Jara vows to work on advancing services, says offers fall short

The chairman of the Doha round's services negotiating group this week told the Trade Negotiations Committee that offers now on the table provide few if any new commercial opportunities to services companies.

Chile's ambassador to the WTO Alejandro Jara said a "considerable number of members" of the World Trade Organization have identified the request-offer method as part of the problem in the services negotiations. Many want to explore other negotiating options, Jara said, and he promised to hold intensive consultations to identify complementary approaches within the parameters of the General Agreement on Trade in Services and the existing negotiating guidelines.

This could include plurilateral and multilateral approaches, in which members define the sectors that are most important to them and reach agreement on what the negotiations should achieve. Several members have begun to use such an approach, with 11 countries putting forward a proposal on telecom services and 12 members submitting a proposal on how to evaluate offers on mode 4, or movement of natural persons.

Jara only made a passing reference to a proposal by the European Union to develop "indicators to measure and promote progress" for the services negotiations (Inside U.S. Trade, July 8, p. 5). He noted that members have raised questions about whether this so-called benchmarking approach would preserve the flexibility they currently enjoy under the GATS. Some critics of benchmarking have argued that it infringes on that flexibility to choose the sectors in which to make commitments and the level of concessions.

Jara said members should work during the next cluster of services talks in mid-September to develop recommendations for the December ministerial. To help this effort, he said he would focus his consultations on further assessing what concessions members are seeking in the services negotiations, as well as the negotiating methods. In addition, he said he would focus on special and differential treatment of developing countries as well as targeted technical assistance.

A large part of Jara's report to the TNC focused on members' individual assessments of offers currently on the table, including the levels of concessions sought in each sector and mode of supply.

Several members, the majority of which were developing countries, identified mode 4 as their "main area of export interest in services," according to an annex to the Jara TNC report. Members want the elimination of visa quotas or increased quotas, temporary access or contractual service suppliers and independent professionals. In addition, members called for the elimination of economic needs tests and nationality requirements, according to the annex.

Jara noted that less than half of the offers contain improvements to horizontal commitments on mode 4. He said members did not think these offers "adequately address the categories of main interest for developing countries, namely contractual service suppliers and independent professionals. But he also said members identified some improvement in existing offers on categories of natural persons not linked to commercial presence.

According to Jara's summary, both developed and developing countries want better offers in computer and related services, particularly improving access on cross-border or mode 1 supply and the lifting of foreign equity limits for companies establishing a commercial presence. Members also called on each other to, at a minimum, bind existing commitments, he said.

On telecommunication services, another area identified as a critical sector among virtually all developed countries as well as several developing countries, members also criticized foreign equity limits on investments. Members including the U.S., European Union, Canada and Japan have called for the elimination of most-favored nation exemptions in that sector during the last services negotiations.

Jara said members were also critical of the fact that only one of the 10 developed country members who have submitted their services offers have offered to open their audiovisual services sector. In this area, the U.S., Hong Kong, China, Japan, Taiwan and Mexico have called for more access while members such as Canada and the EU have made it clear they want to protect this sector.

Jara also noted in his report that members were critical of the current methodology used for defining telecom services. The WTO relies on the United Nations Provisional Central Product Classification (CPC) standard definition for services, which the U.S. has not adopted in a few key sectors and subsectors, mostly in computer and related services. Jara said members felt the CPC references for telecom were out of date, but said there was not yet a common view on possible alternatives.

On financial services, members highlighted several practices that constitute barriers to trade, including restrictions on the form of establishment, restrictions on the composition of boards of directors, restrictions on the expansion or number of branches and foreign investment ceilings.

Jara said Japan led a group of members in criticizing the offers on maritime transport services, an area of particular sensitivity in the U.S. because of the restrictions imposed by the Jones Act. According to Jara, 21 of the existing offers contain no concessions on maritime transport and members consider the offers that have been tabled to be of very low quality.

Finally, Jara said that many delegations believe momentum is building for a meaningful result on domestic regulations in time for the Hong Kong ministerial. He said that the Working Party on Domestic Regulation should be able to make some elements for possible disciplines before Hong Kong. There are several proposals on domestic regulations that have been put forward by members, including proposals on qualification requirements, technical standards, licensing and a proposal by the U.S. on transparency, Jara said.

But he acknowledged that members remain far apart in other areas of services rules negotiations, such as safeguards, subsidies and government procurement.