Transcript Can competition and trade policy be reconciled?

Scheduling GATS Commitments
& Sectors of Interest to Vietnam
David Hartridge
Hanoi, Vietnam
August 5-6, 2003
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Schedule of Specific Commitments

The GATS requires each Member to submit a
Schedule of Specific Commitments that lists the
sectors in which it grants Market Access and
National Treatment.

There is huge variation in the coverage of
Members’ schedules. New Members usually have
very wide coverage (more liberal than many
current Members).
Market Access Commitments

Article XVI forbids the following types of marketaccess limitations unless scheduled (no other
limitations are possible under this Article):
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

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

Number of suppliers
Value of service transactions
Number of operations or quantity of output
Number of natural persons
Type of legal entity
Foreign equity participation
National Treatment and Additional
Commitments

Article XVII - Obligation to treat foreign
services and service suppliers no less
favourably than your own like services and
suppliers in scheduled sectors.

Any kind of limitation in favour of nationals can
be maintained if it is listed in the schedule.

Article XVIII - Additional commitments go
beyond market access and national treatment –
e.g. the reference paper on telecommunications
Meaning of “limitations”

Scheduling a service does not mean it must
be fully liberalized in all modes.
Commitments can be made in one, two,
three or four modes.
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And commitments can be limited:
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“unbound” = no commitment in that mode
“none” = no limitation (full commitment)
Specific limitations can be scheduled.
How to prepare a schedule: Step 1

Select sectors and sub-sectors for inclusion
Relevant considerations [underlying
objectives]:
Attract foreign investment [employment],
foster
competition [efficiency], broaden product
choice
[consumer welfare], etc.
How to prepare a schedule: Step 2

Consider need for limitations or modal
exclusions
Relevant considerations [type of limitation]:
Prevent market congestion [quantitative
access
restrictions], promote technology transfer
[joint venture requirements], prevent market
disruption [phase-in commitments], etc.
Scheduling Recommendations

No general references to domestic laws
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No unspecified economic needs tests
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Use CPC (UN Central Product
classification) numbers whenever
possible

