Resolutions of the World Services Congress

November 1999, Atlanta

(2) Resolutions from various sessions of the World Services Congress:

• Achieving Regulatory Transparency and Pro-Competitive Regulatory Reform Through Trade Negotiations

• After The Freight Hits The Dock: Achieving New Efficiencies in Rail, Transit, Trucking And Air Freight

• Aging Populations and How the WTO Can Help

• Airing Differences: What Business Needs in a New Agreement on Air Cargo Services

• Barriers to Electronic Commerce: The Agenda for WTO Negotiations

• Creating a Global Marketplace in Legal Services: A Roundtable Discussion

• Creating an Open Market for Accountancy: Its Essential Role in Economic Modernization, Capital Mobilization and Stable Financial Markets

• Effective Strategies for Insurance Providers in the Global Market Place: Goals and Objectives for Negotiations

• Establishing Pro-Competitive Regulatory Regimes Through Services Negotiations

• Expanding Business Opportunities: China on the Brink of WTO

• Freeing Up Cross-Border Trade in Financial Services: Considering the Electronic Dimension

• Globalization of Entertainment and the Media: A Roundtable on Creating New Freedoms and Markets

• GSN Statement on WTO Negotiations on Services

• How the Energy Services Industry Can Use Trade Negotiations to Secure and Expand Markets

• Moving Business Personnel: An Agenda for WTO Action

• Services in the Asia-Pacific Region

The Global Services Network (GSN) is an informal, private sector-led, forum which gathers the global services community of business people, government officials, academics, and others who are committed to increased trade and investment in services, and a rules-based, multilateral trading system. The Network’s participants are dedicated to build global support for the liberalisation of international services trade through multilateral negotiations under the auspices of the World Trade Organisation (WTO).

Services underpin all forms of international trade and all aspects of global economic activity. The broad range and diversity of the service sector includes services such as accountancy, audio-visual, distribution, energy, engineering & construction, environmental, express delivery, financial services, health care, information technology, legal, telecommunications, transportation, travel and tourism, and professional and business services. The liberalization of services markets enhances economic growth, and helps provide developing countries with essential infrastructure to speed their modernization. It provides increased choice and opportunities for consumers of the broadest range of products and services at the lowest cost.

Negotiations on services in the WTO present governments with the opportunity to liberalise trade in services by committing themselves to reducing barriers to market entry in all modes of supply, and to reform domestic regulations that hinder fair and open markets. The WTO negotiations on services should be used to achieve a contestable, competitive market in every services sector in every WTO member country.

To accomplish this, WTO member governments are encouraged to:

• Implement and enforce all GATS commitments and in particular the services agreements already negotiated. All WTO members should strive to undertake and implement commitments to open markets for the supply of telecommunication services and adopt the regulatory principles of the reference paper. All signatories of the Financial Services Agreement should ratify and implement their commitments under that agreement.

• Secure binding commitments in as many sectors as possible for market access and national treatment.

• Give priority to reviewing MFN exemptions to exclude only the most sensitive issues from liberalisation, and ensure that exemptions are precise, transparent, temporary, and limited to the minimum required for their purpose.

• Recognise that liberalisation of services markets in both developing and developed countries is critical to their economies to strengthen domestic services capacity, its efficiency, and competitiveness. Governments should extend technical assistance to developing countries to ensure their full preparation and participation in the negotiations on services.

• On a sector by sector basis where appropriate, develop pro competitive regulatory principles that promote open and efficient markets. Such regulation will foster clear and reliable information about sector specific laws and practices.

• Improve the transparency and openness of the World Trade Organisation. To engender confidence in the WTO, proceedings, access to documents and decisions should be improved and made available to the public on a timely basis.

• Under Article VI of the GATS, develop horizontal disciplines for domestic regulation that result in transparent and predictable regulatory institutions and outcomes, and the imposition of the least burdensome or least trade restrictive rules based on objective criteria, so as to promote freer trade and equitable competition and to encourage cooperation between independent sectoral regulators.

• Reformulate the classification of services whenever necessary to accurately describe the structure of services industries.

• Make all possible efforts to progressively eliminate barriers to the free movement of key business personnel.

• Agree on transparent procedures in public procurement, with the long-term objective of a single binding WTO multilateral set of rules on procurement.

