Following the recent WTO Ministerial in Nairobi, U.S. Trade Representative Michael Froman observed that WTO members are free to consider new approaches to trade issues. They are no longer bound to the Doha Development Agenda, a 14-year effort that has yielded few results. Instead of trying to negotiate agreements that require acceptance by all WTO members, groups of countries can negotiate new trade liberalizing commitments that apply only to those prepared to meet them. One such group is the 23 WTO members that began negotiating a Trade in Services Agreement (TiSA) in 2013. Those talks have accelerated over the past several months and the participants are now aiming to conclude an agreement this year.
TiSA is being negotiated outside of the WTO, as a plurilateral agreement, among countries that are interested in liberalizing trade across the spectrum of service sectors — from telecommunications and technology to distribution and delivery services. In addition to expanding access to services, TiSA will improve the rules that govern trade in services, building on the 1994 General Agreement on Trade in Services.
On January 23, in an informal meeting in Davos, Switzerland, the United States and other participants in the TiSA negotiations reaffirmed their commitment to conclude an ambitious agreement this year. In a statement on the Davos meeting, the U.S. Trade Representative’s Office reinforced the importance of those negotiations by pointing to the vital role that services play in the U.S. economy, accounting for three-quarters of U.S. GDP, 4 out of 5 jobs and about 30% of U.S. exports. The U.S. considers TiSA as providing an opportunity to ensure that U.S. service suppliers have the same access abroad that foreign suppliers enjoy in the U.S.
In the TiSA talks, the U.S. is seeking new disciplines that would address restrictions on cross-border data flows and server localization requirements, forced transfers of technology, restrictions on the ability to make payments electronically and unfair advantages that governments provide to state-owned enterprises. While pursuing these objectives, it wants to ensure that TiSA does not impede its ability to adopt regulations to pursue public interest objectives, such as the protection of health, safety and the environment.
On the other side of the Atlantic, on January 18, the European Parliament, in its International Trade Committee, set guidelines for the TiSA negotiations. In providing direction to the European Commission, the EU negotiator, the Parliament emphasized the importance of an “an ambitious opening” of public procurement, telecommunications, transport, financial and professional services markets. It also wants a curb on restrictive practices such as forced data localization and foreign equity caps. The parliamentary members also requested specific safeguards for EU consumers with respect to roaming fees that apply to use of mobile phone while traveling and fees for use of credit cards abroad.
The Parliament drew “red lines” around EU public services, labor rights, citizens’ data and the right to regulate. They are seeking explicit exclusions for sensitive EU sectors, including all public services (such as education, health, social services, social security systems) and audio-visual services.
The 23 TiSA participants, which represent nearly 70 percent of the world’s services market, are Australia, Canada, Chile, Chinese Taipei, Colombia, Costa Rica, European Union (28 Member States), Hong Kong China, Iceland, Israel, Japan, Korea, Liechtenstein, Mauritius, Mexico, New Zealand, Norway, Pakistan, Panama, Peru, Switzerland, Turkey, and the United States.
Other countries may join the negotiations with the approval of the current participants. New entrants must share the ambition of creating a high-standard agreement and a commitment to its liberalization objectives.
One of the issues for the negotiators is how to respond to China’s application to join the negotiations. The EU, including its parliamentary committee, supports its participation. But, the U.S. and others have reservations regarding China’s commitment to liberalization of its services market, and as a consequence are reluctant to open the door to it.
The 16th round of TiSA negotiations is set for the first week in February, chaired by the U.S.
Jean Heilman Grier
January 26, 2016