EUropa.S. 2016
22nd – 25th of April 2016 | University of Piraeus Organized by Institute of Research & Training on European Affairs EE
EUropa.S. 2016 INTA
Study Guide
TOPIC: “European Union multilateral trade in services system: Discussing the potential of the TISA Agreement and reviewing the ongoing nature of the negotiations”
EUropa.S. 2016 Committee on International Trade Study Guide
Table of Contents 1. Greeting of the Board................................................................................................................. 3 2. The International Trade Committee of the European Parliament (INTA Committee)......................................................................................................................................... 4 3. General Introduction on the agenda item .......................................................................... 6 4. The European Union (EU) and the World Trade Organization (WTO) .................. 8 5. Legal Framework ......................................................................................................................10 A) Trade without discrimination.........................................................................................10 B) Free trade................................................................................................................................11 C) Predictability .........................................................................................................................11 D) Fair competition...................................................................................................................12 E) Development and economic reform .............................................................................12 6. Current Situation – Trade in Services Agreement (TISA) .........................................13 7. Conclusion ....................................................................................................................................16 8. European Parliament’s Political Parties Position .........................................................17 8. 1 European People’s Party (EPP) ...................................................................................17 8.2 Progressive Alliance of Socialists and Democrats (S&D)....................................18 8.3 European Conservatives and Reformist (ECR) .......................................................18 8.4 Alliance of Liberals and Democrats for Europe (ALDE)......................................19 8.5 European United Left- Nordic Green Left (GUE - NGL) .......................................20 9. Food for thought – Points for Discussion.........................................................................21 10. Glossary ......................................................................................................................................22 11. Questions Raised.....................................................................................................................24 12. Bibliography .............................................................................................................................25
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
Page|1
EUropa.S. 2016 Committee on International Trade Study Guide 13. Further Resources ..................................................................................................................27
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
Page|2
EUropa.S. 2016 Committee on International Trade Study Guide
1. Greeting of the Board Honorable MEPs, We are Evangelia Mitropoulou (President) and Maria Vasileiadou (Vice-President), or more precisely, the Board of the Committee on International Trade – INTA. We are extremely pleased to welcome you in the 7th edition of EUropa.S.. To begin with, let us talk to you a little bit, in general, about the goals that we are setting for the upcoming sessions, as well as our willingness to guide you the best way possible. We are really excited to bear in mind that you are all going to equally work for the succession of this committee, since it’s you, the MEPs that are able to make it the most unique one you have ever participated in. From our own side, we want to assure you that we will do our best in order to contribute to making this conference an unforgettable experience. Taking into consideration our committee’s topic: “EU multilateral trade in services system; discussing the potential of the TISA Agreement and reviewing the ongoing nature of the negotiations”, we should all be ready and eager to attempt approaching as efficiently as possible an issue that challenges our today’s world of trade in services as well as the near and far future. It is really of great importance to address this crucial issue through fully applying the rules of procedure, conducting fruitful debates and proposing direct ways of dealing with it and to be more precise with the ongoing negotiations taking place on the grounds of the TiSA Agreement. Through the present study guide, we are making an effort to provide you with all important aspects of the EU multilateral trade in services system and of course, through mentioning the aspects of mainly involved countries, and the predictable risks on the EU trade system. All MEPs are highly encouraged to study the legal framework and the risks that may be faced, and have an outstanding knowledge of the current situation in their countries as well as of their policies so as to produce the expected proposals. We are already waiting to hear your substantiated and innovative ideas and of course, answer to every question you may have through e-mail and even Facebook. Feel free to ask! We are looking forward to working with you guys! And remember, that concerning us, your questions are our pleasure to be answered!
Best regards, The Board of INTA Committee
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
Page|3
EUropa.S. 2016 Committee on International Trade Study Guide
2. The International Trade Committee of the European Parliament (INTA Committee)1 One of the most important functions for the European Union is to produce guidelines and commonly agreed courses of actions. In order to achieve it, the European Parliament consists of twenty parliamentary committees. Every committee focuses on a specific area. The existence of so many different committees proves the European Parliament’s willingness of approaching respectively all aspects of the problems raised in the Union. The members of the European Parliament (MEPs) who participate in these committees, and as a result in the Committee on International Trade, mostly do preparatory work for the plenary sessions which are held in Brussels or in Strasbourg. Bearing in mind that the Parliament acts as a co-legislator, sharing with the Council of the European Union the power to adopt and amend legislative proposals, as well as cooperates with national parliaments of the EU countries, the work of INTA is thought to be a key factor in the EU law-making process. To be more precise, the International Trade Committee is a parliamentary committee, which deals with matters that concern the establishment, the implementation and the observation of the EU common commercial policy and its external economic relations as well as the trade investment and the legislation. In addition, INTA is responsible for the EU relations with the World Trade Organization (WTO), one of the most important international organizations since for the time being, it consists of 161 countries- members. Concerning the legislative process, in all parliamentary committees, such as INTA, proposals and/ or draft reports are submitted by the European Commission and the Council of the European Union and then examined by the Members of the European Parliament (MEPs) in order to be presented in the European Parliament's plenary session. The parliamentary committees are also able to propose amendments to the proposed directives and regulations that have been produced by the Commission. Last but not least, it should be stated that an important to this whole procedure MEP is the rapporteur, who is responsible for writing the draft report that will be presented to the committee in order to be examined and be amended, before it reaches its final form and be adopted by vote. Once the report is passed European Parliament. What is a parliamentary committee? [Online] Available from: http://www.europarl.europa.eu/aboutparliament/en/20150201PVL00004/Powers-andprocedures, http://europarliament.touteleurope.eu/follow/what-is-a-committee.html. [Accessed: 24th November 2015]. 1
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
Page|4
EUropa.S. 2016 Committee on International Trade Study Guide through the committee vote, it is regarded ready to be presented in the plenary session and then be discussed and voted again. (The general understanding of the way that the Union works is our main goal at this point. The specific rules under which the INTA works, and are going to be followed in the simulation, can be found in the official website, and will be further explained to you by us, during our first committee session).
