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Services in a Development Round: Three Goals and Three Proposals
Abstract
The benefits of services trade reform are huge but services negotiations in the World Trade Organization (WTO) are making little progress. A proximate cause is the current negotiating process, based on an inertial request-and-offer approach rather than a set of goals that would give direction and momentum to the negotiations. The paper suggests that WTO members should consider: (1) locking in the current openness of cross-border trade for a wide range of services; (2) eliminating barriers to foreign investment either immediately or in a phased manner where regulatory inadequacies need to be remedied; and (3) allowing greater freedom of international movement at least for intra-corporate transferees and for service providers to fulfill specific services contracts. A deeper problem is that WTO members have sought to negotiate market access in services without adequately addressing concerns that the General Agreement on Trade in Services (GATS) commitments limit regulatory freedom unduly and unpredictably, that regulatory institutions in many countries are too weak to cope with liberalized markets, and that there is no provision for the regulatory cooperation that is necessary for successful liberalization, particularly of temporary labor mobility. Three types of actions are needed: (1) at the current stage of its development, theGATS must focus primarily on disciplines for measures that discriminate against foreign services and providers, rather than on politically sensitive and legally complex rules for nondiscriminatory measures; (2) a credible assistance mechanism must be established to help developing countries make the regulatory improvements needed for successful liberalization; and (3) where necessary, WTO members should make access commitments on labor mobility conditional on the fulfillment of specific conditions by source countries-to screen services providers, accept and facilitate their return, and combat illegal migration.
... While partial reforms may not be welfare-enhancing for reasons discussed previously, both theory and the evidence suggests that in practice benefits are likely to outweigh costs by a large margin especially if accompanied by goods trade liberalization, and that the potential gains from full services liberalization may well be several times that from goods liberalization. Insofar as the markets concerned are not competitive and policies prohibit new entry, opening up to competition 39 Mechanisms that could facilitate agreement to liberalize mode 4 trade are discussed in Mattoo and Carzaniga (2003) and in Mattoo (2005). The experience of Canada in managing temporary movement is discussed in Blouin (2005); Bhatnagar and Manning (2005) discuss developments in this area in ASEAN. ...
... Their findings suggest greater collective investment by WTO members in monitoring and transparency is needed to increase the benefits of WTO membership to small countries. Jara and Carmen Dominguez (2005) and Mattoo (2005) discuss the negotiating agenda and process in the Doha Round. A precondition for progress is that negotiators identify a set of broad goals for the services negotiations that make sense from a development perspective, provoke engagement from the business community, and satisfy the overall mercantilist constraint of ensuring a "balance of concessions". ...
Since the mid 1980s a substantial amount of research has been undertaken on trade in services. Much of this is inspired by the WTO or regional trade agreements, especially the EU, but an increasing number of papers focus on the impacts of services sector liberalization. This paper surveys the literature, focusing on contributions that investigate the determinants of international trade and investment in services, the potential gains from greater trade (and liberalization) and efforts to cooperate to achieve such liberalization through trade agreements. There is increasing evidence that services liberalization is an important source of potential welfare gains, but relatively little research has been done that can inform the design of international cooperation - both trade agreements and development assistance - so as to more effectively promote development objectives.
... The author finds that a 10% increase in the share of low skilled immigrants in the 2 See http://www.doleta.gov/business/skilltobuild.cfm. See, for instance, Mattoo (2005) labor force decreases the price of immigrant intensive services such as housekeeping and gardening by 1.3% percent and of other non traded goods by 0.2%. ...
This paper analyzes the impact of temporary immigration on the prices of non-tradable goods and services. It presents a model of a small open economy that produces two goods/services, one tradable and one non tradable. It is assumed that temporary immigrants are confined to work in the non-traded sector and that they are only imperfect substitutes for permanent immigrants and native low skill workers. In our theoretical set-up temporary immigration is predicted to have a negative effect on the prices of non-traded goods and services, while the effect of permanent immigrants depends on the relative low skill domestic labor intensity of the non tradable sector. We test these predictions empirically using a panel dataset of 14 U. S. cities for the period 2000-2006. In line with other recent empirical studies we find that both types of immigration have a negative impact on the relative price of non-tradable services as a whole. These findings confirm that immigration, like trade and offshoring, has the potential to increase welfare through the reduction of consumer and input prices. When distinguishing individual non tradable sectors, though, we find evidence that permanent immigration increases the price of transport and health services. This finding is in line with the predictions of earlier theoretical work and suggests in the context of our model that these sectors are less low skill domestic labor intensive than tradable goods and services.
JEL Classification: F22, P42, F16
... multilateral MFN obligation that may lead countries to shy away from committing under the GATS. Mattoo (2005) advances that the entry of foreign service providers raises certain deeply rooted fearsincluding loss of national identity, competition for jobs, and illegal immigration-which are better addressed in a bilateral or regional forum. Preferential arrangements allow host governments to manage labor inflows more carefully, taking into account cultural and other ties between countries. ...
Introduction A remarkable feature of the recent wave of regional trade agreements (RTAs) is the inclusion of a trade in services component in many agreements. At the end of 2006, the WTO counted fifty-four such service accords, of which only five predate the conclusion of the Uruguay Round. The rising interest in service trade agreements reflects a number of developments. First, as tariffs have come down, policymakers have turned their attention to other barriers restricting international commerce. Second, the growth of world trade in goods and the emergence of international production networks have highlighted the importance of an efficient services infrastructure – whether in telecommunications, finance, logistics or legal advice. Market openings in services offer the prospect of performance improvements in services, and allow goods producers to draw on multinational service networks in organizing their business. Third, technological progress has vastly expanded the range of services that can be traded cross-border. The well-known outsourcing phenomenon has led to the emergence of new dynamic export industries in services, which hold significant potential for low-wage developing countries. Finally, many governments have transferred the provision of infrastructure services to the private sector, expanding the scope for foreign participation in services. Indeed, services FDI has grown faster than total FDI in recent years, as service providers from high- and middle-income countries seek out new commercial opportunities in foreign countries.
... A "signaling exercise" among a group of Ministers is being used to seek improved offers on services in parallel with discussions on "modalities" in agriculture and non-agricultural market access (NAMA). It remains to be seen how far these improvements will bridge the gap between what is currently on the table and a more ambitious outcome (Mattoo, 2005). ...
Abstract The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations,and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. P olicy R esea R ch W o R king P a P e R 4672 The outlines of a potential agreement, emerging after
... Therefore, service sector reforms and trade can potentially do much to enhance economic growth and welfare. However, developing countries face two central challenges: first, identifying the particular elements of 'good' (economically sound) services policy; second, assessing how the choice of good policy at the domestic level can be supported by multilateral, regional or bilateral trade negotiations (Mattoo, 2003). The ability of trade agreements to promote real policy changes in services in-country is not clear. ...
