WPS6108 Policy Research Working Paper 6108 Guide to the Services Trade Restrictions Database Ingo Borchert Batshur Gootiiz Aaditya Mattoo The World Bank Development Research Group Trade and Integration Team June 2012 Policy Research Working Paper 6108 Abstract A new Services Trade Restrictions Database collects and first response to the strong demand for better information makes publicly available information on services trade from policy-makers, negotiators, researchers and the policy assembled in a comparable manner across 103 private sector. Even in its present version, the database countries, five sectors (telecommunications, finance, can play an important role in advancing policy reform transportation, retail and professional services) and the by facilitating the analysis of services policies, informing key modes of service supply. It contains richly textured international negotiations by providing data on actual policy information as well as a preliminary quantification policies, and provoking dialogue and refinements by of policy measures. This paper is a guide to the database, making information on policies publicly available. and provides a description of the data, how it was Through feedback from various interested parties, the collected, how policy information was quantified, and database may evolve into a collectively created public how the data are presented in the publicly available, good. interactive Web database. The database is best seen as a This paper is a product of the Trade and Integration Team, Development Research Group. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The authors may be contacted at amattoo@worldbank.org, i.borchert@sussex.ac.uk and bgootiiz@worldbank.org. The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. Produced by the Research Support Team Guide to the Services Trade Restrictions Database Ingo Borchert, Batshur Gootiiz and Aaditya Mattoo* JEL Classification: F13, F14, L80 Keywords: Services trade barriers, quantification, trade policy patterns. *World Bank, 1818 H Street NW, Washington DC 20433. Contact information: I.Borchert@sussex.ac.uk, bgootiiz@worldbank.org, and amattoo@worldbank.org. The authors would like to thank Rudolf Adlung, Nora Dihel, Ana M. Fernandes, Shushanik Hakobyan, Bernard Hoekman, Aart Kraay, Hildegunn Nordås, Sebastian Saez and David Tarr and the World Bank‟s Council of Chief Economists, for many helpful suggestions. We are grateful to Thelma Choi, Samantha De Martino, Yinuo Geng, Anna Rakhman, Nadia Rocha and, especially, Christine Lee, who contributed significantly to the creation of the database, and to Qinghua Zhao, who designed the website. This paper is part of a World Bank research project on trade in services supported in part by the governments of Norway, Sweden, and the United Kingdom through the Multidonor Trust Fund for Trade and Development, and by the UK Department for International Development (DFID). The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent, or any of the aforementioned individuals or institutions. 2 TABLE OF CONTENTS 1. INTRODUCTION 3 2. ABOUT THE DATA 4 3. DATA COLLECTION PROCESS 15 4. QUANTIFICATION OF SERVICES POLICY INFORMATION 17 5. DATA PRESENTATION ON THE WEBSITE 24 6. CONCLUSION 33 LIST OF TABLES Table 1: Coverage of sectors and modes of supply 7 Table 2: Description of standardized measures for mode 3 (all sectors) 9 Table 3: Description of sector-specific measures 10 Table 4: Key restrictions and STRI scores for Brazil 18 Table 5: Scores for individual measures in mode 3 bank lending sector 20 Table 6: Burundi – mode 3 bank lending sector 21 Table 7: Thailand – mode 3 bank lending sector 21 Table 8: India – mode 3 bank lending sector 22 Annex Tables 34 LIST OF FIGURES Figure 1a: Making a selection (STRI tab) 26 Figure 1b: Making a selection (All policy measures tab) 26 Figure 2: Results in STRI tab 27 Figure 3: Results in “Key restrictions� tab 29 Figure 4: Results in “Main policy measures� tab 31 Figure 5: Results in “All policy measures� tab 32 3 1. INTRODUCTION The Services Trade Restrictions Database collects and makes publicly available information on services trade policy assembled in a comparable manner across 103 countries, five sectors (telecommunications, finance, transportation, retail and professional services) and the key modes of service supply. This paper is a guide to the database and provides a description of the data that has been collected, how it was collected, how policy information was quantified, and how the data are presented in the publicly available, interactive Web database. An analytical account of the emerging patterns of policy across countries and sectors can be found in Borchert, Gootiiz and Mattoo (2012). This companion paper also presents evidence on the impact of policy barriers on investment flows and access to services. The database is best seen as a first response to the strong demand for better information from policy-makers, negotiators, researchers and the private sector. Even in its present version, we see the database as playing an important role in advancing policy reform by facilitating the analysis of services policies; in informing international negotiations by providing data on actual policies; and in provoking dialogue and refinements by making information on policies publicly available. Thus, we do not regard the initial version of the database as providing a definitive picture of trade policy but as a first approximation which will, through feedback from various interested parties, evolve into a collectively created public good – along the lines of a “wiki-database.� The entire database – including all qualitative and quantitative information, annotated descriptions of policies, as well as detailed documentation – is publicly available at http://iresearch.worldbank.org/servicestrade.1 To the best of our knowledge, no other data source provides similar information on barriers to services trade in a comparable manner for such a large cross-section of countries. 1 Any inquiries or feedback regarding the database can be sent to servicestrade@worldbank.org. 4 2. ABOUT THE DATA The Services Trade Restrictions Database contains information on policies that affect international trade in services. Services trade is defined, as is now customary, to include the supply of a service through cross-border delivery, through establishing a commercial presence, or through the presence of a natural person.2 The perspective is one of a foreign supplier who wishes to provide services to consumers in a particular country, and we focus mainly on policy measures that discriminate against foreign services or service providers. Domestic regulations that affect domestic and foreign agents alike are only covered in the few instances where they clearly have a major impact on trade. It is important to clarify at the outset what the database does not (yet) cover, which should be the focus of future data collection efforts. First, the database does not include information on the existing market structure – e.g. the number of firms, their market share and ownership – across sectors and countries, which means that our policy measures capture the restrictions on entry into markets but do not capture the prevailing extent of competition between domestic and/or foreign firms. Second, we do not collect data on outcome variables such as prices, quality, or diversity of services. Third, we are able to cover the state of prudential and pro-competitive regulation only in a rather limited way, which makes it hard to assess how far these ostensibly non-discriminatory measures offer de facto protection to domestic service providers. This gap also makes it hard to assess how far the gains from market-opening depend on the state of complementary regulation, and we emphasize that a mechanical elimination of trade barriers is not necessarily desirable in all sectors. Fourth, we capture only limited information on the implementation of policies. For instance, we make an effort to identify certain aspects of the process by which services providers are granted licenses, such as transparency and accountability, but the process remains opaque and it is hard to determine whether the processes in themselves offer protection to domestic providers. Finally, the database focuses on countries‟ Most-Favored Nation (MFN) policies, which in (paradoxical) trade parlance means their non-preferential policies, and contains only limited information on their preferential policies. We discuss this issue further below under the heading „Dealing with preferential policies.‟ 2 We do not cover “consumption abroad,� a mode of delivery that is particularly important in services like tourism, education and health – sectors not covered by the database. 5 Countries covered in the database The database encompasses information from a total of 103 countries, of which 79 are non-OECD countries, henceforth called developing countries, and 24 are OECD countries, together broadly representing all regions and income groups in the world.3 For the full list of countries covered, please see Annex Table 1. First-hand information for non-OECD countries was collected by administering a questionnaire, whereas similar information for OECD countries was obtained from publicly available sources. To ensure data accuracy, policy information was subjected to review by government officials, which led to confirmation and/or update of the data for most of the OECD countries and a number of developing countries. The full list of governments which confirmed the policy information is available in Annex Table 1. Sectors and modes covered in the database The database focuses on five major services sectors, namely financial services (banking and insurance), telecommunications, retail distribution, transportation4 and professional services (accounting and legal), with each sector further disaggregated into subsectors as applicable. The choice of sectors was based primarily on our assessment of their economic importance from a development perspective, on the existence of meaningful restrictions on services trade, and on the feasibility of collecting relevant policy data. We have not at this stage covered two important areas of export interest for developing countries: cross-border trade in business processing services (associated with the “outsourcing� phenomenon) and the international movement of less-skilled individuals to deliver services in fields such as construction. The rationale for not including the former is that such cross-border trade is largely free from explicit restrictions; the rationale for not including the latter is that the immigration policies which most significantly affect such movements of people are notoriously opaque. However, we hope to be able to address these gaps in future data collection exercises. We recognize 3 The regional affiliation of countries in this database follows the official World Bank country classification, which groups all non- high income countries into world regions. For ease of exposition there are two exceptions to this rule: Trinidad and Tobago is presented as part of the Latin America and Caribbean (LAC) region, and Bahrain, Kuwait, Oman, Qatar and Saudi Arabia are referred to as Gulf Cooperation Council (GCC) countries. All six are high-income countries in official World Bank terms. 4 Regarding policies governing cross-border (mode 1) trade in international air passenger transportation services, we draw on the WTO‟s QUASAR database since it represents the most comprehensive source currently available on bilateral air services agreements, covering over 2000 agreements. 6 that some of our conclusions, such as regarding the overall restrictiveness of services policy at the country level and the relative restrictiveness of services sectors, are necessarily influenced by this choice of sectors. We also recognize that the growing scope for digital delivery, for example in certain intermediate professional services, is allowing services providers to circumvent traditional barriers to trade and so trade in these areas may be de facto more liberal than our data would suggest. However, any descriptive or econometric analyses that rely on cross-country patterns of trade restrictions for given sectors are not affected. Within each sector or subsector, the database covers the most relevant modes of supplying the respective service: commercial presence or FDI (mode 3 in WTO parlance) in every subsector; in addition, cross-border supply (mode 1) of financial, transportation and professional services; and the presence of service supplying individuals (mode 4) in professional services. Box 1 provides the definitions of modes of supply covered by the questionnaire. Table 1 summarizes the combinations of subsectors and modes for which information is available. Box 1: Definitions of modes Cross–border supply of services (mode 1): Under the GATS, this mode is defined as the supply of a service from the territory of one Member into the territory of any other Member. It is analogous to trade in goods, and arises when a service crosses a national border, for example, if a consumer in country A purchases software or insurance from a provider located in country B. It would also include the purchase by a consumer in country A of transportation services – such as a train ride or flight - from a provider located in country B. The supply of services through commercial presence (mode 3): Under the GATS, “commercial presence� means any type of business or professional establishment, including through (i) the institution, acquisition or maintenance of a juridical person, or (ii) the creation or maintenance of a branch or a representative office within the territory of a Member for the purpose of supplying a service commercial. This survey considers four types of commercial presence: a firm from country B might open a branch or subsidiary in the territory of country A, it might acquire part or all of an already existing firm in the territory of country A, or it might enter through Joint Venture with an already existing firm in the territory of country A. Thus, the service is provided within A by a locally-established affiliate, subsidiary, or branch of the foreign-owned and controlled firm. The temporary presence of natural persons (mode 4): Under the GATS, this mode is defined as the supply of a service by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member. Thus, it covers the temporary presence of individuals for the purpose of providing services directly to firms or consumers or for employment in service providing firms. 