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TWN Info Service on WTO and Trade Issues (Apr22/07)
12 April 2022
Third World Network

WTO Services Division propagates "dangerous" narrative on JSIs
Published in SUNS #9554 dated 12 April 2022

Geneva, 11 Apr (D. Ravi Kanth) - The Trade in Services and Investment Division (TSID) of the World Trade Organization published early this month the first issue of "Services Insights" online, propagating the role played by services in "Trade and Health and Trade and Environmental Sustainability" initiatives among others.

This new periodical appears to be yet another attempt at the alleged continued "brazenness" with which the WTO Secretariat, under the leadership of director-general Ms Ngozi Okonjo-Iweala, has been chipping away at the Marrakesh Agreement, said people familiar with the development.

As reported in SUNS #9549 dated 5 April 2022, the Secretariat's Environment Division has provided substantial technical services to a group of countries pursuing a non-mandated issue, namely the "Trade and Environmental Sustainability Structured Discussions (TESSD)."

Simultaneously, the TSID has launched its first publication ostensibly to build a nexus on the work on the non- mandated issues, seemingly knowing full well that the Secretariat is not mandated to pursue work on these controversial initiatives that are not part of the multilateral mandates.

The Secretariat has also provided a report on the informal Joint Statement Initiative (JSI) on "structured discussions on investment facilitation for development" on 23 March.

"Being force-fed select information is becoming a very serious problem in this place," said a former services negotiator, who asked not to be identified.

The Secretariat's continued work on the non-mandated initiatives poses an existential threat to the WTO, which was established as a rules-based, member-driven, and intergovernmental organization.

The apparent "brazenness" with which the Secretariat, led by Ms Okonjo-Iweala, seems to be engaging in these initiatives, including providing technical services, could perhaps constitute a "new normal" of quotidian practices, said people, who preferred not to be quoted.

More disturbingly, these practices are allegedly in violation of Articles II.1 and III.2 of the Marrakesh Agreement.

For example, Article III.2 of the Marrakesh Agreement states unambiguously that, "the WTO shall provide the forum for negotiations among its members concerning their multilateral trade relations in matters dealt with under the agreements in the Annexes to this Agreement. The WTO may also provide a forum for further negotiations among its Members concerning their multilateral trade relations, and a framework for the implementation of the results of such negotiations as may be decided by the Ministerial Conference."

THE NEW SERVICES PERIODICAL

To start with, in a foreword in the "Services Insights" periodical, the Director of the TSID, Ms Xiaolin Chai, says that the first issue contains "a selection of news, articles and opinions on the vast world of trade in services," and that it is "a pursuit to build professional networks on services trade and investment". She says that "this periodical that we are launching today is an additional step towards enhancing awareness about the importance of services trade - the idea is to deep dive into the issues captured by the daily headlines and unveil the "services trade" behind the news."

Ms Chai points out that today, services account for about 55% of GDP and 45% of employment in developing countries - "those shares being even higher, at almost 70% in advanced economies."

She argues that there is a substantial component of embedded services in manufacturing trade, with services trade accounting for 50% of world trade.

Ms Chai maintains that global foreign direct investment is largely about investments in services sectors.

Without the underpinning ICT (Information and Communications Technology) services, "e-commerce would have remained science fiction," she says.

She says somewhat hyperbolically that, "Without online services such as telemedicine, teleconferencing and distance learning, as well as the ability to tele-work and shop online, it is hard to imagine how an average household could have been able to cope with the Covid Pandemic crisis", amidst the growing "digital divide" across countries, particularly in developing countries.

Ms Chai asserts that "as the world becomes more digital, and attempts are made at all levels of society and to make it more sustainable and resilient, services trade and investment will feature highly in the policy agenda of all countries."

She wants the Multilateral Trading System to focus not only on the three pillars - the WTO's negotiating function, the enforcement function of the dispute settlement system, and the implementation function - but more importantly on "keeping pace with current times."

