Trade in Educational Services: Trends and Emerging Issues

This paper examines the trends and emerging issues in trade in educational services. It provides rough estimates of the size of the international market in educational services drawing on the limited data available in services trade statistics and data on foreign students in tertiary education in OECD countries. It outlines the current commitments for trade in educational services under the General Agreement on Trade in Services (GATS). It also reviews the implications of the on‐going GATS negotiations for further multilateral trade liberalisation in this sector. It points out that OECD countries have been noticeably reluctant to make proposals for further liberalisation of trade in educational services. One reason for this is the concern in many countries about the potential threats posed to cultural values and national traditions by growing trade liberalisation in educational services. Finally, the paper reviews some of the main policy issues arising from trade in educational services.     

The value of market access and national treatment commitments in services trade agreements

This paper looks at market access and national treatment commitments for services in the General Agreement on Trade in Services (GATS) and in 95 regional trade agreements (RTAs) involving the countries that are covered in the OECD Services Trade Restrictiveness Index (STRI). The objective is to quantify the impact of legal bindings on trade in services that result from a reduction in the uncertainty faced by exporters. Bilateral bindings indices are created for five broad service sectors (professional services, computer services, telecoms, financial services and transport services). They indicate how close the sector is from a fully bound regime with no possibility to introduce any new trade barrier, by comparing commitments with the actual trade regime. These bilateral indices are then tested over the period 2000–2014 in a structural gravity model. Despite differences across sectors, the results confirm that the legal bindings typically found in services trade agreements tend to have a positive impact on exports even if no actual liberalisation takes place.     

Movement of Natural Persons and the GATS

Trade in services has expanded considerably in recent years, However, numerous regulatory barriers constrain such trade, especially when it involves the temporary cross-border movement of labour, also termed, movement of natural persons. Many developing countries have the potential to export services through cross-border movement of professional, semi-skilled and unskilled labour. The General Agreement on Trade in Services (GATS) seeks to progressively liberalise trade in services via different modes of supply, including the movement of natural persons. Under the first round of GATS negotiations, member countries have made sectoral and cross-sectoral commitments to promote trade in services for these different modes of supply. This paper discusses the significance of and various constraints to the movement of natural persons in service trade. It also assesses the nature of liberalisation that has occurred in this mode of supply under GATS and notes the limited progress made in this regard. In view of the ongoing round of GATS negotiations, it suggests ways to stregthen the overall GATS framework through greater transparency and specificity in the commitments on movement of natural persons and through the introduction of various multilateral disciplines.     

Domestic Regulation and the WTO: The Case of Water Services in Developing Countries

Trade liberalisation of environmental services, and water services in particular, under the current WTO General Agreement on Trade in Services (GATS), has been widely advocated as a means of increasing private sector participation in the water sector in developing countries. Recognising that effective regulation is needed to ensure that the potential gains from private sector involvement are fully realised, the paper considers the relationship between national regulatory autonomy and GATS liberalisation in water services. The empirical evidence on the impact of private sector involvement in the provision of water services in developing countries is reviewed, and a number of reasons why water privatisation has been problematic in lower‐income countries are identified, including transaction costs and regulatory weaknesses. The study concludes that developing countries with limited regulatory resources should adopt a cautious approach to services liberalisation, by sequencing market liberalisation measures to match the development of their regulatory institutional capacity.     

The Internationalisation of Advertising

World expenditure on advertising has grown faster than world gross product in recent years. Organisational structure is highly dichotomised between small and large firms: the latter have engaged in restructuring into major transnational networks co-ordinated by holding companies. This is the most effective way to service multinational clients which have globalised product development but sell locally. But trade in advertising services is restricted by barriers to market access, national treatment and the opportunities created by global agreements such as the GATS. Technology may, however, be a more important influence on the internationalisation of agenceis than trade liberalisation.     

