UPSC Express

• The Ministerial Conference is the highest decision-making body of the WTO and meets at least once every two years.

Main points of discussion in MC11

• Service negotiation under GATS will be on priority:
  • Domestic regulation: to address the contentious issue of professional visa fee hikes by the likes of the US and UK, which India has been claiming are discriminatory.
  • Agreement on Trade Facilitation in Service (TFS)
  • Global rules on services and e-commerce: While EU proposed it and wants to finalize but India wants to avoid these rules.
• India will also push for others pending issues like progress of Doha Development Agenda (DDA), commitment on Public stock-holding, new mechanism for domestic support for food procurement, seeking sharp cuts in support to farmers in the US and Europe etc.

What is GATS?

• While services currently account for over 60 percent of global production and employment, they represent no more than 20 per cent of total trade (BOP basis).
• In order to facilitate the trade in service sector by simplifying or removing complexity in trade rules & regulation by member state in service sector, it was needed to have General Agreement on Trade in Services (GATS) with same objectives as its counterpart in merchandise trade, the General Agreement on Tariffs and Trade (GATT)
• GATS entered into force in January 1995 as a result of the Uruguay Round negotiations to provide for the extension of the multilateral trading system to services.
• The GATS is the first multilateral, legally binding set of rules covering international trade in services.
• The objective of GATS:
  • Creating a credible and reliable system of international trade rules
  • Ensuring fair and equitable treatment of all participants (principle of non-discrimination)
  • Stimulating economic activity through guaranteed policy bindings
  • Promoting trade and development through progressive liberalization
• All Members of the World Trade Organization are signatories to the GATS and are committed to entering into further rounds of services negotiations.

Modes of Supply of services:

The definition of services trade under the GATS is four-pronged, depending on the territorial presence of the supplier and the consumer at the time of the transaction.

• Mode 1 — Cross border trade: A user in country A receives services from abroad through its telecommunications or postal infrastructure.  Such supplies may include consultancy or market research reports, tele-medical advice, distance training, or architectural drawings.
• Mode 2 — Consumption abroad: Nationals of A have moved abroad as tourists, students, or patients to consume the respective services.
• Mode 3 — Commercial presence: The service is provided within A by a locally-established affiliate, subsidiary, or representative office of a foreign-owned and — controlled company (bank, hotel group, construction company, etc.).
• Mode 4 — Presence of natural persons: A foreign national provides a service within A as an independent supplier (e.g., consultant, health worker) or employee of a service supplier (e.g. consultancy firm, hospital, construction company).

Major areas of services negotiations under GATS:

• Services negotiations covers four areas:
  1. Trade Facilitation in Services (TFS)
  2. Services related to e-commerce – Set of rules to facilitate online service transactions focusing on the issues of electronic contracts, electronic authentication and trust services, consumer protection and unsolicited commercial electronic messages
  3. Market Access- Negotiations to liberalize market conditions for trade in services
  4. Domestic Regulation – It relate to how WTO members should develop licensing & qualification-related measures and technical standards to ensure that these measures & standards are impartial and adequate. These should be based on objective and transparent criteria that do not constitute unnecessary barriers to trade in services.
• The first such round started in January 2000. Since 2001 the services negotiations became part of the “single undertaking” under the Doha Development Agenda (DDA), whereby all subjects under the negotiations are to be concluded at the same time.

What is Trade Facilitation in Services (TFS)?

• TFS will be like the Trade Facilitation Agreement (“TFA”). TFA, adopted recently, will facilitate trade in goods.  Similarly a well-structured TFS will significantly enhance the potential for trade in services.
• India is pushing for TFS Agreement, which also aims to ensure easing rules regarding movement of professionals and skilled workers across borders for temporary work/projects.
• The objective behind India’s proposal for an Agreement on TFS is to initiate discussions at the WTO on how to comprehensively address the numerous border and behind-the-border barriers, across all modes of supply, which are impediments to the realization of the full potential of services trade.

India’s submission

• On TFS:
  
  • Through TFS, India wants issues related to easier access for Indian software and accounting professionals along with nurses and doctors.
  • It particularly emphasised hurdles faced by natural persons supplying services in foreign jurisdictions.
• On Domestic rule:
  
  • India has highlighted the difficulties faced by services suppliers from developing economies in complying with complex domestic regulations brought out by developed country Members.
  • India also rejected attempts by some WTO Members such as European Union and Canada to include ‘gender equality’ in the services trade negotiations agenda under DR discipline as it will create service trade barrier.
• On e-commerce:
  
  • There is fear that under the banner of e-commerce several other aspects are sought to be introduced that will leave countries like India with little flexibility in seeking domestic content for programmes such as Digital India and may also make it tough to depend on open source software.
  • Plus, it limits the government’s ability to tailor rules that serve its interests instead of policies that benefit only Amazon or Alibaba.
• On Doha Round
  
  • For the last 16 years, WTO has been negotiating the Doha Round – which includes agriculture, services and import duty on industrial goods – but has made little headway due to the reluctance of the US and the EU to play ball.
  • Instead of discussing and negotiating issues of Doha round like agriculture farm subsidy, public stock-holding etc., these countries instead want new issues such as e-commerce, investment facilitation and a global regime for MSMEs.
• The other issue that is likely to be clinched is a global agreement on support for fisheries although the agenda has now been reduced only to illegal, unregulated and unreported fishing. On this issue too Indian officials said, they would seek a postponement as it will impact poor fish farmers who receive support from the state governments.

India’s support

• India is banking on support from the African Group to block the launch of negotiations, which may culminate in global standards.
• But there is a split with many African countries indicating their backing for the move from Japan, South Korea and Singapore, with tacit support from the US.
• In past, India and China have joined hands to get the developed world for many negotiations like reduce subsidies offered to their farmers etc. But China too is not in favour of international disciplines but is open to a more accelerated work programme.

Way forward

• Due to short time duration, no outcome in the form of an agreed text can be expected in Buenos Aires in these areas, and the proponents agree with this assessment.
• In terms of post-Buenos Aires work on these two topics, India and the EU have communicated their intention to re-engage on services trade facilitation and online transactions, respectively.