Developing Trade Rules for Services: A Case of Fragmented Coherence?

Abstract

This paper presents the results of a four-year project tackling several issues relating to multilateral and preferential trade in services. One of the underlying organising principles of our research on services trade has been a presumed fault line between the innate coherence that is achieved through multilateral rules and commitments, on the one side, and the more inherently fragmented nature of preferential solutions or rules, on the other. Doubtlessly rooted in the way mainstream trade theorists and economists more broadly have long championed multilateralism over its peripheral brethren, such a perception proceeds from the assumed second-best nature of preferential, or non-WTO-centric, policy and rule-making approaches. Our key messages put forward concrete proposals to improve regulation of services trade. We find, inter alia, that: a) fragmentation is a source of policy and innovation apt to inform multilateral rule-making, while theatres at the periphery may yield superior outcomes or more politically palatable bargains; b) the adoption of a necessity test applicable across services sectors at the multilateral level would improve the quality of services trade regulation domestically; c) the current treatment of labour mobility under GATS is not conducive to an optimal global governance of migration; d) when examing likeness, both service-related and supplier-related factors have to be considered to decide whether there is competitive relationship in the marketplace; e) Overlapping multilateral and bilateral rules on investment blur the rights and obligations of domestic authorities and foreign investors in services; f) co-ordination between the WTO and arbitral panels so that similar principles are intepreted in a uniform manner can lead to a more coherent international investment framework in services.

Keywords: World Trade Organization (WTO), General Agreement on Trade in Services (GATS), Trade in Services, Preferential Trade Agreements (PTAs), domestic regulation, likeness, labour mobility, investment