LDC Services: Geneva Practitioners Seminar Series: Making Sense of GATS and Applying Good Practices in Services Negotiations

Transcription

1 LDC Services: Geneva Practitioners Seminar Series: Making Sense of GATS and Applying Good Practices in Services Negotiations Seminar 4: Services in Global Value Chains Session 1: GVC perspective on Global Trade The role of services in GVCs Rainer Lanz, WTO Development Division, WTO Building, Room B 27 March 2015

2 Contents What are GVCs and why are they important? What is the role of services in GVCs? How are services traded and measured? Services as inputs or enablers into manufacturing Services as inputs in fragmented services production Conclusions

3 What are GVCs and why are they important?

4 Trade in intermediates are important Imports of parts and components by country group, (US$ billions) Source: WTO World Trade Report 2014

5 iphone international production Toshiba, Murata Texas Instruments, Broadcom Infineon Samsung Quanta Foxconn

6 Cambodian T-shirt (30.75 $) production stages 6

7 What is the role of services in GVCs?

8 Do balance of payments statistics accurately capture the importance of services for world trade? Services (% of World GDP) Services (% of World exports) Source: Lanz and Maurer (2015)

9 Take a holistic view on how services are traded Direct cross-border services trade (GATS mode 1) Movement of consumers (mode 2) and labour (mode 4) Measured by balance of payments (BOP) Movement of capital (mode 3) Measured by foreign affiliate statistics (FATS) Indirect services trade (embodied in goods) Measured by trade in value added statistics (international input-output tables) Domestic versus foreign value added content of exports

10 In value added terms, services double their share in world trade! Services value added content of exports, 2008 Domestic content (%) Foreign content (%) Total in 1995 (%) 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 10% 10% 10% 30% 36% 22% World Developed Developing Source: Lanz and Maurer (2015) based on OECD/WTO Trade in Value Added Database

11 What is the role of services in GVCs? 1. Services as inputs or enablers in manufacturing Thinking in a box Mode 5 (services embodied in goods) Servicification of manufacturing Research and development Engineering services Technical testing Design services Market research Telecommunications Computer services Manufacturing services Management consulting Transport services Building-cleaning services Telecommunications Computer services Packaging Printing, publishing Transport services Logistics Warehousing Legal services Accounting services Financial services Advertising Wholesale and retail trade Financial services Insurance services Rental/Leasing Maintenance and repair Technical testing Information services Product development Manufacturing Distribution Sales After-sale services 2. Services as inputs in fragmented services production Services value chains of services networks

12 Services inputs (value added) are vital to goods value chains Source: OECD

13 Value added decomposition of manufacturing exports 100% 90% 80% 70% 60% 50% 40% 30% Services VA: domestic Services VA: foreign Services VA accounts for 32% of manuf. exports in developed countries and 26% in developing countries Foreign services content is similar in developed and developing countries Manufacturing exports in developing economies have a lower domestic services content 20% 21% 14% 10% 0% 11% 12% Manuf. exports (developed) Manuf. exports (developing) Source: Lanz and Maurer (2015) based on OECD/WTO Trade in Value Added Database

14 Value added decomposition of manufacturing exports 100% 90% 80% 70% 60% 50% 40% 30% 4% 7% 45% 12% 8% 9% 42% 15% Other VA: domestic Other VA: foreign Manufacturing VA: domestic Manufacturing VA: foreign Services VA: domestic Services VA accounts for 32% of manuf. exports in developed countries and 26% in developing countries Foreign services content is similar in developed and developing countries Manufacturing exports in developing economies have a lower domestic services content 20% 21% 14% Services VA: foreign 10% 0% 11% 12% Manuf. exports (developed) Manuf. exports (developing) Source: Lanz and Maurer (2015) based on OECD/WTO Trade in Value Added Database

15 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Value added decomposition of manufacturing and services exports 4% 7% 45% 12% 21% 8% 9% 42% 15% 14% 2% 1% 3% 3% 4% 3% 5% 4% 81% 72% 11% 12% 10% 11% Manuf. exports Manuf. exports Services exports Services exports (developed) (developing) (developed) (developing) Other VA: domestic Other VA: foreign Manufacturing VA: domestic Manufacturing VA: foreign Services VA: domestic Services VA: foreign International fragmentation of services is less pronounced as compared to goods Mode 3 trade is included in domestic services value added Source: Lanz and Maurer (2015) based on OECD/WTO Trade in Value Added Database

16 Direct and indirect exports of services value added US$ billion 1,600 direct VA exports indirect: services indirect: manufacturing indirect: other* 3% 1,400 4% 1,200 1,000 44% 47% 4% % 14% 5% 7% 5% 3% 3% 3% 34% 52% 39% 43% 30% 43% 58% 5% 7% 4% 12% 14% 48% 49% 61% 50% 31% 15% 33% Business services Wholesale & retail Transport & telecoms Finance & insurance

17 Conclusions (I) Services are traded not only directly cross-border (m1) but also through the movement of people (m2, m4), capital (m3) and indirectly through goods Services account for 20% of world trade in BOP terms, and 40% in value added terms Services can enter value chains as inputs or enablers in manufacturing or as inputs in fragmented services production

18 Conclusions (II) Services value added accounts for 32% of manufacturing exports in developed countries and 26% in developing countries. Importance of domestic and imported services for the productivity of manufacturing firms Developing countries add significantly less domestic services value. Support to domestic services sector, including attraction of foreign investment (commercial presence mode 3) Opportunities in direct services exports: IT and business process offshoring

19 Thank you for your attention