S/CSS/W/6
Page 1
Organization / RESTRICTED
S/CSS/W/6
29 September 2000
(00-3962)
Council for Trade in Services
Special Session / Original: English
COMMUNICATION FROM HONG KONG, CHINA
Scope and Coverage of the Services Negotiations
and their Guidelines
The attached communication has been received from the delegation of Hong Kong, China with the request that it be circulated to Members of the Council for Trade in Services.
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This paper is submitted in accordance with paragraph 2 of the “Roadmap” document agreed by the CTS on 26 May 2000 and issued on 9 June as Job No. 3573. The paper puts forward proposals from Hong Kong, China both for the negotiations and the negotiating guidelines.
I.INTRODUCTION
2.The mandated services negotiations are now well under way and significant work is being undertaken in the CTS – in both normal and Special Sessions – as well as the subsidiary bodies. As we delve deeper into the wide range of services issues that needs to be addressed, we have gained useful knowledge both on what the negotiations should encompass and on how they should be guided. And of course, in the run up to the Seattle Ministerial Conference and since then, there has been a lot of sound thinking and proposals on what the negotiating guidelines should include. Hong Kong, China wishes to build on this work.
II.OBJECTIVES FOR THE NEGOTIATIONS
3.Hong Kong, China’s overall objectives for the negotiations remain:
(a)to achieve progressive trade liberalisation in the whole range of services sectors by broadening and deepening market access and national treatment commitments;
(b)to uphold the fundamental WTO principle of non-discrimination by eliminating the exemptions to the Most-Favoured Nation (MFN) treatment;
(c)to tackle vigorously barriers to trade in services arising from domestic regulations and anti-competitive behaviour;
(d)to ensure that the GATS rules remain relevant and responsive to the needs of the modern business world through developing new rules and disciplines, and clarifying and if necessary, reviewing certain GATS provisions;
(e)to enhance the transparency and certainty of the specific commitments and domestic regulations; and
(f)to ensure that the package flowing from the above is wide enough in scope and flexible enough in application, to meet the aims and aspirations of all Members. A balanced package is one most likely to achieve a successful result for the negotiations.
III.NEGOTIATION OF SPECIFIC COMMITMENTS (ArtICLE XIX)
4.At the heart of the negotiations is the need to broaden and to deepen the specific commitments of Members, by the reduction and elimination of the adverse effects on trade in services of measures, as provided for under Article. XIX. The Uruguay Round (and subsequent telecommunications and financial services) commitments for market access and national treatment in general did no more than bind what was the then legal regime of Members – and often less. Since then, actual liberalisation has proceeded apace, and many Members have felt the benefit of enhanced competition, with improved services. We must seek to achieve real and meaningful liberalisation and commitments in this round of negotiations.
5.In approaching this aim, Hong Kong, China considers that the only logical starting point for the negotiation of specific commitments is the current schedules. This means we expect to achieve significantly higher bound levels of commitments by the conclusion of the negotiations.
6.In order to maintain the interest of all Members, it is essential that the coverage of sectors and modes be comprehensive. That is: there must be no a priori exclusion of any sector or mode of supply.
7.Hong Kong, China considers that the main method by which specific commitments are negotiated should be the traditional request-and–offer approach. It is only through this bilateral, focussed, approach that individual Members can achieve their goals. However, Hong Kong, China is also interested in developing other approaches, including clusters, model schedules and additional commitments for regulatory principles, in the limited number of sectors where such would be useful. These ideas are developed in paragraphs 9 to 14 below.
8.The scheduling of Specific Commitments cannot be separated from attendant MFN Exemptions that have been taken in many cases. MFN Exemptions are a fundamental derogation from a key WTO principle. All Members should be concerned at their number, their often broad and undefined coverage and the apparent lack of willingness to face up to their removal. The ongoing Review has highlighted that many Members have not yet started to consider the steps they will need to take when the exemptions are to be removed before 2005, in accordance with the Annex. It is essential that the negotiations and the guidelines comprehensively cover: the negotiation of the elimination of the MFN Exemptions; a Review of whether the conditions which created the need for the Exemptions still prevail; and the systemic issues that have arisen during the course of the ongoing Review. Hong Kong, China aims for the total elimination of all MFN exemptions by the conclusion of this round of negotiations or end 2004 whichever is the sooner.
IV.PRIORITIES FOR NEGOTIATION OF SPECIFIC COMMITMENTS
9.Bearing in mind paragraph 6 above, Hong Kong, China places a high priority on achieving firm commitments, undertaken on a fully MFN basis, in the maritime and audio visual services sectors. In addition, Hong Kong, China would like to see a focus on three areas related to specific commitments: our priorities on rule making are set out in paragraphs 15 to 19 below.
A.Economically related Sectors/Modes
10.Many current business activities are so structured that, for effective market access, commitments in several sectors are necessary for service providers to operate effectively. This is particularly so in the key infrastructure services sectors of: finance; telecommunications; distribution; transport; construction; and professional, computing and advertising under Business Services. Within these, Mode 3 access is key. But so also is Mode 1 and Mode 4, and greater scope for frequent visits by specialist personnel and intra corporate transfers. Hong Kong, China views it as a priority to obtain a comprehensive and balanced set of commitments in these vital infrastructure sectors, across all Members.
11.In addition, Hong Kong, China will encourage commitments covering several sectors (the “clusters” approach) in areas where suppliers aim to offer a “one stop shop” approach and hence need wide ranging commitments. Hong Kong, China’s priorities, inter alia, are: services relating to logistics, distribution and delivery hub activities; project management and related activities; and tourism. Hong Kong China will follow up with proposals in these areas.
