Services Performance in Developing Countries: Elements of the Assessment

1
Services Performance in Developing Countries
Elements of the Assessment

• Manuela Tortora
• Trade Negotiations and Commercial Diplomacy
  Branch
• Jolita Butkeviciene
• Trade in services section
• UNCTAD

2
Elements of this assessment are gained from the
UNCTAD Expert Meetings

• Construction services
• Energy services
• Environmental services
• Health services
• Tourism services
• Air transport services
• Special treatment to the LDCs problems

3
What may developing countries seek in the
assessment?

• Establish lessons learned in the past
• What may be relevant for the new negotiations?
• What conditions are necessary to maximize the
  benefit to all?
• How development objectives may be reflected in
  the balanced outcome of the negotiations?
• How the existing asymmetries in the level of
  development should be addressed?

4
Common elements in services sectors analyzed

1. Access to technology
2. Banking and finance
3. Public policy concerns
4. SMEs
5. Licensing
6. Access to information networks
7. Anti-competitive practices

1. Movement of persons
2. Regulatory framework
3. GATS classification
4. Regional integration

5
Common Elements

• Access to technology
• Environmental, construction, energy services
• Government regulations
• Joint ventures
• Training of manpower
• Tourism
• Health

• Banking and Finance
• Environmental, construction, energy services
• Strengthening domestic banking sector
• Access to international finance
• Foreign investment

6
Common Elements

• Public policy concerns
• Health
• International measures
• Energy, Environment
• Universal service obligation
• Government regulations

• Small and Medium Enterprises (SMEs)
• All sectors
• Privatisation as a factor
• Access to domestic market
• Increasing costs
• Alliances and size of the projects

7
Common Elements

• Access to information networks
• Health, tourism services
• direct supply of services
• Construction, energy, environmental services
• Management of inventories
• Source of market information

• Licensing requirements
• Construction, environmental, energy
• Pre-qualification requirements
• Technical standards
• Multiple regulations at all levels of government
  and nongovernmental bodies

8
Common Elements

• Movement of persons
• All sectors
• Economic needs test
• Accreditation and recognition of qualifications
• Nationality, residency requirements
• Immigration regulations

• Lack of competitive environment
• Construction
• Permit system
• Energy
• Access to network facilities
• Tourism
• CRS/GDS networks

9
Common Elements

• GATS classification
• Energy, environmental services
• Not adequate coverage under present
  classification
• Construction, tourism, health services
• Barriers to liberalization are in other services
  sectors

• Regulatory framework
• Environmental services
• New standards
• Construction services
• Model law
• Health, energy services
• Privatisation driven needs for new legislation

10
Common Elements

• Importance of the regional integration among
  developing countries
• Better market access opportunities
• Building of global competitive strengths
• Experience with services liberalization
• Harmonization of laws
• Regional policy on services
• Mutual recognition of professional qualifications
  and facilitated movement of persons
• Liberalization of government procurement
  regionally

11
Now the specific sectoral elements
12
Construction Services developing country view

• Key physical infrastructure service
• Address poverty, upgrade welfare and provide
  employment creation
• Trade concern obtain access to domestic market
• Market 60 in developing countries
• SMEs and few globally operating firms
• Trade concerns
• Procurement practices for multilaterally financed
  projects
• Subsidies as export credit to feasibility studies
• Reserve socially important projects for local AES
  firms

13
Energy Services developing country view

• Energy services as central in providing efficient
  access to energy in support of development
• Reliable and efficient access to all
• Market privatisation of vertically integrated
  services creates new trade opportunities
• Specific trade concerns
• Limiting monopoly power and transparency on
  transmission fees
• Relevance of the emergency safeguard measures

14
Environmental Services developing country view

• Sustainable development, including provide safe
  drinking water, sanitation, address air
  pollution
• Market developed
• on the basis of global standards, new laws and
  fiscal policies
• privatisation of public utilities
• Specialized services as opposed to standardized
• Trade concerns
• Importance of the issues of ownership and control
  of large-scale investment
• Competitive market for environmental liability
  insurance

15
Health Services developing country view

• Universal access to basic health care equity,
  quality and availability
• Market influenced
• by the NHS reform
• budgetary pressures and growing health
  expenditures
• Privatization
• Trade concerns
• Portability of insurance
• Outflow of patients
• Managerial skills
• Issues related to telemedicine

16
Tourism services developing country view

• Sustainability of tourism in economic, social,
  cultural and environmental sense
• Tourism market is the only service sector that
  provides concrete and quantified growing trade
  opportunities
• Fundamental pillar of many economies
• Importance of efficiency, viability and
  sustainability
• Trade concerns
• Unbalanced trade benefits
• Leakage effect
• Importance of transport services, especially air
  transport

17
Air transport services

• How to bring air transport services to the GATS?
• Selected sub sectors, e.g.charter flights
• Include ownership and control as mode 3
  commitments under the GATS
• Extend commitments on air transport services to
  include mode 4
• To that extent make ATS subject to the
  multilateral trade disciplines, including dispute
  settlement

18
and now the negotiating action
19
NEGOTIATING TRADE IN SERVICES IN THE DOHA WORK
PROGRAMME

• UNCTAD
• Manuela Tortora
• Trade Negotiations and
• Commercial Diplomacy Branch
• March 2002

20
Think in perspective

• In the current context of ongoing negotiations
  on services, the main purpose of a GATS
  assessment is to provide inputs for the
  developing countries negotiating positions at
  the WTO and in the regional/subregional fora.

