GATS NEGOTIATIONS; WHY SERVICE
INDUSTRY ASSOCIATIONS SHOULD GET INVOLVED
The second, ongoing round of
negotiations for the General Agreement on Trade in Services (GATS) puts
exporters around the world in a position to help shape the future of this
important sector. However, many service exporters and industry associations do
not know where to begin. This article draws on ITC’s GATS Consultation Kit to
explain why and how service industry associations should communicate with their
policy-makers.
Trade negotiators may not always be
familiar with the capabilities and competitiveness of their service exporters
and so they are not yet in a good position to develop appropriate negotiating
strategies.
Most service exporters and
associations are also unfamiliar with the GATS and its schedules — or lists of
liberalization commitments — and are therefore not necessarily able to provide
useful input for trade negotiators. ITC has developed tools to help both sides
to talk productively to each other.
Industry Spokespersons
Given that individual service firms
do not usually belong to the same business associations, and in the absence of
an “umbrella” services organization, it is very difficult to reach potential
and existing exporters in order to give them the opportunity to provide input
to these important trade negotiations. This is why trade support institutions
(TSIs) — such as service industry associations and chambers of commerce — are
key interlocutors in reaching enterprises in the services sector, advocating
for trade in services issues and advising governments on appropriate
negotiating objectives for trade in services.
Why Get Involved
For years, service firms in
developing countries have exported their services despite non-tariff barriers
to trade. In some instances, working with a local partner has made this
possible. They will in all probability continue to export, but the
participation of TSIs in the services trade liberalization process can help
firms to be more profitable and successful in their export initiatives.
Experience has shown that a supportive, rather than protectionist, policy
environment is of greater benefit to service exporters.
The following points underline the
importance of services trade liberalization to service exporters:
·
Access
to world-class services will help exporters in developing countries to
capitalize on their competitive advantage.
·
Liberalization
can lead to lower prices, better quality and
·
Another
benefit is the opportunity to innovate faster, a key success factor for
exporters of services. Countries with liberalized markets have been great
product and process innovators.
·
Service
commitments under the GATS foster foreign direct investment, bringing
technology transfer and new skills and technologies that benefit the wider
economy.
·
The
GATS will result in greater transparency, allowing firms to provide their
services under predictable, stable conditions. They are able to plan for the
future with greater certainty, encouraging long-term investment. Ultimately,
service exporters and consumers in both industrial and developing countries
will be the winners from the agreement.
Approaching
Deadline
In the current round of negotiations, 30 June 2002 was the
deadline for requests for market access in the various sectors, and members
have until March 2003 to make liberalization offers.
As member economies take stock of their initial requests for
market access and prepare to make their final offers, it is crucial that
service exporters and industry associations familiarize themselves with the GATS
and be vocal about the trade-related issues of their industry.
To maximize gains from the GATS negotiations, developing
country governments should revise their national GATS schedule to reflect the
needs and growth potential of their domestic service industries. Knowing what
their service exporters need from the GATS will help governments to determine
negotiating priorities – and trade and industry associations are well placed to
give them this information.
GATS Consultation
Process
ITC has developed the GATS Consultation Kit, to help prepare
TSIs to advocate on behalf of their service sectors, and provide input to trade
officials on:
·
services
trade dynamics;
·
the
types and volume of local service exports; and
·
the
particular challenges faced by service exporters.
The process is described in full in ITC’s GATS Consultation
Kit available
online, with a descriptive video.
The GATS Consultation Kit, consisting of two parts, can help
to obtain detailed private sector feedback on the domestic impact of GATS since
1995, to assess the national schedules of commitments in relation to service
industry needs and to identify the concessions service exporters want from
trading partners.
It helps TSIs to hold three different consultations with
service exporters, or to combine the questions listed into a single session.
The online GATS Consultation Kit lists other useful advice and several
alternatives for formatting the consultations in order to help the facilitator
prompt participants for more detailed information.
Part 1 assists with reviewing national GATS schedules and
can be used either to assess the existing national schedule of commitments of
the TSI’s country and/or assess the commitments made by key trading partners.
Part 2 provides a series of detailed questions to elicit
input from service exporters, divided into three sets of consultation questions
on:
·
the
application of trade principles;
·
modes
of supply and their impact on export opportu-nities; and
·
domestic
regulations and their impact on export competitiveness.
Part 1: Re-evaluate
Commitments
The current negotiations are a time to re-evaluate the national
commitments governments undertook after the first round of GATS negotiations.
