Post 2015: Global Action for an Inclusive and Sustainable Future

CHApTER EIgHT
The share of trade
in services in GDP
of MICs over the
1990–2011 period
was about 24%.
This is an
indication of the
extent to which
trade in services
could expand
in LICs.
154
2011, trade in services accounted for about 17%
on average. 102 up to 2003, the average was 15%
and much of the growth in the share of trade in
services in GDp took place between then and 2007.
It has been declining since 2008. Growth and then
decline in trade in services could be a reflection
of changes in FDI flows to lIcs, particularly the
financialisation of commodities and investments in
extractive industries (see Section 8.3.2), although it
could also be due to a high increase in GDp growth.
the share of trade in services in GDp of mIcs over
the 1990–2011 period was about 24%. this is an
indication of the extent to which trade in services
could expand in lIcs, with the associated increases
in income and economic expansion.
Services, and in particular trade in services, are
important for promoting human development, such
as improvements in education and health (cali et
al., 2008). trade in services in health and education
is particularly important in SIDS, where there are
few local providers (basnett, 2008 and 2007). the
potential of trade in services to promote inclusive
and sustainable development remains restricted,
however, mainly because of institutional (rules)
and policy barriers. 103 For example, very few lIcs
engage in meaningful trade in services agreements
that remove barriers and establish harmonised
systems and standards. Existing agreements are
mostly at regional or sub-regional levels, whereas
best practices in the services sector are likely to be
from outside the region. Similarly, national policies
often place restrictions on foreign providers, either
because strong interest groups can deter policymakers
from undertaking reform and/or because
of the lack of capacity to understand the impact of
reforms and to design regulations and safeguards.
the lDc waiver in the General agreement on
trade in Services (GatS) agreed in the Wto
in December 2011 opens the way for advanced
EuropEan rEport on DEvElopmEnt 2013
economies to give preferential treatment to lDcs
in services trade. an area that would benefit lDcs
is the provision of preferential treatment in mode
Iv (or labour mobility) for temporary workers
originating from lDcs (see chapter 9). the Eu
could take the lead in designing a preferential
arrangement for trade in services with lDcs similar
to the ‘Everything but arms’ initiative 104 on goods.
8.4.4 Stalling at the multilateral level
the Doha Development round of the Wto was
launched in 2001. negotiations remain at an
impasse, and in view of the current lack of interest
in multilateral solutions, a substantial breakthrough
is unlikely to be achieved in the immediate future.
Despite this, the interest of some lDcs in the
DDr include securing new duty-free and quotafree
(DFQF) market access across 100% of product
lines in developed-country markets, agreement on
trade facilitation, ensuring the adequate provision
of trade-related assistance, as well as requiring some
agreement on specific product and commodity
lines, such as cotton. While the issue of trade at the
multilateral level relates directly to the DDr and
the Wto, there are other multilateral platforms
for other global issues, such as climate change,
that have also stalled. the fact that there has been
so little progress might suggest that it is not trade
multilateralism as such which is at an impasse, but
rather multilateralism in general as an approach to
addressing global issues.
the lack of an active multilateral framework is
likely to most disadvantage and further marginalise
the lIcs and lDcs. a multilateral process is more
likely than bilateral and regional approaches to
be more inclusive and dilute power hierarchies,
while the outcomes are less likely to marginalise
the interests of weak economies (Keohane and nye,
1985). but it is also important for multilateralism to
address new global development challenges and
103 For a detailed discussion on constraints to trade in services in developing countries (see te velde, 2005).
104 the Eba initiative allows lDcs to export agricultural and manufactured products to Eu markets duty free and quota free (see European commission,
2012d).