Report

T RADE IN SERVICES AND SOUTH ASIA: AN OVERVIEW 103
their services markets, instead their commitments fell
far short of the prevailing level of liberalisation. This
was true for both developed as well as developing countries
though developing countries made lower level of
commitments and in fewer services sectors. South Asia
was not an exception to this trend. Hence during the
Uruguay Round and spill-over negotiations on financial
and telecommunication services India made commitments
in only 36 out of 161 sub sectors. Similarly, Pakistan,
Sri Lanka, Bangladesh, and the Maldives made
commitments in only a few sectors while Nepal and
Bhutan were not part of the multilateral trading system.
The ongoing round of negotiations – the Doha
Round – is certainly different, particularly for the
developing countries because apart from import
interests in services they now have export interests in
some of the services sectors as well. Nevertheless, the
number of such countries which have a proven
comparative advantage in services trade and are willing
to undertake commitments in more and more sectors
is not too many. This scenario is best reflected in the
case of South Asia. Out of the seven countries only
India and to a limited extent Pakistan have shown their
willingness to lock-in their autonomous liberalisation
undertaken in services. Sri Lanka, which made commitments
in just three sectors during the Uruguay Round
and thereafter and has submitted initial offer, has not
shown any willingness to undertake additional commitments.
Likewise, neither Bangladesh nor Maldives has
offered to improve their original commitments. In fact,
Nepal seems to be the only South Asian country that
undertook relatively high level of commitments in a
large number of services sectors during its accession
negotiation (70 out of 161 sub sectors nearly double
of what India committed during and after the Uruguay
Round). Like Nepal, Bhutan is also likely to undertake
liberal commitments in a number of services sectors
during its accession negotiation.
The study argues that given the faster growth in
services in almost all South Asian countries, they have
an opportunity to come closer to reap the benefits of
liberalisation in the sector. Education and health being
part of social infrastructure and construction and
telecommunication being part of basic infrastructure
are fundamental to their overall growth. In light of this,
it seems imperative that these sectors are given their
due importance. While the state of development in these
sectors is certainly at different stages in different countries,
what is interesting is that there is some amount
of complementarity among these countries warranting
rapid integration in services. The Maldives has a lot to
offer in tourism as its services are of world class. Nepal,
Sri Lanka, and Bhutan have a clear advantage in tourism
and can always attract a huge number of tourists
from the region. Pakistan has quite a few academic
institutions from which other South Asian countries
can gain. India has some advantages in construction,
health and education services from which other counties
can gain. At the regional level, it is surprisingly true
that a lot of formal and informal movement of service
providers is already taking place. Maldives is clearly a
case in this regard as it receives thousands of workers
form India, Sri Lanka and Bangladesh particularly to
work in the tourism sector. Likewise, thousands of
Indian nationals are working in Bhutan. If workers from
Bangladesh and Nepal come to India seeking work,
along with them also come students and patients who
pay for the services they receive.
In view of these complementarities, the study
strongly argues that SAFTA member countries urgently
need to expand the scope of SAFTA by including at
least these identified five services sectors. As the study
is limited to five sectors, similar complementarities have
to be found in other services sectors in order to recommend
for their inclusion. Moreover, these countries
ought to make wider and deeper commitments than
they would be doing under the GATS if they want to
gain more from the regional integration.
The subsequent chapters discuss individual services
sectors and sub-sectors – construction and related
engineering services, tourism and travel related services,
higher education services, telecommunication services
and health services, respectively. The discussion in these
chapters begins with the analysis of original
commitments (initial, and revised offers). An attempt
is made to identify the restrictions on trade in these
services in each of the member countries. With respect
to the construction services sector, due to its close links
with professional services such as engineering and
integrated engineering services architectural and urban
and landscape services, the chapter discusses the
restrictions in these services as well to show the state
of liberalisation in the full range of services which affect
the transaction of construction services. Similarly, the
chapter on tourism, wherever feasible, also discusses
the liberalisation undertaken under the GATS regime
in the area of air transport which is so closely linked to
international tourism. Finally, an attempt is made to
identify the sub-sectors where there is a possibility of
MRAs to facilitate trade.