www. thecommonwealth.org trade in professional services – effective participation by the...
TRANSCRIPT
www. thecommonwealth.org
Trade in Professional Services –
Effective Participation by the
Commonwealth Caribbean
Commonwealth SecretariatMay 2006Barbados.
By. Andrew O. Satney
www. thecommonwealth.org
• The WTO and the General Agreement on Trade in Services (GATS)
• What are Professional Services?• How are Professional Services Traded• The Main Challenges• How to address them.• Professional Services Promotion Projects - the
Trade Section Experience
• Global trend .
Programme Focus: the issues
www. thecommonwealth.org
Trade in Services governed by the WTO (1994)• Defining what are Services?• Professional Services: What are they?• Modes of Supply.• The global trade.• Improving Export Competitiveness
WTO and GATS (Rules)
www. thecommonwealth.org
Defining International Trade in Services
Services are traded internationally when the supplier and customer
are from different countries, regardless of
Location of the transaction
www. thecommonwealth.org
Professional Services TradeModes of Trade in Services:
All “modes” of supply
Mode 1 - Cross-border supplyMode 2 - Consumption abroadMode 3 - Commercial presenceMode 4 - Movement of natural persons
www. thecommonwealth.org
Professional Services Trade
The Four Modes:
Mode 1 – Cross-border Supply – information flows from one
country to another via communication networks.
E.g.. Accounting Services, architectural drawings transmitted via email,
www. thecommonwealth.org
Professional Services Trade
Mode 2: A consumer travels to another
country to purchase a service.
E.g. Health Tourism, Education Services.
www. thecommonwealth.org
Professional Services Trade.
Mode 3: Commercial Presence – a service supplier from one country establishes an office or branch in another country
to provide a service.
E.g.. Subsidiary of an insurance company.
www. thecommonwealth.org
Professional Services Trade.
Mode 4: Movement of Natural Persons -
Where the individual(s) supplying the service
physically go to another country to provide services.
E.g. consultants; doctors.
www. thecommonwealth.org
Global Services Trade
World Trade in Services (millions US$)
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
1993
1995
1997
1999
2001
2003
Exports
Imports
Growth averaged 7% per annum 1993-2004 Growth recently reaccelerated after slow 2000-
2001 Moving away from traditional industries
(transport, travel) and towards ICT, BPO, etc.
www. thecommonwealth.org
Percentage Service Trade by Industry
www. thecommonwealth.org
CARICOM Services Trade Main Trends 1997-2002
• Total Services Exports increased by 14% from US$6.2 billion in 1997 to $7.1 billion in 2002
• Total Services Imports increased by 24% from $3.7 billion in 1997 to $4.6 billion in 2002
• Services trade balance stagnated or declined from 1999
• Deficit on goods trade averaged more than US$ 5 billion over period
• Net deficit on external account in Caricom of US$2.7 billion in 2002
www. thecommonwealth.org
0.0
20.0
40.0
60.0
80.0
100.0
120.0
Ant
igua
&B
arbu
da
St.
Luci
a
Mon
tser
rat
Sub
-tot
al O
EC
S
S. V
ince
nt &
Gre
nadi
nes
The
Bah
amas
Gre
nada
Dom
inic
a
Jam
aica
St.
