GATS 2000: New Directions in Services Trade Liberalization

By Pierre Sauvé; Robert M. Stern | Go to book overview

COMMENT BY Juan A. Marchetti

The background papers prepared for this session are all interesting, thought provoking, and provide challenging insights into the main issues involved in the forthcoming services negotiations. I find myself in the situation of trying to convey a developing country's perspective as I come from a developing country that has undertaken an ambitious economic reform agenda in the past decade. Before I touch upon some of the issues raised in these chapters, I would like to state one proviso about the context of these negotiations.

The scope of what is sometimes called the Millenium Round is not yet clear. What we do know, however, is that a round of negotiations on trade in services will take place as foreseen in GATS. As an economist, I must acknowledge that convincing arguments in favor of trade and investment liberalization abound. They should suffice to support the basic idea of further services liberalization and a meaningful round of services negotiations (in terms of binding such liberalization). But, although services negotiations are important, they should not be looked at as if they were isolated from the rest of the package. This view would clearly be unrealistic. In fact, for most developing countries, the willingness to liberalize their services sectors and, more important, to translate that liberalization into meaningful commitments in the WTO, will largely depend on the benefits accruing to them as a result of other negotiations, such as those in textiles or agriculture. Cross-sectoral trade-offs will be part of the next round of negotiations, and building momentum for the services negotiations will depend on building momentum in other sectors of interest to developing countries.

Having said that, let me turn to the substantive issues raised in the first three background papers prepared for this session. The following comments are essentially based on what might be called "basic economic instincts." First and foremost, I fully agree with the basic conclusion of the chapter by Patrick Low and Aaditya Mattoo that "it is possible to make significant improvements in GATS, and to make it a much more effective instrument of liberalization, without fundamental structural changes, which are, in any case, of doubtful political feasibility."

As you already know, one of the key principles of GATS, at least for most developing countries, is that of progressive liberalization. Article XIX

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