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Examples are advertising services (CPC 871), reinsurance and retrocession ...... Centre for Trade and Sustainable Development, “WTO Mini-Ministerial, Day.
Legal Issues of Economic Integration

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Legal Issues of Economic Integration 35(4): 301–321, 2008. Services Key for Doha © 2008 Kluwer Law International. Printed in the Netherlands.

Services as Key for the Conclusion of the Doha Round By Dr Rafael Leal-Arcas*

Abstract This article aims to stress the importance of services negotiations for the conclusion of the Doha Round. It is argued in the article that trade in services is of high importance for the economies of both developed and developing countries, and that there remains substantial scope for many World Trade Organization (WTO) countries to make further commitments towards greater liberalization within the services sectors and within all modes of supply provided in the General Agreement on Trade in Services (GATS). After an explanation of the notion of trade in services, the article analyzes the GATS, the progressive liberalization of trade in services in the framework of the Doha Round, the request/offer method of negotiations in services trade viewed from the perspective of the European Communities, and the July 2008 WTO Mini-Ministerial Conference in relation to services.

I.

Introduction

This article addresses the current World Trade Organization (WTO) negotiations on trade in services in the framework of the Doha Development Agenda (DDA).1 Since July 2006 (the date that the Doha Round talks were suspended), we have seen the obvious weaknesses and deficiencies of the multilateral trading system and, as a reaction, the proliferation of regionalism – although this has been happening for quite some time now – and bilateralism. We will *

1.

Senior Lecturer in International Economic Law & European Union Law, and Deputy Director of Graduate Studies, Queen Mary, University of London. 2008–2009 Tillar House Resident Fellow, American Society of International Law; and Fellow at Georgetown University Law Center (Institute of International Economic Law). Member of the Madrid Bar. Interestingly, rich countries call this agenda of negotiations the ‘DDA’, whereas poor countries refer to it as the ‘Everything but Development Round’. It has certainly been a mistake to call this round the ‘development round’, since the DDA is a multilateral trade negotiation with very little input on development. This rather vague distinction between rich and poor countries is based on the World Bank’s country classification. See The World Bank, ‘Country Classification’, available at (last visited 20 Mar. 2008).

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see that the substance and nature of the services negotiations in the Doha Round are quite different from those of the Uruguay Round: the latter laid the ground rules for trade in services in the General Agreement on Trade in Services (GATS);2 the former is about extending liberalization and complementing those ground rules.3 We shall explore the position of the European Community (EC) and its Member States in the DDA for the case of services negotiations.4 It is argued in the article that trade in services is of high importance for the economies of both developed and developing countries. As a result, it is key for the conclusion of the Doha Round since services is the dominant economic activity in the world and contributes to overall development. The article also argues that there remains substantial scope for many WTO countries to make further commitments towards greater liberalization within the services sectors and within all modes of supply provided in the GATS. It will be demonstrated that, despite the commitments made within the GATS, services sectors still exhibit limitations that restrict equal competition for foreign competitors, sometimes resulting in non-compliance with the WTO doctrines of marketaccess and national treatment. Different WTO countries set different strategies for services liberalization, reflected in their GATS or other negotiating positions. Excessive use of non-tariff barriers can lead to ineffective enforcement of GATS commitments, resulting in true market-access lagging behind bound rates. Some countries keep a conservative position on their bound commitments, while in reality a more liberal access is enjoyed, affording them stronger leverage on future rounds of negotiation. A failure to effectively enforce bound commitments can also reflect an inability within a country to ensure uniform domestic implementation.5 The article is divided into six parts. After the introduction, Part II analyzes the notion of trade in services and the GATS; Part III discusses the progressive liberalization of trade in services as the optimal way forward in the Doha 2.

3. 4.

5.

General Agreement on Trade in Services, 15 Apr. 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1B, ‘The Results of the Uruguay Round of Multilateral Trade Negotiations – The Legal Texts’, 325, 33 I.L.M. 1167 (1994). For a full text of agreements resulting from the Uruguay Round, see Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, 15 Apr. 1994, ‘Legal Instruments – Results of the Uruguay Round’, 1, 33 I.L.M. 1125 (1994). That said, there are still some controversial issues of the Uruguay Round in the Doha Round, namely the audiovisual services. Kerremans, B. ‘What Went Wrong in Cancun? A Principal-Agent View on the EU’s Rationale Towards the Doha Development Agenda’, European Foreign Affairs Review 9 (2004): 363-393 at 364. Among those who claim that there is potential for developing countries to benefit from trade liberalization are Anderson, K., Maritin, W. & van der Mensbrugghe, D. ‘Doha Merchandise Trade Reform: What’s at Stake for Developing Countries?’, World Bank Policy Research Working Paper 3848, Feb. 2006, available at .

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Round; Part IV explores the actual services negotiations in the DDA from the perspective of the European Communities; Part V analyzes the July 2008 WTO Mini-Ministerial Conference from the services trade perspective; the conclusions are presented in Part VI.

II.

Definition of Services and the GATS

The GATS has failed to provide a legal definition of what ‘services’6 should mean for purposes of the Agreement. However, the GATS does define trade in services. The GATS ‘applies to measures by Members affecting trade in services’.7 Until now, the Appellate Body has not felt the need to define services in abstract terms, and has taken a pragmatic approach by indicating which sector was affected in the cases adjudicated under the GATS so far.8 The failure to address these definitional matters certainly raises issues concerning the scope of applicability of the GATS. Although the scope of the GATS is not limited to any list of covered sectors, there is no agreement on an exhaustive list of services. This problem arose during the negotiations on electronic commerce at the WTO.9 This lack of agreement has surmountable legal implications, namely that the general GATS obligations apply to all services, but WTO Members may impose restrictions when scheduling their specific commitments. During the Uruguay Round, a ‘Services Sectoral Classification List’10 was developed. It is based on the UN Central Product Classification System (CPC), and classifies services by sector. The use of the Services Sectoral Classification List is not mandatory. Yet, many WTO Members have adopted it as a basis for scheduling their commitments under the GATS.11 The GATS allows some flexibility for countries to determine which service sectors they want to subject to the GATS full participation and deregulation pressures. However, some GATS rules apply even to sectors where countries have not committed. In addition, as will be analyzed later, the text of the GATS commits all WTO countries to ‘progressive liberalization’ (GATS 6. 7. 8.

9. 10.

11.

