VZCZCXYZ0003
PP RUEHWEB

DE RUEHC #8372 0552248
ZNR UUUUU ZZH
P 242244Z FEB 08
FM SECSTATE WASHDC
TO RUEHBR/AMEMBASSY BRASILIA PRIORITY 0000
INFO RUEHGV/USMISSION GENEVA PRIORITY 0000

UNCLAS STATE 018372 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD WTRO BR
SUBJECT: DEMARCHE REQUEST: WTO SERVICES NEGOTIATIONS 
 
 
SENSITIVE BUT UNCLASSIFIED ENTIRE TEXT. PLEASE PROTECT 
ACCORDINGLY. 
 
¶1.    This is an urgent action request.  See paragraph 7 
below.  (Because of time constraints, we are unable to 
provide translations.) 
 
Summary 
------- 
¶2.  The WTO Doha Round is moving into a critical stage of 
detailed negotiations across all elements of the single 
undertaking.  As services is one of the three market access 
pillars of the Doha Round, along with Agriculture and 
Non-Agricultural Market Access (NAMA), we must see meaningful 
progress in services in order to achieve a strong Doha 
outcome by the end of 2008.  To stress the importance of 
services and encourage participation in upcoming bilateral 
meetings and the proposed signaling conference, Post is 
requested to deliver the letter and background points in 
para. 8 and 9 to appropriate officials of the host government 
no later than February 27.  End Summary. 
 
Background 
----------- 
¶3.  The Doha Round launched by WTO Members in November 2001 
is the USG's top trade priority.  Services, agriculture, and 
industrial goods are the three core market-access negotiating 
groups of the Doha Round.  Progress in all three groups will 
be essential to meet the objective of completing the 
negotiations by the end of 2008. 
 
¶4.  Since the launch of the Round, the United States has 
submitted two Doha Round services offers in 2003 and 2005 and 
has engaged in intensive bilateral and plurilateral 
negotiations. For the United States, a successful Doha 
package must include significant commitments from WTO members 
in our target sectors:  financial services, 
telecommunications, express delivery, computer and related 
services, distribution, environmental, and energy services. 
As reported in December 2007 summaries of the plurilateral 
groups, few members have come forward to indicate that they 
will offer significant market access in services. On February 
12, WTO Services Chair DeMateo released a report on the 
status of the negotiations indicating areas of convergence 
and divergence between developed and developing countries. As 
noted in the report, the U.S., EU, and other members are 
seeking both the binding of existing practice and new market 
access commitments. 
 
¶5. Currently, Doha negotiations are moving towards a 
potential Ministerial meeting and agreement on Agriculture 
and NAMA modalities.  Revised texts in those two groups were 
released on February 8, and WTO Director General Lamy has 
called this step the final sprint towards establishing 
modalities.  For many countries, including the United States, 
there will not be agreement on Agriculture and NAMA 
modalities unless there is sufficient clarity that services 
will achieve a comparable level of ambition.  This requires 
two elements: 1) a multilaterally agreed Chair's text to be 
agreed in parallel with Agriculture and NAMA modalities, and 
2) a signaling exercise among the 25-30 Members engaged in 
the plurilateral market access negotiations. 
 
¶6.  The next step in the process is to urge Ministers from 
our eleven key target markets (Argentina, Brazil, China, 
Egypt, India, Indonesia, Malaysia, Philippines, South Africa, 
Thailand, and Turkey) to send negotiating teams, including 
capital-based sectoral experts, to Geneva the week of March 
10 to engage in a series of intensive bilateral meetings with 
U.S. negotiators.  These meetings would be followed by senior 
level discussions and culminate in a signaling exercise in 
the form of a ministerial event, ideally chaired by Director 
General Lamy, where oral commitments would be exchanged among 
Ministers from the 25-30 Members engaged in the plurilateral 
negotiations. The letter in para. 8 provides further details 
on our country-specific sectoral requests. 
 
 
Action requested 
---------------- 
¶7.    Please deliver the letter to the Minister responsible 
for trade, using the accompanying background points as 
appropriate, no later than February 27. (See para. 8 and 9) A 
signed copy of the letter will be sent to Post via email. 
Please slug responses to State EEB/TPP/MTA Carol Henninger 
and USTR Todd Nissen. 
 
Text of Letter to be delivered as non-paper 
-------------- 
¶8.    Begin Text: 
 
H.E. Ambassador Celso Amorim 
Minister of Foreign Affairs 
Ministry of Foreign Affairs 
Brasilia, Brazil 
 
Dear Minister Amorim: 
 
We are rapidly approaching a major decision point in the Doha 
Round; therefore, I wanted to stress the important role the 
services negotiations play in our thinking.  Services account 
for two-thirds of the U.S. economy and 8 out of 10 jobs.  In 
many developing countries, services account for over 50 
percent of jobs, and represent the largest share of total 
economic output and the fastest growing component of GDP. 
For developing and developed countries alike, expanded trade 
in services promises significant opportunities for economic 
growth and development.  In light of this economic and 
political reality, the Doha Round simply must achieve 
meaningful progress in services market access in order to 
receive broad support in the United States and other 
like-minded countries. 
 