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
Page|5
EUropa.S. 2016 Committee on International Trade Study Guide
3. General Introduction on the agenda item During the upcoming sessions of the Committee on International Trade (INTA), as it has already been stated, we will concentrate on approaching the issue of the EU multilateral trade in services system. To begin with, an overview of such an issue is encouraged to be made, taking into consideration that it seems to be a topic including two different issues or even precisely a topic based on two different pillars; the first pillar is the potential of the Trade in Services Agreement (TiSA) and the second one is the ongoing nature of the negotiations. Those two keystones need to be combined so as to enable the promotion of general aims deriving from the agreement’s own promotion. The potential of this agreement is proven to be a milestone for the multilateral trading system, keeping in mind the principles that undertakes and expands. At this point, the aim to be reached is more exclusive and difficult than in the past, since there is already the General Agreement on Trade in Services (GATS), which has been based on the General Agreement on Tariffs and Trade (GATT). The reviewing of the ongoing negotiations should be conducted according to the WTO’s general objectives. The examination of all these specific terms as well as the overview of the interaction between the European Union and the World Trade Organization (WTO) will enable all Members of the Parliament to properly formulate their viewpoints and stable positions. All these are going to be presented afterwards in great detail. Note that the existing international legal framework covers in an adequate way the targeted idea, since it has managed to address some important aspects through the WTO’s principles. Nevertheless, it should be taken into consideration that the question competitiveness versus collaboration needs to be effectively answered since the general risks need to be addressed. The following demonstrates the global trade in goods and services.2
2
Source: Policy Department, based on data from UNCTAD.
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
Page|6
EUropa.S. 2016 Committee on International Trade Study Guide
SERVICES 21%
0%
GOODS 79%
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
Page|7
EUropa.S. 2016 Committee on International Trade Study Guide
4. The European Union (EU) and the World Trade Organization (WTO) The European Union was set up in 1950, initially as the European Coal and Steel community, with the scope of ending the destroying wars between neighbors. Today, after many alternations of its initial form, mainly made by several treaties, is more integrated than ever, when at the same time is the biggest player in the international trade game. Trying to elaborate on the interaction between the European Union and the World Trade Organization that has occurred, but is also expected to occur, we need to further examine in detail the WTO’s history. As we already stated, the World trade organization was founded in 1995, following the General Agreement on Tariffs and Trade (GATT), which introduced in 1948, after the World War II, in order to contribute to the regulation of the international economic policies and financial standards, as well as to prevent the recurrence of the protectionist policies that have been followed between the two World Wars. 3 More precisely, in the early decades of the twentieth century, increasingly complex interactions between the counties, created the need for a common ground to be reached, in order to facilitate and regulate trade relations between the countries. The result, the General Agreement on Tariffs and Trade (GATT), was able to create an international round table and to provide a different approach –or in other words, a more multilateral one- to the trade system, while it managed to establish trade rules that were recognized internationally. The basic idea was to create a common field for all the countries mainly aiming to the reduction of the tariffs and any kind of barriers that caused discriminative treatment among them. As it was widely maintained and as it has been confirmed by the latest history, free and fair trade can result in economic growth and development. The Dispute Settlement Body was one of the most important achievements of the WTO, as it was given the power to rule on the trade disputes as well as to enforce decisions. The rules were predefined and agreed by all the members of the WTO so as to ensure the equal treatment for any dispute regardless the political weight and the economic clout. The European Union has used the WTO’s dispute settlement system several times in order to target traditional trade barriers while predominantly focusing on developed countries. The EU is represented by the European Commission with participation, in overall, in 177 settlement cases, 95 as a complainant and 82 as a defendant to have been reported until 2015. Nor the cases that EU has contributed as a “third part” are less, a fact that has helped the EU to monitor disputes involving other parties. 3
Elina Villup. (October 2015). The Trade in Services Agreement: an end to negotiations in sight? (in depth analysis). [Online] Available from: http://www.europarl.europa.eu/RegData/etudes/IDAN/2015/570448/EXPO_IDA(2015)57044 8_EN.pdf. [Accessed: 24th November 2015.]
