Transcript Services - CUTS International

Services Negotiations in Doha
Round:
Concerns of South Asia
WTO Doha Round and South Asia: Linking Civil Society with
Trade Negotiations
9-10th March 2005,
Colombo, Sri Lanka
By
Pranav Kumar
CUTS Centre for International Trade, Economics &
Environment, India
Email: [email protected]
Presentation Coverage
 Global trade in services
 Services sector in South Asia
 A recap of the services negotiation in WTO
 Current status of services negotiation in WTO
 South Asian strategy in the Doha round
 South Asia’s major interests
Global Trade in Services (some
features)
Trade in services has grown faster than
merchandise
 60% of global output
 30% of global employment
 20% of global trade
 World services trade growth – 155%
between 1990-2002; mfg. – 97% and
Ag. – 40%
Global trade in services
(contd.)
The composition of FDI has shifted
towards services:
 Early 1970s – one-quarter of the world
FDI
 1990 – less than one-half
 2002 – two-third of total FDI
The composition of services FDI is
also changing
Global Trade in Services
(contd.)
Developing countries’ share has increased:
 In last 15 years - a four fold increase in
services export from developing cts.
 Increase in share in global services exports –
14% in 1985-89 to 20% in 2000.
 Share in global outward FDI in services
climbed from 1% in 1990 to 10% in 2002.
Global Trade in Services
Holds an immense potential in terms of
further expansion of world trade:
 By 2050 the world services exports
would exceed merchandise
 In case of USA this situation would
come much earlier – by 2037
Global Trade in Services
Developing countries likely to benefit more:
 Global gain of $260bn p.a. by eliminating all
post UR barriers – 1/2 of it from services (Dee
et al 2000).
 Benefits vary from under 1% to over 50% of
GDP (GEP 2002, WB)
 Significant gain for DCs – 1.6% (India) to
4.2% of GDP if tariff-equivalents of protection
cut by 1/3 in all countries (Chadha et al 2000)
 Increased developed countries’ quotas by 3%
of their labour force generates gains of
Services Sector in South Asia
Commonalities:
 Important sector in terms of its contribution
to GDP – ranging between 40-50 %.
 Second most important sector after
agriculture in providing employment
 Remittances – South Asia is the second
largest remittance recipient area (20%)
 Greatly endowed in semi-skilled and
unskilled labours
Services Sector in South Asia (contd.)
Differences:
 Except
India and Sri Lanka other three countries
witnessed a decline in their services export in post WTO
period.
Exports of commercial services from South Asia,
1993-03
30000
Bangladesh
Million dollars
25000
India
20000
Nepal
15000
10000
Pakistan
5000
Sri Lanka
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Ye ars
Services Sector in South Asia
Differences:
 B’desh and Pak are net importers while India,
S.Lanka, Nepal have trade surplus.
Services Exports and Imports in $mn, 2003
Exports
Imports
Net trade
India
25043
21593
3450
Nepal
267
197
70
Sri Lanka
1385
1003
382
Pakistan
1485
3095
(-)1610
Bangladesh
404
1676
(-)1272
Countries
Services Sector in South Asia
Differences:
 Except India, others have advantage
only in mode 4. India’s interest lies in
mode 1 and 2 in addition to Mode 4.
Services Negotiations in the WTO
 Initially many countries were skeptical and
opposed
 High degree of flexibility – in rules and market
access
 UR only a beginning; GATS required more
negotiations
 Further negotiations started in 2000
 End of 1st Phase In March 2001 – adoption of
“negotiating guidelines and procedures”
 DDA and July Package
March 2001 “Negotiating Guidelines
and Procedures”
Adoption of “request-offer” approach for negotiating new
specific commitments on:
 National treatment
 Market access
 Additional commitments
Mandate members to continue negotiations on
“outstanding issues”:
 Emergency Safeguard Mechanism (ESM)
 Disciplines on domestic regulation
 Disciplines on govt. procurement and subsidies
Services in Doha Dev. Agenda
 March 2001 guidelines as the basis for
continuing the negotiations
 To pursue Art. XIX objective of “progressively
higher levels of lib. of trade in services”.
 Flexibility for DCs - freedom to open fewer
sectors; progressive ext. of market access
 The mandated neg. was supposed to
conclude on 1 January 2005.
Services in “July Package”
 Fresh deadline for submission of revised
offers
 Stress on high-quality offers, particularly in
sectors and modes of export interest to DCs
 Special attention to be given to LDCs
 Emphasis on mode 4
 To intensify efforts on rule-making under
GATS
 Targeted technical assistance to DCs
Current Status of Negotiations
“The services negotiations are in a bad
situation. If there isn’t a decent services
package at the end of the day, it’s very
difficult to imagine any meaningful outcome
on other items”
---- Hamid Mamdouh, Director of
WTO Trade in Services Division
“What we have on table is very poor. We have a
daunting task over the next few months.”
---- Alejandro Jara, C’man of CTSSS
Current Status of Negotiations
 Nearly two years after the deadline for
countries to make initial offers, only 47 have
submitted
 Most of the offers put forward to date are
horizontal in nature and lack sectoral
commitments
 The three most popular service sectors in
regards to improved offers are – financial,
telecommunication and business
Current Status of Negotiations
 USA expressed its inability to table a better
offer in Mode 4.
 Only in the area of domestic regulation some
momentum has built up.
 Before the May 2005 deadline for first or
revised offers and the next services cluster in
June several informal meetings have been
planned.
 A special session on LDCs shall be held in
next services cluster.
South Asia’s Strategy in Doha Round
 India has been very proactive. Made its
initial conditional offer in January 2004
 Sri Lanka also made its initial offer in
September 2003.
 Bangladesh and Nepal are exempt from
making any offers.
 Pakistan is yet to make its initial offers.
India’s Strategy in Services
Negotiations
 Probably the first DCs to make a
comprehensive submission on Mode 4 in
Nov. 2000
 Offered to undertake extensive commitments
under Mode 1 & 4
 substantially improved access to some critical
service sectors.
 India signed a joint statement with 15 other
countries urging CTSSS to accelerate
services negotiations
South Asia’s Major Interests
 India – Mode 1, 2 & 4
 Sri Lanka and Nepal – Mode 2 & 4
 Pakistan and Bangladesh – Mode 4
Major Hurdles Under Different Modes
of Supply
Mode 4:
 Economic Needs Test
 Strict visa procedures
 Non-recognition of professional qualifications
 Imposition of discriminatory standards or
burdensome licensing requirements
 Payment of social security without
corresponding benefits
 Requirement of registration with or
membership of professional organisation
Major Hurdles Under Different Modes
of Supply
Mode 2:
 US federal or state govt. reimbursement
of medical expenses is limited to
licensed, certified facilities in the US or
in a specific state.
 Lack of long-term portability of health
coverage for retirees from OECD
countries.
Major Hurdles under Different Modes
of Supply
Mode 1:
Legislation by many US states to ban
outsourcing of government contracts
Europe introduced a legal norms called
“Transfer of Undertakings and
Protection of Employees” to protect
workers in outsourced deals.
Systemic Problems in Services
Negotiations
 Negotiations proceed through a
laborious process of requests and
offers.
 Definitional Issues in Mode 4 – lack of
uniform definition, statistics not
compiled according to mode 4 criteria,
time-period of temporary movement