OECD Services Trade Restrictiveness Index: Policy trends up to 2018 - January 2018

 
OECD Services Trade Restrictiveness Index: Policy trends up to 2018 - January 2018
OECD Services Trade
Restrictiveness Index:
Policy trends up to 2018
January 2018
OECD Services Trade Restrictiveness Index: Policy trends up to 2018 - January 2018
OECD TRADE AND AGRICULTURE DIRECTORATE

This booklet is published under the responsibility of the Secretary-General of the OECD. The
opinions expressed and the arguments employed herein do not necessarily reflect the official
views of OECD countries.
The publication of this booklet has been authorised by Ken Ash, Director of the Trade and
Agriculture Directorate
Comments are welcome and should be sent to tad.contact@oecd.org.

Photo credits: Cover Illustration © Jeffrey Fisher

© OECD (2018)

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OECD Services Trade Restrictiveness Index: Policy trends up to 2018 - January 2018
STRI Policy Trends up to 2018

   The OECD Services Trade Restrictiveness Index (STRI) is a unique tool that provides up-to-
   date information on regulatory changes that affect trade in services in 44 countries across
   22 sectors, accounting for over 80% of global services trade.

   Launched in 2014 and updated annually, the STRI offers a comprehensive and transparent
   overview of global trends in services trade regulations, while facilitating deeper analysis
   into the effects that such regulations have on trade in services. The STRI is updated each
   year to incorporate changes that have been introduced through new or amended laws and
   regulations. This evidence-based tool allows policymakers to assess reform options,
   benchmark them relative to global best practice, and assess their likely impact; helps trade
   negotiators identify restrictions that most impede trade; and is a source of regulatory
   transparency for businesses seeking to enter foreign markets.

   Results from the most recent STRI update show that although there is evidence of some
   progressive liberalisation of services markets, the overall 2017 STRI indices are more
   restrictive than in 2016, highlighting an overall tightening of the global regulatory
   environment for services trade. These results are largely due to restrictive horizontal policy
   changes being implemented in a number of countries that affect all services sectors. This
   was particularly the case for measures affecting services supplied through the temporary
   movement of natural persons (Mode 4), due to more stringent entry conditions being
   applied to persons seeking to provide services on a temporary basis, such as intra-corporate
   transferees, contractual or independent services suppliers. In addition, some countries
   have introduced economy-wide limitations on cross-border data flows.

   Top regulatory performers

      The top ten countries with the most open markets for services trade in 2017 are Latvia,
       Ireland, Germany, Netherlands, Australia, Lithuania, Denmark, Japan, United Kingdom,
       and the Czech Republic.
      Norway recorded the most significant liberalising reforms in 2017, followed by Indonesia
       and Iceland.
      Leading sectoral reformers from 2014 to 2017 include Mexico in telecommunications, the
       People’s Republic of China in rail freight transport services, and Japan in logistics services
       (customs brokerage).

   Top services exporters

      The United States exported services worth USD 752 billion in 2016, followed by the
       United Kingdom (USD 333 billion), Germany (USD 281 billion), France (USD 237 billion),
       and the People’s Republic of China (USD 207 billion).

© OECD 2018
OECD Services Trade Restrictiveness Index: Policy trends up to 2018 - January 2018
4│   STRI POLICY TRENDS UP TO 2018

 Key analytical findings

        Services trade barriers impede services exports. OECD estimates reveal that the
         trade cost equivalent of services trade barriers largely exceeds the average tariff on
         traded goods. Services trade barriers have a strong anti-export bias that impedes
         services exports as much as services imports. Trade costs arise both from policies that
         explicitly target foreign suppliers and from domestic regulation that falls short of best
         practice in the area of competition policy and rule-making.
        Consumers and firms pay the cost of trade restrictions. Entry barriers allow
         incumbent firms to gain market power, limit competition, and delay innovation. The
         costs of a policy environment that reduces competition from new entrants, whether
         domestic or foreign, is ultimately borne by consumers and downstream business
         customers, who pay higher prices and enjoy less choice than they would in more
         competitive markets. The resulting price increases for domestic users of services can
         be quantified as a sales tax equivalent on their purchases. On average, estimates of the
         tax equivalent of the restrictions recorded in the STRI range from about 3% in road
         freight transport to almost 40% in broadcasting. In some segments of transport and
         logistics, as well as in construction, the average estimated sales tax equivalent is about
         20%, and in some countries almost 80%, imposing substantial additional costs on
         manufacturing enterprises and eventually on final customers.
        Regulatory co-operation can reduce trade costs. Differences among countries in
         regulating the same service create additional costs for exporters that need to adapt to
         new sets of rules in each new market. Regulatory differences become more important
         as trade barriers come down to a level where firms start to consider entering multiple
         markets. Thus, when markets are relatively open, trade costs imposed by the average
         degree of regulatory differences is estimated at about 40% in ad valorem terms. While
         regulatory harmonisation can reduce trade costs, removing the most onerous
         restrictions first is a prerequisite to maximise the gains from regulatory co-operation.
        Trade in services depends on the movement of professionals. The cross-border
         movement of people does not account for a large share of services trade, but it is
         essential for international business operations. Mobility of natural persons across
         international borders is particularly key for trade in business services, which in turn
         is an important channel for knowledge transfer.
        Trade in services underpins the digital economy. Liberalisation and pro-
         competitive reforms in the telecommunications sector are associated with a
         substantial reduction in the trade costs for business services. High capacity networks
         at competitive prices are a necessary condition for a digital transformation of
         knowledge-intensive services. Access to the professions and the services they provide
         is also essential.
        Services reforms help SMEs. The costs of dealing with regulatory hurdles and
         complying with diverging regulations in every new market fall more heavily on small
         and medium-sized enterprises (SMEs). For micro firms engaging in cross-border
         exports, an average level of services trade restrictiveness represents an additional 7%
         in trade costs relative to large firms. Establishing an affiliate abroad involves even
         higher costs; for a small firm an average level of services trade restrictiveness is
         estimated to be equivalent to an additional 12% tariff compared to large firms.

