Promoting Effective Institutional Mechanisms in Trade in Services

Challenges and Lessons for Low Income Developing Countries (LIDC), Least

Developed Countries (LDCs) and Lower Middle Income Countries (LMICs)

Presentation Outline

1. Understanding Institutional Mechanisms in Trade in Services

– What is their role? – Who are the key institutional actors for trade in services?

2. Scenarios in LDCs, LICs, LMICs and highlights from Case Studies of Institutional Mechanisms of TiS • Scenarios

– Challenges to LDCs, LICs, LMIC s in the context of TIS Institutional Mechanisms

• Case Studies– Case Study 1: Brazil’s CAMEX– Case Study 2: The European Union (EU)

3. Lessons to be drawn– Recommendations drawn from case studies– Further recommendations

Rationale

Effective institutional structures and processes enable the governments, in collaboration with all stakeholders, to come up with

holistic trade in services (TIS) policies, which would also inform TIS negotiation positions based on ground realities (economic, and

statistical inputs).

The stakeholders‘ ownership of TIS policies, fostered through their active participation, facilitates implementation of resulting policies.

Some characteristics of effective institutional mechanisms

Direction and decisions including TiS negotiations are related to government’s stated priorities

Coordination amongst government and agencies is an important component for ensuring political will and implementation

Mechanisms exist for ministries to consult each other Government positions are based on adequate and

coherent informationThere is close collaboration with the all stakeholders

involved in services trade

Significance of TIS

In global trade exchanges, services are increasingly providing development opportunities that could be leveraged by the LDCs, LICs and LMICs

However a number of challenges hamper the effective integration of these group of countries in global TiS, and these include the lack of effective institutional mechanisms

Key Institutions and Stakeholders and their roles in policy elaboration

• Government (ministries, departments):– Coordinate consultations/negotiations amongst stakeholders– Formulate policies

• Agencies (sector regulators):– Oversee implementation of sectoral regulations, carry out technical analysis and elaborate

proposals for improving their respective regulatory frameworks

• Private sector:– Through their organizations, advocate for conducive business and investment environment

that enhances trade– Deliver first-hand input for analysis of sectorial characteristics (comparative advantage,

…)– Are the ultimate users of opportunities arising in trade including TiS

• CSOs:- Promoting the society’s interests (consumer welfare, ensuring availability of basic services,

i.e. education, health care,…)- Assisting government and private sector in assessing sectors’ readiness for liberalization

2. Main challenges for LDCs, LICs, LMICs• Institutional mechanisms lack focus on trade in services (as

opposed to trade in goods, which has traditionally been the main focus for these set of countries)

• Structure: Ineffective organization: overlapping responsibilities in government structures Insufficient Inclusivity: Private sector’s and Civil Society Organizations’ (CSOs’)

impact on policy-making is very limited (even if consultation exists)

• Capacity: High personnel turnover leading to:

Lack of knowledge of trade in services (as opposed to goods) Lack evaluation/analysis skills in TiS

Lack of data

Inadequately informed decision making process

(Drawn from study on Uganda, Zambia, Nepal)

2. Challenges Cont’d

Zambia:• Multitude of committees and sub-committees

making it difficult for stakeholders especially the private sector to participatelower attendanceInsufficiently qualified representatives replace

seniors in meetings leading to outcomes not reflective of ground realities

2. Challenges Cont’d

Nepal:

• Although consultative mechanisms exist, some stakeholders such as CSOs expressed frustration that agreed-on policies are not implemented Which could result in loss of trust between such stakeholders and

government

Barbados:• Private Sector finds the performance of civil service bodies

unsatisfactory:– slow pace of regulatory transitions, where such are agreed;– Slow decision-making

2. Challenges Cont’d

Uganda:• Some stakeholders especially CSOs lack

knowledge about TIS (as opposed to trade in goods) therefore limited participation

• Even the players in TiS have limited understanding of opportunities at regional, and multilateral level, hence less involved in policy formulation

Case Study 1: Brazil

• Institutional mechanism in TIS clearly defined into technical and political processes

– Technical process in TIS: supervised by Ministry of External Relations (MER)

– Political process: within Foreign Trade Chamber (CAMEX = the government chamber, mandated to formulate Government’s trade policy)

