This story
was taken from Bulatlat, the Philippines's alternative weekly
newsmagazine (www.bulatlat.com, www.bulatlat.net, www.bulatlat.org).
Vol. V, No. 16, May 29-June 4, 2005
Stakes for Philippines High as WTO Services Talks
Near Deadline The
Philippines has not much to gain except on Mode 4 and a great deal to suffer
from liberalizing its services sector The end of May could
breathe new life or kill the services talks in the World Trade Organization (WTO).
It is the deadline for the submission of new and revised offers of services
sectors up for liberalization. © 2004 Bulatlat
■
Alipato Publications Permission is granted to reprint or redistribute this article, provided its author/s and Bulatlat are properly credited and notified.
By Jennifer del Rosario-Malonzo
IBON Features
Posted by Bulatlat
Crucial to the present negotiations is the “request-offer” process, in which
individual WTO members request new market access and national treatment
commitments, and respond with offers of new commitments.
As of the February 2005 negotiating cluster, the last formal cluster before the
May 31 deadline, 45 member countries are still expected to make offers
(excluding the Least Developed Countries or LDCs).
Of crisis and benchmarks
The chair of the Services Negotiating Committee and the WTO Secretariat declared
the negotiations in crisis and a proposal twas floated to establish quantitative
benchmarks -- a minimum level of commitments that any WTO member would have to
make in this round of negotiations.
The United States said the “request-offer” approach has failed to sufficiently
advance the current round of talks and suggested “supplementing” the approach
with a new initiative designed to bring other countries up to US standards.
American negotiators have been discussing the initiative with other developed
countries, including the European Union, Canada and Japan.
According to the US, a number of WTO members with potentially significant
services markets, such as the Philippines, South Africa, Pakistan, and Morocco,
have failed to submit initial market-opening offers in the talks, and many
offers currently on the negotiating table contain no commitments in sectors such
as distribution, maritime transportation and construction. Other sectors where
offers are weak include healthcare, education, environmental services, and
postal/courier services.
The depiction of a crisis in GATS talks appears to be a ploy however to force
many Third World countries to submit offers in services. The proposed benchmarks
are also meant to compel countries to commit their services to be liberalized
even if they do not intend to.
Mode 4
Given the continuing offensives of developed countries in opening up their
services sector, governments of Third World countries are pushing for Mode 4
(Temporary Movement of Natural Persons) as a key issue.
Many poor countries have registered their disappointment in the services talks
because of the lack of improvement on Mode 4 offers of developed countries while
they are being pressured to submit offers for liberalization on other modes. For
these governments, Mode 4 represents one of the few areas that provide gains for
them in the liberalization process.
In general, Mode 4 of the GATS covers: 1) persons providing services where a
foreign service supplier obtains a contract to supply services to the host
country company and sends its employees to provide the services; 2) independent
service providers abroad: an individual selling services to a host country
company or to an individual; 3) persons employed abroad by foreign companies
established in the host country (but excluding nationals of the host country).
Underdeveloped countries have criticized the United States and other rich
countries for failing to offer any substantive offers on Mode 4. Among the
issues being raised in the negotiations regarding Mode 4 commitments are:
1) “De-linking” or separation of Mode 4 from Mode 3- the application of Mode 4
at present is restricted and often associated with commercial presence. Third
World countries, led by India, have been urging the separation of Mode 4 from
Mode 3. The main argument is that only transnational corporations (TNCs) from
developed countries can afford commercial presence.
2) Horizontal commitments are limited- despite the fact that Mode 4 commitments
are mostly horizontal and cover almost all services, these are subject to
various limitations regarding immigration rules and economic needs test. Due to
these limitations, the application and benefits from Mode 4 as a mode of supply
is relatively narrow and biased toward highly skilled workers and professionals
employed by the TNCs.
Brazil, India, and China are pushing for more ambitious Mode 4 commitments.
However, developed countries are not receptive due to rising unemployment rates
as well as political reasons in their own homefront. For instance, the US
Congress recently declared that it would continue to oppose any agreement
negotiated at the WTO that would allow foreign business and professional
personnel to enter the US to work on a temporary basis. These comments came as
the US was preparing to submit its revised offer on services trade at the WTO by
end-May.
Philippines’ stakes
The Philippines has been identified as one of the WTO members with potentially
significant services markets that have not yet submitted offers of sectors to be
liberalized.
Services accounts for roughly 44 percent of the Philippines’ gross domestic
product (GDP). GDP growth in 2004 was mostly driven by the growth of services
particularly telecommunications and finance, with activities in call centers and
business process outsourcing, private services, trade and real estate boosting
consumer spending and investments. It is thus unsurprising that the Philippine
government is being pressured to further open up the services sector to foreign
service providers under the GATS.
In the current services negotiations, developed countries have made it clear
that they want to open up sectors that are also publicly provided such as
healthcare, education and environmental services (e.g., water). At present, the
Philippine government’s policy thrust of privatizing and commercializing social
services is making life more miserable for the average Filipino.
For example, the privatization of water and power has made these vital utilities
more inaccessible to the poor as rates continue to escalate. In healthcare,
public hospitals are instituting a pay-for-service policy that limits access to
health service for poor families. Also, the privatization of state colleges and
universities and the deregulation of private education resulted in higher
tuition, making education too costly.
The liberalization of these services under the GATS will further limit
government involvement, facilitate the entry of foreign providers that will only
take advantage of the profit opportunities and leave many Filipinos without
access to basic social services.
Furthermore, foreign investments flocking in would not only bleed the economy
dry through dollar repatriations; they would also compete with and eventually
squeeze out domestic businesses.
Meanwhile, the Philippines has a stake in getting Mode 4 commitments from
developed countries. About eight million overseas Filipino workers (OFWs) are in
over 140 countries. In the 1970s, the country initially started exporting
low-skilled labor to the Middle East. But recent trends show that Filipino
migrant labor has broadened into a variety of skills-- from professionals
(medical, IT, health), to middle skilled (caregivers, entertainers, seafarers),
and low skilled (domestic helpers and unskilled labor).
If Mode 4 commitments become more liberal, Filipino workers are expected to find
it easier to offer temporary services abroad. Thus, given the fact that the
Philippines has not much to gain except on Mode 4 and a great deal to suffer
from liberalizing its services sector, the government’s trade negotiators should
not respond to liberalization requests and must not submit any offer this coming
May 31 without substantially improved Mode 4 offers especially from the US and
other developed country-destinations of OFWs.
The GATS negotiations should also be made a venue to discuss the negative
effects of services liberalization. A comprehensive assessment of the impact of
GATS should be demanded and that until such evaluation has been done, there is
actually no basis for proceeding with liberalization.
In the local scene, there is a need to truly assess the direct and indirect
effects of liberalizing services. Congress must initiate a review of policies
implemented in line with the GATS as well as other WTO agreements, and the
impact of these policies on the economy and especially on the Filipino people.
Posted by Bulatlat