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Revitalising services negotiations at the World Trade Organization (WTO): Can technical assistance help?

Research report

Written by Dirk Willem te Velde

Research report

Services negotiations at the WTO are progressing slowly, limiting the potential for services liberalisation to benefit developing countries, so new impetus may be required to revitalise services negotiations. New negotiation strategies have already been proposed – but it is not clear whether and how this will be progressing. A different strategy that might help services negotiations, and with it the ability of the services sector to contribute further to development, is the use of technical assistance and capacity building to assist developing countries assess the impact of liberalisation, build up regulatory capacities and address supply capacities. Binding access to such technical assistance may help developing countries make pre-commitments that would become binding commitments only when access to technical access has been satisfactory, and therefore without the obligation to make commitments binding.

At Hong Kong, WTO Members could:
• recall the importance of TA, not just for Geneva negotiators but also for capital based (sectoral) officials to enable them to undertake services assessments and improve regulatory capacities;
• refer explicitly to the LDC modalities for services negotiations (as is currently in the draft ministerial text), and make TA more automatic;
• think about conducting a stocktaking of existing TA for services negotiations along the following pillars of “Aid for trade in services”
o Aid for the supply capacity of services (e.g. human resource programmes)
o Aid for addressing the regulatory framework and capacities (e.g. to establish regulatory agencies in the telecommunications sector)
o Aid for addressing bottlenecks at the level of capitals (e.g. in kickstarting national services trade policy and equipping it with the funds to buy in TA)
o Aid for translating the services regulatory framework into GATS language
o Aid directly but appropriately for negotiators (sectoral and Geneva based) to negotiate away international trade barriers.

This paper reports three major findings:
1. The level of support for services trade negotiations is low, only around three quarters of a per cent (0.75%) of total aid for trade policy and regulation. Continued support is needed for negotiators in Geneva and back in support for their capitals. This support is needed in the short and long-run, whether countries are willing to pre-commit or not.
2. At the same time, the bottleneck towards seeing services sectors in the context of GATS is not a problem of translating rules into GATS language (in Geneva and capitals) alone but lies mainly elsewhere. The main challenge in progress on services offers is rooted in the absence in many countries of a clear strategy to develop the services sectors, lack of thinking about how GATS commitments may help the development of the services sectors, and lack of assistance in conducting impact assessments of liberalisation and building up regulatory capacities, and finally a lack of building up the supply capacities and mechanisms to interact amongst ministries and the private sector. These issues are much more likely to be solved on a sustainable basis when there is a national trade in services working group, perhaps working along sectoral lines, that can buy in support if and when this is needed in the context of a commitment.
3. There needs to be a new operationalisation of LDC modalities on services negotiations, because none of the references to capacity building in GATS is bound. This will need to include the idea that countries can make pre-commitments that are binding only when countries have had access to adequate and satisfactory technical assistance. There is some support for such a mechanism. We suggest it might be done either by adjusting a remaining SDT (Special and Differential Treatment) proposal in a positive way to include binding commitments on aid for (services) trade, or rewriting one of the articles in the LDC services modalities with the same effect.

Dr Dirk Willem te Velde