The Manual on Statistics of International Trade in

The Manual on Statistics of International Trade in Services and Current Revision Process joscelyn. magdeleine@wto. org © WTO/OMC 1

GATS Compilers of Statistics BOP/FATS Trade Negotiators Trade in services statistics • By service sectors • By partner • By modes of supply © WTO/OMC 2

Manual Why are statistics on international trade in services needed in trade negotiations? Decision-making Compare Market access Quantify © WTO/OMC Negotiate Statistical framework 3

Assessment of Trade in Services under the GATS The Linchpin: Article XIX: 3 “For each round, negotiating guidelines and procedures shall be established. For the purposes of establishing such guidelines, the Council for Trade in Services shall carry out an assessment of trade in services in overall terms and on a sectoral basis with reference to the objectives of this Agreement, including those set out in paragraph 1 of Article IV”. © WTO/OMC 4

Assessment Regional Trade Agreements • Increasing number of Preferential Trade Agreements • New WTO transparency mechanism (14/12/2006): – Early announcement and notification of RTAs – Factual presentation on trade in services • Trade or BOP data by services sector/subsector, by partner • GDP or production data by services sector/subsector • Relevant FDI statistics by services sector/subsector, by partner • Data on movement of natural persons by services sector/subsector, by partner © WTO/OMC 5

2002 Manual What is the problem for the statistical framework? Goods “cross-border” • • Services mode 1: “cross-border” mode 2: consumption abroad mode 3: commercial presence mode 4: presence of natural persons response: Manual on Statistics of International Merchandise International Trade in Trade Statistics (IMTS), Services (MSITS) Rev. 2 - Compilers Manual Compilation guidance © WTO/OMC 6

2002 Manual The 2002 Manual on Statistics of International Trade in Services Guidelines and recommendations on the measurement of trade in services Balance of Payments statistics Foreign Affiliates Trade in Services statistics Annex: Movement of natural persons © WTO/OMC 7

2002 Manual BOP Statistics Short Presentation (1/2) BOP summarises transactions of an economy with the rest of the world BOP Current account Capital & financial account Goods Services 11 components Transportation Income Travel Current transfers Communications etc. © WTO/OMC Of interest for GATS purposes but. . . 8

2002 Manual BOP Statistics Short Presentation (2/2) • More detail needed than 11 BPM 5 services components MSITS introduces EBOPS (breakdown of BPM 5 services) • Most services delivered under Mode 3 and Mode 4 are not well covered or identified However, some BOP indicators helpful: • Foreign Direct Investment Mode 4 Mode 3 • Compensation of employees • Workers’ remittances © WTO/OMC 9

2002 Manual FATS Statistics - Short Presentation Coverage • Operations of foreign affiliates, • Particular focus on services Indicators • Turnover • Employment • Value added • … Concepts & definitions • Manual on Statistics of International Trade in Services © WTO/OMC 10

2002 Manual Modes of Supply and Statistical Domains © WTO/OMC 11

Recommendations Manual: 5 core recommendations • Implementation of BPM 5 principles (resident / non-resident transactions): • Definitions, Valuation, Recording • Classification of services (11 main standard services components) • First EBOPS disaggregation: • Focus on most important services for compiling economy + related memorandum items © WTO/OMC 12

Recommendations 5 core recommendations (continued) • Foreign Direct Investment (FDI) statistics: • Complement to FATS statistics • Often only quantitative information related to commercial presence • Flows, income and stocks; Broken down by industry • FATS statistics: main basic variables • Basic variables: sales, employment, value added, etc. ; compiled by industry (ICFA); inward and outward FATS • Inward FATS (directly connected to GATS) often easier to collect © WTO/OMC 13

Recommendations 5 core recommendations (continued) • Partner country statistics – Transactions between residents and nonresidents: • Total services • BPM 5 main services items • If possible EBOPS items – FATS and FDI statistics for main ICFA categories – Priority: most important partners © WTO/OMC 14

Recommendations Additional recommendations • Completion of EBOPS implementation • Further FATS statistics details • Collect information on natural persons under GATS framework • Separate trade (resident/non-resident transactions) between related and unrelated parties • Allocation of transactions to modes of supply © WTO/OMC 15

Need for a revised Manual • Incorporate BPM 6 and SNA revisions + ISIC, CPC, Tourism statistics. . • New recommendations relating to activities of foreign affiliates: – OECD Handbook on Economic Globalisation Indicators – OECD Benchmark Definition of FDI – Eurostat recommendations Manual • Need for guidance for mode 4 and modes of supply generally. . . 1 st worlwide consultation in 2006 © WTO/OMC 16

Planned Structure of Revised Manual (1/2) Chapter I – General introduction and foundations Chapter II – Conceptual framework Chapter III – Transactions between residents and non-residents Chapter IV statistics – Chapter V – Foreign affiliates Modes of supply © WTO/OMC 17

Planned Structure of Revised Manual (2/2) Annex II – EBOPS, CPC, Ver. 2, GNS/W/120 correspondence tables Annex III – ICFA – EBOPS correspondence tables Annex IV – Extract from the General Agreement on Trade in Services Annex V – Services Sectoral Classification List – GNS/W/120 Annex VI – The Manual and Tourism statistical frameworks Annex VII – Analysing trade in services data Annex VIII – Cross-cutting issues on goods © WTO/OMC 18 and services ?

