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United States seeks new international trade agreement to cover services

WASHINGTON--The United States will meet representatives of other major economies to try to negotiate a global agreement on the trade in services, the top U.S. trade representative (USTR) Ron Kirk said Tuesday.

“The negotiations will begin in Geneva, Switzerland, with a group of 20 trading partners, who represent nearly two-thirds of global trade in services,” Kirk said, in a statement from his office.

The talks come despite the languishing movement of the WTO's global Doha trade talks, where progress has been slowed due to the global economic slowdown.

Kirk said the talks on a services agreement would begin within 90 days. He expects the group of negotiating parties to increase as the talks proceed, according to a letter he sent to the U.S. Congress.

The list of parties with which the U.S. will negotiate includes Australia, the European Union, Hong Kong China, Japan and Mexico.

A USTR official said the U.S. wants to move ahead, even if some major trade partners, such as China, are not participating.

“Not all countries are in a position to constructively engage in an agreement like this at this time,” USTR spokeswoman Carol Guthrie said in an emailed.

“Rather than wait, we are taking action with like-minded partners to build a stronger international consensus around a framework of policies and best practices that will support economic development,” Guthrie said.

Kirk said that tradable services are five times less likely to be exported than manufactured products.

The services agreement should ensure greater “transparency and predictability” from trading partners by, for example, providing public notice of proposed regulations, Kirk said.

Some of the barriers that currently impede international trade of services include licensing agreements, requirements that service providers have accreditation in an export market and government procurement that favors domestic industries, said Brad Jensen, a senior fellow at the Peterson Institute for International Economics, a think tank.

The U.S. currently enjoys a large trade surplus in the services sector, noted a Business Roundtable news release. November 2012 U.S. services exports came in at US$36.3 billion with a US$17 billion trade surplus, it said.

Negotiations in the World Trade Organization's Doha round have been dogged by disagreement on how much the United States and the European Union should reduce farm aid and the extent to which emerging market giants such as India and China should cut tariffs on industrial products.

WTO Director General Pascal Lamy has encouraged partial accords in light of the next ministerial level conference, which will take place at the end of 2013.

Jensen said the talks on a trade agreement covering services should be more successful than the Doha round because they include only parties who are “self-selected” and want to reach a deal.

The hope is that the talks pick up enough momentum so that they attract other major economies, such as China and India, Jensen said.

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