PROMOTING REGIONAL INTEGRATION THROUGH SERVICES … · 2015. 1. 30. · Arpita Mukherjee Tanu M....

Arpita Mukherjee Tanu M. Goyal 

PROMOTING REGIONAL INTEGRATION THROUGH SERVICES SECTOR IN SOUTH AND SOUTH EAST ASIATAKING CASE OF INDIA‐THAILAND COMPREHENSIVE ECONOMIC COOPERATION AGREEMENT

Presentedat"TradeandInvestmentforTomorrow:PromotingAsia‐PacificRegionalIntegration” ARTNeTRESEARCHWORKSHOP,10‐12December2013Macao,China

11December2013

Layout of the Presentation

RationaleandObjectiveoftheStudyMethodology ApproachtheTarget Trends Analysis Findings

ConclusionandTakeaways

Layout of the Presentation

RationaleandObjectiveoftheStudyMethodology ApproachtheTarget Trends Analysis Findings

ConclusionandTakeaways

WhyarewelookingatservicesandwhyarewelookingatIndiaandThailand?Whatdoweintendtoachievebylookingatthem?

Why Services?

ServicesisanimportantcomponentofGDPofSouthandSouthEastAsia(over50%in2012)

Itisagrowingcomponentoftrade GrowthinSouthAsia’sshareinworld’sservicesexportandimportincreasedfrom1%in1990toaround4%in2010

ForEastAsia,theshareinworldservicesexportincreasedfrom8%in1990to12.8%in2010andshareinworldservicesimportincreasedfrom7.7%in1990to11.7%in2010

SouthandEastAsiahavetradecomplementaritiesinservices SouthAsiahasadvantageinknowledge‐basedserviceswhileEastAsiaininfrastructureandtravelservices

Withglobalslowdown,countriesintheregionareexploringnewmarketsanddiversifyingexportbasket

Services is a key component of trade agreements in South and East Asia – SATIS, AFAS, RCEP, TPP…

India

India’sintegrationwithEastAsiaisincreasing..

Source:ExtractedbyauthorsfromBaldwin(2007),Fig.1,page5(withmodifications)

Concludedagreements

Negotiationsongoing

Objective of the Study

Theobjective ofthisstudyistounderstandtheprospectsofenhancingservicestrade,investmentandco‐operationbetweenSouthandSouthEastAsia,takingtheexampleoftwocountriesfromeachregion—IndiaandThailand

WhyIndiaandThailand?• ServicesareagrowingcomponentofGDPinbothIndiaandThailand• Thailandisakeyplayeringlobalvaluechainingoods,whynotinservices?IndiahascompetitivenessincomputerservicesandtradeiswithlimitedcountriesoftheWest

• Thetwocountrieshavetradebarriersinservices.ThailandmorerestrictivethanIndia(49%FDIcap)– opensonbilateralbasis

• BothIndiaandThailandhasstrongMode4interest,butcategoriesdiffer• IndiaandThailandarecurrentlynegotiatingatradeagreement

Layout of the Presentation

RationaleandObjectiveoftheStudyMethodology ApproachtheTarget Trends Analysis Findings

ConclusionandTakeaways

Layout of the Presentation

RationaleandObjectiveoftheStudyMethodology ApproachtheTarget Trends Analysis Findings

ConclusionandTakeaways

Howdoweapproachtheobjective?Whatwehaveandwhatwelookfor?

Methodology

AgreementAnalysis:foranalysing andcomparingthearchitecturalelementsofThailandandIndia’sagreements,wewilluseFinkandMolinuevo(2008)

SchedulingApproach PositiveList,NegativeList,HybridApproachInvestment Coverage ,RelationshipbetweenServicesandInvestment

Chapter,RelationshipswithInvestmentAgreementsOtherIssues GovernmentProcurement,MutualRecognitionAgreement,

PrimarySurvey• Presenceandinterestineachothersmarkets–fillingdatagaps

• Statusandbarrierstomarketintegration

Understandwhatcanbeachievedfromthetradeagreementforenhancing

servicestrade

Layout of the Presentation

RationaleandObjectiveoftheStudyMethodology ApproachtheTarget Trends Analysis Findings