GATS Art. I(3)(b). GATS Art. I(1). See Appellate Body Report, Canada – Certain Measures Affecting the Automotive Industry (‘Canada – Automotive Industry’), WT/DS142/AB/R, adopted 19 Jun. 2000, ‘Wholesale Trade Services of Motor Vehicles’, para. 157; Appellate Body Report, EC – Regime for the Importation, Sale and Distribution of Bananas (‘EC – Bananas’), WT/DS27/AB/R, adopted 25 Sep. 1997, ‘Wholesale Trade Services’, paras 223-228. Bacchetta, M. et al., WTO, Electronic Commerce and the Role of the WTO, Special Study No. 2, 1998. See WTO, Services Sectoral Classification List, MTN/GNS/W/120, 10 Jul. 1991, available at (last visited 24 Oct. 2007). Examples are advertising services (CPC 871), reinsurance and retrocession (CPC 81299), and voice mail (CPC 7523). GATS Arts XVI, XVII and XVIII.

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Article XIX.1). Expansion of the GATS scope and the sectors it covers is now underway in the so-called ‘GATS 2000’ negotiations. Once a sector is committed to the GATS, it is virtually impossible for the public to reinstall control over it because the GATS rules require financial compensation to every WTO Member to do so. That said, modification of commitments by governments is perfectly compatible with GATS Article XXI. Because the very notion of including the services sector in a ‘trade’ agreement was so controversial, the GATS is structured as a ‘bottom-up’ agreement. This means that most GATS requirements only apply to service sectors that countries specifically agree to open up to competition by foreign corporations. The GATS ‘market-access’ rules (Article XVI) go well beyond requiring that governments treat foreign firms in the same way as domestic firms. Rather, unless otherwise specified in their schedules, these rules flatly prohibit governments from placing certain limits on, or applying certain policies to, foreign service operations in covered service sectors. Under the GATS market-access rules, federal, state and local governments may not, in principle: (1) limit the number of service suppliers, including through quotas, monopolies, economic needs tests12 or exclusive service supplier contracts (absolute bans on certain service-sector activities, such as bans on hotel construction on protected shoreline have been interpreted as GATS-prohibited ‘zero quotas’ by two WTO trade tribunals); (2) limit the total value of service transactions or assets, including by quotas or economic needs tests; (3) limit the total number of service operations or the total quantity of a service; (4) limit the total number of natural persons that may be employed in a particular service sector; (5) establish policies which restrict or require specific types of legal entity or joint venture through which a service supplier may provide a service; or (6) limit foreign ownership expressed as a maximum percentage or total value.13 In relation to commitments on market-access and national treatment, let us remember that individual countries’ commitments to open markets in specific sectors – and how open those markets will be – are the outcome of negotiations.14 In the case of trade in services, the specific commitments are 12

13.

14.

The economic needs test is a mechanism controlled by government, industry or professional associations to decide whether the entry into the market of new foreign, and sometimes domestic, firms is warranted on economic grounds. This mechanism may be discretionary and protectionist. GATS Article XVI, which sets out market access rules, proscribes the use of economic needs tests. See Walter Goode, Dictionary of Trade Policy Terms, 5th ed., Cambridge University Press, 2007, pp. 144-145. There are different interpretations of GATS Art. XVI among scholars. I share the view of Mavroidis that Art. XVI(2) is a list of the most frequent violations of national treatment (GATS Art. XVII). As a result, negotiators wanted to show their desire to abolish these measures, as they are deviations from national treatment. See Mavroidis, P. ‘Highway XVI Re-visited: The Road from Non-discrimination to Market Access in GATS’, World Trade Review 6, no. 1 (2007): 1-23 at 9 and 22. For an analysis of the national treatment in the GATS, see Mattoo, A. ‘National Treatment in the

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listed in documents called ‘schedules of commitments’, which reflect specific tariff concessions and other commitments that they have given in the context of trade negotiations, such as the Uruguay Round. The content of the schedules changes over time to take account of different modifications, such as GATT Article XXVIII negotiations or rectification procedures. So, for example, if a government commits itself to allow foreign banks to operate in its domestic market, that is a market-access commitment.15 And if the government limits the number of licenses it will issue, then that is a marketaccess limitation. If the government also says foreign banks are only allowed one branch while domestic banks are allowed numerous branches, then that would be an exception to the national treatment principle.

III.

Progressive Liberalization of Services Trade: The Best Way Forward16

Unlike trade in goods, multilateral services trade did not have a multilateral liberalization movement. It only came into being after the GATS came into force. The reason was that services were initially, although incorrectly, perceived as non-tradable. For instance, in some services industries the simultaneous presence of producers and consumers was considered necessary. However, the current perception of services is diametrically different.17 The Uruguay Round was only the beginning of liberalization of services trade.18 The GATS commits WTO Member governments to undertake negotiations on specific issues, and to enter into successive rounds of negotiations to progressively liberalize trade in services.19 According to Article XIX of the GATS, the first round had to start no later than five years from 1995: 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 and periodically

15. 16. 17. 18.

19.

GATS: Corner-stone or Pandora’s Box?’ Staff Working Paper TISD-96-02, available at (last visited 19 Nov. 2007). See Mavroidis, P. ‘Highway XVI Re-visited: The Road from Non-discrimination to Market Access in GATS’, World Trade Review 6 no. 1 (2007): 1-23. Dee, Ph. & Hanslow, K. ‘Multilateral Liberalization of Services Trade’, in Stern, R. (ed.), Services in the International Economy, University of Michigan Press, 2001. Jara, A. & Domínguez, M.C., ‘Liberalization of Trade in Services and Trade Negotiations’, Journal of World Trade 40, no. 1 (2006): 113-127. For an analysis of the post-Uruguay Round trade liberalization implications, see Das, D.K. ‘Implications of the Forthcoming Round. Trade Liberalization in a Dynamic Setting’, in Das, D.K. (ed.), Global Trading System at the Crossroads. A Post-Seattle Perspective, Routledge, 2001. See the paper prepared by the Center for International Environmental Law for the World Summit on Sustainable Development entitled ‘WTO Negotiations to Liberalize Trade in Services: New Challenges for Sustainable Development’.

