Lecture 3: The role of TISIs: Policy advocacy and promoting trade in services

1.2 Introduction

Notes:

After completing this lecture, participants will be able to:

 Understand approaches to enhancing service competitiveness at a national level;
 Identify actions which TISIs can take to promote service competiveness for SMEs; and
 Identify actions to support the formulation of positive policies for services.
1.3 Approaches to Improve Service Competitiveness

1.4 True or False?

Feedback:

This is false. In fact, there are a number of private sector actors which can assist the government to facilitate service
competitiveness. Chief among these are Trade and Investment Support Institutions (TISIs).

TISIs include, among others, trade promotion organizations, chambers of commerce, sector associations, coalition of
services industries, enterprise development agencies and supply chain management organizations.

As we will see in this lecture, TISIs have a wide range of options, not only to assist and support SMEs engaged in
international trade in services, but also to advocate for a facilitating policy environment.
1.5 Looking at trade in services through the context of IVCs

Notes:

When thinking about enhancing service competitiveness, it is useful to look at available options through the context of
international value chains (IVCs).
Adding value in goods IVCs
In the case of goods IVCs, value added is measured through each stage’s inputs and outputs. Usually, the output of one
stage is the input of the next stage, as goods IVCs tend to follow a linear production chain.
As we have seen in lecture 1, the activities that report the most value added along a goods supply chains are those
related to services. These tend to be located at the beginning and end of supply chains, such as R&D/innovation and
international logistics.
Adding value in service IVCs
Unlike goods IVCs, service IVCs do not follow a linear production chain in which the output of one stage is the input of
the next one. Moreover, because the levels of added value of the segments of a service IVC tend to vary wildly, it is
usually not possible to generalize with regard to their location within the chain. These difficulties in identifying the value
added of service tasks are compounded through the lack of service trade statistics that are generally available.
To overcome these setbacks in data gathering, human capital inputs (skills and experience) are used to determine the
value of tasks in service IVCs. Indeed, many studies have shown human capital to be a key determinant of value creation,
competitiveness and services exports from developing countries.
The higher the educational requirements (the human capital inputs required) of a task, the higher the value-added by
that task, and the higher the salary per employee performing it. Thus, increased value added in service IVCs can result in
higher value added socially (in this case, better wages for workers), as shown in the table on this slide. Fernandez-Stark,
K., Bamber, P. & Geref, G. (2011) <http://www.cggc.duke.edu/pdfs/2011-11-11_CGGC_Offshore-Services-Global-Value-
Chain.pdf>.
1.6 The importance of data collection for trade in services

Notes:

The availability of sufficient data for trade in services is essential to fully understand the possibilities of increasing value
addition, both for goods and service IVCs.
However, challenges remain when it comes to capturing service transactions:
 Services are intangible and heterogeneous, which makes them hard to measure.
 On many occasions, services cannot be supplied separately from other services or goods. If services are not contracted
separately and are produced “in house”, then they are not priced as such and are usually misrepresented as goods in
reporting.
 Current trade statistics have difficulty correctly registering service transactions under all 4 modes of supply, especially
when international trade in services takes place within the same territory (e.g. modes 2, 3 and 4).
1.7 The importance of digital technology for trade

Notes:

Digital technology is a fundamental enabler of trade. Not only does it reduce the complexity and inefficiencies of cross-
border exchanges by reducing transaction costs, it also allows for the creation of new organization structures, business
models and even products.
The global management consulting firm McKinsey <http://www.mckinsey.com/business-functions/digital-mckinsey/our-
insights/digital-globalization-the-new-era-of-global-flows> McKinsey estimates that global flows of goods, foreign direct
investment (FDI) and data have, taken together, increased global GDP by roughly 10%. According to this estimate, data
flows have had a larger impact on global growth than traditional flows of goods! This shows the accelerating economic
power of cross-border data flows, which started to take place only 15 years ago.
In fact, according to McKinsey, data flows have grown 45-fold in only a decade, and might grow another nine-fold by
2021!
The graphs below show the difference between the levels of cross-border data flows between 2005 and 2014.
1.8 The role of information communication technology in facilitating trade in services

Notes:

The role of ICT in facilitating trade in services is twofold:

 It reduces the transaction costs of operations (eg. travel);

 It drives the demand for information-intensive and ICT-related services (eg. telecommunications).

