Reforming Services Trade Policies for Development (P172000) Services Trade Policy Commitments: Inventory of Non-Conforming Measures in Bilateral Investment Treaties (BITs) Roberto Echandi, Alena Bulatnikova, Giulia Jonetzko and Fatima Qurashi, February 24, 2021 1. Background and objective Services – ranging from transport and telecommunications to health and education – account for an overwhelming share of overall economic activities, generating more than two-thirds of GDP, attracting over three-quarters of foreign direct investment in developed countries, employing the most workers, and creating most new jobs globally. They are also increasingly delivered across borders under various modes of supply. Consequently, services are central to the growth and poverty reduction agenda, and international trade and investment in services is critical to services performance. Despite their widely acknowledged contribution to economy-wide performance, services remain shackled by a host of restrictive policies maintained by countries that impede cross-border trade, investment activity, consumer and labor mobility. Helping developing countries design policies to better use services trade for economic development requires detailed diagnostics to shed light on the ways in which services contribute to a countries’ competitiveness and integration in the global marketplace. However, unlike for trade in goods - and despite international efforts over the last few years - serious gaps in data remain that must be closed in order to better model the impacts of services trade policy; support the development of services trade diagnostics; and to provide implementation support for services trade negotiations and policy reforms. As part of this project, Reforming Services Trade Policies for Development (P172000), the ETIRI, DECTI teams have been working together with the WTO Trade in Services Division in updating the Services Trade Restrictiveness Database (STRD),which includes the Services Trade Restrictiveness Index (STRI) for a series of countries. STRIs are index numbers based on estimates of restrictiveness levels assigned to various kinds of applied measures affecting trade in services. 1 Reforming Services Trade Policies for Development (P172000) They are useful for comparative purposes and rankings. However, for purposes of promoting a focused dialogue on services-related reforms, and in addition to a simple index showing the level of restrictiveness existing in a particular sector, stakeholders must be able to identify the specific law or regulation which may need to be reformed to reduce or eliminate trade-distortive effects. The identification of the specific regulatory measures affecting trade in services in a given market is also critical for the private sector, which needs to assess the regulatory playing field before starting to trade services with or invest in a particular country. That is why, as a joint effort between the World Bank and the WTO, the I-TIP Services Database, the services component of the Integrated Trade Intelligence Portal of the WTO was created. The Services I-TIP database includes WTO Members’ specific commitments under the General Agreement of Trade in Services (GATS), as well as commitments undertaken in International Free Trade Agreements applicable to trade in services. However, neither the I-TIP Database, nor the STRD, takes into consideration trade in services commitments included in Bilateral Investment Treaties (BITs). There are more than 3,000 BITs in force world-wide. These agreements apply to investments in all sectors, including commercial presence in services. However, most of these agreements do not address barriers to trade in services, as they tend to apply only to protect investments established in the host country in accordance with the latter’s domestic laws and regulations. Nevertheless, over the last two decades, an increasing number of countries have negotiated BITs that apply both in the pre-and post establishment phases, and as a result, incorporate specific commitments regarding establishment of trade in services through commercial presence. Based on the increasing importance of BITs applying to the establishment of commercial presence in services is that this project prepared the inventory of non-conforming measures (NCMs) in BITs. Such inventory maps specific commitments in all sectors regarding national treatment, MFN and market access affecting trade in services mode 3 in the phase of pre-establishment. 2 Reforming Services Trade Policies for Development (P172000) An inventory of non-conforming measures (NCMs) is a tool that would enable to complement both the STRI and the I-TIP database for Free Trade Agreements by identifying each and every single measure that is non-conforming with the key principles of promoting freer trade in services in mode 3. For many countries these inventories already exist and have been incorporated into International Trade and Investment Agreements under a negative list approach. Furthermore, for other countries which may have not negotiated such treaties they may have nevertheless prepared a negative list under their own domestic legislative agendas. In this context, a key opportunity to complement the STRI is a compilation of NCMs included in Trade in Services Chapters both in existing in deep preferential trade agreements (PTAs) and BITs which have been negotiated. Notably, such agreements (in particular PTAs) often include a standstill commitment for trade in services across all sectors and in all modes of supply with respect to key barriers