Trade Negotiations and Maritime Trade Negotiations and Maritime ServicesServices

Ramesh ChaitooRamesh ChaitooServices Trade Specialist, CRNMServices Trade Specialist, CRNM

rchaitoo@sunbeach.netrchaitoo@sunbeach.net

Address to CSA Annual General MeetingAddress to CSA Annual General MeetingCartagenaCartagena

October 18October 18--20, 200420, 2004

Transport ServicesTransport Services

Maritime transport (freight & passengers) Maritime transport (freight & passengers) –– some liberalization but global talks not some liberalization but global talks not productiveproductiveAir transport Air transport –– bilateral deals; no bilateral deals; no liberalizationliberalizationRoad transport Road transport –– slow changes but slow changes but increasing cooperation (in NAFTA increasing cooperation (in NAFTA Mexican trucks can only take freight to the Mexican trucks can only take freight to the US border)US border)

What do traders want?What do traders want?

As trade liberalization increases the global As trade liberalization increases the global volume of goods, traders need a Global volume of goods, traders need a Global network of maritime transport services that network of maritime transport services that are:are:

-- ReliableReliable-- EfficientEfficient-- Cost effectiveCost effective

Ships carry almost 80% of world trade in Ships carry almost 80% of world trade in goodsgoods

MultiMulti--Modal TransportModal Transport

Maritime is not enoughMaritime is not enoughNeed to have seamless, efficient systems Need to have seamless, efficient systems for moving goods from factory across for moving goods from factory across borders to consumer’s doorborders to consumer’s doorSo companies want greater access in the So companies want greater access in the whole transport chain with courier as final whole transport chain with courier as final serviceservice

End objective of trade negotiationsEnd objective of trade negotiations

Reduce cost of shipping and other Reduce cost of shipping and other maritime servicesmaritime servicesMove goods faster from producer/supplier Move goods faster from producer/supplier to end consumerto end consumerAllow easier interaction between all Allow easier interaction between all handling pointshandling points

Privatization of Port ServicesPrivatization of Port ServicesPanama & Buenos Aires first to allow private Panama & Buenos Aires first to allow private sector to operate terminals for container & other sector to operate terminals for container & other cargo.cargo.1997 1997 –– Rio Grande, SantosRio Grande, Santos1999 1999 –– Peru opened Peru opened MataraniMatarani2000 2000 –– Chile Chile -- San Antonio, Valparaiso, San Antonio, Valparaiso, IquiqueIquique, , MejillonesMejillones2001 2001 -- Costa Rica granted Spanish firm Costa Rica granted Spanish firm ((BoludaBoluda) right to ) right to pilotagepilotage, towage, mooring & , towage, mooring & stevedoring in 5 ports stevedoring in 5 ports –– Caldera, Caldera, GolfitoGolfito, Punta , Punta Arenas, Punta Morales and Arenas, Punta Morales and QueposQuepos..

Positive changesPositive changes

Increased efficiency & lower costs.Increased efficiency & lower costs.In last 10 years, cost per container in In last 10 years, cost per container in Buenos Aires fell from $450 to $120.Buenos Aires fell from $450 to $120.In In CartagenaCartagena –– average vessel time at average vessel time at berth for container ships fell from 72 hours berth for container ships fell from 72 hours to 16 hours; to 16 hours; Container movements increased from 7 to Container movements increased from 7 to 20 per hour; and cost per container fell 20 per hour; and cost per container fell from $984 to $228!!!from $984 to $228!!!

Services Trade RulesServices Trade Rules

Global trade in services governed by the Global trade in services governed by the General Agreement on Trade in Services General Agreement on Trade in Services (GATS) under the WTO.(GATS) under the WTO.Services market access negotiated Services market access negotiated through 4 Modes of supply through 4 Modes of supply –– (1) cross (1) cross border; (2) consumption abroad; (3) border; (2) consumption abroad; (3) commercial presence; (4) temporary entrycommercial presence; (4) temporary entryBut no deal on maritime services and few But no deal on maritime services and few countries liberalized this sectorcountries liberalized this sector

Maritime Services NegotiationsMaritime Services Negotiations

1.1. Maritime Transport ServicesMaritime Transport Services2.2. Maritime Auxiliary ServicesMaritime Auxiliary Services3.3. Port ServicesPort Services

