67 WTO members reach a landmark deal

Monday, 2021-12-06 08:38:03
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According to WTO Director-General Ngozi Okonjo-Iweala, thanks to the deal, annual savings could amount to 150 billion USD globally. (Photo: Xinhua/VNA)
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NDO - A group of 67 members of the World Trade Organization (WTO), including the US, China, and European Union (EU), has just reached the successful conclusion of the negotiations of the WTO Joint Statement Initiative on Services Domestic Regulation. Praising the landmark significance of this deal, WTO Director-General Ngozi Okonjo-Iweala emphasised that annual savings could amount to 150 billion USD globally.

In recent years, the growth rate of trade in services has exceeded the growth rate of trade in goods. According to WTO estimates, the revenue of trade in services currently accounts for about half the value of global trade, but costs more than twice the cost of goods, of which about 40% is related to unclear or cumbersome regulations.

In the context that the WTO has not been able to sign multilateral trade agreements among all 164 members for a long time, several countries are still actively participating in smaller-scale negotiations to discuss how to create a favourable environment for trade in services which were launched in 2017.

According to the deal that was recently reached by 67 WTO members, the parties committed to putting appropriate regulations in place so as not to hinder service suppliers from exporting to other markets. The deal ensures that licensing requirements and procedures, and technical standards, do not constitute a barrier to trade in services.

The US immediately lauded the agreement, saying that the US has long championed transparency and fairness of regulatory rules as a fundamental feature of good governance. “This initiative is the first successful WTO services negotiation in years, and shows how WTO Members can take practical, common-sense steps to address clearly defined trade problems”, said US Trade Representative (USTR) Chief Katherine Tai.

EU Trade Commissioner Valdis Dombrovskis also hailed the agreement as a “breakthrough”, helping to reduce bureaucracy in the trade in services sector. As the world's second largest exporter of services, the UK has actively participated in the negotiations and supports the deal. London believes that the new regulations will help businesses, especially small and medium enterprises, to easily access foreign markets.

The Organisation for Economic Co-operation and Development (OECD) estimated that, if new regulations are implemented by the G20 countries, the costs of trade could be reduced by up to 6%, with annual cost savings of up to 150 billion USD. Banking, information technology, telecommunications, architecture, and engineering will be among the service sectors that will benefit the most.

According to WTO analysis, service sector growth is often associated with job creation, diversification of productivity and output, and indirectly improving the competitiveness of enterprises in the manufacturing sector.

The group of 67 countries that have just reached the deal accounts for only a third of the WTO’s members but represents more than 90% of the total value of global trade in services. Trade in services is a key driver of prosperity and strongly supports the global recovery after the COVID-19 pandemic. In addition, the recently reached deal also brings “new energy” to the WTO in response to the need to reform and adapt to the rapid changes of the world economy.

Tranlated by NDO