Touting Benefits of Liberalisation
The task of convincing developing nations that the foreign provision of services is essential for their development is an ongoing task. The Business and Industry Advisory Committee (BIAC) recommended that the OECD undertake a study of the economic benefits of liberalization in key service sectors so as to ‘build a broader constituency for liberalisation’. It also recommended that it improve its collection of service-related statistics to show to the public how important services are to the economy.
The European Services Forum (ESF) also planned to put together case studies of how liberalization in the service sector has helped developing countries and use them to persuade the governments of developing countries. Banker Andrew Buxton told the 1999 World Services Congress that European negotiators ‘need to have good news stories, examples of where liberalization has shown clear benefits’. He recognized that there would be some losers in the liberalization process and it was the threatened institutions that would ‘lobby hardest against the liberalization process’.
Examples of beneficial liberalization were somewhat contentious. Buxton, for example, cited Enron’s controversial Dabhol power plant which he said ‘will bring much needed reliable electricity power to the country’. In fact it ended up producing electricity that was far too expensive for the locals to buy.
Service industries are particularly keen to open up government procurement markets because procurement by government and public authorities and agencies represents such a large share of government expenditure. They claim, without any real evidence, that this opening up in developing countries will enable better quality services to be available at lower prices and facilitate technological and knowledge transfer, which would promote sustainable development.
Benefits to the US
The task of persuading local politicians of the need for services deregulation, at home and abroad also continues. CSI president Vastine told a Senate Finance Committee hearing that because ‘foreigners have a high propensity to consume US services’ and because US service companies tended to be competitive in most service sectors, reducing trade barriers would stimulate US trade and reduce the US current account deficit. Vastine argued that US domestic policies should be formulated to enhance the competitiveness of service companies, for example ‘permitting US-based financial services companies to reinvest earnings overseas without first being taxed by the US’. This would be an advantage local companies would not have.