GATS TRAINING MODULE: CHAPTER 7

Preparing Requests and Offers

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7.1 Negotiating Approaches

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In their Uruguay Round schedules, many Members confined commitments to binding status quo conditions in a limited range of sectors. The number of services included, and the levels of access bound, remained modest in general. This may have been due to a variety of factors: governments’ preference to play it safe, i.e. to avoid tensions over the interpretation and application of a completely new set of rules; reticence on the part of services-related Ministries and agencies, which had no prior experience with international trade negotiations; difficulties of small administrations, short of resources, to keep pace with the negotiating process in Geneva; and the instincts of seasoned negotiators who, in the absence of requests from large trading partners, may have preferred to keep silent.

In order to benefit from GATS negotiations, however, it is necessary for governments to reconsider old habits. As noted above, unlike traditional trade agreements for goods, the GATS extends to consumer movements (mode 2) and the movement of production factors — in the form of investment flows intended to establish a commercial presence (mode 3) and of natural persons entering markets to supply a service (mode 4). Commitments under the relevant modes may enhance an economy’s attractiveness for internationally mobile resources (human and/or physical capital) which, in turn, could help to overcome domestic supply shortages. It cannot be taken for granted that the requests received from trading partners, if any, coincide with an economy’s developmental needs in attracting such resources.

The scope of GATS allows for broad-based interaction with, and integration into, international product and factor markets. Focal areas of interest, from a developmental perspective, might include infrastructural services, such as transport, distribution, finance and communication, that have economy-wide growth and efficiency implications. This implies, in turn, that in the definition of negotiating positions any defensive interests of sector incumbents, and the possible cost of adjustment, would need to be balanced with such wider economic benefits.

Liberalization strategies must be well conceived. For example, governments may need to think about the sequencing of individual reform steps within and between sectors, and the need for complementary regulatory change (definition of prudential standards, creation of supervisory bodies, etc.).

 

 

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