Several South nations coalesce around Indian TFS proposal

India has floated a proposal for a WTO agreement on “trade facilitation in services” to ease cross-border flows of services.

by D. Ravi Kanth

GENEVA: Several developing and least-developed countries on 4 July coalesced around an Indian proposal for pursuing negotiations at the WTO on trade facilitation in services (TFS) to cut transaction costs associated with unnecessary regulatory and administrative burdens on cross-border movement of services, several negotiators told the South-North Development Monitor (SUNS).

Surprisingly, the champions of the Trade Facilitation Agreement (TFA) in goods trade – the United States, the European Union, Japan, Canada and several developing countries which were members of the Colorado group – remained silent on India’s proposal for negotiating a TFS agreement along the lines of what was accomplished in the TFA for goods in 2014, an African trade negotiator told SUNS.

While silent on the proposed TFS, the US however said, in its non-paper on the work programme on electronic commerce, that members must consider “ensuring faster, more transparent customs procedures: The sort of provisions contained in the WTO Trade Facilitation Agreement can make very direct contributions to digital trade. Administrative and at-the-border barriers can often be a bigger problem than tariffs for exporters of digital equipment.”

A large majority of developing, least-developed and many developed countries also signalled their willingness to pursue negotiations on the unfinished business of the Doha services negotiations, particularly on market access (MA) and domestic regulation (DR).

However, the US, which is leading the plurilateral negotiations on a Trade in Services Agreement (TiSA) outside the WTO, chose to remain silent on the unfinished market access and domestic regulation negotiations.

The developed countries led by the EU, the US, Canada and Japan (the erstwhile Quad countries), along with their allies in the developing world such as Mexico, Hong Kong, Singapore, Korea, Chile and Argentina, pressed for starting negotiations on electronic commerce/digital trade. The US has presented a non-paper on the e-commerce/digital trade work programme even before members have completed negotiations on the outstanding issues in the Doha services negotiations.

These conflicting demands, almost along North-South lines, over the unfinished Doha services negotiations came into full display at an informal open-ended meeting of the Doha services negotiating body at the WTO on 4 July.

The chair of the Doha services negotiations, Ambassador Gabriel Duque, sought members’ views on how to continue work after the summer break in September. During the previous informal session on 3 May, said Duque, members had pressed for resuming negotiations on domestic regulation and market access.

The Colombian chair suggested that work on least-developed-country (LDC) issues also should be taken up along with digital economy and TFS. He said a balanced outcome is needed without resorting to sequencing issues in other areas.

Against this backdrop, said Duque, members must spell out their positions on different areas so as to prepare a work programme for the eleventh WTO Ministerial Conference in December 2017, according to people familiar with the development.

“Holistic outcome”

India, which was the first to take the floor, said that it is a major “demandeur of a holistic outcome on services covering both DR and MA, in keeping with the GATS mandate, Negotiating Guidelines & Procedures and all the Ministerial Decisions including the Annex C of the HKMD [Hong Kong Ministerial Declaration].”

Among other things, the HKMD in Annex C emphasized that “members shall strive to ensure a high quality of offers, particularly in sectors and modes of supply of export interest to developing countries, with special attention to be given to least-developed countries.”

Significantly, the HKMD called on members to “achieve progressively higher levels of liberalization with no a priori exclusion of any service sector or mode of supply and shall give special attention to sectors and modes of supply of export interest to developing countries. Members note the interest of developing countries, as well as other Members, in Mode 4.”

India said it wants substantial and comprehensive outcomes in “Mode 1 [cross-border], Mode 4 [movement of natural persons] and disciplining of domestic regulations, including in areas such as qualification requirements and procedures [which are critical for India].”

Taking a dig at those countries which are pursuing the TiSA negotiations, India maintained that members must get “back to the full mandate of services negotiations under the CTS-SS [Special Session of the WTO Council for Trade in Services].” India called for intensifying efforts to achieve rapid progress in each of the pillars of the services negotiations, especially in areas such as market access, domestic regulation and LDC services waiver, to achieve progressively higher levels of liberalization of trade in services.

Given the “numerous border and behind-the-border barriers as well as procedural bottlenecks, which are impediments to the realization of the full potential of services trade,” India said that there is a crying need for an agreement on trade facilitation in services along the lines of the TFA in goods adopted by WTO members in 2014.

The TFS agreement, India said, “should address the key issues that are pertinent to facilitating trade in services, such as transparency, streamlining procedures and eliminating bottlenecks.” Further, a comprehensive TFS agreement will ensure that “the commitments that were taken in the Uruguay Round are implemented in a meaningful manner and also provide the basis for realization of benefits from improved commitments in future negotiations.”

The TFS agreement will be based on strong special and differential treatment provisions as set out in the TFA, India maintained. India said it will circulate a written proposal on TFS soon, according to people familiar with the development.

China said it is looking forward to India’s proposal on TFS, emphasizing that it would require urgent discussion on such a constructive proposal, said a negotiator who asked not to be quoted.

Turkey said TFS is “a great idea” and that it looked forward to India’s proposal. Uganda welcomed India’s proposal on TFS, while a representative for the LDCs said that their group is ready to engage on the proposal.

Several countries – Nigeria, the EU, Singapore, Japan, Hong Kong, Canada, Korea, Mexico, Chinese Taipei, Colombia, Norway, Chile, China, Australia, Turkey, South Africa, Argentina and Russia – supported India’s demand for intensifying negotiations on domestic regulation.

Many countries – India, New Zealand, Singapore, Japan, Hong Kong, Canada, Korea, Mexico, Chinese Taipei, Colombia, Switzerland, Norway, China, Turkey and Thailand – pressed for intensifying market access negotiations.

E-commerce proposal

In sharp contrast to the demands for negotiations on domestic regulation and market access, the developed countries and several developing countries rallied around the US for pursuing negotiations on e-commerce/digital trade. The US had on 1 July presented a three-page non-paper for launching a work programme on e-commerce.

The US non-paper suggested several examples in the work programme that members must consider for an outcome, including:

l     Prohibiting digital customs duties;

l     Securing basic non-discrimination principles;

l     Enabling cross-border data flows;

l     Promoting a free and open Internet;

l     Preventing localization barriers;

l     Barring forced technology transfers;

l     Protecting critical source code;

l     Ensuring technology choice and authentication methods;

l     Safeguarding network competition;

l     Fostering innovative encryption;

l     Building an adaptable framework for digital trade;

l     Preserving market-driven standardization and global interoperability;

l     Ensuring faster, more transparent customs procedures;

l     Promoting transparency and stakeholder participation in the development of regulations; and

l     Recognizing conformity assessment.

In a nutshell, the US is advancing a maximalist agenda on e-commerce/digital trade without addressing the issues of domestic regulation and market access as set out in the Doha work programme, trade negotiators told SUNS. (SUNS8277)                                          

Third World Economics, Issue No. 619/620, 16 June – 15 July 2016, pp3-4