LDC services wait for a breakthrough

Work on the services waiver for the least developed countries (LDCs) is progressing at a slow pace. Given that the process required a clear road map on the issue, one could not expect that operationalising the waiver could have been very quick. Still, the LDCs do not seem comfortable with the proceedings that they believe should have been faster.

The WTO services agreement, the General Agreement on Trade in Services (GATS), specifies that each member shall provide non-discriminatory treatment to services and service suppliers of other WTO members (Most-Favoured Nation or MFN principle). Subsequently, the LDC Services' Waiver, adopted at the WTO eighth Ministerial Conference in 2011, provided for granting preferences by the non-LDC members to all LDCs in accessing their markets. For the first time, this decision allowed the WTO members to deviate from their MFN obligation under the services agreement. The decision elated the LDCs with the hope that despite many constraints, they, too, would be able to export services in areas of their capacity by virtue of the waiver. But there was no noticeable move in materialising the decision of the eighth Ministerial. In fact, progress in this respect was expected in the form of Notifications by the non-LDC members of the specific preferences they were willing to grant for the LDCs. In the wake of the stalemate, the 9th WTO Ministerial at Bali, Indonesia in 2013 took steps in the form of a roadmap towards operationalisation of the waiver. Some forward movements have taken place in the past months.

At a high-level meeting of the WTO Services Council in February 2015, members discussed measures that would support the growth of services' trade in the LDCs by providing their services' exports with preferential treatment. This was an important step in implementing a key Bali decision in support of the LDCs, which aims to enhance their participation in world services trade. At the meeting, more than 25 members indicated services sectors and modes of supply from the LDCs to which they would give preferential treatment. Director-General Roberto Azevêdo expressed satisfaction at the move saying, "It is vital that we implemented all the elements of the Bali Package without delay - and particularly the decisions on LDC issues. The decision on operationalising the LDC Services Waiver is one of these, and is extremely important. Services exports from LDCs are increasing rapidly, though of course they are starting from a very low base. We have a duty to support the growth of this sector. I urge potential preference-granting members to indicate where they intend to provide preferential treatment to LDC services and service suppliers. "

At the high-level meeting, many WTO members mentioned various technical assistance initiatives to improve services' export capacity of the LDCs. The initiatives included training programmes for the LDC service suppliers and support to upgrade infrastructure. Some members announced new initiatives and measures. In the meeting, Bangladesh's Minister for Commerce, Tofail Ahmed MP, spoke about the potential of services to support growth in Bangladesh. He urged the developed and developing nations to come up with 'open minds to operationalise the Services Waiver so that we, LDCs can accelerate the process of development, process of poverty alleviation, process of ensuring minimum needs of our people.'

Earlier, the LDCs had requested preferences from developed and developing members (those in a position to do so) in 74 services sectors. Some of the preferences include: expanding access for the temporary movement of business people (Mode 4) from the LDCs for a range of services professions and occupations, waiving fees for business and employment visas for the LDC persons, non-imposition of economic needs and labour market tests for the LDC members, extending the duration of stay of the LDC professionals in the markets of preference-granting members.        

So far, only two Notifications announcing preferences to the LDC services sector have come by -- the first by Canada in March this year followed by Australia in May. Australia's Notification concerns tourism, transport (maritime, air, rail, road and auxiliary services) and business services (computer, professional and other business services). The LDC Group welcomed these Notifications while urging the members in a position to do so, to notify their preferences as soon as possible and to include measures pertaining to the cross-border movement of natural persons (Mode 4). The LDC Group reported that 25 bilateral meetings had taken place since the last Services Council meeting in March and suggested an evaluation after July.

Finding the pace of work slow, the WTO Council on Services called upon member states in a position to grant preferences to endeavour to notify the WTO as early as possible, but no later than July 31, 2015. Sixteen WTO members reiterated their commitment to meet the deadline and said that they are completing their internal processes.

Progress in operationalising the services' waiver is less than satisfactory. The non-binding nature of the commitment is yet to shape things in a promising manner for the LDCs whose resource constraints and limited capacity call for meaningful preferences in the services sector.

wasiahmed.bd@hotmail.com