Sabrina Varma Project on Trade in Services Trade for Development Programme South Centre

Commonwealth Secretariat/TRALAC African Regional Workshop, Cape Town, South AfricaOVERVIEW OF WTO SERVICES NEGOTIATIONS POST HONG KONG: Implications for African Countries Sabrina Varma Project on Trade in Services Trade for Development Programme South Centre 10-11 April 2006

OUTLINE of PRESENTATION • Starting point: Cairo Development Benchmarks and Livingston Declaration for African Group/LDCs/ACP: preserving existing architecture; assessment; review of progress; progress in rules especially ESM; Article IV and LDC Modalities implementation; affirmation of right to regulate • G90 position going into HK and at HK • Ministerial Declaration (paragraphs 25-27) • Annex C : (paragraphs 3, 6, 7, 9, 12) • Modal, MFN exemptions and scheduling objectives (paragraph 1) • Rules negotiations (paragraph 4) • Domestic regulation negotiations (paragraph 5) • Timelines (paragraph 11) • Trade-related concerns of small economies (paragraph 8) • Technical assistance (paragraph 10) • Format: Text, Key points, Development and practical implications, Post HK State of Play (where relevant) • What is missing? • Concluding Remarks

General Comments • Essentially CTS SS Chair’s draft elements of the ministerial declaration laid out in Geneva in the lead up to HK remained intact • G90 proposal contributed to tempering HK outcomes • Relationship between contents of Ministerial Declaration and Annex C ambigious • From Doha mandate to HK outcomes shows a shift in emphasis not necessarily in the interest of development • Developing countries are being asked to pay in NAMA and services for the pressure being felt in agriculture by particularly the EC and US

HK Ministerial Declaration: Paragraph 25 (I) • “The negotiations on trade in services shall proceed to their conclusion with a view to promoting the economic growth of all trading partners and the development of developing and least-developed countries, and with due respect for the right of Members to regulate. In this regard, we recall and reaffirm the objectives and principles stipulated in the GATS, the Doha Ministerial Declaration, the Guidelines and Procedures for the Negotiations on Trade in Services adopted by the Special Session of the Council for Trade in Services on 28 March 2001 and the Modalities for the Special Treatment for Least-Developed Country Members in the Negotiations on Trade in Services adopted on 3 September 2003, as well as Annex C of the Decision adopted by the General Council on 1 August 2004.”

HK Ministerial Declaration: Paragraph 25 (II) • Key points: • Provides context of negotiations by recalling the objectives of the services negotiations • Makes reference to the GATS related principles set out in the Doha Ministerial Declaration, Negotiating Guidelines, LDC Modalities and July Framework • Development implications: • Important paragraph for developing countries as a way to ensure that negotiations remain accountable to the existing GATS architecture which recognises the importance of national policy objectives, individual country situations etc • Practical implications: • Provides principles for which negotiations and their outcomes must be consistent • Should be used to pursue existing development orientated mandates including assessment, review of progress of negotiations, implementation of Article IV

HK Ministerial Declaration: Paragraph 26 • Key points: • Recalls the flexibility accorded to developing countries in accordance with Article XIX of the GATS. • Draws on parts of paragraphs 1 and 2 of the Negotiating Guidelines by referring to achieving progressively higher levels of liberalisation whilst recognizing appropriate flexibility for individual developing countries. • Reference to negotiations taking into account the size of economies in their own right is taken from paragraph 3 of the Negotiating Guidelines • Special situation of LDCs is recognised consistently with GATS Article IV:3 and paragraph 4 of the LDC Modalities. • LDC are not ‘expected’to undertake new commitments – this is a reformulation of paragraph 4 of the LDC Modalities • Development implication: • Important provision for developing countries given it recognises the existing flexibilities and should continue to be used in the plurilateral and bilateral approach • Practical implications: • Up to developing countries to ensure this remains the cornerstone of negotiations • Unclear how the reference to size of economies may impact on negotiations in practise • Paragraph 4 of the LDC Modalities refers to Members ‘exercising restraint in seeking commitments from LDCs’ – this implies that LDCs are not expected to undertake commitments – this is made explicit in the Ministerial Declaration – this does not stop Members from requesting LDCs to undertake new commitments and LDCs