to trade in services, specifically: (i) national treatment, (ii) MFN, (iii) market access, (iv) local presence, (v) top managerial personnel and (vi) performance requirements. Some BITs may include such standstill commitments for trade in services under Mode 3 for all sectors. This means that for every country which has one of these agreements, it should be possible to identify services trade commitments (see Box 2 for an example). For deep PTAs, the Trade Research Group and the Global Trade and Regional Integration Unit of the World Bank – in collaboration with the WTO - have recently collected this data for more than 50 countries in Europe, the Americas, Africa, the Middle East and Asia Pacific region (see Box 3). However information has not yet been gathered for BITs which include information not only for services but also for investment in primary and manufacturing sectors. This component will expand the data collection exercise on NCMs in BITs. The value added in preparing an inventory of NCMs, in addition to its complementarity to the STRI, is threefold. Firstly, inventories of NCMs comprise an official listing of laws and regulations which have been explicitly recognized by governments as barriers to trade in services. Thus, the possibility of any country contesting the assessment of the listed measures as barriers to trade is low - as could happen with other types of exercises. Furthermore, some BITs follow an approach whereby they bind the whole universe of laws and regulations to all the disciplines of the Treaty, 3 Reforming Services Trade Policies for Development (P172000) only excluding a limited set of sectors from those commitments. Secondly, inventories of NCMs apply not only to a set of services sectors, but to all of them and therefore have broad coverage. Thirdly, being part of international agreements, NCMs are used as a benchmark to the commitments of standstill, rollback and gradual liberalization of trade in services for each of the countries concerned. Thus, once these inventories were prepared, it would be possible to leverage them to identify and compare the actual level of bindings on all services sectors in an economy. Once the primary data was collected through the inventory, processing such information in a user-friendly manner (perhaps even including it in existing WBG database) would be useful for policymakers and researchers in identifying convergent patterns of regulations/restrictions amenable to negotiating strategies. It could also be of interest to business users interested in understanding the regulatory status quo in countries in which they seek to trade or invest. This note describes the work undertaken in compiling this inventory, including the methodology used to mine primary data, the conceptual framework to map the trade in services restrictions, and the criteria and format used to prepare the inventory. In addition, and as part of the work to start leveraging the inventory for policy advice, the African Union Commission requested the World Bank to provide support for the ongoing African Continental Free Trade Area (AfCFTA) negotiations on trade in services. The World Bank, in co-operation with the WTO Secretariat, led the process by leveraging the inventory of all BITs negotiated by African countries to identify the acquis which the AfCFTA parties can leverage to conclude the trade in services negotiations. A PPT describing this first application of the inventory is attached as Annex to this report. 2. Conceptual Framework: Distinguishing between relevant and non-relevant BITs for mapping trade in services establishment restrictions. As shown by Figure 1, currently there are more than two thousand BITs in force worldwide. All of those treaties, the majority of which were negotiated and entered into force in the 1990s, apply to both portfolio and foreign direct investment (FDI) in all sectors, including investment in services, i.e. trade in services under mode 3 based on the GATS terminology. However, not all of these BITs are relevant for purposes of mapping barriers affecting the entry of services suppliers in host countries. The key criteria to distinguish relevant from irrelevant BITs when undertaking that 4 Reforming Services Trade Policies for Development (P172000) exercise is the approach used in the different treaties to deal with the issue of admission and establishment of investment in the host country . Figure 1. Number of IIAs Negotiated: 1980-2019 The issue of admission and establishment refers to the entry of investments and investors of a contracting party into the territory of another contracting party. According to customary international law, States have the right to regulate or prohibit the admission of foreign investors— and consequently, of their investments-- in their territories. Regardless of how liberal a country may be regarding foreign investment, the fact is that traditionally most nations of the world have refrained from granting foreign nationals and companies an unrestricted right to invest into their economies. Historically, access limitations imposed on foreign investment have been justified on economic, social, political and even national security grounds. The negotiation of most BITs has evolved within this context, most of these investment agreements have not been conceived as instruments to provide foreign investors with the right of establishment –which amounts to market access—in the host countries. Indeed, from an historical perspective, most BITs are agreements which have focused on providing investment protection only in those economic activities in which foreign investors may be permitted to invest in accordance with the national legislation of the host State. However, as will be explained in this section, among the BITs negotiated during the last decade, 5 Reforming Services Trade Policies for Development (P172000) there are different techniques and modalities to deal with the issue of admission and establishment of foreign investment. 