B.National Treatment
12.National Treatment (NT) is very important, not only to provide fair access but also to promote a healthy services sector. Hong Kong, China will push for two goals in the area of NT:
(a)full NT in mode 3, where mode 3 market access in provided;
(b)a clear agreement on the scope and reach of NT in modes 1 and 2 , so as to enable Members to have confidence to make NT commitments in these modes.
C.Additional Commitments
13.Hong Kong, China has noted the significant and highly beneficial impact of the basic telecommunication reference paper, included by many Members as an additional commitment in 1997. We consider the reference paper approach is the most effective way to ensure that effective market access is not impeded by restrictive business practices. We believe that a similar reference paper approach could be used to promote, inter alia, e-commerce as an activity generally.
14.Hong Kong, China also believes that there may be scope for making additional commitments in the area of transparency. Transparency is a very important factor in achieving genuine market access and a level playing field. Clearly our work under Article VI:4 is highly relevant here. But Hong Kong, China sees merit in pursuing transparency in both the WPGR and in the negotiations.
V.RULE MAKING WORK
15.Of equal importance to the negotiation of Specific Commitments, is our work on GATS Rules, primarily taking place in the Working Party on GATS Rules (WPGR) and the Working Party on Domestic regulation (WPDR). The negotiations of specific commitments and rule making should proceed together and should aim for comparable levels of achievement. The rule making work should be concluded prior to the end of the current negotiationsand this should be spelt out in the negotiating guidelines. Hong Kong, China will focus as a high priority on the following areas.
A.Subsidies
16.Subsidies can significantly distort trade and investment. They are also an area where some Members are able to offer incentives others cannot match. Hong Kong, China will seek to have disciplines introduced, during the course of the negotiations, to reduce or eliminate trade distortive subsidies across a wide range of services sectors where they are prevalent.
B.Article VI:4
17.It is vital that domestic regulation does not act as a disguised barrier to trade. The work under Article VI:4 is thus very important to ensure that MA/NT commitments are not thwarted. Work on Article VI:4 should be specifically highlighted in the negotiating guidelines. Hong Kong, China considers that the accountancy disciplines made a good start in the area of professional services and will seek, during the course of the negotiations, to have the principles therein applied to a wide range of professions. Hong Kong, China will also pursue a broad necessity test (to ensure that measures are not more trade restrictive than necessary to fulfil broad, generic legitimate objectives), considerably enhanced transparency, and clear and fair procedures where licensing and qualification issues are concerned.
C.Government Procurement (GP)
18.Hong Kong, China believes that GP should be brought within the ambit of the GATS during the course of the current negotiations. A suitable method of scheduling GP commitments should be established early on, so that such commitments can be negotiated at the same time as the others. Such commitments should, inter alia, cover a high degree of NT and no MFN exemptions. Solid progress in GP should be a feature in the negotiating guidelines.
D.Review of the GATS
19.Even after only five years of use, it is clear that the GATS is by no means a perfect legal instrument. Hong Kong, China strongly believes that we must take the opportunity of the negotiations to review certain GATS provisions. This is to ensure that Members would have a clear understanding on the scope and reach of the provisions concerned, without altering the basic structure of the GATS. The negotiating guidelines should specially refer to a review of the GATS. Hong Kong, China would like in particular, to see Article V (on preferential trading arrangements) and Article.XX:2 (on how to schedule commitments) reviewed.
VI.TIMING AND DURATION OF THE NEGOTIATIONS
20.The Roadmap has laid down the timetable for the initial phase of the negotiations up to March2001. The timing thereafter cannot be looked at in isolation from other built in agenda items of the WTO and ongoing efforts to launch a Round. However, it should be clear from the above catalog of issues, that the issues in services are wide ranging and complex. It is unrealistic to think that substantive progress can be made on either the negotiation of specific commitments (with its concomitant need to consider scheduling matters) or the rule making work in a short period of time
21.Hong Kong, China proposes that by late 2001 Members should agree to table detail requests and that this should launch a period of intensive request-and-offer negotiations on a bilateral, plurilateral and multilateral basis, that should last up two years or until the end of the New Round, whichever is later.
22.By late 2001 Hong Kong, China considers that substantial agreement should have been reached on disciplines in the rule making area. Ideally the scope of new rules should be known by the time serious requests-and-offer r negotiations commence. And in any event, the new rules should be finalised, ready for introduction, well before the conclusion of the negotiations.
VII.FLEXIBILITY FOR DEVELOPING COUNTRIES AND AUTONOMOUS LIBERALISATION
23.Hong Kong, China fully subscribes to the provision of the GATS which provide for flexibility for developing countries to undertake commitments in a progressive manner and with the objectives of Article IV in mind. We believe, however, that the liberalisation of services sectors, provided that appropriate regulatory frameworks are in place, is in the overall benefit of all Members. We thus consider that the best approach to flexibility is to provide for realistic phasing in periods for commitments for developing countries, rather than to consider the exclusion of sectors from specific commitments. We look forward to discussing with colleagues how to implement this aspect of Articles XIX and IV.
24.As regards autonomous liberalisation, it is in the interests of all Members that Members who have undertaken autonomous liberalisation are encouraged to bind it fully (and more) in their schedules. But it is clear that such Members seek to have their liberalisation acknowledged in some way. This is not an easy area where concrete steps can be taken to meet these aspirations. But Hong Kong, China believes that the best way to tackle the issue is to have a dedicated session of the CTS Special Session to discuss the issues involved.
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