Report

116 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA
construction industry in the country. 6 The CDB is
responsible for registration, classification and monitoring
of consultants, contractors, and their performance.
There is nothing in its rules and regulations which could
suggest the presence of any discriminatory provisions.
Since the country heavily depends on other countries’
assistance in the area of construction particularly on
India there does not seem to be any explicit discriminatory
provisions.
Current development theories contend that
infrastructure together with integration into the world
economy is essential for economic development
(UNESCAP 2003). Small countries such as Bhutan face
considerable challenges, as the cost of infrastructure
provision is very high, and successful integration is
constrained by several structural and locational
problems associated with smallness and remoteness.
The high costs of infrastructure provision makes small
countries heavily dependent on external assistance for
capital investments.
Bhutan should undertake liberal commitments in
the sector that will help it improve its infrastructure.
This will have very positive implications for tourism
services. It should also make its Mode 4 regime liberal
so that other South Asian countries can gain market
access for their professionals and workers. This will
improve the overall quality of labour in the country
and may lead to skill enhancement in the local labour.
Other Regulations Affecting Trade in
Construction Services
Recognition
As already noted, Article VII of GATS specifies that
for the fulfillment of its standards, licensing or certification
of service suppliers, a member may recognise the
education and experience obtained or licenses or
certification granted in a country. This article thus urges
members to recognise the educational or other
qualifications of service suppliers of other countries.
Recognition related issues are of crucial significance to
developing countries including South Asian ones as lack
of such recognition of professional qualifications can
act as a formidable barrier to providing services
especially via movement of natural persons. As per the
provision of this article, members have an obligation
to notify the Council for Trade in Services (CTS) of
existing recognition agreements as well as new ones
that are negotiated. However, it appears that not all
such agreements are notified. It can therefore be argued
6
About the CDB, http://www.cdb.gov.bt/aboutcdb.htm, last visited on 24 October 2007.
that adequate opportunity is not being provided to
other members to indicate their interests in participating
in these negotiations. In view of the ineffectiveness of
notification obligations one would tend to consider this
article as any other best endeavour clause (Kumar
2005). Further, the problem is that there is no provision
for mandated review or negotiation on this article to
make desired improvement.
Perhaps the most important domestic policy issue
to be addressed relates to the recognition of qualifications.
Lack of recognition of qualifications often constitutes
a major barrier to entry by South Asian service
suppliers, who are largely outside existing recognition
initiatives and thus at a disadvantage in various services
where licensing and certification requirements apply
to entry (Chanda 2005). However, India has made an
historical attempt by having taken some steps in this
direction in its agreement with Singapore- CECA. The
CECA has a list of professionals and both parties are
expected to recognise their qualifications. In the context
of South Asia it is suggested that a similar exercise
should be carried out. However, here apart from professionals,
the list must also include less skilled and semiskilled
workers.
At the South Asian level developing MRAs with a
view to recognising qualifications of engineers,
architects, town planners, and all other skilled or semiskilled
workers will be immensely beneficial to the
South Asian countries in facilitating trade in construction
services. Having the precedence of India–Singapore
agreement and an agreement in the pipeline with Sri
Lanka, developing MRAs in the sector may not be that
daunting. One bilateral agreement will enable the region
to apply it to all other countries. The most important
point is that since Mode 4 is the most restricted mode
at the regional level the gains will also be most from
liberalising it and MRAs would play an instrumental
role in facilitating the presence of natural persons.
However, since the issue of MRAs is complex it deserves
more detailed discussion and accordingly, this has been
discussed in the Chapter 5.
Classification issue: In view of related professional
services being placed under the business services sector
under W/120 classification, Cuba argues that members
should hold discussions within the purview of the
existing interrelationship between the construction and
related engineering services sector and the professional
services sector with regard to architectural services,
engineering services, integrated engineering services and