ABSTRACT
The state of relations between Israel and her neighbors inevitably means that much discussion of economic cooperation is in fact about how to obtain a position in which economic cooperation becomes feasible. The fact that international transactions in the service sector are close to the center of international economic diplomacy is due almost entirely to the efforts of the United States. The US has been pressing hard to place trade in services on the agenda of the forthcoming round of General Agreement on Trade and Tariffs trade talks. Despite the fact that services are a focus of international economic diplomacy and despite the attention they have received from academic economists, there is no generally accepted definition of the term "services." The literature nevertheless abounds with attributions of characteristics to services. Hindley and Smith argue that the theory of comparative advantage applies to services as well as to goods.
