REGIONAL LIBERALIZATION ON SERVICES IN ACCORDANCE WITH MULTILATERAL DISCIPLINES

1
REGIONAL LIBERALIZATION ON SERVICES IN ACCORDANCE
WITH MULTILATERAL DISCIPLINES

• Commercial Diplomacy Programme
• UNCTAD

2
The GATS and Regional economic integration

• The GATS enables its members to be a party to,
  or to enter into preferential agreements
  liberalising trade in services art.V of GATS is
  the equivalent to art.XXIV and to the Enabling
  Clause of the GATT.
• Art.V provides for an exception to the general
  obligation of MFN treatment contained in art.II
  of GATS for parties of a regional trade agreement
  in services, meaning that the preferential
  treatment they apply among members of the
  regional agreement does not have to be extended
  to other GATS members.

3
Regional agreements liberalising services must
comply with the conditions established in Art.V,
i.e.

• To be notified to the Council of Trade in
  Services of the WTO, and fulfil 2 basic
  conditions
• have a substantial sectoral coverage in terms
  of sectors, volume of trade affected and modes of
  delivery, and
• provide for national treatment for services
  providers, eliminating substantially all
  discrimination.
• These conditions must be met at the entry into
  force of the agreement or on the basis of a
  reasonable time-frame.

4
Flexibility of art.V

• Art.V provides for flexibility in the
  implementation of these requirements when the
  agreement
• involves developing countries, and
• is related to a wider process of economic
  integration of trade liberalisation.
• BUT how and who will determine substantial
  sectoral coverage and the appropriate
  time-frame ?
• Regional integration agreements among developing
  countries such as the MERCOSUR and the Andean
  Community have set a time-frame of 8-10 years to
  achieve a substantial sectoral coverage and
  full liberalisation of trade in services.

5
Other provisions contained in Art.V

• The level of barriers to trade in the sectors
  covered by the regional agreement should not be
  raised compared to the level applicable before
  the agreement when signing the regional
  agreement.
• Para. 3(b) of art.V allows to grant more
  favourable treatment to juridical parties owned
  or controlled by natural persons of the parties
  of the regional agreement., i.e.it allows to
  introduce or to maintain a preferential treatment
  on the basis of nationality.

6
Implications of these GATS provisions when
negotiating regional agreements on services

• The higher the level of commitments adopted in
  the GATS, less space is left for regional
  preferential treatment,
• for example
• if a country binds in the GATS an unrestricted
  market access to all members (MFN) in all service
  sectors and for all modes of delivery, it will
  not be able to grant a preferential treatment in
  any sector nor mode to the members of the
  regional agreement. Therefore, the regional
  agreement will be less attractive for all parties
  concerned compared to the multilateral agreement.
  
• The margins of preference determine the
  relevance of the regional agreement compared to
  the multilateral agreement.

7
The importance of the margins of preference in
the negotiation of a regional agreement

• The expected value of regional integration for
  its members depends on what they can reasonably
  expect as the result of the regional negotiation.
• If they expect to receive the same market access
  from their regional partners as in the
  multilateral framework, their offers will be less
  significant.
• While some countries will not benefit of a
  regional margin of preference, others could
  benefit from them.
• By definition, regional agreements in services
  should provide for a GATS plus treatment for
  their members. The approach of positive lists
  allows for preferential treatment for regional
  agreements.

8
The importance of multilateral negotiations of
GATS 2000 for regional agreements

• New disciplines to be developed in GATS 2000 such
  as subsidies, emergency safeguards, government
  procurement, will have an impact on what has been
  or could be agreed at the regional level.
• Any new regional agreement should be compatible
  with the current GATS provisions and with future
  provisions.
• To maintain its relevance, the regional agreement
  should go beyond future GATS provisions.

9
Main elements to be considered for the
negotiation of a regional agreement in services

• The COVERAGE of the liberalisation, i.e. how
  many sectors, what modes of delivery, what volume
  of trade involved, will there be exemptions
  (permanent or temporary)? what measures will be
  covered (i.e. subsidies, government
  procurement?).
• The KIND of liberalisation, i.e. MFN treatment
  and national treatment with preferences for the
  partners n the regional agreement?
• Related disciplines, i.e. the provisions that
  address specific issues of trade in services,
  such as transparency, monopolies and competition,
  safeguards, subsidies, rules of origin, dispute
  settlement.

10
Regional liberalisation of trade in servicesthe
example of the Andean Community
11
WHAT IS THE ANDEAN COMMUNITY

• A subregional integration scheme established in
  1969 among 5 Latin American countries (Bolivia,
  Colombia, Ecuador, Peru, Venezuela) all members
  are middle-income developing countries.
• It adopts supranational decisions that are
  automatically incorporated into the national
  legal frameworks without ratifications (as in the
  EU).
• It has a common external tariff for trade in
  goods and aims at achieving a common market for
  goods and services in 2005.

12
Andean commitments regarding trade in services

• The General Framework of Principles and Rules
  for Liberalising the Trade in Services in the
  Andean Community was adopted as the
  supranational decision number 439 in June 1998.
• Its main objective is to create a common market
  of services among andean countries through the
  elimination of restrictive measures.

13
Andean commitments regarding trade in services

• Coverage all sectors, all modes and all
  measures. Only exclusion air transport services
  and services provided by governmental authority.
  But there were common regimes prior to this
  decision for transport services, maritime
  services, road transport and air transport.
• 5 liberalising principles MFN, national
  treatment, market access, right to free transit
  and temporal presence, automatic recognition of
  qualifications and licenses.
• Negative lists, with the possibility of
  registering reservations and total
• liberalisation are set as objectives for the year
  2005 through annual
• negotiations where progressive liberalisation is
  to be achieved.
• Related disciplines rules of origin, safeguards,
  subsidies, and special and differential treatment
  for 2 of the 5 members.