THE URUGUAY ROUND NEGOTIATIONS ON SERVICES: A THIRD WORLD PERSPECTIVE

By Martin Khor Kok Peng

For Third World Network, June 1990

PART ONE

THE URUGUAY ROUND NEGOTIATIONS ON SERVICES

1.       PRESENT SCHEDULE OF GATT SERVICES NEGOTIATIONS: DRAFT FRAMEWORK TO BE COMPLETED BY JULY 1990

It is crucial for developing countries to urgently formulate a strategic position relating to the services issue at the Uruguay Round because negotiations are being rushed in the first half of 1990 so that a draft framework of principles on services can be completed by July 1990.  By December 1990 the Uruguay Round is scheduled to end, and the industrial countries very much want an agreement on services to be adopted by then.

The most recent developments in the Geneva negotiations, and the future schedule already planned, are as follows:

  • Dec 1989: A paper containing the draft elements of a basis for 1990 negotiations on services was prepared.
  • 16 – 19 Jan 1990: The Group of Negotiations on Services (GNS) begin 1990 talks and agree to a timetable for meetings to the end of July. The timetable is as follows.
  • 26 Feb – 2 March: The GNS will consider the ‘structure’ of the services framework, the issue of statistics, and the role of other international arrangements and disciplines.
  • 26 – 30 March: The GNS will consider the ‘structure’ issue again, and the issue of mechanics of liberalisation including the nature of initial commitments by countries, definition and increasing participation of developing countries, and institutional issues.
  • 7 – 11 May: Discussions will be on definition and participation of developing countries, statistics, the role of other international arrangements and disciplines, institutional issues, identification of sectors requiring annotations, and initial presentation of liberalisation undertakings by participants.
  • 18-22 June: The same topics will be covered.
  • 16 – 20 July: A draft framework of services will be completed and submitted to a legal drafting group.
  • December: Final meeting of Uruguay Round in Brussels.

From the above schedule, it is obvious that the Third World countries must grasp and grapple with the issues being negotiated very soon, in order to make strong and informed positions for itself.

In the following sections, we trace the origins of the services negotiations, the main issues of contention, the different views of developed and Third World countries, and the implications for the Third World for accepting an agreement on the industrial countries’ terms.

2.         HOW SERVICES WERE BROUGHT INTO URUGUAY ROUND

Up to now, GATT’s jurisdiction has only been in the area of international trade in goods.  In 1982, the United States first raised the subject of services in GATT during the preparatory work for the 1982 Ministerial meeting.  It expressed the need to study the applicability of GATT principles to trade in services, and suggested negotiations in GATT to establish a framework to regulate such trade.  This was vehemently opposed by Latin American and other Third World countries which felt that GATT was an inappropriate forum to deal with services and that it should continue to deal only with goods.  They expressed fears that “retaliatory trade measures permitted under GATT would be legitimized in this area, entailing the risk that measures, or threats, of retaliation in respect of trade in goods would be applied so as to obtain modification of existing laws and regulations on services.  Any such outcome would be unacceptable to the developing countries.” (Mendoza 1989:60)

Over the next few years, the US administration pursued the issue of services to be included in GATT.  It was motivated by the desire of US transnational services companies to expand their markets and operations, and thus to break down barriers especially in the Third World that hinder such expansion.  The EC, other European countries and Japan eventually joined the US in pushing for services in GATT.

At the Punta del Este meeting that launched the Uruguay Round in 1986, it was finally agreed that services would be a major topic of negotiations.  However, taking into account Third World views, the services negotiations would be conducted outside GATT’s legal framework.  Thus, there would be two separate tracks: the negotiations on goods under GATT and the separate services negotiations. (As it turned out, however, the two ‘separate’ sets of talks became integrally linked, as industrial countries use the Third World’s requests for concessions on goods as a bargaining chip to push for Third World concessions on services).

According to the Punta del Este mandate on Services:

  • “Negotiations in this area shall aim to establish a multilateral framework of principles and rules for trade in services, including elaboration of possible desciplines for individual sectors, with a view to expansion of such trade under conditions of transparency and progressive liberalisation and as a means of promoting economic growth of all trading partners and development of developing countries. Such framework shall respect the policy objectives of national laws and regulations applying to services and shall take into account the work of relevant international organizations” (emphasis added).

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