- Trade topics
Trade in services covers a huge variety of sectors, including professional, financial, telecommunications, transport, postal and courier, retail and distribution, environmental, health, education, tourism, and recreational services. Trade in services is vital for the EU economy, as indicated by the following:
- The EU is the world’s largest trader of services;
- Trade in services accounts for 25% of the EU’s GDP, with services exports exceeding €900 billion per year, and;
- Trade in services supports 21 million EU jobs, directly and indirectly.
Why the EU negotiates agreements on trade in services
Removing unnecessary and discriminatory restrictions to the supply of services is important in order to harvest the societal and economic benefits of services. The EU has been at the forefront of negotiations to open up trade in services, both at multilateral level and in bilateral agreements.
The key objectives in these negotiations are to ensure that EU service providers:
- are allowed to supply services in foreign markets, and;
- are not discriminated against compared to national operators or other foreign operators.
The services negotiations do not seek to deregulate services. Addressing barriers to trade in services does not prevent countries from regulating the services provided to their citizens. Countries remain free to define and implement appropriate standards to protect health, safety and the environment, which apply to domestic and foreign service suppliers alike.
Trade in services in the EU’s bilateral trade agreements
The EU’s trade strategy seeks to complement multilateral liberalisation efforts with deeper commitments in preferential trade agreements. In 2021, the EU applied 45 trade agreements with 77 partners.
All the EU’s bilateral trade agreements typically cover trade in services. Recent agreements such as the Comprehensive Economic and Trade Agreement with Canada (CETA), and the Trade and Cooperation Agreement with the United Kingdom – and ongoing negotiations such as those with Australia and New Zealand – include comprehensive and ambitious provisions on services.
Just like at multilateral level, bilateral trade agreements do not seek to impose privatisation or deregulation, but only to progressively facilitate trade through greater openness to foreign service suppliers.
Services in the EU’s trade strategy
The EU’s trade policy communication, An Open, Sustainable and Assertive Trade Policy, adopted in February 2021, identifies six areas that are critical to achieving EU trade policy and supporting the digital transition. Trade in services is among them.
The communication recognises that, “the nature of trade will continue to evolve. It will become more innovation-driven, supported by intellectual property (IP) protection, with an increasing role of services trade compared to goods”.
Trade in services in the World Trade Organization
At the World Trade Organization (WTO), trade in services is primarily regulated by the General Agreement on Trade in Services (GATS). The GATS applies to all WTO Members, thus including the EU and its Member States.
The objectives of the GATS are to create a reliable and predictable system of international rules for trade in services, and to facilitate the progressive liberalisation of services markets.
Plurilateral negotiations on issues relating to trade in services are currently ongoing at the WTO. These negotiations cover two areas:
- Domestic Regulation: More than 60 WTO Members, including all EU Member States, are currently involved in these negotiations. Participants comprise both developed and developing countries, and cover more than 70% of global trade in services. The aim of these negotiations is to prevent the adoption of measures that constitute unnecessary barriers to trade in services, while nonetheless allowing countries to pursue national public policy objectives.
- E-commerce: 86 WTO Members, including all EU Member States, are currently engaged in these negotiations. The potential economic value of the negotiations is significant, as WTO commitments are negotiated in what is perhaps the most dynamic and strategic area of modern trade. The scope of the negotiations includes over 40 issues, which cover a wide range of trade-related aspects of e-commerce, such as facilitating electronic transactions (e.g. e-contracts, e-signatures, e-payments); enhancing consumer and business trust; facilitating online trade in goods; etc.