Description:
Trade and investment in services are
inhibited by a range of policy restrictions, but the best
offers so far in the Doha negotiations are on average twice
as restrictive as actual policy. They will generate no
additional market opening. Regulatory concerns help explain
the limited progress. This paper develops two proposals to
enhance the prospects for both liberalization of services
trade and regulatory reform. The first is for governments to
create mechanisms ("services knowledge platforms")
to bring together regulators, trade officials, and
stakeholders to discuss services regulatory reform. Such
mechanisms could identify reform priorities and
opportunities for utilization of "aid for trade"
resources, thereby putting in place the preconditions for
future market opening. The second proposal is for a new
approach to negotiations in the World Trade Organization,
with a critical mass of countries that account for the bulk
of services production agreeing to lock-in applied levels of
protection and pre-committing to reform of policies
affecting foreign direct investment and international
movement for individual service providers -- two areas where
current policy is most restrictive and potential benefits
from liberalization are greatest. If these proposals cannot
be fully implemented in the Doha time frame, then any Doha
agreement could at least lay the basis for a forward-looking
program of international cooperation along the proposed lines.