International Trade in Services.pdf - DSpace at Khazar University

Assessing the Potential of Services Trade in Developing Countries 25
to do only a small amount of business locally. Similarly, a requirement that engineers
and doctors obtain domestic licensing and certification can impose additional
costs on foreigners who have already gone through a similar certification
process in their home countries.
With regard to each cell of table 1.3, an analyst may make additional distinctions
that apply to the service sector under consideration. Regulations may appear
to be protectionist, but may still serve legitimate purposes, such as protecting
health and safety or preventing fraud. Such regulations, if they are applied in a
nondiscriminatory manner, are not protectionist. They should not necessarily be
viewed as a barrier to the trade in services, even though they may result in higher
standards than those prevailing abroad and thus reduce imports relative to the
level they might reach without the regulations. Meanwhile, the lack of discrimination
is not sufficient by itself to absolve a regulation of the charge of protectionism
if, for example, it enforces a standard that has no legitimate purpose, but happens
to be met by domestic providers and not foreign providers. Distinguishing
legitimate from illegitimate regulations may therefore require a detailed knowledge
of the industry that only industry experts possess. As a consequence, vested
interests may often be involved in the regulatory process.
The policy framework for market openness: Principles
for regulatory quality and performance
Trade policy makers at the Organisation for Economic Co-operation and Development
have identified six principles that are key to market-oriented and trade- and
investment-friendly regulation (OECD 2005). The principles reflect the basic precepts
underpinning the multilateral trading system. They are useful guidelines in
the assessment of the extent to which a country’s regulatory framework contributes
to market openness. The stronger the implementation capacity of the government
in question, the more ambitious the government may be in seeking to live up to
these principles. The efficient regulatory principles (with illustrative good regulatory
practices) from a market openness perspective are shown in table 1.4.
Conclusions
We note the importance of the service sector in high-, middle-, and low-income
countries, together with the contribution of the trade in services to the GDP of
these countries. We draw a distinction between backbone services such as finance,
telecommunications, and transport and the nonbackbone services that are the
focus of this volume. These nonbackbone services, which include accounting,
construction, distribution, engineering, environmental, health, IT, and legal