Summary of key points

The meeting of the GSN was coordinated by the USCSI. The HKCSI was represented by Prof Anming Zhang of City University. The following is a summary of key points made during the meetings with WTO officials. The summary is prepared by Julian Arkell of ITSP, a member of the GSN.

Michael Moore, Director General, WTO

Difficult transition period, trying to find right way to handle it, with appropriate internal transparency. Hope that the General Council on Monday 7 February will start the negotiations on agriculture and services. Positive feedback at Davos from business leaders who wanted to assist, but were feeling intimidated by the adverse publicity. He would go onto the offensive to explain what the core WTO business is, and how it will work better with other institutions such as the World Bank and IMF. Indeed the WTO can help more ordinary people than either of them can.

David Hartridge, Director, Trade in Services Division, WTO

His division has 10 posts, or about the same as the agriculture division, whereas the ITU has about 800.

The last General Council, in December, was unhelpful on implementing the negotiations. He hopes the next one will have a more co-operative atmosphere, and indicate objectively that the negotiations have started efficiently. No one seemed to be questioning the guidelines for the services included in the draft Ministerial text at the end of Seattle, and all wanted to get started, but formally that text is dead. He hoped however that unhelpful linkages between services and other issues would not get in the way. It will be unavoidable with agriculture particularly on the three year deadline. Many countries want to see substantial reductions in agricultural subsidies, which the EU, Switzerland and Japan are resisting. The EU needs a larger package. There is discussion on whether the negotiations for the two sectors should be run by special negotiating committees, or by existing standing committees (ie the CTS for services). The Cairns Group strongly want a special committee for agriculture, and services really needs one to keep the negotiations separate from ongoing routine work. The standing committees have rotating chairmen, whereas the negotiating group needs stable chairmanship.

There will be an informal CTS meeting on 11 February under its existing chairman Stuart Harbinson of Hong Kong, and a formal one on 25th. A decision is needed on how to handle the three mandated services subjects review processes: (1) accounting rates for international telephone calls - MFN is in suspense on the discriminatory ITU rates, (2) MFN Exemptions: they have to be reviewed now (and are subject to negotiation in the Round), by means of written questions and answers on why they are necessary, followed by a CTS special two day session to discuss the whole lot, and (3) the Air Transport Annex, which would be lengthy and more like a negotiation, since to increase the services included would need an amendment to the GATS and would be hard fought by experts from capitals. Perhaps each will need special CTS meetings under a different chair, just as there were special groups for the telecoms and financial services negotiations.

The Committee on Specific Commitments (CSC) will continue discussing the classification of services, so that they can be properly specified in schedules, and the Scheduling Guidelines will be revised. The Working Party on Domestic Regulation (WPDR) will study whether the principles evinced during the work on accountancy can be transferred to other regulated professions, and continue work on transparency and necessity. The Working Party on GATS Rules will deal with subsidies, safeguards and Government Procurement. Work on emergency safeguard measures (ESMs) is gathering momentum and has to be concluded by the end of the year. There is an ASEAN draft soon to be tabled. DCs want ESMs so that they can make bolder specific commitments. There appear to be no demandeurs on subsidies and Government Procurement. The latter is the subject of discussions on transparency at the WTO level. The Committee on Financial Services will not do any multilateral rule making, and will only meet when market access request lists are tabled, and thus possibly not this year. However, if the WPDR? work begins to affect financial services the US would probably want it dealt with in the Committee on FS. Perhaps a Reference Paper may be needed for financial services, rather on the lines of the one for basic telecommunications. Should the WPDR work not get anywhere, then the only recourse would be to dispute settlement should the necessity of a measure acting as a barrier be challenged.

Questioners raised the: problems of prudential measures that were discriminatory and yet were excepted by the carve out; need for better classification of energy and environmental services; new air transport services; need to revive the work on electronic commerce, which has got stuck at the General Council; need for further work on a formula for the movement on natural persons, building on the Pakistani proposal.

Keith Rockwell, Director of Information and Media Relations, WTO

KR is spokesman for the WTO and a close adviser to the DG. Although the long Seattle text was now in pieces, there was a better idea of bottom lines. Most ministers now feel that they lost because everything that was on the table had gone, except agriculture and services. The least controversial matters will be started on first, and anyhow for services a good start had been made during 1999 on many matters. It had been heartening that the commitments made on financial services in 1997 were held to despite the financial crisis that started later that year, and this has given a feeling of confidence. The peace clauses on agricultural subsidies run out by the end of 2000, so there is an incentive to conclude by then. In the services negotiations there should be something for all countries. Thus it is likely the General Council will wave through the ?uilt in agenda’ for agriculture and services mandated at Marrakesh. However, the chairmanships and modalities may be difficult to settle on.

