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NON GOVERNMENTAL ORGANIZATIONS (NGOS): SYMPOSIUM
Symposium on issues confronting the world trading system
summary reports by the moderators

6 and 7 July, World Trade Organization, Geneva, Switzerland  

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Saturday, 7 July

Session IV: Services The status of public services and Negotiating issues for the current services round

Moderator: B.K. Zutshi — former Indian Ambassador to WTO
 

STATUS OF PUBLIC SERVICES

Summary of the discussion:

  • The GATS does not define "public services" per se, nor does it contain any prescription as to how such services should be provided, whether by private of public suppliers, or regulated.
     

  • The Agreement excludes from its coverage all services provided in the exercise of governmental authority, which are defined as those supplied neither on a commercial basis nor in competition with other suppliers.
     

  • It was generally observed that the scope of this carve-out is not clear, and that the terms involved are not defined. A number of speakers called for an authoritative interpretation of this provision by the Council for Trade in Services. Others wondered about the legal status of the Preamble to the GATS, which recognizes Members' right to regulate on the supply of services to meet national policy objectives.
     

  • It was noted that many of the concerns raised by civil society with regard to public services under the GATS did not relate to the Agreement as it stands at present, nor to what its implications have been, but rather to what these could be in the future.
     

  • The debate focused on health and education services, given the high degree of government involvement in these sectors. Some argued that public education should be outside the trade regime; others observed that health and education services have been traded for years, long before the GATS existed, and that the process had neither been initiated nor accelerated by the Agreement.
     

  • It was observed by some that private suppliers of health and education services could be more efficient and provide a better quality service than public suppliers, to the benefit of all consumers; it was noted by others that this would be welcome only if the private sector guaranteed the same levels of quality, universal availability and employment as the public sector, which was not the case in practice. It was further remarked that it was up to individual Members to decide the degree of private sector involvement in these sectors, that the GATS played no role and that it was essential that such flexibility be preserved. It was also felt that there was no case for foreclosing the option of multilateral liberalization.
     

  • The concern was raised by some speakers that developing countries might be put under heavy pressure by trading partners to liberalize their public services in the context of the current round of services negotiations. It was remarked by others that such pressures would be far stronger in a bilateral context than in a multilateral one.
     

  • It was the overall view that a rule-based system for international trade is essential. While there are elements of it which could be improved, "a" WTO was indispensable.

 

NEGOTIATING ISSUES IN THE CURRENT SERVICES ROUND

Summary of the discussion:

  • The fourth issue to be discussed in the services session was the content of the ongoing services negotiations.

  • There were two strands both in the introductory remarks and the following discussion:

A. Issues to be discussed under the so-called built-in agenda, consisting essentially of rule-making areas that had been left over from the Uruguay Round; and

B. access issues – in implementation of the concept of "progressive liberalization" - as provided for under the recently adopted Negotiating Guidelines and Procedures for Services.

  • Concerning the built-in agenda, the main emphasis was on the negotiations on an emergency safeguards mechanism in services and, even more so, on the negotiations under Article VI:4 on Domestic Regulation.

  • A detailed debate took place on the need for a general safeguard mechanism in the GATS. It was felt that there was no clarity about who was to be protected, against what and how. It was also felt that it would be difficult to craft a provision to cover all modes of supply.

  • Relating to Article VI:4, concerns were expressed that the necessity test provided for under the relevant provisions could constrain governments' ability to pursue essential policy objectives, including those relating to environmental protection. Specific concern revolved around the absence, in the exception clauses under Article XIV, of a specific reference to measures needed for the conversation of exhaustible natural resources. (Such concerns had already been raised in the first session on Friday). Why had the relevant provision from GATT not been transferred into the GATS?

  • It was explained that GATS negotiators did not apparently see the need for such clause in services since, contrary to the GATT, governments are not prevented under the GATS from operating export prohibitions. Secondly, there are no legal provisions in the Agreement that would prevent a government from operating non-discriminatory restrictions, or even a ban, on the use of any given resources.

  • It was also pointed out that some participants' interpretation of the necessity test may be mistaken since the test related only to the relationship between a measure and the intended objective (social, environmental and whatever else), but did affect Members' ability to set such objectives within their jurisdiction. Moreover, negotiations under Article VI:4 had an important other element, that of transparency, which could not reasonably be put into question.

  • Concerning the ongoing services round, certain doubts were expressed whether the GATS will ever turn into a catalyst for effective trade liberalization. These doubts were rooted in the sectoral nature of the Agreement, the need for regulator's close involvement, and the tendency to prefer bilateral or regional approaches over the multilateral route.

  • However, while some current trends seems to justify such a sceptical assessment, I personally feel that Governments have to resist them and protect the stability and integrity of a rules-based multilateral system.

  • It would be very unfortunate, not least for the weaker participants, should we not succeed in making these services negotiations a success – across sectors, modes and, most importantly, across all participating countries.

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