Examination of Witnesses (Questions 20-39)
IFSL, ABI AND LLOYD'S
OF LONDON
22 NOVEMBER 2005
Q20 Judy Mallaber: I want to clarify
out of the previous questions precisely the nature of the scope
of the negotiations that are taking place. Mr Roberts, you have
already mentioned about India and the Philippines increasingly
providing services to developed counties. I think ABI and Lloyd's
both noted in their evidence that very few requests for the opening
of service sectors have been made to the least developed countries.
Obviously we touched on that earlier. You are both primarily interested
in market access in the developed and advanced developing countries:
is that fair? That is your primary area?
Mr Roberts: That is correct. The
European Union have said that they are not making requests of
the least developed countries.
Q21 Judy Mallaber: Is the services
negotiation really one for the developed counties and the most
advanced developing countries alone?
Mr Roberts: If I might vary that
very slightly, I think it is for the developed countries and those
developing countries that are not least developed; i.e. not Bangladesh
or in that sort of lower category of development. Whether that
is actually in the interests of the least developed countries
is another question, of course, but they are being excluded.
Q22 Judy Mallaber: Should service
sectors, other than financial services, be included in it, or
are you saying this is primarily about financial services?
Mr Roberts: I was talking about
all services.
Q23 Judy Mallaber: Should the least
developed countries be involved in those negotiations or should
it be left to those that are not the least developed? Surely whatever
is negotiated in this Round on the services agreement is going
to end up having implications across the board, is it not?
Mr Roberts: No, because the way
it is done is by a request and offer system. Each country makes
requests of the others what liberalisation they would like and
the other country then responds with what offer it is prepared
to make. Given the EU statement that they are not asking the least
developed countries to commit, I imagine to a very large extent
they will not, and so they will be excluded from that.
Q24 Judy Mallaber: Does that mean
that it will primarily involve financial services?
Mr Roberts: No, there are 150-odd
separate service sectors on which countries can either make requests
or make offers. It is across the whole range of services trade.
Q25 Judy Mallaber: Are the same kinds
of conditions likely to be imposed in the different sectors or
do you see the sector you are dealing with as operating quite
differently from some of the other sets of negotiations and trading
that is going on?
Mr Roberts: It is a matter for
each country to decide the sectors on which it wants to make requests
and the sectors on which it makes offers. It is perfectly possible
to see extensive liberalisation in some sectors and not in others.
For example, quite a lot of developing counties make offers on
tourism because they think that is a good area for them. We in
Europe will make a lot of requests on financial services, telecoms,
distribution services and environmental services, areas where
we are strong. It will vary from country to country but there
should be a pretty substantial spread of requests and offers at
the end of the day.
Q26 Judy Mallaber: When you have
been in the church halls talking to the NGOs, have you been saying
to them, "Well, the poorest countries are not going to be
affected"?
Mr Roberts: I would say in practice
they are not going to be affected but I would also say that on
economic grounds it seems to me desirable for the least developed
countries, as for others, to open their service markets. A country
like Benin wanting to sell its cotton into the United States needs
to have access to good banking, insurance, transport, distribution,
port, shipping, et cetera, services if it is to get its cotton
into world markets. Its cotton is highly competitive but its local
services are not, and it needs access to those services.
Q27 Judy Mallaber: What response
do you get from the NGOs when you make that argument?
Mr Roberts: I tend not to persuade
them, I have to say, despite trying! I think some NGOs would have
more sympathy with this argument than others.
Q28 Rob Marris: It seems to me this
is like a school dance. If you have a request-offer going round
for people to dance and you do not do it, the teacher comes along
and you go into benchmarking and you are told to participate.
Are you comfortable with the process or not?
Mr Roberts: I am comfortable with
the view that request-offer so far has produced very little results
and we need to look for other ways to try to get this negotiation
moving forward faster.
Q29 Rob Marris: What other ways would
you use?
Mr Roberts: In the European Commission's
proposals on benchmarking, which I expect you have in mind, we
would, from the business point of view, support one part of it
and oppose the other. We think that it is a mistake to press for
numerical targets for liberalisation, partly because you might
end up with a lot of minor and unimportant sectors, excluding
financial services for example, but mainly because I do not think
that that approach is going to get the support it would need to
be adopted. It is very widely opposed by other delegations. The
second part of the Commission proposal is what is called the plurilateral
approach. That means a coalition of willing countries getting
together to see what they can work out together to liberalise
in a particular sector, and doing so by drawing up model schedules
which are an example of how, if you were going to liberalise in
this sector, you might do so and what kind of market opening measures
you would take.
