Distribution companies provide the necessary link between producers and consumers, within and across borders. The efficiency of the sector helps ensure that consumer welfare is maximized and also that the benefits of freer trade in goods actually make their way to final consumers. Failure of the distribution sector to perform its role well – which can be induced by government policies restricting competition – can lead to a significant misallocation of resources and economic costs.

Despite being a key infrastructure service, distribution currently has the unfortunate characteristic of being one of the services sectors with the fewest multilateral commitments: there is a big gap between the sector's economic importance and the access conditions accorded in the context of the GATS. Preferential trade agreements – as well as WTO accessions – have provided for much more advances, especially with regard to the market access commitments of developing countries. Nevertheless, many WTO members remain without international trade commitments in this key sector, and a number of barriers continue to affect providers and raise costs for consumers.

This chapter reviews the key issues for the further liberalization of this sector at the multilateral level. It looks at the recent trends in the sector and related company strategies; analyzes existing multilateral commitments and provides a detailed picture of the restrictions applied to distributions services by WTO members; reviews the reform experiences of some important members; and evaluates the advances made in PTAs against the background of the ongoing negotiations in the Doha Round.