China Expresses Interest in Joining Services Negotiations, Creating New Opportunities & Risks

Stephanie Henry

China has stated its interest in joining the Trade in Services Agreement (TISA) negotiations, according to a BNA report. If it formally joins the negotiations, China’s participation would add new dimension and complexity to the talks, and would correspond with China’s stated intention to pursue “proactive strategies” to strengthen its services sector. The TISA negotiations, launched in 2013, seek to remove barriers and increase market openings originally covered in the 1995 General Trade in Services (GATS) agreement. The TISA negotiations currently include 50 participants, representing 70 percent of global GDP.

China’s participation in TISA could mean further openings of its services sector for US companies, particularly given renewed negotiations of a US-China bilateral investment treaty, which China has agreed to negotiate on the basis of pre-establishment national treatment. China has already acknowledged that this approach will mean the elimination of its Catalogue Guiding Foreign Investment in Industry, which details restrictions on foreign investors in both the services and manufacturing sectors.

Any agreement reached under TISA will be subject to Trade Promotion Authority (TPA), or “fast-track,” for approval by the US Congress. TPA accelerates the timeline for Congressional consideration of certain trade agreements, and lays out negotiating objectives for trade agreements. Congress is currently negotiating how to craft a TPA bill, which some in Congress believe should include provisions on currency manipulation. TISA would be the only trade agreement that China is a party to that would be subject to TPA objectives.

Development of its services sector has become a focal point of China’s economic reform debate. Boosting the services sector share of its economy has been touted by government leadership as integral to “rebalancing” China’s economy away from overreliance on fixed asset investment and manufacturing, and creating employment. China’s services sector provided 43 percent of China's Gross Domestic Product (GDP) in 2010, and employed 34 percent its workforce that year. China released its first Five-Year Plan for the services industry in September 2012, which stated its objective of boosting the percentage of GDP and jobs from the services industry by 4 percent by 2015.

Countries currently participating in the TISA negotiations include Australia, Canada, Chile, Colombia, Costa Rica, the European Union, Hong Kong, Iceland, Israel, Japan, Liechtenstein, Mexico, New Zealand, Norway, Pakistan, Panama, Paraguay, Peru, South Korea, Switzerland, Taiwan, and Turkey.