Policy Brief 5, September 2006

Increasing LDC Participation in Services through Special Priority Market Access in the WTO.

The participation of Least Developed Countries (LDCs) in international trade in services is minimal. Unlike the case of goods, in services, LDCs compete on a Most Favoured Nation (MFN) basis. It is therefore impossible for a country to give a market opening only to LDCs, on terms more favourable than is available to others. Bearing in mind that LDCs have the weakest capacities to compete, the present rules lock them out of the ever increasing opportunities in international trade in services. A key objective of the General Agreement on Trade in Services (GATS) is to reverse this trend, by providing a set of international rules that result in increased participation of LDCs. Members have agreed that LDCs require special priority in services.

Simply put, special priority would entail more favourable treatment of LDC services suppliers under the GATS, including through priority market access. Various GATS negotiating mandates call for the development of an appropriate mechanism to operationalise the according of special priority to LDCs. Some of these include GATS Article IV: 3, the Guidelines and Procedures for negotiations, the Modalities for the Special Treatment of LDCs, and the Hong Kong Ministerial Declaration of December 2005.

The LDC Group presented a proposal for a Mechanism to operationalize Article IV:3 of the GATS, which would create legal space for Members to accord special priority access to LDC services suppliers, without violating MFN. However, this proposal is being ignored, signalling Member’s unwillingness to appreciate the issue’s importance, and to deliver on the mandate.

This Policy Brief argues for the need to find a WTO solution that implements an already existing mandate, as a means to increasing LDC participation in international trade in services.

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