DO you own or finance a locally owned business in the services sector in the Caribbean? Do you work in tourism; the financial sector or insurance; the mail service; as an architect or lawyer; or in a supermarket? If you do, you, your employer or union should inform government and the Regional Negotiating Machinery of the position you wish them to take in services negotiations at the World Trade Organisation (WTO) in Geneva. There, very soon, governments will consider whether to dismantle regulations that discriminate nationally in favour of activities undertaken or provided solely by local enterprise.

This is the much over-simplified message reinforced this week by the leaking of a number of confidential internal European Commission (EC) documents, prepared for the WTO negotiations on liberalisation of trade in services.

The papers, published on the Internet by a non-governmental organisation, the oddly named Corporate Europe Observatory, contain initial requests from the EC to named WTO member countries for the abolition of restrictions on who can provide locally certain services. They propose the removal or adaptation of laws and regulations that restrict trade in services in 29 WTO member states.

The leaked documents suggest that the European Union intends now or in the future to ask all WTO member states to open up to full competition their financial services sector, the water and energy sectors and the retail, tourism and transport sectors.

In developing a case the European Union is not alone. All WTO members including the Caribbean are or should be in the process of developing their own WTO negotiating positions for liberalising trade in services. The EU have had the misfortune of having their position revealed publicly before the June 30 deadline set for all such lists to be filed, but others will follow. When eventually made public it is expected that the wish list of the US may be more far-reaching still and include the ultra-controversial areas of health and education.

To understand what this means in practice and the potential threat or benefits to industries or professions not having a position, it is necessary to know something about how the arcane and frequently mind-numbing WTO negotiating process works.

In outline, each WTO member state prepares in detail a list on a country by country basis that sets out which barriers to trade it wishes to see removed. These documents are then placed on the table and a complex multi-faceted negotiation begins. In this, countries or groups of nations agree on general principles and which issues to group together. They then consider what they are prepared to concede, the period over which they will make any changes and the access or concession they want in return from the country or group of countries making the request.

In the process, huge trade-offs are agreed sometimes based on the actual or notional value of the concession or concessions made. At other times they are offset against political understandings or agreement on a totally unrelated issue. It is a process in which frequently the smallest nations and most vulnerable get hurt if not well represented or in an appropriate alliance with others.

Invariably in the WTO process it is the world's two largest traders in goods and services, the EU and the US that have the most to offer and gain and can obtain the most concessions. Despite this, nations such as India and Brazil have begun to exercise their negotiating muscle.

For the Caribbean these negotiations are critical. Today, more than 71 per cent (1999) of the region's GDP comes from services. An outline of the approach the EU will take towards the Caribbean is already apparent in the EC's draft negotiating mandate for EU/ACP economic partnership agreements (EPAs). In it the EC suggests that EPAs will provide for "a progressive and reciprocal liberalisation of trade in services". While Europe makes clear the process will be undertaken with "a certain measure of flexibility depending on levels of development", the document confirms that services liberalisation in the ACP is very much on the EU's agenda.

What happened to the Caribbean rum industry six years ago is a good example of the implications of services negotiations. In 1996 at the WTO Singapore ministerial meeting, the EU and US wanted but could not fully agree on a deal on the liberalisation of the market in information technology. In the end in a corridor discussion the EU and US agreed unilaterally as a side deal the cost would be for both to liberalise their markets in white spirits (largely gin, vodka and rum). This was to the advantage of EU and US distillers but indirectly almost resulted in the destruction of the Caribbean rum industry, Europe's preferential supplier.

Speculation in Europe now has it that Europe's Trade Commissioner will try to make rapid progress in the services negotiations to open up new markets in areas such as financial services in which the EU has a comparative advantage. It is suggested that he may wish to do so in order to pave the way for Europe to agree in parallel WTO agriculture negotiations to dismantle the extensive protection provided to EU farmers under the Common Agricultural policy. As the prices the Caribbean receives for its sugar under the EU/ACP sugar protocol are linked intimately with arrangements for European beet producers any EU position that links the services negotiations with reform of the ACP needs watching carefully.

By every measure services negotiations are very difficult to follow and inaccessible to all but a few. Historically, much of the Caribbean has shown itself adept at negotiating on commodities but has shown little interest in coming to terms with the political implications of not having a strong position on services. With the notable exception of the Dominican Republic and Barbados, few officials and seemingly no ministers have yet mastered the services portfolio. When tourism supports one in four in employment and financial services in some cases underwrite government revenues, all trade and tourism ministers in the independent and non-independent Caribbean need to understand fully what is at stake.

Traditional industries remain vital to the region but now so too are the newer sectors that provide locally the tax revenues that enable government to maintain socially viable systems. For this reason everyone in the region has a reason to have a view on the future of services negotiations in Geneva.

David Jessop is the executive director of the Caribbean Council for Europe.

Email: david.jessop@caribbean-council.com

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