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Transcript of Services in Doha: What is on the Table? Aaditya Mattoo (based on research with Ingo Borchert and...
Services in Doha:
What is on the Table?
Aaditya Mattoo
(based on research with Ingo Borchert and Batshur Gootiiz)
ICTSD-World Bank-WTO2 November 2010
Three questions:
• Where are we today?
• Where would we like to be?
• How do we get there?
AFG
ALB
DZA
AND
AGO
ATA
ATG
ARG
ARM
AUS
AUT
AZE
BHS BHRBGD
BRB
BEL
BLZ
BEN
BMU
BTN
BOL
BIH
BWA
BRA
BRN
BGR
BFA
BDI
BLR
KHM
CMR
CAN
CPV
CAF
TCD
CHL
CHN
COL
COM
COG
CRI
HRV
CUB
CYP
CZE
DNK
DJIDMA
DOM
ECU
EGY
SLV
GNQ
ERI
EST
ETH
FLK
FRO
FJI
FIN
FRA
GUF
PYF
GAB
GMB
ISR
GEO
DEU
GHA
GRC
GRL
GRD
GLPGTM
GINGNB
GUY
HTI
HND
HUN
ISL
IND
IDN
IRNIRQ
IRLXIM
ISR
ITA
CIV
JAM
SJM
JPN
JOR
KA Z
KENKIR
PRK
KOR
KWT
KGZ
LAO
LVA
LBN
LSO
LBR
LBY
LIE
LTU
LUX
MAC
MKD
MDG
MWI
MYSMDV
MLI
MLT
MTQ
MRT
MUS
MEX
MDA
MCOMNG
MAR
MOZ
MMR
NAM
NPL
NLD
NCL
NZL
NIC
NER
NGA
MNP
NOR
OMN
PAK
PAN
PNG
PRY
PER
PHL
POL
PRT
PRI
QAT
REU
ROM
RUS
RWA
SMR
STP
SAU
SEN
SYC
SLE
SGP
SVKSVN
SLB
SOM
ZAF
ESP
LKA
LCAVCT SDN
SUR
SJM
SWZ
SWE
CHE
SYR
TWN
TJK
TZA
THA
TGO
TON
TTO
TUN
TUR TKM
TCA
UGA
UKR
ARE
GBR
USA
URY
UZB
VUT
VEN
VNM
ESH
WSM
YEM
YUG
ZAR
ZMB
ZWE
Low income
Lower middle
Upper middle
High-OECD
High-nonOECD
No data
Services trade database coverage
Financial, telecommunications, transport, retail, professional
Restrictiveness of services trade policy in 102 countries
Source: Borchert, Gootiiz and Mattoo (2010)
New World Bank services policy database showssubstantial but uneven unilateral liberalization
ECU TTOGEONIC DOM NLDPOLARM LTUBGRMUSMNG IRLKGZ GBRMDG NZLROMPERCOLPRY AUS USASWEHND KAZGTM JPNARGBRA ESPGHASEN GRCCZEHUN DEUKHMZMB CANPAK ALB AUTMAR UKR TURRWA CHL KORRUS DNKUZB BELPRT FINBOLCMR ITANGACIVMLI URY MEXKEN CRI FRAYEMTZA ZAFMOZUGAMWI BLRVENNAMLSO DZATUNLKAJOR BWABGDVNMNPL LBN SAU
OMNCHN PANDRC BHRMYSEGY THAPHLIDN
INDZWE IRN
ETH
02
04
06
08
01
00
Re
str
ictiv
en
ess
of s
erv
ices
tra
de
po
licy
0 10000 20000 30000 40000GDP per capita, 2007
Note: GDP per capita, PPP (constant 2005 internat US$)Kuwait and Qatar excluded
Services trade restrictiveness index (STRI) by regions and sectorsServices trade restrictiveness index (STRI) by regions and sectors
020
40
60
80
Res
tric
tiveness
of se
rvic
es
trade p
olic
y
SAR MENA EAP World LAC AFR ECA OECD
Financial Transportation
Telecom Professional
Retailing
Source: Borchert,Gootiiz, Mattoo 2010
Transportation and professional services are among the most protected sectors everywhere
Uruguay Round Commitments and Actual Policy
SENNGA
NAM
UGADRC
MLI
MOZMWI
MUS
MDG
LSO
ZAF
CIV
ZMB
GHA
ZWE
CMR BWA
RWA
KE N
TZA
THAPHL
CHN
MYS
VNM
IDN
KHM
MNG
UKR
ALB
ROM
GEO
ARM
HUN
LTU
CZE
BGR
KGZ
POL
TUR
OMN
KWT
SAU
BHR
MEX
CRI
PER
CHLNIC
GTM
PRY
ARG
BRADOM
PANBOL
ECU
HND TTO
VEN
COL
URY
EGY
TUN
MA R
JOR GBR IRLAUT
FIN
FRAKOR
AUS
DEU USA
ITA
JPN
PRT DNK
NLDSWE
GRC
BEL
ESP
