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Transatlantic Regulatory

Cooperation in Services
Can it help the developing world?

Linda Schmid

Independent Consultant
International Trade Policy and Development
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Transatlantic Regulatory Cooperation in
Services: Can it help the developing world?

A Report To the German Marshall Fund Of The United States

April 2008

Linda Schmid
Independent Consultant
International Trade Policy and Development

Introduction...................................................................................................................... 3
Regulatory Cooperation in the Transatlantic Services Market.................................. 4
Effective Services Regulation Matters to the Developing World............................... 7
Current Weaknesses in Developing Countries’ Regulatory Systems......................... 9
What is the Current State of International Regulatory Cooperation?..................... 12
What the European Union and United States Should Do to Strengthen
Services Markets in Developing Countries............................................................. 14
The Importance of Working Together......................................................................... 18
Conclusion and Areas for Further Research............................................................... 20
Acronyms........................................................................................................................ 21
Annex 1: Total Financial Flows of Official Development Assistance...................... 22
Annex 2: Official Development Assistance by Major Purposes............................... 23
Annex 3: Additional Official Development Assistance Statistics............................. 25
Bibliography.................................................................................................................... 26

Linda Schmid is an independent consultant on international trade policy and development. She served as the trade in services officer
of the International Trade Center in Geneva. She also acted as trade director for the Caribbean Trade and Competitiveness Program
in Barbados. Previously, she was the vice president and director of electronic commerce for the U.S. Coalition of Service Industries in
Washington, DC. She is a contributing author to Managing the Challenges of WTO Participation, Lschmiddc@gmail.com.
1 Introduction

The European Union (EU) and the United States productivity in agriculture and manufacturing.
(U.S.) have dynamic services markets highly To improve their ability to trade internationally
integrated through deep trade and investment and take advantage of greater trade liberalization,
ties. Differences in regulatory approaches and developing countries have requested assistance
philosophies occasionally cause transatlantic from industrial countries and multilateral
disagreement regarding how each should respond organizations. Such assistance helps developing
to specific challenges or market needs. This is economies build regulatory capacity and oversee
particularly true in services, which tend to be more evolving services markets effectively, equitably,
highly regulated than manufacturing industries. and efficiently. Strengthening regulatory
Recent EU/U.S. summits have acknowledged how structures, independence, and technical
such differences can also limit transatlantic trade and competence improves regulatory oversight and
investment. A variety of EU/U.S. regulatory dialogues enforcement and allows developing countries to
have been created to increase understanding between stimulate more dynamic services industries.
policymakers on both sides of the Atlantic, share
best-practice and lessons learned, and minimize An EU–U.S. transatlantic initiative that emphasizes
divergent regulatory approaches. the value of legal and regulatory institutions will
foster services markets in least developed and
Transatlantic cooperation on regulatory issues developing countries and thus contribute to long-
can also help the developing world improve run economic growth. The European Union and
their services economies. Services consistently United States should work in partnership with
represent a significant portion of Gross Domestic developing countries to improve governance,
Product (GDP) in developing countries and regulatory oversight, and the predictability of the
global trade in services is growing. Furthermore, multilateral trading environment in services. This
services industries play a pivotal role as will measurably improve services markets around
intermediate inputs that influence trade and the globe.

Transatlantic Regulatory Cooperation in Services 3


2 Regulatory Cooperation in the
Transatlantic Services Market

Points of Cooperation The EU and U.S. service economies are also well
integrated. Trade with Europe accounted for 40%
The European Union and the United States have of total U.S. cross-border exports and imports of
some of the most dynamic services markets in private services in 2005.3 In that year, the United
the world. The European Union was ranked the Kingdom, Germany, France, Switzerland, and the
number one exporter and importer of world Netherlands were among the top ten importers
commercial services in 2005, while the United and exporters of cross-border services to and from
States was ranked number two.1 Commercial the United States.4 The United States accounted
services represented 22.5% of total exports and for approximately 32% of the EU external trade in
21.2% of total imports for the European Union, and commercial services in the same year.5 Even more
28.3% of total exports and 14.4% of total imports significantly, the trade relationship is dwarfed by
for the United States. Measured by employment, the bilateral investment relationship. U.S. sales of
services dominate both economies: in 2005, 78.6% services through affiliate companies in Europe
of U.S. employment was in the services sector, with almost doubled cross-border trade in services in
the European Union approaching 70%.2 Both the 2004. European owned affiliates accounted for 68%
European Union and the United States thus have a of total sales of services by affiliates in the United
stake in the continued growth of the transatlantic States in the same year. The United Kingdom—
and the global services economy. followed by Germany and France—had the largest
proportion of such sales in the United States.6

Table 1: Share of goods and commercial services in total trade, 2005


Exports Imports
Value Share Value Share
Commercial Commercial
Total Goods Total Goods
services services
World 12,690 81.0 19.0 12,610 81.4 18.6
European Union (25) 4,978 77.5 22.5 4,893 78.8 21.2
United States 1252 71.7 28.3 1,959 85.6 14.4
(Billion dollars and percentage, based on balance of payments data)

Source: World Trade Organization, International Trade Statistics, 2006, p. 21.

1 
World Trade Organization, International Trade Statistics, 2006, 3 
United States Bureau of Economic Analysis, U.S. International
p. 20. Services Cross-Border Trade in 2005 and Sales through Affiliates
in 2004, October 2006, p. 24.
2 
Organization of Economic Cooperation and Development,
OECD in Figures, 2006, p. 33. 4 
United States Bureau of Economic Analysis, U.S. International
Services Cross-Border Trade in 2005 and Sales through Affiliates
in 2004, October 2006, p. 25.
5 
Eurostat database http://epp.eurostat.ec.europa.eu
6 
United States Bureau of Economic Analysis, U.S. International
Services Cross-Border Trade in 2005 and Sales through Affiliates
in 2004, October 2006, p. 36.

