Services Negotiation and Plurilateral Agreements: TISA and sectoral approach

1. The World Trade Organization (WTO) General Agreement on Trade in Services (GATS) negotiation has not resulted in any major achievements since the Telecommunication and Financial Services Agreements concluded in 1997 due to a lack of momentum in the Doha Round, concerns about free-riding, and free trade agreement (FTA) competition. In the stalemate in the Round, TISA, together with FTAs, have been promoted as a strong tool for liberalization and rulemaking in services.

2. Trade in Services Agreement (TISA) is a plurilateral initiative among like-minded countries aiming at high level liberalization and rulemaking in services. Japan needs to be involved fully in it since this framework has the potential to form global rules directly, create new business opportunities for Japan, and serve as a leverage in individual FTAs to protect Japanese interests.

3. Although the legal structure of TISA is to be discussed, defining TISA as an FTA is problematic since it may lead to an arbitrary interpretation of Article 5 of GATS, furthermore, the scenario for globalizing it involving developing members is not clear, economic welfare problem exists, and it does not match the horizontal nature of services regulations. In light of global rulemaking, TISA should be developed based on the idea of participation of members forming critical mass and the extension of benefits of the agreement to non-participants on a most-favored nation (MFN) basis.

4. Sectoral agreement as exemplified in the Telecommunication and Financial Services Agreements is a useful tool to develop GATS that is capable of incorporating the characteristics of various sectors. Sectoral approach should be developed in TISA aiming at global rules. Japan is encouraged to table sectoral proposals actively in such areas as retail and distribution, manufacturing related services, culture related services, environment related services, and cross border data flows in TISA.

This is the English version of the Japanese Policy Discussion Paper (14-P-002) with some additional information and changes.