THE CURRENT SERVICES ROUND
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THE CURRENT SERVICES ROUND. Services: General perception. NOT TRADABLE AND NOT STORABLE Simultaneity of production and consumption Role of local establishment STRONG GOVERNMENT INVOLVEMENT Existence of natural monopolies, public service obligations, etc.

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Services general perception
Services: General perception

  • NOT TRADABLE AND NOT STORABLE

    • Simultaneity of production and consumption

    • Role of local establishment

  • STRONG GOVERNMENT INVOLVEMENT

    • Existence of natural monopolies, public service obligations, etc.

    • Infrastructural importance of services (transport, telecom, etc.)

    • Role of non-economic objectives (social, cultural, safety)

  • INTANGIBLE

    • Quality criteria for services providers rather than for products

  • NO TARIFFS

    • Access conditions determined by regulation, quotas etc.


But...

  • Certain services - international transport and communication - have been traded for centuries

  • Services are supplied in conjunction with goods (finance, insurance, marketing, etc.)

  • Services have become tradable as a result of:

    • technical progress (e-banking, tele-medicine, distance learning)

    • government retrenchment

    • market liberalization and regulatory reform



Importance of Services Trade

Limited role of services in total world

trade (~ 20 % on BOP basis) but ...

  • more rapid growth than goods trade

  • GATS broader in coverage than BOP

  • role of services in trade facilitation


Services trade has grown faster in developing than in high income countries
Services trade has grown faster in developing than in high-income countries

Source: World Bank




GATS: Scope, coverage, definition countries

  • MEASURES AFFECTING TRADE IN

    SERVICES AT ALL GOVERNMENT LEVELS

  • ALL SERVICES(except governmental services

    and measures affecting air traffic rights)

  • FOUR MODES OF SUPPLY

    • Cross-border supply

    • Consumption abroad

    • Commercial presence

    • Presence of natural persons


Modes of supply
Modes of supply countries

EXAMPLE (Health)

Tele-diagnosis from Country B into A

A’s resident obtains hospital treatment in B

Hospital operator from B has subsidiary in A

Physician from B practices in A

MODE

1. Cross-border Trade

2. Consumption Abroad

3. Commercial Presence

4. Movement of Natural

Persons


Purpose of the gats
Purpose of the GATS countries

  • Assists governments that want to reduce their trade barriers and/or consolidate reforms

  • Contributes to coordination of economic policy-making

  • Better access to foreign markets

  • Transparency and predictability of trading conditions

  • Efficient and impartial settlement of disputes


Gats key obligations
GATS: Key Obligations countries

  • Most-Favoured Nation (Article II)

    • Applies to all sectors

  • Obligations implying openness to international competition (Market Access and National Treatment) only apply in accordance with each Member’s schedule of commitments

    • Only in selected sectors

    • Subject to conditions and limitations inscribed


Starting point of the negotiations countries

(‘progressive liberalization’

pursuant to Article XIX)


Pattern of commitments sectoral distribution
Pattern of Commitments: countriessectoral distribution



Level of Treatment for countriesCommitted Sectors


Starting point: Applied Regimes countries

  • Actual regimes tend to be far more liberal in many countries than commitments suggest.

  • Widening gap between UR schedules and

    • schedules of recently acceded countries

    • access conditions negotiated under FTAs


Services countries

Negotiations:

Process and

State of Play

(Specific Commitments)


How services negotiations work
How Services Negotiations Work countries

From the outset:

  • Essentially a bilateral process

  • Some key principles:

    • No sector or mode excluded a priori

    • Flexibility for developing countries

    • Starting point: existing commitments

    • No change in basic structure of the GATS


STATE OF PLAY countries(July 2006)

INITIAL OFFERS:

71 Schedules (covering 95 Members*)

REVISED OFFERS:

31 Schedules (covering 55 Members*)

*Counting EC Members (EC 25) individually




Sub sectors committed before and after offers all members
Sub-Sectors Committed: countriesBefore and After Offers (all Members)


Offers main features iii
Offers: Main features (III) countries

“Few, if any, new commercial opportunities would ensue for service suppliers. Most Members feel that the negotiations are not progressing as they should."[1]

Chair of CTSS, July 2005 (TN/S/20)


  • Sobering Assessment: countries

  • Long delays

  • (initial target date: March 2003)

  • Modest achievements

  • (number of sectors and substance)

  • Uneven participation of developing

  • countries

  • Little change in MFN Exemptions

  • _____________________________________________________________________________

  • Little progress in rules negotiations


How negotiations work
How Negotiations Work countries

  • Since Hong Kong Ministerial:

    • Plurilateral request/offer process

    • LDCs not expected to undertake new commitments

    • No formula, but set of multilateral objectives per mode


Negotiating Objectives (I) countries

Modes 1 to 3 (examples)

  • No requirement of commercial presence (mode 1)

  • Commitments at existing levels of access (modes 1 & 2)

  • Removal or substantial reduction of ENTs

    (modes 2 & 3)

  • Enhanced levels of foreign equity, more types of legal entity (mode 3)


Remaining Risks... countries

  • Contamination from AG & NAMA

  • Lack of political resolve

  • Exaggerated expectations(access abroad as a substitute for own reform)

  • Impact of regionalism in services


Reason for hope nevertheless
Reason for Hope, Nevertheless countries

  • Experience with previous trade rounds

  • Too much at stake

  • No credible alternative to WTO

  • Domestic liberalization pressure in (infrastructure-related) services

    (> competiveness of user industries,

    threat of industrial relocation)


WHAT NOW? countries


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