# **SERVICES IN DOHA:  WHAT’S ON THE TABLE?**

In the Doha negotiations, the focus is primarily on agriculture and manufactured goods. Services are mentioned, but more out of a sense of obligation than conviction. This is a puzzle. Some 80 percent of GDP in the US and the EU originates in services. Together they account for over 60 percent of world services exports. The business service exports of India, China and Brazil have grown by well over 10 percent every year for the last decade, and India may soon export more services than goods.

The potential gains from reform of trade in communications, finance, transport and business services are large – probably larger than those from comparable liberalization of goods trade. Even exploiting the opportunities arising from goods trade liberalization will require better services: Sub-Saharan African exporters today pay transport costs many times greater than the tariffs they face in industrial country markets.<sup>1</sup> Moreover, without progress in services there simply may not be enough on the table to allow progress in other market access areas: services are the strongest export interest of WTO members like the EU, India and US that are the focal point of efforts to liberalize agricultural trade.

So services matter. But what is Doha doing about it? It has been hard to judge, because of the opaqueness of services policies and the opaqueness of the request-offer negotiating process. This paper tries to assess what is on the table. It begins by summarizing what we believe is the first survey of _applied_ trade policies in the major services sectors of 56 industrial and developing countries. These policies are then compared with these countries’ Uruguay Round commitments in services and the best offers that they have made in the current Doha negotiations.

The bottom line: At this stage, Doha promises somewhat greater security of access to services markets but not an iota of liberalization. Ironically, two of the most protected sectors, transport and professional services (involving the international mobility of people), are either not being negotiated at all or not with any degree if seriousness. Uruguay Round commitments are on average 2.3 times more restrictive than current policies. The best offers submitted so far as part of the Doha negotiations improve on UR commitments by about 13% but are still on average 1.9 times more restrictive than actual policies. At present, Doha offers not greater access to markets but a weak assurance that access will not get worse.

Negotiators have been content to let services lag. The “request-offer” negotiating process has resulted in a low-level equilibrium trap. As important, services have not been given the political attention their economic significance deserves. The WTO’s Hong Kong Ministerial had set out ambitious goals. Our analysis shows that those goals are still remote.

Section I of this note describes our survey and the policies on the ground in the countries surveyed. Section II describes how Doha improves on the Uruguay Round, and how far offers are from reality. Section III concludes with unsolicited advice on how we might do better.

> 1 A recent World Bank book shows that Indian horticultural producers receive on average only one-sixth of the price consumers pay because of inefficient storage, transport and distribution. Providing farmers better access to services would enhance the economic gains from, and strengthen the political case for, agricultural trade liberalization.

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