SERVICES: DEVELOPING COUNTRY WTO MEMBERS JOIN FORCES TO MOVE AHEAD ON 'HORIZONTAL' ISSUES

At a 28 October special session of the Council for Trade in Services (CTS), discussions centred on two 'horizontal' services issues of major importance to developing countries: 'credits' for autonomous liberalisation (AL), and review of the implementation of GATS Article IV (facilitating developing countries' integration into global services trade).

On autonomous liberalisation, a group of 24 developing country Members tabled a list of possible alternative options for establishing modalities for granting 'credits' for AL -- a move which several other Members reportedly welcomed as a "positive step forwards". As a contribution to make progress related to the contentious issue of conducting a general evaluation of the services liberalisation process [assessment], a group of eight Central American and Caribbean Members put forward a proposal on how to implement an effective review mechanism of the implementation of GATS Article IV so as to increase participation of developing countries in world trade. According to one source, this proposal -- which will be formally discussed at the CTS resume session on 1 November -- would surely meet with "a high degree of political support by industrialised countries." In this context, it was further indicated that this move was to be seen as an attempt by developing countries to bring certain elements of the current services negotiations from the bilateral to the multilateral level.

Autonomous liberalisation

The group of 24 developing countries circulating the 'list of questions' responded to the CTS Chair's draft modalities on addressing the AL issue by adding "some ideas to move forward" on some of the still unresolved issues in this debate. One of these open questions is the question of whether all Members or only developing countries should be eligible for 'credits' for AL (BRIDGES Weekly, 12 June 2002). While "not prejudging any position," a trade source said, the document indicated that when granting or requesting credits for unilaterally-undertaken services liberalisation, it should be borne in mind that the so-called 'Doha Development Agenda' is "placing [developing countries'] needs and interests at the heart of the Work Programme (paragraph 2 of the Doha Declaration), so that special consideration should be given to developing countries.

The group of 24 developing countries includes Argentina, Bolivia, Brazil, Ecuador, Dominican Republic, Guatemala, Honduras, India, Indonesia, Malaysia, Mexico, Nicaragua, Pakistan, Panama, Paraguay, Peru, the Philippines, Senegal, Sri Lanka, Thailand, Venezuela and Uruguay.

GATS Article IV monitoring mechanism

A group of developing countries including Bolivia, Barbados, Colombia, Cuba, Ecuador, Nicaragua, Peru and Trinidad and Tobago tabled a proposal outlining options on how to implement the "reviews and evaluation agreed upon by Members" in paragraph 15 of the services negotiation guidelines -- a provision which the group views as "an integral part of the principle of special and differential treatment [S&D] for developing and least-developed countries" (LDCs).

Paragraph 15 provides that to ensure the effective implementation of GATS Article IV (dealing with increasing participation of developing country Members in world trade) and Article XIX.2 (containing S&D- related provisions for developing countries in the market access negotiations), the CTS "when reviewing progress in negotiations, shall consider the extent to which Article IV is being implemented" and it should suggest "ways and means of promoting the goals established therein." Furthermore, it "shall conduct an evaluation, before the completion of the negotiations, of the results attained in terms of the objectives of Article IV", such as strengthening services capacity and competitiveness, improving access to distribution channels and information networks, and greater market access in areas of special interest.

As such, the group of developing countries proposed to conduct the 'progress review' as a standing agenda item in the CTS for which 'benchmarks' should be established, such as reviewing the offers received in response to requests tabled (offers will be handled multilaterally as opposed to the bilateral initial requests); the degree of flexibilities developing countries could retain based on the offers made; and the "special priority to be given to the LDCs as mentioned in Article IV.3 and to the needs of small service suppliers of developing countries" as mentioned in paragraph 15 of the Guidelines. In terms of procedure, the review mechanism should be based on relevant information provided by Members and on the analysis of offers by the WTO Secretariat, the UN Conference on Trade and Development (UNCTAD) and other relevant agencies. The group further suggested taking stock of the progress "in negotiations related to the implementation of Article IV" at the Fifth WTO Ministerial Conference scheduled for next September in Cancun, Mexico.

This proposal will be addressed at the 1 November resumption of the CTS under the agenda item "review of progress". Also under this bullet, a developing country source said, "some Members" would voice their concern about the fact that while good progress was being made in the services market access negotiations, a similar degree of movement was lacking in other sectors such as agriculture. In the context of the 'single undertaking' design of the Doha Round negotiations, the paces in the different negotiating fora thus needed to be synchronised, the source indicated.

Small economies

Small Island Developing State (SIDS) Mauritius tabled a proposal (TN/S/W/8, searchable at http://docsonline.wto.org/) addressing the particular problems of small economies to increase their participation in world services trade due to their "comparative disadvantage" in competitive core services such as transport, financial services and telecommunication services. The prospects of further focusing on the tourism sector in small economies were "constrained by the consideration to preserve the ecological balance and prevent environmental degradation," Mauritius further explained in its communication (see also the recent WTO Secretariat's "Discussion Paper on the Environmental Effects of Services Trade Liberalisation" (WT/CTE/W/218)). Mauritius argued that a one size-fits-all approach was not capable of recognising the unique circumstances of the small economies. Similar to its approach in the agriculture negotiations, Mauritius proposed that special consideration be granted to small economies in order to overcome their vulnerabilities and difficulties. To that end, according to Mauritius, GATS Article IV should be "effectively operationalised"; small economies should only be expected to "take commitments that are commensurate with their capacities, levels of development, and size of economies"; and, amongst other things, they should be "provided with market access in sectors and modes of supply of specific interest to them. Finally, Mauritius suggested setting up a monitoring mechanism reporting to the CTS on the implementation of Article IV "for the benefit of the small service suppliers of the small economies."

Further proposals tabled: US communication on "Small and Medium-Sized Services Enterprises" (TN/S/W/5); EC communication on "Coverage of CPC 84 - Computer and Related Services" (TN/S/W/6 and S/SCS/W/35).

ICTSD reporting.