Reducing the Barriers to International Trade in Accounting Services by Lawrence J White

The service sector accounts for more than 70 percent of the gross domestic product (GDP) of advanced industrial economies. Though trade in services is difficult to calculate and many transactions still go uncounted, current estimates place the worth of such trade as at least $2.5 trillion, or about a third of total world trade.

For the United States, the world’s most advanced industrial economy, the service sector looms even larger. Services account for almost 80 percent of U.S. production and U.S. employment (while manufacturing accounts for 19 percent of U.S. GDP and 18 percent of U.S. employment).

The surplus in U.S. services trade also partially offsets persistent U.S. merchandise trade deficits. In 1999, the services trade surplus was $76 billion; the merchandise deficit, $347 billion.

Despite the increasing importance of services trade and investment, only in 1995 did the multilateral trading system establish rules for opening markets in these economic sectors by negotiating the General Agreement on Trade in Services (GATS). This first effort at a discipline for services trade and investment created a framework of general principles and rules but left the large-scale liberalization of individual sectors to later negotiations.

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