Info Service on WTO and Trade Issues (Oct16/06)
6 October 2016
Third World Network
circulates concept paper on TFS initiative
Published in SUNS #8322 dated 29 September 2016
Geneva, 28 Sep (D. Ravi Kanth) -- India has circulated a “concept
note” to members at the World Trade Organization on 23 September for
considering an initiative on “Trade Facilitation in Services” agreement
to eliminate numerous barriers and bottlenecks that impede global
trade in services, a move New Delhi likened to the so-called Trade
Facilitation Agreement (TFA) for goods concluded in 2013.
Describing the TFA as “a significant milestone in relation to trade
in goods,” India has suggested that there is “a need for a counterpart
agreement in services (“TFS Agreement”), which can result in reduction
of transaction costs associated with unnecessary regulatory and administrative
burden on trade in services.”
The two-page “concept note” circulated to members of the WTO’s Working
Party on Domestic Regulation (WPDR), according to India, will address
several “key” issues such as “transparency, stream-lining procedures,
and eliminating bottlenecks” for facilitating trade in services.
The “scope of the proposed TFS Agreement,” India says, will cover
measures affecting trade in services across all modes of supply and
it will include special and differential treatment provisions for
developing and poorest countries like in the TFA.
A TFS Agreement, according to India, will also address several cross-cutting
issues that impinge on all four modes of supply of services. An illustrative
list of cross-cutting issues mentioned by India in the concept note
(i) Publication and availability of information, including automation
and international electronic exchange of trade data.
(ii) Transparency in application of all measures of general application
affecting trade in services.
(iii) Ensuring administration of measures affecting trade in services
in a reasonable, objective and impartial manner.
(iv) Consultations and cooperation among relevant authorities.
(v) Opportunities to comment before entry into force of measures affecting
trade in services.
(vi) Procedures and timelines for consideration of applications from
service suppliers, as well as for appeal and review.
(vii) Disciplines on taxes, fees, charges and other levies on supply
(viii) Special and Differential Treatment for developing country Members
(ix) Institutional arrangements.
Further, the proposed TFS will also cover specific issues in the four
modes of supply of services under the General Agreement on Trade in
Services (GATS). The mode-specific issues suggested by India are as
(a) Mode 1: Facilitation of free flow of data across borders for ensuring
meaningful supply of Mode 1 services.
(b) Mode 2: Facilitation of supply of Mode 2 services, including through
cross-border insurance portability for availing of medical or tourist
related services in a foreign country. Endeavour to streamline temporary
entry formalities, such as visa processing fees, procedures and timelines
for consumers seeking entry into another country to avail of services
(such as medical services, education services, tourism, etc.).
(c) Mode 3: Facilitation of supply of Mode 3 services, including through
measures such as single window clearance for setting up commercial
presence. Disciplines on charges applicable on Mode 3 service suppliers,
in order to ensure that these do not unfairly disadvantage foreign
(d) Mode 4: Facilitation of supply of Mode 4 services through simplification
of procedures for temporary entry and stay, and clarity in respect
of work permits and visas as relevant for the categories of the Mode
Disciplines on measures relating to taxation, fees/charges, discriminatory
salary requirements, social security contributions in relation to
temporary entry, etc. in order to ensure that these do not unfairly
disadvantage foreign service suppliers.
India has argued that “a well-structured TFS will significantly enhance
the potential for trade in services for all [WTO] members” and that
it would require “careful deliberation in order to enable the development
of a framework that can effectively address the main concerns of all
Puzzlingly, India chose to circulate the paper at the WPDR, a weak
limb of negotiations for liberalizing trade in services, instead of
the Doha special negotiating body on services. The WPDR is in a limbo
since 2009 after a major industrialized country, the United States,
shot down a middle ground text issued by the former Singapore’s trade
diplomat Peter Govindasamy.
Despite regular meetings of the WPDR over the past seven years and
another watered-down text in 2011 to kick- start the outstanding work
on domestic regulation, the US succeeded in atrophying the WPDR, according
to a developing country services negotiator who asked not to be quoted.
Moreover, India’s concept note comes at a time when major developed
countries - the US, the European Union, and several other members
- are shutting down their borders for movement of short-term services
providers under Mode 4.
After the Brexit and the heightened scare-mongering unleashed by right-wing
political parties in the US and the EU member countries about the
threats posed by foreign workers for jobs previously held by locals,
it is somewhat intriguing as to what India can accomplish at this
juncture when immigration has become a violent political issue, the
services negotiator argued.
On Tuesday (27 September), the European Union trade commissioner has
listed several issues - digital trade, electronic commerce, services,
fisheries subsidies, and domestic farm subsidies - as likely candidates
for the WTO’s eleventh ministerial meeting next year. It remains to
be seen how Brussels would respond to India’s paper on TFS.
It is not clear whether India weighed the pros-and-cons of its proposed
TFS Agreement which largely involves eliminating domestic regulation
barriers and economic need tests that developing countries want from
the developed countries.
The Trade Facilitation Agreement for goods was piloted and clinched
by the developed countries, particularly the United States and the
EU, as part of the initiative launched by the Colorado group at the
WTO’s first ministerial conference in Singapore in 1996.
It was also part of the four Singapore issues - trade and investment,
competition policy, government procurement, and trade facilitation
- that were dropped at the WTO’s fifth ministerial conference in Cancun,
Mexico, in 2003 following fierce opposition from developing countries.
Later, the Trade Facilitation Agreement was included in the July 2004
framework agreement as a compromise for addressing the core issues
in the Doha Development Agenda, especially in all three pillars -
market access, trade- distorting domestic support, and export competition
- of agriculture and market access for industrial goods based on less-than-full-reciprocity
Ultimately, the TFA was hived off from the DDA by the US along with
its developed and some developing countries’ allies after 2009 despite
protests from developing countries, including India - which repeatedly
emphasized that the outcome of the Doha negotiations shall be treated
as part of a single undertaking under paragraph 47 of the Doha Work
The TFA, which sought to harmonize customs procedures and provisions
of the developed countries in developing countries, is primarily a
market access agreement, according to the former Brazilian ambassador
Roberto Carvalho de Azevedo.
However, it was Azevedo, as WTO’s Director-General, who enabled the
US and its allies to secure the TFA at the WTO’s ninth ministerial
meeting in Bali, Indonesia, in 2013, and also facilitated the decimation
of the DDA negotiations at the WTO’s tenth ministerial conference
in Nairobi, Kenya, according to an African trade envoy who asked not
to be quoted.
Against this backdrop, India’s paper on TFS appears to be a conscious
move by New Delhi to switch gears from the bread-and-butter issues
of poor farmers and the permanent solution for public stockholding
programs for food security to the demands of its software services
companies who are facing major barriers in the US, according to services
negotiators familiar with the development.
Also, New Delhi’s concept note has come on the heels of a trade dispute
that India is waging against the US at the WTO over Washington’s several
inconsistent policies on visa fees and numerical quotas for L-1, and
H-1B visas. +