CARICOM TRADE IN SERVICES STATISTICS (CTIS)PROJECT June-December 2016 Regional Training Workshop November 21 to 25, 2016 by Lucilla Lewis, Lead Consultant

MSITS MANUAL OF STATISTICS ON INTERNATIONAL TRADE IN SERVICES (MSITS) CONCEPTUAL FRAMEWORK

Early History of Trade in Services RESULTING IN MSITS IN 2002 AND NOW MSITS 2010 Globalisation and trend towards trade liberalisation Uruguay Round WTO and the General Agreement on Trade in Services (GATS) and the Agreement on Trade- related Aspects of Intellectual Property Rights (TRIPS) GNS/W/120 list of services sectors Development of BPM5 and now BPM6 Developments by OECD and Eurostat Establishment of Inter-Agency Task Force on Statistics of International Trade in Services Development of Manual on Statistics of International Trade in Services

THE TIS STATISTICAL FRAMEWORK The Extended Balance of Payments on Services (EBOPS) The FDI Flows and Stocks The Foreign Affiliates Statistics (FATS) The GATS Four Modes of Supply

APPROACH OF MSITS Consistency with international standards related to trade in services, and extending them where necessary and feasible Recommendation of a phased implementation approach to meet each country’s priorities while improving inter- country comparability Importance of metadata

Publication of Manuals First manual was published by 6 agencies at the end of 2002: The EC The IMF The OECD The UN The UNCTAD The WTO

Why was it necessary to Publish the Manual on SITS A guide to statistical compilers A useful tool for Governments and international organisations that use statistical information in connection with international negotiations on trade in services in particular with respect to the General Agreement on Trade in Services (GATS) which came into effect in January 1995 To ensure standardisation and international comparability of statistics on trade in services compiled by countries.

How is the Manual on Statistics of International Trade in Services (MSITS) Structured? It builds on existing statistical systems (BOP and SNA) extends the balance of payments services classification (EBOPS) recommends compilation of statistics on Foreign Direct Investment (FDI) and Foreign Affiliates Statistics (FATS) identifies modes of supply of services (GATS 4 modes of supply- Cross Border, Consumption Abroad, Commercial Presence, Movement of Natural persons) discusses statistics on the presence of natural persons (GATS mode 4) Recommends approaches for compiling statistics on the GATS 4 modes of supply

WHY THE NEED FOR SITS To support negotiation of specific commitments and to monitor thereafter developments in the areas concerned To aid in the evaluation of market access opportunities Help in the preparation of decisions on negotiating priorities and strategies Facilitate the assessment of the extent of liberalisation Provide statistical background for settling disputes To provide the business sector with information to identify market opportunities

THE CHALLENGE: INTANGIBILITY OF SERVICES The term services covers a range of intangible products and activities that are difficult to encapsulate within a simple definition. MSITS adopts the definition of services from 2008 SNA as follows: “Services are the result of a production activity that changes the conditions of the consuming units, or facilitate the exchange of products or financial assets…”

CONVERGENCE WITH SNA In the framework of this definition SNA speaks of transformation services Changes in the condition of the consumer’s goods Changes in physical conditions of persons Changes in the mental conditions of persons and margin services: which result when one institutional unit facilitates the change of ownership of goods, knowledge capturing products, some services or financial assets between two other institutional units e.g. wholesalers and retailers

Extended Balance of Payments Services (EBOPS) classification gives detail on resident-nonresident transactions in services almost completely consistent with 1993 SNA and BPM5 and now SNA 2008 and BPM6

DIRECT INVESTMENT FLOWS Provides definition of FDIs Recommends compilation of flows and stocks of foreign direct investment enterprises

FATS VARIABLES Provides definition of foreign affiliates Recommends basic variables for compilation – sales/turnover and/or output; employment; value added; exports and imports of goods and services; and number of enterprises Recommends other variables for compilation

GATS 4 Modes of Services Supply mode 1 – cross border supply mode 2 – consumption abroad mode 3 – commercial presence or FATS mode 4 – movement of natural persons

Possible data sources- MSITS for EBOPS detail: expansion of balance of payments data collection or through dedicated TIS Questionnaire for inward FATS: existing data sources e.g. national accounts, (collaboration with Central Bank to get preliminary register of FDIs and FATs), direct survey for outward FATS: survey of domestic parents Inward and outward FDI flows and stocks: BOP data Rough approximation of GATS 4 Modes of Supply: GATS Modes 1 and 2 and part of mode 4 balance of payments transactions, GATS Mode 3 FATS statistics

MSITS 2010 (Second MSITS Manual published in 2010) Why? Largely to remain consistent with other statistical systems - BOP and SNA To introduce a chapter which discusses in more details and makes further recommendations on the measurement of modes of supply of services To go beyond SNA 2008 and BPM 6 and the traditional national accounting concept of trade to consider how services are delivered internationally from a perspective related to trade and market access negotiations !!!! Importance of information by trading partner

MSITS 2010 and International Agreements While the 2 main building blocks of MSITS have remained, MSITS 2010 provides a clearer description of how to use these statistics with respect to international agreements. BPM6 continues to be the primary source of statistical guidance on international trade in services, international investment transactions and economic flows associated with the movement of workers. MSITS therefore maintains the broader categories in BPM6 but provides further details so as to identify services that feature significantly in international trade.

Standard Components of BPM6 and MSITS 2010 both (CPC V2 based) Manufacturing services on physical inputs owned by others Maintenance and repairs not included elsewhere (n.i.e.) Transport Travel Construction Insurance and pension services “Other” Financial Services Charges for use of intellectual property (n.i.e.) Telecommunications, computer and information services Other business services Personal, cultural and recreational services Government goods and services (n.i.e.)

STANDARD PRESENTATION BPM6 AND EBOPS 2010

Components with Greater Details Insurance services Charges for use of intellectual property Other Business Services Personal, cultural and recreational services.

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