Services: Still No Breakthrough On Autonomous Liberalisation

 At an informal special session of the Council for Trade in Services (CTS) on 29 May, delegates failed for the second time to agree on a Chair's text on modalities for so-called autonomous liberalisation credits. The existing draft Chair's text outlines possible elements for setting up a credit system for Members who unilaterally open up their service sectors outside of the WTO negotiations context. Regarding Services subsidiary body developments, the Working Party on GATS Rules (WPGR) met on 3 June to address the question of how to include an emergency safeguard mechanism (ESM) into the General Agreement on Trade in Services. In addition, the Working Party of Domestic Regulation met on 4 June to discuss the development of disciplines under the mandate of Article VI:4 of the GATS.

Credits for both developing and developed countries?

In the ongoing debate on autonomous liberalisation (see BRIDGES Weekly, 26 March 2002), the key issue whether all trading partners or only developing country Members should be eligible for credit remained unresolved. According to many Members, autonomous liberalisation has mostly been undertaken by developing countries under International Monetary Fund (IMF) and World Bank programmes. Some developing country Members take the view that it would contravene the idea of granting credit if, for example, industrialised countries would be awarded for unilaterally liberalising their financial services sector. The Chair's draft text [JOB (02)/35/Rev.1] as it stands does not differentiate between both country groupings. However, a group of 25 developing countries said in their comment to the Chair's paper that at least "special consideration" should be given to developing countries' unilateral liberalisation measures in the request/offer phase.

According to sources, another point contested by mainly developed countries and developing country Members such as India is the question of whether credit should only be given in the areas of services, or in other sectors such as in goods as well. Furthermore, according to trade sources, certain acceding Members would also like to be eligible for credit, with several delegations, including the EC, disagreeing to this as they consider an accession process tantamount to a negotiation. Credit, they argue, could only be granted for autonomous liberalisation "since previous negotiations" as provided for in the Guidelines as well as in GATS Article XIX:3.

Members convened for the informal CTS meeting on autonomous liberalisation to address the issue prior to the formal CTS special session to be held from 5-7 June. In the course of last March's services cluster, Members agreed to request the CTS Chair, Chile's Ambassador Jara, to draft a negotiating text on possible elements for establishing such a credit system (see BRIDGES Weekly, 26 March 2002). His first version (JOB (02)/35) had already been partly rejected in the consultative process with Members since the March CTS negotiating session. Sources indicated that the Chair will not issue a second revision of JOB(02)/35/ Rev.1 in the near future. Although 'autonomous liberalisation' is an agenda point for the 5-7 June formal special session of the CTS, sources do not expect a resumption of the debate around the issue during this services week.

Paragraph 13 of the GATS Negotiating Guidelines and Procedures provides that "based on multilaterally agreed criteria, account shall be taken and credit shall be given in the negotiations for autonomous liberalisation undertaken by Members since previous negotiations." In general, discussions so far have concentrated on the issue of which measures could be eligible for credit, with Members principally agreeing that both sectoral and horizontal measures should be considered. Additionally, according the WTO Secretariat, Members seem to agree that only MFN-based liberalisation -- i.e. commitments made vis-à-vis all trading partners -- would be eligible for credit.

Subsidiary bodies

The working Party on GATS Rules met on 3 June to discuss, inter alia, two papers on an emergency safeguard mechanism (EMS) -- one by the EC (S/WPGR/W/38, searchable at http://docsonline.wto.org/gen_search.asp) and an informal submission by Australia. As Members were not able to touch on all targeted issues, they decided to reconvene on the afternoon of 4 June. Just recently, on 15 March this year, WTO Members agreed to prolong the deadline for completing negotiations on an ESM, which expired on that very date, to 15 March 2004 (see BRIDGES Weekly, 19 March 2002).

BRIDGES will report further on the WTO services week in its forthcoming issue.

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