Preferential access for LDC services exports hangs in the balance in Bali (en)
(BALI, INDONESIA) — While the overall services exports of the poorest countries are increasing, they are not yet making sufficient progress in the fastest growing and most lucrative areas, such as professional services, business-to-business outsourcing and IT-services. This should be a wake-up call to the international community, which needs to take practical steps to put in place the preferential treatment promised to least developed countries (LDCs) two years ago, and to increase assistance in the services sector, said ITC Executive Director Arancha González at a session on Operationalising the LDC Services Waiver in Bali, Indonesia yesterday.
The session was organized by the Geneva-based International Centre for Trade and Sustainable Development (ICTSD) at the Trade and Development Symposium, which is taking place in parallel with the Ninth World Trade Organization (WTO) Ministerial Conference in Bali this week.
There is much room to go for LDCs in service exports, said Shanker Prasad Koiralam, Minister of Commerce and Supplies from Nepal in his keynote address. LDCs’ share of global service exports stands at only 0.6%, significantly below their share of global goods exports at 1%. “I am asking developed and developing members to expedite the operationalization of the waiver,” he said.
Operationalization means identifying areas in which individual WTO members are willing to give preferential treatment to LDC service exporters and getting the relevant WTO committee to sign off on the proposed preferences.
Market access preferences are automatically allowed under current rules, without the need for an endorsement from the WTO. These preferences could include, for instance, allowing a certain number of service providers to enter a country for temporary work under an LDC-only quota, said Hannes Schloemann, Director of WTI Advisers. “A legitimate question is why no one has done it so far,” he said.
The first step is to identify the services that LDCs have the capacity to supply and the barriers they currently face in these areas, said Sherry Stephenson, Senior Fellow at ICTSD, who moderated the discussion. “Then negotiations can begin so that other members provide preferential access in these areas,” she said.
ITC will continue to support LDCs in their efforts to increase services exports, Ms. González said. It will contribute to improved data collection to better understand where the potential for increased services exports lies. ITC will also prioritize technical assistance in services sectors, including the development of customized programmes to help LDCs increase their capacity and meet international client requirements. At the same time, ITC will support the creation of an enabling business environment in LDCs that is conducive to SME export growth, she said.
One problem is that LDCs themselves do not fully recognize the gravity of the situation, said Amelia Kyambadde, Uganda’s Minister of Trade, Industry and Cooperatives. “We need to invest in the synthetization of LDCs themselves about the importance of the services sector for their economy,” she said. “And we must develop a strategy for engagement from developed and developing country members.”
The large majority of LDCs are already exporting in some of the most important sectors, such as tourism, transport, communications, financial services, cultural and recreational services. At the same time, they are much less present in the services areas that are the fastest growing, such as environmental and IT services, said David Primack, Executive Director of International Lawyers and Economists against Poverty.
The real problem is not market access, but lack of appropriate skills said Peter Balas, Deputy Director General for Trade at the European Commission. “When it comes to the quality of services, LDCs need to be competitive not only in price but also in quality,” he said.