Balancing the Objectives of
Different Developing Countries
Agriculture Vs. Services, Safeguard Vs. Services
International Seminar on Developing Countries
and Services Negotiations, June 6-7, 2006
ICRIER, New Delhi,
By
Pradeep S Mehta, Secretary General
CUTS-International
[email protected]
Global Trade in Services: Some
Features
Trade in services has grown faster than
merchandise
60% of global output
30% of global employment
20% of global trade
World services trade growth – 155% between
1990-2002; mfg. – 97% and Ag. – 40%
Global Trade in Services: Some
Features
The composition of FDI has shifted towards
services:
Early 1970s – one-quarter of the world FDI
1990 – less than one-half
2002 – two-third of total FDI
The composition of services FDI is also
changing
Developing Countries’ Share in
Global Services Trade
Developing countries’ share has increased:
In last 15 years - a four fold increase in services
export from developing countries.
Increase in share in global services exports –
14% in 1985-89 to 20% in 2000.
Share in global outward FDI in services climbed
from 1% in 1990 to 10% in 2002.
Developing Countries’ Export of
Services (Share in World Trade)
Offensive
Country
China
Not offensive
Share (%)
2.9
Country Share (%)
Thailand
0.9
Malaysia
0.8
Egypt
0.7
HK China
2.5
India
1.9
Mexico
0.7
Singapore
1.7
Brazil
0.5
Philippines
--
S. Africa
0.4
Source: International Trade Statistics 2005, WTO
LDCs Export of Services
• Third category of countries in the WTO
• Mainly defensive interest as they are not in a
position to participate in current services
negotiations
• Their combined share in world commercial
services trade is only 0.41%
• Major LDC Exporters – Tanzania, Ethiopia,
Cambodia, Maldives, Bangladesh, Nepal and
Uganda
• Most of the LDCs are net importer of services
and agriculture
Agriculture Vs. Services:
How to Balance?
Share in World
Trade (%)
Agri. Service
Major Exporter of Both
China
3.1
2.9
Major Farm Exporters
Brazil
3.9
0.5
Arg.
2.2
-Indon.
1.6
-Mex.
1.5
0.7
Chile
1.2
--
Share in World
Trade (%)
Agri. Service
Major Services Exporter
HK Ch.
-2.5
India
1.1
1.9
Sing.
-1.7
Reasonable Share in
Both
Thailand
2.1
0.9
Malaysia
1.7
0.8
Source: Compiled from International Trade Statistics 2005, WTO
Agriculture Vs. Services: How to
Balance?
• Fundamental Problem – Services trade
liberalisation is an agenda of business while
agr. is that of poor countries
• China would not have problems – likely to gain
by trade liberalisation of both the sectors
• Brazil, Arg. may not open up services sector
unless there is a satisfactory progress on agr.
• India has made it clear – no trade off between
agr. and services
Agriculture Vs. Services:
How to Balance?
• The other major service exporters Singapore
and HK China hardly have anything to offer on
agriculture
• Thailand and Malaysia (Cairns Group), also
have reasonable share in services trade may
like to see progress on both fronts
• Some of the LDCs have agressive interest in
agriculture but most of them have defensive
position on services
Emergency Safeguard Measures (ESM)
The mandate for the negotiations on ESM
emanates from Article X(1) of GATS:
“There shall be multilateral negotiations on the
question of ESM based on the principle of nondiscrimination. The results of such negotiations
shall enter into effect on a date not later than
three years from the date of entry into force of
the WTO Agreement.”
Emergency Safeguard Measures (ESM)
• A number of DCs led by ASEAN supports the
need for an ESM for services trade
• Provides symmetry with goods trade, which
contains a safeguard clause
• Confers required safety when undertaking new
liberalisation commitments
• May work as an incentive to undertake new
market access commitments
• However, negotiations so far have revealed
sharp differences between Members
ESM: Why It is Important?
• Low level of development in many DCs and
LDCs
• These countries have not carried out an impact
assessment of services liberalisation
• Assist in meeting national economic and social
policy objectives
• Neutralises the risk of liberalisation
commitments by poor countries
• No alternative mechanism to address import
surges
ESM: Feasibility and Desirability
• Those against, argue that it is neither feasible
nor desirable – EU’s argument
Not an unique demand. Provisions of ESM are there
in many RTAs – NAFTA (in financial services), EEA,
CARICOM, ASEAN framework agreement on
services
Therefore, counters the argument of infeasible and
not desirable
• How can ESM be incorporated into the
agreement?
 Available to all WTO countries but with S&DT
provisions for DCs and LDCs.