                                                                                           © OECD 2018
OECD Services Trade Restrictiveness Index: Policy trends up to 2018 - January 2018
STRI POLICY TRENDS UP TO 2018   │5

Monitoring services policy changes 2014-2017

   The 2017 STRI update identified 70 policy changes across all countries. A similar number of
   changes were recorded in 2016 (75) and 2015 (69) (Figure 1). These changes include
   policies that both restrict and liberalise services trade. The main policy changes identified
   over the years are described in Annex I for each country covered.
   Since 2014, the number of liberalising reforms has been higher than the number of
   restrictive changes. In 2016, liberalising reforms accounted for almost 76% of the total
   recorded in the STRI database. Tightening measures were most visible in 2015, when 36%
   of changes were restrictive for services trade. However, most changes that tightened trade
   apply horizontally across the economy and contribute to the STRI results across all sectors,
   leading to a higher overall impact on the indices.
   While about 24% of all changes were trade restrictive in 2016, this increased to 32% in
   2017 due to the introduction in a few countries of more stringent conditions across the
   economy, particularly those limiting the temporary movement of natural persons providing
   services (Figure 2).

                                       Figure 1. Extent of policy changes across years

               Number of policy changes recorded in the STRI database across all sectors and countries

                                              Tightening                       Liberalising

    2017

    2016

    2015

           0            10               20                30   40        50              60      70         80

       Source: STRI database (http://oe.cd/stri-db).

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OECD Services Trade Restrictiveness Index: Policy trends up to 2018 - January 2018
6│   STRI POLICY TRENDS UP TO 2018

                          Figure 2. Nature of changes in 2016 and 2017, number of measures
                                                   Liberalising   Tightening
                                    2016                                       2017

                    24%
                                                                    32%

                                                       76%                             68%

       Source: STRI database (http://oe.cd/stri-db).

Policy changes across modes of supply

  The STRI differentiates between the nature of policy changes by modes of services supply
  through commercial establishment (Mode 3), temporary movement of natural persons
  (Mode 4), and changes that affect services irrespective of the mode through which they are
  supplied (all modes). The latter category is comprised of barriers to competition and
  regulatory transparency, in particular.
  Figure 3 shows that services supplied via temporary movement of natural persons (Mode 4)
  are particularly affected, with the highest net increase in the STRI results in 2017. This is
  the result of a few countries applying stricter labour market tests for some or all three
  categories of persons covered in the STRI (intra-corporate transferees, contractual services
  suppliers, and independent services suppliers). Two countries have introduced quotas on
  intra-corporate transferees and contractual services suppliers. In one country, the duration
  of stay for corporate transferees was reduced, while two countries introduced new
  conditions for obtaining permits, including the condition that sponsors must support the
  person in question.
  Liberalising reforms have also been introduced in several countries. These included the roll-
  back of burdensome ex ante regulations when these were no longer needed, as well as the
  simplifying of customs procedures for courier and logistics firms. A number of countries,
  particularly those within the European Union, also liberalised policies affecting the
  temporary movement of natural persons (Mode 4 access) by introducing new permits for
  intra-corporate transferees coming from non-EU Member States, providing more clarity on
  the conditions and duration of stay applicable to these persons.

                                                                                             © OECD 2018
STRI POLICY TRENDS UP TO 2018   │7

   At the same time, policy changes have been implemented that restrict services supplied
   through all modes. These include raising barriers to competition in local markets, more
   stringent conditions for foreign suppliers to access the public procurement markets in some
   countries, as well as measures that affect regulatory transparency.
   With respect to services supplied through commercial establishments, trade restrictive
   changes include measures that affect foreign investment, particularly conditions related to
   establishing and managing foreign branches. The impact of liberalising measures has been
   narrower, although reforms included the easing of foreign ownership limitations, lifting of
   restrictions on capital transfers, and the easing of conditions affecting board of directors
   and managers.

                                   Figure 3. Policy changes and modes of supply (2017)
                                      Cumulative change in STRI results across countries

                                                       Liberalising   Tightening

          0.1

        0.08

        0.06

        0.04

        0.02

            0

        -0.02

        -0.04

        -0.06
                                Mode 3                            Mode 4                   All modes

       Source: STRI database (http://oe.cd/stri-db).

Sector-specific impacts

   Looking at the STRI results through a sectoral lens, the net effect of trade restricting
   measures has been larger than that of the trade liberalising measures (in terms of
   cumulative changes in the value of the indices across all countries during 2016-17; see
   Figure 4). This is mainly due to the fact that most trade restrictive changes recorded in this
   period were horizontal in nature, and, as such, they affect the indices of all sectors. For
   instance, tightening measures affecting the temporary movement of people contributes to
   increasing the results across all sectors.

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8│   STRI POLICY TRENDS UP TO 2018

 The highest net liberalisations have taken place in some of the sectors that form part of the
 digital network and the transport and logistics chain. In motion pictures and sound
 recording, one country has liberalised foreign ownership completely, whereas others have
 eased the conditions for granting subsidies to film producers and abolished statutory
 monopolies on copyright management in sound recording. In logistics services, reforms
 particularly affected customs brokers where conditions on licensing have been lowered in
 some countries, and in others the customs procedures have been made easier through, for
 instance, raising the de minimis thresholds and establishing single windows for customs
 procedures.
 In 2017, the largest overall increase in services restrictiveness at the sectoral level was seen
 in the telecommunications sector. In some countries, foreign suppliers no longer benefit
 from regulated access and interconnection fees and conditions imposed on local
 incumbents. Other sectors with high cumulative restrictiveness include some of the physical
 infrastructure services, such as construction services. In addition, changes in public
 procurement processes and to the nationality requirements for the boards of directors of
 construction firms are changes that contributed to increased trade restrictiveness.

