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Facilitating trade in services

The Trade in Services Agreement or TiSA is a trade agreement currently being negotiated by 23 members of the World Trade Organisation (WTO), including the EU.

Services are an increasingly important in the global economy and a central part of the economy of every EU country. The EU is the world's largest exporter of services with tens of millions of jobs throughout Europe in the services sector.

The WTO members negotiating TiSA want to open up trade in services between each other. They hope other WTO members will join in the talks or the agreement when it is signed. That is why TiSA is based on an existing international agreement, the General Agreement on Trade in Services (GATS), which involves all WTO members. This means that if enough WTO members join in, TiSA could be turned into a broader WTO agreement.

Quite simply: it will create growth and jobs.

The EU is the world's largest exporter of services with tens of millions of jobs throughout Europe in the services sector. Making it easier for EU firms to export services to other countries will help secure growth and jobs here in the EU. And making it possible for firms from outside Europe to offer their services in the EU will increase choice and lower prices for businesses and consumers alike.

TiSA is facilitating trade in services in the countries taking part in the talks, so providers from one country can offer their services in another. An example would be an Australian lawyer advising a client in Canada.

Each country's negotiators are discussing the terms and conditions which suppliers from other countries will have to meet in order to provide services in their market.

Negotiators are discussing all areas which the General Agreement on Trade in Service (GATS) already covers.

These include all service sectors except:

  • air traffic rights - the rules on where and how airlines can carry passengers and freight between countries
  • services only governments provide, such as justice, policing or defence.

Extract from the GATS, Article I:3

3. For the purposes of this Agreement:
(…)
(b) "services" includes any service in any sector except services supplied in the exercise of governmental authority;
(c) "a service supplied in the exercise of governmental authority" means any service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers.

TiSA addresses barriers to trade in services between the countries taking part in the talks. These barriers include:

  • treating foreign suppliers differently from local ones - for example, a country might only allow companies owned by its own citizens to provide telecoms services. This type of barrier is called a 'limitation to national treatment'.
  • limiting the extent to which foreign suppliers can operate - for example, a country might impose an 'economic needs test' to assess whether the presence of foreign suppliers would increase competition beyond a certain level; such barriers are called 'limitations to market access'.

Each country can choose:

  • the types of service it wants to open to competition from the other countries taking part
  • the extent to which it wants to do so.

So each country taking part in the TiSA makes commitments tailored to:

  • the ways in which its markets for different services are structured
  • any industries which it wishes to shield from foreign competition
  • its level of economic development.

TiSA will not include measures designed to protect investors, such as an Investor to State Dispute Settlement (ISDS) mechanism.

TiSA is tackles discrimination that currently stops service suppliers from one country from operating in another country. TiSA does not affect each country's ability to regulate its services markets in other ways, even if that country doesn’t restrict other countries' suppliers in any way.

So TiSA does not change other rules that all suppliers have to meet, whether foreign or domestic, such as measures that:

  • protect people's health and safety, or the environment
  • set minimum qualifications for people wishing to supply a particular service
  • safeguard people's rights at work.

In trade policy, the EU speaks with one voice on behalf of all 28 EU countries. So in the TiSA the EU acts as a single participant.

In addition, a further twenty-two countries and territories outside the EU are taking part:

  • Australia
  • Canada
  • Chile
  • Chinese Taipei
  • Colombia
  • Costa Rica
  • European Union
  • Hong Kong
  • Iceland
  • Israel
  • Japan
  • Korea
  • Liechtenstein
  • Mauritius
  • Mexico
  • New Zealand
  • Norway
  • Pakistan
  • Panama
  • Peru
  • Switzerland
  • Turkey
  • United States

Updating and strengthening international rules

One of the reasons the EU is taking part in the TiSA talks is to strengthen the multilateral trading system.

The EU is the world's biggest exporter and importer of goods and services. Millions of jobs throughout the EU depend on trade. So it is clearly in the EU's interests to have open trade based on clear and fair rules. The World Trade Organisation's (WTO) trade rules – agreed unanimously by its members – provide the framework for international trade.

