TWN
Info Service on WTO and Trade Issues (Feb15/02)
13 February 2015
Third World Network
High-level meeting on operationalising LDC services waiver
Published in SUNS #7958 dated 10 February 2015
Geneva, 9 Feb (Kanaga Raja) -- The WTO Council for Trade in Services
convened a high-level meeting on 5 February where a number of developed
country members and developing country members in a position to do
so indicated the services sectors and modes of supply where they intend
to provide preferential treatment to the Least Developed Countries
(LDCs).
Under the Bali Ministerial Decision of 7 December 2013, the Council
for Trade in Services was instructed to initiate a process aimed at
promoting the expeditious and effective operationalisation of the
LDC services waiver.
According to the Decision: "With a view to accelerating the process
of securing meaningful preferences for LDCs' services and service
suppliers, the Council for Trade in Services shall convene a High
level meeting six months after the submission of an LDC collective
request identifying the sectors and modes of supply of particular
export interest to them. At that meeting, developed and developing
Members, in a position to do so, shall indicate sectors and modes
of supply where they intend to provide preferential treatment to LDC
services and service suppliers."
"Members, in their individual capacities, are encouraged at any
time to extend preferences to LDCs' services and service suppliers,
consistent with the waiver Decision, which have commercial value and
promote economic benefits to LDCs. These preferences may accord, inter
alia, improved market access, including through the elimination of
economic needs tests and other quantitative limitations," the
Decision further said.
According to trade officials, the non-LDC members on 5 February made
their announcements based on the collective request that the LDCs
had submitted in July 2014 (S/C/W/356) indicating the services sectors
and modes of supply of key interest to the LDC group.
In their collective request submitted last July, the LDCs said that
due to a number of barriers and encumbrances, it is clear that LDC
services suppliers are experiencing difficulties in being able to
supply services sought by existing and potential consumers and clients
in a number of WTO Members, both developed and developing countries.
"Underpinning such difficulties are, for example, obstacles to
recognition of LDC educational institutions, diplomas, and professional
skills; imposition of transit taxes and other fees on tourists travelling
to LDCs; and onerous application fees for visas, licenses, and residence
and work permits, which for many LDCs are tantamount to one month's
salary for their families - a detriment, but also a severe loss if
the visa is not granted and when the fees are not returned. Visa denials
stamped on passports, or similar stamps with the same implication,
and other measures, serve to stigmatize qualified LDC suppliers who
have been presented with offers or are contracted abroad," the
LDCs had said in the collective request.
The collective request had further noted that other barriers range
across several sectors impacting Modes 1, 2, 3 and 4 market access
and national treatment. But the most staggering market access, administrative
and other barriers were in Mode 4, where, LDC services suppliers indeed
have secured customers abroad. Some LDC companies willing to enter
markets and establish under Mode 3 are also facing barriers similar
to those they face, as natural persons, under Mode 4.
At the high-level meting on 5 February, trade officials said that
in their indications, the non-LDC members covered most, if not all,
sectors in modes 1, 2 and 3 including professional services, IT and
computer services, other business services, construction, distribution,
financial services, transport and logistics, tourism, and sporting
and other recreational services.
Some members made specific indications, with Canada, for example,
saying that it would respond to 75% of the requested sectors.
In mode 4, some members responded to the request concerning contractual
services suppliers, independent services suppliers and intra-corporate
transfers.
According to trade officials, these included, amongst others, India,
which made a specific offer to train 1,000 persons from the LDCs each
year; China, which said that it would train 1,200 LDC professionals
in 2015 and organise 19 training sessions on various sectors; Japan,
which said that it would waive resident permit fees and not impose
economic needs tests and labour market tests; and Korea, which made
offers in mode 4.
Many members made their offers based on their market access offers
in the Doha Round context. For example, the US said that it could
immediately grant preferential treatment in the translation and interpretation
services.
According to trade officials, many members including Mexico, Norway,
Australia, Iceland, and the EU went further by using their most liberal
Free Trade Agreements as a basis.
Mexico and the US proposed to extend the outcomes of the Trade in
Services Agreement (TISA), which is being negotiated outside the WTO,
specifically to the LDCs.