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
Page|8
EUropa.S. 2016 Committee on International Trade Study Guide The International Trade Committee has expressed its views through reports, public hearing and oral questions to the Commission and the Council.4 The European Union, along with the United States of America, has been a vital part in the international trade system since World War II. The EU was inspired by the GATT principles and practices, as it was originally designed to remove customs and barriers and promote trade between its members. The Union has been of the main supporters and promoters of the multilateral trade with rules of law. A system with such principles makes sure that its businesses enjoy free market access abroad, while supporting economic growth domestically at the same way that is does support the economic growth and development for third counties, especially the least developed ones. The EU’s Common Commercial Policy is one of the areas in which the Union as such has full and direct competency which actually means that EU works as a single actor in the WTO and it is represented by the Commission and not the States. The trade agreements are being negotiated by the Commission that is defending the interest of all 28 member states. The Commission regularly consults and reposts to the Council and the European Parliament as after the Lisbon Treaty, both are co legislators and have an equal say among international trade matters. Through the WTO, the EU has also been a promoter of multilateral framework for trade negotiations. The international trading system has changed in a dramatic way during the last years. The old system which was mainly dominated by EU and US has become a more open system with new actors such as transition economies and developing countries. The EU and the WTO are fully aware of the benefits of the liberalization of the international trading system which has been of a tremendous help for many developing countries which have experienced an unprecedented time of sustained development and growth during the last years.5
European Commission. (2013). The EU and the WTO. [Online] Available from: http://ec.europa.eu/trade/policy/eu-and-wto/. [Accessed: 22nd November 2015]. 5 World Trade Organization. The European Union and the WTO. [Online] Available from: https://www.wto.org/english/thewto_e/countries_e/european_communities_e.htm. [Accessed: 22nd November 2015]. 4
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
Page|9
EUropa.S. 2016 Committee on International Trade Study Guide
5. Legal Framework The WTO agreements are quite lengthy and complex since they are legal texts covering a wide range of activities6. Though, there is a number of simple, fundamental principles which run throughout all of these documents. These principles are the foundation of the multilateral trading system. These are: a) trade without discrimination, b) free trade, c) predictability, d) fair competition and e) development and economic reform.7 To be more precise, the following need to be presented:
A) Trade without discrimination 1. Most-favoured-nation (MFN): treating other people equally Under the WTO agreements, countries cannot normally discriminate between their trading partners. Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to do the same for all other WTO members. This principle is known as most-favoured-nation (MFN) treatment. It is so important that it is the first article of the General Agreement on Tariffs and Trade (GATT), which governs trade in goods. MFN is also a priority in the General Agreement on Trade in Services (GATS) (Article 2) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (Article 4), although in each agreement the principle is handled slightly differently. Together, those three agreements cover all three main areas of trade handled by the WTO. Some exceptions are allowed. For example, countries can set up a free trade agreement that applies only to goods traded within the group — discriminating against goods from outside. Or they can give developing countries special access to their markets. Or a country can raise barriers against products that are considered to be traded unfairly from specific countries. And in services, countries are allowed, in limited circumstances, to discriminate. But the agreements only permit these exceptions under strict conditions. In general, MFN means that every time a country lowers a trade barrier or opens up a market, it has to do so for the same goods or services from all its trading partners — whether rich or poor, weak or strong. 2. National treatment: Treating foreigners and locals equally Imported and locally-produced goods should be treated equally — at least after the foreign goods have entered the market. The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents. This principle of “national treatment” (giving others the same treatment as one’s own nationals) is also found in all the three main WTO agreements (Article 3 of GATT, Article 17 of GATS and They deal with: agriculture, textiles and clothing, banking, telecommunications, government purchases, industrial standards and product safety, food sanitation regulations, intellectual property, and much more. 7 World Trade Organization. Principles of the trading system. [Online] Available from:https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm [Accessed: 24th December 2015]. 6
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 10
EUropa.S. 2016 Committee on International Trade Study Guide Article 3 of TRIPS), although once again the principle is handled slightly differently in each of these. National treatment only applies once a product, service or item of intellectual property has entered the market. Therefore, charging customs duty on an import is not a violation of national treatment even if locally-produced products are not charged an equivalent tax.
B) Free trade Lowering trade barriers is one of the most obvious means of encouraging trade. The barriers concerned include customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively. From time to time other issues such as red tape and exchange rate policies have also been discussed. Since GATT’s creation in 1947-48 there have been eight rounds of trade negotiations. A ninth round, under the Doha Development Agenda, is now underway. At first these focused on lowering tariffs (customs duties) on imported goods. As a result of the negotiations, by the mid-1990s industrial countries’ tariff rates on industrial goods had fallen steadily to less than 4%. But by the 1980s, the negotiations had expanded to cover non-tariff barriers on goods, and to the new areas such as services and intellectual property. Opening markets can be beneficial, but it also requires adjustment. The WTO agreements allow countries to introduce changes gradually, through “progressive liberalization”. Developing countries are usually given longer to fulfil their obligations.
C) Predictability Sometimes, promising not to a raise a trade barrier can be as important as lowering one, because the promise gives businesses a clearer view of their future opportunities. With stability and predictability, investment is encouraged, jobs are created and consumers can fully enjoy the benefits of competition- choice and lower prices. The multilateral trading system is an attempt by governments to make the business environment stable and predictable. In the WTO, when countries agree to open their markets for goods or services, they “bind” their commitments. For goods, these bindings amount to ceilings on custom tariff rates. Sometimes countries tax imports at rates that are lower than the bound rates. Frequently this is the case in developing countries. In developed countries, the rates actually charged and the bound rates tend to be the same. The system tries to improve predictability and stability in other ways as well. One way is to discourage the use of quotas and other measures used to set limits on quantities of imports -administering quotas can lead to more red-tape and accusations of unfair play. Another is to make countries’ trade rules as clear and public (“transparent”) as possible. Many WTO agreements require governments to disclose their policies and practices publicly within the country or by notifying the WTO. The regular surveillance of national
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 11
EUropa.S. 2016 Committee on International Trade Study Guide trade policies through the Trade Policy Review Mechanism provides a further means of encouraging transparency both domestically and at the multilateral level.
D) Fair competition The WTO is sometimes described as a “free trade” institution, but that is not entirely accurate. The system does allow tariffs and, in limited circumstances, other forms of protection. More accurately, it is a system of rules dedicated to open, fair and undistorted competition. The rules on non-discrimination -MFN and national treatment- are designed to secure fair conditions of trade. So too are those on dumping (exporting at below cost to gain market share) and subsidies. The issues are complex, and the rules try to establish what is fair or unfair, and how governments can respond, in particular by charging additional import duties calculated to compensate for damage caused by unfair trade.
