Jul 19, 1989

U.S. FOR EXCLUSION OF AIR, MARITIME SERVICES IN AGREEMENT.

GENEVA, JULY 18 (BY CHAKRAVARTHI RAGHAVAN)— The United States is against inclusion of air and maritime transport sectors from any future services agreement now being negotiated in the Uruguay round.

This U.S. position, albeit postulated indirectly, comes out loud and clear from the U.S. paper, tabled Monday in the group of negotiations on services (GNS), on "implications for application of concepts, principles and rules for the transportation sector".

In terms of the mid-term accord on services, the GNS is currently engaged in testing some of the concepts, principles and rules suggested for a framework agreement in their application to individual sectors and types of transactions.

At its meeting in june the GNS had examined the concepts and principles in terms of construction and telecommunication sectors. At its current meeting the transport and tourism sectors are being examined, and at the next, in September, professional and financial services sectors are to be similarly examined.

For elaboration of a multilateral framework, among the concepts and principles considered relevant under the mid-term accord are: transparency, progressive liberalisation, national treatment, MFN/non-discrimination, market access, increasing participation of third world countries, safeguards and exceptions, regulatory situations and others already on the table or participants may suggests.

In its paper the U.S. does not clearly say that it will exclude the air and maritime transport sectors.

But the various issues it has raised on grounds of national security, sovereignty, and environmental and safety considerations, health of domestic industries, and investment and immigration policies, in the application to these sectors of the suggested concepts and principles, leaves little room for doubt about U.S. aims and intentions.

That the same considerations could also mean exclusion of other sectors, on which the U.S. wants to include in a services agreement (telecommunications, financial and business services, etc,) by other countries does not appear to have fazed the U.S. negotiators in putting forward these views in relation to air and maritime sectors.

At the GNS discussions Monday, Singapore would appear to have made the point that the group was not currently considering inclusion or exclusion of any particular sector, but that similar considerations (as those in the U.S. paper) could lead others to exclude telecommunication or other such sectors that the U.S. wants to include.

Right from the beginning, both labour and capital in the transport sector service industries (as well as several others) in the U.S. have been opposed to the services negotiations or the inclusion of the particular sectors in the multilateral framework agreement.

But the U.S. pushed for the services agreement under pressure from financial services like American express, and telecommunication, including data flow, interests in the U.S.

The U.S. had wanted a general framework agreement to be concluded, with its application to sectors and any particularities for them to be decided later.

But the EEC, as well as the third world countries, insisted that without knowing to which sector or sectors the agreement would apply, it was not possible to negotiate or conclude a general framework agreement in services.

At one stage, to get around this problem and avoid domestic lobbies against a services negotiations, the U.S. had come up with the concept of "anonymous" request lists for inclusion - each participant was to be able to send to the GATT secretariat anonymously the sectors to be included, which would be collated and presented by the secretariat to the GNS.

The unacceptability of this to others and the ridiculousness of governments formulating their views "anonymously" ultimately forced the U.S. to give up this idea.

In its latest paper, the U.S. has argued that aviation and maritime sectors are viewed "uniquely" by many countries in terms of their close association with "national sovereignty" and "national security", as well as heavy regulation for stringent "environment and safety standards".

Another point raised, in relation to "liberalisation" pushed by U.S. in other areas, is health of domestic industries and related policies.

The EEC, during the discussions in the GNS, would appear to have made some of the same points, including noise levels for aircraft and other "technical standards" used to regulate and thus reduce competition.

Restrictions on night landings and less advanced aircraft on grounds of "noise", and other "standards" are used in some of the advanced countries to protect their domestic enterprises.

In earlier services discussions, and even now in other negotiating areas like intellectual property, the U.S. has shown disregard for existing international conventions and has pushed for their revisions through the Uruguay round negotiations.

Now in relation to the aviation and maritime sectors the U.S. has underscored the existence of various international conventions and bilateral treaties - the international civil aviation agreement and bilateral treaties under it, the conventions under the international organisation and the UNCTAD liner code in shipping, as well as the "long standing treaties of friendship, commerce and navigation" among countries, and the effects of any services on these.

It suggests that application of "Montreal principles" could have profound effect on existing rules governing trade t n aviation and maritime services, and hence "progressive liberalisation" as defined in the Montreal mid-term accord in this area "is premature".

Shipping cargo allocation schemes, cabotage regulations (under which coastal and internal maritime transport is reserved to domestic enterprises) would have to be given up.

An "open skies" environment (in aviation and maritime sectors) could be the result and would have effects on health of domestic industries and related policies that would have to be carefully evaluated, the U.S. says.

In respect of the "national treatment" principle too, the U.S. cites the cabotage principle, the national security principle (under which licensing of merchant vessels and air carriers in U.S. is subject to requisition of vessels, aircraft and crew during war and national emergency obligations of citizenship), practice of reservation of military and other government impelled cargoes to national flag air and ocean carriers.

The application of MFN principle must similarly "take into account" (as required in the mid-term accord) international understandings affecting the service industries.

In this regard the MFN principle could not coexist with the bilateral under the Chicago convention in aviation, applying the principle of reciprocity without multilateralising it.

The market access in terms of the "preferred mode of delivery" by the exporter would involve open regimes for movement of personnel and investments, which are governed by immigration and other laws.

Interestingly, these considerations have been brushed aside by the U.S. in its demands in the services and Uruguay round negotiations (in investments and intellectual property issues) for the right of investment and access to domestic markets for U.S. TNCS.

This is also one of the demands, for example in the insurance sector, against India in the "super 301" action.

However, the U.S. wants application of "transparency" principle to these sectors.

This, in the U.S. view, must involve all existing national laws, regulations and administrative guidelines directly or indirectly affecting transportation, being routinely made available to "interested parties", and "some opportunity" provided for parties to comment on new rules or regulations.

This is far beyond existing provisions in international agreements, including GATT, where notification procedures apply only in relation to specific obligations undertaken, and none about new rules and regulations and opportunity for "interested" outside parties to agitate these issues.

The U.S. also suggests liberalisation and deregulation to improve access in auxiliary services - cargo handling, storage and warehousing and port services, particularly those run by "privately commissioned entities" which might be monopolies (a term that would cover airport authorities, port and dock authorities, where these are run as commercial public sector entities).