... Perhaps greater progress could be made by turning the negotiating progress on its head, and instead of the incremental and unproductive request and offer process, Members could strive directly to define a final package. To be both worthwhile and attainable, such a "package" on services would have to be balanced from a mercantilist perspective, commercially relevant from a business perspective, and offer substance rather than rhetoric from a development perspective (Mattoo, 2005). Indeed, the WTO's Hong Kong Ministerial Declaration sketched out similar ambitious aims. ...
Services trade reform matters, but what is Doha doing about it? It has been hard to judge, because of the opaqueness of services policies and the opaqueness of the request-offer negotiating process. This paper attempts to assess what is on the table. It presents the results of the first survey of applied trade policies in the major services sectors of 56 industrial and developing countries. These policies are then compared with these countries' Uruguay Round commitments in services and the best offers that they have made in the current Doha negotiations. The paper finds that at this stage, Doha promises greater security of access to markets but not any additional liberalization. Uruguay Round commitments are on average 2.3 times more restrictive than current policies. The best offers submitted so far as part of the Doha negotiations improve on Uruguay Round commitments by about 13 percent but remain on average 1.9 times more restrictive than actual policies. The World Trade Organization's Hong Kong Ministerial had set out ambitious goals for services but the analysis here shows that much remains to be done to achieve them.
... But greater ambition will be needed on the market access dimension of services negotiations if the outcome of Doha is to be commercially relevant and thereby garner the needed political support by key industries to approve a negotiated deal in national parliaments. We have written elsewhere on the possible elements of a meaningful Doha deal on market access (Mattoo, 2005). To date offers have been very limited, and few signals have been given by WTO members that they are willing to use the GATS to open service markets to greater competition. ...
Trade and investment in services are inhibited by a range of policy restrictions, but the best offers so far in the Doha negotiations are on average twice as restrictive as actual policy. They will generate no additional market opening. Regulatory concerns help explain the limited progress. This paper develops two proposals to enhance the prospects for both liberalization of services trade and regulatory reform. The first is for governments to create mechanisms (services knowledge platforms) to bring together regulators, trade officials, and stakeholders to discuss services regulatory reform. Such mechanisms could identify reform priorities and opportunities for utilization of aid for trade resources, thereby putting in place the preconditions for future market opening. The second proposal is for a new approach to negotiations in the World Trade Organization, with a critical mass of countries that account for the bulk of services production agreeing to lock-in applied levels of protection and pre-committing to reform of policies affecting foreign direct investment and international movement for individual service providers -- two areas where current policy is most restrictive and potential benefits from liberalization are greatest. If these proposals cannot be fully implemented in the Doha time frame, then any Doha agreement could at least lay the basis for a forward-looking program of international cooperation along the proposed lines.
... Cortes (2006) provides an empirical assessment of 5 "US Jobs: Reach for the Stars...or a Hammer" by Ilana Mercer in WorldNetDaily.com, 11 May 2004. 6 See, for instance, Mattoo (2005) and the interview with Ségolène Royal in El País on 17 September 2006. 4 immigrants' effects on the prices of services in US cities. ...
This paper analyzes the impact of temporary immigration on the prices of nontradable goods and services. It presents a model of a small open economy that produces two goods/services, one tradable and one non tradable. It is assumed that temporary immigrants are confined to work in the non-traded sector and that they are only imperfect substitutes for permanent immigrants and native low skill workers. In our theoretical set-up temporary immigration is predicted to have a negative effect on the prices of non-traded goods and services, while the effect of permanent immigrants depends on the relative low skill domestic labor intensity of the non tradable sector. We test these predictions empirically using a panel dataset of 14 U.S. cities for the period 2000-2006. In line with other recent empirical studies we find that both types of immigration have a negative impact on the relative price of non-tradable services as a whole. These findings confirm that immigration, like trade and offshoring, has the potential to increase welfare through the reduction of consumer and input prices. When distinguishing individual non tradable sectors, though, we find evidence that permanent immigration increases the price of transport and health services. This finding is in line with the predictions of earlier theoretical work and suggests in the context of our model that these sectors are less low skill domestic labor intensive than tradable goods and services.
... Not all WTO members submitted their GATS offers of liberalization. Between May of 2005 and March of 2008 only 30 revised offers were submitted, mainly from developed countries with only a few from developing ones. 2 In fact, many governments exclude all sectors from their offers, which produces a snow ball effect: the more exclusions, the higher vulnerability of governments to domestic lobbies with vested interests and the fewer possibilities for trade-offs between WTO members (Mattoo 2005;Jara, Dominguez 2006). In 2007, Members continued to address the issues of Special and Differential Treatment (SDT) of developing countries in services. ...
Using a computable general equilibrium model we assess the effects of services trade liberalization in Poland and its major trading partners in the context of the WTO Doha Round negotiations and the ongoing process of trade liberalization within the enlarged European Union. The paper provides a thorough descriptive analysis of the data on trade in services. It gives a complete picture of the sectoral and geographical structure of Poland’s trade in services in 2007. We also provide an analysis of revealed comparative advantage indices based on sectoral data. The review of literature is focused on a discussion of the methodology for assessing the barriers to trade in services. The core of the paper consists of a CGE simulation using the GTAP model. We employ the Hoekman (1995) tariff equivalents as a proxy for the initial level of trade barriers. Our four scenarios include those of complete liberalization, EU-only liberalization and two intermediate scenarios. The most optimistic scenario is expected to bring a 0.9% increase in Polish GDP and welfare improvement of close to 0.8% of GDP value. However, more than half of this gain is attributed to the liberalization within the EU that is bound to happen independently from the Doha process.
... A " signaling exercise " among a group of Ministers is being used to seek improved offers on services in parallel with discussions on " modalities " in agriculture and non-agricultural market access (NAMA). It remains to be seen how far these improvements will bridge the gap between what is currently on the table and a more ambitious outcome (Mattoo, 2005). ...
The outlines of a potential agreement, emerging after seven years of negotiations, imply that Doha offers three key benefits: reduced uncertainty of market access in goods and services; improved market access in agriculture and manufacturing; and the mobilization of resources to deal with the trade problems of least developed countries. WTO Members have offered to make large reductions in legally bound levels of protection in goods and services. The reductions in currently applied levels of protection are smaller. For the least developed countries, the proposed"duty free and quota free"access will only add significantly to their access under existing preferential access arrangements if industrial and developing country members include vital tariff lines. The initiatives on trade facilitation and aid for trade can play a valuable catalytic role in promoting reform and mobilizing assistance, but substantial effort is still needed to translate notional benefits into actual gain.
... The first problem can be resolved through explicit measures that guarantee to regulators that their autonomy will not be constrained by the GATS. Mattoo (2005) and Hoekman, Mattoo and Sapir (2007) argue that making national treatment the primary objective of negotiations would do much to provide such assurances. The second problem requires actions to assist developing countries to improve domestic regulatory capacities. ...