HK Ministerial Declaration: Paragraph 27 • “We are determined to intensify the negotiations in accordance with the above principles and the Objectives, Approaches and Timelines set out in Annex C to this document with a view to expanding the sectoral and modal coverage of commitments and improving their quality. In this regard, particular attention will be given to sectors and modes of supply of export interest to developing countries.” • Key points: • Refers to ‘intensifying negotiations in accordance with principles in paragraph 22-26 and Annex C • Objective is to expand sectoral and modal coverage’ and quality of commitments • “Particular attention to sectors and modes of supply of export interest to developing countries” is recognised • Practical implications: • Gives ambition to the negotiations with use of terms ‘intensify’, ‘expand’ and ‘improve’ • Developing countries need to ensure this remains consistent with the principles in paragraphs 25-26 • And consider benchmarks for ensuring sectors and modes of export interest are reflected

ANNEX C: Paragraph 3 (I) • “Members shall pursue full and effective implementation of the Modalities for the Special Treatment for Least Developed Country Members in the Negotiations on Trade in Services (LDC Modalities) adopted by the Special Session of the Council for Trade in Services on 3 September 2003, with a view to the beneficial and meaningful integration of LDCs into the multilateral trading system.” • Key points: • Presented under ‘Objective’ pillar • Commits Members to implement LDC Modalities with a view to their integration in the multilateral trading system • Development implications: • This is the main ‘development’ orientated objective in Annex C and should be taken seriously and to its full advantage • If implemented, would enable LDCs to address various important development issues such as strengthening supply side capacity, access to distribution channels, targeted market access, training and technology transfer. • Practical implications: • Provides a commitment to fully implement the LDC Modalities and therefore broadens ownership at political level • African non LDC countries should consider ways in which to support LDCs in implementing the LDC Modalities • Other: • The operational aspect of this paragraph is set out under paragraph 9, under the ‘Approaches’ pillar of Annex C, which is discussed below. • Should also be read with Para 47 in the Ministerial Declaration which reinforces implementation of the LDC Modalities, giving priority to sectors and modes of interest to LDCs, especially mode 4.

LDC Modalities Post HK State of Play • On CTS agenda since 2003 • Despite active efforts of LDCs in 2005, not much progress had taken place to implement the LDC Modalities: in June submitted a broad paper on a possible way forward and September cluster submitted a note on special priority and a question-answer document. EC submitted a response to the questions. • Since Hong Kong, LDCs recently submitted a proposal on a legal mechanism for according special priority to LDCs through an Understanding (to have similar effect as enabling clause under GATT which currently does not exist for GATS) • LDCs are also in preparation to revise their joint request on mode 4 which was initially submitted in 2005 • LDCs need to consider engaging in rules and domestic regulation given their implications

ANNEX C: Paragraph 9 (I) • “Members in the course of negotiations, shall develop methods for the full and effective implementation of the LDC Modalities, including expeditiously: - Developing appropriate mechanisms for according special priority including to sectors and modes of supply of interest to LDCs in accordance with Article IV:3 of the GATS and paragraph 7 of the LDC modalities. - Undertaking commitments, to the extent possible, in such sectors and modes of supply of identified, or to be identified, by LDCs that represent priority in their development policies in accordance with paragraphs 6 and 9 of the LDC Modalities. - Assisting LDCs to enable them to identify sectors and modes of supply that represent development priorities. - Providing targeted and effective technical assistance and capacity building for LDCs in accordance with the LDC Modalities, particularly paragraphs 8 and 12. - Developing a reporting mechanism to facilitate the review requirement in paragraph 13 of the LDC Modalities.”

