The International Services Agreement (ISA) may be the most exciting and consequential proposal in trade policy in years proposal in trade policy in years,” according to John Murphy, vice president of international affairs, U.S. Chamber of Commerce. He testifiedMarch 12 at a public hearing sponsored by the Office of the United States Trade Representative (USTR) and convened before the interagency Trade Policy Staff Committee (TPSC). 

ISA proposes a high-standard, free-trade agreement for services among 47 countries:  Australia, Canada, Chile, Chinese Taipei, Colombia, Costa Rica, the 27 nations of the European Union, Hong Kong China, Iceland, Israel, Japan, Korea, Mexico, New Zealand, Norway, Pakistan, Panama, Peru, Switzerland, Turkey and the United States. This group generates approximately 70 percent of global trade in services, representing a critical mass of the worldwide total.

The ISA is being designed to eventually be accepted by the World Trade Organization as  a plurilateral initiative, which is supported by a significant number of WTO members but falls short of universal participation.  The starting point for negotiations will be the most ambitious market-opening agreements made by the concerned nations. For the United States, the starting point in many cases will be the services disciplines section of the U.S.-Korea free trade agreement.

Issues raised in Tuesday’s testimony included enhanced market access and national treatment, cross-border data flows, regulatory barriers and regulatory discretion, state-owned enterprises, and a host of sector-specific recommendations.

“With every $1 billion in U.S. services exports supporting an estimated 4,000 U.S. jobs, the ISA holds the promise of real benefits for service workers – from engineers to software designers, accountants to college professors,” says Deputy Assistant U.S. Trade Representative for Services Christopher Melly, who received testimony from stakeholders at the hearing.

The U.S. Chamber’s Murphy, in testimony, pointed out that, “America is by far the world’s largest exporter of services. U.S. cross-border exports of services reached $632 billion in 2012, and the related U.S. services trade surplus surpassed $195 billion. In addition, services sales by foreign affiliates of U.S. multinational corporations topped $1 trillion in 2012. Combined, total sales of U.S. services abroad in 2012 reached approximately $1.7 trillion. Services currently represent approximately 75 percent of U.S. economic output and 80 percent of U.S. private sector employment.”  None-the-less, “Just 1 in 20 enterprises in highly-tradable business services export.”

 Tuesday’s testimony will enable USTR to further develop and refine U.S. objectives and goals, and will assist the negotiators in identifying barriers that constrain and disrupt the international supply of services.