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2020 | OriginalPaper | Chapter

Coherence and Divergence in Agreements on Trade in Services: A Drama in Three Acts

Author : Panagiotis Delimatsis

Published in: Coherence and Divergence in Services Trade Law

Publisher: Springer International Publishing

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Abstract

This chapter reviews instances of coherence and divergence in trade in services agreements through recourse to a series of events that led to the creation of the General Agreement on Trade in Services (GATS) and its evolution via developments at the preferential level. It traces developments in this area in three stages. It begins with an analysis of the background that explains the rise of services integration as a stand-alone topic in the agenda of multilateral trade negotiations. The focus then shifts to the genesis of the GATS; the analysis of the dynamics that evolved in the wake of the Uruguay Round; the identification of the birth defects of the GATS; and the instances of embedded divergence. Finally, the chapter discusses how preferential trade agreements (PTAs) undermine coherence but, on an optimistic note, also points to potential situations that can act as remedies for such fragmentation.

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previous chapter Introduction

next chapter Services Liberalization by Sub-Central Entities: Towards Deeper Commitments?

See Hoekman and Mattoo (2008), p. 23.

See Ariu (2016), pp. 138–149.

WTO, World Trade Statistical Review 2018, p. 20.

See Maurer, Magdeleine and Lanz (2016), p. 42.

Smith (1937), p. 315; See, for the quote, Drake and Nicolaidis (1992), p. 43.

Drake and Nicolaidis (1992), p. 43.

Art. 53:1 of the Final Act; also Krommenacker (1984), p. 141.

See also Delimatsis (2018), p. 195.

See Ehlermann and Campogrande (1988), p. 484; also Snell (2002).

Case C-55/94, Reinhard Gebhard v Consiglio dell’Ordine degli Avvocati e Procuratori di Milano, ECLI:EU:C:1995:411, para. 22; See also earlier, Case 60/84, Cinéthèque, ECLI:EU:C:1985:329, para. 10; and C-275/92, Schindler, ECLI:EU:C:1994:119, para. 30.

Case C-55/94, Gebhard, para. 20. Note that this case law is now abandoned. See C-452/04, Fidium Finanz AG v Bundesanstalt für Finanzdienstleistungsaufsicht, ECLI:EU:C:2006:631, para. 32.

See Marchetti and Mavroidis (2011), p. 690.

Feketekuty (1998), p. 80.

See, among many others, Feketekuty (1988).

OECD, ‘Report by the High-Level Group on Trade and Related Problems’ (OECD, 1973), at 63.

See Kelsey (2008), p. 61.

See GATT, Thirty-Eight Session, Ministerial Declaration adopted on 29 November 1982, L/5424, 29 November 1982, p. 14.

See Sapir (1985), p. 40.

Hill (1977), p. 315; also Krommenacker (1979), p. 510.

Brock (1982), p. 229; also Malmgren (1985), p. 18.

Also Bhagwati (1987), p. 26.

Bhagwati (1984), p. 140; also Reyna (1993), p. 2343.

USTR, US national study on trade in services, 25 January 1984.

USTR, US national study on trade in services, 25 January 1984, p. 77; also Berg (1987), p. 10.

Drake and Nicolaidis (1992), p. 58.

GATT, ‘Communication from Brazil’, MTN.GNS/W/3, 11 March 1987.

Reyna (1993), p. 2361.

Marconini (1990), p. 19; Woodrow (1991), p. 222; also Hindley (1990), p. 136; Smeets et al. (1991), p. 197.

See Hoekman B (1993) Developing Countries and the Uruguay Round: Negotiations on Services, PRWP No 1220, The World Bank, p. 14.

See also Croome (1999), pp. 102, 207, 310.

See the chapter by Jacobsson in this volume.

Inter alia, Bhagwati (1984), p. 139; Sampson and Snape (1985), p. 172; See also Chang et al. (1999), p. 94; Arup (2000), p. 121.

Arts I:2 GATS and XXVIII(b) GATS. During the GATS negotiations the original word ‘delivery’ was replaced by the word ‘supply’ because the latter was understood as covering those measures directly governing as well as those indirectly affecting the supply of services. See also Panel Report, EC – Bananas III (US), para. 7.281 and fn 455. In US – Gambling, however, ‘supply’ and ‘delivery’ were used interchangeably. See, for example, Panel Report, US – Gambling, paras 6.280ff.

The 1993 Scheduling Guidelines clarify that in the case of a service supply through mode 1 ‘…the service supplier is not present within the territory of the Member where the service is delivered’. GATT, ‘Scheduling of Initial Commitments in Trade in Services: Explanatory Note’, MTN.GNS/W/164, 3 September 1993, para. 19(a).

To date, transport and travel are the leading sector for the developing world in terms of growth. Tourism accounts for over 40% of Africa’s commercial services exports, whereas in the LDC group only this percentage is more than 10% higher.

The so-called ‘negative list’ approach means in the GATS jargon that, other than the sectors and sub-sectors that are explicitly listed in a Member’s list of MFN exemptions, the MFN principle applies to all sectors. See also Adlung and Carzaniga (2009), p. 357.

Mattoo (2000), p. 67.

