[Economy/GSM2] Trade in Services Agreement (TiSA) vs WTO: MFN-Forward, Standstill & Ratchet, India’s stand, with Model Answers in Hindi & English

1. Mock Questions for UPSC Mains GS Paper-2
2. Introduction
3. Origin of Trade in Services Agreement (TiSA)
4. TISA’s Classification of services
   1. MNCs in Public Service Delivery
   2. TISA vs. Public sector enterprises
   3. Labour Rights vs commercial presence
   4. Data Privacy
   5. Blanket cover to future services!
   6. TISA Mechanisms: Standstill, Ratchet & Living agreement
5. India’s stand on TISA
6. USA’s Stand on TISA
7. Conclusions
8. Answer writing in Hindi
   1. Introduction / परिचय
   2. टीसा के चर्चाधीन प्रावधान चिंताजनक है क्योकि:
   3. सार / Conclusion

Mock Questions from TISA Agreement for GSM2

UPSC Mains GSM2-Syllabus Topic: Important International institutions, agencies, for a (structure, mandate); Bilateral, Regional, Global groupings & Agreements (involving and/or affecting India)

Answer Following in 200 words each:

1. “Trade in services agreement (TISA) is a manifestation of developed nations’ dissatisfaction with WTO.” Elaborate.
2. Trade in services agreement (TISA) aims to improve the international export of services, yet India, BRICS and ASEAN nations are not participating in it. Why?
3. Explain following mechanism associated with TISA agreement 1) Standstill 2) Ratchet 3) Living Agreement. Why is India opposed to such mechanisms?

Introduction

Origin of Trade in Services Agreement (TiSA)

• Since the initial days of WTO, the developed nations were eager to expand coverage of the General Agreement on Trade in Services (GATS), first to capture the emerging middle class in developing nations, and later to balance their trade deficits in services with India and China.
• But since 2001, WTO’s attention was shifted to Doha Development Agenda (DDA), which focused on developing nations’ demands related to international trade of agriculture, industrial goods etc.
• Hence the dissatisfied group of WTO members, known as “Really Good Friends of Services” initiated talks for Trade in services agreement (TISA) in 2012-13.
• This initiative/group is largely made up of US, EU, Australia and other developed nations.Their draft TISA agreement aims for deeper commercialization and more business friendly regulation of services in international trade.
• TISA nations’ strategy is to first ratify an agreement amongst themselves, outside the WTO regime. Then gradually expand its net to more and more WTO members using carrot and stick approach.
• Ultimate goal of TISA nations is to bring emerging economies, such as China, India and ASEAN with whom they’ve trade deficit in services.

TISA’s Classification of services

TISA classifies services according to four modes of ‘supply’, and aim to reduce barriers in their international trade:

1. CROSS-BORDER: e.g. IT/BPO call centre and other services provided through fax, phone or electronic means.
2. CONSUMPTION ABROAD: e.g. tourism, students studying abroad
3. NATURAL PERSONS: e.g. executives, consultants or engineers who are staying temporarily in another country for a project.
4. COMMERCIAL PRESENCE: e.g. foreign companies such as Walmart, Citibank establishing branches in India.

“TISA’s provisions vs India’s stand” can be summerized in a few lines. But here I’m giving elaborate descriptions since they’ll also come handy as fodder points for Essays related to Global Economy and Mecantalism in the Modern Age, MNCs, Data Privacy, Efficiency in Services Delivery etc.

MNCs in Public Service Delivery

• TISA excludes only a handful of public services such as police, judiciary, prisons, statutory social security schemes and defense from its purview.
• All the other public services such as education, healthcare, postal, telecommunications, waste collection, water provision, electricity, transport, etc. will fall under TISA.
• Then individual government will not be allowed to create monopoly OR reserve it only for the public sector or not-for-profit entities.
• Implications: MNCs would enter in health and education sector. While such competition will improve the service delivery, but critiques opine, it’ll create following problems:
  • Poaching of good teachers and doctors from public institutes with lucrative salaries, to a level that good education and healthcare is only available in highly expensive private schools and hospitals. Public sector will not be able to match these salaries. This will further deteriorate public service quality.
  • Degree churning foreign universities with online courses without local faculties or physical libraries. TISA regulations will forbid UGC/MCI etc. from imposing regulatory checks on them unless agreed by all member nations.