7 Table 1: Coverage of sectors and modes of supply Sectors/Sub-sectors Mode 1 Mode 3 Mode 4 Banking Bank lending x x Deposit acceptance x x Insurance Automobile insurance x x Life insurance x x Reinsurance x x Telecom Fixed-line x Mobile x Retailing Retail distribution x Transport Air passenger domestic x Air passenger international x x Maritime shipping international x x Maritime auxiliary services x Road trucking x Railway freight x Professional Services Accounting x x x Auditing x x x Legal advice foreign law x x x Legal advice dom law x x Court representation x x Policy measures covered in the database The primary focus of the database is on policies and regulations that discriminate against foreign services or foreign service providers, as well as certain key aspects of the overall regulatory environment that have a significant impact on trade in services. It is convenient to distinguish between measures that can be found in each of the sectors and those which are specific to certain sectors. Thus, the questionnaire contains a core set of standardized questions that are relevant for each subsector-mode combination; for example, whether there is a limit on foreign equity participation in mode 3. In addition, the questionnaire includes sector-specific questions; for example, whether there is a restriction on locations of outlets in retail services, or whether there is a restriction on the establishment of an international gateway in basic telecommunications. 8 Table 2 provides a comprehensive overview of all standardized questions in mode 3, and the full list of sector-specific measures, including measures for mode 1 and mode 4, are shown in Table 3. The complete questionnaire is available from the database website. A definition of terms used in the questionnaire and in the Tables below is provided in Annex Table 2. With regard to mode 3, the set of standardized measures can be divided into the following broad categories: i. Legal form of entry and restrictions on foreign equity; ii. Licensing limits and transparency of licensing requirements; iii. Restrictions on operations; iv. Relevant aspects of the regulatory environment. Measures governing mode 1 are slightly different from measures related to mode 3 in that they typically stipulate conditions under which cross-border trade may take place. Mode 4 measures, covered only in professional services, cover also immigration rules and qualification requirements that significantly affect this mode. 9 Table 2: Description of standardized measures for mode 3 (all sectors) Categories Description Measures This category includes measures affecting the form of Market entry allowed commercial presence that foreign service providers can establish, Greenfield branch allowed and covers most of the measures falling within the scope of Greenfield subsidiary allowed GATS Article XVI on market access. Measures include those Greenfield subsidiary: Max. foreign ownership allowed (%) affecting the legal form of entry: e.g. a branch, greenfield Domestic private entity acquisition allowed subsidiary, acquisition of private domestic entity, acquisition of Domestic private entity acquisition: Max. ownership by a single foreign entity allowed (%) government owned entity, and joint ventures. This category also Domestic private entity acquisition: Max. aggregate foreign ownership allowed (%) Form of includes measures such as foreign equity restrictions, which are Domestic private entity acquisition: Controlling stake allowed Entry defined as restrictions on the equity share foreign natural or Domestic public entity acquisition allowed juridical persons can hold in a firm incorporated in the country in Domestic public entity acquisition: Max. ownership by a single foreign entity allowed (%) question. The equity limit refers both to the combined share of Domestic public entity acquisition: Max. aggregate foreign ownership allowed (%) non-residents and to the share of individual natural or juridical Domestic public entity acquisition: Controlling stake allowed persons. Joint venture allowed Joint venture: Max. ownership by a single foreign entity allowed (%) Joint venture: Max. aggregate foreign ownership allowed (%) Joint venture: Controlling stake allowed This category includes, most importantly, limits on the number of License required licenses issued which constitute a quota on the number of License criteria publicly available providers and fall within the scope of GATS Article XVI on License automatic if publicly available criteria fulfilled market access. It also includes aspects of the policy regime Different licensing criteria for foreign and domestic firms capturing discrimination in licensing criteria (GATS Article XVII Number of licenses limited on national treatment), transparency and predictability of License allocation: First come first served licensing requirements, and license allocation mechanisms License allocation: Competitive tender Licensing (potentially falling within the scope of GATS Article VI on License allocation: At discretion of authority domestic regulation). License allocation: Other Length of license (years) License renewal required Automatic license renewal Licensing decision within a certain period required Licensing decision: Max. number of days permitted Informing of reasons for license rejection required 10 Categories Description Measures These measures focus on restrictions after establishment on the Nationality requirement for employees operations of the firm, such as nationality requirements for the National employees: Min. percentage required board of directors or employees, and restrictions on the National employees: Min. number required repatriation of earnings (which would fall within the scope of Nationality requirement for board of directors GATS Article XVII on national treatment). National board of directors: Min. percentage required Operations National board of directors: Min. number required Residency requirement for board of directors Resident board of directors: Min. percentage required Resident board of directors: Min. number required Restrictions on repatriation of earnings Other forms of discrimination The regulatory measures focus on the independence of the sector Existence of regulatory authority for the sector regulator, the opportunity for firms to be informed of regulatory Regulatory authority independent from sector ministry changes that affect them and the ability of firms to appeal Right to appeal regulatory decisions Regulatory decisions. These are non-discriminatory measures affecting both Prior notice of regulatory changes Environment domestic and foreign suppliers and fall within the scope of GATS Article VI on domestic regulation and Article XVIII on additional commitments. Table 3: Description of sector-specific measures Sectors Modes Categories Description of categories and measures Measures per category These measures capture restrictions affecting a Demonstration of domestic unavailability of service required foreign bank established outside the territory of Restrictions on sector of the domestic firm using the service the relevant country. The cross-border supply of Length of the loan restricted Conditions banking services may confront restrictions on Size of the loan restricted Mode 1: under which the types of services provided and the ability of Interest rate restricted Cross a service may consumers to obtain services, such as by Other forms of restrictions border be provided proving the lack of domestic availability. Approval required Financial: Banking: Registration required Lending and Size of the deposit restricted acceptance of Restrictions on the currency deposited deposits These measures aim to capture restrictions Number of branches restricted affecting operations and expansion of banking Number of ATMs restricted Mode 3: services beyond the first branch. For example, Transactions in local currency restricted Commercial Operations restrictions on currency of banking services and Raising capital domestically restricted presence access to deposit insurance scheme affect the Access to Central Bank's discount window ability of foreign firms to compete. Access to main payments system Access to deposit insurance schemes 11 Sectors Modes Categories Description of categories and measures Measures per category Conditions These are insurance-specific measures that aim Term of insurance policy restricted Mode 1: to assess if there is restriction on the type of Value of insurance policy restricted under which Cross insurance policy that domestic consumers can Financial: Auto a service may border buy on a cross-border basis. insurance, life be provided insurance and These measures aim to assess whether domestic Obliged to cede part of insurance to a domestic re-insurer reinsurance Mode 3: insurance companies have the freedom to Percentage of insurance to be ceded to a domestic re-insurer Commercial Operations reinsure with foreign reinsurance firms presence operating in the domestic market. In basic telecommunications, restrictions on License technology neutral establishing an international gateway oblige Ownership and operation of an international gateway permitted providers to use the gateways of incumbents Gateway license fee (USD) Operations and may put them at a disadvantage, as would VoIP (voice over internet protocol) operation allowed restrictions on the use of VoIP – a departure from the principle of technological neutrality. Mode 3: Telecommunications: The absence of an independent regulator can be Regulatory authority independent from operators of basic telecom Commercial Fixed and Mobile an impediment in the telecommunications services presence sector, because of potential incumbent control Interconnection agreements/prices publicly available over essential facilities. These measures aim to Publishing Reference Interconnection Offer required Regulatory understand whether a country provides an Spectrum use publicly available Environment enabling regulatory environment for competition, such as by ensuring greater transparency of interconnection arrangements and spectrum use. In retailing, restrictions behind the border can Limits on opening multiple brand stores be important and are often hard to capture. In Opening of multiple brand stores: Differential treatment general for retailing, distribution channels are Selling a particular product or brand restricted Mode 3: important, and the restrictions on the location Restrictions on products/brands: Differential treatment Retailing Commercial Operations and number of outlets, and types of products Zoning laws: Differential treatment presence sold at these locations are covered. An effort is Restrictions on the number of outlets also made to identify whether these measures Number of outlets: Differential treatment are discriminatory. In air transportation, air services agreements are BASA publicly available bilateral and these agreements are often Number of BASAs in use Conditions confidential. The measures in cross-border air Number of air transport agreements with seat and/or frequency Transportation: Air Mode 1: under which passenger services focus on transparency of the limitation Passenger Cross a service may bilateral agreements and whether these Number of air transport agreements granting 5th freedom rights International border be provided agreements contain restrictions on the route, number, and capacity of flights between two countries. 