TWN Info Service on WTO and Trade Issues (Nov05/13)

22 Nov 2005

Dissatisfaction over text and process voiced at services meeting

At an informal services meeting at the WTO last Friday 18 November morning, several developing countries voiced their dissatisfaction on the process by which the Chair was drawing up texts for the Ministerial, as well as the content of his text.

Many key aspects of the Chair's revised text on services came under fire. The developing countries proposed changes to the text in many areas, or removal of whole sections.

Below is a report of this meeting on last Friday 18 Nov. the meeting was resumed at 6pm on Friday and lasted to 9pm. A separate report on that night meeting is also being sent to you.

With best wishes
Martin Khor


Dissatisfaction over text and process voiced at services meeting

Geneva, 18 Nov 2005:  By Martin Khor and Goh Chien Yen (TWN)

Disagreements on many parts of a draft Ministerial text on services became evident at an informal plenary meeting on services at the WTO on Friday (18 November). Many developing countries also voiced serious concern with the imbalance between negotiations in services (where the Chair intends to submit Ministerial text) and in NAMA and agriculture (where the Chairs are only preparing status reports).

Some countries also voiced dissatisfaction at the way the Chair of the services negotiations, Ambassador Fernando de Mateo of Mexico, is conducting the services negotiations.

The wide divergences of positions on the draft text were on many key items in the Chairman's revised draft text (JOB(05)/262/Rev. 1), including on "numerical targets and indicators" (or multilateral approach on "benchmarking") in paragraph 11, plurilateral negotiations (para 10), sectoral and modal objectives (para 5), qualitative targets in each mode (para 4), mention of a possible government procurement framework (para 7b) and timelines (para 15).

Many delegations from developing countries reiterated their opposition to any mention of "numerical targets and indicators", and also wanted the removal of the paragraph on sectoral and modal objectives. On plurilateral negotiations, several asked that the text (which requires mandatory participation) be amended to so that participation is on a voluntary basis.

Several delegations are also calling for the removal of the detailed text on qualitative targets, to be replaced by more general language that is also not obligatory. And some delegations wanted to remove mention of a "possible framework for government procurement" in the paragraph relating to rule-making.

As many more delegations wanted to speak, the meeting will resume at 6.00 pm Friday.

At the start of the meeting, some delegations voiced dissatisfaction with the process of text-drafting in services. One concern was that there were only reports on the status of negotiations being submitted for the negotiating groups in agriculture and NAMA, and thus it would be imbalanced for a Ministerial text to be submitted for services.

Another concern voiced was that the Chairman seemed adamant in presenting his own version of the text under his "personal responsibility", and that he had till now not been amenable to the many changes proposed by many members.

This concern, that the Chairman has insisted on maintaining many items and texts in his respective drafts, despite clear opposition from many members, is widespread among many developing countries.

Venezuela said it was surprising that so many members had voiced clear opposition to various paragraphs (4, 5, 10, 11) and against the instruments that act against the flexibilities in GATS and the GATS architecture itself.

Addressing the Chair, Venezuela said: "In face of all these expressions of disagreement, your answer has always been the same, that this text is under your own responsibility. In this room, we should ask the question, until where does your responsibility extend? And because of that, why are we sitting here?"

Venezuela said it was time to start eliminating all those parts of the Chair's document which do not enjoy and will not get a consensus. It said the Chair's role is to guide the negotiations in a way that reduces differences among countries and try to reach a consensus.

"Allow me to say that with your attitude, you have reached exactly the opposite results. The differences get bigger everyday and it is on you that will fall the responsibility of what will happen in the near future."

Venezuela said that if the Chair continues his position that the text should be left as it is, as text under his own responsibility, then it would request that in the preamble it should be stated not only that the text does not have consensus but that many delegations are opposed to the general content of the text.

Several delegations referred to the link between the negotiations on services and those on agriculture, NAMA and other areas.

The Indonesian Ambassador, speaking on behalf of Brunei, Indonesia, Malaysia, the Philippines and Thailand, said this is a Development Round and developing countries agreed to it on the premise that the existing imbalances of the trading system would be rectified in these negotiations.

