AUSTRALIA, SWITZERLAND PROPOSALS ON SERVICES.

Jul 21, 1988

AUSTRALIA, SWITZERLAND PROPOSALS ON SERVICES.

GENEVA, JULY 19 (IFDA) -- Australia and Switzerland have circulated to the Uruguay Round Group of Negotiations on Services (GNS) separate proposals for a multilateral framework on trade in services.

The Australian paper has a one sentence reference to the development issue, in the objectives and scope, and said "provision consistent with the rules and principles of the agreement, for the economic development needs of developing countries".

Participants said that even this "incomplete sentence" appeared to be an afterthought. An earlier version, which had been circulated without any reference, was hastily withdrawn and the new one was circulated, presumably to blunt third world criticisms.

The Swiss paper has said that the framework should be multilateral, with "liberalising" action at two levels: a collective commitment on principles, rules of behaviour and procedures, and for rights and obligations for all Contracting Parties.

The framework should provide for principles, rules for autonomous behaviour, negotiation of agreements, competition, safeguards, institutional provisions, dispute settlement and transitional provisions.

Signatories should agree to the "general orientation" of their national laws and regulations, and anything contrary would be banned in future national laws, regulations or international agreements.

Also, notwithstanding their national regulations, they would also agree to promote fullest possible application of the principles, and take them into account in any amendment or renewal of national provisions.

This appears to run counter to the requirement of the mandate any framework "shall respect" policy objectives of national laws and regulations applying to services.

Signatories are to commit themselves top improve access to their markets so as to allow open competition between national and foreign services and suppliers, with conditions of access or competition not to be deliberately less favourable for one or more foreign services or suppliers than for other comparable foreign services or suppliers.

Also, foreign services and suppliers are to be treated identically with national services or suppliers.

Any agreement between two signatories on trade in services should comply with the principles, and would be applicable only between parties that had subscribed to them.

But the benefits of such an agreement should be extended to any third country requesting it, provided the requesting country offers to carry out the obligations.

However any agreement on services among countries that are linked together in customs unions or free trade arrangements (like those of the EEC of EFTA) need not be open to other countries.

Signatories would provide a list of service sectors or measures on which they would be willing to negotiate with others, and such a list would be an integral part of the framework agreement.

If a signatory finds another has not provided a list or provided a list appreciably below the general level, it could exclude the application of the framework to the other.

However, third world countries would not be expected to provide lists that would be inconsistent with their development needs.

The Swiss paper would also require signatories to notify any new provisions or new practices in respect of services, including amendments to existing laws and regulations.

There should also be provision for cross-notifications.

Australia had provided the earlier version last week here to a conference of service enterprises from the north.

The Australian paper said that the multilateral framework agreement should contain a non-discrimination or MFN provision and a "national treatment" provision to provide equal treatment to foreign suppliers and domestic suppliers.

There should also be provisions describing the type of "market access" – such as cross-border, agencies, establishment, and non-establishment – that might be negotiated or available under the agreement.

There should also be "model mechanisms" for negotiation of market access and for progressive liberalisation.

Additional market access would be "an expectation, rather than a right", and might be subject to a degree of reciprocity.

There would also be provision for "permanent exceptions"; to allow signatories to exempt some regulations or policies governing services activities from the purview of the agreement. These exceptions, to be kept to a minimum, might be on national security considerations, for prevention of disorder or crime, etc.

Unlike in GATT where there is a commitment to maintain balance of rights and benefits, and provision for redress (ultimately through retaliation) for nullification or impairment, Australia envisages in the services agreement only a commitment to maintain a balance of rights, obligations and benefits, and to offer "equivalent alternative concessions" if current market access in any given activity is made more restrictive.

As a part of "transparency" requirement, all laws and regulations relating to a trade in services are to be made available to other signatories, upon request, in a published dorm.

There should also be provision for public comment on proposed regulations before they are adopted, and for redress or review if they are considered to be misapplied.

State-owned or state-sanctioned monopolies should be obliged to treat foreign services and suppliers equally with local services and suppliers.

There should be commitments not to introduce or increase trade-distorting subsidies (whether for production or export) for service activities, with provision to encourage rollback of existing subsidies.

Economic integration agreements between two or more signatories, to liberalise more rapidly trade in services among themselves in contravention of the non-discrimination requirement, should be allowed through a waiver only if a substantial portion of the services trade among the parties is covered by such an agreement.

The Australian paper also calls for provisions for consultation and dispute settlement, permanent exceptions, and provisions for non-application clause as between two signatories, a governing body of representatives of signatory governments with a secretariat as an institutional arrangement, and with provisions for accession of new members and for review of the agreements.

All such notifications would be examined by the committee on services, consisting of representatives of all signatories to the agreement, and this committee would ensure that any new provision or practice respects the principles of the agreement.

There should also be provisions for dispute settlement, and for transitional provisions to enable bilateral or plurilateral existing agreements or parts of them to be made initial agreements under the framework.