                                                           Figure 4. Impact of policy changes on the STRI results, 2016-2017
                                                                                                          Cumulative changes in results across countries

                                       Cumulative trade liberalisations (2016 to 2017)                                                                                                                                                                                 Cumulative trade restrictions (2016 to 2017)
       0.3
      0.25
       0.2
      0.15
       0.1
      0.05
         0
     -0.05
      -0.1
     -0.15
                                                                                           Broadcasting
                                                                       Computer services

                                                                                                          Custom brokerage
                                                                                                                             Rail freight transport

                                                                                                                                                                           Storage and warehousing

                                                                                                                                                                                                                                              Road freight transport
                                                                                                                                                                                                                                                                       Air transport

                                                                                                                                                                                                                                                                                                                                                                                                       Construction
                                                     Sound recording

                                                                                                                                                                                                                                                                                                                                                                          Insurance

                                                                                                                                                                                                                                                                                                                                                                                                                                             Architecture services
              Motion pictures

                                                                                                                                                      Freight forwarding

                                                                                                                                                                                                                                                                                                                                                                                      Legal services

                                                                                                                                                                                                                                                                                                                                                                                                                      Engineering services
                                Telecommunications

                                                                                                                                                                                                     Cargo-handling

                                                                                                                                                                                                                                                                                                            Courier services
                                                                                                                                                                                                                                                                                                                               Accounting services
                                                                                                                                                                                                                                                                                                                                                     Commercial banking
                                                                                                                                                                                                                      Distribution services

                                                                                                                                                                                                                                                                                       Maritime transport

                                Digital network                                                                                      Transport and distribution supply chain                                                                                                                                                   Market bridging and    Physical
                                                                                                                                                                                                                                                                                                                               supporting services infrastructure
                                                                                                                                                                                                                                                                                                                                                      services

        Source: STRI database (http://oe.cd/stri-db).

                                                                                                                                                                                                                                                                                                                                                                                                                                 © OECD 2018
STRI POLICY TRENDS UP TO 2018      │9

Overall STRI performance in 2017

         Figure 5 ranks the overall STRI performance for 44 countries in 2017, based on sectoral
         results and rankings.1 The trend line depicts the extent to which countries’ indices perform
         well compared to top sectoral performers, on the one hand, and the entire sample on the
         other. Closer proximity to the trend line indicates a more balanced performance, whereas a
         higher position in the line is associated with better overall results.

                                                                                           Figure 5. Overall STRI performance, 2017
                                                 25

                                                            LVA

                                                 20
  Number of top 10 rankings across all sectors

                                                                             IRL

                                                                                   DEU
                                                 15                                          KOR

                                                                                      AUS LTU
                                                                           NLD              CHL

                                                                                   DNK       JPN
                                                 10
                                                                                                      CZE         PRT
                                                                                          GBR
                                                                                                            NZL
                                                                                                                  SVN
                                                                                                   FRA
                                                                                                                   CAN
                                                                                                            LUX              USA
                                                 5
                                                                                                                                                  MEX
                                                                                                                  EST SVK
                                                                                                                               POL ZAF   COL    CRI
                                                                                                                   SWE
                                                                                                                                   GRC   AUT FIN              ISR
                                                                                                                                                        BEL     BRA CHN IDN ISL IND
                                                                                                                  ESP
                                                 0
                                                       0              5              10               15                20           25 ITA    HUN 30          35 RUS
                                                                                                                                                          TUR CHE           40        45
                                                                                                                                                    NOR
                                                                                                                   Average ranking

                                                      Source: STRI database (http://oe.cd/stri-db).

         1.                                           Ranks vary from 1 (best performing) to 44 (least performing) for each sector. The variable works in the
                                                      following way: country A ranks, for instance, 5th out of 44 countries in sector X, 12th in sector Y, 1st in
                                                      sector Z, and so on. The variable shows the simple average of these ranks for all 22 sectors.

© OECD 2018
10 │    STRI POLICY TRENDS UP TO 2018

    Where countries have a high number of well-performing sectors and low average sector
    ranks, their overall STRI performance increases. In some cases, countries might rank lower
    on the sectoral average but still have a high number of sectors with low scores, which is the
    case when indices are low in most but a few sectors (e.g. outlier scores may exist due to a
    completely closed market in one sector but open across the others).
    The top ten countries with the highest overall performance in the 2017 STRI were Latvia,
    Ireland, Germany, Netherlands, Australia, Lithuania, Denmark, Japan, United Kingdom, and
    the Czech Republic.

Leading sectoral reformers

    Market opening reforms in Norway had the most significant effect in 2017, amounting to a
    net STRI reduction of 0.27 across all sectors (Figure 6, Panel A). This is the result of reforms
    introduced in the rail transport sector and lowering barriers to competition by establishing
    an independent competition authority and appeal body for competition policy decisions.
    Two other top reformers are Indonesia and Iceland, with net reductions of 0.1 and 0.09
    respectively.
    Indonesia has embarked on extensive reforms over the past few years, with comprehensive
    and far-reaching reforms in 2015 and 2016 resulting in a net decrease of 0.9 of its STRI
    results across all sectors and years (Figure 6, Panel B). Korea and China have each recorded
    significant decreases as well between 2014 and 2017, with net reductions of 0.32 and 0.30
    respectively.
    The reforms in Indonesia were largely the result of a wide-scale reform package introduced
    under the revised Negative Investment List, the main instrument governing foreign direct
    investment. The conditions for foreign investment and trade have been significantly eased
    across a number of sectors, including telecommunications, air transport, logistics services
    and some audio-visual services (OECD, 2017a). As a result, the STRI results have decreased
    significantly, with the greatest effects being observed in motion pictures and sound
    recording services where net reductions amounted to 0.25 and 0.17 respectively (Figure 7).

