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Population: 180 million
Gross Domestic Product (GDP): $3,820 billion
GDP Per Head in 2001: $21,200
GDP per Head in 2001 in purchasing power parity: 100 (Nordicus = 100)
Private stakeholders

• The Nordicus Construction and Transport Association
• The Banking Sector
• The Association of Engineers and Architects

The Economic Outlook:
Nordicus is a high-income developed country. Its trade and investment regime is amongst the world's most transparent, notwithstanding persistent barriers in many areas, including agriculture and services. Reducing such remaining barriers would further increase the efficiency of its economy, and benefit domestic consumers and taxpayers. It would also lessen distortions in global markets, frictions with trading partners and strengthen the multilateral trading system.

Since 1998 domestic demand has led economic growth, which has risen to an average of 4% a year. Inflation has declined to a historically low level of 1.3% in 2000. Unemployment, however, remains high, at 9.8%. Capitalizing on the economic potential of a quickly changing and competitive international environment is seen as requiring a correspondingly high degree of flexibility in labor, goods and services markets.

Both export and import growth fell sharply in value terms in 1999, compared with 1998, although the slowdown was more marked on the export side. These trends continued in 2001., Export growth is estimated at 5% compared to11% growth for imports. In addition to stronger internal demand, import growth (in value terms) was affected by the doubling of the price of oil on world markets. Nordicus’s longstanding surplus on merchandise trade gave way to a deficit of $ 22.7 billion in 2001.

Nordicus: Sectoral Developments Including Services
Nordicus's trade policy regime aims to liberalize trade through multilateral and bilateral negotiations. Services are by far the largest contributor to output in the Nordicus economy. Nordicus is committed to continue removing restrictions to competition and trade in the services sector. The pace of liberalization differs significantly among sectors, however.

The services sector in Nordicus includes a vast array of industries: from finance and telecommunications to distribution, health, education, environmental, travel and tourism, construction, law, engineering, architecture and more. These industries provide millions of jobs and account for more than 70% of Nordicus's private-sector economic production. In addition to this productive capacity, services play a subtle but essential role in our industrial economy, to which they directly contribute about 2.1% of GDP in the form of construction, and provide the infrastructure which allows manufacturing industry and farmers to function. Telecommunications, software and public media are essential to the functioning of all modern industries.

Although the services sector in Nordicus is diversified and well developed, it suffers from limited access to foreign markets. At the same time, due to limited liberalization and the persistence of restrictions in certain domestic sectors, the costs of many services are high and their delivery not very efficient.

Restrictions remain in areas such as financial services, distribution, transportation, and construction. In financial services, steps have been taken to improve foreign access but domestic ownership requirements continue to impede market access . Other serious restrictions are maintained in maritime transport, where competition policy concerns led the competition authority to question existing barriers to foreign participation.

Maritime transport continues to rank among the most protected sectors of the Nordicus economy. The Nordicus maritime transport market is generally closed to foreign competition and international cargoes carried by Nordicus-flag vessels benefit from substantial government assistance. The current government supports cabotage laws that reserve domestic routes to Nordicus operators.

The educational sector in Nordicus is one of the best in the world. however, due to the difficult labor market, there are many unemployed professionals, most notably engineers, architects, and economists. Liberalization of professional services on the multilateral level under the transparent framework of GATS would benefit both these professionals, as well as the countries that seek their services.

Nordicus: Additional Information
Nordicus is a parliamentary federal republic that was formed from a confederation of twenty states more than 100 years ago. Nordicus is characterized by a very sophisticated and well-developed regulatory, administrative, and legislative framework that often serves as a model for other countries around the world.

Nordicus has very restrictive laws when it comes to employment of foreign workers. Under the current economic conditions, especially given the high unemployment rate, it will be very difficult to liberalize these laws.

Job creation is Nordicus’s most urgent economic policy objective, to be realized through improved competitiveness of Nordican enterprises. Although the jobless rate has been declining slowly since 1997, and dipped into single digits in 1999 for the first time in five years, it is still above the natural rate. High unemployment has lad to popular resentment towards the policies of the federal government.

The ruling party, the Liberal Democrats, has been in power for the last eight years and has two years remaining on their current mandate. However, due to the high unemployment rate, unpopular changes in tax laws, and two government scandals, the government is vulnerable and there is a possibility of an early forced election. The opposition is a protectionist party unsympathetic to trade liberalization. Nordican law requires that in the event an election is called, all negotiations with foreign governments must cease pending the outcome of the election.

UNIVERSAL TRADE FEDERATION
NORDICUS

Schedule of Specific Commitments on Services
July 1998

NORDICUS - SCHEDULE OF SPECIFIC COMMITMENTS
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SUMERIA

Population: 45 million
Gross Domestic Product (GDP): N$234 billion
GDP Per Head in 2001: N$5200
GDP per Head in 2001 in purchasing power parity: 52 (Nordicus = 100)

Private stakeholders

• The SUMERIA DISTRIBUT INC
• The Banking Sector
• The Unity Labor Union of Sumeria

The Economic Outlook:
Sumeria is a medium-income developing country. Sumeria is a constitutional monarchy with a democratic parliamentary system. The elected Prime Minister holds executive power, while the role of the monarch has become principally ceremonial and symbolic. Sumeria is committed to the role of private enterprise as a key element in economic growth, and it seeks an international environment where trade and investment will flourish. However, the government plays a strong and pro-active role in developing and industrializing the economy, and in promoting policy goals of poverty alleviation, social restructuring and a more equitable distribution of income.

