Ei-iE

New GATS framework released ahead of "do or die" Ministerial meeting

published 18 July 2008 updated 18 July 2008

With trade ministers set to meet in Geneva the week of July 21 in what is being billed as the last ditch effort to complete the troubled WTO Doha Round of trade talks, the chair of the services negotiations has released a controversial new framework to guide the discussions.

In his latest note to delegations, Mexico’s Ambassador Fernando de Mateo calls on member countries to make commitments under the General Agreement on Trade in Services (GATS) that "substantially reflect" current levels of liberalization.

"This language smacks of the so-called benchmark proposal that was soundly rejected by developing countries at the Hong Ministerial in 2006," says EI’s trade consultant David Robinson. "It means countries will be under enormous pressure to open up a vast range of services, including education and other public services."

Robinson says it is difficult to say how the new benchmarking approach would actually work. There could be pressure on countries to include in the GATS whatever services commitments they have made in regional and bilateral free trade agreements. Generally, countries have made deeper trade concessions on education services in the latter agreements.

As well, countries could be asked to make commitments in sectors where they already allow market access. For instance, while many countries have not made specific GATS concessions on education services, they nevertheless allow for foreign service providers to enter their market.

"The difference is that by making a legally-binding commitment under the GATS, you are essentially agreeing to lock-in that market opening in perpetuity unless you agree to pay compensation or face trade sanctions," notes Robinson. "It makes it extremely difficult to change policy directions."

Finally, countries might be asked simply to adopt the plurilateral requests that have been made in key sectors, including education services.

"Whatever approach or combination of approaches are taken, the result will be far deeper commitments across a broader range of service sectors," warns Robinson. "This is a very disturbing development, particularly given that developing countries had fought so hard against benchmarking."

The new text calls on members to respond to requests from other members "to the maximum extent possible" by offering "deeper and/or wider commitments…." The text also requires that new offers "shall, where possible, substantially reflect current levels of market access and national treatment, and provide new market access and treatment in areas where significant impediments exist...."

De Mateo has also set a deadline of October 15, 2008 for countries to submit their revised offers, with the final draft schedules of commitments to be handed in by December 1, 2008.

Services negotiations are set to heat up with a one-day conference to be held during the latter half of the ministerial meeting. The signaling conference will draw together the ministers from about 30 to 35 countries who will be asked to indicate what improvements they plan to make in their current GATS offers.

The conference is being pushed principally by the United States and the European Union in an effort to secure more access to the services markets in emerging economies such as Brazil, China, and India.

However, the government of India recently indicated its intention to fight for significant GATS concessions from developed countries.

Speaking to reporters in New Delhi, Commerce and Industry Minister Kamal Nath said that unless major concessions were made by developed countries in services, India would not sign onto a final Doha agreement.

Nath said that developed countries have to agree to both better market access and the removal of domestic regulations that he says restrict trade. Controversially, Nath said that regulations like minimum wages and education requirements for service providers are often used as barriers to trade and should be eliminated.

EI General Secretary Fred van Leeuwen says Nath’s comments are outrageous.

"Minimum salaries and minimum education requirements are absolutely necessary to ensure the quality of a service," said van Leeuwen. "We’ve seen in our sector the enormous problems that have arisen when some governments, rather than investing in the education and recruitment of highly qualified teachers, have instead hired unqualified personnel at very low pay. This has had a serious and demonstrable impact on the quality of education students receive. The idea that trade agreements like the GATS would encourage this is reprehensible. There has to be no compromise on this matter."

Observers say energy services, financial services, and telecommunications will likely dominate the discussion during the ministerial meeting, but countries such as Australia, New Zealand, Japan, and the United States are expected to continue demanding concessions on education services from other WTO members.

"While we’ve been successful in getting many countries to back away from including education in the GATS, given the breadth of the latest framework for the negotiations in which no service sector is excluded, we shouldn’t become complacent," argues van Leeuwen. "If anything, recent developments have made it clear that it is absolutely critical that affiliates express their concerns to their officials before the signaling conference and demand that education be kept off the negotiating table."

The current round of WTO talks, first launched in the Qatari capital of Doha in 2001, has been plagued by missed deadlines and failures, largely due to deep divisions over cuts to agricultural subsidies and industrial tariffs.

However, speaking to reporters in July, WTO Director General Pascal Lamy said the chances of a deal were better than they were late last month, when he said there was a little more than a 50 percent chance of success.

"The chances of reaching an agreement have improved," Lamy said. "It changes every day because of the hectic activity in various fields of the negotiations ... [but] yes, the chances have increased as compared to this rough number I gave a few weeks ago."