| Inside US Trade
February 4, 2005 Developing countries want US to miss services deadline to help Mode 4 Developing country members of the World Trade Organization hope to convince the Bush Administration to delay tabling its revised Doha round services negotiating offer on a May deadline, Geneva delegation sources said. Developing countries want the U.S. to take as much time as possible to ensure that its revised offer contains their demand for ambitious new mode 4 commitments covering the movement of natural persons. If the U.S. tables its revised services offer by the May deadline, delegation sources said they believe the offer will contain nothing of interest to developing countries on mode 4. As a result, developing countries would respond in kind by quickly tabling revised offers containing little in the way of new market access concessions, a chief U.S. demand. However, sources said the U.S. Trade Representatives office has yet to begin interagency work to prepare the revised U.S. offer, and might actually welcome a strategy that would give them some cover to delay tabling their revised offer. One informed source said there is a sentiment within USTR that recognizes that the U.S. must do more on mode 4 to ensure that other countries table high-quality revised services offers. One informed source said the feeling at USTR is that U.S. negotiators should take the time to do it right, rather than just tabling a revised offer solely to meet the May deadline. In addition, tabling an offer with new mode 4 commitments by the May deadline would be sure to draw heavy fire from the House Judiciary Committee, which has long warned USTR against including such provisions in trade negotiations. If the Bush Administration missed the May deadline, the additional time could be used to try to work out some arrangement with opponents on Capitol Hill that would allow USTR to make some mode 4 commitments, this source said. A U.S. trade official declined to comment specifically on the status of the U.S. revised offer or on the developing country strategy. The official said only that the U.S. hopes WTO members will come forward with their offers in a timely manner. The official acknowledged that talks on mode 4 concessions are an area that is very controversial, but cautioned that countries should keep some perspective on this issue, arguing that U.S. mode 4 commitments can stand up to anybody elses in the WTO. A Geneva delegation source said developing countries would look to give the U.S. until at least September to table a revised offer, or even until near the December Hong Kong ministerial. According to this source, the developing countries pushing this idea have been holding discussions with the WTO Secretariat on how to put a positive spin on the negotiations should the U.S. slide past the May deadline. U.S. services providers have long argued that the U.S. should make additional mode 4 commitments, not only because they have a commercial interest in this area, but also because they recognize that their own hopes for improved market access in many countries hinge on the ability of the U.S. to offer new mode 4 commitments. An informed source said the U.S. is expected to begin work on preparing its revised offer following a series of sectoral friends group meetings in Geneva this month, so as to get some sense from these groups on what level of ambition other countries believe is possible in various services sectors. However, one informed source said if USTR is serious about trying to put together something on mode 4, USTR should intensify its efforts to convince state governments of the need to accept new mode 4 disciplines. This source said it makes little sense to offer anything new on mode 4, particularly for areas like accounting, legal and medical services which are regulated at the state level, if states are unwilling to lower barriers preventing foreign nationals from performing these services. This source argued that USTR also needs to be more aggressive in lobbying states on the need to accept new mode 4 commitments. It should specifically argue to state leaders that because many countries will refuse to offer new market access concessions without new mode 4 commitments, the export interests of local businesses would be hurt if state governments refused to consider adopting new mode 4 rules. Under the strategy being discussed by developing countries, they would hold off tabling their revised services offers until after the U.S. had put its offer on the table. Contrarily, if the U.S. tables an offer in May with nothing on mode 4, which developing countries see as a litmus test for the validity of the services talks, these countries would respond with revised offers with little in the way of new market access concessions, the source said. For now, discussions on the developing country proposal are being done in a very informal manner among a small group of countries, a delegation source said. Ultimately, a significant outreach will be made to sign up a larger group of developing countries, this source said. Countries are expected to work on the proposal on the margins of this months services talks. The special session of the services committee will meet Feb. 9, Feb. 21-22 and Feb. 25, while the regular services committee will meet on Feb. 18 and Feb. 23, with a number of working party meetings also scheduled for this month. A delegation source said countries including South Africa, Malaysia, Thailand, Indonesia, the Philippines, India, Bangladesh, Pakistan and some Latin American WTO members are all interested in advancing this proposal. Allowing the U.S. more time to try to work something out on mode 4 would also have the advantage of allowing the U.S. to table some mode 4 commitments long after Congress has held a vote on keeping the U.S. in the WTO and after all congressional opportunities to dump fast-track trade negotiating authority have passed, a delegation source said. A Geneva delegation source explained that developing countries see a systemic problem looming on the horizon that could sink the services negotiations. If the U.S. offers little on mode 4, developing countries would respond with little on market access and that might lead the U.S. to give little ground on rules-related topics, such as the creation of an emergency services safeguard. For the moment, this source said developing countries remain convinced that the U.S. cannot offer anything of interest on mode 4 by May. Subsequently, developing countries should not be pressured into tabling high quality offers by the May deadline if the U.S. has trouble doing so on mode 4, this source argued. This source said developing countries have long felt the May deadline was always too ambitious, particularly for those countries that have yet to submit their initial negotiating offers. Why should we have to table in May, when we already said we would have trouble meeting this date? said the source. In addition, this source said developing countries have little interest in a mode 4 transparency initiative that the U.S. has pledged to undertake that would aim to make existing mode 4 provisions more transparent and address current regulatory barriers. This source said the U.S. gave hints about its transparency project in September, but has yet to formally unveil it. This source said the U.S. could table it during this months cluster of services meetings.
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