2.1. The use of the admission clause One of the key distinctive features of overwhelming majority of the BITs negotiated during the 1990s is that they only protect investment which has been established and admitted in the territory of the host country in accordance with the latter`s domestic legislation. This is what is called the “admission clause�., and it has two main significant legal implications. First, the admission clause limits the scope of application of the agreement to the established investment. Thus, BITs do not grant any protection to the investor in the phase where the investment has not yet been effected –what is known in the investment jargon as protection in the “pre-establishment� phase. This allows the host country to apply any screening mechanism for foreign investment it may have in place and therefore, to freely determine the conditions under which –if any- foreign investment will be allowed to enter the country. In short, those BITs which contain an admission clause do not grant investors of one contracting party the right to establish investments in the territory of the other contracting party. The host country then maintains the sole discretion to decide whether investment shall be permitted in its territory. A second implication of the admission clause is that, regardless of whether the host country maintains any screening mechanism for foreign investment, there is no obligation on the part of the host country to dismantle or even bind1 any existing discriminatory legislation which may affect the access of foreign investment into any sphere of economic activity. Because BITs apply only to those investments which have been admitted in accordance with the host country´s laws, if domestic legislation allows for the existence of State monopolies or reserves certain economic activities to national investors or even to foreign investors of a particular nationality, that is part of the legal context in which foreign investment is to be deemed admitted into the host country. 1 In the investment context, to bind an existing level of market access refers to the obligation of the host State to refrain from enacting any new restrictive or discriminatory measure regarding the access foreign investment may have into the domestic economy. As the case with tariff bindings, nothing precludes the host State to dismantle restrictions affecting foreign investment. 6 Reforming Services Trade Policies for Development (P172000) However, it should be noted that, once the investment is admitted into the host country, that investment becomes entitled to all the protection guarantees included in the applicable BIT. Although all of them have the same rationale, the language used in the drafting of the admission clauses varies among the different treaties. For example, some of BITs negotiated during the last decade, like the one between Russia and Ethiopia, just specify that investment of investors of the Parties “shall be admitted in accordance with its laws and regulations�. Other BITs, like the agreement between Singapore and Mauritius and the one negotiated between Thailand and Bahrein address the issue of admission through a clause delimiting the scope of application of the agreement and specify that for the investment to be admitted into the host country, a written approval may be required. Other BITs, like the agreement negotiated between Australia and Egypt, not only stress the fact that the host country is not binding its legislation regarding investment entry – legislation which may vary “from time to time� -- but also indicate that the right of establishment may be contingent on the investment policies adopted by the host country. Table 1. Examples of admission clauses in BITs BIT between BIT between BIT between BIT between Australia Russia and Ethiopia Singapore and Thailand and Bahrein and Egypt (2000) Mauritius (2002) (2001) (2000) Article 2.1. ARTICLE 2 Article 2. Article 3 Promotion and APPLICABILITY OF Scope of Application Promotion and Protection of THIS AGREEMENT protection of investments Investments 1. The benefits of this 1. Each Contracting Party 1. This Agreement shall Agreement shall apply to 1. Each Party shall shall encourage and create only apply - the investments by the encourage and promote favourable conditions for (a) in respect of investors of one investments in its territory Investors of the other investments in the territory Contracting Party in the by investors Contracting Party to invest of the Republic of territory of the other of the other Party and in its territory and admit Singapore, to Contracting Party which is shall, in accordance with such all investments made by specifically approved in its laws and investment investments in accordance investors of the Republic writing by the competent policies with its laws and of Mauritius which are authority in accordance applicable from time to regulations specifically approved in with the laws and time, admit investments writing by the competent regulations of the latter authority designated by Contracting Party the Government of the Republic of Singapore and upon such conditions, if any, as it shall deem fit; (b) in