Services Programme • Volume 12 • Number 16 • 7th May 2008

Services committee looks at signalling conference, LDC modalities

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The Doha Round services negotiations received increased attention this week, with the arrival in Geneva of senior officials from a number of trading nations to discuss how governments might go about assuring each other about future market-opening under a potential WTO accord.Services chair Ambassador Fernando de Mateo (Mexico) told the negotiating committee at an informal meeting on 5 May that WTO Director-General Pascal Lamy was holding consultations on how to organise a "signalling conference," at which countries would ’signal’ the sort of binding liberalisation commitments they were prepared to undertake. The officials are also meeting with each other bilaterally.The signalling exercise has been a demand primarily of developed countries such as the EU and the US, which are seeking what Lamy has called "a certain level of comfort" about future services market-opening levels while they agree to tariff and subsidy cuts in agriculture and manufacturing trade. The WTO chief last month said that these signals, while not equivalent to final offers of specific liberalisation commitments, could credibly demonstrate that "the services negotiations are moving forward."A signalling conference would be timed to coincide with the framework agreements on agriculture and non-agricultural market access (NAMA). However, it is no longer clear when trade ministers might be convened in order to try to finalise the two ‘modalities’ deals. Until as recently as three weeks ago, trade officials had hoped for a ministerial gathering in late May; this now looks likely to slide into June or July, principally due to the slow pace of talks on farm trade.Although the main focus of a signalling exercise would be developed countries and the larger developing countries that have sponsored or received plurilateral requests for market access, sources say that ministers from any country that would like to participate have been invited to notify the WTO Secretariat this week.Sources report that in parallel to the preparation for a signalling conference, de Mateo has been conducting consultations on an updated services text. Since countries negotiate services market opening through a process of requests and offers, a services text would simply set out guidelines for the market access talks - unlike in the agriculture and NAMA talks, where the mathematical formulae in the draft deals define Members’ future market access and subsidy levels. Nevertheless, some countries think that a new text could give a boost to the talks, which have often been marked by governments accusing each other of seeking more access than they themselves are willing to put on offer. De Mateo said that it was not yet appropriate for him to table a new text, given that agriculture and NAMA texts have not been circulated yet.LDC modalities discussedThe recent meeting also looked at the implementation of a longstanding agreement on how the Doha Round negotiations could be used to boost the participation of least-developed countries in global services trade. The so-called ‘modalities’ for the special treatment of LDCs in the services negotiations called on other WTO Members to "give special priority to providing effective market access in sectors and modes of supply of export interest to LDCs," in particular with regard to temporary labour movement of individuals (’mode 4′ in WTO parlance). The modalities, agreed on in 2003, also urged Members to help LDCs build internationally-competitive domestic services capacity, and to improve the poorest countries’ access to international distribution channels and information networks.Many least-developed countries have expressed dissatisfaction with subsequent work to put these LDC modalities into practice, complaints that were repeated by Lesotho and Bangladesh at the recent meeting.In a March 2006 proposal, the LDC group called for developed countries (as well as developing countries declaring themselves able to do so) to accord "non-reciprocal special priority" to LDCs alone. This would suggest some sort of positive discrimination in favour of LDC service providers - similar to those that exist for goods trade, the sponsors argued.According to a February 2008 analysis done by the WTO Secretariat at Members’ request, the LDC proposal implies that "the type of special priority measures contemplated would be inconsistent with the MFN obligation" in WTO rules to treat all trading partners equally. Therefore, the Secretariat note said that implementing the proposal would either require all Members to agree to a ‘waiver’ of the MFN obligation, or to adopt some sort of amendment or interpretation of WTO services rules.Sources report that the US said that the waiver was the best of the three options, adding that developing countries should also accord the LDCs "special priority." Australia asked about a realistic scenario under which LDCs could win such a waiver. India raised questions how the waiver could be implemented, one official said. De Mateo said that he would consult with Members in an attempt to reach a workable solution.Lamy is set to meet with services officials on 9 May. The next services negotiating committee meeting is expected in June.ICTSD reporting.