ConclusionandTakeaways

Layout of the Presentation

RationaleandObjectiveoftheStudyMethodology ApproachtheTarget Trends Analysis Findings

ConclusionandTakeaways

Understandingthepresenttrendoftradeinservices,interestsandbarriersandanalysingthestrategiesintradenegotiations

Services Sector Reforms 

India• Reformsstartedin1991afterbalanceofpaymentcrisis

• LiberalisationandremovalofFDIrestrictionsinanumberofservices

• Dismantlingofpublicmonopoly• Encouragingpublicprivatepartnershipinanumberofsector

Thailand• Reformsstartedin1997afterAsianFinancialCrisis

• LiberaltradeandinvestmentregimeasapartofIMFaidrequirement

• MasterPlanforStateEnterpriseSector– stateenterprisesreducedfrom100to59

• Newregulationsinplace– theBankruptcyLaw(1940)andForeignBusinessAct(1999)

Theservicessectorreformpathandtriggerhasbeensimilar

TradeandInvestmentTrends– SecondaryAnalysis

NeedforaSurvey

Trends and Patterns

Trends in Trade in Services

Source: Compiled and calculated by the authors from UNCTAD Statistics,http://unctadstat.unctad.org/*In case of percentage share, share in total trade is calculated at a percentage of trade in goods and services

Year India ThailandExport Imports Total

TradeTradeBalance

Export Imports TotalTrade

TradeBalance

Value(inUS$Billion)

1990 4.6 6.1 10.7 ‐1.5 6.4 6.3 12.7 0.12000 16.7 19.2 35.9 ‐2.5 13.9 15.5 29.3 ‐1.62005 52.5 47.3 99.8 5.2 19.9 26.8 46.7 ‐6.92011 149 131 280 18 41.1 51.1 92.2 ‐9.9

PercentageShare*1990 20.5 20.5 20.5 21.8 16 18.52000 28.2 27.1 27.6 16.7 20 18.32005 34.5 24.9 29.2 15.3 18.5 172011 33.3 22.6 27.3 15.4 22.2 18.5

Comparative Advantages in Services

Source:CalculatedbyauthorsusingBalanceofPayments(BoP)databaseoftheIMF

RCAsofIndiaandThailandinServicesTradeServiceSectors INDIA THAILAND

2001 2010 2012 2001 2010 2012

Communications 2.79 0.51 0.51 0.37 0.55 0.41

Computers and Information 9.72 5.81 5.38 0.00 0.01 0.02

Construction 0.18 0.17 0.24 1.10 0.54 0.36

Financial 0.29 0.65 0.58 0.00 0.04 0.08

Government services 1.46 0.23 0.20 0.33 0.41 0.39

Insurance 0.85 0.58 0.78 0.35 0.08 0.35

Other business services 0.61 1.10 1.25 0.79 0.75 0.59

Personal, cultural and recreational 0.00 0.33 0.47 0.00 0.29 0.22

Royalties and Licence fees 0.04 0.02 0.03 0.01 0.07 0.07

Transportation 0.60 0.47 0.50 1.05 0.84 0.60

Travel 0.60 0.47 0.50 1.77 2.41 2.72

Service‐Wise Exports and Imports of Services from Thailand to India in 2010

Service Exports(in $million)

Per centShare

Service Imports(in $million)

Per centShare

Travel 307 79.2 Travel 40 30.2Transportation 12 3.0 Transportation 16 11.9Other Services 68 17.5 Other Services 73 55.1

Legal 34 8.7 Legal 26 19.4Governmentservice

1 0.3 GovernmentService

4 2.8

Fees and othercommissions

18 3.5

Royalties andlicence fees

2 1.6

Total 388 100 Total 132 100Source: Data provided by the Bank of Thailand during the survey

Overall,ThailandhasapositivetradebalanceinserviceswithIndia,whichisdifferentfrombothThailandandIndia’sglobaltradepatterninservices.Thailandisanetexporteroftravelserviceswhileanetimporterof

transportationandotherservices

Bilateral Investments in Services: India and Thailand In2012,FDIcontributedaround2.4percenttotheGDPofboth

countries InIndia,theservicessectorhasalargeshareinFDIinflows(64%) InThailandthemanufacturingsectorisalargerecipientthoughtheshareofserviceshasincreased