The challenge in the GATS Council was to strike the appropriate balance between high ambition and flexibility for members that is enshrined in GATS, as well as balance between market access and rules.

"Developing countries do not have complete appreciation of the complexities of services nor the technical capacity to participate meaningfully in an inflexible formulaic approach to the negotiations where any list or formula could only be meaningless or arbitrary," he said.

Demandeurs should also understand the difficulty encountered by developing countries in making offers that transcend the comfort of "progressive liberalisation", said the Asean countries. Without a well developed regulatory regime and working with no single national authority to assess and monitor developments in all services sectors and sub-sectors, developing countries are entitled to as much flexibility as they require.

"We are deeply disturbed by the proposal that will result in an imbalance in the outcome in Hongkong, whereby there will be a services text that is more advanced in detail and specificity, not to mention ambition, as compared to agriculture and NAMA," said the Asean countries. "This is untenable and unacceptable since the Doha Development Round was intended to primarily address the imbalances in the multilateral trading system, especially in agriculture.

"We cannot as a matter of principle accept that an area like agriculture (which is of fundamental importance to developing countries) is accorded only a factual report, while services (in which developing countries hardly have offensive interests except in some sectors and modes that are not adequately addressed by demandeurs, is treated to a draft Ministerial text."

At the recent informal heads of delegations meeting, said the Asean countries, the bottom up approach to drafting was stressed, so was recalibration in all areas as there will not be full modalities in Hongkong, and so was that point that services should not be singled out if agriculture and NAMA were to have only a factual report to Ministers.

Thus, "we need to recalibrate our discussions in this Council to achieve some consistency in approach in agriculture, NAMA and services. And we cannot endorse a non-consensus document to be brought up to any level of decision-making, particularly in Hongkong."

The Asean countries also stressed that they are concerned about the specificity of the draft services text, since the services negotiations (unlike agriculture and NAMA) already have existing modalities. They urged members to intensify the request-offer negotiations as it is the only solution, and "definitely not numerical targets or a dilution of developing country flexibilities under the GATS."

They also urged demandeurs to exercise leadership by giving genuine market access to developing countries in sectors and modes of interest to them. "And in the spirit of the Round's development dimensions we reject today any and all efforts to undermine the GATS structure that our predecessors have delicately negotiated in the Uruguay Round."

Jamaica, represented by Ambassador Ransford Smith, also voiced opposition to the proposed "complementary approaches" that were in the text. He also voiced concern that some members were raising the level of ambition in services to compensate for what they consider they are giving in other areas like agriculture.

In so doing, they are not raising the level of ambition in special and differential treatment and in flexibilities in services, but to the contrary. This is not acceptable and it is also not consistent with the GATS architecture.

The African Group, with Egypt speaking, also called for balance between areas of negotiations in the Hongkong outcome. It also voiced several concerns:

"First, we have strong concerns on the issue of complementary approaches that are incompatible with the GATS spirit and structure. We emphasize that the establishment of any quantitative individual or collective targets would clearly and profoundly undermine the flexibilities provided for developing countries in the GATS provisions and the existing negotiating guidelines and procedures. In line with this, we object the inclusion of numerical targets in the services text."

The Group also expressed concern that plurilateral negotiations must be in conformity with the GATS and the negotiating guidelines. They thus suggested amendments to para 10, to ensure that participation in plurilateral negotiations are on a voluntary basis.

Specifically, it suggested that in the first sentence in the chapeau, the word 'should' be replaced with 'may' so as to make participation voluntary. In line 10 (b), the word 'interested' should be inserted before "member", and the word 'shall' be replaced with 'may if they so wish'. In para 10 (d), the word 'should' be also replaced with 'may'.

Furthermore, the Group expressed "strong reservations" on the prescriptive nature in the draft on the issue of qualitative targets and parameters (in para 4). It wanted revision to make this less prescriptive.

On rule making, the Group saw an imbalance emanating from the government procurement section of the text (para 7b). It was not necessary to specify certain types of proposals. It suggested to end the sentence with the word "members", and delete the last part, "proposals for a possible framework for government procurement."

Zambia, on behalf of the LDCs, said the group believed the preparation for Hong Kong in services should move hand in hand with the other areas of the negotiations, with comparison on a horizontal basis.