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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.20 GATS Articles XIX to XXI deal with progressive liberalization (GATS Article XIX on the negotiation of specific commitments; Article XX on the schedules of specific commitments; and Article XXI on the modification of schedules).21 The GATS requires further negotiations, which began officially in early 2000 under the WTO Council for Trade in Services as well as regular meetings of its relevant subsidiary committees or working parties and are now part of the DDA, and whose aim is to achieve a higher level of liberalization of trade in services. This liberalization will be aimed at enhancing the level of commitments in the schedules and reducing the adverse effect of the measures taken by the governments.22 In 1999, the attempt by the EC (and others) to launch a new round of WTO trade negotiations at Seattle was spectacularly unsuccessful and the accompanying street protests raised the question of whether new negotiations to liberalize trade were appropriate at all. While the opposition to negotiations seemed to be inspired by innumerable unconnected issues, certain themes were perceptible.23 The principal questions seemed to be whether trade liberalization in itself was an appropriate goal or whether it should be accompanied by or subordinated to other concerns, such as those related to the environment,24 working conditions, human rights,25 and the right of communities to choose and apply their own policies and standards. The concept ‘GATS 2000 talks’ refers to the part of the WTO postUruguay Round that concentrates on services trade, specifically the ‘built-in’ services left from the agenda of the Uruguay Round. The starting date for the talks was set for 1 January 2000 in Geneva. These GATS 2000 negotiations 20. 21.

22. 23.

24.

25.

GATS Art. XIX.1. Some authors question the ability of the GATS to promote liberalization on a reciprocal basis. See Hoekman, B. & Messerlin, P. ‘Liberalizing Trade in Services: Reciprocal Negotiations and Regulatory Reform’, in Sauvé, P. & Stern, R. (eds), GATS 2000: New Directions in Services Trade Liberalization, Brookings Institutions, 2000, 487-508. European Commission, ‘Aspects relating to trade in services’, available at . According to Charles Finny, the reasons for the failure of the Seattle WTO Ministerial Conference were the WTO Conference’s poor management by the WTO Secretariat and the US Government. These views were presented by Charles Finny at the conference International Economic Law and National Autonomy: Convergence or Divergence?, Victoria University of Wellington Law School, Wellington, New Zealand, on 14 Dec. 2007. Within the environment, on the specific issue of the clean development mechanism, see Wiser, G. ‘Frontiers in Trade: The Clean Development Mechanism and the General Agreement on Trade in Services’, International Journal of Global Environmental Issues 2, nos 3/4 (2002): 288-309. Cleveland, ‘Human Rights Sanctions and International Trade: A Theory of Compatibility’, JIEL 5 (2002): 133.

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have been confronting two central challenges: (1) the completion of the incipient framework of the GATS rules and disciplines so as to ensure the GATS’s and WTO’s continued relevance in a globalizing environment and (2) the achievement of greater overall trade and investment liberalization than was possible during the Uruguay Round and in subsequent sectoral negotiations, such as basic telecommunications, financial services, maritime transport, and labour mobility issues (the so-called temporary movement of service suppliers). Before the launch of the GATS 2000 talks, a coalition of developing countries called for an assessment of the outcomes of service-sector liberalization and the GATS rules prior to undertaking further deepening of those rules under the GATS 2000.26 A global campaign of civil society groups called for a moratorium on the GATS 2000 talks until this assessment was to be conducted.27 However, these requests28 were steamrollered. The WTO Secretariat, the United States, and the EC pushed for the immediate launch of the built-in GATS expansion talks. Indeed, the December 2001 Doha Ministerial Declaration not only dismissed the demands for a services assessment, but also set a specific timeline for the GATS 2000 talks to conclude by 2005 which, as we know, did not happen.29 In March 2001, the WTO Services Council fulfilled a key element in the negotiating mandate by establishing the negotiating guidelines and procedures.30 Thus the negotiations on services were already almost two years old when they were incorporated into the DDA. These negotiations aim to increase the participation of developing countries in trade in services. To this end, there is appropriate flexibility for individual developing country Members, as provided for by GATS Article XIX:2. Special priority is granted to leastdeveloped country Members as stipulated in GATS Article IV:3. Furthermore, the guidelines make clear that due consideration should be given to the needs of small- and medium-sized service suppliers, particularly those of developing countries. Moreover, the negotiations take place within the existing structure and principles of the GATS, retaining the right to specify sectors in which commitments are undertaken and the four modes of supply. 26.

27. 28.

29. 30.

World Trade Organization, ‘Communication from Argentina, Brazil, Cuba, The Dominican Republic, El Salvador, Honduras, India, Indonesia, Malaysia, Mexico, Nicaragua, Pakistan, Panama, Paraguay, The Philippines, Sri Lanka, Thailand, Uruguay and the Members of the Andean Community (Bolivia, Colombia, Ecuador, Peru, Venezuela)’, S/CSS/W/13, 24 Nov. 2000, at IV (11). ‘Stop the GATS Attack’, Demand letter and list of signatories available at . Prior to the Hong Kong Ministerial Conference in 2005, GATS negotiations proceeded on a bilateral ‘request/offer’ basis. This means that one nation issued a request document for service sector liberalization to another and indicated what it was willing to offer in a second document. Then the two nations bargained on a bilateral basis. See the Doha WTO Ministerial Declaration, para. 15. World Trade Organization, ‘Guidelines and Procedures for the Negotiations on Trade in Services’, S/L/93, 29 Mar. 2001.

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IV.

The EC in the Request/Offer Services Negotiations31

The services sector is currently by far the most dynamic worldwide. It already contributes to economic growth worldwide more than any other sector, and accounts for over 77% of the gross domestic product and employment in the EU. Despite this, services currently still represent less than 30% of European external trade.32 This demonstrates that trade liberalization in the services sector is of great importance for the EU. As a rule of thumb, the services sector contributes 40% to 60% to the GDP in developing economies, and 60% to 80% in the industrial economies. However, the true value of trade in services is understated because a good deal of it is conducted by expressly created corporate establishments in their export markets. This means that this trade in services is not recorded in the balance of payments statistics. Furthermore, given the invisibility and intangibility of many services, when they are delivered to a trade partner, their passage is oftentimes not recorded by the customs department. Therefore, statistics on trade in services are not entirely reliable.33 Developed countries are quite keen in seeing agreement reached on liberalization of services trade on the grounds that substantial gains are to be made for both developed and developing countries by increasing trade in this sector. Thus, countries should open their service markets to external competition so that benefits will come for all. Written into the GATS is a commitment by WTO Members to progressively liberalize trade in services (Article XIX) by entering into successive rounds of negotiations. The first of these mandated regular rounds of negotiations began on 1 January 2000. At the fourth WTO Ministerial Conference in Doha, Qatar, in November 2001, the negotiations on services were incorporated into the DDA. As far as services is concerned, it is important to analyze paragraph 15 of the Doha Declaration: The negotiations on trade in services shall be conducted with a view to promoting the economic growth of all trading partners and the development of developing and least-developed countries. We recognize the work already undertaken in the negotiations, initiated in January 2000 under Article XIX of the General Agreement on Trade in Services, and the large number of proposals submitted by members on a wide range of sectors and several horizontal issues, as well as on movement of natural persons. We reaffirm the Guidelines and Procedures for the Negotiations adopted 31.

