GENEVA--The United States presented members of the World Trade Organization July 14 with a broad-brush proposal setting out its objectives for WTO's recently-launched negotiations on services trade as well as a possible framework for carrying out the talks.
In a proposal presented to a special two-day WTO negotiating session on services, the United States said the starting point for the negotiations should be the current sector-by-sector limitations that member governments maintain on market access for services and not the binding commitments made under the WTO's General Agreement on Trade in Services (GATS), which are in some cases more restrictive than actual practices.
In addition, the United States said members should consider establishing specific WTO rules on government procurement of services and reaching an agreement by mid-2001 on possible new disciplines covering the domestic regulation of services.
Washington said the negotiations should be completed within three years, i.e. by December 2002, with an agreement on the approaches (or "modalities") for services trade liberalization by mid-2001. The concluding deadline is identical to the one proposed by Washington in June for the completion of the WTO's concurrent talks on agriculture, which is itself based on the proposed deadline for the aborted "Seattle Round" of global trade talks.
WTO members agreed earlier this year to proceed with mandated negotiations on agriculture and services despite the failure of member governments to agree on the launch of a new round at their Seattle ministerial meeting late last year.
Trade officials in Geneva said response to the U.S. proposal was generally muted, mainly because members had little time to review the paper in advance. But European Union Ambassador to the WTO Roderick Abbott repeated Brussels' warning that substantial progress in the services talks was contingent on the launch of a broader round that encompassed issues of interests to all WTO members.
Critical Reaction Anticipated
One official following the talks said that specific criticisms were likely to emerge at an special negotiating session in October when the U.S. proposal is reviewed in more detail by members. Likely bones of contention include the proposed December 2002 conclusion date and the idea of referencing to existing practices as the start for market access negotiation. "The response to that [latter proposal] from most countries, especially developing countries, will be that the starting point for them is the scheduled commitments," the official predicted. U.S. Ambassador Rita Hayes told WTO members that the proposal was a follow-up to an agreement reached by members last May on a "road map" for accelerating the services talks. The road map called for the submission of initial market access proposals by the end of 2000 and the identification of issues such as negotiating modalities, increased participation of developing countries in the talks, and autonomous liberalization, which might be covered by the proposals.
"The U.S. believes that [the proposal] might be a useful framework for delegations to consider in coming months, as we progress during this first phase of negotiations and prepare for the next," Hayes said. "We plan to hold discussions with delegations to explain the points in the paper before it is discussed in the fall."
In Washington, U.S. Trade Representative Charlene Barshefksy emphasized the importance of services in the global economy and what economists call the "comparative advantage'' of American firms in the broadly defined sector.
"Services are the infrastructure of today's modern economy," she said in a statement. "Our goal in this negotiation will be to secure maximum market opening across a broad array of services sectors through a broadening and deepening of the services commitments of all WTO countries.''
And she said the United States would continue to lead the discussions on how the new round would proceed.
"As our framework proposals in agriculture and now services demonstrate, the United States is intent on setting the parameters and pace of negotiations in the WTO," she said.
In its paper the United States said that last May's agreement on a service road map "was a significant event demonstrating members' shared interests in moving forward in an ambitious manner in the negotiations. Importantly, the road map set the stage for moving topics from the technical subsidiary bodies up to the special session of the Council for Trade in Services for substantive negotiations."
"In view of the broad, complex and ambitious scope of the negotiations, the United States advocates a strong guiding role for the Council in special session," the U.S. paper continued. "As the designated negotiating body, it is important that the Council in special session provide an opportunity to assess progress in the negotiations, assess balance in this progress, and provide a forum for transparency in the negotiations."
Regarding specific objectives for the negotiations, the U.S paper set out six goals: the reduction or elimination of measures that are inconsistent with GATS market access principles; the reduction or elimination of measures that discriminate between domestic and foreign service suppliers; full application of the WTO's most-favored-nation principle in the services sector; binding "delivery mode" commitments that allow customers and suppliers 'to choose commercially desirable ways of purchasing and selling services;'' improved transparency in domestic regulation of services; and progressive implementation of market liberalization commitments "according to individual circumstances."
'Meaningful' Liberalization Sought
Achieving these goals should be accomplished through "meaningful" liberalization, broader sectoral coverage, and improved classification of services, the United States said. "Many GATS commitments made during the Uruguay Round consisted of standstill bindings," the U.S. paper noted. "While in some cases a standstill binding can represent a significantly open services regime, too often these bindings merely lock in place relatively restrictive regimes. Meaningful liberalization should occur in this negotiation."
On broader sectoral coverage, the United States noted that existing services commitment schedules for many members are often incomplete, with entire sectors or sub-sectors missing. The result is that "trading partners--and more importantly service providers--are unable to determine restrictions in force," Washington argued. "GATS scheduling should be broader and more transparent."
As for classification of services, Washington said an improved scheme should be adopted "that better reflects the realities of trade in services to which all members will adhere...Significant improvements can be accomplished with limited, specific changes to [the existing system] as it now stands."
In addition to a December 2002 deadline for completing the negotiations and starting negotiations from current practices, the United States said members should agree not to adopt any new services measures that could be used to improve their negotiating position or be used as bargaining chips in the talks.
Members should also establish modalities for giving negotiating "credit" to countries that adopt unilateral liberalization measures in the services sector. It "may be possible to set agreed targets for multilateral liberalization (e.g. in the form of model schedules) against which the value of particular autonomous liberalization measures might be gauged," the U.S. paper noted.
The United States also said that members should recognize there are "several different ways to liberalize substantially across a broad range of services sectors. We continue to support the request-offer as one way to achieve target results--that is, to focus a bilateral partner's attention on a specific restriction in a specific sector or sub-sector."
Nevertheless, "this approach has limitations," the United States said. "For example, it presumes that all members have a comparable capacity to develop requests...Moreover, limiting the current negotiations to request-offer would be a step backward, since members already have demonstrated flexibility in post-Uruguay Round negotiations by supplementing request-offer with model schedules, clusters, and common horizontal scheduling by mode--as a means of specifying shared expectations."
"Therefore, the United States proposes that members work now to identify their common expectations for the negotiations. These expectations could constitute benchmarks or yardsticks for assessing progress and results in negotiations."
U.S. Service Industry Response
American service industry executives gave a warm welcome to the U.S. proposal, declaring that it showed the United States was determined to move the negotiations forward despite the distraction of upcoming presidential and congressional elections. "The U.S. statement demonstrates that our government is ready, willing and able to move ahead on key issues in the services negotiations," declared Dean R. O'Hare, chairman and CEO of the Chubb Corporation and chairman of the U.S. Coalition of Services Industries. "We strongly support the U.S. Trade Representative's call for a broad-based negotiation that achieves substantial new liberalization, that uses innovative negotiating approaches, and that concludes within three years, or by December 2002."
CSI President Robert Vastine told BNA that while the services industry "has some quibbles" with the proposal, the U.S. paper was a "good statement which would quell some of the criticisms" that the United States was not prepared to push ahead on services before the November elections.
"The U.S. government is putting its foot down and saying it's getting serious," Vastine said. "It's a very wide, very comprehensive statement which includes everything in the kitchen sink. We will be escalating our efforts to come forward with some real, serious negotiating proposals."
By Daniel Pruzin
Copyright c 2000 by The Bureau of National Affairs, Inc., Washington D.C.:
