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13 March 2018, Gateway House

Creative regulations in trade in services

Pascal Kerneis, director of the European Services Forum, on the merits of one-shot regulations and migration control in a politically sensitive world

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Aashna Agarwal (GH): What are the creative regulatory policies, both domestic and global, needed for trade in services to flourish?

Pascal Kerneis: It’s always a very simple policy for business – we want legal certainty, a legal playing field. Therefore, on the domestic front, we want good regulation, and independent regulators where it is clear for companies what they have to do.

On the international front, it is a little more complicated to achieve these policies. One of the creative ways in which they tried to achieve this was at the Eleventh Ministerial Conference (MC11) in Buenos Aires when they tried at least to launch international domestic regulation cooperation. The idea was that a group of countries were trying to see whether it is possible to together create disciplines, , respecting some rules. I am talking about instances like licensing in services. So licensing procedures should be transparent; of course, the regulation needs to be transparent, but also, all companies would need to know what they have to do; where is the contact point; if there is a refusal of the license, is it possible to appeal, and so on. Some countries have already done this, and I hope this will be a creative solution.

GH: What steps do global economic institutions like the WTO and IMF need to take to promote and internationalize the movement of natural persons?

PK: I don’t think IMF can do much here. There is another international organisation dealing with the movement of natural persons, the International Migration Organisation, which could do something. Your question relates to what is called Mode 4 in trade in services. The solution is to depoliticise this issue, and therefore not use, for now, the word, migration per se, but at least restrict it to legal migration. This is about the migration of workers, that is, business people moving from one country to another within the framework of a business transaction and on a temporary basis. We have to repeat this again and again to make sure that it is not about massive migration to another country because this is already becoming a politically sensitive issue in many countries, including in European countries.

GH: An international agreement on trade in services has never been more necessary. As the director of the European Services Forum, what proposals are you putting forward for a global framework that reflects the priorities of the EU?

PK: We don’t need to reinvent the wheel. We have the General Agreement on Trade in Services (GATS). It is a very good agreement, and even if it is an old one, most of the content is still valid if we want to go deep into it. The problem is that the WTO is not able to deliver anymore. So there is also in Geneva – but not in the WTO – an initiative called the Trade in Services Agreement (TiSA), and that involves a group of countries which will be able to eventually do something. But unfortunately now, the United States has kind of withdrawn from it; and India, China, Russia and Brazil are also not part of it. The European Securities and Services Forum and European Services Forum wanted all the emerging countries to be a part of it, but that is not so.

Business is going on – we cannot wait. But what we now do at our own level is to actually encourage bilateral agreements, and therefore, we have FTAs. The EU has assigned significant agreements with Canada and Japan while we are revising those with Mexico, Chile and many other countries. We have an agreement with India, which is still open: it is not moving, but with others, it is.

On the international front, even if it is going to be better, our companies would always prefer a multilateral front: a one-shot regulation for all countries would be better. But that, unfortunately, is another case – so we go bilateral.

Pascal Kerneis is Managing Director, European Services Forum, Brussels.

Aashna Agarwal is Content Coordinator at Gateway House

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