Trade Policy Note Final-rev08 - Development

VI.
TRADE IN SERVICES
AND DEVELOPMENT STRATEGIES
Trade in services, as defined in the GATS covers a wide range of policy areas,
including investment, communications, transportation, finance, energy, environment,
health, immigration and many others. Government policies to develop the services
sector are essential to the attainment of the MDGs. Governments are now faced with
the challenge of formulating domestic policies in the services sector which provide
universal access for key social services, while faced with pressures to accept bound
liberalization commitments in trade agreements. The services sector should
simultaneously support efficiency and growth, and increase developing country
participation in the world market for services.
Services and the MDGs
The provision of universal access to key services such as health, water and sanitation,
energy and education is central to the achievement of the MDGs. Ill health, poor
education and lack of access to electricity lock millions of people in a poverty trap.
Access to these services enables poor people to become productive member of the
economy and society and reduces rural/urban and gender disparities. The
strengthening of national services sectors and the creation of an efficient services
infrastructure, contribut es to the productivity of other sectors and to international
competitiveness. Trade in services can assist in the attainment of the MDGs by
providing new and better employment opportunities, particularly for new job seekers,
including women, by contributing to the productivity of poorer people, in both the
agricultural and manufacturing sectors, and by facilitating access of domestic service
providers to more lucrative world markets. The main objectives of a national services
policy are thus, (a) to provide universal coverage for basic services such as health,
water, sanitation, education and energy, (b) to strengthen the services infrastructure of
the country to improve the competitiveness of the national economy, and (c) to
penetrate international markets for trade in services.
Universal Access to Services
Many social and infrastructural services in developing countries have traditionally
been under public ownership. A priority development objective has been to ensure
universal access to key services, notably health, water and sanitation, education and,
energy. For various reasons, including lack of ability to pay, geographical isolation or
ethnic and gender factors, poor people have been excluded from access to the most
basic services necessary to maintain their health, and to enable them to be productive
members of the national economy. Governments have attempted to make basic
services affordable to poor people by subsidizing free medical and education services,
cross-subsidized prices for electricity, and investment incentives for sanitation and
energy production in isolated areas. In some cases, the pressing need for capital and
technology to increase supply has led governments to open up public services to
private ownership, including the participation of foreign suppliers. This has brought
these service sectors within the scope of trade negotiations 62 . The entry of foreign
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The implications of GATS negotiations in traditional public service sectors are discussed in Adlung,
Rolf, Public Services and the GATS, WTO Working Paper, ERSD -2005-03, Geneva, July 2005,
http://www.wto.org/English/res_e/reser_e/ersd200503_e.htm.
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