                         Figure 6. Countries with highest net reductions in overall STRI results
                                       Cumulative decrease in STRI results across all sectors

                              A. (2017)                                                B. (2014-2017)
   0                                                              0
             NOR                    IDN                  ISL                IDN                 KOR     CHN

 -0.2                                                           -0.2

 -0.4                                                           -0.4

 -0.6                                                           -0.6

 -0.8                                                           -0.8

  -1                                                             -1

         Source: STRI database (http://oe.cd/stri-db).

                                                                                                        © OECD 2018
STRI POLICY TRENDS UP TO 2018            │ 11

                                              Figure 7. Policy reforms in Indonesia, 2014-17

                                                              2017                        2014
                                                                      Computer
                                              Customs brokerage      0.9         Construction

                                   Freight forwarding                0.8                        Legal
                                                                     0.7
                            Storage and
                                                                     0.6                                  Accounting
                            warehouse
                                                                     0.5

                Cargo-handling                                       0.4                                          Architecture
                                                                     0.3
                                                                     0.2
           Courier services                                                                                            Engineering
                                                                     0.1
                                                                      0

       Rail freight transport                                                                                          Telecommunication

          Road freight transport                                                                                  Distribution

                     Maritime transport                                                                   Broadcasting

                                        Air transport                                           Motion pictures

                                                        Insurance                Sound recording
                                                                      Banking

       Source: STRI database (http://oe.cd/stri-db).

   Mexico has introduced important reforms to modernise its telecommunications sector in
   the past years through lowering barriers to foreign direct investment and fostering a more
   competitive environment for telecommunications services suppliers. These reforms
   resulted in a net STRI decrease of 0.24 in telecommunications (Figure 8, Panel A), halving
   Mexico’s index value in this sector. Emerging evidence shows the benefits of these reforms
   through fast-growing penetration rates, lower prices, and better quality services (OECD,
   2017b). For instance, more than 50 million additional people in Mexico have subscribed to
   mobile broadband since the reforms were introduced.
   China has revised the Catalogue for the Guidance of Foreign Investment Industries in 2015
   and 2017 – the main instrument governing foreign direct investment – which contributed to
   lowering its indices in sectors such as rail freight transport services (Figure 8, Panel B).
   In 2017, Japan has introduced reforms in customs brokerage services, removing, among
   others, the economic needs tests for granting licenses to customs brokers. Complemented
   by a number of economy-wide reforms, Japan’s index in this sector has been reduced by
   0.04 or about 20% compared to the index value in 2014 (Figure 8, Panel C). In legal services,
   the United States was the country with most reductions in the indices, introducing in 2016 a
   temporary licensing regime for foreign attorneys to practice in New York State (Figure 8,
   Panel D).

© OECD 2018
12 │     STRI POLICY TRENDS UP TO 2018

                                                  Figure 8. Leading sectoral reformers
                    Cumulative decrease in STRI results between 2014 and 2017, in selected sectors

                    A. Telecommunications services                              B. Rail freight transport services
              0                                                           0
                    MEX                ISR               IDN                    CHN              NOR                 BEL
       -0.05                                                          -0.05

        -0.1                                                           -0.1

       -0.15                                                          -0.15

        -0.2                                                           -0.2

       -0.25                                                          -0.25

                   C. Logistics - customs brokerage                                      D. Legal services
         0                                                               0
                   JPN                CHL                IDN                    USA               KOR                 SWE

   -0.05                                                              -0.05

       -0.1                                                            -0.1

   -0.15                                                              -0.15

       -0.2                                                            -0.2

   -0.25                                                              -0.25

  Source: STRI database (http://oe.cd/stri-db).

References

              OECD (2017a), Services Trade Policies and the Global Economy, OECD Publishing,
                    Paris. http://dx.doi.org/10.1787/9789264275232-en
              OECD (2017b), OECD Telecommunication and Broadcasting Review of Mexico 2017,
                    OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264278011-en

                                                                                                                       © OECD 2018
STRI POLICY TRENDS UP TO 2018     │ 13

      More information

                                 The STRI analytical findings, presented in Services Trade Policies and
                                 the Global Economy, demonstrate the potential gains from strategic
                                 regulatory reforms such as:
                                  Scaling back restrictions on foreign entry and barriers to the
                                    movement of professionals that discriminate against foreign
                                    services providers.
                                  Adopting strategic reforms across a spectrum of trade, investment
                                    and competition policies to facilitate trade in services.
                                    Targeting bottlenecks in transportation and logistics services to
                                      reduce trade costs.

 STRI online tools
 The STRI Internet page is a single window to the STRI regulatory database, interactive tools such as
 Compare Your Country and Policy Simulator, methodological notes, and links to analytical OECD Trade
 Policy Papers on services trade.

 Compare your country (http://oe.cd/stri-cyc)

                                           This interactive website can be used to compare services
                                           trade restrictiveness across 22 sectors in 44 OECD
                                           countries and partner economies. Key economic
                                           indicators are projected onto a world map to give a
                                           comparative view of the importance of services in the
                                           countries covered by the STRI.

 Policy simulator (http://sim.oecd.org/)

                                           The policy simulator provides all STRI information by
                                           country and by sector. It can be used to understand how
                                           the STRI indices are calculated, to analyse the
                                           contribution of each policy measure to the index, to
                                           compare countries in detail, and to simulate the impact of
                                           a policy change on the index value. Simulations can be
                                           saved and shared with other users, and the relevant data
                                           can be downloaded.

© OECD 2018
14 │   STRI POLICY TRENDS UP TO 2018

 Online STRI regulatory database (http://oe.cd/stri-db)

                                               The online STRI regulatory database displays complete
                                               and up-to-date regulatory information collected for the
                                               sector composite indices. This qualitative database
                                               contains information on trade restrictions and behind-
                                               the-border regulations in the 22 STRI services sectors.
                                               The database entries are documented with reference to
                                               the sources (title and articles of the relevant law), with an
                                               internet link to each legal source.