Clear definition of sub-sectors if
coverage is limited
Examples from Schedules of
Commitments: India
Modes of supply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence of natural persons
Sector or
subsector
Limitations on
market access
Limitations on
national treatment
1) Unbound
1) Unbound
2) Unbound
2) Unbound
3) Only through
incorporation with a
foreign equity ceiling of
51 per cent
3) None
4) Unbound except as
indicated in the
horizontal section
4) Unbound except as
indicated in the
horizontal section
8. HEALTH
RELATED AND
SOCIAL SERVICES
A. Hospital
Services
(CPC 9311)
Additional
commitments
Latvia
Modes of supply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence of natural persons
Sector or
subsector
Services provided
by midwives, nurses
in private
establishments
(CPC 93191,
excluding services
provided within the
public sector)
Limitations on
market access
Limitations on
national treatment
1) Unbound
1) Unbound
2) Public insurance
2) None
programmes do not cover the
cost of foreign medical
services supplied abroad.
3) None
3) None
4) Unbound, except as
4) None
indicated in the horizontal
section. […]
Economic needs
determined by the total
number of nurses and
midwives in the given
region, authorized by local
health authorities.
Additional
commitments
Singapore
Modes of supply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence of natural persons
Sector or
subsector
Limitations on
market access
Limitations on
national treatment
Medical Services
1) Unbound*
1) None
2) None
2) None
3) None, other than the
number of new foreign
doctors registered each
year may be limited
depending on the total
supply of doctors
3) None
4) Unbound except as
indicated in the
horizontal section
*Unbound due to lack of technical feasibility
4) Unbound
Additional
commitments
China
Modes of supply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence of natural persons
Sector or subsector
5. EDUCATIONAL
SERVICES
(excluding special
education services e.g.
military, police,
political and party
school education)
A. Primary
Education
Services
(CPC 921, excluding
national compulsory
education in CPC
92190))
[Similar commitments
for all other Education
Services]
Limitations on
market access
Limitations on
national treatment
1) Unbound
2) None
3) Joint schools will be
established, with foreign
majority ownership permitted
4) Unbound, except as indicated in
Horizontal Commitments and
the following:
foreign education services
suppliers may enter into China
to provide education services
when invited or employed by
Chinese schools and other
education institutions.
1)
2)
3)
4)
Unbound
None
Unbound
Qualifications are
as follows:
possession of
Bachelor's degree or
above and an
appropriate
professional title or
certificate, with two
years' professional
experiences.
Additional
commitments
United States
Modes of supply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence of natural persons
Sector or
subsector
5. EDUCATIONAL
SERVICES
D. Adult Education
(except flying
instruction)
E. Other Education
Services
Limitations on
market access
Limitations on
national treatment
1) None
2) None
3) The number of licences
for cosmetology schools
in Kentucky is limited to
48 total licences , with a
total of 8 licences allowed
for operation of such
schools per congressional
district
4) Unbound, except as
indicated in the horizontal
section
1),2),3),4) Scholarships and grants
may be limited to US citizens
and/or residents of particular
states and may, in some cases,
only be used at certain states
institutions or within certain US
jurisdictions
1)
2)
3)
4)
None
None
None
Unbound, except as
indicated in the horizontal
section
1),2),3),4) Scholarships and grants
may be limited to US citizens
and/or residents of particular
states and may, in some cases,
only be used at certain states
institutions or within certain US
jurisdictions
Additional
commitments
Financial Services
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Covers insurance and related industries, and
banking and other financial services
Strategically vital sector – hence the Annex and
primacy of prudential concerns
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Also vital infrastructure on which efficiency of
whole economy depends
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110 WTO Members have commitments on
financial services – second only to tourism
Financial Services: Why Commit?
Encourage creation of
stable, transparent
legal environment for
investors
Ensure longer-term capital
flows
Attract foreign
direct investment
Create efficient and
sophisticated capital
markets through
introduction of new
technologies and
financial expertise
Preconditions for Successful
Liberalization
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Establish regulatory regimes – Liberalization
must be underpinned by effective supervisory
and regulatory regimes.
Set correct priorities – Premature liberalization
of capital flows can cause instability in a financial
system. Better to allow commercial presence of
foreign suppliers and liberalize a border range of
financial instruments.
No effect on capital flows – The GATS is
Negotiations on Financial Services
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Relative failure of negotiations in 1993 and 1995,
success in 1997; role of the USA
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Still a high priority in the Doha Round
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Request-offer negotiations; input from industry
essential, but beware of protection of vested
interests. The wider public interest should come
first.
Telecommunications
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Another infrastructure service whose efficiency is
critical for the entire economy
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Also a major target for liberalization in both
accession and Doha Round negotiations
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Prime interest of Vietnam’s partners will be in
commercial presence – the possibility of direct
investment in the telecoms sector
Telecoms Reference Paper I
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Safeguards against anti-competitive behaviour
by dominant suppliers – e.g. crosssubsidization
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Guarantees non-discriminatory interconnection
to existing networks
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Requires transparent licencing procedures
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Requires independent regulator
Telecoms Reference Paper II
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Reference paper adopted by each Member as
« additional commitments » under Article XVIII.
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Over 80 Members have accepted it, some with
slight reservations.
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Accession without accepting the reference
paper is almost certainly impossible; it has been
a key element in Chinese and Russian
accessions.
Maritime Transport I
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Failure of EU and US to make commitments in
Uruguay Round - only 29 schedules. Extended to
1996.
Negotiations covered three “pillars”of maritime
transport - international transport, auxiliary services
and access to and use of port services.
Multimodal services also discussed.
Extended negotiations failed; suspended to new
round. Two schedules improved. MFN principle
suspended.
Maritime Transport II
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US unlikely to move despite 37 countries calling
for maritime liberalization
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But potential for many commitments (70-75
countries?) given major diplomatic effort, even
without US
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But also danger of unravelling – withdrawal of
commitments and more MFN exemptions
Good offers in new Round by EU, Japan,
Scheduling GATS Commitments
& Sectors of Interest to Vietnam
David Hartridge
Hanoi, Vietnam
August 5-6, 2003
One law firm around the world One law firm around the world One law firm around the world One law firm around the world