The already lagging World Trade
Organization services negotiations are facing a new hurdle as developing
countries are conditioning increased access of foreign services firms to their telecommunications
and financial markets on U.S. and European Union concessions granting increased
access for their nationals seeking temporary employment, according to informed
sources. India in particular will be looking for an increase in liberalization
for services professionals, and as of now has yet to submit a services offer.
U.S. Trade Representative Robert Zoellick
is trying to explore how to handle developing country demands on this
controversial issue, according to a U.S. trade official. He is looking to see
if there is 'any room for maneuver', but is aware that there are serious
concerns being raised domestically about the extent to which the issue of
temporary entry for foreign workers should be bound into trade agreements,
according to the official.
A private-sector source warned that
increasing temporary access will be a contentious issue as the House and Senate
Judiciary committees, which have oversight on immigration issues, are loath to
agree to changes in immigration policy that have not been initiated at the congressional
level.
Developing countries may thwart U.S.
attempts to secure increased market access in the telecommunications and
financial services sectors if the U.S. does not make an offer on increasing the
number of services professionals it grants entry to, according to an informed
source.
However, to date the U.S. and European Union
have made limited offers on the so-called mode 4 issue of the movement of
natural persons, according to an informed source. The U.S. services offer,
tabled on March 31, contains no new provisions on increased access for foreign
services professionals and does not go beyond the 65,000 cap scheduled as its minimum
in the Uruguay Round.
The EU's offer on temporary access for
services professionals would extend the three-month entry limit of contract
workers to six months for architects, engineers, and management consultants.
But this offer, unveiled on April 29, does not contain the actual numbers of foreign
professionals that would be let in each year.
The EU was forced to delay tabling its
services offer because member states were unable to agree on what to include
with respect to temporary access for services professionals to EU countries
(Inside U.S. Trade, April 4, p. 4).
In addition, services talks are bogged
down over a long-standing linkage to the WTO agriculture negotiations because
developing countries are unwilling to make strong services offers without being
assured of a substantive result on agriculture reform. WTO members are also
wrestling with how to deal with technical issues related to the classification of
new services negotiating chapters, such as express delivery and energy services
raised by the U.S.
To date 23 WTO members have submitted
services negotiations offers, and three of them - Argentina, Uruguay and
Paraguay - have deliberately made limited services offers to show their
displeasure that WTO members failed to meet a March 31 deadline for agreeing on
how to conduct agriculture negotiations, according to sources.
One developing country trade official
characterized the limited offers as a signal to developed countries that
progress in the services negotiations is tied to progress in other areas of the
Doha round of negotiations. Another developing country official said that a
link between agriculture and services is inevitable and that developing
countries would wait to see what direction agriculture negotiations would take
before tabling new and expanded services offers. An ambitious agreement on
services is not possible without a corresponding agreement on agriculture,
according to this official.
U.S. officials in recent weeks have been
downplaying the negative effect of the lagging agriculture talks on the
services negotiations, but at the same time both the U.S. and EU have
emphasized the need to energize these negotiations. A U.S. trade official said
this week that it is 'possible' that people are holding up their offers over
agriculture, but insisted that it was 'hard to make a direct link.'
Among the key developing countries that
have yet to submit services offers are Brazil and India, and neither are
expected to submit their offers at next week's special session of the Services
Council on May 19 & 22, according to sources. In between the two days of
the special session, WTO members will hold a series of informal bilateral
consultations with each other to review and detail their services offers. Some
sources said these bilateral meetings represent the key feature of next week's
services talks. Countries that have yet to submit an offer may give hints at
what their eventual services offers may contain during bilateral consultations,
based on its responses to a country's requests, one informed source said.
The formal session of the Services
Council will focus on a paper by the U.S., EU, Japan and Chile discussing
possible classifications of energy and mining services and a proposal from
least developed countries on special and differential treatment.
The classification paper seeks to develop
a mechanism on how to schedule specific commitments on mining and energy
services, which have never previously existed as separate negotiating chapters.
The U.S. has offered to bind practices that allow foreign firms market access
for services incidental to mining and energy distribution (Inside U.S. Trade,
April 4, p. 1).
Rather than advancing a totally new
mechanism for classifying what activities can be deemed related to energy
services, the paper provides a guide that uses the existing classification
structure and includes illustrative examples of the types of services that
could fall under the categories of services that are Incidental to mining and
energy distribution.
Sources said the issue of how to classify
services for new negotiating chapters, such as energy and express delivery,
present a difficult challenge for negotiators, and is one issue that could slow
down the pace of services negotiations, even if countries see movement in other
areas of the negotiations. 'Even if you get a green light in Cancun on agriculture,
services will still be tough,' said one informed source.
Another source said that countries
tabling offers need to avoid a proliferation of new negotiating chapters that
are created by removing activities from existing chapters and cobbling them
together to form new commitment categories.
Another item on the agenda is a paper
from the Least Developed Country group that calls on WTO members to present
services requests that are congruent with the economic and developmental needs
of the LDCs and that such requests be restricted with respect to the number of
sectors, modes of supply and scope of commitments. Additionally, the paper
advocates allowing LDCs to retain flexibility in undertaking commitments in a
manner consistent with their level of development. The LDCs argue that as long
as a country is classified as an LDC it should not be required to offer
national treatment for services access and should not be forced to agree to
additional commitments on regulatory issues that extend beyond their regulatory
and administrative capabilities.
The 23 WTO members that have submitted services negotiation offers to date are: the U.S., EU, Japan, Canada, Australia, New Zealand, Korea, Czech Republic, Uruguay, Taiwan, Paraguay, Norway, Iceland, Bahrain, Liechtenstein, Panama, Argentina, Switzerland, Senegal, Israel, Hong Kong, Poland and Saint Kitts and Nevis.