trde in services

8/7/2019 trde in services

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TRADE IN SERVICES

MANDEEP SINGH(500802507)


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FLOWOF PRESENTATION

Importance Of Services

History Of GATS

Origin

OfGATS

Components Of GATS

Various Services Under GATS

Different Modes Of Supplying Services under GATS

India & GATS

References


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Importance of Services

World exports of commercial services amounted toUS$ 3,350 billion in 2009,

After growing on average at around 8.5% per

year in value terms since 1980. Trade in commercial services grew faster than trade

in goods (7.5% on average) during this period,increasing its share in total world trade by 3

percentage points. In 2009,services accounted for approximately 21%

of total world trade.


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EXPORT OF COMMERCIAL SERVICES


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HISTORY OF GATS

First attempt came from US at GATT ministerial

meeting in Nov.1982

This incentive came from US private sector providers

However this attempt failed due to oppose of

European Community was not interested &

developing countries oppose the move

Reason- since they thought that comparativeadvantage was mainly with developed countries &

they saw no gain with themselves.


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HISTORY.Contd.

By Uruguay round in 1986 four main clusters were formed-

US & Some OECD(Organization for Economic Co-operation

and Development) countries- who proposed the GATS

concept into GATT

European Community & Some OECD countries & some

developing countries- which were working for overall

compromise

Group ofG-10 led by Brazil & India oppose the US initiative

Group ofG-20 countries who were ready to accept US

proposal but at some conditions


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ORIGIN OF GATS

Inclusion of trade in services in 1986 ministerial

declaration GATT was a result of compromise

between these four clusters.

Following the declaration in 1987 the GROUP OF

NEGOTIATIONS ON SERVICES was formed (GNS)

All the GATT members were also members of GATS


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PILLARES OF GATS

Set of general obligations &disciplines

Schedules of Specific Commitments Annexes on specific issues

GATS

Pillars

By service sectors By mode of supply

Commitments

Under GATS


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GATS

GATS was divided into six parts having 29 articles-

1. Scope of agreement & Definition of services

2.

General obligations3. Specific commitments

4. Progressive liberalization

5. Institutional provisions

6. Final provisions regarding denying by any country


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TYPES OF SERVICES

3. Communications services

4. Construction services

5. Insurance services

6. Financial services

7. Computer and information

services

8. Royalties and licence fees

9. Other business services10. Personal, cultural and

recreational services

Commercial services:Commercial services:

1. Transportation

2. Travel

3. -10. Other commercial services

11. Government services

(not in GATS)


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CONTD

WTO/OMC

2. Travel

1. Transport

3. Communications

services

etc

Sea transport (passenger, freight, other)

Air transport (passenger, freight, other)

Other transport (passenger, freight, other)

Space, Rail, Road, ...

Business travel

Expenditure by seasonal and border workers

Other

Personal travel

Health-related expenditure

Education-related expenditureOther

Postal & courier

Telecommunication


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SECTORWISE COMMITMENTS

11896 92 86

73 6453

42 41 42 37

25

25 2525

2423

2224 24 16 20

0

20

40

60

80

100

120

140

160

DEVELOPING DEVELOPED


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PROPOSALS

16

11

43

64

2 1 0 0

5

8

5

6 34

55

3 10

5

10

15

20

25

DEVELO

PING CO

UNTRIES DEVELO

PED CO

UNTRIES


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GATSARCHITECTUREGATSARCHITECTURE

GATS is divided into two parts:

1.Ru

les of General applications- apply to all servicesectors

2. Specific Rules- apply to service sectors where

specific commitments are made


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GATSGENERAL OBLIGATIONSGATSGENERAL OBLIGATIONS

Most favored nation(MFN)

- must provide equivalent treatment to all members

Transparency- must publish all the information

- must inform other parties of new changed measures

- must reply promptly to all requests by parties


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GATSGENERALGATSGENERAL OBLIGATIONS 2OBLIGATIONS 2

Domestic Regulations

- Qualifications, technical standards & licensing do

not constitute unnecessary barriers against the trade

Negotiation for above disciplines must -

- Be objective

- Not more than ensuring the quality of service

- Licensing procedure can not be restriction in supply

of service


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GATSGENERAL OBLIGATIONS 3GATSGENERAL OBLIGATIONS 3

Exceptions are very limited, except for national

security self defining

Governmental authority

Must meet to criteria


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GATSSPECIFIC OBLIGATIONSGATSSPECIFIC OBLIGATIONS

Members list service commitments in an

annex, which is a part of the agreement

Listing is by service sectors through a classification

system (UN based)

