Transcript Domestic Regulation

“Harnessing Services for Sustainable
Development:
Opportunities and Challenges for Jordan”
21-22 September 2010
Amman
------------------------
Offah Obale,
[email protected]
Outline
Introduction
Services in the global economy
Nature of Services: Scope & coverage
What is a service, some differences from goods, role and kinds of
services,
trends in the global services trade
Services in Developing Countries – Areas of interest
Features, key areas for development (UA, case of water)
Services trade and developing countries (outsourcing, tourism)
Role of Regulation
Services liberalization and development
Pros and Cons, South-South Potential
Way Forward: Considerations for future planning
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Background: kinds of services?
-key role in infrastructure,
competitiveness, trade
facilitation, employment,
GDP
Services
TradeAble
Business,
tourism,
construct
ion
Interme
diate
Infrastr
ucture
Comm,
transport
, financial
Water,
health,ed
ucation
-key role in poverty
reduction (MDGs)
-Regulation important tool
for harnessing benefits and
development
3
Modes of Supply
Mode 1: Only Service Moves
Mode 2: Consumer goes to where service is
4
Modes of Supply
Mode 3: service provider sets up commercial presence
Mode 4: Service provider Moves
5
Why is it important for Governments
to know about services?
 Importance of a conceptual understanding for
governments:
 national level
– data and statistical collection
– national policy making to determine areas of strategic
importance, and areas of potential trade interest
– foreign exchange – balance of payments
 regional and multilateral level
– classification purposes for trade negotiations
– understand implications of modal and sectoral commitments
6
Services Trade: Its Growing
Importance
 World service exports in 2007
- 3.3 trillion USD, 18.1 % growth
- 70 % of GDP in developed countries
 Developing countries’ share in world
services export stands at 25.4 %
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Services Trade: Its Growing
Importance
 However DC trade in services heavily concentrated on few countries
and regions
-Top five exporters 50% all DC services exports (China, India, ChinaHong Kong SAR, Singapore, Republic of Korea)
- Services exports per region:
Asia 75 % per cent of DC exports
Latin America 13 % of DC exports
Africa 10 % of DC exports
Concentrated on sectors
-Travel and transport: 2/3 of DC services exports
-Business, information and communication, financial and insurance
services: 1/3 of DC services exports
Tourism
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Services Trade: Its Growing
Importance
 South – South services trade is continuously
growing
 45 % of DC services exports directed to other DCs
- 11 % of world services trade
- Strong bias towards intra-regional exports
 Share of South – South services trade per region
- Africa 57 %
- Latin America 71 %
- Asia 94 %
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Services & Poverty Reduction
 Services ….
•…cover a broad range of activities;
 …have a key role to play in:
•building infrastructure & competitiveness;
•facilitating trade;
•reducing poverty (basic services) &
promoting gender equality;
offering employment;
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Services & Poverty Reduction
 Services are key for achieving the MDGs:
•Achieving universal primary education (MDG 2)
•Reducing child mortality (MDG 4)
•Improving maternal health (MDG 5)
•Promoting gender equality and women
empowerment (MDG 3)
•Eradicating extreme poverty (MDG 1)
•Developing a global partnership for development
(MDG 8)
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Tools for Poverty Reduction
 Liberalizing services trade can also help:
•Exporting through Mode 4, outsourcing, & in
tourism sector
•Importing to make services more efficient &
increase choice
•However: size of benefits are far from clear&
they are country/context specific
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Tools for Poverty Reduction :
Mode 4 Exports
 Remittances:
•are a major stable source of capital inflows
•improve ability to finance development objectives (lower
school drop out, better health outcomes)
 Employment opportunities:
•decent work for youth & gender empowerment:
 Challenges:
•how to ensure brain gain instead of brain drain
•how to overcome reluctance in receiving countries
•how to channel remittances into productive capacities?
 GATS potential?
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Tools for Poverty Reduction:
Tourism Services
 Among top five export revenue generator for 75 countries
 Benefits from:
•employment, foreign exchange earnings, taxation, multiplier
& spillover effects
 Challenge:
•benefits depend on: degree of integration of domestic sector
tourism, global business practices, access to
distribution networks, degree of leakage, vulnerability to
external shocks
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Tools for Poverty Reduction:
Universal Access
 UA to services:
•significant, strong and manifested relationship with poverty
reduction, inequalities based on wealth & location;
 important infrastructural & social function. e.g., water,
education, health, financial, telecom
 UA policies:
•are diverse & include: public & private provision & many
options in-between (publicly-funded, private services
provision, USOs, subsidies, microfinance, communitybased & other innovative options
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•no one size fits all –need for policy space & flexibility
Tools for Poverty Reduction:
Universal Access: the Case of Water

1.1 billion people lack access to water;
•millions of women spend up to 4 hours a day
collecting water;
•loss of 443 million school days each year caused by
water-related illnesses;
•almost 50 per cent of all people in DCs are suffering
at any given time from a health problem caused by
water/sanitation deficits;
•Implications for human/economic development &
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MDGs.
Tools for Poverty Reduction: GATS
& Universal Access
 Concerns voiced
•that liberalization may negatively affect access/equity;
therefore careful pacing & sequencing of liberalization &
regulation;
•building appropriate institutional & regulatory frameworks,
ensuring that certain preconditions are in place before
opening services markets
 GATS potential?
•limited commitments, Art I carve out, subsidies, UA
language in WPDR negotiations
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The Importance of Regulation
 Role of regulation widely accepted (market failures:
externalities, information asymmetry, imperfect
competition etc.) also social & ethical considerations
 UA: variety of policy options
 FS: numerous FS policies: prudential (viability &
stability of financial system), competition & social
policy (UA & microfinance)
 Regulatory reform:
•proper pacing, sequencing & content of reform; need for
best policy mix for particular situation; requiring
regulatory flexibility
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International Trade Negotiations
Multilateral
 GATS
•Market access & rule making track
•limited progress on development priorities
(Modes 2 & 4), S&D, special priority for
LDCs
 Instead focus on:
•binding existing level of openness, national,
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treatment & domestic regulation
International Trade Negotiations
Multilateral: Domestic Regulation
 Art. VI:4 mandate: to develop any “necessary” disciplines
for measures relating to QR, QP, LR, LP, TS
•with a view to ensuring that measures… do not constitute
unnecessary barriers to trade in services…
 Challenge for DCs: to strike a balance between
•preserving domestic policy flexibility & right to regulate;
•specific & clear disciplines to underpin their MA
opportunities (e.g., Mode 4)
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Way Forward
 Proper content, pacing & sequencing of reform (including





appropriate regulatory and institutional framework) are
crucial for reaping development benefits from the services
sector & its liberalisation
There is no one-size fits all solutions
Need for flexibility & policy space in international trade
agreements & negotiations
Need for a multi stakeholder approach involving the
private sector and civil society
Need for services assessments to make informed choices in
services trade negotiations
Need for commercially meaningful commitments in
sectors of priority interest to developing countries and
modes 4 and 1 to deliver on DDA
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The end
Thank you
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