Research is still focusing on answering the question of how much success was generated by World Trade Organization initiatives to liberalize service industries. Service industries comprise the service sector of the economy, which is the tertiary level of economic sectors. It focuses on intangible service industries, such as financial services, tourism and transportation services, and is third to the secondary manufacturing sector and the primary agricultural sector. Fortunately, some information on the success of WTO's GATS (General Agreement on Trade in Services) initiatives is available from as recently as 2016. This recent information helps to focus the overall perspective that there is a mixture of success and currently unfulfilled expectations.
Success: Panama reports in Focus Economics that their service sector accounts for 75% of their gross domestic product (GDP) and the strength of their globally-oriented economy is linked to US dollars. Panama is further expanding its service industry through a Chinese consortium funding an agreement to build an Atlantic-side container port on the Panama Canal, with negotiations underway for a similar container port on the Pacific side of the canal. Panama has had a lot of success. As of 2011, the Philippines are also considered successful, as was predicted in 1999.
Waiting Expectations: Facing market encroachments on their sugar, textile, and apparel industries, Mauritius developed a strategy for increasing tourism and hotel service in their service sector. As of 2015, contribution to GDP from tourism and hotel services, as reported by the World Travel and Tourism Council, rose from slightly over 80 billion Mauritian Rupee (80 MURbn) in 2005 to slightly over 100 MURbn in 2015 (with fluctuations between over 100 MURbn in 2007-08 and down to 90MURbn in 2009). Mauritius expects to attain its original goal of 150 MURbn by 2025 (Mauritius, 2004-5 and 2015).
Under Expectations: African nations classified as least developed countries and low-income countries (LDCs and LICs) have not been able to take advantage of service sector liberalization because they lack capitalization due to insufficient foreign direct investment (FDI) for service sector and infrastructure development. Currently, the advocated strategy is based on "the imperative of attracting service sector FDI" that will fund "servicification of production and global value chains (GVCs)" (Nkululeko Khumalo, Bridges Africa, ICTSD). These concepts include packaging services with manufacturing sector goods (servicification) and tapping into technological and organizational changes in transnational corporations (African Nations, June, 2016).
Research published in 2012 by Bernard Hoekman and Aaditya Mattoo of the World Bank states that liberalization of "trade and investment" in service industries has had ineffective, limited progress:
Liberalization of trade and investment in services through trade agreements has progressed less than trade in goods. . . limited progress [has been] achieved to date in the WTO and major regional agreements on services. . . trade agreements have not been more effective at integrating the services markets of participating countries.
This echoes the 2009 research by Rudolf Adlung of the World Trade Organization that found there has been "virtually no liberalization" in service industries because of a mercantilist attitude of equal exchange in trade.
The Preambles to GATT and GATS refer [to]. . . the concept of '. . . reciprocal and mutually advantageous arrangements [and to] Members' desire to achieve 'progressively higher levels of liberalization through successive rounds of multilateral negotiations aimed at promoting the interests of all participants on a mutually advantageous basis.'
Liberalization affects the relationships between developing and developed countries in at least two recognizable ways:
- Developing countries depend more on developed countries (e.g., capital dependence in African LDCs and LICs), especially in light of the need for FDI (compare Panama to Mauritius or African countries).
- The mercantilistic attitude in the WTO agreements (GATS) requires an equal reciprocity in trade agreements and transactions, a reciprocity many developing countries are not equipped to meet.