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As you are aware the Doha ministerial meeting of the WTO mandated the launch of the highly complex Request-Offer phase of GATS negotiations. The timelines established for new commitments in over 160 services sector are The submission of initial requests - June 30, 2019 Initial offers - March 31, 2019 Deadline for negotiations to end January 1, 2019.
We are aware that India has received requests from 17 trading partners since June 30 2002. To date none of these requests have been made publicly available to facilitate an informed debate.
On 25 February 2019 documents containing requests by the European Union to 109 countries were leaked to the Polaris Institute in Canada who coordinated their release to GATS activists around the world. These documents are available at www.polarisinstitute.org. The Government of India received its requests on 4 July 2019 and it is unfortunate that it is only now that the public has access to these documents.
EQUATIONS has analysed the request to India and our response (in the form of an open letter to the Prime Minister of India) is appended below. It should be noted that this analysis does not provide a comprehensive picture of the implications of this request. Anyone would agree that more time is required to analyse this complex document. We have also included issues that we view as critical in terms of India's trade policy on services. We urge individuals, social movements, trade unions and NGOs to examine other sectors in the document and write to the Government of India to provide the time and space for an informed debate before committing services sectors to the binding rules of the GATS.
OPEN LETTER TO THE PRIME MINISTER OF INDIA ON GATS NEGOTIATIONS.
February 26, 2019.
Shri Atal Behari Vajpayee
RE: COMMENTS ON LEAKED EUROPEAN UNION REQUESTS TO INDIA ON GATS
Honourable Prime Minister:
We are writing with regard to the requests that India has received from the European Commission (EC) and its member states as part of the ongoing Request-Offer phase of the WTO's (General Agreement on Trade in Services) GATS negotiations.
It is our position that these Requests to India from the European Commission (as well as other trading partners) should have been made public by the Government of India, rather than being leaked by a public interest NGO (The Polaris Institute, Canada). You, sir have stated that India's position in trade negotiations should be arrived at after the broadest possible consultations with stakeholders. Sadly so far, most processes by the Commerce ministry related to the current GATS negotiations have not adhered to the fundamental concepts of transparency and democracy. This is despite at least three formal requests by us to Ministry officials to display the requests that India has received on the Commerce Ministry website. We wish to emphasise that access to these documents is crucial to understand what India has been requested, is likely to offer and analyse possible implications. Since we have obtained a copy of the requests to India (on 25 February 2019 from www.polarisinstitute.org) we would like to use this opportunity to comment on the tourism, and part of the environmental services, sector in the document and more generally on what we view as essential considerations with regard to India's position in the ongoing GATS negotiations.
1. ECs request to further commitments in the Tourism sector
Any analysis of the implications of the ECs present requests will have to be informed about the past commitments India has made in the last round of commitments i.e., in 1994. India's 1994 commitments in the GATS relating to the tourism industry relate primarily to four sub sectors; Hotels and Restaurants, Travel Agencies and Tour Operators, Tourist Guide Services, and Others. Of these four, the Indian government has made documented commitments on two, the first and second. Prominent trade policy analysts and Commerce ministry officials have stated that 'an analysis of India's commitments in a traditionally liberal and less sensitive sector such as tourism shows that India has adopted a highly cautious approach to liberalisation' during commitments made during the Uruguay round. If this was the intention of Indian trade negotiators, our examination of Indian commitments in tourism shows that either this conclusion is wrong or there have clearly been erroneous entries under the hotels and restaurants sub sector. While six possible limitations are possible, India's entry under Mode 3 (commercial presence) shows that it has chosen to invoke only item 6, a limitation on the participation of foreign capital. This implies that henceforth any regional or local government policy that could limit the number of service suppliers, total value of transaction or assets; the total number of service operations or quantity of service output; the total number of natural persons and require a certain type of legal entity or joint venture can possibly be challenged as violating India's market access commitments. The first limitation is crucial as regulations restricting access to ecologically fragile areas are a well-recognised means of preserving the resource in question. For this reason, tourism related activities in India's protected areas i.e. National Parks and Wildlife sanctuaries are highly regulated and falls within the mandate of the respective Forest Departments and not the Tourism Ministry. To allow for such regulatory flexibility, and given that there are several areas in the GATS where rule making in still in process, even the WTO secretariat has advised member governments to include relevant limitations into their schedule of commitments. The inability of trade negotiators from the Commerce ministry to foresee such implications on domestic regulations is clearly evident.