Kitt
s &
Nev
is
Bel
ize
Hai
ti
Guy
ana
Trin
idad
&T
obag
o
Sur
inam
e
ServicesGoods
CompositionPercent total exports of goods and services
www. thecommonwealth.org
SERVICES AS % GDP: 2000SERVICES AS % GDP: 2000
Source: ECLAC (2002)
AntiguaAntigua 92.9%92.9% JamaicaJamaica71.1%71.1%
St. LuciaSt. Lucia 87.1%87.1% TrinidadTrinidad67.9%67.9%
St. KittsSt. Kitts 84.2%84.2% BelizeBelize62.4%62.4%
BarbadosBarbados 84.1%84.1% HaitiHaiti61.8%61.8%
GrenadaGrenada 83.9%83.9% SurinameSuriname61.5%61.5%
St. VincentSt. Vincent 83.3%83.3% GuyanaGuyana 46.5%46.5%
DominicaDominica 76.4%76.4%
www. thecommonwealth.org
SERVICES AS % EXPORTSSERVICES AS % EXPORTS
Source: IMF and ECCB
AntiguaAntigua 91.4%91.4% JamaicaJamaica56.6%56.6%
Montserr.Montserr. 91.0%91.0% DominicaDominica55.0%55.0%
St. LuciaSt. Lucia 81.9%81.9% BelizeBelize44.8%44.8%
BarbadosBarbados 79.6%79.6% HaitiHaiti37.6%37.6%
The BahamasThe Bahamas 78.6%78.6% GuyanaGuyana21.1%21.1%
GrenadaGrenada 72.1%72.1% SurinameSuriname18.6%18.6%
St. KittsSt. Kitts 68.2%68.2% TrinidadTrinidad12.5%12.5%
St. VincentSt. Vincent 66.9%66.9%
www. thecommonwealth.org
Trends in OECS Services Trade: 1993-2002
-
200
400
600
800
1,000
1,200
1,400
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
US
$ m
ill
Total OECS Services Exports Total OECS Services Imports
Balance of services trade
www. thecommonwealth.org
Composition of Caricom Services Imports 1997-2002
Transportation34%
Government Services
5%
Other Business Services
24%
Personal, cultural, and recreational
services0%
Royalties & Licence fees
2%
Computer and Information
0%
Travel21%Communications
2%
Financial 1%
Construction 3%
Insurance8%
www. thecommonwealth.org
OECS Services & Merchandise Trade Balances
(1,500)
(1,000)
(500)
-
500
1,000
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
US
$ m
ill
Balance of services trade Balance of merchandise trade
www. thecommonwealth.org
Overall Caricom Trade Balance 1997-2002
-7000
-6000
-5000
-4000
-3000
-2000
-1000
0
1000
2000
3000
4000
1997 1998 1999 2000 2001 2002
Services Trade Balance(US$ m)
Merchandise TradeBalance (US$ m)
External Balance
www. thecommonwealth.org
Relative Share of Individual Caricom States in Total Services Exports 1997-2002
Suriname1%
St. Lucia4%
Montserrat0%
Jamaica28% Belize
2%Grenada2%
Guyana2%
Dominica1%
Barbados15%
St. Kitts & Nevis1%
St. Vincent & Grenadines
2%
Trinidad & Tobago
9%
Antigua & Barbuda
6%
Bahamas27%
www. thecommonwealth.org
What are Professional Services?
• Referred to as “knowledge-based” Services.
• There are over 69 identified sub sectors in the GATS;
• Difficult to define because it is not physical line a “good”.
• Involves mainly people and technology.
www. thecommonwealth.org
Professional Services Contd.
Construction-related LegalHealth-related Market researchEducation-related Management
consulting ICT and Software Development.Engineering Printing and
Publishing.
www. thecommonwealth.org
Trade in Professional Services:How can St. Lucia Participate..
• No. 1. THE ENABLING ENVIRONMENT:
The Role of Government in Providing the “Enabling Environment” !!!!!!!!!!
• No. Being Competitive – globally i.e. quality of service, competitive pricing, etc.
www. thecommonwealth.org
Exporting Professional Services: Main Challenges
• Qualifications and \procedures to qualify (MRA and accreditation);
• Nationality and residency requirements;• Restrictive visa and work permit;• Government procurement laws• Slow and inadequate legal processes;• Lack of transparency – e.g. publication of
regulations;• Excessively high fees for obtaining services.
www. thecommonwealth.org
Exporting Challenges (Contd).
• Cultural (business or social)• Language;• Unnecessary bureaucracy;• Attitude – you must be prepared to take risks.• Rapidly changing global trade environment.• Bi-lateral and multilateral trade negotiations.• Myopic approach to the business.• Competitiveness • Financial resources (risks).“
www. thecommonwealth.org
Exporting Challenges (contd.)
• Scale – too small to for pre-qualifications
• Cost of Communication and Travel.
• Your reputation is not known.
• Inadequate knowledge
• Inadequate support facilities.
