Examination of Witnesses (Questions 296-299)
Mr John Cooke and Mr Roger Brown
1 JULY 2008
Q296 Chairman: Welcome, Mr Cooke
and Mr Brown. I ought to issue the conventional warning. You are
on the air; you are being broadcast throughout but you will get
a transcript of whatever you say so that any infelicities can
be revisited. We always ask witnesses whether they would like
to make an opening statement or whether they would like us just
to launch into questions—it is your choice.
Mr Cooke: We felt that we had given you
written evidence, so we are quite happy to be launched into questions.
Q297 Chairman: Thank you very much.
In which case, I will start. Nobody has told us a great deal about
services so far, really because progress on services has not been
enormously strong, so we are particularly interested in how you
see the prospects right up to date for liberalisation of trade
in services? In short, where do you think we are in the negotiations;
do you remain hopeful or do you think it is very difficult? And
why do you think that the progress has been so appallingly slow?
Mr Brown: I think there are two main
elements to this. First of all, there is the state of the Round
generally and, as we all know, it has been slow, it has been difficult
and the outcome is uncertain, and that is true for services as
for the rest of it; and we will need to see what happens at the
Ministerial, which has been called for 21 July. I understand that
they are going to devote at least one day, possibly more, to a
services signalling exercise. But services has been dragged down
by the general problems with the Round. The other element is that
services has been very much overshadowed by NAMA and agriculture,
despite the fact that services accounts for over 70 per cent of
European GDP and offers the greatest prospects for welfare gains.
It was decided that agricultural tariffs, subsidies and industrial
tariffs were the gateway issues and that services would be slotted
in later. So the fact is that in the Doha process there has been
very little serious negotiation on services; so you have the general
problem and that specific difficulty.
Mr Cooke: I would add two things to that.
One is that in general I see the prospects for liberalisation
of trade in services as quite good. Leaving aside the Doha Round
a lot of countries have been and are gradually liberalising trade
in services and see good reason to do so. Certain services like
financial services are part of the bedrock infrastructure for
economic growth and they see the need to gradually liberalise
those. As for the difficulties in the Doha Round, I think—particularly
if you have not yet been introduced much to the question of negotiations
on trade and services—it needs to be recognised that negotiating
liberalisation of services is simply much more difficult than
negotiating liberalisation of trade in goods. With trade in goods
the negotiations in the many past GATT round negotiations have
been about tariff reductions. There are two things about that.
One is that there can be a calculus if you reduce the tariff by
X per cent do you expect to increase trade by Y per cent? So it
is possible for countries to take a view of what they are offering
and what they expect to get in return in terms of trade. Negotiating
on services is not subject to any kind of formulae or calculus
of that kind; one is really negotiating about regulatory barriers
to free trade in services and these regulatory barriers are parts
of countries' domestic regulation; they can be politically sensitive
legislative issues so they are completely different prospects
to negotiate. With that, I think, goes the fact that the domestic
regulators who have to be involved in each country in liberalising
trade in services may be marching to a completely different drum—different
timing from the trade negotiators in Geneva—so that any
country that is participating in such a negotiation has quite
a difficulty in rallying its own forces to produce results that
involve trade ministers, other ministers, regulators and so on
in a timescale that leads to making an offer in a negotiation.
Q298 Chairman: Are you saying to
us that the prospects for liberalisation in the Doha Round may
not be that great, but the prospects generally for the liberalisation
at least of financial services are better?
Mr Cooke: I think in the long run that
they are positive, yes. I am also hopeful about the Doha Round.
Q299 Lord Moser: If I may, is there
also a problem about the data, the statistics on services being
less hard? Are you implying that it is a slightly more wishy-washy
area for negotiation data on services, or are you not implying
that?
Mr Cooke: I think the data has always
been more difficult to assemble.
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