The scenario gets worse as we examine limitations on national treatment. There are none scheduled, both for hotels and restaurants as well as travel agencies and tour operators under Mode 3. While non-discrimination may seem like a rational objective in a scenario where powerful domestic firms enjoy several undue benefits thereby resulting in low-quality, high cost and outdated services, such a simplistic template cannot be applied to the tourism sector. We consider this inability to factor in limitations a patent failure on part of the Commerce ministry. It is important to note in the present negotiations any further limitation implies renegotiation of the commitment. The only way forward for India is to maintain the status quo or remove limitation 6.
The latter is precisely what the EC has requested India to eliminate. Foreign Investment can have beneficial impacts in a sector provided it is carefully regulated. In tourism equity caps on hotels serve several important public interest objectives. In ecotourism initiatives, from an environmental perspective, it has been proved that involvement of people living in the area could help better management and rational consumption of the resource resulting in long term conservation. On the economic side it is important to plough back profits because a community that is not benefiting economically is likely to be hostile to projects in the area and this will endanger the viability of the whole process. Local equity and local incorporation requirements are also important from a jurisprudence perspective.
In a recent seminar "World Trade Organisation: Tourism and Environment" in Goa (February 21-22, 2003) a member of the Goa Chambers of Commerce and Industry, representing the tour operators perspective, highlighted both the lack of awareness and consultation on GATS. He highlighted the anti- competitive trade practices by the dominant tour operators from Europe which marginalized the highly fragmented industry in Goa and expressed fears that with binding commitments in the sector, small and medium scale enterprises (SMEs) would face hard times ahead. He recommended the setting up a task force to examine implications on SMEs and unless the report was submitted to the respective ministries, India should make no further commitments.
2. ECs request for commitments under protection of biodiversity and landscape (Under environmental services)
The are two kinds of Protected Areas in India: national parks and wildlife sanctuaries. Both these are governed by the Wild Life (Protection) Act of 1972.Other forest areas are generally covered by the Forest (Conservation) Act of 1980. According to the Indian Constitution (Article 48 A) the State should strive to protect and improve the environment and to safeguard forests and wildlife. Biodiversity protection is presently solely the responsibility of the Government run Forest Department (which come under state and central jurisdiction). This clearly falls under the government exemption clause (Article I.3) and we urge the government to reject this request.
3. Address regulatory failure in tourism before making commitments
Even orthodox free trade theorists emphasise the need first for a coherent regulatory framework, one that balances economic, environmental and social agendas, in order for countries to benefit from trade liberalisation. The current state of tourism regulation in India leaves much to be desired. There is an urgent need to create new, and where possible amend, tourism regulatory and policy frameworks to support key environmental and social goals. While tourism development should be capped in certain destinations governments should develop regulations and policies that support smaller-scale tourism initiatives that are initiated and managed by local entrepreneurs in areas where tourism development is feasible. For example, there is an urgent case for strengthening the Coastal Regulation Zone Notification of 1991, regulations should be developed for ecotourism and the Environment Impact Assessment requirement for tourism projects needs to be broadened. The multi-stakeholder approach should be a prerequisite to any such planning initiative.
4. Increase competence and level of coordination between ministries (at the central as well as state level)
It is evident that the negotiators in the tourism sector are not well versed in GATS rules while trade negotiators from the Ministry of Commerce are not familiar with tourism. Examination of policy documents also shows that tourism policy makers themselves are not knowledgeable about the environmental and social impacts of tourism. Present levels of understanding on the GATS and the timelines set by the Doha ministerial is clearly inadequate. This was evident from a recent letter (dated 16 January 2019) that EQUATIONS received from the Ministry of Tourism and Culture welcoming our view in dealing with requests on tourism services from trading partners. In paragraph 3 the letter mentions 'As you are aware that as per the Doha declaration we have to furnish our initial offers to the WTO. Our department is contemplating sending our initial offers by 1st week of February 2003'. We would like to emphasise here that there is nothing in the GATS or in the Doha ministerial declaration that states that we have to submit offers. Further, while the Doha timeline for initial offers is March 31 2003 the alacrity of the tourism ministry to increase commitments even before that date defies reason. The environment and human resources ministries should also be involved in consultations, as should all the respective state government ministries (see next point). Lack of such coordination will lead to conflicts with the mandate of other ministries. Currently, India's record of accomplishment concerning this harmonization leaves much to be desired.