respect of the investments in the territory of the Republic of Mauritius, 7 Reforming Services Trade Policies for Development (P172000) to all investments made by investors of the Republic of Singapore which are specifically approved in writing by the competent authority designated by the Government of the Republic of Mauritius and upon such conditions, imposed in conformity with the law, as it shall deem fit;… 2.2. National Treatment, Most Favored Nation (MFN) Treatment and Market Access in the pre-establishment phase Besides those BITs containing an admission clause, traditionally there has been a second category of investment agreements which follow a different approach, granting certain rights of entry to investments from treaty partners. In particular, this second approach consists in providing foreign investors with most-favored-nation (MFN) and national treatment -and in some cases market access understood as the commitment to abstain to impose non-discriminatory quantitative restrictions-- not only once the investment has been established, but also with respect to the right of establishment. Thus, these BITS provide MFN and national treatment both in the pre- establishment and post-establishment phases of the investment. Simply stated, this means that investors of one Party will be granted the same right to invest in the territory of the other as granted to domestic investors and investors of any other third country. These BITs have been designed with the purpose of assuring the free entry of such investments – albeit with country-specific reservations—into the territory of the host country. Usually a host country will regard foreign investment in certain sectors of its economy as contrary to its domestic legislation or to its vital national interests. Thus, when a right of establishment appears in a BIT, the parties retain some degree of flexibility to control the admission of FDI from the other party, usually by allowing for the inclusion of a list of industries, activities or laws and regulations that may be exempted from the obligations to grant national treatment and MFN to the pre- establishment phase of the investment. 8 Reforming Services Trade Policies for Development (P172000) The use of this approach was traditionally limited to those BITs concluded by the United States and after the mid-1990s -- once NAFTA had been negotiated-- also by those agreements concluded by Canada. However, during the last decade, not only Canada and the United States continued to negotiate BITs with a significant number of countries, but also, other nations like Japan have also started to use this approach in the negotiation of their own BITs. Within this category of agreements the interesting aspect to underline is the different techniques that have evolved to deal with the exceptions to the national treatment and MFN obligations. During the last decade, annexes including reservations became more sophisticated and precise, delimiting with greater detail the scope of the negative list of exceptions, and consequently, demanding greater skill and attention at the moment of elaborating them. Table 2. Examples of provisions granting national and MFN treatment in the pre- establishment phase subject to one annex of reservations BIT between the United States BIT between Canada and Costa Rica and Azerbaijan (1998) (1997) ARTICLE II ARTICLE III 1. With respect to the establishment, acquisition, Establishment of Investment expansion, management, conduct, operation and sale or 1.Each Contracting Party shall permit establishment of a other disposition of covered investments, each Party new business enterprise or acquisition of an existing shall accord treatment no less favorable than that it business enterprise or a share of such enterprise by accords, in like situations, to investments in its territory investors or prospective investors of the other Contracting of its own nationals or companies (hereinafter "national Party on a basis no less favorable than that which, in like treatment") or to investments in its territory of nationals circumstances, it permits such acquisition or or companies of a third country (hereinafter "most establishment by: favored nation treatment"), whichever is most favorable (a) investors or prospective investors of any third (hereinafter "national and most favored nation State; treatment"). Each Party shall ensure that its state (b) its own investors or prospective investors. enterprises, in the provision of their goods or services, For the purpose of this Agreement, “prospective investor� accord national and most favored nation treatment to means any natural person or enterprise of one Contracting covered investments. Party who actually has carried out concrete steps toward making an investment in the territory of the other 2. (a) A Party may adopt or maintain exceptions to the Contracting Party. obligations of paragraph 1 in the sectors or with respect to the matters specified in the Annex to this Treaty. In 2. A Contracting Party may adopt or maintain exceptions adopting such an exception, a Party may not require the to the obligation stated in paragraph (1) above, in the divestment, in whole or in part, of covered investments sectors, measures, or with respect to the matters specified existing at the time the exception becomes effective…. in Sections I, II, III and VI of Annex I of this Agreement. Indeed, as table 2 shows, BITs negotiated during the end of the 1990s and during the beginning of this century used to have just one annex listing the sectors where the host country would reserve