Promoting Effective Institutional Mechanisms in Trade in Services Challenges and Lessons for Low Income Developing Countries (LIDC), Least Developed Countries (LDCs) and Lower Middle Income Countries (LMICs)

Presentation Outline 1. Understanding Institutional Mechanisms in Trade in Services – What is their role? – Who are the key institutional actors for trade in services? 2. Scenarios in LDCs, LICs, LMICs and highlights from Case Studies of Institutional Mechanisms of TiS Scenarios – Challenges to LDCs, LICs, LMIC s in the context of TIS Institutional Mechanisms Case Studies – Case Study 1: Brazil’s CAMEX – Case Study 2: The European Union (EU) 3. Lessons to be drawn – Recommendations drawn from case studies – Further recommendations

Rationale Effective institutional structures and processes enable the governments, in collaboration with all stakeholders, to come up with holistic trade in services (TIS) policies, which would also inform TIS negotiation positions based on ground realities (economic, and statistical inputs). The stakeholders‘ ownership of TIS policies, fostered through their active participation, facilitates implementation of resulting policies.

Some characteristics of effective institutional mechanisms Direction and decisions including TiS negotiations are related to government’s stated priorities Coordination amongst government and agencies is an important component for ensuring political will and implementation Mechanisms exist for ministries to consult each other Government positions are based on adequate and coherent information There is close collaboration with the all stakeholders involved in services trade

Significance of TIS  In global trade exchanges, services are increasingly providing development opportunities that could be leveraged by the LDCs, LICs and LMICs  However a number of challenges hamper the effective integration of these group of countries in global TiS, and these include the lack of effective institutional mechanisms

Key Institutions and Stakeholders and their roles in policy elaboration Government (ministries, departments): – Coordinate consultations/negotiations amongst stakeholders – Formulate policies Agencies (sector regulators): – Oversee implementation of sectoral regulations, carry out technical analysis and elaborate proposals for improving their respective regulatory frameworks Private sector: – Through their organizations, advocate for conducive business and investment environment that enhances trade – Deliver first-hand input for analysis of sectorial characteristics (comparative advantage,…) – Are the ultimate users of opportunities arising in trade including TiS CSOs:  Promoting the society’s interests (consumer welfare, ensuring availability of basic services, i.e. education, health care,…)  Assisting government and private sector in assessing sectors’ readiness for liberalization

2. Main challenges for LDCs, LICs, LMICs Institutional mechanisms lack focus on trade in services (as opposed to trade in goods, which has traditionally been the main focus for these set of countries) Structure:  Ineffective organization: overlapping responsibilities in government structures  Insufficient Inclusivity: Private sector’s and Civil Society Organizations’ (CSOs’) impact on policy-making is very limited (even if consultation exists) Capacity:  High personnel turnover leading to:  Lack of knowledge of trade in services (as opposed to goods)  Lack evaluation/analysis skills in TiS  Lack of data Inadequately informed decision making process (Drawn from study on Uganda, Zambia, Nepal)

2. Challenges Cont’d Zambia: Multitude of committees and sub-committees making it difficult for stakeholders especially the private sector to participate  lower attendance  Insufficiently qualified representatives replace seniors in meetings leading to outcomes not reflective of ground realities

2. Challenges Cont’d Nepal: Although consultative mechanisms exist, some stakeholders such as CSOs expressed frustration that agreed-on policies are not implemented  Which could result in loss of trust between such stakeholders and government Barbados: Private Sector finds the performance of civil service bodies unsatisfactory: – slow pace of regulatory transitions, where such are agreed; – Slow decision-making

2. Challenges Cont’d Uganda: Some stakeholders especially CSOs lack knowledge about TIS (as opposed to trade in goods) therefore limited participation Even the players in TiS have limited understanding of opportunities at regional, and multilateral level, hence less involved in policy formulation

Case Study 1: Brazil Institutional mechanism in TIS clearly defined into technical and political processes – Technical process in TIS: supervised by Ministry of External Relations (MER) – Political process: within Foreign Trade Chamber (CAMEX = the government chamber, mandated to formulate Government’s trade policy)

