SERVICES new frontier for the developing countries, therefore,

 

 

 

 

 

SERVICES IN DOHA DEVELOPMENT ROUND – GOALS AND
NEGOTIATIONS

 

 

 

 

 

 

 

 

 

 

 

University
of Warsaw

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Faculty
of Political Science and International Relations

Institute
of International Relations

Efe
Yegul

January
2018

 

 

 

 

 

 

 

1)     INTRODUCTION

The
need for a more inter-connected world as a means of economy and peaceful globe

was a high necessity right after the
horrors of the Great Depression and the Second World War. The General Agreement
on Tariffs and Trade (GATT) which was evolved to the World Trade Organization
(WTO) in 1995 took over these purposes by aiming to regulate the trade in
goods, services and intellectual property between the member countries. Today,
WTO also provides a structure for dispute settlement and trade negotiations
between parties and it plays a significant role in the world trade.

            In
the last decades, with the growing globalization trend in almost all the
aspects of the international affairs, developing countries started to become
the major players in the world trade, for example, China, India and Brazil.
There was a great need to an agenda which would focus on the developing
countries to integrate them better to the world trade by reducing the trade
barriers, creating a bigger interconnectedness and cooperation in the trade in
services and increase the world trade. Therefore, in 2001, the Doha Development
Round was launched by the WTO in Doha, Qatar. The negotiations couldn’t be
finished in its deadline in 2005. There was a big breakdown in the negotiations
in 2008 and since then, the negotiations are stalled due to various reasons. In
today’s world economy, trade in services negotiations are having a great
importance, since it is a vital step towards the development for the emerging
economies. Integrating these economies into the global services can be
considered as a new frontier for the developing countries, therefore, the
details of this component of the Doha Development Agenda needs a detailed
review.

This paper first will
give brief information about the Doha Development Agenda. Afterwards, the
fundamental information about the General Agreement on Trade in Services will
be examined, in order to better understand the services negotiations.
Afterwards, the trade in services negotiations and goals of the Doha Agenda will
be intensely discussed. At the end, the various reasons of the failure of the
Doha negotiations will be discoursed.

 

2)     DOHA DEVELOPMENT AGENDA

As
it was mentioned in the introduction, a more effective trade system in the
world was both WTO and GATT’s fundamental purpose. In order to achieve this,
there was a necessity to adjoin the developing countries into the trading
system, especially after the growing globalization trend. Also, giving adequate
and efficient opportunities to the all parties of the organization would help
to achieve the organization’s essential purposes. Therefore, the fourth
ministerial conference of WTO gathered in Doha in 2001 and in this meeting, the
ministers of the member states decided to launch new series of multilateral
trade negotiations under the roof of WTO. January 1, 2005 was determined as the official deadline for
concluding the negotiations by the Doha Ministerial Declaration.1
Also, some key principles and procedures were announced alongside with the
deadline, such as: transparency, special and differential treatment for
developing and least-developed countries, single undertaking the negotiations
and debating the developmental and environmental aspects of the negotiations.

In
the means of the work programme, there were 21 subjects listed in the Doha
Declaration. These subjects are: Implementation, agriculture, services, market
access (non-agriculture), intellectual property, investment, competition,
transparency in government procurement, trade facilitation, anti-dumping,
subsidies, regional agreements, dispute settlement, environment, e-commerce,
small economies, trade, debt and finance, trade and technology transfer, technical
cooperation, least-developed countries, special and differential treatment.

3)    
General Agreement on Trade in Services (GATS)

            Before explaining the trade in services negotiations and its
goals in the frame of the Doha Development Agenda, the General Agreement on
Trade in Services should be introduced. The General Agreement on Trade in
Services was created in the Uruguay Round in 1995 and it is considered as the
landmark achievement of the round. Essentially, GATS shares the same objectives
with the GATT, such as creating a more liberalized and multilateral trading
system to service sector. “While services currently account for over 60 percent
of global production and employment, they represent no more than 20 per cent of
total trade.”2 The mentioned numbers are
reflecting the importance of the services in world trade. Moreover, the trade
in services, which was considered as a domestic issue for the countries, is
becoming more international and mobile, especially after the technological
advancement and the globalization flow in the world.

            The
GATS now covers a number of different service sectors, such as transportation,
banking, telecommunication, insurance and etc. Also the Agreement divides the
services into four modes. These are: cross-border supply, consumption abroad, commercial
presence and presence of natural persons.

·       Cross-border
supply generally covers the
services which is transferring from one member country to another

·       Consumption
abroad indicates the consumer’s
movement to another country to obtain services, such as tourism.

·       Commercial
Presence mentions a presence of
a service supplier in another country to provide services by investment and
ownership

·      
Presence of natural persons refers to the service supplying activities of the
persons of a member in the territory of another Member.

