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TWN Info Service on WTO and Trade Issues  (Oct07/06)

10 October 2007


Consultations to start on a WTO draft services text

The Chair of the services negotiations at the WTO is to begin consultations with a view to producing a first draft text on services, which would be considered alongside the modalities texts on agriculture and non-agricultural market access (NAMA).

The drafting of a services text was agreed to at a meeting of the Special Session of the Council for Trade in Services on 28 September, according to the director of the trade in services division of the WTO, Hamid Mamdouh.

However several developing countries voiced dissatisfaction with the idea of producing a new "services text" (which has been pushed by the developed countries), as there is already a services modalities text in Annex C of the Hong Kong Ministerial declaration.

A highlight of the Friday meeting was a statement by India, voicing concerns over the disappointing responses of developed countries to requests on Mode 1 (cross-border supply) and Mode 4 (movement of natural persons).

Lack of an ambitious outcome in these areas, would "seriously and perhaps fatally impact on the prospects of an early conclusion of the Round," warned India's Ambassador Ujal Singh Bhatia. In an indirect reference to developed countries, he said that the services negotiations should be about "give and take" and not "take and take."  

Below is a report of the services meeting of 29 September.  It was published in the SUNS on 2 October 2007.  It is reproduced here with the permission of the SUNS.  Any reproduction or re-circulation requires the prior permission of the SUNS (sunstwn@bluewin.ch).

With best wishes
Martin Khor
TWN


Consultations to start on a WTO draft services text
Published in SUNS #6335 dated 2 October 2007 
By Kanaga Raja, Geneva, 1 Oct 2007

The Chair of the services negotiations at the WTO is to begin consultations among members this week with a view to producing a first draft text on services, which would be considered alongside the modalities texts on agriculture and non-agricultural market access (NAMA).

The drafting of a services text was agreed to at a meeting of the Special Session of the Council for Trade in Services on Friday, according to the director of the trade in services division of the WTO, Hamid Mamdouh.

The Special Session was held at the end of a two-week cluster of meetings of the regular services bodies as well as plurilateral and bilateral request-offer meetings.

At the Friday meeting, the Chair of the services negotiations, Ambassador Fernando de Mateo of Mexico, also presented a report reviewing the progress in the services negotiations (see below).

The drafting of a services text was first pushed for by developed countries including the United States, European Union and Japan at an informal small-group meeting convened by the Chair in mid-September.

Their aim, according to diplomats, was to use a text to achieve agreement on a high level of ambition on liberalization of services markets, especially on Mode 3 (commercial presence).

There was talk of amending Annex C (on services) of the Hong Kong Ministerial Declaration of December 2005, in order to have some kind of "bench-marking", or to have developing countries commit, for example, to bind the present level of national treatment in Mode 3.

However, this idea of the developed countries was opposed by several key developing countries in the informal talks.

At the Friday session, some developing countries including Venezuela, Cuba and Argentina reportedly were of the view that a text on services was not necessary. Other developing countries were not opposed to a services text as such, but made clear that Annex C could not be amended.

And while developed countries wanted a high ambition to be achieved for market access in Mode 3, many developing countries and their groupings also stressed the need for issues of interest to them to be included in the text.

India emphasized the need for progress in market access openings of developed countries in Modes 1 and 4, the LDC Group stressed the need to operationalise modalities giving special treatment to LDCs, and the ASEAN group requested that there be progress on rules for an emergency safeguard in services.

A highlight of the Friday meeting was a statement by India, voicing concerns over the disappointing responses of developed countries to requests on Mode 1 (cross-border supply) and Mode 4 (movement of natural persons).

Lack of an ambitious outcome in these areas, would "seriously and perhaps fatally impact on the prospects of an early conclusion of the Round," warned India's Ambassador Ujal Singh Bhatia. In an indirect reference to developed countries, he said that the services negotiations should be about "give and take" and not "take and take."

Mamdouh told journalists that the meeting on Friday morning focussed only on the principle of having a text. There was no detailed discussion about what that text would contain, but some delegations referred to some examples of what a text must include.

He indicated that the text would include non-controversial issues such as missed deadlines. He added that one thing on which there was consensus is that any text produced in this context must reaffirm Annex C (of the Hong Kong Ministerial Declaration) as the basis for continuing and concluding the negotiations.

According to Mamdouh, the general view is that Annex C at this point is untouchable. The common thread that came up unanimously was the reaffirmation of Annex C. Whatever text that Chairman Ambassador De Mateo might produce will have to be faithful to Annex C, as the basis for the negotiations.

At the conclusion of the meeting, the Chair said that he would start consulting from the week starting 1 October with a view to producing a draft services text. The consultations will include all members and through open-ended informal meetings as well as small groups of particular interests and concerns.

Mamdouh said that everyone realizes that the extent and pace of progress in services will have to be commensurate with what happens in agriculture and NAMA.

He added that some members also stressed that any drafting exercise cannot change Annex C in any way. Everything that has been agreed in the negotiations so far has to be preserved - going back from Hong Kong, the July package, the negotiating guidelines that was agreed in 2001, and even back to the GATS itself.

