International Trade in Services: More Than Meets the Eye

Abstract

In this paper I present an overview of international trade in financial services. Though often intangible and invisible, trade in services is important, accounting for almost a fifth of total world trade in 2000; and trade in services has been growing in both absolute and relative terms, thoughgrowth was more rapid in the 1980s than in the 1990s. The international negotiating framework for reducing barriers to trade in services the General Agreement on Trade in Services (GATS) came into existence in 1995, as part of the World Trade Organization (WTO). The GATS has thus far had only limited success in achieving reductions in barriers to trade in services, though a negotiating round among member countries is currently under way. This slow progress is largelydue to the extensive national regulation that frequently surrounds services and the entry (and trade) barriers that are often part of that regulation. The structure of the GATS document itself, as well as the WTO's post-Seattle defensiveness, reflects the political sensitivity of these national regulatory issues; but this sensitivity, unfortunately, has impeded progress in reducing trade barriers.