4:48 PM May 31, 1995

RUGGIERO AGAINST CAPITAL-LABOUR TRADE-OFFS

New Delhi 30 May (TWN) -- The WTO Director-General, Renato Ruggiero, has advised developing countries not to seek a trade-off or linkage between financial services liberalisation and their demands for movement of natural persons as a mode of delivery for services.

Ruggiero came to Delhi, on the last lap of his visit to Asia, in his mission to bring about liberalisation of financial services and press countries like India to improve their "offers" on liberalisation of their financial services markets.

Ruggiero, who has already visited Singapore, Manila (where he met the Cairns Group of Agricultural/Trade ministers) and Bangkok, was addressing a meeting of industrialists.

The Marrakesh Ministerial meeting (which concluded the Uruguay Round negotiations and the WTO Agreement and its annexes) has provided for continuance of the negotiations on financial services and movement of natural persons as a mode of delivery for services to continue till end of June.

The GATS recognizes as trade in services, supply of a service from the territory of one Member into that of another, in the territory of a Member to consumers of another Member, by a service supplier of one Member through commercial presence in the territory of another, and a service supplier of one Member, through presence of natural persons of a Member in the territory of another.

The continuation of the financial services negotiations came about because of a last-minute demand (November 1993) by the US that unless it was able to get much better access to financial services markets of others and/or a commitment by these countries to bring about full liberalisation within an agreed time-frame, it would not agree to a most-favoured-nation treatment to WTO members in its financial services offers/schedules, but will only assure existing access. Full liberalized access to others would be provided only on basis of non-MFN treatment and reciprocity.

The US demand for access and full liberalisation is through 'establishment' and/or commercial presence, and to apply to all the financial services sectors -- including banking, insurance, securities and other trading etc.

India and a few others, dissatisfied with the "offers" from the major industrial countries like US, EU, Japan etc on the "movement of natural persons" as a mode of delivery had insisted on the continuance of this negotiations also, co-terminus with the financial services negotiations.

In the negotiations here in Geneva, India and a few others have said they could not make better offers on financial services without getting some better benefits on movement of natural persons.

Ruggiero's remarks in New Delhi referred to this.

In his first press conference in Geneva (after taking over), and in some interviews thereafter, Ruggiero has made some noises about the movement of natural persons negotiations, but has left little doubt that his main objective is to ensure the "successful conclusion" of the financial services negotiations -- one of the main issues on the US agenda and one on which it has been hinting it might invoke S.301 to open up markets of developing countries.

At Bangkok, Ruggiero (according to media reports from there) called for flexibility by developing and developed countries on the financial services issue, and rejected complaints of US pressures on developing countries.

Reuters quoted him as saying in Bangkok at a news conference: "I would not say the United States is making pressure. The system of GATT and now the WTO system constitutes bilateral approaches in the multilateral frame, so it happens you have to exchange concessions".

Ruggiero also said at Bangkok that industrial countries were keen to export their financial services and warned developing countries they will face increasing competition to attract financial resources. "In the next year, developing countries will be obliged to compete more and more in the capital markets to attract resources and investment, so you need good financial services".

In Delhi Ruggiero assured the industrialists that he was committed to pushing the EU, North America and Japan to provide greater access to "natural persons".

The financial services negotiations, he said, was due to end in June and it would be unfortunate "if we miss this opportunity".

Calling for give and take within the system, Ruggiero told the industrialists: "If you don't liberalise, you will see instead of non-discriminatory rules, discriminatory bilateral negotiations".

The WTO head thus seemed to miss the whole point of the WTO accords, namely its multilateral system is based on bilateral negotiations and exchange of concessions which have to be multilateralised and applied on a most-favoured-nation principle to every member.

In other comments, Ruggiero said that while discussions on the social clause at the WTO would be useful to clarify issues, it could come on the WTO agenda only by consensus and at this point of time there was no chance of this happening. In any event a solution to the social problem could not come about through restrictions on trade.

Ruggiero's remarks on financial services and the social clause issue seemed to be different from the more forthright stand adopted by his predecessor, Peter Sutherland who in his comments and speeches seemed somehow to better evoke the concerns of developing countries.

To Sutherland voicing the concerns of the developing countries seemed to come naturally. Ruggiero does attempt to do this, but it is an effort and not natural, and this comes out in off the cuff remarks, observers have noted.

Some of the passages in Ruggiero's recent speech at Singapore on the future trade agenda seemed to have been lifted verbatim from a speech of Sutherland, just before he laid down office, at Ottawa.

But in some of Ruggiero's off-the-cuff remarks on the social clause, or his push on financial services, the Ruggiero position seemed to reflect those of the US and Europe.