Role of Developing Countries in Services Negotiations: Offensive or Defensive The Case of India by...
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Transcript of Role of Developing Countries in Services Negotiations: Offensive or Defensive The Case of India by...
Role of Developing Countries in Services Negotiations: Offensive or Defensive
The Case of India by
Arpita Mukherjee
Developing Countries & Services Negotiations
6-7 June, 2006
25 years of ICRIER - Linking India to the World Economy
Services sector & India • Dominant sector – contributes significantly to GDP
(over 50 %) and employment
• Services exports account for around 40% of total exports
• World trade in commercial services increased by 11 % to 2.4 trillion in 2005
• India’s share in world trade of commercial services is increasing at a fast pace
• Relative ranking of India as exporter of commercial services improved significantly from 34 in 1995 to 15 in 2004 and 10 in 2005
• Share of India’s export in total exports of commercial services was 2.8% in 2005
25 years of ICRIER - Linking India to the World Economy
Services sector & India• Shift from traditional exports such as transport and
travel to newer areas such as software, health
• Increase in cross-border trade via new technologies- telemedicine, call centres, medical and legal transcriptions, outsourcing services, on-line services, etc.
• Exporter of knowledge based services and importer of infrastructure services
• Significant development in sectors such as telecommunication
25 years of ICRIER - Linking India to the World Economy
India’s Negotiating Position • Performance and global competitiveness of the sector
determines government’s negotiating position • Negotiating position changed since the Uruguay Round • India now has an offensive interest in services
negotiations • Different from India’s position in agriculture and NAMA• Why offensive?
• India has autonomously liberalised most of the service sectors
• Need for infrastructure investment• Exports increased - Indian service providers are facing
several barriers in markets of export interest • Limited gains in areas of export interest in Uruguay
Round – Mode 4• Focused on liberalisation of trade through Mode 4 and
Mode 1
25 years of ICRIER - Linking India to the World Economy
What India wants in Mode 4? • Commitments in categories of CSS/IP delinked from
commercial presence
• Uniformity in Mode 4 categorization
• Removal/reduction in ENT/labour market test
• Exemption of social security
• Increased duration of stay and possibility of renewal
• Abolition of quota
• Not using absolute wage parity as a precondition
• Allow intra firm labour mobility
• Separate temporary from permanent movement
• Improve transparency in immigration and labour market regulations and in applications of limitations
• Disciplining Domestic Regulation
25 years of ICRIER - Linking India to the World Economy
What India wants in Mode 1? • Commitments in Mode 1 across a wide range of
commercially meaningful sector/sub-sectors for professionals services, computer related services, health services, education, etc.
• Similar commitments wherever possible for Modes 1 and 2
• Ensure that commitments address the inadequacy of GATS classification to cover all Mode 1/2 services and takes into account technological developments in future
25 years of ICRIER - Linking India to the World Economy
Pushing Ahead Offensive Interest• India is a major player in the services negotiations
• India’s revised offer in August 2005 shows significant improvements over initial offer – one of the best revised offers
• India supported complementary approach to negotiations
• India is in favour of a prescribed and qualitative approach and not a quantitative one
• India supported plurilateral negotiations
• Address Domestic Regulation related barriers
25 years of ICRIER - Linking India to the World Economy
Achievements So Far….• Some improvement in horizontal offers in Mode 4
• Expanded to include contractual service suppliers, independent professionals, graduate trainees (EU offer)
• Requirement of economic needs and labour market tests removed/relaxed for intra-corporate transferees, professionals, business visitors (Canada, EU)
• Period of stay extended for business visitors, executives, senior managers, specialists (Canada, New Zealand)
• Clarified definitions of service provider categories and associated qualification and training requirements
• Some expansions in Mode 1 commitments
• Annex C of Hong Kong Ministerial Text addresses our some of our concerns in Modes 1 and 4
25 years of ICRIER - Linking India to the World Economy
Annex C : Hong Kong Ministerial Text
• In Modes 1 and 2, members should undertake commitments at existing levels of market access on a non-discriminatory basis
• Remove the requirement of commercial presence in Mode 1
• In Mode 4, new or improved commitments on the categories CSS (Contractual Services Suppliers), IP (Independent Professionals) delinked from commercial presence and new improved commitments in ICT (Intra-Corporate Transferees) & BVs (Business Visitors).
