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Hard to hard in GATS

Parallel to the agricultural negotiations, there are fierce negotiations on trade in services in the WTO. It is in those negotiations the front clearly goes between rich and poor countries.


The dramatic WTO negotiations are about much more than agriculture. They also deal with trade in industrial goods (NAMA), trade in services (GATS) and patent rights (TRIPS).

Seen from the Third World, the main problem is that rich countries connect all these negotiations. The US and the EU will not intervene in the agricultural negotiations if they are not allowed to sell industrial goods and services much more freely than today.

Many developing countries still have high tariffs on imports of some industrial goods, not only to protect domestic production, but also to raise money for slender treasuries. The United States, the EU and other countries with efficient industry have demanded hard cuts in such tariff rates. Norway has depended on these requirements, partly because fish is defined as industrial goods in the WTO.

The EU will change the rules of the game in GATS

Equal pressure is on developing countries in the negotiations on trade in services (GATS). In principle, GATS frees any country to decide whether it will open to competition from abroad when it comes to trade in services. This freedom will now end in the EU and the US.

The reason is that few developing countries are willing to open up to full competition from abroad. Both the EU and the US therefore now demand that all WTO countries commit themselves to open a large and fixed part of the service area for competition from abroad. This must be done through so-called "benchmarking" – by setting some threshold values ​​for liberalization that all countries must follow.

Market access for 93 of 163 services

GATS operates 163 different service areas in which it can be traded. The EU requires developed countries to commit to full competition from abroad in at least 139 such service areas, while developing countries must commit to at least 93 service areas, ie in well over half of the service areas covered by GATS. The USA has followed up in the same direction – and suggests demands for full foreign competition in 110 and 80 service areas, respectively.

The EU is particularly concerned about gaining market access in the areas of civil engineering, IT services, retail trade, water supply, sewage and waste services, finance and telecommunications services, shipping and some consulting and business services.

The United States and a number of other countries – such as Norway – also demand that the education sector be opened up to international competition.

Developing country is responding

Most developing countries have reacted strongly to this demand for "benchmarking". This means changing the rules of the game in GATS. Until now, all WTO countries have been free to decide whether it will open up to competition from abroad when it comes to trade in services.

This freedom may have been illusory enough. Many developing countries are in a forced situation where they just cannot choose freely. They are constantly forced to think short-term: It may seem far more important to sell a little more food and more textiles to Europe and North America – now and until next year – than to shield a service industry or a public sector that has hardly arrived Started.

Short-term benefits can count more than what is most fateful about GATS: the fact that a country that has opened up a service industry to foreign competition can never reverse such a decision – as long as the country is a member of the WTO.

Locked in for years

Nevertheless, negotiations on trade in services have been stalled for several years. By the end of March 2003, all countries should have reported on which new services they would open to international competition. Only 48 countries responded – if the EU is considered one country.

Few developing countries responded, and their offers often went no further than committing themselves to the competition from abroad that the country had already opened up to. Many offers did not even go that far. Many developing countries did not dare to commit to maintaining the market access that foreign companies already had – for all time to come.

The developing countries were given another chance. A new response deadline was set at the end of May 2005. It did not help much.

Same dilemma as before

Developing countries are in the same dilemma as before: Many of them could of course wish for better access to the service markets in another country, for example in a neighboring country. But if one then as a WTO country opens up to competition from companies in this country – the consequence is that one must open up to this competition from all WTO countries. Such are the regulations in GATS.

At the same time, the Western service group has the most to gain from open international competition. Full and equal market access for Western service groups can tear apart what a developing country has done to build up a national and local industry base in the relevant service areas. Free competition has never been a match on equal terms between the strong and the weak.

That is why Brazil has stated that without major cuts in customs protection and agricultural support in rich countries, there is a complete stop in the negotiations on industry and services – and has got most developing countries involved.

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