Talks between all WTO members to try to facilitate trade in services have been held up for several years. TiSA involves a limited number of WTO members, but together they account for about 70% of world trade in services. TiSA also provides an opportunity to come up with an agreement that other WTO members could join later. WTO members have already signed up to a multilateral agreement on services, dating back to 1995. They could incorporate TiSA into the WTO's current rules and eventually become part of the WTO's rules.

No, not at all.

In trade as in other areas, the EU is committed to a multilateral approach involving as many countries as possible. Indeed, the EU and other WTO Members worked hard to shape a deal at the World Trade Organisation’s (WTO) Ministerial Conference in Bali in 2013. All 159 countries agreed on ways to make trade easier and to boost the world's economies, especially those of developing countries.

The agreement in Bali was a boost for the WTO and the multilateral trading system because it showed that its members can work together to get results. It could help to get the WTO’s multilateral trade negotiations – the so-called Doha Round – moving again. This is why the EU wants to see the WTO's post-Bali work programme include a substantial part on services.

In the meantime, TiSA could give a boost to the current Doha Round of multilateral trade talks, by gathering together those countries that want to further open up trade in services. TiSA is open to any other WTO members that share their ambition. Once these members reach a certain number, the aim is to move TiSA into the multilateral trading system.

The countries taking part in the TiSA talks want to draft the agreement in a way that it can be integrated into the WTO's General Agreement of Trade in Services (GATS) at a later stage. As a result, TiSA includes many of the GATS' key provisions. So the two agreements will be fully compatible with each other.

In practice, each TiSA participant could simply update its existing GATS commitments and replace them with its new commitments in TiSA – a bit like upgrading software on a computer.

The same applies to any new or improved rules the participants agree should apply to trade in services between them.

A two-pronged aproach: TISA and EU trade talks with individual countries

The TiSA negotiations are quite different from our trade talks with individual countries so we are pursuing them separately

In TiSA, the EU – together with the other 22 participants – is aiming to get an agreement on services with the other countries. We hope other countries will join the agreement.

That is why the talks are focussing on:

  • getting participants to increase the openness of their services markets building upon what they already agreed to in the WTO's 1995 General Agreement on Trade in Services (GATS)
  • improving and updating rules covered by the GATS, such as those covering good administrative practices or telecommunication services
  • creating new regulatory disciplines on trade in services, for example with respect to electronic commerce (such as for consumer protection)

In trade talks with individual countries, like the US, Japan and Canada, we are focussing more on agreeing tailor-made solutions to specific problems.

For three reasons:

  • Efficiency: Although the EU has free trade agreements with most of the countries taking part, the services parts of these agreements could benefit from being updated. With some of the others participants, the EU does not have any agreement on services at all. Together, these countries together represent around 20% (€130bn) of the EU's services exports. Taking part in TiSA means we can deal with both these issues at the same time
  • Growth and jobs: As more WTO members decide to join the TiSA talks, the economic importance of the final agreement will grow. That is good news for growth and jobs in the EU: we are the world's largest exporter of services and EU firms will be able to sell more services to other countries.
  • Clarity: The agreement will develop new rules in areas such as licensing procedures or access to telecommunication networks. These would apply to all countries involved in TiSA and would provide new export opportunities for EU companies in these areas.

Protecting public services

No, it will not.

No EU free trade agreement forces governments to privatise or deregulate any public service at national or local level. Nor will TiSA or any other trade deal which the EU is currently negotiating.

Countries that sign up to free trade agreements can keep public monopolies and regulate public services as they see fit.

In the TiSA talks, each country is free to choose the services or activities it wants to allow foreign companies to provide. These choices are known as 'commitments'.

The EU always excludes from its commitments:

  • publicly-funded health and social services
  • publicly-funded education
  • water collection, purification, distribution and management services
  • film, TV and other audiovisual services.

