A new report published by the German Development Institute calls on TiSA parties to pay closer attention to ensuring developing countries can join later and are not negatively affected by the deal.
TiSA members include a dozen self-declared ‘developing countries’. But the TiSA negotiations could lead them onto a regulatory path that might isolate the TiSA group from the rest of the emerging world, the in-depth study of the services liberalisation agreement currently under negotiation in Geneva concludes.
“Given the large number of developing countries and major emerging economies that are outside of TiSA, the future agreement will be expected to have significant impacts on these third countries through affecting services market access as well as through setting higher regulatory standards in certain services sectors and disciplines, among others”, the authors write.
“This may well lead to diversion in services trade and investment for non-members, the extent of which will vary, depending upon the content of the final agreement”, the trade experts reckon.
The report’s authors call on TiSA members to ensure the final text makes it possible to include developing economies – and their concerns – in future. TiSA members have stated they want to integrate the final agreement into the framework of the World Trade Organization. They are planning to make its architecture compatible with the WTO’s GATS, the world trade body’s services treaty. But opposition to launching a services deal by major emerging markets in 2011 meant TiSA talks were kick-started outside the WTO.
For TiSA to integrate the WTO, it needs to in involve a “critical mass” of world trade in services. Though TiSA members account for 71 percent of world trade in services, so the report, reaching critical mass means more than 90 percent should be covered. What is more, “the TiSA area accounts for 68, 70 and 65 per cent of the global indirect services exports contained in exports of agriculture, manufacturing and business services, respectively”, the report reads.
“Since 2005, emerging economies have consistently recorded decreasing shares of intermediate imports from the TiSA area, illustrating stronger ties with business services hubs outside the countries participating in the agreement. Business services exported by emerging economies are growing and becoming sophisticated enough to compete with the dominant Western providers”, the report explains.
Should it come into force, “TiSA could potentially deepen a certain segregation of services markets that is already discernible and thus harm the growth of emerging market services”, the report reads. There are also growing services production network centred around emerging economies like China or India, which could be harmed by TiSA.
TiSA talks have so far not included any “development friendly” topics so far, the authors of the report deplore. “The issues that have been omitted in the TiSA discussions are, strikingly, those that have strong implications for economic development, namely: cooperation and capacity-building; competitiveness and business facilitation; development; and regulatory coherence”. The authors believe “this may be one of the reasons for the lack of interest by developing countries to date in the TiSA negotiations”.
Referring to the EU-Canada free trade agreement currently awaiting signature the authors note that “ironically, even the CETA agreement, which does not include any developing-country members, has chapters addressing cooperation and capacity-building, development and regulatory coherence”.
TiSA members should thus better focus more on these matters if they want to see a chance of TiSA making it into the WTO. Starting with accepting China into TiSA would be step in the right direction, the report says. China has asked to join TiSA, but the US and Japan have refused to let it in so far.
TiSA parties are Australia, Canada, Chile, Chinese Taipei, Colombia, Costa Rica, the EU, Hong Kong, Iceland, Israel, Japan, Liechtenstein, Mauritius, Mexico, New Zealand, Norway, Pakistan, Panama, Peru, the Republic of Korea, Switzerland, Turkey and the United States