Services: Developing Countries jointly object to 'targets' in Ministerial draft; and attack EU paper

Fourteen developing countries have issued a joint paper during the services negotiations at the WTO objecting to having any reference to "targets" as an negotiating approach in the services text of the Ministerial Declaration for the forthcoming WTO conference in Hong Kong.

At the same informal consultation held on 27-28 October, a wide range of developing countries strongly opposed a new proposal by the European Union to introduce "benchmarking" or compulsory targets for liberalization commitments under the General Agreement on Trade in Services (GATS).

Many of the developing countries referred to the two rival papers during the consultations, rejecting the EU proposal while voicing support for the room document presented by the 14 countries.

The 14 countries included Brazil, which introduced the paper, Argentina, Cuba, Dominican Republic, Guatemala, Kenya, Indonesia, Malaysia, Paraguay, the Philippines, Thailand, Uruguay and Venezuela.

Their paper stated the following: "A pre-condition agreed by Members for the consideration of any possible complementary approaches in the services negotiations is that they have to be compatible with the GATS and the Negotiating Guidelines (S/L/93).

"Having examined the proposals that contain quantitative and qualitative mandatory targets presented so far as part of the complementary approaches we consider that they are not compatible with the GATS Preamble and Article XIX: 2, as well as paragraphs 2, 3, 4, 11, 12 of the Negotiating Guidelines.

"Therefore, it is not appropriate to include in the Hong Kong Ministerial Declaration any reference to quantitative or qualitative mandatory targets."

The developing countries were in particular referring in their joint statement to the draft Ministerial text on services prepared by the Chairman of the services negotiations, Mexican Ambassador Fernando de Mateo, which included the item "targets and indicators" as an element under "Approaches", despite the objections to this "benchmarking" approach by many developing countries over several weeks.

The EU presented its new paper, which advocates the "benchmarking" approach, providing details and figures. It sets a high target for developing countries to make "new or improved" commitments in 93 out of the total 163 sub-sectors (or 57% of the total) in the GATS negotiations. (See article in SUNS #5904).

It also requires developing countries, in Mode 3 (commercial presence) of the GATS, to remove or reduce limitations on types of legal entry, and foreign ownership limitations (authorising at least 51% foreign ownership).

In a separate paper on agriculture issued late Friday to members of the FIPS (five interested parties), the EU makes the same demands, as well as additional demands, of developing countries, in services, as a condition for retaining the offers it has made on agriculture. (See separate story in this issue of SUNS).

Strongly criticising the EU services paper, Brazil described it with four terms starting with the letter "I" - incompatible (with the flexibilities and architecture of GATS); imbalanced; inappropriate and "incredibly unrealistic".

Several developing countries, including those that did not join the common statement of the 14 members, also criticised the EU proposal, including Mexico, Chile and Egypt.

The Caribbean countries (Antigua and Barbuda, Barbados, Dominica, Grenada, Jamaica, Trinidad and Tobago, Saint Kitts and Nevis, and Saint Vincentr and the Grenadines) said: "We remain opposed to complementary approaches that are based on formulae and targets. We wish to reaffirm that such approaches compromise teh flexibilities under the GATS and the negotiating guidelines. We support the statement on complementary approaches tabled by a group of developing countries."

Some developed countries, such as Australia, supported the EU proposal.