NEW Manual GATS Pillars Shorter and clearer definition of GATS and Set of general obligations and disciplines coverage Countries schedules of specific commitments Annexes on specific issues Commitments under GATS By modes of supply By services sectors The Services Sectoral Classification List GNS/W/120 . . . More detailed description of modes of supply in Chapter V © WTO/OMC 19

NEW Manual Statistical systems Definition of services Tourism “Rest of the world account” Definition of tourism, visitor, products, etc. SNA 2008 Foreign-controlled corporations Trade in services Definitions of economic variables Definition of international transactions BD 4 Overlapping products Migration BPM 6 Foreign Direct Investment Merchandise Migrants, travellers AMNE/FATS © WTO/OMC International migration flows and stocks HEGI 20

Integrated Statistical Classifications Statistics Negotiations EBOPS (Services) Goods SITC HS Services CPC (All) Products Activities GNS/W/120 Other ISIC, Rev. 3 ICFA © WTO/OMC 21

NEW Manual Statistical classifications CPC Version 2 ISIC Revision 4 ISCO 2008 © WTO/OMC 22

NEW Manual Approach and framework Guidelines and recommendations on the measurement of trade in services Trade in services in Balance of Payments EBOPS Services supplied through direct investment - FATS Services supplied through presence of natural persons and labour mobility. . . Analysis by origin and destination © WTO/OMC 23

BOP/EBOPS services changes Main revisions in draft BPM 6/EBOPS classification of services Commercial services: 1. Manufacturing services on physical inputs owned by others 5. Construction 6. Insurance and pension services 4. Travel 7. Financial services 5. 5. - 11. Other commercial services 8. Charges for the use of intellectual property 9. Telecommunications, computer and information services 2. Repairs and maintenance 3. Transport 10. Other business services 12. Government goods and services (not in GATS) © WTO/OMC 11. Personal, cultural and recreational services 24

BOP/EBOPS services changes Proposed main revisions for Chapter III and EBOPS All BPM 6 changes included “Travel” – alternative presentation by product “Computer services” breakdown: software and other “Other business services” restructured: Research and development Professional and management consulting services Technical, trade-related and other business services “Gambling services”, “Cultural services” identified Supplementary: Architectural, Engineering, Distribution services etc. ? Alternative: Software transactions, Call centres, environment etc. ? Service contracts vs. employer-employee relationship clarified © WTO/OMC 25

BOP/EBOPS services changes Intellectual property in BPM 6 and MSITS? © WTO/OMC 26

FATS changes Proposed main revisions for Chapter IV FATS No large change Name change: FATS = Foreign Affiliates Statistics Alignment with HEGI, BD 4 and Eurostat FA regulation Link with international delivery of services and trade negotiations Revised ICFA proposal following ISIC Rev 4 © WTO/OMC 27

NEW chapter An example: Tourism sector Negotiating list GNS/W/120: Hotels and restaurants Travel agencies and tour operator serv. Tourist guide services Other services Affiliates of hotel chains (mode 3) Sales of tourism operators (mode 1) Mode 2 ↓ BOP Travel but © WTO/OMC 4 modes of supplying services Foreign tourist guides (mode 4) Foreign managers/ intra-corporate transferees (mode 4) 28

NEW chapter Develop practices to separately identify modes in EBOPS Information needs for assessing trade in services by modes of supply - Value of services exports or imports - More specific variables (market access), e. g FDI or number of persons moving (flow) or present (stock) Simplified approach: - either dominant mode → e. g. telecommunications (mode 1) - or no dominant mode → e. g. computer consultant (mode 1 and 4) waste-treatment (mode 2 and 4) construction (mode 3 and 4) → Most significant mode of supply © WTO/OMC 29

NEW chapter 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 delivered (time/resources)? Mostly by fax, email, etc. Mode 1 Natural person at the end (e. g. to supervise) The person’s knowledge was essential to deliver the service Mode 4 2. Require in specific surveys allocation by each GATS mode of supply 3. Require estimated share of inputs for the service trade related to mode 4 © WTO/OMC 30

GATS NEW chapter © WTO/OMC 31

NEW chapter © WTO/OMC 32

NEW chapter Mode 4, migration and tourism statistics Categories of the UN Recommendations on Statistics of International Migration, revision 1: Migrant categories Non-migrant categories © WTO/OMC 33

Proposed Annex on Analyzing Trade in Services Data • Combining balance of payments data, foreign affiliates trade data, and mode 4 data for analysis • addressing linkages between services trade and production data • Uses of bilateral flow data including asymmetries • Identifying comparative advantage • Market access • Global outsourcing • Health services: an example of sectoral analysis © WTO/OMC 34

Next steps for the Revision of MSITS May 2006 – September 2008 Worldwide consultation on scope of update and issues TFSITS reviewed worldwide consultation responses Started drafting of Chapter on modes of supply and updating/drafting of other chapters Consultation with 2007 OECD-Eurostat Expert meeting and 2008 Working Party on International Trade in Goods and Services. Progress report to IMF BOPCOM and UN Statistical Commission Draft chapters agreed by TFSITS September – 24 November 2008: Worldwide consultation on complete draft of revised MSITS December 2008 – February 2009: TFSITS to review comments and redraft MSITS chapters March – April 2009: TFSITS meeting: review comments and revised draft; cross-cutting issues Summer 2009: Finalize draft and chapters and post for final review November 2009: Prepare submission to UNSC March 2010: Draft submitted to UN Statistical Commission Revised Manual in 2010! © WTO/OMC 35