Services Performance in Developing Countries: Elements of the Assessment

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

2. Elements of this assessment are gained from the UNCTAD Expert Meetings • Construction services • Energy services • Environmental services • Health services • Tourism services • Air transport services Special treatment to the LDCs problems

3. 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?

4. Access to technology Banking and finance Public policy concerns SMEs Licensing Access to information networks Anti-competitive practices Movement of persons Regulatory framework GATS classification Regional integration Common elements in services sectors analyzed

5. 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

6. 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

7. 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 Elements

8. Lack 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 Elements

9. Regulatory 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 Elements

10. Common Elements Importance 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

11. Now the specific sectoral elements

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. …and now the negotiating action

19. NEGOTIATING TRADE IN SERVICES IN THE DOHA WORK PROGRAMME UNCTAD Manuela Tortora Trade Negotiations and Commercial Diplomacy Branch March 2002

20. 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 countries’ negotiating positions at the WTO and in the regional/subregional fora.

21. To what extent the implementation of the GATS contributes to achieving the developmentgoals of the country or the subregional integration scheme To what extent the implementation of the GATS contributes to the country’s export goals in the area of services. What key elements of the assessment should be considered by developing countries when preparing negotiating positions?Both quantitative and qualitative indicators, in particular:

22. The WTO is not the appropriate forum to address the supply constraints of the developing countries, but: • Several development-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 WTO negotiations on services only. • Countries which benefit from liberalisation in developing markets should support development efforts.

23. Two main reasons to prepare the negotiations on services in their proper context of the Doha Work Programme: • Because of the “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 trade rules besides GATS are consistent with and supportive of development and export goals of developing countries.

24. SERVICES IN THE CONTEXT OF THE « SINGAPORE ISSUES »: • The issue of investment 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.

25. SERVICES IN THE CONTEXT OF THE « SINGAPORE ISSUES »: • In many services sectors, the issue of competition 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.

26. 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.

27. SERVICES IN THE CONTEXT OF THE « SINGAPORE ISSUES »: • Developing countries should devote attention to the formulation of their positions on trade facilitation, that may have implications on several key infrastructure services that are at the core of the trade operations.

28. THE NEW WTO WORKING GROUPS ONTRADE, DEBT AND FINANCE, AND TRANSFER OF TECHNOLOGY • Developing countries should bring their experience on trade in services in both working groups. • Issues such as how to finance the development of an export capacity in services could be identified. • Technology gaps and measures in services sectors should be explored.

29. NEGOTIATING MANDATES ON TARIFFS: • In many services sectors, the supply and export capacity of developing countries depends on imported goods, equipment or tools. • Tariffs may be an obstacle to trade in services.

30. NEGOTIATING MANDATES ON TRADE AND ENVIRONMENT: The new negotiations on « environmental goods and services » have 2 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).

31. NEGOTIATING MANDATE ON WTO RULES ON REGIONAL TRADE AGREEMENTS: • For many export interests of the developing countries, the subregional/regional liberalisation of trade in services is as important as the multilateral liberalisation, but the assessment is still limited in this regard. • Article V of GATS will have to be seen in parallel with the negotiations on WTO rules on regional agreements.

32. SPECIAL AND DIFFERENTIAL TREATMENT: • Plays a key role in the Doha Work Programme. • Operationalisation of article IV beyond what is so far being negotiated bilaterally. • Envisage S/D in the sectoral commitments in light of the development and export goals. • Consider issues such as transfer of technology, joint ventures, training of human resources, support to the regulatory frameworks, etc. in the requests/offers. • Envisage provisions for LDCs’ greater participation in trade in services. • Improve coherence in the international economic environment – not only at the WTO.