Trade in services for development
In the meeting of the Council for Trade in Services, members discussed “Trade in Services for Development” – a co-publication by the WTO Secretariat and the World Bank – highlighting that the dynamic and rising importance of global services trade offers significant growth and development opportunities for developing economies.
Accounting for over two-thirds of world GDP – twice the combined shares of agriculture and industry – services employ more workers and generate more jobs than any other sector. Developing economies’ services exports have been expanding at a faster pace than the world average since 2005, making services the most dynamic segment of world trade. Given their greater involvement in the services sector, women, young people and micro, small and medium-sized enterprises stand to reap greater benefits from efforts to facilitate and expand services trade.
The report stresses that, as the global economy is increasingly shifting towards services, services trade policies can make an important contribution to achieving a number of policy objectives and solving key global challenges, including in relation to inclusiveness, digital connectivity, export diversification, achievement of the United Nations Sustainable Development Goals, green transition and manufacturing productivity. The report underscores that international cooperation and assistance to developing economies will be critical to harnessing the rapid pace of change in services markets and to unlocking the sector’s development potential.
Latest trends in trade in services
In its presentation on recent developments in services trade, the WTO Secretariat’s Economic Research and Statistics Division noted that services recorded strong growth across most sectors in 2023 – driven by digitally delivered services and by international travel – in contrast to a decline in goods trade. It is estimated that in the first half of 2024, services trade grew 8 per cent year-on-year, with data up to September/October showing robust export growth from individual economies.
Presenting the results of the updated WTO-OECD Balanced Trade in Services dataset to be released shortly, the WTO Secretariat explained that the dataset now covers 14 additional sectors up to and including 2023, providing a matrix of services trade for 200 economies and partners, regions and selected groups. The Secretariat is also coordinating a revision of the Manual on Statistics of International Trade in Services in the international statistical community, in collaboration with the Organisation for Economic Co-operation and Development.
Follow-up to outcomes of ministerial conferences
The Council explored around 20 proposals submitted recently by six members regarding giving effect to specific outcomes from past ministerial conferences. The discussions are part of the broad objective to reinvigorate its work on trade in services, while also facilitating the increased participation of developing members in services trade, in line with the mandate from the 14th Ministerial Conference held in February 2024 in Abu Dhabi.
Several members underscored the need to avoid duplicating the work carried out in the Council’s subsidiary bodies, such as the Committee on Trade in Financial Services, and the need to have balanced deliberations.
Members agreed that there appeared to be convergence on embarking on discussions on the interplay between services trade and good regulatory practices, digitalization, development and the green transition. It was agreed that members proposing similar discussion topics would consolidate their ideas, with the aim of building consensus before the next Council meeting in March 2025.
Participation of least-developed countries (LDCs) in services trade
Members continued discussions on how collect information to assess to what extent service suppliers are engaging with consumers and enterprises in other economies, particularly in the 51 WTO members that have notified preferences for LDC services and service suppliers. This is a follow-up to the ministerial mandate to operationalize the “LDC Services Waiver”, under which members can notify preferences for LDC service suppliers, with the aim of boosting LDC participation in services trade.
The waiver was adopted at the 8th Ministerial Conference in 2011.
A total of 37 WTO members are classified as LDCs. More information on the waiver can be found here.
Services trade concerns
Members discussed three previously addressed specific trade concerns involving cybersecurity measures and mobile applications, among other services-related topics.
Japan and the United States, supported by several other member governments, reiterated concerns about the cybersecurity measures of China and Viet Nam. China repeated concerns with certain services measures of the United States. China also reiterated its concerns regarding India’s measures in relation to mobile applications.
Trade in financial services
Members discussed three proposals on how to reinvigorate the deliberative function of the Committee on Trade in Financial Services. The proposals covered e-commerce and the costs of remittance services. In addition, members looked into advancing discussions on resilience to crises and disaster preparedness. The Committee is one of the Services Council’s subsidiary bodies.
Facilitating electronic payments
Members continued discussing a proposal from China to hold dedicated discussions on the WTO’s role in facilitating electronic payments across economies, including through cooperation with other organizations. China suggested looking at the challenges that developing economies and least developed countries (LDCs) face, such as the lack of effective infrastructure and regulatory frameworks.
Interoperability of electronic payment systems
The Philippines’ proposal suggested holding an experience-sharing thematic session on facilitating the interoperability of electronic payment systems (i.e., the capability for the diverse components and participants of the payment system to connect with each other and transfer funds between each other).
The Philippines proposed sharing national, bilateral and regional experiences, focusing on laws and regulations related to electronic money issuance, payment system oversight frameworks, licensing requirements and regulatory sandboxes allowing businesses to experiment with new approaches (including cooperation between members). Consumer protection, cybersecurity and anti-money laundering could also be addressed, the Philippines said, in addition to the role of the private sector and the challenges faced by developing economies and LDCs. Further interaction with international standard-setting bodies was also suggested.
Reducing the cost of remittance services
Members continued discussing a communication circulated by India in March, which proposed the establishment of a work programme to look at ways of reducing the cost of remittance services. While members have not reached consensus on establishing a work programme as proposed, India suggested that members engage in a thematic information-sharing discussion on remittances. Underscoring the importance of remittances to the GDP of many economies, India noted that such discussion would make a key contribution to advancing financial inclusion and to meeting members’ development objectives.
Members acknowledged the importance of discussing the three issues listed above, emphasizing how the Committee’s work can complement ongoing work in other fora and the importance of avoiding duplication. Noting the complementarity of the subjects raised by these proposals and the need to ensure that specific aspects of these topics are also addressed, they agreed to further consult between Committee meetings on organizing the proposed thematic sessions in 2025.
Resilience to crises and disaster preparedness
Members addressed how the Committee could operationalize the Abu Dhabi Ministerial Declaration’s paragraph 21 which calls for further WTO work aimed at supporting resilience to crises and disaster preparedness. Pakistan announced the forthcoming submission of a proposal on how to move forward on this topic.
Recent developments in services trade policy
An event held on 4 December titled “Global Services Trade Policy: an Overview and Recent Developments” presented recent data from the joint World Bank and WTO Services Trade Policy Database and Services Trade Restrictions Index. The database collates information on policies and regulations affecting trade in services in 134 economies and 34 services subsectors across nine broad sectors. These are: financial services, communications, distribution, transportation, computer services, professional services, construction, health and tourism services.
While very few economies are completely closed to the entry and operation of foreign services suppliers on their territories, the database reveals that services trade policy restrictions remain relatively high overall. However, restrictiveness varies considerably both across and within sectors and modes of supply, as well as among different regions and income groups.
Data available for 69 economies between 2016 and 2022 show that the active opening of services sectors in developing economies, combined with a recent trend towards more restrictiveness in advanced economies (after three decades of opening of their services sectors), is leading to a convergence in the level of services trade opening across economies. Policy reforms are estimated to have lowered trade costs between 5 and 10 per cent.
More information on the Services Trade Policy Database and the Services Trade Restrictions Index is available here.
This event was organized by the WTO’s Trade in Services and Investment Division as part of the “Simply Services” speaker series, an informal platform for sharing the latest information on trends in services trade. The webcast of the event can be watched here.
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