Liberalizing trade in services : a survey

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.Economic Theory&Research,Trade and Services,Free Trade,Transport Economics Policy&Planning,ICT Policy and Strategies

The next round of services negotiations: identifying priorities and options

International trade

Tentative first steps : an assessment of the Uruguay Round agreement on services

A major result of the Uruguay Round was the creation of a General Agreement on Trade in Services (GATS). The GATS greatly extends coverage of the multilateral trading system, establishing rules and disciplines on policies affecting access to service markets. In this paper, the author asks: what does the GATS do to bind policies? And has it established a mechanism likely to induce significant liberalization through future rounds of negotiations? The GATS consists of two elements: 1) a set of general concepts, principles, and rules that apply across the board to measures affecting trade in services; and 2) specific commitments on national treatment and market access. These apply only to service activities listed in a member's schedule - reflecting the agreement's"positive-list"approach to determining coverage - and only to the extent that sector-specific or cross-sectoral qualifications or conditions are not maintained. The impact of the GATS depends largely on the specific commitments made by members, and sectoral coverage is far from universal. High-income countries scheduled about half of their service sectors; developing countries as a group (including Eastern European countries in transition) scheduled only 11 percent. And the sectors scheduled often continue to be subject to measures that violate national treatment or limit market access. High-income countries scheduled only 28 percent of the universe of services without exceptions to national treatment or market access obligations. For developing countries, that figure is only 6.5 percent. Much remains to be done. The GAT's weaknesses include: 1) a lack of transparency. No information is generated on sectors, subsectors, and activities in which no commitments are scheduled - most often the sensitive areas where restrictions and discriminatory practices abound; 2) the sector-specificity of liberalization commitments. Negotiations were driven by the concerns of major players of each industry, leading to an emphasis on"absolute"sectoral reciprocity, limiting the scope for incremental liberalization, tradeoffs across issues, and an economywide perspective; and 3) the limited number of generic rules. Rather than lock in liberal situations that exist, the GATS allows for the future imposition of restrictions (creating"negotiating chips"). To foster nondiscriminatory liberalization, sectoral agreeements should be firmly imbedded in a framework of general rules and disciplines. Many of the framework's general principles apply only if specific commitments have been made. Therefore they are not general. Proposals for improving the GATS should probably build on the existing structure as mush as possible. Possibilities include the following: 1) ultimately, apply the same rules to goods and services. Eliminate the artificial distinction between the two; 2) adopt a negative-list approach to scheduling commitments for the sake of transparency; 3) eliminate overlap between national treatment and market access; 4) develop generic,"horizontal"disciplines for the different modes of supply through which service markets may be contested; 5) explore the possibility of converting quota-like market access restrictions to price-based equivalent measures, thus ensuring that the most-favored-nation and national treatment principles are satisfied; 6) make framework disciplines general by eliminating all instances in which rules are conditional on the scheduling of specific commitments; and 7) agree to a formula-based approach for liberalizing and expanding the GAT's sectoral coverage in future negotiations.Economic Theory&Research,Environmental Economics&Policies,Payment Systems&Infrastructure,Decentralization,Health Economics&Finance,Health Economics&Finance,Economic Theory&Research,Trade and Services,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,ICT Policy and Strategies

Competition policy and the global trading system : a developing country perspective

Starting in the late 1980s, policy makers and academics began increasingly to call for the development of multilateral discipline on anticompetitive practices. Some believe that falling trade barriers must be complemented by antitrust measures to ensure that foreign competition materializes; some believe that without multilateral discipline it would be impossible to limit the use of anti-dumping and related policies; and some believe that the exercise of market power by global multinationals requires a global code on competition. Efforts to establish multilateral disciplines on competition have resulted only in various codes of conduct, none of them legally enforceable. But prospects for negotiating an agreement improved with the recent decision at the first ministerial meeting of the World Trade Organization (WTO) to establish a working group on the topic. The author evaluates various options from the perspective of developing countries: agreeing to minimum standards for national antitrust laws; expanding the reach of the WTO provision on nullification and impairment to policies that restrict competition; granting the WTO a mandate to advocate competition; and doing nothing. He concludes that developing counties would benefit from and agreement that: bans price-fixing and marketsharing; includes a ban on export cartels; initiates a process of replacing anti-dumping actions with enforcement of domestic competition laws; and strengthens the WTO s mandate to advocate co nt may be quite difficult, however, as some of these elements will be opposed by various special-interest groups in industrial countries.Payment Systems&Infrastructure,Environmental Economics&Policies,Economic Theory&Research,Labor Policies,Markets and Market Access,Trade and Regional Integration,ICT Policy and Strategies,Environmental Economics&Policies,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Economic Theory&Research

Proposals for WTO reform : a synthesis and assessment

This paper summarizes the major arguments and proposals to reform the modus operandi of the World Trade Organization --including decision-making procedures, negotiating modalities, and dispute settlement. Much has already been done to improve the internal and external transparency of World Trade Organization processes. Some proposals for structural reform ignore incentive constraints and the fact that the World Trade Organization is an incomplete contract that must be self-enforcing. Others -- such as calls for a"critical mass"approach to negotiations --can already be pursued (and have been). The agenda for international cooperation increasingly revolves around"behind-the-border"regulatory externalities that do not necessarily lend themselves to binding commitments in a trade agreement. This suggests a focus on strengthening notification/surveillance and developing more effective mechanisms for dialogue on regulatory policies that may create negative spillovers.Economic Theory&Research,Trade Law,World Trade Organization,Trade and Services,Free Trade

