Jul 22, 1988

U.S., EEC AND JAPAN OPPOSE INCLUSION OF LABOUR IN SERVICES.

GENEVA, JULY 20 (IFDA/CHAKRAVARTHI RAGHAVAN) -- The United States, the European Communities and Japan have reportedly rejected Mexico’s proposal for including labour among the sectors to be covered in the Uruguay round negotiations for a Multilateral Framework for Trade in Services.

In the Group of Negotiation on Services (GNS), which is meeting here this week, Mexico has tabled a paper outlining some of the objectives and measures that would have to be adopted to give effect to the Punta del Este mandate that any multilateral framework for trade in services should promote "the development of developing countries".

Among the concrete measures to give effect to the objective, Mexico has said that services in which third world countries were competitive should be the subject of negotiations. In this connection, it had listed labour and labour-intensive services.

The framework, Mexico had further said, should not merely deal with regulations having a negative impact on trade in services, but also on labour flows, which should be included "to compensate, albeit marginally, for the fact that developed countries control more than four-fifths of international trade in services".

In turning down this idea, while commenting on the Mexican proposals, the U.S., EEC and Japan are reported to have said that whether the framework should include "labour-intensive services" would be a matter that should be negotiated.

While turning down mobility of labour, the industrial countries however reportedly argued for mobility for capital and insisted on the need for right of establishment or commercial presence for foreign service providers.

In its paper Mexico had said on this point that negotiations should not cover this right for Direct Foreign Investment (DFI), since the mandate covered only "trade" and not "transactions".

The EEC chose to interpret this passage in the Mexican paper as meaning that there would be no "automatic right of establishment" and that the matter had to be negotiated.

The U.S. and Japan however argued that the framework for trade in services should include the right of establishment.

New Zealand said that since services could not be provided by foreign suppliers without the right to establish and produce the services, the framework should provide for right of establishment.

A number of third world countries who spoke on the Mexican proposals are reported to have given it their broad support.

The idea of including labour and labour-intensive services has been raised at past meetings in their oral interventions, by a number of other third world countries too, including South Korea, India, Pakistan, and Egypt.

Third world countries are also reported to have specifically commended the point in the Mexican paper about the principle of development autonomy.

In its paper, Mexico had pointed out that "each developing country is the best judge of how to serve its development interests", and hence the multilateral framework agreement and sectoral agreements should "suitably reflect the fact that one of the main national policy objectives of developing countries’ laws and regulations is precisely their economic development".

The Punta del Este mandate has said that any multilateral framework for trade in services "shall respect the policy objectives of national laws and regulations applying to services".

While Canada reportedly felt that the Mexican view was "unexceptionable", Switzerland and some others questioned the concept of "development autonomy".

A number of industrial countries also reportedly questioned the Mexican idea that the principle of "relative" reciprocity should be established in the framework "in recognition of the fact that there cannot be equal treatment among unequal parties".

An Indian suggestion that "relative reciprocity" could be established by providing "preferential opportunities" and "targets" in terms of shares for third world service exports, along the lines of the UNCTAD liner code in shipping, was however criticised by industrial countries.

The U.S. felt that this would result in "market-sharing" arrangements, and that it would be a "backward" step and following the trends for market sharing in steel, textiles, footwear, etc.

Canada felt that market-sharing arrangement did not promote efficiency, and should hence be eschewed.

India however reportedly said the only objective test was whether it promoted sustained growth and development, and theoretical ideas about competition and efficiency could not be any yardstick. India also took note of the U.S. view that market-sharing in textiles, steel and footwear was bad, and hoped that this view would be reflected suitably in the concerned negotiating group.

The EEC said it could understand the concept for "preferential treatment", but not market-sharing.

Earlier, the GNS also discussed a Japanese paper putting forward what it called a structure of a multilateral framework for trade in services.

A number of industrial countries in their comments reportedly viewed the paper as more in the nature of "a chick-list of issues".

A number of third world countries in their comments, assailed the Japanese paper on the ground that it had adopted the "GATT model" for the framework, even while the paper had made a number of references to the "special characteristics of trade in services".

They were also sharply critical of the Japanese view that "special and differential treatment" for third world countries in a service framework should be profiled through technical assistance for improvement of statistics and for "researches on trade in services and its development".

"Development", a number of third world delegates reportedly made clear had to be "an integral part" of the service framework, and it could not be reduced to provision of technical assistance for statistics.