ISTIA SLIDESHOW - Whither GATS

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IISTIAÃ INTERNATIONAL SERVICES TRADE INFORMATION AGENCY http://www.servicestrade.org
ISTIA
WHITHER GATS?WHITHER GATS?
CouldCould Services TradeServices Trade StatisticsStatistics Be theBe the ReasonReason thatthat
GATSGATS NegotiationsNegotiations areare StalledStalled??

22
WHITHER GATS?
MOST WTO MEMBERS DONT HAVE USEFUL SERVICES TRADE STATISTICS
Could this be why the negotiations are not moving as quickly?

33
WHAT KIND of TRADEWHAT KIND of TRADE--inin--SERVICESSERVICES
STATISTICS ARE NEEDEDSTATISTICS ARE NEEDED ??

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SERVICES TRADE INFORMATION
WHAT IS CURRENTLY AVAILABLE?
YESYES
crosscross--borderborder
servicesservices tradetrade
statisticsstatistics
NO
NO
NO
MODE 4MODE 4
Movement ofMovement of
Natural PersonsNatural Persons
NO
NO
NO
MODE 2MODE 2
ConsumConsumptionption
abroadabroad
YESYES
butbut SPARSESPARSE
YESYES
butbut onlyonly forfor
OECDOECD
NO
FOREIGNFOREIGN
AFFILIATE TRADEAFFILIATE TRADE
STATISTICSSTATISTICS
FOREIGN DIRECTFOREIGN DIRECT
INVESTMENTINVESTMENT
YESYES
COMPREHENSIVECOMPREHENSIVE
FDI establishment statisticsFDI establishment statistics
& Financial and operating& Financial and operating
data of FDIdata of FDI enterprisesenterprises
National accounts,National accounts,
afterafter
IISSTTIIAA
Technical Assistance &Technical Assistance &
Capacity BuildingCapacity Building
YESYES
butbut SPARSESPARSE
YES butYES but SPARSESPARSE
±± based on IMFbased on IMF
data and nationaldata and national
sourcessources
UNCTADUNCTAD
YESYES
butbut only foronly for
OECDOECD
YESYES
butbut onlyonly for OECDfor OECD
OECDOECD
YES butYES but FDIFDI doesdoes
notnot disaggregatedisaggregate
servicesservices fromfrom
goodsgoods & sectoral& sectoral
diaggregationdiaggregation poorpoor
YESYES
butbut sectoralsectoral
disaggregationdisaggregation forfor
developingdeveloping countriescountries isis
veryvery poorpoor
IMFIMF
MODE 3MODE 3
Commercial presenceCommercial presence
MODE 1MODE 1
CrossCross--border supplyborder supply
SOURCE
YESYES
crosscross--borderborder
servicesservices tradetrade statisticsstatistics

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WHY IS THIS A PROBLEM?
´´During the course of the Uruguay Round it was impossible forDuring the course of the Uruguay Round it was impossible for
services negotiators to judge the value of theservices negotiators to judge the value of the liberalisationliberalisation offersoffers
made by their trading partners either individually or collectivmade by their trading partners either individually or collectively.ely.µµ
United Nations Expert Meeting on International Standards in Statistics on Trade in Services, November 2000;
Statement of Opinion by Mr. Alister Abercrombie, British Invisibles, U.K.

66
´´In the GATS context,In the GATS context, ««.we.we
encounter a crucial problem:encounter a crucial problem:
the framework of negotiatedthe framework of negotiated
commitmentscommitments does not matchdoes not match
the existing structure of tradethe existing structure of trade
statisticsstatisticsµµ WTO (1995), S/C/W/5, paragraph 24.
WTO Secretariat Studies, 1995
««the problems relating to the availability and comparability ofthe problems relating to the availability and comparability of
statistics were thestatistics were the most serious and required urgent attentionmost serious and required urgent attention ««
WTO (1995) S/C/M/2, paragraph 29.

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During the Uruguay RoundDuring the Uruguay Round
developing country contractingdeveloping country contracting
parties expressed concerns aboutparties expressed concerns about
the lackthe lack--ofof--statistics;statistics;
Article XIX.3 of the GATS textArticle XIX.3 of the GATS text
addressed the issue by promisingaddressed the issue by promising
thatthat ¶¶assessmentassessment·· would bewould be
conducted on trade in services;conducted on trade in services;
The First Council on Services MeetingThe First Council on Services Meeting in 1995 put this #1 onin 1995 put this #1 on
the agenda, yet no effective action was taken;the agenda, yet no effective action was taken;
Over 75 Official WTO or GATT MeetingsOver 75 Official WTO or GATT Meetings have made mention ofhave made mention of
the need for technical assistance to developing countries inthe need for technical assistance to developing countries in the areathe area
of services trade statistics, such that they are more able tof services trade statistics, such that they are more able to accuratelyo accurately
assess the state of trade in this area. These are accessiblassess the state of trade in this area. These are accessible online at:e online at:
http://http://www.servicestrade.orgwww.servicestrade.org
SERVICES STATISTICS CAPACITY BUILDING HAS BEEN REQUESTED MANY TIMES
THIS WORK IS DEMAND-DRIVEN