Sumeria is a trading nation, with exports and foreign direct investment playing an important role in its economy. The recent slowdown in the Nordicus economy poses major challenges for Sumeria's trade and investment outlook and thus to Sumeria's short- and medium-term economic prospects. Indeed, the Central Bank predicts that growth will fall to between 3% and 4% in 2003, mainly due to the slowdown in exports to Nordicus.

Sumeria has pursued tight macroeconomic policies since mid-1997. The monetary policy of the National Bank of Sumeria has been targeted at fighting inflation through a strict control of the monetary base. The policy has been successful to some extent. The year-on-year rate of consumer price inflation has fallen from 17% in June 1997 to 9% in September 1998. The fall in inflation has allowed a gradual decrease in interest rates in nominal terms.

Achieving fiscal discipline in the public sector was a significant success in 1998. The consolidated general government deficit fell to 4.6% of GDP, compared to the expected 5.9%. However, the authorities have found it increasingly difficult to control the deficit, mainly due to the absence of significant progress in implementing structural reforms: revenues have been much lower than expected (due to lower privatization receipts and accumulated tax arrears of state-owned enterprises).

Sumeria: Sectoral Developments Including Services
The services sector supports many economic activities; however, one can observe an uneven pattern of liberalization in this area. While basic telecommunication, insurance, construction and tourism have been gradually liberalized, value-added telecommunication, banking, distribution, and transportation services are still closed to foreign competition.

According to Draft Law No. 6963-IX the Bank of Sumeria was to grant banking licenses. Because the Law was never ratified, the freeze on issuing new bank licenses continues. The Draft Law No. 6963-IX would require all banks to meet certain prudential requirements. Foreign banks would be able to operate through locally incorporated subsidiaries. However, they would be subject to much higher minimum capital levels . Foreign banks are defined as banks having below 80% Sumerian equity.

According to Law No. 6761-IX of 22 September 1998, foreign insurance companies may enter Sumeria only as subsidiaries, subject to a maximum foreign-equity limit of 10%. Government equity of 30% is required, and Sumerians must own another 60%. The National Insurance Commission regulates the industry. It sets certain prudential and reporting requirements, and must approve all premium increases.

The SUMERIA DISTRIBUT INC is a publicly traded company that has an absolute monopoly over the distribution system in Sumeria. It issues licenses allowing for establishment of the retail stores and franchise networks. SUMERIA DISTRIBUT suffers from inefficiency and lack of transparency. It is also institutionally connected with the transportation companies in Sumeria, which also operate on the basis of an unpredictable licensing system.

State-owned enterprises continue to play an important role in the Sumerian economy, especially in transportation and distribution services. Aside from their own operations, some of these enterprises provide finance not just to each other, but also to private companies. For example, SUMARONAS, the apparently lucrative state-owned automobile and steel company has purchased stakes in financial institutions, in SUMERIA DISTRIBUTand various hotel chains. It should be noted that the actual state of SUMARONAS financial condition is unknown. There are some speculations that the company is not profitable but rather survives thanks to the political pressure.

Sumeria: Additional Information
Sumeria is a rapidly growing developing country that has relied heavily on inward investment and export promotion to achieve high levels of economic growth. Due to its favorable geographical location Sumeria aims at becoming a main provider of ground and maritime transportation services throughout the world.

The Government recently proposed a plan that envisages a further gradual opening of the services sector, which accounts for over half of Sumeria's GDP, but is not yet as open to trade as manufacturing. This is largely because of restrictions on foreign direct investment and the establishment of commercial presence, the main mode of delivery for most services.

Foreign suppliers of services can establish a commercial presence only through joint ventures, in which combined foreign ownership cannot exceed 25%. Insofar as barriers to commercial presence restrict competition in the provision of services, they tend to impair efficiency in the sector, so that the prices paid for these services, by both businesses and households, are higher than would be the case in a more competitive market. The resulting higher costs of doing business could hamper the competitiveness of all firms in Sumeria that require essential services (such as energy, finance/insurance, telecommunications, and transportation) as inputs into their production and delivery of goods and services.

Footnotes
[2] For the purpose of this schedule of commitments, approval is granted by the responsible Minister if he is satisfied that the investment is likely to be of net benefit to Nordicus taking into account any information, undertakings and representations in respect of the application, and the following factors where relevant:a) the effect of the investment on the level and nature of economic activity in Nordicus, including, without limiting the generality of the foregoing, the effect on employment, on resource processing, on the utilization of parts, components and services produced in Nordicus and on exports from Nordicus;
b) the effect of the investment on productivity, industrial efficiency, technological development, product innovation and product variety in Nordicus;
c) the effect of the investment on competition within any industry or industries in Nordicus;
d) the contribution of the investment to Nordicus's ability to compete in world markets.

[3] Public utilities exist in sectors such as construction of public buildings, related scientific and technical consulting services, and transport services and services auxiliary to all modes of transport.

[4] Nordicus has an association agreement with Sumeria under which professional qualifications are mutually recognized.

[5] Including transaction processing.

[6] Where establishment is subject to an economic needs test, the main criteria are: the number of and impact on existing stores, population density, geographic spread, impact on traffic conditions and creation of new employment.