Liberalisation of Trade in Services (LOTIS) Committee
Minutes of meeting, Monday, 8 November 2019 @ Lloyd’s, One Lime Street, EC3
Alistair Abercrombie BI
Charles Bridge Department of Trade and Industry
Martin Corry Department of Trade and Industry
Alastair Evans Lloyd’s
Mark Hatcher PricewaterhouseCoopers
Ian Kemsley HM Treasury
Tim Kidd Bank of England
Nick Lowe International Underwriting Association
Henry Manisty Reuters Holdings plc
Jackie McHenry Institute of Chartered Accountants
Peter Morrison Clifford Chance
Victoria Powell FSA
Lisa Rabbe Goldman Sachs International
Clare Rilley AUTIF
Gavin Robert Linklaters & Alliance
Ian Williams Prudential Corporation
David Wood Confederation of British Industry
1.1 Minutes of previous meeting approved. No matters arising not covered elsewhere on the Agenda.
1.2 The Chairman said that a call on the Minister for Trade, the Right Honourable Richard Caborn MP, had been arranged for members of the High Level LOTIS Group on 17 November. [Subsequently the Minister for Trade had to postpone the meeting on 17 November to 23rd November @ 3.30 p.m.].
2. Papers for the High Level LOTIS meeting on 15 November had been circulated in final draft form for approval by the LOTIS Committee.
2.1 Professional Services The Chairman said that this was the first time that LOTIS had produced a paper on professional services and he thanked Alistair Abercrombie, Peter Morrison and Mark Hatcher for their work in putting it together. He said that there were some overlaps with the Financial Services paper and some areas where the issues highlighted were quite distinct. The only problem was that it was rather long and technical and he hoped the drafters would be able to compress it and take out some of the technicalities before it went to the High Level Group. Alistair Abercrombie said the introduction covered some common problems for professional services as a whole and some in common with other services. For professional services, the main sector specific issues were nationality, residence and mutual recognition. Peter Morrison pointed to two negotiating priorities, one about how firms could operate in different jurisdictions (problems concerning how local and foreign lawyers could combine together, restrictions on use of a common name etc), and the other about the frequently burdensome qualification requirements imposed on lawyers (reciprocity requirements imposed by some WTO members amounted to MFN violations for example). Mark Hatcher said the accountancy section brought out three priority areas – mobility of professional personnel, mutual recognition of professional qualifications and domestic regulation. Gavin Robert reiterated the point made by Charles Allen-Jones at the High Level Meeting in April that GATS problems were less important in respect of legal services as such than for their clients in other sectors. He added that it was not necessarily the difficulties in getting access to new markets that bothered them. At least foreign firms could be said to have a level playing field in that respect. It was more the problems they had in getting fair treatment and dismantling barriers within markets where they already had a major presence. He cited Hong Kong as an example. Charles Bridge was grateful for this last piece of information since he had not heard it expressed so strongly before. Acknowledging Gavin Robert’s first point, the Chairman said that we should not however neglect opportunities to press the case for market opening for professional services in the negotiations. On the two papers he said that we would no doubt come back to the issues as time went by and therefore that they should be seen to be our initial views. He was grateful for all the comments offered which would be taken account of in the redrafting.
2.2 Moving to the Financial Services draft, the Chairman said that the section on banking securities and asset management still needed some fleshing out. Lisa Rabbe offered a number of points aimed at doing this which the Chairman said he would take account of following the meeting. Comments from around the table included one from Charles Bridge who said that, although he recognised this was a private sector paper, H M Government remained attached to the word "comprehensive" in its hopes for the negotiating round. Henry Manisty, drawing attention to problems for providers of Financial Information, asked what the Committee expected to come out of the reference in the papers to intra-EU difficulties. The Chairman said that, in accordance with the way WTO negotiations were conducted, as well as the EU making requests, it would also be expected to make offers on what it intended to do to liberalise. By identifying one or more member states in our papers we would hope to flag issues we wished to see pursued. Alistair Abercrombie explained that the reason Italy was mentioned in the target list was that its reservations had been recorded in the EU Schedule last time around. In response to a follow-up question on EU barriers from Ian Williams, the Chairman said that we could hope to influence decisions by highlighting our concerns over barriers maintained by countries such as Italy. Apart from that, it was open to other countries like Japan and the USA to single out discrimination against their service providers in European member states.
Following the meeting, the two papers were redrafted and sent forward to the High Level LOTIS Group and copied to the LOTIS Committee.
3.1 Charles Bridge said that the UK wanted a comprehensive round and that the EU had adopted that approach in a set of Council conclusions agreed on 26 October. He expected a difficult discussion on Trade and Labour standards in Seattle, pointing out that, while the EU had given support to the idea of a joint ILO/WTO forum (pointedly not a WTO working group), this would still be highly controversial with developing countries. The position in Geneva had been quite gloomy up until two weeks previously. Then Lamy and other trade ministers had met in Lausanne and agreed on a more flexible negotiating approach. Agriculture was at the heart of the difficulties. The Cairns group were looking for more than the EU or Japan were prepared to concede. Japan was more protectionist on agriculture than the EU. Agreement on the breadth of the round continued to be a difficult issue.
More specifically he said that the EU Council conclusions on Services were not very long (this was as expected) but a paragraph on "cultural diversity" could be open to different interpretations and would allow the French position on audio visual to be maintained.
