European Services Forum
Brussels, 28 September 2006
31st MEETING of the ESF Policy Committee
- Brussels, 26th September 2006 – 14.30 – 17.00
------------------------------------------------------------Draft Minutes
ESF PC Chairman Christopher Roberts welcomed the participants. The list of participants is
attached (enclosure 1).
I.
ADOPTION OF THE AGENDA
The agenda was adopted without revisions.
II.
MINUTES OF THE PREVIOUS MEETING
The minutes of the previous meeting were accepted without revisions.
III.
ESF ACTIVITIES - ORAL REPORTS
The Chairman briefly mentioned the ESLG meeting with Peter Mandelson (27 th June) and the
Global Services Coalition (GSC) mission to Geneva (11-13 July) and he referred to the respective
reports that were sent by the Secretariat. He also reported on his participation the day before at
the WTO Public Symposium, where he contributed as ESF Policy Chairman to a panel discussion
on “Corporate Social Responsibility & the Doha Round: Are there Win-Win Opportunities for the
Private Sector & Developing Countries?”. He mentioned the global frustration expressed by WTO
Director General Lamy in his speech of the opening plenary session as well as by many NGOs
representatives (see ESF NewsFlash 21 of 27th September).
He then reported on the short meeting that he and ESF Director had the same morning with Mr.
Denis Redonnet from the Peter Mandelson Cabinet. Peter Mandelson will be visiting USTR and
US Congress members in a low profile trip (i.e. no press conference, no speeches) on 27-29
September as to discuss further on DDA solutions.
The ESF Secretariat reported on the following recent activities, that concerned essentially bilateral
or regional issues, and to which ESF participated as to follow and contribute to the trade
discussions that were taking place after the July WTO Collapse:
 EU-Asian Business Forum (10-11 September): The exercise was somewhere disappointing
because the interlocutors, gathering business people from Japan, South Korea, China and the
ASEAN Countries, were too diverse and therefore the joint recommendations can only be too
general. That remark is also valid for the official ASEM Summit (see ESF NewsFlash 20 of 13th
September).
 EU-China Business Forum (12 September): The event was interesting and the Joint
Recommendations acceptable. However, it is still difficult to differentiate between the Chinese
business leaders that are really private and those who are still strongly related to the
government, like the Chinese counterparts of the organisers (CCPIT) that is clearly a public
promotion body. It was disappointing to hear that there will not have an EU/China FTA but
rather a Cooperation and Partnership Agreement, which will not tackle new market access for
services companies (see ESF NewsFlash 20 of 13th September).
 ESF trip to Indonesia and Malaysia (19 – 22 September): Taking profit of a Conference
organised by one ESF member in Malaysia, ESF Director visited various ministries in
Indonesia and Malaysia, as well as the ASEAN Secretariat in Jakarta (see PC 45 of 4th
September 2006). The purpose was to signal the interests of the European service industries
in forthcoming EU/ASEAN FTA negotiations, to discuss the possible outcome of such
negotiations and get the views of the various interlocutors on their perspectives of these
negotiations. A full report will come in the coming days.
 EU/India Business Summit and EU/India CEO Roundtable, Helsinki, 12October 2006:
Members were reminded on the forthcoming summit, taking place in parallel to the EU/India
political Summit where it is expected that the launch of negotiations for an EU/India FTA will be
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announced. One of the parallel sessions in the morning will deal with services and in particular
with Financial Services and Legal Services. At the same time will take place the EU/India CEO
Roundtable, which will be chaired by ESF Chairman, Lord Vallance of Tummel. In addition,
Lord Vallance will give a speech at the afternoon plenary session, where EU Trade
Commissioner Peter Mandelson, India Trade Minister Kamal Nath, as well as Philippe de Buck
from UNICE will also be key not speakers. Members were invited to forward to the Secretariat
the particular sector specific aspects that they would wish to be raised by ESF Chairman at
these meetings.
IV.
EUROPEAN COMMISSION BRIEFING ON THE WTO AND BILATERAL NEGOTIATIONS
A. DISCUSSION WITH THE COMMISSION REPRESENTATIVE
The Chairman welcomed Mr. David O’Sullivan, Director General of the DG Trade in the European
Commission.
a)
On the WTO talks, he expressed his own frustration and understood the one of the service
industries by the fact that it was once again Agriculture and NAMA which are blocking the process
while it is well known that the benefits for the EU, for the US as well as for most of the developing
countries will come from the Services, but it is very difficult to bring that issue to politicians,
because it does not bring more votes. The fact that the negotiating procedure for services is
different than for agriculture and NAMA does not facilitate the matter.
