International Conference - The GATS 2000 Negotiations
Report by WK Chan, Secretary General, HKCSI

1. The Conference was hosted by the European Services Forum on 27 November 2000 in Brussels. The title of the Conference was “The GATS 2000 Negotiations - New Opportunities of Trade Liberalisation for All Service Sectors”.
2. The ESF was formed about two years ago by the then EU Trade Commissioner Sir Leon Brittan, as the European counterpart to the USCSI. Its Chairman is Andrew Buxton, former Chairman of Barclays Bank. Its membership consists of 36 European trade federations and 50 major Europe-based international companies.
3. The conference had a sign-up of 445 from 30 countries. About half were from Belgium, including many international representatives of various governments there. British delegates numbered 34, Japan sent 30 people, France, US and Germany had 23, 22 and 21 participants respectively. There was only one – WK Chan from Hong Kong. (An Edna Wong of the Hong Kong Office in Brussels also attended but she was shown as “Belgium”.)

4. The Conference was chaired by ESF Chairman Andrew Buxton. The programme lasted one full day. The Opening Session featured the following keynote speakers:

• Mr Mogens Peter Carl, Director General of the European Commission
• Amb Sergio Marchi, Chairman of WTO Council for Trade in Services
• Ms Ana Palacio, representing the European Parliament
• Mr Minoru Makihara, Chairman of Japan Services Network

5. The Opening Session was followed by a concurrent session with seven breakout groups, respectively on financial services, professional services, electronic commerce, mobility of business personnel, wholesale and retail distribution, postal and express delivery, and energy services.
6. The Conference lunch featured Mr Gui de Vaucleroy, President of the Federation of Belgian Enterprises, as speaker.
7. The afternoon programme consisted of a reporting back of the concurrent session, and a Closing Session with the following keynote speakers:

• Amb Pascal Lamy, EU Trade Commissioner
• Amb Srinivasan Narayanan, Indian Ambassador to the WTO
• Mr Dean O’Hare, Chairman, USCSI
• Mr Francois Huwart, Secretary for External Commerce, French Government
• Mr David Hartridge, Director of Services, WTO

8. In terms of participants, the Conference was a big success both in terms of numbers and quality of speakers. For many participants, the Conference was a good educational exercise on GATS and on trade in services in general.
9. There was, however, not a lot of substantive content in terms of moving the GATS negotiations forward, probably as a result of the lack of progress in the WTO itself on the GATS. No important statement was made by politicians or WTO officials during the Conference, nor was there any statement from the business sector arising from the Conference.
10. Japan’s strong presence in the Conference is noteworthy. Since forming JSN under Keidanren two years ago, the JSN has been quite active. Its Chairman, Minoru Makihara, is Chairman of Mitsubishi Corporation and is a senior and respected figure. Immediately before the Brussels Conference, a 17-member delegation led by Koichi Danno of Mitsubishi Research Institute went on a visit to Geneva and met with WTO officials and negotiators. They also developed a position paper on the GATS negotiations. Together with their strong showing previously in Atlanta, the JSN is becoming a leading player among the Global Services Network.

11. The Conference was followed by a meeting of the Financial Leaders Group convened by the USCSI. The FLG is a high-level international committee hosted by the USCSI comprising major global leaders of the financial services community. It is supported by a “Financial Leaders Working Group” consisting of staffers of the FLG as well as independent experts in financial services.
12. The meeting consisted of 3 members of the FLG (Andrew Buxton, Dean O’Hare and Toru Kusukawa of the Fuji Research Institute) and 31 members of the FLWG. The meeting went through an assessment of the progress of the GATS by Joseph Papovitch of the USTR, and then discussed whether the objectives of the FLG needed revising since the failed WTO ministerial in Seattle. The meeting also considered a draft position paper on the relationship between electronic commerce and financial services, as well as another paper on transparency under the GATS.
13. The FLG decided to hold another meeting during the Hong Kong World Services Congress. FLWG members would continue to hold periodic conferences through telephone. The meeting was then concluded with an informal dinner.

 

Global Services Network meeting

14. On the next morning, a meeting of the Global Services Network was convened. The GSN is the informal network of CSI and related organisations, coordinated by the USCSI. A total of 58 people attended. The meeting was co-chaired by the following:

• Christopher Roberts, representing British Invisibles
• WK Chan, representing HKCSI
• Bob Vastine, President of USCSI
• Pascal Kerneis, Managing Director of ESF

15. The agenda of the GSN meeting included a discussion of the outcome of the US Presidential election (then still not known) and its implication on GATS, an update of China’s entry into the WTO, and progress of GATS in relation to movement of personnel, transparency of domestic regulation, and electronic commerce. The preparation for the World Services Congress in Hong Kong in 2001 was also discussed.