Differences over negotiating guidelines would be difficult to resolve. ‘Milestones’ were being talked about which could put off the start of sectoral negotiations until June 2000 or even later (i.e. the fourth WTO Ministerial in 18 months time). Within the EU, the question was whether member states would have a place at the negotiating table. On this last point, the Chairman stated that from contacts in LOTIS and elsewhere he concluded that the Commission did not have a full enough grasp of the technical issues and therefore we would be most keen for member states to be directly involved. Ian Kemsley said that financial services were not controversial; it was other areas such as agriculture, which would affect the nature of the negotiations. David Wood drew attention to the Commonwealth Business Council’s report to the Heads of Government about to meet in Durban. If this was accepted it meant bringing 50 WTO members actively into play and supporting a comprehensive round. He thought there were still strong arguments for keeping investment on the agenda, if they could be put over effectively. For instance, although the USA was against an FDI type negotiation, it continued to be very keen on commercial presence for services. He did not think developing countries would necessarily be against a broader approach on the benefits of establishment. He hoped that strong statements made recently in Berlin by Mike Moore and Pascal Lamy might cause the Americans to think again. The Chairman reported that the ESN, now renamed the ESF (European Services Forum) had agreed a paper on investment on 5 November to put forward for Seattle.
3.2 World Services Congress, Atlanta 1-3 November
Neil Jaggers said that six people at this LOTIS Committee meeting had gone to Atlanta, among others from the UK. The Congress organisers had talked about expecting 2000 people in advance publicity. In the event a turnout of 700 people from over 50 countries denoted a considerable achievement. It was a tour de force by our American counterparts. With such a full programme it was difficult to choose which break-out sessions to attend. For his part he had attended very good sessions on Insurance, Japan and Asia Pacific. In contrast to the preparatory conference in Washington in June, however, he thought that some of the Academic stream panel discussions were not of such high quality. Common topics running through the conference included Pro-Competitive Regulatory Principles, E-Commerce, the approach of and to the developing countries, structure of the GATS and the nature of the upcoming negotiations. The star performer was former President Fidel Ramos of the Philippines whose excellent plenary address (copies available) provided the text for anyone wishing to argue the case for developing economies to open their markets. Important peripherals in which a number of us were involved included the launch meeting of the Global Services Network (GSN), a meeting of the Financial Leaders Group with government negotiators from the USA and EU and a short presentation from Japan about the launch of the Japanese Services Network, a breakfast meeting of European FLG/FLWG members led by Andrew Buxton with John Mogg, Michel Servoz and John Richardson of the European Commission, and meetings of the FLWG’s Insurance and Banking and Securities evaluation groups.
As was to be expected, there was no "give" in official positions ahead of Seattle and therefore some difficult issues remained to be resolved there. Positions remained entrenched between the EU’s wish for a ‘comprehensive’ round versus the US desire for a "limited and manageable agenda". As worrying from a European perspective was the apparent US wish to spend anything up to the first 18 months on horizontal issues and only then to start on sectoral issues and real negotiations. Selling the concept of Pro Competitive Regulatory Principles to developing countries would require astute tactics, and – more generally – getting the developing countries signed up for a full round was not something to take for granted.
Summing up, he said that the Congress had provided good networking and had been a worthwhile precursor for Seattle.
Mark Hatcher endorsed this account, adding that the session on Accountancy which his PwC senior partner Peter Smith had chaired had been very well attended and had provided a very good opportunity to air issues such as mobility of personnel. He agreed that the Congress had been a worthwhile event.
3.3.1 European Services Forum
The Chairman reported that the ESF had taken a further look at a statement of business principles for the negotiations drafted by US counterparts which the ESF had originally thought too weak. Now UNICE had offered revisions which, if accepted, it was hoped the European side could sign up to. The text of the revised principles had been circulated.
3.3.2 The Chairman drew attention to the DTI invitation for 16 November to a briefing by the Minister for Trade for business organisations planning to go to Seattle. Charles Bridge said this was an open invitation for anyone going to the Ministerial.
3.3.3 The Chairman informed those who were going to Seattle that they should reply promptly to the invitations to the Business ½ day a.m. on Tuesday, 2nd December. The ESF (lately ESN) was also hoping to run events and the European Commission hoped to arrange briefings for private business there. From our collective point of view he suggested that it would be useful to have contact details of all LOTIS and High Level LOTIS members expecting to be in Seattle (Hotel, telephone, fax, arrival and departure dates etc.) and he asked people to let the Secretary have these in advance. Given expected difficulties in getting from place to place in the city he thought it useful to share this information among the UK based participants to help keep people in touch with what was going on.
4. Any Other Business
4.1 Turkey. The Chairman announced that the EC (at short notice, the ‘formal’ deadline being 8 November) wished to consult industry about its discussions with Turkey. Alistair Abercrombie had copies of the questionnaire should any members with business interests in Turkey wish to respond.
4.2 Post Seattle conference. Cameron May, with ABI and BI support, were still planning a conference, probably in March, and we would keep members informed of developments.
4.3 David Wood said that the CBI would be hosting a debrief post-Seattle by Tony Hutton (Director, Trade Policy at the DTI) on 13 December. All welcome. If members had not received an invitation direct, he encouraged them to contact him.
4.4 Next Meeting. This would be held, at the kind invitation of Ian Kemsley, at HM Treasury, at 3.00 p.m. on Tuesday, 25 January 2019.