4)    
TRADE
IN SERVICES IN THE DOHA DEVELOPMENT AGENDA

            Service
negotiations in Doha included the telecommunications, banking, insurance,
construction, distribution and transportation sectors. There were two main
objectives of the negotiations on services in Doha Development Agenda; first
objective was to renovate the GATS rules and principles and the second
objective was to reduce the limitations on the market access and therefore
liberalize the trade in services in order to promote economic growth and
development. The negotiations on the services initiated two years before the
Doha Round thanks to the fact that the realization of the importance of the
services sector in the international trade. In DDA, The Council for Trade in
Services, which meets in special sessions, is the main body for supervising the
negotiations.

            About the modalities and procedures
of the services negotiations, the guidelines stipulate that: “The negotiations
are to be conducted in special sessions of the Council for Trade in Services and
open to all WTO members and acceding countries. The starting point of the negotiations
would be the scheduled commitments at the time. The “request-offer” format is
to be used for negotiating new commitments. In addition, special attention is
to be given to the special needs of developing countries in requesting
commitments from them and making commitments to them.”3

            With the start of the DDA, the
Ministerial Declaration determined the 30 July 2002 as the final date for
submitting the initial requests for the market access and national treatment
commitments for each member state. Also, 31 March 2003 was marked as the final
date for stating the commitments which the member countries willing to accomplish.
Just as other topics which were discussed in DDA, the deadlines for trade in
services negotiations haven’t been met.

            In general, the negotiations were
held under the two paths; in order to develop the market conditions for trade
in services, countries involved to the bilateral and plurilateral negotiations.
These negotiations were mainly about the specific commitments in the certain
areas of the services. The second path was conducting the multilateral
negotiations in order to adjust the domestic procedures, government subsidies, emergency
safeguard measures and etc.

4.1 The Negotiation
Structure and Major Issues

            The
rules of the negotiations administered by the group of working representatives
in the DDA. The “request-offer” format was used in order to conduct the
negotiations on the national treatment and market access commitments. This
format requires a first initial
request from a member country which it would like other members to offer to
make. After this first “wish-list” from the member countries, the negotiations
continue with the responses to the initial offers that other members would be
willing to make. Afterwards, the negotiations progress with more discussions
and offers until the member countries reach a consensus among them. In this
way, the negotiations on the services in DDA were different than the usual way
of the WTO. In the negotiations on goods, WTO managed the negotiations in a
multilateral way at the same time among all the member countries, whereas the
services negotiations conducted simultaneously in a bilateral, plurilateral and
multilateral way. The final decisions had to be accepted by the all
participants.

            The methodology of the services
negotiations took a lot of criticism. According to some negotiators, the
request-offer format hampered the process and made it more difficult to reach a
consensus. In order to prevent the slowdowns and congestion, United States and
European Union suggested creating benchmarks on certain sectors in order to
ease the negotiations. United States wanted to establish the benchmarks on
energy, express delivery, financial services, telecommunications, computer and
other information-related services, and audio-visual services. The conflict
between the developed countries and developing countries which we accustomed to
see in the Doha Development Round occurred again after this suggestion. Some
developing countries expressed their concerns about the benchmark proposal.
According to them, developed countries may focus on the fields which they are
more comparative advantage comparing to the developing countries. Moreover,
there were other participants who thought that changing the rules in the middle
of the game is not legitimate. The positive list method which was used on the
market commitments also had been criticized. “The “positive list” is another
approach of commitment under which the subject sectors of liberalization and
the conditions and restrictions are specifically and explicitly inscribed in
the list regarding national treatment and market access, and no obligations are
to be undertaken regarding national treatment and market access with respect to
any other sectors which are not inscribed in the positive list.”4
The main reason of the criticism to this approach was its potential dissuasive
effect to the new sectors and subsectors.

Presence
of natural persons, which was named as the mode 4, was one of the most
controversial topics in the trade in services negotiations. The negotiations on
this mode caused a lot of divisions among developed and developing countries,
thanks to their different immigration policies. It should be stated that the
starting date of the DDA, which was just two weeks after the 9/11 attacks in
the United States, had an important and also, a negative impact on the
disagreements.

4.2 Key stages and
Goals of the Negotiations

Initially,
the Doha Declaration determined 1 January 2005 as the final date to complete
the trade in services negotiations. However, there was no progress for the
services negotiations in the Cancun Ministerial Meeting in 2003. “The
concluding statement reaffirmed the Doha Declaration and Decisions and
recommitted members to working to implement them fully and faithfully.”5
The so-called “July package”‘ which was adopted by the General Council on 1
August 2004, brought some momentum to the negotiations in 2004. This package
announced on May 2005 as the final date to submit the recommendations related
to which were discussed in Council for Trade special session. The package
recommended to the member countries to send their recommendation as soon as
possible, to give high priority to least developed countries, to mind the
interests of the developing countries and also, to give the necessary technical
assistance to the developing countries.

