Bridges Weekly Trade News Digest • Volume 7 • Number 42 • 11th December 2003

Services Week Shows Dynamism Despite Stalled Doha Talks

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A few ’sparks’ to the otherwise frozen Doha round of trade negotiations appeared during meetings of the WTO Services Council and its subsidiary bodies from 2-5 December. In the request and offer phase of the services negotiations, and in the negotiations on the General Agreement on Trade in Services (GATS) rules and on domestic regulation, some Members took action that injected a small sense of movement into current negotiations. Further, the WTO secretariat presented reports on activities carried out by the Services Council and its subsidiary bodies during 2003.

Services offers increases substantially

While no special (negotiating) session of the Council for Trade in Services was held, requests and offers by developed and developing countries continue to increase. Virtually all WTO Members have received requests issued by some 62 mainly developed and larger developing countries, and 40 or more offers were submitted in 2003. Among the new countries presenting offers were: Bahrain, Bulgaria, Colombia, Chile, Czech Republic, Fiji, Guatemala, Hong Kong, Korea, Macao, China, Paraguay, Peoples Republic of China, Peru, Slovak Republic, Slovenia, Sri Lanka, St Christopher and Nevis, Thailand and Turkey. One trade source noted that the presentation of offers shows that services is still an area in which many players have an interest, and is still the most dynamic area of the current Doha round of negotiations.

Working Party on GATS Rules discusses ESM/subsidies

The Working Party on GATS Rules (WPGR) held its last meeting of the year on 2 December. Delegates commented on the Emergency Safeguard Mechanism (ESM) for the services sector and on reaching the deadline for its completion, set for 15 March 2004. Despite ongoing discussions in 2002 and 2003 on the elements for an ESM and its feasibility and desirability, fundamental differences remain among Members. The Association of Southeast Asian Nations (ASEAN) members are the main demandeurs for an ESM, while some Members, such as the EU, have questioned its feasibility (see Bridges Weekly, 20 March 2003). At the WPGR meeting, Switzerland tabled a non-paper responding to an example of an ESM provided by Thailand and presented an alternate scenario without the ESM. Few comments were made on the paper.

On the 15 March deadline for ESM negotiations, some Members supported the idea of holding a special ESM session in January. The US opposed this initiative, preferring a series of informal consultations on the issue. Members agreed to give the Chair the mandate of holding informal consultations on the ESM until the deadline.

On the subsidies negotiations, Chile provided a paper comprising five examples that highlighted how countries used subsidy programmes, stressing that rules to tackle services subsidies were needed. Many countries backed this paper and requested it to be used as a basis for further discussions. Some delegates, however, pointed out that it should not be considered a substitute for the mandate provided in GATS Article 15, which obligates Members to enter into negotiations to develop multilateral disciplines to avoid trade-distortive effects of services subsidies. The US expressed some reservations over the document, while the EC did not comment on it.

WPDR considers Article VI:4, "necessity tests"

Members also discussed a revised update of a note by the WTO Secretariat on "necessity tests," which refers to the need to make sure that domestic laws and regulations are not more burdensome than necessary from a trade perspective. The WTO Secretariat presented an updated and expanded version of a previous note on "necessity tests" from 1999 (S/WPDR/W/27, shortly available at http://docsonline.wto.org). The note includes a background section on what necessity tests are, and then examines issues related to the necessity test as they have arisen in WTO jurisprudence. WTO Agreements contain a number of provisions commonly referred to as necessity tests. The aim of the necessity test is to establish whether a measure is necessary to achieve certain policy objectives. These policy objectives include issues such as consumer protection, professional competence and quality of services.

According to the note by the WTO Secretariat, Article VI:4 of the GATS does not constitute a direct necessity test on Members. Rather, the Article calls on Members to negotiate any needed disciplines to ensure that measures do not create unnecessary barriers to trade. The disciplines of accountancy would, according to the Agreement, have more legal value since they contain a necessity test in the form of an obligation. The scope of the necessity test in Article VI:4 is basically to measures related to licensing, technical standards and qualifications.

ICTSD reporting.