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Trade in Services and Investment

Trade in Services and Investment. EPA Seminar 14 June 2005 Simon Knott. Cotonou Agreement. Recognises growing importance of trade in services and its contribution to development Takes account of the provisions of the General Agreement on Trade in Services (GATS)

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Trade in Services and Investment

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  1. Trade in Servicesand Investment EPA Seminar 14 June 2005 Simon Knott

  2. Cotonou Agreement • Recognises growing importance of trade in services and its contribution to development • Takes account of the provisions of the General Agreement on Trade in Services (GATS) • Stresses the need for capacity building in services, linked to enhanced competitiveness and increased trade in goods and services

  3. Cotonou Agreement • Recognises the need to promote and protect investment • EPAs to set out general principles • Investment finance important

  4. Services • Fast growing element of international trade and domestic economy • Over 50% of GDP in many developing countries • Economy-wide benefits: jobs, new technology, links to industry • Imports can strengthen economy and increase exports

  5. Key services sectors • Financial services • Telecoms • Transport (including maritime) • Environmental services • Tourism • Business services (including computers) • Construction • Distribution • Others? • Modes of supply: (1) cross border; (2) consumption abroad; (3) commercial presence; (4) temporary movement of people

  6. Services trade restrictions • Limits on the number of foreign service suppliers, through numerical quotas, monopolies, exclusive rights or economic needs tests; • Limits on type of legal entity, e.g. through the exclusion of branches of foreign firms or requirements for joint-ventures; • Limits on foreign share-holding in individual companies or by sector; • Discriminatory licensing or other administrative requirements.

  7. GATS • Article V: Trade agreements must have substantial sectoral coverage and provide for the elimination of substantially all discrimination. • There is flexibility for developing countries and account may be taken of the wider process of economic integration.

  8. Progressive liberalization • Positive list approach • Asymmetry • Transition periods • Regulatory environment • Safeguarding public services • Respect for national policy objectives

  9. Investment • Rate of investment linked to growth • Risks and returns • Improving the investment climate • Encouraging domestic and foreign investment • Regional integration and market size

  10. Investment Principles • Transparency • Stability and predictability • Non-discrimination: national treatment and market access • Movement of key personnel • Freedom of FDI-related capital movements

  11. EU Investment Agreements • EC and Member States competences • Bilateral Investment Promotion Agreements (BITs) • Other EU agreements • EPA negotiations

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