Chapter 3 : Services

Objective

APEC economies, in accordance with the APEC Policy Framework for Work on Services, will achieve free and open trade and investment in the Asia-Pacific region by:

a.                   progressively reducing restrictions on market access for trade in services;

b.                  progressively providing for inter-alia most favoured nation (MFN) treatment and national treatment for trade in services;

c.                   providing, in regulated sectors, for the fair and transparent development, adoption and application of regulations and regulatory procedures for trade in services; and

d.                   recognising the role that e-commerce plays in the supply and consumption of services.

Guidelines

Each APEC economy will:

a.                   contribute positively and actively to the WTO negotiations on trade in services;

b.                  expand commitments under the General Agreement on Trade in Services (GATS) on market access and national treatment and eliminate MFN exemptions where appropriate;

c.                   undertake further actions, where appropriate, to implement the APEC Menu of Options for Voluntary Liberalization, Facilitation and Promotion of Economic and Technical Cooperation in Services Trade and Investment;

d.                   make efforts to provide for the participation of concerned parties in regulations and regulatory processes, the fair and transparent application of regulations, and the prompt consideration of applications; and

e.                   support APEC capacity building efforts to supply services by, inter-alia, strengthening infrastructure, promoting the use of advanced technologies and developing human resources.

Collective Actions

APEC economies will take the following Collective Actions with regard to services in the telecommunications, transportation, energy and tourism sectors[1], and continue to seek Collective Actions in other sectors

TELECOMMUNICATIONS
In accordance with the Cancun Declaration, APEC economies will:

a.                   work to bridge the digital divide at the domestic, regional and global levels, and to cooperate and collaborate with the business/private sector in this effort;

b.                  foster discussion between business/private sector and governments on appropriate means to assess and reward the value of products and services exchanged in the provision of converged Internet services among APEC economies, consistent with the APEC Principles on International Charging Arrangements for Internet Services;

c.                   foster the development of effective policies that support competitive markets in the domestic and international telecommunications and information industries;

d.                   accelerate the pace of implementation of the Mutual Recognition Arrangement on Conformity Assessment for Telecommunications Equipment (MRA);

e.                   work to ensure that policy and regulatory environments better foster the uptake of e-commerce;

f.                    implement within voluntary time frames the APEC Interconnection Principles and consult on the need for further discussions on interconnection; and

g.                  give attention to user requirements for open standards and systems to support interoperability

In addition, APEC economies are encouraged to conform, where appropriate, to:

1.                   The WTO Telecommunications Regulatory Principles Reference Paper;

2.                   The Information Technology Agreement (ITA); and

3.                  The Guidelines for Trade in International Value-Added Network Services (IVANS).

TRANSPORTATION  
APEC economies will:

a.                   respond to the Leaders ‘Auckland Challenge’ of 1999, by implementing the eight steps for more competitive air services on a voluntary basis and by identifying further steps to liberalize air services in accordance with the Bogor Goals, and provide annual progress reports to Leaders through SOM (Note:  some components of this project may fall under Part II Ecotech, subject to further developments);

b.         develop by 2005 an efficient, safe and competitive operating environment for maritime transport, including ports, in the region through improved transparency of maritime and port policies (Note:  some components of this project may fall under Part II Ecotech, subject to further developments);

c.                   complete the Road Transport Harmonization Project and encourage the development of mutual recognition arrangements for certification of automotive product and harmonization of economies’ vehicle regulations through cooperation within United Nations Economic Commission for Europe; and

d.         seek to eliminate the requirement for paper documents (both regulatory and institutional) for the key messages relevant to international transport and trade as soon as practicable by 2005.

ENERGY

APEC Economies, by developing and building on the 14 non-binding policy principles endorsed by APEC Energy Ministers at their Sydney meeting in 1996 which are consistent with the vision, objectives and strategic themes of the recently endorsed Future Directions Strategic Plan that will guide their work over the next five years:

a.                will facilitate trade and investment in the energy sector by

                     i.      responding to the outcomes of a current study on "Strengthening the Operational Aspects of APEC Energy Micro -Economic Reform" that will, inter-alia, inform on barriers to investment in the energy sector and how to remove the barriers.

                   ii.      analysing the broad economic impacts of micro-economic reform policies to deregulate energy markets.

                  iii.      responding as appropriate to the identification of the barriers (policy, technical, regulatory and legal) to the interconnection of power grids in APEC member economies.

                  iv.      actively pursuing the Implementation Strategy and considering the use of Implementation Facilitation Assistance Teams (IFAT) to assist in further reform of the energy markets.

                   v.      strengthening policy dialogue among member economies on important issues affecting energy markets.

                  vi.      supporting the APEC 21st Century Renewable Energy Development Initiative which seeks to advance the use of renewable energy for sustainable economic development and growth in member economies.

                vii.      encouraging in the longer term a greater strategic input from business through the Energy Working Group Business Network (EBN).

