The Hindu : India finalises strategy on services negotiations at WTO

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Friday, Jun 06, 2003

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India finalises strategy on services negotiations at WTO

By Our Special Correspondent

NEW DELHI JUNE 5. India today finalised its strategy on the services negotiations at the World Trade Organisation (WTO), an area crucial for this country especially in regard to movement of professionals. While seeking greater opening up of developed countries in this area, it is prepared to offer in turn liberalisation in the financial, health, computer-related, architecture, tourism, book-keeping and professional sectors.

The strategy was finalised at a meeting of the Cabinet committee on WTO affairs presided over by the Prime Minister, Atal Behari Vajpayee. Official sources said the Commerce Minister, Arun Jaitley, made a detailed presentation on the strategy to be adopted at the forthcoming WTO ministerial conference at Cancun in Mexico in September. As a result, the meeting stretched on for two hours as Cabinet members sought information on the various complex issues to be dealt with at the Cancun conference. This included agriculture which is likely to be one of the main items on the agenda at the conference.

The sources stated that Mr. Jaitley had not planned to make such a presentation but proceeded to do so in view of the keen interest shown by several Ministers in WTO issues, especially those handling key economic portfolios.

Regarding the strategy on services negotiations, the committee is believed to have decided that India would not be prepared to negotiate opening up in four services. These include the retail and wholesale distribution trade, law, posts and courier services and audio-visual sector such as films.

The process of services negotiations has begun at the WTO and India has already made its offer to 62 countries, of which 25 have responded including the U.S. and the European Union. This country is greatly interested in what are known as the mode 1 and mode 4 negotiations in the General Agreement on Trade in Services. The first relates to business process outsourcing (BPO) which has already raised a controversy with several States in the U.S. banning shifting of such jobs from their domestic market to countries such as India.

In this area, India is seeking complete liberalisation.

The second is what is known as ``movement of natural persons'' where this country has been seeking a rise in the bound rate for granting visas for professionals.

This is especially needed in countries such as the U.S. which has bound itself to giving only 65,000 H1B visas to professionals from abroad though the demand is for providing visas to much larger numbers.

In mode 3 there is a linkage of foreign direct investment flows to commercial presence of organisations.

India is not in favour of linking movement of natural persons with commercial presence, sources say, though this is an issue related to telecom and financial services where FDI flows are involved.

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