Pascal Lamy Speaks for Liberalization of Services

Depending on who one hears from, the story circulating in low income countries is that the Doha Round of trade negotiations is registering zero progress is because the EU and to a lesser extent the US are unwilling to abolish trade-distorting subsidies to their farmers. As a result, the collection of lower income countries are in turn reluctant to proceed with negotiations in areas such as physical goods and services.

Apart from the fact that this piecemeal approach to trade liberalization is altogether wrong-headed, this approach by the lower income countries is bereft of much logic. It is often fed by the assumption that their is a hierarchy of industries and sectors that are more important than others and that liberalization of agriculture in the Eu and US would be most beneficial.Following this logic, the liberalization of goods and services trade would be concession in exchange.

In this speech, Pascal Lamy states the clear point that the gains from liberalization of international trade in services would far exceed equivalent liberalization in goods. One could not agree more but sensible application of trade theory is not the one thing that most nations are known for. If only they understood and practised the logic of unilateral liberalization!