This document provides an overview of trade in education services. It discusses the various forms and modes of trade, including cross-border supply, consumption abroad, commercial presence, and movement of natural persons. It notes that higher education is a growing trade sector, with increasing numbers of students studying abroad and foreign universities establishing branch campuses. The key drivers of trade are demand from students and revenue opportunities for institutions, while concerns relate to equity, effects on domestic systems, and quality assurance. Barriers to trade exist across all modes of supply. Exploiting trade opportunities requires understanding the domestic context and negotiating bilaterally or multilaterally.

1. Trade in Education Services
An Overview

2. Structure of Presentation
1. Forms of Trade in Education in the GATS
framework
2. The Importance of Trade in Education –
Recent Trends
3. Driving Forces
4. Sectoral Issues and Concerns
5. Bilateral or Multilateral

3. 1. Forms of Trade in Education
5 Educational Services
5.A Primary education services (921)
- which comprises Preschool Education Services (CPC 92110) and Other Primary
Education Services (CPC 92190). These categories do not include child-care services
(considered as social services in CPC 93321) and services related to literary programmes
for adults, which are part of the sub-category Adult Education Services (CPC 92400).
5.B Secondary education services (922)
- which comprises General Secondary Education Services (CPC 92210), Higher
Secondary Education Services (CPC 92220), Technical and Vocational Secondary
Education Services (CPC 92230), and Technical and Vocational Secondary Education
Services for handicapped students (CPC 92240).
5.C Higher education services (923)
- which comprises Post-Secondary Technical and Vocational Education Services (CPC
92310) and Other Higher Education Services (CPC 92390). The former refers to sub-
degree technical and vocational education, while the latter refers to education leading to a
university degree or equivalent.
5.D Adult education services (924)
- which comprises education for adults outside the regular education system.
5.E Other education services (929)
- which comprises education services at the first and second levels in specific subject
matters not elsewhere classified, and all other education services that are not definable by
level. Excluding education services regarding recreation matters, for example, those
provided by sport and game schools, which fall under sporting and other recreation
services (CPC 964).
Source: WTO, 2010, S/W/313

4. 1. Forms of Trade in Education
 Presentation focuses on higher
education, though trade in language
training, vocational training etc are also
increasing

5. Modes of Supply in Education Services
GATS mode of supply Description Examples for higher
education
Consumption abroad
(Mode 2)
Movement of students
from importing country B
to exporting country A to
obtain education
services
Chinese students
studying in US
universities in the US
Commercial presence
(Mode 3)
Establishment of local
unit of institution from
exporting country A to
importing country B
Country A’s course
offerings through branch
campuses or
subsidiaries of
institutions, franchising
etc.
Cross border delivery
(Mode 1)
Delivery of education
services from exporting
country A to importing
country B
Distance education, tele-
education, education
testing services, on-line
education
Presence of natural
persons (Mode 4)
Temporary movement of
education personnel
Teacher exchange

6. 2. Trends in Trade in Higher Education
Number of international students worldwide

7. 2. Trends in Trade in Higher Education

8. 2. Trends in Trade in Higher Education
 No Negative Effect of 2008-09 Financial Crisis
Students studying abroad, by host region
(in thousands)
0
100
200
300
400
500
600
700
800
900
1000
North America EU 15 Central and Eastern EuropeEast Asia and the Pacific
2008
2009

9. 2. Trends in Trade in Higher Education
 Asia is a Big Importer in Higher Education Trade
Students studying abroad, by sending region
(in percent of total)
0.0
10.0
20.0
30.0
40.0
50.0
60.0
North America Latin America
and the
Caribbean
Central and
Eastern Europe
Asia

10. 2. Trends in Trade in Higher Education

11. 2. The Dominant Exporters
37%
17%
9%
13%
12%
3%
4%
4% 1%000
1999
US
UK
Australia
Germany
France
China
Japan
Canada
New Zealand
Singapore
Malaysia
Korea, Rep. of
24%
14%
13%10%
11%
8%
5%
5%
2%
4%
3% 2%
2007
US
UK
Australia
Germany
France
China
Japan
Canada
New Zealand
Singapore
Malaysia
Korea, Rep. of

12. Trends in Commercial Presence
Top 10 source economies of
international branch campuses, 2009
Host economies for international
branch campuses, 2009
Source Number
United States 78
Australia 14
United Kingdom 13
France 11
India 11
Mexico 7
Netherlands 5
Malaysia 4
Canada 3
Ireland 3
Host economy Number
United Arab Emirates 40
China 15
Singapore 12
Qatar 9
Canada 6
Malaysia 5
United Kingdom 5
Ecuador 4
Germany 4
Mexico 4
Australia 3
Bahrain 3
Puerto Rico 3
Switzerland 3
Source: WTO, 2010, S/W/313

14. 3. Driving Forces
 Demand Side Factors
 Supply Side Factors
 Government Policies in exporting and importing
countries

15. Demand Side Factors - Students
Common factors Specific to study abroad Specific to
partnerships
Limited domestic
tertiary capacity
Low quality in
disciplines in high
demand
Higher rate of
return on
internationally
recognized
qualifications
Access to highly
skilled labor market
of industrialized
countries and global
market (emigration)
Access to
postgraduate and
research
opportunities
Access to highly
paid sectors in
domestic labor
markets
Entry into
postgraduate
studies in
partner
institutions
abroad

16. Supply Side Factors - Institutions
Common factors Specific to study abroad Specific to
partnerships
Foreign students are
an important source of
revenue (domestic
funding is scarce)
Global talent seen as
important for raising
standards
(included in international
rankings of universities)
Students in partner
institutions provide
a pipeline of
graduate students
Opportunities to
build international
profile of faculty
through teaching
and research in
different
environments

17. 4. Sectoral Issues and Concerns
 Equity
 The concern is that you will establish a “two-tier”
higher education system
 Higher quality, foreign provided, education will be just for
rich
 Many countries have two tier domestic systems,
 but there is some provision for enabling poor students to
enter (scholarships, loans, entrance exams etc)
 How do you ensure equitable access to foreign
programs?

