International trade in services has been growing faster than trade in goods.
Services include telecommunications, transport, electricity, data processing, banking and insurance, educational and health services, tourism, education, and professional services, among others.
These are very difficult to detect and regulate. Governments generally regulate their flow through foreign investment policies or domestic regulations, rather than by taxes on imports (tariffs).
It is in the interests of corporations based in the rich countries of the world to make these barriers more transparent, detectable and consistent.
Representatives of poorer countries argued that their priority was not to export services but to expand and develop their own service sectors, including health care, utilities, transport and education.
Furthermore, trade negotiators for southern states argued that state regulation in services is necessary to overcome the inequalities created the global order over many years.
Many political leaders in Southern states, many of whom had recently gone through decolonisation struggles, argued that it was essential for them to take an active role in promoting the development of the service sector in their economies.
Since poorer countries are the main importers of services, they have little to gain from the liberalisation of services. Indeed, many southern state negotiators argued that foreign competition would only undermine their infant service industries.
What happened to Services under the Uruguay Round?
- General Agreement on Trade in Services (GATS) was established.
- National governments may not restrict the entry of firms into sectors such as advertising, banking, insurance.
- National governments cannot oppose excessive profit repatriation, transfer pricing (over charging subsidiaries within a firm in order to minimise taxes).