IndiaandThailanddonothavemajorinvestmentsineachother’smarket

FromApril2000toJuly2013,thecumulativeFDIinflowfromThailandwas$128.62million(ranked38th,0.06%share)

ServicessectorreceivedthehighestFDI Indiaisamongtop‐20investorsinThailand– invested$60millionin

2010alone ManufacturingsectorreceivedamajorityofFDI

Both countries have FDI restrictions

The Survey Primarysurveyofover180stakeholders

In‐depthinterviewsinThailand

Pan‐Indiasurveyusing

semi‐structuredquestionnaires

Stakeholdersconsultation

Sampling FrameProfile of Respondents Number of

RespondentsIndian Companies in Thailand 59Indian Associations 17Indian Professional Bodies 15Thai Companies in India 6Thai associations and professional bodies (Thai spaassociation, Association of Thai Travel Agents, etc.)

9

Academics and Sectoral Expertise 20In‐Depth Interviews in Thailand 20In‐Depth Interviews in India 25Central ministries/state governments/local bodies 5Embassy in Thailand 4Total Number 180

Thereareseveralservicesectordatarelatedissues–difficulttogetbilateraltradedata,Mode‐wisedataanddisaggregateddata

Thereforethereisaneedforaprimarysurvey

Carewastakentocovercompaniesacrossdifferentservices

SampleselectionwasbasedoninformationprovidedbyIndianandThaiembassies

Understandthepresenceineachothersmarketandthestatusandbarrierstomarketintegration

Preliminary Survey Findings – Indian Companies

• 51%oftheIndiancompaniesinThailandoperatethroughagentsanddistributors‐ only34%havewhollyownedsubsidiaries

• Around40%ofthecompaniesarepresentonproject‐basisofwhichamajorityofcompaniesgetprojectsthroughagentsandofthese,83%providecomputerandrelatedservices

• 82%ofIndiancompaniesinThailandalsohavepresenceinotherASEANcountries– amajorityinSingaporeandMalaysia

• SomeofthepotentialareasofcooperationincludetourismandThaispaservicesandamajorityfeltthatCECAwillbebeneficial 0.0 50.0 100.0

Localprocurementiseasy

Largernumberofpartnercompanies

Anarrayofinvestmentincentive…

Taxincentives

Alltypesofproceduresareprompt

Anabundanceofstaffduetolowcosts

Abundanceofland/lowland…

UseofEnglishlanguage

Highqualitystaff

Goodinfrastructure

Marketgrowthpotential

Stablepoliticalandsocialconditions

Factors determining Investment Decision – Indian companies in Thailand

Factordetermininginvestmentdecision

Percentageofrespondentcitingitasveryimportantandimportant

Preliminary Survey Finding – Thai Companies

ComparedtoIndiancompaniesinThailand,thereareveryfewThaicompaniesinIndia,somecompaniesinconstruction

MostoftheThaicompaniesinIndiaarepresentaswholly‐ownedsubsidiaries

Likemostotherforeigncompanies,Thaicompaniesalsopointedoutthatmarketpotentialandavailabilityofhighskilledpersonnelareimportantfactorsdetermininginvestmentdecision

MostThaicompaniesfeelthataCECAincludingserviceswillbebeneficialforThaicompanies

StatusandBarrier Howintegratedarethetwomarkets? Whatarethebarrierstointegration?

Scope for Enhancing Trade in Services and Market Integration

Choice of Services and their Role in Connectivity and Trade AgreementSector Type of Connectivity Role in Bilateral AgreementBanking Physical or infrastructural Crucial sector for any CECA negotiationsTelecommunication Physical or infrastructural Crucial sector for CECA negotiationsTransport and Logistics Physical or infrastructural Crucial sector for regional integrationProfessional Services People‐to‐people Sector of export interest to IndiaInformation Technology Physical or infrastructural

and people‐to‐peopleSector of export interest to India

Tourism People‐to‐people Sector of export interest to ThailandOther Services – spa andchef services

People‐to‐people Sector of export interest to Thailand and isincluded in all Thailand trade agreements