      Hong Kong Ministerial Conference started
on December 2005 and it called the member states to boost the trade in services
negotiations in accordance with the objectives. In the ministerial declaration
of the Hong Kong Round, the Annex C affirmed the objectives, approaches and
deadlines. Alongside with these, the Annex C created frameworks for the new or
improved commitments, most-favoured nation (MFN) exemptions and schedules and
classifications of commitments.6

Plurilateral
negotiations between the group of member states which has common interest in
certain sectors and individual member states started in 2006, based on 21
collective requests. However these negotiations were suspended alongside with
the other negotiations under the Doha Development Agenda in July 2006, thanks
to the deadlock on the agricultural and non-agricultural market access (NAMA)
cases.

On
May 2008, Council for Trade in Services announced a draft services text, which
marked the issues related to the participants’ willingness to reach an
agreement and increase the cooperation in the services field. Also, it
addressed the export interests of the developing countries beside with levels
of market access. On the other hand, a signalling conference was gathered on
July 2008 and it drafted a new schedule for the negotiations and enabled the
participants to evaluate the level of the progress made in trade in services
negotiations.

After
the deceleration on the DDA talks, the trade in services talks accelerated in
2011. “In April 2011, the Chairman of the Council for Trade in Services
submitted a report to the Trade Negotiations Committee on the achievements and
remaining gaps in all four areas of the services negotiations: market access;
domestic regulation; GATS rules; and the implementation of LDC modalities”7 In
December 2011, the WTO members disclaimed the most-favourite nation obligation
for giving special treatment to least developed countries.

5)    
WHY
DOHA DEVELOPMENT AGENDA FAILED?

The
Doha Round negotiations, which was initially aimed to lower the trade barriers,
contribute to least-developed and developing countries’ economies and to
resolve the difficult issues of trade declared as failed by WTO members in
2015, after 14 years of negotiations. “At a meeting of the W.T.O. in
mid-December in Nairobi, trade ministers from more than 160 countries failed to
agree that they should keep the negotiations going.”8
The failed negotiations, which were officially supposed to end in 2005, caused
a lot of time and energy and the reasons of its failure lies beneath both
methodological and political reasons.

First
of all, the need of consensus on decision making process made it very difficult
to reach an agreement in the Doha Development Agenda, considering each country’s
individual political aims, populations, geographies, domestic political
dynamics and etc. On the other hand, developing countries are having bigger
influence on the global trade and global economy today than in 2001. This growing
interests and importance of the emerging economies caused a big division
between member countries in the round talks. Seeking a total consensus between
these countries was way too ambitious for WTO.

As
it was mentioned before, contributing to developing county economies was one of
the fundamental aims the Doha Agenda. For this reason, developing countries
sought more flexibility and the focused on the compromises of developed
countries in the World trade, while the developed countries felt the burdens of
the tariff cuts on their economies. Also, agricultural subsidies were another
important issue. European Union and United States subsidize their agriculture
sector as a policy and in order to foster the developing countries’ economies,
these subsidies needed to be reduced and importing the agricultural goods from
developing countries was necessary. But it was really difficult for the
governments to explain this necessity of the negotiations to their internal
interest groups. Especially, the legislatives of the developed countries
couldn’t handle the pressure coming from the agricultural lobbies. In general,
it can be said that the negotiations were way too burdensome for the developed
countries.

      Even though we roughly mention a two
opposing groups in the Doha talks as developed countries versus developing
countries, it is difficult to say that there is a total solidarity among the
developing countries. Especially in the agricultural field, there were deep
conflicts between net importers and net exporters.

6)    
CONCLUSION

If
everything went right, Doha Agenda would have strengthened economies of the
developing countries and increased the cooperation in the services field and
also, it would have reduced the government subsidies on certain industries in
the developed countries. The failure of the negotiations showed that the
agriculture lobbies in the European Union and United States would never allow
the low cost foreign agricultural goods into their economies and all
multilateral trade agreement on this field is doomed to an end. In short, it
can be said that especially for the developed countries, the self-interest
overcame the interests of collective goods.

      On the other hand, failed multilateral
negotiations in WTO have canalized the countries to have bilateral and plurilateral
services and trade agreements. “Regardless of the motivation, on the long term,
the quality of those agreements is doubtable as the vast majority exclude other
trading nations, including developing countries.”9 Eventually,
these trade blocs may create deeper divisions on both world economy and world
politics. Especially in the services area, owing to the no significant progress
on Doha Round, 50 WTO member states started to negotiations on a separate
plurilateral Trade in Services Agreement (TiSA) in 2013, by aiming to improve
the GATS and form a better and more beneficial agreement.