• Advance electronic commerce by removing unnecessary restrictions to cross-border services business and consumption of services abroad to encourage trade without requiring establishment. Seek to remove unnecessary restrictions on the ability of foreign firms established in a market to supply services electronically within their territory, under both existing and future commitments on commercial presence.

• Continue the WTO Work Program on Electronic Commerce to clarify outstanding issues, and extend the WTO moratorium on customs duties on electronic transmissions.

• Use innovative and time saving negotiating methods to obtain market opening commitments including horizontal, formulaic, and sectoral negotiating approaches.

• Conclude the negotiations on services in three years.

The negotiations on services represent an important opportunity to achieve greater liberalization in all service industry sectors. Opening markets for all services will promote economic growth in WTO member economies.

Establishing Pro-Competitive Regulatory Regimes Through Services Negotiations

The importance of competitiveness and productivity in the Services Sector, because of its size and growing contribution to global trade, is key. Investment, as much as trade, is now the driving force of integration of the global economy. Labor mobility, the so-called “movement of natural persons,” is a priority area for liberalization in the WTO round.

Considering these three crosscutting issues, the panel put forward the recommendations below:

The WTO should in the Round:

• Adopt and strengthen pro-competitive reform measures
• Recognize the need for a balance between:
• competition and social and economic stability
• the interests of developing and developed countries with an emphasis on capacity building in developing countries
• Involve regulators in dialogue on the trade negotiations to a much greater degree than in the past
• Consider the sector-by-sector approach against the benefits of horizontal and more innovative approaches, looking in particular at the relevance and transferability of approaches such as the telecoms reference paper approach
• Renew the mandate of the WTO Working Group on Trade and Investment
• Address investment liberalization forcefully in the GATS negotiations
• Seek a more structured dialogue between immigration, labor market and trade officials on the issue of regulation of labor mobility
• Promote a broader and more structured information exchange on immigration, labor market and trade strategies
• Seek to produce clearer and more relevant classification systems relevant to temporary entry (with reference to the ILO classification system)

After The Freight Hits The Dock:
Achieving New Efficiencies in Rail, Transit, Trucking And Air Freight”

This panel will discuss issues that impact the services involved in moving goods in international commerce. Because of the importance of express services in today’s trade environment, this panel will primarily focus on that sector. The panel recommends that the elimination and reduction of trade impediments and other measures restricting the express delivery services should be a primary objective in the next round of WTO negotiations. Specifically, the panel recommends the following issues as negotiating priorities: sector specific negotiations for express delivery services, trade facilitation measures, and electronic commerce.

Express delivery services are one of the major infrastructures for trade. The major characteristics of the express delivery services sector are: time definite, door to door shipments of all weights and sizes; integration of a wide array of services; end to end control of each shipment and extensive use of advanced information technologies.

As the world advances into the twenty-first century, more and more of world trade will be comprised of the kind of high value/high-tech goods transported by express delivery trade in goods and services is growing faster than the aggregate world GDP. Express delivery services bring together distant sellers and purchasers, as well as bridge the geography of global supply chains. Though their global networks, express delivery service providers have become a part of a major revolution in manufacturing: fast-cycle logistics ad just in time manufacturing and processing.

Because of the integrated nature of express delivery services, any governmental measure adversely impacting any portion of the service impedes the entire service. The governmental measures applied to express delivery services are diverse and numerous. To provide its service, the sector integrates, i.e. performs, a large number and variety of services including pick-up of the item, ground and air transport, delivery, warehousing, distribution, customs brokerage and customs clearance, and the completion of all types of required administrative, commercial, and customs procedures. Effective trade liberalization for the sector necessarily involves the reduction or elimination of all trade restrictions and trade-distorting measures applied to all of these services. The removal of trade barriers and other impediments to the efficient operation of express delivery services will stimulate trade expansion and have a dynamic effect on all international business sectors.

Meaningful liberalization for the express delivery services sector can be achieved only through a sector-specific approach. Express delivery services are not adequately classified within any sector or subsector contained in the sector classification list in the Uruguay Round negotiations. A sector-specific approach would require that all express delivery services currently scattered throughout the GATS be addressed in a single classification and sector specific rules and principles be developed. Because air traffic rights are specifically excluded from GATS, those services would not be part of the negotiations for express delivery services. Discussions on liberalization for air services would take place in other fora.

