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WTO-SPECIAL: EU Zeroes In on Services
By Jason Nardi
HONG KONG, Dec 16 (IPS) - A thrust by the European Union, to secure advantages in the services sector and link this to the cuts in trade-distorting farm subsidies and tariffs demanded by developing countries, has stymied chances of a multilateral treaty at this week's sixth ministerial meeting of the World Trade Organisation (WTO) here.
"We are lacking comparable offers, serious ones on agriculture and NAMA (non-agricultural market access) from our negotiating partners,'' said EU trade commissioner Peter Mandelson at a press conference on Thursday, reporting on lack of satisfactory progress at official negotiations and in the less formal 'Green Room' sessions.
An European Commission (EC) internal document, accessed by IPS, sets out EU objectives. "Services represent the bulk of the EU economy and a satisfactory outcome in this area is of vital interest for us," it states.
While the EC is prepared to cut tariffs, the document says this is ''strictly conditional on movement both in the other pillars of the agriculture negotiations and in the other negotiating areas, i.e. industrial goods, services, anti dumping rules and development."
At the press conference, Mandelson was emphatic that the 'Doha Development Round' was not just about agriculture, and that "Europe is here in Hong Kong to do business with all the others (countries), if they are ready to do so with us." He also warned that "there will be no success, in Hong Kong or elsewhere, if we continue to focus on just one part of the (Doha) round."
Mandelson said that the EU offer to eliminate export refunds in agriculture is still on the table but it has to be matched by a phasing out of all forms of export subsidisation. ''However, we received no matching offer from Australia, New Zealand, Canada and the U.S. We shall proceed in parallel or not at all,'' he said.
Commented Bhagirath Lal Das from the Third World Network advocacy group based in Malaysia: "In this background, the prospects for the Hong Kong ministerial are looking bleak. The developing countries have refused to succumb. The pressures are on, but too much is at stake for them. Now with ample information available to them, they are able to identify their interests more clearly and are unlikely to be rushed into unfair and iniquitous results."
Liberalisation of services in education, health, utilities such as water and power, banking and insurance, temporary migration of workers and other items in WTO's General Agreement on Trade in Services (GATS) is at stake for the EU.
This is no surprise since the EU is the world's largest exporter of services, accounting for nearly a quarter of the world's total services exports. According to the European Commission, services constitute "the single most dynamic economic activity" accounting for at least two thirds of the GDP and employment.
More than half of the world's 100 largest transnational corporations have their headquarters in the EU, and many of these are service companies, mainly in the telecommunications, electricity and water sectors. Most of them were former state-owned monopolies that developed into global players after the liberalisation of the EU internal market.
What is important is that they now have powerful lobbying groups, pushing their governments and especially the EC. As publicly stated, "in services, the EU wants to see negotiations complemented by ambitious mandatory country targets for services sectors to be liberalised."
Pascal Kernesi, managing director of the Brussels-based European Services Forum (ESF), in a meeting on GATS rules on Thursday, said that "service companies are the only ones really supporting the WTO because they want new business opportunities. In the EU we are targeting 20-25 countries for each sector. But if China, India and Brazil don't accept, it will be a failure''.
The EC document finds "the HK draft declaration highly unsatisfactory and, if left unchanged, (it) would not enable the EC to pursue its legitimate offensive trade interests in an effective manner''. "The EC cannot accept that services travel in coach class whilst NAMA and Agriculture travel in business or first (class),'' it continues.
The EU wants to fix "qualitative parameters to define what kind of improved market access would be offered (e.g. "to allow at least 51 percent ownership if a company wants to establish abroad)."
Since EU won't likely obtain this result in Hong Kong, it wants to keep it suspended while obtaining guarantees that negotiations on services will open at the next WTO meeting in the spring of 2006.
This is why, say campaigners, Mandelson has diverted attention to the aid-for-trade package and refused to commit on a final date for ending export subsidies.
Barry Coates, executive director of Oxfam New Zealand said it was ''scandalous'' that the EU has made announcements of aid-for- trade as inducements to get developing countries to sign up to new trade commitments. And it turns out that much of this is previously announced, "recycled" money and that some of the EU aid has actually been recycled twice.
"To put the development package into perspective," added John Hilary, director of Campaigns and policy at War on Want, a London based advocacy organisation, "the EU's two billion euro aid-for-trade package, already announced in July in Geneva, is the same amount that is handed out in EU agricultural subsidies every two weeks''.
Both the United States and the EU have underlined that the aid offered is part of the negotiations and conditional on developing countries signing on the rest of the agreements.
They are asking developing countries to yield to their requests, in exchange for ending export subsidies and other forms of trade distortion, even though they would be merely complying with the elimination of practices held illegal by the WTO itself.
It also appears that the EU's seven-year budget, being discussed in Brussels this week, will not cover the promised increased aid- leaving the EU with no real negotiating power. (END/2005)
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