The EU has also excluded these services from TiSA, as it has in all its other trade agreements. So the EU retains the right to prevent companies from outside the EU from providing these services inside the EU.

Extract from the EU's initial offer in TiSA, November 2013

"The EU reserves the right to adopt or maintain any measure with regard to the provision of all health services which receive public funding or State support in any form, and are therefore not considered to be privately funded".
"The EU reserves the right to adopt or maintain any measure with regard to publicly-funded education services".
"The EU reserves the right to adopt or maintain any measure with respect to the provision of services relating to the collection, purification and distribution of water to household, industrial, commercial or other users, including the provision of drinking water, and water management".
"The EU reserves the right to adopt or maintain any measures with respect to the provision of audiovisual services".

All countries participating in the TiSA talks have excluded all "services provided in the exercise of governmental authority", which are services exclusively provided by government on a non-commercial basis (justice, police or the military). But the EU has gone even further in protecting public services.

The EU has retained its ability to maintain (public) monopolies in respect to public utilities in:

  • all its free trade agreements with individual countries or groups of countries
  • the General Agreement on Trade in Services (GATS) – an international agreement between all members of the World Trade Organisation
  • water collection, purification, distribution and management services
  • film, TV and other audiovisual services.

Extract from the EU's initial offer in TiSA, November 2013

Main text:
"Services considered as public utilities at a national or local level may be subject to public monopolies or to exclusive rights granted to private operators".
Footnote:
"Public utilities exist in sectors such as:

  • related scientific and technical consulting services
  • R&D services on social sciences and humanities
  • technical testing and analysis services
  • environmental services
  • health services
  • transport services
  • services auxiliary to all modes of transport.

Exclusive rights on such services are often granted to private operators, for instance operators with concessions from public authorities, subject to specific service obligations.
Given that public utilities often also exist at the sub-central level, detailed and exhaustive sector-specific listing is not practical".

This means that the EU and its Member States have the right to maintain public monopolies and exclusive rights for public utilities in the EU at all levels of government, including the local level.

No, it will not.

In the TiSA talks, the EU has ensured that EU Member States can take any measure they choose which affects the way they manage, collect, purify or distribute water. The TiSA will not affect this right in any way.

And even if a country did choose to allow foreign firms to provide water services, it would still have the right to set levels of quality or safety, or prices, or take other such measures. Its laws and regulations would apply in the same way to foreign and national suppliers alike.

This is also the case in all other EU trade agreements.

Extract from the EU's initial offer in TiSA, November 2013

"The EU reserves the right to adopt or maintain any measure with respect to the provision of services relating to the collection, purification and distribution of water to household, industrial, commercial or other users, including the provision of drinking water, and water management".

TiSA is based on the WTO's General Agreement on Trade in Services, known as the GATS. In fact, no country which has signed the GATS has made any commitments allowing foreign companies to distribute water in its territory.

Within the EU there is a single market. Its rules mean that firms from one EU country can provide water services in another. But this has nothing to do with TiSA or the GATS.

In the TiSA talks, the EU has been clear about publicly funded education - it will not allow companies from outside Europe to provide such services.

This is also the case in all other EU trade agreements

Extract from the EU's initial offer in TiSA, November 2013

"The EU reserves the right to adopt or maintain any measure with regard to publicly-funded education services".

For privately funded education, the EU's position has differed from one EU country to another.

In the TiSA talks – as in all EU trade negotiations – each EU Member State is free to decide:

  • whether to allow companies from outside the EU to provide education services in its territory
  • if it does so, the conditions these companies would have to meet.

Whatever each country decides, it is still free to devise its own education policy and programmes.

None of the EU's free trade agreements oblige EU countries to privatise their health services. TiSA will be no exception.

Of course, if an EU country chooses to privatise all or part of its health service, it is free to do so.

In the TiSA talks, the EU has said it will not allow companies from outside the EU to provide publicly funded healthcare or social services.

This is also the case in all other EU trade agreements.

