Slow movement

While negotiations on trade in agriculture, held under the aegis of the World Trade Organisation (WTO), have made some headway, this has not been the case with trade in services.

And going by the wait-and-watch attitude adopted by most countries, notably the developing ones including India, it is futile to expect any breakthrough soon.

India's revised offer on trade in services, approved on Monday by the Cabinet committee on the WTO headed by Prime Minister Manmohan Singh, bears out the cautious approach the country intends to adopt in this field.

India has not only confined the fresh offer to mainly those sectors where initial offers had been made in June 2003, it has also made it clear that its final stand will depend on what the other countries offer in return.

Besides, it has opted for higher "binding" limits when it comes to foreign direct investment in sectors like banking, telecom, retail and accounting, presumably so as to be able to safeguard domestic interests.

The sectors where commitments were indicated by India in the initial Uruguay Round included business services, construction and related engineering services, health, social services, tourism and travel-related services, maritime services and transport.

The issues concerning international trade in services are far more complicated, at least in some respects, than those in agriculture. For one thing, the developed countries have relatively great capacity in the services sector compared to that of most developing economies.

Besides, the developing countries are likely to be pressured to open up more and in more sectors than they would be willing to do. An indication to this effect is already available in the European Commission's vast list of services where it wants the developing countries to open their doors.

Thus, liberalisation of trade in services can potentially lead to uneven benefits and costs for the developed and the developing worlds.

However, India's position is different from that of most developing countries, as it has inherent strengths in several services and can benefit from greater access in those areas in other countries.

India already earns something like $30 billion from its services exports. Some global agencies project the potential will be $200 billion by 2020.

It can, therefore, be argued that it is in India's interests to keep the services sector negotiations going. In fact, such a move is essential to provide the country some leverage in exploiting its comparative advantages by prompting its trading partners to be more liberal in opening up their services sectors, especially in areas like business process outsourcing and movement of natural persons.

Where other developing countries are concerned, they can always fall back upon the original Doha Declaration, which provides flexibility for them to choose whether to liberalise and in which areas, when and by how much.

What is really needed is that like-minded developing and other countries come together to form groupings, such as the G-20 for the agriculture trade talks, to acquire a voice that effectively articulates and asserts their viewpoint. Only then will they be able to protect their legitimate interests and may even be able to extract some benefits from the developed countries.