Global Policy Forum

The World Development Movement has copies of leaked documents which reveal the EU's hidden agenda to introduce compulsory targets for service liberalisation for the forthcoming World Trade Organisation (WTO) talks in Hong Kong, this December. The leaks directly contradict the recent statement by UK Trade Secretary Alan Johnson that "We must not force liberalisation on developing countries…we must leave it for them to decide the 'what, when and how' of their market openings."[1]

The documents include a 'Draft Ministerial Text on Services' which clearly calls for "numerical targets and indicators" for service liberalisation [2], and an EU proposal to the WTO setting out exactly what targets it wants. The leaked proposal shows the EU is demanding developing countries make commitments in 93 of the 163 sub-sectors listed under the General Agreement on Trade in Services (GATS).[3] These have been introduced despite persistent developing country opposition to having mandatory targets for forcing open their economies to foreign companies.[4] The EU is also demanding that developing countries engage in 'sectoral negotiations' and implement 'model schedules' of GATS commitments.

The EU's attempt to force minimum standards for services liberalisation fundamentally changes the agreed process for the GATS talks. Currently, these talks are conducted on a bilateral 'request-offer' basis. In other words, countries can choose whether they want to make any GATS commitments at all and, if so, how many. Previously, this flexibility has been lauded by the EU and the UK Government as being 'development- friendly'.[5] WDM Head of Policy Peter Hardstaff said:

"This is a classic example of how the WTO works. Developing countries have spent most of the last month fighting against GATS benchmarks. Now they find that their demands have been totally sidelined by rich nations wishing to force open poor country markets for the benefit of their companies. This clearly exposes Alan Johnson's public call for an end to forced liberalisation as empty rhetoric because the UK is supporting policies which do the opposite.

"This is in direct contradiction to the UK and EU's arguments that GATS is pro-poor. What could be more development unfriendly than forcing open poor country markets for the benefit of rich country companies? The EU's 'benchmarking' proposal also contradicts the UK Government's claim that there are no plans to change the negotiating approach.[6]

"The EU is attempting to force developing countries into a liberalisation straightjacket that will undermine their ability to pursue pro-development, pro-poor policies.

"The EU's insistence on pursuing the 'benchmarking' issue, and the Chair of the services negotiating group's decision to ignore widespread developing country opposition, means this looks set to be one of the key battlegrounds at the WTO Ministerial in Hong Kong. The EU has clearly not learned the lesson from Cancun where the talks collapsed because it ignored developing country opposition to its demand for new WTO agreements on issues such as investment."

Notes

[1] Alan Johnson MP, Secretary of State for Trade and Industry, United Kingdom, The Wall Of Shame, Speech at The Foreign Policy Centre, London, Thursday 20 October 2005

[2] Council for Trade in Services Special Session. Draft Ministerial Text on Services. 26th October 2005. Job(05)/262, paragraph 9 (Word)

[3] Communication from the European Communities and its Member States. 'Elements for "Complementary Approaches" in Services'. 27th October. Council for Trade In Services Special Session. TN/S/W/55 (PDF)

[4] The EU's benchmarking push has angered developing countries, with those speaking out including Brazil, Rwanda (representing Least Developed Countries), South Africa, Indonesia, Malaysia, the Phillipines, Bangladesh, Mexico, Cuba, Venezuela, Trinidad and Tobago, and Antigua and Barbuda (representing a range of other Caribbean countries).

[5] For example, according to the EC, "the GATS is probably one of the most development friendly agreements in the WTO system because of its [flexible] structure" (European Commission. (2002). Concept paper on development provisions. Communication to the WTO's Working Group on the Relationship between Trade and Investment WT/WGTI/W140 12 September 2002).

[6] According to the UK's Department for Trade and Industry, "Negotiations proceed on the basis of requests and offers; that is, countries request each other to consider liberalisation in particular sectors, and respond with offers. Agreement to liberalise is not reached until all participating Members – including developing countries – are satisfied with the total package being offered. There are no plans to change this approach." (DTI. (2005). General Agreement on Trade in Services (GATS): The GATS (http://www.dti.gov.uk/ewt/service.htm) viewed on 21/09/05).

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