Tariffication in Services

In this paper I lay out the case, as I see it, for tariffication of services. I argue that the prospects for achieving significant liberalization of the international provision of services will be greatly improved if something like this proposal is followed. By amending the GATS to permit countries to tax foreign providers of services in a manner that is roughly analogous to tariffs on imported goods, countries will be encouraged to bring most categories of services under GATS discipline. Of course, that discipline will be much weakened by doing this, since the taxes may be set so high that little if any trade will occur. However, once this is done, it will become possible for countries to negotiate reductions in these service tariffs in exactly the same way that they have done for goods over the last fifty years. Considering the amount of time it has taken to achieve significant liberalization of trade in goods, we should not expect to achieve it in services any time soon. However, by starting the process with tariffication, we place services upon the same well-traveled road that has been followed before, and we can be more confident that the future negotiating process will take us where we want to go, even if we cannot know how soon we will get there.