Working paper
The Dynamics of Transatlantic Negotiations in Services
Economic Policy Paper Series
The German Marshall Fund of the United States
Economic Policy Paper Series
Update version from a 2009 GEM working paper.
Tough times are expected in the year(s) to come, but focusing entirely on public and private budget cuts is not a politically sustainable policy. On top of its direct impoverishing impact, austerity has an indirect impact, which is very corrosive in the long run for consumers. It induces producers of goods and services to retreat to their home markets, reducing the level of competition in the markets they left behind. There is thus an urgent need to build a pro-growth agenda, for which the services sector is the best candidate, since it accounts for 60-70 percent of the G20 GDP. Such an agenda means reforms: in order to take the right decisions when redesigning their strategies, service providers need clarity and predictability on how their markets will operate. History shows that introducing pro-growth domestic reforms is hugely bolstered by opening — or reopening — domestic markets to foreign competitors. This is why a “sleeping” Doha is not a reason for not starting negotiations now on how to improve market access in services. This paper argues that the two largest world economies, the United States and the EU, should launch bilateral negotiations on services. The expected gains for consumers and the opportunities for service providers are huge in both sides of the Atlantic because their services sectors are likewise huge and because the protection still prevailing in many services areas is still high.