5. Democratic deficitIn Part 1, which encompasses the scope and definition of the GATS, Article 1(3), mentions that in "...fulfilling its obligations and commitments, each member shall take such reasonable measures as maybe available to it to ensure their observance by regional and local governments and authorities and non governmental bodies within its territory". This implies that a binding commitment in the GATS applies across the board to all state governments. Tourism as a subject is presently not in any of the lists (Central, State and Concurrent) in the seventh schedule under the Indian constitution and hence state governments have had considerable policy flexibility vis-à-vis their tourism policies. Recently the central tourism ministry expressed interest in including Tourism as a subject of the Concurrent list. The constitution recognises the right of both Parliament and the State Legislatures to legislate concurrently with regard to subjects enumerated in the concurrent list. Though its presence in the concurrent list implies that state governments continue to have certain policy flexibility, several states have opposed this fearing the use of Article 254. This article enunciates that in case of conflict between a Union and a State law, the former shall prevail.
Policy diversity to meet the particular circumstances of a region cannot be underestimated as experiences of tourism development vary in different parts of India. While in some areas the main need is the creation of an institutional framework that helps in developing the right kind of tourism (i.e. in areas that have hitherto not seen much tourism development, such as the north eastern states of India and the new tribal states of Uttaranchal, Chattishgarh and Jharkand), in other areas the imperative is to regulate and monitor this industry to ensure that the impacts on the environment is minimized by curtailing market access into overdeveloped areas (even when there is an economic incentive). Goa's fragile coastal areas that have seen indiscriminate tourism related investment are a case in point. To arrive at an all-encompassing framework for international trade in tourism is, for this reason, problematic in the Indian context.
Several participatory initiatives could be challenged by India's present commitments. For example the Community based ecotourism project in Lata Village in the Nanda Devi Biosphere Reserve, the Panchayat led 'people to people' tourism programme in Kumarakom, Kerala and the ecologically sustainable community based tourism in Khonoma, Nagaland could be challenged as being in violation of GATS clauses.
Given that such negotiations are likely to intrude into internal policy making spaces it is unfortunate that several state tourism department officials are even unaware of the GATS negotiations. Trade officials in the commerce ministry are obviously not the best judges of ground level impacts of a complex sector like tourism. Consultations with localregulators will help in bridging this democratic deficit.
6. Lack of clarity on GATS clauses.
The GATS is a relatively new, and arguably the most complex, agreement under the mandate of the WTO. Its apparent flexibility in terms of vertical commitments, limitations possible and inadequate interpretation of certain clauses and of the complexities in the tourism sector have tended to cloud trade negotiators perceptions. This has led to a number of key misunderstandings on the implications of certain clauses. In tourism for example flawed commitments made in 1994 have taken away our ability to put in limitations on market access for hotels in ecologically fragile areas in the present phase of negotiations. Rule making on several key clauses is speeding up and it is prudential that negotiators exercise utmost caution unless there are certain on how these new disciplines will apply. For example it unclear as to whether the disciplines currently being formulated on domestic regulation will apply horizontally or to specific sectors.
7. GATS link with Investment
We appreciate the work done by the Indian delegation, led by the Commerce Minister Shri. Murasoli Maran, during the Doha ministerial meeting in November 2001 in stopping Investment and other new issues from entering the WTO framework. An Investment agreement within the WTO would maximise investor rights and minimise the policy space of developing country governments to determine their developmental trajectory. It is now a well-recognised fact the GATS, through the presence of Mode 3 contains features of both a trade and investment agreement. In this context we fear that binding commitments under Mode 3 may have potentially far- reaching implications for domestic policy choices. Binding commitments will conflict with our ability to regulate investment in the services sector through equity ceilings, obligations on technology transfer, universal services provision and employment of local labour. It is evident that the GATS endeavour to progressive liberalisation will target such public interest limitations as is evident in the case of the ECs request on practically every sector. We urge the Government of India to exercise utmost caution in making Mode 3 commitments in any of the sectors.