12 Sectors Modes Categories Description of categories and measures Measures per category These measures in maritime shipping target the Quota for private cargo: Liner restrictions on different types of cargo: private Quota for private cargo: Bulk Conditions vs. public or government, bulk vs. liner. In Quota for government cargo: Liner Transportation: Mode 1: under which maritime shipping, shippers have been known Quota for government cargo: Bulk Maritime Shipping Cross a service may to form agreements to set prices, thus it is Carrier agreements exempt from competition law International border be provided important to consider whether these agreements are exempt from a country's competition law. There are 6 types of maritime auxiliary services Cargo-handling services to own ships allowed that matter after a ship of goods arrives at a Cargo-handling services to other ships allowed country‟s ports. The questionnaire asks whether Storage/warehousing services to own ships allowed foreign shipping firms are permitted to establish Storage/warehousing services to other ships allowed their own facilities in the port and supply these Customs clearance services to own ships allowed Transportation: Mode 3: services for their own ships and for ships other Customs clearance services to other ships allowed Maritime Auxiliary Commercial Operations than their own. Some countries have more than Container-station/depot services to own ships allowed Services presence one port, so these questions are targeted at the Container-station/depot services to other ships allowed main international port (in terms of traffic) of Maritime agency services to own ships allowed the country. Maritime agency services to other ships allowed Freight forwarding services to own ships allowed Freight forwarding services to other ships allowed This measure focuses on the licensing Staffed with professionals licensed to provide the service desired requirement of professionals providing services Mode 1: Restriction on a cross-border basis. Licensing may not be a Cross on Service barrier for the provision of international law border Provider but, in other services, this may be an important measure. These measures essentially focus on whether Separate legal entity allowed local licensing is required for and linked to the Limits on ownership or control by foreign nationals ownership and establishment of professional Ownership or control by foreign nationals: Percentage allowed Professional services: services firms in another country. The legal Limits on ownership or control by non-locally-licensed Accounting, auditing, Form of form of law and accounting firms are different professionals legal services Entry from that of firms in other sectors, so this Ownership or control by non-locally-licensed professionals: Mode 3: category of measures is important in capturing Percentage allowed Commercial the sector-specific features of the service Membership in an international network or association by a local presence providers. firm allowed These measures affect the operations of law and Association with locally-licensed professionals as partners or accounting firms. shareholders permitted Operations Hiring of locally-licensed professionals as employees permitted Restrictions on name Restrictions on clientele 13 Sectors Modes Categories Description of categories and measures Measures per category The entry questions in mode 4 focus on whether Nationality of host country required local licensing is a requirement to provide the Automatic recognition of foreign license services. If nationality is required to provide the Foreign-licensed professionals eligible to practice subject to services or obtain a local license, the sector is conditions Sector considered closed to foreign professionals. It is Openness possible for a country to allow professionals of certain countries without restriction due to regional trade agreements, while not allowing people from other countries; in this case, the comments provide details. This category covers restrictions and Residency in the host country required requirements for obtaining licenses to provide Education required the professional services. If a university degree Education: Foreign degree recognized is required, we ask whether a foreign degree is Education: Type required recognized; and if local university degree is Education: Number of years required Licensing required, we ask whether it is a prohibitive Training or work experience required Mode 4: restriction. Similarly, we ask if previous work Training or work experience: Foreign experience recognized Movement experience is required and if that work Training or work experience: Number of years required of people experience has to be locally obtained, which Passing a professional exam in the host country required could be a significant restriction. These types of entry are found in GATS Types of entry available schedules and regional trade agreements. The Intra-corporate transferee (ICT) allowed Types of definition of each type is found in Annex Table Service-supplying employee (SSE) of a firm based abroad allowed entry 2. Independent professional as employee of a local firm (IPE) allowed Independent professional as contractual service provider (IPC) allowed All measures covered under this category are Quota for foreigners: ICT, SSE, IPE, IPC applicable to all types of entry: intra-corporate Labor market test: ICT, SSE, IPE, IPC transferees (ICT), service supplying employees Economic needs test required: ICT, SSE, IPE, IPC Entry (SSE), or independent professionals (IPE and Minimum wage or wage parity requirement: ICT, SSE, IPE, IPC conditions IPC). These categories are commonly found in Limits on the length of stay initially allowed: ICT, SSE, IPE, IPC GATS schedules and regional trade agreements. Duration of stay initially allowed: ICT, SSE, IPE, IPC The definitions of labor market and economic Extension of stay permitted: ICT, SSE, IPE, IPC needs test are provided in the Annex Table 2. 14 Dealing with preferential policies A major challenge faced during the data collection process consisted of some countries being part of regional or other preferential arrangements and, therefore, applying one set of policies for their preferred partners and another set for the rest of the world. For the most part, the database will describe a country‟s MFN policies, which in (paradoxical) trade parlance means its non-preferential policies. Consequently, any restrictiveness score will in general reflect the restrictiveness of a country‟s MFN policies. However, in the case of some countries for which the preferential regime obviously dominates the trade relationships, such as the member countries of the European Union, the database does also include a description of preferential policies. Not only are the EU member countries highly open vis-à-vis each other, but they also trade significantly with each other. As a result, an artificial entity entitled „EU20‟ has been created to capture EU member countries‟ policies as applicable to non-EU providers. For individual EU countries, we constructed trade-weighted measures of openness. In future work, we hope to extend this approach to other regional groupings. With regard to Gulf Cooperation Council (GCC) member economies, for instance, a considerable amount of information about their preferential policies towards each other can be found in the annotations to specific measures in the database, even though the values of those measures reflect the individual country‟s MFN policies. 15 3. DATA COLLECTION PROCESS Policy information for non-OECD countries was collected through questionnaires over the period of 2008-2010 and comparable policy information for OECD countries was obtained from publicly available sources.5 The questionnaires were developed drawing upon the existing literature on services trade, model questionnaires that had been used in the context of WTO services negotiations, and related work at other institutions such as the Australian Productivity Commission and the OECD. Most importantly, extensive consultations with the private sector representatives and government officials (especially trade negotiators and regulators) helped identify the key policy barriers for each sector. The questionnaires were completed by local law firms that were familiar with the policy regime in the respective countries and sectors and had experience in working on similar projects. The complete list of law firms that contributed to the questionnaires is contained in Annex Table 6. One law firm was tasked with administering one questionnaire for each country. A series of pilot surveys were conducted in early 2007 for 8 countries for which more than one law firm was used in each country. The results of that pilot indicated that similar responses were provided by the different law firms, for the most part because they were asked to objectively evaluate policy and regulatory documents. Instances in which policies or their implementation was guided by non- codified practices are described in annotations pertaining to the database value fields. The process of data collection and data evaluation was iterative and interactive; once the law firms had completed the surveys, responses were checked for consistency both within and across questionnaires, and follow-up clarifications were sought if necessary. Data confirmation and processing Upon receiving the surveys and after processing the information, a summary of applied policies per subsector and mode of supply was submitted to governments for feedback and review. The contact points for the government review were the permanent representatives of the countries to the WTO 5 These sources include WTO Trade Policy reviews, countries‟ most recent offers submitted in the WTO‟s Doha negotiations, the AXCO insurance database, OECD reports on “Exceptions to National Treatment for Foreign- Controlled Enterprises�, and the IMF‟s annual reports on exchange arrangements and exchange restrictions. 16 or delegates responsible for services trade at the WTO. These officials directly responded to us in some cases, and in other cases forwarded the information to officials in their respective capitals. Some of the governments provided comments that updated the information provided by the law firms, but most policy information was confirmed as correct. Annex Table 1 indicates which governments provided feedback on the policy information collected. Using and interpreting the data The policy information collected has been processed and harmonized so as to ensure comparability of responses across both principal dimensions of the dataset, i.e. across countries and sectors. For instance, if a country requires a certain minimum percentage of domestic employees (nationals) in any sector by virtue of a „horizontal‟ legislative measure, then this information is replicated in identical terms in every subsector within this country. Likewise, whenever different idiosyncratic policy measures could give rise to the same effect, for instance provisions that limit the number of licenses in a quota-like manner, such instances have for each measure in question been coded in a harmonized way across countries. While every effort has been made to ensure comparability, two caveats should be kept in mind when interpreting the data. First, in Section 2 we identified areas that are not included in the current version of the database, e.g. many aspects of non-discriminatory domestic regulation. Hence, any statement such as „open without restrictions,‟ as sometimes found in the “Key restrictions� tab of the database, is to be understood as conditional on the scope of questionnaire. Such statements should not be read to indicate that there are no regulatory requirements at all. Second, the restrictiveness scores presented in the STRI tab provide an approximate quantitative assessment of overall openness but users should be aware that no „confidence intervals‟ are attached to these numbers.6 While we maintain that all STRI scores are comparable across countries and indeed should reflect a country‟s position relative to other countries in terms of restrictiveness, comparisons of closely adjoining STRI figures should be treated cautiously. Indeed, the absence of confidence intervals in the STRI approach is one major motivation for pursuing alternative strategies of quantification (see Borchert, Gootiiz and Mattoo, 2012). 6 The STRI stands for the Services Trade Restrictions Index, which is discussed in more detail in Section 4. 17 4. QUANTIFICATION OF SERVICES POLICY INFORMATION It is notoriously difficult to measure policies affecting services trade because of their variety and complexity (see the overview by Deardorff and Stern, 2008). We consider alternative approaches (see Section 3 in Borchert, Gootiiz and Mattoo, 2012); the database presents one approach to quantification which we call the Services Trade Restrictions Index (STRI) because it is simple, transparent and fairly robust, and captures the essence of policy restrictiveness consistent with more sophisticated methods. The STRI is a measure of the restrictiveness of a country‟s policy regime based on the policy information alone. This measure helps depict the overall patterns in policy across countries and sectors. It builds on a relatively long tradition of restrictiveness indices, ranging from simple counts of policy barriers (Hoekman, 1996) to more complex weighted averages, where weights reflect prior (usually subjective) assessments of the relative restrictiveness of specific policy barriers (OECD, 2009; 2011). Methods that assign fixed weights to all types of restrictions (entry, operational, regulatory) and that treat the restrictions as additive are flawed in certain respects. For instance, if foreign suppliers are not allowed to enter in the first place, then that restriction is binding and other restrictions on operations and regulatory environment simply do not matter. Similarly, a foreign equity limit of 49 percent already precludes foreign corporate control and so adding to it a further (frequently encountered) requirement that the majority of board of directors be nationals would amount to double counting. We construct a single measure of overall openness for any subsector-mode combination, e.g. one for the cross-border supply of bank loans and another for accepting bank deposits by establishing commercial presence abroad. This measure of openness remains subjective but is relatively simple and transparent, and avoids the pitfalls of the approaches mentioned above. Essentially, we assess policy regimes for each subsector-mode combination in their entirety and assign them into five broad categories: completely open, i.e. no restrictions at all; completely closed, i.e. no entry allowed at all; virtually open but with minor restrictions; virtually closed but with very limited opportunities to enter and operate; and a final residual “middle� category of regimes which allows entry and operations but imposes restrictions that are neither trivial nor stringent. Table 4 presents 18 those five principal categories. In order to further illustrate what portfolio of policies might underpin those restrictiveness scores, we provide an example for each category taken from the „key restrictions‟ section of our database (all examples refer to one country, Brazil, only to provide a consistent illustration). Table 4: Key restrictions and STRI scores for Brazil Overall policy 5-point description Key restrictions scale Open without “Entry is allowed through a subsidiary and/or branches. Authorization is 0 restrictions required.� (Automobile insurance – mode 3) Virtually open “Cross-border deposit taking is allowed subject to approval and 25 registration.