CRNM Private Sector Trade Brief Volume One

CRNM PRIVATE SECTOR TRADE BRIEF

The CRNM Private Sector Trade Brief is supported by a project funded by the Inter- American Development Bank Multilateral Investment Fund (MIF) to "Strengthen the Private Sector's Role in the Caribbean Community 's External Negotiations." It is a monthly publication which forms part of the CRNM private sector outreach activities to update the CARICOM private sector and solicit their feedback on developments in the external trade negotiations.

Volume 2 March 2005

IN THIS ISSUE: Understanding the Implications of Services Negotiations for Trading by Regional Enterprises

Within this trade brief we will examine some of the challenges and opportunities to be derived from negotiations on trade in services from a CARICOM perspective:

Global and Regional Trends in Services Trade
Services in the General Agreement on Trade in Services (GATS)
Creating New Opportunities for Modern Trade and Investment
Increasing Movement of Service Providers
Improving regional competitiveness in major service sectors: Tourism, Transportation and Information Communication Technology (ICT)

Global and Regional Trends in Services Trade

Commercial services in sectors such as finance, tourism, telecommunications, transport, software development, construction, education and professional services have become the 'lifeblood' of both regional and global economies. In 2004, world exports of commercial services were estimated to have grown to US$1.8 trillion, expanding by about 20% over the 2000 estimated value of US$1.5 trillion. By comparison,world exports in merchandise trade grew from US$6.4 trillion to US$7.5 trillion over the same period, a growth rate of about 17%.(Source: UNCTAD) Today, trade in services is estimated to account for over 60% of production and employment in the world.

With the exception of Guyana, the contribution of services to overall GDP in all CARICOM countries exceeds 60% (see Figure 1).In recent years within CARICOM, services exports have shown an upward trend, moving from US$6.2 billion in 1997 to US$7.1 billion in 2002, a 14% increase. The corresponding upward trend in services imports shows a 24% increase from US$3.7 billion in 1997 to US$4.6 billion in 2002. (Figure 2) The average annual value of total services exports for all countries excluding Haiti over the period between 1997 and 2002 was US$6.8 billion. The average value of services imports over the same period was US$4.2 billion.

Services in the General Agreement on Trade in Services (GATS)

Given the growing global importance of trade in services and the need for a multilateral framework for negotiations, the General Agreement on Trade in Services (GATS) was concluded as part of the Uruguay Round. The GATS took effect in 1995 within the newly established World Trade Organization (WTO). The full GATS text and annexes can be found at :http://www.wto.org/english/docs_e/legal_e/26-gats_01_e.htm.

To read more about implications of the General Agreement on Trade in Services (GATS), Click here [More]

Creating New Opportunities for Modern Trade and Investment

It is now widely recognized by both governments and private sector interests within the CARICOM region, that the reliance on traditional exports, is no longer a viable way to create economic growth. Few economies within the region have achieved the levels of sophistication in goods production, required to be competitive in a liberal trading environment. In general, declining competitiveness in traditional exports, limitations in infrastructure for production and distribution and the erosion of preferential treatment in key markets have signaled the urgent need to diversify exports. There is a need for an increased emphasis on services exports and the development of new industries to reduce the over-dependence on tourism in most CARICOM economies. (According to UN ECLAC, in 2000, nearly 90% of the services receipts of the Bahamas and 67% of Jamaica came from tourism services.)

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Increasing Movement of Service Providers

In CARICOM Member States, as in other developing countries, professional services are generally traded through Modes 1 and 4. Constraints to Mode 1 (Cross-border) supply of services include licensing, residency and nationality requirements, and registration, among others. The current GATS negotiations in the Doha Round are seeking to address these issues. Temporary movement of service suppliers (under Mode 4) is normally constrained by work permit and visa requirements in foreign countries. Trade negotiations may be able to increase transparency in work permit procedures.

Improving regional competitiveness in major service sectors: Tourism, Transportation and Information Communication Technology (ICT)

In view of the significance of the Tourism, Transportation and ICT sectors to regional development, the CRNM recently engaged in regional sector specific consultations in tourism and transportation. Further consultations are planned with major regional players in the ICT sector, within the current year.

For more on improving regional competitiveness in major service sectors: Tourism, Transportation and Information Communication Technology (ICT), click here [More]

[Click Here To post views on Services Negotiations within a virtual discussion forum]

Comments in relation to this trade brief content may be forwarded to the barbados.office@crnm.org

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