Transcript Global Trade in Services: - Central Bank of Barbados

CSME and Competitiveness
of Services Exports
Ramesh Chaitoo
Services Trade Specialist, CRNM
Seminar on Charting Our Course in CSME
Barbados, 5 May, 2005
Integration Theatres
FTAA
COTONOU
WTO
CARIFORUM
BI-LATERALS
ACS
CSME
OECS
Composition of Caricom Services Exports
1997-2002
Current Priorities
• Develop new service industries
• Attract substantial new investment in
services
• Diversify services exports – while tourism
continues to serve us well, the margins are
decreasing
Caricom Revised Treaty
• Chapter 3 – Establishment, Services,
Capital and Movement of Community
Nationals (Arts. 30-50)
• CSME - Free movement of capital,
services and labour by December 31,
2005
Impact of CSME
• Greater opportunities
• Greater competition among services firms
& professionals
• Quality of service will have to improve as a
result
• Greater room for business growth,
collaboration and joint ventures
• Costs of services to businesses and
consumers should decrease
LIBERALISATION REGIME
FREE MOVEMENT AND TRADE IN SERVICES
• Provision of services as a right (ART 30)
• All services will be open to competition
except :
(a) those involving the exercise of
governmental authority Art 30
(b) those where there is a monopoly Art 31
• Non Discrimination applies to all laws, rules
administrative measures and service
industries
Supply of Services
• Services supplied by any of four modes
(Art. 36)
Mode I : Cross Border
Mode 2 : Consumption Abroad
Mode 3 : Commercial Presence
Mode 4 : Presence of Natural
Persons
FREE MOVEMENT OF NATURAL
PERSONS
CARICOM SKILLED NATIONALS ACT
Movement of Skills :
(i) Companies and Non-Wage Earners (self
employed persons)
(ii) Wage Earners - University Graduates ,
Musicians, Artistes, Sports Persons Media
workers; Managerial,Technical and
Supervisory Staff of establishing entities
14 countries – one market
“CARICOM national” means a
person who:
(a) is a citizen of a Member State; or
(b) has a connection with a Member State of
a kind which entitles that person to be
regarded as belonging to or, if it be so
expressed, as being a native or resident of
such a Member State for the purposes of
the laws thereof relating to immigration;
Characteristics of CARICOM Services Firms
•
•
•
•
Small (SMEs) – less than 20 employees
Limited capital base, access to finance
Limited marketing resources
Low brand name recognition beyond
domestic market
• Need to grow in order to become
exporters
Constraints to Services Firms
• High cost and poor access to finance/
capital
• High cost of infrastructural services –
telecoms, electricity, business services
• Limited incentives for services
How will CSME address these?
•
•
•
•
Single market for finance
Single market for skills
Freedom of movement of capital
Attract greater investment?
Cost of Capital
• Spread or margin between lending and
deposit interest rates is high in Caricom –
tending towards 10 % in some countries
• Interest rate on loans for investment varies
from 18 % in Suriname to 8-10 %
• Prime rate in Trinidad is 8.75 %; in
Canada it is 4.25 %
Commercial Bank Interest Rate Spreads
Countries
1999
2000
2001
Bahamas
7.5
7.9
7.3
Barbados
6.5
7.1
7.6
Belize
10.5
10.8
11.1
EC Currency
Union
6.6
6.5
7.7
Guyana
8.5
9.0
10.0
Jamaica
10.4
8.4
8.4
Suriname
11.5
14.0
13.0
Trinidad&Tbgo
9.5
8.7
7.5
Source: CCMS
2002
2003
Agreement on Financial Services
• CARICOM-wide flow of financial services
• Need to lower cost of capital
• Make borrowing possible by anyone from
any location in the Community
• Need to focus on efficiency and lower cost
finance for businesses
Need to attract FDI in Services
– “Or a company or other legal entity which is
50% or more owned and effectively controlled
by a CARICOM national with the power to
name a majority of its directors or otherwise
legally direct its actions”
Mutual Recognition in CARICOM
• Article 35 of the Revised Treaty (2001)
Acceptance of Diplomas, Certificates
and Other Evidence of Qualifications
CARICOM Revised Treaty - Art. 35
1. COHSOD, ….. shall establish common
standards and measures for accreditation
or when necessary for the mutual
recognition of diplomas, certificates and
other evidence of qualifications of
nationals of the Member States in order to
facilitate access to, and engagement in,
employment and non-wage-earning
activities in the Community.
