Transcript Toolkit for services, development and trade

Diagnosing Services Trade Potential:
Lessons from UNCTAD Services Policy Reviews
October 2, 2015
Mina Mashayekhi
Head, Trade Negotiations and
Commercial Diplomacy Branch
DITC/UNCTAD
UNCTAD
Outline
• Services are enablers of development
• In what areas and activities can developing countries
realistically develop and exploit new trade opportunities?
• What are common challenges faced by developing countries in
promoting trade in services policy-making and negotiations?
• Which diagnostic tools assist developing countries in
identifying and targeting specific constraints to unlock latent
potential?
• What institutional mechanisms are most appropriate for
effective policy-making and negotiations?
• Concluding remarks
2
Services are enablers of development
• Services, including infrastructure services (ISS - transport, energy,
financial services, telecom and ICT) play a key role
– Contribute to output, employment and trade (including growing South-South
trade)
– Fundamental inputs to all economic activities, both goods and services
– Essential to efficient functioning of productive capabilities and a determinant of
competitiveness
– Contribute to lowering trade costs
• Knowledge, technology and innovation services promote
diversification, structural transformation and sustained growth and
development
• Technology and global value chains (GVC) increase tradability of
services and their potential for export diversification and upgrading
• Devising policy, regulatory and institutional frameworks is important
to harness benefits of services, but it remains a critical challenge
3
Services & sustainable
development goals (SDGs)
• The achievement of proposed goals and targets relies on universal
access to basic & essential services
–
–
–
–
Health (Goal 3), Education (Goad 4) and water & sanitation (Goal 6)
Ending poverty (Goal 1), gender equality (Goal 5), cities and human settlements (Goal 11), climate
change (Goal 13)
E.g., lack of access to fin. services represents a major impediment for income opportunities of
individuals (the poor, women and youth) and for firms (SMEs and micro-enterprises)
SDGs of cross-cutting nature presume efficient, environmentally sustainable and equitable
functioning of the services sector (e.g. Sustainable tourism, sustainable consumption and
production)
• Infrastructure services (ISS) are essential for infrastructure development,
industrialization and innovation (Goal 9)
–
–
–
Energy (Goal 7) and transport (Goal 11); the role of ICT in Goal 4 on education;
Access to financial services (Goal 1), hunger and food security (Goal 2);
Knowledge, technology and innovation services essential for Goals 1, 2, 5, 8, 9
• Trade in services is expected to play a major role under goal 17 as a
"means of implementation".
4
In what areas and activities can
developing countries realistically
develop and exploit new trade
opportunities?
5
Servicification, with increase share of
services in GDP
80
•
In developed countries
the increased share of
services is mainly
associated with a
declining industrial share
•
In DCs, it largely
corresponds to a
decrease in the share of
agriculture
•
LAC is the one region
where services contribute
most to output
•
The continued prevalence
of agriculture in Africa and
of industry in Asia renders
the services sector less
prominent
60
40
20
LDCs
Developing
Asia
Developing
America
Developing
Africa
Developing
economies
Transition
economies
-20
Developed
economies
0
1980 Change 1980-2012
Contribution of services to GDP by region, 1980-2012 (%)
Source: UNCTADStat
6
Structural transformation of economies and
services' growing contribution to employment
Services, 39.1
Services, 45.1
Industry, 20.5
Industry, 23
Agriculture, 40.4
Agriculture, 31.8
2000
2013
Contribution of services to global employment, 2000 and 2013 (%)
Source: ILO
7
Services in GVCs
•
There has been a move towards
the outsourcing and off-shoring of
specific tasks within a production
chain
•
Numerous services (both basic
and sophisticated) are among the
tasks that enter into VCs
•
Most services considered to be
producer services are tradable
•
Within VCs activities related to
research and development and
