42nd GROUP ON SERVICES (GOS) Meeting
29 May 2010
Sapporo, Japan
Summary Record
1. The 42nd meeting of the Group on Services (hereinafter referred to as “the meeting”) was held in Sapporo, Japan on 29 May 2010. Ms Miyon Lee, GOS Convenor, chaired the meeting. Nineteen (19) economies were represented: Australia; Brunei Darussalam; Canada; Chile; China; Hong Kong, China; Indonesia; Japan; Korea; Malaysia; New Zealand; Papua New Guinea; Peru; the Philippines; Singapore; Chinese Taipei; Thailand; the United States and Viet Nam. The APEC Secretariat and the APEC Policy Support Unit (PSU) were also present.
I. Chair’s opening remarks
2. The Convenor welcomed members to Sapporo and noted the heavy agenda of issues to be discussed in the meeting.
II. Adoption of the agenda
3. The meeting adopted the draft agenda (2010/SOM2/GOS/001) with some minor adjustments to the order of the discussion.
III. Adoption of the summary record of the previous meeting
4. The meeting adopted the Summary Record of the 41st Group on Services meeting, held on
1 March 2010 in Hiroshima, Japan, which was circulated and finalized intersessionally
(2010/SOM2/GOS/002).
IV. Support for the multilateral trading system
5. The Convenor stated there was continuing support for APEC caucus meetings in Geneva, but noted that she couldn’t attend the services cluster of meetings held in April.
6. Japan provided an update on the April services cluster, noting several new approaches were discussed such as taking a more coordinated approach for several sectors or discussing horizontal issues such as consumer protection, but some members were hesitant about the new approaches. Japan noted the next services cluster of meetings would be held in late June and hoped that an APEC caucus would be held again in the near future.
7. The Convenor noted she would try to have an APEC caucus meeting in Geneva at the next services cluster of meetings.
V. Work program for 2010
1. Updates on current GOS Activities
a. APEC Legal Services Initiative (ALSI)
8. Australia provided some background on the proposed Draft Best Practice Guidelines for the Regulation of Foreign Lawyers and Transnational Law Practice (2010/SOM2/GOS/004). The draft best practice guidelines were an outcome of the ALSI and were first developed as a result of workshop held in Singapore in 2009. Australia noted the guidelines were intended to identify best practices for the regulation of foreign lawyers which could assist APEC economies considering implementing or amending their legislation or foreign lawyer regulations. Australia confirmed the best practice guidelines would not be binding.
9. Canada stated their legal system has clear demarcation between practice of domestic and foreign law and they would not have the flexibility to enable many of the proposed practices. Canada would prefer to see clear text in document acknowledging the principles are non-binding, being proposed as guiding principles and asking economies to make best efforts, taking into account their unique regulatory and professional conditions.
10. Singapore, Japan and Chile supported the proposal.
11. Thailand and Peru noted they would provide proposed wording for the guidelines intersessionally. Korea and Indonesia requested additional time to provide comments to improve the guidelines. Hong Kong, China suggested some amendments on the texts of the draft guidelines.
12. China suggested Australia rebadge the proposed best practice guidelines as the recommendations from the ALSI workshop. China noted they had some reservations on the proposed guidelines and hoped to have more time to exchange views with Australia about these concerns.
13. The United States was supportive of the idea of the guidelines, but noted that the content of the guidelines needed to be done properly. The United States noted regulators in the United States didn’t like governments talking about these issues in isolation, and would prefer to be directly involved in the process. The United States suggested, as way of developing the guidelines further, encouraging the network of regulators formed in the ALSI to talk to each other so they can figure out what guidelines should be as the current draft covers a lot of difficult topics in this field and some of the guidelines are inconsistent with the actual practices in many APEC economies.
