Uruguay abandons TiSA

Uruguay has become the first country to pull out of plurilateral negotiations on a controversial accord to open up services markets.

by Roberto Bissio

MONTEVIDEO: Just a week before the deadline for submitting national offers on liberalization of services sectors under the ongoing “secret” talks for a Trade in Services Agreement (TiSA), Uruguayan President Tabare Vazquez decided on 7 September to abandon the plurilateral negotiations and has directed the government to comply.

Uruguay is the first participant to abandon the ongoing TiSA talks. At an earlier stage, when the plurilateral talks idea was broached in 2012 by the so-called “Really Good Friends of Services”, Singapore was part of this group, but it withdrew as soon as the sponsors (Australia, the United States and the European Union) outlined their views and demands.

At that initial stage, the proposal was for an  “International Services Agreement (ISA)”, to be negotiated plurilaterally and lodged in the World Trade Organization as an Annex IV agreement. [See Chakravarthi Raghavan (2014), The Third World in the Third Millennium CE, Vol. 2: The WTO – Towards Multilateral Trade or Global Corporatism? (Third World Network, Penang), pp. 367-368. For an analysis of the TiSA talks and implications for the WTO multilateral trading system, see Raghavan’s article in TWE No. 597.]

The Uruguayan president’s action followed a decision taken on 5 September by a very large majority of the Frente Amplio, the governing leftist political coalition, against Uruguay continuing to be part of the TiSA negotiations. The talks are taking place in Geneva but outside the framework of the WTO and its General Agreement on Trade in Services (GATS).

The Frente Amplio’s decision considered it “inconvenient” for Uruguay to keep negotiating TiSA, “taking into account our vision on an integral development of the nation”. There were 117 votes in favour of leaving the negotiations and only 22 against it.

TiSA is widely recognized as an attempt to ultimately exert pressure on other countries to sign on to an agreement the nature of which has not been accepted within the WTO multilateral trading system and its agreements and rules. It was initiated by the United States and Australia with the European Union as a key player as well.

With the withdrawal of Uruguay from the negotiations, the remaining countries are Australia, Canada, Chile, Chinese Taipei, Colombia, Costa Rica, the European Union, Hong Kong China, Iceland, Israel, Japan, Liechtenstein, Mauritius, Mexico, New Zealand, Norway, Pakistan, Panama, Paraguay, Peru, Republic of Korea, Switzerland, Turkey and the United States. Noticeably absent are the majority of developing countries, especially the larger ones.

The factions in the Frente Amplio led by Economy Minister Danilo Astori and Foreign Minister Rodolfo Nin were the only significant ones in the coalition to support TiSA. The Movement for People’s Participation led by former president Jose Mujica voted against, even though Mujica was still president when Uruguay joined the negotiations last February.

When the Frente Amplio formally took a vote against TiSA, the right-wing parliamentary opposition offered their votes to build an ad hoc majority in favour of the agreement and thus divide the governing coalition.

However, Tourism Minister Lilian Kechichian, acting as spokesperson for the Council of Ministers, announced on 7 September that “the President respects the majority and has asked the foreign minister to implement it”.

Ministerial analyses

The governing coalition had studied the issue over four months, and before making its decision, the coalition’s governing council demanded from all ministries an analysis on how the opening up of the services sector would affect their agendas and what items they would want to include in the “negative list” of sub-sectors not to be opened up.

(A “negative list” approach means that all sectors are liberalized except for those specifically excluded. A “positive list” approach liberalizes only those sectors that are included in a predetermined list and usually also allows for conditions on such liberalization.)

The La Diaria newspaper had access to the summary of ministerial analyses presented to the Frente Amplio council by its chair, Daniel Marsiglia. According to La Diaria, the Ministry of Labour and Social Security stated that some of the TiSA requirements would contradict the norms of the International Labour Organization (ILO) that Uruguay has signed up to and that are therefore to be considered as national law.

The Ministry of Industry, Energy and Mines informed the council of the governing coalition that the proposed TiSA would imply risks to the telecommunication policies of Uruguay. Since a privatization law was repealed by referendum in 1992 the telephone company (fixed lines), the generation and distribution of electricity, the country’s only oil refinery and all water and sanitation services have been run by state-owned companies. Further, the state-owned banks, even when competing with private national and international banks, hold three-quarters of deposits, while the state-owned insurance company controls around half of the market.

Meanwhile the state-owned cellphone company has double the number of subscribers compared to the two competing foreign-owned cellphone corporations. The telecommunication policy that TiSA would challenge has allowed Uruguay to have a phone network that is 100% digitized. All towns and schools are linked via optic fibre and all children of schoolgoing age are provided with free access to the Internet, as part of the “one laptop per child” policy that Vazquez himself started in his previous presidential term. (Vazquez was president before Mujica. Both were elected by the Frente Amplio coalition of progressive parties and movements.)

The Ministry of Agriculture rejected the liberalization of some services it provides, in particular the identification and tracking of cattle which allows Uruguay to export meat at higher prices than its neighbours. The Ministry of Tourism, overseeing an area that accounts for the majority of the country’s services exports, reported that no benefits would be obtained from TiSA in its area as tourism is already liberalized. The Health Ministry reported that it is not in a position to produce a “negative list” due to the rapidly changing nature of the health services that could make such a list obsolete in a short time.

On the other hand, TiSA was positively reviewed by the Ministry of Foreign Affairs, which argued that the presence of Uruguayan negotiators in the TiSA-related meetings would help them “gain experience”. The Ministry of Economy and Finance highlighted that TiSA would bring benefits to local software producers and professional services (such as lawyers and accountants).

Interestingly, when the Frente Amplio convened a public discussion, the chair of the Uruguayan Chamber of Software expressed hope that TiSA would help them open up markets by allowing their technicians to travel abroad more freely, yet demanded that the government procurement system continue to favour offers from national companies over those from foreign corporations. It became clear during the debate that this sector, which accounts for at most 2% of national income, was ill-informed.

The so-called Mode 4 provision of services (i.e., the movement of natural persons abroad to supply a service) is excluded from the ambit of TiSA at the instance of the United States. In the US, the EU and Australia, the movement of natural persons for supply of services is governed by visa requirements of immigration policies and the application of “needs tests”. Thus the Uruguayan software industry would not have obtained from TiSA the access it wants and at the same time risked losing continued government support if the agreement they had lobbied for were to be accepted by Uruguay.

With the decisive vote, socialist parliamentarian Roberto Chiazzaro highlighted that it was the first time TiSA had been discussed widely and openly in any country and “it is remarkable how much people got informed, participated and discussed and Tabare [President Vazquez] has to be praised for having heard the people and his political organization before taking a decision”.      

Roberto Bissio is Director of the Third World Institute based in Montevideo, Uruguay. An earlier version of this article was first published in the South-North Development Monitor (SUNS, No. 8091).

Third World Economics, Issue No. 600, 1-15 September 2015, pp9-10