WTO's plurilateral services negotiations are voluntary, stresses developing countries

At a meeting on services at the WTO last week, several developing countries have stressed their understanding that participation in the plurilateral mode of negotiations would be on a voluntary and non-compulsory basis.

At the conclusion of a week of meetings, which were mostly among groups, a plenary session was held on Thursday (16 February), at which several members spoke on the method of plurilateral negotiations, as well as on the negotiations on rules.

The plurilateral mode of negotiations was a major issue of contention prior to and during the WTO's Hong Kong Ministerial Conference in December 2005. After several revisions (with each draft diluting the nature of the plurilateral method), Annex C on services of the Hong Kong Declaration was adopted; its paragraph 7 stated that members receiving plurilateral requests "shall consider such requests".

At the meeting of the Council for Trade in Services (Special Session) on 16 February, many members made clear they see the plurilateral approach as a voluntary, non-compulsory process that could act as a complement to the existing bilateral request and offer approach to the services negotiations.

The US said that while it was "fully committed to the plurilateral negotiations", it also informed members that it will continue to pursue the bilateral track as well. Some trade diplomats said privately that the US did not appear to be keen to pursue the plurilateral route, preferring the bilateral approach.

In a statement, the Philippines said: "We need not re-emphasize that the final wording of paragraph 7 of Annex C reaffirmed and does not alter the primacy of the request and offer method of negotiations, and that the desire for an increased level of commitments under paragraph 4 of GATS article 19, must yield to the due respect needed for national policy objectives mandated by paragraph 2 of GATS article 19."

Brazil said that it is "clear from that text that this mechanism (plurilateral negotiations) is a purely voluntary process."

According to Malaysia, the plurilateral process is another mechanism to improve offers through the request-offer approach, but this time between a bigger group of members.

At the meeting, delegates underscored the need for the plurilateral process to be member- driven and made as simple and uncomplicated as possible. Several developing country members also pointed out the need to bear in mind their limited financial and technical resources when working out how the plurilateral process is to be conducted.

"We should try to make this process as simple as possible so as to not tax the resources of already overburdened members at this critical time of the Doha negotiations," said the Malaysian Ambassador, Muhamad Noor Yacob.

The plurilateral negotiations should recognize constraints of developing countries, Brazil emphasized. As such the plurilateral meetings when they are being planned for should not be held concurrently, if not the developing country delegations would be split up in the negotiations. Brazil stressed the importance that Geneva-based diplomats be present at all the plurilateral meetings.

Malaysia proposed that the meetings should be planned within the two-week cluster (when services negotiations are planned) and not be extended beyond this period. "Information on the requests to members, the list of requesting members, and the requested members can be made known to the membership. The timing of meetings should also be circulated, in order for other interested members to take part," he said.

Malaysia also pointed out that "the financial burden of having experts around for a long time will be enormous Meetings should [therefore] be scheduled in such a way that does not require them to be here for more than a period of 2 to 3 days."

On a more substantive note, Malaysia urged requesting members "to be realistic in their demands." Seeking for no limitations in all modes is not feasible under the present circumstances, it pointed out. "Requesting members must also take this opportunity to understand the problems faced."

Malaysia also made clear that while "the plurilateral process will afford better understanding of each member's situation as regards a particular sector within a wider context, at the end of the day, requests will be considered, but the decision on improving offers remains with each member."

This point was also stressed by Ambassador Manuel Teehankee of the Philippines, who said that "the full flexibilities currently enjoyed by Members under the GATS is in no way impaired by Annex C (of the Hong Kong declaration on services).

"First is development. We must remain faithful to the shared vision to facilitate the participation of developing countries in the international trade in services, while taking account of their economic situation and level of development. These are the fundamental principles on which the negotiations rest.

"We recall that in the negotiations last year running up to Hong Kong, this Council was suddenly reacquainted with GATS article XIX from all our debates and discussions, and indeed the full flexibilities currently enjoyed by Members under the GATS is in no way impaired by Annex C.

"Another important provision is GATS article IV, which provides for the strengthening of domestic services capacity of developing countries, and their efficiency and competitiveness. And an important sub-paragraph in this article is the call for liberalization of market access in sectors and modes of supply of export interest to developing countries."