14. The Convenor noted many members strongly supported developing the guidelines, but more discussions on this issue were required to take into account concerns raised from the regulators’ and the private sector’s views.
b. Workshop for Capacity Building on the Role of Cross-Border Services Trade in New Growth Strategies
15. Korea presented an update on the Workshop for Capacity Building on the Role of Cross-Border Services Trade in New Growth Strategies to be held on 16-17 September in Sendai, Japan (2010/SOM2/GOS/005). Korea noted the purpose of the project is to increase understanding among APEC member economies of how cross-border services trade could contribute to the new growth strategies. The workshop will provide an overview of: services industry and trends in cross-border services trade; concepts of new growth strategies; services and inclusive growth; and, services and sustainable growth. Korea requested the assistance of economies in suggesting additional experts in these areas to speak at the workshop.
16. Australia thanked Korea for its work on the project and noted services have an important role to play in the growth strategy; not only for inclusive and sustainable growth, but also for knowledge based growth. Australia suggested the workshop could assist to identify priority areas of action for the GOS.
c. Trade in Services the APEC Region: Patterns, Determinants and Policy Implications
17. The PSU recalled at GOS1 they announced the launch of a new project to better understand the importance of the services sector and the factors in explaining trade in services. The PSU noted they had appointed Developing Trade Consultants Inc to undertake the study and that the progress report had been finalised (2010/SOM2/GOS/006). The study was a work in progress and the progress report included a work plan on the tasks ahead and pending issues.
18. Dr Ben Shepherd from Developing Trade Consultants Inc presented the report’s preliminary findings (2010/SOM2/GOS/006a). Key messages in the report included: services account for more than 50 percent of APEC GDP; benefits of free and open trade in services not only leads to direct economic benefits, but also positive spillovers; only 20 percent of services produced are actually traded, but while there is a low rate of trade in services, the rate has been increasing rapidly since early 2000s; and, there is a lot policymakers can do to help processes along e.g. facilitate trade in services by reducing transaction costs, highlight the role of “backbone” sectors (telecommunications, retail/distribution, logistics). Dr Shepherd noted in the next version of the report attention would be given to: the way policies have changed over time and their links with trade flows and economic outcomes; the inclusion of some case studies; the role of regional integration agreements; and, the inclusion of additional data, if available.
19. The Convenor suggested it would be useful for additional data to be included in the report such as statistics for Chinese Taipei, more data related to bilateral and intra-regional trade among APEC members or data more disaggregated by service sectors and economies.
20. The United States noted, based on the preliminary results seen, this would be an important study. The headline conclusions were very instructive and provided lots for the GOS to discuss. The United States commented the report seems to be equating policy with restrictiveness regardless of the policy’s objectives, which could be problematic, and asked what type of costs and what type of policies were being looked at in the “transaction costs”.
21. Korea suggested it would be useful if the report looked at bilateral trade within the APEC region and the impact of the services sector on inclusive growth and green growth.
22. China commented some important issues had been ignored in the report e.g. difficulties developing economies face while developing services sectors and mode 4 issues. China also suggested that the PSU should explore developing their own data rather than relying on external sources.
23. Australia thanked the PSU for the work done so far and looked forward to the proposed case studies and study of the policy environment.
24. Dr Shepherd thanked economies for their helpful comments and questions and noted many of them would be discussed in the development of the next version of the report. With regard to data, Dr Shepherd noted it was difficult to get data across economies and even more difficult to get data across time periods, but if economies wished to provide data from their own economy, he would be happy to incorporate that. With regard to transaction costs associated with policies, Dr Shepherd noted he was trying to identify costs factors, but he was not making a judgment that the policies necessarily needed to be removed. That would need to be assessed on a cost-benefit basis, but he saw the report as the first step in that process i.e. highlighting areas where we need to know what balance of costs and benefits are.
25. The PSU requested comments from economies on the progress report by 11 June 2010.
d. APEC Seminar on Trade in Health Services
26. The Philippines presented the outcomes of the APEC Seminar on Trade in Health Services which was held in Cebu, Philippines on 9-11 February 2010 (2010/SOM2/GOS/003a). As a result of seminar, participants identified possible areas for APEC to cooperate in the future, including: promoting investments in trade-related health care services among APEC members, enhancing cooperation on e-health among APEC members; enhancing cooperation on data collection and dissemination on trade in health services among APEC members: and, enhancing the trade negotiating capacities of health ministries of APEC members. The Philippines suggested, in terms of future work, they may look at developing a proposal on mode 2 medical tourism.
