EDITORIAL: Japan Needs Strategy For WTO Services Talks

TOKYO (Nikkei)--The World Trade Organization has been in business for 18 years and is looking long in the tooth: As technology and management techniques advance, the WTO needs new rules for trade in goods and services, and soon.

Japan, the U.S., European countries and others -- 21 in all -- are scheduled to begin talks in April on a sweeping review of the General Agreement on Trade in Services (GATS), which took effect in 1995.

It is still unclear which areas of trade and investment will come up for discussion. Each country will present its own proposals. Japan needs to quickly work out a strategy for the talks. Japanese companies also need tell the government what they want from the negotiations.

The typical person has only a vague idea of what is meant by "trade in services." When tourists from abroad stay at an inn, for example, or ride a high-speed train, they are buying Japan's "service exports." When Japanese companies use the services of foreign banks or consultants, these count as part of Japan's "service imports."

May I Be Of Service?

Unlike trade in goods, where tariff levels are easy to spot, it is not easy to identify barriers to trade in services. And new services appear on the market much faster than new goods.

The unique aspects of services trade requires flexibility in negotiating new rules and calls for foresight in considering new types of services, rather than just existing ones -- finance, transport, telecommunications, medical care, education and the like. The government and the private sector must work closely together to come up with ideas for the WTO talks.

Japan has long relied on manufacturing to fuel its economic growth, and has had a competitive advantage globally in many areas. But to keep that growth going, the country must develop high-value added service industries to match its manufacturing prowess.

Liberalization of services goes hand in hand with regulatory reform. Prime Minister Shinzo Abe's government has set up panels on industrial competitiveness and deregulation that should lead the discussion on Japan's position in the upcoming WTO negotiations, while being open to ideas from companies about how to create a vibrant service sector.

(The Nikkei, Feb. 28 morning edition)

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