Today half of total services exports are conducted through digital means

According to McKinsey <http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/digital-

globalization-the-new-era-of-global-flows>, over the past decade trade in services delivered through digital means has
more than doubled, amounting to USD 2.4 trillion in 2014.

81% of digitally-enabled services exports come from developed countries. India and the Philippines are the only two
developing economies noted among the top 10 exporters of digitally-enabled services.

That said, however, developing countries are increasingly engaging in digitally-enabled service exports, with a growing
number of countries, including China, Malaysia, Brazil and Indonesia, relying on technology to offer IT, BPO and voice
services.

The following graph shows the growth of commercial service exports and Internet use, thus attesting to the important
role of technology to international trade in services.
1.9 The importance of public-private cooperation

Notes:

Cooperation between a country’s public and private sectors ensures an enabling environment for business to operate
while safeguarding public objectives. Cooperation is particularly important when it comes to international trade in
services, as its costs can often be much higher and less visible than in the case of international trade in goods. What’s
more, not only are regulations that have an impact on international trade in services often spread across different
bodies, they also tend to affect domestic services providers as well, adding another layer of complexity.
Some of the reasons for which public-private cooperation is needed in international trade in services include:
 Trade in services statistics are usually not very comprehensive, making it is difficult for policymakers to assess the
current trade situation and make plans to improve competitiveness;
 The service sector is not homogenous and different sub-sectors often have specific needs;
 Service providers are usually geographically dispersed;
 Service providers usually need to meet certain sets of qualifications, licensing and technical standards and procedures
set by licensing and accrediting organizations.
The public and private sectors can complement each other:
The private sector can offer:
An understanding of the specific costs and obstacles affecting international trade in services (different by sub-sector).
The public sector can offer:
A holistic approach and policy coherence, keeping in mind overarching public objectives while promoting service exports.
In fact, in recent years, public-private cooperation in Brazil, Egypt, India, Morocco and Kenya has been instrumental for
the development of service exports in those countries, including in business process outsourcing (BPO), knowledge
process outsourcing (KPO) and tourism.
1.10 Coalition of services industries (CSIs)

Notes:

The services sector is very heterogonous and services providers are usually atomized. As such, there is no single voice to
bring up service issues to the public sector.
Because of this, service industries may want to form into coalitions, creating umbrella organizations strategically
designed to bring together service enterprises and associations to discuss and find common ground on policy and export
issues.
These coalitions contribute to:
 Educate policymakers on the service economy; and
 Address the practical challenges that restrict trade and solve supply-side constraints that limit the competitive position
of service enterprises.

Some of the supply constraints faced by service enterprises and which coalitions help overcome include:
 Lack of qualifications;
 Unreliable electricity and limited broadband connections;
 Challenges in branding, marketing and quality assurance;
 Obstacles to expanding international commercial networks;
 Meeting international standards in their own industry, for example, in real estate, elective health and wellness services,
engineering and architectural services;
 Domestic regulation on foreign exchange controls, double taxation, foreign ownership, limitations on movement of
persons across borders.

Operations
Operations by a coalition of service industries (also called CSIs) include the following:
 Orchestrate the working group meetings of its members
 Develop position papers, letters to public officials, testimonies
 Develop trade barrier lists
 Convene services symposiums to raise awareness of its members' interests
 Collaborate with sister CSIs around the world, especially to promote the progress of negotiations and commercial
developments in services
 Collaborate with academics, policy experts and institutes
 Manage relationships with its members
 Manage relationships with public officials
 Manage media relations
 Manage online outreach
 Undertake fundraisers and membership drives

For more information on the different operations, please have a look at: Coalition of Service Industries: Why & How
http://www.intracen.org/uploadedFiles/intracenorg/Content/Exporters/Sectors/Service_exports/Trade_in_services/CSI
%20Why%20and%20How.pdf

CSIs across the world

CSIs have a forty-year history, with the oldest, the United Kingdom’s Committee on Invisible Exports (CIE - today called
“The City UK”) having been in operation since 1968.
As of 2014, 26 coalitions of service industries have been identified with an online presence
1.11 Sectorial focus

