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Info Service on WTO and Trade Issues (Mar23/10) Geneva, 28 Mar (D. Ravi Kanth) — Attempts seem to be underway by members of the controversial plurilateral Joint Statement Initiative (JSI) on domestic regulation (DR) in services, including the United States and the European Union, ostensibly to “frustrate” India and South Africa who have raised technical and systemic objections to the schedules of specific commitments submitted by the 35 JSI members, by refusing to give written replies to their objections, said people familiar with the development. India and South Africa raised several objections – both technical and systemic – arising from the notifications of specific commitments under the modification of schedules as contained in document S/L/80. The two countries concluded meetings with the 35 JSI members by 20 March. While South Africa held meetings with all 35 JSI members in one go on 10 March, India held consultations with each member by 20 March. The JSI members who participated in the consultations with South Africa and India were Albania, Argentina, Bahrain, Canada, Chile, China, Costa Rica, the European Union (which includes 27 member countries), Georgia, Hong Kong, China, Iceland, Japan, Kazakhstan, Korea, Liechtenstein, Mauritius, Mexico, Moldova, Montenegro, Nigeria, North Macedonia, New Zealand, Norway, Paraguay, Peru, Singapore, Switzerland, Chinese Taipei, Thailand, Ukraine, United Arab Emirates, the United Kingdom, the United States of America, the Russian Federation, and Saudi Arabia. Following the meetings, the two countries apparently sought written replies to the oral answers provided by the JSI members in order to gain certain legal clarity/certainty, said people familiar with the consultations. However, the three co-conveners of the JSI on domestic regulation in services – Costa Rica, the European Union, and Australia (though Australia is yet to submit its notification) – simply refused to provide their replies made during the consultations in writing to India and South Africa, compounding the problem of them making a proper assessment. “Nothing obliges us to give the answers in writing,” said a JSI participant, preferring not to be quoted. The participant claimed that there are no rules in the WTO’s General Agreement on Trade in Services (GATS) that requires members seeking modification in their services schedules to give their replies in writing to the objections raised by any member. Further, the JSI participant argued, under Article XVIII of the GATS concerning additional commitments, “members may negotiate commitments with respect to measures affecting trade in services not subject to scheduling under Articles XVI or XVII, including those regarding qualifications, standards or licensing matters. Such commitments shall be inscribed in a Member’s Schedule.” According to another JSI participant who took part in the consultations, under Article XXI of the GATS concerning modification of schedules: “(a) A Member (referred to in this Article as the “modifying Member”) may modify or withdraw any commitment in its Schedule, at any time after three years have elapsed from the date on which that commitment entered into force, in accordance with the provisions of this Article; (b) A modifying Member shall notify its intent to modify or withdraw a commitment pursuant to this Article to the Council for Trade in Services no later than three months before the intended date of implementation of the modification or withdrawal.” In the worst-case scenario, the JSI participant said, the 35 JSI members could potentially raise a fresh trade dispute under the GATS provisions that are allegedly being violated by India and South Africa. It appears that the JSI members seem to be adopting a “tactical” stand by allegedly attempting to “frustrate” India and South Africa in their efforts to come to any proper conclusion soon, said participants, who asked not to be quoted. If the prevailing situation continues without any response from India and South Africa, then the JSI participants could further modify their specific commitments under the provisions of document S/L/84. Document S/L/84 states that “modifications in the authentic texts of Schedules annexed to the GATS not resulting from action under the procedures for the implementation of Article XXI of the GATS (modification of schedules) adopted by the Council for Trade in Services on 19 July 1999, which consist of new commitments, improvements to existing ones, or rectifications or changes of a purely technical character that do not alter the scope or the substance of the existing commitments, shall take effect by means of certification.” However, it says that “at the end of the 45-day period, if no objection has been raised, the Secretariat shall issue a communication to all Members to the effect that the certification procedure has been concluded, indicating the date of entry into force of the modifications.” More importantly, it emphasizes that: “Any Member wishing to object to the certification