There may be problems with the implementation of transition periods for TRIPS, TRIMS, Customs Valuations and subsidies for goods. Should there be a blanket cover for all (opposed by the EU and US), or a review case by case.

The DG is holding consultations to improve the WTO internal transparency and working efficiency yet retaining progress by consensus. He will report in May. Quite a lot of work will be needed by the next Chair of the General Council before more sensitive subjects such as investment and competition and labour standards can be revisited. There is a general need for more education on how the WTO works, as so many public statements are not based on reality. He presumed that the US Congress would not vote to take the US out of the WTO when the vote comes up in the summer.

Stuart Harbinson, Hong Kong, Chairman of the CTS, and Michael Stone, Hong Kong, former chairman of the Working Party on Professional Services.

The political game in Geneva was linking agriculture and services. The agriculture players were effective and had sharp swords. The unique set of circumstances at Seattle had created the failure. Perhaps too much has been made of it, as there have been other reverses at the GATT in the past, and it bounced back. The chair of the CTS and other committees come up for change in February. He had put off the first informal meeting of the CTS until 11 February so as to be after the General Council on 7th, and the formal meeting would be on 25th. He wants to approach things gently, so no discussions of negotiating guidelines will be done in February. He hopes that the CTS can ease into the three review items (MFN, Air, telecoms) and anyhow most of the year was to have been spent on developing rules. No time was yet being lost. Bilateral meetings will not start yet, though.

Stone said that the work on professional services would continue, as governments were consulting professional bodies on the accounting disciplines, and the broader work on principles would continue at the WPDR. The WTO also had an agreement to cooperate with the ITU. There were about 30 countries which met as the Friends of Services Group before Seattle, and twice in January, and he hoped this would continue as the best way to stimulate a positive atmosphere.

Andrea Spear, Counsellor, Australian Mission

The Cairns Group was concerned at the large subsidies still in existence around the world, so their top priority was to get things going again. If they did not, the image and credibility of the WTO would suffer. The hard negotiations for services would only start when the request and offer process was well under way. The DCs were keen to ensure that they gained credit for autonomous liberalisation since the end of the Uruguay Round. It seemed that since there were ESMs for goods, it was a precondition to have a parallel for services, though it was not clear if this were desirable or feasible. Other key subjects included the movement of workers, tourism, and the assessment of trade in services. The problem was that it was too soon for the impact or benefit of services liberalisation to be measured. The Australian government had sponsored work on global trade reform and on quantifying barriers to trade in services. Much information can be gathered from their website (www.dfat.gov.au). Although there may have to be some milestones to be passed in tandem, she hoped there would be no tit for tat problems between agriculture and services.

Tarek Adel, First Secretary, Egyptian Mission

Everyone seemed agreed on the need to start soon on the mandated subjects. Different groups of countries want to see progress on agriculture and services. Egypt supports an immediate restart, and will later on submit offers on services liberalisation if partners do too. The DCs will count on the provisions of Article 19, an unchanged GATS architecture, the request/offer process, freedom for national policy objectives, and a start of negotiations on sectors of interest to their exporters - which for Egypt includes tourism, audio-visual and construction, where access to neighbouring countries is the priority. They cannot compete with the EU, Japan or the US, from whom they need investment. He felt that developed countries had not fulfilled their obligations on the movement of workers from DCs. Egypt had made a good financial services offer, and was one of the first to ratify. Help on capacity building from the WTO was dismally small and irrelevant. He hoped work on electronic commerce would continue in stages until the fourth Ministerial, as it may dominate world trade in future. In Egypt there was a Centre for Technical Support in the Prime Minister? office dealing with electronic commerce.

Sergio dos Santos, Second Secretary, Brazilian Mission

Things were at a very preliminary stage, but there would have to be strict symmetry between the negotiations on agriculture and services. Work should not be faster and broader on services than on agriculture. For Brazil the provisions of Articles 4 and 19 were important. Sequencing of work was important in services, and work on the unfinished rules must be complete to achieve legal certainty, before turning to requests and offers. Work on ESMs must be finished by December. Work on the negotiating guidelines for services could not start if there were no progress on agriculture. It was important to remember that despite what the figures appeared to show about the proportion of services in the GDP of DCs, that they did not reflect the true position because of the huge amount of black economy. He was unsure whether further work on electronic commerce could be fitted into the now much smaller post-Seattle package. Although Brazil had not yet ratified its offers on basic telecoms and financial services, it was a procedural delay, and the offers were not being rethought.