8. Areas of interest to developing countries
The WTO secretariat has successfully sold the GATS as one of the most development-friendly of all Uruguay Round agreements. Regretfully progress in areas of interest to developing countries has been far from meaningful in the GATS council since these are more 'good endeavour clauses' rather than those that are legally binding. India should forcefully push for the implementation of Article IV. Mode 4 or temporary movement of natural persons is clearly an area where India could meaningfully participate in liberalisation of services trade. But here again an examination of present schedules show that the commitments undertaken by the developed countries have very little to offer to the developing countries in terms of opening their markets or facilitating the administrative arrangements or providing national treatment in the area of movement of natural persons. Mode 4 concessions have hitherto implied that movement of labour in skilled and unskilled services is tied to movement of capital; that is, present commitments are largely restricted to business visitors and intra-corporate transferees. Regardless, it is important for India to continue to emphasise the fundamental importance of Mode 4 if the ongoing negotiations are to have any meaning at all for developing countries. If this is not done the inherent imbalance in GATS and the basic asymmetries in trade in services will get further accentuated with increased level of commitments from developing countries in sectors of interest to developed countries. But if the previous rounds of multilateral negotiations are taken as indicative it is likely that the Doha round as well will be again an exercise in fostering greater capital movement with most of the commitments being made in sectors of interest to developed countries; namely, the first three modes of supply.
9. Alleviate data deficits and provide an assessment
The importance of making commitments in tourism and other sectors only after a complete understanding of the sector and the complex interlinkages between sectors cannot be overemphasized. To properly evaluate the value of specific commitments, considerable statistical work must be undertaken. This information must also be made available mode-wise. It is important to recall that during the Uruguay round of negotiations India and Brazil led the developing countries in resisting the inclusion of services and one of the most forceful arguments used by our then Trade Ambassador Shri S. P Shukla was the sheer impossibility of having meaningful negotiations on services in the absence of trade data. Despite this the recent manual from the UN statistical commission after 14 years of work states that it is unfeasible to collect data in accordance with the categories of modes of supply of services. This sorry state of affairs has led the noted trade analyst Chakravarthi Raghavan to describe developing countries and services trade as akin to 'chasing a black cat in a dark room, blindfolded'.
In this context it is also useful to recall that the GATS Negotiating Guidelines mandates the GATS council to carry out an assessment of trade in services in overall terms and on a sectoral basis. We urge India to lead the developing countries to continue to push for this assessment as they have previously done and the ambit of such an exercise should not only be quantitative, i.e. of an economic nature, but should also address qualitative aspects, such as the GATS' impact on social, environmental and developmental realities in individual WTO Member countries. India should also begin a national assessment, on similar parameters, of the liberal autonomous regime in several services sectors. Unless there is a relevant body of research to assess impacts, we urge the government to exercise caution during these negotiations.
Unlike trade in goods, international trade in services is not confronted with border tariffs and therefore many domestic regulations, considered barriers to trade, are the target for elimination of rounds of negotiations. The resultant changes in national legislation are likely to bind future governments (both the central and regional) from changing policies to reflect developmental priorities.
Without comprehensive consultations, within central ministries and more specifically state governments, any commitments or negotiations in the GATS are by construction handicapped. This handicap cannot be taken lightly; it has the potential to inflict substantial damage to the Indian constitution. The key to the secret of democracy is the involvement of the citizen. By that yardstick trade policy in India falls far too short.
Once again we recommend the Commerce ministry to make public all the Requests we have received in order to facilitate an informed democratic dialogue on possible offers. India's possible offers should also importantly be debated in the Parliament before being submitted to the WTO secretariat. Unless the above-mentioned concerns are addressed we urge India to use the flexibility accorded by the Doha ministerial declaration and the GATS text to refrain from making any more binding commitments in the GATS.
We look forward to your response to these concerns and to learning what position India will take regarding the requests that India has received from the EC as well as other trading partners
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EQUATIONS is an NGO based in Bangalore. We believe that the present forms of Tourism development raises serious questions regarding its real benefits as also its socio-economic, environmental and cultural impacts on host communities in developing countries. Investigating impacts and alternatives in Tourism policies and structures we lobby for a Tourism that is more just ,culturally appropriate and equitable
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