The Trade in Services Agreement (TiSA) is a proposed trade agreement currently being negotiated by 23 countries, all of which also belong to the World Trade Organisation (WTO). The parties involved represent the interests of countries located in every corner of the world: In Europe, TiSA includes 32 countries, of which the EU represents 28 as one single entity; there are seven TiSA countries in Asia, five in North America, three in South America, two in Oceania, and one in Africa.
The premise of TiSA is to open up and facilitate the worldwide trade of services. Services are an integral part of the world’s economy, especially in Europe, where the EU is the leading global exporter of services – powered by tens of millions of jobs in the service sector. TiSA aims to promote the trade of services such as banking, health care and transport on a global scale by removing certain international barriers around these markets. The current TiSA members comprise 70% of world trade in services; a successful end to negotiations is hoped to deliver more growth in this share, as well as more jobs in the service sectors of the respective TiSA member countries.
With the WTO acting as the world’s regulator for trade, the question has been asked as to why these countries have taken it upon themselves to broker a new trade in services agreement. The answer lies in an existing WTO pact, namely the General Agreement on Trade in Services (GATS). TiSA is based on the WTO’s GATS, in terms of scope, definitions, market access, national treatment and exemptions. The last GATS was established by the WTO in 1995. Since then there have been vast advances in technology, changes in business practices and continual globalization; the countries negotiating TiSA see it as an opportunity to create a new dynamic for trade in services which would more accurately reflect modern day trade. They hope that if enough WTO members join TiSA, that it could become a wider WTO agreement, spreading its impact beyond the current 23 members.

TiSA – A Pact between Pals?

The Trade in Services Agreement began life as an initiative of the United States, who proposed it to representatives of a group of countries known as the Really Good Friends. The countries in this group are leading world economies, and make up the lion’s share of global trade – together, the EU and the US alone comprise 40%.
China has expressed a willingness to join the negotiations, and, although existing TiSA members state that the negotiations are inclusive, admittance to China has not yet been forthcoming. It remains to be seen what China joining the table could mean for negotiations, or why the Asian superpower has yet to join TiSA talks, especially as the EU has been particularly vocal about supporting the inclusion of China.

Lifting the Lid on TiSA

For a long time TiSA negotiations were surrounded by an air of mystery; meetings between representatives always take place behind closed doors in Geneva and their outcomes kept secret. The tight grip held by the TiSA members on the details of their negotiations ended emphatically, in one fell swoop, the moment WikiLeaks released draft documents of the TiSA financial services annex in June 2014.
Further leaks instigated by WikiLeaks showed how sections of the Trade in Services Agreement could lead to legal loop holes which would help companies circumnavigate data protection laws. The leaks highlighted that the American negotiating mandate for the agreement to lower burdens between the service sectors of 50 different states – in both the US and EU – stipulates that governments should not be able to prevent companies from transferring data across borders and out of the domain of the user – even if that company has no physical presence in the user’s country. In practice that means that any company that has no branch in the EU – and transferred data outside of the EU – would not be expected to adhere to EU data protection laws.
This is bound to turn heads in Germany, where TiSA could be perceived as a less extreme reminder of Angela Merkel’s fears that the NSA tapped the German chancellor’s mobile phone in 2013. However, for Germany and the rest of Europe, TiSA need not signal the ringing of alarm bells when it comes to regulating international data transfers. In May 2015, we at the Global Economic Dynamics Project (GED) held a seminar, “Shaping free & Safe Transatlantic Data Flows: Benefits and Challenges”, together with the Global Economy and Development programme. There, we discussed why shaping a safe and seamless exchange of data across borders would result in enormous economic growth, and why regulating this exchange without fears will do more good than harm in the long run – so long as everyone plays by the rules.
You can find more information about our joint seminar, as well as other in-depth, thoughtful analysis on today’s global economy, on the GED website.

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