GATS [electronic resource] : the case for open services markets

93 Pages·2002·2.4 MB·English

by  Organisation for Economic Co-operation and Development

GATS: The
Case for Open
Services Markets
©OECD,2002.
©Software:1987-1996,AcrobatisatrademarkofADOBE.
Allrightsreserved.OECDgrantsyoutherighttouseonecopyofthisProgramforyourpersonaluseonly.
Unauthorisedreproduction,lending,hiring,transmissionordistributionofanydataorsoftwareis
prohibited.YoumusttreattheProgramandassociatedmaterialsandanyelementsthereoflikeanyother
copyrightedmaterial.
Allrequestsshouldbemadeto:
HeadofPublicationsService,
OECDPublicationsService,
27,57r7u5eAPnadrirse-CPeadsceaxl,16,France.
GATS: The Case for
Open Services Markets
OECD((Q
ORGANISATIONFORECONOMICCO-OPERATIONANDDEVELOPMENT
ORGANISATIONFORECONOMICCO-OPERATION
ANDDEVELOPMENT
PursuanttoArticleIoftheConventionsignedinParison14thDecember1960,
andwhichcameintoforceon30thSeptember1961,theOrganisationforEconomic
Co-operationandDevelopment(OECD)shallpromotepoliciesdesigned:
-toachievethehighestsustainableeconomicgrowthandemploymentanda
risingstandardoflivinginMembercountries,whilemaintainingfinancial
stability,andthustocontributetothedevelopmentoftheworldeconomy;
-tocontributetosoundeconomicexpansioninMemberaswellasnon-member
countriesintheprocessofeconomicdevelopment;and
-tocontribute tothe expansion ofworld trade on amultilateral, non-
discriminatorybasisinaccordancewithinternationalobligations.
TheoriginalMembercountriesoftheOECDareAustria,Belgium,Canada,
Denmark, France, Germany,Greece,Iceland, Ireland, Italy, Luxembourg,the
Netherlands,Norway,Portugal,Spain,Sweden,Switzerland,Turkey,theUnited
KingdomandtheUnitedStates.ThefollowingcountriesbecameMembers
subsequently through accession at the dates indicated hereafter: Japan
(28thApril1964), Finland (28thlanuary 1969),Australia(7thJune 1971), New
Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic
(K2o1rsetaD(e1c2tehmbDeecre1m9b95e)r,1H9u96n)gaarnydt(7htehSMloavyak19R9e6p)u,blPiocla(n1d4th(2D2endceNmobveermb20e0r0).199T6h)e,
CommissionoftheEuropeanCommunitiestakespartintheworkoftheOECD
(Article13oftheOECDConvention).
Publicenfran^aissouslelitre:
Pourl'ouverturedesmarchesdeservices
L'ACCORDGENERALSURLECOMMERCEDESSERVICES
©OECD2002
Permissiontoreproduceaportionofthisworkfornon-commercialpurposesorclassroom
useshouldbeobtainedthroughtheCentrefranrjaisd'exploitationdudroitdecopie(CFC),
2f0o,rreuveedreyscCoruanntdrsy-Aeugxucsetpitnst,he750U0n6itPeardis,StFartaensc.e,Intelt.h(e33-U1n)i4t4ed07S4t7at7e0,sfpaxer(m33i-s1s)i4o6n34sh6o7ul19d,
beobtainedthroughtheCopyrightClearanceCenter,CustomerService,[phone],
222RosewoodDrive,Danvers,MA01923USA,orCCCOnline:www.copyright.com.Allother
taoppOlEicCaDtioPnusblfiocraptieornmsi,ss2,iornuetoAnrderper-oPdausccaelo,r7t5r7a7ns5laPtareiasllCoerdpeaxrt16o,fFtrhaisncbeo.okshouldbemade
Foreword
Formorethanadecade,serviceshavebeenthefastestgrowingcomponent
oftheglobaleconomy.Totalmeasurabletradeinservices,asdefinedbythevari-
ous"modesofsupply"subjecttomultilateraldisciplinesundertheWorldTrade
Organisation'sGeneralAgreementonTradeinServices(GATS),standatsome
USD2.3trilliontoday.Thisrepresents7.6%ofworldoutputandclosetoafifthof
totaltradeingoodsandservices.Suchfiguresareusefulremindersoftheeco-
nomicandcommercialsignificanceofthesectorandofnegotiationsaimedatpro-
gressivelyrollingbackimpedimentstotradeandinvestmentinservices.