88
TheseThese cancan bebe foundfound on the ISTIAon the ISTIA WebsiteWebsite atat http://www.servicestrade.orghttp://www.servicestrade.org
SERVICES TRADE STATISTICS
Capacity building needs have been discussed in over 75 official meetings

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What is ISTIA?
‡ A New International Agency, Geneva-based
‡ Being Mandated To Provide FDI And Trade-in-services Capacity
Building
‡ Works To Fulfill An Unmet Needs for Developing Countries;
‡ Works With National Governments To Improve Statistical Information
‡ Works With National Governments And
Intergovernmental Agencies To Provide
Training on the New Data-set of Statistics
related to GATS and globalization in general
1. Trade-in-Services
2. FDI
3. FATS (FDI operations statistics)

1010

1111
Recipients of ISTIA Work
4. Universities & Economic
Think-tanks
ISTIA cooperates with
academic institutions and
other competence centres to
facilitate knowledge-sharing
5. Private Sector Actors:
Businesses, Investors,
Commercial Entities
ISTIA works to educate the
private sector as to the new
statistical information.
6. Inter-governmental Agencies
ISTIA works to make use of
existing competencies and to
share knowledge and experience
acquired with other agencies.
Need training to use the new data-set
in the negotiation context - and to
use the statistical information with
a view towards understanding the
relationship of statistics to real
business operations ± so that services
commitments have a meaning & context.
Central Banks, Ministries of Finance,
Ministries of Investment and National
Statistical Agencies need assistance
in designing, and implementing a
Country-specific strategy to improve
Trade in services and FDI statistics via
Enterprise Surveys
Need assistance to comprehend
the new data-set and to be better
able to use the statistics
for evidence-based policymaking

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WHAT KIND OF SERVICES STATISTICS AREWHAT KIND OF SERVICES STATISTICS ARE
NEEDED BY DEVELOPING COUNTRIES?NEEDED BY DEVELOPING COUNTRIES?
TradeTrade--inin--Services Statistics thatServices Statistics that AddressAddress::
1. GATS Four Modes Of Supply
of Services delivery. Without this, the
WTO legal framework is not correctly
addressed by statistical measures.
2. Sectoral Measurement
Current means of measurement don·t
measure most of the sectors addressed
by GATS negotiations, such as telecomms
consulting, legal services & others that are
crucial for effective negotiating. Ideally, the WTO ´120 listµ would be used in
sectoral definitions, as it is the most specific set of definitions.
3. Services as ¶Products· as does the GATS Legal Framework
² The GATS legal agreement treats services, in the trade context, as products. BUT trade in
services statistics, as they are collected in developing countries, do not capture data in the
same way as the GATS. i.e. in developing countries are collected on an industrial, not a
product basis ² and therefore much statistical information is not adequately captured.

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in this context, is
‡ Information detailing services-sector trade-flows, between
trading countries or economies.
‡ Principally national-accounts-related information (information
on cross-border financial flows, collected by national
governments and reported to the International Monetary Fund)
‡ Two basic components (at first pass)
1. Cross-border services trade information
2. Foreign-direct-investment (FDI) information (including FDI in services)
a. FDI flows and stocks
b. Trade of FDI-related establishments
c. Data concerning FDI operations
Imports, exports, sales, expenditures, profits,
assets, employment, value-added produced by
FDI-based enterprises.
Linkages to be drawn to the GATS Four Modes of Supply
Special surveys designed to capture GATS Mode 4
services trade (movement on natural persons)

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TRADE in SERVICES STATISTICS
WHO IS WORKING ON IT? (and related work)

1717
TheseThese data aredata are alsoalso important forimportant for privateprivate sectorsector actorsactors,, includingincluding businessesbusinesses
conductingconducting tradetrade andand investmentinvestment intointo and made byand made by developingdeveloping country businessescountry businesses
ISTIAISTIA
SeeksSeeks to "to "FillFill the Gaps"the Gaps"
««betweenbetween IMF 1993IMF 1993
standards (SNA and SDDS)standards (SNA and SDDS)
andand developingdeveloping countrycountry
tradetrade negotiatornegotiator andand
policymakerpolicymaker needsneeds

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The IMF Balance of PaymentsThe IMF Balance of Payments
Compilation guideCompilation guide recommendsrecommends TwoTwo ModalitiesModalities for collection of servicesfor collection of services
tradetrade information as part of Nationalinformation as part of National AccountsAccounts Data CollectionData Collection

1919

2020
CROSS BORDER SERVICES TRADE

2121
GATS Mode 3: FDIGATS Mode 3: FDI InflowsInflows
FlowsFlows, vs. Stocks,, vs. Stocks, whatwhat dodo theythey meanmean??
TheseThese couldcould bebe enhancedenhanced forfor betterbetter accuracyaccuracy,,
asas wellwell as to showas to show specificityspecificity forfor sectorsector and informationand information
AboutAbout operationoperation of FDIof FDI enterprisesenterprises inin developingdeveloping countriescountries

