Services: Little Visible Progress As Members Reflect On Requests And Wrangle On Assessment

26 March 2002

Finalising this month's services cluster, Members at a 19-22 March special session of the Council for Trade in Services (CTS) met to discuss, inter alia, the assessment of trade in services and the treatment of autonomous liberalisation, as well as numerous sectoral proposals submitted for market access negotiations under the General Agreement on Trade in Services (GATS) Article XIX. Whereas issues such as establishing modalities for granting "credits" for autonomous liberalisation undertaken by Members were addressed at length during the four-day special session, almost no substantial sectoral discussions took place. Concern was expressed among some developing country Members that as-yet unresolved sectoral and subsidiary body issues would be dealt with bilaterally.

Regarding the agenda item on the assessment of liberalisation of services trade, several Members, including Peru, Pakistan and Cuba, made interventions underscoring the importance of such exercises to developing countries, and that these should commence immediately prior to Members undertaking new commitments. Although no new papers were tabled on assessment, trade sources say the issue will remain a standing agenda item, since both the GATS (Article XIX.3) and the Doha negotiation guidelines (para 14) mandate the CTS to carry out such an assessment as an "ongoing" activity. According to Article XIX.3, "the Council for Trade in Services shall carry out an assessment of trade in services in overall terms and on a sectoral basis with reference to the objectives of this Agreement, including those set out in paragraph 1 of Article IV".

Several developing countries are pushing for a determination on whether GATS objectives have been advanced, in particular those contained in Article IV:1 on increasing participation of developing countries in services trade. However, sources say it is now less likely that Members will be able to reach any multilateral conclusions due to the position of some Members that what would be required are national services trade assessments by individual Members. (see also BRIDGES Weekly, 12 December 2001).

In this context, it should be noted that both a group of non- governmental organisations (NGOs), as well as the WTO, held separate meetings on GATS assessment on 12 and 14-15 April, respectively, so as to inform Member delegations about the state-of-play of assessment efforts already undertaken by different institutions (see BRIDGES Weekly, 19 March 2002).

Autonomous liberalisation

With new papers tabled by the EC (S/CSS/W/133, searchable at; see also BRIDGES Weekly, 26 February 2002), Hong Kong China (S/CSS/W/134) and Paraguay (S/CSS/W/140), Members addressed the question of how to grant credit for services liberalisation outside the negotiation process as mandated by GATS Article XIX.3 and guidelines para 13. The EC proposed that Members who have implemented autonomous liberalisation measures should specify the credit sought, which might take different forms (i.e. leaving the process to bilateral negotiations). For its part, Uruguay suggested -- as did Korea in previous submissions such as in S/CSS/W/126 -- a formula approach, attributing values to certain factors related to the importance and nature of the liberalised service sector. Hong Kong China sought a middle-ground position by proposing the establishment of mutually agreed modalities and criteria, while leaving the determination of the credit as such to the request/offer process. This approach may be the most likely. As the Chair stated in a note of 8 March, difficulties in agreeing to a formula approach would make a purely multilateral approach to this issue unlikely, but a combination of bilateral and multilateral approaches might prove more promising at this stage. Members therefore asked the Chair to hold informal consultations so as to come up with draft modalities by May, sources indicated.

Horizontal issues

In the debate on GATS Article IV (increased participation of developing countries), Uganda, on behalf of all least-developed countries (LDCs), tabled an informal proposal (JOB(02)/30) under GATS Article XIX.3 for the modalities for special treatment for LDCs under Article IV.3. Uganda's paper put forward a list of elements for these modalities such as the requirement that LDCs should not be requested to make specific commitments in more than four services sectors and that developed countries should grant full market access and national treatment to services and service suppliers from LDCs in sectors and modes in which the LDCs have specific export interest. As the paper was tabled close to the end of the special session, Members were not able to make substantive comments on Uganda's proposal.

Under the agenda sub item 'Economic Needs Test' (ENT), MERCOSUR submitted a paper (S/CSS/W/139) proposing that, as a means to implement GATS Article IV, "during the current negotiations developed country Members eliminate their ENTs in sectors and modes of supply of export interest to developing countries." The proposal was welcomed and supported by a number of developing countries, but Members' comments were limited due to the late submission of MERCOSUR's proposal.

Sectoral proposals

According to a developed country delegate, the Chair of the CTS tried to stimulate a discussion by bringing up several issues addressed both in horizontal as well as sectoral proposals. However, Members did not enter into substantive discussions as "after three rounds of going through all the proposals Members had not much more to say," he stated. Some developing country sources indicated, however, that they regarded this as another indicator that the "big players" such the US and the EC would try to "bilateralise" the negotiating process in an attempt to move unresolved issues in the bilateral request/offer phase where they would have more bargaining power and where they could approach issues such as domestic regulation and classification on a more clearly targeted basis.

It should be noted, however, that Members are mandated by Doha Declaration para 15 to table their initial requests for specific commitments by 30 June and are therefore speeding up work at the capitals to finalise the preparation of their requests. Despite this tight timeframe, sources stated, it appeared that "nobody would turn down a request tabled by developing country Members after 30 June" as many of them were very likely not able to prepare their initial requests by that date.

Other issues

Although Members had originally intended to conduct a stocktaking exercise reviewing the progress in the negotiation made so far (see BRIDGES Weekly, 26 February 2002), Members showed only little interest on the last day of the CTS special session to look "where we have been" but would "rather focus where we go" in terms of the organisation of future work, trade sources said. They further reported that some Members started voicing that they would like to give more time to the delegations for the bilateral talks. To this end, they suggested, the current five-day special sessions should be reduced to two-days meetings allowing delegations more time to interact bilaterally. According to observers, however, a decision on the structure of the forthcoming meetings could only be expected by the next services cluster tentatively scheduled to be held from 27 May to 7 June (see also the annual calendar of WTO meetings for 2002, downloadable at the ICTSD website).

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