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Services Trade and Regulation Supporting International Cooperation and Domestic Reform. Bernard Hoekman International Trade Department World Bank WTO, April 11, 2011. Indisputable facts….
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Services Trade and RegulationSupporting International Cooperation and Domestic Reform Bernard Hoekman International Trade Department World Bank WTO, April 11, 2011
Indisputable facts… • The cost and quality of services inputs is a major determinant of how much countries can benefit from globalization • Firms need efficient and reliable services to compete in the world economy • Opening markets to trade and investment flows is an important channel for giving domestic firms access to better services, diversifying its export basket of goods and services • Effectively integrating services markets is complex because it involves regulatory reform and cooperation
Serious policy challenges….. • Developing countries face significant difficulties in designing reforms, in part because of concerns about the realization of regulatory objectives • Multiple players with different objectives within governments/countries • Provision of services involves a network or cluster of activities: e.g. logistics services or tourism. • Absence of information on extant regulations, their purpose and impact • Limited knowledge of alternative regulatory options
World Bank support for regulatory reforms • Information: data on applied policies across many countries • Analytical work: impacts of applied policies within countries • Incl. regulatory assessments • Instruments: • Research • Policy dialogue • Knowledge Platforms • Projects
Services Trade Restrictiveness Indicators • 102 countries: 78 developing countries surveyed, comparable data for 24 OECD countries • Five broad services sectors: Financial, Telecom, Retail, Transportation, Professional Services. • Within sectors, different modes of supply where applicable • Multiple policy dimensions but focus on discriminatorypolicy measures • more than 3,000 country-subsector-mode combinations • Index of restrictiveness of applied policies (STRI)
Trade and Transport Facilitation Assessment • Logistics costs are determined by the regulatory environment for logistics operators, not just quantity and quality of infrastructure • Within countries, logistics in lagging/remote/ island regions may be key trade barrier due to high costs of shipping small volumes • Logistics councils or other public-private trade facilitation bodies important to identify/implement better logistics services • Consultation/coordination processes needed for rapid adoption of new requirements to participate in global supply chains
Professional Services in East Africa: Regulatory Cooperation for Regional Integration • Collection of new information on market conditions, policies and regulatory regimes in accountancy, engineering, and legal services • Key findings: • National markets for these services in East Africa remain underdeveloped • Regional market fragmented by restrictive policies and regulatory heterogeneity • Policy recommendations: • Four priority areas – domestic regulatory practices, trade barriers, international labor mobility, and education • Require both national reform and international cooperation • Regulatory reforms needed for effective regional competition Source: Dihel, Fernandes, and Mattoo (2011)
Accountancy services in East AfricaAnalytical basis for policy advice • A comparison of domestic entry regulations for accountants by World Bank researchers reveals important differences across countries Source: Dihel, Fernandes and Mattoo (2011)
Working towards a MRA in accountancy between Kenya, Rwanda, and Tanzania • Ambitious step in regional liberalization and regulatory cooperation in context of EAC Common Market Protocol: annex on mutual recognition agreements • 2010: Accountancy professional bodies of Kenya (ICPAK), Rwanda (ICPAR), and Tanzania (NBAA) signed an MRA for academic and professional qualifications • Establishes the East African Community Institutes of Accountants (EACIA) • Empowered to issue CPA designation to qualified candidates • Exempts CPAs from re-examination of professional competence • Mutual recognition of practical experience waiver if domestic experience in 3 out of previous 5 years • Reciprocal eligibility for membership of EAC bodies subject to CPA certificate, 3 years professional experience, and no misconduct • Promote member education development and institutional strength • Workshops in Nairobi in September 2010 brought together professional associations, regulators, trade negotiators, and business representatives and created a platform for dialogue to move the accountancy MRA forward • Uganda (not an initial signatory) also participated in the workshop
Services Knowledge Platforms (SKP) • Objectives • Assess/analyze impacts of current policy regimes • Exchange information and learn from a variety of national experiences with regulation/reform • Identify beneficial reforms and needed investments • Link to aid for trade initiative for support for implementation • Connect stakeholders to different sources of expertise – local, regional, global • Build on existing platforms—APEC, OECD, etc. –and existing networks of regulators • Facilitate South-South knowledge exchange • Anchored in regional communities • Demand-driven and action oriented • Interest is a SKP has been expressed by PAFTA, CEFTA, ECOWAS, Tripartite (East and Southern Africa)
An input into (future) cooperation • Progress on services in WTO impeded in part by regulatory concerns and uncertainty • Locking-in current policies in GATS or negotiating pre-commitments to liberalize in future require that governments see this as beneficial • Concrete action to address regulatory agenda a precondition for making commitments • Same is true for data lacunae – need to improve statistics • All these factors/requirements indirectly supported by types of activities discussed
Further reading/references B. Hoekman and A. Mattoo, “Services Trade Liberalization and Regulatory Reform: Re-invigorating International Cooperation,” http://www.voxeu.org/index.php?q=node/5969 Thank you