At the World Trade Organization on Thursday, a group of 67 nations, including the United States, China, and EU members, struck an agreement on facilitating trade in services.
After four years of negotiations, the countries, who make up little over a third of all WTO members yet account for 90% of global services trade, reached an agreement.
WTO Director-General Ngozi Okonjo-Iweala welcomed the agreement as “historic,” citing predictions that it will reduce service trade costs by up to $150 billion per year.
Faced with the WTO’s long-standing failure to reach multilateral trade agreements among all 164 members, a growing number of nations have turned to plurilateral negotiations to advance in areas such as domestic services regulation.
In a statement, Washington said the agreement will “enhance the transparency and fairness of processes for acquiring authorizations to perform services by individuals and corporations in a wide range of industries.”
In a statement, US Trade Representative Katherine Tai said, “This proposal is the first successful WTO services negotiation in years, and it demonstrates how WTO members may take real, common sense initiatives to address clearly defined trade challenges.”
Valdis Dombrovskis, the EU Trade Commissioner, praised the “groundbreaking” agreement, adding that it would “reduce red tape in services trade.”
Services trade has increased dramatically over the last decade, with the World Trade Organization estimating that it currently accounts for over half of all global trade.
However, the cost of trading in services is roughly twice that of trade in products.
Regulatory discrepancies, as well as opaque regulations and costly procedures, account for a large amount of the costs.
Members of the WTO are free to regulate their service sectors, but since 2017, a growing number of nations has sought to promote sound regulatory standards in order to avoid unduly restricting trade.
