Policy Statement & Submission

APEC's contribution to the WTO

1. APEC plays a constructive role in the interaction between multilateral and regional trading systems. APEC's positive contribution to the WTO is nowhere better illustrated than at the first Ministerial Conference of the WTO in Singapore in December 1996, when the Information Technology Agreement championed by APEC was embraced by the WTO. Since then the ITA has become one of the most remarkable achievements of the multilateral trading system since the Uruguay Round.

2. When the Doha Development Agenda (DDA) was launched in 2001 at WTO's Doha Ministerial, the world was looking forward to another round of ambitious trade liberalisation to benefit all economies. The negotiations suffered a setback at the WTO Ministerial Conference at Cancun last year, when ministers failed to agree on the way forward. Fortunately, at the meeting of the WTO General Council which ended on 31 July, agreement was reached to revive the talks. To put the negotiations back on track, more fresh impetus and renewed momentum is now needed. The APEC Ministerial meeting in Santiago can give just such a boost to the WTO.

3. We call on leaders and ministers of APEC member economies to seize the opportunity in Santiago to deliver a strong message of support to the WTO talks. In particular, as a coalition of service industry bodies, we urge the APEC leaders and ministers to support real and substantial progress, with tangible results, in the negotiations on the General Agreement on Trade in Services, which is an important part of the DDA.

The crucial importance of services in the DDA

4. The development of the service sector is critically important for economies, developed and developing alike:

- In the OECD countries, services account for 69% of economic output, while agriculture accounts for 2.1%.

- Even in low income countries, services account for an average of nearly 50% of GDP, with agriculture representing 23%.

- More than half of all global flows of foreign direct investment are now in the services sector. This investment is normally in the form of investment in local companies, often with local partners. Access to modern services (financial, professional and infrastructure services, for example) is essential to growth and development in any economy.

5. Services is the fastest growing sector of world trade, but many barriers still persist. Liberalisation of trade in services will benefit not just export sectors, but the service industries in general and the economy as a whole.

- All countries stand to gain from opening up markets for trade in services. For exporters, both in developed and (in growing numbers) in developing countries there is increased income and jobs. For importers, again both in developed and developing countries, access to state-of-the-art services in a host of different sectors provides the essential infrastructure without which their economies cannot achieve full potential.

- Liberalization brings efficiency and modernization, and is crucial in attracting foreign direct investment. At present, the value of services trade is estimated at only 25% of the value of merchandise trade, largely because markets for services are much more protected. Little progress was made in the Uruguay Round, and many barriers to services trade remain.

A push for services liberalisation

6. In the course of the DDA negotiations, agriculture has become a major stumbling block to progress in other areas. While we recognise the inter-related nature of the negotiations, we urge the leaders and ministers of the APEC economies to give a push to bring forward the services talks, and not to allow progress to be slowed down by agriculture and other issues.

7. Despite the importance of services trade liberalisation, to date, only one third of WTO members have tabled initial offers (in spite of a March 31, 2003 deadline), and many of these offers are not ambitious enough in terms of range and depth of liberalisation. Many more are needed to begin to realize the potential of the Doha Round, and they should be broader in terms of the sectors covered, and deeper in terms of the levels of market access.

8. Accordingly, we call on negotiators to proceed with substantive negotiations on services liberalisation, in accordance with Annex C of the Doha Work Programme agreed at the General Council meeting in July 2004. The latter includes the following elements (full text as Appended):

- Submission of initial offers and revised offers by May 2005.

- A commitment to ensure a higher quality of offers, with a view to providing effective market access and in order to ensure a substantive outcome, particularly in sectors and modes of supply of export interest to developing countries.

- Reaffirming of progressive liberalization with no a priori exclusion of any service sector or mode of supply and giving special attention to sectors and modes of supply of export interest to developing countries.

- Noting the interest of developing countries, as well as other Members, in Mode 4.