• Lack of data and information on local supply situation (trade statistics).
www. thecommonwealth.org
Challenges: Contd…
• Economic philosophies have changed, but bureaucracy hasn’t
• Governments take control-oriented approaches• Private sector is considered “guilty until proven
innocent”• Bureaucracies designed to prevent abuse - not to be
efficient• Opportunities for corruption• “Murphy’s Law”
www. thecommonwealth.org
How to address them.
- Creative approach to marketing.
- Your own knowledge of the market, etc.
- Ensuring that the “supply-side” is prepared: – knowledge of preparing and submitting proposals.
- Using local and international support services.
www. thecommonwealth.org
Addressing the Challenges.
- Knowledgeable trade officials.- Adequate representation in the markets;- Collaboration between government
officials and professional service providers.
• Providing support Services - Government. E.g. Austrade – http://www.austrade.gov.au/.
www. thecommonwealth.org
Addressing Challenges (Ctd.)
• Formation of partnerships (Joint Venture).• Provide reliable and updated information.• Taking a global approach to business.• Establish a strong local base.• Developing the “softer skills” of doing business. • Meeting International standards.• An enabling environment (removing
unnecessary impediments).
www. thecommonwealth.org
Projects on Export Promotion by Trade Section
• Cyprus
• Sri Lanka
• Malta
• Malaysia.
www. thecommonwealth.org
The Global Trend.
• Growth in Global trade in Services is estimated at over 7% in 2003 dominated by professional services.
• Valued at over US$2.5 trillion.• Services account for at least 20% of global trade• Why can’t The Commonwealth Caribbean benefit from
this?• The challenges are not insurmountable• Take the Global Approach.
www. thecommonwealth.org
In this day and age of global internet connectivity and inexpensive telecommunication costs, any country with the right mix of talent, infrastructure and conducive business environment can compete in the global marketplace for knowledge workers and IT- enabled services.
OPPORTUNITYIn this day and age of global internet connectivity and inexpensive telecommunication costs, any country with the right mix of talent, infrastructure and conducive business environment can compete in the global marketplace for knowledge workers and IT- enabled services.
In this day and age of global internet connectivity and inexpensive telecommunication costs, any country with the right mix of talent, infrastructure and conducive business environment can compete in the global marketplace for knowledge workers and IT- enabled services.
In this day and age of global internet connectivity and inexpensive telecommunication costs, any country with the right mix of talent, infrastructure and conducive business environment can compete in the global marketplace for knowledge workers and IT- enabled services.
In this day and age of global internet connectivity and inexpensive telecommunication costs, any country with the right mix of talent, infrastructure and conducive business environment can compete in the global marketplace for knowledge workers and IT- enabled services.
In this day and age of global internet connectivity and inexpensive telecommunication costs, any country with the right mix of talent, infrastructure and conducive business environment can compete in the global marketplace for knowledge workers and IT- enabled services.
www. thecommonwealth.org
What is your Vision? Your Horizon?
• Is it Local – your town?
• Is it Your country?
• Is it within the OECS?
• Is CARICOM?
• Is it The Americas?
• Is it Global?
www. thecommonwealth.org
A Tale of Many Cities
- Dubai Internet City
- Dubai Media City
- Dubai Industrial City
- Dubai Sports City
- Dubai Motor City
- Dubai Maritime City
- Dubai Humanitarian City
- Dubai Healthcare City
- Festival City
- The Lost City
- International City
- Academic City
- Knowledge Village
- Global Village
- Dubailand
www. thecommonwealth.org
Palm Islands - Three man-made islands in the shape of palm trees. 500apartments, 2 000 villas, 25 hotels and 200 shops.
125 km of additional coast line created.
www. thecommonwealth.org
Dubai Sports City - 7.5 km² complex of outdoor & indoor stadiums
www. thecommonwealth.org
Hydropolis - Unique submarine hotel of 220 under sea apartments with their panoramic view of marine life.
www. thecommonwealth.org
Dubai Waterfront - Extending to 81 sq km, world’s largest sea front. Larger than Manhattan in New York.
www. thecommonwealth.org
Sources of Information and Support
1. The Commonwealth Secretariat – Trade Section: www.thecommonwealth.org;
2. UNCTAD;3. ITC;4. The World Bank;5. European Union.6. Global Services Network:
www.globalservicesnetwork.com 7. Government Ministries/agencies, colleagues.8. The Internet