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Manual on Statistics of International Trade in Services

Manual on Statistics of International Trade in Services. Workshop on International Trade in Services Beirut April 18-20, 2011. Structure of Lecture. Background GATS; modes of supply F oreign A ffilia t es S tatistics (FATS)

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Manual on Statistics of International Trade in Services

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  1. Manual on Statistics of International Trade in Services Workshop on International Trade in Services Beirut April 18-20, 2011

  2. Structure of Lecture • Background • GATS; modes of supply • Foreign Affiliates Statistics (FATS) • Statistics onActivities of Multinational Enterprises (AMNE)

  3. Background • The 2010 Manual on Statistics of International Trade in Services (2010 MSITS) serves… • primarily as a guide for compilers to support implementation of statistical concepts • governments in providing a better overview for economic analysis, policy-making, and guidance in international negotiations on trade in services • businesses and others to monitor developments in international services markets, to identify potential trade opportunities

  4. Background • The term “international trade in services” in the Manual covers… • trade in services between residents and nonresidents • services delivered through locally established, but foreign-controlled enterprises • cases where individuals are temporarily present abroad to supply a service • The Manual extends the concept of trade in services, however it conforms entirely to existing international standards

  5. Background • The Manual’smajor components: • BPM6 concepts and classifications related to international trade in services • BPM6 extensions by product category and partner country • Foreign Affiliates Statistics (FATS) that complement BPM6, and are beyond the scope of BPM6, as broadly defined in General Agreement on Trade in Services (GATS) • Statistical approach for the treatment of the GATS’modes of supply, especially mode 4, i.e. services supplied through the presence of natural persons

  6. Negotiations under the DohaDevelopment Agenda (DDA); GATS (1) • Under the framework General Agreement on Trade in Services (GATS), WTO members are committed to entering into successive rounds of trade liberalizing negotiations • Governments require statistics to support the negotiation of specific commitments in trade in services, and to monitor developments in the area concerned

  7. GATS (2) • In March 2001 the Guidelines and Procedures for the Negotiations on Trade in Services were adopted by the Council for Trade in Services • first set of legally enforceable multilateral obligations and commitments governing the use by WTO members: • laws; regulations; administrative actions in respect of the purchase/payment/use of a service; presence of foreign service suppliers

  8. GATS (3) • Three main objectives: • to progressively liberalize trade in services through rounds of negotiations • by that to encourage economic growth and development • to increase participation of developing countries in world trade in services

  9. Modes of Supply (1) • GATS defines the modalities through which services may be supplied, depending of the location of the supplier and the consumer: • Mode 1 – cross border supply Supplier of one country supplies services to consumers in another country without either supplier or consumer moving into the resident country of the other • e.g. services supply enabled by Internet or telephone; • law firm delivering legal advice by phone to a consumer; a physician providing medical diagnosis to a patient via email.

  10. Modes of Supply (2) • Mode 2 – consumption abroad Consumers are outside their home territory to consume services • e.g. travel • Mode 3 – commercial presence Service suppliers establish or acquire an affiliate, branch or representative office in another territory to provide their services FATS • e.g. foreign bank invests in host economy to create a subsidiary in order to supply banking services

  11. Modes of Supply (3) • Mode 4 – presence of natural persons (i.e. an individual) Individual moves temporarily to resident country of consumer to provide the service on behalf of himself or the enterprise (self-employed person or his/her employee) • e.g. independent architect overseeing a construction project; a self-employed computer consultant; or a computer specialist transferred temporarily to a branch of his employer; fruit-picker on a host country farm on the basis of a services contract Balance of payments transactions are primarily mode 1, mode 2, and [part of] mode 4

  12. Modes of Supply (4) Example: • Supply of tourism and travel-related services: • Mode 2 – consumption abroad Consumers are outside their home territory to consume services • Mode 3 might be involved, e.g. the establishment of a branch of a hotel chain • With the presence of a hotel manager, Mode 4, intra-company movement; or a foreign tourist guide present in the host economy • Sale of services by international tourism operator through computer reservation system, Mode 1