ANNEX C: Paragraph 9 (II) • Key points: • Under ‘Approaches’ pillar – therefore operational aspect • Refers to paragraphs 6, 7, 8, 9, 12, 13 for implementation • Calls on Members to assist LDCs in identifying their sectors and modes of export interest • Members to undertake commitments ‘to the extent possible’ (para 6) • Reporting mechanism for facilitating reporting requirement • Practical implications: • Reiterates what is already in the LDC Modalities • Does not provide actual way forward, despite LDC proposals • LDCs should focus on specific objectives and related strategy (ie. enabling clause) • Consider how to make technical assistance related to LDC Modality implementation

ANNEX C: Paragraph 6 • “Pursuant to the principles and objectives above, we agree to intensify and expedite the request-offer negotiations, which shall remain the main method of negotiation, with a view to securing substantial commitments.” • Key Points: • Under ‘Approaches’ pillar • ‘Intensify and expedite’ request-offer negotiations • Justification is ‘pursuant to principles and objectives’ • Objective to secure ‘substantial commitments’ • Request-offer remains main method of negotiation • Practical implication: • Provides the stage for a higher level of ambition in market access negotiations

ANNEX C: Paragraph 7 (I) • “In addition to bilateral negotiations, we agree that the request-offer negotiations should also be pursued on a plurilateral basis in accordance with the principles of the GATS and the Guidelines and Procedures for the Negotiations on Trade in Services. The results of such negotiations shall be extended on an MFN basis. These negotiations would be organized in the following manner: (a) Any Member or group of Members may present requests or collective requests to other Members in any specific sector or mode of supply, identifying their objectives for the negotiations in that sector or mode of supply. (b) Members to whom such requests have been made shall consider such requests in accordance with paragraphs 2 and 4 of Article XIX of the GATS and paragraph 11 of the Guidelines and Procedures for the Negotiations on Trade in Services. (c ) Plurilateral negotiations should be organised with a view to facilitating the participation of all Members, taking into account the limited capacity of developing countries and smaller delegations to participate in such negotiations.” • Key points: • Plurilateral approach would be in addition to bilateral request-offer negotiations • In accordance with GATS and Negotiating Guidelines • Results on MFN basis • Groups of Members can submit collective requests – identifying objectives for that sector or mode • Receiving Members ‘shall consider’ the request in accordance with paragraphs 2 and 4 of Article XIX and 11 of the Negotiating Guidelines • Participation of Members should be facilitated given the limited capacity of developing countries and smaller delegations

ANNEX C: Paragraph 7 (II) • Development implications: The plurilateral requests raise important systemic issues related to: - classification - domestic regulation particularly harmonisation in interests of foreign service suppliers - universal service obligations and meeting public policy objectives - flexibility provisions are yet to be tested in this context - it may lead to a benchmark of commitments for all Members - it does not address Article IV objectives or LDC modalities in terms of providing market access in sectors and modes of interest to developing countries and LDCs • Practical implications: • Commitments being extended on an MFN basis presents an anomaly if it is a plurilateral approach • Unclear how it relates to bilateral request-offer negotiations because plurilateral approach will work to create certain expectations • Entering into plurilateral requests is not mandatory given Members ‘shall consider such requests’– therefore a Member can consider the request (there is an onus to do so) but can decline based on Article XIX:2 whereby it may not be consistent with the Member’s national policy objectives or development situation, and in any case developing countries can liberalise fewer sectors and transactions • Article XIX:2 will therefore be a critical buffer for developing countries in responding to plurilateral requests which are likely to be ambitious. Developing countries should also refer to paragraphs 2 and 12 of the Negotiating Guidelines • Defensively, the reference to Article XIX:4 and paragraph 11 of the Negotiating Guidelines could be problematic given they refer to liberalisation being advanced and directed towards increasing the general level of specific commitments – which may place pressure on developing countries • Will place constraints on developing countries involved in plurilateral approach due to need for capital based experts to be present

