MOFTIC/COMSEC TRADE IN SERVICES WORKSHOP,

CARA LODGE, THURSDAY FEBRUARY 8, 2007 

 

“STRATEGY FOR THE DEVELOPMENT AND

EXPORT PROMOTION OF PROFESSIONAL SERVICES IN GUYANA,” 

 

Statement By Dr. The Hon. Henry B. Jeffrey,

Minister of Foreign Trade and International Cooperation

 

Mr. Chairman…

Ladies and Gentlemen

            Let me welcome you to this very important National Workshop on the Professional Services Trade of Guyana and let me also extend a special welcome to our friends and partners from the Commonwealth Secretariat and the Consultants who are associated with this project.

I wish to express my and my Ministry’s gratitude to Mr. Andrew Satney and his colleagues at the Commonwealth Secretariat for rapidly approving the project proposal and funding.

Ladies and gentlemen allow me to take the next few minutes to reflect on some developments in the area of trade in services and to indicate their importance for us in Guyana.

 The International Trade in Services:

In our times the services sector has emerged as a major contributor to economic development and the global trade in services has been expanding at a rapid rate.  This is particularly so in the area of “other services”: for example professional services, value-added telecommunications, financial services, health care and education and training.  Services account for approximately one-fifth of recorded world trade as well as the majority of domestic activities in most economies. 

For most regional economies the major employment sectors include tourism, telecommunication and data processing, finance and insurance and entertainment.  Since the 1990s the telecommunications and computer related services such as data processing have been registering increased growth and making ever greater contribution to Caribbean economies. 

For most CARICOM States the contribution of services trade to GDP is over 50%.  Services output relative to total output for CARICOM countries was over 60% between 1996 and 2004 for the MDCs and over 80% for the LDCs.  Services present the best prospects for economic diversification and global repositioning. However, our capacity to produce internationally competitive service exports needs to be further developed and it is in this context that we need to consider the current drive to liberalize trade in services. 

The External Trade Negotiations as a Tool of Development:

The negotiations to liberalize trade in services are being undertaken in various bilateral and multilateral forums.  For example, Guyana, as a member of CARICOM, is already envolved in the WTO DRha round negotiations and the CARIFORUM-EU negotiation for an  Economic Partnership Agreement (EPA).  It is expected that, shortly, CARICOM will commence negotiation with the Dominican Republic for a trade in services agreement.   

These negotiations are closely related, though they may differ in scope and depth of commitments.  In this regard, perhaps the first issue that needs to be understood is that the norms and disciplines established under in the WTO GATS agreements constitute the “floor” or the minimum standards, for the liberalization of trade in services. Consequently, any agreement to liberalize trade in services must not only be compatible with the WTO GATS provisions, but is normally expected to go further than GATS.  The Agreement would have to be WTO “plus” to maintain its own identity.

            Against this background, I would say that the timing of this workshop is right for three main reasons.  Firstly, for Guyana, and indeed for the region as a whole, developments in the various external negotiations are not divorced from the regional programme in the CARICOM Single Market and Economy (CSME).  The implementation of Protocol II on the Right of Establishment, Provision of Services and Movement of Capital, in the Revised Treaty of Chaguaramas, has put in place a common services regime for the region

The objective of the common regime is to ensure that regional service providers receive no less favourable treatment than what is or will be given to non-CARICOM suppliers in the various member states.  CARICOM members should in no way be disadvantaged in terms of treatment in the regional economy as a result of liberalization to the multilateral environment.   

Secondly, in the current EPA negotiations with the EU, a substantive free trade regime in services, with critical investment and market access opportunities for CARICOM in the EU market, is expected. 

Thirdly, the stalled WTO Doha negotiation is scheduled to resume shortly, in Geneva.  Guyana remains actively engaged in the process and in the submission of services offers.