Notes:

Besides efforts aimed at building competitiveness in the service sector as a whole, TISIs can take actions to help the
development of specific services sectors. To do this, they can look into possibilities for collaboration with organizations
dealing with these sectors.
For example, if the goal of a TISI is to increase professional services exports, it could consider collaborating with
professional bodies. Although these are not intended to encourage the exports of services per se, they can nonetheless
assist putative service exporters indirectly. TISIs could facilitate cooperation and exchanges among professional bodies
in different countries, potentially resulting in increased mutual understand and eventual recognition of requirements.
This will most certainly have an impact on the export possibilities of professional services.
For instance, let us imagine that a TISI has the promotion of medical tourism as part of its mandate. Such a TISI could, for
example, collaborate with the Ministry of Tourism, the Ministry of Health, the Department of Immigration, and the
professional body for medicine, among others. NGOs can also play a role. In the promotion of medical tourism in India, it
was an NGO, the Indian Healthcare Federation, affiliated to the Confederation of Indian Industry and in collaboration
with the Government, which prepared the guide on Indian hospitals aimed at potential medical tourists.
In fact, India’s Ministry of Tourism has done the following to encourage medical tourism:
 Dedicated an exhibition space for medical tourism in ITB Berlin, a leading trade show for the international travel
industry;
 Organized road shows focusing on medical tourism;
 Produced advertising materials;
 Provided fiscal incentives for the development of medical tourism;
 Supported the participation of medical and wellness tourism providers to fairs.
What’s more, the Ministry of Home Affairs of India collaborated by creating a new category of visa, called a “medical
visa”, to be used by foreigners entering the country for medical purposes.
Thus, TISIs have an important role to play when it comes to linking organizations together and conducting advocacy
together with them in order to encourage exports in specific services sectors.
1.12 Answer the question

Feedback:

Thank you. The following is a “model answer” which you may find useful to frame your thoughts.

In order to improve the competitiveness of service exports, two major elements should be considered: IVCs and digital
technology. IVCs structure the way in which trade happens. Services offer a possibility for value addition in goods IVCs
through the insertion of service tasks such as branding and design. This should also be kept in mind when analysing
potential improvement in value addition along services IVCs. Extending the scope or depths of tasks provides a more
comprehensive offer for the client and, thus, contributes to upgrading.

Access to digital technology is another key element as half of all service exports are facilitated through digital means.
The role of ICT in facilitating trade in services is twofold: it reduces the transaction costs of operations; while also driving
the demand for information-intensive and ICT-related services.
1.13 The role of TISIs in Supporting SMEs to Increase the Competitiveness of Service Exports

1.14 Answer the question

Feedback:

All of them. In fact, there are many different actions which TISIs can take to help SMEs export services, from training and
identifying market access opportunities to creating coalitions of services industries, and even promoting a national
brand name. Truly, there is a wide variety of things that can be done; the only limit is creativity!

The following slides will introduce a variety of actions which TISIs can take to help service SMEs become more
competitive.
1.15 Create a coalition of service industries

Notes:

Steps to formulate a coalition of services industries

Since each CSI is unique, there is no single recipe to create one. However, there are some basic steps that can be taken
to assist coalitions to take shape.

One very important early step to take is to collect trade statistics for services. If these are not available, collecting
anecdotal business evidence would also be helpful. Having such information can help a TISI define the areas in which the
planned CSI should work: policy information and negotiation advocacy, business understanding, market intelligence,
access to government procurement, etc.

Another early step is to analyse the structure of other coalitions in order to learn from what others have done, in
particular to determine the best fit for membership of the particular CSI.

Eventually, once the ground has been laid, industry leaders can get together and hold a “founders’ meeting” to develop
the founding documents of the CSI in accordance with local commercial law. The founders’ meeting would, for example,
define the purpose of the association and determine its leadership criteria, including the required qualifications and
qualities of its President in order to ensure continued success. Founders would agree on matters such as the CSI’s
governance, the role of the board, membership responsibilities and the organizational structure. Their initial meeting
might also outline the priorities for the annual agenda.