27. The United States commended the Philippines for the running of the project and its report. The United States suggested the GOS may wish to discuss some of the issues coming out of the seminar such as mode 2 medical tourism and ICT/telehealth issues.
28. Peru noted health services were a priority sector for Peru and offered assistance with any follow-up initiatives regarding this sector. Australia noted it was interested in work in e-health and ways to promote cross border trade in e-health and looked forward to further cooperation in this area.
29. The Convenor commended the Philippines for its thorough presentations and reports and encouraged members to think about the possible areas for future work identified in the report to see where members could contribute in future.
e. Services Action Plan (SAP)
30. The Convenor noted the APEC Secretariat had responded to tasking from the Committee on Trade and Investment to populate the SAP Matrix of Actions (2010/SOM2/GOS/007).
31. Australia recalled as part of the APEC Service Initiative endorsed by Ministers in November 2009, the SAP aims to provide a framework for coordinating APEC’s work on services across all fora. Australia noted the matrix of actions was a useful tool for planning and prioritising future services work in APEC. Australia suggested in prioritising APEC services activities, the priorities should accord with broader APEC priorities under regional economic integration and the new growth strategies. Australia proposed three categories for priority actions: (i) projects focussed on logistics services to complement work under the Supply Chain Connectivity Framework; (ii) projects aimed at boosting trade in professional, education and ICT services which contribute to knowledge based growth; and, (iii) projects aimed at freeing up trade in EGS which could make a contribution to sustainable growth.
32. China appreciated the Secretariat’s efforts in compiling the activities, but was concerned that proposed projects were included in the matrix. Australia responded the matrix was meant to be a planning tool, but if the planned projects were not included then the matrix would just become a documentation of historical work and would be far less useful for prioritising future projects. Indonesia echoed Australia’s point of view on the inclusion of future actions in the matrix.
33. The United States agreed Australia’s suggestions for priority sectors were fitting, but cautioned against tying the work of GOS too firmly to these sectors at exclusion of other things. The United States noted it may be better for GOS to say that one of the priorities would be to undertake work which fulfils broader APEC objectives in these three areas, but at the same time make it clear the GOS would also consider work where member economies are interested and which serves broader APEC objectives.
34. The Convenor agreed the future actions column was important to see where members had interest and where they wanted to work in future, but agreed to update the status of proposed projects following the GOS meeting.
2. Discussion of new work programs in GOS
a. Project Management
35. The APEC Secretariat Project Management Unit (PMU) made a presentation on the new project proposal process and changes put in place for current projects i.e. the introduction of new monitoring and evaluation report requirements (2010/SOM2/GOS/008).
b. Concept Notes for approval
i. APEC Accounting Initiative – Australia
36. Australia introduced their concept note for The APEC Accounting Services Initiative (2010/SOM2/GOS/009). As the regulatory environment for foreign professional accounts remains very complex, particularly in APEC region, the project is designed to help accountants by improving the transparency of regulations affecting accounting service suppliers including auditors. The project would have four elements: (i) an inventory of current licensing and qualification requirements in each APEC economy for the provision of accounting services by foreign professionals; (ii) a workshop bringing together regulators and accounting service suppliers to discuss a range of issues including how regulatory practices affect service suppliers, the effect of the introduction of international accounting standards on regulatory regimes, and areas of cooperation between various accounting bodies; (ii) development of a set of voluntary, non-binding guidelines, to act as a tool for economies introducing international standards, or revise their accounting regulations; and, (iv) development of a publicly available website to act as a central repository for licensing and qualification requirements. Australia thanked the Philippines, Japan and the United States for co-sponsoring the proposal and welcomed further offers of co-sponsorship.