E) Development and economic reform The WTO system contributes to development. On the other hand, developing countries need flexibility in the time they take to implement the system’s agreements. And the agreements themselves inherit the earlier provisions of GATT that allow for special assistance and trade concessions for developing countries. Over three quarters of WTO members are developing countries and countries in transition to market economies. During the seven and a half years of the Uruguay Round, over 60 of these countries implemented trade liberalization programmes autonomously. At the same time, developing countries and transition economies were much more active and influential in the Uruguay Round negotiations than in any previous round, and they are even more so in the current Doha Development Agenda. At the end of the Uruguay Round, developing countries were prepared to take on most of the obligations that are required of developed countries. But the agreements did give them transition periods to adjust to the more unfamiliar and, perhaps, difficult WTO provisions particularly so for the poorest, “least-developed” counties. A ministerial decision adopted at the end of the round says better-off countries should accelerate implementing market access commitments on goods exported by the least-developed countries, and it seeks increased technical assistance for them. More recently, developed countries have started to allow duty-free and quota-free imports for almost all products from least-developed countries. On all of this, the WTO and its members are still going through a learning process. The current Doha Development Agenda includes developing countries’ concerns about the difficulties they face in implementing the Uruguay Round agreements.
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 12
EUropa.S. 2016 Committee on International Trade Study Guide
6. Current Situation – Trade in Services Agreement (TISA) Services play a major role in all modern economies, whether they are considered “dynamic or not”. The efficiency in the service sector is considered to be extremely important for trade and economic growth as they can provide vital support to all countries’ economies. Economic growth can be boosted by the increased trade in services especially in a world that is increasingly globalized and interdependent.8 “Trade policy has always been the principal instrument of foreign policy of the EU”.9
The European Union has proven to be the largest trading bloc in the world (the largest exporter of goods and the second larger importer of goods) and most importantly, the second larger on commercial services. The members of the European Union represent the 7% of the world’s population and the one fifth of the total global amount of imports and exports. The basis for this leading role is the Common Commercial Policy (CCP), which is one of the three centralized policies in the EU. Since 1957, when the Treaty of Rome was signed, all EU member states decided to reach common grounds through “uniting their voices” as far as the trade sector is concerned, and to a small extent, “sacrifice” their sovereignty in this policy area to the European Union’s -super nationallevel. This commercial hegemony of the EU has often been taken advantage of the union as a diplomatic footing. Referring to the services’ sector once again, it cannot be denied to be one of the most important sectors to every country's economy, especially for the European Union’s members, taking into consideration that the European Union is the largest exporter of services with millions of jobs throughout Europe based on the services system. The abovementioned facts point out the current situation or in other words, the necessity of an existing legal framework able to support the trade in services. And here comes the Trade in Services Agreement. TiSA is based on an already existing agreement, the General Agreement on Trade in services (GATS), in which all the members of the WTO are involved. Currently, 23 countries are taking part to the TiSA Agreement’s negotiations: Australia, Canada, Chile, Taiwan, Colombia, Costa Rica, European Union, Hong Kong, Iceland, Israel, Japan, Liechtenstein, New Zealand, Norway, Mexico, Pakistan, Panama, Paraguay, Peru, South Korea, Switzerland, Turkey and the United States. Uruguay and Mauritius recently joined the club of the so-called “very best friends”. The goal of the TiSA agreement is to improve the existing agreement and negotiate a higher standard agreement on services among the countries that share the same believes. Apart from that, the long term goal of the agreement is to constitute a
Eurostat. International Trade in Services. [Online] Available from: http://ec.europa.eu/eurostat/statistics-explained/index.php/International_trade_in_services. [Accessed 24th November 2015]. 9 Sapir, 1998. 8
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 13
EUropa.S. 2016 Committee on International Trade Study Guide document full of terms that can be accepted by as much members as possible and even those who do not participate in the ongoing negotiations, but have the opportunity to change their minds and join the agreement after it has been signed. This is the reason for which the TISA agreement takes into consideration all the provisions of the GATS agreement. TiSA is considered to be very important for the European Union, as it is widely believed that it is able to promote growth and guarantee more job opportunities. For instance, EU firms will have easier access to the countries participating in the agreement and it will be more possible for firms from outside Europe to offer their services in the EU something that will result in increasing consumer choices and lowering prices for both businesses and consumers. Having stated the above information, the questions that arise are “what will TISA cover?” and “which sectors will be affected?” As we have clarified, the main goal is to facilitate trade in services mostly in countries that take part in the negotiations. An example that helps to understand the nature of the agreement is the case of an American lawyer, who can offer his services to an Australian client. The circumstances and the conditions under which suppliers from one country have to meet up in order to provide services in other countries’ market are being negotiated and discussed by the representatives of each country. The areas that are being discussed are the ones that GATS already covers. These include all service sectors except air traffic rights and services only governments are to provide. The relevant article is cited below. TISA addresses barriers to trade services between the countries that take part in the talks. These barriers include: Treating foreign suppliers in a different way than the local ones; such is the “limitation to national treatment” barrier. Limiting the extend level to which foreign suppliers can operate; such is the “limitation to market access” barrier. Every country is responsible for: The type of service it wants to open to competition from the other countries that taking part, and the extent to which it wants to apply the agreement.
In other words, every country is making commitments adjusted to their services market structures, concerning the industries that it wants to protect from the competition and the level of its economic development. Another question that may arise due to the TiSA negotiations is “why is Europe trying to reach a multilateral free trade agreement while there are already many bilateral free trade agreements with most of the countries?” Examining the potential of the TiSA Agreement, it should be pointed out that this agreement is quite different from the individual trade talks between EU and other countries.
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 14
EUropa.S. 2016 Committee on International Trade Study Guide Opening services market of all the members of the agreement has to be built on the legal framework that is determined by the GATS with the update of some existing provisions that concern the administrative practices or the telecommunications services while creating new regulatory principles on trade in services such as the electronic commerce need to be kept under consideration. On the other hand, in the individual trade talks with other countries (e.g. Japan, Canada) the purpose is to agree on solutions to specific problems. As a result, the EU is getting involved with this international trade agreement for the sake of efficiency, development and clarity. Taking part in TiSA is beneficial for the union considering the fact that it will open the road to either improve the provision of the already existing agreement or to make the start for the cooperation with countries that are not part in any agreement yet. The more countries participate the more efficient and beneficial the agreement is. However, there has been a lot of criticism concerning the adoption of such an agreement. Various concerns have risen about TiSA’s ability to interfere in every county’s domestic law. David Cay Johnston , an American investigative journalist, who specializes at economics underlined for example that: "Any trade in services deal should come after robust public debate about how much freedom each sovereign country should relinquish when it comes to changing its banking, insurance and other regulations.” To be more precise, the most important thing that has to be taken under careful consideration is the potential of TiSA agreement. To further approach the potential of this agreement, it is believed to be crucial to attempt an overview of the different policies of the European Parliament’s political parties.
