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India’s TFS proposal gets little support

India’s proposal for launching talks at the WTO on trade facilitation in services has sparked concern among developing countries which contend that it is too wide-ranging and not covered by a WTO negotiating mandate.

by D. Ravi Kanth

GENEVA: Members of the African Group and least-developed countries on 3 May raised several systemic concerns over India’s draft negotiating proposal for facilitating trade in services at the WTO.

In raising their concerns, these members conveyed unmistakably that it was difficult to discuss the proposal due to lack of a mandate as well as in the prevailing international political climate, services negotiators told the South-North Development Monitor (SUNS).

Major developed countries such as the United States, the European Union, Australia and Canada among others also expressed skepticism in varying degrees over the trade facilitation in services (TFS) proposal, suggesting that the provisions in the proposal are not ripe for discussion at this juncture, said several participants who asked not to be quoted.

Two countries – Turkey and Switzerland – welcomed India’s proposal for starting discussions, while Korea reminded India that there could be many more trade facilitation elements such as e-commerce and investment facilitation.

India however remains opposed to WTO discussions on both e-commerce and investment facilitation as sought by China, Brazil, Argentina, Korea and Australia among others.

“Lively discussion”

In an unusual development rarely witnessed during a negotiating session, the chair of the Doha negotiating body for services, Ambassador Hector Marcelo Cima from Argentina, gave the floor to the head of the WTO secretariat’s services division, Abdel-Hamid Mamdouh, to comment on India’s TFS proposal.

Despite sharp concerns raised by many developing and developed countries on the proposal, Mamdouh apparently praised the proposal, saying “we have not seen lively discussion like this for some time,” according to participants present at the meeting.

“From an institutional point of view, it [India’s TFS proposal] is very refreshing,” Mamdouh said, suggesting that “a lot of issues have been raised of which there is a factual background within the secretariat,” and “in situations like this, [as] in prep[aration] for the Uruguay Round, the acquis to this kind of discussion is having an open mind and avoiding an all-or-nothing approach.”

“A lot of rich elements [in the Indian proposal] are here; and what helps is finding the right methodology – and structure of a discussion – and taking this on a thematic basis helps to clarify a lot of the conceptual gaps that are there [in the proposal],” the WTO official maintained.

“There is a lot of energy – very important but I would suggest this would not be seen as the end of the line,” Mamdouh said.

During the three-hour special negotiating session, convened to discuss India’s TFS proposal, an Indian official maintained that the proposal, which is modelled along the lines of the Trade Facilitation Agreement (TFA) for goods, is not about new market access.

India said the proposal, which was being introduced for the third time after it was discussed during meetings of the WTO Working Party on Domestic Regulation and the Council for Trade in Services, contains issues on facilitation that ought to apply to all sectors even if members have not taken prior commitments.

TFS, India argued, should not be construed as a vehicle for market access and services liberalization but as an attempt for ensuring that existing commitments are meaningful, according to those present at the meeting.

In the face of increasing linkages being drawn in the Indian proposal for simplifying cross-border services in Mode 1 of the WTO’s General Agreement on Trade in Services (GATS), India said the improvements sought in cross-border services are not about e-commerce.

The Indian official also suggested that the use of the word “immigration” by some members was misleading as the TFS proposal is seeking only improvements in Mode 4 of temporary movement of short-term services providers.

Concerns

On behalf of the African Group, Rwanda raised three broad concerns: (i) lack of mandate, (ii) overly ambitious scope, and (iii) lack of balance.

The Indian proposal, according to Rwanda, contains few issues that are covered by the mandate and includes many new issues which do not fall under the Doha mandate. The scope of the TFS proposal is extremely broad, while the TFA is limited to customs procedures that cannot be extended to the entire new services agreement. More importantly, on balance, the African Group said, the core issue is agriculture given its important role in employment generation.

“In the absence of a discernible progress on elimination by developed countries of harmful subsidies that distort market prices – which undermined agriculture in Africa since many decades – and a lack of progress on the permanent solution for public stockholding programmes for food security, we take a pragmatic view that there are extremely minimal realistic prospects for taking up the TFS,” Rwanda said emphatically, according to a negotiator who asked not to be quoted.