Source: Compiled by authors from the survey and secondary research

Institutionalconnectivityisanoverarchingmechanismthatcutsacrossallsectors

Status of Integration in Services – India and Thailand

Threeformsofintegration‐ Institutionalconnectivity,PhysicalconnectivityandPeople‐to‐peopleconnectivity

Betterconnectivityorintegrationofservicessectormayhelpenhancingtradeandinvestmentbetweensthetwomarket

Basedonthis,certainservicesarechosen– thesearealsoservicescrucialforIndia‐Thailandtradeagreement

Institutional Connectivity  Status

o ComplementaryPolicy:India’sLookEastandThailand’sLookWesto Bothareactivelyengagedintradeagreements– withinASEANandwitheachothero ConcludedEarlyHarvestSchemecovering82productcategoriesandnegotiatingservicesunderASEANo Negotiationsareon‐goingunderIndia‐ThailandCECA‐ severalissuesinCECAnegotiationswhichalso

adverselyimpactmarketintegration

Barrierso Limitedknowledgeabouteachother’smarkets,requirementsandregulationso Weakregulatorystructureincertainsectors– evolvingregulationsmakingitdifficulttotake

commitmentso FDIlimitationso Foreignersaregrantedcase‐by‐caseapprovalandhighincidenceofcorruptiono Non‐transparentprojectbiddingprocesso Lowinvolvementofstakeholdersandindustryinpolicymakingo InThailand,foreignnationalsarenotallowedrepresentationoncompany’sboardortop‐level‐

management– unlikeSingapore,Thailanddoesnotfollownomineestructureforshareholdingo BoardofInvestmentRouteinThailandhashighminimumcapitalrequiremento StatespecificissuesinIndia– servicesquasifederalregulations

Physical Connectivity – (a) Transport and Logistics Sector 

ThailandisIndia’sentrypointinASEANthroughlandconnectivity– (a)strategicreasons(b)lowerlogisticscoststoincreasecompetitiveness

Bothcountriesneedtoexploitseverallandandsearoutesthatcanbebeneficial• Myanmarhasakeyroleinphysicalconnectivity

India‐Myanmar‐ThailandTrilateralHighwaylinkingMoreh (inManipur,India)withMaeSot(inTak,Thailand)throughBagan (inMandalay,Myanmar)

Mekong‐IndiaEconomicCorridorChennai(India)withBangkok(Thailand)throughtheDawai (Myanmar)port

Scopefordevelopingdomestictransportinfrastructureandcollaboratingwitheachother• ConnectNorth‐EastofIndiawiththerest‐ Kaladan MultimodalTransitTransport

project• DedicatedFreightCorridorontheGoldenQuadrilateral• DevelopmentofChennai‐Bangalore‐MumbaiIndustrialCorridorandDelhi‐

MumbaiIndustrialCorridor

Selected Infrastructure Projects for Transport Connectivity 

Chicken’s Neck

Source: Extracted from Kimura et. al. (2011), Figure 5, page 52, with inputs from survey conducted by authors

Physical Connectivity – (b) Telecommunications

Domesticmarketsareverydifferent– whileIndiahascompetitioncomparativelyThailandhasmonopolisticsituation

Thailandregulatoryregimeisevolving– independentregulator? Thereisscopeforcollaborationtobringdownbothdomesticand

internationalcallrates Internetpenetrationislowinbothcountries,Internetchargesarehighin

Thailandlandingrightsarewiththegovernment Companieshavelimitedknowledgeandpresenceineachothersmarket Scopeforfosteringintegrationthroughtradeagreement– addsecurityand

predictabilitytoinvestment ScopeforIndiancompaniesinThailand‐ largelyonewaytradeflow

LandconnectivitythroughNorthEastIndia Indiacaninvestindevelopingunder‐seacablethroughMyanmarordirectlyfromAndamanandNicobarIslands

UndertakeR&Dinvestmentsandsoftwaredevelopment IndianserviceproviderscanestablishpresenceinThailandandinvestinsettinguptelecommunicationinfrastructure

Physical Connectivity – (d) Information Technology IndiaisoneofthelargestexporterofITserviceswhileThailandisoneofthelargestmarketsin