b.            will seek to reduce barriers to trade created by differing energy performance test methods and energy performance requirements by supporting the establishment of an APEC Energy Efficiency Test Procedures Coordinator.

c.      will strengthen energy security in the region by developing and implementing an energy security initiative with the aim of improving the functioning of energy markets; energy efficiency and conservation; diversification of energy resources; renewable energy development and deployment; and enhance short term preparedness such as oil stocks and surge production of oil; and explore the potential for alternative transport fuels

TOURISM

APEC economies will:

a.     Remove impediments to tourism business and investment by:

(i)     promoting and facilitating the mobility of skills, training and labour;

(ii)    promoting and facilitating productive investment in tourism and associated sectors;

(iii)   removing regulatory impediments to tourism business and investment; and

(iv)   encouraging liberalization of services trade related to tourism under General Agreement on Trade in Services (GATS)

b.    Increase mobility of visitors and demand for tourism goods and services in the APEC region by:

(i)     facilitating seamless travel for visitors;

(ii)    enhancing visitor experiences;

(iii)   promoting inter- and intra-regional marketing opportunities and cooperation;

(iv)   facilitating and promoting e-commerce for tourism business;

(v)    enhancing safety and security of visitors; and

(vi)   fostering a non-discriminatory approach to the provision of visitor facilities and services.

c.     Sustainably manage tourism outcomes and impacts by:

(i)    demonstrate an appreciation and understanding of natural environment and seek to protect the environment

(ii)    foster ecologically sustainable development opportunities across the tourism sector, particularly for small and medium sized enterprises, employment and providing for open and sustainable tourism markets

(iii)   protect the social integrity of host communities with particular attention to the implications of gender in the management and development of tourism

(iv)   recognize, respect and preserve local and indigenous cultures together with our natural and national cultural heritage

(v)    enhance capability building in the management and development of tourism.

d.     Enhance recognition and understanding of tourism as a vehicle for economic and social development by:

(i)    harmonizing methodologies for key tourism statistical collections, consistent with activities of other international tourism organizations

(ii)    facilitating the exchange of information on tourism between economies

(iii)   promoting comprehensive analysis of the role of tourism in member economies in promoting sustainable growth

(iv)   expanding our collective knowledge base on tourism issues in order to identify emerging issues and assist in the implementation of the Seoul Declaration on an APEC Tourism Charter. 

The current CAP relating to services can be found in the Services Collective Action Plan

Canada’s Approach to Trade in Services in 2003

Canada is pursuing the Bogor objective of "free and open trade and investment" by 2010 in services sectors. Canada has a very liberal services regime. This liberalization has been complemented by international commitments pursuant to the 1994 North American Free Trade Agreement (NAFTA) and the 1995 General Agreement on Trade in Services (GATS). Domestic legislation has been amended where required to bring it into conformity with Canada's international obligations.  The 1997 Canada-Chile Free Trade Agreement has enhanced and secured access to markets for the services providers of both countries. Canada is involved in negotiations on a free trade agreement, including trade in services, with the other Western Hemisphere countries (FTAA).

Canada participated actively in efforts to broaden and strengthen the GATS, including through work on the built-in agenda.  Pursuant to the February 1997 Agreement on Basic Telecommunications Services, Canada made commitments on an MFN basis, including the ending of monopolies in this sector.  In keeping with Canadian commitments on financial services, Canada has announced a new policy framework for the Canadian financial services sector and brought legislation and related regulations into force concerning foreign bank branching.    Actively involved in the GATS maritime transport services negotiations in 1996, Canada sought to secure commitments in the areas of international maritime transport, maritime auxiliary services (e.g. storage and warehousing, freight forwarding) and access to and use of port facilities and onward transport.

Since February 2000, Canada has been engaged, with other WTO Member countries, in a new round of GATS negotiations.   In this context, Canada participates in WTO work on domestic regulations, safeguards, subsidies and government procurement in a services context.  The November 2001 Doha Ministerial set in motion the market access phase of the GATS negotiations and mandated that "participants shall submit initial requests for specific commitments by June 30, 2002 and initial offers by March 2003." 

As a result, Canada made public on July 8, 2002 a description of its initial request for market access in services to more than 40 WTO members, none of which is a least developed country. As a general rule, Canada asked its trading partners to at least match Canada's current level of commitments. Canada's initial offer reflects the negotiating objectives set out in March 2001 and incorporates the results of consultations held with a wide range of stakeholders since January 2000. For a more detailed summary of Canada’s requests, please visit our GATS 2000 website.

Canada released its initial conditional offer on March 31, 2003 and was the first country to commit to making its offer public.  This public release reflects Canada's leadership in promoting greater transparency with the WTO and we are pleased that other WTO members have followed with similar commitments.  Canada also paid particular attention to the requests made and concerns raised by developing countries and, in particular, the least developed countries, by including in its initial offer elements of interest to these countries, such as the temporary entry of services suppliers.  Please visit our website to view Canada’s initial conditional offer.