Customs related measures often adversely affect the provision of express delivery services and place a burden on international trade. The negotiations can most easily address these issues under the umbrella of “trade facilitation”. Without trade facilitation advances, market access gains may be diluted if trade is otherwise frustrated by non-tariff barriers. Given the role of the express delivery services sector as a trade facilitator, the adoption and implementation of guidelines on express shipments would enhance export promotion and facilitate the cross border movement of all goods and services.

A chief element of express delivery services is heavy reliance upon advanced information technologies, the Internet, and e-commerce. The governing principle in the negotiations should be that the imposition of customs duties where such duties do not currently exist is contrary to trade expansion. WTO Members should formally recognize that such duties constitute barriers to trade in services and have the potential to dilute the trade promotion and facilitation benefits of electronic commerce. The GATS most-favored-nation and national treatment principles should have unconditional application to the provision of Internet access and to other forms of electronic commerce. WTO Members should ensure that all measures affecting electronic commerce are administered in a reasonable, objective, and impartial manner. The trend towards applying internationally recognized and accepted commercial legal standards to electronic commerce should continue, and strong disciplines must be developed to prevent domestic service suppliers from adopting or engaging in practices relative to electronic commerce which would reduce the competitiveness of foreign service suppliers.

Recommendations:

• Express delivery services are one of the major infrastructures for global trade and are particularly critical to the explosive growth in electronic commerce. Express delivery services have become not only an important facilitator but also a key creator of world trade.

• Because of the integrated nature of express delivery services, any governmental measure impacting any portion of the service impedes the entire service. The governmental measures applied to express delivery services are numerous and diverse including restriction on ownership of trucking operations and burdensome and archaic custom clearance procedures.

• Express delivery services are not adequately classified within any single sector or subsector contained in the sector classification list used in the Uruguay Round negotiations.

• Meaningful liberalization for express delivery services can be achieved only through a sector-specific approach.

• The panel recommends that the express delivery services sector be a negotiating priority for the next round of WTO negotiations.

Expanding Business Opportunities: China on the Brink of WTO

The World Services Congress panel on China and the WTO discussed both the economics and politics of China’s bid to join that organization. The panel also reviewed the role that the private sector can play to support China’s economic reform efforts and to spur governments to conclude the WTO negotiations, which have now lasted for over a decade.

On the economic issues, the panel agreed China’s domestic reforms, while incomplete, are on track and are, in fact, irreversible. Whether China joins the WTO, the panel expressed confidence that China’s leaders will move forward with plans to adopt more market-oriented policies.

The panel also agreed the pace of economic reform would be governed by China’s need to ensure stability. In this regard, services industries, especially financial services companies, can make a significant contribution to stability by creating jobs and mobilizing long term capital. The panel believed that WTO membership would accelerate this process by embedding the rule of law into the Chinese economy.

On the political side, the panel noted that the window of opportunity for Chinese membership is closing. Domestic political considerations in China, the U.S. and Europe may be overriding the economic rationale for Chinese membership and making it difficult for China to participate at the Seattle ministerial in other than an observer capacity. This will diminish the legitimacy of the WTO, will raise the price tag for eventual Chinese membership and will expose the fragility of, in particular, the U.S.-China bilateral relationship.

The panel believed that the task of pressing the case for China’s WTO bid may well fall to the international private sector. The panel concluded it is critical for international business to press all governments to avoid drawing out the negotiations and to act quickly to make China a part of the drafting of the next generation of trade rules.

BPF1

Goals and Objectives for Negotiations

The insurance industry provides benefits for WTO member economies, workers and citizens in a very broad and beneficial manner through promotion of trade, risk financing, internal capital market development, life insurance and retirement products, and individual consumer protection through individual and group products.

In the 1997 financial services negotiations, efforts were made to establish a structure of commitments to provide increased and assured market access and non-discriminatory treatment in insurance markets around the world. Some 70 countries undertook insurance-related obligations at that time. While many simply codified existing practices, some new liberalization was achieved as well.

During the upcoming WTO negotiations, the insurance industry believes it is important build on these achievements through broader and deeper commitments by a wider range of countries, and should be done based on the approach embodied in the "Understanding on Commitments on Financial Services". Significant restrictions remain in many important markets, including nationalized markets in several key instances. In addition, it is critical for the WTO to address issues that relate to the restrictive nature of insurance regulation in many markets. Insurers do not dispute the necessary role of regulation. Our focus is on encouraging the development and implementation of regulation which promotes competition as well as consumer protection.