Invirtuallyeverycountrytheperformanceoftheserviceseconomy,particu-
larlythekeyenablingsectorsoffinance,telecommunicationsandtransportation,
canmakethedifferencebetweenrapidandsluggishgrowth.Simplyput,anineffi-
cientservicesectoractslikeaprohibitivetaxonanationaleconomy.Growingreal-
isationoftheeconomy-widepotentialofefficientserviceindustriesusheredin
far-reachingliberalisationoftradeandinvestmentandeffortsatregulatoryreform
throughouttheworldinrecentyears,facilitatingattemptstoanchorsuchreforms
ininternationalagreementsgoverningcross-bordertradeandinvestment.
TheGATSrankswithoutadoubtamongstthechiefaccomplishmentsofmulti-
lateraltradediplomacyattheendofthe20thcentury.Yettheagreementliesat
thecentreofthecontroversiessurroundingtradepolicyatthestartofthe21st.
Servicesencompassavastanddisparatearrayofeconomicactivityandimply
asimilarlywidescopeofissues,institutionsandinterests.Muchasthefirstsetof
servicestalksduringtheUruguayRoundelicitedrelativelylittleattentionand
publicscrutinybeyondthecognoscentiinacademic,governmentalandprivate-
sectorcircles,proposalstobuildupontheachievementsoftheUruguayRound
andsubsequentnegotiationsintheWorldTradeOrganisation(WTO)command
considerableattentiontoday,notallofitpositive.
CriticalassessmentsoftheGATStypicallyfindtheirorigininthebroadercon-
textofbacklashagainstglobalisationandthecommercialisationthatitbringsto
someactivitiespreviouslyinsulatedfromthemarket.Claimsofthreatstothepro-
visionofpublicservices,suchaseducationorhealthservices,ortoserviceswith
strongpublicgoodconnotations,suchaswaterorelectricitydistribution,are
©OECD2002
GATS:TheCaseforOpenServicesMarkets
amongthemostcommonlyvoicedconcernsassociatedwiththeGATSandwith
theveryideaofliberalisationoftradeandinvestmentinservices,includingat
regionallevel.
Aparadoxofanti-GATSsentimentisthatmuchofitisrootedintheOECD
area,wheretheshareofservicesinemploymentandstandardsoflivingishighest
andwherethebenefitsofregulatoryreformandofliberalisationoftradeand
investmentinserviceshavearguablygeneratedthegreatestgainsinconsumer
welfareandallocativeefficiencies.Notsurprisingly,thepublicpolicydebateon
servicesinOECDcountrieshasnottendedtocentreondisputingtheeconomic
caseforopenmarkets.Rather,thecriticismhasgenerallyfocusedontherespec-
tiverolesthatthemarketandthestate(asbothregulatoranddirectpurveyorof
servicessuchaseducationandhealth)shouldassume,aswellontheperceived
threattonationalregulatorysovereigntyallegedlyposedbytradeandinvestment
rule-making.
Manyoftheargumentsputforwardtodayagainstliberalisationoftradeand
investmentinservicesarebasedonmisinformationandalackofunderstandingof
theGATS.Atthesametime,thesignificanteconomy-widebenefitsderivingfrom
liberalisationoftradeandinvestmentinservicesdonotreceiveenoughattention,
andthisreinforceslessthanpositiveviewsoftheliberalisationoftradeand
investmentingeneralandparticipationinthemultilateraltradingsystemthrough
membershipoftheWTOinparticular.
Mindfuloftheneedtorestoregreaterbalancetothisnascentpublicpolicy
debate,MembercountriesaskedtheOECDTradeDirectorateinearly2001topre-
pareastudyaimedathelpinggovernmentstobettercommunicatetheeconomic
rationaleforcommittingto-andmaintaining-openservicesmarketsandto
identifymoreclearlywhatisandwhatisnotatstakeinthenewsetofWTOser-
vicesnegotiations.
Thepresentstudy,whichfollowsinthefootstepsoftheOrganisation'shighly
acclaimed1998OpenMarketsMatter,istheanswertothatrequest.Itreviewsthe
mostrecentempiricalevidenceinordertoofferacomprehensivetreatmentofthe
benefitsandcostsofliberalisationoftradeandinvestmentinservices.Italsopro-
videsanin-depthconsiderationof-andoffersacounternarrativeto-someof
themostprominentcriticismslevelledattheGATSandthepursuitofliberalisa-
tionoftradeandinvestmentinservices.
