WTO’s least developed countries submit collective request on services waiver

25 July 2014

Earlier this week, the WTO’s poorest members, known as the Least Developed Country (LDC) Group, submitted a collective request regarding the preferential treatment they would like to see for their services and service suppliers. The move comes seven months after the global trade body’s ministerial conference in Bali, Indonesia, where members agreed to take steps for bringing this “services waiver” into operation.

The LDC services waiver, as it is referred to in trade circles, was initially an outcome of the 2011 WTO Ministerial Conference, held in Geneva, Switzerland. However, in the two years that followed, no preferences had been requested by LDCs or granted to them, prompting WTO members to reconsider ways to use the services waiver.

As a result, at the WTO’s subsequent ministerial conference in Bali, Indonesia last December, members agreed to initiate a process aimed at promoting the “expeditious and effective operationalisation” of the LDC services waiver.

This decision was one of the major outcomes of the “Bali Package” together with the WTO’s Trade Facilitation Agreement, and select decisions on other provisions relating either to development or agriculture. (For more on trade facilitation, see related story, this edition)

High-level meeting

Under the terms of the 2013 Bali Decision, the submission of the LDC collective request now triggers a six-month period for the Council for Trade in Services (CTS) to convene a “high-level meeting.”

At this event, those developed and developing countries in a position to do so shall indicate sectors and modes of supply where they intend to provide preferential treatment to LDC services and service suppliers.

The waiver, as outlined in the 2011 Geneva ministerial decision, releases WTO members from their legal obligation to provide non-discriminatory treatment to all trading partners – as outlined in Article II of the General Agreement on Trade in Services (GATS) – when granting trade preferences to LDCs.

It effectively operates as a new LDC-specific “Enabling Clause” for trade in services and follows a two-track approach. In trade jargon, an enabling clause allows developed members to give differential and more favourable treatment to developing countries.

Under the first track, quota-type measures falling within the six categories of market access listed in GATS Article XVI are automatically authorised. For the second track, non-market access measures falling under other GATS obligations – such as preferential national treatment or regulatory arrangements – are not automatic but can be authorised by the CTS.

The waiver is initially set to last 15 years from the date of adoption, 17 December 2011.

Collective request

According to sources familiar with the 21 July document, the request calls for the fulfilment of WTO members’ past commitments toward giving LDCs special priority in services sectors and modes of supply.

The commitments referred to include those provided under GATS Article IV.3, as well as the modalities for special treatment for LDCs in the negotiations (TN/S/13), Annex C of the 2005 Hong Kong Ministerial Declaration, and the 2011 waiver decision itself.

The LDC collective request also urges members to take initiative in their individual capacity to fulfil the Bali decision on the services waiver, referring to paragraph 1.3, which encourages members to extend preferences at any time to LDCs’ services and service suppliers – independent of the request process.

The document is based on country studies, interviews, experiences, and intensive research undertaken by the LDC Group in order to identify sectors and modes of supply of key interest to their countries, as well as barriers their services providers face when exporting to third markets.

The scope of the individual requests in the collective document is manifold, ranging from horizontal measures to very specific sectoral ones. These include, among others, measures in the area of tourism, banking, transport, education, information and communication technology (ICT), business process outsourcing (BPO), and creative industry services.

Preferences selected from offers tabled previously under the WTO’s Doha Round negotiations have also been requested, as have preferences related to work permits and allowing recognition of LDC professionals’ qualifications.

Next steps

Over the next six months, WTO members will engage in consultations with the LDC Group in order to respond to the collective request at the high-level meeting. The LDCs have reserved the right to modify the request’s terms ahead of the event.

“In my view, your aim should be high, but grounded in the fact that we are indeed dealing with new territory,” said WTO Director-General Roberto Azevêdo in a speech in June 2014 in Bangladesh, referring to the LDC Group.

“I will support you in the best way I can to advance this issue in the WTO,” the trade chief said.

ICTSD reporting.

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