DP5628 Services, Economic Development and the Doha Round: Exploiting the Comparative Advantage of the WTO

Author(s): Bernard Hoekman , Aaditya Mattoo

Publication Date: April 2006

Keyword(s): services trade , investment , WTO , negotiations , Doha round

JEL(s): F13

Programme Areas: International Trade and Regional Economics

Link to this Page: www.cepr.org/pubs/dps/DP5628.asp

This paper discusses what could be done to expand services trade and investment through a multilateral agreement in the WTO. A distinction is made between market access liberalization and the regulatory preconditions for benefiting from market opening. We argue that moving forward on multilateral services liberalization requires a shift from bilateral request-offer negotiations to a model schedule approach that sets ambitious objectives - ideally full national treatment for the major backbone services. Attainment of such objectives, especially by smaller and poorer members, requires procompetitive regulation and strengthened regulatory institutions in developing countries. This suggests linking implementation of liberalization commitments to the provision of development assistance (‘aid for trade’) to bolster regulatory capacity and enforcement could enhance the relevance of the WTO for developing countries. Bolstering WTO mechanisms to monitor the actions of both developing and high-income country governments could make the institution much more relevant in promoting not just services liberalization but, more importantly, domestic reform of services policies.