RESTRICTED  WORLD TRADE  
ORGANIZATION  S/C/W/314 
7 April 2010 
 (10-1811) 
Council for Trade in Services   
  
 
MODE 3 – COMMERCIAL PRESENCE 
 
Background Note by the Secretariat
1 
  
1. This Note has been prepared at the request of  the Council for Trade in Services, with a view 
to stimulating discussions in the Council and providing background information on the supply of 
services through commercial presence (mode 3).  The present Note concentrates on issues considered 
to be most relevant to the GATS.  It is not  intended to provide a comprehensive account of issues in 
relation to this mode of supply since developments with respect to mode 3, in particular economic, 
trade and regulatory developments, are already la rgely covered in the Background Notes of the 
Secretariat on specific services sectors.  This note will therefore aim not to duplicate treatment in 
sectoral Notes and puts greater emphasis on some horizontal issues.
2   
I. INTRODUCTION  
2. Mode 3 is one of the four modes of supply through which services may be supplied under the 
GATS.  Mode 3 occurs when a service supplier of  one WTO Member supplies a service through some 
form of commercial presence in the territory of another WTO Member. 
3. Establishing a commercial presence in a foreign territory is the primary way in which many 
services are traded internationally.  Mode 3 is be lieved to account for approximately 55-60 per cent of 
all services trade.3  Further, over 60 per cent of the global stock of foreign direct investment (FDI) 
now relates to the tertiary sector.  Proximity and di rect interaction are often preferred in many services 
sectors, even when cross-border supply is technica lly feasible.  A presence in the market often makes 
it easier to respond to consumer preferences, whic h are shaped by factors like language or the 
regulatory environment.  Beyond market proximity, a range of other motivations cause service suppliers to expand their operati ons beyond their national basis, for example the desire to:  compete 
on the same footing as enterprises established within  the relevant territory;  take advantage of 
opportunities in terms of acquisition of, or part nerships with, established enterprises;  seize 
opportunities presented by the sale of government assets or investment policy reforms;  build or 
develop one's own network infrastructure abroad; achieve benefits from ge ographic diversification 
and/or increased specialization;  avoid trade barriers that exist in other modes of supply;  reduce costs 
of labour, transportation or other inputs;  or dr aw on the host economy's skills, labour costs or 
technology with a view to setting up a base to export services to foreign markets (or sometimes to the 
supplier's home market).   
                                                     
 
1 This document has been prepared under the Secret ariat's own responsibility and without prejudice to 
the positions of Members and to their rights and obligations under the WTO. 
2 The 1998 series of Secretariat papers did not include a Background Note  specifically devoted to 
mode 3, on which the current one could build upon.  Nevertheless, this Note updates some mode-3-related 
information contained in a previous Secretariat Note on the Structure of Commitments for Modes 1, 2 and 3 (S/C/W/99, dated 3 March 1999, and Corr.1). 
3 Magdeleine and Maurer (2008), p. 18, Table 5. S/C/W/314 
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  4. The supply of services through commercial presence has benefited from important 
liberalization initiatives across the world over the last 20 years.  However, various trade restrictions 
are still applied to mode 3, despite  its economic importance.  Invest ment restrictions, for example, 
tend to be much more prevalent in services sectors th an in other industries, especially manufacturing.  
Also, GATS commitments under this mode are, overall, limited, including because they do not reflect 
the liberalization that has occurred since the Uruguay Round and the extended negotiations on 
telecommunications and financial services.
4  
5. This Note is structured as follows.  Part II takes a closer look at the scope of mode 3 as 
defined in Articles I and XXVIII of the GATS.  Part III presents relevant statistics in relation to the 
supply of services through commercial presence and hi ghlights key trends in trade and investment 
flows.  Part IV then discusses economic implicat ions, as well as trends, in relation to mode 3 
liberalization.  Section V provides an overview of the treatment of mode 3 in schedules of 
commitments, including through an overview of existing horizontal and sector-specific limitations.  
Relevant MFN exemptions are also analysed.5    
II. SCOPE OF MODE 3 UNDER THE GATS 
6. GATS Article I:2(c) defines mode 3 trade as "the supply of a service by a service supplier of 
one [WTO] Member, through commercial presence in th e territory of any other [WTO] Member".  To 
understand the scope of mode 3, one also needs to  look at Article XXVIII of the Agreement, which 
provides definitions for key terms used.   
7. In Article XXVIII, "commercial presence" is defined as "any type of business or professional 
establishment  within the territory of a Member for the purpose of supplying a service, including 
through: (i) the constitution, acquisition or maintenan ce of a juridical person, or (ii) the creation or 
maintenance of a branch or a representative office wi thin the territory of a Member for the purpose of 
supplying a service" (GATS Article XXVIII(d), emphasis added ).   
8. First, it can be observed that the GATS does not define further what constitutes a "business or 
professional establishment", and that such terms ar e not necessarily limited to the examples listed 
since these are preceded by the terms "includi ng through", which indicates that the list is not 
exhaustive.  The term "juridical person", however, is further defined in Article XXVIII, again through 
the use of a non exhaustive list: it "means any legal en tity duly constituted or otherwise organized 
under applicable law, whether for pr ofit or otherwise, and whether privately-owned or governmentally-
owned, including any corporation, trust, partnership, joint venture, sole propriet orship or association".  
The definition of commercial presence also covers branches and representative offices, which are not 
juridical persons.  Since in the GATS a service supplie r is defined as a juridica l or natural person (see 
Article XXVIII(g) and (h)), a footnote to Article XXVIII specifies, as regards supply under mode 3, that 
forms of commercial presence that are not juridical persons (e.g., branches and representative offices) shall benefit from the treatment accorded to service suppliers under the Agreement (see footnote 12 to 
the Agreement).
6   
                                                      
4 In a number of cases, however, ongoing liberaliza tion projects in basic telecommunications had been 
reflected in "phase-in commitments" inscribed in the schedules resulting from the extended negotiations in this 
sector.  They were concluded in February 2007 (Fourth Protocol to the GATS).   
5 This Note does not address Members' offers or proposals in the ongoing negotiations nor 
commitments undertaken in preferential trade agreements .  Common  negotiating objectives on mode 3 are 
detailed in paragraph 1 of Annex C to the Hong Kong Ministerial Declaration.   
6 The GATS does not impose local incorporation or any specific degree of permanence for an entity to 
qualify as a "commercial presence".  However, certain WTO Members have chosen to restrict the types of 
commercial presence covered by their commitments, or the conditions under which they may operate in their 
  S/C/W/314 
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  9. Second, the definition of commercial presence ma kes clear that mode 3 also covers what is 
often referred to as the "pre-establishment" phas e, in reference to the process of establishing a 
commercial presence.  Indeed, Article XXVIII(d) includes a reference to the constitution  and acquisition  
of a juridical person and to the creation  of a branch or representative office.  The GATS makes no 
formal distinction between pre-establishment a nd post-establishment.  Such provisions as most-
favoured-nation treatment (Article II), market acces s (Article XVI), and nati onal treatment (Article 
XVII) cover both pre- and post-establishment aspects of mode 3.  The Panel report on China - 
Publications and Audiovisual Products  found that mode 3 under the GA TS covers "entities that have 
established a commercial presence in the host Member and/or entities that seek to establish  in the host 
Member" (emphasis added).7   
10. A commercial presence may be set up as a new establishment or so-called "greenfield 
investment", e.g. a foreign bank establishing a new, w holly-owned branch or subsidiary that competes 
with domestic firms.  Alternatively, a commercia l presence may result from the acquisition, in whole 
or in part, of an already existing domestic firm, in which the fore ign natural or juridical person 
acquires a controlling interest or majority ow nership.  The GATS, however, makes no formal 
distinction between these two situations.    
11. Third, another important component of the de finition of mode 3 under the GATS relates to 
what may be called the rule of origin.  Article  I:2(c) refers to the supply of a service by a supplier of 
one Member  through commercial presence in the territory  of any other Member  (emphasis added).   
12. In order to determine the foreign nature of the service supplier when the service is provided 
through commercial presence, and thus ensure that  its activities are covered by the Agreement, the 
GATS requires that the commercial presence be owned or  controlled by (natural or juridical) persons 
of another Member.  The GATS offers no direct  definition of "service supplier from another 
Member", but Article XXVIII includes a definition of "juridical person of another Member".  In order 
to qualify as a "juridical person of another Memb er", the commercial presence must be owned or 
controlled either by (i) natural persons  of that other Member, i.e., nati onals or permanent residents of 
that other Member;  or by (ii) juridical persons  of that other Member, i.e., companies constituted or 
otherwise organised under the law of that othe r Member, and engaged in  substantive business 
operations in the territory of that Member or any other WTO Member.  Ownership is relatively easy to establish: a juridical person is "owned" by person s of a Member if more than 50 per cent of the 
equity interest in it is beneficially owned by pers ons of that Member (Article XXVIII(n)(i)).  Control 
is not defined by means of a precise equity share;   it is a relative concept, which depends on the 
overall shareholding structure of a given company.  A juridical person is "controlled" by persons of a 
Member if such persons have the power to name a majority of its directors or otherwise to legally 
direct its actions (Article XXVIII(n)(ii)).
8   
13. As a consequence, a commercial presence in wh ich foreign participation fails to reach these 
levels of ownership or control, ca nnot be considered as a "service supplier of any other Member", and 
treatment affecting it would thus not be captured by the GATS under mode 3.9  That said, naturally, 
                                                                                                                                                                     
territory, by inscribing a corresponding mode-3 market ac cess limitation in the horizont al or sector-specific part 
of their schedules.  See Part V of this Note. 
7 Panel Report on China – Publications and Audiovisual Products,  WT/DS363/R, para. 7.974. 
8 As regards forms of commercial presence other than juridical persons, see footnote 12 of the 
Agreement.    
9 WTO jurisprudence has addressed the issue of the origin of a service supplier under mode 3 of the 
GATS.  See in particular: Panel Report on Canada – Autos , WT/DS139/R, WT/DS142/R, adopted 19 June 2000, 
as modified by Appellate Body Report WT/DS139/AB/R , WT/DS142/AB/R, para. 10.257 to 10.259;  Panel Report 
on EC – Bananas III (USA) , WT/DS27/R/USA, footnote 492, para. 7.318;  Panel Report on China - Publications 
and Audiovisual Products,  WT/DS363/R, paras. 7.1282 and 7.1393.    S/C/W/314 
Page 4  
 
  measures by a Member that would prevent natura l or juridical person of another Member from 
achieving ownership or control of a commercial presence would be subject to the GATS.  
III. STATISTICS IN RELATION TO THE SUPPLY OF SERVICES THROUGH MODE 3 
AND MAIN TRENDS 
14. More than one-half of world trade in services is estimated to take place through commercial 
presence (Table 1).  In recent years, developments  in computer, communications, and transportation 
technologies have in a number of instances reduced the need for a supplier to establish a commercial 
presence in foreign markets, in particular by perm itting services to be provided cross-border (mode 1).  
Still, in many service sectors, the more commercia lly attractive way of serving foreign markets is by 
setting up a business or professional establishment under mode 3.  
 