Developing Countries and the Political Economy of the Trading System

trade policy, economic development, international negotiations, WTO

The WTO and the Doha Round: Walking on Two Legs

The Doha Round of the World Trade Organization (WTO) negotiations has been ongoing for 10 years, and given political cycles in major countries, there is not much hope for a rapid conclusion. The topics on the table are important, and in principle there is enough substance for all countries to gain from an agreement, but, unfortunately, too much emphasis has been placed on gains through market access alone. The Doha Round is about much more than market access. Concluding the talks arguably requires greater recognition of the value of trade policy disciplines that will be part of any agreement. The WTO is not just a market access negotiating forum; it is also a multilateral umbrella through which governments can agree on rules of the game for other trade-related policies. Given the slow progress of the Round, greater emphasis could be put on leveraging existing WTO bodies to enhance the transparency of nontariff measures, address regulatory concerns that impede liberalization of trade in services, and launch a dialogue on domestic economic policies that can create negative spillover effects for trading partners.Doha Round, WTO, trade, liberalization, market access, services, nontariff, trade policy, globalization, negotiations

Bolstering Global Trade: Governance A Work Program for the WTO presented by the High-Level Board of Experts on the Future of Global Trade Governance

The WTO provides the foundation of the rules-based global trading system that has played a critical role in sup- porting growth in global GDP during recent decades. Preserving the salience of the WTO is vital in managing the adjustment pressures from globalization and sustaining the cooperation needed to govern trade relations in a world in which the transformation towards a global digital economy and associated servicification of production creates new policy challenges. Efforts to address these challenges are stymied by disagreements between WTO members regarding the priorities for the multilateral trading system. These disagreements reflect differences in views on the extent to which national policies have adverse international effects and the costs and benefits of ne- gotiating additional trade policy rules. The result has been to impede progress on rule-making for both long- standing core policies of concern to many WTO members (e.g., agriculture) as well as new policy areas. Matters have been compounded by dissatisfaction by some Members regarding the functioning of the WTO dispute set- tlement body and transparency mechanisms. While preferential trade agreements are important complementary vehicles for countries to pursue deeper coop- eration on trade policy matters than has been possible in the WTO, such initiatives depend on the strong foundation of basic rules provided by the WTO. Moreover, they only offer partial solutions – many of the emerging policy areas of concern to business and civil society call for multilateral cooperation. Re-vitalizing such coopera- tion does not require major changes in the organization. What is needed is willingness to engage in candid, substantive discussion of perceived problems and possible solutions. The recent Agreement on Trade Facilitation, with its positive approach to addressing development concerns, and the success of Members in incrementally deepening cooperation on some matters under the purview of some WTO agreements – e.g., addressing specific trade concerns arising from proposed new product regulations – show that WTO Members can innovate and agree to common approaches towards trade policies while recogniz- ing differences in social preferences and national circumstances

Rethinking International Subsidy Rules. Bertelsmann Working Paper 28/02/2020

Geo-economic tensions and global collective action problems call for international cooperation to revise and de-velop rules to guide both the use of domestic subsidies and responses by governments to cross-border competition spillover effects. Current WTO rules that divide all subsidies into either prohibited or actionable cate-gories are no longer fit for purpose. Piecemeal efforts in preferential trade agreements and bi- or trilateral configurations offer a basis on which to build, but are too narrow in scope and focus. Addressing the spillover ef-fects of subsidies could start with launching a work program at the 12th Ministerial Conference of the WTO to mobilize an epistemic community concerned with subsidy policies, tasked with building a more solid evidence base on the magnitude, purpose and effects of subsidy policies

Developing countries and the Uruguay Round : negotiations on services

In the late 1980s many developing countries experienced something of a pardigm shift: governments began to pursue more market-oriented domestic policies. There was an increasing perception that liberalizing access to service markets was a potentially low-cost, effective method for improving the quality and efficiency of domestic service sectors. These unilateral policy developments increased the incentives for developing countries as a group to participate in a multilateral agreement to liberalize trade in services. The author explores the extent to which the initial negotiating positions of developing countries are reflected in the draft General Agreement on Trade in Services (GATS) that has emerged from the Uruguay Round negotiations. He investigates whether the unilateral policy changes implemented by many developing countries in the late 1980s had a discernible impact on the draft GATS for developing countries. Many developing countries are pursuing regulatory reform and liberalization. To what extent will signing the GATS help governments trying to make their service sectors more efficient? Is the result of the defensive negotiating strategy that was pursued consistent with the shift toward a policy of liberalizing service markets? This issue is of particular relevance insofar as recent liberalization-plus-privatization programs in developing countries were driven by external forces rather than domestic pressure (industry) groups - which might reduce the credibility of liberalization policies. Membership in a binding multilateral agreement could help bolster reform efforts by increasing the costs of backsliding.Trade and Services,Poverty Assessment,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Governance Indicators,Rules of Origin