WORLD TRADE
ORGANIZATION
RESTRICTED
S/C/W/60
28 October 1998
(98-4221)
LAND TRANSPORT
SERVICES
PART I -
GENERALITIES AND ROAD TRANSPORT
Background Note by the Secretariat
I.
introduction
1.
This note
has been prepared at the request of the Council for Trade in Services. It provides background information on land
transport services for discussion in the information exchange programme of the
Council. It contains basic and general information on trade in these services
and should not be considered exhaustive.
2.
During the
Uruguay Round negotiations a special Working Group was set up for transport
services. In the course of its work,
this Group examined, in particular, a note by the Secretariat MTN.GNS/W/60
dated 4 July 1989 on "Trade in Transport Services", of which
paragraphs 95 to 106 and Tables 11 to 13 are devoted to land transport. Notes on the Group's three meetings concerned
with land transport are reproduced in documents MTN.GNS/TRANS/1 of 30 July 1990
and MTN.GNS/TRANS/5 of 30 November 1990.
Two drafts sectoral annexes on land transport submitted by Members
(MTN.GNS/TRANS/W/2 of 20 September 1990 and MTN.GNS/TRANS/W/5 of
17 October 1990) are also of interest.
3.
It was
agreed at the outset of the exchange of information programme that the land
transport paper would cover rail transport services (Section 11.E in
document MTN.GNS/W/120: passenger transportation, freight transportation,
pushing and towing services, maintenance and repair of rail transport equipment,
supporting services for rail transport services), road transport services
(Section 11F: passenger
transportation, freight transportation, rental of commercial vehicles with
operator, maintenance and repair of road equipment, supporting services for road
transport services) and pipeline transport (Section 11G: transportation of fuels , transportation of
other goods).
4.
For
convenience, this study has been divided into two parts. The present note deals first with matters
which concern all forms of land transport and then with road transport in
particular. A second note will examine
rail transport in greater detail. As far
as pipeline transport is concerned, it has already been dealt with in the
document on energy services (S/C/W/52).
5.
The land
transport sector covers a wide range of activities which often have little in
common. Thus, some types of transport
are highly capital-intensive (rail transport, pipelines), whereas others
require relatively little investment (taxis, trucks, even coaches). Some employ large numbers of people (rail
transport, for example, where a single company may employ as many as several
hundred thousand people, taxis, HGVs), whereas in other cases labour costs are
of only marginal importance (pipelines).
Moreover, some of these activities take place within a regulatory
context characterized by planning considerations and the need to provide a
public or universal service (urban public transport, passenger rail transport),
whereas others are clearly treated as purely market activities (pipelines,
freight transport by road and rail). The
degree of concentration is also extremely variable. Some activities are in the hands of
monopolies or oligopolies (pipelines, rail transport), while others may be
carried on by companies of various sizes or even by individuals (taxis, urban
and suburban road passenger transport, road haulage). In view of this diversity the economic and
regulatory characteristics can only be described subsector by subsector.
6.
Nevertheless,
these activities have certain features in common. Thus, like telecommunications or energy,
transport provides a "horizontal" service which benefits the economy
as a whole, including the production of both goods and services, and if it is
paralysed, then it is the economy as a whole that suffers. It is also a "downstream" secondary
activity whose cycles follow and amplify those of the general economy, i.e. an
increase in GDP results in a more than proportional increase in the demand for
transport. Furthermore, these are
activities which to some extent compete with each other and with other modes of
transport. Thus, taxis, urban buses and
subways compete for urban passengers;
rail, road, inland waterways, cargo ships and pipelines compete for
freight traffic; and trains, aircraft,
coaches and even taxis compete for the interurban passenger business. This intermodal competition and the steady
haemorrhage of traffic from rail to road which began in the thirties are
largely responsible for the regulatory regime governing land transport, the
"foreign competition" element being marginal and a consideration only
in the road freight transport sector.
7.
Finally,
the various types of land freight transport also have in common the
characteristic of being subject to the GATT rules and having already given rise
to an initial body of jurisprudence.
Article III.1 of the GATT stipulates that "rules, regulations
and requirements affecting … the internal transportation of products … should
not be applied … so as to afford protection to domestic production". Article III.4 establishes a national
treatment principle in this respect, specifying that "[these] provisions
shall not prevent the application of differential internal transportation
charges which are based exclusively on the economic operation of the means of
transport and not on the nationality of the products". These provisions have been interpreted in the
context of two panel reports. Article V of the GATT also establishes
detailed and rigorous rules concerning transit.
Although it has sometimes been invoked during consultations, in
particular in connection with pipelines, it has never been the subject of a
detailed interpretation by a panel. Finally, land transport, and in particular
road freight transport, lies at the heart of the trade facilitation work
currently being undertaken by the WTO under the auspices of the Council for
Trade in Goods, as evidenced, for example, by document G/C/W/113 of 20 April
1998 "Check-list of Issues Raised During the WTO Trade Facilitation
Symposium, Note by the Secretariat".
II.
overview
of the economic, trade and regulatory characteristics of the road transport
sector
8.
Altogether,
road transport represents between 2 and 6 per cent of Members' Gross Domestic
Product (GDP) and employment, depending on their geography, the structure of
their transport network and their level of development. The figures vary considerably even between
neighbouring countries with a comparable level of development: thus, within the European Community road
transport represents 5.7 per cent of Austria's GDP and 5.5 per cent of
employment, whereas in France the corresponding figures are respectively 1.1
per cent of GDP and 1.7 per cent of employment (Source: International Road Transport Union - 1990
figures).
9.
Because of
the downstream nature of road transport activity, the steadily increasing
complexity of production methods (the increasing numbers of plants involved in
the manufacture of a single product) and the generalization of just-in-time
production, road transport has an impact on GDP and employment which far
exceeds these figures. Thus, in the
United Kingdom, an econometric study showed that an increase of £1 on road
transport costs led to a reduction of £1.66p in GDP.
10.
It is not
possible to give a complete geographical breakdown of these figures, even in
terms of GDP, since in their GDP statistics many countries, particularly
developing countries, do not distinguish between modes of transport or, within
the land mode, between road transport, rail transport and pipeline transport. In any event, aggregated at this level, the
figures are of only relative significance.
In fact, road transport covers three large groups, each with its own
economic and regulatory logic: passenger
transport (urban and interurban) and freight transport.