� (Bank deposit acceptance – mode 1) Existence of “Residency is required. There is an education requirement; foreign 50 major/non-trivial degrees may be accepted. There is a quota for intra-corporate transferees restrictions and independent professionals: at least two thirds of employees of a firm must be Brazilians. The duration of stay initially allowed is 90 days to two years, depending on visa type. Extensions are possible, depending on the type of visa, but usually only once. Foreign-licensed professionals are subject to labor market test and economic needs test. There is a minimum wage/wage parity requirement.� (Auditing – mode 4) Virtually closed “The limit on foreign ownership is 20 percent of voting capital, and there 75 is no limit on foreign ownership of non-voting capital. Firms with 3 or more employees are required to employ Brazilian nationals to fill at least two-thirds of their positions.� (International air passenger transportation – mode 3) Completely “Cross-border provision of services not allowed. Must be established as 100 closed a local office and headquarter and must be properly registered with local professional association.� (Accounting – mode 1) Notes: As is apparent from the examples shown, most subsector-mode combinations are characterized by multiple provisions, in which case the regime assignment reflects the overall restrictiveness of all applicable measures. It is convenient to assign a value to each of these five regimes on an openness scale from 0 to 100 with intervals of 25, which we call an STRI.7 As the example in Table 4 shows, most policy regimes have more than one provision in place per subsector and mode of supply, in which case the 7 At this level, basic STRI scores are no more than „labels‟ attached to the five ordered categories of restrictiveness, but as soon as these scores are further processed, either by aggregation or by use in a quantitative model, the specific values assume a cardinal meaning that implies the five categories are „equidistant‟ in terms of restrictiveness. The alternative approach of ranking policy bundles aims to avoid exactly this assumption. 19 assigned score (shown in the right-most column) reflects the overall restrictiveness of all measures evaluated simultaneously.8 The STRI focuses on a narrow set of measures which discriminate against foreign services and providers.9 In the absence of such discriminatory measures, the STRI takes the value of zero, which is associated with the greatest level of openness. However, since the STRI does not adequately cover other, potentially complementary areas of prudential and pro- competitive regulation, and since it is likely that the results of liberalization depend on the state of complementary regulation, we cannot claim that a zero level of STRI is necessarily immediately desirable from a broader welfare or development perspective. While policy measures that underlie the STRIs are mainly limited to discriminatory measures, the database does also include several policy measures regarding a sector‟s overall regulatory environment, such as the presence of an independent regulator or the ability to appeal a regulator‟s decision. Process of arriving to an aggregate country STRI The process of obtaining a country STRI score involves three steps. The first step is to select the policy measures that go into building the STRIs for each subsector-mode combination. For each subsector-mode, we focus on the measures that affect entry and operation of foreign entities most significantly. These key measures are a subset of all measures covered by the questionnaire (Annex Table 3). The second step is to determine the level of restrictiveness imposed by a particular measure in place; that is, a decision whether e.g. a limit on number of licenses deserves a restrictiveness score of 25 or 50. To determine the level of restrictiveness of certain measures, we consulted private sector representatives. For example, we asked a global bank representative whether a restriction on entry through a branch is perceived as severe a restriction on entry as is a restriction on acquisition, and which restriction would have a larger impact on the entry decision. To standardize the scoring process and to reduce subjectivity, a scoring rule sheet was set up in order to provide a guideline used to score restrictiveness of particular policy measures. Annex Table 4 documents the entirety 8 Policy measures can in principle be divided into two tiers. The first tier measures include those that affect market entry decisions most significantly, such as a limit on foreign ownership and the number of licenses. The second tier measures are those that affect operations of service providers, such as restrictions on the repatriation of earnings. The second tier measures do not contribute to overall restrictiveness when first tier measures are prohibitive. In contrast, if the first tier measures are not prohibitive then second tier measures are also considered in determining the overall restrictiveness score. 20 of scoring rules for all sectors. To illustrate how scores are assigned to individual policy measures, Table 5 depicts one particular example from the bank lending sector mode 3. Table 5: Scores for individual measures in mode 3 bank lending sector Scores 0 25 50 75 100 Foreign No Foreign Foreign ownership of Foreign Foreign ownership restrictions ownership equal less than 50% is ownership ownership (99% or to or greater than allowed less than or not allowed more 50% is allowed equal to 25% allowed) but less than 99% allowed Legal form No Entry through a Not allowed to Subsidiary Foreign of entry restrictions branch not establish a subsidiary allowed only firms allowed. (Greenfield for firms from cannot investment not the regional acquire allowed), but trade local firms Tier one: acquiring local entity agreement and not Measures is allowed. member allowed to affecting countries. set up entry subsidiary Licensing No Discretionary Limit on the number Licenses are No license restrictions licensing, which of licenses or not issued at issued at is not clearly discretion which is this time, but all or based on clearly restriction on exception can exclusive prudential entry, such as be granted on monopoly grounds economic needs test a case by case (discriminatory) or basis limit on total value of services or transactions Operations No Restrictions on Tier two: restrictions branching and/or Measures ATMs affecting Regulatory There are few measures in regulatory environment, but those are not considered in operations environment constructing the STRIs For most subsector-mode combinations, there are several policy measures that are restrictive. It is important to emphasize that basic STRI scores reflect the overall policy regime per subsector-mode under consideration, rather than a weighted average of individual policy measures. Assigning a score to a bundle of measures helps us take into account the existence of binding restrictions which potentially render other measures redundant; thereby avoiding double-counting or adding individual measures with arbitrary and fixed weights. Tables 6 through 8 spell out three detailed examples, each from a different country, of how scores for a subsector-mode combination (mode 3 bank lending) are assigned when there are several restrictions in place. 21 Table 6: Burundi – mode 3 bank lending sector Scores 0 25 50 75 100 Foreign The foreign ownership ownership limit is 20%, although greater ownership may be allowed if authorized by the Central Bank. Legal form of No entry restrictions Licensing Foreign banks must obtain an authorization from the Central Bank in order to enter the Burundi market. Operations No restrictions → the resulting score equals STRI = 75. Table 7: Thailand – mode 3 bank lending sector Scores 0 25 50 75 100 Foreign Foreign equity generally ownership limited to 25% of paid-up registered capital. Equity ownership through other forms is possible. Legal form of Entry as a branch entry is not allowed. Licensing No limit on licenses Operations Foreign banks are allowed to have 1 branch for each bank. 75% of BOD must be Thai nationals. → the resulting score equals STRI = 50. 22 Table 8: India – mode 3 bank lending sector Scores 0 25 50 75 100 Foreign The limit on ownership foreign ownership is 74 percent if through an acquisition. Legal form of Only through one entry form of legal entry at a time Licensing There is a limit of 20 licenses for foreign bank branches per year, which applies regardless of whether a foreign bank is establishing a new branch as its primary vehicle of entry into India, or setting up branches of a wholly- owned subsidiary that is already operating in India. Operations A minimum of 50 percent of the Board of Directors should be Indian nationals. → the resulting score equals STRI = 50. The restrictiveness imposed by policy measures is subsector-specific, so measures selected to be included in the key restrictions have to be sector specific. As an example, a prohibition on acquiring state-owned entity is scored as 50 in the telecommunications and transportation sectors but is not scored in retail distribution. This is because state-owned entities continue to play a significant role in telecommunications and transportation sectors in many developing countries, yet a large presence of state-owned entities in retailing is not observed. Similarly, a restriction on the number of branches is an important barrier to consider in financial services but is less important in telecommunications and transportation, since in these sectors firms usually do not enter new markets through branches. The third step is to aggregate subsector–mode scores to modal and sector scores using a set of weights. For a detailed description of the weights used for all sectors and modes, please refer to Annex Table 5. The scoring process can be summarized as follows: Let s jmc denote the basic scores on a 5-point scale per subsector and mode of supply. In order to arrive at an aggregate STRI 23 of country c, STRI c , we begin by taking weighted averages across modes of supply m  M , ( whereby the set of modal weights wmj ) is specific to sector j. The sectors differ in the relative importance of alternative modes for delivering a specific service. For instance, in a „consumer service‟ such as life insurance, a higher modal weight is attached to commercial presence than in the reinsurance sector in which cross-border provision amongst firms is the dominant mode of supply. Formally, the sectoral scores are given by STRI cj  m wmj ) s jmc ( Sectoral scores are then aggregated across all sectors j  J using weights w j that reflect the relative importance of constituent services sectors in domestic value added. Sector weights w j are based on services sectors‟ standardized share in total services output for an „average‟ industrialized country. Overall country-level scores are obtained as STRI c   j w j STRI cj The complete weighting schemes used to aggregate modes, subsectors and sectors, respectively, can be found in Annex Table 5. All scores at any level of aggregation are available in the “STRI� tab of the database; in particular, the full set of baseline STRI values s jmc is accessible so that users are free to devise alternative aggregation schemes if they so wish. We recognize the subjectivity of this approach. Yet given data constraints and the wide range of sectors covered, there is no obviously superior method of comparable quantification. The subjectivity is somewhat mitigated by the extensive consultations we have conducted with the private sector representatives and regulators in making the assignments of weights to specific categories. We also checked the robustness of the assignments by moving border-line policy regimes across categories. We believe that the adopted approach is better equipped than any fixed algorithm to turn the rich and difficult-to-quantify aspects of policy information into broadly plausible if somewhat imprecise restrictiveness scores. In Paul Krugman‟s words, it has the virtue of being “roughly right rather than precisely wrong.