WTO Trade in Services III

1. WTO Trade in ServicesIII Professor dr. juris Ola Mestad Centre for European Law and Scandinavian Institute of Maritime Law International Economic Law Course Spring 2009

2. Today’s Items • Education and national treatment – Article XVII • Disciplining regulatory behaviour – Article VI • Maritime Services negotiations • Services and investment

3. I. What Is Special With Education? • Only 46 WTO members have made education commitments • What about your own country? • Education is a key feature of national identity building • It has a strong cultural component • ”Investment” in education is probably the single most important investment that a country can undertake • This makes it different from other public services like health and welfare, that are based on a distributive justice rationale

4. The Case of Jamaica’s Higher Education Commitments • Jamaica has bound higher education in its schedule without qualifications • September 2003: Request for like allocation of public funding to institutions ”boasting franchised degrees from a number of foreign universities” • It was ”evident that many Caribbean governments lacked the capacity … for formulating effective policy responses” (The University of the West Indies)

5. Public Funding and Article XVII National Treatment • 1. In the sectors inscribed in its Schedule, and subject to any conditions and qualifications set out therein, each Member shall accord to services and service suppliers of any other Member, in respect of all measures affecting the supply of services, treatment no less favourable than that it accords to its own like services and service suppliers. • 2. A Member may meet the requirement of paragraph 1 by according to services and service suppliers of any other Member, either formally identical treatment or formally different treatment to that it accords to its own like services and service suppliers. • 3. Formally identical or formally different treatment shall be considered to be less favourable if it modifies the conditions of competition in favour of services or service suppliers of the Member compared to like services or service suppliers of any other Member.

6. National Treatment and Public Funding • Is public funding covered by the National Treatment obligation? • ”all measures affecting the supply” (Art. XVII.1) • The relevant test is the effect on ”the conditions of competition” (Art. XVII.3) • Likeness test in respect of education • Leading to same exams or similar levels? • Public funding to other subjects is covered

7. What About Direct Government Supply of Education • Does national treatment with respect to public funding also cover direct government supply of education? • Interpretation of whether government supply is a ”measure” • In my opinion, it is not • A measure is a kind of intervention • Examples from the definition in Art. XXVIII: ”a law, regulation, rule, procedure, decision, administrative action, or any other form” • As long as the government is only funding its own activities, national treatment does not require funding of international education suppliers • If the government is also funding national individual suppliers, the national treatment obligation applies

8. The Concept of Government Supply of Education • Government supply also covers sub-levels of government like provinces, counties, municipalities • Should it also cover supra-levels of government like The University of the West Indies? • This is delegated governmental activites, but delegated to a supranational or intergovernmental institution • Is that really different from delegation of activities to sub-levels? • Compare the definition of ”measures by Members” in Art. I.3(a) • Would a denial of analogy be a dicrimination of poorer small contries, that really should be encouraged to co-operate between themselves?

9. II. Regulatory Behaviour • Quantitative restrictions – Article XVI Market Access • Covered last time • Qualitative restrictions – Article VI Domestic Regulation • Hotly debated issue – why? • Mainly still to be negotiated

10. Article VI: Domestic Regulation • 1. In sectors where specific commitments are undertaken, each Member shall ensure that all measures of general application affecting trade in services are administered in a reasonable, objective and impartial manner. • 2. (a) Each Member shall maintain or institute as soon as practicable judicial, arbitral or administrative tribunals or procedures which provide, at the request of an affected service supplier, for the prompt review of, and where justified, appropriate remedies for, administrative decisions affecting trade in services. Where such procedures are not independent of the agency entrusted with the administrative decision concerned, the Member shall ensure that the procedures in fact provide for an objective and impartial review. • (b) The provisions of subparagraph (a) shall not be construed to require a Member to institute such tribunals or procedures where this would be inconsistent with its constitutional structure or the nature of its legal system.

11. Article VI: Domestic Regulation con’t • 3. Where authorization is required for the supply of a service on which a specific commitment has been made, the competent authorities of a Member shall, within a reasonable period of time after the submission of an application considered complete under domestic laws and regulations, inform the applicant of the decision concerning the application. At the request of the applicant, the competent authorities of the Member shall provide, without undue delay, information concerning the status of the application.

12. Article VI: Domestic Regulation con’t • 4. With a view to ensuring that measures relating to qualification requirements and procedures, technical standards and licensing requirements do not constitute unnecessary barriers to trade in services, the Council for Trade in Services shall, through appropriate bodies it may establish, develop any necessary disciplines. Such disciplines shall aim to ensure that such requirements are, inter alia: • (a) based on objective and transparent criteria, such as competence and the ability to supply the service; • (b) not more burdensome than necessary to ensure the quality of the service; • (c) in the case of licensing procedures, not in themselves a restriction on the supply of the service.

