DEVELOPMENT: Services Needs Poorly Served

By IPS Correspondents Reprint | | Print |

Ravi Kanth Devarakonda

GENEVA, Mar 17 2008 (IPS) - Developing countries say they are unlikely to secure meaningful market access for their short-term contractual and independent services providers in developed countries during the ongoing Doha trade talks.

They are also unhappy over the repeated refusal by developed countries to remove the "domestic regulation" barriers that impose discriminatory qualification and licensing conditions on developing country professionals.

As part of the Doha trade negotiations, intense bilateral meetings were held last week between the United States, the European Union, Canada, Japan, Norway, India, Brazil, Argentina, Malaysia and South Africa among others, to discuss what each side is prepared to give in different areas of the trade in services.

"Even small economies like Namibia were targeted by the trade majors – the United states and the European Union – in environment services cutting across municipal services, waste management and air pollution, which has risk implications for developing countries," Ben Katjipuka, Namibia&#39s trade envoy to the World Trade Organisation, told IPS.

These bilateral meetings are expected to provide a platform for the trade ministers to discuss at a "signalling conference" next month how the services package of the Doha trade negotiations will be finalised.

"India has been actively participating (in the bilateral meetings) on the assumption that the liberalisation of trade in services will be a two-way street," Indian trade envoy to the World Trade Organisation Ambassador Ujal Singh Bhatia told IPS.

"The proposed signalling conference cannot be a forum for developing countries to report how they propose to respond to the requests made to them by the developed countries," Bhatia said.

But many developing countries that took part in last week&#39s meetings said they failed to secure any satisfactory commitments on two important areas – Mode 4 and Mode 1 – of trade in services. Mode 4 refers to the short-term movement of professional and contractual services providers from one country to the other to perform jobs on the site. Mode 1 represents cross-border services that are supplied from one country to the other through information and communication technologies.

Several studies commissioned by the World Bank and by independent economists show clear gains of around 150 billion dollars to developing countries if rich nations like the United States and the European Union minimise barriers on Mode 4 of trade in services.

But developed countries are in no mood to relax these barriers, on the grounds that they are politically sensitive.

"India is extremely disappointed with the poor quality of responses, particularly on Mode 4, where there has been hardly any change in the offers received from its developed country partners (last week)," a senior Indian services negotiator told IPS.

"We are let down by the pronounced negative response to our requests in Mode 4 and Mode 1," the negotiator added.

In a proposal titled &#39Liberal Mode 4 Commitments – A win-win for all members&#39, a group of developing countries – China, India, Pakistan, Peru, and Thailand – argued that the industrialised countries have an obligation in the Doha Round to address the "asymmetry" between those services supplied by the developed countries and those by the developing countries in Mode 4 and Mode 1.

During the previous Uruguay Round of trade negotiations, the developed countries managed to pry open many developing countries for supplying finance and telecom services. "Let us not forget that the Uruguay Round concluded with a rich haul in finance and telecom in the form of an Annex on Financial Services, Understanding on Financial Services and the Annex on Telecommunications, while the developing countries were left high and dry in regard to Mode 4," the proposal pointed out.

Against this backdrop, the U.S., which is the most important trading partner for Indian contractual services suppliers and independent services suppliers, "wants to retain the same level of commitment in Mode 4 as in the Uruguay Round, without any improvement," the Indian negotiator said.

Further, developed countries such as the U.S. adopted a "status quoist" approach in domestic regulation provisions such as qualification and licensing requirements.

However, they have demanded that developing countries increase the limits for foreign equity in services sectors relating to banking and insurance, telecom services, energy, distribution (retail) and environment services.

"Indeed, the developed countries have less than satisfactory offers even in those key infrastructure services where developing countries maintain liberal regimes," said Bhatia.

For India and other developing countries a satisfactory package to be decided by ministers would necessarily include an outcome on Mode 4, he said.

The current Doha Round is a "development" round and market access in sectors and modes of interest to developing countries is a key component of this "development" dimension, India has said.