TWN Info Service on WTO and Trade Issues (Feb10/09)
17 February 2010
Third World Network

Members reiterate their positions at services special session
Published in SUNS #6861 dated 11 February 2010

Geneva, 10 Feb (Riaz K. Tayob) -- A meeting of the Special Session of the Council for Trade in Services of the World Trade Organization (WTO), where the Doha Round services negotiations are taking place, saw Members merely reiterating their previously-held positions. In addition, further consultations are to be held on the Chair's report for the Doha stocktaking exercise expected to take place end March, trade diplomats said.

The half-day meeting on Tuesday was chaired by Ambassador Fernando de Mateo of Mexico.

The meeting also considered the implementation of the modalities for the special treatment of Least Developed Countries in the negotiations on trade in services, the work of the subsidiary bodies (reports by Chairpersons) and review of the progress in the negotiations.

Speaking to SUNS after the meeting, several trade diplomats relayed their understanding of what transpired in the meeting.

One trade diplomat confirmed that another cluster of talks will be held in March along with other meetings.

Another trade diplomat said that the sequence of meetings will probably be a cluster of services negotiations in March, and a Council for Trade in Services Special Session (CTS-SS) to provide input into the Senior Officials' meeting, leading into the end March stocktaking exercise.

According to a trade diplomat, in the meeting on Tuesday, the developed countries largely applied pressure to secure their market access demands in services despite there being little progress on developing countries' needs in the agriculture and non-agricultural market access (NAMA) negotiations.

In broad terms, the demandeur developed countries (including Canada, Australia and the European Union) that engaged in bilateral services talks said that they were not satisfied with the level of ambition shown. There had been clarification on the "offers and signals" but there was a reluctance to negotiate further. One developed country reportedly said that the bilateral talks were running out of steam, according to the trade diplomat.

India had engaged in plurilateral talks focused on cross-border trade (Mode 1) and movement of natural persons (Mode 4) and reported that there were no improvements in the offers, said another trade diplomat.

South Africa was of the view that considerable progress has been made in taking the negotiations forward. It said that throughout the bilateral and plurilateral processes, the "Enchiladas", and the Signaling Conference, developing countries have displayed their commitment to achieving a credible outcome in these negotiations.

However, said South Africa, "we continue to see a lack of ambition from demandeur countries in making commitments in sectors and modes of supply of export interest to developing countries and this is particularly evident in Modes 1 and 4."

Of even more concern is that some of the largest demandeur countries continue to drive down the level of ambition in the Agriculture negotiations, whilst simultaneously calling for increased ambition in services, added South Africa.

"This does not bode well for a successful conclusion of this Round," warned South Africa, calling on these Members to respect in full the mandate received from Ministers in Doha.

The session also discussed reports from the subsidiary bodies of the Council for Trade in Services.

The session heard that the Working Party on Domestic Regulation (WPDR) was building on the 20 March 2009 text of the previous Chair. A trade diplomat said that there was some perceived progress in the talks. Proposals for amendments to the text include some new and previous proposals.

South Africa voiced concern that valuable progress on the Chair's text of March 2009 was unraveling. It believed that this text achieved a fair compromise, reflecting a balance of the views of Members.

While it acknowledged that elements of the text can be improved upon, it stressed that to completely re-open this text to new proposals would be a waste of the years of painstaking work that went into developing this text and would constitute a serious setback for these negotiations.

With respect to the Working Party on GATS Rules (WPGR), a trade diplomat said that there was a feeling of new life and a new vibrancy in the discussions on subsidies.

However, views were still "polarised". Some Members were of the view that subsidies in services have no trade distortive effect, while others wanted a focus on the trade distortive effect of such subsidies.

South Africa said that while it did not want the disciplines to constrain its policy flexibility to address legitimate development objectives, it however could not proceed on the basis that services subsidies have no trade distorting effects, "and to do so would be naive and irresponsible".

South Africa believed that an information-sharing exercise will be a valuable first step in generating greater transparency and clarity on the issue. It however stressed that this will only add value if all Members, particularly those that dominate services trade, are active participants in the process.

South Africa further explained that the initial information-sharing exercise elicited a less-than- optimal response, but this should not prevent the quest for the establishment of disciplines.

Trade diplomats said that there have been no new real developments in talks on Government Procurement and on the Emergency Safeguard Measure (ESM). However, on the ESM, there was still not much enthusiasm, a trade diplomat said. The session heard that there were discussions and proposals on what may constitute a "domestic industry". However, he said, Members' positions "remained far apart".

A Draft Decision titled "Preferential and More Favourable Treatment to Services and Services Suppliers of Least-Developed Countries" (undated) was circulated at the meeting. Further discussions on this document are to take place, according to trade diplomats.

The draft decision is essentially a waiver from the most-favoured nation treatment clause (Article II. 1) of the General Agreement on Trade in Services (GATS) to allow Members to provide preferential and more favourable treatment to services and services suppliers of LDCs.

There are some paragraphs that are as yet undecided and thus reflected in brackets.

There are two alternate operative paragraphs one (in brackets) regarding the formulation of the waiver.

According to a trade diplomat, the first alternative grants a more general waiver to LDCs in respect of Article II. 1. Some countries, he said, regarded this formulation as obscure.

