Bridges Weekly Trade News Digest • Volume 5 • Number 40 • 8th November 2001

Services Week: Time Running Out For Safeguard Measures

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As WTO Members entered a new so-called ‘Services Week’ yesterday — the last of 2001 — the question of the establishment of an Emergency Safeguard Mechanism (ESM) under the GATS appears as the most urgent and contentious issue on the agenda, with the deadline for its adoption expiring on 15 March 2002. While this question is being addressed in one of the subsidiary bodies to the Council for Trade in Services, the week will also include further market access discussions within the Services Council as part of the ‘GATS 2000′ negotiating process. In view of these Special (negotiating) Sessions, several new negotiating proposals have been, or are in the process of being, tabled; Colombia, in particular, has submitted a series of sectoral proposals, relating, inter alia, to distribution, telecommunication, environmental and tourism services.

Emergency Safeguards

Pressure is mounting on Members to reach consensus on the establishment of an ESM as the deadline of 15 March 2002 closes in. Mandated by GATS Art. X, negotiations on the adoption of an ESM were initially to be settled in 1998. This and other deadlines have lapsed and been extended; according to trade sources prospects now "look gloomy" that the 15 March deadline will be met.

As BRIDGES Weekly went to press, Members were meeting in the Working Party on GATS Rules (WPGR) — a subsidiary body to the Council for Trade in Services — in an ultimate attempt to reach the consensus necessary to start drafting an ESM. Members had already agreed in earlier meetings that in order to be able to meet the March deadline, the Working Party would have to be able to work on a draft text in November at the latest. However, despite intensive informal consultations undertaken by WPGR Chair Hugo Cayrus (Uruguay) last week, Members have not as yet been able to reach consensus to start working on a draft instrument.

Considered by many developing countries as a precondition for further opening of their markets, countries such as the US, the EC, Japan and Mexico remain strongly opposed to the adoption of an ESM, arguing that the GATS is flexible enough to accommodate all kinds of situations. India also fears that emergency safeguards will in fact not serve developing countries, but would be used against them, in particular in the supply of services by natural persons (mode 4). Other Members, such as Argentina, Chile, Costa Rica and Switzerland, occupy a middle ground. These countries are not convinced that "a clear case" has been made in favour of an ESM, but are willing to compromise, as they feel the adoption of safeguard measures is important to many developing countries and thus necessary for the success of market access negotiations.

BRIDGES Weekly will report on the outcome of the meeting in next week’s issue.

New proposals tabled for market access discussions

From 3 to 7 December, Members will be holding negotiating sessions within the Council for Trade in Services as the ‘GATS 2000′ negotiations proceed (on precedent session, see BRIDGES Weekly, 9 October 2001). During these five days, discussions will include all proposals and all sectors, as well as horizontal issues such as assessment, mode 4 (movement of natural persons) and the implementation of GATS Art. IV (Increased participation of developing countries in services trade). The aim of the talks is to clarify any obscure points in the proposals, and also to organise future work which, with the decision to launch a new round of global trade talks, will constitute a major point of the session, sources said. The need for organisation and coordination also stems from the interconnectedness of work being carried out in special session and in the subsidiary bodies. Some trade sources predict that discussions on certain sectors or horizontal issues will be moved to some of the subsidiary bodies; for instance, financial services may henceforth be removed from the special session agenda to that of the Committee on Financial Services

The process of actual negotiations, which according to the GATS negotiations’ ‘Guidelines and Procedures’ will be carried out mainly through a "request and offer" approach, are to begin in June 2002 as agreed in the Ministerial Declaration adopted in Doha, Qatar on 14 November.

New proposals tabled

In view of the 3 to 7 December Special Session, several Members have submitted new negotiating proposals stating their interests. Specifically, Colombia yesterday circulated several proposals relating to services sectors such as telecommunications, distribution, tourism and environmental services (proposals S/CSS/W/119-123, available at the WTO web site, http://www.wto.org/. At press time, these proposals were only available in Spanish).

In its proposal on telecommunications (S/CSS/W/119), Colombia stresses the importance of this sector for the productivity of the economy as well as a means to reduce the digital divide between developed and developing countries. However, Colombia also says that many developing countries will only further open up their markets for this sector, in particular in relation to commercial presence (mode 3), if they are given meaningful concessions in other services sectors of particular interest to them.

In relation to environmental services, the Colombian communication underscores that liberalisation in the sector, above all through the commercial presence of foreign companies, could be favourable to developing countries in terms of technology transfer and the environmental quality in these countries. However, the proposal says, in negotiating commitments in this sector, account must be taken as to the level of development of each Member. Colombia also stresses that the current classification of environmental services is not an appropriate basis for negotiations, as it does not contain new services in the sector. Furthermore, the communication says that in order to have a balanced outcome of liberalisation in the sector of environmental services, developing countries must be granted market access for the movement of natural persons providing environmental services at the international level.

Regarding tourism services, the Colombian proposal stresses the importance of the sector for developing countries in terms of the foreign exchange earnings and employment that it generates. Given this importance, the communication calls for the removal of economic needs tests in relation to market access for tourism services, and also points to the importance of adequate visa legislation. Though the proposal stresses the problems developing countries are facing in relation to anti-competitive practices by tour operators enjoying dominant positions, it makes no mention of the Annex to the GATS on tourism, proposed by the Dominican Republic and others in order to address the problem (see BRIDGES Weekly, reference of this article).

BRIDGES Weekly will report on developments during the services week in forthcoming issues.

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