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One law firm around the world One law firm around the world Scheduling GATS Commitments & Sectors of Interest to Vietnam David Hartridge Hanoi, Vietnam August 5-6, 2003
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Schedule of Specific Commitments n The GATS requires each Member to submit a Schedule of Specific Commitments that lists the sectors in which it grants Market Access and National Treatment. n There is huge variation in the coverage of Members’ schedules. New Members usually have very wide coverage (more liberal than many current Members).
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Market Access Commitments n Article XVI forbids the following types of market- access limitations unless scheduled (no other limitations are possible under this Article): Number of suppliers Value of service transactions Number of operations or quantity of output Number of natural persons Type of legal entity Foreign equity participation
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National Treatment and Additional Commitments n Article XVII - Obligation to treat foreign services and service suppliers no less favourably than your own like services and suppliers in scheduled sectors. n Any kind of limitation in favour of nationals can be maintained if it is listed in the schedule. n Article XVIII - Additional commitments go beyond market access and national treatment – e.g. the reference paper on telecommunications services.
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Meaning of “limitations” n Scheduling a service does not mean it must be fully liberalized in all modes. Commitments can be made in one, two, three or four modes. n And commitments can be limited: “unbound” = no commitment in that mode “none” = no limitation (full commitment) Specific limitations can be scheduled.
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How to prepare a schedule: Step 1 n Select sectors and sub-sectors for inclusion Relevant considerations [underlying objectives]: Attract foreign investment [employment], foster competition [efficiency], broaden product choice [consumer welfare], etc.
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How to prepare a schedule: Step 2 n Consider need for limitations or modal exclusions Relevant considerations [type of limitation]: Prevent market congestion [quantitative access restrictions], promote technology transfer [joint venture requirements], prevent market disruption [phase-in commitments], etc.
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Scheduling Recommendations n No general references to domestic laws n No unspecified economic needs tests n Use CPC (UN Central Product classification) numbers whenever possible n Clear definition of sub-sectors if coverage is limited
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Examples from Schedules of Commitments: India
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Latvia
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*Unbound due to lack of technical feasibility Singapore
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China
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United States
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Financial Services n Covers insurance and related industries, and banking and other financial services n Strategically vital sector – hence the Annex and primacy of prudential concerns n Also vital infrastructure on which efficiency of whole economy depends n 110 WTO Members have commitments on financial services – second only to tourism
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Financial Services: Why Commit? Ensure longer-term capital flows Encourage creation of stable, transparent legal environment for investors Attract foreign direct investment Create efficient and sophisticated capital markets through introduction of new technologies and financial expertise
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Preconditions for Successful Liberalization n Establish regulatory regimes – Liberalization must be underpinned by effective supervisory and regulatory regimes. n Set correct priorities – Premature liberalization of capital flows can cause instability in a financial system. Better to allow commercial presence of foreign suppliers and liberalize a border range of financial instruments. n No effect on capital flows – The GATS is concerned only with liberalization of financial services and not of capital flows.
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Negotiations on Financial Services n Relative failure of negotiations in 1993 and 1995, success in 1997; role of the USA n Still a high priority in the Doha Round n Request-offer negotiations; input from industry essential, but beware of protection of vested interests. The wider public interest should come first.
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Telecommunications n Another infrastructure service whose efficiency is critical for the entire economy n Also a major target for liberalization in both accession and Doha Round negotiations n Prime interest of Vietnam’s partners will be in commercial presence – the possibility of direct investment in the telecoms sector
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Telecoms Reference Paper I n Safeguards against anti-competitive behaviour by dominant suppliers – e.g. cross- subsidization n Guarantees non-discriminatory interconnection to existing networks n Requires transparent licencing procedures n Requires independent regulator
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Telecoms Reference Paper II n Reference paper adopted by each Member as « additional commitments » under Article XVIII. n Over 80 Members have accepted it, some with slight reservations. n Accession without accepting the reference paper is almost certainly impossible; it has been a key element in Chinese and Russian accessions.
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Maritime Transport I n Failure of EU and US to make commitments in Uruguay Round - only 29 schedules. Extended to 1996. n Negotiations covered three “pillars”of maritime transport - international transport, auxiliary services and access to and use of port services. Multimodal services also discussed. n Extended negotiations failed; suspended to new round. Two schedules improved. MFN principle suspended. n Major political problem for US - Jones Act and Section 19 of Merchant Marine Shipping Act, 1920.
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Maritime Transport II n US unlikely to move despite 37 countries calling for maritime liberalization n But potential for many commitments (70-75 countries?) given major diplomatic effort, even without US n But also danger of unravelling – withdrawal of commitments and more MFN exemptions n Good offers in new Round by EU, Japan, Australia and New Zealand
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One law firm around the world One law firm around the world Scheduling GATS Commitments & Sectors of Interest to Vietnam David Hartridge Hanoi, Vietnam August 5-6, 2003
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