services add higher values to the
product
•
Improved ICT are helping expand
global and regional VCs
8
25 DCs with highest GVC
participation rate, 2010 (per cent)
Services and exports (i)
– The estimated share of services in total exports of goods and
services has been 25% in developed countries and 15% in
developing countries
– These values may not reflect the full importance of the services
sector for international trade as services represent a significant - yet
uncaptured - part of the value added embedded in exports
– Measured in value added terms, services accounted for 45% of the
value of world exports in 2009
– Trade in services has also greatly increased between 2003 and 2013
(from about US$ 2 trillion to about US$ 4.7 trillion)
– Developing countries expanded services exports faster than
developed countries between 2000 and 2013, and their share in world
services exports increased from 23-30%
9
Services and exports (ii)
Category of
commercial services
Developed
economies
Developing
economies
Developing
Africa
Developing
America
Developing
Asia
Transport
18.2
21.2
30.3
18.7
20.8
23.8
Travel
21.7
34.1
43.4
39.8
32.5
44.6
Communications
2.9
2.0
5.2
2.3
1.7
7.6
Construction
1.8
3.0
2.0
0.1
3.5
4.6
Financial and insurance
11.4
5.7
3.9
6.1
5.8
3.2
Computer and
information
6.3
6.0
1.4
3.5
6.7
1.2
Royalties, licence fees
9.5
1.0
0.3
2.1
0.8
0.3
Other business services
27.3
26.5
12.9
26.6
27.6
14.4
Personal, cultural and
recreational
1.1
0.6
0.5
0.8
0.6
0.4
100.0
100.0
100.0
100.0
100.0
100.0
Total
Commercial services exports by region and category, 2013 (%)
Source: UNCTADStat
10
LDCs
FDI in services
– Commercial presence through FDI is the major mode of supply in services
– UNCTAD estimated the value of all sales by affiliates at $36 trillion in 2014 - if
half is assumed to be in services, trade through foreign affiliates could be
estimated to be in the order of $18 trillion, nearly four times greater than global
cross-border services exports
– In 2012, services accounted for 63 per cent of global FDI stock
– FDI to financial services amounted to $452 billion in 2010-2012 (16 fold increase
since 1990-1992), mainly attributed to developing and transition economies
– FDI into transport and communication also increased sharply in this period
Remittances
11
-
Services exports through the temporary movement of natural persons (Mode
4) is substantial for developing countries, based on the growth of migrants
and remittances
-
In 2014, developing countries received $436 billion in remittances
What are common challenges faced by
developing countries in promoting trade
in services policy-making and
negotiations?
12
Typical challenges of developing country
services economies
Systemic challenges
• Poverty-related consumption constraints
• Limited access by vulnerable groups (e.g. limited access to financial
services among the rural population and SMMEs)
• Large segments of the services sector remain in the informal
economy
• Scarcity of skills and qualifications domestically
• Inadequate infrastructure (e.g. energy)
13
Typical challenges of developing country
services economies
Policy, regulatory and institutional challenges
•
•
•
•
•
•
Lack of competition law and authority
Process for legislative enactment is slow and often lags behind market
developments
Delays in regulatory processes
Insufficient policy and institutional frameworks
Weak dialogue and coordination between government agencies and
between government agencies and stakeholders
Lack of resources for government initiatives in support of the services
sector
Trade-related challenges
•
•
14
Dominant role of foreign services suppliers vis-à-vis domestic suppliers
Slow implementation of policy and regulatory reforms as compared to trade
negotiations and obligations (e.g. in the EAC region)
The complex nature of services policy-making
• Involves multi-agency coordination and stakeholder consultations
• Requires a holistic approach to policy formulation
• Covers various categories of services (producer services, essential services,
infrastructure services) and seeks to achieve varying policy objectives
(attainment of SDGs, employment, promotion of exports, investment attraction,
increased competitiveness of the economy, etc.)