4 The German Marshall Fund of the United States


Avoiding Points of Differences • The European Commission (EC) and the
U.S. Office of Management Budget (OMB)
The relationship between the European Union dialogue considers general regulatory policies of
and the United States is so deep that regulators mutual interest.10
from both economies have, in many cases,
recognized the need for increased cooperation • The U.S./EU High-Level Regulatory
to build greater awareness of, and confidence Cooperation Forum identifies tools to facilitate
in, each other’s regulatory approaches and the regulatory cooperation such as confidentially
There is a
way in which they interact. At a political level, arrangements, expert exchanges, and training.11
renewed
this has often been supported by the recognition
that transatlantic trade in services could even be • Various sector-specific dialogues, such as the impetus for
deepened with greater regulatory cooperation by Transatlantic Financial Markets Regulatory regulatory
reducing transaction costs through more cohesive Dialogue, address regulatory issues in cooperation.
transatlantic regulation. Examples are easy to more detail.12
come by: trade restrictive regulatory approaches In each instance regulators share their experiences
in transport, telecommunications, and electricity and best practices to deepen understanding of
inhibit cross-border investment.7 Divergent regulatory approaches with their transatlantic
regulatory requirements force managers and counterparts and, when possible, improve the
policymakers to consider and adapt to foreign transatlantic regulatory environment. Regulatory
regulatory regimes. This was seen through counterparts:
transatlantic responses to the EU Financial
Conglomerates Directive and the U.S.’ Sarbanes- • exchange experts, and compare regulatory
Oxley Act.8 Finally, some firms have experienced review processes, agency governance and
inconsistent treatment as a result of differences in specific rules and regulations;13
application of competition policy in the European
Union and the United States.9 • identify conflicts in approach, principles, or
implementation and seek to reduce frictions that
Consequently, there is a renewed impetus might result from different practices;
for regulatory cooperation to create a more
harmonious transatlantic regulatory environment • consider legislative and administrative
and improve the means of addressing regulatory developments and establish systems to facilitate
issues. In recent years, the European Union and mutual recognition of regulatory criteria;
the United States have developed a variety of fora
to facilitate bilateral cooperation, both in services 10 
Office of the United States Trade Representative, 2005
markets and in manufacturing: Roadmap for EU–US Regulatory Cooperation and Transparency,
http://www.ustr.gov/world_regions/europe_middle_east/.
7 
See Organisation of Economic Co-operation and Development 11 
Office of the United States Trade Representative, U.S.–EU
(OECD), The Benefits of Liberalizing Product Markets and Reduc- High-Level Regulatory Corporation Forum Agenda, May 2006,
ing Barriers to International Trade and Investment: The Case of http://www.ustr.gov.
the United States and the European Union, May 2005, p. 20. 12 
See for example, K. Alexander, E. Ferran, H. E. Jackson, N.
8 
E. Tafara, SEC Testimony Concerning Global Markets, National Moloney, A Report on the Transatlantic Financial Services Regu-
Regulation, and Cooperation before the House Financial Services latory Dialogue: Discussion Paper No. 576, Harvard Law School,
Committee, May 13, 2004, p. 6. January 2007, p. 5.
9 
R. Epstein, “EU Continues Battle against Microsoft,” The European Commission, Non Paper for FSC Meeting, Septem-
13 

Financial Times, March 5, 2007. ber 2005, p. 1.

Transatlantic Regulatory Cooperation in Services 5


• create tools to ease review of foreign investors, This experience can help define what cooperation
and share application data; means in practical terms. Dialogue and cooperation
play an important role in avoiding the creation of
• share information on developments in the new barriers to trade and improving the overall
markets related to new products or corporate quality of regulation on both sides of the Atlantic.
and consumer behavior; and Consistent regulatory dialogue and cooperation
will encourage the European Union and the United
• compare the implementation of international
States to continue reconciling divergent regulatory
standards within their respective markets
approaches and rules. Even if regulatory systems
and globally.14
ultimately continue to differ, the regulatory
Through dialogue and consistent engagement, dialogue recognizes that there is much the
EU and U.S. regulators are setting a precedent for European Union and United States can learn from
regulatory cooperation and wading deeper into the one another.
globalization of the policy process. Such cooperation
often begins with soft confidence-building The European Union and United States should
arrangements, which later develop into formal efforts use their experience with transatlantic regulatory
that seek mutual recognition or harmonization. This cooperation to strengthen service markets in
process can be observed in the financial services the developing world. They should cooperate to
sector, where EU and U.S. regulators have shown set global policy standards for building services
a willingness to deepen cooperation,15 including markets that are rooted in consistent regulatory
recognizing the equivalence of accounting standards. engagement and transparent public policy
discussion. Given the pressing need to solve
14 
Office of United States Trade Representative, EU–U.S. Financial intractable economic development challenges
Markets Regulatory Dialogue, June 2004, http://www.USTR.gov. in least developed and developing countries the
15 
The Sarbanes-Oxley Act of 2002 mandated SEC rules on the European Union and United States should use
composition of audit committees, which were in direct conflict
with a German provision requiring the presence of a company
regulatory cooperation as a means to strengthen
employee on such committees. The SEC responded by creating services markets and reduce poverty in the
an exception. The EU Financial Conglomerates Directive re- developing world.
quired consolidated supervision of multi-sector financial firms.
The SEC created new rules to accommodate this objective. See
E. Tafara, SEC Testimony Concerning Global Markets, National
Regulation, and Cooperation before the House Financial Services
Committee, May 13, 2004, p. 6.

6 The German Marshall Fund of the United States


3 Effective Services Regulation
Matters to the Developing World

The Importance of Service Industries to hire, and how they find, market, and serve
Developing Countries their clients.

The pivotal role played by services in the economies • The formulation and administration of services
of least developed and developing country economies industry rules determines the fairness of services
is often under-appreciated. In fact, they are a valuable markets and the perceived integrity of the
source of employment and constitute, on average, an regulator.
expanding proportion of GDP. For example, in some
• Regulatory practices19 influence the ability Iriuscidunt verci
countries of the East African Community (EAC),
of businesses to easily understand the rules tinciduisi. Lis ad
services represent as much as 54% of GDP; in the
Southern African Development Community (SADC), governing services industry operations as well elessi. Um alis
services represent up to 67% of GDP.16 as a firm’s ‘time-to-market’, product quality, and dolor si. Ing eum
cost of providing services. dolorem nullaor
The share of global services trade from developing tionseq uipsum
countries is also growing rapidly. While world Together, these factors shape the quality of the
ipsusto dolore
commercial services exports increased, on regulatory environment20 and affect the ability
of a services firm to compete with domestic and feum quiscil iscilis
average, by 10% a year between 2000 and 2005, the
foreign firms. er si et vent amcor
comparable figure for Africa was 13% a year. 17
ad dio eum vel
However, regulatory weakness and inefficiency in The opportunities for growth are clear in
services sectors can prevent developing countries telecommunications and energy services.
from capturing the full benefits of a dynamic Competitively priced and vibrant telecommunications
services market. services diminish asymmetries in market
information and lower transaction costs across
Attention to regulatory infrastructure is required economic sectors. Likewise, because energy is an
to help capture the growth potential of services essential input to services firms, more consistent
industries and improve productivity across and affordable energy services enable firms to
the economy: carry out operations without frequent and costly
interruptions of electricity supplies.21
• Developing economies can strengthen the
competitive position and viability of agricultural,
manufacturing, and services exporters by 19 
Regulatory practices that result in excessively burdensome
improving industry rules and regulatory accreditation, qualification, or technical standard requirements
delay time-to-market.
practices. 20 
Rules may discriminate against foreign firms in registration
or authorization requirements, fees or taxes on repatriation of
• Industry rules influence the structure of the
18
earnings, or government procurement, for example.
services firm, where firms locate, whom they 21 
Given the dramatic demand for energy in least developed
and developing countries, the European Union and the United
16 
The World Bank World Development Indicators Database, States should undertake dedicated research to determine the
http://www.world bank.org. most effective oversight structure for energy markets that will,
in the near term, produce renewable energy that can be widely
17 
World Trade Organization, International Trade Statistics, 2006. distributed at an affordable cost.
18 
Industry rules can constrain service markets in least devel-
oped and developing countries; for example, industry rules that
limit foreign investment, geographic scope, or type or quantity
of service products.

