U.S. Floats New Initiative to Supplement Existing Approach to WTO Services Talks

The United States May 17 conceded that the long-standing 'request-offer'approach to negotiating greater openness in world services trade has failed to sufficiently advance the current round of talks and suggested 'supplementing' the approach with a new initiative designed to bring other countries up to U.S. standards.

A senior U.S. trade official, testifying at a hearing of the House Ways and Means Trade Subcommittee, said that U.S. negotiators have been discussing the initiative with a number of other World Trade Organization members, including the European Union, Canada, and Japan.

The announcement--made by Deputy U.S. Trade Representative Peter F.Allegier--came less than three weeks after the chairman of the WTO negotiating group of services, Alejandro Jara, of Chile, said in Geneva that he would be holding informal discussions with WTO member governments aimed at sounding out their ideas for jump-starting the stalled services negotiations.

Officials said at the time that a number of WTO members, including the United States, the EU, Hong Kong, and Switzerland, have voiced their support for Jara's initiative and expressed their willingness to consider other approaches.

Allgeier said May 17 that advancing the services talks remains 'one of our highest priorities' in the WTO negotiations. But he said that other countries have not been as ambitious 'as we think they should be,' and he proposed 'supplementing' the request-offer approach by identifying 'core critical services' that other countries could 'level up' to the United States 'in terms of the openness of our services market.'

While Allgeier provided no further details, suggesting that the proposal was at an early stage, it appeared to track a proposal made later at the hearing by Norman R. Sorensen, chairman of the U.S. Coalition of Service Industries, who said that he had just concluded a series of meetings with U.S. and WTO officials, as well as U.S. trading partners, to discuss 'several options for getting the services talks back on track.'

At the hearing, Sorensen proposed, in particular, that WTO members agree initially to make market-opening commitments in all services sectors--something that has been lacking so far.

'If WTO members can accept that as a starting point,' he said, 'it will improve the negotiating environment significantly, allowing negotiators to focus on the depth, scope, and quality of commitments. Those commitments should at least capture current levels of liberalization.'

The WTO negotiations have been dealing with liberalizing services trade in four modes of delivery: the cross-border movement of products, the movement of consumers to the country of importation, the establishment of a commercial presence in the country where a service is provided, and the temporary cross-border movement of business and professional personnel.

Some WTO members with potentially significant services markets, such as the Philippines, South Africa, Pakistan, and Morocco, have failed to submit initial market-opening offers in the talks, and many offers currently on the table contain no commitments in sectors such as distribution, maritime transportation, and construction.

Other sectors where offers are weak include health care, education, environmental services, and postal/courier services.

Sorensen said that, in further negotiations, the United States could request that other WTO members bring their schedules of services commitments 'at least up to the quality of liberalization reflected in the schedules of countries that have done the most to liberalize their services sectors, like the United States.'

'This approach would be helpful because the United States and a handful of industrialized countries have already taken on the most commitments,' he said, 'while many other countries have made relatively few commitments.'

Sorensen said that various analyses of existing services schedules show, for example, that most Latin American countries, with the exception of Argentina and Mexico, have made full or partial commitments in only 20 percent of all possible service sectors, while Asian countries such as Thailand and Malaysia have made commitments in less than 40 percent of sectors.

The informal consultation initiative announced by WTO services negotiating group chairman Jara last month suggested to some a possible shift away from a pure request-offer approach that has been the basis for the negotiations to date.

Under this approach, WTO members put forward market access requests to countries of potential interest, and those members then respond to the requests with offers of their own, with the negotiations then taking place on a bilateral basis to narrow the gaps between the requests and the offers.

The WTO schedule calls for members to submit their revised offers--even though some 40 countries have failed to submit their initial offers, which were due in March 2003--by the end of May.

Allgeier said that the United States is on track to meet the end-May deadline.

The EU said on April 20 that it had submitted an initial revised offer to the EU's 25 member states for their approval and would make it public once it has been cleared internally.