Mobilizing businesses to expand trade in services

Business communities in developing countries must be fully involved in expanding trade in services and tackling related regulatory issues to tap the vast potential of the growing services sector, according to a new book by the International Trade Centre (ITC).

Mobilizing Business for Trade in Services provides an overview of how policymakers and businesses can work together to develop specific services sectors, such as tourism and communications. The guide offers information on trade negotiations and export strategies as well as analysis of governance changes and trade negotiations needed to support a vibrant services industry in developing countries.

‘This book gives business coalitions and trade negotiators a foundation to make informed choices as they shape trade in services accords and regulatory reform,’ said ITC Executive Director Arancha González. ‘Good policy and regulatory reform can minimize compliance costs, improve competitiveness and allow trade to grow.’

Prospects for developing countries

Opportunities to expand trade in services come from domestic markets as well as increased trade with other countries, which can aid economic development and reduce poverty.

The contribution of services to gross domestic product (GDP) is growing in the developing world, accounting for more than 50% of GDP in some developing countries and more than 45% of GDP in many least developed countries, according to research cited in the book. Services exports have even weathered the recent financial crisis, steadily growing over the past decade in developing countries such as India, China and Brazil, where commercial services exports have grown at an annual average rate of 28%, 22% and 16%, respectively.

Domestic regulation

Most barriers in services trade relate to the way governments regulate services, according to the author of the book, Malcolm McKinnon. Trade agreements negotiated between governments or at the regional level have a direct impact on regulations in services. As such, the business community must understand the issues that drive government regulation. They include guaranteeing essential services, protecting consumers, correcting market failures, ensuring adequate competition and meeting social objectives.

Governments in turn must appreciate business perspectives on domestic reform and factor them into domestic policymaking and national negotiating positions.

Trade negotiations can be truly effective only if they take into account both points of view. Business coalitions, both national and international, can help promote business interests and ensure that trade negotiations include priorities such as improving regulatory transparency and investment protection.

For more information, read the book in print or online in English, French and Spanish: http://intracen.org/Mobilizing-Business-for-Trade-in-Services