Mohd Zain Mohd Dom, Minister Counsellor, Malaysian Mission

The acrimonious mood seemed to have subsided, as shown in informal consultations. Tempers had cooled, and were now more realistic, Seattle was in the past. He hoped there would be no deadlock and the services work could restart. Malaysia had a significant agricultural sector and exports. He doubted services could use the pre-Seattle text, and a start from scratch would have to be made. However, the GATS itself was clear and provided inherent guidelines. Malaysia would not open its services markets in a big bang fashion, and the government was greatly concerned at the trade deficit in services, as they were a big market for imports. They would place conditionalities on investment so as to help the national firms to grow. As the Ministry of Finance conducts the services negotiations, a typically cautious approach will be taken. Financial services will be a no go area for some years. Due to the 1997 crisis, the Prime Minister thinks that liberalisation is not good for Malaysia. There is a defensive attitude, and no interest in services exports. The Banking Acts ban cross-border provision. The lawyers have a closed mentality. An ESM mechanism will be needed, but not as a protectionist tool, as they do not want it used against them by other countries.

EU: over-riding interest is to get something back on the road, even if modest. The built in agenda is the key substance, and is mandated from 1 January - it is a fact, not a new decision. He will not push on modalities or timetable as that would attract counterclaims. The detail can be organised by the committees for the negotiations on agriculture and services. The DG will concentrate on confidence building, looking at the concerns of the DCs on implementation where transitional deadlines have passed, and access for LDCs to markets. Contentious issues such as transparency, participation, procedure reform, institutional changes and so on, should be explored by the DG. Countries are better prepared on services this time round, due to regional free trade agreements, and the EU widening and agreements with neighbouring countries.

Canada: everyone is getting back to business. After Seattle the WTO must send out a positive signal, and the informal council meeting earlier in the day had shown reasonable attitudes. There was a convergence of views that the existing structure should conduct the business, rather than try to set up special groups, which might draw negative reactions. In substance there would be no difference. The position on services at Seattle was good, and it was hoped that the November 2000 date for requests could be achieved, followed by negotiations in 2001.

Japan: it is natural for the mandated work to start. The problem was that not many countries could see a win-win possibility for services, and few countries choose services as their priority. There was thus a need to promote the benefits of services more widely, as otherwise the negotiations will not proceed as rapidly as you would like. Services will only be helped by a broader set of negotiations.

US: the Quad is doing constructive work, and wished to get things moving again. Services were a unique group that work together on a lot of issues, had capable support from the Secretariat and had a good chairman. The Quad were looking at how to convince the DCs on the benefit of creative approaches to formulas in addition to the request/offer process. Brazil and India do not want to move on liberalisation until all the work on the rules is complete. The US does not agree as there is much important work that can be done in parallel. They should be more flexible to allow groups to deal with specific subjects such as financial services and other sectors of high priority. There was a concern that the DCs would insist on making links with other issues such as implementation and transition periods. They also needed much technical assistance.

Pimchanok Vonkhorporn, First Secretary, Thailand Mission

Thailand had a master plan to privatise and fully liberalise telecoms by 2006. They were not negative on services liberalisation. However, being a member of the Cairns Group (as well as ASEAN and APEC) there were many interests to balance. Agriculture was of great importance, and acted as a safety net during hard times for many workers. Thailand would prefer to see parity between the negotiations on agriculture and services. They were now more open than before the financial crisis, and allowed four banks to be 100% owned by foreigners for up to 10 years, when it had to be reshaped to 49%. This was a big deal as there were not many banking licences. Insurance firms would soon be allowed to have up to 49% foreign participation. There were some foreign Internet Service Providers, but Thailand did not make many cross-border commitments. They hoped to bind autonomous liberalisation in this round. They would soon issue a paper making proposal on ESMs, though it was rather legalistic, building on the parallel provisions for goods and agriculture.

