5 July 2005

General comments on the DDA

1. The Hong Kong Coalition of Service Industries is a long-time champion of multilateral trade. We support the trade negotiations conducted by the WTO under the Doha Development Agenda (DDA). We would like to express our views ahead of the Sixth Ministerial Conference (MC6) of the WTO, to be held in Hong Kong in December, as follows.

2. The DDA promises huge gains in world trade, yet the negotiations have been plagued by a perception of lack of good faith. With the collapse of the last Ministerial Conference at Cancun in 2003, the WTO cannot afford to fail again at MC6. The maximum effort must be made by all sides to agree on a credible package in MC6, to enable the Round to conclude by the practical deadline of 2006.

3. DDA’s success would require leadership from the world’s major trading nations, especially the “quad group” – the US, EU, Canada and Japan. They should rise above domestic and narrow sectoral interests to enable a successful outcome to be achieved. To make the DDA a genuinely “development” round, there must be tangible benefits for developing countries, both in market access and in areas of practical concern to them such as trade facilitation, special and differential treatment, and technical assistance programmes to enhance their negotiating capacity.

4. To ensure a balanced outcome, the WTO must not allow agriculture to dominate the negotiations at the expense of other issues, whether in the lead-up to or during MC6. Besides agriculture, there must be concrete progress in non-agricultural market access, as well as liberalization of trade in services.

5. We note with regret that the services negotiations have been lagging behind that of other issues. We would like to stress that the services negotiations, due to their highly regulated nature, are much more complicated than tariff negotiations. Without a more intensive effort, services risk being left behind in the DDA negotiations. As a service economy, Hong Kong has much stake in the services negotiations and should seek to maximize our contribution to the negotiations.

Negotiations on services: approach

6. The HKCSI is concerned that the services negotiations are progressing too slowly. In a joint statement issued on 24 June, the HKCSI has joined a coalition of other services organizations to warn against a crisis in the services negotiations, and to call on political will to be mobilized urgently to put the talks back on track. (Statement attached.)

7. We strongly support active participation by the Hong Kong government in the services negotiations. Besides being party to popular “friends groups” such as computer services, telecommunications, financial services and logistics, we encourage the Hong Kong negotiators to be active in the corresponding “friends groups” of other sectors of potential export interest to Hong Kong, such as air services, energy, education and environment. It is hoped that Hong Kong’s active involvement could help expedite the formation of formal negotiating groups, so as to achieve early results.

8. With regard to the methodology of the negotiations, we share the view that the current request/offer process is too cumbersome and needs improving. We appreciate that it would be difficult to develop new methodologies half way through the negotiations. However, we call on negotiators to be open-minded about developing new models for negotiation in the course of the talks. In the joint services statement of 24 June, for instance, the formula of an offer to “capture existing liberalization, with a view toward broadening and deepening commitments, in all modes of supply, across as many service sectors as possible” has been suggested and should merit serious consideration.

9. In the negotiations on rule-making, we are especially interested in the concept of “transparency standard” for services regulations. This could be further explored through developing and applying objective criteria for the “necessity” and “proportionality” provision of the GATS on domestic regulations, for example, developing guidelines to interpret the provision of “not introducing regulations that are more burdensome than necessary”.

10. With regard to the Mode 4 negotiations (movement of natural persons), the HKCSI and other global services organizations have put forward the concept of a “GATS visa”, which should be further pursued in the negotiations to facilitate movement of business people across borders.

11. Our expectation for the DDA is to have the negotiations completed within 2006. We appreciate that services liberalization is complicated and can never be “completely finished”, nevertheless, we stress that it is essential for commercially tangible results to be achieved. To enable the services negotiations to move forward meaningfully, we believe the end of the DDA should also herald the beginning of fundamental structural and methodological changes in the negotiating process, in accordance with the principle of progressive liberalization. In other words, the whole request/offer process and the architecture of GATS should be reviewed after the DDA.

Specific service sectors

12. Following consultation with members of the HKCSI, we would like to comment on the negotiations on specific service sectors as follows.

13. Aviation support services. Hong Kong’s service providers in aviation-related services would like to seek more liberal treatment in other markets in the areas of ground handling, catering, cargo services, aircraft cleaning and maintenance, etc.

14. Business and professional services. Hong Kong’s business and professional sectors have taken a very proactive role in seeking market access to Mainland China through CEPA. We would encourage the government negotiators to use that experience to apply to the GATS talks, with a view to exploring broader market access in economies of interest to Hong Kong professionals.

15. Financial services. Through the efforts of the Financial Leaders Group (convened by the USCSI and International Financial Services London), the Global Services Network are developing model schedules on insurance and securities. The HKCSI is party to that effort and we endorse the use of the model schedules as a basis for negotiating broader market access in financial services.

16. Logistics. As a major global logistics hub – a world-class service provider in the full range of logistics services such as sea, land and inter-modal transport, integrated logistics, shipping, courier, etc – Hong Kong has taken the initiative and should continue to take the lead in the negotiations on logistics services in the DDA. We have particular interest in the developing and emerging markets, particularly on investment and as agent for international or mid-size companies. Liberalisation in the areas of local shareholding, movement of business professionals, nationality requirements, etc. would be very welcome.

17. Telecommunications. Hong Kong has one of the most liberalised, if not the most liberalised, regulatory regime in telecommunications. But the same is not true of many of our trading partners, particularly the developing and emerging economies. For these countries, trade barriers such as those relating to residency, foreign ownership control or prohibitive license fees, are not uncommon. With our free and liberal regime, Hong Kong should try to leverage on the DDA negotiations to seek liberalization in the telecom sector of these sectors.

Greater transparency of the negotiations

18. We are grateful to the government for continuing to engage the business sector in the DDA negotiations. We would like to suggest that this effort will be more fruitful if the government can provide greater transparency of the negotiating process. We understand that it would not be practical (nor desirable) to disclose fully Hong Kong’s negotiating positions and tactics, such as details of Hong Kong SAR’s requests and offers under GATS. Nevertheless, periodic reports on the progress of the negotiations would certainly help facilitate more substantive business input. In that connection, we note the recent information paper published by the government on Hong Kong’s revised GATS offers – this is a good step in informing business and the public about the negotiations. We would encourage the government to publish similar information papers in the course of the DDA negotiations, both in the lead-up to, during, and after MC6.