Australia’s Minister for Trade Simon Crean and U.S. Trade Representative Susan Schwab had a joint op-ed in Friday’s Wall Street Journal talking about the importance of expanding free trade for service sectors:
Communication, finance, energy, transportation and distribution services are essential inputs for the production of goods and services, and are “force multipliers” that expand economic opportunities and increase productivity. An efficient services sector is crucial to the development of vibrant, modern and resilient economies.
In fact, several developing countries have autonomously liberalized certain sectors of their economies as part of their development strategy, recognizing that high services barriers only constrain their economic potential. For example, telecommunication markets have been opened up throughout the developing world, and everywhere this has resulted in greater telephone access and lower charges, with profound positive effects on rural farmers, small businesses and industrial exporters.
This is why services are such an important part of most countries’ development strategies, and why they need to be part of Doha’s agenda. The Doha negotiations give developed and developing countries a once-in-a-generation opportunity to lock in services liberalization and harness its potential for future growth.
Reforms to trade in agriculture and industrial products have dominated headlines on the Doha Round, and it is true that these reforms will be extremely valuable. But liberalizing global services markets can provide even greater potential economic benefits.
Services contribute more to the world economy than agriculture and manufacturing combined, and are the fastest growing component of global economic growth, according to the World Bank. Comprehensive services-sector liberalization – through open markets and nondiscriminatory treatment of service suppliers – would permanently boost the global economy by more than $1 trillion. This is a greater boost than the full removal of subsidies and tariffs around the world on agricultural and goods markets.