TRADE: Report Warns Developing South on Services

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Jul 11 2002 (IPS) - The countries of the developing South should not agree to new commitments in the negotiations for liberalising trade in services as long as adequate research and data is lacking, says a prominent expert as time runs out at the World Trade Organisation (WTO) for reaching an accord in the services sector.

Chakrvarthi Raghavan, trade analyst and researcher, recommends in his book “Developing Countries and Services Trade”, that the nations of the South should avoid new concessions in the initial WTO talks on guidelines and modalities for the new round of negotiations on international services trade.

The services sector encompasses banking, insurance, telecommunications, news, education, transport, tourism, energy, water and health, among others.

It is up to the industrialised countries to liberalise sectors and “modes of delivery of export interest for developing countries,” says Raghavan.

India’s Commerce Minister Murasoli Maran says “the growth of developing countries’ service sectors are being blocked by a plethora of regulations governing access to developed countries’ markets.”

Thus the discussion on guidelines for international talks for liberalising trade in services got under way last week as the deadline came and went for WTO member countries to present their petitions for aspirations for market openings by their trade partners.

The next period for the WTO-sponsored talks comes at the end of March 2003, when the 144 members of the international body are to announce what concessions they are willing to grant in the services sector.

The United States and the European Union, which together represent 70 percent of the world’s services exports, seemed enthused about the unfolding of he next phase of the global negotiations.

Holding greatest interest for developing nations is the provision of services through the physical relocation of persons from one country to another, a modality that the industrialised world generally seeks to avoid.

The limited commitments made on the supply of services through movement of persons “have been practically nullified in the industrialised countries due to the immigration and visa restrictions and laws and ‘needs’ tests,” said Raghavan.

The World Bank, meanwhile, has stated that “the temporary cross-border movement of workers into industrial economies” could provide greater gains than those associated with traditional trade liberalisation.

The “imbalance” created by immigration barriers could be addressed by “providing for the possibility of an outside adjudicatory process over visa restrictions,” except in cases involving questions of national security, suggests Raghavan.

Industrialised countries could also adopt measures that encourage companies and government entities to import services from developing countries, proposed the researcher.

But, he stressed, “before developing countries undertake any more commitments, the issue of data needs to be addressed.”

Raghavan blames the lack of concrete information or even “rough data” for the relative failure of developing countries in what were known as the Uruguay Round of multilateral trade talks (1986-1994), particularly in the area of market access in the services sector.

“The Uruguay Round was conducted without the aid of any data that could enable participants to understand the full implications and to make some judgements of the costs and benefits of what was being negotiated,” he said.

Unlike international trade in goods, the services sector has not had access to comparable data that would allow developing countries to “make a rough assessment of the value of concessions given and exchanged.”

Public Services International (PSI), an international trade union federation, has pointed out that even the WTO itself has recognised this lack of information in a recent report on social and health services.

For most developing countries, says Raghavan, the obstacles for developing nations in negotiating services result in a case of “a blindfolded person in a dark room chasing a black cat.”

This situation has persisted in the initiatives launched to fill in the gaps after the Uruguay Round concluded, he said.

Given the current information conditions and the fact that international statistics fail to provide precise data on services trade, the developing countries would be advised not to make further commitments, Raghavan states in his book.

Raghavan, editor of SUNS, a specialised newsletter on trade and development issues, questions the outcome of the Uruguay Round, and charges that the world’s poor countries “have given concessions without effectively getting any in return.”

The result is a severe imbalance in which “the advantages have not been mutual and there is no overall balance in rights and obligations” in trade, he said.