The voice of the European Service Industries for

« The voice of the European Service Industries for International Trade Negotiations in Services » Séminaire sur les commerce des services Organisé par Is. DB Casablanca, 15 – 18 juin 2009 "The trend of International Services Trade & Investment" Pascal Kerneis Managing Director ESF (European Services Forum)

« The voice of the European Service Industries for International Trade Negotiations in Services » 1. Presentation of the European Services Forum 2. What are we talking about, what kind of services? 3. Place of services in the world economy and world trade 4. What does international trade in services includes? 5. Where the majority of FDI goes?

« The voice of the European Service Sectors for International trade Negotiations in Services » WHO ESF DOES REPRESENT? • 30 European services companies, most of them major multinational companies (represented at CEO or Chairman level in the European Services Leaders Group – ESLG) • 37 European trade federations of various services sectors (e. g. banking, insurance, telecommunications, express, architects, engineers, accountants, shipping, tourism, etc. )

« The voice of the European Service Industries for International Trade Negotiations in Services» ESF covers most services sectors, including: • Insurance • Banking • Business services: IT & Computer; consulting, advertising, after-sales services • Professional services: legal services, accountants, architects, engineers • Construction services • Distribution services • Publishing services (incl. Music) • Postal & Express Delivery services • Audio-visual services • Energy related services • Environmental services • Telecommunication services • Tourism • Air Transport • Maritime Transport But no members in Education or Health services For more information, see www. esf. be

« The voice of the European Service Industries for International Trade Negotiations in Services» ESF MEMBERS INCLUDE: • • • BARCLAYS BANK BT (British Telecom) CLIFFORD CHANCE COMMERZBANK DEUTSCHE BANK DHL FRANCE TELECOM GOLDMAN SACHS IBM EUROPE LLOYD’S • PRICEWATERHOUSECOOPERS • ROYAL AHOLD NV • SIEMENS AG • STANDARD CHARTERED BANK • TELEFONICA • TNT • TUI • VEOLIA ENVIRONMENT For more information, see www. esf. be

« The voice of the European Service Industries for International Trade Negotiations in Services» ESF MEMBERS INCLUDE: For more information, see www. esf. be

« The voice of the European Service Sectors for International trade Negotiations in Services » WHAT DOES ESF DO? 1. It represents the interests of European services companies that export (or wish to export) their services and that do (or wish to do) business outside the EU. 2. As an important and well recognised Forum in its scope of activity, ESF is an appropriate interlocutor for the briefings done by services negotiators from Brussels (DG Trade) and from Geneva (WTO), reaching a large panel of the interested sectors in one place. 3. It informs its members on the GATS negotiations and regional and bilateral trade negotiations, on the offensives and/or defensives positions of the other trading parties.

« The voice of the European Service Industries for International Trade Negotiations in Services» Agriculture Industry Services The Services sector generates 90% of new jobs in the EU 15

World Economy: Percentage of GDP by Sector, 2006

« The voice of the European Service Industries for International Trade Negotiations in Services» * Source: WTO International Trade Statistics – 2008 * : Includes significant re-exports or imports for re-export.

« The voice of the European Service industries in international trade in services negotiations » International Trade in Services: what does it include? • Services exports in the balance of payment include commercial transactions that involve the crossing of borders. • It comprise the cross-border services (mode 1) like electronic commerce transactions, architectural plans sent by fax, legal consultancy provided by e-mail, • Payment of a tourism package (all inclusive trip), payment of yearly university fees (mode 2), payment of licence or franchise fees (royalties), payment of transport fees (shipping, air cargo & express), etc. • The repatriation of profits of affiliates (mode 3); • The payment of the contract between the companies who agreed to get an accountant (natural person) moving to the customer to make an audit for six weeks (mode 4), etc.

Trends in World Trade in Services

International Trade in Services 28. 9% 42. 2%

« The voice of the European Service industries for the International trade in services negotiations » EU-27 International Trade in Services with non-EU Countries 2007, EUR bn Rank Country Trade Volume Exports Imports Balance 1 USA 266 852 139 135 127 717 11 417 2 Switzerland 105 490 61 503 43 987 17 516 3 Japan 6 China 33 183 31 535 19 378 13 805 5 573 17 766 13 769 3 996 4 Russia 31 268 19 238 12 030 7 208 5 Norway 30 920 19 008 11 912 7 096 7 Canada 21 343 11 695 9 648 2 047 8 Singapore 18 530 11 397 7 133 4 264 9 Turkey 18 517 6 617 11 900 -5 282 10 Australia 17 031 10 747 6 284 4 463

EU-27 International Trade in Services with non-EU Countries in 2006 (EUR bn) Rank Country Trade Volume Exports Imports Balance 11 Hong Kong 13. 584 6. 896 6. 688 0. 207 12 India 12. 526 6. 978 5. 548 1. 430 13 Korea 10. 367 6. 339 4. 028 2. 341 14 Brazil 9. 777 5. 162 4. 615 0. 548 15 South Africa 9. 662 5. 305 4. 357 0. 948 16 Egypt 7. 320 2. 294 5. 026 -2. 732 17 Croatia 7. 045 2. 283 4. 762 -2. 478 18 Mexico 6. 778 4. 091 2. 687 1. 403 19 Thailand 6. 517 1. 999 4. 518 -2. 519 20 Israel 5. 501 33. 112 2. 389 0. 723 21 Morocco 5. 172 1. 672 3. 500 -1. 828 22 Taiwan 5. 116 3. 066 2. 050 1. 016 23 Argentina 4. 049 2. 395 1. 654 0. 741 24 Malaysia 3. 888 2. 078 1. 810 0. 268 25 New Zealand 3. 138 1. 809 1. 329 0. 480 26 Indonesia 2, 483 1. 412 1. 071 0. 341

Trends of the EU International Trade in Services

EU International trade in Services (Trends in volume – Bio €)

« The voice of the European Service Industries for the GATS negotiations » Trade between Member States exceeds Extra-EU trade € 679. 6 bn € 498. 5 bn Source: Eurostat TOTAL EXPORT (intra + extra: 1178. 1 Bio €)

« The voice of the European Service Industries for the GATS negotiations » What ITS does not include? • The activities of the foreign affiliates within the country in which they are established are not taken into consideration (= part of local GDP), nor the self financed investments through benefits (reinvested earnings/income) (also local). • The flow of capital involved in mode 3 operations, i. e. the financing of the establishment of a new commercial presence in a foreign country; This is included in the Foreign Direct Investment (FDI) accounts, not in the balance of payment, hence not considered as services exports. • More than 65% of global FDI flows are invested in services sectors (see hereafter).

What does FDI include? • FDI Capital Flows • FDI income • FDI stocks in a country at the end of the year

Services contribute to the largest share of FDI (1) 444, 1 Bn € were invested in Services sectors by the EU in 4 years (63, 6 % of total 697, 5 Bn €) (extra EU)

Services contribute to the largest share of FDI (2)

« The voice of the European Service Industries for the GATS negotiations » 86% of the investment coming to the EU are done in the Services sectors;

« The voice of the European Service Industries for the GATS negotiations » THANK YOU FOR YOUR ATTENTION! Pascal KERNEIS Managing Director European Services Forum – ESF 168, Avenue de Cortenbergh B – 1000 – BRUSSELS Tel: + 32 2 230 75 14 Fax: + 32 2 320 61 68 Email: esf@esf. be Website: www. esf. be