ANNEX C: Paragraph 7 Post HK State of Play (III) • 71 initial offers and 31 revised offers as of April 2006: overall not much progress in areas of interest to developing countries • End March and early April cluster devoted to plurilateral meetings (only WPDR and formal CTS/SS retained in clusters whilst CTS/Regular session and other subsidiary bodies will meet before or after cluster so that more time is allowed for plurilaterals/bilaterals • So far, meetings have not resulted in any outcome – have been of clarification nature where information is exchanged on existing commitments and/or relevant domestic regulations, questions asked • To date there are 18 plurilateral requests on:- telecommunications - financial services- mode 3- MFN exemptions (audiovisual)- construction services- computer related services- legal services- energy services- environmental services- architectural, engineering and integrated engineering services- maritime services- postal and courier services (including express delivery) - audiovisual- logistics- cross border supply- air transport services- private education- distribution

ANNEX C: Paragraph 7 Post HK State of Play (IV) • Developed countries: it tends to be the same core group of main demandeurs in all plurilateral requests – these countries are also deemed recipients of their requests – therefore they have to meet the commitments they are asking of others which may be sensitive in many cases (eg. in mode 4 element of requests, US is only deemed a recipient of the requests) • Developing countries: mainly bigger developing countries have been targeted although there are exceptions (no LDCs). There are some developing countries who are also demandeurs with developed countries • Developing countries have submitted 2 plurilateral requests in services related to agriculture and mode 4 • It is not clear how process will continue • It is likely that further technical discussion and negotiations will take place at bilateral level • It is possible that there will be focus on a short list of sectors

ANNEX C: Paragraph 7 Post HK State of Play (V) • Plurilateral requests tend to contain elements of the modal objectives adopted in Hong Kong under para 1 of Annex C • Focus on mode 3 market access through removal or reduction of :- type of legal entity- foreign equity participation- nationality/residency requirements- number of foreign service suppliers and firms • Removal of ENTs • Mode 4 requests in possible areas of interest remain unambitious - still based on professional categories, limited to horizontal commitments/limitations • In some cases specific flexibility is provided (eg. legal services) • Reference papers, model schedules and particular classifications are examples of tools used to seek liberalisation through the plurilateral requests

ANNEX C: Paragraph 12 • “The Special Session of the Council for Trade in Services shall review progress in the negotiations and monitor the implementation of the Objectives, Approaches and Timelines set out in this Annex.” • Development implications: • Limited review of progress given it is focused on objectives and approaches and timelines set out in annex • No mention of having to take into account principles or having to meet existing GATS objectives • Practical implications: • No reference to existing mandate for review of progress of negotiations under paragraph 15 of the Negotiating Guidelines • Push for completion of assessment • Ensure mandated review of progress of negotiations are encompassed in this process given it relates to implementation of the development orientated GATS provisions

Modal, MFN exemptions and Scheduling Objectives (paragraph 1) I • “In order to achieve a progressively higher level of liberalisation of trade in services, with appropriate flexibility for individual developing country Members, we agree that Members should be guided, to the maximum extent possible, by the following objectives in making their new and improved commitments:” • Key points (of chapeau): • Calls on Members to be guided to the maximum extent possible by modal, MFN exemptions and scheduling objectives (each objective discussed in detail below) – what does this mean? • Objectives are guidelines towards a course of action and Members are to follow as much as possible • Development implications: Do these guidelines promote development? • too prescriptive • infringes on Article XIX: 2 flexibilities in GATS • focused on liberalisation without development consideration • Members have their own development objectives that do not match paragraph 1 objectives • Members should be able to determine their own objectives for commitments • Example: ensuring GATS commitments strengthens domestic service suppliers and consumers • Practical implications: • Do Members have to follow these guidelines? • Best endeavour language and therefore countries are not bound to follow them • However, pressure may exist to follow these guidelines, and in response, recall paragraph 25 of the Declaration which reaffirms GATS objectives and principles – so, if objectives goes against these, then do not be guided by these objectives