 

Side trip to Geneva

16. Taking advantage of the Brussels Conference, I made a side trip to Geneva and held meetings with the following:

• Ms Doreen Conrad, Head, Trade in Services Unit of the International Trade Centre
• Mr Michael Stone, Deputy Representative of the Hong Kong Office and Ms Elina Ng, Principal Trade Officer of Hong Kong government
• Mr Hamid Mamdouh of WTO’s Services Division
• Mr Yusuf Kalindaga of UNCTAD

17. The discussion in these meetings centred on progress of the GATS as well as preparation for the Hong Kong WSC in September 2001. A brief courtesy call was also made to David Hartridge, WTO’s Director of Services.

18. The WSC received a lot of attention in the Brussels Conference. The three senior private sector representatives – Messrs Buxton, Makihara and O’Hare – are all Honorary Advisors to the WSC 2001. I took the opportunity to thank them all individually for their support. They all mentioned the Hong Kong Congress in their respective speeches.
19. The WSC brochure was not ready at that time but copies of the preliminary brochure, overprinted on HKTA “shell”, was distributed, as was a one-page invitation to the WSC. Specially prepared “invitation” folders were also presented to representatives of the ESF, USCSI, JSF, British Invisibles, UNICE, WTO and UNCTAD. In particular, a breakfast meeting was arranged with the Secretary General of the JSF.
20. The Hong Kong WSC continued to receive attention in the Financial Leaders Group meeting on 27 November, and again in the Global Services Network meeting on 28 November. As the ESF Conference was not intended to be conclusive or decisive on the GATS negotiations, it generated considerable anticipation for the Hong Kong event.
21. In conversations about the WSC many people expressed a strong interest in China and e-commerce – precisely the themes which have been chosen for the WSC. Some other suggestions in relation to the WSC included:

• The organiser should be bold and try to get state leaders to attend
• Emphasise continuity with previous conferences, e.g. Atlanta, Seattle, Brussels; also there should be a message that ongoing progress is being made.
• The key is to continue to build up communication in the process of organising the WSC. A discussion forum on the Web is suggested.
• The GSN should support the WSC by continuing its ongoing communication in domestic regulations, e-commerce and transparency.
• Sectors specifically expressing an interest in being addressed: telecom and energy.
• The WSC should also be open to the NGOs.
• There should be an effort to get more developing countries to attend.

22. In the meetings in Geneva the suggestion was made to invite WTO Director General Mr Mike Moore to be an Honorary Patron of the WSC. The ESF has described its Brussels Conference as being held “with the participation of the WTO”, featuring the WTO logo on the Conference brochure. It was suggested to me that this should be the model to follow, so as to get the WTO involved and to hence attract more participants. We were advised to proceed with this quickly as the WTO might be revising its procedures for use of its logo soon.
23. In meetings with the International Trade Centre and UNCTAD the WSC was also promoted to them. They were asked to encourage developing countries to participate.

Sergio Marchi, Chairman of WTO Trade in Services Council

• An information base has been established for services, but it is still deficient especially in statistics. Accordingly a seminar on services statistics has been held in October.
• The draft text on guidelines and procedures for the next round was ready, but it was not yet formalised. Because of the failure in Seattle, the drafting is still ongoing. A composite text is expected by the December meeting of the Council on Trade in Services.
• There will be a stock taking meeting of the Council next March. This will be a key meeting to agree on the progress and to chart the way forward.
• There are two parts of negotiations: the rule making part on safeguards, subsidies, government procurement, regulations, etc; and the negotiations themselves, which require elaborate guidelines on modalities, treatment of developing countries, etc.
• Views are welcome on how the WTO reaches out to the private sector.
• On the launch of a new round, both services and agriculture will have an important role to play.

Peter Carl, Trade Directorate of the EU

• Seattle failed not because of substance but for fortuitous reasons.
• A substantial concern was worsening transatlantic trade relations. But trade disputes should not be settled by retaliation.
• WTO members should realise that narrow sectoral focus (e.g. agriculture) is not enough; a new round must be cross-sectoral.
• The EC negotiating objective for the future of the GATS is to increase number and quality of market access and national treatment commitments. The EC agenda is for a comprehensive coverage with no exclusion of sectors, transparent process, preservation of cultural identity and sustainable development, and e-commerce.
• The next step for GATS is the submission of sectoral proposals to reflect cross interests.

Ana Palacio, Euro MP

• Electronic commerce should be win-win. It is cross border in nature and fits with GATS objectives.
• The threat towards territorialisation of e-commerce should be avoided. The outdated jurisdictional concept of e-commerce is not relevant now.
• Thus a horizontal approach in e-commerce regulation is supported.

Minoru Makihara, Chairman, JSN

• APEC has reached a concensus for a new trade round in 2001.
• JSN was set up last year with 60 corporations. They paid a visit to Geneva before this Conference and met with a number of WTO delegates. JSN has developed a position paper on GATS.
• Domestic regulation was of utmost importance to them.
• A strong government commitment is needed to ensure the negotiations succeed.
• Developing country involvement is crucial and no timetable should be set for the negotiations.
• Japan used not to support free trade agreements, but now it’s position is changing and a FTA with Singapore is being negotiated.
• JSN supports the Hong Kong WSC.

