TWN Info Service on WTO and Trade Issues (Nov05/14)

22 Nov 2005

Services new report out on Wednesday, Asean countries make major proposals on services text

Last Friday evening, the services meeting at WTO resumed. The chairman of the meeting announced that he would issue a new draft text or report on services on Wednesday (23 Nov).

At the meeting, Asean countries proposed major changes to the Chair's present draft.

Below is a report on this.

With best wishes
Martin Khor

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Chair Promises New Draft Ministerial Text on Services This Wednesday

By Goh Chien Yen (TWN),Geneva 22 Nov 2005

Mexican Amb. de Mateo, Chair of the WTO services negotiations told delegates at the end of last Friday’s late night informal plenary meeting that he will be coming up with a revised draft ministerial text by the middle of this week, after receiving extension comments and proposed changes to his current draft text from members.

Although it is unclear how he would amend his draft given the divergent views between by and large the developed and developing country members expressed at the meetings on Friday morning and evening. He had indicated in earlier meetings that he cannot remove any item that has been proposed and had said that he could only make an alteration only if there is a consensus to do so, according to trade sources. (see SUNS report 16 Nov 2005)   It is also unclear whether further meetings and consultations would be held by the Chair to bridge these differences.

On the one hand developed country members such as the US, Australia and the EU want to see the current draft ratcheted up in several areas. Members would then be compelled to undertake more and deeper liberalization commitments in the area of services. 

Accordingly, the EU said that it wanted stronger language in para 4 of the draft text (JOB (05)/ 262/ Rev. 1) so that countries are pushed to undertake deeper commitments in the different modes of supply. It had also insisted during the meeting, that the paragraph dealing with numerical targets and indicators which will force members to make more market access commitments must be retained. In addition, the EU had proposed for stronger language in para 10 of the draft on plurilateral negotiations in order to make participation by members mandatory.

On the other hand, many developing country members see that the current draft text as going beyond the GATS framework and the “guidelines” that are supposed to be the  basis of the negotiations. Several developing country delegations such as the African Group and the LDC group have said during the Friday morning meeting that the draft must respect and not undermine the flexibilities contained in GATS.

This point was reiterated by a group of ASEAN countries – Malaysia, Indonesia, Thailand, the Philippines, and Brunei, later at the evening meeting. They said in a joint statement “that the Ministerial Declaration cannot alter the delicate balance of rights and obligations under the General Agreement on Trade in Services, and as elaborated in the 2001 Negotiating Guidelines. Any specific political guidance or negotiating instruction from our Ministers in Hong Kong will have to be operationalized within the framework of the GATS structure and the Negotiating Guidelines.”

Accordingly they pointed out during the meeting that para 4 which urges members to make deeper commitments in the different modes of supply as being “too detailed.” They added that the “length and function of this paragraph adds further imbalance to the excessive focus on market access as compared to the GATS Rules and Domestic Regulations.”

As such they proposed to “retaining the substance of the chapeau of paragraph 4, while accommodating the meaning of items listed in a shorter and more open language, without being too specific” to read as follows:

“We agree that members should strive to ensure that their new and improve commitments take into account:

a)      improved offers in all four modes of supply in undertaking market access and national treatment commitments;

b)      new offers in sectors beyond those committed under the UR, particularly in sectors of export interest to developing countries, and in particular Mode 4 liberalisation

c)      substantial reduction or elimination of exemptions from most favoured (MFN) treatment and Economic Needs Tests (ENTs); and

d)      ensuring that clarity, certainty, comparability and coherence in the scheduling and classification of specific commitments adheres to, inter alia, the Scheduling Guidelines pursuant to the Decision of the Council for Trade in Services adopted on 23 March 2001.

These ASEAN countries were supported by other developing country members such as South Africa, Jamaica and Rwanda during the evening meeting.

In relation to para 10 on the plurilateral approach, the ASEAN countries insisted that “the plurilateral process, as in the bilateral negotiations, should have due respect for national policy objectives and the level of development of individual Members.”

They felt that “the GATS and the Guidelines already provide a solid basis for pursuing plurilateral negotiations in services.”

Hence, they proposed to rewrite para 10 with the following: “in addition to bilateral negotiations, we agree that the request offer negotiations could also be pursued on a plurilateral basis in accordance to the GATS and Negotiating Guidelines.” All subsequent text in para 10 of the draft is to be removed. This sentence would then be part of the current para 9.

They added that “the full flexibility afforded by the request-offer process is an important element of the GATS structure, and was considered critical to getting the GATS 1994 acceptable to developing countries [and would therefore ] reject… any and all efforts to undermine the GATS structure.”

Together with many developing country members, these ASEAN countries also called for the complete deletion of para 11 during the meeting which dealt with numerical targets and indicators.

Finally, on the section of the text on timelines found in para 15 of the time, the ASEAN countries proposed suggest the deletion of the reference to end of 2006 in the chapeau, or to February 2006 in 15(b), echoing what some delegates had already proposed that morning. The ASEAN countries also supported the deletion of 15(c) as suggested by a number of delegations.