THIRD WORLD MARKETS "TERRA INCOGNITO" ON SERVICES TRADE DATA.

Mar 2, 1990

THIRD WORLD MARKETS "TERRA INCOGNITO" ON SERVICES TRADE DATA.

GENEVA, FEBRUARY 28 (BY CHAKRAVARTHI RAGHAVAN) -- If statistics are seen as providing a map to guide policy-makers in their deliberations, much of the Third World is terra incognito or unknown territory as far as statistics about international trade in services are concerned, according to the United Nations' Statistical Office.

Making this comment this week at the meeting of the Uruguay Round Group of Negotiations on Services, William Seltzer, Director of the UN's Statistical Office, warned that unless concerted actions are taken soon "neither the Uruguay Round of negotiations nor even the next round of negotiations will have the data they need to reach sound and equitable conclusions".

In the three years of negotiations on the issue of trade in services, the ICs have been trying to brush aside the issue and problems of services and lack of data about production, "trade", "transactions", etc., arguing that it was a long-term project and negotiations could not be held up for that.

The attempts of the UN, UNCTAD etc to develop a methodology for collection of national data to reflect the "services" and their contribution, as well as international "trade" and "transactions" have run into the problem of "definition", as well as funds needed both at the international level and to provide technical help to Third World countries.

The ICs have discouraged such efforts being undertaken ahead of an agreement on the Framework, lest it come in the way of their attempts to use this to get rights of establishment for their TNCS, or provide support to the Third World fears about liberalisation of the trade in services.

At the same time a group of ICs, the so-called Voorburg group, have been trying to develop their own methodology, which would then be presented to the UN and the Third World to adopt, that would best subserve their common interests.

Seltzer's remarks to the GNS came at the formal meeting of the group which later moved into informal consultations on the structure and market access issues.

The informal consultations, participants said, showed a major division between the Industrial Countries on the one hand and the Third World countries, particularly the Latin American countries who have presented a comprehensive proposal on the framework, on the other, over the question of timing of negotiations for initial level of commitments for liberalisation of trade in services.

The Latin American group of countries, as well as other Third World countries who have expressed support for the SELA paper, have envisaged negotiations for liberalisation, to be taken up only after the shape of the Multilateral Framework and the nature of its rights and obligations are known, and after its entry into force.

The U.S., EEC and others want negotiations on the Framework and the first round of negotiations for liberalisation to go on in parallel and for Parties to the framework to agree on an initial level of commitments, including freeze on new restrictions.

In addressing the statistical issue, Seltzer reminded the GNS that the UN statistical office had overall responsibility for collection and compilation of statistics on many of the major components of international trade in services, including international trade statistics, national accounts statistics, industrial statistics, as well as related methodological work.

These responsibilities were carried out in close cooperation with, and in some cases on behalf of a broad range of UN organs and international organisations such as UNCTAD, UN Regional Commissions, GATT and IMF among others, and they were guided in this work by the UN Statistical Commission comprising chief statisticians from 24 member-states, Seltzer told the GNS.

Various participants in the GNS, at each stage, had recognised the critical role of "sound and comprehensive" statistics in reaching equitable solutions to the complex problems before the GNS.

That the issue was once again before the GNS was a demonstration of the important role that statistics should play in these negotiations and of the continuing inadequacies of statistics on services, including trade in services, Seltzer said.

There were serious shortcomings in the available data, and in terms of the statistical methodology i.e. internationally agreed definitions, classifications and reporting practices, and shortcomings in terms of the application of existing methodology.

"Finally, and the most important shortcoming for the GNS", Seltzer added, "is a marked unevenness in the availability and quality of data from different groups of countries".

"If statistics are seen as providing a map to guide policy-makers in their deliberations, available statistics on international trade in services leave much of the developing world marked as a terra incognito, an unknown territory".

The UN official recalled that three years ago the UN Statistical Office, in cooperation with the UNCTAC, UNCTAD, GATT and the IMF, had developed a proposal for a concerted and integrated approach to the problem involving conceptual development, technical cooperation and data collection.

A four-year programme had been suggested addressing primarily, but not exclusively, the needs of Third World countries including preparation of appropriate technical manuals and training activities. Although some preliminary interest was expressed in this proposal by individual prospective donors, "no tangible support has been received to date".

"Unfortunately", he added, "the description of the state of statistics in that proposal remains largely unchanged and the needs outlined in the proposal remain unaddress".

Referring to the efforts of some of the OECD countries to tackle these issues among themselves and evolve a methodology, Seltzer said that, as the UN Statistical Commission had noted at its session last year, despite the valuable contribution of the Voorburg Group on services statistics that group could not replace the traditional methods for developing statistical methodology.

The Commission had also asked the UN Secretary-General to seek extra-budgetary financing for a comprehensive programme involving development of methodology, data compilation and technical cooperation in this field of statistics.

If this or some modified proposal had been supported in 1987, Seltzer said, "we would today be further advanced in statistics than we are ... Unless concerted action is initiated soon, neither the Uruguay Round of negotiations nor even the next round of negotiations will have the data they need to reach sound and equitable conclusions".

Seltzer in effect reminded the GNS Monday that the lack of statistics and efforts to fill the gap have not progressed because of the failure of the ICs to agree to find extra-budgetary resources needed for this work by the UN.

GNS participants said that in the informal discussions on the framework, and the draft paper put forward on behalf of a group of Latin American and Caribbean countries, the U.S. and EEC would appear to have objected to the approach in the paper envisaging first negotiations on a framework and its entry into force before starting negotiations on an initial level of commitments.

The U.S. and EEC said they want a schedule of market access concessions of each country to be negotiated and incorporated into the Framework, in the same way as the General Agreement and the schedule of each signatory's tariff concessions.

The Latin American countries, as well as several other Third World participants, said that without knowing the details and shape of the framework and its obligations, they could not negotiate or bind themselves to any initial level of commitments.

Another division between the ICs and the Third World revolved round the view of the U.S. that the Framework would cover all traded services save those sectors and subsectors that each country, in its schedule, excepts - the so-called negative list concept of coverage.

Third World countries on the other hand favoured a positive list approach - agreeing on the list of traded services to be included and listing them in an annex.

In discussing the relationship and role of the Framework and its institutional set-up with other international organisations, a number of Third World participants underscored the role of organisations like the ITU, ICAO, UNCTAD etc in the services area, while the U.S. also brought in the role of IMF and the GATT.

However, some Third world participants underlined that GATT was not an institution or Organisation but only a contract.

The proposals of the U.S., Switzerland and some others envisage not only close coordination between the GATT and their proposals for a General Agreement on Trade in Services (GATS), but a common secretariat and other such services.

Third World countries however underscore that the negotiations for the proposed multilateral framework on services is totally outside of and independent of the GATT or the GATT negotiations, and that they could not accept any linkage between the two.

The U.S. and the Swiss also reportedly suggested that since a number of services were embedded in goods that were traded internationally and hence there should be close links between the future services Organisation and the GATT.

However, some Third World participants said that if some services were embedded in goods, which were traded, these were already covered by the GATT, and the proposed framework for services should exclude the services embedded in the goods.