Assessing the Benefits to Developing Countries of Liberalisation in Services Trade

This paper discusses the potential impacts of services trade liberalisation on developing countries and reviews existing quantitative studies. Its purpose is to distill themes from current literature rather than to advocate specific policy changes. The picture emerging is one of valiant attempts to quantify in the presence of formidable analytical and data problems yielding only a clouded image of likely impacts on trade, consumption, production and welfare emerging to the point that the policy implications of results are not always clear. A central intuition would seem to be that with genuine two‐sided (OECD/non‐OECD) liberalisation in services that are seemingly considerably labour‐intensive in delivery, the potential should be there for significant developing country gains from global liberalisation allowing full cross‐border delivery. However, this picture is neither fully endorsed by available studies, neither is it explicitly contradicted. This seems to be the case for a number of reasons. One difficulty with the studies is that the conceptual underpinnings of what determines trade in services and how this trade differs analytically from that of trade in goods (if at all) is an issue prior to assessments of impacts of liberalisation of trade in services on developing countries being discussed. Key issues here are the treatment of mobility for service providers (both firms and workers), and the differing analytical structures needed to analyse individual service items (banking, insurance, telecoms, etc.). Some recent analytical work suggests that liber‐alisation in some service items, such as banking, need not always yield gains, and this contrasts with quantitative studies where analytical structures mirror conventional trade in goods treatments. The discussion and measurement of barriers to service trade in both developed and developing countries is also problematic. One is talking of domestic regulation, entry barriers, portability of providers, competition policy regimes more so than only barriers at national borders, as with tariffs. Both representing and quantifying such barriers raise major difficulties, and these are also spelled out in the paper. Which barriers actually restrict trade, and which do not because they are redundant is one issue, for instance. It is also often misleading to represent barriers in simple ad valorem equivalent form. As a result, numerical modelling work on the effects of service trade barriers which is based on ad valorem equivalent modelling is often not fully convincing. In addition, individual country results vary considerably across studies in ways that it is frequently hard for outsiders to understand. Studies do, however, point towards a tentative conclusion that effects are small and positive for developed and most developing countries if FDI flow changes accompanying service trade liberalisation are excluded from the analysis, but much larger and more variable across countries if they are present. This could be taken to suggest that mode 3 GATS liberalisation (roughly captured in some studies) might be important for developing countries; but mode 4 GATS liberalisation could be even more important given large barriers to labour flows across countries. Thus, if service trade liberalisation is thought of primarily as a surrogate for improved functioning of global factor markets in which more capital flows to developing countries and more labour flows from them to developed countries, then developing countries could benefit in a major way from genuine two‐sided (OECD/non‐OECD) liberalisation. Developing countries fear, however, that in global negotiations on services liberalisation where there is an asymmetry of power that largely one‐sided liberalisation may be the outcome, and their gains will be correspondingly limited. The paper concludes by evaluating econometric studies on linkage between services liberalisation and country growth rules, and briefly discusses some key sectoral issues in health services and transportation.     

What is at Stake in the Doha Round?

In this study the key elements of the WTO Doha Round are simulated and the main implications for international trade and national income are analysed. Based on negotiation information, three scenarios are designed. All scenarios encompass goods, services and agricultural liberalisation as well as trade facilitation. For goods liberalisation, a so‐called Swiss formula is used to cut bound tariff rates. Agricultural tariffs are cut according to a tiered linear formula. Attention has been given to the modelling of trade facilitation. Indirect as well as direct trade transaction costs are modelled. For simulation of the services liberalisation quantitative estimates of indirect trade barriers are used. The simulation results show that all regions in the aggregation gain in the simulated Doha scenarios, with a particularly strong result for developing countries. A conservative estimate is that global income increases with 0.2–0.7 per cent of initial GDP, depending on the level of liberalisation. Trade facilitation contributes the most to these results, with increased market access for non‐agricultural goods coming in second place. Overall, simulations indicate the importance of countries’ own liberalisation for their national income gains, and the importance of a broad‐based round.     