This paper discusses what could be done to expand services trade and investment through a multilateral agreement in the World Trade Organization. A distinction is made between market access liberalization and the regulatory preconditions for benefiting from market opening. The authors argue that prospects for multilateral services liberalization would be enhanced by making national treatment the objective of World Trade Organization services negotiations, thereby clarifying the scope of World Trade Organization commitments for regulators. Moreover, liberalization by smaller and poorer members of the World Trade Organization would be facilitated by complementary actions to strengthen regulatory capacity. If pursued as part of the operationalization of the World Trade Organization's 2006 Aid for Trade taskforce report, the World Trade Organization could become more relevant in promoting not just services liberalization but, more importantly, domestic reforms of services policies.
... Jara and Carmen Dominguez (2005) and Mattoo (2005) discuss the services negotiating agenda in the Doha Round. A precondition for achieving progress in such negotiations is that participants identify a set of broad goals that make sense from an economic perspective, provoke engagement from the business community, and satisfy the overall mercantilist constraint of ensuring a " balance of concessions " . ...
Since the mid 1980s a substantial amount of research has been undertaken on trade in services. Much of this is inspired by the World Trade Organization or regional trade agreements, especially the European Union, but an increasing number of papers focus on the impacts of services sector liberalization. This paper surveys the literature, focusing on contributions that investigate the determinants of international trade and investment in services, the potential gains from greater trade (and liberalization), and efforts to cooperate to achieve such liberalization through trade agreements. It concludes that there is increasing evidence that services liberalization is an important source of potential welfare gains, but relatively little research has been done that can inform the design of international cooperation-both trade agreements and development assistance-so as to more effectively promote development objectives.
... However, if rules and commitments affect the substance of the domestic regulation that applies to sectors, regulators can be expected to resist multilateral disciplines that tie their hands. To be both worthwhile and attainable, a 'package' on services must be balanced from a mercantilist perspective, commercially relevant from a business perspective, and offer substance rather than rhetoric from a development perspective (Mattoo, 2005). The focus on obtaining market-opening commitments in the WTO has led to a relative neglect of the wider regulatory context. ...
Little progress has been made since the creation of the WTO on expanding and deepening the coverage of services liberalization
commitments. This paper identifies and discusses five hypotheses that may explain the absence of dynamism: (i) technological
changes allowing ever more services to be traded cross-border unaffected by policy; (ii) strong incentives to pursue liberalization
on an autonomous basis (unilaterally); (iii) perceptions that bilateral or regional cooperation are a good substitute for
the WTO; (iv) standard political-economy factors, such as adjustment costs and resistance by incumbents to erosion of rents;
and (v) concerns that the WTO will affect the ability of regulators to enforce national norms. We argue that all of these
explanations play a role, and that some of these factors significantly impede the scope for reciprocal exchanges of ‘concessions’—the
engine of WTO negotiations.
... rom mode 3 and from the nationality of the employer in the destination country. More generally, it would be possible to deviate from the potentially restrictive definition of mode 4 under GATS. The literature also provides guidance as to the characteristics of such a scheme that would facilitate acceptance of the scheme by potential host countries. Mattoo (2005), for instance, suggests that source countries should accept certain obligations including pre-movement screening and selection, accepting and facilitating return, and commitments to combat illegal migration. He argues that cooperation at the source can help address security concerns, ensure temporariness and prevent illegal labour flows ...
Given the sluggish progress in multilateral trade negotiations Southern and Eastern African negotiators are likely to focus their attention on the negotiations of Economic Partnership Agreements with the European Union. This paper analyses possible advantages and disadvantages for ACP countries of including the services sector in these regional agreements. It describes the latest developments in a number of services sectors, including financial services, tourism and business services. Particular attention is paid to the possible role of mode 4 flows. For each individual sector the role of regulation, the importance of first mover advantages and the possible role of foreign technical assistance are discussed. The paper attempts to identify possible export opportunities for ACP countries and analyses the risks and benefits for these countries of giving preferential access to EU suppliers in those services sectors where African countries are likely to import.
This study aims to analyse the effects of the General Agreement on Trade in Services (GATS) on the investment activities of the Pakistani insurance sector. First, we analyse the impact of GATS on the overall and company-wise return on investment of the insurance sector of Pakistan. In a panel data setting, the traditional fixed and random effect models are unsuitable for dealing with the possible issues, including endogeneity, unobserved heterogeneity, profit persistency, and the correlation between lagged dependent variables and independent variables. Therefore, we apply the Generalised Method of Moments (GMM) system estimator to the panel data from 1984 to 2018. In the Arellano-Bond framework, the estimated results indicate that the overall investment returns of the Pakistani insurance sector have increased after the GATS membership. However, company-wise analysis reveals mixed evidence. The average returns of IGI Insurance Limited and EFU General Insurance Limited have increased significantly after the GATS membership. These results support one of our empirical conjectures that a rising tide lifts some boats more than it does others. Then, we apply Markowitz’s Portfolio Theory to estimate the portfolio returns and the associated risk using the financial statements data from 1984 to 2018. The estimates of portfolio analysis reveal that the portfolio returns of the Pakistani insurance sector improve by 6.70 percentage points after the membership. However, the associated portfolio risk also increases by 11.13 percentage points, 7.40 times higher than the Pre-GATS risk. Despite the better returns, there is an intensive increase in investment volatility after GATS membership. This study provides a valuable reference for insurance managers and the Ministry of Finance and Securities & Exchange Commission of Pakistan to control and improve the insurance sector’s performance in Pakistan.
This chapter explains the basic structure of the General Agreement on Trade in Services (GATS), and how it applies to measures that affect trade in services. Although a number of terms and concepts in the GATS have been borrowed from the General Agreement on Tariffs and Trade (GATT) - the older agreement covering merchandise trade - there are important differences. That is, the GATS is more comprehensive in coverage, its definition of trade in services extends beyond the traditional notion of cross-border exchange to cover consumer movements and factor flows (investment and labor), and the reach of relevant disciplines is not confined to the treatment of products (i.e., services), but extends to measures affecting service suppliers (producers, traders, and distributors). The breadth in scope and coverage of the GATS contrasts with the flexibility of its rules. Unlike under the GATT, the use of quantitative restrictions is legitimate under the GATS unless explicitly foregone by the Member concerned, and national treatment is not a general obligation, but a negotiable commitment. Country specific schedules of commitments define the extent to which these rules apply to individual service sectors. There are no common templates. The chapter then discusses the achievements to date (or lack thereof) in the current Doha Round of services negotiations, with a focus on the issues especially from a developing-country perspective. © International Bank for Reconstruction and Development/World Bank, 2008. All rights reserved.
