Trade in Services Negotiations: Preparatory Issues Achim Seiler, Trade Consultant and Capacity Building Specialist, Kathmandu EU-Project: Trade and Private Sector Development (TPSD) TPSD is implemented by in cooperation with and

Questions for Preparing Services Negotiations: Strategy Is there a national or sector strategy for services that should inform preparatory work for negotiations? Has thought been given to the place of reform in the development of the domestic service market and the relationship of that reform to international trade negotiations? Source: ITC 2013 (Marconini and Sauvé)

Questions for Preparing Services Negotiations: Coordination Is the coordinating authority, agency, or ministry fully in place and ready to operate? Source: ITC 2013 (Marconini and Sauvé)

Questions for Preparing Services Negotiations: Capacity Building Have capacity-building needs been identified for the overall approach to liberalization and trade agreements – i-e: readiness to liberalize, strategies to adopt in negotiating liberalization and advantages from negotiating access to foreign markets? Are other priorities in related international forums clear to all participants in the preparatory process – for example, positions and commitments taken in the context of bilateral agreements? Is there a reasonable understanding among participants and the coordinating entity as to what measures affect trade under international trade agreements? In the case of sector ministries and agencies, how should the capacity-building exercise best be pursued? Source: ITC 2013 (Marconini and Sauvé)

Questions for Preparing Services Negotiations: Inventory of Measures Does an inventory of measures affecting trade in services already exist at the horizontal and/or sectoral level? Is the information gathered in such inventories also being used to underpin domestic dialogue with key regulatory agencies and external stakeholders and as a means to promote regulatory review and refom processes? Once an inventory of regulatory measures exists, what is the basis to determine which regulatory requirements are in need of change? Source: ITC 2013 (Marconini and Sauvé)

Questions for Preparing Services Negotiations: Timing Where regulatory change appears necessary, can or should changes be contemplated within the timeframe of ongoing international negotiations? Should these changes be part of the country´s negotiating offer? Source: ITC 2013 (Marconini and Sauvé)

Questions for Preparing Services Negotiations: Offer What is the criterion to choose measures and/or modes of supply to determine which sectors should be offered as bound, partially bound or unbound? Has a clear distinction been established between defensive and offensive interests? How does the government establish its negotiating red lines, i.e. points beyond which it is not prepared to engage or commit? Source: ITC 2013 (Marconini and Sauvé)

Questions for Preparing Services Negotiations: Export Interests Are offensive interests able to take advantage of the negotiations, or is there need for additional capacity-building, in particular for private-sector supply? Have export-market studies beed conducted within government or by the private sector? Has all the relevant information (public, private, international) regarding export interests been compiled, analysed and circulated among the preparatory group? Source: ITC 2013 (Marconini and Sauvé)

Questions for Preparing Services Negotiations: Consumers/Users How significant is the voice of consumer/user groups in the formulation of service sector policy? Should technical assistance be directed at nurturing such voices or sustaining their development? Source: ITC 2013 (Marconini and Sauvé)

Questions for Preparing Services Negotiations: Consultation Has the coordinating entity managed to organize the consulting process with relevant stakeholders in the public and private sectors, including trade unions and non-governmental organizations? Is the consultation process with stakeholders broad enough to be truly representative? Source: ITC 2013 (Marconini and Sauvé)

Questions for Preparing Services Negotiations: Decision-Making Does the decision-making process seek to achieve a proper balance between sectoral, individual corporate and economy-wide objectives (both offensive and defensive)? Source: ITC 2013 (Marconini and Sauvé)

Trade Policy Formulation Checklist (Thailand) Existing Commitments Japan India ASEAN FTA & Strategic Partnership China 2 WTO 3 Others 1 9 Policy Formulation Existing domestic laws Policy Decision Making NGOs 4 8 Govt Liberalisation Plan/Policies 5 7 Academic 6 Internal Prep Studies Academic Studies Private Sector Policy Framework Background Studies Stakeholder Consultations Source: ITC 2013 (Vonkhorporn)

Concerns Arising in Services Negotiations 1. Has the government identified specific rule-making issues to which it intends to attach priority importance in the conduct of services negotiations? 2. How adequate are the negotiating skills of the country´s trade and regulatory officials, particularly as regards the capacity to take an active part in discussions on rule-making issues in services negotiations? 3. Has the government considered teaming up with other WTO Members or regional partners in formulating proposals and negotiating on selected rule-making issues? Marconini and Sauvé, 2009

Concerns Arising in Services Negotiations 4. Has the government considered how best to cooperate with various international organizations, bilateral donors or expert NGOs in formulating negotiating proposals on selected rule-making, market-opening or development issues? 5. Has the government considered the pros and cons of participating in collective requests and offers on selected rule-making, thematic or sectoral issues with a view to overcoming resource constraints and achieve scale economies in the conduct of negotiations? Marconini and Sauvé, 2009