According to Mamdouh, Chairman De Mateo confirmed that the consultations and preparation of a text would be with a view to implementing Annex C, and not changing it.

On other developments, Mamdouh reported that a first discussion of a text on domestic regulation (by the Chair of the group on domestic regulation, Mr. Peter Govindasamy of Singapore) had been concluded. At some point, the Chair will be issuing a revision of the text.

Mamdouh said that the bilateral and plurilateral negotiations of the last two weeks were useful. But members felt that the plurilateral format has almost fulfilled its purpose and it was about time that more emphasis was laid on bilateral negotiations.

In a statement to the meeting, India's Ambassador Ujal Singh Bhatia said that while the current round of the discussions concluding Friday has provided some useful insights into the positions of members, especially regarding the plurilateral requests made to them, however, "we are clearly witnessing a process of diminishing returns."

"The stage of clarificatory discussions is over. We need to convert clarifications into offers soon," said India.

Its assessment was that there is a clear imbalance in the responses. By and large, developing countries have been more forthcoming in their responses to the plurilateral requests, than developed members.

On the issues of most concern to India, Mode 4 and cross border supply (Mode 1), the responses have been especially disappointing.

For India, an ambitious outcome in services is even more important at this stage. India said that its positions in agriculture are largely defensive, because of the predominance of subsistence farming in India. In NAMA, it has been consistently providing market access to its trading partners.

"It is only in services that we expect some gains... I would like to underline that this Round cannot conclude without substantial responses on issues of the greatest interest to developing countries."

Regarding the issue of a services text, India had an open mind but it needed to be clear about its objectives. "In agriculture and NAMA, the objective is quite clear: to get modalities of negotiations in place. In services, we already have modalities, which were agreed in Hong Kong.

"Hence, any services text would necessarily have to outline how these modalities get converted into a market access offer. For India, a services text should outline steps to operationalize the guidance given to members in Annex C of the Hong Kong Ministerial Declaration. And this would include all Members clearly outlining how they intend to meet the broad objectives for each of the Modes stated in Annex C."

In particular, developed countries have to do more than developing countries and must come forward with clear signals to provide market openings in sectors and modes of interest to developing countries.

Full and effective implementation of LDC modalities for the special treatment of LDC Members should constitute an integral part of the text. The date for next offers would also form part of the services text.

Further, more intensive engagement on GATS rules under Articles X, XIII and XV, leading to improved rules, should continue. Needless to say, said India, negotiations should be guided by the relevant provisions of GATS including Art XIX, which provides for appropriate flexibility for developing countries.

Reiterating its statement made at the Trade Negotiations Committee (TNC) in July, India said that this is a negotiation and it involves "give and take", not "take and take".

"And we expect to see genuine responses from our major trading partners in Modes 1 and 4. Without clear signals in this regard, I am afraid we will not be able to realise our shared objective of an ambitious outcome."

"For some of us at least, the lack of an ambitious outcome in services, would seriously, perhaps fatally, impact the prospects of an early conclusion of the Round," India cautioned.

In his report, Ambassador De Mateo said the last two weeks' meetings were useful and Members are keeping in sight the shared goal of preparing an improved set of offers.

The unresolved issues of agriculture and NAMA are still with us, he said, but this should not prevent us from advancing our own work as far as possible.

De Mateo said he invited a group of ambassadors to an informal meeting on 13 September. Several expressed the view that with the submission of draft texts by the Chairs of agriculture and NAMA, we should be thinking how services negotiations would best be served.

At the time of adoption of the modalities on agriculture and NAMA, there would be a need for some guidance on services, ideally in the form of a text to be adopted at the same time as the modalities.

He said that it seems that, at a minimum, such a text would need to contain a new date for revised offers as well as the time-frame for a mechanism pursuant to the LDC modalities. There were also other elements suggested for inclusion in such a text.

According to the Chair, one of the main conclusions that emerged from that meeting was that Annex C remains the basis for continuing and concluding the services negotiations. "Anything we do would be by way of implementing Annex C," De Mateo said.

Meanwhile, pressure for a services text and for an "ambitious result" in services also came last week from leading service industry associations in the Global Services Coalition which held meetings with delegations at the WTO.

In a 27 September press release, the Coalition said that the Doha Round must deliver new trade liberalization, not simply bindings of existing market access.

While there were draft texts for agriculture and NAMA, the bad news is that there is not yet any corresponding text for services, said Sergio Marchi, Chairman of the Canadian Services Coalition and a former Canadian Ambassador to the WTO.

He called for a roadmap toward a successful conclusion of the services negotiations. Such a text should also call for a dedicated Ministerial meeting on services, and a clear view of key Members' liberalizing intentions, said the press release.

"Absent an ambitious deal in services with substantial and commercially meaningful new market access, including and acknowledging inter-linkages across the four modes of supply, the deal would be incomplete, unbalanced, and difficult to sell or support."

 


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