Bridges Weekly Trade News Digest • Volume 13 • Number 40 • 18th November 2009

Delegates Frustrated at Slow Pace of Services Talks

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Two weeks of intense WTO negotiations to liberalise trade in services have been largely disappointing, delegates reported. “There was no progress on anything,” one official said, noting that the meetings amounted to “a repetition of everything that has been said for the last two years.”

While some experts had expected the talks to show some new dynamics in the light of the global financial and economic crisis, none of the three proposals on financial services that negotiators discussed at the meeting garnered consensus approval.

The first proposal submitted came from the United States and called for negotiators to increase information exchange on a select group of services, particularly non-life insurance services. But some delegates expressed unease with the proposal, on the grounds that it gave too much weight to the concerns of developed countries.

A second proposal, this one from Pakistan, considered regulatory frameworks for e-banking and e-trade, particularly in light of the fact that some developing countries’ markets and regulatory frameworks have struggled to handle increased traffic on this front. While the proposal was not opposed outright, in the end there was “no agreement that the Pakistan proposal could go ahead,” one delegate said.

Concerning the financial services sector, delegates also considered proposal from Argentina, Ecuador, India and South Africa that would have the WTO secretariat help the negotiators examine the links between trade in financial services and the ongoing economic and financial crisis.

The proposal, as presented, would have two phases. In the first, the secretariat would compile a list of provisions in the General Agreement on Trade in Services that are relevant to financial services and government stimulus measures, conduct a literature review of recent studies on the matter, and organise a dedicated session at the WTO to update members on new findings. Then, in phase two, the secretariat would provide a subjective analysis of how national stimulus measures have impacted trade in financial services. That analysis, however, would be conducted on a ‘non-attributable basis’, the proposal stressed, meaning that countries would not be called out for specific measures that their governments had adopted.

Most delegates reportedly welcomed the first part of the proposal, but some expressed unease over ‘Phase Two’. The United States opposed it outright, much to the consternation of some other delegates. “It’s unfortunate that something that is so dominant in every newspaper you open these days isn’t thought to be worthy of being discussed,” one delegate commented.

Controversies also remain in the market access negotiations. These talks are mandated to cover four broad topics, or ‘modes’ in WTO parlance: the cross-border supply of services (Mode 1); consumers or firms making use of a service in another country, as in the tourism industry (Mode 2); the ‘commercial presence’ of branches of services companies in other countries (Mode 3); and the movement of skilled workers across borders (Mode 4).

Developing countries have a strong interest in Mode 4 commitments by developed countries, i.e., the possibility that their skilled workers might be able to move more easily across borders to supply various services. But developed countries largely oppose deeper commitments on this mode, and developing countries “continue to be disappointed on mode 4 signals from developed countries,” one delegate said.

Delegates also considered a new proposal on the controversial negotiations on domestic regulation disciplines. The proposal, which was put forward by a group of countries led by Switzerland, reportedly condenses some of the existing chair’s draft text on procedures and was submitted as a confidential ‘room document’.

ICTSD reporting.