The first formal cluster of services meetings held at the WTO since the Doha Round talks were suspended last July concluded on 27 April after two weeks of intensive plurilateral and bilateral negotiations. Although many developing countries remain reluctant to further open their markets to foreign services providers until there is more progress in the talks on agriculture and industrial tariffs, some major 'demandeur' Members such as the EU and the US have identified key 'breakthrough' sectors in which they are especially eager to see new liberalisation.

Most of the plurilateral market access negotiations - based on the collective requests for liberalisation submitted by groups of demandeurs in specific services sectors in February last year - took place in the first week. The second week was taken up primarily by bilateral negotiations, based on both these collective requests and the country-specific requests that individual Members had tabled previously.

Plurilaterals more specific than in past

Sources say the plurilateral negotiations were more focused than in the past, benefiting from more thorough preparation by the requesting Members. Each of these sector-specific negotiations was coordinated by one sponsor of the collective request, and each had a structured agenda unlike the more free-wheeling discussions in previous plurilateral discussions.

The targeted countries were each specifically asked whether they were going to meet the liberalisation commitments set out in the collective request, and, if not, why they were unable to do so. They were also asked whether they were prepared to formally bind the level of liberalisation actually applied in practice in each sector and, again, why not, if they were unable to do so. A delegate noted that the demandeurs appeared better-informed about the regulatory and other policies in place in the requested countries and are actively using this information as leverage for seeking qualitatively improved offers of commitments from trading partners.

In the past, it had proved easier for countries facing requests to take a defensive approach when they wanted to, by asking the different sponsors a series of technical questions about precisely what they were seeking (see BRIDGES Weekly, 12 April 2006).

Bilaterals: EU, US identify 'breakthrough' sectors

The bilateral negotiations were even more focused as major demandeurs targeted the WTO Members where their export interests are most critical. Among these are Brazil, India, China and the four big markets within the Association of Southeast Asian Nations (ASEAN) - Indonesia, Malaysia, the Philippines and Thailand.

The US, for instance, had bilateral meetings with the so-called ASEAN 4 at the level of both technical officials and ambassadors. These meetings focused on the 'breakthrough' sectors for the US -- energy, telecommunications, financial, distribution, audio-visual, postal and express delivery services, and computer-related services. These 'breakthrough' sectors are those in which the US private sector is interested in significant concessions, absent which would discourage them from trying to prod the US Congress to extend the Bush administration's fast-track authority to sign off on a Doha deal. The authority is set to expire on 30 June.

On the other hand, the EU identified financial, telecommunications, computer-related services, maritime transport, distribution, postal and courier, construction, environment and legal services as its 'breakthrough' sectors.

The idea of 'breakthrough' sectors has likewise prompted Mexican Ambassador Fernando de Mateo, chair of the services negotiating body, to adopt a sectoral approach in his continuing series of 'enchilada talks' with a group of ambassadors from about two dozen selected WTO Members. This, however, has prompted debate among the smaller circle of demandeurs, the so-called 'Really Good Friends of Services', over precisely what the 'breakthrough' sectors should be, and how to set the order in which they ought to be discussed.

Sources say that the lineup of issues for the 'enchilada talks' scheduled for next week tentatively includes maritime transport, logistics, computer-related services and Mode 4 (the temporary movement of workers). This set of prioritised sectors apparently does not sit well with the US, which opposes liberalising its maritime transport sector because of long-standing legislation -- the 1920 Jones Act -- which prohibits foreign-made ships from supplying maritime transport services in its national waters and as well as waters within 200 miles of its shoreline. The Jones Act has benefited from a much-criticised exemption from market access liberalisation, which only the US has been able to enjoy, under the General Agreement on Tariff and Trade.

The US has likewise gotten cold feet on the liberalisation of logistics services, which it had advocated previously, due to controversy over the sale of US ports to a Dubai-based company. In early 2006, the US Congress invoked national security concerns to enact legislation to impede the sale of port management businesses in six major US ports to Dubai Ports World, a state-owned company based in the United Arab Emirates. Since the controversy, the US has curbed its participation in the so-called 'Friends of Logistics Services'. It also declined to join the collective request on logistics services.

Developing countries want progress on Ag, NAMA

In the meantime, many developing countries remained reluctant to agree to substantive commitments, as well as to set new timelines for submitting revised offers of liberalisation, absent greater clarity on the possible outcome of the negotiations on agriculture and non-agricultural market access (NAMA).

At the Special Session of the Council for Trade in Services held at the end of the two-week cluster on 27 April, Brazil referred to certain demandeurs as falling into a 'take-and-take' mentality, rather than the 'give-and-take' approach more appropriate to a mutually beneficial conclusion to the Doha Round. It likewise proposed that in the event that new timelines are set for tabling revised offers, this should parallel the sequence provided in the Hong Kong Declaration, which set the target date for the submission of new, revised offers three months after the putative date for agreement on modalities in the agriculture and NAMA negotiations.

Uganda, on behalf of the African Group, expressed dissatisfaction with the work done thus far on operationalising the Modalities for the Special Treatment of Least-Developed Countries. The African Group asked for 'meaningful' services trade opportunities in the context of supply of services where LDCs had real supply capacity, such as in Mode 4. As one way of operationalising these Modalities, many LDCs are asking trading partners to allocate specific Mode 4 quotas exclusively in favour of LDCs. They are also requesting other WTO Members to relax their entry and work permit requirements for workers from LDCs, as a form of special and differential treatment.

De Mateo concluded the discussion in the CTS-SS by scheduling a meeting of the CTS-SS at the end of May or beginning of June, to be followed by another services cluster to be held either in the last two weeks of June or first two weeks of July.

ICTSD reporting.