EC Trade Related Technical Assistance Programme for Pakistan in Services “ Challenges for Business in Services Negotiations” May 31, 2005 Karachi, Pakistan

2 Business Challenges Awareness of the Nature of the Services Economy Identification of Trade in Services Impediments Articulation of Interests Implementation

3 Nature of the Services Economy Size, scope, growth, employment Value of telecom infrastructure Services relationship to commodity, agriculture,textile production Nature of services impediments Transparency in domestic regulation

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6 Telecommunications as the conduit for international services trade… Access to foreign markets Means to find, market, and service foreign customers Quality, cost, access determinants of competitive position

7 Services as a significant component of agricultural, commodity, textile production Logistics services critical to bringing products to market Banking and insurance services crucial to international trade Professional (legal, accounting, engineering) fundamental to hard & soft business

8 Services trade impediments may take the shape of government “measures” or regulatory barriers at national & sub national level i.e. domestic and foreign: Law Regulations Administrative rules “GATS establishes rules and disciplines for policies affecting access to services markets" - Bernard Hoekman - Assessing the General Agreement on Trade in Services

9 Transparency in domestic regulation is critical to services markets Method of creation, publication, administration, adjudication of rules: Enables business to understand the rules governing commercial practices Influences time, quality, and cost of providing services Affects the ability to compete vis-à-vis domestic and foreign firms

10 Grasping the "trade framework” Cross-border Consumption abroad Commercial presence -- establishment -- investment regime Temporary movement of people

11 A professional service firm is required to partner with local firms in foreign markets. They find this impedes their ability to grow. Potential Obstacle: prescriptive corporate structure Request: ability to establish in form of company’s choice A construction firm identifies a prospective project in a foreign market. Potential obstacle: bids not open to foreign enterprises Request: non-discriminatory treatment Financial institution has identified prospective market niche in foreign country. Potential obstacle: product-specific restriction Request: elimination of constraint Identification of Trade in Services Impediments

12 Establishment rules are a matter of the bottom line for business: Where firms locate Who and how many employees they hire Which clients they serve Their scope and type of service products How they access capital Cost of doing business Competitive position

13 W. K. Chan of the Hong Kong Coalition of Service Industries founded in 1990 representing 50 services sectors advised: "we keep in regular contact with our members, conduct periodic consultations and occasionally cooperate with academic institutions on studies to identify their interests... we also maintain close contact with our constituent members (industry and professional associations) to gauge their views." Consultation, studies, and collaboration are best practices to elicit export barriers. Identification of Trade in Services Impediments

14 Identification of Trade in Services Impediments by Intra-Industry Consultation Undertaking across service firms and industries is a delicate process. Market players can: Examine problems found operating in domestic & foreign markets Explain how problems affect business operations Consult to determine if there are common obstacles Talk to service users such as agriculture and commodity producers to find common positions The commercially significant impediments that are common to players generally form the basis of consensus

15 Hearings can help identify services trade constraints Valuable "demand pull" device to drive private sector input Individual firms and services associations participate Facilitates parliamentary or inter- ministerial consideration of services trade issues Critical to process

16 Articulation of Interests: The Written Word Letters to the editor of the local newspapers Letters to parliamentarians, trade ministers, regulators or the chief executive Testimony for presentation at trade hearings Declarations for release at important trade events Brief white papers identifying and explaining the obstacles and their impact on business Firms can act independently or in groups to articulate their interests

17 Articulation of Interests: The Spoken Word Meet one-on-one with public representatives to introduce and explain issues Orchestrate symposiums to discuss services trade issues and attract press attention Participate in radio or television talk shows and leverage the press

18 Articulation of Interests: Structured “Decision Maker Meeting” Planning strategy Anchor spokespeople to explain interests to public-sector representative Consensus on key messages Provision of trade issue briefing documents Request for specific action Follow-up

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20 Trade Agreements of Pakistan with other Asian Countries Economic Co-operation Organization (ECO) Countries: Pakistan, Iran, Turkey, Afghanistan, Kyrgyzstan, Azerbaijan, Tajikistan, Turkmenistan, and Uzbekistan. South Asian Association for Regional Cooperation (SAARC) Countries: Pakistan, Bangladesh, Bhutan, India, Maldives, Nepal, and Sri Lanka. South Asian Preferential Trade Agreement (SAPTA) Countries: Pakistan, Bangladesh, Bhutan, India, Maldives, Nepal, and Sri Lanka. South Asian Free Trade Agreement (SAFTA) Countries: Pakistan, Bangladesh, Bhutan, India, Maldives, Nepal, and Sri Lanka.

21 “Challenges for Business in Services Negotiations” Implementation