One of the potentially most important achievements of the General Agreement on Tariffs and Trade (GATT) conference in Geneva went largely unheralded. It reflected an invisible revolution that has transformed the economies of the United States and its major trading partners. And it could, over the long term, have a much more profound impact on the question of American jobs than the highly publicized disputes over steel, agriculture and autos.
The achievement: taking the first step toward placing services such as banking, insurance, data processing and shipping on the GATT agenda. True, the initial U.S. proposal to liberalize restrictions affecting the service industries was watered down. But the trade ministers did agree to examine service issues at a national level and to exchange information on services through the GATT.
The objective is to determine by 1984 whether an international agreement on services is desirable and, if so, how to proceed. It marks the first time the GATT has formally taken up the question of services and in the calculus of international trade issues, that constitutes a clear step forward.
Stripped of all jargon, what the achievement at Geneva could mean is that some of the most dynamic sectors of the American economy will be allowed to compete fairly in the world marketplace. Barriers against U.S. services are little understood, but their impact on American jobs is just as damaging as Japan's curbs against American tobacco, citrus and beef or Europe's tariffs against U. S. wheat.
Consider the plight of U.S. insurance companies interested in doing business in Norway: the Norwegian government has not licensed a foreign insurance firm in the past four decades. Australia forbids the screening of television commercials filmed abroad, and West Germany requires German models for all advertising produced in the country.
There are other significant impediments that hamstring banks and other companies that depend on advanced systems for handling information. In Canada, for example, all foreign banks must maintain and process data within Canadian borders. U.S. airlines also face barriers against hooking into the reservations computers of airlines in some West European countries, and major American law firms have been denied permission to open offices in Tokyo.
These impediments take on greater importance as it becomes clear just how profound the invisible services revolution has been. In the United States, statistics compiled by the Bureau of Labor Statistics show that seven out of 10 non-agricultural jobs are in the services sector. Services also account for 66 percent of the GNP-- 54 percent excluding government. Service industries are among our most dynamic and productive, and they help make our goods-making sector more efficient and competitive.
Service industries also have played an important but largely unrecognized role in maintaining vitality in the American balance of trade. In recent years, as U.S. trade deficits have grown, services have consistently shown a positive and increasing balance of payments. According to the U.S. International Trade Commission, services will account for $135 billion in the U.S. current account this year, a 52 percent increase over 1980.
The reason for this dramatic surge in service industries is a structural change in the world economy. In fact, this touches the heart of the argument put forth by leaders of many developing nations that the very structure of the world economy must be altered if they are to develop the industries they need to achieve industrialization. If we in the post- industrial West are to allow Brazilian steel and South Korean shoes to penetrate our market, our dynamic service industries must in turn be allowed to compete in world markets without unfair and burdensome restrictions.
If the work program agreed to in Geneva can begin to develop international rules for services, it will be a major milestone in the history of international trading relations. For this delicate process to continue, the United States will have to convince its trading partners that liberalization of trade in services, like liberalization of trade in goods, is in everyone's interest.