- A commitment to intensify efforts to conclude the negotiations on rule-making.

- Agreement to provide targeted technical assistance to enable developing countries to participate effectively in the negotiations.

9. In addition, we would like, from the private sector's point of view, to make the following elaboration on some aspects of the services negotiations, as follows.

- Now that May 2005 is the new date for submission of revised offers, we urge all WTO members to take this date seriously. The goal is to for all WTO members to submit offers and for substantial improvement to be made for revised offers.

- Putting services in the context of the overall DDA negotiations, we wish to highlight the need for the services negotiations to take more time, due to their diversity and often highly regulated nature, unlike the more straightforward agricultural negotiations. Thus WTO members must press ahead with talks on services liberalization and not to have to wait for results from negotiations on agriculture or other subjects.

- In the course of the GATS negotiations, it is important to aim for commercially meaningful market access commitments, especially in important sectors (such as financial services) of major trading economies. Likewise, it is important to address Mode 4 issues (movement of natural persons) adequately, and in this context the concept of a “GATS visa” to facilitate movement of personnel across borders for trade in services is worth exploring further.

- It is our belief that developing economies have much to gain from services liberalisation, and we urge them to come forward more aggressively to table quality offers on services. To enable them to do so, we support more technical assistance programmes by the WTO secretariat to enhance the institutional capacity of developing countries in the negotiations.

Conclusion

10. The failure of the Seattle and Cancun Ministerial Conferences has signaled a multilateral trading system in trouble. On both occasions, the WTO has recovered, with the launch of the Doha Round in 2001 and the “July package” in 2004. While success is by no means assured, the way is now open for negotiators to achieve meaningful results through the DDA negotiations – results which will be crucial for the development and prosperity of every economy. With the DDA negotiations now at a critical juncture, APEC, as the biggest regional trade body, can give the WTO the boost it needs. An opportunity now beckons for APEC to do so, as leaders and ministers of APEC economies meet for the 16th time in Santiago this November. We call on APEC to take that opportunity and articulate a strong message, through the Leaders Declaration and the Ministerial Statement, to give the support needed to enable the DDA negotiations to succeed, particularly on services.

11. All economies have much to gain from the liberalization of trade in services. A strong new commitment is now needed to engage a critical mass of economies in the GATS negotiations and to achieve the promise of substantial liberalization and tangible benefits. Governments have a responsibility to ensure that these benefits are delivered to all, through effective negotiations under the DDA to produce tangible results.




Australian Services Roundtable
Canadian Services Coalition
European Services Forum
Hong Kong Coalition of Service industries
International Financial Services London
Japan Services Network
Service Coalition of Exporters, Santiago Chamber of Commerce
US Coalition of Service Industries







Appendix – Annex C, Doha Work Programme, July 2004
Recommendations of the Special Session of the Council for Trade in Services
(a) Members who have not yet submitted their initial offers must do so as soon as possible.
(b) A date for the submission of a round of revised offers should be established as soon as feasible.
(c) With a view to providing effective market access to all Members and in order to ensure a substantive outcome, Members shall strive to ensure a high quality of offers, particularly in sectors and modes of supply of export interest to developing countries, with special attention to be given to least-developed countries.
(d) Members shall aim to achieve progressively higher levels of liberalization with no a priori exclusion of any service sector or mode of supply and shall give special attention to sectors and modes of supply of export interest to developing countries. Members note the interest of developing countries, as well as other Members, in Mode 4.
(e) Members must intensify their efforts to conclude the negotiations on rule – making under GATS Articles VI:4, X, XIII and XV in accordance with their respective mandates and deadlines.
(f) Targeted technical assistance should be provided with a view to enabling developing countries to participate effectively in the negotiations.
(g) For the purpose of the Sixth Ministerial meeting, the Special Session of the Council for Trade in Services shall review progress in these negotiations and provide a full report to the Trade Negotiations Committee, including possible recommendations.