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Minutes show how domestic regulation deal in services schedules resolved

The January 24, 2024 meeting shows how talks with 54 WTO members led South Africa and India to drop their objections to commitments incorporating the plurilateral services deal

By Peter Ungphakorn
POSTED MARCH 6, 2024 | UPDATED MARCH 6, 2024

More details have emerged explaining what happened in talks between some participants in the plurilateral agreement on services domestic regulation and objectors India and South Africa, leading to the objections being dropped.

The story is told in the minutes of the multilateral (WTO-wide) working party handling domestic regulation in services. The minutes are still restricted but will be public in a few months. A leaked copy is here.

They show that South Africa and India had already told WTO members they would drop their objections several weeks before their formal announcements.

Objections dropped on services regulation say nothing about other plurilaterals

Faced with the impossibility of going to arbitration, India and South Africa were forced to drop their objections. They did so for countries that had amended their proposed commitments

By Peter Ungphakorn
POSTED FEBRUARY 28, 2024 | UPDATED APRIL 6, 2024

Most of the reports coming from the World Trade Organization’s Ministerial Conference in Abu Dhabi speak of the new plurilateral agreement on services regulation entering into force at the conference.

That was the line taken on the WTO website and in the participants’ press conference.

As a result, many media reports also used the term and missed crucial details about what was really going on, including the fact that it only applied to some participants in the deal.

Describing this as a new agreement “entering into force” is not wrong, but it is misleading.

India and South Africa have not dropped all their objections — a point that is missed in most of the reporting

What has happened is that participants in the new agreement on domestic regulation in services have attached the text of the agreement to their individual commitments (called “schedules”) in services, rather than to the general WTO rule-book.

This has avoided the need for WTO-wide consensus on adding to the rule-book an agreement among only part of the WTO’s membership, in the face of opposition from India and South Africa.

Even with this alternative route, India and South Africa still resisted. They raised objections about the proposed new schedules of commitments.

But here the rules are different. India and South Africa could not object forever. So they eventually dropped their objections on some of the schedules, which could then be certified, justifying the description of “entering into force”.

Plurilateral services commitments from 54 members certified, leaving 16 to go

India has joined South Africa in dropping its objections to some of the commitments incorporating the new plurilateral deal on domestic services regulation

(Original headline: “Plurilateral services commitments from 53 member certified, leaving 17 to go”.)

UPDATES April 5, 2024. The WTO Secretariat announced on April 4 that El Salvador’s revised services schedule had been certified because “the Secretariat has received no objections within 45 days as stipulated in the procedures”. The proposal was circulated on February 19, 2024.

In other words, India and South Africa never objected to El Salvador’s February 19 proposal, which seems to have gone straight to pasting in the domestic regulation disciplines, instead of linking to the reference paper. The following day, El Salvador circulated the supplement to its services schedule.

That meant 54 members’ schedules involving the plurilateral agreement had been certified, leaving 16 members’ schedules still uncertified (including the UK’s, facing post-Brexit objections from Russia). One more participant — Timor Leste — is not counted because it is still in the final stages of completing WTO membership.

March 28, 2024. South Africa dropped its objections to four more proposed revised schedules of commitments in services after they were corrected. We can assume that they continue the practice of pasting the new disciplines directly into the documents rather than simply link to the reference paper.

The four are from Albania, Canada, Georgia and South Korea, bringing the total of corrected documents so far to 31, from 58 members. (Chile’s was corrected twice; the UK’s is still uncertified because of post-Brexit Russian objections.)

India had not yet followed suit, so the four new corrected documents remain uncertified, and the certified total is unchanged

By Peter Ungphakorn
POSTED FEBRUARY 27, 2024 | UPDATED APRIL 15, 2024

At the last-minute India has dropped its objections, allowing a plurilateral agreement on streamlining domestic services regulations to be fully legal in 53 World Trade Organization members.

India’s announcement, circulated on the first day of the WTO’s Ministerial Conference in Abu Dhabi, follows South Africa’s almost two weeks ago

In a paper circulated on February 16, South Africa said it no longer objected to the 27 new commitments from 54 WTO members on services. India withdrew its objections on the same 27 revised lists (or “schedules”) of commitments in services.

This has allowed 26 revised schedules from 53 WTO members to be officially certified. One — from the UK — faces additional objections related to its departure from the EU (Brexit), but Britain said it would continue to apply the new disciplines anyway.

