CUTS Institute for Regulation & Competition

1. CUTS Institute for Regulation & Competition Training Programme on Commercial and Economic Diplomacy 22-26 October 2007, Royal Orchid, Jaipur Doha Round Market Access Negotiations in Services Exercise on Identification of Possible Trade Offs Analysis of the Identification Exercise By B K Zutshi October 25, 2007

2. 2 Post Exercise Presentation • Step 1 • To gauge the actual and the potential International competitiveness of various service sectors, in any case of those sectors where requests have been received through sectoral studies • Such a sectoral study would have brought out the current state of the regulation of the sector, current reform process, if any, and/or possible agenda for future reform • Step 2 • Consultations with all stakeholders on future possible reform and on possible commitments, their nature and extent B K Zutshi

3. 3 Post Exercise Presentation Contd… • Step 3 • Use the outcome of the first two steps to decide on the requests to be made on your trading partners, and • To make the initial offer, which will be related to the offers of the trading partners • Step 4 • Take the measure of your own difficulties in accepting the requests on you and that of your trading partners of accepting your requests • Step 5 • On that basis draw up a tentative list of what you can offer and in return what you expect to receive • Since the negotiations are a protracted process and reiterative in nature, steps 2, 3, 4 and 5 may have to be repeated several times B K Zutshi

4. 4 Post Exercise Presentation Contd… • Analysis • To the extent that India has a reform and liberalization agenda under implementation, there is a degree of flexibility available in making concessions • That is also a drawback in services negotiations inasmuch as reversal of policy is not easy and is harmful to the domestic industry, and therefore binding is not of critical importance to your partners, particularly in mode 3 • This acts as a disincentive for your trading partners in meeting your requests in cases of political sensitivity • This may call for going beyond autonomous liberalization and pre- commit further liberalization B K Zutshi

5. 5 Post Exercise Presentation Contd… • Analysis contd… • In view of our strong competitive edge in IT-enabled and knowledge-based services, it is in our interest to seek across the board liberalization under mode 1 for all service sectors except financial and transportation services, at least in respect of business to business services. This is all the more necessary because of increasing protectionist pressures in major developed countries to introduce protectionist regulations in the current open regimes. • Another area of interests is liberalization under mode 4, at least in respect of professional services and contract services. This is the area of greatest sensitivity among the developed countries, particularly in the US. B K Zutshi

6. 6 Post Exercise Presentation Contd… • Analysis contd… • We should refrain from making commitments in services where we have not yet built a sound regulatory system. The examples are those of municipal services like water supply and waste management. However in order to get commitments in areas of substantial export interest to India, one could consider pre commitment on the basis of a reform programme. • This may even call for cross-sectoral concessions. India has some flexibility in NAMA B K Zutshi

7. 7 Post Exercise Presentation Contd… • Analysis contd… • In the 28thh September CTS-SS meeting in Geneva India’s Ambassador expressed India’s position on the issue in the following words : • [India] expect[s] to see genuine responses from our major trading partners on modes 1 and 4. Without clear signals in this regard , I am afraid we will not be able to realize our shared objectives of an ambitious outcome. For some of us at least, the lack of ambitious outcome in services would severely, perhaps fatally, impact the prospects of an early conclusion of the round. B K Zutshi