Technical Process: responsibilities & roles Case Study 1: Brazil DNS Focal Point for TIS: Coordinates Communicates Formulates Trade Commitment SCS: policy evaluation compilation of statistical data Develop sector- specific policies (technical analysis)

Technical Process: responsibilities & roles Case Study 1: Brazil Trade Commitment Submission of

Political Process CAMEX‘s Council of Ministers (CoM) establishes consensus on Services Negotiations trade commitments by consulting: Subcommittees: topic-specific decision-making bodies, formed by concerned ministry representatives; pass on decisions to council of ministers Private Sector Advisory Council: provides private sector advice CoM passes decision on to the Brazilian government Case Study 1: Brazil CAMEX enables the government of Brazil to carry out integrated action and coordination among government agencies and that have responsibilities in the area of foreign trade, as well as consult with the private sector.

Evaluation of TIS policy-making -Effective structure: -Establishment of trade-specific divisions: e.g. Division of Services Negotiations (DNS) -Well functioning coordination between ministries, regulators and divisions -Cost-effective -Training of personnel (Foreign Trade Analysts) Case Study 1: Brazil

Case Study 2: The EU Civil Society Dialogue (CSD): Including stakeholders in TIS policy- making CSD holds structured and regular meetings on issues such as: Trade policy issues ( both services and goods) in bilateral and multilateral trade agreements Sustainability Assessment of implemented policies

Case Study 2: The EU The key principles: Participation: consulting as widely as possible Oppenness and Accountability: increases credibility Effectiveness: early consultation enables stakeholders to exert influence Coherence: reporting on meetings facilitates feedback, evaluation and review

Case Study 2: The EU Evaluation: Civil Society Dialogue assumes the role of a forum that enables stakeholders to participate in TIS policy-making process Key Principles provide framework for utilization of platform to the benefit of all stakeholders Strengthens ties between stakeholders, enabling cooperation and participation in external platforms, e.g. WTO Ministerial Conferences

3. Lessons to be drawn Structure (Brazil): Using existing structures for analysis of sector-specific TIS-policies  cost reduction  prevention of overlapping responsibilities Establishing TIS-specific bodies (=DNS) that coordinate stakeholders‘ input and formulate common position Participation of private sector provides valuable information about the impact of TIS-policies on the business environment (e.g. establishment of databases)

3. Lessons to be drawn Structure (Brazil): effective mechanisms Establishment of a legally mandated body that deals with political implementation of technical recommendations (= CAMEX) while: Consulting with stakeholders Allowing for the formation of subcommittees, whose composition is flexibly determined by the sector-specific issues discussed Channeling of each TIS-issue via its relevant ministries and subcommittees ensure efficient analysis and negotiations

3. Lessons to be drawn Structure (EU): inclusivity Establishment of a forum dedicated to inclusivity of stakeholders Elaboration of guiding principles to ensure effective utilization by all stakeholders Wide-spread ownership of TIS-policy outcome facilitates implementation Record-keeping ensures smooth policy-making process, access to information and can mitigate effects of high turn-over rates (Zambia)

3. Lessons to be drawn Building Capacity (Brazil): -In Government: - commercial diplomacy training at Brazilian diplomatic representations in European countries -Establishment of “Foreign Trade Analyst“ as career path -In private sector: -MDIC organizes workshops for private sector on importance of service trade, and means through which they could actively participate in policy formulation and implementation

3. Lessons to be drawn Further recommendations: inclusivity Widen Inclusivity through grassroot participation Raise awareness of importance of TIS and participation in policy-making processes amongst stakeholders Encourage formation of associations (private sector/civil society) to enhance stakeholders‘ effectiveness

3. Lessons to be drawn Further recommendations: capabilities Governments, CSOs and the private sector should consistently provide capacity building on TIS-issues Increase capabilities of data collection and statistical analysis Explore “Smart partnerships“ between stakeholders and development agencies to mitigate resource constraints