 STRI Composite Indices at OECD.Stat (http://oe.cd/stri-stat)

                                               The STRI indices are easily accessed and extracted from
                                               OECD.Stat (under the heading: Industry and Services,
                                               subheading: Services Trade Restrictions). In addition to
                                               the five policy areas, the indices are presented by four
                                               additional classifications: GATS market access/national
                                               treatment and domestic regulation/other, GATS modes of
                                               supply, Discriminatory versus non-discriminatory
                                               measures, Firm’s establishment versus on-going
                                               operations. The indices of regulatory heterogeneity based
                                               on the same information included in the STRI regulatory
                                               database are also available under this section.

 STRI mobile application (available for iOS and Android devices)

                                               This mobile application features an integrated policy
                                               simulator function with downloadable data for offline
                                               use. Built-in quick links guide users to other STRI tools
                                               and materials. The application is available on Apple’s App
                                               Store and Google Play Store.

           OECD Services Trade Restrictiveness Index             OECD Trade and Agriculture Directorate
           http://oe.cd/stri                                     http://www.oecd.org/tad

           OECD STRI sector notes and papers                     Sign-up for OECD e-mail alerts
           http://oe.cd/stri-sectors                             http://www.oecd.org/OECDdirect

                                        For further information contact:

           John Drummond                                          Hildegunn Kyvik Nordås
           Head, Trade in Services Division                       Senior Trade Policy Analyst
           (John.DRUMMOND@oecd.org)                               (Hildegunn.NORDAS@oecd.org)

                                                                                                          © OECD 2018
STRI POLICY TRENDS UP TO 2018   │ 15

                                                   Annex I

                                        Policy Changes Across Countries

      This annex presents some of the main policy changes identified in the annual STRI updates
      for the countries covered. Detailed country information can be found on the STRI website
      and online database.2
 Australia
      In June 2016, New South Wales introduced a 4% surcharge for foreign persons (including
      foreign corporations) in addition to the duty payable on the purchase of residential
      property. Furthermore, foreigners are also subject to a land tax surcharge of 0.75% (in
      2017) for residential property.
 Austria
      As of October 2017, a new permit for intra-corporate transferees is available for non-
      EU/EEA nationals. The period of validity has been extended from one to three years for
      managers and specialists. Moreover, the Federal Ministry for Labour, Social Affairs and
      Consumer Protection may, by regulation, fix quotas for the employment of non-EU/EEA
      intra-corporate transferees. In the telecommunications sector, parts of the fixed line
      telephony market have been deregulated in May 2017.
 Belgium
      B Logistics, one of the main rail freight operators in Belgium, was partly privatised in
      2015. The state-owned Belgian national railway company, SNCB, now owns only 31% of
      its equity shares.
 Brazil
      The Federal Supreme Court ruled in 2015 to exempt the designated postal operator from
      VAT and other local taxes for both its postal and courier services.
 Canada
      As of June 2017, the investment review threshold under the Investment Canada Act was
      raised to CAD 1 billion in enterprise value for investors wishing to directly acquire control
      of a Canadian business. This applied to: (1) WTO investors that are not state-owned
      enterprises; and (2) by non-WTO investors that are not state-owned enterprises whereas
      the Canadian business that is the subject of the investment is, immediately prior to the
      implementation of the investment, "controlled by a WTO investor".
 Chile
      In 2017, Chile revised its customs regulation, introducing, inter alia, an Authorised
      Economic Operators Scheme open to foreign firms, and authorising the release of goods
      before the determination and payment of duties.

 2.   Available at http://oe.cd/stri.

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16 │   STRI POLICY TRENDS UP TO 2018

 China, People’s Republic of
       The 2015 revision of the Catalogue for the Guidance of Foreign Investment Industries –
       the main instrument governing foreign direct investment in China – eased investment
       conditions in key service sectors such as distribution and rail freight transport services. In
       telecommunications services, China introduced regulations in 2015 on number portability
       and interconnection in fixed line. It also revised the Telecom Business Classification
       Catalogue, which since 2016 mandates the resale of mobile communication services. In
       September 2016, the general requirement for prior approval of foreign investments was
       replaced with an online notification requirement. The Catalogue for the Guidance of
       Foreign Investment Industries is updated every two to five years, the most recent entering
       into effect in June 2017. The new Catalogue introduced a negative list approach, lifting
       investment screening in sectors not covered in the Catalogue. A new Cybersecurity Law
       entered into effect in 2017, introducing new conditions affecting data transfers abroad.
 Colombia
       Since 2015, the Financial Superintendence has been financially autonomous. In 2016, the
       New Customs Statute (Nuevo Estatuto Aduanero) introduced a de minimis regime imposing
       minimum warehouse surface requirements for postal operators, and an obligation for
       courier services operators to be available 24/7.
 Costa Rica
       In 2017, Costa Rica ratified the United Nations Convention on Contracts for the
       International Sale of Goods, which aligned national contract rules for cross-border
       transaction to internationally standardised rules.
 Czech Republic
       As of April 2017, the Regulatory Body for Access to Transport Infrastructure (Úřad pro
       přístup k dopravní infrastruktuře) has been established as an independent regulator to
       oversee access to the rail infrastructure for rail transport operators.
 Denmark
       There are no significant policy changes that affect the score of the STRI during the period
       2014-2017.
 Estonia
       In 2017, foreign workers were subject to wage parity requirements. In 2015, rules were
       introduced to improve the enforcement of copyright in the digital environment.
 Finland
       A major state-owned construction enterprise, Destia, was privatised in 2014. In the
       distribution sector, shop opening hours were deregulated in 2015, and labelling standards
       reformed in 2016.
 France
       In 2016, the labour market test for intra-corporate transferees was removed. However, a
       transport company established outside of France and seeking to provide cross-border
       transport services to France must submit a notification to the labour inspectorate where
       the service will be provided (Déclaration préalable de détachement transnational).
       Moreover, as of 2016, only licensed professionals can hold shares in auditing firms.