The Philippines added that "it would not be wise for us to think that the plurilateral process of negotiations is the panacea to our disappointment in the services negotiations We expect the demandeurs in the market access side of the services negotiations to provide the leadership, by giving genuine market access to developing countries in sectors of interest to them."

Many developing country delegations also gave their views on the services negotiations on rule-making.

China emphasised the importance of rule-making especially in domestic regulations in order to get a balanced result.

The Philippines said that Annex C provides for an intensification of efforts to conclude the negotiations on rules making, stressing the belief of the ASEAN countries on the need for emergency safeguards in the services sector.

"We agree that there are complex regulatory issues and divergent views on desirability and feasibility. We believe, however, that through international cooperation, most of the technical, legal or policy issues raised are not as impossible as they seem."

The Phillippines also reminded that paragraph 5 of Annex C provides for the development of disciplines in domestic regulation before the end of the current round of negotiations.

"My delegation also reads this particular mandate in the light of paragraph 25 of the Ministerial Declaration that reaffirms the right of Members to regulate. We will look, therefore, to ensuring that the domestic regulations negotiations result in the optimal balance between the right to regulate (on a broad, horizontal basis), and providing for necessary disciplines, particularly on qualification requirements and procedures to reduce unnecessary regulatory barriers to trade in mode 4, which is of importance to developing Members."

Malaysia also said that an outcome on emergency safeguard mechanism (ESM) and domestic regulations are important to provide balance in these negotiations. Conclusion on ESM would be the impetus to the negotiations as it might provide comfort to developing countries to substantively engage in market access negotiations.

Six ASEAN members (Malaysia, Indonesia, Philippines, Thailand, Brunei and Myanmar) presented a room document on how to take the ESM negotiations further. Malaysia explained that the paper was aimed to exercise the Hong Kong mandate to intensify negotiations on rules through focused discussions.

Brazil made a substantial presentation on three issues: assessment of the Hong Kong Ministerial and the road ahead on process and on substance.

On assessment of Hong Kong, Brazil said that the prevailing negotiating atmosphere in Geneva in the weeks and months prior to the 6th Ministerial Conference gave rise to low expectations. Results at the Conference, although modest, were not meaningless, and represent an important step forward.

A significant element in this outcome was the impressive degree of solidarity and collaboration among developing countries, despite their diversity. This was reflected in the Services negotiations, where mandatory benchmarks and numerical targets were definitively put aside.

A delicate balance was struck between the imperative of preserving the fundamental architecture of GATS and the requirement of further specificity for the services negotiations to proceed.

Brazil continues to be of the view that services has not been, is not, and shall not become, any kind of obstacle to the Doha Round, as the difficulties lie elsewhere.

On process in the road ahead, Brazil said it was important to ensure procedures that are open, transparent, inclusive, and democratic, so as to enable Members, in particular developing countries, to have their interests duly reflected in the outcome of the services negotiations. The bottom-up approach is essential to achieve a perception of ownership by all Members.

Brazil said that time is short and "we therefore need to take a simple and pragmatic approach."

"As in bilateral negotiations which have served us well thus far, there should be no fixed recipe to organize plurilateral negotiations. It is up to the Members who chose to participate in each of these plurilaterals to define the procedures that most suit that particular group."

Nevertheless, two caveats are needed, said Brazil. First, any results of such negotiations will be extended to all WTO members at the end of the Round.

Second, although entirely Member-driven, participants in these plurilaterals should not succumb to the temptation to create collective fait-accompli.

"The GATS has a well-defined scope and any attempt to alter the basic elements of the Agreement will likely create turbulence we can ill afford in the current phase of the negotiations."

Brazil said it is prepared to work towards a plurilateral process. Although it is clear from that text that this mechanism is a purely voluntary process, Brazil is ready to continue to work constructively within this format and to consider all the collective requests it might receive.

Bilateral negotiations may continue to contribute to the services negotiations, as they allow for further precision and accuracy in members' demands in some sectors and modes of supply. Nevertheless, the coexistence of plurilaterals and bilaterals has to be administered in a way as to avoid unnecessary overlapping.

On substance in the road ahead, Brazil said that the development of a set of disciplines on domestic regulation is perfectly within our grasp in 2006. On safeguards, Brazil is confident that "a serious, collective effort will allow us to add this important element to the services framework."

It is also critical to redouble efforts to find an appropriate solution to the remaining agreement specific S&D proposals as well as the implementation of the LDCs' modalities.