have become an increasingly important topic in
the WTO and in the world trade agenda as well
as in the European Union (EU) and in the creation
of an effective Single Market in Europe.
flows firstly from the simple fact that services
represent on average 70 percent of countries’
GDP, meaning that any change in services necessarily
has a major effect on countries’ economies and
on the world economy.
importance also flows from the fact that, even
though trade in services has increased during
the last decade, domestic services markets are
still highly protected, compared to product markets.
This situation prevails even within the EU—in
fact, intra-EU liberalisation in services is largely
coupled with liberalisation at the world level
(the same was observed for trade in goods in the
1960s-1990s). A high level of protection in services
means that massive efficiency gains can be expected
from trade liberalisation in services, creating
a strong impetus for growth and development.
services liberalisation raises more complex problems
than product market liberalisation. First, services
are often protected by regulations which can have
both desirable effects (for instance, providing
some guarantee as to quality) but also undesirable
consequences, such as protecting domestic service
providers from foreign competition. More than
ever, it is therefore necessary to evaluate the
costs and benefits of existing or proposed regulations.
Second, product liberalisation generates welfare
gains and reduces administrative costs (because
of fewer formalities, less red tape, less corruption,
etc.). By contrast, services liberalisation creates
welfare gains, but generally requires better regulations,
and hence increases administrative costs, even
though this latter evolution may be the price
to pay for better governance.