Table 1.  Statistical approximat ion of modes of supply (percentage) 
Mode 1 Cross-border supply  
 25 – 30  
Mode 2 Consumption abroad  10 – 15  
Mode 3 Commercial presence  55 – 60 
 
Mode 4 Presence of natural persons  less than 5 
 
            Source :  Magdeleine and Maurer (2008) 
15. This Section highlights some trends in mode 3 based on foreign affiliates and foreign direct 
investment statistics.  Foreign affiliates statistic s are regarded as providing the closest and best 
available approximation for mode 3.  However, they currently remain very sparse. 
A. FOREIGN AFFILIATES STATISTICS (FATS) 
16. For statistical purposes, "commercial presence" ma inly falls within the purview of Foreign 
Affiliates Statistics (FATS).  FATS describe the act ivities of an economy's affiliates based abroad 
(outward FATS) as well as the contribution made by  foreign affiliates resident in that economy 
(inward FATS).  From a GATS perspective, the mo st pertinent information collected through FATS 
data is that on output or sales.10  These are conventionally regarded as the closest and best available 
proxy for mode 3, despite some differences in definitions.11   
17. As FATS are a new statistical domain, data ava ilability is still low – data is mainly compiled 
by developed economies and only in recent years – and coverage of service activities is not always 
complete.  To date, 16 Members report outward FA TS (mainly sales and employment data), while 35 
Members publish inward FATS, covering a broader ra nge of variables.  Furthermore, for those 
                                                      
10 Generally, output is identical to the value of sales.   However, for certain ac tivities, such as wholesale 
trade, retailing, and financial intermediation, important differences exist between both measures.  For example, 
although for wholesale trade and retailing the sale is that of goods, the output is defined as a service, equal to the trade margins realized on goods purchased for resale.  See: UN et al. (2010).  
11 For example, in the context of FATS, affiliates that are considered as foreign-controlled are those 
where a foreign investor has majority ownership of the vo ting power.  In addition, due to current data collection 
constraints, FATS capture total output/sales of companie s primarily engaged in services activities, meaning that 
sales numbers may capture these compan ies' sales of goods wher e these correspond to a secondary activity.     S/C/W/314 
 Page 5 
 
 
  Members that report, the comprehensiveness of the data is still limited in terms of sectoral 
disaggregation or number of years available.12   
18. Tables 2 and 3 provide total outward and inward  FATS data for those Members that do report 
it.  Despite limitations, the data show that sales through foreign affiliates have experienced strong 
growth during the most recently available years.  Average annual growth of inward FATS between 
2003 and 2006 reached 15 per cent.13  For example, Japan's inwa rd FATS almost doubled between 
2003 and 2006.   
Table 2:  Sales by foreign affiliates of resident comp anies - affiliates located abroad primarily engaged in 
services  activities (o utward FATS), 2003-2006 
(US$ billion and percentage) 
  Value Annual percentage change 
  2003 2004 2005 2006 2000-03 2004 2005 2006 
Australia a, b  24.6 ... ... ... ... ... ... ... 
Austria b ... ... ... 29.6 ... ... ... ... 
Belgium b,  c 31.7 41.8 47.8 ... 31 32 14 ... 
Canada d 70.6 74.8 81.8 98.0 -6 6 9 20 
Czech Rep e 0.3 0.4 1.0 1.3 -3 58 139 28 
Finland f ... 13.0 12.4 18.7 ... ... -4 51 
France b, c, g 145.6 ... ... ... -12 ... ... ... 
Germany ... ... 400.1 429.7 ... ... ... 7 
Greece ... ... 3.5 ... ... ... ... ... 
Hungary  f ... 0.4 ... ... ... ... ... ... 
Israel f  ... 2.6 2.9 ... ... ... 14 ... 
Italy ... ... 115.3 125.3 ... ... ... 9 
Japan  40.3 44.5 53.5 57.3 ... 10 20 7 
Latvia b, h  ... ... ... 0.2 ... ... ... ... 
Portugal b 5.6 7.1 9.9 12.8 2 27 40 29 
Slovak Rep. f ... ... 0.0 0.0 ... ... ... 17 
United States 521.8 583.5 668.7 761.5 6 12 15 14 
Note: Excluding wholesale and retail trade and repair activities. Data  for economies shown in italics exclude most or a large 
part of financial intermediation activities. 
a  Refers to fiscal year 2002-03 (July- June). Community, social and personal (ex cept health), hotels and restaurants and 
communications services are not covered;  b Only includes affiliates directly owned.;  c Classified under services according to 
activity of parent company;  d Branches are excluded;  e Only the first level of indi rect ownership is covered;  f Community, 
social and personal services are not covered;  g Refers to 2002 value and annual percentage change for 2000-02;  h Only 
covers extra-EU (27) affiliates. 
Given the recent development of this stat istical framework, comparability and covera ge of data may not always be complete. 
Source :  WTO (2009). 
                                                      
12 Latest available statistics generally date back to 2006 or, at best, 2007.  For comparability purposes, 
the data presented below refer to 2006. 
13 On the basis of 14 economies reporting data over this period.   S/C/W/314 
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  Table 3:  Sales by affiliates of foreign companies - resident affiliates primarily engaged in services 
activities  (inward FATS), 2003-2006 
(US$ billion and percentage) 
  Value Annual percentage change 
  2003 2004 2005 2006 2000-03 2004 2005 2006 
Austria  a  24.9 ... ... ... ... ... ... ... 
Belgium 25.0 28.2 28.9 ... ... 12 3 ... 
Bulgaria  b ... 2.5 2.9 ... ... ... 19 ... 
Cyprus  b, c ... 0.9 0.9 1.1 ... ... 8 14 
Czech Republic 18.6 23.0  28.5 30.6 40 23 24 7 
Denmark  b, d, e 4.9 ... ... ... 29 ... ... ... 
Estonia ... 1.6 2.1 2.4 ... ... 26 18 
Finland 11.8 13.6 13.3 ... 35 15 -2 ... 
France 102.6 128.8 148.0 161.4 ... 26 15 9 
Germany ... ... 187.8 199.6 ... ... ... 6 
Greece  d 4.5 ... ... ... ... ... ... ... 
Hong Kong, China  f ... 83.1 91.6 114.0 ... ... 10 24 
Hungary 9.5 11.8 12.9 17.5 ... 24 10 36 
Ireland 16.6 18.7 26.7 33.2 ... 12 43 24 
Israel  b  4.0 4.2 5.9 ... ... 5 41 ... 
Italy  60.4 71.9 77.8 ... ... 19 8 ... 
Japan  g, h 14.8 20.8 33.3  27.1 ... 40 60 -19 
Latvia  b 0.9 1.3 1.8 2.3 ... 45 35 32 
Lithuania  b ... 1.9 2.3 ... ... ... 23 ... 
Netherlands  a, b 33.2 ... 55.9 ... ... ... ... ... 
New Zealand  i 11.9 ... ... ... ... ... ... ... 
Norway  b  17.2 18.6 24.0 26.4 ... 8 29 10 
Poland 6.9 9.0 11.3 19.3 ... 31 25 71 
Portugal  b 10.4 7.5 10.0 13.0 ... -28 33 30 
Romania  b 2.6 5.4 ... 10.1 ... 108 ... ... 
Slovak Republic  b ... 4.8 6.4 6.6 ... ... 34 2 
Slovenia 0.8 1.2 ... ... ... 55 ... ... 
Spain  a, b 40.6 52.3 52.5 69.3 ... 29 0 32 
Sweden 36.4 43.5 46.0 52.9 25 19 6 15 
Trinidad and Tobago  d 0.2 ... ... ... 29 ... ... ... 
United Kingdom 174.8 222. 1 253.3 283. 6 ... 27 14 12 
United States 416.0 425.7 460.5 563.5 1 2 8 22 
Note: Excluding wholesale and retail trade as well as repair activities. Data for ec onomies shown in italics exclude all or a 
large part of financial intermediation activities. 
a  Only direct control;  b  Some or all community, social a nd personal services activities ar e not covered;  c Hotels and 
restaurants activities are not covered;  d Refers to 2002 valu e and annual percentage change for 2000-02;  e Transport, 
storage and communications activ ities are not covered;  f  Includes other income;  g  No estimation for non-response;  
h  Real estate activities are also not covered;  i  Pre liminary results based on 53 per cent of foreign affiliates. 
Given the recent development of this stat istical framework, comparability and covera ge of data may not always be complete. 
Source :  WTO (2009). 
 