Extract from the EU's initial offer in TiSA, November 2013

"The EU reserves the right to adopt or maintain any measure with regard to the provision of all health services which receive public funding or State support in any form, and are therefore not considered to be privately funded".

But any EU country can allow firms from outside Europe to provide private healthcare. If it does so, it is still free to regulate those services – for example, by defining the safety and quality standards which suppliers have to meet.

No, it is not.

A ratchet clause in a trade agreement means a country cannot reintroduce a particular trade barrier that it had previously and unilaterally removed in an area where it had made a commitment.

In TiSA the ratchet clause:

  • applies only to commitments on 'national treatment' (i.e. on equal treatment for foreign and local suppliers)
  • does not apply to commitments on 'market access' (deciding the extent to which foreign suppliers can operate – for example whether there is a monopoly or not).

Each country can choose which types of services foreign suppliers can provide and under what conditions. If a country decides not to take any commitment for market access, it will always have the right to close the sector to competition in the future, for example by imposing a monopoly.

The EU has decided not to take any market access or national treatment commitments on:

  • publicly-funded health and social services
  • publicly-funded education
  • water collection, purification, distribution and management services
  • film, TV and other audio-visual services.

There can be no question of the ratchet applying to these services because the EU has decided to exclude these services from its obligations under TiSA. The EU will remain free to allow or not foreign firms to provide such services in the EU.

So claims that the ratchet clause in TiSA could be used as a backdoor mechanism to privatise public utilities, such as public water services, are simply untrue.

Excluding particular services from the ratchet in TiSA

Under TiSA, any country can decide not to apply the ratchet to particular services that are covered by the negotiations.

This means the EU can choose to exclude from the ratchet any decisions to treat foreign services suppliers the same as local suppliers for particular services. An exclusion can apply to the EU as a whole or to one or more EU countries.

So the EU could reverse any decision to remove a discriminatory barrier for foreign companies in a sector excluded from the ratchet.

No, it will not.

The ratchet clause in TiSA will not affect the right of countries to regulate in a non-discriminatory way.

For example, a country will remain free to introduce new laws setting a minimum wage, social, safety, quality or environmental standards so long as these applied equally to foreign suppliers and local companies and do not limit the number of companies allowed to provide services.

So claims that the ratchet clause would limit a country's right to regulate public services are simply untrue.

Safeguard European culture and workers' rights

In the TiSA talks – as in its other trade negotiations past and present – the EU will not open up its market for film, TV, radio and other audio-visual and cultural services to suppliers from outside the EU.

Extract from the EU's initial offer in TiSA, November 2013

"The EU reserves the right to adopt or maintain any measures with respect to the provision of audiovisual services".

Some EU Member States have agreed to open up certain cultural services to foreign competition in:

  • the WTO's General Agreement on Trade in Services (GATS)
  • the EU's trade agreements with individual countries or groups of countries.

These services include:

  • news agencies
  • theatres
  • bands
  • circuses

Governments of these countries have chosen to do so because they believe their economies will benefit.

No. Agreements on trade in services do not cover the laws which underpin people's rights at work, such as their right to join a trade union or earn the minimum wage.

Every EU country sets rules for people from outside who want to come to provide services. These rules specify:

  • whether they are eligible for state pensions, unemployment benefit, or other social security schemes
  • how long they can stay
  • whether they are eligible for the minimum wage, where this exists
  • the extent to which they can negotiate their wage collectively, for example through a trade union.

EU countries set some of these rules individually; others they agree together at EU level.

In the TiSA talks the EU has said it will only sign up to a final agreement on the clear understanding that:

  • all EU and Member States' laws and regulations on non-EU citizens entering, staying or working in the EU will continue to apply
  • we will not allow workers from outside the EU to enter the EU temporarily if this would affect a dispute between management and workers inside the EU.
Extract from the EU's initial offer in TiSA, November 2013

"All other requirements of EU and Member States' laws and regulations regarding entry, stay, work and social security measures shall continue to apply, including regulations concerning period of stay, minimum wages as well as collective wage agreements."
"Commitments do not apply in cases where the intent or effect of their temporary presence is to interfere with, or otherwise affect the outcome of, any labour/management dispute or negotiation."