Concretely speaking, a CSI’s founding documents might include:

 A constitution or articles of incorporation

 A handbook for the Board of Directors

 A description of staff positions and responsibilities

 An initial budget

 An agenda for the first year

For more information on creating and sustaining CSIs, please consult the following ITC publications:

 Creating Coalitions of Services Industries

http://www.intracen.org/uploadedFiles/intracenorg/Content/Publications/Creating%20Coalitions%20of%20Services%
20Industries%20-%20final%20Low-res.pdf

 Sustaining Coalitions of Services Industries

http://www.intracen.org/uploadedFiles/intracenorg/Content/Publications/201-2015-332%20%20-
%20Low%20Res%20PDF%20-%20Sustaining%20Coalitions%20of%20Services%20Industries.pdf

1.16 Build a national brand name

Notes:

Another way in which TISIs can contribute to service competitiveness is by helping to build a national brand name that
SMEs active in the service sector could use.
Actions to promote a national brand name could include:
 Preparing directories listing service export enterprises;
 Marketing the capabilities of local service enterprises in target offshore markets;
 Conducting activities to raise awareness of the importance of a service sector;.
 E.g. The tradition of the Brazilian carnival contributes to the development of the tourism sector in Brazil. Other
activities that contribute to tourism development could be film or music festivals.
 Work together with different partners to ensure that education programs match the needs of the labour market.
Some examples of successful national brand names:
Tourism in India
Incredible India <http://incredibleindia.org/> is an initiative aimed at making tourism activities in India more accessible,
as well as to build trust among consumers with regard to travelling to India. The website and app of the initiative provide
access to information on recognized Indian tourism service providers, including tour operators, travel agents, and hotels
in different locations across the country.
Incredible India was launched by the country’s Ministry of Tourism, working in collaboration with the following TISIs:
 Indian Association of Tour Operators
 Association of Domestic Tour Operators of India
 Federation of Hotel and Restaurant Associations of India
 Hotel Association of India
 Adventure Tour Operators Association of India
 India Convention Promotion Bureau

IT in India
NASSCOM <http://www.nasscom.in/vision-and-mission> is the industry association which represents the IT-BPM sector
in India. It was established in 1988 as a not-for-profit organisation. Today, it has some 1,400 members and represents
95% of industry revenues. It organizes events to give Indian companies active in the sector the opportunity to present
their products.
Highlights of the 2015 Nasscom India Leadership Forum https://www.youtube.com/watch?v=6k5DB40ut3I

IT in Bangladesh
In recent years, Bangladesh has been building its image as a provider of IT and IT enabled-services (ITES). In fact, ITC is
working with the Dhaka Chamber of Commerce and Industry (DCCI) and the Bangladesh Association of Software and
Information Services (BASIS) in order to assist in the promotion of Bangladeshi exports in this sector.
Today, Bangladesh is one of the top emerging IT outsourcing destinations not only for mobile services and applications,
but also for graphic-design execution services (image editing, banner creation), with many global players such as
Samsung, AMD or Rocket Internet setting up operations in the country. Today, IT companies operating in Bangladesh
include more than 1,500 registered service providers employing over 250,000 ICT professionals.
1.17 Organize trade and investment events

Notes:

There are a variety of events that can be organized to improve the competitiveness of service SMEs. In particular, trade
and investment events for services are useful to:
 facilitate B2B match making
 promote national branding in services
 raise awareness of the importance of the service sector, both domestically and internationally

Concretely, trade and investment events for services could include:

Trade in Service Fairs
These are international events that bring together services providers from different areas and sectors for networking
and business purposes. They are also a conducive forum to discuss public-private cooperation.
Some major trade in service fairs around the world include:
 The China Beijing International Fair for Trade in Services (CIFTIS) http://www.ciftis.org
 Media: CIFTIS 2016 Beijing Fair https://www.youtube.com/watch?v=55xeSwpUbMU
 The Global Exhibition on Services (GES) in India http://www.gesdelhi.in
International Business Excellence Awards Ceremonies for Services
An international Business Excellence Award Ceremony for Services can be organised at either the national or regional
level. Generally, its aim would be to motivate SMEs towards a higher performance, as well as to draw their attention
towards other past cases of successful exports in their industry.
A good example of such a ceremony is the E-Services Excellence Award (ESEA), an annual award ceremony hosted by
Dubai Trade to reward the best performers in e-services and mobile services adoption with the aim of encouraging
automation and the use of technology.
More information on the E-Services Excellence Award can be found here: http://esea.ae/about-esea