NZL
CAN
NPL
IND
BGD
PAK
LK A
SEN
NGA
NAMUGA
DRC
MLI
MOZ
MWI
MUSMDG
LSOZAF
CIV
ZMBGHA
ZWE
CMR
BWA
RWA
KE NTZA
THAPHL
CHNMYS
VNM
IDN
KHM
MNG
UKRALB
ROM
GEOARM
HUN
LTU
CZE
BGRKGZ POL
TUR
OMNKWT
SAU
BHR
MEXCRI
PER
CHL
NIC
GTMPRY ARGBRADOM
PAN
BOL
ECU
HND
TTO
VEN
COL
URY
EGY
TUN
MA R
JOR
GBR IRL
AUT
FINFRA
KOR
AUSDEU
USA
ITA
JPN
PRT DNK
NLDSWE
GRC
BEL
ESP
NZL
CAN
NPL
IND
BGD
PAK
LK A
02
04
06
08
01
00S
ervi
ces
trad
e re
stric
tiven
ess
inde
x
0 10000 20000 30000 40000 50000GDP per capita (2007)
Restrictiveness of UR commitment Fitted values
Restrictiveness of actual policy Fitted values
UR and applied policy -92 countries
Source: Borchert,Gootiiz, Mattoo 2010
Uruguay Round Commitments, Doha Offers and Actual Policy
ZAF
KENNGA
MUS
PHL
CHN
IDNMYS
THA
ALB
CZE
TUR
LTU
HUN
POLBGR
BHR
OMN
DOM
MEX
CHL
BRAPE R
BOL
TTOGTMHND
ARG
URY
PAN
CRI
COLNIC PRY
JOR
MAR
TUNEGY
NZL
USA
DNK
AUS
GRC
FIN
JPN
PRT
AUT IRLSWEDEU
NLDCANGBR
KOR BEL
ESP
ITAFRA
LKA
IND
PAK
ZAF
KEN
NGAMUS
PHL
CHN
IDN MYSTHA
ALB
CZE
TUR
LTU
HUNPOL
BGR
BHR
OMN
DOM
MEX
CHL
BRA
PE R
BOL
TTOGTMHND
ARG
URY
PAN
CRI
COLNIC PRY
JOR
MAR
TUNEGY
NZL
USADNK
AUS
GRC
FINJPN
PRT
AUT
IRLSWEDEU
NLD
CAN
GBR
KOR
BEL
ESP
ITA FRA
LKAIND
PAK
ZAFKENNGA
MUS
PHL
CHN
IDN
MYSTHA
ALB CZETUR
LTU
HUN
POLBGR
BHROMN
DOM
MEX
CHL
BRAPE RBOL
TTO
GTMHND ARG
URY
PAN
CRI
COL
NIC
PRY
JOR
MAR
TUN
EGY
NZL
USA
DNK
AUSGRC
FIN
JPN
PRTAUT
IRLSWE
DEU
NLD
CAN
GBR
KORBEL
ESP
ITAFRA
LKA
IND
PAK
02
04
06
08
01
00S
ervi
ces
trad
e re
stric
tiven
ess
inde
x
0 10000 20000 30000 40000GDP per capita,PPP
Restr ictive ness of GATS co mmitment Fitted values
Restr ictive ness of DOHA Offers Fitted values
Restr ictive ness of actual policy Fitted values
STRI for 61 countries, excluding Qatar and 31 countries that did not submit offers
Source: Borchert,Gootiiz, Mattoo 2010
Comparison of UR commitments, Doha offers, and actual Comparison of UR commitments, Doha offers, and actual policies by regionpolicies by region
Source: Bochert, Gootiiz, Mattoo 2010
02
04
06
08
0S
erv
ice
s tr
ade
re
stri
ctiv
en
ess
ind
ex
SAR GCC LAC AFR MENA EAP OECD ECA
Binding gap, offer gap and applied policy for 93 countries
Actual Policy
Offer gap (Doha Offer-Actual policy)
Offer Improvement (Uruguay Round commitment-Doha Offer)
Comparison of UR commitment, Doha Offers, and policies Comparison of UR commitment, Doha Offers, and policies by Sectorby Sector
Source: Bochert, Gootiiz, Mattoo 2010
010
2030
4050
6070
80S
ervi
ces
trad
e re
stric
tiven
ess
inde
x
Financial Telecom Retailing Maritime shipping Professional Overall
Offer Improvement (Uruguay Round commitment-Doha Offer)
Offer gap (Doha Offer-Actual policy)
Actual Policy
Mode 3/FDI: Actual policies in services trade (2008-2009) Open Restrictive
Closed
Countries Banking Telecom-Fixed RetailingMaritime Shipping Int. Accounting
China
India
Malaysia
Indonesia
Philippines
Thailand
Cambodia
Argentina
Brazil
Chile
Colombia
Mexico
Jordan