• Data is required for evidence-based policy-making
– Limitations in data availability(for all Modes, but in particular M 3 and 4 not
captured)
– Statistics do not reflect full importance of services value added embedded in exports
of goods (45% in 2009)
• Differentiated policy intervention is needed to target
– General economy-wide objectives (e.g. increased competitiveness)
– Services specific objectives (e.g. formalization of services providers)
– Sectoral services objectives (e.g. financial inclusion, high-speed connectivity for the
BPO sector)
15
The multiplicity of trade fora in which services
trade is negotiated
• The Doha Round of the WTO:
–
–
–
The LDC Services Waiver operationalization is still under way
The LDC group submitted a collective request in July 2014
A high-level meeting was held in Feb. 2015 where countries signalled their preferences
–
Some 12 countries have submitted notifications of preferential treatment for LDC services
and services suppliers under the waiver
• Plurilateral negotiations of the Trade in Services Agreement (TISA):
–
Negotiations are under way among 24 members (70% of global services trade)
–
TISA is said to aim for comprehensiveness, subsequent multilateralization, and capturing
existing autonomous and preferential liberalization
• Services become a major feature of 21st century RTAs:
–
–
–
16
These RTAs are oriented for deeper and comprehensive integration, with a strong regulatory
focus that addresses behind-the-border services measures;
2 mega-regional (TPP and TTIP) place a strong emphasis on regulatory coherence,
generating concern that upward harmonisation of standards may adversely impact the
complying capacity of developing countries exporters hence the need for capacity building
and cooperation
In Africa, the Tripartite FTA and continental FTA offer opportunities for bringing coherence to
African regional integration on services.
Which diagnostic tools assist
developing countries in identifying and
targeting specific constraints to unlock
latent potential?
17
UNCTAD's toolkits to enhance regulations &
institutions
(1) Multi-year Expert Meeting on Trade, Services and Development
– Platform for expert deliberation through an exchange of country experiences and
lessons learned to identify best-fit practices on services, trade and development;
– They have identified recommendations and areas for deeper research.
(2) SPRs serve as a toolkit for policymakers and regulators:
– Identify constrains and offer practical recommendations on a best-fit policy mix;
– Ensure policy coherence and build institutional capacities;
– Aim to enhance productive and trade capacity in services, enhance economywide competitiveness and meet development objectives;
(3) Country survey, case studies & dedicated research
– E.g., Further to MYEM recommendations in 2009, UNCTAD conducted surveys
of infrastructure regulators and competition authorities (part I on infrastructure
regulation and institutions, and part II on trade of ISS), which useful insights
18
Services Policy Reviews (SPRs)
What is a SPR?
A systematic review of policy, regulatory and institutional frameworks
characterizing the domestic services sector to provide an overview of
a country's services economy and in-depth analysis of selected sectors
SPR Activities
Launch of the review process
Desk-based assessment
1st multi-stakeholder consultation
Field research and follow-up investigations
2nd multi-stakeholder consultation for validation
Dissemination
Implementation & follow-up
19
SPRs - objectives
1. Strengthen policy, regulatory and institutional frameworks to harness
benefits from the services sector
2. Strengthen coherence and interlinkages among sectors in the national
economy
3. Manage a successful services reform process, including through multistakeholder engagement
4. Recognise the special role of infrastructure services (ISS) and knowledgebased services for structural transformation
5. Improve negotiating capacities and evidence-based approaches for services
trade
6. Monitor results achieved through reforms and adjust related policies over
time
20
SPRs - country coverage
AFRICA
ASIA
LATIN AMERICA
Angola
Bangladesh
Jamaica
Lesotho
Kyrgyzstan
Nicaragua
Rwanda
Nepal
Paraguay
Uganda I and II
21
Peru
SPRs - sectoral focus
1. Kyrgyz Republic
(2010)
Tourism and energy services
2. Uganda I (2010)
Insurance, legal, accounting, construction, engineering serv.
3. Nepal (2010)
Tourism and ICT services (software)
4. Lesotho (2011)
Financial, professional (health) and tourism services
5. Rwanda
(2011/2013)
Tourism, ICT and IT-enabled services
6. Peru (2013)
Engineering (focus on consultancies), logistic, accounting and
computer services
7. Uganda II (2013)
Distribution, ICT services and computer and related services
(CRS) and services auxiliary to all modes of transport
8. Nicaragua (2013)
Tourism, Finance, Telecom and road transport services
9. Paraguay (2014)
Financial, Telecom, Education, Construction and related
professional (architectural and engineering) services
10. Bangladesh (2014)
Tourism, Telecom and ICT, Construction, professional services
22
Services Policy Reviews
• SPRs are an opportunity to review and improve services data:
– The methodology relies in the use of various national and international sources
– It seeks to identify early on the need for surveys, visits and interviews
– The recommendations provide general but also sector-specific recommendations
relating to data improvements
• SPRs are published for wider dissemination, to enrich the
knowledge base and stimulate further participatory policymaking
processes regarding services
• Study tours aim to allow the beneficiaries to learn from other
countries' experience and promote institutional cooperation between
counterpart organizations
• Regional workshops bring together officials and experts of a region,
to reflect on opportunities and challenges relating to services and
services trade
23
Uganda SPR I and II
• Uganda is a landlocked LDC with a
predominantly rural population which had made
considerable progress in diversifying its economy
in the past decade;
• Services represent the biggest contribution to
GDP;
• The SPR I focuses on insurance services,
professional services (legal, accounting) and
construction & engineering services;
• The SPR II focuses on distribution services, ICTrelated services and services auxiliary to all
modes of transport.
