The Services Trade Restrictions Index (STRI) takes a value between 0 and 100, with higher values indicating more restrictive regimes. Policy regimes are divided into five broad categories: i) completely open, i.e., no restrictions at all (0); ii) completely closed, i.e., no entry allowed at all (100); iii) virtually open but with minor restrictions (25); iv) virtually closed but with very limited opportunities to enter and operate (75); and v) a final residual “middle” category of regimes that allow entry and operations but impose restrictions that are neither trivial nor stringent (50).

The STRIs for Eurasia show that the region maintains virtually open regimes with minor restrictions (see Table 17 and Appendix for more details). The financial and telecommunication sectors are the ones with the highest barriers to trade. The most closed economy is Belarus, with an overall index of 35.1, followed by Ukraine (27.2), Russia (25.7), and Uzbekistan (23.4). Belarus’s restrictions in telecommunications (mode 3) are associated to virtually closed regimes in fixed-line telecommunications. Beltelcom is a state-owned monopoly provider of services. If a foreign investor wishes to acquire a share of the incumbent, a resolution by the President is required. Constraints in telecommunications are also important in Russia and Uzbekistan. In the first case, entrance into fixedline telecommunications must be done through a subsidiary. The radio frequency spectrum may be limited, but licenses are allocated first come, first served or by auction. In the second case, a limit on licenses applies. The number of licenses and the method of allocation are determined by the Cabinet of Ministers.

Table 15. Services Trade Restrictions Index in Eurasian Countries

|Country|Overall|Financial|Telecomm.|Retail|Transportation|Professional|
|---|---|---|---|---|---|---|
|Belarus|35.1|53.8|62.5|0|36.8|40|
|Ukraine|27.2|24.4|25|25|26.7|35|
|Russian Federation|25.7|46.7|50|0|14.2|32|
|Uzbekistan|23.4|24.6|50|0|32|31.5|
|Kazakhstan|17|22.1|25|0|16.4|28|
|Kyrgyzstan|15.2|8.4|0|0|45.7|28|
|Georgia|11.5|9|0|0|8.8|37|
|Armenia|11.4|2.6|0|0|25|32|

Source: World Bank’s Services Trade Restrictions Database (2012).

Restrictions in the financial sector are relevant in Belarus and Russia. In the case of Belarus, a license for providing some banking services can be obtained two years after registration of the bank. There is a limit on licenses, due to a 50% threshold on foreign investment in the banking sector. If this limit is reached, foreign investment in banking would not be possible. In the case of automobile and life insurance, entry through a branch is not allowed. For entry through a subsidiary and acquisition, the foreign ownership limit is 49%. For a single foreign investor, the foreign ownership limit is 35%. In the case of Russia, entry in the banking system is possible through a subsidiary and/or representative office. There is no limit on foreign ownership. However, the limit on overall foreign investment in the banking sector is 12% of the overall assets of the bank. Licenses are subject to authorization of the Central Bank on a nondiscriminatory basis. At least 50% of the Board of Directors and 75% of the employees of the company should be Russian.

Trade policy barriers in the transportation sector are relatively important in Kyrgyzstan and Belarus, with STRI indexes of 45.7 and 36.8, respectively. In both cases, constrains are mainly associated to rail freight as the market is closed under a state monopoly. Trade policy barriers for countries with relatively low restrictions have been concentrated in professional services. In Ukraine, constraints appear in mode 4. For auditing services, there is an education requirement; foreign degrees are recognized if deemed acceptable to the Ukrainian authorities under the international treaties to which Ukraine is a party.

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