its right not to grant national and MFN treatment in the pre-establishment phase. In those 9 Reforming Services Trade Policies for Development (P172000) agreements, once a sector is included in the Annex, the Contracting Party concerned is free to maintain or adopt new measures inconsistent with the obligations to provide national and MFN treatment. It should be noted that some agreements, like the BIT between Canada and Costa Rica cited below, provide for the possibility of making reservations just with respect to the investor in the pre-establishment phase, while other agreements, like the BIT between the United States and Azerbaijan, also allows the contracting parties to refrain from granting national or MFN treatment to the investment already established. More recently, BITs providing for national and MFN treatment in the pre-establishment phase have tended to use a more sophisticated approach to deal with reservations to those obligations. In this regard, three trends seem evident. First, the possibility of making reservations to refrain from granting national and MFN treatment in both the pre and post establishment phases of the investment is now generalized. Thus, BITs recently negotiated by the United States, Canada and Japan allow the Contracting Parties to make reservations not only regarding the treatment to be provided to the investors of the other Contracting Party, but also to regarding their investments. Second, the Contracting Parties are now allowed to make reservations to only to the obligations of national and MFN treatment, but also to other obligations usually included in this kind of agreements, such as performance requirements and top managerial personnel. Third, this category of BITs now includes two different kinds of annexes or reservations. One annex includes a list of existing laws and regulations which are inconsistent with one or several of the obligations from which is possible for the Contracting Parties to adopt reservations. This is an annex of non-conforming measures, the effect of which is to bind the level of conformity existing between the domestic legislation of the Contracting Parties and the obligations of the BIT at the time of the negotiations.2 Thus, once the BITs enters into force, Parties may amend any of the non-conforming measures included in this annex, provided that the amendment does not 2 Some agreements, like the BIT negotiated between United Status and Uruguay, contain two annexes of non- conforming measures. While Annex I covers all sectors in general, Annex III applies only to financial services. 10 Reforming Services Trade Policies for Development (P172000) decrease the conformity of the measure with the obligation concerned as it existed immediately before the amendment. Table 3 illustrates concrete examples. Table 3. Examples of provisions providing for Annexes of Non-Conforming Measures in BITs BIT between the United States Canada Model BIT BIT between Japan and and Uruguay (2004) Vietnam (2004) (2003) Article 14: Non-Conforming Article 9 Article 6 Measures Reservations and Exceptions 1. Notwithstanding the provisions of 1. Articles 3, 4, 8, and 9 do not 1. Articles 3, 4, 6 and 7 shall not Article 2 or 4, each Contracting apply to: apply to: Party may maintain any exceptional measure, which exists on the date on (a) any existing non-conforming (a) any existing non-conforming which this Agreement comes into measure that is maintained by a measure that is maintained by force, in the sectors or with respect Party at: to the matters specified in Annex II (i) a Party at the national level, as set to this Agreement. (i) the central level of government, out in its Schedule to as set out by that Party in its Annex I, or 2. Each Contracting Party shall, on Schedule to Annex I or Annex III, (ii) a sub-national government; the date on which this Agreement comes into force, notify the other (ii) a regional level of government, (b) the continuation or prompt Contracting Party of all existing as set out by that Party in its renewal of any non-conforming exceptional measures in the sectors Schedule to Annex I or Annex III, or measure referred to in subparagraph or with respect to the matters (a); specified in Annex II. Such (iii) a local level of government; notification shall include (c) an amendment to any non- information on the following (b) the continuation or prompt conforming measure referred to in elements of each exceptional renewal of any non-conforming subparagraph (a) to the extent that measure: (a) sector and sub-sector or measure referred to in subparagraph the amendment does not decrease matter; (b) obligation or article in (a); or the conformity of the measure, as it respect of the exceptional measure; existed immediately before the (c) legal source of the exceptional (c) an amendment to any non- amendment, with Articles 3, 4, 6 and measure; (d) succinct description of conforming measure referred to in 7. the exceptional measure; and (e) subparagraph (a) to the extent that purpose of the exceptional the amendment does not decrease measure. the conformity of the measure, as it existed immediately before the 3. Each Contracting Party shall amendment, with Article 3, 4, 8, endeavor to progressively or 9. reduce or eliminate the exceptional measures notified pursuant to paragraph 2 above. 