 
19. The data also highlight the importance of servi ces sales of foreign affiliates for a number of 
reporting economies.  In the case of Germany, outw ard FATS in 2006 (US$430 billion) was equal to 
about 15 per cent of GDP.  Further, as illustrated in Figures 1 and 2, for reporting economies, the 
value of outward and inward FA TS often tends to exceed that of commercial services exports and  S/C/W/314 
 Page 7 
 
 
  imports.14  For the United States, for example, sales of  affiliates abroad (outward FATS) was worth 
almost 80 per cent more than its exports of comme rcial services under the balance of payment (BOP) 
framework.  Third, systematic data on sectoral di stribution of inward or outward sales of foreign 
affiliates are scarce, but available information hi ghlights, among other things, the importance of 
financial services, which, for example, represent about  40 and 50 per cent of foreign affiliates' sales of 
the United States and Germany, respectively (see Tables A-1 to A-4 in Annex).   
Figure 1 - Comparison of outward sales of foreign a ffiliates and exports of commercial services (BOP), 
selected economies (2006).   
(US$ billion) 
0100200300400500600700800
United States
Germany
France (2002)
Italy
Canada
Japan
Belgium  (2005)
Austria
Finland
Portugal
Greece (2005)
Israel (2005)Outward FATS BOP services exports
 
Note:  Caution should be exercised when comparing FATS  and BOP trade in services data given definitional 
differences.  In particular, BOP statis tics are broken by product, whereas FA TS provide data on services activities 
(i.e. sales of foreign affiliates primarily engaged in services activities). 
Source :  WTO Secretariat  
 
  
                                                     
 
14 Balance of payment statistics on co mmercial services are a proxy fo r the supply of services under 
modes 1, 2 and 4.   In a few instances, BOP statistics could cover mode 3 trade as transactions involving foreign 
entities established on a short-term basis (less than on e year), which would in principle be recorded under 
exports/imports of services. S/C/W/314 
Page 8  
 
  Figure 2 - Comparison of inward sales of foreign a ffiliates and imports of co mmercial services (BOP), 
selected economies (2006)  
(US$ billion) 
 0100200300400500600
United States
United KingdomGermanyFrance
Hong Kong, China
Italy (2005)Spain
Netherlands (2005) Sweden
Ireland
Czech Republic
Belgium (2005) Japan
Norway PolandHungary
Finland (2005)
Israel  (2005)Inward FATS BOP services imports
 
 Note:  See Figure 1.    
Source :  WTO Secretariat 
 
 
20. While the only developing economies that report FA TS data are Israel (inward and outward),  
Hong Kong, China (inward only) and India (outward for computer and IT-enabled services only), a partial picture of services supplied through mode 3 into and by developing Members can be gleaned 
from "mirror" FATS that are collected by certain developed economies.  For example, in 2006, the 
most recent year for which data are available, 6 per cent of the total turnover of foreign affiliates 
engaged in services activities in Germany originated from developing economies.  The relevant shares 
were 4 per cent in France in 2006, 9 per cent in the United Kingdom in 2005, and 18 per cent in Japan 
in 2004.
15    
21. Although the United States compiles similar sta tistics on total turnover, it also publishes 
separately a set of statistics on total services supplie d by foreign affiliates (i .e. sales of services 
notwithstanding whether the affiliates are primarily involved or not in services activities), which is 
conceptually more in line with GATS information need s.  These data show that, in 2007, sales of such 
firms from developing economies (excluding develo ping Europe) in the United States reached US$55 
billion, accounting for 8 per cent of total services su pplied through foreign affiliates, compared to 6 
per cent in 2004.  Conversely, US majority-owned  affiliates established in  developing Members 
(excluding developing Europe) s upplied US$248 billion worth of services in 2007.  These supplies 
increased by 20 per cent on average per year between 2004 and 2007.  Supply through US affiliates in 
developing economies accounted for 24 per cent of to tal services supplied by affiliates of US firms 
abroad, compared with 21 per cent just three years pr ior.  About one-half of these supplies took place 
                                                      
15 WTO (2010), pp. 21-23.  S/C/W/314 
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  through affiliates in developing Asia, 43 per cent in  Latin America and the Caribbean, 5 per cent in 
Africa, and 3 per cent in the Middle East.16 
B. FOREIGN DIRECT INVESTMENT (FDI) 
22. Despite their limitations, statistics on foreign direct investment (FDI) are a useful complement 
for analysing commercial presence.  FDI statistic s do not measure sales or operations of foreign 
affiliates, but transactions between direct investor s in one economy and their enterprises resident in 
another economy (flows) as well as investment positi ons (measuring the value of the stock of direct 
investment).17  Nevertheless, FDI data can permit to high light certain trends, including the increasing 
extent to which certain economies are relying on commercial presence to supply services internationally.   
23. A key trend in recent years has been the surge of FDI in services.  Worldwide, the services 
sector is now by far the largest recipient of FD I, accounting in 2007 for US$9539 billion, or 61 per 
cent of total world inward FDI stock, compared to 47 per cent in 1990 (see Table 4).  Nominal growth 
rates of services FDI have been significantly highe r than for FDI in the manufacturing and primary 
sectors, whose shares of total FDI have  declined over the period reviewed.
18  
24. The expansion, in nominal value terms, of services-related inward and outward FDI between 
1990 and 2007 was even more pronounced for develo ping than for developed economies.  The greater 
relative importance of services within total FDI also  holds true for developing economies: services 
accounted for 65 per cent of developing economies' inward FDI stock and for 86 per cent of their 
outward FDI in 2007 (compared with, respectiv ely, 44 per cent and 48 per cent in 1990).19  Overall, 
developing economies' foreign direct investment (inward plus outward) in  services sectors were 
multiplied by more than 20 in the last 15 years.20  
25. The share of developing economies in the global inward services FDI stock has also 
increased, from 18 per cent in 1990 to 26 per cent in 200 7.  Their share of world inward FDI in the 
primary and manufacturing sectors was lower, at 21 pe r cent in 2007.  For example, currently some 61 
per cent of India's annual FDI inflows go into the services sector, while in 2000 services were 
attracting just 17 per cent of FDI inflows.21   
 
                                                      
16 WTO (2010), pp. 21-23.  
17 FDI stock does not measure the value of the servi ces supplied, although the value of the investment 
can obviously have a link with turnover.  Another diff erence with the GATS defin ition of commercial presence 
is that FDI is defined through a threshold of at least 10 per cent ownership of the voting power.  In the GATS, the juridical person of another Member in the case of supply through commercial pres ence needs to be majority-
owned or controlled by natural or juridical persons of that other Member.  Control can be achieved with less 
than majority ownership in certain circ umstances.   See UN et al. (2010).   
18 The financial crisis has had a negative impact on global FDI flows, including services FDI flows, 
although comparable data are not yet av ailable to assess the impact of the cr isis on the sectoral distribution of 
FDI.  See UNCTAD (2010).    
19 Naturally, these percentages can vary significantly from one economy to the other.   
20 WTO (2010), p. 4. 
21 Satyanand and Raghavendran (2010).  The growth of services FDI was most likely linked to steps 
taken in the last decade to relax in vestment restrictions in  a number of services sectors in India.    
  S/C/W/314 
Page 10  Table 4:  Estimated world inward an d outward FDI stock, by sector (2007)  
 (Value in US$ billion)  
 Developed Economies Developing Economies South East-Europe and CIS World 
Sector Value Share a Annual 
growth 
1990-2007 Value Sharea Annual 
growth 
1990-2007 Value Sharea Annual 
growth 
1990-2007 Value Sharea 
 
INWARD FDI STOCK 
Primary 863.7 7.5% 10.8% 240.8 6.3% 13% 68 22.9% - 1172.4 7.5% 
Manufacturing 3251.6 28.1% 10% 916.8 24% 10.9% 77.4 26% - 4245.8 27% 
Electricity, gas and water 271.5 2.3% 23.9% 71 1.9% 20.4% 2.4 0.8% 
- 344.9 2.2% 
Construction 90.2 0.8% 10.4% 40.8 1.1% 12.5% 4.9 1.6% - 135.8 0.9% 
Services 6938.8 59.9% 13.9% 2474.5 64.8% 17.4% 126.4 42.5% - 9539.7 60.8% 
Unspecified 167.3 1.4%  72.6 1.9%  18.1 6.1% - 258 1.6% 
Total 11,583.2 100% 12.4% 3816.5 100% 14.9% 297.2 100%  15,696.9 100% 
 
OUTWARD FDI STOCK 
Primary 1110.5 7.8% 12.3% 45.2 2.4% 18.3% 5.5 26.9% - 1161.2 7.2% 
Manufacturing 4052 28.4% 10.3% 163.9 8.6% 20.2% 1.6 7.9% - 4217.4 26% 
Electricity, gas and water 201.4 1.4% 19.8% 11.3 0.6% 30.2% 0.5 2.5% 
- 213.2 1.3% 
Construction 55.9 0.4% 7% 9.5 0.5% - - - - 64.8 0.4% 
Services 8576.4 60.1% 14.9% 1645.6 86.2% 35.2% 11.8 57.7% - 10,233.8 63.1% 
Unspecified 281.6 2%  34.2 1.8%  1 5% - 316.8 2% 
Total 14,277.8 100% 13.1% 1909.6 100% 30.6% 20.4 100%  16,207.2 100% 
 Note:      a  Sector's share of total inward or outward FDI stock.   
  The sectors of construction and electricity, gas and water are not included within services sectors because statistics collec ted under these categories are considered to be more 
related overall to goods production than to services.  See:  UN et al. (2010), p. 7 (footnote 14).  See UNCTAD (2009), pp. 218- 219 for additional details on data  estimations.  In particular, 
economies of South East Europe and CIS were not included within developing economies so as to permit comparisons over time.   
 Source :  Computed by the Secretariat on the ba sis of data in UNCTAD (2009), pp. 218-219.  
 
 
  S/C/W/314 
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  26. Developing economies' share of the global stock of outward FDI in services jumped from 1 
per cent in 1990 to 16 per cent in 2007.  In contrast, developing economies' share of world outward FDI in the primary and manufacturing sectors only reached 4 per cent in 2007.   
27. Tables A-5 and A-6 (in Annex) show the dist ribution of global services FDI (outward and 
inward) by sector.  In 2007, financial and business services continued to account for the lion's share of 
inward FDI stock in services worldwide, with shares over 30 per cent.  In terms of growth, however, 
other services have performed better since the 1990s , including education, and health and social 
services.  The sectoral distribution of inward FDI is roughly similar across developing and developed 
economies, the main exception being that servi ces FDI into developing economies focused to a 
greater extent on business services, which attracted about 50 per cent of all inward services FDI.  
With respect to outward FDI, developing ec onomies' focus on business services is even more 
pronounced, accounting for 68 per cent of the outward FDI stock.
22   
28.  Although no internationally comparable data exist, it is likely that a notable proportion of 
developing economies' mode-3-related investments ar e destined for other developing economies.  For 
example, an important part of China's outward FDI is in the service sector and goes to other 
developing economies.  In 2006, 65  per cent of total Chinese outward FDI stock (US$148 billion) was 
in services.  Relevant service sectors include fi nance, retail and wholesale, and transport and 
warehousing.  Approximately 95 per cent of to tal outward FDI flows from China between 2003 and 
2006 have gone to other developing economies.23     
IV. LIBERALISATION OF MODE 3 TRADE: ECONOMIC IMPLICATIONS AND 
TRENDS   
29. The overall benefits of FDI for host economies have been well documented and extensively 
discussed.24  The examination of the specific impact of mode 3 liberalization has been less extensive, 
although many of the same points are equally valid.  R ecognition of the benefits of an open regime to 
services FDI and mode 3 supply are reflected in a ge neral trend towards liberalization over the last 25 
years, including over the last decade, across a ll country groups.  This section first discusses the 
economic implications of liberalization, includ ing by relying on empirical studies, and then 
underscores some key policy trends.25 
                                                      
