Bridges Weekly Trade News Digest • Volume 5 • Number 34 • 9th October 2001
GATS: Highlights From WTO Services Week
In the shadow of preparations for the Doha Ministerial Conference, WTO Members are pursuing negotiations on the liberalisation of services trade under the General Agreement on Trade in Services (GATS) during a ’services week’, which also involves talks on the completion of a GATS regulatory framework (see Bridges Weekly, 2 October 2001).
Sectoral discussions
As BRIDGES Weekly went to press, Members had completed two of the three days (5, 8 and 12 October) set aside for sectoral negotiations within the Council for Trade in Services (CTS). On 5 October, discussions focused on assessment of trade in services, autonomous liberalisation, and education services. During the second session on 8 October, the agenda consisted of various proposals relating to sectors such as transport, energy, and tourism.
5 October session
Regarding assessment — an issue considered by many developing countries as being of paramount importance — sources said Pakistan, together with supporters such as Cuba, Zimbabwe and Venezuela, introduced a draft paper relating to future work on the subject at the time it was introduced orally. Bridges will report on this draft when it becomes available.
On autonomous liberalisation (liberalisation outside negotiations on a voluntary basis), opinions continued to diverge as to whether credit for such liberalisation should be given to any Member or to developing countries only. Several developing countries argued that this is a development issue and is treated as such under other WTO Agreements, in particular relating to goods. Delegates from these Members stressed that in the context of the GATS, credit for autonomous liberalisation could be a means to operationalise Art. IV on the increasing participation of developing countries in services trade. In addition to this question of principle, Members have yet to agree on multilateral criteria for the treatment of autonomous liberalisation.
Talks later moved on to individual services sectors, commencing with the sensitive subject of education services and the presentation of a new proposal submitted by Australia (S/CSS/W/110, 1 October 2001). In resumé, the Australian paper argues for enhanced commitments in the sector, while recognising that Members must retain the right to regulate these services given their public significance.
8 October Session
Discussions on individual services sectors continued at the Special Session on 8 October, where Members addressed energy, transport, and tourism.
Japan supplemented its original proposal with a submission on energy services (S/CSS/W/42/Suppl. 3, 4 October 2001), which underscored the need for liberalisation of the sector and the problems Members face due to the lack of satisfactory classification of the energy services sector under the GATS. In parallel, Japan stressed the public interest aspect of energy services, as well as the strong linkage between energy, environment and development. The proposal calls for flexibility to address these issues, and also requests that efforts be made in all countries to harmonise energy policies with environmental policies. Specifically, Japan refers to commitments undertaken by itself and many other Members to reduce greenhouse gas emissions under the Kyoto Protocol to the UN Framework Convention on Climate Change (UNFCCC).
Reactions from the floor generally reflected the opinion that liberalisation did not mean deregulation and that there was an urgent need to address the classification issue in relation to negotiations on energy services. Cuba and Malaysia, in particular, stressed that developing countries should enjoy appropriate flexibility in meeting national policy objectives and that negotiations should strive toward increased participation of developing countries in international services trade, as stated in GATS Arts. IV and XIX.
Another point stressed by virtually all intervening countries was that negotiations were not to address the question of ownership of natural resources, which most Members hold in public trust.
Tourism
The Dominican Republic presented the revised draft Annex on Tourism (see BRIDGES Weekly reference of 2 October in this article), which is designed to discipline anti-competitive practices which impact on the sustainability of tourism. "There has been a lot of talk in these sessions of sustainable development and the implementation of Art. IV [calling for the increased participation of developing countries in services trade]. The proposal of an Annex on tourism to the GATS is the only concrete action to date going in this sense", said Ambassador Federico Cuello of the Dominican Republic.
In response to the tourism presentation, Uruguay, on behalf of the Mercosur group, stressed that the tourism sector is very important since it represents one third of the total value of trade in services. It is also a major source of foreign exchange earnings for almost all developing countries. While welcoming the revised draft, Mercosur countries felt that a first step could be to improve existing commitments and remove discriminatory limitations to the entry of service suppliers. Kenya, which has a major economic interest in tourism, took the floor to say that the GATS as it stands today is incapable of dealing with anti-competitive practices, and voiced its total support for the draft Tourism Annex. For its part, Mexico said it would shortly table its own proposal on tourism, while the EC said they wanted a new round to deal with competition issues in general.
The US made an intervention saying it could not see how the Annex would contribute to sustainable development or to bringing more tourists to destinations, and also wondered what the proponents intended with "sustainable development".
The special session will resume on 12 October. Inter alia, Members will address financial and recreational services.
GATS Regulatory Framework
Members also met in a subsidiary body to the CTS to discuss the question of the establishment of emergency safeguard measures (ESM) under the GATS (see BRIDGES Weekly, reference of 2 October in this article, also BRIDGES Monthly, September 2001, available at: http://www.ictsd.org/monthly). To the dismay of many developing countries, the US submitted a communication saying they would accept proceeding to detailed discussions of a possible agreement on ESM only if they were convinced that this would lead Members to make improved commitment in market access negotiations.
Developing countries have been advocating in favour of the adoption of emergency safeguards, saying they could not be expected to make further commitments in the negotiations on liberalisation in services trade if they didn’t have an emergency exit. Their argument is now dampended by the US communication. The next meeting of the Working Party on GATS Rules, where ESM are discussed, will take place at the beginning of December.
ICTSD Internal Files.