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 15
EUropa.S. 2016 Committee on International Trade Study Guide
7. Conclusion In conclusion, the negotiations about the Trade in Services Agreement has to be continued in order to reach a result that is feasible, functional, based on the legal framework that GATs provides and cover all the needs and concerns that have been expressed by all the countries that will join the agreement. The current situation is a situation that can change from one day to another. All different aspects of the topic, from the legal framework that needs to be respected to the proposals that need to be taken into further consideration, have been tried to be covered. It is our duty to review the ongoing situation. In other words, since the issue is multidimensional, all the sub- topics suggested on the present study guide must be studied, discussed and hopefully resolved. At this point, it should be noted that the proposals have to be targeted, realistic and effective.
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 16
EUropa.S. 2016 Committee on International Trade Study Guide
8. European Parliament’s Political Parties Position
8. 1 European People’s Party (EPP) The European People’s Party (EPP) describes itself as the center right group in the European Parliament and one of its main believes it that in order to achieve economic growth and development, the market should be able to operate as freely as possible. As a result, the Free Trade Agreements signed by the EU are firmly supported by the MEPs of the EPP.10 International trade, in general, is considered of major importance for social cohesion and prosperity. The EPP Group supports an approach that is aiming to lowering non-tariff barriers and to creating a global level field, especially in the EU’s telecoms sectors as well as transports, professional and financial services. The 21st century has brought a number of different rules on the global trade table, concerning the digital era, and consequently, the EPP stresses the need to provide consumers with such as roaming and e-commerce. An acceptance of the agreed rules and ambitions from other interested parties will lead to a future multilateralization. However, EPP has expressed some red lines in order for TiSA to obtain European Parliament’s approval. These red lines include, pubic services, notably health, education and water while they are considered to be “not for sale” as the agreement should not accept the movement of the natural persons.11 Viviane Redin, EPP MEP, rapporteur in the INTA committee stated: "As the world champion in trade in services, the EU should not punch below its weight. TiSA is an opportunity to shape globalization, ensure more reciprocity in terms of access to foreign markets and provide more rights to consumers. That being said, the EU should not punch above its weight either. Our public and cultural services must be unequivocally excluded, our right to regulate fully preserved and our fundamental rights duly safeguarded".12
EPP Group in the European Parliament. (2013). EU-US free trade agreement: large majority of EP votes for early negotiations. [Online] Available from: http://www.eppgroup.eu/pressrelease/EU-US-Free-Trade-Agreement. [Accessed 25th November 2015]. 11 Bordelex (2013). Viviane Reding sets out European Parliament “red-lines” for TiSA. [Online] Available from: http://www.borderlex.eu/viviane-reding-sets-european-parliament-red-linestisa/. [Accessed: 25th November 2015]. 12 EPP Group in the European Parliament (2015). TiSA: Yes to better international regulation, but no to lower domestic regulation. [Online] Available from: http://www.eppgroup.eu/pressrelease/Viviane-Reding-says-%22Yes-But%22-to-TiSA. [Accessed: 25th November 2015]. 10
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 17
EUropa.S. 2016 Committee on International Trade Study Guide
8.2 Progressive Alliance of Socialists and Democrats (S&D) Multilateralism has been an essential element for the Socials and Democrats (S&D) party of the EU. For the S&D Group trade principles are clear: Trade is not an end in itself, but rather a means to an end. International trade should be characterized by common political principles that promote the social-democratic values of freedom as fairness and social justice. Fair trade can result in a number of positive contributions for the economies of all the countries of the world as it is able to reduce the poverty and to promote the economic development. Rules that are effective, fair and transparent are needed in order to achieve it. The inclusion of the services in trade agreements may offer opportunities both to the European service system and the domestic employees. Through negotiation, gains in trade can be achieved with the liberalization of the services system while adopting fair – balanced rules to allow the potential development. It is important to select the services that will be liberalized carefully in order to avoid mistreatments of some fundamental principles of workers within the EU. S&D believes that public service as education, health and water must be protected in the free trade agreements as the development of a strong public services sector is essential for every country.13 Bernd Lange, S&D MEP and chair of the INTA committee mentioned: “The EU’s trade policy must meet the challenges of our globalized world. Based on pure commercialism it will neither promote sustainable development nor fight the root causes of migration effectively. This strategy must apply its parts I restoring the people’s confidence in our trade policy. Anything less would be a lost opportunity”
8.3 European Conservatives and Reformist (ECR) The European Conservatives and Reformists (ECR) group was created in 2009 and it is considered to be in the center right to right wing of the European Parliament. Its MEPs are mostly of the Conservative Party of the UK and Law and Justice of Poland. The ECR believes that trade is a vital element of every economy of the world, especially for developing countries as it can be of a great help in order to assist them to achieve their goals and run out of the poverty trap. ECR supports free and fair trade and stresses its opinion that open markets will enable them to develop deeper and more comprehensive relation between the member countries. ECR is in favor of a European Market that is
Bernd Lange. (2012). Fair trade and sustainable growth, Group of the Progressive Alliance of Socialists and Democrats in the European Parliament. [Online] Available from: http://www.socialistsanddemocrats.eu/sites/default/files/SD%20trade%202%200%20EN%20 %20final%20internet%20position%20paper%20120521.pdf. [Accessed: 25th November 2015]. 13
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 18
EUropa.S. 2016 Committee on International Trade Study Guide strong and competitive and able to attract investment as a result, ECR, is a fighter of the protectionism and the imposition of trade barriers concerning the global trade. Free trade that includes the reduction of trade barriers such as tariffs and quotas will help billion people to improve their lives both in developed and developing countries.14 Syed Kamall, MEP for London, Chair of the ECR said: “The EU needs to approach the way it sets the terms of trade differently if we are to make more progress in opening markets and facilitating economic growth. Rather than trying to fuse together sets of rules and standards that are becoming ever more complex, we should be looking to mutual recognition of each other’s rules and standards where possible”.