Morocco
Ghana
Nigeria
South Africa
Kenya
Australia
Denmark
Japan
Korea, Republic
United States
Mode 3/FDI: GATS commitment and Doha Offers Open
Restrictive
Closed
Countries Banking Telecom-Fixed RetailingMaritime Shipping Int. Accounting
China
India NC Unbound
Malaysia NC
Indonesia NC NC
Philippines NC NC
Thailand
Cambodia Unbound
Argentina NC
Brazil
Chile NC NC
Colombia NC NC
Mexico
Jordan
Morocco
Ghana NC Unbound NC
Nigeria NC
South Africa Unbound
Kenya NC NC NC
Australia
Denmark Unbound
Japan Unbound
Korea, Republic
United States NC
Source: Bochert, Gootiiz and Mattoo (2010)
Mode 1: Actual policies in services trade (2008-2009) Open
Restrictive
Closed
Countries Bank: Loans Life insuranceMaritime Shipping Accounting Law (domestic)
China
India
Malaysia
Indonesia
Philippines
Thailand
Cambodia
Argentina
Brazil
Chile
Colombia
Mexico
Jordan
Morocco
Ghana
Nigeria
South Africa
Kenya
Australia
Denmark
Japan
Korea, Republic
United States
Source: Bochert, Gootiiz and Mattoo (2010)
Mode 1: GATS commitments and Doha Offers Open
Restrictive
Closed
Countries Bank: Loans Life insuranceMaritime Shipping Accounting Law (domestic)
China Unbound Unbound NC
India Unbound Unbound NC
Malaysia Unbound Unbound NC
Indonesia Unbound NC Unbound
Philippines CP req CP req NC NC
Thailand Unbound Unbound Unbound
Cambodia CP req Unbound
Argentina Unbound Unbound NC
Brazil Unbound Unbound NC
Chile Unbound Unbound NC Unbound NC
Colombia Unbound Unbound NC Unbound NC
Mexico Unbound Unbound NC
Jordan CP req NC
Morocco Unbound Unbound NC
Ghana Unbound NC NC
Nigeria Unbound Unbound NC
South Africa Unbound Unbound Unbound Unbound
Kenya Unbound NC NC NC
Australia Unbound Unbound
Denmark Unbound Unbound
Japan Unbound Unbound
Korea, Republic Unbound Unbound NC
United States Unbound Unbound NC
Source: Bochert, Gootiiz and Mattoo (2009) “CP req”: commercial presence required; NC: no UR Round commitments and Offer reflects the commitment.
Where would we like to be?
• to harvest unilateral liberalization.
– Difficulty of making the required legislative changes in negotiating context
– Blistering technology cycle versus ponderous negotiating cycle
• to advance liberalization beyond unilateral levels.
Two levels of ambition for multilateral services negotiations
Mode 1: Shared interest in cross-border trade in business services
Source: WTO “International trade statistics 2010”, Tab. III-9
Regional distribution of other commercial services exports, percentage shares, 2000 and 2009
Average growth rate 1998-2008 of other commercial services exports, selected countries, percent,
1.52.4
10.110.6
11.411.812.0
15.216.3
17.518.2
19.522.322.723.0
26.427.9
28.832.0
0 10 20 30(%)
NigeriaJamaicaMalaysia
New ZealandUnited States
MauritiusUnited Kingdom
IsraelNorway
BrazilSpain
SwedenFinland
ChinaIreland
MoroccoArgentina
MaltaIndia
Romania
Source: WTO Trade in Services Database,Other Commercial Services.
