SOME MEMBERS CALL FOR GREATER FOCUS ON SERVICES, AS TALKS RESUME IN GENEVA

Services talks kicked off the new year on 22 January with a two-week 'cluster' of meetings. As usual, the subsidiary bodies of the Council for Trade in Services will meet during the first week (22-26 January); the second (29 January - 2 February) will see request-offer negotiations between Members. In line with the 'soft' resumption of the Doha Round, however, all discussions will take place on an informal basis, while delegations await concrete signals from the 'mini-ministerial' meetings being held on the margins of the World Economic Forum in Davos this week.

Market access negotiations in services are anticipated to gain some political momentum from the gathering of ministers representing about 30 Member countries. During a 'green room' meeting on 22 January, WTO Director-General Pascal Lamy agreed to a request by services demandeurs such as the US, the EU, and Japan that he emphasise in Davos that services trade is a critical component of the overall market access negotiations. They specifically asked him to stress that meaningful offers of services liberalisation could help unlock possible concessions by major developed countries in the agriculture and industrial goods talks.

Domestic regulation takes lead in Geneva

Among the various issues being discussed in Geneva, disciplines on domestic regulation appear to have taken precedence. Domestic regulation, which refers to measures that governments apply to both local and foreign entities supplying or seeking to supply a service in their territory, has long been guarded jealously by Members as their sovereign prerogative. These measures, typically covering qualification requirements, qualification procedures, licensing requirements, licensing procedures and technical standards that suppliers have to comply with in order to be able to supply a service, have the potential to be unduly trade-restrictive. Article VI of the General Agreement on Trade in Services itself mandated Members to negotiate possible disciplines on domestic regulation. The December 2005 Hong Kong Ministerial Declaration specified that new disciplines should be developed before the end of the Doha Round.

To carry out the Hong Kong mandate, the chairman of the Working Party on Domestic Regulation has been pursuing a series of informal consultations with a number of Members through a so-called 'Room F' process, named after the room in the WTO building where the consultations are being held. Initial discussions centered on proposed texts for new disciplines, specifically on elements which seemed to be the most difficult. These relate to provisions which seek to improve the transparency of regulations by requiring governments to provide interested parties an opportunity to comment on them prior to their implementation, and to ensure that regulations meet the so-called 'necessity test', or are not more burdensome than necessary to meet national policy objectives. Other proposals would require technical standards to be based on objective and transparent criteria. The draft texts that Members are considering are taken from a July 2006 informal paper by the WPDR chair that provided different versions of potential disciplines on transparency and the 'necessity test' (see BRIDGES Weekly, 19 July 2006).

Trade sources say that the discussions on 'prior comment' proved quite contentious, with developing countries such as Egypt and Uruguay expressing strong reservations about such requirements. The US - the main proponent of transparency disciplines - expressed serious concern that even non-mandatory language on 'prior comment' was being opposed. From its own perspective, it said, 'prior comment' requirements were the only element of the proposed disciplines that had potential value. On the other hand, one observer pointed out that the 'best endeavour' language suggested by the WPDR chair on 'prior comment' appears even more prescriptive than what the US had tabled in June 2006, and that opponents of 'prior comment' may, ironically enough, look at the US proposal more favourably than they had before.

More recent discussions have focused on other elements of the disciplines relating to qualification requirements and procedures and licensing requirements and procedures. Significantly, qualification requirements and procedures and licensing requirements and procedures are not subject to any 'necessity test' under the proposed disciplines. Some delegates say that this is further indication that the 'necessity test' is practically 'dead in the water' and will at best be reflected only as part of the preamble to any rules adopted at the end of negotiations. Many sectors of civil society which have traditionally criticised the 'necessity test' as unduly restricting countries' right to regulate in critical sectors such environmental protection and water distribution are expected to welcome this development.

Meanwhile, the WTO Members in the Association of Southeast Asian Nations (ASEAN) have sought to breathe new life to discussions on a possible emergency safeguards mechanism (ESM) for services trade in the Working Party on GATS Rules (WPGR), by tabling a revised draft agreement setting forth the requirements and procedures for imposing a safeguards measure. The revised draft draws on past submissions by the group in 2000 and 2004. The new draft is scheduled for deliberations in the WPGR informal meeting scheduled in the week.

ICTSD reporting.