Trade in services and LDCs
The aim of increasing the participation of developing countries in services trade is enshrined in the preamble to the WTO's General Agreement on Trade in Services (GATS). At the 8th Ministerial Conference in Geneva in 2011, WTO members adopted a waiver to allow preferential treatment for services and service suppliers from least-developed countries (LDCs). Over 50 WTO members have since notified preferential treatment under the waiver.
LDC exports of services
LDC services exports represent only a small portion of world exports and are concentrated in just a few sectors. They are supplied mainly in mode 1 (services supplied from one country to another) and mode 2 (consumers or firms making use of a service in another country - e.g. tourism). Only limited data is available on the destination of LDC exports.
- Market access for products and services of export interest to least-developed countries
- LDCs in services exports and data gaps
- LDCs’ performance in services exports
GATS and LDCs — 1995
The preamble to the GATS states that the Agreement aims “to facilitate the increasing participation of developing countries in trade in services”. GATS Article IV takes this further by requiring WTO members to negotiate specific commitments relating to:
- strengthening the domestic services capacity of developing countries
- improving their access to distribution channels and information networks
- liberalizing market access in areas of export interest to these countries, giving “special priority” to least-developed countries (LDCs).
It states that these objectives are to be implemented through a process of progressive liberalization (Article XIX), taking into account national policy objectives and members' development levels, both overall and in individual sectors. In addition to receiving technical assistance from the WTO Secretariat, developing countries are therefore given flexibility to:
- open “fewer sectors” than those opened by developed countries
- liberalize fewer types of transactions
- extend market access in line with their development situation, including attaching access conditions aimed at achieving the objectives referred to in Article IV.
Article XIX requires members to establish for each round of services negotiations how they will provide special treatment for LDCs. These are known as “modalities”.
LDC services modalities — 2003
The modalities for the special treatment of LDCs in the services negotiations, adopted in September 2003, require members to provide “effective market access” in sectors and modes of supply of export interest to LDCs when making specific commitments. Wherever possible, members are requested to make commitments in “Mode 4” (individuals travelling from their own country to supply services in another). The modalities further stipulate that members should develop “appropriate mechanisms” to fully implement Article IV:3 and to facilitate the effective market access of LDC services and service suppliers to foreign markets.
Hong Kong Ministerial Conference — 2005
At the Hong Kong Ministerial Conference in 2005, members recognized the economic difficulties LDCs face and acknowledged that they are not expected to undertake new commitments in trade in services in the Doha Development Agenda.
LDC services waiver and its operationalization
On 17 December 2011, the Geneva Ministerial Conference adopted a decision (WT/L/847), allowing WTO members to grant preferential treatment to services and service suppliers from LDC members. Preferential treatment related to market access (GATS Article XVI) can be implemented once a notification has been submitted to the Council for Trade in Services. Preferential treatment regarding any other measure is subject to approval by the Council. The LDC services waiver will remain in place for 15 years from the date of its adoption. According to the waiver, notifications must specify the preferential treatment, the sectors concerned and the timeframe for these preferences.
As no member made use of the LDC services waiver between 2011 and the Bali Ministerial Conference in December 2013, ministers adopted a decision on the “Operationalization of the Waiver Concerning Preferential Treatment to Services and Service Suppliers of Least-Developed Countries” on 7 December 2013. The decision establishes various steps to encourage WTO members to make use of the waiver, and directs the Council for Trade in Services to convene a high-level meeting six months after LDCs submit a collective request identifying sectors and modes of particular export interest to them.
The LDC collective request was submitted on 21 July 2014 and a high-level meeting took place on 5 February 2015. At the meeting, over 25 developed and developing countries indicated sectors and modes of supply where they intend to provide preferential treatment to LDC services and service suppliers. More here.