Over the last several months insurance industry representatives in North America and Europe have worked to develop a set of guidelines that seek to provide a basis for further negotiations in this area.* These "pro-competitive regulatory principles" enjoy a broad range of support from insurance underwriters, intermediaries, reinsurance providers and others in the insurance industry. The critical elements of these principles can be summarized as follows:

• Full market access and freedom of form of establishment and operation;
• Non-discriminatory treatment for foreign insurance providers and intermediaries in foreign markets;
• Development of transparent legal, administrative and regulatory environments based on "best-practices" and international standards;
• Regulatory focus on solvency and prudential standards, not micro-management of price and form;
• Freedom to introduce new products and services;
• Standstill on new restrictions and protection of existing investments;
• Permit cross-border trade, including MAT, and free access to international reinsurance markets.

Ultimately, the international insurance industry will determine its support for future WTO insurance commitments based on a simple but essential bottom line criterion -- the commercial value of the commitments.

Recommendation: WSC insurance industry representatives recommend that governments pursue full market access and national treatment commitments from all WTO members, according to the Understanding on Financial Services, as well as additional commitments that result in a pro-competitive market environment for foreign insurers in those markets.

• Joint US-European Working Document on "Pro-Competitive Regulatory Principles in Insurance"

The Agenda for WTO Negotiations

To advance electronic commerce, the overarching objective of the global business community in the coming WTO Services 2000 negotiations is to broaden and deepen countries’ GATS liberalization commitments in all sectors. Those service industries that use electronic commerce need market access and national treatment to extend the benefits of international electronic commerce.

The private sector urges WTO governments to:

• Make permanent the WTO’s moratorium on Customs Duties on Electronic Transmissions to codify the duty-free treatment of electronic transmissions.

• Adopt and fully implement the WTO Agreement on Basic Telecommunications as well as the reference paper on an accelerated basis as a fundamental step to expand the benefits of electronic commerce.

• Recognize that the expansion of electronic commerce in WTO member economies will require substantial commitments in cross border and consumption abroad of services where most electronic transactions take place.

• Refrain from enacting trade related measures that would impede electronic commerce, even if enactment of such measures would not otherwise violate existing international legal obligations.

• Recognize the role of electronic commerce in promoting and facilitating international trade and reaffirm that current WTO obligations, rules, disciplines and commitments, namely the GATT, GATS and TRIPS agreements, are technology and application neutral.

• Assess the degree to which national measures now affecting electronic commerce promote or hinder that medium, and seek to eliminate or modify existing regulations that unnecessarily impede electronic commerce.

• Agree that Article VI of the GATS should not be weakened by introducing exceptions or carve outs.

• Seek to strengthen Articles III & VI of the GATS to ensure transparent and least burdensome rules in the application of domestic regulations.

• Agree that countries as an urgent matter should ratify the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty.

BPF11 continued

• Continue the WTO Work Program on Electronic Commerce inter alia to identify, reduce and eliminate barriers to international electronic commerce.

• Agree to extend technical assistance to developing countries to ensure their full preparation and participation in the Services 2000 negotiations.

The Services 2000 negotiations represent an important opportunity to move beyond the status quo and achieve greater liberalization in all service industry sectors. Opening markets for all services will open the market for electronic commerce.

Background: The rules of the General Agreement on Trade in Services apply to the audiovisual industry in the same manner as they apply to all other services. Currently, 19 countries have made market access commitments in audiovisual services, including, the Dominican Republic, Hong Kong, India, Japan, Korea, Malaysia, Mexico, New Zealand, Panama, Singapore, the United States and others.

Status: Several issues have affected countries’ willingness to take market access commitments in this sector. A number of industry representatives have expressed concern that the services classification list itself is an impediment to countries’ taking meaningful commitments. The classification list either completely omits, or badly describes key services, including cable system operators, channel operators (also know as programmers), satellite television service providers, and cinema operators. Some have expressed the belief that countries should have unimpeded flexibility to retain current measures and to adopt new measures to promote and protect their domestic film industries, whether or not those measures are discriminatory or limit market access. Others have noted that countries already have accepted trade commitments on audiovisual products pursuant to the General Agreement on Tariffs and Trade.

