EU notifies preferential treatment to services exports from LDCs

24 November 2015

On 18 November, the EU notified the WTO Council of Trade in Services of the preferential treatment which it intends to make available to services and service suppliers of the global trade body’s poorest members. In doing so, the EU joins other WTO members who have responded to the commitments made at the 2013 WTO Ministerial Conference in Bali related to the LDC services waiver.

To date 18 WTO members -- Canada, Australia, Norway, Korea, China, Hong Kong, Chinese Taipei, Singapore, New Zealand, Switzerland, Japan, Mexico, Turkey, the US, India, Chile, Iceland and Brazil -- have submitted notifications. The notification from South Africa is reported to be underway and is likely to be submitted soon.

Concretising the “signals”

"The EU attaches great importance to helping the least developed countries better integrate into the world trading system," said Cecilia Malmström, EU Commissioner for Trade.

"I hope this will encourage all developed and developing WTO members, who have not yet given preferential treatment to these countries, to do so without delay," she added.

In July 2014, the group submitted a collective request regarding the preferential treatment it wanted to see for LDC services exports. At a high-level meeting in February, 22 WTO members responded to the collective request made by the LDC Group for preferential treatment for the services sector by indicating sectors and modes where they were considering providing preferences as well as support for projects on technical cooperation.

Earlier this year, the EU signalled various areas in which it could provide LDCs with preferential access to their services markets. (See Bridges Africa, 9 February 2015)

Since then, the LDC Group has been encouraging WTO members to formally notify the CTS of their actual preferences, including detailed information regarding the sectors or sub-sectors concerned and the period of time during which the member plans to maintain those preferences.  

Nature of the commitments

The EU notification contains, among other elements, various commitments related to commercial presence (Mode 3) and cross border supply of services (Mode 1).

Some obligations concerning the temporary presence of natural persons for business purposes are also described including provisions regarding business visitors for establishment purposes, intra-corporate transferees, and services sellers.

For example, the EU commitment would allow LDCs to transfer management trainees to affiliated companies in the EU in about 30 sectors or sub-sectors for a maximum duration of one year of experience.

Companies from LDCs with a contract to provide services in the EU will be able to send skilled professionals to Europe to provide these services.

As per the terms of the notification, 37 sectors of interest for contractual service suppliers and independent professionals from LDCs are liberalised. The sectors referred to in the “schedule”, a term used in this context to refer to the listing of preferences as contained in the notification, cover a wide range of professional activities including legal advisory services, accounting and bookkeeping services, architectural services, engineering services, medical and dental services, midwifery services, educational services, travel agencies and tour operators’ services, and technological services, to name a few. 

In all cases, a certificate of higher education or qualification of an equivalent level is required for the supply of the service which is expected to take place on a “temporary basis.”

A number of country-specific reservations are detailed in the document regarding most commitments.

The “schedule” indicates that it does not contain any commitment on audio visual services.

Additionally, according to some specialists,  the document contains strict language with regard to the movement of natural person (Mode 4) specifying that the schedule “does not apply to measures affecting natural persons seeking access to the employment market of the EU, nor shall it apply to measures regarding citizenship, residence or employment on a permanent basis.”

One developed country delegate indicated that the challenge for LDCs is to now build capacity to be able to export in these sectors and effectively make use of these preferences.

Duration of the preferences

According to the EU, the preferences tabled by the EU will last for the duration of the waiver and until a country is no longer on the UN list of least-developed countries.

The timing of the operationalisation of the waiver has often been referred to as crucial in past discussions and has received more attention lately in the run-up to Nairobi. LDCs now seek a modification of the duration of the services waiver—potentially through a ministerial decision in Nairobi—so that notified preferences can apply for 15 years from the date that a member submits its notification.

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