North-South divide in services talks

Differences of view among the membership are also a feature of the WTO services negotiations, with developed and developing countries staking out varying positions.

by D. Ravi Kanth

GENEVA: A large majority of developing and least-developed countries at the World Trade Organization (WTO) have demanded that Annex C of the Hong Kong Ministerial Declaration must remain the basis for drawing up the post-Bali work programme on services, according to trade envoys familiar with the non-attributable summary issued by the chair of the Doha Round services negotiations on 27 April.

The chair, Ambassador Gabriel Duque of Colombia, issued a five-page restricted non-attributable summary setting out the positions held by members in which the views of the developing countries differ from those held by the developed countries, said an African trade envoy who preferred not to be identified.

The chair’s summary will come up for discussion on 5 May at an informal open-ended meeting.

Essential negotiations

In his summary issued to members on 27 April, Duque said most members acknowledged that the services negotiations formed an “essential” part of the Doha Development Agenda (DDA) negotiations.

[The architecture of the WTO’s General Agreement on Trade in Services (GATS) envisages, in terms of its Article XIX, the “progressive liberalization” of the services trade, with members engaging in a round of services negotiations every five years (Art. XIX:1) starting from the date of the WTO’s entry into force, with guidelines to be established by the WTO Council for Trade in Services for each round of negotiations both overall and sectorally (Art. XIX:3), and with an overall guidance set in Art. XIX:2. Such a round was agreed upon and launched in 2000, but this was rolled into the Doha Round launched in November 2001. The 2005 Hong Kong Ministerial Declaration and mandate, in Annex C, set further parameters for voluntary services liberalization, but ensuring fidelity with the basic GATS architecture.

[During the preparatory process for the 1999 Seattle Ministerial Conference of the WTO and subsequently, and at the time of the launch of the Doha Round, the EU, the US and other developed countries said they had to undertake some painful cuts in their agricultural support programmes and needed some political cover to enable them to point to likely concessions they would get in services, and hence the earlier launched services negotiations should be rolled into the Doha Round talks. Believing in such promises, the developing countries agreed. However, the commitments on agriculture are not only sought to be resiled from through arguments about changes in trade, but the services liberalization is sought to be delinked to get more concessions from the developing world while jettisoning the Doha Round mandates. The current arguments in the services talks also appear to be attempts of the US and the EU to repudiate all this earlier history and narrative, while attempting a parallel exercise of an arguably illegal attempt to negotiate and insert into the WTO a conditional non-MFN plurilateral services accord, the so-called Trade in Services Agreement (TiSA). – SUNS]

According to the chair, given the growing share and importance of services in global trade, one country maintained that services are the “engine” of economic growth while another member spoke of the critical importance of services to its economy.

Most members pressed for a “realistic, doable, and balanced” outcome in the services negotiations, while some countries called for an “ambitious” outcome. A few others wanted “good, credible, and meaningful results” in the services negotiations, according to the chair.

As regards the way forward for the services negotiations in the post-Bali work programme, most members called for “calibrated” movement with those in agriculture and market access for industrial goods (NAMA), while farm-producing countries of South America insisted that the level of ambition in agriculture must decide the outcome in services.

The chair said “one delegation took the view that the services negotiations were a complementary pillar of the DDA” while some other members suggested that services should not be “delinked from other pillars and therefore, should not lag behind.”

A few delegations, according to the chair, “cautioned that the negotiations on services could not await the outcome of post-Bali work in agriculture and NAMA, since services negotiations were particularly lengthy and needed an early start.”

Many members, especially the developing countries, demanded that Annex C of the Hong Kong Ministerial Declaration should guide the objectives of the post-Bali work programme, while one delegation said the Hong Kong Ministerial Declaration provided “for bilateral and plurilateral market access negotiations, text-based negotiations on domestic regulation, focused discussion on the GATS rules.”

Some members, the chair said, pressed for “other milestones in the [services] negotiations” such as the existing initial offers and revised offers, the plurilateral requests, and the 2008 signalling conference to guide the objectives of the work programme.

However, the US and Australia did not want the previous milestones to be the starting point for setting the ambition in the work programme as “those milestones did not reflect subsequent changes in the patterns of trade and further autonomous liberalization,” said a trade envoy from Asia.

India and countries of the African, Caribbean and Pacific (ACP) Group said that “it was important that the work programme fully express the development dimension of the negotiation.”

Both India and ACP members emphasized the “importance of flexibilities granted to developing country members in the GATS itself, such as in Article XIX:2 as well as in the existing negotiating mandates such as Annex C.”

Many industrialized countries acknowledged the importance of market access in any services outcome while Japan stated unambiguously that market access was central to the services outcome, “given the very low or symbolic level of commitments that had been agreed in the Uruguay Round.”

But one member said that it is not going to make any further movements to its DDA offer, according to the chair’s summary.