Transatlantic Regulatory Cooperation in Services 7


Chart 1: The importance of services in the EAC and the SADC, 2005

SOUTH MOZAM- SWAZI-


KENYA UGANDA TANZANIA AFRICA MAURITIUS ZIMBABWE NAMIBIA ZAMBIA BIQUE MALAWI BOTSWANA LESOTHO LAND TANZANIA ANGOLA
70

60
Services are
a valuable
Value added by services (% of GDP)

50
source of
employment
40
and an
expanding
proportion 30
of GDP.
20

10

0
Source: The World Bank World Development Indicators Database.

8 The German Marshall Fund of the United States


4 Current Weaknesses in Developing
Countries’ Regulatory Systems

As the following section demonstrates, developing • In the financial sector, inadequate bank
countries face significant challenges creating and supervision can permit lending based on political
administering transparent and robust regulatory pressure rather than creditworthiness; access to
environments for services markets. credit is also a significant challenge for many
service sector firms.24
Developing countries face greater regulatory
challenges than developed countries. Many are • In the telecommunications sector, distorted
still grappling with the transition to market- regulatory processes can mean that licenses
based economies, which requires new legislation, are granted to new providers based on opaque
new institutions, and the expertise to implement criteria rather than a transparent competitive
relatively new policy approaches. In general, process; substandard telecommunications
regulatory institutions in developing countries infrastructure can hinder development.25
operate in a weak institutional setting with minimal
resources and scant market information. • Inconsistent energy supplies are also obstacles
to expansion.
Despite the potential for growth, the cost and
quality of transport, finance, telecommunications, Business owners firmly believe they could operate
and energy services often hinder productivity more competitively if the regulatory environments
and trade in the agricultural and manufacturing at home and in neighboring countries were
sectors, at least in part due to weak regulatory and streamlined and more transparent.26
institutional frameworks. 22 Developing countries face a series of specific
• In the transport sector, a lack of coordination challenges in responding to this demand.
between maritime, rail, and road regulators Governments may lack public policy mechanisms
can create excessive costs for logistics services. to gather market information, and may, therefore,
The United Nations reports that “[i]n 2003, the be unable to accurately assess the scope or depth
international freight costs of African countries of problems that impede services industries.
as a proportion of the value of their imports Regulatory institutions may lack the personnel and
represented 11.9%, twice the world total of 5.4%, experience necessary to address challenges in their
and almost four times the costs for developed respective services market. Government ministries
market economies of 3.9%.”23 may create conflicting and overly burdensome
requirements because they do not communicate.
22 
Two thirds of manufacturing costs, on average, are typically
purchases of intermediate goods and services, consequently, 24 
Service firms in least developed and developing countries
input cost and quality has a direct effect on firms’ costs and consistently complain about the inability of financial institutions
competitiveness. For an explanation of the theory of trade in to provide credit appropriate to a service firm business model,
intermediate inputs and its benefits, see J. Hodge and H.K. Nor- which is built on intellectual rather than physical assets.
das, Liberalization of Trade in Producer Services—The Impact on
Developing Countries, Chr. Michelsen Institute, 1999.
25 
Despite telecommunications liberalization in many least
developed and developing countries, the cost and availability of
23 
UN Council on Trade and Development, Negotiations broadband for commercial purposes remains uncompetitive. See
on Transport and Logistics Services: Issues to Consider, 2006 P.A. Stern, Assessment of the Telecommunications Services Sector
Document:UNCTAD/SDTE/TLB/2005/3, p. 4. in CARICOM: Convergence Issues at the Regional and Interna-
tional Level, Caribbean Regional Negotiating Machinery, June
2006, p. 41–42.
26 
European Commission Trade Related Technical Assistance
Program for Pakistan, Services Capacity Report, September 2005,
http://www.wto-pakistan.org/Pages/Publications_1.html.

Transatlantic Regulatory Cooperation in Services 9


Developing countries will be better equipped ensure confidence in the fairness of legal and
to respond to these challenges if they adopt six regulatory institutions. Yet in many developing
fundamentals of services markets: countries, regulators are poorly staffed and face
challenges enforcing supervisory requirements.
• a clear political mandate These problems are well illustrated by the
• good governance financial sector. The Bank for International
• regulatory independence Settlements (BIS), the International Organization
• regulatory cooperation of Securities Commissions (IOSCO), and the
• procedural transparency International Association of Insurance Supervisors
• effective competition policy (IAIS) identified preconditions for effective
regulatory supervision. These include sound and
A clear political mandate
sustainable macroeconomic policies, effective
A significant challenge for technically competent market discipline, an effective tax and accounting
regulators in developing countries is the larger framework, enforceable property rights, and rule of
government’s attitude toward regulatory activities law. This type of market infrastructure is essential
and the ability of judicial institutions to enforce the to many services sectors, and developing economies
law. Although supervisors may know what they need will need support to build the necessary expertise,
to be doing, their government may not back them judicial institutions, and enforcement capacity to
with appropriate legislation or resources. Without a support it.
clear political mandate, regulatory institutions may
Regulatory independence
fail to ensure objective and rigorous oversight and
vested interests may unduly constrain or corrupt Separating the regulatory body from the services
oversight activities. Developed economies have provider is a primary tenet of building services
long-standing legislative frameworks and judicial markets. Ensuring that the regulatory body
institutions that support oversight of finance, is not accountable to the services provider
insurance, telecommunications, transport, and and that regulations are applied fairly across
energy markets. market participants is critical. Regulatory
independence, then, is essential if developing
If developing economies are to garner the value
countries wish to transition certain sectors from
added of dynamic services industries, regulators
government ownership to private provision in a
must have a clear political mandate to perform
market economy.
their duties transparently and independently.
As one USAID official noted: “If there is no Dislodging an incumbent and introducing
desire at the national level for the promulgation competition is difficult in any market. It is
and enforcement of oversight rules, externally particularly difficult in economies with few
prescribed processes will not be sustainable once resources, little institutional experience with
the funding stops.”27 independent regulation, and nascent competition
authorities. Consequently, many developing
Good governance
countries experience protracted transitions.
Good governance encompasses a variety of Regulatory agencies must have the capacity to
activities carried out by the public sector that overcome powerful incumbents and be granted
robust, independent enforcement capabilities.
27 
U.S. Agency for International Development (USAID), Official
Interview, February 16, 2007.

