Industry Efforts on Services Talks Face Sensenbrenner Opposition

A revised United States services offer expected in May or shortly thereafter is not expected to include new market access for business personnel since services industry representatives are still trying to build congressional support for such concessions, according to private-sector sources. The U.S. is under pressure from developing countries to provide additional access for business personnel in the Doha round services negotiations, or run the risk that developing countries will not open their markets in the negotiations.

These industry efforts face a formidable hurdle in the House with Judiciary Committee Chairman James Sensenbrenner (R-WI) who this week expressed his opposition to addressing immigration issues in trade agreements outside the 'normal legislative process,' according to a March 3 letter reprinted below. But he emphasized that he would give serious consideration to any proposals the administration might make for changing the Immigration and Nationality Act.

The letter asks acting U.S. Trade Representative Peter Allgeier to reaffirm a commitment made by then USTR Robert Zoellick that the Bush Administration 'will not entertain any changes to American immigration or antitrust laws in the context of the General Agreement on Trade in Services (GATS) or in any other multilateral or bilateral trade agreements.' He charged that including immigration matters in trade agreements considered under fast-track 'degrades' congressional ability to subject immigration proposal to the debate and amendment process 'vital' to creating sound immigration law.

He said he was 'gratified' that Zoellick agreed that any changes to American immigration and antitrust laws be considered through the normal legislative process. 'As you know, it was only because of Ambassador Zoellick's commitment that I and many members of the House and Senate agreed to support the passage in the 108th Congress of legislation implementing the U.S.-Chile and U.S.-Singapore Free Trade Agreements,'
the letter said.

Sensenbrenner said that he expects Allgeier and any future appointee to the USTR slot to adhere to this agreement. 'I look forward to receiving your assurances regarding this matter,' the letter said.

Before Sensenbrenner sent the letter, his staff had made it clear that industry would have to make the case for increased access for the movement of natural persons or mode 4 access. U.S. industry sources said the task facing them was to demonstrate to Sensenbrenner's staff that changing visa provisions, including the creation of a new category for workers with specialized skills, does not amount to a change in immigration law.

'We need to differentiate between permanent immigration and our short-term temporary entry to fulfill a specific task, whether that be signing a deal, receiving training, carrying out a contract, etc.,' one industry source said. 'Mode 4 is in no way meant to offer the rights of permanent residency, solely the entry of personnel for a finite period.'

Industry lobbying has focused on a range of measures that could open the U.S. further to the temporary entry of skilled workers, including a possible new visa category. It would allow foreign employees with specialized skills to fulfill a contract in the United States, they said. The current H1B visa category can only be used by professionals who have a college degree.

Recognizing that this is a controversial proposal, industry groups are also focusing on administrative changes that would improve visa application processing without legislative changes, including increased transparency, they said.

Earlier this week, services industry representatives said they will not approach Sensenbrenner staff again on the services issue until they have a 'concrete proposal' to show how services in general and mode 4 access specifically will benefit the U.S. economy and assure improved market access offers from other WTO members in the Doha round. This proposal would include anecdotal evidence on the difficulties services companies have faced in trying to bring foreign employers into the U.S. to fulfill contracts, they said.

Industry representatives led by the Coalition of Service Industries
(CSI) are meeting with members of House Ways and Means and Senate Finance Committees as well as individual members from states where service industry providers are constituents, sources said. This includes New York, California, Colorado, Massachusetts, Missouri, Louisiana, Tennessee, Maryland and Georgia, they said.

The industry representatives have not yet approached the Senate Judiciary Committee, but expect to get a friendlier response than from the House side given the positions that senior member Sen. Orrin Hatch
(R-UT) has taken, they said. They said they had no clear reading on the position that Senate Judiciary Chairman Arlen Specter (R-PA) will take on mode 4 access.

Getting congressional support is critical for USTR to move forward, according to these sources. 'USTR cannot do [offers on movement of natural persons] until Congress does something,' one source said. 'So countries insisting on [these concessions] must be told this should not be a prerequisite for their own proposals.'

But these sources acknowledge that Indonesia, Thailand and the Philippines have linked access to their services markets to concessions by the U.S. on mode 4 access. For example, Thailand's proposed offer does not include any opening of its financial services sector, one U.S.
industry source said. At the same time, U.S. industry sources criticize such linkage as counterproductive.

These industry sources also said there is no clear understanding among members of the World Trade Organization on what constitutes mode 4 access. The U.S. side tends to define it in terms of executives and highly technical workers while developing countries think of it as laborers and healthcare workers, one source said.

However, they downplayed the impact of having the U.S. table its revised offer without new mode 4 concessions by saying that they expected at least two more rounds of offers before the Doha round concludes. 'The unofficial consensus is that this is early days,' and that best offers have not yet been put forward, industry sources said.

One factor complicating the U.S. domestic debate is President Bush's initiative to change immigration law, which he announced in January 2004, but expressed renewed interest in during this year's State of the Union Address. The president's proposal would make individuals abroad and undocumented employees from Mexico currently working in the United States eligible for temporary work visas, provided they have an employer who is willing to offer them a job.

This effort could confuse the U.S. debate on mode 4 access because congressional members would see it as providing temporary entry for laborers, including undocumented workers, one industry source said.

The U.S. could miss a May deadline for a revised services offer, but will likely be able to table it soon thereafter, industry sources said.
The administration is still in the process of gathering industry input and has not yet moved onto the interagency process for developing a revised offer, they said. This process will involve the departments of Treasury, State and Justice, they said.

The U.S. had hoped to begin that internal process by the end of February, but the administration has told industry they still intend to meet the May deadline, sources said.

If the U.S. revised offer does not contain more mode 4 access, it does not mean the U.S. will not do so at a later stage of the negotiations, one source said.

Developing countries have previously signaled that they would not oppose the U.S. missing the May deadline if it meant additional mode 4 access commitments (Inside U.S. Trade, Feb. 4, p. 1).

U.S. industry sources also said that the administration should fight back against any developing country effort to link their offers in services to getting concessions on their priority interests on agriculture and non-agriculture market access (NAMA) negotiations. The U.S. government should instead make its own link by insisting that it needs better offers in services in order for it to make concessions in agriculture and NAMA negotiations, he said. 'From our stance, we are making meaningful offers in areas of interest to developing countries in the agriculture and NAMA talks,' he said.

In mid-February, acting U.S. Trade Representative Peter Allgeier noted that while mode 4 is 'a difficult issue for us,' and has to be handled carefully, 'we do hear how important this is to many, many countries, and so this is one of the areas that we have a lot of work to do back in our capital to find the right response on this issue.'

To continue their lobbying for an ambitious services deal, CSI members are planning visits to capital-based services negotiators in New Delhi, Beijing, Kuala Lumpur and Jakarta in April, sources said. This effort follows up on the Feb. 9-11 meeting of the Financial Leaders Group in Geneva, where services industry representatives met with capital-based negotiators from Indonesia, India, Thailand, Brazil, Egypt, Philippines, Venezuela, Australia, EU, Canada and Japan.