SERVICES: CHAIR JARA REPORTS ON POST-DOHA PROCESS, DEVELOPING COUNTRIES DISAPPOINTED

In a report presented to the Trade Negotiations Committee (TNC) on 14 July, Ambassador Alejandro Jara, Chair of the special (negotiating) session of the WTO Council for Trade in Services (CTS), wrapped up the work under the mandate of the Doha Declaration undertaken by the CTS, as well as its subsidiary bodies, since the last Ministerial Conference in November 2001. Jara also addressed in his report -- prepared under his own responsibility -- key issues related to future work to be undertaken for Members to successfully conclude the services negotiations by the end of 2004. The report will be further synthesised to provide language on services for the Cancun Ministerial Declaration. While the report suggests that the Ministerial Conference should set "landmark dates" to accelerate the market access negotiations in the services area, many developing countries reportedly voiced their frustration at the lack of a matching degree of ambition with respect to rule-making, the issue of assessment and other areas of particular importance for developing countries, such as mode four (movement of natural persons). Meanwhile, the EU tabled a new submission on possible disciplines for licensing procedures at the Working Party on Domestic Regulation (WPDR).

Low level of participation and commitments

According to Jara's report (TN/S/10, searchable at http://docsonline.wto.org), only "thirty initial offers have so far been received by the Secretariat, including 15 from developing country Members," despite a 31 March deadline having passed. The report therefore called on those Members who had not yet tabled their offers do so as soon as possible, so that a "higher level of participation and engagement by all Members" could be achieved in the negotiations. Moreover, Jara deplored the low quality of some of the offers in terms of coverage of sectors and modes of supply, as well as depth of commitments. So as to accelerate the market access negotiations, the report suggests that trade ministers at Cancun should set "landmark dates by which Members would improve their initial offers and finally revise them with a view to concluding the negotiations". However, a trade source reported that some developing countries had criticised the report for not making a clearer reference to the need to significantly improve the "more than disappointing" offers tabled by Members such as the EU and US on movement of natural persons (so-called mode four) -- an area which is of high importance for many developing countries.

Rule-making neglected?

The General Agreement on Trade in Services (GATS), as well as the Negotiating Guidelines, mandate Members to conclude negotiations on an emergency safeguard mechanism (ESM), subsidies, government procurement and domestic regulation before the end of the ongoing services round (scheduled for 1 January 2005). Despite this commitment to address market access and rules-related aspects in parallel, Members are -- in all four rule-making areas -- still far apart on key questions such as whether or not it is actually politically desirable and practically feasible to develop disciplines. Notably, Chair Jara's report does not make any reference to the deadline set out in the Negotiating Guidelines, although original draft language had reportedly addressed Members' commitment to conclude negotiations on rules and domestic regulation by end-2004. Some Asian developing countries complained about this understatement with regard to the rule-making process, demanding clear guidance from trade ministers at Cancun on the issue of desirability, and called for similar "landmark dates" in the rules area as suggested by Jara in the market access context. These countries also expressed frustration regarding their "disregarded efforts to include specific comments to the reports aimed at addressing existing asymmetries" in the services process. Many developing countries see progress on an ESM as well as multilateral disciplines on subsidies in services as a precondition for accepting ambitious new market access commitments in services.

Special treatment of LDCs still to be agreed

According to the GATS (Article XIX.3), modalities need to be established for the special treatment of least-developed countries (LDCs) in the market access negotiations with a view to implementing GATS Article IV (increasing participation of developing countries) as well as to design new LDC commitments which are commensurate with their specific "development, trade and financial needs". Although such modalities were originally designed to be developed before the adoption of the Negotiating Guidelines in 2001, no agreement has so far been reached on this issue (BRIDGES Weekly, 10 July 2003). Due to this "remaining piece of the negotiating architecture," LDCs have not yet considered themselves in a position to submit their initial requests and offers to trading partners. Therefore, Jara in his report called on Members to reach an agreement on LDC modalities before the Cancun Ministerial Conference. Accordingly, Members agreed to continue both formal and informal talks on LDC modalities over the forthcoming weeks.

Assessment discussion revisited

The GATS as well as the Negotiating Guidelines require Members to conduct an assessment of trade in services with reference to the objectives of the GATS -- with particular focus on the facilitation of increasing participation of developing countries in global services trade. According to Chair Jara's report, "the Council has been pursuing this exercise since 1998", and "some 145 submissions have been made" on this subject. Nevertheless, several developing countries, including Pakistan, reportedly contested that most of these submissions could not be qualified as "assessments," and they further criticised the fact that so far no conclusions had been extracted from the ongoing assessment exercise on whether or not services trade liberalisation has actually lived up to the expectations Members had attached to it. Pakistan and others repeatedly called for a multilateral assessment of services liberalisation prior to entering into a new round of services negotiations.

EU presents proposal for disciplines on licensing procedures to WPDR

At a 1 July meeting of the WTO Working Party of Domestic Regulation (WPDR), the EU presented a proposal (S/WPDR/W/25) outlining possible disciplines on licensing procedures. According to the EU, the submission was meant to contribute to creating a conducive and transparent regulatory framework for licensing procedures under the negotiating mandate under GATS Article VI.4 (domestic regulation). However, other measures covered by VI.4 such as technical standards and qualification procedures were addressed in the proposal.

However, other measures covered by VI.4 such as technical standards and qualification procedures were addressed in the proposal. The EU's submission used language contained in Article VI.4 itself, the Disciplines on Domestic Regulation in the Accountancy Sector (S/L/64), the WTO Agreement on Import Licensing Procedures, as well as the Reference Paper for Telecommunications Services. The content of the proposal did not address the substance of regulations; it simply sought to ensure that procedures under which a license is obtained are subject to some basic common rules, and to avoid a situation in which the procedures would become unnecessary obstacles to trade. While some of the features of the EU proposal also can be found in a recent submission tabled by trading partner Japan (Bridges Weekly, 28 May 2003), the emphasis in the EU paper was placed on reasonable and automatic procedures, time frames, transparency and due process.

Members' initial reactions to the EU submission reportedly were cold on the part of countries such as the US and Canada, who would like to see domestic regulation issues dealt with bilaterally or through agreed reference papers. Several developing countries, for their part, voiced their deep dissatisfaction regarding the lack of reference to visa procedures in either of the proposals presented by Japan and the EU.

ICTSD reporting.