Documents menu

U.S. bombshell re WTO

Inside US Trade, Vol.17 no.22m, 4 June 1999

Barshefsky Reveals U.S. Push to Broaden WTO Services Talks

U.S. Trade Representative Charlene Barshefsky this week said the U.S. is hoping to significantly broaden commitments to be made in the upcoming World Trade Organization services negotiations by changing the negotiating format. In a June 1 speech before the World Services Congress in Washington, Barshefsky said the U.S. is hoping to move away from the so-called "request-offer" approach used to negotiate the Uruguay Round's General Agreement on Trade in Services (GATS).

Under this approach, members were required to apply new GATS rules only to service sectors they agreed to put forward during those negotiations.

Instead, the U.S. is hoping to create a structure for the services talks to be launched late this year that more closely resembles the Uruguay Round's tariff negotiations for goods, she said. These talks applied generally to all goods except for those that were specifically exempted.

"We need to look at whether we can come up with a more efficient negotiating structure than the request-offer process of the Uruguay Round," Barshefsky said.

Specifically, Barshefsky said the concepts used to negotiate tariffs for goods could be employed in the services talks. In addition to the request-offer approach, previous tariff negotiations have used the zero-for-zero approach, in which WTO members agree to eliminate all tariffs in a sector, and the formula approach, in which members agree to reduce tariffs by certain amounts depending on their current levels.

For services, these latter two approaches could involve negotiators agreeing to eliminate all barriers to trade in a certain service sector, or agreeing to a formula under which these barriers are reduced to certain negotiated levels.

Barshefsky indicated that applying these other approaches in the services talks could quicken the pace of services liberalization because it would allow members to seek liberalization in areas without having to wait for members to put forward those areas. "We have to decide what combination of negotiating structures will work best in the services sector," she said.

With this idea in mind, Barshefsky said the U.S. will push for new and improved liberalization commitments in sectors such as finance, telecommunications, distribution, audiovisual, construction, education, health, travel and tourism, and professional services.

In her prepared remarks, Barshefsky noted that the GATS negotiations created a set of services rules, but only set "some" precedents for market access. "Even for WTO members trade [in services] is highly restricted," she said in her speech. "In most service sectors we see few specific commitments."

She said that only 14 WTO members have made commitments in the audiovisual services sector, and no developing countries have made commitments on the gathering and dissemination of news. Also, fewer than 50 WTO members have made commitments on distribution services, an area Barshefsky called "critical" to liberalizing trade in goods.

She also noted that while approximately 70 members have signed the WTO agreements on financial services and telecommunications, that means each agreement has not been signed by about 60 members.

Barshefsky's comments mirror those made last year by other U.S. officials, who also said that another way to achieve an expanded liberalization package is to develop broad regulatory principles that all services regimes would have to follow. This approach would be in line with the WTO agreement on basic telecommunications services, which broke new ground by developing regulatory principles for the sector.

This would also be in line with Article 6 of the GATS, which obliges members to ensure that their domestic regulations do not impede trade in services that are listed in members' schedules of commitments. Art. 6 was written generally, and specific regulatory principles still need to be worked out.

Barshefsky said creating regulatory principles for services is another U.S. goal in the WTO talks, and that the principles could include the notion that regulations should be developed in a transparent way and that they generally should not restrict trade. She said she is interested in receiving industry proposals on possible principles.

Another U.S. goal for the services talks is to ensure that any agreement anticipates developments in technology, and that new modes of delivery do not face unfair barriers, Barshefsky said. This could include making sure that services such as health care are not discriminated against because they are delivered electronically.

Before the new trade round is launched at the WTO ministerial meeting in Seattle scheduled for Nov. 30 to Dec. 3, Barshefsky said the U.S. wants to strike an agreement guaranteeing transparency in government procurement, which she said is important to services because governments are significant purchasers of services. In addition, the U.S. wants to extend the voluntary commitment made by WTO members in May 1998 not to place any duties on electronic transmissions made over the Internet.

Finally, she said that work in regional trade arrangements such as the Free Trade Area of the Americas (FTAA) and the Transatlantic Economic Partnership (TEP) between the U.S. and European Union will help the U.S. prepare for the WTO talks. The FTAA is expected to complete a draft chapter of services commitments in the hemisphere by September, while under the TEP, the U.S. and EU are working on ways to recognize the qualifications to which each holds professional services workers.

In other areas, Barshefsky signalled that the U.S. could be open to including investment in the next round of negotiations, but said that it would be "out of the question" to simply take up in the WTO the Multilateral Agreement on Investment (MAI) talks that failed in the Organization for Economic Cooperation & Development. Instead, Barshefsky said it is an open question whether a "more modest" package could be included in the WTO talks.

She said the key factor in deciding this question is whether a proposal can be put forward that would win enough support from both developed and developing countries. It would do the sector "no good" if members put forward a sweeping investment package that fails again, she said.

Barshefsky noted that the MAI talks in the OECD are "effectively dead," and that there is unlikely to be any further discussion of investment in the OECD in the foreseeable future.

In a related development, officials from the U.S., EU, Japan and Canada were expected to meet yesterday (June 3) to continue work on reach a common position on the upcoming services talks, sources said. Sources said last year that Quad members have previously discussed the idea of agreeing to a structure for the talks that would move away from the request-offer approach (Inside U.S. Trade, June 19, p. 6).