He said that one can now see the contours of a feasible deal for the DDA. It will now be up to the
decision makers to decide either we take it or we leave it. If there is no deal by December
2006/January 2007, it would be better to start again in few years time a different type of
agreement. But we would run the risk that world will be different, the WTO will not be the same,
and the multilateral trade system and the WTO might be at a systemic risk.
The blockages are various: The big emerging countries consider that there is not enough for them
on the table. Brazil clearly wants a deal and is willing to help but will not run the risk of breaking
the ranks of the G20. The US are facing a dilemma during a election period. They brought
themselves in a logic where they ask a $ for $, as to please the farm lobbyists. The US are alone
with that logic against the whole WTO partners, and not only the EU. Mr. O’Sullivan highlighted
the fact that the EU has got the courage of saying to its farmers to be prepared to suffer more. The
EU indicated that it was ready to give up to 50% in Agriculture Market Access (AMA), to make a
substantial cut in Domestic Support and to bind the elimination of the export subsidies. This is
going much beyond what was achieved in the Uruguay round and would represent an offer
equivalent to +/- 2% of the EU GDP. He understands that this might be considered as not
sufficient by some partners, but this was a trade negotiation and the EU needed to get something
in exchange of that effort.
He recalled that at the July G6 meeting, NAMA was not even
discussed, not mentioning services.
It will be up to the US to decide, after the Mid Term elections in November 2006 to decide whether
they want (and can) strike a deal. It is said that if the Democrats win the majority in the two US
Congress Chambers, it will be very difficult for the Bush Administration to get a short time
extension of the TPA. If the Democrats win the House of Representatives, it will also be tough. If
they win the Senate only, it might be a bit easier. There will be a window opportunity, a last
moment of truth, to make a political deal between the G4 or/and G6 in spring 2007, which would
allow a Single Undertaking agreement with all WTO Members at the end of 2007.
If the mutual political constraints in the US, EU and major emerging countries are not reconcilable,
we will then count the various lost that we would have missed:
1) The binding of the agriculture reform by developed countries in the WTO.
2) It will bring a large number of cases to the Dispute Settlement Mechanism of the WTO, in
particular towards the US farming system which is at risk, which might bring the DSU and the WTO
as a whole under the US attacks.
3) It might put into question the abolition of export subsidies.
4) The world agro-industry will not benefit from the tariffs cuts in AMA.
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5) The world manufacturing industry will not benefit from the tariffs cuts in NAMA.
6) All the GATS offers that are now on the table, even if not sufficient, will be lost.
7) The bigger losers will be the developing and least developed countries (DCs & LDCs) which will
lose the quota free/tariffs free system, the aid for trade package, the trade facilitation agreement
and all the various special and differential treatment that they negotiated the last five years.
b)
What next for the EU? The EU will enter a post DDA period where it will go ahead with
regional and bilateral trade negotiations. For the EU, the bilaterals are not a substitute for the
multilateral system. They are only complementary. The moratorium decided by the EU in 1999 to
freeze any new bilateral agreement’s negotiations is not sustainable any more. The Commission is
aware of the business pressure to try to catch up the various share of markets or potential share of
markets that they lost due to the signing of FTAs all around the world, giving preferential access to
their competitors. Mr. O’Sullivan reviewed a long list of agreements under negotiations or that
would likely come under negotiations in the near future:
1) EU/Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia & United Arab
Emirates): The negotiations started 17 years ago, were active only the last 5 years and are really
close to a deal, hopefully before the end of this year.
2) EU/Mercosur (Argentina, Brazil, Paraguay, Uruguay & Venezuela): The negotiations started in
1999; they nearly finished in October 2004. If the DDA is closed, they might be revived at some
point in time.
3) EuroMed negotiations on trade in Services and Investment (Algeria, Egypt, Israel, Jordan,
Lebanon, Morocco, Palestine Authority, Syria and Tunisia): The mandate for these negotiations,
as to achieve what is already implemented in the various Association Agreements with these
trading partners as regards trade in goods, has been adopted in July 2004 and should be achieved
by 2010.
4) EU/ACP Economic Partnership Agreements (EPAs) (75 countries, 6 EPAs regions): These
negotiations have been launched in 2005, with as major purpose to find a new solution between
the EU and the ACP countries on the Waiver that the exchanges between the two zones are
excluded from WTO principles. This waiver comes to an end at the end of 2007. However, except
for the EPA with the Caribbean countries, services are not really negotiated seriously.
