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Trade in Professional Services – Effective Participation by the Commonwealth Caribbean

Trade in Professional Services – Effective Participation by the Commonwealth Caribbean Commonwealth Secretariat May 2006 Barbados. By. Andrew O. Satney. Programme Focus: the issues. The WTO and the General Agreement on Trade in Services (GATS) What are Professional Services?

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Trade in Professional Services – Effective Participation by the Commonwealth Caribbean

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  1. Trade in Professional Services – Effective Participation by the Commonwealth Caribbean Commonwealth Secretariat May 2006 Barbados. By. Andrew O. Satney

  2. Programme Focus: the issues • The WTO and the General Agreement on Trade in Services (GATS) • What are Professional Services? • How are Professional Services Traded • The Main Challenges • How to address them. • Professional Services Promotion Projects - the Trade Section Experience • Global trend .

  3. WTO and GATS (Rules) • Trade in Services governed by the WTO (1994) • Defining what are Services? • Professional Services: What are they? • Modes of Supply. • The global trade. • Improving Export Competitiveness

  4. Defining International Trade in Services Services are traded internationally when the supplier and customer are from different countries, regardless of Location of the transaction

  5. Professional Services Trade Modes of Trade in Services: • All “modes” of supply • Mode 1 - Cross-border supply • Mode 2 - Consumption abroad • Mode 3 - Commercial presence • Mode 4 - Movement of natural persons

  6. Professional Services Trade The Four Modes: Mode 1 – Cross-border Supply – information flows from one country to another via communication networks. E.g.. Accounting Services, architectural drawings transmitted via email,

  7. Professional Services Trade Mode 2: A consumer travels to another country to purchase a service. E.g. Health Tourism, Education Services.

  8. Professional Services Trade. Mode 3: Commercial Presence – a service supplier from one country establishes an office or branch in another country to provide a service. E.g.. Subsidiary of an insurance company.

  9. Professional Services Trade. Mode 4: Movement of Natural Persons - Where the individual(s) supplying the service physically go to another country to provide services. E.g. consultants; doctors.

  10. Global Services Trade Growth averaged 7% per annum 1993-2004 Growth recently reaccelerated after slow 2000-2001 Moving away from traditional industries (transport, travel) and towards ICT, BPO, etc.

  11. Percentage Service Trade by Industry

  12. CARICOM Services Trade Main Trends 1997-2002 • Total Services Exports increased by 14% from US$6.2 billion in 1997 to $7.1 billion in 2002 • Total Services Imports increased by 24% from $3.7 billion in 1997 to $4.6 billion in 2002 • Services trade balance stagnated or declined from 1999 • Deficit on goods trade averaged more than US$ 5 billion over period • Net deficit on external account in Caricom of US$2.7 billion in 2002

  13. Composition Percent total exports of goods and services

  14. SERVICES AS % GDP: 2000 Antigua 92.9% Jamaica 71.1% St. Lucia 87.1% Trinidad 67.9% St. Kitts 84.2% Belize 62.4% Barbados 84.1% Haiti 61.8% Grenada 83.9% Suriname 61.5% St. Vincent 83.3% Guyana 46.5% Dominica 76.4% Source: ECLAC (2002)

  15. SERVICES AS % EXPORTS Antigua 91.4% Jamaica 56.6% Montserr. 91.0% Dominica 55.0% St. Lucia 81.9% Belize 44.8% Barbados 79.6% Haiti 37.6% The Bahamas 78.6% Guyana 21.1% Grenada 72.1% Suriname 18.6% St. Kitts 68.2% Trinidad 12.5% St. Vincent 66.9% Source: IMF and ECCB

  16. Trends in OECS Services Trade: 1993-2002

  17. Composition of Caricom Services Imports 1997-2002

  18. OECS Services & Merchandise Trade Balances

  19. Overall Caricom Trade Balance 1997-2002

  20. Relative Share of Individual Caricom States in Total Services Exports 1997-2002

  21. What are Professional Services? • Referred to as “knowledge-based” Services. • There are over 69 identified sub sectors in the GATS; • Difficult to define because it is not physical line a “good”. • Involves mainly people and technology.

  22. Professional Services Contd. Construction-related Legal Health-related Market research Education-related Management consulting ICT and Software Development. Engineering Printing and Publishing.

  23. Trade in Professional Services:How can St. Lucia Participate.. • No. 1. THE ENABLING ENVIRONMENT: The Role of Government in Providing the “Enabling Environment” !!!!!!!!!! • No. Being Competitive – globally i.e. quality of service, competitive pricing, etc.