Cross-border supply; consumption abroad; commercial presence; and temporary movement of natural persons. There is no doubt that the GATS is an investment agreement, as over 50% of services trade is conducted through Mode 3. See Magdeleine J and Maurer A, Measuring GATS Mode 4 Trade Flows, WTO Staff Working Paper, ERSD-2008-05, October 2008, https://www.wto.org/english/res_e/reser_e/ersd200805_e.pdf (last accessed 3 December 2019).

The so-called ‘negative list’ approach means in the GATS jargon that, other than the limitations listed in the sectors and sub-sectors that are explicitly listed in a Member’s Schedule, Members are bound to fully apply the market access and national treatment obligations in those sectors and subsectors.

Except for certain GATT-related cases.

See Delimatsis (2007), p. 13.

See Lamprecht and Miroudot (2018).

GATT, ‘Services Sectoral Classification List’ MTN.GNS/W/120, 10 July 1991.

See https://unstats.un.org/unsd/classifications/unsdclassifications/cpcv21.pdf (last accessed 3 December 2019).

For instance, in the aftermath of the US – Gambling saga, the US sought to change the entry of its schedule with respect to the cross-border supply of gambling and betting services. However, this has been impossible for more than 2 years now.

Also Appellate Body Report, US – Gambling, para. 180.

See WTO, Council for Trade in Services, ‘Energy Services’, S/C/W/311, 12 January 2010, p. 2.

See also WTO, Council for Trade in Services (Special Session), ‘Energy Services’, Communication from the United States, S/CSS/W/24, 18 December 2000, Annex A.

Cf. Leroux (2007), p. 757. The Appellate Body confirmed that treaty interpretation ‘is ultimately a holistic exercise that should not be mechanically subdivided into rigid components’. See Appellate Body Report, China – Publications and Audiovisual Products, para. 348.

Appellate Body Report, EC – Computer Equipment, para. 109.

As the Appellate Body noted in EC – Computer Equipment [para. 82] when interpreting GATT Schedules, “the security and predictability of tariff concessions would be seriously undermined if the concessions in Members’ Schedules were to be interpreted on the basis of the subjective views of certain exporting Members alone”.

See, for instance, Appellate Body Report, US – Gambling, para. 182.

This can be contrasted to the GATT where only the Harmonized System of the World Customs Organization (WCO) is the relevant benchmark.

See also Ortino (2006), p. 124. The Appellate Body implicitly agreed with this limitation in US – Gambling, para. 182.

See Marchetti and Roy (2008), p. 66.

See Antimiani and Cernat (2018).

See Kelsey (2016), p. 119.

For this intermingling, compare C-390/99, Canal Satélite Digital, ECLI:EU:C:2002:34, paras 31–33. In the WTO context, see Appellate Body Report, China – Publications and Audiovisual Products. See also Antimiani and Cernat (2018).

See Miroudot and Shepherd (2016), p. 66.

Arguably, however, this explains recent initiatives by certain WTO Members such as India for the creation of an agreement on trade facilitation in services as a means of redistributing gains from trade in services.

Crozet et al. (2016), pp. 585–607.

See Delimatsis (2010), pp. 443–473.

Nordås and Rouzet (2015).

See Hoekman (2016), p. 149.

See Hoekman and Shepherd (2017).

See Beverelli et al. (2017), pp. 166–182.

See Balchin N et al., Trade in services and economic transformation, ODI Report, November 2016, https://set.odi.org/wp-content/uploads/2016/11/SET-Trade-in-Services-and-Economic-Transformation_Final-Nov2016.pdf, p. 47.

See Arnold et al. (2008), pp. 578–599.

See Arnold et al. (2016), pp. 1–39.

See Adlung and Miroudot (2012), p. 1045.

Cf. Delimatsis (2017), p. 583.

The EU-Japan FTA takes a wiser approach by introducing a single chapter with various sub-sections, which means that the general framework is applicable to all sub-sections unless otherwise indicated.

See Polanco and Sauvé (2018), p. 575; and Gari (2020). See also the chapter by Gari in this volume.

It is worth mentioning that, even in this case, no coherence between the EU and its DCFTA partners as a group is ensured. For instance, based on the Association Agreements that underlie such PTAs, the EU is committed to concluding mobility partnerships with those partners. However, not all EU Member States participate in these partnerships (in fact, participation varies from DCFTA to DCFTA), typically due to Mode 4-related disagreements relating to the timing and breadth of labour market openness but also due to anachronistic views about competences. Such divergence, arguably, undermines the effectiveness of the EU development policy.

See WTO, ‘Joint Ministerial Statement on Services Domestic Regulation’, WT/MIN(17)/61, 13 December 2017.

See, for an early claim along these lines, Delimatsis et al. (2011), p. 245.

See Roy (2014), p. 15.

See Sauve and Shingal (2014), p. 401.

See Rueda-Cantuche et al. (2018).

WTO, World Trade Report 2018, at 114.

See Miroudot and Shepherd (2016).

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Title: Coherence and Divergence in Agreements on Trade in Services: A Drama in Three Acts
Author: Panagiotis Delimatsis
Publisher: Springer International Publishing
Book: Coherence and Divergence in Services Trade Law
Print ISBN: 978-3-030-46954-2

Electronic ISBN: 978-3-030-46955-9

Copyright Year: 2020
DOI: https://doi.org/10.1007/978-3-030-46955-9_2