8.4 Alliance of Liberals and Democrats for Europe (ALDE) The Alliance of Liberals and Democrats for Europe (ALDE) Party is the party for liberal democrat values in Europe. ALDE is in favor of a multilateral system based on fair rules equal for all the members in order to achieve sustainable development and reduce poverty.15 However, ALDE believes that trade policy should try to promote globalization with a human face rather than reforms that do don’t offer benefits to the people. In a result, ALDE stresses the need for the EU’s role at a world level to be strengthened and be promoted with tangible progress during the WTO negotiation for the Free Trade Agreements. The EU has to use the trade agreements in order to assure that European businesses can operate in the highest level abroad. It is essential that markets in services be as opened as possible. Transparency is the most important key for success concerning trade in services for the ALDE party as it strongly believes that Tisa’s mandate should be published.16 Alexander Lambsdorff MEP, the ALDE spokesperson for TiSA stated: "Just like TTIP, TiSA offers great potential benefits for the European economy and its citizens. It's vital that EU Member States avoid the mistakes made with TTIP and publish the negotiating mandate for TiSA as soon as possible.”
14
European Conservatives and Reformists Group. International Trade Committee, Main ECR priorities.[Online] Available from: http://ecrgroup.eu/policy/inta-international-tradecommittee/. [Accessed: 25th November 2015]. 15 Alliance on Liberals and Democrats for Europe Group. (2015). Member states must publish TiSA negotiation mandate. [Online] Available from: http://www.alde.eu/nc/press/press-and-releasenews/press-release/article/member-states-must-publish-tisa-negotiating-mandate-44852/. [Accessed 25th November 2015]. 16 Alliance on Liberals and Democrats for Europe Group. (2015). World is watching divided socialists avoid responsibility on TTIP vote - Socialists need an internal ISDS. [Online] Available from: http://www.alde.eu/key-priorities/eu-in-the-world/trade/. [Accessed 25th November 2015].
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 19
EUropa.S. 2016 Committee on International Trade Study Guide
8.5 European United Left- Nordic Green Left (GUE - NGL) The Confederal Group of the European United Left – Nordic Green Left (GUE/NGL) views activities of Multinational cooperation with suspicion. It believes that Free trade agreements do not always benefit all the members of the agreements. Worldwide social and ecological destruction has been caused due to the liberalization of the trade relations between the countries. It expresses its opposition to all the Free Trade Agreements and stresses the needs of the change of the definition of the trade relations as we know it today.17 As far as TiSA agreements is concerned, GUE/NGL believes that like other international trade agreements, TiSA threatens with privatization many public services and will every government that will sign this agreement will no longer be able to make new laws supporting the public provision of services. TiSA would lead to the restriction of a government’s ability to set its own criteria in public procurement. In addition, it is major threat for the labor rights while a single market between the EU and the other members of the agreements will be created where all the fundamental rights will be lost. Tisa for the GUE/NGL party will be the death of democracy and it will probably cause another financial crisis. Therefore, action have to be undertaken in order the TiSA negotiations to stop.18 Helmut Scholz, German GUE, NGL MEP mentioned: "The protagonists of TiSA call themselves the 'really good friends of services. But in fact they are the close buddies of private corporations selling services for major profits. Their interest is neither universal access to services for all citizens, nor the people working hard to provide people the services they need.”
European United Left/ Nordic Green Left/ European Parliamentary Group. (2015). What is TiSA about? [Online] Available from: http://www.guengl.eu/uploads/publicationsdocuments/Tisa_long_flyer_web.pdf. [Accessed 25th November 2015]. 17
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 20
EUropa.S. 2016 Committee on International Trade Study Guide
9. Food for thought – Points for Discussion An undoubtedly questionable issue is the institutional arrangement for a committee that will ensure the succession of the expected results of the Trade in Services Agreement. The creation and the promotion of such an institution needs to be taken into further consideration, since it has already been discussed once previously in a relative situation. More specifically, searching in the core of the negotiations of the failed AntiCounterfeiting Trade Agreement (ACTA), which ended a couple of years ago, it will be easily revealed the controversial nature of the negotiations on such an idea. Another point that needs to be thoroughly examined is the most favored nation clause for market access. It is needless to say that its inclusion in the agreement’s texts is thought to be necessary and justificable. Addressing the question of the positive and negative effects of the TiSA Agreement, the following should be underlined: The important and deep contribution of the services systems on creating new growth and development has been confirmed by various studies. Services have become crucial for each and every challenge that every country, developed or nor, phases nowadays, reducing poverty, increasing productivity as well as facilitating the trade by increasing competitiveness. In addition, the trade in services has increased rapid growth. The cross-border services trade appears to be more resilient in a crisis than merchandise trade. Facts have shown that between 2008 and 2012, there was a rapid expansion of construction and transportations services even though there was an economic recession. The same has been observed in the tourism services.
