Today, in Geneva, the World Trade Organisation has published its latest World Trade Report, focused on the future of services trade.
Services have become the most dynamic component of global trade, with an increasingly important role in the global economy. The Report examines how trade in services is evolving and why services trade matters.
The Report uses a new dataset developed by the WTO that captures the various ways in which services are supplied across borders, providing a new estimate of the total value of services trade.
It examines major trends affecting trade in services, including demographic changes, digital technologies, rising incomes and climate change. The Report also looks at how services trade may evolve over the next 20 years and how it may contribute increasingly to inclusive growth and development.
The Report examines how costs for services are declining, largely due to the impact of digital technologies, and how this is expected to expand the share of services in global trade. It concludes that if economies are to reap the benefits of the growing role of services trade, international cooperation will need to intensify.
Some key findings:
- Trade in services has expanded faster than trade in goods between 2005 and 2017, at 5.4 per cent per year on average.
- When commercial presence in another country is accounted for, trade in services was worth US$ 13.3 trillion in 2017.
- Distribution and financial services are the services most traded globally, each accounting for almost one-fifth of trade in services.
- Services value-added accounts for close to half of the value of international goods and services trade.
- Trade in services creates welfare gains for society through a more efficient allocation of resources, greater economies of scale, and an increase in the variety of services on offer.
- An important avenue through which services trade benefits societies is the improvement in firms’ competitiveness, both in the services and manufacturing sectors.
- A large number of jobs is supported by services exports, but the effect of services trade on the level and structure of employment has so far been minimal.
- Trade costs in services are almost double those in goods, but they fell by 9 per cent between 2000 and 2017 thanks to the spread of digital technologies, the lowering of policy barriers, and investment in infrastructure.
- Four major trends will affect services trade in the future: digital technologies, demographic changes, rising incomes, and the impact of climate change. These trends will create new types of services trade, affect the demand for services, and disrupt trade in some services while creating new markets in areas such as environmental services.
- The share in global trade of the services sector could increase by 50 per cent by 2040. If developing countries are able to adopt digital technologies, their share in global services trade could increase by about 15 per cent.
- Despite the reforms that most economies have undertaken over the past few decades, trade in services remains subject to higher barriers than trade in goods.
- Accompanying market-opening negotiations with greater international cooperation focused on domestic regulatory measures may be one way to harness the potential of services trade.
You can find the full report here.