discuss these matters direct with business, and noting that his remarks were personal and not necessarily HMG policy, Tony Sims said that the nine months since Seattle had seen some positive and some negative developments. On the positive side, negotiations were progressing on services and agriculture, developing countries were happy to have got recognition of the need to review implementation of Uruguay Round agreements, important technical work was commencing in other areas, and China could become a member of the WTO early next year. On the negative side, developing countries might become dissatisfied with how far they could actually get on the post-Uruguay round implementation issue, there were differences among members over the scope of a new round, and a potentially divisive debate was starting about the process required to start a new round. Whereas the EU and its allies on agriculture (namely Norway, Switzerland, Korea and Japan) argued for a comprehensive round, others, mirroring the US approach, wanted a narrower agenda with selected sectoral topics such as tariffs, trade facilitation, transparency of government procurement and E-Commerce. There appeared to be little political will on either side to try to get these groups to come together this side of the US Election.

3.2 Since, after Seattle, no-one wanted another Ministerial to fail, there was growing support for an incremental approach, bringing in topics for negotiation as they became "ripe". The drawback of such an approach for the EU would be that some matters seen to be in the EU’s interest to be negotiated could be left on one side. With continuing vocal NGO opposition to the WTO, Tony Sims noted that business support for negotiations had been muted. In the GATS he thought that a broader round would be required; the days of single sector negotiations (as in the financial services and telecommunications agreements in 1997) were past.

3.3 Tony Sims said that the GATS negotiations had plus points: Marchi was a good chairman of the Services Council, and the Council was marked by a constructive spirit, the road map was useful, important work was being done on scheduling and tourism and the US proposal for the negotiating process, albeit ambitious, provided a basis to work on. On the downside, it was proving difficult to agree the guidelines called for in the GATS articles, and the assessment of trade in services was slowing things down, and the Cairns Group wanted movement on agriculture before being willing to take fresh steps on services.

3.4 There was also a difficult debate on the process for the GATS. The EU was promoting its line on clusters, the US wanted model schedules and the developing countries were suspicious of both. Work on Domestic Regulation ("necessity" and "transparency") might stall. The US was moving away from "necessity" and developing countries had problems with both. The stock take on services and agriculture scheduled for next spring was going to be important in showing whether we could expect to see further progress or not.

3.5 Tony Sims said he hoped not to appear to be concluding this part of his presentation on too glum a note. He said it would be helpful if business could voice the case for trade liberalisation and let the Commission and the DTI know, sector by sector, what the barriers really were. He asked business to encourage its counterparts in other countries (both in the US and the developing world) to do the same with their negotiators.

3.6 Opening discussion, the Chairman complimented the CBI on its recent booklet stating the business case. David Wood asked how a timetable could be imposed on topics introduced by the suggested incremental process. Tony Sims said that a sort of timetable existed on agriculture running between the French Presidential election in spring 2002 and the expiry of the peace clause on agriculture at end 2003. He thought it may be possible to agree on negotiations on, say, tariffs and trade facilitation within the WTO Council (i.e. not requiring a new Ministerial meeting) but that there would be problems over doing the same for investment, or in agreeing language on the environment and labour standards. John Cooke asked where the debate on "clusters" as against alternative approaches stood. Tony Sims said that while such ideas looked attractive in theory, developing countries would oppose, being fearful that "clusters" or "model schedules" would be imposed on them. He thought it would boil down to the accepted Request and Offer process with countries being able to use "clusters" as a tool to inform themselves. The Chairman asked whether the EU would in the end be faced with the choice of a limited round or no round at all if developing countries resisted negotiating on labour standards, environment, competition and investment. Tony Sims said that no negotiator would get everything he wanted.

4.1 Safeguards. Turning to GATS Rules, Tony Sims said that there was little to say on Government Procurement or Subsidies but on Safeguards the deadline of 15 December was approaching. The ASEAN paper had been widely welcomed in having been both comprehensive and moderate. It had given rise to very good discussions in the WTO in four informal meetings since April. They were now waiting for a text to be drawn up by the lawyers in WTO language but there were delays on the ASEAN side in delivering this. Some developing countries saw a safeguards agreement as helping them to make better liberalisation commitments. This was a subject which the industrialised country members needed to take seriously. The principle of the matter had been put on one side; the talks were focussed on feasibility. There were signs that the industrialised and the developing worlds were engaging on questions of detail.