The African Group also maintained that there is little or no chance of the TFS proposal delivering on Mode 4 in the current international climate.

Bolivia said that the TFS proposal will raise systemic concerns, suggesting that there is no mandate to discuss issues in Mode 1 concerning cross-border services.

Canada issued a mixed comment, viewing TFS as a bold concept and suggesting that the TFA was about trade in goods and domestic regulation (DR) is about services. India wants to apply both the TFA and DR, Canada suggested. Canada said sectoral approaches would be better at this juncture.

South Africa concurred with Rwanda on the overly ambitious scope and lack of mandate for discussing India’s TFS proposal at this juncture. Apparently, South Africa said it is not in a position to agree with the Indian proposal given the commitments it undertook during the previous Uruguay Round negotiations under an apartheid regime. Further, the proposal will widen the differences in commitments and obligations as it would reduce the scope for applying the right to regulate issues that fall in the domain of domestic policymaking.

South Africa reminded India that the Doha Development Agenda was launched on the promise of helping developing countries to integrate into the global trading system. The developing countries were promised that the existing inequities, particularly in agriculture, would be addressed. But after 16 years of negotiations, there is no serious attempt to remove or reduce seriously trade-distorting domestic agricultural subsidies, South Africa said, adding that its participation in the services negotiations will hinge on the outcomes in agriculture, particularly in the reduction of trade-distorting domestic subsidies.

South Africa said it continues to have profound concerns about the Indian proposal as it goes well beyond the Doha Development Agenda, including the provisions in Article 19 of the GATS as well as Annex C of the Hong Kong Ministerial Declaration.

Moreover, at a time when countries remain opposed to both investment facilitation and e-commerce, the Indian proposal is raising these same new issues in a different context, South Africa said. The proposal, according to South Africa, includes Modes 2 and 3 as well as elements of e-commerce. It reminded India about paragraph 34 of the Nairobi Ministerial Declaration which has acknowledged that some members do not agree to identify or discuss new issues for negotiations.

South Africa said that while it would consider improvements in Mode 4 as part of a development round, the improvements sought in Modes 1, 2 and 3 in the Indian proposal and b y including new issues lack an overall mandate.

On behalf of the least-developed countries (LDCs), Uganda raised fundamental concerns on India’s TFS proposal while welcoming the improvements in Mode 4.

Uganda said “trade rules are primarily designed to ensure market access and not directly defined to promote efficiency or social welfare,” suggesting members are concerned about adoption of disciplines that are highly intrusive in the domestic domain.

Uganda said the LDCs, which are the weakest members of the global trading organization, will only adhere to ministerial decisions, declarations and mandates. It said what is proposed by India on TFS has no “mandate”, suggesting that the LDC group seeks improvements in Mode 4 for assisting its services providers. But the Indian proposal could initiate negotiations on e-commerce “with neither an explicit mandate from our ministers, nor consensus from all members,” Uganda said.

For LDCs, issues such as duty-free and quota-free market access, rules of origin, cotton and the services waiver as contained in the mandate, along with trade-distorting domestic subsidies in agriculture, are vital, and not TFS that has no mandate, Uganda said.

Several other countries such as Cuba and Venezuela also expressed the same concerns, while Kenya asked India to clarify how the TFS issues could be negotiated without a mandate, according to participants present at the meeting.

Argentina and Brazil welcomed India’s proposal, suggesting that they are ready to discuss the provisions, while China sought clarifications on technical issues.

The US, the EU and Australia, among others, made ambiguous statements on the Indian proposal. The US acknowledged that the current environment has made known sensitivities harder to achieve, arguing that India’s proposal will take a long time for any resolution.

In crux, India has made itself vulnerable by introducing the TFS proposal in the Doha services negotiating group after adopting  strong positions on e-commerce and investment facilitation. By raising TFS at this inappropriate time, India is unwittingly undermining the likely outcomes on the permanent solution for public stockholding programmes for food security and the special safeguard  mechanism  for  developing  countries, trade negotiators said. (SUNS8456)                                         

Third World Economics, Issue No. 638, 1-15 April 2017, pp7-9


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