NEGLECTED ELEMENTS IN SERVICES AGENDA FOR FUTURE MEETINGS.

Feb 8, 1988

NEGLECTED ELEMENTS IN SERVICES AGENDA FOR FUTURE MEETINGS.

GENEVA, FEBRUARY 5 (IFDA/CHAKRAVARTHI RAGHAVAN)— The Uruguay Round Group of Negotiations on Services (GNS), at its next meeting in last week of February, is to focus its discussions on the elements of its agenda that have so far got little or no attention, according to participants in the GNS.

The discussion is thus expected to include issues like definition of "services" and "trade in services", the coverage (the various service sectors) of the multilateral framework, and existing international disciplines and arrangements, as well as the question of technical support by the "relevant international organisations".

Though the GNS at the outset of its work agreed to structure its discussions around five elements, mots of the discussions so far have been around only one or two of them – the concepts and principles that some of the advanced industrialised states want to incorporate into a general multilateral framework, and on national regulations and laws viewed by individual participants as barriers to their service exports.

U.S. Officials, and U.S. private enterprises (like American Express) which are behind the U.S. drive, have said they want a general framework agreement, providing among other things for transparency of national regulations and blocking new protectionist regulations, to be agreed upon before end of this year, leaving other details like sectors to be covered or detailed sectoral agreements and liberalisation to future negotiations.

Most of the proposals envisage foreign service enterprises seeking to provide services in a market to be able to "establish" themselves in the country concerned to produce and provide the services, and for national regulations to be subject of international scrutiny.

The Punta del Este declaration mandates the negotiators to "respect" the policy objectives of national laws and regulations applying to services, and "to take into account" the work of relevant international organisations.

However, little attention has been paid to these and, even worse unilateral interpretations have been made to negate them, one participant later told IFDA.

Much of the discussion at the last meeting of the GNS (January 27-29) reportedly was on the proposals and papers put forward by the European Communities and Switzerland – documents issued in December, but formally introduced and explained by its authors only now and commented upon by others.

Efforts to close the discussion in the GNS on this basis, and proceed to "negotiations" (as the U.S., the EEC and others want), was however objected to by some of the third world participants, who reportedly complained that various elements on the agenda had not been addressed, and the discussions in the GNS were not being structured around the agenda’s five elements.

During the discussions some third world participants while critical of various ideas in the EEC proposals, felt it had at least sought to address some third world concerns like "development", and oligopolistic market power exercised by some TNC service industries.

But the papers of the EEC (as also some earlier papers of others) also reportedly came in for some sharp comments, according to participants.

The EEC’s concept of "inappropriate" national regulations and of "development objectives" to subserve trade expansion opportunities for service industries of other countries was, for example, viewed as "neo-colonialist" approach by Trinidad and Tobago.

Several other participants reportedly noted that the mandate that the multilateral framework to be negotiated "shall respect policy objectives of national laws and regulations applying to services" ipso facto ruled out either the idea of any supra-national "standards" or "objectives" by which these national laws would be tested or subject to an "examination process" by a permanent "regulations committee" of participants in the future multilateral framework.

The Swiss submissions also came in for critical comments.

While arguing that a new framework on services should not impose any general liberalisation or oblige countries to adopt a uniform behaviour, the Swiss paper has reportedly argued for "progressive liberalisation", and, laying down the criteria for this and excluding "certain types of behaviour incompatible with it".

The principles of such a framework, the Swiss are reported to have suggested, should be comparable to the GATT, and the two regimes should not be incompatible.

The Swiss paper also reportedly argues that in the matter of "goods" the state physically or geographically "intercepts, taxes or controls" at the border, and traditional trade policy (as in GATT instruments) intervenes at the border.

But this "filter" would not "catch" most services, and in order to act on services it was necessary "to intervene at the stage where they are produced or provided", and any international discipline should have "adequate and original mechanisms", and there should be "a readiness to innovate", and apply to the opening of markets for services, and concerning factors of production and/or provision of services.

Some of these concepts and ideas were challenged.

On the idea of international norms and standards on economic and development policies, India reportedly pointed out that the only international standard or norms were hat in "charter of rights and duties of states".

Several participants noted that some of the concepts now sought to be introduced – "appropriate regulations", "perceived barriers", and "standstill" on regulations affecting "trade in services" – had been put forward before Punta del Este and rejected.

The Punta del Este compromise language was thus the only basis for further work, and previous concepts and ideas of some of the proponents could not be brought in by the backdoor.

Also, the only way national policy objectives and goals could be respected was to accept them.

Reopening old ideas would involve the GNS arguing about the, without any possibility of understanding being reached for the entire time frame envisaged for the GNS.

Without any agreement on international norms or benchmark, the very concept of a standstill on "new barriers to trade in services" was not possible at all.

Other participants said that many of the problems blocking progress in the work of the GNS were due to failure to tackle some of the elements of the agenda.

India reportedly said that unless the GNS tackled the issue of "definition", there could be no real progress.

The papers of the industrialised countries had either tried to ignore the problem or had been reticent, merely defining it in terms of "residual" (activities not covered by goods) or in terms of "tertiary" activities.

It was also necessary to tackle the definition issue, and the sectors or activities to be covered, if the jurisdictions of other international organisations and existing arrangements was not to be impinged upon or considered to be capable of being amended or superseded through the Uruguay round negotiations.

On the view that the services framework would have to provide for the right of establishment to produce or provide the service, India reportedly noted that the "right of residence" for foreigners would be the logical counter-part of the right of establishment.

The EEC reportedly noted in this regard that unlike some other industrial countries (U.S.A., Japan, etc.), it had only talked about right of "commercial presence" to render the service. It recognised that a degree of labour mobility would be needed to provide the services.

India reportedly said that if labour mobility was to be recognised, it could not be delimited by referring to immigration laws and regulations.

On the EEC idea of progressive liberalisation of market access to improve international competitiveness as a motor force for growth and development, India asked whether any of the dominant industrialised countries – U.S.A., Germany or Japan – had developed their service sectors through open markets or by long periods of closed regimes?

On the question of labour movements, the EEC would appear to have said that if India and others were willing to discuss "commercial presence"; it could discuss labour movement.

The EEC idea that there should be "principles of behaviour". Applicable both to national monopolies and firms or groups of firms with dominant positions was welcomed by some as a basis for further discussions.

Some participants reported Brazil as having welcomed the EEC paper as "a basis for further work", but others said this seemed to be an error in interpretation, and that the original Spanish did not carry any such implication.

The view was also put forward by several third world participants that in the context of "respect" for national policy goals and objectives, and the inherent right of countries to define their "development" concepts and contents, the multilateral framework should really tackle in terms of "received barriers" to expansion of services trade the restrictive business practices of transnational corporations and their oligopolies.

Existing international arrangements in various service sectors, it was also underlined, could not all be termed as "merely technical" (as the U.S. has done in its presentations), and thus to be ignored in relation to negotiating a framework for "trade in services".

Several of the sectoral arrangements, some third world participants insisted, had "economic" provisions, and these could not be ignored, much less indirectly amended or changed through the Uruguay round negotiations.

The nature of existing arrangements should be more fully explored through specific questions addressed to each and every one of the international organisations.