The European Union took a crucial step last week to break a deadlock over market access to services such as banking and energy which is threatening to stall global negotiations on a free trade pact.

The European Commission said the 25-nation bloc had submitted revised requests to 103 fellow members of the World Trade Organization (WTO) to reduce restrictions and expand market access opportunities for European service providers.

Services contribute more to economic growth and job creation worldwide than any other sector but account for only 25% of international trade.

Negotiators have until May to outline their positions on the services sector or risk upsetting the timetable of the so-called Doha round of global trade talks, which also covers the agricultural and manufacturing sectors.

Officials say that because the Doha Round links progress in agriculture and manufacturing to progress in services, failure to forge an accord in services could threaten the whole round.

Trade ministers aim to meet in Hong Kong in December to finalize their negotiating positions for Doha.

“So far, progress in services negotiations in the Doha Round has been slow,” European Trade Commissioner Peter Mandelson said in a statement.

“We need to ensure that service negotiations match the ambition of other negotiating areas such as agriculture.”

The Commission said the bloc’s requests, a reworking of demands it put forward in mid-2002, would not dismantle or undermine public services and nor do they aim to privatize state-owned public companies.

Accordingly, no requests are being made to any country on health or audiovisual services, and only the United States is receiving a request for higher education market access which itself is limited to privately funded services.

The EU’s executive said the requests were also crafted with a view to promoting the development of the world’s poorest countries and improving their capacity for trade.

These nations will be asked to make market access offers for only two essential infrastructure sectors from a choice of five: telecommunications, financial services, transport, construction and environmental services.

Around 120 of the nations taking part in the services talks must reach a bilateral accord with every other member, making them much more complicated than agriculture and manufacturing talks, which target across-the-board tariff cuts. (Reuters)