The LDCs stated that the paragraph on plurilateral negotiations goes beyond what is consistent with the negotiating guidelines and procedures as well as the GATS. The LDCs thus suggested that there should be a clear statement that Members should voluntarily choose whether to participate in the plurilateral negotiations or not; and the deletion of any references to mandatory obligations to participate in these negotiations.

Besides the above statements, many other members also proposed changes to various parts of the Chairman's draft Text.

Regarding para 2 on principles, several delegations such as El Salvador, Guatemala, and South Africa, wanted the words "a higher level of liberalization of trade in services" changed to "progressive liberalization" so that it would be more consistent with the objectives and principles of the GATS. Some countries such as Australia were opposed to the suggested change.

On para 3, many countries were against the Chair's description of the negotiations as lacking in "significant progress" and wanted this deleted. Others members which have offensive interests in the negotiations such as Australia wanted it retained.

On para 4 (regarding qualitative benchmarks to improve commitments in the four modes), several delegations also raised concerns. China has pointed out that para 4 as it currently stands is far too prescriptive in telling members what to do and should therefore be changed. South Africa said some delegations are presently working on new language to replace current paragraph and it would support this when it is presented.

On para 5 (sectoral and modal objectives), China pointed out that the explicit allusion made to a document (annex to the Chairman's Report to the TNC) is unnecessary and the reference to it should be removed from the draft text. This was also the view of many other delegations. The US however suggested that the Annex document could still be referred to in the draft text but as a footnote.

On para 7 (rule-making), South Africa suggested that the term "including on proposals for a possible framework for government procurement" be removed. The Africa Group also supported this proposal.

On the issue of plurilateral approaches to the negotiations contained in par a 10, many members said that the plurilateral negotiations in keeping with the GATS architecture should not be on a mandatory basis. In this respect, Brazil and Argentina, proposed that the word in para 10(b) of the draft be changed from "shall" to "should" to reflect that the plurilateral approach is not a compulsory one.

Corroborating this notion, Cuba added that the word "interested" be inserted before "member" whenever the latter appear in para 10. This, it felt, would underscore the voluntary nature of the plurilateral approach. This point was also made by many others, including the Africa Group.

In relation to para 10( c) of the draft which says that "the Council for Trade in Services in Special Session shall review progress in such negotiations", some members (including the Africa Group) raised the point that this is superfluous since this is what the Council is tasked to do already in relation to the whole of the negotiations.

Accordingly, it was proposed that para 10(c) be deleted or move to constitute a separate paragraph on its own rather than part of the plurilateral approach of para 10.

On para 11, on the issue of "numerical targets and indicators" which has been the most contentious part of the draft text, most members who spoke wanted this paragraph deleted completely. Argentina argued that its inclusion would upset the whole balance of the draft since there is absolutely no consensus on this issue. Others opposing the paragraph included Brazil, Guatemala, El Salvador, Cuba, China, South Africa, Jamaica, as well as the Africa Group and several Asean countries.

However, developed countries such as the EU, Canada and the US want to see numerical targets and indicators as part of the text. The US submitted its new proposal on "collective" numerical targets during the meeting. Canada tried to persuade the others saying that it is possible to have numerical targets in a manner consistent with the GATS architecture.

Regarding para 15 on "timelines", some members pointed out that it is not clear at this stage when the round would end. Cuba thus proposed that the reference to the "end of 2006" in the chapeau to para 15 be changed to "end of the round." Others also said that there should be no reference to dates in the subsequent bullet points to para 15. Australia, however, argued for the retention of "Feb 2006" in para 15(b) which is square bracketed in the draft text.

In contrast to the views of most of the developing countries, the EU said that the current draft text does not yet reflect the high level of ambition it requires. From its perspective, it is only a "best endeavour text."

It wanted the language in para 4 on modal commitments and para 10 on plurilateral approaches to the negotiations strengthened and made more directive, which would compel members to undertake more significant commitments. The EU emphasized the need to have numerical targets and indicators in the draft text.

The EU attempted to justify its views, arguing that the level of ambition in services has to be brought up to the level of that in agriculture and NAMA.

Several other delegations were scheduled to speak when the meeting resumes on Friday evening.