FTAA SERVICES NEGOTIATIONS ADVANCE

Sherry M. Stephenson, an international trade specialist and deputy director of the Trade Unit of the Organization of American States, spoke at a workshop on services organized by Florida International University’s Institute for International Professional Services (IIPS) on March 13. Stephenson described her experiences with the FTAA services negotiations to a group of business, professional and academic representatives. The president of the Coalition of Service Industries, Bob Vastine, presented the industry’s views to the well-attended workshop.

Stephenson and Vastine both noted the real progress achieved in negotiations in the services area. They initially expressed enthusiasm for the WTO process, where services was the only truly unbracketed area at the Seattle meeting. Now that the WTO is bogged down and draft texts are being elaborated for the Americas, the FTAA is becoming more interesting. According to Stephenson, the FTAA negotiators are moving ahead with low-key talks. Services is a good example of progress being made in developing the drafts for the nine FTAA negotiating groups. Despite the complicated issues involved, essentially the same group of negotiators has been working together on services since 1996, creating a good environment for moving ahead.

The main stumbling block in the FTAA negotiations in this area is the difficulty of defining and quantifying services flows. Another problem is Mercosur’s demand for “strict parity” between services and agricultural negotiations. Many Latin American countries worry about their small services sectors confronting the huge and expanding United States services industry; however, numerous smaller Caribbean Basin economies have large services sectors and are seeking progress in this area. Another consideration is the growth of trade in services, which is much greater than traditional merchandise trade in the hemisphere and the rest of the world. This is a phenomenon of the new economy that urgently needs attention, after being considered an “invisible” for so long.

Negotiations in the FTAA have the advantage of innovation, or the obligation to go beyond WTO standards. Because of the WTO charter, the FTAA will have to expand on existing trade liberalization, moving into new territory. It also appears that the FTAA will adopt a NAFTA-like, more transparent approach to services. This is technically called a “negative approach,” in which all restrictions to the liberalization must appear in the treaty in order for it to be valid. Both the General Agreement on Trade in Services (GATS) and Mercosur have the more limited, bottom-up, “positive” approach. Unrestricted areas are listed, and interpretations and increments have to be hammered out over time. Our hemisphere has produced 22 agreements on trade in services since 1994; only one, Mercosur, has been of the GATS type.

Finally, Stephenson was encouraged by the inclusion of “cluster” agreements in the FTAA. Such agreements imply an across-the-board liberalization of all forms of services involved in a single activity; for example, electronic transactions. Tourism is a good candidate for cluster agreements in our hemisphere. However, Stephenson reminded her audience that without adequate and expanded regulatory reforms, trade liberalization could create problems. Vastine was not as clear that this was a requirement for progress; he showed some discomfort with the idea of increasing regulations and government interventions.

The services sector is all about national regulation, and the question of professional qualifications and other types of criteria for the use and sales of services will be of concern to many elements within society when debate reaches the national level. Negotiations involving services are advancing, but the future is sure to bring close scrutiny of the results as well as much debate.