Report

102 QUANTIFICATION OF BENEFITS FROM ECONOMIC COOPERATION IN SOUTH ASIA
As part of its accession negotiations Bhutan seems
to have submitted liberal services offer in the WTO
and if Nepal is any reference point then it is sure that
Bhutan would be finally making wider and deeper
commitments in services. As of now it appears it has
covered a number of services sectors in its offer. Like
Nepal and the Maldives, while Bhutan has export
interest in tourism it has strong import interest in
education and construction services.
Least Developed Countries
As four out of seven South Asian countries are LDCs,
any study ought to take into account their special
position. It is interesting that the significance of the
services sector is growing in all South Asian LDCs. The
Maldives’ services sector largely due to its booming
tourism has sustained a relatively high rate of growth.
Similarly, Bangladesh, Bhutan and Nepal have also
shown better growth in services and have a liberal trade
regime in place. However, it is a matter of concern that
apart from Nepal and Bhutan – recently acceded and
acceding countries respectively – the commitments
made by the remaining LDCs in South Asia, i.e.
Bangladesh and the Maldives are far below the
prevailing level of liberalisation in their countries.
It should however be appreciated that with the
process of the negotiations on services continuing,
identifying the sectors and modes of supply that will
bring the greatest degree of benefits is of critical interest
to LDCs. At the regional level it is important that
developing countries should not seek the same level of
market access commitments from LDCs as they should
be doing among themselves. At the same time the
developing countries should open their Mode 4 regime
at all skill levels and also allow cross-border supply of
services via Mode 1 so that LDCs could gain from
regional liberalisation. Overall, it appears that Modes
1 and 4 are of special significance to the LDCs and it
should be imperative on the part of all South Asian
countries to arrive at a consensus with an aim to
liberalising these two modes.
MUTUAL RECOGNITION AGREEMENTS
Unlike goods, which are primarily regulated by border
measures, services are regulated by domestic regulation
as services are largely produced and consumed inside
the economy. This particular feature of services makes
the issue of regulation relatively complicated. Taking
into account this aspect of domestic regulation the
GATS has made some provisions. Thus while Article
VI specifies rules for domestic regulation, there is
another article – Article VII which provides rules for
recognition of qualification. Recognition is an important
issue for all services being studied. However, it is
the construction and related engineering services sector
that is heavily dependent on recognition of qualifications
of service providers. Education services can also
gain from the recognition of qualification. Movement
of teachers, experts and trainers could be hugely
facilitated if the sector develops MRAs in the region.
Likewise, qualifications of tourism professionals can
also be recognised. In order to deal with the problem
of lack of recognition of qualifications it would be beneficial
if South Asian countries could arrive at a decision
to have agreements on mutual recognition of qualifications,
credentials and other requirements for the supply
of services. It is interesting in this regard that since
almost all countries of the region follow the same
Commonwealth pattern of education, they have better
chances to rapidly conclude such agreements. India has
shown the way by having made the beginning in this
direction in its agreement with Singapore – CECA.
Recognition of qualifications is not the only
limitation that is hampering trade in these services at
the regional level. There are many other limitations such
as issuance of visa to service providers, differential
taxation policy and not so conducive FDI regime. The
visa issue is being discussed in the WTO and India’s
proposal on services negotiations has in fact discussed
this issue in greater detail (India 2000). However, this
issue is closely linked to the recognition of qualifications
since visa issuing authorities could be given clear criteria
for the service providers they wish to allow. The Indian
proposal calls for a separate visa category for service
providers aimed at curtailing the discretionary power
of visa issuing authorities and thereby facilitating the
movement of professionals. At the regional level though
there have been some positive movements in regard to
issuance of visa, a lot remains to be achieved so that
service suppliers encounter fewer hurdles and spend
less amount of time in obtaining visa.
As regards other issues such as taxation policy and
FDI regime, consistent efforts being made in opening
of their economies have helped them, to some extent,
streamline the procedures.
SOUTH ASIA AND SERVICES NEGOTIATIONS
During the Uruguay Round WTO member countries
did not make wider and deeper commitments to open