So, if the EU were to agree in the TiSA talks to allow some people from outside the EU to provide services in the EU temporarily, this would not affect EU or national laws on social or labour conditions.

The EU has also set this condition in the WTO's General Agreement on Trade in Services (GATS).

Protecting people's data

No, it will not.

TiSA will contain the same safeguards for protecting privacy that currently exist in the General Agreement on Trade in Services (GATS), an international agreement signed by all members of the World Trade Organisation (WTO).

Nothing in TiSA would stop a country from applying its confidentiality or data protection laws.

Extract from the GATS, Article XIV

"Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on trade in services, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Member of measures: (…)
(c) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement including those relating to: (…)
(ii) the protection of the privacy of individuals in relation to the processing and dissemination of personal data and the protection of confidentiality of individual records and accounts";

As for the transfer of financial data, all existing EU and national laws on the protection of privacy will continue to apply. TiSA will not change them in any way.

In the TiSA talks we are discussing possible rules for the transfer of data. These are inspired by similar provisions in our existing free trade agreements, such as the one with South Korea.

Extract from EU-Korea Free Trade Agreement, Article 7.43

"Each Party, reaffirming its commitment to protect fundamental rights and freedom of individuals, shall adopt adequate safeguards to the protection of privacy, in particular with regard to the transfer of personal data".

No, it will not.

Nothing that we are proposing in TiSA would affect a country's right to regulate financial services, provided it treated foreign companies the same way as local ones. Any country could restrict trade to keep its financial system stable or to protect consumers or investors.

In the TiSA talks, we are discussing:

  • shared principles to apply in regulating financial services
  • ways in which we could open up our markets to each other
  • other measures to ensure we treat foreign and local firms in the same way

We are mostly basing ourselves on two existing WTO agreements which the EU and others signed in 1997:

No. ACTA – the Anti-Counterfeiting Trade Agreement – is dead. The EU has no intention of reviving it.

ACTA was intended to end the trade in fake (counterfeit) goods. The European Commission fully respects the position of the European Parliament, which voted against ACTA.

So we have no plans to use TiSA to draw up new rules to end trade in counterfeit goods. There will be no 'ACTA through the backdoor' – neither in TiSA, nor anywhere else.

Ensuring transparency

No. Trade negotiations are not held in public, but they are not secret.

The Commission regularly gives updates on progress in the talks, and copies of all negotiating documents, to:

  • the Council of the European Union, which brings together the governments of the EU's 28 countries
  • the European Parliament.

We also meet frequently with representatives of civil society.

When it comes to trade policy the European Commission negotiates on behalf of the EU and its Member States. The 28 Member States have more impact speaking with one voice than if they were each to try to reach a deal alone.

TiSA is no exception. The Commission negotiates on the basis of guidelines or 'negotiating directives' it receives from the Council of the EU, where representatives of all EU governments sit.

Each EU government is accountable to its national parliament. Throughout the talks, the European Commission keeps the EU Member States and Members of the European Parliament (MEPs) informed of developments. In the course of the negotiations, EU Member States can give the Commission guidance and the Council of the EU might decide to give it new instructions

Once the negotiators have reached an agreement, the EU's Member States – meeting in the Council – and the European Parliament will examine the text. The final decision to approve or reject the agreement lies in their hands.

The mandate is the guidelines the governments of the EU's 28 member countries gave to the European Commission to negotiate TiSA.

The governments of the EU's 28 member countries gave the European Commission a mandate to negotiate TiSA.  The mandate is a set of guidelines for the Commission.  Only EU governments can decide whether to publish their guidelines.

The European Commission had called for the mandate to be made public.  In March 2015, EU governments agreed to publish the mandate, a move the Commission hailed as a welcome boost for transparency.