PEER-REVIEWED PAPER: Obstacles and Opportunities in International Engineering Services

Abstract

In light of the growing importance of engineering design construction and procurement services in international trade, this paper analyzes obstacles faced by U.S. firms in such trade, as well as the opportunities for trade expansion within the framework of recent rules to liberalize trade in services. The impact of market-oriented reforms in developing countries is also examined. Regulatory obstacles pertain to recognition of local qualification, type of business entity, advertising, and fee setting, while other obstacles are competition from local firms, differences in technical standards, and complexities of operating in multicultural systems. U.S. firms face more regulatory restrictions in Europe, where the market share of billings and awards has decreased, while their performance has improved in Asia amid rapid investments in infrastructure. Key features of the new General Agreement on Trade in Services include the most-favored-nation principle, transparency of regulations and dispute settlement procedures, and freedom to use any mode of supply. The implementation of the new trade rules and further privatization should enhance U.S. firms' performance.