Trade liberalisation in environmental services: Why so little progress?

WTO-led trade liberalisation in environmental services is often seen as having considerable potential for generating 'win-win' outcomes for the economy and the environment. Despite this, progress in liberalising environmental services within the GATS framework has been limited. This paper argues that a major barrier to progress in environmental services liberalisation is uncertainty about the development impact of environmental services liberalisation in developing countries. We develop this argument using the example of water services, where market opening needs to be accompanied by effective domestic regulatory measures. The paper argues that uncertainty on the interpretation of the GATS rules on domestic regulation acts as a further constraint on countries' willingness to make new commitments for trade liberalisation in environmental services. The final section of the paper makes a number of proposals for 'accompanying policies' that may be needed to be adopted if progress is to be made in meeting the Doha Development Agenda's commitment to the reduction or elimination of barriers to trade in environmental services. Copyright © 2006 The Berkeley Electronic Press. All rights reserved.