10 The German Marshall Fund of the United States


Regulatory cooperation sequence introduction of new rules, and prevent
unnecessary duplication.”30
Cooperation between regulators from different
countries is fundamental to market oversight in an Procedural transparency also facilitates regulatory
increasingly globalized economy. Services firms coordination across borders, reduces discretionary
frequently operate on a regional or global basis, in decision-making, and helps market participants
multiple jurisdictions, and with varying regulatory understand requirements. Open public policy
requirements and supervisory competence. systems invite discussion, debate, and create
Cooperation
Furthermore, regulations and administrative rules informed and fair rulemaking.
between
in one market may conflict with requirements
in another market, thereby constraining trade in Developed economies use procedural transparency regulators
services. The need for international cooperation to promote sound public policy decisions that from different
is widely understood28 as a means to ensure govern services markets. Developing countries countries is
oversight with exchange of information and in some instances must overcome opaque public fundamental to
cooperation between authorities. Regulators in policy customs, undue influence by powerful market oversight.
developing economies should, as IOSCO principles stakeholders, and a lack of resources to institute
state: “have authority to share both public and procedural transparency. Many developing
nonpublic information with domestic and foreign economies may lack a legislative framework that
counterparts. The regulatory system can allow for prescribes principles for administrative procedures.
assistance to be provided to foreign regulators who Therefore, establishing procedural transparency
need to make inquiries in the discharge of their requires additional resources and sustained
functions and exercise of their powers.”29 Yet in political support.
contrast to their counterparts in rich, developed Competition policy
economies, regulatory institutions in least
developed and developing countries may lack the Developing countries that are in the process of
resources to cooperate for effective oversight. restructuring their services markets can strengthen
competition authorities. How the government
Procedural transparency oversees and disciplines service firms influences
Procedural transparency helps regulators the quality and scope of services products
understand the purpose, scope, and requirements provided. New competition authorities that
of regulatory regimes in other markets. According pursue antitrust violations in developing countries
to the Institute of International Finance, “regulators with significant concentrations of ownership,
and, when applicable, legislators should make however, face considerable political challenges.
public the goals of proposed regulations and Nascent authorities with limited experience,
policy decisions behind existing ones. With minimal resources, and, in some cases, political
clarity of regulatory goals, proposed rules, and interference, struggle to effectively address anti-
specific regulations, home and host regulators can competitve practices to improve services markets in
identify points of overlap or divergence, better developing countries.

28 
IAIS, IOSCO, and BIS emphasize the importance of coopera-
tion between regulators in their respective “core principles” to
ensure rigorous oversight.
29 
International Organization of Securities Commissions, Objec-
tives and Principles of Securities Regulation, May 2003. 30 
Institute of International Finance, Proposal for a Strategic
Dialogue on Effective Regulation, December 2006, p. 24.

Transatlantic Regulatory Cooperation in Services 11


5 What is the Current State of
International Regulatory Cooperation?

Building regulatory capacity could help least Bilateral


developed and developing countries effectively
address the public policy challenges of The EC32 and the United States provide the
globalization, by enabling services firms to reduce majority of their respective official development
administrative costs and improve their competitive assistance (ODA) through bilateral and regional
position. Too often regulatory agencies in such missions located in developing countries
countries operate with few professional staff, a (see Annex 1). Each provides a little over 10%
Cumsan hendio weak enforcement division, and dated regulations. of their respective bilateral ODA to economic
con vullaorem In restructuring efforts, officials may face the infrastructure. Assistance to regulatory authorities
challenge of mitigating entrenched interests that is only a subcomponent of that 10% (see Annex 2).
zzrilit laorting
can otherwise stall adjustments and complicate For the EC and the United States, there is a slight
el do exer si tin
enforcement actions. downward trend to sector specific regulatory
ulputem iure institutions as a proportion of bilateral ODA.
velendrer sequat. To participate in the global economy, trade
Ummy nissis eum ministers rightly recognize that regulatory reform Multilateral
dolummy nullaor in the services sector can boost domestic industrial
The International Monetary Fund (IMF), World
amconsecte capacity. Consequently, developing countries have
Bank, and UN Economic Agencies receive a
exercilisl ut requested assistance to build regulatory institutions.
significant proportion of resources from the United
vullandio odo The UN reports that “African governments have
States and the European Union. In turn, these
expressed the urgent need for international support
agencies deliver technical assistance to regulatory
to strengthen their markets, their supply capacities,
authorities in developing countries. For example,
and their regulatory and supervisory authorities.”31
the World Bank’s Financial Sector Assessment
Regulatory authorities in the developing world
Program33 provides comprehensive analysis of
must have adequate resources and access to state-
financial regulatory systems for least developed
of-the-art regulatory approaches and procedures to
countries to leverage aid, loans, and to put through
manage reform and meet oversight responsibilities.
legislation required for supervisory institutions.34
This demand for regulatory cooperation between Similarly, the Joint Integrated Technical Assistance
industrial and developing countries is growing Program35 helps least developed and developing
as a result of services trade negotiations and countries in Africa implement national steering
globalization. The European Union and the United committees with services subcommittees to consult
States supply assistance to regulatory institutions with stakeholders, bringing together representatives
through three channels: bilateral missions,
multilateral institutions, and global standards- 32 
The EC acts as a donor and a multilateral recipient of member
setting bodies. state funds. Member states also provide funds directly to recipi-
ent countries and multilateral agencies independent of the EC.
See OECD, European Community Development Assistance Com-
31 
United Nations Conference on Trade and Development, Trade mittee Peer Review, July 2007, p. 41.
and Development Aspects of Insurance Services and Regulatory
Frameworks, 2005 Document: UNCTAD/DITC/TNCD/2005/17,
33 
World Bank Independent Evaluation Group, Financial Sector
p. 4. Assessment Program IEG Review of the Joint World Bank and
IMF Initiative, 2006.
Financial Service Industry Technical Assistance Provider,
34

Official Interview, March 14, 2007.


35 
World Trade Organization, Technical Assistance and Training
Plan, 2006, p. 26.

12 The German Marshall Fund of the United States


of ministries that oversee key service sectors. Assessment
Multilateral institutions also cooperate with
standards-setting bodies (see below), when working Demand for regulatory cooperation is growing
with least developed and developing countries. due to a heightened awareness of the value of
services markets in least developed and developing
Standards-setting bodies countries. Multilateral, bilateral, and regional trade
negotiations have focused attention on the nature
Standards-setting bodies facilitate exchanges of services markets and the underlying regulatory
between regulators and work with supervisors Iriuscidunt verci
frameworks governing financial, insurance,
in least developed and developing countries to tinciduisi. Lis ad
telecommunications, transport, and energy sectors.
enhance technical competence. Such bodies Consequently, least developed and developing elessi. Um alis
engage national regulators to strengthen regulatory countries are examining long-standing institutional dolor si. Ing eum
oversight standards and deliver technical assistance. problems that stunt the growth of services markets. dolorem nullaor
The International Competition Network (ICN) tionseq uipsum
facilitates technical exchanges between competition Technical assistance providers report that requests ipsusto dolore
authorities and organizes workshops for officials for regulatory assistance exceed their resources feum quiscil iscilis
from developing countries. Similarly, the to meet demand. In particular, they report “a
er si et vent amcor
International Civil Aviation Organization (ICAO), gap in attention to least developed countries,”38
ad dio eum vel
the International Maritime Organization (IMO), since technical cooperation is disproportionately
and the International Telecommunications Union allocated to larger emerging markets: Brazil, Russia,
(ITU) offer technical assistance to regulators in India, and China (BRICs). The concentration on
developing countries.36 In the financial sector, the BRICs is a reflection of the size of those markets
the Bank for International Settlements (BIS), and their possible influence on market stability
the International Organization of Securities in developed economies. Nonetheless, technical
Commissions (IOSCO) and the International assistance providers also found that even though
Association of Insurance Supervisors (IAS) assist regulatory authorities in least developed and
developing country supervisors. Such bodies developing countries need more resources, they can
recognize the variety of regulatory approaches and make a decisive difference in those countries with
expose examiners to “sound analytical principles”37 baseline technical competence and a functional
to assess regulatory issues in the context of existing judicial system. There is, therefore, a need for
domestic law. further action.

