Services Programme • Volume 11 • Number 38 • 7th November 2007

Preparations underway for new services text

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PREPARATIONS UNDERWAY FOR NEW SERVICES TEXT

With the chairs of the Doha Round negotiating committees putting together draft deals to present to Members sometime in the next month, WTO Members are telling the mediator of the services talks what they would like to see in the text he is preparing to guide further discussions.

Unlike the negotiations on agriculture and industrial goods, where mathematical formulae in the draft deals will define Members’ future market access levels, 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. It might also describe potential rules governing services trade.

Members last week gave the services negotiations chair proposals, including draft provisions, in some cases, outlining what they want to see in the text. Ambassador Fernando de Mateo (Mexico) is expected to conduct consultations over the next two weeks with a view to developing the text. These will occur both in his meetings with a small group of officials from about two dozen countries - dubbed the ‘enchilada talks’ after the Mexican dish — as well as larger meetings with countries’ lead services negotiators.

Developing countries like Brazil, China, India, Pakistan, South Africa and Thailand insist that the text must reflect precisely the specific modalities that governments agreed to at the Hong Kong Ministerial Conference in December 2005. Set out in Annex C of the Ministerial Declaration, these called for Members to undertake significant commitments in sectors and modes of interest to developing countries (including on temporary cross-border labour movement, ‘Mode 4′ in services trade parlance). They also said that a text should set out timelines for countries to make final market access offers and prepare their commitment schedules.

Another significant demand was for the text to preserve the ‘positive list’ structure of the General Agreement on Trade in Services (GATS) negotiations. This approach affords governments the flexibility to choose which sectors and modes in which to make binding liberalisation commitments. This contrasts with proposals for ‘benchmarking’ made by some developed countries before the Hong Kong summit, that would set quantitative liberalisation targets for Members, i.e., require them to open a fixed number of sectors and modes to foreign competition. The developing countries also urged de Mateo to reaffirm the flexibility accorded to developing countries in GATS Article XIX, which calls for progressive liberalisation that takes into account their level of development, thus allowing them to open up fewer sectors and place more conditions on foreign services suppliers allowed into their markets.

The group also emphasised the need to continue discussions on GATS Rules (relating to emergency safeguard measures, government procurement, and subsidies to the services industry), as well as on disciplines on domestic regulation.

The group of least-developed countries (LDCs), in a letter to de Mateo, focused more specifically on the Hong Kong Declaration’s call for Members to effectively implement the ‘Modalities for the Special Treatment of LDC Members’ (Paragraph 3 of Annex C). This September 2003 decision prescribed granting LDC Members flexible treatment as well as market access in areas of interest to them, so as to promote their integration into international services trade. The LDCs noted that the said modalities had provided for the development of an appropriate mechanism for according special priority to sectors and modes of supply of interest to the poorest countries, and asked for this to be done before Members present final offers.

At the other end of the spectrum, developed countries want countries to permanently bind their existing levels of liberalisation (as for manufacturing tariffs, countries are free to go beyond the minimum level of liberalisation to which they are formally committed, and many do). The EU is reportedly seeking a ‘pledging session’ at which countries would signal future services commitments, if a broader Doha Round deal were coming together. Sources say that Brussels sees this as an opportunity for countries to put forward the offers they held back after negotiations collapsed in July 2006. The US is not opposed to the notion of such ‘pledges’, but is thought to be less eager.

Some developed countries also want a ‘factual assessment’ of how plurilateral market access talks - which has complemented the traditional bilateral bargaining since early 2006 - has boosted countries’ willingness to make new commitments. Some developing countries, which were among the principal recipients of plurilateral requests, said that such an assessment might hold up the market access negotiations.

In recent consultations, some developing countries appeared to be shifting gear and accepting a notion, put forward by developed countries, that the draft text should not focus heavily on Mode 4, or the ‘movement of natural persons’, if progress is to be made on the discussions. Industrialised countries such as the US have long argued that temporary labour movement - say for construction workers, nurses, or computer programmers - involves immigration issues, and is thus heavily political. The African Group has however reiterated that there must be a meaningful outcome on Mode 4, one of few areas in the services talks in which many of them have a comparative advantage, if the negotiations are to end in agreement, or, for that matter, to promote development.

ICTSD reporting.