Continuing
to 14 years of negotiations, which came to a lot of deadlocks in this period, could
have endangered the ultimate goals of the WTO in the World trade. In this
sense, ending the Doha negotiations may lead the WTO countries to different
approaches to liberalize the World trade lowering the trade barriers and bigger
cooperation in the services field. On the other hand, even though WTO has
failed to reach an agreement in Doha, the Organization keeps its importance to
be the policeman for the international trade. After the failed negotiations,
WTO has to respond quickly to the new challenges of the world trade and it
should seek new opportunities to reach its fundamental goals by seeking mutual
benefits for both rich and poor countries of the world.

 

 

 

 

 

 

 

 

BIBLIOGRAPHY

1)    
Berceanu, Corina. “Why has the
unsuccessful Doha round resulted in bilateral and inter-regional FTAs and what
are the consequences for global trade?” Geopolitics.ro,
January 16, 2013.

Why has the unsuccessful Doha round resulted in bilateral and inter-regional FTAs and what are the consequences for global trade?

2)    
Bhalla, V.K. International Business. New Delhi: S. Chand Publishing, 2008.

3)    
Cooper, William H. “Trade in Services: The Doha Development Agenda Negotiations and U.S.
Goals.” Cornell University ILR School, 2011

4)    
Fergusson, Ian F. “World Trade Organization Negotiations: The Doha Development Agenda.”(CRS
Report for Congress), Congressional Research Service, Updated January 18, 2008.

 https://www.nytimes.com/2016/01/01/opinion/global-trade-after-the-failure-of-the-doha-round.html

https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact1_e.htm

5)    
Lester, Simon. “Is the Doha Round Over? The WTO’s Negotiating Agenda for 2016 and
Beyond.” Herbert A. Stiefel Center for Trade Policy Studies, No. 64,
February 11, 2016.

6)    
Ministry of Economy, Trade and Industry
of Japan. “2013 Report on Compliance by Major Trading Partners with Trade
Agreements – WTO, FTA/EPA and BIT.” (2013): Part 2, Chapter 11.

7)    
The Editorial Board. “Global Trade After
the Failure of the Doha Round.” New York
Times, January 1, 2016.

8)    
World Trade Organization. “Doha
WTO Ministerial 2001:
Ministerial Declaration.” November 20, 2001.
https://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm

9)    
World Trade Organization. “Services
Negotiations: Key stages in the negotiations.”
https://www.wto.org/english/tratop_e/serv_e/key_stages_e.htm

10)
World Trade Organization. “Services
negotiations” https://www.wto.org/english/tratop_e/serv_e/s_negs_e.htm

11)
World Trade Organization. “The General
Agreement on Trade in Services (GATS): objectives, coverage and disciplines.”
https://www.wto.org/english/tratop_e/serv_e/gatsqa_e.htm

12)
World Trade Organization. “The WTO: What
is at stake?” March 12, 2001. https://www.wto.org/english/news_e/spmm_e/spmm54_e.htm

13)
World Trade Organization. “Understanding
the WTO: What is the World Trade Organization?

 

 

 

1 “Doha WTO Ministerial 2001:
Ministerial Declaration,” World Trade Organization, Accessed December 25, 2017,
https://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_e.htm

2 “The General Agreement on Trade
in Services (GATS): objectives, coverage and disciplines,” World Trade
Organization, Accessed December 27, 2017, https://www.wto.org/english/tratop_e/serv_e/gatsqa_e.htm.

3 William H. Cooper,” Trade in
Services: The Doha Development Agenda

Negotiations
and U.S. Goals,” Cornell University IRL School, (October 2011): 8.

4 Ministry of Economy, Trade and
Industry of Japan, “2013 Report on Compliance by Major Trading Partners with
Trade Agreements – WTO, FTA/EPA and BIT.” (2013): Part 2, Chapter 11, Page 719

5 “Key stages in the
negotiations,” World Trade Organization, Accessed December 27, 2017  https://www.wto.org/english/tratop_e/serv_e/key_stages_e.htm

6 Ibid.

7 Ibid.

8 The Editorial Board, “Global
Trade After the Failure of the Doha Round,” New
York Times, January 1, 2016, https://www.nytimes.com/2016/01/01/opinion/global-trade-after-the-failure-of-the-doha-round.html,
Global Trade After the Failure of the Doha Round.

9 Corina Berceanu, “Why has the
unsuccessful Doha round resulted in bilateral and inter-regional FTAs and what
are the consequences for global trade?,” Geopolitics.ro,
 January
16, 2013, http://english.geopolitics.ro/why-has-the-unsuccessful-doha-round-resulted-in-bilateral-and-inter-regional-ftas-and-what-are-the-consequences-for-global-trade