News Release

Pascal Lamy

No. 30/03
April 29, 2003

WTO SERVICES: EU PROPOSES TO IMPROVE TRADING OPPORTUNITIES GIVING DEVELOPING COUNTRIES A BETTER DEAL

Today the EU brought to the table in the WTO a detailed list of sectors where it is offering companies and individuals in third countries further opportunities to offer services in the already very open EU market. Services already account for two-thirds of EU employment and economic activity; and the further opening of trade in a number of areas, ranging from telecommunications to banking, insurance, environmental services or distribution will contribute to growth and employment in the EU. At the same time, the EU offer should encourage other WTO members to bring to the table ambitious offers. A particular focus of the offer aims to give developing countries a better deal especially in sectors of interest for them via the temporary entry of foreign nationals into the EU to provide services. "Services are an essential part of both developed and developing country economies and therefore vital to making the Doha Development Agenda really worthy of the name. This EU offer is a substantial one," EU Trade Commissioner Pascal Lamy said. "It contains real improvements for foreign services providers in terms of access to the EU market and takes particular account of developing countries' interests."

Although it is ambitious in terms of market opening, particularly for developing countries, the EU offer fully preserves European public services and in particular European health and social services, education and audio-visual services, where the EU is making no offer. Pascal Lamy said, "The offer that is being tabled is tailored to ensure that public services within the EU are fully safeguarded, and that we keep our ability to set the rules that service providers will have to respect."  Commenting on the process, including the publication today of the full text of the EU offer, Lamy concluded: "In launching the Doha Development Agenda, the EU stressed the importance of delivering real access to the EU market, particularly from developing countries. To move ahead on services, it was evident that we needed a transparent, fair and democratic process. So we arranged an unprecedentedly broad consultation process with industry, civil society and of course the Community institutions: the Commission itself, Council and the European Parliament. After a passionate and intense debate, we have unanimous support in the Commission and Council and a clear majority in the European Parliament. This should be a guarantee to the European citizens that this important matter has been properly handled, and that we are serious about our assurances that we will not undermine public services. We strongly believe that this rather open process will lend credibility to our negotiating stance, but that of course is for others to judge."

Through this offer trade in a large number of sectors is expanded, including telecoms, financial services, business and professional services, distribution, environmental services, construction, news agencies and tourism. The EU offer builds on the already extensive WTO commitments.

The EU offer goes far in meeting developing countries' requests, who do have significant export interests in services, as has been shown by the requests they have addressed to the EU. This is the case with the temporary entry of foreigners into the EU to provide services (so-called Mode 4), where the EU offers to widen the scope of sectors covered and the duration of the stay in the EU. This is in response to the requests received from developing countries and a clear sign of the EU's commitment to a development Round.

The level of ambition of the EU offer on services is meant to steer overall progress of the Doha Development Agenda, in particular of two of its main components, market opening and the integration of developing countries. In the current uncertain political and economic environment, the EU is determined to move forward in order to reach a successful Ministerial meeting in Cancún next September and to conclude the Round by the deadline of end 2004.

Major steps in WTO negotiations on services

In the WTO services are discussed on the basis of requests and offers brought to the table by each WTO partner. Each WTO member is free to make offers on the sectors of its choice and there is no exact reciprocity of sectors:

• January 2000: start of services negotiations as set by the Uruguay Round agreement.
• November 2001: WTO Ministerial Conference launches the Doha Development Agenda negotiations. The Doha mandate sets a timetable for negotiations on services.
• End of June 2002: submission of requests for improved market access on services. The EU has sent requests to 109 WTO members and has received so far thirty-five requests, out of which twenty-seven are from developing countries.
• July 2002 - March 2003: bilateral meetings among WTO members to present and explain the requests.
• End of March 2003: submission of initial offers on services.

Transparency and participation in the EU

• The EU offer is fully made public for the first time in negotiations on services.
• To prepare the offer, the EU Commission conducted from beginning of November 2002 to end of January 2003 an unprecedented public consultation on the requests received by the EU. Several EU member states have undertaken similar public consultations.
• Regular meetings and other consultations have been organized with representatives of civil society.
• The European Parliament has had several opportunities to discuss with the Commission the services offer.
• Those documents, as well as various papers on previous steps of WTO negotiations on services, are available to the public on the Commission's website: http://europa.eu.int/comm/trade/services/index_en.htm

For more information: http://europa.eu.int/comm/trade/services/index_en.htm and http://europa.eu.int/rapid/start/cgi/guesten.ksh?p
_action.getfile=gf&doc=IP/03/582|0|RAPID&lg=EN&type=PDF

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Annex

Details of the EU offer

Temporary entry of foreign nationals (Mode 4)

Mode 4 covers people traveling to the EU to provide services for a limited period of time. In order to meet various requests received, particularly from developing countries, the offer includes several improvements:

• for overseas companies having a contract to provide services to a client in the EU, for the first time, all fifteen member states have taken commitments on a range of sectors, including legal, architectural, engineering and computer services, and the length of stay for skilled personnel sent to the EU is extended from the previous three to six months;
• a new sub-category of contractual service suppliers is offered: self-employed highly skilled people will be able to enter the EU for up to six months to provide certain services, such as engineering, computer services and management consultancy;
• a service company with a graduate training program will be able to transfer its "managers of the future" for up to one year's work experience with an affiliated company in the EU.

In all cases, existing rules governing working conditions, minimum wage requirements and any collective wage agreements in the EU will continue to apply.