The Mode 4 commitments of WTO Members are narrow and shallow. Even though trade negotiations for enhanced Mode 4 access started well before the launch of the DDA- prospects for success are thin. These negotiations followed a traditional mercantilist approach- with limited attention to the underlying difficulties countries face in letting people into their borders, either generally, or on the basis of a WTO GATS commitment. This Book argues that this approach alone will not succeed. It proposes a focus not on trading market access concessions only, but on discussions aimed at understanding each other's regulatory approaches. To date, in terms of the literature available, we know very little about how WTO Members are managing their Mode 4 commitments. We know even less about how the WTO could learn from clearly more advanced steps in regional liberalization processes. This Book addresses these issues- through case studies of market access and national treatment commitments, and regulatory approaches in Economic Integration Agreements of a select group of WTO Members. Springer International Publishing Switzerland 2014. All rights reserved.
Theoretically, welfare gains from liberalisation of trade in services arise from falling prices and technology transfers from foreign firms. Empirically, due to the role of the regulatory framework in barriers to trade in services ('behind-the-border' laws) substantial gains are only reached when entry of foreign firms is widened. We have a close look at the way impediments to trade in services affect cost-price margin in telecommunication in Middle East and North Africa (MENA) countries. First, we criticise the measurements of barriers in trade in services, which tend towards an overestimation. Second, we show that analyses bend to overvalue the impact of regulations on the cost-price margin in telecommunications for MENA countries, in line with inadequate econometric techniques or underestimation of the effect of technical progress. Therefore, the best way in terms of trade in services liberalisation is to opt for a flexible, qualitative interpretation of the quantitative results and rank ordering of countries.
In the framework of a work on the developing countries, this thesis analyzes the effects of liberalization of financial services on their economic development. The theory predicts positive effects of liberalization on the economies. This study takes part in it by exploring new forms of correlation between liberalization and economic development. The method used in our research is to treat liberalization of trade in services by three of its aspects. These are the theoretical aspect, the legal aspect and the empirical aspect.
Theoretically, welfare gains from liberalisation of trade in services arise from falling prices and technology transfers from foreign firms. Empirically, substantial gains are only reached when entry of foreign firms is widened. These results rest upon three strong assumptions. First, substitution elasticities need to be important, which is not the case empirically for aggregated service data. Second, information is required on the breakdown of the initial price-wedge between rent and inefficient technology. Third, wage differences do not reflect only productivity gaps. This paper argues that, such strong hypotheses tend to over-estimate the gains expected from liberalising trade in services. Design of reforms and economic policy considerations matter too, including not only timing and sequencing issues but also the trade-off between regional arrangements and multilateral agreements.. 2 We thank participants at 'Premières Journées du GDR Economie du développement et de la transition' in Clermont-Ferrand in July 2007, 'Economic, Social and Environmental Consequences of the Liberalization of Trade in North Africa and the Middle East' co-organised in Rabat in October 2007 by the GATE and the UNCEA and at the Jean Monnet Lecture, in the Frei Universität, Berlin, in June 2009, for their comments and suggestions on an earlier draft of the paper. Usual disclaimers apply.
The rapid development of the Internet and other information communication technologies (ICTs) has led to the growing electronic cross-border delivery of services and digital products such as software. 1 While regional trade agreements increasingly innovate as regards the cross-border delivery of services and the incorporation of chapters on e-commerce, on the multilateral level the General Agreement on Trade in Services (GATS) has not evolved since the end of the Uruguay Round. This paper reviews the progress in bilateral and multilateral trade agreements in securing liberal digital trade, i.e. electronic cross-border trade flows of data, services and digital products. The paper's purpose is to start thinking about what digital trade rules may be needed today and in fifteen years from now. It focuses on the role of the multilateral trading system as regards digital trade flows actually taking place over information networks. The first and the second parts of this paper analyse developments with respect to electronically delivered products and services at the multilateral and bilateral trade levels. The third part raises the question of what digital trade rules are needed today and in 2015–2020. The views expressed in this paper are those of the author, and shall neither be attributed to the Organisation for Economic Co-Operation and Development (OECD) nor its member countries. 1 The term 'e-commerce' is used within the WTO as the 'production, distribution, marketing, sale, or delivery of goods and services by electronic means' (see General Council (GC), Work Programme on Electronic Commerce, WT/L/274 (30 September 1998). With the term digital content the author refers to products which are digitally encoded and transmitted electronically over networks (e.g. movies, music, software, computer games).
The rapid development of the Internet as well as of other information and communication technology (ICT) has led to increased electronic cross-border delivery of services and digital products such as sound recordings, audiovisual works, video games, computer software and literary works. While regional trade agreements increasingly innovate as regards the incorporation of chapters on e-commerce, the cross-border delivery of services, and the inclusion of new Internet-related provisions on intellectual property rights in the online context, on the multilateral level, no substantial progress has been achieved since the end of the Uruguay Round. This paper reviews the progress made in bilateral and multilateral trade agreements in securing liberal digital trade, understood as the electronic cross-border trade of services and digital products. Provisions that concern new IPR rules specific to digital trade are also looked into. Building on these enquiries and taking into account the complexity of the regulatory environment, the paper discusses digital trade rules are needed today and in the future. Forthcoming in Mira Burri and Thomas Cottier (eds.), Trade Governance in the Digital Age (Cambridge: Cambridge University Press, 2011).
By the beginning of this year, EU institutions are approving a proposal of directive on the internal market services liberalization. It is probably the last important step along the path of european economic integration, started in 1957 with the Treaty of Rome. The proposal has not yet an easy pattern, above all for the "country of origin principle". This principle is seen by the supporters as an important tool to speed up the process, but by the opponents as a way to favour possible bottom races for social standards, due to a competition based exclusively upon the employment factor. A basic question is what it will remain at the end of the day, after revisions, corrections, integrations that characterize intermediate steps to find a more accepted solution that could let start a slower liberalization pattern. The work begins with an introductory section where we briefly review the phases of market liberalization, trying to fix the principal points and the sectors interested by the directive, the actual situation and the changes of the proposal. Then, we show theoretical - empirical evidence about service liberalizations, with specific reference to the hypothesis of directive. A quantitative - qualitative analysis of a case study about an Italian province, neighbouring with a new entered country and with an high proportion of services activities, is a first attempt to analyse the expectations of the subjects involved by the proposal. Finally, some considerations follow.