Many members including Australia, the US, Switzerland, New Zealand,
Chinese Taipei, Iceland, Hong Kong-China, Liechtenstein and Russia
also said that their markets are already open.
Others touched upon the supply side constraints faced by the LDCs
and that these be addressed through technical assistance activities,
with the US, for example, mentioning one of its USAID programmes.
According to trade officials, all members expressed hope for a prompt
domestic process so that they could notify their preferences for the
LDCs to the WTO as soon as possible.
Members agreed to set 31 July 2015 as the deadline for the submission
of the preferences for the LDCs, but preferably before that, trade
officials added.
As to the next steps, Members will assess this high-level meeting
at the next Services Council meeting on 19 March 2015.
According to the WTO website, in a video message, WTO Director-General
Roberto Azevedo said that it was vital to "implement all the
elements of the Bali Package, and particularly the decisions on LDC
issues, without delay."
He also urged potential preference-granting members "to indicate
where they intend to provide preferential treatment to LDC services
and service suppliers."
Speaking on behalf of the LDC Group, Ms Amelia Anne Kyambadde, Minister
of Trade, Industry and Cooperatives of Uganda, said that Bali was
a significant Ministerial for the WTO in that many Members lauded
the results on Trade Facilitation as the first Agreement from the
Doha Development Round in WTO history.
However, of the decisions taken for LDCs in Bali, the decision to
operationalize the 2011 MC8 LDC Services Waiver Decision came with
promises of concrete results, after the LDC Group could examine its
interests and table a collective request.
"In Bali, we recognized that the promise to grant preferential
treatment to LDCs services and services suppliers in the form of a
waiver, was suffering from attrition. That waiver decision has a shelf
life of only 15 years. Three years have slipped away with no notifications
of commitments from any Member in favour of services preferences to
LDCs," said the Minister.
As far as the sectors and modes of supply are concerned, Uganda said
that its request has provided specificity, priorities, and flexibility.
"We reduced our ambition on the supply of services through the
movement of natural persons (Mode 4). In the collective request, aside
from what we have asked about market access and quotas, we actually
focused our attention on preferences in administrative areas such
as reducing procedures, reducing fees and paperwork for visas, work
permits, residents permits and the like where LDC services suppliers
have an offer or obtained a contract in your country."
According to Uganda, onerous application fees for visas, licenses,
and residence and work permits, for many LDCs are tantamount to one
month's salary for their families, also a severe loss if the visa
is not granted and the fees are not returned.
"We believe that Members can provide preferences to LDC suppliers
in the form of reduced application procedures and reduced fees, whether
or not the granting Member is providing market access preferences
or bindings."
In Mode 3, the supply of services through commercial presence, Uganda
said that LDC small and medium sized enterprises have suffered similar
barriers that they found in Mode 4, in terms of burdensome paperwork,
restrictions, and requirements that render the ability to form a presence
impossible.
"Some Members have informed us that their markets are already
open and that they are considering assistance initiatives to help
LDC suppliers avail themselves of such openness. However, we remind
Members that in WTO we speak of market access bindings and certainty,"
said Uganda.
Uganda underlined that the high-level meeting will be a decisive test
on the credibility of the WTO. "A successful outcome of this
meeting will greatly impact the lives and livelihoods of millions
of our poor people."
The Commerce Minister of Bangladesh, Mr Tofail Ahmed, told the high-level
meeting that the issue of preferential market access in services is
a long-standing one. It is a well recognised fact that the LDCs need
preferential market access to better integrate them into the multilateral
trading system.
With this spirit, he noted, the GATS contains a specific provision
for providing special priority to LDCs in the case of services.
"However, we had to negotiate year after year to develop a mechanism
for providing special priority to LDCs. Finally, we ended up with
a Waiver Decision in 2011 though the GATS came into force in 1995
along with the WTO. But, the Waiver Decision is not yet operationalized."
The Minister said that to achieve the goal of becoming a middle-income
country by 2021, "we need faster growth of economy. We are trying
to have faster growth by utilizing trade opportunities evolving in
international trade. In fact, we are doing better in trade in goods.
One of the reasons of our better performance is DFQF [duty-free quota-free]
market access we are enjoying in various markets of our friendly countries."