36 
The ICAO, IMO, and ITU are regulatory oversight standards 38 
Financial Service Industry Technical Assistance Provider, Of-
setting bodies and associated with the UN. ficial Interview, March 14, 2007.
Federal Trade Commission, Official Interview, March 22,
37 

2007.

Transatlantic Regulatory Cooperation in Services 13


What the European Union and United
6 States Should Do to Strengthen Services
Markets in Developing Countries
The European Union and the United States are The European Union and the United States should
uniquely well positioned to help build services play their part by jointly agreeing priority areas
markets through regulatory assistance in least in which they could help services markets in
developed and developing countries. European developing countries and ensure those priorities are
and U.S. regulatory principles, that have evolved implemented by their respective and joint official
over time and which are important to service development assistance programs. The form of
sectors in industrial countries, can be useful to regulatory cooperation would, of course, vary with
Cumsan hendio developing countries interested in building their the economic size, regulatory sophistication, and
con vullaorem own services markets. International partners can the nature of the services markets in the developing
zzrilit laorting share their experience institutionalizing good country. If, however, agreement could be reached,
el do exer si tin governance practices and can help developing this would constitute a transatlantic initiative that
ulputem iure countries build constituencies for regulatory promotes good governance, supports regional
velendrer sequat. independence, cooperation, transparency, and integration, and contributes to the predictability of
strong competition policy. the multilateral trading environment.
Ummy nissis eum
dolummy nullaor The European Union and the United States possess Promote good governance
amconsecte well-established regulatory authorities and the
exercilisl ut expertise to grapple with difficult regulatory The European Union and the United States
issues. They generally recognize the relationship can share methods to foster and grow services
vullandio odo
between good governance, rigorous public policy economies through procedural transparency,
debate, regulatory transparency, and economic regulatory cooperation, and regulatory
development. Furthermore, they have an economic enforcement. By delivering a clear and consistent
interest in seeing services markets expand in least message on the value of good governance, the
developed and developing countries. European Union and the United States would
enable developing countries to intensify regional
Promoting improved regulation and fostering trade and better participate in the global economy.
good governance in developing countries would
also promote the UN Millennium Development A transatlantic initiative would provide technical
Goals. The 2000 Millennium Declaration called assistance to developing economies, aimed at
for the development of “a global partnership measurably improving the skills of regulatory
for development” with a subsidiary target to officials. It should:
“develop further an open trading and financial • emphasize the importance of retaining expert
system that is rule-based, predictable, and non-
officials in the public sector through competitive
discriminatory [which] includes a commitment
salaries and professional training
to good governance, development, and poverty
reduction—nationally and internationally.”39 • engage officials with the appropriate technical
Regulatory cooperation with developing countries expertise to maintain procedural transparency
can contribute to the achievement of this objective
by building good governance. • create inclusive consultative processes

• safeguard regulatory independence


39 
http://www.un.org/millenniumgoals/

14 The German Marshall Fund of the United States


And since these tasks require additional financial Support regional integration
resources, the European Union and the United
States should advocate that public expenditures of Regional trade arrangements and limited resources
multilateral institutions reflect their commitment prompted regulators in developing economies
to sustaining competent regulatory authority in to work with their professional counterparts in
developing countries. neighboring countries.41 By cooperating regionally,
they are better positioned to facilitate trade and
The initiative should include assistance to nascent expand their knowledge of industry activities.
Iriuscidunt verci
competition authorities. There are commonalities A transatlantic initiative would build upon
tinciduisi. Lis ad
in EU and U.S. competition policy; however, existing cooperation and help regional regulatory
the European Union and the United States institutions improve rules, monitor compliance, elessi. Um alis
maintain “significant variations in law, policy, and strengthen enforcement. dolor si. Ing eum
and enforcement.”40 Despite these differences, dolorem nullaor
the European Union and the United States can The combination of weak governance, a minimal tionseq uipsum
contribute to the implementation of competition tax base, and budgetary constraints impairs ipsusto dolore
policy in developing countries by focusing on national regulatory institutions. Regional feum quiscil iscilis
analytical principles and tools and applying them to integration can help countries deal with these
er si et vent amcor
the domestic environment. challenges. For example, the members of the
ad dio eum vel
Organization of Eastern Caribbean States (OECS),42
In support of good governance, the initiative should while maintaining their own national regulators,
also promote the use of technology in regulatory worked together to create the Eastern Caribbean
institutions to help make electronic government Telecommunications Authority. The Authority is
achievable. The ability of government entities to designed to streamline rules and address technical
serve constituencies and collaborate electronically issues in order to improve the quality and lower the
represents a practical way for regulators in least cost of telecommunications infrastructure.43
developed and developing countries to improve
productivity and gather market information from A transatlantic initiative would build upon
participants. For example, prior to issuing new similar regional regulatory integration efforts in
rules for a given industry, a regulatory agency can finance, insurance, telecom, transport, and energy.
post a notice requesting input from stakeholders, According to a USAID official, “donors see a return
allowing the public to submit formal comments from supporting national and regional initiatives
on proposals. Online systems can also broaden with their own momentum.”44 A transatlantic
public dialogue regarding the value and effect
of regulatory measures. They support informed
41 
Kenya National Services Workshop, Nairobi, Kenya, spon-
sored by International Lawyers and Economists Against Poverty,
debate on potential externalities, market failures, March 2–3, 2006.
or the challenges of reform. Electronic government 42 
Members of the Organization of Eastern Caribbean States
contributes to objective application of industry include: Anguilla, Antigua and Barbuda, Dominica, Grenada,
Montserrat, St. Kitts and Nevis, St. Lucia, and St. Vincent and the
requirements by standardizing and institutionalizing Grenadines, http://www.oecs.org/membs.htm.
procedures, thereby eliminating undue discretionary 43 
P.A. Stern, Assessment of the Telecommunications Services
decision making by public officials. Sector in CARICOM: Convergence Issues at the Regional and
International Level, Caribbean Regional Negotiating Machinery,
June 2006, p. 41–42.
40 
E. M. Graham and J. D. Richardson, Global Competition 44 
U.S. Agency for International Development (USAID), Official
Policy, Institute for International Economics, 1997, p. 339. Interview, February 16, 2007.