� 24 5. DATA PRESENTATION ON THE WEBSITE While a summary measure of restrictiveness is convenient and indeed indispensable for quantitative analyses, we believe that the real strength of the database is the richly textured policy information that has been collected. A single number cannot do justice to this detailed policy information. In addition, different users are likely to have different needs as to the data content, level of detail, and type of presentation. For these reasons, the database has a pyramid-like structure and consists of four layers: The most detailed information is to be found within the “All policy measures� tab which, as the name indicates, includes all measures covered by the questionnaire, plus associated comments, if any, for each country, subsector, mode of supply, and regulatory category. From this large set of information, which may be too detailed for certain purposes, the “Main policy measures� tab gathers a predefined subset of „core‟ measures – that is, measures to be found in all sectors as opposed to sector-specific policies – which are chosen for their perceived significance on trade in services. The “Key restrictions� tab displays a summary of major applied policy barriers that directly contribute to determining the final STRI scores. The difference from the “Main policy measures� tab is mainly expositional: whereas the latter is a fixed list of measures, the “Key restrictions� tab shows a concise summary of only key restrictions per subsector and mode. In the “Key restrictions� tab, therefore, users cannot select individual policy measures to be included, whereas in the two tabs “Main policy measures� and “All policy measures� users are able to select any individual policy measure(s) per subsector-mode they wish to view. Also, it is important to note that the key restrictions include policy measures that discriminate against foreign providers as well as some non-discriminatory measures which are deemed to significantly affect trade in services. Nonetheless, it is only the discriminatory restrictions that are considered in calculating the STRI scores. Annex Table 4 shows the scoring rules for key restrictions. Finally, the “STRI� tab provides the quantitative restrictiveness scores for each of the 103 countries. At the most disaggregated level, which corresponds to the “Key restrictions� tab, these indices are displayed by subsector and mode. In contrast to any other tab, indices are then aggregated across 25 modes of supply and across sectors, and can be viewed at any of the aforementioned levels. The most aggregated level consists of overall country scores. By structuring information in these four ways, we hope to present the information embodied in the database in alternative ways that correspond to a wide range of interests and intended uses. For instance, researchers may want to use the STRI score in quantitative analyses, or the most disaggregated level of data to develop their own quantification. Policy-makers may want to see the aggregate policy regime presented in the “Key restrictions� and compare the aggregate information across sectors, modes and countries quickly, or they may want to compare specific policy details using the “All policy measures�. The following sections will in turn discuss each tab in greater detail. It may be emphasized, though, that all tabs and the query/results view are fully interlinked. For instance, data can first be retrieved for any combination of countries, sectors and/or modes of supply, at the user‟s discretion. Second, in terms of navigation, users are able to constantly modify and re-define data queries in response to search results. For example, a user may define an initial query to encompass financial services in Argentina and view the corresponding STRI score results, then switch to inspect the policy summaries corresponding to this specification, then decide to add Brazil as well as telecommunications services, view the policy summaries, and finally switch back to the STRI tab and download indices corresponding to this amended query. In using the database, it is necessary first to make selections based on the sectors, subsectors, modes, and countries for which information is sought. A selection can be made starting from any of the four tabs. Figure 1a depicts the choices that are available for all tabs in terms of sectors, modes, and countries. Moreover, Figure 1b shows that there is an additional selection box on individual policy measures available in the “All policy measures� tab (see below). As with the other selection boxes, the one displaying individual policy measures is also “interlinked� with other boxes in that there are measures that are sector- or mode-specific. As a consequence, if the mode of supply is selected first, say cross-border, only measures applicable to mode 1 will be active in the policy measures box. The same logic applies to sectors, for not all policy measures can be mapped to all sectors. 26 Figure 1a: Making a selection (STRI tab) Figure 1b: Making a selection (All policy measures tab) 27 STRI STRI numbers are provided at several layers of disaggregation, with scores for each sector-mode combination, for overall modes, for overall sectors/subsectors, and for the country as a whole. For example, in the financial services sector, the overall financial sector STRI is an aggregated score of the scores for banking and insurance; similarly, the banking STRI is aggregated from the scores for “lending by banks� and “acceptance of deposits by banks�. The score for bank lending, just as the score for deposit acceptance, is itself a combination of mode 1 and mode 3 scores for that subsector. In other words, the sector-mode scores (bank lending mode 1 and bank lending mode 3) for each sub-sector are combined using modal weights (presented in Annex Table 5) to create an overall bank lending STRI, which is averaged with overall deposit acceptance STRI to form a banking score which, in turn, is averaged with the overall insurance STRI for a financial sector overall index number. Figure 2 shows an example of the STRI scores for Albania. Figure 2: Results in STRI tab 28 Key restrictions As mentioned earlier, the “Key restrictions� tab contains a narrative summary of key restrictions. The choice for particular measures to be included in the key restrictions was guided by discussions with sector experts and private sector representatives, from which those policy measures emerged as having a significant effect on services trade in a particular subsector-mode. The key restrictions are summarized for each subsector-mode, per country; there are a total of 34 subsector-modes. For each subsector-mode, the “Key restrictions� summary was prepared using a negative list approach as far as possible. A negative list approach means that measures are explicitly mentioned only if they are in fact applied. For example, if there are no restrictions on foreign ownership, no measure is mentioned. However, if foreign ownership is limited to 49% this restriction is reported. The summary of key restrictions is not an exhaustive list of all measures covered by the survey but rather is a subset of standardized and sector specific measures as listed in Annex Table 3. In addition, whenever the questionnaire responses mention idiosyncratic measures that we believe affect entry and operation of foreign service suppliers, those measures are incorporated and scored accordingly. For example, if the approval of the President is required for investment to take place, then this requirement is mentioned in the summary although this measure was not covered in the questionnaire. Under the “Key restrictions� tab, selection can be made for each sector, sub-sector, mode and country. An example for the financial sector of Albania is shown in the diagram below. It should be noted that the summaries include both the most important standardized measures as well as the most important sector-specific measures. The key restriction summaries include both the main discriminatory measures and some important non-discriminatory measures that potentially have a significant effect on trade. 29 Figure 3: Results in “Key restrictions� tab Main policy measures The “Main policy measures� tab contains a subset of policy measures that have been collected. Having a separate tab for “Main policy measures� helps users navigate across the most important policy measure more efficiently, yet allows users to view the policy measures in the most disaggregated form and at the individual policy level. The picture below is an example of the results for Albania in the “Main policy measures� tab. As can be seen, there are several measures or factors for each subsector-mode combination. In situations where a simple response is insufficient to explain the nuances of a certain policy, the “comments� column affords the opportunity to provide more detailed commentary. Generally, responses in the value fields labeled „Response‟ are limited to “yes�, “no�, “not applicable�, or a number. “Yes� and “no� responses are straightforward, indicating the existence or non-existence of the restriction, while responses with numbers usually indicate a percentage. 30 In addition, in the “Main policy measures� tab the following special values appear in the database (the same also applies to the “All policy measures� tab): i. A value field will be missing if it was returned blank in the questionnaire and a value could not be imputed, i.e. a missing value signifies missing information. ii. A value field will be “n/a� or “not applicable� if the presence of the relevant restriction is logically impossible in the particular context; this is a consequence of some measures being linked in a hierarchical manner. For instance, in the case of Albania, the cross-border acceptance of deposits (market entry mode 1 – the top-level measure) is not permitted; thus the question “Demonstration of domestic unavailability of service required� has no bearing and, hence, it is “not applicable�. Likewise, if in a given sector, a country does not require a license, then subsequent questions about license conditions or license duration are not applicable, in which case, the user will see “n/a�. iii. Market entry questions are the root for all remaining measures within a given sector. If a sector is closed to foreign suppliers, equity restrictions will be set to zero values and all remaining questions will be coded “n/a�, following the logic set out in (ii) above, because the presence of any further restriction is predicated on the sector being open to foreign entry. Market entry measures will never be missing but there are few instances in which neither „open‟ nor „closed‟ would be appropriate. These cases are coded as “partially open�, and explanations are offered in the corresponding comment field. 31 Figure 4: Results in “Main policy measures� tab All policy measures The “All policy measures� tab supplies all collected information on individual policy measures affecting trade in services. Figure 5 shows the results of the “All policy measures� tab, which presents information on individual policy measures and responses for Albania‟s banking sector, mode 3. One fundamental difference of “All policy measures� compared to the other three ways of displaying policy information is with regards to the Selection tab. It is possible, when making the initial selections, to choose from a list of specific policy questions in addition to the selection boxes on sectors/subsectors, modes, and countries. The policy measures selection box provides an opportunity for researchers to assess only certain categories of policy information and, thus, provides another layer of detail to the database. Each category belongs to particular mode or all modes. For example, the „Sector Openness‟ category contains measures that belong to all modes, whereas categories such as Form of Entry, Licensing, Operations, and Regulatory Environment contain mode 3 measures only. 32 Figure 5: Results in “All policy measures� tab 33 6. CONCLUSION The importance of better access to policy information on global services trade was the impetus for our attempt to put together this database on services trade restrictiveness. We hope that the information available through the database can be of use to researchers, policymakers and business. Similarly, we hope that this product could act as a medium for further discussions on the topic of services trade, and that such discussions and feedback would assist in continually improving the database in the future. REFERENCES: Borchert, Ingo, Batshur Gootiiz and Aaditya Mattoo (2012), “Policy Barriers to International Trade in Services: Evidence from a New Database�, World Bank Policy Research Working Paper, forthcoming. Deardorff, Alan V. and Robert M. Stern (2008), “Empirical Analysis of Barriers to International Services Transactions and the Consequences of Liberalization�, Chapter 5 in: Aaditya Mattoo, Robert M. Stern and Gianni Zanini (eds.), A Handbook of International Trade in Services, Oxford University Press, pp. 169-220. Hoekman, Bernard (1996), “Assessing the General Agreement on Trade in Services�, in: Will Martin and L. Alan Winters (eds.), The Uruguay Round and the developing countries, Cambridge: Cambridge University Press, pp. 88-124. OECD (2011), “Services Trade Restrictiveness Index: Opening the Way for Services Trade Liberalization�, downloadable at http://www.oecd.org/trade/stri. OECD (2009), “Methodology for Deriving the STRI�, paper presented at the OECD Experts Meeting on the Services Trade Restrictiveness Index (STRI), 2-3 July 2009, Paris. 34 ANNEXES Annex Table 1: List of countries covered and status of government confirmation Year policy Government information Source of confirmation Region Countries collected information received10 AFRICA (AFR) Botswana 2009 WB survey AFRICA (AFR) Cameroon 2008 WB survey AFRICA (AFR) Burundi 2010 WB Survey Yes AFRICA (AFR) Congo, Dem. Rep. 2008 WB survey AFRICA (AFR) Cote d'Ivoire 2008 WB survey AFRICA (AFR) Ethiopia 2008 WB survey AFRICA (AFR) Ghana 2008 WB survey AFRICA (AFR) Kenya 2008 WB survey AFRICA (AFR) Lesotho 2008 WB survey AFRICA (AFR) Madagascar 2008 WB survey AFRICA (AFR) Malawi 2008 WB survey AFRICA (AFR) Mali 2008 WB survey AFRICA (AFR) Mauritius 2008 WB survey AFRICA (AFR) Mozambique 2008 WB survey AFRICA (AFR) Namibia 2008 WB survey AFRICA (AFR) Nigeria 2008 WB survey AFRICA (AFR) Rwanda 2009 WB survey AFRICA (AFR) Senegal 2008 WB survey AFRICA (AFR) South Africa 2008 WB survey AFRICA (AFR) Tanzania 2008 WB survey AFRICA (AFR) Uganda 2008 WB survey AFRICA (AFR) Zambia 2008 WB survey AFRICA (AFR) Zimbabwe 2008 WB survey East Asia and Pacific (EAP) Cambodia 2008 WB survey East Asia and Pacific (EAP) China 2011 WB survey Yes East Asia and Pacific (EAP) Indonesia 2008 WB survey East Asia and Pacific (EAP) Malaysia 2008 WB survey Yes East Asia and Pacific (EAP) Mongolia 2008 WB survey Yes East Asia and Pacific (EAP) Philippines 2008 WB survey East Asia and Pacific (EAP) Thailand 2008 WB survey Yes East Asia and Pacific (EAP) Vietnam 2008 WB survey South Asia (SAR) Bangladesh 2008 WB survey South Asia (SAR) India 2008 WB survey South Asia (SAR) Nepal 2008 WB survey South Asia (SAR) Pakistan 2008 WB survey Yes South Asia (SAR) Sri Lanka 2008 WB survey 10 No entry means government feedback has not been received. 