The Uruguay Round of multilateral trade talks achieved to broaden the trading agenda beyond manufacturing, expanding into new sectors. In particular, the inclusion of services signalled the acknowledgement of their importance in international trade. Members agreed to establish a comprehensive set of rules governing services trade, which are included in the GATS. The progressive liberalisation of trade in services became a goal of the new WTO round. This agenda offers all countries a chance to take stock of developments in the services sector so far, and undertake progressive further opening.

In recent years, the share of services in the world economy has expanded markedly. Services now account for almost 70% of production in high-income countries, and are also increasingly important in middle and low income economies. OECD studies show that opening up trade in services would benefit both developed and developing countries, despite a perception in poorer countries that they will lose out because their domestic service industries are inefficient. For all economies, the gains from more open services trade are substantially greater than those from liberalising trade in goods.

Reform in services is no easy task. The gains from reform may not materialise if policies that restrict competition persist. Examples abound of reforms that did not produce the expected benefits because other measures remained in place that allowed firms to forestall vigorous competition. Reform efforts must also take into account the legitimate role of government to ensure that social objectives, such as universal service provision, are met. OECD work confirms that for reforms to contribute to development, strengthened regulation and domestic policies will have to accompany liberalisation.

The complexity of liberalising service trade under the GATS should not be underestimated, particularly in light of the limited capacity of many developing countries. A country needs to gather significant knowledge before submitting market opening requests and offers. This includes identifying opportunities and challenges for its exporters and its capacity building needs, as well as assessing the likely impact of liberalisation. Preparing for the negotiations requires a multi-stakeholder approach. The OECD, in cooperation with UNCTAD, is assisting WTO Members in managing the GATS negotiations.