Transatlantic Regulatory Cooperation in Services 15


initiative should therefore advance regional trade negotiations in achieving legally binding
consensus by helping to further integrate regulatory commitments on services trade and associated
entities within regional organizations, such as the regulatory disciplines. Such an initiative would help
East African Community (EAC), the Economic alleviate regulatory barriers to trade in services46
Community of West African States (ECOWAS), the and improve the scope and quality of services
Organization of Eastern Caribbean States (OECS), markets in developing countries.
the Caribbean Community and Common Market
Cumsan hendio (CARICOM), and Common Market of Eastern and Bilateral trade agreements have been used by
con vullaorem Southern Africa (COMESA). developed economies to strategically extend
regulatory approaches that faced difficulty
zzrilit laorting
The experience of transatlantic regulatory achieving multilateral acceptance in the World
el do exer si tin
cooperation created a set of best-practices Trade Organization (WTO). This is particularly
ulputem iure that could promote regional cooperation and true in the areas of competition policy and
velendrer sequat. integration among developing countries. Such investment rules. Bilateral trade agreements set a
Ummy nissis eum practices identify the scope of cooperation, precedent of deeper regulatory commitments in
dolummy nullaor build confidence, and engage key senior-level telecommunications and financial services. This is
amconsecte management. They illustrate ways in which to evident in U.S. bilateral agreements with provisions
exercilisl ut effectively allocate adequate resources in order to on telecommunications, competition policy,
vullandio odo maintain transparency, promote intra-ministry and financial services. Likewise, proposed EU
discussion, and engage diverse stakeholders in Economic Partnership Agreements (EPAs) contain
the market.45 distinct regulatory provisions.47

Contribute to the predictability of the The practical consequence of the proliferation of


multilateral trading environment trade arrangements with conflicting regulatory
provisions is a more fragmented “global” trading
The European Union and the United States environment. Market participants from developing
may be tempted to use bilateral assistance to countries with fewer resources must operate in
propagate a particular regulatory approach. Given a less predictable trading environment with a
the attractiveness of U.S. and EU market entry, multitude of overlapping and sometimes conflicting
their bilateral negotiating partners may agree regulatory requirements on trade in services. This
to divergent regulatory approaches that arise in puts them at a disadvantage to market participants
trade negotiations. Such a system risks operating from developed countries with more resources.
inefficiently and adversely penalizing developing
economies with limited resources. The European Union and the United States
should intensify multilateral trade negotiations to
A transatlantic initiative should prompt the achieve a more consistent trading environment
European Union and the United States to ensure for services and improve services markets in
that the regulatory provisions in their respective the developing world. The Uruguay Round
bilateral trade agreements are compatible.
It would recognize the value of multilateral 46 
This includes addressing proactively services rules associated
with emergency safeguard measures (GATS Article X), govern-
ment procurement (GATS Article XIII), and subsidies (GATS
45 
Office of United States Trade Representative, EU–U.S. Regula- Article XV).
tory Cooperation Best Cooperative Practices, June 2006, http:// 47 
Cariforum–EC Economic Partnership Agreement (EPA),
www.ustr.gov.
http://ec.europa.eu/trade/.

16 The German Marshall Fund of the United States


created multilateral rules on trade in services Telecommunications Reference Paper on regulatory
in recognition of the growing value of services principles.50 In the latter, regulatory principles
markets. Under the General Agreement on Trade prescribe specific objectives for regulatory measures
in Services (GATS), regulatory issues are addressed governing competitive safeguards, interconnection,
in Article VI on domestic regulation, and in the universal service, public availability of licensing
telecommunications and financial services annexes. criteria, independent regulators, allocation and use
GATS exemplifies the advantages of a multilateral of scarce resources.
approach based on a consistent framework of The European
principles and rules. Finally, the GATS Annex on Financial Services51
Union and the
contains provisions protecting prudential
GATS Article VI requires members to ensure measures and recognition arrangements. The United States
that measures affecting trade in services are Understanding on Commitments in Financial should intensify
administered in a “reasonable, objective and Services addresses regulatory issues and protects multilateral trade
impartial manner” where trade commitments are the transfer and processing of financial information. negotiations.
made. The Article also permits the development of The European Union52 has joined other WTO
new disciplines. Thus, the WTO’s Working Group members in committing to specific licensing and
on Domestic Regulation is considering disciplines notification procedures for insurance and financial
“to prevent domestic regulations (qualification service providers.
requirements and procedures, technical standards
and licensing requirements) from constituting 50 
http://www.wto.org/english/tratop_e/serv_e/telem_e/tel23_e.htm
unnecessary barriers to trade [in services].”48 World Trade Organization, A Handbook on the GATS Agree-
51 

ment, Cambridge University Press, 2005, p. 82.


Regulatory disciplines are also found in the 52 
World Trade Organization, Additional Commitments by the
Annex on Telecommunications49 and the European Communities and Their Member States, (GATS/SC/31/
Suppl.4/Rev.1), P.18.
48 
World Trade Organization, A Handbook on the GATS Agree-
ment, Cambridge University Press, 2005, p. 23.
49 
World Trade Organization, A Handbook on the GATS Agree-
ment, Cambridge University Press, 2005, p. 85.

Transatlantic Regulatory Cooperation in Services 17


7 The Importance of Working Together

The European Union and United States how developing economies administer services
collaboration on regulatory capacity building can markets.56 The European Union and United States
make it easier for least developed and developing have demonstrated that they can work together
countries to absorb technical assistance. A in this way. For example, the U.S. Millennium
consistent message from the European Union Challenge Corporation established in 2004 extends
and United States will also have greater political technical assistance if developing countries meet
influence on policymakers in developing countries specified policy indicators. In Benin, under a
Cumsan hendio than divergent approaches. As argued above, the “compact” with the government, the United States
con vullaorem European Union and United States have experience responded to the government’s request for a
zzrilit laorting building institutional capacity that can help future program to strengthen the judiciary. The European
el do exer si tin efforts in developing countries, and should work Union had a similar project and, at the field level,
ulputem iure together to avoid providing conflicting regulatory project managers worked to allocate assistance
velendrer sequat. recommendations to developing countries. without overlap.57 Such experience will help in
future efforts.
Ummy nissis eum Developing countries face challenges absorbing
dolummy nullaor technical assistance from the multitude of official By working together, the European Union and
amconsecte development assistance channels that often have United States can offer an analytical approach
exercilisl ut differing objectives, timelines, and reporting that enables regulators in developing countries to
vullandio odo requirements. This is why, in 2005 under the “Paris determine the best response to regulatory issues
Declaration on Aid Effectiveness,”53 developed given their domestic environment, by recognizing:
countries agreed to harmonize aid delivery and
adhere to principles for the effective provision of • Firstly, that a lack of consistency in their
technical assistance to developing countries. The respective approaches might harm developing
European Union and United States should apply countries. A transatlantic initiative designed to
the tenets of the Paris Declaration to transatlantic build regulatory capacity in developing countries
capacity-building efforts. would require the European Union and United
States to compare their regulatory approaches
Moreover, technical assistance providers believe and identify divergences. They would work
they have a greater impact when the European to address regulatory differences that have a
Union and United States deliver the same message negative impact on developing countries.
at the same time. For example in the Southeast
Europe Initiative54 the United States supported • Secondly, that due to the binding nature of trade
EU efforts to deliver legal and trade policy agreements, the European Union and United
technical assistance to help establish the Central States must consider the potential negative
European Free Trade Agreement.55 Delivering the impact of divergent regulatory provisions in
same message on the value of effective legal and their respective bilateral agreements. They have
regulatory institutions can positively influence a responsibility to compare regulatory provisions

53 
http://www.oecd.org 56 
Millennium Challenge Corporation, Official Interview,
54 
http://www.cldp.doc.gov March 9, 2007.

http://www.europa.eu/rapid/pressReleasesAction.
55 
57 
Millennium Challenge Corporation, Official Interview,
do?reference=IP/06/1837 March 9, 2007.

