India’s TFS initiative meets US roadblocks

An Indian proposal for a WTO agreement on easing services trade has come up against resistance from the US.

by D. Ravi Kanth

GENEVA: An Indian “concept note” for crafting a Trade Facilitation in Services (TFS) agreement at the WTO received support from various countries on 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 not lead to a developed-versus-developing-country battle, services negotiators told the South-North Development Monitor (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, technical standards and transparency.

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”.

In presenting the proposal at a 6 October meeting of the WTO’s Working Party on Domestic Regulation (WPDR), 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 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 WPDR 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 raised questions on the proposal.

China sought to know whether it is consistent with Article VI.4 of the WTO’s General Agreement on Trade in Services (GATS) which deals with developing general disciplines for all professional services and, where necessary, additional sectoral disciplines.

But the negotiations on improving disciplines on domestic regulation have remained in the doldrums since 1998 because of opposition from the US, which had opposed two draft texts issued in 2009 and 2011 by the then chairs of the WPDR.

TFS concept note

After the discussion on the joint proposal on “administration of measures”, India formally introduced its two-page “concept note” on a “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 Conference in Bali in 2013, addresses 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, addresses several cross-cutting issues such as “transparency, streamlining procedures and eliminating bottlenecks” for facilitating trade in services.

India also listed specific issues in each of the four modes of supply of services under GATS. The issues include:

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

(ii) 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) 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) 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. China, however, maintained that it would need time to offer concrete suggestions from its capital, which was currently on holiday.

The EU said it remained open to the Indian concept note. Several other developing and poorest countries from Africa, Asia and South America supported the 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 the TFA had consensus among all members when it attempted to bring about improvements in freedom of transit, fees and formalities connected with importation and exportation, and publication of administration of trade regulations.

The US position on the 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 strongarm tactics by the US when it forced the African countries in May 2014 to agree to the protocol [that would bring the TFA into effect],” 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 TFA, 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 WPDR.

Services subsidiary bodies

In a separate development, on 5 October, the US and Brazil joined hands in whittling away two other subsidiary bodies – the Working Party on GATS Rules (WPGR) and the Committee on Specific Commitments (CSC) – of the WTO’s 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 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 the WPGR and China for the 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 another services subsidiary body, the Committee on Trade in Financial Services, also cropped up during the meeting of the CTFS.

It is an open secret that developed countries which 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 recent services 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. (SUNS8329)                      

Third World Economics, Issue No. 626, 1-15 October 2016, pp12, 16