Recommendations:

• Negotiators should revise the services classification list to better describe the range of services industries that are relevant to trade in audiovisual services.

• As part of the built-in agenda’s mandate to address trade rules affecting services subsidies, negotiators should be mindful of the special role that subsidies play in many countries in promoting production of a diverse range of film and television products and services.

• Negotiators should seek to ensure that this highly trade-intensive service industry enjoys the benefits of world trade rules, both with regard to traditional audiovisual services and to new media, while respecting the importance of promoting and preserving cultural diversity. Given the very constructive discussion at the World Services Congress, participants agreed that discussions should continue on how to secure the benefits of trade rules while maintaining diversity and quality of audiovisual services worldwide.

• Negotiators should extend the WTO standstill agreement on duty-free treatment for electronic transactions.

• WTO members should fully implement TRIPS to ensure that audiovisual works of all nations are protected from piracy. Negotiators should avoid weakening, reopening or delaying implementation of TRIPS.

Aging Populations and How the WTO Can Help

Over the next half century, most WTO member nations will experience dramatic demographic transitions resulting in larger retiree populations and shrinking numbers of active workers supporting traditional pay-as-you-go social security systems. This fact and the inevitable economic pressures placed on citizens, economies, and governments should be of concern to the WTO trade ministers in Seattle as they launch the 2000 round of negotiations.

Private sector financial service providers strongly support the development of a WTO agenda to address the issue of aging populations and trade mechanisms to increase the stability of the global trade economy and the financial security of member governments and their citizens. The private sector recommends that WTO classifications be improved to cover the provision of pension products and services as well as the management of pension assets. In addition, it calls for the development of a WTO mechanism to strongly encourage global pension reform based on free market principles, with sound regulation and tax mechanisms that encourage citizens to offset the forecasted large gaps in public expenditures through either group or individual forms of savings and benefits.

Member governments should commit to maintain current liberal practices. Within a reasonable time frame and by a specified date, they also should schedule phase-in plans and market access improvements consistent with the pension reform recommendations of the World Bank and Organization for Economic Cooperation and Development. These schedules should not only include commitments in the provision (underwriting, sales, servicing) of pension and related services, but also commitments to liberalize investment restrictions. Any reservations under WTO regulatory carve-outs should be narrow and clear so as to avoid inappropriate and unjustified restrictions on the management of retirement funds.

The global problem of aging populations will be a major challenge to WTO member governments in the next century. The private sector believes it can play a constructive role in helping meet this challenge if WTO mechanisms to protect market-based retirement systems are implemented as part of the outcome of the 2000 round. We call on WTO member governments to recognize the urgent nature of these issues and hope to work with them to find solutions to our common problems.

Freeing Up Cross-Border Trade in Financial Services:
Considering the Electronic Dimension

Financial services play a fundamental role in most countries’ economies: financial services facilitate virtually every other economic activity. Trade in financial services has grown rapidly in recent years as the countries of Latin America, Asia, and Central and Eastern Europe have become more integrated to world financial markets.

Liberalization of trade in financial services is good for both developing and developed countries. For developing countries, free trade in financial services usually means greater competition. This competition increases efficiency, leading to cheaper and better financial services. It also leads to better allocation of capital, more investment opportunities, and greater ability to manage risks and withstand shocks. Studies show that developing countries that open their financial markets generally experience faster economic growth than those with closed financial markets. As competition produces better returns for investors, savings increases and this in turn increases economic growth.

Electronic commerce has the potential to expand the benefits of trade in financial services even further. Electronic delivery of financial services can create even greater efficiencies, reduce costs further, and facilitate new markets and products. Buyers and sellers need not be physically present to conduct business. In addition, the electronic marketplace is currently free from explicit trade barriers.

Although a good first step, the 1997 financial services annex to GATS did not eliminate all barriers to international trade in financial services. While some countries opened access to their markets completely, others opened access only to certain sectors or only to limited degrees. Certain countries took exemptions from national treatment in the financial services agreement. The following three recommendations are intended to ensure that consumers reap the maximum benefit from electronic cross-border trade in financial services and financial information:

• More countries need to make commitments in financial services and financial information. WTO members should expand existing commitments to cover more services and more modes of supply and to reduce existing exemptions. Existing exceptions to flow of financial information should be eliminated.