Modal, MFN exemptions and Scheduling Objectives (paragraph 1) II Mode 1 objectives • “(i) commitments at existing levels of market access on a non-discriminatroy basis across sectors of interest to Members” • Development implications: • goes against right of developing countries to liberalise at a pace according to development levels, which can be below existing levels of market access • Many developing countries’ mode 1 service suppliers are nascent and therefore should have policy space to become competitive globally • “Sectors of interest to Members” treats developing countries and developed countries’ liberalisation interests on an equal basis • “(ii) removal of existing requirements of commercial presence” • Development implications: • commercial presence requirements: regulatory mechanism, technology and skill transfers, etc.

Modal, MFN exemptions and Scheduling Objectives (paragraph 1) III Mode 2 objectives “(i) commitments at existing levels of market access on a non-discriminatroy basis across sectors of interest to Members” • Development implications: • Same as for mode 1 • “(ii) commitments on mode 2 where commitments on mode 1 exist” • This is to ensure commitments allow services providers who can deliver services both for mode 1 and 2 to do so • e.g. a bank in Country A can deliver financial services to a foreign customer who is physically present in Country A (mode 2) or electronically to a customer abroad (mode 1) • Development implications: • Could be positive for developing country service providers who have the capacity to supply services through modes 1 and 2 • Defensively, a Member may want to limit foreign customers for the benefit of domestic customers in mode 2

Modal, MFN exemptions and Scheduling Objectives (paragraph 1) IV Mode 3 objectives • “(i) commitments on enhanced levels of foreign equity participation” • Development implications: • Threatens ability of domestic providers from developing and increases risk of take-overs and loss of domestic entities • Foreign ownerships may remove full ability to regulate depending on domestic regulations • “(ii) removal or substantial reduction of economic needs tests” • Development implications: • Controversial because some developing countries have requested removal of discriminatory ENTs in mode 4 and other areas from developed countries’ schedules • However, ENTs are development policies • e.g. applying and ENT to assess whether additional foreign services suppliers will crowd out domestic service suppliers

Modal, MFN exemptions and Scheduling Objectives (paragraph 1) V Mode 3 objectives (continued) • “(iii) commitments allowing greater flexibility on the types of legal entity permitted” • Development implications: • Removes policy space to adopt development policy options, e.g. requirements for cooperation with domestic entity • Seeks to increase liberalisation commitments that allow for greater benefits by foreign suppliers/investors relative to nationals • For example: expand commitments beyond joint ventures and partnerships (which provide for benefits of nationals) to 100% foreign owned commercial presence Mode 4 objectives • “(i) and (ii) new or improved commitments on the categories CSS, IP, Others, de-linked from commercial presence, and ICT and BV...” • New or improved commitments are to be done to reflect inter alia: • Removal or substantial reduction of ENTs • indication of duration of stay and possibility of renewal • Weak objective and most developed countries have this in their schedules • Development implications: • Weak objectives compared to other modes • Same points on ENT from mode 3 • No mention of broader coverage of sectors and skills, however, inclusion of “inter alia” may allow for such an objective in negotiations • Mode 4 category discussion in CTS not concluded • If categories based on EC proposal on categories, then it would not allow for low skilled coverage

