OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Executive Office of the President
Washington, D.C.

United States Announces Proposals for Liberalizing Trade in Services
U.S. Leadership Spurs Momentum to Fulfill Doha Agenda

July 1, 2002

WASHINGTON - The United States today announced proposals for liberalizing global trade in services, designed to remove foreign barriers in areas such as financial services, telecommunications, and environmental services. Today's announcement by the United States meets the time frame requirements set at the WTO negotiations launched in Doha, Qatar last fall and will spur momentum on the Doha Development Agenda. During those talks, 144 WTO members agreed to a work program designed to liberalize trade across a wide variety of areas, including services.

The services proposals are in the form of a list of specific requests the United States is making to other countries to lower their trade barriers in areas such as financial services (including banking and insurance), telecommunications, express delivery, energy services, computer services, distribution services, and environmental services.

The United States believes its proposals in the services area will spark further trade liberalization action by other WTO members. In recent weeks, the United States has offered proposals to liberalize global trade in agriculture and has announced a framework for easing WTO rules to allow poor countries to gain greater access to drugs needed to combat HIV/AIDS, malaria, and other public health crises.

"Liberalizing services has a force multiplier effect, reverberating across an entire economy - every product, idea, or consumer benefits from a more effective and efficient service sector," said U.S. Trade Representative Robert B. Zoellick. "U.S. companies and workers are at the forefront in providing top quality services. Expanding our access to overseas service markets will promote economic growth, create new job opportunities, increase consumer choices, and raise living standards for workers and their families."

"Services promote the interchange of goods, people, and ideas. To the extent that the services sector is opened and modernized, countries will receive an economic boost," added Zoellick.

Zoellick noted that liberalization in services through a multilateral process continues the historic post-WWII U.S. vision of promoting shared economic growth, opportunity, and peaceful prosperity through trade, competition, and openness. Over the last fifty years, tariffs on manufactured goods have fallen by some 90 percent. But there has been little multilateral progress in liberalizing services, because it was addressed for the first time in the 1994 Uruguay Round Agreements. The Uruguay Round of negotiations resulted in standstill bindings - countries promised to not make their restrictions any worse. The Doha trade negotiations are historic, because they have set up a negotiation framework to reduce barriers in services.

The services proposals, which meet the June 30 time frame set out in Doha, suggest that WTO members remove cumbersome and often costly regulatory procedures that make it difficult for American legal, financial, insurance, and other service providers to conduct business in foreign countries. The proposals also recommend that WTO members remove discriminatory trade restrictions in sectors such as telecommunications, express delivery, energy services, and environmental services. In line with WTO rules, each proposal is mindful of other countries' desire to protect their consumers, environment, and other vital domestic interests.

Service industries are a major component of U.S. economic activity, accounting for 80 percent of U.S. employment and 63 percent of the U.S. Gross Domestic Product (GDP). The United States also is the world's largest exporter of services. U.S. services exports have more than doubled over the last 10 years, increasing from $137 billion in 1990 to $279 billion in 2000, according to U.S. Department of Commerce data.

Americans import relatively few services with their additional dollars, while foreigners buy more U.S. services. Those additional service exports help to offset the U.S. goods deficit, bringing greater balance to the U.S. trade account, according to research by the Institute for International Economics.

Zoellick welcomed the active participation of developing countries in services liberalization efforts, which has resulted in submission of over 50 proposals by them to the WTO negotiations to date. Later this year, the United States will sponsor a technical assistance seminar in Africa on services to help trading partners advance their interests in the negotiations.

Other WTO members are expected to submit proposals for liberalizing services and countries will meet bilaterally to consider those requests. The next deadline for formal negotiating offers in response to the proposals is March 31, 2003.

Background
The meeting of WTO trade minsters in Doha, Qatar in November 2001 established deadlines for the services negotiations, requiring submission of initial requests by all WTO Members by June 30. The multilateral trade negotiations launched at Doha are scheduled to conclude no later than January 1, 2005. In addition to services, WTO negotiations are underway in agricultural and non-agricultural goods.

The June 30 submission time frame for services is the first of the major deadlines established at Doha - another key deadline is the end of March 2003, when there is to be agreement on the methodology for the agriculture negotiations as well as the submission of formal offers in the services negotiations. A review of progress in the Doha negotiations is scheduled for the WTO's 5th Ministerial Conference in Cancun, Mexico, September 10-14, 2003.

The United States is the world's largest exporter of commercial services. According to the latest data available, U.S. commercial services exports in 2000 were $279 billion - more than double their level 10 years ago. In addition, sales of services by majority U.S.-owned affiliates overseas were $338 billion in 1999. U.S. services exports support over 4 million U.S. jobs - jobs in both the services and manufacturing sectors. U.S. services-exporting industries are spread throughout the country: Every state in the union has companies engaged in exports of information and data processing services, and 49 states engage in export of software services.

U.S. Trade Leadership
Since Doha, the United States has moved forward globally, regionally, and bilaterally to promote trade liberalization. Some of the global trade steps the United States has taken include:

- Trade Capacity Building: The Bush Administration recognizes that many developing countries need the tools and training to help them participate more fully in the global trading system and reap the full benefits of liberalization. The United States spent $555 million in 2000 on trade-related capacity building programs. In January, after meeting with WTO ministers from African countries and the Cairns Group of agricultural exporters, Zoellick announced a $1 million U.S. contribution to a voluntary World Trade Organization (WTO) fund to provide technical assistance for developing country trade capacity-building efforts. The Doha Development Agenda Trust Fund is aimed at building the capacity for developing countries to participate in the full range of WTO negotiations and activities agreed to in Doha.

- Agriculture: In June, the United States called for broad negotiations to increase agriculture trade liberalization and expand market access. Specifically, the U.S. is leading a coalition, which includes most WTO members, that calls for the elimination of export subsidies in five years. The United States is seeking significant reforms of "state trading enterprise" (STE) companies, such as ending monopoly privileges; ending government STE "bailouts" and other special privileges that distort trade and production and create perverse incentives; and improving transparency. This U.S. initiative is in direct response to concerns that the Canadian Wheat Board (CWB) monopoly hurts U.S. wheat farmers.

- Access to Pharmaceuticals: Last week, the United States announced a framework that would allow poor countries unable to produce pharmaceuticals to gain greater access to drugs needed to combat HIV/AIDS, malaria, and other public health crises. This framework would permit a mechanism for easing WTO rules regarding production of these vital medicines. This initiative is part of the Administration's global effort to address the serious health problems, such as HIV/AIDS, afflicting African and other poor developing countries.

Following this release is an executive summary that provides general information and details the service sector and other proposals.