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@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