World BankServices Trade and International Negotiations Course

April 20, 2004

“A Practical Approach to Analyzing U.S. Services Trade”

Richard W. BrownChief, Services and Investment Division

U.S. International Trade Commission

The mission of the Commission is to:

(1) administer U.S. trade remedy laws pertaining to dumping and subsidies;

(2) provide the President, USTR, and Congress with independent research and analysis on matters of international trade and competitiveness; and

(3) maintain the Harmonized Tariff Schedule of the United States.

The United States International Trade Commission

The Commission is an independent, nonpartisan, quasi-judicial federal agency.

USITC Services Analysis

• The Commission’s services analysis has qualitative and quantitative elements.

• BEA produces data on cross-border trade, foreign direct investment, and affiliate transactions annually.

• BEA also produces data in the National Income and Products Accounts that assist in examining the state of U.S. service industries.

• Nontariff barriers to services trade and investment are identified through a variety of means, and are usually discussed in a qualitative fashion.

Much of USITC services analysis focuses on the identification of foreign trade impediments.

Much of this information is available electronically.

GATS schedules http://www.wto.orgNational Trade Estimate Reports http://www.ustr.govCountry Commercial Guides http://www.export.govWTO Trade Policy Review http://www.wto.orgAPEC Individual Action Plans http://www.apec-iap.orgEconomic Policy & Trade Practices Reports http://www.state.govEU Databases http://mkaccdb.eu.intState Department cables

Additional information is gathered through public hearings

ITC public hearings http://www.usitc.gov

In many instances, firms will not provide information in a public setting, but they will provide information in person-to-person interviews

** Affiliates of U.S. parent firms are especially valuable sources of information.

Sources of information on foreign trade impediments

Express Delivery Services: Competitive Conditions Facing U.S.-Based Firms in Foreign Markets (USITC Pub. 3678, Apr. 2004)

Solid and Hazardous Waste Services: An Examination of U.S. and Foreign Markets(USITC Pub. 3679, Apr. 2004

Oil and Gas Field Services: Impediments to Trade and Prospects for Liberalization(USITC Pub. 3582, Mar. 2003)

Natural Gas Services: Recent Reforms in Selected Markets(USITC Pub. 3458, Oct. 2001)

Electric Power Services: Recent Reforms in Selected Foreign Markets(USITC Pub. 3376, Nov. 2000)

All reports are available at www.usitc.gov.

Industry-specific reports requested by the U.S. Trade Representative and Congress

Section 2104(f)(2) of the Trade Act of 2002 provides that the Commission is to submit to the President and the Congress, no later than 90 calendar days after the President enters into the agreement, a report providing an assessment of the likely impact of the agreement on the U.S. economy as a whole and on specific U.S. industry sectors and consumers.

Two such reports have been published so far

U.S. Singapore Free Trade Agreement: Potential Economywide and Selected Sectoral Effects (USITC Pub. 3603, June 2003)

U.S. Chile Free Trade Agreement: Potential Economywide and Selected SectoralEffects (USITC Pub. 3605, June 2003)

Several more will be published soon

Australia (forthcoming, approx. May 2004)

Morocco (forthcoming, tentatively June 2004)

Central America and Dominican Republic (forthcoming , tentatively July 2004)

Andean Countries

All reports available at www.usitc.gov.

USITC reports on the projected effects of free trade agreements

Trade impediment databases

GATS article Number of violations

II—Most-favored-nation treatment 263

III–Transparency 14

IV–Increasing participation of developing countries 25

VI–Domestic regulation 15

VIII-Monopolies and exclusive service suppliers 5

X-Emergency safeguard measures 1

XI–Payments and transfers 2

XV–Subsidies 12

XVI–Market access 3,909

XVII–National treatment 1,074

Industry Nature of Reported Impediment

Air transport Cabotage restrictions, ownership restrictions, government procurementrestrictions, leasing restrictions

Banking Regulation varies by state, multiple regulatory bodies, state and federalrestrictions on nationality of directors

Business State residency requirements, representative office requirements

Communications Investment restrictions, lengthy licensing proceedings, reciprocity, MFNexemptions on DTH and DBS transmission and digital audio services

Express delivery Wartime Supplemental Appropriations Act

Insurance Regulation varies by state

Maritime transport Jones Act, government procurement restrictions

Professional Licensing regulations vary by state, licensing regulation lacks transparency,visa procedures lengthy and burdensome

U.S. impediments to trade in services (as identified by the EU)

Import Restraints report

• The Economic Effects of Significant U.S. Import Restraints: Third Update 2002(USITC Pub. 3519, June 2002)

• http://www.usitc.gov

• USTR has requested that the Commission produce a report that measures welfare gains from liberalizing trade impediments.

• The 2002 report included discussions of maritime, trucking, and air transport services and financial services, but estimated welfare gains from liberalizing maritime trade impediments only.

• The study found that:– Complete liberalization of maritime cabotage under the Jones Act would yield estimated

welfare gains of $656 million.– Liberalization of the U.S.-build requirement would yield estimated welfare gains of $261

million.

GATS coverage of services integral to express delivery services, by industry

Percent0 10 20 30 40 50 60 70 80 90 100

0

20

40

60

80

100

On-line info and database retrieval

Road transport: Freight transportCourier

Freight transport agency services

Cargo handling

Storage and warehousing

Partial and full commitments/potential commitments (Measurement of regulatory transparency)

Source: Compiled by the Commission.

Countries included are: Argentina, Australia, Brazil, Canada, China, Chile, France, Germany, Greece, India, Italy,Japan, Mexico, Netherlands, New Zealand, Norway, Korea, Sweden, the United Arab Emirates, and the UnitedKingdom.

Note:--The average, indicated by criss-crossed lines, is 28 percent for full commitments and 44 percent for partial andfull commitments.

Ful

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mitm

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/pot

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mitm

ents

(Mea

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ess)

Per

cent

Percent

0 10 20 30 40 50 60 70 80 90 100

0

10

20

30

40

50

60

70

80

90

100

CanadaChina

Partial and full commitments/potential commitments (Measurement of regulatory transparency)

Australia

Sweden Brazil

Korea

Argentina

Japan

New Zealand3

Mexico3

United Arab Emirates3

India3

Service industries included are: On-line information and database retrieval, road transport --freight transport, cargo handling, storage andwarehousing, freight transport agency services, and courier. 2 France, Germany, Greece, the Netherlands, Norway, and United Kingdom have the same data points. 3 India and Mexico have identical data points; New Zealand and the United Arab Emirates have identical data points.;and France,Germany, Greece, Netherlands, Norway, and the United Kingdom have identical data points.

Note.-- An average (indicated by criss-crossed lines) is calculated without Chile and Singapore’s FTA numbers, resulting in an average of28 percent for full commitments and 44 percent for partial and full commitments.

Source: Compiled by the Commission.

Chile(GATS)

Chile (FTA)

Singapore (FTA)

FranceGermany

GreeceNetherlands

NorwayUnited Kingdom

Italy

GATS coverage of services integral to express delivery services, by country

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