The purpose of this paper is to provide basic research on how sovereign states should cooperate internationally for effective control of temporary cross-border movement of labor, focusing especially on the accomplishments under the framework of regional trade agreements (RTAs). In the course of globalization, migration streams have increased in scale and become more diversified and complex, including irregular migration. Facing these trends, many receiving countries are enforcing tougher border control regulation, along with which the legal framework of international cooperation between countries of source and destination is being built for the purpose of controlling migration flows. With regard to the GATS Mode 4, a subset of temporary labor migration is also recognized as the subject of liberalization from the trade policy perspective. As a result, the cross-border movement of labor issue, which was previously subject solely to the controls and regulations of sovereign states as a migration policy problem, has in recent years come to also be recognized very strongly as a trade policy problem. While the GATS Mode 4 multilateral negotiations have not been able to accomplish results as initially expected, we can find various examples in which further liberalization has been realized in the case of RTAs. Their approaches to labor mobility are in a wide variety of ways. Some cover the mobility of people in general, including permanent migration and right of residence within the whole region and others are confined to GATS-type movement (temporary movement of service providers). This divergence is in large part explained by, firstly, the individual factors of each RTA including the geographic proximity, similarities in levels of development, and cultural and historical ties, and secondly, the extent to which the contracting parties are aiming as the goal of the RTAs: whether they aim at deep economic integration or limit their commitment only to the extent of contributing to trade and investment liberalization. The following results can be drawn from this research. (1) Problems regarding cross-border movement of labor need various regulatory methods corresponding to the various forms of labor mobility. (2) The types of cross-border movement of labor that should be liberalized on the MFN-treatment basis under the GATS multilateral negotiation are rather limited, and with regard to other types it is desirable that liberalization be pursued bilaterally or on a regional level. (3) The divergence of RTA provisions governing cross-border movements of labor reflects the complex intertwining of both migration and trade policies, and it is essential to study and understand their meanings from these policies' perspectives in order to achieve a desirable liberalization of cross-border labor mobility for all interested parties.
A critical analysis of barriers to trade in services
Trade in services covers four modes of supply: cross-border trade, consumption abroad, commercial presence and presence of natural persons. Thus, impediments to trade in services involve the regulatory framework. Domestic reforms are at stake to provide falling prices and technology transfers arising from trade liberalisation for forward using industries. We look at the way gravity equations explain the determinants of trade in services and how they permit to assess the gain arising from the removal of impediments to trade. First, we criticise the measurements of barriers to trade in services. We then show that if gravity equations provide a good fit for international transactions in services, they tend to overestimate the impacts of impediments to trade in services and thus the growth of exports and
Fdi
inflows occurring from liberalisation.
Classification JEL : F13, F14, F53, L8
A fashionable feature of new generation preferential trade agreements (PTAs) has been the inclusion of a trade in services component. Does this trend imply a fundamental shift in the governance of world services trade towards fragmented and discriminatory trade arrangements? This paper will use the experience of PTAs negotiated so far and the literature on the political economy of regional integration to analyze the nature of preferential services liberalization and its consequences for the multilateral trading system. It will argue that these agreements unleash political economy forces that both help and hinder further progress at the WTO.
The General Agreement on Trade in Services (GATS) has attracted much attention in public and academic debate. The aim of this article is to analyse the application of the GATS to internet-based services, thus providing a lens through which important issues concerning the GATS can be highlighted. This article reviews the far-reaching implications of the recent US - Gambling dispute for the regulation of (internet-based) services. It argues that World Trade Organization Members need to make a greater effort to delineate the key GATS obligations (market access, national treatment, and disciplines on domestic regulation) in order to provide national law- and policy-makers and trade negotiators with more legal certainty and predictability in the application of the GATS.
This paper evaluates the challenges and opportunities confronted by five major members of Association of Southeast Asian Nations (ASEAN-5). The structural transformation of ASEAN-5 is being assessed by examining the role of services in value added, trade and employment. The issue of ASEAN-5 export competitiveness in services is tackled by analysing the revealed comparative advantage (RCA) indices for transport, travel, insurance and financial services. Also, this paper evaluates the members' service trade liberalisation scorecard. This paper contends that, apart from the external trading environment, industry, firm and delivery mode-specific factors play an important role in shaping firms' decisions to export.
Fermenting baker’s yeast converts the unsaturated aldehydes 7 and 11 into the saturated alcohols 8 and 12, respectively. The microbial saturation of the double bond proceeds in high chemical yields and the stereoselectivity of the reduction is strongly influenced by the E∶Z ratio of the substrate. Enantiopure 8 and 12 are chiral building blocks for the synthesis of bisabolene sesquiterpenes and their usefulness is shown in the preparation of (+)-epijuvabione 1 and (−)-juvabione 3.
Introductory remarks The successful culmination of the General Agreement on Trade in Services (GATS), while unsatisfactory in terms of the ‘teeth’ of general obligations or the level of liberalisation commitments, provides the legal framework for liberalising the services trade. The breadth of the GATS coverage; the novelty of the issues at stake; the sectoral diversity; the specificities associated with services of which the state used to be the monopoly supplier or was involved in supplying; the regulatory intensity of several services sectors and the inherent complexity of the GATS due to the multiple modes of supply, are only few of the justifications for the deficiencies of the GATS. Thus, the GATS can still be seen as a work in progress, more than a decade after its inception. Although WTO Members concluded the drafting of Articles XVI and XVII, they failed to agree on a provision that would tackle origin-neutral domestic regulations with an unduly trade-distortive effect. Consequently, at the end of the Uruguay Round, Members adopted the current (weak and provisional) wording of Article VI:4 GATS. Leaving this provision unfinished, together with the choice of making the national treatment obligation a negotiable commitment, has considerably weakened the potential ‘bite’ of the GATS. For want of anything better, Members explicitly conveyed in Article VI:4 their willingness to develop, through a work programme, concrete disciplines on domestic regulation. © Cambridge University Press 2008 and Cambridge University Press, 2009.
This paper reviews the progress in bilateral and multilateral trade agreements in securing liberaldigital trade, i.e. electronic cross-border trade flows of data, services and digital products. Thepaper’s purpose is to start thinking about what digital trade rules may be needed today and infifteen years from now. It focuses on the role of the multilateral trading system as regardsdigital trade flows actually taking place over information networks.The first and the second parts of this paper analyse developments with respect to electronicallydelivered products and services at the multilateral and bilateral trade levels. The third part raisesthe question of what digital trade rules are needed today and in 2015–2020
This Negotiation Advisory Brief has been prepared as part of ILEAP's work programme on Aid for Trade. It is intended for general information purposes only, and should not be relied upon as legal advice, nor is it intended to replace legal advice. It was drafted under the coordination of ILEAP Executive Director Dominique Njinkeu (and edited and published under his responsibility) by Massimiliano Calì of the Overseas Development Institute (ODI), London, with inputs and suggestions from Sheila Page, Hugo Cameron, Dominique Njinkeu, and Dirk Willem te Velde. Genevieve Matthews provided editorial assistance. Views expressed in this publication should not be attributed to ILEAP, its Board of Directors, its funders, or the institutions with which lead advisors are associated. Comments can be sent to the ILEAP Secretariat (dominique.njinkeu@ileap-jeicp.org).