SoutheastAsianregion India’sFDIregimeisopenwhileThailandhasarestrictivemarket PostIndia‐SingaporeCECA,mostIndiancompaniesoperateinThailandthroughSingaporeon

project‐by‐projectbasis ShortageoftechnicalskillsinThailandandscopeforIndiancompanies/serviceprovidersto

operatedirectlyinthemarket CanprovideITservicestosectorssuchaslogisticsandsupplychain,financialsectorandcontent

fortelecommunicationssector Scopeforinter‐governmentalagreementinareaslikee‐governance

Withgrowingcommercialconnectivitythereisaneedforgreaterfinancialconnectivity Atpresentthelevelofbankingintegrationislow– therearerestrictionsonforeignbankbranches

andsubsidiariesinThailand Indianbanksarekeentoestablishpresencebuttherearemarketaccessrestrictions– licenses RBIpreferBankingthroughreciprocityintradeagreements Limitedknowledgeabouteachothersregulatoryregime

Physical Connectivity – (c) Banking

Barriers to Physical Connectivity

Bottlenecksintransportnetworko Forlandlinks,thereisfirstneedtodevelopbetterroadsinIndialinkingNorth‐Easttotherestofthecountryo Evenifsea‐linksarebuilt,thereisneedtostreamlinecustomproceduresinIndia– shipmentsareoftennot

deliveredontimetodestinationo Inter‐statelinksarepoorinIndiaandthereisnoguaranteeofcargoclearanceo InThailand,foreignserviceproviderscannotprovideintegratedlogisticsservices– fragmentedsupplychain

Telecommunicationinfrastructureisnotwelldeveloped,landline,mobile,internetandbroadband

Inadequatefinancialinfrastructure BankingsectorismostrestrictiveinThailand– foreignownershipallowedupto49%andrequireprior

approvalfromBankofThailand Bankingregulationschangerandomly– increasedminimumcapitalrequirementfrom5to12millionBaht AnIndianbankpointedoutthatittook6yearstogetalicenseandthereareseverebranchrestrictions–

ATMsarealsotreatedasbranchinThailand InIndia,RBIimposesalimitofthenumberofoverseasbranchanIndianbankcanhaveandtherefore,most

IndianbanksarenotkeentoopenbranchesinThailandwhencomparewithcountrieswithhigherReturnonInvestment

ThaigovernmentusepriceschemestoprohibitprivateplayersfromenteringandsettinguptheirowninfrastructureintheITsector

People‐to‐People Connectivity – (a) Tourism Service

SignificantbilateraltradebetweenIndiaandThailand– largelyonewayflowfromIndiatoThailand,oneofthelargestforeignexchangeearnersinThailand

Categoriesoftouristincludeleisure,medical,pilgrimsandMICErelated‐ majorityoftouristsfromIndiatoThailandvisitonleisuretourismwhilefromThailandtoIndiaitisonpilgrimage

Complementaritytothetourismindustryisthehospitalityindustry– scopeforIndianhotelierstoopenchainsinThailandandforThailandtoinvestinbudgethotelsinIndia– havesupportedgrowthofairtransportfacilities

Scopeforjointtourismpromotionforattractingthirdcountrytouriststhroughdigitalmarketingandundertakingjointprogrammesformedicaltourism–developmentofservicesvaluechain

Year Number(inMillions) PercentshareinTotalForeignTouristsArrivedinThailand

2008 0.54 3.692009 0.61 4.232010 0.79 5.442011 0.55 3.80

Source: Information provided by the Tourism Authority of Thailand during the survey

Indian Tourist Arrivals in Thailand (2008‐2011)

People‐to‐People Connectivity – (b) Specialty Services: Spa and Ayurveda Specializedskills‐ SpaservicesareofkeyimportancetoThailand– coveredinalltrade

agreements SpaandAyurvedacantogetherbeapartofglobalvaluechaininmedicaltourism‐

complementaryservicesandIndiaandThailandcanhavejointpackagesforthirdcountrynationals

ThereisademandforThaispaworkersinIndiahowever,theknowledgeislowandmisleadingperceptionsabouttheservice

ThereisscopeforanMRAbetweenIndiaSpaandWellnessAssociationandThaiSpaAssociationforeasiermovementofpeopleandskillrecognition

