India presses WTO on trade in services

India’s National Association of Software and Service Companies (NASSCOM) is pressing World Trade Organization (WTO) members in Geneva to assemble an agreement on a framework for agriculture trade, in order to move on to the liberalization of trade in services.

India is a key opponent of subsidies by governments of developed countries to their farm sector, an issue that has come in the way of an agreement in recent rounds of global trade talks.

“If there is no agreement on agriculture, that should not let the talks get bogged down,” said Kiran Karnik, president of NASSCOM in Delhi. ” We should push the services agenda, because this is where developing countries including India definitely have a bright future.” NASSCOM has teamed up in this connection with organizations of services industries in a number of countries including Australia, Japan and the U.S.

India’s software and services outsourcing industry is keen on including software services and business process outsourcing (BPO) services under a WTO agreement, particularly after the outcry by some politicians and labor unions in the Europe and the U.S. against their countries’ offshore outsourcing by U.S. and European companies and governments.

“We are already seeing a number of non-tariff barriers to Indian software and BPO services exports to the U.S. and Europe,” Karnik said.

The U.S. Senate, for example, passed in January an appropriations bill totaling US$328 billion, which contains provisions that restrict government contractors from outsourcing work overseas. A number of U.S. states are considering measures to restrict the implementation offshore of government contracts, and to give preference to local contractors.

NASSCOM has teamed up with services industries associations in other countries, working under the banner of the Global Services Coalition. Besides NASSCOM, the Coalition includes the Australian Services Roundtable, Canadian Services Coalition, Coalition of Service Industries in the U.S., European Services Forum, Japan Services Network and the Hong Kong Coalition of Service Industries.

The WTO talks face a self-imposed July 31 deadline to break the current impasse, and a key obstacle remains the reluctance of the U.S. and the European Union to agree on farmer subsidies cuts. The current round of free trade talks under the aegis of the WTO began three years ago in Doha, Qatar, and is generally referred to as the Doha Development Agenda or the Doha Round.

If negotiators fail to adopt a framework for agriculture this month, it could spell the end of the Doha Round, according to the statement issued last week by the Global Services Coalition. At a minimum, the round will fall into a state of inactivity for at least a year, owing to upcoming European Commission leadership changes, and the U.S. presidential election, among other factors, the statement said. Developed and developing countries alike will be denied the benefits of further trade liberalization while the Doha Round languishes, the statement added.

Progress in global trade talks hinges on agriculture, but nowhere will the effects of failure be felt more broadly than in the services sector, which comprises the bulk of economic output in both developed and developing countries, according to the statement from the Global Services Coalition, which added that services account for 45 per cent of gross domestic product (GDP) on an average in low-income countries, and a much higher proportion in developed countries. Agriculture, in contrast, represents 25 per cent of GDP in low income countries, and only two per cent in high income countries.

However, services currently represent only about 20 per cent of total world trade, a reflection of the relatively closed markets for services around the world. Services liberalization is the best opportunity for global economic growth, according to the statement.

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