In telecommunications, existing commitments need to be implemented, more countries need to make commitments, and discriminatory tariffs should be eliminated. Additional commitments to greater unbundling by communication providers should be made. There should be more specificity on reasonable rates for leased lines, and specific commitments on Internet access. Internet providers should not be regulated as common carriers.

• WTO members should reaffirm that existing commitments are technology-neutral and that financial service providers may use any protocol, including Internet, to supply a service.

BPF2 continued

Explicit barriers to the electronic marketplace must be avoided. The customs moratorium on electronic transmissions should be made permanent. A technological infrastructure of connectivity between the Internet “backbone”, Internet service providers, and end users is also necessary to ensure that financial services can make the most of the “electronic dimension.” A legal “infrastructure” of certification, disclosure, payment and privacy standards is also important. Tariffs on end-user devices, such as PC’s, should be reduced.

• In addition, WTO members should recognize that national-based regulation of items such as safety and soundness and consumer protection can pose a barrier to cross-border provision of financial services. Review of best practices, harmonization of regulatory standards, mutual recognition of regulatory regimes, and recognition of the greater sophistication of wholesale customers as compared to retail customers would do much to reduce that barrier. WTO members should review evaluate how well their regulation of financial services providers is advancing the goals of fairness and transparency.

If WTO members follow these recommendations, the electronic dimension of financial services will promote economic growth and financial stability. The OECD estimates that general liberalization of services around the world could raise the pace of global growth by over 1.5% per year. Electronic commerce promises the greatest gains for developing countries, where services are least efficient and transaction costs are highest. WTO members should seize the opportunity offered by the new round to unleash the positive force of electronic delivery of financial services.

How the Energy Services Industry Can Use Trade Negotiations
to Secure and Expand Markets

The World Services Congress recognizes that:

• Energy services comprise an array of service activities related to the development, extraction, production, marketing, consumption and management of energy products, including coal, electricity, gas, nuclear, oil and renewable energy resources.

• Energy services provide the critical linkages in ensuring continued access to adequate energy supplies at reasonable prices.

• A thriving energy services sector is critical to economic well-being and improved living standards, especially with its potential to serve the 2 billion people who today do not have access to commercial energy.

• A growing energy services sector helps protect the environment by promoting efficient energy management and energy resource use.

The World Services Congress and its private sector members urge the WTO Ministerial to increase substantially global market access opportunities for energy services providers through all appropriate modalities in the new round of WTO services negotiations. The World Services Congress recommends the clarification of the application of existing General Agreement on Trade in Services (GATS) commitments to certain energy services; and the extension of existing GATS commitments to other energy services; and the development of new disciplines (as necessary) to ensure meaningful market access commitments, including an open regulatory environment that covers such areas as interconnection guarantees and transparent, non-discriminatory licensing procedures.

Moving Business Personnel: An Agenda for WTO Action

We recommend that the temporary movement of key business personnel between WTO member states should be placed, as a matter of priority, on the agenda of the 2000 round of WTO negotiations. The objective of this recommendation is the reduction of government measures which impede or prevent key business personnel from timely movement between, and temporary presence in, WTO member states.

The panel agreed that liberalization in this area is a “win-win” situation for developing, as well as industrialized countries, as the seamless and consistent provision of services assists with infrastructure development and creation of employment opportunities.

We are seeking a harmonized set of rules, which will bring certainty, transparency and speed to the issue of mobility of key business personnel. We look to the new round of GATS negotiations to place the following items on its agenda:

• Agreement on common definitions of key business personnel

Commitments as to the fourth mode of supply often include definitions and terms of key business personnel which are neither clear nor consistent from one member to another. As a result they are often subject to arbitrary and discriminatory application by regulatory authorities. In the future, a precise definition or cross-referencing of key business personnel should be agreed by the WTO.

• Agreement on transparent process

The process of movement of key business personnel would be aided by the production, by each signatory, of a simple explanation of visa and work permit requirements and the publication on an annual basis of statistics relating to the numbers of temporary working visas granted.

• Provision for the short-term movement of key business personnel

Of utmost importance is the establishment of an expedited procedure for strictly defined short-term transfers. Certain criteria could be established to allow eligible employers to apply for program certification with the local immigration department. Upon certification, the individual applications could be self-administered by employers and adjudicated at the consulate/embassy of the host country.

