Brazil's Services Trade and International Trade Negotiations

Statistical Analysis an Example from Brazil Trade in Services and International Agreements Hanoi, Vietnam, May 23-27, 2005 CARSTEN FINK Demands of the trade negotiator How much trade is there? What are the barriers service providers encounter and how important are these barriers? How would trade respond to a reduction of trade barriers? Statistical analysis in the goods case Data on imports and exports of goods available for highly disaggregated product groups Information on tariffs available for the same product groups Estimates of trade elasticities available; well-established framework for modeling the effects of trade liberalization How much services trade is there?

Obtain information on offensive and defensive interests in services: How important is services trade relative to goods trade? In which sectors and to which countries do domestic firms export services? What is the geographic and sectoral breakdown of services imports? Example: Brazils BOP exports Figure 2.2: Services exports (in US$), 1990-2000 Millions of US dollars 10,000 9,000 OTHER SERVICES 8,000 INSURANCE SERVICES 7,000 TRAVEL TRANSPORTATION 6,000 5,000 4,000 3,000 2,000

1,000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Source: IMF Balance of Payments Source: Brazil Trade Policies to Improve Efficiency, Increase Growth and Reduce Poverty. Vol. IV. (The World Bank, 2002). Breakdown of other services

1995 2000 Miscellaneous business and professional services 19% Remaining other services 81% Miscellaneous business and professional services 45% Remaining other services 55% Source: Brazil Trade Policies to Improve Efficiency, Increase Growth and Reduce Poverty. Vol. IV. (The World Bank, 2002). Further breakdown of misc. business and professional services 2000 1995 Advertising and Legal services 1% related services 2% Legal services 1%

Advertising and related services 4% Other 26% Other 55% Services between affiliated enterprises 22% Architectural, engineering and related services 44% Services between affiliated enterprises 25% Source: Brazil Trade Policies to Improve Efficiency, Increase Growth and Reduce Poverty. Vol. IV. (The World Bank, 2002). Revealed comparative advantage Brazil k Exports RCAk World k

Exports Total Exports Brazil World Total Exports Brazils RCA indices Exports Goods Services Transport services Travel Insurance services Other business serv. 1990 1.10 0.56 0.79 0.61 0.80 0.51 1991 1.12 0.49 0.79 0.44 0.40

0.41 1992 1.12 0.50 0.93 0.36 0.55 0.47 1993 1.14 0.44 0.72 0.34 0.69 0.29 1994 1.12 0.51 0.89 0.28 0.69 0.61 1995 1.09 0.61 1.03 0.28 0.86 0.50

1996 1.13 0.45 0.58 0.21 0.01 0.62 1997 1.12 0.49 0.52 0.26 -0.16 0.83 1998 1.09 0.63 0.71 0.36 0 1.16 1999 1.08 0.65 0.47 0.46 0.72 1.36 2000 1.06

0.75 0.47 0.46 1.33 1.68 Source: Brazil Trade Policies to Improve Efficiency, Increase Growth and Reduce Poverty. Vol. IV. (The World Bank, 2002). Brazils inflows of FDI in services Billions of US$ 160 140 Services 120 Industry 100 Agriculture 80 60 40 20 0 1995 2000 Source: Brazil Trade Policies to Improve Efficiency, Increase Growth and Reduce Poverty. Vol. IV. (The World Bank, 2002).

Sales of Services by US Foreign Affiliates in 1996 Figure 2.9: U.S. Foreign Affiliates Sales of Services, 1998 Millions of US dollars 1600 1400 1200 Brazil Mexico 1000 800 600 400 200 0 Wholesale trade Finance (except depository institutions) Insurance Hotels and other lodging places Advertising

Equipment rental (except automotive and computers) Computer and data processing services Other business services Motion pictures, including television tape and film Management and public relations services Transportation Source: U.S. Bureau of Economic Analysis Source: Brazil Trade Policies to Improve Efficiency, Increase Growth and Reduce Poverty. Vol. IV. (The World Bank, 2002).