For more information, please contact:

George Braun

Government of Canada

Department of Foreign Affairs and International Trade

george.braun@dfait-maeci.gc.ca

Foreign Investment or Right of Establishment (including Joint Venture Requirements)

Several provinces have removed some Citizenship requirements as outlined in the applicable sections.

There are no limitations on market access with respect to commercial presence.  However, under the Investment Canada Act, acquisition of control of a Canadian business by a non-Canadian is subject to approval by Investment Canada for businesses with assets over a particular amount (C $223 million in 2003), adjusted each year to reflect any changes in nominal GDP.  With respect to national treatment, Canada did not undertake GATS commitments on the following types of measures (see Canada’s GATS Schedule for more details):

- supply of a service, or its subsidization, within the public sector;

- subsidies related to research and development;

- federal and sub-central tax measures resulting in differences in treatment for "Canadian-controlled private corporations" (generally pertaining to small business);

- tax measures where the service supplier is directly or indirectly owned by government;

- ownership and management nationality restrictions on investors in the privatization of state enterprises;

- differential treatment in terms of benefits or price with respect to the general supply of social services to the public, particularly with respect to income security or insurance, social security or insurance, social welfare, public education, training, health and child care;

- a majority of the directors of federally incorporated and most provincially incorporated corporations in Canada must be Canadian citizens or persons ordinarily resident in Canada or a particular province;

- federal or sub-national measures that are more favourable to aboriginals or their organizations;

- there are differential restrictions or taxes in some provinces that apply to non-residents in the purchase of certain types of land, e.g. public land, farm and shore land; and

- eligibility for investments from small business development corporations and differential treatment of corporations in Ontario with respect to capital gains on shares of corporations resident in Canada.

Temporary Entry and Stay of Service Providers and Intra-Corporate Transferees

With respect to the movement of persons providing services, natural persons falling into the following categories may enter or stay on a temporary basis, subject to certain conditions: business visitors, intra-corporate transferees, executives, managers, specialists, and professionals. For more details, please consult Canada’s GATS Schedule of Specific Commitments and its Supplement on Movement of Natural Persons.

Foreign Exchange Control/

Movement of Capital

There are no foreign exchange controls or restriction on movement of capital.

Other Generic Requirements

Applied to Trade in Services

With respect to cross-border and consumption abroad of services, there are no limitations on market access.  With respect to trade in services national treatment, there are no limitations other than the following measures set out in the Canadian GATS Schedule: tax measures affecting scientific research and experimental development services; Ontario tax measures with respect to payments for management services made to affiliated non-residents; preferences to Albertan or Canadian service suppliers in the case of all large scale energy project development; preferences to Newfoundland and Nova Scotian services suppliers for petroleum operations. More information can be found in Canada’s GATS Schedule of Specific Commitments. 

Canada’s exceptions to MFN Treatment could be found in Canada’s GATS List of Article II (MFN) Exceptions.

General Policy

Position

Canada had one of the most open and liberal services regimes in the world, with the services sector accounting for about two-thirds of Canada's GDP and over 15 percent of Canada's total trade (1996). 

Internal liberalization of the Canadian services market was  complemented by new  international commitments, under both the North American Free Trade Agreement (NAFTA), (1994), and the WTO agreement, including commitments under the General Agreement on Trade in Services (GATS), (1995).  Overall, only a few MFN exemptions and horizontal measures applied under Canada's GATS commitments.  Domestic legislation was amended where required to bring it into conformity with Canada's international obligations. 

Additional commitments have been made by Canada under:

-WTO Agreement on Basic Telecommunications (1997)

-WTO Agreement on Financial Services (1997)

-Canada-Chile Free Trade Agreement (1997)

-Canada-Costa Rica Free Trade Agreement (2001)

Canada entered into negotiations on a Free Trade Area for the Americas (FTAA), which includes a Working Group on Services (1998). 

Canada is negotiating at the WTO in the current round of market-access talks.  Canada’s initial offer was released publicly on March 31, 2003.

Foreign Investment or Right of Establishment (including Joint Venture Requirements)

There were no limitations on market access with respect to commercial presence (1996).  However, under the Investment Canada Act, acquisition of control of a Canadian business by a non-Canadian was subject to approval by Investment Canada for businesses with assets over a particular amount adjusted each year to reflect any changes in nominal GDP.  With respect to national treatment there were few limitations.

No major changes in measures of general application.

Temporary Entry and Stay of Service Providers and Intra-Corporate Transferees

With respect to the movement of persons providing services, natural persons falling into the following categories were able to enter or stay on a temporary basis, subject to certain conditions: business visitors, intra-corporate transferees, executives, managers, specialists, and professionals (1996).

No major changes in measures of general application.

Foreign Exchange Control/

Movement of Capital

No foreign exchange controls on the movement of capital.

No foreign exchange controls on the movement of capital exist.

Other Generic Requirements Applied to Trade in Services