The problem in context

Belize and Costa Rica made modest commitments in the General Agreement on Trade in Services (GATS) at the Uruguay Round and the Fourth (Telecommunications) and Fifth (Finance) protocols negotiated there-after in 1997. Costa Rica's commitments reflect status quo bindings of market liberalization, Belize's commitments reflect less than that. This is not surprising: most developing countries used the provisions of GATS to commit a few sectors at levels which were already open and to the extent allowed by their domestic policy contexts.

Belize and Costa Rica also present an interesting puzzle: why did these economies with vibrant service sub-sectors, in serious need of foreign investment in others, and with sizable service export surpluses, make low commitments? Borrowing a Costa Rican trade official's words, why did they make ‘timid commitments’ in services?

The evidence that follows for the two countries confirms the essentially bottom-up nature of GATS: both countries choose particular sectors for commitment – at levels acceptable to domestic actors. Interestingly, they also exhibit significant policy differences: Costa Rica was positioning itself to take advantage of being a service-based export-led economy; Belize remains ambivalent about the role of services in general and GATS commitments in particular.

This chapter shows that GATS commitments as such present a static picture; the decision-making processes leading up to them reveal the dynamics behind thinking about the role of services in economies.