Bridges Weekly Trade News Digest • Volume 8 • Number 13 • 8th April 2004
WTO Services Council: Members Find Services Offers Disappointing
The WTO Council on Trade in Services (CTS) met for a special (negotiating) session on 2 April, marking the end of two weeks of meetings of the bodies under the Services Council. At the meeting, Members generally signalled their disappointment with the results of the ongoing request-offer phase of the services negotiations. While developed countries focused their criticism on the low number of offers, most developing countries stressed that the quality of the offers made was unsatisfactory. Also during ’services week,’ Members considered new submissions on special and differential (S&D) for developing countries, and on logistics services.
Reasons for the slow request-offer phase
Currently, only 42 countries have presented offers to liberalise their services sectors. According to trade delegates, the lack of progress on services — once termed the "engine of the Doha Round" — is due to the fact that Members link services to progress in the (stalling) agriculture negotiations, to negotiating tactics, to national political considerations, and to a lack of technical capacity. While no country has blocked the services negotiation process so far, key agricultural exporters, such as Brazil, South Africa, the Philippines and Egypt, have not yet presented their initial offers. These countries feel that, even so, services talks are more much advanced that work in other areas, such as market access for goods and agricultural products, were not even negotiating modalities have been agreed despite more than three years of discussions.
In a statement, 18 developing country Members collectively indicated that negotiations "do not show real any real improvement to the existing commitments" made by developed countries under mode 4 (movement of natural persons). For many developing countries and least developed countries, mode four represents one of the few areas providing clear gains from progressive liberalisation in the services field. The group of 18 developing countries also pointed out that the offers on mode 4 were linked to local presence (mode 3), and called for "de-linked" mode 4 offers. According to the submission, the de-linked" approach should be accompanied by the elimination of restriction on duration, pre-employment conditions, economic need tests, quota restrictions on visas, discriminatory tax treatment and recognition of qualifications. The countries pointed out that certain developed countries had not presented any opening in mode 4 in their offers.
The Coalition of Services Industry also recently raised concerns with the lack of critical mass in services negotiations, noting the economic importance of the services sector (see BRIDGES Weekly 24 of March). In OECD countries, services account for 69 percent of their GDP, while agriculture only contributes 2.1 percent.
The way forward
On the way forward, some Members supported setting a specific deadline for the submission of offers. The Chair of the CTS proposed holding so called "confessionals," or meetings with individual delegations to get a clearer understanding of positions and flexibilities. While some Members supported this approach, other felt a deadline could add an unnecessary burden to the process, and "confessionals" would give the Chair to large a role in the talks.
Strengthening S&D in services negotiations
On the services negotiations, the delegation of Colombia, on behalf of a number of developing countries, presented a revised proposal on the implementation of paragraph 15 of the guidelines and procedures for the services negotiations (TN/S/W/19, shortly available at http://docsonline.wto.org). Paragraph 15 of the services guidelines focuses on developing country issues such as increased participation, respect of national policies and special and differential (S&D) treatment in Members’ schedules.
The submission by Colombia stressed the need for specific benchmarks in this regard to assist in the valuation of commitments in the offer and request process, and called for the possible development of modalities for increased participation of developing countries in services trade. For the development of benchmarks, the proposal identified sectors and modes in which developing countries had shown specific interests (professional services, outsourcing services, tourism, and mode 4). The proposal suggested that developed country offers be analysed on a case-by case basis, so as to allow for an evaluation of whether they actually addressed developing countries concerns. Finally, the proposal called for the predictability of commitments, meaning clarifications of certain issues, especially under mode 4. While some developed countries expressed reluctance to subjecting themselves to multilateral scrutiny, others took a positive stand with regard to the proposal.
Liberalisation of "logistics" services
Also during the course of the latest round of services talks, a number of Members including Australia, Hong Kong, China, Switzerland, China Tapei, and Nicaragua presented ideas for further liberalising the logistics and related services sector (see http://www.dfat.gov.au/trade/negotiations/services/logistics_services_310304.pdf). Their unofficial paper argued that enhanced liberalisation and provision of logistic services could assist in the further development of supply and distribution chains of goods and other services. According to this group, liberalisation would be a determining factor of competitiveness of an economy at the global level. The proposal contained a list of core freight logistics services including: services auxiliary to transport; container and cargo handling; storage; warehousing; and transport agency services. The proposal also mentioned related services such as courier, retail, commission agents, and rental (aircraft and ships). While many Members’ offers already include some of these sub sectors, proposal sought to identify a core group of activities, which would facilitate international trade in goods and the provision of certain services.
The next services week is scheduled to begin on 23 June, with a CTS special sessions on 28 June and 2 July.
ICTSD reporting; "Developing Countries Continue to Criticize Absence of Offers in WTO Services Talks," WTO REPORTER, 1 April 2004; "WTO Members Issue Call For Liberalization of Logistics Services," WTO REPORTER, 2 April 2004.