INT L TRADE LAW: DOHA & SERVICES LIBERALIZATION. Prof David K. Linnan USC LAW # 665 Unit Ten

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1 INT L TRADE LAW: DOHA & SERVICES LIBERALIZATION Prof David K. Linnan USC LAW # 665 Unit Ten

2 BEYOND PILLARS DOHA MINISTERIAL DECLARATION 1. Uruguay Round saw services liberalization as controversial, but its establishment in principle 1994 left implementation in form of actual negotiations more to Doha (like goods trade in early 1950s) 2. Concept of Doha Round in part as so-called development round, services tends to be higher on economic agenda of developed countries so trade-off material 3. Note the parallel to liberalization of trade in goods but with certain twists because of special nature of services and idea at outset that services liberalization proceeding often bilaterally as with FTAs CAN WE REVISIT THE WHY QUESTION RE FREE TRADE AT ALL & EXAMPLE OF FINANCIAL SECTOR PROBLEMS?

3 DOHA DEC CONTENT WORKING THROUGH DOHA DECLARATION AREAS IN NEXT MONTH 1. Trade Liberalization-Agriculture (last week) 2. Trade Liberalization-Services (this week) 3. TRIPS & Singapore Issues (March 29) 4. Anti-Dumping & Counterveiling Duties (April 5) 5. Trade & Environment (plus dispute resolution; April 12) DID WE MAKE THE NEGOTIATING DEADLINE? SO WHAT?

4 GATS MODES GATS PECULIARITIES (MODES) 1. Services supplied from one country to another (e.g., international telephone calls), officially cross-border supply & mode 1 2. Customers making use of a service in another country (e.g., tourism), officially consumption abroad & mode 2 3. Foreign country setting up subsidiaries or branches to provide services in another country (e.g., foreign banks), officially commercial presence & mode 3 4. Individuals traveling from their own country to supply services in another (e.g., consulting), officially presence of natural persons & mode 4 NOTE BOTH THAT PRESENCE MAY BE REQUIRED (IMPLICATING INVESTMENT & IMMIGRATION LAW UNDER 3 & 4, AND THAT E-COMMERCE MAY MAKE A HASH OF 1 & 2

5 GATS GOVT SERVICES GATS PECULIARITIES (GOVT SERVICES EXCEPTION) 1. Issue that so-called govt services are carved out of GATS, defined as [GATS includes any services] except services supplied in the exercise of governmental authority 2. Issues re govt involvement in economy & what is done in the exercise of governmental authority (privatization in some contexts, in others non-profits) SO WHAT DOES EXERCISE OF GOVERNMENTAL AUTHORITY MEAN AS OPPOSED TO REGULATION ITSELF?

6 GATS OBLIGATIONS I GATS OBLIGATIONS & DIFFERENCES TO GATT CONTEXT 1. Most favored nations (temporary phase in recognizing preexisitng FTA type liberalization), ability to schedule exceptions 2. National treatment, generally a negotiated item and scheduled because of problem that it assumes already present as service provider so really market access (bound commitment, like tariffs) 3. Transparency (one shop accessibility for foreigners & publication requirement in effect regarding regulation)

7 GATS OBLIGATIONS II GATS OBLIGATIONS & DIFFERENCES TO GATT CONTEXT (CONT D) 4. Regulation, at heart of govt view of services typically & somewhat different from hidden picture in GATT as protectionism waiting to happen (prob of prudential regulation in financial services, etc.; no undertakings re deregulation) 5. Recognition in terms of reciprocity as with licensing and supervision between any govts entails giving other govts ability to negotiate same, standards issues WHAT IS INT L APPROACH FOR EXAMPLE TO MULTINATIONALS IN REGULATED INDUSTRIES LIKE BANKING?

8 GATS OBLIGATIONS III GATS OBLIGATIONS & DIFFERENCES TO GATT CONTEXT (CONT D) 6. Non-interference (as with int l payments & undertakings implicitly required for modes 3 & 4), given the nature of services tends unlike GATT to rights of establishment anyway vs outsourcing via telecommunications (issues re modes 1 & 2) 7. Specific industry focus (financial services, telecommunications, air transport services) initially, formally different but more vested interests, unlike GATT genericism ULTIMATELY, BACK TO ISSUE OF SELF-INTEREST IN SERVICES LIBERALIZATION

9 CHANGING CIRCUMSTANCES DOES THE SERVICES LIBERALIZATION DEBATE STILL LOOK LIKE IT DID IN EARLY 1990S, WHY OR WHY NOT? 1. Looking at specific industries, what has changed in financial services, telecommunications & air transport? 2. Do the developing country positions still look the same, or how do phenomena like outsourcing software & call center work via modern telecommunications now look? 3. At lower end, unrecognized pressure in human migration terms (often working at lower end of services industries like tourism & construction) LOOKING FORWARD, HOW DO YOU THINK SERVICES LIBERALIZATION LOOKS PROSPECTIVELY TO DIFF COUNTRY GROUPINGS? REMEMBER, LAWYERS THEMSELVES ARE IN A (LEGAL) SERVICES INDUSTRY

10 TRIPS & SING. NEXT Read Bahala pages , Read the following documents on the WTO website: Singapore Ministerial Declaration of December 13, 1996 (especially paragraphs 20-22) Understanding the WTO: Investment, Competition, Procurement, Simpler Procedures Explore the Trade and Investment page Explore the Competition Policy page Watch the World Bank B-SPAN video 09/25/03 Trade facilitation and Global Economic Prospects: Beyond the WTO Agenda D=880 Explore the TRIPs materials page Watch the following WTO video Adrian Otten, The Trade Related Intellectual property Rights Agreement (TRIPs) Tapes 1 & 2 on the WTO general video access page