Trade in Services Agreement (TISA)

TISA Market Snapshot TISA Parties total GDP : CA$61,329.2 billion (2015)

: CA$61,329.2 billion (2015) TISA Parties % of world GDP : 65% (2015)

: 65% (2015) TISA Parties total population : 1.621 billion (2015)

: 1.621 billion (2015) Canada services exports: CA$102.3 billion (2015)

CA$102.3 billion (2015) Canada % services exports : 16.3% of Canada’s total export (2015)

: 16.3% of Canada’s total export (2015) Canada services exports to top 5 TISA Parties*: CA$79,1 billion (2015)

CA$79,1 billion (2015) Canada % services exports to top 5 TISA Parties*: 77% of total services export (2015) *U.S., EU, Switzerland, Australia, Hong Kong

About TISA Negotiations

What is TISA?

The Trade in Services Agreement (TISA) is a services-trade only agreement currently being negotiated by 23 Members of the World Trade Organization (WTO), including Canada. The negotiations were launched in March 2013 by a group of like-minded countries to further liberalize trade in services by developing new and enhanced disciplines and to improve market access. Although the TISA negotiations are being conducted outside the WTO framework, Parties are building upon the WTO’s General Agreement on Trade in Services (GATS) with the objective of transforming it to a WTO agreement by broadening participation to all WTO Members.

TISA Parties represent an enormous services market of almost two-thirds of the world’s economy with more than 1.6 billion people and a combined GDP of nearly $50 trillion in 2015. The 23 Members of the WTO participating in the TISA negotiations (i.e. the Parties) are: Australia, Canada, Chile, Chinese Taipei, Colombia, Costa Rica, the European Union, Hong Kong (China), Iceland, Israel, Japan, Liechtenstein, Mauritius, Mexico, New Zealand, Norway, Pakistan, Panama, Peru, South Korea, Switzerland, Turkey, and the United States.

Objective

The objective of the TISA is to strengthen rules and improve market access for trade in services. More precisely, the agreement being negotiated between the Parties addresses discriminatory barriers to cross-border trade in services, provides a more predictable investment environment for service suppliers, and improves the mobility of services providers. Negotiating Parties are considering proposals related to transparency, domestic regulation, financial services, telecommunications, electronic commerce, movement of natural persons, international maritime services, air transport services, state-owned enterprises, and express delivery services, among others.

Canada holds a significant interest in the TISA negotiations, as it represents an opportunity to address market access issues (e.g. limits on the number of service suppliers or transactions, discrimination against foreign service suppliers, etc.) with many important trading partners. The TISA will promote the use of good regulatory practices, based on objective and transparent criteria, which supports the interests and competitiveness of Canadian service suppliers. Combined, these objectives aim to provide benefits to Canadian consumers by stimulating healthy competition in the Canadian marketplace and by improving businesses opportunities for a wide range of Canadian companies, both small and large.

The TISA is also supportive of Canada’s progressive approach to trade as it has the potential to contribute to greater innovation in the services industry and to support inclusive growth through the benefits that could flow to small-and-medium-sized services suppliers, including those in the environmental services sector. To help promote more inclusive participation, Canada has proposed an innovative provision to ensure that measures relating to licencing and qualification requirements and procedures do not discriminate on the basis of gender.

In the context of the TISA market access negotiations, Canada is pursuing improved commitments from all TISA Parties to address Canadian interests in key sectors, including:

Professional services (legal, architectural, engineering)

Environmental services

Information and communication technology (ICT) services

Financial services

Additionally, Canada is a strong advocate for increased transparency in trade in services. It is seeking commitments from all Parties to publish proposed laws and regulations in advance and to provide interested parties with an opportunity to comment on such proposed laws and regulations. Canada is also pursuing rules for domestic regulation to ensure transparency and objectivity for licensing and qualification requirements for certain services, while respecting and retaining each Party’s right to regulate in the public interest.

Current status of the negotiations

At the most recent round of negotiations, held from December 6-8, 2016, Parties to stock of the good progress achieved this year to advance the negotiations towards conclusion. However, more work is required to conclude the small number of remaining issues for the more advanced annexes such as Financial Services, Professional Services, Electronic Commerce, Localization, Telecommunications, Movement of Natural Persons and Transportation. Parties also discussed and assessed the final Market Access offers tabled in late October 2016.