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 21
EUropa.S. 2016 Committee on International Trade Study Guide
10. Glossary Multilateral Trade: The are three principles that run throughout all of the WTO documents. These principles are thought to be the foundation of the multilateral trading system. More specifically, trade without discrimination, free trade (gradually through negotiation), predictability (through binding and transparency), promoting fair competition and encouraging development and economic reform are proven to be the core of the multilateral trading system. In general, multilateral trade is the attempt by governments to make the business environment stable and predictable.19 At this point, trying a more strict definition, it should be mentioned that a trading a multilateral trading facility is a trading system that facilitates the exchange of financial instruments between multiple parties.20 GATT: The General Agreement on Tariffs and Trade is a treaty following the conclusion of the World War II. More precisely, it was formed in 1947 and signed into international law on January 1, 1948. It was thought to be one of the focal features of the international trade agreement, until it was replaced by the creation of the World Trade Organization on January 1, 1995. This agreement promoted the reduction of barriers of international trade through reduction in tariffs, quotas and subsidies.21 GATS: The General Agreement on Trade in Services is a treaty of the World Trade Organization that entered into force in January 1995, and is binding for all WTO members, since they are all signatories to it. The agreement was created in order to extend the multilateral trade system to the sector of services, since GATT (General Agreement on Tariffs and Trade) had already provided this system for the sector of goods. Trade in Services: Article I of the General Agreement on Trade in Services (GATS)22 referring to the scope and definition of trade in services defines that: ď ś This Agreement applies to measures by Members affecting trade in services.
19
World Trade Organization. Principles of the trading system. [Online] Available from: https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm. [Accessed: 24th December 2015]. 20 Investopedia. Multilateral Trading Facility. [Online] Available from: http://www.investopedia.com/terms/m/multilateral_trading_facility.asp?layout=infini. [Accessed: 23rd November 2015]. 21 Investopedia. General Agreement on Tariffs and Trade (GATT). [Online] Available from: http://www.investopedia.com/terms/g/gatt.asp?layout=infini. [Accessed: 15th November 2015]. 22 World Trade Organization. The General Agreement on Trade in Services (GATS). [Online] Available from: https://www.wto.org/english/docs_e/legal_e/26-gats.pdf. [Accessed: 12th November 2015].
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 22
EUropa.S. 2016 Committee on International Trade Study Guide For the purpose of this Agreement, trade in services is defined as the supply of a service: From the territory of one member into the territory of any other member; In the territory of one member to the service consumer of any other member; By a service supplier of one member, through commercial presence in the territory of any other member; By a service supplier of one member, through presence of natural persons of a member in the territory of any other member. For the purposes of this Agreement: Measures by members means measures taken by: Central, regional or local governments and authorities; and Non-governmental bodies in the exercise of powers delegated by central, regional or local governments or authorities; In fulfilling its obligations and commitments under the Agreement, each member shall take such reasonable measures as may be available to it to ensure their observance by regional and local governments and authorities and non-governmental bodies within its territory; Services includes any service in any sector except services supplied in the exercise of governmental authority; A service supplied in the exercise of governmental authority means any service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers.
TiSA Agreement: The Trade in Services Agreement (TiSA) is a trade agreement currently being negotiated by 23 members of the World Trade Organization, including the EU, aiming to further opening the trade is services between them. This future trade in services agreement is based on the General Agreement on Trade in Services (GATS), and is expected to advance the stalled multilateral negotiations carried out under the WTO’s “umbrella” guided by those nations which are willing to continue negotiations on trade in services.23 (More information and details concerning the present negotiations on this agreement are going to be provided afterwards. Each specific European Parliament’s Political Parties’ policies on the potential and/ or the negative impact of the adoption of the agreement will also be presented in the part of the study guide that serves this option of the EU multilateral trading system’s examination).
Eurostat statistics. (2014). International trade in services. [Online] Available from: http://ec.europa.eu/eurostat/statistics-explained/index.php/International_trade_in_services. [Accessed: 24th November 2015]. 23
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 23
EUropa.S. 2016 Committee on International Trade Study Guide
11. Questions Raised 1. Why is the TISA Agreement important for the European Union?
2. Which will be the outcome of an international agreement in trade in services? 3. How can it be assured that TiSA will become part of the WTO’s rules? 4. What TiSA will cover? 5. Which services’ sectors will be covered by the TiSA Agreement? 6. How the phrase used in the GATS as “service supplied in exercise of governmental authority” could be narrowed or extended in the TiSA Agreement so as to properly explained to exclude some sectors of services of the scope of TiSA? 7. Given the fact that there is a great number of bilateral agreements between the EU members, is the adoption of a the TiSA, a multilateral agreement of such vital importance? 8. Can the TiSA Agreement constitute a frontier for the developing countries? Are services a new frontier for the sustainable development? Or, in other words, will trade in services be a new growth opportunity?
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 24
EUropa.S. 2016 Committee on International Trade Study Guide
12. Bibliography Websites
European Parliament. Legislative powers and procedures of a parliamentary committee. [Online] Available from:
http://www.europarl.europa.eu/aboutparliament/en/20150201PVL0 0004/Powers-and-procedures, http://europarliament.touteleurope.eu/follow/what-is-acommittee.html . [Accessed: 24th November 2015].
European Parliament. What is a parliamentary committee? [Online] Available from: http://europarliament.touteleurope.eu/follow/what-is-acommittee.html. [Accessed: 24th November 2015]. EPP Group in the European Parliament. (2013). EU-US free trade agreement: large majority of EP votes for early negotiations. [Online] Available from:
http://www.eppgroup.eu/press-release/EU-US-Free-TradeAgreement . [Accessed 25th November 2015].
Borderlex (2013). Viviane Reding sets out European Parliament “red-lines” for TiSA. [Online] Available from: http://www.borderlex.eu/viviane-redingsets-european-parliament-red-lines-tisa/. [Accessed: 25th November 2015]. World Trade Organization. Principles of the trading system. [Online] Available from:
https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm
[Accessed: 24th December 2015]. Investopedia. Multilateral Trading
Facility.
[Online]
Available
from:
http://www.investopedia.com/terms/m/multilateral_trading_facility. asp?layout=infini . [Accessed: 23rd November 2015].
