-Distribution services, defined as wholesaling, retailing, and franchising services;
-Education services;
-Communication services, defined as enhanced telecommunication services, courier services, and audiovisual
services;
-Health care services;
-Professional services, defined as accounting, architectural, engineering, construction, advertising, and legal
services;
-Land-based transportation services, defined as rail and trucking services; and
-Travel and tourism services
Overview of South American Schedules
GATS signatories agreed that developing countries require a more gradual approach to services trade
liberalization, and therefore would initially schedule fewer commitments in the first round of GATS
negotiations. This proved to be the case with respect to the schedules submitted by South American
countries. For example, South American countries did not schedule any commitments on audiovisual services
or education services. This means that South American countries remain free to maintain or impose limits on
market access and national treatment (i.e., they remain free to deny foreign firms the same rights accorded to
domestic firms). Commitments on certain other industries, such as land transportation and health care
services, were scheduled by just one or two countries.
Among the industries that were addressed in the schedules, the commitments generally represent standstill positions rather than liberalization, as was the norm for most GATS signatories during the initial round of talks. Such commitments establish benchmarks and improve regulatory transparency. As a result, U.S. service providers are better able to assess the regulatory environment and gain some measure of assurance that trade restrictions will become no worse, and may become less burdensome.
On the basis of foreign fieldwork and industry interviews, it appears that the actual market environment in most South American countries is significantly more liberal than indicated by their schedules of commitments. This discrepancy reflects both recent policy changes and negotiating tactics. Since the conclusion of the Uruguay Round, a number of deregulation and privatization programs have been initiated across the region that have liberalized the competitive environment substantially. In addition, negotiations related to Mercosur, NAFTA accession, or APEC may have provided incentive for countries to make limited concessions under the GATS in order to maintain bargaining power in other negotiating fora.
Assessment by Country
South America represents less than 10 percent of total U.S. services trade, with the most significant U.S.
export markets being Brazil, Argentina, Venezuela, and Chile. Argentina scheduled the most commitments,
covering more sectors than any other South American country. By contrast, the schedules from Brazil and
Chile are less ambitious, with few sectors covered by commitments. Smaller countries, such as Bolivia and
Paraguay, tended to schedule very few sectors.
Assessment by Industry
The service industries accounting for the greatest U.S. export volume are travel and tourism, transportation,
professional services, and distribution services. Several South American countries scheduled full
commitments pertaining to travel and tourism services, indicating that trade in the industry is largely
unrestricted. Land transportation services did not fare as well, although Brazil and Uruguay scheduled
commitments that address the industry. Treatment of professional services varied by service industry. For
example, commitments on accounting services and legal services were scheduled by a number of countries,
whereas architectural and engineering services were addressed less frequently. Commitments on distribution
services were scheduled by three countries.
Labor Mobility
As was customary among most GATS signatories, South American countries' commitments on the entry and
stay of business persons applied only to selected types of employees, typically senior managers and
specialists. A number of the South American countries impose stringent restrictions in this area. For
example, Bolivia, Chile, Colombia, Peru, and Venezuela limit the percentage of foreign employees to between
10 and 20 percent of total staff. Other countries, such as Argentina, Brazil, and Uruguay, declined to specify
the permissible duration of stay. In such cases, foreign regulators appear to retain broad discretion regarding
the entry and temporary stay of business persons.
Capital Investment
A number of South American countries listed investment-related restrictions. For example, Brazil requires
that investment capital be registered with the central bank, Chile restricts the repatriation of investment
capital for a 3-year period, and Colombia imposes a tax on profit remittances by foreign companies.
Similarly, Bolivia and Brazil limit market entry options by requiring foreign companies to establish
separately incorporated subsidiaries. Investment-related measures generally reflect current regulation.
Exemptions From Most-Favored-Nation Treatment
GATS signatories are obligated to accord most-favored-nation (MFN) treatment to services and service
suppliers of other signatory countries. Under the MFN principle, a country generally is required to accord
terms and conditions of trade to any one trading partner that are "no less favorable" than those accorded to
any other trading partner. In certain instances, however, South American countries listed MFN exemptions.
These exemptions principally affect land transportation and audiovisual services. With respect to land
transportation, several countries scheduled exemptions from MFN treatment to accommodate existing
agreements that accord preferential treatment to firms from neighboring countries. With respect to
audiovisual services, several countries reserved the right to accord preferential treatment to countries with
which they have coproduction agreements. In both cases, however, there are mitigating circumstances that
reduce the adverse effects of exemptions on U.S. firms. Specifically, for logistical reasons, U.S. land
transportation service firms have expressed only limited interest in providing their services in countries that
are not contiguous with the United States, and developments such as the progressive liberalization of
telecommunication services and the advent of new electronic media such as the Internet will make it
increasingly difficult for governments to restrict the provision of audiovisual services.
Industry Viewpoint
While some U.S. industry representatives have noted specific sectoral concerns with respect to market access
and transparency issues, most have expressed satisfaction with the degree to which South American countries
are participating in the GATS. They also indicate that the absence of country commitments on many
industries does not necessarily reflect closed markets. In fact, U.S. service providers generally report that
competitive conditions are improving across South America as a result of privatization and market
liberalization programs.
Conclusion
Due to the widespread omission of commitments on subject service industries, the South American schedules
provide modest benchmarks and slight improvements in transparency. As a result, the South American
commitments offer little immediate benefit to U.S. service providers. However, by presenting some
information on impediments to trade in services when little was available previously, and by establishing a
framework for future negotiations, the GATS provides a substantial foundation from which to achieve
progressive liberalization. More tangible benefits for U.S. service providers, in the form of binding
commitments to full market access and national treatment, may be achieved in future rounds of negotiations.