In order to promote B2B match-making, TISIs can:

 Organize trade fairs, as discussed;
 Provide an electronic platform for B2B match-making;
 Prepare directories of service exporters and make them available in targeted offshore markets;
 Assist in marketing the capabilities of local service enterprises in targeted offshore markets; and
 Organize trade missions abroad. This is particularly important in the case of international trade in services, which is
highly dependent on maintaining good relations with clients.

1.18 Provide training

Notes:

Offering training to SMEs engaged in exporting services is a good way for TISIs to boost their competitiveness.

Broadly speaking, the training delivered can be divided into three clusters:

1.Export knowledge: This consists of imparting SMEs with general export knowledge covering market research and
analysis, marketing and branding, access to finance, business plan formulation, and managing relationships.

2.Exporting services: This consists in training SMEs with regard to aspects specific to service exports, including human
resource expertise and development, reputation, customer-focus, online functionality, ISO export standards
certification, technology, intellectual property protection, and innovation.

3.Customized sessions: This consists in organizing customized sessions for small groups of service exporters organized by
service sub-sector, focusing on managing and enhancing innovation for export success.
1.19 Identify market access opportunities

Notes:

TISIs can support SMEs in identifying market access opportunities and trade barriers. A good way to go about this is to
analyse service commitments under GATS and RTAs.

Some useful tools to do this include:

 Performing a preliminary assessment: The map below is a simple way to visualize service imports and exports by
country, as well as the number of sectors committed under the GATS.
https://www.wto.org/english/res_e/statis_e/statis_maps_e.htm Can we insert this interactive map in our lecture?

 Confirming the conditions of RTAs covering services: Accessing RTAs covering services is possible through the WTO
Regional Trade Agreements Information System (RTA-IS), where RTAs can be filtered based on whether they cover
services or goods. http://rtais.wto.org/UI/PublicMaintainRTAHome.aspx.

 Checking services commitments under existing agreements: I-TIP Services http://i-tip.wto.org/services/default.aspx

offers information on services commitments under the GATS and RTAs, with applied measures in services and services
statistics.

Following trade negotiations: TISIs can follow international trade negotiation processes to understand where market
opportunities are present for services. For this purpose, TISIs can:

 Read and produce newsletters specialized in trade news.

 Keep close relationships with their country’s mission to the WTO and trade negotiators dealing with services, e-
commerce and digital trade.
 When a new agreement is reached, analyse market access opportunities and compare them with those under existing
agreements.

TISIs can keep close relationships with other TISIs and CSIs in other countries in order to explore business opportunities.

1.20 Answer the question

(Multiple Choice, 10 points, 1 attempt permitted)

Feedback:

There is no restriction on market access (“None”). There are opportunities for establishing hotels in Brazil under a
commercial presence. As per national treatment, some incentives are only provided to Brazilian firms.
1.21 The role of TISIs in Supporting Conducive Policies for International Trade in Services
1.22 Answer the question

Feedback:

Yes, they certainly can. There are several actions that TISIs can take to contribute to the formulation and reform of
policies to support service trade competitiveness, including:

Advocating for trade in services

Promoting hubs of excellence

Providing research and trade statistics

Supporting the development of a services roadmap

Providing policy recommendations, especially in the areas of policy coherence, reform sequencing and trade
negotiations

Organizing public-private dialogues

The following slides will introduce a variety of actions which TISIs can take to contribute to the formulation and reform
of policies to support service trade competitiveness.
1.23 Advocating for trade in services

Notes:

As mentioned previously, services providers tend to be fragmented. As such, their voice is usually not heard by
policymakers. In fact, this is one of the main reasons why advocacy by TISIs on behalf of the service sector is particularly
desirable.
Another reason for TISIs advocacy for international trade in services has to do with the lack of visibility of barriers in this
area. While goods encounter “visible” barriers, such as tariffs and other measures at the border, regulations affecting
international trade in services take place “behind the border” and tend to not exclusively target international trade.
According to the WEF <http://www3.weforum.org/docs/WEF_SCT_EnablingTrade_Report_2013.pdf>, reducing supply
chain barriers to trade, many of which are related to trade in services, could increase global GDP up to six times more
than removing tariffs.
Advocacy for international trade in services takes place to solve challenges present at three levels, as shown below.
1.24 Promoting hubs of excellence

Notes:

Broadly speaking, hubs of excellence are groups of enterprises that collaborate with each other to mutually enhance
their competitiveness, while also interacting with government agencies and universities. Promoting hubs of excellence is
key to service competitiveness, as innovation is crucial when exporting services.

