Bridges Weekly Trade News Digest • Volume 7 • Number 29 • 28th August 2003

Services: Developing Countries Call For Stronger Focus On Horizontal Issues, Mode Four

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SERVICES: DEVELOPING COUNTRIES CALL FOR STRONGER FOCUS ON HORIZONTALISSUES, MODE FOUR

A number of developing countries expressed their disappointment with the first Cancun Ministerial text (available at http://www.ictsd.org/ministerial/cancun/docs/draft_cancun_minist_text.pdf) in the area of services. The WTO Secretariat released the text in mid-July 2003 (see BRIDGES Weekly, 28 July 2003). A number of countries felt that while the text strongly emphasised market access issues, including the request and offer process, it neglected many outstanding horizontal and rule-making issues. These included assessment, modalities for least-developed countries (LDCs), emergency safeguards, subsidies, government procurement and domestic regulation. Many developing countries further felt that developed countries, in their initial offers, had given little, with offers related to movement of natural persons (mode four) virtually absent. Mode four is an area that is of fundamental interest to developing countries.

A number of developing countries, including Bolivia, China, Colombia, Cuba, Egypt, Guatemala, India, Indonesia, Malaysia, Mexico, Nicaragua, Pakistan, Peru, the Philippines, Thailand Uganda and Zimbabwe submitted a proposal for revising the first draft of the ministerial text in early August. This proposal recognised progress made in the market access component of the services negotiations, and "urged participants to intensify [...] their efforts and improve the quality of their offers, particularly in sectors and modes of supply of export interest to developing countries especially Mode 4". Regarding rule- making, the countries proposed that these "negotiations shall be concluded in accordance with their respective mandates and deadlines, noting especially the deadline of 15 March 2004 for emergency safeguard measures, on which we urge Members to intensify their efforts towards a successful conclusion".

In response, some changes were integrated into the final pre-Cancun draft ministerial text (see http://www.ictsd.org/ministerial/cancun/docs/Job.03.150.Rev.1.pdf) released on 24 August. This text indicates that

"We are committed to intensifying our efforts to bring the negotiations on specific commitments to conclusion. [...] With a view to providing effective market access to all Members, due regard shall be given to the quality of offers, particularly in sectors and modes of supply of export interest to developing countries. We call upon those participants who have not yet submitted their initial offers to do so as soon as possible. Improved offers should be submitted by [...]. We are also committed to intensifying our efforts to conclude the negotiations on rule-making under GATS Articles VI:4, X, XIII, and XV in accordance with their respective mandates and deadlines, noting the deadline of 15 March 2004 for emergency safeguard measures. [...]. We note the interest of developing countries, as well as other Members, in Mode 4".

According to various sources, both developing and developed countries seemed satisfied with the new text. In the last General Council session (see related story, this issue), Bangladesh, India and Egypt mentioned the need for stronger language on mode four. The text will be submitted to ministers in Cancun as it stands.

Regarding modalities for the treatment of LDCs, there is not yet agreement. Nevertheless, the WTO trade sources indicate Chair Jara of the Council for Trade in Services is undertaking consultations, seeking to achieve results prior to Cancun. The new draft text explicitly states the existence of a "text to be added on modalities for the special treatment of least-developed country Members depending on the outcome of the ongoing consultations".

ICTSD reporting.