Transport

The main improvements in the offer are:

• maritime transport, which had been withdrawn following the failure of the post-Uruguay Round negotiations on maritime transport. In addition to the contents of the 1996 offer, the EU offer guarantees access to feeder of international cargo and movement of empty containers in accordance with existing EU and member states' legislation;
• air transport: the offer includes new commitments on groundhandling and airport management services.

Financial services

The EU offer includes the sectors already opened within the EU since 1997 (end of previous extended negotiations on financial services). So, on top of benefiting from the harmonization achieved within the EU single market, foreign financial institutions will enjoy an improved market access in the fields that have not been harmonized at EU level.

• Cross-border provision of financial services from third countries is extended, including the provision of insurance of air transport to Austria and the possibility to lead manage Sterling issues without being established in the UK.
• As regards commercial presence, central securities depositories services are open to competition in Italy, the economic needs test to establish a bank in Portugal is suppressed and the restrictions on the legal form to trade securities listed on stock exchanges in Austria, Denmark, Greece and Spain are removed.

Telecoms

The EU offers to guarantee to third countries' operators full access to the internal market, while fully safeguarding the right of the EU, for example, to define its universal service objectives. The EU also removes restrictions, such as prohibitions for telecom companies to engage in non-telecom activities (e.g., computer-related services) in Greece, restrictions on foreign ownership in Portugal or prohibitions against providing telecom services across borders in several member states.

Postal and courier

This sector, essential for the competitiveness of the economy and today in rapid evolution, includes in particular handling of letters, newspapers and parcels, but also express delivery services. The EU offer covers those sectors that are already opened in the EU internal market since 1997. Thus, the EU offers market access and national treatment in express delivery services and parcels (together a EUR 31 billion market) and for the handling of letters of more than 350 grams. At the same time, the rules and functioning of universal service as they exist within the EU are fully preserved.

Professional services

Foreign lawyers and law firms will be able to establish in any member state and provide legal services in full respect of the law of any country in which those lawyers are qualified. Foreign accountants will be allowed to review and compile financial statements and other accounting information for European clients. Foreign architects and engineers will be able to provide plans, designs, projects, specifications and cost estimates to their clients in the EU, without being discriminated against on the basis of their nationality. This improved market access is without prejudice to the fulfillment of the necessary qualifications required by EU law for consumer protection.

Computer services

As computer services is a key sector for the development of the Information Society in Europe, the EU offers full market access to foreign service providers, including to highly-skilled self-employed computer experts. This should enable Europe to benefit from the best computer services at the lowest cost, with a view to reach the goal set in the "Lisbon strategy." Foreign computer experts will for instance be allowed to enter the EU temporarily to provide maintenance and repair services for computer systems and networks.

Other business services

EU commitments are improved by liberalizing packaging services in some member states, and removing member states' specific limitations on printing and publishing on a fee or contract basis. Furthermore, some nationality, residence and commercial presence conditions are also removed for a number of activities.

Environmental services

The EU offers to open its market to foreign providers on waste water, sanitation and similar services. The EU also offers improved commitments on noise and vibration abatement services and on cross-border advisory services for the protection of biodiversity and landscape. Commitments on contractual services suppliers of environmental services are particularly relevant in the area of consulting, environmental impact assessments and similar service activities.

Distribution

The offer gives non-EU nationals the same treatment as granted to EU nationals when applying for the opening of new department stores. Thus, the granting of licenses for new department stores will be done on the merits of each application including its compliance with non-discriminatory national regulations, such as land-use planning laws, regardless of the nationality of the companies. In addition, the offer allows commission agents to provide cross-border services and liberalizes franchising in some member states.

Construction

The offer eliminates some national limitations to market access and national treatment, including in particular all national limitations on commercial presence, such as nationality conditions for managers of construction companies in Greece. This responds to requests made not only by industrialized countries but also by developing countries and removes obstacles for foreign companies to set up and develop their business in the EU.

Tourism

Non-EU nationals wishing to establish travel agencies in the territory of the EU are granted the same treatment as EU nationals. The nationality of the companies or of their managers will not be taken into account for the authorization of new travel agencies.

News agencies and entertainment services

On news agency services, the offer improves the commitments of the European Union by lifting a number of limitations in place in some member states. Limits on foreign participation in Italy and Portugal are removed. Nationality requirements in Portugal and residency requirements in Sweden are suppressed. On entertainment services, libraries, archives, museums and other cultural services, as well as sporting and other recreational services, no changes are made.

Audiovisual services

The current regime is unchanged: no commitment in this sector and maintenance of all exemptions to the Most-Favored Nation clause listed by the EU during the Uruguay Round to cover cultural policies, such as co-production agreements and privileged treatment accorded to audio-visual works originating from the EU and other European countries.

Education, health and social services

The offer does not include any changes. Member states fully retain the right to decide the most appropriate organization of their education and health systems.

Public utilities

The offer introduces no changes to the current limitations in favor of public utilities within the EU.

Horizontal commitments on commercial presence

• general regime for foreign investment: the EU offer improves further its liberal framework by removing the prior authorization in Portugal for investment above 20% of the capital of companies. As a result, the attractiveness and openness of the EU as an investment location is confirmed;
• real estate: existing limitations essentially relate to authorization procedures that foreign nationals have to pursue prior to acquiring and/or renting real estate. The offer removes three of these restrictions and converts a scheduled limitation for foreigners to acquire property into an authorization procedure;
• subsidies: the ability for the EU to provide subsidies in services sectors is maintained. This allows the EU and its member states to develop their regional and research policies and to preserve the sustainability of the public sector.