BBC news. (2015). France's Le Pen announces far-right bloc of anti-EU MEPs. [Online] Available from: http://www.bbc.com/news/world-europe-
33147247. [Accessed: 24th November 2015].
Borderlex. (2014) Marine Le Pain joins the international trade committee of the European Parliament. [Online] Available from:
http://www.borderlex.eu/definitive-list-inta-members-europeanparliament-le-pen-factor/. [Accessed: 24th November 2015].
European Conservatives and Reformists Group. International Trade Committee, Main ECR priorities.[Online] Available from: http://ecrgroup.eu/policy/inta-
international-trade-committee/. [Accessed: 25th November 2015].
European Commission. (2013). The EU and the WTO. [Online] Available from: http://ec.europa.eu/trade/policy/eu-and-wto/. [Accessed: 22nd November 2015] Eurostat statistics. (2013). International Trade in Services. [Online] Available from: http://ec.europa.eu/eurostat/statistics-
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 25
EUropa.S. 2016 Committee on International Trade Study Guide explained/index.php/International_trade_in_services .
[Accessed
24th
November 2015]. Eurostat statistics. (2014). International trade in services. [Online] Available from: http://ec.europa.eu/eurostat/statisticsexplained/index.php/International_trade_in_services . [Accessed: 24th November 2015] World Trade Organization. The European Union and the WTO. [Online] Available from:
https://www.wto.org/english/thewto_e/countries_e/european_comm unities_e.htm . [Accessed: 22nd November 2015].
EPP Group in the European Parliament (2015). TiSA: Yes to better international regulation, but no to lower domestic regulation. [Online] Available from:
http://www.eppgroup.eu/press-release/Viviane-Reding-says%22Yes-But%22-to-TiSA. [Accessed: 25th November 2015].
Bernd Lange. (2012). Fair trade and sustainable growth, Group of the Progressive Alliance of Socialists and Democrats in the European Parliament. [Online] Available from:
http://www.socialistsanddemocrats.eu/sites/default/files/SD%20tra de%202%200%20EN%20%20final%20internet%20position%20pape r%20120521.pdf . [Accessed: 25th November 2015].
Alliance on Liberals and Democrats for Europe Group. (2015). World is watching divided socialists avoid responsibility on TTIP vote - Socialists need an internal ISDS. [Online] Available from: http://www.alde.eu/key-priorities/eu-inthe-world/trade/ . [Accessed 25th November 2015]. Alliance on Liberals and Democrats for Europe Group. (2015). Member states must publish TiSA negotiation mandate. [Online] Available from:
http://www.alde.eu/nc/press/press-and-release-news/pressrelease/article/member-states-must-publish-tisa-negotiating-mandate44852/. [Accessed 25th November 2015].
European United Left/ Nordic Green Left/ European Parliamentary Group. (2015). What is TiSA about? [Online] Available from:
http://www.guengl.eu/uploads/publicationsdocuments/Tisa_long_flyer_ web.pdf. [Accessed 25th November 2015]. Books Bernard Hoekman, (ed) (2009) The WTO – Trade in Services: Critical Perspectives on the Global trading System and the WTO series. Italy: European University Institute. Kem Alexander and Mads Andenas, (ed) (2008) The World Trade Organization and Trade in Services. Leiden; Boston: Martinus Nijhoff Publishers.
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 26
EUropa.S. 2016 Committee on International Trade Study Guide
13. Further Resources
European
Parliament,
latest
news.
[Online]
Available
http://www.europarl.europa.eu/news/en. [Accessed 2015].
24th
from:
December
World Trade Organization. The General Agreement on Trade in Services [Online] Available from: https://www.wto.org/english/docs_e/legal_e/26-
gats.pdf. [Accessed: 24 th November 2015].
What is a multilateral agreement? [Online] Available from:
http://useconomy.about.com/od/glossary/g/multilateral.htm. [Accessed: 24 th November 2015].
Elina Villup. (October 2015). The Trade in Services Agreement: an end to negotiations in sight? (in depth analysis). [Online] Available from:
http://www.europarl.europa.eu/RegData/etudes/IDAN/2015/57044 8/EXPO_IDA(2015)570448_EN.pdf . [Accessed: 24th November 2015.]
European Free Alliance in the European Parliament. The Greens/Who we are. [Online] Available from: http://www.greens-efa.eu/staff/presswebcommunications-and-multimedia/about-us/48-who-we-are.html.
[Accessed: 24 th November 2015].
European Free Alliance in the European Parliament. (2014). TiSA. [Online] Available from: http://www.greens-efa.eu/tisa-services-trade-agreement12524.html. [Accessed: 24th November 2015]. Europe of Freedom and Direct Democracy. [Online] Available from: http://www.efdgroup.eu/about-us/our-charter. [Accessed: 24 th
November 2015].
The EU is using TIPP in the course of its political agenda. (2015). [Online] Available from: http://www.efdgroup.eu/newsroom/item/the-eu-is-using-
ttip-in-the-course-of-its-political-agenda2?highlight=WyJ0cmFkZSIsInRyYWRpbmciLCJ0cmFkZXMiLCJpbiIsImlucy IsInNlcnZpY2VzIiwic2VydmljZSIsInNlcnZpY2luZyIsInRyYWRlIGluIiwidHJ hZGUgaW4gc2VydmljZXMiLCJpbiBzZXJ2aWNlcyJd. [Accessed: 24 th November 2015].
UNCTAD. Services: New frontier on sustainable development. [Online] Available from: http://unctad.org/en/PublicationsLibrary/ditctncd2013d4_en.pdf.
[Accessed: 24 th November 2015].
EUropa.S. 2016, 22nd - 25th April, Athens, Greece europas.irtea@gmail.com |www.europas.irtea.gr
P a g e | 27