Tentative first steps : an
            assessment of the Uruguay Round agreement on services
A major result of the Uruguay Round was
            the creation of a General Agreement on Trade in Services
            (GATS).  The GATS greatly extends coverage of the
            multilateral trading system, establishing rules and
            disciplines on policies affecting access to service markets.
            In this paper, the author asks: what does the GATS do to
            bind policies? And has it established a mechanism likely to
            induce significant liberalization through future rounds of
            negotiations?  The GATS consists of two elements: 1) a set
            of general concepts, principles, and rules that apply across
            the board to measures affecting trade in services; and 2)
            specific commitments on national treatment and market
            access.  These apply only to service activities listed in a
            member's schedule - reflecting the agreement's
            "positive-list" approach to determining coverage -
            and only to the extent that sector-specific or
            cross-sectoral qualifications or conditions are not
            maintained.  The impact of the GATS depends largely on the
            specific commitments made by members, and sectoral coverage
            is far from universal.  High-income countries scheduled
            about half of their service sectors; developing countries as
            a group (including Eastern European countries in transition)
            scheduled only 11 percent.  And the sectors scheduled often
            continue to be subject to measures that violate national
            treatment or limit market access.  High-income countries
            scheduled only 28 percent of the universe of services
            without exceptions to national treatment or market access
            obligations.  For developing countries, that figure is only
            6.5 percent.  Much remains to be done.  The GAT's
            weaknesses include: 1) a lack of transparency.  No
            information is generated on sectors, subsectors, and
            activities in which no commitments are scheduled - most
            often the sensitive areas where restrictions and
            discriminatory practices abound; 2) the sector-specificity
            of liberalization commitments.  Negotiations were driven by
            the concerns of major players of each industry, leading to
            an emphasis on "absolute" sectoral reciprocity,
            limiting the scope for incremental liberalization, tradeoffs
            across issues, and an economywide perspective; and 3) the
            limited number of generic rules.  Rather than lock in
            liberal situations that exist, the GATS allows for the
            future imposition of restrictions (creating
            "negotiating chips").  To foster nondiscriminatory
            liberalization, sectoral agreeements should be firmly
            imbedded in a framework of general rules and disciplines.
            Many of the framework's general principles apply only
            if specific commitments have been made.  Therefore they are
            not general.  Proposals for improving the GATS should
            probably build on the existing structure as mush as
            possible.  Possibilities include the following: 1)
            ultimately, apply the same rules to goods and services.
            Eliminate the artificial distinction between the two; 2)
            adopt a negative-list approach to scheduling commitments for
            the sake of transparency; 3) eliminate overlap between
            national treatment and market access; 4) develop generic,
            "horizontal" disciplines for the different modes
            of supply through which service markets may be contested; 5)
            explore the possibility of converting quota-like market
            access restrictions to price-based equivalent measures, thus
            ensuring that the most-favored-nation and national treatment
            principles are satisfied; 6) make framework disciplines
            general by eliminating all instances in which rules are
            conditional on the scheduling of specific commitments; and
            7) agree to a formula-based approach for liberalizing and
            expanding the GAT's sectoral coverage in future negotiations.