Modal, MFN exemptions and Scheduling Objectives (paragraph 1) VI MFN exemptions • “(i) removal or substantial reduction of exemptions from MFN treatment” - response to the lack of reduction in MFN exemptions from the CTS Review • “(ii) clarification of remaining MFN exemptions in terms of scope of application and duration” • Development implication: • Does not consider development aspects of MFN exemptions of developing countries • Practical implication: • Reduction of exemptions and clarification are subject to CTS review of MFN exemptions Scheduling commitments • “(i) ... clarity, certainty, comparability and coherence in scheduling and classification ... Through adherence to inter alia Scheduling Guidelines...” • Practical implications: • No value added • “inter alia” could mean that other types of guidelines could be utilised • May allow for the use of model schedules, new/revised classifications proposed by Members that have not been multilaterally agreed, etc. • “(ii) ... scheduling of any remaining ENTs adheres to the Scheduling Guidelines...” • Practical implications: • Scheduling Guidelines states: “regarding ENTs the entry should indicate the main criteria on which the test is based, e.g. if the authority to establish a facility is based on a population criterion, the criterion should be described concisely” – this is vague • Reiterating this has no value added in the Declaration

Modal, MFN exemptions and Scheduling Objectives (paragraph 1) VII • Conclusions • These objectives fail to reflect the development considerations unique to developing countries in negotiations • Modal objectives should be subject to negotiation, i.e. they should be requested of a Member through the request-offer process • How far Members can be guided by these objectives should be based on national development objectives • Most importantly, paragraph 1 does not force Members to adopt its objectives

Chair Report on sectoral and modal objectives (paragraph 2) • “As a reference for the request-offer negotiations, the sectoral and modal objectives as identified by Members may be considered (footnote: Chair Report to TNC (TN/S/23) without legal standing” • Key points: • Chair Report is controversial because written on “Chair’s own responsibility” based on some consultations and not agreed by all Members • Some Members wanted reference to this document for legitimacy in use in negotiations • Addition of footnote does not have an impact on the legality of the Chair Report • Development implications: • Does not consider concerns and interests of many developing countries • No development objectives in the Chair Report • Objectives strictly on liberalising without development consideration • Practical implications: • Chair Report “may be considered” and therefore Members can consider them in their requests • Members are not obligated to consider these objectives in their response to requests • Does not rule out other forms in which sectoral and modal objectives may be communicated to Members, e.g. supplementing the Chair Report

Rules Negotiations (paragraph 4) I • “Members must intensify their efforts to conclude the negotiations on rule-making under GATS Articles X, XIII and XV in accordance with their respective mandates and timelines:” • Key Points (on chapeau): • Chapeau: “Members must intensify efforts to conclude negotiations with respective mandate and timelines” • “Intensifying efforts” does not oblige Members to conclude negotiations before the end of this round • Development implications: • Important rules disciplines, e.g. for ESM and subsidies, that can serve as important development policies, may not be concluded by the end of this round • According to the Guidelines and Procedures for Negotiations, rules negotiations should conclude before market access negotiations

Rules Negotiations (paragraph 4) II Emergency Safeguard Measures (ESM) • “(a): ... engage in more focused discussion ... with the technical and procedural questions relating to the operation and application of any possible ESM in services.” • Key Points: • Positive because it presumes to settle the “feasibility” question • Negative because it leaves unanswered the “desirability” question • Does not refer to Members proposals as is for government procurement and subsidies • Development implications: • Without a clear mandate to conclude negotiations Members may not have in place an ESM for their liberalisation commitments • An ESM is key to ensuring GATS liberalisation does not cause irrecoverable damage to domestic service suppliers • Article XIX:2 and Article XXI procedures are not adequate • Practical implications: • Members are to discuss ESM technically this year – continuation of the status quo

Rules Negotiations (paragraph 4) III: ESM Post HK State of Play • Little overall progress in rules • Last formal meeting of WPGR in February 2006 • Little headway on ESM despite 10 years of discussion • ASEAN minus main proponents • Moral support provided by some other developing countries • February 2006 room document by ASEAN minus addressing various issues raised in prior discussions related to feasibility and S&D issues

