SERVICES WEEK: MODALITIES ON AUTONOMOUS LIBERALISATION NEAR APPROVAL

During the meeting of the WTO's Council for Trade in Services (CTS) special session on 3 and 6 March, delegates neared conclusion on modalities for granting 'credits' for Members' autonomous liberalisation (AL). Also of interest during meetings on services last week, Japan submitted a new draft Annex on domestic regulation to the Working Party on Domestic Regulation. Meanwhile, civil society groups reacted strongly to a leaked document containing the EU's requests for access to the services sectors of its WTO trading partners. In the current set of negotiations, Members are focusing on market access negotiations -- taking a request-offer approach -- and also engaging in parallel negotiations on horizontal issues such as GATS rules, domestic regulation and AL.

At the meeting of the CTS special session, Chair Ambassador Jara of Chile put forward a new draft on the modalities for AL on 4 March (JOB (02)/35/Rev3 - see http://www.ictsd.org/issarea/services/resources/Credits.pdf), which follows a process of informal consultations addressing unresolved issues in the draft text and aims at finalising agreement on modalities for granting credit to autonomous liberalisation by end of this month (see BRIDGES Weekly, 15 January 2003). The revised draft has been widely accepted by WTO Members.

Only Bulgaria, Jordan, the Kyrgyz Republic and Oman expressed dissatisfaction with the Chair's revised draft, specifically regarding the issue of recognition of commitments by recently acceded WTO Members. However, Bulgaria, Jordan and Oman said they would go along with the consensus. The Kyrgyz Republic, taking a different stand, did not give its final approval to the revised draft, and asked for a footnote to paragraph 10 that would clarify that recently acceded countries had undertaken equal or more significant GATS commitments than other WTO Members. The Chair, supported by various countries including Chile, the EU, and Uruguay, said the inclusion of such a footnote would not be binding, and would not be advisable in the current situation. Instead, he proposed that the country present a statement making the reservation after the revised draft is approved. No final agreement was reached, and the approval of the revised draft was postponed until the CTS special session meeting on 6 March.

Japan proposes draft Annex on domestic regulation

Prior to the start of the CTS special session, at a 24 February meeting of the Working Party on Domestic Regulation (WPDR), Japan presented an informal communication that proposed an Annex to the GATS on Domestic Regulation (JOB/(03)/45, see http://www.ictsd.org/issarea/services/resources/Credits.pdf). This draft Annex was presented to stimulate the WPDR's work in developing disciplines according to Article VI.4 of the GATS (domestic regulation). The objective of the draft Annex is to facilitate trade in services by ensuring that measures relating to licensing requirements and procedures, qualifications requirements and procedures, and technical standards do not constitute unnecessary barriers to trade in services. The draft Annex builds on much of the content of the Disciplines on Domestic Regulation in the Accountancy Sector (S/L/64) approved in 1998. It would enhance transparency provisions contained in the disciplines for accountancy (i.e. by including a new process for public comments). It would also add due process-like provisions regarding administrative guidance by governments relating licenses and qualifications and administrative and judicial reviews.

Two particular features of the draft Annex exhibit notable developing country implications. These are its applicability only to "bound" commitments in GATS Member's lists and their non-applicability to measures regulating the entry of natural persons into, or temporary stay in, a Member's territory. The first supports many WTO and developing country Members' stance on work undertaken in the WPDR, that domestic regulation disciplines should only apply to "bound" commitments and not horizontally to the trade in services. This view has not been shared by the US, which considers that any new discipline on domestic regulation must apply horizontally to "bound" or "unbound" commitments.

The second feature relates to a wide exception in a potential set of disciplines on domestic regulation regarding "measures regulating" the entry of natural persons into, or temporary stay in, a Member's territory -- including those measures necessary to protect the integrity of, and to ensure the orderly movement of natural persons across, its borders. The exception is oriented towards retaining developed countries' sovereign rights and maximum flexibility regarding visa authorisations, visa-granting procedures and country entrance regulations. The exception affects the interest of developing countries regarding mode four of supply (a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member). Countries such as India and Pakistan have previously stressed that excessive discretionary powers regarding visa authorisation procedures undermines any possible benefits arising from 'bound' commitments in sectors of relevance to mode four, i.e. computer services and professional services.

NGOs voice concern over leaked EU services requests

In related news, the EU's requests for further liberalisation in the services sectors of its trading partners -- submitted during the current phase of services negotiations, which includes a request-offer approach to expand market access on a bilateral basis -- were leaked on 25 February to the public. This confidential report, from July 2002, contains detailed requests to 109 countries covering a variety of services sectors, and is available on the Canadian Polaris Institute website (http://www.polarisinstitute.org).

Focusing on the risks the requests pose to developing countries, World Development Movement spokesperson Peter Hardstaff in the UK commented that the EU "has chosen to target working state and not-for profit service provision, for submission to the ultra free-market rules of this agreement. This is most notably in water but they have also made extensive demands for access to energy, transport and telecommunications markets in poor countries". The EU has, however, previously explained that its requests "do not seek to dismantle public services, nor to privatise state-owned companies," and no requests have been made on health or audiovisual services (see BRIDGES Weekly 10 July 2002).

Civil society groups in the US have condemned the EU requests targeting American service providers. They caution that many of the services are regulated at the state and local levels, which are disconnected from WTO negotiations. Consumer group Public Citizen's Lori Wallach warned that "everything from your town's municipal drinking water to the local electricity utility to the US postman are headed for sale on some Geneva 'trade' negotiating table". The civil society groups voiced their criticism as negotiators were meeting in Geneva at the CTS.

During the current phase of negotiations, virtually all WTO Members have received initial requests from some 30 mainly developed and larger developing countries, with the US and EU requesting new market access in most of the 12 services sectors, including business services, communication, construction, distribution, environmental services, financial services, tourism and transport. Negotiators face a 31 March deadline for responding to requests received with initial offers.

ICTSD reporting; "US groups protest EU services request at WTO," REUTERS 25 February 2003; "EU Asks U.S. to Revise Rules for Service Sector," DOW JONES 24 February 2003; "Leaked documents reveal UK Government hypocrisy over trade agreement danger," Press Release, WORLD DEVELOPMENT MOVEMENT, 25 February 2003.