Although a number of WTO Members have made commitments to television services sector in the initial and revised offers during the Doha Round, the regime offered still appears extremely restrictive. As evidenced by the China-Hongkong Closer Economic Partnership Arrangement (CEPA) and the EU Television without Frontier (TVWF), a general producer-based rule of origin for services trade may fall short of realizing the legal and economic rationales of the concept of origin. Considering the impact of the multiplicity of channels available for distribution of television services made possible by new technology, legal and precise defi nitions are needed to determine the ‘origin’ of television services. Moreover, the ongoing panel proceeding of China-AVHE is a signifi cant opportunity to clarify the issues as to whether audiovisual services should be treated as ‘ordinary’ services. In any event, the W/120 classifi cations and their correspondence with the Central Product Classifi cation (CPC) need to be renegotiated to make it clear whether the General Agreement on Trade in Services (GATS) disciplines should apply to services delivered on demand, such as Internet downloads.
* Provides an innovative account of the perceived tension between free trade and human rights, setting out and critically examining the assumptions underlying this debate
* Gives a full overview of the social history of the trade and human rights debate
* Suggests a new framework for the trade and human rights debate, focusing on the WTO's role in bringing together the expert knowledge and informal relationships that drive states' behaviour in the international economic order.
The rise of economic liberalism in the latter stages of the 20th century coincided with a fundamental transformation of international economic governance, especially through the law of the World Trade Organization. In this book, Andrew Lang provides a new account of this transformation, and considers its enduring implications for international law. Against the commonly-held idea that 'neoliberal' policy prescriptions were encoded into WTO law, Lang argues that the last decades of the 20th century saw a reinvention of the international trade regime, and a reconstitution of its internal structures of knowledge.
In addition, the book explores the way that resistance to economic liberalism was expressed and articulated over the same period in other areas of international law, most prominently international human rights law. It considers the promise and limitations of this form of 'inter-regime' contestation, arguing that measures to ensure greater collaboration and cooperation between regimes may fail in their objectives if they are not accompanied by a simultaneous destabilization of each regime's structures of knowledge and characteristic features. With that in mind, the book contributes to a full and productive contestation of the nature and purpose of global economic governance.
In 2005 the WTO Appellate body ruled that the United States' total prohibition on cross border gambling services was unlawful under the General Agreement on Trade in Services (GATS). The questions raised by the case - whether and how a Government could block service provision on moral grounds - went to the heart of key controversies surrounding international economic law. How do you reconcile a liberal system of international trade in services with national governments' desire to protect social values through service regulation? How much control are the WTO members willing to transfer to the WTO? How much regulatory diversity can the international trading system withstand? This book provides a comprehensive analysis of the regulation of services under the WTO's GATS Agreement. Through a thorough examination of the GATS negotiation history, substantive provisions, judicial interpretation, and ongoing reform process, the book presents a clear picture of how the multilateral trading system justifies and tolerates regulatory diversity. In this respect, the book focuses on the core general principles of necessity and transparency, which would allow the assessment of the consistency with the GATS of domestic regulations in services at a horizontal, cross-sectoral level. In addition, the book reviews with a critical eye the ongoing GATS negotiations on the creation of rules on domestic regulations. Available in OSO: http://www.oxfordscholarship.com/oso/public/content/law/9780199533152/toc.html
The WTO intellectual property and services agreements (TRIPs and GATS) form the global legal framework in which governments now regulate trade in knowledge. This second edition analyses the provisions of the agreements and examines closely the thirteen years of implementation and revision. Gathering together the interpretations placed on the agreements by the WTO dispute settlement bodies, it reports on the initiatives taken by the members both to liberalise trade in knowledge and to shape international business regulation. Drawing on this, Christopher Arup assesses the future of the WTO as a global law-making institution. Three expanded case studies (legal services, genetic codes/essential medicines, and on-line media) illustrate the impact of the agreements and highlight the challenges faced by the WTO in reconciling free trade with social regulation.
A substantial body of research has taken shape on trade in services since the mid-1980s. Much of this is inspired by the WTO and regional trade agreements. However, an increasing number of papers focus on the impacts of unilateral services sector liberalization. The literature touches on important linkages between trade and FDI in services and the general pattern of productivity growth and economic development. This paper surveys the literature on services trade, focusing on contributions that investigate the determinants of international trade and investment in services, the potential gains from greater trade, and efforts to cooperate to achieve such liberalization through trade agreements. There is increasing evidence that services liberalization is a major potential source of gains in economic performance, including productivity in manufacturing and the coordination of activities both between and within firms. The performance of service sectors, and thus services policies, may also be an important determinant of trade volumes, the distributional effects of trade, and overall patterns of economic growth and development. At the same time, services trade is also a source of increasing political unease about the impacts of globalization on labor markets, linked to worries about offshoring and the potential pressure this places on wages in high income countries.
[eng] We present a two-sided search model where agents differ by their human capital endowment and where workers of different skill are imperfect substitutes. Then the labor market endogenously divides into disjoint segments and wage inequality will depend on the degree of labor market segmentation. The most important results are : 1) overall wage inequality as well as within-group and between-group inequalities increase with relative human capital inequality ; 2) within-group wage inequality decreases while between-group and overall wage inequalities increase with the efficiency of the search process ; 3) within-group, between-group and overall wage inequalities increase with technological changes. [fre] Immigration et justice sociale. . Cet article est d�di� � la m�moire d'Yves Younes qui nous a quitt�s en mai 1996, et dont les derni�res r�flexions sur l'importance du ph�nom�ne migratoire dans les �tats-Unis des ann�es 1980-1790 m'ont beaucoup influenc�.. L'ouverture des fronti�res entre le Nord et le Sud peut-elle se retourner contre les plus d�favoris�s du monde, c'est-�-dire les non-qualifi�s du Sud ?. Avec deux facteurs de production, les migrations Sud-Nord b�n�ficient tou�jours aux moins qualifi�s du Sud, puisqu'ils y sont le facteur le plus abondant. Mais avec trois facteurs de production (trois niveaux de qualifications, ou deux niveaux et un facteur capital imparfaitement mobile), l'ouverture des fronti�res peut conduire � une baisse du salaire des moins qualifi�s du Sud si leur compl�mentarit� avec le travail tr�s qualifi� ou le capital du Nord est suffisamment faible compar�e � celle des sudistes plus qualifi�s.. Plusieurs �tudes r�centes sugg�rent effectivement que les �lasticit�s de compl�mentarit� chutent brutalement au-del� d'un certain �cart de qualification. Cependant, rien ne prouve que ces effets soient suffisamment forts pour que l'ouverture optimale des fronti�res du point de vue de la justice sociale
This report emphasizes high-income countries’ responsibility to lead by example in pursuing more open markets and in supporting the Least Developed Countries to raise their export competitiveness. It proposes concrete and practical steps that governments and international agencies can undertake to bring trade to bear on development. The report has been prepared by a group of leading experts who contributed in their personal capacity and volunteered their time to this important task. I am very grateful for their thorough and skilled efforts, and I am sure that the practical options for action in this report will make an important contribution to achieving the Millennium Development Goals. I strongly recommend it to anyone who is interested in how to mobilize trade for development.