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STRI POLICY TRENDS UP TO 2018      │ 17

 Germany
      There are no significant policy changes that affect the score of the STRI during the period
      2014-2017.
 Greece
      There are no significant policy changes that affect the score of the STRI during the period
      2014-2017.
 Hungary
      Since 2015, Hungary applies quotas on work permits for natural persons with non-EU
      nationalities working on a temporary basis in the country. Such work permits are required
      for services suppliers as well. As of 2016, intra-corporate transferees from third countries
      can stay in Hungary for up to 12 months on their initial permits.
 Iceland
      Temporary capital controls introduced following the financial crisis have been gradually
      lifted and the remaining controls relevant for services trade were lifted in 2016. Iceland
      has also reformed its copyright enforcement regime, abolishing a statutory monopoly in
      copyright management in sound recording, and aligning its regulation of copyright
      management and subsidies in the film industry with EU directives. Deregulation of mobile
      telecommunications services took effect in 2017. On the other hand, new restrictions on
      movement of people were introduced in 2017, limiting access for contractual services
      providers to education and R&D activities, and introducing an obligation to purchase local
      health insurance as a condition for obtaining work permits for intra-corporate transferees
      and independent services providers.
 India
      In 2015 India lifted foreign equity limits from 26% to 49% in the insurance sector and
      foreign branches were permitted in the reinsurance field. Further investment
      liberalisation took place in 2016 when foreign equity limits were removed for airport
      services, and cable and satellite broadcasting and foreign equity limits were eased in civil
      aviation. Minimum capital requirements for establishing a company were eliminated in
      most sectors in 2016. On the other hand, India introduced an equalization levy of 6% on
      purchases of advertising services from non-resident companies in 2017.
 Indonesia
      Indonesia has fully or partially opened several sectors to foreign investment under the
      2016 Negative Investment List.3 These include air freight transport, logistics services,
      telecommunications, audio-visual services, architecture and engineering services.
      Minimum capital requirements were removed in 2016. In 2017, more favourable
      conditions for the release of imported goods before determination and payment of duties
      have benefitted distribution, courier and logistic services. In the same year, Indonesia
      revoked minimum capital requirements for maritime transport service. However, the
      Construction Act of 2017 imposed nationality requirements on the management of
      construction and architecture companies.

 3.   Daftar bidang usaha yang tertutup dan bidang usaha yang terbuka dengan persyaratan di bidang penanaman
      modal, Government Regulation No. 44/2016, available at:
      http://peraturan.bkpm.go.id/jdih/front/form/19133

© OECD 2018
18 │   STRI POLICY TRENDS UP TO 2018

 Ireland
       In 2016, Ireland introduced a time frame of six months within which the Central Bank of
       Ireland, the sector regulator, must decide on applications for authorisation to provide
       insurance services.
 Israel
       In 2016, the Capital Market, Insurance and Savings Authority, the sector regulator for
       insurance services, was made independent from the Ministry of Finance. In commercial
       banking, the residency requirement for two-thirds of the board members of banks was
       lifted in 2017.
 Italy
       In 2017, Italy implemented the EU Directive regarding intra-corporate transferees from
       outside the European Union. Accordingly, the maximum duration of stay for intra-
       corporate transfers was changed to 36 months for managers and specialists.
 Japan
       In 2017, Japan amended Customs Business Act by removing the economic needs test.
       Customs brokerage firms are no longer required to place at least one qualified customs
       specialist in each office.
 Korea
       The requirement that foreign investors transfer stocks to Korean national(s) within six
       months in cases where their registration is cancelled was lifted in 2015. Restrictions on
       internet banking were also lifted. Conversely, a requirement that only licensed architects
       may establish an architectural firm was introduced that same year.
 Latvia
       As of January 2017, the fixed telecommunication market segment has been deregulated.
 Lithuania
       Since September 2016, Lithuania no longer applies a labour market test for contractual
       service suppliers staying in the country for less than 12 months. As of June 2017, the
       market for fixed telephony has been deregulated. That same year, foreign professionals
       are no longer required to take a local exam to become a licensed auditor.
 Luxembourg
       Since December 2015, approval to establish a branch may be refused if reciprocity for
       Luxembourg companies is not guaranteed by the national law of the foreign investor.
 Mexico
       In recent years, Mexico has passed a series of reforms, including, inter alia, a new
       telecommunications and broadcasting law, and a new financial law. The
       telecommunications reforms eased foreign participation in the mobile and fixed-line
       services segments of the sector. It also introduced a new independent regulator, with
       exclusive authority over the sector and new sanctioning powers, as well as a series of pro-
       competitive measures challenging the dominant position of incumbent firms. The financial
       reform aimed to strengthen prudential regulation, increase credit penetration and
       promote competition. As a result, foreign financial institutions can now open branches in
       Mexico to provide insurance services. Although this possibility is still subject to

