RESTRICTED  WORLD TRADE  
ORGANIZATION  TN/S/W/44 
17 June 2005 
 
 (05-2566) 
Council for Trade in Services 
Special Session Original:   Spanish 
 
 
 
COMMUNICATION FROM CUBA 
 
Assessment of Services Trade and Libe ralization in Underdeveloped Economies  
 
 
 The following communication from Cuba, dated 7 June 2005, is being circulated to the 
Members of the Council for Trade in Services.  
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I. INTRODUCTION 
1. Cuba is of the view that an assessment of trad e in services is greatly needed in view of its 
importance for the WTO negotiati ons on specific commitments. 
2. The developing countries need to ensure that  multilateral rules and commitments on trade in 
services contribute to economically rational policy ma king at the national and international levels.
1 
3. It must be ensured that economic growth is not  concentrated in a few countries and that the 
growing participation of underdeveloped countries in trade takes place effectively, in order to 
contribute to reducing the current asymmetry betwee n Members in international trade in services. 
II. REFLECTIONS ON THE ASSESSM ENT OF SERVICES TRADE AND 
LIBERALIZATION IN UNDERDEVELOPED ECONOMIES 
4. According to World Bank data2, service sector GDP is the fastest growing component of total 
GDP in both low- and middle-income economies.  However, the difference between developed and 
underdeveloped economies in terms of level of devel opment of services activity is so great that value 
added growth rates alone are not an adequate b asis on which to evaluate the sector's performance. 
5. It would be an interesting exercise for Memb ers to assess the part the annual value added 
growth rates cited by the World Bank have played  in more equitable income distribution and higher 
ranking in the Human Development Index in middle- and low-income economies. 
6. With the specific market-opening measures it has introduced over the last 15 years, Cuba has 
succeeded in distributing income to the benefit of the whole of society.  This in turn has enabled it to 
                                                      
1 Hoekman Bernard, Mattoo Aaditya, and English Philip, citing Alexander and Estache 1999, in 
"Development, Trade, and the WTO:  A Handbook".  World Bank, 2002. 
 
2 See document TN/S/W12 of 31 March 2003 An Assessment of Services Trade and Liberalization in 
the United States and Developing Economies", citing World Bank data for 2000 (page 2). 
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 maintain the principle of fair access for consumer s to basic services.  Cuba has shown that scarce 
resources can be distributed effectively. 
7. Although the service exports of some underdevelope d economies have grown at a faster pace 
than those of developed countries, and despite  an increase in their service exports since the 
establishment of the WTO, such growth has brought about no significant change in the 
underdeveloped countries' position in world trade in se rvices.  This is related to the high asymmetry in 
the sector which is structural in origin. 
8. Economic growth in the abovementioned cases, prompted in part by the new options for 
cross-border supply made possible by innovations in information and communications technology, 
has largely been concentrated in a few Asian count ries.  For many underdeveloped countries, access 
to the new information technologies remains a problem. 
9. Since the conclusion of the Uruguay Round, ma ny underdeveloped countries have seen little 
change in their contribution to world trade in servi ces.  The share in global service exports of Latin 
America, Africa and developing As ia taken together amounted to roughly 20 per cent both in 1994, 
the year in which the GATS was signed, and in 200 3.  Latin America's share amounted to only 4 per 
cent in 1994, falling to 3.4 per cent in 2003, and w as largely concentrated in Mexico and Brazil;  
Africa's share stayed at 2.2 per cent throughout the same period, while Asia on its own accounted for 
14.5 per cent.
3 
Share of Selected Underdeveloped Regions  
in World Trade in Services, 2002 (% ) 
 
 Exports 2003 Exports 1994 
World  100.0  100.0 
Latin America  3.4  4.0 
Africa  2.2  2.2 
Asia*  14.5  13.8 
   
All regions  20.1  20 
Excluding Asia*  5.6  6.2 
 *Excluding Japan, Australia and New Zealand. 
 Source:   Calculations based on Interna tional Trade Statistics (WTO, 2004). 
 
10. The above table shows the structure of service e xports for selected regions in 2003.  Together, 
the countries of Latin America and Africa accounted for less than 6 per cent of global trade.  
However, this figure rises to approximately 20 pe r cent if the countries of underdeveloped Asia are 
included.  The high polarization is clear. 
11. According to WTO statistics4, as regards income from "Other Commercial Services" (which 
principally comprise the new forms of cross-borde r supply related to telecommunications services, 
financial services, insurance and business services), the 15 leading exporters accounted for 75.8 per 
cent of the world total in 2003.  In this case, onl y China and Hong Kong, China belong to this select 
group, and together totalled a 5.2 per cent share in th at year – another instance of high concentration.  
As with transportation and travel services, the de veloped countries account for the highest percentage. 
                                                      