Rules Negotiations (paragraph 4) IV Government procurement (GP) • “(b): ... engage in more focussed discussion and... put greater emphasis on proposals by Members, in accordance with Article XIII of the GATS.” • Article XIII: 1 states that MFN, market access and national treatment does not apply to GP • Current proposals on the table are mainly from the EC for a market access framework for GP in services • Development implications: • Government procurement is an important development tool for developing countries, e.g. allows governments to provide equitable and sustainable services to people and support important and necessary domestic service suppliers, etc. • Practical implications: • Developing countries must maintain their rejection of market access in GP based on Article XIII: 1 • If the EC pushes their proposals on market access, then developing country Members may have to submit counter proposals

Rules Negotiations (paragraph 4) V:GP Post HK State of Play • Discussions focused on EC proposal for framework on GP • S&D, thresholds, procedural rules and non-discrimination raised

Rules Negotiations (paragraph 4) VI Subsidies • “(c): ... intensify their efforts to expedite and fulfil the information exchange... engage in more focused discussions on proposals by Members, including a possible working definition of subsidies in services” • Key points: • Declaration mandates continuation of early stages of discussion in negotiations • Unclear message on whether a definition of subsidies is possible • Development implications: • Disciplines on subsidies, which can ensure developing countries maintain subsidies for development purposes and fair competition with developed countries, may not be concluded by the end of this round • Practical implications: • Continues status quo in negotiations

Rules Negotiations (paragraph 4) VII: Subsidies Post HK State of Play • Switzerland presented response to a questionnaire on information exchange • Issues related to public services, working definition of a subsidy and geographical coverage were raised • Members agreed for the WTO Secrétariat to update a previous note on a compilation of views relating to the definition of a subsidy

Domestic Regulation negotiations (paragraph 5) • “Members shall develop disciplines on domestic regulation pursuant to the mandate under Article VI:4 ... before the end of the current round of negotiations. We call upon Members to develop text for adoption. In so doing, Members shall consider proposals and the illustrative list of possible elements for Article VI:4 disciplines (reference to JOB(05)/280) • Key point: • Clear mandate to conclude negotiations before the end of this round • Development implications: • Need to ensure strong development objectives are maintained, enhanced in disciplines and the right to regulate is upheld (defensively) and balancing this with offensive interests such as disciplines for qualification requirements which impact mode 4 • Critical question is scope of these negotiations in light of necessity test • How to ensure disciplines not too burdensome for developing countries? • Practical implications: • Negotiations will move quickly • Developing countries with interest in strengthening current proposals, e.g. SDT, must submit proposals as soon as possible and engage in negotiations

Domestic Regulation negotiations (paragraph 5): Post HK State of Play • WPDR has met 3 times in 2006 so far in both informal and formal modes (next informal planned for May) • Recent proposals by Mexico and Switzerland on technical standards, proposals by Brazil et al and Small Economies • Under own responsibility WPDR Chair provided a road map, state of play and calender of meetings with focus on issues to address such as Licensing/ qualification requirements and procedures; Technical standards; transparency, Objectives; Scope and application; definitions; Development considerations

Timelines (paragraph 11) I • (a) and (e): Shall submit outstanding initial offers as soon as possible and strive to do so before 31 July • Development implications: • Initial offers must be submitted only after developing countries have undertaken domestic assessments of GATS liberalisation and national development objectives • Developing initial offers must consider Article XIX: 2 flexibilities • Practical implications: • “As soon as possible” – if there is no possibility for developing countries to submit an initial offer, then they are not forced to do so • “Strive” means to try and does not oblige definite initial offer submission before the end of this round • Developing countries should insist on an assessment and review to understand the development implications of GATS liberalisation and how to ensure implementation of Articles XIX: 2 and IV

Timelines (paragraph 11) II • (b): Plurilateral requests by 28 February • Already discussed above • Development implications: • Plurilateral requests must be considered in the same way bilateral requests have been considering, by utilising: • Article XIX: 2 flexibilities • Article IV objectives and • recognition of development objectives of GATS • Requests should be met only if they are in line with national development objectives • Practical implications: • Members should not have to submit new requests if their earlier requests remain outstanding, however, earlier requests could be submitted again plurilaterally

