Trade in Services Negotiation Skills Training Course 'Preparing for ASEAN Negotiations' Training Documentation 21–24 April 2015, Lao Plaza Hotel, Vientiane Capital, Lao PDR Published by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH Registered offices Bonn and Eschborn, Germany Regional Economic Integration of Laos into ASEAN, Trade and Entrepreneurship Development (RELATED) 5th floor, Premier Building, opposite Simeuang Temple, Setthathirath Road, Unit 10, Piawat Village, Sisattanak District; Vientiane Capital, Lao PDR T +856 21 226 000 – 3 Ext: 124 F +856 21 226 004 [email protected] www.giz.de/laos As at July 2015 Printed by Kaoyord Image 12-14 Ban Phiavat Sisattanak District Vientiane Lao PDR Tel/Fax:(+856 21) 21 8949, 21 6655 E-mail: [email protected] www.kaoyordimage.com Photo credits Lukas Wahl (cover page) Text Andrea Spear Lisa Eifert Sitthiroth Rasphone Souphaphone Saignaleuth Onida Vinavong On behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) Trade in Services Negotiations Skills Training Course – „Preparing for ASEAN Negotiations“ TABLE OF CONTENTS INTRODUCTION ............................................................................................................... 5 PART I. UNDERLYING CONCEPTS FOR TRADE IN SERVICES NEGOTIATIONS ........ 7 Session 1. Why are services important for trade and development?............................... 7 Session 2. The Lao PDR economy and service sectors: Structure, service sector development and aspirations .........................................................................................18 Session 3. The conceptual basis of trade in services negotiations: The WTO General Agreement on Trade in Services (GATS) ......................................................................20 1. Classifications and Definitions ............................................................................20 2. GATS Principles and Aims ..................................................................................21 3. GATS vs. GATT (Services vs. Goods) ................................................................22 4. Scope of GATS ...................................................................................................23 5. Modes of Supply .................................................................................................23 6. Obligations and Rights ........................................................................................24 7. Legal Aspects – the Key Articles in the GATS ....................................................25 8. GATS Annexes ...................................................................................................29 9. GATS Negotiations and Scheduling ....................................................................30 10. Services Negotiating Approaches: Positive, Negative and Hybrid lists ............32 11. Some interesting questions that have arisen during GATS negotiations ..........34 PART II. CURRENT TRADE IN SERVICES NEGOTIATIONS INVOLVING LAO PDR ....35 Session 4. ASEAN Framework Agreement on Services (AFAS) ....................................35 Session 5. Challenges for the submission of schedules of the 10th AFAS package .......38 Session 6. Negotiating the new ASEAN Trade in Services Agreement (ATISA) ............39 Session 7. Services in the Regional Comprehensive Economic Partnership Agreement (RCEP) ..........................................................................................................................41 PART III. DESIGNING NEGOTIATING STRATEGIES .....................................................42 Session 8. Strategic thinking about services negotiations and national interests ...........42 Session 9. Defining a Lao position: comparison between GATS and AFAS 9 commitments and discussion of options for further liberalisation ...................................43 MFN Exemptions .......................................................................................................44 AFAS Logistics Priorities ............................................................................................44 1. Business Services..................................................................................................45 2. Communication Services .......................................................................................56 3 Trade in Services Negotiations Skills Training Course – „Preparing for ASEAN Negotiations“ 3. Construction Services ............................................................................................59 4. Distribution Services ..............................................................................................59 5. Education Services ................................................................................................61 6. Environmental Services .........................................................................................62 7. Financial Services ..................................................................................................62 8. Health-related Services ..........................................................................................62 9. Tourism Services ...................................................................................................63 10. Recreational, cultural and sporting Services ........................................................64 11. Transport Services ...............................................................................................65 Session 10. Trade negotiations – good practices and tips .............................................68 TIMELINE AND STEPS AHEAD ......................................................................................71 ANNEX .............................................................................................................................72 1. Agenda of the Training Course on Trade in Services Negotiations .........................72 2. List of Participants ..................................................................................................76 3. Group Picture .........................................................................................................78 4. Presentation on the Importance of Trade in Services (Session 1) 5. Presentation on the Lao PDR Economy and Service Sector (Session 2) 6. Presentation on WTO General Agreement on Trade in Services (GATS) (Session 3) 7. Presentation on ASEAN Framework Agreement on Services (AFAS) (Session 4) 8. Presentation on ASEAN Trade in Services Agreement (ATISA) (Session 6) 9. Presentation on RCEP (Session 7) 10. Presentation on Professional Services in Lao PDR (Session 9) 11. Presentation on Tourism and Recreational Services under GATS (Session 9) 12. Good practices and tips for trade negotiations (Session 10) If you require additional information or have any questions concerning this training documentation, please contact: Mr. Phouthasack Souvannasao, Deputy Director, Investment Promotion Division, Ministry of Planning and Investment (E-Mail: [email protected]) Ms. Lisa Eifert, Associate Advisor, GIZ Regional Economic Integration of Laos into ASEAN, Trade and Entrepreneurship Development (RELATED) Project (E-Mail: [email protected]) 4 Trade in Services Negotiations Skills Training Course – „Preparing for ASEAN Negotiations“ Introduction The services sector bears increasing relevance for economic diversification and development in Lao PDR. In 2013, services accounted for a quarter of all trade and around 37% of GDP in Lao PDR. This underlines the importance for the Lao government to gain a better understanding of this sector, as well as the proceedings, complexities, opportunities and threats associated with services liberalisation. The ASEAN Economic Community (AEC) is the key objective of regional economic integration among ASEAN member states. The road towards achieving AEC by 2015 was guided by the AEC Blueprint which member states embraced in 2007. The AEC Blueprint envisions (a) a single market and production base, (b) a highly competitive economic region, (c) a region of equitable economic development, and (d) a region fully integrated into the global economy. The crucial first pillar, the single market, is based on five free flows, namely free flow of goods, free flow of services, free flow of investment, freer flow of capital and free flow of skilled labour. Services, therefore, will be traded freely within ASEAN. There are to be no more restrictions of any kind for ASEAN services providers to sell their products in any of the AEC countries. In addition, free flow of services means that ASEAN service providers might set up branches or own services business in any other ASEAN country; majority foreign ownership will be allowed in all services sectors once liberalisation is completed. Currently, services liberalisation is negotiated under the ASEAN Framework Agreement on Services (AFAS). With the 9th round of AFAS negotiations, which were completed in 2014, countries have made commitments or fully liberalised between 80 and 100 services sectors. Multiple rounds of negotiations will lead to the goal of full services liberalisation. This training course aims to impart fundamental understanding and negotiating skills to better equip the Lao negotiators and services regulators for continuing negotiations. The five main objectives of the training course on Trade in Services Negotiation Skills (and hence of this documentation) are the following: 1) Participants