| Vol. 1 No. 6 | A Monthly NewsLetter of Ministry of Commerce |
June 1999 |
From the Editorial Desk The Uruguay Round brought the services sector, for the first time, into the fold of multilateral trade negotiations. According to the General Agreement on Trade in Services (GATS), the Most Favoured Nation (MFN) and "transparency" (viz. publication of all laws and regulations) are the two obligations that apply to all services. The commitments, viz., market access and national treatment apply to services that are to be opened up according to specific negotiated commitments only, subject to conditions incorporated in the schedule of commitments. The Agreement covered all the four modes of delivery of a service, including cross-border supplies, "commercial presence" and "movement of natural persons". The General Agreement on Trade in Services is coming up for review in the year 2000. Preparations for the negotiations would involve deciding the market access that we can give and the market access that our services would like to have in other countries. This involves filing of schedules in respect of 12 major sectors and 161 sub-sectors. Preparatory work in this regard has already been initiated. Movement of Natural Persons, especially professionals, is of special importance to us as India enjoys a distinct comparative advantage in this area covering a whole range of services from computer and related services to hotel, health, engineering, construction and other professional services. The process of economic liberalisation involving opening up of capital intensive services such as banking, telecommunications etc., must be matched by increased access for the temporary movement of our professional people in services of export interest to us. However, hardly any commitments have been made by developed countries in regard to the fourth mode for delivery of services under GATS i.e. movement of natural persons. Negotiations on this will also form part of GATS negotiations in 2000. Excerpted alongside are the highlights of issues and India’s concerns in the area of services, as outlined in a paper circulated by India in the General Council of the WTO.
Services Negotiations : Issues and India’s concerns
Article XIX of the General Agreement on Trade in Services (GATS) clearly provides that WTO Members shall enter into successive rounds of negotiations, beginning no later than 1 January 2000, with a view to achieving progressively higher level of liberalisation in the areaof services.
The first point to note is that the experience of GATS we have had so far is limited to three years. The Singapore Ministerial Conference* noted that fulfilment of the objectives agreed at Marrakesh for negotiations on the improvement of market access in services had proved to be difficult. However, since then, negotiations in the Basic Telecommunications and in Financial Services have been successfully concluded. In Professional Services, we are close to completing the work in the accountancy sector. However, we regret to note that in the one area of tremendous importance to developing countries in general and India in particular, i.e. Movement of Natural Persons, the results have been most unsatisfactory. If the mandated negotiations to commence in the year 2000 are to have any meaning at all for developing countries, this area of Movement of Natural Persons must figure prominently. But more on that later. Like the delegation of Australia, we too believe that the negotiations on the Safeguards, Government Procurement and Subsidies may be folded into the next round of negotiations.
In the three years that have gone by, it is also important to ask the question, has the participation of developing countries increased in the Services area as foreseen by Article IV ? Article IV had provided that the goal of increasing participation of developing countries would be accomplished through strengthening of their domestic services capacity, through improved access to distribution channels and information networks and through the liberalisation of market access in sectors and modes of supply of export interest to developing countries. Regretfully action in these three areas has been far from meaningful leading to inadequate participation of developing countries in this crucial area.
As is well known, the GATS is based on a positive list of commitments undertaken by individual Members in the form of Schedules.Therefore, Members undertake market access commitments in sectors of their choice as provided for under Article XVI of GATS. This fundamental feature, therefore, will no doubt govern also the mandated negotiations due to commence in January 2000. To properly evaluate the value of specific commitments, considerable work on classification and statistics must be undertaken. This information must also be made available mode-wise.