18. Negative Effects on Domestic Institutions
 Public universities are chronically under-funded
 Cannot withstand competition from well-established
public and private universities from OECD countries
 These institutions receive public funding, including
government sponsored marketing
 Is this a “trade-distorting” subsidy?
 Domestic universities have many roles, not just
training for immediate job market
 If they cannot offer the “profitable” courses, because of
competition, they will require more subsidies
 Competition for highly qualified university teachers

19. Concerns of the academic community
 Institutional autonomy
 Tenure of faculty and impacts on academic freedom
 Intellectual property rights
 Who do the courses / materials belong to?
 Role of education as an essential public service is
undermined.
 Appreciate and promote “internationalization” , but
in general are skeptical of exclusively commercial
reasons

20. Quality and Scope
 Developing countries may attract low quality foreign
providers, who rely on “foreign” name
 Limited range of programs offered by exporters
 Examples:
 Many UK polytechnics (renamed as universities) started
advertising in India to get students. Low quality at
relatively high cost.
 Only 8 percent of US universities offered programs
abroad, and most were in China, Western Europe and in
business/ management
 Many students cheated by “fly by night” operators

21. Barriers to trade in education
 Mode 1: Cross-border supply
• Restriction on import of educational material
• Restriction on electronic transmission of course material
• Non-recognition of degrees obtained through distance
mode
 Mode 2: Consumption abroad
• Restriction on travel abroad based on discipline or area of
study
• Restriction on export of currency and exchange
• Quota on the number of students proceeding to a county
or institution
• Prescription of minimum standards or attainments

22.  Mode 3: Commercial presence
• Insistence on a local partner
• Insistence that the provider be accredited in the home country
• Insistence on partner/collaborator being from the formal academic
stream
• Insistence on equal academic participation by foreign and local
partner
• Disapproval of franchise operations
• Restrictions on certain disciplines/areas/programs that are deemed
to be
against national interests
• Limitations on foreign direct investment by education providers
• Difficulty in approval of joint ventures
 Mode 4: Presence of natural persons
• Visa and entry restrictions
• Restriction on basis of quota for countries and disciplines
• Nationality or residence requirements
• Restriction on repatriation of earnings
Barriers to trade in education

23. 5. Exploiting the potential of trade
 Trade is here to stay and will grow – underlying
dynamics of regional and global integration are very
powerful
 Two sets of negotiations are required
 Internal to country
 Between Ministry of Education and Ministry of Trade
 Provide opportunities for other stakeholders to participate
 Between countries
 Will be conducted by Ministry of Trade, but include
Ministry of Education, for transparency

24. A strong external negotiating stand
requires…
 Understanding of domestic education context
 What are the current drivers of domestic demand?
 Secondary enrolment ratio and tertiary enrolment ratio
(excess demand)
 Is demand for domestic labor market or foreign labor
market?
 For general degrees or technician/ technical degrees?
 How important is price, quality, and other factors?
 What external providers already exist / might be
interested?
 In what forms of provision?

25. … Understanding the Domestic Context
 What domestic regulatory mechanisms exist?
 How strong are quality assurance mechanisms?
 Procedure for recognition of degrees?
 Rules governing foreign education providers?
 What are the country’s goals for higher education?
 Expanding access? Equity?
 Improving quality? (in private sector? In public sector through
competition)?
 Building capacity in specific areas? (science and technology;
teacher training; vocational training)

26. External negotiations
 Your negotiating stand, strategy and tactics can be
improved
 Assess your “situational power”
 How critical is the need to have external providers?
 How interested are they in your country? (what
advantages does it offer to them)
 How far have you got your act together?
 Increase your “knowledge power”
 What do you know of your negotiating partner ? (what do
they want? How badly do they want it? )
 Craft persuasive arguments (appeal to the other side, but
do not compromise your core interests)

27.  The MAIN problem:
 Lack of communication between Education Ministry
and Trade Ministry
 Example:
 Jamaican trade policymakers wished to position higher
education sector as an export industry (1994)
 Education stakeholders were ignorant of debate
 They saw proposed liberalization as threat to equity and quality
 Another Problem
 Lack of coherent education sector strategy

28. Some instruments are available…
 Strengthen domestic quality assurance agencies
 But these may be non-existent or weak
 Requires specialized human resources
 Difficult for small countries due to lack of human
resources
 For large countries, due to large number of programs
 Alternative is to use quality assurance mechanisms
of exporting countries
 But make sure the specific programs offered are
accredited or meet standards
 Or ensure that program is accepted by employers in
exporting country