ISTIA - Afghanistan class

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Improving INTERNATIONAL SERVICES TRADE INFORMATION in The Islamic Republic of AFGHANISTAN I S T I A INTERNATIONAL SERVICES TRADE INFORMATION AGENCY case postale 3547 Tel: +41 22 549 8688 CH - 1211 Geneva 3 Fax: +41 22 549 8688 Switzerland E-mail: info@servicestrade.org http://www.servicestrade.org What Is Services Trade Information & Why It’s Important to the Government of Afghanistan

International Trade and Afghanistan: 

International Trade and Afghanistan For centuries, Afghanistan, as a part of the Silk Road, was an apex of world trade activity. Trade remains an engine of growth to the economy of Afghanistan. .

International Trade and Afghanistan: 

International Trade and Afghanistan In an economy that has been so ravaged by war and drought, trade continues to provide employment and revenues. Jobs continue to be created in the transport, fuel, road building and repair, wholesale and retail trade sectors.

Afghanistan & the WTO: 

Afghanistan & the WTO Last December, the Government of Afghanistan committed to begin work on accession to the WTO. This being part of the strategy of the new Government towards Economic Recovery and Development.

International Trade and Afghanistan: 

International Trade and Afghanistan Statistics not collected in Afghanistan on a consistent basis since 1992-3; Trade Information (statistics) difficult to procure or produce; The World Bank did two major surveys in 2001-2002 of trade and economic statistics. The IMF has produced economic and trade statistics for the Afghan economy for the three year period between 2002/2003, 2003/2004, and 2004/2005*. . *Estimates

Some basic statistics, per the IMF: 

Some basic statistics, per the IMF Billions of U.S. Dollars Billions of U.S. dollars Economy of Afghanistan some recent IMF statistics

Some basic statistics, per the IMF: 

Some basic statistics, per the IMF Billions of U.S. Dollars Sectoral makeup of GDP, by percentage GDP sectoral makeup, 2002 – 2005 Islamic Republic of Afghanistan S ource: IMF 2005, International Monetary Fund Country Report No. 05/34, Islamic State of Afghanistan: Selected Issues and Statistical Appendix, from http://www.imf.org

Some basic statistics, per the IMF: 

Some basic statistics, per the IMF Billions of U.S. Dollars Sectoral makeup of GDP, by percentage Growth in GDP, by sector 2003 – 2005 (year on year) Islamic Republic of Afghanistan S ource: IMF 2005, International Monetary Fund Country Report No. 05/34, Islamic State of Afghanistan: Selected Issues and Statistical Appendix, from http://www.imf.org

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SERVICES TRADE is Trade in Services is Trade in Intangibles (versus trade in goods which you can see touch and feel); Trade in goods is easier to measure, because there is a actual item that crosses a border, and can be evaluated by customs officials; But you cannot pass an invisible ‘product’ such as a service, through customs! Trade-in-services, or “services trade“ is d ifficult to measure (even for some developed countries) but ESPECIALLY for developing countries

SERVICES IN AFGHANISTAN: 

SERVICES IN AFGHANISTAN TWO TELECOM COMPANIES TO LAUNCH THEIR NETWORK IN AFGHANISTAN , Saturday May 21, 2005 (1549 PST), Pakistan Tribune ISLAMABAD, May 22(Online): The Afghan government is considering to consent foreign Telecommunication companies for their network in the war ravaged country. According to sources two foreign companies who are present working in the telecom sector of Pakistan have contacted the Afghan authorities for their operation in Afghanistan. They have provided detail written information about their services. It is expected that the tenders in this regard might be opened in next month. Why Services Trade Statistics are important to Afghanistan Government decisions & Negotiations, bilaterally or Multilaterally (WTO). FDI in Services: Level of foreign participation in Afghan companies This is an issue about which the government must make decisions. Market Access: Legal permission of foreign companies to do business or « enter » our country and do business there. National Treatment : If we want to provide the same legal treatment to foreign businesses as to domestic businesses.

