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98 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA<br />
requests on improved conditions for temporary movement<br />
of natural persons for purposes of supplying services<br />
and cross-border supply of services, among others.<br />
Apart from India Pakistan is another country from<br />
the region that has offered commitments in all three<br />
sectors – construction, education and tourism. In<br />
construction and education services Pakistan has strong<br />
import interests and thus offers an opportunity to other<br />
SAFTA member countries to supply these services. In<br />
tourism services the country has both export as well as<br />
import interests. Overall it appears that lack of adequate<br />
capital and skilled manpower is hampering the<br />
expansion of supply capacity of the country in these<br />
services. Pakistan has undertaken some reforms to<br />
liberalise its FDI regime in the services sector which<br />
has shown good results in attracting FDI. Pakistan being<br />
the second largest market in the region is of great value<br />
to other south Asian countries. In addition, Pakistan<br />
also needs to explore opportunity in order to export<br />
services in the region.<br />
Sri Lanka<br />
The services sector has emerged as the most important<br />
contributor to the output of the economy and employment<br />
in Sri Lanka, accounting for over 55% of GDP<br />
and 44% of total employment. Key services sectors<br />
contributing to the economy are tourism, telecommunications,<br />
banking, insurance, shipping and air transport<br />
(CUTS 2007). Considerable liberalisation has taken<br />
place over the last two decades on a unilateral basis<br />
than under the auspices of the GATS framework. Sri<br />
Lanka has made commitments in only three services<br />
sectors under the GATS in tourism and travel services,<br />
financial services and telecommunication services.<br />
In the ongoing GATS negotiations at the WTO, Sri<br />
Lanka has so far not made any substantial improvement<br />
in its existing commitments perhaps due to the limited<br />
number and low quality of market opening offers it<br />
has received. Sri Lanka has submitted its request list to<br />
various countries mainly in professional services,<br />
computer-related services, health related and social<br />
services, transport services and services auxiliary to all<br />
modes of transport. Sri Lanka’s primary focus in GATS<br />
negotiations like many other developing countries is<br />
to negotiate commitments in Mode 4. In return, Sri<br />
Lanka has also made an initial offer in telecommunications,<br />
financial services and tourism on the basis of<br />
existing level of liberalisation. Sri Lanka appears to have<br />
taken the position that if it makes any new or improved<br />
offers for further liberalisation of services, this will<br />
be done on the basis of the prevailing level of liberalisation.<br />
As it took very limited commitments during the<br />
Uruguay Round, overall, Sri Lanka’s services trade<br />
regime seen from the GATS angle paints a very restrictive<br />
and conservative picture. It has huge interest in<br />
the liberalisation of services like construction and<br />
education. However, unless it offers meaningful<br />
commitments it may not be able to obtain market access<br />
in the desired sectors. At a regional level Sri Lanka is a<br />
significant market and some of its services are of high<br />
standard. As an island country it has a relatively developed<br />
maritime transport system and it can play an<br />
important role in services trade at the regional level.<br />
Its desire to negotiate an agreement with India on<br />
services only substantiates the point that its services<br />
have reached a certain level where it can have some<br />
arrangement with India. At the same time, this indicates<br />
that while Sri Lanka may not be willing to undertake<br />
liberal commitments at a multilateral level it may do<br />
so at the regional level. The level of its engagement<br />
with India in services trade further reinforces the point<br />
as Sri Lanka is already an important trading partner in<br />
tourism, construction and education services. Sri Lanka<br />
is also engaged in services trade with other South Asian<br />
countries.<br />
Bangladesh<br />
The services sector has become the largest contributor<br />
to the GDP in Bangladesh. Currently its share in GDP<br />
stands at 57.50%. Wholesale and retail trade constituted<br />
14.12%, transport, storage and communication<br />
contributed 10.01%, real estate, renting and other<br />
business activities accounted for 8.14%, community,<br />
personal and social services accounted for 7.52%<br />
(Bangladesh’s TPR 2006). However, its share in the<br />
country’s total employment was only 34.75% in<br />
2004–05. Workers’ remittances contribute significantly<br />
to the economic development of the country by<br />
reducing unemployment and augmenting foreign<br />
exchange reserves and income. In 2004–05, the<br />
remittances from expatriate Bangladeshi workers as<br />
percent of GDP and commodity export stood at about<br />
6.43% and 44.47% respectively.<br />
Although services account for more than half of<br />
Bangladesh’s GDP, inefficiencies and shortages in<br />
essential services hamper economic growth<br />
(Bangladesh’s TPR 2006). Trade in services only<br />
amounts to 5–7% of the country’s total trade in goods.<br />
The trade deficit for commercial services is between