Liberalising trade in services

Although the Doha Round negotiations have not shown any forward movement, a joint statement issued in early July, indicates movement in services negotiations. According to the statement, some members of WTO have got together to kick start negotiations on an agreement to liberalise trade in services.

Current participants are Australia, Canada, Columbia, Costa Rica, the EU, Hong Kong, Israel, Japan, Mexico, New Zealand, Norway, Pakistan, Peru, South Korea, Switzerland, Taiwan, Turkey and the US.

Representatives of these countries have signed the joint statement which announces their intention to “intensify “work towards a new multilateral agreement. The talks are expected to begin in September this year. The joint statement reads that while the GATS “provides a strong foundation … there have been considerable developments in advancing the liberalisation of trade in services in the 16 years since its conclusion.”

In addition, “a significant number of members have made great advances in opening up their [services] markets, both autonomously as well as through more than 100 services trade agreements notified to the WTO,” many of which have “broken new ground both in terms of market access and in the development of improved services trade rules”.

The statement says that a potential deal should build upon the existing WTO General Agreement on Trade in Services (GATS) as well as the subsequent services provisions in preferential trade agreements since established among members.

The participants said they plan to move what have until now been exploratory discussions to “a new phase aimed at clearly defining the contours of an ambitious agreement on trade in services.”

According to the statement, any such agreement should (1) be comprehensive in scope, including substantial sectoral coverage with no a priori exclusion of any sector or mode of supply, (2) include market access commitments that correspond as closely as possible to actual practice and provide opportunities for improved market access, and (3) contain new and enhanced rules developed through negotiations. Finally, the statement encourages other WTO members who “share a high level of ambition for the liberalisation of trade in services, including these objectives, to take part in this effort.” Existing participants are especially considering how to further broaden the involvement of developing countries and how to take into account the interests of least-developed countries.

According to the statement, “any such agreement would aim to capture a substantial part of the liberalisation achieved in other negotiations on trade in services — the outcome of the agreement could then be brought into the multilateral system.”

Although at this point of the negotiations, no sectors or modes are being excluded, the negotiators have said that such an agreement should be comprehensive in its scope and should have substantial sector coverage and that they should negotiate market access commitments that “correspond as closely as possible to actual practice and provide opportunities for improved market access and contain new and enhanced rules developed through negotiations.

During the Doha Round negotiations many of the emerging economies wanted an acceptable deal in agriculture and non agricultural market access if they were to make improved offers in the services sector. No compromise was reached between the developed and the developing country members at that time.

Technical discussions among the newly formed group are covering subjects such as how to multi-lateralise the results of this initiative, whether or not to establish a positive or negative list. Under a negative list, all areas other than those specifically excluded are liberalised and under a positive list, only the areas that the members offer are liberalised. Also discussed are a potential standstill commitment to not create new obstacles to services trade, how to set the level of market access commitments etc.

The very important emerging economies such as Brazil, India, China and South Africa have not participated in the negotiations so far and if these negotiations are to be meaningful, their participation is important as they offer the best services markets of the present and the future.

The services sector will continue to bring revolutionary changes to international trading in the future. As such, these negotiations must be watched closely, particularly if they are able to bring on board the BRIC members and the other important emerging economies.

(Manel de Silva holds an Honours Degree in Political Science from the University of Ceylon, Peradeniya and has engaged in professional training in Commercial Diplomacy at ITC and GATT. She has served as a trade diplomat in several Sri Lankan Missions overseas and was the first female Head of the Department of Commerce as Director General of Commerce.)