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The International Supply of Services

Explore the background, definition of mode 4, recommendations from MSITS 2010, country experiences, and future expectations for international supply of services.

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The International Supply of Services

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  1. The International Supply of Services andreas.maurer@wto.org joscelyn.magdeleine@wto.org

  2. Int’l. Supply of ServicesOutline • Background.... • What is mode 4? • Recommendations of MSITS 2010 on modes and what can/could be done? • Some country experiences • What can we expect in the (near?) future?

  3. Modes of supply in MSITS • MSITS 2002 introduced modes of supply in statistical context. • While introducing subject in annex, identified further research necessary for mode 4 • Work that led to MSITS 2010, clarified mode 4 in statistical framework • New chapter on modes of supply (chapter 5) : “.... estimating Mode 4 within BOP service account will help the overall estimation of international supply of services by mode.” (value)

  4. Who is covered by Mode 4? • Contractual service suppliers • Self-employed (independent) service suppliers • Employees of foreign service suppliers • Intra-corporate transferees and persons directly recruited by the foreign affiliate • Services sellers / Persons responsible for setting up commercial presence • Value of services provided • Number of natural persons 2 basic information needs for mode 4

  5. Remittances, compensation of employees: not measures of mode 4 Labour mobility Trade in services(incl. mode 4) Value: Compensation of employees Workers remittances BPM6: Personal transfers Services categories SNA, BPM, MSITS Number of persons: Non-migrants International migrants, of which short-term Visitors RSIM Rev.1, IRTS 2008

  6. Int’l. Supply of ServicesOutline • Background..... • What is mode 4? • Recommendations of MSITS 2010 on modes and what can/could be done? • Some country experiences • What can we expect in the (near?) future?

  7. International Supply of Services to United States : a first breakdown by modes Mode 2 10.2% 23.1% Mode 1 + 4 Mode 3 66.7% Source: Author's calculations based on "U.S. International Services: Cross-Border Trade in 2008 and Services Supplied Through Affiliates in 2007" Survey of Current Business, BEA, U.S. Department of Commerce, 2009.

  8. Mode 1 Mode 4 Mode 2 Mode 3 What’s the problem with measuring the value of GATS Modes of Supply? ? ? ? Intermodal linkages Services may be delivered through several modes of supply A single service transaction through different modes

  9. Simplified allocation of FATS and EBOPS data to modes of supply (1/2) * In territory where affiliate established. If not possible to breakdown by EBOPS 2010 product, by activity using ICFA Rev.1 ** Certain degree of uncertainty regarding certain charges

  10. Simplified allocation of FATS and EBOPS data to modes of supply (2/2) CHALLENGE

  11. Mode1 + 4 23.1% International Supply of Services to United States: further breakdown by modes Mode 2 Mode4 0.5% 10.2% Mode1 + 4 Mode1 16.8% 5.8% Mode 3 5.7% Mode3+4 66.7% 0.1% Source: Author's calculations based on "U.S. International Services: Cross-Border Trade in 2008 and Services Supplied Through Affiliates in 2007" Survey of Current Business, BEA, U.S. Department of Commerce, 2009.

  12. Options to assess Mode 4 delivery in surveys Mode 1 Mode 4 1.Did the service delivery involve physical presence of service provider? Yes? Then, how was most of the service value provided (time/resources)? Mostly by fax, email, etc. Natural person at the end (e.g. to supervise) Combine with other sources? Model based estimates? The person’s knowledge was essential to deliver the service 2. Require in services surveys allocation by each GATS mode of supply 3. Require estimated share of services inputs for Mode 4 services trade

  13. Int’l. Supply of ServicesOutline • Background..... • What is mode 4? • Recommendations of MSITS 2010 on modes and what can/could be done? • Some country experiences • What can we expect in the (near?) future?

  14. Indian International Supply of Computer Services, IT Enabled Services and BPO by Mode, 2008-09 28.4 11723 26.8 Source: Reserve Bank of India (2010), converted to US dollars by authors.

  15. Commercial presence $116m, 27% Australian projects $215m, 51% Australia's legal services international income by mode of supply, 2006-07(million USD and percentage) Fly in-fly out $93m, 22% Source: ILSAC Survey of Australian Export Market for Legal Services 2006-07

  16. Int’l. Supply of ServicesOutline • Background..... • What is mode 4? • Recommendations of MSITS 2010 on modes and what can/could be done? • Some country experiences • What can we expect in the (near?) future?

  17. Estimating trade in services by mode? (1/2) • Demand for estimation of services trade by modes of supply exists • For the value of trade: within the framework of BOP services statistics • Simplified allocation in MSITS 2010 as starting point: guide for compilers for first estimation (have knowledge of how services providers and consumers behave in their economy) • Do we need to do more in the (near) future?

  18. Estimating trade in services by mode? (2/2) • Main issue to identify modes of supply in BOP services: estimating mode 4 • Necessary to estimate mode 4 for all BOP services items? Not for all : only those where mode 4 is deemed important • Mode 4 importance varies across countries and items: compilers to identify necessity for specific services items. • Cooperate with service sector professionals and users

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