 

Air transport is one of the world’s fastest growing industries, making a vital contribution to the development of international trade, travel and tourism. Although “air transport” primarily conjures up images of passengers travelling, the majority of commercial aircraft are carrying cargo in some form or other. While in terms of weight on 2% of all cargo moves by air worldwide, the OECD estimates that air freight transport now accounts for well over a third of the value of the world trade in merchandise.

The new services provided by the air cargo industry – in particular the development of fully integrated express delivery services on a worldwide basis – have positioned cargo operators as key players in ensuring businesses’ ability to attain and maintain global competitiveness. Integrated carriers allow businesses’ to streamline their supply chains leading to reduced delivery lead-times, faster responses to market needs (including after-sales service), reduced inventory and savings in warehousing. Using air cargo services, manufacturers can acquire components and materials in the best value markets, locate facilities where labor and skills are available at competitive rates and market their products globally.

Air Transport Services

Air transport services should continue to be treated separately under the aviation annex. The required review of the Annex should focus on the best way to liberalize that sector. There is a disagreement among the panel members as to whether hard traffic rights should be included under the GATS. One panelist strongly believes that hard traffic rights should continue under separate aviation agreement, either bilateral or multilateral, but not under GATS. The other panelists believe that hard traffic rights should be included in the GATS.

Undoubtedly, cargo service providers and shippers worldwide would benefit from an open international air cargo market, and also an open regime for express delivery services.

Regulatory Constraints on Integrated Express Delivery Services

The panel noted a clear distinction between air transport services and express delivery services. Because express delivery services must integrate many different services together to provide a true express service, any regulatory constraints on any part of the chain creates a barrier to express services. The panelists take the view that all services that make up an express service, with the exception of air transport services should be treated as a separate new sector under GATS.

Recommendations

• The globalization of the manufacturing process and the growth of e-commerce have created a need for a globally integrated air cargo network. Further multilateral liberalization in the air cargo sector, and particularly with respect to the services provided by integrated cargo carriers, is urgently needed and should be a priority of governments.

• Air transport services should continue to be treated separately under the Aviation Annex. The required review of the Annex should focus on the best way to liberalize that sector. There is a disagreement among the panel members as to whether hard traffic rights should be included under the GATS. One panelist strongly believes that hard traffic rights should continue under separate aviation agreement, either bilateral or multilateral, but not under GATS. The other panelists believe that hard traffic rights should be included in the GATS.

Services in the Asia-Pacific Region

Services markets in East Asia and the Pacific Basin were severely shaken by the economic crisis in the region. How can the efforts in APEC and the WTO 2000 negotiations help overcome obstacles to the development of services markets in this vast, highly diverse region?

Chair:

• Roberto de Ocampo, Former Minister of Finance, currently Senior Advisor, SGV & Company / Arthur Andersen, Manila, The Philippines.

Panelists:

• Koichi Danno, Executive Vice President, Mitsubishi Research Institute, Tokyo, Japan
• Brant Free, Senior Vice President, International External Affairs, The Chubb Corporation, Washington, DC
• Judith King, Chief Executive Officer, Australian Services Network, Melbourne, Australia
• Kwok-Chuen Kwok, Chief Economist, Northeast Asia, Standard Chartered Bank, Hong Kong

The panel discussion noted that several of the once booming economies of the Asia-Pacific were drawn into a whirlpool of business failures and havoc following the flotation of the Thai baht in July 1997. The consequent collapse of asset prices and currency depreciations in several East Asian economies revealed important structural weaknesses that eventually triggered the economic slump now referred to as the Asian financial crisis.

To deal with the crisis, many experts concluded that structural reforms of government, business, and the financial sector had to be undertaken rapidly. In light of the need for decisive action to stop the downward swing of the financial crisis and set the affected countries back on the road to recovery and future prosperity, several governments undertook reform programs.

In the session, each panelist spoke on services in the region from their respective country perspectives, and commented on how services trade can provide economic stabilization and growth in the region in the wake of the Asian financial crisis. The panelists also emphasized the need for improvements in the recording and use of services statistics for more accurate reflection of the impact and value of services trade. The panelists agreed that progress in the APEC process can strengthen the region’s participation and influence in the WTO negotiations, and highlighted the need for regional organizations like APEC and ASEAN to put forward solid positions that reflect the experience and needs of those regions.

