The (Potential) Contribution of Services Liberalization to Development: What Role for the GATS? Rudolf Adlung 1

Transcription

1 The (Potential) Contribution of Services Liberalization to Development: What Role for the GATS? Rudolf Adlung 1

2 Potential Economic Links 2

3 I. Economic Efficiency and Growth A. (Infrastructural-)Services as Conduits of Trade B. (Infrastructural-)Services as Production Inputs II. Developing Competitive Service Industries ( Mode 3) III. Contribution to Income Transfers ( Mode 4) IV. Provision of Social Services 3

4 I.A Infrastructure and Trade: Transport & Communication In three-quarters of all countries, access barriers in provision of transport services are greater than tariff barriers* Transport costs are on average 70% higher in developing than in developed countries* The cost ratio of international to local telecom calls may vary between 10:1 (and less) in liberalizing countries to over 50:1 elsewhere * Source: WTO, World Trade Report 2004.

5 Trading across borders: Selected indicators, 2007 Time for export (days) Cost to export (US$/Container) Time for import (days) Cost to import (US$/Container) Singapore Malaysia Indonesia China Thailand Philippines Vietnam India Pakistan '336 Bangladesh '184 Source: World Bank Doing Business Database Note: The tariff equivalent per day in transit is estimated at 0.8 per cent. Source: Hummels,

6 I.B Liberalization of Infrastructural (= Producer ) Services : More rapid growth of user industries Indian manufacturing as a case in point: In tandem with liberalization policies, the use of services as production inputs expanded at some 16 per cent p.a. (constant prices) over the 1990s, up from less than 1 per cent in the 1980s. The contribution of services to the growth of manufacturing output is estimated to have increased concurrently from about 1 per cent to 25 per cent. Source: Banga and Goldar (ICRIER, 2004)

7 II. Developing competitive service industries ( Mode 3) Sector Services Main Suppliers Audiovisual & Cultural Services Professional Services Computer & Related Services Motion picture production & distribution; sound recording; cultural & sporting; news agency services; animation Bookkeeping; document management; architectural design; etc. Software implementation; data processing; database services data entry & processing Argentina; Brazil; Hong Kong, China; India; Mexico; Venezuela India; Singapore and others India; Israel and others 7

8 Developing competitive service industries (cont'd) Sector Services Main Suppliers Other Business Services Health services Abstracting & indexing; electronic publishing; telemarketing; web-site design; maintenance & repair of equipment; call centres Laboratory testing; telediagnosis and consultation services; interpretation of computer tomography scans India and others China; India; Mexico; Philippines and others Source: UNCTAD, World Investment Report

9 Growth of Business Service Exports, Ireland India China Brazil Romania Argentina Israel Malta Finland Spain United Kingdom Jamaica Nigeria New Zealand Morocco Malaysia Mauritius Sw eden Norw ay United States (%) Source: Hoekman and Mattoo (2007)

10 Key Focus: Liberalizing commercial presence The economically dominant mode of supply (ca. 50% of all services trade) Main promoter of structural change Directly available without international cooperation (unlike mode 4), but... However, other frameworks have proven more attractive than comprehensive trade rounds (PTAs, BITs, WTO accessions) 10

11 III. Generating income transfers (Remittances) Huge potential gains Focal area of interest of many DCs But: Highly politically sensitive; limited coverage of mode 4; regulatory barriers; wage parity requirements, etc. Current contribution to services trade under the GATS: < 5 per cent... 11

12 IV. Provision of Social Services Instruments: Universal service obligations (regulation, funds, subsidy schemes, etc.) But: Ability to regulate(?); cost of institutional reform(?) 12

13 ... but services liberalization is no panacea 13

14 Services reform and development: Relevant issues Big Bang versus gradual reform Appropriate sequencing: (re-)regulation / access liberalization / privatization Contestable markets (effective competition) to prevent private rent-seeking Effective regulation, including prudential rules and universal service obligations, to protect consumers and the public interest 14

15 Services reform and development: Role of policy commitments? Enhancing predictability or protecting policy space? Pros and cons of access commitments + More stable market conditions over business/election cycles + Deeper liberalization through reciprocal concessions + Contribution to internal policy coordination - Reduced scope for policy experiments - Risk of premature / ill-specified commitments 15

16 Role of GATS Negotiations? 16

17 Time- and resource-intensive domestic preparation Liberalization moves are more challenging to prepare and implement than tax or tariff changes Solution: Phasing in of commitments at pre-defined future dates(?) 17

18 Phase-in Commitments (Per cent of participants) Uruguay Round (1993/94): 13 % Doha Round Offers ( ): 9% Extended UR negotiations (1997) - Financial Services: 3 % - Basic Telecom: 60% Preferential Agreements ( ): 67% WTO Accessions ( ): 86%* * Sector focus: Telecom, Banking & Insurance, Distribution, Business Services, Postal & Courier Services, Construction Source: Adlung (2007)

19 Phase-in commitments in Basic Telecommunications (Feb. 1997) LATIN AMERICA Argentina No restrictions as of 8 November Grenada Reserved for exclusive supply until No restrictions thereafter. Venezuela No restrictions as of 27 November AFRICA Côte d'ivoire Mauritius South Africa ASIA India Korea Pakistan Thailand Monopoly until 2005, no restrictions thereafter. Monopoly until 2004, no restrictions thereafter. Monopoly until 31 December 2003: thereafter duopoly and authorities will consider the feasibility of more licences. Review the subject of opening up of national long-distance service in 1999, and international services in Will raise foreign equity participation in facilities-based supplier. Proposes to divest 26% to a strategic investor who will have an exclusive licence for the operation of basic telephonic services for seven years. Will introduce revised commitments in 2006, conditional upon the passage and coming into force of new communication acts. 19

20 A closer look at WTO accessions Many meaningful commitments with relatively short implementation periods (Vietnam: ~66% of all sectors; China: 60%; Nepal: 50%; Oman: 40%) But: Special circumstances (carrot: WTO membership) Challenge: Create similar conditions in trade rounds 20

21 A HAPPY END (?) 21