The schedules of another 17 participants in the domestic services regulation agreement have not been certified, apparently because they have not been amended to the satisfaction of India and South Africa.

South Africa drops objections to 27 plurilateral services commitments

South Africa’s announcement covers commitments from 54 of the 71 participants in the plurilateral agreement on services domestic regulation

SEE UPDATE
Plurilateral services commitments from 53 members certified, 17 to go
AND
Experts: India, S.Africa unlikely to succeed in blocking WTO services deal
Technical note: types of plurilateral deals and adding them to WTO rules
Explainer: The 18 WTO plurilaterals and ‘joint-statement initiatives’
Technical note: Participation in WTO plurilateral talks

By Peter Ungphakorn
POSTED FEBRUARY 17, 2024 | UPDATED FEBRUARY 22, 2024

Ten days before the World Trade Organization’s Ministerial Conference South Africa has dropped its objections to 54 WTO members implementing an agreement to streamline domestic regulation in services, leaving only India dissenting on these cases.

In a paper circulated on February 16, South Africa says it no longer objects to the 27 new commitments on services (in documents called “schedules”).

They are from 54 WTO members: Argentina, Bahrain, Chile, China, Costa Rica, the EU (including for its 27 member states), Hong Kong, Iceland, Israel, Japan , Kazakhstan, Liechtenstein, Mauritius, Moldova, Montenegro, New Zealand, North Macedonia, Norway, Paraguay, Peru, Singapore, Switzerland, Thailand, Ukraine, United Arab Emirates, the UK and the US.

These new commitments contain new rules on domestic regulations in services. They are the result of “plurilateral” negotiations — meaning they were talks among only part of the WTO membership — concluded in December 2021.

Altogether 71 WTO members are participants in the deal but so far only 27 schedules from 54 members have been corrected to South Africa’s satisfaction.

Experts: India, S.Africa unlikely to succeed in blocking WTO services deal

It would be impossible for India to make a case for what ‘compensation’ it is owed in return for more commitments undertaken by others — Hamid Mamdouh

By Peter Ungphakorn
POSTED FEBRUARY 7, 2023 | UPDATED FEBRUARY 9, 2023

India and South Africa are questioning the right of 62 World Trade Organization (WTO) members to implement their agreement to streamline domestic regulation in services, but experts question whether the two can prevent the deal from becoming legal.

The deal was concluded in December last year. Since then, most of the participants have submitted what they have each agreed to do, in the form of draft revised “schedules” (or lists) of commitments in services.

Estimates by the WTO and Organization for Economic Cooperation and Development (OECD) suggest the agreement could potentially save trade costs by about US$150bn annually. The 62 WTO members that have submitted new draft schedules account for about 89% of world services trade — 92.5% if all 70 participants are counted, WTO Deputy Director-General Anabel González says.

‘Who invented the four modes of services supply?’

The idea evolved over almost three years among negotiators in the Uruguay Round talks in the 1980s, crystallised by the EU delegation

By Peter Ungphakorn
POSTED FEBRUARY 15, 2022 | UPDATED FEBRUARY 19, 2022

We now take for granted that services can be traded internationally in four ways known as the “four modes”, but once upon a time this was not so clear-cut.

The four “modes of supply” (or “modes of delivery”) are:

cross border supply — where a service provider in one country sells the service to a customer in another country without anyone moving, for example professional advice over the telephone or internet
consumption abroad — where the customer travels, for example tourism
foreign commercial presence — where the service provider sets up a subsidiary or branch in another country, for example a bank or insurance company
movement or presence of natural persons — where individuals travel to provide the service either as staff in the foreign branch or subsidiary or independently, for example maintenance engineers travelling to service aircraft abroad

This is now established right at the top of the World Trade Organization’s General Agreement on Trade in Services, under Article 1, “Scope and Definition”:

2. For the purposes of this Agreement, trade in services is defined as the supply of a service:

(a) from the territory of one Member into the territory of any other Member;

(b) in the territory of one Member to the service consumer of any other Member;

(c) by a service supplier of one Member, through commercial presence in the territory of any other Member;

(d) by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member.

How they are now applied can be seen in the commitments that each WTO member has made in services, in fiendishly complicated documents known as “schedules” of commitments (explained in this technical note).

But it took some time to arrive at that point.

