International Trade in Services.pdf - DSpace at Khazar University

Market Structure, Liberalization, and Trade 155
The impact of trade liberalization on the overall number of distribution enterprises
could lead to significant changes in the shares of GDP and employment in
the wholesale and retail sectors. The trend toward vertical integration within
larger enterprises will have consequences on the distribution of inputs to other
sectors of the economy and, hence, on overall economic development and competitiveness.
It will also have an impact on informal retailers and street markets.
The extent of the liberalization of market access in developing countries ultimately
depends on the balance achieved between the expansionist aims of the
multinationals and prevailing societal objectives, expressed through land use
zoning and limits on the number and size of supermarkets, hypermarkets, and
medium outlets and, in some cases, employment and equity aims in income
distribution.
If there are labor market rigidities, the limitations on layoffs may discourage
foreign suppliers of services from establishing local subsidiaries that could otherwise
create employment. The establishment of an adequate social safety net and of
effective retraining programs is thus needed to enhance labor market flexibility.
The temporary entry of foreign service personnel may be required to provide the
training in necessary skills for national workers. Regulations on work-related
issues include those on worker rights (the observance of International Labour
Organization standards, including on freedom to unionize), conditions of
employment (working hours, holiday entitlements, minimum wages, job security,
gender equality, opportunities for the handicapped), and insurance benefits. Liberalization
may result in different, usually opposite, effects among workers at large
companies relative to workers in family-owned shops (microenterprises), in
which employment conditions may be much inferior.
Governments also need to take into account the macroeconomic effects of liberalization
and the flows of inward FDI associated with the arrival in the market
of large foreign-owned companies that could have consequences for national
finances, including tax collection, and an impact on consumer prices. There could
be wide-ranging effects on supply chains, both national and international, and on
land use and prices in the urban areas where the new, large-scale supermarkets are
located.
Ambiguous tax laws and cumbersome regulations are regarded by investors as
serious impediments. Deregulation should focus on enhancing transparent
enforcement and on reducing the trade restrictiveness of regulations that fulfill
objectives not directly related to trade in distribution services. Laws have to be
taken into account that prohibit the sale of certain products such as tobacco;
alcoholic beverages; pharmaceutical, medical, and orthopedic goods; weapons,
munitions, and other arms and military equipment; chemical products; precious
metals and precious stones; art; and petroleum and petroleum products. The