32. 33.

For an overview on the relationship between the EC and the GATS, see Eeckhout, P. ‘Constitutional Concepts for Free Trade in Services’, in de Burca, G. & Scott, J. (eds), The EU and the WTO. Legal and Constitutional Issues, Hart Publishing, 2001, 211-235. European Services Forum, ‘Position Paper on EU Free Trade Agreements’, 28 Feb. 2008, 2. Mildner, S. & Werner, W. ‘Progress or Stagnation? Services Negotiations in the WTO Doha Development Round’, Intereconomics 40, no. 3 (May/Jun. 2005): 158-168.

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by the Council for Trade in Services on 28 March 2001 as the basis for continuing the negotiations, with a view to achieving the objectives of the General Agreement on Trade in Services, as stipulated in the Preamble, Article IV and Article XIX of that Agreement. Participants shall submit initial requests for specific commitments by 30 June 2002 and initial offers by 31 March 2003.34 As for the scope of the negotiations on trade in services, it is important to note that most-favoured-nation (MFN) exemptions are subject to negotiation according to paragraph 6 of the Annex on GATS Article II (MFN) exemptions. In such negotiations, appropriate flexibility is accorded to individual developing country Members of the WTO. In relation to the modalities and procedures, it was agreed in the same guidelines that the negotiations would be conducted in special sessions of the WTO Council for Trade in Services and regular meetings of its relevant subsidiary committees or working parties,35 which would report on a regular basis to the General Council, in accordance with decisions taken by the General Council. Needless to say, the negotiations must be transparent and open to all Members and acceding States and separate customs territories according to decisions taken in this regard by the WTO General Council. A.

How Multilateral Services Negotiations Work

The modus operandi of services trade liberalization is through bilateral, plurilateral or multilateral negotiations, and the main method of negotiation is the request/offer approach. The Council for Trade in Services in Special Sessions must continue to carry out an assessment of trade in services in overall terms and on a sectoral basis with reference to the objectives of the GATS and of its Article IV in particular. This should be an ongoing activity of the Council and negotiations are adjusted in the light of the results of the assessment. In accordance with GATS Article XXV, technical assistance is provided to developing country Members,36 on request, in order to carry out national/regional assessments.37 The Doha Declaration called for participants of the Doha round to submit initial requests for specific commitments from other WTO Members by 30 34. 35. 36.

37.

Doha WTO Ministerial Declaration, WT/MIN(01)/DEC/1, 20 Nov. 2001, available at . World Trade Organization, ‘The Doha Declaration Explained’, available at . Saner, R. & Paez, L. ‘Technical Assistance to Least-Developed Countries in the Context of the Doha Development Round: High Risk of Failure’, Journal of World Trade 40, no. 3 (2006): 467-494. See Tuerk, E. & Krajewski, M. ‘Assessment on Trade in Services in the Context of the Current GATS Negotiations in the WTO’, Center for International Environmental Law, Nov. 2001.

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June 2002 and to present initial offers to other WTO Members by 31 March 2003.38 The EC, which has played a major role in the implementation of, and ongoing negotiations under, the GATS, submitted sectoral proposals to the WTO in December 2000 setting out its negotiating objectives in twelve services sectors covered by the GATS, and a communication on the EC’s general objectives for the negotiations was submitted in March 2001. From the EC point of view, the European Commission believes that these negotiations are conducted by the Commission in a transparent way. Its objectives are stipulated in a mandate given to the Commission by the EU Council and the European Parliament in October/November 1999. To intensify and expedite services negotiations, Annex C of the Draft Hong Kong Ministerial Declaration introduced an interesting mode of negotiations, i.e., plurilateral negotiations. Annex C also exhorted Members to make new binding marketaccess commitments across the four modes of services supply, and to give up existing restrictions on granting equal treatment to services providers from all WTO countries. These plurilateral negotiations, unlike conventional bilateral negotiations, permit a group of members to present collective requests to other members in any sector or mode of supply.39 Furthermore, the plurilateral approach has solidified a platform for interested WTO Members to build upon initial, sector-specific discussions, either through an extended round of negotiations similar to what transpired after the Uruguay Round or in the context of the next round of services negotiations mandated under the GATS.40 That said, Annex C also failed to deliver any timelines for service negotiations, even in a preliminary sense.41 The Doha Declaration endorsed the work already done under the Council for Trade in Services, reaffirmed the negotiating guidelines and procedures, and established some key elements of the timetable including, most importantly, the deadline for concluding the negotiations as part of a single undertaking. A successful conclusion of the Doha Round must include satisfactory results on services trade. Moreover, services are a crucial component of the Doha Round and, therefore, positive results are needed in services trade so as to complete the single undertaking.42 In a nutshell, the roadmap for the Doha Round in services trade was as follows: 38.

39. 40.

41. 42.

For an explanation of the commitments under the GATS in the Doha Round, see Adlung, R. & Roy, M. ‘Turning Hills into Mountains? Current Commitments under the GATS and Prospects for Change’, Economic Research and Statistics Division Staff Working Paper ERSD-2005-01, Mar. 2005, World Trade Organization. See ‘TNC: Lamy Outlines Doha Round Roadmap for Hong Kong and Beyond’, Bridges Weekly Trade News Digest, vol. 9, no. 35, 19 Oct. 2005, C-3. Bernabe, J. & Cheng, S. ‘The Doha Round Negotiations on Services: An Overview’, 2. Paper prepared for a seminar entitled Realizing the Doha Development Agenda As if the Future Mattered, at the Salzburg Seminar, Salzburg, Austria, 16-21 Feb. 2007. See ‘TNC: Lamy Outlines Doha Round Roadmap for Hong Kong and Beyond’, Bridges Weekly Trade News Digest, vol. 9, no. 35, 19 Oct. 2005, C-4. See speech by Lamy, P. ‘Why services are crucial for concluding the WTO Doha Round’, Euro-

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– – – – – – –

to start negotiations by early 2000 under the Council for Trade in Services; to negotiate guidelines and procedures by March 2001; to present initial requests for market access by 30 June 2002;43 to present initial offers of market access by 31 March 2003; stock taking was originally meant to be the fifth WTO Ministerial Conference in 2003 in Cancun; revised market-access offers by 31 May 2005; and deadline as part of a single undertaking originally by 1 January 2005, which unofficially became fatal at the end of 2006.