Innovation in services:

 is client-driven

 takes place at the point of interaction between a service provider and a client

 is people-driven as well as laboratory-driven

 does not necessarily offer economies of scale

 is tangled up with everyday creativity and design

 usually suffers from inadequate opportunities for collaboration between service providers and the academic and R&D
community

 is often, and particularly in developing countries, undermined by lack of digital infrastructure, disconnects between
different national standards, lack of inter-operability and inadequate IP protection

TISIs can promote the establishment of hubs of excellence in different ways:

 Encouraging the clustering of different service activities. Clustering various activities in the same geographical location
leads to a number of “knock-on” benefits for services, most notably resource-sharing (e.g. client and provider
networks, e-platforms, interoperability, common language centres or other facilities).

 Promoting innovation through vocational training. By providing current or aspiring service providers with vocational
 training, TISIs have the ability to spur the creativity and capabilities of SMEs, and thus contribute to their
competitiveness.

 Sharing best practices and disseminate the spillover effects from the hub to other enterprises: Once a nascent hub of
excellence has been created, TISIs should engage in relational and promotional activities, aimed at not only enlarging
the hub, but also disseminating its spillover benefits to as broad a number of beneficiaries as possible.

 Helping enterprises in the hub use their stronger negotiating power with the public sector: By acting in concert,
enterprises that are members of a hub of excellence can gain leverage, which must be properly directed to have an
effect. A service hub of excellence could, for example, advocate to the public sector to make the case for more
accessible and higher quality digital infrastructure.

 Presenting the relevance of the service industry: With a good understanding of the importance of the service industry
and international trade in services, policies that are more conducive to service competitiveness are much more likely
to be put in place. Similarly, private sector initiative will be focused on the industry, providing supporting services such
as finance and telecommunications services.

A good example of a Hub of Excellence for services is Singapore’s Center of Logistics Excellence, a facility designed to
serve as a knowledge hub for logistics, promoting a conducive environment for logistics companies to operate across
Asia.

To learn more about Singapore’s Center of Logistics Excellence, please click here:

http://www.cevalogistics.com/centers-of-logistics-excellence/Singapore

1.25 Providing research and trade statistics

Notes:

TISIs can provide research and trade statistics to support key players in formulating or reforming policies for service SME
competitiveness.
Research:
 Conduct surveys to understand the location of major barriers for SMEs when it comes to importing / exporting services.
 ITC conducts an SME Competitiveness Survey to understand challenges faced by enterprises at the firm, business
environment and national levels. The latest results are included in the SME Competitiveness Outlook 2016
http://www.intracen.org/SMEOutlook/.
 Analyse services regulator self-assessment questionnaires.
 Produce service business briefs, highlighting SME success stories in service exports and drawing recommendations for
each sector.
 Produce newsletters covering business opportunities, new regulations affecting the business environment, and trade
fairs.
 Analyse the involvement of specific service SMEs in IVCs.
 Analyse whether certain obstacles to exporting services are due to the lack of available local service inputs (or the
impossibility to import them).
Trade statistics can be collected on:
 The monetary value of trade
 Any other unit in which that service could be assessed. (e.g. the number of films produced in the case of audio-visual
services).
 The services inputs (in terms of both their origin and their specific sector) needed for the production and export of
services.
TISIs can provide SMEs an incentive to collaborate with them in providing their trade statistics by, for example:
 Ensuring anonymity;
 Ensuring that the results of the research are made available to the participating SMEs;
 Providing training sessions;
 Organizing dialogues among participating SMEs in order to share best practices and explore synergies to offer joint
export products;
 Offering a raffle for a trip to take part in a service trade fair or other business-related event;
 Supporting participating SMEs in renting a booth at a service trade fair.
1.26 Supporting the development of a service roadmap

