Trade in services is not well understood. Unlike trade in goods, where buyers and sellers physically transport objects across borders, it is possible to sell a service to a client on the other side of the world, unbeknownst to anyone else, without ever leaving the comfort of your living room. The ‘product’ is often intangible – for example advice or analysis – and capturing accurate data on the true value of services being traded across borders has eluded statistical agencies. There are also classification problems: the profits repatriated from the foreign branch of a bank do not register in a country’s national accounts as a services export, yet they are at least in part the result of a foreign country allowing outside financial services providers to operate in their territory.
When it comes to removing barriers to trade in services, there are no tariffs to remove. The rules governing services trade instead focus on whether:
- a person or the software selling services needs to be in the same territory as the person buying the services;
- foreign providers are allowed to sell their services directly to a country’s consumers at all;
- there are restrictions on foreign services suppliers opening local subsidiaries, branches or offices;
- foreign nationals are allowed to provide services in person on a temporary basis;
- qualifications or licenses granted by foreign bodies are recognised or not; and
- there are any numeric restrictions on the quantity or value of a service sold by a foreign provider.
To read the full article from the Centre for European Reform, click here.
Keeping Up Appearances