Wednesday 4 November 1992

MANY SERVICES TRADE ISSUES ON UNCTAD AGENDA

Geneva 2 Nov (Chakravarthi Raghavan) -- A week-long meeting of the UNCTAD's 'Standing Committee on Developing Services Sectors:

Fostering Competitive Services Sectors in Developing Countries' ended here last week with an unanimously agreed work programme on development of services sectors and several policy areas relating to Trade in Services.

Arising from the Cartagena Commitment at UNCTAD-VIII and the terms of reference of the Standing Committee set by the Trade and Development Board in April, the work programme relating both to the development of services and services sectors in developing countries as well as some of the policy issues on trade in services, was surprisingly adopted by the first meeting of the Standing Committee without much controversy or tension that had enveloped the issue both at Cartagena and at the Board meeting.

At Cartagena after the agreement on the various issues had been negotiated and accepted, in the final plenary the US came back to deliver a long explanatory statement and interpretation virtually questioning and challenging the document in several parts.

At the April Board meeting too, the US took a hard line position in trying to keep out of UNCTAD any policy issues relating to the trade in services questions being negotiated in the Uruguay Round and will come within the purview of a future General Agreement on Trade in Services. The US, with other industrialized countries, also took the position that work in UNCTAD should focus in this, as in other areas, on domestic policies of developing countries and not on their international dimensions or policy framework.

Third World participants at the meeting of the Standing Committee said that while many of the industrialized countries had made their usual caveats about need to avoid duplication of work, and need to coordinate activities with other relevant organizations, none of them objected to the policy-oriented work in several areas nor were any 'controversies' (about UNCTAD and GATT roles) brought up.

The reasons for this was not clear.

One view is that unlike before and at Punta del Este (where the Uruguay Round negotiations were launched) where the US took a gung-ho attitude to put 'services' under the rubric of 'trade' into the General Agreement and was opposed by the developing countries, the US position and views have changed considerably, even though it was not always reflected in the stands of the Reagan-Bush ideologues at UNCTAD or the UN itself.

There is perhaps now a greater realisation that much more work needs to be done both to develop conceptual and other ideas on various issues and that the old habits of discussing and developing a consensus within the North in the OECD and then pushing it through the GATT may no longer work or suffice.

The agreed work programme seeks to promote transparency in services development and trade, foster competitive services sectors and strengthen technical cooperation in these activities.

Under Transparency the Standing Committee is

• to develop a conceptual framework for collection and compilation of internationally comparable statistics on all modes of delivery, in particular with regard to commercial presence and movement of natural persons, as well as contributing to the improvement of the Central Product Classification (of the UN Statistical Office) in order to adapt it to the specific needs of international trade in services; and
• collect and disseminate information on measures, including laws and regulations, affecting the access of services and service suppliers to world markets, including a study of the possibility of setting up a computerized database in this regard, with a view to enhancing the service exports of developing countries.

If and when the Uruguay Round of MTNs is concluded and the General Agreement on Trade in Services (GATS) under it comes into being, there would be a framework of rules and disciplines to govern this 'trade' which, by its very nature goes far beyond the normal concept of international 'trade' in goods when they cross the international frontiers, both the developed and developing countries have taken a leap in the dark in that there is no data available on the extent of the 'trade' and the effect of any 'liberalisation' or exchange of concessions on a country's economy.

Though the GATT and many others use the IMF balance-of-payments data as proxy for data on trade in services, and some of these are used in projecting figures like 250 billion dollar boost to the world economy by the conclusion of the Round, everyone agrees that the IMF data are so defective, conceptually and statistically, that a proper framework of data collection and compilation would need to be evolved.

Even during the Uruguay Round negotiations, this issue of lack of data was repeatedly raised, and all the statisticians of various organizations involved, the UN, UNCTAD, OECD etc all underscored the need for both clear definition and a conceptual framework for collection and compilation of data at national levels and internationally to enable a clearer picture to emerge.

The agreed work programme in this area would atleast begin this process.

Under the rubric of fostering competitive services sectors, the Standing Committee's work programme includes:

• comparative analysis of services sectors in developing countries examining the role played by the services sector in contributing to growth and sustainable development, including an examination of the contribution of the producer services sector in facilitating competitiveness of the goods-producing sector and to the economy as a whole; assessing weaknesses and capabilities; and, identifying policies to assist developing countries in developing and strengthening their competitive services sectors, including infrastructure relating to services.
• facilitating exchange of experiences on liberalization of services sectors and application of laws and regulations, with a view to stimulating the development of these sectors;
• analysing ways and means of fostering market-oriented development of services sector including, where appropriate, through deregulation and privatization;
• study the impact of subsidies on trade in services, especially on the exports of developing countries;
• examine ways of enhancing access to and use of information networks and distribution channels;
• examining role of joint ventures in stimulating development of services sectors in developing countries and promoting trade in services and their access to technology;
• assessing impact of progressive liberalization and of services imports in the development of competitive services sectors, and examining difficulties faced by developing countries which prevent them from increasing their participation in world trade in services;
• identifying and analysing the possibilities of developing country service exports through temporary movement of persons as service suppliers, be it as sole service providers or as personnel, and analysing measures affecting their ability to export such services due to barriers to temporary movement of persons across national frontiers to supply services;
• analysing on-going processes of recognition and harmonization of qualifications; and
• identifying and analysing policies aimed at promotion of regional, subregional and inter-regional cooperation in services, including among countries at different levels of economic development.

In carrying out its work, the Standing Committee has been asked to give particular attention to the situation of the least developed countries and suggest ways and means for improving their capacity.

The Standing Committee has also been asked, in carrying out its activities, to identify the areas where technical cooperation should be strengthened.