2222
GATS MODE 3 (Commercial Presence)
REQUIRES SPECIALIZED DATA
To best understand the implications of GATS Mode 3 commitments,To best understand the implications of GATS Mode 3 commitments, oneone
must look at all forms ofmust look at all forms of ³³operationsoperations´´ transactions describing thetransactions describing the
³³activitiesactivities´´ ofof ³³Commercial Presence EnterprisesCommercial Presence Enterprises´´ (FDI(FDI--basedbased
subsidiaries)subsidiaries) which are also sometimes calledwhich are also sometimes called ³³foreign affiliatesforeign affiliates´´
Sample transactions include:Sample transactions include: sales, purchases, employment, royalties,sales, purchases, employment, royalties,
valuevalue--added, imports, exports, etc., of FDIadded, imports, exports, etc., of FDI--related enterprises.related enterprises.
These data provide information about theThese data provide information about the
aggregate level of business activity in a givenaggregate level of business activity in a given
economy that is related to such establishmentseconomy that is related to such establishments

2323
soso««..
WhatWhat isis FATS DATA?FATS DATA?
WRONG answer: Obesity statistics
Correct answer: « Foreign Affiliate Trade Statistics, or operations of FDI enterprises

2424
Correct answer: « Foreign Affiliate Trade Statistics, or operations of FDI enterprises
FATS* data are statistics detailing the economic
operations of FDI-related enterprises (GATS Mode 3)
The U.S.The U.S. GovernmentGovernment
collectscollects thisthis information forinformation for
US FDIUS FDI--relatedrelated enterprisesenterprises
visvis--aa--visvis enterpriseenterprise surveyssurveys
FATS dataFATS data cancan showshow
policymakerspolicymakers andand negotiatorsnegotiators
whatwhat kindkind ofof economiceconomic effectseffects
thatthat FDI has onFDI has on theirtheir
economyeconomy (for(for inwardinward FDI)FDI)
andand thatthat theirtheir outwardoutward FDIFDI
hashas abroadabroad (for(for outwardoutward FDI)FDI)
**ForeignForeign AffiliateAffiliate Trade StatisticsTrade Statistics

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**ForeignForeign AffiliateAffiliate Trade StatisticsTrade Statistics
The U.S.The U.S. GovernmentGovernment usesuses
enterpriseenterprise surveyssurveys toto gathergather
richrich nationalnational accountsaccounts datadata
WouldWould developingdeveloping countriescountries bebe interestedinterested inin suchsuch information,information,
forfor itsits FDIFDI enterprisesenterprises abroadabroad? It? It wouldwould provideprovide usefuluseful
informationinformation relatedrelated to GATS Mode 3to GATS Mode 3
FATS* data are statistics detailing the economic
operations of FDI-related enterprises (GATS Mode 3)

2626
GATS MODE 4:GATS MODE 4:
MovementMovement of Naturalof Natural PersonsPersons
SaleSale
Mode 4Mode 4 statisticalstatistical capturecapture willwill involveinvolve
newnew modalitiesmodalities withwith surveysurvey atat nationalnational levellevel

2727
SHORT TERM SOLUTIONS
During data improvement, many Developing Countries can make use of private sector databases
such as the one used by UNCTAD, to learn more about FDI flows based on mergers and
acquisitions, for GATS Mode 3 insight on FDI flows and operations data on FDI-related
enterprises.
Example: Egyptian Merger and Acquisition Data, used as a
Proximitive for foreign direct investment flows

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Questions for National Governments
1. Will Enterprise Survey Reporting Mandatory or Voluntary?1. Will Enterprise Survey Reporting Mandatory or Voluntary?
± Should enterprise survey reporting be statuatory (legally required)?
± If yes, should penalties be involved for non-compliance be involved?
2. Benchmark2. Benchmark--level of reporting: Who reports?level of reporting: Who reports?
± For example, the U.S. requires that firms conducting over 1 million dollars of cross-border
services trade to report
3. Confidentiality of Survey Data: Will survey3. Confidentiality of Survey Data: Will survey respondantsrespondants receive immunity?receive immunity?
± Enterprise Survey respondants are more truthful if they are guaranteed protection
from legal or tax use of the collected data
± This requires independence of the statistical bureau and trust-ability of the
government
4. Which sectors will have4. Which sectors will have havehave inin--depth surveys?depth surveys? verses, which are part of
overall services sector surveys
5. Resource Allocation issues5. Resource Allocation issues ±± How this work will be funded in a stable and
predictable manner?
These questions would be addressed by interThese questions would be addressed by inter--Ministerial Task Force at national levelMinisterial Task Force at national level

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ISTIA provides a ³Basket of Alternatives´
such that developing countries can better understand their options

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ISTIA utilizes EXISTING COMPETENCEin related areas
synthesizing related capacities and existing competencies into a focused programme for services
trade statistics, which can be replicated in future country projects

3131
ISTIA
THANKS YOUTHANKS YOU
forfor youryour attentionattention

ISTIA SLIDESHOW - Whither GATS

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