                                                                                           © OECD 2018
STRI POLICY TRENDS UP TO 2018   │ 19

      government authorisation, and granted on the basis of reciprocity, it nevertheless
      increases certainty and clarity on the regulatory environment in the sector. In 2015,
      Mexico established an independent rail regulatory agency. In 2017, Mexico rolled back the
      foreign equity restrictions on domestic air transport services; foreign ownership of air
      companies is now permitted up to 49%.
 Netherlands
      There are no significant policy changes that affect the score of the STRI during the period
      2014-2017.
 New Zealand
      In May 2015, the Companies Act 1993 was amended to require all companies to have at
      least one director domiciled in New Zealand or an “enforcement country” (currently only
      Australia). A temporary ban on the parallel importation of films for commercial sale for a
      period of five months from the film’s international release ended on 31 October 2016.
 Norway
      In 2016, Norway eliminated the postal monopoly for letters in courier services. Pro-
      competitive regulations overseen by an independent regulator was introduced in the rail
      freight sector in 2017. By the same token the competition authority can no longer be
      instructed by the government on individual cases or on the general interpretation of
      competition laws, and its decisions can be appealed to a newly established independent
      body.
 Poland
      There are no significant policy changes that affect the score of the STRI during the period
      2014-2017.
 Portugal
      Portugal privatised CP Carga, the former public rail freight transporter and cargo-handler,
      in 2015. It has also taken steps to ensure the independence of the insurance regulator. The
      liberalisation in architecture services in 2015 repealed a reciprocity requirement for
      admission to the Portuguese Order of Architects, which is a prerequisite to practice in the
      country. However, a reciprocity requirement was introduced for the Order of Portuguese
      Engineers and the Order of Portuguese Technical Engineers.
 Russian Federation
      In 2015, a new legal requirement came into force requiring that certain personal data
      collected in the Russian Federation be stored on local servers. In 2016, the Russian
      Federation introduced limitations on foreign participation in the total authorised capital of
      credit institutions, and lowered the threshold for foreign equity allowed in broadcasting
      companies. As of 2017, certain subsidies granted for the acquisition of rail transport
      equipment cannot be granted to foreign entities.
 Slovak Republic
      In courier services, a pro-competitive dispute settlement mechanism, under the auspices
      of the regulatory authority, was introduced in 2016.

© OECD 2018
20 │   STRI POLICY TRENDS UP TO 2018

 Slovenia
       Slovenia adopted a new Collective Management of Copyright and Related Rights Act in
       2016, in which conditions for membership in a collective copyright management body are
       based on objective, transparent and non-discriminatory rules.
 South Africa
       South Africa eliminated quotas for contractual services suppliers and independent
       services suppliers. It repealed labour market tests for intra-corporate transferees in 2014.
 Spain
       Since 2014, labour market tests have been lifted for contractual services suppliers. At the
       same time, their maximum duration of stay was extended from 12 to 24 months. In 2014,
       the duration of stay for intra-corporate transferees and independent services suppliers
       was shortened from 60 to 36 months and 24 months, respectively.
 Sweden
       Fixed line telephony was deregulated in 2017, following a market analysis by the regulator
       which found the sector to be competitive.
 Switzerland
       There are no significant policy changes that affect the score of the STRI during the period
       2014-2017.
 Turkey
       In 2015, Turkey adopted a regulation implementing the 2013 Law on Liberalisation of the
       Turkish Rail Transport. The new regulation paved the way for operationalising the
       reforms prepared for the rail transport sector. In 2016, Turkey adopted a new law on the
       protection of personal data.
 United Kingdom
       A cap on contractual interest rates for short-term credit was implemented in January
       2015. As of 2017, under the new Immigration Skills Charge Regulations, a sponsor must
       pay a fee of GBP 1 000 per year to the Secretary of State each time it assigns a certificate of
       sponsorship to a non-EEA skilled worker (Tier 2). Smaller employers pay GBP 364 per
       year and certain exemptions may be granted.
 United States of America
       Since 2016, foreign attorneys can obtain a temporary authorisation to practice law in New
       York. As of July 2016, foreign banks with USD 50 billion or more in US assets must form a
       US intermediate holding company (IHC) to act as the parent company of all of the foreign
       bank’s US subsidiaries. In 2016, the threshold for de minimis regime on custom duties for
       imported merchandise was raised to USD 800.

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STRI POLICY TRENDS UP TO 2018            │ 21

                                                    Annex II

                                              STRI Indices by sector

The digital network

                            Figure A.1. Telecommunications services, 2017

               Restrictions on foreign entry            Restrictions to the movement of people    Other discriminatory measures
               Barriers to competition                  Regulatory transparency                   Average
               STRI 2014

        0.6

        0.5

        0.4

        0.3

        0.2

        0.1

         0

                     Figure A.2. Television and broadcasting services, 2017

               Limitations on foreign entry             Limitations on the movement of people      Other discriminatory measures
               Barriers to competition                  Regulatory transparency                    Average
               STRI 2014
        0.7
        0.6
        0.5
        0.4
        0.3
        0.2
        0.1
         0

© OECD 2018
22 │   STRI POLICY TRENDS UP TO 2018

                                     Figure A.3. Motion pictures services, 2017

                   Limitations on foreign entry       Limitations on the movement of people   Other discriminatory measures
                   Barriers to competition            Regulatory transparency                 Average
                   STRI 2014
          0.6

          0.5

          0.4

          0.3

          0.2

          0.1

           0

                                    Figure A.4. Sound recording services, 2017

                   Limitations on foreign entry       Limitations on the movement of people   Other discriminatory measures
                   Barriers to competition            Regulatory transparency                 Average
                   STRI 2014
          0.5

          0.4

          0.3

          0.2

          0.1

           0

                                                                                                                    © OECD 2018
STRI POLICY TRENDS UP TO 2018           │ 23

                                        Figure A.5. Computer services, 2017

              Restrictions on foreign entry           Restrictions to the movement of people    Other discriminatory measures
              Barriers to competition                 Regulatory transparency                   Average
              STRI 2014

        0.5
       0.45
        0.4
       0.35
        0.3
       0.25
        0.2
       0.15
        0.1
       0.05
          0

The transport and distribution supply chain

                                  Figure A.6. Air transport services, 2017

              Restrictions on foreign entry           Restrictions to the movement of people    Other discriminatory measures
              Barriers to competition                 Regulatory transparency                   Average
              STRI 2014
        0.7
        0.6
        0.5
        0.4
        0.3
        0.2
        0.1
         0

© OECD 2018
24 │   STRI POLICY TRENDS UP TO 2018

                                  Figure A.7. Maritime transport services, 2017

                   Restrictions on foreign entry     Restrictions to the movement of people   Other discriminatory measures
                   Barriers to competition           Regulatory transparency                  Average
                   STRI 2014
         0.6

