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A Canadian Perspective on Services Trade and Related Opportunities for Indonesia

Nadia Bourély Counsellor and Senior Trade Commissioner Embassy of Canada to Indonesia

Pemerintah Kanada – Divisi Perdagangan

Overview

• Canada’s Services Sector
• Canada’s Approach to Trade in Services

Negotiations

• Role of the Canadian Trade Commissioner Service
• Opportunities for Indonesia in the Services Sector

Pemerintah Kanada Divisi Perdagangan

Canada’s Services Sector

• Key figures:

– 70% of Canada’s GDP – Employing 3 out of 4 working Canadians – Worth $95.2 billion a year – accounts for 16.8 percent of Canada’s total trade with great potential for growth.

• Most of Canada’s services providers are SMEs
• Contributes to investments, competition, and innovation
• Services employ more well-educated knowledge-workers than any other sectors

and have some of the best paid jobs in Canada (i.e. R&D, professional services).

• Proven expertise in knowledge-intensive, advanced services in such areas as

engineering, architecture, information management, environmental protection and monitoring, mining and energy development.

Pemerintah Kanada Divisi Perdagangan

Services are driving Canada’s growth…

0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 $ Trillions Service-producing industries Goods-producing industries

Note: Source: Statistics Canada, CANSIM, Table 379-0031, Gross domestic product (GDP) at basic prices All industries: Δ 21% Goods: Δ 10% Services: Δ 27% 30% 70%

The Importance of Services

• Services are playing a larger role in Canada’s economy as well

as in international trade, especially through the progression of global value chains.

• Services and imports have a key role as intermediate inputs.

– E.g. Consulting engineering on a large infrastructure project; – After sales service for a software product

• Importance of partnering with other innovative countries to

access foreign knowledge, technologies and expertise in creating marketable products.

Pemerintah Kanada Divisi Perdagangan

Trade in Services Negotiations

there to negotiate?

• Services trade barriers tend to be

domestic regulations rather than border measures

• Many are within provincial jurisdiction

(including self-regulating professions)

• Most were designed for non-trade

public policy goals

• Some are designed with the purpose
• f discriminating
• The type and impact of barriers differs

from sector to sector

• Limitations on the right to invest or establish a

business e.g. FDI restrictions; Joint Venture requirements; citizenship or residency requirements

• Limitations on number of services providers

allowed; number of natural persons employed

• Lack of transparency on rules/regulations
• Discriminatory licensing requirements
• Border barriers (i.e. labour market tests

Examples of services regulations that arise in services negotiations

Canada’s CBTS Model

• Greater and more predictable market access

– new sectoral access, beyond existing GATS obligations, in areas of interest, e.g. professional services (e.g. commercial education and training, research and development), environmental services and business services – level playing field for Canadian service suppliers against key competitors

• Increased transparency and predictability of domestic regulatory regime

– “negative list” approach for listing reservations – ‘’standstill’’ mechanism ensures that neither Party will impose future measures more restrictive than those in place when FTA came into force – ’’ratchet’’ mechanism binds future autonomous liberalization

• MFN clause ensures that any additional benefits granted by a partner to its future

FTA partners will also be extended to Canada.

• Non-binding mutual recognition agreement framework
• Policy Space/Exclusions for policies based on priorities

Canada’s CBTS Model

Modalities for listing commitments

Positive list:

• Parties “opt in” to commitments
• Does not apply to uncommitted sectors
• Applies to sectors and not specific measures
• No ratchet or standstill unless negotiated

Negative list:

• Applies to measures not sectors (i.e., significantly broader)
• Parties “opt out” of commitments
• Applies to all sectors not specifically reserved against in Annex II
• Ratchet and Standstill mechanisms
• Establishes a level playing field in perpetuity for services trade

Canada’s Objectives in Trade in Services Negotiations

• For Canadian exporters and investors in services

sectors

– Obtain increased market access in key sectors – Ensure regulatory transparency and predictability

• Maintain full policy flexibility in key services areas:

– No request/offer in health; public education; other social services; culture

• Address, as much as feasible, the services interests

and concerns of our trading partners

Pemerintah Kanada Divisi Perdagangan

Canada’s Trade Commissioner Service

Pemerintah Kanada Divisi Perdagangan

The TCS promotes Canada’s economic interests in the global marketplace.