(The first alternative paragraph one states that the obligations imposed under paragraph 1 of Article II of the GATS are hereby waived to the extent necessary to permit Members to provide preferential and more favourable treatment to services and services suppliers of least-developed countries without according the same treatment to like services and service suppliers of all other Members provided that any such treatment shall be granted immediately and unconditionally to like services and service suppliers of all least developed countries.)

The second alternate, which some developed countries preferred, states that notwithstanding Article II. 1, Members may provide preferential and more favourable treatment with respect to the application of measures described in Article XVI (market access).

Both alternates do state that such treatment shall be granted immediately and unconditionally to like services and service suppliers of all LDC Members.

Paragraph 5 states that this waiver shall terminate upon the expiration of a period of fifteen years from the date of its adoption. The fifteen year period is in brackets and hence undecided.

The waiver relies on the UN designation of LDCs (paragraph 6).

According to trade diplomats, there will be further consultations by the Norwegian consultative group on the process, as there were quite a number of questions on the draft that had to be reviewed. Japan, according to a trade diplomat, said that while it was flexible, the time period of 15 years should be looked at after the other parts of the draft had been settled.

A trade diplomat told SUNS after the meeting that a problem was that the format, scope and structure of the Chair's report for the stocktaking exercise was not known. The Chair, De Mateo, was to undertake consultations with Members on his report.

According to a trade diplomat, during the discussions, Pakistan reportedly said that for a stocktaking exercise, there should be stock available.

Furthermore, the trade diplomat added that he had garnered from various discussions outside that WTO Director-General Pascal Lamy wanted the Chairs to produce texts that will be used as the basis for the stocktaking exercise. Lamy, he said, was understood to want "across the board texts" prepared by individual Chairs.

Meanwhile, at a separate meeting Tuesday morning of the Committee on Specific Commitments (CSC), Members received a proposal/communication from Japan regarding the "relationship between old and new commitments in the Doha Round negotiations" (a room document dated 3 February).

According to Japan, the paper has been prepared in order to identify elements to be discussed with regard to the relationship between old and new commitments in the Doha Round negotiations.

The document states that it builds on the past discussions and tries to indicate a possible way forward to find an appropriate solution to this important issue. Trade diplomats said that Australia and Canada had in the past also sought to address this matter.

According to a trade diplomat attending the CSC session, little progress was made on the proposal. There was a common understanding that there should not be a "rollback" of commitments already made in the scheduling exercise during the scheduling of commitments in the current round.

The Japanese proposal sought a mechanism to address "rollbacks" and ensure "legal stability of the new schedules".

According to the trade diplomat, in its intervention, the US was of the view that according to the Vienna Convention (on the Law of Treaties), the previous schedule (GATS schedules filed at Marrakesh and/or under subsequent protocols) would not have legal effect.

Meanwhile, the Working Party on Domestic Regulation (WPDR) continued its discussions on 2-3 February. In its Annotated Agenda, the WPDR has suggested an approach for the contents of the Chair's report for the end-March Doha stocktaking exercise.

The WPDR, which falls under the Council for Trade in Services, is considering the March 2009 Chairperson's draft disciplines on Domestic Regulation (known as Peter's text) which is intended to replace certain current disciplines contained in GATS Article 6.

Members discussed the preparation of the WPDR report by current Chair, Ms Misako Takahashi of Japan, for the March stocktaking exercise.

According to trade diplomats that spoke to SUNS after the meeting, the Chair will conduct informal consultations with Members concerning the preparation of her report for the stocktaking exercise.

Regarding the preparation for the end-March stocktaking, the Annotated Agenda states that at last December's WPDR meeting, several proposals for a product were made, including for the Chair to prepare a revised text, a bracketed text reflecting textual proposals, an annotated text, or a state-of-play document.

In considering the various proposals, and after further conversations with various delegations, the Chair believed that these ideas can be integrated to some extent.

The Chair suggested, in the Annotated Agenda, to prepare a detailed annotation of the current text, taking into account all text proposals that have been made on the various paragraphs during consultations since June 2009.

The document would also contain a Chair's assessment of the state-of-play and, as appropriate, contain drafting suggestions or ideas for further work.

The WPDR meeting also discussed the Development Chapter (10) of the March 2009 Chairperson's draft disciplines on Domestic Regulation (known as Peter's text) and the meaning of "soft-law" language in the draft disciplines.

The meeting further discussed the communication/proposal from China, Hong Kong (China) and Pakistan on paragraph 2 of Peter's text which sought to replace "disguised restrictions on trade" with "unnecessary barriers to trade".

The new proposed language from the three Members now reads: "The purpose of these disciplines is to facilitate trade in services by ensuring that measures relating to licensing requirements and procedures, qualification requirements and procedures, and technical standards are based on objective and transparent criteria, such as competence and the ability to supply the services, and do not constitute unnecessary barriers to trade in services."

According to a trade diplomat, following some discussions on this, the Chair summarised that this is not a new issue and was first proposed in 2006. After a lot of debate, the Committee arrived at "disguised restrictions on trade", as this was more agreeable for countries.

The Chair said that three issues are not clear. First, there is no common understanding of the issue. Two, whether the necessity test as proposed should be part of the text. And three, if it is part of the text, then in which part: the operative or preamble. +