RESTRICTEDWORLD TRADE
ORGANIZATIONS/C/W/55
20 October 1998
(98-4048)
Council for Trade in Services Original:  English
COMMUNICATION FROM THE UNITED STATES
Education Services
The attached paper has been received from the delegation of the United States with the
request that it be circulated to the Members of th e Council for Trade in Services to assist in the
discussion on Education Services in the context of the information exchange programme.
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GROWTH OUTLOOK AND BENEFITS OF LIBERALIZATION
One of the most basic benefits of liberalization of  trade in education services is that it
increases the variety and amount of education services available to WTO members.   These are vitalto all countries, including the emerging economies, which are in need of technology-savvy,
well-trained workforces that are  able to compete in the global economy.   This acts as a spur to
foreign investment and the further transfer of im portant technologies.  The growth of education
services also raises demand for a wide range of related goods and services, including production and
sale of educational and  training materials and equipment.
The largest current source of receipts for educ ation services is student fees paid to attend
traditional institutions of learning (not-for-prof it universities and colleges).  However, education
services is a growing industry, branching out into new institutions (for-profit education and training
facilities, corporate-sponsored universities),  new methods of delivery (including distance learning via
the internet, radio and television broadcasts, etc.) and new  activities (educational support services,
including testing services).    One of the fastes t growing segments of this market involves the
provision of  management or technical training (inc luding language training) and skills upgrades for
current members of the workforce.  The need for such education is particularly acute in
high-technology industries including  medical services , computer services, and flight training schools.
According to official U.S. trade data, cross-border sales of education services by U.S.
companies to foreign purchasers totaled $ 8.3 billion in 1997, the most recent year for which data is
available.  These exports represent the tuition and living expenses of foreign residents enrolled in U.S.
universities and colleges.  In 1996 (1997 figures are not yet available), U.S. imports of education
services totaled $ 1 billion, consisting of tuition and living expenses of U.S. students who study
abroad.  Affiliate trade also was significant although figures are not available.  And these statistics donot fully capture the fastest growing segments of the market, including for-profit educational
institutions and education services provided via  electronic means.
POSSIBLE AREAS FOR FUTURE DISCUSSION AND WORK
o It is clear that the current CPC definitions covering education services do not adequately
reflect the evolving nature of services trade in this area.  We need to give further thought toS/C/W/55
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developing a model definition that, among other things, avoids arbitrary distinctions between
“higher,” “adult” and “other” education; that takes account of the fact that a great deal of
education and training is now for-profit and takes place outside of a traditional university
setting; and that addresses the growth of distance learning and training, including as provided
via electronic means.
o The Secretariat notes that  WTO members have made fewer commitments for education
services than any other service area except for energy services.    However, this is balanced by
the fact that a number of  countries have made substantial commitments in higher
education-plus categories, so the basis exists for broader liberalization.  And the importance
of liberalization to countries at all levels of development is affirmed by the very
comprehensive commitments undertaken by  countries such as  Sierra Leone and Lesotho.
o It would be useful for WTO members to establish a common understanding that such
openness to foreign service providers leads to economic growth and for the WTO members
who have not yet made commitments in this sector to give serious thought to doing so.
o Virtually no WTO member applies restrictions on consumption abroad of education services;
this would seem to be  an area where we can consider moving forward together.
o The rationale for WTO members’ remaining commercial presence restrictions (limitations on
the type of legal entity; participation of foreign capital; establishment of for-profit
institutions; needs tests; accreditation and licensing requirements, etc.)  should be reviewedand the restrictions liberalized to the greatest extent possible.
o Provision of distance education and training services via electronic means is a growing
portion of the trade, and WTO members should endeavour to allow this trade to flourish.
WTO members’ acceptance of the landmark agreement on telecommunications andtelecommunications pro-competitive regulatory principles also will help support growth of
this mode of supply, via cable and satellite transmissions, audio- and video-conferencing and
the internet.
o More study is needed of regulatory issues, including recognition of degrees and accreditation
of institutions, and how this affects the ability of WTO members to supply education services.
U.S. REGIME
In the Uruguay Round, the United States took on substantial commitments to maintain open
its market to foreign suppliers of adult education (not including flying instruction)  and for “other”
education services.  For both categories, the U.S. maintains no restrictions on market access  excepton the movement of natural persons (“unbound, except as indicated in the horizontal section”) and
one State’s limitation on the number of licenses for establishment of cosmetology (beauty
enhancement) schools.  The U.S. also has in place one national treatment restriction regarding access
to certain scholarships and grants.
In the U.S., traditional institutions of higher education are accredited by non-governmental,
regional and subject-specific organizations.  Education professionals are licensed by state and local
governments.   Other types of institutions, including for-profit providers of adult and other
management, technical training, operate largely free of regulation and are responsive to the demands
of the marketplace, but are subject to consumer protection laws.S/C/W/55
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REMARKS ON SECRETARIAT PAPER/QUESTIONS FOR DISCUSSION
P. 9, para. 13 - More study is needed regarding in ternational initiatives relating to recognition of
courses, programs, etc.
p. 10, issues for discussion: These seem useful points of departure for further discussion of regulatory
and recognition issues.
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