shall submit a notification to that effect to the Secretariat for circulation to all Members. A Member making an objection should to the extent possible identify the specific elements of the modifications which gave rise to that objection. The objecting Member(s) and the modifying Member shall enter into consultation as soon as possible and shall endeavour to reach a satisfactory solution of the matter within 45 days after the expiry of the period in which objections may be made. When an objection has been notified, the certification procedure shall be deemed concluded upon the withdrawal of the objection by the objecting Member or the expiry of the period in which objections may be made, whichever comes later. Such a withdrawal shall be communicated to the Secretariat. When more than one objection has been raised, the certification procedure shall be deemed concluded upon the withdrawal of the objections by all objecting Members or the expiry of the period in which objections may be made, whichever comes later. The Secretariat shall issue a communication informing all Members of the withdrawal of the objection(s) and the conclusion of the certification procedure, indicating the date of entry into force of the modifications.” “TALKING PAST EACH OTHER” In a way, the JSI members are attempting to address only the “technical” issues concerning their services domestic regulation-specific commitments while deliberately ignoring the “systemic” issues raised by India and South Africa over their schedules, said participants, who asked not to be quoted. The consultations seem to have become an exercise of “talking past each other” without addressing all the issues – both technical and systemic – raised by the two developing countries. Yet, the JSI participants seem to have “turned a deaf ear” to the objections raised by India and South Africa over the systemic issues, said participants, who asked not to be quoted. India and South Africa had complained that the WTO is a multilateral organization that allows multilateral negotiations that some have allegedly taken illegally out of its formal structure to conclude the JSI on services domestic regulation, said a negotiator, who asked not to be quoted. According to a joint proposal (WT/GC/W/819/Rev.1) issued on 28 April 2021, India, South Africa and Namibia argued that the JSIs allegedly violated the following “fundamental principles and objectives of the multilateral system, enshrined in the Marrakesh Agreement”:
* Art. II.1: “The WTO shall provide the common institutional framework for the conduct of trade relations among its Members …”; * Art. III.2: “The WTO shall provide the forum for negotiations among its Members concerning their multilateral trade relations”; * Consensus-based decision-making, as enshrined in Arts. III.2, IX, X, and also X.9 of the Marrakesh Agreement; * The procedures for Amendments of rules as articulated in Art. X. India, South Africa and Namibia argued that the new form of “plurilateral(s)” or “Open Agreements” are inconsistent with the WTO’s core principles as set out in the Marrakesh Agreement. Further, India, South Africa and Namibia contended that “the Marrakesh Agreement provides that the agreements and associated legal instruments included in Annex 4 to the Agreement are “Plurilateral Trade Agreements”.” “The Ministerial Conference, upon the request of the Members party to a trade agreement, decides exclusively by consensus to add that agreement to Annex 4,” they said, suggesting that there was no consensus either at the WTO’s eleventh ministerial conference (MC11) in Buenos Aires in December 2017 or now. According to the three countries, “the JSI proponents intend to create a new set of Agreements, which are neither multilateral agreements nor Plurilateral Agreements [as defined in Article II.3 of the Marrakesh Agreement].” Further, the three countries said the JSI proponents “appear to suggest that when offered on a most-favoured- nation (MFN) basis, no consensus is required for bringing in these new rules into the WTO.” “This approach, however, is legally inconsistent with the fundamental principles and procedures of the Marrakesh Agreement …”, India, South Africa and Namibia said in their proposal. According to the proposal submitted by the three countries, “a procedure for amending rules is enshrined in Article X of the Marrakesh Agreement. On the other hand, the GATT and GATS contain specific provisions for modifications of Schedules.” They said that the JSI proponents “have confused amendment to rules and modifications to schedules, and the proposed introduction of new agreements into the WTO to bypass the requirements of Article X of the Marrakesh Agreement. However, new agreements are not amendments to schedules.” It remains to be seen in which direction the face-off between India and South Africa on one side, and the 35 JSI members on the other, will proceed due to exchanges that appear to be lacking in trust among the two sides, said participants who asked not to be quoted. +
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