TISA vs. Public sector enterprises

• TISA mandates that state-owned enterprises (SOEs) have to operate on commercial basis only, whenever they procure or sell services.
• Implications: India’s public sector enterprises will be forbidden from giving preference to domestic startups, MSME, SC/ST entrepreneurs etc. while procuring raw material or services, or selling any services at a concessional rate to bottom strata of society.
• TISA prohibits monopolies and exclusive service providers. So India may have to open up rail services to private sector.

Labour Rights vs commercial presence

• In the countries across the world, labour laws provide for trade unions & collective bargaining, work and rest hours, bonus and work conditions.
• However, app based aggregators such as Uber are disrupting this old system and blurring the lines between workers’ clockable and spare time. These app-aggregators claim they’re not ’employers’ in legal sense, they merely connect people who want a service with independent contractors who’re willing to provide it. Hence out of purview from such domestic labour laws!
• This type of sharing economy model allows non-salaried, non-insured and non-licensed freelancers/ independent contractors to provide the services. Customers’ privacy and personal safety becomes a concern, especially in transport, tourism, hotel, and hospitals.
• Yet, TISA’s market access rule prohibits individual governments from imposing regulatory measures on them. All such proposals have to be approved by TISA’s high powered bodies.
• Implications: India alone can’t classify  Uber as an employer and force it to provide social security contribution to taxi drivers’ EPFO accounts. In TISA regime, this will require assent from all members/ or its high powered bodies. Similarly, licensing and training norms for accountants, lawyers, engineers and pharmacists may have to be acceded to TISA panels and India’s regulatory bodies may lose their independence.

Data Privacy

• TISA prevents governments from restricting cross border data and imposing local server requirements.
• Positive: Infosys, TCS et al won’t have to maintain servers in EU while catering to their clients. This will reduce cost of operations.
• Negative: Foreign companies may move Indian data to a country with weaker privacy rights or weaker laws on disclosing tax defaulters and terrorists’ information. This can hurt our our soverenigity and security.

Blanket cover to future services!

• Draft TISA even provides that any future services which are not yet born, will be automatically covered by TiSA after their birth! e.g. in future some new financial service similar to peer-to-peer landing or more complex form of mortgage backed securities is developed, then RBI / SEBI may not be able to impose strict regulations on it.

TISA Mechanisms: Standstill, Ratchet & Living agreement

1. Standstill and ratchet mechanisms: Which means countries have to lock themselves in the current level of liberalization and they can move only in one direction i.e. further liberalization. e.g. UPA-II had allowed 51% of FDI in multibrand retail. Then, successive governments can’t reduce it, even to protect the interest of kirana shop owners. While liberalization is necessary for economic growth, but TISA undermines democratically elected government’s independence in decision making for public interest.
2. ‘MFN-forward’ feature: meaning any future concession given to a trading partner under a bilateral treaty will automatically get extended to other members of TISA. So, if India gives any concessions to services import from Bhutan, Nepal or LDC because of her strategic or humanitarian goals, then American import of service will have to be treated in same manner. Implications: suppose we waived the work-visa fees for Somalian executives, then we’ve to do same with Americans, EVEN IF America doesn’t waive visa fee for Indian workers!
3. TiSA is designed to be a living agreement. Meaning, once ratified TiSA will become a forum for continuous negotiations and further piecemeal and sectoral deals. Experts fear, this will reduce the public and parliamentary security. e.g. Data privacy will be kept out of the original agreement, but after we’ve ratified, it’ll be introduced as a backdoor bureaucratic file update, when public/media attention may be diverted with some other issue.

India’s stand on TISA

• We already give faster clearance to short-term work visas, waived visa fees on reciprocal basis, ratified WTO’s trade facilitation agreement.
• We’ve relaxed FDI in various service sectors, abolished FIPB, reformed IPR regime and initiated measures for ease of doing business under the Make in India initiatives.
• So, India’s stand on trade in services is not one-way export oriented.
• However, what TISA proposes is not acceptable to us for the aforementioned reasons. Whatever progress we’ve achieved under Doha Development round of WTO, to adequately safeguard the interests of developing nations and LDC, will be undone / weakened, if TISA comes into force.
• Therefore, along with BRICS and ASEAN members, we too are not participating in TISA discussions.

