by Michitaka Nakatomi, Consulting Fellow, RIETI
With the stagnation of services negotiations under the World Trade Organization (WTO), the Trade in Services Agreement (TISA) is currently the only framework that possesses the potential to advance direct global liberalisation and rulemaking. The plurilateral format, used as the next-best alternative, opens up new possibilities that would be impossible for any of its participants to achieve in isolation.
This policy brief looks at the circumstances that led to the shortcomings of the General Agreement on Trade in Services (GATS) which in turn led to the inception of TISA. It also looks at the options that were available (in particular with regard to its legal form) before the negotiations took place as a free trade agreement outside the WTO. Moreover, it looks to how the TISA can eventually be multilateralised through sectoral agreements such as the GATS Annex approach, i.e. sector by sector, or issue by issue). If a universal agreement, based on reaching critical mass and extending the benefits according to the most-favoured nation (MFN) principle can be reached in individual sectors, there is potential to advance global services liberalisation from the TISA framework.
This policy brief is a translation and summary of ‘サービス交渉とプルリ合意－TISAとセクターアプローチ’ RIETI Policy Discussion Paper Series 14-P-002, February 2014.
With the stagnation of services negotiations under the WTO, TISA is the only framework that possesses the potential to advance direct global liberalisation and rulemaking. The use of a plurilateral format, in which all the major developed nations are participating as the next-best alternative, opens up the possibility of rulemaking and liberalisation in the services sector that would have great potential to offer a foundation for the creation of overseas business opportunities at a level that would be impossible for any of its participants to achieve in isolation.
TISA also shifts the focus from exclusively working on mega free trade agreements (FTAs) to utilisation of both mega-FTAs and plurilaterals as indispensable forums for services negotiations. It is of particular importance that both the EU and the US participate in TISA, in addition to Trans-Pacific Partnership (TPP) and the Japan-EU FTA. Between these fierce rivals (especially in the area of regulations), the TISA will reduce the risk of other countries being sandwiched between them, in a similar way that Japan was in the past. Indeed, both the US and the EU have already initiated proposals that take both mega-FTAs (in particular the TPP and the Transatlantic Trade and Investment Partnership (TTIP)) and TISA into consideration.
The major trading blocs will introduce the contents of TISA into their mega-FTAs and force Japan and other third countries to accept them, stressing the fact that they are international rules – unless they grasp the movement towards the TISA and become part of that movement. It can be assumed therefore, that the TISA will function as an ”insurance policy’,’ providing significant leverage to protect Japan’s national interests in its mega-FTAs. Given the importance of the services sector, both the government and the private sector have recently displayed increased interest in the agreement. In the view of various service industries, TISA is a framework worthy of the great effort required to achieve it.
 The EU complained to GATT regarding procurement targets in the US-Japan Semiconductor Trade Agreement and ruled to contravene GATT. In addition, on the recent case in which South Korea applied different definitions of standards in the electric and electronics and automotive fields in relation to the FTA with the US and the EU, see Nakatomi (2013d).
 See Keidanren Proposal (2013).