Parties continue to consult internally until a date is determined among the Parties to reconvene for the next formal round of negotiations.

How to get involved

In an effort to engage with Canadian citizens and stakeholder groups across the country on Canada’s approach to trade policy, the Government of Canada consults regularly with a wide range of stakeholders during active trade negotiations. Global Affairs Canada also consults with all the relevant federal government departments and agencies as well as with provincial and territorial government officials and indigenous groups). Global Affairs provides regular updates and seeks views and advice during negotiations from interested business groups, exporters, investors, citizen-based organizations, academics, and labour unions.

If you would like to learn more about the Government of Canada’s public consultations on the TISA, please consult the News section or follow us on Twitter and Facebook.

Global Affairs Canada is keen to hear from all interested parties to help to inform Canada’s position in the negotiations. Officials would be particularly interested to hear from Canadian companies, investors or associations about any market access barriers they are faced with or concerned about as they operate in the various countries involved in the TISA negotiations.

To request more information about the TISA negotiations or provide your views, please e-mail: TMSconsultation@international.gc.ca

Issues under Negotiation

TISA negotiations are divided in two parts: the core text which includes general provisions and modalities for scheduling commitments, and the annexes. Each annex represents a specific issue in the TISA Agreement for which Parties are negotiating mutual commitments or disciplines. Some of the annexes apply horizontally to trade in services (e.g. Transparency, Domestic Regulation) and others are industry specific (e.g. Air Transport Services, Financial Services).

TISA Parties have not yet agreed on the final annexes to be included in the Agreement; however, descriptions of the more advanced annexes that enjoy broad support among TISA Parties are provided below:

Domestic Regulation

Services providers can encounter barriers to trade in foreign countries when confronted with non-transparent licensing or authorization systems. The Annex on Domestic Regulation seeks to promote clear and effective disciplines on domestic regulation to ensure predictability and transparency in the licensing or authorization process. In the context of this Annex, Canada is seeking to include an innovative provision to ensure that measures relating to licencing and qualification requirements and procedures do not discriminate on the basis of gender.

Electronic Commerce

The digitization of trade presents opportunities to promote inclusive economic growth, including by eliminating distances, increasing connectivity and providing SMEs access to a global consumer base. The Annex aims to facilitate online trade, address impediments faced by consumers and businesses that conduct trade in the electronic environment, and contribute to online consumer confidence.

Financial Services

The Annex seeks to expand market opportunities in financial services while recognizing the unique nature of the sector and the need for flexibility to adopt regulatory measures. Financial services include insurance and insurance-related services, as well as banking and other financial services (e.g. portfolio management).

Localization

The Annex seeks to apply non-discrimination obligations on Local Presence, Local Management and Boards of Directors, Local Content and other Performance Requirements, in the broader scope of the Agreement.

Telecommunications

The Annex seeks to enhance regulatory certainty for telecommunications service suppliers by including disciplines to ensure that telecommunications regulators act impartially, objectively and in a transparent fashion and support competitive development in the sector.

Movement of Natural Persons

The Annex aims to facilitate the movement of certain categories of business people on a temporary basis to supply services. While commitments taken vary by Parties, categories usually covered are business visitors, intra-corporate transferees, investors, and professionals. Covered business people have to enter a country (TISA Parties) for specific business purposes, for specified period of time under precise condition stipulated by a contract agreed in advance of entry. This Annex concerns only the temporary mobility of certain businesses persons and does not include any references to low skilled labour or permanent immigration.

Professional Services

The Annex aims to expand opportunities for services providers in professional services sectors, which include architectural, engineering, and legal services. Given the capability and expertise of Canadian firms in these areas, strong TISA commitments in the professional services sectors are of key interest to Canada.

Transparency

The Annex sets out requirements for a Party’s laws and regulations in order for interested persons to be acquainted with them in a timely manner. The Annex also sets out parameters for Parties to allow interested persons to provide comments prior to adoption of laws and regulations.

Transport Services

Transport services are separated into three different annexes on International Maritime transport services, Air transport services and Road transport services.

The International Maritime transport services annex seeks to achieve greater liberalization while respecting each Party’s desire to protect against cabotage.