18 The German Marshall Fund of the United States


in their respective bilateral agreements, either Union and United States should not forget their
signed or proposed. They should proactively own governance and regulatory failures and how
avoid creating divergent regulatory approaches they happened.
through their bilateral agreements that have a
negative impact on developing countries. • Finally, that any effort be inclusive, fully
engaging regulators from developing countries
• Thirdly, that challenges to governance and to leverage local expertise and market
regulatory oversight are universal issues. When knowledge to strengthen regulatory systems
Iriuscidunt verci
providing assistance in these areas, the European responsive to local conditions.
tinciduisi. Lis ad
elessi. Um alis
dolor si. Ing eum
dolorem nullaor
tionseq uipsum
ipsusto dolore
feum quiscil iscilis
er si et vent amcor
ad dio eum vel

Transatlantic Regulatory Cooperation in Services 19


8 Conclusion and Areas for
Further Research

Regulators in developing countries face a variety developed and developing countries successfully
of internal and external challenges. Institutions achieve effective regulatory oversight and the
themselves may suffer from a weak mandate impact of regulatory provisions in bilateral
or wavering political support. They may lack trade agreements on the multilateral trading
resources, expertise and experience, and environment. Three areas, in particular, require
operate under ad hoc regulatory processes. The further attention:
institution may have insufficient enforcement
Cumsan hendio capacity, without access to appropriate oversight • The first area would examine developing
con vullaorem practices and stakeholder input. Furthermore, countries that effectively achieve high-quality
external public policy practices may not protect regulatory oversight with limited resources.
zzrilit laorting
against unduly influential interests. Given the Analysis would identify those countries
el do exer si tin
magnitude of regulatory challenges in developing that effectively use and adapt international
ulputem iure oversight standards and investigate their
velendrer sequat. countries, developed countries should provide
substantially more support to international practices. Research would also include an
Ummy nissis eum assessment of regional regulatory integration
regulatory cooperation.
dolummy nullaor arrangements, their approach to competition
amconsecte The European Union and United States are at a policy, and cooperation in finance, insurance,
exercilisl ut crossroads in influencing the nature of the global telecommunications, transport and energy.
vullandio odo trading environment. With the need for greater Research would describe regional arrangements,
transatlantic and global regulatory cooperation, the scope of their application, and their drivers.
the European Union and United States can take
the lead in building regulatory capacity that will • A second area for research would focus on
enable developing countries to experience the the regulatory provisions of U.S. bilateral
gains of vibrant services economies. A transatlantic agreements and those proposed for EU EPA
initiative to build regulatory capacity would negotiations. An index of regulatory provisions
create confidence in the developing world to in established Free Trade Agreement’s (FTA) and
manage globalization. proposed EPA’s would classify them according
to service sector and their cross sectoral
In this way, a transatlantic initiative would application. An examination of the prescriptive
contribute to the completion of the Doha Round of regulatory provisions of U.S. and EU bilateral
trade negotiations. agreements would determine their compatibility
to avoid contradictory regulatory requirements.
Adjustments in the multilateral trading
environment combined with domestic policy • The final area would identify differences
reforms offer the best prospects for greater gains in between European Union and United States
investment and trade creation that least developed regulatory approaches that are particularly
and developing countries need to grow their problematic for developing countries. Research
economies. The European Union and United States would pinpoint competing regulatory
must partner with developing countries in order approaches to services markets that create
to create and strengthen fundamental legal and institutional, administrative, or resource issues
regulatory institutions. for developing countries. Such a study would
also examine how conflicting requirements
Nonetheless, further research is warranted impact firms from developing countries.
in several areas. It should examine how least

20 The German Marshall Fund of the United States


9 Acronyms

BIS Bank for International Settlements


CAFTA-DR Dominican Republic–Central America–U.S. Free Trade Agreement
CARICOM Caribbean Community and Common Market
COMESA Common Market for Eastern and Southern Africa
EAC East African Community
EC European Commission
Iriuscidunt verci
ECOWAS Economic Community of West African States
tinciduisi. Lis ad
EPA Economic Partnership Agreement elessi. Um alis
EU European Union dolor si. Ing eum
FDI Foreign Direct Investment dolorem nullaor
tionseq uipsum
FTA Free Trade Agreement
ipsusto dolore
GATS General Agreement on Trade in Services feum quiscil iscilis
GDP Gross Domestic Product er si et vent amcor
IAIS International Association of Insurance Supervisors ad dio eum vel
ICAO International Civil Aviation Organization
ICN International Competition Network
IFRS International Financial Reporting Standards
IMF International Monetary Fund
IMO International Maritime Organization
IOSCO International Organization of Securities Commissions
ITU International Telecommunications Union
MOU Memorandum of Understanding
ODA Official Development Assistance
OECS Organization of Eastern Caribbean States
OECD Organisation of Economic Co-operation and Development
OMB Office of Management and Budget
SEC Securities and Exchange Commission
U.S. United States
WTO World Trade Organization

Transatlantic Regulatory Cooperation in Services 21


Annex 1: Total Financial Flows of Official
Development Assistance

Table 2: U.S. total financial flows of ODA


USD millions at current prices and exchange rates
United States 1989–90 1994–95 2001 2002 2003 2004 2005
Total official flows 9,063 9,817 12,185 13,517 17,388 19,025 26,575
Official development assistance 9,536 8,647 11,429 13,290 16,320 19,705 27,622
Bilateral 7597 6,449 8,284 10,570 14,659 16,250 25,279
Cumsan hendio
con vullaorem Multilateral 1939 2,198 3,145 2,720 1,661 3,455 2,343
zzrilit laorting Other official flows –473 1,170 755 227 1,068 –679 –1,048
el do exer si tin Bilateral –473 1,170 755 227 1,068 –679 –1,048
ulputem iure Multilateral — — — — — — —
velendrer sequat.
Ummy nissis eum
Grants by NGOs 2,191 2,558 4,569 5,720 6,326 6,792 8,629
dolummy nullaor
amconsecte
exercilisl ut Private flows at market terms 2,485 40,986 21,864 5,173 14,147 6,465 69,206
vullandio odo
Total flows 13,738 53,361 38,618 24,410 37,860 32,283 104,410
Source: OECD, United States Development Assistance Committee Peer Review 2006.