         0.5

         0.4

         0.3

         0.2

         0.1

           0

                                Figure A.8. Rail freight transport services, 2017

                   Restrictions on foreign entry     Restrictions to the movement of people   Other discriminatory measures
                   Barriers to competition           Regulatory transparency                  Average
                   STRI 2014

            1
          0.9
          0.8
          0.7
          0.6
          0.5
          0.4
          0.3
          0.2
          0.1
            0

                                                                                                                     © OECD 2018
STRI POLICY TRENDS UP TO 2018           │ 25

                          Figure A.9. Road freight transport services, 2017

               Restrictions on foreign entry         Restrictions to the movement of people    Other discriminatory measures
               Barriers to competition               Regulatory transparency                   Average
               STRI 2014

        0.5

        0.4

        0.3

        0.2

        0.1

         0

                                       Figure A.10. Courier services, 2017

               Restrictions on foreign entry         Restrictions to the movement of people    Other discriminatory measures
               Barriers to competition               Regulatory transparency                   Average
               STRI 2014
           1
         0.9
         0.8
         0.7
         0.6
         0.5
         0.4
         0.3
         0.2
         0.1
           0

© OECD 2018
26 │   STRI POLICY TRENDS UP TO 2018

                                       Figure A.11. Distribution services, 2017

                   Restrictions on foreign entry       Restrictions to the movement of people   Other discriminatory measures
                   Barriers to competition             Regulatory transparency                  Average
                   STRI 2014
          0.7
          0.6
          0.5
          0.4
          0.3
          0.2
          0.1
           0

                           Figure A.12. Logistics cargo-handling services, 2017

                   Restrictions on foreign entry       Restrictions to the movement of people   Other discriminatory measures
                   Barriers to competition             Regulatory transparency                  Average
                   STRI 2014
            1
          0.9
          0.8
          0.7
          0.6
          0.5
          0.4
          0.3
          0.2
          0.1
            0

                                                                                                                       © OECD 2018
STRI POLICY TRENDS UP TO 2018               │ 27

               Figure A.13. Logistics storage and warehouse services, 2017

              Restrictions on foreign entry    Restrictions to the movement of people     Other discriminatory measures
              Barriers to competition          Regulatory transparency                    Average
              STRI 2014

          1
        0.9
        0.8
        0.7
        0.6
        0.5
        0.4
        0.3
        0.2
        0.1
          0

                   Figure A.14. Logistics freight forwarding services, 2017

               Restrictions on foreign entry     Restrictions to the movement of people      Other discriminatory measures
               Barriers to competition           Regulatory transparency                     Average
               STRI 2014

        0.5
       0.45
        0.4
       0.35
        0.3
       0.25
        0.2
       0.15
        0.1
       0.05
          0

© OECD 2018
28 │   STRI POLICY TRENDS UP TO 2018

                            Figure A.15. Logistics customs brokerage services, 2017

                   Restrictions on foreign entry      Restrictions to the movement of people   Other discriminatory measures
                   Barriers to competition            Regulatory transparency                  Average
                   STRI 2014
            1
          0.9
          0.8
          0.7
          0.6
          0.5
          0.4
          0.3
          0.2
          0.1
            0

Market bridging and supporting services

                                   Figure A.16. Commercial banking services, 2017

                   Restrictions on foreign entry      Restrictions to the movement of people   Other discriminatory measures
                   Barriers to competition            Regulatory transparency                  Average
                   STRI 2014
          0.6

          0.5

          0.4

          0.3

          0.2

          0.1

           0

                                                                                                                      © OECD 2018
STRI POLICY TRENDS UP TO 2018           │ 29

                                        Figure A.17. Insurance services, 2017

              Restrictions on foreign entry               Restrictions to the movement of people    Other discriminatory measures
              Barriers to competition                     Regulatory transparency                   Average
              STRI 2014
        0.6

        0.5

        0.4

        0.3

        0.2

        0.1

         0

                                              Figure A.18. Legal services, 2017

              Restrictions on foreign entry               Restrictions to the movement of people    Other discriminatory measures
              Barriers to competition                     Regulatory transparency                   Average
              STRI 2014
          1
        0.9
        0.8
        0.7
        0.6
        0.5
        0.4
        0.3
        0.2
        0.1
          0

© OECD 2018
30 │   STRI POLICY TRENDS UP TO 2018

                                Figure A.19. Accounting and auditing services, 2017

                   Restrictions on foreign entry             Restrictions to the movement of people   Other discriminatory measures
                   Barriers to competition                   Regulatory transparency                  Average
                   STRI 2014
            1
          0.9
          0.8
          0.7
          0.6
          0.5
          0.4
          0.3
          0.2
          0.1
            0

Physical infrastructure services

                                             Figure A.20. Construction services, 2017

                   Restrictions on foreign entry             Restrictions to the movement of people   Other discriminatory measures
                   Barriers to competition                   Regulatory transparency                  Average
                   STRI 2014

          0.5
         0.45
          0.4
         0.35
          0.3
         0.25
          0.2
         0.15
          0.1
         0.05
            0

                                                                                                                             © OECD 2018
STRI POLICY TRENDS UP TO 2018           │ 31

                                     Figure A.21. Architecture services, 2017

              Restrictions on foreign entry          Restrictions to the movement of people    Other discriminatory measures
              Barriers to competition                Regulatory transparency                   Average
              STRI 2014
        0.7
        0.6
        0.5
        0.4
        0.3
        0.2
        0.1
         0

                                      Figure A.22. Engineering services, 2017

              Restrictions on foreign entry          Restrictions to the movement of people    Other discriminatory measures
              Barriers to competition                Regulatory transparency                   Average
              STRI 2014
        0.5
       0.45
        0.4
       0.35
        0.3
       0.25
        0.2
       0.15
        0.1
       0.05
          0

© OECD 2018
OECD Services Trade Restrictiveness Index: Policy trends up to 2018
January 2018                                         http://oe.cd/stri
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