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GATS negociations : state of play

Sunday 23 April 2006, by Webmoudir

NOTE TO THE GUE/NGL (European Unitde Left/Northern Green Left, group at the European Parliament) by Raoul Marc Jennar, researcher at URFIG

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1.1 General Agreement on Trade in Services, article XIX, §1

1."In pursuance of the objectives of this Agreement, Members shall enter into successive rounds of negotiations, beginning not later than five years from the date of entry into force of the WTO Agreement [1995] and periodically thereafter, with a view to achieving a progressively higher level of liberalization. Such negotiations shall be directed to the reduction or elimination of the adverse effects on trade in services of measures as a means of providing effective market access. This process shall take place with a view to promoting the interests of all participants on a mutually advantageous basis and to securing an overall balance of rights and obligations."

Guidelines and procedures for the negotiations on trade in services (adopted by the Special Session of the Council for Trade in Services on 28 March 2001)

a) objectives :

- the negotiations shall aim to achieve progressively higher levels of liberalization of trade in services through the reduction or elimination of the adverse effects on trade in services of measures (measures = laws and other legal provisions at national, regional and local levels)

- there shall be appropriate flexibility for individual developing country Members

b) scope :

- there shall be no a priori exclusion of any service sector or mode of supply
- in negotiations on Most-Favored-Nations exemptions, appropriate flexibility shall be accorded to individual developing country Members

c) procedures :

- liberalization shall be advances through bilateral, plurilateral (between interested governments) or multilateral (involving all the WTO Members States) negotiations

- the main method of negotiation shall be the request-offer approach

- there shall be appropriate flexibility for individual developing country Members for opening fewer sector, liberalizing fewer types of transactions, progressively extending market access in line with their development situation

Doha Declaration (November 2001)

Endorsing the above guidelines, the Conference decided that Participants shall submit initial request for specific commitments by 30 June 2002 and initial offers by 31 March 2003 (§ 15).

The Conference decided also to agree to negotiations on the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services [§31(iii)].

But, at the time of the deadlines, the request-offer process was facing a lack of enthusiasm by a huge majority of non industrialized countries. It explains the August 2004 Decision.

1.4 1st August 2004 Decision

a) Members who have not yet submitted their initial offers must do so as soon as possible. Revised offers should be tabled by May 2005.

b) Members shall strive to ensure a "high quality" of offers.

c) Members shall aim to achieve progressively higher levels of liberalization " with no a priori exclusion of any service sector or mode of supply ."
d) Members must intensify their efforts to conclude the negotiations on domestic regulation in areas relating to qualification requirements and procedures, technical standards and licensing requirements, emergency safeguard measures and subsidies. The goal is to make sure that national, regional and local laws and rules are not more "burdensome than necessary" and have no "distortive effects" on trade competition. Negotiations are under way with the purpose of elaborating lists of laws and rules that represent "unnecessary barriers to trade in services."

Even after such decision, the level of request and offers remained too law according to report of The EU Commission to the Council of Ministers. Among the 148 Members on 15 September 2005, only 69 have submitted initial offers and among them 30 have submitted revised (= increased) offers.

For the UE, the USA, followed by countries like Australia, Canada, Japan, New Zealand, the question was: how to impose countries to make commitments? The answer was given by the Hong Kong Declaration based on initial EU proposals.

1.5 Hong Kong Declaration (December 2005)

1.5.1 Paragraphs 25, 26, 27 :

- all governments are urged to participate actively in the negotiations towards achieving a higher level of liberalization of trade in services

- LDCs (Least Developed Countries = the poorest) are not expected to undertake new commitments

- negotiations are going to be intensified during 2006 with the a view to expanding the sectoral and modal coverage of commitments and "improving" their quality.

1.5.2 Annex C :
Objectives for the 2006 negotiations:

a) on modal coverage of commitments :

Mode 1 (cross-border supply of services : services flow from the territory of one Member into the territory of another Member) :

- commitments at existing levels of market access on a non-discriminatory basis across sectors of interest to Members

- removal of existing requirements of commercial presence

Mode 2 (consumption of services abroad : a service consumer moves into another Member’s territory to obtain a service) :

- commitments at existing levels of market access on a non-discriminatory basis across sectors of interest to Members

- commitments on mode 2 where commitments on mode 1 exist

Mode 3 (commercial presence : investment in services activities abroad) :

- commitments on enhanced levels of foreign equity participation

- removal or substantial reduction of economic needs tests

- commitments allowing greater flexibility on the types of legal entity permitted

Mode 4 (presence of natural persons : persons of one Member entering the territory of another Member to supply a service) :

- new or improved commitments on the categories of Contractual Services Suppliers, Independent Professionals and Others, de-linked from commercial presence, to reflect inter alia: removal or substantial reduction of economic needs tests and indication of prescribed duration of stay and possibility of renewal, if any

- new or improved commitments on the categories of Intra-corporate Transferees and Business Visitors, to reflect inter alia: removal or substantial reduction of economic needs tests and indication of prescribed duration of stay and possibility of renewal, if any.

b) on MFN Exemptions

- removal or substantial reduction of exemptions from most-favoured-nation (MFN) treatment

- clarification of remaining MFN exemptions in terms of scope of application and duration

c) on emergency safeguard measures, government procurement and subsidies, Members shall conclude the negotiations

d) on domestic regulation, Members shall develop disciplines before the end of the current round of negotiations.

e) on plurilateral request-offer negotiations :

- any Member or group of Members may present requests or collective requests to other Members in any specific sector or mode of supply, identifying their objectives for the negotiations in that sector or mode of supply.

