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Mode of supply
Chapter 5 i MSITS 2010
Mode 1: Cross-border
Mode 2: Consumption abroad
Mode 3: Commercial presence
Mode 4: Presence of natural persons
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Mode of supply - overview
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Mode 1:CROSS-BORDER SUPPLY
•
Cross-Border Supply is when a service is supplied from the territory of one
country into the territory of any other country. This is most often done using
electronic delivery (i.e. telephone, fax or internet)
•
Example: A user in country A receives services from abroad through its
telecommunications, information technology or postal infrastructure. Such
services may include consultancy or market research reports, tele-medical
advice, distance training, or architectural drawings.
•
Mode 1 contributes to 35% (WTO 2005) of services trade internationally.
•
Sectors where Mode 1 is important:
– Professional services
– Computer related services
– Telecommunication services
– Courier services
– Other Sectors conducive to consultancy services
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Mode 2: Consumption Abroad
•
Consumption Abroad refers to a service which is supplied when
consumers from one country make use of a service in another country.
•
Example: Nationals of country A have moved abroad to country B as
tourists, students or patients to consume the respective service.
•
Mode 2 contributes to 10% to 15% (WTO 2005) of services trade
internationally.
•
Sectors where mode 2 is important
– Tourism
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Mode 3: Commercial Presence
•
Commercial Presence covers services supplied by a services supplier of one
country by establishing a presence in the foreign market by opening an office in
the territory of any other country. This could be done by a company setting up a
subsidiary or branches in another country.
•
Example: The service is provided within country A by a locally-established
affiliate, subsidiary, or representative office of a foreign-owned and controlled
company, such as a bank, hotel group or construction company.
•
Mode 3 contributes to 50% (WTO 2005) of services trade internationally.
•
Sectors where Mode 3 is important:
–
–
–
–
Financial Services
Oil, Gas and Mining Services
Telecommunication Services
Environmental Services
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Mode 4: Temporary Movement of Natural Persons
•
Temporary movement of natural persons covers services supplied by a service
supplier of one country through the presence of natural persons in the territory
of any other countries. For example, this is often done through the movement of
company staff to other countries.
•
Example: An advance team of engineers preparing for an investment in another
country, a consultant or manager traveling from their country to another country
to supply their service.
•
Mode 4 contributes to 1% - 2% (WTO 2005) of services trade internationally.
•
Sectors where Mode 4 is important:
– Information Technology
– Professional services
– Other services where the movement of service supplying personnel is
crucial (i.e. after sales services)
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Simplified allocation of FATS and EBOPS data to modes of supply (1/2)
Manufactacturing serv. on inputs owned by others
Maintenance and repair services n.i.e.
Transport
Passenger
Freight
Post and courier services
Other
Serv. to domestic carriers in foreign ports (and vice-versa)
Other
FATS
(sales or
output) *
Mode
3
X
X
X
Balance of payments trade in
services
X
X
X
X
X
X
X
1
2
X
X
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Mode(s)
1 and 4 2 and 4 3 and 4
X
X
X
X
X
Travel
X
Goods
Local transport services
Accommodation services
Food-serving services
Other services
X
X
X
X
Construction
X
X
Goods
Services
X
X
Insurance and pension services
Financial services
Charges for the use of intellectual property n.i.e. **
X
X
X
X
X
X
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Simplified allocation of FATS and EBOPS data to
modes of supply (2/2)
Telecom., computer, and information services
Telecommunications services
Computer services
Information services
Other business services
Research and development services
Professional and management consulting services
Technical, trade-related and other business services
Architectural, engineering, scientific, other technical serv.
Waste treatment -depollution, agri. and mining services
o Waste treatment and de-pollution
o Services incidental to agriculture, forestry and fishing
o Serv. incidental to mining, and oil and gas extraction
Operational leasing services
Trade-related services
Other business services, n.i.e.
Personal, cultural and recreational services
Government goods and services n.i.e.
FATS
(sales or
output)
Mode
3
X
X
Balance of payments trade in
services
1
4
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Government goods n.i.e., Credits and debits
Government services n.i.e., Credits
Government services n.i.e., Debits
Commercial services purchased in host economies
o Government units in diplomatic and similar enclaves
o Personnel from home economy and dependants
Other commercial serv. n.i.e purchased by government
Non-commercial services acquired by government
Distribution (wholesale, retail trade) services
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Mode(s)
1 and 4 2 and 4 3 and 4
X
X
X
X
X
X
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Norwegian example
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Mode of supply – why & the way forward 1/2
•
Why is MOS important
– National authorities, trade associations,
– WTO negotiations
– Other
•
Is it really that important?
•
How much effort should be laid down?
•
Is it relevant for all countries, all economies?
•
Sectors shifting mode?
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Mode of supply – why & the way forward 2/2
• How to get updated information?
– Put some supplementary questions to all respondents
 in each survey (quarterly surveys in Norway)?
 in the survey for Q4 each year
 Every fifth year
– Put some supplementary questions to X most significant
respondents
 in each survey (quarterly surveys in Norway)
 in the Q4-survey each year
 Every fifth year
– Other methods?
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