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Market access for the government procurement of services: Comparing recent PTAs with WTO achievements
The treatment of services in preferential trade agreements provides an important point of comparison with their treatment in the multilateral trading system. Recently several studies have examined aspects of the treatment of services in PTAs. These analyses have provided insights into a number of important questions: (a) To what extent are countries willing to make broader and deeper commitments regarding services liberalization in PTAs as compared to the GATS? (b) Why is this so? (c) What costs does the proliferation of such commitments entail? (d) Can such commitments serve as building blocks for multilateral liberalization or are they more likely to undermine it? An important related question concerns possibilities for the eventual multilateralization of commitments on services liberalization in PTAs (Baldwin Evenett and Low 2007).
Beyond the main screen: Audiovisual services in PTAs
Audiovisual services have long been a sensitive issue in the WTO where key members have traditionally held very divergent views. It is not surprising therefore that this sector has failed to attract either a significant number of commitments under the GATS or offers in the Doha Round. Indeed only twenty-nine members have commitments while only eight had made offers by the end of 2007. In comparison preferential trade agreements have provided for significant advances: audiovisual is one of the sectors in which the contrast between multilateral and preferential commitments is the greatest especially in bilateral agreements where the United States is involved.
The Chilean experience in services negotiations
Trade in services was brought into the world negotiating agenda in the early 1990s. Since the entry into force of the North American Free Trade Agreement in 1994 and the World Trade Organization in 1995 countries have engaged in active negotiations in this area both regionally and bilaterally. Latin American countries have been particularly active in this process having negotiated 20 percent of PTAs covering trade in goods and 47 percent of those dealing with trade in services that have been notified to the WTO. Chile and Mexico stand out having notified to the WTO ten and nine agreements covering trade in services respectively.
Out of stock or just in time? Doha and the liberalization of distribution services
Distribution companies provide the necessary link between producers and consumers within and across borders. The efficiency of the sector helps ensure that consumer welfare is maximized and also that the benefits of freer trade in goods actually make their way to final consumers. Failure of the distribution sector to perform its role well – which can be induced by government policies restricting competition – can lead to a significant misallocation of resources and economic costs.
The domestic dynamics of preferential services liberalization: The experience of Australia and Thailand
Both Australia and Thailand have keenly pursued bilateral preferential trading agreements in recent years. These have covered services though to varying degrees. Services domestically important and in some areas sensitive to both economies need to be liberalized as an important means of improving overall productivity and economic performance.
Telecommunications: Can trade agreements keep up with technology?
Since 1997 when the WTO negotiations on basic telecommunications concluded the market for telecommunications has witnessed an enormous transformation. The sector has evolved from one in which government monopolies supplied the services usually over landlines to one in which the vast majority of governments have sold some or all of their ownership interests and introduced competition. During this same period mobile phones which now comprise close to 70 percent of all telephones in use globally have overtaken fixed-line services in nearly all countries. Over the past decade the internet has evolved from a largely experimental technology to a full-fledged commercial service that is an integral part of the business world of consumers’ lives and of the global economy. Internet technology might well form the backbone for the communications industry in the near future – the so-called next-generation networks (NGNs).
Why isn’t South Africa more proactive in international services negotiations?
Services are increasingly central to economic activity across the developing world and South Africa is no exception. By African standards the South African economy is quite diversified and has a robust services sector that in some areas exports competitively to developing countries and to developed markets. One would therefore expect to find the South African government assertively advancing these export interests through international trade negotiations while selectively liberalizing access to its domestic services markets in order to ensure their long-term competitiveness and to promote economywide benefits. While there has been some movement in the latter direction largely through unilateral reforms in recent years this has not translated into a proactive services trade negotiating strategy.
Opening Markets for International Trade in Services
A unique comparison of how service trade negotiations have evolved on the regional/bilateral level and at the WTO.
The liberalization of cross-border trade in services: A developing country perspective
One of the notable trends in recent years has been the increasing importance of the cross-border supply of services. This is occurring in a large number of services sectors both through the partial substitution of services earlier supplied by the commercial presence of foreign companies or by moving natural persons and through trade in newer services such as telemedicine and research and development. The other dynamic trend is the growth in offshoring with developing countries as important participants. These trends provide huge scope for developing countries to exploit their comparative advantages in labor-intensive services without displacing substantial labor in developed economies at the same time adding to efficiency gains and cost reductions in the latter. The further opening of markets for cross-border services by providing the necessary boost to the global growth engine could become a win-win situation for all.