The Annex on Air transport services aims to achieve legal certainty over the scope and coverage of air transport services covered in TISA versus those covered in a Party’s Air Transport Agreements.

The Annex on Road transport services aims to achieve clarity on what constitutes international road freight transport services and related logistics’ markets.

State-Owned Enterprises

The Annex aims to establish a level-playing field between private enterprises and state-owned enterprises that are principally engaged in commercial activities.

Institutional / Dispute Settlement

The objective of the Institutional provisions is to facilitate the administration of the Agreement between the Parties. The Dispute Settlement provisions seek to establish a mechanism for the settlement of state-to-state disputes that may arise under the Agreement.

Frequently Asked Questions (FAQs)

What are Canada’s priorities in TISA? Canada is one of the world’s largest services exporters, and services make a significant contribution to the country’s economy. Canada’s priorities in the TISA are to create new opportunities for Canadian services suppliers in new markets and improve the transparency and predictability of international regulation in trade in services. In particular, Canada seeks to improve opportunities for Canadian companies in key sectors, including: engineering services, financial services, architecture services, environmental services, as well as information and communications technology services.

Will the TISA affect Canada’s right to regulate the domestic provision of services? TISA will not undermine the right to regulate in the public interest, whether at the federal, provincial/territorial, or municipal level. As in all of Canada’s existing free trade agreements, including the TISA, Canada reserves the right to maintain and adopt measures that promote or protect societal values and the public interest.

Will the TISA affect the ability of regulators to properly carry out approval processes? The TISA does not constrain regulatory activities, but rather affirms principles of good regulatory practice; namely that regulations be administered in a reasonable, objective and transparent manner. The TISA sets basic rules which do not undermine the regulatory process, but ensure all applicants have access to a transparent process with reasonable timelines.

Will the TISA rules on approval processes constrain the ability of regulators to undertake environmental assessments prior to approving projects? The TISA contains a general provision that creates a broad exception for, among other things, any measure necessary to protect human or animal or plant life or health. Therefore, in the unlikely event that an environmental assessment process fell short of the TISA rules on regulatory process, it would still be exempt from a challenge by another Party. It is important to recognize that TISA will not provide foreign investors with the ability to initiate disputes. Will the TISA affect Canada’s investment regime? As in all of Canada’s existing FTAs, including TISA, Canada reserves its ability to administer the Investment Canada Act. This allows the Government of Canada to screen foreign investment to ensure security and “net benefits” to our economy while reflecting the current level of openness for investment in most services sectors. Additional policy flexibility is maintained for certain sensitive sectors (e.g. Air and Maritime Transport). Will the TISA include an Investor-State Dispute Settlement mechanism? The TISA will not include an Investor-State Dispute Settlement mechanism. Negotiations towards a dispute settlement mechanism are drawing inspiration from the state-to-state approach used by the World Trade Organization. Will the TISA affect public healthcare and public education? In all its existing free trade agreements, Canada has never undertaken commitments for public services, such as healthcare and public education. How is the TISA compatible with Canada’s progressive approach to trade? The progressive approach to trade is a policy framework that recognizes that trade policies need to be designed to respond and contribute meaningfully to the Government’s overall economic, social, and environmental policy priorities. Canada’s approach to the TISA is fully in line with this agenda because, for example: the TISA will ensure the government’s continued right to regulate; it has the potential support the development of various environmental sectors, including renewable energy; it supports innovation and inclusive economic growth, including specific benefits for small and medium-sized enterprises; and Canada is aiming to include clear a provision that prohibits countries from discriminating on the basis of gender as it relates to licences, permits and authorizations for service suppliers, as well as a provision on international cooperation to ensure access to information communication technologies for people with disabilities. Can other countries join the TISA negotiations? The TISA negotiations are open to WTO Members, provided that they demonstrate an ability and willingness to be constructive and ambitious. The ultimate objective of the TISA Parties is to broaden the membership to all WTO Members once the agreement is negotiated, so that all WTO Members can benefit from enhanced disciplines and improved market access for trade in services. What kind of commitment is Canada seeking in terms of mobility for business persons? When it comes to investing and providing services, there is no substitute for Canadian business persons being physically on-site, where their operations and clients are located. Thus, Canada’s key objective in temporary entry negotiations, including the TISA, is to secure commitments from trading partners which eliminate barriers that our business persons face at the border, such as economic needs tests and quotas. This is important because it will result in more predictability for Canadian businesses that need to get their people into TISA markets. Will the TISA limit the ability of Canada to regulate financial services? A “prudential carve-out” is a staple of Canada’s agreements with respect to financial services. The carve-out provides financial authorities with the ability to take measures to protect the soundness of financial systems without violating trade agreements.