Progressive liberalisation to secure balance of rights and obligations
The mandate of the negotiations due to commence in January 2000 may be found under part IV of GATS entitled "progressive liberalisation" in Article XIX. The notion of "progressive liberalisation" involving a gradual approach is, therefore, fundamental to the new round of negotiations. This process of liberalisation, besides being progressive, shall take place with a view to promoting the interests of all participants on a mutually advantageous basis and to securing an overall balance of rights and obligations. The new mandated negotiations, if they are to be successful, must be mutually advantageous to all WTO Members and must preserve the balance of rights and obligations. The GATS framework was agreed upon after careful consideration and keeping in mind the interests of all participating countries in order to preserve the overall balance of rights and obligations. We would, therefore, not favour any change in the present architecture of GATS involving the four modesof supply.
Article XIX also provides that the process of liberalisation to be launched in the mandated negotiations must take place with due respect for national policy objectives and the level of development of individual Members, both overall and in individual sectors. It further provides that there shall be appropriate flexibility for individual developing country Members for opening fewer sectors, liberalising fewer types of transactions, progressively extending market access in line with their development situation and when making access to their markets available to foreign service suppliers, attaching to such access conditions aimed at achieving the objectives referred to earlier by us in Article IV aimed at increasing participation of developing countries.
Mandated negotiations from 2000: India’s approach
It is against this background that India approaches the mandated negotiations in Services due to commence in January 2000. It calls upon the developed WTO Members to approach these negotiations, conscious of their responsibilities and obligations towards the developing countries enshrined in the GATS.
An important aspect relating to the mandated negotiations is the choice of sectors. This is important because the choice will determine to a great extent whether or not developing countries will benefit from these Services negotiations. It will also determine to what extent the objectives of Article IV are realised.
In this context, India continues to emphasise the primordial importance of mode four i.e., Movement of Natural Persons. Detailed reasoning as to why this is important for us has been presented by India at various meetings. Suffice it to say that the commitments by developed countries in this area in the mandated negotiations will determine the overall balance of rights and obligations of countries like India.
The major problem in this area that India faces vis-a-vis commitments by developed countries is the insistence by the latter on what is known as an economic needs test (ENT). The ENT is a huge trade barrier to the Movement of Natural Persons as service suppliers. ENT detracts from the predictability of trade and nullifies the commitments otherwise undertaken in the form of market access. So, one of the things that India would look forward to in these negotiations is the total elimination of ENT from the horizontal commitments of developed Member States. In the alternative, the ENT must, at a minimum, be based on transparent and objective criteria.
Yet another barrier to trade through Movement of Natural Persons is the administration of the visa regime. Thus, efforts must be made to streamline visa regimes when related to trade-related Movement of Natural Persons. In this context, the notion of GATS visas based on automatic entry or multiple entry of long duration must be explored by developed country Members.
Sectors of interest to developing countries such as India would broadly include, but not be limited to, Computer and Related Services; Professional Services; Health Related and Social Services; Tourism and Travel Related Services; Transport Services; Other Business Services; Construction and Related Engineering Services and Audio-visual Services.
In conclusion, subject to the conditions mentioned in Article XIX and the objectives mentioned in Article IV, India approaches the mandated negotiations due to commence in January 2000 with the hope that the outcome will promote the interests of all WTO Members, particularly the developing country Members and will secure an overall balance of rights and obligations.
(Excerpts from the statement made by India in the General Council of the WTO in November ’98 on the forthcoming Services negotiations) |
In This Issue F SERVICES NEGOTIATIONS : ISSUES & INDIA’S CONCERNS
F DELIVERY OF SERVICES The four modes F NEED FOR GREATER MARKET ACCESS FOR MOVEMENT OF PROFESSIONALS
F TRADE IN SERVICES : OPPORTUNITIES AND CONSTRAINTS Project commissioned by Commerce Ministry F SERVICES - NEW OPPORTUNITIES FOR EXPANSION OF EXPORTS Business Implications of GATS Arrangement F GENERAL AGREEMENT ON TRADE IN SERVICES (GATS) Excerpts from "Indian Industry’s guide to WTO" F MONTHLY UPDATE FROM PMI/GENEVA (15TH MAY - 15TH JUNE, 1999) F SCHEDULE OF MEETINGS AT THE WTO, GENEVA : JULY
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