Syed Habib Ahmed, Counsellor, Pakistan Mission

Services is a relatively new field for the government and officials, and there was a learning process going on in the capital and Geneva. He hoped that there would not be procedural delays so that the services work could proceed - in the past the work was well conducted by Mr Harbinson, and he hoped he could be kept in the chair. Their paper on the movement of workers had been well received and he hoped it would lead to increased specific commitments. He was concerned by the divergence of views between DCs and OECD countries on ESMs, as they wanted to see them in place as a protection against unforeseen events. He thought the ASEAN paper would be a good one on this subject. There must be no room, however, for imaginative interpretations of any language on ESMs. The Pakistan economy was not mature in services, and IT was relatively new. They hoped to become pro-active in their services interests, and not just react. They had interest in the movement of workers in professional services, health and education. They had a liberal regime for inward FDI - the best in the region. Even though 2000 was mainly rule making, people should not sit idle in capitals and should work in readiness for the requests deadline. He was not so comfortable with formulas or other innovative approaches.

WPDR: there was a quick switch of mandate when the WPPS was subsumed into the WPDR in mid 99, to concentrate on GATS Article VI.4. They were looking at overall concepts in a safe harbour setting - a sort of pedagogical process kept contention free. The necessity test, and least trade-restrictive means were of interest, and the clarification of horizontal means for improving transparency. Other issues such as equivalency and international standards did not attract so much interest yet. They hoped to look at practical matters for the necessity test, and Australia had tabled a paper. Members would table their ideas on transparency, which would be a Christmas tree of practical elements, rather than a systemic theme. The WPDR would probably back off financial services, because the treasury people had captured that turf. There was also the coherence work of the WTO with the WB and IMF to improve regulatory systems.

CSC: they were looking at the schedules of specific commitments which were where restrictions in markets could be tracked, by reviewing the guidelines on scheduling - they gave advice on how to record commitments in a coherent way; and they were looking at issues of classification. Members were being cautious since any revisions might affect existing specific commitments. They were looking to see if there were clusters of services that were regulated in a similar way (such as the professions), or had other close linkages (such as in tourism, maritime, airport management), but it was not a developed concept. They would not use the concept for electronic commerce. The US had promised some work on energy services which could be a priority. Distribution and transport were heavily regulated. It was hoped members would make inputs on environmental services too.

Andrew Stoler and Ablasse Ouedraogo, Deputy Directors General, WTO

There would be consensus on getting the agriculture and services work up and running, and Seattle had been put behind us. There would be special sessions for GATS in February and March, and for agriculture in March. They had not ruled out having two chairmen for each committee, one for negotiations and the other for ongoing routine matters. It was hoped that by Easter the work programmes would be alive and well, including that for investment, competition, Government Procurement and electronic commerce. The DCs will likely make a linkage between the extension of transition periods and the extension for a while longer of the moratorium on duties on electronic commerce. The work on electronic commerce should have been on a separate track, but had got wrapped up with everything else before Seattle. They will try to get it back to be dealt with normally. As a fall back it might be raised in the services context, and ?ubble up’ from there. So far there has been no request for delay in implementing TRIPS obligations. In the TRIMS and Customs Valuations agreements Members are allowed to make requests for delay in implementation in certain circumstances, and these would anyhow be addressed case by case as waivers were needed on a three-quarter majority basis. For TRIPS it would much tougher (ie consensus) as obligations would be undone.

Not all members were represented in Geneva and the WTO was joining with UNCTAD, UNDP the WB and IMF to give technical help where necessary so that all members could feel at ease in participating in all business of the WTO and pursue/defend their own interests. Due to the impasse at Seattle, there was the chance now for all DCs to be associated with the next moves on all fronts. There were 41 African members, and they had formed a group to nominate someone to follow their interests and report back on the mandate. The DG needed an increase of CHF 10 million for this technical assistance budget - compared with the present budget of CHF 740,000 ! It was hoped that business would be back to normal by the summer, with new arrangements for transparency for members in place. Beyond that it was difficult to see, if only due to the US and other elections.

The China accession process envisaged the following stages: (1) complete the bilaterals, (2) complete the schedules for goods and services and compile a working party report, (3) US congressional approval of NTR, (4) approval by General Council of WTO, (5) ratification by Chinese parliament (6) lodging of ratification instrument with WTO, whereupon 30 days later China would become a member. Hopefully this would all be done over the coming few months.

The WTO does not normally take money from private sources, but for Seattle it accepted funds from a European Foundation to pay for journalists from some DCs to be in Seattle. A few Member countries provide sizeable trust funds for technical assistance. The irony was that acceding members received far more assistance than existing members.

Note: their responsibilities include (inter alia):

Stoler: market access for goods, trade in services, dispute settlement

Ouedraogo: development, the ITC, trade and finance