The fourth session of the Multi-year Expert Meeting on Trade, Services and Development examined experiences and lessons learned in promoting coherence between policies, regulations and trade liberalization approaches, so as to support services sectors.
The Multi-Year Expert Meeting, held between 18th and 20th May, brought together over 100 participants, including ambassadors, senior officials and regulators from Government, high-level representatives of international and regional organizations (ILO, ISO, World Bank, WTO, OECD, ITU), and representatives from the civil society, private sector and academia. It was chaired by Mr. Onyanga Aparr, Ambassador of Uganda.
- Services economy and trade for development.
- Domestic regulations and trade liberalization in services.
- Regulatory frameworks and trade in telecommunication and ICT services.
- Financial services regulation and liberalization.
- Experiences and lessons in coherent approach to trade and regulation of services.
In his remarks opening meeting, Mr. Guillermo Valles, Director of UNCTAD's Division on International Trade on Goods and Services, and Commodities noted that the services sector constitutes a backbone of the modern economy and act as social fundamentals for people's lives. Infrastructure services in particular, such as transport, energy, ICT, telecom and financial services, provide inputs to all economic sectors, and as such can catalyse structural transformation.
Following on Ms. Mina Mashayekhi, Head, Trade Negotiations and Commercial Diplomacy Branch, highlighted that since the achievement of many Sustainable Development Goals is linked to the efficient functioning of services sector, universal access to essential services and strengthening infrastructure, Agenda 2030 is indeed a services agenda. Further, that facilitating trade in services plays a key role on reducing trade costs and improving trade and productive capacity of all sectors and the economy as a whole.
In harnessing development potential of services, policies, regulations and institutional frameworks are crucial, as they are a key determinant of services sector performance. A key policy question is how to ensure a coherent approach to services policy and regulation, and trade liberalization. This question was addressed on the first day.
In the first panel discussion, Mr. Xu Bo, Deputy Director-General, Services Department, Ministry of Commerce of China, shared his country's experience in implementing practical measures to strengthen policy coherence. This included strengthened institutional mechanism for inter-agency coordination, experimental policies and incentives, introduction of new data system, and promotion of services trade liberalization, including through 14 FTAs and four pilot free-trade zones in Shanghai, Guangdong, Fujian and Tianjin.
On the same theme, Mr. Rashid S. Kaukab, Executive Director, CUTS International Geneva, pointed out that an institutional mechanism enabling consultation and coordination among stakeholders is indeed key to upholding policymaking process, enabling the policy maker to identify issues faced by the services sector and identify possible policy solutions in a holistic manner.
Mr. Pascal Kerneis, Managing Director, European Services Forum representing the European services private sector, stressed that much of services trade today is also conducted by the manufacturing sector, and that services account for high value-added segments of GVCs. Such "servicification" of the economy has significantly changed the scope and nature of services policy and liberalization, which need to be factored in in defining coherent services regulatory and trade policy agenda.
In the second pane of the day, experts then turned the question of the relationship between domestic regulations and liberalization in the context of trade agreements. This is important because the domestic regulation has become the major focus of trade liberalization initiatives in multilateral, plurilateral and regional contexts. Recent "mega-RTAs" have placed particular emphasis on regulatory coherence in a bid to reduce trade restrictive effect of divergent national regulatory systems. The role of international standards such as those developed by ISO has become all the more important.
Addressing this question, Mr. Marc Vanheukelen, Ambassador of the European Union to WTO, stressed the case for minimizing regulatory divergence between countries through regulatory cooperation including under RTAs to reduce trade costs. He also highlighted the importance of good regulatory practice in reducing compliance costs while noting that meeting high regulatory standards might be a challenge for developing countries because it would require administrative and other resources.
On the same issue, Ms. Sanya Reid Smith, Legal Adviser and Senior Researcher, Third World Network, pointed out that certain provisions of recent mega RTAs disciplining domestic regulatory discretion could run the risk of imposing major constraints on legitimate domestic regulation affecting services and policy space, particularly for developing countries.
Observing that the existing "producer-driven" approach which regarded domestic regulation as an impediment to market access failed to address the problem of international market failure, Mr. Aaditya Mattoo, Research Manager, Trade and Integration, World Bank, argued that a new "consumer-based" approach whereby exporting country regulatory commitments are to be seen as a condition for market access could deliver both regulatory cooperation and further liberalization in services.
On the second day, experts then took on issues relating to telecommunication and ICT, as well as financial services sectors. Policy and regulatory coherence was also found pivotal in securing services sector development and deriving effective development dividends therefrom.
On telecommunication and ICT services, Ms. Hayun Kang, Director, Department of International Cooperation Research, Korea Information Society Development Institute, underlined that innovation and upgrading in these services were closely linked to trade commitments, as well as active public industrial policies, including enabling institutional arrangements, promotion of demand and earmarked universal access funds.
As regards financial services, noting that some international banks had recently withdrawn correspondent banking services (known as "de-risking") partly in response to new anti-money laundering and counter terrorism-financing regulations in certain jurisdictions, Mr. Wayne McCook, Ambassador of Jamaica, argued that financial regulatory efforts should take into account the needs of developing countries as de-risking practices have profound economic and social consequences in his country and region, particularly interrupting remittance flows.
Following, Ms. Liliana Rojas-Suarez, Senior Fellow, Centre for Global Development, underlined the importance of improving (digital) financial inclusion through a better regulatory framework, which would encourage innovations in digital finance and their use by low-income populations.
In the final panel on the third day, experts engaged in exchanges of country and regional experiences and lessons learnt towards the identification of best-fit practices in securing a coherent approach to trade and regulation of services.
Reference was made to UNCTAD's Services Policy Reviews (SPRs), which have served as a toolkit to enhance services policies, regulations and institutions, and helped LDCs prepare market access requests in the context of preferential services market access in their favour. Ms. Margarita Peña, General Director of Service Trade, Ministry of Industry and Trade of Paraguay underscored that UNCTAD's SPR had helped her country design and implement policy reforms and initiatives in such areas as construction, education, financial and telecommunication services. Several requests were made to UNCTAD, including from Namibia, to undertake new SPRs for different countries.
Mr. Luiz Mauricio Navarro, Ministry of Development, Industry and Foreign Trade of Brazil, stressed the difficulties of evidence-based policy making in services as data paucity is an inherent problem in the sector. Brazil has developed the Brazilian Integrated System of Foreign Trade in Services and Intangibles (Siscoserv), which have helped the country in the formulation and implementation of coherent services policies and trade negotiations.
Mr. Pralok Gupta, Assistant Professor, Centre for WTO Studies, Indian Institute of Foreign Trade, shared India's experience highlighting the importance of preserving policy space and gradual approaches to trade liberalization in services. This ensured a successful reform process as services liberalization and regulations are evolutionary and experimental in nature, and coherence needs to be achieved over time.
Many participants highlighted the importance of the MYEM discussion in promoting a better understanding on key policy issues affecting services economy and trade for informed policymaking. The meeting forms a part of UNCTAD's toolbox to help developing countries harness the benefit of services economy for development, together with research and analysis, capacity-building support including SPRs and multilateral and regional trade negotiations, and the Global Services Forum. UNCTAD will hold the third session of the Global Services Forum on 21 July in Nairobi, Kenya, at the occasion of UNCTAD 14.
