[ Document: Trade: GATS @ WTO (Document Archive) ]

liberated: 22nd Oct 2005. From Internet

10^th October, 2005

Issues Paper and Guiding Principles for Use of Complementary Approaches for the Services Negotiations

October 2005

At the outset, it may be clarified that this is not a position paper or a negotiating proposal. It merely attempts to provide a focus and a structure to the entire debate on use of complementary approaches. It tries to point out relevant issues that need to be discussed and determined. It also attempts to lay down some basic principles that may need to be agreed upon to have acceptance amongst the broad membership.

It is also an effort to assist the formal and informal processes in the larger group given that there is very little time for outcomes at Hong Kong that provide a balance for the entire membership.

Objectives

• Provide greater specificity and direction to the existing guidelines already contained in the NGP, the Doha Mandate and the July package with a view to improving the quality of offers and providing encouragement and incentive for all members to participate.

• Provide the right balance of interests across the membership particularly in meeting the sectors and modes of export interest to developing countries.

Guiding Principles of Complementary Approaches

• Any complementary approach must supplement and not replace the existing request offer approach. In fact, it is necessary to identify how to intensify the request offer approach through possible revised requests, focused meetings (bilateral and if necessary, plurilateral etc).

• Such approaches must preserve the basic architecture of GATS and the flexibility it provides particularly for developing country members.

• While it may be useful to encourage LDC’s to participate in the negotiations on specific commitments, any targets would not be applicable to them.

• There would be no pre-selection of any sectors for the purpose of developing targets or objectives collectively. It goes without saying that members would be guided by the requests they have received from their trading partners. Further, there should be clear priority given to sectors and modes of export interest to developing countries as already contained in existing mandates.

• The focus of any such approach should be improvements from the existing commitments. Consequently, existing level of commitments should not be the criteria for determining any credit for the current round.

• Both multilateral and plurilateral approaches would be useful and should follow the above guiding principles.

Broad Political Objectives for the Negotiations

• Distinction should be made between certain objectives that can be agreed upon multilaterally by members and would be applicable irrespective of the approach that might be decided upon by members. Such broad parameters would be applicable to any bilateral, plurilateral or multilateral approach equally. This is distinct from the approaches themselves.

• For such broad objectives, the most realistic parameters could relate to each of the four modes of supply. There could be broad indicators of the nature of improvement that members would need to make in each of them in order to fulfil the collective ambition of high quality of offers. Some possible qualitative parameters are listed below. The issue of the extent of prescription and the instrumentality for operationalizing such parameters would have to be determined.

• Mode 1 – bind the existing regimes especially in commercially meaningful sectors and also remove requirements of commercial presence for such sectors.

• Mode 2 – similar approach as in the case of Mode 1 with the added possibility of similar commitments in Modes 1 and 2 for commercially meaningful sectors except when there is specific need for differential commitments.

• Mode 3 – enhancement in the existing foreign equity levels; allow greater flexibility in types of legal entity; could remove discriminatory ENT’s etc

• Mode 4 – commitments particularly in categories de-linked from commercial presence like CSS and IP and removal of ENT’s for such categories, prescribed duration of stay along with possibilities for renewal etc. Improved commitments in already existing categories of ICC and BV based on such parameters.

• In addition, parameters relating to reduction of MFN Exemptions and scheduling clarity particularly if specifically requested by other trading partners

• For each of these modal qualitative parameters, provision of adequate flexibility to take into account the level of development of individual developing country members.

• A monitoring mechanism in the CTS – SS to specifically evaluate how offers of members meet such qualitative criteria and provide necessary direction in case corrections are required.

Approaches – Multilateral

• There may be different ways of determining certain quantitative targets which might be agreed multilaterally. However, the issue of extent of prescriptiveness of any such approach would have to be addressed. Possible quantitative indicators could be:

• Some kind of target for individual members to reach in terms of the number of sub-sectors where each member would be expected to make improvements from the existing commitments. If such numerical targets are to be fixed, would it be required to have differential targets collectively for developed and developing countries with the latter being lower.

• A collective target to be met by the entire membership without any specific prescription for each individual member but with the understanding that all members would contribute to such a collective target. In such a case, the mechanism for contribution of individual members to the collective target, monitoring achievement of such a collective target and how corrective action could be taken if there is a short fall would have to be clearly determined. The issue of the balance of interests may also have to be addressed.

Approaches - Plurilateral

• Plurilateral approaches may be needed in addition to bilateral request offer process to address specific sectoral/modal objectives of members that might go beyond what is obtainable on the basis of broad objectives shared collectively. This would require specific articulation of sectoral/modal objectives and goals by Friends Groups or other Groups of interested members and their reaching out to other members in whose markets they may be interested including through specific Model Schedules, check lists etc.

• Issues to be discussed would include the issue of participation and whether a “critical mass of members” concept would be needed for such an approach. The extent to which this may be mandatory or otherwise is another variable.

• Another issue would be how to implement such an approach. One possibility could be intensification of the request-offer process but on a plurilateral basis with possible plurilateral meetings as well. The results of any such negotiations should be equally accorded to all WTO members on an MFN basis.

• One further issue would be the relationship of any such approach with the Chair’s Annex to the July report which contains on the Chair’s responsibility, a compilation of sectoral and modal objectives as expressed by members. This would possibly need to be a continuous process in any case. The extent to which there could be any reference to such an Annex in the Ministerial text would have to be determined. The link with possible plurilateral approaches post Hong Kong would also have to be explored.