13. Article VI: Domestic Regulation con’t • 5. (a) In sectors in which a Member has undertaken specific commitments, pending the entry into force of disciplines developed in these sectors pursuant to paragraph 4, the Member shall not apply licensing and qualification requirements and technical standards that nullify or impair such specific commitments in a manner which: • (i) does not comply with the criteria outlined in subparagraphs 4(a), (b) or (c); and • (ii) could not reasonably have been expected of that Member at the time the specific commitments in those sectors were made. • (b) In determining whether a Member is in conformity with the obligation under paragraph 5(a), account shall be taken of international standards of relevant international organizations applied by that Member. • 6. In sectors where specific commitments regarding professional services are undertaken, each Member shall provide for adequate procedures to verify the competence of professionals of any other Member.

14. III. Two Paradoxes of Liberalization of Maritime Services • Maritime transport is one of the globally most liberalized service sectors, but it seems nearly impossible to reach a binding liberalization agreement in the WTO • Most of the total volume of goods covered by WTO GATT is transported by ship but there seems to be no connection between binding liberalization of trade in goods and performance of or trade in maritime services

15. Typical Maritime Sector Restrictions • Cargo sharing agreements • Bilateral • Liner conferences • National preferences • Restricted access to government and strategic cargoes • Cabotage • Cargo reservations • Limitations on local presence and investment • Other • Tax treatment

16. Annex on Negotiations on Maritime Transport Services 1.  Article II and the Annex on Article II Exemptions … shall enter into force for international shipping, auxiliary services and access to and use of port facilities only on: • (a) the implementation date to be determined under paragraph 4 of the Ministerial Decision on Negotiations on Maritime Transport Services; or, • (b) should the negotiations not succeed, the date of the final report of the Negotiating Group on Maritime Transport Services provided for in that Decision. 2.  Paragraph 1 shall not apply to any specific commitment … which is inscribed in a Member’s Schedule. 3.  From the conclusion of the negotiations referred to in paragraph 1, and before the implementation date, a Member may improve, modify or withdraw all or part of its specific commitments in this sector … .

17. The Involved Interests • EU, Japan, Norway and other shipping countries want liberalization • EU and Norway are aligned • Joint initiatives • Previously there has been some tactical disagreement, also within the EU • The difficult, and most important player, the US, is reluctant • Changed emphasis over the years? • Cabotage • Mulitimodal transport • Developing countries • Some transformation of interests over the last years?

18. Doha Round Status March 2009 • All negotiations have broken down (July 2008) • Maritime services still not generally covered under GATS MFN obligations • Countries with scheduled commitments in the relevant sector are bound by their commitments as well as by the MFN obligation (Art. II) • The sector negotiations apparently even more difficult (but not so generally important) than agriculture and the special safeguard measure to protect developing countries against import surges in food which finally made the negotiations brake down in July

19. IV. Services and Investment • Mode 3 – commercial presence is in reality including investment Article I.2 c) • The failed request for a broader agenda for the Doha round to include trade and investment • See Van den Bossche 90-91, Dolzer & Schreuer 26-27 • European Communities – Developing countries

20. Performance Requirements under TRIMs (under GATT) • Agreement on Trade-Related Investment Measures • Members, • …Desiring to promote the expansion and progressive liberalisation of world trade and to facilitate investment across international frontiers so as to increase the economic growth of all trading partners, particularly developing country Members, while ensuring free competition; • …            Recognizing that certain investment measures can cause trade-restrictive and distorting effects;

21. TRIMs con’t • Article 2: National Treatment and Quantitative Restrictions • 1. Without prejudice to other rights and obligations under GATT 1994, no Member shall apply any TRIM that is inconsistent with the provisions of Article III or Article XI of GATT 1994. • 2. An illustrative list of TRIMs that are inconsistent with the obligation of national treatment provided for in paragraph 4 of Article III of GATT 1994 and the obligation of general elimination of quantitative restrictions provided for in paragraph 1 of Article XI of GATT 1994 is contained in the Annex to this Agreement.

22. TRIMs Annex: Illustrative List • 1. TRIMs that are inconsistent with the obligation of national treatment provided for in paragraph 4 of Article III of GATT 1994 include those which are mandatory or enforceable under domestic law or under administrative rulings, or compliance with which is necessary to obtain an advantage, and which require:  • (a) the purchase or use by an enterprise of products of domestic origin or from any domestic source, whether specified in terms of particular products, in terms of volume or value of products, or in terms of a proportion of volume or value of its local production;  or • (b) that an enterprise’s purchases or use of imported products be limited to an amount related to the volume or value of local products that it exports. • …