International Trade in Services.pdf - DSpace at Khazar University

154 International Trade in Services
significantly affect how the suppliers of distribution services operate and trade.
For example, an econometric model simulating the impact of regulations on distribution
in eight OECD countries has revealed that the consequent sector inefficiencies
might impose substantial welfare costs, rivaling even those associated
with trade barriers (Bradford 1995). This finding is likely to be relevant also in the
case of the effect of regulations in developing countries.
The dimensions that governments should consider in regulating the distribution
sector are the range of services available to consumers and the welfare of consumers
in the various market segments; the efficiency, productivity, and technical
innovation of retail stores and their supply chains; the degree of competition (by
type of concentration, whether horizontal cooperation or vertical) and specialization;
pricing issues; internationalization; health and safety; urban planning and
zoning; and social and labor conditions. In trade terms, these characteristics of the
sector can affect the extent and nature of the market access of foreign companies
and the degree of national treatment once such companies are established in markets,
that is, the extent to which the regulations apply equally to local companies
and workers, as well as to foreign affiliates and temporary foreign employees or
consultants.
The economic development of the distribution sector is shaped by consumer
demand factors and societal aims. Political and legal decisions that are taken in the
context of liberalization could serve to speed up this process. The choices facing
governments revolve around the way to phase in far-reaching changes and to mitigate
the inevitable costs of structural adjustment that adversely affect the poorest
people, whether these are shop owners, agricultural producers, or consumers.
These costs arise if family-owned shops are put out of business, leading to the
need for unemployment benefits, early retirement on state pensions, or retraining
for alternative employment. Various regulatory and administrative tools must be
deployed to mitigate the negative effects, but the required human, institutional,
and financial resources may not always be available.
The impacts of liberalization on which governments should focus are conditioned
by the level of social and economic development; the quality of legal governance;
the availability of information and communication technology infrastructure,
equipment, and skills; and the effect on the environment. There is no panacea
to propose to governments. It may be important to phase in liberalization measures
if there are sensitive social issues at stake (such as racial and gender balancing),
if the resources to address the adverse consequences of structural adjustment are
lacking, or if aid for capacity building is necessary. The most singular issues revolve
around ethnic history, social networks, the prevailing legally recognized structure
of enterprises, the privileges accorded to certain categories of citizens, land ownership,
real estate prices, the state control of outlets, and product prices.