As for the term ‘initial’, it was indicative of the reality of the negotiating process, which in itself was a succession of requests-and-offers operations. Each WTO Member submits an initial request which does not have to be exhaustive. No WTO Member has to necessarily have to think of every possible item it wishes to request of the other WTO Members. The principal aim of the services negotiations for the EC is to improve market access for European services exporters.44 During the Uruguay Round, the EC already made liberal commitments, making commitments in more than 120 sub-sectors, and its trade interests in this area are essentially offensive. The main objectives of the EC, therefore, are: elimination of entry barriers such as limitations on the number of services suppliers, limits on foreign ownership or shareholding, restrictions on the type of legal entity, and compulsory joint venture or numerical quotas. More specifically, the EC is seeking improved commitments and clarification of existing commitments. At the same time, the EC seeks for a reduction in scheduled limitations both of a horizontal and sectoral specific nature. B.

Initial Requests

In April 2002, the EC’s GATS requests included hundreds of pages, countryby-country, for a new access to education, health, water, energy, transportation, and entertainment services. The EC’s requests to the United States contained a state-by-state list of zoning, land ownership, liquor distribution, and other laws that the EC was seeking to eliminate. These demands for market access are concrete examples of the issues at stake in the current GATS negotiations. In the framework of the GATS 2000 talks, Modes 3 and 4 remain most controversial.

43.

44.

pean Services Forum and the London School of Economics conference, 15 Oct. 2007. European Commission, ‘EU tables market access requests to inject momentum into WTO services negotiations’, available at . Hardstaff, P. ‘Benchmarking in GATS: Exposing the EU’s Aggressive Services Agenda’, World Development Movement, Nov. 2005.

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The shift from a focus on trade across borders (Mode 1) to establishment of a business within another country (Mode 3) brings every domestic policy issue and priority under scrutiny of the GATS. In the specific case of Mode 4, the controversy arises because Mode 4 can be associated with immigration policy, even if the relationship between the two concepts (Mode 4 and immigration policy) does not appear anywhere in the GATS. In this respect, a major success of the DDA would be for the WTO Membership to agree conceptually on the scope of Mode 4. One benefit that Mode 4 brings to the world trading system is the alleviation of the lack of qualified workers in WTO countries.45 However, an issue of concern is whether exporting countries of Mode 4 will have enough human capital to actually benefit from the right to export qualified workers in a knowledge-based society. As it stands, some WTO developing and least-developed Members might not even be able to benefit from Mode 4 for lack of (highly)-qualified professionals.46 Since there is no categorization in Mode 4, the only informal requirements are (1) that the service be temporary, and (2) that the service provider not seek permanent entry in the labour market of the WTO Member where the service takes place. However, the question remains: Which type of service providers will not seek entry in the labour market? Once again, Mode 4 creates a division between developed and developing countries of the WTO in the sense that developed countries do not want Mode 4 to become a substitute for immigration – the argument being that there is already immigration in developed countries – whereas developing countries want a full implementation of Mode 4.47 The EC fulfilled on 1 July 2002 a major step in its DDA by presenting its initial requests for improved market access on services to 109 WTO Members in Geneva.48 These requests, which seek a reduction in restrictions and an expansion of market-access opportunities, cover the following sectors: professional services, telecommunications, business services, postal services, distribution, construction and related engineering services, financial services, environmental services, tourism, news agency services, and energy services. However, no requests were made to any country on health services or audiovisual services, and only the United States received a request limited to privately funded higher education services. Requests were made on environmental services, but did not touch on the issue of access to water resources which, in the European 45.

46 47. 48.

On the possible trade creating effects of service trade liberalization via Mode 4, see Jansen, M. & Piermartini, R. ‘The Impact of Mode 4 Liberalization on Bilateral Trade Flows’, World Trade Organization, Economic Research and Statistics Division, Staff Working Paper ERSD-2005-06, Nov. 2005, available at . However, developing and least-developed countries always have the possibility of exporting nonhighly qualified workers, such as domestic help, which is a major source of Mode 4 at present. Interview with Mr Plaza, Spanish trade diplomat dealing with international services trade, on 15 Mar. 2006. See the Summary of the EC’s Initial Requests to Third Countries in the GATS Negotiations, Brussels, 1 Jul. 2002, available at .

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Commission’s view, in no way undermined or reduced host governments’ ability to regulate pricing, availability and affordability of water supplies as they chose. The EC requests do not intend to dismantle public services,49 or to privatize state-owned companies. The requests in services trade negotiations seeking the elimination or reduction of exemptions from the obligation to accord MFN treatment in financial services might be folded into the plurilateral discussions on financial services. Other areas regarded by the Commission as being more sensitive, such as the education and health sectors and the audiovisual sector, would remain off limits. ‘Time is running out for others to match our level of ambition and bring real market-access opportunities to the table’,50 said EU trade commissioner Peter Mandelson on 2 June 2005, addressing journalists in Brussels. ‘This is essential for a successful and balanced agreement at the Hong Kong Conference’,51 said Mr Mandelson, referring to the Sixth WTO Ministerial Conference at which a long-awaited breakthrough in the stalled Doha Negotiations was hoped to happen. Services trade is certainly a major area of interest to the EC. The EC has a solid background in the field thanks to the EU internal market experience, which makes EU Member States be like-minded in most areas of services.52 Although press reports of the WTO Doha Round have focused on agriculture, the EC is actively pushing the opening up of the services markets in developing countries. According to John Hilary of the UK organization War on Want, this policy is dictated by the European Services Forum, a network of representatives from the European services sector formed in 1999. The policy, in the view of Hilary, aims to open up essential public services in the developing world, such as health, water and transport to competition from western corporations. So the logical question is: are essential public services threatened by the GATS negotiations? The European Commission’s answer is no. It has stated that public services are an essential feature of the social model and of each country’s cohesion, and that the EC fully shares the importance that citizens in Europe and elsewhere attach to maintaining and developing public services. Public services are at the heart of the European social model and, in this 49.

50. 51. 52.

Public services do not have a precise legal meaning per se. See in this respect, Harlow, C. ‘Public Services, Market Ideology, and Citizenship’, in Freedland, M. & Sciarra, S. (eds), Public Services and Citizenship in European Law, Oxford University Press, 1998, 50-51; Scott, C. ‘Services of General Interest in EC Law’, European Law Journal 6 (2000): 312; Marlet Garcia, E. ‘Public Service, Public Services, Public Functions and Guarantees of the Rights of Citizens: Unchanging Needs in a Changed Context’, in Freedland, M. & Sciarra, S. (eds), Public Services and Citizenship in European Law, Oxford University Press, 1998, 57-59. See article by Borak, D. ‘U.S. and EU Increase Service Offer’, United Press International, 6 Jun. 2005, available at . Id. For an analysis of the impact of multilateral services trade negotiations on the intra-EC’s provisions of services, see McMahon, J. ‘The World Trade Organisation Dimension: The General Agreement on Trade in Services’, Mitchell Working Paper Series, 4/2007.