USA’s Stand on TISA

President Trump has already pulled out of Trans Pacific Partnership (TPP) agreement. Experts opine that he favours bilateral agreements over multilateral / regional agreements. Because in bilateral agreement he can get more concessions by asserting US power one-on-one against other countries. Hence three scenarios are possible:

1. USA exits TISA and the movement collapses. Singapore, Uruguay and Paraguay have already pulled out.
2. USA exits TISA, but movement continues under EU. Although this is an unlikely scenario, because USA accounts for over  25% of the global trade in services, so without USA the entire deal / movement may seem less lucrative for the MNCs and their lobbyists.
3. USA continues to lead TISA with even more enthusiasm, because TISA’s pro-corporate  approach matches with the temperament of President Trump! This scenario could be troublesome for India, Chian, BRICS and ASEAN.

Conclusions

Q1 asks you to ‘elaborate’. So, it is a ‘discuss’ type question, hence conclusion should be summary type. Let’s make:

WTO is setup for not only removing the barriers to international trade, but also to ensure that developing countries and LDC benefit fully from the global trading system. With the rise of economic and diplomatic strength of India, China and other emerging economies, it’s expected that WTO forum becomes more receptive to their demands, sometimes resulting into delays to arrive at a decisions.
Hence, developed nations have been trying to sidestep WTO and fast-track their agendas with non-WTO mechanisms such as TPP, TATIP and TISA.

Q2 and Q3 asked you to examine / explain India’s stand. So it conclusion should be finding type. Let’s make:

It’s true that international trade in services faces many tariff and non-tariff barriers, but those issues need to be addressed by amending WTO’s GATS agreement, rather than creating non-WTO mechanisms spearheaded by developed nations and their corporate lobbyists. Because, such mechanisms will not give adequate voice to developing and least developed nations. Therefore, India sides with WTO supervised trade negotiations, over TISA, TPP and TATIP.

Answer writing in Hindi

Introduction / परिचय

(Origin type) यद्यपि सेवा क्षेत्र वैश्विक अर्थव्यवस्थामें २/३ से ज्यादा हिस्सेदारी रखता है, किन्तु, २००८ के वैश्विक वित्तीय संकट के बाद से विकसित देशोसे होने वाले सेवा निर्यात में नकारात्मक वुध्धि  आई है. लेकिन उनकी सेवा व्यापार से जुडी समस्याओ को विश्व व्यापार संगठन (WTO) के दोहा समझौता वार्ता व् जी.ऐ.टी.एस. करार में वाचा नही मिल रही, इस कारण अमरीका, यूरोपीय संघ व् अन्य विकसित देशोने वर्ष २०१२-१३ में विश्व व्यापार संगठन के बाहर एक सेवा व्यापार करार  (TISA) के लिए प्रयत्न आरम्भ किए.

टीसा के चर्चाधीन प्रावधान चिंताजनक है क्योकि:

