At Whose Service? Employment Effects of Services Trade Reform in the MENA Region and Sub-Saharan Africa

WTO Public Forum
Geneva, Switzerland

Panelists and Moderator

• Ejaz Ghani, Lead Economist in Economic Policy and Debt, PREM Network, World Bank
• Marion Jansen, Chief Economist, International Trade Centre
• Taisuke Ito, Economic Affairs Officer, United Nations Conference on Trade and Development
• Pierre Sauvé (Moderator), Director of External Programmes and Academic Partnerships, Faculty Member, World Trade Institute (WTI), University of Bern

Background
Trade in services is the new frontier in international trade theory and practice. Modern trade agreements go beyond the removal of traditional barriers to goods trade, such as tariffs, and increasingly deal with issues previously thought to be of strictly domestic concern, notably in the field of service sector regulation. Service sector provisions can be found or are foreseen in a number of such “new generation” trade agreements: the Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU, the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the US, the Trans-Pacific Partnership (TPP) across countries in the Asia-Pacific region and the Trade in Services Agreement (TiSA) between American, Asian and European countries.

Trade agreements with services provisions are not exclusive to developed economies. In the MENA region and Sub-Saharan Africa, various relevant policy initiatives concerning services trade reform are either imminent or under way, be they unilateral, bilateral (e.g. EU Deep and Comprehensive Free Trade Agreement negotiations with four MENA countries), regional (e.g. SADC Trade in Services negotiations or the extension of the Agadir Agreement to cover services) or multi-lateral (e.g. GATS mandated progressive liberalization).

It has long been recognized that service sector development plays a key role for the functioning of the broader economy and hence the creation of jobs. Inefficient provision of key services such as transport, telecommunications and financial services are major obstacles to economic activity in developing countries. Often, the underlying cause of such underperformance is inefficient regulation, which trade agreements seek to address.

At the same time, efficient regulation does not imply deregulation. The services sector has traditionally been highly regulated for a number of both economic and non-economic reasons. Market failures, for example, are pervasive in a number of service sectors and warrant government involvement to function efficiently. Non-economic objectives may include social goals (income distribution, universal access to certain services, consumer and workers’ protection), community goals (cultural diversity, biodiversity) as well as strategic interests (energy security).

Services trade reform, which essentially amounts to regulatory reform, hence is a complex undertaking with potentially serious and unforeseen ramifications. For many, the potential impact on employment is perhaps the most tangible effect. Nonetheless, the economic literature offers to date only very little robust insights on the employment implications of services trade reform, be they short-, or long-term. One of the reasons for the lack of scientific guidance on this matter stems from the relative novelty of the subject itself and stands in stark contrast to a well established literature on goods trade reform.

Against this background, CEP is organising a workshop on the employment effects of services trade reform in developing countries, with a focus on the MENA region and Sub-Saharan Africa, in order to improve our understanding of related challenges and opportunities for creating jobs.
Relevant questions that will be addressed include:

• What are the insights on employment effects of services trade reform in the empirical literature and in simulation exercises?
• To what extent does service sector reform have employment effects beyond the sector under reform and how does policy need to take this into account?
• What are the methodological difficulties in assessing employment effects and how should informed policy making take account of underlying assumptions?
• What are important flanking policies that help ensure positive employment effects of services trade reform and how feasible are they in the MENA region and Sub-Saharan Africa?
• Which sectors are most important for employment generation and how can services trade reform contribute to expanding them?
• In terms of employment benefits, what are the promises of unilateral vs. bi-/multilateral liberalization?
• Are there any market access barriers to service export growth that may inhibit employment generation in the region? If so, which modes of services supply, which sectors and which trading partners are most affected?