Approaches to Liberalizing Services

Abstract

Inly since completion of the Uruguay Round have developing countries in East AsOnly since completion of the Uruguay Round have developing countries in East Asia and the Western Hemisphere shown interest in liberalizing services. Ambitious efforts are now being made to incorporate services in liberalization objectives of both sub-regional and regional integration efforts, including in the Asia-Pacific region under APEC and in the Western Hemisphere under the Free Trade Area of the Americas (FTAA) process. At the sub-regional level, member countries of both ASEAN (in East Asia) and MERCOSUR (in Latin America) have chosen to follow the liberalization model set forth in the World Trade Organization's (WTO) General Agreement on Trade in Services (GATS), and to open their services markets gradually and piecemeal. In the Western Hemisphere, Mexico has successfully promoted the NAFTA model of a more comprehensive liberalization of services markets - and several Latin American countries have adopted the same approach. Regionally, APEC has chosen a concerted voluntary approach to liberalizing services markets. Within the Western Hemisphere, participants are defining which approach they will use in the negotiations on services launched as part of the FTAA in April 1998. In all these efforts, a stated desire to promote more efficient services markets is often hindered by reluctance to open services markets rapidly or comprehensively because of historically entrenched protectionism in the sector and ignorance of the regulatory measures that impede trade in services. Presumably it would be easier to liberalize services at the sub-regional level, among countries at similar stages of development (although the liberalization's economic value there might be questioned). Liberalizing services at the broader regional level is a difficult and ambitious goal, given the diversity of countries involved in such efforts. Thus liberalization will probably move more slowly at the regional than at the sub-regional level - perhaps even more slowly than at the multilateral level. It is possible that the new round of multilateral talks on services scheduled to begin under the WTO in 2000 may well eclipse the recently begun regional efforts.