35 Year policy Government information Source of confirmation Region Countries collected information received10 Middle East and North Africa (MENA) Algeria 2008 WB survey Middle East and North Africa (MENA) Egypt 2008 WB survey Yes Middle East and North Africa (MENA) Iran, Islamic Rep. 2008 WB survey Middle East and North Africa (MENA) Jordan 2008 WB survey Middle East and North Africa (MENA) Lebanon 2008 WB survey Middle East and North Africa (MENA) Morocco 2008 WB survey Middle East and North Africa (MENA) Tunisia 2008 WB survey Yes Middle East and North Africa (MENA) Yemen 2008 WB survey Gulf cooperation council (GCC) Bahrain 2008 WB survey Gulf cooperation council (GCC) Kuwait 2008 WB survey Gulf cooperation council (GCC) Oman 2008 WB survey Gulf cooperation council (GCC) Qatar 2008 WB survey Gulf cooperation council (GCC) Saudi Arabia 2008 WB survey Latin America and Caribbean (LAC) Argentina 2008 WB survey Latin America and Caribbean (LAC) Bolivia 2008 WB survey Latin America and Caribbean (LAC) Brazil 2011 WB survey Yes Latin America and Caribbean (LAC) Chile 2008 WB survey Yes Latin America and Caribbean (LAC) Colombia 2008 WB survey Latin America and Caribbean (LAC) Costa Rica 2008 WB survey Yes Latin America and Caribbean (LAC) Dominican Republic 2008 WB survey Latin America and Caribbean (LAC) Ecuador 2008 WB survey Latin America and Caribbean (LAC) Guatemala 2008 WB survey Yes Latin America and Caribbean (LAC) Honduras 2008 WB survey Latin America and Caribbean (LAC) Mexico 2011 WB survey Yes Latin America and Caribbean (LAC) Nicaragua 2008 WB survey Latin America and Caribbean (LAC) Panama 2008 WB survey Latin America and Caribbean (LAC) Paraguay 2008 WB survey Yes Latin America and Caribbean (LAC) Peru 2008 WB survey Yes Latin America and Caribbean (LAC) Trinidad and Tobago 2008 WB survey Yes Latin America and Caribbean (LAC) Uruguay 2008 WB survey Latin America and Caribbean (LAC) Venezuela 2008 WB survey Eastern Europe and Central Asia (ECA) Albania 2008 WB survey Eastern Europe and Central Asia (ECA) Armenia 2008 WB survey Yes Eastern Europe and Central Asia (ECA) Belarus 2008 WB survey Yes Eastern Europe and Central Asia (ECA) Bulgaria 2008 WB survey Eastern Europe and Central Asia (ECA) Georgia 2008 WB survey Eastern Europe and Central Asia (ECA) Kazakhstan 2008 WB survey Yes Eastern Europe and Central Asia (ECA) Kyrgyz Republic 2008 WB survey Publicly available Eastern Europe and Central Asia (ECA) Lithuania 2008 Yes sources Publicly available Eastern Europe and Central Asia (ECA) Poland 2008 Yes sources Publicly available Eastern Europe and Central Asia (ECA) Hungary 2008 sources 36 Year policy Government information Source of confirmation Region Countries collected information received10 Publicly available Eastern Europe and Central Asia (ECA) Czech Republic 2008 Yes sources Eastern Europe and Central Asia (ECA) Romania 2008 WB survey Yes Eastern Europe and Central Asia (ECA) Russia 2008 WB survey Yes Eastern Europe and Central Asia (ECA) Turkey 2008 WB survey Yes Eastern Europe and Central Asia (ECA) Ukraine 2008 WB survey Eastern Europe and Central Asia (ECA) Uzbekistan 2008 WB survey Publicly available High income OECD Australia 2008 Yes sources Publicly available High income OECD Austria 2008 Yes sources Publicly available High income OECD Belgium 2008 Yes sources Publicly available High income OECD Canada 2008 sources Publicly available High income OECD Denmark 2008 Yes sources Publicly available High income OECD Finland 2008 Yes sources Publicly available High income OECD France 2008 Yes sources Publicly available High income OECD Germany 2008 Yes sources Publicly available High income OECD Greece 2008 Yes sources Publicly available High income OECD Ireland 2008 Yes sources Publicly available High income OECD Italy 2008 sources Publicly available High income OECD Japan 2008 Yes sources Publicly available High income OECD Korea, Republic 2008 Yes sources Publicly available High income OECD Netherlands 2008 Yes sources Publicly available High income OECD New Zealand 2008 Yes sources Publicly available High income OECD Portugal 2008 Yes sources Publicly available High income OECD Spain 2008 Yes sources Publicly available High income OECD Sweden 2008 Yes sources Publicly available High income OECD United Kingdom 2008 Yes sources Publicly available High income OECD United States 2008 Yes sources 37 Annex Table 2: Definitions of key terms in the questionnaire Branch: A branch office is part of the foreign legal entity under which it operates, although it has its own organization and administration. Branch offices are not locally incorporated. Subsidiary: A separate legal entity from the parent company. It is locally incorporated. Joint Venture: A collaborative arrangement between a foreign firm and a domestic firm which could involve joint ownership. Ownership: for the purpose of this survey we define ownership as direct (legal) ownership of capital. It does not necessarily concern voting rights. Controlling stake: this gives the party effective direction over the firm. It may involve (but is not limited to) majority voting rights or control of the board, for example. Sector specific definitions Retail Bank: A bank which provides checking and saving deposits, home loans, credit cards, and other similar services to domestic consumers. Asset Management: the management of assets on behalf of individuals, firms, institutions or other entities, including choosing and monitoring appropriate investments and allocating funds accordingly. Central Bank's discount window: the practice whereby the central bank extends short-term loans secured by government bonds to financial institutions. When a bank is in need of money, it can turn to the Central Bank for a loan, the interest that the Central Bank charges the bank is called the discount rate. Main payments system refers to the main system used for moving funds, payments, and money between financial institutions. Financial accounting: The collection, recording and extraction of financial information, and the summary of it in the form of a periodic profit and loss account, a balance sheet and a cash flow statement in accordance with legal, professional, and capital market requirements. Financial auditing: The examination and assessment of the activities, controls, records and systems that underpin accounting information and reports. Financial audits are typically performed by firms of practicing accountants due to the specialist financial reporting knowledge they require. Court appearances/oral arguments: Legal representation of one party‟s interest against another party, before the courts or other domestic judicial or quasi-judicial bodies. Legal advice/counseling: General counseling, advice and drafting of documents and other related legal services concerning domestic, foreign or international law. Intra-corporate transferees: an employee of multinational firm transferred from an office in one country to an office in another country. Example: A multinational accounting firm transfers an accountant in its New York office to its Paris office for two years. Service supplying employees: employees of a foreign services supplier located abroad that enter the country to supply services in the country to fulfill a contract in that country. Example: An accounting firm in the US sends its accountants to China to do an audit for a client of the firm in China. 38 Independent professionals: individuals that enter the country to sell services directly to firms, people, or government agencies, including to fulfill contracts, and to be employed by service providers within the country. The professional would already have a contract or offer from the employer in the host country when entering the country. Economic Needs Tests (ENTs): A set of criteria the government applies to foreign worker applicants to assess their economic contribution to the sector of employment and the country as a whole. These criteria may include but are not limited to: the belief that the foreign worker will directly create domestic income or jobs for citizens, the assurance that the worker will transfer technology or knowledge to citizens, and other measures of the worker‟s economic impact. Labor Market Tests (LMTs): Labor market tests are a sub-field of the ENTs specified in many countries. They attempt to gauge whether the labor market requires the particular skills of the foreign worker. The criteria may include but are not limited to: evidence that the employer made an attempt to recruit citizens before offering the job to the foreign worker and the existence of a worker shortage in the area of the job offer. 39 Annex Table 3: Coverage of measures for “Key restrictions� Sectors Modes Categories Measures Key restrictions Standardized measures YES (only in Form of Entry Greenfield branch- allowed banking) Form of Entry Greenfield subsidiary – allowed YES Form of Entry Greenfield subsidiary - max. ownership allowed YES Form of Entry Acquisition domestic private entity – allowed YES Form of Entry Acquisition domestic private entity -max. ownership allowed by a single entity YES Form of Entry Acquisition domestic private entity -max. ownership allowed by a group of entities YES YES (only in Form of Entry Acquisition domestic private entity - controlling stake allowed telecom and transport) ALL SECTORS, Form of Entry Acquisition domestic state-owned entity –allowed YES EXCEPT FOR YES (only in MODE 3 PROFESSIONAL Form of Entry Acquisition domestic state-owned entity -max. ownership allowed by a single entity telecom and SERVICES transport) Acquisition domestic state-owned entity -max. ownership allowed by a group of Form of Entry YES entities YES (only in Form of Entry Acquisition domestic public entity -controlling stake allowed telecom and transport) Form of Entry Joint Venture –allowed Not covered Form of Entry Joint Venture -max. ownership allowed by a single entity Not covered Form of Entry Joint venture -max. ownership allowed by a group of entities Not covered Form of Entry Joint Venture -controlling stake allowed Not covered 40 Sectors Modes Categories Measures Key restrictions Licensing License required Not covered Licensing License criteria publicly available Not covered Licensing License automatic if publicly available criteria fulfilled Not covered Licensing Difference in licensing criteria for foreign and domestic applicants YES Licensing Limit on number of licenses available YES License allocation-first come first served, through competitive tender, at discretion of Licensing Not covered regulatory body, and other Licensing Length of license Not covered Licensing License renewal required Not covered Licensing If renewal required it is automatic Not covered ALL SECTORS, EXCEPT FOR Licensing Requirement to provide a licensing decision within a timeframe Not covered PROFESSIONAL MODE 3 SERVICES AND Licensing Maximum number of days permitted before providing a licensing decision Not covered TRANSPORT Licensing Obligation to inform applicants of reasons for license rejection Not covered Operations Nationality requirement for employees (minimum %) YES Operations Nationality (or domestic residency) requirement for board of directors (minimum %) YES Operations Restrictions on repatriation of earnings YES Operations Other forms of discrimination YES Regulatory Environment Existence of regulatory authority for the sector Not covered Regulatory Environment Regulatory authority independent from sector ministry Not covered Regulatory Environment Right to appeal regulatory decisions Not covered Regulatory Environment Prior notice of regulatory changes Not covered 41 Sectors Modes Categories Measures Key restrictions Sector specific measures Condition on consumer Demonstration of domestic unavailability of service desired YES Condition on services Sector of the firm using the service YES Condition on services Size of the deposit (loan) YES Condition on services Interest rate (deposit or loan accounts) YES Condition on services Currency deposited YES Condition on services Period or maturity (loan) YES MODE 1 Condition on services Term of the insurance policy (insurance) YES Condition on services Value of the insurance policy (insurance) YES FINANCIAL Condition on services Obliged to cede to a domestic re-insurer YES SERVICES Condition on services Percentage that must be ceded YES (RETAIL BANKING, Condition on consumer Approval required YES AUTOMOBILE, Condition on consumer Registration required Not covered LIFE AND REINSURANCE Condition on services Other forms of restrictions YES SERVICES) Form of Entry Greenfield branch allowed YES Operations Restrictions on the number of branches YES Operations Restrictions on the number of ATM YES Operations Restrictions on transactions in local currencies Not covered MODE 3 Operations Restrictions on raising capital domestically Not covered Operations Access to central Bank discount window Not covered Operations Access to main payment system Not covered Operations Access to deposit insurance schemes Not covered Operations (reinsurance) Obliged to cede to a domestic re-insurer Not covered 42 Sectors Modes Categories Measures Key restrictions Licensing License technology neutral YES Operations Operators permitted to own and operate international gateway YES Operations Gateway license fee (USD) YES TELECOMMUN Operations VoIP operation allowed YES ICATIONS (FIXED LOCAL, Regulatory Environment Existence of regulatory authority for the sector YES MODE 3 FIXED LONG Regulatory Environment Regulatory authority independent from sector ministry YES DISTANCE AND MOBILE) Regulatory Environment Regulatory authority independent from fixed line incumbent YES Regulatory Environment Interconnection agreements/prices publicly available Not covered Regulatory Environment Operators required to publish Reference Interconnection Offer Not covered Regulatory Environment Spectrum use publicly available Not covered Operations Limits on opening multiple brand stores YES Operations Limit on opening multiple brand differ for foreign and domestic retailers YES Operations Retailers restricted from selling any products YES Operations Restrictions on products differ for foreign and domestic retailers YES RETAILING MODE 3 Operations Zoning laws apply to retailers YES Operations Zoning laws applied differently to foreign and domestic retailers YES Operations Restrictions apply to the number of outlets that can be established YES Operations Restrictions apply to the number of outlets differ for foreign and domestic retailers YES 43 Sectors Modes Categories Measures Key restrictions Air passenger international BASA publicly available Information not Air passenger international Total number of BASA-s in use available from the Air passenger international