24
SWOT analysis
Strengths
•
•
Significant reforms, incl. privatization,
investment facilitation and trade
liberalization undertaken in the last decade
Trade-led growth
Weaknesses
•
•
•
•
Opportunities
•
•
25
Participation in several regional trade blocs
(EAC, COMESA) make Uganda an attractive
destination for investment
Scope for increase in local consumption of
various sectors
Insufficient infrastructure (incl. services) to
support economic growth
Sizeable shortfall on the services account,
notwithstanding recent growth in services
exports
Size of players often remains small
Delays in the legislative/regulatory
processes
Threats
•
•
Need to strengthen the capacities of
professionals to ensure international
competitiveness
Legislative developments and reforms are
not in parallel with EAC common market
liberalization
Stakeholders' concerns
•
•
•
•
•
26
Compliance with EAC Common Market Liberalization requirements is lacking
in some sectors (e.g. the Accountants Act, as well as the Fifth Schedule of the
Advocates (Enrolment and Certification) Regulations read together with the
Advocates Act were not in full compliance with the EAC Common Market
liberalization requirements);
The country needs to develop regulatory and institutional capacity to deal with
regional developments (e.g. Uganda Insurance Commission seeks to scale up
the Insurance Institute of Uganda/enhance the level of professionalism in the
insurance industry to match better performers in Kenya and Tanzania);
Lack of qualified professionals with specialized skills (e.g. insurance sector
has shortage of specialist doctors to assess some incapacities with accuracy);
Low uptake of technology is also of concern for several sectors (e.g. the
inadmissibility of electronic evidence in Ugandan courts and accounts for the
backlog of cases the legal sector presently suffers, access to poor technology
by logistics service providers leads to delays in customs clearance at the
border points);
Limited access to credit limits the possibilities of small service suppliers.
General recommendations
• Promote coordination between various government entities to and
address overlapping mandates;
• Expedite key legislative laws and amendments to address gaps
and inefficiencies in the services sector;
• Ensure regulatory compliance with licensing requirements and
universal access obligations;
• Evaluate pertinence and feasibility of local content provisions;
• In certain sectors, there is a case for the establishment of a
dedicated statutory autonomous institution (e.g. proposal for a
Uganda maritime logistics authority);
• Seize opportunities of East African Community region-wide
initiatives for trade facilitation;
• Provide the necessary hard and soft infrastructure in support of
the services sector.
27
Some sectoral recommendations
Accounting:
•Conclude MRA with EAC Partner States in 5-yr implementation period for
progressive liberalization;
Legal:
•Reform the Law Council with a view to developing its independence,
autonomy and self-accounting;
Insurance:
•Charge a mandatory insurance training levy as part of all premiums;
•Establish a special training fund by the Uganda Insurers Association;
Construction:
•Consider setting up a State construction company;
•Adopt a mandatory sub-contracting policy to enable the local construction
firms to participate more in the construction market.
28
Implementation and follow-up
• A Services Task Force was constituted to embark on policy
interventions with a clear road map;
• Draft National Services Trade Policy and Draft Services Master Plan
for its implementation are in the formal process of adopting them;
• The Government of Uganda is moving forward with trade related
infrastructure reforms;
• Identify trade policy options and build capacity of services trade
negotiators;
• Mainstream trade in services in sectoral plans and strategies;
• Institutional and regulatory support to relevant public agencies;
• Build capacity towards private sector competitiveness;
• Data collection in the services sector;
• Uganda commits to implement the key recommendations as per the
national SPR.
29
What institutional mechanisms are
most appropriate for effective policymaking and negotiations?
