By Maurice R. Greenberg and Lawrence A. Cunningham

Through the late 1970s, US officials did not believe that services were a particularly important part of the domestic economy. While the US Trade Act of 1974 had referenced international trade as including services, this aspect of trade remained a blind spot. This posed a huge cost to many global companies, such as American International Group( AIG). After all, trade in services offered substantial opportunities for economic growth that were not being harnessed. Maurice“ Hank” Greenberg made it his mission, for AIG and the US, to correct this misunderstanding, a decades-long process that ultimately repaid mightily.

For purposes of international trade and US economic growth, rendering services is just as important and worthy of respect as selling goods. In fact, from the US perspective, the economic value of the service sector had been steadily rising and would grow even faster in the next decades. Yet many thought that expanding the scope of international trade agreements was infeasible at the time, due to other priorities being debated on longstanding issues of dispute among US trading partners.

At the time, international trade law still did not recognize services as part of the global trading regime. The General Agreement on Tariffs and Trade( GATT) did not encompass services. Though US policy supported open trade in services, the United States lacked the leverage usually available in trade disputes. It remained to convince world leaders to change these rules to open trade in services too, just as the global community had long preferred trade in goods to be open.

Maurice“ Hank” Greenberg, former chairman and CEO of AIG.

Along with many American CEOs, James D. Robinson III of American Express, had grown frustrated over international trade in services in the late 1970s. Countries around the world blocked access to markets for charge cards and other financial products offered by American Express. Discrimination took many forms against different service sectors. While Japan strictly controlled financial firms operated by foreigners, other countries imposed duties on imported computer software that restricted the flow of financial information. Some countries gave subsidized loans to national shipping firms or imposed quotas on foreign movies. Subtler tactics forbade a foreign accounting firm from using its international name. Other tools were blatantly protectionist, like the punitive landing fees that some governments imposed on foreign air carriers.

In 1979, as Robinson became exasperated with failed attempts to access foreign markets, American Express created a team to fight back. But Robinson discovered that no company, acting alone, could meet the challenge. After comparing notes about these problems, Greenberg and Robinson joined forces and organized other companies in their cause, which included Citibank in banking, Pan American World Airways in aviation and Peat Marwick Mitchell in accounting. In 1982, this group became the Coalition of Service Industries( CSI).

The CSI’ s mission was clear: equal treatment for services in international trade. That meant an even playing field, without discrimination between domestic and foreign companies, concerning establishing a business, accessing markets and offering new products. Throughout its history, the CSI called upon successive US Trade Representatives, all of whom understood the mission as in the national interest and worked avidly in support of it throughout the 1980s and 1990s.

In Washington, the CSI also won the support of many influential members of Congress from both parties and their staffs. Such support enabled the CSI to occupy a unique role on trade policy in Washington, as a member of an advisory committee on trade in services. The coalition used that role to urge global trade representatives to include trade in services on the GATT agenda. A breakthrough came quickly in 1982, when William Brock, the US Trade Representative from 1980 to 1985, persuaded his counterparts in vital countries to add it to the November 1982 GATT ministerial meeting in Geneva. This was the first formal international recognition of the subject as legitimate.

Why was it so hard to bring people worldwide to understand the importance of trade in services? A principal reason was absence of statistics. Governments, including the US government, maintained substantial data on the volume of trade in goods. None, however, kept reliable track of trade in services. No one could verify its importance and few had the curiosity to ask. Among the first ambitions the CSI had was to persuade the US Bureau of Labor Statistics to measure trade in services.

The CSI reached that milestone in 1984, when amendments to the US trade law mandated improved government data collection on trade in services. The figures stunned those outside the service industries. Trade in services, it turned out, was a central piston of the economy: by the 1980s, 70 % of the US GNP and jobs were attributed to the service sector; international trade exceeded $ 1 trillion and onefourth of that was in services.

In addition to the lack of statistics, the intellectual underpinnings had not been formed. Classical economists, from Adam Smith on, dismissed service enterprises to be of secondary importance. These economists worked in a world when the

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