4. Neither Contracting Party shall, after the entry into force of this Agreement, adopt any new exceptional measure in the sectors or with respect to the matters specified in Annex II. 5. The provisions of paragraph 4 above shall not be construed so as to prevent a Contracting Party from amending or modifying any existing exceptional measure, provided that such amendment or modification does not decrease the conformity of the exceptional measure, as it 11 Reforming Services Trade Policies for Development (P172000) existed immediately before the amendment or modification, with the provisions of Article 2 or 4. 6. In cases where a Contracting Party makes such amendment or modification, the Contracting Party shall, prior to the entry into force of the exceptional measure or, in exceptional circumstances, as soon thereafter as possible: (a) notify the other Contracting Party of the elements of the exceptional measure as set out in paragraph 2 of this Article; and (b) provide, upon request by that other Contracting Party, particulars of the exceptional measure to that other Contracting Party. 7. Notwithstanding the provisions of paragraph 4 of this Article, each Contracting Party may, in exceptional financial, economic or industrial circumstances, adopt any exceptional measure in the sectors or with respect to the matters specified in Annex II, provided that such Contracting Party shall, prior to the entry into force of the exceptional measure: (a) notify the other Contracting Party of the elements of the exceptional measure as set out in paragraph 2 of this Article; (b) provide, upon request by that other Contracting Party, particulars of the exceptional measure to that other Contracting Party; (c) allow that other Contracting Party reasonable time to make comments in writing; (d) hold, upon request by that other Contracting Party, consultations in good faith with that other Contracting Party with a view to achieving mutual satisfaction; and (e) take an appropriate action based upon the written comments made pursuant to sub-paragraph (c) of this paragraph or the results of the consultations held pursuant to sub- paragraph (d) above. BITs recently negotiated by the United States, Canada and Japan also envisage a second kind of annex which comprises a list of economic activities or sectors where the Contracting Parties may maintain or adopt measures inconsistent with one or several of the obligations of the BIT. Thus, 12 Reforming Services Trade Policies for Development (P172000) in the areas or sectors included in this second annex, Parties do not bind any existing laws or regulations, rather they reserve their right to adopt new non-conforming measures which may have not existed at the time of negotiations. This is why this kind of annex is often known as annex of “future measures�. From the perspective of the investor, it is clear that BITs that provide for MFN and national treatment at the pre-establishment phase are more advantageous than those containing an admission clause, as the former agreements provide with more certainty regarding the conditions of entry into the host country. Table 4 illustrates with some concrete examples how BITs recently negotiated provide for this kind of annex. Table 4. Examples of provisions in BITs providing for Annexes of Future Measures BIT between the United States Canada Model BIT BIT between Korea and Japan and Uruguay (2004) (2002) (2004) Article 14: Non-Conforming Article 9 Article 4 Measures Reservations and Exceptions 1. Notwithstanding the provisions of … Article 2, paragraph 3 of Article 8, 2. Articles 3, 4, 8, and 9 do not …. or Article 9, each Contracting Party apply to any measure that a Party 2. Articles 3, 4, 6 and 7 shall not may adopt or maintain any measure adopts or maintains with respect to apply to any measure that a Party not conforming with the obligations sectors, subsectors, or activities, as adopts or maintains with respect to imposed by Article 2, paragraph 3 of set out in its Schedule to Annex II. sectors, subsectors or activities, as Article 8, or Article 9 (hereinafter set out in its schedule to referred to as an "exceptional 3. Neither Party may, under any Annex II. measure") in the sectors or with measure adopted after the date of respect to the matters specified in entry into force of this Treaty and Annex I to this Agreement. covered by its Schedule to Annex II, require an investor of the other 2. Each Contracting Party shall, on Party, by reason of its nationality, to the date on which this Agreement sell or otherwise dispose of an comes into force, notify the other investment existing at the time the Contracting Party of all existing measure becomes effective. exceptional measures in the sectors or with respect to the matters specified in Annex I. Such notification shall include information on the following elements of each measure: (a) sector and sub-sector or matter; (b) obligation or article in respect of which the measure is taken; (c) legal source or authority of the measure; (d) succinct description of the measure; and (e) motivation or purpose of the measure. 3. In cases where a Contracting Party adopts any new exceptional measure in the sectors or with respect to the matters specified in 13 Reforming Services Trade Policies for Development (P172000) Annex I after the entry into force of this Agreement, such Contracting Party shall, prior to the entry into force of the measure or, in exceptional circumstances, as soon thereafter as possible: (a) notify the other Contracting Party of the elements of the measure as set out in paragraph 2 of this Article; and (b) hold, upon request by that other Contracting Party, consultations in good faith with that other Contracting Party with a view to achieving mutual satisfaction. This conceptual framework has been used as a basis to undertake the exercise of the inventory of non-conforming measures in BITs. Thus, the inventory maps all existing-non conforming measures (NCMs) with obligations of providing national treatment, MFN and market access that may affect trade in services in the phase of establishment of the commercial presence of services suppliers. Such approach will enable compatibility of data between the information gathered in this inventory and the information available in the I-TIP database on Trade Agreements regulating trade in services. 