Services constitute at least a quarter of total trade. Between 2009 and 2019 global services trade increased by nearly 50%, compared to 18% for goods trade. Yet it is rarely taken as seriously as goods in global trade policy discourse. This is a problem when making the case for trade.
There seem to be three major reasons why services trade is not taken sufficiently seriously.
- Definition: Politicians and specialists don’t fully understand what services trade involves and are then unable to elaborate the benefits of growing the sector – they may not even think of it as ‘real trade’;
- Measurement: Difficulties in counting services leads to oddities like the two largest services exporters claiming a surplus with each other, or iPhones being considered a product when their services components are of much greater value;
- Mutuality: Countries have found it difficult to demonstrate beneficial trade relations with other countries in services given that barriers are primarily regulatory in nature.
It is time to change the services narrative, to show that this is real and growing trade, and likely to increase in importance in the future. We need also to broaden the debate from generic consultancy or financial services to specifics like films or engineers. Developed countries particularly reliant on services trade should take that lead, tackling the problems and emphasising services as just as important as goods.
NG-series-Paper-5-1To read the full report from the European Centre for International Political Economy (ECIPE), please click here.