International Conference on Broadening Economic Integration

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INCORPORATING SERVICES LIBERALISATION INTO SAFTA
CURRENT STATUS

• International Conference on Broadening Economic
  Integration
• in Southeast Asia Incorporating
  Services Liberalization
• Institute of Policy Studies of Sri Lanka
• 30-31 March 2009
• Colombo, Sri Lanka
• Rajan Sudesh Ratna
• Professor
• Centre for WTO Studies
• New Delhi
• rsratna_at_nic.in
• Telefax 91 11 26512151

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Services in SAFTA chronology

• Importance of Services especially Tourism was
  recognised in the Tenth SAARC Summit(Colombo,
  29-31 July 1998).
• Thirteenth SAARC Summit (Dhaka, 12-13 November
  2005) recognised the potential of trade in
  Services, especially informal trade and decided
  for a study to see how services could be
  integrated into the SAFTA process.
• First Meeting of the SAFTA Ministerial Council
  (Dhaka, 20 April 2006) approved the course of
  action including completion of study on Services
  in a time bound manner.
• Second Meeting of the SAFTA Ministerial Council
  (Kathmandu, 26 February 2007) approved the
  recommendations made by the SAFTA Committee of
  Experts and directed the Secretariat to ensure
  that the Study on Trade in Services should be WTO
  plus, as also WTO compliant.

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Services in SAFTA chronology (2)

• The Fourteenth SAARC Summit (New Delhi, 3-4 April
  2007) agreed to the vision of a South Asian
  community, where there was smooth flow of goods,
  services, peoples, technologies, knowledge,
  capital, culture and ideas in the region. They
  stressed that to realize its full potential,
  SAFTA should integrate trade in services. They
  called for a finalisation of an Agreement in the
  services sector at the earliest.

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Services in SAFTA chronology (3)

• Third Meeting of the SAFTA Committee of Experts
  (New Delhi, 1-2 March 2008) took note of the
  Revised Regional Study done by the Coordinator of
  the Study Research and Information System for
  Developing Countries (RIS), New Delhi . It
  recommended that RIS may be requested to draft a
  Draft SAARC Framework Agreement on Trade in
  Services (SAFAS) by 30 June 2008.
• Third Meeting of the SAFTA Ministerial Council
  (New Delhi, 3 March 2008) considered the Study on
  Potential of Trade in Services under SAFTA
  including recommendations of the Third Meeting of
  the SAFTA Committee of Experts thereon. The
  Meeting endorsed the recommendations of the Third
  Meeting of SAFTA COE and decided that RIS be
  requested to draft the text of Draft SAARC
  Framework Agreement on Trade in Services (SAFAS)
  by 30 June 2008. It also decided to constitute an
  Expert Group by 30 June 2008 to commence
  negotiation on the Framework Agreement on Trade
  in Services.

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Services in SAFTA chronology (4)

• The Fifteenth SAARC Summit (Colombo, 2-3 August
  2008) expressed satisfaction at the conclusion of
  the Study on Trade in Services and welcomed the
  decision of SAFTA Ministerial Council to commence
  negotiation on the Framework Agreement on Trade
  in Services. Towards achieving further economic
  integration, they also directed that the Draft
  Agreement on Investment Promotion and Protection
  be finalized early and the SAARC Arbitration
  Council be operationalized.

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Highlights of study by RIS

• The study summarized the importance of service
  sector in the SAARC economies and trade including
  intra-regional trade while examining the
  potential of trade in services in the region in
  view of their complementarities as well as the
  potential of mutual trade in select services
  sectors.
• It examined the patterns of liberalization of
  trade in services by SAARC countries under GATS
  commitments and done autonomously and highlights
  the regulations that may act as barriers.

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Highlights of study by RIS (2)

• It discusses the relevance of liberalization of
  trade in services in terms of benefits and costs
  of such liberalization.
• Lists some sectors of high priority as identified
  by the national studies Tourism, Transport, IT,
  ITeS Telecom, Energy, Education, Health,
  Financial Services, etc.
• Finally it proposes for following a positive list
  approach to enable progressive, sequential
  liberalisation, including some special and
  differential treatment for LDCs as recognized in
  SAFTA.

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CURRENT STATUS
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Services Negotiations

• 1st meeting of Expert Group November 2008,
  Kathmandu
• 2nd Expert Group Meeting January 2009,
  Kathmandu
• 3rd Expert Group Meeting May 2009, Kathmandu
  (tentative)

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Services Broad principles

• The Expert Group has reached an understanding on
  
• Guidelines and timeframes for negotiations
• WTO Sectoral classification could be the base
• Progressive liberalisation of Services as per
  Article V of GATS
• Positive list approach to be followed with a
  request and offer modality

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Future Roadmap

• Given the fact that only two meetings have been
  held so far, the progress made is encouraging.
• Framework Agreement may not pose much problems.
• More meetings will bring complex issues which
  would need to be resolved.
• Areas of difficulty Commitments going beyond
  GATS as well as either committing at least
  (freezing) or going beyond autonomous
  liberalisation, Sectors Modes to be included,
  definitions of juridical persons or legal
  entities, etc.

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Services Way Forward

• SAARC Members have been through lots of
  impediments/problems in matter of trade.
• Members are at various stages of economic
  development and thus ambition levels needs to be
  realistic.
• If individual country interest is kept primary
  the overall objective of regional prosperity
  development will suffer.
• Need for prioritising the regional benefits and
  negotiate accordingly while keeping the
  individual priorities/market access priorities
  for the later part of negotiations or during
  subsequent periodical reviews.

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THANK YOU