Uruguay abandons TiSA

Original Publication Date: 
10 September, 2015

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An earlier version of this article was first published in south-north development monitor SUNS #8091

Montevideo, 8 September (Roberto Bissio) – Just a week before the deadline for submitting national offers on liberalization of services sectors under the on-going “secret” talks for a “Trade in Services Agreement (TiSA), Uruguay President Tabar? V?zquez decided on Monday, 7 September, to abandon the plurilateral negotiations and has directed the government to comply.

While Uruguay is the first participant in the TiSA talks to abandon the on-going negotiations, at an earlier stage when the plurilateral talks idea was broached in 2012 by the so-called “Really Good Friends of Services”, Singapore was part of this group, but soon as the sponsors (Australia, the United States and the European Union) outlined their views and demands, Singapore withdrew.

At that initial stage, the proposal was for an “International Services Agreement (ISA)”, to be negotiated plurilaterally, and lodged in the World Trade Organization as an Annex IV agreement.

[See Chakravarthi Raghavan (2014), ‘The Third World in the Third Millennium CE, Vol. 2: The WTO - Towards Multilateral Trade or Global Corporatism’, TWN Penang, pages 367-368. For analysis of TiSA talks and implications for the WTO Multilateral Trading System, see Raghavan (2015) SUNS, #8066 and 8067 available here.]

The Uruguay President’s action follows a decision taken on Saturday (5 September) by a very large majority of the Frente Amplio, the governing leftist political coalition, against Uruguay continuing to be part of the TiSA negotiations taking place in Geneva but outside the framework of the World Trade Organization (WTO) and its General Agreement on Services (GATS). A vast majority of the Frento Amplio voted against Uruguay’s participation in the TiSA talks.

The Frente Amplio’s decision considered that it is "inconvenient" for Uruguay to keep negotiating TiSA "taking into account our vision on an integral development of the Nation", and received 117 votes in favour of leaving the negotiations and only 22 against it.

TiSA is widely recognised as an attempt to ultimately assert pressure on other countries to sign on to an agreement the nature of which has not been accepted within the WTO multilateral trading system and its agreements and rules. It was initiated by the United States and Australia with the European Union as a key player as well.

With the withdrawal of Uruguay from the negotiations, the remaining countries are Australia, Canada, Chile, Chinese Taipei, Colombia, Costa Rica, the European Union, Hong Kong China, Iceland, Israel, Japan, Liechtenstein, Mauritius, Mexico, New Zealand, Norway, Pakistan, Panama, Paraguay, Peru, Republic of Korea, Switzerland, Turkey and the United States.

Noticeably absent are the majority of developing countries especially the larger ones.

The factions in Frente Amplio, led by Economy minister Danilo Astori and Foreign minister Rodolfo Nin were the only significant members of the coalition to support TiSA. The Movement for People's Participation led by former president Jos? Mujica voted against, even though Mujica was still president when Uruguay joined those negotiations last February.

When the Frente Amplio formally took a vote against TiSA, the right wing parliamentary opposition offered their votes to build an ad hoc majority in favour of the Agreement and thus divide the governing coalition.

However, Tourism minister Lilian Kechichian, acting as spokewoman for the Council of Ministers announced on Monday that "the President respects the majority and has asked the foreign minister to implement it".

The governing coalition studied the issue over four months and before making its decision the coalition's governing council demanded from all ministries an analysis on how the opening up of services would affect their agendas and what items they would want to include in the "negative list" of economic sectors not to be opened.

A "negative list" approach means that all sectors are liberalized except fo those to be excluded. A "positive list" approach liberalizes only those sectors or parts of a sector that are included in a predetermined list and usually also allows for condiitons on such liberalization.

The local newspaper "La Diaria" had access to the summary of ministerial analyses presented to the Frente Amplio council by its chair, Daniel Marsiglia. According to the report in “La Diaria”, the Ministry of Labour and Social Security considers that some of the TiSA requirements would contradict the norms of the International Labour Organization (ILO) that Uruguay has signed up to and are therefore to be considered as national law.

The Ministry of Industry, Energy and Mines informed the council of the governing coalition that the proposed TiSA would imply risks to the telecommunication policies of Uruguay. Since a privatization law was repealed by referendum in 1992 the telephone company (fixed lines), the generation and distribution of electricity, the only oil refinery of the country and all water and sanitation are run by state-owned companies. Further, the state-owned banks, even when competing with private national and international banks, hold three quarters of the deposits, while the state-owned insurance company controls around half of the market.

Meanwhile the state-owned mobile cell phone company has double the number of subscribers compared to the two competing foreign-owned cell phone corporations. The telecommunication policy that TiSA would challenge has allowed Uruguay to have a phone network that is 100% digitalized. All towns and schools are linked via optic fiber and all children of school age are provided with free access to the Internet, as part of the "one laptop per child" policy that V?zquez himself started in his previous presidency. (V?zquez was president before Mujica. Both were elected by the Frente Amplio coalition of progressive parties and movements.)

The Ministry of Agriculture rejected the liberalization of some services it provides, in particular the identification and tracking of cattle which allows Uruguay to export meat at higher prices than its neighbors. The Ministry of Tourism, overseeing an area that accounts for the majority of the exports of services of the country reported that no benefits would be obtained from TiSA in its area, as tourism is already liberalized. The Health Ministry reported that it is not in a condition to produce a "negative list" due to the rapidly changing nature of the health services that could make such a list obsolete in a short time.

On the other hand, the service agreement was positively reviewed by the Ministry of Foreign Affairs, that argued that the presence of Uruguayan negotiators in the TiSA-related meetings would help them "gain experience" while the Ministry of Economy and Finances highlighted that TiSA would bring benefits to the local software producers and professional services (such as lawyers and accountants).

Interestingly, when the Frente Amplio convened a public discussion, the chair of the Uruguayan Chamber of Software expressed his wish that TiSA would help them open up markets by allowing their technicians to travel abroad more freely, but yet demanded that the government procurement system continues to favour offers from national companies over those from foreign corporations. It became clear during the debate that this sector, which accounts for at most two percent of the total national income, was ill-informed.

Mode IV provision of services (that require the movement of natural persons abroad to supply a service as provided under the WTO GATS has a "positive list" approach) are excluded from TiSA at the instance of the United States. In the US, the EU and Australia, the movement of natural persons for supply of services is governed by visa requirements of immigration policies and the application of ‘needs test’. Thus the Uruguay software industry would not have gotten from TiSA the access it wants and, at the same time risked losing the continuation of government support if the agreement they had lobbied for were to be accepted by Uruguay.

With the decisive vote, socialist parliamentarian Roberto Chiazzaro highlighted that it is the first time that TiSA is discussed widely and openly in any country and "it is remarkable how much people got informed, participated and discussed and Tabar? (President V?zquez) has to be praised for having heard the people and his political organization before taking a decision".

(*Roberto Bissio is Director of the Third World Institute based in Montevideo, Uruguay, and contributed this report.)