5) EU/Central America RTA (Costa Rica, El Salvador, Guatemala, Honduras, Panama and
Nicaragua): The negotiations of an FTA with this region have been officially launched at the EULatin America Summit on 13th may in Vienna. It is unclear however whether the services will be
seriously negotiated.
6) EU/Andean Community RTA (Bolivia, Colombia, Equator and Peru): An agreement of principle
to launch negotiations with that region has been agreed upon at the EU-Latin America Summit on
13th may in Vienna.
7) EU/Ukraine FTA: The EU would like to modify the existing mandate for negotiating a new
Partnership and Cooperation Agreement (PCA) as to include trade negotiations. The first PCA with
Ukraine entered into force in 1998. The EU has signed a bilateral agreement with Ukraine on
March 2003, but Ukraine has still to get official accession to the WTO. Until then the commitments
undertaken by Ukraine on Services cannot be implemented.
8) EU/Russia FTA: Mr. O’Sullivan was unclear about new negotiations with Russia, as to deepen
the trade aspects of the existing PCA (signed in 1994 and entered into force on 1st December
1997).The EU has signed a bilateral agreement with Russia on 21st May 2004, but as for Ukraine,
Russia has still to get official accession to the WTO. Until then the commitments undertaken by
Russia in the bilateral agreement on Services cannot be implemented. Mr. O’Sullivan also said
that such new trade negotiations with Russia could only start once Russia would have effectively
adhered to the WTO, but did not explain what the link was.
9) EU/South Korea FTA: the negotiations should start soon and should be concluded in a quick
time. ESF Members were asked to provide their views for such an FTA. ESF Secretariat
highlighted that the GATS conditional offer from South Korea was rather good and that it would be
important to bind that level and even more in an international treaty, if the WTO is not able to
deliver.
10) EU/ASEAN FTA (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines,
Singapore, Thailand & Vietnam): The Commission is keen to open trade negotiations with the
region, as to achieve a block to block deal, but with sufficient margin in the mandate as not to be
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stalled because of possible political difficulties. Given that the ASEAN countries are also
demandeurs, these negotiations could start at the beginning of next year. The services component
of these negotiations should be very important, given that the study produced by CEPII for the
Vision Group highlighted that the larger benefit of such an agreement will be in the services
sectors, and in particular for the ASEAN countries.
11) EU/China PCA: It will not be an FTA with China, but Mr. O’Sullivan emphasised that in the
PCA there is an agenda for economic aspects and investments that should be of interests to
services sectors, including transparency exercise and regulatory cooperation.
12) EU/India TIA: It will not be a traditional FTA with India, but rather a Trade and Investment
Agreement. A High Level Group on trade and investment were created last year at the EU/India
Summit in New Delhi. The conclusions of that Group, that recommend the opening of talks
between the two parties, will be taken into consideration at the next EU/India Summit that will take
place in Helsinki on 12 October 2006. The Commission should seek a negotiating mandate by the
end of this year or beginning of next year.
Mr. O’Sullivan underlined that in most of these agreements currently under negotiations or soon to
be negotiated, the services will take an important part of the negotiations, and that therefore it
would be important for the EU negotiators to have the support of the European services industries
and that a body like ESF was probably even more important than during multilateral negotiations to
provide views to the Commission.
During the discussion, The Director General confirmed that the EU Member States always
preferred the “Positive List” approach for the services negotiations and the industry would need
good argument to change this. On the calendar of the new FTAs, he said that it was likely that the
proper negotiations will likely not start before next spring. Meanwhile the Commission has first to
get adopted the “Communication on Trade and Competitiveness” (scheduled for 4th October) so
that the EU Member States can act the end of the moratorium on bilaterals. Then the Commission
will seek for a mandate from the EU Member States, which should be done in one package for
many FTAs, if possible before Christmas. He took note on the request for more statistics in the
field of trade in services. He mentioned that an EU/US FTA was not on the agenda, given the
impossibility to find an agreement over agriculture, and the likely bad image that such negotiations
would give to the rest of the world. He however agreed with the huge interpenetration of the two
economies and highlighted the work going on regulatory convergence between the tow blocs. He
agreed that the intellectual debate on the biggest gain coming from services was lost in the WTO,
but that it was reflected in the current practice, where many countries have undertaken
autonomous liberalisation since the end of the UR as to attract FDI in services sectors. He said
that he understood the need for the industry to participate early in the negotiating process and was
open to work with the services sectors also in the bilateral talks, but emphasised the need to
respect the confidentiality of the trading partners’ positions.
