Services Are Essential to the Doha Agenda: WTO Head Pascal Lamy Urges Developing Countries to Invest in Service Talks

Article excerpt

If the Doha Development Agenda is to be completed in December 2006, there will need to be basic movement on several issues to match the ambitions expressed in the title and goals adopted for the round in 2001. Among these issues are services.

Services play a key role in the Doha Agenda, and countries should not leave talks on opening up services to global trade until the other issues are resolved, for several reasons:

* There is a clear link between development and benefits brought about by opening service markets. Developing countries that embraced and invested in the establishment of a service industry are clearly in the forefront of the battle against poverty and illiteracy.

* Countries with open service markets have seen greater product and process innovation, based largely on their access to foreign capital and world-class technology. The explosive growth of the Internet--and of Internet-related sectors--in liberalizing countries is only one example, however breathtaking. Availability of world-class services has enabled exporters in developing countries to capitalize on their competitive strength, whatever the goods and services they have to offer.

An increasing number of developing countries, building on foreign investment and expertise, have been able to make impressive inroads in international service markets. Opening up services has become an indispensable element of development strategies. In turn, this has prompted many initially sceptical governments to change track. Having largely remained on the sidelines of the Uruguay Round, they now play an increasingly vocal role in service negotiations.

Powerful engine for growth

Modern services can help overcome the constraints of economic poverty, geographic periphery and social exclusion. Matched with sound educational policies and investment in infrastructure, the service sector has proven a powerful engine for growth and development. The phenomena of outsourcing and cross-border supply of services, facilitated by information and communications technology and foreign direct investment, have introduced new strategic elements in the negotiations. Modes of supply of certain services, which were difficult to conceive in the past, have not only materialized in practice but in some instances have become commonplace.

Outsourcing services has become an important feature of international trade in services. Developed countries have gained access to a new pool of talent abroad and have boosted productivity. Developing countries have seen the establishment of high-tech industries and gained a substantive increase in income related to service jobs. Outsourcing is thus influencing policy decisions in both developed and developing countries, in ways that require complex examination of trade, economic and social factors.

Not all of these changing features of trade in services have been fully reflected in the negotiations on the General Agreement on Trade in Services--the GATS. Also, these changes have brought about new concepts and challenges.

Challenges of the GATS

* Political sensitivities. Several non-governmental organizations and civil society groups consider that opening service markets is a dangerous path to follow for less competitive economies. …

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