Regional trade agreements and trade in services

Abstract

The services sector accounts today for two thirds of global output (65% of GDP in 2004; 45% of GDP in 1960) and represents the fastest growing sector of the global economy. In a world where competitiveness is key to economic development, services play a vital role in ensuring a competitive economy. Service industries provide the infrastructure allowing modern economies to function by linking geographically dispersed economic activities or supplying crucial inputs into products competing in the domestic and global markets. In recent years the number of international agreements purporting to liberalize and promote trade in services has increased dramatically. While the General Agreement on Trade in Services (GATS), negotiated as part of the Uruguay Round in the late 80s/early 90s, has represented the pioneer-and often the model-in the field, much of the recent and current international treaty making addressing trade in services (as well as trade in goods and foreign investment) has occurred at the regional and bilateral levels. The outlook stemming out of this almost frenetic treaty-making activity is a complex and multilayered network of international rules regulating the transnational movement of services and service providers in essential sectors such as the financial, telecommunication, business and professional sectors. This chapter is divided in two main parts. Section II describes the basic features of the GATS focusing in particular on the following issues: (a) scope of application, (b) general obligations and disciplines, (c) specific commitments and (d) sectoral disciplines. Focusing broadly on these same issues, section III will analyze the services chapters of the Regional Trade Agreements (RTAs) that have been notified to the WTO Council for Trade in Services on the basis of Article V GATS. This chapter does not address the issue of the level of liberalization that these RTAs have actually accomplished or the issue of the compatibility of these agreements with GATS. Click here to view a draft version of the paper.