Issues Paper for Services Group Meeting

liberated: 22nd Oct 2005. From Internet

Issues Paper for Services Group Meeting

12^th October, 2005

Given that equivalent level of specificity is required in the mandate for services at Hong Kong and this is the last opportunity for this, it is essential to work out the parameters for defining such specificity for a balance in the market access negotiations. There is also a recognition that two rounds of offers have not delivered desired results. Hence, we need clear objectives as well as certain complementary approaches to supplement the request offer process while maintaining the GATS architecture with a view to improving quality and coverage of offers and achieving a balance of interests across the membership especially in the sectors and modes of export interest to developing countries.

It would be useful to settle certain guiding principles which would add to the comfort levels of the entire membership. It appears that there is already broad consensus on some of these principles and we could move on based on our collective understanding on them :

Any complementary approach must supplement and not replace the existing request offer approach which in fact needs to be intensified simultaneously.

Such approaches must preserve the basic architecture of GATS and the flexibility it provides particularly for developing country members including the levels of development of individual members.

While all members should participate, any targets that may be agreed would not be applicable to LDC’s.

The focus of any such approach should be improvements from the existing commitments. The special situation of newly acceded countries who have taken extensive commitments at the time of their accession to the WTO would be taken into account.

There is need to provide certain broad political objectives for the negotiations. These would address the issue of quality and coverage. Improvements in quality could be addressed through modal qualitative parameters which need to be worked out in detail, reduction in MFN exemptions and scheduling clarity. The extent of prescription of such parameters would need to be determined while balancing the issues of specificity and flexibility. Coming to certain possible parameters, there would need to be direction on commitments in cross border supply to cover the increasing business opportunities and dynamic technological developments across a broad range of sectors. Similarly, direction would be needed for Mode 3 improvements relating to enhanced foreign equity levels, removal of economic needs tests etc. Improvements in Mode 4 commitments in categories de-linked from commercial presence through enhanced coverage, removal of economic needs tests, prescribing length of stay etc needs to be specially highlighted since this would provide incentive for the broader membership to participate more actively in these negotiations. The issue of enhanced coverage could be met either through suitable inclusion in such political objectives or through the possibility of numerical targets.

On modal parameters, all four modes will need specific indicators to provide right balance of interest across all members while being mindful of the importance of Mode 4 to a large number of members for whom this may be a good incentive to participate more actively in the services negotiations.

Quantitative targets could be determined either through individual targets for members in which case lower differential targets for developing countries compared to developed countries would need to be considered. Such quantitative targets could relate to improvements in a certain number of sectors/sub-sectors from existing commitments either through new commitments or improvements in existing sectors/sub-sectors. The issue of maintaining the appropriate flexibility provided under GATS and the NGP would have to be considered while developing such numerical targets. Alternatively, there could be some collective targets for the membership to achieve progressively higher levels of liberalization. In this case, the question of how to provide incentive for individual members to contribute and how to measure and remedy any short fall from the collective target would have to be met. Combinations of these two could also be considered.

Plurilateral approaches may also be considered for allowing for higher levels of ambition in specific sectors and modes of interest to members which could be articulated through Model Schedules, Checklists etc. The issue of participation of members and how to operationalize such an approach including through possible plurilateral requests, plurilateral meetings to address such requests etc would have to be determined.

The market access that may be obtained needs to be complemented through clear disciplines on domestic regulations to ensure it is meaningful and effective. We would need clear direction from Hong Kong to enable development of legal disciplines post Hong Kong for the elements contained in Article VI:4 .This could be best achieved through developing a list of elements without prejudice to their final applicability horizontally or otherwise. In many areas particularly in Mode 4, meaningful market access would require such disciplines.

We would also need to consider a realistic package on the three rules areas involving a clear direction on the continuation of work post Hong Kong.

There would also need to be a suitable package on LDC modalities and the Special and Differential treatment proposals.