22 For details on the FDI policy of sovereign wealth funds (SWFs), including th e sectoral distribution, 
see UNCTAD (2009a), pp. 27-28.  SWFs’ investments have been highly concentrated in financial and business 
services.  During 1987–2008, financial services accounted for 26 per cent (by value) of SWFs’ total cross-
border mergers and acquisitions, and business services for 15 per cent.  The largest investments were made by SWFs of the United Arab Emirates and by Singapore’s Temasek .  Compared with the servi ces sector, the shares 
of the manufacturing and primary sectors were low: 17 per cent and 14 per cent, respectively.  However, in 
2008, SWFs extended their investments abroad in mining, quarrying and petroleum industries.  
23 Offshore financial centres account for a significant proportion of these outward flows.  See OECD 
(2008b). 
24 See, for example, the Final Outcome of the International C onference on Financing for Development , 
United Nations (2002): "Foreign direct investment contributes toward financing sustained economic growth 
over the long term.  It is especially important for its po tential to transfer knowledge and technology, create jobs, 
boost overall productivity, enhance competitiveness and entrepreneurship, and ultimately eradicate poverty 
through economic growth and development", p. 9. 
25 For differences between mode 3 and services FDI, see footnote 17 and related discussion.   S/C/W/314 
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  A. E
CONOMIC IMPLICATIONS OF MODE 3 LIBERALIZATION  
1. Overview 
30. Openness to trade under mode 3 contributes to  economic growth and development through a 
variety of channels.  Generally, foreign direct investment increa ses the quantity and productivity of 
factor inputs.  Mode 3 suppliers may provide service s that current domestic suppliers do not or cannot 
provide, and transfer knowledge, technology and finance that may be unavailable in the host 
economy.  Knowledge spillovers that boost productivity can rela te to technologies, but also 
management skills, working methods, or human cap ital (e.g. through labour training or skill 
acquisition).26   
31. Investments in services can also help develop or improve basic services infrastructures, which 
other sectors of the economy rely upon.  More effici ent producer services (e.g. finance, managerial 
services, engineering, marketing) generate importa nt productivity gains for domestic firms that use 
them.  In addition, since services play an impor tant role in cross-border supply chains (e.g. 
distribution services, transport, logistics, courier and express delivery, business services), 
liberalization serves to further integrate economies and boost trade.   
32. Conceptually, the removal of foreign equity rest rictions, or of other limits to the entry of 
foreign suppliers through mode 3, can be compared  to the abolition of quotas on imports of goods.  It 
enhances competition in the domestic market which, in turn, serves to dimini sh rents and leads to 
higher productivity, lower prices and more efficient resource allocation.27  Overall, FDI restrictions in 
services may have a greater impact than similar rest rictions in other sectors since supply through other 
modes is not always an easy substitute in term s of accessing markets, whether for technological 
reasons or the need for proximity to consumers.28 
33. Attracting foreign investment is also playing a key role in fostering the offshore business 
services industry.  For example, Jamaica is host to large centres of more than 1000 agents of main 
multinational companies in the offshore business se rvices industry.  In Guyana, where offshore 
operations only took off recently, 1400 people now work in offshore business services, 830 of which 
in foreign companies.29  In larger developing country markets,  offshore operations are often combined 
with operations for the local market, but still,  in Brazil, IBM alone exported US$300 million in 
2007.30  Tables A-7 and A-8 provides examples of th e presence in Latin America and the Caribbean 
of main foreign call centre firms and firms providing combinations of BPO and IT services.  As noted 
by ECLAC, by working through networks of est ablished multinationals, either as providers or 
partners, companies in the host market can "tap  into global services markets where brand and 
reputation enjoyed by the largest firms would ot herwise represent significant barriers to entry".31    
2. The Importance of the Policy Framework  
34. While it is impossible to capture regulatory issu es relating to mode 3 liberalization on a cross-
sectoral basis,32 the importance of having in place an adequate policy framework is generally 
                                                      
26 The latter may be of particular importance for se rvices, which often tend to be intensive in human 
capital.   
27 Hardin and Holmes (1997);  Deardorff and Stern (2008). 
28 Lennon (2008), looking at US data, finds that cross-border supply and commercial presence tend to 
have a complementary, rather than substitutive relationship.  
29 ECLAC (2009), p. 69. 
30 Ibid, p. 72. 
31 Ibid, p. 87. 
32 Regulatory issues have largely been addressed in the Background Notes by the Secretariat on 
specific services sectors.     S/C/W/314 
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  recognized.  For example, for all services sectors,  this means ensuring that competition is harnessed, 
through prevention of anti-competitive practices.  In network services, additional actions are often 
needed to ensure that dominant suppliers do not undermine access.  Examples of regulatory action to 
accompany liberalization relate to such policy obj ectives as consumer protection or achievement of 
universal access.33  Also important for the performance and level of commercial presence in services 
are government policies in relation to education as well as those affecting the investment climate, 
including good governance, transparency and protection of property rights.34 
35. Government policies with respect to the sequencing of liberalization also matter.  A clear is 
the interaction with privatization.  If privatization occurs first, without the introduction of competition 
(i.e., liberalization), this may simply amount to the transfer of monopoly rents to private hands.  
Studies have also suggested that lesser benef its occur when competition is introduced after 
privatization, including because location-specific sunk costs, which are important in a number of 
services sectors, may confer durable benefits to th e first-arrived even after competitors have been 
allowed to enter the market.35   
3. Empirical Studies of liberalization-generated productivity and growth effects 
36. Although empirical studies have differed in th eir assessment of FDI spillovers, the more 
recent and prevailing view appears to be that FD I can have significant effects on economic growth 
through such channels.36  The debate has indeed shifted to  policy approaches that encourage or 
discourage such spillovers (e.g., trade openness, absorptive capacity). As regards human capital, 
evidence suggest that multinationa l enterprises (MNEs) tend to provide more training and upgrading 
than domestic firms.  MNEs can also have fu rther impact in the host economy through positive 
influence on human capital enhancement in other firm s, such as their suppliers or other enterprises 
with which they develop close links, although th at depends on a range of  government policies, 
including labour market regulation.37   
37. A recent study by the OECD (2008a) suggests that knowledge spillovers from FDI vary 
considerably across sectors, which may explain differe nt empirical results in the literature.  Services 
industries enjoy the strongest productivity-enhancing e ffects of FDI as a result of such spillovers, 
especially through interaction with downstream consum ers.  The analysis suggests that encouraging 
commercial presence in services sectors can generate strong positive direct and indirect effects in the 
economy.  These tend to be greater in more competitive markets, as stronger competition may induce greater transfer of knowledge from the parents to th eir affiliates abroad so as to face up to competition 
from domestic rivals.  Such transfers increase opportunities for transfers to domestic firms.   
38. Rather than looking at the spillover effects of FDI versus domestic investment, another set of 
studies have focused on the economy-wide impact of services liberalization, in particular as regards 
mode 3.
38  These studies highlight how liberalization of services FDI boosts economic growth, inter 
alia, by increasing the productivity of host country firms, which depend on the availability, cost, and 
quality of producer services. 
                                                      
33 Hoekman and Mattoo (2008);  OECD (2002).  Naturally, effective regulations are important even if 
full liberalization is not attained, and are also relevant for other modes of supply. 
34 World Bank (2003);  UNCTAD (2004), pp. 185-208. 
35 Fink, Mattoo, and Rathindran (2003);  Fink and Mattoo (2004);  Hoekman and Mattoo (2008), pp. 
46-49;  World Bank (2003), pp. 96-99. 
36 Ozturk (2007).    
37 OECD (2008a). 
38 A number of other studies look at the impact of services liberalization, although these tend to focus 
on particular sectors.  See Hoekman and Mattoo (2008), pp. 38-42 for a survey. S/C/W/314 
Page 14  
 
  39. Eschenbach and Hoekman (2006) study the imp act on growth of services reforms undertaken 
in 20 transition economies between 1990 and 2004.  They find that policy changes in such infrastructure services as telecoms, finance and tran sport are highly correlated with inward FDI and 
that the services reforms, with emphasis on mode 3 liberalization, are pos itively linked to the 
economic performance of these economies after 1990.   
40. Konan and Maskus (2006) deve lop a computable general equilibrium model to assess the 
potential effects of removing barriers to services trade in Tunisia.  They find that reducing services barriers generate relatively large welfare gains an d low adjustment costs.  Even with modest 
assumptions with respect to the prevailing services re gime, aggregate welfare is estimated to increase 
by more than 7 per cent, more than three times the estimated effect of liberalizing goods trade.  
Seventy-five per cent of the welfare gains come fro m liberalizing the supply of mode 3, through the 
elimination of inefficiencies (e.g. failure to employ world-class production techniques) and rent-
generating distortions that investment barriers create.  Services liberalization increases economic 
output in all sectors and raise real returns to bot h capital and labour.  Another study using a similar 
approach focuses on potential effects of Russia's accessi on to the WTO, and also finds that the greater 
component of potential welfare gains from liberalizat ion stems from the removal of barriers to FDI in 
services sectors.
39  The authors estimate that the gains from liberalization of services FDI would 
represent more than 70 per cent of total potential gains, which amount to a mean household income 
gain of 7 per cent, with slightly greater gains for poorer households on average.   
41. Other empirical studies have centred more directly on the role of services in improving 
productivity in other economic sectors, further high lighting the role of many services as key inputs to 
other economic sectors.  Arnold, Javorcik and Mattoo (2006) look at the effects of services reforms on 
the productivity of manufacturing industries relying on services inputs.  Based on the experience of the Czech Republic between 1998 and 2003, the study  shows a positive relationship between services 
sector reform and the performance of domestic firms in downstream manufacturing sectors.  The 
authors suggest that allowing entry of foreign s uppliers, and the resulting competition, is the main 
channel for such productivity effects.  Foreign suppliers introduce into the host country knowledge 
about new products and inte rnational best practice.  This results in improvements in the quality and 
reliability of services (e.g. more reliable communica tion networks), the introduction of new services 
(e.g. new financial services or digital value-adde d telecom services), and a wider availability of 
services (e.g. greater Internet coverage or greater availability of business consulting services).   
42. A similar study, based on a survey of over 1000 firms in 10 Sub-Saharan African countries 
also shows a positive relationship between th e productivity of manufacturing firms and the 
performance of locally produced services that ar e used as inputs (communications, energy and 
financial services).  The authors argue that successful  participation by African producers in export 
markets may be constrained by the difficulty in accessing services inputs at home, especially since, in 
many African countries, firms' expenses on such inputs  constitute a much larger fraction of total costs 
than elsewhere, often much larger than labour co sts.  Eliminating barriers to competition would 
therefore have a strong impact on growth and poverty reduction.
40   
43. Finally, recent work based on data for 10,000 Indian firms between 1990 and 2005 
underscores the strong positive impact that FDI reforms in infrastructure-important services – 
banking, telecom and transport – have ha d on the productivity of manufacturing firms.41  The authors 
argue that such effects occurred as, for example,  liberalization in the banking sector induced better 
                                                      
