PLURILATERAL SERVICES NEGOTIATIONS SET TO START ON 27 MARCH

The plurilateral approach to the WTO services negotiations is set to move into high gear, with negotiations between groups of demandeur and target countries to start from 27 March. The plurilateral process was jumpstarted with the submission of 22 collective requests for market access starting from 28 February, the target deadline set out in the Hong Kong Ministerial Declaration (see BRIDGES Weekly, 8 March 2006).

Of these, 16 requests pertain to specific sectors or sub-sectors, namely legal; architectural/engineering/integrated engineering; computer and related services; postal/courier including express delivery; telecommunications; audiovisual; construction and related engineering; distribution; education; environmental; financial; maritime transport; air transport; logistics; energy; and services related to agriculture.

Three of the plurilateral requests relate to the modes of supply: the cross-border supply and consumption of services (modes 1 and 2), establishment of commercial presence (mode 3) and temporary access for individual workers (mode 4).

A further three refer to the elimination or reduction of existing exemptions from most-favoured nation (MFN) treatment, which Members were, in principle, allowed to maintain for a period of ten years from the 1995 entry into force of the General Agreement on Trade in Services (GATS). The first of these requests applies across-the-board to all scheduled MFN exemptions, while the other two relate specifically to MFN exemptions maintained in the financial services and the audiovisual services sectors.

Japan, EU, US most prolific demandeurs

Japan participated in the highest number of collective requests: 13 sectors, the plurilateral request on mode 3, and all three requests on MFN exemptions.

The US and the EU each participated as requesting Members in 12 of the sectoral requests in addition to joining the plurilateral request on mode 3. Notable differences in their sectoral requests include the US' participation in the requests on education and audiovisual services. The EU refrained from joining the request on audiovisual services, in part due to sensitivities from France about the 'cultural exception'; it had also decided not to submit requests related to education, health, and water for human consumption. On the other hand, the EU joined the request on air transport services and on maritime transport services, while the US did not because of its politically sensitive Jones Act legislation, which prohibits the use, sale or lease of foreign-built or reconstructed vessels in its national waters or its exclusive economic zone, and which benefits from a much-contested, longstanding exemption under WTO rules. Australia also participated in 12 sectoral requests, while Canada, Norway and New Zealand each joined nine sectoral requests.

Among the developing countries perceived as having a strong offensive interest in services trade, Hong Kong participated in 11 plurilateral requests involving six sectors, Mexico joined in 10 requests involving six sectors, Singapore had nine requests in seven sectors and Chile had eight requests in six sectors. India participated in plurilateral requests on computer and related services, as well as those on mode 4 and cross-border services supplied through modes 1 and 2.

Notably, Malaysia joined in 2 sectoral requests -- for education and for computer-related services -- prompting some analysts to wonder whether the country is moving away from its traditionally cautious approach to the services negotiations, at least in selected sectors.

Argentina, Brazil, Paraguay and Uruguay co-sponsored a plurilateral request on services related to agriculture. It is one of the few sectoral requests which did not arise out of previous 'Friends' Group' work. Some observers have also been quick to point out that this is the only plurilateral request so far where the requesting Members are all developing countries and the requested Members all developed, including the US, the EU, Japan, Canada, Australia, New Zealand and Switzerland

15 developing countries back request on mode 4

Not unexpectedly, the plurilateral request on mode 4 attracted the greatest number of developing country participants, although the request on modes 1 and 2 was also backed bv developing country Members. Among the targeted countries for the mode 4 request are the US, the EU, Japan, Canada, Australia, New Zealand, Switzerland, Norway and Iceland. Sponsors included Argentina, Brazil, China, India, Egypt, Morocco, and Thailand,

The mode 4 collective request focuses on the categories of contractual service suppliers and independent professionals. Among the salient features of the request is its stipulation that wage parity should not be a pre-condition for the entry of foreign workers, which observers say is likely to attract the attention of labour unions in recipient countries. The request likewise asks that economic needs tests (ENTs) should be removed or substantially reduced. These ENTs, which allow the entry of service suppliers only upon determination that there is no domestic supplier able and willing to supply the same service, are often used to keep out workers from developing countries.

The request enumerates an indicative list of around 24 sectors/sub-sectors where improved market access is sought for these categories of service suppliers. An early criticism is that the criteria laid down for qualifying for entry as a contractual service supplier or an independent professional are quite narrow, and thus limit eligibility to workers with high skill levels. According to some sources, this has prevented a number of developing countries from joining in the collective request.

The request on computer and related services appears to be the one with the most even represented of developed and developing countries. Several negotiators point to this as evidence of the commonality of opportunities in this sector for countries across different levels of economic development.

Demandeurs presumed demanded

The 16 sectoral plurilateral requests generally share the same format, identifying the requesting Members and stating the number of Members receiving the request (without identifying them). They also explicitly say that each of the requesting Members is deemed to be a recipient of the request, which responds to the question of whether plurilateral demandeurs would be expected to undertake the same level of liberalisation commitments they were requesting from other Members. Delegates say that this was the only way that plurilateral requests could contain commitments that did not meet a 'least common denominator' of acceptability among all demandeur Members.

The requests generally refer to the the sub-sectors and activities in which binding market access is sought, as well as specific commitments sought for each mode for such sub-sectors or activities. Mostly, they seek the removal or substantial reduction of limitations and conditions to market access. In some cases, such as for maritime transport and computer and related services, model commitment schedules are attached.

Philippines receives 19 requests; Brazil 18

Sources indicate that the Philippines led all countries, receiving 19 plurilateral requests involving 15 services sectors. Indonesia and Thailand follow close behind, with 17 requests covering 15 sectors. Malaysia received 15 requests spanning 13 sectors. China received 17 requests in 15 sectors, while India received 15 requests over 14 sectors.

Among the countries in Latin America, Brazil received plurilateral requests in all but the sector it made a request in -- a total of 18 requests. Argentina received 14 requests in 12 sectors. In Africa, South Africa received 15 requests in 13 sectors; Egypt received 14 collective requests involving 12 sectors.

None of the least-developed countries have received plurilateral requests, consistent with the Hong Kong Declaration's stipulation that they would not be expected to undertake new commitments. Sources say however that LDCs are planning to submit a collective request on mode 4, building on the request they had previously tabled in June 2005.

Plurilateral discussions of the requests will be had between the requesting Members and recipients thereof in the forthcoming cluster of services meetings scheduled from 27 March - 7 April. Already, many representatives among the requested Members have voiced concerns with regard to the time and resource constraints they anticipate during the cluster, given that they will have to prepare and be present in almost all plurilateral discussions.

ICTSD reporting.