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The Mark Twain Institute For Your Information The U.S. ‘Plan B’ for services trade negotiations may not be so bad?
Sep 24, 2003

From Harry Freeman, Chairman The bad news out of Cancun was that several issues deeply divided WTO members, so much so that consensus was elusive. The good news is that services trade liberalization was not one of those issues. But then, that may be because the Ministers never got to it.

While “Plan A” -- services trade liberalization at the multilateral level -- is likely stalled for the next several years, the United States does not intend to wait for the multilateral process. U.S. Trade Representative Robert Zoellick has announced that he will pursue still more free trade agreements (FTAs) that will cover services trade.

FTAs are a potentially good option for liberalizing services trade. The FTAs with Singapore and Chile are particularly noteworthy. Those agreements accomplished a method of liberalization – the “negative list” – that has eluded negotiators at the multilateral level. So prospects for positive movement on services trade liberalization is good, maybe even better than at the multilateral level where the approach of the “positive list” seems entrenched. And let’s not forget the Free Trade Area of the Americas.

Given the importance of the services sector to the American economy and its positive contribution to the U.S. current account balance, the more we do to promote trade liberalization in this sector, the better. The bang for the buck is huge. So even though the scope of liberalization from a country perspective will be smaller than a multilateral agreement would likely yield, from the perspective of the U.S. economy as a whole, it does not seem the sailboat is dead in the water. I may be wrong about this.

* The Mark Twain Institute, a Washington think tank dedicated to work on economic statistics. Mr. Freeman can be contacted at MTI@marktwaininstitute.org. The Institute’s web site is www.marktwaininstitute.org.

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