39 Rutherford and Tarr (2008), "P overty Effects of Russia's WT O Accession: Modeling 'Real' 
Households with Endogenous Productivity Effects", Journal of International Economics 75 (1), pp. 131-150. 
40 Arnold, Mattoo and Narciso (2006).  
41 Arnold, Javorcik, Lipscomb and Mattoo (2008).  S/C/W/314 
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  capital allocation and investments in higher return pr ojects, while telecom liberalization enhanced the 
reliability and reduced the cost of the service.     
B. TRENDS IN THE LIBERALIZATION OF MODE 3 TRADE  
44. Since the 1980s, governments worldwide have  adopted attitudes and policies towards 
liberalization of foreign direct investment.  Service sectors have not escaped this trend towards 
reduction of barriers, although these remain, overall, significantly higher than in other sectors.   
45. Liberalization of services FDI has occurred in both developing and developed economies, 
even though liberalization in developing economies has tended to start taking hold later, in the 1990s. 
Building on previous work by Golub (2003), UNCTAD (2006), and OECD (2006), Golub (2009) 
summarizes trends in barriers to services FDI, by sector, in 77 develope d and developing economies.42  
Figure 3, using data from Golub's index (2009), high lights that levels of restrictiveness in developed 
economies have been reduced gradually between 198 1 and 2005.  The estimated level of openness to 
services FDI in 2005 was estimated at about twice the level of 1991.  The trend towards lighter 
restrictions between 1981 and 2005 was discer nable across all service sectors reviewed. 
 
Figure 3:  Evolution of FDI restrictions in services in OECD countries between 1981 and 2005 
(0-1 scale: 0= open, 1=closed) 
00.050.10.150.20.250.30.350.40.450.5
1981 1986 1991 1998 2005Services FDI Restrictiveness Index
 
 Note:  Based on information for 23 OECD countries.  
 Source :  Prepared from data found in Golub (2009), p. 1263. 
 
                                                      
42 Golub uses a FDI restrictiveness index that focuses on such barriers as foreign equity limits, FDI 
screening (e.g., ENTs), and restrictions on operations of foreign suppliers.  For an assessment of FDI 
liberalization trends between 1981 and 2005, also see Kobrin (2005).  S/C/W/314 
Page 16  
 
  46. Existing research also suggests that barriers are more important in developing than in 
developed economies.
43  That said, there are also significan t variations across sectors, as shown in 
Figure 4.  For example, levels of restrictions in developed and developing economies are comparable 
in transport services, but those in developing econo mies are significantly higher in others.  Among the 
sectors reviewed, the most restrictive regimes ove rall were found in communication, transport, and 
finance.  In contrast, conditions of access and ope ration tended to be more open in construction and 
tourism.   
Figure 4:   FDI restrictions in services per sector and country groups, 2004-05.  
(0-1 scale: 0= open, 1=closed) 
00.050.10.150.20.250.30.350.40.450.5
Business Communication Construction Distribution Finance Tourism Transport All Services Services FDI Restrictiveness IndexDeveloped Economies
Developing Economies
 
 Note:  Based on a sample of 77 de veloped and developing economies.   
 Source :  Prepared from data found in Golub (2009), p. 1256-58. 
 
47. Variations in overall levels of restrictiven ess across economies are largely explained, aside 
from levels of development, by differences in th e use of foreign ownership restrictions, which 
contribute most to restrictiveness levels. 
48. Finally, Golub finds that there is a strong negative correlation across the economies reviewed 
between the level of restrictions to services FDI and the ratio of services FDI to population.44   
V. GATS COMMITMENTS AND MFN EXEMPTIONS RELATING TO MODE 3 
A. SPECIFIC COMMITMENTS  
49. Despite many liberalization moves undertaken by governments in recent years and the 
economic importance of this mode of supply, GA TS commitments on mode 3 are rather limited in 
                                                      
43 Golub (2009);  UNCTAD (2006).  
44 Golub (2009), p. 1264.  S/C/W/314 
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  scope.  Indeed, as for other modes of supply, on aver age across all Members, a bout two-thirds of all 
services sub-sectors have remained without GATS bindings. 
50. As regards the level of treatment bound for sche duled sectors, mode 3 is characterized by the 
greatest number of limitations and, by the same t oken, the highest proportion of partial commitments.  
This contrasts with modes 1 and 2, where much fe wer limitations are scheduled.  At the same time, 
mode 3 features the fewest "unbound" entries among all modes.45   
51. Tables 5 and 6 show the structure of commitmen ts under mode 3 for both market access and 
national treatment for a sample of sectors.46  Table 5, which takes into account horizontal limitations, 
underscores the extent to which mode 3 is subject to partial bindings (i.e. with limitations):  an 
average of 75 per cent for market access and 81 pe r cent for national treatment for the sub-sectors 
reviewed.  Only 4 per cent of entries under market access are unbound, while 21 per cent are 
unrestricted.  In all these sub-sectors, the proportion of  partial bindings under market access is above 
50 per cent, and that of unbound entries never surpasses 15 per cent.   
52. Table 6 excludes horizontal limitations in dete rmining the level of treatment, meaning that 
only the level of binding specified for each sector is taken into account.  Compared to Table 5, 
naturally, the proportion of full commitments is grea ter, while that of partial bindings is reduced.  
Nevertheless, it is noteworthy that the proportion of partial bindings is still quite high: an average of 
57 per cent for market access and of 44 per cent for national treatment.  Even without horizontal limitations, more than two-thirds of market access bindings are partial in the relevant sub-sectors of telecom, financial, and transport services, as well as  in legal and accounting services.  In contrast, the 
Table also highlights that sector-specific limitations  are relatively infrequent in such business services 
as computer services and management consulti ng, as well as in environmental services.   
 
Table 5: Structure of commitments on Mode 3 in se lected sub-sectors: with  horizontal limitations 
Market Access National Treatment Sector 
Full Partial Unbound Full Partial Unbound 
Business Services  
Legal Services 6% 88% 6% 8% 86% 6% 
Accounting/auditing/bookkeeping 14% 84% 1% 16% 82% 3% 
Architectural Services 29% 69% 3% 13% 83% 4% 
Medical & dental services  20% 67% 13% 15% 75% 11% 
Data processing services  33% 66% 1% 16% 80% 4% 
R&D services (natural sciences) 22% 78% 0% 11% 89% 0% 
Advertising services 28% 69% 3% 15% 82% 3% 
Management consulting services 35% 64% 1% 19% 79% 1% 
Communication Services  
Courier services 20% 78% 2% 11% 89% 0% 
Voice telephone services 8% 90% 2% 7% 88% 6% 
Private leased circuit services 9% 88% 3% 8% 85% 8% 
Electronic mail 16% 81% 3% 18% 78% 4% 
Online info & data base retrieval 15% 81% 4% 16% 79% 5% 
Motion Picture and Video Tape 
Production and Distribution 18% 68% 14% 14% 75% 11% 
Construction, Engineering  
Construction work (building)  35% 60% 4% 7% 85% 7% 
                                                      
45 Greater shares of full commitments have been scheduled for modes 1 and 2 than for mode 3, 
although the proportion of unbound entries is much hi gher under mode 1.  Adlung and Roy (2005);  Marchetti 
and Roy (2008).    
46 This builds upon information contained in WTO Secretariat Notes S/C/W/99 and S/C/W/99/Corr.1. S/C/W/314 
Page 18  
 
  Market Access National Treatment Sector 
Full Partial Unbound Full Partial Unbound 
Construction work (civil engin.)  33% 63% 4% 9% 84% 7% 
Distribution  
Wholesale trade 20% 78% 2% 13% 84% 4% 
Retailing services 17% 77% 6% 6% 91% 4% 
Educational Services  
Secondary education 27% 66% 7% 5% 78% 17% 
Adult education 27% 71% 2% 15% 80% 5% 
Environmental Services  
Sewage services 35% 65% 0% 18% 82% 0% 
Refuse disposal 31% 69% 0% 15% 85% 0% 
Financial Services  
Non-life insurance 6% 91% 2% 12% 82% 6% 
Acceptance of deposits 14% 86% 0% 13% 84% 3% 
Lending of all types 15% 83% 2% 11% 85% 4% 
Trading in securities 14% 85% 1% 10% 89% 1% 
Health Related, Social Services  
Hospital services 23% 70% 6% 17% 74% 9% 
Social services 24% 76% 0% 12% 82% 6% 
Tourism Services  
Hotels and restaurants 27% 72% 1% 23% 74% 2% 
Travel agencies 29% 66% 5% 22% 71% 7% 
Recreational Services  
Entertainment services 16% 75% 9% 11% 80% 9% 
News agency services 38% 54% 8% 12% 81% 8% 
Transport Services  
Maritime (freight) 7% 83% 10% 10% 78% 12% 
Rail (passenger) 18% 76% 6% 12% 76% 12% 
Rail (freight) 17% 78% 6% 17% 72% 11% 
Road (passenger) 18% 78% 5% 15% 78% 8% 
Road (freight) 17% 81% 2% 17% 81% 2% 
 
Average of Above  
21%  
75%  
4%  
13%  
81%  
6% 
Note:  On the basis of schedules of all Members as of Marc h 2010.  The number of Members with commitments varies from 
sub-sector to sub-sector.  National treatment limitations do not include discriminatory meas ures listed under the market 
access column. Source :  WTO Secretariat. 
 