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respect, the European Commission expresses a commitment to ensuring that this remains so. According to the WTO Secretariat, the GATS negotiations are about opening up service trade, not about deregulating services, many of which are closely regulated for very good reasons. In respect of public services, all WTO Members would arguably remain free either: (1) to maintain the service as a monopoly, public or private; (2) to open the service to competing suppliers, but to restrict access to national companies; (3) to open the service to national and foreign suppliers, but to make no GATS commitment on it; or (4) to make GATS commitments covering the right of foreign companies to supply the service, in addition to national suppliers.53 This view on the impact of the GATS negotiations on public services is not universally shared. In all these cases, governments remain free to set levels of quality, safety, price or any other policy objective they see fit. It is inconceivable that any WTO Member would agree to surrender such a fundamental right. C.

Revised Requests

On 24 January 2005, the EC submitted revised requests for improved market access on services to the WTO Members in Geneva. The revised requests seek a reduction in market-access restrictions and an expansion in trading opportunities for the European services industry. To guide the negotiations to a successful conclusion in services trade, a work plan was created in the pre-Hong Kong Ministerial Conference phase. This plan included setting an overall level of ambition for services market access and an ambitious negotiating strategy in order to achieve a high level of ambition for global services liberalization, particularly in key sectors such as financial services, telecommunications, computer and related services, express delivery, distribution, and energy services. The EC provides for market access in services trade.54 Within the WTO, countries agree to open trade in services on the basis of requests and offers to other WTO Members. Each country decides the sectors it wants to open to international trade.55 There remain some sectors within the EU in which market access for services imports from third countries could be improved. We are in 53. 54.

55.

See World Trade Organization, ‘GATS – Fact and Fiction’, Geneva, May 1998, 1-17, at 9, available at . See the views of Peter Carl in a report from the seminar on ‘Which Priorities for the New Commission in the WTO?’, in Stockholm, on Thursday 16 Dec. 2004, available at . See European Commission, ‘WTO-DDA: EU Ready to Go the Extra Mile in Three Key Areas of the Talks’, available at .

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front of a win-win situation, where it is in the mutual interest of the EC and its trading partners to reduce barriers to trade. The EC agenda is, thus, to seek better access for European services exporters in foreign markets and to secure a more transparent and predictable regulatory environment for services.56 For developing countries, it would also be beneficial since they depend on access to modern services, such as in the field of finance, telecommunications, transport and IT services, in order to obtain economic development and export growth. How can the EC achieve this goal? By requesting that WTO Member countries make a reduction in restrictions to and expansion of market-access opportunities for the European services industry. This is of high importance to the EC, since the services sector is the single most important economic activity in the EU. EU Member States should press for a wide-ranging EC approach to the Doha Round, aimed at tackling the main barriers to trade in services. Not surprisingly, tourism is the sector in which we find the highest number of bindings. Health and education, however, have the lowest number of commitments. This proves that the GATS is respectful of the diversified economic and social realities among its member countries.57 D.

Initial Offers

As for initial offers, the EC and its Member States,58 after giving careful consideration to the requests submitted by WTO Members, in particular by developing countries, tabled in April 2003 their initial offer in the framework of the ongoing services negotiations under the GATS and in the context of the DDA.59 The decision on the Doha Agenda work programme (the so-called July package) reached by the WTO General Council on 1 August 2004 provided renewed impetus to the services negotiations and set out a process for improving the quality of the offers submitted. Following the conditional offer from the EC and its Member States in services trade on 29 April 2003, the EC had been accused by developing countries of being protectionist in this sector.60 The EC offer was conditional on the submission of substantive offers 56.

57. 58. 59.

60.

For a historical perspective of trade in services for the EU, see Timmermans, Ch. ‘Common Commercial Policy (Article 113 EEC) and International Trade in Services’, in Capotorti, F., Eherlmann, C.-D., Frowein, J., Jacobs, F., Joliet, R., Koopmans, T. & Kovar, R. (eds), Du Droit International au Droit de l’Integration, Nomos Verlagsgesellschaft, 1987, 675-89. European Commission, ‘Trade in Services’, available at . As we know, the EC does not have a common external policy in services trade. Langhammer, R.J. ‘The EU Offer of Service Trade Liberalization in the Doha Round: Evidence of a Not-Yet-Perfect Customs Union’, Journal of Common Market Studies 43, no. 2 (2005): 311-325. See Communication from the European Communities and their Member States (Conditional Offer) on 29 Apr. 2003, available at .

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from WTO Members in sectors where the EC had made requests. The EC, therefore, retained its right to withdraw any elements of it at any time during the negotiations. As stated above, already in July 2002, the EC submitted its initial requests for improved market access in services to WTO Members.61 The sectors where the Commission proposed that the EC make no offer were health, audiovisual services, and education. On the other hand, the sectors where the Commission proposed that the EC make an offer were: professional services, computer services, business services, postal services, telecommunications services, construction and related engineering services, distribution, environmental services, financial services, tourism, news agencies, transport, and energy services. Moreover, all horizontal commitments were included (public utilities, investment, real estate, subsidies, and Mode 4). While the EC has important offensive interests in the area covered by Mode 4, developing countries have placed a particular emphasis on Mode 4. Many developing countries are dissatisfied with developed countries’ offers to them in Mode 4.62 The lack of quality offers in Mode 4 is often cited by delegations as a basis for their reluctance to commit to opening their services markets in other areas. Some developing countries also maintain that the lack of progress on negotiating issues of importance to them in agriculture, industrial goods, and rules hinders their ability and inclination to table more liberal offers in services. On the other hand, developed countries argue that the responsibility for the poor quality of offers is on developing countries. In the view of developed countries, the issue of linkage with other negotiating areas is a two-way street, i.e., substantial offers in services could facilitate negotiations in other areas of the trade agenda.63 Furthermore, some people argue that Mode 4 can actually be used as an incentive for making sure that developing countries conclude the Doha Round as well as future bilateral trade agreements.64

61

62

63

64.