GATS下中国互联网过滤审查制度法律问题研究——以谷歌搜索引擎争端为视角

中国与谷歌搜索引擎争端涉及中国的互联网过滤审查制度。首先,中国相关措施适用于GATS。其次,搜索引擎服务属于Provisional CPC844"数据库服务",中国并没有对该服务部门作出承诺,因而中国并不承担市场准入及国民待遇的义务。再次,美国对中国可能的诉讼根据是GATS第3条透明度。最后,即使专家组认定搜索引擎服务属于其他中国作出具体承诺的服务部门,中国也可援引GATS第14条一般例外进行抗辩。总体而言,美国并没有强有力的理由提起WTO诉讼。     

Economic Implications of WTO Negotiations on Non‐agricultural Market Access

The economic implications of current WTO negotiations are likely to be far reaching. The World Bank and UNCTAD estimate annual global gains in agriculture and non‐agricultural products (including fish) of about $70−150 billion each under various scenarios and technical assumptions. Liberalising trade in services could be even more important, especially if agreement were reached to facilitate the temporary movement of labour (Mode 4 under the General Agreement on Trade in Services, GATS). Some qualifications, however, are in order. First, gains are likely to be spread unevenly across countries and across sectors; and, second, short‐term adjustment costs might precede long‐term gains. Much depends on how ambitious liberalisation is and on policies to facilitate adjustment. This paper examines the Doha mandate in non‐agricultural market access (NAMA) and the current state of the WTO negotiations, in particular some key proposals being considered at the December 2005 Ministerial Meeting in Hong Kong. We analyse various scenarios and their implications for trade, welfare, output, employment, revenues and preferences, as well as the distributional effects across countries and sectors. We note possible adjustment problems related to balance of payments and structural adjustment, as well as revenue and preference losses. These suggest the need for ‘aid for trade’ to help developing countries realise gains possible from WTO negotiations.     

The Regulation of Professional Migration: Insights from the Health and IT Sectors in ASEAN

This paper develops several indicators to measure the extent and depth of rules governing international migration. It is set in the context of moves towards further liberalisation of services trade and associated labour mobility (Mode 4) under GATS and related regional trading arrangements. Ten Southeast Asian countries at various stages of economic development are examined as a case study, with special reference to health care and information technology. These sectors are priority sectors for regional cooperation in services trade in ASEAN, but were expected to represent opposite extremes in terms of the regulation of migration. The study finds that the more advanced countries tend to have more liberal regimes for international movements of skilled manpower, although there were smaller differences regarding general visa and work permit arrangements. Generic restrictions on mobility were related to trade policies, as well as to direct barriers (often country‐specific) to migration. They included minimum salary requirement, levies on foreign workers, economic needs tests, and limitations related to language, education and job experience. Controls were more extensive in the health care sector, related to social considerations as well as professional organisational interests.     

Regulatory barriers to trade in services: A new database and composite indices

This paper presents new data on services trade regulation for 46 countries in 22 services sectors over 6 years (2014–2019). The data consist of qualitative information which is scored and weighted to produce composite indices. They cover market access and national treatment restrictions with respect to all GATS modes of supply, but also behind the border domestic regulation such as licensing, non-transparent regulatory procedures and competition policy. The database is updated annually. The trade restrictiveness indices (STRIs) are significantly correlated with services trade flows, but also with the performance of the sectors subject to the restrictions including logistics performance indicators, interest spreads, density of ATMs and secure servers, broadband penetration and outcomes such as legal rights and the time to resolve insolvency.     

International Trade and Health Policy: Implications of the GATS for US Healthcare Reform

This paper examines the implications of the General Agreement on Trade in Services (GATS), the World Trade Organization’s agreement governing trade in health-related services, for health policy and healthcare reform in the United States. The paper describes the nature and scope of US obligations under the GATS, the ways in which the trade agreement intersects with domestic health policy, and the institutional factors that mediate trade-offs between health and trade policy. The analysis suggests that the GATS provisions on market access, national treatment and domestic regulation, which are designed to eliminate ‘regulatory barriers’ to global trade in health services, limit the range of options that state and federal regulators and legislative bodies can employ to regulate the health sector and implement healthcare reforms. As such, the paper identifies the broader social and ethical implications of free trade policy.     