Thesis (doctoral) - Universität, Bayreuth, 2005.
Dans le cadre d'un travail sur les pays en développement, cette thèse analyse les effets de la libéralisation du commerce des services financiers sur le développement économique. La théorie prévoit des effets positifs de la libéralisation sur les économies. Cette étude y participe en explorant des nouvelles formes de corrélation entre la libéralisation et le développement économique. La méthode utilisée dans notre recherche est de traiter de la libéralisation du commerce des services en abordant trois de ces aspects. Il s'agit donc de l'aspect théorique, de l'aspect légal et de l'aspect empirique.
Little progress has been made to date in using the GATS framework to lock-in already implemented unilateral reforms, let alone
in inducing new liberalization. The same is true for rule-making efforts. A number of potential explanations for the lack
of traction are identified and assessed. These include limited feasibility of using the reciprocity mechanism to mobilize
domestic export interests; less need for reciprocity to achieve global welfare improvements in policy; weaknesses in domestic
regulatory capacity; and uncertainty/asymmetries regarding the magnitude and distribution of costs and benefits of policy
reforms. All these factors play a role in reducing the scope for the GATS to be an effective instrument to help governments
overcome domestic and international policy externalities. Changes in negotiating modalities and focus could help strengthen
the relevance of the GATS as an instrument of multilateral cooperation.
Services trade has truly become an engine of world growth. Over the past two decades, international trade in services has
grown faster than world merchandize trade, which in turn has grown faster than world output. A combination of policy liberalization
and technological progress has facilitated trade in many previously untradable services. However, very little progress has
been made towards new policy liberalization in the ongoing Doha Development Round. This article discusses trade in services
in five sections. Following a short introduction, Section I presents data on the past growth of services trade flows and makes
rough projections of future expansion. The second and third sections summarize the achievements of the WTO in the service
field, both as a negotiating forum and a dispute settlement system. The third section also emphasizes how FTAs are now playing
the leading role in services liberalization. The fourth section critiques the absence of progress in the Doha Round and the
fifth section examines the hot issue of services outsourcing. The concluding section offers policy recommendations for containing
a possible protectionist backlash and promoting new liberalization.
The study, thus, touches only tip of an iceberg in terms of its analytical power to explain movement of students across nations. It points out to the definite existence of country specific barriers and from a pilot case study in India, highlights some of these possible barriers. However, future studies should be attempted to understand the extent of barriers to trade in education services through more intensive primary survey and bilateral country studies.
This paper discusses what could be done to expand services trade and investment through a multilateral agreement in the WTO. A distinction is made between market access liberalization and the regulatory preconditions for benefiting from market opening. We argue that prospects for multilateral services liberalization would be enhanced by making national treatment the objective of WTO services negotiations. Moreover, if complemented by assistance to strengthen regulatory capacity in developing countries, the WTO could become more relevant in promoting not just services liberalization but, more importantly, domestic reforms of services policies. Copyright 2007 The Authors
Journal compilation 2007 Blackwell Publishing Ltd
This paper discusses what could be done to expand services trade and investment through a multilateral agreement in the WTO. A distinction is made between market access liberalization and the regulatory preconditions for benefiting from market opening. We argue that moving forward on multilateral services liberalization requires a shift from bilateral request-offer negotiations to a model schedule approach that sets ambitious objectives - ideally full national treatment for the major backbone services. Attainment of such objectives, especially by smaller and poorer members, requires procompetitive regulation and strengthened regulatory institutions in developing countries. This suggests linking implementation of liberalization commitments to the provision of development assistance (‘aid for trade’) to bolster regulatory capacity and enforcement could enhance the relevance of the WTO for developing countries. Bolstering WTO mechanisms to monitor the actions of both developing and high-income country governments could make the institution much more relevant in promoting not just services liberalization but, more importantly, domestic reform of services policies.
The rapid development of the Internet has led to a growing electronic cross-border delivery of services. While the WTO negotiations have not caught up to the reality of such service trade, the first GATS case dealing with the Internet, namely United States Measures Affecting the Cross-Border Supply of Gambling and Betting Services , has advanced matters. This paper distils the substantive conclusions of the case and remaining questions in relation to Internet-supplied services and certain core concepts of the GATS. Moreover, it sheds light on the case s implications for the services negotiations under the ongoing Doha Development Agenda. It concludes that the second ever GATS case has provided an encouraging set of answers to the unresolved questions of the WTO s Work Programme on E-Commerce, mainly confirming the applicability of GATS commitments to electronically supplied services and shaping the concept of technological neutrality. While more work or dispute settlement cases are necessary to clarify the remaining questions, the rulings have paved the way for the GATS to be a more effective discipline for cross-border (electronic) trade. The paper also explains that a chilling effect of the rulings on the Doha services negotiations is not warranted.
Cross-border trade in services is growing rapidly, with both developed and developing countries among the most dynamic exporters. Despite the substantial global benefits from such trade, the adjustment pressures created in importing countries could provoke a protectionist backlash -some signs of which are already visible in procurement and regulatory restrictions. The current negotiations under the Doha Development Agenda offer an opportunity to lock in current openness and preempt protectionism. This note describes how a bold initiative under the General Agreement on Trade in Services (GATS) can help secure openness. The views expressed in this paper are those of the authors, and not necessarily those of the institutions to which they belong. Discussions with Rudolf Adlung, Abdel-Hamid Mamdouh, Catherine Mann and Juan Marchetti were critical to developing the arguments presented here. The comments of other participants in seminars in India and Paris are gratefully acknowledged.
This paper is concerned with three problems in the interpretation of the national treatment obligation in the General Agreement on Trade in Services (GATS). First, the precise domain of Article XVII on national treatment has not been clearly delineated, particularly in relation to Article XVI dealing with market access. Secondly, there is a difference between the text of Article XVII and the structure of the schedules of commitments, which makes it difficult to interpret the scope of the national treatment obligation even for identical services supplied through different modes. The final, and most complex, problem arises in establishing the definition of "like" services and "like" service suppliers. Uncertainty about the precise meaning of the national treatment obligation may undermine the key GATS objective of creating a secure, predictable trading environment. Moreover, the extent of liberalization implied by the commitments under GATS depends on the precise choice of interpretation., but none of them are responsible for the errors that undoubtedly remain.
This article discusses the National Treatment (NT) obligation as applied in the GATT tax discrimination cases. The central thesis of the paper is that case-law has not clarified the interpretation of the terms in Article III. It appears that the reason for this failure is the lack of a conceptually coherent view of the role of the NT obligation. After summarizing the case-law on discriminatory taxation, this article lays out a theory of the role of NT in trade agreements, in order to shed light on appropriate interpretations of the terms appearing in Article III. We start from the notion that the GATT is an obligationally incomplete contract. This incompleteness invites beggar-thy-neighbour type behaviour, and the NT obligation is an imperfect remedy for such problems. We suggest that likeness/directly competitive or substitutable (DCS) should be determined ‘in the market place’, whereas the ‘so as to afford protection’ criterion is ultimately about the protection of expectations concerning the intent behind domestic regulations. But since intent usually cannot be determined directly, adjudicating bodies have to seek recourse to indirect evidence, as is frequently done in legal practice.