‘Plurilateral’ WTO services deal struck after breakthrough text released

Creating new rules without officially calling them ‘rules’ solves an immediate problem but leaves long term questions

Skip this update and go straight to the article

This article was revised in December 2021, but follows the structure of the original version from September 2021.

UPDATE, DECEMBER 3, 2021:

The deal was eventually announced in Geneva on December 2, 2021, even though the Ministerial Conference had been postponed.

A lightly revised version of the September “reference paper” was released along with a list of the 68 participating members (counting the EU as 28) that had submitted “schedules” (lists) of commitments to streamline domestic regulation. These were combined into a single declaration.

The legally binding part of the deal is those commitments, which will be added to the schedules of commitments participating countries already attached to the WTO’s General Agreement on Trade in Services.

The reference paper itself will not be an official WTO agreement, but the new schedules of commitments will refer to the principles in the reference paper, making those commitments legally binding in practice.

By December 2, 2021, the 68 participants were:

Albania; Argentina; Australia; Austria; Bahrain; Belgium; Brazil; Bulgaria; Canada; Chile; China; Colombia; Costa Rica; Croatia; Cyprus; Czech Republic; Denmark; El Salvador; Estonia; European Union; Finland; France; Germany; Greece; Hong Kong, China; Hungary; Iceland; Ireland; Israel; Italy; Japan; Kazakhstan; Korea, Republic of; Latvia; Liechtenstein; Lithuania; Luxembourg; Malta; Mauritius; Mexico; Moldova, Republic of; Montenegro; Netherlands; New Zealand; Nigeria; North Macedonia; Norway; Paraguay; Peru; Philippines; Poland; Portugal; Romania; Russian Federation; Saudi Arabia, Kingdom of; Singapore; Slovak Republic; Slovenia; Spain; Sweden; Switzerland; Chinese Taipei; Thailand; Turkey; Ukraine; United Kingdom; United States; Uruguay

By Peter Ungphakorn
POSTED SEPTEMBER 29, 2021 | UPDATED DECEMBER 6, 2021

Almost 70 members of he World Trade Organization (WTO) announced a deal to discipline domestic regulation of services on December 2, 2021, two months after they agreed on the rules they would apply.

The final text saw only minor adjustments compared with the original announced on September 27, 2021, and described as a breakthrough allowing the final deal to be struck.

The September announcement paved the way for the participants to agree on the complete package by the Ministerial Conference (November 30 to December 3 this year), the WTO said. At that time the talks’ participants were officially had 65, but actually 66 WTO members. This has now risen to 68 (or officially 67)

All that remained after the September 27 announcement was for the participants to go through each other’s individual commitments on how the new disciplines would be applied, the WTO said.

‘WTO terms’ apply in any future UK-EU trade relationship. But how much? Part 3 services and more

A lot has been said about Britain trading with the EU on ‘WTO terms’. But a fundamental misunderstanding needs to be cleared up. It’s not just about ‘no deal’. Part 3 of 3

This final of 3 parts looks at UK-EU trade in services
and other issues under “WTO terms”.
Part 1 is on the meaning of “WTO terms”. Part 2 is on goods trade.
A short summary is here
.
They draw partly on a paper from The UK in a Changing Europe

By Peter Ungphakorn
POSTED MAY 27, 2020 | UPDATED MAY 27, 2020

As with goods, if the UK and EU fail to reach agreement, or if the agreement has limited content, UK-EU trade will see new trade barriers in services. Also possible are complications in intellectual property and dispute settlement among other issues.

If the EU and UK fall back on WTO commitments what does this mean for services?

Be warned. I’m not about to give a proper answer. This is an attempt to point to where the information can be found. There’s so much detail — 160 sub-sectors of it — I’ll wait for others to take up the baton

Air transport: WTO commitments on all services are unbelievably complicated, but landing rights are totally excluded

By Peter Ungphakorn
POSTED APRIL 12, 2017 | UPDATED MARCH 11, 2020

A lot has been said about the impact on trade in goods if the UK and EU fail to strike a free trade deal after Brexit. They would rely on their WTO commitments, such as on tariffs and quotas. Much less has been said about the commitments on services, despite their importance to the UK economy.

This is not surprising. Firstly, countries’ commitments in the WTO on opening their services markets (known as services “schedules”) are unbelievably complicated. The WTO has a 2,000-word guide to understanding them (approximately 5 pages) — and even that is written for readers who are already familiar with a range of technicalities. (See also this technical note on services schedules.)