The International Supply of Services andreas maurer wto org

The International Supply of Services andreas. maurer@wto. org joscelyn. magdeleine@wto. org 1

Int’l. Supply of Services Outline • Background. . • What is mode 4? • Recommendations of MSITS 2010 on modes and what can/could be done? • Some country experiences • What can we expect in the (near? ) future? 2

Modes of supply in MSITS • MSITS 2002 introduced modes of supply in statistical context. • While introducing subject in annex, identified further research necessary for mode 4 • Work that led to MSITS 2010, clarified mode 4 in statistical framework • New chapter on modes of supply (chapter 5) : “. . estimating Mode 4 within BOP service account will help the overall estimation of international supply of services by mode. ” (value) 3

Who is covered by Mode 4? Contractual service suppliers – Self-employed (independent) service suppliers – Employees of foreign service suppliers Intra-corporate transferees and persons directly recruited by the foreign affiliate Services sellers / Persons responsible for setting up commercial presence 2 basic information needs for mode 4 • Value of services provided • Number of natural persons 4

Remittances, compensation of employees: not measures of mode 4 Labour mobility Value: Compensation of employees Workers remittances Trade in services (incl. mode 4) Services categories BPM 6: Personal transfers SNA, BPM, MSITS Number of persons: Non-migrants International migrants, of which short-term Visitors RSIM Rev. 1, IRTS 2008 5

Int’l. Supply of Services Outline • Background. . . • What is mode 4? • Recommendations of MSITS 2010 on modes and what can/could be done? • Some country experiences • What can we expect in the (near? ) future? 6

International Supply of Services to United States : a first breakdown by modes Mode 2 10. 2% Mode 3 23. 1% Mode 1 + 4 66. 7% Source: Author's calculations based on "U. S. International Services: Cross-Border Trade in 2008 and Services Supplied Through Affiliates in 2007" Survey of Current Business, BEA, U. S. Department of Commerce, 2009. 7

What’s the problem with measuring the ? value of GATS Modes of Supply? ? ? Intermodal linkages Services may be delivered through several modes of supply Mode 4 Mode 1 Mode 2 Mode 3 A single service transaction through different modes 8

Simplified allocation of FATS and EBOPS data to modes of supply (1/2) * In territory where affiliate established. If not possible to breakdown by EBOPS 2010 product, by activity using ICFA Rev. 1 ** Certain degree of uncertainty regarding certain charges 9

Simplified allocation of FATS and EBOPS data to modes of supply (2/2) LE L GE N HA C 10

International Supply of Services to United States : further breakdown by modes Mode 2 10. 2% Mode 3 66. 7% Mode 4 0. 5% Mode 1 1+4 16. 8% 23. 1% 5. 8% Mode 1+4 5. 7% Mode 3+4 0. 1% Source: Author's calculations based on "U. S. International Services: Cross-Border Trade in 2008 and Services Supplied Through Affiliates in 2007" Survey of Current Business, BEA, U. S. Department of Commerce, 2009. 11

Options to assess Mode 4 delivery in surveys 1. Did the service delivery involve physical presence of service provider? Yes? Then, how was most of the service value provided (time/resources)? s? ce ur s? so ate Mostly by fax, email, etc. er im Mode oth est Natural person at the end ith ed (e. g. to supervise) e w bas bin el om od C The person’s knowledge M Mode was essential to deliver the service 1 4 2. Require in services surveys allocation by each GATS mode of supply 3. Require estimated share of services inputs for Mode 4 services 12 trade

Int’l. Supply of Services Outline • Background. . . • What is mode 4? • Recommendations of MSITS 2010 on modes and what can/could be done? • Some country experiences • What can we expect in the (near? ) future? 13

Indian International Supply of Computer Services, IT Enabled Services and BPO by Mode, 2008 -09 28. 4 11723 26. 8 Source: Reserve Bank of India (2010), converted to US dollars by authors. 14

Australia's legal services international income by mode of supply, 2006 -07 (million USD and percentage) Commercial presence $116 m, 27% Australian projects $215 m, 51% Fly in-fly out $93 m, 22% Source: ILSAC Survey of Australian Export Market for Legal Services 2006 -07 15

Int’l. Supply of Services Outline • Background. . . • What is mode 4? • Recommendations of MSITS 2010 on modes and what can/could be done? • Some country experiences • What can we expect in the (near? ) future? 16

Estimating trade in services by mode? (1/2) • Demand for estimation of services trade by modes of supply exists • For the value of trade: within the framework of BOP services statistics • Simplified allocation in MSITS 2010 as starting point: guide for compilers for first estimation (have knowledge of how services providers and consumers behave in their economy) • Do we need to do more in the (near) future? 17

Estimating trade in services by mode? (2/2) • Main issue to identify modes of supply in BOP services: estimating mode 4 • Necessary to estimate mode 4 for all BOP services items? Not for all : only those where mode 4 is deemed important • Mode 4 importance varies across countries and items: compilers to identify necessity for specific services items. • Cooperate with service sector professionals and users 18