Air transport agreements with seat and/or frequency limitation survey. Policy information and Air passenger international Air transport agreements granting 5th freedom rights restrictiveness index Air cargo international Open regime came from the WTO's QUASAR Air cargo international Regulated through BASAs TRANSPORTAT MODE 1 database. ION (AIR Air cargo international Other conditions PASSENGER, Maritime shipping international Quotas for private cargo: liner YES CARGO DOMESTIC Maritime shipping international Quotas for private cargo: bulk YES AND Maritime shipping international Quotas for government cargo: liner YES INTERNATION AL, MARITIME Maritime shipping international Quotas for government cargo: bulk YES SHIPPING, AND Maritime shipping international Exemption of carrier agreements from competition law YES MARITIME Are foreign shipping firms permitted to establish their own facilities in the main AUXILIARY Maritime auxiliary services Not covered port and supply the following services for their own ships? SERVICES) Maritime auxiliary services Cargo handling YES Maritime auxiliary services Storage and warehousing YES MODE 3 Maritime auxiliary services Container station YES Maritime auxiliary services Maritime agency YES Maritime auxiliary services Customs clearance YES Maritime auxiliary services Freight forwarding YES 44 Sectors Modes Categories Measures Key restrictions Cross-border trade allowed Cross border trade allowed YES MODE 1 Restriction on service provider Staffed with professionals licensed to provide the service desired YES Condition of provision of Demonstration of domestic unavailability of service desired YES service Market entry Establishing commercial presence-allowed YES Form of Entry Greenfield branch- allowed YES Form of Entry Separate legal entity allowed YES Form of Entry Limits on ownership by foreign nationals YES Form of Entry Percentage of ownership allowed to foreign nationals YES Form of Entry Limits on ownership by non-locally-licensed professionals YES Form of Entry Percentage of ownership allowed to non-locally-licensed professionals YES ACCOUNTANCY Form of Entry Local membership of an international network or association allowed YES AND LEGAL Licensing License required Not covered MODE 3 Licensing License criteria publicly available Not covered Licensing License automatic if publicly available criteria fulfilled Not covered Licensing Difference in licensing criteria for foreign and domestic applicants YES Licensing Limit on number of licenses available YES Licensing Obligation to inform applicants of reasons for license rejection YES Operations Association with locally-licensed professionals as partners permitted YES Operations Association with locally-licensed professionals as shareholders permitted YES Operations Hiring of locally-licensed professionals as employees permitted YES Operations Restrictions on name YES Operations Restrictions on clientele YES 45 Sectors Modes Categories Measures Key restrictions Market Entry Market closed - Nationality of host country required YES Market Entry Automatic recognition of foreign license granted YES Market Entry Foreign-licensed professionals eligible to practice subject to conditions YES Licensing: Legal Status Condition Residency in the host country required YES Licensing: Qualification Condition Education – Required YES Licensing: Qualification Condition Education - Foreign degree recognized YES Licensing: Qualification Condition Education – Type Not covered Licensing: Qualification Condition Education - Number of years Not covered Licensing: Qualification Condition Training – Required YES Licensing: Qualification Condition Training - Foreign training recognized YES Licensing: Qualification Condition Training - Number of years YES ACCOUNTANCY MODE 4 Licensing: Qualification Condition Work experience – Required YES AND LEGAL Licensing: Qualification Condition Work experience - Foreign experience recognized YES Licensing: Qualification Condition Work experience - Number of years YES Licensing: Qualification Condition Passing a professional exam required YES Type of Entry Entry as ICT, SSE, IP - allowed YES Entry Condition Quota for Foreigners - ICT, SSE, and IP YES Entry Condition Labor Market Test - ICT, SSE, and IP YES Entry Condition Economic Needs Test - ICT, SSE, and IP YES Entry Condition Minimum Wage/Salary or Wage Parity Requirement - ICT, SSE, and IP YES Entry Condition Limits on the length of stay initially allowed- ICT, SSE, and IP YES Entry Condition Duration of stay initially allowed - ICT, SSE, and IP YES Entry Condition Possibility of extension of stay - ICT, SSE, and IP YES 46 Annex Table 4: Rules for scoring the key restrictions Only measures that are included in the summary of “key restrictions� are scored. The scores reflect the overall restrictiveness of key policy measures applied to a subsector-mode (and not to individual measures). When there is only one measure that is restrictive, the following scoring rule applies, but when two or more measures are in place, the score reflects the overall restrictiveness of the policy measures. Category of openness: Scores Open 0 Virtually open 25 Significant restrictions 50 Virtually closed 75 Closed 100 47 A. STANDARDIZED MEASURES FOR ALL SECTORS IN MODE 3 Sections Survey questions # Different scenarios Scores Qualifications Foreign equity participation not allowed (ownership reserved for 1 100 nationals) Foreign ownership less than or equal to 25% allowed (subsidiary, 2 75 acquisition private) Foreign ownership less than or equal to 50% allowed (subsidiary, If FDI limit or any other 3 50 restrictions differ for listed (in acquisition private) Foreign ownership greater than 50% but less than 99% allowed the local stock exchange) and a. FDI limit in a subsidiary? 4 25 I. FOREIGN (subsidiary, acquisition private) non-listed companies, the score b. FDI limit in acquiring a EQUITY LIMIT Foreign equity limit for a single foreign investor is less than or will reflect the requirements for private entity? 5 25 equal to 50% and the restriction is discriminatory non-listed companies, assuming Ownership of 25% or greater by indigenous group (even if non- the restrictions apply to listed 6 25 companies are prudential. discriminatory) 7 FDI limit is decided on a case by case basis 50 If foreign equity ownership in a state-owned entity is decided by 8 0 the privatization process Not allowed to establish a subsidiary (Greenfield investment not 9 50 allowed), but allowed to acquire certain shares of existing entity. Not allowed to acquire a local private entity. If acquisition of If companies must be publicly 10 state-owned entity is not allowed, it is NOT considered as a 50 a. Is subsidiary allowed? listed in the local market, it II. LEGAL FORM restriction in all sectors, EXCEPT for telecom and transport. b. Is acquisition of private prevents small and medium OF ENTRY If companies must be publicly listed in the host country (since it entity allowed? sized foreign companies to enter 11 affect the total foreign ownership and it means substantial fixed 50 the market. cost) If companies must be publicly listed anywhere (including in their 12 25 home country) 48 Sections Survey questions # Different scenarios Scores Qualifications Limit on the number of licenses: No license issued at all or 13 exclusive monopoly, except in mobile telephony where limitation 100 of spectrum constrains the number of providers. Limit on the number of licenses or discretion which is clearly A. This rule applies to all sectors restriction on entry, such as economic needs test (discriminatory) except for transportation. In or limit on total value of services or transactions (total FDI in Is there a limit on the 14 50 transportation, licensing section insurance sector etc), or approval requirement by non-prudential number of licenses? was not covered in the 2007 agencies (such as approval of the President, Prime Minister, and versions of the survey, which Parliament required) affect 56 countries. Thus 15 Reciprocity is a pre-condition for supplying the services 50 licensing is not scored across all III. LICENSING 16 There is a temporary restriction on licenses 50 countries. Discretionary licensing, which is not clearly based on prudential B. For all sectors, if license 17 25 needs to be renewed annually, it grounds Discretion or approval which is purely prudential. If approval of is not treated as a restriction. License renewal is mentioned in 18 the banking sector regulator, such as the Central Bank, is 0 the summary when it appears, required, it is considered prudential. Are the licensing criteria but not scored as a restriction. Discriminatory licensing requirements that are significant (such discriminatory? 19 50 as prolonged prior presence such as representative office) Discriminatory licensing requirements that are minor, such as 20 25 additional documentation Nationality requirement for BOD captured in the FDI. If BOD majority is not captured by Nationality requirement for Nationality requirement for Board of directors: 50 percent or 21 25 FDI (missing), then the score board of directors? more of BOD must be nationals. should be 25. If BOD requirement is for nationals OR residents, this is not scored. IV. OPERATIONS Minority of BOD must be nationals or nationality requirement Nationality requirement for 22 applies, but percentage is not defined (i.e. limitations expressed 0 employees? in numbers). 23 Nationality requirement for employees not treated as a restriction 0 Restrictions on repatriation Restrictions on repatriation of earnings, such approval, 24 25 of earnings? discriminatory taxes, foreign exchange rules Repatriation of earning is subject to tax and approval, but non- 25 0 discriminatory 49 B. SECTOR SPECIFIC MEASURES 1. FINANCIAL SERVICES (MODE 1 AND MODE 3) MODE Survey Questions # Different Scenarios Score Qualification 1 If commercial presence is required 100 2 Requirement to prove domestic unavailability 75 If residency or commercial presence is required for cross- 3 Approval is required 25 border services, it is treated as a restriction. 4 Allowed if consumer initiates the purchase 25 MODE 1 Restrictions on more than one of the following: interest rate, 5 50 maturity, sector, size and other restrictions. Restrictions only on one of the following: interest rate, maturity, 6 25 sector, size, and other restrictions. Obliged to cede to domestic reinsurer, requirement larger than 7 50 20% Obliged to cede to domestic reinsurer, requirement is not clear or 8 25 smaller than or equal to 20% Obliged to cede to domestic reinsurer, requirement larger than 9 50 20% Obliged to cede to domestic reinsurer, requirement is not clear or 10 25 smaller than or equal to 20% MODE 3 11 Legal form: Restriction on entry through branch (primary form) 25 A. Operational measures are not applicable to reinsurance Operational restrictions: Branching and ATM subsector. 12 25 -Explicit quota or other types of limit 50 MODE Survey Questions # Different Scenarios Score Qualification 2. TELECOMMUNICATIONS Acquiring state-owned entity not allowed or FDI allowed in Note: In telecommunications, 1 25 state-owned entity is less than or equal to 50%. regulator independence is covered by the “key In mobile telecom only, if the limit on the number of licenses is 2 0 restrictions� summary, but is due to frequency spectrum not scored. In mobile telecom only, limit on the number of licenses, but 3 25 MODE 3 reason is not given Restrictions on international gateway (IG): Ownership of 4 infrastructure and/or operation of IG not allowed or prohibitive 25 fees apply to IG licensing. Is it legal for fixed or mobile service providers to 5 Restrictions on VOIP: it not allowed or some restrictions 25 route their international calls using VOIP? 3. RETAILING Restrictions on operation such as on products, brands, or outlets Restrictions on particular 1 50 products such as tobacco, are significant MODE 3 alcohol, arms, weapons, Restrictions on operations such as products, brands, or outlets, explosives, and pharmacy etc 2 25 depending on degree of restriction NOT treated as restrictions. 4. TRANSPORTATION Significant restrictions on foreign shares of cargo and explicit 1 50 preferences for national shipping lines MARITIME: Minor restrictions on foreign shares of cargo and minor form of 2 25 MODE 1 preferences Carrier agreements (such as conferences) exempt from 3 25 competition law Acquisition of state-owned entities not allowed or foreign equity A. In transportation, licensing 4 25 ALL TYPES OF limit in a state-owned entity is less than or equal to 50%. was not covered in the 2007 TRANSPORT (Air For maritime auxiliary services, 6 types of services are version of the survey, which Maritime auxiliary services 5 25 passenger, air considered: If one or two types of services not allowed affect 56 countries, thus it is include cargo handling, cargo, road freight Exception: if 'customs clearance' is the only type of service that not scored across all storage and warehousing, 6 0 domestic, rail is not allowed countries. container station, maritime freight domestic, 7 If three or four types of services not allowed 50 B. For international air agency, customs clearance, maritime shipping 8 If only one is allowed 75 transportation services, and freight forwarding. international, and requirements for withholding auxiliary services): For maritime auxiliary services, if all six types of services are not and designation rights are not MODE 3 9 100 treated as a restriction, since it allowed was not covered in the survey. 51 MODE Survey Questions # Different Scenarios Score Qualification 5. PROFESSIONAL SERVICES Assumptions: 1 Commercial presence or residency required. 100 A. Foreign firms have qualified professionals. B. 2 Cross border supply of services not allowed. 100 The clients abroad are non- professional firms. 3 Demonstration of domestic unavailability of service required. 