Maritime Transport ServicesMaritime Transport Services

International Transport (freight and International Transport (freight and passengers) less passengers) less cabotagecabotage transporttransportKnown as “Blue water” servicesKnown as “Blue water” services

Maritime Auxiliary ServicesMaritime Auxiliary Services

Maritime Cargo Handling Services (not Maritime Cargo Handling Services (not including direct activities of independently including direct activities of independently organised organised dockersdockers))Storage and Warehousing Services Storage and Warehousing Services Customs Clearance ServicesCustoms Clearance ServicesContainer Station and Depot ServicesContainer Station and Depot ServicesMaritime Agency ServicesMaritime Agency ServicesMaritime Freight Forwarding ServicesMaritime Freight Forwarding Services

Port ServicesPort ServicesPilotagePilotageTowing and tug assistanceTowing and tug assistanceProvisioning, fuelling and wateringProvisioning, fuelling and wateringGarbage collecting and ballast waste disposalGarbage collecting and ballast waste disposalPort Captain's servicesPort Captain's servicesNavigation aidsNavigation aidsShoreShore--based operational services essential to ship based operational services essential to ship operations, including communications, water and operations, including communications, water and electrical supplieselectrical suppliesEmergency repair facilitiesEmergency repair facilitiesAnchorage, berth and berthing servicesAnchorage, berth and berthing services

At global level blue water & auxiliary At global level blue water & auxiliary services are largely openservices are largely openBut countries have not made legally But countries have not made legally binding commitments re the current binding commitments re the current market access in maritime servicesmarket access in maritime servicesNegotiations on Port services main issue Negotiations on Port services main issue now. Governments hesitant to open this now. Governments hesitant to open this sector.sector.

Colombian ProposalColombian Proposal

In November 2001 Colombia argued that In November 2001 Colombia argued that the “effective liberalization of maritime the “effective liberalization of maritime transport services should result in the transport services should result in the elimination of cartels that fix prices and elimination of cartels that fix prices and frequencies, and consequently in lower frequencies, and consequently in lower tariffs and an improved service.”tariffs and an improved service.”

Market Access Barriers in Maritime Market Access Barriers in Maritime ServicesServices

1.1. Restrictions on the participation of foreign Restrictions on the participation of foreign capitalcapital

2.2. Measures that favour national flag vessels & Measures that favour national flag vessels & national companiesnational companies

3.3. Restrictions on new entrantsRestrictions on new entrants4.4. Restrictions on specific types of legal entityRestrictions on specific types of legal entity5.5. Discrimination against foreign carriers in use of Discrimination against foreign carriers in use of

port services (or cargo reservation or cargo port services (or cargo reservation or cargo sharing)sharing)

Market access barriersMarket access barriers6.6. Restrictions on the use of shipping agentsRestrictions on the use of shipping agents7.7. Discriminatory taxation measures and port Discriminatory taxation measures and port

duesdues8.8. Restrictions on consecutive Restrictions on consecutive cabotagecabotage9.9. Measures lacking rationality, objectivity and Measures lacking rationality, objectivity and

impartialityimpartiality10.10. Vexatious procedures during port callsVexatious procedures during port calls11.11. Procedures that are unnecessary or Procedures that are unnecessary or

inconsistent with current market trends, inconsistent with current market trends, implemented by customs or related servicesimplemented by customs or related services

United States United States –– big problembig problem

The Jones Act restricts U.S. domestic The Jones Act restricts U.S. domestic deepdeep--sea, Great Lakes and inland sea, Great Lakes and inland shipping to vessels owned, built, flagged shipping to vessels owned, built, flagged and crewed in the U.S.and crewed in the U.S.Major contention in all maritime services Major contention in all maritime services negotiationsnegotiations

US US –– Chile FTAChile FTA

Chile Chile –– Customs brokers Customs brokers -- no NTno NTUS US –– Shipping Shipping -- no NT; no MFN; US also no NT; no MFN; US also

includes maritime transport in “future nonincludes maritime transport in “future non--conforming measures” re NT, MFN & local conforming measures” re NT, MFN & local presence.presence.

Both States reserve right to adopt or Both States reserve right to adopt or maintain any measure that discriminates maintain any measure that discriminates among countries regarding: among countries regarding:

-- maritime matters, including salvage. maritime matters, including salvage.

