WTO Talks Teeter on the Brink Again

published 31 October 2007 updated 31 October 2007

The future of the World Trade Organization's troubled Doha Round of talks remains in doubt again as negotiators from developing and developed countries have been unable to bridge their deep differences despite a series of intensive negotiations in September.

While some progress has reportedly been made in agricultural talks, positions seem to be hardening over the issue of industrial tariffs – the so-called Non-Agricultural Market Access (NAMA) negotiations.

At a meeting of the WTO General Council in early October, a group of about 90 developing countries issued a joint statement sharply criticizing developed country demands in the NAMA talks and warning that any progress in the negotiations can only be made once the agricultural issues are settled.

“Agriculture is the unfinished agenda of the Uruguay Round and significant progress in this area is critical for establishing a fair and equitable global trading regime and to obtain a balanced and development-friendly outcome from this round,” said the statement.

The group, which includes Argentina, Brazil, India, South Africa, and the African, Caribbean and Pacific (ACP) group of countries also condemned the NAMA draft text as unacceptable because it imposes deeper tariff cuts on developing countries.

Argentina's WTO ambassador Alberto Dumont said the tariff cuts being proposed in the draft NAMA text are “out of the question”.

The group’s statement was immediately slammed by the European Union and the United States, with the EU's WTO ambassador Eckart Guth warned that it “clearly doesn't bode well” for a successful outcome to the Doha negotiations.

“This could be the beginning of the end of the round,” echoed Sean Spicer of the U.S. Trade Representative’s office. “This is a gigantic step backward. Are they trying to find a successful outcome or are they trying to light a fuse to blow up this round?”

New text on services planned

Despite the continuing impasse in the Doha talks, members gave the chair of the services negotiations the mandate to begin drafting a text aimed at expanding the scope and coverage of the General Agreement on Trade in Services (GATS).

While many officials are unclear about what exactly would be included in the draft text, the chair of the services group, Mexico’s Ambassador Fernando de Mateo, said he will at the very least propose a new deadline for the submission of new offers on service sectors, including education, members are willing to liberalize. Member countries were to submit their revised offers by July 31, 2006 but that deadline lapsed when the entire Doha talks were temporarily suspended.

Australia, Japan, New Zealand and the United States have been pressing developing countries, particularly in Southeast Asia, to open up their education services “market” in the GATS, a move that EI is concerned would intensify and lock-in the commercialization and privatization of education.

The decision to prepare a draft text comes after an intensive week-long lobby by services industry groups who have long complained about what they see as the lack of progress in GATS talks.

New draft on domestic regulation expected in November

Meanwhile, controversial talks are proceeding separately on developing new GATS restrictions on domestic regulations – rules and procedures affecting licensing requirements, qualification requirements, and technical standards required of service providers.

Unlike current GATS rules which prohibit governments from enacting measures that discriminate against foreign providers or favour those from some WTO members over others, domestic regulation restrictions would apply to non-discriminatory measures that are applied equally to all service providers.

For EI, this has raised concern that where countries have made GATS commitments to open up their education sector a host of legitimate measures may be exposed to potential challenge. Everything from the qualification requirements of teachers to the accreditation and quality assurance of schools could be at risk.

In a meeting on October 5 with EI’s trade consultant David Robinson and other NGOs, the chair of the domestic regulation talks, Peter Govindasamy, indicated that some progress was being made in the negotiations but that a number of critical issues remain unresolved.

Govindasamy said that following the release of his second draft text in April, a series of informal meetings were held to discuss the proposals. According to Govindasamy, there are a number of areas where some consensus is emerging or where a middle-ground might be found, but that wide differences remain on several critical issues.

The most contentious issue that remains unresolved is whether domestic regulations will be subject to a necessity or relevance test, meaning that countries would have to show that rules they require service providers to fulfill with respect to qualifications, licensing and standards are not “disguised restrictions” on trade or more burdensome than necessary.

In an unusual alliance, Brazil and the United States have joined forces against the necessity test, warning that its inclusion in any new restrictions could threaten a number of important regulatory measures, such as those designed to protect consumers, public health and safety, and quality. Meanwhile, Australia and Hong Kong have been aggressively making the case for the need for stronger restrictions and a necessity test to counter what they see as regulatory barriers to the trade in services.

Some differences are also emerging over the scope and application of the proposed domestic regulation restrictions. According to Govindasamy, some members including Argentina are arguing that the restrictions should not apply to those services that countries have already agreed to liberalize in the GATS, but only to new commitments. Others want the restrictions to apply to all existing and future commitments.

The outcome of this issue will be significant, particularly for those countries that have already made commitments in sensitive sectors such as education. If the domestic regulation restrictions apply retroactively to these sectors, then the extent of the commitments will be immediately deepened.

In addition, it appears that countries will not have an opportunity to make any special exemptions to domestic regulation restrictions. In the last round of trade talks when the GATS was crafted, member countries were able to make commitments in service sectors and list any non-conforming measures they wished to maintain. For instance, a country may have made a commitment on education services, but also included what is called a “specific limitation” on a measure, such as preference given to hiring nationals as teachers, that would otherwise violate the rules of GATS that prohibit discriminatory treatment. When making these specific limitations, however, countries were only concerned about measures that were discriminatory. Domestic regulation restrictions, by contrast, apply to non-discriminatory measures.

When asked whether member countries would be given an opportunity to list as exemptions measures they want protected from domestic regulation restrictions, Govindasamy was clear in stating that this was not likely to happen.

“It’s very important that all EI affiliates, but particularly those whose countries have made commitments in education services, lobby and press their education officials into assessing the impact of the proposed domestic regulation rules on measures in the education sector,” says EI’s Deputy General Secretary Elie Jouen. “Without this kind of regulatory audit, many countries will remain unaware of just what the risks are with these domestic regulation rules.”

Govindasamy is cautiously optimistic that negotiators will be able to find a compromise position, but he admits the differences are too far apart at the moment. He intends to release a third draft text in November.