Concerns Arising in Services Negotiations 6. What role is the government thinking of assigning to Art. XVIII (Additional Commitments) of GATS (and PTA equivalents) in sequencing liberalization undertakings (pre-commitment to future opening) and/or addressing sector-specific complements of market openinng (for instance government procurement, emergency safeguards, labor mobility-related issues, etc.)? 7. According to what criteria does the government choose among measures and/or modes of supply, and among sectors that are to be offered as bound, partially bound, or unbound in the negotiations? Marconini and Sauvé, 2009

Concerns Arising in Services Negotiations 8. Has a clear distinction been established between defensive and offensive interests in the negotiations? 9. Are the country´s negotiating „red lines“ clearly established, and does a process exist to revisit these in the light of developments within and outside the services negotiations? 10. Have export interests been identified so as to contribute to the elaboration of a realistic request list? 11. How does the government compile information on foreign barriers affecting the country´s service suppliers? Marconini and Sauvé, 2009

Concerns Arising in Services Negotiations 12. Has a mock request list been elaborated on the basis of existing and/or compiled information? 13. How does the ministry responsible for the conduct of services negotiations seek input from key stakeholders in responding to requests for market-opening formulated by trading partners? 14. Do consultations focus primarily on targeted sectors and key domestic suppliers or is an attempt made to weigh the economy-wide implications of acceding to negotiating requests? Marconini and Sauvé, 2009

Concerns Arising in Services Negotiations 15. Does the government weigh the pros and cons of binding less than the status quo, notably in terms of the signals such a decision may send regarding the country´s investment and regulatory climate? 16. To what extent is the government´s negotiating stance in services, notably as regards the evolution of liberalization offers, informed by – and coordinated with – the state of play of negotiations in non-service sectors? Marconini and Sauvé, 2009

Factors to Consider in Formulating a Request or Offer Possible Benefits: Country Level More efficient use of resources Attract more foreign investment Expanded job opportunities, reduced „brain drain“ Enhanced labor force skills Increased foreign exchange earnings Increased tax revenues Economic diversification Increased services efficiency Increased technology transfer Increased economic growth throughout the economy OECD, 2002

Factors to Consider in Formulating a Request or Offer Possible Benefits: Consumers Lower prices for services (leading to a better standard of living, greater purchasing power) Better quality of service (including convenience, responsiveness, timeliness) - Greater choice, new services offerings OECD, 2002

Factors to Consider in Formulating a Request or Offer Possible Benefits: Business Services Lower costs of doing business; increased profitability Ready availability of capital; reduced cost of funds Greater ability to own & dispose of assets Fewer foreign exchange limits; ability to repatriate profits Infusion of new technologies and innovation - Greater adherence to international standards Enhances scope for mergers and strategic alliances Remove red tape; increase transparency regarding domestic regulatory requirements Access to skilled labor and expertise Access to larger markets and cheaper service inputs - Increased efficiency and competitiveness OECD, 2002

Factors to Consider in Formulating a Request or Offer Concerns to be addressed: Country Level - Determine the impact on domestic economic performance and regulatory conduct of various levels of policy binding (e.g. below the status quo, status quo, pre-commitment to future liberalization) Ensure good quality services Ensure adequate infrastructure for business activities Assess impact of market opening on scope for achieving universal service supply/access objectives, particularly for the poor and/or geopgraphically disadvantaged Need to improve environmental stewardship and address possible adverse environmental impacts arising from liberalization OECD, 2002

Factors to Consider in Formulating a Request or Offer Concerns to be addressed: Country Level Ensure ability to regulate according to best international practices where feasible and enforce regulatory regimes adequately Restrict the scope for illegal activities Maintain a stable political and economic environment Adequate means of disciplining the potential anticompetitive conduct of dominant firms (domestic and foreign) Can competition policy play a larger role in disciplining market conduct post-liberalization? - Ensure adequate tax revenues for the gvernment OECD, 2002

Factors to Consider in Formulating a Request or Offer Concerns to be addressed: Consumers Assess impact of market opening on scope for achieving universal service supply/access objectives, particularly for the poor and/or geographically disadvantaged Ensure adequacy, reliability and quality of public services Safeguard consumer rights, and provide redress for complaints - Ensure sensitivity to local needs OECD, 2002

Factors to Consider in Formulating a Request or Offer Concerns to be addressed: Business Services Allow local firms to recoup initial investments Encourage investment in improved services Ensure the growth of local enterprises Ensure acceptance of locally-produced services Encourgae adoption of/compliance with international standards Ensure availability of appropriately-skilled workers Ensure disclosure of financial information by foreign firms Ensure financing at competitive rates Ensure effective professional (service industry) associations OECD, 2002