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Developing Countries & Services Negotiations 6-7 June, 2006

Explore India's significant role in global services negotiations, delving into its offensive stance, key objectives in Mode 4 and Mode 1, and achievements in pushing ahead its interests. Gain insights into India's position, challenges faced, and advancements made in enhancing market access and addressing regulatory barriers.

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Developing Countries & Services Negotiations 6-7 June, 2006

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  1. Developing Countries & Services Negotiations 6-7 June, 2006 Role of Developing Countries in Services Negotiations: Offensive or Defensive The Case of India by Arpita Mukherjee

  2. Services sector & India • Dominant sector – contributes significantly to GDP (over 50 %) and employment • Services exports account for around 40% of total exports • World trade in commercial services increased by 11 % to 2.4 trillion in 2005 • India’s share in world trade of commercial services is increasing at a fast pace • Relative ranking of India as exporter of commercial services improved significantly from 34 in 1995 to 15 in 2004 and 10 in 2005 • Share of India’s export in total exports of commercial services was 2.8% in 2005

  3. Services sector & India • Shift from traditional exports such as transport and travel to newer areas such as software, health • Increase in cross-border trade via new technologies- telemedicine, call centres, medical and legal transcriptions, outsourcing services, on-line services, etc. • Exporter of knowledge based services and importer of infrastructure services • Significant development in sectors such as telecommunication

  4. India’s Negotiating Position • Performance and global competitiveness of the sector determines government’s negotiating position • Negotiating position changed since the Uruguay Round • India now has an offensive interest in services negotiations • Different from India’s position in agriculture and NAMA • Why offensive? • India has autonomously liberalised most of the service sectors • Need for infrastructure investment • Exports increased - Indian service providers are facing several barriers in markets of export interest • Limited gains in areas of export interest in Uruguay Round – Mode 4 • Focused on liberalisation of trade through Mode 4 and Mode 1

  5. What India wants in Mode 4? • Commitments in categories of CSS/IP delinked from commercial presence • Uniformity in Mode 4 categorization • Removal/reduction in ENT/labour market test • Exemption of social security • Increased duration of stay and possibility of renewal • Abolition of quota • Not using absolute wage parity as a precondition • Allow intra firm labour mobility • Separate temporary from permanent movement • Improve transparency in immigration and labour market regulations and in applications of limitations • Disciplining Domestic Regulation

  6. What India wants in Mode 1? • Commitments in Mode 1 across a wide range of commercially meaningful sector/sub-sectors for professionals services, computer related services, health services, education, etc. • Similar commitments wherever possible for Modes 1 and 2 • Ensure that commitments address the inadequacy of GATS classification to cover all Mode 1/2 services and takes into account technological developments in future

  7. Pushing Ahead Offensive Interest • India is a major player in the services negotiations • India’s revised offer in August 2005 shows significant improvements over initial offer – one of the best revised offers • India supported complementary approach to negotiations • India is in favour of a prescribed and qualitative approach and not a quantitative one • India supported plurilateral negotiations • Address Domestic Regulation related barriers

  8. Achievements So Far…. • Some improvement in horizontal offers in Mode 4 • Expanded to include contractual service suppliers, independent professionals, graduate trainees (EU offer) • Requirement of economic needs and labour market tests removed/relaxed for intra-corporate transferees, professionals, business visitors (Canada, EU) • Period of stay extended for business visitors, executives, senior managers, specialists (Canada, New Zealand) • Clarified definitions of service provider categories and associated qualification and training requirements • Some expansions in Mode 1 commitments • Annex C of Hong Kong Ministerial Text addresses our some of our concerns in Modes 1 and 4

  9. Annex C : Hong Kong Ministerial Text • In Modes 1 and 2, members should undertake commitments at existing levels of market access on a non-discriminatory basis • Remove the requirement of commercial presence in Mode 1 • In Mode 4, new or improved commitments on the categories CSS (Contractual Services Suppliers), IP (Independent Professionals) delinked from commercial presence and new improved commitments in ICT (Intra-Corporate Transferees) & BVs (Business Visitors). • In Mode 4, removal/substantial reduction of ENT and indication of the duration of stay and possibility of renewal • Develop disciplines on Domestic Regulation

  10. Plurilateral Negotiations • Complimentary approach to enhance market access commitments • Brings together a critical mass of developed and developing countries – around 35 countries are involved in discussions • Plurilateral requests have been made in 16 sectors • Requests have been made in all four modes and MFN exemptions • Requests are mostly made by developed economies - US and EU made requests in 12 sectors each, Japan in 13 sectors • Target groups are developing countries – Philippines, India, Malaysia, South Africa, Brazil • India received requests in 14 sectors, MFN exemptions for audio-visual services

  11. Plurilateral Requests made by India India is the coordinator of Mode 1/2 and Mode 4 and cosponsor of requests in computer and related services and architecture, engineering and integrated engineering • Modes1/2 • Made jointly with Chile, Mexico, New Zealand, Pakistan, Singapore, etc. to both developed and developing countries - US, EC, Canada, Australia, Brazil, Argentina, China, Philippines, Malaysia, etc. • Full commitments in wide range of sectors/sub-sectors • Commitments are sought at two digit level for certain sectors such as computer related services to take into account technological developments • Commitments to reflect commercially meaningful opportunities

  12. Plurilateral Requests made by IndiaCont……. • Mode 4 • Made jointly with developing countries ( Argentina, Brazil, Chile, China, Mexico, Pakistan, etc.) to developed countries (US, EC, Australia, Canada, Japan, etc.) • Sought new/improved commitments in - CSS and IP delinked from commercial presence • Clarifies definitions and categories for CSS/IP • Wage parity should not be precondition for entry • ENT should be removed/substantially reduced • Duration of stay for one year or for duration of contract (if longer) with provision for renewal • Transparency in Mode 4 commitments

  13. Plurilateral Requests made by IndiaCont……. • Computer and Related Services • Made jointly with developed and developing countries - Australia, Canada, US, EC, Chile, Mexico, Pakistan, etc. • Made to Argentina, Brazil, China, Indonesia, Thailand, Egypt, Philippines, South Africa, etc. • Full MA and NT commitments in Modes 1,2 & 3 and commitments in Mode 4 in accordance with Annex C

  14. Response to Requests Received • India is a serious player in plurilateral negotiations • Indicated that it can meet requests • Substantially in certain sectors such as construction and related engineering services, and maritime transport services • Partially in sectors such as energy, telecommunication • Difficult to meet requests in sectors such as Distribution (retail), legal services, audio-visual services • India has already made an ambitious revised offer - whether India would improve it or not would depend upon what it get in return in areas of export interest

  15. Issues and Concerns • How to balance offensive and defensive interests? • Domestic reforms requirements - in certain areas the regulatory regime is still evolving • Agriculture vis-à-vis services • India’s major trading partner, the US, have not shown much interest in liberalizing Mode 4 • The US has indicated that India, Brazil and ASEAN countries are target countries. Target sectors are telecommunication, computers, express delivery, energy, audio-visual and distribution services – these are sensitive sectors for India

  16. Issues and ConcernsCont……. • Will there be meaningful liberalisation? • It is likely that developed countries may meet Mode 1 request • Some developed countries would partially meet Mode 4 request • How to address Domestic Regulation related barriers? • Working together with other developing countries to push ahead the negotiations

  17. Thank You!

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