CUTS Institute for Regulation & Competition Strengthening Skills on Commercial and Economic Diplomacy Training Programme for Civil Servants and Executives(CDS.05) July 2006, Jaipur Session 10 WTO Negotiations on Services A Presentation By B. K. Zutshi July 19, 2008

2 Outline of the Presentation Introduction: Inclusion of Services Trade in the MTS GATS: A brief outline Inclusion in the Doha Round Current Status on Negotiations in respects of  Market Access  Rules WTO Negotiations on Services

3 Introduction: Inclusion of Services Trade in the MTS WTO Negotiations on Services How did this happen?  Shift in Competitive advantage in respect of manufactures  Technological developments in telecommunications and computing  Dominance of and Competitive advantage of Developed countries in Services Fragmentation of the then MTS, namely the GATT and the need to reverse the trend

4 WTO Negotiations on Services GATS: A brief outline Tracks closely the GATT Paradigm with some modifications  Like GATT, consists of a set of rules applicable across the board to all members ; and  A negotiated schedule of commitments Unlike in the case of GATT, Market Access and National Treatment are negotiated obligations to which conditions and qualifications can be attached by members through their commitment schedules MFN and Transparency obligations applicable across the board with temporary MFN exceptions negotiated during the UR

5 GATS: A brief outline…Contd. Special and Differential Treatment : Article IV on increasing participation of developing countries & Article XIX on Progressive liberalization in keeping with their national objectives and individual level of development. Market Access, an Artificial Construct, with a closed group of measures that can be maintained in sectors where commitments have been made. National Treatment with conditions and qualifications. GATS is also partly an investment agreement under Mode 3 Institutional Provisions WTO Negotiations on Services

6 GATS: A brief outline…Contd. Supplier Presence Service supplier not present within the territory of the Member Service supplier present within the territory of the Member Other Criteria Service delivered within the territory of the Member, from the territory of another Member Service delivered outside the territory of the Member, in the territory of another Member, to a service consumer of the Member Service delivered within the territory of the Member, through the commercial presence of the supplier Service delivered within the territory of the Member, with supplier present as a natural person Mode CROSS ‑ BORDER SUPPLY (Mode 1) CONSUMPTION ABROAD (Mode 2) COMMERCIAL PRESENCE (Mode 3) PRESENCE OF NATURAL PERSON (Mode 4) Modes of Supply

7 Market Access Progress so far disappointing, although services negotiations were launched in 2000 as a part of the built-in agenda of the UR negotiations. Negotiations are partly a hostage to the pace and progress of agriculture negotiations. No fresh time table has been laid down for submission of revised offers. The chair of the special session of the services council was exploring the possibility of issuing a text on services, on the lines of the modalities text in Agriculture and NAMA. A text has since been issued but not on the lines of the texts in Agriculture and NAMA. Some negotiations seem to be on in respect of plurilateral requests to augment the request and offer mode of negotiations. Signaling Conference on Market Access Commitments B K Zutshi WTO Negotiations on Services: Current Status

Market Access Contd… Reportedly, there is no movement on the part of developed countries on issues of interest and concern to developing countries under mode 4, both in respect of enhanced commitments and procedural reform in visa and work permit regulations. Also reportedly, poor response from developed countries about binding of the existing degree of openness of their markets under mode 1. The existing offers on the table do not have much liberalizing content. In any case, most such offers are not even at the level of existing degree of openness. This is true, even where, as in the case of India, the latest offer on the table is vastly superior to the level of the UR commitments. There are good prospects of binding of the existing degree of openness by a number of major developing countries, provided the overall package is substantial from their point of view. This is particularly true of India. 8 B K Zutshi WTO Negotiations on Services: Current Status

Market Access Contd… Is there, relatively speaking, a lack of interest, or even apathy, in the service sector industry in developed countries about liberalization under the GATS? If so, what would be the reasons? Autonomous liberalization since the close of the UR? What is the additional value of the binding of such liberalization for security and predictability of the existing market access? Are there any political economy reasons in the way of further liberalization under the GATS in major economies? Several developing countries, including in particular India, have indicated that for them a balanced outcome in the DDR will have to have a substantive improvement in market access in the services sector, which will mean liberalization in all modes, modes 1 and 4 included. 9 B K Zutshi WTO Negotiations on Services: Current Status

Services Rules GATS provided for further negotiations on the following  Domestic Regulations Article VI(4)  Emergency Safeguard Measures Article X  Government Procurement Article XIII  Subsidies Article XV Except in the case of Article VI(4), the progress of negotiations in other areas has been very poor. In case of Emergency Safeguard Measures, in spite of a most prolific engagement, there is still no clarity on the three fundamentals of who to protect from what and in what manner. 10 B K Zutshi WTO Negotiations on Services

Services Rules Contd... In case of Government Procurement, there is no understanding even on the scope of the negotiating mandate. The position in the subsidies negotiation is hardly any better. There has been no response by Members to sharing information on existing subsidies, as required by the mandate. A draft text is under negotiations under Article VI(4). In my view the text reflects a minimalist approach to a possible outcome in this area, which is of most vital importance to the realization of effective market access. B K Zutshi 11 WTO Negotiations on Services