Table 3: EC total financial flows of ODA


USD millions at current prices and exchange rates
EC 1989–90 1994–95 2001 2002 2003 2004 2005
Total official flows 2,969 5,190 6,293 6,332 8,319 10,559 10,985
Official development assistance 2,777 5,111 5,961 5,448 7,173 8,704 9,390
Bilateral 2,546 4,527 5,517 5,150 6,445 8,068 8,687
Multilateral 231 584 444 298 728 636 703
Other official flows 193 79 331 883 1,146 1,856 1,595
Bilateral 193 79 331 883 1,146 1,856 1,595
Multilateral — — — — — — —

Grants by NGOs — — — — — — —

Private flows at market terms — — — — — — —

Total flows 2,969 5,190 6,293 6,332 8,319 10,559 10,985


Source: OECD, European Community Development Assistance Committee Peer Review 2007.

22 The German Marshall Fund of the United States


Annex 2: Official Development Assistance
by Major Purposes

Table 4: U.S. bilateral ODA by major purposes at current prices and exchange rates
United States 1994–95 1999-2000 2004–05 2004
USD USD USD Total
million Percent million Percent million Percent dac%
Social infrastructure and services 2,420 37 3,546 35 10,761 43 38
Education 370 6 292 3 635 3 9
of which basic education 71 1 155 2 499 2 3 Iriuscidunt verci
Health 536 8 392 4 1,141 5 5 tinciduisi. Lis ad
of which: basic health 205 3 331 3 998 4 3 elessi. Um alis
Population and reproductive dolor si. Ing eum
505 8 651 6 1,446 6 3 dolorem nullaor
health
Water supply and sanitation 76 1 164 2 981 4 4 tionseq uipsum
ipsusto dolore
Government and civil society* 430 7 602 6 4,871 20 13
feum quiscil iscilis
Other social infrastructure
503 8 1,445 14 1,686 7 4 er si et vent amcor
and services
Economic infrastructure ad dio eum vel
1,033 16 1,344 13 3,341 13 17
and services*
Transport storage* 24 0 12 0 748 3 5
Communications* 77 1 10 0 227 1 1
Energy* 210 3 100 1 1,707 7 8
Banking and financial services* 74 1 1 0 214 1 1
Business and other services* 647 10 1,221 12 446 2 2
Production sectors 982 15 368 4 1,500 6 6
Multisector 67 1 1,017 10 1,272 5 7
Commodity and program aid 980 15 1,127 11 1,034 4 3
Action relating to debt 102 1 2,211 9 11
Humanitarian aid 463 7 1,610 16 3,279 13 7
Administrative costs of donors 525 8 702 7 1,040 4 5
Core support to NGOs — — — — — — 2
Refugees in donor countries 254 3 503 2 3
Total bilateral allocable 6,470 100 10,069 100 24,942 100 100
For reference:
Total bilateral 8,028 79 10,085 80 24,942 90 76
Of which: unallocated 1,558 15 16 0 — — 2
Total multilateral 2,196 21 2,449 20 2,898 10 24
Total ODA 10,244 100 12,534 100 27,840 100 100
Source: OECD, United States Development Assistance Committee Peer Review 2006.
*Represents ODA components that partially include assistance to regulatory entities.

Transatlantic Regulatory Cooperation in Services 23


Table 5: EC bilateral ODA by major purposes at current prices and exchange rates
EC 1995 2000 2004–05 2004–05
USD USD USD Total
million Percent million Percent million Percent dac%
Social infrastructure and services 497 27 1,824 26 4,295 42 34
Education 38 2 392 6 583 6 8
Cumsan hendio of which basic education 19 1 258 4 205 2 2
con vullaorem Health 67 4 295 4 452 4 4
zzrilit laorting of which: basic health 50 3 167 2 389 4 2
el do exer si tin
Population and reproductive
ulputem iure 35 2 41 1 145 1 3
health
velendrer sequat.
Water supply and sanitation 41 2 228 3 550 5 5
Ummy nissis eum
dolummy nullaor Government and civil society* 34 2 641 9 1,921 19 11
amconsecte Other social infrastructure and
283 15 228 3 645 6 4
services
exercilisl ut
Economic infrastructure and
vullandio odo 316 17 1,171 17 1,497 15 14
services*
Transport storage* 267 14 549 8 984 10 5
Communications* 9 0 131 2 27 0 1
Energy* 28 1 281 4 258 3 5
Banking and financial services* 5 0 103 1 38 0 1
Business and other services* 7 0 108 2 190 2 1
Production sectors 325 17 622 9 725 7 6
Multisector 130 7 632 9 674 7 7
Commodity and program aid 534 28 1,495 22 1,304 13 3
Action relating to debt — — — — 21
Humanitarian aid 74 4 903 13 1,096 11 8
Administrative costs of donors — — 184 3 594 6 5
Core support to NGOs — — 96 1 1 0 2
Refugees in donor countries — — — — 3
Total bilateral allocable 1,876 100 6,927 100 10,187 100 100
For reference:
Total bilateral 6,740 88 7,226 86 10,227 94 77
Of which: unallocated 4,865 64 300 4 40 0 2
Total multilateral 902 12 1,145 14 609 6 23
Total ODA 7,642 100 8,371 100 10,836 100 100
Source: OECD, European Community Development Assistance Committee Peer Review 2007.
*Represents ODA components that partially include assistance to regulatory entities.

24 The German Marshall Fund of the United States


Annex 3: Additional Official Development
Assistance Statistics

Table 6: Bilateral ODA by region 2004–05 average


EC (USD million) U.S. (USD million)
Sub-Saharan Africa 3,203 Sub-Saharan Africa 3,899
South and Central Asia 738 South and Central Asia 2,311
Other Asia and Oceana 497 Other Asia and Oceana 744
Middle East and North Africa 1,371 Middle East and North Africa 8,371
Iriuscidunt verci
Latin America and Caribbean 752 Latin America and Caribbean 1,828 tinciduisi. Lis ad
Europe 1,066 Europe 657 elessi. Um alis
Unspecified 1,052 Unspecified 3,802 dolor si. Ing eum
Source: OECD, Development Assistance Committee, http://www.oecd.org/dac. dolorem nullaor
tionseq uipsum
ipsusto dolore
Table 7: Top 10 recipients of gross ODA 2004–05 average feum quiscil iscilis
EC (USD million) U.S. (USD million)
er si et vent amcor
ad dio eum vel
1 Turkey 360 1 Iraq 6,926
2 Serbia and Montenegro 262 2 Afghanistan 1,060
3 Morocco 258 3 Egypt 750
4 Afghanistan 234 4 Sudan 575
5 Congo, Democratic Republic of 232 5 Ethiopia 552
6 Egypt 224 6 Jordan 368
7 Palestinian admin. areas 197 7 Colombia 366
8 India 164 8 Palestinian admin. areas 227
9 Mozambique 162 9 Uganda 225
10 Tanzania 161 10 Pakistan 224
Source: OECD, Development Assistance Committee, http://www.oecd.org/dac.

Transatlantic Regulatory Cooperation in Services 25


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Transatlantic Regulatory Cooperation in Services 27


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