Services
Export Policies and the General Agreement on Trade in Services
Compared to its counterpart in merchandise trade the General Agreement on Tariffs and Trade (GATT) of 1947 the General Agreement on Trade in Services (GATS) contains a variety of conceptual innovations. In addition to cross-border supply the Agreement covers three additional types of transactions i.e. the supply of services via consumer movements abroad as well as the presence of foreign firms and foreign service professionals in the respective markets. At the same time the GATS accommodates a range of measures including the use of quantitative restrictions and discriminatory taxes or subsidies which are clearly constrained under the GATT. The Agreement offers particularly broad scope for various types of export-related interventions regardless of ensuing market distortions. The social and economic relevance of such measures is immediately evident. This paper seeks to provide an overview and assessment in the light of relevant GATS provisions and WTO dispute rulings.
The TISA Initiative
The plurilateral negotiations on a Trade in Services Agreement (TISA) have attracted much attention in trade policy circles. Policy and economic implications are intensely debated given the number and economic importance of participants. This paper aims to provide insights into the market access issues arising in such negotiations. Should TISA negotiations result in participants exchanging the best commitments they have so far undertaken in their preferential trade agreements (PTAs) – a reasonable starting point — TISA market access commitments would go well beyond GATS commitments and services offers tabled in the Doha Round. While this would be in itself a significant outcome (especially in terms of predictability and stability) we also highlight however that the real economic benefits would be reduced by the fact that a number of participants have already exchanged significant concessions amongst themselves through bilateral PTAs. Further and more importantly exchanging 'best PTA' commitments would not meet the participants' most important export interests. These have often remained unaddressed in many of the previous bilateral negotiations or involve countries not currently participating in TISA. Addressing better these export interests would require going beyond an exchange of 'best PTA' commitments among TISA participants — with the more difficult policy and negotiating decisions that this implies — and/or seeking to expand the group of participants. We also discuss the different forms that such a plurilateral agreement may take vis-à-vis the WTO framework.
How to Design Trade Agreements in Services
This paper deals with claims recently raised in various circles that structural faults in the General Agreement on Trade in Services (GATS) have prevented WTO Members from advancing services liberalization under the Agreement. The GATS is generally associated in this context with a bottom-up (positive-list) scheduling approach where the sectors on which trade commitments are undertaken are selected individually. This is claimed to be less efficient in terms of liberalization effects than alternative approaches under which everything is considered to be fully committed unless specifically excluded (top-down or negative listing). However a closer look at services negotiations conducted in various settings including the Doha-Round process WTO accession cases and different types of regional trade agreements suggests that such structural issues have limited if any impact on the results achieved. What ultimately matters are not negotiating or scheduling techniques but the political impetus that the governments concerned are ready to generate.
Services Rules in Regional Trade Agreements
The study tries first to assess the extent of similarities and divergences among services rules in regional trade agreements as compared to the GATS. To do so it uses a typology identifying variations in 48 key provisions structured under seven themes commonly found in RTAs and using the GATS as a benchmark. The analysis identifies two main “families” of agreements GATSinspired and NAFTA-inspired) and a residual category. The paper briefly explores the historical development that led to these families as well as their geographical spread both on an agreement by agreement basis and a country by country basis. The paper then analyses by theme the variations found in the RTAs among services rules including their novelty as compared to the GATS. Given the lack of available information on the implementation of the agreements the paper tries to assess whenever possible the magnitude of the discrepancies and their practical impacts. While subject to some qualifications the results of the study are relatively straight forward: there is no "spaghetti bowl" in services rules but just two "families" and one residual category. The details reveal that the degree of divergence between those two families does not overall seem insurmountable. This assessment concords with other studies (e.g. Marchetti Roy) that have equated them in terms of national treatment and market access and have compared directly commitments undertaken under the three families of agreements. One may even note a certain tendency to a convergence towards the GATS model (e.g. the addition of market access clause in the second generation of NAFTA-like agreements or the use of GATS-type architecture by EU for agreements else than pre-adhesion ones). In terms of "novelty" the results prove somewhat disappointing except in certain areas like mode 4 and transparency. Other issues in which in view of the intensity of WTO DDA debates one would have expected a lot of bilateral creativity such as domestic regulation safeguards and recognition provisions show themselves to be surprisingly embryonic. Finally anecdotal evidence gathered for instance during the drafting by the WTO Secretariat of Trade Policies Reviews and factual presentations on RTAs suggest that in numerous instances provisions relating to future negotiations or even regular meetings are not implemented thereby casting doubt on the effective impact of RTA provisions (including diverging ones) on trade realities.
Is There Reciprocity in Preferential Trade Agreements on Services?
Are market access commitments on services in Preferential Trade Agreements (PTAs) reciprocal or simply unilateral? If reciprocal do concessions granted in services depend on concessions received from the trading partner in other services or in non-services areas as well? In this paper we investigate the presence of reciprocity in bilateral services agreements by sub-sector mode of supply and type of agreement (North-North South-North South-South). To do so we use a database of concessions given and received by 36 WTO Members in 40 services PTAs. Results reveal the presence of reciprocity at the product (sub-sector) level and across economic sectors (i.e. preferences in services trade in exchange for preferences received in goods trade). Reciprocity is stronger in agreements between developed countries. The findings provide insights into motivations for services PTAs but also the multilateral negotiations. Indeed the negotiation of services PTAs provides an incentive to withhold services offers in the Doha Round in order to extract more - reciprocal- concessions at a bilateral level. The existence of reciprocity on a sectoral basis may also hold lessons on optimal ways to improve the multilateral negotiating process.
