TWN Info Service on WTO and Trade Issues (Mar17/07)
6 March 2017
Third World Network

India's draft legal proposal for TFS
Published in SUNS #8411 dated 28 February 2017

Geneva, 27 Feb (D. Ravi Kanth) - India has called for substantial improvements in several articles of the World Trade Organization's General Agreement on Trade in Services (GATS) to "facilitate the movement of information, data, technology and natural and juridical persons in an increasingly globalized and digitized world," according to the draft legal text reviewed by SUNS.

In a thirteen-page draft legal proposal for negotiating the "Trade Facilitation Agreement for Services" (TFS), India has underscored the need for "transparency, objectivity, clarity, predictability, impartiality, reasonableness, timeliness, and easing the regulatory burden in providing the basis for realization of the full benefits of trade in services."

New Delhi wants members at the WTO to negotiate to improve "relevant aspects of GATS Article III (transparency), Article IV (increasing the participation of developing countries), Article VI (domestic regulation), Article VII (Recognition), Article XIX (negotiations on specific commitments), and the Annex on Movement of Natural Persons supplying services under the agreement (Mode 4), with a view to addressing issues relevant for facilitating trade in services."

It has emphasized "the need to facilitate increasing participation of developing and especially least-developed country members in trade in services, including inter alia through assistance and support for capacity building with a view to strengthening their domestic services capacity, efficiency and competitiveness."

Given the "special economic situation and their development, trade and financial needs," LDCs must be accorded special consideration, India argued.

In Section I, India has included ten articles that would form the core part of improvements to be negotiated for facilitating trade in services in Mode 1 (cross-border supply of services), Mode 2 (consumption abroad) and Mode 4 (movement of natural persons). It has not called for any improvements in Mode 3 (commercial presence).

The ten articles in Part I include:

i. "Scope and definitions" in Article 1;

ii. "Publication and availability of information" (publication, opportunity to comment and information before entry into force) in Article 2;

iii. "Administration of measures" (single window, application timeframes, electronic application and acceptance of copies, processing of applications, appeals and review, information and verification requests, fast track procedures) in Article 3;

iv. "Fees and charges" in Article 4;

v. "Administration of economic needs tests" in Article 5;

vi. "Provisions pertaining to recognition" (qualification and licensing requirements and recognition agreements) in Article 6;

vii. "Facilitating cross-border flow of information" in Article 7;

viii. "Facilitating consumption abroad" (cross-border insurance coverage and emergency authorization in Mode II of GATS) in Article 8;

ix. "Provisions facilitating movement of natural persons (grant of temporary entry, multiple entry and social security contributions - in Mode 4);

x. "Cooperation among competent authorities.

In "Development Provisions" of Section II, India has proposed what ought to be the "special and differential treatment" provisions in Article 11, and "technical assistance" in Article 12.

And in the final Section III, India has spelled out what are called "institutional arrangements and final provisions."

The "institutional arrangements" in Article 13 include "committee on trade facilitation in services" and "national committee on trade facilitation in services."

The Article 14 in Section III includes "final provisions" such as "developed countries shall implement this agreement from the date of its entry into force."

But "developing country members" shall not be required to apply the provisions for a period of [X] years from their date of entry into force." Further, the developing countries can ask for extension "before the end of this transitional period" for implementing the disciplines.

The LDCs are exempted from implementing the provisions of the TFS agreement but are "encouraged to implement the provisions" to the extent compatible with their special economic situation and their development, trade and financial needs.

In effect, India is asking for substantial improvements in Mode 1 (cross-border services), Mode 2 (consumption abroad), and Mode 4 (movement of natural persons or short-term services providers).

Articles 1 to 5 call for transparency and administration of measures, including single window clearance, electronic application and acceptance of copies, fast track procedures, reasonable fees and charges commensurate with the costs incurred by the competent authorities, and ensuring that "economic needs test - where applied - do not result in undue delays and uncertainty for service suppliers."

Given the barriers and burdensome measures imposed by industrialized countries in trade in services, the difficult areas of India's proposal are in facilitating consumption abroad such as medical tourism in Article 8 and provisions facilitating movement of natural persons in Article 9.

In "facilitating consumption abroad" in Article 8 of the Indian proposal, New Delhi is proposing "cross border insurance coverage" i.e., "in order to enable meaningful access to services consumed in another member, each member shall encourage the insurance services providers in its territory to enable insurance coverage in respect of health related services availed in another member" and "members shall endeavour to expedite the processing of immigration formalities in respect of service consumers who are seeking medical services or such other services that are urgent and/or essential."

In Article 9 concerning "provisions facilitating movement of natural persons," India is asking WTO members to negotiate on "grant of temporary entry," including "develop[ing] a scheme for GATS visa applicable for categories of natural persons committed in their schedule of specific commitments", granting "multiple entry" to services suppliers, and exempting short-term services providers from social security contributions in the foreign country where the services is going to be provided.

Further, India is proposing that where social security contributions are not exempted, then the member which has collected contribution "shall refund such contribution, or the unused portion thereof, to the short-term services provider at the time such short-term providers return to his/her home country."

India's proposal could not have come at a more inappropriate time than now, particularly when the Trump administration is talking of abandoning the multilateral trading system and opting for bilateral free trade agreements where it can dictate letter and verse of any prospective deal.

Also, when the developed countries are resorting to worst and cruel forms of "visa-vetting", particularly in the land of so-called "freedom and opportunity"- i.e, the United States, India's proposal could take decades before anything can happen in the movement of skilled short-term services providers.