Market Structure and Market Access

We explore an issue at the nexus of domestic competition policy and international trade, the interaction between goods trade and market power in domestic trade and distribution sectors. We examine the effect of variations in conditions of domestic competition in services on trade volumes in goods in the cases of both linear and nonlinear import demand, including standard form CES‐based gravity models of bilateral trade flows. Theory suggests a set of linkages between service‐sector pricing and goods trade supported by econometrics involving imports of 22 OECD countries vis‐a‐vis 69 exporters. Competition in distribution services affects the volume of trade in goods. Additionally, because of interaction between tariffs and pricing, the market structure of the domestic service sector becomes increasingly important as tariffs are reduced. Indeed, depending on the degree of competition, market access concessions on tariffs may be effectively undone in some cases by changes in margins. For exporters, we find that service competition in destination markets matters most for exporters from smaller, poorer countries. Our results also suggest that while negotiated agreements leading to cross‐border services liberalisation may boost goods trade as well, they may also lead to a fall in goods trade when such liberalisation involves FDI leading to increased service sector concentration.     

Possible Dynamic Effects of AFTA for the New Member Countries

We discuss the possible dynamic benefits of economic integration for the new members of ASEAN. Direct evidence on regional integration and growth is weak, but three indirect channels are possible. Openness increases access to foreign knowledge, which could help productivity growth. Trade liberalisation is likely to stimulate investment and might promote the integration of the regional production network. Binding liberalisation under AFTA would help ‘lock‐in’ and accelerate liberal economic reforms. These gains are not automatic, however. Discriminatory liberalisation will switch imports from sources with high stocks of knowledge towards ASEAN countries, which have lower stocks, and so may lower productivity growth. We term this ‘dynamic’ trade diversion. In addition, local absorptive capabilities must be developed to benefit fully from technology transfer. Finally, we recommend extending AFTA commitments on an MFN basis in order to avoid static and dynamic trade diversions.     

Liberalising Trade in the Agriculture Sector of a Small Island State: The Case of Fiji

This paper uses Fiji as a case study to investigate the impacts of three trade liberalisation policies – removal of sugar price subsidies, unilateral trade liberalisation and multilateral trade liberalisation, implied by the successful completion of the Doha Round. Removal of the sugar price subsidies has an adverse effect on real output, real national welfare and employment, but promotes growth of non‐agricultural exports in the long run. Unilateral trade liberalisation, in the form of tariff cuts in the agricultural sector, increases real output, real national welfare and non‐agricultural exports in the medium term. However, this growth is not sustained in the long term. The best outcome for Fiji is multilateral trade liberalisation which increases real output, real national welfare, non‐agricultural exports and employment. It is argued that reform of trade policies in less developed countries could come at a cost, therefore highlighting the need for compensating mechanisms to deal with the adverse impacts. Other measures to assist farmers to expand output in response to a rise in prices could include measures to reduce transport, storage and packaging costs, as well as institutional measures to enhance the functioning of input and factor markets.     

Liberalising Temporary Movement of Natural Persons: An Agenda for the Development Round

We discuss liberalising the temporary mobility of workers under Mode 4 of the GATS, particularly the movement of medium and low skilled service providers between developing and developed countries. Such mobility potentially offers huge returns: a flow equivalent to three per cent of developed countries’ skilled and unskilled work forces would generate an estimated increase in world welfare of over US$150 billion, shared fairly equally between developing and developed countries. The larger part of this emanates from the less‐skilled, essentially because losing higher‐skilled workers cuts output in developing countries severely. The mass migration of less skilled workers raises fears in developed countries for cultural identity, problems of assimilation and the drain on the public purse. These fears are hardly relevant to temporary movement, however. The biggest economic concern from temporary mobility is its competitive challenge to local less skilled workers. But as populations age and the average levels of training and education rise, developed countries will face an increasing scarcity of less skilled labour. Temporary mobility thus actually offers a strong communality of interest between developing and developed countries. The remainder of the paper looks at the GATS provisions on Mode 4 and the commitments that have been made under it. The paper reviews several official proposals for the Doha talks, including the very detailed one from India, and considers several countries’ existing schemes for the temporary movement of foreign workers. Many countries have long had bilateral foreign worker programmes, and some regional agreements provide for liberal and flexible movement. These show what is feasible and how concerns can be overcome. We caution that, to be useful, any WTO agreement must increase mobility, not just bureaucratise it. The paper concludes with some modest and practical proposals. We suggest, inter alia, that licensing firms to arrange the movement of labour is the most promising short‐term approach to increasing temporary mobility.     