Technical Process: responsibilities & rolesCase Study 1: Brazil

DNSFocal Point for TIS:• Coordinates• Communicates• Formulates

Trade Commitment

SCS:• policy

evaluation• compilation

of statistical data

• Develop sector-specific policies (technical analysis)

Technical Process: responsibilities & rolesCase Study 1: Brazil

Trade Commitment

Submission of

Political Process

CAMEX‘s Council of Ministers (CoM) establishes consensus on Services Negotiations trade commitments by consulting:

• Subcommittees: topic-specific decision-making bodies, formed by concerned ministry representatives; pass on decisions to council of ministers

• Private Sector Advisory Council: provides private sector advice

CoM passes decision on to the Brazilian government

Case Study 1: Brazil

CAMEX enables the government of Brazil to carry out integrated action and coordination among government agencies and that have responsibilities in the area

of foreign trade, as well as consult with the private sector.

Evaluation of TIS policy-making- Effective structure:

- Establishment of trade-specific divisions: e.g. Division of Services Negotiations (DNS)

- Well functioning coordination between ministries, regulators and divisions

- Cost-effective

- Training of personnel (Foreign Trade Analysts)

Case Study 1: Brazil

Case Study 2: The EU

Civil Society Dialogue (CSD): Including stakeholders in TIS policy-making

CSD holds structured and regular meetings on issues such as:

• Trade policy issues ( both services and goods) in bilateral and multilateral trade agreements

• Sustainability Assessment of implemented policies

Case Study 2: The EU

The key principles:

• Participation: consulting as widely as possible• Oppenness and Accountability: increases credibility• Effectiveness: early consultation enables

stakeholders to exert influence• Coherence: reporting on meetings facilitates

feedback, evaluation and review

Case Study 2: The EU

Evaluation:• Civil Society Dialogue assumes the role of a forum that

enables stakeholders to participate in TIS policy-making process

• Key Principles provide framework for utilization of platform to the benefit of all stakeholders

Strengthens ties between stakeholders, enabling cooperation and participation in external platforms, e.g. WTO Ministerial Conferences

3. Lessons to be drawn

Structure (Brazil):• Using existing structures for analysis of sector-specific

TIS-policies cost reduction prevention of overlapping responsibilities

• Establishing TIS-specific bodies (=DNS) that coordinate stakeholders‘ input and formulate common position

• Participation of private sector provides valuable information about the impact of TIS-policies on the business environment (e.g. establishment of databases)

3. Lessons to be drawn

Structure (Brazil): effective mechanisms• Establishment of a legally mandated body that deals

with political implementation of technical recommendations (= CAMEX) while:

• Consulting with stakeholders• Allowing for the formation of subcommittees, whose

composition is flexibly determined by the sector-specific issues discussed

Channeling of each TIS-issue via its relevant ministries and subcommittees ensure efficient analysis and negotiations

3. Lessons to be drawn

Structure (EU): inclusivity• Establishment of a forum dedicated to inclusivity of

stakeholders• Elaboration of guiding principles to ensure effective

utilization by all stakeholders

Wide-spread ownership of TIS-policy outcome facilitates implementation

• Record-keeping ensures smooth policy-making process, access to information and can mitigate effects of high turn-over rates (Zambia)

3. Lessons to be drawn

Building Capacity (Brazil):

- In Government:- commercial diplomacy training at Brazilian diplomatic

representations in European countries- Establishment of “Foreign Trade Analyst“ as career path

- In private sector:- MDIC organizes workshops for private sector on

importance of service trade, and means through which they could actively participate in policy formulation and implementation

3. Lessons to be drawn

Further recommendations: inclusivity• Widen Inclusivity through grassroot

participation• Raise awareness of importance of TIS and

participation in policy-making processes amongst stakeholders

• Encourage formation of associations (private sector/civil society) to enhance stakeholders‘ effectiveness

3. Lessons to be drawn

Further recommendations: capabilities• Governments, CSOs and the private sector

should consistently provide capacity building on TIS-issues

• Increase capabilities of data collection and statistical analysis

• Explore “Smart partnerships“ between stakeholders and development agencies to mitigate resource constraints