75 Qualifications: 1. The mode 1 measures didn't Providing the core services not allowed, but consulting is cover licensing, qualification 4 75 MODE 1 (via allowed. and other regulatory phone, email, or The work has to be done through a local agent (firm or conditions. 5 50 fax): Accountancy individual). 2. The types of services cover and Legal all, including statutory 6 Legal domicile required. 25 auditing and review of tax documents. Providing services one type of accounting/auditing services (such 7 25 3. If restrictions that are not as statutory auditing) not allowed covered by the survey are 8 Staffed with professionals licensed to provide the service. 0 mentioned and if they potentially affect the supply of 9 Other restrictions that affect the supply of service via mode 1 25 services, they are captured in point # 8. 10 Establishing commercial presence not allowed 100 Assumptions: Providing the actual services not allowed, but consulting is A. Foreign firms are qualified 11 75 allowed to provide the same type of 12 Reciprocity is a pre-condition for supplying the services 50 services in the home country. Association with locally-licensed professionals as partners or B. Foreign professionals or 13 50 partners possess the necessary shareholders not permitted 14 Greenfield branch not allowed 25 skills, qualifications, and 15 Separate legal entity not allowed 25 experience. MODE 3: Ownership by foreign nationals or by non-locally licensed Qualifications: Accountancy and professionals not permitted or foreign ownership of less than A. If local qualification is 16 50 necessary for partners to set Legal 50% allowed (assuming entry through other forms allowed, such as association with local partners) up a partnership, it is 17 Limit on number of licenses 50 considered restrictive. Significant discrimination in licensing criteria for foreign and B. Separate legal entity is 18 50 defined as "having a separate domestic applicants 19 Difference in licensing criteria not significant 25 office from the parent company", but it is not a Hiring of locally-licensed professionals as employees not 50 20 locally incorporated entity. permitted 21 Restrictions on name or brand international name or clients 25 52 MODE Survey Questions # Different Scenarios Score Qualification 22 Market closed (nationality required, no exceptions) 100 Assumptions: 23 If reciprocity is a pre-condition to provide the services 75 The foreign professionals: Nationality is required except for a group of countries, A. Are natural persons, who 24 with which a country has preferential trade agreements 75 intend to provide services (i.e. EU or GCC) temporarily in a host country Nationality required to provide the actual services, but as defined in the GATS. The 25 75 professional is not seeking for consulting is allowed citizenship or employment on Must be resident to be licensed or to work as a 26 25 a permanent basis. B. professional Foreign professionals Foreign-licensed professionals eligible to practice subject 27 depends qualified to provide the to conditions services in their home 28 Quota for Foreigners - ICT, SSE, and IP 50 jurisdictions. We wish to 29 Labor Market Test - ICT, SSE, and IP 50 identify the additional 30 Economic Needs Test - ICT, SSE, and IP 50 licensing requirements the Mode 4 31 Education - Foreign degree not recognized 75 professionals have to fulfill. Work experience or training - Foreign training not C. If Mutual Recognition 32 50 recognized agreements are required, not Not-sector specific and overall restriction on nationality treated as a restriction. 33 of employees at a firm level (If this is the only 25 restriction) 34 Passing a professional exam required 0 Two types of entry not allowed 35 50 (Entry allowed only through ICT, SSE or IP) 36 If only one type is not allowed 25 Minimum Wage/Salary or Wage Parity Requirement - 37 25 ICT, SSE, and IP (If this is the only restriction). Limits on the length of stay initially allowed- ICT, SSE, 38 0 and IP 39 Duration of stay initially allowed - ICT, SSE, and IP 0 40 Possibility of extension of stay - ICT, SSE, and IP 0 53 Annex Table 5: STRI construction: sector and modal weighting schemes Modal Sector weights weights Subsectors, Aggregate sectors by mode of supply ( wmj ) wj Banking Mode 1: 0.149 (1) Deposit acceptance 0.15 (2) Bank lending 0.15 Mode 3: (3) Deposit acceptance 0.85 (4) Bank lending 0.85 Insurance Mode 1: 0.095 (5) Life 0.10 (6) Automobile 0.10 (7) Reinsurance 0.80 Mode 3: (8) Life 0.90 (9) Automobile 0.90 (10) Reinsurance 0.20 Telecommunications Mode 3: 0.095 (11) Fixed-line 1.00 (12) Mobile 1.00 Retailing Mode 3: 0.239 (13) Retail distribution 1.00 Transportation Mode 1: 0.223 (14) Air passenger international 0.70 (0.037) (15) International shipping 0.70 (0.037) Mode 3: (16) Air passenger international 0.30 (17) Air passenger domestic 0.30 (18) International shipping 0.30 (19) Maritime auxiliary 1.00 (0.050) (20) Road freight 1.00 (0.062) (21) Rail freight 1.00 (0.037) Professional Services Mode 1: 0.199 (22) Accounting 0.20 (23) Auditing 0.20 (24) International law 0.20 Mode 3: (25) Accounting 0.40 (26) Auditing 0.40 (27) Domestic law 0.50 (28) International law 0.40 (29) Court representation 0.50 54 Modal Sector weights weights Subsectors, Aggregate sectors by mode of supply ( wmj ) wj Mode 4: (30) Accounting 0.40 (31) Auditing 0.40 (32) Domestic law 0.50 (33) International law 0.40 (34) Court representation 0.50 Notes: As an exception to the modal aggregation rule outlined above, air passenger transportation subsectors are first aggregated within mode 3, i.e. air passenger domestic and air passenger international, then the resulting modal score is aggregated with mode 1 using the modal weights as shown. Annex Table 6: List of law firms that contributed to filling country questionnaires Survey year Region Country Law firm Website Mailing address Phone Luke & 2009 Africa Botswana No website P Bag UB 00702 Gaborone 267 75090454 Associates 28, rue de l'industrie Building Sella Paride Rubeya & Co - 2010 Africa Burundi http://www.rubeya.bi 1st Floor, 6th appartment 257 22 24 89 10 Advocates BP 202 Bujumbura - Burundi JING & 537, Rue AFCODI 2008 Africa Cameroon http://www.jingpartners.com (237) 33 43 36 71 Partners Off Texaco Njo-Njo, Bonapriso Abidjan Cocody II Plateaux, rue des Raux, Amien jardins, les vallons immeuble 00 225 22 41 76 2008 Africa Cote d'Ivoire & Partners, No website Antilope, 2nd étage 72 Lawyers Firm BP 03 Cidex 3 Congo, Dem. Avenue Louise 106 1050 Brussels 2008 Africa DLA Piper http://www.dlapiper.com (32) 2 500 15 00 Rep. Belgium Tadesse Kiros Law Office Tadesse, Mega Building, 3rd Floor, Room # Getachew & 310 2008 Africa Ethiopia http://www.tkethiopianlawyer.com 25-191-179-2622 Abate Law Bole Road Office P.O.Box 33293 Addis Ababa, Ethiopia Fugar and http://www.fugarandcompany.com Wesley House, Liberia Road 2008 Africa Ghana (233) (21) 679222 Company .gh P.O. Box 6274, Accra-North, Ghana ALN House Eldama Ravine Gardens Anjarwalla & http://www.africalegalnetwork.co Off Eldama Ravine Road P.O. Box 2008 Africa Kenya Khanna 25-420-364-0223 m 200 - 00606 Nairobi, Advocates Kenya Mei & Mei 2008 Africa Lesotho No website 2662-232-7079 Attorneys Madagascar Nouvel Immeuble NY HAVANA 1st (+261) 20 22 295 2008 Africa Madagascar Conseil http://www.cabinet-mci.com floor, Ankorondrano 25 International Antananarivo 101 MADAGASCAR Whitehall, 6 Victoria Avenue, PO Box Wilson & 2008 Africa Malawi No website 527 (265)-182-988 Morgan Blantyre, Malawi Survey year Region Country Law firm Website Mailing address Phone CABINET (00223) 675 43 93 2008 Africa Mali http://www.lexis-conseil.com BP E 4278 BAMAKO MALI D'AVOCATS (00223) 221 01 68 Temple Court Banymandhub 2, Labourdonnais street 2008 Africa Mauritius Boolell http://www.templegroup.mu (230) 212 9810 Port-Louis Chambers Mauritius Rua General Pereira D‟Eça 90, 2008 Africa Mozambique Mozlegal http://www.mozlegal.com 258 21 496 900 Maputo, Mozambique Ellis & 3300 Windhoek Namibia, Windhoek, 2008 Africa Namibia http://www.ellisnam.com (264)6124-2224 Partners Namibia Barristers, 11 Raymond Njoku Street, S.W. 2008 Africa Nigeria Solicitors & No website 234-1-2692197 Ikoyi, Lagos Trade Mark Private (25)-078-876- 2009 Africa Rwanda No website 6454 Kigali - Rwanda consultant 3163 Membre de PricewaterhouseCoopers Cabinet de conseils juridiques et 2008 Africa Senegal FIDAFRICA No website (221) 849 05 00 fiscaux 3, place de l' Independence BP 6454 Dakar PO Box 248 Bowman& Cape Town 2008 Africa South Africa http://www.bowman.co.za 27-(0)-214807800 Gilfillan Inc 8000 South Africa 6th Floor, Amani Place Ohio Street +255 (0) 22 213 2008 Africa Tanzania http://www.crbafricalegal.com PO Box 79958 5637 Dar es Salaam, Tanzania M/s Katende, Ssempebwa & Co. Advocates Katende, Radiant House, (256) 414- 23- 2008 Africa Uganda Ssempebwa & http://www.kats.co.ug Plot 20, Kampala Road 3770 Co. Advocates P.O.Box 2344, Kampala, Uganda, East Africa Chibesakunda C/o Chibesakunda & Co., P.O. Box 2008 Africa Zambia http://www.dlapiper.com (260) 1 23-6 319 & Co. 30279, Lusaka, Zambia Kantor & http://www.kantorimmerman.co.z MacDonald House, 10 Selous Avenue, 2008 Africa Zimbabwe 263 4 793 626 Immerman w Box 19, Harare, Zimbabwe Survey year Region Country Law firm Website Mailing address Phone 33, Street 294 (Corner Street 29), East Asia DFDL Sangkat Tonle Bassac 2008 Cambodia http://www.dfdlmekong.com 855-2321-0400 and Pacific Mekong Law Khan Chamkarmon (PO Box 7) Phnom Penh, Cambodia East Asia Jun He Law (86-10) 2011 China http://www.junhe.com and Pacific Office 8519.1377 Hadromi & Partners Law Firm Setiabudi Atrium, 2nd Floor, Suite East Asia Hadromi and 2008 Indonesia http://www.hadromi.com 209A (62-21) 520 7040 and Pacific Partners Jl. H.R. Rasuna Said Kav. 62, Jakarta 12920, Indonesia 18th floor, Wisma Sime Darby, Jalam East Asia Rajah, Daryl 2008 Malaysia http://www.rajadarrylloh.com Raja Laut-50350, Kuala Lumpur, 603-2694-9999 and Pacific & Loh Malaysia International Trade Centre East Asia Mahoney & Suite 500 2008 Mongolia http://www.mongolialaw.com (976) -11-325344 and Pacific Lynch Baga Toiruu 37B Ulaanbaatar, Mongolia 22/F ACCRALAW TOWER Second Avenue corner 30th Street, East Asia 2008 Philippines ACCRA Law http://www.accralaw.com Crescent Park West (632) 830-8000 and Pacific Bonifacio Global City, 0399 Taguig METRO MANILA, PHILIPPINES Bangkok, Thailand Tilleke and East Asia Supalai Grand Tower, 26th Floor 2008 Thailand Gibbens Law http://www.tillekeandgibbins.com +66 2653 5555 and Pacific 1011 Rama 3 Road, Chongnonsi, Firm Yannawa 10120 LuatViet - DMC Tower, 4th Floor, 535 Kim Ma East Asia 2008 Vietnam Advocates & http://www.luatviet.com Street, Ba Dinh District, Hanoi, 844 220 3152 and Pacific Solicitors Vietnam Eastern Boga & 2008 Europe and Albania http://www.bogalaw.com P.O.Box 8264 Tirana, ALBANIA +355 4 225 1050 Associates Central Asia Eastern Grant 4a Kuznetsovi street, apt. 29, Yerevan, 2008 Europe and Armenia Thornton http://www.grantthornton.am 374 93 422 039 Republic of Armenia Central Asia Amyot Survey year Region Country Law firm Website Mailing address Phone Eastern Stepanovski, 2 Timiryazeva Street, Office 7, Minsk 2008 Europe and Belarus Papakul & http://spplaw.by 375 29 133 8839 220004 Belarus Central Asia Partners Eastern Penkov, 22-A Iztok District, 1113 Sofia, 2008 Europe and Bulgaria Markov & http://www.penkov-markov.eu 359 2 971 3935 Bulgaria Central Asia Partners Eastern 2008 Europe and Georgia BGI Legal http://www.bgi.ge 31 Abuladze Street, Tbilisi, Georgia 995 32 99 72 92 Central Asia Eastern Grata Law Firm Grata Law http://www.gratanet.com/en/kazak 2008 Europe and Kazakhstan 104, M.Ospanov Street, Almaty, 7 727 2 445-777 Firm hstan/contacts/almaty Central Asia 050020, Republic of Kazakhstan Eastern Kalikova & Kyrgyz 71 Erkindik Boulevard, Bishkek, 2008 Europe and Associates http://www.k-a.kg 996 312 66 60 60 Republic Kyrgyz Republic Central Asia Law Firm Eastern Musat & 43 Aviatorilor Blvd., 1st District, 2008 Europe and Romania http://www.musat.ro 40 21 202 5900 Asociatii Code 011853, Bucharest, Romania Central Asia Eastern Perevedenovskiy per., 13 Neocleous & 2008 Europe and Russia http://www.neocleous.ru Building 21 +7 495 933 8703 Co Central Asia 105082, Moscow, Russia Eastern Pekin & Bayar Ahular Sokak No.15 Etiler 34337, 2008 Europe and Turkey http://www.pekin.com.tr 90 212 359 5700 Law Firm Istanbul, Turkey Central Asia Eastern Shevchenko Leonardo Business Center, 14th floor 2008 Europe and Ukraine Didkovskiy & http://www.asterslaw.com 19-21 Bohdana Khmelnytskoho St. 380 44 230 60 00 Central Asia Partners Kyiv, 01030, Ukraine Eastern Grata Law http://www.gratanet.com/en/uzbeki 39, Gogol Street, Almaty, 050002, 2008 Europe and Uzbekistan 7 701 722 32 86 Firm stan/contacts/tashkent Kazakhstan Central Asia Gulf Talal Abu- 2008 cooperation Bahrain Ghazaleh http://www.tag-legal.com 921100 Amman 11192, Jordan 00962 6 510 0900 council Legal Gulf Salhiya Complex, Gate 1, 3rd Floor Al-Sarraf & 2008 cooperation Kuwait http://www.asarlegal.com P O Box 447, Safat 13005 +965 2292 2700 Al-Ruwayeh council Kuwait Survey year Region Country Law firm Website Mailing address Phone Gulf Al Busaidy, P.O. Box 686, Ruwi 2008 cooperation Oman Mansoor http://www.amjoman.com Postal Code 112, Muscat 00968 2481 4466 council Jamal & Co. Sultanate of Oman Gulf Talal Abu- 2008 cooperation Qatar Ghazaleh http://www.tag-legal.com 921100 Amman 11192, Jordan 00962 6 510 0900 council Legal Adv. Mohammed Al Marri in association with Al Tamimi & Company, Gulf Al Tamimi & Sheikh Mohammed Bin Suhaim 2008 cooperation Qatar http://www.tamimi.com 97444572777 Company Tower council 3rd floor Ras Abou Aboud, PO Box 23443, Doha, Qatar Gulf Post Office Box 6387 http://www.saudilegal.com/membe (+966-2-) 2008 cooperation Saudi Arabia Jeddah 21442 rs/andreas_haberbeck.html 6504475 council Saudi Arabia (54 11) 5167 Latin Estudio San Martín 140, piso 14 – C1004AAD 1610; (54 911) 2008 America and Argentina Cavallaro http://www.estudiocavallaro.com Buenos Aires – Argentina 4089 0601 Caribbean Abogados Latin C.R. & F. 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