Air transport liberalization: A world apart
International air transport has traditionally been the subject of extensive regulatory controls. Imagine a world in which prices the number of seats the number of flights the types of aircraft and the cities to be served are all decided by agreements between states in which no third-party competition exists in which strict national ownership rules are applied and in which the only unknown parameter for airlines is the number of passengers who will turn up in the end. This is the “Bermuda II” type of agreement which served as the model for the organization of the post-war international air industry and whose features only partially “eroded” over the years still largely underpin the regulatory framework of the sector.
Measuring GATS Mode 4 Trade Flows
The paper discusses the research work which has taken place over recent years with respect to the measurement of GATS mode 4 – presence of natural persons in the context of the revision of the Manual on Statistics of International Trade in Services. Realistic estimates of mode 4 trade are virtually non-existent. Based on the GATS legal definition the paper introduces the statistical conceptualization of mode 4. While showing that balance of payments labour related flows indicators such as worker's remittances and compensation of employees cannot be used as substitutes the paper discusses relevant balance of payments transactions in individual services sectors for estimating the value of this trade. Given the complexity of many services contracts (one service contract may involve the use of more than one mode to supply services to consumers) it provides simplifying assumptions that help build these measures of mode 4 trade in services. The paper recognizes that the proposed simplified statistical approach to modes of supply does not strictly adhere to GATS provisions and explains that it has been designed as a first guidance to provide relevant information for GATS while ensuring feasibility and consistency with statistical frameworks. Examples are given showing the interest of some economies to estimate the size of mode 4 trade. The paper also presents how existing migration and tourism statistics could be used to assess the physical mode 4 movement (flows) and presence (stocks) in terms of number of persons. It introduces necessary extensions (separate identification of relevant mode 4 categories of persons breakdowns by origin/destination occupations length of stay etc.) of these statistical frameworks in order to conduct a proper assessment of mode 4.
Bilateralism in Services Trade
In most of the current literature the spread of regionalism in international trade relations is iscussed in terms of a rapidly rising number of preferential trade agreements (PTAs). Far less attention is given to the even more rapid proliferation of bilateral investment treaties (BITs) and their overlap with obligations assumed by WTO Members under the General Agreement on Trade in Services (GATS). About 60 per cent of world foreign investment stocks are in services and thus covered by mode 3 (commercial presence) of the GATS. A closer look reveals that BITs generally apply across a far wider range of sectors in particular in the case of LDCs and developing countries than those scheduled under the GATS. Furthermore a number of obligations enshrined in BITs go beyond their potential counterparts under the GATS. At the same time since most WTO Members have not listed relevant exemptions from the Most-Favoured-Nation (MFN) clause of the Agreement their BIT obligations are to be applied on an MFN basis. While this extension may not cause problems in many cases given generally liberal investment regimes and the focus of most treaties on protecting rather than liberalizing access inconsistencies remain between the two frameworks. Based on an assessment of relevant provisions this article discusses options on how WTO Members could proceed.
The Contribution of Services Liberalization to Poverty Reduction
There are various conceivable links between services liberalization and poverty reduction including the efficiency effects associated with increased competition in intermediate (infrastructural) services income transfers generated by workers moving abroad or the mobilization of private investment for social policy purposes. Arguably the most promising option for interested governments regardless of complementary moves by trading partners is the opening of and creation of favourable investment conditions in core infrastructural services. However apart from basic telecommunications both the Uruguay Round schedules and the offers submitted in the Doha Round to date have remained disappointing in this respect. Effective services liberalization as measured by the share of phase-in commitments in total commitments has occurred mainly in the context of WTO accessions and Preferential Trade Agreements. Given the apparent lack of political impetus in broader-based trade rounds this article discusses options how the submission of more meaningful offers could be encouraged.
General introduction
This Note has been produced at the request of the Council for Trade in Services in the framework of the second review of the Air Transport Annex.