The obstacles in the services trade negotiations are in no way insurmountable, Ms Chai says, suggesting to "bring Members' GATS (General Agreement on Trade in Services) commitments closer to regulatory and policy reality, build on the recent disciplines on domestic regulations (JSI on domestic regulation in services) to continue reducing trade costs among an ever increasing number of participants, assist countries in reducing the digital divide, help developing countries and LDCs increase their participation in services trade, enhance capacity building through technical assistance and facilitate e-commerce and investment - just to name a few."

She says that the challenges in services trade need to be addressed "holistically" as they are "multi-dimensional, inter-disciplinary, and because they involve behind-the-border measures."

"DANGEROUS" NARRATIVE

For the past many months, the WTO's TSID has been promoting work on the JSIs on domestic regulation in services, digital trade, and investment facilitation, even though there is no multilateral mandate on them.

Even though members had complained about the Secretariat's alleged transgressions into areas that are not multilaterally mandated, the DG and her senior officials are increasingly "turning a deaf ear" to these complaints, said people familiar with the development.

While the issues around Modes 1 (cross-border trade), 2 (consumption abroad), and 3 (commercial presence) of the GATS are highlighted, the report does not elaborate on the importance of Mode 4 (movement of short-term services providers) to the developing countries, as it is the only mode of supply of services where developing countries have a competitive edge.

The Covid-19 pandemic also highlighted the importance of the temporary movement of professionals, especially as developed countries were facing a crisis in terms of the availability of nurses, doctors, and other medical staff.

The periodical also fails to mention that the pandemic has further deepened the digital divide, as people with access to digital technologies were able to remain connected while others could not, which has added to global inequality.

Therefore, it is not e-commerce per se but digital infrastructure that needs to be built.

INDIA PROVIDES DEVELOPMENT-ORIENTED NARRATIVE

In a room document (RD/SERV/159*) circulated before the suspended WTO's 12th ministerial conference (MC12) late last year, India argued that "the COVID-19 pandemic has had a devastating impact on global services trade, especially that of the developing countries, including the Least Developed Countries (LDCs)."

In its proposal, India pointed out that "inclusive participation of developing countries, particularly Least-Developed Countries (LDCs), in global services trade, continues to be a major development challenge."

New Delhi underscored the need for reviving the services sectors that were most hard hit due to the pandemic.

The sectors that needed urgent revival, according to India, are "travel, hospitality, health, transportation and education services which are important contributors to the employment and income generation in the developing countries, including LDCs."

It urged "members to facilitate movement of natural persons, critical for recovery of these sectors," and called for easing "travel restrictions, where feasible, and harmonize the recognition of vaccine and test certifications."

Further, India called for the removal of "the regulatory barriers that render their market access commitments meaningless including related to qualification requirements and procedures to facilitate trade in services especially through Mode 4, an area of key interest for developing countries."

It urged members to "consider the services sector opportunities that arose from the pandemic, specifically breaking down barriers to sectors such as health and professional services where delivery is possible through virtual means."

India emphasized the importance of facilitating the transfer of technology through cooperation between members.

It underscored "the need to intensify the work on assessment of trade in services with reference to the GATS objectives and the extent of implementation of Article IV on increasing participation of developing countries, and suggest means of promoting the goals established therein."

Besides facilitating "comprehensive discussions on services, we urge the Secretariat to update their earlier sectoral and modal notes," India said.

India drove home a strong message that "in keeping with the centrality accorded to "development" in the Doha round, we highlight that discussion on services must take into account the development needs and constraints of developing countries and commitments for sectors and modes of export interest to developing countries."

It said that "we are committed to engage in accordance with the GATS mandate including GATS Article XIX with built-in flexibilities, GATS Article IV, the Doha Ministerial Declaration and Annex C of the Hong Kong Ministerial Decision."

India emphasized "the benefits of the multilateral trading system in supporting our deeper cooperation in developing a WTO response to achieve a sustained and inclusive recovery of services trade."

In short, India has provided a development-oriented narrative, unlike the "dangerous" narrative suggested by the WTO Secretariat, in alleged violation of the WTO rules.

 


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