4.2 In discussion, John Cooke said that positions in the industrialised world would vary. Tony Sims said that the Americans were against the issue in principle but wanted to be engaged in the design of any safeguard. They had come forward with the suggestion of a scheduling approach, i.e. that, rather than having a general safeguards mechanism, a Member would have to negotiate the right to use a safeguard in relation to specific commitments. John Serocold asked if time limits had been discussed for the duration of safeguard measures. Tony Sims said that this had been covered in the ASEAN paper but we were waiting to see the legal draft for what time period would be suggested. In response to a question from John Thirlwell who had evidence that US industry was extremely hawkish on safeguards, he said that, nevertheless, delegates from many industrialised countries, including the US, had participated constructively in the Working Party’s discussions.

5.1 Movement of Natural Persons. Mark Hatcher introduced the paper which had been circulated for the meeting. It was necessary, he said, to emphasise the temporary nature of the movement of persons. Since the last LOTIS meeting, Roger Davis of PricewaterhouseCoopers had presented an interim paper for the ESF meeting with the Article 133 (Services) Committee. Apart from comments by Malcolm McKinnon, the EU members’ response had been muted. Today’s version would in essence be the paper to be considered by the European Services Forum on 25^th September. He invited comments/support from the LOTIS Committee. The concern was that this subject was not high on the EU agenda outside the UK and Germany. The plan was to have it discussed in a panel session at the ESF Conference on 27 November; the aim was to have it debated in Geneva.

5.2 The Chairman said that he hoped the PricewaterhouseCoopers paper would be accepted by November as the ESF position to go to the European Commission. Graham Bartlett reported that on the strength of two discussions in the Article 133 Committee there was not enough support from member states to push the matter forward. Work needed to be done in other EU member countries to convince them of the arguments. The Chairman said he would feed that into the ESF meeting on 25 September since he suspected there was a degree of industry support across the EU to promote movement of skilled personnel. Another line, promoted by the USCSI, was to encourage a country like India to be a demandeur, enabling the EU and USA to respond sympathetically. Mark Hatcher noted that PricewaterhouseCoopers had engaged Dick Self of Akin Gump Strauss Hauer and Feld (a former US services negotiator) to prepare a model template for GATS commitments. It was hoped that ultimately either India or Pakistan might pick up the ideas reflected therein.

5.3 Replying to Nick Lowe’s question about the apparent loss to countries like India and Pakistan of skilled personnel, Mark Hatcher said that the temporary nature of the postings ensured their return to home countries with enhanced skills. John Serocold noted that lawyers were not included and wondered whether the proposed use of self-certification might favour large companies and thereby be potentially anti-competitive. Picking up on which EU member states were pro or anti, Tony Sims said that Sweden was the only one lined up with the UK; his information was that Germany was against. He supported the Chairman’s suggestion about tactics and suggested an approach to the Confederation of Indian Industry. The Chairman said the German stance might be a political one but there was no doubt that their I.T. industry’s need for skilled people was similar to the UK’s. He concluded the discussion by saying that the LOTIS Committee clearly gave its general support for Mark Hatcher’s paper with the hope that it would be endorsed by the ESF.

6.1 Domestic Regulation. John Cooke said he had been volunteered as rapporteur for papers on domestic regulation, both in the Financial Leaders’ Group and in the ESF. The US Securities Industry Association paper was a good starting point for both papers when it came to "transparency". The other main issues of "necessity" and "proportionality" were both difficult ones on which to present a generally agreed view. The Chairman said that the LOTIS Committee would be prepared to comment on a draft text.

7.1 CSI/JSN/ESF meeting. The Chairman said that he had received no report of the New York meeting on 28 July between the heads of the USCSI, the ESF and the Japanese Services Network. We would circulate such information as would be given to the ESF Policy Committee on 25 September.

8.1 ESF Conference: 27 November. The Chairman said the Conference should be well worth attending. On the following day, also of potential interest to LOTIS members, the EC was holding a conference on the Challenge of Globalisation and the EU’s market access strategy. Lisa Rabbe wished also to draw attention to a conference on 24 November being arranged by the EC’s Directorate General for Trade and Competition. John Cooke said that he would be chairing a session on regulation at the ESF Conference. He hoped that the IAIS would be represented and, following an encouraging meeting with an EC/private sector team led by Robert Madelin earlier in the summer, that the Basle Committee of banking supervisors would also feel able to participate.

9.1 Any other business.

i. Victoria Powell introduced John Sloan who would be replacing her as the FSA’s observer on the LOTIS Committee.

ii. Next meeting. Following the meeting, arrangements were made to hold the next meeting at 10.30 am on Friday 8^th December. At the kind invitation of Martin Manuzi, this will take place at the Institute of Chartered Accountants in England and Wales, Chartered Accountants’ Hall, Moorgate Place, EC2P 2BJ.