Notes:

A service roadmap is a plan for the development of the service sector and the promotion of service exports. It guides all
of the different public and private actors involved in international trade in services to achieve a set of common and
targetable goals.
For example, the APEC Services Competitiveness Roadmap (2016-2025)
http://mddb.apec.org/Documents/2016/MM/AMM/16_amm_012.pdf, endorsed at the 28th APEC Ministerial Meeting
in Lima, Peru on November 17th and 18th, 2016, specifies the following targets:
 Ensuring an open and predictable environment for access to service markets by progressively reducing restrictions to
service trade and investment;
 Increasing the share (%) of service exports from APEC economies among total world service exports in order to exceed
its current share of world services exports by 2025;
 Increasing trade in services in the APEC region so that, by 2025, its compound average annual growth rate exceeds its
historic average of 6.8% and the share (%) of value added by the services sector to the total GDP of the APEC region
exceeds the global average.

TISIs can play a role in helping develop such roadmaps by:

 Stressing the importance of services, not just for international trade, but for the entire national economy (both in gross
and value-added terms);
 Providing research that allows for the setting of objective, measurable and attainable goals;
 Involving various stakeholders from the public and private sectors to participate in the definition of the roadmap;
 Distributing responsibilities and risks in the roadmap (which agency will monitor the attainment of the goals?);
 Setting milestones for achieving the long-term goals and, if needed, triggering the revision of targets among the
stakeholders;
 If the services roadmap is to be conducted at a regional level, contacting TISIs in other countries and involving them in
the roadmap development process.
1.27 Providing policy recommendations

Notes:

When it comes to promoting service competitiveness, TISIs could give policy recommendations in two major areas:
1.Advocating for coherent policies
2.Supporting trade negotiations

Coherent policies to enable trade in services

Coherent governmental policies are necessary to establish a conducive and enabling environment for business, which is
something that is always desirable. This is particularly the case for services as they are regulated by more than one
government agency, are traded through different modes of supply, and are more sensitive to contractual relationships
than goods are.
Indeed, enterprises think about doing business without realizing what mode of supply is involved. However, services
transactions often require more than one mode of supply, either for practical or commercial reasons.
For example, a Spanish bank establishes a branch in Mexico (mode 3), employing Indian nationals to provide IT services
locally (mode 4) while also importing advertising services from South Africa (mode 1).

 Policy coherence among modes of supply

The multiplicity of modes of supply involved in a single services business requires a conducive and coherent
environment for trade in services. This means that policies addressing the different modes need to be
complementary, and not work at cross-purposes.
Following the example of the Spanish bank, if policies and regulations only facilitate mode 3 (the establishment of
the bank) while hampering its trade in services under modes 1 and 4, the Spanish bank might reconsider its
operations in Mexico as it cannot easily follow its business model in that country.
 Policy coherence within a single mode of supply
Each mode of supply requires a coherent and wide-ranging policy approach, especially for modes 3 and 4, which
require a commercial presence and the movement of natural persons.
Following the example of the Spanish bank, let us imagine that there is a trade agreement between Spain and
 Mexico that includes mode 4 commitments covering IT professional services. Even with such an agreement, if the
procedures for applying for a visa in Mexico are not transparent, it will still hamper actual trade under mode 4.

What can be done to guarantee policy coherence?

TISIs need coordinating mechanisms to engage different government agencies and collaborate in ensuring “whole-of-
service” policy coherence. One way to do this consists of proposing a self-assessment on service regulation to be
undertaken by services regulators at different levels. This will allow regulators to understand and anticipate the impact
of regulations on domestic competitiveness in services, especially with regard to SME exporters.

APEC-OECD Integrated Checklist on Regulatory Reform

In 2005, the APEC and the OECD jointly launched an Integrated Checklist on Regulatory Reform
<http://www.oecd.org/gov/regulatory-policy/41992858.pdf>, which is a voluntary tool that APEC economies can use to
assess their regulatory reform efforts.
The checklist has four sections. The first one consists of a questionnaire on regulatory reform, while the other three
contain questionnaires focused on individual policy areas: regulatory policies; competition policies; and market
openness policies.
So far, five APEC economies have published their self-assessment reports using this checklist: Australia, Chinese Taipei,
Hong Kong, Korea and the United States. For more information, click here <http://www.oecd.org/gov/regulatory-
policy/apec-oecd-integrated-checklist-on-regulatory-reform.htm>.

