Trade in Professional Services – Effective Participation by the Commonwealth Caribbean Commonwealth Secretariat May 2006 Barbados. By. Andrew O. Satney www. thecommonwealth. org
Programme Focus: the issues • • • 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. www. thecommonwealth. org
WTO and GATS (Rules) 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 www. thecommonwealth. org
Defining International Trade in Services are traded internationally when the supplier and customer are from different countries, regardless of Location of the transaction www. thecommonwealth. org
Professional Services Trade Modes of Trade in Services: All “modes” of supply Mode 1 - Cross-border supply Mode 2 - Consumption abroad Mode 3 - Commercial presence Mode 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 Growth averaged 7% per annum 1993 -2004 Growth recently reaccelerated after slow 20002001 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
Composition Percent total exports of goods and services www. thecommonwealth. org
SERVICES AS % GDP: 2000 Antigua St. Lucia St. Kitts Barbados Grenada St. Vincent Dominica 92. 9% 87. 1% 84. 2% 84. 1% 83. 9% 83. 3% 76. 4% www. thecommonwealth. org Source: ECLAC (2002) Jamaica 71. 1% Trinidad 67. 9% Belize 62. 4% Haiti 61. 8% Suriname 61. 5% Guyana 46. 5%
SERVICES AS % EXPORTS Antigua Montserr. St. Lucia Barbados The Bahamas Grenada St. Kitts St. Vincent 91. 4% 91. 0% 81. 9% 79. 6% 78. 6% 72. 1% 68. 2% 66. 9% www. thecommonwealth. org Source: IMF and ECCB Jamaica 56. 6% Dominica 55. 0% Belize 44. 8% Haiti 37. 6% Guyana 21. 1% Suriname 18. 6% Trinidad 12. 5%
Trends in OECS Services Trade: 1993 -2002 www. thecommonwealth. org
Composition of Caricom Services Imports 1997 -2002 www. thecommonwealth. org
OECS Services & Merchandise Trade Balances www. thecommonwealth. org
Overall Caricom Trade Balance 1997 -2002 www. thecommonwealth. org
Relative Share of Individual Caricom States in Total Services Exports 1997 -2002 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 Health-related Education-related ICT and Software Development. Engineering www. thecommonwealth. org Legal Market research Management consulting Printing and Publishing.
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
OPPORTUNITY 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 www. thecommonwealth. org workers and IT- enabled services.
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 Healthcare City - Dubai Media City - Festival City - Dubai Industrial City - The Lost City - Dubai Sports City - International City - Dubai Motor City - Academic City - Dubai Maritime City - Knowledge Village - Dubai Humanitarian City - Global Village www. thecommonwealth. org - Dubailand
Palm Islands - Three man-made islands in the shape of palm trees. 500 apartments, 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 www. thecommonwealth. org
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