Art. 35
2. The Member States shall establish or
employ, as the case may be, appropriate
mechanisms to establish common
standards to determine equivalency or
accord accreditation to diplomas,
certificates and other evidence of
qualifications secured by nationals of other
Member States.
Art. 35
3. COHSOD shall also establish measures
for the coordination of legislative and
administrative requirements of the
Member States for the participation of
Community nationals in employment and
for the conduct of non-wage-earning
activities in the Community.
Regime for Professional Services
Step 1 - Implementation of Skills Legislation
to allow the free movement of university
graduates
Step 2 - Development of regulatory and
administrative arrangements for free
movement
Step 3 - Establishment of a national and
regional accreditation infrastructure
Regime (cont’d)
Step 4 – Introduction of model legislation for
professional services to allow
convergence of regulations
1st initiative - Caribbean Accreditation
Authority for Education in Medical and
Other Health Professions
So, what is on the ground now?
• Regional associations for: accounting,
architecture, engineering, legal, doctors
and nurses.
• Not much movement now; segmented
national markets
• Official process will change that with
Single Market – no work permit
requirement
Accounting
• Very international and global firms –
KPMG, Peat Marwick
• Now reorganizing at the regional level
• Standards are global – ACCA, CGA, etc.
• So, in principle, there should be little
difficulty in mutual recognition for trade in
accounting, auditing services
Legal Services
•
•
•
•
Caribbean Council for Legal Education
National Bar Associations
University of the West Indies – LLB
Regional Law Schools (3) grant Legal
Education Certificate – 2 yrs study
• New lawyers from region – no problem for
movement
• More complicated for outsiders
Acceptance of other lawyers
• If trained overseas may have to write
exam to gain entrance to law school
• Places are quite limited
• Various scenarios but lawyer does not
need to be called to Bar if only providing
legal advice;
• Only critical if need to appear before Court
• If registered in one Caricom state lawyer
should be recognized by others
Medical Professionals
• If doctors are UWI trained or from
accredited universities – fairly easy
• If from other circumstance – complex
• Nurses – Regional exam and common
standards. Nurses should be able to move
in Caricom; but they emigrate instead!!
Conclusion
• Mutual recognition, equivalence, accreditation,
common standards mandated in Treaty setting
up single market
• Governments set rules – professional
associations have to comply
• Licensing & registration requirements at the
national level will converge
• Suriname & Haiti – different systems so more
difficult to foster movement of
professionals/university graduates
Medical Professions
• Patients still travel to doctor
• But in public health system Guyana & TT
share specialists
• Visiting opthalmologist from Canada with
clients in Guyana
• With free movement doctors and all
professionals will be able to move to
clients rather than vice versa
New Challenges
• Professionals will have to rethink their
client base and catchment market
• Could lead to greater specialization &
better utilization of human resources
• You need to focus on your core
competency and distinguish yourself
• May have to brand yourself differently and
an Internet presence will become part of
your profile
Convergence of Standards
• Draft Caricom Professional Services Bill
• Regulations will be very similar across
CARICOM
Services vs Goods
• Barriers to goods are clear and at the
border – tariffs, quotas, etc.
• But services regulated at all levels of
government and very complicated regimes
– technical standards, licensing
requirements, professional qualifications,
safety regulations, residency/ citizenship
requirements, etc.
Categories of Persons Eligible to
Move Freely
• CARICOM nationals/natural persons who
are:
– University graduates;
– Media persons, sports persons, artistes and
musicians;
– Self-employed service providers;
– Managerial, Technical and Supervisory staff
relating to the particular enterprise;