The GATS schedules are complex, which can make assessing a country’s
liberalization commitments a daunting task. Using the schedules, TSIs have to
identify restrictions that are applicable to all service sectors, then
determine whether or not their specific sector is scheduled for negotiations.
To get a complete picture of the trade commitments facing the entire service
industry, they must also familiarize themselves with their country’s other
trade obligations, including regional agreements and customs unions.
Part 2: Monitor Trade Principles...
The four basic trade principles around which the GATS is
structured are:
·
transparency — policies and regulations should be clear and readily accessible to
foreign service exporters;
·
most-favoured nation treatment — services and service providers from foreign
markets should all be treated the same;
·
national treatment — foreign services and service providers should be treated
the same as domestic services and service providers; and
·
market access — access to the domestic market should not be trade-distorting.
TSIs need to focus on any difficulties exporters may have
had in these areas since GATS came into effect in 1995. Sample questions to ask
exporters:
·
How
easy is it for them to find out about the regulatory environment in another
country?
·
How
is the service exporter treated in that foreign market?
·
Are
the enquiry and contact points able to answer the service exporter’s questions?
...exploit modes of
supply...
In services trade negotiations, all liberalization “requests
and offers” are framed in terms of four modes of supply, which are:
·
Mode 1: Cross border — only the ser-vice moves (e.g., by e-mail, Internet or
courier).
·
Mode 2: Consumption abroad — the customer travels to the supplier’s country.
·
Mode 3: Commercial presence — the supplier sets up an office in the customer’s market.
·
Mode 4: Presence of natural persons — the supplier travels temporarily
to the customer’s market.
TSIs need to learn about what modes of supply their service
exporters use and in which modes they experience difficulty in accessing export
markets. Sample questions:
·
What
barriers do service exporters face in trying to trade cross border?
·
Are
there restrictions on Internet access?
·
How
easy is temporary business entry?
·
Are
service exporters treated the same when investing in a local office?
...and assess
domestic regulations
Most domestic regulations concerning the supply of services
were developed without much analysis of their impact on services trade flows.
While the GATS negotiations are not intended to eliminate domestic regulations,
they try to prevent trade distortions from them.
TSIs need to determine whether and how their government
should change the domestic regulatory environment to facilitate trade. They can
also suggest that their government request foreign governments to make changes
in their regulations. Sample questions:
·
Are
regulations enforced consistently?
·
Are
service exporters aware of the regulations that are covered by the GATS?
·
Are
there regulations in place for the licensing of professionals or for codes of
conduct?
Dialogue is Key
Trade and service industry associations can play a key role
in informing trade officials about services trade issues. Thorough, honest
dialogue between service exporters and their industry representatives is
crucial to drawing up policy recommendations that are truly reflective of the
industry’s interests. Only such recommendations will be credible and useful for
GATS negotiators and trade officials.
Negotiations Framework
The GATS covers trade in 150 services in 12 service sectors.
It is different from the General Agreement on Tariffs and Trade in four
significant ways:
·
The
agreement covers both the service and the service provider.
·
Liberalization
focuses on making sure that domestic regulations do not distort trade flows,
rather than on reducing or removing tariffs.
·
Members
make liberalization offers in terms of four “modes of supply” of a service
rather than simply by service.
·
Members
grant each other market access and national treatment by sector and mode of
supply.
Finding Schedules
Schedules can be found on the WTO web site (http://www.wto.org) by clicking on “Trade
Topics”, then “Services”. Schedules of specific GATS commitments for trading
partners are available by clicking on “GATS Text” under “Services”, then on
“List of Schedules of Specific Commitments” (under “Appendix”) and then on the
name of the country.
Service Sectors Covered by the GATS
·
Business
services
·
Communication
services
·
Construction
and related engineering services
·
Distribution
services
·
Educational
services
·
Environmental
services
·
Financial
services
·
Health-related
and social services
·
Tourism
and travel-related services
·
Recreational,
cultural and sporting services
·
Transport
services
·
Other
services not included elsewhere
* This article was prepared by Prema de Sousa and Doreen
Conrad using material developed by Dorothy Riddle. For more information about
the GATS Consultation Kit (an introduction to the Kit is available
online. For other services-related material from ITC, contact Doreen
Conrad, Head, Trade in Services Unit, at conrad(at)intracen.org.
** International Trade Forum, Issue 2/2004, pp.18-20.
*** Required permission for re-publication was taken from
the ITC. The translated Turkish version of the article is available at: http://www.akademiktisat.net/calisma/hizmet/gats_hizmet_birlikleri.htm