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Mainstreaming Services Into The National Export Plan
Reproduced with thanks to Trade in Services Section,
International Trade Centre, Geneva
Question:
What are business-to-business services?
Business-to-business
services are services sold to other businesses rather than an individual
consumer. Business-to-business services are also known as "producer
services" or "intermediate services." Global demand for these services is expanding as companies
outsource service support needs.
Question:
What is a “traded service”?
A
traded service is any service sold to a foreign national regardless of location,
for example, management consulting services delivered electronically, or by
other means (such as courier), to foreign customers/clients located abroad.
Other examples include tourism, educational, or medical services
delivered in your country to foreign customers/clients visiting from abroad.
Banking services delivered abroad via branch or subsidiary established
abroad are traded services. Accounting services delivered via professionals to foreign
customers/clients located abroad are traded services. Instances of international trade in services can be found in
almost all economies.
Question:
What size of firm exports services?
Service
exporters may be any size, from a one person office to a large conglomerate.
In general, at least 60% of service firms have fewer than 10 employees
and at least 95% of service firms have fewer than 50 employees.
Question:
How are services traded?
The
General Agreement on Trade in Services (GATS) defines trade in services in four
different ways or "modes" of supply.
Mode
1 or "cross-border":
the supply of a service from the territory of one member into the territory of
any other member;
Mode
2 or "consumption abroad":
the supply of the service in the territory of one member to the service consumer
of any other member;
Mode
3 or "commercial presence":
the supply of a service by a service supplier of one member, through commercial
presence in the territory of any other member;
Mode
4 or "temporary movement":
the supply of a service by a service supplier of one member, through presence of
natural persons of a member in the territory of any other member.
The
Four Modes of Supply
Under
the General Agreement on Trade in Services
Mode 1 or cross-border represents services that are sold by someone in your country to someone abroad, with only the service crossing the border – e.g., architectural drawings sent by courier, a consultant report sent by e-mail, etc.
Mode 3 or commercial presence refers to national firms established abroad selling services in a foreign market.
Mode
4 or temporary movement refers to services that
are sold or delivered through the presence of the service provider temporarily
in a foreign market. For example,
if you were to travel to South Africa to deliver a workshop, you would be
exporting through Mode 4.
Question:
Which business-to-business services do foreign clients frequently consume in the
domestic market?
International
organizations and foreign companies with local offices in the domestic market
frequently consume support services such as: building cleaning, courier,
equipment rental, equipment repair & maintenance, printing &
photocopying, personnel supply, security services, and travel agency services.
Foreign
companies or international organizations in the domestic market frequently
consume professional services such as: accounting, engineering, legal,
management consulting, and market research services.
Foreign
companies or international organizations in the domestic market frequently
consume support services for visiting business tourists and technical training
services.
Question:
How can service export markets be identified to indicate consumption of domestic
services in mode 2?
Identifying
the country of origin of tourists, students, and foreign investors will provide
a list of service export markets.
Question:
How can domestic firms with offices established abroad be identified to indicate
national services trade in mode 3 or establishment?
The
UN Conference on Trade and Development has a web site http://www.UNCTAD.org
that
offers foreign direct investment country profiles that contain this information
for some countries.
Asking
the following questions will provide important information on services
transactions by mode of supply as well as significant export markets.
Questions:
1.
What is the number of foreign students and what is their country of
origin?
2.
What is the number of foreign tourists and what is their country of
origin?
3.
What is the number of foreign investors and what is their country of
origin?
4.
What is the number of foreign established firms with an office located in
the country and what is their country of origin?
5.
What is the number of workers in the services sector including utilities;
construction; transport, communication; wholesale, retail, hotels, restaurants;
finance, insurance, real estate, business services; community, social, personal
services; and public administration?
6.
What is the number of foreign patients and what is their country of
origin?
Following
is a collection of data sources to help determine services transactions by mode
of supply.
Education
Reviewing
the countries where students study abroad provides information on the scope of
mode two or consumption abroad services transactions in foreign markets.
Review
the Table C3.5. “Number of foreign students in tertiary education by country
of origin” (2001) by OECD. The
Table provides information on countries where students are studying from
Bangladesh, Djibouti, Ecuador, Indonesia, Kenya, Peru, Pakistan, and Rwanda.
The Table also provides information on the number of university students
from OECD and Non-OECD countries that are studying abroad in OECD countries and
in Argentina, Chile, India, Indonesia, Malaysia, the Philippines, the Russian
Federation, Thailand, Tunisia, Uruguay.
Reviewing
the number of tourists and their respective countries of origin will provide
information on the scope of mode 2 or consumption abroad services transactions.
The
World Tourism Organization's Yearbook of Tourism Statistics provides information
on over 190 countries and territories
including detailed data on arrivals and nights (for the period 1996-2000) of
international inbound tourism broken down by country of origin of visitors/tourists:
arrivals at frontiers of tourists from abroad and arrivals at frontiers of
visitors from abroad. The Yearbook
is offered online in the ITC library.
Reviewing
foreign direct investment on a sector specific basis by country of origin will
provide information on the scope of mode 3 or commercial presence services
transactions.