China - Certain Measures Affecting Electronic Payment Services
On 15 September 2010 the United States requested consultations with China with respect to “certain restrictions and requirements maintained by China pertaining to electronic payment services for payment card transactions and the suppliers of those services”.
SMEs in Services Trade
Issues related to small- and medium-sized enterprises (SMEs) supplying services have been raised at earlier stages of the Doha Round in various negotiating contexts and more recently at meetings of the Council for Trade in Services. It is difficult however to find a common denominator as to whether SME-related concerns might merit attention from a trade policy perspective under the General Agreement on Trade in Services (GATS). Without proposing any priorities this paper seeks to provide an overview of issues that Members might want to address in the WTO from promoting compliance with transparency disciplines under existing provisions to advancing the liberalization and rule-making mandates of the GATS with an SME focus.
Services Commitments in Preferential Trade Agreements
Preferential trade agreements (PTAs) on services have proliferated since 2000. This working paper briefly presents the expansion of the dataset initially developed in Marchetti and Roy (2008). The data permits to assess the extent to which market access commitments undertaken by WTO Members in PTAs go beyond GATS commitments and offers made in the context of the Doha Development Agenda. The dataset which covers PTA commitments of 53 WTO Members (counting EU Members States as one) is available at: http://www.wto.org/english/tratop_e/serv_e/dataset_e/dataset_e.htm
Expect the Unexpected? LDC GATS Commitments as Internationally Credible Policy Indicators? The Example of Mali
There is a stark contrast between the ambitious investment promotion efforts of many least developed countries (LDCs) and their often minimal commitments under the General Agreement on Trade in Service (GATS). At a time of urgent need to address domestic infrastructure and investment gaps this situation cannot be a positive signal for investors (either domestic or foreign) and may be a missed opportunity to address services aspects of the Millennium Development Goals (MDGs). LDCs often lack internationally credible mechanisms for making commitments which contributes to their evident difficulty in attracting the more employment-generating types of investment that could bring greater opportunities for poverty alleviation. Considering that most LDCs under domestic laws have already opened a wide range of services sectors to foreign direct investment (FDI) there may be an opportunity to enhance the international consistency and credibility of LDC investment promotion efforts by making GATS commitments while preserving substantial "policy space" with regard to the actual status quo. While reforms to domestic regulations are undoubtedly of greater importance to attracting FDI GATS commitments including partial commitments can be used to publicize LDC investment priorities in services (such as attracting new businesses encouraging joint ventures and technology transfer etc.) and make them legally binding internationally. Offers to make new GATS commitments can further be used as "bargaining chips" in the current Doha Development Agenda (DDA) negotiations. Mali has been selected as a case study due to the fact that trade and investment policies are clearly and consistently documented.
Fog in GATS Commitments
The creation of the General Agreement on Trade in Services (GATS) in the Uruguay Round and its entry into force in 1995 marked a new stage in the history of the multilateral system. It was motivated essentially by the rapid expansion of international services trade within an increasingly open environment in many countries. Given the peculiarities of services trade including the intangible nature of the products concerned and the need for direct contact between supplier and user in many cases the Agreement contains a variety of conceptual innovations including its extension to modes of supply beyond conventional cross-border trade (consumption abroad commercial presence and presence of natural persons) and its coverage and legitimization of various types of non-tariff restrictions. In turn the new concepts needed time to be absorbed by the ministries and agencies involved in services trade. Further the positive-list or bottom-up approach to scheduling trade commitments under the GATS meant that great flexibility was given to Members in selecting the sectors concerned and specifying the levels of access provided under individual modes. Thus not surprisingly the schedules that emerged from the Uruguay Round which still account for the majority of current commitments contain a variety of unclear or superfluous entries that may cause interpretation problems. Their solution could contribute significantly to the clarity and comparability of access obligations across sectors and WTO Members. The scheduling conventions agreed for the Doha Round thus provide specifically for the possibility of technical refinements that leave the substance of commitments unchanged. However not only was this possibility used more sparingly to date than might have been expected but additional flaws would be introduced if some current offers were to enter into effect. The following discussion with a focus on a particular group of entries (market access via commercial presence) tries to explain the scope for such refinements and develop a clearer picture of the areas where further action might be needed.
Endowments, Power, and Democracy
In spite of their growing importance in international trade as well as in bilateral and multilateral trade negotiations services have only attracted limited attention from researchers interested in determinants of trade policies and trade cooperation. This paper seeks to account for countries' varying levels of market access commitments under the multilateral General Agreement on Trade in Services (GATS). I develop an argument suggesting how levels of democracy and factor endowments are associated with more commitments. The empirical analysis supports these propositions and also suggests that relative size as well as regulatory capacity are positively linked to GATS commitments.