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EU: Trade Commission to Block Talks on Public Services Liberalization

by By Tobias Buck in Brussels and Guy de Jonquieres in LondonFinancial Times
February 5th, 2003

The European Union is expected to bow today to political and popular concern about public services, by ruling out talks in the Doha world trade round on further liberalization of its health, education, energy and water markets.

Officials said the EU stance, to be outlined by Pascal Lamy, trade commissioner, at a European Commission meeting, reflected acute sensitivities among member governments and the impact of campaigns by activists opposed to further private sector involvement in public services.

Although the officials insisted that many of the activists' allegations about the World Trade Organisation's role in regulating public services were exaggerated or wrong, they said they wanted to avoid fuelling the controversy.

"If we want to attempt to carry civil society groups, then we should avoid scaring them unnecessarily," said one government official. He said most member states were reluctant, for domestic political reasons, to include the four sectors in the talks.

The officials added that the EU had already committed itself in the Uruguay Round to opening its markets in the four sectors, and that in several it had received few demands from trade partners for further liberalization.

The Commission will also make clear that under strong pressure from France, it remains opposed to WTO talks on liberalizing audio-visual services, despite US pressure to eliminate its restrictions on non-EU suppliers.

However, in a gesture to developing countries, Brussels is expected to signal that it is prepared to discuss further relaxation of its rules on the temporary immigration of skilled personnel providing business and professional services.

India, which wants to raise computer software exports, has long demanded that its citizens be allowed greater freedom to travel to rich countries' markets to provide such services.

Much of the EU liberalization package, which must be approved by member states and is conditional on satisfactory proposals being made by other WTO members, focuses on telecommunications, financial services, distribution, tourism, construction and transport.

However, the Commission's proposals are expected largely to entrench reforms achieved since the Uruguay Round ended in 1994, or harmonise differences between member states, rather than provide for radical further opening of the EU market.

WTO members are due to submit proposals on services and decide parameters for negotiations on agriculture by March 31. While many EU countries have a strong interest in opening world services markets, they are divided over how far to liberalize farm trade.

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