The
following resources will be helpful in determining this information for foreign
firms established in the domestic market and for domestic firms established
abroad.
UNCTAD's
World Investment Directory located at:
FDI
Country Profiles
contain extensive data on FDI flows and stocks activities of TNCs, the legal
framework within each country/economy, including legislation relating to
bilateral treaties that govern national investment policy.
The profiles include:
Some of the countries
under study are not covered (Pakistan, Djibouti, Mozambique).
FDI
Interactive Database requires online registration, at no cost.
This database provides information regarding global FDI flows, stocks,
cross-border mergers and acquisitions, and investment treaties based on year and
country.
http://www.unctad.org/Templates/Page.asp?intItemID=2705&lang=1
Free
downloads are available for Bangladesh and Mozambique.
Reviewing
the number of workers in distinct service sectors will provide useful
information on the distribution of employment across sectors.
The
ILO Labour STA online statistics is a helpful source of information. http://laborsta.ilo.org/
See
“Total employment by Economic activity category” under “Yearly Data”.
Health
Reviewing
the number of foreign patients by country of origin will provide useful
information on mode two or consumption abroad services transactions.
This
information may only be available at the national level.
http://www.Martindale.com/XP/Martindale/home.XML
Provides a tool called
the “Lawyer Locator” that enables users to search for a lawyer or law firm
anywhere in the world. Listing of representative clients and office address provides information as to whether and where the firm is exporting its
legal services.
International
Organization for Standardization (ISO)
Gives the latest available worldwide certification picture. It includes
country-by-country breakdowns and comparisons with previous years. Free abridged
version available from:
http://www.iso.org/iso/en/iso9000-14000/pdf/survey2003.pdf
NOTE:
ISO develops and maintains the ISO 9000 standards, but it does not itself issue
ISO 9000 certificates. Certificates are issued independently of ISO by the
various national and international certification or registration bodies
operating around the world. Each certification or registration body has a list
of its clients, but there is no central database of all these
certifications/registrations. The CD-ROM version (available for 47 FCH) of the
ISO Survey includes a breakdown of
certifications by business sector, i.e. enables to search for the number of
certified service firms per country.
Investment
Promotion Network (IPAnet)
Established
in 1995 as part of the Multilateral
Investment Guarantee Agency (MIGA's) mandate to enhance Foreign
Direct Investment (FDI) in developing regions, the Investment
Promotion Network (IPAnet) is the leading international investment-specific
portal Web site providing free access to online foreign investment http://www.ipanet.net/index.cfm.
Provides business
information, legal information, market information, opportunities and events in
the following sectors: information and communication technologies, energy and
resources, infrastructure, manufacturing, services (financial, property, tourism/travel,
transport/logistics, trade/commerce, and other services).
http://devdata.worldbank.org/data-query/
Provides development
indicators for every country from 1999 to 2003, organized in 5 themes: people,
the environment, the economy, technology and infrastructure, trade and finance.
Additional
Sources of Information:
The
Central Statistical Office
The
Central Bank
The
Tourism Ministry
The
National University
The
Ministry of Commerce
The
United Nations Statistical Office National Accounts Data
Service
firms require the ability to finance operating activities on the basis of an
overdraft against accounts receivable. Commercial
banks may not offer this means of financing they may rely solely on physical
collateral (despite the willingness of central banks to accept accounts
receivable as collateral).
The
workforce may not have sufficient skills needed in service firms, for example,
communication, problem solving, and computer skills, due to insufficient
secondary and postsecondary education and training.
Service
firms may not enjoy the same tax incentives or treatment as other industries in
the economy.
Service
firms rely on information and communication technology and equipment to operate.
High import duties raise the price of this equipment to service providers
elevating their cost of doing business and impairing their ability to compete.
The Information Technology Agreement is designed to address this issue.
Public
entities providing similar services may compete directly with private sector
service firms.
Service
suppliers reliant on particular infrastructure service inputs controlled by
monopolies may have to pay monopoly prices for the inputs.
Excessive
time lag of public-sector payment to domestic service suppliers, over 45 days,
impairs cash flow and limits financial resources to develop export markets.
Recognition
of electronic documents would lower operating costs for service firms.
Service firms can increase their productivity by using electronic
documents.
Service
providers are dependent on telecommunications infrastructure to conduct
international trade. High priced,
low speed communications infrastructure can impair their ability to compete
internationally.
Donor
and government procurement rules and processes that favour foreign suppliers or
other public-sector agencies may disadvantage domestic private sector service
firms. Open procurement processes
that allow domestic service firms to compete for donor and government service
contracts expose them to wider market demands and can strengthen their expertise
and consequently their potential for exporting.
National
quality registrars may not be familiar with accreditation of service firms to
international service quality standards. Registration
and implementation of service quality standards is critical to export
competitiveness.
Financial,
telecommunications, transport, and energy monopolies that are not adequately
regulated may artificially raise the cost of doing business and reduce
competitiveness for service exporters.
The
inability of professional service providers to incorporate or function as
multidisciplinary firms may reduce their export competitiveness.
© Copyright Koinonia Ventures Limited, 2006
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