People‐to‐People Connectivity – (c) Professional Services IndiahaslargeeducatedEnglish‐speakingworkforce‐ Mode1and4areofkeyimportanceto

Indiaintradeagreements(WTOandbilateral) Thailandhaslimitedinterestinthesector Foranytradetohappen,thereisaneedformutualrecognitionofqualificationsbetween

professionalassociations Thesurveyrevealedthatthereisreluctanceonbothsidestocollaborateinthesector– sensitive

forbothcountries

Barriers to People‐to‐People Connectivity 

Mode4issensitiveintradenegotiations:BothIndiaandThailandaredemandeurofMode4inWTOandFTAs– However,whileIndiademandsmovementofhighskilledprofessionals,Thailanddemandsspecializedskills

Anumberofservicesareclosedforforeignnationals– legal,accountancy,etc. Conditionsonforeignserviceproviders:anumberofprofessionsarereservedforThai

nationalswhileinIndiathereareregistrationrequirements Mutualrecognitionisanissueincertainprofessionsandservices Problemsrelatedtovisaandworkpermit:Indiaimposesminimumsalaryrequirementwhile

Thailandhasrestrictionsoncitizenship Thailandhasaneconomicneedstestandcompulsorylocalemploymentcondition(1:4ratio)‐

insomesectorslikebanking,difficulttomeetlocalhiringconditions Languageisamajorbarrier:knowledgeofEnglishlanguageislowinThailand QualityofIndianworkforceisdeterioratingandworkattitudeisnotconsideredgoodbyThai

employers Indiadoesnotgivevisaonarrival‐ businessvisitors Lackofsocialsecurityarrangementleadingtoamuchlowertake‐homeincomeforexpatriates

ApproachintheWTO BilateralAgreements– howfardotheygo?

Analysis of Trade Agreements

WTO Offer of India and Thailand Bothhavemadeanofferbelowtheautonomousregime Indiaofferedtomakecommitmentin11sectors,Thailandin10 BothIndiaandThailandimposemarketaccessandnationaltreatmentrestrictionsinModes3

and4 WhileThailandrestrictsforeigninvestmentsto49%inallsectors,Indiaimposednational

treatmentrestriction– preferentialaccesswithtechnologytransfer InMode4,differencesindefinitionofservicesuppliers(managersandspecialists) India’sofferinMode4betterthanThailand(broaderdefinition,longerdurationofstay) BothIndiaandThailandaredemandeurs inModes1and4– however,Indiademandshigh‐

skilledpeoplewhileThailand’sskillrequirementsareveryspecificandspecialized Insector‐specificoffer,Thailandofferedmarketaccessinonlycertainsub‐sectors,limitingthe

abilitytoprovideend‐to‐endservices SectorssensitivetoThailand:integratedengineeringservices,medicalanddentalservices,

servicesprovidedbymidwives,nurses,physiotherapistsandpara‐medicalpersonnel,R&Dservicesinsocialsciencesandhumanities,servicesrelatedtomanagementconsultingservices,touristguideservices,amongothers

SectorssensitivetoIndia:education,retail,postalservices,railways Overall,Thailand’sRevisedOfferismorerestrictivethanIndia’s

Commitments in FTAs BothIndiaandThailandhavecomprehensiveagreements– IndiawithSingapore,

Japan,MalaysiaandKoreaandThailandwithAustraliaandJapan IndiafollowsafixedpatternacrossallFTAswhileThailandcustomizeitsagreements

totherequirementsofatradingpartner InMode3Thailandhasgonebeyondautonomous– increasedinvestmentlimitsand

madecommitmentsinsectorsotherwiserestricted‐ Thailandundertakesforward‐lookingcommitments

Indiadoesnotundertakeforwardlookingcommitmentsbuttrytobindtheexistingautonomousregime– sinceIndiahasbeenliberalisingthedomesticmarket,theextentofcommitmentshaveimprovedovertheWTORevisedOffer

Mode4,Indiacommittedunderallfourcategoriesofservicesuppliers,ThailanddidnotcoverIPbutgivespreferentialtreatment‐ ProvisionofAPECAustralianBusinessTravelcardunderitsagreementwithAustralia

ThailandhastheIndiatriestosecureliberalisationcommitmentsinModes1and4 Indiaisalsoaproponentofdevelopingdisciplinesondomesticregulations Bothhavechaptersoncooperationandrecognisetheimportanceofmutual

recognitionagreement

Comparison of Design and Coverage of Bilateral Agreements

Parameters India–Korea CEPA India–Japan CEPA Thailand–Japan EPA Thailand–Australia FTASectors covered India has taken commitments 

in all 11 broad services sectors covered under the W/120

India has taken commitments in all 11 broad services sectors covered under the W/120

Thailand has taken commitments in 10 broad sectors. The excluded sector is health and social services.