• In Mode 4, removal/substantial reduction of ENT and indication of the duration of stay and possibility of renewal
• Develop disciplines on Domestic Regulation
25 years of ICRIER - Linking India to the World Economy
Plurilateral Negotiations • Complimentary approach to enhance market access
commitments
• Brings together a critical mass of developed and developing countries – around 35 countries are involved in discussions
• Plurilateral requests have been made in 16 sectors
• Requests have been made in all four modes and MFN exemptions
• Requests are mostly made by developed economies - US and EU made requests in 12 sectors each, Japan in 13 sectors
• Target groups are developing countries – Philippines, India, Malaysia, South Africa, Brazil
• India received requests in 14 sectors, MFN exemptions for audio-visual services
25 years of ICRIER - Linking India to the World Economy
Plurilateral Requests made by India
India is the coordinator of Mode 1/2 and Mode 4 and cosponsor of requests in computer and related services and
architecture, engineering and integrated engineering
• Modes1/2
• Made jointly with Chile, Mexico, New Zealand, Pakistan, Singapore, etc. to both developed and developing countries - US, EC, Canada, Australia, Brazil, Argentina, China, Philippines, Malaysia, etc.
• Full commitments in wide range of sectors/sub-sectors
• Commitments are sought at two digit level for certain sectors such as computer related services to take into account technological developments
• Commitments to reflect commercially meaningful opportunities
25 years of ICRIER - Linking India to the World Economy
Plurilateral Requests made by India Cont…….
• Mode 4
• Made jointly with developing countries ( Argentina, Brazil, Chile, China, Mexico, Pakistan, etc.) to developed countries (US, EC, Australia, Canada, Japan, etc.)
• Sought new/improved commitments in - CSS and IP delinked from commercial presence
• Clarifies definitions and categories for CSS/IP
• Wage parity should not be precondition for entry
• ENT should be removed/substantially reduced
• Duration of stay for one year or for duration of contract (if longer) with provision for renewal
• Transparency in Mode 4 commitments
25 years of ICRIER - Linking India to the World Economy
Plurilateral Requests made by India Cont…….• Computer and Related Services
• Made jointly with developed and developing countries - Australia, Canada, US, EC, Chile, Mexico, Pakistan, etc.
• Made to Argentina, Brazil, China, Indonesia, Thailand, Egypt, Philippines, South Africa, etc.
• Full MA and NT commitments in Modes 1,2 & 3 and commitments in Mode 4 in accordance with Annex C
25 years of ICRIER - Linking India to the World Economy
Response to Requests Received• India is a serious player in plurilateral negotiations
• Indicated that it can meet requests
• Substantially in certain sectors such as construction and related engineering services, and maritime transport services
• Partially in sectors such as energy, telecommunication
• Difficult to meet requests in sectors such as Distribution (retail), legal services, audio-visual services
• India has already made an ambitious revised offer - whether India would improve it or not would depend upon what it get in return in areas of export interest
25 years of ICRIER - Linking India to the World Economy
Issues and Concerns• How to balance offensive and defensive interests?
• Domestic reforms requirements - in certain areas the regulatory regime is still evolving
• Agriculture vis-à-vis services
• India’s major trading partner, the US, have not shown much interest in liberalizing Mode 4
• The US has indicated that India, Brazil and ASEAN countries are target countries. Target sectors are telecommunication, computers, express delivery, energy, audio-visual and distribution services – these are sensitive sectors for India
25 years of ICRIER - Linking India to the World Economy
Issues and Concerns Cont…….
• Will there be meaningful liberalisation?
• It is likely that developed countries may meet Mode 1 request
• Some developed countries would partially meet Mode 4 request
• How to address Domestic Regulation related barriers?
• Working together with other developing countries to push ahead the negotiations
25 years of ICRIER - Linking India to the World Economy
Thank You!