ThisstudyexplainswhytheGATS,farfromthesovereignty-impairingstraight-
jacketthatitscriticsclaim,caninmanyregardsbeseenasthemost"develop-
ment-friendly’’ofallWTOagreements,affordingmembercountriesfullfreedomto
choosethenature,paceandformofmarketopeninginamultilateralsetting.It
showswhythegainsfrominternationalco-operationandmultilateralrule-making
areparticularlylargeintheservicesarea.Becausesuchgainshavejustbegunto
©OECD2002
Foreword
betapped,theongoingnegotiations,towhichtheDohaDevelopmentAgendahas
givenrenewedimpetus,offersWTOmembersaready-madeopportunitytouse
theGATSasameanstosupportdomesticreformsdeemedbeneficialfroma
developmentperspectivebygovernmentsandcivilsociety.
Thisstudy,whichformspartoftheOECDTradeCommittee’songoingwork
programmeontradeinservices,wasdraftedbyPierreSauveoftheTradeDirec-
torate.ItbenefittedfromsignificantcontributionsbyRosemaryMorrisand
MassimoGeloso-Grossoanddrewonbackgrounddocumentationpreparedby
CraigvanGrasstek.
ThisvolumeispublishedontheresponsibilityoftheSecretary-Generalof
theOECD.
©OECD2002
GATS:TheCaseforOpenServicesMarkets
Acronyms
ABT AgreementonBasicTelecommunications
APEC Asia-PacificEconomicCooperationForum
CGE Computablegeneralequilibrium
DSU DisputeSettlementUnderstanding(WTO)
ESM Emergencysafeguardmeasure
FD1 Foreigndirectinvestment
GATS GeneralAgreementonTradeinServices
GATT GeneralAgreementonTariffsandTrade
GDP Grossdomesticproduct
GPA GovernmentProcurementAgreement(WTO)
ICT Informationandcommunicationtechnologies
1LO InternationalLabourOrganization
IMF InternationalMonetaryFund
ITU InternationalTelecommunicationsUnion
MAI MultilateralAgreementonInvestment
MFN Mostfavourednation
NAFTA NorthAmericanFreeTradeAgreement
SCM SubsidiesandCountervailingMeasures(WTO)
UNCTAD UnitedNationsConferenceonTradeandDevelopment
WTO WorldTradeOrganization
©OECD2002
8
TableofContents
Acronyms 6
ExecutiveSummary 9
Chapter1. Introduction 13
Chapter2. StatingtheCaseforOpenServicesMarkets 17
Chapter3. HarnessingtheEconomy-widePotentialofServiceSector
Efficiencies 23
TheBenefitsofOpenServicesMarkets:EmpiricalEvidence 35
Chapter4 AcknowledgingtheComplexitiesofServicesReform 45
Chapter5 GlobalisationanditsDiscontents:theGATSCritics 51
Chapter6 WhattheGATSIs-andIsNot 57
Chapter7 AddressingCriticismsoftheGATS 65
Chapter8 NegotiatingChallengesUndertheGATS 75
Chapter9 ConcludingRemarks 81
Notes 85
References 89
Boxes
21.. SGeernveircaelseixnctehpetigolnosbafloresceornvoicmeysasprovidedforinGATSArticleXIV 713
3. Addressingtheserviceexportprioritiesofdevelopingcountries 78
Figures
1. Relationshipbetweenservicesemploymentandnationalincome 19
2. Convergingtrendsinservicestrade 20
3. Significanceofservicesinselectedcountries'exports 21
4. ProductmarketliberalisationinOECDcountries 27
5. Decliningcostsofinternationaltelephonecalls,1983-99 29
6. Relativewagelevelsinservicesectors 31
©OECD2002
GATS:TheCaseforOpenServicesMarkets
7. DecliningcostsforimportinggoodsintotheUnitedStates 32
8. Adecadeofdefactoliberalisation:investmentregimesinthe1990s 54
Tables
1. iRnegOuElaCtDorcyouenntvriireosnmentsinserviceindustriesandelectricitysupply 26
2. Thefourmodesofsupplyforinternationaltradeinservices 60
3. ExceptionsforgoodsandservicesinWTOagreements 62
©OECD2002