Global Policy Forum

Plurilateral Services Negotiations Not Good for South or Multilateral Trading System

In January, a controversial initiative was taken by some WTO member countries (mainly advanced industrialized countries) to start negotiations on services on a plurilateral basis. In contrast to multilateral agreements where all WTO members are part of the agreement, plurilateral treaties are voluntary. The initiative was widely criticized by developing countries, who argue that a plurilateral convention will not give them the promised benefit of expanded exports in the developed world. In this op-ed piece, Bhagirath Lal Das presents the main reasons brought forward by those opposing a plurilateral agreement on services.   

By Bhagigrath Lal Das

March 12, 2012

My views on Services negotiation in the WTO continue to be similar to those I have held since the new negotiation in this area started around 2001. These views apply to the negotiations in the proposed plurilateral framework too.

Developing countries do not have adequate services supply capacity to take advantage of export opportunities in services sector in the developed countries. Hence negotiation, whether in multilateral or plurilateral framework, may not give them the benefit of expanded exports in the developed countries. And while seeking such opportunities in the developed countries, they will inevitably have to take obligations that may constrain their development options in services sectors. Thus what is most likely in the services negotiations is that they may lose out on options without any significant gain on exports.

Sometimes, the developing countries may consider it useful for their development to have imports of services from the developed countries. This can be achieved through autonomous liberalization policies and measures that can be suitably curtailed or modified in future when the situation so demands. But if they undertake a binding commitment in the WTO regarding such liberalization, they will lose the option of withdrawing or modifying them. Any such counter action will necessarily involve very heavy compensation.

The developing countries are at a stage of development where it is important for them to retain their flexibility and options regarding policies and measures relating to services imports. It is particularly important in critical sectors like finance and telecommunication. And these are precisely the sectors where the developed countries would be anxious to get concessions from the developing countries in the services negotiations in the multilateral and pluritaleral framework.

Coming specifically to the services negotiations in the plurilateral framework, I feel it will not be good, either for the developing countries or for the multilateral trading system as such. Plurilateral framework emerging out of the Tokyo Round of negotiations in 1979 did not have much success, particularly from the point of view of the developing countries. Hardly a couple of the developing countries were participants in the plurilateral agreements.

What I have said above is from the angle of development from the point of view of the developing countries. Then there is also the strategic angle. Some developed countries are expressing their intention to launch a plurilateral process even if the developing countries, particularly the major ones, do not participate in it. In this context it is important to consider that the main objective of the developed countries in having services negotiation is to get commitments from the developing countries, particularly the major ones. For agreements or understanding among themselves, the developed countries can improve on or expand the OECD guidelines that may be there in the services area. Or they can evolve such guidelines with much more ease than what is possible in the WTO. Thus proposing to start a plurilateral process even without the participation of major developing countries in the WTO appears to be a tactical move to rope in these developing countries either right in the beginning or at a later stage. It is important for the developing countries to be aware of this possibility.


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