Timelines (paragraph 11) III • (c) second round of revised offers by 31 July • Aiming to receive revised offers before the summer break • Development implication: • Same implications as for initial offers • Practical implication: • Only need to submit a revised offer if there is something new to offer • Will be linked to progress in other areas such as NAMA and agriculture

Timelines (paragraph 11) IV • (d) Final draft schedules of commitments by 31 October • May not only be a formality – Members may use this as another opportunity to offer something and to “correct” earlier offers, which could include removing previous offers for commitments • Development implications: • Assessment and review, which hold important development objectives, are missing in timelines • Practical implications: • Because initial and revised offers are not binding developing countries can modify their previous offers in any way they choose • i.e. it may be necessary to go back on previous offers if it is in line with development objectives, reduce previous liberalisation offers if now deemed too ambitious, or match offers with concessions received from trading partners in services and/or other areas • Developing countries should insist on an assessment and review to understand the development implications of GATS liberalisation and how to ensure implementation of Articles XIX: 2 and IV before the end of the round

Technical Assistance (paragraph 10) (I) • “Targeted technical assistance should be provided through, inter alia, the WTO Secretariat, with a view to enabling developing and least-developed countries to participate effectively in negotiations. In particular and in accordance with paragraph 51 on Technical Cooperation of this Declaration, targeted technical assistance should be given to all developing countries allowing them to fully engage in the negotiation. In addition, such assistance should be provided on, inter alia, compiling and analyzing statistical data on trade in services, assessing interests in and gains from services trade, building regulatory capacity, particularly on those services sectors where liberalisation is being undertaken by developing countries.”

Technical Assistance (paragraph 10) (II) • Key points: • Calls on the WTO Secretariat and others to provide technical assistance to enhance developing countries and LDCs’ participation in negotiations • Assistance to take place through: • Compiling and analysing statistical data • Assessing interests and gains from services trade • Building regulatory capacity especially for sectors developing countries liberalise • Part of assistance to occur through the Integrated Framework • Development implications: • Text lacks language on development objectives although Members could insist on incorporating development objectives in the different areas of technical assistance • Enhancing participation in negotiations should not be limited to increasing liberalisation but ensuring development objectives are met • Practical implications: • Members should ensure development aspects are considered in technical assistance by for example: • Statistical data could include the way in which key sectors are related to development gains in developing countries • Assessment could include objectives from paragraph 14 of the Guidelines and Procedures for Negotiations, e.g. objectives of Article IV, and qualifying gains as “development” gains for developing countries • Building regulatory capacity could be conducted with the primary objective of carrying out development policies and regulations especially with regards to foreign service suppliers

WHAT IS MISSING? • Implementation of Article IV: especially mode 4 • Assessment • Review of Progress of Negotiations (negotiating guidelines) • Rules first • LDC Modalities?

CONCLUDING REMARKS • From Doha to HK shows increasing shift towards market access • Developing countries and LDCs should focus on those elements of the negotiations which will support and strengthen domestic supply side capacity and assist in obtaining important human development objectives given the level of development of their services sectors • Negotiation based development benchmarks in GATS should comprise: assessment; review of progress; LDC modalities and Article IV implementation; conclusion of an ESM and further progress in subsidies vis-à-vis market access; and right to regulate and policy space remain based on individual country requirements for the present and future • Developing countries should have comprehensive/consistent positions on how negotiations are pursued in all areas of GATS and be based on national requirements • All flexibilities and existing GATS architecture remains intact and should be preserved and exercised • In a broader context need to learn lessons from agriculture and avoid a ‘race to the bottom’ in services • Unity remains key for developing countries and LDCs

Thank you South Centre Chemin du Champ d’Anier 17 Case Postale 228 1211 Geneva 19 Switzerland +41 227918050 varma@southcentre.org www.southcentre.org

Sabrina Varma Project on Trade in Services Trade for Development Programme South Centre