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Negotiations for a Services Free Trade Area in the Americas. By Jaime Niņo
Jul 22, 2001

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  • Despite having a more liberal services trade regime after Western Hemisphere countries subscribed to a number of bilateral and 14 sub-regional services trade agreements in addition to the General Agreement on Trade in Services (GATS) in the last decade, services trade in the region is registering smaller growth rates since 1995. After growing over 10% during the late eighties and early nineties trade in services in Latin America and the Caribbean presented null growth in 1999, while North American trade in services dropped from a 20% growth rate to 5% growth in the same time span.

    Undoubtedly, the financial instability that has hit the less developed economies of the region has played a meaningful role in stalling services trade, but it is also true that the services agreements signed until now have yet to deliver a more liberal and transparent environment for trade in services in the Americas. The region has been at the vanguard of developing rules and disciplines aimed at governing services trade through a diversity of negotiating approaches. Yet, this diversity as well as the great deal of overlapping between different trade agreements has probably created more confusion than the transparent market place they sought to initiate.

    Last 22 April the heads of state of 34 countries of the Western Hemisphere launched in Quebec the third phase of trade negotiations to create a free trade area in the Americas. The agreement represents a unique opportunity to create a common framework governing trade in services in the Western Hemisphere by 2005 that goes beyond progress achieved until now under the GATS.

    The services chapter of the future Free Trade Area of the Americas also provides a unique opportunity to develop a liberal and transparent framework that governs all services trade within the Western Hemisphere and puts and end to the existing dispersion.

    The current phase of talks is critical to the agreement, as negotiators will be making decisions on the architecture of the agreement itself. These involves making choices about how rules on investment and temporary movement of personnel will relate to the services chapter and what will be the negotiating approach to liberalizing trade in services in the Western Hemisphere. Also, negotiators have yet to decide the ultimate objective of the negotiations, or how much liberalization is to be achieved and at what pace. Certainly, these issues that are to be resolved by April of 2002 are among the most difficult to negotiate, but negotiators have made progress during the previous two phases of the negotiations. >p> The so-called Free Trade Area of the Americas is to cover all services industries, and include disciplines in all modes of supplying services and government procurement. Negotiators have also agreed on a common set of principles that will govern trade in services in the Western Hemisphere, namely, the granting of treatment of most favored nation (MFN) to services providers of all 34 countries as well as treating any services provider of the Western Hemisphere economies in the same way as nationals (National Treatment). The agreement will also include a denial of benefits to services providers of non-member.

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