30
Lessons learned on policy coherence
and coordination
– Refers to horizontal and vertical coordination, not only between sectoral
policies but also with trade, investment, competition, industrial, social
and other policies
– The overall services strategy should factor in several attributes of each
category: value added, sophistication of skills, knowledge and
technology intensiveness, and investment
– A national agenda formulated in a single policy document may optimise
impact
– Coordination and cooperation between regulators and the competition
authority is essential
– Example: In Uganda, the later issues non-binding preliminary opinions
for consideration and action by sectoral regulators
31
Lessons learned on effective
institutions and governance
– Includes national, regional and international levels of multi-stakeholder
coordination, strategy definition, and resource allocation
– An inter-institutional coordination mechanism benefits from
endorsement at a high political level, a formalised legal mandate,
resources and capabilities
– Independent regulators are essential in ensuring neutral, effective and
procompetitive regulation
– Cooperation between regulatory bodies is important
– Cooperation at regional and international level is also important given
the importance of standard recognition and harmonization
– Example of the Regional Technical Commission on Telecommunications
in Central America that coordinates telecom development and
regulatory harmonisation
32
Lessons learned on evidence-based
policymaking
– Improved collection, treatment and analysis of services data
is required
– In the interim compilation of services data (aggregated for
sectors of specific interest) can take place through surveys to
the private sector - such surveys would be mandatory (but not
used for fiscal control purposes) and lack of response would
be subject to penalties
– Ex. of Brazil's Integrated System of Foreign Trade in Services
and Intangibles (SISCOSERV)
• Ensures adequate classification of services activities according to the UN CPC and
data collection on the 4 modes of trade in services
• Fed by mandatory reporting from economic agents for all services transactions
between residents and non-residents
• Facilitated by a strong institutional setting derived from a Presidential decree and
the country's experience in e-government and e-platforms
33
Lessons learned on an enabling productive,
technology and business environment
– The development of productive clusters can promote intensive cooperation and
coordination among firms and create economies of scale to reduce operational
costs and enhance competitiveness - it may facilitate better integration of
higher value added segments of regional and global value chains
– Enhancing a national innovation system is also important to integrate firms in
higher value added segments and to promote structural transformation
– Example of Peru: UNCTAD SPR recommended establishing a technological
innovation centre for software, for the development of computer-related
services
– Formalizing the economy can create an enabling environment, as informality
affects many SMEs and their capacity to establish linkages with the economy
– In Nicaragua, the simplification of administrative procedures to grant licences
and authorizations facilitates the entry of new operators. This simplification
may include the creation of a single licence for telecommunication services
providers
34
Lessons learned on labour skills development
– A qualified workforce promotes knowledge and technology intensive
services
– This requires a sound education strategy, both at technical and higher
levels, that matches labour demand and provided skills
– Strong links and interaction between private sector, academia and
policymaking bodies facilitates the identification of skills gaps and
academic solutions
– Agreements with foreign universities could facilitate academic exchanges
and international accreditations
– Example of Lesotho: UNCTAD SPR recommended that Gvt implement a
retention strategy to curb professionals’ exodus and form partnerships
with countries which can provide health professionals while Lesotho
continues to improve training institutions
35
Towards the services master plan
• SPRs are expected to catalyse and institutionalise an endogenous
process of services policy formulation, implementation and review:
– Where an action plan is developed, it provides clear steps and timelines for a
reform process that is expected to lead to a services master plan;
– The sponsoring ministry can ensure regular monitoring of the implementation
and impact assessment of implemented measures. The related conclusions can
be presented to stakeholders providing the basis for the master plan revision.
Services master
plan: from
implementation to
development
Source: UNCTAD
36
Concluding remarks
• Services trade continues to play a major role in development and
should be firmly anchored in the post-2015 development agenda as
a major enabler of inclusive and sustainable development
• Pursuing SDG-related objectives through the development of
domestic services sectors and services trade will require policy
coherence and coordination; sound institutions and good
governance; and evidence-based policymaking
• There is need for best-fit policies tailored to each countries specific
circumstances
• The process of services policy formulation, implementation and
review requires the attention of both Government, the involvement
of all relevant stakeholders and the support of their development
partners
37
Thank you for your
attention
[email protected]
UNCTAD