Live Mint | 23 November 2016
TiSA negotiations fall victim to the Trump tremor
by D. Ravi Kanth
A Trump tremor struck several major trade initiatives last week. The proposed plurilateral deal (a transaction involving some parties to the World Trade Organization, but not all) called the Trade in Services Agreement (TiSA) has become another victim on the global trade Richter scale. Trade envoys from 23 countries involved in the TiSA negotiations decided on Friday (18 November) to cancel a summit scheduled to take place on 5 December.
The much bigger Trans-Pacific Partnership (TPP) agreement involving 12 Pacific countries is already marooned. Yet the US, led by the lame-duck President Barack Obama, is still pursuing another plurilateral initiative called the Environmental Goods Agreement (EGA) despite President-elect Donald Trump’s vociferous opposition to the Paris Agreement on climate change. The EGA’s fate will be known during a ministerial meeting beginning on 2 December. Under the pretext of tackling climate change, the US, the European Union, and other major advanced countries have blatantly pursued a tariff elimination agreement for environmental goods based on the classical mercantilist framework. Such is the credibility of the EGA!
Coming to the TiSA negotiations, it is common knowledge that three members—the US, the EU, and Australia—led the negotiations for the past five years ostensibly for crafting an “ambitious” and “comprehensive” trade agreement. It is supposed to be based on the best provisions of the bilateral and regional trade agreements already signed by some of the participants.
Significantly, the US has ensured that China is kept out of the TiSA brigade, despite overwhelming support for its inclusion. The US repeatedly blocked Beijing’s application for joining the TiSA talks in 2012, despite support from the EU and a majority of the participants. Meetings were largely held at the American, EU, and Australian missions in utter secrecy. At times, the participants also congregated at the Centre William Rappard that houses the WTO. The latest 21st round of TiSA negotiations, for example, were held largely at the WTO, while some sessions took place at the EU mission.
Washington remained pretty clear about its intentions for launching the TiSA negotiations: fork out plurilateral agreements in different sectors out of the multilateral Doha Development Agenda negotiations so as to ensure US objectives in a coalition of the willing. Otherwise, it is difficult to explain why TiSA negotiations ought to be held in the first place when countries actually made significant and fairly ambitious offers for opening markets in different services sectors at a Doha signalling conference in 2008.
The latest revised offers submitted by 22 members, except Pakistan, revealed several interesting facets of the TiSA negotiations. The group comprises Australia, Canada, Chile, Chinese Taipei, Colombia, Costa Rica, the European Union, Hong Kong, Iceland, Israel, Japan, Liechtenstein, Mexico, New Zealand, Norway, Panama, Peru, South Korea, Switzerland, Turkey, US, Pakistan and Mauritius.
The annexes in 17 sectors such as finance, telecommunications, e-commerce, energy services, delivery services, state-owned enterprises, localization provisions, air transport services, maritime transport services, road transport services, so-called Mode 4 involving movement of short-term services providers, and domestic regulation provisions that include the necessity test, among others revealed broadly the winners and losers. For example, if sectors such as finance, e-commerce, telecommunications and delivery services set high benchmarks, other sectors like Mode 4, maritime transport, air transport, road transport, and domestic regulation contained kid-glove provisions.
The revised market access offers filed before 21 October, though, remain confidential, and reveal numerous asymmetries in which the dominant members offered access only in areas of their core interest. The US, for example, provided an ambitious offer in sectors like financial services, telecommunications, e-commerce, state-owned enterprises, and delivery services, among others. The US offer in financial services, telecommunications, and e-commerce came close to what was offered in the Trans-Pacific Partnership (TPP) agreement.
Thus, Washington included little or zero market access for the movement of short-term services providers in Mode 4 that is vital for countries like Mexico, Peru, and Turkey on grounds of immigration concerns. It failed to provide any access to maritime services which is vital for the EU, Japan, Korea, Norway, and Hong Kong, among others. The US also chose to shelter sub-federal services sectors from any foreign participation. It placed tremendous conditions even in the transport sector, which is a major barrier for Mexico to send its goods.
The EU, for example, placed stiff barriers for the movement of short-term services providers and refused to accept data services and tough localization provisions. Brussels also inserted “reciprocity” conditions, implying that in areas where it is not going to secure credible market access such as in maritime services, it will not offer access in other areas where it has defensive interests.
In short, the hotchpotch of proposed TiSA commitments exposed the glaring disparities, akin to the classical Darwinian framework of the survival of the fittest. That this is also the case with the so-called 21st century agreement of TPP, which is a grand bonanza for financial services, banks, and pharmaceutical companies, is well-known. That the US pursued TPP as a strategic security initiative to contain China in the Pacific region more than as a trade agreement based on comparative advantage is as clear as daylight. Yet Trump and Bernie Sanders succeeded in turning the tables against the TPP.
Indeed, in these quixotic and post-truth times, nemesis has its subtle ways of catching up with the reality. The so-called Third Alternative based on market fundamentalism and Washington consensus of uninterrupted trade liberalization and globalization on the one side, and ultra-conservative social and religious policies on the other that began with the fall of the Berlin Wall more than 25 years ago wreaked havoc on a global scale. It is, therefore, unsurprising that the emergence of populists/populism has become the order of the day.