Negotiation of Trade in Services Agreement - Consultation Document

INTRODUCTION

The Hong Kong Special Administrative Region (HKSAR) Government announced today (28 May 2013) that Hong Kong would participate in the negotiations for a trade in services agreement (TISA) with some World Trade Organization (WTO) members. The TISA will be a high-ambition and comprehensive agreement with broad participation that could be multilateralised in the future.

2. This paper provides background information on the TISA negotiations and invites comments and suggestions from interested parties with a view to assisting the HKSAR Government in formulating its overall position in the negotiations of the TISA. Feedback should be forwarded to the Multilateral Division of the Trade and Industry Department (TID) by 18 June 2013. Contact details are set out at the end of this document.
3. This consultation document is also available at TID's website: www.tid.gov.hk

BACKGROUND

4. A group of WTO members has been exploring a new approach to take forward services negotiation by pursuing the TISA. This group consists of 22 participants, including Australia, Canada, Chile, Chinese Taipei, Colombia, Costa Rica, the European Union, Hong Kong China, Iceland, Israel, Japan, Korea, Mexico, New Zealand, Norway, Pakistan, Panama, Paraguay, Peru, Switzerland, Turkey and the United States.

TISA Technical Discussions

5. In 2012, the potential participants of the TISA held several rounds of technical discussion to define the key elements of the agreement. A framework for negotiation was agreed in December 2012. According to the framework, the objectives of the TISA are as follows:

   1. a high-ambition trade in services agreement, compatible with the WTO General Agreement on Trade in Services (GATS), that would attract broad participation and which could be multilateralised in the future;
   2. comprehensive scope, with no a priori exclusions of any sector or mode of supply;
   3. through negotiation, commitments that correspond as closely as possible to actual practice and provide opportunities for improved market access;
   4. new and enhanced disciplines to be developed on the basis of proposals brought forward by participants during the negotiations; and
   5. an agreement that is open to new participants who share the same objectives and the parties will consider how to take into account the development objectives of least developed countries.
6. The HKSAR Government aspires to conclude a high-standard services agreement, which is in Hong Kong's interest, is consistent with WTO principles and provisions, and can contribute to multilateral services trade liberalisation.

Trade Relations

7. With 22 participants, the TISA covers many major services markets of the world as well as some emerging markets. The other 21 participants of the TISA contribute to 70% of the total world trade in services and about 50% of Hong Kong's services trade in 2011. The group includes eight of Hong Kong's top ten services trading partners (see Annex A (pdf format)). In 2011, Hong Kong's services exports to the TISA economies reached HK$370 billion, registering an average annual growth rate of 4.9% for the period from 2007 to 2011^(Note2). Information on export, import and total trade in services between Hong Kong and the TISA participants is set out in Annex B (pdf format).
8. Hong Kong service suppliers are active in the services markets of the TISA participants. In particular, our exports of financial services to the group in 2011 are very significant, accounting for around 80% of our total exports in the sector. This is followed by business services (including professional services, computer and related services, research and development services, real estate services and rental/leasing services without operators) and transport services, each accounting for around 70% of our total exports in the sectors concerned.

KEY AREAS TO BE COVERED IN THE NEGOTIATIONS AND VIEWS SOUGHT

Market Access

9. Hong Kong is a service-oriented economy and is a strong exporter of services. In 2011, the service industry constituted over 93% of Hong Kong's Gross Domestic Product (GDP). Hong Kong's total trade in services in the same year reached HK$ 1,285 billion, with exports amounting to HK$ 706 billion. According to the figures published by the WTO, Hong Kong was the world's 14th largest commercial services trading entity in 2011. We were also the world's 11th largest commercial services exporter and the world's 20th largest commercial services importer in 2011.
10. Given our keen interests and strong potential in trade in services, securing better market access in the provision of services in the TISA participating economies and enhancing disciplines to liberalise trade in services will be of great benefits to Hong Kong economy. The TISA, if successfully concluded, would be a very significant trade agreement and should provide Hong Kong with better access to the services sectors of the economies involved and create more business opportunities beneficial to our long-term economic growth.

11. We invite views on –

    1. which service sectors and service measures of the participating economies Hong Kong should particularly focus on in the negotiations under the TISA, e.g. for the relatively new markets whether provision of service in a particular sector or a particular mode is being contemplated; or whether there are any existing or foreseeable hurdles to the provision of any services in any of the markets involved (please specify market(s)); and
    2. whether there are any service sectors, areas or measures which Hong Kong should be more cautious in undertaking commitments, including those commitments to maintain our current regime for access of services or service suppliers of the markets involved.

    We also welcome other comments and inputs on matters relating to access to the services markets of TISA participants.

New and Enhanced Disciplines

12. New or enhanced disciplines would also be negotiated on the basis of proposals by TISA participants for inclusion in the agreement. These disciplines, similar to agreed and binding best practices, seek to address regulatory practices that may impair the benefits accruing to the participants in the TISA. In preliminary discussions, participants have signalled interests in negotiating disciplines in a number of areas, including domestic regulation, movement of natural persons, information and communications technology, maritime transport, government procurement, professional and education services, export subsidies, and postal and courier. Disciplines in other areas could also be proposed during the negotiations.

13. We invite views on –

    1. the areas of disciplines that we should focus on particularly out of those mentioned in paragraph 12 above; and
    2. whether there are existing hurdles faced by Hong Kong service suppliers in the export of services that could be addressed by new and enhanced disciplines for trade in services.

CONCLUDING REMARKS

14. The TISA should help foster closer economic and trade relations not only with our major trading partners but also with some relatively new markets. An expanded service industry should attract growing investment interest in Hong Kong from both domestic and external sources. These developments taken together will further augment the international business and commercial centre role of Hong Kong.
15. In order that the Government may better assess our community's aspirations on the TISA to be negotiated between Hong Kong and the economies involved, and to develop our overall position in the negotiations taking into account such aspirations, interested parties are invited to put forward their views and suggestions in writing on this subject by 18 June 2013. Response can be sent in by mail, fax, or e-mail as indicated below. For enquiries, you are welcome to contact Ms Andrea Wong at 3403 6400 or email: mdiv1@tid.gov.hk.

    Mailing address:	Multilateral Division Trade and Industry Department 17/F, Trade and Industry Department Tower 700 Nathan Road Kowloon.
    Fax Number:	2390 7479 / 2789 2491
    E-mail address:	mdiv1@tid.gov.hk

    Trade and Industry Department
    The HKSAR Government
    28 May 2013