US US –– Central America (CAFTA)Central America (CAFTA)Costa Rica Costa Rica –– Maritime transport Maritime transport -- no NT; no MFN; must no NT; no MFN; must establish local presence; establish local presence; Customs brokers Customs brokers –– no NT; must establish local no NT; must establish local presence.presence.El Salvador El Salvador –– Customs agents Customs agents -- no NT; no MFN no NT; no MFN treatment.treatment.Honduras Honduras –– Maritime transport Maritime transport -- no NT; no MFN; must no NT; no MFN; must establish local presence.establish local presence.Nicaragua Nicaragua –– Maritime transport Maritime transport -- no NT; no NT; Ports Ports –– no market access.no market access.US US –– Customs brokers Customs brokers –– no NT; need local presence.no NT; need local presence.

WTO NegotiationsWTO Negotiations

Negotiations on maritime transport were Negotiations on maritime transport were not completed in Uruguay Round & not completed in Uruguay Round & continued after WTO came into beingcontinued after WTO came into beingBut negotiations broke down in 1996But negotiations broke down in 1996Now part of the Doha Round Now part of the Doha Round –– 2006?2006?What happens in maritime services in What happens in maritime services in FTAA may depend on WTO because FTAA may depend on WTO because trading patterns are global not regional; trading patterns are global not regional; shipping lines are not regionalshipping lines are not regional

Maritime commitments in WTOMaritime commitments in WTOOnly 47 of 140+ WTO members made market Only 47 of 140+ WTO members made market access commitments in maritime servicesaccess commitments in maritime servicesSome Some CbbeanCbbean states granted access mainly in states granted access mainly in blue waterblue water services (A&B; Jam; St Kitts; St services (A&B; Jam; St Kitts; St Lucia; VCT; T&T).Lucia; VCT; T&T).Auxiliary Auxiliary –– St Lucia; VCTSt Lucia; VCTOther services Other services –– A&B; T&T; A&B; T&T; T&T T&T –– no blue waterno blue water; navigation aids; ship ; navigation aids; ship surveys & repairs/building (not modes 1&2)surveys & repairs/building (not modes 1&2)

Other countriesOther countries

Aruba and Aruba and NetherlandNetherland Antilles Antilles –– shipping shipping & auxiliary& auxiliaryHong Kong, Philippines, Korea, Malaysia Hong Kong, Philippines, Korea, Malaysia ––blue water & auxiliaryblue water & auxiliaryCanada, EU, Japan Canada, EU, Japan –– NO commitments NO commitments

Requests to Requests to CbbeanCbbean in GATSin GATS

The EU, Japan & Panama asked The EU, Japan & Panama asked BdosBdos, , GrenGren, Guy, Jam, T&T to grant greater , Guy, Jam, T&T to grant greater market access in all submarket access in all sub--sectors and all sectors and all modes of supply for :modes of supply for :–– Shipping (freight and passenger),Shipping (freight and passenger),–– auxiliary services, auxiliary services, –– access to and use of portsaccess to and use of ports

Requests in FTAARequests in FTAAThe Dom Rep asked for the following:The Dom Rep asked for the following:

Jam Jam –– take full commitments in all modes of take full commitments in all modes of supply for Other Cargo Services (72129)supply for Other Cargo Services (72129)T&T T&T -- take full commitments in: transport of take full commitments in: transport of passengers by ferry; transport of cargo (frozen passengers by ferry; transport of cargo (frozen or or refrigrefrig goods, bulk liquids of gases, goods, bulk liquids of gases, containerized freight); support services for containerized freight); support services for maritime freightmaritime freight

Maritime/Port issues in RegionMaritime/Port issues in Region

Lack of efficiency Lack of efficiency –– undue delays; undue delays; unpredictability, nonunpredictability, non--transparent transparent processesprocessesLack of dataLack of dataUnclear appeal procedures, etc.Unclear appeal procedures, etc.BUT greater trade requires greater BUT greater trade requires greater efficiencyefficiency

Caribbean Interests?Caribbean Interests?What do maritime service companies in What do maritime service companies in CbbeanCbbeanwant in FTAA? Or WTO? want in FTAA? Or WTO? Is any firm thinking of supplying services Is any firm thinking of supplying services overseas?overseas?We need input from stakeholdersWe need input from stakeholdersMust have offensive interests in negotiations; not Must have offensive interests in negotiations; not only defensive approach only defensive approach Singaporean/Singaporean/PhillipinePhillipine firms supply maritime firms supply maritime and port services in other countriesand port services in other countries