Thailand has undertaken commitments in 8 broad sectors identified in W/120.The three excluded sectors are environmental, financial and health and social services.

Scheduling GATS‐style hybrid approach ‐positive listing of sectors and negative listing of barriers 

GATS‐style hybrid GATS‐style hybrid Negative list

Sectoral carve‐outs

Air transport services  Air transport services and cabotage in maritime transport services 

Air transport services and cabotage in maritime transport services

‐

Coverage Dual coverage for investments (under investment chapter and under Mode 3 in trade in services chapter) and movement of people

Dual coverage for investments and movement of people

Dual coverage for investments and movement of people

Single schedule 

Has separate chapters on

Telecommunication, movement of natural persons and investments

Movement of natural persons and investments 

Movement of natural persons and investments

Movement of natural persons, investments and e‐commerce

Types of service suppliers covered 

BV, CSS, ICT, IP BV, CSS, ICT, IP BV, CSS, ICT BV, CSS, ICT

Layout of the Presentation

RationaleandObjectiveoftheStudyMethodology ApproachtheTarget Trends Analysis Findings

ConclusionandTakeaways

Layout of the Presentation

RationaleandObjectiveoftheStudyMethodology ApproachtheTarget Trends Analysis Findings

ConclusionandTakeaways

The Way Forward – Enhancing Trade in Services through Negotiations

PrimereasonforThailandtoenterintoanagreementwithIndiaisproliferationofFTAsinASEANandIndia’sgrowingintegrationwithASEANmemberstates

Bilateraltradeinservicesatpresentislowhowever,thereisscopeforenhancingtradeandinvestment

Anumberofbarriersarerelatedtomarketaccessthatcanaddressedthroughnegotiations

ThailandisanetexporterofservicestoIndia– primarilyduetolargeexportoftravelservices– soitshouldnotworryaboutservicesagreement

Regulatorybarrierswithstrongdomesticreformsandclearimplementationstrategy

Knowledgesharingisimportantandgreatercooperationisrequiredinthisregard

Scopeforcollaborationinspecificsectors

Key Takeaways BothIndiaandThailandhaverestrictiveFDI

regimeandevolvingregulations– affectstransparency

Integrationinphysicalinfrastructureandeasingmovementofpeoplewillhelpinenhancingtradeinservices

Businessfacilitatinginstrumentssuchasbankshouldbeencouraged

Soundinstitutionalframeworkandgreatercooperationandinteractions– governmenttogovernment,industryassociationsandbusiness

Reciprocity– visaonarrivalandaccommodationofeachothersinterest

Thailandcustomizesitsagreementaspertradingpartnersrequestandoffers– Indiashouldutilizetheflexibilityoneachothersinterest

Focusofcommitmentsratherthanonlycooperation

India‐ThailandCECAnegotiationsare

slow– stickyissues(a)commitmentsonmovementofpeople(b)slowreformsand

domesticbarriers

ThailandisdemandingmarketsaccessforThaispaworkersandremovalofUS$25000salarycondition– IndianMinistryofLabour isreluctanttocommit

Indiademandbettercommitmentsinbankingsector– ThaibankingsectorisfairlyrestrictedandThailandisreluctanttocommitinthesector

TherecentslowdowninIndianmarkethasalso

sloweddownthespeedofnegotiations

ThailandhasgainedfromEarlyharvest‐worried

abouttheimplicationofbroadeningtheagreement

Thank YouFordetailscontact:ArpitaMukherjeeProfessor,ICRIERarpita@icrier.res.inTanuM.Goyal,ResearchAssociate,ICRIERtgoyal@icrier.res.in