The Dynamics of Transatlantic Negotiations in Services

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Series Details February 2012
Publication Date February 2012
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Tough times were expected in the year(s) to come, but focusing entirely on public and private budget cuts was not a politically sustainable policy. On top of its direct impoverishing impact, austerity had an indirect impact and was very corrosive in the long run for consumers. It induced producers of goods and services to retreat to their home markets, reducing the level of competition in the markets they left behind.

There was thus an urgent need to build a pro-growth agenda, for which the services sector was the best candidate, since it accounted for 60-70 percent of the G20 GDP. Such an agenda meant reforms: in order to take the right decisions when redesigning their strategies, service providers needed clarity and predictability on how their markets would operate. History shows that introducing pro-growth domestic reforms is hugely bolstered by opening — or reopening — domestic markets to foreign competitors.

This is why a 'sleeping' Doha was not a reason for not starting negotiations thennow on how to improve market access in services. This paper argues that the two largest world economies, the United States and the EU, should launch bilateral negotiations on services. The expected gains for consumers and the opportunities for service providers were huge in both sides of the Atlantic because their services sectors were likewise huge and because the protection still prevailing in many services areas was still high. Potential gains came from three sources:

+ cutting the currently applied barriers on market entry;
+ lowering the U.S. and EU bound commitments on services liberalization dating from the Uruguay Round to the level of the (much) lower barriers actually in force today, a source of invaluable certainty in a crisis plagued by so much uncertainty; and
+ 'defragmenting' the EU internal market by opening the markets of the most protectionist EU Member States to competition from the United States and from the other EU Member States — and vice-versa for the U.S. 'internal market'
In this context, this paper gives a sense of the services for which some ' willingness to negotiate ' could be targeted for moving ahead.

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