- Members to whom such requests have been made "shall consider such requests"

- plurilateral negotiations should be organised with a view to facilitating the participation of all Members, taking into account the limited capacity of developing countries and smaller delegations to participate in such negotiations

- the results shall be extended on a MFN basis.

This is the way to reduce to the minimum the flexibility provided by GATS art. XIX despite the fact that this flexibility has been confirmed regularly since 2001.

Timelines :

- any outstanding initial offers shall be submitted as soon as possible

- plurilateral requests should be submitted by 28 February 2006

- a second round of revised offers shall be submitted by 31 July 2006

- final draft schedules of commitments shall be submitted by 31 October 2006.


2.1 As usual at the beginning of the year, new people have been appointed during the WTO General Council on 8 February. Ambassador Eirik Glenne from Norway is the Chairperson of the General Council for 2006. The Mexican Ambassador, Fernando de Mateao was retained as chair of the services negotiations (probably because his record of imposing irregular procedures before Hong Kong that led to Annex C on services). In that capacity, he will chair the special sessions of the Council for Trade in Services.

2.2 On the sidelines of the World Economic Forum in Davos (end of January 2006), there was a WTO informal mini-ministerial meeting (with WTO DG Pascal Lamy, EU Trade Commissioner Mandelson, 17 ministers, among them US Portman); a document was adopted on timelines for the post-Hong Kong negotiations. Since then, this document called Timelines 2006 has been distributed as a WTO document (Job 6/13). It has introduced new obligations that had not been agreed to in Hong Kong (but not on services negotiations). This is the way 19 people are able to impose their views to 149 countries.

2.3 The Trade Negotiations Committee (TNC), the WTO body that coordinates the negotiations on the Doha agenda met for the first time since Hong Kong on 7 February. The chair of the TNC is Pascal Lamy. On services, he said : "the Hong Kong Declaration opened the door for plurilateral negotiations, which will be to a great extent demand driven. For the negotiations to achieve real progress over the next weeks, the request/offer negotiations must be intensified."

At the same TNC meeting, Ambassador Oscar Carvallo, of Venezuela, referred to the reservation he made at the final plenary session of the Hong Kong ministerial meeting which adopted the declaration and stated that it is therefore not bound by the deadlines relating to the services negotiations contained in Annex C of the Ministerial Declaration. Nor would it be obliged to adhere to the new dates contained in document Job 6/13 Timelines 2006. Several other developing countries also raised concerns with the Timelines 2006.

2.4 At the conclusion of a week of meetings on services among groups of countries, in Geneva, a Special session of the Council for Trade in Services was held on 16 February. Many countries from the South (LDC, developing and emerging countries) made clear that they see the plurilateral approach as a voluntary, non-compulsory process. Ambassador Manuel Teehankee from the Philippines underlined that "the full flexibility currently enjoyed by Members under the GATS [art. XIX] is in no way impaired by Annex C of the Hong Kong Declaration."

2.5 Group of countries have been created with the aim to coordinate plurilateral requests. They are called "Interested Parties" or "Friends" of particular sector, with a coordinating Member in every group:

Friends of Architectural and Engineering services sector: coordinator: Canada
Friends of construction services sector : Japan
Friends of telecommunications services sector : Singapore
Friends of energy services sector : EU
Friends of legal services sector : Australia
Friends of maritime transport services sector : Japan
Friends of postal and courier services sector : USA
Friends of Education services sector (in the process of creation) : New Zealand

2.6 By 28 February, plurilateral requests for services liberalization have been submitted. At least 14 sectors are targeted :

- Air Transport services

- Architectural and Engineering services

- Audiovisual and cultural services

- Computer services

- Construction services

- Distribution services

- Education services

- Energy services

- Environmental services

- Financial services

- Legal services

- Maritime Transport services

- Postal and courier services

- Telecommunications services

The EU is not making request in audiovisual and cultural services neither in education services, nor in distribution services. The USA is making requests in these specific sectors. The EU made requests in the other 11 sectors. The EU and the USA requests seek the removal of

1. foreign investment limitations
2. restrictions on form of establishment (e.g. prohibitions of branching)
3. prohibitions on supplying services cross-border (e.g. via the Internet)
4. nationality requirements
5. discriminatory regulatory policies
6. restrictions on competition (e.g. limitations on new entrants).

It is expected that more requests will follow.

So far, the demandeurs countries are : Australia, Canada, Chile, Ecuador, Egypt, EU, Hong Kong, China, India, Iceland, Japan, Korea, Malaysia, Mexico, New Zealand, Norway, Pakistan, Panama, Peru, Saudi Arabia, Singapore, Taiwan, Turkey, USA.

Plurilateral meetings to discuss these requests are expected to be held during the next services cluster of meetings scheduled from 27 March to 7 April 2006.

I plan to analyse the requests as soon as I have collected all the documents.

Raoul Marc JENNAR
Consultant to the GUE/NGL at the European Parliament

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