3 Calculations based on WTO reports for 2002, 2003 and 2004. 
 
4 International Trade Statistics (WTO, 2004). 
  TN/S/W/44 
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 12. The new cross-border delivery options made po ssible by innovations in information and 
communication technologies, have not had the same impact on the behaviour of the service exports of underdeveloped countries. 
13. Studies concur that "deregulation and liberali zation have not always been marked by, or 
necessarily led to, improvements in competitiveness brought  about by lower tariffs or prices.  In some 
cases, they have served only to change the nature of the economic agent responsible for producing or 
supplying the service:  from public to private or from national to transnational."
5 
14. In order to make service industries perform, the underdeveloped countries need, as a basic 
step, to address regulatory and institutional matt ers before as well as during the opening up process, 
bearing in mind that they are less able to compete than the developed countries and that there is much 
transnational activity in the sector, concentr ated largely in the developed countries. 
15. Other authors6 note that "unfortunately several studies show that deregulation and 
liberalization have not always led to lower prices, as  what occurs is a transfer from state monopoly to 
private monopoly, with considerable shrinkage of consumer surplus." 
16. The vast difference in service export capac ity between developed and underdeveloped 
countries is largely due to the fact that competiti on is impossible in many sectors as they are already 
dominated by transnationals, concentrated essen tially in the United States of America and the 
European Union. 
III. CONCLUDING REMARKS 
17. Liberalization of trade in services could be of benefit provided it takes place in an orderly 
manner and meets the development objectives of th e countries implementing it.  The vast range of 
sectors precludes any generalization of market-ope ning policies, as each sector affects the economy 
differently when liberalized. 
18. According to paragraph 44 of the Doha Minist erial Declaration and the Decision adopted by 
the General Council last July, for there to be progr ess and a positive outcome to the negotiations for 
the majority of underdeveloped countries, it is essen tial to make headway in the work to strengthen 
the provisions on Special and Differential Treatment. 
19. This necessarily involves greater market opening on the part of the developed Members, and 
will mean in the end including specific provisions in the various WTO Agreements so as to confer the 
necessary flexibility to afford th e underdeveloped countries greater benefit in the light of those 
agreements. 
20. The effectiveness of regulation and competition will,  in the long term, determine the size of 
the gains from trade and how different groups in society share them.  Ineffective regulation and 
                                                      
5 Ramón Sánchez Tabares and Alfredo Sánchez Daza, "D esregulación y apertura del sector financiero 
mexicano",  Revista Comercio Exterior de México , Vol. 50, No. 8, Mexico, August 2000. 
 
6 Vivianne Ventura Díaz, María José Acosta, José Elías Durán, Mikio Kuwayama, José Carlos Matos 
"Globalización y servicios:  cambios estructu rales en el comercio internacional," in Comercio Internacional  46. 
International Trade and In tegration Division, ECLA C, United Nations.  Santiago, Chile, December 2003. 
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 competition will lead not to lower prices but to high er profits, benefiting the owners of capital rather 
than consumers.
7 
21. It must be borne in mind that although barriers to foreign market access cannot be reduced 
unilaterally, a necessary condition for benefiting from membership in the WTO is the development of 
a national strategy for the liberalization of domestic markets, proactive efforts to open foreign markets 
for services, and the promotion of multilateral rules that enhance development prospects.8 
22. Development of national policies is important in Members seeking to integrate their 
economies into international trade efficiently.  The development of the tourism sector in Cuba is a 
case in point.  Independently of this, the negotiations  can contribute to eliminating the trade barriers 
that affect many underdeveloped countries fundament ally.  Cuba accordingly lends its full support to 
the negotiations. 
23. In Cuba's view it is essential that, the underd eveloped countries first and foremost set up a 
regulatory framework allowing them to secure po licy objectives in an environment conducive to 
competition which does not displace domestic indus try and which guarantees consumer access to 
services. 
24. It has often proved difficult for underdeveloped countries to gain access to information and 
communication technologies, which are largely in the hands of developed countries.  Without the possibility to acquire technology, capital and markets,  there is little point in creating openings in the 
domestic market.  Competition with transnational companies must encourage development;  otherwise it will accentuate the low competitiveness and th e asymmetries of many of the underdeveloped 
economies. 
                                                     
 
7 Hoekman Bernard, Mattoo Aaditya and English Philip, citing Alexander and Estache 1999, in 
"Development, Trade, and the WTO:  A Handbook", World Bank, 2002. 
 
8 Hoekman Bernard, Mattoo Aaditya and English Philip, "Development, Trade, and the WTO:  
A Handbook", World Bank, 2002.  TN/S/W/44 
 Page 5 
 
 
  
Bibliography  
  1. Hoekman Bernard, Mattoo Aaditya and Eng lish Philip, citing Alexander and Estache 1999, 
"Development, Trade, and the WTO:  A Handbook".  World Bank, 2002. 
 2. International Trade Statistics, WTO, Geneva, 2004.  3. Vivianne Ventura Díaz, María José Acosta, José Elías Durán, Mikio Kuwayama, José Carlos 
Matos "Globalización y servicios:  cambios estr ucturales en el comercio internacional", in 
Comercio Internacional 46 . International Trade and Integration Division, ECLAC, United 
Nations, Santiago, Chile, December 2003. 
 4. Ramón Sánchez Tabares and Alfredo Sánch ez Daza "Desregulación y apertura del sector 
financiero mexicano", Revista Comercio Exterior de México , Vol. 50, No. 8, Mexico, 
August 2000. 
 
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