Dodwell in SOM1 Moscow - Post 4

February 11, 2012

This weekend, ABAC brought trade negotiators for both goods and services together in Moscow for a rare joint meeting. The aim was to demonstrate that liberalizing services trade is just as important for boosting trade and competitiveness in goods as it is for services.

ABAC proposed to trade negotiators back in the San Francisco SOM3 last year that officials from the two important trade policy groups – one dealing with services, the other with goods (“the stuff you can drop on your foot” as one Market Access Group (MAG) official put it) – could valuably meet together to examine embedded and embodied services. It had been a clear conclusion from the Services liberalization report championed by ABAC Hong Kong China and ABAC Philippines through summer last year, and endorsed by leaders in Hawaii last November, that the long-standing neglect of services trade and investment liberalization was hurting the export competitiveness of goods producers – in particular high value-adding ones, and goods produced along long transnational supply chains. The study showed that goods exporters did not realize how much of the value of their exported products were actually attributable to services that were either “embodied” in the item, or “embedded” alongside the goods – including marketing, after-sales service and repair, and so on. ABAC’s proposed joint session in Moscow between the Market Access Group and the Group on Services (GOS) on Embedded and Embodied Services was conceived to educate on the “fuzziness” of the line between goods and services, and to provide some numbers on how significant the services value-add was.

ABAC facilitated presentations from two excellent expert sources on embedded and embodied services – Andreas Maurer from the World Trade Organisation and Jane Drake Brockman, the principle author of our Services liberalization report. Feedback from services trade negotiators was strongly positive – but that might be expected. It was less certain whether the Market Access negotiators (focused on liberalization of trade in manufactured goods) bought into the implications of ABAC’s message – that their future success in driving liberalization of goods trade depended as much on services liberalization as it did on liberalization for goods. More work will clearly need to be done. That makes future joint MAG-GOS sessions very important.

ABAC is suggesting at least three possible future themes for joint sessions – regulatory divergence as a barrier to goods trade as well as services; foreign investment liberalization; and the role of services in driving competitiveness in the goods sector. It may be some time before we discover whether our officials focused on trade in goods buy into our concern that neglect of services liberalization is hurting the overall competitiveness of our economies.

The Joint session was also a valuable opportunity for us to flag the three key recommendations of ABAC’s Services liberalization study: the call for a “Services only” round to supersede the stalled Doha Round; the call for a tripartite Services Liberalisation Expert Group, and the call for improving data collection to reflect the importance of services. APEC officials are expected to report back to ABAC when we meet in Hong Kong on Feb 22-24.

Some snapshots at Moscow: Night tours for APEC officials. To break from the stress of dawn-to-dusk meetings...

The Kremlin at night time, at minus 20 degrees centigrade.

Moscovites skating in Red Square

The Novodevinchy Convent on Red Square

* Read Dodwell's latest post from SOM1 Moscow


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