NEGOTIATIONS ON NEGOTIATIONS ON SERVICESSERVICES

Commercial Diplomacy Commercial Diplomacy Programme Programme

& & TrainForTradeTrainForTrade

General Features: General Features: Trade in ServicesTrade in Services

Importance of Services in the Global Importance of Services in the Global EconomyEconomy : :

Technological advances have served to Technological advances have served to change the provision of services as well as the change the provision of services as well as the perception of the services sector as a whole perception of the services sector as a whole

Growing importance of services for economic Growing importance of services for economic growth:growth:

Chart 1: Services as percentage of GDP. Chart 1: Services as percentage of GDP.

Economic Importance of Economic Importance of ServicesServices

Mayor contributor to GDP and employment in all Mayor contributor to GDP and employment in all developing countries, approximating indicators of developing countries, approximating indicators of developed countriesdeveloped countries

50-70 per cent of GDP 50-70 per cent of GDP 60-80 per cent of employment60-80 per cent of employment Importance of assessing the structure and dynamic of Importance of assessing the structure and dynamic of

services in developing countries:services in developing countries: - growth of traditional activities (retail, restaurants, repair - growth of traditional activities (retail, restaurants, repair

shops, tourism, personal services)shops, tourism, personal services) - growth of the “informal economy”- growth of the “informal economy” - weight of government tends to overestimate economic - weight of government tends to overestimate economic

significance. (Brazil 16% GDP)significance. (Brazil 16% GDP)

Services as percentage of GDP.Services as percentage of GDP.

services as percentage of GDP in 2000

67.6 70.2 71 6833.2

64.3 68 70.9 80

32.4 29.8 29 3266.8

35.7 32 29 20

020406080

100120

% o

f GD

P

services industry and agriculture

Growing importance of Growing importance of services for employmentservices for employment

Key services industriesKey services industries

The provision of services such as insurance, The provision of services such as insurance, information technology, accountancy and research information technology, accountancy and research has an impact on economic competitiveness has an impact on economic competitiveness through interaction with industrial activities and through interaction with industrial activities and other services.other services.

Increasing Importance of International Trade in Increasing Importance of International Trade in ServicesServices

Growing importance of Growing importance of services for employmentservices for employment

employment in services. 2000 estimates

64 74 74 5627

53 68 71 75

36 26 26 4473

47 32 29 25

020406080

100120

% o

f tot

al e

mpl

oym

ent

services industry and agriculture

Increasing Importance of Increasing Importance of International Trade in ServicesInternational Trade in Services

growth in international trade in services by region. 1990-2001

6% 6%

5% 5%

8%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

NorthAmerica

LatinAmerica

WesternEurope

Africa Asia

Increasing Contribution of Increasing Contribution of Services to World Trade Services to World Trade

services as a proportion of world trade in 1980

39

1625

3641

27

42

16

59

25

37

4

010203040506070

services manufactures industry agriculture

% o

f G

DP

low income middle income high income

Leading Services Traders: Leading Services Traders: A Comparison of Developed, A Comparison of Developed,

Developing & Transitional Developing & Transitional Economies Economies

leading service traders in 2001

72.10%

24.10%3.70%

market economy countries developing countries

Eastern Europe countries

Leading Service Exporters. A Leading Service Exporters. A comparison of various countries comparison of various countries

leading service exporters in 2001. in percentage of world export of services

18.1

7.45.5 5.5 4.4 3.9 2.9 2.3 2 1.8

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101214161820

USAUK

Franc

e

Germ

any

Japa

nIta

ly

Hong

Kong

China

China

Korea

Singa

pur

Leading Service Importers Leading Service Importers

leading service importers in 2001. in percentage of world imports of services

13

9.27.4

6.34.3 3.9

2.7 2.3 1.7 1.6

02468

101214

Structure of Service Exports Structure of Service Exports

Shift towards Telecommunications, Shift towards Telecommunications, Computing Services and Information Computing Services and Information

structure of service exports in 1980

3530 33

2

2936

30

5

34

24

39

30

10

20

30

40

50

transport travel communication,computer

information etc.

insurance andfinancialservices

% o

f to

tal

low income middle income high income

Structure of Service ExportsStructure of Service Exports

structure of service exports in 2000

18.8

32.6

46

2.6

23.8

44.5

29.8

2

23.229.7

41.6

5.5

0

10

20

30

40

50

transport travel communication,computer

information etc.

insurance andfinancialservices

% o

f tot

al

low income middle income high income

Role of Services in Trade and Role of Services in Trade and DevelopmentDevelopment

Basic economic infrastructure required for systemic Basic economic infrastructure required for systemic competitiveness, and overall welfare. [education, health, competitiveness, and overall welfare. [education, health, energy, sanitation, transport, telecom, financial services]energy, sanitation, transport, telecom, financial services]

““Producer services” content in goods, and in other services Producer services” content in goods, and in other services increasingly generate a higher proportion of value added: increasingly generate a higher proportion of value added: externalisation of supply as a source of sectoral dynamism externalisation of supply as a source of sectoral dynamism and specialization, services efficiency a source of and specialization, services efficiency a source of competitivenesscompetitiveness

Logistic chains as a source of overall trade Logistic chains as a source of overall trade competitiveness: [ports, airports, transport services, competitiveness: [ports, airports, transport services, telecom, information services, distribution networks] telecom, information services, distribution networks]

Trade of integrated packages of goods and services (high Trade of integrated packages of goods and services (high technology products) every day more important.technology products) every day more important.

Services are increasingly tradable in themselves: Services are increasingly tradable in themselves:

Key Analytical QuestionsKey Analytical Questions

Are services performing adequatelyAre services performing adequately their role in trade and their role in trade and development?development?

- - national assessment of services and trade in servicesnational assessment of services and trade in services What strategies and policies should be implemented to enhance What strategies and policies should be implemented to enhance

services contribution to trade and development?services contribution to trade and development? - definition of national and sectoral development policies- definition of national and sectoral development policies What role could international agreements, multilateral, regional What role could international agreements, multilateral, regional

and bilateral, play in supporting national developmental policies and bilateral, play in supporting national developmental policies in the services sector?in the services sector?

- definition of negotiating strategies and positions on the basis - definition of negotiating strategies and positions on the basis of national developmental policies safeguarding required policy of national developmental policies safeguarding required policy spaces.spaces.

National Assessment of ServicesNational Assessment of Services

Statistical requirements: National Accounts Statistical requirements: National Accounts and Balance of Payments.and Balance of Payments.

Sectoral Analysis of domestic supply, Sectoral Analysis of domestic supply, market dynamism, trade, competitiveness, market dynamism, trade, competitiveness, and regulatory frameworkand regulatory framework

Participation of stakeholders in assessmentParticipation of stakeholders in assessment

National Developmental PoliciesNational Developmental Policies

Policy options are within a continuum ranging Policy options are within a continuum ranging from protection, through “infant industry from protection, through “infant industry promotion” (active public policies) to full promotion” (active public policies) to full liberalization (market reliance).liberalization (market reliance).

There is no “one size fits all” policy. It has to be There is no “one size fits all” policy. It has to be defined by sector in the light of developmental, defined by sector in the light of developmental, social and cultural objectivessocial and cultural objectives

National policies and objectives are expressed National policies and objectives are expressed through the regulatory framework and by through the regulatory framework and by established limitations to market access and established limitations to market access and national treatmentnational treatment