 
Table 6: Structure of commitments on mode 3 in se lected sub-sectors: without horizontal limitations 
Market Access National Treatment Sector 
Full Partial Unbound Full Partial Unbound 
Business Services  
Legal Services 15% 79% 6% 17% 77% 6% 
Accounting/auditing/bookkeeping 29% 70% 1% 42% 56% 3% 
Architectural Services 50% 47% 3% 59% 37% 4% 
Medical & dental services  35% 53% 13% 38% 51% 11% 
Data processing services  72% 26% 1% 72% 24% 4% 
R&D services (natural sciences) 67% 33% 0% 72% 28% 0% 
Advertising services 51% 46% 3% 59% 38% 3% 
Management consulting services 74% 25% 1% 79% 19% 1% 
Communication Services   
Courier services 46% 52% 2% 52% 48% 0% 
Voice telephone services 11% 87% 2% 25% 70% 6% 
Private leased circuit services 14% 83% 3% 33% 59% 8% 
Electronic mail 4% 96% 0% 12% 88% 0%  S/C/W/314 
 Page 19 
 
 
  Market Access National Treatment Sector 
Full Partial Unbound Full Partial Unbound 
Online info & data base retrieval 24% 72% 4% 56% 39% 5% 
Audiovisual services 29% 57% 14% 32% 57% 11% 
Construction, Engineering   
Construction work (building)  66% 29% 4% 62% 31% 7% 
Construction work (civil engin.)  59% 37% 4% 56% 37% 7% 
Distribution   
Wholesale trade 35% 64% 2% 38% 58% 4% 
Retailing services 32% 62% 6% 34% 62% 4% 
Educational Services  
Secondary education 39% 54% 7% 56% 27% 17% 
Adult education 51% 46% 2% 63% 32% 5% 
Environmental Services   
Sewage services 63% 37% 0% 76% 24% 0% 
Refuse disposal 60% 40% 0% 79% 21% 0% 
Financial Services   
Non-life insurance 18% 80% 2% 35% 58% 6% 
Acceptance of deposits 18% 79% 3% 35% 62% 3% 
Lending of all types 20% 74% 6% 36% 60% 4% 
Trading in securities 20% 79% 1% 38% 61% 1% 
Health Related, Social Services   
Hospital services 43% 51% 6% 55% 36% 9% 
Social services 65% 35% 0% 65% 29% 6% 
Tourism Services   
Hotels and restaurants 47% 52% 1% 53% 45% 2% 
Travel agencies 53% 43% 5% 65% 27% 7% 
Recreational Services   
Entertainment services 41% 50% 9% 41% 50% 9% 
News agency services 73% 19% 8% 81% 12% 8% 
Transport Services   
Maritime (freight) 24% 66% 10% 32% 56% 12% 
Rail (passenger) 24% 71% 6% 59% 29% 12% 
Rail (freight) 22% 72% 6% 61% 28% 11% 
Road (passenger) 28% 68% 5% 43% 50% 8% 
Road (freight) 29% 69% 2% 43% 55% 2% 
Average of the above 39% 57% 4% 50% 44% 6% 
Note:  See previous Table.  
Source :  WTO Secretariat. 
 
53. Comparisons across groups of Members suggest a broadly similar structure of commitments 
under mode 3, namely a predominance of partial bi ndings.  That said, LDCs tend to exhibit not only 
more full bindings, but also more "unbound" entries.   Partial commitments also predominate among 
acceding Members, but the proportion of full bindings is greater. 47   
54. Greater differences between groups of Members appear when not only the structure of 
commitments (full, partial, unbound), but also th e absence of commitments is taken into account.  
Figure 5 shows, among other things, that partial bindings under mode 3, while preponderant for 
developed economies, only account for a minorit y of scheduling cases for developing economies 
(except for acceding Members) sinc e most of the sectors reviewed have not been committed in the 
first place.    
                                                      
47 Discrepancies may be attributed in part to differences in sectoral coverage.  S/C/W/314 
Page 20  
 
  Figure 5:  Type of commitment undertaken in  selected sectors under mode 3 
0%10%20%30%40%50%60%70%80%90%
All Schedules Developed Tran sition Developing LDC AccedingCategory of Member
Full Partial Unbound No Commitment 
Source :  Adlung and Roy (2005), p. 1175. 
 
55. As regards the number of limitations scheduled  under mode 3, sectors with most limitations 
per commitment are telecommunications (basic teleco m in particular) and financial services, while 
those that are less limitation-intensive include com puter, distribution, constr uction and environmental 
services.48  
56. With respect to the types of limitations scheduled under mode 3, market access limitations are 
roughly split in half between, on the one hand, quant itative restrictions as covered by subparagraphs 
(a) to (d) of GATS Article XVI:2 and, on the other ha nd, those relating to restrictions on the type of 
legal entity (including joint-venture requirements)  and on the participati on of foreign capital (sub-
paragraphs (e) and (f) of Article XVI:2).  Most quota- type limitations relate to  the number of suppliers 
(a), rather than to the value of transactions/asset s (b), operations/output (c ), or natural persons 
employed (d).  Further, as noted in S/C/W/99, a good number of scheduled entries under market access cannot readily be interpreted as limitations in the sense of Article XVI:2, such as references to 
unspecified licensing and qualification requirements or national treatment li mitations erroneously 
scheduled under market access.  This may suggest, in  turn, that current commitments offer significant 
scope for technical amendments.  Horizontal lim itations include all types mentioned above, except 
that limitations on the number of suppliers are mostly found under sector-specific commitments.
49    
57. Among the market access limitations scheduled in the horizontal secti on, limitations on the 
participation of foreign capital (subparagraph (f) of Article XVI:2) are contained in 18 schedules and 
requirements of type of legal entity/joint venture (s ubparagraph (e) of Article XVI:2) in 29 schedules.  
Also, certain Members have limitations for mode 3 with respect to services considered as public 
utilities, providing that these may be subject to monopolies or exclusive rights.  Others have 
scheduled, under market access or national treatme nt, limitations relating to foreign exchange 
restrictions or limits on transfers abroad.50   
                                                      
48 S/C/W/99, pp. 3-4;  also Adlung and Roy (2005), pp. 1174-1177. 
49 It can be recalled that, in relation to mode 3, paragraph 1 of Annex C of  the Hong Kong Ministerial 
Declaration refers to (i) commitments on enhanced levels  of foreign equity participation, (ii) removal or 
substantial reduction of economic needs tests, and (iii) commitments allowing greater flexibility on the types of 
legal entity permitted.  The plurilateral request on mode 3 focuses on horizontal commitments.   
50 However, such entries need to be read in  the light of Article XI of the GATS.    S/C/W/314 
 Page 21 
 
 
  58. Commitments under mode 3 are also subject to  many economic needs tests (ENTs).  ENTs 
are not market access limitations per se , but rather a form through which certain market access 
limitations can be expressed, namely those relating to subparagraphs (a) through (d) of Article XVI:2.  
Currently, ten ENTs for mode 3 have been inscrib ed by Members under the horizontal section of their 
schedule.  Certain of these entries relate to fore ign investment screening mechanisms, sometimes with 
a focus on acquisitions.  In addition, schedules contain 150 sector-specific ENTs for commercial 
presence, which represent 72 per cent of all sector-s pecific ENTs.  The sectors where most sector-
specific ENTs for mode 3 are to be found ar e, in declining order, financial services, 
telecommunications, business services, transport, tourism and travel-related services, and distribution.
51  Most ENTs, whether in relation to mode 3 or other modes of supply, provide little or 
no guidance concerning the criteria on which the test is based.  Entries also sometimes do not indicate 
clearly to which market access limitation under Article  XVI:2 (a) to (d) the ENT relates.  Lack of 
sufficient precision can also lead to ambiguities as to  whether an ENT is inte nded to be discriminatory 
or non-discriminatory.   
59. Further, it can be observed that various market  access entries under mode 3, including in the 
horizontal section of schedules, refer generally to  approval or authorization requirements and/or 
procedures, without clear reference to any of th e six limitations under Article XVI.  Such types of 
entries leave considerable scope for interpretation.  In particular, it remains unclear whether relevant 
requirements or procedures are imposed for qualit y-related purposes only, thus potentially falling 
under Article VI, or whether they serve as impl ementation mechanisms for measures covered by 
Article XVI.     
60. With respect to national treatment, more than 80 per cent of limitations un der mode 3 relate to 
nationality and residency requireme nts, ownership of real estate or land, subsidies, as well as 
discriminatory requirements relating to licensing, sta ndards, and qualifications or to registration and 
authorisation requirements.  Overall, unlike for market access, horizontal limitations are much more prevalent than sector-specific ones.  Limitations relating to subsidies and to ownership of real 
estate/land are predominantly horizontal, while resi dency and nationality requirements can be found 
to a greater extent under sector-specific commitments.    
61. Naturally, the types of limitations vary acr oss sectors, as suggested by the Sectoral 
Background Notes from the Secretariat.  For market  access, quota-type restrictions tend to be 
concentrated in telecoms and financial services, wh ile limitations relating to the type of legal entity 
and foreign capital participation are more equally distributed.  For national treatment, nationality and 
residency requirements, the main types of secto r-specific limitations, are relatively frequent in 
financial services, professional services, and transport services.   
 
B. MFN  EXEMPTIONS  
62. Many of the MFN exemptions listed by WTO Memb ers relate to mode 3, even if exemption 
lists do not specify relevant modes of supply in the same way as schedules of commitments do.  While 
sector-specific exemptions have been discussed, where relevant, in the sectoral Background Notes by 
the Secretariat, various Members have also liste d MFN exemptions applying to all sectors.  Among 
those, a number is directly related to mode 3.   For example, two Members have taken an MFN 
exemption in relation to the differentia l application of foreign equity limits.52  Further, a handful of 
Members has taken exemptions in relation to the ownership of real estate or land.   
                                                      
51 Based on S/CSS/W/118, as well as on schedules that have since entered into force. 
52 GATS/EL/52;  GATS/EL/95.  S/C/W/314 
Page 22  
 
  63. About a dozen Members have listed MFN exempti ons concerning bilateral investment treaties 
(BITs).
53   These exemptions generally serve to cover any preferential treatment granted under BITs, 
although the exemptions of two Members (Canada and Chile) are limited to the dispute settlement 
procedures of these treaties. Clearly, BITs are not  economic integration ag reements permitted under 
Article V of the GATS, given their focus on inv estments (in service sectors and otherwise) and the 
a priori  exclusion of certain modes of supply.  In most cases, existing MFN exemptions have not been 
reciprocated by the other party to the BIT.  The latter is therefore bound to extend to all WTO Members any preferential treatment that may result from the BIT.
54    
64. The number of BITs has exploded since the 1990s to exceed 2,600 by the end of 2008.55  
While the scope and obligations of BITs  are different from those of the GATS56, there are some 
overlaps nevertheless.  These include, in particular, the granting of national treatment to certain 
investments (e.g., subsidiaries) in services sectors.  Th at said, it needs to be st ressed that in the vast 
majority of BITs, the national treatment oblig ation is limited to the post-establishment phase.57   
_________________ 
                                                      
