Background on Services

Removing barriers to global services trade will strengthen prospects for economic growth, create jobs, diversify economies, and develop human capital in knowledge-based industries.  Researchers at the University of Michigan estimate that the elimination of service barriers would yield a $1.4 trillion income gain for the world, with most of the gain going to developing countries. 

Services liberalization enhances the gains from liberalization in goods and agriculture by making the infrastructure of modern economies – express delivery services, reliable communications, financial services, transportation services and others – more widely available. In addition to creating jobs and supporting growth in the service sector, services trade supports manufacturing and agriculture by reducing production costs, enhancing productivity gains, and facilitating product distribution. 

Results from Hong Kong

The agreement at Hong Kong establishes a solid platform for future progress in the services negotiations.  It includes a commitment to intensify negotiations and sets deadlines for submitting offers and finalizing negotiations.  Highlights of the Services text include:

• A commitment to intensify market access negotiations to achieve progressively higher levels of liberalization across all service sectors and modes of supply – providing a basis to press for robust results in key sectors such as financial services, telecommunications, computer and related services, express delivery, distribution, and energy services
  
• The Ministerial Declaration reaffirms the sovereign right of each country to regulate, and highlights the GATS requirement to extend appropriate flexibility to developing countries. 
  
• The Declaration sets objectives for market access commitments, approaches for expediting the negotiations, and confirms deadlines of February 2006 for plurilateral requests, July 31, 2006 for a second round of revised offers, and October 31, 2006 for final offers.