SERVICES IN AFGHANISTAN: 

SERVICES IN AFGHANISTAN ADB to Help Expand Cellphone Services in Afghanistan , Thursday April 07, 2005 (1617 PST) KABUL, April 08 (Online): The Asian Development Bank (ADB) will help to improve telecommunications in Afghanistan through a US$35 million loan signed Wednesday to finance the nationwide expansion and upgrading of the country's leading cellular network. Statistics will be important to understand the level of foreign competition in the economy versus the newly developing businesses in nascent domestic industries

Services are important for developed countries: 

Services are important for developed countries WTO GATS Agreement (1995) a. One of the four principal WTO Agreements 1. WTO GATT Agreement 2. WTO GATS Agreement 3. WTO TRIPS Agreement 4. WTO TRIMS Agreement Services are predominant in most developed country economies example: In the USA, over 83% of GDP is services-generated. GATS = General Agreement on Trade in Services

Services are important for developing countries: 

Services are important for developing countries Percentage of the economy which is services-based, per OECD surveys, 1999

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The GOVERNMENT OF AFGHANISTAN greatly needs servcies statistical capacity building 1. ..will soon be interested in making binding legal commitments in the context of the WTO services trade agreement, which will have long lasting implications for their experience as international services exporters. 2. ..Afghan government officials do not have access to GATS-related data that are based on real financial transactions related to their economies; 3. .. Ministries of Foreign Trade, Commerce and Finance are not currently receiving technical assistance to improve their services trade statistics.

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SERVICES TRADE INFORMATION in this context, is Information detailing services-sector trade-flows , between trading countries or economies. Principally national-accounts-related information (information on cross-border financial flows, collected by national governments and reported to the International Monetary Fund) Two basic components Cross-border services trade information Foreign-direct-investment (FDI) information (including FDI in services ) FDI flows and stocks Trade of FDI-related establishments Data concerning FDI operations (imports, exports, sales, expenditures, profits, assets, employment, value-added)

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UNDER THE WTO Cross-border Rules for Services Trade used for adjudication of trade disputes for the first time in history. The Four Modes of Supply (of Services Trade) were defined 1. Cross-border Services Trade (trade taking place over borders) 2. Consumption Abroad (trade via movement of consumer) 3. Commercial Presence (trade via foreign direct investment - FDI ) 4. Movement of Natural Persons (trade by movement of service provider) FDI – foreign direct investment

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SERVICES TRADE INFORMATION WHY IS THIS A PROBLEM? “ During the course of the Uruguay Round it was impossible for services negotiators to judge the value of the liberalisation offers made by their trading partners either individually or collectively. ” United Nations Expert Meeting on International Standards in Statistics on Trade in Services, November 2000 ; Statement of Opinion by Mr. Alister Abercrombie, British Invisibles, U.K .

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“In the GATS context, ….we encounter a crucial problem: the framework of negotiated commitments does not match the existing structure of trade statistics” WTO, S/C/W/5, paragraph 24. WTO Secretariat Studies, 1995 …the problems relating to the availability and comparability of statistics were the most serious and required urgent attention … WTO S/C/M/2, paragraph 29.

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SERVICES TRADE INFORMATION WHAT IS CURRENTLY AVAILABLE? SOURCE MODE 1 Cross-border supply MODE 2 Consum ption abroad MODE 3 Commercial presence MODE 4 Movement of Natural Persons FOREIGN DIRECT INVESTMENT FOREIGN AFFILIATE TRADE STATISTICS IMF YES but sectoral disaggregation for developing countries is very poor NO YES but FDI does not disaggregate services from goods & sectoral diaggregation poor NO NO OECD YES but only for OECD NO YES but only for OECD YES but only for OECD NO UNCTAD YES but SPARSE – based on IMF data and national sources NO YES but SPARSE YES but SPARSE NO National accounts, after I S T I A Technical Assistance & Capacity Building YES for DEVELOPING COUNTRY AND LDC ECONOMIES YES for DEVELOPING COUNTRY AND LDC ECONOMIES YES for DEVELOPING COUNTRY AND LDC ECONOMIES YES for DEVELOPING COUNTRY AND LDC ECONOMIES YES for DEVELOPING COUNTRY AND LDC ECONOMIES

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What Services Statistics Are Available for Afghanistan?

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What Services Statistics Are Available for Afghanistan?

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What Services Statistics Are Available for the USA? Financially based and therefore  ( COMPARABLE , and useful in negotiations or decisions) Cover many services sectors therefore  PROVIDE A WIDE RANGE Consistent collection methods and therefore  RELIABLE Proven collection modalities which provide  VALIDITY

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Enhancing IMF Services Trade Information WTO Services Agreement (called GATS, General Agreement on Trade in Services) addresses legally binding commitments in over 100 services sectors. IMF Reporting provides information for a fraction of this number of sectors used in WTO negotiations.

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WHAT KIND OF SERVICES STATISTICS ARE NEEDED BY Afghanistan? Trade-in-Services Statistics that Address: GATS Four Modes Of Supply of Services delivery. Without this, the WTO legal framework is not correctly addressed by statistical measures. 2. Sectoral Measurement Current means of measurement don’t measure most of the sectors addressed by GATS negotiations, such as telecomms consulting, legal services & others that are crucial for effective negotiating. Ideally, the WTO “120 list” would be used in sectoral definitions, as it is the most specific set of definitions. 3. Services as ‘Products’ as does the GATS Legal Framework … the “WTO/120” list of services sectors used by trade negotiators treats services as products, as does the international statistical standard of the Central Product Classification (CPC) System used by the UN.

