BRIEFING NOTES

Services

Services such as telecommunications, banking, insurance, construction, distribution and transport help to enhance overall economic performance.

Over the last 20 years or so, the government's role in the supply of many services has changed fundamentally from producer, distributor and financier to regulatory control and enforcement. To reflect these new market realities, the international trading system was adjusted with the entry into force of the WTO's General Agreement on Trade in Services (GATS) in January 1995.


Other briefing notes:
Agriculture
Non-agricultural market access (NAMA)
> Services
Rules
Intellectual property: geographical indications and biodiversity
Trade and environment
Trade facilitation
Special and differential treatment
Dispute settlement
E-commerce
Jargon buster
Country groupings
Briefing note on intellectual property: non-violation complaints

 

See also:
Services negotiations
Doha declaration
Doha declaration explained


The GATS defines four ways (“modes”) of delivering or trading a service:

  • Mode 1 is where services are supplied from one country to another (e.g. international phone calls), officially known as “cross-border supply”;
      
  • Mode 2 is where consumers or firms make use of a service in another country (e.g. tourism), officially known as “consumption abroad”;
      
  • Mode 3 is where a company sets up branches abroad (e.g. banks operating in overseas countries), officially known as “commercial presence”; and
      
  • Mode 4 is where individuals travel abroad to provide services in another country (e.g. fashion models), officially known as “movement of natural persons”.

 

Under the Doha round of negotiations

  • Governments aim to open, improve and clarify the rules on regulations, the poorest countries and flexibilities.
      
  • A la carte system: Each government has the right to decide which sectors it wants to open to foreign companies and to what extent, including any restrictions on foreign ownership.

 

Main concern: Does the GATS force governments to privatize and deregulate all services, including public services, to allow foreign competition from transnational corporations?

  • There is no legal obligation on a government to privatize any service, nor does the GATS outlaw government or private monopolies.
      
  • Even if a government decides to open its domestic public services to foreign suppliers, it retains the right to set limits on foreign involvement, to set qualification requirements, to set standards for consumer health and safety and to introduce new regulations to pursue any other policy objective.

 

Some key issues in the Doha negotiations

  • Many developed countries are looking for new export opportunities in sectors such as financial services, telecoms, energy services, express delivery and distribution services.
      
  • Several developing countries are seeking similar opportunities in sectors such as tourism, medical services and professional services, as well as opportunities for their individual service providers under mode 4.
      
  • In addition, many countries, both developed and developing, are working on clearer disciplines on domestic regulations such as qualification standards for professionals such as accountants, lawyers and healthcare workers.

 

Signalling conference

As governments advanced towards establishing modalities for Agriculture and non-agricultural market access (NAMA), many delegations stressed the need to gauge progress in the services request-offer negotiations. Since the revised services offers were going to be submitted only at a later stage, it was agreed to hold a “Signalling Conference” at ministerial level on 26 July 2008. The conference provided governments with the opportunity to exchange indications on their own new and improved commitments as well as the contributions expected from others. It was understood that, while the signals exchanged were important in measuring progress, they would not represent the final outcome of the negotiations. They would provide comfort to governments by reflecting real progress in the services negotiations.

The conference was chaired by Pascal Lamy. He presented a detailed report to the Trade Negotiations Committee on 30 July 2008 (JOB(08)/93.

 

Negotiating method

Negotiations to improve market access are conducted through a request-offer procedure. Governments send requests to each other indicating what market access opportunities they are seeking; the governments in receipt of such requests reply by submitting their initial offers specifying how and to what extent they are willing to consider opening their domestic market in response to these requests.

This sets in motion a series of bilateral or plurilateral bargaining sessions. Regardless of which country submits a request, the offer from the responding country applies to all countries. At the end of negotiations, the final offers then become legally-binding commitments specifying the conditions under which market access is granted.

 

Work in progress

  • Work on a text. On 26 May 2008, the chairman of the services negotiations distributed a report on his consultations concerning a multilateral text. This text could provide further guidance in the services negotiations at the time of the establishment of modalities in agriculture and NAMA. The chairman’s consultations are attempting to agree on language for the services element of the breakthrough package comprising the agriculture and NAMA modalities. All members agree that Annex C of the 2005 Hong Kong Ministerial Declaration would remain the basis for continuing and finalizing the services negotiations.

  • Discussions in the Council for Trade in Services in Special Session: Following the guidance provided in the Chairman's report (26 May 2008) and the better than expected results of the Signalling Conference (26 July 2008), members have continued to discuss the key steps required to conclude the services negotiations.

  • Bilateral and plurilateral request-offer negotiations to improve market access: In anticipation of a breakthrough in agriculture and NAMA, the bilateral and plurilateral request-offer negotiations have focused on technical work in preparation for the submission of final offers.

  • Negotiations to develop appropriate methods and mechanisms for effective implementation of the least-developed countries’ modalities. Work has been continuing on a waiver mechanism allowing members to grant special priority to services exports from least-developed countries.

  • Negotiations on rule making: The Chairman launched a work programme of informal technical discussions on key outstanding issues in the emergency safeguard measures, subsidies and government procurement negotiations.

  • Negotiations to develop disciplines on domestic regulations: The Chairperson of the Working Party submitted on 20 March 2009 a second revised draft of the text on domestic regulations. Work has continued on the basis of that draft.

 

Find out more

  THE STORY SO FAR

 
• January 2000: Negotiations begin

• March 2001: Guidelines and the Procedures for the Negotiations on Trade in Services are adopted

• November 2001: Doha Development Agenda is adopted

• March 2003: Deadline for receiving “initial offers”

• July 2004: ”July Package” establishes deadline of May 2005 for submission of revised offers

• December 2005: Hong Kong Ministerial Conference reaffirms key principles of services negotiations

• July 2006: Doha negotiations suspended

• February 2007: Resumption of negotiations

• May 2008: Report on Doha negotiations issued

• July 2008: Signalling Conference