SERVICES TEXT BLOWS UP IN THE FACE OF THE HONG KONG MINISTERIAL

By Benny Kuruvilla

S.African Minister speaking to civil society on Annex C

In the Ministerial draft that was taken from Geneva to Hong Kong the sections on services (Paragraph 19-21 in the main text and Annex C) were the most controversial. The brackets on Annex C, which showed that it was not a consensus document, partly reflected this.

Knowing that services could stymie a successful outcome at Hong Kong, it was tactically discussed before the Ministerial began in a meeting of the Core Group on services (a non inclusive group which comprises 15 countries and is co-chaired by the US and India) on the evening of 12 December 2005. It was not on the agenda for the first 2 days of the Ministerial. The idea of the main demandeurs was to front load the ministerial with other issues such as agriculture, NAMA and development and introduce Annex C towards the end thereby ensuring that dissenting voices would be muted.

They couldn’t have been further away from the truth. On 15 December 2005, Philippines, South Africa, Indonesia, Venezuela and Cuba submitted a letter to Chairman John Tsang that mentions that Annex C cannot be part of the final Ministerial declaration. The G90 has also submitted an alternative text to Annex C. Both these developments have been severely criticized by countries such as US, EU, Switzerland, Japan, Australia and India.

G90 PROPOSAL: Though the G90 text deletes contentious sections from Annex C there are 3 main areas where it is still problematic. Paragraph 5 calls for members to develop disciplines on domestic regulation before the end of the current round of negotiations. It refers to an extremely problematic text that was submitted by the Chairman of the Working Party on Domestic Regulation to the GATS Council on 15 November 2005 as the reference document. The underlying principle of the negotiations on domestic regulation is to develop disciplines that ensure that domestic regulatory frameworks are not ‘unnecessary barriers’ to trade. Several developing countries are wary of this and have called for more time to understand the implications of multilateral rules on domestic regulation. In paragraph 6 it mentions, similar to Annex C, that negotiations may also be pursued on a plurilateral basis. Paragraph 10 calls for effective timelines to conclude the negotiations and mentions that any outstanding initial offers and plurilateral requests shall be submitted as soon as possible.

CIVIL SOCIETY RALLIES BEHIND VENEZUELA AND SOUTH AFRICA: In an emergency meeting with civil society groups the Venezuelan Ambassador Oscar Carvallo called for support and solidarity. Earlier in the day Venezuela formally stated that their position was for a complete rejection of Annex C. Ambassador Carvallo said that the G90 proposal was a timely intervention but it still in some ways preserves elements of Annex C. ‘We are willing to engage in the negotiations but only if the present Annex is rejected and the G90 proposal is used as a basis for talks. This is our take it or leave it position’, he said. It was reported that Cuba would also walk out of the talks if Annex C was used as the basis for negotiations. Other countries that were being brought in to strengthen this group included South Africa, Philippines, Indonesia and Kenya. Several G90 countries were also being contacted. The Venezuelan Ambassador also informed groups that a green room on services was to start and they were being kept out of it.

South African Minister for Trade and Industry Mandisi Mpahlwa also invited civil society groups to listen to his country’s positions on Annex C. ‘Its quite clear that we wont achieve anything useful in Hong Kong. In services South Africa’s position is that developments are not keeping with the agreed flexible approach’, he told a packed room of civil society groups from across the world.

GROUPS SUPPORTING ANNEX C: Clearly in a minority now countries in favour of Annex C include Japan, Australia, Hong Kong, Canada, India, United States, Chile, Mexico and Switzerland. The EU opposed Annex C but for completely different reasons. They want Annex C re-opened to include stronger language with numerical targets for increasing FDI and more clarity on plurilateral negotiations.