• Foreign-market access
• Trade leads
• Exports
• Business contacts
• Events
• Technology transfer
• Licensing agreements
• Joint-venture development
• Investment in Canada
• R&D partnerships

The TCS facilitates:

Canada’s TCS Team in Jakarta

• TCS supports Canadian companies abroad

– Key Services include: Preparation, Market Intelligence, Key Contacts,

and Problem Solving

• TCS assists Canadian companies of all sizes, though

primarily we work with SMEs.

• Priority Sectors in Indonesia include

– Renewable Energy, Aerospace and Defence, Education, Extractives Sector, Water and Wastewater, Building Products, ICT, Infrastructure, Agriculture

• Canada has strengths in both products and services

segments in these sectors

Pemerintah Kanada Divisi Perdagangan

Examples of TCS Work

Education:

• Canada’s technical training strengths that match industry growth include:

engineering technology, construction trades (eg electricians, construction management, concrete), and renewable energy.

• TCS supports Canadian technical and trades training institutions looking to

partner with local partners.

Construction/Building Products:

• Canada has expertise in engineering and design of eco-friendly,

sustainable building design practices, products and systems. Examples include energy efficient lighting systems; design for weather extremes; renewable energy generation.

• TCS works with Indonesian firms seeking this skill set to match with

Canadian engineering/design firms.

Pemerintah Kanada Divisi Perdagangan

Bilateral Trade in Services……..

Pemerintah Kanada Divisi Perdagangan

• Canada-Indonesia bilateral trade in services:

– valued at Rp. 4010 Million (CAD 411 Million 2015) – Bilateral trade in goods CAD 3.5 Billion in 2015)

• Top 3 sectors for bilateral services trade:

– Travel Services – Commercial Services – Transportation and Government Services

………….A Growing Trend

Pemerintah Kanada Divisi Perdagangan

in Millions of CAD Country Category 2011 2012 2013 2014 2015 Indonesia Services exports, total 204 247 244 236 251 Indonesia Travel 97 102 121 128 n.a. Indonesia Commercial services 71 106 86 71 n.a. Indonesia Transportation and government services 36 39 37 37 n.a. Indonesia Services imports, total 108 122 112 152 160 Indonesia Travel 34 35 35 40 n.a. Indonesia Commercial services 10 23 12 45 n.a. Indonesia Transportation and government services 64 64 65 67 n.a.

From 2011 to 2015, growth in both services exports and imports .

Opportunities for Indonesia

• Areas of complementarity include extractives,

infrastructure, clean energy, maritime security and education

• Trade in Services is mutually beneficial
• Examples of Canadian companies providing

services in Indonesia:

– Insurance: Manulife, Sun Life – Education: LaSalle College – Engineering: Hatfield

Pemerintah Kanada Divisi Perdagangan

Looking Ahead

• Strong services sector key to develop value-added

domestic industry

• Indonesia’s ambitious trade agenda and ongoing

economic reforms presents great opportunities

– Mobilize political will and inter-departmental coordination – Consultations with stakeholders: private sector, civil society – FTAs as a tool to trigger domestic institutional and regulatory reforms and develop internationally competitive businesses and attract foreign investment

• Participation in global commerce deepens ties,

ensures stability, raises standards of living and contributes to sustainable economic growth

Pemerintah Kanada Divisi Perdagangan

The Canadian Trade Commissioner Service Le Service des délégués commerciaux du Canada Pemerintah Kanada - Divisi Perdagangan

Embassy of Canada (Kedutaan Besar Kanada) Trade Commissioner Service (Divisi Perdagangan) WTC I, 6th Floor

• Jl. Jend. Sudirman Kav 29-31

Jakarta Email: jkrta-td@international.gc.ca www.indonesia.gc.ca www.tradecommissioner.gc.ca