21
What key elements of the assessment should be
considered by developing countries when preparing
negotiating positions? Both quantitative and
qualitative indicators, in particular

• To what extent the implementation of the GATS
  contributes to achieving the development goals of
  the country or the subregional integration scheme

• To what extent the implementation of the GATS
  contributes to the countrys export goals in the
  area of services.

22
The WTO is not the appropriate forum to address
the supply constraints of the developing
countries, but

• Several development-oriented trade rules can be
  shaped at the WTO for supporting the capacity of
  the developing countries to take advantage of the
  liberalisation.
• This effort should not be confined to the WTO
  negotiations on services only.
• Countries which benefit from liberalisation in
  developing markets should support development
  efforts.

23
Two main reasons to prepare the negotiations on
services in their proper context of the Doha Work
Programme

• Because of the single undertaking that will
  need to be an overall meaningful outcome from the
  point of view of development
• Because of the need to ensure that other trade
  rules besides GATS are consistent with and
  supportive of development and export goals of
  developing countries.

24
SERVICES IN THE CONTEXT OF THE  SINGAPORE
ISSUES 

• The issue of investment regimes is already
  embedded in the GATS.
• The developing countries experience of GATS
  implementation could be useful in the context of
  the post-Doha work on investment.

25
SERVICES IN THE CONTEXT OF THE  SINGAPORE
ISSUES 

• In many services sectors, the issue of
  competition has a high priority from the point of
  view of market access for the exports of
  developing countries (tourism for example).
• The identification of anticompetitive practices
  in trade in services could be a key element in
  the post-Doha work.
• The developing countries experience in
  telecommunications requires more analysis and
  cannot be automatically applied to other sectors.

26
SERVICES IN THE CONTEXT OF THE  SINGAPORE
ISSUES 

• Transparency and government procurement are also
  already contained in many sectorial committments,
  but they will continue to be sensitive issues.
• Discussions on transparency in services may
  enligthen the work on transparency in general at
  the WTO.

27
SERVICES IN THE CONTEXT OF THE  SINGAPORE
ISSUES 

• Developing countries should devote attention to
  the formulation of their positions on trade
  facilitation, that may have implications on
  several key infrastructure services that are at
  the core of the trade operations.

28
THE NEW WTO WORKING GROUPS ONTRADE, DEBT AND
FINANCE, AND TRANSFER OF TECHNOLOGY

• Developing countries should bring their
  experience on trade in services in both working
  groups.
• Issues such as how to finance the development of
  an export capacity in services could be
  identified.
• Technology gaps and measures in services sectors
  should be explored.

29
NEGOTIATING MANDATES ON TARIFFS

• In many services sectors, the supply and export
  capacity of developing countries depends on
  imported goods, equipment or tools.
• Tariffs may be an obstacle to trade in services.

30
NEGOTIATING MANDATES ON TRADE AND ENVIRONMENT

• The new negotiations on  environmental goods
  and services  have 2 kinds of implications on
  the negotiating positions on services
• developing countries will need to identify what
  are the  environmental goods  where they have
  an interest
• Developing countries need to set their positions
  on the classification of environmental services
  in view of the implications on other services
  sectors (energy for instance).

31
NEGOTIATING MANDATE ON WTO RULES ON REGIONAL
TRADE AGREEMENTS

• For many export interests of the developing
  countries, the subregional/regional
  liberalisation of trade in services is as
  important as the multilateral liberalisation, but
  the assessment is still limited in this regard.
• Article V of GATS will have to be seen in
  parallel with the negotiations on WTO rules on
  regional agreements.

32
SPECIAL AND DIFFERENTIAL TREATMENT

• Plays a key role in the Doha Work Programme.
• Operationalisation of article IV beyond what is
  so far being negotiated bilaterally.
• Envisage S/D in the sectoral commitments in light
  of the development and export goals.
• Consider issues such as transfer of technology,
  joint ventures, training of human resources,
  support to the regulatory frameworks, etc. in the
  requests/offers.
• Envisage provisions for LDCs greater
  participation in trade in services.
• Improve coherence in the international economic
  environment not only at the WTO.