  24. Exporting Professional Services: Main Challenges • Qualifications and \procedures to qualify (MRA and accreditation); • Nationality and residency requirements; • Restrictive visa and work permit; • Government procurement laws • Slow and inadequate legal processes; • Lack of transparency – e.g. publication of regulations; • Excessively high fees for obtaining services.

  25. Exporting Challenges (Contd). • Cultural (business or social) • Language; • Unnecessary bureaucracy; • Attitude – you must be prepared to take risks. • Rapidly changing global trade environment. • Bi-lateral and multilateral trade negotiations. • Myopic approach to the business. • Competitiveness • Financial resources (risks).“

  26. Exporting Challenges (contd.) • Scale – too small to for pre-qualifications • Cost of Communication and Travel. • Your reputation is not known. • Inadequate knowledge • Inadequate support facilities. • Lack of data and information on local supply situation (trade statistics).

  27. Challenges: Contd… • Economic philosophies have changed, but bureaucracy hasn’t • Governments take control-oriented approaches • Private sector is considered “guilty until proven innocent” • Bureaucracies designed to prevent abuse - not to be efficient • Opportunities for corruption • “Murphy’s Law”

  28. How to address them. • Creative approach to marketing. • Your own knowledge of the market, etc. • Ensuring that the “supply-side” is prepared: – knowledge of preparing and submitting proposals. • Using local and international support services.

  29. Addressing the Challenges. • Knowledgeable trade officials. • Adequate representation in the markets; • Collaboration between government officials and professional service providers. • Providing support Services - Government. E.g. Austrade – http://www.austrade.gov.au/.

  30. Addressing Challenges (Ctd.) • Formation of partnerships (Joint Venture). • Provide reliable and updated information. • Taking a global approach to business. • Establish a strong local base. • Developing the “softer skills” of doing business. • Meeting International standards. • An enabling environment (removing unnecessary impediments).

  31. Projects on Export Promotion by Trade Section • Cyprus • Sri Lanka • Malta • Malaysia.

  32. The Global Trend. • Growth in Global trade in Services is estimated at over 7% in 2003 dominated by professional services. • Valued at over US$2.5 trillion. • Services account for at least 20% of global trade • Why can’t The Commonwealth Caribbean benefit from this? • The challenges are not insurmountable • Take the Global Approach.

  33. OPPORTUNITY In this day and age of global internet connectivity and inexpensive telecommunication costs, any country with the right mix of talent, infrastructure and conducive business environment can compete in the global marketplace for knowledge workers and IT- enabled services. In this day and age of global internet connectivity and inexpensive telecommunication costs, any country with the right mix of talent, infrastructure and conducive business environment can compete in the global marketplace for knowledge workers and IT- enabled services. In this day and age of global internet connectivity and inexpensive telecommunication costs, any country with the right mix of talent, infrastructure and conducive business environment can compete in the global marketplace for knowledge workers and IT- enabled services. In this day and age of global internet connectivity and inexpensive telecommunication costs, any country with the right mix of talent, infrastructure and conducive business environment can compete in the global marketplace for knowledge workers and IT- enabled services. In this day and age of global internet connectivity and inexpensive telecommunication costs, any country with the right mix of talent, infrastructure and conducive business environment can compete in the global marketplace for knowledge workers and IT- enabled services. In this day and age of global internet connectivity and inexpensive telecommunication costs, any country with the right mix of talent, infrastructure and conducive business environment can compete in the global marketplace for knowledge workers and IT- enabled services.

  34. What is your Vision? Your Horizon? • Is it Local – your town? • Is it Your country? • Is it within the OECS? • Is CARICOM? • Is it The Americas? • Is it Global?

  35. A Tale of Many Cities - Dubai Internet City - Dubai Healthcare City - Dubai Media City - Festival City - Dubai Industrial City - The Lost City - Dubai Sports City - International City - Dubai Motor City - Academic City - Dubai Maritime City - Knowledge Village - Dubai Humanitarian City - Global Village - Dubailand

  36. Palm Islands - Three man-made islands in the shape of palm trees. 500apartments, 2 000 villas, 25 hotels and 200 shops. 125 km of additional coast line created.

  37. Dubai Sports City - 7.5 km² complex of outdoor & indoor stadiums

  38. Hydropolis - Unique submarine hotel of 220 under sea apartments with their panoramic view of marine life.

  39. Dubai Waterfront - Extending to81 sq km, world’s largest sea front. Larger than Manhattan in New York.

  40. Sources of Information and Support • The Commonwealth Secretariat – Trade Section: www.thecommonwealth.org; • UNCTAD; • ITC; • The World Bank; • European Union. • Global Services Network: www.globalservicesnetwork.com • Government Ministries/agencies, colleagues. • The Internet

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