Of course, in and of themselves market opportunities and trade “concessions” should not be confused with real commercial possibilities.  This is where the development is to make countries ready for trade.   Nevertheless, the trade arena should be considered as an important step in a long journey.  Adopting a strategic approach to trade in services negotiations contains within it several benefits:

a.       It sends a powerful and well recognized signal to the international private sector that commercial opportunities exist and that it is incumbent on them to explore and assess such opportunities as they would any other.

b.      It marks the government’s commitment to a particular development path that contains known. Neither governments nor the private sectors should be surprised by unexpected developments.

c.       It provides the private sector with a set framework in which to make business decisions.  It is now widely accepted that businesses value predictability above all other factors when considering investment options.

d.      Services also have the twin benefits of generally being more environmentally friendly, more positive working conditions and generally better wages, than traditional industries. 

e.       Services firms, since they tend to be less reliant on expensive capital investments are much more flexible and adaptive to new technologies.  Especially in the digital era, this means that “technological advancement” is not really a geographical determined factor in the international market place.  Hyderabad, India can be as technologically advanced – and perhaps more so – as Silicon Valley in California.   

Why focus on Services?

            Quite often the potential for expanding services exports is overlooked in national development planning because of inadequate statistics and a lack of familiarity with the export activities of services firms.  Sometimes there is the presumption that the necessary developmental activities are the same for goods and services, which is not the case.

            Given the fast pace at which trade in services is currently growing, it is imperative that Guyana maximize the opportunities for growth and development.  To ensure continued growth and expansion of services, the major constraints must be identified and addressed in a strategic way.

Based on existing official data in 2005, Distribution, Transportation and Communication, Engineering and Construction, Rent of Dwelling, Financial Services, and other Services accounted for 32.8% of GDP.  Ten years prior, in 1995, these same services represented only 22% of GDP. 

The draft study on the services sector in Guyana, by the USAID-GTIS states: “the services sector in Guyana has great potential but at present, is extremely underdeveloped as compared to its regional CARICOM neighbors.  Past and present priority on agriculture production has resulted in an under-appreciation of the benefits of services exports.  In contrast, other CARICOM countries have been heavily dependent on services exports, particularly in the area of tourism.  Consequently, there is a gap in services production between Guyana and its regional neighbours.  While Guyana’s aggregate services are higher than several OECS countries, it is about one-half of Suriname’s, one-sixth of Barbados’ and one-twentieth of those of Jamaica and Trinidad and Tobago.  Notwithstanding, the importance of services has increased considerably in Guyana in the last ten years and now represents almost half of economic activity”. 

            With key agricultural exports being threatened by the persistent challenges to preferential trading arrangements, and labour-intensive manufactured exports facing increased competition, the development of services exports is an essential plank of the country’s future development.

            The key policy issue, therefore, is what type of arrangements, both internally and in any extra-regional trade agreement, can be developed to encourage the expansion of non-tourism services in the region.  Having implemented the necessary internal reforms, external trade arrangements could be complementary and further improve the local environment for foreign investors. 

            We need to broaden and deepen, at the same time, our understanding of the Services sector and its potential for the modernization of the national economy.  We need to do so quickly, not only in relation to the rapid developments in the multilateral trading environment but importantly for the critical issues that need to be addressed in the context of our national development.

             To overcome the “invisibility” of services industries, an immediate first task is to develop a widespread awareness that services make important contributions to the national economy in terms of job creation, wealth creation, and foreign exchange earnings. 

            Also, because there is little training available as yet on services, technical assistance needs to be provided to the services sector.  Services firms need to become aware of international quality standards. 

 Finally:

During the past week I participated in a strategy meeting of CARICOM Trade Ministers, and a Joint Meeting of the Prime Ministerial Sub-Committees on the CSME and the External Trade Negotiations, in Monte go Bay, Jamaica. 

There was an important discussion and exchange of views on the

development vision for the Caribbean Community.  With respect to the economic dimension of the Vision, the document, which is now before the Heads of Government for adoption, states inter alia:

“The goal (for services) should be to increase the share of non-tourism services to 50 percent of the total by 2015. Services are well suited for development of small and medium-enterprises (SMEs) and can contribute to growth with equity.  Increased earnings will come from growth of the following service clusters: Information; Energy-related; Culture, entertainment and sport; Health; Education; Accounting; Legal; Engineering; and Architectural drafting.

 Today’s event will allow us to develop a strategy and dovetail into this regional vision. I wish to encourage your maximum participation and input in the technical session of the workshop.         

I thank you once again and declare the workshop open. 

February 8, 2007