Shall vs best endeavour  battle over GATS talks guidelines

by Chakravarthi Raghavan

Geneva, 21 Mar 2001 - After nearly five hours of comments and discussions - at an informal meeting of the Special Session of the Council on Trade in Services (CTS) on Tuesday evening - on a secretariat draft of guidelines and procedures for the negotiations, a new revised draft is expected to be produced by the secretariat.

The CTS, in special sessions, is running the new round of services talks at the WTO, and is to meet again later this week to consider any new text, which has to be approved and adopted by the CTS before the services talks can move forward.

A major  difference between the developing countries and the industrialized world over the guidelines is the objection of the industrialized countries to the mandatory ‘shall’, used in the objectives and principles, the scope of the negotiations as well as modalities and procedures.

The industrialized nations would rather have these couched in ‘best endeavour’ language, so that during the negotiations, they could easily depart from these in applying pressure on developing countries to open up their service markets and come up with a final package - which would be difficult to change.

One sticking point is in the paragraph under modalities, requiring the CTS to carry out, as an ongoing activity, an assessment of the trade in services, in overall terms and on a sectoral basis, and with reference to the objectives of the GATS and of Art. IV (for increasing participation of the developing countries in the international trade in services and access to networks) in particular, and for adjustment of the negotiations in the light of such assessment.

In the secretariat draft of 16 March, these two - the assessment of trade in services and the adjustment of the negotiations - are couched in the ‘shall’ language, a mandatory requirement. This had been done at the insistence of the broad coalition of 74 developing countries - the Group of 24, which tabled a draft set of guidelines and procedures, and the African and Caribbean countries who also had drafts on particular aspects and threw their support behind the 24-country draft.

At Tuesday’s discussions, the US and Europe were opposed to the use of ‘shall’, and wanted to dilute it into a kind of ‘best endeavour’ language. But a number of developing countries did not agree.

In addition, the African group wanted an assessment of the implementation of Art.IV and a few other areas, and for the adjustment of the negotiations. Their view was sought to be accommodated by combining it with the mandatory assessment of the trade in services and the mandatory adjustment of the results. The major industrial nations are opposed to both.

A second point of contention is over the paragraph relating to the scope, where again the mandatory ‘shall’ has been used, for taking up and completing the negotiations on safeguards by March 2002 (as set by the CTS in its decision of 1 December 2000), and on subsidies, government procurement and domestic regulations and standards and qualifications for service providers.

The language now requires that all these negotiations (which were intended to be taken up and completed immediately after Marrakesh) on the GATS Articles, which have not progressed, should be taken up and completed before any negotiations and their conclusion into specific commitments.

The current ambiguities and lack of detailed rules favour the US and EC.

A further point of difference relates to the ‘small’ economies and ‘small’ service suppliers, and the implied preferential treatment for them.

A number of Latin American countries - Mexico, Chile and Brazil, among them - were not agreeable to this further division among developing countries. The major industrial nations support the demand for such a provision put forward by some of the African and Caribbean nations. But the other developing countries are opposed, though only some of the Latin American countries spoke up.

There is also opposition from the developing countries to the idea of ‘standstill’ written into the draft. The experience of most of them with the ‘standstill and rollback’ commitment in the Punta del Este Declaration for the Uruguay Round has been a negative and unhappy one. They are reluctant to agree to it again, since it may tie their hands into undertaking domestic regulatory and other measures that they are permitted to do under the GATS now. – SUNS4860

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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