  13. Modes of Supply (5) Example: A computer services supplier and a consumer are established in 2 different territories • The supplier has a commercial presence in a third territory, Mode 3 • The affiliate may act as intermediary between client and supplier • However, most of the supply may be taking place through Mode 4, i.e. the parent company sends specialist to client • Part of the services are also provided online, Mode 1 • The affiliate may also be involved in the supply, online, Mode 1, or itself sending an employee, Mode 4

  14. MSITS: Allocation of BOP/EBOPS to Modes of Supply • Transport(except supporting and auxiliary services to carriers in foreign ports), • Telecommunications services • Information services • Insurance and pension services • Financial services • Fees for franchises (part of charges for intellectual property n.i.e.) Mode 1 • BPM6/EBOPS largely corresponding to Mode 1:

  15. MSITS: Allocation of BOP/EBOPS to Modes of Supply • Travel (excluding purchases of goods) • Supporting and auxiliary services to carriers in foreign ports • Maintenance and repair services n.i.e. • Manufacturing services on physical inputs owned by others Mode 2 • BPM6/EBOPS largely corresponding to Mode 2:

  16. MSITS: Allocation of BOP/EBOPS to Modes of Supply • BPM6/EBOPS services transactions, where no single Mode is dominant • Information technology consultant may provide computer services through traveling to non-resident client (Mode 4), or from his office through telecommunications (Mode 1); or combination of two • For construction, companies may want to establish short-term commercial presence (Mode 3), and/or post own workers in the host economy (Mode 4)

  17. Extended Balance of Payments Services Classification (2010 EBOPS) • The EBOPS is consistent with the BPM6 standard components • Gives further detail on resident-nonresident transactions in services than covered in the BPM6 • Developed specifically for MSITS

  18. Foreign Affiliates Statistics (FATS) (1) • Mode 3, commercial presence: services delivered through locally established but foreign controlled enterprises • definition of foreign affiliate • an enterprise resident in the compiling economy over which a unit not resident in the economy has control • similar to direct investment enterprise but only concerned with enterprises in which the direct investor has majority interest. (i.e. more than 50% ownership)

  19. FATS(2) • Establishment of affiliate usually only method that permits close and continuing contact between provider and customer • Sales – measure of service transaction; therefore, most important variable • other important variables – employment; value added; exports and imports of goods and services; and number of enterprises • generally required as an adequate assessment • of economic effects of affiliate operations • and measures to liberalize the delivery of services through Mode 3

  20. FATS (3) • Outside the scope of balance of payments statistics • Data compiled for: • inward FATS —foreign-owned affiliates in the compiling economy • outward FATS —foreign owned affiliates of the compiling economy

  21. FATS (4) • Why FATS? • to capture aspects of international trade in services that are out of scope of BPM6 • to understand the phenomenon of growing integration and globalization • to monitor commitments under the GATS

  22. Statistics on Activities of Multinational Enterprises (AMNE) • not a grouping in MSITS but closely related to FATS • provides information on foreign controlled enterprises • data relate to overall holdings and activities of direct investment enterprises • wider dataset compiled separately from BOP and IIP statistics • complements data on international transactions • data cover all activities (services as well as mining, manufacturing, etc.)

  23. What does MSITS Recommend? • Disaggregate according to EBOPS (start with items of major importance to country) • Collect FDI statistics • FATS basic variables • EBOPS, FDI, and FATS by partner country and by industry aggregates • EBOPS memorandum items • FATS further details • Allocation to GATS modes of supply

  24. Current Work • Update of MSITS in line with the 2008 SNA and BPM6 • revisions to EBOPS and to FATS recommendations • MSITS 2010 Approved by UNSC in February 2010 • EBOPS 2010 fully consistent with BPM6 • Develop recommendations for mode 4 • Develop compilation guidance (FATS, travel services, remittances) • Already developed for remittances

  25. Where to Find the Manual? http://unstats.un.org/unsd/tradeserv/TFSITS/msits2010.htm

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