Progress of WTO Services Negotiations on Maritime Transportation

1. Progress of WTO Services Negotiations on Maritime Transportation Hiroyuki Nishida Director,International Negotiations Office, International Shipping Division, Maritime Bureau, Ministry of Land, Infrastructure, Transport and Tourism (MLIT) 10 June 2010

2. History of WTO Services Negotiations (Liberalization of maritime transport) 1986: Commenced negotiation 1994: Agreement reached at the ministerial meeting -Agreement Establishing the WTO, GATS adopted (put into effect in 1995) -For the three sectors, maritime transport, finance and basic telecommunications services, agreement was not reached, and negotiation to be continued. Uruguay Round (1986～1994) 1994: Commenced negotiation 1996: For finance and basic telecommunications services, agreement reached.Only for the maritime transport, negotiation interrupted. For this sector alone, agreement was not reached. Negotiation continued for the three sectors (1994～1996) Doha Round (2001～　 　) Jan. 2001: Commenced negotiation at the ministerial meeting (Doha) Dec. 2005: Agreed upon holding multilateral conferences in addition to bilateral negotiations, at the ministerial meeting (Hong Kong)<Japan assumes the presidency of the multilateral conference for the maritime transport sector> Jul. 2006: Negotiation interrupted at the G6 ministerial meeting Jan. 2007: Negotiation resumed at the annual meeting of the World Economic Forum. Jul 2008: At the ministerial-level meeting (Geneva), discussion developed for broad agreement on negotiations in 2008, but no agreement was reached, with a large difference in opinion between developed and developing countries for the agricultural sector. * It is stipulated that, at the Doha Round, discussions should be comprehensively made on the agricultural sector, NAMA (non-agricultural market access) sector and services (including maritime transpor) sector, and agreement should be reached on comprehensive commission. * The maritime transport is one of the six important negotiations subject sectors of the Japanese services area (maritime transport, computer, telecommunications, distribution, construction and finance). 1

3. Structure of WTO and GATS World Trade Organization (WTO) Overview Set up in January 1995, the WTO is an international organization aimed at accelerating deregulation on trade of goods and services among multiple countries. Headquartered in Geneva, it had 153 member states (districts) and areas as of October 2008. Basic Principles of the GATS Most favored nation (MFN) Treatment: Every member state shall equally give the same treatment to any other member state. Market Access (MA): Every member state shall not take any limitations listed on access to national market. National treatment (NT): Every member state shall give the same treatment to individuals and businesses from any other member state as it gives to its domestic individuals and businesses. 2

4. Promotion of Free and Fair Shipping Market through WTO Challenges ○MFN treatment requirement of the GATS isl not enter into force in the Maritime transport sector only.No secure fair competition conditions. ○Many members have not made substantial commitments.No way to prevent the introduction of protectionist measures Approach Maritime Friends Group promotes free and fair competitive conditions on oceangoing shipping through actions shown below. ○In February 2006, 13 co-sponsor members presented “the Model Schedule on Maritime Transport Services” as model commitment along which they requested 26 recipient members to make their offer. China has changed from recipient to co-sponsor later. Target for Request (a) Maritime Transport Services (b) Maritime Auxiliary Services (c) Additional Commitment ex）Commitment of use of port services 　*Maritime Friends Group：Australia, Canada, China, EC, Hong Kong, Iceland, Japan, Mexico, NZ, Norway, Panama, The Republic of Korea, Switzerland and Chinese Taipei (14members) *Target members：USA, Argentina, Brazil, ASEAN etc.(25members) 3

5. ・Marrakesh Agreement Establishing the World Trade Organization (WTO Agreement) entered into force on January 1, 1995 andconsists of 16 articles and 4 annexes. WTO has 153 members as of September 2009. Negotiations of Maritime Transport Services on WTO ・Annex 1B:General Agreement on Trade in Services（GATS） （consists of 29 articles, 8annexes and Schedules of the members) -applies to measures by Members affecting trade in services.(Article I 1.) • In March 2006, 13 co-sponsor members * presented “the Model Schedule on Maritime Transport Services” shown below as model commitment along which they requested 26 recipient members to make their offer. (*14 members at present) • As of March 2010, 10 recipients (including U.S.A)have not made commitments/ offers in International Freight Transport. Furthermore, 8recipients have not made commitments/ offers at all in maritime transport services). Target for Maritime Transport liberalization： (a)Maritime Transport Services and (b) Maritime Auxiliary Services ※ ※(b) Maritime Auxiliary Services: Maritime cargo handling, Storage and Warehousing, Customs Clearance, Container Station and Depot, Maritime Agency and Freight Forwarding Services

6. State of play of the Liberalization of Maritime Transport Services ・ Model Schedule on Maritime Transport Services is to promote the liberalization of Maritime Transport. ・The most important service is ”Maritime Transport Services” of Mode 1（Cross-border supply）. ・At present many members have few commitments/offers in Maritime Transport Services. It is important to expand commitments/offers in order to limit the possibility to take protectionist measures. Image of member’s commitments/offers Possibility to take protectionist measures Possibility to take protectionist measures Additional Commitment Ex）Commitment of use of port services such aspilotage, towing and tug assistance, etc. Maritime Auxiliary Services Ex） Commitment of access to cargo handling service, maritime agency service, etc. Scope of Commitment Additional Commitment Ex）Commitment of use of port services such aspilotage, towing and tug assistance, etc. Maritime Auxiliary Services Ex） Commitment of access to cargo handling service, maritime agency service, etc. Maritime Transport Services Ex)Commitment of international transport (freight and passengers) Maritime Transport Services Ex)Commitment of international transport (freight and passengers) Recipients which have not made commitments/offers at all in Maritime Transport Services （8members） Recipients which have made commitments/offers in Maritime Transport Services（17members） Co-sponsors （14members） 5