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The Manual on Statistics of International Trade in Services and Current

Revision Process

joscelyn.magdeleine@wto.org

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Trade in services statistics

• By service sectors• By partner• By modes of supply

GATS

Compilers of Statistics BOP/FATS

Trade Negotiators

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Why are statistics on international trade in services needed in trade negotiations?

Market access

NegotiateDecision-making

Compare Quantify Statistical

framework

Manual

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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

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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

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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

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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

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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

GoodsServicesIncomeCurrent transfers

11 componentsTransportationTravelCommunicationsetc.

2002 Manual

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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 3

Mode 4

2002 Manual

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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

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Modes of Supply and Statistical Domains

2002Manual

Mode of Supply Relevant Statistical Domains

Mode 1: Cross border supply

BOP: Commercial services

(excluding travel and construction services)

Mode 2: Consumption abroad

BOP: Travel

Mode 3: Commercial presence

FATS statistics BOP: construction services FDI data (supplementary information)

Mode 4:

Presence of natural persons

Insufficiently covered BOP: commercial services (excluding travel)

supplementary information: compensation of employees

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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

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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

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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

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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

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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

... 1st worlwide consultation in 2006

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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

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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

frameworksAnnex VII – Analysing trade in services data Annex VIII – Cross-cutting issues on goods and

services ?

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Shorter and clearer definition of GATS and

coverageGATSPillars

Set of general obligations and disciplines

Countries schedules of specific commitments

Annexes on specific issues

Commitmentsunder GATS

By modes of supply

By services sectors

The Services Sectoral Classification ListGNS/W/120

... More detailed description of modes of supply in Chapter V

NEW Manual

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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, travellersForeign Direct Investment

AMNE/FATS

NEW Manual

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Integrated Statistical ClassificationsNegotiationsStatistics

Products

Activities

Goods

CPC(All)

HS GNS/W/120

EBOPS(Services)

ISIC, Rev. 3

ICFA

Services

SITC

Other

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Statistical classifications

CPC Version 2

ISIC Revision 4

ISCO 2008

NEW Manual

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Approach and frameworkGuidelines 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

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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

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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 developmentProfessional and management consulting servicesTechnical, 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

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Use of intellectual property

Sale/purchase of ownership rights

Franchises and trademarks Charges for the use of intellectual property

capital account entry

Outcomes of research and development

Charges for the use of intellectual property

research and development

services

Computer, audiovisual, and related services:

License to use excluding

reproduction and distribution

License to reproduce and/or

distribute

(a) Customized all types relevant service

item

(b) Noncustomized—downloaded or otherwise electronically delivered

relevant service item

(c) Noncustomized—provided on physical media with periodic license fee

relevant service item

relevant service item*4

(d) Noncustomized—provided on physical media with right to perpetual use

goods

charges for the use of intellectual property n.i.e.

Intellectual property in BPM6 and MSITS?BOP/EBOPS

serviceschanges

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Proposed main revisions forChapter 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

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Affiliates of hotelchains (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 restaurantsTravel agencies and tour operator serv.Tourist guide servicesOther services

4 modes of supplying services

NEW chapter

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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

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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

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GATS Simplified allocation of FATS and EBOPS data to modes of supply

Modes of supply 1 2 3 4 1 and 4 2 and 4 3 and 4

Foreign Affiliates Statistics (by service product using EBOPS; if not possible by service activity using ICFA) Services sales/output (by type of sevice) X

Balance of Payments (by service product using EBOPS) Manufacturing serv. on physical inputs owned by others X Maintenance and repair services n.i.e. X Transport X Passenger X

Freight X

Post and courier services X

Other

Serv. to domestic carriers in foreign ports (and vice-versa) X

Other X

Travel X Goods

Local transport services X

Accommodation services X

Food-serving services X

Other services X

Telecommunication, computer and information services X Telecommunication services X

Computer services X

Information services X

Construction X Goods

Services X

Insurance and pension services X Financial services X

NEW chapter

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Simplified allocation of FATS and EBOPS data to modes of supply

Modes of supply 1 2 3 4 1 and 4 2 and 4 3 and 4

Charges for the use of intellectual property Licenses to reproduce and/or distribute computer software

Licenses to reproduce and/or distribute audiovisual products

Charges for use of outcomes of research and development

Franchises and trademarks licensing fees X

Other business services X Research and development services X

Professional and management consulting services X

Technical, trade-related and other business services

Architectural, engineering, scientific, other technical serv. X

Waste treatment, de-pollution, agricultural, mining services

o Waste treatment and de-pollution X

o Services incidental to agriculture X

o Services incidental to mining x

Operational leasing services X

Trade-related services X

Other business services, n.i.e. X

Personal, cultural and recreational services X Government goods and services n.i.e. Government goods n.i.e., Credits and debits

Government services n.i.e., Credits

Government services n.i.e., Debits

Commercial services purchased in host economies

o Government units in diplomatic and similar enclaves X

o Personnel from home economy and dependants X

Other commercial services n.i.e purchased by government X X

Non-commercial services acquired by government

Estimated distribution (wholesale, retail trade) services X

NEW chapter

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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

Length of stay of individuals Purpose of trip or migration Less than

3 months 3 to 12 months

more than 12 months

Visitors Personal International

Holiday, leisure and recreation Recommendations on Visiting friends and relatives Tourism Statistics 2008 Education and training Shopping Etc.

Business and professional (no employer-employee relationship with entity established in compiling economy)

X x

Contractual service supply X x - self-employed a X x - employed X x Intra-corporate transfer X x Serv. salespersons/ commercial pres. X x Other

Employment (migrant workers, employment-based settlement)

Intra corporate transfer x X Directly recruited by a foreign

established company x X

International civil servants Other

Trainees Family reunification/formation Etc.

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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

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Next steps for the Revision of MSITSMay 2006 – September 2008Worldwide consultation on scope of update and issuesTFSITS reviewed worldwide consultation responsesStarted drafting of Chapter on modes of supply and updating/drafting of other chaptersConsultation 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 CommissionDraft chapters agreed by TFSITS

September – 24 November 2008: Worldwide consultation on complete draft of revised MSITSDecember 2008 – February 2009:TFSITS to review comments and re-draft MSITS chaptersMarch – April 2009: TFSITS meeting: review comments and revised draft; cross-cutting issuesSummer 2009: Finalize draft and chapters and post for final reviewNovember 2009: Prepare submission to UNSCMarch 2010: Draft submitted to UN Statistical Commission

Revised Manual in 2010!