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SERVICES TRADE INFORMATION WHERE HAS THIS BEEN EVIDENT? During the Uruguay Round developing country contracting parties expressed concerns about the lack-of-statistics; Article XIX.3 of the GATS text addressed the issue by promising that ‘assessment’ would be conducted on trade in services; The First Council on Services Meeting in 1995 put this #1 on the agenda; Over 75 Official WTO or GATT Meetings have made mention of the need for technical assistance to developing countries in the area of services trade statistics, such that they are more able to accurately assess the state of trade in this area. These are accessible online at: http://www.servicestrade.org

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SERVICES TRADE INFORMATION WHO IS WORKING ON IT? INTERNATIONAL AGENCY STATISTICAL MANDATE SERVICES STATISTICAL CAPACITY BUILDING? WORLD BANK Technical Assistance Group Statistical capacity building, but no mandate or funding for services data NO WORLD BANK Development Data Group Poverty data, Millenium data, International Comparability data NO UNITED NATIONS Statistical Directorate, NEW YORK Trade-in-Goods Data (COMTRADE) NO UNITED NATIONS UNCTAD , GENEVA Foreign Direct Investment (FDI) data NO IMF Balance of Payments & National Accounts Data, Technical Assistance and Capacity-building for Balance-of-Payments data only; no FATS or services NO WTO Use of UN-SD COMTRADE Data for analytical work, Statistics on GATS Legal Commitments NO OECD National Member Data on Services and Foreign Affiliate FATS; Production of Inter-Agency Manual on Statistics for Trade in Services (MSITS) NO

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SERVICES TRADE INFORMATION HOW IS IT CURRENTLY COLLECTED? The IMF Balance of Payments Compilation Guide recommends two Modalities for collection of services trade information as part of National Accounts Data Collection International Transactions Reporting Systems (ITRS) Government Collection of Enterprise Data (by statutory modalities)

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GATS MODE 3 (Commercial Presence) REQUIRES SPECIALIZED DATA To best understand Mode 3 data, one must look at all forms of “operations” transactions describing the “activities” of “Commercial Presence Enterprises” (FDI-based subsidiaries) which are also sometimes called “foreign affiliates” Sample transactions include: sales, purchases, employment, royalties, value-added, imports, exports, etc., of FDI-related enterprises. These data provide information about the aggregate level of business activity in a given economy that is related to such establishments

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SERVICES TRADE INFORMATION HOW DO DEVELOPING COUNTRIES CURRENTLY COLLECT IT? INTERNATIONAL TRANSACTIONS RECORDING SYSTEMS (ITRS) Capital account transaction measurement Completed by Central Banks and Financial Institutions Surveys estimating financial flows from the TOP-DOWN DATA POOR

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SERVICES TRADE INFORMATION HOW DO DEVELOPED COUNTRIES CURRENTLY COLLECT IT? GOVERNMENT COLLECTION OF ENTERPRISE DATA (ES) Surveys conducted by a government agency Surveys submitted by private sector to government Better data-capture Resource intensive (for enterprises and governments) DATA RICH

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SERVICES TRADE INFORMATION HOW CAN WE IMPROVE IT? Government collection of x x x x x x x x x Enterprise Data - deployed Governance Issues - addressed

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SERVICES TRADE INFORMATION WHAT ABOUT NEGOTIATORS? I S T I A strategy: Improve national statistics on trade in services; Train negotiators and policy makers to use the new statistics. Course: « What are Services Statistics? »

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SERVICES TRADE INFORMATION WHAT WILL IT ENTAIL? I S T I A Co-ordination & Training for National Governments National Government Commitment of Resources National Government Deployment of Statutory Reporting National Governance Issues - Confidentiality of Reported Data (affected by trust relationship to govt & culture) - Statutory Nature of Reporting (required by law? non-reporting penalized?) - Treatment of Data (secret?, legally admissible?) - I S T I A can provide examples of SUCCESSFUL BEST-PRACTICES

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SERVICES TRADE INFORMATION HOW LONG WILL IT TAKE? This depends entirely on the resources available and desire of national government decision makers of the Government of Afghanistan….

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A new agency in Geneva focused on serving developing country and LDC needs in the area of services trade information capacity building I S T I A International Services Trade Information Agency

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I S T I A THANKS YOU for your attention