Negotiating High-Quality Trade Agreements. Henry Gao UNESCAP, Bangkok, Nov 27, 2018

Transcription

1 Negotiating High-Quality Trade Agreements Henry Gao UNESCAP, Bangkok, Nov 27, 2018

2 Outline What are high-quality trade agreements? What are the main issues? How to negotiate such agreements?

3 I. DEFINITION

4 Traditional FTAs Mainly market access issues Trade in goods: manufacturing and agricultural products Tariffs: Substantially all the trade (80-90%); Enabling clause Non-tariff measures: Customs administration issues: Customs valuation, Rules of origin, pre-shipment inspection, import licensing etc. Trade remedy: anti-dumping, subsidy countervailing, safeguards TBT & SPS

5 High-quality FTAs Deeper market access New issues Behind-border Issues and Regulatory coherence

6 II. ISSUES

7 New issues Services Investment Competition Labor & environmental provisions E-commerce Regulatory coherence

8 Services Positive listing (WTO): Schedule of commitments: Sector, Modes of supply, market access, national treatment, additional commitments Negative listing (NAFTA, TPP): Presumption of liberalization Annex A: List of non-conforming measures Annex B: List of reservations

9 Positive listing: GATS Modes of supply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence of natural persons Sector or subsector 9. TOURISM AND TRAVEL RELATED SERVICES A. Hotel and restaurants services (CPC ) Limitations on market access 1) Unbound* 2) None 3) Joint ventures required with foreign majority ownership permitted Limitations on national treatment 1) Unbound* 2) None 3) The majority of employees of joint venture hotels and restaurants shall be nationals Additional commitments 4) Unbound except as indicated in the horizontal section 4) Unbound except as indicated in the horizontal section 9

10 Horizontal Commitments Modes of supply: 1) Cross-border supply 2) Consumption abroad 3) Commercial presence 4) Presence of natural persons Sector or Limitations on subsector market access I. Horizontal Commitments ALL SECTORS INCLUDED IN THIS SCHEDULE 4) Unbound, except for the temporary presence for up to three years of the following categories of persons: A. Services Salespersons B. Intra-corporate Transferees Executives Managers Specialists Professionals C. Personnel Engaged in Establishment Limitations on national treatment 3) Unbound for subsidies. Acquisition of land subject to government approval. 4) Unbound, except for measures concerning the categories of natural persons referred to in the Market Access column. Additional commitments 10

11 Negative listing: Annex A

12 Negative listing: Annex B

13 Investment Substantive obligations: Fair and equitable treatment Expropriation and Compensation Institutional arrangement: Investor-state arbitration

14 Competition Duty to adopt competition laws Procedural Fairness in Enforcement Private right of action

15 Environment, labour & human rights issues Format: Chapters or side agreements? Language: soft or hard? Specificity: general standards or particular agreements? Incorp. into domestic regime: Enforcement: Failure to enforce = violation? DS: subject to normal DS? Remedy: trade sanctions?

16 E-commerce Free cross-border information flow Prohibition of data localisation Forced transfer of source code Recognition of electronic signature and electronic authentication methods Trade facilitation issues Privacy & personal information protection Consumer protection

17 Regulatory coherence What standard? Adoption of international standard Mutual recognition Harmonization of standards How to ensure conformity? Creation of new regulatory agency Re-allocation of regulatory power

18 Conflict of Norms Between different FTAs: TPP v. EU FTAs? competition, GMO, investment etc Between FTA & WTO? 1. No rule in the WTO: competition, SOE, e-commerce 2. Rule exists in WTO but no conflict: government procurement, services, IP 3. FTA rule conflicts with WTO rule: Substantive rules: labor, environment, etc Procedural rules: dispute settlement, other restrictive regulations of commerce?

19 Possible solutions Technical assistance Longer implementation periods More mutual recognition rather than harmonisation

20 III. NEGOTIATION

21 Negotiation: Main steps Research Consultation Framing the issue & get a mandate Coalition-building Negotiate (external) Negotiate (internal) Implementation Henry Gao 21

22 Research Know yourself: offensive/defensive interests Know the other party: offensive/defensive interests Where to start: past FTAs by the partner Henry Gao 22

23 Consultation With whom? Government:central/local Producers/exporters Importers/retailors Consumers/labor/environmental groups Academics/experts Involving both domestic and foreign stakeholders Henry Gao 23

24 Framing the Issue Careful framing of the issue at both the national and international level is critical to Negotiations At National Level Statement of Issue Should Highlight the key commercial and policy issues Provide a basis for domestic coalition building At International Level Statement of Issue Should Identify Common Policy Objective and Economic Rationale Provide basis for international coalition building Allow for win/win solutions Henry Gao 24

25 What is a Mandate? Dictionary: an authoritarian command or instruction To Negotiators: is direction from your Government to undertake a specific negotiation Sets specific objectives Provides appropriate flexibility in terms of objectives and the process Can be very specific and detailed or more broadly defined Henry Gao 25

26 What is a Mandate (cont.) Two types of Mandates are often confused in talking about WTO negotiations: 1. Mandate agreed by Ministers on what will be covered in Negotiations and how in broad terms 2. The specific mandate provided to each country s negotiating team by its Government based on the Ministerial mandate Henry Gao 26

27 Developing a Negotiation Mandate The most difficult part of the negotiation And yet it is the most important A Mandate must be guided by the national interest based on Consultation with stakeholders Economic orientation of government of the day Strengths and weaknesses Industrial expectations for the future Government s willingness to make tradeoffs Henry Gao 27

28 Negotiating Mandate A detailed analytical document to inform government leaders of all issues and results of consultations Usually endeavours to evaluate impact of market opening on domestic economy But not required Sets out your country s general objectives to be pursued in this negotiation and specific objective in the areas we are dealing with Establishes general objective E.g. open foreign market for your competitive exports to increase overall welfare Henry Gao 28

29 HOW TO NEGOTIATE? Henry Gao 29

30 Who, what, where Henry Gao 30

31 WHO?: know your partner Big country v. small country Experienced country v. inexperienced country Major trade partner v. little trade Political considerations Henry Gao 31

32 WHAT: THREE TYPES OF NEGOTIATIONS Tariff Rules Services Henry Gao 32

33 Tariff negotiation modalities Tariff negotiations (Art XXVIII bis) Tariff negotiation modalities: Request and offer (until Dillion Round) Liner cut (Kennedy Round): 30% across board Formula cut (Tokyo Round) Swiss formula: Z = AX/(A+X) To deal with problems such as Tariff escalation and Tariff hike Henry Gao 33

34 Tariff Escalation Henry Gao 34

35 Impact on Trade Henry Gao 35

36 RULES More like drafting contracts Meaning of wording: a major proportion v. the major proportion National proposal group proposal chairman s text final agreement Constructive ambiguity? Examples? Henry Gao 36

37 SERVICES Request and offer Rules negotiation Mutual recognition agreements Sectoral/cluster approaches Henry Gao 37

38 WHERE Different negotiation dynamics in different fora WTO: coalition building + MFN RTA: cross-linkage of issues Bilateral: know the other party Henry Gao 38

39 Sell it home You can never achieve 100%, so negotiate with and persuade domestic actors becomes important Cross-sector trade-offs Compare with other partners Political v economic benefits Turn to your coalitions Opportunities for domestic reform Henry Gao 39

40 Thank You!