Norway proposed a minimum binding of sectors in existing GATS commitments at the level applied domestically or in the regional trade agreements (RTAs), followed by a request-offer process for sectors currently outside the schedule with a view to achieving the binding at the applied level, said a developing-country trade envoy.

Important guide

For many members, said Duque, Annex C in the Hong Kong Ministerial Declaration was an important guide for determining the market access contents of the post-Bali work programme while some members spoke of the previous milestones such as revised offers, plurilateral requests, and indications from the signalling conference.

However, some developed countries said that “binding of a significant portion of ‘water’ in the GATS commitments was a realistic and doable outcome.” Singapore and Australia underscored the need to take into account “RTAs and autonomous liberalization to assess how much ‘water’ could be bound,” implying the removal of the gap between current bound and autonomous commitments, according to negotiators familiar with the informal open-ended meetings.

India, Barbados on behalf of small and vulnerable economies (SVEs) and ACP countries, and Malaysia among others said “with respect to developing countries, the market access part of the work programme needed to fully express the development dimension of the negotiations.”

For SVE and ACP members, said Barbados, “flexibilities granted to developing countries members in GATS Articles IV and XIX:2, Annex C of the Hong Kong Ministerial Declaration, and the negotiating guidelines” must be preserved intact.

The recently acceded members (RAMs), led by Chinese Taipei, said they had undertaken GATS commitments that in many cases were similar or greater than those of developed-country members. Therefore, other countries should also make commitments at similar levels, the RAMs argued.

The LDCs demanded that the Bali ministerial declaration on services – which includes a waiver, granting of preferences, full and effective implementation of LDC modalities and Annex C of the Hong Kong Ministerial Declaration – must be fully implemented.

Mexico suggested the submission of revised offers by the end of September, after members undertake intensive negotiations in order to submit final offers by December 2015.

The following countries demanded specific market access in specified sectors, according to several negotiators familiar with the services negotiations:

l     Australia: Financial, IT (telecom, computer and related), professional, construction and related engineering, freight, transport and logistics, environment, private education, mining and energy-related services; in all these reducing restrictions on cross-border supply, foreign equity caps, use of business names, joint venture requirements;

l     Canada: Environmental services;

l     Hong Kong-China: New and improved commitments in the following indispensable sectors: maritime, logistics and related, telecom, financial, computer and related services, as well as work on non-sectoral, cross-cutting issues such as the elimination or substantial reduction (or at least clarification of scope) of MFN exemptions; full market access and national treatment in cross-border supply, especially professional services, research and development and distribution services as set out in the plurilateral request on cross-border supply; removal of horizontal limitations in Mode 3, especially foreign equity limitations; improvement of offers in above areas as outlined in collective requests;

l     Japan: Computer and related, telecom, distribution, financial, maritime and other services;

l     India: Liberalization of Mode 4, sectors of export interest to developing countries, binding of market access and national treatment in all modes of supply in favour of developing countries;

l     New Zealand: Considerable importance of Mode 1, need to update schedules for services now technically feasible, particular interest in Mode 3, private education, environmental, air services, maritime, logistics, computer and related services, postal and courier, retail trade and distribution, business and professional services;

l     Norway: Locking in of market access and national treatment in telecom, maritime and energy services, insurance, maritime transport services and energy-related services, and reintegrating the maritime sector through the application of MFN;

l     Chinese Taipei: Computer, maritime, logistics, telecom, construction, engineering, audiovisual, environment, distribution and tourism;

l     Switzerland: Improved market access and national treatment commitments in areas covered by the plurilateral requests, with the highest priority in computer and related services, telecom, distribution, construction, and energy services.

Many industrialized-country members also called for ambitious results in domestic regulation and said it should be part of the services element of a post-Bali work programme. A majority of delegations expressed an interest in domestic regulation disciplines that ensured that negotiated market access outcomes are not undermined, the chair maintained.

The US, Canada and Brazil warned that “deep horizontally applicable disciplines, including on a necessity test, would not be feasible in the context of a post-Bali work programme with overall reduced ambition,” said a services negotiator who took part in the chair’s informal meetings.

Turkey said a successful conclusion of the domestic regulation element of the post-Bali work programme should encourage members to develop disciplines on administrative measures regarding visas and temporary work permits that heavily impede in particular developing-country service suppliers’ ability to provide services.

India, members of the ACP Group and Uganda underscored the need for “special and differential treatment provisions that linked the obligation to implement regulatory disciplines to the acquisition of capacity through the provision of adequate assistance and support for capacity building, as well as self-selection of transition periods.”

Except for Singapore, all other members of the Association of South East Asian Nations (ASEAN) called for the inclusion of emergency safeguards in the post-Bali work programme.

“One delegation noted that an outcome on emergency safeguards could provide a balancing element in the services negotiations,” according to the summary. (SUNS8014)                     

Third World Economics, Issue No. 592/593, 1-31 May 2015, pp17-19