Apr 25, 1989
SERVICES CONCEPTS TO BE EXAMINED IN SIX SECTORS
GENEVA, APRIL 21 (BY CHAKRAVARTHI RAGHAVAN)— The Uruguay round Group of Negotiations on Services (GNS) has decided to take up six individual service sectors to examine the applicability and implications of some of the proposed concepts, principles and rules for a multilateral framework an services. The sectors to be taken up for examination at the next three meetings of the group are: telecommunication services, construction services, professional services, financial services, transportation services and tourism services. The GNS has scheduled three further meetings - first week of June, week of July 17 and week of September 16. At the next meeting in first week of June, the GNS will take up detailed examination of the construction and telecommunication services. Also, listed for discussion at the next meeting in June, expected to last a week, are the issues of "definitions" and "transparency". While listing tourism and transport for the meetings in the week of July 17 and professional and financial services for the meeting in September, the GNS would appear to have agreed that this would be a flexible schedule. And that examination of sectors not completes at one meeting would be taken up at the next and discussions continued. The Montreal mid-term package agreement in services has listed some eight elements considered as relevant for the concepts, principles and rules of the multilateral framework of principles and rules to be negotiated. But before any such concepts, principles and rules can be agreed upon, they are to be tested and examined for their applicability and implications for individual sectors and types of transactions. The concepts considered relevant and mentioned in the mid-term, package are: transparency, progressive liberalisation, national treatment, MFN/non-discrimination principle, market access, increasing participation of third world countries in world trade and service exports, safeguards and exceptions, and regulatory situations. However, the mid-term agreement also said that other elements mentioned in the report of the GNS to the Montreal meeting as well other new ideas and concepts that participants put forward would also be considered. Among these are some elements that third world countries had suggested: relative reciprocity, preferential market access opportunity, access to modern technology, enhancing national services capacity, activities and practices of market operators, sovereignty of national economic space etc. While some of these could not be included in the Montreal package, when the U.S. opposed them in the "green room" consultations there, some of the third world countries had entered caveats that they would make use of this catchall provision to bring them back on the agenda of the GNS. For the purpose of this week's GNS meeting, the GATT secretariat had produced what was described as "a reference list of sectors" this appears to have come in for some criticism at the formal and even more at the informal meetings of the GNS. The GATT document had referred to the three existing classifications, and had in effect canvasser for one of them, which would have helped the U.S. and other industrial countries to bring some services sectors on to the agenda and exclude tome others. The three classifications are: the International Standard Industrial Classification (ISIC) an activity-based classification, the planned Central Product Classification (CPC) a product-based system, and the IMF classification based on balance of payments transactions. Interestingly, the secretariat in its document now has acknowledged many of the defects and deficiencies in all these classifications, that third world countries have been raising but had been brushed aside in the race to forge an agreement. In the discussions, the methodology adopted by the secretariat and its disagregations were criticised by some of the third world countries. However, the document was seen as only a "reference" document and not a negotiating text, and thus more controversies were avoided. It was generally agreed that the methods of classifications and systems should flow naturally from the discussions and negotiations and no decisions favouring one or other system need be taken now. Some third world participants said that it was gradually becoming evident that in the entire services field, there are some major conflicts of interest among the three major trading partners the U.S., EEC and Japan. This, they said, was evident in the way they reacted in relation to the proposals for taking up one or other sector for detailed examination of the concepts. Japan for example appeared very reserved and cool to the proposal, by hang Kong and supported by Brazil, that the financial services should be taken up for examination. This is because in this sector, both the U.S. and the European Community are pressing Japan to open up its economy in these services. Similarly, the U.S. which has been in the forefront of the demand for a services framework and to include some professional services, does not want ail of them to be brought in, but only what it calls "accredited services" - those services where institutional or accredited associations regulate entry. The secretariat reference document had listed some 25 services, including a miscellaneous category. These included: agricultural, forestry and fishing services, mining and oil-field services, legal services, accounting and taxation services, architectural services, advertising, market research and opinion polling, surveying and exploration, advisory and consultative engineering, industrial engineering, engineering design, project management, urban planning, interior design, R and D, laboratories, testing and certification, computer-related services, travel agents and tour operators, labour recruitment, investigation and security services. The U.S. clearly wants a more restrictive category, while third world countries want a broader category of all professional services, if they are to be included. The EEC itself originally suggested what it called "tradeable services", qualifying it further by saying that coverage (sectors to be included in the agreement) could not be agreed upon before the full multilateral framework is agreed upon. It has been evident for some time that the European Community has some reservations about entering into a binding multilateral framework agreement in services, ahead of its own decisions an the single market in services anti what it plans to do internally and in terms of outsiders. Equally it is clear that the U.S. and Japan for the same reasons want a framework to be settled before 1992 and made applicable in this context. It is thus clear that apart from the south north tensions and differences in this area, there are also north-north differences. One third world participant said that while this would give some scope for third world countries to achieve their own objectives and needs. This would be possible only if they did their own homework individually, and forged a collective stand. Otherwise as in the past the three giants would reach a modus vivendi among themselves and try to force it on others. That would be the worst of the bad scenarios from the third world point of view. Another aspect that would appear to have come up this week was the attempt at the U.S. and its allies like Canada to claim that despite the wording of the Montreal agreement, issues of investment in services industries and right of establishment were wide open. Brazil, Egypt and India on the other hand contended that this was precluded. They noted in this connection that the paragraph of the Montreal text dealing with work on definition had agreed that this should proceed on the basis that the multilateral framework might include trade in services involving cross-border movement of services, of consumers, or of factors of production where these are essential for suppliers. However all this has been qualified by the stipulation that these should be examined in the light of: --Cross-border movement of service and payment, --Specificity of purpose, --Discreteness of transactions, and --Limited duration. The last two, it was pointed out, would in fact rule out "right of establishment" as well as general migration of labour. Only those cross-border movement of factors that have a specific purpose in supply of services and involving discreteness (or individual and separate) transactions are envisaged.