One law firm around the world One law firm around the world Scheduling GATS Commitments & Sectors of Interest to Vietnam David Hartridge Hanoi, Vietnam

One law firm around the world One law firm around the world One law firm around the world One law firm around the world

Scheduling GATS Commitments

& Sectors of Interest to Vietnam

David Hartridge

Hanoi, Vietnam

August 5-6, 2003

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 market-access limitations unless scheduled (no other limitations are possible under this Article):

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 services.

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.

And commitments can be limited:

“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

No unspecified economic needs tests

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

Additional commitments

8. HEALTH RELATED AND SOCIAL SERVICES A. Hospital Services (CPC 9311)

1) Unbound 2) Unbound 3) Only through

incorporation with a foreign equity ceiling of 51 per cent

4) Unbound except as

indicated in the horizontal section

1) Unbound 2) Unbound 3) None 4) Unbound except as



Sector or subsector




Services provided by midwives, nurses in private establishments (CPC 93191, excluding services provided within the public sector)

1) Unbound 2) Public insurance programmes do not cover the cost of foreign medical services supplied abroad. 3) None 4) Unbound, except as

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.

1) Unbound 2) None 3) None 4) None

Latvia


Sector or subsector




Medical Services

1) Unbound* 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

4) Unbound except as


1) None 2) None 3) None 4) Unbound

*Unbound due to lack of technical feasibility

Singapore


Sector or subsector Limitations on market access



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]

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) Unbound 2) None 3) Unbound 4) Qualifications are

as follows: possession of

Bachelor's degree or above and an appropriate professional title or certificate, with two years' professional experiences.

China


Sector or subsector




5. EDUCATIONAL SERVICES D. Adult Education

(except flying instruction)

E. Other Education Services

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) None 2) None 3) None 4) Unbound, except as


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) 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

United States

Financial Services

Covers insurance and related industries, and banking and other financial services

Strategically vital sector – hence the Annex and primacy of prudential concerns

Also vital infrastructure on which efficiency of whole economy depends

110 WTO Members have commitments on financial services – second only to tourism

Financial Services: Why Commit?

Ensure longer-term capital flows

Ensure longer-term capital flows

Encourage creation of stable, transparent legal environment for investors

Encourage creation of stable, transparent legal environment for investors

Attract foreign direct investmentAttract foreign direct investment

Create efficient and sophisticated capital markets through introduction of new technologies and financial expertise

Create efficient and sophisticated capital markets through introduction of new technologies and financial expertise

Preconditions for Successful Liberalization

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 concerned only with liberalization of financial services and not of capital flows.

Negotiations on Financial Services

Relative failure of negotiations in 1993 and 1995, success in 1997; role of the USA

Still a high priority in the Doha Round

Request-offer negotiations; input from industry essential, but beware of protection of vested interests. The wider public interest should come first.

Telecommunications

Another infrastructure service whose efficiency is critical for the entire economy

Also a major target for liberalization in both accession and Doha Round negotiations

Prime interest of Vietnam’s partners will be in commercial presence – the possibility of direct investment in the telecoms sector

Telecoms Reference Paper I

Safeguards against anti-competitive behaviour by dominant suppliers – e.g. cross-subsidization

Guarantees non-discriminatory interconnection to existing networks

Requires transparent licencing procedures

Requires independent regulator

Telecoms Reference Paper II

Reference paper adopted by each Member as « additional commitments » under Article XVIII.

Over 80 Members have accepted it, some with slight reservations.

Accession without accepting the reference paper is almost certainly impossible; it has been a key element in Chinese and Russian accessions.

Maritime Transport I

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.

Major political problem for US - Jones Act and Section 19 of Merchant Marine Shipping Act, 1920.

Maritime Transport II

US unlikely to move despite 37 countries calling for maritime liberalization

But potential for many commitments (70-75 countries?) given major diplomatic effort, even without US

But also danger of unravelling – withdrawal of commitments and more MFN exemptions

Good offers in new Round by EU, Japan, Australia and New Zealand

One law firm around the world One law firm around the world One law firm around the world One law firm around the world

Scheduling GATS Commitments & Sectors of Interest to Vietnam

David Hartridge

Hanoi, VietnamAugust 5-6, 2003

Documents

One law firm around the world One law firm around the world Scheduling GATS Commitments & Sectors of Interest to Vietnam David Hartridge Hanoi, Vietnam