Listing requires specifying modes

Listing requires specifying any limits or exceptions


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GATSSPECIFIC OBLIGATIONSGATSSPECIFIC OBLIGATIONS

MARKETACCESSMARKETACCESS

Market access

No limits on number of service

suppliers

No limits on total value of

service operations

No limit on number of

employees

No limits on legal entities

Public, private,for profit and

not-for-profit

No limits on foreign capital

Consequence

No limits on retail outlets or

on locations of outlets

No limits on retail outlets

No limits on temporary entry

No restrictions on private

outlets No restrictions on foreign

ownership and control


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GATSSPECIFIC OBLIGATIONS 2GATSSPECIFIC OBLIGATIONS 2

National Treatment

Must provide level of treatment at least as good as thebest treatment provided to like services and service

providers Equivalent treatment, not identical

Like broadens the scope

Applies to subsidies


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Detailed View of Modes of Service Supply

(GATS) used by trade negotiators

Mode 1 Cross-border

Mode 2 Consumption abroad

Mode 3 Commercial presence Mode 4 Presence of natural persons


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Cross-border Supply (Mode 1)

Service crosses border

No movement of producer or consumer

ExamplesExamples::

Customer support (call centers)

Telecommunications

Remote diagnostic services (telemedicine)


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Consumption Abroad (Mode 2)

Consumer travels to the location of the producer

Examples:Examples:

Tourism

Education (study abroad)

Medical services (involving travel)


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Presence (Mode 3)

Foreign Direct Investment

Service is delivered through a locally established

affiliate

E.g. The establishment of a branch of a foreign

based firm such as a legal office or bank


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Temporary movement of natural persons

(mode 4)

Natural person (individual) travels to the country

where production occurs

Self-employed service producer

Employee of service producer


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Temporary movement of natural persons

(mode 4)

Important question: At what point does the person

become a resident of the country where the

service is provided?

BOP conventions After 1 year.

GATS Whatever is agreed, but may be longer

than 1 year.


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UNDERSTANDING MODES OF SUPPLYING

SERVICES


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CONTD


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SAMPLE OF SCHEDULE OF GATS

COMMITMENTS


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UNDERSTANDING

Let us consider a specific example to distinguish between thefour modes of supply. A particular firm in country 'X'establishes a subsidiary in country 'Y' to provide services.

This is supply of

services through Mode 3 i.e. CommercialPresence. An architect of the said firm sends blueprints overthe Internet to another firm in country "Y"- this is Mode 1 i.e.Cross Border Supply. An Engineer from the said firm isdeputed to work in the subsidiary firm established in country'Y' for a limited period for managerial operations - this is

Mode 4 i.e. Movement of Natural Persons. Certain traineesfrom the subsidiary in country 'Y' visit country 'X' and availof both education and tourism services in country 'X' - this isMode 2 exports i.e. Consumption Abroad for country 'X'


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INDIA & GATS


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Contribution to GDP


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INDIAS EXPORT OF SERVICES


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INDIAS IMPORT OF SERVICES


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Indo-US TRADE IN SERVICES

The Indo-US services trade is likely to grow to an

ambitious $150 billion in the next six years, says a

CII estimate.

At present, the country's total engagement with the

US is over $60 billion, out of which about $40

billion are accountedfor by the merchandise trade.

Last fiscal, the services exports to the US touched

$22 billion.


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Present & future of Indian GDP

In 2010 In 2042 Multiples

GDP (in $ Trillion) 1.25 10.62 8.5

INDUSTRY 352.5 2867.5 8.1

SERVICES 686.3 7540.2 11.0

AGRICULTURE 212.5 212.5 1.0


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LIMITATIONS & BARRIERS IN GROWTH

PROTECTIONISM APPROACH

Discriminatory access to distribution and communications system

(TELECOMMUNICATION ,INSURANCE)

Quantitative-restriction (QR)-type policies

Price-based barriers(visa fees, entry or exit taxes, discriminating airline

landing fees,

port taxes,

tariffs)

Limits on foreign share-holding in individual companies or by sector

Qualification and licensing requirement


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References

http://capitalstock.wordpress.com

www.wto.org

http://www.sice.oas.org

www.rbi.org.in

www.rbi.org.in/scripts/BS_EntireSearch.aspx?search

String=services&strSection=Publications

www.wikipedia.org


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trde in services

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