See European Commission, Summary of the EC’s Initial Requests to Third Countries in the GATS Negotiations, July 1, 2002, available at http://trade.ec.europa.eu/doclib/docs/2004/ april/ tradoc_116821.pdf. Bernabe, J. & Cheng, S. ‘The Doha Round Negotiations on Services: An Overview,’ p. 3. Paper prepared for a seminar entitled Realizing the Doha Development Agenda as if the Future Mattered, at the Salzburg Seminar, Salzburg, Austria, February 16-21, 2007, available at http://www.gmfus. org/economics/ template/page.cfm?page_id=106 Bernabe, J. & Cheng, S. ‘The Doha Round Negotiations on Services: An Overview’, 3. Paper prepared for a seminar entitled Realizing the Doha Development Agenda As if the Future Mattered, at the Salzburg Seminar, Salzburg, Austria, 16-21 Feb. 2007. Personal views expressed by Charles Finny at the conference International Economic Law and National Autonomy: Convergence or Divergence?, Victoria University of Wellington Law School, Wellington, New Zealand, on 14 Dec. 2007.

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E.

Revised Offers

On 2 June 2005, the EC submitted a revised services offer in the Doha negotiations.65 The new proposal, which was submitted to the WTO on 2 June 2005, outlines how the EC is prepared to further open access to its services market in exchange for improved access to other WTO Members’ markets. As in the initial offer, the revised offer of the EC was conditional on other WTO Members making substantive offers in sectors where the EC has made requests. While ambitious in scope and responding in many ways to requests for access from developing countries, the EC’s offer safeguards public services such as education, health, and audiovisual services. It would allow lawyers, accountants, bookkeepers, architects, and engineers to open offices in the EU or to offer their services from abroad. Specialists such as computer programmers could obtain short-term residence permits through Mode 4. By furthering the improvements contained in the initial offer, which the EC had tabled in 2003, the revised EC offer provides additional opportunities as regards the movement of highly qualified natural persons. Following the May 2004 enlargement of the EU, the revised offer will extend access conditions offered in the EU to the new EU Member States. The offer therefore contains a significant number of commitments on the part of the new Member States, which they take in order to match the degree of liberalization already offered in the rest of the EU. This notably concerns the permitted length of stay, the number of sectors that are covered, and the length of the underlying contract. In general, no economic needs test can be applied within a numerical ceiling, whose level will be determined in the course of the negotiations. As a result, services companies will, for example, be able to transfer management trainees to their affiliated companies in the enlarged EU, so as to allow them to get up to one year of European work experience. Overseas companies with a contract to provide services in twenty-one important sectors will be able to send skilled employees to the EU to provide these services for up to six months at a time. Another improvement brought by the revised offer is to add legal services to those sectors where self-employed services suppliers based overseas will be able to enter the EU for up to six months at a time to provide services to clients based in any of the twenty-seven EU Member States. In all such cases, EU and national working conditions, minimum wage requirements and collective wage agreements will apply. EU Member States will also continue to be able to refuse entry to persons who pose a security threat or are considered to be at risk of abusing the terms of their entry. This revised offer covers horizontal commitments, MFN exemptions, and specific commitments in individual service sectors. By no means should the 65.

Communication from the European Communities and Their Member States (Conditional Revised Offer) on 2 Jun. 2005, available at .

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revised offer of the EC be construed as offering the privatization of public undertakings or as preventing the EC from regulating public services in order to meet national policy objectives. Like the United States, which showed an interest in continuing the lowering or elimination of equity caps on foreign investment, along with the binding of existing levels of cross-border services’ supply into other markets and expanded commitments in financial, telecommunications, energy, computer related, distribution, express delivery, and audiovisual services, the EC focused on many of the same sectors, with the exception of audiovisual services, where France’s insistence on protecting cultural diversity requires Brussels to exclude the sector from any liberalizing commitment. In addition, the EC also identified environmental services as a sector where they will continue to press trading partners to undertake commitments.66 EU Member States use two main instruments to enforce their national policy guidelines. First is the economic needs test. Article XVI:2 GATS permits resort to an economic needs test. Through such a test, when it comes to wholesale and retail services trade, the governments of Belgium, Denmark, France, Italy and Portugal set a limit on the number of department stores in order to prevent ruinous competition, to facilitate transport infrastructure planning, and to regulate the special distribution of stores. These need tests create uncertainty about the stability of market accessibility.67 The second instrument to enforce national policy guidelines is residence criteria. Companies are restricted in supplying specific insurance services through Mode 1 only if the head office is based in the EU. Residence criteria are also applicable to natural persons if they act in a position of responsibility on behalf of the company (i.e., the CEO, founder, board of directors, supervisory council, etc.). Such restrictions are often found in offers for trade in financial and insurance services. It is interesting to note that, although the European Union is a customs union in trade in goods, when it comes to services trade it has not yet reached the same stage of integration. How far the EU is from becoming a customs union in services trade is very difficult to assess because of the non-quantitative nature of trade restrictions in this sector. Serious differences in national policies seem to be the reason for lack of a customs union in services trade in the EU. An example is the discrepancy among EU Member States concerning the perception of Anglo-Saxon dominance in audiovisual services. External influences such as the Doha Round may help in the creation of a customs union for services trade, as was the case of industrial goods during the Dillon and Kennedy Rounds.

66. 67.

Bridges Weekly Trade News Digest, ‘Members Looking at Potential Compromises on Services’, vol. 11, no. 9, 14 Mar. 2007. Low, P. & Mattoo, A. ‘Is There a Better Way? Alternative Approaches to Liberalization under the GATS’, in Sauvé, P. & Stern, R. (eds), GATS 2000. New Directions in Services Trade Liberalization, Brookings, 2000.

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V.

