WTO Members Continue Review of LDC Services
Waiver, e-Commerce Work Programme
The
1 July meeting of the Council on Trade in Services addressed the WTO work programme on e-commerce and the operationalization of a waiver
from WTO rules that allows members to offer more favourable
market access for service providers from least developed countries (LDCs). Members
also reviewed services-related notifications submitted by a number of WTO members
and addressed several services-related trade concerns. They also discussed issues
related to services domestic regulation and the role of maritime transport in the
post-COVID-19 recovery in separate meetings of the Council’s subsidiary bodies.
The Council
chair, Ambassador Ángel Villalobos Rodríguez of Mexico,
reported on the 2-3 June webinar organized
by the Council on "Least developed country services export performance and
facilitating implementation of preferences notified under the LDC Services Waiver". WTO Director-General, Dr
Ngozi Okonjo-Iweala, Chad's
Minister of Trade Ali Djadda Kampard
and Uganda's Commissioner for External Trade Emmanuel Mutahunga
gave welcome remarks at the webinar.
The chair
said he believed the webinar offered plenty of food for thought. A number of members welcomed the event and said
they found the discussions constructive, with some calling for further efforts to
ensure more effective operationalization of the waiver. Several members noted the
sharp drop in LDC services exports during the COVID-19 pandemic due to their dependence
on the travel and tourism sector, while others cited the need for improved data
on LDC trade in services.
The LDC Services Waiver allows
governments that so wish to grant more favourable treatment
for LDC services than what is given to all other members. Adopted at the 2011 Ministerial
Conference, the waiver exempts members from their obligation to grant services and
service suppliers from all WTO members the same access to their markets, also known
as the “Most-Favoured Nation” obligation.
The purpose
of the waiver is to enhance the participation of the world's poorest countries in
world services trade. A total of 36 WTO members are classified as LDCs. To date,
51 members have granted preferences in favour of LDCs.
Members
continued their information-sharing exercise related to electronic commerce, particularly
in the context of the COVID-19 pandemic.
Chad,
on behalf of the LDC Group, noted some services-specific challenges for LDCs in
the utilization of e-commerce, particularly related to online payment services.
The Republic
of Korea and China reported on the sharp increase in online retail sales during
the COVID-19 pandemic.
A couple
of members reiterated the need for strengthening the work programme
in order to fully understand the implications of e-commerce on matters such as competition,
transfer of technology, data storage, and the impact of automation on traditional
jobs and low-income workers.
A few
members also reiterated their well-known and divergent positions regarding the WTO's
e-commerce moratorium. At previous Ministerial Conferences, members have agreed
not to impose customs duties on electronic transmissions. The current extension
of the moratorium runs until the 12th Ministerial Conference (MC12)
scheduled for late 2021.
Members
raised five specific trade concerns previously addressed at the Council for Trade
in Services. Japan and the United States reiterated concerns about cybersecurity
measures of both China and Viet Nam; China sought further clarifications about Australia's
5G measures and raised concerns regarding services trade measures of India. The
US repeated its concerns and sought clarifications about Russia's software pre-installation
mandate.
In regard
to a previous concern, China noted the revoking of relevant executive orders by
the United States on prohibited transactions with Tik
Tok WeChat, and other Chinese applications, which China
said was a positive step in the right direction.
The United
States raised a new concern regarding requirements for the localization of customer
services in Saudi Arabia. The US said the decision, due to enter into force on 31
July, will impose significant difficulties and costs for many companies with major
investments in Saudi Arabia and hinder the ability of these companies to serve their
customers in the Kingdom. The European Union echoed the US concerns. Saudi Arabia
responded that the decision fully conforms with the Kingdom's
WTO commitments and will not change existing market access regulations and requirements.
Five
delegations expressed concerns, at a meeting of the Working Party on Domestic Regulation
on 30 June, with the talks on domestic regulation
for services taking place between a group of 63 WTO members, otherwise
known as the "Joint initiative on Services Domestic Regulation". The working party is one
of the Council for Trade in Services' subsidiary bodies.
The concerned
members mentioned a risk of undermining the consensus-based nature of the multilateral
trading system and amending or diluting existing rules of the WTO General Agreement on
Trade in Services (GATS). Disregarding existing multilateral mandates
could have negative consequences on other negotiations like agriculture or development,
including by pushing them into the background, they said. As difficult as these
negotiations may be, they remain critical for the multilateral trading system. This
leaves members with only two options: either
remaining outside the domestic
regulation talks or discussing issues inconsistent
with their levels of economic development and priorities.
While
each member has the right to add additional commitments to its schedule (pursuant
to GATS Article XVIII), it
cannot dilute or amend any GATS provisions and these new commitments should not
concern matters that fall under Part II of the GATS entitled "General Obligations and
Disciplines."
Re-emphasizing
the open and transparent nature of the talks, the chair of the joint initiative,
Mr Jaime Coghi of Costa Rica,
reiterated that the group remains available to engage with any interested member.
An outcome on services domestic regulation will benefit services suppliers from
all members – developed and developing countries alike – and will facilitate trade
with markets of members currently covering over 70 per cent of world services trade,
he said. In line with the objectives of the disciplines developed under the initiative,
many developing countries are already engaged in domestic regulatory reforms to
cut red tape in services regulations, recognizing the economic benefits that this
would bring to their own services markets.
Some
participants in the initiative explained that they have launched the process to
reach an outcome in services domestic regulation, recognizing that progress at the
multilateral level was not feasible because of the opposition of some members. They
reiterated that the multilateral mandate from GATS Article VI:4
remains intact and that the disciplines under discussion in the initiative will
improve participating members' existing commitments under the GATS, creating new
rights for all members.
The chair
of the working party, Ms Verónica
Bogarín Closs of Paraguay, noted
that "previous failures to finalize work in the WTO have led to doubts as to
what the Working Party on Domestic Regulation would be able to achieve." She encouraged delegations that see scope for
developing disciplines in the working party at this stage to engage with other members
and identify areas where multilateral disciplines might be viable.
Members
examined the implementation of GATS commitments at a meeting of the Committee on
Specific Commitments on 29 June. This exercise started in 2020 based on a proposal from
the United States. The proposal seeks to
review members' "conditional" commitments, under
which the entry into force, implementation or updates of specific commitments is
conditional upon national legislative actions or policy reviews. Members are undertaking
the review on a voluntary basis, with a view to improving the transparency and legal
certainty of their specific commitments. The Committee on Specific
Commitments is a subsidiary body of the Council for Trade
in Services.
Maritime
transport accounts for over 80 per cent of world trade in volume. It has played
a critical role in keeping trade flows open and supply chains intact during the
COVID-19 pandemic. A swift and equitable post-crisis recovery will need to consider
policies that facilitate maritime transport and allow economies to reap the full
benefits of maritime trade growth. This was the focus of a webinar co-organized
by the WTO's Trade in Services
and Investment Division and the International Chamber of Shipping on 29
June as part of the "Simply Services" series .
Under discussion was a recent quantitative study entitled "Protectionism
in Maritime Economies".
Experts
from national maritime authorities, international organizations, as well as from
the shipping industry and the trade community shed light on the evolution of the
maritime transport sector before, during and after the pandemic. They also stressed
how maritime transport can support economic recovery and pointed to the role of
the world trading system in facilitating maritime transport and strengthening supply
chains.