However, he said, "our trade in services still remains very poor
though 50% of our GDP comes from services. We have enormous potential
in services. Being a home of 160 million people, Bangladesh has a
large pool of human resources. We are capable of providing many kinds
of services based on our human resources, if proper market access
opportunities are provided."
According to trade officials, in its remarks, the US acknowledged
and appreciated the efforts made and the fact that the WTO has now
moved to a more tangible phase with regards to this decision on the
LDCs. It has the potential to produce meaningful outcomes.
The US said that it has a very open market for services with few restrictions
including an open market in tourism, education, ICT services and the
creative services industries. It does not impose work permit and residence
permit requirements and its mode 4 commitments are among the best
in the WTO.
The US said that it believes that the most useful focus of the effort
is to examine and address export capacity constraint issues, and it
remains committed to working with the LDCs in this regard.
The US also mentioned its ambition to liberalise the services trade
including through the TISA negotiations. It is ready to extend the
outcomes of the TISA to the LDCs.
It also said that it could immediately provide access to LDCs of its
translation and interpretation services, which is a revised offer
that it made under the Doha Round.
The US also said that it needs more time to process what it had heard
today before it can maybe make more offers before the 31 July 2015
deadline.
The EU said that its preferences will include both a significant sectoral
scope, and market access in specific sectors and modes of supply.
The indications - or signals - presented today, will be followed by
a formal notification with a specification of these unilateral preferences,
once a formal internal legal decision is taken.
For Mode 4, the EU is prepared to offer preferences that constitute
a comprehensive improvement over existing GATS commitments. These
will include key elements of the improvements made in its DDA offers,
such as the expansion of categories, sectoral scope and periods of
stay - and benefits found in its recent preferential agreements, such
as a broadening of the sectors covered by commitments.
The EU said it has progressively improved its DDA-offers, for example,
by adding new commitments for graduate trainees, doubling the period
of stay for contractual services suppliers, or adding the categories
of Independent Professionals (IPs) and Graduate Trainees. Further,
such consolidated benefits now apply on an EU-wide basis in the enlarged
Union, subject to specific limitations.
In this context, the EU mentioned preferences relating to intra-corporate
transfers, business visitors, and contractual service suppliers.
The EU said that it is preparing preferences, in addition to the Mode
4 elements, within all groups of sectors identified in the LDC collective
requests. The EU is prepared to offer preferences, going beyond the
extensive offers already presented as part of the DDA, in a number
of sectors including for example: Travel and tourism services including
also convention services; Financial services, possibly also including
payment services; Transport and logistics services; ICT and outsourcing
services.
The collective requests also cover an extensive ("catch-all")
list of sectors in addition to the groups mentioned above, the EU
noted, saying that it welcomes this approach, and is prepared to offer
preferences for a majority of these.
This would imply market access and national treatment commitments,
that builds on the EU's DDA offer supplemented with further improvements
found in recent development-oriented FTAs. Examples of this include
professional services such as auditing and taxation services, business
services like real estate, design, rental and leasing services, management
consulting, repair and maintenance services and several more, it said.
India proposed to grant preferential treatment in the areas of market
access, technical assistance and capacity building and visa-related
offers. In mode 4, these include engineering services, integrated
engineering services, computer services, management consulting, project
management services other than for construction, hotel and lodging,
travel agency and tour operator services, and tour guide services
other than in the English language.
It suggested new improvements in its commitments in the category of
installer of services, which was requested by the LDCs. Offers in
mode 3 will be without any foreign equity limitations, it said.
In the area of technical assistance, India proposed to earmark 25%
of all technical assistance and capacity building opportunities to
LDC members. It will be providing preferential treatment to services
suppliers providing consultancy services in training programmes in
financial services, as well as consultancy courses for LDC professionals.
It would accord priority in training of LDC professionals and is also
committed to promoting tourism, which is an important services sector
for the LDCs. It will be providing free space for the LDCs during
the Indian edition of the Global Exhibition on Services and every
year thereafter, as well as for other events. It is also proposing
to waive visa fees for LDC applicants.
According to trade officials, China announced three categories where
it would be granting preferential treatment to the LDCs - market access,
domestic regulation and capacity-building and assistance.
