7. Compiling data by Mode of Supply THE CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION

The four GATS modes of supply Mode of supply is determined by where the consumer and supplier are located at the time the service is supplied. Four modes: Mode 1: cross-border supply Mode 2: consumption abroad Mode 3: commercial presence Mode 4: movement of natural persons

and Statistical Domains: The simplified approach in MSITS2010 Value of services trade GATS Modes of Supply and Statistical Domains: The simplified approach in MSITS2010 Mode 1 Mode 2 Mode 4 Balance of Payments Services Statistics Mode 4: Remittances and compensation of employees are not measures of mode 4 trade Mode 3 Foreign AffiliaTes Statistics (FATS) + other (quantitative) indicators (in particular mode 4) © WTO/OMC

Determining the relevant mode of supply Needs 2 groups of variables: Value of the services (exports and imports), FDI transactions and position in services industries, And the number of persons temporarily moving and present abroad in the context of the supply of services (mode 4). Broken down according: To the type of services supplied (product or type of activity) To the direction of the supply (origin and destination) To the relation between the parties (related or unrelated enterprises)

Determining the relevant mode of supply Ideally each BOP services transactions should be allocated by mode of supply to fulfil GATS needs. Too burdensome using EBOPS 2010 breakdown Recommended for countries meaningful items At least for the 12 major BOP services components Full allocation as a long term goal. As a first step simplifying assumptions are recommended Each type of service to be allocated to a dominant mode And when there is no single dominant mode, allocation to be done to the most significant mode The most difficult task is to assess the relevant part of transactions relating to mode 4 Ic is

Focus on mode 4 “Presence of natural persons when an individual is temporarily present in the territory of an economy other than is own to provide a commercial services” MSITS §5.16 Services suppliers may be: Contractual services suppliers: self-employed or employees Intra-corporate transferees and foreign employees directly recruited by foreign affiliates Business visitors or services sellers Mode 4 applies to service suppliers at all skill level Duration of stay: temporary Temporary not defined in the GATS: depends on the category of persons involved (generally not aligned with the one year rule) Excludes permanent migration

Modes of supply simplified approach

Modes of supply simplified approach

Simplified approach modus operandi Each service item is allocated to one or several modes of supply, based on an assumption on how a specific service item is “most probably” supplied by exporters (or to importers) of the economy, Adaptation of this generic allocation to the compiling economy, taking account of the compiler’s experience and of the opinion of the trade negotiators, Additional information on specific services sectors (legal services, computer services, consultancy, construction…) may help to validate the assumptions: contacts with major services providers or trade associations, relevant ministries, The next step would be the use of surveys targeted towards the most relevant services sectors of the compiling economy.

Several (alternative) approaches to compiling modes of supply

Simplified allocation using table 5-2 Used as a first stage Compiler has to decide how the specific service item is most probably supplied by exporters (or to importers) Evaluation if the allocation is relevant for each compiling economy Validation of the allocation by additional information (qualitative interviews with relevant players in specific sectors) and/or the use of surveys. Advantage: minimum use of resources

Developing a sector specific survey Developing a sector specific survey may be burdensome for data providers and compilers. But the approach would be interesting for policymakers and trade negotiators. The sectors specific surveys would be developed with the relevant public bodies and/or the relevant service industry association. Specific surveys could be developed for instance for legal, computer and construction services… Define modes of supply in surveys and ask respondents to allocate transactions themselves. Amounts by modes of supply or share of each mode in %.

Using existing BOP services surveys Amend existing surveys for one or two relevant services sectors, when surveys are being reviewed or new ones are created Screening surveys should identify the sector and actors Surveys could cover all modes or be focused on mode 4 Indicate if the supply of the service involved the physical presence of foreign individuals (mode 4). If the answer is yes, ask how most of the service supplied. Example: « Was this service transaction (or part of it) fulfilled through the presence of one of your employees? » YES NO If YES, part of it:….%

Developing model based estimates Developing model based estimates using data from other frameworks From migration and tourism statistics, households surveys, employment statistics, enterprises surveys… Information used to build an estimation on mode 4 For example tourism statistics could be used for collecting further information on mode 4 trade; information on flows (stocks) on mode 4 persons could be obtained by adding supplementary detail to existing questionnaires The UK air arrival form can be supplemented by further information regarding the length of stay and information about the business work purpose in order to clearly identify mode 4 persons.

Developing model based estimates

Developing model based estimates

Collecting mode data in NZ’s service census Joint survey between Statistics New-Zealand and the Ministry of Foreign Affairs and Commerce. Quarterly international trade in services survey with 1350 enterprises Census of companies that trade services, every 3-5 years with 6300 enterprises: most recent census fo the year 2011 Census includes questions on respective contribution of modes of supply (in %) For 7 aggregate groupings of services (information and IT services, business services…) and for five partners.

Mode of delivery in survey questionnaire

Lessons from NZ For a given service item, the modes are spotted as a percentage of the revenue. The three modes in the balance of payments: modes 1,2,4 Total=100 Preliminary test of the concepts on respondents Concepts well understood, sometimes helped respondent to understand BOP concepts. Required careful wording in guide and questionnaire Modes 2 and 4 especially tricky: the term “temporarily abroad” may cause some confusion. Of course mode of supply is not recorded in company invoice: rely on respondent knowledge. Less burdensome than anticipated…but efforts would be done only in case of a policy need.

How NZ’s services exported?

NZ’s mode of supply by service type

Conclusions There is a need to develop statistics of international trade in services with a breakdown by modes of supply for GATS negotiation purpose, The production of such statistics on a systematic basis would be burdensome, together for the reporters and the BOP compilers, The MSITS 2010 gives some guidelines for a simplified approach focused on the allocation by dominant or most significant mode, Such an allocation should be adapted to information needs, existing data collection systems and resources constraints,