53 Canada, Chile, Costa Rica, Jordan, Kuwait, Poland, Singapore (for Investment Guarantee 
Agreements), Trinidad and Tobago, and Uruguay.  Turkey has a MFN exemption which permits it to extend 
national treatment to investments of nationals or companies of certain specified countries, although no mention is made of investment agreements per se .   Thailand has an MFN exemption in relation to the granting of 
national treatment to American entities (and also citizens) operating businesses and providing services in a 
number of sectors, pursuant the Treaty of Amity and Economic Relations with the United States.      
54 Issues relating to BITs have been mentioned in a number of Uruguay Round and WTO documents, in 
particular: MTN.GNS/W/177/Rev.1;  MTN.GNS/W/114;  PC/SCS/M2;  PC/SCS/M4;  S/C/W/1.   
55 UNCTAD (2009b).  
56 The focus of most BITs is on investment protection.  Relevant disciplines concern, inter alia , 
expropriation, transfers, or minimum standard of treatment, as well as the inclusion of an investor-State dispute 
settlement mechanism.  The scope of these treaties is qu ite different from that of the GATS since, among other 
things, they apply to investments in all sectors – and not services trade only –, and because "investments" are 
not limited to professional and business estab lishments, but encompass a variety of assets.  
57 BITs with national treatment provisions covering the pre-establishment phase include a number of 
BITs to which the United States, Canada and Japan are party.  Naturally, such treaties contain different types of 
exceptions and reservations to the national treatment obliga tion, including as regards services sectors.  BITs do 
not contain a market access obligation like Article XVI of the GATS.  See: OECD  (2007);  Adlung and 
Molinuevo (2008); DiMascio and Pauwelyn (2008);  Roy (2003).  For an assessment of mode 3 commitments in 
preferential trade agr eements, see Marchetti and Roy (2008).     S/C/W/314 
 Page 23 
 
 
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the General Agreement on Trade in Services and Pros pects for Change", Journal of World Trade 39 
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Arnold, Jens Matthias, Beata S. Javorcik, Molly Lipscomb, and Aaditya Mattoo (2008), "Services 
Reform and Manufacturing Performance: Evidence from India", World Bank Policy Research Paper 
4109, Washington DC.  
Arnold, Jens Matthias, Beata S. Javorcik, and Aaditya Mattoo (2006), "The Productivity Effects of 
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 Arnold, Jens Matthias, Aaditya Mattoo, and Gaia Narciso (2006), "Services Input and Firm Productivity in Sub-Saharan Africa;  Evidence fro m Firm-Level Data", World Bank Policy Research 
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Deardorff, Alan V. and Robert M. Stern (2008), "E mpirical Analysis of Barriers to International 
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DiMascio, Nicholas and Pauwelyn, Joost (2008), "Non -Discrimination in Trade and Investment 
Treaties: Worlds Apart or Two Sides of the Same  Coin?", American Journal of International Law  102 
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Transition Economies, 1990-2004", Review of  World Economics 142 (4), pp. 746-64. 
 
Fink, Carsten, Aaditya Mattoo, and Randeep  Rathindran (2003), "An Assessment of 
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Fink, Carsten and Aaditya Mattoo (2004), "Regiona l Agreements and Trade in Services: Policy 
Issues", Journal of Economic In tegration 19 (4), pp. 742-79. 
Golub, Stephen S. (2003), "Measures of Restrictions on Inward Foreign Direct Investment for OECD 
Countries", OECD Economic Studies 36, 2003/1, pp. 85-116.   
Golub, Stephen S. (2009), "Openness to Foreign Di rect Investment in Services: An International 
Comparative Analysis", The World Economy 32 (8), pp. 1245-1268. 
Hardin, A. and Holmes L. (1997), "Services Trad e and Foreign Direct Investment", Australian 
Industry Commission Staff Research Paper, available at: 
http://www.pc.gov.au/ic/research/information/servtrad. 
Hoekman, Bernard and Aaditya Mattoo (2008), "Ser vices Trade and Growth", in Marchetti and Roy 
(eds.), Opening Markets for Trade in Services:  Countries and Sectors in Bilateral and WTO 
Negotiations, Cambridge University Press and WTO, Cambridge UK.  S/C/W/314 
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  Kobrin, Stephen J. "The Determinants of Libera lization of FDI Policy in Developing Countries: a 
Cross-sectional Analysis, 1992-2001", Transna tional Corporations 14 (1), pp. 67-104.  
 Konan, Denise Eby and Keith E. Maskus (2006), "Qua ntifying the Impact of Services Liberalization 
in a Developing Country", Journal of De velopmental Economics 81 (1), pp. 142-162. 
 
Lennon, Carolina (2008) "Trade in Services: Cro ss-Border Trade vs. Commercial Presence. Evidence 
of Complementarity", PSE Working Papers 52, Paris. 
Magdeleine, Joscelyn and Andreas Maurer (2008), "Measuring GATS Mode 4 Trade Flows", WTO 
Staff Working Paper, ERSD -2008-05, October 2008. 
Marchetti, Juan and Martin Roy (2008), "Services Liberalization in the WTO and in PTAs", in 
Marchetti and Roy (eds.), Opening Markets for Trade in Services: Countries and Sectors in Bilateral 
and WTO Negotiations, Cambridge University Press and WTO, Cambridge UK.  
 Moran, Theodore H., Edward M. Graham, and Magnus  Blomström (eds.) (2005), Does Foreign Direct 
Investment Promote Development, Institute for International Economics, Washington DC.  
 OECD (2002), Foreign Direct Investment for Deve lopment: Maximising Benefits, Minimizing Costs, 
Paris.  
OECD (2006), "OECD's FDI Regulatory Restrictiv eness Index: Revision and Extension to More 
Economies", Economics Department Wo rking Papers No. 525, Paris.  
 OECD (2007), "The Interaction between Investment  and Services Chapters in Selected Regional 
Trade Agreements", OECD Trade Po licy Working Paper No. 55, Paris. 
OECD (2008a), "FDI Spillovers and their Interrelationships with Trade", OECD Trade Policy 
Working Paper No. 80, Paris.   
OECD (2008b), Investment Policy Reviews: China 2008, Paris. OECD (2009), "Vertical Trade, Trade Costs and FDI", OECD Trade Policy Working Paper No. 89, 
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Ozturk, Ilhan (2007), "Foreign Direct Investme nt - Growth Nexus: A Review of the Recent 
Literature", International Jour nal of Applied Econometrics and Qu antitative Studies 4(2), pp. 79-98.  
Roy, Martin (2003), "Implications for the GA TS of Negotiations on a Multilateral Investment 
Framework: Potential Synergies and Pitfalls", Journal of World Investment  4(6), pp. 963 -986. 
Rutherford, Thomas F. and David G. Tarr (200 8), "Poverty Effects of Russia's WTO Accession: 
Modeling 'real' households with e ndogenous productivity effects", J ournal of International Economics 
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Satyanand, Premila Nazareth and Pramila Raghavendr an (2010), "Inward FDI in India and its Policy 
Context", Columbia FDI Profiles, Vale Columbia Center on Sustainable International Investment, 
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United Nations, European Commission, Interna tional Monetary Fund, OECD, UNCTAD, WTO 
(2002), Manual on Statistics of International Trade in Services, Geneva.    S/C/W/314 
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  United Nations, European Commission, Interna tional Monetary Fund, OECD, UNCTAD, WTO 
(2010), Manual on Statistics of International Tr ade in Services, draft, unedited version: 
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UNCTAD (2004), World Investment Report 2004: The Shift Towards Services, Geneva. UNCTAD (2006), "Measuring Restrictions on FDI in Services in Developing Countries and 
Transition Economies", UNCTAD Current Studies on FDI and Development, Geneva.   
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Production, and Development, Geneva. 
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UNCTAD (2010), "Global Investment Trends Monitor:  Global and Regional FDI Trends in 2009", 19 
January 2010, Geneva.    
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Investment in Latin American and the Caribbean, 2008", Santiago, Chile. 
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WTO (1999), "Structure of Commitments for Modes 1,  2 and 3", Background Note by the Secretariat, 
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_______________ 
 S/C/W/314 
Page 26  
 
  ANNEX:  TABLES 
 
 
Table A-1:  United States, outwar d FATS: sales abroad by non-bank foreign affiliates of US companies 
primarily engaged in services activities, 2005-2006   
(US$ billion and per cent) 
ISIC 
Rev.3 Sector description 2005 2006 Share in 
Total 
Services in 
2006 
55 to 93 Total Services (excluding wholesale and retail trade service 
activities) 668.7 761.5 100.0% 
          
55     Hotels and restaurants 27.3 33.6 4.4% 
60 to 64     Transport, storage and communications 98.8 110.6 14.5% 
60 to 63     Transport and storage 44.8 49.1 6.4% 
64       Post and telecommunications N.A. N.A. N.A. 
642         Telecommunications 54.0 61.6 8.1% 
65 to 67     Financial intermediation 268.4 304.2 39.9% 
70 to 74     Real estate, renting and business activities 201.5 229.1 30.1% 
72       Computer and related activities 69.1 69.9 9.2% 
73       Research and development 4.5 4.7 0.6% 
74       Other business activities 97.0 114.8 15.1% 
741         Legal, accounting, book-k eeping, auditing activities, etc. ... ... N.A. 
744         Advertising 10.3 12.4 1.6% 
80 to 93     Community, social and personal services 72.6 84.0 11.0% 
80       Education 1.6 1.9 0.3% 
92       Recreational,cultural and sporting activities 17.5 23.7 3.1% 
921         Motion picture, radio, telev. and other entertainment act. N.A. N.A. N.A. 
Memorandum items:        
50 to 93 Total Services (including whol esale and retail trade service 
activities) 1807.1 1995.8 - 
50 to 52 Wholesale and retail trade; repair 1138.4 1234.2 - 
40+41 Electricity, gas and water supply 45.4 45.2 - 
45 Construction 15.4 14.8 - 
Note:  ISIC stands for International Standard Industrial Classification of  all economic activities, Rev.3.   
Source:   OECD.Stat database, Globalisation, Activ ity of Multinationales, September 2009.  
  S/C/W/314 
 Page 27 
 