Myth vs. Reality

Myth: The TISA will lead to the privatisation of Canada’s public services, including health and education services. Reality: The TISA would not prevent the Government of Canada from regulating in the public interest. In the TISA, Canada is not offering any commitments that would impact publicly-funded health services, publicly-funded education services, and social services. In all its free trade agreements, Canada has never taken commitments or forced any other Party to take commitments to privatise public services.

Myth: The TISA will undermine the capacity of Canada to implement the Paris Climate Change Agreement. Reality: Climate change is a key priority for the Government of Canada. Canada is firmly committed to the principle that trade liberalization and environmental protection should be mutually supportive. To this end, the liberalization of trade in services has the potential to bring tangible benefits to the environment and support the development of various complementary sectors, including renewable energy. The TISA preserves the right to regulate and to amend regulations to meet national environmental policy objectives, for all TISA Parties. In line with all of Canada’s existing FTAs, the draft TISA text contains exceptions that would allow Parties to maintain and adopt measures that promote or protect societal values and interests in a manner that is consistent with their domestic policy.

Myth: The TISA is negotiated without the consultation of the Canadian population. Reality: The Government of Canada published a notice in the Canada Gazette prior to launching trade negotiations to alert the public and to solicit views from all Canadians. This practice was employed in the winter of 2013 prior to Canada joining the TISA negotiations. Following this initial consultation, Global Affairs Canada has been engaged in regular meetings to consult with interested and affected businesses, citizen-based organizations and individual Canadians, as well as provincial and territorial governments with an aim to develop and inform Canada’s negotiating position. In addition, Global Affairs Canada provides updates on the status of the negotiations on its website. The Government of Canada welcomes the interest of all Canadians on the TISA and encourages further engagement as the negotiations continue.

Myth: The TISA will undermine the protection of Indigenous peoples’ rights in Canada. Reality: Canada protects Indigenous peoples’ rights in all its international trade agreements. Commitments made in the TISA do not affect Canada’s ability to confer new and existing benefits and advantages to Indigenous peoples at the federal, provincial, territorial or municipal level. To preserve constitutionally-protected rights of Indigenous peoples, and to maintain policy flexibility with respect to Indigenous issues, Canada’s traditional approach in its Free Trade Agreement is to include exceptions relating to Indigenous groups in the areas of services and investment, government procurement, and state-owned enterprises. Myth: The TISA will force the Government of Canada to deregulate Canada’s services industries. Reality: The TISA does not compel or promote the deregulation of services. Canada’s regulatory regime is one of the most advanced in the world in terms of transparency and predictability. Good regulatory practices employed by various regulatory bodies in Canada are often used to set the benchmarks for the development of international trade disciplines – not the other way around. Myth: The TISA will lead to an influx of foreign workers from TISA countries, taking over Canadian jobs. Reality: As with all of Canada’s trade agreements, including TISA, Canada’s immigration laws are not covered by the obligations of the agreement. Canada does take reciprocal commitments with its trading partners to facilitate work permits for certain highly skilled professionals who have a pre-arranged contract with or employment offer from a Canadian business. In other words, foreign professionals could not simply enter Canada and seek work in competition with Canadians. Myth: The TISA will allow the entry of low-skilled labour. Reality: Consistent with all of its existing free trade agreements, Canada will not take any commitments for low-skilled workers in the TISA.

Environmental Services

Canada is seeking to raise the level of commitments from TISA Parties on environmental services, making cleaner practices more accessible and widespread to complement efforts to liberalize trade in environment goods negotiated through the WTO Environmental Good Agreement (EGA). Canada’s efforts to deliver an ambitious outcome in Environmental Services is captured by this Market Access request which has been submitted to all TISA Parties: