Trade Rules in Services: Issues and Problems - EU-LDC
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Transcript Trade Rules in Services: Issues and Problems - EU-LDC
Trade Rules in Services:
Issues and Problems
EU-LDC Network Annual Conference
Trade and Poverty Reduction
Rotterdam, 30 and 31 May 2001
Carsten Fink, The World Bank
Services Trade and Overall
Economic Performance
• Financial services are key to an efficient
transformation of savings into investment
• Transport services contribute to the efficient
distribution of goods domestically and internationally
• Telecom services are at the heart of the dissemination
of information and knowledge in the economy
Well functioning service industries contribute to
overall economic efficiency and growth. Ceteris
paribus, the poor are likely to benefit.
Gains from Services
Liberalization
• Traditional gains due to comparative advantages
• Many services are inputs into production. High costs
of producer services can lead to negative effective
rates of protection
• Services liberalization is often accompanied by the
breakup of public monopolies
• Service providers can reap economies of scale and
scope (especially important for small economies)
Gains from Services
Liberalization (#2)
• To be trade internationally, many services require the
movement of production factors (FDI, temporary
movement of individual service providers)
• Services liberalization and growth:
–
–
–
–
Increased investment
Greater diffusion of knowledge
Risk of brain drain
Empirical evidence points to positive link
Accomplishing Successful
Reform: Domestic Liberalization
• Eliminate barriers to cross border trade
• Remove barriers to establishment trade
– Greater benefits from competition than change of ownership
– Are there good reasons to limit entry by policy?
• Credibility of services reforms
• Strengthen domestic regulations to address market
failures and advance social objectives
• Develop competition policy to address private abusive
practices
Accomplishing Successful
Reform: Foreign Liberalization
• Movement of individual service providers
– Quotas
– Visa requirements
– Qualification and licensing requirements
• Consumption abroad
– Example: health services, need portability of health
insurance
Managing Conflicts Between
Equity and Efficiency
• Services liberalization often lowers prices and
improves the poor’s access to services (e.g., telecoms)
• Service reform may entail elimination of (cross-)
subsidies.
• Private firms may “cherry pick”.
Need for universal service regulation:
– Universal service funds, subsidy schemes, vouchers
– Services roll-out obligations in licenses (beauty contests)?
Other Effects of Services
Liberalization on the Poor
• Need to “locate” the poor.
– Consumption effects
– Employment effects
– Income effects
• Effects on government revenues and spending
How Can the GATS help?
• Unleash liberalization through an exchange of
specific commitments
– So far, limited use has been made of reciprocal
negotiations
• Pre-commit to future reform
• Gain credibility by binding policy
• Disciplines on regulatory measures to ensure
effective market access
Specific regulations that enhance poor people’s
access to services are largely the domain of domestic
policy