While the Doha Development Agenda has remained on life support in Geneva awaiting changed international circumstances and perhaps a new WTO Director-General, services have become the hot topic in multilateral trade policy circles.
In the face of strong pressure from some of the world’s biggest companies the Obama Administration has agreed to seek support in the WTO for an attempt to liberalise services trade on a plurilateral basis, in advance of the conclusion of the multilateral negotiations.
To date, 15 other WTO members, including New Zealand, have expressed willingness to join the US in exploring this possibility. Support for this idea is the strongest from the US, City of London and Australian Trade Minister.
Launching a negotiation on services on a plurilateral basis is allowed in Article V of the General Agreement on Trade in Services (GATS), the WTO treaty governing trade in services.
However, such an approach has not been thought about until recently as an outcome from the Doha Development Agenda negotiations was expected and services were one of the three pillars of this negotiation.
While supported by at least 16 WTO members including the US, Japan, EU, Australia and New Zealand, the move to launch a negotiation in this fashion has divided the WTO membership and has drawn strong opposition from China, Brazil and India in particular.
On the surface, an agreement by many of our trading partners to move substantially beyond existing WTO commitments on trade in services should be a good thing for New Zealand.
Services make up over 70% of our GDP and in the case of tourism and education
makeup two of our biggest export earners. Across the board, there is excellent potential to grow our services export earnings. There are a number of barriers in markets around the world to us achieving our potential.
However, what does this development actually mean for the Doha Development Agenda negotiations, which offered so much potential for our agriculture, forestry and fisheries exporters, and our manufacturers?
Does it not signal the possibility that these negotiations no longer have any hope of conclusion?
The WTO Round was being conducted on the basis of a ‘single undertaking.’
This meant no one part of the negotiation could be concluded until all other parts of the negotiation had been concluded. This was very important for New Zealand as many WTO members would have loved to leave agriculture to last, and maybe not agree any liberalisation in this sensitive area.
But the single undertaking meant that to achieve a member’s offensive interests in services or manufacturing, it was necessary also to agree a good outcome on agriculture.
The WTO Services plurilateral seems to throw the WTO Round and the concept of a single undertaking to one side.
We will watch developments on this closely. It is still unclear what, if anything will be achieved in this process. It is possible that the development is being used by the Obama Administration as an attempt to feign commitment to global progress in election year in full knowledge that no outcome was likely.
Australia likewise might be driven by a desire to be seen to be active, rather than expecting any outcome.
There are many questions unanswered, such as whether any final agreement would be implemented amongst just the 16 current participants, or whether the US will need to have, others join in to create a “critical mass” of world trade.
It is also unclear whether the participants are planning to allow non-participants to ‘free ride’ on the negotiating outcome, or whether it will apply to just those participating.
Catherine Beard is executive director of ExportNZ based in Wellington. The above report has been reproduced here with their permission.
