As part of discussions on implementation of the Bali package discussions have taken place in the World Trade Organization (WTO) on waivers of the usual most favored nation (MFN) rules to help less developed countries (LDCs) when cross-border services are provided by them. A high level meeting of the WTO Services Council was held on 5 February 2015 to discuss preferential measures that could be implemented to help the cross-border trade in services by LDCs. One of the aims of the Bali package is to help participation of LDCs in world trade.
The services sector accounts for nearly 47% of the gross domestic product of LDCs, but exports of services account for only 11.6% of total LDC exports of goods and services. LDC participation in the export of commercial services amounts to only 0.6%. The WTO’s waiver of the normal MFN rules to help LDC services is therefore very important in ensuring that LDCs can make use of market opportunities and integrate themselves into the global trading system. The LDC group in the WTO has been identifying priority areas in which waivers of the normal rules would help their service exports.
In July 2014 the LDC group in the WTO circulated a collective request concerning preferential treatment to services and service suppliers in LDCs. This collective request included horizontal requests that would apply to all services and also some requests specific to particular industry sectors. The horizontal requests included a special temporary visa category for LDC contractual service suppliers; waiver of all economic needs tests or labor market test for LDC suppliers with a bona fide contract for two years (renewable); waiver of restrictions on contractual service suppliers whose entry and stay is under contract with a bona fide employer; waiver of restrictions on independent professionals with an offer or contract from a bona fide consumer in the host country; and a waiver of restrictions on individuals installing and servicing machinery where this was a condition of purchase of the machinery and the contract does not exceed three months in a twelve month period.
The collective request by LDCs also include a request for waiver of conditions on local hires; waiver of restrictions on repatriation of capital investments and profits; waiver of ownership requirements and conditions on ownership of land; waiver of restrictions on benefits under double taxation arrangements, refunds and other tax administration benefits. Also part of the collective request was a waiver on social security, income tax and other deductions from remuneration of LDC service suppliers across all sectors and modes of supply if the LDC service supplier is only providing services under a contract and not as a salaried employee.
The collective request also included requests for waivers in specific sectors including tourism, banking and insurance, transport, education, information technology and creative industry services. The collective request also contained a list of categories of service suppliers that could be covered by the waivers.
At the meeting of the WTO Services Council on 5 February 2015 25 members identified service sectors and modes of supply to which they would give preferential treatment. The Chair of the Council reported a high level of engagement from developed and developing countries who could give preferential treatment to services from LDCs and members had addressed most of the service sectors to which LDCs had referred in their collective request. The preferences mentioned by participating members included expanded access for business people from LDCs for a wide range of services; waiving fees for employment and business visas f or people from LDCs; not imposing economic needs or labor market tests for LDC members; and extending the duration of visits by professionals from LDCs. These preferences will be implemented by the countries agreeing to implement them when the LDCs have completed their domestic procedures and have notified the WTO.
