Manual on Statistics of International Trade in Services

4. Statistical treatment of modes of supply: the
simplified approach
2.72. Modes of supply are central to GATS. They are
defined in its very first article and are the basis on which
WTO member countries’ commitments are scheduled.
The <strong>Manual</strong> introduces, for the first time, modes of
supply in the statistical context.
2.73. However, a comprehensive statistical treatment
of modes of supply that would fully mirror the GATS
legal definition and other GATS articles would be out of
the scope of the present <strong>Manual</strong>. Such an approach
would fail to ensure compatibility with international
statistical systems, such as BPM5 and the 1993 SNA,
and would demand excessive resources for
implementation.
2.74. Drawing on GATS legal provisions, the <strong>Manual</strong>
proposes, as a first approximation, a simplified approach
to the statistical allocation of trade in services to modes
of supply that is operational in the statistical context and
consistent with international statistical standards.
(a) Simplified statistical criteria
2.75. To allow the allocation of services transactions to
modes of supply in a systematic way, the <strong>Manual</strong>
proposes unambiguous criteria derived from the GATS
definitions. The <strong>Manual</strong> acknowledges that this
allocation is only a first step in the estimation process
and that further research and empirical information will
be required both to validate and to refine the estimates.
These simplified criteria are based on the following
considerations:
(a) To the extent that foreign affiliates are a good
approximation of commercial presence entities, FATS
statistics provide information of service supplied
through mode 3;
(b) Service transactions between residents and nonresidents,
as captured in the balance of payments
accounts described in the BPM5 system, broadly cover
mode 1, mode 2, and part of mode 4. 37
37 There are some limitations, however, to the assimilation of
commercial presence entities to foreign affiliates or to the
correspondence between BPM5 service transactions and
modes 1, 2 and 4. For example, such limitations relate to the
foreign ownership criteria used for the identification of
foreign affiliates and to the residence criteria that underpin
statistical systems, while GATS legal provisions are not based
20
2.76. It is therefore possible to derive much
information on services transactions by modes of supply
from BPM5 and FATS statistics. However, the fourth
mode of supply, mode 4, goes beyond the notion of
“services transactions” in BPM5 and FATS. It would be
necessary to draw on supplementary data from BPM5
and FATS as well as from other statistical systems, such
as migration and labour market statistics, to have a
broader picture of mode 4.
2.77. The simplified statistical criteria are based on the
territorial location of the transactors (consumer and
supplier) at the time the service is supplied, as well as on
the type of the supplier (an individual or a business
enterprise, respectively termed “natural or juridical
persons” in GATS). They yield the same results as the
GATS definition in most cases, while also providing
clear guidelines for those that present special difficulties.
However, it should be stressed that the <strong>Manual</strong>’s
guidelines on the compilation of statistics by modes of
supply are laid out only for statistical purposes and do
not imply any legal interpretation of GATS provisions.
These criteria are shown in chart 1. In addition, each
mode of supply is further illustrated in chart 2.
2.78. These statistical criteria for the allocation of
modes of supply are further complemented with
simplification rules discussed below.
(b) Balance of payments statistics by modes of supply
2.79. Balance of payments service transactions broadly
correspond to mode 1, mode 2, and part of mode 4. Yet a
given balance of payments service category generally
includes transactions corresponding to several modes.
Moreover, several modes of supply may be used for a
single service transaction. With a view to facilitating the
analysis and compilation of service transactions between
residents and non-residents by modes of supply, the
<strong>Manual</strong> suggests the use of two simplification rules.
2.80. First, separate identification of modes deemed to
be relatively marginal in a given service category is not
recommended. Thus, if the major part of a given service
category corresponds to services supplied under one
mode, this mode could be fully allocated to that service
category. For example, telecommunications services
would be allocated to cross-border supply (mode 1)
because most transactions between residents and non-
on these statistical criteria. These limitations are discussed
further in the present chapter as well as in chapters III and IV
below.