Transcript
TRADE IN SERVICES
Aarti khanna
Jubinder singh
TRADE IN SERVICES
ECONOMIC IMPORTANCE
BASIC CONCEPTS
SERVICES: GENERAL PERCEPTION NOT TRADABLE AND NOT STORABLE
- Simultaneity of production and consumption- Role of local establishment
STRONG GOVERNMENT INVOLVEMENT
- Natural monopolies, public service obligations, etc.- Infrastructural importance (transport, telecom, etc.)- Role of non-economic objectives (social, cultural, safety)
INTANGIBLE- Quality criteria for services providers rather than for
products
NO TARIFFS- Access conditions determined by regulation, quotas etc
… BUT:
Certain services - international transport and communication -
have been traded for centuries
Services are supplied in conjunction with goods (finance,
insurance, marketing, etc.)
Services have become tradable as a result of:
- technical progress (e-banking, distance learning)- government retrenchment- market liberalization and regulatory reform
SERVICES: ECONOMIC IMPORTANCE Share in Production and Employmentdepending on resource structure and level
of development of an economy
Share in Total World Trade more rapid expansion than merchandise trade
CHART I: SHARE OF SERVICES IN PRODUCTION (GDP, 2000)
0%10%20%30%40%50%60%70%80%90%
100%
United
Sta
tes*
Franc
e
United
Kin
gdom
Poland
Argen
tina
Colom
bia
Peru
Philip
pines
India
Mal
aysia
Ugand
a
Camer
oon
Angol
a
Services Industry Agriculture
CHART II: WORLD EXPORTS OF GOODS AND SERVICES (1980 - 2000)
0
50
100
150
200
250
300
350
400
1980 82 84 86 88 90 92 94 96 98
2000
(19
80
=1
00
)
0
1500
3000
4500
6000
7500
9000
10500
12000
Bill
ion
$
Goods Services
Services
GDP
Goods
SERVICES EXPORTS BY ECONOMIC GROUPS
26%
74%
DEVELOPING COUNTRIES
Developed countries
SERVICES TRADE AND DEVELOPMENT: EXPECTATIONS
“The gains from liberalizing services may be substantially greater than those from liberalizing trade in goods, because current levels of protection are higher and because [there would be] spill over benefits from the required movement of capital and labour.” (World Bank, 2001).
Infrastructural services such as telecommunications, finance and transport are crucial determinants of overall economic efficiency and growth.
SERVICES TRADE AND DEVELOPMENT: NECESSARY CONDITIONS Appropriate sequencing of reforms [(re-
)regulation/liberalization/privatization] Contestable markets (effective competition) Effective regulation, including prudential rules, to protect consumers and the public interest
GENERAL AGREEMENT ON TRADE IN SERVICES:
MAIN FEATURES
GATS: OBJECTIVES
Expansion of services trade Progressive liberalization through
successive rounds of negotiations as a means of promoting growth and development
Transparency of rules and regulations Increasing participation of developing
countries
GATS CLASSIFIES TRADE IN SERVICES INTO FOUR MODES OF SUPPLY:
Mode 1: Cross-border supplyMode 2: Consumption abroadMode 3: Commercial presenceMode 4: Presence of natural persons
UNIVERSAL COVERAGEAll Services (except those provided in the exerciseof governmental authority
Business andprofessional
Finance and insurance
Communications
Health and social
Construction Tourism Distribution Recreation, culture,
sports Education Transport Environment Other
BASIC OBLIGATIONS UNDER THE GATS(a)General obligationsMFN TreatmentTransparency
(b) Specific CommitmentsMarket AccessNational Treatment
INFORMATION IS CONTAINED IN SERVICES “SCHEDULES” Each WTO Member is required to have a
Schedule of Specific Commitments which identifies the services for which the Member guarantees market access and national treatment and any limitations that may be attached.
SPECIAL PROVISIONS FOR DEVELOPING COUNTRIES In particular, the objective of facilitating the
increasing participation of developing countries in services trade has been enshrined in the Preamble to the Agreement and underlies the provisions of Article IV.
This Article requires Members, inter alia, to negotiate specific commitments relating to the strengthening of developing countries' domestic services capacity; the improvement of developing countries' access to distribution channels and information networks; and the liberalization of market access in areas of export interest to these countries.
Trade in ServicesINDIA
INDO-US TRADE IN SERVICES The Indo-US services trade is likely to
grow to an ambitious $150 billion in the next six years, says a CII estimate.
At present, the country's total engagement with the US is over $60 billion, out of which about $40 billion are accounted for by the merchandise trade. Last fiscal, the services exports to the US touched $22 billion.
LIMITATIONS/BARRIERS
"It’s a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York "
- Mr Obama
PROTECTIONISM APPROACH
Discriminatory access to distribution and communications system (TELECOMMUNICATION ,INSURANCE)
Quantitative-restriction (QR)-type policies
Price-based barriers
(visa fees, entry or exit taxes, discriminating airline landing fees, port taxes, tariffs)
Limits on foreign share-holding in individual companies or by sector
Qualification and licensing requirement
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