Q30 Rob Marris: Is this a whole bunch
of bilateralism or is it a kind of partial multilateralism? Is
it a consortium approach?
Mr Roberts: The latter; it is
a consortium of countries that are interested. It is already working,
for example, in computer services involving a lot of developed
countries that are particularly interested in computers; i.e.
India and Singapore. Previously, about six years ago, this worked
very well in telecoms where an agreement on telecoms was reached
through a group getting together in this way and developing a
sort of model schedule. Then they found that other countries joined
into this particular party, so you ended up, if I remember rightly,
with 50 or 60 countries that signed up to a telecoms agreement.
Going down that path is more promising.
Q31 Rob Marris: You do not see that
as undermining the WTO, which is the World Trade Organization?
Mr Roberts: No, anybody is welcome
to join these plurilateral arrangements. It will be a voluntary
thing. People will join because they see it in their interests
to do so. I think that is perfectly consistent with the principles
of the trade negotiations on services.
Q32 Mr Bone: From your evidence,
which was very clear and well argued, I think you are saying that
the European Union position in the World Trade Organization on
this is a bit of a waste of time, not a lot comes out of it, and
it is better when you go to this mini-multilateralism, and also
that they have got it wrong on the least developed countries as
well. I agree with your argument absolutely that they will benefit
most. You are saying they got it wrong in a couple of areas?
Mr Roberts: Who have got it wrong?
Q33 Mr Bone: We are talking about
the EU strategy in the WTO and so that is way I put it.
Mr Roberts: With the least developed
countries, I suspect the position is that they did it because
they thought it was in the economic interests of developing countries
and as a negotiating tactic. There was so much pressure not to
push the least developed countries in the direction which some
people, in my view mistakenly, perceived they ought not to be
going. It was a tactical reason. On the benchmarking and numerical
targets, I think they were trying to find some kind of system
which was parallel to the formulas being developed in agriculture
and in manufacturing. What they have developed on numerical targets
in services just plainly is not working. Indeed, European industry,
including British industry, has told the Commission as much in
the last week or so.
Q34 Chairman: In paragraph 16 of
your memorandum you are actually quite critical of the EU's approach
to service negotiations. You plead to be more closely involved;
you offer your expertise. This rings bells with me. You are saying,
between the lines, that the British are the best here and the
Europeans are not standing up for British interests very effectively.
Is that what you are saying? Paragraph 16: "IFSL members
are keen to be involved closely in the formulation of the EU's
approach to the services negotiations in the WTO." There
is an implication that you have not been adequately involved.
Mr Roberts: Yes, that is true.
For example, the European let alone the British service industry
were not consulted about the proposal for numerical targets. Had
we been, we might have warned of some of the risks of that. I
think it is difficult in a fast-moving negotiation to consult
business and other stakeholders all the time, but the Commission
could be doing a bit more on this front.
Q35 Chairman: You are saying that
your sector of UK plc is extremely important and needs to be rated
very highly in the negotiations?
Mr Roberts: Yes, absolutely.
Q36 Chairman: One last area of questioning,
if I may, in all this bewildering array of acronyms and nomenclature
and it is the word "plurilateral", which I came across
reading the papers for this meeting. "Mode IV" is the
other one I want to talk about, which is really based on the movement
of highly qualified individuals. I think your memorandum, Mr Roberts,
makes great play on this in paragraph 13.
Mr Roberts: That is right, Chairman.
Q37 Chairman: I want to be clear,
first of all, on which direction we are talking about, to make
sure I have this right. Is it our staff going to developing countries
to be able to offer their highly qualified services or a developing
country's personnel coming here to be able to assist us?
Mr Roberts: Both.
Q38 Chairman: Would you like, and
this is implicit from the last question, to have greater access
to developing countries' skilled staff in your sector here?
Mr Roberts: Yes. For instance,
accountancy firms find the delays which can hold up movement of
essential staff to do jobs overseas very unhelpful. Often, by
the time you get permission for the person to go and the visa
available and so on, it is too late; the job has had to be done.
There are also problems the other way of bringing in skilled people
here.
Q39 Chairman: What would be the effect
in both countries on this trade in high calibre staff if it were
to be freed up? Does it bring benefits to both sides or does it
have disadvantages for domestic staff in those countries?
Mr Roberts: What one would expect
to happen is that the movement of skilled staff for temporary
jobs would be to do jobs which cannot be done or cannot be done
as well by people available locally. The degree of displacement
would not be significant. This does not appear to be seen as a
problem by anybody. The problems seem to arise more on security
grounds, immigration grounds.
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