Provide inputs for formulating trade negotiation strategies

TISIs can feed into trade negotiations strategies at the multilateral and regional levels in order to provide the
perspectives of enterprises and the private sector.
In particular, TISIs can provide information to trade negotiators regarding the following elements:
 Trade flows among countries involved in negotiations, with a particular focus on identifying opportunities,
complementarities and competition by sector.
 Areas showing a high potential for services exports, based on the composition of the local industry.
 The main trade barriers faced by service exporters:
 Identifying whether these barriers are a result of the actual measures taken by the authorities in foreign markets,
or whether they are a matter of implementation.
 Identifying the type of barrier: market access, national treatment or domestic regulation.
 General barriers affecting exports by different services sectors
 E.g. investment policy, immigration policy, etc.
1.28 Organising public-private dialogue

Notes:

TISIs can organize public-private dialogues to ensure that the policy environment correlates with private sector needs.
These dialogues should improve the business environment for services exports, while enhancing transparency and
efficiency at the regulatory level.

A potential agenda for public-private dialogue could be as follows:

 State of play on the development of the service sector

 Economic importance of the service sector (value added in GDP, jobs, exports) and potential for growth

 Policies affecting the sector domestically and in the destination markets

 Takeaway messages and actionable agenda - summary of the discussion and links from the main messages to
actionable points that could be reported to the appropriate body in the public sector.

Some considerations for conducting public-private dialogue include:

 The dialogue should be open and expectations should be clear.

 Parties should develop a set of common values and rules to conduct the dialogue.

 Inclusiveness is important and special attention should be given to women, youth and SMEs.

 The dialogue needs to deliver concrete results within realistic timelines in order to gain the confidence of the business
community.

 The dialogue should be a repetitive exercise in engagement. The accumulation of contacts is important to reinforce the
message of the dialogue and break with dominant paradigms which prevail in both the private and public sectors.
1.29 Answer the question

Feedback:

TISIs are an instrumental player in framing an enabling environment for service enterprises to flourish, from taking the
lead in beginning public-private dialogues to promoting innovation and assisting in the capacity building of enterprises.
The fact that services are more skill-intensive than capital-intensive gives TISIs vast opportunities to be creative in
supporting SME skills enhancement and innovation. When it comes to fostering service competitiveness, creativity is the
only limit.
1.30 Ask the expert

Notes:

 What role can Trade and Investment Support Institutions (TISIs) and Coalition of Services Industries play?
https://www.youtube.com/watch?v=Buv7DDO-_rI&list=PL52a9jvYEGUsmUFLopsiNtAxOL0vg_ZPM&index=13
 Why is innovation so important for building competitiveness in services?
https://www.youtube.com/watch?v=lHvOiqYUKqw&index=7&list=PL52a9jvYEGUsmUFLopsiNtAxOL0vg_ZPM
 How do hubs of excellence develop?
https://www.youtube.com/watch?v=TzAp0krmU7c&index=9&list=PL52a9jvYEGUsmUFLopsiNtAxOL0vg_ZPM
1.31 Key Points

Notes:

Remember:
 Any approach to improving service competitiveness should consider the IVC structure and the possibilities for value
addition through service tasks, as well as the importance of digital technology to facilitate trade in services.
 TISIs have a key role to play in supporting SMEs to increase the competitiveness of services exports. Their range of
action is wide, going from creating a coalition of service industries to organizing trade and investment events and
offering training.
 TISIs also have a key role when it comes to supporting conducive policies for international trade in services. They can
advocate for trade in services, promote the formation of hubs of excellence and support the development of services
roadmaps, among other actions.
 The fact that services are more skill-intensive than capital-intensive gives TISIs vast opportunities to be creative in
supporting SME skills enhancement and innovation. When it comes to fostering service competitiveness, creativity is
the only limit.
1.32 Thank you for completing the lecture