Services Performance in Developing Countries: Elements of the Assessment Manuela Tortora Trade Negotiations and Commercial Diplomacy Branch Jolita Butkeviciene.

Services Performance in Developing Countries: Elements

of the Assessment

Manuela TortoraTrade Negotiations and Commercial Diplomacy

Branch

Jolita ButkevicieneTrade in services section

UNCTAD

Elements of this assessment are gained from the UNCTAD Expert Meetings

• Construction services

• Energy services

• Environmental services

• Health services

• Tourism services

• Air transport servicesSpecial treatment to the LDCs problems

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?

Common elements in services sectors analyzed

1. Access to technology2. Banking and finance3. Public policy concerns4. SMEs5. Licensing6. Access to information

networks7. Anti-competitive

practices

8. Movement of persons

9. Regulatory framework

10. GATS classification

11. Regional integration

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

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

Common Elements

Licensing requirements• Construction,

environmental, energy– Pre-qualification

requirements;– Technical standards;– Multiple regulations at

all levels of government and nongovernmental bodies

Access to information networks

• Health, tourism services– direct supply of

services• Construction, energy,

environmental services– Management of

inventories– Source of market

information

Common ElementsLack of competitive environment

• Construction– Permit system

• Energy– Access to network

facilities• Tourism

– CRS/GDS networks

Movement of persons• All sectors• Economic needs test

– Accreditation and recognition of qualifications

– Nationality, residency requirements

– Immigration regulations

Common ElementsRegulatory framework

• Environmental services– New standards

• Construction services– Model law

• Health, energy services– Privatisation driven

needs for new legislation

GATS classification• Energy, environmental

services– Not adequate coverage

under present classification

• Construction, tourism, health services– Barriers to liberalization

are in other services sectors

Common ElementsImportance 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

Now the specific sectoral elements

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

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

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

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

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

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

…and now the negotiating action

NEGOTIATING TRADE IN SERVICES NEGOTIATING TRADE IN SERVICES IN THE DOHA WORK PROGRAMMEIN THE DOHA WORK PROGRAMME

UNCTAD

Manuela Tortora

Trade Negotiations and

Commercial Diplomacy Branch

March 2002

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 inputs for the developing countries’ negotiating positionscountries’ negotiating positions at the WTO and in the regional/subregional fora.

What key elements of the assessment should be What key elements of the assessment should be considered by developing countries when considered by developing countries when

preparing negotiating positions?preparing negotiating positions?

Both quantitative and qualitative indicators, in particular:

To what extent the implementation of the GATS contributes to achieving the developmentdevelopment goalsgoals of the country or the subregional integration scheme

To what extent the implementation of the GATS contributes to the country’s export goalsexport goals in the area of services.

The WTO is not the appropriate forum to The WTO is not the appropriate forum to address the address the supply constraintssupply constraints of the of the

developing countries, but:developing countries, but:

• Several development-oriented trade rulesdevelopment-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 WTOnot be confined to the WTO negotiations on services only.

• Countries which benefit from liberalisation in developing markets should support support development efforts.development efforts.

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

• Because of the “single undertaking”“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 other trade rulestrade rules besides GATS are consistent with and supportive of development and export goals of developing countries.

SERVICES IN THE CONTEXT OF THE « SINGAPORE ISSUES »:

• The issue of investmentinvestment 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.

SERVICES IN THE CONTEXT OF THE « SINGAPORE ISSUES »:

• In many services sectors, the issue of competitioncompetition 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.

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.

SERVICES IN THE CONTEXT OF THE « SINGAPORE ISSUES »:

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

THE NEW WTO WORKING GROUPS ONTHE NEW WTO WORKING GROUPS ONTRADE, DEBT AND FINANCE, AND TRADE, DEBT AND FINANCE, AND

TRANSFER OF TECHNOLOGYTRANSFER OF TECHNOLOGY

• Developing countries should bring their experience on trade in servicesexperience on trade in services in both working groups.

• Issues such as how to finance the how to finance the development of an export capacitydevelopment of an export capacity in services could be identified.

• TechnologyTechnology gaps and measures in services sectors should be explored.

NEGOTIATING MANDATES ON NEGOTIATING MANDATES ON TARIFFS:TARIFFS:

• In many services sectors, the supply and export capacity of developing countries depends on importedimported goods, equipment or tools.

• TariffsTariffs may be an obstacle to trade in services.

NEGOTIATING MANDATES ON NEGOTIATING MANDATES ON TRADE AND ENVIRONMENT:TRADE AND ENVIRONMENT:

The new negotiations on « environmental goods and services » have 2 kinds of implications2 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).

NEGOTIATING MANDATE ON WTO NEGOTIATING MANDATE ON WTO RULES ON REGIONAL TRADE RULES ON REGIONAL TRADE

AGREEMENTS:AGREEMENTS:

• For many export interests of the developing countries, the subregional/regional liberalisationsubregional/regional liberalisation of trade in services is as important as the multilateral liberalisation, but the assessment is still limited in this regard.

• Article VArticle V of GATS will have to be seen in parallelin parallel with the negotiations on WTO rules on regional agreements.

SPECIAL AND DIFFERENTIAL SPECIAL AND DIFFERENTIAL TREATMENT:TREATMENT:

• Plays a key rolekey role in the Doha Work Programme.• Operationalisation of article IVOperationalisation of article IV beyond what is so far being

negotiated bilaterally. • Envisage S/D in the sectoral commitmentsS/D in the sectoral commitments in light of the

development and export goals. • Consider issues such as transfer of technology, joint ventures, transfer of technology, joint ventures,

training of human resources, support to the regulatory training of human resources, support to the regulatory frameworksframeworks, etc. in the requests/offers.

• Envisage provisions for LDCs’LDCs’ greater participation in trade in services.

• Improve coherencecoherence in the international economic environment – not only at the WTO.