TCS Daily

Some Steps Forward, Some Backward

By Charles Finny - March 20, 2006 12:00 AM

In my 1 March article "Working Around the Protectionists" I suggested that a plurilateral approach to services negotiations might add real impetus to this important leg of the three-legged WTO Doha Round. I also suggested that if sectors were selected carefully, there was a good chance developing countries would become more interested in (and committed to) the negotiations on services. Interest from developing countries has been sorely lacking in the services negotiations to date.

One sector that seemed to be particularly ripe for priority attention was IT support services: the systems that support electronic commerce, call centres and outsourcing of software development. I was therefore very pleased to find a range of articles the other day from Indian papers saying (I have selected from several):

  • "India has requested greater liberalisation of computer and related services and increased access to professionals in developed markets in the service sector negotiations in the WTO..."
  • "India is reportedly considering opening up architecture and engineering services, though nothing has been finalised yet. It is also toying with the idea of seeking market access in health services, especially in Mode 1, given the country's strengths in telemedicine, teleradiology and telepathology..."
  • "Under Mode 4, India is seeking increasing access for employees of contractual service suppliers and independent professionals. Both groups currently face huge barriers in the form of visa restrictions, insistence on their companies having a commercial in the country where they provide the service.""The request made by India seeks a waiver of the wage parity condition, under which the host country insists that these workers and professionals be paid at the same rates as workers in that country. This effectively kills the cost advantage that manpower from India provides.'
  • "India has also sought substantial reduction in the economic needs test, which is often used to deny access to service sector professionals."
  • "The request also seeks a clear enumeration of the list of sectors/occupations, where such employees and professionals will be allowed or a clear negative list of sectors, where they will not be allowed."
  • "In the case of computer and related services, India is seeking full market access and national treatment commitments in Modes 1, 2 and 3."

Obviously there is much work to be done but this change of approach from India is a positive sign.

Also positive, for me, is news that New Zealand is actively participating in plurilateral requests on private education services, maritime services, air transport services, engineering and architecture services, construction services, postal and courier services, computer and related services, legal services, and logistical services.

I am told that there is no plurilateral request on tourism services "as access restrictions in tourism services are generally not substantial". I agree, but there are substantial investment (mode 3) and immigration policy (mode 4) policy issues inhibiting the development of tourism trade in a number of countries. I think these barriers could usefully be addressed in the WTO negotiations. They might also be of interest to some developing economy members -- such as India. New Zealand, for example, has a serious skills shortage, and labour shortage, and this is impacting very negatively on the tourism industry. New Zealand could usefully liberalise immigration rules in this sector, and could easily make mode 4 concessions which would add impetus to these negotiations.

While the above may be signaling the prospect of long overdue progress on services, the wider picture for the WTO Round is looking a little more bleak after the meeting last weekend in London between the EU, US, Australia, India, Brazil and Japan. Given the failure of these talks to take the negotiations forward, I have increasing concern that the end-April deadline for "full modalities" on agriculture and non-agricultural market access will be missed. Normally, missing a deadline would not matter that much. Many have been missed already in the Doha negotiations. However, comments made by USTR Portman prior to, and immediately after, the London meeting seemed to suggest that -- given the 2007 expiry of the Trade Promotion Authority -- a roll over of this deadline doesn't really seem to be an option.

I also start getting concerned when I see the US, Australia and New Zealand preparing the case for the EU to get the full blame, should the negotiations fail. Post London, the calls for the EU to do more were being renewed from these countries. My firm view is that the EU cannot be held fully to account for the failure of these talks -- should failure be the result. My understanding is that intensive negotiations are about the resume at working level on all areas. So, in the time left before the end of April, I hope that all players look again at their strategies, to see what further concessions might be made to support a more positive outcome. For the EU, this might mean forward movement on agricultural market access. For the US, I suggest another look at domestic subsidies. And for Australia and New Zealand I would be looking at what real liberalization can be offered on industrial tariffs and services.

Charles Finny is CEO of Wellington Regional Chamber of Commerce in New Zealand.


1 Comment

Indians are Hypocrites
As I understand the article India wants do more outsourcing. Also as I understand it India is looking to place more Indians in Australia to do 'onshore outsourcing' (ie staff living in barracks, fed by company, purchase from company store paid Indian rates etc etc)!

Also as I understand non-indians are prohibited from working in India except in some very highly specialised categories. Thus someboy like myself whose job went to India (thanks for nothing Telstra!) would not be allowed to follow it if I wanted to !

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