Financial Services

• Regulators have specialist roles that cannot be taken over by WTO.
• Involvement of interest groups and other players, e.g. OECD, is important.

Professional services

• The standards arising from the negotiations on accounting can be used for other professions.
• The professions need to re-examine their own ethical codes of conduct to determine to what extent these codes should be used to consumer protection or for protection of the producer.

e-commerce

• The WTO approach to e-commerce is two-prone: first, in the GATS negotiations itself through the “services cluster” such as telecom and other sectors; and secondly through the e-commerce work programme relating to domestic regulation, competition, intellectual property, etc.
• We should resist replacing the physical border, which is being dismantled by e-commerce, by a new legal border. WTO’s role is to remove barriers, not to make new rules to regulate. Consumers should not be used as alibi for nationalistic protection. A code of conduct approach is preferred to avoid interference by regulators.
• Internet may not sterilise local culture; instead content and multimedia can be used to help preserve local culture.

Movement of personnel

• There is strong evidence of the need for temporary movement of managers and professionals.
• Business has to do more to improve understanding of government and immigration authorities of this need.

Wholesale and retail

• The distribution industries are not adequately covered in the GATS.
• The need is for freedom to operate, for 100% subsidiaries, the right to own land, equal treatment in approval for buildings and tax laws, and free movement of people.

Postal and express services

• These services play a critical part in the supply chain, and a higher priority should be accorded them.
• A “reference paper” for this sector, similar to the one for telecom, should be useful.

• There should be separate negotiations on air cargo.

Energy services

• “Energy services” need to be better defined.
• There is no perfect market model yet, especially since there is a public interest element in energy.

Discussion

• Trade negotiators need to persuade regulators that trade liberalisation is in their interest.
• Japan’s position on the GATS is that there should be a balanced agenda for a new round. MFN exemptions should be eliminated. Maritime services should be included, and a formula approach may be considered for the negotiations.

Pascal Lamy, EU Trade Commissioner

• Openness is critical for the negotiations. Civil society must be involved. They should be persuaded that service sectors mean jobs.
• The GATS is still incomplete in terms of market opening. The objective should be to open to all subjects with no exclusion.
• GATS will bring about long term growth to the benefit of developing countries.
• The GATS may have public policy implications but the aim is not necessarily privatisation or de-regulation but fair access.
• There should be stricter regulatory disciplines under pro-competitive principles.
• The unfinished business especially safeguards and government procurement should be tackled.
• The sectoral priorities for the EC included environmental services, construction, distribution, financial services and telecom, e-commerce, and transport, including maritime services.
• The real momentum will be in the sectoral negotiations. The Council meeting next March will thus be important.
• A market-access round will be too difficult post-Seattle. A new round will have to be inclusive, with agenda ranging from market access liberalisation, updating and improving WTO rules on investment and competition, development country concerns, transparency of WTO, to public concern about trading especially in relation to environment.

Dean O’Hare, USCSI Chairman

• The US will have a divided House with no strong mandate. The lesson from the emphatic vote on PNTR for China, however, is that a good deal plus a determined Administration will bring results even in a divided Congress.
• An important reason for the Seattle failure was that the majors – US, EC, Japan – could not agree. If they cannot, there will be no new round.
• The developing countries must be convinced that they are winners.
• We should move decisively past rule making to opening new markets.
• The HK WSC should be made global and involve new players.

Srinivasan Narayanan, Indian Ambassador to the WTO

• Agriculture and services are difficult enough themselves and should not be entangled with others in a big new round.
• Development countries are especially interested in Mode 4 (movement of personnel) because this is where their comparative advantage lies. But most actual commitments are very restrictive. Developed countries should undertake more commitments here.

David Hartridge, WTO Director of Services

• The services negotiations started quite well, though mainly on the rule-making side.
• Lately 23 developing countries jointly submitted a text on guidelines on negotiating procedure. GATS offers investment and flexibility which should benefit them.
• There has been much controversy from the NGOs and GATS is becoming the focus of the anti-WTO movement. More explanation is needed and government and business must help in the explanation.
• The attack has focused on investment, government services such as health and education, and regulation (the alleged threat to government’s right to regulate). But these attacks are all misplaced.

Francois Huwart, French Commerce Minister (speech delivered in French)

• A calendar for bilateral request/offers should be established.
• A balance is needed on developing countries who want safeguards.
• Other concerns are temporary movement of people and audio visual policy to preserve cultural identity. Growing sectors like telecom and environmental services are of interest too.
• There should be a global round with other subjects built in.

Andrew Buxton, ESF Chairman (in conclusion)

• The HK WSC will provide an occasion, in good timing, to follow up progress of the GATS.

China update (during the GSN meeting)

• The outstanding issues between EU and China are in the areas of implementation of licensing procedures, the freedom of choice of partners, and clarification over modification of equity interests.
• EU wants these to be sorted out in order to pre-empt dispute settlement.
• If the issues are resolved, China can be in the WTO by first part of next year.