Manual on Statistics of International Trade in Services

Country A
Country B
Mode 1. Service transactions
Mode 2. Service transactions
Mode 3. Service transactions
Mode 4. Service transactions
Mode 4. Employment
Service firm
Natural 
person
Consumer 
from A
Consumer 
from A
Company
Foreign 
affiliate
Consumer 
from A
Supplier 
Temporary em ploym ent
Direct Investm ent in country A
Service 
supply
Consumer 
from A
Natural
person
Natural
person
Service 
supply
Self em ployed goes to country A
or em ployee sent by firm from B
Consumer 
from A
Supplier 
The service crosses the border
The consum er goes abroad
Service 
supply

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24 
recommended by the relevant statistical systems (see 
paras. 2.20 and 2.21 above). 
(d) Special problems in statistical treatment of mode 4 
2.94. Mode 4 services supplied through the presence of 
natural persons pose particular measurement problems that 
cannot be fully resolved within the BPM5 and FATS 
framework. In addition, no simple correspondence can be 
readily established between any existing statistical 
framework and the part of GATS mode 4 services that is 
not covered by the BPM5 concept of trade in services. The 
trade-related movement of natural persons has given rise to 
a need for information collected on a new conceptual basis. 
Although not a new phenomenon, the concept of mode 4 
delivery of services in trade is new; it must first be defined, 
and then a new statistical framework must be elaborated for 
measuring it. In that respect, annex I begins the process of 
constructing such a system: it reviews relevant existing 
statistical frameworks in order to identify useful aspects 
that might provide relevant measures for mode 4 services in 
the future. 
2.95. GATS is clear that its use of the term “presence” 
refers to a non-permanent presence. Although nowhere 
is the term “non-permanent” defined, countries have 
commonly defined it as referring to a period of between 
two and five years. Commitments are also made with 
regard to specific sectors or occupations and are not 
general. The statistical interpretation of 
resident
is an 
individual who has a centre of economic interest in an 
economy. This is usually defined as an individual who 
stays, or intends to stay, for one year or longer in an 
economy. 
2.96. The mode 4 service may be directly supplied - by 
self-employed individuals abroad or by employees 
abroad sent by non-resident firms to the host country - 
or
may be indirectly supplied with the individual abroad 
working for a service supplier resident in the host 
country. Only services directly supplied by a non-
resident supplier to a resident customer would be 
counted as international trade in services in the BPM5 
framework. 
2.97. 
The issues concerning definition and 
measurement of mode 4 are addressed in more detail in 
annex I, yet there remains a need for further research and 
development of a framework for statistics that can be 
used to measure the value of services provided through 
mode 4.