Report

CROSS-CUTTING ISSUES AND CONCLUSION 191
Bangladesh has received requests. Construction and
engineering services seem to be the main area in which
most of the member countries that have sought market
access through their requests are interested. Bangladesh
has import interest in construction and related engineering
services and it ought to undertake commitments.
However, what is more interesting about education and
tourism services is that Bangladesh has been suggested
to have both import and export interests in these
services and it has accordingly been advised to offer
commitments and make request to seek commitments
from other members. In both these services Bangladesh
seems to be largely interested in opening Mode 3 in
order to have foreign commercial presence.
The study suggests that all three services sectors –
construction and related engineering services, education
services, and tourism and travel-related services – have
a negative balance-of-payments and these are thus
sectors of import interest to Bangladesh (Raihan and
Mahmood 2004). The GDP shares for education
services (2.36%), tourism and travel-related services
(0.67%) are comparatively low.
Opportunities through market opening would only
be meaningful where the supply of service providers is
of an adequate quality. Investment in training and
education (fiscal resource issues) is a must for ensuring
improved quality, standards, and competitiveness of
service providers (Raihan and Mahmood 2004).
Establishment of independent regulatory bodies and
monitoring mechanisms to ensure standards is another
way to create level playing fields. The strategy should
include plans for active negotiations for MRAs with
key markets. Short-term bilateral agreements with
selected countries and institutions would be useful to
understand the difficulties and streamline solutions.
These efforts would help to bring transparency in
mutual recognition.
Hence they argue that incremental liberalisation
measures in the services trade might open windows of
opportunity. However, the special position of LDCs
should be taken into account also in the context of
South Asia. One of the problems with regard to the
South Asian LDCs is that they lack institutional
capacity to cope with the burden of trade negotiations
at WTO. For instance, since the Maldives does not have
any representation in Geneva, due mainly to financial
constraints, participation in the WTO activities is
limited to those financed by WTO, e.g. Geneva Week,
Ministerial Conferences, and technical assistance
opportunities such as training, workshops, seminars,
etc. (Maldives’ TPR 2002). Similarly, Bangladesh and
Nepal are grossly underrepresented by their Missions
in Geneva. However, it is a vicious circle which seems
to be difficult to break. As they lack the capacity to
fully participate in the proceedings of WTO, they are
not able to gain the desired market access and since
they do not gain market access, they are not able to
generate required interest in international trade and
eventually, do not accord priority to the multilateral
trading system. Thus LDCs are marginalised in services
talks and they may free ride or will be bypassed
(CENTAD 2007). In this regard, LDC modalities should
not be taken as a pretext not to participate in the
negotiations, as other members may not put adequate
pressure on them to open their markets.
At the regional level the LDCs modalities should
give the LDCs a free hand to liberalise their services
for other South Asian countries. Rather this should be
used as an opportunity to bind-in the prevailing level
of liberalisation. This will give them meaningful market
access for their services as well as experience with
respect to handling negotiations and once they succeed
they would like the commitments undertaken at
regional level to multilateralise in due course. It is also
interesting to note that LDCs are not only looking at
markets of developed countries but also developing
countries. In this regard, the South Asian market will
provide an important window to their exports.
Modal Interest in Services Trade
South Asia’s modal interests cover all four modes of
the GATS. While the primary interest lies in movement
of natural persons and cross-border supply, also
significant are exports through movement of consumers
and overseas commercial presence. However, it is
mainly India which has an interest in all four modes,
given its more mature services sector relative to the
other economies of the region.
Mode 1 (Cross-Border)
Market access commitments/offers in Mode 1 by the
major industrialised countries are fairly liberal. Still
there is scope for further liberalisation in Mode 1
through improved coverage of relevant services and
through the scheduling of more full commitments, as
currently less than half of the commitments are full or
unrestricted. The liberalisation of Mode 1 by South
Asian countries is significant given recent trends in
intra-developing country trade via outsourcing.
Therefore, all SAFTA member countries should
liberalise this mode.