B. FOLLOW UP OF THE DISCUSSION WITH MR. O’SULLIVAN ON FUTURE ESF ACTIVITIES
The Chairman recalled the members that ESF mandate was originally GATS related only. After
the failure of the Cancun WTO Ministerial, Members agreed to extend the scope of the ESF
activities as to follow the development of the services aspects of bilateral and regional talks and
keep the membership informed (see Minutes of 21st PC meeting – 21st October 2003). However,
the length of ESF mandate is still linked to the end of the GATS negotiations, which are now
suspended. Now the European Union strategy on trade policy will turn into bilateral negotiations
and that is seems that we will enter soon in a post DDA phase, there is a need to see what are the
views of ESF members on whether or not ESF should continue its action on this direction and
whether this action should be pursued beyond the WTO negotiations. The Chairman recalled the
support of the Director General of DG Trade who mentioned that the negotiators would need a
facilitator like ESF in their new strategy and expressed the hope that ESF Members would continue
to support the existence of ESF. He reminded that to pursue the ESF action, sufficient financial
support was needed and that is was important for the members to signal their intentions to the
Chair or the Secretariat as to allow drafting of the budget with accurate knowledge. It was
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suggested that, should a debate about the ESF mandate take place at the next meeting, a
consulting paper on the various possibilities should be drafted and circulated in advance.
The Policy Committee Chairman informed the Members that Lord Vallance accepted to chair the
ESF up to June 2007, as to support its running and to give time to have a clear view on the DDA.
Lord Vallance will write in the coming weeks to all ESF Members, at the CEOs of the companies
and the Chairmen of the associations, as to ask them to maintain their membership and to give
clear indication of their intention. Mr. Sagne, Secretary General of the Architects’ Council of
Europe and current Chairman of the European Services Platform, underlined that it was important
to recall the benefit of the platform allowing exchange of information on services issues in the
internal markets for ESF members.
V.
PREPARATION OF THE INFORMAL MEETING WITH MEMBERS OF THE 133
COMMITTEE ON SERVICES
The Chairman noted that this item had less relevance for this meeting than originally planned. The
Secretariat reminded the Members that this item was put on the agenda at a time when the DDA
talks were not yet suspended. The ESF meeting with the Members of 133 Committee on Services
would have likely been organised before 31st October, which was the date scheduled for the WTO
Members to table the final GATS Offers. The Finnish Presidency meanwhile informed the
Secretariat of the new schedule of meetings for the 133 Committee and confirmed that they still
wanted to continue to discuss with the service sectors, given that the role of 133 Committee on
Services will be as important in the bilateral talks as in the multilateral talks. The Chairman
recalled the members that the date proposed by the Finnish Presidency was on 21st November.
However, given that this meeting is usually organised after the ESF Policy Committee meeting, the
Policy Committee Chairman has to consult ESF Chairman on his willingness and availability to
attend the next meeting. The secretariat of Lord Vallance indicated that Lord Vallance would be
available only on 4th December. ESF Secretariat will come back to the Members on this issue as
soon as possible.
VI.
ESF MEMBERSHIP
Members unanimously approved the ESF membership application of the “Movement des
Entreprises de France” – MEDEF.
VII.
ANY OTHER BUSINESS
Mr. Carlos Rodrigues Cocina from Telefonica, who is chairing the MEBF (Mercosur-Europe
Business Forum) Services and Investment Working Group, reported on the MEBF/EU Steering
Committee meeting that took place the day before, on 25th September. The meeting was to
prepare the MEBF Plenary Conference that will take place in Buenos Aires (Argentina) on 5 & 6
November 2006. He invited ESF members who would have comments on the draft EU Proposal
on Services and Investment to contact him directly. The text was circulated to ESF Mail on 20 th
September as well as in the meeting folder. Progress in the EU/Mercosur negotiations were still
stalled, essentially due to the link between the DDA negotiations on agriculture. It was unclear how
the participation of Venezuela would influence the discussions. Given that Venezuela (which
recently joined the Mercosur as full member) did not participated at all at the negotiations so far, it
was likely that Venezuela will be an Observer, but everything will depend on the evolution in the
near future.
VIII.
DATE OF THE NEXT MEETINGS
As mentioned in Section V here above, the next ESF Policy Committee meeting will take place
either on Tuesday, 21st November 2006, or on Tuesday, 4th December 2006 depending of ESF
Chairman’s availability. Members were kindly asked to pencil these dates on the diary up until the
Secretariat will inform them of the retained date.
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