Under market access, in the area of mode 4, China said that it will
grant business visitors the possibility to stay in the country for
up to six months, applicable to all the 100 services sectors and sub-sectors
that have been included in China's services schedule.
In air transportation, China said that there will be the possibility
of establishing joint venture enterprises with Chinese partners under
mode 3. It also mentioned building and cleaning services, and printing
and packaging material services.
On domestic regulation, China said it will provide preferential treatment
in tourism, whereby it will simplify and streamline the procedures
for the LDCs and shorten the timeframe for the processing of applications.
On capacity building, China said that within the framework of South-South
cooperation, it is offering to reinforce capacity building. It will
invite 1,200 professionals from the LDCs to visit China and will organise
19 training sessions and will invite around 500 persons from the LDCs
to attend those sessions. The sessions will cover tourism services.
China said that it will assist further in the construction of infrastructure
in the tourism sector, as well as the construction of services facilities
such as hospitals, schools, stadiums and theatres.
In some closing remarks at the end of the high-level meeting, the
Chair of the Services Council, Ambassador Choi Seokyoung of the Republic
of Korea, noted the "very high level of engagement" from
the preference granting countries.
More than 30 members intervened under this agenda item with indications
of preferences that they would grant to sectors and modes of interest
to LDC services and service suppliers. Their willingness to contribute
substantially to the process through their indications today is a
positive development, said the Chair.
Most developed members and developing members in a position to do
so, have indicated a willingness to grant access on the basis of their
DDA offers to LDCs. Some of them have gone further and consider granting
access to LDCs on the basis of their most liberal preferential agreements.
With regard to specific sectors and modes of supply, the Chair said
that the meeting has heard from numerous delegations that they are
willing to provide improved market access in modes 1, 2 and 3, with
few, if any, restrictions in a range of services sectors, such as
professional services, IT and computer services, other business services,
construction services, distribution services, financial services,
transport and logistics services, tourism services, and recreational
and sporting services.
The Chair noted that some members have foreshadowed preferences in
more quantitative terms. One member, for example, indicated that it
would respond to some 75% of requested sectors with the granting of
either full access, or access with very limited restrictions.
With regard to the collective request on Mode 4, the Chair observed
that a number of delegations have stated their willingness to respond
specifically on the sought-after categories of contractual service
suppliers and independent service suppliers for a range of professions
and occupations, on which, only very few commitments have been made
at the multilateral level.
Additional commitments on other requested categories, such as graduate
trainees and installers have equally been indicated by several Members.
In addition, on other categories such as business visitors or intra-corporate
transferees, GATS-plus preferences for LDCs have been detailed by
many Members.
Several Members indicated that specific restrictions would not apply
to LDC members, such as economic needs and labour market tests, and
have indicated the extension of timeframes for the duration of stay
of natural persons engaged in Mode 4 movement.
According to the Chair, one member specifically indicated the waiving
of visa fees for business and employment visas for LDC persons. Another
member proposed waiving of residence permit fees. Several members
reported on their efforts to streamline and rationalize their visa
procedures which would benefit LDC service suppliers.
Compared to these substantive indications, the Chair said that the
meeting heard fewer specifics on the area of recognition and professional
accreditation.
The Chair further said that a large number of members emphasised the
importance of targeted technical assistance to address supply side
constraints, and to enhance the participation of LDCs in world trade
services.
A number of concrete initiatives conceived to benefit LDC services
suppliers were mentioned, many of them relating to training programmes
to the benefit of LDC service suppliers, and support in infrastructure
upgrading.
According to the Chair, a number of members noted the large degree
of openness that they are already extending on an MFN-basis to all
WTO members, including LDCs.
"I believe we would all agree that to the extent members are
fully liberalized with regard to Article XVI measures, there is no
scope for preferences under this Article. That said, numerous specific
requests by the LDC Group relate to measures that go beyond Article
XVI, and relate to positive measures that would further facilitate
the supply of services by LDCs. Such measures require consideration
by all Members, also those who are generally more ‘open'", said
the Chair.
The Chair underlined that it is crucial to follow up on the verbal
indications delivered today through concrete notifications to the
Council. +