Exports, Selected Countries, 1998 - 2008Average Growth Rate of Commercial Services
Source: WTO Trade in Services Database, Other commercial services
More restrictive transport policies are associated with more expensive and poorer quality logistics services
Source: Borchert, Gootiiz, Grover and Mattoo (2010)
UZBLAO
RWAKAZ
MUS
URYNICNLD
CRICHL
LTU
ALB
NZLDNK
PHL
PANLBN
GBR
INDBGR
DOM
PRT
POL
PER
JPN
SWE
GRC
ITA
DEU
GHA
GTM
AUS
ESP
KORBEL
FIN
IRL
ROMUGA
CANIDNHNDARGFRA
BRA
MDG
SEN
USA
ZAF
UKR
MEX
GEO
COL
ETH
LKA
KENDRC
KGZ
TUR
MOZ
ECU
NAM
VEN
ARMNPL
NGA
ZMB
KHM
RUS
PAK
MYS
MLI
BOL
PRY
DZAMNG
CZE
CIV
BWA
BGD
HUN
TZA
YEM
JORAUT
THA
BHREGY
TUN
CMR
VNM
IRN
KWTCHN
OMN
QAT
SAU
-1-.
50
.51
e( L
PI_
com
p_pr
iced
2009
| X
)
-.1 0 .1 .2e( agI_m0_tra | X )
coef = -1.4153001, (robust) se = .53648491, t = -2.64
LPI_comp_priced2009: IV estimationPartial regression graph
UZBLAO
RWAKAZ
MUS
URY
NIC
NLD
CRI
CHLLTUALB
NZLDNK
PHLPAN
LBN
GBRIND
BGR
DOM
PRT
POL
PER
JPN
SWE
GRC
ITA
DEU
GHA
GTMAUS
ESP
KOR
BELFIN
IRL
ROM
UGACAN
IDN
HND
ARG
FRA
BRA
MDG
SEN
USA
ZAF
UKRMEX
GEO
COL
ETH
LKA
KEN
DRC
KGZ
TURMOZ
ECU
NAM
VEN
ARMNPL
NGA
ZMB
KHM
RUS
PAK
MYS
MLIBOL
PRY
DZA
MNGCZE
CIV
BWA
BGD
HUN
TZAYEMJOR
AUT
THA
BHREGY
TUN
CMR
VNM
IRN
KWT
CHN
OMN
QAT
SAU
-1-.
50
.51
e( L
PI_
qual
ity_l
ogis
tics2
009
| X )
-.1 0 .1 .2e( agI_m0_tra | X )
coef = -1.613734, (robust) se = .58220632, t = -2.77
LPI_quality_logistics2009: IV estimationPartial regression graph
Availability of competitively priced logistics services
Quality of logistics services
Land-locked or policy-locked? Restrictive services policies deepen economic isolation
Source: Borchert, Gootiiz, Grover and Mattoo (2010)
• In air transport and telecommunications services, applied trade policies in landlocked countries are almost twice as restrictive as in coastal countries.
More restrictive policies lead to higher market concentration and more limited access to services even after taking into account the influence of geography and incomes
55
33
43
23
020
4060
Air mode 1 Telecom
Overall STRI for air transport and telecom
Landlocked Coastal
Services reform vital for trade facilitation
• “Trade-facilitating” investments will earn a poor return unless they are accompanied by meaningful services reform.
• But countries (including the landlocked) cannot unilaterally reform international transport. The policies in other countries, industrial and developing, also limit competition.
• The de jure and/or de facto exclusion of transport would be a serious omission from a “development round”.
Procedure US inpatient
price ($)
US inpatient volume
US outpatient price ($)
Estimated US outpatient
volume
Foreign price including travel cost ($)
Savings if 10% of US patients undergo surgery abroad instead of in the US ($)
Knee surgery 10,335 399,139 4,142 60,000 1,236 380,604,366 Shoulder Arthroplasty 5,940 23,300 7,931 N/a 2,204 8,704,809 TURP 4,127 111,936 3,303 88,064 2,385 27,581,317 Tubal Ligation 5,663 78,771 3,442 621,229 1,248 171,065,574 Hernia Repair 4,753 40,553 3,450 759,447 1,608 152,655,706 Skin lesion excision 6,240 21,257 1,696 1,588,884 812 151,952,860 Adult Tonsillectomy 3,398 17,251 1,931 102,749 1,010 13,588,218 Hysterectomy 5,783 640,565 5,420 N/a 1,869 250,704,845 Haemorrhoidectomy 4,945 12,787 2,081 137,213 781 23,160,663 Rhinoplasty 5,050 7,265 3,417 N/a 1,906 2,284,315 Bunionectomy 6,046 3,139 2,392 41,507 1,487 5,186,290 Cataract extraction 3,595 2,215 2,325 1,430,785 1,133 171,078,116 Varicose vein surgery 7,065 1,957 2,373 148,043 1,393 15,618,521 Glaucoma procedures 3,882 - 2,292 75,838 1,017 9,670,440 Tympanoplasty 4,993 754 3,347 149,246 1,261 31,408,685
Total savings 1,415,264,725
Source: Mattoo and Rathindran (2006)
Mode 2: Example: the US could save over $1.4 billion annually even if only one in ten US
patients chooses to undergo just 15 types of low-risk treatment abroad
Mode 3: Example: India’s reform of services sectors
Newly created index of services reform
0
0.5
1
1.5
2
2.5
3
3.5
4
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Banking Insurance Telecom Transport
Newly created index of services reform
0
0.5
1
1.5
2
2.5
3
3.5
4
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Banking Insurance Telecom Transport
0
5
10
15
20
25
30
35
40 Growth Rate (CAGR)
36%
20%
FDI in Services*
FDI in Non-services
India: FDI in services sector is growing faster than in non-services . . .
