TWN Info Service on WTO and Trade Issues (Oct16/12)
14 October 2016
Third World Network

India's TFS initiative meets US roadblocks
Published in SUNS #8329 dated 10 October 2016

Geneva, 7 Oct (D. Ravi Kanth) -- India's "concept note" for crafting a Trade Facilitation in Services (TFS) agreement at the World Trade Organization received support from various countries on Thursday (6 October), but the United States cast doubts on New Delhi's initiative.

The US questioned whether the Indian initiative can be compared to the Trade Facilitation Agreement (TFA) in goods and whether it will lead to a developed versus developing country battle, services negotiators told SUNS.

The US, however, welcomed another proposal from a group of industrialized and several developing countries for addressing "administration of measures" for developing licensing requirements and procedures, qualification requirements and procedures, and technical standards to be addressed separately.

That proposal was tabled by Australia, the European Union, Chile, Colombia, Mexico, Norway, Republic of Korea, and Chinese Taipei and seeks to address elements related to "Transparency, Development, and Institutional Provisions".

At a meeting of the WTO's Working Party on Domestic Regulation (WPDR), Australia presented the proposal on "administration of measures" for developing licensing requirements and procedures, qualification requirements and procedures, technical standards, and transparency.

Australia said members needed more "certainty" in the administration of measures. It argued that the group will present more proposals in the coming days along with the negotiating texts.

The EU said that it is a co-sponsor of the proposal which needs to be addressed on a strong footing in the coming months.

Chile, Japan, and Chinese Taipei among others supported Australia in demanding negotiations on these issues.

The proposal on "Administration of Measures" for negotiation in the GATS Working Party on Domestic Regulation (WPDR), according to Australia, covers elements of domestic regulation related to the administration of licensing requirements and procedures, qualification requirements and procedures, and technical standards.

It also includes a General Provisions paragraph on the scope of application to facilitate Members' consultations on the proposed disciplines, Australia said, according to services negotiators present at the meeting.

The US said it is open to discussing the issues listed in the Australian proposal, arguing that the "administration of Measures" is important for trade in services.

Several developing countries as well as China raised questions on the proposal circulated by Australia and others.

China sought to know whether it is consistent with the GATS Article 6.4 which deals with developing general disciplines for all professional services and, where necessary, additional sectoral disciplines.

But the negotiations on improving disciplines in the domestic regulation have remained in the doldrums since 1998 because of opposition from a major developed country - the United States - which had opposed the two drafts texts issued in 2009 and 2011 by the then chairs of the WPDR.

After the discussion on the joint proposal on "Administration of Measures," India formally introduced its two- page "concept note" on "Trade Facilitation in Services" agreement for removing barriers and bottlenecks that impede global trade in services.

India said while the existing Trade Facilitation Agreement for goods which was concluded at the WTO's ninth ministerial meeting in Bali, Indonesia, in December 2013, addressed the simplification of customs procedures, it wants a similar agreement for doing away with the numerous hurdles in global trade in services.

The concept note, according to India, will address several cross-cutting issues such as "transparency, streamlining procedures, and eliminating bottlenecks" for facilitating trade in services.

India also listed the specific issues in the four modes of supply of services under the General Agreement on Trade in Services. The issues include:

(i) Facilitation of free flow of data across borders for ensuring meaningful supply of Mode 1 services.

(ii) 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.).

(iii) 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 service suppliers.

(iv) 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 4 commitments.

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.

China thanked India for its concept note for facilitating trade in services without bottlenecks. China, however, maintained that it will need time to offer concrete suggestions from its capital which is currently on holiday.

The European Union said it remains open to the Indian concept note. Several other developing and poorest countries from Africa, Asia, and South America supported India's concept note.

But the US posed a volley of questions on the Indian paper and asked what it intends to achieve, according to negotiators present at the meeting.

The US maintained that TFA had consensus among all members when it attempted to bring about improvements in freedom of transit (Article V), fees and formalities connected with importation and exportation (Article VIII), and publication of administration of trade regulations (Article X).

The US' position on TFA, according to a developing country negotiator, is inaccurate as there was no consensus on the TFA when it was introduced or even concluded at Bali.

"The consensus was manufactured through strong-arm tactics by the US when it forced the African countries in May, 2014 to agree to the protocol," the official said.

India's concept paper, according to the US, also posed the risk of transforming the discussion into a developed versus developing country confrontation.

The US said that the special and differential flexibilities proposed in India's paper on TFS can only involve longer time periods for implementing the agreement as in the Trade Facilitation Agreement but not result in new concessions for developing countries.

The US also sought to know from India whether its proposal will need a new mandate that goes beyond the current mandate of the WTO's Working Party on Domestic Regulation.

In a separate development on 5 October, the US and Brazil joined hands in whittling away two subsidiary bodies - the Working Party on GATS Rules (WPGR) and the Committee on Specific Commitments (CSC) - of the Council for Trade in Services.

Brazil, which refused to put a concrete proposal in writing for discontinuing these two bodies, succeeded in forcing a decision with the help of the US despite opposition from many developing countries.

Disturbingly, the proponents seeking work in these two bodies - the Working Party on GATS Rules and the Committee on Specific Commitments - remained silent when Brazil and the US managed their way through an oral brainstorming presentation.

The two countries claimed that these two bodies have become redundant over the years without any significant contribution, said a services negotiator from a South American country, who asked not to be quoted.

The Chairs of these two bodies (Argentina for WPGR and China for CSC) will hold consultations to determine if there is a need to convene a meeting.

The effect of this is the de facto suspension of the work in these two bodies, said another trade official.

The question of continuing the work in the Committee on Trade in Financial Services also cropped up during the meeting of the CTFS.

It is an open secret that developed countries who refuse to acknowledge or even talk about the role they played in the global financial crisis have frustrated any work in the CTFS, the official said.

In a nutshell, the three meetings showed that while developing countries remain disunited in advancing their developmental proposals, the industrialized countries along with a group of developing countries are able to push their proposals with little resistance, several developing country negotiators said. +