The Trade in Services Agreement: Opportunities for Canadian Service Suppliers

by Bennett Jones LLP
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On March 18, Canada announced publicly that it was joining 20 of its trading partners, including the United States, Mexico, the European Union, Switzerland, Japan, Korea, Hong Kong and Australia in negotiating a new international instrument to further liberalize trade in services. The instrument will be called the Trade in Services Agreement, or TISA.

Despite its bland name (arrived at after considerable debate) and the fact that it has suffered for attention in comparison with the launch of US-EU trade negotiations and Japan’s pending participation in the Trans-Pacific Partnership (TPP), the TISA is potentially of more immediate value. Parties to the negotiations are responsible for some 70 percent of global services trade. The TISA could realistically produce, in relatively short order, important new opportunities for Canadian service suppliers in key markets around the world.

The TISA negotiations were borne of the frustration felt by certain WTO Members when negotiations to liberalize services trade became a casualty of the stalled Doha round of WTO negotiations. The TISA is to be negotiated outside of the WTO by a subset of WTO Members committed to services trade liberalization. Expectations for the TISA are that it will reflect new types of services that have emerged since the WTO’s General Agreement on Trade in Services (GATS) was negotiated some 20 years ago; lock-in liberalization undertaken unilaterally by parties since the GATS came into force; and expand commitments among the parties on market access and non-discrimination.

As counsel to the Canadian Services Coalition, Bennett Jones participated in meetings last month in Geneva between business representatives from Canada, the United States, Australia and Taiwan under the umbrella of the Global Services Coalition and the WTO ambassadors and services negotiators from many of the parties involved in the TISA. The meetings were timed to coincide with a meeting of the negotiators to discuss how the content of the TISA should differ from and expand on that of the GATS.

In the course of these meetings and various discussions on their margins it quickly became clear that there is a real commitment among the parties to conclude an ambitious agreement and that there is optimism that this can be done by 2014. Parties recognized that they will need to confront how the TISA might one day be brought within the fold of the WTO and the extent to which the TISA will overlap with other major trade liberalization initiatives now underway. It was also clear that parties are divided on whether and how new entrants should be encouraged. In particular, there is concern voiced by some that the price to pay for enticing large emerging economies such as China, Brazil or India to join would be an agreement so diluted that it would lose most of its relevance for business.

Importantly, however, there is near consensus on many of the substantive issues the TISA will need to address. These include:

  • Access for individuals to go to other countries to supply services (so-called Mode 4 supply), and in particular, improving temporary entry for business people, professionals and technical experts, including intra-company transfers, which can be critical for businesses seeking to operate in foreign markets.
  • The free flow of data across borders, unhindered by, for example, requirements that data be stored on servers in the country in which it is being used. This is a critical issue for the United States but as the TPP negotiations have shown, it is also a complicated one, raising sensitive considerations of privacy protection and national security.
  • A horizontal obligation to provide national treatment to all services and suppliers of other participants, subject to express, limited exclusions (a so-called negative-list approach).
  • Disciplines on barriers to cross-border service supply, such as licensing or residency requirements, and on investment, including requirements as to residency, form of establishment, participation in joint ventures or the satisfaction of economic needs tests.

Other matters flagged as important by some of the parties include disciplines on the conduct of state-owned enterprises and government procurement of services.

Many delegations stated explicitly that for the TISA negotiations to succeed, businesses in each party need to become engaged in identifying the services trade barriers they face and pressing their governments to address them. Here in Canada, the Department of Foreign Affairs and International Trade has published a notice in the Canada Gazette, soliciting the views of interested parties and asking them to identify services sectors, activities and relevant markets of export interest and barriers they facing in accessing those markets. The notice can be found at: http://www.gazette.gc.ca/rp-pr/p1/2013/2013-03-16/html/notice-avis-eng.html#d111. The deadline for submissions is April 30, 2013.

Bennett Jones’ International Trade and Investment group is positioned in all aspects of international trade and investment law. Our members have a proven track record of expertise in all of the elements that comprise the regulation of international business, including market access for goods, services, intellectual property and investment. Our practice is also fully integrated with the firm’s extensive cross-border commercial, transactional, tax, banking and dispute settlement services.

Our experience spans domestic trade and investment laws, international rules and treaties, and international dispute settlement in trade and investment matters. Our depth allows us to offer the most comprehensive range of legal services in Canada in relation to international trade and investment regulation. Whether clients require advice on technical border issues or high-level trade policy, treaty negotiation or international relations matters, we are able to draw on our members’ unparalleled expertise in international business regulation to provide timely, practical and informed advice.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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