服务贸易领域的原产地规则在区域经济一体化进程中的应用

乌拉圭回合谈判后,多边贸易体制的调整范围由货物贸易扩大到服务贸易。WTO规则允许各成员根据最惠国原则对不同成员的服务和服务提供者给予差别待遇。《服务贸易总协定》(简称为GATS)第5条对"经济一体化协定"的规定也允许对隶属于区域成员国的服务或服务提供者给予区域性更优惠待遇。服务贸易领域因此也日益关注起对原产地规则的研究。我国自2004年1月1日实施《内地与香港关于建立更紧密经贸关系的安排》(简称为CEPA)起,"香港公司"可以在内地享受市场准入和政策优惠的待遇。但是很多所谓的"香港公司"是由欧美等其他国家的服务提供者在具体进行业务操作,而优惠的实际获得者是这些"搭便车"的外国公司。本文通过对服务原产地规则国际协调和规范的阐释,对我国CEPA的发展现状进行分析并提出几点完善性建议。     

Tracing the Effects of WTO Accession on Policy‐making in Sovereign States: Preliminary Lessons from the Recent Experience of Transition Countries

We examine in this paper the effects of WTO Accession on policy‐making and institutional reforms in transition countries. This is done by looking at the experience of those transition countries which are already Members of the WTO and/or which have recently acceded. We start by trying to distinguish between effects of accession negotiations and from those which are the results of autonomous policy initiatives. The areas of domestic policy‐making which are considered in the analysis include market access, governance, government budget, structural reforms, trade and investment arrangements with regional partners and macroeconomic management. We find that no precise blueprint of accession conditions can be ascertained and argue that the WTO played a role, albeit not an exclusive one, in the process of liberalisation. We also find that the costs of WTO Accession are not negligible, but that the benefits of WTO Membership are significant in terms of improved, more predictable, market access and its stability, improved governance and a recourse to better economic policies without significant loss to government revenues.     

Comparative Advantage and the Gains from Financial Trade: A Reappraisal

Emerging market crises have suggested that a national benefit‐cost assessment of external financial liberalisation could well prove unfavourable. This paper re‐examines the principle of comparative advantage in its application to financial trade to seek guidance on measures that might permit a fuller realisation of the potential benefits involved. Drawing a parallel with Balasubramanyam's work on the gains from FDI and international migration we distinguish between those arising in financial trade from the net transfer of capital, and those deriving from the contemporaneous exchange of financial claims or services of equivalent value. In the first interpretation a country's comparative advantage is manifested by its role in ‘intertemporal’ trade (as a borrower or lender). Our alternative emphasis is on the contractual risk‐return characteristics of the financial claims exchanged. This perspective is applied firstly to portfolio diversification gains arising from further international stock market integration. Secondly, price risk management for developing countries in international primary commodity trade is discussed. Both applications imply the need for significant institutional development but could realise approximately contemporaneous gains reminiscent both of those involved in merchandise trade and in the skills and product (or service) flows that Balasubramanyam has emphasised in relation to FDI and international migration.     

美国禁止通过互联网提供赌博服务的贸易争端评述

安提瓜诉美国“赌博案”是世贸组织争端解决机制新近审理结案的一个涉及以互联网方式跨境提供服务的典型案例。文章介绍了这一案件的背景,论述了本案所涉及的实体法律问题,简要分析了本案所带来的启示并预测了其前景。本案的审理及其结果,展现了国际服务贸易中的市场准入规则的重要影响,更凸现了服务贸易的市场开放和国内社会安全之间的潜在矛盾。同时,也将对世贸组织体制内的电子商务、自由贸易与公共道德之关系等问题的走向产生重要影响。