3. Methodology to mine and classify the data to prepare the inventory The analysis started by accessing all the texts of publicly available BITs currently in force worldwide. This was achieved by leveraging various public databases, in particular the following: • UNCTAD IIA data base: https://investmentpolicy.unctad.org/international-investment- agreements/by-economy • The Foreign Trade Information System (SICE) Database of the Organization of American States http://www.sice.oas.org/ • Electronic Database of Investment Treaties (EDIT) of the World Trade Institute at the University of Bern : • https://edit.wti.org/treaty/about • ICSID data base on investment treaties: https://icsid.worldbank.org/en/Pages/resources/Investment-Treaties.aspx 14 Reforming Services Trade Policies for Development (P172000) Based on the analysis of these databases comprising more than two thousand BITs negotiated worldwide and publicly listed, a set of 170 BITs including specific commitments related to the establishment of commercial presence for services were identified and mapped. This set of BITs comprise most of the investment treaties negotiated by the United States, Canada and Japan. Table 5. List of BITs included in the Inventory United States of America Canada Japan Albania Argentina Argentina Argentina Armenia Armenia Armenia Barbados Bangladesh Azerbaijan Benin Cambodia Bahrain Burkina Faso China Bangladesh Cameroon Colombia Belarus China Egypt Bolivia Costa Rica Georgia Bulgaria Côte d'Ivoire Hong Kong, China SAR Cameroon Croatia Iran Congo Czechia Iraq Croatia Ecuador Israel Czech Republic Egypt Jordan Democratic Rep of the Congo Guinea Conakry Kazakhstan Ecuador Hong Kong, China SAR; Kenya Egypt Hungary Korea, Republic El Salvador Jordan Kuwait Estonia Kuwait Laos Georgia Latvia Mongolia Grenada Lebanon Morocco Honduras Mali Mozambique Jamaica Moldova Myanmar Jordan Mongolia Oman Kazakhstan Nigeria Pakistan Kyrgyzstan Panama Papua New Guinea Latvia Peru Peru Lithuania Philippines Russian Federation Moldova Poland Saudi Arabia 15 Reforming Services Trade Policies for Development (P172000) Mongolia Romania Sri Lanka Morocco Russia Turkey Mozambique Senegal Ukraine Nicaragua Serbia United Arab Emirates Panama Slovakia Uruguay Poland South Africa Uzbekistan Romania Tanzania Viet Nam Rwanda Thailand Senegal Trinidad and Tobago Slovakia Ukraine Sri Lanka Uruguay Trinidad and Tobago Venezuela Turkey Ukraine Uruguay Uzbekistan Does not apply to establisment NT,MFN & MA apply establishment Only MFN in establishment Replaced by FTA BIT coexists with FTA Terminated 4. Country reports Specific reports for each country having a BIT in force applying in the pre-establishment phase to trade in services in mode 3 have been prepared. Each report lists the specific reservations to the key obligations affecting trade in services included in each agreement as applicable: (i) national treatment; (ii) MFN, (iii) Market Access (non-discriminatory quantitative restrictions), (iv) performance requirements, (v) Top managerial personnel and (vi) local presence. Further, each country report differentiates between reservations for existing non-conforming measures (i.e. laws and regulations inconsistent with applicable commitments) often included in a specific Annex, and reservations allowing the countries to maintain or adopt new non-conforming measures in the future (usually included in an annex for future measures, or Annex II). An explanation and illustration of a typical entry for a non-conforming measure is included in Figure 2 below . 16 Reforming Services Trade Policies for Development (P172000) Figure 2. Existing non-conforming measures: Annex I Example 17 Reforming Services Trade Policies for Development (P172000) Figure 2. Future Measures: Annex II Example This project has focused in the compilation, identification and analysis of these non-conforming measures. The data is now available in document format. Thus, a next stage would entail incorporating this data in a format compatible with the services I-TIP data base in order to incorporate this inventory to the services I-TIP portal. This will enable to start distilling and analyzing comparative patterns of restrictions across sectors and countries. 18 Reforming Services Trade Policies for Development (P172000) 5. Forward look As a global dataset, the inventory must be continuously updated and expanded to remain relevant and useful. However, empirical data suggests that with few exceptions, most countries are opting to negotiate investment chapters within the context of broader Free Trade Agreements rather than self-standing BITs. Thus, keeping the database updated should not represent a major challenge and most of the effort has already been undertaken with project. Subsequent updating work will likely remain marginal. The forward look for FY22, would be to plan the systematization of the data resulting from the inventory to incorporate it into the services I-TIP data base and starting to leverage this new wealth of information for further analytical and regulatory research on trade in services. 19