BRIC countries are major exporters of services and have adopted a supportive stance in negotiations on the liberalisation of trade in services in the WTO. India and Brazil are the oldest members of WTO, whereas China joined up in December 2001. Russia is yet to be a full member of WTO. Except Russia, India, Brazil and China are also the active members of G 20. To a great extent, therefore, countries in BRIC have a mutual understanding in relation to multilateral trade negotiations including services? trade.

Services have become the single largest sector in most of the BRIC countries and have more vibrancy in services? trade than trade in goods, except perhaps China. Vibrancy in the domestic service sectors is as an indication of the potential for trade in services.

The services exports from BRIC have reached news heights in recent years growing at an average 36% per annum since 2001, outstripping the world average annual growth of 16%. As on 2005, BRIC countries together share about 7.03% of world services exports and 7.58% of world services imports, of which China Mainland (excluding Hong Kong) occupies the top position in BRIC both in terms of export and import of services.

Meanwhile, BRIC as a whole is a net services? importing region, where India is the only country which has positive services trade balance whereas rest of the three BRIC countries import more than what they export in services trade (see table). The current success of BRIC and other developing countries in services trade is a direct result of their substantial liberalisation carried out on account of services trade since the Uruguay Round of negotiations.

Despite, their contribution of over 14% in world services? trade, BRIC countries differ among themselves in multilateral services trade negotiations such as in domestic regulations and autonomous liberalisation. As mandated by Article 19 of GATS, BRIC countries, except Russia, have had negotiations to further liberalise international trade in services that has been going on since 2000, and adopted WTO compliant guidelines, objectives, scope and method for the negotiations in a clear and balanced manner.

They also unequivocally endorsed some of GATS? fundamental principles?members? right to regulate and to introduce new regulations on the supply of services in pursuit of national policy objectives; their right to specify which services they wish to open to foreign suppliers and under which conditions;and the overarching principle of flexibility for developing and least-developed countries.

The guidelines are, therefore, sensitive to public policy concerns in important sectors such as health care, public education and cultural industries, while stressing the importance of liberalisation in general, and ensuring foreign-service providers have effective access to domestic markets. This helped the 2001 Doha Ministerial Declaration to incorporate a ?single undertaking? of the Doha Development Agenda.

Since the Uruguay Round of negotiations, BRIC countries made market-access commitments and exemptions on a number of services sectors at the same time. These commitments and exemptions are contained in their original services? schedules.

Later, these countries undertook sectoral negotiations such as on the movement of natural persons, telecommunications and financial services and also took new commitments specifically in the services? trade sectors.

BRIC countries global services? trade has been growing sharply. However, despite trade complementarities and a whole set of services liberalisation carried out at multilateral level, intra-BRIC services? trade is rather small. Except financial, travels and computer and information services, intra-BRIC services export is yet to enlarge. For example, India?s services export to BRIC is limited to exports of software and IT BPO.

Similarly, services trade between Russia, Brazil and China are limited to transportation, financial and construction services. BRIC countries have a vast services? market. However, market imperfections and the domestic regulatory system coupled with restrictive services (barriers) policy are pulling down the BRIC countries from having higher trade in services.

In the case of banking and other financial services, there are many limitations in market access and national treatment in Brazil. For example, opening bank branches and subsidiaries of foreign financial institutions are not permitted. In the case of tourism and travel related services, Brazilian firms operating in the Amazon and north-eastern regions benefit from certain tax-credit incentives.

Other incentives are limited to firms with majority of capital held by Brazilian citizens or legal entities. In case of rail transportation, government authorisation is mandatory and granting of new authorisation is discretionary.

In India, on the other, there are limitations on market access in telecommunication services. There are several limitations on market access in insurance and insurance-related services in India. However, compared to Brazil, the Indian banking sector is much more liberalised. In BRIC, China is highly restrictive in legal services?both in market access and national treatment. For example, in market access, foreign law firms can provide legal services only in the form of representative offices in selected cities in China. BRIC countries require strong export capacity in order to keep ahead in the globalised world. They enjoy a strong domestic market in many sectors, which could probably play a key role as the platform for developing export capacity. This pattern is evident in telecommunications, audiovisuals, distribution, and transport and related services?and even, in some cases, in e-commerce related sectors in BRIC. Normally, countries tend to follow a pattern: serving the domestic market first, and then once the critical size had been reached, taking steps to exports excepting ICT-enabled and related services where geography is less important and tourism, where a country may aim at global markets initially.

Needless to say, in order to enhance trade in services, BRIC countries need to take steps to specialise in services? sector that will not only enhance their domestic services market but also strengthen export capacity. At the same time, they have to continue reforming their national regulations in services sector and to remove the barriers which area affecting services trade to grow.

?The author is fellow, RIS, New Delhi. The views expressed are personal