WTO Mini-Ministerial Conference of July 2008

The WTO Mini-Ministerial Conference of July 2008 ended in a breakdown. Governments’ latest attempt to salvage a deal in the Doha Round broke down on 29 July 2008, as ministers acknowledged that they were unable to reach a compromise after nine days of a WTO Mini-Ministerial Summit. This raises the question of how to move forward in this complex international trade negotiations scenario.68 In order to achieve a successful deal, Pascal Lamy has said in the past that the basic ingredients of a Doha deal are clear: the United States must agree to deeper cuts to its ceiling on trade-distorting farm subsidies, the EC must offer more agricultural market-access,69 and developing countries such as Brazil and India must further reduce their industrial tariffs. This was due to a demand that the possibility of increasing tariffs by developing countries be incorporated in the deal to protect farmers from import surges under a special safeguard mechanism.70 Import-sensitive China and India were pitted against the US’s demands for predictable market access for farm products. A rational explanation for the failure of the multilateral trade talks is that countries such as India want to protect its poor and subsistence farmers, while the US and the EC negotiators are under pressure from powerful farm lobbies. As will be examined later, the services negotiating committee met during the miniministerial conference to finalize work on a text aimed at providing guidance on how to proceed in the services talks, ahead of the ’signalling conference’ that had been scheduled during the mini-ministerial conference. Bolivia, Cuba, and Venezuela maintained their opposition to the most recent services text, joined this time by Nicaragua. Those countries maintained that there was no need for a roadmap for the talks, arguing that the services provisions of the Hong Kong Ministerial Declaration provide sufficient guidance for the negotiations.71 According to Pascal Lamy, trade ministers that participated in the MiniMinisterial Conference ‘were very close to finalizing modalities in agriculture 68

69

70

71

Mercurio argues that systemic institutional impediments still exist, which not only hinder the successful conclusion of the Doha Round, but also prevent effective long-term institutional governance and vision. See B Mercurio ‘The WTO and its Institutional Impediments’ (July 2007) University of New South Wales Faculty of Law Research Series Working Paper 46 available at http://law.bepress.com/unswwps/flrps/art46/ (last visited 14 July 2007). See G-33 Ministers Call on Developed Countries to Take First Step to Break Doha Deadlock, BRIDGES WKLY. TRADE NEWS DIG., Mar. 21, 2007, http://www.ictsd.org/weekly/07-03-21/story1.htm The special safeguard mechanism is a system available under the WTO Agreement on Agriculture to WTO members that have converted non-tariff measures to tariff protection. It allows WTO members to impose additional tariffs on agricultural products if import volumes exceed defined trigger levels or if import prices fall below defined trigger prices. See Walter Goode, Dictionary of Trade Policy Terms, 5th ed., Cambridge University Press, 2007, p. 396. International Centre for Trade and Sustainable Development, “WTO Mini-Ministerial, Day Three: and Then There Were Seven,” 24 July 2008, available at http://ictsd.net/i/wto/englishupdates/14095/ (last visited September 12, 2008).

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and [non-agricultural market access]’72 in the framework of deals governing tariff and subsidy cuts that governments had hoped to strike. He said that ‘a huge amount of problems which had remained intractable for years have found solutions’,73 even though the talks ultimately failed on the extent to which developing countries would be able to protect farmers from import surges under a special safeguard mechanism. In his statement to the Trade Negotiations Committee during the July 2008 WTO Mini-Ministerial Conference, David Shark, a US trade official, took aim at India and China for ‘insisting on the ability to raise agricultural tariffs in violation of their current WTO commitments’,74 and ‘firmly refusing’75 to take part in sector-specific liberalization initiatives for industrial machinery, electronics and chemicals.76 That said, although the Mini-Ministerial Conference was going to focus on agriculture and industrial goods, trade in services is a central part of any final Doha Agreement. At the Mini-Ministerial Conference there was a signalling conference, in which WTO Members signalled where and how they plan to improve access to their services markets for other WTO Members. It was understood that, while the signals exchanged were important in measuring progress, they would not represent the final outcome of the negotiations. They would instead provide comfort to WTO Members by reflecting real progress in the services negotiations. In this sense, officials from several countries expressed satisfaction with the signalling conference on services trade liberalization held on 26 July 2008 in the framework of the July WTO Mini-Ministerial Conference in Geneva, at which participating countries – mostly developed and relatively large developing countries – provided indications of the sort of binding market-opening commitments they would be willing to undertake under a Doha Round Agreement. Such a signalling conference was just meant to provide a credible signal that the negotiations were moving forward. WTO Members acknowledged that, while they proceeded with services liberalization in their economies, the gap between existing levels of openness and current commitments continued to widen.77 Some participants stressed that a satisfactory outcome of the services negotiations could be one of the most significant dividends of the DDA, as a development Round. Most participants indicated their readiness to improve access conditions for Mode 4.

72. 73. 74. 75. 76. 77.

Bridges Weekly Trade News Digest, ‘WTO Mini-Ministerial: The Day After’, Issue 11, 30 Jul. 2008. Ibid. Bridges Weekly Trade News, ‘G-7 Talks on Special Safeguard Mechanism Inconclusive As Blame Game Heats Up’, Issue 9, 29 Jul. 2008. Ibid. BNA International Trade Daily, ‘U.S. Ups Pressure on China, India to Participate in Sectoral Tariff-Cutting’, 29 Jul. 2008. Lamy, P. ‘Services Signalling Conference’, JOB(08)/93, 30 Jul. 2008.

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On Mode 4, Indian commerce minister Kamal Nath was pleased about the ‘good movement by the United States and by the EU’78 since both WTO Members were prepared to make concessions on allowing more professionals from India and other developing countries to work temporarily in their markets.79 Mr Nath was also pleased about the concessions on Mode 1, since Modes 1 and 4 are important to India’s information technology sector. He stressed the importance of the domestic regulation aspect of the services negotiations. An Indian trade official said that the EC had suggested that it might consider lifting economic needs tests, a regulatory requirement that can make it nearly impossible to use Mode 4 access. Although the exercise of the July 2008 WTO Mini-Ministerial Conference does not represent the final outcome of the services negotiations, it has represented a step forward in the services negotiations.

VI.

Conclusion

There remains considerable potential for further multilateral services trade liberalization, even if the growth of South-South regional trade over the last decade has been quite remarkable; however, certain fields such as culture, education, health and public services remain a barrier to the current trend of services liberalization. Moreover, although agriculture seems to be the key issue to disentangle the Doha talks, as evidenced by the fatal results of the WTO Mini-Ministerial Conference of July 2008, opening up service markets remains a vital aspect of a successful outcome from the Doha Round. In this respect, many developing countries see sending services supplies under Mode 4 of the GATS to lucrative markets as one of the principal areas of negotiations during the Doha Round. Whether the development promise of the Doha Round is achieved will depend on the extent to which the present level of commitments under Mode 4 will be expanded. Finally, a better outcome might happen if deals on industrial goods, services and trade facilitation were hammered out first before turning to agriculture, instead of the reverse, as has been happening.

78. 79.

Bridges Weekly Trade News Digest, ‘Members Give Mixed Reactions to Lamy Compromise, Take “A Good Step Forward” on Services’, Issue 7, 27 Jul. 2008. International Trade Reporter, ‘U.S., EU Cite Moves in “Signaling” Talks On Services; India Likes “Mode 4” Openings’, vol. 25, no. 31, 31 Jul. 2008, 1128.

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