South nixes US, EU call for binding autonomous services liberalization

Developing countries have opposed developed-country calls to set their autonomously taken services liberalization measures as binding WTO commitments.

by D. Ravi Kanth

GENEVA: A large majority of developing countries on 7 May firmly rejected demands from the United States, the European Union and other developed countries for binding the autonomous liberalization measures taken by them in the services sectors after the Uruguay Round of commitments.

The developing countries made clear that they are not willing to undertake “commitments for free” in the services negotiations under the Doha Round, several services negotiators told the South-North Development Monitor (SUNS).

The developing countries, especially Brazil, South Africa, India and Argentina among others, made it clear that agriculture remains the yardstick of the Round and at the core of the sequencing framework. They said that without clarity in agriculture, it would be futile to discuss elements in the services negotiations at this juncture.

Around 61 members also rejected a demand from Canada which wanted the WTO secretariat to circulate the offers made by developing countries at the services signalling conference in 2008. The developing countries made clear that it is inappropriate to discuss those offers when the level of ambition was already being lowered in agriculture and industrial goods.

The developing countries – Brazil, South Africa, India, Ecuador, Barbados on behalf of the Africa, Caribbean and Pacific (ACP) Group – also chided the chair of the Doha Round services negotiations, Ambassador Gabriel Duque of Colombia, for issuing a one-sided summary in favour of developed countries on 27 April. The developing countries asked the chair to issue a corrigendum or revision to the summary as the summary he circulated had failed to reflect their views on the sequencing and the request-and-offer-based framework of the services negotiations.

At a volatile meeting of the services negotiating body on 7 May, the differences over the chair’s summary and the demands made by developed countries resulted in an all-out confrontation which has been rarely seen at recent meetings of the WTO, several services negotiators told SUNS.

“Benchmarking”

The chair’s five-page, non-attributable summary had suggested “benchmarking” the services market access negotiations instead of creating a platform to discuss the possible elements that would go into the services work programme by end-July, a developing-country services negotiator told SUNS.

During the 7 May meeting, the US said that Washington would settle for market access in services if members are willing to “bind” their current autonomous services liberalization measures, according to participants familiar with the meeting.

The demand of the US was reflected in the chair’s summary: “the starting point could be existing GATS [General Agreement on Trade in Services] commitments, taking into account RTAs [regional trade agreements] and autonomous liberalization to assess how much water could be bound.”

The chair’s summary had also maintained that “one delegation proposed a minimum binding of sectors in existing GATS commitments at the level applied domestically or in its RTAs, followed by a request/offer process for sectors currently outside the schedule with a view to achieve bindings at the applied level.”

Several industrialized and a few developing countries such as Singapore supported the US demand for binding autonomous liberalization of services on the ground that it would lead to binding of a significant portion of “water” in the GATS commitments as “a realistic and doable outcome.”

The European Union called for “transparency” and “predictability” in the services commitments on par with the tariff reduction formula for market access in agriculture and industrial goods.

The demands made by the US and the EU provoked a sharp response from Brazil, South Africa and India along with Barbados, the coordinator for the ACP Group.

Brazil posed some sharp questions to industrialized countries on the 2008 revised draft modalities in agriculture as well as on the bound and applied farm subsidies by the US and other industrialized countries. It asked whether the major industrialized countries are ready to accept the 2008 revised draft modalities to reduce their domestic farm subsidies in line with their demands in services. Brazil emphasized that agriculture is the key to determining the level of ambition for the entire Doha Round talks, arguing that without clarity in agriculture it would be difficult to move in the services negotiations.

South Africa said while no meetings are being held in market access for industrial goods which is an area of critical concern, an attempt is being made to determine what members ought to do in services through the binding of autonomous levels of liberalization.

India said while members want removal of “water” between bound and applied commitments in services, they are not prepared to remove “water” in their Aggregate Measurement of Support (AMS) for trade-distorting domestic subsidies in agriculture.

India also asked whether major industrialized countries are ready to provide reciprocal concessions in services by removing the visa restrictions on short-term services providers in Mode 4 in return for binding commitments at the current applied level for services.

Canada demanded that the WTO secretariat circulate a paper indicating the commitments made in different sectors at the 2008 signalling conference.

Around 61 developing countries rejected Canada’s demand, saying that those commitments have no relevance in the context of the reduced level of ambition for “cutting water” in farm subsidies.

Hong Kong-China asked the WTO secretariat to convene a workshop on domestic regulation but this was opposed by the US. (SUNS8019)                        

Third World Economics, Issue No. 594, 1-15 Jun 2015, pp8-9