ec trade related technical assistance programme for pakistan in services “ challenges for business...
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EC Trade Related Technical Assistance EC Trade Related Technical Assistance Programme for Pakistan in ServicesProgramme for Pakistan in Services
“Challenges for Business in Services Negotiations”
May 31, 2005
Karachi, Pakistan
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Business ChallengesBusiness Challenges
• Awareness of the Nature of the Services Economy• Identification of Trade in Services Impediments• Articulation of Interests• Implementation
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Nature of the Services EconomyNature 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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Pakistan Exports 2003
Manufactures76%
Mining products2%
Agricultural products11%
Other commercial services
4%
Travel1%
Transportation6%
Other Commercial Services:CommunicationConstructionInsuranceFinancialComputerInformationOther businessCultural & recreational Royalties & license fees
Source: World Trade Organization Time Series Database
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Pakistan Trade in Services 1999-2003 (Exports)
0
100
200
300
400
500
600
700
800
900
1999 2000 2001 2002 2003
Transportation
Travel
Other commercial services
Sour ce: Wor ld T r ade Or ganization T ime Ser ies Database
Other Commercial Services:CommunicationConstructionInsuranceFinancialComputerInformationOther businessCultural & recreational Royalties and license fees
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Telecommunications as the conduitTelecommunications as the conduit for international services trade… for international services trade…
• Access to foreign markets• Means to find, market, and service foreign
customers• Quality, cost, access determinants of
competitive position
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Services as a significant component of Services as a significant component of agricultural, commodity, textile productionagricultural, 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
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Services trade impediments may take the shape of Services trade impediments may take the shape of government “measures” or regulatory barriers at government “measures” or regulatory barriers at national & sub national level i.e. domestic and national & sub national level i.e. domestic and foreign: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
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Transparency in domestic regulation is critical to Transparency in domestic regulation is critical to services marketsservices 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
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Grasping the "trade framework”Grasping the "trade framework”
• Cross-border• Consumption abroad • Commercial presence -- establishment --
investment regime• Temporary movement of people
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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 structureRequest: 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 enterprisesRequest: non-discriminatory treatment
Financial institution has identified prospective market niche in foreign country.
Potential obstacle: product-specific restrictionRequest: elimination of constraint
Identification of Trade in Services ImpedimentsIdentification of Trade in Services Impediments
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Establishment rules are a matter of the Establishment rules are a matter of the bottom line for business: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
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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 ImpedimentsIdentification of Trade in Services Impediments
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Identification of Trade in Services Identification of Trade in Services Impediments by Intra-Industry ConsultationImpediments 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
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Hearings can help identify services trade Hearings can help identify services trade constraintsconstraints• 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
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Articulation of Interests: Articulation of Interests: The Written WordThe 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
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Articulation of Interests:Articulation of Interests:The Spoken WordThe 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
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Articulation of Interests:Articulation of Interests:Structured “Decision Maker Meeting”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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Trade Agreements of Pakistan with other Asian Trade Agreements of Pakistan with other Asian
CountriesCountries 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.