Recognizing that much still needs to be done to strengthen the economies of the Asia-Pacific, the private sector recommends that:

• APEC countries fully implement structural reform programs that reflect the private-sector consensus on actions to be taken in supporting services liberalization;

• APEC countries work together to strengthen the region’s participation and influence in the WTO negotiations;

• APEC countries allow the private sector to play a more involved and constructive role in the policy-formulation and implementation process;

• The WTO facilitate and assist in the development of institutions and relevant associations and bodies, and through these groups help with the development of regulatory frameworks that advance the internationalization of the global services markets.

• The WTO assist with capacity-building efforts to facilitate structural reforms and the full implementation of reform measures.

Creating an Open Market for Accountancy:
Its Essential Role in Economic Modernization,
Capital Mobilization and Stable Financial Markets

Improving the movement of people, knowledge and skills is at the heart of the forum’s recommendations.

In the short term, spreading knowledge and best practice comes through the deployment of people. Ministers should therefore agree to the elimination or reduction of government measures which prevent or impede key business personnel from timely movement between, and temporary presence in, WTO Member countries.

In the long term, the movement of people will be helped by the recognition of professional qualifications. Ministers should therefore increase the number of bilateral mutual recognition agreements between WTO Members (following the Guidelines for Mutual Recognition Agreements or Arrangements in the Accountancy Sector)

Knowledge should not be crowded out by restrictions on market access. Ministers should therefore urge more WTO Members to make commitments for accountancy services and further develop the Disciplines on Domestic Regulation in the Accountancy Sector (in accordance with the requirements of GATS Article VI:4).

In these ways, accountancy will become the genuinely global profession, as it needs to be, to serve the world’s capital markets and to support economic development.

Description of the Issue: Trade in legal services is growing in response to the increasing demands of legal service consumers. However, the continued growth of this trade faces multiple challenges in the form of national laws, regulations and professional rules of governance limiting the extent to which non-nationals may offer their services. While rules of governance for the legal profession are important in all jurisdictions to ensure the competence of lawyers, protect consumers and preserve the independence of judgment of lawyers, the development and implementation of these rules need not, and must not, serve as barriers to trade which restrict the consumers’ ability to obtain the services they desire. Any multilateral rules governing trade in legal services will have to allow legal service consumers freedom of choice while maintaining the professional standards with which legal services will be provided.

Status of the Issue: Governments have devoted relatively little attention to addressing the barriers restricting trade in legal services. The World Trade Organization (“WTO”) covers legal services under the General Agreement on Trade in Services (“GATS”), but thus far the treatment of legal services under the GATS has been limited to certain signatory countries submitting an initial schedule of commitments, and preliminary work in the WTO Working Party on Trade in Professional Services. At the regional level, treatment of cross-border trade in legal services has been sporadic. The European Union regulated the provision of legal services among Member States, but this regulation has not been extended to legal service providers from non-Member States. Under the NAFTA, certain aspects of a Joint Recommendation and Model Rule issued in 1998 were rejected by significant state bar associations in the United States as being too restrictive, and these objections now have been raised at the governmental level. Trade in legal services also is covered by some bilateral trade agreements, as well as agreements between private sector professional bodies.

Recommendations: Multilateral rules governing trade in legal services should allow consumers to obtain the services they need on a non-discriminatory basis. The multilateral rules also should establish a framework within which the national regulation of the legal profession continues without unduly restricting the ability of non-national legal service providers to offer their services. To achieve such an agreement, negotiators should focus their efforts on the identification and evaluation of the barriers that currently exist. Specifically, negotiators should address: (1) existing national restrictions relating to the ability of non-national legal service providers to offer their services in a host country, and the rules relating to the scope of the legal services they may provide; (2) existing national restrictions relating to the form of association between national and non-national legal service providers; (3) nationality requirements which restrict the manner in which non-national legal service providers operate (issues of “management” and “control”); (4) nationality requirements on local licensing, registration, and bar membership; (5) restrictions on the name under which the legal service providers may offer their services; and (6) the transparency of national rules and regulations. By framing future negotiations around these issues, progress can be made in liberalizing trade in legal services without compromising the standards of the profession.