Germany's Service Sector Reforms: Lessons for Policy-Makers

Abstract

In Germany, where manufacturing has traditionally dominated the economy, this article examines the opening up of telecommunications, insurance and to some extent postal services to international competition. It highlights two issues for policymakers to consider when they engage in service sector reforms. First, it is difficult to measure trade in services. However, this problem can be addressed by supplementing price analyses with proxy indicators of market access such as market share, availability of licenses, etc. The use of such indicators promotes transparency and facilitates negotiations to reform services. Secondly, the article argues that lobbying by producers and users of services cannot fully explain reform nor does EU membership significantly constrain reluctant member states. A major key to reform was the ability of the government to re-interpret services as regular tradable products combined with new regulation to shelter exposed groups such as consumers and workers against harm. The implication is that domestic governments have a key role to play in “selling” services reform to the electorate.