• ‘ठहराव व् रेचेट’ प्रावधानों के अंतर्गत एकबार उदारीकरण के पश्च्यात, उस कदम को नई सरकार पलट नही सकती.  उदा. यूपीऐ सरकार ने मल्टीब्रांड रिटेल में ५१% विदेशी निवेश की छुट दी थी. उसके बाद की सरकारे उस निर्णय को पलट नही सकती भले ही नयी सरकार को लगता हो की छोटे व्यापारियो के हितोमें ऐसा फेसला जरूरी है. अत: इस प्रावधान से चुनी हुई सरकारों की जनहित में निर्णय लेने की  स्वायत्तता पर जोखिम दीखता है.
• शिक्षा, स्वास्थ, रेल तथा अन्य सार्वजनिक सेवाओ में बहुराष्ट्रीय कंपनियो के आने पर कोई सभ्य-देश रोक नही लगा सकता.
• सरकारी निगमों को केवल मुनाफे के उद्देश्य से ही कार्य करना होगा. अर्थात वे किसी लघु उद्योग या पिछड़े वर्ग के उद्यमकर्ता को प्रोत्साहित करने के लिए कुछ कच्चा माल उनसे खरीदे, या फिर गरीबवर्ग को स्वयम नुकसानी उठा कर भी सस्तेमें सेवा प्रदान करे- एसे निर्णयों पर भविष्यमें  प्रतिबंध होगा.
• मोबाइल एप के जरिये अन्य देशो से सेवा देने वाली वैश्विक कम्पनीओ के उपर लगने वाले श्रम कानूनों और सेवा मानको के नियमो का स्वरूप क्या हो? इस बाबत कोई एक देश अकेला निर्णय नही ले पाएगा. इस से बहुराष्ट्रिय कम्पनियो को लाभ देने के लिए टेक्सीचालक और सेवाक्षेत्र से जुड़े अन्य छोटे श्रमिको का शोषण ओर बढने का डर है. साथ ही साथ यात्री, विधार्थी, मरीजो की सुरक्षा के मानको में चुक होने का भी.
• आई.टी. सेवा प्रदान करने वाली कम्पनी को देश के अंदर ही डेटा सर्वर रखने होंगे इस प्रकार की जिद भी कोई देश नही कर पाएगा. आलोचकों को डर है, की इसका लाभ लेकर बहुराष्ट्रीय कंपनिया एसे देशो में अपने डेटा सर्वर स्थापित करेंगी जहा व्यक्तिओं की गोपनीयता के कानून उनके हक़ में हो. इससे राष्ट्र की सुरक्षा व् संप्रभुता पर जोखिम आ सकता है.
• एसी कोई सेवा जो अभी विद्यमान नही है, किन्तु भविष्यमें जिसका जन्म होगा, तो उसे भी टीसा करार का सरंक्षण अपने आप दिया जाएगा. वितीय क्षेत्र में नवीन प्रकार के वित्तीय प्रपत्रो (financial instruments) पर आर.बी.आई व्  से.बी. की निगरानी की स्वायत्तता को ये प्रावधान कमजोर करेगा.
• टीसा का स्वरूप एक ‘जीवित करार‘ का रखा गया है. अत: एक बार संसद में बहाल करने के बाद भी छोटे मोटे सुधार टीसा मुख्यालय के पिछले दरवाजे से करना संभव है. ये प्रावधान देश की अर्थ व्यवस्था पर संसदीय निरिक्षण को कमजोर करता है.
• सबसे पसंदीदा राष्ट्र (अग्रिम): इस प्रावधान के अंतर्गत, यदि किसी सदस्यने टीसा से जुड़ने के बाद, अलग से द्विपक्षीय करार से किसी अन्य मित्र देश को सेवा व्यापर में छुट दी, तो वो सभी छुट उस देशने सभी टीसा देशो को भी देनी होगी. भारत को डर है की  मैत्री, मानवता व् सामरिक द्रष्टिकोण से उसके द्वारा नेपाल, भूटान को देने वाली छुट का लाभ भी विकसित देश की बहुराष्ट्रीय कम्पनिया इस प्रावधान के अंतर्गत  ले जाएंगी.

सार / Conclusion

Summary Type

• विश्व व्यापार संगठन (WTO) का उद्देश्य केवल आंतराष्ट्रीय व्यापार में विद्यमान रूकावटो के दूर करना ही नही है, बल्कि ये भी सुनिश्चित करना है की विकसित तथा अति अल्प विकसित देशो के हितो का भी इसमें ख्याल रखा जाए. पिछले डेढ़ दशक में भारत, चीन व् अन्य उभरती अर्थव्यवस्थाओ की आर्थिक व् राजनयिक शक्ति बढ़ी है, इसलिए आंतराष्ट्रीय संगठनों में उनके मसलो को पहेले से ज्यादा प्राधान्य व् संवेदनशीलता मिलना भी अपेक्षित है, जिस कारण, फ़सलो पर पहोचने में देरी होती है.
• इसके चलते, विकसित देश अपनी प्राथमिकताओ को जल्द से जल्द लागू करने के लिए, विश्व व्यापार संगठन (WTO) से बाहर जाकर ट्रांस पेसिफिक भागीदारी (TPP), ट्रांस-एटलांटिक व्यापार व् निवेश भागीदारी (TATIP) तथा सेवा व्यापर करार  (TISA) जेसे समझोतों के लिए प्रयत्नरत है.

Finding Type

• विश्व व्यापार संगठन (WTO) की निगरानी में बनाये गये समझोतों में सभी सदस्यों को समान आवाज मिलती है, विकसित तथा अति अल्प विकसित देशो के हितो का भी इसमें ख्याल रखा जाता है. अत: भारत डब्ल्यूटीओ से बहार निकल कर बनाए गए बहुपक्षीय करारो के समर्थन में नही है.
• यधपि सकल घरेलू उत्पादन के हिसाब से भारत एक सेवाक्षेत्र प्रधान अर्थव्यवस्था है, किन्तु टीसा के ज्यादातर प्रावधान विकसित देशो की सेवा क्षेत्र से जुडी हुई बहुराष्ट्रिय कम्पनियो के हितो की रक्षा के लिए बनाए गए हो ऐसा प्रतीत होता है.
• इसलिए, न केवल भारत बल्कि ब्रिक्स व् आसियान समूह के सभी  देशोने भी इस करार से स्वयम को अलग रखा है.