For this reason, the United States will not be able to agree 
to modalities on Agriculture and NAMA unless there is also 
agreement on a framework for services that gives us 
confidence that an equally ambitious outcome will be 
achieved.  First, this requires that we produce a 
multilateral services text that contains general guidance on 
the level of market access we expect to achieve.  We can be 
flexible in developing this guidance, but it is imperative 
that a services text proceed in parallel with the texts on 
Agriculture and NAMA and reflect a comparable level of 
ambition. 
 
Second, we also need to have assurance that your next revised 
offer will contain meaningful improvements in commercially 
significant sectors that are the drivers of economic growth. 
In order to provide this assurance, we request your active 
participation in a signaling exercise that will take place 
over the next several weeks.  More specifically, we request 
that you send a negotiating team to Geneva beginning the week 
of March 10, 2008, to engage in a series of intensive 
bilateral meetings aimed at providing greater understanding 
of the content of the next set of services offers.  These 
bilateral meetings would be followed by discussions at a more 
senior level and culminate in a ministerial event, ideally 
chaired by the Director-General, where oral commitments would 
be exchanged among Ministers from the 25-30 Members engaged 
in the services plurilateral market access negotiations.  For 
purposes of the meetings beginning March 10, we request that 
you send experts who will have authority to negotiate market 
access commitments in the following sectors:  financial 
(banking, securities and insurance); telecommunications; 
postal and courier, including express delivery; computer; 
distribution; environmental; and energy services. 
 
In order to help frame the discussion, we have identified 
below a number of key sectors in which we are looking for new 
commitments and a substantial reduction or elimination of 
limitations.   Areas where we are seeking new commitments for 
sectors and modes of supply not currently in Brazil's GATS 
offer include the following: 
 
- Computer and related services (full sector coverage, 
including mode 1); 
- Distribution services (mode 1, wholesale distribution of 
fuels, retail distribution of motor vehicles and parts); 
- Energy services (services incidental to mining, related 
scientific and technical consulting, and integrated 
engineering services); 
- Environmental services (full sector coverage); 
- Express delivery services (delivery of goods; and 
commitments on a pro-competitive market); 
- Financial services (mode 1 commitments for advisory and 
other auxiliary services related to banking and other 
financial services, for financial information and data 
processing, and for securities services for sophisticated 
consumers; mode 2 commitments for all banking and financial 
services; and mode 1 and 2 commitments for MAT insurance, 
reinsurance, insurance brokerage, and auxiliary insurance 
services); and 
- Telecommunication services (value-added services; mode 1 
coverage; and full Reference Paper commitments). 
 
Areas where we seek the reduction or elimination of 
significant limitations in Brazil's GATS offer include: 
 
- Presidential authorization requirements for establishment 
in banking and securities services; 
- Branching for banking and insurance; 
- Foreign equity in telecommunication services due to the 
horizontal reservation providing for executive branch 
discretion; and 
- Preference for use of Brazilian satellites. 
 
Finally, we also would like to address ongoing concerns 
regarding your general exclusion of mode 1 and mode 2 
commitments in virtually all sectors. 
 
In closing, I want to be clear that this is an important 
stage of the negotiations, but not the final stage.  All 
offers, of course, remain provisional, with the negotiation 
of services commitments continuing up to the submission of 
final schedules.  We agree that achieving market openness 
should be a primary objective in the services negotiations 
and that binding existing access would be a major step toward 
achieving this goal.  However, in order to achieve meaningful 
liberalization, I believe it is in our mutual interest to 
preserve flexibility to also seek greater market access from 
those countries that continue to maintain significant 
impediments to services trade. 
 
I trust you share our goals of achieving a successful 
conclusion to the Doha Round and will devote the necessary 
resources to this exercise. 
 
Sincerely, 
 
Susan C. Schwab 
United States Trade Representative 
 
End text of letter. 
 
Background points 
-------------- 
¶9. Begin points. 
 
- We are rapidly approaching a major decision point in the 
Doha Round.  At this juncture, we want to highlight the 
importance of the services negotiations to the United States. 
 
- Services account for two-thirds of the U.S. economy and 8 
out of 10 jobs.  In many developing countries, services 
account for over 50 percent of jobs, and represent the 
largest share of total economic output and the 
fastest-growing component of GDP. 
 
-  The Doha Round must achieve meaningful progress in 
services in order to deliver on the development promise of 
the DDA and to receive broad support in the United States, 
including from our Congress. 
 
- The United States will not be able to conclude an agreement 
on Agriculture and Non-Agricultural Market Access (NAMA) 
modalities without a clear sense that services will achieve a 
comparable level of ambition. 
 
- To achieve the necessary progress in services, we request 
your commitment to engage constructively in the ongoing 
services text negotiations and in a signaling exercise. 
 
- First, we request that you send a negotiating team to 
Geneva for bilateral meetings with the United States 
beginning March 10, 2008.  The delegation should have 
expertise in the following sectors:  financial (banking, 
securities and insurance); telecommunications; postal and 
courier, including express delivery; computer; distribution; 
environmental; and energy services. 
 
- Following the bilateral meetings, we expect senior 
officials to hold further discussions leading to a 
ministerial level signaling event. 
 
- We trust you share our goals of achieving a successful Doha 
Round conclusion this year and will thus devote the necessary 
resources to the services negotiations. 
 
End background points. 
 
End action requested. 
 
¶10.   Department appreciates post's assistance. 
RICE