 
  Table A-2:  United States, inward FATS: sales by US  affiliates of non-bank foreign companies primarily 
engaged in services activities to residents in the US, 2005-2006   
(US$ billion and per cent) 
ISIC 
Rev.3 Sector description 2005 2006 Share in 
Total 
Services in 
2006 
55 to 93 Total Services (excluding wholesale and retail trade service 
activities) 460.5 563.5 100.0% 
          
55     Hotels and restaurants 24.0 27.0 4.8% 
60 to 64     Transport, storage and communications 82.2 98.5 17.5% 
60 to 63     Transport and storage N.A. N.A. N.A. 
64       Post and telecommunications N.A. N.A. N.A. 
642         Telecommunications 36.3 42.6 7.6% 
65 to 67     Financial intermediation 192.7 257.8 45.7% 
70 to 74     Real estate, renting and business activities 107.3 125.0 22.2% 
72       Computer and related activities 13.4 16.4 2.9% 
73       Research and development 2.2 2.5 0.5% 
74       Other business activities 67.1 71.1 12.6% 
741         Legal, accounting, book-keepin g, auditing activities, etc. N.A. N.A. N.A. 
744         Advertising 20.1 21.0 3.7% 
80 to 93     Community, social and personal services 54.3 55.1 9.8% 
80       Education 0.5 0.5 0.1% 
92       Recreational,cultural and sporting activities N.A. N.A. N.A. 
921         Motion picture, radio, telev. and other entertainment act. 7.9 8.1 1.4% 
          
Memorandum items:        
50 to 93 Total Services (including whol esale and retail trade service 
activities) 1394.2 1573.0 - 
50 to 52 Wholesale and retail trade; repair 933.8 1009.5 - 
40+41 Electricity, gas and water supply 49.6 48.6 - 
45 Construction 35.7 33.8 - 
Note:  ISIC stands for International Standard Industrial Classification of  all economic activities, Rev.3.   
Source:   OECD.Stat database, Globalisation, Activ ity of Multinationales, September 2009.  
 
 S/C/W/314 
Page 28  
 
  Table A-3:  Germany, outward FATS: sales abroad by foreign affiliate s of German companies primarily 
engaged in services activities, 2005-2006  
(US$ billion and per cent) 
ISIC 
Rev.3 Sector description 2005 2006 Share in 
Total 
Services in 
2006 
55 to 93 Total Services (excluding wholesale and retail trade service 
activities) 400.1 429.7 100.0% 
          
55     Hotels and restaurants 3.2 2.8 0.7% 
60 to 64     Transport, storage and communications 127.7 143.7 33.4% 
60 to 63     Transport and storage 74.5 82.7 19.2% 
64       Post and telecommunications 53.2 61.0 14.2% 
642         Telecommunications 32.3 37.6 8.8% 
65 to 67     Financial intermediation 203.7 212.1 49.4% 
70 to 74     Real estate, renting and business activities 56.3 61.7 14.4% 
72       Computer and related activities 18.2 20.1 4.7% 
73       Research and development 1.3 1.8 0.4% 
74       Other business activities 21.4 24.5 5.7% 
741         Legal, accounting, book-keep ing, auditing activities, etc. 3.4 3.1 0.7% 
744         Advertising 0.7 0.6 0.1% 
80 to 93     Community, social and personal services 9.3 9.3 2.2% 
80       Education 0.1 0.1 0.0% 
92       Recreational,cultural and sporting activities 1.1 1.5 0.3% 
921         Motion picture, radio, telev. and other entertainment act. N.A. N.A. N.A. 
          
Memorandum items:        
50 to 93 Total Services (including wholesale and retail trade service 
activities) 1044.4 1124.5 - 
50 to 52 Wholesale and retail trade; repair 644.2 694.8 - 
40+41 Electricity, gas and water supply 49.3 74.1 - 
45 Construction 16.2 18.6 - 
Note:  ISIC stands for International Standard Industrial Classification of  all economic activities, Rev.3.   
Source:   OECD.Stat database, Globalisation, Activ ity of Multinationales, September 2009.  
 
 
  S/C/W/314 
 Page 29 
 
 
  Table A-4:  Germany, Inwa rd FATS: sales by German  affiliates of foreign companies primarily engaged 
in services activities to resid ents in Germany, 2005-2006  
(US$ billion and per cent) 
ISIC 
Rev.3 Sector description 2005 2006 Share in 
Total 
Services in 
2006 
55 to 93 Total Services (excluding whol esale and retail trade service 
activities) 187.8 199.6 100.0% 
          
55     Hotels and restaurants 5.8 5.2 2.6% 
60 to 64     Transport, storage and communications 54.0 59.0 29.6% 
60 to 63     Transport and storage 24.7 25.4 12.7% 
64       Post and telecommunications 29.3 33.6 16.8% 
642         Telecommunications 25.7 29.6 14.9% 
65 to 67     Financial intermediation 54.9 58.6 29.3% 
70 to 74     Real estate, renting and business activities 65.6 68.0 34.1% 
72       Computer and related activities 19.8 19.7 9.9% 
73       Research and development 1.4 1.5 0.7% 
74       Other business activities 22.0 23.4 11.7% 
741         Legal, accounting, book-keep ing, auditing activities, etc. 6.2 6.3 3.1% 
744         Advertising 1.5 1.4 0.7% 
80 to 93     Community, social and personal services 7.4 8.8 4.4% 
80       Education 0.1 0.1 0.1% 
92       Recreational,cultural and sporting activities 5.8 6.4 3.2% 
921         Motion picture, radio, telev. and other entertainment act. N.A. N.A. N.A. 
          
Memorandum items:        
50 to 93 Total Services (including wholesale and retail trade service 
activities) 526.3 586.7 - 
50 to 52 Wholesale and retail trade; repair 338.5 387.1 - 
40+41 Electricity, gas and water supply 6.6 8.5 - 
45 Construction 9.4 10.8 - 
Note:  ISIC stands for International Standard Industrial Classification of  all economic activities, Rev.3.   
Source:   OECD.Stat database, Globalisation, Activ ity of Multinationales, September 2009.  
 S/C/W/314 
Page 30  
 
  Table A-5:  Estimated world inward services FDI stock, by sector, 2007  
(Value in US$ billion)  
 Developed economies Developing economiesa  World 
Sector Value Share   Value Share   Value Share  
ALL SERVICES 6938.8 100% 2600.9 100% 9539.7 100% 
        
Trade 1376.7 19.8% 283.5 10.9% 1660.2 17.4% 
Hotels and restaurants 75 1.1% 31.7 1.2% 106.7 1.1% 
Transport, storage and communications 661 9.5% 259.5 10% 920.5 9.7% 
Finance 2457.4 35.4% 584.5 22.4% 3041.9 31.9% 
Business activities 1536.6 22.2% 1389.1 53.4% 2925.7 30.7% 
Education 7.8 0.1% 1 0% 8.8 0.1% 
Health and social services 25.8 0.4% 5.4 0.2% 31.2 0.3% 
Community, social and personal services 31.9 0.5% 15.7 0.6% 47.6 0.5% 
Other & unspecified services 744.9 10.7% 30.5 1.2% 775.4 8.1% 
a  Including economies from S outh-East Europe and CIS. 
Source :  Computed by the Secretariat on the basi s of data in UNCTAD (2009a), pp. 218-219.   
 
 
Table A-6:  Estimated world outward services FDI stock, by sector, 2007 
(Value in US$ billion) 
 Developed 
economies Developing 
economiesa  World 
Sector Value Share   Value Share   Value Share  
ALL SERVICES 8576.4 100% 1657.4 100% 10,233.8 100% 
        
Trade 928.5 10.8% 149.2 9% 1077.7 10.5% 
Hotels and restaurants 114.9 1.3% 9.8 0.6% 124.7 1.2% 
Transport, storage and communications 652.6 7.6% 75.8 4.6% 728.4 7.1% 
Finance 3248 37.9% 276.6 16.7% 3524.7 34.4% 
Business activities 2777 32.4% 1124.5 67.9% 3901.5 38.1% 
Education 1.5 0% - - 1.6 0% 
Health and social services 2.3 0% 0.1 0.01% 2.4 0% 
Community, social and personal services 65 0.8% 4.3 0.3% 69.3 0.7% 
Other & unspecified services 778.5 9.1% 17.1 1% 795.5 7.8% 
a  Including economies from S outh-East Europe and CIS. 
Source : Computed by the Secretariat on the basi s of data in UNCTAD (2009a), pp. 218-219.   
 
 
Table A-7:  Footprint of the major contact centre companies (offshore si tes or global delivery centres) in 
Latin America and the Caribbean, 2007  
 Call centre  Location of operations in the region 
1 West (United States)  Guatemala, Jamaica 
2 Teleperformance (France)  Argentina, Brazil, Chile , Dominican Republic, El Salvador, Jamaica, Mexico 
3 Convergys (United States)  Argentina, Brazil, Colombia 
4 SITEL (Canada)  Brazil, Chile, Colombia, Mexico, Panama 
5 Atento (Spain) a  Argentina, Bolivarian Republic of Vene zuela, Brazil, Chile, Colombia, El 
Salvador, Guatemala, Mexico, Panama, Peru, Uruguay 
6 TeleTech (United States)  Argen tina, Brazil, Costa Rica, Mexico 
7 ICT Group (United States)  Argentina, Costa Rica, Mexico 
8 Sykes (United States)  Brazil, El Salvador 
9 24/7 Customer (India)  Guatemala 
10 Stream (United States)  Costa Rica,  Dominican Republic, El Salvador 
a  Locations presented here for Atento  are not necessarily offshore operations. 
Source : ECLAC (2009), p. 76.  S/C/W/314 
 Page 31 
 
 
  Table A-8:  footprint of major inte grated BPO/IT companies (offshore si tes or global delivery centres) in 
Latin America and the Caribbean  
Company  Countries 
IBM Global Services (United Stat es)  Argentina, Brazil, Mexico 
Accenture (United States)  Brazil 
HP Services (including EDS) (United States) Argentina, Brazil, Chile, Mexico 
CapGemini (France)  Argentina, Brazil, Chile, Guatemala, Mexico 
ACS (United States)  Brazil, Dominican Republic, Guatemala, Jamaica, Mexico 
Tata Consulting (India)  Argentina, Brazil, Chile, Ecuador, Mexico, Uruguay 
Wipro (India)  Brazil, Mexico 
Infosys (India)  Mexico 
Source : ECLAC (2009), p. 80. 
 
 
 
__________