This paper evaluates the impact of service sector trade liberalization on the world economy by a ten-region, eleven-sector CGE model with import embodied technology transfer from developed countries to developing countries. Simulation results show that service sector trade liberalization not only directly affects world service production and trade, but also has significant implications for other sectors in the economy. The major channel of the impact is through inter-industry input-output relations and TFP growth induced from services imported by developing countries from developed countries, which may be embodied with new information and advanced technology.
Cross-border trade in services is growing rapidly, with both industrial and developing countries among the most dynamic exporters. Despite the substantial global benefits from such trade, the adjustment pressures created in importing countries could provoke a protectionist backlash-some signs of which are already visible in procurement and regulatory restrictions. The current negotiations under the Doha Development Agenda offer an opportunity to lock in current openness and preempt protectionism. This paper describes how a bold initiative under the General Agreement on Trade in Services can help secure openness.
There are two key issues that must be addressed in evaluating GATS. First, what does it do to bind current policies? Second, has it established a mechanism that is likely to induce significant liberalization in the future? Seeks to provide answers to these questions, and begins with a brief overview of global trade flows in services and a discussion of the implications of the lack of information on trade barriers for multilateral negotiations. Provides a summary of the main elements of GATS and analyzes the sectoral coverage of the commitments made by the 97 members that had presented their services schedules to the GATT Secretariat. Discusses possible implications of the scheduling approach that was chosen, and asks whether future negotiations in the GATS content are likely to lead toward a fully nondiscriminatory trade regime (as opposed to managed trade). Examines options for addressing the architectural weaknesses of GATS.
This paper contributes empirically to our understanding of informed traders. It analyzes traders' characteristics in a foreign exchange electronic limit order market via anonymous trader identities. We use six indicators of informed trading in a cross-sectional multivariate approach to identify traders with high price impact. More information is conveyed by those traders' trades which--simultaneously--use medium-sized orders (practice stealth trading), have large trading volume, are located in a financial center, trade early in the trading session, at times of wide spreads and when the order book is thin.
The author analyzes the results of the financial services negotiations under the World Trade Organization's General Agreement on Trade in Services (GATS). He shows that the negotiations have contributed to more stable and transparent policy regimes in many developing and transition economies and that the commitments in no way compromise the countries'ability to pursue sound macroeconomic and regulatory policies. But even though the number of countries that participated in the eventual agreement was impressive, the liberalizing content of commitments was in many cases quite limited. Numerical estimates suggest that in general the African and Eastern European participants made much more liberal commitments than the Asian and Latin American participants. On the whole, the outcome probably reflects how each participant balances the benefit of unilateral commitments against the benefit of retaining bargaining chips for future multi-sectoral negotiations. Two aspects of the outcome cause concern: 1) There has been less emphasis on introducing competition by allowing new entry than on allowing (or maintaining) foreign equity participation and protecting the position of incumbents. 2) Where it was deemed infeasible to introduce competition immediately, participants have taken little advantage of the GATS to lend credibility to liberalization programs by pre-committing to future market access.
The previous General Agreement on Trade in Services (GATS) negotiations produced little liberalization of the movement of individual service providers (mode 4), and the potentially large global gains from suchmovement remain unrealized. In the current negotiations, as part of the Doha Development Agenda, developing countries are seeking greater openness in their area of comparative advantage: the movement of providers unrelated to commercial presence abroad. At the same time, many multinational firms would like easier intra-corporate movement of their personnel. We describe how this coincidence of interest could be harnessed to deliver greater openness at least for skilled service providers.
We discuss liberalising the temporary mobility of workers under Mode 4 of the GATS, particularly the movement of medium and low skilled service providers between developing and developed countries. Such mobility potentially offers huge returns: a flow equivalent to three per cent of developed countries’ skilled and unskilled work forces would generate an estimated increase in world welfare of over US$150 billion, shared fairly equally between developing and developed countries. The larger part of this emanates from the less‐skilled, essentially because losing higher‐skilled workers cuts output in developing countries severely. The mass migration of less skilled workers raises fears in developed countries for cultural identity, problems of assimilation and the drain on the public purse. These fears are hardly relevant to temporary movement, however. The biggest economic concern from temporary mobility is its competitive challenge to local less skilled workers. But as populations age and the average levels of training and education rise, developed countries will face an increasing scarcity of less skilled labour. Temporary mobility thus actually offers a strong communality of interest between developing and developed countries.
The remainder of the paper looks at the GATS provisions on Mode 4 and the commitments that have been made under it. The paper reviews several official proposals for the Doha talks, including the very detailed one from India, and considers several countries’ existing schemes for the temporary movement of foreign workers. Many countries have long had bilateral foreign worker programmes, and some regional agreements provide for liberal and flexible movement. These show what is feasible and how concerns can be overcome. We caution that, to be useful, any WTO agreement must increase mobility, not just bureaucratise it.
The paper concludes with some modest and practical proposals. We suggest, inter alia, that licensing firms to arrange the movement of labour is the most promising short‐term approach to increasing temporary mobility.
After failure to agree at the end of the Uruguay Round, and after reaching an interim agreement in July 1995, the negotiations on financial services in the context of the General Agreement on Trade in Services (GATS) were finally concluded in December 1997. The largest service sector, including banking, insurance and other financial services, was now fully subject to multilateral trade rules. Not only did the agreement consolidate the relatively open policies of industrial countries which account for much of world trade in financial services, it also elicited wide participation from both developing countries and countries in transition. This paper studies the commitments on financial services that have been made by close to one hundred developing countries and all the Eastern European Members of the WTO. Earlier research by Kono et al. (1997), Sorsa (1997) and Kono and Low (1996) took stock of what had been achieved by July 1995. This paper first updates and deepens the previous analyses of commitments, and then examines some of the economic implications. The next section describes how financial services fit into the GATS framework, and examines whether broader economic concerns justify limiting the scope of commitments. Section 3 analyses the pattern of market access commitments of the developing countries and countries in transition. Section 4 examines the relationship between the GATS commitments and the domestic reform process. Section 5 discusses the economic implications of allowing foreign participation through equity ownership in existing financial institutions rather than through new entry. Section 6 concludes the paper.
Expanding WTO Membership and Heterogeneous Interests, forthcoming in the World Trade Review
- B Hoekman
Hoekman, B. (2005), Expanding WTO Membership and Heterogeneous Interests,
forthcoming in the World Trade Review.
- Un Millennium
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UN Millennium Project, Task Force on Trade (2004), Trade for Development, New
York, United Nations.