Prospects for Services Trade Negotiations

Abstract

Trade and investment in services are diffi cult to measure, and the regulatory barriers that inhibit the free fl ow of services are hard to quantify. As a result, very little attention has been paid to dismantling barriers to services trade and investment in free trade negotiations. Th is paper examines what has been achieved in both regional and multilateral compacts by surveying international precedents involving Asian countries which have included services trade reforms. We then assess the prospects for services trade negotiations and explore how services trade negotiations could be pursued over the next decade through two distinct channels: the Trans-Pacifi c Partnership (TPP) and a plurilateral approach among groups of WTO countries. We fi nd that in the case of developing Asia, free trade agreements have largely excluded services or have only committed to "lock in" current practices in a narrow subset of service sectors. Th is is also the case in agreements negotiated between developing countries, which have produced less substantial commitments to liberalize services than those negotiated between developing and developed countries. Multilateral negotiations on services have also underperformed, as substantive negotiations on services in the Doha Round never really got underway. We advocate a stronger eff ort by developing Asian countries to prioritize services negotiations in their regional arrangements, and to expand coverage of services in those pacts to a broad range of infrastructure services that are included in other FTAs in force or under construction in the Asia-Pacifi c region.JEL Codes: F10, F13, F14, F15, F23, F59, G28, H50, H70

Liberalizing Trade in Services: Lessons from Regional and WTO Negotiations

“…The same is true for procurement disciplines: if included in PTAs, both goods and services procurement will usually be covered (see e.g. Schott et al (2012) on the Korea-US FTA). These two policy areas are not covered by general WTO disciplines.…”

“…The group has not yet decided whether any negotiated liberalization or disciplines would be implemented on an MFN or conditional MFN basis. Schott et al (2012) argue that "Conditional MFN treatment may be the wiser choice in this agreement considering the fact that several important countries have not yet agreed to participate in the ISA and would be 'free riders' on the prospective liberalization if the accord is implemented on an MFN basis." In fact, a number of WTO members have indicated that they will oppose the incorporation of a plurilateral services agreement into the WTO, implying that negotiation of PTAs will be the only alternative available to WTO members seeking to cooperate on services trade and investment policies.…”