A successful TTIP negotiation on services requires a comprehensive approach that includes new market access commitments, high-standard trade and investment rules, and compatible regulatory regimes that reflect the realities of today’s businesses and technologies. The objectives in this paper are confined to market access and non-discrimination in services. The regulatory aspects of services, which are critical to the success of the TTIP, are covered in the BCTT Working Group on Regulatory Cooperation.
In addition, BCTT objectives in several other Working Groups have direct and significant importance for services. These include the Working Groups on Investment, Supply Chain/Trade Facilitation, Digital Trade, and Mobility/Visa Issues.
Modes of Delivery
Services are delivered in four ways – 1) across borders, including via digital networks, 2) by providing the service in the firm’s home country to a service consumer who is visiting the country, 3) by providing the service within the territory of a country through the firm’s subsidiary or branch, or 4) by temporarily sending an employee overseas.
It is essential that U.S. service providers be able to choose which mode of delivery best supports their business operations. Each of these modes must be covered by each party’s market access commitments.
Objectives for the TTIP Negotiations
- Limitations with respect to core obligations, such as national treatment, Most Favored Nation (MFN), market access, cross-border supply, and local presence, should be scheduled on a negative list basis, be crafted as narrowly as possible, and be subject to a “ratchet” to lock in subsequent liberalization. Limitations set out in the non-conforming measures should be phased out over time, or at a minimum, be subject to periodic review to consider whether such limitations continue to be necessary. Due to the significant economic relationship between the United States and the European Union, any existing equity caps should be eliminated as to allow for maximum investment in each other’s market.
- In addition, TTIP should address the following market access issues:
- Technological Innovation
Technological innovation often leads to the development of new services. Market access commitments should ensure that the supply of any new services be permitted without further negotiation.
- Clustering/Integrating Services
Market access commitments should provide access throughout the supply chain by taking account of inter-related services, i.e., services that may fall in different categories but are complementary to each other in providing an integrated services package to consumers.
The following rules should apply to all services sectors in the TTIP:
- Cross-Border Data Flows
The United States and the European Union have an important role to play in setting the world standard with respect to the free flow of data.
In support of services through electronic channels, there must be a clear obligation to permit cross border data flows and external data storage, management, processing, and access (so, for example, users may benefit from the availability of cloud computing services), within a firm, in its operations in other markets, and with its customers and vendors, wherever they may be located. This principle has been described in the EU-US Trade Principles for ICT Services. These principles should be made binding in the TTIP for all services sectors.
Companies that implement policies, procedures, and standards consistent with industry best practices for securing personal data in computer systems and databases must be allowed to process that personal data freely across country borders.
The agreement should include a general prohibition on localization requirements (e.g., data storage, server location, domestic employment quotas).
- Performance Requirements
All forms of performance requirements should be prohibited (e.g., sourcing and local content requirements) for all investors.
- Business Operations
Services providers should be free to choose the juridical form of their business operation (e.g. subsidiary, branch, etc.) and mode of delivery. Nationality requirements for senior management and Board members should be prohibited.
- Universal Service Requirements
Any universal service requirements should be implemented in a manner that is non-discriminatory, transparent, and avoids anti-competitive effects.
- State-Supported/Owned Enterprises (SOEs)
When state-supported and state-owned enterprises (SOEs) are engaged in commercial activity, they should not be granted more favorable treatment (including preferential financing) than competing private service providers. Procurement by SOEs should be on a commercial basis only. SOEs should be subject to all of the disciplines that govern the party that owns them.
Since the rules contained in the TTIP are likely eventually to have much broader geographic application, even multilateral application, it is important that general disciplines on SOEs be articulated, not just fashioned to deal with particular situations between the two parties.
The agreement should foster a high level of regulatory transparency, including through a robust notice and comment process, and ensuring open data formats in government information.
Licensing requirements should be transparent, including a timeframe for approval or denial of a licensing application. Neither party should limit the number of suppliers in the market.
For more information about this working group, please contact:
Peter Allgeier, Coalition of Service Industries