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"We must recognise that there is a vast gap in the varied stages of development of the service industries in the developed and the less developed economies which perhaps could not be easily bridged by a multilateral agreement," he said.
"I could understand why many developing economies are still reluctant to open their service market for fear of irresistible invasion by foreign and more advanced suppliers which would overwhelm their newly developed industries, and why developed economies are wary of committing to keep their markets open while the potentially lucrative markets in the developing camp remain closed to them.
"This is particularly relevant to financial services, basic telecommunication services and maritime transport services where huge markets are involved.
"And yet the main purpose of the General Agreement on Trade in Services (GATS) is just to overcome such problems to help forge a free service market," said Mr Tam.
Reviewing Hong Kong's participation in WTO negotiations, Mr Tam said one observation was that perhaps the time was not yet ripe for a full-fledged multilateral agreement on these sectors.
"Another observation is that the extended negotiations were carried out sector by sector, quite unlike the comprehensive negotiation practice adopted during the Uruguay Round," he said.
"While this sectoral approach could allow greater focus on the liberalisation of that particular sector, it also reduced the scope for compromise through give-and-take across different sectors.
"Besides, negotiations were more susceptible to the powerful lobbying by their domestic industries, obvious in the case of US for financial services and basic telecommunication services."
In his address, Mr Tam gave a brief account on the latest position of the four tracks of service negotiations required by the Uruguay Round.
He said the negotiation on movement of natural persons was completed with an agreement in July last year which allowed temporary entry of persons to provide services, subject to national immigration rules.
The negotiations on financial services which aimed at dismantling trade barriers in the financial sector, have ended in a temporary agreement.