TWN Info Service on WTO and Trade Issues (Mar17/18)
21 March 2017
Third World Network
Indian TFS draft faces sharp questions, intense scrutiny
Published in SUNS #8425 dated 20 March 2017
Geneva, 17 Mar (D. Ravi Kanth) -- Many developing and least-developed
countries, including members of the African Group, sharply questioned India at
the World Trade Organization (WTO) on Thursday (16 March) over its proposal to
negotiate a standalone agreement on Trade Facilitation for Services (TFS)
without any prior mandate, services negotiators told SUNS.
The Indian proposal also came under intense scrutiny from major industrialized
countries on grounds that it would impose commitments in areas such as data
flow of information, portability of insurance in Mode 2, and social security
payments and economic needs tests in Mode 4 among other issues.
It faced difficult and sharply different questions from different members
depending upon their overall trade priorities, said several services
negotiators who asked not to be quoted.
At a regular meeting of the WTO Council for Trade in Services, India presented
the salient features of the draft legal text on areas outside the domestic
regulation disciplines such as cross-border services in Mode 1, consumption
abroad in Mode 2, and several issues concerning improvements in the movement of
natural persons in Mode 4.
The 14 articles set out in the Indian draft legal text cover a range of issues
such as transparency-related provisions, administration of measures such as
single window clearance, fees and charges, administration of economic needs
test, cross-border insurance coverage for promoting medical tourism in Mode 2,
and "provisions facilitating movement of natural persons (grant of
temporary entry, multiple entry and social security contributions) in Mode
India seeks better cooperation among competent authorities and institutional
arrangements such as establishing a "committee on trade facilitation in
services" and "national committee on trade facilitation in
In Article 14, it says the TFS Agreement when it is negotiated and agreed
"shall" require the developed countries to implement the provisions
as and when it enters into force.
But "developing country members shall not be required to apply the
provisions for a period of [X] years from their date of entry into force."
Further, the developing countries can ask for extension "before the end of
this transitional period" for implementing the disciplines.
India explained "cross border insurance coverage" in respect of
health related services availed in another member and "members shall
endeavour to expedite the processing of immigration formalities in respect of
service consumers who are seeking medical services or such other services that
are urgent and/or essential."
In Article 9 concerning "provisions facilitating movement of natural
persons," India is asking WTO members to negotiate on "grant of
temporary entry," including "develop[ing] a scheme for GATS visa
applicable for categories of natural persons committed in their schedule of
specific commitments", granting "multiple entry" to services
suppliers, and exempting short-term services providers from social security
contributions in the foreign country where the services are going to be
India also wants that where social security contributions are not exempted,
then the member which has collected the contribution "shall refund such
contribution, or the unused portion thereof, to the short-term services
provider at the time such short-term providers return to his/her home country."
In response to India's proposal, there were two sets of questions from members.
Many developed and some developing countries that took part in the failed
plurilateral initiative on Trade in Services Agreement (TiSA) grilled India as
to how it could come up with issues that ostensibly dealt with immigration,
data flows of information, portability of insurance, and social security
contributions - which failed to find any consensus over the years.
The second set of questions raised by the African Group and the LDCs revolved
around lack of mandate and questionable long-term benefits for the African
On the first set of questions, the European Union asked India about two issues,
according to negotiators present at the meeting.
(i) the usefulness of a formal agreement on TFS when the format of such an
agreement doesn't seem flexible;
(ii) the concerted attempt in the Indian proposal to address issues outside
trade policy remit such as immigration, portability of insurance for the health
sector, social security contributions and immigration procedures.
Australia said that it is ready to work for facilitating services in Mode 4 but
posed sharp questions on how India proposed elimination of hurdles in
cross-border supply of services, particularly data flow of information.
Canada drew red lines on issues concerning social security policies and
immigration of services.
On behalf of the African Group, South Africa reiterated the comments it made
during the meeting of the Working Party on Domestic Regulation on Tuesday (14
The African Group acknowledged the constraints faced by Indian services
suppliers in foreign markets, which was also the case with the African
countries that have a comparative advantage in supplying lower skilled workers.
But the group sought to know from India whether it is realistic in "the
current political climate" to present a proposal that would take away the
right to regulate services.
South Africa said that members of the African Group are not clear about what
the proposed TFS means for developing and least developed countries.
Moreover, the Indian proposal imposes several new and potentially onerous
multilateral obligations on African countries, South Africa said on behalf of
the African Group.
Significantly, the Indian proposal is "extremely broad" in its scope,
particularly in an area such as trade in services, and inappropriately built on
the lines of the Trade Facilitation Agreement for goods which deals only with
customs provisions, the African Group said.
India is seeking an entirely new services agreement in which the long-term
gains for African countries, who are net importers of services, remain few and
far between, the African Group argued.
The African Group also maintained that there is no negotiating mandate for
elements in the Indian proposal barring a sub-set of issues in the domestic
regulation of GATS Article VI. 4 mandate.
The issue of mandate, South Africa emphasized, must not be taken lightly as
developing countries want mandates to be adhered to in the rule-based WTO.
The African Group spoke about the enhanced transparency obligations that go
even beyond GATS Article III despite the avowed goal of TFS to be a
development-centered proposal. The reality, according to the African Group, is
that for many African countries, in particular LDCs, there is no capacity or
resources to comply with the transparency obligations proposed.
The African Group said that it is concerned about how the proposed TFS would
impact on its Members' right to regulate.
The administration of measures enumerated by India seem "extremely broad
and appears to expand the market access commitments Members have taken",
the African Group maintained.
On behalf of the LDCs, Uganda welcomed the Indian proposal on TFS on grounds
that the poorest countries want enhanced preferential treatment for their
services exporters through reduction of fees and charges, including social
security charges when supplying services through Mode 4.
Uganda said LDCs supplying a service on a temporary contract should not be
charged social security deductions.
Uganda also welcomed "ways to reduce obstacles to Mode 4 market access
such as multiple entry visas and a possible GATS visa are useful especially to
our services suppliers", as proposed by India.
However, the LDCs raised the following preliminary questions:
* Can India clarify why the disciplines would apply to Article 2 on publication
requirements and Article 8.2 - Facilitating Consumption Abroad emergency
authorization, regardless of whether countries have scheduled the sector or
not? If a Member schedules only a sub-sector, does that mean the entire sector
is captured under the disciplines?
* On single window, India has made the distinction between competent
authorities for authorization and immigration, respectively. However, is single
window operable in services where Members could have scheduled a number of
sectors and services in domestic regimes that are diverse with a number of
specialized competent authorities? Has India conducted any cost analysis of how
this would work in services?
* Does the TFS proposal involving market access areas such as ENTs, Modes 1, 2
and 4, modify the architecture of the GATS and the flexibilities for developing
countries found in GATS Article IV and GATS Article XIX?
In a nutshell, when major industrialized countries are slamming doors on
short-term services providers and denying medical tourism through portable
insurance schemes, India ought to have assessed carefully about the timing of
such a proposal and whether it falls in the mandate which is an imperative for
negotiating any agreement at the WTO.
More important, at a time when the developed and some developing countries are
pushing for electronic commerce negotiations without any mandate, which was
opposed by India, it remains moot as to how it came up with a proposal that has
no mandate, services negotiators argued. +