(1992/93 values are indexed to 1; Unit: US$)
1992
/93
1993
/94
1994
/95
1995
/96
1996
/97
1997
/98
1998
/99
1999
/00
2000
/01
2001
/02
0
5
10
15
20
25
30
35
40 Growth Rate (CAGR)
36%
20%
FDI in Services*
FDI in Non-services
India: FDI in services sector is growing faster than in non-services . . .
(1992/93 values are indexed to 1; Unit: US$)
1992
/93
1993
/94
1994
/95
1995
/96
1996
/97
1997
/98
1998
/99
1999
/00
2000
/01
2001
/02
…has boosted not only productivity and exports in services, but also the
performance of downstream manufacturing industries
Gains in Annual TFP Growth After Services Reform
0
1
2
3
4
industries withlimited
dependence on banking
industries with high
dependence on banking
industries with limited
dependence on telecomms
industries with high
dependence on telecomms
Percent Gains in Annual TFP Growth After Services Reform
0
1
2
3
4
industries withlimited
dependence on banking
industries with high
dependence on banking
industries with limited
dependence on telecomms
industries with high
dependence on telecomms
Percent
New study based on panel data for 4,000 Indian firms for the 1990-2005 period finds that
banking, telecommunications and transport reforms all have significant positive effects on the productivity of manufacturing firms
Source: Arnold, Javorcik, Lipscomb and Mattoo (2008).
Mode 4: Shared global interest in greater mobility of individual service providers
•Stong intuitive and empirical evidence of large gains from labor mobility, skilled and unskilled (e.g. Winters, et al.).
•A 10% increase in the number of foreign graduate students would raise patent applications by 4.5%, university patent grants by 6.8% and non-university patent grants by 5.0%. Increases in skilled immigration also have a positive, but smaller, impact on patenting.
Chellaraj, Maskus and Mattoo (2008)
What should we aim for in a services agreement?
• To lock in existing openness, especially on cross-border trade (mode 1) and consumption abroad (mode 2)
• To gradually phase out barriers, especially in transport and foreign investment (mode 3), consistently with development objectives
• To at least begin to allow and facilitate the movement of individual service providers (mode 4)
III. How do we get there?
First, diminished government willingness because of three concerns:
• Loss of regulatory freedom• Regulatory unpreparedness• Lack of regulatory cooperation
The crisis has enhanced these fears.
Why have countries been reluctant to commit multilaterally?
Market access negotiations need to be supported by greater regulatory cooperation
Because while services are increasingly globalized, regulation remains national
•More coherent assistance to developing countries to build regulatory institutions and institute access-widening policies: “aid for services trade” and a “services knowledge platform”
•More cooperation on prudential regulation (e.g. on finance and data flows) and pro-competitive regulation (e.g. on transport and information services)
•More cooperation between host and source countries on mode 4 (as in bilateral labor agreements)
Some of this cooperation will necessarily be bilateral and regional
Second, diminished business interest because of:• Unilateral and bilateral/regional liberalization, • Growing economic interdependence has reduced
likelihood of policy reversal• Negotiating pessimism
Has the crisis vindicated or dispelled complacence?
How can we break out of the low-level equilibrium trap lo low expectations and limited engagement?
Why have countries been reluctant to commit multilaterally?
Achieving parity of ambition for services: can we break the negotiating stalemate?
Proposal: Instead of incremental, sectoral or modal negotiations, is it possible to define a final package which is balanced, developmentally desirable and commercially relevant?
Would a critical mass of countries consider committing to:
• No new restrictions, especially on cross border trade in business services, and more open transport
• Precommitment to reform, especially on FDI, and to greater regulatory cooperation and assistance
• Greater scope for temporary migration with source country obligations