1. © WTO/OMC1 The Manual on Statistics of International Trade in Services and Current Revision Process joscelyn.magdeleine@wto.org

2. © WTO/OMC2 Trade in services statistics By service sectors By partner By modes of supply GATS Compilers of Statistics BOP/FATS Trade Negotiators

3. © WTO/OMC3 Why are statistics on international trade in services needed in trade negotiations? Market access NegotiateDecision-making Compare Quantify Statistical framework Manual

4. © WTO/OMC4 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”. Assessment of Trade in Services under the GATS Assessment

5. © WTO/OMC5 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 Assessment

6. © WTO/OMC6 What is the problem for the statistical framework? Goods “cross-border” response: International Merchandise Trade Statistics (IMTS), Rev.2 - Compilers Manual 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 Trade in Services (MSITS) Compilation guidance 2002 Manual

7. © WTO/OMC7 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 2002 Manual Annex: Movement of natural persons

8. © WTO/OMC8 Of interest for GATS purposes but... 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 Income Current transfers 11 components Transportation Travel Communications etc. 2002 Manual

9. © WTO/OMC9 BOP Statistics - Short Presentation (2/2) More detail needed than 11 BPM5 services components MSITS introduces EBOPS (breakdown of BPM5 services) Most services delivered under Mode 3 and Mode 4 are not well covered or identified However, some BOP indicators helpful: Foreign Direct Investment Compensation of employees Workers’ remittances Mode 3Mode 4 2002 Manual

10. © WTO/OMC10 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 2002 Manual

11. © WTO/OMC11 Modes of Supply and Statistical Domains 2002 Manual

12. © WTO/OMC12 Manual: 5 core recommendations Implementation of BPM5 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 Recommendations

13. © WTO/OMC13 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 Recommendations

14. © WTO/OMC14 5 core recommendations (continued) Partner country statistics –Transactions between residents and non- residents: Total services BPM5 main services items If possible EBOPS items –FATS and FDI statistics for main ICFA categories –Priority: most important partners Recommendations

15. © WTO/OMC15 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 Recommendations

16. © WTO/OMC16 Need for a revised Manual Incorporate BPM6 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

17. © WTO/OMC17 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– Foreign affiliates statistics Chapter V– Modes of supply

18. © WTO/OMC18 Planned Structure of Revised Manual (2/2) Annex I–EBOPS 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 and services ?

19. © WTO/OMC19 Shorter and clearer definition of GATS and coverage GATS Pillars Set of general obligations and disciplines 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 NEW Manual

20. © WTO/OMC20 HEGI BPM6 SNA 2008 “Rest of the world account” Statistical systems Definition of services Definition of intern- ational transactions Foreign-controlled corporations Definitions of economic variables Trade in services Tourism Definition of tourism, visitor, products, etc. Merchandise Overlapping products BD4 Migration International migration flows and stocks Migrants, travellers Foreign Direct Investment AMNE/FATS NEW Manual

21. © WTO/OMC21 Integrated Statistical Classifications Negotiations Statistics Products Activities Goods CPC (All) HSGNS/W/120 EBOPS (Services) ISIC, Rev. 3 ICFA Services SITC Other

22. © WTO/OMC22 Statistical classifications CPC Version 2 ISIC Revision 4 ISCO 2008 NEW Manual

23. © WTO/OMC23 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 NEW Manual

24. © WTO/OMC24 5.Construction 6.Insurance and pension services 7.Financial services 8.Charges for the use of intellectual property 9.Telecommunications, computer and information services 10.Other business services 11.Personal, cultural and recreational services Commercial services: 1.Manufacturing services on physical inputs owned by others 2.Repairs and maintenance 3.Transport 4.Travel 5. - 11. Other commercial services 12. Government goods and services (not in GATS) Main revisions in draft BPM6/EBOPS classification of services BOP/EBOPS services changes

25. © WTO/OMC25 Proposed main revisions for Chapter III and EBOPS All BPM6 changes included “Computer services” breakdown: software and other “Travel” – alternative presentation by product “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.? BOP/EBOPS services changes Alternative: Software transactions, Call centres, environment etc.? Service contracts vs. employer-employee relationship clarified

26. © WTO/OMC26 Intellectual property in BPM6 and MSITS? BOP/EBOPS services changes

27. © WTO/OMC27 Proposed main revisions for Chapter IV FATS No large change Link with international delivery of services and trade negotiations Alignment with HEGI, BD4 and Eurostat FA regulation Revised ICFA proposal following ISIC Rev 4 FATS changes Name change: FATS = Foreign Affiliates Statistics

28. © WTO/OMC28 Affiliates of hotel chains (mode 3) An example: Tourism sector Mode 2 ↓ BOP Travel but Foreign tourist guides (mode 4) Foreign managers/ intra-corporate transferees (mode 4) Sales of tourism operators (mode 1) Negotiating list GNS/W/120: Hotels and restaurants Travel agencies and tour operator serv. Tourist guide services Other services 4 modes of supplying services NEW chapter

29. © WTO/OMC29 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 Develop practices to separately identify modes in EBOPS NEW chapter

30. © WTO/OMC30 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. Natural person at the end (e.g. to supervise) Mode 1 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 NEW chapter

31. © WTO/OMC31 GATS NEW chapter

32. © WTO/OMC32 NEW chapter

33. © WTO/OMC33 Mode 4, migration and tourism statistics Migrant categories Non-migrant categories Categories of the UN Recommendations on Statistics of International Migration, revision 1: NEW chapter

34. © WTO/OMC34 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

35. © WTO/OMC35 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 re- draft 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!